This document provides an overview of the Lower Colorado River Authority's (LCRA) Fiscal Year 2009 Business Plan. Some key points include: - The plan aims to focus resources on priorities, provide wholesale electric customers with the lowest cost energy, and evaluate programs and services to ensure they are delivered efficiently. - Proposed budget reductions for FY2009 total over $7 million and include reductions to grant programs, operational expenses, public safety positions, and archaeology education. - The plan prepares for challenges like growing electricity demand, transmission system needs, regulatory changes, water/wastewater infrastructure, and greater public access to rivers/lakes. - Key drivers for the plan include the

1. LCRA FY 2009 Business Plan 

2. Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Look at Revenues and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Rate Impacts of This Business Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Key Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Wholesale Power Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Transmission Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Water Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Community Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
General Manager
Thomas G. Mason Corporate Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Assistant General Manager and Chief Administrative Officer
Rick Bluntzer
Assistant General Manager and Chief Operating Officer
Marcus W. Pridgeon
Acting Chief Financial Officer
Brady Edwards
General Auditor*
W. Charles Johnson, Jr., CPA, CIA
General Counsel*
John Rubottom
LCRA Board of Directors
Rebecca A. Klein, Chair
Clayborne L. Nettleship, Vice Chair
Linda C. Raun, Secretary
Brenda Adair
Steve K. Balas
Kay Carlton
Ida A. Carter
John C. Dickerson III
Walter E. Garrett
W.F. Woody McCasland
Franklin Scott Spears, Jr.
Bobby Steiner This Business Plan presents a long-term vision for LCRA and affiliates and a summary
Timothy Timmerman of its operational plans. The Business Plan should not be used as a basis for making a
B.R. Skipper Wallace financial decision with regard to LCRA or any of its securities or other obligations. For
Lucy Wilke more complete information on LCRA and its obligations, please refer to LCRA’s annual
financial report, the official statements relating to LCRA’s bonds, and the annual and
The Board of Directors is composed of 15 members appointed by the governor. Directors material event disclosures filed by LCRA with the nationally recognized municipal
represent counties in the electric and water service areas. The directors meet regularly to securities information repositories and the State Information Depository pursuant to
set strategic corporate direction for the general manager and staff, to approve projects Rule 15c2-12 of the Securities and Exchange Commission. The information in this
and large expenditures, and to review progress on major activities and industry issues. report and each of the documents referred to speaks only as of its date. Copies of the
documents referred to above or elsewhere in this report may be obtained from James
* These positions report to the general manager and the Board of Directors. Travis, Controller, LCRA, 3700 Lake Austin Boulevard, Austin, Texas 78703.

3.  Introduction 
The Lower Colorado River Authority
began preparations for its fiscal year (FY)
2009 Business Plan with a new general
manager, a new management structure
and a new direction for the organization.
Managers and staff reviewed their opera-
tions with these objectives:
• LCRA will continue to carry out its
public service mission as spelled out in its
enabling legislation.
• LCRA will focus on priorities and use
its resources wisely for the benefit of the
communities and customers it serves.
• LCRA will work hard to provide its
wholesale electric customers with energy
at the lowest possible cost.
What’s New in This Plan
LCRA’s FY 2009 Business Plan has been crafted in response to these expecta-
tions. The plan contains additional information that explains more about the
factors that affect the costs of the services LCRA provides.
Throughout the publication, “Sources and Uses” graphs – for LCRA total
as well as each business unit – show the major sources of revenues and how
they’re spent.
New sections discuss the projected rates for key LCRA electric and water
services, the major sources and uses of the Development Fund, LCRA staffing
levels, and other issues that affect the costs of providing services.
The sections for LCRA’s five business units have also been expanded to include
information about issues affecting each business unit, including cost-cutting
measures and specific customer concerns.
The result is a Business Plan that discusses not only the things LCRA will be
doing but also how it is paying for them. We hope this is information that is
useful to LCRA Board members and customers in evaluating our progress in
meeting their expectations that we provide meaningful public services in a
cost-effective manner.
