Okay, it is nine o'clock and we have a forms are called to order the public utilities board
meeting for the city of Denton for July 12 2021.
The first item is presentations from the public is anyone in the audience that wishes to speak?
Okay, do we have anybody on the phone?
No, chair, there is nobody on the phone for this meeting.
Okay, thank you.
Then the next item is the consent agenda.
Does any board member wish to pull an item from A through I?
Okay, Barbara is pulling H and then you have your hand up.
Let's see a a C and D and D will be quick questions.
Okay.
Nothing from Devon.
Nothing from Billy.
Okay.
Is there a motion to approve items B, E, F, G, and I move approval and a second second
and been seconded.
All in favor.
Say aye.
Aye.
Negative.
That carries.
Okay.
Item A.
We have somebody for them.
Okay.
So I'm gonna ask Brad Watts, he's our superintendent to come up here and respond to you.
Morning.
So I guess I'm curious, so regarding all the replacement of poles and inspection of poles
and such, how often do they need to be inspected and how often might they have any kind of
issue?
The inspection process can vary from five years, six, seven years, and it's been quite
some time since we've actually done a pole inspection and so with my department in engineering,
we started a pole inspection process and we really wanted to get a start date.
And so we're gonna inspect the entire infrastructure of all our wood poles, concrete poles, and
even steel poles.
Some utilities might do it, you know, broken up in quarters or however, and that's what
our goal will be is after we get all the poles inspected, then we have a starting point and
then we will start doing them on a quarterly basis then.
What sort of issues might you encounter?
The main issues you're gonna find is gonna be ground rot and just the age of the pole.
And you know, we've still got some aging poles out there, but the main thing is below ground
level and then also you get like just mother nature of lightning strikes that we don't
know that's hit the pole and you know might have burned parts of the pole out or something
to that effect.
Okay.
All right.
Any other questions?
Do we have a motion to approve item A?
Move approval.
Second.
All in favor say aye.
Aye.
Carries.
Item C. That was you two right there.
Yes.
And Brad will handle this one as well.
Okay.
Okay so I might have missed it.
Maybe I wasn't just didn't understand.
So is this to do active maintenance now or is kind of planning for the future for replacing
lights on I-35?
It's gonna be a little bit of both.
The majority though is gonna be the maintenance side of it.
Poles getting knocked down, lights going out, and we've actually encountered some theft
where they've actually stole the wire out of there.
And then part of it, you know, TxDOT's fixing to do another project in Denton and so that
could involve some of that and then also we've got the LED light project because the lights
that are on 35 now are majority HPS lights and they'll be as we're moving forward, when
we have a light go out, we will change it out with an LED and over a process and then
get them all changed out.
Okay.
Thank you.
Any other questions?
All right.
Do we have a motion to approve item C?
So moved.
And a second?
Second.
Or a seconded.
All in favor say aye.
Aye.
And that's moved.
Item D. Okay.
Good morning.
It's the Ben show today, sorry.
So if I read that right, it looks like the current contract ended two days ago?
Is that correct?
On the 10th.
Yes.
So today is the 12th.
The 12th.
So what does that mean for us right now?
Right now it means that basically they're not to be doing any consulting work for us
as part of a new permit or a permit for expansion.
So how does that impact the city?
It does not do anything right now because the permit is in the executive director's
office waiting for his signature.
It has been remanded back from the SOA, administrative law judge, and we're just waiting for his
signature and then that could happen anywhere from two days to about two weeks and then
once that happens then there's some stuff on the back end that we're going to need them
to do.
Okay.
To help us along.
So right now, I mean, if it could have hit at any other time it might have impacted us
a little bit but it's really opportune time right now.
Good deal.
Thank you.
Okay.
Thank you.
Any other questions?
All right.
Do we have a motion to approve Item D?
So moved.
And a second?
Second.
Thank you, Billy.
All in favor say aye.
Aye.
Opposed?
It's approved.
Thank you, Brian.
Okay, and Item H, that was Barbara.
I just had a question, who is currently, who are we dealing with on the banks?
Here comes Cassie.
Cassie Ogden is coming up, she's the director of finance.
Good morning.
We're currently using Wells Fargo.
That has been our bank for several years now.
Okay.
It looks like it's a pretty good deal.
