Finance Audit Mar 17 2026

Unknown: 10子

Unknown: All right.

SPEAKER_07: Good evening and welcome to the Finance and Audit Committee and Special Board Meeting

SPEAKER_07: of March 17, 2026.

SPEAKER_07: This meeting is being recorded and can be accessed on SMUD's website.

SPEAKER_07: Please remember to unmute your microphone when speaking in order that our virtual attendees

SPEAKER_07: may hear.

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SPEAKER_07: ends.

SPEAKER_07: Would the Chief Legal Officer please conduct the roll call?

Unknown: Director Kurth?

Unknown: Here.

SPEAKER_13: Director Buie-Thompson?

SPEAKER_13: Chair Rose?

SPEAKER_13: I'm here.

Unknown: Director Kurth and Chair Rose are present.

SPEAKER_13: Director Buie-Thompson is absent.

SPEAKER_13: Also present are Directors Fishman, Herber, Sam Bourne and President Tamayo.

Unknown: Perfect.

SPEAKER_07: Thank you.

SPEAKER_07: So number one on tonight's agenda is SMUD's 2025 financial statements in the independent

SPEAKER_07: audit report.

SPEAKER_07: I believe we have Bethany from Baker-Tilly coming in virtually.

Unknown: Yes.

SPEAKER_09: Hello.

Unknown: Hello.

Unknown: Sorry.

Unknown: Let me just share my screen.

SPEAKER_09: Oh, it's already up there.

SPEAKER_09: Well, hello.

SPEAKER_09: Thank you for giving me some time today to present the audit results of the 2025 financial

SPEAKER_09: statement audit of the Sacramento Municipal Utility District and its joint power authorities.

SPEAKER_09: If you want to go to the next slide, please.

SPEAKER_09: As part of our audit, we provide a few deliverables.

SPEAKER_09: The first and probably most important is the audit opinion that comes in the front of your

SPEAKER_09: financial statements.

Unknown: Secondly, we have a separate report called the reporting and insights from the 2025 audit.

SPEAKER_09: That is a separate report that talks through our audit approach.

SPEAKER_09: It talks through the scope of what is included in the audit.

SPEAKER_09: And it does talk through the required communication and overall audit results related to the audit.

SPEAKER_09: And that's the report that I'm going to talk through at a fairly high level today.

SPEAKER_09: So, go to the next slide, please.

SPEAKER_09: Firstly, I want to talk a little bit about our responsibilities and the overall scope

SPEAKER_09: of the audit.

Unknown: So, your financial statement audit is performed in accordance with generally accepted auditing

SPEAKER_09: standards, which requires us to plan and perform that audit to obtain reasonable assurance

SPEAKER_09: that your financial statements are free from material misstatement.

SPEAKER_09: That reasonable assurance is a very high level assurance, but it is not absolute assurance.

SPEAKER_09: In order to do that, we perform a risk assessment to determine the overall audit plan and audit

SPEAKER_09: steps to reach that high level of assurance and to overall express our opinion that your

SPEAKER_09: financial statements are free from material misstatement and presented fairly in accordance

SPEAKER_09: with generally accepted accounting principles.

SPEAKER_09: Part of that risk assessment is a review of internal controls and procedures over your

SPEAKER_09: key financial areas, including a review of your general IT controls and systems that

Unknown: feed into your financial statements.

SPEAKER_09: In addition to performing the audit in accordance with generally accepted auditing standards,

SPEAKER_09: in the current year, SMUD or the district was also required to have a single audit for

SPEAKER_09: federal funding that was received, which means we also perform the audit under government

SPEAKER_09: auditing standards, commonly referred to as yellow book standards.

SPEAKER_09: That requires us to just follow a different set of rules, a slightly more stringent set

SPEAKER_09: of rules, specifically related to continuing professional education and a few other requirements.

SPEAKER_09: In addition, as well as our audit opinion, you also received a separate report on internal

SPEAKER_09: control and compliance, and you will also receive a separate single audit report once

SPEAKER_09: that review is complete.

Unknown: Can I go to the next slide, please?

SPEAKER_09: So generally, as part of the audit, we focus on key transaction cycles, which is included

SPEAKER_09: on the following slide.

SPEAKER_09: We also review areas with significant estimates, and those significant estimates are detailed

SPEAKER_09: in that audit insights and results report that require communication.

SPEAKER_09: But as part of the audit, we review key assumptions included in those estimates to determine that

SPEAKER_09: the inputs are reasonable and in compliance with governmental accounting standards.

SPEAKER_09: So key estimates include your pension and OPEB liabilities, asset retirement obligations,

SPEAKER_09: the fair value of your fuel hedges and interest rate swaps, depreciation, as well as other

SPEAKER_09: miscellaneous accruals.

SPEAKER_09: In the current year, there was also a new standard that was effective, GASB 102, related

SPEAKER_09: to certain risk disclosures.

SPEAKER_09: The standard didn't impact any of the numbers in your financial statements, but provided

SPEAKER_09: additional guidance with footnote disclosures around certain concentrations and constraints,

SPEAKER_09: or potential concentrations and constraints that could have a significant impact to the

SPEAKER_09: organization.

Unknown: The standard did not have an impact to your financial statements.

SPEAKER_09: It was reviewed and determined that a separate footnote disclosure was not required.

Unknown: But I do like to mention the new standards that were effective in the current year, specifically

SPEAKER_09: because it does require additional time and energy from your staff to read the standard,

SPEAKER_09: interpret the standard, and then apply it to your organization.

Unknown: If you want to go to the next slide, please.

SPEAKER_09: So here are the key transaction cycles that are included in your financial statements.

SPEAKER_09: Depending on the nature of the account balance, we generally do something to validate every

SPEAKER_09: material account balance.

SPEAKER_09: Procedures performed would be test of controls over certain areas, confirmations from third

SPEAKER_09: parties for your cash and investments, long-term debt, detailed testing related to vouching

SPEAKER_09: to underlying support, whether contracts, invoices, et cetera, and detailed substantive

SPEAKER_09: analytic procedures in some cases to ensure everything is appropriate and in keeping with

SPEAKER_09: our overall understanding of the account balance and organization.

SPEAKER_09: In addition, we spend a lot of time reviewing and tying out the financial statements and

SPEAKER_09: footnotes to the audited balances and the underlying support obtained from our detailed testing.

SPEAKER_09: If you want to go on to the next slide, please.

SPEAKER_09: The audit was performed in accordance with generally accepted auditing standards as well

SPEAKER_09: as government auditing standards, which provides that reasonable assurance that your financial

SPEAKER_09: statements are free from material misstatement.

SPEAKER_09: The financial statements of the district and its joint power authorities all received unmodified

SPEAKER_09: opinions in the current year, which is considered a clean opinion and the highest level of assurance

SPEAKER_09: that we can provide to you as your auditors.

Unknown: In addition, as part of our auditing standards and risk assessment, we are required to review

SPEAKER_09: internal control over those key financial areas, and we are required to communicate to you if we

SPEAKER_09: note a control deficiency that would rise to the level of a significant deficiency or material

SPEAKER_09: weakness.

