QuickBooks desktop 2023. Enter purchase order or PO. Let's do it within 2-its QuickBooks desktop 2023. Support Accounting Instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. Here we are in QuickBooks desktop give great guitars practice file we started up in a prior presentation going through the setup process we do every time maximize the homepage to the gray area view drop down no team we got the hide icon bar open windows lists checked off open windows open on the left hand side reports drop down company and financial let's open the P&L profit and loss income statement change the range from 010123 to 123123 nothing is in it thus far going to the reports drop down again company and financial this time the balance sheet and then let's customize that one for the range change from 010123 to 123123 January to December 2023 fonts and numbers to increase that font size to 12 OK yes and OK. In prior presentations we imagine that we had an accounting system outside of QuickBooks we transferred the ending balances from the prior system to the beginning balances as of 1231 2022 and then we're going to start our current data in the system 2023. We then imagined the kind of transactions that would be in place oftentimes when starting a new business which will be financing the business. So we then thought about us as the owner putting money into the business and we thought about taking a loan out increasing the checking account increasing our cash. We then took some of that money and we put it into an investment as we're holding on to it to see if we can get some return on it as we're holding on to it. Then we bought the necessary equipment which is typically the next step that we're going to use to generate revenue that being the furniture and fixture. Now we're going to be thinking about buying the inventory which is of course the next thing we need to stock up or get our hands on before we can start selling it and making money. So we're still not to the point where we're really generating revenue. We're still at the point where we financed the business. We're doing all the startup process. We got the we're imagining we got the store and we've got the furniture and equipment the fixed assets that we need to generate revenue. Now we got to buy the inventory of course. Now if I go back to the home page you'll recall we did some discussions on the different kind of inventory processes that you could be using. So if you're tracking inventory within the system first of all you might be in a type of business that does not have inventory a service business. We will record some service transactions as well which is typically generally a little bit easier. If you have inventory then you might use a periodic inventory system or a perpetual inventory system. If you use a periodic inventory system then you might not set up the tracking of inventory within QuickBooks but rather track it outside on something like an Excel sheet. And then you might just enter your sales basically as you normally would with a non inventory tracking item or service item. And then you would adjust your inventory amounts periodically in accordance with the physical counts that you will do of inventory possibly nightly possibly weekly possibly monthly. That's one method you can do if you're tracking inventory within the system you're using a perpetual inventory system. QuickBooks usually uses the flow assumption of an weighted average flow assumption. You can see that you're tracking inventory because it'll have this top line on the vendors area. So let's just recap on the preference related to that by going to the edit preferences. And then if we're in the inventory items here we're in the company preferences we got the inventory turned on that needs to be checked off in order for us to have inventory tracking within the system. The tracking of the inventory will not only record the balance sheet account of inventory but also the sub account of the items of inventory we have. So then the normal process when we purchase the inventory will be the purchase order then the bill and then we're going to pay the bill basically the way we normally would. Now you might just say if you might be in a situation where you don't have a purchase order and you're just paying for the inventory as you as you buy it. In which case you might use just a standard bill form for example which would increase accounts payable and record the inventory that you're purchasing to an item. Track it in the payable and then pay it or you might use just a check type of form in a similar fashion when you purchase the inventory. But you might be in a situation and this would usually be one where you have a bit more leverage on the purchasing side where you have a purchase order. A purchase order is more of a unique form because unlike most forms it doesn't actually have a financial transaction related to it it's just a request for inventory. So remember if you're purchasing something like from Amazon on the personal side of things from an online store. You pay for it at the point in time you order it and therefore you have a financial transaction even though you have not yet received whatever you paid for. But with a purchase order that is a situation let's say we're buying our guitars from from Epiphone or whatever. We're going to request the guitars from Epiphone but we're not going to pay for them until they get to our warehouse which means we have a little bit more leverage.  So that means at the point in time of the purchase order we have not made a payment and we don't have the inventory therefore no financial transaction. But we want to track the fact that we made the request so that we can then tie it to the bill that we will receive. We'll imagine we've received the bill with the box of guitars that we're going to receive in the future. That's the general process. Let's open up a purchase order. We're going to imagine that we're going to be ordering our guitars from Epiphone in this fashion. So we're going to say Epiphone do I have that vendor yet. We do. That's the one vendor we've done business with already. So we're going to say Epiphone. I'm going to say keep the shipping as is because we would like it to be coming to us at our address here. We got the template. We're going to use the standard template. We're going to say for our practice problems can be 01 let's say 12 23 01 12 23 will keep the purchase orders will be numbered for us. The vendor doesn't have any other information here because we just put the name on the vendor information. But if we're emailing this to them that might be all we need. We need it to be shipped to us. So we're going to need our address that we want it to be shipped to. So you get the other options for ship to options if you add other options for the shipping. If you have different locations and then we're going to add the items. So these are the inventory items that we set up. You'll recall in the lists the item lists where we've got the inventory items we're considering now. So I'm going to say that we're going to be purchasing. I'm just going to start typing them in an ELP tab that pulls in the Epiphone less Paul quantity. I'm going to say 20 of those 20 of those. 20 times $400. That's the cost. Not the sales price is going to be $8000. We're not purchasing it for a specific customer in this case. We may purchase it for a specific customer in the future. If someone comes into the store and they say I want this particular guitar. I want it in plaid or some weird color or something. We don't have that. Maybe we then order it from Epiphone specifically for them tracking the customer as we go. Epiphone our vendor the person we're purchasing the guitars from doesn't need the customer information clearly. But we want to track it possibly internally so that we when we get the guitar can turn around and sell the guitar to the customer we bought it for. But we're just buying these for the shop here. So this is going to be an EPR. Let's say that's going to be an Epiphone Riviera. Let's say we're going to get five of those at 440 which is driven by the thing and that gives us to 20 driven by the item. The thing EPS H that's going to be an Epiphone semi hollow body. Let's say we were going to buy four of those and that 320 cost 1000 to 80. And then we're going to say we buy an EPS P which is an Epiphone standard pro. Let's say we buy five of those and they are the 2400 because they're 480 times 5. So that comes out to 13,880. Now everything that we see on this purchase order would indicate to us there should be some impact on the financial statements because it looks like there would with all these numbers on it. But no, because it's going to be the open it's going to be the purchase order that is open. And we're going to tie it to a bill so no financial transaction to it. So I'm going to save it and close it just to check that out. I'll add the Epiphone. Did I misspell Epiphone? If I misspelled anything I apologize. And so we're going to go back on over here now when we create the bill next time we're imagining we will receive the Epiphone guitars. And if I type in Epiphone it's going to say here's a purchase order and we'll be able to populate the bill from the purchase order. When we get the guitars imagining that there's a bill inside the box of the guitars telling us you owe us money. We can also track the purchase order by going to the vendor center here or vendor center drop down. And we can take a look at the purchase order Epiphone. There's the bill right there. So I'm sorry. There's the bill. We want to see the purchase order. Let's go to the transactions all transactions and let's say we need to say all dates. There's the purchase order. I had to change the date because I'm working in the future. And then I can also see it in the transaction area here. And so we've got the purchase orders up top and we're searching the purchase order. So this is purchase order and the date for all transactions. So if I go into that there's the