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August 22 2012 Agenda Packet-final

VIEWS: 2 PAGES: 129

									                                        Agenda
                           Colorado Springs Utilities Board
                            August 22, 2012 - 1:00 p.m.*
                                Blue River Board Room
                     5th Floor, Plaza of the Rockies South Tower
                                     121 S. Tejon

Est.Time                                                                     Objective

1:00        I. Call to Order

1:05        II. Executive Session
                In accord with City Charter art. III, § 3-60(d) and its
                incorporated Colorado Open Meetings Act, C.R.S. § 24-
                6-402(4)(f), and Rule 10 of the Utilities Board Bylaws,
                the Board, in Open Session, is to determine whether it
                will hold a Closed Executive Session. The purpose of
                the closed executive session is to discuss a personnel
                matter. The Utilities Board Chair shall poll the Utilities
                Board members, and, upon consent of two-thirds of
                the members present, may hold a closed executive
                session. If consent to the closed executive session is
                not given, the item may be discussed in open session or
                withdrawn from consideration.

2:00            *Reconvene for open meeting

            II. Minutes
                A. Approval of Minutes of July 18, 2012 Meeting              Decision

2:10       III. Recognition/Customer Comment Period

2:20       IV. Governance Monitoring Reports (see attachments)

               A. Annual Report on Executive Limitation                      Monitoring
                   (EL) 3 – Treatment of Staff

               B. Semi-Annual Report on Executive Limitation                 Monitoring
                   (EL) 4 – Asset Protection

               C. Quarterly Report on Executive Limitation                   Monitoring
                   (EL) 7 – Financial Condition and Activities
            D. Annual Report on Executive Limitation                Monitoring
               (EL) 10 – Water Rights Protection and Development

            E. Semi-Annual Report on Executive Limitation           Monitoring
               (EL) 11 – Enterprise Risk Management

            F. Quarterly Chief Executive Officer Performance Plan   Monitoring
               Results Board-CEO Linkage
               (BL) 6 – Monitoring CEO Performance

            G. Chief Executive Officer’s Communication Executive    Monitoring
               Limitation (EL) 8 – Communication and Support to
               the Board

        V. Discussion/Action Items (see attachments)

3:00        A. Waldo Canyon Post-Fire Update                        Discussion
               Executive Limitation (EL) 13 -- Infrastructure

            B. Water Outlook and Drought Response Planning          Discussion
               Update
               (EL) 10 – Water Rights Protection and Development

3:30        C. Authority                                            Decision
               Board-CEO Linkage (BL) 1 – Global Governance –
               Management Connection

       VI. General Board Discussion

       VII. Adjournment
                                                                                            Item II
                                                                                           Minutes



                             Colorado Springs Utilities Board
                                     Meeting Minutes
                                Wednesday, July 18, 2012
                                  Blue River Board Room
                       5th Floor, Plaza of the Rockies South Tower
                                       121 S. Tejon


Utilities Board Members Present: Chair Scott Hente, Vice Chair Jan Martin,
Board Members Merv Bennett, Lisa Czelatdko, Angela Dougan, Bernie Herpin, Tim Leigh,
Val Snider and Brandy Williams

Excused: none

Staff Members Present: Jerry Forte, Sherri Newell, Bruce McCormick, Bill Cherrier, Gary
Bostrom, Dave Padgett, Carl Cruz, George Luke, Abigail Ortega, Dave Maier, Tamara
Kirk, City Attorney Chris Melcher, Deputy City Attorney Ken Burgess, City Auditor Denny
Nester

I.     Call to Order

       Chair Hente called the Utilities Board meeting to order at 1:02 p.m.

II.    Minutes

       Board Member Snider moved to approve the June 20, 2012 minutes. Board
       Member Bennett seconded the motion. The motion passed unanimously.

III.   Recognition/Customer Comment Period

       A. 2012 Secretary of Defense Employer Support Freedom Award Semi-Finalist
          Mr. Forte introduced Retired Rear Admiral Richard Young, Colorado State
          Chairman, Employer Support of the Guard and Reserve (ESGR), who
          recognized Colorado Springs Utilities for their nomination for the prestigious
          Secretary of Defense Employer Support Freedom Award, which is the highest
          recognition given by the U.S. Government to employers for their support of
          employees who serve in the Guard and Reserves.

       B. 2012 American Heart Association Platinum Award
          Ms. Kirk, Human Resources Supervisor, introduced Ms. Leslie McGinn,
          Executive Director, American Heart Association, who recognized Colorado
          Springs Utilities for receiving the Platinum level recognition award, the highest



                                             3
                                                                                          Item II
                                                                                         Minutes
         award possible, for its ongoing commitment to wellness. Colorado Springs
         Utilities is one of only three companies in Southern Colorado to receive this
         award and has received the award four years in a row.

         Mr. Sam Masias provided an overview of the solar industry from 2006 to 2011,
         including the number of systems installed and the cost of solar energy. He
         also provided a summary report on solar gardens and how much solar has
         been adopted in Colorado Springs since 2006. He commented that he hopes
         more solar energy is adopted by the community in the future. He responded
         to Board Member Herpin’s question regarding the relation of rebates and
         costs to the number of installations.

         Mr. Bob Stephenson commented on water rates and asked some questions
         regarding the availability of information from Colorado Springs Utilities on
         factors influencing residential water rates.

IV.   Governance Monitoring Reports

      A. Semi-Annual Report on Executive Limitation
         (EL) 13 – Infrastructure

         No questions or comments

      B. Annual Report on Executive Limitation
         (EL) 6 – Financial Planning/Budgeting

         No questions or comments

      C. Quarterly Report on Contracts Issued Over $50,000
         Executive Limitation (EL) 8 – Communication and Support to the Board

         Mr. Forte responded to Board Member Dougan’s question regarding the
         status of the Over $50,000 contracts and their relation to the approved
         budget. She requested information on large projects be provided before they
         are implemented. She also requested additional information be provided on
         an ongoing basis on contracts based on projects, issues, assets, and routine
         operations and maintenance expenditures.

         Vice Chair Martin commented on number of local contracts and the stimulus
         they provide to the local economy.

         Board Member Leigh requested additional information be provided on some
         of the expenditures on the Over $50,000 Report.




                                           4
                                                                                   Item II
                                                                                  Minutes
    Mr. Luke, General Operations Manager, Energy Services, clarified that most of
    the expenditures for Drake on the Over $50,000 report are for routine
    operations and maintenance.

    Mr. Forte mentioned that the information is also provided in the Annual
    Operating Plan (AOP) and budget.

D. Chief Executive Officer’s Communication Executive Limitation (EL) 8 –
   Communication and Support to the Board

    Water Outlook:
    Ms. Ortega provided an update on the water outlook including the U.S.
    drought monitor, outlook, weather conditions, water demands, forecasts and
    storage capacities. She also reviewed regional water contract sales and a
    summary of the water situation outlook.

    Board Member Herpin commented that Colorado Springs Utilities customers
    are currently participating in voluntary water restrictions. Mr. Forte
    mentioned that we would be increasing communication to customers
    regarding voluntary water restrictions and conservation.

    ECA/GCA Update
    No questions or comments

    Fire Update
    Mr. Maier, Enterprise Risk Manager, provided estimated costs incurred from
    fire related activities, including fire suppression, emergency protective
    measures, recovery and support, restoration of infrastructure, reservoir and
    watershed remediation. He explained that costs were tracked from the
    beginning of the fire, with the majority of costs associated with fire
    suppression, infrastructure damage and resumption of services. He provided
    information on cost reimbursements expected to be provided through
    Federal Emergency Management Agency (FEMA) grants.

    Mr. Maier responded to Board Member Dougan’s question regarding the
    inclusion of staff overtime expenses in FEMA reimbursements.

    Mr. Bostrom, Water Services Officer, provided information on the Burned
    Area Emergency Response (BAER) Team report. He discussed the severity of
    damage in different areas and how the flow of water might be affected by the
    damage. He summarized information included in the BAER Team Report,
    including maps of burn severity, slopes and models, identifying asset values at
    risk, and recommendations for emergency treatments.




                                     5
                                                                                        Item II
                                                                                       Minutes
         Mr. Bostrom responded to Board Member Leigh’s questions regarding water
         flow in the burn areas and reimbursable expenses in relation to fire damage.
         He then responded to Board Member Bennett’s question regarding recovery
         of lumber and Board Member Snider’s question regarding the flammability of
         mulching used as an emergency treatment.

         Mr. Bostrom summarized next steps including assembling a post-fire team,
         assessing and developing information and work plans for immediate and
         short-term stabilization. He then provided an assessment of remaining work
         needed to restore electric and gas. He responded to Mr. Snider’s question
         regarding restoring service to the 360 homes lost.

         Mr. Bostrom responded to Board Member Benett’s question regarding
         damage to the Wildland Fire Team’s equipment. Mr. Forte confirmed that
         much of the Wildand Fire Team’s equipment was damaged or destroyed.

         Chair Hente commented on the value of the decision last year to put a person
         full-time to manage the Wildland Fire Team.

         Vice Chair Martin requested an opportunity to meet members of the Wildland
         Fire Team to express appreciation of their efforts.

         Board Member Snider commented on the value and versatility of the Wildland
         Fire Team members and the importance of the service that these individuals
         provide the organization and community.

         Board Member Czelatdko commented on how impressed she was by the
         responsiveness of the organization during the fire and how much the
         community appreciated Colorado Springs Utilities’ efforts to restore service to
         customers.

         Board Member Herpin commented on how beneficial it is to the community
         to have a four service utility which enabled seamless assistance to customers
         and response to the emergency. He commented on the value of the Wildland
         Fire Team for protecting Colorado Springs Utilities’ assets.

A break was called at 2:14 p.m.
The meeting reconvened at 2:34 p.m.

Executive Session

The meeting reconvened at 4:02 p.m.




                                           6
                                                                                           Item II
                                                                                          Minutes


V.   Discussion/Action Items

     A. Financial Planning and Budgeting
        Executive Limitation (EL) 6 – Financial Planning/Budgeting

          Chair Hente suggested postponing this item to August.

          Board Member Williams commented that she would like to have extra time to
          analyze the 2013 budget.

          Board Member Snider mentioned that the community should be involved in
          the budget process.

          Vice Chair Martin suggested having a budget workshop.

     B.   Drake Analysis
          Executive Limitation (EL) 13 – Infrastructure

          Mr. McCormick, Energy Services Officer, provided an overview of the Utilities
          Board direction to move forward with an analysis of alternatives for Drake,
          including estimated costs of canceling and transferring the SO2 emissions
          control project at Drake. He summarized the approach including technical
          analysis, economic development and roles of the Utilities Board,
          Chamber/EDC and staff, and the public. He discussed defining the scope of
          the analysis and provided an update on the status of the analysis. He
          summarized the recommendations to suspend the S02 emissions control
          project at Drake and begin at Nixon while conducting a full analysis of
          alternatives for Drake.

          Mr. John Gaughan commented that there are many unknown variables and
          EPA mitigation involved in moving from Drake to Nixon that are likely to add
          much more to estimated costs.

          Ms. Kanda Calef commented that there is an economic downturn in our
          community and that we need to consider this in moving forward with Drake
          and that it is appropriate to adopt affordable alternatives to meet EPA
          emission standards without compromising the economic interests of the
          community.

          Mr. Dan Malinaric, Atmel, commented that we need to consider all factors
          contributing to increasing utilities costs and to think about not just Atmel, but
          the employees of Atmel and their contribution to the economic base of
          Colorado Springs. He questioned whether the decisions we are making are



                                            7
                                                                                      Item II
                                                                                     Minutes
going to impact rates and make us more competitive or less competitive for
companies.

Mr. Sam Masias commented that we must consider the future and the effects
of coal fired power on the environment and on members of the community.
He also mentioned that the cost of operation and maintenance of Drake is
likely to increase because it is dated technology.

Mr. Walter Lawson commented that the visual and environmental impacts of
Drake are balanced by the low cost energy it provides. He commented that
before any retirement work can be done, there needs to be an energy source
alternative in its place. Mr. McCormick responded to Mr. Lawson’s regarding
the cost of providing an alternative source of energy.

Mr. Lee Milner commented on the request for proposal (RFP) Scope of Work
regarding capacity expansion if Drake is retired. He discussed the impact on
rates of retiring Drake and building a new plant. He also discussed Demand
Side Management (DSM), mentioning that conservation needs to be
considered, using Austin as an example. Mr. McCormick responded to Mr.
Millner’s question regarding putting out another RFP for the analysis.

Mr. David Amster-Olszewski referenced Austin’s DSM efforts and commented
that now is an excellent time to move forward with transferring the scrubber
project to Nixon and consider alternatives to Drake, including conservation,
without increasing rates.

Board Member Herpin commented that our DSM efforts are currently similar
to Austin’s.

Board Member Czelatdko commented that the Utilities Board is interested in
a cleaner, affordable energy supply. She emphasized that there have been
years of study and research by previous Utilities Boards for the solutions for
emissions control and that the solution by Neumann Systems Group (NSG) to
efficiently capture air pollutants has been tested. She mentioned that there
are 38 local companies involved as contractors for this project, providing jobs
in the community. The Board understands that the conversation of
decommissioning Drake has come up over the years for many different
reasons and is considering all factors, including fiduciary responsibility to rate
payers. She stressed that the Utilities Board is committed to a transparent,
unbiased process for analysis which involves the community.

Board Member Bennett commented that even if we decommissioned Drake,
it could not be accomplished immediately.




                                   8
                                                                                   Item II
                                                                                  Minutes
Board Member Bennett moved that in order to meet the clean air act and
regional haze obligations, Colorado Springs Utilities complete the installation
of the Neumann Neustream System at the Drake Power Plant and that the
Utilities Board authorize a study, to be completed in 2013, that will lead to a
planned decommissioning of the Drake Power Plant.

The motion was seconded by Board Member Czelatdko.

Board Member Dougan expressed concern that the community was not
involved enough in the decision for the NSG scrubber project and that she
cannot support moving forward with NSG scrubbers without more
information. She does not support moving forward with NSG scrubber
project or spending $500,000 for the analysis of Drake.

Board Member Leigh commented that there are a lot of unanswered
questions. He mentioned that he reluctantly supports the motion, but would
like to see more DSM efforts. He emphasized that he supports having the
lowest rates for rate payers.

Board Member Herpin mentioned that maybe the RFP should be opened up
to a broader selection of companies. He commented that a considerable
amount of research and money have gone into the NSG solution, that it
provides the best cost solution for meeting EPA standards and should
continue. He agreed with Board Member Bennett’s motion.

Board Member Martin commented that we have to make a decision today
based on the information we have today and that a lot of work has gone into
the NSG system to be sure it is a good solution. She mentioned that
businesses come to Colorado Springs specifically because of our low electric
rates. She supported Board Member Bennett’s motion.

Board Member Snider supported Board Member Bennett’s motion. He
mentioned that it is important to show fiscal responsibility to rate payers and
that we need to honor the contract we have in place with NSG.

Board Member Williams did not support the motion. She commented that
the study needs to be done before any decisions are made. She agreed that
the primary focus is low rates and would like to consider alternatives before
making a decision.

Chair Hente supports the motion. He commented that the Board made a
commitment to NSG and it needs to fulfill that contract. He also commented
that the right way to do this from a budgeting perspective is to put the Drake
analysis into the 2013 budget.



                                  9
                                                    Item II
                                                   Minutes


         The motion passed on seven to two vote.


VI.    General Board Discussion

VII.   Adjournment

       The meeting was adjourned at 4:44 p.m.




                                        10
                                                                                Item IV-A
                                                             Governance Monitoring Report




Date:       August 15, 2012

To:         Utilities Board

From:       Jerry Forte, P.E., Chief Executive Officer

Subject:    Annual Report on Executive Limitation (EL) 3 – Treatment of Staff


Information Objective:        Monitoring

Significant informational updates to Executive Limitation (EL) 3 since the last report
include:

        •   A total of five different types of Diversity/Outreach opportunities were
            offered throughout the reporting period in efforts to continue educating
            employees on diversity topics.
        •   Workforce composition analysis shows continued efforts to attract and retain
            a diverse workforce.
        •   One promulgation to the Personnel Policies Manual (PPM) was completed
            during this reporting period.
        •   A compliance forum which included legislative updates was presented by
            Human Resources to all Colorado Springs Utilities leadership.




                                              11
                                                                                       Item IV-A
                                                                    Governance Monitoring Report


                                 Colorado Springs Utilities Board
                                       Monitoring Report


Date:             August 15, 2012

Policy:           Executive Limitation (EL) 3 – Treatment of Staff

Frequency:        Annual                                                    Method: Internal


Global Policy Prohibition: With respect to the treatment of paid and volunteer staff, the
Chief Executive Officer may not cause or allow conditions that are unfair, undignified, or
disrespectful.

Compliance: The CEO reports that these conditions have not occurred as of this
monitoring report.

Comments/Interpretation: This report reflects July 1, 2011 through June 30, 2012
activity. Colorado Springs Utilities continues to support and promote the Delta Team in
recognizing and leveraging diversity for employees. This is accomplished in a variety of
ways such as diversity training for employees, management training and educational
and community outreach. Some notable activities include:

Employee Diversity Training:
   •      Creation of new diversity training titled “Culture of Honor” which will be presented to all
          employees beginning in June, 2012.

Management Training:
   •      A compliance forum which included legislative updates was presented by Human
          Resources to all Colorado Springs Utilities leadership. Additional focused trainings for
          two Divisions regarding legal compliance changes and expectations regarding treatment
          of staff were held.

Educational and Community Outreach:

Events 2011:
   •      July 17, Pridefest at Acacia Park
   •      August 4, Peterson AFB Career Tracks for Military Spouses at Peterson AFB
   •      August 7, Everybody Welcome Cultural Festival at America the Beautiful Park
   •      August 9, Colorado Springs Diversity Forum’s Diversity and Inclusion Workshop
              o Military Community in our Community at Colorado Springs Regional Building




                                                  12
                                                                                   Item IV-A
                                                                Governance Monitoring Report

   •   August 10, Latino Community Luncheon Forum at Crowne Plaza Hotel
   •   August 10, "The Wellbriety Movement: The Journey to Forgiveness”
           o Film followed by Q&A with Don Coyhis of White Bison at Cornerstone Building,
                Colorado College
   •   August 12, Immigration Symposium "The Amache Japanese Internment Camp,"
       Granada, CO at the Fine Arts Center
   •   August 23 – 29, CSDF Delegation to City of Fujiyoshida, Japan for Fire Festival
   •   September 7, Black Advisory Council Meeting/ Guest Speaker Dr. Vila, AFA Chief
       Diversity Officer at Penrose House – El Pomar
   •   September 23, Meeting with Mr. Yasumoto Oyama, The Acting Consul General of Japan
       at City Hall and lunch at Kura Restaurant
   •   October 12, Latino Luncheon at Crowne Plaza
   •   October 15, National Association for the Advancement of Colored People (NAACP)
       Freedom Fund Gala at Crowne Plaza
   •   October 20, Diversity Awards Luncheon – Colorado Springs Diversity Forum (CSDF) and
       CSBJ at Cheyenne Mountain Resort
   •   November 19, Indian Community event “Vivaah” at Pikes Peak Center
   •   December 6, Military/Vet meeting at Colorado Springs Chamber of Commerce

Events 2012:

   •   January 16, Martin Luther King Jr. Breakfast at Cornerstone Colorado College
   •   January 21, Chinese New Year at City Auditorium
   •   February 2, Black History Live A.A. Burleigh Slave, Civil War Soldier, Educator at
       Stargazers Theater
   •   March 13, Consul General of Japan and Mrs. Ikuhiko Ono Memorial reception for the
       Great East Japan Earthquake at Mitchell Hall at the Denver Botanic Gardens
   •   March 19, Quality of Life Indicators (QLI) Community Engagement Vision Council
       Meeting at Pikes Peak United Way
   •   March 20, Asian Emerging Leaders Development (ELD) Advisory Board El Pomar
       (Penrose House)
   •   March 22, Community Focus Fund (CFF)/DELTA Team National Basketball Wheelchair
       Tournament at Olympic Training Center
   •   March 22, Colorado Springs Civil Rights Division and Colorado Springs HUMAN
       RELATIONS COMMISSION Black /Latino coalition to a public discussion at Slocum
       Commons, Colorado College
   •   April 18, Presentation of the Cherry Trees for the City of Colorado Springs and Consul
       General of Japan at Acacia Park
   •   April 19, Diversity Panel for DELTA Diversity Team at Leon Young Service Center
   •   April 21, Black Chamber of Colorado Springs 20th Anniversary Banquet at Double Tree
       Hotel



                                              13
                                                                                 Item IV-A
                                                              Governance Monitoring Report

   •   May 4, Employee Support Group Reserves (ESGR) Banquet at Denver Tech Center
       Marriott
   •   May 4, El Cinco de Mayo Dinner at Doubletree Hotel
   •   May 23 – 24, “Experience the Springs” at Leadership Pikes Peak and United Way

Policy Prohibition 1: The CEO shall not allow violation of the City’s Zero Tolerance
policy.

Compliance: The CEO reports that these conditions have not occurred as of this
monitoring report.

