P R E S E N T E D B Y :

Paula Gold-WilliamsPresident & CEO

N o v e m b e r 2 7 , 2 0 1 8

I n f o r m a t i o n a l U p d a t e

STRATEGIC UPDATE & FLEXIBLE PATH

Board Public Input Session

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AGENDA

• COMPANY OVERVIEW

• CORPORATE RESPONSIBILITY

• ACCOMMODATING GROWTH, PROMOTING

EFFICIENCY & CUTTING COSTS

• OUR FLEXIBLE PATH

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WE ARE A BUSINESS OWNED BY THE COMMUNITY!

• We will continue to be SA’s Energy Experts, keeping safety & security top priorities.

• We will prudently incorporate levels of renewable / non-emitting energy sources.

• We will make improvements every year to help ensure success.

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4

B Y T H E N U M B E R S

# Largest Municipally Owned Electric and Gas Utility in the U.S.

Solar Power Production in Texas; Seventh in the Nation

Wind Power Production in Texas

Most Trusted Brand in the

South Region by MSI

Years of Serving

San Antonio

AA+

Premier Credit Rating

838k

352kOur Customers

Electric1

Gas

$11B - Assets

$2.6B - Annual Revenue$1 as of 11/27/18

WHICH ALIGNS TO OUR FOCUSOF PEOPLE FIRST…

• Our everyday collective focus must beon our 3 Pillars:

COMMUNITY

EMPLOYEES

CUSTOMERS

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WE MUST CONTINUE ASKING OURSELVES…Are we solving things so customers benefit?

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CORPORATE RESPONSIBILTY

• GIVING OUR TIME!

• GIVING OUR RESOURCES!

• CONNECTING WITH OUR CUSTOMERS

• EXTENDS TO OUR NEE PARTNERS

• BENEFITS LOCAL & DIVERSE COMPANIES

• WE ARE THANKFUL FOR OUR WONDERFUL CUSTOMERS!

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CORPORATE RESPONSIBILITY -GIVING OUR TIME!

• ANNUAL VOLUNTEER HOURS > 16,500 HOURS YTD

• DONATED SCHOOL SUPPLIES = 4,729 LBS & MORE THAN $900

• UNITED WAY GOLF TOURNAMENT = $132,000 RAISED FOR SAMM MINSTRIES

• BLOOD DONATED = 850 UNITS WITH 1 BLOOD DRIVE REMAINING

• ANGEL TREE GIFTS – GIFT GIVING IN PROGRESS

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CORPORATE RESPONSIBILITY -GIVING OUR RESOURCES!

High United Way Contributions:

3 years of $1 million +

2018:$1.1 million

CORPORATE RESPONSIBILITY-CONNECTING WITH OUR CUSTOMERS

Mobile Support Center

Customer Care Fairs

Board of Trustees Meetings

City Council Meetings

Public Input Sessions

Social Media

Special Requests

CPSEnergy.com

Partner Engagement

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Economic Development

$3,316,000 Million to local education

programs.

Thanks New Energy Economy (NEE) Partners!

CORPORATE RESPONSIBILITY-EXTENDS TO OUR NEE PARTNERS

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CORPORATE RESPONSIBILITY -BENEFITS LOCAL & DIVERSE COMPANIES

Becky Bailey, CPS Energy Supply Chain Sr. Director, stands with Johnette Lee and Chris Crane of San Antonio Lighthouse for the Blind & Vision Impaired.

• Local non-profit awarded office supply contract

• We are investing in the community by contracting with local, small and diverse entities

• Competitively priced with national chains• Products made in San Antonio

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LIGHTHOUSE FOR THE BLIND & VISION IMPAIRED

Video Spot

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CORPORATE RESPONSIBILITY –WE ARE THANKFUL FOR OUR WONDERFUL CUSTOMERS

Video Spot

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CORPORATE RESPONSIBILITY –WE ARE THANKFUL FOR OUR WONDERFUL CUSTOMERS

Video Spot

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ACCOMMODATING GROWTH, PROMOTING EFFICIENCY & CUTTING COSTS

This is how we save our customers money & add value.

CITY OF SAN ANTONIOGROWTH (1)

San Antonio continues to be a magnet for economic & population growth.

• San Antonio metro growth rate has climbed consistently for the last few years

• The 2017 increase of 24,208 represents an average of 66 people per day

• The San Antonio area is preparing for a 1.1 million population increase by the year 2040

(1) Source – https://www.texastribune.org/2018/05/24/texas-census-san-antonio-tops-national-list-population-houston-growth/dated May 24, 2018 16

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52 PRODUCTS & SERVICES AND GROWING

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REDUCING THE PEAKTHROUGH DEMAND RESPONSE

4,200

4,400

4,600

4,800

5,000

5,200

5,400

7/3 7/19 7/23 8/16 8/17 8/23

MW

CPS Energy Peak Load Demand Response

CPS Energy successfully partnered with 140,000 residential & 560 Commercial & Industrial customers across our community

to manage demand during the hottest days

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39

162

221

273318

345 352

463

522

620

681

748771

$-

$100

$200

$300

$400

$500

$600

$700

$800

$900

0

100

200

300

400

500

600

700

800

900

FYE2009 FYE2010 FYE2011 FYE2012 FYE2013 FYE2014 FYE2015 FYE2016 FYE2017 FYE2018 FYE2019 FYE2020 FYE2021

Dollars

in M

illions

MW

STEP Cumulative Expenditures STEP Cumulative MW

PROGRAM FLEXIBILITY

$’s Supporting Conservation:

STEP

Helping To Proactively Change Behaviors

$’s Building a Coal Plant + Operations &

Maintenance <

20

Operational cost savings result in not seeking rate

increases for 5 years, which saves customers money.

