2022 Environment, Social, & Governance Report

ENVIRONMENT, SOCIAL, & GOVERNANCE REPORT 2022

TABLE OF CONTENTS

Overview 2

A Note from the President & CEO of 2 Establishing an Environment, Social, and Governance Framework 3

ESG Focus Areas 3 Utility Systems 6 Environment 7

Supporting Clean Energy 9 Embracing Change through Innovation 13 Grid Modernization 14 Electric Vehicles 15 Sustainable Operations 17 Reducing Waste 19

Protecting East Tennessee’s Rivers and Streams 21 Habitat and Wildlife Protection 22 Improving Air Quality 23

Conserving Energy Together 26 Social 27

Community Involvement 29

Stakeholder Engagement 31 Economic Empowerment 33

Addressing Energy Burden 34 The Employee Experience 36 Leadership and Governance 41

Board of Commissioners 43 Financial and Accounting Transparency 44 Business Ethics 44

Risk Management 45 Community Resiliency 46

About KUB

Knoxville Utilities Board (KUB) provides electric, fiber, natural gas, water, and wastewater services to more than 478,140 customers in Knoxville and parts of seven surrounding counties. KUB exists to serve its customers by providing safe, reliable, and affordable utility services, but its mission is more than just pipes and wires: it’s about being good stewards of the environment and safeguarding our communities’ resources for generations to come.

Establishing

an Environment, Social, and Governance

A Note from the President & CEO

Framework

KUB exists to serve our customers; that is our mission and bottom line. As we provide the essential utility services our community depends on, we recognize we must be environmentally and socially responsible, and KUB has a strong legacy of being just that. Over many years, KUB has been recognized for leadership in environmental stewardship, with investments in green energy, alternative fuels, and more efficient operations, and also for participating in and giving back to the communities we serve with initiatives like TeenWork, Vol Time, Project Help, Round It Up, and our annual United Way campaigns. KUB has also been recognized for our more recent Diversity, Equity, and Inclusion efforts.

This year, we are taking a new approach to sharing this information with our customers and stakeholders by developing our first Environment, Social, and Governance (ESG) report to provide a more holistic view of sustainability at KUB. As we continue to focus on better service for our customers and support for our community every day, I am proud to share information about these goals and initiatives in this new way.

Gabriel J. Bolas II, KUB President & CEO

KUB’s Sustainability Mission is rooted in the three key areas of ESG

Environment:

Social:

Our Approach

The purpose of this report is to provide its stakeholders with an overview of KUB’s sustainability progress and a look into its aspirations for the future, including commitments to renewable energy, further adoption of alternative fuels within our fleet, and more intentional Diversity, Equity, and Inclusion initiatives within our company. This report includes metrics for our Fiscal Year (FY) 22, unless otherwise noted.

Safeguarding our communities’ environmental resources and creating a greener future for generations to come

Improving our social impact, both within the company and in the broader community

Governance: Maintaining a governance structure for leadership and management to drive positive change

Our Priorities

Environment

Supporting the development of renewable energy and providing customers access to renewable energy programs

Preparing for a clean and resilient energy grid compatible with distributed energy resources, smart technologies, and electric vehicles (EV)

Paving the road to EV adoption through partnerships and charging infrastructure investments

Ensuring sustainable operations that prioritize efficiency, reduce emissions, protect our rivers, streams, and natural habitats, promote air quality, and reduce waste

Helping customers conserve energy and save money

Social

Engaging stakeholders and participating in the community

Building partnerships and programs, which promote economic empowerment

Addressing energy burden for our customers and ensuring equitable access to services

Developing intentional programs and policies to promote Diversity, Equity, and Inclusion

Ensuring the safety and well-being of KUB customers and employees

Governance

Ensuring community needs are at the forefront of KUB business decisions

Maintaining a financial balance between KUB utility infrastructure operations and its commitment to sustainability and its community

Operating ethically as a provider of crucial public services

Ensuring the integrity and reliability of our utility systems

Our Utility Systems

KUB is proud to provide high-quality, safe, and reliable electric, fiber, natural gas, wastewater, and water services to Knox and parts of seven surrounding counties in East Tennessee. KUB’s Century II infrastructure maintenance program ensures its utility systems continue to operate reliably not only for KUB’s current 478,140 customers, but for generations to come. Learn more about the operation of KUB’s system in its 2022 Annual Report.

View Annual Report

Award-Winning Service

KUB’s utility systems are consistently recognized nationally by groups including the American Public Power Association, American Public Gas Association, and the National Association of Clean Water Agencies for excellent operations and exceeding regulatory standards.

KUB has also been recognized regularly for its continued commitment to sustainable operations across its systems and commitment to the community. Most recently, KUB was designated a Smart Energy Provider by APPA, received APGA’s inaugural Excellence in Environmental Stewardship Award, TVA’s EnergyRight North Star Award, and the awards listed below.

• Governor’s Environmental Stewardship Award

• U.S. Environmental Protection Agency (EPA)

ENERGY STAR certification

• AMWA Sustainable Water Utility Management Award

• TVA EnergyRight Top Performers

APGA Excellence in Environmental Sustainability

• The Association of Metropolitan Water Agencies (AMWA) Sustainable Water Utility Management Award

The American Water Works Association (AWWA) Award of Excellence in Distribution System Operations

• Diamond level American Public Power Association Reliable Public Power Provider (RP3), with a perfect 100-point score

American Public Gas Association’s System Operational Achievement Recognition (SOAR) Program

• Utility of the Future Today Recognition from the National Association of Clean Water Agencies, the Water Environment Federation, the Water Environment Research Foundation, and WateReuse

TVA EnergyRight North Star Award for efforts to reduce low-income energy burden in underserved areas and Top Performer Awards for the following programs: Home Energy Workshops, Home Uplift, Do-It-Yourself Home Energy Assessments, and Home Energy Evaluations.

