MINUTES OF LINCOLN ELECTRIC SYSTEM ADMINISTRATIVE … › pdf › board › minutes-2020 › bd-min-june.pdf · 1 day ago · MINUTES OF LINCOLN ELECTRIC SYSTEM ADMINISTRATIVE BOARD

MINUTES OF LINCOLN ELECTRIC SYSTEM ADMINISTRATIVE BOARD Minutes of regular meeting held at 9:30 a.m., Friday, June 19, 2020, at the Lincoln

Electric System Walter A. Canney Service Center, 2620 Fairfield St, Lincoln, Nebraska.

Board Members Present: Sarah Peetz, Andy Hunzeker, DaNay Kalkowski, Eliot

Bostar, David Spinar, Rebecca Lai, Lucas Sabalka Board Members Absent: Karen Griffin, Layne Sup

(These board members connected to the meeting virtually, but cannot vote virtually or be counted as present as the Nebraska Open Meetings Act does not allow virtual participation for LES board meetings.)

LES Staff Present: Kevin Wailes, Jason Fortik, Lisa Hale, Laura Kapustka,

Dan Pudenz, Trish Owen, Paul Crist, Joel Dagerman, Eric Ruskamp, Mel Palmer, Amber Tate, Taletha Kryzsko, Shelley Sahling-Zart

Others Present: Cathy Pudenz, Larry Kathol, Bill Noble, Donna Noble Other individuals participated virtually. News Media Present: None Vice Chair DaNay Kalkowski declared a quorum present and called

the meeting to order at approximately 9:30 a.m. A safety briefing was provided. She noted that LES conducts its meetings in compliance with the Nebraska Open Meetings Act and noted that copies of the Act are located with the Board Assistant Secretary.

Due to the current public health emergency circumstances, LES implemented special measures intended to balance compliance with the Nebraska Open Meetings Act with the public health directives designed to mitigate spread of the COVID-19 coronavirus. LES made arrangements for some board members and the public to access the meeting virtually, though only board members present in person on site can be officially noted as present in compliance with the Nebraska Open Meetings Act.

Due to current circumstances and as permitted by the Nebraska Open Meetings Act, public comments from customers were suspended for this meeting. LES advised customers on its web site and through social media that if they would like to express concerns to the LES Administrative Board regarding any agenda item or other

Call to Order & Safety Briefing

- 2 -

LES business, they could email comments to [email protected].

Vice Chair Kalkowski asked for approval of the minutes of the meeting of May 15, 2020. Andy Hunzeker moved their approval. David Spinar seconded the motion. The vote for approval of the minutes was:

Aye: Hunzeker, Kalkowski, Bostar, Spinar, Lai,

Sabalka

Nay: None

Absent: Griffin, Sup, Peetz Andy Hunzeker, Chair of the Personnel & Organization Committee,

reported on Committee discussions which included the following: 1) researching the possibility of offering STEM scholarships; 2) changes to the employees’ 401(k) retirement plan as required by the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act that was recently passed by Congress to address a variety of COVID-19-related impacts; 3) a temporary elimination of the cap on the number of hours that an employee may donate pursuant to the Leave Donation Policy to potentially cover more donation requests related to COVID-19; 4) update on the results of the company-wide merit increases for the 2019 performance cycle; and 5) the annual CEO performance review. (Exhibit I)

Lucas Sabalka, Chair of the Operations & Power Supply Committee, reported on Committee discussions which included the following: 1) Norris Service Area Adjustment status update; 2) physical security update; 3) Rokeby Unit 1 repair update; and 4) North American Reliability Corporation (NERC) audit overview and results. (Exhibit II)

Sarah Peetz arrived at this time.

Layne Sup, LES representative on the DEC Board of Directors,

reported on activities of the District Energy Corporation (DEC) which included the following: 1) executing a contract with Encore Energy Services for natural gas purchasing services for a three-year term commencing in August 2021; 2) revising a Memorandum of Understanding between DEC and LES regarding fuel oil transfers; COVID-19 impacts on DEC operations and practices; 3) a feasibility

Approval of Minutes Personnel & Organization Committee Report Operations & Power Supply Committee Report District Energy Corporation (DEC) Update

mailto:[email protected]

- 3 -

study for installing service piping extensions from the existing DEC State Plant to new State buildings; 4) a financial report; 5) and miscellaneous updates including recognition of Sarah Peetz for her service representing LES on the DEC Board. (Exhibit III)

David Spinar, Chair of the Communications & Customer Services Committee, reported on Committee discussions whichincluded the following: 1) credit and collection activities including plans to resume credit and collection activities in the next few months that were suspended due to the COVID-19 pandemic; and 2) various changes to LES community outreach and educational activities caused by the COVID-19 pandemic, including plans for a virtual Sustainable Living Festival event July 20-24; 3) (Exhibit IV)

Joel Dagerman, Manager, System Planning, provided an overview of major construction activities and an outlook for construction for the remainder of the year. (Exhibit V) He reviewed year-to-date building permits compared to previous years and the impact of general construction activity on LES construction work. Dagerman highlighted preventive maintenance projects to enhance reliability such as the Duct Installation Program and pole inspection and replacement programs, among others. He also highlighted planned projects including discretionary rebuild projects to convert overhead distribution facilities to underground and LES work related to the South Beltway.

Laura Kapustka, Vice President & Chief Financial Officer, provided an update on LES 2020 bond disclosure and compliance efforts. (Exhibit VI) In 2012 the LES Administrative Board adopted compliance procedures that require an annual status update to the board. She provided an overview of disclosure requirements should LES experience any of sixteen events. Staff continues to monitor compliance on a monthly basis.

Kapustka noted that staff continues to monitor the financial environment in continued anticipation of issuing bonds pursuant to the financing authorization approved by the Board in November 2019. The COVID-19 pandemic caused staff to temporarily stand down, but the markets are again looking favorable for issuing bonds. She noted that staff is working with bond counsel and LES’ financial advisor and will keep the Board apprised of financing developments.

Communications &Customer Services Committee Report

2020 Construction Review & Outlook

Tax-Exempt Financing Compliance Update

- 4 -

Lisa Hale, Vice President Customer Services, noted that last month the Board reviewed proposed changes to the LES Service Regulations which address the following areas:

* Rate code assignment for 3-phase service; * Customer obligations regarding underground service

conduits; * Developer obligations regarding installation of

distribution facilities; * After-hours reconnection fee; * Past due reminder fee; and * Removing a provision related to aid-to-construction for

underground service in new residential areas.

LES issued a number of communications soliciting feedback from customers regarding the proposed revised service regulations which were posted on the LES web site. Hale reported to the Board that no comments were received from the public regarding the proposed revisions. Andy Hunzeker moved adoption of LES Resolution 2020-08, approving the revised LES Service Regulations to become effective July 1, 2020. (Exhibit VII) David Spinar seconded the motion. The vote to adopt LES Resolution 2020-08 approval of the minutes was:

Aye: Peetz, Hunzeker, Kalkowski, Bostar, Spinar,

Lai, Sabalka

Nay: None

Absent: Griffin, Sup Eric Ruskamp, Manager, Regulatory Compliance, reported on the

results of the 2020 North American Electric Reliability Corporation (NERC) Compliance Audit, also referred to as the Midwest Reliability Organization (MRO) Audit as it is conducted by MRO review teams as authorized by NERC. (Exhibit VIII) The audit scope consists of two audit teams addressing: 1) compliance with NERC operations and planning standards; and 2) compliance with critical infrastructure protection (CIP) standards. He reviewed the logistics and documentation required for the audit.

Ruskamp reported that the audit found zero violations, zero areas of concern, and noted 13 recommendations of things staff could consider to better ensure continued compliance. The MRO audit teams also noted to positive observations

Approval of Revised LES Service Regulations – LES Resolution 2020-08 Midwest Reliability Organization Audit Overview & Results

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which were: 1) LES’ culture of compliance, including professional interactions with staff and staff management of the volume and intensity of the audit; and 2) LES’ internal controls program which contributes to system reliability.

The board commended staff on the excellent audit results noting that they have also observed a strong culture of compliance throughout LES.

Lisa Hale, Vice President Customer Services, provided an overview

of credit and collection activities to date and plans to transition to normal operation over the next couple of months. (Exhibit IX) She reminded the board that LES temporarily suspended disconnection of electric service for non-payment and waiving late fees beginning March 16. She noted that incoming customer calls are down 28 percent and payment arrangements are down 283 percent. In addition, there have only been 100 pledges from LES’ Energy Assistance fund with only about 31 percent of the funds expended to date. Assistance is also available through the federal Low-Income Home Energy Assistance Program (LIHEAP). Hale noted that 2,100 customers have not contacted LES about their past due bills which is 350 percent higher than a typical year. These accounts total nearly $1 million in past due balances.

Staff has been encouraging customers to call and seek payment arrangements or assistance through various methods including bill messages, news releases, social media, LES.com, letters, fliers (in multiple language, radio spots, as well as working with a variety of community partners such as Community Action.