Yes, we have a good working relationship with Wells Fargo.
We haven't had any issues.
We did have two other bidders but just really came down to price and probable performance.
Right.
Okay.
Thank you very much.
You're welcome.
Move approval.
And do we have a second?
Second.
All in favor say aye.
Aye.
Opposed?
That one carries.
Next item is consider approval of the June 28th, 2021 minutes.
Do we have any changes or corrections to those minutes?
No.
Do we have a motion to approve?
Move approval.
Thank you, Billy.
And a second?
Second.
All in favor say aye.
Aye.
And you weren't here?
Yeah.
Okay.
Thank you.
There is two.
Items for individual consideration.
Consider recommending the adoption of an ORNS for the City of Denton, a Texas Home Rule
Municipal Corporation authorizing the city manager or their designee to execute a contract
with USIC Locating Services LLC for locating and marking all existing and future installed
utility lines for Denton Municipal Electric and the fiber, water, and wastewater departments
providing for the expenditure of funds therefore and providing an effective date RFP 7672 awarded
to the USIC Locating Services LLC for three years with the option for two additional one-year
extensions and the total five-year not to exceed amount of $4,500,000.
Okay.
I have a little presentation to talk about the underground utility locating and when
we first started doing it with contractors it was the electric department only based
off of the needs from the electric department and how many and then did it share?
Sorry about that, I thought I had it.
But now we're involving fiber optics has also been located by a contractor and now water
and wastewater will start utilizing a contractor.
As you know, in the state of Texas, you know, everybody hears the term, you know, call before
you dig.
It used to be Dig Test and now it's Texas 811 and Denton County is one of the fastest
growing counties in the state of Texas and then many types of the utilities in Denton
are, you know, buried underground underneath the streets, roadways, or right-of-ways, sanitary
and storm sewers, water, natural gas, oil pipelines, telephone, fiber optic, cable television,
traffic signal, electric power, so there's quite a bit of stuff buried in the ground.
These things are all protected under federal laws to prevent people from just going out
and digging, you know, and damaging or doing a strike on an underground line.
Anytime there is a hit on our lines, whether it be water, electric, of an unmarked or improper
marked line can result in, you know, serious injury, loss of service to customers, cost
of repairs, and loss of revenue, and, you know, until the repairs are made for all utilities
affected by an excavation strike.
The cost for us to do the city staff to perform a locate is approximately, depending upon
the department, it could be $50 to $100 an hour, which includes the labor and the vehicle
cost.
Depending on the locate also is a factor, you know, when you're doing hourly, paying
an employee to do the locate, you know, based on the department performing the locate.
And then you've also got costs for the city staff to perform emergency locates after hours,
you know, in the event of a, you know, water line or gas line or electric line.
After hours we have to call a locate, so do the contractors that are coming out to fix
the lines.
And then a cost for, this can range anywhere from $100 to $200 an hour, based on the length
of the locate and things like that, after hours and over time.
Cost for a contractor on the current contract that we're on right now is $12.04 per locate.
And then for the fiber locate it's $10.20 per ticket for each locate.
And then the locate prices are the same.
Due to the high volume of daily locate requests, which it's indenting as we're growing, it's
just getting more and more and more.
It would require additional staff specifically designated to perform locates should a decision
made to revert back to in-house locate services.
And on this page, you know, the locate costs, and you'll see a difference in electric locate
cost and then a water locate cost.
And one of the main reasons is we go all the way up into the meter base in the yard.
So the locate has to also do in the street, the right of ways, but also up into the customer's
yard for the customer service.
Water, you know, they're mainly in the street.
Once you leave the meter, then up in the yard, then that becomes the property owner's responsibility.
So that's one of the areas that reduces some of the costs for water.
And then fiber, they pretty much stay the same throughout there.
I mean, the fiber network is what it is.
It's not growing as much as the water and electric because, I mean, they have their
own little gridded area.
And then in locates, you see in 2018, they fluctuate up and down.
There's many things that can affect, you know, how many locates you're going to have in a
year.
What the economy's doing, I'll give you an example as far as when, like, one of the telecommunication
companies want to come in, and for example, Viles, when they came in denting with Viles,
they were digging in everybody's yard.
So our locates just, you know, went through the roof, but then once we got past that,
then it went back down.
