WEBVTT 00:00:00.000 --> 00:00:10.640 Okay, it is nine o'clock and we do have a quorum, so we're called to order the public 00:00:10.640 --> 00:00:16.400 utilities board for the city of Denton on April 12th, 2021. 00:00:16.400 --> 00:00:23.480 The first item is public comment, do we have anyone who's wishing to speak? 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 00:00:26.480 --> 00:00:27.480 moment. 00:00:27.480 --> 00:00:30.560 We're going to the regular meeting. 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? 00:00:36.640 --> 00:00:37.640 Billy? 00:00:37.640 --> 00:00:40.960 I'd like to pull item number A. 00:00:40.960 --> 00:00:41.960 Okay. 00:00:41.960 --> 00:00:43.560 All right. 00:00:43.560 --> 00:00:44.560 Letter A. 00:00:44.560 --> 00:00:46.760 Letter A. 00:00:46.760 --> 00:00:47.760 Anyone else? 00:00:47.760 --> 00:00:48.760 All right. 00:00:48.760 --> 00:00:54.640 Do we have a motion to approve items B through D? 00:00:54.640 --> 00:00:57.760 Okay. 00:00:57.760 --> 00:00:58.760 Karen? 00:00:58.760 --> 00:01:00.120 So moved. 00:01:00.120 --> 00:01:04.120 Karen moved and I think Barbara seconded. 00:01:04.120 --> 00:01:05.120 Okay. 00:01:05.120 --> 00:01:07.120 Billy, item A. 00:01:07.120 --> 00:01:18.640 Let me pull this up, excuse me. 00:01:18.640 --> 00:01:31.640 I'd just like a little more insight into where this was and I'm looking at the, I'm sorry. 00:01:31.640 --> 00:01:36.680 Morning, ladies and gentlemen, Jason Brown, Denton Energy Center. 00:01:36.680 --> 00:01:37.680 Great. 00:01:37.680 --> 00:01:38.680 Go ahead, Jason. 00:01:38.680 --> 00:01:41.680 I'm sorry, Susan, but I just. 00:01:41.680 --> 00:01:42.680 Okay. 00:01:42.680 --> 00:01:43.680 It's all right. 00:01:43.680 --> 00:01:44.680 My question. 00:01:44.680 --> 00:02:00.840 Hold on just a second. 00:02:00.840 --> 00:02:18.160 Okay. 00:02:18.160 --> 00:02:19.160 Sorry about that. 00:02:19.160 --> 00:02:21.200 I couldn't really hear y'all. 00:02:21.200 --> 00:02:30.760 Okay, so item A is the contract with Asset Works for a CMMS system. 00:02:30.760 --> 00:02:32.860 Correct? 00:02:32.860 --> 00:02:41.640 We are basically getting into a whole lot of maintenance activities and work orders and 00:02:41.640 --> 00:02:46.520 correct work orders and that type of stuff to where we are needing a asset management 00:02:46.520 --> 00:02:53.320 system to track and control and keep historical data for the facility itself. 00:02:53.320 --> 00:03:01.400 In addition to work orders and corrective work orders and maintenance activities, it 00:03:01.400 --> 00:03:08.620 will also be taking care of all of our parts and that kind of stuff. 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 00:03:20.920 --> 00:03:29.160 expenditures coming from its analysis or maybe I don't understand what the software does 00:03:29.160 --> 00:03:30.880 that much, Jason. 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 00:03:38.800 --> 00:03:40.960 that will be done. 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 00:03:48.480 --> 00:03:51.160 a work order and track work order. 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 00:03:57.080 --> 00:03:59.420 time-consuming for staff. 00:03:59.420 --> 00:04:01.120 Within this, it's a system. 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 00:04:08.000 --> 00:04:12.800 actually fill out a work order in this system and keep it going that way. 00:04:12.800 --> 00:04:13.800 Same with parts. 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 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 00:04:25.820 --> 00:04:34.800 a report and see how much that piece of equipment has costed, maintenance, hours, parts, downtime, 00:04:34.800 --> 00:04:35.800 that kind of stuff. 00:04:35.800 --> 00:04:39.320 Lee, you had your hand up, do you have a question also? 00:04:39.320 --> 00:04:40.320 Yes, ma'am. 00:04:40.320 --> 00:04:46.920 Are you going to be taking your current paper-based system and moving it into the computerized 00:04:46.920 --> 00:04:53.020 system or will you be starting from scratch to create a new database in that system? 00:04:53.020 --> 00:04:55.840 A little bit of both, sir. 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. 00:05:04.320 --> 00:05:10.000 Right now, we're storing them in files, so engine one has a file. 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 00:05:17.320 --> 00:05:26.300 task, but originally off of the start, if this is awarded and approved, we'll be loading 00:05:26.300 --> 00:05:31.680 all of the assets and then as we continue, we'll keep putting all of that documentation 00:05:31.680 --> 00:05:37.000 in the system, so eventually it will all be in the system. 00:05:37.000 --> 00:05:42.640 Okay, so will the historical data that you currently have be uploaded into this computerized 00:05:42.640 --> 00:05:43.640 system? 00:05:43.640 --> 00:05:44.640 That is correct. 00:05:44.640 --> 00:05:45.640 Okay. 00:05:45.640 --> 00:05:46.640 Thank you. 00:05:46.640 --> 00:05:47.640 Yes, sir. 00:05:47.640 --> 00:05:48.640 Other questions? 00:05:48.640 --> 00:05:49.640 Okay. 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, 00:06:01.960 --> 00:06:07.280 right now, everybody's converting a lot with technology, continuing to grow. 00:06:07.280 --> 00:06:12.760 Wish I was in this technology business, but with that having said, I'll move approval. 00:06:12.760 --> 00:06:13.760 Okay. 00:06:13.760 --> 00:06:14.760 Do we have a second? 00:06:14.760 --> 00:06:15.760 Mr. Ryback. 00:06:15.760 --> 00:06:18.760 All in favor say aye. 00:06:18.760 --> 00:06:19.760 Aye. 00:06:19.760 --> 00:06:20.760 Aye. 00:06:20.760 --> 00:06:23.560 Motion carries. 00:06:23.560 --> 00:06:32.680 The next item is consider the approval of minutes for March 22nd, 23rd, and April 5th 00:06:32.680 --> 00:06:33.960 of 2021. 00:06:33.960 --> 00:06:35.520 Are you moving approval, Karen, or? 00:06:35.520 --> 00:06:38.440 No, I just had an amendment. 00:06:38.440 --> 00:06:41.880 Oh, okay. 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. 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 00:06:59.640 --> 00:07:04.200 that we approved A, B, D, and E, but there were only three consent agenda items. 00:07:04.200 --> 00:07:05.680 Oh, okay. 00:07:05.680 --> 00:07:07.480 Good catch. 00:07:07.480 --> 00:07:13.080 There was no D and E, and there was a C. That's my memory anyway. 00:07:13.080 --> 00:07:20.720 Well, and Kim, can we go back and look at the video and have that corrected? 00:07:20.720 --> 00:07:21.720 We can do that. 00:07:21.720 --> 00:07:22.720 Okay. 00:07:22.720 --> 00:07:32.600 So, maybe we would amend it to be minutes approved with the corrections. 00:07:32.600 --> 00:07:33.600 Yeah. 00:07:33.600 --> 00:07:34.600 Okay. 00:07:34.600 --> 00:07:35.920 Everything else looks fine. 00:07:35.920 --> 00:07:36.920 Okay. 00:07:36.920 --> 00:07:39.760 So, are you making that motion, Karen? 00:07:39.760 --> 00:07:40.760 Sure. 00:07:40.760 --> 00:07:41.760 Yes. 00:07:41.760 --> 00:07:42.760 All right. 00:07:42.760 --> 00:07:43.760 And the second? 00:07:43.760 --> 00:07:44.760 Multitasking here. 00:07:44.760 --> 00:07:45.760 Second. 00:07:45.760 --> 00:07:46.760 Okay, Barbara. 00:07:46.760 --> 00:07:47.760 All in favor say aye. 00:07:47.760 --> 00:07:48.760 Aye. 00:07:48.760 --> 00:07:49.760 Aye. 00:07:49.760 --> 00:07:50.760 Motion carries. 00:07:50.760 --> 00:07:55.200 Okay, the next item is consider recommending the adoption of an ordinance for the city 00:07:55.200 --> 00:08:00.760 of Denton, a Texas Home Rule Municipal Corporation, authorizing the city manager or their designee 00:08:00.760 --> 00:08:06.680 to execute a contract with Wartsilla North America, Inc. for the supply of routine maintenance 00:08:06.680 --> 00:08:11.200 supplies and services for the Denton Energy Center, providing for the expenditure of funds 00:08:11.200 --> 00:08:17.120 therefore and providing an effective date to award Wartsilla North America for three 00:08:17.120 --> 00:08:21.840 years with the option of two additional years extensions with a total five-year not to exceed 00:08:21.840 --> 00:08:26.040 amount of $3,448,184. 00:08:26.040 --> 00:08:32.560 Who's doing that one? 00:08:32.560 --> 00:08:33.880 Jason Brown again. 00:08:33.880 --> 00:08:34.880 Yeah. 00:08:34.880 --> 00:08:35.880 It's me again. 00:08:35.880 --> 00:08:38.080 Hold on just a second. 00:08:38.080 --> 00:08:57.440 I think I got this figured out now. 00:08:57.440 --> 00:09:20.840 Ms. Kim, I'm having trouble. 00:09:20.840 --> 00:09:30.320 Is it sharing it? 00:09:30.320 --> 00:09:47.160 All right, y'all can see me and hear me. 00:09:47.160 --> 00:09:50.680 Sorry, I thought I had it. 00:09:50.680 --> 00:09:56.640 So, Jason Brown, Plaint Manager, Denton Energy Center again. 00:09:56.640 --> 00:10:01.840 The Denton Energy Center Equipment Maintenance Parts and Services prepared for you a short 00:10:01.840 --> 00:10:06.680 presentation this morning to briefly discuss the need for maintenance parts and services 00:10:06.680 --> 00:10:11.120 for this, for the equipment at the Denton Energy Center. 