May 24, 2021 Public Utilities Board on 2021-05-24 9:00 AM

Okay, it is 902 on May 24th, so we're called to get to order the three of Denton Public Utilities Board meeting. We do have a quorum, but Mr. Rebeck is trying to get back on so you can see him. The first item is the consent agenda. Can we hear your voice? Can you speak? I know you said you wanted to pull item A, correct? Yes, ma'am. Okay. Does any other board member wish to pull an item? Item E. Yes, ma'am. E. E is an echo. E is an echo. Got it. Anything else? Alrighty then, I'm going to go ahead and try to reboot and get my video back. Okay, so then, well, first we'll approve items B, C, D, F, G, H, I. I know my elf of that, but we have a motion to approve those items. Motion to approve, move. Second. Was that you, Billy? Yes. Okay. And Barbara, second. All in favor say aye. Aye. Aye. Opposed? Why don't we take item E first, since Lee is still having an issue? Thank you, ma'am. I'll be right back. And Susan, before you go there, I think we skipped the item A on the agenda. I don't know if there's any public comment or not. Oh, oh, I am so sorry. Yes. Let's go back to that. Is there anyone on? I didn't hear you, Susan. Anybody? Is there anybody on the phone for public comment? Let's not be. Can people hear me? Billy or tech staff, are you aware? Yes, ma'am. Let us check real quick, Susan. Okay. Okay. Thank you. Thank you for reminding me. Thank you. Thank you. Thank you. , sir. Susan, we don't believe that we have anyone online, but if there is someone, we'll come back to you. But we don't believe there's anyone. Absolutely. Thank you. All right. Let's move on to item B. What was your question, Ben? Yeah. I had a couple of things. So if I understand right, Aeropur is, I guess, is that the product is basically just sprayed onto the area, correct? We have Brian Burner on the line. This is Brian Burner. Can you hear me? Yes. Okay. Yeah. Brian Burner, solid waste director. I appreciate the question. The Aeropur system is, it's what we call a low volume, high pressure system. So it's actually aspirated into the atmosphere. So it's not sprayed on like you might spray on with a spray bottle or a aerosol can. It's actually put into the air and used to capture odor molecules and destroy them. It is a sole source product and it's very effective at controlling landfill odors. Okay. So to follow up on that, what kind of environmental impact or even health impact might we expect from that? Well, based on the information we get from the manufacturer, there is minimal impacts to the surrounding community and to the environment in that, from what I understand, when it meets with the odors, it destroys them and at the end of the day, it ends up reducing itself down biologically. Okay. Finally, as I was digging through the paperwork there, documentation, it looks like there's multiple flavors of the spray, I guess what it smells like that costs different things. Is there any reason we settled on the berry flavor, which is, I think I saw that. Is that correct? I believe that is correct and again, based on the offensive net for lack of a better term, just what the odor is, while it is considered quote unquote berry flavored, it is aesthetically neutral in the area. So it's not an overwhelming, it's not like you're standing in a berry patch, mind you. It basically smells neutral in the area. Very good. Thank you. Okay. And Barbara, did you have a question also? No, I thought item A had been pulled. That's the reason I didn't say anything. I guess they said it was pulled, but Lee pulled it and he wasn't on. We couldn't see him visually, so that's why we just rearranged it. I had a question on that one. On item A? Yes. Okay. All right. Any further questions for item E? Do we have a motion to approve item E? I'll move. Thank you. And the second? Is that you, Ben? Ben, second. All in favor say aye. Aye. Aye. Opposed? Okay. Back to item A. Lee. Thank you, ma'am, for your consideration on that. It seems like everything worked this time, so the item in question was for the Archer contingent energy risk outage insurance. I would just like a little explanation, if possible, about what that is, how it works. I did read the attached materials, but I found myself a little confused as to whether it was a plus, a minus, or both. We got Terry Nolte on the line. Good morning, PUB, Terry Nolte, Assistant General Manager. I do have a quick presentation I can run through, Mr. Rybak, if that would help you. I think it would. Thank you. Okay. Let me share. Okay. Can everyone see that? Yes, sir. Okay. So, you know, basically the policy is to provide protection in the event of forced outages during the summer month when we see high prices. This is different from the property insurance that was before you at your last meeting and that the Council approved last week. Property insurance would cover the loss of the deck from a property like a storm or something like that that would actually destroy the facility or a fire. This particular type of insurance basically is a financial settlement that provides the difference between the operating costs of the generator and the