Comments/Interpretation: Complaints (July 1, 2011 through June 30, 2012)

Internal Complaints – Nineteen internal complaints alleging illegal discrimination or
violations of written and verbal policies were received by Human Resources. Of the
nineteen employee complaints filed:
           •   Fourteen complaints resulted in findings “not substantiated”
           •   Two complaints were “substantiated” and appropriately addressed by
               leadership
           •   One complaint was withdrawn by the complainant
           •   Two complaints are currently in the investigation stage

External Complaints – Three external complaints alleging illegal discrimination or
violations of written and verbal policies were received by Human Resources. Of the
three employee complaints filed:
           •   Two complaints alleging discrimination are still pending
           •   One complaint was “not substantiated”

Policy Prohibition 2: The CEO shall not allow violation of the City’s policy prohibiting
retaliation against City or City enterprise employees.

Comments/Interpretation: Retaliation complaints (July 1, 2011 through June 30, 2012)
Internal Complaints – One internal complaint alleging retaliation was received by Human
Resources. Of the one employee complaint filed:

           •   The complaint was “substantiated” and appropriately addressed by leadership


External Complaints – One external complaint alleging retaliation was received by
Human Resources. Of the one employee complaint filed:




                                             14
                                                                                 Item IV-A
                                                              Governance Monitoring Report

           •   The external complaint is still pending

Policy Prohibition 3: The CEO shall not operate without written personnel policies,
which clarify personnel rules for staff, provide for effective handling of grievances and
salary appeals, and protect against wrongful conditions, such as nepotism and grossly
preferential treatment for personal reasons.

Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: All personnel policies are posted on the intranet, which is
accessible by all employees. A copy of the Personnel Policies Manual can be printed
upon request. The document includes policies for handling complaints (or grievances)
and protecting employees against wrongful conditions.

All new employees receive training on how to access the Personnel Policies Manual on the
intranet during new employee orientation.

Policy Prohibition 4: The CEO shall not operate without an employee notification and
comment process before promulgation of any changes to the written personnel policies.

Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: Colorado Springs Utilities posts all revisions to the Personnel
Policies Manual (PPM) in accordance with QBD document #01674 Personnel Policies
Manual Promulgation.

Policy Prohibition 5: The CEO shall not fail to acquaint staff with their rights under this
policy.
Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: Existing and new staff are aware of their rights under this
policy.

All policies are posted on the intranet for access by all employees. Additionally all
employees are required to complete the following courses every three years:

   •   Preventing Sexual Harassment
   •   Preventing Employee Discrimination/Americans with Disabilities Act
   •   Compliance Training, Labor Law




                                               15
                                                                               Item IV-A
                                                            Governance Monitoring Report

Policy Prohibition 6: The CEO shall not operate without a written affirmative action
plan and quarterly monitoring of workforce composition
Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: Colorado Springs Utilities’ Affirmative Action Plan has been
in place since June 2, 1998.

Colorado Springs Utilities’ 2012 Affirmative Action Plan is posted on the intranet. The
annual update was completed June 30, 2012. Workforce composition analysis by
ethnicity and gender are reflected in the following:


                           Workforce Analysis Index
                         (Minority Men and All Women)
       60.0


       55.0


       50.0


       45.0


       40.0
               Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q1 2012 Q2 2012
         SU     46.0    46.0     46.3     46.0     46.5     46.7     46.5     46.4
         ALF    54.5    54.5     54.5     54.5     54.5     54.5     54.5     54.5
*The available labor force (ALF) data used in the comparison, reflects the June 2004
Colorado Department of Labor and Employment report based on 2000 census data for
the Colorado Springs Metropolitan Area, which includes El Paso County.




                                            16
                                                                               Item IV-A
                                                            Governance Monitoring Report

                  Colorado Springs Utilities Workforce Analysis
                Women Representation (includes Minority Women)
      50.0

      45.0

      40.0

      35.0

      30.0

      25.0
                Q4       Q4       Q4       Q4       Q4        Q4       Q1        Q2
               2006     2007     2008     2009     2010      2011     2012      2012
         SU    30.8     29.7     29.9     30.0     30.3      31.2     31.0      31.0
         ALF   45.2     45.2     45.2     45.2     45.2      45.2     45.2      45.2
* The available labor force (ALF) data used in the comparison, reflects the June 2004
Colorado Department of Labor and Employment report based on 2000 census data for
the Colorado Springs Metropolitan Area, which includes El Paso County.


                 Colorado Springs Utilities Workforce Analysis
                           Minority Representation
                              (Men and Women)
      25.0


      20.0


      15.0


      10.0
               Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q1 2012 Q2 2012
         SU     22.4     23.3     23.2      22.8     23.3      23.1      23.0      22.7
         ALF    17.1     17.1     17.1      17.1     17.1      17.1      17.1      17.1

* The available labor force (ALF) data used in the comparison, reflects the June 2004
Colorado Department of Labor and Employment report based on 2000 census data for
the Colorado Springs Metropolitan Area, which includes El Paso County.




                                          17
                                                                                 Item IV-A
                                                              Governance Monitoring Report

                  Minority Representation (Men and Women)

                                         Colorado Springs
                                              Utilities                 Current ALF
                                          (June 30, 2012)
 Black                                        5.0%                       4.5%
 Hispanic                                    13.1%                       8.5%
 Native Hawaiian/Pacific
                                              0.3%                       0.2%
 Islander
 Asian                                        2.7%                        2.7%
 American Indian Alaskan
                                              1.6%                        1.2%
 Native
 Total Minority                              22.7%                      17.1%

As part of the effort to attract, recruit and retain a diverse workforce the organization
advertises job openings targeting a spectrum of demographic populations and
participates in a variety of community outreach programs. In addition, Human
Resources assists hiring authorities in developing strategic recruiting approaches to
ensure Colorado Springs Utilities is visible as an Equal Employment Opportunity
organization.

This is accomplished through:
    • Inclusion of verbiage indicating Colorado Springs Utilities as an Equal
         Employment Opportunity/Affirmative Action employer in all job postings;
    • Leveraging dedicated resources such as eQuest, Jobing.com, LinkedIn.com and
         Direct Employers as vehicles to communicate employment opportunities to
         niche and diversity sources as well as state workforce agencies on a local and
         national level.
    • Posting positions with various groups, for example:
             o AbilityLinks.org
             o Hire A Hero
             o RecruitMilitary.com
             o African American Leadership Institute
             o National Society of Black Engineers
             o Urban League of Metro Denver
             o National Black MBA Association
             o Native American in Business
             o Hispanic Professionals
             o Society of Women Engineer
             o IEEE Women in Engineering
             o Diversity Professionals




                                             18
                                                                                 Item IV-A
                                                              Governance Monitoring Report

•   Distributing weekly job opportunities and presentations to many community and
    diversity organizations some of which include:
            o Pikes Peak Gay and Lesbian Community Center
            o The Diversity Forum
            o Colorado Springs National Association for the Advancement of Colored
                People (NAACP)
            o Colorado Springs Chinese Cultural Institute
            o Lotus Foundation
            o El Pomar Emerging Leaders Development (ELD)
            o Women’s Resource Agency
            o Department of Vocational Rehab
            o Department of Veteran Affairs
            o Colorado Employer Support of the Guard and Reserves (ESGR)
•   Participation in the periodic Armed Services’ transition program.
            o Peterson AFB
            o Fort Carson
            o Air Force Academy
            o Colorado Employer Support of the Guard and Reserves (ESGR)
•   Participation in job fairs targeting minorities for management, engineering and
    information technology positions.
            o Denver Diversity Career Fair
            o Colorado School of Mines
            o Colorado Construction Career Days
            o University Colorado Boulder (CU)
            o University of Colorado Colorado Springs (UCCS)
            o Hire Vets First Career Fair
            o Colorado State University (CSU) Fort Collins Engineering Fair
            o Military Veterans Employment Expo
            o Colorado State University (CSU) Pueblo
            o DeVry Institute
            o Fort Carson Career Fair
            o All Colorado Alumni Career Fair

Policy Prohibition 7: The CEO shall not fail to periodically assess the organizational
climate in business and personnel issues using statistical sampling techniques.

Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: A survey was conducted in 2010 by an external agency, ETC
Institute. Leadership continues to address feedback received from this survey.




                                            19
                                                                                 Item IV-B
                                                              Governance Monitoring Report




Date:           August 15, 2012

To:             Utilities Board

From:           Jerry Forte, P.E., Chief Executive Officer

Subject:        Semi-Annual Report on Executive Limitation (EL) 4 – Asset Protection


Information Objective: Monitoring

Significant informational updates to Executive Limitation (EL) 4, other than financial
updates, through the second quarter of 2012 include:

   •    Local spending dollars increased $6.8 million while the percentage of local
        spending decreased 5 percentage points to 34.8 percent. Despite the decrease,
        Colorado Springs Utilities surpassed its goal of 30 percent. El Paso County and
        local businesses are competitive as evidenced by the percentage of total
        spending associated with purchase orders and contracts with area addresses;
        Referenced in Policy Prohibition 4.

   •    Colorado Springs Utilities had two (2) reportable thefts of copper during the first
        and second quarters of 2012. The two thefts occurred at Wilson substation, and
        at the North Work Center. Total loss estimate is approximately $3,300. The
        Colorado Springs Utilities vehicle reported stolen in a former EL 4 report has been
        recovered with no damage. Referenced in Policy Prohibition 5.

   •    Business Continuity conducted exercises and completed plan updates on the Nixon
        Power Plant, Gas Propane, Wastewater Collections, Wastewater Treatment CSU All
        Hazard, and Water Dam emergency response plans, and the Nixon, Gold Camp,
        South Suburban, Penrose, Highline, North Catamount, South Catamount, Crystal
        Creek, Upper Blue, Mason, McReynolds, Wilson, Rosemont, and Montgomery
        Water Dams emergency action plans. Colorado Springs Utilities also exercised the
        Natural Gas emergency response plan as part of Cheyenne Mountain’s Condor Crest
        exercise. Business Continuity also supported the Waldo Canyon Fire with the
        activation of the CSU All Hazard emergency response plan. Referenced in Policy
        Prohibition 5.




                                              20
                                                                                          Item IV-B
                                                                       Governance Monitoring Report

                                  Colorado Springs Utilities Board
                                        Monitoring Report

Date:          August 15, 2012

Policy: Executive Limitation (EL) 4 – Asset Protection

Frequency:     Semi-Annual                     Method: Internal

Global Policy Prohibition: The Chief Executive Officer shall not allow corporate assets, tangible
and intangible, to be unprotected, inadequately maintained or unnecessarily risked.

Compliance: The CEO reports that these conditions have not occurred during this reporting
period.

Comments/Interpretation: The Chief Executive Officer’s stewardship of assets is represented
in part by Colorado Springs Utilities’ organizational financial statements. These statements
reflect assets, claims to those assets and the effects of transactions and other events that result
in changes in asset balances. The statements are audited annually and monitored to ensure
that management complies with their stewardship responsibilities.

Accordingly, the CEO shall not:

Policy Prohibition 1: Allow non-bonded personnel access to material amounts of funds.

Compliance: The CEO reports that these conditions have not occurred during this reporting
period.

Comments/Interpretation: Colorado Springs Utilities maintains a commercial crime insurance
policy. Public Official Bonds in the amount of $500,000 are maintained for coverage of the Chief
Planning and Finance Officer, the General Manager of Financial Services, and the Manager of
Treasury and Finance.

Policy Prohibition 2: Unnecessarily exposes the organization, its board, or staff to claims of
liability.

Compliance: The CEO reports that these conditions have not occurred during this reporting
period.

Comments/Interpretation: Colorado Springs Utilities continues to participate in a joint self-
insurance reserve fund with the Municipal Government for workers compensation claims. An
injuries and damages reserve fund for uninsured liability claims is also maintained. As of June
30, 2012, injuries and damages reserve balance is $ 122,478, compared to $ 214,744 at the end
of second quarter during 2011. Colorado Springs Utilities self-insures automobile liability



                                                  21
                                                                                              Item IV-B
                                                                           Governance Monitoring Report

coverage up to $500,000 for each accident. Claims in excess of $500,000 up to $35 million are
covered by an insurance policy. As of June 30, 2012, automobile liability reserve balance is
$951,880, compared to $893,937 at the end of second quarter during 2011. These reserve
balances are adjusted to reflect the sum of outstanding claims at the end of the second quarter
2012. All injuries and damages claims are expensed immediately and the reserve account
balances are reviewed and adjusted quarterly for known claims as warranted.
As of June 30, 2012, injuries and damages reserves by service were:
    Electric                     $       28,631
    Natural Gas                           2,654
    Water                               41,279
    Wastewater                          49,914
    Total                        $      122,478

As of June 30, 2012, automobile liability reserves by service were as follows:
    Electric                   $           388,882
    Natural Gas                            126,590
    Water                                  298,014
    Wastewater                             124,787
    Streetlights                  13,607
    Total                      $           951,880

Policy Prohibition 3: Operate without written claims policies that address fair treatment of
claimants, legal liability, ratepayer costs and sound business practices.

Compliance: The CEO reports that these conditions have not occurred during this reporting
period.

Comments/Interpretation: Administrative Regulation 2.16 establishes Colorado Springs Utilities’
formal risk management and claims policy. (The Municipal Government Risk Management Division
adheres to its Functional Claim Handling and Processing Procedures Manual and a risk
management service-level agreement with Colorado Springs Utilities in order to address claims in
a manner consistent with Administrative Regulation 2.16).

The following table summarizes the claims received through June 2012 as compared to 2011. A
total of one hundred eighty two (182) claims were received in the first half of 2012, of which thirty
three (33) claims were outstanding as of June 30, 2012, representing a total outstanding reserve
estimate of $145,464.68. Comparatively, there were one hundred eighty two (182) claims
received through the first half of 2011, of which nineteen (19) were outstanding as of June 30,
2011, representing a total outstanding reserve estimate of $164,992.




                                                    22
                                                                                                    Item IV-B
                                                                                 Governance Monitoring Report



                                 Colorado Springs Utilities
                                 LIability Claims Received
 50

 40

 30
                                                                                               2012
 20                                                                                            2011

 10

  0
       Jan    Feb    Mar   Apr   May   Jun     Jul    Aug      Sep   Oct   Nov   Dec


        Jan    Feb    Mar    Apr    May      Jun     Jul       Aug   Sep   Oct     Nov   Dec    Total
2012    34     33     31     30     33       21
2011    26     29     22     31     45       29      24        38    38    27      28    28     365

Policy Prohibition 4: Operate without written purchasing regulations assuring legal and fiscal
compliance that address such items as competitive acquisition practices, conflict of interest,
favoritism, and local vendor policies.

Compliance: The CEO reports that these conditions have not occurred during this reporting
period.

Comments/Interpretation: Written purchasing regulations that address and comply with the
expectations of this policy prohibition are maintained. El Paso County and local businesses are
competitive as evidenced by the percentage of total spending associated with purchase orders
and contracts with area addresses as required under this Policy Prohibition.

The following table summarizes spending for the most recent twelve (12) months ending June
2012 as compared to the twelve (12) months ending June 2011. Local spending dollars increased
$6.8 million while the percentage of local spending decreased 5 percentage points to 34.8
percent. Despite the decrease, Colorado Springs Utilities surpassed its goal of 30 percent.

Percentage of Total Procurement Spending by Supplier Location (12-Month Rolling)




                                                          23
                                                                                                               Item IV-B
                                                                                            Governance Monitoring Report


                                   July 2010 through June 2011                               July 2011 through June 2012
                               Spending                 Percent                         Spending                  Percent
  Business address           (in millions)              of total                      (in millions)               of total

El Paso County              $110,618,477                    40.2%                    $117,429,967                     34.8%
Elsewhere in
Colorado*                   $118,580,265                    43.1%                    $157,240,101                     46.6%

Out of state                 $45,958,005                    16.7%                     $63,009,968                     18.7%

Total                       $275,156,747                     100%                    $337,680,036                     100%

                                                         YTD Spending             Percent of YTD total
                         *Pueblo County:                  $19,455,228                   14.4%

                        *Fremont County:                  $689,770                         0.5%
        NOTE: The above data excludes purchases of coal, natural gas, electric power and the delivery of these commodities for use in
                                      Colorado Springs Utilities’ system or for resale to customers.

    Policy Prohibition 5: Fail to protect corporate assets including, but not limited to, water rights,
    rights of way, corporate image, physical assets, intangible assets, intellectual property,
    information, and files from loss or significant damage.

    Compliance: The CEO reports that these conditions have not occurred during this reporting
    period.

    Comments/Interpretation: Plans and programs are in place that address and comply with the
    expectations of this policy prohibition. The items that have occurred or are forthcoming that meet
    the expectations of this policy prohibition are:
    Loss of Assets: Colorado Spring Utilities had two (2) reportable thefts of copper during the first
    and second quarters of 2012. The thefts occurred at the Wilson Substation, and at the Pinkerton
    North Work Center. Total loss in cost of material to replace is estimated at $3,000 from Wilson
    substation (copper grounds) and $300 from the Pinkerton North Work Center (two small spools of
    wire of a truck). This cost excludes labor and equipment cost for replacement. The thefts were
    reported to the Colorado Springs Police Department but at this time no suspects have been
    identified. Additional patrols have been implemented in these two areas to help deter future
    thefts. Colorado Springs Utilities also continues to participate in the Governors' “Commodities
    Metal Task Force”, established to mitigate the continual thefts of metals throughout Colorado.
    It was reported in the last EL 4 Report to the Utilities Board that in October of 2011, a 1997 F150
    truck (CSU Vehicle # 2222) was stolen from the Martin Drake Power Plant site. This vehicle was
    recovered by CSPD with no damage.

    Business Continuity: Business Continuity conducted exercises on the Nixon Power Plant, Gas
    Propane, Wastewater Collections, Wastewater Treatment and the Water Dam emergency



                                                                 24
                                                                                          Item IV-B
                                                                       Governance Monitoring Report

response plans. CSU also exercised the Natural Gas emergency response plan as part of
Cheyenne Mountain’s Condor Crest exercise. Business Continuity participated in the design
team for the Western Cyber Exchange exercises to be conducted in August. Plan revisions were
completed on the Gas Propane, Nixon Power Plant, CSU All Hazard, Wastewater Treatment,
Wastewater Collections, and Water Dam emergency response plans, and for the Nixon, Gold
Camp, South Suburban, Penrose, Highline, North Catamount, South Catamount, Crystal Creek,
Upper Blue, Mason, McReynolds, Wilson, Rosemont, and Montgomery Water Dams emergency
action plans. The purpose of the plans is to support continued operations during an emergency
event.
Telephone Drills were conducted using the automatic notification system for the Capacity, Gas
Propane, Wastewater Collections, Wastewater Treatment, and Water Dam, emergency
response plans, and the Nixon, Gold Camp, South Suburban, Penrose, Highline, North
Catamount, South Catamount, Crystal Creek, Upper Blue, Mason, McReynolds, Wilson,
Rosemount and Montgomery Water Dams emergency action plans. Telephone drills were also
conducted for the notification processes for Clear Springs Ranch Wildland Fire and Wildland
Fire Red Flag.
Business Continuity also supported the Waldo Canyon Fire with the activation of the CSU All
Hazard emergency response plan.

Policy Prohibition 6: Receive, process, or disburse funds under controls which are insufficient to
meet the City Auditor’s standards.

Compliance: The CEO reports that these conditions have not occurred during this reporting
period.

Comments/Interpretation: All funds are received, processed and disbursed under controls
reviewed and approved by the City Auditor.

Policy Prohibition 7: Invest Colorado Springs Utilities funds in violation of Bond Ordinance
requirements.

Compliance: The CEO reports that these conditions have not occurred during this reporting
period.

Comments/Interpretation: All cash and investments are in U.S. Treasury Notes, U.S. Treasury
Bills, U.S. Agency securities, repurchase agreements, money market funds and secured bank
accounts that comply with bond ordinance investment security requirements. The current
aggregate value of Colorado Springs Utilities funds is $439.0 million with a weighted average yield
to maturity of 0.298% and a weighted average of 32.0 days to maturity. The weighted average
yield to maturity decreased from 0.327% during the first half of 2012. Market conditions account
for the decreasing weighted average yield. The following table provides more detail on cash and
investments.