So it can fluctuate up and down.
Water stays right there with us pretty close, and then fiber, you know, again, fiber is
what it is.
They don't have as much.
And this is an example.
When somebody digs and they don't have locates, this was actually out in front of Bonnebrae
substation.
This took out three circuits, and so -- and they didn't have proper locates.
They had locates, but then when they started excavating, they removed the locates in a
new company -- or the same company, I apologize -- the same company came back to work.
The lines were moved, or the marks were erased because of digging, and then they actually
hit three circuits, so we had a, you know, major outage of three circuits on that side
of town.
It can be very costly when somebody don't -- when they don't call for locates.
And in our direction, you know, we're seeking approval for a contract of underground utility
electric -- utility electric and fiber line locating services for the city of Denton and
award USIC locating services LSE in a three-year, with the option two additional one-year extensions
and the total of a five-year contract not to exceed $4.5 million.
And the main reason to try and put this much money on this contract is we don't know what's
coming.
We know that we've got 100 coal ranches that's going to hit, and when that does, the locates
are just going to go crazy for water and electric.
And then whatever else is coming down, you know, Denton is the -- it's one of the fastest
growing counties in Texas, and we want to be prepared for it.
And I'll answer any questions.
>> Any questions?
Yes, Barbara, go ahead.
>> Are they going to go back and start from the beginning to log them?
You said some of them were marked properly, so will they be locating?
Will this be comprehensive for the city?
>> I guess I don't -- I'm not understanding your question.
>> Okay.
You commented that sometimes they've -- the lines have been improperly located.
Are they going to check, go back and check so that we will have, during the course of
this contract, all of these things located within our city?
>> Well, locates are only -- and I made an improper statement.
I think I misled you on that.
It wasn't that it was improperly marked.
They marked the lines, but then while they were digging with the big excavators, the
lines were moved when they took the dirt up, and then it's their responsibility to call
us to let us know that we've damaged our -- the locates, we can't see where the lines are,
we'll go out.
Our -- actually our service trucks and water department also will go out right then and
re-mark, if not the contractor, to make sure that the lines are identified and marked.
Was that -- I guess I misled -- I said the wrong thing, and I guess that you took that
from that.
>> Yeah.
Barbara, I think what Brad's saying is that when that second crew from that same company,
when they came back the next day, they should have called in a line locate, and they didn't.
And that's what he meant by not being properly marked.
>> Okay.
>> Yes, ma'am.
>> Okay.
So we can re-mark the lines immediately right then.
>> And this does not displace any employees.
This is because we can't handle the work.
>> Correct.
>> Okay.
Any other questions?
>> What liability does the line locate company have for correctly locating these -- any lines
that you say about to locate?
>> They can be 100% liable if they improperly mark, which, you know, there's clauses in
the contract where they can, you know, they can argue it and everything, but they are
100% liable.
So if they mismark or if they don't mark.
So we can't go back to them for, you know, for all costs, the damages and everything.
>> Okay.
Oh, yes, go ahead, Desmond.
>> So I'm noticing in the presentation you had costs for 2020 and number of locates for
2020.
It looks like it was $460,000 total cost and then about 50 -- a little over 50,000 locates,
55,000 locates.
So that's like $9 a locate in cost.
>> The current contract, we're at $12 and I'm speaking for electric, it's $12.04 and
then fiber is $10.85.
On the current contract we're in right now, do you have the price for the new contracts?
If not, I can give them to you.
>> Yeah, they're in here, but I'm just doing that math, it seems like the 2020 actual costs
were lower than the proposed contract.
And they can fluctuate up and down depending on one of the things that affected some of
that would have been COVID because there were contractors that weren't working and then,
you know, based off call volume how many people need locates versus, you know, 19, 2020, 2021.
>> Yeah, so just looking at just the water, $134,000 for 23,000 locates.
So that's $6 a locate that we performed ourselves?
>> No, I see there's different parts of the line locate contract.
You've got your locate for just a normal locate that you go out and then you have an after
hours locate and so that's going to entail all that and then you also have another price
that's thrown in there as far as when a locator, they keep having to come back over and over
and over and over, they will call that a project rate.
Since they're coming back out there so many times, they've moved to a different rate because
they're going to spend, you know, three or four hours out there locating something so
then they charge us a locate so that it's not broken down but that, you know, that involves
all those prices.