market price in the event of a forced outage. So we have a requirement within the energy risk management policy to procure this. We will also be procuring similar product for the winter, January, February, and that will be done in the December timeframe. So this will be back in front of you again for the winter. So these are the types of events that the outage insurance covers. Most importantly, loss of fuel. We don't expect that in the summer, but that was obviously the issue that got us in the winter. Any type of control system failures, any type of cooling water system failures. And so the way that the policy works is there is a deductible amount. So for the first hour, we have 12 units each rated at 18.75 megawatts. We would have a deductible amount in the first hour of 18.75 megawatts before the policy would kick in. And as I said, the settlement basis is the difference between the spot hourly clearing price and established price. So in the example here, if our established price was $50 and the clearing price was $5,000, then you see what the settlement would be. The maximum payout that we're suggesting during this term is $18.5 million. The premium is $629,550 through somewhere up to as high as $800,000. And that is determined by the market on the day that we bind the coverage because it's based upon the forward price of energy for that June through September period. It is an increased issue. >> If I may, sir, so what we're looking at here, this is the typical summer, I don't know if adjustment's the right word, but insurance policy. So we will be reconsidering or you will be representing something similar for the upcoming winter later this year. >> That is correct. >> Okay. So just from my understanding, had we had such insurance in force last winter, we would have received a settlement as you describe here on this page. >> Yes. Whatever -- >> I'm sorry to interrupt. Can you pull the presentation down? >> Yes, ma'am. >> Thank you. Go ahead. >> Oh, I'm sorry. I thought you had -- yes, so Mr. Ryback, yes, so if we had had that policy in place, whatever the deductibles were, we would have obviously incurred the deductible before the payout would have occurred. But then whatever the max cap would have been, that's what we would have received. So in this particular example, had we had this policy in place, we'd have collected $18.75 million. >> Mm-hmm. >> Okay. Which obviously wouldn't have covered the total shortfall, but it would have been of some benefit. >> Correct. >> Okay. Well, this is probably why I didn't understand. I thought the insurance was for both, the winter and the summer, but this was only for the summer. Okay. So thank you for the clarification. I appreciate it. >> No problem. >> Any other questions? >> And, Barbara, you had a question. Correct. >> Well, that -- I just wanted to hear that explanation. That was my question. >> Okay. And then, Billy, you had your hand up. And Terry, the question is, what is outstanding, what would not be covered, what kind of outage would not be covered? >> Pretty much covers anything. I'm trying to think of something, Mr. Chief, but I can't think of anything that would not be covered. We try to write the policies as broadly as possible. I guess, you know, a force majeure event could -- you know, a tornado or something that destroyed a unit might not be covered. But again, we've tried to keep it as broad as possible in order to include as many things as we possibly can. >> Okay. Of course, I'm sure the insurance company is pretty well versed with our air permit, so they're aware of what our limitations are there, too. >> Yes, sir. There's an exhaust of due diligence process that we go through with the policy -- with the carriers on this particular insurance coverage. It takes us -- you know, they review all of our outage information, all of our permit information, our maintenance history, all that before they offer the premium for the policy. >> Okay. Thank you. >> Other questions? All right. Do we have a motion to approve item A? >> I move approval. >> Seconded by Lee. All in favor, say aye. >> Aye. >> Opposed? Earlier, I forgot to mention that we are pulling the work session item. They are not prepared with everything for today, so before we go into items for individual consideration, I wanted to have that item pulled. And also we have a closed session that is available to us only if we have somebody who has questions on item B. So will somebody have any questions on the hedge plan for item B? Okay. I see none, so we don't need to go into a closed session. Okay. Items for consideration. First item is consider approval of the May 10th minutes. And Katherine, I wasn't there. Do I just vote, or do I -- >> Abstain. >> Abstain. Abstain. Thank you. All right. Do we have a motion to approve the minutes of May 10th? >> I move. >> Okay. Thank you. Mr. Rybak, second? Billy's a second. All in favor, say aye. >> Aye. >> Now abstain. Okay. Item B. Consider recommending the adoption of an ordinance for the City Council of the City of Denton, Texas, repealing Ordinance Number 2420, approving and adopting the 2021 Denton Municipal Energy Risk