purchase order. Okay let's do a couple more now I'm going to close this out. I'm going to say okay let's go into the home page and let's do another one. Now note you can go into the purchase order here. You can also go into the vendor center that we had open and you could go to new transactions. So there's multiple places you could go to add a purchase order. So I could say new and I could say that we want to have a purchase order from here. So go into the same form type. Now I'm going to add another vendor just as we go. So I'm going to add the vendor as we go. I'm going to say now I want to buy from Gibson USA. Again hopefully I'm spelling these properly. I'm going to say tab. Add the vendor as we go. If it's a large vendor that we're doing a lot of business with we might want more detail on the vendor. So we might want to do a more complex setup to get the address and all that kind of stuff. But I'm just going to do a quick add for the purposes of our practice problem. We're going to say this happens on 112 as well. And so we're going to say Gibson ship to here we're requesting a new item. I don't think I have a do I have a GI you yeah we do a GI USA Gibson USA is what we want. Then we're going to order three of them at $304 that's the cost not the sales price. No customer will deal with the customer field later that comes out to 912. Once again no transaction related to it. It's just a request for the guitar. So I'm going to do another one as we go. So I'm going to say save and new this time save a new instead of save and close. And let's say we're going to we're going to say this one is from diamond.  I'm going to do a quick add for them. And we're going to say this one also on the 12th we're just ordering all of our guitars. This time we're going to order a ukulele though I think this is a ukulele a diamond head ukulele. I'm just making these up by the way I'm just using random guitars here so this is not the actual price or anything of these items. So 74 72 ukuleles are nice though we got we got three of those that comes out to 72 for the ukuleles. All right let's do another one I'm going to say save and new again save and new and I did I miss belt diamond head diamond diamond. I'm going to keep it as it is here we go we're going to say the next one we're going to also buy another one from Epiphone again who's our major vendor basically. And this will be on the 13th let's say and this one is going to be we want an ELP that's an Epiphone Les Paul and we want 50 of those 400. We're going to buy these specific for another customer we're going to imagine which is going to be Eric music. So now now we have this customer came in and said we want 50 ELP guitars and we're going to say OK we'll order them for you specifically. So now we have a customer that we hope to sell to and we're now going to our vendor Epiphone ordering these guitars specifically for them. I'm going to add the customer in the purchase order even though the vendor doesn't need that this is not information for the vendor. It's for us to track so that when I get the receipt of these 50 guitars I can turn around and make an invoice with it. So I'm going to say this is going to be for Eric music. I don't think I have that yet. So I'm going to add a customer it's going to be Eric music which is just a generic name. Can I spell something right in this practice problem. Eric music will just keep it at that. Now clearly if it was a new customer we would probably want more detail about their information so we can contact them their phone number their address or what not. Send them our mailing letter and whatnot. But I'm just going to do the minimum for our practice problem to link out these forms. And so we're also going to say he wants it and an EPS H which is an Epiphone semi hollow body 10 of those which I'm also going to track to Eric music. That's so the new thing here is we've got that customer field populated. Okay so let's do another one now. I'm going to say save a new again save a new this one is going to be for Gibson guitar again Gibson guitar. And we'll bring it on down and say that this one's going to be a new item. So now we're going to add the inventory item on the fly as we go here. So I have never ordered this particular guitar before I don't have it set up in the item list. We could go to the item list and set it up here but I'm just going to set the new item up as we go. So I'm going to say new and it's going to be an inventory part the item I'm going to call it a GSB tab tab tab. The description is going to be a Gibson GSG a Gibson SG. I'm just going to call it. Okay. Gibson SG is going to be for 590 cost 598 cost a good sold will be the expense account when we hit when we enter an invoice or sales receipt. The preferred vendor we could say is Gibson and then it's going to be sale and we're going to sell it for 777. We're going to say 777 sales price. It's going to be a taxable item. And then we're going to say it's going to go to our sales account when we create an invoice or sales receipt making the sales document inventory is going to be tracked in inventory. I'm not going to put up a minimum reorder point. That's when that'll tell us or Warner's when it's getting low the amount on hand. We don't have any on hand right now. It's the first time we bought them total value as of date. So I think that's good. We'll just keep it there and say OK. And then hold on a second. I put a bison. I'd be in. Am I going to I have to fix that. So I'm going to go to the list drop down item list and let's just go into this item and double click on it. And it should be a G here. It should be a G right. A G for crying out loud. You got to fix something. Don't you. I'll just keep. I'll just keep that. I'm going to say close. OK. Back to the purchase order. So let's put it in here again. And I think it should populate properly but I already have it. So there's a G. OK. So let's how many of those we want. We're going to want 10 of those. We're going to say and this is going to be bought for a specific customer again. Let's just add the new customer. It's going to be music stuff store which is a very generic name. I know but hope and so we'll set it up quick setup. So there it is. So that looks good. So let's save it and close it finally. And yes I see. I'm just going to add OK. So then if I go to the home page we expect we bought all these guitars or we're ordered them. We haven't bought them yet. We haven't paid for them. We expect hopefully they're going to come into our store our location with a bill attached to them and then we'll enter the bill when we receive them. That's going to be the next link in the chain here. When we get the box of guitars we can count them. We can see if they tie out to the purchase order. We might have some internal control checks if we have a warehouse so that they can count the amount that they receive. And then we can and not tell them how much the purchase order was right. And we can then tie it to the purchase order to see if everything links up properly and so on. And so if if I go to then the vendor the the vendor center now I can look at these purchase orders by people that we purchase from. So here's Diamond. I think there should be a D there but Diamondhead and so we've got the purchase order here. We've got Epiphone with the purchase order Gibson and so on. We can also look at the transactions and the purchase orders. We can sort those that are open. They're all open at this point in time. And as we receive these guitars in the future we can locate those items here and see and tie them out to the purchase order. We can tie them out to here or we can just basically say we're going to enter the bill. And basically when we type in any of those particular vendors it'll it'll ask us if we want to use the purchase order to populate the bill. I'm not going to do that now. We're going to wait. That's what we get to do next time.  Hold off. That's what we do next time.


meeting off. It's a welcome everybody to the October meeting with the Burlington Board of Lecture Commissioners. We meet every generally every second Wednesday of the month at 5 30 here online now these days. So for any folks out there that might be that might catch this later on YouTube on the channel 17 site to be aware that we welcome your input, your thoughts, concerns, and adaboys and are always welcome here to express those and have a seat at the table. That being said, we'll start off the the meeting here with the agenda. Are there any changes or deletions, additions to the agenda? Hearing none, we'll move on to the minutes of the September 9th meeting. Are there any changes, concerns, additions, subtractions to that? None for me. Hearing none, I'll entertain a motion on accepting the minutes as represented. I hope that we accept the minutes as presented. Second. We have a second and so let's we'll vote on that by roll call. Commissioner Sagman. Hi. Commissioner Herndine. I'm. Commissioner Moder. Hi. Commissioner Whitaker. Hi. Motion passes. Thank you. Thank you, folks. That's the meeting. Item number three will be the annual audit presentation from KPMG and I'll let you folks take it away. Great. So good evening, folks. For the record, my name's Brock Romano. I'm the lead audit partner for the audit at the Burlington Electric Light Department. Joining me is Heather Cooney. Heather, I think, is a more familiar face to some of the folks on present. Heather has worked as the engagement manager for the past several years. So I can see that somebody is controlling the handout, which is excellent because if you left it in my hands, we might have some challenges. So we've got a document that we have to kind of walk through some of the highlights. Andrew, just and or Darren, are you folks going to walk the commissioners through the draft funding statements and do you have to do that prior to or after we make our presentation? Can everyone hear me? I'm getting a little bit of feedback. So back in August, we reviewed the preliminary unaudited