Electric Utility Acquisition Study Phase 1 General ... · Electric Utility Acquisition Study ....

Electric Utility Acquisition Study

Phase 1

General Feasibility Report

September 30, 2014

Presented by: Enchantment Energy Consulting, LLC

and Rio Energy, LLC

http://www.bloomfieldnm.com/

Bloomfield Electric Utility Acquisition Study September 30, 2014

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1 TABLE OF CONTENTS 2 Executive Summary ............................................................................................................................... 3

2.1 Introduction .................................................................................................................................. 3

2.2 Background ................................................................................................................................... 3

2.3 Current Situation ........................................................................................................................... 4

2.4 Analysis and Results ...................................................................................................................... 4

2.5 Recommendation .......................................................................................................................... 7

2.6 Next Steps ..................................................................................................................................... 7

3 Introduction .......................................................................................................................................... 8

4 Background ........................................................................................................................................... 8

5 Current Situation ................................................................................................................................. 10

6 Analysis Methodology ......................................................................................................................... 11

7 Acquisition Potential ........................................................................................................................... 12

8 Comparable Municipal Electric Utilities .............................................................................................. 16

9 Recommendation ................................................................................................................................ 17

10 Next Steps ....................................................................................................................................... 18

11 Appendices ...................................................................................................................................... 19


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Bloomfield Electric Utility Acquisition Study Phase 1 – General Feasibility

2 EXECUTIVE SUMMARY

2.1 INTRODUCTION The City of Bloomfield, New Mexico (“Bloomfield” or “City”), its residents and businesses receive electric service from Farmington Electric Utility System (“FEUS”), a vertically integrated municipal electric utility. The City’s population is approximately 8100 and translates to just under 3300 premises in the City receiving electric service. The City is interested in completing a detailed Study, Strategy and Implementation Plan for the acquisition of the electric utility assets within the City of Bloomfield and allowed extensions thereof, from FEUS and formation of a municipal electric utility under the control of the City of Bloomfield. This report reflects the Phase 1 – General Feasibility of the prospective effort.

The Primary Objectives for formation of a Municipal Electric Utility under the City’s control:

1) Provide reliable electric service to the residents and businesses of the City of Bloomfield 2) Stabilize and maintain the average effective rates for electric service to City residents and

businesses 3) Provide employment opportunities for City residents within the City of Bloomfield 4) Generate revenues for the City that allow for returns to be used to improve the quality of life for

the residents of the City of Bloomfield

2.2 BACKGROUND Bloomfield has received electric service from a Farmington based utility since at least the mid 1920’s and since the late 1950’s has had the opportunity to acquire the system within the City limits. The city of Aztec exercised their rights in 1960 and completed the acquisition of their system approximately a year later following a legal battle. Bloomfield is now taking a close look at exercising their rights to acquire the properties within the City limits.

As of December of 2013 the City limits expanded through the process of annexation of the area within five miles of the City limits. The areas incorporated in the annexation process included land consisting of industrial plants that are very large electricity consumers. The addition of these potential electric customers positively affects the economics of creating a municipal electric utility in the City.

The City commissioned two separate studies assessing the feasibility of acquiring the electric utility assets within the City’s boundaries. The first report in 1991 was performed by Patterson and Ellett Professional Engineers. A follow-up opinion by Tommy Bolack was provided to the City Council in


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summer of 1992. Mr. Bolack was the Electric Utility Director at the City of Aztec at the time his report was presented. The second report by Ellett and Gaynor Professional Engineers was presented in 2012.

The studies concluded that formation of an electric utility in Bloomfield was feasible but that the success was dependent upon the acquisition cost and the cost of wholesale power supply to the serve the loads within the City. All the reports previously presented expressed a strong expectation that FEUS would fight the acquisition effort.

2.3 CURRENT SITUATION With the newly incorporated areas included in the City, the potential electric load to be served is nearly two times as large as it was prior to annexation. The larger load will attract more interest from wholesale power suppliers which should result in a more robust competitive procurement process if the City moves forward.

Low Gas Prices – The US natural gas market is producing record quantities of natural gas and as such price levels are currently low and expected to remain low for the foreseeable future. The five year Henry Hub (CMEGROUP, 2014) futures average is $4.26 per million Btu which translates to wholesale power prices in the range of $0.035 per kilowatt-hour to $0.040 per kilowatt-hour.

Franchise Tax - The City currently charges FEUS a Franchise Tax which is paid by its residents to FEUS then to the City. The Franchise Tax is expected to produce in excess of $300 thousand per year. Formation of a municipal utility would require termination of the franchise agreement and loss of franchise fee/tax revenue to the City but may be captured through electric rate design.

FEUS Transfers to General Fund- The revenues from FEUS customers in the City are providing significant subsidies to other departments in the City of Farmington (“Farmington”) and in turn providing added quality of life potential for Farmington’s residents without a reciprocal benefit being awarded to residents of the City.

EPA Issues – FEUS faces considerable uncertainty regarding the future of their power supply. The recent EPA ruling, Clean Power Plan (CPP) that applies to existing generation resources will subject FEUS to increased compliance costs and the costs will put upward pressure on all rate classes served by FEUS.

The City’s current situation and general market conditions provide a favorable environment for a comprehensive look at the formation of a City municipal electric utility.

2.4 ANALYSIS AND RESULTS As stated the current situation and market conditions are favorable for the City to consider the acquisition of the electric utility system in the City limits and formation of a City municipal electric utility. The analysis to determine General Feasibility was performed in three steps:

1) Operational Budget Development – Develop a Proforma operational budget that consists of the potential revenues that may be generated by the electric consumers in the City limits and the costs of all the departments, activities and responsibilities of an operating municipal electric utility. The organizational structure from which the analysis is based is shown below as Figure ES-1.


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Figure ES-1: Organizational Structure

This structure assumes a full complement of resources to operate an electric utility including a Director, field and technical resources, and back office to augment the existing back office personnel already in place to manage the water and wastewater utility. A total of just more than 14 FTE are contemplated to staff the electric utility operations.

Projected revenues and expenditures are shown below in Table ES-1 and shows the margin available to purchase a delivered wholesale power supply.

Table ES-1: Proforma Margin Analysis

ELECTRIC ENTERPRISE Bloomfield

PROJECTED REVENUES $11,856,383

ELECTRIC ENTERPRISE-EXPENDITURES **ADMINISTRATION/COMPLIANCE/SAFETY/CUSTOMER SERVICE 672,153 **ELECTRIC CONSTRUCTION/TRANSMISSION/DISTRIBUTION/ELECTRICAL ENGINEERING 2,236,561 **METER READNG/INSTALLATION /ELECTRIC METER SHOP 237,711 **SUBSTATION MAINTENANCE /RELAY DIVISION/SYSTEM CONTROL CENTER 498,546

**ELECTRIC ENTERPRISE-EXPENDITURES $ 3,644,972

**ELECTRIC ENTERPRISE - MARGIN $8,211,412


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The above figures include an allocation for capital expenditures which will, in part, be excluded from the operating budget and included in an enterprise capital funding plan. Proforma Budgeted Revenues are estimated at just over $11 Million which leaves ample headroom for procurement and delivery of wholesale power supply.

2) Comparative Analysis – Compare the Proforma operational budget to operational budgets of similarly sized municipal electric utilities. Compare organization size, structure and overall cost levels to assess the appropriateness of the assumptions made in development of the Proforma Operational Budget.

Chart ES-2: Comparative Analysis

3) Wholesale Market Analysis – Investigation and discovery of wholesale power market price levels that are indicative of wholesale power supply price levels the city may receive if a competitive procurement process was conducted to contract a power supply. The wholesale electric market is driven in large part by natural gas prices. As noted above, the current price levels for natural gas are averaging $4.26 per Million BTU at the Henry Hub trading point. That translates to power prices in the $ 0.035 per kilowatt hour to $0.040 per kilowatt hour range which is a significant discount to electric commodity prices embedded in current FEUS rates.


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2.5 RECOMMENDATION The analysis shows that there is adequate margin between expected revenues and the operational expenses, expected wholesale power costs and capital repayment to generate earnings from a City municipal electric utility enterprise. Based on the Information gathered and the subsequent analysis the recommendation is to move forward with Phase 2 of the Electric System Acquisition effort.

2.6 NEXT STEPS The next steps are to move forward with Phase 2, Electric System Acquisition Strategies will consist of three main Tasks:

Task 1 – Commission an updated appraisal of the electric facilities contemplated for acquisition by an American Society of Appraisers accredited Appraiser. Develop multiple strategies for the acquisition of the FEUS electric facilities currently within the City limits.

Task 2 – Conduct a Non-Binding Request for Information (“RFI”) process to assess the wholesale power market liquidity, additional price discovery and to identify potential providers. Assuming favorable responses to the RFI are received and the decision is made to continue to move forward a Request for Proposals (“RFP”) for binding offers would be developed and distributed to market participants identified in the RFI process.

Task 3 – Develop an Acquisition Implementation Plan for execution of the acquisition strategies developed in Phase 2, Task 1 and 2. This plan should include a high level budget and timeline to assess the needed effort of internal City resources as well as identify outside consultants and technical experts that will be required to perform all the necessary tasks to ensure a successful outcome.


