Energy Resources Customer Services Jun 17 2026

Unknown: Music

Unknown: Hello

SPEAKER_02: Hello, Chaddy Cathy's down there.

Unknown: Are we ready?

Unknown: Okay.

SPEAKER_02: Thank you.

SPEAKER_02: Good evening and welcome to the Energy Resources and Customer Services Committee and Special

SPEAKER_02: Board Meeting, June 17.

SPEAKER_02: This meeting is being recorded and can be accessed on SMUD's website.

SPEAKER_02: Please remember to unmute your microphone when speaking in order that our virtual attendees

SPEAKER_02: may hear.

SPEAKER_02: The microphone will display a green light indicator when the mic is on.

SPEAKER_02: For members of the public attending in person that wish to speak at this meeting, please

SPEAKER_02: fill out a speaker's request form located outside of this room and hand it to our SMUD

SPEAKER_02: security team.

SPEAKER_02: Members of the public attending this meeting virtually that wish to provide verbal comments

SPEAKER_02: during the committee may do so by using the raised hand feature in Zoomer pressing star

SPEAKER_02: 9.

Unknown: The time public comment is called.

SPEAKER_02: Technical support staff will enable the audio for you when your name is announced during

SPEAKER_02: the public comment period.

SPEAKER_02: You may also submit written comments by emailing them to public comment at SMUD.org.

SPEAKER_02: Written comments will be read into the record but will be provided to the board electronically

SPEAKER_02: and placed into the record of the meeting if received within two hours after this meeting

SPEAKER_02: ends.

SPEAKER_02: Chief legal officer, please conduct the roll call.

Unknown: Director Sanborn.

SPEAKER_04: Here.

Unknown: Director Fishman.

Unknown: Here.

SPEAKER_04: Chair Buie-Thompson.

SPEAKER_04: Present.

SPEAKER_04: All committee members are present.

SPEAKER_04: Also present are directors Rose, Herber, Kurth and President Tamayo.

Unknown: Great.

SPEAKER_02: Thank you.

SPEAKER_02: One on tonight's agenda is to discuss adopting the 2026 update to our SMUD utility security

SPEAKER_02: plan.

SPEAKER_02: Our presenter today is Kirsten DePersis.

SPEAKER_02: She's the director of facility security and emergency operations.

SPEAKER_00: Good evening.

SPEAKER_00: Thank you for having me here tonight.

SPEAKER_00: I'm here to present to you SMUD's updated physical security plan and ask the board to adopt the

SPEAKER_00: plan to meet the requirements of the California public utilities commission or CPUC.

SPEAKER_00: This is an update to the plan that was approved in 2021 by the board and it's required to

SPEAKER_00: be updated every five years and reapproved.

SPEAKER_00: So the purpose of the security plan is to address covered distribution facilities that

SPEAKER_00: serve critical customer loads and confirm whether the existing resiliency measures are

SPEAKER_00: sufficient.

SPEAKER_00: The types of critical customer loads that we're talking about are things like law enforcement

SPEAKER_00: facilities, airports, wastewater treatment facilities, regional safety centers, trauma

SPEAKER_00: center hospitals.

SPEAKER_00: It's important to note that the CPUC regulation only covers assets that don't already fall

SPEAKER_00: under NERC SIP 14.

SPEAKER_00: SIP 14 covers the physical security of low impact distribution assets of which SMUD has

SPEAKER_00: none at this time.

SPEAKER_00: So the intent here is to ensure that utilities evaluate potential physical security risks

SPEAKER_00: and address them through an approved utility security plan.

SPEAKER_00: The CPUC adopted this decision for physical security plan requirements in 2013 after the

SPEAKER_00: Metcalf incident which was an attack on a large distribution substation that was owned

SPEAKER_00: by PG&E.

SPEAKER_00: After the attack, the regulatory bodies throughout the U.S. felt that it was necessary to put

SPEAKER_00: minimum basic security standards in place to protect electrical infrastructure.

SPEAKER_00: So the CPUC has a very precise process, six step process that we go through every five

SPEAKER_00: years.

SPEAKER_00: The first step is to just simply identify these covered distribution facilities.

SPEAKER_00: The second step is to assess the risk of a successful physical attack on these facilities

SPEAKER_00: and determine whether the mitigation measures we currently have in place are sufficient.

SPEAKER_00: In step three, we develop our security plan and we include individual mitigation plans

SPEAKER_00: for each of those facilities where the existing measures don't adequately address the identified

SPEAKER_00: risks.

SPEAKER_00: In step four, we obtain an independent review along with recommendations and then we address

SPEAKER_00: those recommendations.

SPEAKER_00: In step five, we obtain a final review of the plan by a qualified authority as designated

SPEAKER_00: by the CPUC.

SPEAKER_00: And in step six, which is what we're here for tonight, is to have present the validated

SPEAKER_00: final plan and have the board adopt the plan and submit that to the CPUC.

SPEAKER_00: So you should all have a copy of that plan in your board packet.

SPEAKER_00: So let's talk about our findings.

SPEAKER_00: So when we first came in 2021, there were 314 total distribution substations.

SPEAKER_00: Of those, 17 of them were covered under the CPUC directive.

SPEAKER_00: At the time, we found that all 17 substations had either built in redundancy or backup generation,

SPEAKER_00: meaning that no additional mitigation measures were required.

SPEAKER_00: Now it's important to note that in 2025, the CPUC changed the scope of review from just

SPEAKER_00: distribution substations to include all distribution assets, which includes transformers in addition

SPEAKER_00: to substations.

SPEAKER_00: So you'll see that this year in our 2026 plan, we now have 483 total distribution assets.

SPEAKER_00: And again, that's those substations and transformers.

SPEAKER_00: Of those, we have determined that 49 of them are covered under the CPUC directive.

SPEAKER_00: That's the 17 original substations from 2021 and an additional 32 transformers that are

SPEAKER_00: now included under the additional scope that was changed in 2025.

SPEAKER_00: We've reviewed all of those and all 49 assets have either built in redundancy or backup

SPEAKER_00: generation, again, meaning that no additional mitigation measures are necessary.

SPEAKER_00: So as we've talked about, step 4 of this process was a third-party review and the recommendations

SPEAKER_00: with that review.

SPEAKER_00: So we commissioned Archer to review our plan and provide their recommendations.

SPEAKER_00: The major recommendation that Archer had for us was to do an onsite review of each of those

SPEAKER_00: 49 identified assets.

SPEAKER_00: Now I want to make clear that this recommendation was simply a best practice and not an indication

SPEAKER_00: of any challenges or noncompliance with the CPUC directive.

SPEAKER_00: So once we do that review, the results of that review will allow SMUD to make informed

SPEAKER_00: decisions about how to further reduce risk by leveraging the existing mitigation measures

SPEAKER_00: that we have in place or implementing new mitigation measures should that be required

SPEAKER_00: or determined.

SPEAKER_00: So the work to do this review of the 49 assets is going to be completed in 2027.

SPEAKER_00: So in addition to that onsite review, Archer did have a few minor incidental recommendations.

SPEAKER_00: Those have all been incorporated into your final plan as well.

SPEAKER_00: And I think the key takeaway here is really that SMUD's existing design and operational

SPEAKER_00: redundancy continues to satisfy the CPUC requirements without requiring any additional

SPEAKER_00: mitigation measures or projects.

SPEAKER_00: So the fifth step was validation.

SPEAKER_00: We utilized the Sacramento County Sheriff's Department Security Services Division to review

SPEAKER_00: and validate our physical security plan.

SPEAKER_00: They have confirmed that it does adequately address the identified requirements as outlined

SPEAKER_00: by the CPUC.

SPEAKER_00: And then finally we're here at the final step, which is adoption by the board.

SPEAKER_00: So tonight we are seeking approval and adoption from the board.

SPEAKER_00: And should the board approve the adoption of the plan, we are also seeking approval

SPEAKER_00: to submit a copy of the board resolution to the CPUC.

SPEAKER_00: And with that, I will ask if there's any questions.

Unknown: Does there have any questions?

SPEAKER_00: Great.

Unknown: All right.

Unknown: Thank you very much.

SPEAKER_00: Thank you.

Unknown: And I think all of the comment cards were for item number 2, correct?

SPEAKER_04: Correct.

SPEAKER_04: I don't see any hands for this item.

SPEAKER_04: Okay.

SPEAKER_02: Great.

SPEAKER_02: Item number 2 is to discuss large load policies and considerations for cost recovery.

SPEAKER_02: We have Scott Martin, our CFO, here to speak on this item.

Unknown: Do I tell?

SPEAKER_12: Yep.

SPEAKER_12: I can't tell between the red and green.

SPEAKER_12: It is good.

SPEAKER_12: You are good.

SPEAKER_12: So yeah, now it's on.

SPEAKER_12: Good evening, everybody.

SPEAKER_12: Nice to be here with you.

SPEAKER_12: I have to say, I'm kind of the sixth man tonight.

SPEAKER_12: The starting five weren't here, so I got to step in and do this.

SPEAKER_12: I hope I don't miss my shot.

SPEAKER_12: You know, it doesn't rim out on me or something.

SPEAKER_12: But anyway, glad to be here.

SPEAKER_12: Thanks to the public for being here as well.

SPEAKER_12: Appreciate all of you attending and look forward to your comments later.

SPEAKER_12: Let's go to the next slide.

SPEAKER_12: So one thing that, you know, this presentation definitely is the beginning of the conversation

SPEAKER_12: on large loads for us.

SPEAKER_12: Something that it is definitely not is a proposal on the draft language for how we deal with

SPEAKER_12: large loads.

SPEAKER_12: So this is not we are not proposing a tariff tonight.

SPEAKER_12: We're not proposing a draft board policy tonight.

SPEAKER_12: This is really kind of the beginning of what would be the process to develop either a board

SPEAKER_12: policy or potentially at some point a tariff that would address large loads.

SPEAKER_12: So tonight really what we're going to be doing is as it says here on this agenda, we'll be

SPEAKER_12: looking at some backgrounds so we can kind of level set on where we are with large loads

SPEAKER_12: in terms of those loads that are already in our service territory and kind of how they

SPEAKER_12: compare against other larger loads that are also in our service territory.

SPEAKER_12: We'll overview some of the processes, both the local jurisdiction processes as well as

SPEAKER_12: SMUD's processes for sort of approving or moving forward with new loads, large loads.

SPEAKER_12: We'll talk about some of the risks and benefits.

SPEAKER_12: We also did a pretty extensive research effort.

SPEAKER_12: We looked at a lot of utilities in cities and jurisdictions across the country to try

SPEAKER_12: and get a feel for what are all the different policy issues that the board and the public

SPEAKER_12: in Sacramento should consider as we look at the large load issue.

SPEAKER_12: And we also engaged with LPPC and consultants to also help us with that research.

SPEAKER_12: So we'll be showing you some of the results of that.

SPEAKER_12: And then we're going to talk a little bit about what we do from here, how we move forward,

SPEAKER_12: what the next steps might be and what the schedule for those next steps would be.

SPEAKER_12: So that's what we're doing tonight.

SPEAKER_12: Next slide, please.

SPEAKER_12: Yeah.

SPEAKER_12: Thank you.

SPEAKER_12: So in terms of background and, again, just sort of level settings so that everybody's

SPEAKER_12: kind of on the same page as to kind of where we stand right now with large loads.

SPEAKER_12: First off, you know, large loads are definitely an evolving issue in the United States.

SPEAKER_12: You can see, I mean, you can't hardly read the utility press without reading, you know,

SPEAKER_12: a story about large loads.

SPEAKER_12: And it really covers the full gamut, right?

SPEAKER_12: You have everything from cities like Reno or Seattle saying there's a moratorium until

SPEAKER_12: next year on any new large loads until we can figure out the appropriate approach.

SPEAKER_12: To Utah, which is looking at a very significant new large load called Stratis.

SPEAKER_12: And it is, you know, going to be built on a 40,000-acre, 62-square-mile site, which

SPEAKER_12: would be up to 9,000 megawatts of new load for Utah, which is about double their current

SPEAKER_12: full state load.

SPEAKER_12: So it is a very substantial, very significant new large load.

SPEAKER_12: And it runs the gamut between those two extremes, right?

SPEAKER_12: You have pretty much everything in between.

SPEAKER_12: So there's a lot of variety out there.

SPEAKER_12: There's a lot of different situations, different utilities, different approaches, different

SPEAKER_12: cities, different approaches.

SPEAKER_12: So we're hoping, again, to, as we talk about some of the policy issues later on to kind

SPEAKER_12: of cover, you know, where we see the main issues falling.

SPEAKER_12: We do have in Sacramento and SMUD an obligation to serve.

SPEAKER_12: I do want to remind everybody that that is the case.

SPEAKER_12: So as the local jurisdictions act on new load and zone properties and people move in

SPEAKER_12: and build and construct and operate new businesses, we have the obligation to provide them a

SPEAKER_12: lot of electricity within our service area.

SPEAKER_12: That's part of our mandate.

SPEAKER_12: Now within that obligation to serve, we can establish tariffs.

SPEAKER_12: And those tariffs define how we provide that service and at what cost.

SPEAKER_12: They define the relationships that we have with the customer in terms of power quality

SPEAKER_12: and power provision.

SPEAKER_12: And they also define what the customer is going to pay, say, in upfront costs versus

SPEAKER_12: pay over time in rates.

SPEAKER_12: They define what those rate structures look like.

SPEAKER_12: Are they just usage charges?

SPEAKER_12: Are they demand charges?

SPEAKER_12: Are they a mix of them?

SPEAKER_12: Are they infrastructure charges?

SPEAKER_12: Et cetera and et cetera, right?

