MINUTES OF LINCOLN ELECTRIC SYSTEM ADMINISTRATIVE BOARD

Transcription

1 MINUTES OF LINCOLN ELECTRIC SYSTEM ADMINISTRATIVE BOARD Minutes of regular meeting held at 9:30 a.m., Friday, October 19, 2018, at the offices of Lincoln Electric System, 1040 O Street, Lincoln, Nebraska. Board Members Present: Board Members Absent: LES Staff Present: Others Present: News Media Present: Layne Sup, Tammy Ward, DaNay Kalkowski, Andy Hunzeker, Sarah Peetz, Lucas Sabalka, Vicki Huff, Jerry Hudgins Vacant Board Seat Kevin Wailes, Shelley Sahling-Zart, Laura Kapustka, Jason Fortik, Dan Pudenz, Lisa Hale, Lacy Stockdale, Melissa Palmer, Troy Hopkins, Steve Steinauer, Marc Shkolnick, Lucas Fahrer, Kelley Porter, Dan Dixon Ken Winston, Josh Miller None Chair Layne Sup called the meeting to order at approximately 9:30 a.m. A safety briefing was provided. He noted that LES conducts its meetings in compliance with the Nebraska Open Meetings Act and noted that copies of the Act are located near the entrance to the Board room. Chair Sup asked for approval of the minutes of the meeting of September 21, Vicki Huff moved their approval. Lucas Sabalka seconded the motion. The vote for approval of the minutes was: Call to Order Approval of Minutes Aye: Nay: Absent: Sup, Ward, Kalkowski, Hunzeker, Peetz, Sabalka, Huff, Hudgins None Vacant Board Seat Ken Winston, Nebraska Interfaith Power & Light, supports the carryover of the unused Sustainable Energy Program funds and appreciates LES tiered facilities charge system as opposed to a single fixed charge. Winston also provided suggestions for increasing the likelihood of success as it pertains to energy efficiency. (Exhibit I) Comments from Customers

2 Sarah Peetz, Chair of the Operations & Power Supply Committee, reported on Committee discussion which included the following: 1) an update on the Nebraska State Penitentiary DEC plant construction; 2) an overview of the Affordable Clean Energy Rule; 3) an update regarding transmission & distribution asset management; 4) an update on LES plug-in electric vehicle study; and 5) an update regarding the Virtual Net Metering Program. Jerry Hudgins, Chair of the Finance & Audit Committee, reported on Committee discussion which included the following: 1) an ERM 2018 preliminary risk review & update; 2) the third quarter 2018 financial review & forecast; 3) Internal Auditing s third quarter report; and 4) an update regarding District Energy Corporation (DEC) and Nebraska Utility Corporation (NUCorp). Sarah Peetz gave a brief overview on the activities of the District Energy Corporation (DEC), including updates on the state tort claim and DEC Management Agreement. Peetz also reviewed the DEC financial report. Laura Kapustka, Vice President & Chief Financial Officer, provided an overview of communication channels used for the public to provide feedback regarding the proposed 2019 budget and rates. (Exhibit II) Kapustka gave a summary of the questions presented by the public, a majority of which pertained to rate restructuring, the Sustainable Energy Program and LED street light cost of service. The Lincoln City Council is scheduled to take action on the proposed 2019 budget and rates at its November 19, 2018 meeting. Operations & Power Supply Committee Finance & Audit Committee District Energy Corporation Update Approval of 2019 LES Operating and Capital Budget LES Resolution Following discussion, Vicki Huff moved adoption of LES Resolution , approving the LES 2019 Operating and Capital Budget and recommends its approval by the Lincoln City Council. (Exhibit III) Andy Hunzeker seconded the motion. The total authorization for $347,991,000 includes an operating authorization of $271,971,000 and a capital authorization of $76,020,000. The vote to adopt LES Resolution was: Aye: Sup, Ward, Kalkowski, Hunzeker, Peetz, Sabalka, Huff, Hudgins - 2 -

3 Nay: Absent: None Vacant Board Seat LES Resolution adopts the LES Rate Schedules which does not include a system-wide rate adjustment for 2019, but does provide for: a) an adjustment to the LED Street Light Maintenance Rate to ensure adequate cost recovery; b) changes to the fixed and variable rate components for Residential and Heating Service rate classes; and c) changes to select Service Fees, with all changes to be effective January 1, (Exhibit IV) Vicki Huff moved adoption of LES Resolution Tammy Ward seconded the motion. The vote to adopt LES Resolution was: Approval of 2019 Rates-LES Resolution Aye: Nay: Absent: Sup, Ward, Kalkowski, Hunzeker, Peetz, Sabalka, Huff, Hudgins None Vacant Board Seat Jason Fortik, Vice President of Power Supply, provided the Board with a 2018 third quarter update. (Exhibit V) Net power costs were $9.29 million under budget. The year-to-date peak load day was reached on July 12, 2018, when customers demanded 755 MW of energy. Laura Kapustka, Vice President and Chief Financial Officer, provided the Board with the third quarter 2018 financial review and 2018 year-end forecast. (Exhibit VI) Retail sales were only slightly above year-to-date budget of $210.2 million. Projected yearend debt service coverage is currently at Kapustka noted net power costs and transmission costs are playing a big role in the projected debt service coverage. Kevin Wailes, Chief Executive Officer, presented the key performance indicators for the third quarter of (Exhibit VII) The Monthly Financial and Power Supply Reports were distributed to the Board and staff was available to answer questions. (Exhibit VIII) Third-Quarter 2018 Power Supply Report Third-Quarter 2018 Financial Review and Forecast Third-Quarter 2018 Key Performance Indicators Monthly Financial and Power Supply Reports - 3 -

4 The Board was informed of the Community Services Committee s Halloween Costume and Candy Drive. Board members are also invited to attend the annual Safety Kickoff on Tuesday, December 4, The next regular meeting of the LES Administrative Board is scheduled for Friday, November 16, 2018, at 9:30 a.m. There being no further business before the Board, Layne Sup declared the meeting adjourned at approximately 11:30 a.m. Miscellaneous Next Meeting Adjournment DaNay Kalkowski, Secretary BY: S/Lacy Stockdale Lacy Stockdale Assistant Secretary - 4 -

5 Exhibit I

6 LES Comments Ken Winston on behalf of Nebraska Interfaith Power & Light. We support LES' plans to carry over unused funds from the 2018 SEP program for sustainability puqposes. 'We also support LES' plans to establish a lowincome energy efficiency program. We appreciate LES's tiered facilities charge system as opposed to a single fixed charge because it is fairer and incentivizes efficiency. Although we would prefer a system in which there are no bill increases for lower use customers, LES's approach is more equitable for more of its customers than a single fixed charge. The following are suggestions for increasing the likelihood of success of the new low-income efficiency proposal, the SEP going forward, energy effrciency in general and customer engagement. 1. Establish a diverse task force of low income, neighborhood and other community representatives to make sure there is a low-income efficiency program that best serves the needs of the community. 2. Establish a continuing funding source for the low-income program. 3. Make energy efficiency apart of the energy portfolio of LES, including establishing goals for energy efficiency. 4. Improve marketing and outreach to make sure both the SEP and the new low-income efficiency program are reaching the people who need to be reached. Suggestions: presentations at Mayor's Environmental Task Force and neighborhood roundtable, outreach to groups with contact lists. 5. Work with the city of Lincoln and other agencies to improve energy efficiency in public buildings. 6. Work with businesses, community organizations and idea leaders to make Lincoln the most energy efficient community in the region. 7. Establish a customer engagement portal on the website for comments and suggestions. It could be called "LES Listens" or something like that. Nebraska IPL would be glad to work with LES regarding the above suggestions through messages with congregations and through our contact lists.

7 LES INFORMATION i 1. LES is a public entity. That means every customer is an owtìer and we have the right to have a voice in LES's decision making process. 2. LES has board meetings every third Friday at9,,30 a.m. The public can make comments at the beginning of every meeting. Meetings are at 1040 O St. 3. LES provides good service; some of the lowest electric rates and highest reliability of any utility in the region. 4. LES programs save this community millions of dollars every year; example, Lincoln Public Schools energy efficient ground coupled heat pumps, one of the first in the nation. It saves the school district several million dollars every year. 5. Another example is the district energy corporation which provides energy for city and county buildings providing major energy and cost savings. 6. LES gets approximately one-third of its energy from renewable sources, one third from natural gas and one-third from coal. 7. LES has a history of leadership on clean energy issues. Example, its net metering and solar programs.

