Presented by:

Jelynne LeBlanc‐BurleyExecutive Vice President & Chief Administrative Officer, 

Corporate Support Services

CPS Energy Update

Alamo Heights Neighborhood AssociationNovember 2, 2010

Agenda

• State of the Utility– Challenges for the Industry and CPS Energy – Capital/Operating Requirements and Recent 

Rate Adjustments– Future Generation Resources– Impact of Energy Efficiency and Conservation 

Programs and Renewables

• Overview of CIED Fund

• Focus on the City of Alamo Heights – Electric Service, Reliability and Projects– Green Power Community

2

3

Our Strengths

• Solid financial position ‐ CPS Energy is rated AA+, Aa1 and AA by Fitch Ratings, Moody’s Investor Services and Standard & Poor’s, respectively. The ratings outlook from all three ratings agencies was also designated as stable.

• Diversified generation portfolio – Nuclear, coal, gas and renewables

• Reliable electric and gas systems

• Low bills ‐ Customers’ combined energy bills rank among the lowest of the nation’s 20 largest cities

• Talented and experienced employees

4

The Industry’s Challenges

• Rising costs and increased need to build new and replace old infrastructure

• Changing technologies

• Regulatory and compliance requirements

• Balancing customers’ desires versus what customers are willing to pay

• Aging workforce

5

CPS Energy’s Challenges

• Energy efficiency goal of 771 MW savings

• Replacement of aging generation plants will require decisions on new generation sources

• Funding a significant capital program

• Focus on sustainability

• Keeping a close eye on new and emerging technologies

• Responding to public desire for a more transparency in decision making processes

6

FY 2011 Capital Budget by Program Category

66

Customer Connect, 14.2%

Civic Improvement, 2.3%

Infrastructure Modernization, 22.2%

System Expansion, 13.1%

Enhancement Projects, 11.9% Spruce 2 & Peakers, 

22.4%

Environmental & Regulatory, 13.9%

Approximately 90% of CPS Energy’s proposed capital budget will be used to: Complete strategic projects in progress, Spruce 2 Braunig Peakers,Connect new customers, Respond to civic improvement requests, Meet environmental/regulatory mandates, andMaintain safety & reliability through system expansion or replacement of aging infrastructure.

FY 2011 / $523M

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FY 2011 Operating Budgetby Program Category

•Approximately 70% of CPS Energy’s Operating Budget is comprised of fuel, purchased power, owner costs and regulatory costs.  

•Approximately 30% of CPS Energy’s Operating Budget is comprised of internal non‐fuel expenditures such as labor, materials & services.  

Electric Fuel & Purchased 

Power, 41.7%

Distribution Gas, 10.6%

Regulatory & Other, 4.4%

STP Non‐Fuel O&M, 12.4%

CPS Energy, Non‐Fuel O&M, 30.9%

FY 2011 / $1,190.5M

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Revenue Requirement Drivers for FY 2011

Electric:• New Generation (Spruce 2, Braunig Peakers)

• Environmental / Regulatory Requirements

• Maintain Safety & Reliability

• Cover Operating Costs

• Support Customer Growth

Gas:• Required Civic Improvements (State, County, City)

• Maintain Safety & Reliability 

9

Rate Adjustments

On February 18, 2010 the San Antonio City Council approved 

the following rate adjustments:

BASE Rate BILL IMPACT BILL %

Electric 7.5%    $3.52* 3.4%

Gas  8.5%    $2.05 N/A

Electric & Gas N/A $5.57 4.2%

*Includes annualized fuel benefit associated with Spruce 2 after it comes on‐line 

System Est. Res.

Average Residential Bill

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Support for our Customers

• Residential Energy Assistance Partnership– Helps elderly, disabled or low‐income customers pay their electric and 

gas bills.  Public and community organizations that provide emergency funds to pay electric bills. 

• Budget Payment Plan – Average your bill and pay the same amount every month.

• Critical Care Program – Minimize risk for losing power to critical medical equipment.