SPEAKER_12: So we have the obligation to serve, but we also provide tariffs that make our service

SPEAKER_12: fair and reasonable and equitable and follow our rule to board established criteria when

SPEAKER_12: we serve our customers across the different kinds of customer classes that we have.

Unknown: Can I ask a question?

SPEAKER_05: Yes, Director.

SPEAKER_05: I appreciate you framing this and what we're doing tonight.

SPEAKER_05: Sure.

Unknown: What's the chance that there's a large data center out there that's going to come and

SPEAKER_05: want to be served before we get done putting together the tariff?

Unknown: I'd say customers are contacting us all the time.

SPEAKER_12: We do have some applications right now, but I think on the next slide I'll go over kind

SPEAKER_12: of how we are segmenting the service.

SPEAKER_12: And I think maybe I can get to your question a little bit better than right now.

SPEAKER_12: In addition to the tariffs that kind of define that obligation to serve, we also have a couple

SPEAKER_12: of other means that we utilize to encourage local economic development, and that would

SPEAKER_12: be the economic development rates that we have within our tariff.

SPEAKER_12: Those are predefined.

SPEAKER_12: They offer a very small discount to commercial customers' bills as a result of local economic

SPEAKER_12: benefits they provide.

SPEAKER_12: Maybe that's job growth.

SPEAKER_12: Maybe that's a new load in revenue within our service territory and utilization of existing

SPEAKER_12: facilities or other potential local benefits.

SPEAKER_12: So we provide these economic development rates.

SPEAKER_12: It's not necessarily that these economic development rates would apply to, say, new large loads,

SPEAKER_12: but we do have these within the current tariff today.

SPEAKER_12: Six customers are taking it.

SPEAKER_12: Three customers within the last 10 years also took it.

SPEAKER_12: They've ended their agreements.

SPEAKER_12: These agreements are typically 10 years long.

SPEAKER_12: The agreements are really structured through the local economic development agencies in

SPEAKER_12: partnership with them and require the local businesses to provide significant commitments

SPEAKER_12: and information on the new jobs or new loads or new facilities or expanded facilities that

SPEAKER_12: they would be providing in Sacramento as part of getting these rates.

SPEAKER_12: And then we have one other tool.

SPEAKER_12: It's called the customer tailored agreements.

SPEAKER_12: Those agreements are really in place to tackle any of the issues that are really outside

SPEAKER_12: of the tariff language or outside of what our current tariff offerings may provide.

SPEAKER_12: So they would cover anything else that you might think of.

SPEAKER_12: And we have currently one customer that is on a customer tailored rate and agreement.

SPEAKER_12: And that customer signed their agreement back in 2025.

SPEAKER_12: That board may remember us coming to you for approval for that agreement in 2025.

SPEAKER_12: It actually phases that customer out off of the customer tailored agreement and onto their

SPEAKER_12: standard rate by 2028.

SPEAKER_12: So every year they have a migration, a one-step migration, until they get until 2028 when

SPEAKER_12: they will be back on a standard service and the standard service rate for a customer of

SPEAKER_12: their size.

SPEAKER_12: So at that point we won't have any customer tailored agreements.

SPEAKER_12: But again, customer tailored agreements kind of give us that unique flexibility within

SPEAKER_12: certain bounds to provide rates and services that are more tailored to a unique customer

SPEAKER_12: situation that doesn't quite fit perfectly within the tariff structure.

SPEAKER_12: As I mentioned already, we do have one active data center application for a service greater

SPEAKER_12: than 50 megawatts in its extremely early stages.

SPEAKER_12: I'll talk more about kind of what the stage is of progression of a local jurisdiction

SPEAKER_12: approving a project and then SMUD approving a project or serving a project later on in

SPEAKER_12: the presentation and kind of see where maybe these customers are.

SPEAKER_12: We also have four other applications, one of which is a large load greater than 50 megawatts

SPEAKER_12: that is not under the data center kind of genre.

SPEAKER_12: And we have a few others that are under kind of the data center genre, but again, less

SPEAKER_12: than 50 megawatts.

SPEAKER_12: In terms of, yeah, sorry.

SPEAKER_12: Thanks.

SPEAKER_09: I'm trying to put this in perspective if, say, a typical load for us is about 2800 megawatts

Unknown: and the data centers that we currently have are 68.

Unknown: Is that kind of in round numbers?

SPEAKER_12: You're referring to the charts on the right there?

SPEAKER_12: Yeah.

SPEAKER_12: Yeah, so let me get to those now and I think I can break that down a little better for

SPEAKER_12: you.

SPEAKER_12: Yeah.

SPEAKER_12: The top pie chart on the right, that shows the number of accounts that we have.

SPEAKER_12: And that little, I think that's a yellow slice.

SPEAKER_12: I'm going to say yellow.

SPEAKER_12: That's a yellow slice of the pie at the top there with the 20 at the top.

SPEAKER_12: That shows the number of data center accounts that we have.

SPEAKER_12: And then the rest of the pie, I'm not even going to attempt what color that is.

SPEAKER_12: Is that blue?

SPEAKER_12: Okay, blue.

SPEAKER_12: The 904, that's all the other customers' accounts that are greater than 300 KW.

SPEAKER_12: So we have 20 total accounts that are data centers.

SPEAKER_12: We have 904 total accounts that are greater than 300 KW that are not data centers.

SPEAKER_12: So data centers really represent 2% about of the total accounts that are greater than

SPEAKER_12: 300 KW.

SPEAKER_12: Relatively small number of accounts.

SPEAKER_12: The top five data centers that we have are listed there on the right.

SPEAKER_12: You can see the names of those top five data centers within our service territory.

SPEAKER_12: Now the lower pie chart, what that shows is the load.

SPEAKER_12: So the peak demand.

SPEAKER_12: Again the yellow pie slice shows the data center demand, 68 total megawatts for those

SPEAKER_12: 20 accounts.

SPEAKER_12: And then 547 megawatts is the total demand for the 904 accounts that again are greater

SPEAKER_12: than 300 KW.

SPEAKER_12: So this is the commercial group.

SPEAKER_12: So that represents about 11% of the load.

SPEAKER_12: Now you might ask, well, 22% of the number of customers and 11% of the load, data centers

SPEAKER_12: are typically larger and more energy.

SPEAKER_09: It's 11% of the large loads.

SPEAKER_09: Yes.

SPEAKER_09: Exactly.

SPEAKER_09: So 2.5% of our total load.

SPEAKER_09: All the data centers together are 2.5% of our load.

SPEAKER_12: About that.

SPEAKER_12: Okay.

SPEAKER_12: Thanks.

SPEAKER_12: Total system load.

Unknown: Yes.

SPEAKER_12: Exactly.

Unknown: And if you look at the very far right, the top five customers that we have in terms of

SPEAKER_12: demand, state of California, county and city of Sacramento, NTT, which is a data center,

SPEAKER_12: Intel, which is a research campus chip manufacturing, right?

SPEAKER_12: Not necessarily a data center per se.

SPEAKER_12: But those are the top five customers that we've got, commercial customers, in terms

SPEAKER_12: of total demand.

Unknown: Okay.

SPEAKER_12: So let's go to the next slide, please.

Unknown: All right.

SPEAKER_12: Let's talk a little bit about maybe the definition.

SPEAKER_12: I know I've been using the words large loads and those kinds of things.

SPEAKER_12: This really maybe helps to define better what we're trying to talk about when we say large

SPEAKER_12: loads versus say standard loads.

SPEAKER_12: Really when we're talking about standard loads, we're talking about loads that are less than

SPEAKER_12: 50 megawatts total.

SPEAKER_12: That means that they would typically be interconnected on the 69 kV system or on a lower distribution

SPEAKER_12: voltage.

SPEAKER_12: Okay.

SPEAKER_12: Large loads, however, we are defining as greater than that 50 megawatt threshold.

SPEAKER_12: The reason is that those loads would then typically be interconnected to the 115 or

SPEAKER_12: 230 kV transmission system.

SPEAKER_12: Okay.

SPEAKER_12: Today we have nobody, no customer that is in that large load category based on this

SPEAKER_12: definition.

SPEAKER_12: There's nobody that is directly connected to our 115 or 230 kV transmission system.

SPEAKER_12: We only have customers that are, as we're calling on this slide, standard loads, 50

SPEAKER_12: megawatts or less, and connected to our 69 kV or below systems.

SPEAKER_12: In terms of those standard loads, we have rates, rules, rule two, rule 16, which address

SPEAKER_12: upfront infrastructure costs and who pays, customer or SMUD, as well as the nonstandard

SPEAKER_12: rule two.

SPEAKER_12: When we say nonstandard, we mean let's say a customer came in and said, you know what,

SPEAKER_12: I know your standard service is a single feed, but I have a need for higher reliability,

SPEAKER_12: so I want another feed from a separate substation as an example.

SPEAKER_12: So I can be served from this substation with one feed and another substation from a totally

SPEAKER_12: separate feed.

SPEAKER_12: Now I've got two services to my single site.

SPEAKER_12: That helps me with my reliability because if one goes down, I can immediately cut over

SPEAKER_12: to the other.

SPEAKER_12: But I don't need both at the same time.

SPEAKER_12: One is just totally redundant to the other one.

Unknown: I'm only going to use one service at a time.

SPEAKER_12: If somebody were to come in and ask for something like that, it's nonstandard.

SPEAKER_12: That would not be our normal standard service.

SPEAKER_12: That would be covered under rule two.

SPEAKER_12: And the costs of that second feed would be covered and paid for through our rule two

SPEAKER_12: tariff language.

SPEAKER_12: Okay.

SPEAKER_12: Yes, sorry, Director Sambur.

SPEAKER_03: Whose rules are these?

SPEAKER_03: These are ours.

SPEAKER_03: So these are our rules?

SPEAKER_12: They are existing today in our current SMUD tariffs, yes.

SPEAKER_03: Okay.

SPEAKER_03: And where would the public be able to see what these rules are?

SPEAKER_12: They're all online on SMUD.

SPEAKER_12: Okay.

SPEAKER_12: I'm ready to know if they can get them.

SPEAKER_12: Read them through when you're really wanting to relax at night.

SPEAKER_12: You can just go out to SMUD.org, read rule two.

SPEAKER_12: Okay.

Unknown: I personally think it's really exciting.

SPEAKER_12: But I mean, not everybody gets as excited as me about it.

SPEAKER_12: So rule two covers those nonstandard situations.

SPEAKER_12: Rule 16 covers all the standard situations, standard installations within our standard

SPEAKER_12: service.

SPEAKER_12: And that covers what does the customer pay for that standard service versus what does

SPEAKER_12: SMUD pay through or cover through our rates for the service.

SPEAKER_12: Okay.

SPEAKER_12: Because there's really a balance between do you cover all of the infrastructure costs

SPEAKER_12: of server customer through upfront payments or do you cover it through ongoing payments

SPEAKER_12: through the rates, right?

SPEAKER_12: There's a balance between those two things.

SPEAKER_12: And that's what our current rules do is balance between those two things.

SPEAKER_12: Some is covered through our rates.

SPEAKER_12: Some is covered upfront under standard service today.

SPEAKER_12: And then again, as I mentioned, in those unique needs, sometimes we have those customer tailored

SPEAKER_12: agreements.

SPEAKER_12: We only have one.

SPEAKER_12: It's being phased out.

SPEAKER_12: We haven't had many in our history.

SPEAKER_12: I think I've done maybe two in the time that I've been here in 25 years.

SPEAKER_12: So not many.

SPEAKER_12: And then large loads, easy there, oh, sorry, Director.

SPEAKER_12: Don't age me.

SPEAKER_12: All right.

SPEAKER_12: So large loads is a different category.

SPEAKER_12: Again, as I mentioned, we don't have any customers in this category.

SPEAKER_12: We don't have anyone directly connected to our transmission system.

SPEAKER_12: So as far as rates, infrastructure costs, nonstandard needs, all those need to be determined.

SPEAKER_12: Often customers that are going to connect to our transmission system are very unique.

SPEAKER_12: They require upgrades that are not standard upgrades given standard loads.

SPEAKER_12: So because of their uniqueness and their nonstandard nature, and the fact that we've never had

SPEAKER_12: a load that large requesting service from SMUD, we had not ever established really what

SPEAKER_12: the terms would be for customers in that category.

SPEAKER_12: What we have had is customer tailored agreements.

SPEAKER_12: So if we did have a customer that were to come on and wanted service at that greater

SPEAKER_12: than 50 megawatt large load category, then we would utilize today, right now, the customer

SPEAKER_12: tailored agreement to define those service terms, to define what they would pay up front,

SPEAKER_12: to define what their rates would look like, to define how we would protect all of our

SPEAKER_12: other customers, to define what the environmental impacts might be and what we might ask of

SPEAKER_12: the customer.

SPEAKER_12: So all of that within the customer tailored agreement scope.

SPEAKER_12: So let's go to the next slide.

SPEAKER_12: Let's talk a little bit about the different processes that go on to have a customer.

SPEAKER_12: Just the 50 megawatts, why not 25 or 20?

SPEAKER_11: 50 is a big number, although it's not big in terms of what's talked about with AI development.

SPEAKER_12: I think the reason is because less than the 50 megawatt typically gets onto our 69 kV

SPEAKER_12: system for interconnection or lower, like a distribution level or sub-transmission level

SPEAKER_12: type voltage.

SPEAKER_12: And all of those facilities and assets are currently addressed through our current rules,

SPEAKER_12: Rule 2, Rule 16 and rate designs that we currently have in place.

SPEAKER_12: When you start to get above that level, that's where you're starting to interconnect directly

SPEAKER_12: to the 115 or the 230 system.

