WEBVTT

METADATA
Video-Count: 1
Video-1: https://azcc.granicus.com/MediaPlayer.php?view_id=3&clip_id=7006

NOTE
MEETING SECTIONS:

Part 1 (Video ID: https://azcc.granicus.com/MediaPlayer.php?view_id=3&clip_id=7006):
- 00:00:03: Staff Meeting Opening, Amanda's Farewell, and Anne's Welcome
- 00:02:28: Introduction to HDR Presentation on Market Trends
- 00:07:58: HDR's Perspective on Evolving Water and Energy Markets
- 00:09:51: Value of Water Discussion: One Water Approach
- 00:15:54: Funding Investments Through Cost-Based Models
- 00:23:06: Long-Term Water Augmentation Program with WIFA
- 00:30:04: Public Comment: Commissioner Marquez Peterson's Water Questions
- 00:33:00: Public Comment: Commissioner Thompson's Water Questions
- 00:34:44: Public Comment: Commissioner Lopez Discusses Water Innovation
- 00:57:51: Presentation on Power Market Trends and Challenges
- 01:05:32: Public Comment: Commissioner Marquez Peterson on Supplier Reaction
- 01:09:03: Public Comment: Commissioner Thompson on Digital Revolution
- 01:12:11: Public Comment: Vice Chair Walden's Concerns
- 01:13:20: Public Comment: Commissioner Lopez Asks How To Maintain Stability
- 01:17:46: Discussion: Repeal Rules on Gas and Rest
- 01:22:16: Motion to Executive Session
- 01:28:50: Vote and Adjournment


Part: 1

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Alright. Looks like it is time for our, April 28 staff meeting or May 28 staff meeting. What month is it? Holy moly. May almost June. Yeah. I'm going to start with a point of personal privilege. Many of you know, Amanda. She's been, I actually she worked on my campaign long before I even knew her. She's been with our office since the very beginning. As a matter of fact, she was, the one that did the filings that opened my very first docket, hours after we were sworn I was sworn in. She's been an integral, into the success of our office and over the years she's done everything from taking

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notes at meetings and making recommendations to setting up the open meetings and the workshops to, to making sure that I'm where I need to be and at the time I need to be there and all while trying to do that, in a manner that doesn't, you know so I don't look like a complete slob, you know. She, she's usually telling me that my collar needs fixed. She's been such a blessing to our office that even my wife wanted to pass along her, thanks for everything that Amanda's done and sends her regrets that she actually wasn't able to be here today to thank you in person. So while this is not technically Amanda's last day with our office,

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it did occur to me recently that this is likely the last opportunity I have to do this publicly. So, with apologies to Michael for doing this while he's out of the office, I just wanted to take this time to say thank you for everything and you will be greatly missed and I do have a little present for you. Alright. And secondly, many of you have already met Anne Hood. Anne and Amanda have been splitting the time for the last couple of weeks as Amanda works her way out of our office. Anne is working her way in so I would also like to take this time to officially welcome Anne to our team if you want to stand up and wave.

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So thank you both and, like I said, we're gonna miss you, Amanda. So, with that, I think it's time for, item number one. Vice Chair Walden. Thank you. And move item number one for discussion. Thank you. And, for this item, this was an item that our executive director wanted the, the commissioners to have this presentation. So I'm gonna go ahead and let him introduce the item and what's going on here. Thank you, chair. HDR Engineering is headquartered in Omaha, Nebraska. I've worked with them over the years on wastewater water projects.

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I think the last water project was a $20,000,000 loop around the city of Bellevue, a wastewater project that was along the Missouri River and within 500 feet of a a levee, which required NEPA and Army Corps of Engineer approval, which is, more frustrating than you can ever imagine. So, I've had a long history of working with HDR. Inadvertently, we met here in Arizona at an Arizona State University meeting discussing various infrastructure projects,

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and the crew that you see here that's gonna present today, introduced themselves to me. And we had coffee, and as we discussed, it became clear that there's a lot of activity going around in the country that impacts what happens in Arizona. And because of their national and international experience, it was my thought that they might be able to provide some insight to us as to why costs are where they are and what are the delays and what are some regulatory hiccups that they see from a broader perspective than just Arizona,

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although there will be obviously some Arizona discussion. But I thought it would be a nice discussion and provide an opportunity for the commissioners to ask questions and get some insight. So thank you. Sounds good. Thank you, sir. HDR, you are up. Alright. Thank you very much. Mhmm. Alright. So how do I get this presentation up on the screen? There it is. Perfect. Okay. So my name is Aaron Mier. I'm with HDR Engineering, obviously. And, Doug, thank you for the introduction. I I don't need to spend quite as much time talking about why we're here,

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I guess. Doug did a great job of of describing the evolution of this conversation. We're not here pitching anything. This is really an open discussion, and, hopefully, there's a few, interesting, interesting ideas or thoughts, or discussion items that come up that just generate some some, some thoughts or questions or discussion items as we go through. But, as we talked with Doug, it just became evident there's a lot of things that are swirling not only in the on the public side of the business, but private impacting both, the water and the energy industries, that impact both of our worlds. So I'm gonna take just a moment and,

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talk about who we are. So in front of you today, I'm Erin Mier. I'm the Southwest Region Water Director for HDR. I cover, the Southwest of HDR, which is, the six states, I guess, focused in the color Colorado River Basin, you know, gay me, me, with all the different issues going on surrounding that right today. But also Jason Fort, and Jason is our area operations manager for, Arizona and Mexico, and that covers all of HDR's business lines. HDR is a big company. We do more than just water, wastewater. We also do power energy, which you'll hear about in just a second.

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But there's a number of other business lines, transportation, mining industry, architecture, you know, private development, you name it, technology that we do, worldwide. So we cover a lot of different bases and and and very horizontal, so there's a lot of perspective we bring. Oh, I'm sorry. Also, Stephanie Padgett is here. Stephanie, leads our resources, team in the area, which covers our energy and power markets. And, we're doing a lot of work with, the utilities in the state, as well as nationally. And, she can provide some perspective of what's going on in those markets as well. And then we've invited Trent Stober.

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Trent's online and joining us online. Trent is our utility management services director for HDR, globally, and, Trent will be joining us to talk a little bit about, what we term as value of water, and we'll talk a little bit about costs and what that means and and what's dry, generating and driving that. So a little bit about HDR. So HDR, we're, we're a 108 year old company. So we were founded in 1917 in Nebraska. Doug mentioned that. But, interestingly enough, we were, the our Phoenix office of HDR was our fourth office of HDR.