• Residential Disabled Citizens Billing Program– Eligible citizens can request additional time to pay their bill.

• Senior Citizens' Billing Program– Extend the payment period for your monthly bill if you are age 60 years 

and older. 

• Temporary Hardships– Request additional time to pay your bill to avoid disconnection.

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Next Generation Resource Decision

• Integrated Resource Plan updated annually

• We are actively evaluating the optimal time to select our next generation resource option

• Considerations will include:– Impact of Energy Efficiency and Conservation Programs

– Carbon Legislation

– Emerging Technologies

– Availability and Pricing of Fossil Fuels

– Impact of Energy Efficiency and Conservation

– The San Antonio Economy

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CPS Energy Native Load

Natural Gas 40%

Coal 32%

Nuclear 15%

Renewable 13%

2010 Capacity

Gas 4%

Coal 44%

Nuclear 40%

Renewable 11%

Purch Pwr 1%

Projected 2010 Generation

Total Capacity = 6945 MW Total Generation = 21,167,000 MWh

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CPS Energy Renewables

Wind 97%

Solar 2%Landfill Gas 1%

2010 Renewable Capacity

Total Renewable Capacity = 882.5 MW Total Renewable Generation = 2,241,000 MWh

Wind 97%

Solar < 1%Landfill Gas 3%

Projected 2010 Renewable Generation

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Options To Meet Future Needs

Storage 4) Distributed Generation1) Traditional Generation

3) Demand Side Resources2) Renewable

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Inventory of Power Plants

Fuel Capacity (MW) Planned Retirement Date22009 Capacity

FactorUnit 2 Nuclear 540 2048 103.4%Unit 1 Nuclear 540 2047 91.0%

J.K. Spruce Unit 1 Coal 560 2047 73.8%J.K. Spruce 2 Unit 1 Coal 750 2065 new

Unit 1 Coal 435 2032 66.2%Unit 2 Coal 436 2033 60.3%

A. von Rosenberg Unit 1 Gas 481 2055 31.1%Unit 2 Gas / Oil 435 2029 17.2%Unit 1 Gas / Oil 445 2027 16.8%Unit 3 Gas / Oil 420 2025 15.6%Unit 1 Gas / Oil 225 2021 11.1%Unit 2 Gas / Oil 240 2023 8.0%

Leon Creek CT (4) Gas 186 2059 6.7%Leon Creek Unit 4 Gas 95 2010 1.3%W.B. Tuttle Unit 3 Gas 100 2010 0.8%Leon Creek Unit 3 Gas 60 2010 0.7%Braunig Peakers CT (4) Gas/Oil 190 2064 new

Capacity: 6138 Generation Portfolio CF: 45.3%

Covel Gardens Landfill Gas 9.6 12/31/2020 75.0%Cottonwood Creek Wind 100.5 11/30/2025 32.5%Sweetwater 4 Wind 240.8 5/23/2027 31.1%Desert Sky Wind 160.5 12/31/2021 27.1%Papalote Creek3 Wind 130.4 12/31/2024 26.8%Penascal3 Wind 76.8 4/30/2024 23.7%

Renewable Capacity: 718.6 Renewable Portfolio CF: 30.2%

Total Capacity: 6856.6 Total Generation Portfolio CF: 43.7%

2 Fossil plant retirements based on 55 yr. life. Renewable energy retirement date based on contract end date.3 Penascal capacity factor based on 9 months of operation and Papalote Creek based on 3 months of operation.

1 In 1988-89, CPS Energy's 28% share in STP accounted for 700MW of total capacity. In May 2005 CPS Energy's additional share of 12% added 325MW. In 2007, turbine upgrades increased CPS Energy's share to 1080 MW. STP 1 & 2 capacity factors are calculated based on the original

Ren

ewab

le

unit capacity of 1250.6 MW. STP 1 & 2 retirement date is based on original 40 yr. operating license plus a 20 yr. extension.