00:10:11.120 --> 00:10:17.400 In this, we'll briefly discuss the major objective of this contract, types of maintenance, maintenance 00:10:17.400 --> 00:10:24.940 intervals, and lastly, the bid summary for this purchase. 00:10:24.940 --> 00:10:30.240 The objective of this contract is to help achieve the highest possible unit availability 00:10:30.240 --> 00:10:32.200 for each engine. 00:10:32.200 --> 00:10:38.920 The units must be available during high-priced hours to insulate DME customers for high-priced 00:10:38.920 --> 00:10:45.200 market exposures and for performing equipment preventative maintenance to ensure unit reliability 00:10:45.200 --> 00:10:48.040 and availability is maintained. 00:10:48.040 --> 00:10:54.000 Despite best efforts, mechanical systems are subject to random failures, however, performing 00:10:54.000 --> 00:11:00.960 routine maintenance and having spare parts on hand is the best practice to ensure unit 00:11:00.960 --> 00:11:04.380 reliability and availability is maintained. 00:11:04.380 --> 00:11:09.760 By performing equipment preventative, predictive, and corrective maintenance, we are doing everything 00:11:09.760 --> 00:11:15.160 in our power to ensure the asset is maintained in tip-top shape to maintain efficiency and 00:11:15.160 --> 00:11:20.080 reliability and availability to remain cost-effective for our customers. 00:11:20.080 --> 00:11:27.120 In the next few slides, I'll briefly discuss routine maintenance schedule parts and the 00:11:27.120 --> 00:11:31.360 benefit of these parts to help understand why we need this purchase of routine maintenance 00:11:31.360 --> 00:11:36.440 parts and why it is a long-term solution to achieve our objective. 00:11:36.440 --> 00:11:43.000 Please feel free to ask any questions at any time as we go. 00:11:43.000 --> 00:11:50.360 The denture engine center, much like your car engine, it must be maintained routinely 00:11:50.360 --> 00:11:56.040 as recommended by your equipment manufacturer to operate correctly. 00:11:56.040 --> 00:12:01.120 This is called preventative maintenance program, where predictive, preventative, and corrective 00:12:01.120 --> 00:12:03.020 maintenance activities occur. 00:12:03.020 --> 00:12:07.640 Many components require routine maintenance to proactively inspect for where premature 00:12:07.640 --> 00:12:15.400 failure and critical parts must be replaced or repaired. 00:12:15.400 --> 00:12:20.840 The preventative maintenance activities are performed consistent with OEM recommendations 00:12:20.840 --> 00:12:21.840 guidelines. 00:12:21.840 --> 00:12:25.440 OEM is equipment manufacturer. 00:12:25.440 --> 00:12:30.000 Based on operating hours, this chart just depicts our current estimation of when maintenance 00:12:30.000 --> 00:12:32.360 activities will occur. 00:12:32.360 --> 00:12:40.400 So 2020, 2022, 2023, all minor maintenance activities, and then it just keeps progressing 00:12:40.400 --> 00:12:43.960 as operating hours continue. 00:12:43.960 --> 00:12:48.880 All maintenance activities require a shutdown of the individual units, but we want to minimize 00:12:48.880 --> 00:12:52.320 the length of time that they're unavailable for generation. 00:12:52.320 --> 00:12:59.160 So having contract in place for parts and services on hand is crucial. 00:12:59.160 --> 00:13:03.000 As you see in this chart, we are due for minor maintenance currently, and in the following 00:13:03.000 --> 00:13:10.300 years until the first major maintenance activity takes place at about 12,000 operating hours. 00:13:10.300 --> 00:13:17.440 As you can see from this chart, 12,000 operating hours were projected to be 2024, 2025, somewhere 00:13:17.440 --> 00:13:24.240 in that time range, but keep in mind with the denture engine center being dispatched 00:13:24.240 --> 00:13:32.000 against the ERCOT market, the time frames could change a little bit forward or backwards. 00:13:32.000 --> 00:13:36.120 Our objective is to make the units available as often as possible, as I said earlier, to 00:13:36.120 --> 00:13:38.480 generate the most revenue from the market. 00:13:38.480 --> 00:13:46.640 So we must be prepared to perform the maintenance task to ensure efficiency, availability, and 00:13:46.640 --> 00:13:48.600 reliability of the equipment. 00:13:48.600 --> 00:13:52.160 Jason, I have a question. 00:13:52.160 --> 00:13:54.040 Yes, sir. 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? 00:14:00.800 --> 00:14:05.500 So everything at the plant, well, let me go back just a little bit. 00:14:05.500 --> 00:14:09.080 Most everything at the plant is hour-based maintenance. 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 00:14:17.280 --> 00:14:18.760 fall into that category. 00:14:18.760 --> 00:14:26.320 There are a few pieces of equipment that are calendar-based, so monthly, quarterly, annually, 00:14:26.320 --> 00:14:33.840 but most of those are like safety eye washes, some of your motors for increasing intervals 00:14:33.840 --> 00:14:37.840 and that type of stuff. 00:14:37.840 --> 00:14:38.840 That answer? 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 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. 00:14:49.360 --> 00:14:51.600 It's individual pieces of equipment, sir. 00:14:51.600 --> 00:14:56.480 So each one operates individually, so unit one through 12. 00:14:56.480 --> 00:15:02.080 Unit one is engine generator and auxiliaries. 00:15:02.080 --> 00:15:04.100 And then you have two and three and four. 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, 00:15:11.720 --> 00:15:15.280 and then so on and so forth throughout the engines. 00:15:15.280 --> 00:15:16.280 All right. 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 00:15:20.680 --> 00:15:21.680 review of those. 00:15:21.680 --> 00:15:22.680 Correct. 00:15:22.680 --> 00:15:23.680 Gotcha. 00:15:23.680 --> 00:15:24.680 Yes, sir. 00:15:24.680 --> 00:15:25.680 Thank you. 00:15:25.680 --> 00:15:27.280 Yes, sir. 00:15:27.280 --> 00:15:32.040 So the major benefit of entering into this contract is that the best overall price for 00:15:32.040 --> 00:15:35.640 the material on the market was achieved. 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 00:15:40.600 --> 00:15:46.360 doing everything that we can do to ensure that we're maintaining efficiency to the OEM 00:15:46.360 --> 00:15:55.840 standard to ensure reliability, availability, and cost effectiveness for our customers. 00:15:55.840 --> 00:16:01.920 So late last spring, we began proactively preparing for current and future maintenance 00:16:01.920 --> 00:16:05.520 activities, outages, minor maintenance, that kind of stuff. 00:16:05.520 --> 00:16:14.000 So we hit streets seeking prospective bidders for this type of equipment with a formal IFB 00:16:14.000 --> 00:16:18.840 for the parts needed for all of the minor maintenance intervals. 00:16:18.840 --> 00:16:20.960 The specifications were posted. 00:16:20.960 --> 00:16:26.120 They were sent to 95 potential suppliers, two companies submitted bids, one the OEM 00:16:26.120 --> 00:16:31.040 and then a third-party company. 00:16:31.040 --> 00:16:35.520 Of the two, one was partial and had higher prices than the OEM. 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 00:16:41.680 --> 00:16:44.920 on all aspects of the equipment. 00:16:44.920 --> 00:16:49.080 We are recommending and requesting the approval of the maintenance parts and services in the 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 00:16:57.440 --> 00:17:02.840 annual budget as needed based on operating hours. 00:17:02.840 --> 00:17:04.880 And I'm free for any more questions. 00:17:04.880 --> 00:17:07.440 Jason, I have a question. 00:17:07.440 --> 00:17:08.440 Sorry, Ben. 00:17:08.440 --> 00:17:09.960 I'll just jump in here quickly. 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 00:17:14.800 --> 00:17:17.000 or is this a new service altogether? 00:17:17.000 --> 00:17:19.040 No, sir. 00:17:19.040 --> 00:17:27.720 The major aspect of -- sorry, hold on just one second. 00:17:27.720 --> 00:17:30.960 There you go. 00:17:30.960 --> 00:17:33.880 Is that better? 00:17:33.880 --> 00:17:35.280 That's fine. 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. 00:17:42.960 --> 00:17:51.160 The services aspect of this is for unplanned emergencies and items that site staff can't 00:17:51.160 --> 00:17:52.920 work on. 00:17:52.920 --> 00:17:58.200 So logic based issues, control module issues. 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, 00:18:04.800 --> 00:18:07.560 have them work on it, return it. 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, 00:18:14.000 --> 00:18:19.920 almost 2.7 million, we currently do not have a contract for parts. 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 00:18:27.320 --> 00:18:31.680 maintenance activities and now we're running out of those parts and need to replenish so 00:18:31.680 --> 00:18:34.400 that we can keep doing preventative maintenance. 00:18:34.400 --> 00:18:39.320 All right, so this is a new service or operation to support the plant. 00:18:39.320 --> 00:18:40.320 That is correct. 