American Public Power Association Smart Energy Provider designation

American Public Power Association Excellence in Public Power Communications Award

• Recognition by the 100 Best Fleets in the Americas Program and NAFA Fleet Management Association’s Green Fleet Awards

Supporting Clean Energy

KUB is committed to improving the sustainability of its operations and providing clean energy programs for residential and business customers. As renewable energy solutions become increasingly important to businesses, local governments and community members, supporting the development of clean energy resources has become a key part of KUB’s strategy to help create a greener future for the communities it serves.

Green Invest

KUB’s most significant contribution to renewable energy is its commitment to purchase solar power through TVA’s Green Invest Program on behalf of KUB customers. In 2020, KUB became the first local power company to participate in the program with a commitment to purchase 502 megawatts of solar – the largest of any organization to take advantage of the Green Invest program. While supply chain pressures impacted the timeline and ability to build a portion of the originally planned solar capacity, KUB is currently on track to bring online a total of 325 MW by 2025 with a $3.1 million annual investment for the next 20 years. When KUB committed to participating in Green Invest, it also set a goal to generate 20% of its total electric load from solar resources. Green Invest is a major step toward achieving that goal, as it accounts for approximately 14% of KUB’s load.

The new-to-the-world solar arrays built through Green Invest will generate enough green energy to power approximately 54,000 average homes. The program enables KUB to meet its own sustainability goals while demonstrating KUB’s commitment to serve the Knoxville area as an environmental steward and partner. The purchase is a significant step to help the City of Knoxville meet its goal to reduce carbon emissions by 80% relative to 2005 and positions Knoxville as one of the top cities in the nation for solar power investment.

“Knoxville is now the No. 1 city in the Southeast and one of the top cities in the nation for solar power investment, thanks to the Knoxville Utilities Board and Tennessee Valley Authority” –TVA

Working Toward a Common Goal:

Climate change is one of the major challenges facing today’s society. Many of KUB’s sustainability efforts complement emissions reduction strategies.

For many years, KUB has worked in close partnership with the City of Knoxville on sustainability initiatives, including efforts in support of the City’s emission reduction goals. In 2020, KUB joined the City of Knoxville Mayor’s Climate Council to address sustainability goals for the community.

KUB also participates in efforts such as TVA’s Carbon Accounting Cohort to gain valuable insight into the largest drivers of community emissions and better understand where we can have the greatest impact.

Power Supply Flexibility

Additionally, KUB is excited to begin evaluating new opportunities through TVA’s flexibility option, which will allow it to generate up to 5% of its electric load. This could amount to up to 80 MW of new distributed generation if implemented as solar power, and it will provide KUB the opportunity to increase access to renewable energy, lower costs for customers, and promote economic development in the region.

Supporting Customer-Owned Solar

KUB has more than 300 customer-owned solar arrays interconnected to its distribution system, and for many years, KUB has partnered with TVA to offer distributed generation programs for these customer-owned systems.

• Green Connect: Connects KUB customers interested in solar or battery installation at their homes with a Quality Contractor Network

• Dispersed Power Production: Allows customers to own renewable generation at their properties and receive payment for excess generation

• Green Power Providers: Historically enabled customers to install renewable generation at their homes and businesses and receive premium power purchase payments from TVA.

While the program is no longer open for new sign-ups, KUB will have GPP customers until their 20-year agreements expire.

Community Solar

KUB is bringing solar to its community by building Knoxville’s first Community Solar project, which broke ground in April 2022. The project will enable KUB customers to subscribe to solar through a shared solar array located in the Knoxville community.

KUB has committed $1.4 million to building the array, which is located on a three-acre site between the City of Knoxville’s Public Works Service Center and Interstate 40. It is projected to generate 1.36 gigawatt hours of electricity annually.

KUB’s investment in this project supports the community’s renewable energy goals by providing access to solar power without the large upfront cost and home construction that solar installation requires. This also allows customers who rent, live in multi-family units, or have homes unsuitable for solar arrays the chance to support local solar production. The program is expected to become available in winter of 2023.

Embracing Change Through Innovation

As the utility industry evolves, KUB seeks smarter ways to keep its community connected and promote a clean and resilient distribution system. The energy system of the future will support a wide array of clean energy sources, implementation of smart technologies, and widespread adoption of electric vehicles. KUB collaborates with many stakeholders and industry partners and facilitates an internal Utility Transformation Team to stay at the forefront of these efforts. Recent opportunities include:

• Advanced Distribution Planning project with EPRI: Identifies areas of opportunity for load management projects and system impact that could later be applied to determine optimal placement of future solar facilities or battery storage

TVA’s valley-wide Regional Grid Transformation study: Evaluates the value of grid transformation and develops a vision for the future

• TVA’s Connected Communities Steering Committee: Researches national leading practices and outlines a roadmap for enabling Connected Communities in the Valley

Grid Modernization

In 2022, KUB began working on an internal Grid Modernization Roadmap to identify future trends and needs for the electric distribution system. Recent advancements in digital, information, and telecommunication technologies require utilities like KUB to continually look for opportunities to adapt and improve. KUB is partnering with a consultant to create a roadmap which will expand and enhance the capability, resiliency and reliability of KUB’s electric grid. The project evaluates KUB’s current and future capabilities, using industry insight and trends, to identify strategic gaps and develop initiatives to close those gaps. These initiatives will help create a 10-year roadmap that will help inform or guide future decisions and investments.

