Good afternoon.

The time is now 2 05 p.m.

on Wednesday, March 4th, 2026, in the City of San Antonio B session is called to order.

Madam Clerk, please call roll.

Councilmember Corps.

Councilmember Mickey Rodriguez.

President.

Councilmember Viegeran.

Here.

Councilmember Mungia.

Present.

Councilmember Castillo.

Councilmember Galvan.

Here.

Councilmember Alderete Gabito.

Here.

Councilmember Mesa Gonzalez.

Present.

Councilmember Spears.

Councilmember White.

Mayor Jones.

Here.

Mayor We Have Core.

Great.

Thank you.

Okay.

So at today's meeting, we have two items.

We'll begin with a briefing from CPS Energy on their FY27 budget.

And I asked that they come in.

As we, as the board was just updated, this is the largest CPS budget ever, both in terms of capital as well as an OM.

And so I think it was important that this body get a sense of where that's headed.

This budget also assumes a rate increase.

And so as presented, it creates it assumes a rate increase.

So it's important that we again we never want to get caught flat footed when our constituents ask about these things.

So I appreciate the CPS folks coming in and giving just some top levels at this point so we can I see the chair is here as well, so thanks uh Chair Romero for joining.

Um and then the second topic um related uh as well will be um just an update actually um from both of our utilities on um the state of data centers.

Um we know that obviously this is a national topic.

This is something that is also driving um and shaping the uh the need for additional support from our utilities, and so a common um frame of reference on this kind of where we are and where we're going, especially as we are talking about two uh major budgets, both for CPS and SAWs, is only prudent.

Yeah.

So um we'll teach we'll take the first topic and then we'll do a round of of comments and questions, and then we'll take the second topic and do it that way as well.

Okay, over to you, Maria.

Thank you, Mayor, and good afternoon, Mayor and Council.

Um, as the mayor mentioned, the first item is a briefing by CPS on their fiscal year 27 proposed budget.

Just a little bit of context.

CPS uh energy fiscal year is from from February 1 to January 31st.

So the briefing will provide an overview on the development of their budget as well as a summary of their proposed budget.

So with that, I'm gonna turn it over to CPS Energy to introduce the presentation.

Um good tee up uh from from Mayor Jones in terms of um giving this budget briefing.

Um as she mentioned, this is informational, um, I think really good information for the for the council.

Um as many of you know, uh, we've had many discussions with the council, um, our board of trustees, and uh the you know the community over the last uh four to five years.

Um and we've consistently gotten feedback from from all audiences that you know the focus continues to be on uh reliability, affordability, and uh you know, to the extent the pursuit of greener or cleaner energy.

Um and with that steady feedback from our customers over the last five years, um, including conversations we've had uh with the Ray Advisory Council back in 22.

Um, it's been the really the policy direction and the policy strategy of our board to really make the long-term investments that you've seen us do uh for the community, um, not just in the past, but on a going forward basis.

So all that said, the investments here that we we're gonna discuss um uh are really reflecting a few things in our budget, right?

The the information we'll share here addresses you know the continued local growth that we continue to experience, um you know, even in excluding the uh you know large load or data centers, which we'll talk about later.

Um this budget focuses on using our capital effectively uh to upgrade our equipment in all of our service territory to be as efficient as possible.

Um this budget also achieves to try and keep rates um you know balanced so that all customers pay their fair share, and we've heard that feedback um and we can talk more about that in the next presentation as well.

And it's also worth noting that our teams continue to actively engage in various financing options uh to help pay for the things and the investments to help mitigate um impact on customer bills the best we can.

So I share that just as a quick tee up and we'll go ahead and uh move on here with the presentation.

So four things really are the objective for today.

I'll spend time talking about our process here at CPS Energy.

We used to develop our process, uh our budget rather, uh, and then describe the financial circumstances which we use as guardrails uh to achieve the financial health that we often speak about.

Um I'll also summarize at a very high level, as uh Mayor Jones indicated the capital and OM forecast that we've uh indicated and shared with our board last week.

Um, and then I'll um also speak a little bit about some of the efficiencies that we have uh worked towards at CPS over the last handful of years, which ultimately benefit our customers.

Uh and then I'll um I'll wrap up with a brief uh view of um how our funding compares with the expenditures that we anticipate making through the year and then wrap up so we can move on to our our next topic.

So, in terms of um, you know uh our process, right?

As you'd expect, we spend um a lot of time um on an annual basis um conducting a comprehensive budget review.

Um obviously, as as this council knows, we have a long-term uh focus in terms of our planning assumptions and our planning horizons.

A lot of what we do are multi-year uh investments uh that require you know the consistency in in execution and also the consistency of the funding.

Um there are obviously many inputs that you can see on the slide before and assumptions that really drive our planning process, um and we're continually revising those and updating those and challenging ourselves, uh, which ultimately manifest into the numbers that you see.

Um and ultimately we designed that budget that we'll talk about of to achieve um you know what we believe the community's expectations are in terms of the service that we we provide.

And so I'll take you to the next slide here.

Um, you know, one of the ways that we meet the community's financial needs is really by saying financially healthy.

And um, you know, for those of you that have known me for the years, it's often something I've talked about here at this council and at our board.

Uh, and really my main point has always been at the end of the day, our financial health translates into uh lower borrowing cost through the strength of our credit rating and allows us to fund a lot of the needed investments ultimately leading to lower rates for for all of our customers in the community.

Um as part of our process, you know, we set these financial boundaries that you see on uh on the slide here.

And these really do function as cost discipline um uh mechanisms as we are internally deliberating our numbers.

Um for the last five years, you've heard me uh talk to this council about three financial boundaries that are used to manage our financial health, and that is what is reflected on this slide.

Uh, you've heard me talk about these numbers.

The illustration is a little different uh to reflect that we're really trying to triangulate and keep everything within uh these three metrics.

So I'll point out these metrics, right, are these boundaries rather are our metrics, right?

So they're another way, they're just another way to measure the relationship of one number to another number.

And it's really the relationships that tell that story more than any one individual number.

So as you look through and you try to be you know communicate what they all mean.

Um the first one at the very top is our debt to capitalization ratio.

That's the jargon word we use, but ultimately this is a measure of um as a view of debt rather um that looks at um the outstanding amount of debt we have relative to our net worth.

And the target that we've set is seven less than 70 percent, um, which is consistent with our expectations of the rating agencies for our credit rating, and we expect to um use that as our upper bound while we are in this period of high investment.

Um the second one I'll speak to is our ability to um recover borrowing costs, and that's really the bottom left.

Um the the jargon word you've heard me use before is our adjusted debt service coverage ratio.

But really, the easiest way to think about this is um what is our ability as CPS Energy uh to recover funding necessary to cover our borrowing costs, right?

So like our mortgage payment on the long-term uh investments.

That target is one and a half times, uh, and and that's consistent with what we've spoken about over the last several years.

And that very last one in the bottom right-hand corner is really a measure of of our access to liquidity.

So, how much cash or available credit do we have for the just in case?

Uh, and that target has always been 150 days of cash on hand or greater, um, or in combination with available credit, 200 days of liquidity uh on hand.

So those are reflected here in a little different visual than we've talked about, but very consistent with um how I've spoken about it in the in the past.

Okay.

So here we have on this page our our capital plan.

And I'll say a couple of um overarching comments uh on on this uh first.

Ultimately, this is intended, as I said earlier, to achieve the service levels and expectations of our of our community.

We do have close to 28,000 customers that we're expected to connect this year, about 26,000 of them being electric, and another 5,000 customers on the on the gas side.

So we are a growing community, and I think that's a very good positive for everyone here.

If you're in other cities like a Dallas or Houston, you know, CPS Energy would be multiple companies, three or four different ones.

And so here in CPS, we have one owner for a transmission and distribution company on the electric side.

Same with gas.

We're a transmission and distribution gas company.

We're also the power generation company, and we're also your retail electric provider who you call up on the call center and get service.

So that that model has served us very, very well.

I'll note here the big buckets.

Um this will look similar to the the format we've used in years past.

It's 1.7 billion, um, unique to our capital budget.

This is the portion that is partially funded uh by debt and partially funded by cash.

So in this instance of this year, we intend to fund close to 80% of this 1.7 um through debt and the other 20% with cash.

So the real benefit is the amount of uh cash flow and and kind of rate recovery to to pay that is is not really 1.7 billion.

And that's really an example of when we say we're using our balance sheet efficiently to manage customer bills, it's through that financing techniques and managing to those metrics that I spoke about earlier.

Obviously, the largest categories probably come as no surprise 700 million there for our efforts to improve reliability.

Um interesting note, about 60 60 percent, 400 million of that 700 is for transmission work.

And as this council knows, the transmission portion of the business that we own here in the city of San Antonio, it's actually regulated at the state level.

So uh I would put this in the category of you know required work, but different recovery methods, but it's still under the umbrella of what we spend.

Um the other 300 million really focuses on um uh other uh reliability and resiliency, civic projects, things like that to support um you know our community, and this is what directly translates to you know outage times and things of that nature for our customers.

The next most obvious bucket there is around customer growth, which again we'll hit hit on that a little bit in the next presentation.

Uh you know, about 290 million of that is is purely to hook up new customers and get them to be you know build and paying customers.

So the 28,000 customers on the electric and the 5,000 customers on the gas, uh that is the uh that's the work being done to get them connected.

And obviously, you know, power generations are middle uh that middle category there, um, obviously significant.

Um, our fleet, since the last time we spoke to our council in any detail, our fleet is about 3,000 megawatts larger.

Um so the investments uh to um uh keep those plants um in in good working order is significant, but what you don't see here is the contribution to the revenue side that those assets bring into our community.

And then again, you know, technology and security.

This council has heard a lot over the last four years.

Our investment into our our back office IT infrastructure, uh effectionately known as our enterprise resource planning efforts, um, and the investment we've made uh on the security side.

Um and then the very last category there can you know that's the outreach that you see in the community.

When you see anyone from Deanna Hartwick's team out in the community helping folks out, get uh doing fares, things of that nature, that's in here.

We um uh and connecting uh you know connecting customers for folks are out doing that too.

Um and there is a component in here as well, um, attributable to um some of our locations and uh closing down some of our uh our sites and and centralizing uh location-wise uh some of our facilities so that our frontline folks can dispatch in an efficient manner.

On this last slide, or this next slide rather, this is the OM portion of our budget.

Again, this is 1.1 billion.

Uh, and so this is a lot of the activity that um you know you would expect as ongoing maintenance and routine work.

Uh I will note that the first category there is our labor, right?

We have close to 3,700 employees out in the community.

Uh that relationship, about 45% is the kind of historical relationship that we've always had relative to our ONM budget.

We obviously have a lot more employees than we did four years ago, um, not just through the planned growth, but also through our acquisitions.

We um took on some other employees through that effort.

Um, and then again, power sustainability and resiliency.

This is um doing the the oil changes you need for our power plants.

Um it's obviously more complicated than that, but that's the type of maintenance we do.

About half of that spend or about 150 million of that spend is uh for our um our part ownership in STP.

Um and that's obviously a great generating resource in terms of reliability, and it's also a zero carbon uh resource.

Um so a great investment, and our our customers have benefited from that.

Uh and again, there's a lot more other investments again on the technology side, on the reliability side as you go down there.

A lot of this work you see out in the communities around maintenance on poles, maintenance on street lights, um replacing circuits, uh, tree trimming, um, a lot of that work is is all under this bucket here under um the the OM category of reliability.

So the more exciting slide I'd like to share is the uh the next one.

So uh, you know, all that said, um, you know, we often get asked, you know, what what have you guys been doing to look for efficiencies or cost savings and things of that nature?

We wanted to take a few examples and just put them on the on the screen here so we can show you know the council and show our community kind of the work that we've been doing.

There have been um operational items that we've been able to um uh to update and get some some efficiencies through through the um through the internal uh kind of rigor on the far left hand side.

There have been some in the middle there.

There's a lot of work that our IT department has been doing in terms of optimizing our cloud uh subscriptions and things of that nature.

And obviously the big one that you've heard this council talk about is the strategy we have around wholesale revenue.

Um, you know, wholesale revenue contributed about 300 million dollars net of fuel this past year.

Um, again, another record year, um, which really helps um cover um some of the other expenses that um you know we we need to spend.

And some of the other things that our customers don't have to do anything for and doesn't impact um uh service levels are some of these financing activities on the far right that we're able to do through um prepaid transactions.

We're we're just taking um taking advantage of the opportunities in the financial markets to achieve savings uh through um some of these natural gas or renewable energy uh prepaid purchases for for a commodity we were going to buy anyways.

All that to say um there's a lot of work that our community or that our teams do to really try and um you know keep our cost down for our for our customers.

Okay, so this will be my last slide before I wrap up.

So what does all this mean?

As you look at fiscal 27, this slide is really a breakdown of um the funds uh to pay for the things and how we bring in uh the money to um to cover those.

So I'll start on the far left-hand side for the sake of just stepping down this really quickly.

This is our expenditures that we anticipate and forecast for fiscal year 27, so the the year that we're in.

Um that one point, I'm rounding up to 1.1 billion on OM.

That is the number that I showed you earlier.

That is one of the uh numbers that our board of trustees votes on every year you know, for us to execute on.

The line below that's our desk debt service.

And I have the word capital there, uh, just to connect the dots back.

Um, the 1.7 billion of capital that we talked about, um, again, that's not the the full amount being spent in that actual year.

Part of that is debt finance, part of it is cash financed.

So this whole 675 million is the principal interest portion uh that we are paying for.

And I equate it to like a mortgage we put on a house.

It's it's what you pay every every year.

And then the other ones, um, you know, the repair and replacement account.

Uh this is really the the cash uh balance that we use to help fund a portion of our capital plan.

Uh that's about 530.

And then you can see below that is our city payment forecast for the year, about 560 million, uh, which is uh a little bit higher than list this year was closer to uh 510 million, I think, for our fiscal year.

And the rest of that bucket um is the fuel and regulatory cost.

Um that is you know, their unavoidable cost.

This is what we inject into our system to run the power plants, go through our gas distribution lines, um, and the regulatory costs associated at the state level.

Um so that takes you through the expenditures.

And as you go over to the revenue side, what I'm calling out here was that you know the revenue that we forecast to project covers about 99% of what we think is going out the door on the expense side.

As the major alluded to, um, you know, that is a delta um that that we have in in the planning.

So I'll call out a few things as we go down and address that.

Um I think one thing that stands out is that growth number of 200 million dollars, and it's hard to see on the bar, but on the bottom right you can see that.

Um 200 million dollars of our forecasted revenue is coming from kind of three buckets of growth.

About almost 20 million from residential growth, those are the 26,000 customers we talked about, and about um a little over 40 million from our commercial and industrial growth.

Again, the lion's share of that organic growth is coming from our wholesale book, um, which is going up another 135 million relative to uh last year.

So our forecast is in the in you know the 400 plus uh million range for for wholesale revenue next year, um, which is which is a great story.

Um the other point I'd make is you know, the big story with CPS energy is that a lot of our revenues um over the years are are fairly volatile, and a lot of the expectations we have depend on is it a really hot summer?

Is there scarcity in in uh ERCOT that helps our wholesale book?

Or is it really mild?

So to address the point of having a you know a delta between the revenue and expenditures, uh, what we often say is hey, we are going to get ourselves through the summer months.

That gives us opportunity to materially get through a large port of portion of the year that drives our year-end forecast.

And and at that point, I think we can discuss the the options in which um we can uh go back filling up any gaps that exist.

But what I've learned in my time here is whatever estimate of a gap we have, it's gonna be different by the time we get on the other side of the summer, um, which is why we like to kind of have those conversations, more detailed conversations, when we have a better idea.

Um so with that, uh I'll wrap up uh Mayor Jones so that we can um move on, but I'll I'll pause for any questions.

Thank you.

Thank you, Corey.

Thank you, Corey.

Thanks for walking us through that.

Um, you know, and always my hat's off to the CPS team, they do great work.

Um and thankful that we can all, though again, as we're looking at not only the financial situation of the community, but also both of our utilities coming with their largest budgets and both coming with uh um potential rate increase requests, really important that we have this information sooner rather than later, and we have it across the council sooner rather than later.

So thank you for that.

Um, a little bit of good news, uh, if you would, you know, the major acquisition that was made uh last year.

Speak a little bit to um you know how that's performing, how that's already you know putting money into uh into the coffers.

Yeah, so um I'll speak at a high level and anyone else can chime in.

But we made the purchase this past fiscal year, um uh and it had um not only was the the cost of purchase the equivalent megawatts um about half as much as it would to be to be built, the uh the contribution to wholesale revenues was about 10 million more just for the balance of last year than we anticipated, so close to 30 million dollars just from the assets we bought going forward.

Um, a lot of that incremental 130 million that we spoke about um is attributable to those those assets and the totality of the the forecast we have for this upcoming year um is largely um uh driven by not just the purchase we adjusted, but also driven by um the previous purchase.

And all of that to to your point, uh Mayor Jones is it helps our customers to the extent we can get the revenue now from these assets before we grow into it.

That is another dollar that we collect from the state of Texas who needs our product, but is not something we have to collect locally.

So as we get in future conversations, we can talk about that.

Great.

Thanks, Corey.

Um as we dig into to this, at this point, I know you want to uh the intent obviously is to get through the summer, right?

Before you come back to the council with what a potential rate increase might be.

Um but when you shared with the CPS board that this assumed a rate increase, did you already have one in mind?

Uh I think I'd phrase it this way the $50 million gap that we have, um, if if nothing changed, right?

Then uh and there was concurrence upon the board, uh, then that would be the placeholder for for a rate increase for that amount to achieve that.

Okay, but not a specific percentage at this point.

Um no, it would we would actually wait for our cost of service uh study, which we've talked about to finish, and then we would be able to allocate that appropriately.

Okay, great.

Um, it was helpful for me, um, and I think maybe a cheat sheet for the rest of the council as well, is to um uh compile a uh you know the high level uh high ticket items that are in that 700 million, um, I think would be really helpful for the for the council to understand.

Um can you we are also obviously watching um at the federal level as there are changes not only in regulations but also changes in the incentives, and as we understand, you know, our um focus on on um how we want CPS to make and meet our energy needs, right?

Is closely aligned to our objectives as outlined in the climate action adaptation plan.

Can you so can you speak to how this budget continues to keep us on that path, right?

Even in light of some of those changes, or maybe some of the tweaks that this budget accounts for in light of the changes at the federal level.

Yeah.

Now that's you or Elena, whoever wants to answer that.

Maybe tag team.

Uh I'll I'll be very quick and just say that it absolutely aligns with the generation plan that our board approved previously, which was in line with CAP.

So the acquisitions we did, those natural gas were part of the original profile.

What we don't talk about are the RFPs on the solar and the wind and the battery storage, which are other types of resources that are consistent with that.

So this budget contemplates and is um absolutely consistent with um kind of the previous direction, kind of agnostic with what's going on.

Um but that's what we can control to the extent we can't control something, then you know things may shift.

But Lena, do you have anything else you want to add?

Okay.

Um one point that Corey made that is important um is obviously you know the city owns CPS, uh, but we do not interfere in operations.

However, we do understand the ways in which we can help ourselves as a city and largely in the way of property tax, right?

And so um we know that when CP CPS buys and sells a lot of property, right?

Constantly does that uh to meet operations.

We do potentially, though, I think have an opportunity to ensure that we are um looking at those to make sure that we're not disproportionately um paying higher for something as a result of where that property is in the city, right?

We know a piece of property right downtown, the property value on that or trajectory of that potential for that quite high, right?

Versus maybe another place.

So um it's a balance when we look at those uh potential purchases when we look at you know, certainly what a CPS need to do to do their work.

Um, how can we also at the same time ensure we are best protecting um property tax value for our community?

As we know there's not there's just not a lot of other ways in which we can generate that.

So protecting potential property tax um is really important.

Okay.

Okay.

Um councilwoman.

I'll try to give it to Les Maria, you had something you'd like to say.

No, Mayor Okay, go ahead.

Councilwoman.

Thank you.

Uh thanks so much, Corey, for this presentation.

Um, you know, one of the things I did want to mention is that when people think of city services, they think of CPS services and vice versa.

And what I mean by that is that if someone sees a tree hitting a power line, they don't care who is trimming that tree to not hit the power line, whether it's CPS or City of San Antonio, we're very much one in the same in residents' eyes.

And so I do think it does that part that really relies on a strong partnership between the city and CPS.

And um, you know, it it it goes it goes without saying, but we're all part of the same team when when it means caring for our residents.

Um and I would say that because we're part of the same team, that means we have extra high standards.

Um, Rudy, I know you're a phenomenal leader, and you have a great leadership team.

Obviously, I know that you all are led by Francine uh with the board and and and you're leading a great board as well.

So there is some inherent trust because of great people leaders like you all and anybody we interact with, you know, from the customer outreach, customer service team, they're all phenomenal.

And so thank you so much.

Whether it's you all attending coffee's with the councilwoman, whether it's you all helping us uh with a specific customer issue, we we definitely appreciate the um partnership.

So um, I know one of the things that we in district seven have talked and worked with you all on is a large number of power power outages um from broken tree branches, um specifically on the northwest side of district seven.

And so we know that reliability is extremely important, and that we also know that an investment in this infrastructure is extremely important.

So it's it's it's we're it's smart of us to continue to invest wisely uh in this.

Um also too, thank you for continuing to invest in security.

We know security breaches seem to be more frequent and sophisticated, so we have to stay ahead of the game here.

Um I applaud y'all's efforts on the cost reduction strategies in slide seven.

I did have a quick question.

Um has the reduction in non-emergency overtime, has that had an impact on service delivery.

Um I don't think so.

Um, from what I understand, no, the intent was it was non-emergency, so I don't believe there's been um significant impact.

Okay.

Um yeah, and you know, we we just obviously want to make sure again CPS customer service is the same as city customer service.

So we just want to make sure that we're taking care of our residents um in unison.

On slide eight, I did have a quick uh question.

One of the the um expense drivers was gas leak surveying and repairs.

Um is that one of the major um expense drivers, or what goes into that?

No, it's not.

Um, you know, we've we're always diligent about doing surveys, we're always diligent about doing gas locates, you know.

We 866 or is you know, call before you dig.

So um those are our non-questioned work when we do that.

So that's it was just an example to be relatable.

Okay, got it.

Sounds good.

And obviously, you know, we know that um some of the rate increases coming up with uh CPS and SAS and others, is it's really gonna put our our residents in a bind.

But what we can do is make sure that we are all doing our due diligence to make sure that uh our partners in in CPS and in SAWS you know, have a good plan, have a good uh process for taking care of our residents and can offer more to our residents than they're doing today.

So this all looks good to me.

Thank you so much.

Thank you.

Thank you, ma'am.

Councilman Via Gadon.

Thank you.

Uh thank you, Corey, for the initial uh presentation.

I think we're we're just at the beginning, and there's still some questions that I kind of have.

I'm looking forward to the next conversation because I think there's a lot of potential there as we move forward and and and what what is potentially out there for energy sources and revenues.

Um we need to take a look at this as a in a holistic approach as we look at rates and rate restructuring and um how we make how we weatherize the homes, especially in the poorer sides of town in the south side.

Uh again, I will continue to say that this is all good to know, but if they can't get into a program where they can affordably weatherize their windows, getting a new AC unit isn't gonna help.