00:18:40.320 --> 00:18:42.240 I'm sorry, Ben, I'll yield the floor to you. 00:18:42.240 --> 00:18:46.120 Jason, you actually answered my question, so I'm good to go. 00:18:46.120 --> 00:18:47.120 Oh, perfect. 00:18:47.120 --> 00:18:51.840 Yeah, let's remember that Wartsilla is the manufacturer of these engines. 00:18:51.840 --> 00:18:52.840 Correct. 00:18:52.840 --> 00:18:55.840 Karen, go ahead. 00:18:55.840 --> 00:19:00.400 You're muted. 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 00:19:06.040 --> 00:19:09.920 past when we were talking about warranty. 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. 00:19:16.480 --> 00:19:21.560 Is that what we're dealing with or the warranty period has run out? 00:19:21.560 --> 00:19:22.560 So correct. 00:19:22.560 --> 00:19:24.160 The warranty period ran out two years ago. 00:19:24.160 --> 00:19:25.160 Two years ago. 00:19:25.160 --> 00:19:26.160 Okay. 00:19:26.160 --> 00:19:27.160 Yes, ma'am. 00:19:27.160 --> 00:19:33.160 So in that, the only thing the OEM warranty had during the construction time period and 00:19:33.160 --> 00:19:38.560 one year after that was issues, corrective issues and that kind of stuff. 00:19:38.560 --> 00:19:46.240 The warranty never took care of maintenance and prolonged maintenance activities. 00:19:46.240 --> 00:19:53.200 And Jason, you said you started this nine months ago, started looking into this? 00:19:53.200 --> 00:19:54.520 Yeah. 00:19:54.520 --> 00:19:59.000 We started the process late fall of last year. 00:19:59.000 --> 00:20:00.480 Okay. 00:20:00.480 --> 00:20:01.640 Okay. 00:20:01.640 --> 00:20:04.200 Any other questions? 00:20:04.200 --> 00:20:06.200 Right. 00:20:06.200 --> 00:20:08.960 Do we have a motion to approve? 00:20:08.960 --> 00:20:10.440 Barbara? 00:20:10.440 --> 00:20:14.320 Barbara's motioning and Lee is seconding. 00:20:14.320 --> 00:20:15.880 All in favor say aye. 00:20:15.880 --> 00:20:16.880 Aye. 00:20:16.880 --> 00:20:17.880 Aye. 00:20:17.880 --> 00:20:18.880 Opposed? 00:20:18.880 --> 00:20:19.880 Okay. 00:20:19.880 --> 00:20:20.880 It carries. 00:20:20.880 --> 00:20:29.240 And the next item, sorry. 00:20:29.240 --> 00:20:33.440 Consider recommending the adoption of an ordinance for the city of Denton, Texas amending the 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 00:20:40.080 --> 00:20:46.720 allow for adjustments to the electric fund in $140 million for the purpose of purchasing 00:20:46.720 --> 00:20:52.240 power during the winter storm Yuri event, declaring a public person purpose and providing 00:20:52.240 --> 00:20:58.640 several several ability clause and an open meetings clause and an effective date. 00:20:58.640 --> 00:21:02.560 Good morning, PB members, chair, Nick Benson, assistant director of finance. 00:21:02.560 --> 00:21:07.440 Let me get the presentation pulled up really quick. 00:21:07.440 --> 00:21:10.720 Okay. 00:21:10.720 --> 00:21:14.400 So one slide, Susan, is what we have for this item really quick. 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. 00:21:17.080 --> 00:21:18.480 So I just want to say welcome. 00:21:18.480 --> 00:21:22.040 We're actually really glad that you're here and look forward to the conversations today 00:21:22.040 --> 00:21:25.400 in the coming months as we talk about the upcoming budget cycle. 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. 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, 00:21:36.560 --> 00:21:42.140 we have had increased purchase power expense associated the recent storm event. 00:21:42.140 --> 00:21:48.720 Those net expenses were $140 million, approximately, so we are looking to increase our appropriation 00:21:48.720 --> 00:21:55.600 authority in the operating budget from $231.1 million to $371.1 million. 00:21:55.600 --> 00:22:00.480 So this will cover those additional purchase power expenses and keep us within that budgetary 00:22:00.480 --> 00:22:04.960 authority that the PB and city council approves. 00:22:04.960 --> 00:22:05.960 That's it. 00:22:05.960 --> 00:22:15.000 Thank you for questions if you have any questions. 00:22:15.000 --> 00:22:16.080 I have one. 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, 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. 00:22:26.520 --> 00:22:32.160 Is that is that my correct understanding is correct, Susan, but but actually, you know, 00:22:32.160 --> 00:22:36.120 in our expenditure authority that we have within the budget, the majority of the purchase 00:22:36.120 --> 00:22:41.300 power expenses are actually covered in the original adopted budget of $231 million. 00:22:41.300 --> 00:22:42.960 But but the you're correct. 00:22:42.960 --> 00:22:45.440 We did come back after the expense occurred. 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, 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 00:22:54.960 --> 00:22:58.500 back to you in advance if we think we're going to exceed the budget. 00:22:58.500 --> 00:23:01.400 But in this situation, like Susan said, it was an emergency situation. 00:23:01.400 --> 00:23:03.440 We're actually coming to you after the fact. 00:23:03.440 --> 00:23:06.840 That's absolutely correct. 00:23:06.840 --> 00:23:10.280 Any other questions? 00:23:10.280 --> 00:23:12.360 Do we have a motion to approve? 00:23:12.360 --> 00:23:17.920 We think we have an option, so I'll move approval. 00:23:17.920 --> 00:23:18.920 Thank you, Billy. 00:23:18.920 --> 00:23:19.920 Do and Karen seconding. 00:23:19.920 --> 00:23:20.920 Okay. 00:23:20.920 --> 00:23:21.920 All in favor say aye. 00:23:21.920 --> 00:23:22.920 Aye. 00:23:22.920 --> 00:23:26.680 And I see Mr. Ryback needed to step away. 00:23:26.680 --> 00:23:33.520 So the next item management reports. 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 00:23:38.360 --> 00:23:46.800 is the the January 2021 deck informal staff report and in the actual dashboard and certainly, 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 00:23:50.760 --> 00:23:58.200 any questions regarding that report looks like none. 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 00:24:05.080 --> 00:24:10.680 matrix and obviously today we're going to be going through some wrap up presentations 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 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 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 00:24:27.600 --> 00:24:32.320 know what priorities you have for for the upcoming budget and certainly want to take 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 00:24:37.960 --> 00:24:42.400 mode and so we are already working with the finance department working through the various 00:24:42.400 --> 00:24:47.560 budgets and and submittals for for the next fiscal year. 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 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 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 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 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 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 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 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 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 00:25:32.840 --> 00:25:36.920 any questions that you have and as well as why certain things are being proposed and 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 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 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 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 00:25:58.960 --> 00:26:04.120 probably I apologize for stealing your thunder here but you know some of these were were 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 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 00:26:17.960 --> 00:26:21.960 these questions are still there certainly think they're still valid we'll be bringing 00:26:21.960 --> 00:26:28.900 back the majority of these through our comprehensive solid waste management report that we'll be 00:26:28.900 --> 00:26:35.240 bringing to you here in the next few months but with that certainly happy answering questions 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 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 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 00:27:06.020 --> 00:27:12.120 commercial bulk program to help property owners manage illegal dumping could you briefly tell 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 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 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 00:27:30.000 --> 00:27:34.560 business owner has found that there's bulk on their property they've got materials they 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 00:27:39.640 --> 00:27:44.420 they can call customer service and just like your residential crew we will send it out 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 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 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 00:28:08.180 --> 00:28:12.620 aware of that and again you know just call customer service nine four zero three four 