Managing Energy Demand

Time of Use Rates

Implemented in November 2020, KUB’s Time of Use rate structure incentivizes load shift by sharing the financial benefits with participants. KUB’s Time of Use program offers rates that vary based on the time of day energy is used. Energy used during on-peak hours has a higher rate, while energy used during off-peak hours costs less. On-peak and off-peak hours vary by season. Since 83 percent of daily time is off-peak, Time of Use rates provide money-saving opportunities for customers who are able to shift high energy-use activities, such as doing laundry, taking showers, adjusting thermostats, and charging EVs, to off-peak hours.

Enel X Demand Response

TVA’s Enel X Demand Response program drives energy savings by offering incentives to commercial and industrial customers that can provide dispatchable peak load reduction. The program helps support the reliability of the local electric grid and maintain affordable electricity prices. KUB’s Kuwahee Wastewater Treatment Plant and Mark B. Whitaker Water Treatment Plant participate in the TVA Enel X Demand Response Program along with approximately 50 other commercial and industrial customers.

Smart Thermostat Demand Response Program

KUB partnered with TVA to offer smart thermostats to approximately 450 KUB electric customers in exchange for their participation in a residential Demand Response program.

Promoting Electric Vehicle Adoption

Supporting the adoption of electric vehicles (EVs) is a major component of KUB’s sustainability efforts. KUB understands that electric utilities are uniquely equipped to support the development of charging infrastructure within their communities and that KUB’s distribution system will play a key role as residents and businesses look to transition to electric vehicles.

KUB staff participate in a variety of partnerships and teams, which aim to address the barriers to EV adoption:

• Member of East Tennessee Clean Fuels since 2004, serves on Board of East Tennessee Clean Fuels, and founding member of Drive Electric Tennessee

• TVA EV Local Power Company Working Group participant, which supported the development of TVA and TDEC’s Fast Charge Tennessee funding and TVA’s Electric Vehicle Charging Power Rate

• TVA and Electric Power Research Institute fleet electrification study participant, which assesses how utility companies can plan for increased electric fleet loads coming to the distribution system

• Supports City of Knoxville charging infrastructure needs, such as installation of their Knox Area Transit Electric Bus Depot chargers

• Ongoing infrastructure support for commercial and industrial customers looking to electrify their fleets

EV Charger Rebates

In 2019, KUB rolled out its EV Charger Rebate Program, which provides customers with rebates up to $400 to purchase level 2 chargers for their homes. In 2021, KUB expanded the program to subsidize charger installation costs and include condo owners in the eligibility criteria. KUB was the first TVA local power company to offer a rebate program and has assisted nearly 300 customers with over $100,000 worth of rebates since the program began.

EVC Power Rate

KUB was the first TVA local power company to introduce the new Electric Vehicle Charging (EVC) rate, which reduces demand charges for separately metered EV stations and helps support the development of new chargers in our service territory.

Workplace and Public Charging

KUB has been a member of the East Tennessee Clean Fuels Coalition’s Tennessee Workplace Charging Partnership since 2016. KUB provides free level 2 charging to its employees at its Hoskins Operations Center and Jackson Avenue campuses. KUB also provides free charging to the public at its Downtown Knoxville Promenade parking garage.

Partnering to Support EV Adoption in Our Community

Knoxville’s All-Electric KAT Buses

In September of 2021, KUB joined the City of Knoxville, Knoxville Area Transit (KAT), elected officials, and others in Caswell Park to introduce and celebrate the first 12 all-electric buses to join the KAT fleet. This was a major milestone in Knoxville’s path to cleaner transportation. KUB played a key role by working with KAT to ensure its bus depot would have enough power to charge as many as 25 all-electric business as KAT works to build out its electric bus fleet in the coming years.

UT Student Charger Project

In November of 2021, the University of Tennessee, Seven States Power, and KUB celebrated a new electric vehicle charging station on the east side of UT campus. The project was led by engineering and business students as part of the UT Heath Integrated Business and Engineering program. The charging station, which is located in Staff 7 lot right across from the Tennessee River, is available for both public and university charging.

Sustainable Operations

KUB operates with sustainability in mind. KUB’s Environmental Stewardship Strategic Team identifies new opportunities to improve sustainability in KUB operations through facilities upgrades including retrofits, more efficient operations, and new initiatives to better align operations with KUB’s environmental mission.

Sustainability Highlights

• LEED and EnergyStar certified buildings

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Investing in Efficiency at KUB Facilities

The Miller’s Building was built in the heart of Downtown Knoxville in 1905 and housed the Miller’s Department Store until the early 1970’s. In 1998, the building underwent a total renovation to preserve its original historic charm, becoming home to KUB’s corporate headquarters.

Since obtaining the property, KUB has worked to improve the efficiency of the building for both internal and external tenants. KUB has invested in several sustainability projects including green power purchases, mechanical upgrades, building automation systems, and lighting retrofits. In FY22, KUB began a multi-year lighting replacement to convert all remaining fluorescent bulbs to LEDs. When complete, the project is expected to save over 900 MWh of energy annually, reducing both costs and emissions.

Sustainability in Mind

When bidding new services and projects, KUB’s procurement process includes a checklist to ensure project managers, consultants, and contractors consider vaious opportunities for environmental sustainability on projects, such as renewable energy, energy efficiency, water quality and conservation, waste management and recycling, and air quality.

KUB’s historic Miller’s Building in downtown Knoxville continues to achieve ENERGY STAR certification. The building performs in the top 25 percent of similar facilities nationwide for energy efficiency and meets strict performance levels set by the U.S. Environmental Protection Agency.

