Unknown: Z
Unknown: The Finance and Audit Committee and Special Board Meeting of September 16, 2025.
SPEAKER_05: This meeting is being recorded and can be accessed on SMUD's website.
SPEAKER_05: Please remember to unmute your microphone when speaking in order that our virtual attendees
SPEAKER_05: may hear.
Unknown: The microphone will display a green light when the mic is on.
SPEAKER_05: For members of the public attending in person who wish to speak at this meeting, please
SPEAKER_05: fill out the speaker's request form located on the table outside this room and hand it
SPEAKER_05: to SMUD Security.
SPEAKER_05: Members of the public attending this meeting virtually who wish to provide verbal comments
SPEAKER_05: during the committee meeting may do so by using the raise hand feature in Zoom or pressing
SPEAKER_05: star 9 while dialed into the toll free telephone number at a time when the public comment is
SPEAKER_05: called.
SPEAKER_05: Technical support staff will enable the audio for you when your name is announced during
SPEAKER_05: the public comment period.
SPEAKER_05: You may also submit written comments by emailing them directly to publiccommentatsmud.org.
SPEAKER_05: Written comments will not be read into the record but will be provided to the Board electronically
SPEAKER_05: and placed into the record of the meeting if received within two hours after the meeting
SPEAKER_05: ends.
SPEAKER_05: Will the Chief Legal Officer, Ms. Laura Lewis, please conduct the roll call.
Unknown: Dr. Bowie-Thompson?
SPEAKER_02: Yes.
Unknown: Dr. Rose?
SPEAKER_00: Here.
SPEAKER_02: Chair Kurth?
SPEAKER_02: Here.
SPEAKER_02: All committee members, please.
SPEAKER_02: Chair?
SPEAKER_02: All committee members are present.
SPEAKER_02: Also present are our Directors Tamayo and President Fishman.
Unknown: Thank you.
SPEAKER_05: Okay.
SPEAKER_05: That establishes a quorum then.
SPEAKER_05: Item number one is to discuss certifying the California Environmental Quality Act, CEQA,
SPEAKER_05: Oveca Ranch Solar Project as the project, final environmental impact report, including
SPEAKER_05: the adoption of the findings, adopt the mitigation monitoring and reporting program for the project,
SPEAKER_05: and approve the project.
SPEAKER_05: With us tonight is Ms. Emily Bikini, our Interim Director of Environmental Safety and Real
SPEAKER_05: Estate.
SPEAKER_05: Welcome.
SPEAKER_05: The floor is yours.
SPEAKER_16: Great.
SPEAKER_16: Thank you.
SPEAKER_16: Good evening.
SPEAKER_16: Again, my name is Emily Bikini.
SPEAKER_16: I'm the Interim Director of Environmental Safety and Real Estate Services here tonight
SPEAKER_16: to talk with you about the California Environmental Quality Act CEQA document for the Oveca Ranch
SPEAKER_16: Project.
SPEAKER_16: The Oveca Ranch Solar Project is a 75 megawatt solar facility that will be located on approximately
SPEAKER_16: 400 acres of leased land.
SPEAKER_16: It will also have a 37.5 megawatt battery energy storage system, a substation about
SPEAKER_16: eight miles of 69 kV distribution lines that will interconnect the project to our system.
SPEAKER_16: It will require that we amend three Williamson Act contracts, and that will allow for us
SPEAKER_16: to add solar energy generation to the contracts as a compatible use, along with the agricultural
SPEAKER_16: uses that will continue.
SPEAKER_16: They'll still continue to be foraging and sheep grazing on the property.
SPEAKER_16: These maps show the location of the project.
SPEAKER_16: It's located in southeastern Sacramento County.
SPEAKER_16: Like I said, the project is located on 400 acres.
SPEAKER_16: We analyzed a total of 534 acres.
SPEAKER_16: We also looked at a couple of options for the interconnection lines, but ultimately
SPEAKER_16: decided on this line that comes west along Gerber, north along McSalsier, and then west
SPEAKER_16: along Florin was the route that we're moving forward with.
Unknown: Since we went through the prepared and environmental impact report, we started our process with
SPEAKER_16: a public review with the notice of preparation.
SPEAKER_16: So we let the public know we're planning to prepare this environmental impact report.
SPEAKER_16: We started off with a 30-day public comment period that began in the beginning of September
SPEAKER_16: 2024 and ran through to the beginning of October.
SPEAKER_16: We have a very robust outreach program.
SPEAKER_16: So we published the notice at SMUD.org and in the Sacramento Bee.
SPEAKER_16: We had copies available here at – or I'm sorry, next door at the Customer Service Center
SPEAKER_16: and at our East Campus Operations Center.
SPEAKER_16: And then we mailed it to landowners within half a mile of the solar facility and with
SPEAKER_16: 500 feet of the interconnection lines.
SPEAKER_16: The notice was also shared with the Native American tribes that we consult with along
SPEAKER_16: with the Sacramento Municipal Air Quality Management District.
SPEAKER_16: All told, we mailed out about 250 notices.
SPEAKER_16: We had a public meeting on September 18th and 12 members of the public attended.
SPEAKER_16: We received nine comment letters on the notice of preparation.
SPEAKER_16: Many of the comment letters were from state and local agencies that had either comments
SPEAKER_16: notifying us or letting us know about existing regulations that they have jurisdiction over
SPEAKER_16: or existing facilities in or near our project.
SPEAKER_16: So they wanted to make us aware of those to prevent any potential conflict.
SPEAKER_16: We did get a letter from Defenders of Wildlife.
SPEAKER_16: They had concerns about potential impacts on sensitive species, including Swainson's
SPEAKER_16: Hawk and Vernal Pool habitat.
SPEAKER_16: And we've been able to address those comments and work with them to feel more comfortable
SPEAKER_16: about the project.
SPEAKER_16: We also appreciated the project footprint and suggested we participate in the South
SPEAKER_16: Sac HCP, which we weren't able to do because this isn't a covered activity.
SPEAKER_16: We heard from one member of the public, Mr. Werder, and he was concerned about drawdown
SPEAKER_16: of the water aquifer.
SPEAKER_16: All of these comments we were able to address and incorporate into the environmental impact
SPEAKER_16: report.
SPEAKER_16: And we found that there would be no significant or unavoidable impacts as a result of the
SPEAKER_16: project.
SPEAKER_16: We do have a list of mitigation measures for the resource sections provided here for you.
SPEAKER_16: Most of them are construction related impacts, noise or air quality impacts associated with
SPEAKER_16: dust that could be generated from construction.
SPEAKER_16: There's a suite of preconstruction surveys for biological resources that would occur.
SPEAKER_16: We also have measures like for inadvertent discovery of cultural or tribal cultural resources.
SPEAKER_16: We are mitigating for the loss of agricultural land that's associated with the substation
SPEAKER_16: and battery storage area.
SPEAKER_16: That location is about four acres in size, so there would be mitigation for that, along
SPEAKER_16: with mitigation for the loss of potential Swainson's Hawk foraging habitat.
Unknown: When we published the draft EIR, we have a 45-day public comment period that started
SPEAKER_16: in mid-March of this year and ended in early May.
SPEAKER_16: Our notices went out to the same suite of individuals.
SPEAKER_16: In addition to what I shared previously, we also notified those folks that provided comments
SPEAKER_16: on our notice of preparation.
SPEAKER_16: We had a public meeting on April 10th, but no one from the public attended.
SPEAKER_16: We received eight comment letters on the EIR.