>> Thank you.
>> Any other questions?
All right, do we have a motion to approve this item?
>> Moved.
>> Second.
>> Well, actually Ben moved first so Billy, you're the second.
All in favor say aye.
>> Aye.
>> Opposed?
Thank you.
Management reports.
Mr. Palenty.
>> So Madam Chair, members of the PB.
So we have a couple of items here for you.
The first one is a memo from our finance department regarding the series 21 utility system revenue
refunding bonds.
Cassie Ogden is here with us if anyone has any questions on that particular memo.
>> Questions from the board?
Go ahead, Mr. Taylor.
>> So I'm new up here.
So I don't know if this has already been covered.
I was wondering if we had an idea of what the likely impact will be over the next-- over
the 30-year term to rate payers.
>> That's a good question.
>> Good morning.
So we did a presentation at the last PB meeting on the electric performa and the rate impact.
Right now we are not projecting to increase rates.
That's one of the reasons we wanted to do the refunding and spread that cost over 30
years so that it wasn't a one, you know, one hit in one year to the rate payers.
But we have a lot of uncertainties right now with the electric fund.
We have an outstanding full case rate filing for our transmission cost of revenue which
could impact the revenue that we receive on our transmission costs or assets.
And then we also have a cost of service study that's currently outstanding.
So we didn't want to bring a rate increase forward and then have a cost of service study
done that could potentially impact the rates.
So we're projecting to bring back rate discussions in December.
>> OK.
Thank you.
>> OK.
So the next item that we have here for you is I think it's a follow-up memo from our
purchasing compliance area for the north-south main project.
It was a tender agreement that Christine Taylor, our director over that area is here if anyone
has any questions.
>> Questions on the memo?
I see none.
>> OK.
And then the final two items are just our feature agenda items, you know, and Nick will be talking
a little bit more again with you about the schedule for the budget and in final approval
or recommendation to the council from the board, not just on the budgets for the utilities
but also on the individual rate ordinances, those will be coming to you as well.
And then the last item is on the new business action items, obviously we still have a couple
of items that are still on here, one for solid waste, one for DME.
And then as you know, the governor did call it a special session.
And even though there was no specific item on his agenda for electric, I can tell you
that there is a hearing.
I think the hearing is actually today that's being had on various electric-related issues.
And so we're going to wait until probably the end of the legislative session to come
back to you and kind of give you a synopsis of all the activities and any impacts that
we may have on the utilities.
But with that, if there's any questions on these items or if there's something else that
you'd like to be added on there, just let me know.
Okay.
Thank you.
Yes, Berman.
Do we have someone monitoring the bills that might potentially affect?
Yes, ma'am.
So we have, the city has a contract with two lobbyists, Jackson Walker on the general government
side that handles the majority of the city and then we have focus advocacy that handles
just DME-related items.
And so there's certainly the lobbyists that are keeping in touch with what's going
on, but we have a number of different staff members across the city for DME.
Terry Nolte has been very active in that area for us and will continue to do that, not just
with the legislature, but also with the PUCT and RCOT as well.
Thank you.
Yes, ma'am.
All right.
Then we're on to concluding items.
This is the opportunity to make any public comments or add something to a future agenda
item.
Does anybody have something?
I'd like to welcome Devin Taylor to the board and maybe just tell us a little bit about
yourself.
Sure.
Thank you.
And how you got into this.
So I'm Devin Taylor, newly appointed today to the board.
I grew up in Denton County and graduated from Ryan High School and raising a family here
in Denton and I look forward to serving our community and working with this board toward
long-term sustainability, reliability and quality of services as our city continues
to grow.
And I'm really excited to be here.
Welcome.
Okay.
The last item is our work session.
Receive a report and hold a discussion and give staff direction regarding the water,
wastewater, drainage, solid waste, electric and customer service fiscal year 2021-2022,
preliminary budget capital improvement program and five-year financial forecasts.
Good morning, Chair, PB members, Nick Vinson, Assistant Director of Finance.
Let me get the presentation pulled up really quick.
And welcome, Mr. Taylor.
We're definitely excited you're here to talk about the budget with us.
All right, before we get started, a brief introduction.
So I'm going to walk through the utility budget presentation.