Management Policy. Confirming authority as approved in the 2021 ERMP, authorizing and approving the subsequent execution of such ancillary and related documents, including without limitation contracts, nominations, certificates, assignments, licenses, directions, instruments, confirmations, orders, and statements as are authorized by the 2021 ERMP, which are incident to or related there to confirming that the City of Denton, Texas, its Mayor, its City Council members, its City Manager or designees, its City Attorney or designees, and the City Secretary or designees are authorized to perform such acts and obligations as are reasonably required to consummate the future transactions which are provided for and authorized by the 2021 ERMP. Finding that the purchase of electricity, natural gas, and related commodities and instruments are exempt from the requirements of competitive bidding. Finding that the purchase of electric energy, natural gas, and related commodities and instruments made by the City under the terms of the 2021 ERMP are in the public welfare of the citizens and electric rate payers of the City, authorizing the expenditure funds, therefore providing an effective date. Item B, who's presenting? We have Smith Day, who's going to go through a very short presentation. Thank you. Good morning, TV. That's quite a handful, but let me let me get to the presentation screen here so I can share that. And away we go, hopefully, you can all see that. Okay, a couple weeks ago, I promised we'd be back for the conclusion of this item. We introduced it, we had questions and answers, you've had it in your hands. And just to recap real quick, we didn't want to belabor this too long. What we're asking today is your recommendation to approve this. Again, to reiterate, the 2020 version of the risk policy was introduced and explained. This is an annual thing. We've had this policy for many years. We update it every year. We try to continuously improve it. The policy is designed to give a governance structure for the operation of the hedging and financial portfolio for the energy costs of DME. So it's pretty straightforward. The plan, again, to recap, the policy changes for 2021 are largely driven by the hedge plan. So the hedge plan is connected to the policy, the policy is, of course, connected to the risk committee, the risk committee is connected to the BUB, et cetera, on up to the council. So what we had to do was make adjustments for accommodate the changes in the hedge plan. We did that to this risk policy. The other big change was to remove the outage insurance from EMO authorized products to move that over to city risk and legal. And that was done as a decision to keep that area traditional. And that's really the risk area of whether we have a tornado that blows the building down. That's a different policy than the one Terry just explained. And what we're doing today is just simply asking for you to recommend approval so we can move forward with our 2021 version of our risk policy. Lee, you have a question. Yes, I do. One of the things I read in this ordinance and the attached materials had to do with noncompetitive pricing. Now I'm assuming that's because the utilities you're connected to, you're connected to, and that's that. But I would like to at least ask for some clarification. Is that something that I'm looking at, Catherine, is that something that we can answer? Okay. Yes, sorry. Yep. Thank you. Can you direct me to the area specifically? Was it in the policy? Do you have that? Oh, you're going to make me reread this? No, it's a big policy. I've got it here though. It is a big policy. I think what Lee was asking about, captive shipper is our noncompetitive pricing. Correct, Smith? Which one? I'm sorry? He was referring to... Exempt from the requirements of competitive bidding. That was what I was asking about. Oh, I'm sorry. So that's the products that are exempt, right? So under the statutory framework of Texas, there are certain exemptions to the public procurement laws. Energy is one of them. One of the big reasons that energy is exempted is because it's a real time product. There's no way you can go through a multi-week procurement process when you need that energy right this minute. And that was a great example, was the tropical winter storm, Yuri. So winter storm, Yuri, we needed tremendous amounts of excess power. We needed it right then, right there. So you really have to go procure it on the spot. And that's why the exception exists in the statute. Okay. Well, thank you. Again, I read it. I was like, why would it be exempt and that it makes sense for connected utilities? Power, obviously power and gas and the crisis situation you're procuring in real time. Again, I just wanted to ask the question for clarification. Thank you. Yes, sir. Thank you. Any other questions? All right. Do we have a motion to approve item B? Okay, Ben is moving in. Barbara is seconding. All in favor say aye. Aye. Opposed? That one carries. Item C. Thank you. Consider recommending the adoption of an ordinance for the City of Denton, the Texas Home Rule Municipal Corporation, authorizing the