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It was it was it was started in in 1959. So we've been in the valley for a long time. And, HDR is Henning Hemingston Durham and Richardson. We have grown to be a, a global company that's over 14,000 professionals. We have over 200 offices globally and I talked I touched on a number of the markets that we provide services for. We're in 15 different countries and, and here locally in Arizona, we our main office is in Phoenix. We have three fifty staff in the Phoenix office,

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which is, you know, it's incredible to see the growth that's gone on within the valley. But our second largest office obviously in, in Arizona is is Tucson, which we have a substantial practice in our Tucson office. So why we're here today, really it's to provide a cross sector perspective on what's evolving in the water and energy markets. As Doug had talked about, we're really highlighting some key system pressures that are impacting, reliability, the supply chains, demand across all those sectors, and and just discuss some of the drivers and the the policy considerations that are

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shaping utility, planning and investment. And I think that impacts costs and decision making on not only the con the the the consumers, but also the regulatory age agencies that are making decisions on how those are being regulated and then enabling a dialogue amongst us in discussion on, on some of the adaptive procurement, approaches, that are accelerating innovation in the markets. And you'll see that coming up when we talk a little bit about WIFA and how we do infrastructure delivery and some things are coming up, in front of us.

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So the first thing we're going to talk about is our water markets and I'm going to hand off the discussion as we talk discussion as we talk about the value of water. I wanna invite, Trent Stober to talk. Hi, David. Can you hear me okay, Aaron? I can. We can. Go ahead, Trent. You're doing okay. Great. And, I apologize for not being there. I'm up in the Northwest working with a utility that has a long range capital plan that's going to necessitate double digit rate increases for the foreseeable future. So, you know, we're seeing this impact across the country in terms of the various drivers that we

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have that, are causing some significant constraints whether it's on, you know, some water supply issues, regulatory issues and so forth. And it's really leading us to think about different funding models, and then also, very importantly, the impacts of affordability on our customers, which I'll touch on in just a minute as well. So, really our value of water, which I'll get into, is making our business case for the investments that we need to make, today and into the future. And that starts, Eric, if you go to the next slide,

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with a concept around one water that you've probably heard about, where we look for opportunities to partner with not only our utilities but also other stakeholders. So on the bottom of the graphic, we have, our water utilities and we're seeing great partnerships between utilities. You're seeing it in Arizona where we have wastewater partnerships with drinking water for direct and indirect potable reuse. But then we can extend that, both to the natural environment with our, the benefits that we provide to our ecosystems and watersheds,

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but also external, partners in our communities like community development and industry because this economic development is the lifeblood of our communities. And then, with the challenges we have not only on water supply but water quality type issues, agriculture has to be part of the partnership as well to overcome some of the challenges that we have. And then on the inner part of this graphic, we have our four primary goals of water quantity, so how do we supply enough water for our customers,

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quality so that we protect human health and the environment, equity so that we have a lens to ensure that all of our customers have equitable levels of service but also an affordability challenge that I'll talk about in a little bit, and then also resiliency. Not only the resiliency of our infrastructure and our supplies but also the resiliency of our utilities in terms of their, finance. Can we go to the next slide or can I control this now? Okay. Value of water. So now let's talk about the value of water. This is really,

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an approach that we've embraced to try to make sound, infrastructure, decisions. Not only, a good strong business case but also to lead that towards community support for the important investments that we have. And that comes down to, maximizing the value out of our investments and then using that to justify the benefits and getting the community support that we need, so that we're looking at the broader triple bottom line of our goals of social, environmental, and economic, benefits. And really here we're trying to shift from the traditional least cost perspective that we've

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had traditionally in the engineering space and think about the broader benefits because we might have a higher cost, investment that really provides, more benefits to our customers and our communities so that we can really make the case for those investments and make legacy decisions, for our capital investment. So next slide. Okay. So how do we do this? We we look at these, the benefits that we're providing from our water, what we term as our water stewards, whether those are water supply agencies,

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our public or private utilities, irrigation authorities, tribes are important in many parts of the country, and then really our valuation approach so that we can try to capture the social, economic, and, environmental benefits that our investments make not only, for the utility but also for the broader reach of our customers. So we'll go to the next one. And we can kind of align these benefits and determine the value of those benefits around these four primary goals. So things like in quality,

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our human health improvements, our public health, you know, improvements, but also opportunities for recreation, ecosystem services as well. And then the quantity side, you know, if you could think about what the economic impact is, if we don't have a reliable, water supply, we can we can assess that and then use that in our decision making processes for those investments. And then on the resiliency side, if we have failures in our system, there's a direct economic impact to our communities. So how do we mitigate that risk and communicate the value of mitigating that risk?

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And then in the equity space, for sure evaluation of affordability, which I'll talk about a little bit more. So next slide. So how do we pay for these investments? And this really comes down to our cost based models for rate setting, which starts with our revenue requirements to pay for both operational and the capital investments that we need. And then we, use this cost of service model, associated with rates so that we can allocate the the revenue requirement to our different

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customer classes and then design the rates so that the the customers pay equitably for that cost of service. Go to the next one. And one thing that we, you know, we're dealing with this with a utility that I'm supporting right now is how we assess our capacity fees. And so the graphic, to the right shows our capacity needs. And this could be the capacity or infrastructure, the capacity of our water supplies, and so forth, where we haven't quite reached there,

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but we need to, commonly look at how our growth pays for growth. And so in this model, assuring that the future customers are paying for that increase in demand, and that comes down to how we allocate cost both to those new customers, but also the capacity, fees as well. So that we, maintain equity between our existing customers and those, future and and new customers that are coming online as well. Next slide. And and Trent, maybe just to touch on this slide, I think one of the things that we chatted about that's that's interesting and maybe

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a phenomenon, that's occurring in the Southwest and I think we can appreciate it in Arizona, is if you look at the dash line and the existing system capacity, I think that line is being threatened, you know. So that line of existing system capacity and available water and reliability is is potentially going is being shut downward or being threatened in terms of, you know, how much water is available. So now you're becoming, what's what's available now is is maybe not really what's available now. And when you talk about growth paying for growth, it's not just growth paying for growth.

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It's also you have to also catch up on what's unavailable capacity. Yeah. Absolutely, Aaron. And, you know, some of the if if that line is is reducing because of water supply constraints or what have you, you. The existing customers should be part of the equation on paying to bump that line back up to where it should be. And the same would go for infrastructure reinvestment. So we've largely, and I'll touch on in a little bit, probably underfunded the reinvestment into our assets.

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Those assets were paid from, you know, future or, past generations, but the current customer should be paying for, part of the allocation for rehabilitating our existing systems as well. So it applies both to supplies but also, aging infrastructure reinvestment. It's a great point. So one thing, you know, there's a lot of discussion around affordability And I try to break this down into two different buckets, both acceptability and affordability. And I've provided the Oxford dictionary definitions of acceptability and affordability.