financial statements. So we are not going to walk through the financial statements today. We provided a June or the FY20 financial statements or the unaudited ones back in August provided an update back in September. So I will give an update on the results stand now, but we're not going to do that. Once the financial statements are issued, we'll provide the face of the financial statements to the commission and some metrics for next month's packet. But with that, I'll just give a quick update of the FY20 results. So where we were had a net loss of $1.2 million and in last month's meeting, I mentioned that we had two open journal entries, one relating to OPEB and relating to booking a regulatory asset, what we received an accounting order for relating to capitalization. Both of those entries have since been recorded and that lands us at a net loss of $972,000 for FY20. But with that, I'll turn it over to Heather and Brock to walk through. Heather or Brock, did you want to walk through the presentation? Yeah, I'll start, Andrew, and then I'll transition to Heather. But so for the folks following online, just our handout, Andrew, are you controlling the slides as well? If we could go to the next one, that'd be great. So again, we're going to have some high-level comments on our audit, highlight some of the significant focus areas of the audit, and then obviously would welcome any questions management, Andrew, or the commissioners have. So just getting into the presentation, in terms of KPMG's commitment, and this is a commitment to all of our clients, not just to the Electric Light Department, is a quality service, quality audit done in a transparent way. We do focus or we do employ what we call a risk-based audit strategy. That means we're not auditing every account, every dollar of your fund-adjust statements, but based upon risk characteristics, dollar size, auditor judgment, applying audit procedures to selected accounts, and Heather will go through the areas of major focus during this year's audit. And then obviously having people that are skilled and qualified in both GASB reporting, regulatory financial reporting, given how the regulators kind of impact the flow of information throughout your financial statements. So if we could go to the next slide. So obviously COVID-19 has been the elephant in the room. KPMG, like many large professional services firms, has stood up a portal where management, clients, management, audit committee members, commissioners, regulators, legislators can go and access a library of information. I'm not going to go through specifics, but I do think for those folks that have an interest in how COVID-19 is impacting the auditing community and our clients, this is an excellent and comprehensive portal. Clearly, we were forced to do this audit completely remotely. Something our technology and your technology allows, I will tell you it gets interesting when you have to observe an inventory remotely, but the profession is finding a way with the technology and management was very patient and accommodating to us as we work through a fully remote environment for this year's audit. In terms of if we could go to the next page, please, Andrea, thank you. So here we have a summary of audit results and whenever we meet with a governing body, whether that's a board of commissioners, a legislative body or an audit committee, we're required to have certain communications to that governing body. And I'm going to go through many of those in summary fashion in a second, but on this slide and the next slide, next two slides actually are those required communication. In terms of where we are in the audit, we expect to issue what we call an unmodified opinion on your financial statements. I think I grew up in an environment where we call that a clean audit opinion. If that's a more familiar term to folks on the commissioners, board of commissioners, I think that's something you should expect for management. If there were a situation where we were contemplating an unmodified opinion, we would be having a conversation long before this particular meeting. We do have a few cleanup items that we're working on. Management representation letter is a significant part of the audit evidence we gather that is outstanding. I'm just going to tick through a few of these items on this list here. In terms of significant unusual transactions, if there were those type of transactions, we would be obligated to discuss them with the governing body. Significant uncorrected audit adjustments or corrected audit adjustments, those are situations where we have suggested an adjustment to the financial records of the light department. Sometimes those adjustments are not recorded. We call those uncorrected audit statements. Sometimes they are in fact recorded by management. This year's audit, there were no such proposed adjustments, whether recorded and or uncorrected or waived, as we like to call them. I've covered the audit as a report. In terms of control observations, another key element of the audit is the assessment of the department's internal control structure. Unlike our SEC clients, we do not opine on internal controls, but we do assess them as part of our audit. If there were severe control deficiencies and severe deficiencies, by that I mean material weaknesses or significant deficiencies. We would be communicating those here. There were no deficiencies notified, identified during this year's audit. I think that's a good testament to the level of attention that's paid to financial reporting and internal controls by your management team. If we could go to the next slide, please. Thank you, Andrea. Again, here, just continue with required communications. In terms of significant accounting policies, significant accounting estimates, none that I want to bring to the attention of the commissioners. I will tell you that we sometimes describe a client's appetite for aggressive internal control, excuse me, aggressive accounting policies and or aggressive significant accounting estimates on a scale, and sometimes we would share with governing bodies, whether a particular client had aggressive policies, particularly in the area of recognizing revenue and or deferring liabilities and expenses. I will tell you that there are no such aggressive accounting policies that we've identified during past audits nor during this audits. Heather is going to cover some of the areas of significant audit focus. I'm just going to complete this slide in the next by saying that there are no matters that that we would want to bring to the attention of the commissioners during the conduct of our audit. We've got great cooperation. I think when Heather walks through the audit procedures, you'll see the depth and detail that we went through. There is a slide in the back of the deck. I'm going to pull forward and talk about it now. Andrea, you don't have to flip to it, but there is a slide on independence. One of the cornerstones of what we do relates to independence. One of the matters that we communicate with the governing board is the fact that we were independent during the audit and we're independent now, meeting both in terms of appearance and in services. With that, I'm going to turn it over to Heather and have her walk through some of those areas of emphasis and then invite folks to ask whatever questions they may have. Heather, if you wouldn't mind. Thank you, Brock. Beginning on slide six, we start our review of our audit results for our areas of emphasis. These areas should look very similar to what we had reviewed in the past if we can move forward just one slide. Andrea, thank you. The first area we've identified within here relates to accounts receivable and revenue. As part of our test work with this area, we do select a sample of customers and confirm their outstanding balances. This year I think was the first year we've ever had a 100% return rate on that, so it was very encouraging. We also review and test the accuracy of customer billings to ensure that the approved electric rate was used. We review renewable energy credit sales and other revenues to ensure that the amount collected was accurate and properly supported. We also do a comparison between kilowatt-hour sold and kilowatt hours purchased and produced to make sure that that appears reasonable. Finally, we do look at the reasonableness this year of the deferred revenue portion relating to the EEU, which was a new transaction this year. Cash and investments is another area that we look at. As part of this audit area, we do obtain third-party confirmations for all cash and investment balances. This would include the confirmation of the balances relating to transco and velco investments and the related dividends received. We did want to highlight that these investments are carried at cost. We review the financial statements to ensure that the financial statements contain an accurate presentation as well as the appropriate disclosures have been included relating to cash and investment. Utility Plant and Service is the next area. For utility plant and service, we do obtain a roll forward looking at additions, material additions, and deletions that took place during the year. We select a sample of those material additions to ensure that they're properly supported and should have been been capitalized. We look at the associated depreciation expense and we look as far as the outstanding debt is concerned. We do also obtain confirmations for all debt and those confirmations would include not just the outstanding bonds, but as well as any letters or lines of credits. We review the department's compliance with financial debt covenants. And similarly, with the other areas, we look at the overall presentation and disclosures of debt within the financial statements. Expenses and inventory, we do perform test of details related to payroll expense. And we also test the existence and accuracy of operating expenses through test of details, including purchase power expenses, which is