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 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 00:28:28.480 --> 00:28:35.680 owner who's already paying for the dumpster is also paying for the unauthorized dumping 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 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 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 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 00:28:58.840 --> 00:29:03.760 remain we're managing access appropriately to our properties and that's the same thing 00:29:03.760 --> 00:29:11.740 with graffiti you're responsible for repairing graffiti right it's along the same lines correct 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 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 00:29:30.640 --> 00:29:37.040 items does any board member wish to congratulate somebody or something on a future agenda I 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 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 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 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 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 00:30:16.160 --> 00:30:20.560 receive a report hold a discussion and give staff direction regarding the fiscal year 00:30:20.560 --> 00:30:27.160 2020-21 budget capital improvement program rates five-year financial forecast for water 00:30:27.160 --> 00:30:33.000 wastewater solid waste and the electric funds good morning again Nick Benson assistant director 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 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 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 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 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 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 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 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 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 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 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 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 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 00:31:48.760 --> 00:31:53.920 water revenue for the water utility for the PB members have seen this before and those 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 00:31:57.920 --> 00:32:02.120 grouped into different categories you can see at the top interest operating you have 00:32:02.120 --> 00:32:08.320 some residential revenue commercial water for resale other white other water transfers 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 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 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 00:32:22.720 --> 00:32:28.640 30th of 2020 this is the adopted budget so this budget was adopted during the budgeting 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 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 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 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 00:32:54.200 --> 00:32:58.760 wholesale agreements that we have out there with different entities did come in a little 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 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 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 00:33:19.080 --> 00:33:25.720 budgeted water expenses by different operational units so within the water utility we have 00:33:25.720 --> 00:33:30.200 different operational units we divide them by divisions we have an admin division utility 00:33:30.200 --> 00:33:36.500 administration public affairs production distribution metering lab miscellaneous and these categories 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 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 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 00:33:54.960 --> 00:34:00.880 2021 and this budget was combined with water administration and public outreach and so 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 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 00:34:10.720 --> 00:34:15.760 looking at their operating expenses and doing some reductions during that difficult time 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 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 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 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 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 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 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 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 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 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 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 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 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 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 00:35:28.680 --> 00:35:34.520 made up of two components a working capital and operating reserve itself so total budget 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 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 00:35:45.480 --> 00:35:50.680 fee capital reserve this is for a large capital project which is the Lakebury Roberts plant 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 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 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 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 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 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 00:36:18.160 --> 00:36:25.000 rate increases or operational you know decreases or savings within the fund to get us back 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 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 00:36:39.000 --> 00:36:43.720 to the PEB and the city council about every single year during the budgeting process so 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 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 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 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 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 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 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 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 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 00:37:35.440 --> 00:37:42.520 a rate decrease for customers which averaged about a dollar and eight cents for the average 00:37:42.520 --> 00:37:48.120 residential customer and I'll talk to you about an average here shortly then just the 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 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 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 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 00:38:09.780 --> 00:38:14.360 that the fund issues to fund those capital projects this is the debt payment for that 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 00:38:21.800 --> 00:38:26.680 Ray Roberts plan expansion project of 90 million some of the recent improvements staff had 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 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 00:38:38.760 --> 00:38:45.480 the five-year capital plan so we budget for very several things in the capital budget 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 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 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 00:39:04.040 --> 00:39:08.400 a notice of intent coming forward soon for your consideration revenue funding so this 00:39:08.400 --> 00:39:12.960 is funded through the water rates and this is cash funding a portion of those projects 00:39:12.960 --> 00:39:16.920 we do have some internal targets we like to meet with different type of projects within 00:39:16.920 --> 00:39:23.760 the fund impact fee funding this is those projects within water they're impact fee eligible 00:39:23.760 --> 00:39:28.720 most of those projects are growth related and so we did complete a study regarding that 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 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 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 00:39:46.240 --> 00:39:51.880 storm event the finance department had started an in-depth fund balance analysis and really 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 00:39:56.320 --> 00:40:02.400 were sufficient really when comparing ourselves to other municipalities or those professional 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 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 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 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 00:40:29.000 --> 00:40:34.040 confused seems like something should be a taking away and other things should be an 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 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 