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3 INTRODUCTION The City of Bloomfield, New Mexico (“Bloomfield” or “City”), its residents and businesses receive electric service from Farmington Electric Utility System (“FEUS”), a vertically integrated municipal electric utility. The City of Bloomfield has a population of approximately 8100. Based on current electric utility data from FEUS for July 2014, that translates to just under 3300 premises receiving electric service from FEUS within the City limits.

The estimated total peak electric load within the City is approximately 31 megawatts (“MW”) and estimated annual consumption is 132 million kilowatt hours (“kWh”). The estimated total FEUS revenues generated by the City, its residents and businesses is nearly $12 Million per year which represents more than 10% of FEUS total Electric Enterprise revenues for fiscal year 2014. As a matter of policy FEUS transfers the eligible FEUS enterprise earnings to the City of Farmington’s general fund. For fiscal year 2014 FEUS budgeted $6.4 Million for transfer to the general fund. Bloomfield’s prorated portion would be $640,000 using a 10% share.

The City commissioned a detailed Study, Strategy Development and Implementation Plan for the acquisition of the electric utility assets within the City of Bloomfield and allowed extensions thereof, from FEUS and formation of a municipal electric utility under the control of the City of Bloomfield. This report reflects the Phase 1 – General Feasibility of the prospective effort.

The Primary Objectives for formation of a Municipal Electric Utility under the City’s control:

1) Provide reliable electric service to the residents and businesses of the City of Bloomfield 2) Stabilize and maintain the average effective rates for electric service to City residents and

businesses 3) Provide employment opportunities for City residents within the City of Bloomfield 4) Generate revenues for the City that allow for returns to be used to improve the quality of life for

the residents of the City of Bloomfield

This report provides detailed information regarding the necessary organizational structure, electric-specific field service requirements, shared service estimates and potential revenue projections for a municipal electric utility sized to serve the City of Bloomfield. Also included is a comparative analysis of several municipal electric utilities in the region along with an indicative view of the wholesale power market to determine the availability of competitive wholesale power supplies. The recommendation to move forward with the next phase of the project is based on the positive results of the analysis.

4 BACKGROUND Bloomfield has received electric service from a Farmington based utility since at least the mid 1920’s and since the late 1950’s has had the opportunity to acquire the system within the City limits. The city of Aztec exercised their rights in 1960 and completed the acquisition of their system approximately a year later following a legal battle. Bloomfield is now taking a close look at exercising their rights to acquire the electric utility facilities and properties within the City limits and pursue formation of a municipal electric utility owned and operated by the City of Bloomfield.


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Figure 1-http://www.tricitytribuneusa.com/wp-content/uploads/Blmfd_Annex_SJC1-e1386889845375.jpg

This isn’t the first time the City has studied the prospect of forming a City owned electric utility. The City has commissioned two separate studies assessing the feasibility of acquiring the electric utility assets within the City’s boundaries. The first in 1991 performed by Patterson and Ellett Professional Engineers. A follow-up opinion by Tommy Bolack was provided to the City Council in summer of 1992. Mr. Bolack was the Electric Utility Director at the City of Aztec at the time his report was presented. The second report by Ellett and Gaynor Professional Engineers was presented in 2012 and provided detailed estimates of the cost of the physical electric distribution system.

The first study in 1992 estimated the electric load within the City (prior to annexation) at 4.88 MW and total annual consumption at 21 Million kWh. The second study in 2012 estimated the total annual consumption at just over 43 Million kWh and reported total commercial demand greater than 100kW of just over 3 MW and total City demand of approximately 9 MW. Both studies used a replacement cost estimate to determine the value of the electric facilities and made similar determinations of what the wholesale power supply price/rate would need to be to make the effort economically feasible.

The studies concluded that it is feasible but that the success was dependent upon a favorable price for electric facilities acquisition and the cost of wholesale power supply to the serve the loads within the City. Given the recent successful annexation process additional substations are now inside the City limits and will need to be appraised to determine a fair market value.

Noted above, as of December of 2013 the City limits expanded through the process of annexation of the area within five miles of the City limits. The areas incorporated in the annexation process included land consisting of industrial plants that are very large electricity consumers. There are four companies that own about $165 million worth of property in the proposed annexation area (Boetel, 2013). The property is home to gas-fired plants, compressor stations and pipelines owned by Enterprise, Transwestern Pipeline Co., ConocoPhillips and Williams. The addition of these potential electric customers positively affects the economics of creating a municipal electric utility in the City. The large industrial loads operate at a high load factor and make the City load more attractive to wholesale

http://www.tricitytribuneusa.com/commission-oks-annexing-roads-into-city/blmfd_annex_sjc1/


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power suppliers.

5 CURRENT SITUATION With the newly incorporated areas included in the City, the potential electric load to be served is two times as large as it was prior to annexation. Larger loads and a more favorable load factor will help wholesale power suppliers manage the risk of serving the full requirements of the City’s electric load. The loads in the newly annexed areas include additional electric facilitates that serve the large industrial customers which makes power delivery to the City as a whole easier to manage. Phase 2 will require additional site/system evaluations to determine the various delivery options that the City may employ. More specifically, the larger load will attract more interest from wholesale power suppliers which should result in a more competitive procurement process if the City moves forward. Delivery of the wholesale supply will be specifically defined once the terms of a system acquisition are agreed to between FEUS and the City. The ultimate delivery point will have an effect on the final delivered price.

One source of wholesale supply used by FEUS to provide electric service originates from a hydropower (“Hydro”) allocation from the Western Area Power Administration (“WAPA”). The WAPA Hydro allocation is contracted to the City of Farmington and an application process is required to determine if the City may be entitled to an allocation should it form its own electric utility. The application process should begin in the next two to three years to be considered for an allocation but the City will be required to wait for the next contract period (October 1, 2024) to receive any Hydro associated with an allocation should their application be accepted and an allocation granted. This element could be negotiated between the City, WAPA and FEUS. The City of Aztec was awarded a WAPA Hydro allocation subsequent to separating from the FEUS system. The rates for WAPA Hydro are currently structured with a demand charge of just over $5.00 per kW per Month and energy charge of just over $0.01 per kWh averaging about $0.026 to $0.027 per kWH.

Additional current considerations:

Low Gas Prices – The US natural gas market is producing record quantities of natural gas and as such price levels are currently low and expected to remain low for the foreseeable future. It’s no surprise to Bloomfield that natural gas production is up significantly and prices are at levels not seen since the early 2000’s. In various basins such as the Cheyenne hub in northern Colorado/southern Wyoming region pipelines that were expected to transport gas supplies west to east have projects being proposed to reconfigure the compression points to allow for east to west transportation. As a result of the abundant supply, the five year Henry Hub (CMEGROUP, 2014) futures average is $4.26 per million Btu which translates to wholesale power prices in the range of $0.035 per kilowatt-hour to $0.040 per kilowatt-hour.

Franchise Tax - The City currently charges FEUS a Franchise Tax for FEUS’s use of the city’s rights-of-way. The tax is paid by the City’s residents to FEUS as a component of the electric bill and then FEUS pays the City. The Franchise Tax is expected to produce in excess of $300 thousand per year. Formation of a municipal electric utility would require termination of the franchise agreement with FEUS and result in the loss of franchise fee/tax revenue to the City, however those revenues may be captured through the subsequent electric rate design. Once the City is operating its own electric utility a franchise agreement between the City and its newly formed electric utility will become unnecessary.


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FEUS Transfers to General Fund- One overriding assumption in this analysis is that FEUS is operating the electric enterprise at a profit. The portion of those profits that are statutorily allowed to be transferred are subsequently transferred to the Farmington General Fund. A significant share of those earnings are from FEUS customers that reside in the Bloomfield City limits and are providing subsidies to other departments in the Farmington and in turn providing added quality of life potential for Farmington’s residents without a reciprocal benefit being awarded to residents of the City. Successful operation of an electric utility by the City has the potential to earn at a similar rate of return and provide similar benefits to the Bloomfield General Fund for use as the City sees fit.

EPA Issues – FEUS faces considerable uncertainty regarding the future of their power supply. There are two EPA related developments with which FEUS is and will be required to incorporate into their long term supply planning process. The ongoing San Juan Generating Station (“SJGS”) Abandonment Case and the recent EPA proposed ruling, Clean Power Plan (CPP). In the PNM SJGS Abandonment case (hearings scheduled for October 2014) the parties have a non-binding agreement that would result in an increase in the FEUS share of SJGS by 65 MW and at an increased capital cost due to the modifications required to keep the remaining units in operation and in compliance with the EPA rules. The CPP applies to existing generation resources and is related to Carbon Dioxide (“CO2”) emissions. Comments on the CPP are due to the EPA by December 1, 2014 and a revised rule will be published 6 to 8 months following. As currently written it will subject FEUS to increased compliance costs and the costs will put upward pressure on all rate classes served by FEUS.

