Finance Audit May 19 2026

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Unknown: All right, there comes Nancy.

Unknown: All right, you guys, let's go ahead, about five seconds.

Unknown: All right, good evening and welcome to the Finance and Audit Committee and Special Board

SPEAKER_12: Meeting of May 19, 2026.

SPEAKER_12: This meeting is being recorded and can be accessed on SMUD's website.

SPEAKER_12: Please remember to unmute your microphone when speaking in order that our virtual attendees

SPEAKER_12: may hear.

SPEAKER_12: The microphone will display a green indicator light when the mic is on.

SPEAKER_12: For members of the public attending in person that wish to speak at this meeting, please

SPEAKER_12: fill out a speaker's request form located on the table outside this room and have it

SPEAKER_12: to SMUD security.

SPEAKER_12: Members of the public attending this meeting virtually that wish to provide verbal comments

SPEAKER_12: during the committee meeting may do so by using the raised hand feature in Zoom or pressing

SPEAKER_12: star nine on your phone at the time public comment is called.

SPEAKER_12: Technical support staff will enable the audio for you when your name is announced during

SPEAKER_12: the public comment period.

SPEAKER_12: You may also submit written comments by emailing them to publiccommentat smud.org.

SPEAKER_12: Written comments will not be read into the record but will be provided to the board electronically

SPEAKER_12: and placed in the record of the meeting if received within two hours after the meeting

SPEAKER_12: ends.

SPEAKER_12: Will the Chief Legal Officer please conduct the roll call?

Unknown: Dr. Kurth?

SPEAKER_01: Here.

SPEAKER_01: Dr. Buettomson?

SPEAKER_01: Present.

SPEAKER_01: Chair Rose?

SPEAKER_12: I'm here.

SPEAKER_01: All committee members are present.

SPEAKER_01: Also present are directors Fishman, Herber, Sanborn and present Tamayo.

Unknown: Perfect, thank you.

SPEAKER_12: So we have a quick agenda tonight.

SPEAKER_12: Number one is to discuss adopting amendments to SMUD's 2026 salary schedule and we have

SPEAKER_12: Matthew Powell, our Manager of Classification, Compensation and Performance.

Unknown: Great, thank you.

SPEAKER_06: As mentioned, my name is Matthew Powell, Manager of Compensation, Classification and Performance

SPEAKER_06: and going to present an update to the 2026 board approved salary schedule.

SPEAKER_06: So in December 11th last year, the board approved the 2026 salary schedule.

SPEAKER_06: As OSCE and IBEW were currently in active negotiations at that time, the schedule included

SPEAKER_06: the 2025 wages for both of those groups.

Unknown: Additionally, PAS and confidential employees received a 3.5% structure adjustment in wages

SPEAKER_06: in December last year and this was also reflected in that initially approved schedule.

SPEAKER_06: Following successful ratification of the MOUs for both OSCE and IBEW, staff have updated

SPEAKER_06: the 2026 salary schedule to reflect the wage rates as negotiated and agreed upon.

Unknown: Additionally, PAS and confidential employees also received an additional 0.5% in April of

SPEAKER_06: 2026, up to 4% in their structure adjustment.

SPEAKER_06: This updated wage schedule is presented to the Board of Directors for consideration and

SPEAKER_06: approval with the previously mentioned adjustments to comply with CalPERS regulations and requirements

SPEAKER_06: and the public employees retirement law.

SPEAKER_06: Approval of the adjusted salary schedule mid-year will ensure SMUD employees and retirees will

SPEAKER_06: have their total wages calculated in any 2026 CalPERS retirement calculations.

SPEAKER_06: This is the conclusion and I'll take any questions that you may have.

Unknown: All right.

SPEAKER_12: I don't have any questions.

SPEAKER_12: Are there any public comments?

SPEAKER_12: I do not expect so.

Unknown: No, I don't see any hands now.

Unknown: Perfect.

SPEAKER_12: Thank you.

Unknown: Thank you.

Unknown: So item number two is to discuss adopting a resolution calling for the election for

SPEAKER_12: the Directors for awards 3, 4, 6 and 7 and requesting Sacramento County to consolidate

SPEAKER_12: that election with the November 3rd, 2026 general election.