a significant line item on the financial statements. As Brock had mentioned, we do perform an inventory observation, which was unusual this year because it was fully remote and definitely want to add my thanks to the department for working with us on that. I think it was the first inventory observation that our office here in Burlington had done remotely. So I think it went pretty smoothly. So thank you. And in relation to the woodchip inventory, we also look at the reasonableness of the consumption and purchase of woodchips throughout the year. On the next slide, you can move forward one. Thank you. Pension and post-retirement benefit plans is the next area. So we do involve a KPMG actuary who does review the actuarial report for the pension plan to ensure that the plan assumptions and the liability of the plan appear reasonable. And we test pension contributions as well as the post-employment contributions. And when you review the financial statements, you'll note that the disclosures for both of these areas are quite significant. So we do review the disclosure requirements and ensure that the information has properly been disclosed within the financial statements and agree to the actuarial reports for both the pension and the post-employment, post-retirement plan report. And then finally, the other areas of emphasis, as we've said throughout each of these areas, we do perform a detailed review of the financial statements and the notes to ensure that they do conform with GAP as well as other industry practices. We also reach out to the attorneys in which the department has utilized during the year to obtain legal letters to ensure that there are any potential assessments or claims judgments against the department that should be disclosed or accrued for within the financial statements. We review other disclosures and commitments and contingencies as well as discussed with management subsequent events to determine if there are additional items that can be disclosed within the statements. And finally, we will be obtaining a management representation letter once all of our procedures are performed and prior to the issuance of the audit. So I think that walks us through the areas of emphasis. Does anyone have any questions on those areas? Thank you. I think that ends my portion of the prepared remarks. Yeah, I think Heather, thank you. So if there's any questions, happy to answer them. So yeah, the floor is up. Wish I could make an audit more exciting, but the optimal answer when you talk to accountants and I think attorneys is if it's boring, it's a good meeting. If it's exciting, trust me, I've been in meetings with governing bodies where accounting gets exciting and it's typically not good news. So Bob, I'm seeing you show up in the teams on two different participant lines and I'm not sure if that's what's causing the echo and he disappeared. We'll wait. We'll hang up. Hopefully he's trying to come back. Do we have any idea if he's coming back, Laurie, or if he's still connected? I can try and call him, but I'm not sure. Let me see if I can call him. Here we go. Okay, how's that? How is that? Much better. All right. Trivial question. What is a management representation letter? Which way does it go? So excellent question. So that is a letter signed by senior members of management that's provided to us. The auditor is KPMG. And so the underlying premise in a set of financial statements is that the financial statements themselves, including all of the notes, are the domain of management. And I sometimes like to point out, and I'm looking at 52-page report, there's just a couple pages that belong to KPMG. That's our opinion. The rest of the document belongs to management. So management makes a representation to us that the financial statements are complete, that there are no issues that would need to be brought to the attention of auditors so that we could discharge our responsibility under professional standards. So it is a required communication required by the profession, not required by KPMG, but required by the accounting profession as a condition of every audit. So it's not unique to you folks. It's just something that happens in the normal course of business between management and accounting firm. Thank you. Other questions? Any from the management? All right. So we have set aside some a chunk of time for the commission to have a discussion with the auditors. Given what they've told us, however, I just wanted to take a straw. Do we feel like we need that? I know that's typically something we've done before, but I've always done. We've certainly set it aside. But what's everyone's feeling about having to necessarily take that 10 minutes and sit here and look at each other and get to know each other better? Or I mean, this is certainly a pretty stellar report. And so whatever. I throw it out to commissioners if we should take that time. Okay. I have two answers to that question. One is sure we can skip it. On the other hand, if there was something that was controversial, the person who would argue, no, we can skip it would be pre-identified as the complainer. The way to avoid that as a matter of pattern is to go into it automatically anyway. Okay. That seems reasonable. So why don't why don't we do that? And yeah, I guess that's a yep. I can buy into that argument. Anybody else? Right. Why don't we do that? It's reasonable enough. Are we going to executive session 10 minutes? I've got 555 on the clock. So if Lori can set us up for that, then we will reconvene. I sent you the wording for the executive session with your packets. Okay. Does anyone have that? Somewhere. I have it. Do you want me to? Yes, that would be lovely. That'd be great. Okay. I've got it. I moved that the commission enter into an executive session to discuss the KPMG information with the commission under the provisions of Title I, Section 313, Subsection A1A of the Vermont Statues. Do we, that's fine. No, we have to read the prior statement about premature general public knowledge. Oh, okay. I can read that one too. Yeah, the entire, the entire. It's a whole arch. Should I start from the beginning? Sure. Sure. I moved to find that premature general knowledge of KPMG's evaluation of BED's management with the commission would clearly place the Burlington Electric Department at a substantial disadvantage per Title I, Section 313, Subsections A1A3 of the Vermont Statues, because such information may risk contractual relationships with BED counter parties in the regular sale and purchase of energy and is considered an evaluation of BED personnel. I moved that. Keep going. We need a second. Second. We have a second. We'll roll call vote. Commissioner Shagman. Hi. Commissioner Herendine. Hi. Commissioner Modi. Hi. Commissioner Whitaker. Hi. Thank you. Now you can do the next one. I moved, I moved that the commission enter into executive session to discuss the KPMG information with the commission under the provisions of Title I, Sections 313, Subsection A1A of the Vermont Statues. Second. Second. Second. Commissioner Shagman. Commissioner Shagman. Commissioner Herendine. Hi. Commissioner Modi. Hi. Commissioner Whitaker. Hi. Okay, we're now in executive session and we will be back with everyone shortly. Okay, Scott, could you... All right, so does everybody looks like Channel 17 is back and looks like most of our friends are back in here. Yes. Could you tell me who made a motion to executive session? Bob made the motion. Bethany seconded with the unanimous I at the end of that. So we'd say it's probably 606. Okay, thank you. So now that we're back in public session, I would entertain a motion to accept the audit. I moved that we accept the audit. Second. There was second and all in favor by roll call. Commissioner Shagman. Commissioner Herendine. Hi. Commissioner Modi. Hi. Commissioner Whitaker. Hi. Motion passes. Thank you. Thank you guys again at KPMG. Thank you very much. Thank you so much. Enjoy your meal. Thank you so much. Bye-bye. Bye-bye. Thank you. All right, we'll move on to the next item on the agenda, which is the public forum. Do we have anybody here? I'm guessing not. No, there's no one from the public. But again, for the sake of folks that are going to watch, hopefully watch this on YouTube at some point on Channel 17. We are your electric commission in Burlington. We meet every Wednesday at every first, or second Wednesday of the month. 5.30 here online, and hopefully eventually back at 5.85 pine. We welcome your comments, your concerns, your atta boys. Bring it on. We'd love to have you. There's always a seat at the table. Moving on. Commissioner's Corner. This is the part of the meeting where commissioners have an opportunity to present issues, questions, things happening over the last month. Just kind of an open what's up. The floor is open. Bob, I'd like to thank James and Gabrielle, who's not here tonight, for good reason. We had a three-some discussion of the financial report on McNeil. I raised questions about that. I'm satisfied with what we discussed, and I just want to extend my thanks for that. Also, I want to, as they say, send a shout out to the mayor's 6th October release about net zero energy, particularly about the $100 per ton CO2 equivalent is being folded into policy. I also took another look at the PowerPoint. I think it might have been from July, but maybe it's been updated anyway. I thought it was great. I guess I never looked carefully enough at it. It's really powerful. I even sent it to some people in Montana who work in the energy business. It's great. So, heads off with that. Now I'll point out that the logo still has no human being in it, and I want to hope that it will change that. It's got wind towers and solar panels and bicycles and electric cars and all that, but no people. We talked about that last time, too. I think that's about it. Oh, well, okay, small point. Actually, I'll make my small technical point in an email to everybody. It's about units again, my favorite topic. So, that's