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 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 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 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 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 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 00:41:18.440 --> 00:41:22.520 the line that's already existing we've already incurred that debt for it that replacement 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 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 00:41:33.640 --> 00:41:41.000 a debt component associated with it does does that make sense rancher Nick this is tony 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 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 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 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 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 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 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 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 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 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 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 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 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 00:42:55.280 --> 00:43:03.640 you know it could simply be called cash funded capital absolutely yeah um someone else has 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 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 00:43:16.560 --> 00:43:20.800 on our findings that i'll walk you through here shortly staff does not recommend changing 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 00:43:25.640 --> 00:43:30.200 to you in transparency and show you that we did do an extensive analysis of different 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 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 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 00:43:47.840 --> 00:43:53.520 different utilities you can see in here lewisville mckinney garland frisco mesquite and grand 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 00:44:00.040 --> 00:44:10.300 frisco being 58 so professional organizations within the water fund we do look at several 00:44:10.300 --> 00:44:15.200 different organizations when looking at metrics like this and really even looking at our rate 00:44:15.200 --> 00:44:20.000 survey for each year that we participate in so the first one is the international city 00:44:20.000 --> 00:44:24.960 management association also referred to as icma and the american water works association 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 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 00:44:35.360 --> 00:44:41.760 utilities throughout the state the water environmental federation which is wef and the government 00:44:41.760 --> 00:44:46.640 finance officers association which is gfa and as i said on the previous slide based 00:44:46.640 --> 00:44:52.280 on these different percentages in these organizations staff does recommend keeping the reserve the 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 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 00:45:05.200 --> 00:45:09.960 basic water rate terms review the cost of service study that we recently completed with 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 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 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 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 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 00:45:38.600 --> 00:45:42.900 the volume charge is the volume metric charge is charged per thousand gallons in the water 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 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 00:45:53.320 --> 00:45:58.400 rate ordinance and the utility rate ordinance is passed annually by the pub and city council 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 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 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 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 00:46:14.800 --> 00:46:21.960 utility and the last one was completed in 2014 in 2019 the city contracted graph with 00:46:21.960 --> 00:46:27.880 graph telus to update it again those studies are usually updated every five years um so 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 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 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 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 00:46:48.000 --> 00:46:53.000 is to establish cost of service based rates ensure revenue stability in the fund and ensure 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 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 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 00:47:08.200 --> 00:47:11.240 rates every year as part of the budgeting process when we bring them forward to you 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 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 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 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 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 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 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 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 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 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 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 00:48:16.440 --> 00:48:22.320 dollars shy of it then wholesale is listed there at the bottom 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 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 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 00:48:41.560 --> 00:48:47.840 hydrants um for um emergency situations um and then we also get it so contractors around 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 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 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 00:49:01.160 --> 00:49:08.040 okay very good thank you for that clarification yes sir 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 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 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 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 00:49:28.840 --> 00:49:33.880 know higher to the right of this chart you see larger water consumption um really the 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 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 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 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 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 00:49:59.680 --> 00:50:05.400 distribution in that tier which we definitely thought was important to point out 85 percent 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 00:50:11.000 --> 00:50:15.000 the bill distribution being that second tier and then so forth going forward you can see 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 00:50:20.280 --> 00:50:24.200 so the majority of the residential customers are in that first tier and then this bottom 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 00:50:29.200 --> 00:50:34.440 meter in the residential customer class is that three-quarter inch meter and i'll point 00:50:34.440 --> 00:50:40.880 that right out to you here shortly this is the commercial distribution um same thing 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 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 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 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 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 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 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 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 00:51:30.440 --> 00:51:37.640 on the change out change out time period hi uh this is pretendation of deputy director 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 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 00:51:54.560 --> 00:51:57.520 thank you thank you pre-tim 00:51:57.520 --> 00:52:05.320 all right so residential rates those are the current rates for the water utility i will 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 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 00:52:13.560 --> 00:52:17.760 them here shortly um but the two components that we talked about earlier so the facility 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 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 00:52:28.320 --> 00:52:32.240 can see the the facility charge is consistent throughout the year is fifteen dollars eighty-four 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 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 00:52:47.600 --> 00:52:51.480 that per thousand gallon rate is consistent