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Board of Directors MeetingApril 26, 2018
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MWTG and SPP: What’s Next?
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What happened?April 20, 2018, Xcel Energy issued a press release announcing that it was terminating efforts to form an RTO in the Rocky Mountain West. As grounds, Xcel cited:
• Limited opportunities for westward expansion• Increased costs of expansion • Recent regulatory developments with RTOs
Though the other MWTG participants have not announced that they are terminating efforts to join SPP, integration with SPP probably does not make sense without Xcel.
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Where does this leave us?If the MWTG/SPP integration is truly dead, it will mean business as usual for Platte River and the other MWTG participants for now.
• All of our existing transmission contracts will remain in place
• We will remain in the Xcel balancing authority• We will continue operation under the Joint Dispatch
Agreement• We will continue with existing wind power purchase
agreements and evaluation of options for solar and storage
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Short term considerations• We will need to decide on a reliability coordinator
• The notice of termination to Peak Reliability could be revoked
• CAISO is planning to offer reliability coordination services by early 2019
• Other options may be considered
• We will need to make decisions about the integration of additional renewable resources
• The current Roundhouse contract has an option for an additional 75 MW of wind power
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Longer term considerations• Can the Joint Dispatch Agreement be expanded beyond
the current intra-hour operations?• Does it make sense to join the CAISO energy imbalance
market (EIM)?• Are there other viable options for a regional transmission
organization in the West?• MISO?• PJM/Peak?• CAISO?• Formation of a new market?
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Questions?
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Board of Directors MeetingApril 26, 2018
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Strategic Plan Board of Directors Meeting
April 26, 2018
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Purpose
• High level 3 year guiding plan• Alignment with mission, vision and values
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Focus• Enhanced customer experience
• Collaborative communications and community outreach
• Resource diversification and alignment
• Infrastructure Advancement
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Enhanced customer experienceCommitted to providing our owner communities and their customers with solutions, programs and choices to help achieve their varied goals.
• Rates - comprehensive review of rate making practices
• Efficiency Works – continue to work with communities to deliver efficiency programs that add value
• Distributed energy resources - Energy future; developing service offerings for our customers
• Electric vehicles – study benefits/costs to our system
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Communications and community outreachInternal and external communications are key to an organizations success
• Participation – reach out to stakeholder and civic groups
• Media outreach – strategically proactive and responsive
• Technology – social media and microsites to educate and engage
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Resource diversification and alignmentTransformation of how energy is made and delivered to our communities and their customers
• Integrated Resource Plan – starting the process early with high levels of public engagement
• MWTG – participation in broader, organized energy market will provide access to more energy resources and more efficient transmission systems.
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Infrastructure and technology advancementContinued investment in infrastructure and technology to provide secure, safe and reliable service• Transmission substation security – intrusion detection
and building access control• Cyber security – disaster recovery response plan,
training, system testing and refinement• Interactive energy management tools – platforms and
programs that enable choices and communications• Fiber optic strategic initiatives –broadband delivery
services, leasing options, transfer of excess capacity
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• Water resources – the Windy Gap Firming Project = firm water supply for electric generation operations
• New headquarters project – manage next gen technologies, increase work effectiveness, community access
Infrastructure and technology advancement
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Questions/Comments
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Board of Directors MeetingApril 26, 2018
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Safety Program OverviewJason Maldonado, CSP, SMS
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The Platte River Safety StoryStriving for Safety Excellence
No job is so important and no service so urgent that an employee must violate a safety rule or risk injury/illness over taking the time to perform their work safely. • Assess risk • Educate and equip• Eliminate and manage hazards
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Injury Analysis 2015-2017
*Analysis based on 28 first aid, 13 recordable, and 3 lost time injuries.
• 63% soft tissue injuries• 49% related to human factors
(Body position, ergonomics, strength, etc.)