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4.  
Key Budget Reductions Preparing for Changes and Challenges
As part of the planning process, LCRA’s executive managers have evalu- The FY 2009 Business Plan also reflects how LCRA’s business units are pre-
ated the organization’s programs, services and internal operations to identify paring for changes and challenges through these proposals:
activities that have outlived their usefulness or are no longer in demand by
LCRA customers. • options for expanding LCRA’s portfolio of generation resources to meet the
growing demand for electric power;
Thus far, the evaluation has resulted in the following proposed reductions that
total more than $7 million alone for FY 2009: • funding to carry out LCRA’s role of helping maintain and expand the state’s
electric transmission system to ensure reliable service;
• Reductions in the Community Development Partnership and Partnerships
In Parks grant programs. • preparations for state-mandated changes in determining the cost and deliv-
ery of electricity through the setup of a “nodal” market;
• Reduction of operational expenses throughout the organization.
• more efficient operation of LCRA’s water and wastewater utilities to serve
• Reduction of Public Safety positions and consolidation of services. growing demand; and
• Elimination of archaeology education programs, focusing instead on archae- • plans for parks and greater public access to the lower Colorado River and
ology issues associated with project construction. Highland Lakes.
In addition, LCRA plans to eliminate the employee Gain Sharing program This Business Plan may also raise additional questions, and that’s a good
in future years in favor of more targeted incentives. Based on last year’s pay- thing. Those conversations help LCRA carry out its responsibilities of pro-
out, this move could save some $3.5 million annually. This savings would not viding public service – and of being transparent in how it carries out those
reduce LCRA’s budgeted operations – funding for Gain Sharing payments services.
were contingent on net revenues that LCRA achieved in excess of its debt-
service-coverage obligations. But the change reflects LCRA’s commitment Please address your questions and comments to LCRA’s general manager,
to efficient operations by link- Thomas G. Mason, by phone at 1-800-776-5272, Ext. 3283, or by e-mail at
ing incentive pay to outstanding Thomas.Mason@lcra.org.
employee performance.
While the projected savings of $7
million for FY 2009 is small when
compared to LCRA’s total budget,
these are the first of several cost-
savings measures that LCRA will
continue to make in coming years
as it carries out its commitment to
efficient operations.
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5. FAQs
The Key Drivers
of LCRA’s Business Plan
These key themes shaped
LCRA’s development of its

F R E Q U E N T L Y Business Plan:
A S K E D
Q U E S T I O N S • LCRA embraces its ongoing
obligation to find ways to
deliver its services at the
lowest reasonable cost.
• What objectives did LCRA follow in developing this Business Plan? • As a public service entity
The objectives were: more tightly defined corporate goals; elimination funded by user rates and fees,
of programs that were no longer needed or wanted by LCRA customers; LCRA continues to evaluate its
the merging or elimination of duplicated programs; growth of programs
?
public and community services
needed by the public or changing conditions; and opportunities for to make sure it is providing
centralization as cost reduction, in keeping with the spirit of LCRA’s
in the most cost-effective
enabling legislation.
manner those services that
customers need and want.
• Did LCRA cut costs by adopting a hard dollar target?