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But from a utility rate, perspective, acceptability is really what, you know, the community and the decision makers, whether it's the ACC or, you know, the, elected officials in public utilities, what they accept in terms of rate increases. Affordability is often confused with that because affordability is really whether our customers can afford the rates, not necessarily whether they accept the rates, but in particular on low income customers. And I and we're seeing significant,

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low income customer, restraints in utilities right now. So there's a lot of innovations around that, both statutorily and within various low income customer programs. Because of the broader customer base may not have a broader, affordability challenge. It's really these more vulnerable customers in our system. And often we have customer assistance programs, in many in most states, I would say, those customer assistance programs cannot be funded through the rate dollars,

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and have to have additional revenues beyond rates that go in to pay for those customer assistance programs. There's some states that, particularly Oregon, Washington, have recently heard Texas has got statutory authority to, fund those out of the the rates that the utility, well, you know, generates. So I think there's some solutions there that we need to really think about broader across the country on how to fund our, our infrastructure investments and and protect some of the more vulnerable customers that we have

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in our systems. Move on to the next one. So going back to the issue with aging infrastructure, and you could use this analogy as well for your water supply constraints. You know, we typically in our our utilities, we have a current, level of funding, to pay for aging infrastructure. But often that's not really funded to the level that we need to, lead to a sustainable utility. And when we recognize that, we we need to, make sure that, we avoid this rate shock in in private utilities insolvency.

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So when we recognize that and start raising the rates to pay for that unfunded, piece of maintaining our level of service, we can try to mitigate that rate shock, within our utilities. The longer that that defers and that's what, you know, my client is, living with right now, the longer that's deferred, the steeper that rate increase profile is. And that's when we really get into rate shock, acceptability issues, and truly affordability issues for our low income customers as well. So that's all I have.

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Jason, you wanna talk about WIPA or Yeah. Yeah. Absolutely. And thank you, Trent. The, one of the things that we did wanna talk a little bit about because I think that that equation the historical equation in Arizona of quantity, resiliency, equity, and affordability that historic system is being challenged a bit in in the current, state of water supply around the state of Arizona. And, you know, we see that with the Colorado River. We see that with with other water supply constraints within the state. And so the the that with the challenge of that

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that leads the state to starting to think about other other alternatives. And we wanted to spend just a little bit of time talking about supply augmentation and, the program, the long term water augmentation program that, the Water Infrastructure Finance Authority of Arizona is is, currently charged with. We are working closely with WIFA as as their as their partner in in delivering this program, and so we just wanted to talk a little bit about how that program is is operating because it's, a model that some other states are actually starting to look at as well as

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a possibility. Can I maybe have you get talk more into the mic? To the mic? Okay. I was getting some feedback, so I was stepping Yeah I think they're having trouble bumping you up loud enough. Okay. I can I can do that no problem? So a quick quick background on the long term water augmentation program that WIFA is undertaking back in 2022 the the state made the legislature made an initial investment and authorized a billion dollars towards long term water augmentation in the state and in 2025 the the legislature reaffirmed the commitment for that to that fund there's

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currently about $380 $390,000,000 available in that fund for investment. Part of what went with that, authorization is that, it opened it created a broad pathway for creative ways of bringing new supplies to the state and so it allows for a very wide variety of delivery models and contracting models to allow for creativity in bringing those new supplies and the other stipulation that went with that is that 75% of the funds had

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to be spent on importation projects, importing new supplies from outside the state. So WIPA has spent a couple of years beginning the implementation program of that. So if you think about it that you've got essentially a pot of seed money that's available and the ability to be creative in the way that that you're contracting for delivery of new supplies. Again that that is thinking about that historic equation of quantity and resiliency. When resiliency and quantity have been challenged,

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we're coming we're looking at creative ways to be able to solve that challenge in this in this approach. So what WIPA has done is essentially gone forward and I won't go all into into the real deep details but they've gone forward with bringing forward contracts and teams that have the ability to develop major augmentation programs and each of those teams have brought forward a proposal that WIFA is essentially paying for them to become to to evaluate the the viability of of those proposals.

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They will be looking at those those proposals from a, through a variety of lenses. Lenses they can refer to them as water importation projects, and they're looking at the viability of those projects through through these lenses of, you know, engineering you know the the is is it is it can it can it be done physically environmental and cultural impacts that the program would bring forward regulatory and permitting requirements impacts to communities and then the financial approach to delivering and that's that that's getting

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into that discussion of of of equity and affordability. So WIPA is is in the process now of of beginning to perform these evaluations with with these private sector partners to evaluate which if any projects become advantageous for the state. Now with that said that's that's the supply side right of how do we develop new supplies that can enhance the quantity and resiliency the the other side of that is what is the demand side you know what does the demand side look like for for programs like this and you know just as a level setting framework DWR

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is projected that Arizona demand in 2060 will have a demand deficit of about a million and a half acre feet and that back in 2023 when the initial sort of survey work was done, utilities were estimating that in ten to fifteen years, they would have demand for an additional 100,000 to 500,000 acre feet of water through a program like this. Now the big variability in this is resiliency of Colorado River water supplies and then also, frankly the the equity and affordability pieces how much does new water water supply like

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this cost? So what WIF is taking on through this is a stair step approach and hopefully the graphic is large enough that you're able to see the stair steps where WIFA is working with providers to develop and evaluate feasibility and also with utility customers to evaluate their appetite for securing supplies through through programs like this and there's a stair step development of progressive evaluation with further and further level of detail and further and further level of

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commitment. As I said this this is an approach like this is is different in the state it's actually different in The United States there are not a lot of programs that have been developed like this in The United States. The WIFM model, while it's in its fairly early days at this stage, is being used as a as a template in in other states and several other states are looking at what WIFM is doing and in the process of considering similar programs. So it'll be interesting to see how this develops but the I think the takeaway

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from it is that as that historic equation of quantity resiliency and equity and affordability, as that the historic norms are being challenged that it's going to be incumbent on Arizona and and other states that are facing similar challenges to look for creative solutions that that can potentially address, address those needs. And next is power. Do we wanna take some questions before we jump into power? Yeah. Be happy to. We could like we can do that. Yeah. Let's just go down the the list. The commissioner Marcus Peterson. Hi. Thank you, chair. I don't have any questions at at this point.

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I'm I'm interested, I guess, in the the connect as you know, at the sheriff's office, I've been putting together a Colorado River update to the commission based on negotiations we're referring probably for an August staffing. So, I guess, like, I'd like to better understand from HDS perspective. Is that the right timing? I'd like to know more about this supply challenges we're facing. As I reached out to the private body utilities that are engaged at four and Arizona Water, I was told really August is when we might know something. Is that is that the case? I think that's a good assessment at this stage. You know, the the thing the developments on the Colorado River are in some ways moving very

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quickly and in some ways moving at glacial pace, and and so, you know, the timing of how, the the negotiations and discussions are going with other basin states, how the, discussions are going in in Washington with the Bureau of Reclamation, that is, that is anybody's best guess as to how that is going to continue to to to develop. I I wouldn't wanna speculate, but I think, you know, August is would be a a a good time frame. Hopefully, by then, there is there's some some further development. So it's the best I could offer at this stage. Okay.