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22
HAZARD ASSESSMENT TOOLSConduct a risk analysis to help prioritize jobs
R = P x S
Risk is a function of probability, and severity
• What is the probability? How likely will a worker be injured or become ill as a result of an accident or exposure? (unlikely, likely, very likely)
• What is the severity? How serious will the injury or illness be as a result of an accident or exposure? (minor, serious, death)
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Planning for Zero
Assess Risk
Correct Hazards
Compensate For
Remaining Risk
Conduct Work
Accomplish The Mission
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Education & Prevention Above Policy Through practical, targeted emphasis on hazards, safety provides resources and recommendations geared toward eliminating the potential for employee injury. This method helps build trust in the safety process, creates a partnership with other work groups and is accomplished through:
• “Why” focused training• Flexibility to address urgent safety needs as they arise• Evaluation of work area health risks (IH Analysis)
combined with annual health testing• Collaborative input on complex, high hazard tasks
• Not regulation-based roadblocks
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Lifecycle of a HazardHey, using that board
doesn’t look safe!!!
Maybe we should do something different.
Fix the Hazard
The manager then engages to fix the
problem
Whatever man! I’m fine.
Ok, you’re probably right.
Ok, sorry.
Supervisor, lead or other manager with authority to
correct the problem.
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Successful Injury Prevention Current Initiatives
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Active Release Techniques®ART is a soft tissue injury treatment and prevention protocol that was initially developed to help elite athletes perform at their peak and recover from injuries as fast as possible.
• Voluntary program aimed toward preventing through direct treatment and education
• Allows employees to utilize ART treatments in order to improve their overall quality of life, and with it their productivity at work.
• Provides valuable leading indicators that help identify areas/employees at high risk of injury
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ART Treatment BreakdownIn less than one year, the ART process has yielded some valuable data that is helping to direct injury prevention efforts. Using this data we are able to target programs such as RSI Guard and our upcoming job specific body positioning initiative to the areas where employees experience the most discomfort, and potentially the most risk of injury.
• 136 individual cases• 382 ART sessions• 88% improvement reported (closed)• Average 3.68 sessions per closed case
*Data is based on all treatments from July 2017 to March 2018
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CollaborationRather than dictate how others perform work, the primary method for development of new procedures and programs has been to partner with groups who will use the new processes.
• Lockout/Tagout (LO/TO) – Operations, Engineering, Maintenance
• Electrical Safety – I&E, Facilities, Operations, Substations
• Hazard Communications (HAZCOM) – Environmental, Maintenance, Facilities
• Respiratory Protection – Maintenance, Operations
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Electrical Safety Program
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Program OverviewThe Electrical Safety Program is based on the most current industry standards for electrical safety in the workplace. It provides criteria for qualifying, training and assessing the skills of employees who are exposed to electrical hazards.
• Training of qualified, non-qualified, and general employees
• Process designed around PRPA equipment• Criteria for selection of protective gear• Provisions for conducting authorized energized work
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Control of Hazardous EnergyJointly owned by Safety and Plant Operations, this procedure assures the personal protection of every employee who performs maintenance on plant systems. Among other things, the items below detail enhancements made to the existing process.
• Focus on personal protection• Adoption of group
Lockout/Tagout (LO/TO) boxes in combination with personal locks
• Inclusion of contract personnel
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Program OverviewControl of Hazardous Energy provides a consistent approach for protecting employees during the service and maintenance of machines and equipment when the unexpected energization, startup, or release of stored energy could cause harm.
• Personal Protection (Locks)• Focus on hazards• Verification of Zero Energy • Integration with plant Lockout/Tagout (LO/TO) software
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Emergency Management Through TechnologyPlatte River has a history of preparedness and quick response. Safety is leading the effort to update the company’s emergency management protocols through the use of technology and routine reinforcement.
• Program migration to a cloud-based system (Crisis Commander)
• Employee training • Plant tours for emergency
planners / first responders• Quarterly drills
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Employee Engagement Without the willingness and dedication of Platte River staff, no safety program would be successful. Below are just two examples of the many ways employees actively participate in keeping everyone at Platte River Safe.