In consideration of the City’s current situation and general market conditions the City is in a good position. The gas and power markets, uncertainty of the cost of compliance for FEUS, and recent successful annexation provide a favorable environment for a comprehensive look at the formation of a City municipal electric utility.

6 ANALYSIS METHODOLOGY The analysis to determine General Feasibility was performed in three steps:

1) Operational Budget Development – Develop a Proforma operational budget that consists of the potential revenues that may be generated by the electric consumers in the City limits and the costs of all the departments, activities and responsibilities of an operating municipal electric utility. The revenue estimates were derived from application of the current FEUS Rate structures to the historical demand and energy consumption profiles for Residential, Commercial, Industrial and Street/General Outdoor Lighting. Peak demands for non-demand rate customers were derived using estimated load factors. The Proforma Operational Expenditures budget was developed using a full complement of Front-line, Back-office, Field and Technical resources as well as appropriate assumptions for tools, supplies and equipment necessary to provide all the related services required to deliver electricity to the City of Bloomfield residential, commercial and industrial customers. Expenditure levels were compared with an average of 10% of FEUS 2014 budgeted expenses


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for similar functional areas as a benchmark. The 10% was based on the ration of meters in the Bloomfield city limits to total meters in the FEUS system.

2) Comparative Analysis – Since the City’s electric utility Proforma Budget was developed by identifying all the potential skill sets and resource complements needed to provide electric service and by making assumptions regarding the gross additional Full Time Equivalents (“FTE”) an analysis was performed to compare the output to other similar municipal utilities in the region using public data from municipal government websites.

3) Wholesale Market Analysis – Investigation and discovery of wholesale power market price levels that are indicative of wholesale power supply price levels the city may receive if a competitive procurement process was conducted to contract a power supply. The wholesale electric market is driven in large part by natural gas prices. As noted above, the current price levels for natural gas are averaging $4.26 per Million BTU at the Henry Hub trading point. That translates to power prices in the $ 0.035 per kilowatt hour to $0.040 per kilowatt hour range which is a significant discount to electric commodity prices embedded in current FEUS rates.

7 ACQUISITION POTENTIAL As stated above, the market conditions are favorable for the City to consider the acquisition of the electric utility system in the City limits and formation of a City municipal electric utility.

The first step to develop a Proforma Operational Budget is to calculate an estimate of the potential revenues that may be generated by the electric consumers in the City limits. Once the potential revenues are established an organizational structure was developed to identify the costs of all the departments, activities and responsibilities of an operating municipal electric utility. The revenue estimates were derived from application of the current FEUS Rate structures to the historical demand and energy consumption profiles for Residential, Commercial, Industrial and Street/General Outdoor Lighting. Peak demands for non-demand rate customers were derived using estimated load factors.

Table 1: Historical Demand and Consumption

Bloomfield Load Analysis: Meters Customers Demand

kW Load Factor

Assumptions FY2013 Residential 3,643 3,119 3,531 0.65 20,105,958

Small commercial 555 474 1,500 0.50 6,569,340 Large commercial 66 50 5,681 0.33 16,482,560

Street lighting 1 1 66 0.50 287,269 Dusk to dawn lighting 43 41 17 0.50 74,010

Industrial (IN SJ CO<JUNE 2014) 2 2 15,000 0.67 88,310,767 Total Bloomfield 4,310 3,687 25,794 0.58 131,829,904


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As shown in Table 1, there are approximately 3643 meters and 3119 respective Residential customer accounts currently being served by the FEUS. When the combined 524 Commercial Customers and 2 Industrial customers are added to the projected Residential and Lighting loads, the estimated peak demand is over 25 MW and nearly 132 million kWh.

As stated above the revenue estimates were derived from application of the current FEUS Rate structures to the historical demand and energy consumption profiles for Residential, Commercial, Industrial and Street/General Outdoor Lighting. Not included in any calculations is a charge for kVAR or reactive power. FEUS has a charge for kVAR and the City may consider power factor as a specific rate element in the rate design process. In this analysis we assume a unity power factor and no penalty at the wholesale supply level. It will be the City’s responsibility to maintain an appropriate power factor as an element of their transmission agreement.

Once the load estimates were complete the demand and energy usage data was applied to the FEUS rate structures along with a projected Fuel Cost Adjustment to calculate an equivalent revenue potential of more than $11.8 Million (Table 2). As noted above the Franchise tax is currently being collected by FEUS and paid to the City, however those revenues would be included in the overall rate structures and collected from all City customers. Gross Receipts Tax will also be collected by the City. Table 2: Estimated Proforma Revenues

The Proforma operations budget for expenditures was developed using a full complement of Front-line, Back-office, Field and Technical resources as well as appropriate assumptions for tools, supplies and equipment necessary to provide all the related services required to deliver electricity to the City of Bloomfield residential, commercial and industrial customers. The estimates are based on an organizational structure that would be similar the Proposed Electric Organizational Structure shown below as Figure 2 and added as Appendix A.

FEUS Rate Schedules

Base Customer

Charge ($/Month)

Base Revenues

Usage Charge

($/kWh)Usage

Revenues

Demand Charge

($/kW-mo)

Demand Charge

Revenues Expected Revenue

Residential 3.25$ 142,077$ 0.08650$ 1,739,165$ -$ 1,881,242.37$ General Service 6.00$ 39,960$ 0.09309$ 611,540$ -$ 651,499.86$ Large General Service 9.00$ 7,128$ 0.05642$ 929,946$ 9.00$ 460,152$ 1,397,225.59$ Bulk (Industrial) Service 55.00$ 110$ 0.04300$ 3,797,363$ 8.25$ 1,113,750$ 4,911,222.98$ Sub-totals 189,275$ 7,078,014$ 1,573,902$ Power Cost Adjustment (est) 0.01650$ 2,175,193$ 2,175,193$

Total Electric Rate

Revenue 11,016,384.20$ Franchise Tax 5.00% 550,819.21$

Not Included: Gross Receipts Tax 2.625% 289,180.09$ Property taxes 11,856,383.50$ Total Electric Utility Revenue


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Figure 2: Organizational Structure

This structure assumes a full complement of resources to operate an electric utility including a Director, field and technical resources, and back office staff to augment the existing back office personnel already in place to manage the water and wastewater utility. Specifically, positions such as Customer Service Representatives, Meter Readers and Meter Shop Technicians may cross-train existing staff and minimize the need for additional FTE’s to fill new electric utility support positions. A total of just more than 14 FTE are contemplated to staff the electric utility operations.

Specialized technical services are assumed to be contracted on an as needed basis and are estimated as percentages of the cost allocated in the FY14 FEUS budget. Inquiries were made to service providers to verify that the services are available on an as needed contract basis and at prices comparable to the costs reflected in the Proforma Operational Budget.

Much of the front and back office functions and systems are currently in place to allow delivery of water and wastewater services which allows for the resources to be augmentations to the existing staff positions. A detailed line-item budget is included as Appendix B.


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Table 3: Estimated Proforma Revenues & Expenditures

The above estimates include an allocation for capital expenditures which will, in part, be excluded from the operating budget and included in an enterprise capital funding plan. With Proforma Budgeted Revenues estimated at over $11.8 Million and Proforma Budgeted Expenditures at $3.6 Million there is about $8.2 million or an average of $55.90 per megawatt-hour (“MWh”) available to purchase a delivered wholesale power supply. As noted above the current market price levels are tracking natural gas prices ($4.25 to $4.50 per MMBtu) in a range of $35 per MWh to $40 per MWh which leaves adequate headroom for procurement and delivery of wholesale power supply and repayment of debt for the purchase of the system.

ELECTRIC UTILITY ENTERPRISE Sub-TotalPROJECTED REVENUES 11,856,383$

**ADMINISTRATION/COMPLIANCE/SAFETY/CUSTOMER SERVICE 672,153

**ELECTRIC CONSTRUCTION/TRANSMISSION/DISTRIBUTION/ELECTRICAL ENGINEERING 2,236,561**METER READNG/INSTALLATION /ELECTRIC METER SHOP 237,711

**SUBSTATION MAINTENANCE /RELAY DIVISION/SYSTEM CONTROL CENTER 498,546**ELECTRIC ENTERPRISE EXPENTITURES 3,644,972

****ELECTRIC ENTERPRISE - MARGIN 8,211,412$


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8 COMPARABLE MUNICIPAL ELECTRIC UTILITIES Comparative Analysis – Since the City’s electric utility Proforma Budget was developed by identifying all the potential skill sets and resource complements needed to provide electric service and by making assumptions regarding the gross additional Full Time Equivalents (“FTE”) an analysis was performed to compare the output to other similar municipal utilities in the region.

Using public data from municipal government websites as well as information gathered via phone conversations, the Proforma Operational Budget was compared against other municipal electric utilities to measure the average costs per customer. The results compare organization size, structure and overall cost levels to assess the appropriateness of the assumptions made in development of the Proforma Operational budget. All utilities used in the comparison are distribution utilities (nominal transmission assets) which contract for all of their wholesale power supplies to serve their customer base.