Um if they cannot uh have the if they if they keep on buying energy efficient devices but they keep on uh flipping a switch because they have an older grid, that's not going to help too.

So, how do we how do we do this in concert with each other with the different programs that we have?

So I'll look forward to getting some of that information.

The other thing I look forward to, and part of this is because I'm going out into the community and piloting, I'm gonna start with my seniors on going online and checking out these websites.

And I will give y'all all the feedback because I do want all of our residents but our older adults to be able to go online, take care of the bill, look at their energy usage, and that way that they can set up an appointment, come into the field office and talk about why is it so high first thing.

Uh so we're gonna take a look at your website and what they can, what information they can garner regarding their bill there, but it's gonna part of that is having a good website and being able to pay that bill and and being able to do this without having to get a checkbook.

So I really want to make sure that you have the system there so that if they want to pay or if they want to get on a payment plan with CPS, that that is there as we look at that.

And I think that's where we look at incentivizing those that are energy savers, and are um if it's a household of four, but they're not using as much energy as they're supposed to, let's find out why, because they're they're a good model for that.

If it is if it's a household of two senior citizens and their energy bill is way up high, where where are they wasting that energy?

So I think that there's gonna be a lot of conversations to have, and I appreciate all the efforts y'all put in, but I think this is the beginning of a long conversation so that after the summer we can really sit and talk about what rate restructuring looks like and what it looks like for which of our residents and and things like that as we move forward.

So thank you.

Thank you for the presentation.

Keep up uh I'm not gonna tell you all to keep buying more power plants, but um keep off keep our energy on the priority.

I think y'all are really good at what y'all do for San Antonio, but also for uh the state of Texas as a whole.

Thank you.

Thank you, ma'am.

Appreciate it.

Councilman Mesa Gonzalez.

Councilman White.

Thanks, Mayor.

I'll be brief.

Um Corey, thanks for the presentation.

Uh I do want to say that I think over the past four or five years the um the turnaround that CPS and and the the new forward-looking direction has um is paying dividends.

Uh and as we talk about rate increases moving forward, I I gotta say, uh, you know, and I've said it before, if you look at what's been presented to this council this year, potential CPS rate hike, potential SAWS rate hike.

We've talked about um property tax increase.

Uh there's been word of a potential telecom tax, you know, related to via this is entirely too much money that we're asking the citizens of San Antonio um to take out of their pockets.

And um I know, knowing this council that that nobody is gonna want to take a vote in the affirmative on any of those unless we were to see um real data and real evidence that that money is being spent uh appropriately and uh and that there's a real need for the for the increased revenue uh going forward.

And uh, you know, with that said again, I I think that that CPS from what I've seen in the last five years has certainly taken great strides in in that regard, and I love the the the forward looking nature of of what you guys uh have been doing.

Um with that said, I really only have one question and it relates to AI.

Any um exploratory measures you guys are taking or have put in place uh at CPS to maybe make the organization more efficient.

Yeah, okay.

Rudy's gonna say they asked they put in chat GBT.

What is Councilman White gonna ask at this meeting?

Well, in typical utility fashion, uh we're going at it uh in a measured manner, uh, but there are all kinds of efficiencies uh to you know to to speak directly to your question on the other side of the upgrades that we're making, which we've been talking about for four years.

We're in the butt in the middle of that process, and it's going really well.

And um, and a lot of the cases that uh we've been building will lead us to, you know, people the the people we have today are gonna be doing different jobs in the future because of the tools that are coming along, you know, with uh with AI and and just an upgraded computer system.

I mean, our customers are gonna experience you know uh their interactions with uh with us differently.

So I think there um there are some really really uh interesting use cases, councilman to answer your question that um that are on our list of things that we're working on uh that will be enabled by the technology we're making investments in, and and you know, once we get to that point and start implementing them, we'll be coming back with a different list of what you know what cost savings measures have have come uh from the 300 million dollar investment we've been making uh in our technology.

So um, yeah, I'm really excited about uh what's what's to come.

And we're already doing some really cool things.

You know, we used to uh just one example.

We used to you know send a tree trim crew out, and they would start at one part of the neighborhood and they would trim the whole, they would they would they would go the whole line, right?

And some would need trimming and some wouldn't need trimming.

Now we can pinpoint exactly no, we're gonna go to this house, we're gonna trim that tree, and you're gonna, and so you have a more efficient use of your resources because we're using drones, we're using you know, LIDAR, we're using all kinds of technology that has been you know uh come about through um through through through the advent of of AI.

So there are a lot of ways that we're using them today, but there uh are gonna be a ton more uh opportunities once we get our computer systems upgraded.

Okay.

Well, I've got some more for you when it comes to to um to data centers, but I guess we'll save that to the uh to the next part of the conversation because I am I am very interested in in making sure that that we can support these data centers and that we have the uh the the generators and then the capacity and the equipment to make sure that that we can do that because I'm not sure that that we've been able to over the past um year or so.

So uh but I'll save that for the for the second part of of today's B session.

Thanks, Mayor.

Councilman Mesa Gonzalez.

Thank you, Mayor.

Uh thank you for the presentation.

Uh just a couple of uh clarifying questions.

Um I appreciate slide four.

Uh just really a reminder to all of us in this process of these guardrails that are in place, right?

Whether it's CPS or SAZ or the city, uh, those are all important for us to remember that we have um to make sure that our uh we do maintain a strong credit rating and that uh higher borrowing capacity, right?

So I appreciate starting there.

Um on slide five, I think five and six.

So how much of the capital and operation and maintenance spending is directed towards aging power uh plants versus new generation?

Do you have an idea of that?

Um the uh the uh maintenance on the uh fleet we have that's non um non-nuclear is about a hundred million and about 30, 40 percent of that is is from the the new assets we purchased.

Um and so uh you know I I think the the investment we've been making is strong and I think it's uh in line with the the forecasts we anticipated when we were making those acquisitions.

So I'm very pleased with the the investment that we're we're doing for this.

But do you have any I'll follow with the exact detail on you in that yes, yes.

Yeah, if you could that would be helpful.

Uh and then back to slide four, really quickly.

That difference between the cash on hand and the 200 days of liquidity, is that the 1.4 and the 1.5 in the parentheses, or what is that?

That's correct.

So the 1.4 is uh the cash on hand and yes.

Yeah.

Okay.

Let's see.

I think oh, slide seven.

Uh on the operational efficiency.

Do you have any idea of right?

On on the is there any idea of the measurable cost savings that is expected from this?

In addition.

On the operational efficiency, the 40% reduction.

Oh, yes.

It's it's in the millions, several millions.

Um, I can follow up with you, but it was it was um very notable.

Okay.

So we'll get you that.

Okay, thank you.

Uh, just a couple of questions on slide eight.

On the growth, the 28,000 new electric and 5,000 new gas customers.

Can you kind of um expand on what modeling was done to support this level of growth?

Uh I mean, there's it's very extensive, and I think we can go into maybe more detail offline, but um we have a whole team uh within Alena's area that looks at uh all kinds of economic and demographic um trends uh all across the United States and and locally um that really influence um uh what we what we forecast.

So it's not just a trend that we look at, there's a lot of complicated analysis.

We leverage some third parties as well to help with that that forecast.

Okay, perfect.

And then on the the last point there on the plan maintenance for aging fleet, is that extending the life of that existing fleet, or is it kind of setting them up on a path to retire?

Um for all of our fleet has kind of an expected useful life, and so that's really just a maintenance to hit that useful life.

So we haven't made any changes in decisions from um you know when we anticipate something to close as an example.

Okay.

Um okay, those are all my questions for now.

Um, I think to councilwoman via Grant's point, this is just the beginning, so look forward to uh future conversations.

I know we have a talent hall set up in district eight on March 17th, I believe, um, in the morning.

So uh reminder to District 8 residents, um, we will be coming there soon.

Thank you.

Thank you, ma'am.

Councilman McKee Rodriguez.

Thank you, Mayor, and thank you for the presentation.

Um can we go to slide seven real quick for the non-emergency overtime?

What is that 40% reduction estimate to in dollars?

Um, you know, I think as I mentioned earlier, it's several million dollars, and I'll take that as an action to get back to um to both you and uh the councilwoman.

Gotcha.

Sorry, I missed that when it was asked.

No worries.

Um and is that something is that a new reduction that you guys decided this year, or is that something that has been it was something this year that we looked at.

Um you know, we're looking at our process of looking at our engagement with our customers and where we could um you know leverage the good relationships we have and and uh and find savings.

So it was a it was a great effort that was uh done this year.

Okay.

So several million there.

Uh I see 8.75 million saved in fleet strategy, about 1.7 million in uh technology and process automation, and then revenue and market strategies that are anticipated to so I read the revenue and market strategy as uh things that are happening that are anticipated to yield a return on investment, not necessarily a operational efficiency that you're taking on in the new year.

Am I in am I accurate or inaccurate in that?

Uh yeah, that they are more revenue side benefits.

So as an example, I may not have an efficiency on the expense side, but the wholesale revenue is an offset um you know to the expense that our local customers don't have to pay for the commodity savings as an example on that fuel part portion of your bill, that's 30 million dollars now over the next five years that our customers don't have to pay, but they're getting the same product they would have anyways.

So it's um it's not you know, uh like we're out in the field doing a work becoming efficient, but this is just optimizing um the financial markets uh and the wholesale markets uh in a way to defray costs from our local customers, if that if that helps.

Okay, I guess I'm just um because I know a big thing that I know Councilman Wyatt asked for, I know I had asked for was um what can be done to reduce uh a rate increase by as much as possible and minimize whatever that was gonna be.

And I see here things that have been you know, um that have been in the works for multiple years that are creating more uh efficient organization, but uh I think the real goal was to say was to say, hey, before we really before we put this budget together and before we make this this rate increase request of city council and of uh our constituents, what is the out what is the absolute most we can do to ensure that uh that increase is is minimal.

Everything on this page works to works that effort, so we can we can revisit that.

But that that was the intent of this page.

Gotcha.

Um last rate increase it was said that in order to implement a uh a tiered rate structure similar to SAWs, that uh technology was gonna be needed and that that technology would be acquired through the you know the money that was gonna be uh achieved through the previous rate increase.

What is the status of that?

Uh that's part of our ERP project, which is still a couple of years uh out from completion.

That was a five to six year project, so we're in the middle of that.

Uh and I think we'll be ready to have that conversation, you know, on the back half of the summer when we finish our cost of service study that we need to do and can give an update on the status of our implementation.

But we're still a couple years away from finishing up that project uh that uh that you're speaking about it.

That's interesting to me.

And I I know you had probably said it's it would take a while, but four, five, six, seven years.

It's it's it's kind of I don't know, it seems outrageous to me that any technology would take that long to create a system that is comparable to something that's happening at one of our other utilities already.

And so I'm challenged there.

I think we can take it as an action item to follow up.

Um, but it's it's very complicated.

There's multiple hundreds of systems that we're talking about.

Um, and um, you know, we'll we'll take that action item to make sure we give you all the detail that that you require before uh before we have any more conversations on that.

Gotcha.

And then what is your backup plan in the event that or what is a backup budget look like in the event that uh city council does not approve a rate increase?

Because I understand that this budget was presented to the board.

I think I again I'd back up to you know, managing volatility in every year is something we have to do just because of the nature of our revenues.

So through a combination of um uh prioritization and through combination of internal discussions, um, we're kind of always ready to you know pivot.

But I think at this point it's premature to to talk about that.

I think for us it's about getting to the other side of the summer to really see um what position we are in um to to better inform that conversation and to inform that priorization.

Okay.

I think when we're um having conversations with constituents and surely when you come to district two for a town hall, it would be great to say, hey, this is you know this is this is all the work that we've done to prevent a rate increase.

This is what we need at the end of the day.

If we don't get this, then this is what uh the cost of that is.

And I think yeah, making sure that we all know that and what our constituents know is gonna be important.

And right now I'm not fully bought in just yet, and so I those are the questions and I think outstanding items that I have for you.

Understood.

That makes sense.

Thank you.

Thank you, Mayor.

Uh Councilmember Castillo.

Thank you, Mayor.

Thank you, Corey and Rudy, uh, and leadership for um everything y'all do over at CPS Energy.

Uh, as I shared, um, when SAS gave the presentation, we had a utilities town hall really grateful for Matthew and Elena for giving a presentation and filled in district five resident questions.

Uh it was a very rich discussion, and there was lots of value in having both CPS and SAS present uh to talk about the generation plan, and then of course the rate adjustment over on the SAWs uh end.

And what was uh brought up during discussion, right?

Was some similar along the lines of the questions of Councilman McKee retrieve is how can we uh get CPS energy to a point where there's a similar rate structure as SAS.

Uh and Elena did share, right?

It is it is going to require that technology investment.

Um, but I I I do share concerns in terms of the timeline.

I do believe there would be value in uh frequent updates with council in terms of where you are at in that work.

Uh and that way there's uh bench points that we can be following in terms of what that rate adjustment can look like, or not rate adjustment, the overall readjustment of the structure, rather.

Uh and I understand on the next presentation we will be going into some of the weeds within CPS's rate structure.

Um, but given the breakdown on slide uh eight.

Um I I my understanding is there are unique rates for very large users.

For example, the extra large power service rate and the super large power service rate.

I'd like to understand and if possible, receive a list of how many large power users are receiving each of those service rates uh to to just understand the overall impact and and just have an understanding of how this rate structure may be impacting uh both CPS and the city of San Antonio.

Uh so if that's something that we could receive, I'd appreciate that.

And then uh I really appreciate you, Corey, uh emphasizing on the technology component.

This is something with the last CPS conversation that I wanted a greater understanding.

I understand that uh we can't get too specific, or I believe the last time it was, you know, we we don't want to discuss this publicly in terms of what type of technology we're we're purchasing.

I would find value in an executive session with city council to understand uh what what is the the cost per technology line item uh and then also understand what is the the intent of each of those items because um this presentation doesn't necessarily go into the weeds of what type of technology and for what uh councilwoman, we can come back and give you a similar presentation that we give to our board updating them on where we're at in our technology upgrade.

I mean, I know you know four or five years sounds like a lot of time.

It took us a year to get the contracts in place.

It's taken us a year to write the requirements for what we want the system to do, and now we're you know, in the process of getting to the point where we're building that out so that we'll have a release at the end of this year, we'll have a release next year, and then we'll have release in 2028.

So, you know, because we have hundreds of systems that do the things that we need them to do, you have to phase it in so that you don't you know just dump all the toys out of the toy box and you know have to put them back in in a in a way that you weren't expecting to.

So we've got a presentation that we can come give in a future uh B session, uh Ben, that uh that we'll be glad to come and and y'all can dig into it, you know, to the extent y'all are interested.

Thank you.

I appreciate that, Rudy.

And uh my next question is regarding uh the slide that has uh the reduction in uh non-emergency overtime.

Uh can you help me?

Uh uh, can you remind me again how y'all got to to that point?

So let me kind of I'm gonna give you an example.

Um and uh our leaders have been trying to find ways to reduce um you know how we uh schedule crews in a way that doesn't impact reliability but that allows us to save money.

And I'm just give you one example of that.

Uh we used to schedule a lot of Sunday overtime.

If we had to move a line, if we had to impact the customers so that their business, you know, wasn't it you know impacted, we would do the work on Sunday.

Well, guess what?

We pay the highest overtime rates on Sunday.

So we started scheduling that out a little differently, so that maybe we do it you know overnight on a Thursday night when you know uh we can accommodate uh when the customer can accommodate the work.

So, you know, um how we um how we actually uh create crews that are on standby if a storm comes in or if you know something pops up in the in the evening, you know, how we structure crews in a way that allow us to reduce the amount of overtime we're paying.

It's just a it's a healthy way to to constantly be recreating the business in a way that that holds our customers harmless, but allows us to spend less money.

So it's it's all of the above.

It's every time we we schedule a crew for overtime work, is that the most efficient way we can do it, or is there another way?

And then two follow-up questions to that.

Um right, the the conversation of AI concerns me, if especially if it's going to replace an employee, right?

So none of those reductions have to do with potential AI doing work of an electrician.

No, ma'am.

Okay.

And then uh, secondly, that doesn't mean that contract labor is going to be taking up those additional uh hours or no, okay.

I I think that um you know there are there's work that um that I don't necessarily want to pay my linemen 50 bucks an hour to go change the light bulb.

You know, we outsourced our street lighting, whole street lighting program for two reasons.

We wanted to um we wanted to improve the overall service to the community, public safety and all the things that street lighting helps.

Um, but I also don't want my linemen booming up up to 81, you know, in the middle of the night from a safety standpoint.

That's not what I want my my internal crews doing.

So that's something that's primed to be outsourced.

Um that's not gonna take away from the the work that our linemen you know have to do anyway.

So I think there are some things we can do that that are more appropriate for contractors, but overall it's not gonna force a reduction.

And you know, we've got a great relationship with IBW and our and our NAPE, you know, partners, and and we're gonna continue that.

I appreciate that.

Uh, one last question, and for anyone on the team, uh, regarding some of the real estate that CPS Energy owns, right?

I'm excited that one property was sold to to Thad right near Lone Starbury and to see the opportunity there.

Um, but I'm also curious throughout the city, uh, are there any other vacant properties that y'all have that there's potential uh opportunity with the city of San Antonio and the neighborhood and housing services department to uh construct affordable housing on something else vacant property.

So every time we've got a strategic real estate plan uh that looks into the future, you know, uh I am I have committed to investing in our workforce and to invest in our workforce, we've got to retire 1950, 60, you know, old crappy, you know, service centers and build them some new stuff.

Uh and what that allows us to do is consolidate you know multiple you know properties into one location that more efficiently allows us, you know, to send our crews where they need to go.

So every time we we we buy a property implement our real estate master plan, there are probably two or three properties we're gonna sell.

And we buy and sell properties, you know, all the time.

And and I'm I'm um you know, uh sensitive and and I respect the mayor's position on not wanting to take really good properties off the tax roles.

We try really hard to find properties that have been sitting there, you know, for a little for a long time that don't have you know that haven't had any other opportunities to redevelop.

And uh, you know, so I think there's a balance we can reach.

But there are you know, for instance, we bought that old Malibu property off I-10.

It was a we shouldn't have bought it, quite frankly, when we did five, six years ago.

You know, we're in the process of selling that.

Um, and so we're constantly churning, you know, we might buy a property thinking we might need it and then sell it because we find a better way to do it.

So that happens you know, every year.

And to that, I'd like to review the strategic plan, and I think there's opportunity exploring a right of risk, right of first refusal agreement with the city of San Antonio uh with some of those properties because there's a lot of uh need and opportunity, and I think CPS would be a great partner.

I understand you all have to make the decision uh based upon the board's recommendation, but a lot of value there.

Uh and then one last point, uh, right.

I I really like the SAW's strategic plan.

And I think it would be great if CPS Energy can create something similar.

It walks us through uh for the next few years where the investment and in rate adjustment uh would impact, right?

So uh how many more employees would be hired to service some sewer breaks or water main breaks, and it just walks us to detail by detail in terms of where the investment would be going and also the technology that would be used to purchase.

And I think uh I I know offline we're gonna get that list of that technology or special session or uh executive session rather.

Um but I think having like the details would be uh give me comfort uh and confidence in terms of navigating a rate adjustment.

Councilman, we do have a strategic plan.

It's called Vision 2027.

We're working through the board trying to update that right now uh to vision 2030.

So we always keep a five-year plan uh current, and we'll be glad to come talk to you about that.

And I'd love to sit in cross-reference because I have reviewed the last few years, um, but it's not as detailed, right?

Um so I'd like to point out in terms of opportunity of where um CPS can include additional information.

Thank you, Rudy.

Thank you, Mayor.

Councilman Galvan.

Thank you, Mayor, and thank you to the uh everyone for the presentation for the CPS leadership.

Um couple quick things.

I don't think it's anything too different than what folks have said already, but uh definitely would like to see the parsing out of the infrastructure projects that are gonna be highly needed to medium needed, et cetera, uh over the next several years.

I think an overall timeline, whether it's with the rate restrict the rate restructure conversation, the technology needs for that, uh timeline for the cost of service study, timeline for the transmission projects would all be helpful to kind of have us, at least for myself grasp a little bit more of where are we going with all of these, right?

When do we need them?

When is it supposed to come online, come online, and how do we know that residents are gonna be impacted?

Uh how do we expect them to be impacted?

Uh I'm gonna echo Councilmember uh Castillo and Mikro Diggs' points.

I think both we need the kind of detailed view on what happens if we don't go forward with the rate increase.

Um what do we lose?

But also what will we gain?

I think in particular for any time we have conversations on any kind of rate adjustments, whether it's for utilities or tax revenue, et cetera, there should be um a clear and specific uh material change for people that's a hopefully a positive one.

Um I think if residents are seeing okay, grid reliability, that makes sense, and yet my part side of town continues to face uh brownouts in some form or a feeling of that, um, what are we doing to actually address those issues that are gonna be helpful for residents to better understand um for us to communicate uh what's possible with this um this adjustment as well.

Uh same thing goes for any kind of weatherization programs or for tree trimming programs.

I think it's being able to quickly identify where we're able to where we're investing that money into uh that materially benefits our residents, I think will be will be helpful in those conversations.

Umly one question I or sorry, I have two actually.

One big question I had, and this is gonna bleed into the next uh presentation, but with the cost of service um study, I know we'll talk more about that in a bit, but particularly with slide five looking at the infrastructure reliability component.

Um do we can include within the customer cost of service study transmission needs or grid needs to meet growing demand, or is it primarily just what how much energy that customer uses?

Not sure I fully understand the question, but a cost of service is based on the uh um how much each customer usage profile puts on the system.

So it's done, and we routinely do that and we'll update that, talk to the city staff as well.

Got it.

Okay, it does helpful because that my question was more aimed at you know uh if we're seeing a growing uh customer class in some form, do we expect to then see within that cost of service study the inclusion of transmission infrastructure upgrade or grid upgrades that relate directly to that, or is it simply just kind of like the wattage?

No, sorry.

All of this cost is allocated based on how much of those customers put on each one of the buckets.

Okay, in total.

Yeah, okay.

Sorry, yeah.

That's that's helpful.

That's what I wanted to clarify.

The other thing I know uh Lou the Mayor asked for this question about relating to the climate adaptation plan um and the goals there.

Uh I know you said the other lines of our generation plan or with CPS generation plan, but where are we at with CPS meeting the currently set out climate adaptation goals?

Do you want to speak to those versions?

Yeah.

Hello, thank you for the question, Elena Ball with CPS Energy.

Um currently our um carbon emissions intensity for our our uh power generation portfolio is somewhere between eight and nine hundred um uh pounds of CO2 per megawatt hour.

And we have um that's our current state, and we um we expect to you know have market reductions as we see generation changes from um what uh from moving away from coal to um at renewable additions and moving toward um more agile technologies like the resources that we just recently purchased in our portfolio at Corey mentioned it, but we have you know over a gigawatt of RFPs out right now for wind, solar, and storage as well as a 50 megawatt uh community solar uh RFP.

So we've got all of those pieces in place.

Um for 2030, we do expect our objective is to reduce our carbon intensity from the benchmark year by 41 percent and 2040, 71 percent.

And so we do have plans um to move us in that direction.