No. Management and officers determined to what degree services should
be funded. It also was important not to reduce or eliminate any program
• LCRA reviews and sets its
electric and water rates to
generate only those revenues
 Wholesale Power Services 
without first talking with customers about their desire and need for
that program. that are truly needed to
provide the quality and Revenue Analysis In FY 2009, debt service payments of Summary
• What operations were included in this review? reliability of service that In FY 2009, Wholesale Power Services’ $104.3 million are $10.0 million, or
Throughout this Business Plan horizon,
The review spanned all business units and operations. customers expect. operating revenues of $1.08 billion are 10.6 percent, greater than last year’s
WPS continues to provide custom-
• Every LCRA employee has $187.0 million, or 21.0 percent, higher plan. For FY 2010 - FY 2013, increases
• What level of staffing and funding is LCRA using to run ers with a competitive average price of
a responsibility to help than last year’s budget. This increase in debt service payments reflect the
its operations? LCRA manage its costs. Cost addition of peaking and baseload power. The forecasted capital program
reflects a fuel revenue increase of
LCRA wants to be a nuts-and-bolts organization. But LCRA will not consciousness – on matters increases the nonfuel cost component
$163.1 million and a nonfuel revenue generation units. Additionally, cover-
sacrifice safety, reliability or customer service. great and small – needs to
guide every action. increase of $23.9 million. age is included in the nonfuel revenue of power; with the addition of the
• How do these changes reconcile with LCRA’s public service mission? requirement to achieve a targeted 1.25 peaking unit reduces customer expo-
The Texas Legislature charged LCRA with the responsibility to provide a For the FY 2010 – FY 2013 horizon, debt service coverage level. sure to volatile market prices, and the
variety of services for the benefit of the lower Colorado River basin and Cost-Conscious Actions fuel revenue increases are a product of addition of baseload generation lowers
the people of Texas. Legislators gave LCRA to right to sell some of its increased load and increasing fuel prices Projected capital expenditures for FY
services (such as its electric and water operations) to help pay for other • Limitation of nonfuel reliance on market purchases and adds
while nonfuel revenue increases primar- 2009 are $276.1 million and $1,402
public-service activities (such as flood control or protection of the operations and maintenance in
million over the 5-year Plan period. stability to prices.
basin’s natural resources). While that mandate will not change, the order to synchronize fiscal and ily result from WPS’ projected capital
FY 2009 Business Plan reflects an increased consciousness of the costs pricing year. spending forecast. $782 million of the planned capital
that our customers pay for those services. The planned capacity additions help
• Addition of peaking generation expenditures are for base-load generat-
WPS maintain a competitive posi-
• Is LCRA cutting unnecessary programs or services? unit to reduce exposure to Cost Analysis ing units, while $104 million is for the
volatile market prices. Operating expenses in FY 2009 of completion of the Winchester Power tion compared to the market and offer
LCRA has never considered any of its programs or services as
“unnecessary,” if that word refers to services the public can do without • Re-examination of outage $953.6 million are $172.6 million, or Park peaking unit. In addition, the further diversity of fuel sources and
and would not want to pay for. All LCRA operations have been rooted in schedules and budgets. 22.1 percent, higher than last year’s capital plan includes $162 million for generating technology to the LCRA
LCRA’s enabling legislation and deliver a utility service, stewardship of
budget. The primary drivers of this the completion of the FPP Units 1 and
water and land or community support. The challenge is to ensure that • Review and limitation of portfolio.
LCRA is providing the right services at costs that customers are willing programs such as Key increase are higher commodity fuel 2 Scrubber Project.
to pay. Accounts, Solar for Schools, prices as comparative fuel expenses
and LCRAenergy.org.
increased by $163.1 million.
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6.  Key Topics 
Competitiveness of electricity. LCRA does this through Together, these rates combine to
two rate components: develop a time-of-use pricing structure.
Electric Rates
This pricing structure is designed to
LCRA’s electric rates for wholesale cus-
Fuel rate: This component covers the be fair and equitable to all wholesale
tomers are competitively priced, espe-
cost of fuels (natural gas, coal, renew- customers: each customer pays the exact
cially compared to other utilities in the
ables and purchased power) used to same amount for energy based on when
Electric Reliability Council of Texas
generate electricity, as well as the cost it is used (more for peak times like
generating region. LCRA’s competitive
of transporting these fuels to the power summer afternoons, less for off-peak
position is strongly influenced by its
plants and fuel storage facilities, and
Water Services 
times like the middle of the night.)