RA Fan brake device Rawhide Emergency Response Team (ERT)
Brake Clamp
Attachment point
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Moving Forward
• Standardization of incident investigation techniques and problem solving
• Cause mapping and root cause analysis
• Industry leading functional movement assessment• Emergency management tabletops and exercises in
coordination with Security and local agencies
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Questions?
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Board of Directors MeetingApril 26, 2018
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Debt Financing UpdateBoard of Directors Meeting
April 26, 2018
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Financing Plan• Issue next series of bonds in late 2018 / early 2019• Fund a portion of the Headquarters Campus and Windy
Gap Firming projects• Reimbursement Resolution
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Why Issue Bonds?Platte River’s five-year capital plan totals $281 million. A portion of the Headquarters Campus and Windy Gap Firming projects will be funded by a $100 million bond issue.
• SFP days cash on hand target 200 days, without the financing 181 days in 2019
($ in thousands) 2018 2019 2020 2021 2022 5yr Total
Power Production $41,992 $10,130 $6,468 $18,048 $16,628 $93,266
Power Delivery 8,547 2,035 5,828 11,387 2,636 30,433
General 2,117 2,025 3,361 594 383 8,480
HQ Campus 16,428 23,713 4,359 - - 44,500
Windy Gap Firming Project 3,623 20,327 29,667 25,196 25,437 104,250
Total Capital Expenditures $72,707 $58,230 $49,683 $55,225 $45,084 $280,929
Debt Financings (new money) $100,000 $0 $0 $0 $0 $0
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0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
1 Year 2 Year 3 Year 4 Year 5 Year 7 Year 10 Year 15 Year 20 Year 25 Year 30 Year
MMD Range Current MMD Average MMD
Tax-Exempt Interest Rates
Although rates are at levels higher than the all-time lows reached in the last five years, interest rates remain below their long-term averages, particularly on the longer end of the yield curve.
30 Year AAA MMD Rate Position(April 9, 1988 to April 6, 2018)
Summary of April 6, 2018 vs. 30 Year Historical MMD RatesStatistic 1 Year 2 Year 3 Year 4 Year 5 Year 7 Year 10 Year 15 Year 20 Year 25 Year 30 Year4/6/2018 1.61% 1.71% 1.84% 1.96% 2.08% 2.25% 2.43% 2.68% 2.84% 2.91% 2.96%Average 2.36% 2.65% 2.85% 3.04% 3.21% 3.54% 3.92% 4.37% 4.64% 4.78% 4.82%Spread to Avg. -0.75% -0.94% -1.01% -1.08% -1.13% -1.29% -1.49% -1.69% -1.80% -1.87% -1.86%Minimum 0.11% 0.25% 0.36% 0.44% 0.62% 0.89% 1.29% 1.57% 1.80% 1.88% 1.93%Spread to Min. 1.50% 1.46% 1.48% 1.52% 1.46% 1.36% 1.14% 1.11% 1.04% 1.03% 1.03%Maximum 6.80% 6.80% 6.85% 6.85% 6.90% 7.00% 7.10% 7.40% 7.70% 7.80% 7.80%Spread to Max. -5.19% -5.09% -5.01% -4.89% -4.82% -4.75% -4.67% -4.72% -4.86% -4.89% -4.84%
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Interest Rate Forecasts• On March 21, 2018 the FOMC established a new target range for the
fund funds rate of 1.50% to 1.75%.• The FOMC increased the fed funds rate six times since 2015. The total
rate movement was 1.50% from a low range of 0.0% - 0.25% where it remained from 2009 through 2015.
• Amidst the uncertainty regarding how high and how fast long-term interest rates will go, the consensus amongst economists is that short-term rates will increase more and faster than long-term rates.
