Governing in Difficult Times

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Governing in Difficult Times
FMEA/FMPA 2009 Annual Conference Palm Beach
Gardens, Florida July 14 16, 2009
Jeff Tarbert Senior Vice President American
Public Power Association
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Difficult Times

• Rececession/Unemployment
• States in deficit conditions
• City general fund revenues down
• Utility revenues down
• Load growth flat or declining
• Fixed contracts to be met
• Business activity down

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Risks

• Cities slow to recover (funding pressure)
• Meet credit obligations
• Loss of large loads
• Increased power theft
• Sales/revenues down
• Collectables up
• Unemployment lasts
• Stressed/unhappy customers

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Governance Responses Finance

• Protect credit rating
• Maintain reserves (debt service coverage)
• Maintain liquidity/reserves
• Budget conservatively
• Protect cash investments
• Respond quickly to financial changes (sound rate
  policies)
• Consider fuel adjustment charge

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Governance Responses Customer

• Tell full story to customer Often
• Learn facts and develop sound bites (show you are
  on customers side
• Help manage bills (efficiency and conservation)
• Focus on delinquencies (deposits, disconnects)

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Governance Responses Planning

• Plan through the cycle
• Long-term energy efficiency and conservation
  programs (Integrated Resource Planning)
• Consider stimulus funding
• Account for increased carbon costs
• Strong balance sheet
• Demand response ordinance

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Governance Responses Management

• Communicate Often
• Develop metrics
• Debt service coverage
• Debt ratio
• Cash on hand (liquidity)
• Reliability
• Reserves
• Transfers (PILOT)

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Summary

• Increased board knowledge/involvement
• Conservative financial practices
• Increased communication with customers
• Closer working relationship with management
• Public Powers business model provides a
  competitive advantage, but is still a business
  and must provide value to customers

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Contact Information

• Jeff Tarbert
• Senior Vice President
• American Public Power Association
• 1875 Connecticut Ave., NW
• Suite 1200
• Washington, DC 20009
• 202-467-2936
• jtarbert_at_APPAnet.org