SPEAKER_12: This will be the consent calendar item on the Thursday board meeting.

SPEAKER_12: We have Laura Lewis, our chief legal officer.

SPEAKER_01: Yes, this is something the board requires to do every time there's an election and that

SPEAKER_01: is the MUDAC requires that the board call the election and request its consolidation

SPEAKER_01: with the November 3rd general election.

SPEAKER_01: The deadline for making or for filing that resolution is July 1st, 2026.

SPEAKER_01: Go to the next slide.

SPEAKER_01: There are four impacted words, word 3 with Greg Fishman as the incumbent, word 4 with

SPEAKER_01: Rosanna Herber, word 6 with Dave Tamayo, word 7 with Heidi Sanborn and the estimated cost

SPEAKER_01: for the election is about $1.2 million.

SPEAKER_01: The next slide.

SPEAKER_01: So the board has three choices to make.

SPEAKER_01: The first is the length in the form of candidate statements and you'll see historically the

SPEAKER_01: board is elected to limit the statements to 200 words.

SPEAKER_01: This year there's a new option for candidates to submit online only statements at a significant

SPEAKER_01: lower cost.

SPEAKER_01: You'll see the cost for the online statements are $300 for every, regardless of the ward,

SPEAKER_01: you'll see the cost on the left of the printed statements that range anywhere from about

SPEAKER_01: $4800 to about $7100 and all depends on the number of registered voters in the ward.

SPEAKER_01: The other option is to allow for up to 400 words at an additional cost.

SPEAKER_01: So that's something we're going to be asking the board to act on tonight and again historically

SPEAKER_01: the board is elected to allow 200 words.

SPEAKER_01: The next item please.

SPEAKER_01: The other items the board should consider is who pays for the candidate statements.

SPEAKER_01: The candidate has paid and the method of breaking a tie in the unlikely event there's

SPEAKER_01: a tie the board has historically decided to determine a tie by lots which is essentially

SPEAKER_01: a point of name out of a hat.

SPEAKER_01: So with that I will pass it on to the board to have a discussion of all of those three

SPEAKER_01: items.

SPEAKER_01: This is our recommendation.

SPEAKER_08: Laura, if we follow historical practice and each candidate pays for their own candidate

SPEAKER_08: statement, could we choose if I wanted to do 200 and Heidi wanted to do 400 or vice

SPEAKER_08: versa or does it all have to be the same?

SPEAKER_01: It would have to be the same.

SPEAKER_12: Just to clarify the online only, right, it's we can't say no, you can't do an online?

Unknown: No.

SPEAKER_12: Okay.

Unknown: Yeah.

Unknown: It just allows for candidates.

SPEAKER_01: Yeah, it's a little less expensive.

SPEAKER_12: I saw Dr. Herber's hand up first.

SPEAKER_01: That's okay.

SPEAKER_00: I think we should go ahead and go with the 200 words.

SPEAKER_00: You know, that makes the most sense to me.

SPEAKER_00: I think 400, you know, it's more expensive and I have found that, you know, when I've

SPEAKER_00: done my statement, 200 words has been fine.

SPEAKER_00: So my preference.

Unknown: I'm fine with that.

SPEAKER_11: Just got a clarification.

SPEAKER_11: So if we choose either 200 or 400, the online is in addition to the printed?

Unknown: It would be online only instead of in lieu of.

Unknown: So that's a choice instead of the printed?

SPEAKER_11: Correct.

SPEAKER_11: Okay.

Unknown: Go ahead.

Unknown: So if an opponent files, they could still do 400 words and they could do both, right?

SPEAKER_01: The board is choosing which either 200 or 400.

SPEAKER_01: Oh, for everybody who applies.

SPEAKER_05: Okay.

SPEAKER_05: I just wanted to make sure that this would be fair.

SPEAKER_05: Okay.

SPEAKER_05: Well, I'm fine with this staff recommendation.

SPEAKER_05: I'm really glad they allow this new option of doing online only because the cost is quite

SPEAKER_05: prohibitive to a lot of people to even enter a race.

