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 Okay, it is nine o'clock and we do have a quorum, so we're called to order the public

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 utilities board for the city of Denton on April 12th, 2021.

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 The first item is public comment, do we have anyone who's wishing to speak?

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00:00:23,480 --> 00:00:26,480
 This is Tyler Smith with staff, no ma'am, you do not have any public comments at this

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00:00:26,480 --> 00:00:27,480
 moment.

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 We're going to the regular meeting.

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00:00:30,560 --> 00:00:36,640
 Consent agenda, does any board member wish to pull any of the items A through D on consent?

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00:00:36,640 --> 00:00:37,640
 Billy?

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00:00:37,640 --> 00:00:40,960
 I'd like to pull item number A.

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00:00:40,960 --> 00:00:41,960
 Okay.

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 All right.

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00:00:43,560 --> 00:00:44,560
 Letter A.

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 Letter A.

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 Anyone else?

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00:00:47,760 --> 00:00:48,760
 All right.

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 Do we have a motion to approve items B through D?

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00:00:54,640 --> 00:00:57,760
 Okay.

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00:00:57,760 --> 00:00:58,760
 Karen?

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00:00:58,760 --> 00:01:00,120
 So moved.

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00:01:00,120 --> 00:01:04,120
 Karen moved and I think Barbara seconded.

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 Okay.

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00:01:05,120 --> 00:01:07,120
 Billy, item A.

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 Let me pull this up, excuse me.

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 I'd just like a little more insight into where this was and I'm looking at the, I'm sorry.

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00:01:31,640 --> 00:01:36,680
 Morning, ladies and gentlemen, Jason Brown, Denton Energy Center.

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00:01:36,680 --> 00:01:37,680
 Great.

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00:01:37,680 --> 00:01:38,680
 Go ahead, Jason.

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 I'm sorry, Susan, but I just.

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 Okay.

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00:01:42,680 --> 00:01:43,680
 It's all right.

31
00:01:43,680 --> 00:01:44,680
 My question.

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 Hold on just a second.

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00:02:00,840 --> 00:02:18,160
 Okay.

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00:02:18,160 --> 00:02:19,160
 Sorry about that.

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00:02:19,160 --> 00:02:21,200
 I couldn't really hear y'all.

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00:02:21,200 --> 00:02:30,760
 Okay, so item A is the contract with Asset Works for a CMMS system.

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00:02:30,760 --> 00:02:32,860
 Correct?

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00:02:32,860 --> 00:02:41,640
 We are basically getting into a whole lot of maintenance activities and work orders and

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00:02:41,640 --> 00:02:46,520
 correct work orders and that type of stuff to where we are needing a asset management

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00:02:46,520 --> 00:02:53,320
 system to track and control and keep historical data for the facility itself.

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00:02:53,320 --> 00:03:01,400
 In addition to work orders and corrective work orders and maintenance activities, it

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00:03:01,400 --> 00:03:08,620
 will also be taking care of all of our parts and that kind of stuff.

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00:03:08,620 --> 00:03:20,920
 Do you have a percentage of what the cost of this new software will be as to the possible

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 expenditures coming from its analysis or maybe I don't understand what the software does

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00:03:29,160 --> 00:03:30,880
 that much, Jason.

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00:03:30,880 --> 00:03:38,800
 Yeah, so really I don't have a comparison versus the cost of the system versus the analysis

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00:03:38,800 --> 00:03:40,960
 that will be done.

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00:03:40,960 --> 00:03:48,480
 Basically a CMMS system is if you have issues on a piece of equipment, you would fill out

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00:03:48,480 --> 00:03:51,160
 a work order and track work order.

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00:03:51,160 --> 00:03:57,080
 Currently what we're doing now is all paper ledger and that kind of stuff, so it's very

51
00:03:57,080 --> 00:03:59,420
 time-consuming for staff.

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00:03:59,420 --> 00:04:01,120
 Within this, it's a system.

53
00:04:01,120 --> 00:04:08,000
 You go in, you load all of your equipment, your assets, that type of stuff, and you would

54
00:04:08,000 --> 00:04:12,800
 actually fill out a work order in this system and keep it going that way.

55
00:04:12,800 --> 00:04:13,800
 Same with parts.

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00:04:13,800 --> 00:04:20,400
 You can track your parts that go to that piece of equipment or that asset and it would keep

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00:04:20,400 --> 00:04:25,820
 all of your associated cost for that piece of equipment and in the future, you can run

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00:04:25,820 --> 00:04:34,800
 a report and see how much that piece of equipment has costed, maintenance, hours, parts, downtime,

59
00:04:34,800 --> 00:04:35,800
 that kind of stuff.

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00:04:35,800 --> 00:04:39,320
 Lee, you had your hand up, do you have a question also?

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00:04:39,320 --> 00:04:40,320
 Yes, ma'am.

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 Are you going to be taking your current paper-based system and moving it into the computerized

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 system or will you be starting from scratch to create a new database in that system?

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00:04:53,020 --> 00:04:55,840
 A little bit of both, sir.

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00:04:55,840 --> 00:05:04,320
 Basically what we'll do in the beginning is gather all of the data that we have currently.

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00:05:04,320 --> 00:05:10,000
 Right now, we're storing them in files, so engine one has a file.

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00:05:10,000 --> 00:05:17,320
 What we don't have is by asset broken down or subcomponent, so that will be an ongoing

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 task, but originally off of the start, if this is awarded and approved, we'll be loading

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 all of the assets and then as we continue, we'll keep putting all of that documentation

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00:05:31,680 --> 00:05:37,000
 in the system, so eventually it will all be in the system.

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00:05:37,000 --> 00:05:42,640
 Okay, so will the historical data that you currently have be uploaded into this computerized

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 system?

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00:05:43,640 --> 00:05:44,640
 That is correct.

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00:05:44,640 --> 00:05:45,640
 Okay.

75
00:05:45,640 --> 00:05:46,640
 Thank you.

76
00:05:46,640 --> 00:05:47,640
 Yes, sir.

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00:05:47,640 --> 00:05:48,640
 Other questions?

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00:05:48,640 --> 00:05:49,640
 Okay.

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00:05:49,640 --> 00:06:01,960
 That's all I have, I want to do, it's a lot of money to convert and I think every system,

80
00:06:01,960 --> 00:06:07,280
 right now, everybody's converting a lot with technology, continuing to grow.

81
00:06:07,280 --> 00:06:12,760
 Wish I was in this technology business, but with that having said, I'll move approval.

82
00:06:12,760 --> 00:06:13,760
 Okay.

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00:06:13,760 --> 00:06:14,760
 Do we have a second?

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00:06:14,760 --> 00:06:15,760
 Mr. Ryback.

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00:06:15,760 --> 00:06:18,760
 All in favor say aye.

86
00:06:18,760 --> 00:06:19,760
 Aye.

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00:06:19,760 --> 00:06:20,760
 Aye.

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00:06:20,760 --> 00:06:23,560
 Motion carries.

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00:06:23,560 --> 00:06:32,680
 The next item is consider the approval of minutes for March 22nd, 23rd, and April 5th

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 of 2021.

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00:06:33,960 --> 00:06:35,520
 Are you moving approval, Karen, or?

92
00:06:35,520 --> 00:06:38,440
 No, I just had an amendment.

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00:06:38,440 --> 00:06:41,880
 Oh, okay.

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00:06:41,880 --> 00:06:52,840
 I'm pretty sure that we approved consent agendas A through C, not A, B, D, and E.

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00:06:52,840 --> 00:06:59,640
 In the March 22nd minutes, it's just, it said that we, for the consent agendas, it said

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00:06:59,640 --> 00:07:04,200
 that we approved A, B, D, and E, but there were only three consent agenda items.

97
00:07:04,200 --> 00:07:05,680
 Oh, okay.

98
00:07:05,680 --> 00:07:07,480
 Good catch.

99
00:07:07,480 --> 00:07:13,080
 There was no D and E, and there was a C. That's my memory anyway.

100
00:07:13,080 --> 00:07:20,720
 Well, and Kim, can we go back and look at the video and have that corrected?

101
00:07:20,720 --> 00:07:21,720
 We can do that.

102
00:07:21,720 --> 00:07:22,720
 Okay.

103
00:07:22,720 --> 00:07:32,600
 So, maybe we would amend it to be minutes approved with the corrections.

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00:07:32,600 --> 00:07:33,600
 Yeah.

105
00:07:33,600 --> 00:07:34,600
 Okay.

106
00:07:34,600 --> 00:07:35,920
 Everything else looks fine.

107
00:07:35,920 --> 00:07:36,920
 Okay.

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00:07:36,920 --> 00:07:39,760
 So, are you making that motion, Karen?

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00:07:39,760 --> 00:07:40,760
 Sure.

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 Yes.

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00:07:41,760 --> 00:07:42,760
 All right.

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00:07:42,760 --> 00:07:43,760
 And the second?

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 Multitasking here.

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 Second.

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00:07:45,760 --> 00:07:46,760
 Okay, Barbara.

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 All in favor say aye.

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00:07:47,760 --> 00:07:48,760
 Aye.

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00:07:48,760 --> 00:07:49,760
 Aye.

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 Motion carries.

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00:07:50,760 --> 00:07:55,200
 Okay, the next item is consider recommending the adoption of an ordinance for the city

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 of Denton, a Texas Home Rule Municipal Corporation, authorizing the city manager or their designee

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 to execute a contract with Wartsilla North America, Inc. for the supply of routine maintenance

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 supplies and services for the Denton Energy Center, providing for the expenditure of funds

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 therefore and providing an effective date to award Wartsilla North America for three

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 years with the option of two additional years extensions with a total five-year not to exceed

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 amount of $3,448,184.

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00:08:26,040 --> 00:08:32,560
 Who's doing that one?

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 Jason Brown again.

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 Yeah.

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 It's me again.

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 Hold on just a second.

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00:08:38,080 --> 00:08:57,440
 I think I got this figured out now.

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 Ms. Kim, I'm having trouble.

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 Is it sharing it?

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 All right, y'all can see me and hear me.

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00:09:47,160 --> 00:09:50,680
 Sorry, I thought I had it.

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00:09:50,680 --> 00:09:56,640
 So, Jason Brown, Plaint Manager, Denton Energy Center again.

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00:09:56,640 --> 00:10:01,840
 The Denton Energy Center Equipment Maintenance Parts and Services prepared for you a short

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00:10:01,840 --> 00:10:06,680
 presentation this morning to briefly discuss the need for maintenance parts and services

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 for this, for the equipment at the Denton Energy Center.

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00:10:11,120 --> 00:10:17,400
 In this, we'll briefly discuss the major objective of this contract, types of maintenance, maintenance

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 intervals, and lastly, the bid summary for this purchase.

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 The objective of this contract is to help achieve the highest possible unit availability

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 for each engine.

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 The units must be available during high-priced hours to insulate DME customers for high-priced

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 market exposures and for performing equipment preventative maintenance to ensure unit reliability

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 and availability is maintained.

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 Despite best efforts, mechanical systems are subject to random failures, however, performing

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 routine maintenance and having spare parts on hand is the best practice to ensure unit

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00:11:00,960 --> 00:11:04,380
 reliability and availability is maintained.

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00:11:04,380 --> 00:11:09,760
 By performing equipment preventative, predictive, and corrective maintenance, we are doing everything

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 in our power to ensure the asset is maintained in tip-top shape to maintain efficiency and

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 reliability and availability to remain cost-effective for our customers.

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 In the next few slides, I'll briefly discuss routine maintenance schedule parts and the

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 benefit of these parts to help understand why we need this purchase of routine maintenance

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 parts and why it is a long-term solution to achieve our objective.

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 Please feel free to ask any questions at any time as we go.

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 The denture engine center, much like your car engine, it must be maintained routinely

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 as recommended by your equipment manufacturer to operate correctly.

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 This is called preventative maintenance program, where predictive, preventative, and corrective

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00:12:01,120 --> 00:12:03,020
 maintenance activities occur.

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 Many components require routine maintenance to proactively inspect for where premature

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 failure and critical parts must be replaced or repaired.

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 The preventative maintenance activities are performed consistent with OEM recommendations

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 guidelines.

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 OEM is equipment manufacturer.

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 Based on operating hours, this chart just depicts our current estimation of when maintenance

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 activities will occur.

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 So 2020, 2022, 2023, all minor maintenance activities, and then it just keeps progressing

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 as operating hours continue.

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 All maintenance activities require a shutdown of the individual units, but we want to minimize

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 the length of time that they're unavailable for generation.

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 So having contract in place for parts and services on hand is crucial.

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 As you see in this chart, we are due for minor maintenance currently, and in the following

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 years until the first major maintenance activity takes place at about 12,000 operating hours.

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 As you can see from this chart, 12,000 operating hours were projected to be 2024, 2025, somewhere

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 in that time range, but keep in mind with the denture engine center being dispatched

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 against the ERCOT market, the time frames could change a little bit forward or backwards.

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 Our objective is to make the units available as often as possible, as I said earlier, to

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 generate the most revenue from the market.

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 So we must be prepared to perform the maintenance task to ensure efficiency, availability, and

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 reliability of the equipment.

183
00:13:48,600 --> 00:13:52,160
 Jason, I have a question.

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00:13:52,160 --> 00:13:54,040
 Yes, sir.

185
00:13:54,040 --> 00:14:00,800
 The hours that you showed are generic, I presume, and do not apply to a specific piece of equipment?

186
00:14:00,800 --> 00:14:05,500
 So everything at the plant, well, let me go back just a little bit.

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 Most everything at the plant is hour-based maintenance.

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00:14:09,080 --> 00:14:17,280
 So if the unit has a start command, it's all of the hour-based pieces of equipment that

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 fall into that category.

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 There are a few pieces of equipment that are calendar-based, so monthly, quarterly, annually,

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00:14:26,320 --> 00:14:33,840
 but most of those are like safety eye washes, some of your motors for increasing intervals

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 and that type of stuff.

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00:14:37,840 --> 00:14:38,840
 That answer?