Unknown: And I'm happy to report that there are no material weaknesses or significant deficiencies

SPEAKER_09: noted in controls in the current year.

Unknown: I do like to take a step because I know a step back.

SPEAKER_09: I know when you see that there's no material weaknesses or significant deficiencies, a lot

SPEAKER_09: of times when you see that every year from year to year, you get complacent and you expect it.

SPEAKER_09: But that is quite an accomplishment to be able to pull together the full set of financial statements

Unknown: and footnotes with no material changes from the auditors, especially with all the new

SPEAKER_09: accounting standards that come out year to year that tend to make things a lot more complex.

SPEAKER_09: So that is quite an accomplishment to have.

Unknown: Want to go into the next slide, please?

SPEAKER_09: So there is a three to five pages in the middle of that audit insights and results report

SPEAKER_09: that is all our required communication to the governing body.

SPEAKER_09: And we're required to communicate a lot of different things.

SPEAKER_09: I'll just touch base on a few of them as we go by.

SPEAKER_09: It generally is pretty boilerplate and doesn't change much from year to year unless something significant happens.

SPEAKER_09: But I will say there really is nothing significant to report or anything new in this area of that

SPEAKER_09: of the required communication.

SPEAKER_09: There are no changes in accounting policies or significant transactions that were noted during the year.

SPEAKER_09: The accounting estimates, as I mentioned, are included in that report in a little bit more detail than what I discussed.

Unknown: There were no significant difficulties or disagreements with management or consultations outside with another accounting firm.

SPEAKER_09: No other audit findings or issues.

SPEAKER_09: There was one audit adjustment that was noted that was immaterial to the overall financial statements and not indicative of any control issue at all.

SPEAKER_09: If you want to go into the next slide, please.

SPEAKER_09: In addition, attached to that report is also the management representation letter, which is a letter detailing everything that management represents to us as part of the audit.

Unknown: There was no noncompliance with laws and regulations.

Unknown: No going concern issues that were noted.

Unknown: No fraud noted.

SPEAKER_09: And there is a statement in there that we are independent as it relates to the district and its joint power authorities.

Unknown: In addition, there's a small paragraph in there that just kind of goes through the limited procedures that we perform on the required supplementary information that's included in your financial statements, which would include the management's discussion and analysis and those pension and OPEB schedules now in the back of your report.

Unknown: Just want to go on to the next slide. I know I went through that pretty quickly, but if you do have any questions as you go through that report in detail, please don't hesitate to reach out.

Unknown: I will say, you know, overall, we appreciate the help of the SMUD accounting team.

Unknown: I will say we spend probably north of 1000 hours from beginning to end related to the audit from planning, going through all the detailed procedures and finally tying out the financial statements.

Unknown: And I know the folks at SMUD in their accounting and finance department probably spend double or triple that amount of time preparing for the audit, answering our questions, as well as doing their normal duties of ensuring all your transactions get processed timely.

SPEAKER_09: So we do appreciate all the help. Everything was done. Everything was given to us very timely.

SPEAKER_09: And as soon as we ask a question, we pretty much got an answer. So that does make our lives very easy and lets us meet the quick turnaround that you all have for your audit.

Unknown: So we do appreciate all that help.

Unknown: So I have time for any questions if you have any questions at all related to the audit or the financial statements. In addition, included in that report as well as in the presentation is my contact information as well as the contact information for the director on the engagement.

Unknown: You know, ultimately, we're hired by the board. We're required to communicate directly to you.

Unknown: So we want to hear from you if you ever have any questions or concerns throughout the year. We want to make sure that we can address those and incorporate them if needed into our audit procedures.

Unknown: Thank you.

Unknown: All right. Thank you. Director Herbert.

Unknown: Hello, Bethany. How are you?

Unknown: I'm good. How are you doing?

SPEAKER_09: Good. I love to hear every year that we're in compliance. There's not a problem. Everybody is cooperating and everything is good.

SPEAKER_11: What I'm wondering is, could you give us just an example of, you know, something that you might find at, let's say, another utility that, you know, would cause you to be concerned.

SPEAKER_11: I'm just curious, you know, what something bad would look like.

SPEAKER_09: Well, that can vary very much from organization to organization, depending on the size and complexity.

SPEAKER_09: I will say the majority of recommendations that we find, especially in a first year audit, I've had the fortunate pleasure of being able to do quite a few of those.

SPEAKER_09: I'll say the majority of the recommendations probably come around the work order and inventory process.

Unknown: And I think that's just due to the complexity of it at times that there's always room for improvement.

Unknown: And probably second item that we come across normally, especially the last few years with COVID, et cetera, was general turnover of staff and.

Unknown: Having, you know, good people in those positions to be able to understand and interpret those new accounting standards, because there's been some pretty large ones, large and complex ones over the last few years.

SPEAKER_09: And making sure nothing falls through the cracks.

Unknown: Does that help answer your question?

Unknown: Yes.

Unknown: Any other questions or comments?

SPEAKER_07: I don't have any cards on this item.

SPEAKER_07: Do you have any virtual raised hands?

Unknown: No, we do not.

Unknown: Okay.

Unknown: Perfect.

SPEAKER_07: Well, Bethany, thank you so much as always.

SPEAKER_07: We always appreciate you and everybody over there their time and effort.

SPEAKER_07: Thank you very much.

SPEAKER_07: Yeah.

Unknown: Okay.

SPEAKER_07: Thank you.

Unknown: All right.

SPEAKER_07: We'll jump over to item number two.

SPEAKER_07: This is the financial results for the year 2025.

SPEAKER_07: And we have Lisa Limcaco, our finance transformation leader.

Unknown: Good evening, Chair Rose and SMUD board of directors.

SPEAKER_12: And tonight I am going to go over the financial results for 2025.

SPEAKER_12: But before I do that, I wanted to also thank and show my gratitude to Baker Tilly.

SPEAKER_12: We always have a SMUD audit with them and it has just been a great partnership over the years.

SPEAKER_12: I also want to say thank you to our accounting team who does exceptional work throughout the year so that we actually can have a clean audit at the end of the year and have this fast turnaround.

SPEAKER_12: Closing the books and then getting it done by first week of March.

SPEAKER_12: And then also I wanted to recognize my assistant controllers, Mike Wilson, who is here.

SPEAKER_12: And then Tiffany Lee and Jenna Carlile also for their fabulous work as well.

Unknown: And then also for the new director of accounting controller, George Vaughn, who actually came on board right in the middle of the audit and got his feet wet in getting the audit done and reviewing it and making sure that the statements are done on time as well.

SPEAKER_12: And moving forward, starting next month, he will actually be doing the monthly presentations that I usually do.

Unknown: So December 2025, financial highlights, starting with our customer revenues, $1.8 billion, $20 million higher than planned.

SPEAKER_12: This is primarily due to commercial customer revenues being higher than planned.

Unknown: Next we have commodity costs, $531 million or $58 million lower than planned.