SPEAKER_05: That's interesting, though, that it's not both.

Unknown: Yeah, it seems like it would be both.

SPEAKER_08: It seems like if you would get the printed version.

SPEAKER_10: I guess, I mean, I'm not the county, but I mean, I'll definitely, I think it's Karen.

SPEAKER_10: I mean, it's because there are some online only type people.

SPEAKER_10: You would think if you pay the higher version, you would get the online one because you're

SPEAKER_10: paying, I mean, that's something I'll write to the county.

SPEAKER_10: But that just seems strange that you're paying for the higher one, but you wouldn't just

SPEAKER_10: get it or give the option to do both.

SPEAKER_10: Because there are some people that are, you know, millennials or whatever that don't look

SPEAKER_10: at their packet, but they'll look at an online statement and it'll be blank for people that

SPEAKER_10: choose the written version.

SPEAKER_10: So that's interesting.

SPEAKER_10: And Laura, are we choosing tonight to decide for everybody whether or not we do online

SPEAKER_08: only or print only?

SPEAKER_08: Is it?

SPEAKER_01: It's you're choosing either 200 words or 400 words, and then these are the costs.

SPEAKER_01: Online is going to be an option for either.

SPEAKER_01: We don't choose that.

SPEAKER_01: We don't choose that.

SPEAKER_01: The county is saying this is now an option.

SPEAKER_10: Yes.

SPEAKER_10: Okay.

SPEAKER_10: I'm just saying it doesn't make sense.

SPEAKER_02: It's another option because...

SPEAKER_08: So we make the choice 200 or 400 words, and then we can decide down the line whether or

SPEAKER_08: not we want to do online or printed.

SPEAKER_08: And any potential other candidates can also make that decision on their own.

SPEAKER_08: Correct.

SPEAKER_08: Okay.

SPEAKER_08: And if...

SPEAKER_08: I'm not advocating for this, but if we decided that SMUD should pay these costs, would SMUD

SPEAKER_08: pay the costs for every candidate?

SPEAKER_08: Yes.

SPEAKER_08: Okay.

SPEAKER_08: Then I'm definitely not advocating.

Unknown: So just to clarify things, then it's an either or choice between online and printed, or is

SPEAKER_03: there a both?

SPEAKER_01: I think...

SPEAKER_01: Well, I think if you choose...

SPEAKER_01: I think that if it's online, it's online only.

SPEAKER_01: If you choose printed, I believe you'd have it in both because there's going to be an

SPEAKER_01: online...

Unknown: I will clarify that, but I think it would be in both.

SPEAKER_01: Where if you choose online only, it's online only, or you could choose printed and would

SPEAKER_01: likely also show up online.

SPEAKER_01: I will clarify that.

Unknown: But all you have to decide tonight is really the 200 words or the 400 words.

SPEAKER_04: Okay.

Unknown: So it's the candidate that chooses later on if they're going to have it printed or online

SPEAKER_11: only?

SPEAKER_01: Correct.

SPEAKER_01: Yes.

SPEAKER_01: This is new for 2026, so this is new to us as well.

SPEAKER_01: But we'll clarify that.

SPEAKER_04: I'm supporting the 200.

SPEAKER_04: It sounds like...

SPEAKER_04: The Gettysburg Address has only 267 words, so we should be able to do a candidate statement

SPEAKER_04: in less than that.

SPEAKER_04: It's not like combining proper nouns, right?

Unknown: It looks like there's an agreement on the 200 words.

SPEAKER_08: 200 words and candidates pay.

Unknown: Yeah, candidates pay.

SPEAKER_12: Candidates pay, and then determining the tie.

SPEAKER_12: By lots.

SPEAKER_12: By lots.

SPEAKER_12: Yeah.

SPEAKER_12: All right.

Unknown: So that's what we've always done.

SPEAKER_01: This will be on the consent calendar.

SPEAKER_01: Yep.

SPEAKER_12: And then shoot us if something turns out to be different.

SPEAKER_12: They'll let us know.

SPEAKER_12: Yes.

SPEAKER_02: I will let you know.

Unknown: Yeah.

SPEAKER_00: So quick question.

