Substantive portion of response has been highlighted in red below.
From: Hart, Elaine
Sent: Wednesday, October 27, 2010 7:23 PM
To: Weis, Larry
Cc: Mele, Cheryl; Overton, Kerry; Perny, Andy; Reilly, Stuart; Little, Ann; Clark, Ed; Dreyfus, Mark
Subject: RE: $134 million fuel cost question in 2009 / Background with Ott & Goode
Larry
I am responding to the 2009 fuel cost question raised by Mike Sloan. The $134 million question is not a comparison of budget to actual results, but rather a comparison of actual results in two reports. Mr. Sloan compared the following two reports, both of which report actual FY 2009 fuel costs:
(1) EXTRACT from AE Annual Report, March 2010. This report is required annually by the current Competitive Matters Resolution and the content of the report is specified in that resolution. The Fuel Costs section includes total cost by fuel source (excludes hedging and ERCOT fees) related to Austin Energy facilities. The Fuel Cost section does not include purchase power agreements (non-renewable), hedging costs or ERCOT Fees. Fuel Costs of $309,158,288 are reported for actual FY 2009 results.
(2) EXTRACT from FY2011 Budget, August 2010. This is an excerpt from the City of Austin FY 2011 Proposed Budget document, specifically the Austin Energy Activity titled Fuel Expense (Volume II Page 44). The Fuel Expense Activity reports the purchase of natural gas and fuel oil to operate owned generating plants as well as fuel costs of co-owned facilities which use coal and nuclear fuel. This activity is also used to account for the use of purchase power agreements including renewable and non-renewable energy, hedging costs and ERCOT fees. The $442,789,384 total fuel requirements is properly labeled 2008-09 Actual.
The FY 2009 annual report Fuel Costs of $309,158,288 plus a total of $133,631,095 for purchase power agreements (non-renewable), hedging costs and ERCOT fees totals to the $442,789,384 total fuel requirements reported in the budget. Both reports accurately label whether the purchase power agreements, energy hedging and ERCOT fees are included in the total. We will make every effort to improve our reports to ensure that it is clear what we are reporting in the future.
My response does not in my opinion include any competitive information.
EXTRACT from AE Annual Report, March 2010.
EXTRACT from FY2011 Budget, August 2010.
Let me know if you need anything else.
Elaine Hart, CPA
Senior Vice President, Finance & Corporate Services
Austin Energy
721 Barton Springs Road
Austin, Texas 78704-1194
Office: 512-322-6558
elaine.hart@austinenergy.com
www.austinenergy.com <http://www.austinenergy.com>
P Please consider the environment before printing this email and any attachments.
From: Weis, Larry
Sent: Wednesday, October 20, 2010 10:28 AM
To: Hart, Elaine
Subject: Fw: $134 million fuel cost question in 2009 / Background with Ott & Goode
This is the question I was asking. I look forward to the answer
From: Mike Sloan <sloan@vera.com>
To: Weis, Larry
Cc: Larry Weis <lwweis54@gmail.com>
Sent: Wed Oct 20 09:00:27 2010
Subject: $134 million fuel cost question in 2009 / Background with Ott & Goode
Larry:
Thanks again for your generosity in meeting with community stakeholders. I look forward to visiting this afternoon, 5:30 at Lamberts upstairs.
Attached & below is background on the fuel discrepency in 2009 ($309M –vs- $443M). I’ve asked this question of AE many times, starting on March 22 (see attached email)
For whatever reason, Robert Goode & Marc Ott decided against answering this question… I’ve also attached a second email exchange when it appeared — unfortunately in my opinion — that Robert decided to constrain EE spending & focus on pumping up revenues.
A related follow-up question has to do with 2010…. Natural Gas prices have fully dropped in half from FY2008 to FY2010 (attached EIA table), yet overall fuel charges are up by about $80 million and now total over half a billion $. Unless AE jumped on nothing but long term hedges in 2008, it seems like cheaper current gas should have brought this down.
I look forward to talking later today.
Mike
EXTRACT from AE Annual Report, March 2010.
EXTRACT from FY2011 Budget, August 2010.