                                                 25
                                                                                                                           Item IV-B
                                                                                                        Governance Monitoring Report
                                                 COLORADO SPRINGS UTILITIES
                                              SUMMARY OF CASH AND INVESTMENTS
                                                        June 30, 2012


                                                                                                                 Weighted Average
                   FUND AND SECURITY TYPE                                              Value            Yield to Maturity Days to Maturity


     CASH:
         Operating Checking & Savings - Chase                                     $ 103,323,746                  0.181%              1.00
         Safekeeping - Wells Fargo                                                      112,778                  0.050%              1.00
         Line of Credit - USBank                                                          1,043                  0.024%              1.00
         Petty Cash                                                                       9,200                  0.000%              1.00

                                 Unrestricted Cash                                $ 103,446,766                  0.181%              1.00

     INVESTMENTS: 1/ 2/
         Current Portfolio - T-Notes/Agencies                                     $ 38,000,000                   0.463%            359.00

                             Unrestricted Investments                             $ 38,000,000                   0.463%            359.00

                      Unrestricted Cash and Investments                           $ 141,446,766                  0.257%             97.18

RESTRICTED
    CASH:
        P&I Funds - Chase                                                         $ 43,867,754                   0.200%              1.00
        2002C Acquisition Fund - CSAFE                                                  89,765                   0.190%              1.00
        2010B Acquisition Fund - BLB                                               107,358,562                   0.430%              1.00
        2010D Acquisition Fund - Chase                                                 417,620                   0.200%              1.00
        2012A Acquisition Fund - Chase                                              31,819,770                   0.200%              1.00
        2012B Acquisition Fund - Chase                                                 423,484                   0.200%              1.00
        2010B Capitalized Interest Fund - BLB                                       15,247,931                   0.430%              1.00
        2008A Reserve Fund - Chase                                                   1,346,660                   0.200%              1.00
        2008B Reserve Fund - Chase                                                     828,029                   0.200%              1.00
        2008C Reserve Fund - Chase                                                   1,534,611                   0.200%              1.00
        2009A Reserve Fund - Chase                                                   1,648,704                   0.200%              1.00
        2009B Reserve Fund - Chase                                                   2,174,932                   0.200%              1.00
        2009C Reserve Fund - Chase                                                   3,203,186                   0.200%              1.00
        2009D Reserve Fund - Chase                                                   1,528,731                   0.200%              1.00
        2010A Reserve Fund - Chase                                                   3,028,859                   0.200%              1.00
        2010B Reserve Fund - BLB                                                     4,507,244                   2.260%              1.00
        2010C Reserve Fund - Chase                                                   1,198,192                   0.200%              1.00
        2010D Reserve Fund - Chase                                                   7,833,826                   0.200%              1.00
        2011A Reserve Fund - Chase                                                   3,443,109                   0.200%              1.00
        2012A Reserve Fund - Chase                                                   1,210,713                   0.200%              1.00
        2012B Reserve Fund - Chase                                                   2,308,407                   0.200%              1.00
        Banning Lewis Ranch Escrow - Chase                                           2,336,215                   0.050%              1.00
        Benefits Trust Reserve - Chase                                               3,022,596                   0.200%              1.00
        Collateral held by Counterparty - Goldman Sachs                              8,000,000                   0.164%              1.00
        Collateral held by Counterparty - JPMorgan                                   5,500,991                   0.164%              1.00
        Collateral held by Counterparty - Morgan Stanley                            34,300,000                   0.164%              1.00
        Collateral held by Counterparty - BofA/Merrill Lynch                         7,800,000                   0.164%              1.00
        Collateral held for Counterparty - Chase                                       116,772                   0.200%              1.00

                                   Restricted Cash                                $ 296,096,663                  0.319%              1.00

     INVESTMENTS:
         2002C Reserve Fund - Chase                                                     1,481,506                0.200%              1.00

                              Restricted Investments                              $     1,481,506                0.200%              1.00

                       Restricted Cash and Investments                            $ 297,578,169                  0.318%              1.00

                                         TOTAL                                    $ 439,024,935                  0.298%             31.99


         1/ Unrestricted Investments do not include quarterly GASB 31 Mark-to-Market
            adjustments for Balance Sheet reporting in the amount of $9,081


         2/ Investment values are stated at Par Value, which is the future value if held to maturity;
            these values are stated at Book Value in financial statements and total $38,055,203
            for Unrestricted Investments




                                                                   26
                                                                                                   Item IV-B
                                                                                Governance Monitoring Report

Policy Prohibition 8: Fail to pursue any competitive advantage to safeguard the assets of the organization.

Compliance: The CEO reports that these conditions have not occurred during this reporting period.

Comments/Interpretation: None.

Policy Prohibition 9: Operate without written land acquisition regulations, assuring legal and fiscal
compliance, that address fair and consistent appraisal and negotiation practices, and compliance with
applicable relocation benefit requirements.

Compliance: The CEO reports that these conditions have not occurred during this reporting period.

Comments/Interpretation: The Chief Executive Officer complied with this prohibition pursuant to Chapters 4, 6
and 8 of The City of Colorado Springs Procedure Manual for the Acquisition and Disposition of Real Property
Interests as approved by City Council Resolution 155-07, acquiring real property at fair market value.

 SOUTHERN DELIVERY SYSTEM
  Four (4) Permanent Easements and Five (5)
    Temporary easements were purchased
     under the following Resolution Nos.           Permanent            Temporary
                                                    Easement             Easement
                                                     Amount               Amount                     Totals
                    199-11                             $2,950.00             $1,800.00           $4,750.00
                                                                               $250.00             $250.00
                    230-11                            $10,316.00            $12,684.00          $23,000.00
                                                     $198,900.00                               $198,900.00
                   160-10                                                      $200.00             $200.00
                   133-10                                                      $200.00             $200.00
           193-10 Eminent Domain
                                                     $156,000.00                               $156,000.00
               Rule and Order
                                       TOTAL         $368,166.00            $15,134.00         $383,300.00

 Easements Negotiated by Real Estate
 Services
                                                      Permanent             Temporary                  Total
 Marland Road Project                                   $3,005.00                                 $3,005.00
                                                       $16,000.00                                $16,000.00
 Sand Creek Restoration                                $14,500.00            $6,680.00           $21,180.00
 East Washington Easements                              $2,750.00                                 $2,750.00
                                                        $1,375.00                                 $1,375.00
 North Tejon Easement                                   $1,375.00                                 $1,375.00
                                         Total         $39,005.00            $6,680.00           $45,685.00


In addition, twenty two (22) permanent easements were conveyed through the standardized
procedures for easement acquisition and reference, or SPEAR, process.




                                                        27
                                                            Business Continuity Management 2012 Work Schedule                                                                     Item IV-B
                                                                                                                                                               Governance Monitoring Report

                                                                                                                                                                       Completion
Plan                              BCP Process      BCP Lead     Jan     Feb     Mar      Apr      May       Jun      Jul      Aug      Sep     Oct     Nov     Dec       Dates

                                Monthly                         Update of contact list and notification charts in plans, posting to
All Plans                       maintenance        Wendy                       K:drive, and notification emails
Water

Nixon EAP                       Plan Maintenance   Roxana                                                                        8/7
                                Notifind
Big Tooth, Lake Moraine         Telephone Drill    Roxana                                                                      8/14
Homestake                       Telephone Drill    Roxana                                                                      8/28
Homestake                       New Plan           Roxana                                                                               9/21

Big Tooth, Lake Moraine         Plan Maintenance Roxana                                                                                  9/6
Tesla, McCullough, Nichols,     Notifind
Northfield, Rampart             Telephone Drill  Roxana                                                                                 9/25
Tesla, McCullough, Nichols,     Manual Telephone
Northfield, Rampart             Drill            Roxana                                                                                 9/27
Tesla, McCullough, Nichols,
Northfield                      Plan Maintenance Roxana                                                                                        10/19
Rampart                         Orientation      Roxana                                                                                         10/2

Rampart                         Plan Maintenance Roxana                                                                                                 11/9
Wastewater

Electric
                                Notifind
Major Storm                     Telephone Drill    Linda                                                                               9/18

Major Storm                     Exercise           Linda                                                                               9/18

Major Storm                     Plan Maintenance Linda                                                                                         10/5
Electric Emergency Support
Services                        Maintenance        Linda                                                                                       10/5
                                Notifind
Drake Power Plant               Telephone Drill    Donna                                                                               9/5

Drake Power Plant               Exercise           Donna                                                                               9/6

Drake Power Plant               Plan Maintenance Donna                                                                                 9/28
Gas
                                Notifind
Natural Gas                     Telephone Drill    Donna                                                                                       10/2
Natural Gas Emergency Support
Services                        Maintenance      Donna                                                                                         10/30
Natural Gas                     Plan Maintenance Donna                                                                                         10/30
                                Notifind
Interruptible Gas Process       Telephone Drill  Donna                                                                                                 11/15

Business Function

Colorado Springs Utilities
                                After Action
Waldo Fire                      Meeting            Linda                                                             7/25

Waldo Fire                      After Action Report Linda       After Action followed for 6 mths after event                 8/24
                                                    Donna and
HEI*                            Plan Maintenance Linda                                                                                                         12/15
CEO Emergency Binder            Maintenance         Linda                                                                                      10/5
External
Completed
CSU ERP*                        Re-write         Linda                                                               7/25
Gas Propane                     Plan Maintenance Linda                                                               7/25
                                Plan
Nixon Power Plant               Maintenance      Donna                                                               7/20
Gold Camp, south Suburban,      Plan
Penrose, Highline               Maintenance      Roxana                                                               7/17
                                Notifind
Nixon EAP                       Telephone Drill Roxana                                                                7/17
North Catamount, South          Plan
Catamount, Crystal Creek        Maintenance      Roxana                                                      6/19
Gold Camp, south Suburban,      Notifind
Penrose, Highline               Telephone Drill Roxana                                                      7/17
Natural Gas                     Exercise         Donna                 Condor Crest Exercise                6/13
Gas Propane                     Exercise         Linda                                                     6/13
Urban Intake                    Orientation      Linda                                                      6/12
                                Notifind
Gas Propane                     Telephone Drill Linda                                                      6/13
Nixon Power Plant               Exercise         Donna                                                     6/8
North Catamount, South          Notifind
Catamount, Crystal Creek        Telephone Drill Roxana                                                         6/5
                                Notifind
Upper Blue                      Telephone Drill Roxana                                              5/15
                                Plan
Montgomery                      Maintenance      Roxana                                              5/8
                                Plan
Upper Blue                      Maintenance      Roxana                                             5/29
                                Notifind
Nixon Power Plant               Telephone Drill Donna                                             5/16
                                Plan
                                Maintenance
                                document
Major Storm                     manual process Linda                                     4/30
                                Plan
Wastewater Collection           Maintenance      Donna                                   4/25
Clear Springs Ranch Emergency
Notification                  Develop & Test       Donna                                 4/25
Mason, McReynolds, Wilson,    Plan
Rosemont                      Maintenance          Roxana                                  4/17
                              Notifind
Montgomery                    Telephone Drill      Roxana                                  4/23
                              Notifind
Wastewater Collection         Telephone Drill      Donna                                  4/3




                                       * Plans to be included in FERC Security Plan ensure disb includes Water System Operations Manager
                                                                                       28
                                                                  Business Continuity Management 2012 Work Schedule                                                       Item IV-B
                                                                                                                                                       Governance Monitoring Report

                                                                                                                                                              Completion
Plan                                   BCP Process      BCP Lead     Jan     Feb    Mar      Apr     May     Jun      Jul   Aug    Sep     Oct   Nov   Dec      Dates
Wastewater Collection                Exercise           Donna                                4/4
                                     Plan
Wastewater Treatment                 Maintenance        Donna                        3/2
Wildland Fire Reg Flag               Notifind
Notification                         Telephone Drill    Linda                       3/13
Mason, McReynolds, Wilson,           Notifind
Rosemont                             Telephone Drill    Roxana                                 4/3

Clear Springs Ranch Wildland         Notifind
Fire Notification SOP                Telephone Drill    Donna                        3/1

Clear Springs Ranch Wildland
Fire Notification SOP                Chart Revision     Donna                       3/16
                                     Plan
Water Dam ERP*                       Maintenance        Roxana                        3/23
Major Storm                          OMS Review         Linda                        3/1
Water Dam ERP                        Telephone Drill    Roxana               2/21
Water Dam ERP                        Exercise           Roxana               2/22
                                     Notifind
Wastewater Treatment                 Telephone Drill    Donna                2/7
Wastewater Treatment                 Exercise           Donna                2/8
                                     Notifind
Capacity                             Telephone Drill    Roxana       1/19
Capacity                             Exercise           Roxana       1/24

Additional Requests
Homestake                            Telephone Drill    Roxana
Homestake                            New Plan           Roxana
Clear Springs Ranch Emergency
Notification                         Develop & Test     Donna
Urban Intake                         Orientation        Linda
Natural Gas Emergency Support                           Linda &
Services                             New Process        Donna                  Result of the Waldo Fire

Additional Requests 2013
Wildland Fire Plan (Tyler Allison)

Request to be taken off calendar
by Plan Managers
Front Range exercise
CSU Orientation

Taken off calendar by BCM
Manager due to Waldo Fire
Cash Remittance                      Telephone Drill    Linda
Cash Remittance                      Exercise
Cash Remittance                      Plan Maintenance   Linda
Customer Service & Dispatch          Plan Maintenance   Linda
Customer Service & Dispatch          Telephone Drill    Linda

Customer Service & Dispatch          Exercise           Linda        Due to the Waldo Fire and on-going follow up
City EOC Activation                  Training           Linda             meetings FEMA cancelled for 2012

Front Range Power Plant              Plan Maintenance Donna
                                     Notifind
Front Range Power Plan               Telephone Drill  Donna

Hydro Power Plants                   Plan Maintenance Donna
                                     Notifind
Hydro Power Plants                   Telephone Drill  Donna
Hydro Power Plants*                  Exercise         Donna

Birdsall Power Plant                 Plan Maintenance Donna
                                     Notifind                        Due to the Waldo Fire and on-going follow up
Birdsall Power Plant                 Telephone Drill  Donna          meetings FEMA cancelled for 2012 - Per GM
Birdsall Power Plant                 Exercise         Donna         would like Birdsall and Hydros to be a combined
                                                                                           plan




                                            * Plans to be included in FERC Security Plan ensure disb includes Water System Operations Manager
                                                                                            29
                                                                                  Item IV-C
                                                               Governance Monitoring Report




Date:            August 15, 2012

To:              Utilities Board

From:            Jerry Forte, P.E., Chief Executive Officer

Subject:         Quarterly Report on Executive Limitation (EL) 7 – Financial Condition
                 and Activities


Information Objective: Monitoring

Significant informational updates to Executive Limitation (EL) 7 for the second quarter of
2012 include:

      •   Operating Revenues of Colorado Springs Utilities through the second quarter of
          2012 were $418.6 million, which was $12.8 million (3.0 percent) lower than
          budget.

      •   Operating Expenses through the second quarter of 2012 were $332.6 million,
          which were $47.4 million (12.5 percent) lower than budget.

      •   Contributions-in-Aid-of-Construction were higher than budget by $5.7 million
          (37.0 percent) through the second quarter of 2012.

      •   Capital expenditures through the second quarter of 2012 were $104.1 million,
          which was $44.3 million (29.8 percent) lower than budget.

      •   All payroll, debts, tax payments or other government ordered payments or filings,
          and receivables were settled or resolved in a timely manner.




                                               30
                                                                                  Item IV-C
                                                               Governance Monitoring Report

                               Colorado Springs Utilities Board
                                    Monitoring Report


Date:          August 15, 2012

Policy:        Executive Limitation (EL) 7 - Financial Condition and Activities

Frequency:     Quarterly                                      Method: Internal


Global Policy Prohibition: With respect to actual ongoing financial condition and
activities, the Chief Executive Officer shall not cause or allow the development of fiscal
jeopardy or a material deviation of actual expenditures from board priorities established in
Ends policies.

Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: Operating Revenues through the second quarter of 2012
were $418.6 million, which was $12.8 million (3.0 percent) lower than budget. Sales in
the electric and gas services were down year-to-date largely driven by warmer than
normal weather in the first quarter. Operating & Maintenance (O&M) Expenses through
the second quarter of 2012 were $332.6 million, which was $47.4 million (12.5 percent)
lower than budget. Fuel and depreciation expenses, which are included in O&M
expenses, were lower than budget by $25.2 million and $14.0 million, respectively.

Contributions-in-Aid-of-Construction (CIAC) was higher than budget by $5.7 million (37.0
percent) primarily due to increased contract work for military and large commercial
customers.

Capital expenditures through the second quarter of 2012 were $104.1 million, which was
$44.3 million (29.8 percent) lower than budget primarily due to the timing of expenditures.
Electric and water capital expenditures were lower than budget by $24.6 million and $18.5
million, respectively.

Accordingly, the CEO shall not:

Policy Prohibition 1: Exceed the total appropriations for the fiscal year, nor fail to inform
the Board in monitoring reports of transfers of unexpended appropriations between, or
expenditures in excess of budget in:
A.      Electric, gas, water, wastewater, and common Federal Energy Regulatory
        Commission (FERC) capital classifications; or




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                                                                                 Item IV-C
                                                              Governance Monitoring Report

B.       Electric, gas, water, wastewater, and administrative & general FERC O&M
         classifications

Compliance: Capital expenditures in the wastewater service through the second
quarter of 2012 exceeded budget. Additionally, O&M expenses for the water service
through the second quarter of 2012 exceeded budget.

Comments/Interpretation: Due to the timing of work on the several projects, the
wastewater service exceeded the budget through the second quarter by $418,967.
Capital expenditures in all services are expected to be at or below budget for the year.

Due to a payment to the city of Pueblo for road rehabilitation related to SDS
construction, O&M expenses for the water service exceeded the second quarter budget
by $1,291,261. This payment will be reclassified as an approved regulatory asset in July
and will be amortized over 10 years. O&M expenses for all services are expected to be
at or below budget for the year.

Policy Prohibition 2: Fail to inform the Board in monitoring reports of any cancelled major
capital projects in the approved budget or any new major capital projects over $500,000
not funded in the approved budget along with the appropriate budget transfers.

Compliance: Through the second quarter of 2012, six (6) new capital projects over
$500,000 were added and two (2) were cancelled:

Comments/Interpretation: With the implementation of a new budgeting and
forecasting system, as well as processes, system budget transfers are no longer made.
Rather, funds for the additional capital projects were made available by reducing the
forecast for current capital projects and will not result in any services expenditures
exceeding budget on an annual basis. The 6 new projects are:

     •   The Hewlett Packard - 34.5 KVA Extension project ($930,704) is to install new
         electric infrastructure for Hewlett Packard and is completely offset by CIAC
         revenue.

     •   The Programmatic Biological Opinion/10825 Solution project ($750,000) is for
         Colorado Springs Utilities’ participation in a statewide cooperative water project
         (i.e. the purchase of water rights and a contract for water using existing
         infrastructure) to provide water for supplemental flows to meet the needs of the
         Colorado River Endangered Fish Recovery Program.

     •   The Highline Transmission Main- Platte Ave. from Marksheffel Rd. to Academy
         Boulevard project ($952,996) is to install five miles of new finished water
         pipeline that will extend from the new SDS water treatment plant at Marksheffel




                                             32
                                                                                 Item IV-C
                                                              Governance Monitoring Report

       and Highway 94 and extend to a connection with the existing water system in
       Academy Blvd. near Platte Ave. (Hwy. 24).

   •   The South Plant Transformer project ($737,345) is to replace the existing 20
       MVA network #2 transformer with a 50 MVA, 115/12.5kV transformer. The
       existing transformer is nearing the end of its useful life, and future downtown
       load growth will require more capacity for contingency loss of the other
       downtown network source at Santa Fe substation.

   •   The Walmart Data Center - Enhanced Power T&M is a project ($558,840) that
       will install the enhanced power feed to the Walmart Data Center. CSU is under
       contract to provide power to this new Data Center. This project is funded 100%
       by CAIC.

   •   The Front Range Steam Turbine Retrofit project ($1,500,000) is part of the steam
       turbine major outage. A borescope inspection of the steam turbine determined
       that movement of the shims that may exceed tolerance prior to the scheduled
       retrofit in 2013. Therefore, an outage in the fall of 2012 is necessary for repairs
       to correct this issue. The remainder of the project will proceed as scheduled.

The 2 cancelled projects are:

   •   The Contingency Plan for Raw Water Constraints to McCullough Complex project
       ($506,624) was cancelled due to improved understanding of the facilities needed
       for effective transfer pumping.

   •   The Drake 7 Installation of Bull Nose Extension project ($607,944) was
       rescheduled for 2013 due to plant outage scheduling.

Policy Prohibition 3: Transfer revenues between FERC revenue accounts for electric, gas,
water or wastewater services without prior Board approval.

Compliance: The CEO reports that these conditions have not occurred as of this
monitoring report.

Comments/Interpretation: None.

Policy Prohibition 4: Financially act in any way that endangers the best possible bond
ratings or results in an overall fixed-cost coverage ratio of less than 1.6.

Compliance: The CEO reports that these conditions have not occurred as of this
monitoring report.




                                            33
                                                                                  Item IV-C
                                                               Governance Monitoring Report

Comments/Interpretation: On August 3, 2012, Moody’s affirmed Colorado Springs
Utilities existing rating of Aa2 and changed the rating outlook to stable from negative to
reflect that Utilities has demonstrated a willingness to establish rates required to
support a significant capital program and to maintain sound financial metrics. Moody’s
expectation is that executive and board policies that support maintenance of a 2.0 times
adjusted debt service coverage will provide for continued credit stability. Standard &
Poor’s and Fitch Ratings are in the process of conducting their reviews as part of the
2012C bond issue process and this is expected to be completed by mid-August, 2012.
Currently, Colorado Springs Utilities’ AA long-term credit ratings and outlooks remain
stable with both of those agencies.

A review of Utilities’ short-term ratings on the Variable Rate Demand Obligation Bonds is
also being conducted by all three rating agencies, expected to be completed by early
September. Short term ratings are currently at A-1 (Standard & Poor’s), VMIG 1 (Moody’s),
F1+ (Fitch Ratings). The quarter-end fixed-cost coverage ratio was 2.10.

Policy Prohibition 5: Allow Working Capital to drop below 45 days of operating and
maintenance expenses.

Compliance: The CEO reports that these conditions have not occurred as of this
monitoring report.