SPEAKER_16: Most of the comments were ‑‑ the commenters had also submitted letters on the notice of
SPEAKER_16: preparation.
SPEAKER_16: There were a few that provided feedback and asked for some additional clarification in
SPEAKER_16: the document that we had prepared.
SPEAKER_16: Some of the letters were the same, just reminding us, hey, we've got these resources in the
SPEAKER_16: area.
SPEAKER_16: Please be mindful and aware of those.
Unknown: We were able to respond to all of those comments in our final Environmental Impact Report.
SPEAKER_16: The changes that we made didn't alter the conclusion of that document.
SPEAKER_16: We did make changes to the air quality, biological resources, transportation, and recreation
SPEAKER_16: sections.
SPEAKER_16: Again, that was just to either provide clarity or modify the mitigation measures to reflect
SPEAKER_16: processes closer to protocol level surveys.
SPEAKER_16: As we do with all of our projects, we consulted with Native American tribes, both United Auburn
SPEAKER_16: Indian Community and Wilton Rancheria requested consultation.
SPEAKER_16: We met with them.
SPEAKER_16: They had no tribal cultural resources in the area.
SPEAKER_16: But they did ask that we include an inadvertent discovery mitigation measure that basically
SPEAKER_16: says if something is found during construction, we'll stop, we'll reach out and coordinate
SPEAKER_16: with them.
Unknown: And that concludes my presentation for this evening, and I'm willing to take any questions.
Unknown: Thank you.
SPEAKER_05: Do you have questions from the board or committee members?
Unknown: Okay.
Unknown: We have no questions.
SPEAKER_05: Do we have members of the public who wish to speak to us on this issue?
Unknown: No, we do not.
SPEAKER_02: Oh, wait a minute.
SPEAKER_02: We do.
SPEAKER_02: We do have one hand from John.
Unknown: Hello, my name is John Weber.
SPEAKER_04: Can you hear me?
SPEAKER_05: Yes, we can.
SPEAKER_05: Go ahead.
SPEAKER_05: Thank you for calling in.
SPEAKER_04: I just wanted to say I think this is an excellent project, and I like how the battery storage
SPEAKER_04: is located at the same site as the solar.
SPEAKER_04: I do also like that it's a smaller solar farm.
SPEAKER_04: I think it would be better to have 10 75-megawatt farms rather than one 750-megawatt farm, because
SPEAKER_04: when clouds go over, they'll just go over one farm at a time.
SPEAKER_04: It will be easier to stabilize the grid.
SPEAKER_04: I just have one question, if I may ask a question, is will it have single access trackers on
SPEAKER_04: the site?
SPEAKER_04: That's my only question.
SPEAKER_04: Thank you.
Unknown: Thank you, Mr. Weber.
SPEAKER_05: Single access trackers.
SPEAKER_16: The exact technology that will be used hasn't yet been determined.
SPEAKER_16: We're still working with the developers, potential developers to make that decision.
SPEAKER_05: So it's an option, but not sure yet.
SPEAKER_05: Exactly.
SPEAKER_05: Thank you.
SPEAKER_05: Mr. Weber, you still there?
SPEAKER_04: I'm here if you can still hear me.
SPEAKER_04: But yeah, I think a single access tracker would be wonderful if that can be incorporated.
SPEAKER_04: Thank you.
SPEAKER_05: Thank you very much, sir.
SPEAKER_05: I appreciate it.
Unknown: I'm sure the staff will sharpen pencils on that issue.
SPEAKER_05: Please.
SPEAKER_03: I have a question.
SPEAKER_03: There were concerns expressed about vernal pools.
SPEAKER_03: I'm looking at the map, and it appears that all of the land has already been disturbed
SPEAKER_03: for it looks like chilled agriculture, is that correct?
SPEAKER_03: Were there any actual vernal pool impacts to this?
SPEAKER_03: No, there are no impacts to vernal pools.
SPEAKER_16: We were able to avoid those impacts.
SPEAKER_03: Thank you.
Unknown: What's the next step in the overall project development?
SPEAKER_09: What's the sequence approved?
SPEAKER_16: We haven't yet selected a developer or contractor, but we're still working towards a schedule
SPEAKER_16: of having construction start in Q3 of 2026 and a commercial operation date in 2028.
Unknown: Okay.
Unknown: Great.
Unknown: Do we have any additional comments?
SPEAKER_05: Seeing none, the disposition on this is to the full board meeting, is that correct?
SPEAKER_02: Yes, this is a discussion calendar.
Unknown: Okay.
SPEAKER_05: Thank you very much.
SPEAKER_05: Item number two is to discuss approving a contract change to a contract with Kaiser Permanente,
SPEAKER_05: approving a 2026 medical insurance premium rates and extending the contract by one year
SPEAKER_05: for the period January 1, 2026 through December 31, 2026.
SPEAKER_05: The 2026 cost estimated is estimated at $38.4 million.
SPEAKER_05: With this tonight is Mr. Matthew Powell, Director of People Services and Strategies, the interim
SPEAKER_05: and Lori Rodriguez, Advisor to the People Services and Strategies.
SPEAKER_05: Welcome, the floor is yours.
SPEAKER_01: Great.
SPEAKER_01: Thank you.
SPEAKER_01: Good evening.
SPEAKER_01: I'm Matthew Powell, Interim Director of People Services and Strategies.
SPEAKER_01: Joining me this evening is Lori Rodriguez, retired in Neweten.
SPEAKER_01: As we partnered on this, as we partnered on this important effort, and she is also very
SPEAKER_01: familiar with SMUD's medical renewals.
Unknown: I'd also like to thank the benefits team for their great work on this contract renewal.
SPEAKER_01: How quickly another year passes.
SPEAKER_01: We're again preparing for employee open enrollment.
SPEAKER_01: As you saw on the committee meeting agenda, this evening I will have two separate presentations
SPEAKER_01: and board action items to be requesting pertaining to SMUD employee and retiree medical benefits.
SPEAKER_01: First up is the contract renewal for Kaiser Permanente.
SPEAKER_01: The request is to approve the 2026 medical insurance rates and extend the Kaiser contract
SPEAKER_01: by one year, covering the period of January 1, 2026 to December 31, 2026.
SPEAKER_01: It would be 38.4 million dollars.
SPEAKER_01: Second following this agenda item, I'll be presenting on the medical renewal for United
SPEAKER_01: Healthcare, also known as UHC.
SPEAKER_01: The second medical carrier that SMUD currently contracts with for employee and retiree medical
SPEAKER_01: benefits.
SPEAKER_01: I'll go into more detail for United Healthcare in the next agenda item.
SPEAKER_01: I'd like to start on this slide here with providing some high level benchmarking and
SPEAKER_01: background on SMUD's medical benefits.
SPEAKER_01: SMUD currently offers employees and retirees the option of Kaiser Permanente or United
SPEAKER_01: Healthcare.
SPEAKER_01: Between both of those plans, we cover approximately 8,884 lives, about 8,900 lives or enrollments.
SPEAKER_01: This is active employees, retirees and their enrolled dependents.
SPEAKER_01: You'll see on the second main bullet points, the industry trends project that medical premiums
SPEAKER_01: will increase by between 8 and 13% in 2026.
SPEAKER_01: I'll share shortly what is driving those rising healthcare costs.
SPEAKER_01: Like many employers, most employers, employees share in the cost of those medical healthcare
SPEAKER_01: premiums.