Chart 1: Comparative Municipal Electric Utilities

Most notable is the direct correlation to the average cost per customer and the total number of customers a utility serves. City of Longmont, Colorado serves the largest customer base and they enjoy the lowest average cost per customer which is expected due to economies of scale and a fairly dense population base.


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9 RECOMMENDATION The analysis shows that there is adequate margin between the projected revenues and expenses based on rate structures similar to the FEUS rates that the City, City residents and business currently pay and the combined operational expenses, expected wholesale power costs and capital repayment. These margins are projected to generate earnings from a City municipal electric utility enterprise that may be transferred to the City’s General Fund for use at its jurisdictional discretion.

Underlying Risks – Several underlying risks were highlighted in the 2012 Feasibility report. Identification of those risks and mitigation plans are noted below.

• System Acquisition Costs – Risk Potential – Low to Moderate - The 2012 estimated replacement costs for the 2012 distribution system was $6,925,725 (Ellett & Gaynor-2012). The recent annexation of additional property into the Bloomfield city limits includes unverified and non-appraised extensions of the electric system which will have additional value and subsequent acquisition cost. Phase 2 will identify and quantify these costs exposures.

• Wholesale Power Costs – Risk potential – Low to Moderate – Bloomfield is relatively close to an active wholesale electricity trading hub, Four Corners. There are a large number of market participants active at Four Corners and the dominant marginal generation source is natural gas fueled. Risk will be mitigated in Phase 2 through additional market discovery processes.

• Financing Costs – Risk Potential – Low – Bloomfield has a very favorable bond rating and access to cost effective financing. Additionally, this analysis shows that the margin available to service debt will exceed the borrowing need. Phase 2 will quantify the financing requirements and allow for an objective evaluation of the level and cost of debt necessary to complete the transaction and service the subsequent debt load.

Based on the information gathered, the analysis performed, subsequent results and consideration of the underlying risks the recommendation is to move forward with Phase 2 of the Electric System Acquisition effort.


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10 NEXT STEPS The next steps are to move forward with Phase 2, Electric System Acquisition Strategies will consist of three main Tasks:

Task 1 – Commission an updated appraisal of the electric facilities contemplated for acquisition by an American Society of Appraisers accredited Appraiser. Develop multiple strategies for the acquisition of the FEUS electric facilities currently within the City limits.

Task 2 – Conduct a Non-Binding Request for Information (“RFI”) process to assess the wholesale power market liquidity, additional price discovery and to identify potential providers. Assuming favorable responses to the RFI are received and the decision is made to continue to move forward a Request for Proposals (“RFP”) for binding offers would be developed and distributed to market participants identified in the RFI process. The RFP process would be executed as part of Phase 3 Implementation following Task 3 Acquisition Implementation Plan Development.

Task 3 – Develop an Acquisition Implementation Plan for execution of the acquisition strategies developed in Phase 2, Task 1, 2 and 3. This plan should include a high level budget and timeline to assess the needed effort of internal City resources as well as identify outside consultants and technical experts that will be required to perform all the necessary tasks to ensure a successful project outcome.


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11 APPENDICES APPENDIX A – ELECTRIC UTILITY ORGANIZATIONAL STRUCTURE

APPENDIX B – DETAILED PROFORMA OPERATIONAL BUDGET


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Appendix - A


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APPENDIX B

DETAILED PROFORMA OPERATIONAL BUDGET

ELECTRIC UTILITY ENTERPRISE Bloomfield Sub-TotalACCOUNT NUMBER - ACCOUNT DESCRIPTION 10% Notes FTEPROJECTED REVENUES 11,856,383$

ADMINISTRATIONWAGES & BENEFITS601-6005-551. 10-11 PERMANENT 96,947 1 FTE - Electric Utility Director 1601-6005-551.10-13 OVERTIME - No Overtime for Salaried Director601-6005-551.10-25 RETIREMENT - 601-6005-551.20-21 FICA 6,021 601-6005-551.20-22 PERA-REGULAR 8,871 601-6005-551.20-25 INSURANCE-HEALTH 4,797 601-6005-551.20-26 INSURANCE-LIFE 343 601-6005-551.20-31 NM RHCA INSURANCE 1,939

• WAGES & BENEFITS 118,917

OPERATING EXPENDITURES601-6005-551.30-20 ENGINEERING - Include in Engineering Budget601-6005-551.30-35 BOND REFUNDING SERVICES 1,000 601-6005-551.30-40 LEGAL SERVICES 10,000 601-6005-551.30-43 FILING FEES - 601-6005-551.30-82 WORK REQUEST LABOR 250 601-6005-551.30-83 CONTRACT LABOR 5,000 601-6005-551.30-90 OTHER PROF/TECH SERVICE 7,000 601-6005-551.30-96 PAYING AGENT FEES 1,000 601-6005-551.40-10 NATURAL GAS 800 601-6005-551.40-20 E.W.S. UTILITIES 3,000 601-6005-551.40-40 BUILDING REPAIR (TAXABLE) 2,215 601-6005-551.40-60 AD VALOREM TAXES 41,200 601-6005-551.40-61 FRANCHISE FEES/TAXES - Bloomfield won't charge itself a franchise tax601-6005-551.50-05 TELEPHONE 500 601-6005-551.50-10 POSTAGE 50 601-6005-551.50-11 FREIGHT 15 601-6005-551.50-15 ADVERTISING - 601-6005-551.50-16 LEGAL NOTICES 50 601-6005-551.50-17 LOAD PROMOTION 800 601-6005-551.50-20 SUBSCRIPTIONS 26 601-6005-551.50-30 TRAVEL-AIRFARE 2,400 601-6005-551.50-35 TRAVEL-COMBINED 4,808 601-6005-551.50-41 REGISTRATION FEES 1,770 601-6005-551.50-47 ENERGY CONSERVATION EDUC. 5,000 601-6005-551.50-50 DUES 5,110 601-6005-551.50-55 MAINTENANCE AGREEMENTS 1,000 601-6005-551.50-65 PRINTING 50 601-6005-551.50-66 DUPLICATING 75 601-6005-551.50-81 VEHICLE MAINTENANCE COSTS - 601-6005-551.50-86 AUCTION EXPENSE 200 601-6005-551.50-91 MTR VEH-FUEL 325 601-6005-551.50-92 MTR VER-FLUIDS 12 601-6005-551.50-93 MTR VEH-OUTSIDE LABOR 10

601-6005-551.50-94 MTR VEH-OUTSIDE PARTS 10

601-6005-551.50-95 MTR VEH-INSIDE LABOR 60

601-6005-551.50-96 MTR VEH-INSIDE PARTS 18

601-6005-551.52-92 PROPERTY & CASUALTY INSUR78

601-6005-551.60-11 OFFICE SUPPLIES 550 601-6005-551.60-12 OFFICE EQUIPMENT <$5000 100 601-6005-551.60-14 COMPUTER SUPPLIES 605 601-6005-551. 60-25 BOOKS 30 601-6005-551.60-31 CONCESSIONS 150 601-6005-551.60-58 OVER/SHORT/DAMAGED - 601-6005-551. 60-95 COST OF GOODS SOLD 100

601-6005-551.65-09 INTEREST PAID ON DEPOSITS 3 601-6005-551. 65-14 PRINCIPAL 2002 A ISSUE - 601-6005-551. 65-15 INTEREST - 2002 A ISSUE - 601-6005-551.65-55 AMORTIZATION EXPENSE -

• OPERATING EXPENDITURES 95,367

CAPITAL EXPENDITURES

601-6005-551.70-10 VEHICLES - 601-6005-551.70-99 TRANSFER TO WIP - • CAPITAL EXPENDITURES - TRANSFERS601-6005-551. 80-15 TRANSFER TO ELECT CONST (48,780) 601-6005-551. 80-16 TRANSFER TO 701 FUND - 601-6005-551.80-60 TSFR FROM GENERAL FUND 252,540 601-6005-551.80-62 OTH FND CAP CONTRIBUTIONS - 601-6005-551. 80-96 TRANSFER TO 101 POLICY - This is the dividend that goes to the general fund

*TRANSFERS 203,761

•• ADMINISTRATION 418,045 Includes 1 FTE (Elec Dir) - FEUS includes Franchise Tax, $8M transfers to Gen FundCOMPLIANCE

WAGES & BENEFITS601-6007-551. 10-11 PERMANENT 26,939 .5 FTE - Assume that duties would be shared w/Safety 0.5601-6007-551. 10-13 OVERTIME -

601-6007-551.20-21 FICA 1,991 601-6007-551.20-22 PERA-REGULAR 2,465 601-6007-551.20-25 INSURANCE-HEALTH 1,807 601-6007-551.20-26 INSURANCE-LIFE 94 601-6007-551.20-31 NM RHCA INSURANCE 539