it. Thank you. Commissioner, is anything going once? Going twice? No, I'll just say, I did like Bob's point about no people, and I just brought up the webpage. Yeah, that's a good point. Thank you, guys. We'll move on to item number six, which the General Manager Update of Darren Springer. Well, hello. Good evening, everybody. Just with regards to the NetZero logo, I know Mike is online, and I think you may have heard that feedback previously and discussed it with Adam Rabin, who helps design some of our logos. But I think that I certainly appreciate hearing that, and we can continue to iterate on the logo and see what we can incorporate into it. In terms of the report, a few items that I do want to highlight. I'll go with one that Commissioner Herendine just mentioned, which is the new building's policy, which the Mayor did have a press release about, as mentioned. So, we and the planning office and the Department of Permitting and Inspections have been working really for months and really dating back to the launch of the NetZero roadmap in September of 2019. There was a city council resolution by then-counselor Busher around October of 2019 asking us to look into this as follow-up to the roadmap. There's one of the policies outlined in the roadmap was dealing with new buildings, and we've worked quite a bit with a group called the Building Electrification Initiative through funding that Jen Green has obtained through the Urban Sustainability Directors Network, and happily that has been a very productive relationship for us. The Building Electrification Initiative helped us look at what is being done on new buildings to reduce fossil fuel use and increase electrification in other communities. We held a public meeting on this topic back in July, and we have now submitted to the city council a proposal, a policy proposal that basically says that if you are building a new building, you would have a couple options. One would be that you completely use electrification and efficiency and renewable fuels and you don't connect to fossil fuel infrastructure, and that's kind of option A. And then option B is if you are going to be connecting to fossil fuel infrastructure, the policy would apply a $100 per ton carbon fee to the expected fossil fuel use for that building for 10 years, and it would revisit after 10 years and continue that process essentially every 10 years until the building had reduced and then eliminated its fossil fuel use. The other key component of that is a provision requiring buildings to be electric ready when they're built. So even if they don't include things like heat pumps or other types of electrification technologies upfront, that their services size, their panelists size to accommodate future electrification, they're prewired to accommodate future electrification. So we think the combination of those two policies will be an important incentive to help push new buildings towards cleaner technologies. That policy proposal is now with the city attorney to determine appropriate draft ordinance language. It would then go to the ordinance committee of the city council for further process, undoubtedly some continued refinement, and then hopefully back to the full council at some point for a vote and potentially adoption. So appreciate very much Jen Green and Chris Burns for their work with me on this one, and we'll keep the commission posted on our progress there. The legislative session has now wrapped up for the year. I know it was an unusual year that we had the legislature back to continue its work into the fall. And for us, there was a bill that was signed that we were a part of the process. S 337 was signed by the governor. And to remind the commission, what that does is allows us to propose new programs to reduce greenhouse gas emissions that are complementary to our tier three programs and through our efficiency utility. And what we're doing now is we're in the process of coming up with our proposed efficiency programs and rates in the PUC process now. It's kind of in real time. And so we are working with the regulators to determine the best route for us to put these proposals forward and incorporate them into future year programs. And, you know, there are different ways we will potentially approach this. But this should allow us, for example, to work on supporting electric transportation through the efficiency program, which is something that really hasn't been done to date. And one thing I'm particularly interested in is whether we can use some of these funds to incentivize the purchase of higher MPGE vehicles, more efficient electric vehicles. Obviously, switching to an electric vehicle is the first part of the challenge. We want to help people do that. We have rebates to do that. But then we also want to share incentives and information around how to get a more efficient electric vehicle. And there are quite kind of varied range when you look at the MPGE ratings of these different vehicles. So that's one potential opportunity. There will certainly be others and we can keep the commission updated on our work on the S-337 process. Just a couple other quick updates. For the commission's benefit, I think we had a really great effort at McNeil to complete the outage work in September, you know, challenging circumstances amidst the pandemic. A number of different health and safety precautions needed to be put in place to protect our team. And we obviously had external contractors coming on site, so kudos to the Center for Safety team and the entire McNeil generation team and all the folks who worked on the outage. It is complete. The plant is back up and running and, you know, really appreciate the work to keep everybody safe and healthy during such a significant capital project. Last two items. We did have Drive Electric Week. Obviously, we weren't able to do test drives and get people into vehicles this time around. But we did have a webinar, Let's Talk EVs webinar that is available for people to watch on our website if they weren't able to see it live to share information with customers about electric vehicles and our programs. We did conduct an EV survey which generated a good number of responses. You know, I think it was near 200 last I had checked and we're going to be sharing some results from that survey potentially once we can kind of get through them and maybe learn some things about what people are interested in, what barriers they may be facing when it comes to purchasing or leasing an EV or getting a pre-owned EV. And lastly, we did host a guest speaker from Smart Columbus who spoke with the BED leadership team about efforts in Columbus, Ohio to advance EV adoption. And we're taking away some lessons learned from that presentation. They had received a significant grant to demo some different approaches. So that was very, very helpful. And then the final item for me is I just wanted the commission to be aware that over the last five weeks, Jen Green has helped facilitate a USDN developed equity training program. We've had three cohorts at BED, including all members of the leadership team. So all the managers, directors, supervisors, and myself, as well as a number of the folks who are involved in customer relationships and program design. So energy services, policy and planning, customer care, all were engaged in this training and really was focused on how to think about racial equity and social equity in program design in government and featured kind of work that had been done in Seattle as a model for some of the work that is happening in this space. So we're conscious that the commission is very aligned with BED and wanting to advance efforts to support equity and thought you'd all be interested to know about that training. We're going to get the three cohorts together and discuss some concrete next steps as a result of our five weeks of training. We'll be doing that over the next couple of weeks. So we'll have more to report on in the future. And that's everything for me. I'm glad to answer any questions if anybody has them. Oh, yeah. Just a minute. Whoops. I can do this number myself, but I'll ask. So $100 a ton. These days, how much would that add on to, say, a gas bill? Yeah. So we did do some modeling and we looked at the net present value for the first 10 years because, as I mentioned, the policy would essentially renew every 10 years. And just to give a range in looking at it, if you pay the fee up front, so it wouldn't be assessed on your gas bill, it would be an upfront value. If you were a smaller office space, it might add something like $20,000 to the cost of the building. If you were putting in, let's say, a more moderate-sized hotel, it might run a few hundred thousand dollars in terms of the added cost to the building. So there's a range there, certainly. But what we did try to do was actually take buildings that have been placed in service and use actual energy modeling data to look at the potential cost range. And so for an office building, it was around $20,000 for a small office. For a multifamily, it might be in the $130,000 range. For a hotel, it might be upwards of $200,000. Those were some of the values that we looked at for that first 10-year net present value. Okay. Thank you. Other questions, commissioners? Hearing none, let's move on to the financials. I'd just be remiss if I didn't congratulate and thank Andrea and the entire finance team for the outstanding job with the audit process as you've heard tonight. So as we head into the financials, let me offer our thank you for all their good work during this period of time. I would also note that they thought very highly of her and her quick ability to catch up and her knowledge of what was going on, not having been here an entire year. So they were very impressed with you. I appreciate that, but we have a really strong team, so. Yeah. Alrighty, so August financial results. I will start with looking at the monthly COVID impact graphs like we've been doing. Looking at August, residential usage due