Hale noted that LES is planning to transition to modified normal credit and collection activity with appropriate safeguards as follows:

* Late payment charge assessments will resume in late July

for any charges billed July 1 or later and not paid by the due date;

* Standard disconnect notices will be mailed in mid-July; * Disconnections for non-payment will begin in early

August; and * Downtown business office will reopen to the public with

appropriate health safeguards prior to resuming disconnections.

Credit & Collection Update

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Temporary accommodations will include waiving disconnect fees and deposits for the first 30 days, waiving late payment charges under certain circumstances, and modifying payment arrangements to address a customer’s financial situation.

Hale noted that LES has scheduled two virtual meetings the following week with a variety of agencies and interested stakeholders to provide a similar overview of LES’ plans.

Dan Pudenz, Vice President Energy Delivery, was recognized for

his retirement from LES after 43 years of service. Dan had planned to retire at the end of April, but agreed to delay it for a couple of months as LES worked to manage staff and operations during the peak of the COVID-19 public health emergency. Kevin Wailes, CEO, presented Dan with several tokens of appreciation and thanked him for his service. Dan’s wife, Kathy, was present for the meeting and his children were able to virtually share in Dan’s recognition. The Board also extended its gratitude to Dan and wished he and his wife well in his retirement.

Lucas Sabalka moved that the Board go into closed Executive

Session to discuss the annual performance of LES CEO Kevin Wailes. Andy Hunzeker Seconded the motion. The vote to go into closed Executive Session was:

Aye: Peetz, Hunzeker, Kalkowski, Bostar, Spinar,

Lai, Sabalka

Nay: None

Absent: Griffin, Sup

Prior to going into Executive Session, Chair Peetz noted that the Board would not be taking any action following the closed session. Chair Peetz declared the Board in closed Executive Session at approximately 11:25 a.m. She declared the Board out of closed Executive Session at approximately 11:45 a.m.

The monthly Financial and Power Supply reports were distributed

to the Board and staff was available to answer questions. (Exhibit X)

Kevin Wailes briefly noted other COVID-19 activities, notably that

the process of transitioning staff back into the office and

Recognition of Dan Pudenz Executive Session – CEO Performance Review Monthly Financial and Power Supply Reports Update on LES COVID-19 Response

- 7 -

facilities has begun and will continue through July. A variety of measures have been implemented to mitigate any health concerns including, but not limited to, face masks for employees, increased hand sanitizer locations, social distancing requirements, and increased sanitation practices.

Kevin Wailes, CEO, noted the activities of the past few weeks

stemming from the death of George Floyd and the ensuing discussion about race in the community, noting that many companies locally and across the nation have adopted resolutions or statements reaffirming their positions in support of diversity and inclusion. Following significant discussion of ideas, the consensus of the board was that while the LES policies already support diversity, equity and inclusion, action is much more important than additional statements. The Board asked staff to develop and investigate additional action items including, but not limited to a forum for a thorough discussion of the issues of race, diversity and inclusion at LES and in the community prior to developing any formal statement.

The next regular meeting of the LES Administrative Board is

tentatively scheduled for Friday, July 17, 2020, at 9:30 a.m., but subject to change due to the evolving COVID-19 public health emergency.

There being no further business before the Board, Chair Peetz

declared the meeting adjourned at approximately 12:18 p.m.

Discussion Regarding Diversity and Inclusion Next Meeting Adjournment

Andy Hunzeker, Secretary

BY: S/Shelley Sahling-Zart Shelley Sahling-Zart Assistant Secretary

Exhibit I

LES PERSONNEL AND ORGANIZATION COMMITTEE Meeting Summary

Friday, June 5- 12:00pm

1. The committee had a conceptual discussion regarding LES researching the possibility of offering STEM scholarships. The committee, by consensus, asked LES to explore the legal and operational aspects of the proposed scholarship and to report requirements during a future committee meeting.

2. The CARES Act changes to the 401k retirement plan communicated to plan participants in April were discussed

with the committee. Changes include allowing withdrawals from 401k retirement accounts for COVID related financial hardships and the waiver of Required Minimum Distributions. Both changes are effective through December 31, 2020. The 401k plan document will be amended later in the year to capture these changes.

3. Also discussed with the committee is an exception being made to the Leave Donation Policy that will allow employees who are reaching their personal leave maximum accrual to donate leave to the leave donation bank in excess of the 40 hours allowed to be donated annually per employee. This will increase the leave donation bank in case there are donation requests to cover absences related to the pandemic, which are allowed due to the President’s declaration of a Major Disaster. The committee concurred for LES to move ahead with the leave policy exception through the end of the year.

4. The committee was updated on the results of the merit cycle for the 2019 performance year. 3.2% was

budgeted for merit increases in the 2020 budget. Of that amount, 2.83% was used for annual merit increases, with the rest set aside for end of probation increases, etc. Individual increases are determined by management using the employee’s overall performance rating and the employee’s salary % to midpoint. Overall performance rating distribution for nonunion employees was 90 employees Exceeding Expectations and 234 employees Meeting Expectations.

5. The Personnel and Organization committee also conducted the annual performance review of CEO Kevin

Wailes. We will have additional comments following today’s Executive Session on his review.

Exhibit II

Operations and Power Supply Committee Meeting Summary

June 12, 2020 (via MS Teams)

Norris Service Area Adjustment Status Update: In 2001, LES and Norris Public Power District entered into a Joint Planning Agreement that created a process and a framework to guide the transition of Norris’ customers and electric system assets to LES as the City of Lincoln expands. In September of 2019, LES and Norris both agreed to the transfer of customers and assets in the southern part of LES’ service area around Saltillo Road and the proposed South Beltway. Ninety Norris customers were successfully transferred to LES during April and May of this year. In accordance with the terms of the Agreement, LES provided Norris about $2.3M of compensation for facilities and calculated customer revenues to effectuate the transfer.

Physical Security Update: Staff provided an overview of the physical security equipment installations that occurred over the last year at the LES Operations Center and the thermal energy plants LES manages for the District Energy Corporation. These installations involved building access control devices, surveillance equipment, fencing, and gates. Several training exercises and educational materials were provided to LES employees. In mid-2020, a new electronic visitor management system called Envoy will be implemented to replace the existing pencil-and-paper system. A gunshot detection system called Amberbox will also be installed in the Service Center and LES Operations Center lobby areas. Physical security processes have been modified as a result of the COVID-19 situation and the recent protest events in Lincoln have resulted in changes to LES’s mobile patrols and the interactions with local, state, and federal agencies.

Rokeby Unit 1 Repair Update: In August of 2019 a borescope inspection of Rokeby Unit 1 identified damage to some of the turbine blade attachment hardware. After consultation with the original equipment manufacturer (General Electric), the turbine was taken out of service for safety purposes. After a competitive bidding process, LES selected Mechanical Dynamics & Analysis to perform the unit repairs. The original budget was about $3M and the expected return to service date was June 15, 2020. Due to scheduling complications caused by COVID-19 and some additional damage that was discovered once the unit was disassembled, the expected return to service date is now July 27, 2020 at an estimated cost of $3.5M.

NERC Audit Overview and Results: (**This item will be discussed later on today’s agenda**) LES’s previous onsite compliance audit was conducted in May 2017 and its most recent offsite audit was completed in May 2019. Onsite audits are scheduled every three years; however, this year’s scheduled onsite audit was conducted offsite due to COVID-19 concerns. The audit began in February and was completed in May. Prior to the audit, staff performed their annual internal review of all NERC standards applicable to LES so to best prepare for the audit. Interviews with the auditors were completed online and by all accounts, LES’s compliance audit results were very positive. The were no Potential Violations and no Areas of Concern identified by the auditors. There were thirteen Recommendations offered by the auditors, but these represented relatively minor issues. The auditors noted that LES exhibited a strong “culture of compliance” and that the LES subject matter experts were very open and responsive in their interactions with the audit team.

Exhibit III

District Energy Corporation Summary of the May 26, 2020

Board of Directors Meeting

The District Energy Corporation held its most recent Board meeting online on May 26, 2020. Highlights from the meeting include the following:

Management Report

The Board approved a Resolution authorizing the President to sign a contract with Encore Energy Services for natural gas purchasing services and the related balancing services for a three-year term commencing in August 2021.

The Board approved a Resolution authorizing the President to sign a revised Memorandum of Understanding between the DEC and LES regarding fuel oil transfers between to two organizations. Fuel oil transfers will now be completed at no cost to LES to remove any concern that the DEC is acting as a retail provider of fuel oil.

The COVID-19 situation has caused LES to modify its practices for operating and maintaining the DEC plants. Minimal staff interactions and enhanced hygiene practices are being utilized. Staff has also been closely monitoring the status of maintenance contractors and suppliers to mitigate and prepare for disruptions. Thermal services to the DEC’s customers have been maintained at a high level.

The Feasibility Study for installing service piping extensions from the existing DEC State Plant to a new Nebraska Department of Administrative Services office building and parking garage at 17th & K Street and to a renovated Department of Labor office building at 550 South 16th Street was completed. Due to the relatively low projected customer loads, this project was determined to not be economically feasible.

Financial Report

Energy sales through April 30th were 2% under budget, total revenue was 0.2% under budget, and expenses were 8% under budget. Weather, occupancy levels, and some system control issues impacted sales and expenses.

Debt service coverage through April 30th was 2.29 compared to a Budget of 2.02 due to reduced operating expenses.