The Street's Interest Rate Forecast(As of April 12, 2018)
Average Forecasts Current Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19
30-Year UST 3.03% 3.21% 3.33% 3.46% 3.55% 3.67% 3.83%
10-Year UST 2.82% 2.93% 3.05% 3.16% 3.26% 3.36% 3.48%
2-Year UST 2.34% 2.41% 2.56% 2.70% 2.85% 2.98% 3.11%
3M LIBOR 2.34% 2.27% 2.43% 2.59% 2.75% 2.92% 3.04%
Fed Funds Target Rate (Upper) 1.75% 1.95% 2.15% 2.40% 2.60% 2.75% 2.95%
Fed Funds Target Rate (Lower) 1.50% 1.72% 1.92% 2.13% 2.33% 2.52% 2.69%
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Bond Sale Process
• Select the team• Determine project cost and timing• Identify source of repayment• Size and structure the bonds• Determine method of sale
Plan of Finance
• Adopt Authorizing Resolution• Tax analysis & due diligence• Prepare disclosure document (official
statement)
Legal Framework
• Obtain ratings• Underwriter & investor out reach• Sell & price the bonds
Marketing
• Closing/money transfer• Invest bond proceeds• Begin project & track progress• Make principal & interest payments• Monitor for refinancing opportunities• Comply with Arbitrage Rebate
Regulations (IRS/Tax Code)• On-going disclosure by complying with
SEC Rule 15( c)2-12
Administration
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Bond Sale Process
• Select the team• Determine project cost and timing• Identify source of repayment• Size and structure the bonds• Determine method of sale
Plan of Finance
• Adopt Authorizing Resolution• Tax analysis & due diligence• Prepare disclosure document (official
statement)
Legal Framework
• Obtain ratings• Underwriter & investor out reach• Sell & price the bonds
Marketing
• Closing/money transfer• Invest bond proceeds• Begin project & track progress• Make principal & interest payments• Monitor for refinancing opportunities• Comply with Arbitrage Rebate
Regulations (IRS/Tax Code)• On-going disclosure by complying with
SEC Rule 15( c)2-12
Administration
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Structure of the New Bonds
• Tax exempt• Long-term bonds (final maturities greater than 10 years)• Fixed rate, current interest, serial bonds• Optional redemption: par call bonds within 10 years
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$0
$5
$10
$15
$20
$25
$30
$35
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037
Millions
Series JJ
Series II
Series HH
Series GG
Current Debt Service
Substantial decline in DS post 2018 | Excess debt capacity
As of: Debt Outstanding
12/31/2017 $194.3M
06/01/2018 $179.8M
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$0
$5
$10
$15
$20
$25
$30
$35
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043
MillionsNew Debt
Series JJ
Series II
Series HH
Series GG
Projected Debt Service
New debt: represents $100 million issuance, assumes level debt service payments
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Issuance ConsiderationsWindy Gap Firming Project• IRS private letter ruling – confirm the tax status of the bonds• Potential timing delays due to pending litigation• Preliminary cost estimates, subject to change• Determination of pooled financing vs. individual financing
• Provide support for lower/unrated participants• Subordinate loan (30yr, 3.1%)• Bond reserve and liquidity fund• Step-up provisions
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Step-Up ProvisionsIf a pooled participant defaults on debt service payment other participants “step-up” and make the payment.• Firming project participants drafted step-up provisions for
upcoming pooled financing• If defaulting participant does not cure then they lose a portion
of storage, no longer make debt service payments and as long as O&M payments made, continue to participate in project
• Platte River’s proposal• If defaulting participant does not cure, forfeits all storage and
is out of the storage project• Protects non-defaulting parties• Provides strong incentive to not default• Similar to other step-up provisions for pooled financings
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Reimbursement ResolutionTo be reviewed and approved at the May Board meeting.