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00:14:38,840 --> 00:14:43,200
 I guess I was trying to get at the major equipment, the generators, so is that like the average

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00:14:43,200 --> 00:14:49,360
 of their run hours or total run hours of all the units, I just wanted to get a little clarification.

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 It's individual pieces of equipment, sir.

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00:14:51,600 --> 00:14:56,480
 So each one operates individually, so unit one through 12.

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 Unit one is engine generator and auxiliaries.

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00:15:02,080 --> 00:15:04,100
 And then you have two and three and four.

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00:15:04,100 --> 00:15:11,720
 So as unit one hits 4,000 hours, we do the maintenance interval for unit number one,

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 and then so on and so forth throughout the engines.

202
00:15:15,280 --> 00:15:16,280
 All right.

203
00:15:16,280 --> 00:15:20,680
 So that was a generic list, but you have multiple pieces of equipment, so it wasn't an overall

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 review of those.

205
00:15:21,680 --> 00:15:22,680
 Correct.

206
00:15:22,680 --> 00:15:23,680
 Gotcha.

207
00:15:23,680 --> 00:15:24,680
 Yes, sir.

208
00:15:24,680 --> 00:15:25,680
 Thank you.

209
00:15:25,680 --> 00:15:27,280
 Yes, sir.

210
00:15:27,280 --> 00:15:32,040
 So the major benefit of entering into this contract is that the best overall price for

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00:15:32,040 --> 00:15:35,640
 the material on the market was achieved.

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00:15:35,640 --> 00:15:40,600
 We will have OEM support on parts and services and troubleshooting, and best of all, we're

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00:15:40,600 --> 00:15:46,360
 doing everything that we can do to ensure that we're maintaining efficiency to the OEM

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00:15:46,360 --> 00:15:55,840
 standard to ensure reliability, availability, and cost effectiveness for our customers.

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00:15:55,840 --> 00:16:01,920
 So late last spring, we began proactively preparing for current and future maintenance

216
00:16:01,920 --> 00:16:05,520
 activities, outages, minor maintenance, that kind of stuff.

217
00:16:05,520 --> 00:16:14,000
 So we hit streets seeking prospective bidders for this type of equipment with a formal IFB

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00:16:14,000 --> 00:16:18,840
 for the parts needed for all of the minor maintenance intervals.

219
00:16:18,840 --> 00:16:20,960
 The specifications were posted.

220
00:16:20,960 --> 00:16:26,120
 They were sent to 95 potential suppliers, two companies submitted bids, one the OEM

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00:16:26,120 --> 00:16:31,040
 and then a third-party company.

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00:16:31,040 --> 00:16:35,520
 Of the two, one was partial and had higher prices than the OEM.

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00:16:35,520 --> 00:16:41,680
 The partial bidder was rejected as an incomplete bid and also for not being qualified to work

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00:16:41,680 --> 00:16:44,920
 on all aspects of the equipment.

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00:16:44,920 --> 00:16:49,080
 We are recommending and requesting the approval of the maintenance parts and services in the

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00:16:49,080 --> 00:16:57,440
 amount of $3,448,148 towards a lead to be funded from the Denton Energy Center operating

227
00:16:57,440 --> 00:17:02,840
 annual budget as needed based on operating hours.

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00:17:02,840 --> 00:17:04,880
 And I'm free for any more questions.

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00:17:04,880 --> 00:17:07,440
 Jason, I have a question.

230
00:17:07,440 --> 00:17:08,440
 Sorry, Ben.

231
00:17:08,440 --> 00:17:09,960
 I'll just jump in here quickly.

232
00:17:09,960 --> 00:17:14,800
 So do you currently have a company doing this work and this is a replacement for that company

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00:17:14,800 --> 00:17:17,000
 or is this a new service altogether?

234
00:17:17,000 --> 00:17:19,040
 No, sir.

235
00:17:19,040 --> 00:17:27,720
 The major aspect of -- sorry, hold on just one second.

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00:17:27,720 --> 00:17:30,960
 There you go.

237
00:17:30,960 --> 00:17:33,880
 Is that better?

238
00:17:33,880 --> 00:17:35,280
 That's fine.

239
00:17:35,280 --> 00:17:42,960
 So currently, the major aspect of this contract is not really a services, it's the parts based.

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00:17:42,960 --> 00:17:51,160
 The services aspect of this is for unplanned emergencies and items that site staff can't

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00:17:51,160 --> 00:17:52,920
 work on.

242
00:17:52,920 --> 00:17:58,200
 So logic based issues, control module issues.

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00:17:58,200 --> 00:18:04,800
 If we have, say, a head or a turbo that needs repaired, we can send it out to their shop,

244
00:18:04,800 --> 00:18:07,560
 have them work on it, return it.

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00:18:07,560 --> 00:18:14,000
 As far as the parts aspect of this, which is the big bulk of the money, right, to 2.6,

246
00:18:14,000 --> 00:18:19,920
 almost 2.7 million, we currently do not have a contract for parts.

247
00:18:19,920 --> 00:18:27,320
 What we've been doing thus far is using our current stock, our inventory parts, for the

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 maintenance activities and now we're running out of those parts and need to replenish so

249
00:18:31,680 --> 00:18:34,400
 that we can keep doing preventative maintenance.

250
00:18:34,400 --> 00:18:39,320
 All right, so this is a new service or operation to support the plant.

251
00:18:39,320 --> 00:18:40,320
 That is correct.

252
00:18:40,320 --> 00:18:42,240
 I'm sorry, Ben, I'll yield the floor to you.

253
00:18:42,240 --> 00:18:46,120
 Jason, you actually answered my question, so I'm good to go.

254
00:18:46,120 --> 00:18:47,120
 Oh, perfect.

255
00:18:47,120 --> 00:18:51,840
 Yeah, let's remember that Wartsilla is the manufacturer of these engines.

256
00:18:51,840 --> 00:18:52,840
 Correct.

257
00:18:52,840 --> 00:18:55,840
 Karen, go ahead.

258
00:18:55,840 --> 00:19:00,400
 You're muted.

259
00:19:00,400 --> 00:19:06,040
 Just to make some clarification, it seems like we've been over a similar issue in the

260
00:19:06,040 --> 00:19:09,920
 past when we were talking about warranty.

261
00:19:09,920 --> 00:19:16,480
 I mean, the plant is quite new and it's been under warranty and the warranty is now expired.

262
00:19:16,480 --> 00:19:21,560
 Is that what we're dealing with or the warranty period has run out?

263
00:19:21,560 --> 00:19:22,560
 So correct.

264
00:19:22,560 --> 00:19:24,160
 The warranty period ran out two years ago.

265
00:19:24,160 --> 00:19:25,160
 Two years ago.

266
00:19:25,160 --> 00:19:26,160
 Okay.

267
00:19:26,160 --> 00:19:27,160
 Yes, ma'am.

268
00:19:27,160 --> 00:19:33,160
 So in that, the only thing the OEM warranty had during the construction time period and

269
00:19:33,160 --> 00:19:38,560
 one year after that was issues, corrective issues and that kind of stuff.

270
00:19:38,560 --> 00:19:46,240
 The warranty never took care of maintenance and prolonged maintenance activities.

271
00:19:46,240 --> 00:19:53,200
 And Jason, you said you started this nine months ago, started looking into this?

272
00:19:53,200 --> 00:19:54,520
 Yeah.

273
00:19:54,520 --> 00:19:59,000
 We started the process late fall of last year.

274
00:19:59,000 --> 00:20:00,480
 Okay.

275
00:20:00,480 --> 00:20:01,640
 Okay.

276
00:20:01,640 --> 00:20:04,200
 Any other questions?

277
00:20:04,200 --> 00:20:06,200
 Right.

278
00:20:06,200 --> 00:20:08,960
 Do we have a motion to approve?

279
00:20:08,960 --> 00:20:10,440
 Barbara?

280
00:20:10,440 --> 00:20:14,320
 Barbara's motioning and Lee is seconding.

281
00:20:14,320 --> 00:20:15,880
 All in favor say aye.

282
00:20:15,880 --> 00:20:16,880
 Aye.

283
00:20:16,880 --> 00:20:17,880
 Aye.

284
00:20:17,880 --> 00:20:18,880
 Opposed?

285
00:20:18,880 --> 00:20:19,880
 Okay.

286
00:20:19,880 --> 00:20:20,880
 It carries.

287
00:20:20,880 --> 00:20:29,240
 And the next item, sorry.

288
00:20:29,240 --> 00:20:33,440
 Consider recommending the adoption of an ordinance for the city of Denton, Texas amending the

289
00:20:33,440 --> 00:20:40,080
 fiscal year 2020, 2021 budget and annual program for the services of the city of Denton to

290
00:20:40,080 --> 00:20:46,720
 allow for adjustments to the electric fund in $140 million for the purpose of purchasing

291
00:20:46,720 --> 00:20:52,240
 power during the winter storm Yuri event, declaring a public person purpose and providing

292
00:20:52,240 --> 00:20:58,640
 several several ability clause and an open meetings clause and an effective date.

293
00:20:58,640 --> 00:21:02,560
 Good morning, PB members, chair, Nick Benson, assistant director of finance.

294
00:21:02,560 --> 00:21:07,440
 Let me get the presentation pulled up really quick.

295
00:21:07,440 --> 00:21:10,720
 Okay.

296
00:21:10,720 --> 00:21:14,400
 So one slide, Susan, is what we have for this item really quick.

297
00:21:14,400 --> 00:21:17,080
 So I think this is the first time I've been in front of a lot of the new PB members.

298
00:21:17,080 --> 00:21:18,480
 So I just want to say welcome.

299
00:21:18,480 --> 00:21:22,040
 We're actually really glad that you're here and look forward to the conversations today

300
00:21:22,040 --> 00:21:25,400
 in the coming months as we talk about the upcoming budget cycle.

301
00:21:25,400 --> 00:21:32,000
 So we are in front of you today to amend the 2021 operating budget for the electric fund.

302
00:21:32,000 --> 00:21:36,560
 As you're aware, and it's been discussed by the public utility board of last several months,

303
00:21:36,560 --> 00:21:42,140
 we have had increased purchase power expense associated the recent storm event.

304
00:21:42,140 --> 00:21:48,720
 Those net expenses were $140 million, approximately, so we are looking to increase our appropriation

305
00:21:48,720 --> 00:21:55,600
 authority in the operating budget from $231.1 million to $371.1 million.

306
00:21:55,600 --> 00:22:00,480
 So this will cover those additional purchase power expenses and keep us within that budgetary

307
00:22:00,480 --> 00:22:04,960
 authority that the PB and city council approves.

308
00:22:04,960 --> 00:22:05,960
 That's it.

309
00:22:05,960 --> 00:22:15,000
 Thank you for questions if you have any questions.

310
00:22:15,000 --> 00:22:16,080
 I have one.

311
00:22:16,080 --> 00:22:21,240
 So the public purpose of this is that it was basically an emergency and under the law,

312
00:22:21,240 --> 00:22:26,520
 you can go ahead and do what you need to do and then come back and get approval.

313
00:22:26,520 --> 00:22:32,160
 Is that is that my correct understanding is correct, Susan, but but actually, you know,

314
00:22:32,160 --> 00:22:36,120
 in our expenditure authority that we have within the budget, the majority of the purchase

315
00:22:36,120 --> 00:22:41,300
 power expenses are actually covered in the original adopted budget of $231 million.

316
00:22:41,300 --> 00:22:42,960
 But but the you're correct.

317
00:22:42,960 --> 00:22:45,440
 We did come back after the expense occurred.

318
00:22:45,440 --> 00:22:49,840
 So yeah, we do we do like you know, for new PB members, if you're not familiar with it,

319
00:22:49,840 --> 00:22:54,960
 the fiscal year runs from October 1 to September 30 of each year, and we always try to come

320
00:22:54,960 --> 00:22:58,500
 back to you in advance if we think we're going to exceed the budget.

321
00:22:58,500 --> 00:23:01,400
 But in this situation, like Susan said, it was an emergency situation.

322
00:23:01,400 --> 00:23:03,440
 We're actually coming to you after the fact.

323
00:23:03,440 --> 00:23:06,840
 That's absolutely correct.

324
00:23:06,840 --> 00:23:10,280
 Any other questions?

325
00:23:10,280 --> 00:23:12,360
 Do we have a motion to approve?

326
00:23:12,360 --> 00:23:17,920
 We think we have an option, so I'll move approval.

327
00:23:17,920 --> 00:23:18,920
 Thank you, Billy.

328
00:23:18,920 --> 00:23:19,920
 Do and Karen seconding.

329
00:23:19,920 --> 00:23:20,920
 Okay.

330
00:23:20,920 --> 00:23:21,920
 All in favor say aye.

331
00:23:21,920 --> 00:23:22,920
 Aye.

332
00:23:22,920 --> 00:23:26,680
 And I see Mr. Ryback needed to step away.

333
00:23:26,680 --> 00:23:33,520
 So the next item management reports.

334
00:23:33,520 --> 00:23:38,360
 Madam Chair, PB members, the first item that we have here for you and the management reports

335
00:23:38,360 --> 00:23:46,800
 is the the January 2021 deck informal staff report and in the actual dashboard and certainly,

336
00:23:46,800 --> 00:23:50,760
 you know, Nick and other folks from finance are here if you if you have if anyone has

337
00:23:50,760 --> 00:23:58,200
 any questions regarding that report looks like none.

338
00:23:58,200 --> 00:24:05,080
 All right, so so the next item that we have for you is just the the future agenda item

339
00:24:05,080 --> 00:24:10,680
 matrix and obviously today we're going to be going through some wrap up presentations

340
00:24:10,680 --> 00:24:13,960
 of the previous fiscal year as well as an update of the current fiscal year for the

341
00:24:13,960 --> 00:24:20,020
 various utilities and I think Nick or Cassie will be going through that with you and then

342
00:24:20,020 --> 00:24:27,600
 on April 26 we do have scheduled a work session with the PB to kind of go go through but you

343
00:24:27,600 --> 00:24:32,320
 know what priorities you have for for the upcoming budget and certainly want to take

344
00:24:32,320 --> 00:24:37,960
 that feedback as we as we develop the budget and just you guys know we are already in that

345
00:24:37,960 --> 00:24:42,400
 mode and so we are already working with the finance department working through the various

346
00:24:42,400 --> 00:24:47,560
 budgets and and submittals for for the next fiscal year.