diversity of fuel sources and generat-
 ing technology. Currently, LCRA uses
other fuel-related items. LCRA adjusts This pricing structure provides LCRA
its fuel rate periodically to reflect chang- customers with pricing predictability
coal, natural gas, purchased power and
ing fuel and fuel transportation costs. and stability, and they can use it to send
Revenue Analysis Revenues for hydroelectric operations services. A significant number of previ- renewables, along with several differ-
pricing signals to their end-use con-
In FY 2009, Water Services’ operat- are cost-of-service based and continue ously budgeted but unfilled positions ent generation technologies, to meet
Nonfuel Rate: The base rate covers the
sumers to encourage conservation.
ing revenues of $105.4 million are to rise primarily as a result of existing have been eliminated as a result of this its customers’ growing needs for power.
cost of labor, operations and mainte-
$7.5 million or 8 percent higher than debt and future capital improvements. on-going review. For a number of years, LCRA has been
nance, debt and debt-service coverage, Transmission Services
last year’s budget. This increase reflects The projected costs are still well below seeking legitimate options to rebalance
expenses charged from Corporate Ser-
the forecasted market value, which is In FY 2009, debt service payments of the baseload portion of its portfolio and Transmission Services is the only
projected rate increases in all areas as vices, allocations to the Development
tied to the price of natural gas. $36.9 million are greater than last year’s reduce its exposure to volatile market LCRA business unit in which rates are
well as continued growth in demands Fund and other nonfuel costs.
plan by $5.9 million or 19 percent. The prices. As its customers’ needs grow, so
for all of Water Services’ products and
Board-approved rate increases for retail five-year plan does not include any must LCRA continue to invest now in
services. LCRA Total Number of Employees, FY 2003 – FY 2013
treated water and wastewater in West further deferrals of scheduled Water the generation resources it will need in
Travis County area for FY 2009 and FY and Wastewater Utility debt service. 2,500
A series of two rate increases for the the future to provide competitive, reli-
2010 are assumed in the plan. Over- Payback of previously deferred debt is 2,400
firm raw water rate is included in order able power generation.
to carry out effectively LCRA’s statu- all water demands in the West Travis scheduled to begin in FY 2011. 2,300
tory mission of flood control, water County area remain strong, and total How Costs Become Rates 2,200
Number of Positions
living-unit equivalents are expected to Projected capital expenditures for All of LCRA’s business units that sell 2,100
supply, water quality and other river
grow 9 percent in FY 2009. Rates for FY 2009 are $45.3 million and $261 their services base their rates on cost of 2,000
management services. The current rate
wholesale systems are forecast to rise to million over the five-year plan period. service – operations and maintenance,
is $126 per acre-foot and is budgeted to 1,900
match cost of service. More than $188 million of the planned debt costs and debt service coverage,
increase by 9.5 percent on Jan. 1, 2009, 1,800
capital expenditures over the next five labor and capital projects, as well as
and Jan. 1, 2011. 1,700
Cost Analysis years are for water and wastewater other costs that are specific to their 1,600
The proposed 4 percent per year Operating expenses in FY 2009 of utility infrastructure, primarily in the operations. Here is a summary of how 1,500
West Travis County and Williamson FY FY FY FY FY FY FY FY FY FY FY
increase in agricultural irrigation rates $50.5 million are slightly higher the business units use their costs to 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Budget
is largely to keep up with the inflation- than last year’s budget by $500,000 County areas. In addition, the capital determine rates: Actual Proposed
ary effects of the substantial electric or less than 1 percent. Despite grow- plan includes almost $31 million for
and other variable costs of the irrigation ing labor-related costs and increas- the rehabilitation of the floodgates at Wholesale Power Services LCRA’s total number of employees dropped by 54 positions from FY 2006 to
operation. Despite these planned rate ing costs for materials, electricity and Buchanan Dam. LCRA’s wholesale electric service is FY 2007, as LCRA began its review of programs and services and deferred the
refilling of some positions. As of the third quarter FY 2008, LCRA’s work force
increases as well as increases in acreage other commodities, Water Services cost-based. Its rates are designed to actually numbered 2,224. But that number is projected to increase by the end of
farmed, Irrigation Services does not attained essentially a no-growth operat- Summary recover its share of LCRA’s revenue the year as LCRA begins some long-term projects (see graph on next page). The
ing expense budget. This reflects the Demands for all Water Services’ prod- head count is projected to remain relatively flat during FY 2009-2013, averaging
attain full cost recovery. requirements, or its costs of generating 2,377 positions.