SPEAKER_01: The benchmarked average employee cost share is around 16% for an employee only plan and
SPEAKER_01: 25% for an employee plus family plan.
SPEAKER_01: Employees here at SMUD have a cost sharing average or cost sharing percentage of between
SPEAKER_01: 9 and 16% for that individual coverage, depending on the plan, and 11 to 18% for employee plus
SPEAKER_01: family plan with dependents.
Unknown: If we go to the next slide, I'll go into some specifics on our renewal with Kaiser Permanente.
SPEAKER_01: So SMUD offers employees and retirees both an HMO low Kaiser and an HMO high Kaiser plan,
SPEAKER_01: depending on the needs of that enrollee.
SPEAKER_01: There are 4777 lives that are on those Kaiser plans between active, retiree and dependents.
SPEAKER_01: And for those renewals, each year Kaiser establishes a not to exceed or not to be below percentage.
SPEAKER_01: For 2026, that was set between 0 and 20%.
SPEAKER_01: So the 20% was the cap.
SPEAKER_01: As noted on this slide, utilization and claims are the main drivers of premiums, which we
SPEAKER_01: will go into more detail on that next slide.
SPEAKER_01: However, as we're talking about this, utilization includes high dollar claims, the healthcare provider costs,
SPEAKER_01: so such as inflationary impacts, which might be infrastructure buildings, new technology, etc.
SPEAKER_01: The new law, SB 729, which has to do with the diagnosis of infertility and
SPEAKER_01: fertility services, which do contribute to higher premiums, and that's going into effect January 1st.
SPEAKER_01: And you may recall that prior years pharmaceuticals have also been a key contributor to rising healthcare costs,
SPEAKER_01: and that remains true in 2026.
SPEAKER_01: Additionally, GLP1 is also one drug that's continuing to impact costs.
SPEAKER_01: Kaiser has put requirements in place in which the drug can only be prescribed for
SPEAKER_01: diabetes care and other related medical needs.
SPEAKER_01: And so that is mitigating some of those cost pressures on Kaiser's plans.
SPEAKER_01: If we go to the next slide, this takes us a little deeper into Kaiser's utilization.
SPEAKER_01: So Kaiser measures utilization in three categories, inpatient claims, outpatient claims, and pharmacy claims.
SPEAKER_01: You'll see for the 12-month period, used for renewals, this was increased by 15.7%,
SPEAKER_01: 9.1%, and 7.5%, respectively.
SPEAKER_01: Looking at our large claims, or high dollar claims, those over 400,000, there were five in the reporting period.
SPEAKER_01: We are seeing those high dollar claims trend down from the prior 12-month period, which is good.
SPEAKER_01: We're seeing a decrease in those.
SPEAKER_01: If we go to the next slide.
SPEAKER_09: I'll take some bait here.
SPEAKER_09: You show these claims going up.
SPEAKER_09: I'm assuming that they simply raised their costs of service between 5 and 10%, so the claims were not.
SPEAKER_09: Did we necessarily see employees going to the doctor 10 to 15% more?
SPEAKER_09: Am I misconstruing what that number actually means?
SPEAKER_01: So that is a price per member per month, so that isn't in dollar claims?
SPEAKER_01: It's just a dollar, so they gave their staff pay raises and they built facilities, so their pricing went up, they blow that to us.
SPEAKER_09: So it's not like our employees are using any more healthcare.
SPEAKER_01: I would defer to Lori on.
SPEAKER_13: Good evening, Lori Rodriguez.
SPEAKER_13: I would say that it's actually a combination of many things.
SPEAKER_13: So we're having an increase of utilization, so there are some increases in some of these areas as far as inpatient, outpatient, or pharmaceutical.
SPEAKER_13: The other thing that we're seeing is the high dollar claims, so we are seeing those continue to go up.
SPEAKER_13: Ones that are over $400,000, and you are correct.
SPEAKER_13: Also, a percentage of the formula for renewals does include the infrastructure, and it does include technologies, and then increases or wages for providers, doctors, nurses, technicians, etc.
SPEAKER_13: So it's all of that in to overall get the renewal percentage for us.
SPEAKER_01: Thank you.
SPEAKER_06: Thank you.
Unknown: On this next slide, we show a summary and a breakdown of the Kaiser renewal with percentage increases for each of those three plans that Kaiser does offer for our active and retirees, and the percentage changes for 2026.
SPEAKER_01: With the HMO active and early retiree HMO plans and all three in Medicare Advantage Plan combined, the renewal is 9.8%, which represents about $3.7 million increase from the previous year.
Unknown: You can recall that from an earlier slide we mentioned that the trend was projected to be between 8 and 13%, so we're right in the middle of that projected trend in the industry.
Unknown: On this last slide for Kaiser, we've illustrated what the total premium amount for each of those plans are, as well as what the cover would be, covered employees.
SPEAKER_01: So employee only in the first column, employee plus one, and employee plus family, if they wanted to cover all of their dependents.
Unknown: SMUD pays between 85 and 100% of the premium, depending on several factors, as noted here, so we won't be going into that in detail here, but that's just another point to note.
Unknown: This concludes the Kaiser presentation.
SPEAKER_01: I'll pause for questions.
SPEAKER_01: Okay. Thanks.
SPEAKER_05: Do we have questions?
Unknown: No, I'm not seeing any.
SPEAKER_05: Okay. Do we have any public testimony?
Unknown: No, we do not.
SPEAKER_02: I would just say this, I was just going through mine today through this state, and it's exactly the same percentage as going up.
SPEAKER_09: Okay. Well, thank you very much.
SPEAKER_05: And this, the disposition of this is to the full board.
SPEAKER_05: It's at calendar, yes.
SPEAKER_05: It's at calendar. Great.
SPEAKER_05: Thanks very much.
Unknown: Okay. Item number three.
SPEAKER_05: To discuss approving contract change to a contract with United Healthcare Insurance companies approving the 2026 medical insurance premium rates, the 2026 cost estimated at $40.6 million.
SPEAKER_05: You're back up.
SPEAKER_05: I am back.
SPEAKER_01: Very quickly.
SPEAKER_01: Thank you.
SPEAKER_01: Again, Matthew Powell, interim director of People, Services, and Strategies.
SPEAKER_01: As shared, the second medical carrier that SMUD currently has available for employees is United Healthcare.
SPEAKER_01: I'll refer to them interchangeably as UHC as well throughout the presentation.
SPEAKER_01: This evening, we're seeking approval for contract change, approving the 2026 medical premium rates with a cost estimate of $40.6 million for UHC.
Unknown: Our UHC plan provides several choices to employees, including an HMO, HMO Alliance, which is a Sutter-only network, and a high deductible plan.
SPEAKER_01: For UHC, the initial renewal for the HMO plans was 8.9%, which is right in line with that industry trend that I mentioned earlier.
Unknown: And a high deductible was 13.4%.
SPEAKER_01: However, that state bill, SB 729, with those additional services that were mandated, that renewal came in, moved north or moved above to 9.6% for the HMO renewal and 14.4% for the high deductible plan.
SPEAKER_01: Like all Kaiser, all insurances, utilization is the primary driver for these costs.
SPEAKER_01: Similar also to Kaiser, contributing to this is the utilization of GLP-1, which UHC does not have the same mitigation in place in which, for diabetes specifically, UHC does prescribe it for weight loss specifically.
SPEAKER_01: And so we are seeing more use of GLP-1 for the UHC plans.
SPEAKER_01: Of course, again, as I mentioned, the addition of the SB 729 coverage.