There are a lot of changes between now and then in order to effectuate that, but we are going to arrive at substantially lower carbon intensity over the next decade and a half.

Good.

I think that was my ultimate question, right?

Do you anticipate would you describe CPS's work getting to the to meet those goals?

And it sounds like generally yes.

Yes, sir.

Of course, I think shift will look at that still, but thank you.

That's helpful.

Yep.

Those are my questions.

Thank you, Mayor.

Councilman Mungio.

Thank you, Mayor.

Um, following up to some of the questions that were asked, when was the last time your rate structure was updated?

Uh we'll have to get back to you on that.

I know we haven't done anything significant over the last uh two rate increases.

Okay.

Uh let's see here.

And do you all have a regular timeline on that, or is it just kind of as we go along?

The this rate restructuring has come up a number of times today, and and I just want to make a comment.

You know, I think inherently the way SAW's um rates are structured and our rates are structured, it's different.

You know, the from a regulatory standpoint, we have to create rates that are just and reasonable and and reflect the way a customer is using our system.

Um, and and you know, and so there are ways we can create rate structures that incentivize um, you know, less usage, for instance.

Um, you know, now there's philosophical conversations to be had about whether you force people on those rates or whether you make them you know discretionary.

They can go on them if they if they're gonna do the work that it takes um you know to save money.

Um but uh but so I think I think there's probably a conversation that needs to be had ahead of us about all the ways we could structure rates in the electric bus in the electric and gas business and you know which of those we're most interested in and what the ramifications of those are.

You know, the the biggest challenge with tiered rates is you're gonna catch people that are in the uh uh at the lower income levels, and you know, that that can't you know change the way they use power because their old inefficient house is gonna use 2,000 megawatt, you know, 2,000 kilowatt hours uh a month.

And I I am very sensitive from an equity standpoint to forcing people on to a rate that I know is gonna is gonna is gonna increase their bill.

So we have to think about those you know realities of policy and decide what's best for us.

But but I do think we can talk about different race structures uh as we you know get to the point where we can actually implement them in our system and decide what we want to do as a as a community.

Yeah, that's great.

And that that leads me to my next question, actually, because I'm also very sensitive to that is when we are when do we expect to get an in-depth presentation on STEP and the updates and kind of checking on where we are on that.

Um we we actually have um a year three report ready to go anytime the council is ready.

We've had to defer it due to other topics, but we're we're prepared um just as soon as you all are ready.

Yeah, I'll make a note to that to the ELT staff that that would be worthy in this uh conversation.

Um and also the you have a community input committee.

What has what's been their input on this proposed budget and rate increase?

Um hi, I'm Kathy Garcia, also with CPS Energy.

Um our CIC, we actually have a member here today.

Michael, thank you for being here.

Uh, is our 19 member community committee?

And uh we provide briefings to them on a variety of topics.

Um they have received information on uh our budget as well as our ongoing process for refreshing our generation plan.

Um we do have those meetings are open, they are recorded, they are live streamed, and uh we make sure to to take their feedback and incorporate it into all the plans that we bring forward.

Thank you.

So it maybe I haven't seen the meetings, but maybe you can just send me a summary of what their input has been.

Sure.

After you gave them this information, they got to digest it.

That'd be very helpful for me.

Sure.

Happy to do that.

Thank you.

Um so Austin, as it's been documented, y'all have probably heard this in the past, has utilized the professional consumer advocate.

Uh, and I know we have a little different situation here, but is that something that CPS uh in the city through Ben would entertain as a possibility?

Our citizen input committee is where we go for that type of input.

I mean, I it I mean that's I think it's a question whether the city is interested in getting, you know, some type of feedback uh you know independently.

Um, but I mean, our process, you know, our CIC, our board, you know, that I mean their citizen, you know, they're they probably know that's great.

Uh and I'm just looking at as specifically, you know, a consumer advocate, right?

So I know it's great input from the CIC, and that's very important.

I don't know how many of them have been, you know, done or CPAs or have done, you know, scrutiny over large corporations such as yourself.

So I'll talk to Ben about that.

I think that's something I've heard a lot from our some of our community members, and if there's a way for us to do that, that kind of helps the community um feel a little bit better about the situation for us, for me personally, I think it's worth it.

Uh, but we'll have a conversation with Ben about that.

And so when do you anticipate formally starting the rate increase conversation with the city?

I know there's a whole song and dance that you do with Ben.

Councilman, I mean, council has fought forced us to talk about a rate increase before you know it's appropriate.

We're not there yet.

You know, as Corey mentioned, you know, there are not every year do you see kind of a budget deficit being proposed like this, but um, you know, we got a lot of investment to make.

And so we try to layer it in in a way that we think we can either cover it or move it to the following year or manage our budget uh as best we can.

But when you don't come in and at least talk about our financial, you know, integrity as an organization every couple of years, whether you need a rate increase or not, then you're gonna find yourselves five years down the road asking for double digit rate increases or multi-year rate increases, and we're trying to avoid that.

So after you know, we get through the summer, we will see where we're at, and we'll come, you know, talk to council about whether or not we think a rate increase was necessary.

We are not there yet.

We have not said we're coming for a rate increase.

We're showing you that we're, you know, that that we got a lot of work to do and that our financials are getting a little tighter.

Right.

And to just to be correct, the the budget you're presenting does include well last year was a 40 million dollar budget deficit as well.

Yeah.

Okay, so I mean it's not uncommon for us to put everything on the table we think we can manage to and then manage to.

We didn't come in for rate increase last year.

Yeah.

Okay, so I mean, so I hear you, you know.

I wish I could tell you we're coming in for five and a half percent.

You know, we have put placeholders for five and a half percent every other year, so that we're not surprising our community that there's that there's something in our financial plan that you know might trigger a rating.

Yeah, I hope you understand from our perspective, right?

When this is in the news, right, and says it's assuming an increase, we get residents calling us, that's why we have to ask these questions of you, right?

So I understand that that's part of your process and that's what you do, but that's why so many of us are asking that question is because our community folks are asking us about that.

So I get it, maybe that wasn't covered in the news article so well, but that's why we're asking that question.

Speaking of that, do you have a slide?

Uh can you provide it to us eventually with a graph of residential and commercial rate revenues over time and documenting where you have the rate increase.

Yeah, we can do that, councilman.

Thank you.

I appreciate that.

Uh and you know, look, I had a great cafecito a couple weeks ago, and Deanne was there, and our trustee uh for quadruple one was there.

They did a fantastic job talking to residents, and I asked folks, raise your hand if you learned something new today, and everybody raised their hand.

Right.

A lot of folks in that meeting didn't even know that our CPS production includes plants outside of Bear County, right?

And so they were very impressed by that.

You even had a couple folks really advocating for nuclear energy, which I know is something councilman Spears lights up about every time we talk about.

Um so that's really beneficial, right?

And so I really appreciate your team being out there and asking to be there, having really good information available to residents, and of course, you know, Oscar uh from the crew team is always there to help out.

So I mean we have some real crises on our hands sometimes uh through our office, and y'all have folks that sit down with people and really help them, not just with CPS bills, right, but other things going on.

And it matters, right?

And Oscar is actually from D4 from South Sand, and that means a lot to people there.

So I just want to say y'all are doing a great job with crew and all that.

So thank you very much.

Appreciate it.

Councilman Corps.

Thank you, Mayor.

Um, thank you so much for this presentation, and thank you to uh the board leadership that's here.

Dr.

Mare and I just got to sit on a panel during lunch, and we talked a lot about collaboration.

I think one of the challenges that I mentioned is while um we have the privilege, I think, of being able to own our utility companies here, it also presents a unique challenge as well, and that you all have your own board that is appointed, and we have our constituents that are often calling us, kind of like what Councilman Alde Gavito said about calling us about questions and asking for feedback and what council member Mungia just said.

And so I think the best that I'm grateful for this presentation, and I think Jalen mentioned it, like this is a good addition to our discussions because we need to be, I think, as fluent in y'all budgets as your board members are.

And I can for sure say that even sitting on the size for three years, that that is not the case.

I know my my our bond rating, the city, I guess not mine, but the city of San Antonio's, I don't know your bond rating, right?

And so I think it's and maybe that's not the level of detail that everybody wants, but I I feel like we need more of this kind of information.

And so I I know I had asked last time for what your OM expenses are, and so I appreciated it being able to see that.

I didn't realize 45% of y'all's budget was people, and to Councilman Castillo's point, we want those jobs.

We want people to be able to continue to stay in those jobs.

So that's probably not the place that we want you cutting most from, right?

So um, all of that to say I think we need to continue to figure out ways to collaborate and make sure that we can get ahead of things as much as possible.

So if there is a conversation happening where there's gonna be a 50 million million shortfall raised, that we have some kind of talking points ahead of time to say this is why we're showing this.

So on that point, Rudy just mentioned last year that you had a 40 million dollar um deficit that budget that you passed.

How did you guys cut or adjust to count for that?

Yeah, I mean, I think last year was a good example of a lot of things that are unexpected, including the acquisition of of our assets.

Um, you know, over the course of the year, as we progressed, you know, there are budget mitigation or actions that we took that we were um we're confident wouldn't like materially impact service levels.

Um but you know, the acquisition of the the assets actually increased revenues um that we did anticipate.

So you had an existing fleet that was forecasted, and then you had you know new uh new assets.

So a ton of variables, and then on top of that, you know, our our local uh um uh uh base uh you know we had uh more weather than we anticipated.

So we had some additional revenues coming on that side that we hadn't forecasted.

So it's constantly a balancing act every year that we go through.

Um but going into this year, you know, kind of same thing.

So we're just kind of having that conversation.

So where did you end up last year?

Uh we haven't done our year-end financials with our our board yet, um, but we fell within the triangle, basically.

That's that's the goal every year is stay within the triangle.

Um so our debt to capitalization ratio is probably the only one that's notably different than plan because we acquired the assets that we just bought um 100% with debt, but still maintain that below the 70% mark, uh, I think closer to 68 or 67 percent.

And what is your um cash on hand?

It says 150 is the goal.

Is that what you guys have?

Yeah, I mean, we'll be a little bit over that.

I mean, we we generally land between 150 170, give or take.

Um, but a lot of that's actually dependent on what our daily spend is, right?

And the cost of natural gas, as an example fluctuates or daily spend can fluctuate.

Yeah.

So right now is your goal to see whether or not we can get enough revenue this summer to cover that 50 million.

I think it's the goal is to get through the summer to see what what if what exists um you know then is it 50 million?

Is it more, is it less?

Is it is it even?

And I think we just have to get to that point as as we talked about.

Okay.

Okay, well, I I think it's and I heard Dr.

Mare say very clearly today too.

With that this is there's no proposed rate that is being shared today.

I just think we all feel like it's gonna happen, and so we're trying to prepare ourselves for what might be coming.

And to um to Councilmember McKee Rodriguez's points on the the decrease in costs.

We love that.

Like I think that's awesome.

That's what our commute community has been asking for.

But I know Councilman Aston just wanted to double down on it'd be helpful to know what those costs actually are, like how much are we saving in each of those bucket items?

So I just wanted to double down on that request.

Absolutely.

Um then for the tier to rate structure.

This just because it's been talked about a little bit today.

Um, I understand Rudy's point.

I have a very old home, and my electric bill is insane during the summers.

Um, and so I understand that uh challenge for our older homes and areas.

How have other well, maybe this is not the right time if you don't want to discuss it right now, but I'd like maybe if you guys do come back and there has to be a discussion that's made about a proposed change for us to look at that and if you could share with us because we've never had that conversation, at least I haven't been a part of a conversation where we've had that discussion, and I would be interested in at least learning.

Like I just briefly looked at what Austin does and what their different blocks are, and um I'm not quite sure how that would translate if someone's on the step plan.

And so if we could look at some examples of what different homes, different usage looks like and how that would impact their bill, I think it would make it more real for us.

Okay, yeah, we can take it as an action item for follow-up, yep.

And I also wanted to double down on the step request.

I think your programs are great, and we'd like to see them a little bit more and how they're actually impacting our residents.

Absolutely.

Overall, I really appreciate the presentation, and I I just want to thank you.

You did a great job presenting today too.

I want to thank you all for your partnership, and um we we hope we can figure out a way to not disadvantage our most um underserved communities.

Yes, ma'am.

Thanks.

Thank you.

Councilman Spears.

Thank you, Mayor.

Um, Councilman Mumgia is right.

I do love nuclear.

Um, but this is really one of my love languages.

I love to talk about energy.

Um, I really want to say I'm excited to see your cost of service study in the end of the summer.

I appreciate this approach toward your fiscal discipline and the infrastructure resilience and the transparency efforts here.

I I just really appreciate that personally.

Um I'm excited to to be on the National League of Cities National Energy and Environmental and Natural Resources Committee.

So I look forward to more time more talks with y'all about our 2030 vision plan because I'm hoping you know, we talk about federal action.

There is an executive order out for from the president on deploying advanced nuclear reactor technologies for national security, and I'd love to see that incorporated into our our Vision 2030 plan and beyond.

Um I think we are uniquely situated and have opportunities here.

No one else has.

Um downward.

Um so broadly speaking, uh, you know, our goal when we talked to the community back in 22 and built our generation plan and then subsequently talked to our rating agencies.

Oh, which by the way, we're double A minus stable, so we for the credit rating.

Um so we we talked about a plan.

So we're gonna at least have a decade of heavy investment, and through that conversation, we would flex our balance sheet up to the 70 percent level out for a number of years, and then bring it back down to um uh to the closer to the 60 percent range.

I would forecast that the you know effort to start happening in the mid-2030s, right?

I mean, we're 2026 right now.

I think we're gonna take that long with the heavy investment and then keep um tracking it down.

And I think some of the key components that we've talked about with them just for your context is the fact that we did establish that generation plan um with the community input um uh was uh very well received by the Randy HCs because it was a demonstration of a public conversation, a demonstration of the input being taken, and then um we've been executing it since then, you know, with our acquisitions, all the RFPs that Elena mentioned.

So I think it's very helpful.

So the fact that we are sticking to that plan, and uh they my perspective is the uh arrival at 70% isn't a surprise, right?

It's expected.

We gotta show the discipline um to stick to it and and bring that down as we get through this period.

Okay.

Um so tacking on to that, then I guess it goes hand in hand.

I wondered how comfortable you were with the 50 days of borrowing power.

Um, but it sounds like we have a plan to maybe is there a way to in the short term increase that's right, which number protection?

I'm sorry, on access to cash and credit.

So you said I think um you mean the 150 days?

Yeah, we have 150, and with the credit went to 200, right?

Yes, ma'am.

So will we have a short-term plan to increase that 50 day uh buffer?

Um you mean the liquidity number above 200?

Um not deliberately, but um that number can actually that's a floor.

Um we finished last year plus 200.

Um, and that's a function of how much um unused commercial paper we have, and that depends on our refunding schedule.

So we can actually range anywhere between 200 and 350 days, depending on kind of where we are in the year.

But I'm very comfortable with 200 being our floor that we target, knowing that we have kind of that that rotation of commercial paper.

Okay, that's good.

All right, then slide five.

You mentioned on customer growth, it's a 290 million dollars of that 329 goes to new customers.

Where does the other 39 go?

It goes to um it goes to um a lot of other work that is around um like civic uh civic improvements, civic upgrades when we move our equipment.

Um I'll have to get you further detail actually.

Okay, yeah.

It's also new street lights, things like that that you expect to accompany new divisions and things like that.

Okay.

I saw your asterisk at the bottom.

Can you help me understand the contribution and aid of construction?

Oh, yeah.

That's actually a great story.

Um so while this number is 1.7 billion, uh, I believe it says 118 million of that is um funded through construction or contribution and construction of aid.

So an example of this would be um, you know, uh any non-standard unique stuff that a developer for a residential community has an example needs to put in.

Um they they contribute upfront that cash.

So it's really an offset to the expense side that the the broader customer base is not paying for.

Um and that is something that you know not often talked about, but we did want to note that because while it is 1.7, there's 118 million coming in through those types of contributions.

Through through developer typically, yeah.

Upfronting the cost on their development.

Yeah, it's because that's an annual number we expected.

I bet they don't want that.

It's part of it's part of uh, I mean, it's I don't know if they love it.

I won't speak for them.

But it's it's necessary, and we have um you know, we've been doing that for years, and there's tears for that.

Okay.

Um system sales.

I was glad to see a third of that new investment in those new plants was from off system sales.

Yeah.

Um we repaid the investment there a third already.

The the the corpus Christian Laredo plants were were about a third.

The ones we just bought, we earned about 30 million on it, but we anticipate you know 100 plus millions from that um going forward, so significant.

So I see that as hedging our bets, right?

We're we're hedging so we can trans sell off system sales.

Ours is our transmission investment then will help us to do more off-system sales.

Is that the whole um no?

I think the the the broader business case for the the asset purchase was um it is significantly less to purchase assets that's level young or long useful life.

So check there, and it was for the second part of that is it was for growth that we we anticipate having.

So we're gonna grow into that, and that's that is significant to the story.

The the real benefit is well, we'll let's say we grow into that in three to five years.

We're getting this benefit right now today through the wholesale market, which is um I think kind of underpins why this is such a good transaction for the community because you're able to um kind of monetize the asset in the in the near term, um, but then you need them for for here for San Antonio as we grow.

So these are assets we will use um mostly for our local growth over the next 25 plus years.

Okay.

On the outages, are we prepared?

Let's say we have another URI storm.

Are we prepared?

Do we have enough storage capacity?

Or I guess we're gonna be um doing a lot of off-system sales.

Can we make money like Austin and Corpus did now?

Or is should something like that happen again?

I think I I'd broadly say, you know, we're well positioned um from winters from Uri, not only through the investments we've made you know the last five years, the investments in storage, uh, the investments to you know um all of our equipment.

Um and to the extent, you know, their wholesale opportunities, you know, and our assets are running, we'll we'll be there for it.

Okay.

Uh I heard you say that we were investing more in wind and solar, but it was my understanding that market was saturated.

Is that not the case?

Or that's why we're moving toward gas.

My comment would be that we're investing um according to the plan.

So the the amount of wind and solar and battery storage that we talked about, you know, is in that generation plan.

So I don't think we're overinvesting.

I don't know if you want to speak to the market um in terms of saturation.

Sure um relative to market saturation of available resources.

If you look in um at the ERCOT queue for interconnection for generation resources, the top two buckets of resources are actually solar and battery storage.

Um and that that's that's been the case for a while.

Um they're low cost resources, albeit intermittent, um, but they also um can be brought to market fairly quickly.

Um the battery uh technologies are continuing to evolve, and we're seeing um rapid adoption of batteries.

And so uh we actually are getting we have gotten very robust responses from um providers, and I will uh say um for uh for some of the RPs, RFPs we're looking both at new resources as well as at existing resources.

Okay, okay, and then I guess this one may be for Corey.

Have our have our off system sales revenues matched our projections from years past, or are we exceeding that?

Yeah, this uh this past year, um, as Rudy mentioned, the forecast without the acquisition was actually underplanned.

Okay, but with the acquisition, there's an extra 30 million.

Yeah, okay.

And the previous two years were were notably overplanned, um, which was a net benefit for all of us.

That's wonderful.

Yeah, okay.

Um, and then can you tell me about our accounts receivable?

Is that do you do you have that number?

I mean, how are we compared to last year?

It's kind of an indicator to me about the positioning of our residents and how they're doing.

Um, and what is our collection rate?

Yeah, so um the Anna Hardwick team does a great job, and I'll speak at a high level, but generally the trend has been positive.

We've been shipping away at it for the last handful of years.

Um it's actually a positive story that we tell our rating agencies because one thing they look at is not just the outstanding balance, but are you working it down?

And the second point is um that's most current numbers.

Oh, okay.

So we have since last month we had a nine percent reduction.

So we're now at uh 106 million of past two accounts um from our peak of over 200 million.

So it's been significant.

I think one of the coolest things that um Dana's team has been able to do is um ensure that we're putting folks on plans that they can meet, which means we have a very high stick to it rate, um, which is excellent.

And so that that stat that we share, um, again, the rating agencies look to that, and I think that's an impressive one that speaks to um you know kind of the work we've been doing to um I know you may not have it today, but I'd like to see the mix of that with commercial and residential whose pests too, because I I've gotten a couple of of apartment complexes that have been reached out about that have they said are are overdue by significant amounts.

So um I kind of like to see that number, but thanks for all you're doing and yay energy.

Thank you.

Thank you, I appreciate it.

Councilwoman Aldrade Gavito.

Thank you.

I I had failed to mention on slide six.

I do think you all are being strategic in the forecasted capital, which I know that we y'all have worked on in partnership with city council.

But to me it's important to highlight because people may not connect the dots on how you all being strategic here helps lower customer bills in the future.

So just wanted to highlight and call that out and thank you all for y'all's work there.

Thank you.

Thanks, Corey and team for uh coming today answering the questions, frankly, not uh what any would anybody wouldn't expect out of the norm, right?

Um, when the owners of the resource have questions about how the resource is being utilized, right?

So certainly not um I would I push back on the characterization of forcing the conversation, but rather just making the conversation is happening at a tempo and at a level of fidelity uh that this body would expect, uh, frankly, as elected officials.

So appreciate that.

Um let me also just make sure, you know, when I when I moved um to this approach versus the municipal utilities um committee approach, it was really to ensure that we that the full body um is more conversant in these strategic advantages, which in fact CPS and SAWs are.

So I'm thankful for the very thoughtful questions here today.

Um as we can um, I think frankly, when you just look at how quickly the CPS budget has grown over the last five years, that is in fact to meet the demand and to be strategic as been alluded to here.

So all the more reason I think for this body to be able to very quickly answer the questions in a very simple way, right?

That Mrs.

Martinez test about what is going on in their community and frankly who is driving the cost and and who is not.

And no, that gets into our next conversation.

It also allows us, frankly, to tell the good stories about, for example, the the recent acquisition, right?

We got a lot more power at a cheaper rate and it's online faster, which means we're already making money off of it.

Like we need to be able to talk about those things to our community as frankly wins.

I think you'll what you're hearing here as well, though, is is the tension between frankly the the very good work that CPS does to keep our rates low, um, and they are the most competitive, some of the most competitive in the entire state.

Um, however, when it is still too high, seemingly for too many in our community, um, that's the rub, right?

All the more reason then for us to be able to tell the story about why we've got to make these investments, not only for to keep up with growth, but also for maintenance um and just um overall public safety as well.

I want to reiterate the um the ask um and for the bi-monthly update on the technology solution that is has taken a little bit, um, you know, short updates at each of the um bi-monthly updates would be would be appreciated to the body.

Thank you.

I want to just revisit one point, um, Alana, because we had a a little bit of a more fulsome conversation um about not only does this plan, this budget rather help us meet our climate action adaptation goals.

However, um there are some modifications in the approach that are having to be made in light of some of the federal changes, right?

So when we spoke, we talked about unfortunately a coal plant having to stay on longer, right, based on federal guidance, as well as we also talked about having to frontload some certain investments.

So we made those in time before some of these incentives expired.

So there is an adjustment we're making.

But if there is, if you wanted to, you know, provide if you wanted to speak now or if you wanted to provide it in writing, the ways in which we're having to meet those goals at a higher cost in light of federal changes, um, then we would very much appreciate that because we see this not only in terms of cost, um, but also the other changes that are happening at the EPA, right?