Reducing Waste Materials Reuse Program

Through KUB’s Materials Reuse Program, KUB offers excess construction materials, such as wood utility poles, wood pallets, plastic buckets, empty wire reels, and wood timbers, to the community free of charge. The program allows for beneficial reuse of the materials and keeps them out of a landfill.

Biosolids

For over 30 years, KUB has beneficially reused biosolids, the nutrient-rich product of the wastewater treatment process. With this program, 100% of KUB biosolids (approximately 27,000 wet tons annually) are certified as a fertilizer by the Tennessee Department of Agriculture. Since 2011, KUB’s Biosolids Beneficial Reuse Program has been Platinum certified through the National Biosolids Partnership (NBP).

2021 Goals Achieved, Continuous Improvement in 2022

The KUB Biosolids Environmental Management System (BEMS) goals and objectives were developed to seek continual process improvement and enhance biosolids quality. Each year, KUB develops these goals and objectives as part of the NBP requirements. These goals are recorded and assessed throughout each year and at an annual third party audit of KUB’s BEMS. The program goals reinforce KUB’s commitment to environmental performance, regulatory compliance, relations with interested parties and quality biosolids management practices.

In 2021, KUB achieved the following:

• Maintained average fecal coliform levels under 200,000 Most Probable Number (MPN) –which is 1/10 of the regulatory limit – in all reporting periods.

• Maintained volatile solids reduction above 50 percent in all reporting periods except one.

• Continued improvement through the use of the capital project close-out process and the asset management program.

• Began training plant operators on the new Biologically Enhanced High Rate Clarifier (BEHRC) at its Kuwahee Wastewater Treatment Plant.

Protecting East Tennessee’s Rivers and Streams

Some of KUB’s most important positive impacts on sustainability are related to its wastewater system, which treats approximately 30 million gallons of wastewater each day to be discharged to the Tennessee River. KUB’s source water protection efforts focus on river and stream monitoring. It maintains compliance with wastewater National Pollutant Discharge Elimination System (NPDES) permits and maintains programs to prevent sanitary sewer overflows (SSOs).

KUB’s plants receive Peak Performance awards from the National Association of Clean Water Agencies (NACWA) each year for excellence in operations and compliance in meeting or exceeding regulations.

KUB is a member of an area Water Quality Forum, a cooperative network of agencies, nonprofit organizations and citizens who have worked for over 20 years to improve the health of waterways in East Tennessee and maintain a water quality educated community.

KUB also works with a variety of local agencies to ensure proper disposal of unwanted medications, which if flushed down the drain can be difficult to treat and a potential problem for aquatic life. Proper disposal also protects the quality of KUB’s biosolids product. Since 2008, KUB has partnered with these organizations to ensure over 20,000 pounds of unwanted medications were properly disposed of rather than flushed to the wastewater system.

Water Protection Programs

• The Water Quality Stream Monitoring Program is an important environmental effort that monitors the quality of local waterways to locate and eliminate wastewater discharges that impact water quality. KUB assesses water quality data on a routine basis and monitors to ensure water quality criteria are being met.

KUB’s Cross-Connection Control Program helps to ensure protection of the public water system and that regulatory requirements are met. Through the program, KUB works closely with commercial and industrial customers to ensure backflow prevention devices are installed and tested.

• KUB’s wastewater management programs and performance also help to protect water quality. Proactive Grease Control, Private Sewer Lateral, and Industrial Pretreatment programs are key components for working with customers to protect the environment.

Successful Closure of Consent Decree

In June 2022, KUB met an important milestone for its Wastewater System as the Environmental Protection Agency (EPA) filed a motion to close a 2005 Consent Decree in Federal Court. For 17 years, KUB has worked under this Consent Decree to address sanitary sewer overflows on KUB’s wastewater system and violations of the Clean Water Act. Altogether, KUB spent roughly $650 million in improvements, collection system projects, and plant upgrades at Kuwahee and Fourth Creek Wastewater Treatment Plants.

Plant Improvements

KUB installed a new Biologically Enhanced High-Rate Clarifier (BEHRC) at its Kuwahee Wastewater Treatment Plant in FY22. This investment, not only improves plant operations, but it will also provide environmental benefits by providing full physical, chemical, and biological treatment to all plant flows, even during abnormal conditions.

Stream Clean-Ups

KUB has been a long-time participant in community water quality initiatives such as River Rescue and Adopt-A-Stream. While part of a larger community effort, these programs also allow KUB employees to make a direct impact in protecting the waterways and streams of KUB campuses. In FY22, KUB collected more than 40 bags of waste during its semi-annual Adopt-A-Stream clean-ups.

Habitat and Wildlife Protection

KUB is committed to protecting its communities’ natural resources by meeting or exceeding environmental standards and operating responsibly.

Aviation Protection Plan

Electric utility structures are not safe nesting locations for birds, and nesting activity can cause power outages. KUB’s Avian Protection Plan helps prevent unsafe conditions for the wildlife, public, and utility workers by tracking those incidents, ensuring compliance with regulations, establishing practices to avoid and/or manage conflicts, and providing training for staff.

Vegetation Management

Since more than 50 percent of power outages are vegetation-related, pruning is an essential part of excellent reliability. KUB has a team of professional arborists on staff to oversee the program and ensure quality. KUB has been a certified Arbor Day Foundation Tree Line Utility since 2001 and prunes according to the foundation’s high-quality standards.