SPEAKER_01: UHC is also experiencing, as the full industry is, inflationary impacts related to healthcare provider costs, doctors, specialists, nurses, etc.
SPEAKER_01: And an increase on costs on pharmaceuticals in both utilization and just the sheer amount that they do cost.
Unknown: Let me say this, the GLP-1s, right, probably just this in the last presentation, but having Kaiser start putting bounds on these, right,
SPEAKER_09: feels like the healthcare provider getting between people and their doctor, right, which always makes me very nervous as a matter of principle.
SPEAKER_09: And so I would throw that out there. It's probably beyond our ability and our negotiations as one customer.
SPEAKER_09: But it certainly makes me raise an eyebrow when I hear that Kaiser is trying to limit access.
SPEAKER_09: For people who are in need of very important drugs, so I just wanted to say that.
SPEAKER_09: Absolutely. Thank you.
Unknown: On the next slide, again, we're going to speak to that metric, the price per member per month, which is also PMPM, which is the utilization metric that UHC uses.
SPEAKER_01: UHC uses slightly different criteria than Kaiser, and we'll go into those right now.
SPEAKER_01: So the medical net paid PMPM, or price per member per month, increased 6% year over year at UHC, which UHC uses an internal benchmark, and that was 22% higher than their internal benchmark.
SPEAKER_01: Our high cost claimants decreased by 11% year over year, which was actually in line with UHC's benchmark.
SPEAKER_01: And they categorize high cost claimants as over $50,000 in claims, and there were 32 of those at UHC.
SPEAKER_01: This represents 9% of the medical spend, which is a decrease of 3% year over year for those high cost claims.
Unknown: On this next slide, we have a breakdown and a summary of the renewal by each of those plans.
SPEAKER_01: I do want to call out that we have a PPO as well that is closed to new entrants due to its high cost as well as low utilization on there.
SPEAKER_01: As you can see, with the three plans that we were discussing, they categorize the H or they combine the HMO active and retirees in UHC,
SPEAKER_01: and then so there's the HMO high and low, HMO alliance, and then the PPO high deductible high health plan.
SPEAKER_01: And the total renewal for those is 10%, which represents a $4.1 million increase in those costs.
Unknown: I'd also like to note that due to these increases year on year, SMUD is continuing to support
SPEAKER_01: any way that we can to bring these costs down, including employee education and awareness of our
SPEAKER_01: wellness programs and the health assessment program to address these rising costs.
SPEAKER_01: There's also been a strategic team that's been established to explore additional options,
SPEAKER_01: and that's being led by Lori Rodriguez, our retired new owner, so in very good hands.
SPEAKER_01: The next two slides, or I'm sorry, for this slide, we're going to be breaking down what those monthly
SPEAKER_01: medical premium rates are for each of those different plans by the different enrollments,
SPEAKER_01: so by employee only, employee plus one and employee plus family, for active employees.
SPEAKER_01: And as you can see here, these are those monthly rates, and again, SMUD pays between 85 and 100%
SPEAKER_01: depending on the employee status, the plan, and the dependent coverage and rep group.
Unknown: And then on the next slide is by retirees, so this is breaking it down, the same information
SPEAKER_01: by retirees for those, that same criteria.
Unknown: This concludes the presentation for 2026 Kaiser and UHC renewals. Request the board approve the
SPEAKER_01: requested contract renewals for both Kaiser Permanente and UnitedHealthcare, and I'll open up for any questions.
SPEAKER_01: Thank you. Questions? Please, Director Rose.
Unknown: Well, I'm just looking at the numbers. I'm wondering why is Kaiser considerably lower,
SPEAKER_09: but the reality is that UnitedHealthcare's lower plan is actually only about $5,200 more.
SPEAKER_09: Ours are not as grouped together, granted we only have two providers, ours are not nearly
SPEAKER_09: as grouped together as CalPERS are this year, I was just taking a quick peek at this.
SPEAKER_09: But the lower plans are still within 52, a couple hundred dollars.
SPEAKER_09: Okay.
Unknown: Okay. Any other questions? Do we have any speakers?
Unknown: No, we do not. Okay. Thank you very much, then. Appreciate it.
Unknown: Next up is item number four to discuss authorizing the CEO to negotiate and execute a sole source
SPEAKER_05: contract with SAP America Inc. for enterprise resource planning software licenses with a term
SPEAKER_05: between October 1st, 2025 and December 31st, 2030 for in a not to exceed amount of $27 million.
Unknown: You know, I'm afraid I don't exactly know how to pronounce your first name while I'm sitting here.
SPEAKER_05: So our presenter tonight is Mr. Yuvairaju. Okay, great. Paulan Appian. Okay, I did my best. I'll
SPEAKER_05: do better next time. Sorry. Okay, Director of Enterprise Systems Strategy and Governance.
SPEAKER_05: Welcome. Floor is yours. Thank you.
SPEAKER_10: Good evening, President Fishman, board members and everyone attending today.
SPEAKER_10: Again, my name is Yuvairaju Palanipan, the IT Director for Enterprise Systems Strategy and
SPEAKER_10: Governance. I would like to start my presentation by giving the background. Why are we asking
SPEAKER_10: on our requests? First, smarts current enterprise resource planning system, along with our customer
SPEAKER_10: relationship management and business warehouse management solutions that supports a large portion
SPEAKER_10: of smarts business processes such as finance, work management and contact center operations are legacy
SPEAKER_10: on prem, prem is solutions nearing enough mainstream support. Second, our current platform
SPEAKER_10: limits our ability to implement modern technologies and capabilities pivotal for
Unknown: achieving operational excellence. Third, we are actively progressing with a request for proposal,
SPEAKER_10: RFP process to select a qualified system integrator to SE smart to transform our current SAP
SPEAKER_10: legacy solutions or systems to a new and next generation SAP platforms. In this slide and
SPEAKER_10: few other slides, you will be seeing the name of SAP S4HANA. And that's the new platform that we
SPEAKER_10: are embarking on, will be upgrading to. So, on the last point, SAP S4HANA cloud subscription.
SPEAKER_10: We are proposing adapting a five year cloud subscription for SAP S4HANA to enable this
SPEAKER_10: transformation with continuous innovation and cloud-based flexibility.
Unknown: I would like to start my presentation on smarts SAP journey with my personal story.
SPEAKER_10: I bought a car 20 years, 23 years ago, and it was perfectly running. And why I'm sharing this is
SPEAKER_10: it reflects some level to our SAP journey as well. I've been maintaining it regularly.
SPEAKER_10: And despite my family asking me to replace the car, I thought the car maintained properly,
SPEAKER_10: everything's perfect, why I want to change the car. And until a day, it broke down in the middle
SPEAKER_10: of hot sun on the highway, and I need to tow it and I need to replace a car. And fortunately,
SPEAKER_10: I was able to buy an EV. And at that time, I was told, this car brings a lot of intelligence
SPEAKER_10: that you will enjoy it. Really, the time that I really felt the features and the benefit is
SPEAKER_10: when the car, the intelligence avoided the collisions when I was switching a lane
SPEAKER_10: when I'm on the way to office. So, that's why I really felt the intelligence in the car.