347
00:24:47,560 --> 00:24:51,240
 So this I think a good opportune time and just as a reminder this really kind of came

348
00:24:51,240 --> 00:24:57,440
 out of a discussion that Billy and Susan had with city management about you know PB's role

349
00:24:57,440 --> 00:25:01,880
 and and where things might fit in we thought this would be a good opportunity I think in

350
00:25:01,880 --> 00:25:07,700
 the future if we continue to do this we'll probably do it a little bit sooner than than

351
00:25:07,700 --> 00:25:11,720
 April but but again I think it's a good opportunity for if there's some things that you want to

352
00:25:11,720 --> 00:25:16,240
 see in the budget you want to give us a heads up that way we can become you know be better

353
00:25:16,240 --> 00:25:21,640
 prepared for them and then obviously come June we'll we'll be heavy into the budget

354
00:25:21,640 --> 00:25:27,600
 and we'll be coming back to the PB going through the various you know budgets you'll you'll

355
00:25:27,600 --> 00:25:32,840
 get you know line item information for each of the utilities and we'll be happy to answer

356
00:25:32,840 --> 00:25:36,920
 any questions that you have and as well as why certain things are being proposed and

357
00:25:36,920 --> 00:25:42,360
 needed but with that if there's anything else that I've missed on the on the future agendas

358
00:25:42,360 --> 00:25:46,840
 or if there's something that you'd like to see just feel free to let me know now or you

359
00:25:46,840 --> 00:25:54,040
 can always shoot me an email okay and then the last item that we have for you is the

360
00:25:54,040 --> 00:25:58,960
 new business action item again we still have some items on here and and Susan you would

361
00:25:58,960 --> 00:26:04,120
 probably I apologize for stealing your thunder here but you know some of these were were

362
00:26:04,120 --> 00:26:10,960
 questions that we had from Commissioner Ed Soph and Ed's Ed's has recently resigned from

363
00:26:10,960 --> 00:26:17,960
 the PV to to be a member of another another city commission or board and so but some of

364
00:26:17,960 --> 00:26:21,960
 these questions are still there certainly think they're still valid we'll be bringing

365
00:26:21,960 --> 00:26:28,900
 back the majority of these through our comprehensive solid waste management report that we'll be

366
00:26:28,900 --> 00:26:35,240
 bringing to you here in the next few months but with that certainly happy answering questions

367
00:26:35,240 --> 00:26:42,000
 that you may have or if you have for staff regarding any of these items questions all

368
00:26:42,000 --> 00:26:48,760
 right there's no question I think I think Barbara has one oh I'm sorry go ahead thank

369
00:26:48,760 --> 00:27:06,020
 you oh you're muted okay I wanted to ask you about on the it's mentioned that you did a

370
00:27:06,020 --> 00:27:12,120
 commercial bulk program to help property owners manage illegal dumping could you briefly tell

371
00:27:12,120 --> 00:27:18,680
 me what that I don't recall anything of that nature would you would could you tell me a

372
00:27:18,680 --> 00:27:22,920
 little bit about it yes ma'am I think Brian Warner's on here he'll be happy to respond

373
00:27:22,920 --> 00:27:30,000
 to that Brian yes ma'am just like our our you know residential bulk if a commercial

374
00:27:30,000 --> 00:27:34,560
 business owner has found that there's bulk on their property they've got materials they

375
00:27:34,560 --> 00:27:39,640
 can't fit into their dumpster normally because it's one-off or or something of that nature

376
00:27:39,640 --> 00:27:44,420
 they can call customer service and just like your residential crew we will send it out

377
00:27:44,420 --> 00:27:52,000
 send out a a truck to pick that material up for a fee I believe it's a $20 mobilization

378
00:27:52,000 --> 00:28:00,280
 fee and then a $5 per item fee all right so that that mattress and springs that's flinged

379
00:28:00,280 --> 00:28:08,180
 up against my dumpster I can get rid of it yes excellent thank you very much I wasn't

380
00:28:08,180 --> 00:28:12,620
 aware of that and again you know just call customer service nine four zero three four

381
00:28:12,620 --> 00:28:18,840
 nine eight seven zero zero and they will take care of you thank you very much Brian you're

382
00:28:18,840 --> 00:28:28,480
 welcome oh Karen go ahead I just quick follow-up for clarification Brian so the the business

383
00:28:28,480 --> 00:28:35,680
 owner who's already paying for the dumpster is also paying for the unauthorized dumping

384
00:28:35,680 --> 00:28:43,440
 correct okay I mean it's only $25 but it's bad the business owner has to cover it but

385
00:28:43,440 --> 00:28:48,680
 well and again pursuant to state law any any material that is on your property is your

386
00:28:48,680 --> 00:28:53,560
 responsibility to handle and manage regardless of who put it there so that's why it's important

387
00:28:53,560 --> 00:28:58,840
 for as we go through this process you know we've got revetments we're managing that material

388
00:28:58,840 --> 00:29:03,760
 remain we're managing access appropriately to our properties and that's the same thing

389
00:29:03,760 --> 00:29:11,740
 with graffiti you're responsible for repairing graffiti right it's along the same lines correct

390
00:29:11,740 --> 00:29:17,440
 okay same principle thank you I guess one out of three in bad residential you can get

391
00:29:17,440 --> 00:29:30,640
 two items picked up a week yes bulky items so okay any others all right on to concluding

392
00:29:30,640 --> 00:29:37,040
 items does any board member wish to congratulate somebody or something on a future agenda I

393
00:29:37,040 --> 00:29:43,320
 do want to thank Ed so for being on the board he's going to sustainability which everyone

394
00:29:43,320 --> 00:29:50,040
 who knows Ed will know that he'll be absolutely fabulous on that committee so I doubt he's

395
00:29:50,040 --> 00:29:59,200
 watching but if he does it is thank you Ed for your service yes he will congratulations

396
00:29:59,200 --> 00:30:05,320
 to you Susan on your new grandchild that's why you weren't here last time yes he's absolutely

397
00:30:05,320 --> 00:30:16,160
 adorable but what grandma doesn't say that right all right the next item is work session

398
00:30:16,160 --> 00:30:20,560
 receive a report hold a discussion and give staff direction regarding the fiscal year

399
00:30:20,560 --> 00:30:27,160
 2020-21 budget capital improvement program rates five-year financial forecast for water

400
00:30:27,160 --> 00:30:33,000
 wastewater solid waste and the electric funds good morning again Nick Benson assistant director

401
00:30:33,000 --> 00:30:38,700
 of finance and Susan there's four four presentations so I'll walk the pub through water wastewater

402
00:30:38,700 --> 00:30:44,360
 and solid waste and then Cassiog and the director of solid waste walk you through electric so

403
00:30:44,360 --> 00:30:49,080
 the water presentation is like 20-21 slides long if you want we can go through the entire

404
00:30:49,080 --> 00:30:53,160
 thing then take questions or we can stop halfway there is somewhat of a natural break in the

405
00:30:53,160 --> 00:30:59,840
 presentation so we'll get started please let me know if you have any questions we'll be

406
00:30:59,840 --> 00:31:07,800
 happy to answer them okay so really quick a summary of the presentation and what we'll

407
00:31:07,800 --> 00:31:13,400
 discuss today we'll talk about the 1920 end of your actuals look at the 10-year forecast

408
00:31:13,400 --> 00:31:16,920
 I know this may be the first time some of the PB members have seen it so be happy to

409
00:31:16,920 --> 00:31:20,640
 walk you through that in detail and ask ask any questions that you may have we'll address

410
00:31:20,640 --> 00:31:25,680
 them the capital agreement plan we'll look at that capital plan and what's included in

411
00:31:25,680 --> 00:31:29,700
 it and the cost of service overview so we did recently complete a cost of service study

412
00:31:29,700 --> 00:31:34,200
 for the water utility I'll review that with you shortly we'll have a little bit of rate

413
00:31:34,200 --> 00:31:48,760
 discussion that we'll talk about next steps as Tony mentioned earlier so this is the actual

414
00:31:48,760 --> 00:31:53,920
 water revenue for the water utility for the PB members have seen this before and those

415
00:31:53,920 --> 00:31:57,920
 that haven't I'll start on the left-hand side and walk you through it so our revenue is

416
00:31:57,920 --> 00:32:02,120
 grouped into different categories you can see at the top interest operating you have

417
00:32:02,120 --> 00:32:08,320
 some residential revenue commercial water for resale other white other water transfers

418
00:32:08,320 --> 00:32:13,780
 in and impact the revenue and talk about impact fees and a little bit also and 1819 actuals

419
00:32:13,780 --> 00:32:17,880
 you can see this is a couple fiscal years ago this is the most recent fiscal year that

420
00:32:17,880 --> 00:32:22,720
 ended the one we want to talk to you about today so as 1920 this fiscal year ended September

421
00:32:22,720 --> 00:32:28,640
 30th of 2020 this is the adopted budget so this budget was adopted during the budgeting

422
00:32:28,640 --> 00:32:35,480
 process last year and it took effect October 1st of 2020 you know actual revenue what I

423
00:32:35,480 --> 00:32:39,920
 wanted to walk you through you could see residential water cells are really close to that budgeted

424
00:32:39,920 --> 00:32:48,760
 number of 2.5 they did come in at 2.4 commercial was budgeted at 17.6 and came in at 17.1 so

425
00:32:48,760 --> 00:32:54,200
 a little bit below the budget but but fairly close water for resale is some of the contracted

426
00:32:54,200 --> 00:32:58,760
 wholesale agreements that we have out there with different entities did come in a little

427
00:32:58,760 --> 00:33:06,200
 bit above budget which is great so total resources for the department is 48.3 we did use reserves

428
00:33:06,200 --> 00:33:14,640
 of 1.2 for 49.5 and total resources the adopted budget did include reserve usage of 2.9 so

429
00:33:14,640 --> 00:33:19,080
 as you can see we did finish the year about 1.8 million dollars better than originally

430
00:33:19,080 --> 00:33:25,720
 budgeted water expenses by different operational units so within the water utility we have

431
00:33:25,720 --> 00:33:30,200
 different operational units we divide them by divisions we have an admin division utility

432
00:33:30,200 --> 00:33:36,500
 administration public affairs production distribution metering lab miscellaneous and these categories

433
00:33:36,500 --> 00:33:41,560
 help us in the cost of service model to establish the cost for each one and plug those costs

434
00:33:41,560 --> 00:33:49,120
 in to establish our rates so same thing here we had 1819 actuals 1920 budget 1920 actuals

435
00:33:49,120 --> 00:33:54,960
 and then 2021 adopted I did note on here that utility administration no longer has a budget

436
00:33:54,960 --> 00:34:00,880
 2021 and this budget was combined with water administration and public outreach and so

437
00:34:00,880 --> 00:34:05,760
 it was divided between those two one other thing I want to do is just congratulate staff

438
00:34:05,760 --> 00:34:10,720
 they did a great job when COVID hit last year of going into that 19 and 20 budget and really

439
00:34:10,720 --> 00:34:15,760
 looking at their operating expenses and doing some reductions during that difficult time

440
00:34:15,760 --> 00:34:19,640
 so just wanted to point that out we did have a note here at the bottom but you can see

441
00:34:19,640 --> 00:34:27,720
 we did have a savings just shy of 2 million so it's a great job by the operational staff

442
00:34:27,720 --> 00:34:31,160
 this is the 10-year forecast for the water utility I know this says five-year appear

443
00:34:31,160 --> 00:34:35,000
 but this is actually a 10-year period and there's a lot of numbers on this page I will

444
00:34:35,000 --> 00:34:41,560
 do my best to walk you through it from the left to the right so 1920 adopted budget as

445
00:34:41,560 --> 00:34:46,880
 the budget we just talked about so you can see 48.1 in revenue with that 2.9 million

446
00:34:46,880 --> 00:34:52,720
 in reserve usage 1920 actuals you can see that 48.3 that we reviewed a couple slides

447
00:34:52,720 --> 00:34:59,720
 ago with 1.2 in reserve usage as you work your way down the page you can see the adopted

448
00:34:59,720 --> 00:35:07,840
 expenses for 1920 and you can see the actual expenses for 1920 on this green line we always

449
00:35:07,840 --> 00:35:11,320
 do like to point out if there was any rate increases the 1920 budget did not include

450
00:35:11,320 --> 00:35:16,720
 a rate increase or decrease there was nothing and then going a little bit further down what

451
00:35:16,720 --> 00:35:20,080
 I want to point out to everybody is our operating reserve and we'll talk about this a little

452
00:35:20,080 --> 00:35:24,400
 bit later in the presentation and talk to you about what our current policy is and what

453
00:35:24,400 --> 00:35:28,680
 the recommendation is moving forward so currently you can see we have an operating reserve it's

454
00:35:28,680 --> 00:35:34,520
 made up of two components a working capital and operating reserve itself so total budget

455
00:35:34,520 --> 00:35:39,760
 we budgeted at 21.5 where we ended the year with using a little bit less than reserves

456
00:35:39,760 --> 00:35:45,480
 we finished about 23.2 keep moving down the page a little bit you can see we have an impact

457
00:35:45,480 --> 00:35:50,680
 fee capital reserve this is for a large capital project which is the Lakebury Roberts plant

458
00:35:50,680 --> 00:35:55,760
 expansion coming up in a few years we do have nine million setting aside in cash to fund

459
00:35:55,760 --> 00:35:59,600
 the design of that project so I want to be sure to point that out to the PEB today that

460
00:35:59,600 --> 00:36:04,440
 is a big project coming up moving down the page a little bit further down here in the

461
00:36:04,440 --> 00:36:07,760
 bold I definitely want to point this out to you these are those targets that we'll talk

