Audit 1826

Title: Presentation Accounting Policies: Expenditures reported on the SEFA are reported once the expenditures are incurred and the obligation of funds from FEMA and the Texas Department of Emergency Management (“TDEM”). Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. CPS Energy did not pass-through any federal awards to subrecipients during the year ended January 31,2023 De Minimis Rate Used: N Rate Explanation: CPS Energy has not elected to use the ten-percent de minimis indirect cost rate allowed by the Uniform Guidance. No indirect costs were reimbursed. The accompanying schedule of expenditures of federal awards (SEFA) includes the federal award activity of the City Public Service Board of San Antonio, Texas (“CPS Energy”) under programs of the federal government for the year ended January 31, 2023. The information in this SEFA is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of CPS Energy, it is not intended to and does not present the financial position, changes in net assets, or cash flows of CPS Energy. After a presidentially declared disaster, the U.S. Federal Emergency Management Agency (“FEMA”) provides a public assistance grant to reimburse eligible costs associated with repair, replacement, or restoration of disaster-damaged facilities. The Federal Government reimburses in the form of cost-shared grants.

Title: Disaster Grants - Public Assistance (Presidentially Declared Disasters) Accounting Policies: Expenditures reported on the SEFA are reported once the expenditures are incurred and the obligation of funds from FEMA and the Texas Department of Emergency Management (“TDEM”). Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. CPS Energy did not pass-through any federal awards to subrecipients during the year ended January 31,2023 De Minimis Rate Used: N Rate Explanation: CPS Energy has not elected to use the ten-percent de minimis indirect cost rate allowed by the Uniform Guidance. No indirect costs were reimbursed. As a result of a weather event that was a presidentially declared disaster, CPS Energy has been awarded a public assistance grant. The amounts reported on the Schedule for the year ended January 31, 2023 primarily relate to the costs incurred in connection with Severe Winter Storm Uri, which were incurred in 2021 and CPS Energy received appropriate approvals by FEMA in 2023.