SPEAKER_12: And at that point, you're on a transmission level service and our current rules and rate

SPEAKER_12: designs don't necessarily address those very large direct transmission level interconnections.

Unknown: Then maybe you need to tweak the terminology, right?

SPEAKER_11: My understanding is that anything over, say, 1,000 volts at 4,000 amps is exceptionally

SPEAKER_11: large.

SPEAKER_11: It's a one-off custom design project, but that's only four megawatts.

SPEAKER_11: So is there something to be said about these are extra-large?

SPEAKER_11: It's not really just large, right?

SPEAKER_11: Because these are 10 times what we would consider a large jump-out project.

SPEAKER_12: I think at the end of the day, our intent is to segment between, and maybe this is just

SPEAKER_12: an example, the 50, greater than 50, less than 50, but to really segment between those

SPEAKER_12: loads that are directly connected to our transmission system versus those loads that don't directly

SPEAKER_12: connect to our transmission system.

SPEAKER_12: That's kind of as a dividing line.

SPEAKER_12: But again, I think we are we haven't established a policy.

SPEAKER_12: We don't have tariff language yet, right, for anything of this nature.

SPEAKER_12: So how we define is going to be the subject of additional discussion as we move forward.

SPEAKER_12: The local jurisdiction process.

SPEAKER_12: Sorry.

SPEAKER_12: Sorry.

SPEAKER_12: You just got to know this is like a really juicy topic.

SPEAKER_05: I know.

SPEAKER_05: There's lots of questions.

SPEAKER_05: I know.

Unknown: I know.

SPEAKER_05: So what I'm wondering about is, if I understand correctly, what you're saying is if there

SPEAKER_05: is a company who wants 50 plus megawatts, then that could be handled in a custom tailored

SPEAKER_05: agreement if we don't have a tariff addressing it.

SPEAKER_05: So we don't have to worry about someone sneaking under their nose under the tent and building

SPEAKER_05: a big data center.

SPEAKER_05: Is that correct?

SPEAKER_12: Not immediately, no.

SPEAKER_12: Yeah.

SPEAKER_12: We have customer tailored agreements.

SPEAKER_12: They are an option for us.

SPEAKER_12: That is the option that we would use today if a customer were to want service today.

SPEAKER_12: Yes.

SPEAKER_12: We would utilize that pathway.

SPEAKER_12: I think what we're saying in this presentation is that we would propose pathways, potential

SPEAKER_12: pathways forward to help further define what service we and how that service would play

SPEAKER_12: out and what it would cost and what customers would be responsible for versus what would

SPEAKER_12: SMUD be responsible for, right?

SPEAKER_12: And the host of different kinds of impacts that might occur if a large load were to show

SPEAKER_12: up in our service territory.

SPEAKER_12: So we're going to propose maybe different pathways to address this going forward.

SPEAKER_12: But today, right now, it would be customer tailored agreements.

SPEAKER_12: Yes.

SPEAKER_05: Thank you.

SPEAKER_03: So by the time they come to us, though, the locals have already...

Unknown: Yes.

SPEAKER_03: They've gone through a lot of work.

SPEAKER_03: Permits may have already been given.

SPEAKER_03: They're just asking us for energy and the rates and the deal.

SPEAKER_03: So there's a whole lot of work that's been done, hopefully in a public process in the

SPEAKER_03: local land, to get to that point before it ever gets to us.

SPEAKER_03: Exactly.

SPEAKER_03: I just wanted to get to...

SPEAKER_03: Yes.

SPEAKER_03: Right.

SPEAKER_03: No, I'm trying to make sure everybody understands that who's listening because I think people

SPEAKER_03: think that we bring in a lot of emails and people think that we somehow have the final,

SPEAKER_03: you know, the say, but a lot of say has been had long before it gets to us.

SPEAKER_12: Yes.

SPEAKER_12: Absolutely.

SPEAKER_12: The local jurisdiction process happens before our process.

SPEAKER_12: We don't proceed with service or construction of facilities unless the local jurisdiction

SPEAKER_12: has already approved and allowed that customer to utilize the land and do the building and

SPEAKER_12: has addressed things, critical things like water, zoning, local environmental impacts,

SPEAKER_12: air, you know, all these other traffic issues, you know, noise, all these things that the

SPEAKER_12: local jurisdictions are focused on and concerned about when they're talking about land use

SPEAKER_12: and zoning and appropriate, you know, use for a customer site.

SPEAKER_12: Okay.

SPEAKER_12: So all of that process and I laid out sort of an example of what that local jurisdiction

SPEAKER_12: process looks like and it really goes from, you know, an application to a zoning and land

SPEAKER_12: review to environmental and air quality to community engagement to ultimate approval

SPEAKER_12: and then building permits and then development and then any other compliance requirements

SPEAKER_12: that might be ongoing, post development, all of that process, again, it's going to

SPEAKER_12: be unique to each different local jurisdiction.

SPEAKER_12: So this doesn't spell out every individual local jurisdiction and how they do it.

SPEAKER_12: But based on, you know, the local jurisdictions going through a process like this, that would

SPEAKER_12: all occur, all the issues around water and land use, zoning, et cetera, et cetera are

SPEAKER_12: going to be addressed by those local jurisdictions prior to it landing with SMUD.

SPEAKER_12: When it lands with SMUD, then we address the electrical elements of this and the service

SPEAKER_12: elements, electrical service elements of it.

SPEAKER_12: But we also usually contribute to that local process by doing an impact study and design,

SPEAKER_12: preliminary design, electrical design and impact study as part of that local jurisdiction

SPEAKER_12: approval process.

SPEAKER_12: So there's understanding of and information on what it would take to serve a customer

SPEAKER_12: with generation and infrastructure once that customer would start electric service.

SPEAKER_12: So that study is part of that, usually part of that local jurisdiction process and we

SPEAKER_12: provide that information as part of that process.

SPEAKER_12: And the customer pays for upfront the cost of that study work that we do in order to

SPEAKER_12: look at what their impacts would be.

SPEAKER_02: One of the goals of having a policy so these developers before they even start the process

SPEAKER_02: is to understand what potentially could be their cost.

SPEAKER_02: Exactly.

SPEAKER_02: And they're going to Utah and Texas because they're like throwing money, but if we're

SPEAKER_02: not saying whatever policy, we say it's cost recovery you're paying for, that could either

SPEAKER_02: sway or detract people because if we're saying no, you're paying for everything, we're not

SPEAKER_02: doing an economic development rate because we don't do a lot of them anymore.

SPEAKER_02: Exactly.

SPEAKER_02: Right.

SPEAKER_02: Be jobs, they could take that all in consideration, be like I don't want to go through this lengthy

SPEAKER_02: process if they're not going to hand us a bag of cash like these other states are.

SPEAKER_02: So that's kind of where you're trying to get to so that people know before this very, it's

SPEAKER_02: multi-year project.

SPEAKER_02: I mean, even before it gets to us.

SPEAKER_02: So the goal is that we give some general guideline of saying it's both rates or upfront

SPEAKER_02: because I've seen different structures all over.

SPEAKER_02: Some are doing a half half, some are making them pay for all of it.

SPEAKER_02: And that's why we're going through this process.

SPEAKER_02: So people have a heads up as to just so you know, this is if you decide to come here,

SPEAKER_02: this is what you could be looking at because these are large, I mean three to five years

SPEAKER_02: minimum.

SPEAKER_02: Oh yeah.

SPEAKER_12: And probably longer.

SPEAKER_12: Longer even.

SPEAKER_12: So yeah, once they work out their local jurisdiction process, then they get to the SMUD process.

SPEAKER_12: And if we have to build substantial new facilities or assets or even generation, I mean, we've

SPEAKER_12: experienced how long those things take.

SPEAKER_12: They're very long in their time frames to be able to build infrastructure locally to

SPEAKER_12: provide, get the land, do the right of ways, do the permitting, all that work and construction,

SPEAKER_12: it takes many, many years.

SPEAKER_12: And you're absolutely right.

SPEAKER_12: The reason we're really wanting to develop more definition or policy around this or language

SPEAKER_12: tariff, for instance, as an example around this is to provide that guidance to those

SPEAKER_12: who might be interested in Sacramento.

SPEAKER_12: Right now, what we have to give them as well, we have customer tailored agreements and those

SPEAKER_12: are very wide open without a lot of parameters.

SPEAKER_12: So you start negotiating from the top and it can take a very long and significant amount

SPEAKER_12: of time to work through all the different elements because there's no guidelines on

SPEAKER_12: those elements.

SPEAKER_12: So policies would help provide some guidelines.

SPEAKER_12: Tariff language could help provide guidelines so that people, customers, interest parties

SPEAKER_12: could understand kind of where we stand as a foundation on some of these elements that

SPEAKER_12: are at play when they come in and want to locate here.

SPEAKER_12: So let's go to the next slide.

SPEAKER_12: So the SMUD process, again, we do have that obligation to serve defined by our tariffs

SPEAKER_12: and defined by, again, if we don't have a tariff that is applicable, then we use our

SPEAKER_12: customer tailored agreements.

SPEAKER_12: So it would be defined by those agreements and again approved by our board.

SPEAKER_12: We only do our process post the local jurisdiction.

SPEAKER_12: So local jurisdictions can act, make their decision on all the local issues and environmental

SPEAKER_12: concerns, water, land use, any environmental impacts, et cetera.

SPEAKER_12: And then we go through our process to allocate budgets, to approve large contracts, any kind

SPEAKER_12: of customer tailored agreement or other large contracts that we might have to render into

SPEAKER_12: to address the new load, any large land purchases, any significant new infrastructure that we

SPEAKER_12: might have to do.

SPEAKER_12: All that would be part of our assessment and our planning for any kind of new large load.

SPEAKER_12: And we would be bringing those to the board as needed across and as required by the board's

SPEAKER_12: policies throughout the process.

SPEAKER_12: Typically, you know, again, just to kind of give an example of how things might play out,

SPEAKER_12: we have kind of the flow at the bottom there where it talks about customer's

SPEAKER_12: needs.

SPEAKER_12: We go through the CEQA process and then we do all of the final design and right of way

SPEAKER_12: acquisition and then we do construction and development.

SPEAKER_12: That would be execution after that.

SPEAKER_12: And of course, the board would have multiple spots along that process where we would be

SPEAKER_12: bringing say agreements to the board, budgets to the board, CEQA approval to the board, those

SPEAKER_12: kinds of things.

Unknown: So the state requires us to serve.

SPEAKER_03: If someone gets, you know, a business gets a permit from a local entity, we don't get

SPEAKER_03: to pick and choose winners and losers and say we can't provide electricity.

SPEAKER_03: We're not going to.

SPEAKER_06: But we do have the authority to give some parameters on that and our rates.

SPEAKER_03: And couldn't we also require some like support for us to aren't there opportunities for us

SPEAKER_03: to say we really would benefit if you would provide some commercial battery storage that

Unknown: is back up for you but it's also back up for us in the grid.

SPEAKER_03: Or maybe they could use their roof to provide solar or what have you.

SPEAKER_03: So those are all conversations that could be had, correct?

SPEAKER_12: Yes.

SPEAKER_12: Okay.

SPEAKER_12: So let's go to the next slide, actually.

Unknown: Oh, sorry.

SPEAKER_12: Dr. Ritz.

SPEAKER_11: You're saying that these two processes are separate between this side and the previous

SPEAKER_11: side but they're really not.

SPEAKER_11: Because we generally, right, in our utility permitting process, we're going to want to

SPEAKER_11: see a building permit.

SPEAKER_11: There's generally a point in our process where it's like okay, where is your building permits?

SPEAKER_11: Right.

SPEAKER_11: Right.

SPEAKER_11: Especially before we might schedule.

SPEAKER_11: We're not going to schedule a crew until you have a permit in hand.

SPEAKER_11: So it's certainly overlap.

SPEAKER_11: I think I have two questions.

SPEAKER_11: But one of my questions is how much of these processes are going to operate in parallel

SPEAKER_11: versus serial with each other and then how do we be?

SPEAKER_11: I think we're pretty good at this already.

SPEAKER_11: How flexible can we be?

SPEAKER_11: And I know the PUC and the transportation electrification rulemaking with the investor

SPEAKER_11: and utilities have spent a lot of time dealing with this in the previous five or ten years

SPEAKER_11: about what are those parameters around how far does the project move forward and how

SPEAKER_11: much will they cover without some guarantees so they don't put a bunch of money into this

SPEAKER_11: and things don't move forward.

SPEAKER_11: We've seen that with our black and beach electrification work on the heavy duty side as well.

SPEAKER_11: So there's certainly lessons that have been learned that transmit over to this space.

SPEAKER_11: So it's certainly not mysterious.

SPEAKER_11: And I guess my question is at what point in a small process do you hit a dollar figure

SPEAKER_11: where it's going to come to the board?

SPEAKER_11: We don't see individuals coming because we're not talking about anything in a 20 to 50 megawatt

SPEAKER_11: range where you're talking about building a substation just for a project.

SPEAKER_12: And that's exactly the point here is that when you're talking about large loads, it

SPEAKER_12: becomes a really distinct different level of risk, a different level of expenditure,

SPEAKER_12: a different level potentially of benefits, a different level of permitting and resource

SPEAKER_12: requirement, right?

SPEAKER_12: And all those things we feel like should be at least at a high level addressed either

SPEAKER_12: through a board policy so we have more guidance as to how we address them or through tariff

SPEAKER_12: language and or through tariff language so we have more direction on how to address

SPEAKER_12: them as we proceed forward with anybody that may be interested.

SPEAKER_12: I think you're absolutely right.

SPEAKER_12: They're unique.

SPEAKER_12: They're very unique.