8 Exhibit II

9 2019 Proposed Budget & Rates Administrative Board October 19, 2018 Laura Kapustka Vice President & Chief Financial Officer LES.com 1

10 Extensive Customer Outreach Communication channels: Customer communications and meetings: LES.com (Rates calculator) Message on LES bill LES Current newsletter Lincoln Journal Star Board & Customer Meetings News Releases Facebook Twitter Business Advisory Council 9/27 Drive Time Lincoln 10/1 LEC and Chamber (informal discussions) 10/3 Public meeting 10/4 LIBA 10/23 City Representatives Various street light discussions, have extended invites to City Council members Key Accounts - various LES Call Center ongoing LJS Editorial Board 11/9 LES.com 2

11 Questions & Comments from Customers (Details provided to Board Members) Rate Restructuring questions provided opportunity to explain why and how SEP: Budget, carry over amounts, current & future programs LED Street Light cost of service Appreciation from large customers LES.com 3

12 Sustainable Energy Program (SEP) The annual SEP budget is developed based on anticipated customer usage of the SEP programs Since inception, each year s SEP budget has been increased or decreased in response to this anticipated usage LES budgeted $3.0M for 2018 We are projecting that ~$1.5M will be left at year-end The year-end balance will be set aside for sustainability projects After reviewing next year s programs, the 2019 Budget was set at $1.5M The 2018 balance can supplement the 2019 Budget (if needed) LES.com 4

13 Budget Resolution: Adopt 2019 Operating and Capital Budget: Operating - $272.0 million Capital - $76.0 million Total - $348.0 million 2. Provide LES the ability to reimburse itself for 2019 capital expenditures through the future issuance of bonds 3. Provide continued eminent domain authority 4. Resolution : Adopts the 2019 Budget and directs submission to City Council Proposed 2019 Operating and Capital Budget ($ in thousands) $348 Million Capital, $76,020 Power Cost, $142,304 Other Operating, $76,469 Depreciation $53,198 LES.com 5

14 Review of why rates are being restructured LES.com 6

15 Another way to think about restructuring LES.com 7

16 How is rate restructuring done? The Energy Charge is reduced as costs are moved into the Facilities Charge. The proposed 2019 change completes the movement of the distribution and substation costs for Residential customers. Variable Charge Energy Fuel Operating & Maintenance for Plants Distribution system Substations Transmission lines Generating plants Facilities Distribution system Substations Meters & Services Transformers Fixed Charge Customer Customer billing Meter reading LES.com 8

17 Do Facilities costs vary between different size Residential Customers? YES! So levels were created in 2017 Residential customers have been divided into 3 levels based on average annual usage. The levels were implemented to recognize that there are greater costs to serve higher use customers than lower use customers. If all Residential customers were charged the same Facilities charge.it would be $22.43/month 90% of Residential Customers are in Levels 1 & 2 9

18 An Example.. Car rental prices vary based on the size of vehicle chosen. The rental agency is reflecting their cost to purchase and maintain that vehicle in the price. Compact $ Midsize $$ Full-size $$$ Similarly, the cost to bring energy to a residence varies based (primarily) on the size of residence chosen. LES reflects this cost difference through the 3 Facility Levels. Apartment $ Small home $$ Large home $$$ 10

19 What is my Facilities Charge? Monthly Facilities Charge If your average monthly usage is less than 800 kwh..you are in Level 1 Level $ $18.00 If your average monthly usage is between 800 and 1,500 kwh..you are in Level 2 Level $ $26.00 If your average monthly usage is over 1,500 kwh..you are in Level 3 Level $ $

20 Energy Charges are decreasing Monthly Energy Charge (per kwh of energy) Winter 2018 $ $0.055 Summer 2018 $ $0.080 Putting the decreased energy charge in perspective: A customer who uses 1,000 kwh per month. During the winter, will SAVE approximately $4 each month in energy charges During the summer, will SAVE approximately $6 each month in energy charges 12

21 Since restructuring began. Average Residential bills reflect minimal change Note: There was a 3% LES system-wide rate increase implemented in

22 Rate Resolution: Proposed 2019 Budget does not require a system-wide rate adjustment But, does include a change to the LED Street Light maintenance rate to ensure adequate cost recovery. 2. Proposed changes to Rate Schedules include: Continued rate restructuring with changes to the Facilities and Energy Charges for Residential & Heating Service Rate Classes Some Service Fee changes 2. Enhancements to Virtual Net Metering program 3. Service Regulation aid to construction wording change 4. Resolution : Adopts the Rate Schedules and Service Regulation wording change and directs submission to City Council LES.com 14

23 How do LES rates compare? 15

24 2019 Proposed Budget upcoming dates Dates Action Item August 30 Budget & Rates Committee Meeting September 10 Operations & Power Supply Committee Meeting September 13 Budget & Rates Committee Meeting - Rate restructuring September 21 Board Meeting Budget & Rates Presentation September 24 Begin customer outreach TBD (Sept 24-Oct 18) Customer meetings (LIBA, LJS, Other) as requested September 27 Business Advisory Council October 4, 6:00 pm Public Meeting on proposed 2019 Budget & Rates October 11 Budget & Rates Committee - Review public comments October 19 Board Meeting Action on 2019 Budget and Rates October 22-October 31 Individual meetings with City Council members October 29, 5:30 pm City Council first reading on budget & rates. November 5, 3:00 pm City Council public hearing on budget & rates November 19, 5:30 pm City Council takes action on budget & rates LES.com 16

25 Exhibit III

26 LES RESOLUTION WHEREAS, it is the responsibility of the Lincoln Electric System (LES) Administrative Board to develop and recommend to the City Council of the City of Lincoln (City) for its consideration and action a proposed annual budget for the operation of LES consisting of an operating budget and a capital budget; WHEREAS, the LES Administrative Board is charged with the responsibility for the control and management of the personnel, property, facilities, equipment, and finances of LES and annually approves the Operating and Capital Budget to guide the financial and operational activities during the upcoming year; WHEREAS, the Proposed Budget consists of the 2019 LES Operating Budget in the amount of $271,971,000 and the Proposed 2019 LES Capital Budget in the amount of $76,020,000 which was reviewed with the Budget & Rates Committee of the LES Administrative Board; WHEREAS, LES staff provided extensive customer information and outreach on the proposed 2019 Operating and Capital Budget throughout the period September 21, 2018 to October 18, 2018, including a public meeting on the Proposed Operating and Capital Budget on October 4, 2018; WHEREAS, the Budget & Rates Committee met and reviewed the Proposed Operating and Capital Budget on August 30, 2018 and September 13, 2018 and were also provided customer feedback for consideration and are recommending it to the full Administrative Board for adoption; WHEREAS, the LES Administrative Board reviewed the Operating and Capital Budget on September 21, 2018, and has been provided customer feedback on the Operating and Capital Budget for review and consideration; WHEREAS, LES has the obligation to make capital improvements necessary to maintain the electric system in good working order and repair, and; WHEREAS, those expenditures are made from revenues and may be reimbursed to the LES revenue fund or other funds from the issuance of LES electric system revenue bonds;

27 WHEREAS, obtaining right-of-way is an ongoing and necessary process for construction of transmission and distribution facilities that are identified in capital improvement budgets, the implementation of which on occasion requires the use of eminent domain requiring Lincoln City Council approval; NOW, THEREFORE, BE IT RESOLVED, that pursuant to the recommendation of the Budget & Rates Committee, the LES Administrative Board hereby adopts the 2019 LES Operating and Capital Budget in the total amount of $347,991,000 and directs the LES Chief Executive Officer to transmit said documents to the Lincoln City Council for its consideration and approval. BE IT FURTHER RESOLVED, that to the extent capital improvements of LES are made from LES revenues, it is intended that the amount of such expenditures, which is not reasonably expected to exceed $95 million, shall be reimbursable to the LES revenue fund and other funds through the issuance of future electric system revenue bonds, there being no funds of LES or the City reserved, allocated on a long-term basis or otherwise set aside (or reasonably expected to be reserved, allocated on a long-term basis or otherwise set aside) to provide permanent financing for the expenditures related to such expenditures, other than pursuant to the issuance of such electric system revenue bonds, this Resolution being determined to be consistent with the budgetary and financial circumstances of LES and the City as they exist or are reasonably foreseeable on the date hereof. The proper officers of LES shall keep and maintain records at least annually to determine the amount of such capital expenditures that may be reimbursed from electric system revenue bond proceeds. BE IT FURTHER RESOLVED, that the LES Administrative Board hereby requests that the Lincoln City Council give LES ongoing eminent domain authority for those projects identified in the LES Budget. S/Layne Sup Chair Adopted: October 19, 2018