SPEAKER_00: Drawing lots.

SPEAKER_00: I'm not sure I know what that means.

SPEAKER_00: Is it like one and two and then somebody picks?

SPEAKER_01: Is it that simple?

SPEAKER_01: I believe so, yes.

SPEAKER_00: Oh, boy.

SPEAKER_00: Okay.

SPEAKER_01: Thanks.

SPEAKER_01: And if you recall, we looked at last year the cost of having an election.

SPEAKER_01: It would be about a million dollars per word, and it's likely a lot more than that now,

SPEAKER_01: because that was two years ago.

SPEAKER_08: The odds of having an absolute tie are pretty slim.

SPEAKER_01: It's very remote.

Unknown: Yeah.

Unknown: Wow.

Unknown: I should ask, is there any public comment on this item?

SPEAKER_01: I don't see any hands now.

Unknown: Perfect.

Unknown: All right.

Unknown: Then we'll call that.

SPEAKER_12: We'll move on to item number three.

SPEAKER_12: And then item number three is provide the board with SMUD's financial results from the

SPEAKER_12: three-month period ending March 31, 2026, and a summary of the current power supply costs.

SPEAKER_12: Okay.

SPEAKER_12: Thank you.

SPEAKER_07: Good evening, Chair Rose and SMUD board of directors.

SPEAKER_07: I'm here to present on financial results and power supply.

Unknown: Oh, yes.

SPEAKER_07: Sorry.

Unknown: Okay.

SPEAKER_07: First, we'll start with March year-to-date financial highlights.

SPEAKER_07: Consumer revenues is $389 million, which is $2 million higher than plan, driven by

SPEAKER_07: larger than expected commercial usage.

SPEAKER_07: Commodity expenses are $118 million.

SPEAKER_07: That's 14 million over plan.

SPEAKER_07: That's driven by a combination of several factors.

SPEAKER_07: Low cost hydro generation has been higher than plan.

SPEAKER_07: Market power prices have been lower than plan, and we've had lower fuel costs due to lower

SPEAKER_07: thermal generation.

SPEAKER_07: And then other operating expenses is $255 million, $6 million lower than plan, driven by timing

SPEAKER_07: variances in customer services and lower than planned veg maintenance expenses.

SPEAKER_07: This all leads to a net income of $32 million through March, which is $33 million higher

SPEAKER_07: than our plan due to the net income of negative $1 million.

SPEAKER_07: Power supply – or, I'm sorry, energy sources.

SPEAKER_07: So we'll start with the chart on the left, which is just March.

SPEAKER_07: Hydro is slightly under budget due to low precipitation and snowpack.

SPEAKER_07: Thermal is under plan in March, and purchase power is over plan.

SPEAKER_07: Those are both driven by the same factor, which is low market power prices, which makes

SPEAKER_07: it more economical to buy power than to purchase – to buy power than to generate thermal

SPEAKER_07: power.

SPEAKER_07: Now, if you go to the year-to-date chart on the right, it's the same story there where

SPEAKER_07: under and thermal generation and we're over and purchase power because of the economics,

SPEAKER_07: making it cheaper to buy power on the market.

SPEAKER_07: And then finally, hydro year-to-date is slightly above plan due to some early runoff in January.

SPEAKER_07: Delinquency continues to go down.

SPEAKER_07: So it's down $1 million from last month.

SPEAKER_07: That was $28 million last month.

SPEAKER_07: Now it's down to about $27 million.

SPEAKER_07: Thermal and EAPR is about 70 percent of that total.

SPEAKER_07: And of the $27 million, $9.2 million is currently on payment plans.

SPEAKER_07: Precipitation – so when I was up here last month, it was 43 inches, and now it's 51

SPEAKER_07: inches.

SPEAKER_07: So we had obviously a really nice month for precipitation.

SPEAKER_07: We had about eight inches in April.

SPEAKER_07: And overall, we're at 95 percent of our average to date and about 90 percent of the water

SPEAKER_07: year average.

SPEAKER_07: Back is 21.3 percent.

SPEAKER_07: Now this was as of May 11th.