SPEAKER_12: And we need to address them in a different way than the standard service that we're doing

SPEAKER_12: today.

Unknown: Yeah.

Unknown: Let's go to the next slide.

Unknown: Okay.

SPEAKER_12: So let's talk a little bit about the risks and the benefits that we see.

SPEAKER_12: And I just kind of summarized some of the biggest, highest level ones.

SPEAKER_12: Certainly there are more than this, but I think these are the main ones that are of

SPEAKER_12: most concern that we've seen as most concern across the country.

SPEAKER_12: First we've talked about infrastructure.

SPEAKER_12: A lot of these large loads require significant new infrastructure, new lines, new transmission

SPEAKER_12: lines that go miles and miles, maybe new transformers that are very large, expensive assets, maybe

SPEAKER_12: new substations as Director Rose was talking about, either onsite or offsite, new generation

SPEAKER_12: that could be required and that could be a host of different kinds of generation from

SPEAKER_12: renewable to other kinds of generation that might be needed.

SPEAKER_12: So there's a lot of infrastructure and planning that need to go into these very large loads.

SPEAKER_12: And with that comes the risk of stranded assets.

SPEAKER_12: You might build all of these assets to serve the new load.

SPEAKER_12: And then that customer goes into bankruptcy and struggles with their business and is all

SPEAKER_12: of a sudden gone.

SPEAKER_12: That means that all those assets that you just put in place, that you just built, that

SPEAKER_12: you just developed, while other customers may use them over a much longer period of

SPEAKER_12: time, this customer is now gone and not supporting them with revenues.

SPEAKER_12: So that's the risk of the stranded asset.

SPEAKER_12: How do you address that risk within your policies or within your tariff?

SPEAKER_12: In addition to that, we have the renewable portfolio standards that we must meet.

SPEAKER_12: So any new sales that we have would have to meet the RPS regulation and requirements.

SPEAKER_12: In addition to where do we find the additional energy beyond the RPS requirements and the

SPEAKER_12: capacity to meet the customer's peak loads and needs, as well as how do we address any

SPEAKER_12: carbon obligations that we might have as a result of this new load to the extent it can't

SPEAKER_12: be served by renewables.

SPEAKER_12: And then the benefits on the other side here, we do and would have significant new electricity

SPEAKER_12: sales and revenue as a result of those sales.

SPEAKER_12: And that revenue can obviously help, especially if you are able to find points and spots on

SPEAKER_12: your system where you have capacity that customers are not utilizing 100% of the time.

SPEAKER_12: A lot of our assets are built to serve peak loads.

SPEAKER_12: So a lot of the time when that customer is not peaking, the assets are available for

SPEAKER_12: use.

SPEAKER_12: And so if a customer can come in and utilize those assets in times where they're not being

SPEAKER_12: used, not during the peak, then we've got additional electricity sales without a lot

SPEAKER_12: of new infrastructure costs.

SPEAKER_12: And those sales can then help offset the cost for other customers and help keep our rates

SPEAKER_12: much more affordable.

SPEAKER_12: So there are definite potential benefits there.

SPEAKER_12: That really has to do with optimizing our existing infrastructure.

SPEAKER_12: If we have existing infrastructure that could be more fully utilized, then we could benefit

SPEAKER_12: from additional sales with that infrastructure.

SPEAKER_12: There's also potentially opportunity for new grid.

SPEAKER_12: I'm sorry, Director Fisherman.

Unknown: Scott, I want to talk about optimizing existing infrastructure, but in a more regional concept.

SPEAKER_10: I think we're all pretty familiar with the idea of geographic diversity, especially when

SPEAKER_10: it comes to generating resources like wind and solar.

SPEAKER_10: If it's not windy or if the sun isn't shining in one location, chances are it is someplace

SPEAKER_10: else.

SPEAKER_10: And if we can optimize those resources, that provides benefit to everybody.

SPEAKER_10: To what degree – I know people are talking about having a data center that can shift

SPEAKER_10: load from one to another, maybe a cross-country for that matter, or somewhere else in the

SPEAKER_10: world for that matter.

SPEAKER_10: But what kind of coordination is happening regionally?

SPEAKER_10: Is there any to say, gee, let's try to take advantage of that, right?

SPEAKER_10: If we can really have load that helps us pay fixed costs, as long as it's running when

SPEAKER_10: we have excess capacity on the grid and it shifts someplace else when we don't, is

SPEAKER_10: there coordination happening like that?

SPEAKER_12: I would say, yes, the regional markets may help support things like that, but there's

SPEAKER_12: a point at which peaks become local, right?

SPEAKER_12: There's a point at which it's your system, it's your peak that you need to address.

SPEAKER_12: And that peak is physical equipment limitation, right?

SPEAKER_12: What can you actually physically serve with the equipment and assets that you've got?

SPEAKER_12: And so to the extent that it becomes that localized, regional markets aren't – even

SPEAKER_12: if there's capacity available in the regional market, it's really a local limitation on

SPEAKER_12: your asset's ability to serve the load that is the limit that you're talking about.

SPEAKER_12: And so it's more localized, and the customer who is putting that load on your local system

SPEAKER_12: is the one or others, other customers that would need to flex around that peak locally

SPEAKER_12: to address those local system constraints that you might have.

SPEAKER_12: So I think – oh, sorry, Director Tomayo.

SPEAKER_07: So you listed several risks there.

SPEAKER_07: Those are all things that we can address both in tariffs and in policy and in whatever tailored

SPEAKER_07: agreement we have to de-risk those to a pretty good extent.

SPEAKER_07: Is that correct?

SPEAKER_07: Yes.

SPEAKER_07: Absolutely.

Unknown: I think that's just something that I think that we want to make sure that we always do,

SPEAKER_07: that we're keeping our organization and our existing customers whole.

SPEAKER_07: We don't want to accept the risk because some big corporation wants to come in here

SPEAKER_07: and make us build a bunch of things.

SPEAKER_07: We can put a lot of those things on their dime and have contractual and even financial

SPEAKER_07: mechanisms to make sure that we reduce the risk as much as possible.

SPEAKER_07: Correct?

SPEAKER_12: Yeah, absolutely.

SPEAKER_12: I think that's part of the reason we would propose to move forward with either a policy

SPEAKER_12: and or tariff so that we can address these risks fairly and make sure that customers

SPEAKER_12: who are interested in locating in Sacramento are aware of how we're addressing these risks,

SPEAKER_12: how we intend to address these risks, so that they're fully aware before they show up and

SPEAKER_12: ask for an application, for instance, but they understand how we're going to address

SPEAKER_12: these risks.

SPEAKER_12: They might as well understand, and our customers also understand, how we address these risks.

SPEAKER_12: But absolutely.

SPEAKER_12: Let's go to the next slide.

SPEAKER_12: Here are all the different sampling of the entities that we've taken a look at across

SPEAKER_12: the country in doing our research as well as working with LPPC and also our consultant

SPEAKER_12: to look at what are all the different potential policies and tariffs and ideas around the

SPEAKER_12: country as to how to address large loads.

SPEAKER_12: And I'll just say there's a big variety, as we all really know.

SPEAKER_12: But some of the issues that really rise to the top, and we've talked about a lot of them

SPEAKER_12: in this presentation already, but having looked at all of these different entities, it's really

SPEAKER_12: about interconnection queue and process and infrastructure.

SPEAKER_12: It's about rate design, rate schedule language, cost collection, risk mitigation.

SPEAKER_12: These are the things that really kind of rise to the top of the list of things, environmental

SPEAKER_12: considerations and emissions, things like these all kind of rise to the top from the

SPEAKER_12: surveys that we've done.

SPEAKER_12: So let's go to the next slide.

SPEAKER_12: So I just kind of give a really simplistic, and I stress simplistic because there's a

SPEAKER_12: huge variety and a lot of detail in terms of tariff language and policy language and

SPEAKER_12: contract language across a huge spectrum of different utilities and different locations

SPEAKER_12: and different cities across the country.

SPEAKER_12: So I don't mean to say that this is comprehensive necessarily, but it kind of gives a good high

SPEAKER_12: level kind of summary of where different issues, what different subjects there are

SPEAKER_12: that are going on in terms of policies and tariffs when you talk about large loads and

SPEAKER_12: what those issues are and then maybe some examples of the common practices that people

SPEAKER_12: are doing.

SPEAKER_12: So in terms of pricing, I think we've talked about pricing itself, how do we price, what

SPEAKER_12: charge do we do, do we do time of day, fixed charges, demand charges?

SPEAKER_12: Is it a rate schedule?

SPEAKER_12: Is it a customized contract?

SPEAKER_12: And I think we've seen examples of those across the country in both directions.

SPEAKER_12: In terms of commodities, and that would be the energy supply, I think there's a variety

SPEAKER_12: again there.

SPEAKER_12: Do we pass on the cost of that energy procurement to the customer?

SPEAKER_12: Do they build their own generation?

SPEAKER_12: Do we build the generation for them and take on that requirement?

SPEAKER_12: Do we do a power purchase agreement with a third party and have them build generation

SPEAKER_12: and support the new customer load?

SPEAKER_12: There's a variety of approaches there.

SPEAKER_12: I think we've seen people settle in on through the rate design in terms of recovering the

SPEAKER_12: commodity costs.

SPEAKER_12: That's what we do with all of our customers today is through our energy prices and our

SPEAKER_12: demand charges and our tariff prices.

SPEAKER_12: We collect the generation component or the energy component of our rates.

SPEAKER_12: There's also a large interest in new energy sources from very large loads, things like

SPEAKER_12: nuclear energy or small modular reactors or a combination of different energy sources

SPEAKER_12: like solar, wind plus batteries plus natural gas combustion turbines or things like that

SPEAKER_12: being developed across the country as well.

SPEAKER_12: In terms of infrastructure, it really has been boiling down to who pays that infrastructure

SPEAKER_12: cost?

SPEAKER_12: Do you pay it upfront or do you pay it ongoing through the rate design?

SPEAKER_12: I think a lot of jurisdictions have settled on, well, the customer is going to pay it

SPEAKER_12: 100% upfront and then we'll provide a refund as customers come onto that facility or as

SPEAKER_12: the customer that it was built for starts to utilize the facility and you generate some

SPEAKER_12: revenues and then you start making, based on the reserve, you start making some refunds

SPEAKER_12: to the customer for that 100% upfront payment.

SPEAKER_12: Financial security, I think, Director Tamayo mentioned this.

SPEAKER_12: This is really an important one in terms of the risk, the credit risk that might come

SPEAKER_12: with a new customer.

SPEAKER_12: Do you require a long-term contract?

SPEAKER_12: Do you require a minimum notice of departure?

SPEAKER_12: Maybe a minimum billing demand?

SPEAKER_12: What that means is that, let's say, the customer is a 60 megawatt customer but they're only

SPEAKER_12: utilizing 40 megawatts most of the time.

SPEAKER_12: They don't ever hit that 60 megawatt that they asked you for.

SPEAKER_12: Do you charge them at the 60 megawatts regardless or do you charge them at the 40 megawatts

SPEAKER_12: that they're actually using?

SPEAKER_12: If you establish a minimum billing demand, that would mean you charge them the 60 instead

SPEAKER_12: of the actual 40, right?

SPEAKER_12: So that's an option.

SPEAKER_12: Transit fees and then risk premiums or collateral requirements or letters of credit.

SPEAKER_12: Again, as customers might come in with very solid credit.

Unknown: It might be a highly rated utility.

SPEAKER_12: May be very high in terms of negative income but five years from now, circumstances may

SPEAKER_12: have changed.

SPEAKER_12: Markets may have changed.

SPEAKER_12: Customers' value might have changed and all of a sudden that customer's credit is now

SPEAKER_12: questionable.

SPEAKER_12: Should we have a letter of credit and collateral requirements to ensure ourselves against that

SPEAKER_12: changing credit landscape over time?

SPEAKER_12: You can see some of the examples of things that are going on in the industry to try and

SPEAKER_12: address this financial security issue.

SPEAKER_12: Scott?

SPEAKER_12: Yes.

SPEAKER_12: I'll ask for questions.

SPEAKER_11: In the research that we've done, we typically have four components of commercial rates.

SPEAKER_11: The demand charge is often the key one.

SPEAKER_11: Has that research shown that that's not been sufficient, that they're over-requesting and

SPEAKER_11: then that demand charge is not recouping that over-capaciting bill?

Unknown: I don't know that there's enough data to say that that's the trend.

SPEAKER_12: But I think utilities are being conservative in making sure that that doesn't occur, right?

SPEAKER_12: So implementation of a minimum billing demand has been a solution to that risk.

SPEAKER_12: Even if the risk isn't necessarily proven out that that risk exists.

Unknown: I think there's the potential for that to exist.

SPEAKER_12: I think we've seen it in our own service territory as well at times.

SPEAKER_05: Scott, I wonder if you could talk a little bit more about the customer may bring their

SPEAKER_05: own generation.

SPEAKER_05: Can you tell us what that might look like?

SPEAKER_12: So for instance, the simplest would be put solar on your site, interconnected to your

SPEAKER_12: facility and net meter it.

SPEAKER_12: That would be probably the simplest approach.

SPEAKER_12: Maybe a more complex approach might be try and install an SMR.

SPEAKER_12: Get the law changed in California to allow for new nuclear to be built and install a

SPEAKER_12: small modular reactor to meet a lot of your load.

SPEAKER_12: That would be maybe the most aggressive or extreme example.

SPEAKER_12: It could be a balance of different things.

SPEAKER_12: Batteries, solar, maybe even new natural gas engines or combustion turbines, right?