After I get done, Crystal Foster, the customer service manager, can present her presentation.
So we're definitely excited that she's here with us today to present her budget.
She's done a great job.
And our staff, this fiscal year, putting it together.
So we're excited about that.
A little bit of history for the PB members that may not have been here last week, and
we did, or I guess it was two weeks ago, we did walk through the preliminary budget for
each of the utilities.
We looked at the operational information forum, what the goals and accomplishments were for
this previous year and this upcoming year, what the forecast looks like from the operational
standpoint and the capital standpoint, and then what those future steps are.
So the water financial assumptions, what we do, we typically tell the PB and the city
council how we do the revenue forecast from a volume standpoint and an expense standpoint.
So the volume forecast for the water utility, we currently do have a 2% growth forecast
in the out years.
We are looking at that 100 coal ranch development that Mr. Watts had mentioned earlier, starting
the fiscal year 2023.
So these utility performance do include financials from the operating standpoint and revenue standpoint
for that development.
Revenue is the 2% growth in the forecasted years, consistent with that volume forecast.
On the expense side, we currently do have a 3% growth forecast in the out years for expenses.
And then supplemental requests, and for any PB members that may not know, supplemental
requests are new packages that the utility is requesting.
So these could be new people, new initiatives the department wants to accomplish this coming
fiscal year, that we do consider those supplemental packages, that we do consider those separately.
For the water utilities, these did total $413,000.
And then these requests are for increased materials costs, employee licenses, fire hydrant,
and line location services.
So the water tenure forecast, I know there's a lot of numbers on this page, so I'm going
to walk through it fairly slowly.
We did walk through it two weeks ago, but I want to make sure all the PB members are
familiar with what you're looking at.
So what we do is we group the revenues up here at the top.
You can see the water revenues.
We are currently in fiscal year 2021.
And the city's fiscal year does run from October 1st to September 30th of each year.
So we are about three quarters the way through the current fiscal year.
So we are currently in 2021's fiscal year.
You can see we had $49 million in revenues, $52.9 million in expenses.
So the adopted budget that was approved by both the PB and City Council this year had
use of reserves of $3.9 million.
We are forecasting coming a little bit better than that.
So you can see our planned revenues of $48.7, with the expenses coming in at $51.5.
So actually only using about $2.8 million in reserves.
The preliminary budget, or what we're here talking to you today about, is in this column
right here.
We currently have revenues forecasted at $52.2 million.
No planned use of reserves.
You can see the use of reserves in this pinkish tin column right here, or this row.
Expenses of $51.5, with a surplus or a net income of $686,000.
So I did want to walk you down to the bottom of the page a little bit and explain some
of these other numbers.
You can see the Indian Water Fund balance.
So what this fund balance simply is, this is the operating reserve that this fund has
on hand in case something was to happen from an operational standpoint or a rate standpoint
to help minimize that impact to the rate base.
So definitely want to point that out to the PEB members.
Ending this upcoming fiscal year, we'd have about $20.2 million in that reserve.
The targets, so we do have a target for this utility, the minimum of 120 days, with a maximum
of 180 days.
So that minimum equates to about $16.5 million, with that maximum being $24.8.
A couple other numbers on this page I want to point out to you, the impact fee capital
reserve.
We currently have $9 million segregated into that account, and we'll talk a little bit
about that here in just a second.
The impact fee reserve, this is the rest of the impact fee money that's available.
If something was to come up with growth and growth was to stop, we can mitigate some of
that impact to the rate base.
Development plan lines, these are from big developments coming into the community, and
we're currently looking at these funds and how we can use these moving forward.
So going back up the page here, a couple of things I want to point out to you is when
you get out here into the future year, starting in fiscal year 2024 through 2027, you can
see we do have the net income, so about $800,000 in 2024, $5.5 million in 2025, and $4 million
in '26, and then $1.3 million in '27.
So we are working to build up that fund balance as we get out there in the future years, and
really ramping up to help offset that cost of that lake expansion that's coming up in
2027, 2028.
So when you see the increase from 16.5 to 21.3, that is that lake expansion project
at Lake Ray Roberts, about $90 million.
So our thought process is to ramp up that operating reserve to help offset that debt
service.
Going back down here to the impact fee capital reserve, that $9 million I pointed out to
you earlier, it does go away in 2024.