Capital project spending for 2020 is currently expected to be about $212k over the $2.9M Budget due primarily to carry over costs from 2019

Financial modeling was performed to evaluate the potential impacts of COVID-19 on the DEC. Sales to the West Haymarket JPA customer are expected to be lower due to the nature of the businesses in the West Haymarket area. Sales to the other DEC customers are projected to be minimally impacted due to those customers’ governmental nature.

The Board passed a motion accepting the 2019 Financial Statement Audit, which resulted in an unmodified opinion or a “clean” audit.

The Board approved Resolutions authorizing the President to sign a contract with JP Morgan Chase for general banking services and a contract with Union Bank & Trust for custodial services.

Other

Staff provided an overview of the existing Energy Service Agreement and Bond Resolution requirements placed on all DEC customers to cover the financial obligations of the DEC in the event of a default of one of the DEC’s customers. Since the DEC is planning to issue about $44M in bonds within the next year, a customer outreach and Board educational process on this topic is planned to occur over the next several months.

DEC’s General Counsel provided an update on the issues related to DEC having both a corporate structure and an interlocal agency structure. Educational sessions for the County Commissioners and the City Council are planned over the next several weeks with the goal of eliminating DEC’s corporate structure and becoming only an interlocal agency.

The Board approved a Resolution recognizing Sarah Peetz for her service on the DEC Board.

Exhibit IV

Communications & Customer Services Committee Meeting – June 11, 2020 The following is a summary of the June 11, 2020 Communications and Customer Services Committee meeting: 1. Credit and Collection Activities

After reviewing the modified credit activities that have occurred during the past few months, the committee was given information about aged receivables, past due accounts and the typical credit cycle for LES customers. The committee was then updated on the proposed plan for resuming credit and collection activities in the next few months. This update also included the plans for extensive outreach, additional flexibility in arrangements as well as fee waivers that will also be incorporated into this schedule. (This information will also be presented at today’s board meeting.)

2. Reinventing Community Outreach

The communications team modified LES’ community outreach and education plans due to the current environment. LES’ premier event, the Sustainable Living Festival, was originally set for Saturday, July 25. The team is developing a week-long virtual event to be held July 20-24 that will include multiple live events, online videos from community partners, and a variety of activities. Two of the live events will be focused on electric vehicles, including the release of LES’ EV Study results. The virtual event will help LES’ achieve its goal of educating our community on important sustainability topics. Through community partnerships, including the Lincoln STEM Ecosystem, LES has continued promoting careers in energy and encouraging STEM-related education. The team has also communicated new LES hiring protocols as it continues to search for and hire qualified candidates to join the LES team. Another main area of focus has been safety education. LES has many resources and activities available on LES.com and has continuously posted safety-related content on its social media pages. Aligned with Electrical Safety Month, LES launched a coloring contest in May through the Current newsletter and social media channels to help educate the public to steer clear of powerlines. Also, the communications team launched a series of short videos educating viewers on how to stay safe around electricity.

Exhibit V

LES.com

Energy Delivery Construction Review & Outlook

Board MeetingJoel DagermanJune 19, 2020

1

LES.com

Overview• Construction Outlook in 2020• Project Drivers & Programs

• Customer Growth • Reliability/Asset Health• Strategic / Regulatory

• Work Labor and Contracting

2

LES.com

2020 Construction Outlook

• Continue to implement directed health measures to work environment to reduce “shot’s on goal” for all staff

• Focus on safety & “keeping lights on”

• Maintain daily resource availability (internally & externally), look for trends

• Maintain a prioritized construction list of must do

• Impacts…not right now.

3

-50%

-40%

-30%

-20%

-10%

0%3/2 3/9 3/16 3/23 3/30 4/6 4/13 4/20 4/27

Lincoln Vehicular Traff ic Volume Delta from Average*

AM Peak PM Peak Daily

0

100

200

300

400

Jan Feb Mar Apr May

MAN

-DAY

S*

2020 Energy Delivery Man-Days Away*

Man-Days Away for All Reasons

Man-Days Away due to CVD-19 (Unavailable)

*Source: ARCOS non-official

*Source: LTU

LES.com

2020 Building Activity Comparison

0

200

400

600

800

1000

1200

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Single Family MultiFamily

4

Building Permits January – May, 2020

Rank#4

0100200300400500600700

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020


0

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020


January – March April-May

Rank#8

Rank#2

1

2 3

LES.com

• Connection Growth Continues• Direct Impact: Feeder cable,

neighborhood cable & electrical services

• Indirect Impact: Substations & Transmission:

• Recent Substations : 76th _Rokeby; 120th_Alvo;

• Future: NW68th_Holdrege; 105th_Pioneers

Customer Additions - Annual

0

500

1,000

1,500

2,000

2,500

2004 2009 2014 2019

Lincoln Building PermitsSingle Family Multi Family

680

700

720

740

760

780

800

2,800

2,900

3,000

3,100

3,200

3,300

2004 2009 2014 2019

MWGWh

Peak Load & EnergyEnergy (Gwh) Peak MW

5

LES.com

2019 Permits & PUGs

6

2020

2025

Future Energy Delivery Substations

0

500

1,000

1,500

2,000

2,500

2004 2009 2014 2019

Single Family Multi Family PUGs

Permanent Underground Services (PUGs) • 2019 – 956; Consistent • 2020 through May - 344

Recent Energy Delivery Substations

LES.com

• Life cycle costing optimization• Transmission activities

• Annual Line patrol• Vegetation management• ROW Assurance

• Substations activities• West Lincoln sub rebuild• NW68th & Holdrege (Reactor

& design transformer)• Retire NW38th & Cuming,

108th & Alvo

2020 Reliability -Asset Health

7

LES.com

2020 Reliability -Asset Health - Distribution

8

• Largest share of activity• DIP- Duct Installation Program

• Plan vs Actuals, – Years: 15 vs. 9 (complete in 2020)– Cost: $33M vs. $29M– Miles: 510 vs. 420– Duct used: 75+

• Cable Replacement Program • CRP1- 1960’s cable• CRP2- 1970’s cable• CRP3 – Up to 1985

• Pole inspection & replacement• 10 year cycle• Above & below grade inspection

• Street light inspections

0

25

50

75

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cable & Splice Failures

2017 2018 2019 2020

LES.com

• Projects:• TPM• Discretionary Rebuild

Overhead to Underground• Superior St - final stages• Cornhusker Hwy & 61- 63rd St• Capital Pkwy & 32nd St• 84th Street, Pinedale to Vine

• Road projects: • NDOT South Beltway• Planned widening • Lincoln on the Move (LOM):

2020- 2; 2021- 8

Strategic and Regulatory Projects/Programs

9

(Transformer PCB Mitigation)

LES.com

• External Labor Resource Supplement Internal workforce

• Rarely used specialized equipment

• Less Technical (or lower voltage)• Below Grade / Underground

Activities:• Substation Foundations• Directional Boring (DIP, CRP, etc.)• Service Installation

• Decrease use of external contractors as programs mature

ED Internal vs. External Labor Resources

10

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

2004 2009 2014 2019

1000’SInternal vs. External Labor $

Internal Labor External

$0

$5,000

$10,000

$15,000

2004 2009 2014 2019

External Labor by Asset AreaTrans Subs OH UG Waverly Lites

LES.com

Summary• Pandemic Effect (TBD… minimal now)

• Work/Project Drivers & Programs• Customer Growth (Lincoln Forward but

monitor)• Reliability/Asset Health (Good…but

continually improve on worst performers)• Strategic / Regulatory (Anticipating/Look

Ahead)

• Work Labor and Contracting (Supplement work crew for peak work…when needed only)

11

LES.com12

Exhibit VI

LES.com

2020 Bond Disclosure and Compliance Update

LES Administrative BoardJune 19, 2020

Laura L. KapustkaVice President and Chief Financial Officer

1

LES.com

Tax-exempt issuers receive oversight from many sources

• The Securities and Exchange Commission (SEC) • Tax exempt issuers are exempt from SEC registration• SEC Rule 15c-212: underwriters must require tax-exempt issuers to provide

ongoing data• Securities Act of 1933 and Securities Exchange Act of 1934: ensures buyers have

access to information to make an informed decision (Official Statements)• Designated the Electronic Municipal Market Access (EMMA) as the official source

for municipal securities data and disclosure documents. • EMMA = free public access to municipal market information and supports

municipal market transparency• SEC and IRS cooperate to enhance compliance through rules and laws

• The Municipal Securities Rulemaking Board (MSRB) • Writes rules for municipal securities dealers• Make rules regulating banks that underwrite municipal securities and municipal

advisors• Charged by Congress to promote a fair and efficient municipal market• Subject to oversight by SEC

2

LES.com

Meeting LES’ on-going disclosure requirements is

a serious commitment

3

LES.com

• In exchange for the ability to issue tax-exempt debt, the IRS imposes ongoing requirements focused on the use and expenditure of financing proceeds

• IRS states that all tax-exempt issuers should have written procedures regarding ongoing compliance with federal tax requirements

• As a tax-exempt issuer, LES is also required to provide ongoing disclosures of certain financial and operating data and file notices if certain material events occur

• Resolution 2019-06 designates CFO as “Bond Compliance Officer”

4

LES Administrative Board adopted Financing Compliance Procedures in 2012

(and updated procedures in 2019)

LES.com

Compliance procedures require an annual status update to the Board

• 2020 annual checklists have been completed and compliance review found no deficiencies

• Checklist includes items such as: financial assets ownership, arbitrage calculations, continuing disclosure filings, etc.