SPEAKER_12: All of which the customer could pay for potentially put on their location and site, manage themselves,

SPEAKER_12: run themselves, maintain themselves, permit themselves, et cetera.

SPEAKER_05: That they would be totally off the grid, correct?

SPEAKER_12: Potentially they may want backup service from us.

SPEAKER_12: So in case their units are down but they still have to run whatever their loads are, they

SPEAKER_12: may want SMUD to provide that service in case their small microgrid isn't working,

Unknown: right?

SPEAKER_12: Or maybe they do a balance.

SPEAKER_12: They provide for some of their load and then SMUD provides for the balance of that load.

SPEAKER_12: So there's a lot of different varieties, I think, here.

SPEAKER_12: But the point is that some customers may want to do their own generation and permit it,

SPEAKER_12: own it, maintain it, put it on their site, et cetera.

SPEAKER_05: And just to refresh my memory, because I didn't think that customers could totally serve themselves.

SPEAKER_05: I thought that the obligation to serve is part of us having a monopoly.

SPEAKER_05: So how would there be a situation like that?

SPEAKER_12: There may be a situation where it's mutually beneficial for the customer to serve a portion

SPEAKER_12: of their load and for SMUD to serve another portion of their load, right?

SPEAKER_12: So in those circumstances, we would negotiate that approach and how it would play out and

SPEAKER_12: who pays what, right?

Unknown: Okay.

Unknown: I actually read two articles that I was kind of sci-fi.

SPEAKER_03: But apparently some of these data centers are so frustrated with the lack of the grid

SPEAKER_03: capacity that they're looking at doing their own geothermal and going straight down under

SPEAKER_03: the plants to try and grab it and then also looking at infrared coming from space.

SPEAKER_03: So I have never know.

SPEAKER_03: They've got a lot of money to figure it out.

Unknown: They do.

SPEAKER_12: There's examples where they're restarting old nuclear power plants.

SPEAKER_12: I think they're not going to retire very well.

SPEAKER_12: So if you have enough money and you really want that power and you're a very large load.

SPEAKER_02: And just to be clear, that all has to be permitted and gone through a process.

SPEAKER_02: It's not like they can just say, I'm going to build something.

SPEAKER_02: It still has to go through the local jurisdiction, which again, we don't have any impact.

SPEAKER_02: We can comment like another public.

SPEAKER_02: But if somebody wants to build a consensus on there, they would have to get cited, permitted,

SPEAKER_02: go through that very lengthy process, secure the natural gas pipeline and all of that.

SPEAKER_02: We would just support them in whatever balance they may need.

Unknown: Yes.

Unknown: I'm going to hold on to it, Scott.

SPEAKER_10: I'll wait till you're done.

SPEAKER_12: Okay.

SPEAKER_12: So we talked about benefits to the system.

SPEAKER_12: To the extent customers can do demand response or have interruptible service, there might

SPEAKER_12: be situations where they can void the peak and benefit our system by utilizing facilities

SPEAKER_12: that aren't utilized and contribute to system costs.

SPEAKER_12: They can do that either through batteries, maybe backup generation, or maybe even potentially

SPEAKER_12: other means.

SPEAKER_12: Technology, new technology.

SPEAKER_12: And then of course, all the environmental issues, how do we deal with carbon emissions,

SPEAKER_12: land use.

SPEAKER_12: Again, these are our issues.

SPEAKER_12: A lot of times we deal with those through the rate design and others do as well.

SPEAKER_12: But obviously, how we deal with carbon emissions and how we deal with land use policy would

SPEAKER_12: be important as part of this issue.

Unknown: Okay.

SPEAKER_12: Next slide.

Unknown: So let's talk about now maybe turn the page a little bit from policy issues and talk about

SPEAKER_12: a little bit how could we address these things going forward.

SPEAKER_12: There's really kind of two ways.

SPEAKER_12: The first way would be a board policy.

SPEAKER_12: And the second way would be a rate schedule.

SPEAKER_12: Right?

SPEAKER_12: Like rate language in a tariff.

SPEAKER_12: Okay.

SPEAKER_12: When I say terms, that would mean like terms of service that you might apply.

SPEAKER_12: Maybe they're environmental terms, maybe they're pricing terms, maybe they're conditions of

SPEAKER_12: service terms, maybe they're generation, how do you recover the generation, maybe it's

SPEAKER_12: infrastructure, right.

SPEAKER_12: So those would be the terms of an agreement.

SPEAKER_12: Under a board policy, the board would have the flexibility to define under each of those

SPEAKER_12: different elements what is the appropriate kind of high level goals and objectives for

SPEAKER_12: the policy.

SPEAKER_12: For example, under infrastructure, the board might say we need to have a fair allocation

SPEAKER_12: of infrastructure cost to the customer and no impact on the rest of our customer base

SPEAKER_12: as a policy consideration.

SPEAKER_12: Right?

SPEAKER_12: The board could decide what would be the best approach to addressing infrastructure as part

SPEAKER_12: of the board policy.

SPEAKER_12: In a rate schedule, however, we need to be very defined.

SPEAKER_12: This is how infrastructure is going to be dealt with.

SPEAKER_12: This is exactly how we will charge it, how it will get refunded, over what time period,

SPEAKER_12: and under what terms.

SPEAKER_12: And that would all be driven through the rate schedule and applied to every customer case.

SPEAKER_12: With a board policy, you'd be more flexible.

SPEAKER_12: Each customer might be a little bit different.

SPEAKER_12: Have different circumstances and characteristics so you could address it more flexibly through

SPEAKER_12: a board policy that's higher level that would give you more room to address all the different

SPEAKER_12: potential customer situations.

SPEAKER_12: Types of customers, similar thing.

SPEAKER_12: You could have under a board policy pretty much any customer right over a certain level

SPEAKER_12: or attaching to our transmission system as an example.

SPEAKER_12: In a rate schedule, it would be very specific to that rate schedule.

SPEAKER_12: You would define a rate schedule like we have today.

SPEAKER_12: If you're between 300 and 500 KW, you're on this rate schedule.

SPEAKER_12: That's what you get.

SPEAKER_12: Here it is.

SPEAKER_12: If you're over a megawatt, here's your rate schedule.

SPEAKER_12: This is what it is.

SPEAKER_12: If you're over 50, here's your rate schedule.

SPEAKER_12: That's what it is.

SPEAKER_12: That would be the rate schedule approach.

SPEAKER_12: And that would be very defined in terms of the terms of service there.

SPEAKER_12: In terms of the ability to change, in a rate schedule, it would be every two years in a

SPEAKER_12: board policy, the board could take it up, address it, have conversation about it, engage

SPEAKER_12: the public about it, and then change the policy if they saw fit.

SPEAKER_12: The process to change it would be board meetings under a board policy and under the rate schedule

SPEAKER_12: would be the GM report and public rate process.

SPEAKER_12: And that occurs generally speaking every two years.

SPEAKER_12: We could have an off cycle rate process to address something in the tariff language,

SPEAKER_12: but that would be an exception, certainly not the rule.

SPEAKER_12: And the result of these, one, the board policy would be the high level guiding document.

SPEAKER_12: The result would be a contract with the customers that would fit all the board policy that has

SPEAKER_12: been defined.

SPEAKER_12: And the staff would come to the board to describe how the contract that's been negotiated fits

SPEAKER_12: all the appropriate board policies that have been established.

SPEAKER_12: Under the rate schedule, it would be the rate schedule language.

SPEAKER_12: The customer would meet the rate schedule requirements and as long as they met the rate

SPEAKER_12: schedule requirements, they would get on that service.

SPEAKER_12: The timing for approval of board policy could be done by Q4, 2026.

SPEAKER_12: A rate schedule would take until Q3, 2027 because our next rate process will not begin

SPEAKER_12: until Q2, 2027.

SPEAKER_12: So at that point, we would be able to introduce a new rate schedule, have it vetted in public

SPEAKER_12: or with the public, and then come back to the board with a resolution that addresses

SPEAKER_12: large loads through the rate schedules by Q3, 2027.

Unknown: Again, if you wanted to do both, that's kind of the last column there, kind of maybe is

SPEAKER_12: a blend of both worlds there.

SPEAKER_12: You could establish the high level policy by Q4, 2026, and then potentially establish

SPEAKER_12: more detailed rate schedule requirements by Q3, 2027.

SPEAKER_12: I will mention to Director Booby-Thompson's comments earlier that we have a number, a

SPEAKER_12: few customers, not dozens and dozens, but a few customers who have applied for service

SPEAKER_12: that are larger.

SPEAKER_12: And those customers, we are now treating through, or would treat if they get to the point where

SPEAKER_12: they get to the SMUD process and through the local jurisdiction process, we would be treating

SPEAKER_12: them as part of a customer tailored agreement.

SPEAKER_12: That's how we would address them today.

SPEAKER_12: But if the board were to establish a policy by Q4, 2026, that would give us a lot more

SPEAKER_12: guiding principles to be able to share with customers and be clear with customers about

SPEAKER_12: here are the principles that you will need to meet as we negotiate with you and develop

SPEAKER_12: a contract with you for any potential service in the future, assuming you get through the

SPEAKER_12: local jurisdiction process.

Unknown: So, let's go to the last slide.

SPEAKER_12: And so the path forward here, really this lays out maybe a schedule.

SPEAKER_12: Tonight's the presentation on large loads, kind of addressing the whole landscape of

SPEAKER_12: different issues with large loads.

SPEAKER_12: Q3 of 2026, from this point, we would propose board engagement and a presentation of a schedule

SPEAKER_12: to develop a board policy, a draft policy, and to engage the public in a public process

SPEAKER_12: to help us and comment on a draft board policy.

SPEAKER_12: And then in Q4, we would hope to be able to get through both the public process and conversation

SPEAKER_12: with the board to get to a point where we have a draft policy for board review by Q4,

SPEAKER_12: 2026, and ultimately adoption in Q4, 2026.

SPEAKER_12: If we go the rate schedule route, then Q2, 2027 would be the rate process and the public

SPEAKER_12: outreach process would occur as part of the rate process, just like we normally do.

SPEAKER_12: But this large load tariff would be part of that.

SPEAKER_12: And then in Q3, 2027, we would look for a rate process board vote and an adoption of

SPEAKER_12: the tariff at that point.

SPEAKER_12: So we're interested in your feedback.

SPEAKER_12: We want to hear which kind of pathways the board would be interested in or is thinking

SPEAKER_12: about.

SPEAKER_12: And hopefully we can get to kind of a direction on working through a policy and or rate schedule

SPEAKER_12: development and how we want to engage with our customers on this topic.

Unknown: Got a lot of ground to cover here, Scott.

SPEAKER_10: First of all, I think we need to do a policy as soon as possible.

SPEAKER_10: By the end of this year, I think that's pretty clear to me.

SPEAKER_10: If we do the policy, we don't necessarily need to follow it up with a tariff.

SPEAKER_10: The policy could say these are the parameters under which we want these facilities to be

SPEAKER_10: interconnected, and staff gets to work with each one to make sure that whatever deal they

SPEAKER_10: get fits those parameters and then that would come back to the board.

SPEAKER_12: Right.

SPEAKER_12: So can you go to the previous slide, actually?

SPEAKER_12: So that's exactly right.

SPEAKER_12: You could establish a board policy on its own.

SPEAKER_12: It doesn't have to have a tariff with it.

SPEAKER_12: You could do that by Q4, 2026, and the result would be contracts that we would be bringing

SPEAKER_12: back to the board.

SPEAKER_12: And the showing would be how those contracts and the terms of the contracts fit the board

SPEAKER_12: policy.

SPEAKER_10: If we did that and then also decided to do a tariff as part of the rate process, would

SPEAKER_10: that allow a given customer to say, could we allow a given customer to come in and say,

SPEAKER_10: I'd rather do a one-off deal with you, let's negotiate outside of the tariff, or would

SPEAKER_10: it have to be under the tariff?

Unknown: I think the intent of the tariff would just like our tariffs today.

SPEAKER_12: They're meant to be the catchall.

SPEAKER_12: So that would be kind of the intent, right, is to be the catchall.

SPEAKER_12: I think the board policy would establish how we write the language within the tariff to

SPEAKER_12: be the catchall.

SPEAKER_12: But you're always going to get those circumstances that don't quite fit.

SPEAKER_12: And that's why we have that customer tailored agreement.

SPEAKER_12: And I think that's where it would fall out with the tariff and board policy.

SPEAKER_12: You'd have a potential for a customer tailored agreement that would meet tariff language

SPEAKER_12: in some circumstances, meet all the board policy, and we'd have to have a showing as

SPEAKER_12: to why it's beneficial.

SPEAKER_10: The way I'm kind of framing this in my mind and telling me this is even a legitimate way

SPEAKER_10: to do this, if I'm going to buy a new house, I go to a mortgage broker and I say I'd like

SPEAKER_10: to make a big down payment so my payments are less, or I can extend the time frame by

SPEAKER_10: – I can do a 30-year loan or a 15-year loan, or if I get that 30-year loan and I want to

SPEAKER_10: make a minimal down payment but I'm willing to pay some points, I can buy down the cost

SPEAKER_10: of the interest rate.

SPEAKER_10: So any one of the developers of these locations is going to want that – may want that same

SPEAKER_10: kind of flexibility.

SPEAKER_10: Could that level of flexibility be built into a tariff that allows them to make some of

SPEAKER_10: those choices?

SPEAKER_12: Right.

SPEAKER_12: Exactly.

SPEAKER_12: And that's probably more of the challenge with the tariff, is that when you develop

SPEAKER_12: the tariff it's going to be more specific about those kinds of elements, right?

SPEAKER_12: What specifically do we want for collateral?

SPEAKER_12: What specifically do we want for a letter of credit?