462
00:36:07,760 --> 00:36:12,440
 about in a few slides so we have a minimum and a maximum we try our best to be in the

463
00:36:12,440 --> 00:36:18,160
 middle of those two as an indicator you know how the fund is performing do we need to consider

464
00:36:18,160 --> 00:36:25,000
 rate increases or operational you know decreases or savings within the fund to get us back

465
00:36:25,000 --> 00:36:33,080
 in that that range so in 1920 you can see the range was 16.9 and the max being 25.5

466
00:36:33,080 --> 00:36:39,000
 so that actual 21.5 falls well within that so that's one of those key indicators we talked

467
00:36:39,000 --> 00:36:43,720
 to the PEB and the city council about every single year during the budgeting process so

468
00:36:43,720 --> 00:36:52,200
 1920 actual we actually finished at 23.2 with that minimum being 16.3 and that maximum being

469
00:36:52,200 --> 00:36:58,040
 24.8 so we're definitely where we need to be just really quick I want to go through

470
00:36:58,040 --> 00:37:03,360
 2021 because we are in the adopted this person say adopted we're in the adopted 2021 budget

471
00:37:03,360 --> 00:37:06,720
 some of the new PEB members are not here we went through this budget cycles want to make

472
00:37:06,720 --> 00:37:12,520
 sure you are aware what's in it we have 49 million in revenue we are currently forecasting

473
00:37:12,520 --> 00:37:19,280
 or budgeted to use 3.9 million in reserves in 2021 so we'll continue those discussions

474
00:37:19,280 --> 00:37:23,080
 as we go through the 2022 budget process we'll keep you updated with an updated end of your

475
00:37:23,080 --> 00:37:29,560
 forecast but the budget does have some reserve usage included in it o and m budget you can

476
00:37:29,560 --> 00:37:35,440
 see we had expenses of 52.9 with a two percent rate decrease so the water utility did have

477
00:37:35,440 --> 00:37:42,520
 a rate decrease for customers which averaged about a dollar and eight cents for the average

478
00:37:42,520 --> 00:37:48,120
 residential customer and I'll talk to you about an average here shortly then just the

479
00:37:48,120 --> 00:37:53,280
 reserve target you're here at the bottom the adopted budget had 19.3 is what we were had

480
00:37:53,280 --> 00:37:56,800
 in the adopted budget for the end of reserve so it's still above that minimum target is

481
00:37:56,800 --> 00:38:04,600
 17.5 a couple couple big expansions I hear in the future and the point these are really

482
00:38:04,600 --> 00:38:09,780
 quick we'll move on the lake expansion you can see the debt service so this is the debt

483
00:38:09,780 --> 00:38:14,360
 that the fund issues to fund those capital projects this is the debt payment for that

484
00:38:14,360 --> 00:38:21,800
 debt and you can see a 2027 it's 11.6 then 2028 it's 18.1 that big jump there is that

485
00:38:21,800 --> 00:38:26,680
 Ray Roberts plan expansion project of 90 million some of the recent improvements staff had

486
00:38:26,680 --> 00:38:32,280
 made to that plan and plan to construct actually push this lake construction out the 2029 we'll

487
00:38:32,280 --> 00:38:38,760
 put the new budget together so I want to be sure to point that out to everyone this is

488
00:38:38,760 --> 00:38:45,480
 the five-year capital plan so we budget for very several things in the capital budget

489
00:38:45,480 --> 00:38:51,320
 you can see total was 51.8 it's got different components within it so one of them being

490
00:38:51,320 --> 00:38:58,360
 debt that debt payment I just showed you so in 2021 we had budgeted issue 35.5 in debt

491
00:38:58,360 --> 00:39:04,040
 we did recently approve a reimbursement ordinance for 23.7 million of that and then we do have

492
00:39:04,040 --> 00:39:08,400
 a notice of intent coming forward soon for your consideration revenue funding so this

493
00:39:08,400 --> 00:39:12,960
 is funded through the water rates and this is cash funding a portion of those projects

494
00:39:12,960 --> 00:39:16,920
 we do have some internal targets we like to meet with different type of projects within

495
00:39:16,920 --> 00:39:23,760
 the fund impact fee funding this is those projects within water they're impact fee eligible

496
00:39:23,760 --> 00:39:28,720
 most of those projects are growth related and so we did complete a study regarding that

497
00:39:28,720 --> 00:39:34,000
 in 2019 we updated it and those are updated approximately five years a little bit of aid

498
00:39:34,000 --> 00:39:42,160
 in construction the vehicle replacement of 275 000 so that total of 51.8 this is a fund

499
00:39:42,160 --> 00:39:46,240
 balance analysis we wanted to put this in here and update the pub so prior to the winter

500
00:39:46,240 --> 00:39:51,880
 storm event the finance department had started an in-depth fund balance analysis and really

501
00:39:51,880 --> 00:39:56,320
 what we wanted to do was to look across the utilities and see if our reserve requirements

502
00:39:56,320 --> 00:40:02,400
 were sufficient really when comparing ourselves to other municipalities or those professional

503
00:40:02,400 --> 00:40:07,640
 organizations and I'll show you some of those organizations on the next slide so nick before

504
00:40:07,640 --> 00:40:14,960
 you move on I'd like to ask a question from the previous slide yes sir okay I was a little

505
00:40:14,960 --> 00:40:22,840
 confused looking at revenue being added to debt and fees so I'm assuming that debt is

506
00:40:22,840 --> 00:40:29,000
 a payment and revenue is income it is I'm looking at this in the column I'm just a little

507
00:40:29,000 --> 00:40:34,040
 confused seems like something should be a taking away and other things should be an

508
00:40:34,040 --> 00:40:40,600
 ad or vice versa yes sir Mr. Abak let me um if it's okay I'll back up another slide and

509
00:40:40,600 --> 00:40:46,080
 show that to you I should have pointed that out to you um so on the on the pro forma is

510
00:40:46,080 --> 00:40:50,360
 probably the easiest place for me to explain it so these are the expenses here within the

511
00:40:50,360 --> 00:40:57,000
 water fund um in 2021 um you can see this revenue funded capital that's right here on

512
00:40:57,000 --> 00:41:03,960
 this line um this 13.96 that's an expense and then that debt that you're seeing this

513
00:41:03,960 --> 00:41:08,880
 is the debt payment for that debt so really what we try to do is not debt fund 100 of

514
00:41:08,880 --> 00:41:13,920
 all assets in the water utility we typically try to do 25 percent of plan expansions and

515
00:41:13,920 --> 00:41:18,440
 100 of those field service replacements so if we're going out to the street and replacing

516
00:41:18,440 --> 00:41:22,520
 the line that's already existing we've already incurred that debt for it that replacement

517
00:41:22,520 --> 00:41:28,120
 of that line is usually cash funded so they're both expenditure items um shown in the o and

518
00:41:28,120 --> 00:41:33,640
 m expense budget it's just one's revenue funded um utilizing rate revenue and then one has

519
00:41:33,640 --> 00:41:41,000
 a debt component associated with it does does that make sense rancher Nick this is tony

520
00:41:41,000 --> 00:41:48,760
 uh so mr rybeck um the grand total that you see on that that 51.7 million um equals equals

521
00:41:48,760 --> 00:41:55,160
 the expense so it's a so it's a balanced cip budget um so it's both it's both the the money

522
00:41:55,160 --> 00:41:59,320
 that's going to come in which is what's shown here but it's also equal to the expenditures

523
00:41:59,320 --> 00:42:06,000
 that are anticipated to be made in that particular year yeah yeah thank you tony and in in one

524
00:42:06,000 --> 00:42:11,000
 of the thing um terry nalti was reminding me too is this may help us um really what

525
00:42:11,000 --> 00:42:15,560
 this could say is revenue expense and this is a expenditure item and not a revenue coming

526
00:42:15,560 --> 00:42:21,400
 into the fund okay so it's revenue expense not income so that is my confusion okay yeah

527
00:42:21,400 --> 00:42:27,360
 so that's the cost of degenerating the revenue not the revenue okay yeah thank you that's

528
00:42:27,360 --> 00:42:32,920
 my confusion thank you yeah yeah we could simply call it cash funded um capital if we

529
00:42:32,920 --> 00:42:39,680
 wanted that may be a better term for it um but that is that revenue funded thank you

530
00:42:39,680 --> 00:42:44,320
 did susan name anybody else have a question maybe this i was just going to say it's really

531
00:42:44,320 --> 00:42:50,880
 just showing the sources of where we're going to fund the capital that that's correct we're

532
00:42:50,880 --> 00:42:55,280
 going to well we're going to use revenue to cash fund that capital so rate revenue but

533
00:42:55,280 --> 00:43:03,640
 you know it could simply be called cash funded capital absolutely yeah um someone else has

534
00:43:03,640 --> 00:43:08,800
 any questions i'll keep going along here please feel free to stop me again um so the current

535
00:43:08,800 --> 00:43:16,560
 reserve as i showed in the previous slide is 23.3 million was the minimum or 46 um based

536
00:43:16,560 --> 00:43:20,800
 on our findings that i'll walk you through here shortly staff does not recommend changing

537
00:43:20,800 --> 00:43:25,640
 any making any changes to the water fund balance policy but we definitely wanted to show it

538
00:43:25,640 --> 00:43:30,200
 to you in transparency and show you that we did do an extensive analysis of different

539
00:43:30,200 --> 00:43:35,960
 municipalities so um city of denton water utilities here at the top um at the time we

540
00:43:35,960 --> 00:43:41,600
 did it for the 1920 operating budget which is 51.1 million with that minimum target of

541
00:43:41,600 --> 00:43:47,840
 being 33 um the minimum reserve that equates to about 16.9 um and then looking at some

542
00:43:47,840 --> 00:43:53,520
 different utilities you can see in here lewisville mckinney garland frisco mesquite and grand

543
00:43:53,520 --> 00:44:00,040
 prairie and then you can see our 33 really falls really in line with these just below

544
00:44:00,040 --> 00:44:10,300
 frisco being 58 so professional organizations within the water fund we do look at several

545
00:44:10,300 --> 00:44:15,200
 different organizations when looking at metrics like this and really even looking at our rate

546
00:44:15,200 --> 00:44:20,000
 survey for each year that we participate in so the first one is the international city

547
00:44:20,000 --> 00:44:24,960
 management association also referred to as icma and the american water works association

548
00:44:24,960 --> 00:44:30,380
 which is awwa and i will put note that they do an annual rate survey that we participate

549
00:44:30,380 --> 00:44:35,360
 in within the city that really does a great job of benchmarking our rates with other similar

550
00:44:35,360 --> 00:44:41,760
 utilities throughout the state the water environmental federation which is wef and the government

551
00:44:41,760 --> 00:44:46,640
 finance officers association which is gfa and as i said on the previous slide based

552
00:44:46,640 --> 00:44:52,280
 on these different percentages in these organizations staff does recommend keeping the reserve the

553
00:44:52,280 --> 00:45:00,360
 same and not making any changes so this kind of gets into the second part of our conversation

554
00:45:00,360 --> 00:45:05,200
 which really a rate discussion and what i wanted to do is walk the pub through some

555
00:45:05,200 --> 00:45:09,960
 basic water rate terms review the cost of service study that we recently completed with

556
00:45:09,960 --> 00:45:14,800
 you look at those current rates and then look at some rate comparison charts and talk about

557
00:45:14,800 --> 00:45:22,360
 those next steps so water terms and some the two most common terms that you'll hear throughout

558
00:45:22,360 --> 00:45:27,680
 the budget in the rate discussion is the facility charge which is a fixed fee this is charged

559
00:45:27,680 --> 00:45:32,880
 to customers monthly based on the meter size and so does not alternate month to month or

560
00:45:32,880 --> 00:45:38,600
 change or vary it is one static fee that is adopted by pub and city council annually and

561
00:45:38,600 --> 00:45:42,900
 the volume charge is the volume metric charge is charged per thousand gallons in the water

562
00:45:42,900 --> 00:45:48,120
 utility i'll review those here with you shortly and those rates are grouped in different tiers

563
00:45:48,120 --> 00:45:53,320
 within the fund and then just some others going down you'll see these acronyms and their

564
00:45:53,320 --> 00:45:58,400
 rate ordinance and the utility rate ordinance is passed annually by the pub and city council

565
00:45:58,400 --> 00:46:01,820
 and that is available on the city's website so if you haven't seen it i'm definitely reach

566
00:46:01,820 --> 00:46:08,240
 out to us we can provide you a link to it and you can review it if you'd like this is

567
00:46:08,240 --> 00:46:11,160
 the cost of service rate design just kind of an overview of it so i'm going to give

568
00:46:11,160 --> 00:46:14,800
 a little bit of history when the last cost of service study was completed for the water

569
00:46:14,800 --> 00:46:21,960
 utility and the last one was completed in 2014 in 2019 the city contracted graph with

570
00:46:21,960 --> 00:46:27,880
 graph telus to update it again those studies are usually updated every five years um so

571
00:46:27,880 --> 00:46:32,800
 just over a year to get to get to get that completed and coba did slow it down a little

572
00:46:32,800 --> 00:46:36,880
 bit the staff is i'm glad that we did get this completed and we do want to note that

573
00:46:36,880 --> 00:46:41,880
 our consultant from raf telus is here today if we get into the results and you have detailed

574
00:46:41,880 --> 00:46:48,000
 questions and you'll be happy to answer those but the main goal of the cost of service study

575
00:46:48,000 --> 00:46:53,000
 is to establish cost of service based rates ensure revenue stability in the fund and ensure

576
00:46:53,000 --> 00:46:57,320
 fair and equitable rates and i do want to know to also give staff a working model that

577
00:46:57,320 --> 00:47:02,440
 we can update in those interim years so the consultant helps us update it every five years

578
00:47:02,440 --> 00:47:08,200
 but from year one to four one to five staff is actually using that model to update the

579
00:47:08,200 --> 00:47:11,240
 rates every year as part of the budgeting process when we bring them forward to you