That are then making our revisions to the climate action adaptation plan all the more important, as well as when we think about um what the revisions to the economic development plan um economic development Alex's team, uh, what that plan looks like and how we are engaging with um businesses that are potentially looking at coming to San Antonio and the asks that we are making and should be making in light of um some of the changes that we're not gonna be able to account for all ourselves, but that have real significant public health and cost issues if we don't work to address them.

If you wanted to speak to any more of the federal stuff, Alana, you're free to.

Um thank you, Mayor.

I think you characterize them very well.

Um and and to overlay um the point around our renewable additions, um, obviously we have a number of tax incentives um that are going to sunset.

And so recognizing that there will be um you know a potential increase in uh the cost of renewable energy in the in the very near future.

Um, we made the strategic decision uh to go ahead and bring some of those uh requests for proposal into the market right now.

Um, and again, we're seeing very competitive pricing.

We wanted to take advantage of that that opportunity, and certainly am prepared to you know provide a written response on any of these topics for you all uh relative to kind of the federal uh policy perspective.

Thanks for that, Alana.

Um, and as a reminder for for the group and for everybody watching, um, when Storm Uri happened, um, how much did you have to dip into the strategic reserve?

I didn't catch the entire question.

For what what time period were you talking about?

Storm Ure.

Oh, Storm Urie.

Um Storm Erie was um was unique.

I mean, the way we actually financed that was through the regulatory asset that our board approved.

So we um we ended up paying 415 million dollars of undisputed uh uh money.

We we issued debt uh for that, and then the cost recovery component of that on each customer's bill at the time was about a dollar 20-ish.

It's gone down now because we have more customers.

And so um we were able to not touch our um uh our cash balances at the moment, um, and then we're able to um kind of manage it through that mechanism.

And this city council was actually very helpful in in putting those structures in place to enable that.

Um, and then um, yeah, so it was it was something that we then subsequently as a strategy made sure that we have the appropriate kind of short-term uh liquidity available, uh, which to our point about the uh the bottom right side of that triangle around liquidity, we've strengthened those numbers uh mayor uh since that time to make sure that just in case uh we had something there.

Thanks, Corey.

Um appreciate that.

I think you um probably heard loud and clear the interest in uh avoiding a rate increase as much as possible because when we think of the 50 million um over the five billion dollar budget, that's one percent.

Right.

So one percent um seems uh even in one's own personal budget potentially manageable, right?

So um would welcome as we get closer to that understanding um if we did want to um look at uh tapping into the access to cash and and credit, which appears to be almost three billion dollars, or just eating that uh via the five billion dollar budget, um, what are the ramifications of of doing that?

Again, obviously given the sensitivity not only to uh the rate and the potential rate increase here as well as on the SAW side, and just as we see the implementation of the one big beautiful bill that is going to see cuts to Medicare, Medicaid, chip, and SNAP and impacting our most vulnerable, we want to be able to say that we've tried to shoulder as much of this as as possible.

Okay.

Thank you very much.

Okay, um, we will now move on to the data center discussion.

Um Maria, over to you.

Uh thank you, Mayor.

So just to provide a little bit of uh context to this presentation, um council member Ray Galvan submitted a C CR calling for staff to present to City Council an overview of the scope of the cities authority to regulate data centers.

So specifically, the CCR identified a number of questions that the CCR wanted us to address.

Number one was how resource intensive are the data centers in San Antonio.

Number two, how will the growth of data centers in San Antonio impact our natural resources?

Number three, the policy tools that San Antonio has to address the growth of those data centers.

So our governors committee, governance committee refer the CCR to the planning and community development committee.

With our utility briefings already scheduled MB sessions, we schedule this joint briefing from CPS, SOS for Data Center, and also we have added our CD's Development Services Department to address some of the policy tools around the growth of data centers.

So the goal of today's briefing is to provide you with a comprehensive overview and briefing of the data centers to facilitate and provide background information for the city council.

So that's what we we hope to do today.

So this is a three-part presentation.

We'll start with CPS Energy, followed by SAWs, and then our City's Development Services Department.

So with that, I'm going to turn it over to CPS.

Good afternoon, Mayor and Council.

Again, I'm Elena Ball.

I'm the chief strategy officer for CPS Energy.

Thank you all for the opportunity to brief you on the use of advanced computing technologies and the development that's occurring really in our world in our industry.

The topic of large load and data centers have become a key matter for us as a society and a community.

The rapid expansion of advanced computing has many benefits evidenced by its rapid adoption and use.

At the same time, however, we do understand that there are a number of important considerations for both energy, water, and other aspects of our society.

So today our objective is fourfold.

I know that this briefing is about data centers, and that is the majority of the large load growth in San Antonio, but did want to highlight that we do have other large loads in the form of commercial and industrial customers that are both moving to and expanding in our service territory.

We also want to share the impacts and benefits to the community of these large load customers.

Fairness is a critical.

So first up, I know there are a lot of words on this slide, but we wanted to just touch on sort of the backdrop.

We wanted to just first uh remind everyone that we are you know the electric provider for this region, and as a result of that, we're we're legally obligated to serve.

When customers come to our service territory and request service, um we we are obligated to serve.

And so additionally, you know, we are uh working on a number of measures alongside ERCOT and the PUC to address the demand growth that we're seeing.

Um, just a moment, just for a moment of clarity here.

When we talk about large load, we use a threshold here at CPS Energy of 40 megawatts.

I I don't want to get uh too too jargony with you all.

A megawatt of energy is uh equivalent to about 250 homes.

So when we think about a 40 megawatt customer, that's about the equivalent energy use of 10,000 homes.

Um at ERCOT, ERCOT, because they plan for a much larger portion of the the state of Texas, um they actually draw the threshold at 75 megawatts.

So uh that's that's kind of our obligation to serve and who these customers are.

Um we we continue to invest in our system, you know, we're focused on um making sure that we're planning for growth and that we're ensuring um that we have all of the necessary resources to meet growth for the future.

I do want to touch for a moment on who pays for what.

Corey went through in his presentation a number of aspects of cost of service and transmission and retail.

I wanted to break this down in a really simple term.

Um we have customers connect to our system, there are really three groups of infrastructure that electric customers are taking it, are utilizing or taking advantage of.

The first is sort of the state system, our transmission network.

This is akin to an interstate system, and everyone in ERCOT contributes to paying for that in that infrastructure.

And they ultimately are charged based on their use of that system.

More locally, you can think about CPS energy being kind of the local roads and infrastructure.

That's where our retail rates and our cost of service come into play.

Um so customers within our retail service territory, they pay their share of the costs associated with the system that we use to deliver retail service.

And then specifically, customers pay for their driveway.

So there's a there's an amount of costs associated with connecting up to the system, and large load customers pay for their connections.

So just wanted to give that backdrop, and as we talk through this, I may reference back to just that concept around what bucket of costs are we talking about.

You know, so as we think about data centers, first up, we've had data centers in our service territory for many years.

And what we're seeing is an expansion of the use of advanced computing technology, and it's really in service to many industries.

Healthcare organizations, financial institutions, all of us in our personal lives are utilizing, whether we know it or not, advanced computing technology, and it is driving electric demand.

Industrial and technology companies, media and entertainment is probably something that touches all of us and certainly our children, you know, everything from content delivery to video streaming, but there's a tremendous amount of investment and use of advanced compute technology, also in research and educational institutions.

Artificial intelligence is being pointed at some of the most complex and challenging problems of our society, and this technology is used to is being used to advance solutions, and in some cases, decades sooner than we could without it.

And then of course, being military city USA, you know, command control security and intelligence are leveraging advanced computing technology.

So switching to what what our demand outlook looks like here in San Antonio.

I know this is a a bit of a bit of a chart here to kind of digest, but let me orient you.

In San Antonio and in CPS Energy Service Territory, we have currently 59 projects that are in that large load construct.

So these are these are projects that are in excess of 40 megawatts, and they're in various stages of probability.

So if you if you work from the bottom up, actually, the bottom of this funnel represents highly probable projects.

So right now we have 335 megawatts of contracted load.

These are projects that have site control, they have operations occurring, and they're utilizing power.

We're in the contracting phase for about another 1,400 megawatts.

And then as you move up to feasibility study and new customer requests, those projects are much more speculative.

And I understand these numbers are very large.

But this is, you know, we're we're sort of a microcosm of what's happening in the United States and certainly in Texas.

Not all of these projects are going to be built.

Um and we are being very thoughtful, ensuring that we're planning not only for reliability of our system, but also working in conjunction with ERCOT to ensure all of all of the necessary steps are being taken from a planning perspective to ensure reliability.

This is a graphical view of where these large load projects are.

The blue dots are in those more predictable phases, and the red are more in the feasibility study.

And we do have projects both inside and outside the city limits.

And then if you were to zoom out around our service territory, we're seeing a lot of growth.

And throughout the state, ERCOT is experiencing a significant amount of large load growth and a considerable amount of the large load growth, approximately 70% of it is data center support.

So as we talk about what are the impacts and benefits of large load customers, and and I'm going to be kind of specific to the usage characteristics of these large load customers.

They bring they bring capital to help us invest and strengthen our system, but they also bring a large amount of consumption on our existing system.

So as we see large customers come onto the system, and I'll I'll talk to you about commercial and industrial use of the system and how they pay for the system.

They effectively help us take our fixed costs, and and a lot of the costs that we have at CPS Energy are truly fixed costs.

They're the network and the systems that we need to maintain in order to deliver electricity to our customers.

So as that revenue grows, as those that usage grows, those fixed costs can be spread amongst more customers and more kilowatt hours, and that actually has a rate suppressive or muting factor in in rates across the entire customer base.

For large CNI customers, reliability is very important, right?

Part of part of why we as a utility are sought after are our high levels of reliability.

These come these customers are bringing additional infrastructure.

They're in many cases bringing backup generation, which helps support the bulk electric system.

And while I know there's going to be a lot of questions today, likely about what types of fuel are our customers of this nature using, many of these customers have stated corporate objectives of my of migrating to more and more clean energy over time.

And so there'll be another place for us to be able to, you know, help with transition to cleaner energy.

For small business, same kind of benefits, reliability, the rate suppressive benefits, but also these facilities represent a lot of construction jobs.

I know there's a lot of discussion around what are the persisting jobs, but for the next many, you know, probably decade, we're going to see a lot of construction activities in this industry, and that helps small businesses and also local partnerships.

The revenue that these customers will bring not only benefit the utility customers, but they do contribute revenue to that supports city services.

And then generally, um, you know, these these customers are part of our business and economic development backdrop.

Um again, they support by investing in infrastructure and support the tech hub that San Antonio and this region already is.

We we have 21 data centers and have had 21 data centers even before you know kind of the AI boom.

And so this is just continued advancement of the tech hub that we already are.

So I'm gonna transition to the financial impact of large loads.

So by the numbers, um, for every hundred megawatts of these large load customers that we connect to our system, they generate an approximate 29 million dollars in non-fuel revenue annually, which is an uh which translates into $8 million in city payment annually.

Um we mentioned um you know the the customer protections and making sure that we're uh making sure that the costs associated with large loads aren't being passed on to other customers.

We have a number of safeguards and protections that I'm gonna walk you all through.

Um cost recovery is important.

We we make sure that we set up long-term agreements with these customers to get full recovery of the infrastructure investments, and then as Corey mentioned in his presentation, we are undertaking a new cost of service study, and we that is the process where we ensure there's fair allocation of our system costs across all of our customer segments.

Um rapid expansion, data set the data center segment that we have today, as I mentioned, we have about 21 customers accounts for about 110 million dollars of non-fuel revenue.

We're forecasting over the next uh six years by fiscal year 2031, um, that that will grow to 185 million, and that'll result in an additional city payment of 50 million.

So this is an important slide.

I know it's um has a lot of numbers on it, but um oftentimes in this conversation around large loads, there's a question about are these loads coming to an electric service territory and ultimately the residential or small commut small customers paying for these large loads.

This is an actual snapshot of CPS energy today for our fiscal year 2026 of our customer count, 89% of our customers are residential.

So think about this as meters, right?

89% of our customer count is residential, our commercial customers represent about 11%.

When you look at the revenue or the rates that we charge to pay the costs of the system, while the commercial customers represent 11% of our customer count, they're paying over 50% of the revenue.

And so the you know, that's one aspect of understanding as we grow that commercial component, the the dollars and and the revenue associated with that component will actually continue to grow, and as we set cost for the whole system, can be rate suppressive and help all customers with that additional uh with those additional sales and consumption.

So fairness is critical.

Um, you know, as we go through rate processes, um, both at the state level, you know, through the PUC for transmission as well as rate setting in general, um, you know, rates have to be uh defensible, they have to be just and reasonable.

They they can't be preferential or prejudicial, right?

We have to make sure that all of our customer classes are grouped based on their usage characteristics and that we set rates and we set our cost of service based on how those customers use the system, not based on their industry.

And so our rates have to be designed ultimately to cover the cost of service and all of our debt obligations.

We are not setting rates to create a revenue, create additional revenue.

We we uh merely are in this to make sure that our cost of service is covered.

In our most recent cost of service study, which was in fiscal year 2022, we um we conducted a survey working with a third party uh consultant who studied all of our rates.

They looked at our residential class, our cut our small business class, and our medium and large business classes, and they calculated the effectively the amount of cost that those customers create on the system and how much they're paying for that those costs, and came to the conclusion that both our that our business and our CNI customers are effectively paying their fair share plus some, and our residential customers actually get that benefit.

Now, from a rate design perspective, ideally we try to stay between 90, 90 percent and 110%, kind of in aggregate around these customer classes, just to ensure we don't get out too far out of whack and everyone is is effectively paying pretty close to their their cost of the system.

But based on our our most recent cost of service study, residential customers are not subsidizing large C and I customers.

Another component of fairness is is not just how you know paying what you pay for in consumption of electricity, but it's also how do we ensure that we get fair cost recovery at you know, pre-construction, construction, and then you know, as those customers come online.

Um, pre-construction, we require a number of um surety mechanisms, and this is effectively a way for us to require these large customers or these developers to raise a surety as we purchase long lead items, oftentimes very expensive items such as transformers, such that if something happens and the project doesn't move forward, this the utility is made whole and our customers don't bear the cost associated with those long lead items.

Um recently, launched this year, we um have started charging for engineering fee uh studies.

So because of the amount of interest throughout the state and in our service territory, um, we were beginning to expend a lot of resources in order to help our customers study if they they could reliably be connected to our system and what available capacity looks like.

So beginning in 2026, we've now started charging.

The studies range from 75,000 to 150,000, but that's all borne by the customer.

Uh Corey touched on this with regard to construction.

Um, this isn't just large load, but effectively all development does pay a contribution and aid of construction.

And ultimately, um customers that are requesting non-standard facilities, such as having a redundant circuit, many of the time, many times data centers do want that redundancy for high reliability, as well as you know, premium equipment in our in their substations, they're responsible for raising that capital and ensuring that they're paying for those things up front.

As these customers are energized and you know, our are uh our consuming energy, we do set forth a 10-year performance period, um, and we basically set that up such that if they don't meet their ramp schedules, you know, we because we're projecting the costs and the and the revenues that are expected to come in, if they're not meeting their their ramp schedules, we have clawbacks in order again to return dollars back to the utility to protect customers from stranded assets and overinvestment.

Um, and you know, at the at the state level, there is a lot of development going on at the at the public utility commission in ERCOT.

Um, Senate Bill 6 is a an item uh that passed in the legislature.

You all I'm sure have heard heard about it, but effectively it's a it's a rulemaking that is helping with a number of attributes around large loads, including how we study, um how costs are apportioned, uh, backup requirements, as well as um you know requirements for islanding during emergency events, and in general, how ERCOT's even studying these loads and including them in their forecast.

CPS Energy is actively engaged.

We have team members in all of the rulemaking proceedings and are providing comments and perspectives to help shape the implementation of that legislation and actions that are happening at the state.

So as we we think about new solutions, um, the world is is definitely changing.

Um, when you look at the the chart that I showed earlier relative to you know how much prospective load is out there, um it's more than our peak use, right?

And so even stating that you know not all of this will show up, it's still a considerable amount of electric demand.

Um and so across the United States, across the globe, quite honestly, uh you know, there are just new ways to think about how you man how we're managing all of the growth of all kinds, but incluse inclusive of AI.

Um, and it and it's really uh kind of coming down to a handful of areas, right?

So as we think about the interstate system I mentioned, right?

know not all of this will show up still a considerable amount of electric demand and so across the United States across the globe quite honestly uh you know there are just new ways to think about how you man how we're managing all of the growth of all kinds but incluse inclusive of AI and it and it's really kind of coming down to a handful of areas right so as we think about the interstate system I mentioned right the transmission system we're going through a lot of upgrades on that highway system from looking at building new um new higher voltage lines effectively that's helping relieve the congestion that moves energy from one area to another oftentimes renewable energy that's in remote areas to the load centers such as San Antonio these these larger lines are going to be effectively you know higher capacity uh interstates that can move that power you know to the load surveying areas of the of the state additionally the conductors the wires that are riding on the transmission lines you know we are uh we are looking at implementing advanced conductors again that can move more power on power generation this is where you know we're we're really uh getting creative I think as an as an industry and we're seeing a lot of legislative action around power generation customers are bringing their own power right rather than relying on the utility you know based on timelines and other things to uh to build all of the infrastructure to serve them customers are now bringing their own generation and so for us you know we we see this beneficial in a number of ways one you know I mentioned all the growth in the state and the need to have demand flexibility as customers can bring resources that they exercise their capital for that they're running and operating when the grid needs them to shift you know shift load or move out of the way these are resources that have been invested by private capital in order to support bulk reliability and and you know I think some other items that we're looking at we we obviously are are wanting to set up structures that will support this on site generation and then you know we ourselves are are continuing to look at just growth in general and how you know we we continue to make sure that we're investing in reliable generation as well as transmission and distribution and that brings us to one of the tools that we have been working with the the city on since the fall of last year.

I mentioned the on-site generation this is an emerging trend in the industry this very likely will become a requirement under Senate Bill 6 that work is is is underway right now but we are you know working on a new service option pilot this is effectively a pilot tariff that allows for us to study how we how we can work with customers in their behind the meter or their on-site generation it does a few things one it helps customers with a need they're gonna solve one way or another whether it's with CPS energy or through another mechanism but it also again meets that reliability and backup requirement that we fully expect and we know that will help exercise someone else's capital to provide grid flexibility any units whether it's CPS energy units or customer units they're going to require to be they're going to be required to be permitted and comply with all relevant environmental and noise regulations both at the the state the local state and federal level and the pilot that we are working with the the city staff on it is time bound and it would give us an opportunity to evaluate how this how this process will work ultimately as I mentioned we do expect you know this this requirement to come down through state rulemaking and it will give us an opportunity to design a tariff that ultimately would be presented to the council you know in a rate proceeding based on information data and and real world experience there are some other policy tools that we're considering relative to large load as part of the cost of service study we are evaluating establishing a separate large load rate class we as we're working with our cost of service consultant this is one body of work that we're going to ask their help with already mentioned we've started in you know we've initiated and have started charging fees for large load engineering studies and we are looking at you know we're gonna continually be looking at additional measures not only to manage cost recovery to but to continue to protect customers from the development activities of these large loads.

And as as we've discussed in other conversations the federal government is also pursuing ideas to support the growth of data centers while protecting residential customer bills and ensuring these loads are paying their fair share so for CPS energy our focus is continuing to stay steadfast in our customer priorities of reliability affordability and cleaner energy and ensuring as we're establishing you know all of our our strategies that we're apportioning costs in a fair manner and that customers who are bringing growth are paying for the growth we continue to focus on long term planning.

We continue to focus on long-term planning.

This is I'd love to tell you that we have it all figured out.

And you know, the nature of this forecasting is challenging both at the state level and at the local level, but we are absolutely committed to fairness for all of our customers.

We talked about it already, but you know, we're committed to the climate action and adaptation plan goals.

And again, custom customer protection is critical for us.

We need to ensure from a system perspective that we maintain our long term power reserves for our customers.

We do not want to be short power reserves and and create market exposure for our customers.

And you know, here locally, our focus is going to continue to be reliable power and responsible growth.

So that concludes my remarks.

I'd be happy to take any questions.

I think we're gonna move forward to SAS, Mayor, if that's okay with you.

Fine.

Um we will point a personal privilege.

I know Councilman White would like to do something, so go ahead.

Well, Mayor, maybe if I can suggest we do the SAS presentation, and then they'll be through security, and we can bring them in.

Okay.

Thank you.

Okay, go ahead, Muddy.

Thank you.

Thank you, Mayors.

Uh good morning, Mayor, City Council members.

Um appreciate you inviting us here on this topic, top topic of data centers.

Uh, there's a lot of people talking about data centers, and rightly so.

A lot of things to discuss here.

Um we've heard it from the president of the United States talking about it in the uh the state of the union.

We've heard our governor talk about data centers through AI revolution, that that uh that Texas is kind of the epicenter epicenter of day of AI.

Uh, we've heard from legislators, local mayors and council members, um everything from welcoming data centers to moratoriums and and everything in between.

So uh very topical discussion, and we appreciate you you bringing us in.

Um more specifically, obviously, we have the uh the the CCR that was uh put up put forward.

I think Maria talked about some of the questions that will we'll go through on those.

Uh specifically, obviously, I'm gonna talk about the water perspective of it.

Uh to be clear, water we see the the data center advent of data data centers in San Antonio as both a risk and an opportunity.

Um we think is a highly manageable uh risk, but it's something that that obviously we will need to uh to to work with you and our our board to make sure that we have everything uh in the right place and working with the data centers as they come in as all industry person or as all industries come in, we need to have that that constant working relationship with them.

Uh different types of data centers, and I'll quickly get to the water portion of it.

You know that when I talk about data centers, there are the traditional ones, there are lots of those all over the place.

Uh a lot of those are using traditional air-cooled and not heavy water users, and particularly the ones in San Antonio uh are not using a lot of water at this point.

I'll talk through that.

It's really the AI generators, I'm sorry, the AI data centers that are that are coming in that are gonna need a lot more uh natural resource intensive, whether that's energy or water, and a lot of times those are inverse in proportion.

So sometimes when they need a lot of energy, they need less water or vice versa.

So that's where we're gonna talk a little bit about the two when we talk about the water portion of it.

Uh the evaporative cooling is the one that uses by far the the most amount of water, or it can depending on how they're they're using the system.

Uh that is the the highest water intensive usage of data centers.

Uh luckily a lot of them are going away from the evaporative cooling, which is a good thing in terms of uh the proliferation of data centers around Texas and particularly in our community.

Um so the liquid uh uses have a lot less water or a lot less water intensive, and so uh we're we're happy to work through those.

In terms of what that means in San Antonio, um obviously and really across the nation, everybody is grappling with what is the water usage going to be.

We we play a part in various committees, national water committees about what is the the uh the load going to be from the water perspective.

Uh we have we have had both sides.

We've had some data centers looking for a very low amount of water, but we have had had a couple of requests for a very significant amount of water.

Um, and so hopefully locally we have believe we've talked to them and they've reduced that load.

Again, I think that's some of it is going from evaporative to a different technology.

So uh we have seen a little bit of both, at least in the the initial discussion phases.