SPEAKER_12: And this was due to the milder weather that we saw all of 2025, which led to favorable power market conditions that we could procure power at lower prices as well as lower fuel prices and reducing our fuel costs overall.

Unknown: Next we have our other operating expenses, $1,067 million, $62 million lower than planned.

SPEAKER_12: And due to three areas, transmission and distribution expenses lower due to the reduced transmission fee costs that we've had during the year as well as the lower vegetation management costs.

SPEAKER_12: Next we have customer service and information expenses, which was lower due to lower participation and delays in various customer programs.

SPEAKER_12: For example, the My Optimization Program Plus as well as delay in the school hosted solar program.

Unknown: And then finally, that's offset by public good expense being actually $2 million higher than planned due to the higher participation in the energy efficiency programs and low income building electrification programs.

SPEAKER_12: For example, the Community Impact Plan Metalview Project.

Unknown: And then finally, we have $140 million other non-operating revenues, $82 million higher than planned.

SPEAKER_12: And this is due to about $92 million that we received from the IRS on the Inflation Reduction Act Direct Pay Program for the Solano IV WIND Project.

Unknown: All leading to $362 million of net income, which will be invested in capital expenditures as well as pay down debt.

Unknown: Okay, so you know that SMUD is very cash intensive.

SPEAKER_12: And although I reported on the income statement that previously, that doesn't show all the cash that's expended out of SMUD.

SPEAKER_12: So to give a more holistic picture, I want to present the cash flow highlights, which shows the cash in and out of SMUD for 2025.

SPEAKER_12: So starting with operating activities, $637 million, $2.2 billion of receipts came in from customer billings, commodity sales, as well as other receipts like transmission revenues and steam sales and other service revenues as well.

SPEAKER_12: Then on the flip side, we had $1.6 billion of payments that went out regarding commodities, employee costs, and other vendors.

Unknown: Next, we had $536 million of use of capital and non-capital financing activities.

SPEAKER_12: Two big areas in this area that you don't see on the income statement that I usually present is the capital expenditures of $555 million, as well as $116 million of principal interest payments on debt, net of the bond proceeds from refunding.

Unknown: And then finally, the $94 million of receipts from the IRS on a direct pay, as well as some investment tax credits.

Unknown: And then finally, we have $16 million use of investing activities for the year.

SPEAKER_12: This is our Treasury Department on a daily basis monitors our cash, making sure that they invest our money so that we can have yield in interest income so that we can actually mature the securities right at the time that we need it for.

SPEAKER_12: Large expenditures, as well as payment of debt.

SPEAKER_12: So we had $961 million of sales and maturities of securities, which will be liquidated for cash flow needs.

SPEAKER_12: And then we procured about $1 billion of securities for investment yields during the year, all leading to about $85 million of net increase in cash flows.

Unknown: And then finally, we have other 2025 financial highlights.

SPEAKER_12: As mentioned earlier, the $9.2 million that we received for the Solano IV direct pay.

SPEAKER_12: We also received on an annual basis Rancho Seco annual spent fuel settlement of about $5 million.

SPEAKER_12: And then the SFA bond defeasance that we had, which had the $13.8 million per year savings, as well as the administrative savings that we are paying.

SPEAKER_12: And the savings that we are incurring due to the transfer of the SFA, as well as the thermal plants into SMUD.

Unknown: Next, we have approximately $200 million, $210 million net pension liability, which is $98 million lower than prior year.

SPEAKER_12: And we're about 93% funded as of December 2025.

SPEAKER_12: And then for our OPEB, we have a $48 million liability as of December, which is an increase of about $14 million from last year, and we're about 90% funded.

Unknown: And then finally, we have the $200 million new money bonds that we took out in this year.

SPEAKER_12: It is actually $100 million less than we had planned for the budget, which yielded us a savings of about $78 million net present value, or $6 million per year.

SPEAKER_12: Then we also had our first green commercial paper issuance in the country, as well as expanded letter of credit commercial paper programs that support short term cash needs.

SPEAKER_12: And that's my presentation for tonight. Do you have any questions?

SPEAKER_07: I don't see any questions.

Unknown: That's a good report. I appreciate the extra detail in the report. Are there any public comments?

Unknown: No, there are not.

Unknown: All right. Thank you for that one.

SPEAKER_07: So we'll jump to item number three, which is financial results for the month period to end as of January 31, 2026, and the current power supply costs.

SPEAKER_12: Okay. So for the first month of the year, January 2026, we have customer revenues of $135 million, $3 million lower than budget.

SPEAKER_12: This is primarily due to the residential customer usage being lower than planned.

SPEAKER_12: And $32 million of commodity expense, $60 million lower than budget.

SPEAKER_12: And this is due to higher hydrogeneration in January, lower fuel costs resulting from reduced thermal generation, and then purchasing power at market price, favorable market prices.

SPEAKER_12: And then we had $82 million other operating expenses, $3 million lower than budget.

SPEAKER_12: And this is due to two areas, customer service and information expenses being below budget due to the cancellation of the Reach 1.0 grant.

SPEAKER_12: And then the transmission and distribution expenses are below budget due to the lower unit costs for routine vegetation maintenance, all leading to $24 million net income for January.

SPEAKER_02: Thank you. Just a quick question on the transmission and distribution expenses are below budget due to lower unit costs for routine vegetation maintenance. Why would that be?

Unknown: Last year, remember that we had a new vendor that came on board and their pricing was lower, better pricing than previously.

SPEAKER_04: Frank Yimiter, Chief Operating Officer. I think there's a couple of factors we could possibly follow up, but it's partially the contract and it's also some operational excellence activities that have been going on in the area to try to reduce overall unit costs.

SPEAKER_04: The total cost of vegetation management is a function of the unit cost plus the quantity that you complete.

SPEAKER_04: Also, what are full trees removed versus trees trimmed? They're all factors in where the final number ends up, but there has been improvements in the budget there while also increasing the quantities.

SPEAKER_04: The quantities are not the same every year. So this budget, this total cost moves around year over year, but the unit cost reduction is the contract and also some administrative changes we've made on how we operate the program.

Unknown: Well, thank you. I guess I can just remember when I first got on the board, it just seemed like vegetation maintenance was just going up, up, up, up, up. So it's nice to hear that's going down. Thank you.

Unknown: Yeah, there was a major increase in, I think, I may get the year on 2018, there was a legislative change to how vegetation workers were paid that doubled our budget in that year, which is fine.

SPEAKER_04: And we're able to manage it. So we have an obligation to also control it. It's one of the larger amounts. It's mud. Yeah. But it's also pretty important.

Unknown: Very. Thank you.

Unknown: Lisa, on this REACH grant cancellation, is that going to continue to grow throughout the year? Will that number keep growing as we regress through the year?

SPEAKER_07: Is that sort of like one time going to show up as an adjustment or is it budgeted for the whole year? No.

Unknown: I do not know if it was budgeted for the whole year. Laura, maybe.

Unknown: Laura Engway, Chief CEROCarbon Officer. I believe that's most of it right there. Thank you.