• CFO, as Bond Compliance Officer, has certified and filed the annual review

5

LES.com

As a tax- exempt issuer, LES has 10 days to disclose these 16 material events

• Principal and interest payment delinquencies

• Non- payment related default• Unscheduled draws on debt service

reserves reflecting financial difficulties • Unscheduled draws on credit

enhancements reflecting financial difficulties

• Substitution of credit or liquidity providers, or their failure to perform

• Adverse tax opinions or events affecting the tax- exempt status of the security

• Modifications to rights of security holders • Bond calls and tender offers

• Defeasances• Release, substitution or sale of

property securing repayment of the securities

• Rating changes • Bankruptcy, insolvency or receivership• Merger, acquisition or sale of all issuer

assets • Appointment of successor trustee • Incurrence of a financial obligation of

LES that affects security holders • Default, event of acceleration,

termination event, modification of terms, or other similar events related to financial obligation

6

LES.com

Tax- Exempt Compliance is now in maintenance mode

Compliance Procedures (and IRS) require that we have available all transcripts, tax forms, bid documents, etc.:

• For each bond issue credit agreement and commercial paper currently outstanding, and,

• Any bond issues that were refunded by an outstanding bond issue• Over 25 electronic bond files have been prepared and audited• Similar compliance work has been completed for DEC and NUCorp

Bond files will be completed as new financings are completed

Will continue to monitor compliance on a monthly basis

Next internal audit of bond files: 2021 (and every 3 years)

7

Exhibit VII

LE!5Lincotn Electric System

LES RESOLUTION 2O2O.O8

WHEREAS, it is the responsibility of the Lincoln Electric System (LES) AdministrativeBoard to develop Service Regulations which provide the conditions for receiving electric servicein the LES service area;

WHEREAS, LES staff has prepared a document entitled'oService Regulations" whichincludes formatting changes and clarifiring changes to residential underground service conduit(s)requirements; installation of underground distribution facilities; adding definitions for the afterhours reconnection fee and past due reminder fee; and updating verbiage on security deposits toalign with internal guidelines;

WHEREAS, LES staff provided customer information on the proposed ServiceRegulations changes throughout the period May 15, 2020 to June 17, 2020;

WHEREAS, a redline document on the Service Regulations changes was posted toLES.com on May 15,2020, to receive public input and answer questions regarding the proposedchanges; and

WHEREAS, the Communications and Customer Services Committee of the LESAdministrative Board has reviewed the changes to the Service Regulations with LES staff andsupports the recommended revisions.

NOW, THEREFORE, BE IT RESOLVED, that the LES Administrative Board adopts therecommended changes to the Service Regulations to be effective July 1, 2020 in substantially theform as attached.

Adopted: June 19.2020

Exhibit VIII

2020 NERC Compliance Audit | Results

1

Eric RuskampManager, Regulatory Compliance

June 19, 2020

Overview

Review of NERC Compliance Audit Process Annual Internal Review 2020 Compliance Audit

2

NERC Compliance Audit Process

Onsite compliance audits every 3 yearso Last onsite audit: May 2017o Last offsite audit: May 2019

Two Audit Teams: o CIP Teamo Ops & Planning Team

3


CIP (critical infrastructure protection) access control cyber security training change management vulnerability assessments information protection system hardening physical security

Operations & Planning generation-load balance facility ratings system restoration vegetation management operating limits transmission planning generator capability coordination

4


5

FERC

NERC

Regional Entities

Annual Internal Review

40 SMEs 12 Group Managers

Regulatory Compliance

6

360 Tracking Records Compliance narrative review Supporting evidence

2020 Compliance Audit | Schedule

Ops & Planning Offsite Data Collection (Feb 4 – May 10)

2 week Offsite Audit (May 11 – May 22)

1 week Onsite Audit (May 25 – May 29)

CIP Offsite Data Collection (Feb 4 – May 10)

2 week Offsite Audit (May 11 – May 22)


7

2020 Compliance Audit | Schedule

Ops & Planning Offsite Data Collection (Feb 4 – May 10)

3 2 week Offsite Audit (May 11 – May 22 May 29)


CIP Offsite Data Collection (Feb 4 – May 10)

3 2 week Offsite Audit (May 11 – May 22 May 29)


8

2020 Compliance Audit | Scope

Ops & Planning

9

Standard Requirement(s) Topic Group

EOP-005-3 7 System Restoration from Blackstart Resources System Control

FAC-003-4 3, 6, 7 Transmission Vegetation Management Vegetation Management

MOD-033-1 2 Transmission System Model Validation System Control

PRC-002-2 1, 2, 3, 4, 6, 8, 9, 10, 11, 12 Disturbance Monitoring and Reporting Substation


Ops & Planning

10

Standard Requirement(s) Topic Group

EOP-005-3 7 System Restoration from Blackstart Resources System Control

FAC-003-4 3, 6, 7 Transmission Vegetation Management Vegetation Management

MOD-033-1 2 Transmission System Model Validation System Control

PRC-002-2 1, 2, 3, 4, 6, 8, 9, 10, 11, 12 Disturbance Monitoring and Reporting Substation


CIP

11

Standard Requirements Topic GroupCIP-005-5 R1 Firewall access permissions Communications

SubstationCyber Security

CIP-005-5 R2 Interactive remote access Cyber Security CIP-006-6 R1 Physical access controls at control centers and

substationsSubstationPhysical SecurityCommunicationsSEM

CIP-007-6 R1 Need-based logical network port enabling SCADA/EMSPhysical SecurityCyber Security

CIP-007-6 R2 Security patching SCADA/EMSSubstationPhysical SecurityCyber Security

CIP-007-6 R3 Preventing malicious code SCADA/EMSSubstationPhysical SecurityCyber Security

CIP-011-2 R1 Identification and handling of sensitive information

CommunicationsSubstationPhysical SecurityCyber Security

CIP-014-2 R1-R6 Physical protections at critical substations R&T PlanningSubstation


CIP

12

Standard Requirements Topic GroupCIP-005-5 R1 Firewall access permissions Communications

SubstationCyber Security

CIP-005-5 R2 Interactive remote access Cyber Security CIP-006-6 R1 Physical access controls at control centers and

substationsSubstationPhysical SecurityCommunicationsSEM

CIP-007-6 R1 Need-based logical network port enabling SCADA/EMSPhysical SecurityCyber Security

CIP-007-6 R2 Security patching SCADA/EMSSubstationPhysical SecurityCyber Security

CIP-007-6 R3 Preventing malicious code SCADA/EMSSubstationPhysical SecurityCyber Security

CIP-011-2 R1 Identification and handling of sensitive information

CommunicationsSubstationPhysical SecurityCyber Security

CIP-014-2 R1-R6 Physical protections at critical substations R&T PlanningSubstation

Background & Logistics

13

Projector Screen

AuditorsSMEs

Observers

Background & Logistics

14

AuditorsSMEs

Observers

WebEx

Skype

Ops & Planning Audit

3 person MRO review team 3 NERC Standards

– 5 Requirements, 14 sub requirements

94 files provided in initial data submittal 5 requests for information during audit

– 27 additional files provided

4 SME interview calls

15

CIP Audit

5 person MRO review team 4 NERC Standards

– 13 Requirements, 37 sub requirements

327 files provided in initial data submittal 31 requests for information during audit

– 93 additional files provided

6 SME interview calls

16

Audit Results0 Potential Violations0 Areas of Concerns13 Recommendations

1. CIP-005 – Update documentation to reference firewall interfaces rather than the entire asset.

2. CIP-005 – Update drawings to better identify where encryption terminates.3. CIP-007 – Update documentation to better identify the needed Cisco ports.4. CIP-007 – Update documentation to better state that patching needs performed every

35 calendar days.5. CIP-007 – Enhance documentation to better demonstrate the timely performance of

patch evaluations.6. CIP-007 – Some patches were evaluated at their 35 day deadline, consider developing

internal controls to ensure deadline is not exceeded.

17

Audit Results (cont.)

13 Recommendations (cont.)7. CIP-014 – Utilize the 5 year out model in risk assessments.8. CIP-014 – Better identify the roles between LES and 3rd party reviewer in the

performance of the risk assessments.9. EOP-005 – Update documentation to include the reasoning on time duration of

blackstart unit testing.10. FAC-003 – Update vegetation management documentation to reference documents

used in determining conductor movement.11. FAC-003 – Enhance documentation so to show completion of overall vegetation work.12. FAC-003 – Document vegetation patrol results in more detail.13. MOD-033 – Develop a documented process to respond to SPP data requests.

18

Audit Results (cont.)

2 Positive Observations Culture of Compliance

o Professional interactions with LES staff throughout the audit.o LES managed the volume and intensity of the audit well.

Internal Controlso LES’ Internal Controls program contributes to the reliability of the LES system.o Internal Controls discussions were held openly throughout the audit.

