Good morning. As we have a forum, I'll call the City of Ditten Public Utility Board meeting
on Monday, May 10th, 2021. It is 9.01 a.m. and we are in order. Are there any members
from, or anybody from the public that would like to speak?
Thank you, Chair. There are no members from the public wishing to speak on today's agenda.
Thank you very much. Seeing no comments from the public, we'll move into the consent agenda.
Are there any members of the board who would like to pull any of these items A through
E? I'd like to pull C.
Got C from Karen, Mr. Jumper. I'd like to pull A.
Okay. So we're pulling items A and C. Would anybody like to make a motion? Would any member
like to make a motion for items B, D, and E for approval?
I still move. Ms. Russell?
Second. Second from Mr. Jumper. Any further discussion?
If not, please vote. All those in favor, please say aye.
Aye. Any opposed, sign the same.
Seeing none, the motion passes unanimously. Item A, let's just go in order. Mr. Jumper,
if you want to ask your questions. Yeah. Let me get this pulled up. Sorry. Okay.
So there's been several amendments. I see. I was kind of looking through those. The first
couple seem to be relating to design, and then more recently to engineering services
and permitting support. So I was just kind of curious, maybe some backstory here. Why
are we designing so many times? Is that normal? And what is additional services and support?
So, Mr. Jumper, we should have either Pritam Deshmuth or Stephen Gay with the wastewater
utility to respond to that. Mr. Chairman, while we're at it, I'm curious,
it seems that we discussed the construction ads for this Hickory Creek project at our
last meeting. And I asked if we had already approved the design and the answer appeared
to be affirmative, but here it appears we are approving the design after we've approved
the recommendation for the construction work. Or do I have these out of order or are they
different things? So good morning. Can you hear me? Yes.
Hi, good morning. Chair, members of the PUB, Pritam Deshmuth, deputy director for water
and wastewater. Yeah, there are quite several different things that are going on in this
particular contract. It's an older contract, and we would not quite set it up this way
today if given that option. But the way this contract was set up, it actually includes
three different components. So we started with the first project, which is the Hickory
Creek detention facility, which is off of FM 1830 or Country Club Road and Ryan Road
right behind that area. The second project that was added a little bit later is the West
Peak Flow pump station, which was the second amendment for design. It is actually located
at the treatment facility, the water reclamation plant. And then the third project is the Hickory
Creek lift station. And that design is the third amendment. So if you look at it, these
are three separate projects that were combined in the same contract. At the time, it was
the fastest way to move forward to add the Hickory Creek lift station after it had failed,
if you recall a couple years ago. So right now, the actual amendment for this particular
project, it is for the lift station. And it is wrapping up several things, creating record
drawings, providing some construction-related support. We are, as we speak, wrapping up
this project this month. So it will go through a testing phase for about a month. It'll test
the pumps. It'll test the actual lift station. And that's where we needed some support from
the consultant who had actually designed this. And the last piece was creating some record
drawings for this. So we are bringing it forward for that lift station amendment.
Does that answer your question, Mr. Jumper? And Mr. Rybak?
Question? Hang on a second. Ray, you're muted.
Excuse me. I was indeed. Okay. So I'm still not 100% clear, but it sounds like from the
description that the lift station work, this additional design work is for the same lift
station project that we discussed at our last meeting. Is that correct?
So yeah. So I'm not sure what was at last meeting, but I can go back and find out exactly
what items were pulled in last time for the contract amendment.
This isn't a big deal. I don't want to make it a big deal. It's a curiosity question on
my part. So if you don't know and I don't know, then for the moment, I think that's
okay. But I wanted it pulled out so I could at least ask the question. So Ben, I appreciate
you getting on that ahead of me. Ms. Russell, you had a question?
Yes, I was wondering if part of this was because there's a significant amount of construction
going to be happening out in that area. So I want to answer the previous question. I'm
looking at the previous agenda. It was a construction amendment for the contractor, the actual contractor
that is constructing. That was brought in front of PUB for additional amendments related
to the actual construction piece. And this contract is for design amendment. So those
are two slightly different things. One is with the contractor, one is with our design
consultant. Yes, sir, I understand that. But I guess my question is, it looks like the
design came to us after the construction. How could they have a construction ad before
the design ad? It just seems a little out of sync to me. That's all I mean.
I think this design piece is for the actual, as I mentioned, for the actual, the testing
piece, the pump testing, and all the testing that's going to happen after the construction
is completed. And it is also for creating some record drawings. So it's after the fact,
correct? Thank you.
Ms. Russell's question was just I think she was just trying to verify that this lift station
and the other construction is due to the heavy growth in that part of the world?