580
00:47:11,240 --> 00:47:18,280
 so i think that was important to note this is a high level summary of the results of

581
00:47:18,280 --> 00:47:23,860
 that study the actual published document will soon be ready once it is ready we do plan

582
00:47:23,860 --> 00:47:27,560
 to share that with the public utility board but we wanted to give you a summary of what

583
00:47:27,560 --> 00:47:32,720
 the results were for the water utility and so residential you can see the cost of service

584
00:47:32,720 --> 00:47:38,400
 so the cost of providing service to residential customers is just about 22.8 million and the

585
00:47:38,400 --> 00:47:45,920
 current revenue is 21.2 so a little bit of deficit about 1.5 million which is 6.6 percent

586
00:47:45,920 --> 00:47:51,200
 under recovery so we want to make sure the pub was aware of this and commercial cost

587
00:47:51,200 --> 00:47:56,800
 of service is about 10.1 million the current revenue is 12.7 with a little bit of over

588
00:47:56,800 --> 00:48:04,320
 recovery about 2.6 million so 26.2 percent over recovery um irrigation um you can see

589
00:48:04,320 --> 00:48:10,760
 4.6 million um cost of service for current revenue 3.5 so just about a million difference

590
00:48:10,760 --> 00:48:16,440
 and then fire hydrants is is you know close to cost recovery just about thirty one thousand

591
00:48:16,440 --> 00:48:22,320
 dollars shy of it then wholesale is listed there at the bottom

592
00:48:22,320 --> 00:48:31,000
 um uh nick this is lee i was wondering um where do you um get a cost of service from

593
00:48:31,000 --> 00:48:36,880
 fire hydrants i presume the fire department doesn't pay to use the hydrants or do they

594
00:48:36,880 --> 00:48:41,560
 um so well that's a great question the fire hydrant the the fire department does use the

595
00:48:41,560 --> 00:48:47,840
 hydrants um for um emergency situations um and then we also get it so contractors around

596
00:48:47,840 --> 00:48:52,360
 the city have a meter that they can hook on to the fire hydrant that meters how much water

597
00:48:52,360 --> 00:48:56,600
 is taken out of that hydrant for it could be a construction project or a different case

598
00:48:56,600 --> 00:49:01,160
 so that that drives that cost for that and that's where that cost of service comes from

599
00:49:01,160 --> 00:49:08,040
 okay very good thank you for that clarification yes sir

600
00:49:08,040 --> 00:49:11,880
 so this was great information that the consultant put together for us um i'll start on the left

601
00:49:11,880 --> 00:49:16,400
 hand bar graph here and kind of walk you through it so what this does is shows you the distribution

602
00:49:16,400 --> 00:49:21,920
 of bills per thousand gallons of water um so you can see 3 000 gallons there's just

603
00:49:21,920 --> 00:49:28,840
 over 50 000 customers that fall in that tier 4 000 gallons over 50 000 so as you go you

604
00:49:28,840 --> 00:49:33,880
 know higher to the right of this chart you see larger water consumption um really the

605
00:49:33,880 --> 00:49:38,000
 way the rates are set up now and i'll walk you through in a second are really to incentivize

606
00:49:38,000 --> 00:49:42,120
 water conservation in the city and this is what this table shows so i wanted to be sure

607
00:49:42,120 --> 00:49:48,440
 the pbs saw this because it was a great message um the current deal the current bill distribution

608
00:49:48,440 --> 00:49:53,560
 um you can see here on this top right hand corner so the first tier within the water

609
00:49:53,560 --> 00:49:59,680
 utility for that volumetric rate so per thousand gallons and there's 89 percent of the bill

610
00:49:59,680 --> 00:50:05,400
 distribution in that tier which we definitely thought was important to point out 85 percent

611
00:50:05,400 --> 00:50:11,000
 of the consumption the second tier is 15 000 to 30 000 gallons which eighth percent of

612
00:50:11,000 --> 00:50:15,000
 the bill distribution being that second tier and then so forth going forward you can see

613
00:50:15,000 --> 00:50:20,280
 very few of the bills are in that 50 000 plus which is the largest tier we have in the city

614
00:50:20,280 --> 00:50:24,200
 so the majority of the residential customers are in that first tier and then this bottom

615
00:50:24,200 --> 00:50:29,200
 table of course is just a meter size based on uh residential customers so the most common

616
00:50:29,200 --> 00:50:34,440
 meter in the residential customer class is that three-quarter inch meter and i'll point

617
00:50:34,440 --> 00:50:40,880
 that right out to you here shortly this is the commercial distribution um same thing

618
00:50:40,880 --> 00:50:46,280
 here with this this graph you can see um the 1000 gallons is just over three anything below

619
00:50:46,280 --> 00:50:53,120
 that excuse me back up so 10 000 gallon increments on this so this would be zero to 10 000 gallons

620
00:50:53,120 --> 00:50:58,760
 on your left hand side 10 to 20 000 gallons then so forth going forward um so the majority

621
00:50:58,760 --> 00:51:04,840
 of the customers in that zero to 10 000 gallon range um meter distribution you can see the

622
00:51:04,840 --> 00:51:10,240
 three-quarter inch meter um about 1800 meters out there and then a two-inch meter being

623
00:51:10,240 --> 00:51:18,440
 the most common those two just over a thousand yes ma'am or does someone have a question

624
00:51:18,440 --> 00:51:23,920
 yeah barbara how often do you change those meters out i know you're on a regular system

625
00:51:23,920 --> 00:51:30,440
 i i would have to um ask pre-tim or steven maybe to address that question i'm not sure

626
00:51:30,440 --> 00:51:37,640
 on the change out change out time period hi uh this is pretendation of deputy director

627
00:51:37,640 --> 00:51:45,040
 can you guys hear me yes pre-tim we can hear you right yeah typically our program currently

628
00:51:45,040 --> 00:51:54,560
 is a 13-year yeah for those residential meters every 13 years we um have them on a cycle

629
00:51:54,560 --> 00:51:57,520
 thank you thank you pre-tim

630
00:51:57,520 --> 00:52:05,320
 all right so residential rates those are the current rates for the water utility i will

631
00:52:05,320 --> 00:52:08,560
 point out this slide is a little bit different that was included in your backup i had some

632
00:52:08,560 --> 00:52:13,560
 changes i needed to make to the current irrigation rates so i'll walk this um i'll walk you through

633
00:52:13,560 --> 00:52:17,760
 them here shortly um but the two components that we talked about earlier so the facility

634
00:52:17,760 --> 00:52:23,960
 charge is a fixed charge based on the meter size the volumetric rates are um they're seasonal

635
00:52:23,960 --> 00:52:28,320
 so we have a winter rate and summer rate and it's shown down here in this table so you

636
00:52:28,320 --> 00:52:32,240
 can see the the facility charge is consistent throughout the year is fifteen dollars eighty-four

637
00:52:32,240 --> 00:52:42,280
 cents this is for a three-quarter inch meter sorry did someone have a question okay and

638
00:52:42,280 --> 00:52:47,600
 then this is the volumetric rates um so you can see zero to fifteen thousand gallons um

639
00:52:47,600 --> 00:52:51,480
 that per thousand gallon rate is consistent between the winter and summer but once you

640
00:52:51,480 --> 00:52:56,380
 step up to that second tier from fifteen to thirty thousand gallons and that rate does

641
00:52:56,380 --> 00:53:00,920
 increase in the summer so as i mentioned earlier you're really incentivizing water conservation

642
00:53:00,920 --> 00:53:06,120
 this summer in those hot months when people tend to use more water and then the current

643
00:53:06,120 --> 00:53:09,840
 irrigation rates want to put these on here these are for individuals with separate irrigation

644
00:53:09,840 --> 00:53:15,520
 meters and this is for a two-inch meter also so fifteen eighty-four um and that volume

645
00:53:15,520 --> 00:53:20,800
 rate for that first tier in the winter being four or five second tier four or five and

646
00:53:20,800 --> 00:53:26,680
 of course over 30 is 405 but in the summer and it is higher for irrigation is 576 and

647
00:53:26,680 --> 00:53:33,000
 the second tier is 795 and 30 000 plus is 1064 and then you know staff does plan to

648
00:53:33,000 --> 00:53:37,040
 bring this back to the public utility board and fiscal year 2022's budget discussions

649
00:53:37,040 --> 00:53:42,180
 that will start here in the next month we'll run different scenarios answer any questions

650
00:53:42,180 --> 00:53:46,960
 you may have about these rates and how they fit into the pro forma so but these are the

651
00:53:46,960 --> 00:53:53,040
 ones that are currently in place commercial rates so same thing here you have a facility

652
00:53:53,040 --> 00:53:59,060
 charge and a volumetric rate it is broken to a winter and summer rate for irrigation

653
00:53:59,060 --> 00:54:04,240
 customers for regular commercial water usage there is no winter and summer block it's just

654
00:54:04,240 --> 00:54:08,880
 one rate so you can see the facility charge here of fifty dollars and ninety-nine cents

655
00:54:08,880 --> 00:54:12,360
 and that volume charge of four thirty-four so that bill does not change throughout the

656
00:54:12,360 --> 00:54:16,600
 year like a residential customer and if you're a commercial irrigation customer there is a

657
00:54:16,600 --> 00:54:21,260
 winter in a summer charge with the volume charge being slightly less in the winter than

658
00:54:21,260 --> 00:54:29,520
 it is in the summer this is the residential bill distribution and this was recently updated

659
00:54:29,520 --> 00:54:33,760
 as part of the cost of service study so you can see the city of denton here in the middle

660
00:54:33,760 --> 00:54:39,240
 seventy-eight fourteen this is based on seventy-six hundred gallons for the average residential

661
00:54:39,240 --> 00:54:50,440
 customer each month this is the average commercial bill rate comparison so you can see the city

662
00:54:50,440 --> 00:54:55,580
 dent in the middle of four fifty-one fifty-one and this is based on forty-five thousand gallons

663
00:54:55,580 --> 00:55:04,340
 which is that average commercial customer and this is something we put together last

664
00:55:04,340 --> 00:55:07,760
 year as part of the budgeting process and really what we wanted to show was is the rate

665
00:55:07,760 --> 00:55:13,160
 changes over the various fiscal years so you can see in the table from fiscal year twenty-fifteen

666
00:55:13,160 --> 00:55:18,540
 to twenty-seventeen the utilities had some rate increases starting in twenty-eighteen

667
00:55:18,540 --> 00:55:23,040
 we've actually had several rate decreases in the utilities with no increase so we thought

668
00:55:23,040 --> 00:55:26,700
 this was definitely important to point out to the public utility board and city council

669
00:55:26,700 --> 00:55:35,260
 but a great rate history for each of the utilities and then upcoming budget discussions no tony

670
00:55:35,260 --> 00:55:39,080
 mentioned these earlier so this is plan to go to city council on april the twentieth

671
00:55:39,080 --> 00:55:45,160
 next tuesday circling back with you on april the twenty-sixth with a priorities presentation

672
00:55:45,160 --> 00:55:50,560
 and then starting that fiscal year twenty-twenty-two operating in capital budget discussions may

673
00:55:50,560 --> 00:55:55,460
 through september i'm just willing to put those on there i know it's a lot of material

674
00:55:55,460 --> 00:56:06,560
 so i will pull it down and we can address questions that you may have any questions

675
00:56:06,560 --> 00:56:14,320
 i see none all right well great well let me pull up the next presentation which is wastewater

676
00:56:14,320 --> 00:56:28,000
 see if i can get it to share here all right i won't go all through all these individually

677
00:56:28,000 --> 00:56:32,000
 like i did in water it's basically set up the same way so the end of your actuals we'll

678
00:56:32,000 --> 00:56:35,880
 look at the pro forma and then we'll have a rate discussion afterwards and talk about

679
00:56:35,880 --> 00:56:44,520
 next steps so this is the 1920 actuals that we want to put on here so very similar to

680
00:56:44,520 --> 00:56:49,400
 water there's different water um i'm sorry wastewater categories that we receive revenue

681
00:56:49,400 --> 00:56:55,400
 into um so you can see we have a little bit of operating interest up here uh residential

682
00:56:55,400 --> 00:57:02,080
 revenue we have commercial revenue effluent irrigation we have wholesale other wastewater

683
00:57:02,080 --> 00:57:06,400
 we have drainage fees drainage drainage is included in this utility we'll see a separate

684
00:57:06,400 --> 00:57:10,920
 pro forma for that shortly some transfers in those transfers in our majority of cost

685
00:57:10,920 --> 00:57:18,160
 of service transfers from other utilities um to wastewater um and then impact fee revenue

686
00:57:18,160 --> 00:57:23,680
 so in 1920 the adopted budget had thirty six point seven million in revenue we finished

687
00:57:23,680 --> 00:57:29,160
 the year about thirty six point one million so really close to that budget um the adopted

688
00:57:29,160 --> 00:57:33,280
 budget had one point six million in reserve usage uh we actually ended up using about

689
00:57:33,280 --> 00:57:39,640
 seven hundred eighty three thousand so great news this fund this is the 2021 budget so

690
00:57:39,640 --> 00:57:44,280
 this is that current budget that we're currently in um current revenue at thirty seven point

691
00:57:44,280 --> 00:57:55,360
 six with no reserve usage and the adopted budget question yes sir so your actual and

692
00:57:55,360 --> 00:58:03,640
 budget for impact fees was exact it's a great question mr cheek absolutely so um what that

693
00:58:03,640 --> 00:58:07,440
 is that's a great point so the city does receive impact fees in the water and wastewater

694
00:58:07,440 --> 00:58:12,680
 utility when those fees are received they go into the impact fee reserve what we do

695
00:58:12,680 --> 00:58:17,360
 each year from a planning standpoint is we look at the impact fee study we visit you

696
00:58:17,360 --> 00:58:21,760
 know with the pub and the city council through the capital program and we determine a set

697
00:58:21,760 --> 00:58:26,480
 amount to pull from that reserve into the operating fund to fund those projects so that

698
00:58:26,480 --> 00:58:31,560
 number will always be equal to budget it is set up on an annual transfer great question