SPEAKER_12: What specifically – how would we address different credit ratings across different

SPEAKER_12: – right?

SPEAKER_12: How would we specifically address upfront infrastructure costs and refund that?

SPEAKER_12: That would all be more spelled out in the tariff again to be more of the catch-all.

SPEAKER_12: This is how we're going to do this specifically, right, versus a contract under a board policy

SPEAKER_12: which would be the board setting a policy of customers are going to pay, say, 100% of

SPEAKER_12: the upfront cost if you're a large load.

SPEAKER_12: Right.

SPEAKER_12: Right?

SPEAKER_12: Okay.

SPEAKER_12: That's clear.

SPEAKER_12: Now, how does that work, right?

SPEAKER_12: And that can be defined within the contract terms and would have a showing as to how that

SPEAKER_12: meets the board policy as part of the board approval.

SPEAKER_10: And I know we get inquiries about this all the time from prospective companies that

SPEAKER_10: want to do this kind of facility.

Unknown: I mean, are they really all over the place?

SPEAKER_10: Some are willing to put big cash upfront and pay for everything upfront.

SPEAKER_10: Some are willing – well, you know, I don't have the cash right now, but I'm willing

SPEAKER_10: to sign a long-term rate agreement that's at a higher rate or whatever, and I'll pay

SPEAKER_10: it off over time.

SPEAKER_10: They're all over the place.

SPEAKER_12: Yeah.

SPEAKER_12: So, kind of, you look at – well, if you go back to the previous slide where we're

SPEAKER_12: talking about all these different elements, right, you can think of a variety of things

SPEAKER_12: under each of these subjects that customers may be differing on, right?

SPEAKER_12: Some might want to provide their own renewables.

SPEAKER_12: Some might want you to go get a PPA, right?

SPEAKER_12: Some might want you to go build something for them in a partnership agreement, right?

SPEAKER_12: Maybe they've got land locally.

SPEAKER_12: So there's just a huge variety of different options that could occur for each different

SPEAKER_12: customer potentially across these different elements.

SPEAKER_12: So yeah, the flexibility of policy may help you fit those very unique customer circumstances

SPEAKER_12: a little bit better than potentially a tariff.

SPEAKER_10: And I think from previous discussions the board has had, there are certain data centers

SPEAKER_10: that just suck up a ton of power and other resources, and we probably couldn't handle

SPEAKER_10: those just based on the size of the loads that they're coming in.

SPEAKER_10: There are smaller ones that we can handle, and my question is, how much flexibility do

SPEAKER_10: we have to provide incentives for the type of loads that we can handle and that are beneficial

SPEAKER_10: to us versus those that are not?

Unknown: Yeah, I think at the end of the day that can be addressed within the policy, and we

SPEAKER_12: would be able to help define that better, right, as to what might be beneficial versus

SPEAKER_12: non-beneficial load.

SPEAKER_12: Okay, thank you.

Unknown: I have something.

Unknown: Heidi?

SPEAKER_03: Okay, thanks.

SPEAKER_03: So I've been hearing that they're worried they're not setting enough for these fast enough,

SPEAKER_03: which is shocking because they're all over the place already, but now they're offering

SPEAKER_03: smaller options to homeowners to process data on site and pay them like $21,000.

SPEAKER_03: I don't know if you've heard about this, but this is the kind of thing that worries me.

SPEAKER_03: How fast is this moving?

SPEAKER_03: How do we keep up with it?

SPEAKER_03: But I'm now worried that our customers are going to start getting approached to do things

SPEAKER_03: like that, and what are we going to do about that?

SPEAKER_03: Like that to me is something that would need to be in a policy, and we're going to have

SPEAKER_03: to, if you haven't heard of this, it's actually the latest thing.

SPEAKER_03: So that really concerned me when I heard that because that could mean a whole bunch of things

SPEAKER_03: that we don't understand about the grid.

Unknown: Yeah, and that might be something where you might want to address it.

SPEAKER_12: If it's really small customers, like residential customers as an example, that might overload

SPEAKER_12: local circuits and local panels.

SPEAKER_12: Yeah, I mean, that might be something you want to address through both a tariff language

SPEAKER_12: and potentially the policy.

SPEAKER_12: So I'm very much where Director Fisherman is.

SPEAKER_03: I feel strongly we need to get a policy quickly.

SPEAKER_03: So fall, fine.

SPEAKER_03: But I do think we need to look at the rates.

SPEAKER_03: If we're going to do it with our normal process, that's a ways off, and things are coming.

SPEAKER_03: So I guess I'm sure the public and I want to know that we're being transparent about

SPEAKER_03: this.

SPEAKER_03: So they're not on the last to no list.

SPEAKER_03: There's a lot of discussions that happen in the economic development world before the

SPEAKER_03: public knows they're coming.

SPEAKER_03: And I think this is an item that has become such of a hot topic around the country because

SPEAKER_03: of all the problems that have happened.

SPEAKER_03: There's a wide variety of problems that I think they're nervous and they just want to

SPEAKER_03: know that we're going to be transparent in this community about what's being discussed

SPEAKER_03: and they get a chance to weigh in.

SPEAKER_03: And I'm saying this for our friends in local government land as well if they're listening

SPEAKER_03: because I do feel like we all have to work together on this as partners in the community

SPEAKER_03: for the customers and for our relationships.

SPEAKER_03: So thanks.

Unknown: Rosanna?

Unknown: Thank you.

Unknown: Well Scott, I want to say that I really appreciate the way that you have laid this out.

SPEAKER_05: It's very clear.

SPEAKER_05: And the good news is that it's pretty clear that all of us on this board feel that it's

SPEAKER_05: important that our customers are not going to be paying for AI data centers that come

SPEAKER_05: to town and want a free ride.

SPEAKER_05: We have the opportunity to set a policy that will prevent that from happening.

SPEAKER_05: So I think we absolutely need to do that first.

SPEAKER_05: In regards to the tariff or the rate making, I'm a little bit more interested in the custom

SPEAKER_05: tailored agreements.

SPEAKER_05: Just because things are so different for so many different customers, it might be hard

SPEAKER_05: to capture all of that in a new rate schedule.

SPEAKER_05: But I for one feel like we need to definitely set a board policy and then take a look at

SPEAKER_05: whether or not we want to establish a tariff or have more flexibility with a custom tailored

SPEAKER_05: agreement.

SPEAKER_09: Thank you.

SPEAKER_09: Nice work, Scott.

SPEAKER_09: Thank you very much.

SPEAKER_09: A couple things.

SPEAKER_09: First off, I believe that within the board's policies already there's guidance on this,

SPEAKER_09: but I think it's a good idea to pull it all together in one place.

Unknown: There will be some redundancy in there, but that's not the worst thing in the world.

SPEAKER_09: It makes it easier for folks to understand and very clear to people.

SPEAKER_09: Second thing, when you bring this back, I'll be very interested in talking about how we

SPEAKER_09: procure the power for the data centers.

SPEAKER_09: We have some very low cost power right now.

SPEAKER_09: Some of our wind, some of our solar, some of the cheapest power ever been created, our

SPEAKER_09: hydro.

SPEAKER_09: Then when we have a newcomer, do we share that low cost power with them and then have

SPEAKER_09: to buy additional expensive power to fill the gap?

SPEAKER_09: That would tend to increase the average rate for folks.

SPEAKER_09: I want to pay attention to that to make sure that our existing customer base isn't losing

Unknown: access to all this great low cost power that they helped to create.

SPEAKER_09: Next thing, on your list of benefits there, there's one benefit which doesn't matter to

SPEAKER_09: us, I suppose, here at SMUD, being a nonprofit, you work efficiently on all the things that

SPEAKER_09: we do, but it definitely will matter to the local governments.

SPEAKER_09: That's the utility users tax and the property taxes that they're going to see from these

SPEAKER_09: things.

SPEAKER_09: My back to the envelope on a 300 megawatt data center, a small data center by the current

SPEAKER_09: standards, the city of Sacramento could see north of $15, $20 million a year from the

SPEAKER_09: creation of one of these things.

SPEAKER_09: That's an awful lot of stake to a city that can't pay the bills right now and is trying

SPEAKER_09: to find revenue wherever they can.

SPEAKER_09: I guess the closing thought on that is these are high stakes things.

SPEAKER_09: Let's make sure our existing customer base doesn't suffer.

SPEAKER_09: But if we do this right, we can all be better off for it.

SPEAKER_09: We can even see the average rates go down because we'll have higher sales to share the

SPEAKER_09: overhead among.

Unknown: With that, thanks.

SPEAKER_09: I appreciate it very much.

SPEAKER_09: Of course, we'll all be looking forward to when you come back.

Unknown: Dave, did you have a comment?

SPEAKER_02: I still have questions, but I think you guys have comments.

SPEAKER_07: I'll just pile on with the notion that I do think we need to have a policy that is oriented

SPEAKER_07: towards protecting our existing customers and community and all the different types

SPEAKER_07: of risks.

SPEAKER_07: Even if there is a ‑‑ I think that should also inform if there is a tariff, any sort

SPEAKER_07: of tariff would have to be informed by a policy that says structure it so that our

SPEAKER_07: existing customers are protected.

SPEAKER_07: I actually ‑‑ I'm a little skeptical of the notion that we would even be ready to

SPEAKER_07: do a tariff since there are so many different versions of how this could fold out.

SPEAKER_07: Before we set up a tariff unless it was pretty limited in scope, it seems like we don't really

SPEAKER_07: know enough about where all of this is headed or even what the opportunities are to benefit

SPEAKER_07: our system or protect our system or protect our organization and our customers.

SPEAKER_07: It's pretty clear to me that we need to do a policy whether we think we might do a tariff

SPEAKER_07: subsequent to that or not.

SPEAKER_07: Thank you.

SPEAKER_02: Questions or comments?

Unknown: I have a number of things that I wanted to address.

SPEAKER_11: In terms of what would be a beneficial load and those fine lines when we are not at our

SPEAKER_11: peak 40 hours, do we have ‑‑ what kind of a tool or resource do we have so we understand

SPEAKER_11: where and when those hours are?

SPEAKER_11: Is there a heat map of our distribution grid?

Unknown: Yes.

SPEAKER_12: We began looking at that and where we have that sort of available capacity options and

SPEAKER_12: looking at how much we might have available in different locations to address that exact

SPEAKER_12: question.

Unknown: Okay.

Unknown: One of my things that's always in the back of my mind is what is this ‑‑ what is

SPEAKER_11: going to be the durability of this demand and what is the risk of that?

SPEAKER_11: You have seen space X's IPO this week.

SPEAKER_11: One of the pieces of the talking points is built into that valuation is doing AI in space.

SPEAKER_11: Pie in the sky certainly sounds like it.

SPEAKER_11: I never doubt the ability of the owner to do things that are unexpected.

SPEAKER_11: But there are ‑‑ how do you juggle that risk?

SPEAKER_11: From our perspective, right, it's basically how do you mitigate a risk of infrastructure

SPEAKER_11: and stranded assets to our customers.

SPEAKER_11: I think the industry can figure out how it wants to produce power, who wants to be more

SPEAKER_11: efficient and the market and the visible hand will take its course as well.

SPEAKER_11: But it says something in the back of my mind.

SPEAKER_11: I wonder what that said.

SPEAKER_11: I think that we're protected pretty well already by our existing rate structures.

SPEAKER_11: We require our customers to build their own equipment and pay for their own equipment.

SPEAKER_11: Not all utility rates are set up that way.

SPEAKER_11: Is that generally true?

Unknown: Well, yeah.

SPEAKER_12: I mean, there's a lot of nuances to that.

SPEAKER_12: But we do require a lot of the on‑site underground facilities would be paid by the customer.

Unknown: Okay.

SPEAKER_11: Yeah.

Unknown: So, this thing is like that.

SPEAKER_11: Also, one of my questions is, as you think about this, what's that marginal cost of power

SPEAKER_11: around this?

SPEAKER_11: The active discussion is the MCSS, a watt of gas or a watt of the new renewables, which

SPEAKER_11: is all of our new generation.

SPEAKER_11: You can just look at the prices of the contracts that we're signing up for and you can see

SPEAKER_11: stuff is between, say, $70 and $110 a megawatt or a tiny bit more.

SPEAKER_11: So I think that's a really interesting ‑‑ it's an interesting question.

SPEAKER_11: When you start looking at the actual rate, I will say this, I do agree with the idea

SPEAKER_11: of doing a board policy and then following up with a more detailed rate and knowing that

SPEAKER_11: hope of that will work out.

SPEAKER_11: But if you get into the details, you might need to do some adaptive management there

SPEAKER_11: and pivot as well.

SPEAKER_11: The only other things that we've given much thought to are alignment ‑‑ how are we

SPEAKER_11: aligning with a lot of the economic development work and acquisitions, like what GSAP does

SPEAKER_11: locally and I know Rancho Cordova is very eager.

SPEAKER_11: These cities are all very eager to attract businesses.

SPEAKER_11: So I'm sure they're putting together packages for business attraction.

SPEAKER_11: I'm curious how that will align with our own existing rates.

SPEAKER_11: Our economic development rate generally requires a significant number of jobs to be created.

SPEAKER_11: My first thought about reading the details is they probably wouldn't qualify for that.

SPEAKER_11: Very unlikely.

SPEAKER_12: But in terms of working with GSAP, that is absolutely ‑‑ it's a requirement of the

SPEAKER_12: EDR rate, the economic development rate.

SPEAKER_12: You can't get on the economic development rate without working with the local economic

SPEAKER_12: development agency and getting a support from that agency in terms of what you're bringing

SPEAKER_12: and the value you're bringing to the community.