to COVID was up 11.4% while commercial down 6.3, resulting in a net down 1.5%. And you'll see this translate into the financials because you see next to no budget versus actual variants when we're looking at total net sales. As we look into September, you can see that residential came down quite a bit now back in normal ranges, especially with your primarily due to the cooling season being behind us. And commercial to trend back to normal levels. And that's really driven challenges getting turned back up to normal in schools as well. So this net down 3% is likely where, you know, but for anything else you do, where we'll be for a couple months. Any questions on this graph before I jump into the financials? So for the month of August, we came in net income of 2.3 million, which is 400K better than budget, which is good news. I'll start at the top and work my way down. As we just saw in that last graph, sales to customers basically no variance because while residential was up, commercial was down netting to next to nothing. We likely will see an unfavorable variance in September, but we'll see. Other revenues are down 127,000. That is driven primarily by EEU. So that will have an offset and operating expenses as well. Not exactly in terms of the income statement, but pretty close. Power supply revenues. This is our rec revenues. This is favorable 326,000. And it's largely timing. It's really just a function of having higher priced contracts earlier in the year and later there'll be some lower ones. This should reverse. Power supply expenses are favorable 164,000. This is driven by lower fuel costs of 66K. McNeil production was under budget by 14%, and this was offset by the GT having higher production due to some testing. I will note that McNeil year to date is within 2% of budgeted production. Another driver in power supply expenses is transmission expenses favorable for, and it's primarily related to Velco. I do also expect this to flip later in the year. Operating expenses, favorable 165,000. A big chunk of this is relating to energy efficiency expenses. Other items in here, some timing related things like materials and supplies and outside services. And then we also have some areas where it's true savings such as training expense. We have lower labor and benefit costs and that's lower costs relating to vacancies and lower benefit expenses offset by less capitalization of our IT forward project, and some other miscellaneous items. Gain loss and disposal of plant or retirement of plant. This is unfavorable 118K, but it was favorable last month. So if we jump over to year to date you'll see this is timing. Not too much else going on on the income statement for August. I think last month for July's review and this month for August you hear me saying timing for a lot of these responses. And while this favorable variant likely is largely timing, it's also good that there's no unfavorable things going our way. And we are having some pretty diligent expense management and that is helping as well. Any questions on the income statement? Jumping to capital spend. So full year budget of 7.9 million, budgeted year to date 1.7, and actual spend of about 600 or 550K. So still below budget last last month. So for July actuals we were down about a million, still down about a million one. We do expect most of this to be timing largely related to production and our general which is going to be IT forward timing of spend as well as our data center upgrade. So we are still expecting to be close to the 7.9 million as we round out the year. Cash we have 13.6 million as of the end of August. This is 2.4 million up compared to budget which is driven by the $3 million bond anticipation note that was received in July. We budgeted a GO bond in November. So that's timing and you might be wondering why are we up 2.4 million if we received 3 million and if I can refresh your memory to last month we talked about how where we are beginning balance of where we landed, where we ended fiscal 20 versus where we budgeted to end fiscal 20 is what's driving that reduction. And this is up the 13.6 million cash at the end of August is up 1.8 million compared to July and that's just you know due to the normal operations but because it is a rec month that's going to increase our cash balance. And then moving down to metrics, debt service coverage ratio of 3.61 adjusted of 0.90 and days cash on hand of 156. The debt service coverage ratio and adjusted are up moderately from last month and cash coverage is you know holding pretty strong. We will you know it will trend down as we move throughout the year but overall pretty strong metrics. I don't think I forgot anything. Any questions? You're muted. Anyone? Yeah this is Bob. Small point. When you look at the requirement for A and BAA in the first line they're the same. Is that a typo? I don't think it's a typo. I can validate that just to be sure but I believe that that's correct. Yeah I believe if I remember correctly that the debt service coverage ratio of 125 is actually also the covenant ratio for the bonds and obviously different than the adjusted debt service coverage ratio which is a Moody's metric. Okay. Other questions? All right. Thank you Andrea. We'll go on to item number seven which is the IRP presentation and we'll hand the floor over to James Gibbons. So give me just one second to figure my my muting, unmuting, screen sharing and gets us all working. So I'm going to try to share a PowerPoint again and hopefully that will work and if we're really really lucky that just popped up with the IRP summary title slide. Did it? Yep. I'm going to try now doing it as a slideshow from the beginning. Is that still working everybody? Yep. So I've been asked to give a 10 minute summary of the IRP so I kind of scratched my head and culled a three hour presentation down to 10 minutes. This is what's left. I'm going to quickly touch face on the timeline. The IRP was filed with the PUC in September. Customer notices should be going out this month. I attempted to confirm that but I have not been able to confirm that prior to this meeting yet but they should be going out telling the customers that the IRP is available and letting them know that there's a deadline for public comment. Comments would be received into November and then we would start moving into data requests from the regulators, stipulations, MOUs, public hearings probably in the month of December. Reminder. Hey James, sorry to interrupt. This is Mike. I did want to let you know that as of yesterday all the bills going out to the customers have the IRP language in there inviting them to comment and they will hit every customer by the first week in November. So all of that went out. There's also reference to it in this month's North Avenue News and we've put it on front porch forum as well. Thank you very much Mike. Thank you. That's what I was just talking to check and that's what I was looking for. So just a reminder this is a quote from these are quotes from the PUC's order in our last IRP filing which is that the commission's overarching goal is really just checking into how the utilities handle their planning and to make sure their planning process and decision processes are reasonably robust and so that that means that in the context of an IRP you're not actually asking to approve any specific action. No investments are being, no power purchase agreements are approved. It's a review of the decision making process. So a lot of people get confused on that. That is what is being considered in an IRP. It identifies key risks. Traditionally our key risks relate to wholesale energy, capacity, REX, regional transmission. There are other things that will affect our costs significantly but they're not controllable and they're the same across all different, all the futures you look at. So what you're really watching particularly is things that change based on your decisions. Regional transmission service is a large one. That's actually very topical right now but I don't have time to go into it in more depth. It does talk about how we're going to manage those risks. We've always invested in efficiency and we'll continue to do so. We've done active demand response programs. We have rate designs that are tied to strategic electrification. We do manage the purchase and sale of REX and we need to be monitoring our beneficial electrification adoption and our net zero actions in light of the impacts that those will have on our system and on our wholesale energy requirements. It will talk about the needs of how we meet the customer's needs and it does talk about it both in the context of essentially a business as usual and a net zero case that we've looked at and then highlights a set of what we'd be focusing on by department over the next one to three years. Our key priorities are not probably not as surprised to anybody here. We want to keep reliable and resilient grid, safety, environmental stewardship, low cost electric service and rate stability, customer service, equitable access, financial strength, 100% renewable portfolio maintenance and transitioning to net zero, assisting the city and transitioning to net zero. Those are really our key priorities and with the last one being a heavy focus on this round's IRP. The IRP chapters are structured around an executive summary, an introduction, a demand for electricity, which is essentially a load forecast. What we have for resources committed today to meet that load forecast, the status of our existing transmission distribution system in terms of its ability to handle those loads, what we are offering for comprehensive energy services, an assessment of what kind of rate pressure we have and over time, and I'll describe rate pressure in a later slide in a little more detail, how we evaluate decisions and then there was a separate chapter at the request of the DPS really on net zero roadmap implications and at least evaluating the first stages of strategic electrification in quantitative terms. Just