19

Final Thoughts

Challenges with COVID-19 Several new SMEs All SMEs were highly engaged and responsive

Very successful audit Well positioned to handle upcoming challenges

20

Exhibit IX

LES.com

Credit and Collections Update

Lisa Hale, VP Customer ServicesJune 19, 2020

1

LES.com

Refresher: Credit Cycle for LES Customers

Day 0 Day 30 Day 53 Day 60 Day 83 Day 90 Day 96 Day 113 Day 120

Bill 1 SentDays 0 - 30Due in 23 days

00

Start Service

Bill 2 DueLate Payment of 3%

Bill 2 SentDays 30 – 60, with past due balanceDue in 23 days

55

30

Bill 1 DueLate Payment of 3% after this date

53

60

83

Bill 3 SentDays 60 - 90, with past due balanceDue in 23 days

Bill 4 SentDays 90 - 120, with past due balanceDue in 23 days

90

Bill 3 DueLate Payment of 3%

113

120

Eligible for Disconnect

If unpaid, could be disconnected any time after Day 96

Disconnect or Reminder NoticeMailed separately

Due in 12 days

84

96

Eligible for Disconnect

Extension of 30 days given to customers with medical notice on file

126

Day126

*** As of June, bills are likely 6 months past due ***

Special messages

Special messages

Special messages

Special messages

2

LES.com 3

Aging of Receivables

* June and July, 2020 are estimated.

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000Ja

n-19

Feb-

19

Mar

-19

Apr-

19

May

-19

Jun-

19

Jul-1

9

Aug-

19

Sep-

19

Oct-

19

Nov-

19

Dec-

19

Jan-

20

Feb-

20

Mar

-20

Apr-

20

May

-20

Jun-

20

Jul-2

0

< 60 < 90 < 180

Suspended credit activity March 16th

Roughly equals past due amounts on disconnect notices and orders

LES.com

Communicating with Our Customers during COVID- 19…Hold messagesContact Center representativesBill messagesNoticesLettersDoor hangersLES.comRadio spotsSocial mediaFliers (in multiple languages)Community partners (CAPLS)

4

Limited Success in April and May:

• Incoming Calls down 28%

• Payment Arrangements down 283%

• Only 100 pledges from LES’ Energy Assistance fund (31% spent for the year)

LES.com 5

Resuming Normal Activities… with safeguards in place

• Late payment charge assessments will resume in late July for any charges billed July 1 or later and not paid by the due date

• Standard disconnect notices will be mailed in mid-July

• Disconnections for non-payment will begin in early August

• Downtown business office will reopen to the public prior to resuming disconnections.

Temporary accommodations:

• Disconnect fees and deposits will be waived for the first 30 days• Late payment charges may be waived under certain circumstances• Payment arrangements will be modified to address customer’s financial

situation.

LES.com

• There are currently 2,100 customers who have NOT contacted us to make arrangements to pay their past due bills

• This is 350 percent higher than the number of accounts that are typically past due during this time of year

• These accounts total nearly $1 million in past due balances

6

Why Is This Necessary?

There is financial assistance available. LES will make payment arrangements on past due balances, but customers must take action.

LES.com

We will Continue Outreach and Collaboration with Community Partners…

7

LES.com 8

QUESTIONS?

Exhibit X

Revenue & Expense Statement (Condensed)MAY 2020

2020 2020 PercentageYEAR TO DATE Actual Budget Difference Difference

1) Total Revenue $113,299 $128,580 ($15,281) -12%

Despite cooler weather in April and May, residential revenue continues to exceed budget YTD, while commercial and industrial revenues are under budget 13% and 10%, respectively, due to pandemic impact on operations. Wholesale revenue was below budget primarily due to lower generation and related lower sales into the SPP IM at LRS, WS3, WS4 and TBGS.

2) Power Costs 48,146 61,284 (13,138) -21%

Produced power energy expenses were 44% below budget due to LRS, WS4, TBGS and Rokeby not being operated as budgeted. Purchased power expenses for GGS were above budget due to higher than budgeted production. Net SPP IM expense was 130% above budget, as higher purchases were made to offset lower production at the units discussed above.

3) Other Operating Expenses 31,646 33,699 (2,053) -6%

Other Operating expenses (operation & maintenance, administrative & general) were 6% under budget. No one category accounts for a disproportionate percentage of this variance.

4) Depreciation 16,501 16,549 (48) 0%5) Total Expenses 96,293 111,532 (15,239) -14%

6) Operating Income 17,006 17,048 (42) 0%

7) Non-Operating Expense (Income) 16,360 16,027 333 2%

8) Change in Net Position (Net Revenue) $646 $1,021 ($375) -37%Anticipate increases to change in net position in the next few months as larger increases routinely occur during the summer months.

Year End Projection Year End Budget9) Debt Service Coverage 1.85 2.04

Month End Actual Month End Budget10) Days Cash on Hand (Days) 201 133

Comments

(Dollar amounts in 000)

YTD operating revenues are 12% or $15.3M below budget, however the good news is that total expenses are down 14% or $15.2M, offsetting this decline in revenue.

LES.com

LINCOLN ELECTRIC SYSTEM

FINANCIAL AND OPERATING STATEMENT

May 2020

INDEX

REVENUE & EXPENSE STATEMENT - CURRENT MONTH ------------------------------------------------------------- 1

REVENUE & EXPENSE STATEMENT - YEAR-TO-DATE ----------------------------------------------------------------- 2

REVENUES, ENERGY & CUSTOMERS - CURRENT MONTH ----------------------------------------------------------- 3

REVENUES, ENERGY & CUSTOMERS - YEAR-TO-DATE --------------------------------------------------------------- 4

OPERATING EXPENSE STATEMENT - CURRENT MONTH ------------------------------------------------------------- 5

OPERATING EXPENSE STATEMENT - YEAR-TO-DATE ----------------------------------------------------------------- 6

BALANCE SHEET --------------------------------------------------------------------------------------------------------------------- 7

STATEMENT OF CASH FLOWS -------------------------------------------------------------------------------------------------- 8

DEBT SERVICE COVERAGE ------------------------------------------------------------------------------------------------------ 9

NOTE: Federal Energy Regulatory Commission accounting guidance for the Southwest Power Pool Integrated Market (SPP IM) transactions (purchases, sales and other charges) requires netting together these transactions based on the time increments. If, during the time increment, sales to SPP are greater than purchases from SPP, the net amount is recorded as wholesale revenue. If, during the time increment, purchases from SPP are greater than sales to SPP, the net amount is recorded as purchased power cost. Because of this netting process, the energy (MWH’s) amounts no longer directly correlate to wholesale revenue.

REVENUE & EXPENSE STATEMENTCURRENT MONTH MAY 2020

CURRENT CURRENT LAST YEARDESCRIPTION MONTH MONTH MONTH

ACTUAL BUDGET AMOUNT % ACTUAL AMOUNT %OPERATING REVENUES 1. Retail $18,149,691 $21,309,660 ($3,159,969) -14.8% $18,785,705 ($636,014) -3.4% 2. Wholesale 2,511,849 4,907,244 (2,395,395) -48.8% 3,579,064 (1,067,215) -29.8% 3. Other Revenue 675,260 727,845 (52,585) -7.2% 445,727 229,533 51.5% 4. City Dividend 593,565 666,417 (72,852) -10.9% 624,757 (31,192) -5.0% 5. Total Operating Revenues 21,930,365 27,611,166 (5,680,801) -20.6% 23,435,253 (1,504,888) -6.4%

OPERATING EXPENSES 6. Purchased Power 5,911,905 6,049,713 (137,808) -2.3% 7,335,153 (1,423,248) -19.4% 7. Produced Power 2,254,950 6,792,218 (4,537,268) -66.8% 3,581,077 (1,326,127) -37.0% 8. Operations 1,644,509 1,578,903 65,606 4.2% 1,564,818 79,691 5.1% 9. Maintenance 637,110 837,532 (200,422) -23.9% 778,751 (141,641) -18.2%10. Administrative & General 3,824,917 4,208,846 (383,929) -9.1% 3,789,261 35,656 0.9%11. Depreciation 3,236,949 3,328,147 (91,198) -2.7% 4,401,775 (1,164,826) -26.5%12. Total Operating Expenses 17,510,340 22,795,359 (5,285,019) -23.2% 21,450,835 (3,940,495) -18.4%

13. OPERATING INCOME 4,420,025 4,815,807 (395,782) -8.2% 1,984,418 2,435,607 122.7%

NONOPERATING EXPENSES (INCOME)14. Interest Expense 1,972,259 2,066,410 (94,151) -4.6% 2,067,595 (95,336) -4.6%15. Capitalized Interest (45,840) (93,078) 47,238 -50.8% (193,638) 147,798 -76.3%16. Payments in Lieu of Taxes 834,014 866,445 (32,431) -3.7% 878,439 (44,425) -5.1%17. City Dividend Expense 648,044 648,044 0 0.0% 635,337 12,707 2.0%18. Other 27 0 27 - - 230 (203) -88.3%19. Total Other Expense 3,408,504 3,487,821 (79,317) -2.3% 3,387,963 20,541 0.6%20. Interest Income (245,350) (338,519) 93,169 -27.5% (419,039) 173,689 -41.4%21. Total Nonoperating Expense (Income) 3,163,154 3,149,302 13,852 0.4% 2,968,924 194,230 6.5%