• Reimburse Platte River for HQ campus expenses that are incurred before the bond issue with future bond proceeds
• Expenses incurred 60 days prior to Resolution’s effective date can be reimbursed, does not apply to preliminary costs
• Reimbursement bond should be issued within 18 months of initial expenditure or date project is placed in service (must be issued within 3 years)
• Issued similar resolutions for prior bond issues (Series HH, II, JJ)
• Does not approve issuance of new debt• Board will be asked to approve new debt in the future
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Questions / Discussion
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Board of Directors MeetingApril 26, 2018
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Policy Repository and Resolution Rescission
Joe Wilson, General Counsel
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Policy Quality ManagementIn late 2015 a committee of stakeholders from across the organization was established to evaluate policies at Platte River. The team included stakeholders from the following internal functions: ComplianceAuditingHuman ResourcesLegalRisk Critical Infrastructure Protection and Records
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The project scope included:• Create an accepted definition for the term “policy,”• Audit existing policies,• Create user-friendly templates for policies and related
documents,• Create a repository for policies and related documents,• Migrate current policies and related documents to the
repository,• Rescind outdated and obsolete policies, and• Revise and restate policies that need to be amended.
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Project progress to date:• The term policy has been defined. In addition, the team
defined the following other methods for quality management:
Procedure, Process, Plan, Program, Guideline, and Standard
• Documents with the word “policy” in the title or in the document content were reviewed
• Templates created and a classification process formulated
• Policies migrated to the new format. Migration is almost complete
• Policies maintained in the HP document management system, which provides the ability to create a “next review date”
• Policies and other methods can be accessed through the Platte River SharePoint intranet
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Benefits – Process and Business Continuity• Uniformity for writing, approving, and revising guidance
documents• Monitor guidance documents to keep current• Centralize access to guidance documents• Use of SharePoint platform
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Board Action in May:Rescind outdated resolutions, including • Resolution No. 2-74 - Amended and Restated Fiscal Policy• Resolution No. 42-81 - Off-Site Use of Rawhide Ambulance• Resolution No. 58-81 - Conflicts of Interest• Resolution No. 64-82 - General Wage Policy• Resolution No. 13-84 - Deposit and Investment of Funds• Resolution No. 37-91 - Endorsement of Transmission Access Principles• Resolution No. 23-95 - Power Marketing Administration Sale• Resolution No. 6-04 - Gas Hedging Policy• Resolution No. 16-04 - Energy Risk Management Policy• Resolution No. 8-05 - Interest Rate Derivatives• Resolution No. 16-05 - SO2 Emission Allowances
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Board Action in May:Amend and restate policy resolutions:• Board resolution 30-97 –Electronic Mail Policy• Board resolution 19-09 – Expense Recognition Accounting for
Pension Funding; renamed Additional Pension Funding Accounting Policy
• Board resolution 28-12 – Accounting for Debt Issuance Cost Policy; renamed Debt Issuance Expense Recognition Policy
• Board resolution 05-13 - Market Manipulation Prohibition Policy
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Questions?
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Board of Directors MeetingApril 26, 2018
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March Operational Results
Variance Key: Favorable: >2% | Near budget: +/- 2% | Unfavorable: <-2%
Category March Variance YTD Variance
Municipal Demand (0.8%) (0.1%)
Municipal Energy (1.8%) (0.8%)
Baseload Generation (5.2%) (6.8%)
Wind Generation 11.8% (2.6%)
Solar Generation 3.8% (2.9%)
Surplus Sales Volume 8.6% (3.0%)
Surplus Sales Price (5.2%) (6.2%)
Dispatch Cost (2.0%) (2.0%)
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Board of Directors MeetingApril 26, 2018
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CategoryMarch
Variance from Budget($ in millions)
Year to DateVariance from Budget
($ in millions)
Net Income $0.8 $1.6
Debt Coverage .36x .31x
Revenues $ - ($0.7)
Operating Expenses $0.7 $2.7
Capital Additions $3.5 $5.8
Financial Summary
> 2% Favorable | 2% to -2% At or Near Budget | < -2% Unfavorable
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Board of Directors MeetingApril 26, 2018