The reason for that is we do plan to cash fund the design of that lake expansion project.
So $90 million for construction, about $9 billion for the design of that project.
Assumptions for wastewater.
I don't have to read each one of these to you.
This is basically the same as water.
We have the 2% growth forecast on the volume side, the 2% growth forecast on the revenues.
Expenses, we have the 3% growth forecast in the out years, and those supplemental packages,
those new initiatives this utility is looking to do is about $701,000.
Those initiatives do make up of material costs, employee licenses, fire hydrant maintenance,
and some line location and street cut dollars.
So 10-year forecast for wastewater is very similar.
The only differences is mostly just the numbers and the color on the page.
So this one is in orange just to make it stand out from water.
So in fiscal year 2021, this is the adopted budget that we're currently in right now.
You can see 31.2 million or 31.1, 37.1 in revenues, and then 36.9 in expenses, so 292,000
positive.
So basically, we did have a balanced budget this current fiscal year that we're in.
Ending this year, you can see we have 37.1 in revenues, 36.4 in expenses, about $700,000
positive in net income.
So this reserve, this fund is definitely looking good this fiscal year.
The preliminary 2022, moving into this year's column that we're talking about now, and ultimately
we'll seek your approval for next month.
We have revenue of $38.6 million, that makes that number right here, and then $37.9 million
in expenses, about $653,000 in net income, with the ending fund balance by $15.7 million.
And then the targets are right here below.
So you can see the minimum is 100 days, with the maximum being 140 days, so that minimum
equates to about 11.5 as a value, and then $16.2 million on the maximum.
We do have an impact fee reserve in the wastewater fund, similar to water, and it's currently
$9.5 million.
And then we have a drainage reserve we call out separate, and we'll talk about drainage
here shortly, and a development plan line just for those large developments coming into
the community.
So we are looking at that million dollars, and how can we best utilize it in this utility.
In the future years, I do want to point out a couple of things, a little bit different
than the other utilities on water in the 10-year forecast, we were not showing any rate increases
for the entire 10-year period in wastewater, starting in fiscal year 2029, so it is several
years out still.
We do have some 1% rate increases plugged in in 2029 and 2030.
So we do anticipate within the 10-year period that this utility will be some rate increases
in the future.
So I just want to make sure we pointed that out to the PVB, and put that on your radar.
So this is a drainage 10-year forecast.
Drainage is ultimately a department, or an HBU, is what we call an HBU in the finance
department of wastewater.
This also rolls up into the proforma that you just saw a minute ago, but drainage is
supported, or the drainage operation within wastewater is supported by drainage revenue
in the community.
So residents and commercial businesses pay those drainage fees, those impervious services
into this fund.
So fiscal year 2021 is the current budget that we're in, about $5.9 million in revenues,
$5.9 million in expenses.
The majority of their budget is made up of channel rehab maintenance, and what that is,
the drainage channels that you see around the community is maintaining those, erosion,
mowing those, and so forth.
So the majority of the activity in this fund is for that purpose.
So preliminary budget, about $5.6 million in expenses.
Solid waste financial assumptions, very similar to the other utilities, we try to keep it
as consistent as possible when looking at the growth in the community.
Usually a resident or business comes in, they need water, wastewater, and solid waste service,
so the growth is pretty much the same.
On the revenue side, we have the 2% growth forecast in the out years.
We do have some anticipated wholesale agreements that are going to end in fiscal year 2023.
I'll talk about those shortly for some of the new PEB members that you'll know.
The Hunter Cole Ranch development does start showing up in 2023, and then we did put a
note on here for any PEB members that may not remember, or maybe you did, and the sale
construction in the current fiscal year, we did cash fund that development.
So it was moved from 2022 to 2021, we actually cash funded $6.5 million of that sale.
So great accomplishment with this fund, just want to make sure we pointed that out to the
board.
Supplemental request, currently this fund has 282,000 supplemental requests, made up
of 4.5 FTEs, was a field service worker too, heavy equipment operator, roll-off truck driver,
field services supervisor, and an intern, making up that .5.
So we showed a five-year forecast for the solid waste fund, very similar to water and
wastewater, and I apologize, it's a little bit blurry, but we'll try to see it the best
we can here.