28 Exhibit IV

29 LES RESOLUTION WHEREAS, it is the responsibility of the Lincoln Electric System (LES) Administrative Board to develop and recommend to the Lincoln City Council Rate Schedules for retail electric service to ratepayers in the LES service area; WHEREAS, LES staff is proposing changes to the LES Rate Schedules which does not include a system-wide rate adjustment for 2019, but does include a) a change in the LED Street Light Maintenance rate to ensure adequate cost recovery, b) continued restructuring of fixed and variable rate components for Residential and Heating Service rate classes, and c) changes to select Service Fees, all changes to be effective January 1, 2019; WHEREAS, the restructuring of rate components is necessary to more appropriately charge and recover fixed and variable costs of LES and is being done gradually over several years; WHEREAS, LES staff is proposing a change to the Service Regulations which includes a requirement in the aid to construction provision for customers with expected new, or expanded, loads greater than 10MW to contact LES to determine their aid to construction prior to receiving service, to be effective November 1, 2018; WHEREAS, LES staff provided extensive customer information and outreach on the proposed changes to the LES Rate Schedules and the LES Service Regulations throughout the period of September 21, 2018 to October 18, 2018; WHEREAS, a public meeting on the proposed 2019 Budget and related changes to the LES Rate Schedules and the LES Service Regulations was held on Thursday October 4, 2018 at the Walter A. Canney Service Center to receive public input regarding these items; WHEREAS, the LES Administrative Board has reviewed the cost analysis with LES staff and has determined that there is sufficient justification for such change in the LED Street Light Maintenance Rate, Residential and Heating Service fixed and variable rate components and select Service Fees and the aid to construction provision as has been recommended; WHEREAS, it has been determined that said recommendations are consistent with the LES financial targets and the requirements of the City of Lincoln s Bond Ordinance for LES. NOW, THEREFORE, BE IT RESOLVED, that the LES Administrative Board adopts and approves the recommended changes to the LES Rate Schedules, attached in substantially

30 complete form, which includes, but is not limited to, a) an adjustment to the LED Street Light Maintenance Rate to ensure adequate cost recovery; b) changes to the fixed and variable rate components for Residential and Heating Service rate classes; and c) changes to select Service Fees with all changes effective January 1, BE IT FURTHER RESOLVED, that the LES Administrative Board adopts and approves the recommended change to the LES Service Regulations which includes a change to the aid to construction provision which will require customers with expected new, or expanded, loads greater than 10MW to contact LES to determine their aid to construction prior to receiving service, to be effective November 1, BE IT FURTHER RESOLVED, that the LES Administrative Board directs the LES Chief Executive Officer to submit the LES Rate Schedules to the Lincoln City Council for its consideration and approval. S/Layne Sup Chair Adopted: October 19, 2018

31 Exhibit V

32 Power Supply Division 2018 Third Quarter Update Jason Fortik October 19, 2018 LES.com

33 2018 Year to Date Actual vs. Budget Non-Owned Asset Power* $48.84 $46.98 Owned Asset Power $46.89 $43.51 Contract Sales** -$ $12.26 SPP IM Load Purchases $28.48 $33.02 SPP IM Market Revenue -$ $29.08 SPP Other*** -$3.61 -$5.08 Net Power Cost (YTD) $9.29M, 11.7% Under Budget Net *Non-Owned Asset Power does not include SPP IM Purchased **Contract Sales does not include SPP IM Revenue ***SPP Other includes Over-Collected Losses and ARR s/tcr $70.09 $ $50 -$40 -$30 -$20 -$10 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 Revenues Millions ($) Budget Actual Expenses LES.com

34 2018 Natural Gas Price & LMP Natural Gas Price ($/MMBtu) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Lincoln LMP ($/MWh) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Actual Budget LES.com

35 2018 Heating & Cooling Degree Days Cooling Degree Days ,400 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Actual Average Year Heating Degree Days 1,200 1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Actual Average Year LES.com

36 Average Daily Temperature and Energy Consumption (2015 July, 2018) 16,000 Total Daily Control Area Energy Consumption (MWh) 14,000 12,000 10,000 8,000 6,000 4,000 2, Average Daily Temperature (F) LES.com

37 Monthly Demand and Energy Lincoln Load Settlement Area (GWh) YTD Renewable Energy (Equivalent % of Retail Sales) Forecast: 44.7% Actual: 43.0% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Demand (MW) Peak Load Day (YTD) 7/12/ MW All Time Peak Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Current Year Actual Current Year Forecast 8/1/ MW LES.com

38 Year to Date Unit Energy GWH Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec LRS GENTLEMAN WS 3 WSEC 4 WAPA Firm TBGS WIND PSA WIND PPA WAPA Peaking ROKEBY J_St. LFGTE LES.com

39 2018 Year to Date Unit Equivalent Availability Unit WS 3 WS 4 GGS 1 GGS 2 LRS 1 Rok 1 Rok 2 Rok 3 TBGS 1 TBGS 2 TBGS 3 TBGS 4 LFGTE J St. 0% 20% 40% 60% 80% 100% Available Limited Scheduled Outage Forced Outage LES.com

40 Fast Facts SPP 's unit capacity factor by fuel type * % 90.00% 80.00% Capacity Factor 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Coal Natural Gas Wind Hydro Nuclear Solar Oil & Other Percentage of negative real time price intervals at the LES node % % % * Calculated based on 2017 SPP Annual State of the Market Report LES.com

41 2018 Year to Date (January to September) Energy Offered to SPP IM - Approximate (Fuel Type) Energy Utilized by SPP IM - (Fuel Type) Renewable 20% Coal 37% Renewable 37% Coal 57% Oil & Gas 43% Oil & Gas 6% LES.com

42 Exhibit VI

43 September 2018 Year to Date Financial Update Headline: Continued positive financial performance due primarily to lower power and transmission costs paired with higher than budgeted revenues. Laura L. Kapustka Vice President & CFO Administrative Board October 19, 2018 LES.com 1

44 Retail sales only slightly above YTD budget of $210.2M $100 $90 $80 Actual $99.1 Actual $88.9 Dollars in Millions $70 $60 $50 $40 $30 Budget, $94.5 Last Year, $92.6 Budget, $88.9 Last Year, $87.8 $20 $10 $0 Budget Actual $23.8 Last Year Actual $1.9 Residential Commercial Industrial Streetlight Excludes Unbilled Revenue LES.com 2

45 Net power costs and transmission costs are playing a big role in projected debt service coverage 2018 Budget = 2.11 Increases to DSC Lower SPP Transmission Expense Decreases to DSC.24 Net Power Cost: Increased revenue from greater sales to SPP IM, lower purchased power expenses & lower maintenance costs at LRS ($11.3M)..23 Operations & Maintenance / Administrative & General: lower transmission costs ($5.5M), lower SEP participation ($1.5M) and various other expense categories under budget ($4M). Nothing material.06 Retail Revenue: Increased use per customer ($2.7M)..03 Other: Lower debt service & expenses in other categories ($1M) Forecast = 2.67 LES.com 3

46 Year-end Capital now projected to be above budget by $1.2M (Budget is $91M) $3,000 LES Operations Center $29.4M SE Lincoln Reliability Project $6.4M Underground Projects $13.3M Balance of Budget $42M $2,500 $2,827 Dollars in Thousands $2,000 $1,500 $1,000 $500 $0 -$500 -$1,000 -$1,500 -$2,000 Construction going very well, footings and foundations for Phase II to start this fall. May complete Phase II by late August of 2020 (instead of Spring of 2021) Delayed materials combined with lower construction costs -$1,231 Less activity than anticipated due to weather and delayed county project -$1,433 $1,044 Technology projects capitalized rather than recorded as operating due to scope changes. LES.com 4

47 GAAP Generally Accepted Accounting Principles Who makes the rules? Principles & standards for financial reporting Allows readers to compare financial reports LES Financial Reports FERC Federal Energy Regulatory Commission FASB Financial Accounting Standards Board Administers accounting and financial reporting regulations Uniform system of accounts Designated by SEC as responsible for setting accounting standards for public companies in US LES followed certain FASBs until July 2009 Coordinates and shares resources with GASB GASB Governmental Accounting Standards Board Responsible for establishing accounting standards for US governmental entities (including municipal utilities) GASB tends to align with FASB, but, issues guidance related to governmental operations Industry recognizes GASB as official source of GAAP LES.com 5

48 Exhibit VII

49 2018 PERFORMANCE INDICATORS MEASURE STATUS Acceptable Requires Review Unacceptable Actual/ Projection 3rd Qtr 2018 Forecast/ Target 3rd Qtr 2017 Actual/ Projection Fiscal Responsibility Total Retail Revenue ($) $85,817,840 $91,836,593 Total Retail Energy (MWh) 923, ,495 Debt Equity Ratio (%) (Year-end) 69% 70% Debt Service Coverage Ratio (Year-end) Total O&M Expense (excluding Power Supply Expense) per Retail Customer ($/Customer) $127 $156 Days Cash on Hand (Days) Total Non Owned and Owned Generation Power Cost ($/MWh) 1 $28.61 $32.88 Renewable Resources Cost ($/MWh) 1 $30.08 $30.01 Uncollectible Accounts per Revenue Dollar (%) 0.30% 0.39% Re quir es revi Re quir es revi Ac ce pta ble Ac ce pta ble Ac ce pta ble Ac ce pta ble Ac ce pta ble Ac ce pta ble Ac ce pta ble $86,003, ,483 69% 2.29 $ $32.82 $ % 1