SPEAKER_12: So yeah, that's absolutely ‑‑ that coordination must occur under the current tariff.

SPEAKER_11: My last question is just would you have a comment or two about our CO2 obligations and

SPEAKER_11: how we're currently thinking ‑‑ how can we maintain ‑‑ reasonably maintain those

SPEAKER_11: obligations and growing?

SPEAKER_12: And that's the issue around who is ultimately going to be obligated to deal with that carbon

SPEAKER_12: requirement.

SPEAKER_12: It's possible that SMUD might not be.

SPEAKER_12: It kind of depends on how you may set up the energy generation, right?

SPEAKER_12: We may own the renewables.

SPEAKER_12: They may own, say, the nonrenewals as an example, in which case the customer might be responsible

SPEAKER_12: for their own carbon emissions and addressing the carbon emissions with the state and under

SPEAKER_12: the cap and trade program.

SPEAKER_12: So it really ‑‑ how we structure that energy supply is going to be critical in terms

SPEAKER_12: of who has the carbon risk and obligation at the end of the day.

SPEAKER_12: Or if there is a carbon obligation at the end of the day.

Unknown: Yeah.

Unknown: I'll be structured in policy also.

SPEAKER_02: Exactly.

SPEAKER_02: So we don't have to leave it up for discussion.

SPEAKER_02: We can say anything above XYZ, low needs to be procured under these parameters that

SPEAKER_02: are renewable and whatever.

SPEAKER_02: Absolutely.

SPEAKER_02: Part of the policy.

Unknown: Absolutely.

SPEAKER_12: Yes.

Unknown: Dave, you had an initial comment?

SPEAKER_02: Yeah.

SPEAKER_07: One of the things ‑‑ you know, actually I wanted to support what Director Bowie Thompson

SPEAKER_07: just said about, you know, where your ‑‑ you know, attributes of the power that you're

SPEAKER_07: getting.

SPEAKER_07: Another thing that I want to be really clear about is I want to make sure that, you know,

SPEAKER_07: especially since there's so many ‑‑ or there's all this hype and we know there's

SPEAKER_07: going to be strong companies that come in and meet their obligation ‑‑ you know,

SPEAKER_07: meet their goals and some of them are going to blow it.

SPEAKER_07: Or at least that seems like a significant risk to me.

SPEAKER_07: And if a whole bunch of companies are building these centers, some are going to succeed and

SPEAKER_07: some are going to fail.

SPEAKER_07: I want to make sure that the risk is on them and that, you know, that you mentioned letters

SPEAKER_07: of credit, things like that.

SPEAKER_07: So if they're not paying for things up front, that we still have a way to, you know, if

SPEAKER_07: they go belly up, that we're not left holding them back.

SPEAKER_07: So I think that's a really important aspect of it because there's so many companies that

SPEAKER_07: are getting into this.

SPEAKER_07: And if it gets over built on a national scale, then even if they're strong companies, they

SPEAKER_07: may fail at this.

Unknown: Yeah.

SPEAKER_12: Absolutely totally agree.

SPEAKER_12: And I think there's a big variety in terms of security, right?

SPEAKER_12: There's a plethora of different options in terms of security there.

SPEAKER_12: But absolutely agree that security needs to be one of the things we address.

Unknown: I had some logistical questions that I think the public may not quite understand.

SPEAKER_02: In Sacramento County, besides the business parks ‑‑ because I understand the business

SPEAKER_02: parks are probably the most primed, right?

SPEAKER_02: Because of the infrastructure is there, but they are business parks.

SPEAKER_02: Right.

SPEAKER_02: That's what their purpose is for.

SPEAKER_02: Outside of, you know, Metro and McClellan, where could we possibly even see land wise

SPEAKER_02: that could even be close to anything shovel ready in the next five ‑‑ because that's

SPEAKER_02: a limiting factor, right?

SPEAKER_02: Just the land master.

SPEAKER_02: Do we see ‑‑ I know in Harold and Galt there's some pockets.

SPEAKER_02: There's not a lot of infrastructure out there.

SPEAKER_12: Yeah.

SPEAKER_12: I mean, if you were to look maybe east in the Wiltonish area, maybe south, like you

SPEAKER_12: said, in the Galt Grove potentially, maybe Natomas.

SPEAKER_12: But there's not ‑‑ we're not like these other states that have thousands of acres

SPEAKER_02: ready to plop when it is ‑‑ We're not Texas.

SPEAKER_02: We don't have lots and lots of land.

SPEAKER_02: We're a little unique in that.

SPEAKER_02: Very true.

SPEAKER_02: You say you have one in the hopper.

SPEAKER_02: Is that in an already established area or would that be someone in the longer term that

SPEAKER_02: would have to be more fully developed?

SPEAKER_02: Well, it's still a very long term.

SPEAKER_12: Sure.

SPEAKER_12: It's going to be a very long term regardless.

SPEAKER_12: Yeah.

SPEAKER_12: But yeah, it would be more in the Sacramento area.

SPEAKER_12: Okay.

Unknown: Yeah.

SPEAKER_02: Okay.

Unknown: You know, there's a lot of great policies and tariffs out there already.

SPEAKER_02: I think you've seen Georgia in terms of what they're doing, in terms of making sure that

SPEAKER_02: there is demand, making sure ‑‑ I think TVA actually has a higher rate for data centers.

SPEAKER_02: I think, you know, I trust that, you know, the staff will go through the process and

SPEAKER_02: see ‑‑ I mean, other people are doing this first.

SPEAKER_02: A lot of them aren't doing them well.

SPEAKER_02: But I think that's the great thing with AI now, right?

SPEAKER_02: You can see what policies ‑‑ but I've seen ‑‑ you know, I don't see anybody

SPEAKER_02: currently but I see little bits and pieces and I think you did a good job.

SPEAKER_02: I would like to echo, you know, let's make sure that it's economically safe for our rate

SPEAKER_02: payers to be able to, you know, have this opportunity also is something I don't want

SPEAKER_02: to miss.

SPEAKER_02: You know, you're already seeing some utilities actually lowering rates and proposing lowering

SPEAKER_02: rates because they have such high generation.

SPEAKER_02: So I trust that the staff will look at the models out there.

SPEAKER_02: That's what's nice about having a policy board is you can come with some great ideas and

SPEAKER_02: we can discuss in the public.

SPEAKER_02: But, you know, the advent of the data centers I think has been a scary premise largely for

SPEAKER_02: states that don't have policies and don't have boards and avenues.

SPEAKER_02: So I hope that we can look at what failures, look at some lessons learned.

SPEAKER_02: I think a lot of people rushed in.

SPEAKER_02: They saw it as a great land race and gold rush for their communities but didn't look

SPEAKER_02: at, you know, the overall policies.

SPEAKER_02: I think we're also different here in California where we do have a very long and arduous CEQA

SPEAKER_02: where our process where these other states do not have the same process.

SPEAKER_02: So I know we will be leaning on our fellow jurisdictions, you know, to make sure that,

SPEAKER_02: you know, these are all open and transparent policies.

SPEAKER_02: But I agree with having a policy first to just get that.

SPEAKER_02: What's also nice about policies, we review them on an annual basis.

SPEAKER_02: We're rates are a bit more of a process and I think down the road once we get some examples,

SPEAKER_02: I think it will help with the rate process but I don't want to hold up.

SPEAKER_02: At least so that the business public can get an idea of where we're going also to help

SPEAKER_02: with their planning.

SPEAKER_02: I think that's the biggest thing.

SPEAKER_02: If they know they have general guardrails, it may influence, you know, their financial

SPEAKER_02: decision whether or not to locate here or someone that has less arduous process in

SPEAKER_02: terms of financing.

SPEAKER_02: Any other comments before we move on?

SPEAKER_02: I know we have public comments.

Unknown: Okay.

Unknown: So we have Scott, do you have any closing comments or anything?

SPEAKER_02: No, thank you very much.

SPEAKER_12: I think we have what we need.

SPEAKER_12: Great.

SPEAKER_02: Thank you.

SPEAKER_02: We have several comments.

SPEAKER_02: So first is Rick from 350 Sacramento.

SPEAKER_08: Okay.

SPEAKER_08: Thank you, staff and board members.

SPEAKER_08: It's also good to see my old boss here.

SPEAKER_08: I did a great job presenting all of the issues.

SPEAKER_08: I'm speaking today on behalf of a group of environmentalists, not just 350, and that group

SPEAKER_08: is listed in our submitted comments where there's a lot more detail about our concerns

SPEAKER_08: about large data centers in our region.

SPEAKER_08: There's also some specific comments that should have come in from our energy advisor, Ed Smiloff.

SPEAKER_08: On a host of issues and others like Peter Macon will be speaking as well.

SPEAKER_08: I'm not here really to talk about rates.

SPEAKER_08: A lot of people think of me as a rates person, but I'm not going to be addressing those specifically.

SPEAKER_08: I guess what I'd be more talking about has to do with some policy provisions that we

SPEAKER_08: would like to see in any future agreements on serving data centers.

SPEAKER_08: The first one would be public transparency.

SPEAKER_08: Many of us were blindsided by the 18-megawatt data center expansion of PRIME at Macon Business

SPEAKER_08: Park.

SPEAKER_08: It's now been approved and under construction.

SPEAKER_08: I know that the EJ community was very upset about it for various reasons.

SPEAKER_08: Tonight, we are learning from Scott's presentation that SMUD has at least one active possible

SPEAKER_08: applicant in the greater than 50-megawatt range.

SPEAKER_08: Again, these huge data centers can create a lot of potential huge impacts to the surrounding

SPEAKER_08: community.

SPEAKER_08: I think it's only fair that the public get fair warning about these giant projects.

SPEAKER_08: SMUD really is the first point of contact since they have to do an electric design study

SPEAKER_08: before they can really get started.

SPEAKER_08: We feel that SMUD should make the project information that they receive publicly available

SPEAKER_08: as early as possible.

SPEAKER_08: We'd like to know who it is that 50-megawatt plus project is and where they will be locating

SPEAKER_08: so people can prepare for that.

SPEAKER_08: As far as preferred siting, because SMUD is first in line, it's in a unique position to

SPEAKER_08: help decide where and how these data centers can be connected.

SPEAKER_08: Of course, it's best if they're near existing substations and greater than 69 kV transmission

SPEAKER_08: lines, particularly if they have two feeds available.

SPEAKER_08: They should also be in disturbed or industrial areas that are far away from nearby communities.

SPEAKER_08: And we think that SMUD should consider releasing a map of these preferred sites as a guide

SPEAKER_08: both to applicants and to the concerned public.

SPEAKER_08: We need to safeguard the zero carbon plan, make sure that even with all the valley filling

SPEAKER_08: and extra revenue that we do have enough batteries and renewables to provide power

SPEAKER_08: for them and not go over our carbon zero goal.

SPEAKER_08: So thank you.

Unknown: Okay.

Unknown: Then we have John Mubber.

SPEAKER_01: Good evening, Chair, Board and committee.

SPEAKER_01: Thank you for the presentation.

SPEAKER_01: Good work.

SPEAKER_01: This is a very important topic and SMUD needs to make sure they get it right.

SPEAKER_01: Regarding the slide that states as a benefit, quote, may help keep rates affordable.

SPEAKER_01: Is there evidence this has ever happened?

SPEAKER_01: I have found no evidence of a data center keeping rates affordable.

SPEAKER_01: I have dealt with this firsthand moving here from Texas.

SPEAKER_01: Data centers will promise jobs, no or low water use and interruptible electricity demand.

SPEAKER_01: They will deliver a handful of jobs after construction, hundreds of thousands of gallons

SPEAKER_01: of water use a day and 24 7 365 day constant electricity demand.

SPEAKER_01: They have to run 24 7 to make it economical to pay for the very expensive CPUs and GPUs

SPEAKER_01: on the server racks.

SPEAKER_01: They can't be switched on and off.

SPEAKER_01: Currently communities all over the country are organizing and protesting new data centers.

SPEAKER_01: Nobody wants them anywhere close to them.

SPEAKER_01: In a June 10th letter to the Texas PUC and ERCOT, Governor Abbott directs, quote, the

SPEAKER_01: PUC to take action to ensure that data centers, interconnections will result in reduced residential

SPEAKER_01: electrical bills.

SPEAKER_01: And the PUC will take action to require data centers to pay for all of their electrical

SPEAKER_01: infrastructure cost to ensure that no residential rate payer is burdened by those costs.

SPEAKER_01: If the Governor of the most pro-business and anti-regulation state in the country

SPEAKER_01: is directing these actions, the SMUD Board should consider these at its bare minimum

SPEAKER_01: requirements.

SPEAKER_01: New large loads for data centers should be offered no incentives.

SPEAKER_01: They should be required to pay for all of their electrical infrastructure costs, including

SPEAKER_01: new generation.

SPEAKER_01: They should have their own tariff.

SPEAKER_01: So other rate classes won't be affected by their electricity use.

SPEAKER_01: I shared the whole letter in my written comments for you to read the whole thing.

SPEAKER_01: Thank you for your consideration.

Unknown: And then we have Peter Machen.

SPEAKER_13: Thank you to Scott for the presentation.

SPEAKER_13: Rick and I are tag teaming tonight because I'm going to address some of the other issues

SPEAKER_13: that we wrote up in our comments, our letter from 350 Sacramento.

SPEAKER_13: One of them is the rate impacts.

SPEAKER_13: I think some of the other commenters have mentioned this too and board members too.

SPEAKER_13: But we don't think that other customer classes should be impacted by data center power use

SPEAKER_13: or infrastructure requirements, that those costs should be borne by the data centers

SPEAKER_13: themselves.