So in 2021, the current adopted budget that we're in, you can see revenues of $39.8 million,
numbers right here, with expenses of $44.1, so we did have an adopted budget of $4.3 million
in reserve usage.
The council and the PBB both did approve a 5% rate decrease in the current fiscal year
for residential customers, equated about a dollar, I believe six cents a month was the
decrease.
You can see the estimate we were planning to come in, about $38.5 million in revenues,
$43.4 million in expenses, about $4.8 million in reserve usage.
So really close to the budget, just a little bit more than what we originally adopted.
Moving into the preliminary budget, you can see their revenues of $39.8, with expenses
of $37.1 or $2, positive income of $2.7 million.
The majority of this swing of not using reserves is that sale development that I mentioned
earlier.
We're not building that sale this upcoming year, so we're maintaining that revenue within
the fund to offset expenses.
Moving down the pages, we're not forecasting rate increases or decreases for this utility.
We do have an operating fund balance about $8.9 million finishing this upcoming year
of 2022, adopted by PB and city council.
The targets are down here in this pink, you can see the minimum of 5.2 with the maximum
of 6.7 million.
So we are well within that target and actually stay within that target in each of the five
year period.
Moving back up to the front of the top of the page here, I want to point this out to
the board really quick.
The wholesale agreements that I pointed out earlier, this forecast does not contemplate
those being renewed.
If the PB or city council gives us direction or gives, you know, Brian or Soloway's direction
to renew those contracts, this financial picture will change when we bring it back to you for
the 2023 budget discussion.
So just keep that in mind if those agreements are renewed, this entire financial picture
changes because you can't see that 6.2 million going away in 2023.
The electric financial assumptions, so I'll walk through these a little bit different
than water, wastewater, revenue and expenses, the average load growth of 1.5 million, looking
at the load within the community.
The T cost, allowable rate of return on investment, this is what Cassie had mentioned earlier,
this is still pending, so we have made some preliminary assumptions within the financial
forecast.
In fiscal year 2022, we're currently projecting 28.04% return on those transmission assets.
We do decrease this to 13.5% starting in fiscal year 2023, it's really to be proactive and
be conservative within this utility.
So we are making an assumption it's going to go down.
The return on investment of 6%, so this utility does pay a return on investment to the general
fund that ultimately makes its way to the streets fund that was increased a few years
ago when COVID hit I guess about a year and a half ago, it increased from 3.5% to 6%.
It is scheduled to decrease to 3.5% starting in fiscal year 2023.
So it will not stay at 6% unless we're directed for it to stay there.
Some more of the uncertainties that Cassie had mentioned earlier, the summer revenue
forecast, we'll bring this back to you in December once we get through the hot period
of July and August and really see how this fund performs and how the debt performs.
The transmission cost or T cost revenue that I mentioned earlier, that cost of service
study that was mentioned earlier, and then the potential TMP mine sales also noted here.
The reserve levels, so our currently policy is 60 to 75 days, which is 16 to 21%.
We did bring a conversation forward to the PBN City Council.
When the winter storm had hit a couple months ago talking about this reserve requirement
for each of the utilities, the financial recommendation was to leave it alone for water, wastewater,
and solid waste, but to increase it for electric.
So that was the guidance we've gotten so far from the PBN City Council and if that continues
to be the guidance, we'll bring that back forward to you as part of the budget adoption
process.
So look forward to that coming forward here in the next couple of months.
Supplemental request, so the DME or electric fund includes about $400,000 in supplemental
request.
The major items is a senior business intelligent analyst, a line designer, and meteorologist
services.
If you have a question of those, Tony can speak to it or Terry Nolte or anybody that's
here if you have questions regarding the supplemental packages.
The five-year forecast for the electric utility.
So in 2021, you can see adopted revenues is $231.4 million in revenues, about $231.1 million
in expenses.
So we basically had a break-even budget in the current budget year.
We didn't use any reserves or anything.
You can see the estimate.
We have estimated revenue of $344.8 million.
That is above what we are budgeted, mainly due to the deck running during the winter
storm and the revenue that it brought in to offset that purchase power expense.
Expenses of $337 million, which is above the budget.
We did bring a budget amendment forward for the electric utility earlier this year to
offset those purchase power expenses of the winter storm also.
So that is the reason it's above the budget, just want to make sure we pointed that out.