SPEAKER_07: I looked at the numbers again yesterday, May 18th, and that was down to 16 percent of average

SPEAKER_07: at selected sensors.

SPEAKER_07: We do have a full reservoir where 94 percent through May 11th.

SPEAKER_07: Commodity budget – so we won't talk about the table on the left because that hasn't

SPEAKER_07: changed since last month and the water year closed out and we did those transfers already,

Unknown: unless anyone has questions on that.

SPEAKER_07: On the charts – on the tables on the right, the commodity costs are coming in at $618

SPEAKER_07: million at the end of the year.

SPEAKER_07: This is $25 million over plan.

SPEAKER_07: That's driven by lower than expected hydro generation the rest of the year.

SPEAKER_07: Now if you go to the chart below that, you can see that number looks very low at 471

SPEAKER_07: gigawatt hours below plan.

SPEAKER_07: When I'm up here next month, that number is going to be a lot closer to plan.

SPEAKER_07: This is sort of an anomaly.

SPEAKER_07: It's a bit of a timing variance.

SPEAKER_07: This forecast was put together with data through March.

SPEAKER_07: It was very dry, very warm, and all that.

SPEAKER_07: In April, we obviously had a lot of precipitation, so that number is going to be much closer

SPEAKER_07: to plan when I'm up here next month.

SPEAKER_07: I would consider this a bit of an anomaly.

SPEAKER_07: Days cash – we're at 194 days, which is right on plan almost.

SPEAKER_07: And then at the end of the year, we're at 196 days, which is 15 days below plan.

SPEAKER_07: That's driven by the fact that we had $250 million of planned bond issuances in the

SPEAKER_07: budget, and that number – now we're forecasting that we're only going to need about $200 million.

SPEAKER_07: Now that's subject to change, but as of now, that's where we're at is a $200 million

SPEAKER_07: estimate, and that's that green – the green peak you see there in July is the bond

SPEAKER_07: issuance incoming.

SPEAKER_07: And then as a last note, I would just say that we don't anticipate having any commercial

SPEAKER_07: paper outstanding at your end.

Unknown: With that, I can take any questions.

Unknown: Yes.

Unknown: So, we're doing really well, it seems like.

SPEAKER_05: And when we're buying power, because it's cheaper than making it in thermal plants,

SPEAKER_05: it feels like renewables are starting to – tell me if I'm wrong, but the renewables are now

SPEAKER_05: much more affordable, it sounds like, than the thermal and the gas.

SPEAKER_07: For sure buying in the – are you talking hydro renewables, I mean, or like solar?

SPEAKER_07: Well, if you're buying on the market, I'm assuming because of our carbon goals, you're

SPEAKER_05: trying to buy renewables.

SPEAKER_05: So it just seems like we're at a change in the crossroads here, where gases now become

SPEAKER_05: expensive and we can – and it's going to get worse, I suspect, with what's going

SPEAKER_05: on in the world.

SPEAKER_05: So I'm just glad.

SPEAKER_05: It feels like we're at a place where, thank goodness, we have a lot of renewables in our

SPEAKER_05: portfolio and we've been diverse in how we've encumbered them.

SPEAKER_05: So just noticing.

SPEAKER_05: Great.

SPEAKER_07: Thank you.

Unknown: Thank you.

SPEAKER_01: Yes, the word is concerned about this, Chief League Urban Affairs Officer.

SPEAKER_01: That is correct, especially during the spring months when it's sunny outside and you have

SPEAKER_01: a lot of renewables, the prices are very low, even the negative.

SPEAKER_01: However, during other times of the year, they're not available and that's where you need the

SPEAKER_01: thermal still.

SPEAKER_01: But you're right, definitely in the springtime we can ramp down our thermals and take advantage

SPEAKER_01: of sometimes negative power prices.

Unknown: I've got a question.

SPEAKER_11: I'm not sure that this particular report is necessarily the right place to do it, but

SPEAKER_11: Director Sanborn's question regarding the purchase power, I don't see that it distinguishes

SPEAKER_11: whether it's renewable or thermal.

SPEAKER_11: Is there a way that we can report that?

SPEAKER_11: Would that be information that would be easy to include in this?