50 2018 PERFORMANCE INDICATORS MEASURE STATUS Acceptable Requires Review Unacceptable Actual/ Projection 3rd Qtr 2018 Forecast/ Target 3rd Qtr 2017 Actual/ Projection Sustainability & Environmental Responsibility Sustainable Energy Program ($) (YTD) $1,039,776 $2,250,000 Renewable Energy (Equivalent % of Retail Sales) % 33.5% SEP Demand Reduction (YTD) (MW) System Losses (%) (Year-end) 2.40% 2.40% CO2 pounds/mwh Produced 1,578 1,530 Re quir es revi Ac ce pta ble Re quir es revi Ac ce pta ble Re quir es revi $1,854, % % 1,460 Customer Service Average Speed of Answer (Seconds) Phone Service Level (% of calls answered within 30 seconds) 55.40% 70.00% Average Days Sales Outstanding Average Residential Bill 3-month Average (Customer Charge + Energy Charge) / kwh Annual Average Outage Time (SAIDI 3-12 Months) [Total/Normal Weather (Minutes)] Affected Customer Outage Time (CAIDI 4-12 Month) [Total/Normal Weather (Minutes)] $ / 1,025 $ / 1,069 Ac ce 34 / 23 NA / 30 Ac ce 72 / 56 NA / 80 Re quir es revi Un ac ce pta Ac ce pta ble pta pta ble Ac ce pta ble % $ / / / 63 2

51 2018 PERFORMANCE INDICATORS MEASURE STATUS Acceptable Requires Review Unacceptable Actual/ Projection 3rd Qtr 2018 Forecast/ Target 3rd Qtr 2017 Actual/ Projection Employer of Choice DART (# of incidents per 100 employees that results in Days Away, Restricted, or Transfered) 0.87 < 1.9 Ac ce pta ble N/A Outreach Presentations and Tours 109 NA 109 Participants 9,106 NA 7,581 1 Includes fixed, variable, and debt service costs. 2 LES is selling the Renewable Energy Credits (REC); the renewable attributes are transferred to the REC recipient. 3 System Average Interruption Duration Index - The average outage time a customer will experience if all outages were evenly spread over all customers. 4 Customer Average Interruption Duration Index - The weighted average outage time a customer will have if that customer experiences an outage. 5 System losses only calculated once a year. Only billed energy is used for the calculation. Rate Comparison Chart Residential ( /kwh) Avg. Monthly Res. Bill for 1,000 kwh $98.00 $ Commercial ( /kwh) Industrial ( /kwh) All Sectors ( /kwh) Lincoln Electric System Nebraska (2017) U.S. Total (2017) $ Source: Energy Information Administration 3

52 Exhibit VIII

53 LINCOLN ELECTRIC SYSTEM Revenue & Expense Statement (Condensed) SEPTEMBER 2018 YEAR TO DATE (Dollar amounts in 000) Percentage Actual Budget Difference Difference 1) Total Revenue $255,354 $250,837 $4,517 2% Comments Retail revenues are slightly above budget (.8%) through September. This is primarily due to higher use per residential customer owing to greater than normal weather for a majority of the year. Wholesale revenue is 10% above budget YTD primarily due to higher than budgeted sales into the SPP IM. 2) Power Costs 97, ,880 (6,836) Produced Power costs are 7% below budget on a YTD basis primarily due to lower than budgeted operations and maintenance costs. LRS operation and maintenance costs were lower due to lower generation and the outage for SNCR system installation in units 2 and 3. TBGS had lower maintenance costs due to turbine component replacement expenses which were budgeted but the work was not required, and budget underrun in emissions testing. Purchased Power costs are 6% below budget primarily due to favorable pricing in SPP IM, lower WS3 energy expenses and lower renewable wind generation and expenses. -7% 3) Other Operating Expenses 53,023 64,548 (11,525) Other Operating expenses (operation & maintenance, administrative & general) continue to be under budget (-18%) due to the timing of project spending in categories including line clearance, wheeling, transmission (balanced portfolio credit), sustainable energy program -18% participation, consulting services, and software purchases. 4) Depreciation 38,482 38, % 5) Total Expenses 188, ,681 (18,132) -9% 6) Operating Income 66,805 44,156 22,649 51% 7) Non-Operating Expense (Income) 30,323 31,438 (1,115) -4% 8) Change in Net Position (Net Revenue) $36,482 $12,718 $23, % 9) Debt Service Coverage Year-end Projection ) Days Cash on Hand (Days) as of End of Month 207

54 LINCOLN ELECTRIC SYSTEM FINANCIAL AND OPERATING STATEMENT September 2018 LES.com

55 INDEX REVENUE & EXPENSE STATEMENT - CURRENT MONTH REVENUE & EXPENSE STATEMENT - YEAR-TO-DATE REVENUES, ENERGY & CUSTOMERS - CURRENT MONTH REVENUES, ENERGY & CUSTOMERS - YEAR-TO-DATE OPERATING EXPENSE STATEMENT - CURRENT MONTH OPERATING EXPENSE STATEMENT - YEAR-TO-DATE BALANCE SHEET STATEMENT OF CASH FLOWS DEBT SERVICE COVERAGE INVESTMENT REPORT NOTE: Federal Energy Regulatory Commission accounting guidance for the Southwest Power Pool Integrated Market (SPP IM) transactions (purchases, sales and other charges) requires netting together these transactions based on the time increments. If, during the time increment, sales to SPP are greater than purchases from SPP, the net amount is recorded as wholesale revenue. If, during the time increment, purchases from SPP are greater than sales to SPP, the net amount is recorded as purchased power cost. Because of this netting process, the energy (MWH s) amounts no longer directly correlate to wholesale revenue.

56 LINCOLN ELECTRIC SYSTEM REVENUE & EXPENSE STATEMENT SEPTEMBER 2018 CURRENT MONTH CURRENT CURRENT VARIANCE FROM LAST YEAR VARIANCE FROM DESCRIPTION MONTH MONTH BUDGET MONTH LAST YEAR ACTUAL BUDGET AMOUNT % ACTUAL AMOUNT % OPERATING REVENUES 1. Retail $25,760,491 $26,521,426 ($760,935) -2.9% $24,651,925 $1,108, % 2. Wholesale 2,733,706 2,779,766 (46,060) -1.7% 3,009,023 (275,317) -9.1% 3. Other Revenue 710, , , % 808,792 (98,258) -12.1% 4. City Dividend 677, ,530 6, % 638,501 39, % 5. Total Operating Revenues 29,882,450 30,493,066 (610,616) -2.0% 29,108, , % OPERATING EXPENSES 6. Purchased Power 5,336,576 5,962,147 (625,571) -10.5% 7,477,564 (2,140,988) -28.6% 7. Produced Power 4,597,835 4,777,937 (180,102) -3.8% 4,180, , % 8. Operations 1,654,376 2,681,664 (1,027,288) -38.3% 1,911,208 (256,832) -13.4% 9. Maintenance 390, ,415 (383,055) -49.5% 1,198,355 (807,995) -67.4% 10. Administrative & General 3,534,384 3,800,962 (266,578) -7.0% 3,285, , % 11. Depreciation 4,276,777 4,297,679 (20,902) -0.5% 4,242,548 34, % 12. Total Operating Expenses 19,790,308 22,293,804 (2,503,496) -11.2% 22,296,346 (2,506,038) -11.2% 13. OPERATING INCOME 10,092,142 8,199,262 1,892, % 6,811,895 3,280, % NONOPERATING EXPENSES (INCOME) 14. Interest Expense 2,195,587 2,199,896 (4,309) -0.2% 2,023, , % 15. Capitalized Interest (204,807) (245,551) 40, % (55,852) (148,955) 266.7% 16. Payments in Lieu of Taxes 1,364,797 1,503,656 (138,859) -9.2% 1,199, , % 17. City Dividend Expense 635, , % 622,269 13, % 18. Other (3) % 19. Total Other Expense 3,991,312 4,093,338 (102,026) -2.5% 3,788, , % 20. Interest Income (362,396) (221,896) (140,500) 63.3% (126,161) (236,235) 187.2% 21. Total Nonoperating Expense (Income) 3,628,916 3,871,442 (242,526) -6.3% 3,662,821 (33,905) -0.9% 22. Income Before Contributions 6,463,226 4,327,820 2,135, % 3,149,074 3,314, % CONTRIBUTED CAPITAL 23. Contributed Capital Received (34,663) 107,317 (141,980) % 70,660 (105,323) % 24. Contributed Capital Used 34,663 (107,317) 141, % (70,660) 105, % 25. Net Contributed Capital CHANGE IN NET POSITION $6,463,226 $4,327,820 $2,135, % $3,149,074 $3,314, % Page 1