quickly, this is a major piece of every IRP, which is sort of your energy supply portfolio. The dotted line is our forecast, that is a business as usual forecast that is not a strategic electrification load forecast at this point. We are well supplied with energy under normal years for the next two to three years, though I will say that this year has been a challenging year both for wind resources and for hydro resources, not just with the Winnowski one, but actually hydro has been bad enough to impact the Connecticut River output as well. BED will be seeking additional renewable energy as needed and preferably we will try to retain Vermont based resources wherever possible. Our capacity obligation is a, if energy is one part of the major equation, capacity is the other part. Energy is the power, the electricity that drives motors, I'm going to try to be careful with terminology here about, that drives motors, that turn, that lights lights, things like that that does productive work, but we also have an obligation to meet our peak load, which is met with what's called capacity, and that is the capability of a generator to produce power at critical times. We are normally short of capacity. We normally do not have capacity sufficient to meet our obligation. Our obligation is roughly a little over 80 megawatts that is based on a 65 megawatt peak load plus some reserves for contingencies and unexpected events such as transmission line outages, major unit outages in New England. All utilities have a reserve margin added on the top of their peak load. Our two primary resources are not surprisingly the BED gas turbine in McNeil. Our wind resources are not primary producers of capacity because they're not able to produce capacity reliably when called upon or on demand. The Hydro-Quebec contract does not provide any capacity even though it provides a significant amount of energy. That's just a contractual term of it at the time they were putting that contract in place. It was unclear how you would import capacity into this market. However, the capacity prices, which is what we pay for the shortfall, have been basically collapsing in New England for the last five years. We know those prices for the next three years looking forward and they just keep going down year on year. Right now, that capacity short position is not causing us any particular problem. Our supply at 102-point megawatt, I'm sorry, this slide got slipped in a little bit earlier than I wanted. The 102-point megawatt load level is the first stages of strategic electrification that we chose to look at. 102-point megawatt load level is a load that our existing distribution and mostly distribution, but to some extent transmission system cannot handle without upgrades. This was intentionally a level set to push some needed upgrades into our evaluation. The total load required under the net zero forecast is more like 140 megawatts. 102-point megawatts is the early stages of strategic electrification. It is not full electrification of the heating and transportation sectors as envisioned by the net zero road map at this time. To meet the increase load, we do expect there'll be sufficient renewable energy at competitive wholesale prices. It's a relatively significant increase in our loads, but our loads are relatively insignificant relative to New England. So as long as other utilities are not on the same exact trajectory that we are, I think we can meet the early stages of strategic electrification with competitively priced renewable energy from resources that are already existing in New England. We do offer, as you know, comprehensive energy services. So we are both an EEU and a DU. I'm going to keep pointing that out because we are very unique. We are the only one in the state. So our DU can focus on strategic electrification, net metering, demand response, rate structures. The EEU side of the business can focus on efficiency, efficient products, improving existing and new building stocks, things like that. We can also do things like we can generate a green stimulus program as we did this year as a reaction to COVID to try to help maintain our focus and customer's focus on those activities during these challenging times. And that green stimulus program has been well received and is in fact causing the contractors who serve the voluntary to be essentially booked up for the year at this point. Our installations of tier three measures for 2020 year to date have already materially exceeded what we did in 2019 for the entire year. So we're, again, we're progressing very well on that front. Financial assessment. So I created this concept of rate pressure and I want to describe it briefly to everybody. Rate pressure is defined as the change in the cost of service, in other words, the total costs of Burlington Electric divided by customer sales and how those are changing over time. So that's an attempt to recognize that a change in cost, if it's matched by a correspondingly greater change in retail sales does not actually cause rate pressure. That causes pressure that can reduce rates. On the other hand, inflation and things like that simply do cause rate pressure because they don't come with increased electric sales. We are looking at how the various key variables affect potential rate needs and rate pressure, but this is not a forecast of required rate increases. And you'll see from the next slide that the range of possible rate increases we need over the next 20 years is dramatic and is affected significantly by these key variables. So at this point, it's more a tool for evaluating how a potential decision, such as the first stages of electrification, would affect the rate pressure we expect to otherwise see without that decision. So it's a way to look at the change in rate pressure from making a decision against the pressure from not having made that decision. That's a new concept, but I'm curious, does that resonate with folks in general? That makes perfect sense to me. So again, you have a rate pressure when costs increase and sales don't. You have downward rate pressure if costs increase but sales are increasing proportionally more. And no utility isn't going to have rate pressure. I mean inflation, labor adjustments will always cause rate pressure. The question is, does the decision improve that profile or worsen it? This is our base case rate pressure. This is the BAU case. So this does not include strategic electrification. And you can see that we range from needing less than 20% cumulative rate increases over the next 20 years to significant ones. And a lot of that is an effect of the change in rec prices, energy prices, capacity prices. This is not a probable case. This is if the blue line is if everything that could affect us went as badly as it's possible for it to go. And the green line is conversely generally everything is going as well as we can go. And so it just lays out a range of rate pressures. But what's most important is to watch that baseline and then to compare that baseline to what that baseline would look if you do something. And in particular, I'm going to use that red baseline for the comparison to what strategic electrification does to that baseline rate pressure. That's your energy roadmap. Key focus was on energy efficiency, electrification of buildings, electric transportation, multimodal transportation, district energy, and alternative transportation. That's not new. That's really an extraction from the net zero roadmap. Additional risks are adoption rates, limiting peak impacts, particularly the winter peak impacts. As heating load gets converted to electricity, we would move from a winter peaking to summer peaking rather to a winter peaking utility. That's the effect of a large deployment of heat pump technology moving the peak from the summer to the winter. It'll create needs for new and innovative rates, particularly right now. We're looking at rates that would affect heat pumps. We've got EV rates, which affect transportation, but we're looking to do similar type of rate structures to impact the heat pump loads and to try to make sure that to the greatest extent possible they're occurring off peak as well. It will not be quite as easy to simply take that load off peak because on cold days that heating is going to need to still occur at some point during the day. We recognize that. What we can do is reduce the likelihood that it will be all happening at the same time. Power supply costs are going to increase. We will be serving a materially greater amount of load if we electrify the heating and transportation sectors even at the 102.8 megawatt level. Lastly, at this point in time engineering is working on but has not finished reviewing what might be necessary in terms of TND upgrades beyond the 102.8 megawatt level if in fact the loads did go to the 140 megawatt level. This is Darren's favorite slide and what we've done is we've conducted an interim net zero energy analysis at 102.8 megawatts of load, which is 457 gigawatt hours of energy. That is materially up from our current 350,000 gigawatt hours, so it is a material load increase. We will receive incremental revenue under our retail rates. We will see incremental energy costs. We will have to make an additional TND capital investment of somewhere in the order of 19 to 24 million dollars, but because those are all long live assets and we typically finance those assets, that turns into an annual TND upgrade cost of about 1.5 million dollars. Essentially the short answer is that the energy costs and TND incremental costs are less than the wholesale retail revenues. Net zero and business as usual with current rates tends to put downward pressure on our rate increase needs versus what they would otherwise be. It reduces rate pressure relative to the base case. If I could just add, I think that this slide will continue to be a really, really important representation of information that we want to share with our customers, with policy makers. I think a lot of times there's