SAVING YOU MONEY

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OUR FLEXIBLE PATH• OUR PLANTS ARE AGING

• DEVELOPING A FLEXIBLE FUTURE

• CAPACITY MIX POSSIBILITY

• EMISSION INTENSITY REDUCTIONS

• IN SUPPORT OF YOUR MISSION & GOALS

• MODELS BASED ON WHAT WE KNOW TODAY

• FLEXIBLE/OPTIMAL PARTNERSHIPS

o JOINT BOARD MEETING

o SMART SA

976

1,459

1,093

531

2,082447 6,579

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

MW

s

0 - 9 10 - 19 20 - 29 30 - 39 40 - 49 50 + All Years (Total Capacity)

MLB 5-8Spruce 2

MLB 1-4RioAVR

Spruce 1STP 2

STP 1 Deely 1 & 2Sommers 1 & 2Braunig 3

Braunig 1 & 2

Years in Service

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OUR PLANTS ARE AGING

Almost 40% of our capacity comes from plants that are

40+ years old

Proactive maintenance and solid budget controls are required to effectively manage investments in aging units

DEVELOPING A FLEXIBLE FUTURE

AGAIN RELIABILITY MATTERS: Traditional generation is playing the role of “virtual storage” for renewable energy until energy storage

technology scales up

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Now: Renewables and Traditional Generation

Future: Renewables and Energy Storage

Currently not economical

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16% 14% 11% 9%

32%

18%14%

7%

39%

46%48%

13%

16%

13%22%

21%

50%

6% 5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2018Traditional

2040Traditional

2040Flexible Path

Perc

ent

of

Cap

acit

y (M

W)

Storage/Tech

Renewables

Flex Gen

Gas

Coal

Nuclear

FLEXIBLE PATH –CAPACITY MIX POSSIBILITY

We will adjust models as new competing technologies develop and provide more benefits 70%+!

RENEWABLES /NEW TECH

&

80%!!NON-EMITTING

2040 Possible Flexible Path Scenario

CPS ENERGY EMISSION INTENSITY REDUCTIONS THROUGH FLEXIBLE PATH

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0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0

200

400

600

800

1,000

1,200

1,400

1,600

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

20

15

20

17

20

19

20

21

20

23

20

25

20

27

20

29

20

31

20

33

20

35

20

37

20

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NOx, SO2 (lbs/MWh)CO2 (lbs/MWh)

Calendar Year

CO2 History

CO2 Flex Path

NOx History

NOx Flex Path

SO2 History

SO2 Flex Path

Historic Flexible Path Forecast

By 2040, the Flexible Path reduces the intensity of CO2, NOx, & SO2 emissions by 80%, 97%, & 99%, respectively, as indexed to 1997

IN SUPPORT OF YOUR MISSION & GOALS

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Pilot solar and battery storage peak shifting and other battery uses

Plan for evolving integrated processes mitigating risk and enhancing our customers experience

Evaluate pilots and plan future programs

Plan

Evaluate

PilotPlan

Evaluate

PilotWe are being thoughtful about our city’s future

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WE ARE CONSTANTLY WORKING ON MODELS BASED ON WHAT WE KNOW TODAY

• What are the merits of extending or shortening the life of our assets?

• What are the costs of renewable energy and battery storage?

Everything costs money: conservation, renewables, fossil plants & new technology. We are a few years away from needing to make a big

generation decision but will keep costs and reliability at the forefront.

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IN ACTION!

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FLEXIBLE PATH & SMART CITY

Video Spot

FLEXIBLE/OPTIMAL PARTNERSHIPSJOINT BOARD MEETING

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• CPS Energy & SAWS Boards of Trustees held a joint meeting

• CEOs Paula Gold-Williams &Robert Puente discussed: A case study released by the

EDF that highlighted how well our 2 companies work together to conserve energy & water

• Great opportunity to show our organizations’ new potential to work together to benefit our customers for example, a future AMI project

Bottom:SAWS Board of Trustees & Leadership TeamTop:CPS Energy Board of Trustees, CPS Energy Leadership Team & City Manager

October 9, 2018

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FLEXIBLE/OPTIMAL PARTNERSHIPSSMART SA

Video Spot

Partnerships with our owner, the City of San Antonio, along with VIA, SAWS, SARA & SAHA provide for a citywide approach for

innovation and collaboration.

November 27, 2018

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COMMUNITY DIALOGUE = MORE ENGAGEMENT

Our decisions reflect the values & priorities of our community!

City of San Antonio

CPS Energy

Flexible

Path

PoliciesPriorities

Traditional GenerationTechnology & InnovationDesign StrategyManage Plan & Strategy

CustomersEnvironmentalBusinesses Others

PATH TO THE GOALS

ASPIRATIONAL GOALS

Partners Input

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SUMMARY

• WE ARE COMMITTED TO LISTENING

• WE WILL MAKE IMPROVEMENTS, AS NEEDED

• WE WILL CONTINUE TO CONTROL COSTS & KEEP EVERYTHING IN BALANCE

• OUR FLEXIBLE PATH IS “FLEXIBLE”

•BEING YOUR COMMUNITY & BUSINESS PARTNER!!

Thank You