57 LINCOLN ELECTRIC SYSTEM REVENUE & EXPENSE STATEMENT SEPTEMBER 2018 YEAR-TO-DATE VARIANCE FROM LAST YEAR VARIANCE FROM DESCRIPTION YEAR TO DATE YEAR TO DATE BUDGET YEAR TO DATE LAST YEAR ACTUAL BUDGET AMOUNT % ACTUAL AMOUNT % OPERATING REVENUES 1. Retail $217,430,212 $215,696,976 $1,733, % $210,417,061 $7,013, % 2. Wholesale 26,937,727 24,503,863 2,433, % 31,521,333 (4,583,606) -14.5% 3. Other Revenue 5,415,863 5,003, , % 5,584,162 (168,299) -3.0% 4. City Dividend 5,570,013 5,632,600 (62,587) -1.1% 5,504,051 65, % 5. Total Operating Revenues 255,353, ,836,524 4,517, % 253,026,607 (5,796,378) 0.9% OPERATING EXPENSES 6. Purchased Power 53,536,300 56,988,436 (3,452,136) -6.1% 60,327,083 (6,790,783) -11.3% 7. Produced Power 43,507,918 46,891,823 (3,383,905) -7.2% 50,245,735 (6,737,817) -13.4% 8. Operations 15,910,842 22,730,208 (6,819,366) -30.0% 17,493,933 (1,583,091) -9.0% 9. Maintenance 5,355,146 6,571,407 (1,216,261) -18.5% 5,735,575 (380,429) -6.6% 10. Administrative & General 31,756,677 35,246,263 (3,489,586) -9.9% 30,929, , % 11. Depreciation 38,481,817 38,252, , % 38,101, , % 12. Total Operating Expenses 188,548, ,680,787 (18,132,087) -8.8% 202,833,497 (14,284,797) -7.0% 13. OPERATING INCOME 66,805,115 44,155,737 22,649, % 50,193,110 16,612, % NONOPERATING EXPENSES (INCOME) 14. Interest Expense 18,586,053 18,722,055 (136,002) -0.7% 17,511,910 1,074, % 15. Capitalized Interest (1,159,270) (1,469,022) 309, % (431,322) (727,948) 168.8% 16. Payments in Lieu of Taxes 9,689,458 10,699,232 (1,009,774) -9.4% 10,222,407 (532,949) -5.2% 17. City Dividend Expense 5,613,493 5,613, % 5,498, , % 18. Other (1,335) 0 (1,335) - - 2,354 (3,689) % 19. Total Other Expense 32,728,399 33,565,754 (837,355) -2.5% 32,803,384 (74,985) -0.2% 20. Interest Income (2,405,686) (2,128,149) (277,537) 13.0% (1,175,245) (1,230,441) 104.7% 21. Total Nonoperating Expense (Income) 30,322,713 31,437,605 (1,114,892) -3.5% 31,628,139 (1,305,426) -4.1% 22. Income Before Contributions 36,482,402 12,718,132 23,764, % 18,564,971 17,917, % CONTRIBUTED CAPITAL 23. Contributed Capital Received 554, ,853 (410,906) -42.5% 621,381 (66,434) -10.7% 24. Contributed Capital Used (554,947) (965,853) 410, % (621,381) 66, % 25. Net Contributed Capital CHANGE IN NET POSITION $36,482,402 $12,718,132 $23,764, % $18,564,971 $17,917, % Page 2

58 LINCOLN ELECTRIC SYSTEM REVENUES, ENERGY & CUSTOMERS SEPTEMBER 2018 CURRENT MONTH CURRENT CURRENT VARIANCE FROM LAST YEAR VARIANCE FROM DESCRIPTION MONTH MONTH BUDGET MONTH LAST YEAR ACTUAL BUDGET AMOUNT % ACTUAL AMOUNT % REVENUE 1. Residential $12,994,446 $13,182,904 ($188,458) -1.4% $12,462,585 $531, % 2. Commercial (a) 11,914,944 11,972,381 (57,437) -0.5% 11,563, , % 3. Industrial 2,938,853 3,172,203 (233,350) -7.4% 2,945,340 (6,487) -0.2% 4. Street Light 213, ,294 19, % 194,640 19, % 5. Total Billed 28,061,965 28,521,782 (459,817) -1.6% 27,166, , % 6. Unbilled Change (2,301,474) (2,000,356) (301,118) 0.0% (2,514,191) 212, % 7. Total Retail 25,760,491 26,521,426 (760,935) -2.9% 24,651,925 1,108, % 8. SPP Sales 1,419,968 1,279, , % 1,511,543 (91,575) -6.1% 9. Contract Sales 1,313,738 1,500,374 (186,636) -12.4% 1,497,480 (183,742) -12.3% 10. Total Wholesale 2,733,706 2,779,766 (46,060) -1.7% 3,009,023 (275,317) -9.1% 11. Total $28,494,197 $29,301,192 ($806,995) -2.8% $27,660,948 $833, % ENERGY (Megawatt-Hours) 12. Residential 117, ,689 (2,596) -2.2% 107,726 9, % 13. Commercial (a) 143, , % 137,596 6, % 14. Industrial 43,008 46,541 (3,533) -7.6% 41,534 1, % 15. Street Light 1,720 1,759 (39) -2.2% 1,751 (31) -1.8% 16. Total Billed 305, ,942 (5,273) -1.7% 288,607 17, % 17. Unbilled Change (34,126) (22,751) (11,375) 0.0% (27,403) (6,723) 0.0% 18. Total Retail 271, ,191 (16,648) -5.8% 261,204 10, % 19. SPP Sales 97,077 47,693 49, % 58,315 38, % 20. Contract Sales 48,348 49,266 (918) -1.9% 51,418 (3,070) -6.0% 21. Total Wholesale 145,425 96,959 48, % 109,733 35, % 22. Total 416, ,150 31, % 370,937 46, % CUSTOMERS 23. Residential 123, , % 121,668 1, % 24. Commercial (a) 16,930 16, % 16, % 25. Industrial (1) -0.6% 176 (1) -0.6% 26. Street Light % % 27. Total Retail 140, , % 138,549 1, % 28. Wholesale % % 29. Total 140, , % 138,556 1, % Page 3

59 LINCOLN ELECTRIC SYSTEM REVENUES, ENERGY & CUSTOMERS SEPTEMBER 2018 YEAR-TO-DATE VARIANCE FROM LAST YEAR VARIANCE FROM DESCRIPTION YEAR TO DATE YEAR TO DATE BUDGET YEAR TO DATE LAST YEAR ACTUAL BUDGET AMOUNT % ACTUAL AMOUNT % REVENUE 1. Residential $99,057,562 $94,486,546 $4,571, % $92,570,541 $6,487, % 2. Commercial (a) 88,919,146 88,939,697 (20,551) 0.0% 87,762,511 1,156, % 3. Industrial 23,766,458 24,990,562 (1,224,104) -4.9% 24,338,383 (571,925) -2.3% 4. Street Light 1,908,235 1,750, , % 1,735, , % 5. Total Billed 213,651, ,167,201 3,484, % 206,406,731 7,244, % 6. Unbilled Change 3,778,811 5,529,775 (1,750,964) 0.0% 4,010,330 (231,519) 0.0% 7. Total Retail 217,430, ,696,976 1,733, % 210,417,061 7,013, % 8. SPP Sales 14,678,992 12,363,584 2,315, % 20,105,429 (5,426,437) -27.0% 9. Contract Sales 12,258,735 12,140, , % 11,415, , % 10. Total Wholesale 26,937,727 24,503,863 2,433, % 31,521,333 (4,583,606) -14.5% 11. Total $244,367,939 $240,200,839 $4,167, % $241,938,394 $2,429, % ENERGY (Megawatt-Hours) 12. Residential 1,031, ,071 67, % 937,414 93, % 13. Commercial (a) 1,158,123 1,158,501 (378) 0.0% 1,134,832 23, % 14. Industrial 341, ,258 (30,287) -8.1% 354,015 (12,044) -3.4% 15. Street Light 15,587 15,867 (280) -1.8% 15,923 (336) -2.1% 16. Total Billed 2,546,757 2,510,697 36, % 2,442, , % 17. Unbilled Change 11,938 32,003 (20,065) 0.0% 14,190 (2,252) 0.0% 18. Total Retail 2,558,695 2,542,700 15, % 2,456, , % 19. SPP Sales 630, , , % 746,173 (115,815) -15.5% 20. Contract Sales 442, ,119 32, % 374,758 67, % 21. Total Wholesale 1,073, , , % 1,120,931 (47,841) -4.3% 22. Total 3,631,785 3,405, , % 3,577,305 54, % CUSTOMERS AVERAGE 23. Residential 122, , % 121,421 1, % 24. Commercial (a) 16,892 16, % 16, % 25. Industrial % % 26. Street Light % % 27. Total Retail 139, , % 138,258 1, % 28. Wholesale % % 29. Total 139, , % 138,265 1, % Page 4