Comments/Interpretation: The 2012 year-end projection is 67 days of working capital.

Policy Prohibition 6: Transfer unrestricted cash and investments between services
without prior Board approval. Such balances are accounted separately for electric, gas,
water, wastewater, and streetlight services.

Compliance: The CEO reports that these conditions have not occurred as of this
monitoring report.

Comments/Interpretation: None.

Prohibition 7: Fail to settle payroll and debts in a timely manner.

Compliance: The CEO reports that these conditions have not occurred as of this
monitoring report.

Comments/Interpretation: None.

Policy Prohibition 8: Allow tax payments or other government ordered payments or filings
to be overdue or inaccurately filed.




                                              34
                                                                                  Item IV-C
                                                               Governance Monitoring Report

Compliance: The CEO reports that these conditions have not occurred as of this
monitoring report.

Comments/Interpretation: None.

Policy Prohibition 9: Fail to resolve receivables after a reasonable grace period.

Compliance: The CEO reports that these conditions have not occurred as of this
monitoring report.

Comments/Interpretation: The ratio of monthly net accounts receivable write-offs as a
percent of revenue for each month of the second quarter of 2012 was:

               •   Apr         0.44%
               •   May         0.55%
               •   Jun         0.52%

The year-to-date ratio of monthly net accounts receivable write-offs to total revenues,
for the end of the second quarter of 2012, is 0.38 percent, an increase of 0.05 compared
to the end of second quarter 2011. The increase in cumulative write-offs for this quarter
is a result of higher monthly write-offs primarily in May and June when compared to the
same months in 2011. This is attributable to an approximate 24% decrease in utility bill
assistance funds received during the 2011/2012 Low Income Energy Assistance Program
(LEAP) heating season when compared to the 2010/2011 LEAP heating season. The LEAP
Program is available for qualified customers to assist in paying their heating bill from
November through April each year. The industry average for write-offs is currently
~0.74%.




                                              35
                                                                              Item IV-C
                                                           Governance Monitoring Report




                     Supplemental Information

Supplemental information is provided in support of actual financial results included in
comments and interpretations to policy prohibitions; and in support of compliance with
the global policy prohibition with respect to actual ongoing financial condition and
activities.




                                           36
                                                                                               Item IV-C
                                                                            Governance Monitoring Report
                                   Period Ending June 30, 2012

A. Condensed Financial Statements

                                   Condensed Financial Statem ents
                                     Period Ending June 30, 2012
                                           (In thousands)
   Balance Sheet
                                                           6/30/2012         6/30/2011         Variance
     Assets
       Current                                         $      396,708   $       370,479    $      26,229
       Non Current
          Other                                               585,627            559,013          26,614
          Net Capital Assets                                3,110,736          2,993,346         117,390
     Total Assets                                      $    4,093,071   $      3,922,838   $     170,233

     Liabilities
        Current                                        $      179,147   $        177,021           2,126
        Non Current                                         2,592,664          2,400,514         192,150
     Total Liabilities                                 $    2,771,811   $      2,577,535   $     194,276

     Net Assets
       Invested in Capital Assets, Net of
         Related Debt                                  $    1,000,054   $      1,009,554   $      (9,500)
       Restricted                                              94,414             74,794          19,620
       Unrestricted                                           226,792            260,955         (34,163)
     Total Net Assets                                  $    1,321,260   $      1,345,303   $     (24,043)
     Total Liabilities and Net Assets                  $    4,093,071   $      3,922,838   $     170,233

   Statem ent of Revenues, Expenses, and Changes in Net Assets
                                                   6/30/2012      6/30/2011                  Variance
     Operating Revenues                          $     418,640 $      407,502              $     11,138
     Operating Expense                                 332,608        352,735                   (20,127)
       Operating Income (Loss)                   $      86,032 $        54,767             $     31,265
     Non-Operating Revenues (Expense)                 (104,397)        (27,804)                 (76,593)
       Income Before Contributions and Transfers $     (18,365) $       26,963             $    (45,328)
     Contributions in Aid of Construction               20,917          17,675                    3,242
     Transfers-Payments in Lieu of Taxes               (15,339)        (15,980)                     641
     Transfers-Other                                      (386)              -                     (386)
       Change in Net Assets                      $     (13,173) $       28,658             $    (41,831)
     Net Assets-Beginning of Period                    $    1,334,434   $      1,316,644
     Net Assets-End of Period                          $    1,321,260   $      1,345,303

   Statem ent of Cash Flow s
                                                           6/30/2012         6/30/2011         Variance
     Net Cash Provided (Used) By:
       Operating Activities                            $      153,568 $          114,740 $         38,828
       Noncapital Financing Activities                        (16,411)           (16,915)             504
       Capital and Related Financing Activities              (103,432)          (133,465)          30,033
       Investing Activities                                     4,715             16,341          (11,626)
     Net Increase                                      $       38,440 $          (19,299) $        57,739
     Beginning Cash and Cash Equivalents                      361,104            466,158         (105,054)
     Ending Cash and Cash Equivalents                  $      399,544 $          446,859 $        (47,315)




                                                  37
                                                                                                                        Item IV-C
                                                                                                     Governance Monitoring Report

B. Segment Reporting
                                                               Segm ent Reporting (In Thousands)
                                                                  Period Ending June 30, 2012
                                                       Electric     Streetlights     Gas         Water                Wastew ater    Eliminations           Total
Condensed Balance Sheet
  Assets
     Current                                       $     157,712     $        7,306   $    47,229    $    124,724     $    59,737    $              -   $    396,708
     Non Current:
        Other                                            226,378              2,821        64,022         220,438          71,968                   -        585,627
        Net Capital Assets                             1,043,746          18,341          224,291        1,209,731        614,627                   -       3,110,736
  Total Assets                                     $   1,427,836     $    28,468      $   335,542    $   1,554,893    $   746,332    $        -         $   4,093,071

  Liabilities
     Current                                              77,074               547         46,532          37,662          17,332                   -        179,147
     Non Current                                       1,065,182          10,083          221,098         858,150         438,151                   -       2,592,664
  Total Liabilities                                $   1,142,256     $    10,630      $   267,630    $    895,812     $   455,483    $        -         $   2,771,811
  Net Assets:
     Invested in Capital Assets, Net of
      Related Debt                                       129,551          10,702           63,684         557,856         238,261                   -       1,000,054
     Restricted                                           37,030               447         13,254          22,789          20,894                   -          94,414
     Unrestricted                                        118,999              6,690        (9,026)         78,435          31,694                   -        226,792
  Total Net Assets                                       285,580          17,839           67,912         659,080         290,849                   -       1,321,260
  Total Liabilities and Net Assets                 $   1,427,836     $    28,469      $   335,542    $   1,554,892    $   746,332    $        -         $   4,093,071

Condensed Statem ent of Revenues, Expenses and Changes in Net Assets
  Operating Revenues                                     198,990              1,933       112,571          81,061          33,594          (9,509)           418,640
  Operating Expense                                      156,828              2,760       100,705          57,822          24,002          (9,509)           332,608
     Operating Income (Loss)                              42,162              (827)        11,866          23,239           9,592                   -          86,032
  Non-Operating Revenues (Expense)                       (54,990)             (265)        (7,918)         (28,344)       (12,880)                  -        (104,397)
     Income Before Contributions and Transfers           (12,828)         (1,092)           3,948           (5,105)        (3,288)                  -         (18,365)
  Contributions in Aid of Construction                     7,130                61          1,479           9,256           2,991                   -          20,917
  Transfers-Payments in Lieu of Taxes                    (11,652)                 -        (3,687)               -              -                   -         (15,339)
  Transfers-Other                                                -                -             -            (386)              -                   -               (386)
     Change in Net Assets                                (17,350)         (1,031)           1,740           3,765            (297)                  -         (13,173)
  Net Assets-Beginning of Period                   $     302,931     $    18,869      $    66,173    $    655,316     $   291,145    $        -         $   1,334,434
  Net Assets-End of Period                         $     285,581     $    17,838      $    67,912    $    659,081     $   290,849    $        -         $   1,321,260
Condensed Statem ent of Cash Flow s
  Net Cash Provided (Used) By:
     Operating Activities                                 59,770              1,332        19,252          53,898          19,316                   -        153,568
     Noncapital Financing Activities                     (11,700)                 -        (4,772)             61               -                   -         (16,411)
     Capital and Related Financing Activities            (22,972)             (812)         3,212          (74,397)        (8,463)                  -        (103,432)
     Investing Activities                                 (3,112)             (347)           52            3,425           4,697                   -           4,715
  Net Increase                                            21,986               173         17,744          (17,013)        15,550                   -          38,440
  Beginning Cash and Cash Equivalents                     81,386              6,863        (2,628)        230,590          44,893                   -        361,104
  Ending Cash and Cash Equivalents                 $     103,372     $        7,036   $    15,116    $    213,577     $    60,443    $        -         $    399,544
Note: Segment reporting is unaudited and for internal purposes only. Presentation differences may occur betw een audited consolidated financial
      statements and unaudited segment reporting.
Note: Slight differences may occur due to rounding of figures.




                                                                         38
                                                                                    Item IV-C
                                                                 Governance Monitoring Report

C. Unrestricted Cash and Investments

Unrestricted Cash and Investments
(In Millions)
                          Electric  Streetlights        Gas           Water      Wastewater       Total
Balance March 31, 2012 $    34,705 $        6,605   $     (7,692) $     35,729   $   28,798   $      98,145
Change for 2nd Qtr      $   17,365 $          299   $     (2,984) $     23,441   $    5,244   $      43,365
Balance June 30, 2012   $   52,070 $        6,904   $    (10,676) $     59,170   $   34,042   $     141,510




D. Component Units and Joint Ventures

Component Units of the City of Colorado Springs were previously reported in Colorado
Springs Utilities annual reports, however are no longer included therein. Each of the
units/joint ventures has its own financial statements which are then consolidated into
the City of Colorado Springs Consolidated Annual Financial Report (CAFR).




                                               39
                                                                                   Item IV-D
                                                                Governance Monitoring Report




Date:            August 15, 2012

To:              Utilities Board

From:            Jerry Forte, P.E., Chief Executive Officer

Subject:         Annual Report on Executive Limitation (EL) 10 - Water Rights Protection
                 and Development


Information Objective: Monitoring

Significant informational updates to Executive Limitation (EL) 10 since the last report
include:

      •   Colorado Springs Utilities protects Colorado Springs’ existing water resources by
          vigorously defending and developing decreed water rights and pursuing new
          water rights through participation in Water Court cases. As of August 15, 2012,
          Colorado Springs Utilities or Colorado Springs is a party in 135 water rights cases.

      •   Every ten years the Colorado Division of Water Resources (DWR) prepares a list
          of water rights recommended for removal from the State’s water rights
          tabulation. Seven water rights listed as being owned by Colorado Springs
          remained on the list put out by the DWR on December 31, 2011. Colorado
          Springs Utilities’ staff evaluated the seven water rights remaining on the list and
          determined that having them removed from the tabulation would not impact
          Colorado Springs Utilities’ ability to serve water to its customers. In April of
          2012, Colorado Springs Utilities obtained a City Council Resolution granting it the
          right not to protest the inclusion of those seven water rights on DWR’s list.

      •   During this reporting period, Colorado Springs Utilities entered into a Water
          Conveyance Agreement with the City of Manitou Springs. The contract has a
          twelve-year term and allows Colorado Springs Utilities to utilize its water system
          to convey up to 250 AF annually of Manitou’s water to Manitou’s water supply
          system. Colorado Springs Utilities also entered into a Water Service Agreement
          with Cherokee Metropolitan District. The contract is a three-year full service
          contract with annual minimum deliveries of 500 AF and annual maximum
          deliveries of 1,000 AF.




                                               40
                                                                               Item IV-D
                                                            Governance Monitoring Report


                            Colorado Springs Utilities Board
                                  Monitoring Report


Date:         August 15, 2012

Policy:       Executive Limitation (EL) 10 – Water Rights Protection and Development

Frequency:    Annually                                     Method: Internal


Global Policy Prohibition: The CEO may not fail to protect and optimize existing water
resources and aggressively seek to develop new water resources.

Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: The CEO has directed Colorado Springs Utilities to engage in
the following activities to protect and optimize existing water resources and develop
new water resources: participation in Water Court and Civil Court proceedings related
to the protection and development of water rights; development and use of Colorado
Springs Utilities’ non-potable water system; development and use of Colorado Springs
Utilities’ exchange program; and participation in regional, state, and national programs,
work groups and activities relating to issues that have the potential to affect Colorado
Springs’ water resources.

Participation in Water Court and Civil Court proceedings: Colorado Springs Utilities
protects Colorado Springs’ existing water resources by vigorously defending and
developing decreed water rights and pursuing new water rights through participation in
Water Court proceedings. Exhibit 1 attached to this report lists all Water Court
proceedings in which Colorado Springs or Colorado Springs Utilities is currently
participating. Colorado Springs Utilities is also actively engaged in the ongoing
administration and use of Colorado Springs’ water rights, providing the legal foundation
to defend existing water resources, and plan for developing additional water resources.

The Colorado Division of Water Resources (DWR) is required to prepare a list of decreed
absolute water rights for which it has determined the water right has been abandoned,
either in part or in full. Water rights holders may protest the placement of their water
rights on this abandonment list and provide evidence to demonstrate that their water
right has not been abandoned. Fourteen decreed water rights listed as being owned
by Colorado Springs were included on DWR’s July 2010 abandonment list. Colorado
Springs Utilities’ staff evaluated those water rights and found that six of them had no
available yield now or in the future and obtained a City Council Resolution in May of



                                           41
                                                                                  Item IV-D
                                                               Governance Monitoring Report

2011 granting Colorado Springs Utilities the right not to protest the inclusion of those six
water rights on DWR’s list. Colorado Springs Utilities submitted a letter protesting the
inclusion of Colorado Springs’ other eight water rights on DWR’s list. DWR rejected the
protest for seven of the water rights and included those rights on its revised list that was
issued on December 31, 2011. Colorado Springs Utilities’ staff and the City Attorney’s
Office water counsel evaluated the seven water rights remaining on the list and
determined that having them removed from the tabulation would not impact Colorado
Springs Utilities’ ability to serve water to its customers. They also determined that it is
unlikely that the Water Court would be persuaded by the evidence Colorado Springs
Utilities could produce to remove the water rights from DWR’s list. In April of 2012,
Colorado Springs Utilities obtained a City Council Resolution granting it the right not to
protest the inclusion of those seven water rights on DWR’s list.

Development and use of non-potable water system: Colorado Springs Utilities
continues to plan for and develop non-potable projects in compliance with this
executive limitation. Colorado Springs Utilities is currently making improvements to the
process water supply system at the Las Vegas Wastewater Treatment Plant in order to
free up capacity in the non-potable water system. Colorado Springs Utilities is also
investigating different non-potable rate setting methodologies that will increase the
stability of the non-potable rate and reflect the integrated nature of the overall water
and non-potable systems. During 2011, Colorado Springs Utilities delivered
approximately 11,200 acre-feet (AF) of non-potable water to its customers.

Development and use of exchange program: Colorado Springs Utilities operates its
exchange program in order to maximize the use of its reusable return flows that accrue
to the Arkansas River Basin and its tributaries following the diversion and first use of its
fully consumable water supplies. The exchange program allows Colorado Springs
Utilities to exchange its reusable return flows for a like amount of water stored or
diverted upstream of where the return flows accrue to the Arkansas River System (e.g.,
reusable return flows that accrue to the Arkansas River at its confluence with Fountain
Creek can be exchanged or traded upstream for a like amount of water in Pueblo
Reservoir). The exchange program currently yields approximately 29,100 AF of water
annually (about 1,900 AF of local exchange and about 27,200 AF of Arkansas River
exchange). Colorado Springs Utilities estimates that the potential of the exchange
program at full build out is approximately 80,000 AF of water annually.

Participation in activities of potential affect to Colorado Springs’ water resources:
Colorado Springs Utilities’ staff attend, monitor, and regularly participate in meetings
and activities of national, regional, and statewide interest concerning policies and
regulations that may affect Colorado Springs’ water resources. Statewide activities
include negotiations with large water providers and interested parties regarding water
projects and administration as well as programs initiated by the Colorado Department of
Natural Resources, the Colorado Water Conservation Board, the U.S. Forest Service, and
the Bureau of Land Management, among other agencies. An example is ongoing


                                             42
                                                                                  Item IV-D
                                                               Governance Monitoring Report

negotiations related to the protection of endangered fish species in the Colorado River.
Regional initiatives include ongoing discussions and coordination with regional water
districts and other entities such as the Pikes Peak Regional Water Authority and the
Southeastern Colorado Water Conservancy District. Interstate or national matters
include monitoring Colorado River issues such as discussions between the seven states
in the Colorado River basin and discussions between the United States and Mexico
regarding treaty obligations related to Mexico’s apportionment of water from the
Colorado River.

Accordingly, the CEO shall not:

Policy Prohibition 1: Provide water-related services including but not limited to water
leases, storage, conveyance, or treatment (collectively referred to as “water-related
services”), outside the Colorado Springs Utilities exclusive water service territory, unless
in compliance with the City Code and pursuant to a special contract or pursuant to the
Water Management Plan.

Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: At the direction of the CEO, Colorado Springs Utilities only
provides water-related services outside of its exclusive water service territory in
compliance with City Code § 7.6.209 (Water Service Pending Annexation) and City Code §
7.6.210 (Water Service Without Annexation), pursuant to special contracts approved by
City Council, or pursuant to Colorado Springs Utilities’ Water Management Plan. Colorado
Springs Utilities has not entered into any water service arrangements that are
inconsistent with these provisions of the City Code, previously approved contracts, or
the Water Management Plan during the reporting period.

Colorado Springs Utilities provides special contract water-related services to
governments, institutions, and organized special (water) districts only with the approval
of City Council. During this reporting period, Colorado Springs Utilities entered into a
Water Conveyance Agreement with the City of Manitou Springs. The contract has a
twelve-year term and allows Colorado Springs Utilities to utilize its water system to
deliver up to 250 AF annually of Manitou’s water to Manitou’s water supply system.
Colorado Springs Utilities also entered into a Water Service Agreement with Cherokee
Metropolitan District. The contract is a three-year full service contract with annual
minimum deliveries of 500 AF and annual maximum deliveries of 1,000 AF. Colorado
Springs Utilities’ staff continue to discuss possible special water contract arrangements
that comply with this policy prohibition with other interested entities.

Pursuant to the Water Management Plan, Colorado Springs Utilities makes spot sales of
surplus water to agricultural and environmental users in the lower Arkansas River valley,
such as farmers on the Colorado Canal and the Colorado Division of Wildlife. Surplus


                                             43
                                                                                   Item IV-D
                                                                Governance Monitoring Report

water consists of water that Colorado Springs Utilities cannot store or exchange in a
manner that is beneficial to its customers or water that it needs to sell for operational
reasons. As of August 1, 2012, spot sales of surplus water have generated revenue of
$168,000 this year.

Policy Prohibition 2: Allow the use of Denver Basin groundwater in the Colorado Springs
Utilities exclusive water service territory for other than supplemental supply for emergency,
limited irrigation, aquifer storage and recovery, or periodic operation and maintenance
exercising of groundwater infrastructure.

Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: At the direction of the CEO, Colorado Springs Utilities does
not allow the use of Denver Basin groundwater in its exclusive water service territory for
purposes that violate this policy prohibition. During the reporting period, Colorado
Springs Utilities used a limited number of groundwater wells and treatment facilities in the
Denver Basin for irrigation uses and Denver Basin aquifer storage and recovery (ASR).
The use of Denver Basin groundwater for supplemental potable use in emergency
conditions is not currently being implemented, but is possible in the future.

Policy Prohibition 3: Develop or allow development of controlled groundwater in the
Dawson Aquifer in the Colorado Springs Utilities exclusive water service territory.

Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: Colorado Springs Utilities legally controls a majority of the
Dawson Aquifer groundwater within its exclusive water service territory. Colorado
Springs Utilities has not developed or allowed development of groundwater that it controls
in the Dawson Aquifer within the exclusive water service territory. However, there are
some historical Dawson Aquifer wells on land previously annexed into the exclusive
water service territory. Many of these wells are not subject to the control of Colorado
Springs Utilities and the owners are legally entitled to continue operating the wells
under existing well permits, decreed water rights, or both to provide limited private
water service.

Policy Prohibition 4: Enter into special contracts for water-related services unless the
special contracts will provide a benefit to Colorado Springs Utilities ratepayers and citizen-
owners, recognizing the costs of both investments and risks, and will support the
management of water resources in a manner no less protective than Colorado Springs
Utilities policies, practices, and regulations, including regional obligations and
environmental commitments. New special contracts for water-related services approved
pursuant to this limitation shall comply with the following provisions:



                                              44
                                                                                 Item IV-D
                                                              Governance Monitoring Report

A.     Include a premium on fees and rates that will benefit Colorado Spring Utilities
       ratepayers and citizen-owners.

B.     Dedicate 50 percent of the premium as surplus revenue in recognition of citizen
       ownership, which may be appropriated to the general revenues of the City of
       Colorado Springs by the City Council in its Annual Budget and Appropriation
       Ordinance pursuant to the City Charter.