699
00:58:31,560 --> 00:58:40,800
 okay yeah i didn't remember that okay thank you um expenditures by operational units so

700
00:58:40,800 --> 00:58:45,720
 you can see administration rec reclamation collections filled services beneficial reuse

701
00:58:45,720 --> 00:58:50,200
 laboratory and so forth going down uh we'll point out that drainage is included in these

702
00:58:50,200 --> 00:58:55,480
 expenses and i'll show you a separate reform shortly um but you know total expenses in

703
00:58:55,480 --> 00:59:03,200
 the 1920 adopted budget about 38.3 uh with the actuals being about 36.9 uh they adopted

704
00:59:03,200 --> 00:59:08,280
 2021 budget 36.8 million expenses and similar to water is want to point out staff did a

705
00:59:08,280 --> 00:59:12,920
 great job in this utility uh really looking at those covid expense reductions last year

706
00:59:12,920 --> 00:59:16,960
 when we were going through and talking about that internally i mean with the pb and city

707
00:59:16,960 --> 00:59:24,440
 council so it come in below the budget on the operating expense side it's a 10-year

708
00:59:24,440 --> 00:59:28,760
 performance is similar to water we do like to look at things in a 10-year forecast some

709
00:59:28,760 --> 00:59:33,120
 of the growth come in the community is definitely a good thing to do um so very similar it's

710
00:59:33,120 --> 00:59:38,000
 set up exactly almost exactly the same as water so you can see the adopted 2020 budget

711
00:59:38,000 --> 00:59:43,920
 here in this column the 36.7 million in revenue we discussed with that 1.6 million in reserve

712
00:59:43,920 --> 00:59:50,240
 usage operating expenses here's that 38.3 million we saw on the previous slide uh with

713
00:59:50,240 --> 00:59:54,640
 that zero percent rate increase or decrease last year so we didn't have any increases

714
00:59:54,640 --> 01:00:00,000
 or decrease in 2020 we did have a five percent rate decrease in 2019 in the wastewater fund

715
01:00:00,000 --> 01:00:06,880
 and then 2021 here's the adopted budget that we're currently in 37.2 million in revenues

716
01:00:06,880 --> 01:00:16,240
 um basically a balanced budget and then operating expenses 37.167 um operating reserve definitely

717
01:00:16,240 --> 01:00:21,120
 want to show you this for the wastewater fund um so we finished the year at 14.4 million

718
01:00:21,120 --> 01:00:25,440
 you can see that number here uh moving down the page you can see what the existing target

719
01:00:25,440 --> 01:00:31,520
 is so 10.3 being the minimum 14.4 being the maximum so we're right there at that max

720
01:00:32,320 --> 01:00:37,520
 finishing the fiscal year which is great news for this fund i mean 2021 you can see we're

721
01:00:37,520 --> 01:00:45,280
 at 14.2 million um with the minimum being 10.4 and the max being 14.5 um going out in the future

722
01:00:45,280 --> 01:00:50,480
 years i did want to point out that the reserve does uh dip slightly below the reserve requirements

723
01:00:50,480 --> 01:00:56,640
 starting in fiscal year 2026 but this does not anticipate currently any rate increases in the

724
01:00:56,640 --> 01:01:00,960
 future so i want to make the public utility board familiar with that and make sure you're aware of

725
01:01:00,960 --> 01:01:06,000
 it as it said there's no rate increase is currently forecasted that's when we dip below it

726
01:01:06,000 --> 01:01:13,600
 the drainage performance so this is very neat performance that you just saw it is part of the

727
01:01:13,600 --> 01:01:18,160
 wastewater fund we do like to show the public utility board and city council this separately

728
01:01:18,160 --> 01:01:23,040
 each year and the drainage function within wastewater is supported by drainage fees

729
01:01:23,040 --> 01:01:28,800
 the drainage fees are made up of residential fees and commercial fees which is non-residential which

730
01:01:28,800 --> 01:01:34,960
 is the same thing so you can see residential is about 1.9 but commercial being about 3.1 for a

731
01:01:34,960 --> 01:01:43,680
 total of 5.5 so they did have a balanced budget of expenses of 5.5 you can see here they do fund a

732
01:01:43,680 --> 01:01:50,080
 lot of their capital from operating funds from revenue so revenue funded capital of 1.8 million

733
01:01:50,080 --> 01:01:56,320
 you can see that number here in this column we do set aside a drainage reserve is a million dollars

734
01:01:57,040 --> 01:02:00,640
 this is a component of wastewater but we do like to show it separately to show we do have a reserve

735
01:02:00,640 --> 01:02:10,160
 for this fund five-year capital plan similar to water there are different components within here

736
01:02:10,160 --> 01:02:16,720
 you can see the debt component so how much debt we plan to issue the adopted budget included 32.9

737
01:02:16,720 --> 01:02:22,800
 million to date we've approved the reimbursement ordinance for 26.1 million with the notice intent

738
01:02:22,800 --> 01:02:28,880
 coming forward to the pbn city council in the near future this is that cash funded capital this is

739
01:02:28,880 --> 01:02:34,880
 from the operating fund this is paying cash for those assets instead of debt funding on a 5.4

740
01:02:34,880 --> 01:02:40,640
 million impact fee funding we had i think believe one project that was eligible for impact fee funding

741
01:02:40,640 --> 01:02:46,880
 in fiscal year 2021 so this is an expense this is taking those funds and paying cash towards that

742
01:02:46,880 --> 01:02:53,280
 project for the appropriate amount so aid in construction and vehicle replacement 1.2 million

743
01:02:53,280 --> 01:02:55,840
 so total of 40 million

744
01:02:55,840 --> 01:03:03,600
 this is the fund balance analysis so very similar to water we looked at different municipalities a

745
01:03:03,600 --> 01:03:08,240
 lot of municipalities their water and wastewater utilities are combined so we did list them both

746
01:03:08,240 --> 01:03:13,360
 on the same table just wanted to point that out to everybody so currently the wastewater fund balance

747
01:03:13,360 --> 01:03:20,480
 a minimal reserve target of 28 with a maximum of 39 you see that number here so the current reserve

748
01:03:20,480 --> 01:03:27,200
 is 16.3 which is 42 and then very similar to water based on these findings based on the fund

749
01:03:27,200 --> 01:03:31,840
 balance percentage of the other cities and the other professional organizations that we looked at

750
01:03:31,840 --> 01:03:37,120
 we do not recommend a change to the wastewater reserve currently and this is something we can

751
01:03:37,120 --> 01:03:41,600
 continue to monitor every year as part of the budgeting cycle i think this is a great great

752
01:03:41,600 --> 01:03:48,560
 process the finance department went through this year and definitely is valuable this professional

753
01:03:48,560 --> 01:03:53,120
 organizations that we look at on the wastewater side very similar to water but we wanted to list

754
01:03:53,120 --> 01:03:59,280
 these out for you so you can see awwa there icma gfoa and the water environment federation

755
01:03:59,280 --> 01:04:05,200
 and then of course staffs recommendation keeping that reserve target the same i see uh lee has his

756
01:04:05,200 --> 01:04:15,520
 hand up yes lee uh yes uh nick if you could go back one slide thank you um i noticed that the

757
01:04:15,520 --> 01:04:25,920
 on both the water and wastewater frisco had much higher utility reserves than everybody else is

758
01:04:25,920 --> 01:04:33,200
 there a particular reason for that are they anticipating a new plant or plants to bring

759
01:04:33,200 --> 01:04:38,960
 online or to construct or do you know uh mr i'm back i'm i'm not familiar with their capital plan

760
01:04:38,960 --> 01:04:45,120
 i do know that the size of the fund is 100 million and it's likely that that that reserve

761
01:04:45,120 --> 01:04:49,520
 that you're seeing there 58 percent is for both water and wastewater we're looking at them

762
01:04:49,520 --> 01:04:54,000
 separately here's the water and wastewater are separate so if you if we were to combine these

763
01:04:54,000 --> 01:04:58,720
 and look at them together we would be fairly close to that number um but but you're absolutely

764
01:04:58,720 --> 01:05:02,080
 correct it currently looks like it is a little bit more but i'm not familiar with their capital

765
01:05:02,080 --> 01:05:04,480
 program okay thank you

766
01:05:04,480 --> 01:05:15,280
 okay um let's see here so this is the second part of the conversation just like water i want to

767
01:05:15,280 --> 01:05:20,080
 review some basic wastewater terms with you look at the cost of service results for wastewater

768
01:05:20,080 --> 01:05:25,040
 look at the current residential and commercial rates and look at some rate comparisons

769
01:05:25,040 --> 01:05:31,920
 um so very similar i don't have to go through the facility charge and volume charge again

770
01:05:31,920 --> 01:05:38,160
 uh but very very same concept and wastewater is water um some of the codes that you'll see

771
01:05:38,160 --> 01:05:42,400
 in the rate ordinance is sr which is residential wastewater service

772
01:05:42,400 --> 01:05:48,960
 sc is commercial and industrial water service and then sm is metered wastewater inside and outside

773
01:05:48,960 --> 01:05:54,400
 the corporate limits and then wastewater is the self-treated wastewater effluent which is irrigation

774
01:05:57,280 --> 01:06:03,040
 so the cost of service results um you can see uh residential is really close to cost recovery so

775
01:06:03,040 --> 01:06:10,480
 cost recovery being about 12.05 million but the current revenue being about 11.9 so within 64

776
01:06:10,480 --> 01:06:16,880
 thousand the cost recovery which is great and then commercial is 10.9 is the cost of service for it

777
01:06:16,880 --> 01:06:23,360
 it's that number here but the current revenue 10.7 so within 124,000 which is really close to cost

778
01:06:23,360 --> 01:06:29,600
 recovery also um equipment services and eating establishments cost of service is currently 1.3

779
01:06:29,600 --> 01:06:36,720
 1.27 with that current revenue weighing 1.5 so just about 238,000 over cost recovery

780
01:06:36,720 --> 01:06:44,320
 metered wastewater is 200,000 is the cost of service with that current revenue being 220,000

781
01:06:44,320 --> 01:06:50,320
 so wastewater is really close to cost of service um just want to make sure the pb was aware of that

782
01:06:50,320 --> 01:06:55,760
 definitely looks good um so the current rates for residential and commercial customers we just put

783
01:06:55,760 --> 01:07:02,240
 them on one slide here so different than the water utility wastewater service is billed per

784
01:07:02,240 --> 01:07:07,200
 thousand gallons um so there's two components to the rate very similar to water you can see a

785
01:07:07,200 --> 01:07:14,080
 facility charge um of 11 but the volume charge being three dollars and 80 cents and the average

786
01:07:14,080 --> 01:07:20,160
 bill for a wastewater customer or 31.52 and then for a commercial customer the average

787
01:07:20,160 --> 01:07:27,200
 bill is 233.84 um want to point out that the average on the wastewater side is a little bit

788
01:07:27,200 --> 01:07:34,240
 less than water um just you know contemplating the water does not go back to the wastewater treatment

789
01:07:34,240 --> 01:07:39,440
 plant facility so maybe use for irrigation purposes so for residential customers 5,400 gallons

790
01:07:39,440 --> 01:07:42,720
 and for a commercial customer it's 42,750

791
01:07:47,440 --> 01:07:51,600
 this is the residential rate comparison um so you can see the city of denton um right here

792
01:07:51,600 --> 01:07:56,880
 that 3152 that i mentioned that was several other cities that are surrounding or in our area

793
01:07:56,880 --> 01:08:06,240
 and then commercial there's that 233.84 that i mentioned just around middle of the chart

794
01:08:06,240 --> 01:08:14,640
 and then these next steps so april the 20th city council and then circling back to the public

795
01:08:14,640 --> 01:08:20,720
 utility board in april 26 with further discussions and i will pull it down susan for questions

796
01:08:20,720 --> 01:08:28,960
 all right any questions oh karen go ahead

797
01:08:28,960 --> 01:08:37,440
 uh sorry just a quick question um clarification the wastewater usage is not

798
01:08:38,320 --> 01:08:45,600
 metered that would just be gross the wastewater usage is based on the meter coming in and then

799
01:08:45,600 --> 01:08:50,560
 that's a percentage is that right that's correct yeah it's based on the winter um i was just trying

800
01:08:50,560 --> 01:08:54,240
 to look here really quick so it's based on the the winter average that's a great question so

801
01:08:54,240 --> 01:08:58,800
 wastewater service in the city is a non-metered service so how do we get that average usage for

802
01:08:58,800 --> 01:09:04,240
 a residential customer and it's based off the winter average and the winter average is established

803
01:09:04,240 --> 01:09:08,880
 established december through february if you're a new customer and you move in you don't have an

804
01:09:08,880 --> 01:09:14,960
 established winter average you're built a minimum of 5400 gallons until that average is established

805
01:09:14,960 --> 01:09:22,080
 once that average is established it would take the place of that okay yeah okay thanks there was

806
01:09:22,080 --> 01:09:29,840
 some confusion on uh social media about that billy go ahead yeah follow up we discussed this i know a

807
01:09:29,840 --> 01:09:35,920
 few weeks ago but how are we going to weight that with the crazy february that we had this year

808
01:09:35,920 --> 01:09:42,880
 so i may ask tony to speak to that i do believe that that was um tony you want to speak to that

809
01:09:42,880 --> 01:09:48,080
 yeah i'm here billy if if you remember um you went to council and we made the recommendation

810
01:09:48,080 --> 01:09:52,800
 to exclude february and so so that winter averaging is just going to be for those two

811
01:09:52,800 --> 01:09:57,040
 months for december and january just because we knew there'd be there was probably going to be a

812
01:09:57,040 --> 01:10:02,320
 high usage in february you know with all the line breaks and you know issues people were having at

813
01:10:02,320 --> 01:10:06,880
 home and so i think that was the right decision to make um and the council gave us that authorization

814
01:10:06,880 --> 01:10:10,880
 yeah just wanted to make sure it got out there again thank you yes sir