WAGES & BENEFITS 33,835 .5 FTE - Assume that duties would be shared w/Safety

OPERATING EXPENDITURES601-6007-551.30-20 ENGINEERING 5,000 601-6007-551.30-90 OTHER PROF/TECH SERVICE 8,500 601-6007-551.40-40 BUILDING REPAIR (TAXABLE) 120 601-6007-551.50-30 TRAVEL-AIRFARE 1,300 601-6007-551.50-35 TRAVEL-COMBINED 2,308 601-6007-551.50-41 REGISTRATION FEES 1,453 601-6007-551.50-50 DUES 80 601-6007-551.50-55 MAINTENANCE AGREEMENTS 4,570 601-6007-551.50-91 MTR VEH-FUEL 400 601-6007-551.50-92 MTR VEH-FLUIDS 20 601-6007-551.50-93 MTR VEH-OUTSIDE LABOR 100 601-6007-551.50-94 MTR VEH-OUTSIDE PARTS 150 601-6007-551.50-95 MTR VEH-INSIDE LABOR 30 601-6007-551.50-96 MTR VEH-INSIDE PARTS 30 601-6007-551.60-11 OFFICE SUPPLIES 100 601-6007-551.60-14 COMPUTER SUPPLIES 1,425 601-6007-551. 60-42 SAFETY SUPPLIES 400 • OPERATING EXPENDITURES 25,986

•• COMPLIANCE 59,822 .5 FTE - Assume that duties would be shared w/SafetySAFETYWAGES & BENEFITS601-6008-551.10-11 PERMANENT 14,651 .5 FTE-Duties shared with Compliance 0.5601-6008-551.10-13 OVERTIME 100 601-6008-551.10-14 ON CALL/STANDBY 150 601-6008-551. 10-26 COMMUNICATION STIPEND 42 601-6008-551.20-21 FICA 1,098 601-6008-551.20-22 PERA-REGULAR 1,341 601-6008-551.20-25 INSURANCE-HEALTH 599 601-6008-551.20-26 INSURANCE-LIFE 51 601-6008-551.20-31 NM RHCA INSURANCE 293

• WAGES & BENEFITS 18,325 .5 FTE-Duties shared with Compliance

OPERATING EXPENDITURES601-6008-551.30-04 DRUG TESTING 1,000 601-6008-551.30-25 LABORATORY/TESTING FEES 250 601-6008-551.30-84 WASTE DISPOSAL/RECYCLING 1,500 601-6008-551.50-10 POSTAGE 5 601-6008-551.50-30 TRAVEL-AIRFARE 100 601-6008-551.50-35 TRAVEL-COMBINED 500 601-6008-551.50-41 REGISTRATION FEES 300 601-6008-551.50-42 TRAINING MATERIALS 400 601-6008-551.50-50 DUES 50 601-6008-551.50-55 MAINTENANCE AGREEMENTS 50 601-6008-551.50-91 MTR VEH-FUEL 200 601-6008-551.50-92 MTR VEH-FLUIDS 10 601-6008-551.50-93 MTR VER-OUTSIDE LABOR 50 601-6008-551.50-94 MTR VER-OUTSIDE PARTS 75 601-6008-551.50-95 MTR VEH-INSIDE LABOR 15 601-6008-551.50-96 MTR VEH-INSIDE PARTS 15 601-6008-551. 60-11 OFFICE SUPPLIES 150 601-6008-551.60-14 COMPUTER SUPPLIES 350 601-6008-551.60-23 REPAIR PARTS 300 601-6008-551.60-42 SAFETY SUPPLIES 600 601-6008-551.65-46 EHS MEDICAL SURVEILLANCE 750


TRANSFERS601-6008-551.80-20 TRANSFER FROM WATER (472) 601-6008-551.80-30 TRANSFER FROM WASTEWATER (472) 601-6008-551. 80-40 TRANSFER TO GOLF FUND 610601-6008-551.80-60 TSFR FROM GENERAL FUND (19,866) Assumes some funds come from existing Safety Program

• TRANSFERS (20,809)

**SAFETY 4,185 .5 FTE-Duties shared with ComplianceCUSTOMER SERVICEWAGES & BENEFITS601-6010-551.10-11 PERMANENT 78,767 2 FTE addition for Electric 2601-6010-551.10-13 OVERTIME 807 601-6010-551.10-24 LONGEVITY - 601-6010-551.10-25 RETIREMENT - 601-6010-551.10-32 TSFR CUST SERV TO WATER - No Transfer to Water601-6010-551.20-21 FICA 5,776 601-6010-551.20-22 PERA-REGULAR 7,207 601-6010-551.20-25 INSURANCE-HEALTH 13,569 601-6010-551.20-26 INSURANCE-LIFE 263 601-6010-551.20-31 NM RHCA INSURANCE 1,575

• WAGES & BENEFITS 107,963 2 FTE addition for Electric

OPERATING EXPENDITURES601-6010-551.30-47 COLLECTION AGENCY SERVICE 1,600

601-6010-551.30-79 UTILITY BILLING SERVICE 18,000 Higher due to start-up601-6010-551.30-82 WORK REQUEST LABOR 50 601-6010-551.30-83 CONTRACT LABOR 10 601-6010-551.50-10 POSTAGE 26,000 =3700*$0.50*12 = $22,200601-6010-551.50-30 TRAVEL-AIRFARE 500 601-6010-551.50-35 TRAVEL-COMBINED 980 601-6010-551.50-41 REGISTRATION FEES 1,350 601-6010-551.50-42 TRAINING MATERIALS 15 601-6010-551.50-50 DUES 50 601-6010-551.50-55 MAINTENANCE AGREEMENTS 4,250 601-6010-551.50-56 MAINTENANCE CALLS 300 601-6010-551.50-65 PRINTING 450 601-6010-551.50-66 DUPLICATING 300 601-6010-551.52-20 WORK COMP-MEDICAL - 601-6010-551.52-22 WORK COMP-EXPENSE - 601-6010-551.52-31 GEN LIAB-PROPERTY DAMAGE 100 601-6010-551.52-92 PROPERTY & CASUALTY INSUR 5 601-6010-551.60-09 CONFER/MEETING SUPPLIES 150 601-6010-551.60-11 OFFICE SUPPLIES 950 601-6010-551.60-12 OFFICE EQUIPMENT < $5000 1,000 601-6010-551.60-14 COMPUTER SUPPLIES 175 601-6010-551.60-21 MAINTENANCE SUPPLIES 40 601-6010-551.60-25 BOOKS 14 601-6010-551.60-42 SAFETY SUPPLIES 15 601-6010-551.65-20 BANK FEES 20,000 601-6010-551.65-21 SALVATION ARMY ADMIN - 601-6010-551.65-22 SALVATION ARMY ASSISTANCE - Assume Bloomfield Gen Fund makes donations601-6010-551.65-50 BAD DEBTS EXPENSE 13,000

OPERATING EXPENDITURES 89,304 CAPITAL EXPENDITURES

601-6010-551.70-25 COMPUTER SOFTWARE 15,000 Initial System mods and support needed• CAPITAL EXPENDITURES 15,000

TRANSFERS601-6010-551. 80-20 TRANSFER FROM WATER (22,165) Should be some shared expense w/WaterTRANSFERS (22,165)

••CUSTOMER SERVICE 190,101 2 FTE addition for Electric**ADMINISTRATION/COMPLIANCE/SAFETY/CUSTOMER SERVICE 672,153

ELECTRIC CONSTRUCTION WAGES & BENEFITS601-6015-551. 10-64 FROM ELEC RELAY 16,641 0601-6015-551. 10-65 FROM ELEC DIST-DIR LABOR 161,791 601-6015-551.10-66 FROM ELEC ENG-DIR LABOR 24,817 601-6015-551.10-67 FROM ELEC METER SHOP -

WAGES & BENEFITS 203,248 All Transfers from other Elec Depts

OPERATING EXPENDITURES601-6015-551.65-60 DEPRECIATION EXPENSE -

* OPERATING EXPENDITURES - CAPITAL EXPENDITURES601-6015-551. 70-38 PLANT SYSTEM IMPROVEMENTS 212,097 The system is < 5% of the size of FEUS 601-6015-551.70-60 CONSTRUCTION 719,074 The system is < 5% of the size of FEUS 601-6015-551.70-99 TRANSFER TO WIP - 601-6015-551.74-82 WORK REQUEST LABOR - 601-6015-551. 74-83 CONTRACT LABOR CAPITAL -

*CAPITAL EXPENDITURES 931,170 These are the ongoing construction expenses.