city manager or their designee to execute a public works contract with the Mountain Creek of Texas LLC for the construction of the Hickory Creek Interceptor Phase 1 and 2 project, providing for the expenditure of funds there for and providing for an effective date ISB 7252 awarded to Mountain Cascade of Texas LLC and the not to exceed amount of 7,534,784.25. If you'll give us a second, we have Tracy back with a couple of projects. If you could unmute Tracy. Yes. You're muted. There we go. I saw that. Just couldn't click hard enough. Thank you. Good morning, everybody. Let me share my screen with you and let me know if you can see. Excellent. All right. This morning, I'm going to speak to you about the Hickory Creek Interceptor Phases 1 and 2. It's a construction award for an interceptor that's got some longevity on it. So we're excited today to bring this to you. Excuse me, Tracy? Yes, sir. We need that full screen, please. Oh, let's see. Oh, goodness, thank you. It's not working. One minute, please. We've got technical. Fantastic. Thank you. Very good. I apologize for that. My name is Tracy Beck. I'm the project manager for this project. The project scope and purpose, a little bit of background about this project is it's approximately 13,000 linear feet. It's about two and a half miles ranging from approximately I-35 to the north, south to US-377. The purpose is because the project, the existing sewer line is under capacity, and it was built in the 1980s, and we've got a benefit to adding from a range of 30 to approximately 54 inch pipes to relieve the capacity needs. The schedule for this project recently is the advertisement took place in March 14th of 2021. We had a design amendment to address some items. We went through pre-bid, and now we're into the solicitation, passed the solicitation, and we went into the award and open bid. The bid response summary includes six applicants. The lowest bid using the invitation for bid, the IFB, also known as the low bid process, was granted to the Mountain Cascade of Texas for approximately $7.1 million. The OPCC, or the engineer's opinion of probable cost, was approximately $9.5 million. Staff's recommendation for this particular project is to award the project to Mountain Cascade Construction Company. In addition to the contract amount, staff has also added a 5% contingency that's outside of the actual contract that allows staff to work with a change board and other groups to review the change orders, if any, and approve those in turn. The project does have funding, and the project funding sources are from the Wastewater Project Funds. With that, I'd be glad to answer any questions you may have. Can you take the presentation down, please? Thank you. You sure can. Thank you. Go ahead, Barbara. Is there any penalty for not finishing on time, if it has to be extended? No, ma'am. Lee, go ahead. I have a question about the contingency. I noted it's 5%. Is that typical for projects? Yes, sir. Staff has worked through legal to make sure that we have an opportunity to use a changeboard program, which we didn't have about a year ago. So we will review those with finance and other departments to make sure that what we're approving has passed through the review of all the departments, and it's standard on all CIP projects going forward. Okay. Thank you. And I have a question. I know this has been in the works for a very long time. What's the difference between what the engineering estimate was versus how it came in? I mean, that's almost $2 million. Are we confident something wasn't missed in the bidding process? We've reviewed it, and we didn't see anything that was missed. There's a change in the time of when the bids were estimated, as well as the companies are also doing business in the local city. They've been on other projects. So they're a little bit closer to town. So it's going to be more advanced. Okay. Any other questions? Do we have a motion to approve this item? Barbara moved. And Lee seconded. All in favor say aye. Aye. Aye. Aye. We're going to move item E ahead of item D. Mr. Cheek is going to have to recuse himself on item E, so we'll have him do that and come back in for concluding items. So go ahead with management reports, Tony. Okay. So Madam Chair and members of the board, we have on here, the first item we have is a memo from finance regarding the upcoming CO bond sale. If there's any questions that you have regarding that memo, they'll be happy to walk you through any question and certainly we have staff from the utilities available as well. Are there any questions on the go ahead. I have a quick question. In looking through the list, there were some items in the bond and some items not in the bond. And I was curious what drives that having never seen one of these before. So you wouldn't mind. Yeah. Well, what I could tell you specific to DME, obviously, and we had originally planned to issue about 61 and a half million dollars worth of CEOs to fund projects as we started to go through that list again, some projects are delayed or we've kind of rethought the amount that we needed. And so there's just a reprioritization that