Correct. The detention facility and the West Peak Flow Pump Station, both of them are due
to heavy growth and we are creating additional detention for the peak flows. That is correct.
Okay. Any further questions on this item? If not, would anyone like to make a motion
to approve item A? So moved.
I'll take Lee's there and Karen is a second. I'll second, yeah.
Okay. All right. Is there any further discussion? If not, all those in favor, please say aye.
Aye. Any opposed? None the same. There is none. It passes unanimously. Moving on to
item C and that was Mr. Vinnie. Yeah, I just, this isn't really a question. I just wanted
to commend city staff for incorporating the dark sky guidelines into the contract with
the firm. Just looking at that organization, it just seems like it's fairly easy to incorporate
their guidelines for lighting and the payoff is pretty big, both for people who like to
look at the dark sky and also for migrating birds and other things. It's not hard to direct
your streetlights down and just being cognizant of that and incorporating that into your streetlight
design makes a big difference and it doesn't seem that hard. So I just wanted to commend
the staff for being aware of that program and incorporating that into their request
to the firm. I have no objections to C. Official thank you to staff. Yes. Would you like to
entertain a motion, Karen, for this item then? I'll move for approval. We have a motion to
approve. Is there a second? Okay. Barbara, Ms. Russell has a second. Any further discussion?
If not, all those in favor, please say aye. Aye. Any opposed, sign the same. It appears
that this one has passed unanimously. That was consent agenda item C. We are done with
the consent agenda. We'll move on to items for individual consideration. Item A, consider
approval of the April 26th minutes. Any changes? If not, those stand as presented and are approved.
Item B. So, Mr. Chairman and members of the PAB, we have Rowdy Patterson. He's our line
construction division manager. We'll be doing a short presentation here. If you'll give
him just a minute so he can get everything set up for you and he'll walk you through
that. I'll let us know whenever you're ready, Rowdy. You are muted, by the way.
We'll get him unmuted here in a second and get his camera on, too. Kim's helping him
out. Are you unmuted? I broke it. I want you to un-share it real quick.
I think I am. Can y'all hear me? Good morning, Chairman and members of the PAB. As Tony stated,
my name is Rowdy Patterson. I'm the line division manager, one of the line division managers
with DME. I'm over the construction side. And what we're bringing to you this morning
is the findings from the RFP 7633 for underground electric installation. This will be presented
to council. This date is actually wrong. We didn't make that one. We will be on next week's
council agenda. A background of the city's utilization of contractors. We have utilized
contractors for installation of underground utilities since 2000, which we were given
the direction at that time that the council at that time wanted most of our stuff, most
of our new subdivisions, and our downtown area converted to underground. So that's what
we did. At this time, we have approximately 57% of all the electric distribution system
that has been installed underground. We utilize contractors. I call it for the fluff, for
the stuff that our guys can't do. They keep the peaks and valleys from being too high
or too low and making it where our guys can actually do the jobs that are needed to be
done. Right now, for the last 10 years, 25 to 45% of all the electric distribution projects
have been installed by underground contractor. So we've utilized them quite a lot. Hold on
just a second. Here's an example of a project that was done several years back out on Western
Boulevard out towards Wynco distribution center. This was a major project where we installed
a four by four duck bank, 16, four inch conduits, six inch conduits, I'm sorry, for all of the
industrial growth that's going on out there. Wynco was the first one that was fed off of
this. And then we went to... There's a project that was constructed just to the south of
Wynco where we tapped on to this existing duck bank and utilized it to feed this second
one. And then now we have two more that are going in at this time. This is an aerial view
of that duck bank being installed. And if you can see out towards the road, we had to
build a temporary pole line overhead so that we could service them during the construction
project. That pole line has been removed and now it is all underground in that area. Currently,
we have 35 different underground distribution projects in various phases already engineered
and they've been released for us to construct. This is just a listing of a few of those.
Country Club Estates, Bonnie Bray Phase Five is a major ordeal out by Apogee Stadium for
UNT. It's where we're taking all of that down Bonnie Bray underground. And then there's
just a list of some of the other ones. Here's some more pictures of the project out at Love's
Truck Stop when it came in. We actually had to bore underneath 35 and then take a main
line down Barthold Road for the future conversion of 1173. So now forecasted projects. 84 residential
and commercial projects are in various stages of designing and engineering. 31 feeder extensions
are also in engineering design. Some of those projects include all of the I-35 widening
projects. We have eight of them that will be underground and some portions of it will
go back overhead due to where the location is. We also have the Hunter Cole Ranch that
will be coming in. It's a big unknown variable. And then we have the Hickory Creek, Hickory
Street substation, which will be a gas insulated substation. Request for proposals were sent
out to 455 prospective suppliers. We did receive five proposals in. We evaluated them on their
price, the schedules, the compliance with specification and indicators of probable performance.