22. Income Before Contributions 1,256,871 1,666,505 (409,634) -24.6% (984,506) 2,241,377 227.7%

CONTRIBUTED CAPITAL23. Contributed Capital Received 45,125 112,207 (67,082) -59.8% 66,656 (21,531) -32.3%24. Contributed Capital Used (45,125) (112,207) 67,082 -59.8% (66,656) 21,531 -32.3%25. Net Contributed Capital 0 0 0 - - 0 0 - -

26. CHANGE IN NET POSITION $1,256,871 $1,666,505 ($409,634) -24.6% ($984,506) $2,241,377 227.7%

Page 1

VARIANCE FROMLAST YEAR

VARIANCE FROMBUDGET

REVENUE & EXPENSE STATEMENTYEAR-TO-DATE MAY 2020

LAST YEARDESCRIPTION YEAR TO DATE YEAR TO DATE YEAR TO DATE

ACTUAL BUDGET AMOUNT % ACTUAL AMOUNT %OPERATING REVENUES 1. Retail $95,639,216 $101,405,150 ($5,765,934) -5.7% $100,766,526 ($5,127,310) -5.1% 2. Wholesale 10,144,083 19,313,873 (9,169,790) -47.5% 13,613,630 (3,469,547) -25.5% 3. Other Revenue 4,419,315 4,528,502 (109,187) -2.4% 3,451,891 967,424 28.0% 4. City Dividend 3,096,078 3,332,085 (236,007) -7.1% 3,121,867 (25,789) -0.8% 5. Total Operating Revenues 113,298,692 128,579,610 (15,280,918) -11.9% 120,953,914 (7,655,222) -6.3%

OPERATING EXPENSES 6. Purchased Power 30,288,657 29,160,701 1,127,956 3.9% 31,490,681 (1,202,024) -3.8% 7. Produced Power 17,857,316 32,123,519 (14,266,203) -44.4% 22,237,799 (4,380,483) -19.7% 8. Operations 7,882,919 7,723,158 159,761 2.1% 7,624,308 258,611 3.4% 9. Maintenance 3,350,664 4,103,892 (753,228) -18.4% 3,342,879 7,785 0.2%10. Administrative & General 20,411,924 21,872,361 (1,460,437) -6.7% 18,115,701 2,296,223 12.7%11. Depreciation 16,500,570 16,548,561 (47,991) -0.3% 21,792,650 (5,292,080) -24.3%12. Total Operating Expenses 96,292,050 111,532,192 (15,240,142) -13.7% 104,604,018 (8,311,968) -7.9%

13. OPERATING INCOME 17,006,642 17,047,418 (40,776) -0.2% 16,349,896 656,746 4.0%

NONOPERATING EXPENSES (INCOME)14. Interest Expense 9,558,386 10,350,200 (791,814) -7.7% 10,847,317 (1,288,931) -11.9%15. Capitalized Interest (239,170) (415,733) 176,563 -42.5% (984,631) 745,461 -75.7%16. Payments in Lieu of Taxes 4,696,929 4,610,354 86,575 1.9% 4,879,117 (182,188) -3.7%17. City Dividend Expense 3,240,220 3,240,220 0 0.0% 3,176,685 63,535 2.0%18. Other 368 0 368 - - (260) 628 241.5%19. Total Other Expense 17,256,733 17,785,041 (528,308) -3.0% 17,918,228 (661,495) -3.7%20. Interest Income (896,590) (1,757,712) 861,122 -49.0% (1,596,152) 699,562 -43.8%21. Total Nonoperating Expense (Income) 16,360,143 16,027,329 332,814 2.1% 16,322,076 38,067 0.2%

22. Income Before Contributions 646,499 1,020,089 (373,590) -36.6% 27,820 618,679 2223.9%

CONTRIBUTED CAPITAL23. Contributed Capital Received 412,431 561,032 (148,601) -26.5% 530,124 (117,693) -22.2%24. Contributed Capital Used (412,431) (561,032) 148,601 -26.5% (530,124) 117,693 -22.2%25. Net Contributed Capital 0 0 0 - - 0 0 - -

26. CHANGE IN NET POSITION $646,499 $1,020,089 ($373,590) -36.6% $27,820 $618,679 2223.9%

Page 2

VARIANCE FROMBUDGET


REVENUES, ENERGY & CUSTOMERSCURRENT MONTH MAY 2020


ACTUAL BUDGET AMOUNT % ACTUAL AMOUNT %REVENUE 1. Residential $8,363,271 $8,522,684 ($159,413) -1.9% $7,776,563 $586,708 7.5% 2. Commercial 7,371,904 9,203,362 (1,831,458) -19.9% 8,306,798 (934,894) -11.3% 3. Industrial 2,252,326 3,396,713 (1,144,387) -33.7% 2,521,957 (269,631) -10.7% 4. Street Light 162,190 186,901 (24,711) -13.2% 180,387 (18,197) -10.1% 5. Total Retail 18,149,691 21,309,660 (3,159,969) -14.8% 18,785,705 (636,014) -3.4% 6. SPP Sales 1,496,453 3,404,786 (1,908,333) -56.0% 2,535,566 (1,039,113) -41.0% 7. Contract Sales 1,015,396 1,502,458 (487,062) -32.4% 1,043,498 (28,102) -2.7% 8. Total Wholesale 2,511,849 4,907,244 (2,395,395) -48.8% 3,579,064 (1,067,215) -29.8% 9. Total 20,661,540 26,216,904 (5,555,364) -21.2% 22,364,769 (1,703,229) -7.6%ENERGY (Megawatt-Hours)10. Residential 84,078 81,912 2,166 2.6% 75,565 8,513 11.3%11. Commercial 96,688 120,812 (24,124) -20.0% 112,665 (15,977) -14.2%12. Industrial 32,536 47,236 (14,700) -31.1% 36,401 (3,865) -10.6%13. Street Light 705 1,020 (315) -30.9% 1,050 (345) -32.9%14. Total Retail 214,007 250,980 (36,973) -14.7% 225,681 (11,674) -5.2%15. SPP Sales 32,809 188,491 (155,682) -82.6% 35,196 (2,387) -6.8%16. Contract Sales 19,841 46,344 (26,503) -57.2% 22,995 (3,154) -13.7%17. Total Wholesale 52,650 234,835 (182,185) -77.6% 58,191 (5,541) -9.5%18. Total 266,657 485,815 (219,158) -45.1% 283,872 (17,215) -6.1%CUSTOMERS19. Residential 126,016 125,955 61 0.0% 124,297 1,719 1.4%20. Commercial 17,179 17,149 30 0.2% 16,991 188 1.1%21. Industrial 175 176 (1) -0.6% 176 (1) -0.6%22. Street Light 5 5 0 0.0% 5 0 0.0%23. Total Retail 143,375 143,285 90 0.1% 141,469 1,906 1.3%24. Wholesale 8 8 0 0.0% 8 0 0.0%25. Total 143,383 143,293 90 0.1% 141,477 1,906 1.3%

Page 3

VARIANCE FROMBUDGET


REVENUES, ENERGY & CUSTOMERSYEAR-TO-DATE MAY 2020


ACTUAL BUDGET AMOUNT % ACTUAL AMOUNT %REVENUE 1. Residential $44,434,300 $43,260,398 $1,173,902 2.7% $46,072,231 ($1,637,931) -3.6% 2. Commercial 39,099,183 44,882,902 (5,783,719) -12.9% 41,609,876 (2,510,693) -6.0% 3. Industrial 11,306,924 12,534,814 (1,227,890) -9.8% 12,160,794 (853,870) -7.0% 4. Street Light 798,809 727,036 71,773 9.9% 923,625 (124,816) -13.5% 5. Total Retail 95,639,216 101,405,150 (5,765,934) -5.7% 100,766,526 (5,127,310) -5.1% 6. SPP Sales 4,758,088 11,444,783 (6,686,695) -58.4% 7,285,520 (2,527,432) -34.7% 7. Contract Sales 5,385,995 7,869,090 (2,483,095) -31.6% 6,328,110 (942,115) -14.9% 8. Total Wholesale 10,144,083 19,313,873 (9,169,790) -47.5% 13,613,630 (3,469,547) -25.5% 9. Total 105,783,299 120,719,023 (14,935,724) -12.4% 114,380,156 (8,596,857) -7.5%ENERGY (Megawatt-Hours)10. Residential 487,618 516,363 (28,745) -5.6% 514,995 (27,377) -5.3%11. Commercial 528,418 589,000 (60,582) -10.3% 577,139 (48,721) -8.4%12. Industrial 168,789 192,960 (24,171) -12.5% 179,345 (10,556) -5.9%13. Street Light 3,435 5,954 (2,519) -42.3% 5,842 (2,407) -41.2%14. Total Retail 1,188,260 1,304,277 (116,017) -8.9% 1,277,321 (89,061) -7.0%15. SPP Sales 199,426 664,872 (465,446) -70.0% 249,533 (50,107) -20.1%16. Contract Sales 142,749 250,002 (107,253) -42.9% 209,685 (66,936) -31.9%17. Total Wholesale 342,175 914,874 (572,699) -62.6% 459,218 (117,043) -25.5%18. Total 1,530,435 2,219,151 (688,716) -31.0% 1,736,539 (206,104) -11.9%CUSTOMERS AVERAGE19. Residential 125,712 125,761 (49) 0.0% 124,004 1,708 1.4%20. Commercial 17,138 17,127 11 0.1% 16,970 168 1.0%21. Industrial 175 176 (1) -0.6% 177 (2) -1.1%22. Street Light 5 5 0 0.0% 5 0 0.0%23. Total Retail 143,030 143,069 (39) 0.0% 141,156 1,874 1.3%24. Wholesale 8 8 0 0.0% 8 0 0.0%25. Total 143,038 143,077 (39) 0.0% 141,164 1,874 1.3%