SPEAKER_07: Thank you.

Unknown: All right. So January 2026, energy sources. So for the month of January, we had early precipitation and below average snowpack, which caused earlier than expected runoff, which resulted in a higher hydrogeneration for January.

SPEAKER_12: Because the market prices were favorable, it was more economical to operate our thermal plants at lower output levels, which increased it and increased our purchase power.

Unknown: Next, we have delinquency by account type. So you can see here that we actually decreased from December to January to $4 million.

SPEAKER_12: Wait. I'm sorry. This is not the slide.

Unknown: Sorry. It's right at December to January that we have $33 million of delinquency as of January.

SPEAKER_12: And the balance mostly is about $14 million that we're seeing in the installment plans, and about 70 percent of it is in April in residential.

Unknown: Okay. So precipitation as of March 2nd, the cumulative is 39 inches, which is about 102 percent of average to date, and about 68 and a half percent of the entire water year average of 56.9.

SPEAKER_12: There doesn't seem to be any precipitation forecasted for the next two weeks.

Unknown: Next, we have the snowpack and storage reservoir, which is about 42 percent of the average at the selected snow sensors, and the smudge storage reservoirs are about 71 percent of full capacity.

SPEAKER_12: Okay. The commodity budget mitigations and forecasts. Since we are close to the end of March, which is when our water year for the hydro rate stabilization and the waffle rate stabilization fund in which we deposit or withdraw, we are forecasting.

SPEAKER_12: This is as of January, though. We are forecasting about 900,000 to be deposited into the hydro rate stabilization fund, and about 4 million forecasted in the waffle rate stabilization fund.

Unknown: You can see that the commodity annual cost is $17 million forecasted higher than budget, and this is due to having to do with the declining market prices that led to a reduction in our market sales.

SPEAKER_12: And though we could procure power at lower prices, we also sell our power at lower prices as well.

SPEAKER_12: And then also, one of the wind projects, commercial COD date, was moved up from October to April, so the price of that coming on is higher than the market prices.

SPEAKER_12: That's causing the forecast to be a little bit higher than we planned.

Unknown: And then we have a hydro performance annual forecast, so UARP and WAPA is forecasted right now to 239 gigawatts higher than planned.

Unknown: And then finally, we have days cash on hand, and you can see that actual is 216 days slightly above the budget, and then we're projected at 195 days by year end, which is above the 150 minimum cash.

Unknown: And that's my presentation.

Unknown: Any questions?

Unknown: Questions?

SPEAKER_07: I assume we'll know.

SPEAKER_07: We'll get a better idea with next month's February report on where the stabilization funds are sort of headed, and it's been completely dryer.

SPEAKER_07: It's wet, and that's been totally dry, so I'll be curious how that's going to roll.

SPEAKER_07: Now that the forecast is dry for the next two weeks, we're unlikely to get a ton of significant rain.

SPEAKER_07: Yeah, so Scott Martin, CFO.

SPEAKER_05: Yep, you're absolutely correct.

SPEAKER_05: I would suspect at this point we're trending toward having some kind of a transfer from the HRSF funds at this point and being slightly below normal.

SPEAKER_05: Of course, we don't know exactly how much below normal yet, but I think it is going to be slightly below normal at this point, given March.

SPEAKER_05: Perfect.

SPEAKER_07: Any public comments on this item?

Unknown: No public comment.

SPEAKER_13: Okay, thank you.

Unknown: All right, so we'll jump to item number four.

SPEAKER_07: This is to discuss and improve negotiations and execution of a contract change number five with TRC Engineers, Inc.

SPEAKER_07: For professional services to administer SMUD's complete energy solutions program to extend the contract expiration date by one year from February of 2027 to February of 2023.

SPEAKER_07: And to increase the contract not to exceed amount by $8 million from 21.67 to $29.67 million.

SPEAKER_07: And we have our Director of Distributed Energy Solutions, Rachel Wong.

Unknown: Good evening, everyone, and thank you, Director Rose.

SPEAKER_01: And I'm glad you read through all of that.

Unknown: As Director Rose mentioned, I'm here tonight to talk to you about extending the contract expiration date and adding contract dollars to the TRC contract to support our complete energy solutions program.

Unknown: So SMUD's complete energy solutions program, it's our full service comprehensive retrofit program for our small and medium business customers.

SPEAKER_01: The program actually takes a customized approach for each customer.

SPEAKER_01: So we actually encourage multi-measure retrofits.

SPEAKER_01: We start with a building assessment, which includes an audit of all the energy consuming systems.

SPEAKER_01: And we actually develop a project proposal for the customer that can include energy efficiency measures as well as electrification measures.

SPEAKER_01: And we also recommend other program participation, including things like our commercial EV program so they can actually add EV chargers and things like that as well.

Unknown: This program supports both our market rate customers as well as our community impact plan customers.

SPEAKER_01: So when you think about our SHINE applicants or our business improvement district customers, those are actually included non-profits.

SPEAKER_01: Those are included within our complete energy solutions program as well.

SPEAKER_01: So just to get some perspective of kind of what the volume we do in 2025, we installed 336 heat pumps through this program as well as completed 38 community impact plan business district electrification projects in addition to some EE work as well.

SPEAKER_01: And in 2026, just from a proportion of market rate versus CIP, we're expecting that about 70% of the volume of this program is going to be for community impact plan customers as well.

SPEAKER_01: So this program is of this contract is for our program administrator.

SPEAKER_01: And what they do is they support the process from that building energy assessment and energy audit all the way through assigning a contractor, pre and post inspections after the project is completed, as well as the incentive processing.

SPEAKER_01: So for the background on the contract, the original contract was awarded in March of 2020 for $14.5 million.

SPEAKER_01: It did start off a little bit slow because we were right in the middle of COVID.

SPEAKER_01: However, since then, we've been amending to add funds, update fees and contract terms.

SPEAKER_01: The contract doesn't actually end until February of 2027.

SPEAKER_01: But based upon the success we've actually been seeing in our small and medium business pipeline, both for market rate and our community impact plan customers, we're actually forecasting to run out of funds in the next few months.

SPEAKER_01: So that's why we're coming here to the board to ask for a time extension as well as a dollar extension.

SPEAKER_01: And really that's to ensure program continuity.

SPEAKER_01: We're asking for to extend the contract by one year to February of 2028 and adding $8 million in funds.

SPEAKER_01: And just for perspective about the $8 million, because the contract includes repeat processing, we actually include the dollars that go to the customers.

SPEAKER_01: So a little bit over 50% of that $8 million is actually the incentives that we pay out to our customers.

SPEAKER_01: So really the payments for the services is a little bit less than $4 million.

SPEAKER_01: Also for perspective, just to share with you, this program has actually and the current contract has already exceeded its SMUD participation goal.

Unknown: So we are planning on going out to bid for a new program administrator.

SPEAKER_01: And the timing that we're asking for in terms of the one year expansion is to prepare and execute the RFP.

SPEAKER_01: So a couple of things are going on.