Once we narrowed it down, we conducted the best and final offer and clarified line item
pricing. And FX5 utility, who is our current contractor, was ranked the highest and determined
to be the best value for the city. They were also the lowest priced. So the recommendation
that purchasing and DME has come up with is to award FX5 utility construction LLC a five
year contract in the not to CD amount of $15 million, which is based upon previous historic
spend and approved distribution projects budgeted. Like, as I stated before, the contractor was
the lowest cost respondent with also the highest evaluated score. Any questions?
Just one question. I'm glad to see these are moving or it's more common. Glad to see these
are moving forward. Is there any, where are we on the, I think it was Forest Ridge and
some of Montecito that had the underground lines that we had so much trouble with several
years ago?
That project has actually been completed, Billy. That project is done. The maintenance crew
did a lot of that, but we did have our underground boring contractor and FX5 both working on
that project.
Very good. I know y'all had a lot of problems out there.
We did. We did. And it's helped us.
It made your beard gray.
It does. You're exactly right.
It'll do that to you. My question is, so it sounds like you anticipate roughly $3 million
a year of expenditures for this underground work over the next five year period.
That's correct.
Okay. So you've got, you said you had like 35 open distribution projects currently?
Currently that are underground projects.
Well, Mr. Ryback, the only caveat that I'll give you that is the Hunter Coal Ranch development
that could very well have an impact on these numbers here. But I think for right now, I
think we're pretty comfortable where we are.
Understood. Will the Hunter Coal Ranch be a separate project in and of itself as opposed
to this many underground distribution conversions you're currently in the midst of?
It should be included in all of these underground projects that we're talking about. I know
that there is another substation, an Underwood substation that is forecast for out in that
location. So we'll have a project coming out of that substation that'll also be included
in all of this.
Oh, it sounds like you've got lots of fun stuff ahead of you.
We do. Looking forward to it.
Thank you.
Will this contract allow you to escalate some of those dollar amounts forward to you? Like
if you're able to do more than $3 million a year, will you be able to use year twos
and year one?
Yes, that is correct. It doesn't tie us to a yearly amount. It's the 15 million over
the five year.
Okay, that's good. Because, you know, obviously, the faster this happens, the better on everybody.
Correct.
Any other board members with any other questions?
We'll entertain a motion to approve.
Karen raised your hand. I'll take that as a motion to approve.
I'll second.
Second from Mr. Jumper. Any further discussion? If not, all those in favor, please say aye.
Aye.
Aye. Any opposed, sign the setting.
There is none. It passes unanimously. Thank you, Mr. Pax.
Before you move on, I just want to say Rowdy is one of our long tenured employees. I mean,
he's been the DME for 35 years now, Rowdy, and the type of quality that we have of employees
at DME and just really appreciate him and all his staff for the work that they do.
Thank you, Tony.
Yep, we're glad you're still here.
Me too, Billy.
Congratulations on your long term of service.
You bet. Thank you.
All right. We'll move on to Individual Item C, Management Reports.
So, Mr. Chair and members of the PAB, we have a few items that we've provided to you. The
first item that we have listed on here is the Service Assistance Program Clarification.
If you recall, Eugene McKinney from Solid Waste made a presentation that was a follow-up,
so certainly if there's any questions, I think he or Brian Borner are on the line, so just
see if anyone has any questions on that item.
Any questions?
Okay, so the next item is our deck dashboard for month ending February. Nick Benson is
here with us. If anyone has any questions on those, I think that really kind of tells
you at least a bit of the story of what happened during the winter storm, substantial amount
of revenue that did come in as a result of the deck. Obviously, that as much as we had
hoped because of the 48-hour shutdown that we had, but again, pretty large impact there
to the positive to help offset that purchase power expense that you'll see on the other
side of the ledger. But any questions on that?
Yeah, I noticed the high runtimes for August 2020 and February 2021, which made perfect
sense. I'm just not remembering what happened in October 2020 to make those runtimes high.
They're also sort of up at that level. And the reason I'm asking is just I want us to
be able to predict the sorts of things that are going to create a demand.
Yeah, and Terry Nolte is here. He can speak to that. Terry?
Yes. Good morning, PB members. Mr. Vinnie, in October of this past year, we had abnormally
warm weather and the deck did run significantly more than we anticipated. You recall, we had
a relatively mild early part of the summer. We had a hot September and October ended up
being very hot as well. So that's the reason why we had those high runtimes.