Page 4

VARIANCE FROMBUDGET


OPERATING EXPENSE STATEMENTCURRENT MONTH MAY 2020


ACTUAL BUDGET AMOUNT % ACTUAL AMOUNT %

POWER COST 1. SPP Purchased Power $877,727 $742,193 $135,534 18.3% $2,619,721 ($1,741,994) -66.5% 2. Non-Owned Asset Power 5,034,178 5,307,520 (273,342) -5.2% 4,715,432 318,746 6.8% 3. Total Purchased Power 5,911,905 6,049,713 (137,808) -2.3% 7,335,153 (1,423,248) -19.4% 4. Produced Power 2,254,950 6,792,218 (4,537,268) -66.8% 3,581,077 (1,326,127) -37.0% 5. Total Power Cost 8,166,855 12,841,931 (4,675,076) -36.4% 10,916,230 (2,749,375) -25.2%

OPERATION & MAINTENANCE (O&M) 6. Energy Delivery 1,873,109 1,979,551 (106,442) -5.4% 1,887,060 (13,951) -0.7% 7. Transmission 408,510 436,884 (28,374) -6.5% 456,509 (47,999) -10.5% 8. Total O & M Expense 2,281,619 2,416,435 (134,816) -5.6% 2,343,569 (61,950) -2.6%

ADMINISTRATIVE & GENERAL (A&G) 9. Administration 179,036 238,630 (59,594) -25.0% 205,216 (26,180) -12.8%10. Communication & Corporate Records 136,158 241,300 (105,142) -43.6% 181,238 (45,080) -24.9%11. Corporate Operations 767,212 739,538 27,674 3.7% 600,583 166,629 27.7%12. Customer Services 737,991 939,751 (201,760) -21.5% 956,131 (218,140) -22.8%13. Financial Services 342,874 349,540 (6,666) -1.9% 336,514 6,360 1.9%14. Power Supply 476,969 475,447 1,522 0.3% 341,405 135,564 39.7%15. Technology Services 1,184,677 1,224,640 (39,963) -3.3% 1,168,174 16,503 1.4%16. Total A & G Expense 3,824,917 4,208,846 (383,929) -9.1% 3,789,261 35,656 0.9%

17. DEPRECIATION 3,236,949 3,328,147 (91,198) -2.7% 4,401,775 (1,164,826) -26.5%

18. TOTAL OPERATING EXPENSE $17,510,340 $22,795,359 ($5,285,019) -23.2% $21,450,835 ($3,940,495) -18.4%

Page 5

VARIANCE FROMBUDGET


OPERATING EXPENSE STATEMENTYEAR-TO-DATE MAY 2020


ACTUAL BUDGET AMOUNT % ACTUAL AMOUNT %

POWER COST 1. SPP Purchased Power $5,733,030 $2,489,271 $3,243,759 130.3% $7,869,721 ($2,136,691) -27.2% 2. Non-Owned Asset Power 24,555,627 26,671,430 (2,115,803) -7.9% 23,620,960 934,667 4.0% 3. Total Purchased Power 30,288,657 29,160,701 1,127,956 3.9% 31,490,681 (1,202,024) -3.8% 4. Produced Power 17,857,316 32,123,519 (14,266,203) -44.4% 22,237,799 (4,380,483) -19.7% 5. Total Power Cost 48,145,973 61,284,220 (13,138,247) -21.4% 53,728,480 (5,582,507) -10.4%

OPERATION & MAINTENANCE (O&M) 6. Energy Delivery 8,976,846 9,635,974 (659,128) -6.8% 8,581,832 395,014 4.6% 7. Transmission 2,256,737 2,191,076 65,661 3.0% 2,385,355 (128,618) -5.4% 8. Total O & M Expense 11,233,583 11,827,050 (593,467) -5.0% 10,967,187 266,396 2.4%

ADMINISTRATIVE & GENERAL (A&G) 9. Administration 1,017,257 1,144,662 (127,405) -11.1% 1,059,443 (42,186) -4.0%10. Communication & Corporate Records 827,980 1,097,945 (269,965) -24.6% 735,474 92,506 12.6%11. Corporate Operations 4,274,915 4,192,395 82,520 2.0% 3,341,154 933,761 27.9%12. Customer Services 4,096,592 4,455,176 (358,584) -8.0% 4,137,768 (41,176) -1.0%13. Financial Services 1,737,796 1,799,789 (61,993) -3.4% 1,605,302 132,494 8.3%14. Power Supply 2,331,236 2,475,623 (144,387) -5.8% 1,860,585 470,651 25.3%15. Technology Services 6,126,148 6,706,771 (580,623) -8.7% 5,375,975 750,173 14.0%16. Total A & G Expense 20,411,924 21,872,361 (1,460,437) -6.7% 18,115,701 2,296,223 12.7%

17. DEPRECIATION 16,500,570 16,548,561 (47,991) -0.3% 21,792,650 (5,292,080) -24.3%

18. TOTAL OPERATING EXPENSE $96,292,050 $111,532,192 ($15,240,142) -13.7% $104,604,018 ($8,311,968) -7.9%

Page 6


VARIANCE FROMBUDGET

BALANCE SHEETMAY 2020

ASSETS & DEFERRED OUTFLOWS OF RESOURCES LIABILITIES AND NET POSITION END OF VARIANCE END OF VARIANCE

DESCRIPTION MONTH SINCE DESCRIPTION MONTH SINCEBALANCE JANUARY 1 BALANCE JANUARY 1

CURRENT ASSETS: CURRENT LIABILITIES: 1. Revenue Fund (including CDFUO) $113,894,620 $7,944,203 OTHER LIABILITIES 2. Payments in Lieu of Taxes Fund $3,789,433 ($8,134,128) 1. Accounts Payable $18,300,156 ($5,158,176) 3. Rate Stabilization Fund 36,835,125 171,318 2. Accrued Payments in Lieu of Taxes 4,619,494 (8,190,343) 4. Bond Principal & Interest Funds 28,527,142 9,580,020 3. City Dividend for Utility Ownership Payable 1,944,132 (648,044) 5. Other Restricted/Designated Funds 3,721,207 1,111,444 4. Commercial Paper Notes 30,500,000 (35,000,000) 6. Restricted/Designated Funds Total 69,083,474 10,862,782 5. Accrued Liabilities 15,598,415 (685,986) 7. Total Current Asset Funds 186,767,527 10,672,857 6. Total Other Liabilities 70,962,197 (49,682,549) 8. Receivables Less Uncollectible Allowance 19,096,968 (375,200) CURRENT LIABILITIES - RESTRICTED ASSETS 9. Unbilled Revenue 13,768,663 (1,130,750) 7. Current Portion of Long-Term Debt 28,615,000 010. Accrued Interest Receivable 547,678 (547,782) 8. Accrued Interest 6,960,198 (2,497,128) 11. Materials, Supplies & Fuel Inventory 17,326,181 506,772 9. Other Current Liabilities 1,195,466 (105,783) 12. Plant Operation Assets 16,486,131 1,503,101 10. Total Current Liabilities - Restricted Assets 36,770,664 (2,602,911) 13. Other Current Assets 6,132,358 2,847,846 11. Total Current Liabilities 107,732,861 (52,285,460)14. Total Current Assets 260,125,506 13,476,844

NONCURRENT LIABILITIES:NONCURRENT ASSETS: 12. 2003 Bonds 1,150,000 015. Bond Reserve Funds 18,947,748 (31,951) 13. 2012-A Bonds 150,655,000 (66,365,000)16. Self-Funded Benefits Reserve Fund (IBNP) 625,413 834 14. 2013 Bonds 75,525,000 017. Segregated Funds 900,490 0 15. 2015-A Bonds 144,075,000 (15,110,000) 18. Restricted Fund Total 20,473,651 (31,117) 16. 2016 Bonds 65,960,000 0 19. Unamortized Debt Expense 2,761,255 158,015 17. 2018 Bonds 121,205,000 0 20. Other Noncurrent Assets 3,405,381 157,959 18. 2020 Bonds 72,200,000 72,200,000 21. Total Noncurrent Assets 26,640,287 284,857 19. Total Revenue Bonds 630,770,000 (9,275,000)