SPEAKER_10: It's really benefited me. Our SAP journey is like my old car. We have used it, we have loved it,
SPEAKER_10: we have maintained it well. But it's a time for a system with the upgrades that keep us safe and
SPEAKER_10: prepare us for the future. Now, on the smarts SAP journey, we implemented SAP in 1999. And that time,
SPEAKER_10: the version is called R3. And then 2009, this version we upgraded to SAP ECC 6.0,
SPEAKER_10: enterprise core component. And that's the version in 2009. And that's the system we are looking into
SPEAKER_10: upgrading to SAP S4HANA, the name of the new platform, the platform of the feature,
SPEAKER_10: along with SAP BW system, as well as customer relationship management system.
Unknown: Now, I'm going on the case for change. As S4HANA, in other words, platform of feature,
SPEAKER_10: optimizes and modernizes the way we perform our work today. S4HANA provides the latest innovation,
SPEAKER_10: new functionality. SAP has stopped any new innovation in the platform that we have today since
SPEAKER_10: 2016. Smart as considerable employee expertise and familiarities with SAP technology and functional
SPEAKER_10: processes from people, process and technology perspective. SAP has announced the end of life
SPEAKER_10: and exit of mainstream support by end of 2027, December 31st, 2027. S4HANA has been proven
SPEAKER_10: out with comparable utilities like Nebraska Power, Public Power District, Northwestern Energy,
SPEAKER_10: Metropolitan Utility District, Omaha. They have been great partners and open with their own
SPEAKER_10: lessons learned to help us out to shape our own transformations.
SPEAKER_10: S4HANA brings many process and functionality improvements for different modules, different
SPEAKER_10: business verticals. The slide here, I'm showing the cross-functional benefits
SPEAKER_10: that we will be seeing as part of the S4HANA. Knowing data is the next oil,
SPEAKER_10: SAP made two significant improvement in their data models. One, at the infrastructure layer,
SPEAKER_10: they have converted the legacy relational database system from storage base to in-memory base,
SPEAKER_10: which significantly will improve the performance of the system and also increase the data accuracy
SPEAKER_10: and so on. At the application layer, SAP has simplified the data model and unified the data
SPEAKER_10: model, which can improve certain business processes that we have today. Along with that,
SPEAKER_10: SAP also introduced embedded analytics with the power of S4HANA. Embedded analytics has been
SPEAKER_10: introduced as part of this platform, where we can do real-time reporting. Today, the data being
SPEAKER_10: exported to another business warehouse system and is a day older. Some reports we can,
SPEAKER_10: that critical report that we need to do real-time analytics, it will be enabled as part of this
SPEAKER_10: transformation. This new platform also brings an improved user experience. It's called
SPEAKER_10: Fiori. It's a term that SAP used. It is a browser base and has a lot of capabilities and
SPEAKER_10: improvements for the end users. Along with that, enterprise search capabilities also will be
SPEAKER_10: introduced, like a mini Google within the ERP system, which can simplify the search capabilities.
SPEAKER_10: Instead of going into multiple transactions, now our end users can, with a single search,
SPEAKER_10: able to access the data. Lately, SAP has started embarking on the embedded AI.
SPEAKER_10: We are exploring on this, how we can leverage this, but they have introduced embedded AI.
SPEAKER_10: Every new releases, they will be increasing the functionality that the AI can bring into the S4HANA.
Unknown: All in one, with all these improvements, especially with the HANA capabilities running in memory,
SPEAKER_10: it brings the speed, real-time access to data and information that matters most.
Unknown: Finally, investing in this modernization initiative is essential to mitigate risks
SPEAKER_10: associated with legacy system and unlock new capabilities. This concludes my presentation
SPEAKER_10: today. I'm happy to take any questions. Okay, thank you very much. Questions?
SPEAKER_05: I don't think we have any. Are there any members of the public who wish to speak?
SPEAKER_02: We have no public comment. I see Director Fishman, but no thumb up. Okay. Let me ask one.
SPEAKER_09: I remember we allocated some money for the S4HANA project earlier this year, so I went and looked
SPEAKER_09: it up and we had one with Kubra, but it split between our billing and some of the other aspects
SPEAKER_09: of the project. How is this chunk of money tonight different from that 10 million dollars we approved
SPEAKER_09: earlier this year? So, Rishkota, Chief Information Officer. The Kubra's budget is for the bill
SPEAKER_12: payment and presentment as well as that includes even like mailing the billing statements for some
SPEAKER_12: of the people who still opted to receive the bills in the mail. Whereas this contract is for the entire
SPEAKER_12: ERP system. ERP system is integrated with the Kubra or whatever the billing payment platform
SPEAKER_12: that is going to be. The presentment part, we are going to replace it with SEW. It is really the
SPEAKER_12: sending the bills, the PAPR bills, is the one which will continue to use the Kubra. That's what
SPEAKER_12: the money that we requested earlier. Okay. Are we going to see, I know I don't know the overall
SPEAKER_09: architecture of all the different contracts, but are we going to see more contracts for the S4
SPEAKER_09: project come through? What should I be anticipating? Yes, definitely. That's a great question,
SPEAKER_12: Director Rose. So, as you all mentioned about we are working on the RFP for the system integrator
SPEAKER_12: to transition to the S4 HANA. Today's request is for the SAP licenses, the annual licenses for the
SPEAKER_12: next five years. But we will be coming again sometime in the month of January once we select
SPEAKER_12: the SI with the recommendation for the system integrator to implement it. So, the actual project
SPEAKER_12: will be starting in the 26th second quarter going live in 2027, the phase one. So, there will be a
SPEAKER_12: subsequent request will be coming to the board. Can you please just shoot me an email or a memo
SPEAKER_09: with just what that project timeline looks like and what contracts we would expect to have come
SPEAKER_09: to the board. Sure. Yeah, doesn't short. Sure. Thank you. And if you remember,
SPEAKER_14: probably what's helpful, Suresh, there was a slide that you presented a few years ago that showed the
SPEAKER_14: 12 systems, right? I think that might be helpful because it's been a minute, right? And I think
SPEAKER_14: people also don't realize the behemoth that SAP is, right? So, this contract is for our just to
SPEAKER_14: help you out because I've had explained to my clients, this is our all basically all of our
SPEAKER_14: internal systems. So, we had this spider web of many different vendors and what the goal and
SPEAKER_14: everybody's goal, right, with S4HANA is that it's going to combine that. What you saw with Cooper
SPEAKER_14: was our external facing for billing. I mean, somewhat related because they're all related to
SPEAKER_14: the back end, but one is for basically internal staff and one is for external customers. Again,
SPEAKER_14: expensive price tags because that's the world of what some people aren't familiar with the
SPEAKER_14: ERP to. They're enterprise solutions and unfortunately the E is a big E in these things
SPEAKER_14: and people try to piecemeal it because it's cheaper or it's highly customized. I think over time,
SPEAKER_14: people have realized that going to these big E may seem, I mean, it's probably like 100,
SPEAKER_14: I mean, how much are we spending? It's like 170. Yeah, I mean, I'm remembering, but they usually
SPEAKER_14: are and I know it's again a big price tag. It's a little scary for people, but the price tag to
SPEAKER_14: switch is probably three times as much. If you talk to our fellow utilities in Texas that spent,
SPEAKER_14: what, half a billion or something and they haven't even gone live. So, people freak out about the
SPEAKER_14: price tag. It is a lot, but it is because it affects like every department and every system
SPEAKER_14: and that means workflow changes, licensing costs, change, you know, test all of that. So,
SPEAKER_14: it'll be good. I thought that slide was very helpful that showed all the systems and then
SPEAKER_14: the timeline just to remind everybody because we'll be seeing it's like seven years, right?
SPEAKER_14: I mean, when it's, it's a long haul. Thank you for that.