LCRA-wide review of all programs and ucts and services will continue
6 7

7. Rate Impacts
 of This Business Plan 
WPS: The volatile nature of fuel com- Average Wholesale Natural Gas Prices, FY 2003 – FY 2013
modity prices, particularly for natural (Dollars per MMBtu)
gas, will be the most significant driver
of fuel rates in the coming 12 months.
Capital investment activity will become
an increasingly larger piece of the
nonfuel rate as work continues toward
the development of new generation
facilities and ongoing maintenance of
the existing fleet. While LCRA has
committed to holding the nonfuel rate
flat through FY 2009, LCRA expects
it to rise over the next five years due to
increased debt-service costs for WPS’s
capital program. Other nonfuel costs
remain flat.
Transmission: Capital investment
 Community Services  has been, and will continue to be, the
primary factor driving the transmission
cost of service set for LCRA Trans-
Revenue Analysis Cost Analysis Summary mission Services Corporation (TSC) The market price of natural gas, which affects of the cost of LCRA electricity,
by the Public Utility Commission of has increased by roughly 55 percent over the past five years, from $5.24 to
Community Services funds come The focus in FY 2008 was a target per- The five-year plan shows about 5 per- $8.11 per million British thermal units (MMBtu). Current forecasts call for the
primarily from LCRA’s Development centage of cost-cutting. Costs slightly cent growth per year for Community Texas. Over the next five years, LCRA price to peak at about $8.80 per MMBtu by 2009 before dropping slightly and
TSC projects its transmission rate to holding steady through 2013 – although the price will continue to be subject
Fund ($18.8 million for FY 2009). increased due to labor and inflation. Services’ operating funding requirement to market fluctuations.
Other sources of funding include Operating funding for FY 2009 is $1.7 (which is the remaining amount when rise from $3.51 per kW 4CP at the
revenues from these programs: Envi- million lower than FY 2008. Both operating expenses are subtracted from beginning of FY 2009 to $4.50 by
FY 2013, an increase of 28 percent. percent a year over the next five years to System.) Wholesale customers served
ronmental Laboratory Services ($4 revenues and expenditures are up for operating revenues). Capital expendi-
help pay for the rising costs of provid- by WTC may see their rates increase
million), LCRA’s three natural science Environmental Laboratory Services, tures increase after FY 2009, reflecting
Raw Water: Two increases of 9.5 ing the water. by up to 23 percent. Other contract
centers and nature parks ($1 million), due to new contracts with the state. improvements to existing LCRA parks,
percent each are projected for 2009 systems may see rate increases of 2 to
marina and boat dock fees ($700,000), Capital plan costs are down because mainly those located along upper Lake Water and Wastewater
and 2011, to help pay for the costs of 14 percent during FY 2009.
and parks and recreation area user fees of the deferral of land acquisitions for Travis. Grant awards (Community Utilities: Increases of 20 to 25 percent
providing the water. This would raise
($400,000). McKinney Roughs Nature parks. Grant programs are down overall Development Partnership Program) are planned for LCRA’s retail water Telecommunications: No impact
the current rate of $126 per acre-foot to
Park revenues doubled in FY 2008 by $1.5 million per year. (The FY 2008 are held flat for five years at $500,000 systems during FY 2009. (The LCRA on fees is anticipated at this time.
$151 by 2013, a cumulative increase of
primarily through its public/private Business Plan did not break out grants per year. Board has already approved two such
19.8 percent.
partnership with Hyatt Regency Lost spending as a separate line item.) increases: 20 percent for the West Tra- Parks: No impact on fees is antici-
Pines Resort and Spa. vis County (WTC) Water System and pated at this time.
Agricultural Water: Water Ser-
vices proposes a series of increases of 4 23 percent for the WTC Wastewater
8 9