I guess I was indoors the whole time, so I didn't notice. But yeah, thanks for that clarification.
So obviously what we want to do is be able to prepare for unusual weather like that.
So by October, I think we're usually assuming mild weather and low runtimes. So anyway,
that's all. Thank you. Thank you, Terry.
I think Mr. Rybak has a question, Billy. Oh, I'm sorry. Go ahead, Billy.
No problem. Thank you. I'm wondering, the report notes that the energy center produced
about, it looks like I'm reading this right, 118 million more in deck revenue. Did that
help to offset the charges that we had to the utility due to the weather event and the
high price of power? Yeah, the short answer is, yes, absolutely.
And I think the other part of the answer here will be that, I mean, obviously, we still
have almost half the year left here. And so any additional revenue that's recognized through
the deck will continue to offset that purchase power expense. Obviously, we're also going
to have purchase power expense going forward. But the hope is that we're on the positive
side of the ledger to help offset that, that net 140 million dollars that we've been talking
about. Right. That was my question. So I guess we'll
know better later in the year. Yes, sir.
Thank you. Thank you, lady. Thank you, Tony.
Okay, so the next item that we have for you, I know Ms. Devaney had a couple questions
on the Hickory GIS station. And we've submitted a memo to you, kind of just giving you an
update on that project. And I think for the most part, as far as the architectural components,
everything remains as we discussed with the community. The one thing that we have changed
is we've now basically moving forward with a basically a design build process for for
that station. But Jerry Fildler is on the line and Terry's also. So if there's any specific
questions you have, they'll be happy to go through that with you.
You know, I hope y'all hope everybody on the board did look at that photo of what right
now they're thinking. Pretty nice looking number. It's from a few years ago.
Okay, so, you know, the next couple items are really just kind of a heads up on upcoming
agenda items. Certainly, we have the budget and rates presentations here coming to you
starting on June 14. We'll be walking through the various budgets for for the for the three
major utilities, but certainly, you know, solid waste as well. And, and in customer
service will also come to you because they're primarily funded or they're primarily funded
by by the utilities. So that will be coming to you as well. And then as far as new business
action items, you know, we've completed the item on the minutes and we have two items
left over one solid waste that will come back to you when we complete the comprehensive
solid waste management, you know, study and review. And then the question from Mr. Soap
as well on, on the solar installations, we'll, we're going to embed that into the budget
presentation when we come to you with DME's budget and, and hopefully have some conversations
with you about that, just the overall solar programs along with other programs or what
the impacts may be. So, so with that, Billy, that that concludes the items be happy to
answer any questions anyone they have on any of those. Any other questions or new business
action items as well? Suggestions, requests? And we're hearing none. And Billy before,
sorry, excuse me, Billy, before you move on, been asked if you can go back to item A on
the minutes and actually do a vote on that. Oh, okay. All right. I thought I had Robert's
rules of orders in order. Move approval of the minutes from April 26, 2021. Approve approval.
Motion to approve. Ms. Russell. Second from Mr. Jumper. All those in favor, please say
aye. Aye. Aye. Any opposed, sign the same. Hearing none, move on to concluding items,
we've got a work session. Item number A, DME energy risk management policy. So, Mr. Chairman
and members of the board, we have Smith Day. He's our executive manager for risk and compliance
at DME. He'll be walking through the presentation. Smith? Mr. Thank you, Tony. And good morning
members of the BUB. I've got, I'm Smith Day, as Tony said, the executive manager of regulatory
and risk over DME. I've got a few slides to show you this morning. This is an annual event
for us. And it's the update of our risk policy. Again, it's what we want to do here and accomplish
here is get these materials in your hands, because in a couple of weeks, we're going
to bring it back to you for individual consideration item so that you can have a couple of weeks
with them, study them. And if you have some further questions at the individual consideration,
you can ask. So we can take some questions today as well. But without further ado, I'm
going to attempt technology's fate here and share my screen with you. And can everyone
see the screen? Yes. We're good. Very good. Thank you. Okay. What is an energy risk policy?
Well, at its most basic level, the risk is all in the name. The risk management policy
is a document that lays out the parameters of how the organization manages this risk.