Uh San Antonio is a little bit better than a lot of other communities at dealing or are uh better better able to deal with some of the higher usage because of our largest in the nation uh direct recycle system, our purple pipe network, and I'll kind of give you a little bit of a uh a twofer here.

A lot of you want to know about our the expansion of our recycle system in general, even outside of the data center world, and so this will this will talk to that uh a bit.

Uh, we're very proud of our recycle network.

Uh this keeps this keeps usage uses of water on the recycle side as opposed to the potable side.

It keeps us from having to go out and develop new water resources that can become very controversial, more expensive, and that sort of thing.

So our recycled water system uh leaves us a little bit better able to manage and handle uh the data center expansion that we're seeing.

Very generally our our recycled water system uh that is Purple Pipe Network goes around the city, uh a large uh it's about 130 miles worth of pipeline, very vaguely around the 410 corridor, obviously not not directly around the 410 corridor, but we hit most all sides of town.

Uh we said certainly hit both sides of town, but uh all four sides of town.

We don't go into every district, and so some more extensions might need to be made into the future, but those those will cost some money.

Uh, this map shows kind of where the existing data centers are.

We've got about 23 existing data centers uh that are buildings sort of dedicated to data centers, and those are the blue maps, uh the blue dots that are on the slide.

Um, and then some of the what we've got about 10 red squares up there that are some of the new ones that we have in the in the contracting phase.

Uh I'll just address the the the CPS has a different map than we do.

This the red squares really talk about the the um uh the data centers that are in sort of the contracting phase, real customers as opposed to those in the feasibility side side of it.

Um and you can see most of them are are trying to align themselves along the I along the uh uh the purple pipe network, which is great for us, and again it it goes to that that ability for us to manage the the proliferation.

Uh in terms of how much they're using today, uh the slide's been cut off a little bit, but uh so we've got about a hundred acre feet acre foot.

An acre foot is 325,000 gallons of water, about three homes.

One acre foot is roughly three uh three homes, a little bit less than that.

Um it's missing a little piece there, but the total potable usage right now, they're using about 0.1% of the potable usage in San Antonio.

So a very, very small amount being used from a potable side, um, and then about a one and a quarter percent on the recycle water side.

So a very small usage footprint right now that data centers have in San Antonio of the current requests that we have, or the current uh people, the essentially those those 10 dots that I showed you before, uh, that will increase it to about 600 acre feet or 0.3% of our potable potable water usage and about 12 percent of our recycle water.

So significant increases, but all again very uh manageable from a water perspective.

Uh, where does the water come from?

I should really go back to the other slides.

We have three recycle water recycling centers.

Um those three uh wastewater plants that hopefully many of you or or all of you have toured at this point.

Uh the effluent coming out of the back end of those plants after it's fully treated.

There's about a hundred and fifty-eight thousand acre feet uh of effluent that comes the combination of all three plants.

And so, what do we do with that water and how can we better use it?

About 50,000 acre feet of that is dedicated to CPS energy for uh uh the Bronig and Calaveris lakes to keep our lights on, which is pretty important.

Um we also have about 50,000 acre feet that we allocate for downstream uses to make sure that water gets all the way down to the to the coastal um area.

Um this one is by the way, great uh permit that we just got led uh Mr.

Puente led it actually during the just legislative days and continued on at San Antonio at SAWs.

Um and so we have about 50,000 acre feet that's dedicated to downstream flows.

Um of the actual demands for our recycle system, we've got about 20,000 acre feet that that actual demands that came through that purple pipe network that I showed you.

Um that leaves about just under 40,000 acre feet, 38,500 acre feet available of water molecules that could be taken advantage of from a recycled water perspective.

That's an enormous amount of water, it's a very good amount of water.

However, let me uh strongly caution against that number.

Our recycle water network can only provide about 35,000 acre feet today.

So we've already we're already using 20 of that now.

So we've got a little over probably 20,000 acre feet available from our existing system.

If we want to take advantage of the rest of that, there will be some significant in uh expansion of the system that we'll need to do, and we'll need to put some uh some money into it, and so that's that's something into the future.

Um again, that was the volume of water.

Um when you have that volume, then you have to move it around the city, and so we have to really concentrate on our hydraulic capacity and and our and the infrastructure in place, the pumps and the pipes and the tanks that are in place.

Um when you look at it, obviously, as you would uh imagine water generally they're using more of it in the summer and less of it in the winter.

Um so our hydraulic capacity, it depends on time of day, it depends on site specific, where the they're located on the pipeline.

Um but we have about a little over 12, about 1,200,000.

I'm sorry, 1,200 acre feet in a month in our in our highest usage month available.

Um and that would take it to the hydraulic capacity of our line.

We we never want to run things at full uh max peak volume all the time.

So that's where I come up with we've probably got about 10,000 acre feet available to distribute in the existing network.

That will require some more some work on uh infrastructure, but not from an ex not from a big expansion standpoint.

Our recycle system, again, this is another view of that that same map, but in different colors, and that's just to donate uh to uh to notate the east leg and west leg.

So while the systems are connected, the east leg and west leg are connected.

It there's not full ability to move water either way, left uh west and and east.

Um and most of our customers are really along that east leg, that that blue uh blue leg that you that you see.

That's that's the line that is sort of high uh high usage.

We have a lot of customers on that, and we have a lot less capacity on that side of the line than we do on the other side of the line.

So it's site specific is very very important.

We are working, and uh and this is a very important piece.

We're working on a project that would connect the Leon Creek treatment plant you can see there down to the uh Klaus plant.

That will do a whole lot in terms of maximizing our ability to move water from west to east.

Again, there are some more infrastructure projects that will that will come over the next few years, but it'll allow us to move that water a lot better and utilize that at least 10,000 acre feet available.

Uh when we talk about cost, um our recycle water again.

You heard talked about uh cost of service.

Our recycle water is the same way.

We we only charge recycle water customers these rates.

Our regular customers don't get these rates just over the past year.

We've been working really for the last few years, getting it to 100% uh cover cost of service coverage.

And we've got just in 2026, we finally it's finally covering 95% cost of service, which is good.

Um, and recycle rates, we want to keep our recycle water rates lower because we want to incentivize people going to recycle as opposed to a potable source, particularly a large demand customer.

And uh I'm talking about data centers because that's the the point, but really large demand customers, there are lots of different different ones that that are far even outside of the data center world.

But you can say our recycle rates are anywhere from 20 to 47 percent of our other rates, um, so there's certainly some some room there.

Uh the the mayor specifically asked a question at the last council meeting about the uh is recycled water safe to use from a health concern.

Um I want to assure everybody that recycled water is absolutely safe from a cooling tower perspective, from a data center perspective.

We've seen a few of the studies that that are out there, and they really talk about recycled water that's been used in secondary uh uh treatment.

We use a higher standard of treatment.

We have tertiary treatment, um, it has a chlorine residual with help, which helps, and really it's about the maintenance that the individual businesses have on their cooling towers.

Um this is largely with evaporative.

If we're talking about the mayor, we talked a little bit about outside of the data centers, the net local neighborhoods, and so they just need to make sure that there is equipment in place and that they are monitoring to ensure there's not biofilm and contaminants in bacteria causing legionelle and that sort of thing.

So there are some controls that need to be put in there, but it is not about the source of water, it's not about the recycled water, it's really about the equipment and the maintenance at at the businesses.

Policy considerations.

Uh we want to lay out kind of some of the areas of policy considerations that we want to talk about.

Uh we'll we'll bring this back to obviously to our board and then then to you to bring to lay out some of the sp specifics.

Uh but to the extent possible we want to maximize the use of recycled water, particularly with high demand customers.

The more we can put them onto the recycled water system, uh, that's good for us and good for them, good for the community.

Um, so we want to maximize the use of that that may end up being um uh regulatory in nature, hopefully, and as you saw on the map, most of them are are locating around the recycle system.

So uh a lot of that will just happen anyway.

Uh but we need to talk about making sure that we may maximize and and uh uh push the use onto recycle water.

Uh droug rules, we're in one of the most severe droughts in in history right now.

Um we need to make sure that during that that that goes back to the first one that we are using recycled water and not um uh not potable water.

Uh but there are lots of ways that we can shave off some of that, even that usage, and really that goes to the peaking uh usage in the summer times, um, and also using the the the better technologies and going away from the high intensive evaporative use.

Redundance and reliability is incredibly important.

Uh businesses need to have business continuity, they need to be running constantly.

Our recycle uh network needs to be absolutely redundant and reliable.

It was not built like our potable system, it was built for irrigation and flows of uh of sort that's not uh constant 100 uh percent of the time.

So the reliability of the recycle is not what it is in potable, and that's a big deal for a business needing it for their their business process.

Um so we need to be make make sure that our system is redundant and reliable, but also that goes to some of the the um uh regulations that we'll put on the businesses to make sure that their system is redundant and reliability, uh reliable, and what that will look like is more storage on their facility.

Um, so they're able to have more storage in case our system goes down, they're not immediately put out of water, and then they also don't have to follow it.

We don't have to have a secondary backup potable source.

Um the the bigger issue as well is a modified rate structure.

Our recycled water uh rates, as I'm I mentioned, are very low and on purpose.

Um we also do not charge impact fees.

We talked a little bit about our impact fees, and that's really growth paying for growth, very important, particularly in the water side.

We do not have those in place for the recycled side, and so a large expansion of the recycled system probably needs means that we need to look at some of the our impact fees and and make sure that that that is in place.

Uh I would say while that that sounds good, that that's a challenge to get there.

You have to do an engineering plan, you have to put it in a process and um impact fee process.

You're you're looking at five to seven years out before you can even put a rate in place.

The data centers are here today, and so we need to make sure that that that the rate process uh is able to capture what's happening today and also into the future.

So looking at some of the peaking, again, I kind of mentioned that earlier.

Maybe we can shave off some of the peaking, and then put in some of those contamination controls that that uh I mentioned in the previous slide to make sure that businesses are maintaining their systems.

Those are the policy areas.

We'll we'll put some more meat on those bones.

Obviously, we'll talk to the uh talk to you, we'll talk to our board, we'll talk to the industry about making bringing specific proposals uh to you on that.

But those are the areas that we're most concentrated on.

I will also say again, we're working with um uh various national organizations and other entities that are putting rules in place, and so we're looking at some of those.

Austin, for example, said if you're if you're located within a certain distance of our recycle line, you must connect to the recycle line and those sorts of things.

So there are some policies around transparency of water usage and directing people towards the the recycle water network that we're looking at.

So that's my presentation.

Um again, it's a it's an opportunity and risk.

We think it's highly manageable, um, but these are things that we'll have to work through.

Mayor, our next presentation is our um department of development services to talk about policy tools uh for city council around the growth of data centers.

Good afternoon, Mayor and Council.

I mean Tomas with development services, and just to continue the conversation about data centers.

One of the questions in the CCR talked about policies and procedures if we can have anything to control the growth of uh data centers.

So I just want to look at uh the existing unified development code.

It does lack a standalone definition or a line item and uh zoning matrix for data centers.

But what we utilize today is an office data processing and management.

That's the closest thing we have in the matrix, and that's what what we have been using for a long time.

The issue with that is it does allow uh data centers in a lot of uh zoning categories, almost everything except residential.

And we did check with the big cities in town.

Uh Houston doesn't have zoning, so that's we know that.

But Austin, Dallas, and Fort Worth, they all have uh they don't have anything in their uh zoning matrix.

They have it on bigger scale.

So what they allow data centers to be in industrial, that's it, but they don't have a line item specifically for it.

Now in Paso is exactly like the city of San Antonio, they do have a line item in their zoning metrics in regards to data processing.

So they use the similar similar thing we have.

So if the uh recommendation from council is to look into the UDC unified development code and to find other options or solutions, we have a couple of them here.

Option one is to limit the applicable zones to C3 and I one to make it more limited.

And or to do that, plus have some restrictions about a buffer, about a thousand foot from any residential property or parks or hospitals or whatever the recommendation is.

So again, with that said, if uh council elects us to uh proceed with this, we can uh do our due diligence.

We will uh take it and partner with the stakeholders to review that, then we will develop a draft UDC amendment, then we can present it to the zoning commission for a formal recommendation and then bring it to City Council.

And that's it.

Wonderful, thank you, appreciate that.

Thank you.

Um, Councilman White, go ahead.

You have to stand in front of the podium because we can't see you.

Thank you.

Don't be shy.

Well, Mayor, um, first of all, let me uh thank you and your team for for allowing me to uh to have this point of personal privilege today.

And colleagues, thank you for for giving me a minute.

Uh I want to introduce you to Girl Scout Troop 5059.

This is a great, great group of young ladies, and I'm proud to say uh that my daughter Olivia is a part of the troupe.

And today by being here, they are going to receive their inside government badge.

So it's a big day.

It's a big day.

I know I I know most of all these girls.

I've I've coached them in basketball or I've seen them around school, and and this is a group of young ladies that is going to go on to do big, big things for our community.

And um, I'm happy that you're all here today, and I hope you look around this table uh because what you see here is a group of people, uh, men and women uh that come from all different backgrounds and have all different kinds of beliefs.

Um, but we all work together uh on a daily basis to try to come up with things to make the lives of San Antonians better.

And all of you going forward, it doesn't have to be in elected office, but in whatever you choose to do later in life.

Um, I hope that uh a part of your your day-to-day um doings will be to think about how you can serve uh the people you're doing it right now as a part of the Girl Scouts, and I know in the future uh in your careers and in your extra time that uh hopefully you will take some time to to do what you can um to give back, like all of these great uh folks that that I get to to work with every day.

So um congratulations on getting your badge.

Uh and I'm sure they would love um a few comments from our mayor.

All right, ladies.

Well, thank you for joining us today.

Uh, we're very proud of you.

Um I want to see by a show of hands who is gonna get the gold award.

Who's the gold award?

The gold award is the highest rank of Girl Scouts.

So it's like it's the highest one.

So if that's not on your goal list, please make it on there because we know that you can do great things.

Obviously, you've got a wonderful supporter and councilman White.

Um, and uh as he mentioned, you know, the your commitment to improving yourself, uh, the fact that it has started so early, I think really speaks to not only um your maturity and your self-discipline, but also thank you to the parents that brought them here today that takes them to all of their events and um frankly really highlights the importance of an organization like the Girl Stouts that prioritizes civic engagement and community service and personal development.

So congratulations, ladies.

I hope you make a million dollars on your cookie sales.

And if you have cookies, please feel free to pass them out.

But thank you, congratulations on getting the patch today and onward to Gold Award, right?

Okay, thanks, ladies.

Whoever has Samoas, I'm ready to buy some right now.

Thank you, Mayor.

Okay.

Um thank you for all of the presentations.

Um this is a topic that is um getting a lot of attention, and again, related to the to the previous topic, helping our community understand the difference between what is happening and maybe what they hear is potentially contributing to rising costs, right?

And data center topic is is one that is kind of part of that all across.

So I also appreciate um Councilman Galvan being thoughtful and his leadership to make sure that this is a topic that is at the forefront.

So thanks, um, Councilman Galvan.

Um and really appreciate um, you know, the the intent of this was make sure that we level set across the or uh across the council, but also certainly across our two strategic advantages, which are these two utilities.

Um I want to a couple of points of clarification though before we move forward, um, Elena on slide seven, um, which I'm sorry, slide five rather.

Oh, they did bring cookies.

Yeah, thank you.

Oh, they're not they're not gonna make them to you, yeah.

Okay.

Yeah, understood.

Um so on this slide, um, Elena, when we just do quick math here, right?

And I understand not all these things are gonna come to fruition, but if one megawatt is 250 homes, if all of these things came to fruition, uh, this is seven million homes.

It's a it's a very large number.

Um we we do not believe all of these projects will come to fruition.

Um quite honestly, um, there's uh a number of activities going on at ERCOT, including um proposed requirements around um you know uh site control and some collateral mechanisms that we see are really sorting out prospectives from true uh projects.

And in fact, if you note this slide, um this was as of January 12th.

Since January 12th, we've actually seen the number reduce and and we have gotten direct information from customers that it is tied to some of the proposed changes at the state level.

So very large number, but there are um and and one of the other items our cotta is is uh including is effectively clarity on if you've got a project, are you proposing your project in multiple jurisdictions or multiple queues?

And so it's really I think gonna help rationalize the demand.

But but certainly large numbers.

I would say, just for clarification, the 1700 megawatts um that are in the the agreement phase, those are gonna take five to seven years to bring on on on board, right?

So we have a tremendous amount of um work uh both at the customer site and we we ourselves are doing upgrades to our transmission system just for reliability that are gonna be necessary in order to bring that load on.

Well, and and thank you.

Uh, because even just that, that's 440,000 homes still.

So certainly appreciate the the the longer time frame to be able to account for that.

Um the uh when we talk about the um the pilot that was described, um this is one that I uh am particularly interested in and really speaks to ensure that the left hand saws knows what the right hand is doing, CPS.

Um, because in effect, right, just real plain speak.

Um, if this pilot would be approved, uh this would allow these data centers to come into our community at a rate faster than anticipated, because what this essentially does is serve if I've correct your and if I'm mischaracterized, and you'll correct me, I know you will.

Um, because what this does is serve as a bridge until the CPS infrastructure can catch up, right?

And so, i.e.

they would be in our community sooner than then CPS infrastructure can support, right?

And so if we're doing that, I think it's really important we understand um not, I mean it's great that CPS can support, but I I know for a fact SAWS as of right now only has enough recycled water to support two more hyperscalers, and that's it, right?

So understand there's you know, um energy um solutions there, but they're not bringing their own water, right?

They're not bringing their own water.

And Donovan, if you want to come up, one of the things that Donovan mentioned yesterday at our SAWS board meeting when I raised this exact point, is that these folks, the data centers, um, if need be, they they may be, if they're not if we're not able to provide the water, they they may be able to go directly to Edwards Aquifer, thus competing with us.

Is that correct, Donovan?

That's largely correct.

And and let me let me talk a little bit about you.

You mentioned the two customers that that could eat up a lot of the our source.

We've talked a little bit about that.

Um that's really if you have enormous customers.

So we've the ones I talked about using wanting to use five million gallons a day, that is an enormous amount, which is about 5400 acre feet.

I talked about 10,000 acre feet available, and that's where you get to the math of you get two customers and they've eaten up most of that recycled water.

Um, that's an important number to know.

Um luckily I don't think uh we're we're having those sorts of numbers anymore.

I think that that entity that we're we were talking to has reduced their their numbers significantly.

The other entity that had had talked to us has largely gone away, and so I think those numbers are coming down.

So I think we are able to sustain a lot more than than two entities, again, assuming that they're using the the numbers that we're seeing with the other other side.

But um specifically to the Edwards Aquiver for uh question, that answers yes.

Um, and so what we've had in other communities, I talked about some of the policy aspects.

Some of the other communities are requiring that data centers bring their own water to the to the table uh and deed it over to the to the uh the municipality, and that can be helpful for certain communities, but for us, what that means is that they're gonna go out into the market and and uh purchase Edwards Aquifer water rights, and they would bring that to us and give that to us, which might help from that perspective from that one entity, but we are also out looking for Edwards water, and that's part of our water management plan.

Uh Councilwoman, you you mentioned earlier.

And so by by creating that kind of incentive, we're incentivizing the data centers to go out and compete with us for for water resources in the Edwards Aquifer, use the Edwards more, drive up the prices substantially.

So I think that's the point that you made yesterday, Mayor.

Very important point, yes.

And and to your point, I mean, while it might not be the two hyperscalers today, right?

That's nothing to preventing two other hyperscalers from coming in right behind them, and we're in the exact same point, right?

Because adding to uh capacity for recycled water, um, that's I guess given a give us a sense here of of the runway needed uh to to support that.

Yeah, and that that's really go that really goes to the the point of we need to incentivize more ability to the recycled water system, but going away from evaporative cooling.

And again, I think the industry is largely going away from that.

Um so I think organically some of that is happening on its own.

Um, but there might be regulatory policies that that are needed to uh to to incentivize using um lower amounts and better technology.

The information on slide five that Elena presented, um are these the same planning considerations that that you are taking into account.

Um I I don't know the the numbers here and how they uh relate to the to the water side.

Um I do know we talked about the maps and the the entities on the maps and largely the ones that are in those final stages of contracting, they have come to us, and so we I think we are uh planning uh to the same numbers as they are.

Well, I um I would want us to make sure that we we confirm that for sure uh because again this this is a significant list and we want to make sure that there's as small of a delta from the time that CPS knows something to the time SAS knows something, so that again we're all um planning for the same thing given the strain this is on the infrastructure.

Actually, um Elaine, are you able to oh yeah, please go ahead.

I was gonna I was going to um offer um perspective relative to the NSO and the new service offering tariff and um and I wanted to echo the in-processing contracted resources, right?

So that represents about 11 projects, and when you overlay both CPS and SAS map, they're they're identical because of the speculative nature of some of these projects, really looking for power.

Um they're they're working, um, you know, submitting requests and looking at where they might be able to have capacity, and they haven't actually you know uh gotten to a place where they've actually got you know a detailed design that would would inform the water side.

But um our teams do share information, and in fact, we've just um not too long ago read up rolled out a an NDA allowing data sharing between the the entities, and so I did want to add that for the new service offering.

This wouldn't be necessarily bringing new customers, it would be enabling a tariff for behind the meter generation, which is coming with these customers, um, but it would allow us to study that component.

It certainly does, you know, help the utility um get informed around what a tariff would look like because we do um expect under Senate Bill 7 um requirements for behind the meter generation, backup generation for these customers.

So that's that's why we've been working with the city staff on this tariff.

Um it is a pilot uh time bound for two years and limited to no more than 15 customers.

Um and right now um you know we we do have customers who are in that in that contracted phase that are that are interested in in this pilot tariff.

Um Donovan, do you have the water needed to support that that pilot?

I believe so from what we've we've discussed, yes, and and I think really uh the the entity wouldn't be able to get started if they can't bring the water to the to the table.

So uh the entities I'm assuming that are talking to CPS Energy are the ones that are in that final stage of of discussing with us, and so we've already gone through that.

They would need to they would need to build the physical structure.

We don't have a similar pilot where we can bring a plant, a water plant on on site and them using it.

Uh that just doesn't happen.

So they would have to build out a a thing to us.

And that's where the recycled water comes in handy.

Um Rudy, you've shared um some of the uh the reality, if you will, um, with you know, if the pilot isn't approved, uh the companies may be able to, there's a workaround, right?

Um one of those that I heard, I wanted to if you'd confirm or or deny that, but if it is is one of those options really the companies trucking in liquid natural gas.

They do it all over the state where they can get power infrastructure.

Uh they'll truck in compressed natural gas to uh you know to uh to a uh uh you know uh modular unit uh and they'll run it that way.

And you know, they're willing to take now you can't scale that, right?

So you're not gonna get a hundred megawatts out of that, but you're gonna get some amount of capacity that at least let you you know do your construction and and get the project uh going.

You know, and then there are other you know, there are other risks that that I'll generally allude to.

You know, when when we when there's a perception we're in where we can't or are unwilling to do our jobs, I think that's where you find conversations start to happen at the railroad commission or the public utility commission or the legislature saying, hey, you know, CPS Energy is not you know not doing their job down here, we need some legislative relief, and you know, we try to balance all that uh to make sure that we're protecting you know our our you know our service area.