Improving Air Quality

KUB’s Fleet

KUB participates in a variety of opportunities to learn more about alternative fuel vehicle technologies available to fleets and has been a long-standing Board Member of the East Tennessee Clean Fuels Coalition. KUB has promoted the use of alternative fuels in its fleet since 1970 when it first converted some vehicles to run on compressed natural gas (CNG). Today, KUB is proud to have a fleet powered by CNG, electric and hybrid technology, and E85 flex fuel. These vehicles demonstrate KUB’s commitment to reducing emissions for improved air quality and saving on fuel consumption.

In 2022, KUB developed a Fleet Modernization Strategic Plan to drive further adoption of alternative fuel vehicles within its fleet and modernize the fleet through strategic replacement cycles. Through strategic replacement of traditional internal combustion engine vehicles with electric, hybrid-electric, CNG, and flex fuel technology, this effort places KUB on the path to meet its goal of reaching 70% alternative fuels within its light duty fleet by 2030.

Fleet Modernization Strategic Plan

Strategy 1: Improving integrity and resiliency of KUB’s fleet through fleet modernization by:

Establishing a replacement cycle which will be used to inform long-range budget planning for vehicle purchasing.

• Rotating vehicles among work groups to keep mileage consistent.

Strategy 2: Transitioning the energy consumed by KUB operations from fossil fuels to alternative energy sources incorporated into the fleet, achieved by:

• Aligning fleet procurements with KUB’s sustainability goals by purchasing low or zero emissions vehicles.

• Ensuring Electric Vehicle and alternative fuel infrastructure deployment at KUB facilities to support AFV vehicle purchases.

Strategy 3: Reducing energy and fuel consumption by right-sizing the fleet and deploying managed idle technologies, achieved by:

• Establishing and implementing processes for fleet right-sizing to reduce fuel demand.

• Identifying opportunities for shared motor pool vehicles.

• Evaluating idling guidelines to reduce fuel consumption on new as well as fossilfuel powered vehicles.

Improving Air Quality

Natural Gas

As a natural gas distributor, KUB’s goal is to meet the needs of its customers while operating a safe and reliable distribution system. Operating responsibly to minimize its environmental impact is important to KUB, and it is often recognized as a leader among industry peers for its comprehensive safety and integrity programs and adoption of new technologies. This commitment to excellence, along with continual and incremental improvements, is key in reducing methane emissions from an engineering, operational, and maintenance perspective.

Damage Prevention and Public Awareness Programs

Targets third party damages, which are the #1 source of methane emissions on KUB’s system, by conducting outreach to contractors and promoting community awareness to help prevent damage to the system.

Distribution Integrity Management Program

Prioritizes replacement of aging infrastructure as well as high-risk equipment and pipeline components through accelerated actions, such as the Steel and Cast Iron/Ductile Iron replacement programs.

Preventative Maintenance Programs

Promotes early detection of leaks by surveying more often than required and repairing sooner than required.

Emergency Response

Promotes timely response to stop gas leaks with a 30-minute response time goal and use of squeeze offs, valving, and stabs to eliminate the flow of gas.

Construction Practices, Equipment, and New Technologies

Implements construction standards and new technologies to minimize gas loss.

Operator Training

Trains employees to correctly install gas pipeline, equipment, and facilities.

EPA Methane Challenge Highlight

In 2016, KUB joined as a Founding Partner in the EPA Methane Challenge, a voluntary program sponsored by the U.S. Environmental Protection Agency (EPA) that encourages oil and natural gas companies to adopt cost effective technologies and practices that improve operational efficiency and reduce methane emissions. KUB chose to participate in the Cast Iron Mains and Excavation Damages Best Management Practices categories. Since enrollment, KUB has made progress in achieving goals set by the Methane Challenge, most notably by removing all cast iron from KUB’s system.

Conserving Energy Together

For many years, KUB has worked with community partners to provide energy efficiency solutions for its customers. In addition to helping customers save money, energy efficiency solutions are an important tool to reduce carbon and address energy burden. KUB’s partnership with TVA EnergyRight® is key to providing customers with tools and information to save energy, lower utility cost, and support renewable energy. KUB is proud to be an active partner in offering EnergyRight® programs to customers and serve as a partner on various pilots to support successful Valley-wide implementation of new programs. Additionally, KUB seeks opportunities to complement TVA’s offerings with direct investments to expand the impact and benefits for those served through weatherization services. KUB is recognized as a Top Performer in the Valley for delivery of EnergyRight programs.

Energy Efficiency Programs

EnergyRight® Residential Services: Provides residential customers access to in-person and virtual energy audits and efficiency resources.

EnergyRight® Business and Industry: Support businesses and other community organizations through energy efficiency advice and upgrades.

Energy and Water Workshops: Free community Energy and Water Savings Workshops offered in partnership with TVA EnergyRight® and City of Knoxville’s Savings in the House program, which educate participants on ways to take control of energy and water use through interactive displays.

Kids Energy Monster Workshops: Offered through TVA EnergyRight® to teach kids about energy and water usage and how participants and their families can conserve at home.

Comprehensive Services Program: Provides technical support and matching funds through TVA for business and industrial customers including troubleshooting power quality issues on customer equipment, energy audits, and solar commissioning.

Weatherization Services: Various programs including KEEM, Home Uplift, and Round It Up, which have provided weatherization for low-income customers since 2015.

Community Centered Growth Pilot: TVA pilot program to provide energy updates for small businesses in disadvantaged communities.

School Uplift: TVA EnergyRight® Strategic Energy Management program, which supports schools in the region by identifying opportunities to reduce energy costs and improve the quality of the learning environment.