happens every year. And so that's what's happened here. I'll be honest with you regarding DME specifically, we were very, very cognizant of the upcoming debt burden that our repairs are going to have and so we made a conscious effort to reduce and delay some of these projects. And so that's the difference and I'm sure that on the water and wastewater side, it was the same type of process that they went through as well. So it's not uncustomary that there's a divergence from what we originally had in the CIP adopted budget to what we ultimately end up going to sell primarily because of delays in some of these projects. Very good. Thank you. I was curious and I appreciate your explanation. Yes, sir. Okay, if there's no other questions on that, the next item that we have for you is just the future agenda items. Obviously, the name of the game here is budget, budget, budget, right? And so we will be coming to you starting on June 14th, I believe, and the finance group has already been working with the utilities on putting budget presentations together and budgets together and you'll be seeing those over the course of the next couple of months. And then finally, the last item that we have for you is just a recap of new business action items. These are the same two items that are on there. I did want to just simply inform you of two other items that aren't on here. The first one had met with the chair and she's requested a legislative wrap up on all these bills that may be going into effect, that may be impacting our utilities. We're going to plan to do that probably sometime in July. And then obviously the legislature is still meeting, this is the last week that bills can come out of committee to the full legislative body. So it's near the end and so hopefully we'll have resolution on many of those items. And then the only other item that I'll mention to you is I believe June 14th, and again, this is pending council direction tomorrow, but I believe June 14th will be our first basically hybrid meeting where we're going to have some of you here in the work session room. And I think a couple of you have asked that you continue to work virtually, and so there'll be a little bit of a hybrid approach to that. But again, that's pending council direction tomorrow. Once we have that, we'll certainly get that out to the board and all our other committees as well. So with that, I'll be happy to answer any questions that you may have on any of those items. Go ahead, Lee. Tony, just a quick comment since I'm new to the board and the process. I was wondering if during that first meeting we could get, if you will, a high level, sketchy overview of the budget process, how it works before we dive into all the details. Yes, sir, we could do that. I'm looking at Cassie Ogden, our director of finance, she says she'll be happy to get that to you. Okay. Thank you. Yes, sir. All right. Then we'll go into item D. Billy, you want to recuse yourself from this one? Consider recommending the adoption of an ordinance of the city of Denton, a Texas home roll municipal corporation authorizing the city manager or their designee to execute a contract with Jago Public Company for the construction of the 2020 Street Bundle Sector 2 project with geographical limits as follows. North Texas Boulevard from West Oak Street to Eagle Drive, Stella Street from South Bonnie Bray Street to North Texas Boulevard, Chestnut Street from the Welsh Street to Bernard Street, and Welsh Street from Fannin Street to Collins Street providing for the expenditure of funds therefore in providing for an effective date CSP 7582 awarded to Jago Public Company in the not to exceed amount of $5,044,681. You're muted. Dusty, maybe if you put your mic down a little bit, maybe. How about now? Can you hear me now? All right. There we go. Hold on. My name is Dustin Draper. Good morning. As I said, I will be bringing you the 2020 Bundle Sector 2. Let me bring in my presentation real quick. Again, good morning, this is the 2020 Street Bundle Sector 2 award for construction contract. My project overview is it's basically a roadway project with water and wastewater upgrades. My extents, as you can see on the map, are Stella Street from Bonnie Bray to North Texas, North Texas Boulevard from Oak all the way to Eagle, Chestnut Street, and Welsh. The method used in the proposal for this bid was a competitive sealed proposal, CSP. This bid is a little different than most. What you see is a low bid. The proposal is sent out to projective bidders, they place a proposal back and then they are scored in according order to make sure that we're not only getting the lowest bid, but we're also getting the best quality of construction out of our contractors. As you can see from my chart, there was four sent out. Those companies were Jago Public, Texas Bid, Seamen Construction, and Reliable Paving. As you can see, the categories are ranked in total score of 100 from everything from the price to safety record, schedule and written plan, quality and reputation, and key personnel. As you see in these categories right here, Jago Public does win a bid at a 76.05 as the most