Audit 318486

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. 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. The accompanying schedule of expenditures of federal awards (SEFA) includes the federal award activity of the City Public Service Board of San Antonio, TX (“CPS Energy”) under programs of the federal government for the year ended January 31, 2024 and is presented on the accrual basis of accounting. 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).

Title: Summary of Significant Accounting Policies 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. 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. Expenditures reported on the SEFA are reported once the expenditures are incurred and the obligation of funds from FEMA through 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 has not elected to use the ten-percent de minimis indirect cost rate allowed by the Uniform Guidance. CPS Energy did not pass-through any federal awards to subrecipients during the year ended January 31, 2024.

Title: Contingencies 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. 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. CPS Energy participates in federal grant programs, which are governed by various rules and regulations of the grantor agencies. Costs allocated to the respective federal grant programs are subject to audit and adjustment by the grantor agencies; therefore, to the extent that CPS Energy has not complied with the rules and regulations governing the grants, the collectability of any related receivable at January 31, 2024, may be impaired. In the opinion of management, CPS Energy has complied with the rules and regulations governing the respective 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. 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. 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. As a result of the COVID-19 Pandemic that was a presidentially declared disaster, CPS Energy has been awarded public assistance grants. The amounts reported on the SEFA for the year ended January 31, 2024 relate to the costs incurred in connection with the COVID-19 Pandemic, which were incurred in 2020 and 2021 and CPS Energy received appropriate obligations by FEMA in 2024.