Social Highlights

Surpassed milestone of 2,000 homes weatherized in the Knoxville Community

Trained 185 leaders in diversity, equity, & inclusion

Conducted 53 safety and efficiency presentations throughout the community

Raised $194,000 for United Way of Greater Knoxville through employee fundraising

Provided $6.9 million in assistance to customers impacted by the COVID-19 pandemic since 2020

Completed the first year of the newly expanded TeenWork program, which has provided hundreds of high school students with career readiness education and experience since 1995

LOOKING AHEAD

KUB works to ensure the safety of its customers and employees and strives to keep serious, preventable injuries at one or fewer.

To continue KUB focus on every KUB employee’s experience, KUB will implement additional strategies to foster a more diverse, equitable, and inclusive work environment. These include training for all KUB employees, building community partnerships, and developing recruiting strategies to foster diversity and inclusion in the workplace.

KUB will continue the expansion of weatherization programs to provide a root cause solution for high energy usage and has adopted a goal to weatherize at least 250 homes of low-income families.

Community Involvement

TeenWork

KUB’s TeenWork program provides high schoolers with job readiness training through classroom sessions, activities, and a summer internship where they get real-world work experience. After partnering with Austin-East Magnet High School for 26 years, KUB expanded its TeenWork program to two additional schools in its service territory - Fulton and Central High Schools. In addition, KUB added three new business partners to help support the program to ensure each TeenWorker could be paired with a mentor and internship placement.

“What is the best advice you can give to help plan a career rather than simply work to keep a job? Be willing to sacrifice some things to build the career you want.”

– LEJUAN GORDON, KUB Employee & Teenwork Mentor

Stakeholder Engagement

KUB collaborates with a wide variety of stakeholders, starting with its customers and including regulators, community service organizations, educational institutions, government partners, and others. KUB’s Community Advisory Panel was established in 2020 to seek input from its customers on key policy matters that impact them and to share that input with KUB’s Board of Commissioners. The panel’s members represent a diversity of viewpoints, experience, and expertise.

Community Outreach

KUB offers a variety of educational demonstrations free to community groups and organizations throughout the year. In FY21, KUB conducted 53 educational appearances. These include:

Energy & Water Savings Workshops: KUB provides tips to workshop attendees to save energy and water with simple changes in their home. Attendees leave the workshop with a kit to get started right away.

Electric Safety Trailer: KUB’s electric safety trailer demonstrates the importance of proper safety around electric infrastructure through the use of an electrified power line and transformer. Attendees range from elementary schools to first responders.

H2O To Go: KUB provides its high-quality drinking water to the public at events throughout the community with its water station.

Employee Efforts

United Way

Through paycheck contributions and an annual fundraising campaign each fall, KUB employees organize ways to raise money for the United Way of Greater Knoxville. In 2021, KUB employees raised $194,000 for the United Way. In the past 10 years, KUB employees have donated $1.9 million to United Way.

In 2021 KUB employees raised $194,000 for United Way

KUB Cares & Employee Association

KUB provides its employees with eight hours of paid time off to volunteer in the community. KUB Cares, an employee led group, organizes ways throughout the year to promote the use of Volunteer Time. In 2021, KUB Cares organized a volunteer week as part of the annual United Way fundraising campaign, during which 80 employees spent 284 hours giving back to the community. In total, during FY22, 384 KUB employees volunteered more than 2,694 hours at various agencies throughout KUB’s service territory. The KUB Employee Association also works to support the community, organizing fundraisers during the annual United Way campaign, holiday meal baskets for seniors in need, and more.

Economic Empowerment Customer Assistance Programs

KUB has a strong legacy of providing quality customer service and bill payment assistance to those in need. KUB’s Customer Counselor group staffs full-time social workers who work with approximately 200 partner agencies to provide individualized assistance to those in need. On average, KUB Customer Counselors manage an average of 25,000 customer contacts per year.

Project Help: KUB’s Project Help program provides emergency energy assistance to those in need. The program has provided over 2,000 customers with approximately $820,000 in emergency energy assistance since 2017.

Pandemic Response: In 2020, TVA provided local power companies a 2.5% base rate pandemic relief credit. For KUB, the credit equaled $7.3 million and was dedicated to low-income assistance. KUB established the COVID Utility Relief Fund (CURE), which has provided $6.9 million in bill payment assistance to more than 10,000 residential and business customers since it began. KUB also leveraged TVA’s CARE grants with $280,000 in matching funds to provide $640,000 to local nonprofits who provided pandemic assistance in our community.

Addressing Energy Burden

Community Weatherization Programs

KUB’s support for weatherization programs dates back to the Smarter Cities Partnership in 2013. This effort brought together more than 20 community organizations which sought to improve the quality, comfort, and affordability of inner-city homes and eliminate the cycle of high utility bills for low-income families. The partnership secured over $20 million in resources to support education and energy efficiency upgrades through the Knoxville Extreme Energy Makeover (KEEM). Preceeding that, KUB also developed its utility bill round up program, Round It Up, which has continued to provide an ongoing funding source for low-income weatherization services - on average $700,000 per year.

TVA has been a key partner in KUB’s efforts to serve customers with weatherization assistance even following the successes of KEEM. Since 2018, TVA has provided nearly $3 million in funding for Home Uplift in KUB’s service area. KUB’s Board of Commissioners also approved an ongoing annual investment of $1 million per year, which has resulted in a $2.7 million commitment to weatherization since 2020. These funds combined with a TDEC grant for $750,000 in 2021 have allowed the partners to continue serving the many households in need.

Together, these programs have raised more than $27 million and served more than 2,000 homes since 2015. Households that receive weatherization see an average reduction in energy use of 15%.

KUB Water Savers Efficiency Program

KUB’s Water Savers Efficiency Program, administered by CAC, provides low-income customers direct installation of more efficient toilets and plumbing repairs to address high water and wastewater consumption. Additionally, through a partnership with TVA, customers will receive installation of additional low-cost water and energy saving measures, such as faucet aerators, low-flow shower heads, and LED light bulbs.