TRANSFERS601-6015-551.80-65 FROM ELEC DIST-OVERHEAD 93,494 Transfers at 10%601-6015-551. 80-66 FROM ELEC ENG-OVERHEAD 107,721 Transfers at 10%601-6015-551. 80-69 FROM ELEC ADMIN-OVERHEAD 48,780 Transfers at 10%*TRANSFERS 249,995 Transfers at 10%

**ELECTRIC CONSTRUCTION 1,384,413 All Transfers from other Elec DeptsTRANSMISSION/DISTRIBUTION WAGES & BENEFITS601-6025-551.10-11 PERMANENT 337,231 4 FTE - FEUS has 48 FTE for a System >10X Bloomfield 4601-6025-551.10-12 TEMPORARY 7,234 601-6025-551.10-13 OVERTIME 20,165 601-6025-551.10-14 ON CALL/STANDBY 4,022 601-6025-551.10-15 CALL OUT 5,028 601-6025-551.10-24 LONGEVITY - 601-6025-551.10-25 RETIREMENT - 601-6025-551.10-26 COMMUNICATION STIPEND - 601-6025-551.10-31 TSFR TO ELECTRIC CONST (161,791) 601-6025-551.10-51 TSFR FROM PARKS - 601-6025-551.20-21 FICA 27,628 601-6025-551.20-22 PERA-REGULAR 2,178 601-6025-551.20-25 INSURANCE-HEALTH 36,864 601-6025-551.20-26 INSURANCE-LIFE 1,180 601-6025-551.20-27 PERA-IBEW 28,679 601-6025-551.20-31 NM RHCA INSURANCE 6,745

• WAGES & BENEFITS 315,163 4 FTE - FEUS has 48 FTE for a System >10X Bloomfield

OPERATING EXPENDITURES601-6025-551.30-25 LABORATORY/TESTING FEES 1,000 601-6025-551.30-26 OUTSIDE REPAIR SERVICE 2,000 601-6025-551.30-28 PCB MATERIAL DISPOSAL 1,000 601-6025-551.30-29 EQUIPMENT TESTING SERVICE 850

601-6025-551.30-82 WORK REQUEST LABOR 250 601-6025-551.30-83 CONTRACT LABOR 3,000 601-6025-551.40-10 NATURAL GAS - 601-6025-551.40-20 E.W.S. UTILITIES - 601-6025-551.40-40 BUILDING REPAIR (TAXABLE) 800 601-6025-551.50-05 TELEPHONE 2,300 601-6025-551.50-10 POSTAGE 5 601-6025-551.50-11 FREIGHT 300 601-6025-551.50-30 TRAVEL-AIRFARE 900 601-6025-551.50-35 TRAVEL-COMBINED 2,000 601-6025-551.50-41 REGISTRATION FEES 1,900 601-6025-551.50-42 TRAINING MATERIALS 800 601-6025-551.50-43 CERTIFICATION SCHOOLS 1,500 601-6025-551.50-50 DUES 1,100 601-6025-551.50-55 MAINTENANCE AGREEMENTS 125,000 601-6025-551.50-65 PRINTING 40 601-6025-551.50-71 EQUIPMENT RENTALS 4,000 601-6025-551.50-81 VEHICLE MAINTENANCE COSTS - 601-6025-551.50-91 MTR VEH-FUEL 24,500 601-6025-551.50-92 MTR VER-FLUIDS 700 601-6025-551.50-93 MTR VEH-OUTSIDE LABOR 10,500 601-6025-551.50-94 MTR VEH-OUTSIDE PARTS 9,000 601-6025-551. 50-95 MTR VER-INSIDE LABOR 8,500

601-6025-551.50-96 MTR VEH-INSIDE PARTS 1,700 601-6025-551.52-20 WORK COMP-MEDICAL 12,600 601-6025-551.52-21 WORK COMP-INDEMNITY 1,000 601-6025-551.52-22 WORK COMP-EXPENSE 500 601-6025-551.52-24 WORK COMP-INDEMNITY-LUMP - 601-6025-551.52-31 GEN LIAS-PROPERTY DAMAGE 1,500 601-6025-551.52-92 PROPERTY & CASUALTY INSUR 1,200 601-6025-551. 60-11 OFFICE SUPPLIES 300 601-6025-551. 60-12 OFFICE EQUIPMENT < $5000 50 601-6025-551.60-14 COMPUTER SUPPLIES 600 601-6025-551.60-21 MAINTENANCE SUPPLIES 30,800 601-6025-551. 60-22 SMALL TOOLS 5,000 601-6025-551.60-23 REPAIR PARTS 1,200 601-6025-551. 60-24 UNIFORMS 2,200 601-6025-551.60-26 CHEMICALS 800 601-6025-551.60-30 FOOD 20 601-6025-551. 60-42 SAFETY SUPPLIES 2,200 601-6025-551. 60-58 OVER/SHORT/DAMAGED 2,000 601-6025-551.60-70 MAINTENANCE PROJECTS 19,500 601-6025-551.65-30 UNION TOOL REIMBURSEMENT 200

*OPERATING EXPENDITURES 285,315

CAPITAL EXPENDITURES601-6025-551.70-10 VEHICLES 122,500 Used Distr Bucket truck $95k - $150k601-6025-551.70-11 HEAVY EQUIPMENT 28,000 601-6025-551.70-35 TOOLS & TEST EQUIPMENT 1,800 601-6025-551.70-99 TRANSFER TO WIP -

CAPITAL EXPENDITURES 152,300

TRANSFERS601-6025-551.80-15 TRANSFER TO ELECT CONST (93,494)

*TRANSFERS (93,494)

**TRANSMISSION/DISTRIBUTION 659,284 4 FTE - FEUS has 48 FTE for a System >10X BloomfieldELECTRICAL ENGINEERING

WAGES & BENEFITS601-6030-551. 10-11 PERMANENT 183,539 2.7 FTE - Assume 2 Staff Engrs + Contract help 2.7601-6030-551. 10-12 TEMPORARY 9,342 601-6030-551. 10-13 OVERTIME 501 601-6030-551.10-15 CALL OUT 10 601-6030-551.10-25 RETIREMENT 3,000 601-6030-551.10-31 TSFR TO ELECTRIC CONST (24,817) 601-6030-551.20-21 FICA 13,998 601-6030-551.20-22 PERA-REGULAR 16,519 601-6030-551.20-25 INSURANCE-HEALTH 13,718 601-6030-551.20-26 INSURANCE-LIFE 626 601-6030-551.20-27 PERA-IBEW 709 601-6030-551.20-31 NM RHCA INSURANCE 3,611

• WAGES & BENEFITS 220,756 2.7 FTE - Assume 2 Staff Engrs + Contract help

OPERATING EXPENDITURES601-6030-551.30-20 ENGINEERING 15,000 601-6030-551.30-23 RIGHT-OF-WAY STUDIES 3,000 Assume one significant Study Project 601-6030-551.30-24 BLUE STAKE PROGRAM - 601-6030-551.30-83 CONTRACT LABOR 10,000 601-6030-551.40-10 NATURAL GAS - 601-6030-551.40-20 E.W.S. UTILITIES - 601-6030-551.50-05 TELEPHONE 800 One Cellphone Plan at $65/mo601-6030-551.50-10 POSTAGE 75 601-6030-551.50-11 FREIGHT 10 601-6030-551.50-20 SUBSCRIPTIONS 100 601-6030-551.50-30 TRAVEL-AIRFARE 800 601-6030-551.50-35 TRAVEL-COMBINED 1,600 601-6030-551.50-38 RELOCATION REIMBURSEMENT 2,000 601-6030-551.50-41 REGISTRATION FEES 2,200 601-6030-551.50-50 DUES 100

601-6030-551.50-55 MAINTENANCE AGREEMENTS 8,090 601-6030-551.50-56 MAINTENANCE CALLS 250 601-6030-551.50-65 PRINTING 30 601-6030-551.50-66 DUPLICATING 30 601-6030-551.50-70 LEASE-RENTALS 130 601-6030-551.50-73 RIGHT-OF-WAY RENTALS 5,000 601-6030-551.50-81 VEHICLE MAINTENANCE COSTS - 601-6030-551.50-91 MTR VEH-FUEL 2,500 601-6030-551. 50-92 MTR VEH-FLUIDS 50 601-6030-551.50-93 MTR VEH-OUTSIDE LABOR 200 601-6030-551.50-94 MTR VEH-OUTSIDE PARTS 300 601-6030-551.50-95 MTR VEH-INSIDE LABOR 500 601-6030-551.50-96 MTR VEH-INSIDE PARTS 240 601-6030-551.52-20 WORK COMP-MEDICAL 1,030 601-6030-551.52-21 WORK COMP-INDEMNITY 500 601-6030-551.52-22 WORK COMP-EXPENSE 150 601-6030-551.52-92 PROPERTY & CASUALTY INSUR 5,500 601-6030-551.60-11 OFFICE SUPPLIES 600 601-6030-551.60-12 OFFICE EQUIPMENT $5000 100 601-6030-551.60-14 COMPUTER SUPPLIES 5,000 601-6030-551. 60-15 ABSTRACTS 60 601-6030-551.60-19 DRAFTING SUPPLIES 750 601-6030-551.60-21 MAINTENANCE SUPPLIES - 601-6030-551.60-22 SMALL TOOLS 50 601-6030-551. 60-23 REPAIR PARTS 60 601-6030-551.60-24 UNIFORMS 240 601-6030-551.60-25 BOOKS 200 601-6030-551. 60-42 SAFETY SUPPLIES 50 601-6030-551.60-43 SURVEY SUPPLIES 375 601-6030-551. 60-70 MAINTENANCE PROJECTS 1,400


CAPITAL EXPENDITURES601-6030-551.70-10 VEHICLES 2,730 Partial use of existing pool car 601-6030-551.70-15 COMMUNICATIONS EQUIPMENT - 601-6030-551.70-20 COMPUTER HARDWARE - 601-6030-551.70-25 COMPUTER SOFTWARE 5,000 601-6030-551. 70-35 TOOLS & TEST EQUIPMENT 3,030 601-6030-551.70-99 TRANSFER TO WIP -