a misperception that moving to electrification is going to just simply drive up costs. Obviously we've accounted for some costs and investments here, but the idea that if we do this well, we can actually, all things equal, have reduced rate pressure even as we move to electrification, reduce greenhouse gas emissions, reduce fossil fuel use. That's a key point for me from this IRP, one of the most important points and pieces of analysis, and I just wanted to linger on it for a moment so we could all look at it further and I'll get out and enjoy it. A question from Bob. I want to make sure I've got the lingo right. It's reduced rate pressure, but it's reduced greenhouse gas emissions. Pressure, does that mean it's just, well, is it a derivative or you get the picture? Does it mean reduced rates? No, not necessarily. It could up front, but we couldn't absorb 20 years of inflationary increases without something. The question is, is it better than it would otherwise have been? I like to use the phrase, all other things equal. All other things equal, scenario with net zero would have lower rates than the scenario without it. We have not done a rate increase as Darren has certainly found in pointing out with good reasons since 2009. There's almost no way to do that forever for obvious reasons. This is really looking at a change in and pressure, not an absolute value. It should not be taken as a projection of needing rate cases at any particular time or anything else. It just says that all else being equal, we could absorb significant, these are annual energy costs, and what the DPS was hoping to get out of the slide is at least a recognition that there is a cost to increasing T&D system capability associated with the net zero energy. They were concerned that that was not a component of the net zero energy report. One of the key things I'm taking away from it is at the 102.8 megawatt level, and you'll hear me keep saying that because this is only true right now at the 102.8 megawatt level, the T&D upgrade costs are not the majority of the incremental cost. The wholesale market costs for energy transmission capacity are much more significant than the T&D upgrade costs to serve 102.8 megawatt level load. It will be interesting to see if that relationship continues as you ratchet load up higher and higher towards 140 megawatts, but it certainly indicates that the front end of the net zero road map should not pose any problems to us. Okay, you're using the mm to mean a million, I guess. I will say that I believe my staff meant that, yes. All right, okay. It's one of my minor complaints. Just to state it again, a slide or two ago, you talked about adoption rates, and of course that has to do with the consumer's expenses, which I've talked about before, and I know you've dealt with the questions about it, so you don't need to say anything. I just have to say it's out there. Well, I'm sorry, I'm not sure what's up. I'm talking about what it costs me when I put in my electric heat pump. That's actually, I'm going to talk briefly about that on the next slide, but I do appreciate that. So this is some of the extractions from the net zero road map, and this is with the carbon value to $100 a ton. I think one of the things to remember is, yes, there are capital costs, and I believe hopefully my cursor's showing, there are significant capital costs involved with making these conversions. If there is a true value to carbon dioxide emission reductions, then the operational costs are actually lower from doing so, and there's a net benefit, but that is predicated on a real value of carbon of $100 a ton. So yes, there are significant capital costs. It is, our IRP right now is not presuming that the electric department is going to be the funding mechanism for all of this, for obvious reasons, because one of the problems is, if the electric department is the funding mechanism of choice, you will raise the electric rates if you essentially say, we're going to solve this and pay for it all, and then you create a problem for your comparison to natural gas by making that worse. So really what you need is the electric utility can be involved. This assumes we are paying some of the costs of conversion and things like this, but it's not assuming that the electric department is funding the full capital cost of this by any stretch of the imagination. Sure, but that's a dance we've been doing for 30 or 40 years about energy services. We do a little of it, but we're not going to do it all. Right, you do enough to make it occur. So we're counting on supportive local policy. This says federal and state, but I would also obviously say with Darren's announcement about some of the proposals at the city level, those can happen locally, obviously, as well. They may happen locally much quicker than they happen at the federal level, I suspect, and at the state level. It does assume that there will be, that our adoption rates will pick up, because tier three, which is like a piece of net zero, will not meet the net zero requirements. Tier three is not big enough to do that. It's a fraction of them. So that is just a qualifier. I agree with you, Bob, that there is going to be investment required. And it is not going, can't be all electric utility investment. No, just this last sub, just a supplementary, summarization of some of the priorities by department. Just I throw this up because it's some of the stuff we're going to be working on, hopefully none of it's surprising to our electric commission. We'll continue on the distribution and upgrades with capital replacements. We'll continue to advance city goals on zero energy any place we can and help there any way we can. We will be watching the beneficial adoption rates of electrification technologies, because we want to make sure that the distribution upgrades that are required to serve the loads happen, but you don't want to incur them any sooner than you need to, so that you're bearing that cost before you have the revenues to carry that cost. So we'll be watching the change in our loads over time. And as those beneficial electrifications occur and the loads increase, we'll have to monitor when our requirements for distribution upgrades will need to be started. Obviously, a generation will continue to work on reliability and efficient operations. Any way we can improve the efficiency of existing assets is certainly helpful. And that includes creative things like district energy or possible improvements in efficiency and McNeill to electric boilers that could be dispatched on wholesale market signals. Obviously, power supply is going to maintain 100% renewable. It's critical for a couple of reasons, because our renewable exempts us from parts of Tier 2 and creates a higher value for us for the Tier 3 measures we undertake. So that has value in a multiple ways for BED to maintain that 100% renewability. We're going to continue to look for new and innovative rates, and we are still working on those. We do continue to look at energy storage technologies, but I would note that the fallen capacity prices are not helpful to energy storage. And some of the discussions I mentioned about possibly adding generation back into load are not friendly to storage right now. So there's a big unknown in the storage side right now. Energy services continue to be providing services according to the demand resource plan, acquiring all cost-effective technology. It's been a long day. Sorry guys. All cost-effective energy efficiency, customer care and engagement will continue to respond to any of these questions or assistance. Monitoring our financial performance, complete the conversion of core IS functions, enhance our cybersecurity, and continue our safety and risk management activities. So hopefully none of those things are going to be surprising to you in those last two slides. The real focus was on trying to characterize the early stages of the net zero. We don't have any instant needs to go out and buy another energy contract for several years. We can't economically do much on the capacity front. We're watching the strategic electrification and we need to understand what it's going to do to us if it happens, and net zero. I'm sorry, that was 23 minutes. I apologize. Great questions. Anyone? You should have seen it before I cut it. Yeah, I think that was a great presentation. Yeah, super interesting and helpful. And remember it's all available online too. And again, you know, there's no, I mean, we had to file it by a certain date, but at any point the commission has comments on it that they would like to offer, we can accept those. This isn't, you know, this isn't a no action happens until next year because they haven't approved any actions, even if they approve the IRP. So, you know, we can take in comments, considerations, and we can use them the next time we need to make a decision that requires this level of rigor. Yeah, I appreciate that. I'll try to take a closer look. Great. Any other questions from commissioners? All right, thank you, James. That was very informative. Thank you all. Yeah, thank you very much. We'll move on to number eight on our agenda, which is commissioners check-in. Just a chance for a last opportunity to speak up, say something, bring something up. The floor is open. Well, I just want to compliment the staff again. I guess it was a time when maybe the commission used to generate more ideas. I'm not sure about that. I wasn't here. There's so many ideas flying from staff. It's easy to be lazy about that. So what I heard today was great, especially the NZE thing, but also James' discussion about the IRP and the attraction to go into detail. Great stuff. Thank you, Bob. Anyone else? Hearing none, I'll entertain a motion to adjourn. I move that we adjourn. Second. And I'll take a roll call vote. Commissioner Shagman. Bowie. Commissioner Herendine. Aye. Commissioner Modi. Aye. Commissioner Whitaker. Aye. Motion passed. Thanks, everybody. We stand adjourned. Thanks, you everybody. Be well.