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Yeah. And the other question I had on on projected demand and the deficits we're gonna be facing, and I I need to open your slides. I have that link here. I'll have to look. But, does that differentiate between reframing and potable water or bound water and reframing or anything like that? So, the the the evaluate the supply evaluations that are being taken on are really looking holistically. You know, with WIFA through the program and other, I guess, agencies that may consider, water supply, they are looking at it from a holistic supply,

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you know, what what is the what is the overarching need? There are much more detailed studies that each of the the utilities take on as to how they can meet that supply need. You know whether that's groundwater, whether that's reclaimed water, whether that's advanced potable reuse, whether that's surface water, there are lots of different supply whether that's efficiency gains you know there's there are lots of places where efficiency gains can come into this as well. All of those components are really part of each individual utilities planning sphere to consider how best to meet that need and and frankly that that often goes back to

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that discussion about resiliency, reliability, and then and then equity. What are the most cost effective ways of achieving those goals? Okay. Thank you. No further questions. K. Mister Thompson? Sure. Thank you, chair. Is HDR part of the, you know, WIFO went out to RFP a while back and, with the task of, identifying, I guess, stakeholders in two buckets to go out and find water outside of Arizona. Are you part of either of those groups? So HDR is not part of either of the teams that WIFA is currently working

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with on the augmentation projects. Our role with WIFA is we're serving as WIFA's advisor, so we helped WIFA craft the plan, craft the solicitation, and are helping them with the with the implementation of the program. We don't we don't have any affiliation with any of the, of the teams that are are actually of the teams that are are actually performing those feasibility studies or or, under contract to WIFA to to to do that work. Okay. Thank you. Okay. Vice Chair Walden? No questions. Mister Lopez? Yeah. I think, this is gonna go a little longer than we thought. So

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I again, water's kinda my second love language when it came to Arizona. I served, with, commissioner Thompson on AMWA for many years and and discovered a lot again being a native myself, and your company being around here in Arizona for so many decades, you understand how how we, you know, treat water as a precious commodity here. So because of that, since the sixties and when your company was here, again, it's touted out there a lot. Arizona has done a lot of conservation. They've done a lot of reuse. We've done a lot of innovation when it comes to water,

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and we're really sure that we now use about as much water as we did in the nineteen sixties with, what, 5,000,000 more in population, industry, more ag, all of that stuff. And and, I always tell this every time outside of the state that if other states did even half of what we do in Arizona, we wouldn't have a water problem in this country. Now that being said, it means it's gonna be additional cost. It's easier that, yeah, if the water's coming out of the sky or out of a river and you don't have to treat it at all, yeah, it's gonna be cheaper. But again, when you talk about, you know, sustainability, you talk about treating a proper environment and actually being good neighbors that have some

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of the Upper Basin states actually did some treatments and some conservation. Again, we wouldn't have a problem in the Southwest. Now that all preface being said, you know, the title of the, your presentation here being market trends in supply chain. I didn't really hear anything on that. So, again, given the preface of what I said with what we're doing in Arizona, your company is, you know, like you say, not not only national, but international. You what? 15 different countries. What other countries out there or other states are doing better than Arizona? What can we learn about in Arizona,

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to do better? That's a really great question. I think that, when it comes to water innovation and and creativity, you you are absolutely right. Arizona is a leader in innovation. We have a long history of of being good stewards of our water supply of our water resources. You mentioned innovation from the standpoint of management we are also innovators in in Arizona in terms of our ability to use our supplies renewably I think of you know our

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recharge our indirect and direct potable reuse programs those are all places where Arizona is is a leader. Where I think we WIFA is an example of what WIFA is doing is an example of starting to utilize, private markets as as part of that equation. That is something that is much more accepted in other countries, frankly, that is has not been as accepted in The United States yet, when it comes to to thinking like public private partnership and and and things of

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that. Can you give an example of something that's being realized like that? What do you mean by Sure. So there are, when we look at in in in water starved areas, I think of desalination, right, as as a as one of the tools that's in the toolbox. It's not an in this inexpensive supply of water. It's it's a very expensive supply of water, but it also can be a very resilient supply of water. So there are there are other there are areas in Europe and there are areas in The Middle East that have a different set of equations when it comes to

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water quantity resiliency and and and affordability and equity that are using, a greater degree of of private capital to develop water supplies, and that that's something I don't know that it's Arizona is gonna have to consider as we go forward how we want to, how we want to best balance that equation. But there are examples. Israel's a good example. There are another a number of other places in The Middle East that that use private capital significantly for development of of water supplies. Okay.

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And then so on the market trends, would I mean, globally, nationally, you're in Nebraska. I've never heard Right. Of a water problem in Nebraska, but, I mean, I mean, I think of water problems in Nebraska. Exactly. And so, again, regional, it's different. Even in Arizona, right, depends if you're because there's cities and counties that are dependent upon the Colorado River environment, but others that are not, right, that are well watered and they don't really care if Colorado went away. Tomorrow, it wouldn't impact them. Right? So Right. So, so I understand every state, has a different, you know, demon that they gotta deal with. But what are you seeing again as a market trend?

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Is is there anyone out there that's doing any state or any community that's doing something right that they're seeing a better efficient use of water and or costs going down for water anywhere? I don't know that costs going down for water is going to be part is really a a prevailing trend anywhere that that that I'm aware of that that we see, between, supply resiliency, water quality considerations, and and continuing, regulatory impacts. The the realistically the cost of water, I don't think there's a there's a there's a market trend towards decrease.

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In fact, what we're seeing is is continued trend toward, increase in in market cost for water. The the areas where, the market is, I think, pushing forward, and I may ask Trent to to, come off mute and and speak a bit to this, to this as well. But, the areas where I think the market trend is going is continued reinvestment in resiliency not only of water supply but of water infrastructure and balancing, the balance of rate pressures with maintaining that resilient supply.

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We have invested over the years utilities. Arizona is relatively young in its infrastructure investment if you compare it to many places that have much older infrastructure. The balance of equation from developing new infrastructure to maintaining and and rehabilitating and and maintaining level of service with existing infrastructure, there are places around the country that are much further along in that curve than we are, and I think that that Arizona can continue to learn from what those utilities are doing as far as their their reinvestment.