Commitment to Efficiency

KUB has budgeted an ongoing commitment of approximately $100,000 per year for the Water Savers program, which has assisted 38 customers with approximately $75,000 in water efficiency improvements since it launched.

Community Centered Growth Pilot

In FY22, KUB partnered with TVA on a new Community Centered Growth Pilot for commercial customers. The program supports small businesses in economically distressed communities through energy investments including kitchen upgrades, high efficiency light fixtures, HVAC systems, building controls/smart thermostats, and security lighting. KUB recruited 11 small businesses to receive improvements which have included refrigerator replacements, LED lighting, HVAC unit replacements, freezers, ovens, air sealing, hot water heaters, thermostats, and duct repair.

School Uplift Strategic Energy Management Program

In 2021, KUB partnered with TVA to offer a new EnergyRight School Uplift Strategic Energy Management program, which supports schools in the region by identifying opportunities to reduce energy costs and improve the quality of the learning environment. In FY21, two KUB schools located in under-served opportunity zones participated in the program. Several improvement opportunities were identified for South Knoxville Elementary and Vine Middle School including HVAC upgrades, insulation, equipment controls, window replacements, and other improvements.

The Employee Experience

KUB knows that the first step to a good customer experience is ensuring a good employee experience. KUB’s goal is to recruit and retain top talent by fostering an inclusive environment, offering competitive compensation and benefits, encouraging wellness program involvement, and developing employees for long-term success.

Diversity, Equity, and Inclusion (DEI)

At KUB, appreciating the diversity of employees, ensuring equitable practices, and being inclusive of people’s differences is a top priority. KUB is striving to do the following:

• Ensure every employee feels valued, has a sense of belonging, feels included and safe.

• Enhance decision making, problem solving and innovation skills.

• Gain a greater understanding of diverse customers’ needs and circumstances resulting in better service delivery.

$20.4 million in MBE/WBE contracts awarded

To bring this vision to light in FY 22, several measures were put in place including hiring two full-time DEI staff members, conducting DEI training for KUB leadership, analyzing demographic information, and hosting a community job fair. KUB also continued its supplier diversity initiative to support women and minority-owned businesses to which 9.6% of all contracts were awarded.

To ensure DEI is at the heart of the KUB culture, training on terminology and how to practice DEI principles began at the leadership level with a seven-session series for 185 executives, managers, and appraisers/supervisors. Next year, the goal is to have all frontline employees participate in similar, audience-appropriate sessions as well.

A demographic analysis is an important step to understanding equity in access and diverse representation across the organization. Below is the demographic breakdown of full-time employees at the end of FY 22.

Gender Female 22%

Male 78%

Female 237 Male 828 Grand Total 1065

Race/Ethnicity

Tenure Groups

To help fulfill the DEI vision, KUB hosted its first annual job fair in the community. This was a significant step to increase racial representation in the job candidate pool as well as be involved in the community served. Approximately 200 individuals attended the job fair and met over 60 employees from 20+ departments to discuss careers at KUB. From those 200 attendees, 38 applied for job openings, and nine were hired.

Workforce Safety

KUB is committed to the safety and wellbeing of our employees and is always looking for ways to promote a culture of safety and improve overall safety performance. KUB’s safety programs promote enhanced safety communications strategies that influence safe behavior while maintaining a positive relationship between employees. These strategies equip leaders within operations, construction, and maintenance departments with the skills to communicate safety messages to employees and coworkers in an effective and nonthreatening manner.

KUB maintains a variety metrics to help measure safety performance, including an organizational metric that monitors serious, preventable injuries. KUB has an FY23 goal to not exceed more than one serious, preventable injury.

not to exceed

KUB’s “Good Catch” Process is a safe, no-fault process for operations, construction, and maintenance employees to identify unsafe conditions and help prevent serious injuries at work by sharing information that can improve safety performance on the job.

Compensation and Benefits

There are several ways KUB ensures employees have competitive and fair compensation and benefits. Each year an analysis is completed to ensure pay grades are competitive, then employees and leaders engage in a pay-for-performance appraisal process to determine salary increases based on established goals and success.

In addition to the pay-for-performance model, all full-time employees receive the following benefits:

• Generous health benefits with low premiums and deductibles

Benefits starting from day one of employment

• 401(k) contributions and matches

• Paid time off which is available for use after an employee’s first payday

• 11 paid holidays

• Free financial advising

• Educational assistance

• Over 94% of KUB employees are enrolled in KUB medical insurance

• Over 500 financial advising appointments and webinars have been completed

• Over $3 million in 401(k) matches and non-elective contributions made

• $93,000 in educational assistance given in the last fiscal year.

Wellness

Helping employees be safe, healthy, and well is another way KUB cares for its people. The Occupational Health team works to ensure these goals by programs such as Work Healthy, Eat Wise, Be Active, Make Work-Life Fit, and Empower & Appreciate. Every one of KUB’s employees has access to a contracted nurse, registered dietician, and an industrial athletic trainer to assist in being healthy and well. Employees can also complete annual biometric screenings and participate in a wellness bonus program for completing healthy activities throughout the year. Mental health is an important priority too, so each employee and their family members are eligible for six free mental health counseling sessions per issue per year through the Employee Assistance Program (EAP). In 2022, EAP utilization was at 8.2% which is about 25% higher than the national average of other companies with access to free counseling programs.

Training and Development

KUB promotes learning and career growth through employee training and development programs.