Certainly, uh you know, thanks for clarifying that because I think when I you know, at least when I heard that, that's uh that is the um least attractive option, obviously.

Um, and we're obviously though partner partners in shaping, helping to communicate both at the federal level and at the state level, the ledge agenda that shows how it's not just CPS not wanting to provide the service, but it's rather C CPS's owners, the city potentially wanting to do an environmental study to understand the impacts of these various approaches.

Um again, there's a partnership there that we can communicate to folks some of our real concerns uh not only in the ability for water to support this, but also for us to understand uh the real infrastructure and potential public health consequences of of some of these approaches.

Okay.

Donovan mentioned um uh my concern about the the public health uh um risks potentially, right, associated with with recycled water.

Again, you know, some other communities are much further along in their data center journey.

I was talking with the mayor of of Phoenix and uh and in fact um and communities around uh a data center again.

This is a couple of years ago, right?

Um, but they do have higher rates of of C OPD, right?

And so I think it speaks to uh the really important the the importance rather of really strong um controls in place to ensure that not it's the it not the type of water as you mentioned, but rather the the process and the systems in place to ensure that it's as as safe as as possible.

Can you we've also heard um obviously, you know, given my national security background very supportive of uh making sure that JBSA has all that they need.

Um but when we look at um uh potential data centers on JBSA, um would either CPS or SAWS can you highlight for this group, illuminate for this group some of the unique considerations that those pose.

Yeah, so we can't do that.

I can't.

I don't have any specifics for you in terms of whether they are looking to add a data center that we would support.

But but that that infrastructure is there, it's available.

And so we we'd be happy to get into those discussions.

And so we uh here um uh changed our approach uh to when it is acceptable uh for the city staff to um sign NDAs, right?

Especially when it comes in the economic development piece.

Um and so uh you know minimizing your use of NDAs around these particular projects um if outright if not outright um saying we're not going to do that.

Um and if that's something that our own city attorney uh needs to help with, or maybe Andy, you can weigh in now, but um this is an area where again we want to make sure we've got as much transparency and are not needlessly signing and NDAs on this topic if if not if it's not needed.

Okay and mayor, I'll just say from San Antonio from Saul's perspective, we really don't use the NDAs for for these.

Um certainly uh CPS energy, you know, we're we've exposed and will continue to share the data that's in front of us.

We want everyone to know what um what projects or prospective uh loads are coming, and again, this is predominantly around data centers, but it's other things.

So um you this is a very competitive landscape, and so we are careful to protect customer information, um, to protect information that we are um uh sharing and working with these customers given the highly competitive nature.

We can't be in a position, we have to be careful to not be in a position whereby we would be demonstrating uh one exposing a competitive advantage of uh some of these large large companies, or in any way perceive be perceived as a giving um you know any kind of uh you know uh inconsistent or perceived preferential information or or uh treatment to customers.

So we do we do sign NDAs, um, and as I mentioned, we've recently um worked with customers to allow for uh sharing of information at their discretion between us, um SAWS and the city of San Antonio.

My last point on this, I appreciated the uh the tour of the facility where those folks work hard um during an emergency, right, to make sure that um that the way in which folks are impacted during an emergency is as equitable and and the time minimized is uh is minimized as to the greatest extent possible.

One of the things, Alinda, that you mentioned though, that is on the horizon that we need to be cognizant of, certainly I'll be cognizant of it as we're shaping the ledge agenda for 27, but also even the up in the upcoming SA to DC trip, uh, which is the ways in which uh um data centers, certain data centers um are looking for that exemption, um, which then in a time what that means practically, right?

Well, I let me not put words in your mouth.

Why don't you explain it better?

Because it is significant if those folks are you know kind of taken off as not somebody that needs to be impacted during those emergencies.

Yeah yes, and so when you look at um large uh large loads, and in particular um the these data centers that we're talking about, you know, are all going to likely be um you know in play under Senate Bill 6 in the in times of um emergency alert um activities during um you know times of grid distress and our cut right now proposals under Senate Bill Six are that those loads would be directed to come off of the grid to shift that load off and thereby um uh would likely need to have behind the meter generation.

Um there's also provisions under Senate Bill Six relative to demand response and having that backup generation.

So we believe those requirements are coming, and um again that's why we're proposing uh finding ways to effectuate that.

Um but absolutely you know the the expectation um under SNIT Bill 6 is that during times of an emergency alert um where we get into very tight grid conditions, these large loads will have to move out of the way to protect bulk system reliability for all of the tech, all of um 90 percent of you know us Texans that live in and and work in our cot.

Thank you, Alina.

Um, Councilman White.

Thanks, Mayor, and um thank you to Councilman Galvan for um for putting forth this CCR and and for uh kind of letting me jump the line here so I can go talk to uh talk to the Girl Scouts.

Um we need to figure out how how we're gonna get more of these data data centers here, and we got to do it, we've got to do it responsibly.

Um do we need to have some some more large user um policies in place?

Probably.

Uh do we need to make sure that you know we have some of these buffers set up between between the data centers and and neighborhoods?

Um yes, because we we've of course got to protect our neighborhoods, but the jobs and revenue that these data centers can bring to our city just cannot be ignored.

Uh, if you look around the country, including from the data centers that are here, there's uh eighty thousand dollar a year plus jobs for some of these technicians that work at the data centers, 100,000 uh and up for engineers, not not to mention all of the uh construction jobs that that are generated when when these things are built.

In terms of revenue, obviously um the property taxes uh from the land involved is is a significant source of revenue uh for cities where these data centers reside.

But you've also got the personal property taxes that come in as well on the equipment used by the data centers.

And from what I understand, the equipment at these data centers get get changed out every three to five years.

So it's a significant amount of uh of revenue that that can be gained there.

And then of course, for us here in San Antonio, um, you know, uh our our portion of of the CPS energy revenue makes up a large part of our general fund um budget, and so having data centers here is is is gonna be a benefit to us for everything else that we want to do here in the city.

Um it seems to me too, from everything I read that uh the companies that that are putting these data centers all across the country uh will foot the bill to to be here, right?

They are they are willing to pay uh much of the cost of the infrastructure cost um to get established.

Uh I'll also say you know, Maria, I I don't I don't know if there's a um more property tax significant investment, right?

Dense investment that that we can make in our city than the than one of these uh data centers.

And then Rudy, I guess my one question is we we if we grow the generation base here, we can potentially drive down uh the energy costs for for some of our consumers.

Do you think that's fair?

Uh I think it's fair uh from from a couple of perspectives.

Number one, you know, obviously that's a lot of load.

I mean, that's a lot of generation that could be required uh over time.

And you know, whether you build it, you buy it, you put you know, you on the market, you know, we go out and buy more plants.

I mean, that will drive, you know, we're kind of at capacity, you know, with with where we're at right now with our with our debt service, um, you know, to to doing more.

But but I think you know, as they come in, there's revenue associated with that.

So, yes, you know, as we need to procure more power, that helps the whole system.

But the the power they're the power that they're now will be required to bring to the table is the same type of generation that SAWs is having uh to put on.

So there's market opportunities for those smaller generators by working together that can also offset the need for us to go buy some uh at the end of the day.

So I think there's a there's a lot of opportunity.

We just got to put all the pieces together.

And do you see us being in a position, you know, in the next few years to be able to support uh moving more data centers here?

If we are if we all stay on the same page on what we're trying to accomplish, councilman?

Yes.

Okay, all right.

Um and in terms of water, really, really my last question is this closed loop cooling system that I think some of the the newer technology and in the newer data centers are using, uses at least offset some of the concern about the water usage from from some of these facilities.

Is that right?

Absolutely helps, yes.

Uh as we we talked about the evaporative cooling, using it inefficiently to major load on the system.

So the more we can use those kinds of ways, those kinds of technologies that will reduce the water load greatly.

Yeah, okay.

Um well, I got a couple more questions on these that maybe I can ask uh of you guys offline.

Um but but I do think this is uh we we need to embrace embrace these data centers.

They can do they can do a lot for uh I think revenue moving into the city jobs and things like that.

So um I'm for doing all we can to to facilitate it.

Thanks, Mayor.

Councilman go uh Galvan.

Thank you, Mayor, and thank you uh to everybody who presented today overall, uh, but particularly on this topic.

I know we've had multiple conversations over the past month alone, frankly, uh in multiple different settings, whether with SAW, CPS or DSD regarding this topic.

Um very appreciative, of course, also of all uh the industry who have reached out uh since the filing of the C CR talking a bit more about the local uh impact of data centers are having in District Six and across the city.

Uh appreciative Council Member Via Grand as well for hosting uh a kind of round table uh event last week.

It was really helpful at Brooks regarding this topic.

Um and of course, very thankful to all the residents in District 6 who have shared their input on this topic, who have shared their their personal feedback in living uh nearby the highest concentration of data centers in our city.

Um some of the concerns, some of the benefits, some of the questions that they've all had uh are shaped the CCR and have shaped uh I think a lot of this conversation today.

Um in particular, I want to shout out a couple of the HOAs nearby, uh, some of the major data centers, uh, Stone Gate Hill and Westover Valley have a lot of historical knowledge on just kind of talking about what it was like when they were first coming into our community and what it's been like since.

And so all that said, I'm very appreciative of this conversation.

I'm grateful we get to have it here um at a B session.

Uh one of the big things, just to get straight to it uh for the DSD presentation.

I want to be clear just on my support for different things.

Um I'm supportive of the recommendations, but I do think we should focus it on uh I1 zoning versus C3 zoning.

Uh I think frankly, this all should be considered within industrial, similar to that um of other cities that we've seen across the country do this.

Um I think even exploration of a specific youth authorization is still worthwhile to evaluate within this.

The thousand foot buffer is fine with me.

Um I'm just more eager to see what that evaluation looks like.

Um but those are I think my two red lines that I would like to focus on.

Um otherwise within the uh DST task force, uh, which I'm eager to see uh you know what the competition will look like.

Um I think also exploring uh the definition of a data center.

I know Amin you mentioned a bit about that uh in particular, so I think that'd be helpful to have um come out of this.

Um looking at setback requirements, I think just comprehensive review on you know, even landscape buffers, screening uh requirements, building and fire code updates, lighting requirements.

Again, nothing prescriptive, at least from my end on what exactly what those should come with, but I think those should be evaluated because I think there's a lot of opportunity uh to address uh neighbor concerns that I've heard in my community uh that I think could happen as we see an expansion of this industry uh be addressed more proactively, get some ground rules uh for all that out of the way sooner than later.

Of course, in coordination with all the stakeholders needed um for that conversation.

Um I think in particular also even parking requirements would be a good uh conversation there too.

So I'll leave that one where that is.

Um a couple um questions.

I know I forgot who mentioned there was uh a mention on CPS's uh timeline on slide five of this presentation.

What was the the timeline for some of those uh contracted projects?

Um thank you for the question.

Um for the uh contracting phase and under contract, um, those projects are likely to be energized, and each one has a different ramp schedule um in the next five to seven years.

That's so yes, sir.

And then the others are obviously maybe uh maybe further out.

Got it.

Okay.

I think so much of the c the comments I made in the previous CPS presentation regarding the timeline of cost of service studies, uh the timeline of um oh man, I forgot the other part I asked for.

The transmission project uh and even tech needs for re uh rate restructures.

I think that's helpful to keep in mind, just as we're looking at what things do we need to make sure that uh are going in line with all this work as you look at this industry growing here in our city.

I think that'd be helpful to just kind of better understand um overall what our our local energy needs are.

I think within the do we have a timeline for the cost of service study at the moment?

Um we have begun the work.

It's probably gonna be about the next three months.

Is that fair?

Okay.

Got it.

And then be released in the next three months or still some.

Yes, we we always make our cost of service studies public and we'll absolutely share it with this body and and uh and others.

Thank you.

That's helpful.

Um I see there's one of the slides here that talked about the medium to I think it was slide twelve.

Um are we able to parse out the medium and large business uh cost of service study or cost of service at this moment?

We do have all of that information from 2022.

Okay, if we could share that, and then I don't know if it's already within the 2026 study if that could also be uh a pricing out of data as well.

It will be.

Okay, thank you so much.

Um supportive, of course, uh the study fees and the clawbacks and the kind of work related on that front overall.

I really appreciate the work that's already been done uh on the back end and grateful for the conversations you've had with my team about that.

Um the new service, option pilot.

Um I know we talked a little bit about the the potential for or the overall conversation around on-site generation and what kind of fuel will be used there.

Um do we have uh any examples of data centers across the country utilizing more, and maybe this is a conversation that will come through with the larger task force that are using more renewable energy with that backup generation.

Um we you know we do um see in various markets um these large loads coming with different types of generation.

Um and you know, certainly having um resources that are lower carbon are are certainly in in alignment with some of their um corporate objectives.

Um I would say um, you know, certainly with renewables, having um long duration storage is gonna be necessary to support um some of the requirements under our state rules, and that's why you're seeing more of um uh these data centers coming with firm fuel supply um as opposed to intermittent resources because when they do need to move, um they they have to get off the grid.

Um, and that's where that's where the firm fuel comes from.

Got it.

I think understanding that will be helpful just even uh where we're at with battery storage technology, um, about what is possible, right?

Um, not only from maybe just an energy use provider, but also from the data centers themselves, right?

What is possible within their size, their capabilities, um so that way the community can be on the same page about that, and so that we're still as an entire city still trying to meet those climate goals that we're looking at too.

That's a really important thing to to myself, but also to members of my community.

Um we have uh any kind of particular goals with that pilot, what successful one would look like?

We do political outcomes.

We do.

Um and and again, the the success criteria that we've laid out in the the draft NSO, we have five criteria.

Um it's effectively looking at you know studying the tariff, um, you know, make ensuring that we understand um how the resources are used, ensuring that costs are um fully contained within the customer, um, and then just looking at the uh the effectiveness of of uh how we've structured the tariff.

So we we can get you those success criteria, but we've outlined five.

And again, the the pilot is intended for for uh two years um, you know, for customers who raise their hand and say we're interested in this, we will limit that.

We're not opening it up to you know the universe.

Great.

That'd be great to review.

So thank you for that.

One last I think question for CPS was um on the NSO on that same pilot uh and the particularly the tariff portion of it.

Uh will that have to come to council?

I know you mentioned something about it getting some kind of approval, but is that the council or for city staff?

So we've utilized new service offering uh pilot tariffs um in the past, and that that is um you know uh work that occurs with the city staff.

Okay.

And so we have not um we have not uh brought those to council.

Certainly if the pilot appears to be solving um you know the need in a persistent manner and in a way that we've you know identified the the ideal structure, uh we would over we would embed that in an upcoming tariff discussion and uh propose a tariff in in collaboration with the the city staff and uh the mayor and council.

Okay, great.

I think uh you know, as we're seeing progress with it, um it'd be helpful to either get public conversation about it, just given the conversation already, um, or public update I mean, or even uh a memo from the city staff to us that we were able to communicate what's going on as we continue this conversation.

At least that's something I prefer.

Um for SAWs, really quickly.

I don't have too many questions.

I appreciate the briefing we had.

Uh it feels like we saw each other almost every day, I think a week ago or so.

Um so I don't have too too many questions for you, but I did want to ask in particular.

I know we talk a lot about the the shifts in technology uh within the industry to reduce the kind of use of a lot of water within uh within the cooling methods.

Uh do we have uh do we know how many data centers currently use evaporative cooling?

I'm sorry, say it again.

Do we know how many data centers here locally use evaporative cooling?

I don't know if that's something you can share.

I don't have the I don't have that exam as exactly answer, but um the ones that are using evaporative cooling are very low usage uh right now.

Again, evaporative cooling is on lots of different businesses for lots of different reasons, not just data centers.

Fair enough.

We have a lot of evaporative cooling um throughout throughout the city.

But in terms of a larger data center, the ones that are out there right now are using very, very low amounts.

So I think that'd be helpful.

I can and we can have a larger conversation on the back end, both with SAS as well as with industry about what that looks like to kind of show that.

I think it's that same point about that corporate responsibility in that form, making sure that we're they're meeting their own sustainability goals and proving to the community too that the commitment is still there.

I think that's something that's really crucial that I've heard from residents where it's okay.

Well, how you can we require and I say, well, I don't know if we can do that here locally, but also I think there is that commitment, uh, at least on the entities I've talked to about moving to that different technology.

Because one, it's just frankly better for their portfolios most of the time, but also uh helpful to make sure that um it's impact it's supporting the reduction of a negative impact uh to the community.

So I think that's uh something I would like to see how we can share that a bit more to the broader public.

And I would just reiterate, we we did, as I mentioned earlier, we did have an entity looking for a large uh amount of water, which we assume is evaporative, and we do have other evaporative cooling around the state, and so while I say I think generally the tech the industry is largely going towards that.

Um evaporative cooling is still something that is is is used all over and and something we need to pay attention to.

So I appreciate that.

Thank you.

Only thing I was gonna say was just I also appreciate the policy recommendations you provided there.

So thank you so much.

Thank you, Mayor.

Uh Councilman Mickey Rodriguez.

The system is saying that you did.

Okay.

Um Councilman Maltra Techabito.

Thank you.

Uh thanks to uh to both SAS and CPS for y'all's um presentation.

I obviously there was a lot of work and thought that went into this.

And uh, you know, I think that it's important that we we do that work proactively so that way we can make sure the um path forward with data centers doesn't negatively impact the average customer.

I also want to thank Councilman Galvan for pushing this discussion forward.

Um that said data centers are here and more are coming.

Uh it's important that we get ahead of the potential long-term impact sooner rather than later.

Uh many residents are concerned about the impact on water supply and our power grid and the cost and the cost of each of these those utilities.

So I share those concerns.

So having discussions like this and being transparent about it, I think uh is helpful when when we're talking about that.

Um we also do, as councilman White said, know that data centers can create economic opportunity and growth for our city.

So we we have to find that right balance that works for for San Antonio.

Um I was curious on slide five of CPS's um presentation, Elena.

Like if uh you know the mayor asked that would potentially be seven, I forget seven seven million households with a new customer um request.

When we're looking at the funds, and this is quick math, for the under contract, how many millions of dollars would the city potentially get back?

Yeah, for we're estimating for each hundred megawatts that the city would have an increase in city payment of eight million.

And so you can you can just take that hundred and multiply it through the various bands.

Um so we do expect to see increases in revenue, not only for uh CPS energy, but obviously for city payment.

Um and as I mentioned, with that pie chart, it's it's not only revenue, but it's revenue of that large customer class, which will they will naturally bear more of the cost of our system, which will reduce that system cost for residential customers.

For residents, yeah, and I can't remember what slide, but the um pie chart where it talked about the resident payment and the business payment.

I thought that was an interesting breakdown because I think that is something that we we need to keep in mind.

You know, I asked that question because you know, again, those dollars will affect our city's general fund.

And so we need to think about that because you know, we're all wanting to spend more money on nonprofits, we're all wanting to spend money on homelessness and stuff, and so uh we just need to be cognizant of um any unintended consequences we could have if we if we really start limiting this and and you know swing the pendulum uh pendulum one way too far.

Um I do um also think I mean for the UDC amendments.

Were uh partners in our community and data center current data center partners or uh anybody in the data center world uh consulted with these recommendations?

Uh no, we haven't talked to anybody yet.

If uh council directs us to start that process, we will go through that process and get feedback.

Yeah, is there a reason that they weren't consulted?

I mean, I would see them as important stakeholders.

Yeah, uh originally this presentation was mainly the biggest component is the utilities.

But uh I just want to be clear, councilwoman, these are potential options, not recommendations.

So the conversation hasn't started.

This is the very beginning of the conversation.

We we fully intend to speak to current data center providers uh before anything is proposed.

Perfect, thank you.

And thanks for for that clarification, because I definitely would want us to consult with with partners who are already here, um, but also too as we're looking to see.

I I I believe that Phoenix just did a what's good and what's not so good in terms of zoning requirements and so learning from others um as well as as stakeholders here, I think would be best before we kind of jump to one particular uh point on here or the other.

Absolutely.

Yeah, and I do want to echo what uh Rudy mentioned.

I do think that if we if we make it harder for businesses to do here, whether through CPS, whether through zoning or not, we could have unintended consequences of lobbyists going to Austin and saying, hey, break this stuff up, break up CPS or whatever.

And so that would have a tremendous negative impact on us.

And so, you know, I definitely want us to think a couple steps ahead uh before we make um big decisions, but thank you for that clarification.

Um do we I had some some technical questions.

Uh do we have any data centers currently over the recharge zone?

I couldn't tell over that map.

Uh I'll get back to you with the specifics.

They they are all they all seem to be off of the recharge zone.

Okay.

We do have some development uh rules over the recharge zone, so if they're there.

Um they're close.

I'll get back to you.

Okay, yeah, thank you.

Uh, thank that would be helpful.

And also too, while we're getting that information, I think it'd be helpful to understand if they are over the recharge zone, uh, if there's any potential negative impacts with that as well.

And we just went through the whole Wahalota fight, you know, and so we'll just need to be very careful what's going over our recharge zones.

Um, I think in one of the the things that Councilman Galvan and I had briefly talked about too is just the potential impact of data centers being near parks, near wildlife, near schools, near residents.

Um and I think that those are all the the big questions looming over our heads.

So, you know, I definitely appreciate the the CPS's approach and SAW's approach, but also letting us know how it does impact residents and parks and you know all that kind of stuff.

I know sound is a big issue, um, right?

That that sound buffer is a big issue for for data centers, and so um I just want us to think through all of that when when this conversation does progress.

Um of the things that I had heard of uh heard about during some of these conversations were was it was an idea of and I don't know, I don't know the answer.

I just want to talk through it.

Are there ways for data centers to support potential surrounding neighborhoods in cases like a winter storm URI?

Could they help surrounding neighborhoods with um backup electricity in an instance of of URI?

Yeah, it's possible there would be we would need to like do a specific program to figure out how to how to use that um generation resource as a uh you know as a microgrid.

So you've got to put some equipment in and figure out how you know m how big of an area it it could serve, but it's possible.

I would think, and and maybe district six will be covered in this case, but I would think it would be cool that if if data centers do want to come into our city, you know, maybe that's one of the requirements that we talk about.

Hey, you want to be in this area, well then you need to make sure you can support surrounding neighborhoods in in the case of a power outage or days-long power outage, just something different to to think about.

Uh I you know, and I know Councilman Galvan did talk about um a high concentration of these data centers in district six, and so I you know, I I'm assuming there's no specific energy impacts on these direct neighbors.

Am I right in in that assumption?

Um yes, ma'am.

So we any time we um are studying new customers, especially new large customers, we take that per perspective load and run it through a series of models and ensure that we can support the load reliably.

Um and we look at it both from the the bulk electric system, transmission system, as well as the distribution system.

So um, you know, at no time are we going to bring on uh loads that we can't support reliably.

Uh we we certainly do not want to have um you know large loads that re result in power quality issues for the for the balance of our customers.

So uh very strict studies and for these extremely large loads that are above 75 megawatts, they also go through an ERCOT study.

Okay.

So then so then you know, district six residents aren't seeing more of this impact.

There are more of you know, when you look at the map, there certainly are more of these loads in certain parts of the of the of our service territory, but that is not causing reliability issues for adjacent areas.

That's that's that's what I'm asking.

Yeah, because I you know, when you look at that map and you see all of those uh circles circles specifically in district six, you know, we want to make sure it's not negatively impacting certain residents in certain areas more than others.