TRANSFERS601-6030-551.80-15 TRANSFER TO ELECT CONST (107,721)

• TRANSFERS (107,721)

••ELECTRICAL ENGINEERING 192,865 2.7 FTE - Assume 2 Staff Engrs + Contract help**ELECTRIC CONSTRUCTION/TRANSMISSION/DISTRIBUTION/ELECTRICAL ENGINEERING 2,236,561

METER READNG/INSTALLATION WAGES & BENEFITS601-6034-551.10-11 PERMANENT 60,772 1.3601-6034-551.10-12 TEMPORARY 6,017 601-6034-551.10-13 OVERTIME 2,514 601-6034-551.10-14 ON CALL/STANDBY 1,023 601-6034-551.10-15 CALL OUT 704 601-6034-551.10-31 TSFR TO ELECTRIC CONST - 601-6034-551. 10-32 TSFR CUST SERV TO WATER (29,794) 601-6034-551.20-21 FICA 5,280 601-6034-551 .20-22 PERA-REGULAR 1,184 601-6034-551.20-25 INSURANCE-HEALTH 6,244 601-6034-551.20-2 6 INSURANCE-LIFE 217 601-6034-551.20-27 PERA-IBEW 4,377 601-6034-551.20-31 NM RHCA INSURANCE 1,215 * WAGES & BENEFITS 59,752 1.3 FTE (includes $29.7k transfer to Water)

OPERATING EXPENDITURES601-6034-551.30-26 OUTSIDE REPAIR SERVICE 150 601-6034-551.50-05 TELEPHONE 800 one cellphone plan at $65/mo601-6034-551.50-30 TRAVEL-AIRFARE 600 One Training Trip601-6034-551.50-35 TRAVEL-COMBINED 1,350 One Training Trip601-6034-551.50-41 REGISTRATION FEES 2,500 One Training Fee601-6034-551.50-42 TRAINING MATERIALS 30 601-6034-551.50-55 MAINTENANCE AGREEMENTS 1,400 ????? Check with COB Metering601-6034-551.50-65 PRINTING 80 601-6034-551.50-91 MTR VEH-FUEL 5,305 601-6034-551.50-92 MTR VEH-FLUIDS 65 601-6034-551.50-93 MTR VER-OUTSIDE LABOR 150 601-6034-551.50-94 MTR VER-OUTSIDE PARTS 620 601-6034-551.50-95 MTR VEH-INSIDE LABOR 730 601-6034-551.50-96 MTR VEH-INSIDE PARTS 250 601-6034-551.52-20 WORK COMP-MEDICAL 1,200 601-6034-551.52-21 WORK COMP-INDEMNITY 400 601-6034-551.52-22 WORK COMP-EXPENSE 100 601-6034-551.52-31 GEN LIAB-PROPERTY DAMAGE 1,200 601-6034-551.52-92 PROPERTY & CASUALTY INSUR 100 601-6034-551.60-11 OFFICE SUPPLIES 180 601-6034-551.60-12 OFFICE EQUIPMENT $5000 300 601-6034-551.60-14 COMPUTER SUPPLIES 300 One New Handheld Reader601-6034-551. 60-21 MAINTENANCE SUPPLIES 800 601-6034-551. 60-22 SMALL TOOLS 75

601-6034-551.60-24 UNIFORMS 1,700 601-6034-551.60-40 ANIMAL FOOD 70 601-6034-551.60-42 SAFETY SUPPLIES 150 601-6034-551.65-30 UNION TOOL REIMBURSEMENT -

* OPERATING EXPENDITURES 20,605

CAPITAL EXPENDITURES601-6034-551.70-10 VEHICLES 50,000 601-6034-551.70-20 COMPUTER HARDWARE 10,000 601-6034-551.70-99 TRANSFER TO WIP -

•CAPITAL EXPENDITURES 60,000

TRANSFERS601-6034-551.80-20 TRANSFER FROM WATER (7,448)

601-6034-551.80-30 TRANSFER FROM WASTEWATER -

TRANSFERS (7,448)

**METER READNG/INSTALLATION 132,908 1.3 FTE (includes $29.7k transfer to Water) ELECTRIC METER SHOPWAGES & BENEFITS

601-6035-551.10-11 PERMANENT 57,771 1 FTE added to Bloomfield Meter shop (8FTE @ FEUS) 1601-6035-551.10-13 OVERTIME 1,810 601-6035-551.10-14 ON CALL/STANDBY 24 601-6035-551.10-15 CALL OUT 181 601-6035-551.10-31 TSFR TO ELECTRIC CONST - 601-6035-551.20-21 FICA 4,479 601-6035-551.20-22 PERA-REGULAR 667 601-6035-551.20-25 INSURANCE-HEALTH 4,689 601-6035-551.20-26 INSURANCE-LIFE 202 601-6035-551.20-27 PERA-IBEW 4,619 601-6035-551.20-31 NM RHCA INSURANCE 1,155

• WAGES & BENEFITS 75,596 1 FTE added to Bloomfield Meter shop (8FTE @ FEUS)

OPERATING EXPENDITURES601-6035-551.50-05 TELEPHONE 800 One Cellphone Plan a $65/mo601-6035-551.50-10 POSTAGE 12 601-6035-551.50-11 FREIGHT 250 601-6035-551.50-30 TRAVEL-AIRFARE 600 601-6035-551.50-35 TRAVEL-COMBINED 600 601-6035-551.50-41 REGISTRATION FEES 1,200 601-6035-551.50-42 TRAINING MATERIALS 180 601-6035-551.50-55 MAINTENANCE AGREEMENTS 4,200 601-6035-551.50-65 PRINTING 18 601-6035-551.50-81 VEHICLE MAINTENANCE COSTS - 601-6035-551.50-91 MTR VEH-FUEL 2,458 601-6035-551.50-92 MTR VEH-FLUIDS 24 601-6035-551.50-93 MTR VEH-OUTSIDE LABOR 720 601-6035-551.50-94 MTR VEH-OUTSIDE PARTS 480 601-6035-551.50-95 MTR VEH-INSIDE LABOR 300 601-6035-551.50-96 MTR VEH-INSIDE PARTS 144 601-6035-551.52-20 WORK COMP-MEDICAL - 601-6035-551.52-22 WORK COMP-EXPENSE - 601-6035-551.52-92 PROPERTY & CASUALTY INSUR 34 601-6035-551.60-11 OFFICE SUPPLIES 180 601-6035-551.60-12 OFFICE EQUIPMENT < $5000 60 601-6035-551.60-14 COMPUTER SUPPLIES 480 601-6035-551.60-21 MAINTENANCE SUPPLIES 600 601-6035-551.60-22 SMALL TOOLS 288 601-6035-551.60-23 REPAIR PARTS 600 601-6035-551.60-24 UNIFORMS 1,080 601-6035-551.60-42 SAFETY SUPPLIES 300 601-6035-551.60-70 MAINTENANCE PROJECTS 7,800 601-6035-551.65-30 UNION TOOL REIMBURSEMENT 300

OPERATING EXPENDITURES 23,708

CAPITAL EXPENDITURES601-6035-55l. 70-10 VEHICLES - 601-6035-551. 70-35 TOOLS & TEST EQUIPMENT 1,500

601-6035-551.70-53 ELECTRIC METERS 4,000

601-6035-551.70-99 TRANSFER TO WIP -

• CAPITAL EXPENDITURES 5,500

**ELECTRIC METER SHOP 104,804 1 FTE added to Bloomfield Meter shop (8FTE @ FEUS) **METER READNG/INSTALLATION /ELECTRIC METER SHOP 237,711

SUBSTATION MAINTENANCE WAGES & BENEFITS601-6036-551. 10-11 PERMANENT 25,290 601-6036-551.10-13 OVERTIME 1,512 601-6036-551.10-14 ON CALL/STANDBY 2,775 601-6036-551.10-15 CALL OUT 503 601-6036-551.20-21 FICA 2,274 601-6036-551.20-22 PERA-REGULAR 224 601-6036-551.20-25 INSURANCE-HEALTH 77 601-6036-551.20-26 INSURANCE-LIFE 89 601-6036-551.20-27 PERA-IBEW 2,091 601-6036-551.20-31 NM RHCA INSURANCE 506