C.     Not exceed a term of three years, with provisions for renewal, if Colorado Springs
       Utilities water supplies are included.

D.     Not exceed a term of 25 years, with provisions for renewal, for other water-related
       services in which Colorado Springs Utilities water supplies are not included.

E.     Require special contract customers to adopt and enforce water use restrictions, but
       only as necessary to protect Colorado Springs Utilities customers from compulsory
       restrictions on the use of water.

Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: As previously discussed, Colorado Springs Utilities entered into
special contracts pursuant to this policy with the City of Manitou Springs in September of
2011 and with Cherokee Metropolitan District in December of 2011. Both of those
contracts provide a benefit to Colorado Springs Utilities ratepayers and citizen-owners,
contain terms and conditions consistent with this policy prohibition, and received final
approval from City Council.

Policy Prohibition 5: Fail to protect existing and future consumers from compulsory
restrictions on the use of water, specifically when considering and managing special
contracts, except as provided for in the City Code.

Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: Pursuant to City Code §§ 12.4.1301-12.4.1316 (Water
Shortage), Colorado Springs Utilities has the authority and means to systematically manage
water demand and conserve Colorado Springs’ water supply through mandatory watering
restrictions during a drought related water shortage. Water customers are not currently
subject to mandatory restrictions. Exceedingly low snowpack in the winter of 2011-2012
and persistent hot and dry weather have resulted in widespread drought conditions
developing throughout Colorado. These conditions have resulted in below average runoff
and water system yield for Colorado Springs Utilities’ water system in 2012. Colorado
Springs Utilities’ water supply system is designed and operated to withstand recurring



                                             45
                                                                                     Item IV-D
                                                                  Governance Monitoring Report

cycles of drought through its complex network of storage reservoirs, water delivery
systems, and related water infrastructure. Colorado Springs Utilities is closely monitoring
its water supply situation, and does not anticipate having to implement mandatory
watering restrictions in 2012, based on current water storage levels and water
management practices. Colorado Springs Utilities is currently implementing Stage I
Shortage restrictions, which encourage voluntary water conservation through
communication and education, including recommendations for customers to conduct
outdoor watering only three days per week.

Policy Prohibition 6: Reserve Colorado Springs Utilities water for any person, organization,
property, or development not connected to the water system regardless of whether that
entity is inside or outside the city limits or Colorado Springs Utilities exclusive water service
territory.

Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: Colorado Springs Utilities does not reserve water supply for
any person or entity. Colorado Springs Utilities provides water service on a “first-come,
first-serve” basis within city limits pursuant to City Code § 12.4.1001 (Denver Basin
Groundwater). Additionally, pursuant to City Code § 7.6.204 (Rights of the City),
Colorado Springs Utilities does not allocate water to any particular parcel of land until
such land is developed and water is applied to actual use upon such land.

Policy Prohibition 7: Fail to defend Colorado Springs Utilities water rights against claims
and filings by other water rights holders or users if those claims or filings would in any way
impede, infringe upon, or decrease the yield from Colorado Springs Utilities water rights.

Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: At the direction of the CEO, Colorado Springs Utilities
defends and develops Colorado Springs’ water rights through active participation in
ongoing water rights proceedings in Water Court. As of August 22, 2012, Colorado
Springs Utilities or Colorado Springs is a party in 135 water rights cases. Colorado
Springs Utilities typically participates in water rights cases for three purposes: (1) to
obtain decrees for new water rights or to change decreed water rights to allow for
municipal use (applicant cases); (2) to protect Colorado Springs’ existing water rights by
filing statements of opposition to water rights applications of others that have the
potential to injure Colorado Springs’ water rights; and (3) to obtain required judicial
findings of reasonable diligence in the development of Colorado Springs’ decreed
conditional water rights (diligence cases). A complete list of water rights cases to which
Colorado Springs or Colorado Springs Utilities is a party is attached as Exhibit 1.




                                               46
                                                                                   Item IV-D
                                                                Governance Monitoring Report

Policy Prohibition 8: Fail to consider participation with other entities on regional projects
based on the above prohibitions. In addition, the following criteria must be addressed:

A.     Participation in regional projects will provide a benefit to Colorado Springs Utilities
       ratepayers, and require project participants to commit to regional obligations and
       environmental commitments.
B.     Regional projects will not be entered into unless Colorado Springs Utilities has
       control and rights commensurate with Colorado Springs Utilities level of
       participation in the project.
C.     Colorado Springs Utilities participation will not create undue complications or delay
       in meeting Colorado Springs Utilities goals.

Compliance: The CEO reports that these conditions have not occurred during this
reporting period.

Comments/Interpretation: Consistent with this policy prohibition, Colorado Springs
Utilities actively considers participation in regional water projects through its involvement
in discussions, agreements, and studies with regional water entities and stakeholder
groups. However, since the adoption of Policy Prohibition 8, Colorado Springs Utilities has
not entered into any new regional water projects. Nonetheless, Colorado Springs Utilities
continues to participate in existing regional water projects and agreements approved prior
to the adoption of this policy prohibition.




                                              47
                                               Exhibit 1 - APPLICATION CASES                              Item IV-D Governance
                                      EL - 10 Water Rights Protection and Development                        Monitoring Report
                                                          August 2012


Number     Case Name                                                      Interest
03CW320    Substitution Plan for Continental-Hoosier Diversion System     Blue River
04CW132    Denver Basin Groundwater Return Flow Exchange                  Denver Basin
05CW095    Fremont County (Hwy. 115) exchange                             Arkansas Exchanges/Diversions
05CW096    Leased Water Exchange                                          Arkansas Exchanges/Diversions
06CW120    Roy Exchange Application                                       Arkansas Exchanges/Diversions
07CW120    Quail Lake Storage                                             Fountain Exchanges/Diversions
07CW121    Fountain Creek Recovery Exchange                               Fountain Exchanges/Diversions
07CW122    Pueblo/WCR to Local Storage                                    Fountain Exchanges/Diversions
12CW031    Upper Williams Creek Application                               Arkansas Exchanges/Diversions
90CW056    Colorado Springs Utilities - Elephant Rock                     Arkansas Exchanges/Diversions
95CW272B   Homestake Eagle Park Project Groundwater Phase                 Homestake




                                                               48
                                             Exhibit 1 - DILIGENCE CASES                              Item IV-D Governance
                                    EL - 10 Water Rights Protection and Development                      Monitoring Report
                                                      August 2012

Number    Case Name                                                            Interest
01CW113   Sugarloaf Reservoir Diligence                                        Arkansas Exchanges/Diversions
03CW118   Colorado Canal, Lake Meredith Res. & Lake Henry Res. Diligence       Colorado Canal Companies
11CW062   Colorado Canal RF Exchange Diligence                                 Arkansas Exchanges/Diversions




                                                            49
                                               Exhibit 1 - OBJECTOR CASES                                    Item IV-D Governance
                                      EL - 10 Water Rights Protection and Development                           Monitoring Report


Number     Case Name                                                         Interest                        Objector Status
01CW020    Cradlin, LLC, Widefield Water and San., FMIC                      Fountain Exchanges/Diversions   Current
01CW108    Fountain, City of                                                                                 Current
01CW146    Fountain, City of                                                                                 Current
02CW077    Basalt Water Conservancy District                                                                 Current
02CW122    Cripple Creek & Victor Gold Mine (consolidated with 10CW31)                                       Current
02CW131    Front Range Aggregates, LLC / Agile Stone Systems                                                 Current
02CW154    ACA Products                                                                                      Current
02CW281    West Divide Water Conservancy District                                                            Current
03CW019    Upper South Platte Water Conservancy                                                              Current
03CW055    Upper Arkansas Water Conservancy District                                                         Current
03CW104    Upper Arkansas Water Conservancy District Augmentation Plan                                       Current
03CW162    Archie and Linda Dunham                                                                           Current
03CW162    Rocking A Ranch Augmentation Plan                                                                 Current
03CW336    CNL Income Granby, LLC                                                                            Current
04CW096    Upper Arkansas Water Conservation District                                                        Current
04CW202    Wildcat Ranch / Snowmass                                          Twin Lakes                      Current
05CW091    Phantom Canyon Ranch Land and Cattle Company, LLC, and Morley Companies                           Current
05CW105    Highline Canal Company and the City of Aurora                                                     Current
05CW107B   City of Lamar                                                     Arkansas Exchanges/Diversions   Current
05CW144    Reserve at Elk Meadows LLC                                                                        Current
05CW148    West Divide Water Conservancy District                            Twin Lakes                      Current
05CW161    Crown Mountain Park & Rec Dist. & Eagle County Board of County Co Homestake                       Current
05CW189    Roll International Corporation                                    Twin Lakes                      Current
05CW190    Roll International Corporation                                                                    Current
05CW253    West Divide Water Conservancy District                                                            Current
05CW273    Owl Creek Meadows, LLC                                                                            Current
05CW282    Eagle, Town of                                                    Homestake                       Current
05CW295    2075 McLain Flats Road, LLC                                                                       Current
05CW300    Aspen, City of                                                                                    Current
06CW007    Southeastern Colorado Water Conservancy District                                                  Current
06CW008    Southeastern Colorado Water Conservancy District                                                  Current
06CW054    Aspen, City of                                                                                    Current
06CW077    Town of Carbondale                                                                                Current


                                                             50
                                                  Exhibit 1 - OBJECTOR CASES                                     Item IV-D Governance
                                         EL - 10 Water Rights Protection and Development                            Monitoring Report
06CW096       Eagle River Water and Sanitation District                            Homestake                     Current
06CW097       Upper Eagle Regional Water Authority                                 Homestake                     Current
06CW115       Round Mountain                                                                                     Current
06CW118       Rules Governing the Arkansas River Water Bank Program                                              Current
06CW122       City of Fountain                                                                                   Current
06CW123       Security Water District                                                                            Current
06CW255/49C   Denver Water Blue River Diligence                                                                  Current
07CW127       Colorado Water Protective and Development Association                Fountain Exchanges/Diversions Current
07CW128       Colorado Water Protective and Development Association                Arkansas Exchanges/Diversions Current
07CW129       MAGUA (Middle Arkansas Groundwater Users Assn.)                      Fountain Exchanges/Diversions Current
07CW164       River Bend Colorado, LLC                                                                           Current
07CW196       Sopris Mountain Ranch HOA                                            Twin Lakes                    Current
07CW211       Board of County Commissioners of Summit County                                                     Current
07CW225       Minturn                                                                                            Current
07CW256       Clear W. Ranch                                                       Twin Lakes                    Current
08CW012       Booth Well Association                                                                             Current
08CW017       United Feeders, Inc.                                                 Arkansas Exchanges/Diversions Current
08CW026       US Air Force Academy (Farish Lakes)                                  Fountain Exchanges/Diversions Current
08CW114       City of Fountain, Colorado (Plan for Augmentation including Exchange)                              Current
08CW115       City of Fountain, Colorado (Change of Water Rights and Plan for Augmentation, including Exchange)  Current
08CW153       2001 Properties LLC                                                                                Current
09CW048       Bill's Ranch Water Company                                           Blue River                    Current
09CW103       City of Fountain                                                     Fountain Exchanges/Diversions Current
09CW105       MM Ranch, LLC and Fountain Mutual Irrigation Company                 Fountain Exchanges/Diversions Current
105, Original Kansas v. Colorado                                                                                 Current
10CW004       Lower Arkansas Valley Water Conservancy District and Lower ArkansaArkansas Exchanges/Diversions Current
10CW031       Cripple Creek & Victor Gold Mining Company (consolidated under 02CW122)                            Current
10CW047       Basalt Water Conservancy Dist                                        Twin Lakes                    Current
10CW063       The City of Florence (Coal Creek and Williamsburg)                   Arkansas Exchanges/Diversions Current
10CW098       City of Victor and Cripple Creek & Victor Gold Mining Company                                      Current
10CW184       CWCB and Pitkin County BOC                                           Twin Lakes                    Current
10CW242; 11Palmer Divide Water Company                                             Other                         Current
10CW298       Grand County Board of Commissioners                                                                Current
10CW305       Pitkin County                                                        Twin Lakes                    Current
11CW003       Shane, Gary W., Sharon L. and Connie J.; Stedman, Jeffery and Janelle; Eck, Wesley D. and Connie AnCurrent
11CW004       Catlin Canal Company                                                                               Current


                                                                 51
                                                  Exhibit 1 - OBJECTOR CASES                                       Item IV-D Governance
                                         EL - 10 Water Rights Protection and Development                              Monitoring Report
11CW013      City of La Junta                                                                                      Current
11CW042      Cascade Public Service Company v. the City of Colorado Springs                                        Current
11CW047      Lucas Esch Farms and Clock Land Company                             Colorado Canal Companies          Current
11CW077      Lower Arkansas Valley Water Conservancy District and Larkspur, Inc. Arkansas Exchanges/Diversions Current
11CW081      City of Aurora                                                      Twin Lakes                        Current
11CW092      Upper Eagle Regional Water Authority                                Homestake                         Current
11CW159      Colorado Water Conservation Board (confluence with Blue River)      Homestake                         Current
11CW160      Colorado Water Conservation Board (confluence with Piney River)     Homestake                         Current
11CW161      Colorado Water Conservation Board (confluence with Cabin Creek) Homestake                             Current
12CW001      Woodmoor Water and Sanitation District                              Fountain Exchanges/Diversions Current
12CW005      Robert C. Norris                                                    Arkansas Exchanges/Diversions Current
12CW006      Tolari, Elaine D.                                                   Denver Basin                      Current
12CW007      Wolff, Gregory S. and Tanya R.                                      Denver Basin                      Current
2009CV7196   Cascade Public Service Company, Inc. and Cascade Metropolitan District No. 1 v. City of Colorado SprinCurrent
88CW023      Triview Metropolitan District                                                                         Current
96CW233      Cripple Creek, City of                                                                                Current
98CW115      Cripple Creek & Victor Gold Mine                                                                      Current
98CW173      Lake County                                                                                           Current
98CW174      Cripple Creek, City of                                                                                Current
99CW162      Forest View Acres-sw                                                                                  Current
00CW139      Southeastern Colorado Water Conservancy District                                                      Stipulated
00CW146      Town of Monument                                                    Fountain Exchanges/Diversions Stipulated
01CW149      Security WD & FMIC                                                                                    Stipulated
01CW151      Southeastern Colorado Water Conservancy District                                                      Stipulated
02CW369      Gypsum, Town of                                                     Homestake                         Stipulated
02CW388      Clearwater Development, Inc. f/k/a Gypsum Partners, LLC             Homestake                         Stipulated
03CW211      Eagle Park Reservoir Company                                        Homestake                         Stipulated
03CW292      Eagle Park Reservoir Company Aug. Plan                              Homestake                         Stipulated
03CW302      Colorado River Water Conservation District / Wolford Mountain ReservHomestake                         Stipulated
04CW125      City of Salida                                                      Arkansas Exchanges/Diversions Stipulated
04CW237      Gary Land and Livestock, LLC - f/k/a GRC Residence, LLLP and Blue River Ranch, LLC                    Stipulated
04CW238      Gary Land and Livestock, LLC - f/k/a S.G. Company                                                     Stipulated
05CW065      Forest Ridge Community Church                                                                         Stipulated
05CW107A     City of Lamar                                                       Arkansas Exchanges/Diversions Stipulated
05CW266      George B. and Pamela D. Beardsley                                                                     Stipulated
06CW012      Penrose Water District                                              Arkansas Exchanges/Diversions Stipulated


                                                                   52
                                              Exhibit 1 - OBJECTOR CASES                                      Item IV-D Governance
                                     EL - 10 Water Rights Protection and Development                             Monitoring Report
06CW066   Colorado Springs School and Fountain Mutual Irrigation Company                                      Stipulated
06CW110   The Navigators                                                                                      Stipulated
06CW253   Strategic Real Estate Group                                                                         Stipulated
07CW128   Ranch at Roaring Fork                                               Twin Lakes                      Stipulated
08CW045   Town of Monument                                                    Fountain Exchanges/Diversions   Stipulated
08CW063   Town of Monument                                                                                    Stipulated
09CW028   Eagle Park Reservoir Co. / Homestake Project                        Homestake                       Stipulated
09CW084   Comanche Resources, LLC                                             Arkansas Exchanges/Diversions   Stipulated
09CW160   Upper Eagle Regional Water Authority                                Homestake                       Stipulated
09CW169   Vail Associates and Holland Ck. Metro. Dist.                                                        Stipulated
09CW188   Fremont Pass Ditch Co. (Aurora)                                     Homestake                       Stipulated
10CW028   Woodmoor Water and Sanitation District No. 1                                                        Stipulated
10CW029   Woodmoor Water and Sanitation District No. 1                                                        Stipulated
10CW043   Board of County Commissioners of Summit County / Vidler Tunnel      Blue River                      Stipulated
10CW096   Rocky Mountain Materials & Asphalt, Inc.                                                            Stipulated
10CW099   City of Fountain, Colorado                                                                          Stipulated
11CW020   Fremont Re-2 School District                                                                        Stipulated
11CW057   Board of Water Works of Pueblo and the City of Pueblo, Colorado (Lake Minnequa)                     Stipulated
97CW290   Granby Realty (Granby substituted for Sol Vista)                                                    Stipulated
99CW243   Kummer Dev. Corp.                                                   Homestake                       Stipulated




                                                              53
                                                                                     Item IV-E
                                                                 Governance Monitoring Report




Date:        August 15, 2012

To:          Utilities Board

From:        Jerry Forte, P.E., Chief Executive Officer

Subject:     Semi-Annual Report on Executive Limitation (EL) 11 -- Enterprise Risk
             Management


Information Objective:         Monitoring

The significant informational updates to Executive Limitation (EL) 11 since February
2012 include:
      •   Natural gas price volatility remains a primary focus area under the Enterprise
          Risk Management Plan, having been identified as one of the key risks facing
          Colorado Springs Utilities. Colorado Springs Utilities utilizes financial derivatives
          to mitigate the price volatility of natural gas, providing price stability to customer
          rates. Natural gas prices fell from a high of $2.80/mmbtu in January to a low of
          $1.68/mmbtu in April, before rallying back to $2.76/mmbtu in late June. These
          price movements resulted in a first half 2012 average price of $2.20/mmbtu.
          Prices remain at low absolute levels due to weak market fundamentals, with the
          expectation this condition will continue into the latter half of 2012.
      •   As of the end of June 2012, the total natural gas hedge portfolio mark to market
          is $29.53 million in favor of Colorado Springs Utilities’ counterparties. This
          represents a decrease of $23.1 million from the year end 2011 mark to market
          balance of $52.62 million in favor of Colorado Springs Utilities counterparties
      •   Colorado Springs Utilities utilizes financial derivatives to mitigate interest rate
          risk associated with the variable rate debt issuances. Benchmark 10-year
          treasury yields serve as a proxy for fixed rate financial derivates used to hedge
          variable rate debt. Due to a myriad of geopolitical and economic events, yields
          for the 10-year treasury have been volatile in 2012. Yields have fallen sharply
          from high of 2.40% in March to nearly 1.45% in May and finished June at 1.65%.
          This resulted in an average rate of 1.91% over the first half of 2012.
      •   As of the end of June 2012, the hedged portion of the variable rate debt
          portfolio had a mark to market of $236.86 million in favor of Colorado Springs
          Utilities’ counterparties. This represents a $13.5 million increase since year end
          2011, reflecting the decline in interest rates through the first half of 2012.



                                                54
                                                                                 Item IV-E
                                                             Governance Monitoring Report

                             Colorado Springs Utilities Board
                                   Monitoring Report


Date:          August 15, 2012

Policy:        Executive Limitation (EL) 11 – Enterprise Risk Management

Frequency:     Semi-Annual                                  Method: Internal


Global Policy Prohibition: The Chief Executive Officer shall not cause or allow conditions,
procedures or decisions which fail to identify, measure, monitor and manage, within
established risk tolerances, potential events that may affect achievement of the Ends.

Compliance: The CEO reports that these conditions have not occurred as of this
monitoring report.

Comments/interpretation: Many functions exist within Colorado Springs Utilities to
ensure achievement of the strategic objective “Plan for and manage enterprise business
risk.” Functions and activities include: Enterprise Risk Management, Business Continuity,
Issues Management, Project Management, Safety and Health, Customer Safety
Communication, and Government Affairs.

A full risk assessment was conducted in December 2006 in compliance with the
Enterprise Risk Management Plan. An update to the risk assessment was completed in
May 2009. Key risks identified in the 2009 Risk Assessment have been prioritized and
risk mitigation plans to address these risks have been integrated into the Strategic
Planning Process. Specific consideration is given to risk information during the strategic
business planning cycle review and development of objectives and initiatives.

An external risk assessment was completed for calendar year by RW Beck, fulfilling the
requirement that an external assessment take place for years ending in zero or five. The
report concluded that Colorado Springs Utilities is in full compliance with the
requirements of EL-11. The report was provided to the Utilities Board in the 1st quarter,
2011.




                                            55
                                                                                  Item IV-E
                                                              Governance Monitoring Report

Accordingly, the CEO shall not:

Policy Prohibition 1: Fail to establish and maintain a Risk Management Committee to
ensure that duties associated with the identification, measurement, monitoring,
management and reporting of risk on an enterprise-wide basis are fulfilled.

Compliance: The CEO reports that these conditions have not occurred as of this
monitoring report.