SPEAKER_01: We're in the process right now of replacing our demand side management platform.

SPEAKER_01: It's an IT system that we use to support our programs.

Unknown: And so we need to add into those considerations into the RFP, as well as we also need to design in considerations for S4HANA,

SPEAKER_01: and the interaction of the information within SAP that supports our programs as well.

SPEAKER_01: And as you all know, that's a major IT project implementation that's starting to get underway.

SPEAKER_01: We do expect to come back to the board either at the end of this year or the beginning of next year toward the contract from the RFP.

SPEAKER_01: And then we're also going to need time in 2027 in order to implement the new program administrator once it's been selected.

SPEAKER_01: They also use an IT system to kind of manage the things on their side.

SPEAKER_01: So there will be IT implementation work that needs to be done as part of that implementation.

SPEAKER_01: And then this is going to be happening during our S4HANA implementation in 2027.

Unknown: So the other thing to note, and this is just to give some perspective of why February 2028,

SPEAKER_01: is that these small and medium business projects often take or can take up to six months to complete if you think about starting from the building energy analysis.

SPEAKER_01: All the way through rebate processing. So with a contract end of February of 2028, if you go six months back,

SPEAKER_01: that really means that the current vendor can't recruit any new projects starting in September of 2027.

SPEAKER_01: So that kind of gives you some perspective on the timing for the contract request.

SPEAKER_01: So, Net, back to the approval action request is we are requesting your approval for the time and dollar extension.

SPEAKER_01: And happy to take any questions.

Unknown: Thank you for that other question. Director Herber?

SPEAKER_07: Thank you for the update. You know, I'm just curious, the amount of money that we're talking about,

SPEAKER_11: how many more heat pumps do you think we're going to get? Or hot water heaters?

SPEAKER_11: I mean, have you all, you know, looked at that?

Unknown: Yeah, so as you know from our zero carbon plan progress presentations,

SPEAKER_01: and I usually do them every year in the September timeframe, so it's been a little while.

SPEAKER_01: We have a trajectory, and that trajectory of, we measure it in equivalent all-electric homes.

SPEAKER_01: But this is small and medium business commercial customers, and we translate those into equivalent all-electric homes.

SPEAKER_01: So that's really the metric that we do. And, you know, we still have a ways to go to really transform the market.

SPEAKER_01: Our goals from a ZCP standpoint are aligned to statewide goals from a decarbonization standpoint.

SPEAKER_01: The other thing is, as you know, we're facing some headwinds from, you know, pullback of some federal dollars.

SPEAKER_01: But, you know, we are also well positioned in our service territory with our very low rates.

SPEAKER_01: Compared to Pacific Gas and Electric's gas rates. And so customers can save on their bill by building electrification.

SPEAKER_01: And so those are the things that, you know, we need to continue to grow. That goal trajectory grows exponentially.

SPEAKER_01: And we're still, you know, we're starting to get into the curve, but we still have a ways to go.

SPEAKER_01: So, yes, there's definitely a lot of opportunity to go.

SPEAKER_11: Thank you. And I just want to say I really like this program.

SPEAKER_11: And I'm glad we're putting a little bit more money in it.

Unknown: Great.

Unknown: Thank you, Rachel. It's always great to see you.

SPEAKER_02: So kind of following up on what Director Herber said.

Unknown: So does this contractor, because this is going on quite a few years now, does this contractor have like annual targets to hit as far as number of businesses, number of changed equipment?

SPEAKER_02: Or like to keep us on track? And is that why you're recommending this delay?

Unknown: It doesn't... I mean, every contractor is always going to be a change in the...

Unknown: So why we are recommending the contract extension is the contract doesn't end right now until February of 2027.

SPEAKER_01: But the current dollar amount allocated to the contract, we're almost... we've almost encumbered all of the funds.

SPEAKER_01: So really, without a dollar extension at a minimum, we would have to stop the program probably within the next month or so.

SPEAKER_01: Which actually means we're doing really well, right? We're actually indexing faster and, you know, basically encumbering funds faster than what we had originally anticipated in the contract.

Unknown: Now, the other piece that we're requesting is to add an additional year that allows us to get the RFP executed.

SPEAKER_01: Because we do want to go out to bid for a new program administrator since it's been since 2020.

SPEAKER_01: And so by extending the contract for a year and adding dollars, it provides enough time for us to basically put together that RFP, launch the RFP, get the bids, get it awarded, bring it back to the board for contract approval.

Unknown: And then do the IT implementation, you know, the program transition and the IT implementation work that we need to do in order to get the new program administrator on board with continuity of the programs without having to interrupt our market rate program or our community impact plan program.

Unknown: And is it true that the company was bought?

Unknown: So we did get notice that the company did get bought by another company, but the communication has been that there's no changes from what we're currently doing today based upon the fact that the company's been purchased.

SPEAKER_01: Okay, because this is one of my favorite programs. I mean, we've used it, the aerospace museum and other locations in my ward and the customers absolutely love it.

SPEAKER_02: So it's really important to me that this work really well. So no problem with the money. I just want to make sure it's performing as you know, if we're not just throwing money at it and not, you know, like getting more people electrified.

SPEAKER_02: Yes.

SPEAKER_02: And then it sounds like you're happy with the contractor.

SPEAKER_02: Well, I, we're happy with the contractor, but we're also going to go out to bid because it's been since 2020. And so based upon that RFP, we will figure out who that new program administrator is, whether it's the current one or if it's a different one.

SPEAKER_01: Great. Well, I love the program. So thank you. Thank you for all your work on it.

SPEAKER_02: Yes.

Unknown: One public comment. Let me go ahead and take that and I might have a question or two.

SPEAKER_07: Okay.

SPEAKER_07: Afterwards. So Marie Chrisa.

Unknown: Hello and happy St. Patrick's Day. I am Marie Chrisa. I'm the founder of president of Brighton energy and I was born and raised in Sacramento. I set up my headquarters in Arden arcade area 16 years ago and Brighton has been co implementing this program very early.

SPEAKER_10: Very successfully for the last 12 years and we are the current seed partner on this contract and we deliver 41% of the financial value of the program. And I want to go on record saying I fully support any decision made by this board in relation to this med CS program.

SPEAKER_10: Great presentation. If it's possible to bring up slide number two that was just previously presented because it really has some valuable pictures in there, some successful projects and these projects were solely assessed, designed, implemented, post inspected by Brighton energy.

SPEAKER_10: So if anyone can bring that up. If not, I need to keep talking.

SPEAKER_10: I don't think it's because the slide has a timer on.

SPEAKER_07: But you'll know that director Kurthy probably noticed that one of the first ones up there would be Sammy's.

SPEAKER_10: Yeah, Sammy's. Yes. And you know Naz and mom very well. We help them jump start their business and help them with a very complex project. And honestly, they've really become like family to our team.

Unknown: Elks Lodge. There's a picture there with a chef drew once we completely help them renovate their facility and decarbonize the building.