60 LINCOLN ELECTRIC SYSTEM OPERATING EXPENSE STATEMENT SEPTEMBER 2018 CURRENT MONTH CURRENT CURRENT VARIANCE FROM LAST YEAR VARIANCE FROM DESCRIPTION MONTH MONTH BUDGET MONTH LAST YEAR ACTUAL BUDGET AMOUNT % ACTUAL AMOUNT % POWER COST 1. SPP Purchased Power $124,626 $844,733 ($720,107) -85.2% $969,248 ($844,622) -87.1% 2. Non-Owned Asset Power 5,211,950 5,117,414 94, % 6,508,316 (1,296,366) -19.9% 3. Total Purchased Power 5,336,576 5,962,147 (625,571) -10.5% 7,477,564 (2,140,988) -28.6% 4. Produced Power 4,597,835 4,777,937 (180,102) -3.8% 4,180, , % 5. Total Power Cost 9,934,411 10,740,084 (805,673) -7.5% 11,658,424 (1,724,013) -14.8% OPERATION & MAINTENANCE (O&M) 6. Energy Delivery 1,595,134 2,151,731 (556,597) -25.9% 1,925,252 (330,118) -17.1% 7. Transmission 449,602 1,303,348 (853,746) -65.5% 1,184,311 (734,709) -62.0% 8. Total O & M Expense 2,044,736 3,455,079 (1,410,343) -40.8% 3,109,563 (1,064,827) -34.2% ADMINISTRATIVE & GENERAL (A&G) 9. Administration 188, ,879 (23,296) -11.0% 163,348 25, % 10. Communication & Corporate Records 195, ,239 (65,209) -25.1% 182,947 12, % 11. Corporate Operations 499, ,514 76, % 375, , % 12. Customer Services 871,800 1,017,319 (145,519) -14.3% 890,463 (18,663) -2.1% 13. Financial Services 316, ,651 (8,467) -2.6% 298,764 17, % 14. Power Supply 363, ,302 12, % 355,667 7, % 15. Technology Services 1,100,544 1,214,058 (113,514) -9.3% 1,018,903 81, % 16. Total A & G Expense 3,534,384 3,800,962 (266,578) -7.0% 3,285, , % 17. DEPRECIATION 4,276,777 4,297,679 (20,902) -0.5% 4,242,548 34, % 18. TOTAL OPERATING EXPENSE $19,790,308 $22,293,804 ($2,503,496) -11.2% $22,296,346 ($2,506,038) -11.2% Page 5

61 LINCOLN ELECTRIC SYSTEM OPERATING EXPENSE STATEMENT SEPTEMBER 2018 YEAR-TO-DATE VARIANCE FROM LAST YEAR VARIANCE FROM DESCRIPTION YEAR TO DATE YEAR TO DATE BUDGET YEAR TO DATE LAST YEAR ACTUAL BUDGET AMOUNT % ACTUAL AMOUNT % POWER COST 1. SPP Purchased Power $6,556,576 $8,153,338 ($1,596,762) -19.6% $3,023,209 $3,533, % 2. Non-Owned Asset Power 46,979,724 48,835,098 (1,855,374) -3.8% 57,303,874 (10,324,150) -18.0% 3. Total Purchased Power 53,536,300 56,988,436 (3,452,136) -6.1% 60,327,083 (6,790,783) -11.3% 4. Produced Power 43,507,918 46,891,823 (3,383,905) -7.2% 50,245,735 (6,737,817) -13.4% 5. Total Power Cost 97,044, ,880,259 (6,836,041) -6.6% 110,572,818 (13,528,600) -12.2% OPERATION & MAINTENANCE (O&M) 6. Energy Delivery 15,957,538 18,226,275 (2,268,737) -12.4% 13,788,456 2,169, % 7. Transmission 5,308,450 11,075,340 (5,766,890) -52.1% 9,441,052 (4,132,602) -43.8% 8. Total O & M Expense 21,265,988 29,301,615 (8,035,627) -27.4% 23,229,508 (1,963,520) -8.5% ADMINISTRATIVE & GENERAL (A&G) 9. Administration 1,790,017 1,887,579 (97,562) -5.2% 1,697,739 92, % 10. Communication & Corporate Records 1,720,302 2,210,168 (489,866) -22.2% 1,428, , % 11. Corporate Operations 4,527,259 4,359, , % 4,113, , % 12. Customer Services 7,474,719 9,057,223 (1,582,504) -17.5% 8,478,654 (1,003,935) -11.8% 13. Financial Services 2,763,899 3,054,884 (290,985) -9.5% 2,684,575 79, % 14. Power Supply 2,887,176 3,053,021 (165,845) -5.4% 2,946,691 (59,515) -2.0% 15. Technology Services 10,593,305 11,624,271 (1,030,966) -8.9% 9,580,098 1,013, % 16. Total A & G Expense 31,756,677 35,246,263 (3,489,586) -9.9% 30,929, , % 17. DEPRECIATION 38,481,817 38,252, , % 38,101, , % 18. TOTAL OPERATING EXPENSE $188,548,700 $206,680,787 ($18,132,087) -8.8% $202,833,497 ($14,284,797) -7.0% Page 6

62 LINCOLN ELECTRIC SYSTEM BALANCE SHEET SEPTEMBER 2018 ASSETS & DEFERRED OUTFLOWS OF RESOURCES LIABILITIES AND NET POSITION END OF VARIANCE END OF VARIANCE DESCRIPTION MONTH SINCE DESCRIPTION MONTH SINCE BALANCE JANUARY 1 BALANCE JANUARY 1 CURRENT ASSETS: CURRENT LIABILITIES: 1. Revenue Fund (including CDFUO) $120,314,511 $63,335,117 OTHER LIABILITIES 2. Payments in Lieu of Taxes Fund $8,854,201 ($2,919,490) 1. Accounts Payable $19,616,635 ($1,892,116) 3. Rate Stabilization Fund 34,217, , Accrued Payments in Lieu of Taxes 10,217,747 (3,118,217) 4. Bond Principal & Interest Funds 4,324,294 (10,254,827) 3. City Dividend for Utility Ownership Payable 635,337 (1,853,739) 5. Other Restricted/Designated Funds 3,403, , Commercial Paper Notes 65,500,000 (30,000,000) 6. Restricted/Designated Funds Total 41,945,581 (9,439,860) 5. Accrued Liabilities 14,668,284 2,754, Total Current Asset Funds 171,114,293 50,975, MBPP-BNSF-STB Settlement Receivables Less Uncollectible Allowance 27,600,760 7,497, Total Other Liabilities 110,638,003 (34,109,207) 9. Unbilled Revenue 17,865,601 3,778,811 CURRENT LIABILITIES - RESTRICTED ASSETS 10. Accrued Interest Receivable 925, , Current Portion of Long-Term Debt 22,750,000 3,270, Materials, Supplies & Fuel Inventory 13,585, , Accrued Interest 2,546,784 (5,680,287) 12. Plant Operation Assets 13,758,004 (3,244,147) 10. Other Current Liabilities 1,466,505 68, Other Current Assets 2,782, , Total Current Liabilities - Restricted Assets 26,763,289 (2,341,884) 14. Total Current Assets 247,632,266 60,804, Total Current Liabilities 137,401,292 (36,451,091) NONCURRENT ASSETS: NONCURRENT LIABILITIES: 15. Bond Reserve Funds 19,246,049 2,513, Bonds 1,150, Self Funded Benefits Reserve Fund (IBNP) 537,523 5, A Bonds 217,020, Segregated Funds 650, Bonds 75,525, Restricted Fund Total 20,434,061 2,518, A Bonds 167,800, Unamortized Debt Expense 2,908, , Bonds 80,095,000 (19,480,000) 20. Other Noncurrent Assets 3,257, , Bonds 121,205, ,205, Total Noncurrent Assets 26,600,219 3,966, Total Revenue Bonds 662,795, ,725, Less Current Maturities 22,750,000 3,270,000 CAPITAL ASSETS: 21. Less Unamortized Discounts/Premiums (68,976,934) (15,082,111) 22. Utility Plant in Service 1,552,943,634 31,176, Note Purchase Agreement 1,500,000 1,500, Accumulated Depreciation & Amortization (768,943,756) (34,398,362) 23. Revolving Credit Agreement 0 (30,000,000) 24. Construction Work in Progress 140,224,047 25,119, Net Long Term Debt 710,521,934 85,037, Total Capital Assets 924,223,925 21,898, Liabilities Payable from Segregated Funds 646, Other Noncurrent Liabilities 532,436 0 DEFERRED OUTFLOWS OF RESOURCES: 27. Total Liabilities 849,101,799 48,586, Deferred Loss on Refunded Debt 13,853,776 (1,600,845) NET POSITION: 28. Net Investment in Capital Assets 159,658,377 (63,886,977) 29. Restricted for Debt Service 1,873,353 (4,511,031) 30. Restricted for Employee Health Insurance Claims 425,245 (509,806) 31. Unrestricted 201,251, ,390, Total Net Position 363,208,387 36,482, TOTAL ASSETS & DEFERRED OUTFLOWS OF RESOURCES $1,212,310,186 $85,068, TOTAL LIABILITIES & NET POSITION $1,212,310,186 $85,068,422 Page 7