Comments/interpretation: The structure and procedures of the Risk Management
Committee are specified in the established Enterprise Risk Management (ERM) Plan.
The Risk Management Committee meets regularly to monitor the performance of the
organization compared to established risk tolerances for operational risks and financial
risks associated with interest rate and natural gas markets. The City Auditor is invited to
the monthly meetings and a summary of the monthly monitoring review is provided to
the CEO.

Policy Prohibition 2: Fail to establish and maintain a written Enterprise Risk
Management (ERM) Plan and an ERM program that includes management-level policies,
procedures, and process controls to help ensure that enterprise-wide business risk
exposures are properly identified, managed and reported to the Utilities Board. These
business risks shall include at a minimum strategic, legal, financial, operational, and
hazard risks, some of which are separately addressed in greater detail below and in
other Executive Limitations.

   A. Fail to maintain and operate under a written Energy Risk Management Plan that
       establishes appropriate internal controls, approval processes, training
       requirements, guidelines for minimizing risk, proper internal and external audits,
       and appropriate internal reporting to assure responsible compliance.
       a. Fail to use appropriate risk management techniques for acquisition or sale of
          energy that limits Springs Utilities exposure to price volatility.
       b. Allow the acquisition or sale of energy that would unreasonably jeopardize
          Springs Utilities’ ability to meet customer needs.
   B. Fail to maintain and operate under a written Investment Plan which establishes
      investment scope, objectives, delegation of authority, standards of prudence,
      reporting requirements, internal controls, eligible investments and transactions,
      risk tolerance and safekeeping and custodial procedures for the investment of all
      funds of Colorado Springs Utilities.




                                            56
                                                                                  Item IV-E
                                                              Governance Monitoring Report

   C. Fail to maintain and operate under a written Financial Risk Management Plan that
      establishes objectives, internal controls, approval processes, guidelines for
      minimizing risk, proper internal and external audits, and appropriate internal
      reporting to assure responsible compliance.
   D. Endanger the organization’s public image or credibility, particularly in ways that
      would hinder its accomplishment of mission.

Compliance: The CEO reports that these conditions have not occurred as of this
monitoring report.

Comments/interpretation: See below.

Financial Risk Management Programs
Colorado Springs Utilities engages in financial risk management programs to manage
price risk associated with both natural gas and interest rate markets. The objective of
the financial risk management program is to reduce volatility in both natural gas prices
passed to customers and interest rates associated with variable rate bond issuances in
Colorado Springs Utilities’ debt portfolio.

Energy Risk Management
Natural gas price volatility remains an area of focus under the Enterprise Risk
Management Plan, having been identified as one of the key risks facing Colorado Springs
Utilities. Year to date through June 2012, natural gas prices have exhibited lower
volatility as prices have settled into a relatively narrow trading range. Prices fell from a
high of $2.80/mmbtu in January to a low of $1.68/mmbtu in April, before rallying back
to $2.76/mmbtu in late June. These price movements resulted in a first half 2012
average price of $2.20/mmbtu. Prices remain at low absolute levels due to weak market
fundamentals, with the expectation this condition will continue into the latter half of
2012. Demand for natural gas continues to be driven by weather-related factors with
industrial usage growing moderately. Also, high electrical generation demand associated
with an extremely hot summer has reduced the inventory surplus created as a result of
last year’s mild winter and lower heating demand. Surplus supply concerns continue to
weigh on the market due to the large shale gas field discoveries made accessible
through horizontal drilling technology and enhanced production techniques.

Colorado Springs Utilities strives to reduce price uncertainty in an effort to allow
customers to better plan the utilization of utility services and their respective costs. To
support the effort to reduce price uncertainty, a long standing natural gas hedging
program required specific volumes to be hedged according to a defined schedule. This
hedging program has successfully reduced price uncertainty through periods of high
natural gas price volatility. However, in an effort to more effectively balance price
certainty with current weak market conditions, Utilities has suspended hedging
activities for the time being. The suspension of hedging activities took place effective



                                             57
                                                                                 Item IV-E
                                                             Governance Monitoring Report

February, 2012 and is currently in effect. The suspension will allow Utilities the
opportunity to purchase more natural gas at current weak market prices, thereby
balancing price stability with market conditions. The suspension is under continual
evaluation and will be lifted when market conditions indicate the risk of higher market
pricing outweighs the benefit of participation in the current low price environment.

While natural gas hedging activities were suspended in February, 2012, a portion of
forecast retail natural gas retail sales was hedged prior to the suspension and currently
covers a portion of expected sales through October, 2013 As the currently held hedge
positions were implemented during a period of falling prices, the mark to market value
for all 2012 hedged positions is $19.13 million in favor of the counterparties.
Additionally, the 2013 mark to market value is $10.4 million in favor of the
counterparties. The total natural gas hedging portfolio mark to market for the period
June 2012 through December 31, 2013 is $29.53 million in favor of Colorado Springs
Utilities’ counterparties. This cumulative mark to market value compares favorably to
the mark to market value of $52.62 million as of December 31, 2011.

Colorado Springs Utilities also manages price risk associated with electric power prices
through a combination of Colorado Springs Utilities owned generation and long-term
purchased power and fuel supply contracts. Accordingly, the Risk Management
Committee has established a policy to manage price volatility for the planned purchases
of natural gas used in electrical generation. As with the retail natural gas hedging
program, the Risk Management Committee has approved the temporary suspension of
natural gas hedging activities associated with electrical generation. This suspension will
provide the same benefit as outlined in the retail natural gas hedging discussion and will
be reevaluated in the same manner as the retail program.

The mark to market performance of this program is included in the discussion above on
the overall natural gas risk management program.

Colorado Springs Utilities continues to operate under the established Energy Risk
Management Plan. This plan specifically establishes the internal controls for all energy
transactions, including hedging practices. The Energy Risk Management Plan has been
updated to reflect how these controls have changed with changes in organizational
structure.

Interest Rate Risk Management
Financial risk management activities are conducted consistent with defined Risk
Management Policies to manage interest rate volatility associated with the variable
interest rate debt issuances in Colorado Springs Utilities’ debt portfolio. These practices
have resulted in stabilizing interest payments on debt service by minimizing exposure to
short term interest rate volatility. Benchmark 10-year treasury yields serve as a proxy
for fixed rate financial derivatives used to hedge variable rate debt. Due to a myriad of
geopolitical and economic events, yields for the 10-year treasury have been trending



                                            58
                                                                                  Item IV-E
                                                              Governance Monitoring Report

lower through 2012. Yields have fallen sharply from high of 2.40% in March to nearly
1.45% in May and finished June at 1.65%. This resulted in an average rate of 1.91% over
the first half of 2012.

As of the end of June 2012, the hedged portion of the variable rate debt portfolio had a
mark to market of $236.86 million in favor of Colorado Springs Utilities’ counterparties.
This represents a $13.5 million increase since year end 2011, reflecting the decline in
interest rates through the first half of 2012.

Significant lower natural gas prices and interest rates relative to our fixed price hedge
positions in the natural gas and debt portfolios has resulted in Colorado Springs Utilities
posting collateral with several of our counterparties. As of June 2012 Colorado Springs
Utilities had a total of $54.98 million of collateral posted with all counterparties. This
level has decreased from $82.28 million at year end 2011.

The significant decline in posted collateral in light of weakening interest rates is the
result of an interest rate swap novation program executed by PFD in May, 2012. The
novation program effectively transferred two interest rate swaps from a single
counterparty, UBS, to two counterparties, Wells Fargo and Bank of New York Mellon.
Each new counterparty assumed one of the two swaps held by UBS. The reduction in
collateral postings is a result of higher collateral thresholds negotiated with Wells Fargo
and Bank of New York Mellon. Based on the mark to market at the time of the
novation, approximately $39.29 million in collateral was returned to Utilities due to the
higher thresholds.

Colorado Springs Utilities’ Enterprise Risk Management and Treasury groups continually
monitor potential cash requirements associated with collateral postings and have
adequate cash balances and standby credit facilities on hand to maintain a healthy cash
liquidity position should financial markets move adversely against Colorado Springs
Utilities’ financial hedges.

Public Image
The organization’s reputation is protected through communication with employees,
customers, elected officials, the industry, media, financial community, and other
stakeholders.

Colorado Springs Utilities strives to build and sustain a positive reputation through a
comprehensive communications and media relations program. The program provides
timely, relevant and factual information to key stakeholders, and gathers feedback
directly from them to improve service and enhance our image and credibility.

In addition, the organization is prepared to manage communications in the event of a
crisis, emergency or disaster, which can quickly tarnish the organization’s reputation,
erode consumer confidence, and result in significant financial losses.



                                             59
                                                                             Item IV-E
                                                         Governance Monitoring Report


Issues Management processes also support protecting the organization’s public image
and credibility. Issues Management and Community Relations staff meet regularly with
external stakeholders to address concerns and educate customers on projects and
programs to enable accomplishment of the mission.




                                         60
                                                                                                     Item IV-F
                                                                                 Governance Monitoring Report




Date:        August 15, 2012

To:          Utilities Board

From:        Jerry Forte, P.E., Chief Executive Officer

Subject:     Quarterly Chief Executive Officer Performance Plan 2012 Second Quarter Results
             Board-CEO Linkage (BL) 6 – Monitoring CEO Performance

Information Objective: Monitoring

The attached report provides the second quarter results of the 2012 Annual CEO Performance Plan.
The overall rating for second quarter 2012 is 4.06 on a scale of 1 to 5. This translates to a
performance rating of “exceeds expectations.”

The CEO Performance Plan elements are allocated as follows:
   • 80 percent toward achieving Ends results related to strategic objectives in the customer,
      stakeholder, financial, and internal perspectives.
   • 20 percent toward achieving Executive Limitation results, based on the Utilities Board
      assessment of the monitoring reports.

Strategic Objective Indicator Results
The cumulative results of the strategic objective indicators are 3.98. These results translate to a
performance rating of “meets expectations.” Individual indicator results are summarized below.
Indicator                                                     Score                        Rating
Electric System Average Interruption Duration Index (SAIDI)   47.50                        exceeds expectations
Natural Gas Emergency Response Time                           23.92                        exceeds expectations
Water System Average Interruption Duration Index (SAIDI)      8.24                         superior performance
Disruptions in Water Service/1000 Customers                   1.72                         superior performance
Wastewater Sanitary Service Overflows (SSOs)                  2.20                         meets expectations
Wastewater Improvement Index                                  3.60                         exceeds expectations
Debt Service Coverage Ratio                                   2.19                         exceeds expectations
Days Cash on Hand                                             83.10                        superior performance
ECA Balances and Rate Management                              $1,637,204                   superior performance
GCA Balances and Rate Management                              $2,228,504                   superior performance
Responsive to Community Needs and Values                      4.55                         meets expectations
J.D. Power Residential Customer Satisfaction                  Top 13%                      exceeds expectations
J.D. Power Business Customer Satisfaction                     Available in Third Quarter
Regional Utility Price Competitiveness Index                  3.33                         meets expectations
Environmental Index (2/2012)                                  88.00                        exceeds expectations

Monitoring Reports Results
The cumulative results of monitoring report evaluations are 4.39, based on scores provided by the
Utilities Board. These results translate to a performance rating of “met or exceeded policy with sufficient
information provided.”


                                                        61
                                                                                   Item IV-F
                                                               Governance Monitoring Report

                               Colorado Springs Utilities Board
                                     Monitoring Report


Date:            August 15, 2012

Policy:          Board-CEO Linkage (BL) 6 – Monitoring CEO Performance

Frequency:       Quarterly                                    Method: Internal


The attached report provides the second quarter results of the 2012 Annual CEO
Performance Plan.

Summary:
The overall rating for the Second quarter of 2012 is 4.06 on a scale of 1 to 5. This
translates to a performance rating of “exceeds expectations”

The overall CEO Performance Plan elements are allocated as follows:

   •      80 percent toward achieving ends results related to strategic objectives in the
          customer, stakeholder, financial, and internal perspectives.
   •      20 percent toward achieving Executive Limitation results, based on the Utilities
          Board assessment of the monitoring reports.

The overall CEO performance plan rating is derived from the indicator targets outlined
below.

Indicator: Electric System Average Interruption Duration Index (SAIDI)
Strategic Alignment: C1: Deliver Reliable Utility Services
Frequency of update: Monthly (reported as a 12 month rolling average)
Target Range – 52.50 - 47.51 (minutes interruption per customer per year)
Performance – The 2012 first quarter result is 47.50 minutes per customer. This
translates to a performance rating of “exceeds expectations.”
    • Results changed from 50.84 minutes per customer through the first quarter of
        2012 to 47.50 minutes per customer through the second quarter of 2012.
    • There were 318 sustained outages in the first half of 2012, compared to 253
        outages in the first half of 2011. The majority of these outages were caused by
        equipment failures, animals, wind, unknown, and vehicles.
   • The Waldo Canyon wildfire caused significant outage activity in June. The wildfire resulted
      in 2 pole fires and 6 load shedding interruptions, where either Incident Command or the
      fire department requested a line be deenergized. The Waldo Canyon wildfire produced
      17,153 customer hours out of service.




                                              62
                                                                               Item IV-F
                                                           Governance Monitoring Report

   •   Effective January 1, 2012, the organization officially adopted the Institute of
       Electrical and Electronics Engineers (IEEE) definitions of a momentary and
       sustained interruption. Beginning January 2012, only sustained interruptions will
       be used to calculate SAIDI.

Indicator: Natural Gas Emergency Response Time
Strategic Alignment: C1: Deliver Reliable Utility Services
Frequency of update: Monthly (reported as a year-to-date average)
Target Range – 30.00 – 25.01 (minutes to respond)
Performance – The 2012 second quarter result is 23.92 minutes. This translates to a
performance rating of “exceeds expectations.”
    • Results changed from 23.87 minutes through the first quarter of 2012 to 23.92
       minutes through the second quarter of 2012.
    • This indicator represents Colorado Springs Utilities’ emergency response time to
       gas emergencies such as odor complaints, gas leaks, and hit gas lines.
    • Through the second quarter of 2012, Colorado Springs Utilities responded to
       over 2,000 of these types of calls.
    • Performance has been strong for this indicator. The 23.92 minutes Colorado
       Springs Utilities has achieved is an excellent response time for natural gas
       emergencies. Colorado Springs Utilities responds to thousands of gas
       emergencies each year and is consistently able to maintain a favorable response
       time. This excellent response time contributes to the overall positive customer
       service experience with Colorado Springs Utilities.

Indicator: Water System Average Interruption Duration Index (SAIDI)
Strategic Alignment: C1: Deliver Reliable Utility Services
Frequency of update: Monthly (reported as a 12 month rolling average)
Target Range – 13.42 - 11.24 (minutes interruption per customer per year)
Performance – The 2012 second quarter result is 8.24 minutes per customer. This
translates to a performance rating of “superior performance.”
    • Results changed from 8.98 minutes per customer through the first quarter of
        2012 to 8.24 minutes per customer through the second quarter of 2012.
    • Results changed from 10.13 minutes per customer in the second quarter of 2011
        to 8.24 minutes per customer in the second quarter of 2012.
    • There were four major leaks during the second quarter of 2012 for a total of
        61,316 customer minutes out of service. There were five major leaks during the
        same time frame in 2011 for a total of 143,145 customer minutes out of service.




                                           63
                                                                               Item IV-F
                                                           Governance Monitoring Report


Indicator: Disruptions in Water Service/1000 Customers
Strategic Alignment: C1: Deliver Reliable Utility Services
Frequency of update: Monthly (reported as a 12 month rolling average)
Target Range – 3.03 – 2.84 (disruptions per 1000 customers)
Performance – The 2012 second quarter result is 1.72. This translates to a performance
rating of “superior performance.”
    • The result changed from 1.93 through year-end 2011 to 1.72 through the second
        quarter of 2012.
    • The 2011 second quarter result was 2.08 compared to 1.72 in the second quarter
        of 2012.
    • The improved result is due to 27 fewer unplanned disruptions in the first two
        quarters of 2012 compared to the first two quarters of 2011.

Indicator: Wastewater Sanitary Service Overflows (SSOs) per 100 miles of mainline
Strategic Alignment: C1: Deliver Reliable Utility Services
Frequency of update: Monthly (reported as a 12 month rolling average)
Target Range – 2.50 – 1.50 (SSOs per 100 miles)
Performance – The 2012 second quarter result is 2.20. This translates to a performance
rating of “meets expectations.”
    • Results changed from 2.15 through the first quarter of 2012 to 2.20 through the
        second quarter of 2012.
    • Seven SSOs occurred in the second quarter, only one of which was reportable.
    • The majority of the SSOs were the result of blockages in the collection system.

Indicator: Wastewater Improvement Index
Strategic Alignment: I1: Plan, Build, Rehabilitate and Maintain Infrastructure
Frequency of update: Quarterly (reported as cumulative year-to-date)
Target Range – 2.51 – 3.50 (points on 1-5 scale)
Performance – The 2012 second quarter result is 3.60. This translates to a performance
rating of “exceeds expectations.”
    • The 2012 Wastewater Improvement Index is comprised of four projects that
        focus on improving Colorado Springs Utilities’ ability to prevent sanitary sewer
        spills.
    • The projects include: Local Collectors Evaluation and Rehabilitation Project
        (LCERP), Sanitary Sewer Creek Crossings Project (SSCC), Collection System
        Rehabilitation and Replacement Project (Coll R&R), and the Manhole Evaluation
        and Rehabilitation (MHERP) Project. Each project is weighted 25 percent toward
        the total score.
    • LCERP is ahead of schedule, meeting or surpassing all milestones in the second
        quarter with 35 pipe segments replaced, repaired, or rehabilitated. Second
        quarter expenditures were under spent by approximately 24 percent and actual




                                           64
                                                                                Item IV-F
                                                            Governance Monitoring Report

       asset improvements were nine percent higher than planned. LCERP’s 2012
       second quarter rating is 3.40.
   •   SSCC is on schedule, meeting all milestones in the second quarter. Capital budget
       expenditures were over spent by six percent of the projected budget and two
       projects were completed as of the second quarter. SSCC’s 2012 second quarter
       rating is 5.00.
   •   Coll R&R is on schedule, with planned milestones below anticipated asset
       improvements for the quarter, because scheduled work in a golf course was
       asked to be delayed by the owner until the fourth quarter. Capital budget
       expenditures were 80 percent of the projected budget for the second quarter
       because of the schedule delay. Coll R&R’s 2012 second quarter rating is 1.00.
   •   MHERP is ahead of schedule, and all planned milestones have exceeded
       expectations with actual asset improvements 10 percent higher than planned.
       Capital budget expenditures only reflect internal and external crews working on
       manhole rehabilitation. MHERP’s 2012 second quarter rating is 5.00.
   •   The 2012 second quarter result is an average of the rating for each of the four
       projects which comprise the index [(3.40+5.00+1.00+5.00)/4]=3.60.

Indicator: Debt Service Coverage Ratio
Strategic Alignment: I3: Manage Expenditures at All Levels
Frequency of update: Monthly (reported as a year-end projection of actuals plus
forecast)
Target Range – 2.06 – 2.16 (Ratio of Net Pledged Revenues/Bond Year Debt Service)
Performance – The 2012 second quarter result is 2.19. This translates to a performance
rating of “exceeds expectations.”
    • This 2012 second quarter result is a year-end projection incorporating six months of
        actual data and six months of forecasted data.

Indicator: Days Cash on Hand
Strategic Alignment: F1: Ensure Sufficient Revenue to Meet Service & Financial
Requirements
Frequency of update: Monthly (reported as a year-end projection of actuals plus
forecast)
Target Range – 61 – 75 (Days)
Performance – The 2012 second quarter result is 83.1 days. This translates to a
performance rating of “superior performance.”
    • This 2012 second quarter result is a year-end projection incorporating six months of
       actual data and six months of forecasted data.
    • The monthly actual Days Cash on Hand is 90.1.




                                            65
                                                                               Item IV-F
                                                           Governance Monitoring Report


Indicator: ECA Balances and Rate Management
Strategic Alignment: F1: Ensure Sufficient Revenue to Meet Service & Financial
Requirements
Frequency of update: Monthly (reported as a year-to-date average of the monthly
absolute values)
Target Range – $12.0 million to $8.0 million
Performance – The 2012 second quarter result is a year-to-date average absolute value
balance of $1,637,204. This translates to a performance rating of “superior
performance.”
    • The monthly ECA balances for the 2012 second quarter were as follows:
       $1,349,437 under collected at the end of April; $785,092 under collected at the
       end of May; $332,526 over collected at the end of June.
    • On an absolute basis, the ECA balance averaged $822,352 for the second quarter
       of 2012.
    • Current projections show monthly collections that keep the collected balance
       less than $1 million through the end of the third quarter. Fourth quarter
       collections are projected to drive the balance to an under collected position of
       $2,005,710 by year-end.

Indicator: GCA Balances and Rate Management
Strategic Alignment: F1: Ensure Sufficient Revenue to Meet Service & Financial
Requirements
Frequency of update: Monthly (reported as a year-to-date average of the monthly
absolute values)
Target Range – $12.0 million to $8.0 million
Performance –The 2012 second quarter result is a year-to-date average absolute value
balance of $2,228,504. This translates to a performance rating of “superior
performance.”
    • The monthly GCA balances for the 2012 second quarter were as follows:
       $1,452,874 under collected at the end of April; $2,395,888 under collected at the
       end of May; $3,310,624 under collected at the end of June.
    • On an absolute basis, the GCA balance averaged $2,386,462 for the second
       quarter of 2012.
    • Current projections indicate an under-collection balance of $2,624,080 will
       accumulate through year-end.