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And I may ask Trent if you wanna wanna add to any anything else there. Yeah. A couple of things. And I've I've done some work in Israel. I think you're spot on. You know, your point, Jason, is spot on in terms of some of the strategies that they're, taking. I would say here in The U. S, we're seeing water scarcity issues pop up in parts of the country that never had those concerns, right? Whether it's Florida, the Northeast now, has significant water supply issues,

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both in terms of reduced, you know, reduced flows but also sea level rise compounding the issue to compromise, you know, intakes. I you know, we're seeing a convergence of, you know, a bunch of different drivers, particularly around the need to reinvest in our systems on aging infrastructure and then where we have, communities with significant growth and we've got, you know, defer we've had deferral of capacity related projects. Those are converging now with regulatory requirements.

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And so it's like, just a complex pinch point for so many utilities right now, where you've seen, communities, utilities make proactive investments in the past. You're seeing the benefits of that right now where their rates are not, as dynamic as the, the pent up demand. And for so long, and this was the discussion yesterday, the utility, for so long utility leadership took pride in low rates and now we're seeing the new utility leaders

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have to make really hard decisions and the elected officials make hard decisions on how we're gonna pay for the, you know, the pent up demand for infrastructure reinvestment. The other things, you know, we're seeing in, and I know it's not, uncommon in Arizona as well. You've got, you know, these emerging regulatory trends, that are compromising water supplies that are already, you know, have water scarcity issues. So, particularly around emerging contaminants like PFAS, and then on the wastewater side we've got

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issues around not only, you know, PFAS is lagging a bit, but nutrient issues, you know, Southern California, Northern California, Washington, that are really making utilities take a hard look at pivoting over to reuse as a strategy not only for water supply resiliency but also, you know, waste or load reductions in the sensitive receiving waters. You know, an innovative one in, Virginia Beach area is Hampton Road Sanitation District,

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where they've had significant subsidence, from, you know, lowering of water tables and now they're, partnering to inject wastewater for water supply resiliency, but also to mitigate subsidence, which is a huge capital investment, but brings tons of benefits to the the community. And that's where I think unlocking this ability to communicate the benefits to the broader, you know, the broader customer base, I think is is gonna be really important for our utilities to think about moving

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forward so we can gain the support for the revenues we we need to provide these essential services. Right. And I think that, to your point, that comes down to that cross sectional definition you went back to of acceptability versus affordability if they understand why a lot of people may not like it, but at least again they're accepting of it. So it again, kind of address the market trends but, so far, I haven't heard much about supply chain. But what it looks like is some of the challenges that supply again, more states taking on injection.

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That's drills. That's, you know, pipe work. The infrastructure, you're talking about pipes again, and valves, exotic metals, chemicals for water treatment. What are we seeing in supply chain restrictions that are, that we in Arizona can get ahead of, or make these major investments? And you kinda hinted at the slow and steady wins the race. Right? And there's old hare and turtle analogy. Right? And and I come from an area in the East Valley in Chandler where we made steady investments since our infrastructure consistently. And so we've had a very slow and steady raise of our rates,

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and reminding the community that, you know, utilities and water is not exempt of inflationary impacts. They use people, water, steel, chemicals, and all that's going up, so the prices go up. But as you mentioned, if if if you try to say we wanna keep it affordable and kick that can down the road, you pay more later and in a much steeper curve. So in city of Chandler, we communicated that a lot to our our our the value to our citizenry, and they have been very accepting of that. So on the supply chain side, because now we have more and more people trying to do recycling,

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are we seeing a breaking point or an avenue here where we're gonna see an accelerated cost in supply chain, availability of chemicals? Or what what are you seeing, nationwide, worldwide on that? Yeah. So I think when it comes to, you know, raw the raw materials, water water infrastructure is driven by the same raw material raw material demands that that exist across all of our markets concrete, steel, and then in a lot of cases specialty equipment. In general I think the the specialty equipment market,

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is has remained relatively stable the exception and Stephanie will talk about it a bit on the on the power side is is supply chain, constraints on on power infrastructure power and control infrastructure. As far as as far as what is happening from a I guess a chemical pricing standpoint and operating, you know, I don't know again prices are not going down but I don't know that there's necessarily we're seeing that there's a huge constraint on availability and and capacity to develop

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and and and deliver the the the materials that it takes to to build and treat water. Trent or Aaron anything you want to say from a from a regional or national stake? I just would I would say there's there's pockets of contractor capacity issues particular where we have large industrial development. You're competing for the same contractor, and so, you know, we're seeing a pivot, you know, where very few contractors are, are going after like a traditional design bid build type approach.

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So we're seeing contractors become much more selective on what they try to, pursue. So there's both, you know, the con the ability to implement those, you know, projects is being hampered as well and that's driving up some of the costs. So sorry, Aaron, to jump in there. No. It was perfect. Yeah. The only other point I wanted to make and before we jump over to the power markets, I think the supply chain discussion will be a lot more pertinent when we talk about the power markets. But I also wanna just make the point on the supply chain, just to think about the supply chain also as capacity,

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about the future, future water supply as part of that supply chain. So I think one of the things that's going to be facing, the utilities and the customers, specifically in Arizona, is what's the future price, the water that buying that future capacity, that reliability. Because I think those decisions are coming really quickly. You may be buying water that's really expensive to increase your capacity. And you're saying, well, it's you know, why am I buying this water? It's so expensive. That's way out in the future, but it may be the cheapest water you ever purchased when you're twenty years from now. Right? Yeah. And that's that's one of the things that we did.

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Again, talk about innovation. I I I go back a lot because, again, this is, again, my practical experiences in the city channel. We did a water swap with one of the the Indian reservations by us, and and, I mean, a lot of people said, why are you buying that much water? Where now it's being modeled by a lot of other industry, in in cities to take on more water supply, future water supplies. Right? And so that does transition to the WIFA. The billion dollars that was set aside and my assumption here is, again, a lot of that wasn't used. It was, you know, it was established here as a billion dollars to to the WIFA,

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group to say, go find us in some more augmented water. And now it's down to 300 and what was it? $3.63 90,000,000. So my first question was, did did that mean 610,000,000 was used, or it just evaporated, it got left in the bucket, and it just went back into the general fund? Is that correct? Because I'm understanding that a lot of it didn't get used. Right? Correct. The the, so WIFA has done a couple of things with the there's a the there's a couple of things related to that.

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So, first, the you're right. There is 380, 390,000,000 that's that's available right now. The the way the allocations were originally set up in the in the legislation was that the appropriations were made over a series of years, and subsequent legislature legislative sessions have pulled back some of that initial funding commitment, to fund other priorities. So that that that's where the majority of that funding has gone it's not necessarily been spent if you will. WIFA has however used, the funding that is available as seed money.