The Business Education Series (BES) program provides employee networking opportunities across departments and disciplines while teaching about 10 different areas of KUB’s business. Last fiscal year alone, 171 individuals completed BES sessions. In addition, 132 individuals completed career growth classes with topics ranging from learning new software to understanding how to write emails in a business setting. Leadership development is also a vital part of KUB’s culture as evidenced by 25 new leaders completing a 7-session HR Essentials series to help them navigate unique situations they may face after moving from peer-to-boss.

Each of these areas and measures is evidence of KUB’s commitment to invest in its employees and maximize their work experience.

Employees participated in a field ergonomics study using movement and force measurement sensors as part of the Work Healthy program

Gabriel J. Bolas II, KUB President & CEO, speaks at the Community Solar groundbreaking.

Governance Highlights

LOOKING AHEAD

Board of Commissioners

KUB is governed by seven commissioners who serve seven-year terms. Commissioners are nominated by the Board of Commissioners, appointed by the Mayor of Knoxville and confirmed by City Council. The Board of Commissioners appoints a President and CEO, who in turn appoints other officers. KUB operates under the provisions of the Knoxville City Charter, KUB’s by-laws and the rules and regulations for each utility system.

Financial and Accounting Transparency

Investments in sustainability require balance with providing safe, reliable, and affordable utility services. KUB’s financial strategy is a proactive, balanced approach to manage costs, support customer growth, use debt responsibly, and adopt modest rate increases. KUB utilizes a long-range, 10-year financial plan, endorsed by its Board of Commissioners, to support the Century II program, which ensures sustainable lifecycle replacement and maintenance for each utility system with steady investment, incremental rate increases, and an equitable sharing of the costs for service between today’s customers and future generations. For more financial information, see KUB’s Annual Report.

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Fiscal year to date for the period ending June 2022

* Net position is calculated by subtracting expenses from revenues and the Fiber Division did not have revenues in FY 2022. “Based on S&P’s financial management assessment, we view KUB to be ‘1” on a scale of 1-6, with ‘1’ being the strongest.” – Standard & Poor’s “KUB has a long-standing history of well-managed operations, sound fiscal planning and well-developed asset management plans.” – Moody’s Investors Service

Business Ethics

As a provider of crucial public services, KUB recognizes its responsibility to operate in an ethical manner. Accordingly, KUB’s Board adopted an Ethics Policy in 2005 establishing standards of conduct for KUB commissioners, officers, and employees. KUB’s Ethics Policy provides guidance for conflicts of interest, use of information or assets, use of position or authority, acceptance of gratuities, and other applicable guidance and regulations, which govern KUB’s ethical conduct.

Risk Management

KUB has committed a considerable amount of time, planning, and attention to operational business continuity and risk management. KUB’s operations are comprehensive and include plant, distribution, and equipment assets in numerous locations as well as various network and enterprise information technology (IT) systems to manage KUB data and assets. We use a variety of methods to identify, evaluate, and manage risks across the organization in order to ensure the reliability and resiliency of our essential services.

Emergency Planning and Disaster Recovery

Maintaining plans for continuity and recovery of KUB’s essential operational functions in the event of a natural disaster or other emergency warrants ongoing evaluation and planning. KUB’s emergency preparedness efforts encompass training and exercises, community and responder outreach, mutual aid arrangements, emergency resources, and redundancy and backup measures to minimize impact and expedite recovery time in the event of an emergency.

Integrity Management Programs

KUB implements both regulatory and non-regulatory integrity management programs for areas of higher vulnerability. These programs utilize threat identification, risk analysis, strategic planning, mitigation actions, and performance measures to promote the integrity of KUB’s crucial assets.

Reliability Metrics

KUB uses a variety of methods to collect and assess reliability data for KUB systems and operations. Reliability metrics are overseen by KUB’s Audit and Finance Committee and presented annually to the KUB Board of Commissioners.

Cybersecurity Measures

KUB has put in place a variety of policies, procedures, and technologies to protect the integrity of our enterprise IT sytems. KUB also conducts cybersecurity training for new employees as well as regular refresher training to equip employees with knowledge to help identify and prevent cyber-attacks on KUB systems.

KUB uses a variety of methods to identify, assess, evaluate, and manage risks across the organization

Community Resiliency

While conducting research over the past few years, KUB found that its customers often have limited options for high speed internet, and some have no options. Those realities were made even more apparent during the recent COVID pandemic, as a many in KUB’s service area were forced to remain at home to work, teach, learn, and access vital services. It showed, again, that access to internet is critical to keep the community from falling behind in education, technology, and economic growth.

Through further research, KUB learned that 15% of 40,000 Knox County Schools households (6,000 households) did not have wired internet and 2% (800 households) do not have access to wired service.

In response, KUB decided to build a fiber network capable of solving these problems within its service territory. Compared to services provided by private companies, KUB internet will be faster. It provides 100% symmetrical fiber, meaning faster download and upload times than many existing systems. It also serves everyone. Unlike private providers, a new KUB system will go the last mile to everyone who receives KUB electric service. It is also locally owned and operated. KUB Fiber is a local solution that keeps jobs here and is responsive to the needs of the community. It will also provide value to KUB customers.

Aside from being more affordable, KUB’s fiber network will improve reliability on its electric system by reducing outage times by up to 40%. Customers who don’t subscribe to KUB Fiber will also benefit from electric rate stabilization when the network is deployed and lower rates from other internet providers hoping to compete.

In FY22, KUB received final approval from the Knoxville City Council to provide fiber services to KUB electric customers. KUB has since worked to create a new fiber division and develop a phased roll-out plan, which begins in fall of 2022. Deployment is anticipated to be complete in 2028, making KUB Fiber available to approximately 240,000 KUB electric customers.