                                           66
                                                                                 Item IV-F
                                                             Governance Monitoring Report


Indicator: Responsive to Community Needs and Values
Strategic Alignment: I5: Prioritize Resources to Achieve Strategic Destination
Frequency of update: Annually (reported as a mean score survey response)
Target Range – 4.26 – 4.65 (mean score survey response on 1-5 scale)
Performance – The 2012 annual survey result is 4.55 on a scale of 1 to 5. This translates
to a performance rating of “meets expectations.”
    • Overall satisfaction scores for Colorado Springs Utilities’ corporate citizenship
       remain quite high.
    • There is no difference, statistically, in satisfaction between 2011 and 2012.
    • This is the highest score Colorado Springs Utilities has received since the survey
       went to an on-line format.

Indicator: J.D. Power Residential Customer Satisfaction
Strategic Alignment: C2: Be Easy To Do Business With
Frequency of update: Quarterly (reported as cumulative performance over four waves
until study end)
Target Range – 33% – 15% (top ranking of utility companies)
Performance – The second quarter 2012 result is that Colorado Springs Utilities ranked
in the top 13 percent of the J.D. Power and Associates Electric Utility Residential
Customer Satisfaction Study, which translates to a performance rating of “exceeds
expectations.”
    • The J.D. Power and Associates Electric Utility Residential Customer Satisfaction
        Study is conducted on a fiscal year. The final wave of data collection took place
        in April and May 2012.
    • Colorado Springs Utilities ranked 17th in overall customer satisfaction among the
        126 participating utilities nationally.
    • Colorado Springs Utilities’ Overall Customer Satisfaction Index decreased seven
        points, from 672 on a 1,000 point scale in the 2011 study to 665, with the
        industry average moving down three points to 625.
    • Scores for Colorado Springs Utilities remain strong on all six drivers of residential
        customer satisfaction, showing the greatest strength relative to the 126 utilities
        surveyed in the areas of Power Quality & Reliability and Customer Service.

Indicator: J.D. Power Business Customer Satisfaction
Strategic Alignment: C2: Be Easy To Do Business With
Frequency of update: Semi-annually (reported as cumulative performance over two
waves of data)
Target Range – 33% – 15% (top ranking of utility companies)
Performance – Because of the timing of the J.D. Power and Associates business study,
this is a semi-annual measure. Therefore, this indicator will not be updated until
September 2012.




                                            67
                                                                                  Item IV-F
                                                              Governance Monitoring Report

   •   The year-end 2011 result is that Colorado Springs Utilities ranked in the top 2
       percent of utilities participating in a syndicated national study. This translates to
       a performance rating of “superior performance.”
   •   The syndicated study in which business customer satisfaction is measured is
       conducted in two semi-annual waves. The first wave of data collection occurred
       in May through August 2011 and the second in September through December
       2011.
   •   Using an inferred ranking methodology, Colorado Springs Utilities ranked second
       in overall customer satisfaction among 95 utilities.
   •   Colorado Springs Utilities’ 2011 business Overall Customer Satisfaction Index
       score increased 63 points from 677 in 2010 to 740 (on a 1,000 point scale), with
       the industry average increasing to 657.
   •   When compared to the industry, Colorado Springs Utilities ranked first in Power
       Quality & Reliability, Corporate Citizenship, and Customer Service; ranked
       second in customer perception of Price; and third in both Billing & Payment and
       Communications.

Indicator: Regional Utility Price Competitiveness Index
Strategic Alignment: F2: Keep Rates Competitive
Frequency of update: Quarterly (reported as a quarterly average for each customer
class)
Target Range – +/- 5% (of regional average)
Performance – The 2012 second quarter result is a score of 3.0. This translates to a
performance rating of “meets expectations.”
    • The residential class scored 3.34 percent above the regional average. This
       translates to a performance rating of “meets expectations,” earning a score of 3.
    • The commercial class scored 0.32 percent above the regional average. This
       translates to a performance rating of “meets expectations,” earning a score of 3.
    • The industrial class scored 12.49 percent below the regional average. This
       translates to a performance rating of “exceeds expectations,” earning a score of
       4.
    • The second quarter result for 2012 is an overall score of 3 [(3+3+4)/3=3.33]
       which equals “meets expectations.”




                                            68
                                                                                Item IV-F
                                                            Governance Monitoring Report


Indicator: Environmental Index
Strategic Alignment: I5: Prioritize Resources to Achieve Strategic Destination
Frequency of update: Monthly (reported year-to-date)
Target Range – 75.00 – 85.99 (environmental rating scale 0-100)
Performance – The 2012 second quarter result is 88 on a scale of 0 to 100. This translates
to a performance rating of "exceeds expectations.”
    • There were no regulatory agency inspections conducted at Colorado Springs
        Utilities’ facilities in the second quarter of 2012.
    • There were two minor violations in the second quarter of 2012. These were the
        result of: an exceedance of a single sample E. coli standard for reclaimed water
        at the Las Vegas Street Wastewater Treatment Plant; and, a release of non-
        chlorinated UV-treated reclaimed water to the Fountain Mutual Irrigation Canal.
    • No major violations occurred during the period.
    • No air emission exceedances occurred in the second quarter of 2012.
    • There was one reportable sanitary sewer overflow (SSO) in the second quarter of
        2012.

Monitoring Reports Results:
The cumulative results of monitoring report evaluations are 4.39, based on scores
provided by the Utilities Board. These results translate to a performance rating of “met
or exceeded policy with sufficient information provided.”




                                           69
                                                                            Colorado Springs Utilities
                                                                          2012 Annual Performance Plan
                                                                             Chief Executive Officer
                                     To provide safe, reliable, competitively-priced electric, natural gas, water and wastewater
                                           services to the citizen owners and customers of Colorado Springs Utilities.

                                                                                  ENDS - 80% of results
                                                                                                                              RATING SCALE
                         ENDS                                            PARAMETER            1                  2                  3                    4                    5
                 PERFORMANCE PARAMETER                                    WEIGHT, %         Fails           Improvement           Meets               Exceeds             Superior
                                                                                         Expectations        Necessary         Expectations         Expectations        Performance
                                                                                                                                                                                            Results       Points    Rating

Plan & Execute for the Future (Reliability)
 Electric SAIDI (Interruptions in minutes per year) (Monthly)                10             > 57.50          57.50 – 52.51      52.50 – 47.51       47.50 – 42.50          < 42.50            47.50         40        4
 Natural Gas Emergency Response Time (Monthly)                               10             > 35.00          35.00 – 30.01      30.00 – 25.01       25.00 – 20.00          < 20.00           23.92          40        4
 Water SAIDI (Interruptions in minutes per year) (Monthly)                    5             > 15.60          15.60 – 13.43     13.42 – 11.24         11.23 – 9.04          < 9.04             8.24          25        5
 Disruptions in Water Service/1000 Customers (Monthly)                       5              > 3.17            3.17 – 3.04       3.03 – 2.84           2.83 – 2.67          < 2.67             1.72          25        5
 Wastewater (SSOs per 100 miles of mainline) (Monthly)                       10             > 3.00            3.00 – 2.51       2.50 – 1.50           1.49 – 1.00          < 1.00             2.20          30        3
 Wastewater Improvement Index (Quarterly)                                    5              < 1.50            1.50 – 2.50       2.51 – 3.50           3.51 – 4.50          > 4.50             3.60          20        4
Maintain Financial Stability
 Debt Service Coverage Ratio (Monthly)                                       10              < 1.95           1.95 - 2.05        2.06 - 2.16          2.17 - 2.21          > 2.21             2.19          40        4
 Days Cash on Hand (Monthly)                                                 10            < 50 days         51 – 60 days       61 – 75 days         76 – 80 days        > 80 days            83.1          50        5

                                                                                                             $16 million to    $12.0 million to     $7.9 million to
 ECA Over / Under Collection Balance (Monthly)                               3            > $16 million                                                                 < $6.0 million
                                                                                                             $12.1 million       $8.0 million        $6.0 million
                                                                                                                                                                                           $1,637,204       15        5

                                                                                                             $16 million to    $12.0 million to     $7.9 million to
 GCA Over / Under Collection Balance (Monthly)                               3            > $16 million                                                                 < $6.0 million
                                                                                                             $12.1 million       $8.0 million        $6.0 million
                                                                                                                                                                                           $2,228,504       15        5
Demontrate Corporate Responsibility (Rates/Customer Expectations)
 Responsive to Community Needs & Values (Annually)                           3               < 3.50          3.50 – 4.25         4.26 – 4.65         4.66 – 4.90           > 4.90              4.55          9        3
 JD Power Residential Customer Satisfaction (Quarterly)                      7               > 44%           44% – 34%           33% – 15%            14% – 8%             < 8%              13.00%         28        4
                                                                                                                                                                                           Available in
 JD Power Business Customer Satisfaction (Semi-annually)                     3               > 44%           44% – 34%           33% – 15%            14% – 8%              < 8%
                                                                                                                                                                                          Third Quarter     0
                                                                                                                                                                                          Residential =
                                                                                                                                                                                              3.34%;
                                                                                         16% or greater     6 – 15% greater                         6 – 15% lower
                                                                                                                              +/- 5% of regional                      16% or lower than   Commercial =
 Regional Utility Price Competitiveness Index (Quarterly)                    6            than regional      than regional                           than regional
                                                                                                                                   average                             regional average       0.32%;
                                                                                            average             average                                average
                                                                                                                                                                                           Industrial =
                                                                                                                                                                                             -12.49%        18        3
 Environmental Index (Monthly)                                               10             < 65.00          65.00 – 74.99      75.00 – 85.99       86.00 – 94.99          > 94.99            88.00         40        4
                                                            Total:          100                                                                                                                           Rating:   3.98

                                                                    EXECUTIVE LIMITATIONS - 20% of results
                                                                                                                                                                                                                             Total
                                                                                                                      RATING - assigned by the Board                                                                         Possible
                                                                          POLICY               1                   2                  3                   4                5
               EXECUTIVE LIMITATION POLICIES
                                                                         WEIGHT, %                             Partially                                           Exceeded Policy
                                                                                           Not Met or                          Met Policy w/       Met or Exceeded
                                                                                                            Met/Incomplete                                            w/ clear &
                                                                                        Insufficient Data                     Sufficient Data           Policy
                                                                                                                 Data                                               concise data
 EL - 3 Treatment of Staff                                                   10                                                                                                                             0.00                     0
 EL - 4 Asset Protection                                                     10                                                                                                               4.31         43.10                    50
 EL - 5 Compensation and Benefits                                             5                                                                                                                             0.00                     0
 EL - 6 Financial Planning/Budgeting                                          5                                                                                                                             0.00                     0
 EL - 7 Financial Condition and Activities                                  12.5                                                                                                              4.30         53.75                  62.5
 EL - 8 Communication and Support to the Board                               10                                                                                                               4.57         45.70                    50
 EL - 9 Treatment of Consumers                                                5                                                                                                                             0.00                     0
 EL - 10 Water Rights Protection & Development                               15                                                                                                               4.33         64.95                    75
 EL - 11 Enterprise Risk Management                                          10                                                                                                               4.41         44.10                    50
 EL - 12 Pricing of Products and Services                                     5                                                                                                               4.21         21.05                    25
 EL - 13 Infrastructure                                                      7.5                                                                                                              4.46         33.45                  37.5
 EL - 14 Community Investment                                                 5                                                                                                               4.68         23.40                    25
                                                                Total:      100                                                                                                                           329.50     4.39          375

Final Rating Calculation = 0.8*"Ends" result + 0.2*"Executive Limitations" result =                                                                                                                                 4.06

Note: EL1 and EL2 were removed from consideration in the rating at the direction of the Utilities Board




                                                                                                                       70
                                                                              Item IV-G
                                                           Governance Monitoring Report




Date:         August 15, 2012

To:           Utilities Board

From:         Jerry Forte, P.E., Chief Executive Officer

Subject:      Chief Executive Officer’s Communication
              Executive Limitation (EL) 8 – Communication and Support to
              the Board


Information Objective: Monitoring

Informational updates include:

Electric Cost Adjustment and Gas Cost Adjustment (ECA/GCA) -- (No presentation
scheduled)

A summary of the Electric Cost Adjustment (ECA)/Gas Cost Adjustment (GCA), as of July
2012, is provided.




                                            71
                                                                               Item IV-G
                                                            Governance Monitoring Report

                            Colorado Springs Utilities Board
                                  Monitoring Report


Date:         August 15, 2012

Policy:       Executive Limitation (EL) 8 – Communication and Support to the
              Board

Frequency:    Ongoing                                      Method: Direct Inspection


Global Policy Prohibition: The Chief Executive Officer shall not permit the Board to be
uniformed or unsupported in its work.

Electric Cost Adjustment and Gas Cost Adjustment (ECA/GCA)
Unseasonably warm weather continued in July. Due to the typical seasonal under-
collection of fixed costs during the summer, the July GCA collected balance declined to
an under collected balance of ($4.1) million, close to the previous month’s forecast.

The unseasonably warm weather produced higher electric sales and revenues, and
when combined with lower than expected costs, the July ECA collected balance was
higher than projected, resulting in an over collected balance of $1.6 million, which was
$1.0 million higher than forecast.

Projected 2012 year-end balance for GCA has not changed significantly from last
month’s projection, while ECA is projected to be over collected by $2.0 million due to
costs being $3.0 million lower than previously forecast. Collected balances are
projected to stay within approved limits throughout the remainder of the year.




                                            72
    ECA/GCA Update
          (as of July 31, 2012)


              Bill Cherrier
    Chief Planning & Finance Officer

                    73

1
                                                  Comparison to Prior Month




ECA
• This month’s projected 2012 year-end balance is an over-collection of
  $2.0 million
• Last month’s projected 2012 year-end balance was an under-collection of
  ($2.0) million
GCA
• This month’s projected 2012 year-end balance is an under-collection of
  ($2.3) million
• Last month’s projected 2012 year-end balance was an under-collection of
  ($2.6) million


                                     74

  2
                                                                                   August 2012 ECA Analysis – Base Case


                              Electricity Costs vs. ECA Collected Balance                                            (Sep-2011 to Dec-2013)
Collected Balance                                                                                                                  Electric $ per Unit

            $30.0                                                                                                                           $0.0600
                                                          <--- Actual Forecast --->
Millions




            $25.0
                                                                                                                                            $0.0450
            $20.0       $0.0040 Res = 0.9%
                                                           $0.0030 Res = (0.9%)
                  $0.0030                                                                   $(0.0010) Res = (3.5%)
            $15.0                                                                                                                           $0.0300

            $10.0
                                                                                                                                            $0.0150
             $5.0
                                                                 $1.6                   $2.0

             $0.0                                                                                                                           $0.0000

                                             ($2.0)                                                                                ($1.2)
            ($5.0)              ($3.6)
                     ($5.0)                                                                                                                 ($0.0150)
           ($10.0)

           ($15.0)                                                                                                                          ($0.0300)



                     ECA Rate            ECA Collected Balance                   ECA Cost/Unit             Supply Rate Incl ECA
                                                                                      impacts
                                                      Res = residential electric bill75

              3
                                                                                          July 2012 ECA Analysis – Base Case


                              Electricity Costs vs. ECA Collected Balance                                           (Sep-2011 to Dec-2013)
Collected Balance                                                                                                                 Electric $ per Unit

            $30.0                                                                                                                          $0.0600
                                                      <--- Actual Forecast --->
Millions




            $25.0
                                                                                                                                           $0.0450
            $20.0       $0.0040 Res = 0.9%
                                                           $0.0030 Res = (0.9%)
                                                                                           $0.0005 Res = (2.2%)
                  $0.0030
            $15.0                                                                                                                          $0.0300

            $10.0
                                                                                                                                           $0.0150
             $5.0
                                                            $0.3
             $0.0                                                                                                                          $0.0000

            ($5.0)                           ($2.0)                                    ($2.0)
                                ($3.6)
                     ($5.0)                                                                                                                ($0.0150)
           ($10.0)                                                                                                                ($7.9)

           ($15.0)                                                                                                                         ($0.0300)



                     ECA Rate            ECA Collected Balance                  ECA Cost/Unit             Supply Rate Incl ECA
                                                       Res = residential electric bill impacts
                                                                                    76

              4
                                                                                        August 2012 GCA Analysis – Base Case


                                 Gas Costs vs. GCA Collected Balance                                        (Sep-2011 to Dec-2013)

Collected Balance                                                                                                                    Gas $ per Unit

             $30.0                                                                                                                            $1.2
                                                               <--- Actual Forecast --->
 Millions




             $25.0                                                                                                                            $1.0


             $20.0                                                                                                                            $0.8


             $15.0                                                                                                                            $0.6


             $10.0                   $(0.0700)                                                                                                $0.4
                        $(0.0550)
                                                      $(0.0950)
                                      Res =                                            $(0.1700)
                                      (1.8%)              Res =
              $5.0                                                                      Res =                                                 $0.2
                                                          (2.9%)
                                                                                        (8.9%)

              $0.0                                                                                                                            $0.0
                                                 ($0.2)
                      ($2.1)        ($1.9)                                                       ($2.3)
             ($5.0)                                                                                                                           ($0.2)
                                                                      ($4.1)                                                         ($4.4)

            ($10.0)                                                                                                                           ($0.4)



                      GCA Rate               GCA Collected Balance                   GCA Cost/Unit        Supply Rate Incl GCA
                                                          Res = residential gas bill impacts
                                                                                        77

              5
                                                                                               July 2012 GCA Analysis – Base Case


                                 Gas Costs vs. GCA Collected Balance                                       (Sep-2011 to Dec-2013)

Collected Balance                                                                                                                   Gas $ per Unit

             $30.0                                                                                                                         $1.2
                                                           <--- Actual Forecast --->
 Millions




             $25.0                                                                                                                         $1.0


             $20.0                                                                                                                         $0.8


             $15.0                                                                                                                         $0.6


             $10.0                   $(0.0700)                                                                                             $0.4
                        $(0.0550)
                                                      $(0.0950)
                                      Res =                                          $(0.1700)
                                      (1.8%)              Res =
              $5.0                                        (2.9%)                      Res =                                                $0.2
                                                                                      (8.9%)

              $0.0                                                                                                                         $0.0
                                                 ($0.2)
                      ($2.1)        ($1.9)                                                     ($2.6)
             ($5.0)                                                ($3.3)                                                           ($3.5) ($0.2)

            ($10.0)                                                                                                                        ($0.4)



                      GCA Rate               GCA Collected Balance                GCA Cost/Unit         Supply Rate Incl GCA
                                                     Res = residential gas bill impacts
                                                                                      78

              6
                                                                                    Item V–A
                                                                       Discussion/Action Item




Date:          August 15, 2012

To:            Utilities Board

From:          Jerry Forte, P.E., Chief Executive Officer

Subject:       Waldo Canyon Post-Fire Update

Relevant Board Policy:     Executive Limitation (EL) 13 – Infrastructure

Information Objective:     Discussion

Previous Board Communications/Discussion: A Waldo Canyon Fire Update
presentation was provided during the July 18 Utilities Board meeting.

Executive Summary: The Waldo Canyon Fire has dramatically damaged the forest and
the forest floor increasing the risk of catastrophic flooding and water quality
deterioration.

Background Information: Utilities staff continues to work with United States Forest
Service (USFS) on forest restoration and staff continues to evacuate long term (multi-
year) forest restoration.

On July 30th, there was a one in two year rain event (a normal event) in the Waldo
Canyon Fire burn area including West Monument Creek and its tributaries (Northfield
Watershed). Due to the damaged forest, the runoff caused substantial damage to West
Monument Creek, access roads, pipelines and the caretaker house. Preliminary
estimates for Northfield Watershed repairs and protection are approximately $15
Million. This Fall, Colorado Springs Utilities will relocate the caretaker house and garage
and will be building sediment basins and will coordinate with USFS in reducing the risk
of flooding by re-establishing the forest.

Colorado Springs Utilities’ immediate emergency response is to protect utility
infrastructure by rebuilding roads, removing debris and designing sediment basins.

In light of the Waldo Canyon Fire and resulting damage, Utilities staff is significantly
increasing forestry management efforts on the Pikes Peak Watersheds, as well.