SPEAKER_10: We arrange a cooking demonstration with chef drew and made sure that Mark and his volunteers are very comfortable cooking on the new induction cookware and also leather bees. Dr.

SPEAKER_10: And director Fisherman. You'll probably notice we met out front and you knew the third generation is Jake and he knew his grandfather. So very rewarding.

SPEAKER_10: And then last really team center was on there and we applied all our knowledge over the last two years on decarbonizing these buildings and we were able to use a strategy where we took four different trade contractors and expedited the permit process and got all those projects done in just three months.

SPEAKER_10: So Brighton is the only company that has the experience and expertise to successfully decarbonize a building in Sacramento and we appreciate the opportunity that SMUD lets us represent and make such an impact in the community.

SPEAKER_10: So now you're thinking this is fantastic. Why are you here? Well, I am here. It's touched on earlier that TRC was acquired by WSP February 24th. WSP is a multi-billion dollar Canadian based company.

SPEAKER_10: And the industry believes that they will package this program along with the rest and sell it off as their implementation portfolio.

SPEAKER_10: Having a 41% partner not only makes that cumbersome but that does devalue the contract and would prefer to not have SMUD part of that with Brighton.

SPEAKER_10: So in order to ensure program continuity, customer and contractor relationships, success of this program continue that is so favored.

SPEAKER_10: We feel it's in best interest of SMUD to have Brighton continue to be the seed implementer and continue the same financial partnership level as the current change order number four.

SPEAKER_10: I request that the committee ensure that Brighton is named at the SMUD seed at the current work split for change order number five.

SPEAKER_10: Thank you. Questions?

SPEAKER_16: I just want to say welcome. I've seen Brighton Energy. I've seen your office and I always wondered, what is that I wonder? Now I know. So thank you.

SPEAKER_00: Come by more often.

SPEAKER_00: I'll do that.

SPEAKER_10: And we'll see you at Leatherby's.

SPEAKER_10: Okay.

Unknown: Okay. So, Hi, Marie. So you're looking, the ask was to make sure that your contract amount and your sub-amount was the same.

SPEAKER_10: And we're seed. We were blindsided in January and told that we did a great job but we would no longer be seed.

SPEAKER_10: Oh, that you're no longer.

SPEAKER_02: Yeah. Relative to WSP. Yeah. So both. We're still present. We want to continue to do these amazing projects. We want to find the next SAMI and the next Leatherby's and Rayleigh Team Center and be part of this program.

Unknown: And so, all right. So it's like WSP or TRC, right? They've decided to go with a different array of subcontractors for this extension, right? Which is, this is what I'm seeing, right? Is that my, is that understanding correct?

Unknown: I can't validate that. What I can tell you though is I did receive an email. I'm happy to read to you from them in January after consistently saying there would be no extension. That there is an extension and thank you very much, Brighton, but you're not part of it.

Unknown: Okay. All right. I don't think I have any more questions for you. I might have some questions for staff though. Okay. Thank you.

SPEAKER_07: Thank you.

SPEAKER_10: Yeah. Director Herrman.

SPEAKER_10: I just want to say that I've seen your work and it's great. So I hope we can figure out something.

SPEAKER_11: I appreciate that.

SPEAKER_10: Yeah.

SPEAKER_10: Thank you.

Unknown: So let me ask, probably Laura, is there any legal prohibition that the contractor can change its subcontractors?

Unknown: No, they have the authority over what seeds they use.

SPEAKER_13: Okay.

SPEAKER_13: What seeds on contractors?

SPEAKER_07: It puts us into sort of that awkward position, right? Because if they wanted sort of change, like they're legally allowed to change and whatever sort of reasons they may have, I suspect they have them.

SPEAKER_07: I do know that we worked on trying to right size this contract to the right size in terms of how much time staff needed before potentially rebooting it.

SPEAKER_07: And so I know one of the things I wanted to say is that I appreciate that we got this into a more reasonable amount of time. I would say that this is the contract amendment five, which means it's been changed previously four times.

SPEAKER_07: And so I think this board has been very clear over the years that we want to see things rebid wherever sort of practically feasible and definitely the benefit of SMUD.

SPEAKER_07: And so this is definitely pushing, I think, how long we want to see things go between bids.

SPEAKER_07: And I think the staff has got themselves in this position where if we wanted to keep the program running, that we need to make this contract change.

SPEAKER_07: But I definitely would prefer to see us not get into those positions where we need to get more involved.

SPEAKER_07: And I'd rather just see things going out to bid.

SPEAKER_07: And I know companies, especially, they spend a lot of time and effort going through the pre-qualification processes and then the actual bidding.

SPEAKER_07: And we need to definitely be respectful of those companies.

SPEAKER_07: And so when staff sort of switches course at the end of a lot of work on our staff, what happened on the companies, it certainly is a burden.

SPEAKER_07: And it definitely gives that.

Unknown: I see how they can feel that it's unfair that they spent a lot of time and now SMUD is changing course to extend things.

SPEAKER_07: And so just for me, I just want to echo that to staff.

SPEAKER_07: Please be aware as you're working on the contract to make sure that everyone we work with feels like they're being treated fairly when they're bidding on our work products and our opportunities, for sure.

SPEAKER_07: I don't know, Rachel, do you feel like you need to respond to Marie's request to force TRC to continue to use them as a subcontractor?

Unknown: I don't know.

SPEAKER_07: And I should say, have any board comments?

SPEAKER_07: President Tamayo, you have your mic on.

Unknown: Yeah.

SPEAKER_03: I'm wondering how – so I'm assuming that there is original seed credit given for the contract when it was first chosen.

SPEAKER_03: And what is happening with any ongoing obligation to use seed contractors?

SPEAKER_03: I mean, it seems as if the original contract took that into consideration that we should – they should be held to some sort of seed obligation if there's an extension.

Unknown: Good evening, Director Tamayo.

SPEAKER_06: I'll take that question.

SPEAKER_06: For the record, Casey Fallon, the director of procurement warehouse and fleet.

SPEAKER_06: So the intent going forward is to uphold the seed commitment.

SPEAKER_06: I think to date on the contract, the seed subcontracting spend is over 30 percent.

SPEAKER_06: I think it's close to 40 percent.

SPEAKER_06: And that's the plan going forward.

SPEAKER_06: Brighton is named as a subcontractor going forward under contract change number five.

SPEAKER_06: There are also three new seed subcontractors that have been named.

SPEAKER_06: So we don't necessarily know the details of how TRC will carry that going forward.

SPEAKER_06: That's really up to them to decide we can't direct the work to the subcontractors.

SPEAKER_06: So that's a little bit of information just going forward.

Unknown: Okay. Thank you.

Unknown: I'm comfortable – are there any other comments or anything virtually?

SPEAKER_07: You should check.

Unknown: There's no virtual comments that I see. No.

Unknown: Okay. Are there any other questions or comments?

SPEAKER_07: Just to follow up on seed, I mean, to me – because we just had a discussion about seed last month, I think, about –

SPEAKER_02: so to me, that's the main thing is that we keep the seed level where it should be and keep the contracts local.