815
01:10:10,880 --> 01:10:22,080
 okay all right um in my final presentation like i said cassie will present electric i'll walk you

816
01:10:22,080 --> 01:10:25,920
 through solid waste really quick it's a little bit shorter not quite as many slides

817
01:10:27,040 --> 01:10:41,600
 okay so very similar to water and wastewater we'll look at the 1920 actuals we'll look at

818
01:10:41,600 --> 01:10:45,680
 the five-year forecast we'll look at the capital plan we'll look at the fund balance policy and

819
01:10:45,680 --> 01:10:53,120
 staff's recommendation so 1920s budget so i guess first here's the different revenue categories

820
01:10:53,120 --> 01:10:58,640
 that we have within the solid waste fund so we separate out residential residential recycling is

821
01:10:58,640 --> 01:11:03,680
 separated out for transparency we look at front load and side loads so this is commercial service

822
01:11:03,680 --> 01:11:08,800
 look at that roll-off open top service that's in the community then commercial recycling landfill

823
01:11:08,800 --> 01:11:14,320
 gate revenue which is that traffic coming into the landfill the dispose of items and then those

824
01:11:14,320 --> 01:11:19,280
 wholesale agreements that are yeah landfill wholesale agreements that are in place for this fund

825
01:11:19,280 --> 01:11:24,640
 and of course we have some transfers in which are cost of service transfers so 1920 adopted budget

826
01:11:24,640 --> 01:11:30,640
 you can see here we had total revenues of 35.4 million the fan use of reserves of three million

827
01:11:30,640 --> 01:11:39,200
 total resources of 38.5 so the end of your actuals we finished a lot better than that we did not use

828
01:11:39,200 --> 01:11:46,240
 any reserves in 1920 as we originally adopted budget had included one thing i do want to point

829
01:11:46,240 --> 01:11:51,360
 out you can see in the landfill wholesale here it increased from an adopted budget of 2.6 million

830
01:11:51,360 --> 01:11:55,920
 the actual coming in of four million so there's some additional agreements that were approved by

831
01:11:55,920 --> 01:12:02,000
 city council in the pb at that time so that number did come in above the budget 2021 of course this is

832
01:12:02,000 --> 01:12:08,080
 the current budget that we're in we do have planned use reserves of 4.3 million and then as we continue

833
01:12:08,080 --> 01:12:14,160
 through the 2022 budget process or we get started in it we fully intend to have a 2021 end of your

834
01:12:14,160 --> 01:12:18,320
 forecast for you to look at they really forecast where we think we're going to finish the end of

835
01:12:18,320 --> 01:12:22,080
 this fiscal year so that is to come just want to make sure the pb is aware of that

836
01:12:22,080 --> 01:12:29,440
 expenses by division so these are different operational units or divisions within solid waste

837
01:12:29,440 --> 01:12:34,800
 it's administration residential commercial um they have a collection special projects

838
01:12:34,800 --> 01:12:41,200
 and then diversion processing vmr and then keep getting beautiful which is kdb and then side

839
01:12:41,200 --> 01:12:46,000
 operations i do want to point out that kdb was moved to the parks department as part of the 2021

840
01:12:46,000 --> 01:12:51,600
 budget process i'm sure several of the pb members remember that discussion and so total expenses for

841
01:12:51,600 --> 01:12:59,120
 2021 were 44.1 million and we came in last year we finished last year's budget um just about

842
01:12:59,120 --> 01:13:04,480
 two and a half million uh almost three million below budget so very similar to water waste water

843
01:13:04,480 --> 01:13:09,040
 solid waste staff did a great job of looking at these operating expenses and making adjustments

844
01:13:09,040 --> 01:13:15,200
 accordingly so wanted to point that out this is expense by detail so you can see the different

845
01:13:15,200 --> 01:13:20,560
 expenditure categories you can see personnel occur at the top materials and supplies maintenance and

846
01:13:20,560 --> 01:13:25,920
 repair franchise fees are some different things moving down the page but those cost of service

847
01:13:25,920 --> 01:13:31,200
 transfers here at the bottom um debt service one thing we've talked about in the solid waste fund

848
01:13:31,200 --> 01:13:36,400
 for the new pb members is this fund has been doing a great job of transitioning from debt funding

849
01:13:36,400 --> 01:13:40,880
 projects to cash funding so you can actually see is that debt payment for this fund actually

850
01:13:40,880 --> 01:13:47,840
 continuing to decrease so in 1819 it was 8.9 million the adopted budget has it at 6.9 million

851
01:13:47,840 --> 01:13:53,200
 so staff's done a great job at looking at those projects and identifying the ones that we cash

852
01:13:53,200 --> 01:13:58,960
 funded and really prioritizing them so a great thing this fund i have a quick question if i

853
01:13:58,960 --> 01:14:07,040
 could jump in yes sir uh back on uh slide four actually um let me go back really quick here i

854
01:14:07,040 --> 01:14:13,360
 noticed uh solid waste disposal jumped up quite a bit for this budgeted year did you explain that

855
01:14:13,360 --> 01:14:19,440
 or what's going on there i can so in this number this 11.4 million and we'll talk about this in the

856
01:14:19,440 --> 01:14:24,880
 capital side and the landfill is actually cash funding and excel development and i'll point those

857
01:14:24,880 --> 01:14:30,000
 numbers out to you um let me see if i can skip ahead here and i can show them to you so this um

858
01:14:30,000 --> 01:14:37,120
 landfill cell construction that you see here this qaqc number that you see um in this landfill

859
01:14:37,120 --> 01:14:42,240
 equipment these numbers are buried in that 11 million dollar number that you see mr jumper over

860
01:14:42,240 --> 01:14:47,200
 there um on that on that pro forma so that is the reason for that increase this one year is just

861
01:14:47,200 --> 01:14:58,400
 cash funding that cell development thanks so here here's the five-year forecast um so you can see

862
01:14:58,400 --> 01:15:03,040
 the adopted 2020 budget here in this column we're in that three million in reserve usage that we

863
01:15:03,040 --> 01:15:09,120
 talked about we actually finished fiscal year 2020 with no reserve usage um so that left our fund

864
01:15:09,120 --> 01:15:15,840
 balance about 12.2 million uh with the targets being five to six point four million so well

865
01:15:15,840 --> 01:15:22,320
 above that target i mean 2021 we do have planned use reserves of 4.3 million drawing down on that

866
01:15:22,320 --> 01:15:27,200
 fund balance that i pointed out over here so it'd be 7.9 million finishing this fiscal year

867
01:15:27,200 --> 01:15:36,160
 still well within the reserve targets of 6.2 to 7.9 um and then continuing out in the future years

868
01:15:36,160 --> 01:15:41,520
 we do slightly dip below the reserve target in 2025 similar to water and wastewater that's not

869
01:15:41,520 --> 01:15:45,840
 contemplating any rate increases in the fund this is definitely something we'll consider to look we'll

870
01:15:45,840 --> 01:15:52,560
 continue to look at in the 2022 budget process um a couple other things some of the new pb members

871
01:15:52,560 --> 01:15:57,280
 i definitely want to make sure you're aware in this rate um revenue number that you see up here

872
01:15:57,280 --> 01:16:02,880
 the wholesale contract agreements that we have with some private entities uh will end in fiscal

873
01:16:02,880 --> 01:16:10,800
 year 2023 so when you see the decrease from 39.5 million in rate revenue to 34.6 million that is the

874
01:16:10,800 --> 01:16:16,880
 reason why so this contemplates those agreements going away and not being renewed just to make

875
01:16:16,880 --> 01:16:24,160
 sure everybody's aware of that this is the capital plan for the solid waste fund um just pulled this

876
01:16:24,160 --> 01:16:28,960
 up a short while ago but we did have a reimbursement ordinance for three million dollars

877
01:16:28,960 --> 01:16:34,160
 for a fleet expansion building that will be at the solid waste facility that will be included

878
01:16:34,160 --> 01:16:38,880
 in the notice of intent here in the coming weeks to issue debt for that but everything else in this

879
01:16:38,880 --> 01:16:43,360
 fund as i mentioned earlier they have transitioned from debt funding to cash funding and you can see

880
01:16:43,360 --> 01:16:50,560
 all the cell development is cash funded and the vehicle replacement is cash funded so definitely

881
01:16:50,560 --> 01:16:59,040
 a positive thing for the solid waste fund in the city the reserve analysis that we did for solid

882
01:16:59,040 --> 01:17:03,760
 waste very similar to water wastewater looked at several different organizations um that were out

883
01:17:03,760 --> 01:17:10,000
 there um we are not recommending any changes so the current reserve targets is 14 to 18 percent

884
01:17:10,000 --> 01:17:15,200
 that we saw on the pro forma and that current reserve about around 11 million or 29 percent

885
01:17:15,200 --> 01:17:19,760
 based on status finding we're not recommending changes to this reserve and you can see the

886
01:17:19,760 --> 01:17:24,960
 different cities that we compared ourselves to down here at the bottom so the city of arlington

887
01:17:24,960 --> 01:17:30,800
 dallas fort worth garland and plano and what their percentages are and then what that minimum reserve

888
01:17:30,800 --> 01:17:36,000
 target is in each one of these funds of course city of dallas being the largest about four times

889
01:17:36,000 --> 01:17:41,920
 the city of denton's annual budget size about 122 million it's definitely a larger entity

890
01:17:41,920 --> 01:17:47,600
 this is next conversations that are coming up that we talked about in the last couple

891
01:17:47,600 --> 01:17:55,680
 presentations and that concludes solid waste i'll pull this down for questions if you have any

892
01:17:56,880 --> 01:18:09,440
 questions all right thank you very much well good morning pb i'm cassie augen director of finance

893
01:18:09,440 --> 01:18:14,480
 and i'm going to walk through the electric presentation with you so let me share my screen

894
01:18:23,280 --> 01:18:27,360
 and similar to water waste water we are going to talk about the post winter storm

895
01:18:27,360 --> 01:18:30,960
 financial conditions which is a little different than what we've discussed with water and wastewater

896
01:18:30,960 --> 01:18:38,000
 but obviously we had some unexpected large expenses associated with the storm and electric

897
01:18:38,000 --> 01:18:44,080
 so we're going to go through those those and then what staffs recommended options for

898
01:18:44,080 --> 01:18:49,520
 for some of those expenses and then again the five-year forecast and also the fund balance

899
01:18:52,240 --> 01:18:58,080
 so you're probably already aware the the post winter storm condition for electric we did incur

900
01:18:58,080 --> 01:19:08,560
 209 million in collateral and ancillary charges with ercot for that winter storm event so after

901
01:19:08,560 --> 01:19:16,480
 we've netted all of the expenses it really totals 140 million and we did issue 100 million in

902
01:19:16,480 --> 01:19:24,160
 extendable commercial paper to fund that those expenses during the storm as a result of the

903
01:19:24,160 --> 01:19:31,840
 storm s and p did downgrade the the the city's utility bond rating and fitch placed all texas

904
01:19:31,840 --> 01:19:38,720
 public utilities on a negative credit watch as nick mentioned earlier before the winter storm

905
01:19:38,720 --> 01:19:44,560
 we had actually started looking at fund balance the policy and then doing an analysis of each

906
01:19:44,560 --> 01:19:51,600
 fund's fund balance needs post winter storm our analysis changed and as long as as well as our

907
01:19:51,600 --> 01:19:57,680
 recommendation for the electric fund we also have done a deeper dive of the capital program to

908
01:19:57,680 --> 01:20:05,520
 ensure that we we are selling bonds for the projects that we really need and in utilizing

909
01:20:05,520 --> 01:20:14,320
 cash where we can and then just some outstanding items that we may have an impact to the

910
01:20:14,320 --> 01:20:18,880
 to the fund in the future but we're we're unsure right now is that uplift and market repricing

911
01:20:18,880 --> 01:20:25,600
 obviously that that's still unknown but when we do have more information we will bring it back to you

912
01:20:25,600 --> 01:20:34,880
 so we wanted to discuss some debt funding options with the with the purchase power expenses for

913
01:20:34,880 --> 01:20:41,920
 electric we did issue the hundred million dollars of long or i'm sorry of extendable commercial

914
01:20:41,920 --> 01:20:49,040
 paper and that is coming due in may so we do need to make a decision on what to do with the

915
01:20:49,040 --> 01:20:55,520
 hundred million dollars of commercial paper staff's recommendation is to refund it using

916
01:20:55,520 --> 01:21:02,400
 30-year bonds but as i mentioned earlier the total cost of the event was 140 million

917
01:21:02,400 --> 01:21:09,440
 so we could issue an additional 40 million in commercial paper to cover the total of the

918
01:21:09,440 --> 01:21:15,840
 purchase power expenses and really um spread that major expense over several years instead

919
01:21:15,840 --> 01:21:25,760
 of hitting the fund all in one year and or option two is um we do not use extendable commercial

920
01:21:25,760 --> 01:21:30,320
 paper and the fund pays for it out of the fund balance and i'll show you that what that looks

921
01:21:30,320 --> 01:21:36,960
 like um as i mentioned the fund balance analysis that was recently completed before the winter

922
01:21:36,960 --> 01:21:43,360
 storm we staff was going to recommend no increase to the fund balance for electric however as a

923
01:21:43,360 --> 01:21:50,080
 result of the storm we we saw that the need for a large healthy fund balance and after discussing

924
01:21:50,080 --> 01:21:57,760
 with our financial advisors at hilltop we are recommending an increase of the operating reserve

925
01:21:57,760 --> 01:22:05,200
 fund to 100 million with a max of 150 million and you can see the bottom of the screen shows the

926
01:22:05,200 --> 01:22:11,200
 chart with the minimum targets and how we compare with other cities i do want to note these cities

927
01:22:11,200 --> 01:22:17,040
 this information is before the winter storm so we're likely going to see some increases in their

928
01:22:17,040 --> 01:22:24,720
 reserves as well especially given the the bond uh the credit watch and the bond downgrading

929
01:22:24,720 --> 01:22:32,560
 and so with a five-year forecast we wanted to show you what it would look like with