Options: N/A

Recommendations: N/A




                                             79
                                                            Item V-A
                                        Governance Monitoring Report




    Waldo Canyon Post-Fire
           Update




   Gary Bostrom, Chief Water Services Officer
Mike Myers, Wildland Fire Team Chief Coordinator

                August 15, 2012
                        80
                                                                                   Item V-A
                                                               Governance Monitoring Report




               Team Status/Structure
• 26 Team Active members
• One Administrative Team Member
• Includes:
   •   1 Chief Coordinator (Position hired in February 2012)
   •   4 Working Coordinators
   •   2 EMT’s
   •   4 Sawyers
   •   4 Squad Bosses (three in training)
• Advisory Board
        (Comprised of General Managers from all 4 services)
                                       81
                                                                    Item V-A
                                                Governance Monitoring Report




                   Team Versatility
• All 4 services are represented within the team structure.
  (Water, Wastewater, Natural Gas & Electric)
   • Unique to the Fire industry
• Expedited service for shut off or restoration.
• Infrastructure knowledge on the front line.
• Cost avoidance for rate payers when it comes to
  infrastructure impact.
• Fire & FEMA trained emergency responders


                                   82
                                                                         Item V-A
                                                     Governance Monitoring Report




                             Team Standards
The Fire Team is:
  •   Trained to National Wildland Coordinating
      Group (NWCG) standards.
  •   A high performing team.
  •   Demonstrates institutional/system
      knowledge.
  •   Practices a safety culture based on CSU
      values.
  •   Collaborates with organization and
      prioritizes resource needs for training and
      response.
  •   Physically fit and mentally prepared.
  •   Dedicated and committed to protecting
      Colorado Springs Utilities assets.



                                                83
                                                     Item V-A
                                 Governance Monitoring Report




Waldo Canyon Fire
   June 23,2012 – July 5, 2012




              84
                                                                       Item V-A
                                                   Governance Monitoring Report




       Utilities Assets Threatened
      During The Waldo Canyon Fire
• Cedar Heights Water Storage Tanks
    • #1
    • #2
    • #3
•   Cascade Water Storage Tank
•   Cedar Heights Communications Tower
•   North Slope Watershed
•   Northfield Watershed (directly in the path):
    • Rampart
    • Nichols
    • Northfield
                               85
                                                                  Item V-A
                                              Governance Monitoring Report




        Utilities Assets Threatened
       During The Waldo Canyon Fire

• Finished Water Treatment Plants:
   •   Ute Pass
   •   Pine Valley
   •   McCullough
   •   Mesa


• 34/5 KV Electric Transmission line from Rampart to
  Green Mountain Falls Sub Station
• Several thousand service connections

                            86
                                                                              Item V-A
                                                          Governance Monitoring Report




                 Protection Efforts

• Utilities personnel placed at Incident Command Post
  during the first few hours of the fire.
• Mitigation around Cedar Tanks 1, 2 & 3
• Cedar Heights Sub Division Dozer Lines:
   • (Dozer Line A) - 1 mile of line cut in on the west side of the sub-
     division
   • (Dozer Line B) -1 ½ miles of contingency line cut in east of line
     A, in case the fire jumped the first.
   • (Dozer Line C) – ½ mile of line cut on the north/west side of the
     sub division

  The first 5% of containment for the fire was the dozer lines that
  CSU crews put in place in the Cedar Heights sub-division.
                                  87
                         Item V-A
     Governance Monitoring Report




88
                         Item V-A
     Governance Monitoring Report




89
                                                                    Item V-A
                                                Governance Monitoring Report




               Protection Efforts
• A Joint Task Force set up with CSFD for the protection
  of the community and Utilities infrastructure.
• Rotating shifts for 24 hour coverage during the first 3
  days.
• A dozer line was cut from Glen Erie Castle to the
  Pikeview Quarry, but when the column fell it was
  unusable.




                             90
                         Item V-A
     Governance Monitoring Report




91
                         Item V-A
     Governance Monitoring Report




92
                         Item V-A
     Governance Monitoring Report




93
                         Item V-A
     Governance Monitoring Report




94
                                                                 Item V-A
                                             Governance Monitoring Report




               Unique Expertise
• Intimate knowledge of Utilities owned or leased
  properties.
• System knowledge in all 4 Utility services.
• Personal Ownership.
• Start to Finish incident representation.
• Training can be applied to several emergency and non-
  emergency events.




                           95
                                                     Item V-A
                                 Governance Monitoring Report




      Post-Fire Impacts and Restoration
• Fire Damage to
  Energy System
• Post-Fire Flood
  Damage to Northfield
  Water System
• Watershed
  Stabilization and
  Reforestation




                         96

 17
                                                                               Item V-A
                                                           Governance Monitoring Report




            Energy System Fire Damage
                                              • 34.5kV Power Line
                                                ~24 poles compromised




• Restoration work underway
      • Stabilization of hill slopes needed
        to protect line from future damage
                                       97

 18
                                                         Item V-A
                                     Governance Monitoring Report




     Northfield Water System Damage
                        • Pine Valley Pipeline
                        • Northfield Pipeline
                        • Caretaker’s House




                   98

19
                                                     Item V-A
                                 Governance Monitoring Report




     Pine Valley/McCullough Impacts
• Debris & Storm Flows
• Erosion & Sedimentation




                            99

20
                                         Item V-A
                     Governance Monitoring Report




USFS BAER Team Treatments




            100
                                                  Item V-A
                              Governance Monitoring Report




BAER Team Treatments – Northfield Area




                  101
                                                                Item V-A
                                            Governance Monitoring Report


   Next Steps to Protect Systems & Resources
    Watershed Stabilization and Restoration

• Obtain Approvals for
  Work on US Forest Lands
• Coordinate with
  Experienced Agencies
• Implement Immediate Storm
  Flow & Sediment Stabilization
• Assess & Repair Infrastructure
• Stabilize Watersheds
   Additional Hill Slope & Drainage
   Treatments & Reforestation
• Evaluate Funding Alternatives
                                      102
                                                                                         Item V-A
                                                                     Governance Monitoring Report




                  Mountain Shadows
              Building & Reconstruction
• Vegetation Restoration Adjustment - Rate adjustment for limited
  irrigation
      • For residential or business customers re-establishing native vegetation in
        burn area
      • 30 percent decrease on the cost of their water consumption.
      • The program is effective July through Oct. 31, 2012
•    “Building Back Green” post-fire rebuilding efforts to enhance energy
     and water efficiency
      • Rebates for Whole Home Performance (builders) and individual efficiency
        (homeowner)
      • Providing tours, consultation, presentations
•    On-going support to Colorado Springs Together and City’s Rebuilding
     Task Force


                                          103

24
                                                                                                          Item V-A
                                                                                      Governance Monitoring Report




                        Expense Recovery Recap
Expenses during Incident Period (6/23/12 - 7/11/12) expected to be eligible for
reimbursement by FEMA Grants
Overtime and associated payments                                                           $        713,888.80
Mutual aid - fighting the fire and restoring services                                      $        110,876.30
Direct expenses (vehicle usage, fuel, food, supplies, etc.)                                $        126,635.91
Water usage / lost gas                                                                     $        201,301.87
   Total eligible expenses:                                                                $      1,152,702.88
Estimated charges to be paid by FEMA - PAGP Category B (75%)                               $        864,527.16
Other Incremental Expenses during Incident Period (6/23/12 - 7/11/12)
 Covered under State or Category A and C - F of PAGP; Currently Unopened
25% Balance of eligible expenses (Requires matching state funds)                           $        288,175.72
Infrastructure Repairs - 34CW-9 OH circuit, Services to Flying W Ranch & 346 Homes,
Fiber Optic cable, Wilson Communication site, AMR system                                   $      1,207,470.31
Direct expenses (vehicle usage, fuel, food, supplies, etc.) 7/12- 8/10/12                  $          4,539.39
Overtime and associated pymts (7/12/12 - 8/10/12)                                          $         31,525.05
Estimated charges NOT expected to be Reimbursed by FEMA                                    $      1,531,710.47

Expected reimbursements:
Insurance - Fire Related                                                                   $        350,000.00
Total Expenses Not Covered by FMAG and PAGP, Cat B                                         $      1,181,710.47

Total Expenses Incurred                                                                    $      2,046,237.63
Percent of Total Expenses Not Covered by FEMA                                                            57.8%
                                                    104

    25
                                                                            Item V-A
                                                        Governance Monitoring Report




      Other Grants and Insurance Coverage
• Potential Grant Programs Covering WCF Related Costs
      • Hazard Mitigation Grant Program
         15% of Total PAGP Funding for future fire mitigation - TBD
      • 2012 Fire Fund Grant
         Requesting $1.25mil for fire mitigation; application pending
      • Colorado Water Conservation Board Grant
         Watershed Restoration - TBD
• Insurance reimbursements currently available
      • Travelers Fire Damage - $350,000
      • Travelers Flood Damage - $350,000

                                   105

 26
                                                             Item V-A
                                         Governance Monitoring Report




      Questions?




      Colorado Springs Utilities
    Catamount Wildland Fire Team
“Making a Difference in the Community”

                 106
                                                                                    Item V-B
                                                                      Discussion/Action Item




Date:            August 15, 2012

To:              Utilities Board

From:            Jerry Forte, P.E., Chief Executive Officer

Subject:         Water Outlook and Drought Response Planning Update



Relevant Board Policy:      Executive Limitation (EL) 10 – Water Rights Protection &
                            Development

Information Objective:      Discussion


Previous Board Communications/Discussion: N/A

Executive Summary:

Utilities staff will inform the Board of the current water supply conditions and drought
planning efforts

2012 Yields were well below average and the hot, dry summer locally has left reservoir
storage at below normal levels. Stage I Voluntary restrictions are in place and Colorado
Springs Utilities is asking customers to water 3 days per week.

Drought response planning is underway and the 2012-2013 snowpack will determine
the level of action required for 2013.

Background Information:

      2012 Demands: July use averaged 125.1 Million Gallons per Day (MGD), which is
      about 9.6 percent less than in July 2001 and about 13.1 percent more than last July.
      Year to date water use is averaging 81.9 MGD or 17,444 million gallons.
      Temperatures during July were above the thirty year average and for the month
      averaged 75.4 degrees Fahrenheit, which was 106 percent of normal. Year to date
      temperature is averaging 54.3 degrees Fahrenheit, which is 114 percent of normal
      Total precipitation for July was 3.56 inches, which was 125 percent of normal. Year
      to date precipitation is 6.15 inches, 57 percent of normal.




                                              107
                                                                                 Item V-B
                                                                   Discussion/Action Item

   2012 Savings: The current level of watering restrictions is Stage I (Voluntary
   Restrictions). This went into effect on October 1, 2005. No mandatory watering
   restrictions or savings goals have been set for 2012. However, we are currently
   asking customers to voluntarily water just 3 days per week.

   Year to date, Springs Utilities customers have used about 506 million gallons less
   than they did eleven years ago, in 2001. Water use for 2012 is about 23 percent
   lower than 2001 demands normalized to 2012 for customer growth (about a 26
   percent increase in the number of equivalent taps).

   Current Reservoir Levels: Local storage is currently at about 34,406 acre feet (52
   percent of capacity). The 1970-2011 average is about 70 percent of capacity.
   Rampart Reservoir is at 50 percent of capacity, and Pikes Peak storage is at 56
   percent of capacity. System wide, total reported storage is about 156,753 acre feet
   (60 percent of capacity). The Long Term Excess Capacity (LTEC) account in Pueblo
   Reservoir has been added to total storage which affects the percent of capacity.
   Last year at this time, total system wide storage was about 82 percent of capacity. It
   was about 88 percent at this same time in 2010, about 85 percent of capacity in
   2009, about 87 percent of capacity in 2008, and about 87 percent in 2007. The
   1970-2011 average system wide storage for the end of July is about 74 percent of
   capacity.

   Operational Notes: The Homestake Reservoir project is progressing on schedule.
   All of our transmountain projects have been called out of priority so the demands
   will be met out of storage through next spring.

   Higher demands coupled with the low runoff and reservoir maintenance have left
   reservoir storage at lower than normal levels. We currently have 2 years of demand
   in storage and are not expecting mandatory water restrictions. We will continue to
   monitor usage, storage and our water supply situation. We are actively working on
   the drought response plan.


Options: N/A

Recommendations: N/A




                                          108
                                                     Item V-B
                                 Governance Monitoring Report




Water Outlook and Drought
Response Planning Update

 Wayne Vanderschuere, General Manager
   Abigail Ortega, Planning Supervisor

            August 15, 2012

                  109
                                                                                Item V-B
                                                            Governance Monitoring Report




           Current Situation Summary
• Currently in Stage I Drought Declaration (voluntary
  restrictions)
   • Asking customers to water only 3 days per week
• Weather
   • In July, temperatures and precipitation were above average. Year
     to date precipitation is now at 57% of normal
   • The latest official NOAA forecast calls for the probability of above-
     average temperatures across much of Colorado for the next three
     months.
• System wide storage is at 60% (includes Pueblo LTEC
  account)
                                   110
                          Item V-B
      Governance Monitoring Report




111
                          Item V-B
      Governance Monitoring Report




112
                                                                          Item V-B
                                                      Governance Monitoring Report




            Local Weather Conditions
                      (as of July 31, 2012)

• Precipitation (Inches of Moisture)
   • July 2012                3.56 in. (125% of normal)
   • 2012 YTD Total           6.15 in. (57% of normal)

• Average Temperature (Degrees F)
   • July 2012               75.4 Deg. (106% of normal)
   • 2012 YTD Average        54.3 Deg. (114% of normal)




                                113
                                                                  Item V-B
                                              Governance Monitoring Report




                      2012 Demands
                      (as of July 31, 2012)
• July – Averaged 125.1 MGD
   • About 9.6% less than July 2001
   • About 13.1% more than July 2011

• 2012 YTD- Averaging 63.4 MGD
   • About 2.8% less than 2001
   • About 9.0% more than 2011
   • 0.503 Billion Gallons less than 2001

• Since 2001, the number of taps has increased by 26%,
  but water use per tap is down by 23%

                                  114
                                                                              2012 Actual Demands Vs. 2001 Demands
                                                                                                                          (Weekly Data)
                       180.0
                                                                                                                                                                                                     YTD DEMANDS AS OF
                       170.0                       2001 Demands
                                                                                                                                                                                                        July 31, 2012
                       160.0                       2012 Actual Demands
                                                                                                                                                                                                  2001          17,950 MG
                                                                                                                                                                                                  2011          16,002 MG
                       150.0                       2012 Forecast (Daily Dist)                                                                                                                     2012          17,444 MG
                       140.0                                                                                                                                                                 Forecast*                               14,102 MG
                       130.0
                       120.0
Average Demand (MGD)




                       110.0
                       100.0
                        90.0
                        80.0
                        70.0
                        60.0
                        50.0
                                                                                                                                    YTD W EATHER AS OF
                        40.0
                                                                                                                                        July 31, 2012
                        30.0                                                                                                  2012 Cum Precip      6.15 Inches
                        20.0                                                                                                  Percent of Normal      57 %
                                                                                                                                                                                            o
                                                                                                                              2012 Avg Temp                                    54.3  F
                        10.0
                                                                                                                              Percent of Normal                                114 %
                         0.0
                                                          Feb-14

                                                                   Feb-28




                                                                                                                May-09

                                                                                                                         May-23




                                                                                                                                                                                                 Sep-12

                                                                                                                                                                                                          Sep-26
                                                                            Mar-14

                                                                                     Mar-28




                                                                                                                                  Jun-06

                                                                                                                                           Jun-20




                                                                                                                                                                                                                                     Nov-07

                                                                                                                                                                                                                                              Nov-21
                                                                                                                                                                                                                   Oct-10

                                                                                                                                                                                                                            Oct-24
                               Jan-03

                                        Jan-17

                                                 Jan-31




                                                                                                                                                    Jul-04

                                                                                                                                                             Jul-18




                                                                                                                                                                                                                                                       Dec-05

                                                                                                                                                                                                                                                                Dec-19
                                                                                              Apr-11

                                                                                                       Apr-25




                                                                                                                                                                      Aug-01

                                                                                                                                                                               Aug-15

                                                                                                                                                                                        Aug-29

                                                                                                                                       Week Ending
                                                                                                                                        115

                                                                                                                                                                                                            * 2012 Forecast Production
                                                                                                                    Item V-B
                                                                                                Governance Monitoring Report




                                               Monthly Water Use for July

                  4.6
                  4.4
                  4.2
                  4.0
                  3.8
                  3.6
                  3.4
                  3.2
                  3.0
                  2.8
Billion Gallons




                  2.6
                  2.4
                  2.2
                  2.0
                  1.8
                  1.6
                  1.4
                  1.2
                  1.0
                  0.8
                  0.6
                  0.4
                  0.2
                  0.0
                        2001   2002   2003   2004   2005   2006     2007   2008   2009   2010    2011     2012
                                                              116
                                                                                 Item V-B
                                                             Governance Monitoring Report




                         Reservoir Levels
                           (as of July 31, 2012)

• Reservoir Levels

   • Pikes Peak           56%
       • 70-11 Avg.       78%
   • Rampart              50%
       • 70-11 Avg.       78%
   • Local Total          52%
       • 70-11 Avg.       78%
   • System Total*        60%
       • 70-11 Avg.       74%                 Rampart Reservoir,
                                                August 2012
   *System total now includes long term
     excess capacity storage in Pueblo
     Reservoir                          117
                                                                                  Monthly Storage
                                                                                 Percent of Capacity
                      100%
                                                                                                                                        Actual            Projected
                      90%


                      80%


                      70%
Percent of Capacity




                      60%
                                                                                                       2 years of demand

                      50%


                      40%

                                                                                                             1 year of demand
                      30%


                      20%             Monthly Storage (% of Capacity)

                                      Average Storage (1970-2011)

                      10%             80 KAF demand, projected                                                              Storage on July 31 was about
                                      90 KAF demand, projected                                                                    60% of capacity
                       0%
                             Jan-01



                                       Jan-02



                                                  Jan-03



                                                             Jan-04



                                                                        Jan-05



                                                                                  Jan-06



                                                                                           Jan-07



                                                                                                    Jan-08



                                                                                                                   Jan-09



                                                                                                                               Jan-10



                                                                                                                                        Jan-11



                                                                                                                                                 Jan-12



                                                                                                                                                          Jan-13



                                                                                                                                                                   Jan-14
                                                                                             118
                                                                                  Item V-B
                                                              Governance Monitoring Report




       2012 Regional Water Contract Sales
Donala Water & Sanitation District
   •    Donala Water District Water Service Agreement
        • Through July 31, 2012:    253.7 AF for $808,903
        • Premium to Municipal Government: $134,817


Cherokee Metro District
   •    Cherokee Metro District Water Service Agreement
        • Through July 31, 2012:         431.1 AF for $2,193,518
        • Premium to Municipal Government: $365,586

   Total to Municipal Government $500,403
                                   119
                                                              Item V-B
                                          Governance Monitoring Report




            Operational Notes
• Higher water demands and low runoff have resulted
  in decreased reservoir storage.
• Maintenance on Homestake Dam continues to
  progress as scheduled
• Homestake and Blue River and Twin Lakes projects
  are all out of priority for diversions




                       120
                                                                          Item V-B
                                                      Governance Monitoring Report




       Situation Outlook Summary
• The official NOAA forecast predicts above average
  temperatures and equal chances for above or below
  average precipitation for the next 3 months
• The Drought Monitor shows all of Colorado in severe
  to extreme drought conditions
   • The 3 month drought outlook shows some signs of
     improvement
• Currently have 2 years of demand in storage.
• We do not anticipate the need for mandatory water
  restrictions at this time.
   • Voluntary restrictions of 3 days per week are in place



                              121
                                            Item V-B
                        Governance Monitoring Report




Drought Response Planning




            122
                                                           Item V-B
                                       Governance Monitoring Report




               Current Efforts

• Drought response efforts initiated
• Increased education and awareness
• Modeling, forecasting, and condition
  assessment
• Evaluating supply & demand side solutions




                       123
                                                      Item V-B
                                  Governance Monitoring Report




         Drought Response Goals
• Increase customer
  awareness
• Maximize water in
  local storage
• Prepare supply and
  demand side options
  for implementation


                        124
                                                                  Item V-B
                                              Governance Monitoring Report




           Demand Side Solutions

• Education and outreach
• Enhance & simplify Water Shortage Ordinance
  (WSO)
• Develop Water Management Ordinance (WMO)
• Outreach to large customers
  • Water reduction and efficiency improvements




                            125
                                                        Item V-B
                                    Governance Monitoring Report




            Supply Side Solutions
• Increased pumping to
  local storage
• Water agreements &
  exchanges
• Water leasing




                         126
                                                            Item V-B
                                        Governance Monitoring Report




           Schedule and Milestones

• 2012 activities
• Seek approval for Water Shortage and Water
  Management Ordinances (Q1 2013)
• Evaluate water supply indicators (Q1 2013)
• Seek approval to implement supply and demand
  side actions (March 2013)
• Implementation activities (Q2 – Q4 2013)


                        127
                                                              Item V-B
                                          Governance Monitoring Report




                    Summary
• Drought response planning is underway
• 2012-2013 snowpack will determine the
  level of actions for 2013.
• Currently in Stage I Voluntary restrictions
   • 3 days per week outdoor watering




                         128
                                                                                  Item V-C
                                                                    Discussion/Action Item




Date:          August 15, 2012

To:            Utilities Board

From:          Jerry Forte, P.E., Chief Executive Officer

Subject:       Authority



Relevant Board Policy:     Board-CEO Linkage (BL) 1 – Global Governance – Management
                           Connection

Information Objective:     Decision


Previous Board Communications/Discussion: Utilities Board members requested an
agenda item to discuss authority over utilities.

Executive Summary: N/A

Background Information: The Utilities Policy Advisory Committee (UPAC) provided
recommendations to Utilities Board February 2012.

Options: N/A

Recommendations: N/A

The presentation will be provided by Vice Chair Martin prior to the Utilities Board
meeting.




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