SPEAKER_02: So instead of letting that slip, yeah.

SPEAKER_02: Okay. Thank you.

SPEAKER_02: Absolutely.

SPEAKER_02: Okay.

SPEAKER_07: With that, I'm personally okay letting this go forward, Maria.

SPEAKER_07: I'm sorry that I think it's going to be up to the contractor if they want to use your services or not.

SPEAKER_07: I'm personally not comfortable dictating to them who they can use and not use at this point.

SPEAKER_07: And I say that knowing that the contract is going to go – it's going to go back out for bid.

SPEAKER_07: And that process will start back up probably in the next six months or so.

SPEAKER_07: And I apologize if you put in a lot of effort preparing to put in this bid and then they –

SPEAKER_07: it's been modified as put us in the position that we are right now.

SPEAKER_07: But if any board members don't agree with that, if we don't want to put it on the consent calendar, we can always throw it back to staff, too.

SPEAKER_16: Yeah, I'm sorry. Asking questions after the chair, is that okay?

SPEAKER_16: Go for it.

SPEAKER_16: Thanks.

SPEAKER_16: Yeah, it's about the seed content on the program, Casey, if you could come back.

SPEAKER_16: Thanks.

Unknown: So the bid was let with the seed content, or the contract was awarded with that.

SPEAKER_16: And this – and it's been successfully implemented over time.

SPEAKER_16: And so now the request is to extend the contract, and there's additional seed contractors sort of in the mix at this point.

SPEAKER_16: And I understand that we're not able to say who gets which work.

Unknown: What if none of them get this seed work?

Unknown: What if the general decides to do it all themselves?

Unknown: That's a good question.

SPEAKER_06: There are several projects that are in the works. Rachel mentioned transition.

SPEAKER_06: That will happen from now over the next six to nine months with the active projects.

SPEAKER_06: Those are already assigned to a seed subcontractor.

SPEAKER_06: Our expectation is for the prime to uphold the same level of commitment.

SPEAKER_06: And as you know, we've talked about it before in our contracts.

SPEAKER_06: There are no consequences for not upholding the original subcontracting commitment on the front end of our contracting.

SPEAKER_06: And just to reference the comment from earlier, I heard you loud and clear last month on the seed compliance discussion.

SPEAKER_06: And maybe getting a little bit ahead of myself, but we do have a team working on analyzing those active contracts that are in flight to prevent from happening

SPEAKER_06: what you've asked, rather than waiting for those contracts to close and doing the post-close audit.

Unknown: So hopefully that helps answer the question a little bit.

SPEAKER_16: Yeah, it does. It doesn't give me much comfort, though, because we have a new company, a new prime, that can do anything they want.

Unknown: And part of what we've invested in this program is because of the seed component in it.

Unknown: And so you're asking to extend this contract by a year, which ends up being two years from now almost, before it's completed,

SPEAKER_16: and add a great deal of additional money to it with no guarantees at all on whether there's a seed component or not.

Unknown: Yeah, no guarantees. I mean, when I think about our contracts broadly, regardless of the size, whether it's a million dollars or a hundred million,

SPEAKER_06: there's really no guarantee to purchase any sort of equipment or procure services on an ongoing basis.

SPEAKER_06: What I can tell you is obviously this is a very important contract, and these are large dollars for our subcontracting community.

SPEAKER_06: So we will look at this very closely. I'd be happy to monitor it at least monthly going forward.

SPEAKER_06: We can include it in our procurement reports and demonstrate that we're not just waiting for this situation to happen and get ahead of it.

Unknown: Okay, and if you say nothing, the seeds all get cut off and the prime continues with it, would we be in a position to cancel the contract?

SPEAKER_06: All of our contracts have, generally speaking, termination for convenience clauses, and we could entertain that if we get our RFP out sooner and find continuity with the program a different way.

SPEAKER_06: Yes, we have the ability to terminate any contract we have for convenience generally at any time.

Unknown: Okay, thank you.

Unknown: Yes, you know, I just want to express my concern, too, especially since this is a Canadian company. It's not a local business.

Unknown: I just really hope that staff can make it clear that we expect the kind of seed portion of the contract to be honored.

SPEAKER_11: You know, I know you're going to be coming back to us and talking to us about other seed contracts or contracts and where they are with the amount of seed,

SPEAKER_11: but it's really important, I think, to the whole board that we're supporting local businesses and that, you know, that's a real important part of this contract.

SPEAKER_11: And it does bother me that they're from Canada, but, you know, hey, maybe, you know, it's not my place to make a judgment on what staff has reviewed because we don't get into that.

SPEAKER_11: They get to pick the contractors, but it is really important that we not lose sight of our seed.

SPEAKER_09: Is there any room to accelerate the RFP process?

SPEAKER_07: So I was just going to add two things, which is, one, yes, the company has been acquired, but to date, TRC has actually exceeded its seed participation in the work that they've done to date.

SPEAKER_01: So, yes, it's been acquired, and, yes, the parent company is different, but just to reassure in terms of, like, what has TRC done to date is they have exceeded the seed participation.

SPEAKER_01: Brighton's done a lot of great work, right?

SPEAKER_01: So I want to remind the staff that as well.

SPEAKER_01: Like I said, and I think this is kind of where maybe you were going, Director Rose, which is, you know, we are asking for the extension in terms of the timing, and the intent is to bid, which means that gives everybody the opportunity to bid.

SPEAKER_01: It also, if they didn't use seed, would definitely be a ding to them if they were going to bid, right?

SPEAKER_01: That's obviously information for us of their commitment to the principles that we have as much.

SPEAKER_01: So I realize, and I think I tried to explain a little bit of why does it take so long is there's many different moving parts that we're dealing with, and so therefore we actually did have an RFP drafted, but we have to modify it given where we are with regards to different technology systems.

SPEAKER_01: And then we will work as quickly as we can.

SPEAKER_01: So I think this provides us reassurance.

SPEAKER_01: And what we don't want to do is, you know, we could say, okay, we're not going, you know, what are the alternatives?

SPEAKER_01: If you didn't approve the time extension, we might be sort of, you know, dark for a little while, right?

SPEAKER_01: We might just not have a program of availability.

SPEAKER_01: So the way that we've designed the request with regards to the dollars and the timing is to ensure that continuity.

SPEAKER_01: But if we got done earlier, as Casey mentioned, we could end the contract earlier.

SPEAKER_01: I think it's just to preserve enough time knowing the complexity of the work that needs to happen to allow the team enough time to have a really smooth transition, which is really what we want for our programs, to have that continuity, to have that smooth transition.

SPEAKER_01: Thank you.

Unknown: So something came to my mind.

Unknown: So we're going to give them, if we give them a grant or an extension on their contract, can't we include language that says that monthly they report to you on their seed standard and if they drop over time for the whole term of the contract below the amount that they said in the original proposal that won them the contract that we could pull it for cause or convenience?

Unknown: Yeah, we use a third party platform called B2G, it's business to government.