between the winter and summer but once you 00:52:51.480 --> 00:52:56.380 step up to that second tier from fifteen to thirty thousand gallons and that rate does 00:52:56.380 --> 00:53:00.920 increase in the summer so as i mentioned earlier you're really incentivizing water conservation 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 00:53:06.120 --> 00:53:09.840 irrigation rates want to put these on here these are for individuals with separate irrigation 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 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 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 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 00:53:33.000 --> 00:53:37.040 bring this back to the public utility board and fiscal year 2022's budget discussions 00:53:37.040 --> 00:53:42.180 that will start here in the next month we'll run different scenarios answer any questions 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 00:53:46.960 --> 00:53:53.040 ones that are currently in place commercial rates so same thing here you have a facility 00:53:53.040 --> 00:53:59.060 charge and a volumetric rate it is broken to a winter and summer rate for irrigation 00:53:59.060 --> 00:54:04.240 customers for regular commercial water usage there is no winter and summer block it's just 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 00:54:08.880 --> 00:54:12.360 and that volume charge of four thirty-four so that bill does not change throughout the 00:54:12.360 --> 00:54:16.600 year like a residential customer and if you're a commercial irrigation customer there is a 00:54:16.600 --> 00:54:21.260 winter in a summer charge with the volume charge being slightly less in the winter than 00:54:21.260 --> 00:54:29.520 it is in the summer this is the residential bill distribution and this was recently updated 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 00:54:33.760 --> 00:54:39.240 seventy-eight fourteen this is based on seventy-six hundred gallons for the average residential 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 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 00:54:55.580 --> 00:55:04.340 which is that average commercial customer and this is something we put together last 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 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 00:55:13.160 --> 00:55:18.540 to twenty-seventeen the utilities had some rate increases starting in twenty-eighteen 00:55:18.540 --> 00:55:23.040 we've actually had several rate decreases in the utilities with no increase so we thought 00:55:23.040 --> 00:55:26.700 this was definitely important to point out to the public utility board and city council 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 00:55:35.260 --> 00:55:39.080 mentioned these earlier so this is plan to go to city council on april the twentieth 00:55:39.080 --> 00:55:45.160 next tuesday circling back with you on april the twenty-sixth with a priorities presentation 00:55:45.160 --> 00:55:50.560 and then starting that fiscal year twenty-twenty-two operating in capital budget discussions may 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 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 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 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 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 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 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 00:56:44.520 --> 00:56:49.400 water there's different water um i'm sorry wastewater categories that we receive revenue 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 00:56:55.400 --> 00:57:02.080 revenue we have commercial revenue effluent irrigation we have wholesale other wastewater 00:57:02.080 --> 00:57:06.400 we have drainage fees drainage drainage is included in this utility we'll see a separate 00:57:06.400 --> 00:57:10.920 pro forma for that shortly some transfers in those transfers in our majority of cost 00:57:10.920 --> 00:57:18.160 of service transfers from other utilities um to wastewater um and then impact fee revenue 00:57:18.160 --> 00:57:23.680 so in 1920 the adopted budget had thirty six point seven million in revenue we finished 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 00:57:29.160 --> 00:57:33.280 budget had one point six million in reserve usage uh we actually ended up using about 00:57:33.280 --> 00:57:39.640 seven hundred eighty three thousand so great news this fund this is the 2021 budget so 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 00:57:44.280 --> 00:57:55.360 six with no reserve usage and the adopted budget question yes sir so your actual and 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 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 00:58:07.440 --> 00:58:12.680 utility when those fees are received they go into the impact fee reserve what we do 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 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 00:58:21.760 --> 00:58:26.480 amount to pull from that reserve into the operating fund to fund those projects so that 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 00:58:31.560 --> 00:58:40.800 okay yeah i didn't remember that okay thank you um expenditures by operational units so 00:58:40.800 --> 00:58:45.720 you can see administration rec reclamation collections filled services beneficial reuse 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 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 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 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 00:59:08.280 --> 00:59:12.920 great job in this utility uh really looking at those covid expense reductions last year 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 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 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 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 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 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 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 00:59:50.240 --> 00:59:54.640 that zero percent rate increase or decrease last year so we didn't have any increases 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 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 01:00:06.880 --> 01:00:16.240 um basically a balanced budget and then operating expenses 37.167 um operating reserve definitely 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 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 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 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 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 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 01:00:50.480 --> 01:00:56.640 starting in fiscal year 2026 but this does not anticipate currently any rate increases in the 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 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 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 01:01:13.600 --> 01:01:18.160 wastewater fund we do like to show the public utility board and city council this separately 01:01:18.160 --> 01:01:23.040 each year and the drainage function within wastewater is supported by drainage fees 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 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 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 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 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 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 01:02:00.640 --> 01:02:10.160 for this fund five-year capital plan similar to water there are different components within here 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 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 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 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 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 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 01:02:46.880 --> 01:02:53.280 project for the appropriate amount so aid in construction and vehicle replacement 1.2 million 01:02:53.280 --> 01:02:55.840 so total of 40 million 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 01:03:03.600 --> 01:03:08.240 lot of municipalities their water and wastewater utilities are combined so we did list them both 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 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 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 01:03:27.200 --> 01:03:31.840 balance percentage of the other cities and the other professional organizations that we looked at 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 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 01:03:41.600 --> 01:03:48.560 process the finance department went through this year and definitely is valuable this professional 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 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 