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We we we've talked about 75% of the funding being, needing to be obligated for, outside the state. That leaves 25% of the funding available for in state and so WIFA has used, a portion of that funding that's available currently to as seed money for an in state augmentation program as well so WIFA has started putting that money to use at this stage, but the remaining the remaining funds are available as support for the program going forward. So just to,

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again, develop in detail. So the 75% is of the 360 then, that 75% of that $3.60, not 750,000,000 now. The 350 can be used in terms of that. Is that I wanna be careful not to misspeak on that. So I I may have to come back and and be able to provide a a better answer to that. Yeah. It's the nuances of legal speak and legislation. Right? Yeah. I I and I don't wanna I don't wanna speak incorrectly. Okay. Yeah. And that'd be interesting to find out. And then you talk about some of the floods being used. I it got thrown a lot. And I again, when this first came out, and they talked about desal.

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They talk about trying to pipe water in from, you know, Missouri or Houston. And, I mean, all kinds of, you know, like, cloud seeding, I think, was was another one, trying to get water augmentation. Now that they've been three years into this Yes. Is there anything solidified yet within that? I mean, I've never really seen an update saying this is what we are dropping money on to go pursue. Is there Yes. Can you name one or two programs that are being pursued? Thank you. Absolutely. So WIPA has, importation projects to put into this feasibility stage, and they're they are a combination there there are a variety of types of solutions

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and locations for solutions, that are part of those importation projects and they range from desalination, there are a couple of desalination proposals, there are proposals for irrigation efficiency projects, there are proposals for direct potable reuse projects whereby, and and there I'll say so there are seven distinct projects that fall roughly into those categories. The the and they include a combination of proposals that would include potentially piping water into the state. A number of the proposals also consider using exchanges using an exchange framework whereby you

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would develop develop water supplies in a certain location and then use those for exchanges for other water supplies that could be brought to Arizona more readily for example water in Lake Mead as as a possibility. So there are there are seven water importation, projects that are being considered through the program today. Okay. Alright. Last, I guess, statement on the story question, but, we talked about, supply chain and limitations. You know, everybody's competing for kinda similar, resources, but, I'm assuming workforce is in there too. Absolutely. And, probably would be falling or we're talking to a lot of other water utilities and even,

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again, with within government in general. I mean, we're we have and all businesses in my day job. I mean, we have an aging workforce. Yes. And trying to find specialized, again, water engineers and water, is is that also contributing to cost Is in a significant way? Can you speak to that just briefly? Yes. It it absolutely is. Workforce workforce development and I'll I'll I'll take it actually from from two angles. One that Trent hit on with, with contractor availability part of part of the limiting factors in in contractors ability to

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deliver work is their ability to to develop and and and hire and utilize craft labor and and their labor resources to build projects, that is definitely a cost driver Arizona and frankly across all growth areas around around The US. There is also a significant workforce workforce a debate whether to say shortage but there's a workforce in operations and maintenance staff for for utilities as well. As you mentioned there there are, there's there's a retirement wave that is going and there frankly aren't enough people coming

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into the operations workforce to support all of the need that exists. That's driving towards, cost escalation, you know, wage escalation, certainly, but it's also driving towards a greater degree of automation, which, drives capital cost upfront as well. Yeah. Thank you. So I was asking my questions and and again so I guess to summarize, we're seeing, a cautiously optimistic future. When it comes to water, if if we are able to, again, respond appropriately in a timely manner, Costs are gonna go up, but if we can at least act now,

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we can try to mitigate future costs. That's kinda what I'm hearing. Arizona has a long history of innovation and being very responsible stewards with our water supplies. I think there is the there's very definitely the opportunity for that to continue but it's going to take continued investment and that resiliency and affordability equation is going to move from where it historically has been I think as as time goes on. So we can solve the challenges but challenges, but the solutions aren't easy ones. Yeah. And as you said earlier, it's like, you know, you can do anything with some the impossible can occur if you throw enough money in people at it. Right? But,

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but, again, it just it just costs more. Alright. Thank you. Maybe we can shift over to talking about the power market a little bit too. Yes. Thank you. Okay. That's all I have. Thank you. Stephanie. Alright. Wow. Thank you for having me. I'm Stephanie. I am honored to be here. Also, I'm privileged to get to, lead the the engineers and hire the engineers that are really, designing our infrastructure here related to power. So, we'll talk about that now. Yeah. So what we're seeing today, is not typical load growth. This is really structural,

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disruption. Nationally, utilities are have already signed over a 183 gigawatts. Is that right? Yeah. There we go. Over a 183 gigawatts of new large load. That's roughly one fifth of our current US peak demand. At the same time, we're seeing trillions of dollars of investment in AI driven data centers, and and billions in transmission and grid services. You know, what's important to note here is that demand is no longer growing incrementally.

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It's accelerating at a scale and a pace that the grid was not designed to absorb. And increasingly, the limiting factor is not just generation, but it's also the ability to interconnect and deliver that power. So because the grid can't keep up at this pace, the market is having to adapt in real time. So we're seeing a shift towards behind the meter solutions, co located generation, bridge power strategies, all to address the most immediate needs. But these are not long term strategies.

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These are interim solutions, while we wait for the transmission and the system capacity to catch up, which is likely to take about seven to ten years. And then we're also seeing policy evolve to support this shift. The key takeaway here is that the market is moving in addition In addition to scale, these new loads actually introduce technical challenge that challenges that are fundamentally different than what utilities have managed traditionally. So we've already talked about the clear mismatch in timelines between data center infrastructure delivery,

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and, and then grid infrastructure delivery. But we're also seeing that these load profiles are creating operational risk, including power quality issues, that affect both grid equipment, as well as generation assets. And while solutions like battery storage, can help to manage and alleviate some of these, these issues, they actually introduce their own constraints and lifetime considerations. So all this to say this is not just a volume issue, this is also a system performance issue. And then there are the stakeholders.

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The era of socializing data center, cost among the ratepayers is over. The political economy has shifted. Now it's about the question really becomes, how do you design a framework that is, that is transparent enough to be trusted, that is flexible enough to move at the speed, and, is durable enough to survive the next rate case. So now let's look at Arizona. In Phoenix, there are more than five gigawatts of data center either planned or under development.

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That's 15 to 17% of Arizona semiconductors and batteries and, advanced manufacturing and electrification, we're really looking at somewhere between nine and fifteen gigawatts by 2030. That kind of load is essentially like building another Arizona sized utility on top of the existing one. Alright. And then to make things even more concrete, there are three more constraints that we haven't highlighted yet that are really impacting Arizona. First is the aging infrastructure.

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Much of the existing infrastructure is 30 to 50 years old and to upgrade for retrofits that's gonna take five to ten years. Second is workforce. There are significant shortages and skilled labor here in Arizona, and that skilled labor is quickly approaching retirement, so we absolutely have an issue there. And then third is supply chain. Critical equipment like transformers, turbines, the lead times have grown to multi years,

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and we are seeing significant cost increases unlike anything that we've seen. And these constraints are present across the life cycle of the entire project so from design all the way to construction and they do not scale quickly even when demand does. Okay and my last slide here is really just meant to summarize kind of the core message of the presentation. What we're facing is not a single issue, right? This is the convergence of multiple forces impacting affordability and reliability at the same time.