SPEAKER_06: For any contract that's greater than a million dollars that has a seed subcontracting commitment, we require primes and seeds to submit their spending reports and a test on a monthly basis.

SPEAKER_06: So we already have all that data.

SPEAKER_06: We don't share it regularly in this form.

SPEAKER_06: I mean, we could do that though and we could.

Unknown: But you could check it monthly and tell if they're going below the limit that we set.

Unknown: Yes, absolutely.

SPEAKER_06: In response to Director Kurth, that was my offer earlier to do that and roll it into our other procurement reports.

Unknown: Okay.

SPEAKER_02: And I just generally feel like from the previous item we had a month or two ago and this, it just feels like this needs to get buttoned up as far as how we manage our contractors to ensure that they're holding.

Unknown: Because I know at the state we had unreliable contractors.

SPEAKER_02: If you did not deliver on a contract term, that was it.

Unknown: You're unreliable and you get banned from bidding on future projects.

Unknown: And it's pretty simple.

SPEAKER_02: So I don't, I just worry about this because we do want the money to go local as much as possible.

SPEAKER_02: Thank you.

Unknown: So I'm curious about the timing of the acquisition of TRC where we made aware that that was the case.

SPEAKER_03: And so it just, I feel uncomfortable that we've been getting very good service and then we're extending a contract and it's going to end up being actually with another company.

SPEAKER_03: So we were notified recently, although we had been hearing some rumblings, I think, and Marie may have, and Jeff may have mentioned it to us as well.

SPEAKER_01: The one thing I would ask, and this is sort of more aside Rachel's other work.

SPEAKER_01: So the company that acquired TRC is WSP.

Unknown: We have done work with WSP before.

SPEAKER_01: They have actually done some consulting work for us on some of the climate adaptation work that Kithlinave has done and things like that.

SPEAKER_01: So I'm not making any judgment either way about WSP.

SPEAKER_01: But I guess I just make that comment or share that information with you, which is, you know, they're a company.

SPEAKER_01: They acquired TRC.

SPEAKER_01: We don't know what the implications are relative to how they perceive this work that TRC does, whether it's good or bad, right?

SPEAKER_01: So I think that's something that we need to dig into.

SPEAKER_01: That's something we need to monitor.

SPEAKER_01: But, you know, we have expectations of what this program continues to deliver.

Unknown: We're asking for the extension to continue that continuity.

SPEAKER_01: But obviously if it has implications to our program, that's something that we would take action against.

SPEAKER_01: But I would just share that as we actually have worked with WSP before.

SPEAKER_01: Not in this program context, but just as a company.

Unknown: Well, I'm hoping that they can maintain the same high level of seed participation and not just sort of coast for the next two years based on the previous high performance.

SPEAKER_03: Yeah.

SPEAKER_03: I mean, I'd be concerned if they just sort of blow it off and figure out, oh, we can just do this and our average will work out.

SPEAKER_03: Yeah.

SPEAKER_01: And like I said, I mean, assuming they would be interested in bidding for the opportunity to continue, that would reflect upon their performance and our judgment of them as a prospective program administrator if they were not adhering to what our expectations are for seed.

Unknown: Thank you.

SPEAKER_15: And President Smile, Jose Bledipa, member chief diversity officer, I think just one piece that Rachel brought up at the beginning in terms of the approach.

SPEAKER_15: There's a number of low income and nonprofit projects that are in progress right now that if we do stop the contract would be paused for multiple months.

SPEAKER_15: So I think the timing that the team has brought forward will still allow those projects to move forward.

SPEAKER_15: As you see, there's some opportunities to mitigate some of the seed issues, but just want to make sure that folks were aware of the impacts of pulling the contract.

SPEAKER_00: Sure. I've been sitting here trying to exercise my really poor math skills.

SPEAKER_00: So help me out here.

Unknown: The contract already has twenty one point six seven million in it.

SPEAKER_00: And we've we're almost run through that.

SPEAKER_00: Right.

SPEAKER_00: So and we've exceeded the seed requirement for that amount.

SPEAKER_00: Correct.

SPEAKER_00: So which is twenty percent.

Unknown: Is it that much?

SPEAKER_00: We've done almost forty percent.

SPEAKER_01: Is that right?

Unknown: It's almost forty percent is seed.

Unknown: So if we add eight million to that, even if none of that goes to seed, we've still already hit the twenty percent goal.

Unknown: So it is possible.

SPEAKER_01: Right.

SPEAKER_00: OK. We're very close.

SPEAKER_00: I'm good with this.

SPEAKER_00: Thank you.

Unknown: Thank you.

Unknown: OK.

Unknown: Do you think you will be able to summarize that at the end of the meeting?

Unknown: Yes, I will.

Unknown: OK.

Unknown: Are there any other questions or comments before we button up this item?

SPEAKER_07: The next item is just the auditors reported and there's any questions on it.

Unknown: OK. I don't see any more.

SPEAKER_07: OK.

SPEAKER_07: Thank you to the staff.

SPEAKER_07: Thank you, Marie and Brighton Energy.

SPEAKER_07: So are there any and I don't think we had any other public comment on that.

SPEAKER_07: OK. Perfect.

SPEAKER_07: Then item number five is the internal audit services reports, grant administration and G.O. one sixty five transmission line maintenance.

SPEAKER_07: Claire is here for usual.

SPEAKER_07: If there's any questions from the board.

Unknown: OK. Any public comment on that?

Unknown: No, there's no public comment.

SPEAKER_13: Perfect.

Unknown: Otherwise, just a reminder, written comments received on items on the agenda will be included in the record if received within two hours of the end of the meeting.

SPEAKER_07: And then the last item is a summary of committee direction.

SPEAKER_07: I just have one item and that is that staff will monitor this assuming that the board at the meeting tomorrow approves the extension of the TRC contract.

SPEAKER_13: Staff will monitor the seed spend and ensure that TRC is meeting their seed requirements.

SPEAKER_13: And that's what I have.

Unknown: I would add if the other board members are OK with this, if we could get a periodic update on the progress of rebidding this contract.

Unknown: Staff will provide a quarterly update on the status of the solicitation.

SPEAKER_07: Are you OK with that?

SPEAKER_07: I'd like to add the seed.

SPEAKER_02: And the seed as well.

Unknown: OK. With that, let me read the closed session.

SPEAKER_07: Are there any requests to speak on the closed session agenda?

SPEAKER_07: I don't see any.

Unknown: No.

SPEAKER_07: OK. Perfect.

SPEAKER_07: So the board will now enter into closed session to discuss the following item, announcement of closed session agenda, conference with labor negotiators pursuant to section 54957.6 of the government code.

SPEAKER_07: Smud designated representative Jennifer Dibble, Senior Labor Relations Analyst and the employee organization is the International Brotherhood of Electoral Workers or IBEW.

SPEAKER_07: Right. And we will return after the closed session.

Unknown: Thank you.

Unknown: Thank you.

Unknown: Thank you.

Unknown: Thank you.

Unknown: Thank you.

Unknown: Thank you.

Unknown: Thank you.

Unknown: Thank you.