Unknown: Okay. Thank you. Great. And so then I believe this is off the consent calendar. Is that correct?
Unknown: Okay. Thank you. Item number five is to discuss authorizing the CEO to negotiate and award
SPEAKER_05: contracts to HDR Engineering Inc., Bureau Veritas North America Inc., and Energy Project Solutions,
SPEAKER_05: LLC, collectively the contracts to provide construction management services for a five-year
SPEAKER_05: term from October 1st, 2025 to September 30th, 2030 for a total aggregate not to exceed amount
SPEAKER_05: of $15 million for the contracts. And, oops, let me skip the picture. I didn't. Welcome.
SPEAKER_05: Sweet. I'll introduce myself. It's fine. Okay. So, good evening directors and attendees. My name is
SPEAKER_15: Amanda Beck. I'm the manager of renewable project development for SMUD's power generation department.
Unknown: So, tonight I'm here to provide a presentation on the business need for the construction management
SPEAKER_15: services and to present evaluation of the proposals received for those services. So,
SPEAKER_15: these contracts proposed are intended to support construction management at the utility scale
SPEAKER_15: renewable projects being constructed to support SMUD's 2030 zero carbon plan.
Unknown: So, construction managers under these contracts will work closely with our SMUD
SPEAKER_15: project managers acting as on-site assistant project managers representing SMUD's interest
SPEAKER_15: every step of the way. They'll oversee contractor activities, quality control and safety,
Unknown: and make sure all work complies with contract requirements and industry standards.
Unknown: Their core responsibilities will include reviewing contracts and project plans,
SPEAKER_15: ensuring project controls, monitoring schedules and budgets, conducting risk management, and
SPEAKER_15: facilitating ongoing communication through regular meetings and detailed reporting. They'll also
SPEAKER_15: support our permit compliance efforts and help manage interactions with third-party stakeholders.
Unknown: Construction managers will work in tandem with construction management inspectors already on
SPEAKER_15: site to provide on-site oversight of SMUD's utility scale generation projects.
Unknown: So, construction management is all about ensuring our projects stay on track,
Unknown: on scope, on schedule, and on budget while meeting the high quality standards we expect.
Unknown: The firm selected to perform these services will provide full support throughout the entire
SPEAKER_15: project lifecycle from pre-construction planning through construction and all the way to project
SPEAKER_15: closeout. So, these services to be provided under these contracts are important for ensuring
SPEAKER_15: quality, timely, and cost-effective completion of SMUD's utility scale generation projects.
Unknown: Okay, a little bit about the procurement strategy. So, a request for proposals was issued on June
SPEAKER_15: 10th of this year to solicit qualified firms to perform construction management services.
Unknown: A pre-proposal conference was held on June 24th. 22 companies were in attendance, and on July 31st,
SPEAKER_15: seven proposals were received. An initial evaluation was conducted to assess whether
SPEAKER_15: the proposals received, including pricing and other factors, were fair and reasonable. And after the
SPEAKER_15: initial evaluations were concluded, SMUD staff negotiated with the top three ranked proposers
SPEAKER_15: to achieve fair and reasonable pricing and completed the full evaluation of those proposals.
SPEAKER_15: So, the RFP used the scope of one large project for the proposers to bid on in order to provide
SPEAKER_15: it sort of an apples to apples comparison. The award amount is proposed at $15 million to ensure
SPEAKER_15: that we have a contract of value available to support five or more projects through their
SPEAKER_15: construction lifecycle. So, the tables provided here show the ranking of the proposals received
Unknown: based on a scoring rubric that evaluates pass-fail criteria and then scores and weights,
SPEAKER_15: seed, technical and pricing responses. Of the seven proposals received, four were deemed
SPEAKER_15: non-responsive, generally because either the company proposed or construction managers proposed
SPEAKER_15: didn't meet minimum qualifications. Two of the three recommended proposers included seed
SPEAKER_15: participation. You can see that on the screen with the highest ranked proposer HDR achieving the
SPEAKER_15: maximum seed credit. So, with authorization from the board and upon successful negotiation,
SPEAKER_15: the contracts would be awarded to HDR, Bureau Veritas and Energy Project Solutions. That
SPEAKER_15: concludes my presentation and I'm available to answer any questions if you have them.
Unknown: Great. Thank you. Questions from the board?
SPEAKER_09: Any protests or commentary from the non-responsive?
SPEAKER_09: I don't believe so.
Unknown: Okay. Okay.
Unknown: Thank you. Are there members of the public who wish to speak on this?
Unknown: I do not see any hands now.
Unknown: Okay. Thank you. And then this is off to consent, Keller. Thank you very much.
Unknown: Item number six to provide the board with the Enterprise Risk Management ERM quarterly update.
Unknown: And with us tonight is Ms. Jillian Rich, Manager of Enterprise Strategy and Risk
Unknown: Discussion. Thank you.
SPEAKER_05: Great. Thank you for having me. So, we'll use the same structure as we have for the last two
SPEAKER_11: quarters. On the top, I'll give you an update of what risk has increased or decreased since the
SPEAKER_11: last time I saw you in June. And for that, we'll use our legacy risk framework. Moving to the
SPEAKER_11: second arrow, we'll continue to phase in our new risk framework, that risk framework we've been
SPEAKER_11: working on the last few quarters with the goal of having it all done by the SD17 annual monitoring
SPEAKER_11: report, which is scheduled for November Policy Committee. And last but not least, we've been
SPEAKER_11: trying to integrate our commodity risk reporting and our enterprise risk reporting. So, in the
SPEAKER_11: information packet, you have our new standard quarterly report on commodity risk. Nothing is
SPEAKER_11: out of the ordinary, so I don't have a slide on that. But if you have any questions, I'm happy to
SPEAKER_11: take them and get them answered. So, without further ado, let's dig into our legacy risk framework.
SPEAKER_11: So, here you see the 85 risks that we've had, that list that's been in existence for many years here
SPEAKER_11: in a scatter plot on the left. Every shape is a risk. They're organized by risk category on the
SPEAKER_11: left and then on the bottom by their residual risk level, so low, medium, and high. You can see that
SPEAKER_11: the start items are our focus areas and they're all detailed on the right. Those were selected
SPEAKER_11: about three years ago now. So, in terms of changes, we don't see any since I saw you last in June.
SPEAKER_11: As a reminder, in June, we escalated four risks. Our grants, our renewable projects, the general
SPEAKER_11: economy, and our supply chain. We still feel like those are at the escalated level, so they went
SPEAKER_11: from low to medium or medium to high, which means that we monitor them even closer than we would.
Unknown: And things might be stabilizing a bit with federal uncertainty. And so, in the SD17 annual monitoring
SPEAKER_11: report, we'll have updates to all of our risks and that whole landscape and they'll all be calibrated.
SPEAKER_11: So, you might see some shifts by then. But overall, we feel like we're in a steady state.
SPEAKER_11: Okay. So, let's move on now to our new risk framework. We have the second tranche or wave
SPEAKER_11: of risks to detail. My goal today is that you walk away with the definition of these new risks and
SPEAKER_11: how we're structuring them. As you remember, we have that pyramid now. We're trying to add a top
SPEAKER_11: down view to our bottom up risks. So, no longer will you have to have all 85 on an even playing
SPEAKER_11: field. You'll be able to see that story of risk, that forest, before you want to dig into the tree.