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Arizona is seeing explosive demand, and this tension is now shaping every decision that utilities are making without the coordination, right, then affordability gets but if we fail to align infrastructure planning with the community and the policies then we risk the reliability of the system. So Arizona's success will depend on how we build alignment across all of those,

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and that's why community and stakeholders are so important. Transparency around trade offs, early collaboration, and then a long term trust will be critical, as utilities and engineers and regulators and communities and developers, come together to to solve these incredible challenges. So thank thank you. Alright. One last round of commissioner questions. Commissioner Marquez Peterson. Yeah. Thank you for the presentation.

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And and, I mean, you're right on. We've been hearing this for a number of years about the supply chain challenges and issues that are gonna come forward. Why aren't the suppliers reacting more quickly? I've had conversations with Siemens and others in the past about the expansion of their plants. Why aren't they doubling down in, the East Coast where they build or Guanajuato or others? Why aren't they moving faster? I think that's a question that we all have, but a a lot of it, I hear, is related to uncertainty. Right? So where is this a true boom? What is real? What is not real?

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Where's the right place to make that investment? And it will it be long term, or is this temporary? Right? So there's a a lot of things that are kind of pushing on on those types of decisions all at once, and I think it makes it very challenging. But we are seeing investment, probably just not as quickly and as fast as we'd like. Yeah. And I I've heard that from them also. Is this this a bubble? Is this really going to continue? So the tech companies, which are 10 times, if not more, larger than our our regulated utilities,

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are they investing in these suppliers? Are you hearing examples where they're gonna try to expedite some of these supply chain challenges? We hear about them acquiring key pieces, key, pieces of equipment that they need, and that's actually creating that tension with the utility who's trying to also use the same type of turbines or whatever it may be. Mhmm. But are you hearing tech going directly to supply chain? Yeah. I mean, the challenges out there right now is that everybody's competing with everybody. Right? And so the the bigger bulk you can bring to some of these suppliers,

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right, the higher you get in that priority list, and that's not always conducive to utilities. Right? They don't typically buy in bulk, but some of these large, you know, hyperscalers can come in and and they're looking at, sites across The US and, you know, have incredible numbers of turbines, for example, and can place a really large order with some of those, those suppliers that get them to the top of the list. So it is complicating, kind of the traditional utility structure as well. Yeah. I I'm just concerned that it's we're doing business as usual.

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I mean, I've heard your presentation, which was great, but for a couple years now. Right? And I'm not seeing reaction at the supply level. I hear a lot of concern at the utility and the tech company level, but not the actual suppliers responding. And I'm not sure to disconnect. I've also reached out to entities asking who is tracking the the real data related to supply chain challenges. Is that a role for WEC? Is that a role I mean, NERC is now talking about registering large load, but large load's one thing. But what about the supply chain challenges related to that?

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Whose role should it be? Because at the state level, we don't have the resources to do something like that. Should it be elect, which is not their role now, but should it be tweaked so that we're actually setting this? Yeah. I mean, that was more of just a monologue, but if you have any thoughts on that, go ahead. Yeah. No. Fascinating. Lots of lots of challenges to address. That's for sure. Yeah. Okay. No further questions. Thanks. K. Commissioner Thompson? Yeah. I was was on a panel last week, and we were talking about this. And, you know, one of the things that I brought up was, you know, we've had several revolutions in our in in this country.

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You know, the first one was, you know, the industrial revolution, and then we had another one right after World War one. And each of those both lasted approximately a hundred years. And I think we are now in the digital revolution that has been going now for twenty years. And so I, you know, I'm not seeing that this is a bubble anymore. You know, data centers, when they first came into existence ten,

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fifteen, twenty years ago, they're five megawatt, you know, users, consumers. Today, they're 500 megawatt. And it's just you know, we can either sit here with our head in the sand, pretend that it's a bubble and it's not happening, or we can work with our utilities and, you know, ensure that we have transmission and generation, able to handle this growth to keep Arizona as a as a economic, juggernaut in the grand scheme of things with all the states that we're competing with

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and international, competition as well. And, you know, I think, you know, to your one of your slides, you were talking about, you know, behind the meter and in front of the meter solutions not being a long term plan, and I absolutely think they are part of the long term plan. I think if you have a large load user that's willing to build their own generation and take some of that demand off of the grid and free that up for our residential consumers, absolutely, that's a solution. And I think it's those types of out of the box thinking that we should be talking,

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to stakeholders and to, you know, amongst ourselves and as well as our utilities about how do we make this happen and how do we make that transition to get away from keeping our heads in the sand and realizing that this is an issue that has to be resolved and that has to be resolved, and we have to find solutions, multiple solutions to resolving this issue, on a bigger scale. But at the same time, we still have to protect our residential consumer because we don't want that cost to impact our residential consumer.

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But you can't keep you know, you can't allow demand to get out ahead of capacity and expect your grid to remain reliable and resilient. That's all I had. Thank you. K. Michelle Wallen? Yeah. I I was expecting a little more supply chain management discussion today. I appreciated Renee's comments in in bringing that up and addressing that. As commissioner Marquez Peterson said, these are issues, we've been aware of for a while, and certainly she has the most tenure and has been hearing about this for quite some time.

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Though, you know, we don't do water rights on the commission, but I think all five of us do a great job at staying informed of the water issues in Arizona. And certainly with the Colorado River cuts, we're seeing our municipal water suppliers that we don't actually regulate, that are gonna be most impacted by those cuts and certainly have a lot of things they have to look at for, affordability and what their future plans are. I don't have any questions. I think, you know, we get a, we meet with a lot of different groups and presentations like this. I think,

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you know, going forward, this isn't necessarily something that needs to be part of a staff a staff meeting. We could have, you know, met in pairs or individually because I don't wanna set the precedent that, you know, any group gets gets to present as part of the staff meeting. So just wanna kind of throw that out there for our executive director to consider in the future. Thanks. Thank you. Mister Lopez? Yeah. As what's kinda hinted at some of the prior commissioners, I get great information, but it's like, okay. We got a problem. And, you're a company that is global national. You see a lot of other utilities nationally that we don't deal with.