responsible and lowest bid. It's one of the things where, so to speak, the traditional low bid, you always get a low price, but you don't necessarily get the quality of contractor or work that you want to get. My project schedule is, this was prepared at the time this was, job was decided to be designed. It was current staffs that time, at IDEO at that time, to design it in-house. The in-house design was completed in February 2021. Of course, I'm taking it for y'all's approval today on May 24th. Council award hopefully on June 8th, pending y'all's decision today. Staffs proceed on June 21st and my construction complete in June of 2021, or sorry, June 21 of 2022. The staff's recommendation is to authorize the approval of the contract with Jago Public and to not to exceed the amount of $5,044,681 with the 5% TGS traits explained in the earlier slide. Any questions? Well, I just want to say for clarification, the reason why this is coming for us is because of the water. Yes, ma'am. The reason why it's on there, it's a roadway project and there are, due to, yeah, due to aging infrastructure, there are water and wastewater needs that need to be replaced on these roads. Yeah. And that's why it's before us. Yes, ma'am. Normally, a road project would not come here. It just, we have some new members and just want to clarify. All right. Do I, do we have any questions on the project? Yes, Barbara, first. Go ahead, Barbara, I'm sorry. I just wanted to ask, I noticed that the design work was done in-house and I'm sure that is more cost-effective for the city. Is the reason more isn't done in-house because they're that busy or what's your criteria for going outside? Primarily, everybody likes to go outside because of the availability of the deal. We have a limited number of engineers here with inside the city that can draw on design prints. It is, even though you are correct, it is more cost-effective design. There is no way that we could design every project in-house. We just don't have enough staff. It also can be done a lot quicker by outside entities because they have the ability to have 10 or 12 engineers working on it as opposed to just one. Sure. Okay. Thank you. We appreciate it as much. Thank you. No problem. Lee, I think you had a question. Yes, I have a curiosity question. The company that selected J-Go public, their safety record score was reasonably low. And then, of course, the reliable commercial safety record was zero, which I was a little surprised at. Is there any particular reason that the selected company's safety record is a little bit lower than one might hope? Yes, sir. There is. Okay. As these criteria are graded, they are also graded by the information and the proposal that you supply. If you leave a portion out or you don't give all the information that was asked, you have to be scored accordingly. That's why some will get a zero because they didn't submit as much information or all the necessary information as the lower ones, some of them rank, some of them don't. It depends on how well you answer in the proposal. Okay. So it wasn't something related to like some kind of safety record report from the insurance industry or something. It's just on the documentation they provide. Yes, sir. Oh, very good. And just wanted to comment. I think this CSP process does beat the pants off a little bit only, so good on you guys. Yes. Thank you. All right. Any other questions? Do we have a motion to approve item D? Okay. I'll leave right back. Seconded by Barbara Russell. All in favor say aye. Aye. Aye. Aye. Okay. Motion carries. Let me, let Billy know that we're done. Okay. Then the final item is concluding items. Does any board member wish to have something added to the agenda or make any comments? Let's wait just for a second for Billy to come back in case he has something. Yes, Lee. Go ahead. Just a comment. I know Tony and Terry have talked a little bit about adding some meteorological muscle to the team at the DME, and I understand the benefits thereof, and I think Tony appropriately points out that there is a cost impact there for the long term. One thing I would like to ask is if there's some consideration of hiring a meteorological service that could provide alerts, updates, forward forecasting information. Is that something that's being looked at as well? Absolutely. 100%, Mr. Rybak, we're actually having those conversations currently, and we'll be happy to speak with you a little more when we bring the budget to you. Oh, very good. I was just curious about it because it's come up at a couple of our sessions, and the thought had occurred to me in the meantime that maybe a service would be having nothing or having a person on staff. That's exactly the conversation we're having, sir. Okay. Thank you. Well, any other questions? I was waiting for Billy to hop back on, but maybe he's not going to. Okay. He just texted me that he has no concluding items, so there we go, but we have a motion to adjourn. Oh, there he is. He came back to adjourn, okay? Okay. Motion to adjourn. So moved. Okay. I second it. All right. We're concluded at 944. Thank you, everybody. Thank you. Thank you. Bye.