SPEAKER_11: So, last time, we covered the first two, customer and community and financial. And today, I have the
SPEAKER_11: ones in green for you. Safety and security, process and technology, and our people. As a
SPEAKER_11: reminder, the seven strategic risks areas is that dark row in the middle. And we got to that point
SPEAKER_11: by studying all the functions at SMUD as well as the strategic directions, boiling them down into
SPEAKER_11: themes. And so, those are our strategic risks. And then the enterprise risks below them are the
SPEAKER_11: sub risks or what's driving the risks. So, we will cover the profile that you saw last time for
SPEAKER_11: each of these three. And then we'll call it a day. So, first up is safety and security risk.
SPEAKER_11: I should say that in your information packet, you have even more information than what's shown on
SPEAKER_11: this slide. But we're defining this risk as risk related to the safety and security of our people,
SPEAKER_11: community, and critical assets. In the table below, you can see how we've divided it out into sub risks.
SPEAKER_11: And that is the safety of our employees, contractors, and the public, cybersecurity,
Unknown: physical security, and third party. If you want more of a definition of what that means,
SPEAKER_11: in your packet is a full definition that uses a standard format. But in terms of the risk
SPEAKER_11: rating, these are preliminary ratings. They were rated in a bit of a silo. So, when all 27 are done,
SPEAKER_11: we'll get together as a group with our senior leaders and calibrate them. So, some things may
SPEAKER_11: shift. But at least initially, we're thinking that the risk environment for safety and security
SPEAKER_11: is extremely high. Meaning that if we did nothing to prevent this risk, absolutely nothing,
SPEAKER_11: it would have a high impact on us as a business. And it would be highly likely that it would happen.
SPEAKER_11: The good news is that we have a lot of controls and mitigations in place for this. And you can see
SPEAKER_11: a sampling of them in your information packet. And they're everything from our safety for life
SPEAKER_11: culture to our third party contracts and onboarding guides to our cybersecurity team and all of our
SPEAKER_11: standards. So, that brings the remaining risk down to a residual level of medium.
Unknown: So, we're trying to piecemeal this information because there's a lot on this slide. So,
SPEAKER_11: you'll see some blanks right now that'll be filled in. So, you'll have even more information by the
SPEAKER_11: time we have our annual monitoring report. So, next time I see you, we'll have this slide,
SPEAKER_11: but we'll also have a risk trend filled out. And that's an indication of whether we,
SPEAKER_11: subject matter experts feel like this risk may increase or decrease in the future for us.
Unknown: And then we'll also come to you with that white box over on the right filled out. And that'll have
SPEAKER_11: an indication of what's happening in our risk environment, what's happening to us
SPEAKER_11: changing our risk exposure, and then in turn what we're doing about it. So, new controls,
SPEAKER_11: new mitigations that are either in progress completed or coming up next year.
Unknown: Okay. I don't want to, I won't question many of these, but physical security risk being extremely
SPEAKER_09: high, right? Security officers, I think you would think that. But when you look at all of the risk,
SPEAKER_09: it's probably just, I would think just high. I mean, there's always a risk of somebody breaking in,
SPEAKER_09: right? But the showstopper is a side for security and like ransomware attacks these days, right?
SPEAKER_09: Yes. So, sort of, I look forward to having maybe a broader discussion about the overall categories
Unknown: when they're all looking at sort of an apples to apples. Okay. So, just some initial feedback.
Unknown: Great. We'll take that back. And in our calibration, we'll take that into consideration,
SPEAKER_11: provide more detail. Thank you. All right. So, moving on to the next category,
SPEAKER_11: process and technology. So, this is the risk related to the processes and technology that
SPEAKER_11: enable innovation and operational efficiency. The sub-risks here are technology systems,
SPEAKER_11: data governance and privacy, supply chain, and then artificial intelligence and disruptive
SPEAKER_11: technology. We feel like the risk environment overall is high. And with our controls and
SPEAKER_11: mitigations in place, we have a residual risk exposure of medium. Okay. And last but not least,
SPEAKER_11: we have our people, our workforce, the foundation of everything we do. And that is risk related to
SPEAKER_11: SMUD's employees and our goal to maintain an inclusive, engaged, and future ready workforce.
Unknown: We feel, oh, sorry, the sub-risks are talent management, employee experience, and strategic
SPEAKER_11: workforce. So, if you look at the definition of strategic workforce, it's that our needs are going
SPEAKER_11: to become out of alignment with the people and the skills that they have. And so, we feel like
SPEAKER_11: overall, taken all together on average, the risk environment is high. But through our great controls
SPEAKER_11: and mitigations, we have a remaining risk exposure of low. And again, those controls and
SPEAKER_11: mitigations are things like our total rewards, like our employee resources groups, and more.
Unknown: Okay. Yes.
SPEAKER_03: What do you mean by talent management?
Unknown: Yes. Let's look. So, the definition of that is that there's a risk that SMUD may not attract or
SPEAKER_11: retain talent to achieve current and future strategic priorities resulting in operational
SPEAKER_11: and strategic impacts. Thank you. Thank you.
SPEAKER_07: To my own issue, I'll just add to that. We'll talk a little bit more about that later on in the year,
SPEAKER_07: but we're taking a long-term evaluation, not just in the near-term talent needs,
SPEAKER_07: but also long-term in some of the transition and skill set. That's one of the reasons why we see
SPEAKER_07: that as a higher risk right now that we're trying to mitigate. Thank you.
Unknown: All right. Well, thank you for sticking with me and growing familiarity with these new risks.
SPEAKER_11: The benefit is coming in the SD17 annual monitoring report. So, that scatter plot,
SPEAKER_11: that's the last time you'll see that. We're moving all to the new framework for the SD17
SPEAKER_11: annual monitoring report. So, you'll see fewer risks. You'll see that 27 enterprise risks,
SPEAKER_11: but we'll have a lot more in-depth conversation and quality to the reporting. So, in that report,
SPEAKER_11: I'll cover the last two strategic risks first, environmental and reliability. We saved the
SPEAKER_11: biggest for last. And then we'll cover them all together, and you'll have that conversation
SPEAKER_11: filled in about what we've done new to mitigate risk at SMUD in the last year, and then what's
SPEAKER_11: upcoming, and then enhancements we'll make on top of this to our ERM framework at SMUD.
Unknown: Questions? Thanks. Questions? I'm not seeing any at this time. All right. Well, thank you. Thanks. Do
SPEAKER_05: we have members of the public? I do not see any hands, no. Okay. Thank you very much.
Unknown: Let's see here. Item number 7 is to provide the board with SMUD's financial results from the
SPEAKER_05: seven-month period ending July 31, 2025, and a summary of SMUD's current power supply costs.
Unknown: And with us tonight is Ms. Lisa Limcaco, our Director of Accounting and Controller. Welcome.
Unknown: Good evening, Director Kurt and SMUD Board of Directors. I will be going over the July
SPEAKER_17: 31 results. So starting off with customer revenue, $1,024 million, $14 million higher than budget
SPEAKER_17: due to commercial customer revenues being higher than budget. Next we have commodity expense, $313
SPEAKER_17: million, $19 million lower than budget. This is primarily due to the milder weather that we've
SPEAKER_17: seen during the year driving the favorable market conditions to procure power, as well as lower fuel
SPEAKER_17: costs due to lower fuel prices. Next we have other operating expenses, $556 million, $58 million
SPEAKER_17: lower than plan due to three areas, transmission and distribution expenses being lower than budget
SPEAKER_17: due to reduced transmission fee costs, as well as lower vegetation maintenance costs due to the new
SPEAKER_17: vendor that we onboarded at the beginning of the year. Next we have administrative and general
SPEAKER_17: expenses are under budget as well due to delay start of several projects, a couple of them being
SPEAKER_17: the S4HANA pre-work that we've done in 2025 as well as the extended day market. And then finally,
SPEAKER_17: public good expenses have exceeded budget due to the increased participation in low-income
SPEAKER_17: building electrification programs, for example, the Community Impact Plan metal view project.