Plant

STP1

J.T. Deely

O.W. Sommers

Peak

ing

(631

MW

)In

term

edia

te

(224

6 M

W)

Bas

e Lo

ad

(326

1 M

W)

V.H. Braunig

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Sustainable Energy Policy

• On June 8, 2010, the CPS Energy Board of Trustees reaffirmed the Sustainable Energy Policy providing for:– A portfolio of conventional energy generation sources, 

including nuclear, coal, natural gas, renewable energy and energy efficiency and conservation, will begin to transition  CPS Energy from centralized to distributed generation. 

– Such a transition will be supportive of Mission Verde and in sync with the Strategic Energy Plan and Vision 2020.

– Greater San Antonio can become a national pacesetter, in  the process of creating green jobs, jump starting new technology research and development and mitigating climate change. 

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What CPS Energy Looks like by 2020

By 2020, CPS Energy will have achieved:• Consistently rank in Top 5 nationally JD Power & Associates for gas and

electric customer satisfaction• 15% participating in Windricity and Solartricity offerings• Over 100,000 customers actively managing energy use through AMI and

Home Area Network related products• Residential rates remain below Texas competitive markets

• Community peak demand lower by 771MW through STEP• Renewable capacity goal of 1500MW or ~20% of our total generation

additional capacity beginning in FY 2013, with a move to a distributed generation model to bring renewables within CPS Energy’s distribution system

• Low carbon emission baseload power generation• Improved reliability and responsiveness to customer service needs

• Employee satisfaction reaching 90% levels• Continuous improvement culture, including training for the future• Transparent communications at all levels and across all levels

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Energy Efficiency & Conservation Programs

• Residential Programs:– Air Conditioner Rebates

– Air Flow Performance Rebates

– Peak Saver Thermostats

– Wash Right (in collaboration with SAWS)

– Compact Fluorescent Light (CFL) Instant Rebates (Coupons)

– Home Efficiency Rebates• These include rebates for ceiling and wall insulation, spray foam insulation, Energy Star® Windows, window films and screens, and “cool roof” applications.  

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Energy Efficiency & Conservation Programs

• Commercial Programs:– Lighting Retrofit Programs

– Cool Roof Program

– HVAC Program

– Window Coating Program

– Efficient Motor Program

– Custom Measures• This program provides a comprehensive platform for cost‐effective energy efficiency measures not addressed by other CPS Energy program offerings. A customized incentive is offered based on project performance.

– Commercial Demand Response 

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Energy Efficiency & Conservation Programs

– Photovoltaic (PV) Program• Rebates available to both residential and commercial customers for PV systems at $3.00 per watt with a cap of $30,000 for residential and $100,000 for commercial customers.

– Solar Hot Water Rebates• Rebates are calculated using the Solar Rating Certification Corporation (SRCC) calculated Annual kWh Energy Savings Performance table for San Antonio. The listed calculated savings for the system are multiplied by a rate of $0.60 with a cap of $2,000.

• Solar Energy Programs:

Advanced Metering Infrastructure (AMI) Program

• Initial “Go‐Live” is scheduled for 2012• Goal is full, system‐wide 

implementation by 2017

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• 2‐Year Pilot (2010 – 2012)– AMI Vendor Contract (completed)– Implement AMI Network and controlled pilot of 

approximately 40,000 meters for integration testing– Implement Meter Data Management (MDM) system testing– Perform AMI/MDM system acceptance testing– Implement customer engagement pilots– Begin the full deployment process

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Renewable Energy Programs and Resources

• Solar demonstration projects– Energy Management Center – Institute of Texan Cultures 

• Pearl Brewery R&D Project– Partnered with Silver Ventures to install 200‐

kilowatt photovoltaic system; largest commercial solar project in Texas

• New Environmental Lab– 4.06‐kilowatt photovoltaic array

• Solartricity Producer Program– Distributed Generation

• Windtricity with more than 7,000 residential customers and 1,300 business partners, including USAA, HEB, VIA and AT&T Center

Renewable Energy Programs and Resources

• SunEdison Partnership– 25‐Year Purchased Power Agreement (PPA)– 3, 10‐MW installations in San Antonio Area