63 LINCOLN ELECTRIC SYSTEM STATEMENT OF CASH FLOWS SEPTEMBER 2018 CURRENT MONTH YEAR-TO-DATE CASH FLOW FROM OPERATING ACTIVITIES: 1. Received from Sales to Customers and Users $29,482,964 $257,518, Paid to Suppliers for Goods & Services (11,556,920) (136,211,178) 3. Paid to Employees for Services (2,800,809) (25,027,012) 4. Cash Flow from Operating Activities (a) 15,125,235 96,280,135 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: 5. Payments in Lieu of Taxes (1) (12,807,677) 6. City Dividend for Utility Ownership Payments (2) (7,467,232) 7. Other Cash Flow from (used for) Non-capital Financing Activities (3) (20,274,908) CASH FLOWS FROM INVESTING ACTIVITIES: 9. Net (Purchases) Sales of Investments (5,178,574) (57,535,116) 10. Interest Income 147,611 1,666, Cash Flow from (used for) Investing Activities (5,030,963) (55,869,081) CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: 12. Acquisition and Construction of Capital Assets (5,923,990) (59,168,725) 13. Salvage on Retirement of Plant 9, , Cost of Removal of Property Retired (116,572) (1,688,858) 15. Debt Issuance Cost Paid 0 (872,230) 16. Debt Premiums Collected 0 19,612, Net Capital Contributions (34,663) 554, Net Proceeds form Issuance of Long-Term Debt 0 122,705, Principal Payments on Long-Term Debt (19,480,000) (79,480,000) 20. Interest Payments on Long-Term Debt (13,154,123) (26,506,849) 21. Cash Flow from (used for) Capital Financing Activities (38,699,980) (24,341,507) 22. Net Increase (Decrease) in Cash and Cash Equivalents (28,605,711) (4,205,361) 23. Cash and Cash Equivalent Beginning of Period 47,842,537 23,442, Cash and Cash Equivalent End of Period (b) $19,236,826 $19,236,826 STATEMENT OF CASH FLOW FOOTNOTES (a) Reconciliation of operating income to cash flows from operating activities 1. Net Operating Revenue $10,092,142 $66,805, Noncash items included in operating income 4,367,805 39,299, Changes in Assets & Liabilities Increase/(Decrease) 665,288 (9,824,505) 4. Net cash flows from operating activities $15,125,235 $96,280,135 (b) Cash and cash equivalents are defined as cash and investments with original maturities of three months or less. Page 8

64 LINCOLN ELECTRIC SYSTEM DEBT SERVICE COVERAGE SEPTEMBER CURRENT MONTH YEAR-TO-DATE DESCRIPTION ACTUAL BUDGET ACTUAL ACTUAL BUDGET ACTUAL THIS YEAR THIS YEAR LAST YEAR THIS YEAR THIS YEAR LAST YEAR 1. Total Operating Revenues $29,882,450 $30,493,066 $29,108,241 $255,353,815 $250,836,524 $253,026, Total Operating Expenses 19,790,308 22,293,804 22,296, ,548, ,680, ,833, Less Depreciation (4,276,777) (4,297,679) (4,242,548) (38,481,817) (38,252,650) (38,101,263) 4. Operating Expense Net of Depreciation 15,513,531 17,996,125 18,053, ,066, ,428, ,732, Net Operating Revenue for Debt Service 14,368,919 12,496,941 11,054, ,286,932 82,408,387 88,294, Interest Income (a) 311, ,483 98,300 1,884,889 1,800, , Other Income Rate Stabilization Fund AVAILABLE FOR DEBT SERVICE 14,680,254 12,682,424 11,152, ,171,821 84,208,819 89,220, DEBT SERVICE (b) 4,324,651 4,430,031 3,643,885 34,503,538 34,610,549 31,757, DEBT SERVICE COVERAGE (a) Excludes interest from Rate Stabilization Fund. (b) Includes Bond Principal & Interest only. Page 9

65 LINCOLN ELECTRIC SYSTEM INVESTMENT REPORT SEPTEMBER 2018 PURCHASE MATURITY CPN/DCNT (a) CASH PAR FUND / INVESTMENT DATE DATE RATE YIELD EQUIVALENTS SECURITIES VALUE CASH - REVENUE FUND / WORKING FUND $1,920,634 $1,920,634 SHORT TERM FEDERAL INVESTMENT TRUST (STFIT) 14,778,422 14,778,422 REVENUE FUND Federated Treasury Obligations Fund * 1.620% 118, ,396 Banco de Credito Comercial Paper 06/28/ /22/ % 2.520% 7,439,583 7,500,000 Torchmark Corporation Commercial Paper 06/28/ /20/ % 2.556% 7,423,573 7,500,000 Hannover Funding Co. LLC Commercial Paper 06/28/ /12/ % 2.786% 7,404,323 7,500,000 Korea Development Bank Commercial Paper 06/28/ /04/ % 2.462% 7,403,813 7,500,000 Shinhan Bank NY Branch Commercial Paper 06/28/ /22/ % 2.697% 7,368,052 7,500,000 U.S. Treasury Note 06/28/ /15/ % 2.220% 7,435,425 7,500,000 Banco Santander SA/NY Commercial Paper 07/26/ /01/ % 2.648% 7,482,967 7,620,000 ING (U.S.) Funding LLC Commercial Paper 07/10/ /05/ % 2.579% 4,988,869 5,085,000 U.S. Treasury Note 06/28/ /30/ % 2.301% 7,434,750 7,500,000 U.S. Treasury Note 06/28/ /15/ % 2.311% 7,552,800 7,500,000 Societe Generale Commercial Paper 08/27/ /24/ % 2.621% 7,497,643 7,645,000 Bedford Row Funding Corp Commercial Paper 08/28/ /24/ % 2.589% 3,433,572 3,500,000 Bank of China (Hong Kong) Commercial Paper 09/21/ /18/ % 2.735% 5,761,812 5,880,000 Federal Home Loan Banks Bond 06/29/ /21/ % 2.350% 7,411,692 7,500,000 U.S. Treasury Note 06/28/ /15/ % 2.345% 7,376,979 7,500,000 Discount \ (Premium) 81,206 Total Revenue Fund 118, ,497, ,848,396 PILOT FUND Federated Treasury Obligations Fund * 1.620% 25,438 25,438 MUFG Bank, Ltd., NY Branch Commercial Paper 04/20/ /14/ % 2.444% 864, ,000 J.P. Morgan Securities Commercial Paper 05/18/ /11/ % 2.496% 962, ,000 J.P. Morgan Securities Commercial Paper 06/20/ /15/ % 2.579% 946, ,000 Natixis, New York Branch Commercial Paper 07/20/ /05/ % 2.525% 1,119,660 1,140,000 Federal Home Loan Banks Bond 03/22/ /08/ % 2.120% 990,029 1,000,000 Canadian Imperial Holdings Inc Commercial Paper 08/20/ /26/ % 2.482% 1,445,191 1,470,000 Bedford Row Funding Corp Commercial Paper 09/28/ /29/ % 2.548% 1,408,763 1,430,000 U.S. Treasury Note 02/20/ /30/ % 2.105% 1,083,869 1,090,000 Discount \ (Premium) 8,148 Total PILOT Fund $25,438 $8,828,763 $8,980,438 (a) Cash and cash equivalents are defined as cash & investments with original maturities of three months or less. * Interest rate as of end of month. Page 10a