SPEAKER_11: So basically splitting that green bar.

Unknown: Scott Martin, CFO, one of the challenges with that is that California does not identify

SPEAKER_09: the specific unit that an import comes from.

SPEAKER_09: So when we buy in the market from, say, the ISO or within California, it's a generic mix.

SPEAKER_09: So you don't actually get identified as solar or wind or geothermal or anything like that.

SPEAKER_09: It doesn't identify that source.

SPEAKER_09: We know, though, as Laura mentioned, that say in the spring, during the middle of the

SPEAKER_09: day when loads are lower, there's a lot of solar online and that generally speaking you're

SPEAKER_09: buying solar.

SPEAKER_09: But right now the market, we're not, they don't identify, California does not identify

SPEAKER_09: the specific resource that you are buying.

SPEAKER_09: It's just a generic mix.

SPEAKER_11: So I'm not disputing what you said, but it's curious that that would be the case because

SPEAKER_11: I would think that utilities would attach value to whether something's renewable or not.

SPEAKER_09: We do in most utilities when they're selling a renewable or the owner of the renewable

SPEAKER_09: will keep the wreck.

SPEAKER_09: So they sell it as a power resource, energy resource, but they keep the renewable attributes

SPEAKER_09: for themselves.

SPEAKER_09: That's what we do.

SPEAKER_09: When we sell, for instance, Solano into the market or some of the resources that we have

SPEAKER_09: in the south, when we sell them into the market, we keep the renewable attributes for ourselves,

SPEAKER_09: but we sell the power as now it becomes non-green, right?

SPEAKER_09: Because we've kept the renewable attributes for ourselves.

SPEAKER_11: So it's actually tracked in a different way.

SPEAKER_11: Yes.

SPEAKER_11: It's not amenable to doing this.

SPEAKER_11: Okay.

SPEAKER_08: Thank you.

SPEAKER_08: Scott, I mean, chances are, right?

SPEAKER_08: I mean, the energy that we're buying on the market, if it's less expensive than our own

SPEAKER_08: fleet of thermal plants, it's probably not somebody else's thermal plant, right?

SPEAKER_08: There's no guarantees there, but our plants are among the most efficient, therefore the

SPEAKER_08: lease cost, and if we're buying it on the open market, it's probably not a thermal plant.

SPEAKER_09: Generally speaking, I'd say that's probably true.

SPEAKER_09: Like Laura was mentioning, it's mostly true in the spring.

SPEAKER_09: When we have a lot of renewables ramping up and not huge loads in the summer, that's probably

SPEAKER_09: not so true.

SPEAKER_09: You're right.

SPEAKER_09: Or in the fall.

Unknown: Thank you.

Unknown: All right.

Unknown: I don't see any more comment.

SPEAKER_12: Do we have any public comments?

Unknown: No, we do not.

SPEAKER_12: Okay.

SPEAKER_12: Thank you.

Unknown: Thank you.

SPEAKER_12: The last item is, do we have any summary of committee direction?

SPEAKER_01: Don't have anything, though.

SPEAKER_12: Okay.

Unknown: Perfect.

Unknown: And are there any items, any requests to speak on items on the agenda?

Unknown: No, there's no hands.

SPEAKER_01: Okay.

Unknown: Perfect.

SPEAKER_12: Then that, the board will now enter into closed session.

SPEAKER_12: Closed session's agenda is public employment pursuant to section 54.9.57 B1 of the Government

SPEAKER_12: Code related to employment of the CEO and General Manager.

SPEAKER_12: Yeah.

SPEAKER_01: And I don't see any hands for this section either for comment.

SPEAKER_01: Okay.

Unknown: No hands.

Unknown: Okay.

Unknown: All right.

SPEAKER_12: And I don't think we're up.

SPEAKER_12: Will we have action?

SPEAKER_12: Will we come back?

SPEAKER_12: Okay.

SPEAKER_12: The board will not be taking any action during the closed session, so it will be nothing

SPEAKER_12: to report out at the end of the session.

SPEAKER_12: All right.

SPEAKER_12: No further business.

SPEAKER_12: The board will adjourn to closed session.

SPEAKER_12: Thanks, all.