• 40,000 tracking PV panels per site• Specific locations currently in negotiation

– Partnership will include:• Regional SunEdison presence in San Antonio area• Educational Center at one of the installations• Research collaboration with CPS Energy and institutions of higher learning

– Commercial Operation date scheduled for September 2012

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History of CIED Fund

• In 1993, the CPS Energy Board of Trustees established the Overhead Conversion Fund (OCF)– Enhance aesthetic appeal of public areas

• Revenue is allocated annually to the Fund– Based on one percent (1%) of the CPS Energy electric 

base rate revenue collected in the previous year

• In 2005, the Community Infrastructure and Economic Development (CIED) Fund was created out of the old Overhead Conversion Fund

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CIED Fund Projects

• Three categories of projects can now be accomplished using the CIED Fund:– Overhead / Underground Conversion

• Including Decorative Streetlights

– Economic Development

– Environmental Stewardship / Energy Efficiency

• Projects are selected by governing bodies of the Cities in which CPS Energy’s Electric Distribution System is located

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CIED Fund Projects

• Environmental Stewardship/Energy Efficiency: – Projects designed to further our corporate energy 

efficiency objectives and reduce peak demand on the CPS Energy System

– Projects must meet a positive cost benefit analysis to CPS Energy

• Economic Development:– Projects that add new kWh sales and incremental base 

rate revenues and must result in a positive cost‐benefit for CPS Energy

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Alamo Heights Electric ServiceRecent Updates

• Circuits previously feeding Alamo Heights– Terrell Hills Substation: 5 circuits– Olmos Substation: 1 circuit 

• New Exeter substation installed May 2010– All Alamo Heights electric service from the Terrell Hills Substation was transferred to Exeter Substation located on Austin Highway

• Non‐storm outage records indicate system serving Alamo Heights is performing well

• Majority of Alamo Heights reliability issues are related to three storms during the 2010 calendar year

• The largest reliability impact to service continuity during these storm events are the outage contributions caused by trees and other vegetation.

Alamo Heights Electric ServiceReliability

Alamo Heights 2010Storm Circuit Performance

• AH circuit performance during 2010 major storms.

(1) Customer hours interrupted is the sum total of all outages experience by 

all customers

• Two of three storms were classified as major events according to industry reporting guidelines

Date# of 

OutagesCustomers Affected

Customer Hours

Interrupted (1)

Average  Restoration  Time (hours)

June 52 7555 76,143 9.9August 44 6532 19,124 4.4

September 42 973 7,367 10.5

• 2, “10‐Year” storms this summer

• June 2 Storm– 231,696 customers impacted

– 164 circuits operated

• September 7 Storm– 237,445 customers impacted

– 170 circuits operated

Impact of Summer Storms

• Recent Projects Completed:– Completed overhead/gas adjustments to accommodate a civic project on Castano Street       

• As part of the civic project, CPS Energy installed decorative “pendant” street lights that were funded through the CIED Fund

– 9 lights; approximately $ 66,000.00

• Future Projects Near Alamo Heights:– Broadway/Hildebrand Conversion is a City of San Antonio (COSA) Project that is just outside of Alamo Heights, but could impact traffic in the area

– Begins May 2011

City of Alamo HeightsProjects

Incarnate Word 

University

Broadway CondosAT&T

Hildebrand

Broadw

ay

CPS EnergyOverhead to Underground 

Utility Conversion

Indicates where Overhead utilities will be removed

Conversion Project is in coordination with  COSA’s Broadway Corridor Street & 

Drainage Project  ‐‐‐‐‐‐ Begins May 2011

City of Alamo HeightsGreen Power Community

• City of Alamo Heights has achieved the designation of Green Power Community (GPC) as determined by the Environmental Protection Agency and CPS Energy– GPCs are towns, villages, cities, counties, etc. in which the local government, businesses, and residents collectively buy green power in amounts that meet or exceed EPA's Green Power Community purchase requirements.

– Recognition Ceremony scheduled for the November 8, 2010 City Council meeting