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 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 01:04:15.520 --> 01:04:25.920 on both the water and wastewater frisco had much higher utility reserves than everybody else is 01:04:25.920 --> 01:04:33.200 there a particular reason for that are they anticipating a new plant or plants to bring 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 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 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 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 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 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 01:05:02.080 --> 01:05:04.480 program okay thank you 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 01:05:15.280 --> 01:05:20.080 review some basic wastewater terms with you look at the cost of service results for wastewater 01:05:20.080 --> 01:05:25.040 look at the current residential and commercial rates and look at some rate comparisons 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 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 01:05:38.160 --> 01:05:42.400 in the rate ordinance is sr which is residential wastewater service 01:05:42.400 --> 01:05:48.960 sc is commercial and industrial water service and then sm is metered wastewater inside and outside 01:05:48.960 --> 01:05:54.400 the corporate limits and then wastewater is the self-treated wastewater effluent which is irrigation 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 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 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 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 01:06:23.360 --> 01:06:29.600 recovery also um equipment services and eating establishments cost of service is currently 1.3 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 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 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 01:06:50.320 --> 01:06:55.760 definitely looks good um so the current rates for residential and commercial customers we just put 01:06:55.760 --> 01:07:02.240 them on one slide here so different than the water utility wastewater service is billed per 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 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 01:07:14.080 --> 01:07:20.160 bill for a wastewater customer or 31.52 and then for a commercial customer the average 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 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 01:07:34.240 --> 01:07:39.440 plant facility so maybe use for irrigation purposes so for residential customers 5,400 gallons 01:07:39.440 --> 01:07:42.720 and for a commercial customer it's 42,750 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 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 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 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 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 01:08:20.720 --> 01:08:28.960 all right any questions oh karen go ahead 01:08:28.960 --> 01:08:37.440 uh sorry just a quick question um clarification the wastewater usage is not 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 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 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 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 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 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 01:09:08.880 --> 01:09:14.960 established winter average you're built a minimum of 5400 gallons until that average is established 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 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 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 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 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 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 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 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 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 01:10:06.880 --> 01:10:10.880 yeah just wanted to make sure it got out there again thank you yes sir 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 01:10:22.080 --> 01:10:25.920 through solid waste really quick it's a little bit shorter not quite as many slides 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 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 01:10:45.680 --> 01:10:53.120 staff's recommendation so 1920s budget so i guess first here's the different revenue categories 01:10:53.120 --> 01:10:58.640 that we have within the solid waste fund so we separate out residential residential recycling is 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 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 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 01:11:14.320 --> 01:11:19.280 wholesale agreements that are yeah landfill wholesale agreements that are in place for this fund 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 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 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 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 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 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 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 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 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 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 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 01:12:22.080 --> 01:12:29.440 expenses by division so these are different operational units or divisions within solid waste 01:12:29.440 --> 01:12:34.800 it's administration residential commercial um they have a collection special projects 01:12:34.800 --> 01:12:41.200 and then diversion processing vmr and then keep getting beautiful which is kdb and then side 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 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 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 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 01:13:04.480 --> 01:13:09.040 solid waste staff did a great job of looking at these operating expenses and making adjustments 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 01:13:15.200 --> 01:13:20.560 expenditure categories you can see personnel occur at the top materials and supplies maintenance and 01:13:20.560 --> 01:13:25.920 repair franchise fees are some different things moving down the page but those cost of service 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 01:15:57.280 --> 01:16:02.880 the wholesale contract agreements that we have with some private entities uh will end in fiscal 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 01:16:10.800 --> 01:16:16.880 reason why so this contemplates those agreements going away and not being renewed just to make 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 01:16:24.160 --> 01:16:28.960 up a short while ago but we did have a reimbursement ordinance for three million dollars 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 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 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 01:16:43.360 --> 01:16:50.560 all the cell development is cash funded and the vehicle replacement is cash funded so definitely 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 01:16:59.040 --> 01:17:03.760 waste very similar to water wastewater looked at several different organizations um that were out 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 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 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 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 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 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 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 01:17:41.920 --> 01:17:47.600 this is next conversations that are coming up that we talked about in the last couple 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 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 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 01:18:23.280 --> 01:18:27.360 and similar to water waste water we are going to talk about the post winter storm 01:18:27.360 --> 01:18:30.960 financial conditions which is a little different than what we've discussed with water and wastewater 01:18:30.960 --> 01:18:38.000 but obviously we had some unexpected large expenses associated with the storm and electric 01:18:38.000 --> 01:18:44.080 so we're going to go through those those and then what staffs recommended options for 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 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 01:18:58.080 --> 01:19:08.560 209 million in collateral and ancillary charges with ercot for that winter storm event so after 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 01:19:16.480 --> 01:19:24.160 extendable