• WAGES & BENEFITS 35,341 Assumes all Substation Maint contracted

OPERATING EXPENDITURES601-6036-551.30-25 LABORATORY/TESTING FEES 1,000 601-6036-551.30-26 OUTSIDE REPAIR SERVICE 1,000 601-6036-551.30-29 EQUIPMENT TESTING SERVICE 500 601-6036-551.30-82 WORK REQUEST LABOR 200 601-6036-551.30-83 CONTRACT LABOR 500 601-6036-551.50-05 TELEPHONE 500 601-6036-551.50-11 FREIGHT 500 601-6036-551.50-30 TRAVEL-AIRFARE 250 601-6036-551.50-35 TRAVEL-COMBINED 480 601-6036-551.50-41 REGISTRATION FEES 1,000 601-6036-551.50-42 TRAINING MATERIALS 200 601-6036-551.50-65 PRINTING 20 601-6036-551.50-71 EQUIPMENT RENTALS 2,500 601-6036-551.50-91 MTR VEH-FUEL 850 601-6036-551.50-92 MTR VEH-FLUIDS 20 601-6036-551.50-93 MTR VEH-OUTSIDE LABOR 60 601-6036-551.50-94 MTR VEH-OUTSIDE PARTS 300 601-6036-551.50-95 MTR VEH-INSIDE LABOR 150 601-6036-551.50-96 MTR VEH-INSIDE PARTS 50 601-6036-551.60-11 OFFICE SUPPLIES 50 601-6036-551.60-12 OFFICE EQUIPMENT < $5000 250 601-6036-551. 60-14 COMPUTER SUPPLIES 300 601-6036-551. 60-21 MAINTENANCE SUPPLIES 1,500 601-6036-551.60-22 SMALL TOOLS 1,000 601-6036-551.60-23 REPAIR PARTS 200 601-6036-551.60-24 UNIFORMS 500 601-6036-551.60-42 SAFETY SUPPLIES 500 601-6036-551.60-70 MAINTENANCE PROJECTS 2,500


CAPITAL EXPENDITURES601-6036-551. 70-10 VEHICLES 3,500

601-6036-551.70-35 TOOLS & TEST EQUIPMENT 8,000 601-6036-551.70-99 TRANSFER TO WIP -

* CAPITAL EXPENDITURES 11,500

* *SUBSTATION MAINTENANCE 63,721 Assumes all Substation Maint contractedRELAY DIVISION

WAGES & BENEFITS601-6037-551.10-11 PERMANENT 74,889 3/4 FTE but would contract out601-6037-551.10-13 OVERTIME 5,279 601-6037-551 .10-14 ON CALL/STANDBY 4,163 601-6037-551. 10-15 CALL OUT 980 601-6037-551.10-31 TSFR TO ELECTRIC CONST (24,961) 601-6037-551.20-21 FICA 6,414 601-6037-551.20-22 PERA-REGULAR 1,686 601-6037-551.20-25 INSURANCE-HEALTH 3,008 601-6037-551.20-26 INSURANCE-LIFE 262 601-6037-551.20-27 PERA-IBEW 5,166 601-6037-551.20-31 NM RHCA INSURANCE 1,498

• WAGES & BENEFITS 78,384 3/4 FTE but would contract out

OPERATING EXPENDITURES601-6037-551.30-82 WORK REQUEST LABOR - 601-6037-551.50-05 TELEPHONE 800 One Cellphone plan at $65/Mo601-6037-551.50-11 FREIGHT 200 601-6037-551.50-30 TRAVEL-AIRFARE 600 601-6037-551.50-35 TRAVEL-COMBINED 1,200 601-6037-551.50-41 REGISTRATION FEES 1,200 601-6037-551.50-42 TRAINING MATERIALS 250 601-6037-551.50-55 MAINTENANCE AGREEMENTS 700 601-6037-551.50-65 PRINTING 20 601-6037-551.50-81 VEHICLE MAINTENANCE COSTS - 601-6037-551.50-91 MTR VEH-FUEL 1,997 601-6037-551.50-92 MTR VEH-FLUIDS 20 601-6037-551.50-93 MTR VEH-OUTSIDE LABOR 60 601-6037-551.50-94 MTR VEH-OUTSIDE PARTS 300 601-6037-551.50-95 MTR VEH-INSIDE LABOR 250 601-6037-551. 50-96 MTR VEH-INSIDE PARTS 250 601-6037-551.52-92 PROPERTY & CASUALTY INSUR 21 601-6037-551. 60-11 OFFICE SUPPLIES 30 601-6037-551.60-12 OFFICE EQUIPMENT < $5000 250 601-6037-551.60-14 COMPUTER SUPPLIES 300 601-6037-551.60-21 MAINTENANCE SUPPLIES 500 601-6037-551.60-22 SMALL TOOLS 500 601-6037-551.60-23 REPAIR PARTS 1,000 601-6037-551.60-24 UNIFORMS 900 601-6037-551.60-42 SAFETY SUPPLIES 200 601-6037-551.60-70 MAINTENANCE PROJECTS 18,935

OPERATING EXPENDITURES 30,483

CAPITAL EXPENDITURES601-6037-551. 70-10 VEHICLES 35,000 1/2 Small svc truck601-6037-551.70-15 COMMUNICATIONS EQUIPMENT 750 601-6037-551.70-20 COMPUTER HARDWARE 750 601-6037-551.70-25 COMPUTER SOFTWARE 28,500 601-6037-551.70-35 TOOLS & TEST EQUIPMENT 5,000

601-6037-551.70-99 TRANSFER TO WIP - •CAPITAL EXPENDITURES 70,000

**RELAY DIVISION 178,867 Assumes all Relay is contracted (3/4 FTE)SYSTEM CONTROL CENTER WAGES & BENEFITS601-6040-551. 10-11 PERMANENT 117,740 1.5 FTE (16 FTE @ FEUS) - 7 days/week with on-call601-6040-551. 10-13 OVERTIME 1,508 601-6040-551.10-15 CALL OUT - 601-6040-551.10-25 RETIREMENT - 601-6040-551.20-21 FICA 8,837 601-6040-551.20-22 PERA-REGULAR 8,695 601-6040-551.20-25 INSURANCE-HEALTH 9,998 601-6040-551.20-26 INSURANCE-LIFE 414 601-6040-551.20-31 NM RHCA INSURANCE 1,901

• WAGES & BENEFITS 149,093 1.5 FTE (16 FTE @ FEUS) - 7 days/week with on-call 1.5

OPERATING EXPENDITURES601-6040-551.30-82 WORK REQUEST LABOR - 601-6040-551.30-90 OTHER PROF/TECH SERVICE - 601-6040-551.40-40 BUILDING REPAIR {TAXABLE} 250 601-6040-551.40-70 REGULATORY PENALTIES - 601-6040-551.50-05 TELEPHONE 2,600 601-6040-551.50-30 TRAVEL-AIRFARE 3,000 601-6040-551.50-35 TRAVEL-COMBINED 3,300 601-6040-551.50-41 REGISTRATION FEES 12,500 Initial Registrations may be numerous601-6040-551.50-42 TRAINING MATERIALS 2,500 Hgh Initial Training need601-6040-551.50-43 CERTIFICATION SCHOOLS 1,200 601-6040-551.50-50 DUES 10,420 601-6040-551.50-55 MAINTENANCE AGREEMENTS 12,000 601-6040-551.50-65 PRINTING 10 601-6040-551.50-66 DUPLICATING 10 601-6040-551.50-91 MTR VEH-FUEL 100 601-6040-551.50-92 MTR VEH-FLUIDS 10 601-6040-551.50-93 MTR VEH-OUTSIDE LABOR 40 601-6040-551.50-94 MTR VEH-OUTSIDE PARTS 30 601-6040-551.50-95 MTR VEH-INSIDE LABOR 100 601-6040-551.50-96 MTR YEH-INSIDE PARTS 40 601-6040-551.60-09 CONFER/MEETING SUPPLIES 15 601-6040-551. 60-11 OFFICE SUPPLIES 400 601-6040-551. 60-12 OFFICE EQUIPMENT < $5000 - 601-6040-551. 60-13 JANITORIAL SUPPLIES 20 601-6040-551. 60-14 COMPUTER SUPPLIES 920 601-6040-551.60-21 MAINTENANCE SUPPLIES 800 601-6040-551.60-24 UNIFORMS 90 601-6040-551.60-42 SAFETY SUPPLIES 10 601-6040-551.60-70 MAINTENANCE PROJECTS 8,500 601-6040-551. 60-77 PURCHASED POWER-FIRM - Will be determined thru Analysis601-6040-551. 60-80 SAN JUAN TRANS CONTRACT - 601-6040-551.60-81 ELEC TRANS & REGULAT CHGS 23,000


CAPITAL EXPENDITURES601-6040-551.70-10 VEHICLES - 601-6040-551.70-20 COMPUTER HARDWARE 25,000 New Control System computers601-6040-551.70-99 TRANSFER TO WIP -


**SYSTEM CONTROL CENTER 255,958 1.5 FTE (16 FTE @ FEUS) - 7 days/week with on-call**SUBSTATION MAINTENANCE /RELAY DIVISION/SYSTEM CONTROL CENTER 498,546

**ELECTRIC ENTERPRISE EXPENTITURES 3,644,972 3,644,972 Total of 14.5 FTE Addition vs 153 for FUES (excluding Plant Ops) 14.5

****ELECTRIC ENTERPRISE - MARGIN 8,211,412$ Comparison to 10% of the FEUS Total Electric Enterprise Fund

ALL wages & Benefits 1,416,373 14.5Average Annual Wages per FTE (excluding 25% Benefits Loading) 78,145

Operating Expenses 745,252

Capital Expenditures 1,281,230

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