930
01:22:32,560 --> 01:22:40,240
 um the 100 million dollars if we refunded the 100 million with 30 year notes and kind of the

931
01:22:40,240 --> 01:22:46,800
 impact to the fund and you can see um you can see the debt service on that purchase power debt

932
01:22:46,800 --> 01:22:55,440
 service expense line or my mouse is um so it would be about 4.2 million dollars a year for a 30 year

933
01:22:55,440 --> 01:23:02,000
 note for the 100 million and you can see that additional 40 million of expense coming from

934
01:23:02,000 --> 01:23:08,320
 the fund balance and so um you can see this is the the fund balance that would be remaining

935
01:23:08,320 --> 01:23:14,080
 that's projected to be remaining if we did not issue another 40 million in commercial paper

936
01:23:14,080 --> 01:23:18,080
 so it'd really be taking it out of the fund balance and then you can see the

937
01:23:18,080 --> 01:23:25,520
 where we land on those targets as well as the recommended target and this is the amount over

938
01:23:25,520 --> 01:23:32,160
 under the new recommended target so it would really take substantial rate increases to to increase

939
01:23:32,160 --> 01:23:38,080
 back to that recommended target level and I did not include rate increases on this per forma

940
01:23:38,080 --> 01:23:45,520
 because we will be coming back to you during the FY 22 budget discussions to discuss rate increases

941
01:23:45,520 --> 01:23:50,880
 um but we're not we're not prepared yet and obviously the debt service will hit

942
01:23:50,880 --> 01:23:57,680
 next year so that will be a future discussion and I did want to point out we've made um this

943
01:23:57,680 --> 01:24:03,200
 projection for 2021 we've made everything match budget obviously that that's not going to happen

944
01:24:03,200 --> 01:24:08,400
 but we will come back with um how we ended or how we're forecasting to end the year during

945
01:24:08,400 --> 01:24:12,880
 the budget discussions but really wanted to be able to call out the purchase power expenses

946
01:24:16,960 --> 01:24:23,760
 and so the next option that I'm showing is the 140 issuing 140 in commercial paper

947
01:24:23,760 --> 01:24:32,560
 um you can see this this increases that debt service amount to 5.9 million every year but

948
01:24:32,560 --> 01:24:38,080
 that's again spreading it over 30 years instead of impacting that 40 million directly to the fund

949
01:24:38,080 --> 01:24:48,240
 balance so if we um if if pub recommends this option um it will keep our opera our fund balance

950
01:24:48,240 --> 01:24:53,680
 pretty steady um we'll probably have to have future rate increased discussions obviously

951
01:24:53,680 --> 01:24:58,400
 but we still stay at that hundred million dollar um fund balance target

952
01:25:01,200 --> 01:25:08,240
 I have a question so what would be the impact well I guess you're going to do that in future I was

953
01:25:08,240 --> 01:25:13,280
 going to say what's the impact to the rates of 5.9 million dollars but you're going to do that in the

954
01:25:13,280 --> 01:25:21,840
 future yes um we've looked at several different scenarios um and it really depends on how we get

955
01:25:21,840 --> 01:25:28,320
 through the summer too if um we have if we our revenues increase over the summer higher than what

956
01:25:28,320 --> 01:25:34,400
 we anticipated that will you know lessen the rate increase for next year so that's why we really

957
01:25:34,400 --> 01:25:40,160
 wanted to wait to talk about rates um to see how we end the year okay I understand

958
01:25:40,160 --> 01:25:48,240
 and then just just briefly if I may I apologize for interruption um when is the end of the fiscal

959
01:25:48,240 --> 01:25:55,120
 year the fiscal year ends September 30th and the new fiscal year begins October we're going to start

960
01:25:55,120 --> 01:26:01,600
 um the budget discussions like Nick mentioned in May so we'll be forecasting and you'll we'll be

961
01:26:01,600 --> 01:26:06,320
 having those budget discussions with you during the summer and so hopefully we can have a better

962
01:26:06,320 --> 01:26:14,160
 projection of where we're going to land at the end of the year thank you and so just in summary

963
01:26:14,160 --> 01:26:19,120
 these are some options for your consideration um I really wanted to get your recommendation for

964
01:26:19,120 --> 01:26:25,360
 council um again the issuance of 100 million we do have the outstanding commercial paper notes

965
01:26:25,360 --> 01:26:32,000
 that are coming due and we need to make a decision we are recommending long-term bonds and then the

966
01:26:32,000 --> 01:26:38,560
 second item is really that additional 40 million in purchase power should we um issue a commercial

967
01:26:38,560 --> 01:26:43,680
 paper to cover those expenses or or pay for it out of the fund balance and then the third item

968
01:26:43,680 --> 01:26:50,880
 is the fund balance policy itself um we do have a fund balance uh document that we if PB recommends

969
01:26:50,880 --> 01:26:55,760
 this option we'll we'll update it and bring it back to you for consideration and approval of the

970
01:26:55,760 --> 01:27:03,680
 actual policy itself um but we are recommending an increase um to 100 million for a max of 150

971
01:27:03,680 --> 01:27:10,000
 million in the electric fund and then just like we've just already talked about you know we will

972
01:27:10,000 --> 01:27:15,520
 be bringing back um the budget discussions over the next couple of months and have a better

973
01:27:15,520 --> 01:27:22,320
 forecast for you um as we start the 21-22 budget process and that last bullet point is bolded

974
01:27:22,320 --> 01:27:27,680
 because I did want to make sure everyone um knows that this will this will increase rates but we're

975
01:27:27,680 --> 01:27:33,120
 just not sure of how much yet and so we wanted to make sure that we are being transparent with that

976
01:27:33,120 --> 01:27:44,800
 but we want to we'll bring that back at a later date okay discussion

977
01:27:44,800 --> 01:27:54,640
 what do the board members feel on the items that they're asking direction for go ahead Billy so I

978
01:27:54,640 --> 01:28:02,080
 mean unfortunately we're in a circumstance where that hundred to 140 million 150 million possibly

979
01:28:02,080 --> 01:28:13,280
 does fall under an eca adjustment but I think it's barely honestly and still cost of service I

980
01:28:13,280 --> 01:28:20,880
 I do obviously think we have no choice but to finance this thing um so we don't hit the

981
01:28:20,880 --> 01:28:29,040
 right payers really quick here and run businesses off and run stop our development but um I mean

982
01:28:29,040 --> 01:28:32,480
 I certainly want to support staff's recommendation here

983
01:28:32,480 --> 01:28:42,640
 well and we we have started looking at the rate impacts and um we feel like if we if the purchase

984
01:28:42,640 --> 01:28:48,720
 power does fall under that eca component of the rate and it would have a less impact to customers

985
01:28:48,720 --> 01:28:56,000
 if if then if we put it say in the facility charge or your base rate we are running those

986
01:28:56,000 --> 01:29:04,160
 scenarios and we'll we'll be bringing those back for your consideration oh sorry just the one time

987
01:29:04,160 --> 01:29:11,680
 that one time hit in february that now goes into the eca rate for the next possibly 30 years so

988
01:29:11,680 --> 01:29:18,560
 that's I guess where I have a little bit of philosophy confusion I understand it was an

989
01:29:18,560 --> 01:29:26,000
 energy cost I mean but anyway it's just it's confusing a little bit in my head about what we've

990
01:29:26,000 --> 01:29:31,680
 done at the rate in the past and what we're doing with it now I understand that we're having those

991
01:29:31,680 --> 01:29:37,440
 staff discussions internally also we've been debating that very thing well Billy and this

992
01:29:37,440 --> 01:29:42,800
 tony uh I will add you know and um I think Cassie alluded alluded to this I mean we're

993
01:29:42,800 --> 01:29:48,000
 in the process of going through a cost of service study as well and so part of that process will

994
01:29:48,000 --> 01:29:53,440
 include that very discussion that you talk about is what should be in base rates versus eca and

995
01:29:53,440 --> 01:29:58,480
 what recommendations that we come we'll we'll be bringing that back to you um here in the next

996
01:29:58,480 --> 01:30:03,760
 several months and then the other thing too is um just know that we continue to work at the state

997
01:30:03,760 --> 01:30:10,160
 level on um you know trying to advocate for our customers and seeing if there might be opportunities

998
01:30:10,160 --> 01:30:15,680
 down the road for some more favorable financing through the state or at least through some

999
01:30:15,680 --> 01:30:20,640
 state-backed financing if those are if those are available to us then some of this debt could

1000
01:30:20,640 --> 01:30:25,840
 potentially move to a more favorable finance which should reduce the cost of borrowing

1001
01:30:25,840 --> 01:30:32,960
 that you know should lessen the impact over that 30-year period so yeah oh sorry go ahead Billy

1002
01:30:32,960 --> 01:30:42,240
 Lee go ahead oh thank you ma'am um I have two questions if I'm looking at the math correctly

1003
01:30:42,240 --> 01:30:52,800
 that's 40 million a year over 30 years is that 1.2 billion dollars um it's 1.69 million per year

1004
01:30:52,800 --> 01:30:59,840
 in debt service so that includes you know we did um get downgraded on our bond rating um and then

1005
01:30:59,840 --> 01:31:08,640
 I think I believe we're using a 3.5 percent interest um projection but I can verify that

1006
01:31:08,640 --> 01:31:13,840
 and bring that back to you okay my other question to tony's point is there any activity

1007
01:31:13,840 --> 01:31:21,760
 in the legislature currently um towards looking at some um either relief or as you mentioned some

1008
01:31:21,760 --> 01:31:28,160
 kind of financing a vehicle on more favorable terms for utilities based on this unusual event

1009
01:31:30,080 --> 01:31:38,880
 um yeah the um no no no direct relief um so there won't be necessarily a bailout if you will

1010
01:31:38,880 --> 01:31:46,240
 that's been discussed um that's um that's unfortunate um but what's happening is that

1011
01:31:46,240 --> 01:31:52,480
 there has been discussion this is bill called a securitization bill that does include uh the

1012
01:31:52,480 --> 01:31:57,200
 possibility of doing something similar like we see on the on the water side with the water

1013
01:31:57,200 --> 01:32:03,440
 development board where they extend financing at a triple a rated because it's it's backed by the

1014
01:32:03,440 --> 01:32:10,960
 by the state of texas and so again um anytime you can you can go into a more favorable rating debt

1015
01:32:10,960 --> 01:32:14,880
 that lowers the cost of borrowing so certainly that's something that's being discussed and

1016
01:32:14,880 --> 01:32:19,520
 something that we're actively working with our legislative consultants as well as other mo us

1017
01:32:19,520 --> 01:32:25,520
 and frankly the entire electric industry across the state of texas oh i'm sure everybody was

1018
01:32:25,520 --> 01:32:33,120
 impacted so um ma'am if we do get a better rate are we looking at something like 3.5 to 1.7 or

1019
01:32:33,120 --> 01:32:41,920
 3.5 to 3.1 or do you have any sense of that i don't have a sense right now um but as we as

1020
01:32:41,920 --> 01:32:46,880
 we move through the process i i should be able to tell you a little bit better on the projections

1021
01:32:46,880 --> 01:32:53,600
 for the interest rate oh thank you i appreciate both you thank you i'm assuming you'll do a call

1022
01:32:53,600 --> 01:33:00,400
 date that's a shorter period than we typically do so that if this financing does come we can call

1023
01:33:00,400 --> 01:33:06,400
 them and replace them yes and we're going to work with our bond council on what's the um the best

1024
01:33:06,400 --> 01:33:15,440
 way to go about that given the potential um securitization okay um i'm with billy i i don't

1025
01:33:15,440 --> 01:33:22,640
 like this but i think that it's it's what we need to do to finance the 140 million um moving forward

1026
01:33:22,640 --> 01:33:31,440
 and just is what it is go ahead ben so i mean the issue is that the money has to come from somewhere

1027
01:33:31,440 --> 01:33:38,240
 and so we're we're basically just trying to minimize the impact on customers correct right correct

1028
01:33:43,200 --> 01:33:54,240
 so you you need some direction as does anybody disagree with staff recommendation no i don't

1029
01:33:54,240 --> 01:33:58,640
 disagree just i want to make sure we bring it back and discuss about where it will be

1030
01:33:58,640 --> 01:34:05,280
 or you know versus right versus the uh energy cost adjustment rate yes and we will do that

1031
01:34:06,960 --> 01:34:14,880
 all right then thank you um then our final item is we'll be adjourning into a closed session

1032
01:34:14,880 --> 01:34:20,080
 we will not come back but i need to read this before we go into closed session

1033
01:34:20,080 --> 01:34:26,160
 deliberations regarding certain public power utilities competitive matters under texas

1034
01:34:26,160 --> 01:34:35,440
 government code section 551.086 consultation with attorneys under texas government code section 551.071

1035
01:34:37,120 --> 01:34:41,440
 receive a presentation from staff regarding the public power competitive

1036
01:34:41,440 --> 01:34:47,680
 and financial matters about the delivery of power wholesale energy supply and risk management plans

1037
01:34:47,680 --> 01:34:53,840
 hedge plans and strategies as it each relates to dme electric power and gas portfolio

1038
01:34:53,840 --> 01:35:00,400
 and to the february winter storm discuss deliberate and provide input to staff regarding

1039
01:35:00,400 --> 01:35:07,120
 the same consultation with the city's attorneys regarding legal issues legal status legal analysis

1040
01:35:07,120 --> 01:35:12,640
 and legal strategy associated with the above matters and pending and potential litigation

1041
01:35:12,640 --> 01:35:16,560
 where the public discussion of these legal matters would conflict with the duty of the

1042
01:35:16,560 --> 01:35:22,240
 city attorneys to the city of denton and the denton city council under texas disciplinary rules

1043
01:35:22,240 --> 01:35:28,480
 of professional conduct of the state part of texas or would jeopardize the city's legal position for

1044
01:35:28,480 --> 01:35:40,320
 any administrative proceedings or potential litigation all right so i think i'm just going

1045
01:35:40,320 --> 01:35:44,720
 to try to give um kim