SPEAKER_13: I also agree with previous, I think some of the notes that Scott had, the developer should

SPEAKER_13: be finding all of the required upgrades and pay for all of their power either through

SPEAKER_13: pay for it up front or supply a bond or an LLC to protect the rate payers in case they

SPEAKER_13: kind of go and disappear.

SPEAKER_13: I think we could pay them back via rate reductions over time as long as that doesn't impact the

SPEAKER_13: other rate classes.

SPEAKER_13: I do think we should have a separate class for large loads.

SPEAKER_13: My preference, I think I agree with Director Rose about 25 megawatts.

SPEAKER_13: Because if I did the math right, you could serve 35 megawatts on a 21 kV dedicated feeder.

SPEAKER_13: And that's a lot of power.

SPEAKER_13: And that's not 115 kV.

SPEAKER_13: So you can get a lot of energy use there.

SPEAKER_13: Let's see.

SPEAKER_13: I guess I better get moving or I'm going to run out of time.

SPEAKER_13: And then also if you were to charge other rate classes for some of the upgrades provided,

SPEAKER_13: only charge them if those upgrades actually provided a benefit to those rate classes.

SPEAKER_13: And then for interconnection conditions, one of the things we'd like to see, even though

SPEAKER_13: it's been mentioned that the county basically has the first approval process so that they

SPEAKER_13: probably would become public before coming to SMUD.

SPEAKER_13: We think it would be a good idea to create an interconnection queue for large loads where

SPEAKER_13: it would be posted publicly.

SPEAKER_13: Again, if they meet the definition of large load, whatever the board decides is a large

SPEAKER_13: load.

SPEAKER_13: And then it would be okay to redact their names.

SPEAKER_13: But their point of interconnection should be defined.

SPEAKER_13: Their voltage connection level should be defined.

SPEAKER_13: The type of load that they are, it might not be just data centers.

SPEAKER_13: It could be logistics, manufacturing, whatever.

SPEAKER_13: That should be in the queue.

SPEAKER_13: And then the request, the date the request came in and in service date and then the size

SPEAKER_13: of the project.

SPEAKER_13: And then that way the public is kept informed of what's going on with loads.

SPEAKER_13: And I'm out of time.

SPEAKER_13: So thank you.

Unknown: Do we have any online people?

SPEAKER_04: We do have one hand up from Muriel Strand.

Unknown: Okay.

Unknown: Can you hear me?

Unknown: Yep.

SPEAKER_14: Okay.

Unknown: So I definitely think that big new customers should be charged the marginal rates of the

SPEAKER_14: new power that they might require, however that sort of falls out.

SPEAKER_14: So I'm a mechanical engineer, so I'll leave the comments about the loads and all of that

SPEAKER_14: to other folks who clearly know more about than I do.

SPEAKER_14: But so I'm looking at it more from an economics and a market perspective.

SPEAKER_14: So I read The Economist.

SPEAKER_14: And in recent weeks, maybe months, I've been reading stuff on there expressing skepticism

SPEAKER_14: about what is the business case for these guys.

SPEAKER_14: Personally I look at these big corporations and all in this giant race with each other

SPEAKER_14: to get in there first.

SPEAKER_14: Okay.

SPEAKER_14: What about the customer?

SPEAKER_14: What actually is the service that they're providing for the customer?

SPEAKER_14: And so in the conversation about having one of these people in Sacramento, the economic

SPEAKER_14: development department should be part of the conversation so they can talk about what is

SPEAKER_14: the business case for this and what service are they providing for Sacramento's?

SPEAKER_14: Because if this is for somebody thousand miles away, they can do it there.

SPEAKER_14: So yeah, this is a great conversation and I think everybody's going to stay tuned.

SPEAKER_14: So thanks for sharing.

Unknown: I do not see any more hands.

Unknown: Brandon.

Unknown: I just want to have a follow-up question.

SPEAKER_11: What are our requirements around business confidentiality and what could potentially be made public

SPEAKER_11: while respecting these people's rights under our processes?

Unknown: Laura Lewis, Chief of the UN Government Affairs Officer.

SPEAKER_04: I think generic information I think we can post.

SPEAKER_04: I know in some cases if we're looking at largely coming to the area in consultation with GSEC,

SPEAKER_04: sometimes we're required to execute NDAs.

SPEAKER_04: So in that case, we wouldn't be able to disclose the entity, but we could certainly, if someone

SPEAKER_04: buys an application, more than just an inquiry, put the amount of the load, something generic

SPEAKER_04: that wouldn't identify the entity.

Unknown: Yeah, I just think it's something that we should think about.

SPEAKER_11: I think there's certainly a balance there and can always put in a public records access

SPEAKER_11: to.

Unknown: Go ahead.

SPEAKER_03: Yeah, I find that interesting.

SPEAKER_03: I didn't know that we were required to sign NDAs with GSEC.

SPEAKER_03: Because we're a public agency.

SPEAKER_03: We're not required to sign them.

SPEAKER_04: But sometimes we do as part of that conversation because sometimes these entities are looking

SPEAKER_04: at multiple cities to locate and so we do enter into NDAs from time to time to keep

SPEAKER_04: the project details and everything confidential.

SPEAKER_04: We've done that.

Unknown: Okay, thank you.

SPEAKER_02: And there were comments about being blindsided by this 18 megawatt.

SPEAKER_02: We have several.

SPEAKER_02: And what is our process as to notice?

SPEAKER_02: That to me does not seem, is that McClellan, right?

SPEAKER_02: It's at a business park.

SPEAKER_02: The whole point is that.

SPEAKER_02: So what is our normal process?

SPEAKER_02: Because we have other, I mean, NTT is like 35 megawatts, right?

SPEAKER_02: What is our normal process for, I mean, I guess, because I'm not, again, I don't see

SPEAKER_02: it as large.

SPEAKER_02: But do we ever do anything that tells anybody that's any of these larger projects, I guess?

SPEAKER_02: I mean, what is our normal, I haven't seen it.

SPEAKER_02: I'm just saying.

SPEAKER_02: I just haven't seen it in the past because to me we have a process and it's been through

SPEAKER_02: county.

SPEAKER_02: But do we have like a threshold where we say it's over five megawatts?

SPEAKER_02: Can we tell?

SPEAKER_02: We do a big fanfare.

SPEAKER_04: What do we do typically?

SPEAKER_04: We typically don't have a process for that.

SPEAKER_04: We do have an obligation to serve.

SPEAKER_04: So once it's approved by the local entities.

SPEAKER_02: So really, if people want to know what's going on, they need to track projects going through

SPEAKER_02: the county and the cities.

SPEAKER_02: That's where the notification.

SPEAKER_02: Because they're required, right, to notify within a certain area, right?

SPEAKER_02: So it's their job to let people know.

SPEAKER_02: It would be a public process to get the permits that they would need to construct and all

SPEAKER_04: of that.

SPEAKER_04: But we traditionally have not said.

SPEAKER_04: We have not been involved in that.

SPEAKER_04: Until usually like a ribbon cutting.

Unknown: No.

SPEAKER_04: Right.

SPEAKER_02: Right.

SPEAKER_02: Yeah.

SPEAKER_02: No.

SPEAKER_02: Right.

SPEAKER_02: So okay.

SPEAKER_02: I just want to be clear that it's not something we've done, we traditionally do, we plan on

SPEAKER_02: doing.

SPEAKER_02: That notification is required for the local jurisdictions.

SPEAKER_02: Yes.

SPEAKER_04: Yeah.

SPEAKER_02: They have to go through a crazy community process.

SPEAKER_02: A public process, yes.

SPEAKER_04: And sometimes these loads will start at a certain threshold and they'll grow over time.

SPEAKER_04: I think Prime was like that as well.

SPEAKER_04: I discussed shaking this out over there.

Unknown: Yeah.

Unknown: Exactly.

SPEAKER_12: They usually ask for a reserve capacity that is in excess of their starting capacity.

SPEAKER_12: Again, that goes back to that minimum demand type debate that we were talking about earlier.

SPEAKER_12: And then they grow into that capacity that we've installed to serve them over time.

SPEAKER_12: Yeah.

SPEAKER_12: Because they want to ask for more in case they grow.

SPEAKER_02: But when they start, it's usually like a ramp up time.

SPEAKER_02: Regardless, it's noticing of these things coming is a requirement of the local jurisdiction.

SPEAKER_02: It's not something that we traditionally do except for a press release saying, yay, we

SPEAKER_02: have this new customer.

Unknown: Good.

Unknown: Question.

SPEAKER_07: So there's a statement here that, in what Rick provided us, states that it's the first

SPEAKER_07: point of contact in the application process.

SPEAKER_07: Are there cases where somebody would apply for, actually apply for service if they haven't

SPEAKER_07: already applied with the county or the city or the land use authority to get approval

SPEAKER_07: for the project?

Unknown: I would say that that would not typically happen now.

SPEAKER_12: I wouldn't expect that that would typically happen now.

SPEAKER_12: Not to my knowledge.

SPEAKER_07: I mean, that strikes me.

SPEAKER_07: They're not going to ask us for service at a place that they don't even know whether

SPEAKER_07: they're...

SPEAKER_12: Well, okay.

SPEAKER_12: So there's a difference between having a discussion about what SMUD could or could not do in general

SPEAKER_12: versus I've selected this site.

SPEAKER_12: I'm going to build my facility here.

SPEAKER_12: Now I'm going to apply for service at this location.

SPEAKER_12: What is SMUD's service requirements here?

SPEAKER_12: Those are two different levels of conversation.

SPEAKER_12: I would say the first conversation about just generic, don't know where I'm going to locate,

SPEAKER_12: I like Sacramento, seems like it's a reasonable cost, good labor pool.

SPEAKER_12: We'd like to locate here in general.

SPEAKER_12: Those discussions will often happen without an application for service.

SPEAKER_12: The application for service is more of an official, this is the location where I'm at.

SPEAKER_12: I'm proceeding with the local jurisdiction to...

SPEAKER_12: And I've secured this site.

SPEAKER_12: I have site control and I'm proceeding with the local jurisdiction to move through their

SPEAKER_12: process to construct my facility and build my business here.

SPEAKER_12: I now need to understand what the service requirements are for SMUD.

SPEAKER_07: Right.

SPEAKER_07: But they've already contacted, they've already gotten a lot more knowledge about a specific

SPEAKER_07: site where you can actually think about what are the actual impacts versus, oh, what are

SPEAKER_07: your general...

SPEAKER_07: Sounds like we've gotten a lot of inquiries of, hey, what are your general parameters?

SPEAKER_07: What are you going to require from us?

SPEAKER_07: And there might be dozens of those and those are all pretty speculative, right?

Unknown: Yes.

SPEAKER_07: So that wouldn't...

SPEAKER_07: I mean, to me, it doesn't make any sense that we would inform the public, and especially

SPEAKER_07: if somebody was asking about, well, could you serve this site because that's part of

SPEAKER_07: their...

SPEAKER_07: They haven't even bought anything, right?

SPEAKER_07: And they're looking at maybe a piece of property and it doesn't make sense for us to say, oh,

SPEAKER_07: somebody asked us about this particular site because they haven't...

SPEAKER_07: They may already be thinking about, well, negotiating the price.

SPEAKER_07: So anyway, it seems that this assertion that we're the first point in that when we get

SPEAKER_07: those inquiries or applications that we're the first point, that's just...

SPEAKER_07: That's not really...

SPEAKER_07: Doesn't sound like it's generally correct.

SPEAKER_12: Not the first official point, I would say, but we are often an initial point of contact

SPEAKER_12: in just a discovery phase.

Unknown: Right.

SPEAKER_07: Yes.

SPEAKER_07: Which would...

SPEAKER_07: Seems strikes me as being too early in the process to let the public know that, oh, somebody

SPEAKER_07: asked us about this.

SPEAKER_12: In the discovery phase, there's so many different options of customers looking at, including

SPEAKER_12: in and outside of California, in and outside of Sacramento, that we get many of those types

SPEAKER_12: of inquiries frequently.

SPEAKER_12: Yeah.

SPEAKER_12: Okay.

SPEAKER_10: Thank you.

SPEAKER_02: Do you have a question?

SPEAKER_02: Go ahead.

SPEAKER_10: Just a comment, or I guess it's a question too.

SPEAKER_10: In my illustrious previous career as a SMUD Public Information Officer, I remember getting

SPEAKER_10: into a little bit of hot water because I divulged a little too much about a certain customer

SPEAKER_10: and what rate class they were in and what programs they were part of.

SPEAKER_10: I mean, even after they're a signed customer, we have to maintain their confidentiality.

SPEAKER_10: So I mean, there's certain things we can talk about and certain things we can't talk about.

SPEAKER_10: And I don't intend to reinsert myself into the hot water as a board member.

Unknown: Any other comments?

Unknown: Well, thank you.

SPEAKER_02: I think you have some good public comments, right?

SPEAKER_02: So thank you for the public.

SPEAKER_02: I think there's always little bits and pieces, and there's lots of information out there

SPEAKER_02: now with everybody else in front of us.

SPEAKER_02: So you said the timeline would be this summer and fall.

SPEAKER_02: Correct?

SPEAKER_02: Okay.

SPEAKER_02: Well, we look forward to it.

SPEAKER_02: And there's the public here.

SPEAKER_02: Welcome to email your ideas and incorporate.

SPEAKER_02: I think the staff was really good at evaluating and saying why we didn't add XYZ.

SPEAKER_02: But I think it's always good to get a good variety of people's backgrounds.

SPEAKER_02: And hopefully we can do this a positive way that will be a template for everybody else.

SPEAKER_02: So thank you.

Unknown: Thank you.

Unknown: Thank you.

Unknown: Thank you.