commercial paper to fund that those expenses during the storm as a result of the 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 01:19:31.840 --> 01:19:38.720 public utilities on a negative credit watch as nick mentioned earlier before the winter storm 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 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 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 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 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 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 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 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 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 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 01:20:49.040 --> 01:20:55.520 hundred million dollars of commercial paper staff's recommendation is to refund it using 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 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 01:21:09.440 --> 01:21:15.840 purchase power expenses and really um spread that major expense over several years instead 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 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 01:21:30.320 --> 01:21:36.960 like um as i mentioned the fund balance analysis that was recently completed before the winter 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 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 01:21:50.080 --> 01:21:57.760 with our financial advisors at hilltop we are recommending an increase of the operating reserve 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 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 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 01:22:17.040 --> 01:22:24.720 reserves as well especially given the the bond uh the credit watch and the bond downgrading 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 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 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 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 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 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 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 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 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 01:23:25.520 --> 01:23:32.160 under the new recommended target so it would really take substantial rate increases to to increase 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 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 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 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 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 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 01:24:08.400 --> 01:24:12.880 the budget discussions but really wanted to be able to call out the purchase power expenses 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 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 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 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 01:24:48.240 --> 01:24:53.680 pretty steady um we'll probably have to have future rate increased discussions obviously 01:24:53.680 --> 01:24:58.400 but we still stay at that hundred million dollar um fund balance target 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 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 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 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 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 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 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 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 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 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 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 01:26:14.160 --> 01:26:19.120 these are some options for your consideration um I really wanted to get your recommendation for 01:26:19.120 --> 01:26:25.360 council um again the issuance of 100 million we do have the outstanding commercial paper notes 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 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 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 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 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 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 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 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 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 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 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 01:27:33.120 --> 01:27:44.800 but we want to we'll bring that back at a later date okay discussion 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 01:27:54.640 --> 01:28:02.080 mean unfortunately we're in a circumstance where that hundred to 140 million 150 million possibly 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 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 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 01:28:29.040 --> 01:28:32.480 I certainly want to support staff's recommendation here 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 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 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 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 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 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 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 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 01:29:31.680 --> 01:29:37.440 staff discussions internally also we've been debating that very thing well Billy and this 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 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 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 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 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 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 01:30:10.160 --> 01:30:15.680 down the road for some more favorable financing through the state or at least through some 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 01:30:20.640 --> 01:30:25.840 potentially move to a more favorable finance which should reduce the cost of borrowing 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 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 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 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 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 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 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 01:31:21.760 --> 01:31:28.160 kind of financing a vehicle on more favorable terms for utilities based on this unusual event 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 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 01:31:46.240 --> 01:31:52.480 there has been discussion this is bill called a securitization bill that does include uh the 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 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 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 01:32:10.960 --> 01:32:14.880 that lowers the cost of borrowing so certainly that's something that's being discussed and 01:32:14.880 --> 01:32:19.520 something that we're actively working with our legislative consultants as well as other mo us 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 01:34:20.080 --> 01:34:26.160 deliberations regarding certain public power utilities competitive matters under texas 01:34:26.160 --> 01:34:35.440 government code section 551.086 consultation with attorneys under texas government code section 551.071 01:34:37.120 --> 01:34:41.440 receive a presentation from staff regarding the public power competitive 01:34:41.440 --> 01:34:47.680 and financial matters about the delivery of power wholesale energy supply and risk management plans 01:34:47.680 --> 01:34:53.840 hedge plans and strategies as it each relates to dme electric power and gas portfolio 01:34:53.840 --> 01:35:00.400 and to the february winter storm discuss deliberate and provide input to staff regarding 01:35:00.400 --> 01:35:07.120 the same consultation with the city's attorneys regarding legal issues legal status legal analysis 01:35:07.120 --> 01:35:12.640 and legal strategy associated with the above matters and pending and potential litigation 01:35:12.640 --> 01:35:16.560 where the public discussion of these legal matters would conflict with the duty of the 01:35:16.560 --> 01:35:22.240 city attorneys to the city of denton and the denton city council under texas disciplinary rules 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 01:35:28.480 --> 01:35:40.320 any administrative proceedings or potential litigation all right so i think i'm just going 01:35:40.320 --> 01:35:44.720 to try to give um kim