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You deal with a lot of the regulators that we may not not have the insights into. So what I'm my question is is what do we do about it now? What can we and everything is because your printing is presenting us. We're the regulators up here that want to make sure that we're going to be having that affordable and stable grid for the future of this development and like as your presentation said we had a lot coming in. How do we deal with that? What do we do now in order to make sure we do, maintain as affordable as possible, just in reasonable rates to the, to the to the consumer,

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a reasonable return of investment to the utility, and a stable grid? What actions can we take? Do you have any thoughts on that? Well, I mean, we're seeing we're seeing a lot of ideas and a lot of different frameworks across The US. Right? Whether that's tariffs, where, you know, you pay for your growth, a lot of what we just discussed on the water side. Right? So what are those frameworks that allow us to say that, you know, growth pays for growth? I think that's probably the the biggest focus at the moment, at least to address some of the affordability challenges.

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But the extremely complicated question, and I'm not that's an extremely complicated question, and I'm not sure how to solve these. So, again, to that point, are you seeing any other states or regulators in the utility saying x state and regulators are doing it the right way. That's why we're gonna go there because they're knocking down walls, taking down obstacles, and they're making it easy for us to be able to build power, transmission, and, the place we wanna go. Mhmm. Yeah. How do we how do we advertise that Arizona's open for business and willing to

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do that? Yeah. And I think Arizona does a really good job of that, right, on on it but this that's an economic question. Right? It's, like, how do you make it favorable, for the data centers to come in or the large flow to build that infrastructure? But then also on the other side is making sure that they're paying Mhmm. Their fair share. Right? So I I do think that there are things that are happening here locally that are aligning with that, and there are great, probably, examples out there. You can see just by where some of that large load is being developed in the top five states. I think Arizona's in one of those.

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Right? And and looking at the policies that are in place that are bringing those. But I think we're just now catching up to the point that, you know, originally, we had incentives to bring in some of those data centers. And now that's being addressed politically and, across the board. And so now, I think we're right in the middle of, you know, how do we now solve the next problem? It's not just, you know, load pays for itself but also all the complications that we discussed here today that don't allow them to move at the speed that they need. So they are looking at what are our options even when it comes to like

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interconnections, right? We're seeing superscalars, put in, multiple state interconnection requests so that they can identify which one, gets approved first. Right? So there's a complication that actually creates more work for the utilities. And so now we're doing double the work in order to service maybe the single load. So I think there's just a lot of complexity and a lot of things that we need to learn and and align and figure out together. Yeah. Thank you. Alright. Well, thank you guys very much for the the presentation. And, if there are no other questions, we'll go ahead and move on to item number two.

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Don't see any. Okay. Vice Chair Weldon. Do you want me to make a motion to move into executive session? No. Not yet. Just go ahead and just move it for discussion and Okay. I move item number two for discussion. Thank you. And then we'll go ahead and turn to our our legal for an introduction to this. Thank you, mister chairman. Commissioners, yeah. We we ask that this, come before you and we can obviously take it into executive session for, details. But, we have the commission passed two repeal rules, the gas EE and the rest rules.

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The gas was submitted to the attorney general in December, and here we are almost in June and we don't have the rule published or sent to the secretary of state for publication, which means it hasn't taken effect yet. The attorney general under the state statute ten zero four four has the obligation to make the review and submit it to the secretary of state within sixty days. So obviously, they're well past that. I attached some information that you you've seen confidentially, confidentially that

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they're looking at it or they say they're looking at it and they've tied their gas, repeal rule review with the rest repeal rule, which there's really no authority to do that. So we wanted to bring this to your attention and maybe discuss options. We did get an email this morning from a representative from the attorney general's office, stating that, quote, something will be sent to us, Monday or Tuesday next week regarding these issues because we have raised them several times with the attorney general's office. We could postpone if you want till next week and we see their response,

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or we can talk confidentially in executive session if you wanna discuss options. Alright. Thank you. I think I would prefer to go ahead and move forward with our discussions today, on this. So I'll go ahead and make the the motion that we go to. Chair Myers? Yes. Before we go into exec session, I do have a couple of questions. Okay. Sure. Tom, can you briefly describe the Miller decision as it relates to the original arrest approval by the commission and what the court found as it relates to the commission's rate making authority? Sure.

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In the in the Miller decision of 2011, that was actually an appeal. Several entities had challenged the authority of the and the ability of the, commission to make those rules in the first place, whether it had the the power under its rate making power to, you know, do it. The Court of Appeals at that time in Miller held that the commission had the power because it was a a rate making rule. It's how it looked at it. It was not a corporate management rule. That decision, however, has been questioned in 2020 in the Johnson Utilities case,

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where I'm not sure that would be the same result today, whether the court of appeal or the Supreme Court, if they looked at the rest rules themselves, if we pass those today, whether they would be affirmed as pure rate making or whether it would just go too far into corporate management. That's really the test that the courts are looking at is you can regulate rates, but you can't manage the the companies and telling them what energy sources to buy and when and how. If you look at the Johnson decision, that's I would question whether that would,

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be acceptable today. We don't know. But Miller said it was, but the Johnson court expressly cast shade on Miller, in that regard. So it's kind of an open question today. You may have recall from the decision and the recommended order and opinion, there was a discussion by ALJ, Julia Mater, on that issue. It was a little bit, she she described the the area the status of the law today as being, you know, a little bit up in the air. Perfect. Is that all? That's it. Thank you. Alright. That that actually raises more questions, but that's probably something we should say for executive session in my mind.

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So if nobody else has any questions, then I'll go ahead and make a motion that can we go ahead and discuss, both items two and three in one executive session? Yes. Okay. So I'll go ahead and move that we, go into executive session for both items two and three. And, I guess you just raise your hand since most of you are online or or aye if you're Aye. So enclosed. Aye. Alright. Aye. That is unanimous. So we will go into executive session and be back when we're done. Thank you. Alright. I see commissioner Marquez Peterson.

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As soon as we get the rest of the commissioners online, we'll go ahead and get rolling. I think we're all here. K. Vice chair Weldon, are you? I'm here. There we go. Alright. So we can go ahead and get started. And, vice chair, if you wanna go ahead and, well, we've already moved item two. If you wanna go ahead and Yeah. I I move item two for a vote to proceed with the process outlined by legal counsel in the executive session. Session. Alright. I don't have my clicker. But, we can just do it by voice. Yeah. So, Valerie, go ahead and call the roll. Commissioner Lopez?

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Aye. Commissioner Thompson? Aye. Commissioner Marquez Peterson? Aye. Vice Chair Walden. Aye. Chair Myers. Aye. And that by a vote of five ayes, this item has passed. So vice chair, item three. I move item three for a vote to proceed with the process outlined by legal counsel in our executive session. Okay. That works for me. Valerie, go ahead and call it. Commissioner Lopez? Aye. Commissioner Thompson? Aye. Commissioner Marquez Peterson? Aye. Vice chair Walden? Aye. Chair Myers? Aye. And with a vote of five ayes,

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that one also passes. And I do believe that is the end of our, staff meeting today. Thank you everybody for taking care of that. It looks like the room's already empty, so we're good to go. We are adjourned.