66 LINCOLN ELECTRIC SYSTEM INVESTMENT REPORT SEPTEMBER 2018 PURCHASE MATURITY CPN/DCNT (a) CASH PAR FUND / INVESTMENT DATE DATE RATE YIELD EQUIVALENTS SECURITIES VALUE BOND RESERVE FUNDS Federated Treasury Obligations Fund * 1.620% $35,319 $35,319 Federal National Mortgage Association Bond 05/28/ /01/ % 1.650% 1,416,805 1,505,000 Federal Home Loan Mortgage Corporation Bond 06/28/ /15/ % 2.400% 2,916,449 2,950,000 Federal National Mortgage Association Bond 09/01/ /28/ % 1.150% 355, ,000 Federal Home Loan Banks Bond 08/28/ /21/ % 2.630% 2,344,766 2,345,000 Federal National Mortgage Association Bond 09/01/ /28/ % 1.400% 1,400,000 1,400,000 Federal National Mortgage Association Bond 09/01/ /28/ % 1.400% 2,340,000 2,340,000 Federal Home Loan Banks Bond 03/14/ /28/ % 2.400% 3,750,000 3,750,000 Federal National Mortgage Association Bond 06/28/ /28/ % 2.800% 4,600,000 4,600,000 Discount \ (Premium) 87,710 Total Bond Reserve Funds 35,319 19,210,730 19,280,319 BOND PRINCIPAL & INTEREST FUNDS Federated Treasury Obligations Fund * 1.620% 58,111 58,111 Bayerische Landesbank, NY Commercial Paper 09/28/ /25/ % 2.557% 2,399,436 2,425,000 International Bank for Reconstruction and Dev Note 09/28/ /15/ % 2.610% 1,866,569 1,895,000 Discount \ (Premium) 178 Total Bond Principal & Interest Funds 58,111 4,266,183 4,378,111 RATE STABILIZATION FUND Federated Treasury Obligations Fund * 1.620% 115, ,325 Federal National Mortgage Association Bond 02/10/ /14/ % 1.140% 6,323,252 6,325,000 Federal Farm Credit Banks Bond 06/29/ /12/ % 1.391% 5,048,485 5,050,000 Federal National Mortgage Association Bond 12/11/ /26/ % 1.820% 1,729,662 1,732,000 Federal Home Loan Mortgage Corporation Bond 01/30/ /27/ % 2.150% 8,091,809 8,150,000 Federal Farm Credit Banks Bond 12/20/ /12/ % 1.916% 5,135,888 5,140,000 Federal Farm Credit Banks Bond 01/12/ /10/ % 1.970% 2,549,006 2,550,000 Federal Farm Credit Banks Bond 06/29/ /11/ % 2.580% 5,197,014 5,200,000 Discount \ (Premium) 27,079 Total Rate Stabilization Fund $115,325 $34,102,195 $34,262,325 (a) Cash and cash equivalents are defined as cash & investments with original maturities of three months or less. * Interest rate as of end of month. Page 10b

67 LINCOLN ELECTRIC SYSTEM INVESTMENT REPORT SEPTEMBER 2018 PURCHASE MATURITY CPN/DCNT (a) CASH PAR FUND / INVESTMENT DATE DATE RATE YIELD EQUIVALENTS SECURITIES VALUE SELF-FUNDED HEALTH & DENTAL CLAIMS FUND Federated Treasury Obligations Fund * 1.620% $757,920 $757,920 Federal Home Loan Bank Discount Note 09/28/ /13/ % 2.150% 995,482 1,000,000 Discount \ (Premium) Total Self-Funded Health & Dental Claims Fund 1,753, ,757,920 SELF-FUNDED HEALTH & DENTAL RESERVE FUND (INCURRED BUT NOT PRESENTED) Federated Treasury Obligations Fund * 1.620% 8,041 8,041 Federal Farm Credit Banks Bond 01/12/ /14/ % 1.781% 527, ,000 Discount \ (Premium) 1,803 Total Self-Funded Health & Dental Reserve Fund 8, , ,041 SEGREGATED ACCOUNT Federated Treasury Obligations Fund * 1.620% 252, ,605 Federal National Mortgage Association Bond 12/29/ /14/ % 1.780% 198, ,000 U.S. Treasury Bill 06/29/ /20/ % 2.300% 1,271,321 1,300,000 U.S. Treasury Note 09/17/ /31/ % 2.661% 405, ,000 Discount \ (Premium) 1,086 Total Segregated Account 252,605 1,877,116 2,162,605 COST OF ISSUANCE ACCOUNT Federated Treasury Obligations Fund * 1.620% 171, ,133 Discount \ (Premium) Total Cost of Issuance Account 171, ,133 TOTAL $19,236,826 $172,311,528 $193,078,344 (a) Cash and cash equivalents are defined as cash & investments with original maturities of three months or less. * Interest rate as of end of month. Page 10c

68 September 2018 Year to Date Financial Update Headline: Continued positive financial performance due primarily to lower power and transmission costs paired with higher than budgeted revenues. Laura L. Kapustka Vice President & CFO Administrative Board October 19, 2018 LES.com 1

69 Retail sales only slightly above YTD budget of $210.2M $100 $90 $80 Actual $99.1 Actual $88.9 Dollars in Millions $70 $60 $50 $40 $30 Budget, $94.5 Last Year, $92.6 Budget, $88.9 Last Year, $87.8 $20 $10 $0 Budget Actual $23.8 Last Year Actual $1.9 Residential Commercial Industrial Streetlight Excludes Unbilled Revenue LES.com 2

70 Net power costs and transmission costs are playing a big role in projected debt service coverage 2018 Budget = 2.11 Increases to DSC Lower SPP Transmission Expense Decreases to DSC.24 Net Power Cost: Increased revenue from greater sales to SPP IM, lower purchased power expenses & lower maintenance costs at LRS ($11.3M)..23 Operations & Maintenance / Administrative & General: lower transmission costs ($5.5M), lower SEP participation ($1.5M) and various other expense categories under budget ($4M). Nothing material.06 Retail Revenue: Increased use per customer ($2.7M)..03 Other: Lower debt service & expenses in other categories ($1M) Forecast = 2.67 LES.com 3

71 Year-end Capital now projected to be above budget by $1.2M (Budget is $91M) $3,000 LES Operations Center $29.4M SE Lincoln Reliability Project $6.4M Underground Projects $13.3M Balance of Budget $42M $2,500 $2,827 Dollars in Thousands $2,000 $1,500 $1,000 $500 $0 -$500 -$1,000 -$1,500 -$2,000 Construction going very well, footings and foundations for Phase II to start this fall. May complete Phase II by late August of 2020 (instead of Spring of 2021) Delayed materials combined with lower construction costs -$1,231 Less activity than anticipated due to weather and delayed county project -$1,433 $1,044 Technology projects capitalized rather than recorded as operating due to scope changes. LES.com 4

72 GAAP Generally Accepted Accounting Principles Who makes the rules? Principles & standards for financial reporting Allows readers to compare financial reports LES Financial Reports FERC Federal Energy Regulatory Commission FASB Financial Accounting Standards Board Administers accounting and financial reporting regulations Uniform system of accounts Designated by SEC as responsible for setting accounting standards for public companies in US LES followed certain FASBs until July 2009 Coordinates and shares resources with GASB GASB Governmental Accounting Standards Board Responsible for establishing accounting standards for US governmental entities (including municipal utilities) GASB tends to align with FASB, but, issues guidance related to governmental operations Industry recognizes GASB as official source of GAAP LES.com 5

73 Power Supply Division 2018 September Monthly Report Jason Fortik October 19, 2018 LES.com

74 Monthly Actual vs. Budget Non-Owned Asset Power* $5.12 $5.21 Owned Asset Power $4.78 $4.60 Contract Sales** -$1.50 -$1.31 SPP IM Load Purchases $1.91 $2.61 SPP IM Market Revenue -$2.70 -$2.65 SPP Other*** -$0.35 -$0.54 Net $7.22 $7.96 -$4 -$2 $0 $2 $4 $6 $8 $10 Revenues Millions ($) Expenses *Non-Owned Asset Power does not include SPP IM Purchased **Contract Sales does not include SPP IM Revenue ***SPP Other includes Over-Collected Losses and ARR s/tcr Budget Actual LES.com 2

75 100 Daily Temperature Range Monthly High 96 F Degrees in Fahrenheit Monthly Low 41 F Sat Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun Daily Range Normal Low Normal High LES.com 3

76 800 Loads Actual = 695 MW 700 Forecasted = 661 MW MW LES.com 4

77 350 Customer Energy Consumption GWH Budget 2018 Actual LES.com 5

78 Unit Equivalent Availability WS 3 WS 4 Unit GGS 1 GGS 2 LRS 1 Rok 1 Rok 2 Rok 3 TBGS 1 TBGS 2 TBGS 3 TBGS 4 LFGTE J St. 0% 20% 40% 60% 80% 100% Available Limited Scheduled Outage Forced Outage LES.com 6

79 16,000 Resource Energy 14,000 12,000 10,000 MWh 8,000 6,000 4,000 2,000 0 LRS_1 GGS_1 GGS_2 WS 3 WS 4 WAPA Firm TB_1 TB_2 TB_3 TB_4 ROK1 ROK2 ROK3 J_St. WAPA Peaking Wind PSA Wind PPA LFGTE LES.com 7

80 800 Peak Load Day September 20, 2018 Actual = 695 MW MW Hour GGS_1 GGS_2 LRS WSEC 3 WSEC 4 TB_1 TB_2 TB_3 TB_4 LFGTE ROK 1 ROK 2 ROK 3 J_St. Wind PSA Wind PPA WAPA Firm WAPA Peaking Peak Day Load LES.com 8

81 Energy Offered to SPP IM - Approximate (Fuel Type) Energy Utilized by SPP IM - (Fuel Type) Renewable 18% Coal 42% Renewable 31% Coal 66% Oil & Gas 40% Oil & Gas 3% Note: Total percentage may not add up to 100% due to rounding LES.com 9