So uh thank you for that clarification.

Um on on the SAW's presentation on slide eight.

Um was this an intentional shift from 2023 to 2025 using more potable water that to more recycled?

Uh I believe so.

Actually, the the 2024 to 2025, yes, and I think some of that was from Microsoft.

They shifted some from the potable side on to the recycled side side.

That speaks to some of the innovation.

So you okay.

Yeah, and I think it's definitely worth maximizing the use of recycled water uh when it comes to data centers, because we need to obviously protect our our our drinking water at all costs.

Uh well, that those are those are all my comments.

Thanks again to council Councilman Galvan for bringing this discussion to the forefront.

I think it's an important one and lots of uh of items for us to consider moving forward.

Thank you.

Councilmember Vigadon.

Thank you, Mayor.

Uh, thank you for the presentation.

Uh, as I had stated before, when we talked about this in governance, I would be looking at uh specific way to address district three issues because of the lack of infrastructure there.

Uh so I brought in a team or professor to come in and have that conversation.

And as I was doing that, and both SAWs and CPS have been with me through this process of sustainability and resiliency for the last four years.

So I appreciate y'all being there Friday.

But as I looked at it, I looked around the room and I was like, who would be interested in this and who could help?

And so I want to thank Councilman Galvan for coming because he's got the concentration of data centers and uh Councilman Mungia, because his area is very similar to mine in that no infrastructure, and then Councilman Spears, who is like-minded with me in terms of as we look forward to nuclear energy and what do we ask these data centers coming in.

Uh the one thing that that I think our goal is, and this is a great beginning conversation, and I love hearing all the input from the council members here, but this is the beginning.

We need to start looking district by district where these data centers want to come and where we live in the state of Texas.

The reason they are here, the reason they're knocking on the doors, and you know, I I have I have three that have you know through other parties have said, hey, we like your area, some speculative, some who have actually purchased um property, and part of it is because of our utilities.

I've got CPS who has been innovative, who has served South Texas, who has from generational planning to service, all in one in one stop.

I have SAWs that knows how to recycle water, that knows how to use water in droughts that has been proven for generations about what we do.

I mean, I look at Mitchell Lake, which sits in my district, and I was like, we got a problem, SAS knows how to fix it.

So here they are, and they're knocking on our door, but what do we do?

And the thing is, I don't think we just have the opportunity to look at this and maybe copy what other people do, but we have the opportunity right now to lead in Texas to create a playbook where the rest of South Texas and the mega region, as um Secretary Cisnos likes to call it, could look at that and be like, look what San Antonio is doing, what the team in San Antonio has done.

Let's start asking those questions.

We know the data centers are coming, but we want them to give back to the community to make sure because they're here, they're here.

So I really want to be thoughtful as we have this conversation, so I want to keep my comments brief and and show my appreciation for you guys coming, but there's a lot of work ahead of us in terms of this process.

And the one specific thing that I wanted to talk about is UDC code.

Because I've sat on this council for four years, and one of the first things we did was UDC code.

I mean, the process of, and and I knew you were there, bringing home stakeholders.

I just do not feel that if we if we are gonna go through that process, and and Maria, you can chime in too.

Shouldn't we be looking this bigger picture where we're not just looking at data centers, but we're looking at um warehouses that want to function as detention centers too?

Like I want to be able, if we're gonna change UDC code, I want to get policy done.

So I mean, talk me through the month-long, year-long process, because we do it every five years, and we start earlier and earlier with reviewing the UDC code, is what we look at, because what may work for an I in District 6 or District 9 or 10 does not necessarily work where I like my legit, I have legit industrial in this in South Texas.

We have Toyota, we have JCB, we have um we have international.

So that's where we bring the stakeholders together.

So how long would this process take?

Andy, you can answer the question or Maria, would this be spot zoning?

Because that's the other thing I don't want to get into the trouble.

Is we're like, oh well, for this spot you can't, but over here you can.

So can you answer a little about how long that process is going to take?

Sure.

Um so as you mentioned, Councilwoman, normally we update the UDC every five years.

And the overall process takes about a year and a half from the time we start till the time we end.

Because we go through a full process of, as you mentioned, stakeholders, and then we go through the PTAC, and then we go through the zoning commission, planning commission, and then to council.

So it's it's a full process and a long process.

That's why normally we don't like to update the UDC out of cycle, because again, the process is really lengthy.

Um if this topic again uh you direct us to work on it.

My recommendation is to work on it with the next cycle.

We're gonna start mid-year this year and turn our reviews, and then the whole process will be starting from beginning of this coming year, 2027, till the end of the year.

So we can't go through the whole process and identify any updates that we need to take.

And councilwoman, um one of the things one of the items that we're gonna discuss tomorrow at a session is a resolution to begin a process related to zoning changes for detention facilities, privately owned detention facilities.

So, what we're gonna review with you tomorrow is our normal process, and as Amin mentioned, we tried to do that every five years.

But the policy discussion of this body is to do something out of cycle.

Tomorrow we'll show you a couple of ways to get to that.

There's some requirements that we have to follow that we must do.

So we'll have our normal process and an expedited process for discussion tomorrow.

And to answer your question on spot zoning, councilwoman, the the process is designed so that we don't end up with a result that can be a characterized as spot zoning.

Thank you, Andy.

And that and that's what I want at our council to understand is as we as we look at this process and and we ask um we ask for potential UDC amendments that we we start looking back at what we have sitting in our districts where we're like we kind of want to do a little more than just the data center because we're not we're not we want to do more than just that.

So it it looks like we're looking at how we how we plan and how we move forward with SA tomorrow, especially when it comes to us entering into another legislative session that they understand that we're looking at as the technology is growing, as things are moving, as we see shifts in in growth, we we do this in a process that we can we can cover the things that have been concerning our districts for for um for for sometimes generations, but definitely for years.

So I just want to make sure I I appreciate you guys.

It's not that I don't like the UDC amendments.

I I appreciate them.

I just think I know how long this takes, and I think if we can work in conjunction of doing what we're what we're doing in District Three, and what I'm doing with the other council members is ask the questions, get out to the community, see what best questions we can ask, have SAWs and CPS do what they're doing and continue to communicate with each other, then we can look at that next cycle of UDC codes where we have put together something that addresses a number of issues as we upgrade uh our UDC amendments.

So thank you for the presentation.

I think this begins, but again, I I will reiterate I think that this is someplace because of the way this team works together that we're Team San Antonio that we can lead um definitely the region, but I think the state of Texas.

So thank you.

Thank you, Mayor.

Councilmember Mungia.

Thank you, Mayor, and I do want to thank Councilman Gulvan for writing this.

I think it was um there's been a lot of attention on this issue in in our city across the country, and it's it's finally time to kind of sit down and look at all the facts and look what we have here and see what we can do to make things better.

Um and so it came up at one of our meetings, right?

We had a Marbox safety meeting of all things data centers came up, and thankfully Councilman Goholm is there to answer the questions for me.

Um, but you know, uh one of the main things that I was always advocating for at the very beginning of the CCR, and I'm glad it's uh there was a big presentation on was the purple pipe program network.

Um and so I do think expanding that network is going to be crucial, not just for data centers, but to Councilman Via Ground's point, all the large water users in the city, commercially speaking, of course, and that's a lot in our district.

I can imagine I don't haven't seen those numbers.

Um, those are even you know places that can use the non-potable water as part of that.

And it's a delicate issue.

I know we're trying to keep it affordable uh and and under the potable water rate, so I know that's a delicate balance you have to strike.

But I do think you know, having new centers come in if they can be on the purple pipe or contribute to the construction expansion of the purple pipe is the way to go.

Uh, I know that's an extra cost on to them, but to preserve the network and expand it, I think that's gonna be really important and to save uh potable water uh as much as possible.

And maybe you know, the we'd have to look into what the legal issues are, right?

And some of the folks that are already here probably would be grandfathered in, but I do think it's worth exploring because we do need significant investment and those that are uh able to use that and and take up significant water should be able to help contribute to that network.

And quick question, what's the furthest you can be from the purple pipe to be able to connect?

I would say within the Continental 48.

No, I I think uh it it's just how big of a pipeline and how big of a pump you want to do.

So I think we we have a lot of different uh areas there.

Again, it's it's it's site specific, and so there are certain areas that have more capacity than than the others.

Um but you can do a lot with with with pipes and pumps and tanks, and so I I think we can I I don't know that we need to to constrain it.

For example, Austin, I think I mentioned has if you're within 500 feet of the line, you need to uh be on recycle.

I think that that's helpful, but we can you can certainly uh build the line a lot a lot further.

And and that goes to just the expansion part that you're talking about, and and I think on the opportunity side, I mentioned there are risks and opportunities on the opportunity side to the extent we can get um data centers to help out in in paying for this expansion that helps everybody else about uh up on the potable side, but also bringing recycled into into neighborhoods into parks and that sort of thing.

So yeah, and I don't want to just put it on the right.

I think it's some of the other large users, right?

Because broadly speaking, because I know there's some folks here sitting down, so I think that's kind of a good way to do that.

Um so thank you, sir.

I appreciate that.

And I agree with some of my colleagues, you know, we do have to do a longer process for the amendments, and you know, I know a lot of when it comes to zoning, I want to be delicate with that because I know some of the data centers like to be clustered because I think it's more energy efficient for them.

Uh, and it's easier to have those kinds of you know, CPS services or the ones that have to pay for closer to them uh within a certain radius of each other.

And I do think, and we can have this discussion at PCDC too, but we should probably start that stakeholder engagement now, right?

And even if we have some, you know, UDC amendments that most of us will agree with, we can still tack it into the regular 27 process because I think it's kind of a big deal when we have to have a lot of time for this one.

So I don't think we should wait to start the process to begin the conversation.

We should start now and then hold that as we get into the 27 um process.

And you know, um behind the meter generation, um, could you talk to me a little bit more about that?

So, what does that look like?

And are there certain conditions that some centers are required to have that, or is it just optional on their end?

So um, we have customers um that utilize behind the the the meter generation or or utilize generation.

SAWs is actually one.

We've been working with with SAWs to install generation um at various pump stations for resiliency.

Yuri taught us a lot of uh a lot about the importance of that ride-through capability, and we have other customers that have it.

Current data centers, uh many have diesel generators that are backup, and ultimately um, you know, they're they're utilized um in those in those applications, predominantly for ride-through.

So when there's an interruption, they can go on their backup generators and and maintain high availability of of the data centers.

Um, and so you know, as we as we see the growth in the state, um, you know, I mentioned I mentioned a particular piece of legislation.

There's a recognition that with with this growth, there's a need to um during tight grid conditions, have flexibility for these large loads to move off of the grid.

So these um, you know, these customers would have, and it and we we've talked about you know certain types of of resources, it could be fuel cells, it could be natural gas generation, mentioned diesel generation, it could be batteries, it could be other types of storage technology, but ultimately customers would make decisions around um the backup um capability that they have, and they can run those, you know, as they need, um, but also, you know, obviously during those times of of uh tight grid conditions would go on to those backup generators and move that load off the grid so that ultimately the state you know can ride through tight conditions reliably.

And would that be the only time that they'd be able to get onto the backup generation, or would they be have the option to just like maybe during peak times they want to just get on their own generation?

Are they able to do that now?

Yes, they would be able to do that.

And so I think maybe a little deeper dive into what that looks like because we know we'd had a great conversation in the D3 office, and I know that with some of the natural gas uh generation that might be somewhat noisy, right?

Like the way it kind of processes in the building or the plant, I assume, uh, or if there's some sort of you know things that people can smell in the neighborhood around them.

So I'm just kind of curious what that looks like and how loud that generation can get uh at the building with consideration to residents because that can inform us on the setback requirements to residential properties as well.

So I think that would be really uh beneficial for us to see.

Thank you.

That's yes, thank you.

And I you know, I like also what Councilman Galvan said to you about even you know landscaping requirements.

So uh I remember the battle with Microsoft, and so maybe it's not you know 25-year-old oak trees that would get planted, but it is something significant to help uh with sound mitigation with air pollution and some overall aesthetic issues there.

But I uh very excited about the discussion.

I think there's a lot of good solutions we can look forward to.

Um I'm glad that you know our discussion is not to council some councilman uh other degree said it's about banning folks, not about putting on due regulations, but we have them here.

We have to protect our utility resources or water and power, and I think there's a really good balanced way to achieve that uh with bringing these folks to the table.

So thank you very much.

Thank you.

We've been going for a little bit, so we're gonna take a 10-minute recess.

Thanks.

The time is now 5 42 when we are back from recess.

Um councilwoman Mesa Gonzalez, go ahead.

Thank you, Mayor.

Uh thank you everybody for presentations, um, cities, SAWs and CPS.

I think San Antonio has an opportunity to benefit from technological growth and new investment, but at the same time, careful policy oversight is needed to ensure that residential ratepayers are protected, reliability remains strong, and infrastructure investments are financially sound.

Um so maintaining this balance will be important to I've heard to my colleagues and myself as we evaluate policies related to this large um electric load growth.

So uh just a few quick questions.

Um slide eight, I believe this is CPS.

What contractual protections exist?

Is it site eight?

Let me see.

Yes, there it is.

Thank you.

The customer protections, are there any protections that exist now if large load you may have mentioned this, but if large load consumers um reduce operations or close after investments have been made?

Or is that um is there are there protections within CPS or are those all within SB6 or both?

They're actually with CP Pardon me.

It's okay.

Thank you for the question.

They're with CPS energy right now and have been in how we've approached um large load additions for for years.

Um and they are there are some contemplated in Senate Bill 6.

That is that work is under development right now.

Um but um you know, as I I think I had mentioned, let me I'm gonna move slides.

Can I drive for a moment?

Okay.

Um this was a a slide that uh I think may answer some of the questions that you're raising.

Um so when we have a large customer um, you know, come to our service territory.

Um we do require uh pre-construction surety bonds, and so again, these large loads will require specialized equipment, and oftentimes we are needing to order um millions of dollars of equipment, sometimes years in advance of their energization date.

So we have them raise uh effectively collateral or bonding such that if the project doesn't move forward, we can be compensated back and protect our customers.

I touched on study fees a couple of times.

The contributions in aid of construction is another piece, but to your point around having um reduced output or closure, that's where we do have the 10-year performance um period with the clawbacks.

So, for example, if a customer comes in and says, I'm going to ramp over that this period of time to this level, and we've um you know constructed and and built infrastructure to support that, and they don't achieve that or they close, we have the clawbacks to again protect our customers from that investment.

Okay, thank you so much.

And then uh it was also noted on the temporary on-site generation.

Uh what type of generators are used currently or can be used?

Um there are um current current customers have a variety of different backup generation um resources.

There are um, you know, uh generators that are are diesel generators, um, natural gas is is another um type of of generation.

We are starting to see customers bring new and advanced technologies, such as I mentioned fuel cells.

Um, and so it is uh there are a variety of technologies that are are being utilized and are planned to be utilized.

Um the most important thing are the characteristics of the generator, right?

Um, based on the application that they need, how long they need to ride through, and and that's where you will see different types of generators being preferred over other technologies.

And how long can those uh temporary generation, how long are they allowed?

It depends on the type.

Um, for example, diesel generators typically are you know, all of this is is all of these resources have to go through environmental permitting just like we have to for our own resources.

Yeah, yes, standards.

Yes, ma'am.

And so when um when customers are are bringing their you know their own resources, um they will have to file for environmental permitting through TCEQ and possibly EPA, just like um you know, other entities.

And so for diesel, for example, there are strict hour limitations on how much that those um resources can run, and that will be explicitly laid out in their permits.

Okay, perfect.

Um, and I was gonna ask city staff, is there a way that we can get just a summary maybe of F SB6?

Um sent to us just I know it's it's ongoing, but that'll be helpful.

Um then related to SAWs, I really just want to echo Councilman Mungia's point on expanding that recycled water network.

I think it's just you know, given in how we're growing as a city, so would appreciate any effort on that part.

Um, and you know, this happens, and other council members have said this that it's coming up in regular HOA meetings.

We're talking about street um repaving and then a couple of questions come up about data centers.

And so I didn't know if I wanted to ask if CPS or SAWs, but Elena's presentation if there's a way to uh simplify that for general consumption and have it on your website so we can if it's not there already, but if we can just send uh residents to that page to learn more about uh what's happening with these large load users and data centers specifically, I think that would be helpful.

Yes, ma'am, we do have a large load um web part of our website externally, and we we certainly can simplify de engineer these slides and put put uh this content out on that web page if that will work.

Yes, that would be great.

Thank you so much.

I think I think that's it.

Thank you.

I know that resource is very helpful.

I think sometimes um regular folk don't make the connection between large load and data centers, right?

So just making that uh I think to the councilman's point is uh would be very helpful.

Thank you.

Um Councilwoman Castillo.

Uh thank you, Mayor.

Um, thank you to everyone for the presentation.

Wanted to commend and thank Councilmember Gotavan for his initiative with this council consideration request, similar to my colleagues.

This is something that uh I am also receiving more questions of uh what does it look like in terms of regulation and how can we ensure that data centers are good neighbors as they come online in our community?

So, in terms of next steps, I'm supportive of what I mean laid out in terms of uh of partnering with all stakeholders to determine best practices and develop and draft UDC amendments.

I'm also supportive uh with some of my colleagues in the beginning of that conversation sooner than later.

Uh I know there's a number of UDC amendments through PCDC that we've talked about amending, so I think convening community um now rather than later would uh help us make sure that we have a robust UDC amendment plan.

Um to the CPS energy component, uh, or more generally rather, uh, in terms of the overall economic benefit that data centers can have in community, I understand that the city would receive additional city payment, um, but I'm I'm curious in terms of overall tax incentives and or abatements that many of these projects receive, how much revenue is lost, right?

I'm thinking in terms of a couple of the data centers that the city has incentivized.

Can someone walk me through typically what those incentives look like?

I'm thinking more Microsoft what what type of abatements that they received with their data center.

Yes, ma'am.

We only have one active incentive agreement with a data center, and we can definitely get you more of those details.

It's actually a partial rebate.

Um some of the funding is um returned back to them, but some of it is actually kept internally for economic development functions.

I believe it was in 2013, so it's got maybe a couple years left, but we can definitely get you more of those details.

Since then, we have not approved any year.

Council has not approved any more.

And is that primarily a property tax abatement?

Or can you it was ad velorum of uh property personal and real?

Yes, ma'am.

Okay, I appreciate that.

And it was again, it was a rebate.

It wasn't an actual abatement of all properties.

Okay, and then I'm looking at slide six of the CPS presentation with the view uh of agreement and feasibility phases.

How many of those, if any, have received um some type of economic development incentive?

Um for data centers, to my knowledge, there have been none.

Okay.

And no data centers that have received um an E16 agreement.

Sorry, that's all right.

Okay, we have various hype people.

Thank you.

Um again, to my knowledge, uh, none.

Okay, I appreciate that.

And then in terms of the commercial rate, do most what what what do they typically fall under?

Is it uh a super large power service or a high load factor?

And I understand that you are going to explore another model, but typically what do these fall under?

And and again, we have different sizes, but generally for the large load customers, the majority of them are gonna fall under that SLP, that super rate that SLP class.

Okay, I appreciate that.

Yes, and then I just wanted to highlight and I think both CPS um for YAS initiative and exploring what a different model could look like in terms of rate, um, but also saws for what y'all laid out in terms of next steps um on how to move forward together.

Those are my comments and questions.

Thank you, Mayor.

Councilman Spears.

Thank you, Mayor.

Um, I'm gonna say a lot of what my colleagues have said, I guess.

Um thank you, Councilman Galvan.

And I really appreciated the time with uh at the round table with Councilman Mungia and Councilwoman V Via Gran and Councilman.

Did I say Galvan or Via Gran earlier?

Sometimes I don't okay.

I love all of y'all.

But thank you so much for the time we got to talk about this.

Um I just really this is coming.

I see immense opportunity here for San Antonio.

We've been talking about what is San Antonio gonna look like in the future.

This is it, y'all.

This is very exciting to me.

And we have a chance to partner with the best of the best in this industry, help be the leader in in the region across the nation on how to make a good um partnership and to get the get good investments in our community um with willing partners because the truth is our obstacles are their obstacles.

They're worried about water the same way we are.

Their technology changes every single day.

Um in West Texas, we called evaporative cooling swamp coolers, and um I've lived in a house with swamp cooling, and I can tell you that there is a better way to do that.

And um we know this there's new things like immersion technologies here, nuclear is is coming extremely fast.

Um we have the Stargate dollars that we can go after.

Uh that's that's all very exciting things to me because also being military city USA, we can be aware of the unique uh radio isotopes that come from nuclear energy, and that is imperative.

That would be huge for San Antonio to lead in our medical um uh industry in the military medicine industry here.

Um so I want to do the comprehensive overhaul of the UDC.

I think that only makes sense, and the sooner the better.

Uh but again, I just I get very excited about it because it really is it's it's just starting to take shape at the opportunity that we really do have.

And so I would ask that while we're looking at how we play plan this out, since technology is changing quite literally daily in this in this space.

Um, that we be mindful of that in the footprint and how we can help with that.

And I've mentioned that to SAWs and CPS already, and I know they're paying attention to it, but um it's only gonna get better, and we want to be able to meet that need as it improves.

And I'm I'm not the one that knows all the the most about how that's gonna look, but it's just gonna improve.

And um, I think that they will make great partners and um are willing to do a lot to help our communities.

And I want to say also I appreciate Councilwoman Aldeti Gavito for bringing up about the Edwards Aquifer um recharge zone.

Can you talk about what that impact would be again?

Or did I miss the actual impact there?

Yeah, so um to the extent they're uh locating over the Edwards Aquifer, it depends on what the the um the discharge would be.

So if they do have a discharge into there, that's where we would have to make sure that it's either going into the sewer system or there are controls in place that aren't allowing it to seep into the aquifer.

That's the biggest biggest issue.

Then you get into just general land issues, traffic, and those sorts of things that that are normal.

Again, we have specific rules for for development over the recharge, impervious cover and those sorts of things.

So it would be kind of a site-specific uh issue, but um, but those are those are definitely things you have to watch out for.

Yeah, and to your point, though, as we see these closed loop systems coming into play more, it's just better and better for the water situation.

But um so I'm I'm happy and hopeful and hearing everyone see this as more of an opportunity than uh super risky because if it's not us, it will be somebody else.

And um, I think that San Antonio again, just uniquely positioned because of our utilities to do amazing things in this space.

So that's really all I have.

So thank you very much.

Uh councilmember Corr.

Thank you, Mayor.

Thank you all for this presentation.

When I was a school leader, we used to calculate the salaries and rooms for meetings and say, like this meeting is worth X dollars just so we know how much time and money we're spending.

And I just want to say thank you all because I know from all three entities from the city, SAS and CPS, we've spent a lot of money in this meeting today, and that it's valuable conversation.

That we know that it it requires a lot of support to make sure that folks are here to answer questions.

But I want to thank Councilmember Galvan for his first CCR getting right to a B session, which is incredible.

Um that means is uh is clearly bringing up an important issue.

Going last, I have to feel like I need to bring loosen up the energy in the room a little bit.

Um but I I learned a lot from these presentations.

So kind of going off what councilman said, I think this would be helpful for our community.