It defines different types of risk. It lays out a plan to deal with those risks, tells
us the roles of each person in the organization and the authority and limits they have. It
also provides minimum reporting requirements. Why does DME need a risk policy? Well, DME
as a city-owned enterprise is a substantial operation. It is the sixth largest municipal
utility in Texas. The activity it handles really deserves an organized policy on how
to manage the risk for trade payers. The risk policy was developed several years ago, and
as I said earlier, we update it every year. The power supply budget is one of the largest
expenses coming in at a little under 60 million in a typical year. And as we know, the extreme
weather event in February has made this year, of course, a very atypical year. That same
event introduced a multiple set of uncontrollable variables, and these things were outside of
normal market conditions that any utility would prudently plan for. And so that impact
of the event was $140 million, as I think everyone here knows. And it really redefined
the risk profile that DME and really all Texas utilities must plan for. The governance requirements
of the risk policy, annually the policy is reviewed by the risk committee, then of course
here BUB. Ultimately, it's approved by the council with changes if changes are required.
And we do have some changes this year, of course. These changes are largely in reaction
to the February event, to address those in a changing landscape of our risk profile.
The box in the lower right, just to draw your attention to that, defines the risk committee
and who it is and who's on it. As you see, the chair of the BUB is a regular voting member
of the committee. We do have, of course, more than just the folks here in the box, usually
a meeting that consists of additional people from finance. It could be additional people
from actually the city's risk division itself and others from the EMO as well.
Now, some of the highlights of the risk policy, this really provides a high level listing
of the contents of the policy and it's provided in your packet is all the details, of course.
And as I said, we're going to be seeking formal approval here in a couple of weeks. We know
this documents are very technical and for some of you, it's an actual introduction to
the processes that we have. The major provisions of the policy or a separation
of the roles and duties and controls that are within the DME organization around this activity
and the policy delineates the reporting as being required. The two key daily reports
that we have or the daily position reports and the credit exposure reports, and those
are produced every day by the middle office. And that's independent from the deal makers,
which is called the front office. The policy provides a lot of answers as to who, what
and when, but most of the how is in the hedge plan. And the hedge plan is going to be discussed
here in executive session by Terry Nolte here in a few minutes. And that's a key part of
the policy and it lays out the tactical plan and objectives. Now the hedge plan part of
this risk policy is of a competitive nature and it's confidential and it's protected
under statutory exception. Now the other major component of the policy
is the authorized, the list of authorized products that can be traded and the limits associated
with those products and for each role within the organization, how much can a particular
role take on as far as limits and transaction limits.
So some highlights, some of the changes for this year that we'll be asking for. Again,
we're going to, we're going to here, we've been through the risk committee already. This
changes were vetted there. Now we're here at TUV and we'll be at council and then in
a couple of weeks we'll be in the actual approval phase. But these changes were really driven
the bulk of them by the newly identified risks that came along with the winter storm in February.
So we've, in the packet, we provide you a clean and a red line version. And so you can
walk through the two and do some comparisons and see the changes that we're going to ask
for your approval. Again, we recognize that it's, it's a complex,
it's a complex set of parameters in the policy and the hedge plan and we'll be available
to answer any questions you might have. So I will get back to, that is about it for the
slides if I can stop the screen and get me back in and be happy to entertain any questions
that I might be able to answer today. Any questions? We don't want to get detailed
and open session on the hedge plan, but are there any questions other than on that plan?
Does it, doesn't appear to be? Thanks, Clint, I appreciate it.
Thank you, Mr. Cheek. Have a good morning, everyone.
You too. I imagine you're going to hang around for the next item.
If closed, I don't know if close is going to, the close and the zoom is going to let
me do that. I will hear all about it, I'm sure. Thank you.
Okay. Thank you very much. Is there any further discussion? If not, I guess it's time we're
going to convene into closed meeting. Let me go ahead and read this out. Catherine
is that correct? Read it before we go in. Do I just need to read the first paragraph?
Actually, if you could read the entire thing. I'm sorry, I know it's lengthy.
Okay. All right. This is a closed meeting item A, PUB 21-065. Deliberations regarding
certain power, public power utilities, competitive matters under Texas government code section
551.086, consultation with attorneys under Texas government code section 551.071. It's
to receive a presentation from staff regarding public power, competitive and financial matters
about the risks of wholesale energy supply and risk management plans, hedge plans and
strategies as each relates to the DMV electric power and gas portfolio. Discuss, deliberate
and provide input to staff regarding the same. Consultation with the city's attorneys regarding
legal issues associated with the above matters where public discussion of these legal matters
would conflict with the duty of the city's attorneys to the city of Denton and the Denton
city council under the Texas disciplinary rules of professional conduct of the state
bar of Texas or would jeopardize the city's legal position in any administrative proceeding
or potential litigation. And Billy, we should be good to go. I think everybody that's listed
on there, including Smith.