20. Less Current Maturities 28,615,000 0CAPITAL ASSETS: 21. Less Unamortized Discounts/Premiums (69,122,260) (8,622,473) 22. Utility Plant in Service 1,695,411,263 11,534,424 22. Note Purchase Agreement 36,500,000 35,000,000 23. Accumulated Depreciation & Amortization (837,461,179) (11,672,711) 23. Revolving Credit Agreement 35,000,000 35,000,000 24. Construction Work in Progress 95,346,823 6,074,270 24. Net Long Term Debt 742,777,260 69,347,47325. Total Capital Assets 953,296,907 5,935,983 25. Liabilities Payable from Segregated Funds (e) 896,137 0

26. Asset Retirement Obligation 3,232,597 3,232,597 DEFERRED OUTFLOWS OF RESOURCES: 27. Other Noncurrent Liabilities 622,326 0 26. Deferred Loss on Refunded Debt 9,700,288 (1,989,172) 28. Total Liabilities 855,261,181 20,294,61027. Deferred Costs for Asset Retirement Obligations 3,232,597 3,232,597 28. Total Deferred Outflows of Resources 12,932,885 1,243,425 NET POSITION:

29. Net Investment in Capital Assets 254,884,494 43,432,87630. Restricted for Debt Service 21,442,488 11,569,82431. Restricted for Employee Health Insurance Claims 1,192,866 8,37532. Unrestricted 120,214,556 (54,364,576) 33. Total Net Position 397,734,404 646,499

29. TOTAL ASSETS & DEFERRED OUTFLOWS OF RESOURCES $1,252,995,585 $20,941,109 34. TOTAL LIABILITIES & NET POSITION $1,252,995,585 $20,941,109

Page 7

STATEMENT OF CASH FLOWSMAY 2020

CURRENT MONTH YEAR-TO-DATECASH FLOW FROM OPERATING ACTIVITIES: 1. Received from Sales to Customers and Users $20,315,922 $121,803,008 2. Paid to Suppliers for Goods & Services (10,051,791) (81,845,389) 3. Paid to Employees for Services (3,032,433) (15,283,119) 4. Cash Flow from Operating Activities (a) 7,231,698 24,674,500

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: 5. Payments in Lieu of Taxes 0 (12,887,273) 6. City Dividend for Utility Ownership Payments 0 (3,888,264) 7. Other 0 0 8. Cash Flow from (used for) Non-capital Financing Activities 0 (16,775,537)

CASH FLOWS FROM INVESTING ACTIVITIES: 9. Net (Purchases) Sales of Investments (42,476,032) (1,157,153)10. Interest Income 364,075 1,419,656 11. Cash Flow from (used for) Investing Activities (42,111,957) 262,503

CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES:12. Acquisition and Construction of Capital Assets (5,431,053) (21,632,435)13. Salvage on Retirement of Plant 0 43,51914. Cost of Removal of Property Retired (27,010) (1,828,963)15. Debt Issuance Cost Paid 0 21,146,21916. Debt Premiums Collected 0 (9,803,413)17. Net Capital Contributions 45,125 412,43118. Net Proceeds form Issuance of Long-Term Debt 0 142,200,00019. Principal Payments on Long-Term Debt 0 (116,475,000)20. Interest Payments on Long-Term Debt (69,782) (12,763,955) 21. Cash Flow from (used for) Capital Financing Activities (5,482,720) 1,298,403

22. Net Increase (Decrease) in Cash and Cash Equivalents (40,362,979) 9,459,86923. Cash and Cash Equivalent Beginning of Period 80,454,730 30,631,882 24. Cash and Cash Equivalent End of Period (b) $40,091,751 $40,091,751

STATEMENT OF CASH FLOW FOOTNOTES(a) Reconciliation of operating income to cash flows from operating activities 1. Net Operating Revenue $4,420,025 $17,006,642 2. Noncash items included in operating income 3,289,463 16,767,189 3. Changes in Assets & Liabilities Increase/(Decrease) (477,790) (9,099,331) 4. Net cash flows from operating activities $7,231,698 $24,674,500

(b) Cash and cash equivalents are defined as cash and investments with original maturities of three months or less.

Page 8

DEBT SERVICE COVERAGEMAY 2020

DESCRIPTION ACTUAL BUDGET ACTUAL ACTUAL BUDGET ACTUALTHIS YEAR THIS YEAR LAST YEAR THIS YEAR THIS YEAR LAST YEAR

1. Total Operating Revenues $21,930,365 $27,611,166 $23,435,253 $113,298,692 $128,579,610 $120,953,914

2. Total Operating Expenses 17,510,340 22,795,359 21,450,835 96,292,050 111,532,192 104,604,018 3. Less Depreciation (3,236,949) (3,328,147) (4,401,775) (16,500,570) (16,548,561) (21,792,650) 4. Operating Expense Net of Depreciation 14,273,391 19,467,212 17,049,060 79,791,480 94,983,631 82,811,368

5. Net Operating Revenue for Debt Service 7,656,974 8,143,954 6,386,193 33,507,212 33,595,979 38,142,546 6. Interest Income (a) 129,415 276,964 352,779 619,038 1,449,320 1,137,893 7. Other Income 0 0 0 0 0 0 8. Rate Stabilization Fund 0 0 0 0 0 0

9. AVAILABLE FOR DEBT SERVICE 7,786,389 8,420,918 6,738,972 34,126,250 35,045,299 39,280,439

10. DEBT SERVICE (b) 4,682,526 4,721,171 4,324,651 23,178,402 23,605,855 21,623,253

11. DEBT SERVICE COVERAGE 1.66 1.78 1.56 1.47 1.48 1.82

(a) Excludes interest from Rate Stabilization Fund.(b) Includes Bond Principal & Interest only. Page 9

---------- YEAR-TO-DATE ------------------ CURRENT MONTH ----------

LES.com

Power Supply Division2020 May Monthly Report

Jason FortikJune 19, 2020

LES.com

Monthly Actual vs. Budget

2

$5.67

- $1.14

- $1.54

$2.07

- $1.02

$2.25

$5.03

$7.93

- $1.62

- $5.72

$4.67

- $1.50

$6.79

$5.31

-$7 -$5 -$3 -$1 $1 $3 $5 $7 $9 $11

Net

SPP Other***

SPP IM Market Revenue

SPP IM Load Purchases

Contract Sales**

Owned Asset Power

Non- Owned Asset Power*

Millions ($)

Budget Actual

Revenues Expenses

*Non-Owned Asset Power does not include SPP IM Purchased**Contract Sales does not include SPP IM Revenue***SPP Other includes Over-Collected Losses and ARR’s/TCR

LES.com

Daily Temperature Range

3

Monthly Low 33°F

Monthly High 91°F

0

10

20

30

40

50

60

70

80

90

100

5/01

5/02

5/03

5/04

5/05

5/06

5/07

5/08

5/09

5/10

5/11

5/12

5/13

5/14

5/15

5/16

5/17

5/18

5/19

5/20

5/21

5/22

5/23

5/24

5/25

5/26

5/27

5/28

5/29

5/30

5/31

Degr

ees

in F

ahre

nhei

t

Daily Range Normal Low Normal High

LES.com

Loads

4

0

100

200

300

400

500

600M

W

Loads Forecast Weekends

Actual = 447 MW

Forecasted = 588 MW

LES.com

Customer Energy Consumption

5

276.0

230.1

0

50

100

150

200

250

300

2020 Budget 2020 Actual

GW

H

LES.com

Unit Equivalent Availability

6

0% 20% 40% 60% 80% 100%

J St.

LFGTE

TBGS 4

TBGS 3

TBGS 2

TBGS 1

Rok 3

Rok 2

Rok 1

LRS 1

GGS 2

GGS 1

WS 4

WS 3U

nit

Available Limited Scheduled Outage Forced Outage

LES.com

Resource Energy

7

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000M

Wh

Coal Oil & Gas Wind Hydro LFG

LES.com

Peak Load Day – May 1, 2020

8

0

100

200

300

400

500

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

MW

HourGGS_1 GGS_2 LRS WSEC 3 WSEC 4TB_1 TB_2 TB_3 TB_4 LFGTEROK 1 ROK 2 ROK 3 J_St. Wind PSAWind PPA WAPA Firm WAPA Peaking Peak Day Load

Actual = 447 MW

LES.com 9

Coal

Oil & Gas

Renewable

45% 38%

33% 3%

22%59%

Offered UtilizedNote: Total percentage may not add up to 100% due to rounding

Energy Offered and Utilized by the SPP Integrated Marketplace (Fuel Type)

LES.com

Energy Utilized by the SPP Integrated Marketplace

10

WAPA (23 GWh)11%

Gentleman Station (65 GWh)31%

Laramie Station (0 GWh)

0%

Walter Scott (16 GWh)8%

Terry Bundy (6 GWh)3%

Wind PSA's (7 GWh)3%

Landfill Gas (3 GWh)1%

Wind PPA's (91 GWh)43%

Note: Total percentage may not add up to 100% due to rounding

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MINUTES OF LINCOLN ELECTRIC SYSTEM ADMINISTRATIVE … › pdf › board › minutes-2020 › bd-min-june.pdf · 1 day ago · MINUTES OF LINCOLN ELECTRIC SYSTEM ADMINISTRATIVE BOARD