And I even still have a couple of clarifying questions based on some of the questions that were asked that I'm not sure if I'm misunderstanding.

So I'll start with CPS.

So from the large load, um the definition of like large load being data centers.

My understanding is that there's more than just data centers and large load.

Yes, yes, ma'am, there are.

Um, and so um, you know, again, we keep we try to protect our customers with their competitors, but we have large grocers, we have um you know, large manufacturing entities, we have new industries that are um planning to uh to expand or grow in our service territory.

So when we talk about large load, we think about it just in their energy consumption.

But yes, ma'am, there's more than data centers.

Got it, and I think there's different issues with some of those.

Some might have similar water challenges, but others may not.

So I think make when we do provide that clarity for community members, maybe making sure that we identify what percentage is actually data centers from the large load um entities that you all have.

Yes.

And then the second question to that on slide um nine.

The 11% of commercial, what percentage of that 11% is large load?

Yes, that's a good question.

I don't have that stat right in front of me, but I can get back to you on that.

Um but uh yeah, again, the the larger customers are carrying the lion's share of the revenue in that category, but we'll we'll absolutely get it for you.

Okay.

I keep touching this thing.

This the tech support guy's gonna punch me here in a little bit.

Um to give you a subset of what you're asking for of all you know, 90% of our customer of our commercial customers are small business.

Of that 10% are larger than you know, um our largest small business.

So it's a subset of 10%.

So it's in it's in the single digits as a customer count, but it'll be a higher percentage as as a percentage of load.

Right.

So I'm thinking that like one percent of our total um customer count is producing probably like 40% of our revenue.

Probably not too far, maybe a couple two, three percentage points.

And so that's an interesting like I when I was at this conversation earlier today.

I I I was also sharing that like I'd like for our businesses to step up a little bit more, and we've talked about this with um the last conversation around how you guys are uh charging different entities, and maybe that was with SAWs, but similarly with CPS, right?

We we do want folks helping our most underserved communities, and that means sometimes having these people pay their way and pay more than their way, and I love seeing that chart that showed what it costs to serve and how folks are helping us because that's what we need to continue to do, and I think increase that even more where possible.

Um the second question that I have is on slide um the funnel slide, slide five.

So it was mentioned about two projects that are underway for the two projects that are going to be taking on the recycled water that are underway are gonna be basically using up all of the capacity.

Are those un highlighted under here or is this come?

I know that was a SAS question, but I just didn't know if that was calculated in this.

Um so my understanding, and I'll make sure Donathan corrects me if I'm wrong.

That the two customers he talked about were two prospective customers that were using um evaporative technology, so their numbers were very large.

They aren't coming.

Um, and so um, you know, again, I don't want to, I don't want to over uh please correct me if I'm wrong.

Um so I don't believe they're in those numbers, and they're not they're not uh utilizing that technology.

Is that fair?

Uh likely one of them are are in these numbers.

Uh one of them has uh completely gone away.

The other one was a large demand that has reduced their loads.

So I would I would suspect if they're a real customer, I would suspect that that one customer is within this number.

We'll we'll verify which ones, but um okay.

So these contracted are all of the contracted ones that were shown on the map that Saz showed.

Correct.

Okay, that's okay.

So we'll jump over to that.

So a part of this for me was like putting the pieces together.

And like how do we overlay the information SAS was showing us with the information that y'all are showing us so we can get a more comprehensive picture?

And um, I I feel like this was so that conversation was so pointed today because we do think about them in very separate entities, and y'all have your own processes, but even uh we can move on to SAWS, the map that I really loved the map um that y'all showed with the dots that where all the centers were located on slide seven.

So this was interesting.

I mean, this showed why council member Glovan was like, this is the first thing I'm gonna tackle.

It was like infrastructure for me, but it is I had had no idea that I have one right there on I 10.

I'm like, which data center is that?

Um, and so anyways, this being said, this shows us where the recycled water is coming from.

And I'd like to overlay this with how much power they're using and the impact on that.

So we could see both side by side with locations, and I don't know if there's a way to show how much power one of those data centers is using, and um just like the impact of what that looks like.

I think our board asked for the exact same thing yesterday, and so we uh we got a head start on that.

So we'll get that to you.

Um and then the one of the things I didn't even know these were called purple lines.

I love that purple recyclable lines.

Um I would love to see one.

I hope this shows up in the rain rain the drain uh tour.

I keep calling it wrong.

Okay, it is you'll go to the class uh Stephen Evan Clos plant, and there's a big section again, leads to the leads the nation on on redirect recycle.

Well, I love that because I was actually having a conversation with Landa Library today and how they want to tap into this.

And so, what are the limits?

What is the biggest, and I I know we talked a lot about this, but what's the biggest limitation to growth for our recycled water?

Um I I think I think it's that really the reliability and connecting the two at the bottom.

Again, there's some infrastructure things.

I think that's the biggest thing because uh I'll go off on a tangent here.

This the system is 25 years old.

For the past 20 years, we've been having a tr having troubles getting people onto the system.

Now we're having an entirely different conversation, which is too much capacity or too much uh demand on the system.

That's a great problem to have.

Um, but but I think it it's it's certainly doable, and particularly with a library or a smaller facility, uh, then it's just an issue of distance from the pipe, how long how long of a how big of a pipe will they need, where's where is it going to?

So I don't think that's a a problem.

And I know this is kind of a tangent on the data center conversation, and I'm glad this came up as a part of this, but I'm just so curious how we can grow this even more because it seems to be uh a great solution.

And I know like Hemisphere Park is using all of their water on recycled water, and so I feel like we've got to figure out a way to use to grow this, and so that's why I was just thinking that I'm sure that's one of your strategic pillars that you all think about all the time.

Absolutely, you're singing our song, and we appreciate it.

Um the one other question that I had though was on the recycled water cost recovery on slide 12.

What is that?

Why is there that 5% difference for um not being able to cover cost of service?

Like what's the uh this has been a um progression over the past several years.

I think it was it was almost I don't know, 20 or 30 percent of cost recovery.

And so I think that's just a uh I don't know, I'll have to get Doug up to talk to talk to the very specific numbers.

It we didn't say what's 95% and set the rate there.

I think that's just uh we we raised the rate, we had a rate plan through you guys to raise it by 10% a year.

And so over that time period, that's what it has become.

So raising those rates over a five-year period has gotten to a 95% in this year.

So Jalen earlier today mentioned the four-year plan, and I'd love for I'm sure it will be, but I'd like for this to be specifically called out in terms of what growth could look like in this area and how you could potentially get to 100% cost recovery on in that growth as well.

I'm sure that's probably already on your mind, but I think I'd be very interested in seeing that.

I believe next year is the next one where we have a potential of a 10% rate or up to a 10% uh rate um increase, and I think that's where it would fall.

Okay.

Okay.

Um I appreciate the policy considerations that y'all brought forward.

We and we mentioned this earlier, and Dr.

Romero actually said that this is actually not about a power use issue, but it's about transmission, and that was something that even fully understands.

So there's a lot of components I think that are um still uh very complicated and technical about data centers and um and it's become a very national issue that's getting a lot of limelight and attention.

So um I agree with what all my colleagues said about leading the way, but I think we have to figure out how to how to do it, making sure that we're not create I don't know what benefit we would get from a whole town of data centers.

Um so I we'd have to think very strategically about how we grow that and making sure that we're not putting our or our water system that's already very tightened at risk.

So um I'll just that's it for you all.

And um with the DSD UD, we have a list of UDC uh amendments that are coming.

So um uh good luck.

Councilman Galvan.

Thank you, Mayor.

Just really quick.

Uh I wanted to say thank you to all my colleagues um for the support of the conversation as well as their feedback on this as well.

Um I think you know, I listed out a whole bunch of things that I wanted to look at, and I still am very confident in those that comprehensive view, just given the fact of what my residents often discuss, whether it's related to energy or utility or utilities in general, uh, talking about tree canopy, construction concerns, lighting concerns, all those things I think are still part of this conversation.

But I also wanted to make clear too, right?

I I know in particular with the UDC, or I'm sorry, the DSD presentation, there is a of course a focus on DSD doing this kind of work and focusing solely within uh UDC and zoning, and that's what my CCR called for.

I do think, of course, this conversation, if it's worthwhile to bring in SAWs to bring in CPS to bring in parks for tree mitigation fund to bring in fire, whoever it may be, at least I don't know if you need this direction from me, but I feel comfortable saying that uh whether it's a task force or stakeholder group that that should take place.

Um I think it's worthwhile again to just be transparent with our community that we're looking at all these fronts in a coordinated fashion, of course, with the industry in mind as well too, to make sure that we're uh just taking a robust and comprehensive look on it and making it uh the sanitary solution that we deserve, um addressing some of the key concerns all across the board.

Um I know some folks mentioned some community benefits and different ideas there.

Um there's different studies that show that those are really helpful and tangible for our residents.

Um there's some that are already Microsoft's an incredible partner um who does a lot of really good work with some of our ISDs in the area in terms of doing some educational opportunities there.

Um this also support with uh working with the community directly and listening to feedback from them, not being the kind of isolated data centers that we once knew when are they first coming around.

I think a lot of them are shifting in that way.

And so I just wanted to shout out a couple of those that those efforts going on.

Um I think uh whatever ways we can continue to build those partnerships with our communities and our local neighborhoods, our schools, et cetera, uh, our infrastructure itself, whatever way is possible and what's feasible, I think is worth exploring and communicating uh not only with each other but with the larger public as well.

Um I I think the UDC timeline, I agree to customer course point that we're asking for a lot.

I know I always ask for a lot as well with UDC.

Um I think anything that we can do, at least preliminary-wise, is always helpful to at least get the again stakeholders together, as Cotton's Ramungia pointed out, uh, so we can have the conversation quickly and easily when it does come around to the larger comprehensive view on UDC overall.

Um last thing I wanted to note um I know we have a lot of conversations about this uh a variety of people within my office um externally on this topic regarding the hard attack generation, the benefits that come with this, and I want to recognize that those are valuable and those are real.

Um but I also want to make sure that we're being clear-eyed and focused on uh some of the concerns that our residents are are asking about, especially especially my residents are asking about.

Um I understand that there has to be this balance, right?

We do this uh conversation all the time when we talk about other industries, whether it's 18-wheeler parking, whether it's uh housing every other two weeks, and we talk about zoning, and so I think it's worthwhile to understand uh and not be fearful about what uh what we're asking for, whatever they're asking for, bringing that to the forefront and seeing what way we can get to a good compromise there in some form.

Um I also think about all the possible possibly uh hard attack generation we could have from different housing units being developed and that's a development in our city.

Um but I'll leave that there.

And so again, as I thank you to my colleagues um for this conversation today.

Thank you to the mayor for bringing it to B session, and those are all my thoughts at the moment.

Thanks.

Councilwoman Castillo.

Thank you, Mayor.

In short, I wanted to um mention that I am supportive of council member Galvan's uh suggestion that we explore I1 for potential zoning, and then of course landscape buffers and impervious cover as well.

And then uh last point, um, in terms of the the the appetite that I'm hearing uh to support data centers in the city of San Antonio, and given some of the constraints with SAWs, for example, uh can SAWs help us understand how a potential rate adjustment can help support um support maintenance with the the recycled water pipeline.

Yeah, so I think I believe some of the projects that are in the recycled plan, which is to connect that bottom piece that I talked about, that's probably the most important.

I believe that's scheduled for 2030 at this point.

And so again, the rates are in the recycle rates, they're not in the overall rates that we're talking about now.

So it's a different rate process.

Um, and I don't believe that's a part of what you'll be be considering in our in our ongoing process.

Um that to that end, I believe next year we have another potential rate increase in the recycle system up to 10 percent.

That will help.

Um, but as we are also at the end of this year, developing a a recycled water master plan, what that will do is figure out which all of the infrastructure needs are to both um in increase the reliability redundancy, but also to expand it.

And so that will kick off a number of inf infrastructure projects.

Those would go into the process of what projects are needed.

Um so again, we know some of them right now, and it's it's that bottom loop, which is probably the most important um one in there, and that is in the in the plan for 2030.

Thank you.

Appreciate that, Donovan.

Thank you, Mayor.

Could I just add a comment?

Um the council approved a five-year rate increase for recycled water.

We're in year three of that or year four of that.

So that all helped those prior years.

So it was a five-year rate plan just on recycled water.

Thank you.

Okay.

So if you haven't already signed in and you'd like to speak on the second round, I've got just councilwoman core and now and Aldrade Gabito, that's the last.

Okay, so if you haven't already, please use all go ahead.

Just real quick, wanted to echo support for the I1 and Buffer conversation and the community benefits conversation.

Thanks.

Councilwoman.

Thank you.

Yeah, and I'm so glad that Councilman Galvan uh mentioned this because one of the things that I had been harping on, I can't believe I forgot it, is is that we need our these data centers who do come into our community to act like community partners as well.

And um, if they are using our resources, energy and water, um, we need we need them to see we need them to be good corporate players, right?

San Antonio doesn't have a major corporate base, and and so they can do that through their philanthropic giving.

Um, working with schools.

I know that some of them are already doing that, but uh we there's ways that we can see and feel their presence here um by being good stewards in our community.

That's um, thank you.

Has everyone that would like to speak on this as you spoke in?

Okay, great.

A couple of clarifying questions.

Um I'm glad to see there's so much support for the recycled water infrastructure.

Um, Donovan, can you um clarify how much of um exp expansion of the recycled water infrastructure?

Is that only in the full budget requests that you provided or that was provided to SAWs yesterday?

Uh there is no expansion of the recycled water system in the budget um going forward.

No, no, I think in the three options that were presented yesterday.

Are is there any expansion of the recycled and water infrastructure?

I don't believe there's an expansion of the recycle uh system in in that budget.

There's some reliability uh projects that are in there, and again that that bottom loop that that helps with the reliability of the existing system.

If we want to expand it, that's a that's a different conversation.

But none of that is in the budget requests.

Okay, and either of the three options that were presented.

I believe that's the case.

That's correct.

Okay.

Okay, thank you.

Um we may then have to re I mean, based on the sentiment around here in terms of we need more, um, we might want to um and I see the chair here, we might want to think about how we include that um in those three in one of those three options.

Chair, if you'd like to say something, you're welcome to thank you.

I think next year we are scheduled to issue an RFP to do master planning for the recycle system, and so obviously a deliverable out of that process will be how we expand the system.

Now, if things start to move along more quickly, we might need to speed that up so that we can respond to the customer interest that Elena and Donovan shared with you today.

But that was the schedule that we discussed on yesterday.

But we'll monitor that and make adjustments appropriately.

Okay, thank you.

Um, Donovan, I want to oh do go ahead, go ahead.

Just reiterate the the what what we have on the books now and the ones that are coming in, all of those are are capable within the existing system.

We don't necessarily need expansion of the system to serve what we already know is out there.

It really the expansion of the system is out into the future uh where we'll need that and be able to take and not need it, we'll we'll be able to take advantage of it.

Is there a maximum is there a maximum capacity uh for the recycled water um infrastructure based on the the pilot than um that CPS is proposing?

Um I don't know about it in terms of the res of the uh the pilot, but there is a maximum amount is fine, it's a finite source, the recycled water system, and our next goal again, we're using 20,000 acre feet out of it right now.

We think we can get another 10,000 out of it, is kind of our next goal.

Okay.

And and the the what's been shown so far is about 3,000 of that um that's being requested.

Okay.

That's just the data center side.

We've also had other requests from people uncompletely unrelated to data centers, more river flow and those sorts of things.

But um, so you have to balance a lot of these these needs together.

Okay.

Um and Elena, we're not envisioning um, you know, that pilot in any way utilizing potable water, correct?

Or needing to?

No, no, ma'am.

I mean, we're we're you know, um, and I did want to share, you know, we we we do know um uh customers of the the current footprint that are in those lower parts of the funnel that may be interested in this, and we are not anticipating uh generation that would uh surpass what Donovan is talking about relative to the 3,000 for the the data centers that we know are in in construction or in uh agreement phase at this point.

Okay.

On the topic of the pilot, um, what are the consequences?

Well, let me rephrase that.

Um, can you achieve the things that you're looking to understand without accomplishing the pilot?

My concern, as I said, with the pilot, is it essentially allows this to come into the community faster than it would otherwise?

And so I want to make sure that this is in fact the only way in which we can understand the things that you're seeking to understand through the pilot.

Um yes, and and I think Rudy mentioned it, the customers are um because of of the expectation of needing backup generation, um, these uh these resources are gonna they're gonna come and so the pilot is a way for us to uh work alongside these customers and help um understand uh the implications of the the ginsets and the behind the the meter solution.

So um I would say no, there's not another another path for us to understand that, but that um that there are alternatives that the customers would pursue, like we mentioned, kind of trucking in natural gas and other alternatives that um may not be as as helpful to the community and what is our what is the legal flexibility that we have on those approaches that we would not find um attractive.

Maybe that's for Andy or someone on your legal team in terms of the approaches of of how to how to deal with the how they brought it in, right?

So if we did not like the idea, for example, as mentioned here, the idea of trucking in uh um LNG uh to support the data center.

Um is there any legal requirements?

Probably the most probably the most effective one were the ones that that we have been talking about, Mayor, which is the zoning regulations in terms of what sort of activity and how that activity can be supported in terms of neighboring communities, etc.

Okay.

Well, so I want to make sure that we are you know are squaring what Elena just said with what you just said, which is um Elena just said if we don't do the pilot, they could do other things, and you're saying, well, those other things we could actually address via zoning, correct?

Some of those other things, I don't want to right.

It it depends on what's obviously the devil's in the detail mayor, so it'll be part of the zoning process we talk about.

Yeah, sure.

I mean, I think it'll depend on the site, let's be clear, right?

Um, you know, if the temporary power source is connected to a natural gas line, they wouldn't need the trucking.

I think that's what we're exploring here.

Um many sites will allow trucks to be delivered based on their zoning, right?

So I just want to be clear that some of these places could handle as many trucks as they want a day based on their their current zoning.

So there would be some sites that we maybe would have some uh oversight of, but many we wouldn't.

So okay.

Do we have do we have an understanding of how um how the allowing for the pilot potentially changes the timeline um for seeing the data centers in the community?

Um so we we don't anticipate that they're going to change as far as when they're coming into the community.

These customers um that might uh take advantage of the pilot have gone through their electrical studies.

Um they've uh they've secured site control, they have um considerable capital that they've deployed, so we anticipate that they will come in at at the rate that we're the load ramp that we're expecting.

What this does is enables them to um to have that backup generation and and provides a means, but we don't expect that it's gonna affect their timelines.

So that's with the ones that we know, right?

Um, but do we because this is a two-year pilot and because I mean frankly, everyone is looking to get to set up as quickly as possible.

Um, do we anticipate this pilot potentially though encouraging others to enter the community because now this is an option?

Um I again uh you know we have if you go back to the the funnel slide, um you know, we have uh 11 uh customers that are tied to you know the the I'm moving into the funnel so you can be clear here.

Um the 11 projects with the 1700 megawatts, those are the projects that we're uh likely that will we will see you know full output in the next five to seven years based on their electrical studies.

These are likely the candidate um customers that could take advantage of that that pilot over the next two years.

The others, because of where they're at in the in the study process, it's not it's likely not going to be feasible for them to um have um their project in a place that they could take advantage of it.

So again, we've capped the pilot at 15 um uh customers, and again, we we expect uh the customers that may take advantage of this are probably gonna have dozens of megawatts of generation.

Um and and again, we've got the the the time cap.

Um what percentage of the and this is for you, Elena as well, um, of the 1.7 billion in the forecasted capital and the 1.1 billion of the non-fuel O and M from the previous briefing, the budget, um, what percentage of that is directly attributed to supporting current and anticipated growth in data centers?

Um so it's gonna be a subset of our growth metric, and it's also gonna be a subset of that kayak metric of 118 million of contributions and aid of construction.

I don't have that number at the top of my head, but we will we will circle back okay with it.

And I think you know, to the point that was made earlier, when we see when we say to our folks, hey, this is CPS's largest budget ever in terms of capital and OM, then we're everyone's gonna ask, well, how much of that is going to support data centers?

So we've got to be able to just quickly rattle that off.

So I appreciate that.

Um and Donovan, you made a um somewhat funny um comment earlier when you said uh so the question was how far would we like these things to be from the um from the recycled water infrastructure?

And you said the you know contiguous 48.

Um I think you know, we just got a briefing, as you know, from SAWs that show we have the third highest amount of miles of any water infrastructure in the country.

Um york is six times larger than us, Los Angeles is three times larger than us, and so the question about where do we need to put these, it it really is.

I mean, that's why we're asking the question.

It's not where they want to be, it's where we need and and also want them to be in light of not having to needlessly create infrastructure that we then have to maintain, right?

So I do we do look forward to working closely with SAWS to make sure we're being cognizant of of those infrastructure needs, and those are kept to a minimum, um, and i.e.

as close to the existing infrastructure as possible.

Okay.

I want to um again um thank uh councilman Galvan.

I I want to reiterate the uh the importance of the the CBA.

This is um something that has been uh explored with some success in in certain communities because it is I mean, very few jobs, jobs when it's being built, yes, but frankly, very few jobs once it's up and running.

And so what has been more of a successful approach that's getting some some attention is frankly building out more of a campus-like approach.

So you've got the data center, and then you've got the facility next to it where people are actually um having jobs related to uh the data center, but not it's not related to the to the operation or maintenance of it, um, but frankly, is um related to a facility that needs those um that that operates off of it.

So I think we would frankly do ourselves a lot of good by exploring what a campus-like approach would look like for some of these entities in our community.

Okay, I am supportive of um uh the recommendation to expedite uh the review of amendments to the UDC.

Um these companies are not waiting on our timelines, uh, so we should again proactively help ourselves, and I think we do that by reviewing amendments sooner rather than rather than later.

Um as um councilwoman um spears mentioned, this is Military City USA.

So I think we uniquely understand that we are in a competition with the People's Republic of China, and the way in which we have these data centers up and running uh to accomplish work related uh to our national economic security is not lost on this community, probably better understood than most, um, as we also balance all the very um thoughtful considerations that were brought up today as well as identified in in the CCR.

And the way in which we have these data centers up and running to accomplish work related uh to our national economic security is not lost on this community, probably better understood than most, um, as we also balance all the very um thoughtful considerations that were brought up today as well as identified in in the CCR.

So um Maria, do you want to go ahead and summarize what you what you heard today in terms of do outs.

Uh yes, Mayor.

So um what I heard from the council members is an interest to look at the UDC and begin the process of making those amendments.

So what I'm thinking we are gonna do is come back to PCDC with uh what that process would look like so we can begin that process.

Um in terms of the data centers, uh, there's definitely support.

And I think what we are gonna do is based on what we heard today, work with SAUS and CPS, and then come back with an update to to the council.

I think because of the support, I we moving forward with the pilot program is something that we can start um doing now.

So those are the three things that are my takeaways from today.

Thank you to CPS team and to uh to Rudy.

Um, what councilwoman Core said in terms of how much money was in here that wasn't a knock on your salary, Rudy.

Don't get upset.

No, thank you again uh for the uh thoughtful comments around the around the table.

Thanks to CPS and SAWs, and of course, thanks to uh the DSD team for their efforts today.

Appreciate it.

The time is now 6 27, and this meeting is adjourned, and we do have public comment.