Unknown: And then finally, we have non-operating revenues, $140 million, $106 million higher than budget,
SPEAKER_17: and primarily due to the Inflation Reduction Act direct pay program that we had for the
SPEAKER_17: Solano 4 project, all leading to $285 million of net income. Next we have July 2025 energy sources,
SPEAKER_17: so for the month of July, we're seeing due to the milder July weather, we see a reduction in
Unknown: thermal generation, hydro generation, as well as net purchase power for the month compared to budget.
SPEAKER_17: And then year to date, also due to the milder weather that we've seen for the year, we see lower
SPEAKER_17: thermal and hydro generation, but an increase in purchase power due to the lower market prices.
Unknown: Next we have delinquency by account type, an increase from July to August of approximately
SPEAKER_17: $8 million, increasing to $38 million, outstanding as of August. This is usually what we see during
SPEAKER_17: the summer months due to the higher summer bills. Also, we have about $12 million of delinquency
SPEAKER_17: balance with payment plans outstanding as of August.
SPEAKER_17: Next we have the commodity budget, mitigations and forecasts. As you can see, the hydro
SPEAKER_17: performance annual forecasts, we are forecasting to be 138 gigawatts lower than plan. However,
SPEAKER_17: our 2025 commodity forecasts, annual cost is going to be $534 million forecasted, which is $76
SPEAKER_17: million lower than budget. And this is due to the lower load that we've seen due to the milder
SPEAKER_17: weather as well as the favorable market prices. And then no changes in the hydro rate stabilization
SPEAKER_17: or WAPA rate stabilization funds. And then finally, we have days cash on hand. You can see as of July,
SPEAKER_17: actual is 221 days compared to 216 days that was budgeted. And then projected for year end is 182
SPEAKER_17: days increase over the budget of 164 days and our 150 minimum days cash.
SPEAKER_17: And there is no commercial paper outstanding in the projection for year end.
SPEAKER_17: So why is your end of year projection, I don't know, almost 30 days
SPEAKER_09: lower on this one compared to June?
Unknown: Oh, compared to the June? Yeah. Over the month we went from 204 to 182 days.
SPEAKER_09: Because the projections usually show towards the end of the year, a lot of our capital projects,
SPEAKER_17: we spend a lot of our money for the capital projects as well as getting ready to pay off our
SPEAKER_17: debt service. Is that projection that staff starts putting in, hey, we think we have more cash,
SPEAKER_09: so we start planning on how we want to spend that in our capital budget?
SPEAKER_09: In our capital budget?
Unknown: Oh, Scott Martin, yeah. TFO, yeah. No problem. So some of it is, I think there's a couple of
SPEAKER_08: things that happened between the last couple of months. One, we de-feesed the debt with SFA,
SPEAKER_08: which was a fairly substantial amount which saved us on our debt costs, but was a fairly significant
SPEAKER_08: outlay to de-fees that amount. In addition to that, like Lisa mentioned, this reflects the
SPEAKER_08: latest capital forecast. It also reflects the latest in terms of our cash flow, meaning what's
SPEAKER_08: happened this summer, right? And given that in the last, like July and August have been relatively
SPEAKER_08: mild, right, this starts to reflect, especially in July, because this is the end of July,
SPEAKER_08: it reflects the fact that July was also very cool, whereas June would not have had that
SPEAKER_08: reduction in revenue yet for July. So there's a number of things that are happening here
SPEAKER_08: as we move through the year, but yeah, that's some of the things that have gone on with cash flow
SPEAKER_08: this year. Yeah. 30 days cash on hand is a lot of, of all the numbers in this report,
SPEAKER_09: that's probably the most important number to tell you what's really going on where things are
SPEAKER_09: flowing. Okay. Good, good explanation. Thank you. Yeah. And just one other thing. This is actually
SPEAKER_08: really good news in the sense that we are above the budget. And a lot of that comes from the
SPEAKER_08: one-time items that you saw on the previous slide, in particular the Salano IV payment that we got
SPEAKER_08: from the federal government, which was very substantial and has helped us this year avoid,
SPEAKER_08: well, it's going to help us next year as we continue to spend on infrastructure. It's going to help us
SPEAKER_08: avoid new debt and save money. Thank you for that. Oh, please. Dr. Fayo. You mentioned that there
SPEAKER_03: were lower vegetation management costs. And I think you said that it was largely due to a new
SPEAKER_03: vendor, I guess. Is there an overall, I guess, relaxation of the, I guess there was a labor
SPEAKER_03: shortage or competition shortage. Is that, is it, was that lower vendor cost related to an overall
SPEAKER_03: relaxation or is it just that one particular vendor? Scott Martin, I believe it was just that
SPEAKER_08: one. It was, I think Lucas was here that night where we were someone, I can't remember who asked
SPEAKER_08: about that, but Lucas, I believe was here and commented about the startup of that particular
SPEAKER_08: new vendor that they were using. And it took them a little bit longer to get that contract in place
SPEAKER_08: and that vendor started up. And I think that was the drive, that was the significant driver of that
SPEAKER_08: reduction. What's that delay? If I recall correctly, when Lucas here talked about it, he
SPEAKER_00: expected that once it ramps up, a lot of the spending would be actually caught up. We've not
SPEAKER_00: all of it, but there's a good portion of it the underspend would be caught up once the crews are
SPEAKER_00: dispatched and start actually doing the vegetation work. Okay. So it was just, it was really more not,
SPEAKER_03: not just a per unit cost advantage. It was just less level of effort. Okay. Correct. Thank you.
SPEAKER_03: I misunderstood.
Unknown: Okay. Oh, is there a, is there a water supply report? I forget. No? Not this month. Not this
SPEAKER_05: month. Okay. Great. Thank you very much. Do we have members of the public who wish to speak on
SPEAKER_05: this item? No, we do not. Great. Thank you. This is an availability item. Item number eight is the
SPEAKER_05: internal audit services report on the green energy partners plus annual verification program.
SPEAKER_05: There's no presentation, but there I'm sorry, Ms. Claire Rogers is here to answer questions if we
SPEAKER_05: have any. No, we passed. Okay. Thank you. If we didn't pass, there would certainly be questions.
SPEAKER_05: That's right. Okay. And do we have members of the public who wish to speak on this item?
SPEAKER_02: No, we do not. Thanks. Okay. The next item is public comment on items not on the agenda. I have
SPEAKER_05: not received any speakers request forms. Is there anyone else waiting to speak?
Unknown: I don't see any hands now. Okay. Then let me just remind people if you have
SPEAKER_05: comments, written comments received on items not on the agenda will be included in the record if
SPEAKER_05: received within two hours after the end of the meeting. And last item on the agenda is to provide
SPEAKER_05: a summary of committee direction. I just have one item that staff will provide the board with
SPEAKER_02: information on the transition to S4HANA, including the various systems involved, SMA, timeline, and
SPEAKER_02: other necessary contracts. Okay. Sounds great. Then there's nothing more to come before us tonight,
SPEAKER_05: then. We're adjourned. Thank you.