So we showed net income, about $7.8 million is what we're forecasting, and that does anticipate
the rest of the summer months.
In 2022, the preliminary budget, you can see we have $227.5 million in revenues, about
$226.6 million in expenses, so just about $940,000 in net income.
No rate increases are currently being proposed, as Cassie had mentioned.
Once we get through these hotter months in the summer, we'll bring it back to discussion
to you in December and talk about future rate increases if they're needed.
So the current reserve target is $119.2 million, or $119.2 million is currently what we have
in the operating reserve and electric.
What we did is we broke out the current reserve and the proposed.
So under the proposed reserve targets, we'll bring back forward to you or continue to bring
back forward to you in the budget discussions.
The minimum would be $104.2 million, with the maximum being $156.3 million.
So we are within that target in the current year.
As we go in the future years, and you can see we do dip below that target to $72.5 million.
So that would really feed into that conversation regarding future rate increases as we come
back to PAB.
The current reserve target, what was currently in place is the minimum is $36.2, but the
maximum $47.5.
So simply the current operating reserve is within the target that's currently in place.
But if we were to change that target in the future years, we would be below it.
The capital budgets, we'll go through these quickly.
And then definitely if you need more detail, in your backup today, there was what we consider
a mini budget book.
What that is, it's just an operational line item budget for each of the departments within
each of the utilities.
So for water, wastewater, solid waste, and electric, and also included their capital projects.
Definitely let us know if you have questions on that.
So this is the water five-year capital plan.
We do summarize it by different debt issuances.
So in fiscal year 2022, for example, you can see we have $41 million in debt issuance plan
for this utility.
Revenue funding, so it's funded by that rate revenue of the operating fund, about $9.9
million.
Aiding construction, $265,000.
Impact fee funding, so revenue funding of impact fee eligible projects, about $3.5 million.
Also some vehicle replacement, a cash fund in those vehicles within this utility of $300,000.
So total capital program in 2022 is about $55.1 million in the upcoming year.
These are some of the major projects within water.
This is not an exhaustive list, but we did want to provide you the major projects that
are coming up.
So you can see the north missed transmission lines of $14.9 million.
The Ray Roberts capacity rerate of 11.
You can see 2019 bond election projects of $3.2 million.
That's to support those bond elections or the street segments that were approved by
voters a couple of years ago.
Annual field service replacements, so existing line replacements.
And Lake Lizzle treatment plan expansion of $2.5 million.
So total of these projects is about $38.5 million, so making up about three quarters
or 80% of that total capital plan.
Wastewater five-year capital projects, same thing here.
You can see debt funded projects for the wastewater utility, very similar to water, $40.1 million
in projects for the debt side.
Revenue funding about $5 million, aid in construction of $82,000.
Impact fee funding a little bit less.
Eligible projects are not as many on the wastewater side, so about $250,000 in impact fee eligible
projects.
And the vehicle replacement, they have a few more vehicles being replaced, about $1.4 million.
So $46.9 million in total capital projects in fiscal year 2022.
And if I need to slow down or go back, just let me know, as fast as I can, get through
the presentation here.
Solid waste handling, so for the wastewater utility, they have a $14 million project coming
up this year.
It's phase one.
The design completion is July 2021.
Hickory Creek, the wastewater treatment plant land acquisition of $5.8 million, something
that's currently being worked on now.
Hickory Creek Interceptor 3 of $4 million, 2019 bond elections of being consistent across
the city with those projects, and then the field service replacements.
And then you can see the wastewater master plan.
One note I will make on the 2019 bond election program, one thing staff is doing differently
this year than we have in the past, is we're having cross-departmental meetings just to
ensure that what's in the wastewater and water utility is consistent with what engineering
is budgeting.
So if engineering's planning to replace the street, we're also on the water wastewater
side anticipating the same thing.
So we just want to make sure we're consistent across the city.
This is CIP budget.
I'm sorry, this one is not labeled.
This is for the solid waste utility.
You can see they do issue different types of debt issuances.
So 20-year debt, about $2 million, five-year debt, about $483,000.
Revenue funding, about $40,000, and vehicle replacement, by far, is their largest usual
capital project of the year, unless there's cell development, about $4.2 million.
And then you can see how it breaks down by different, just different type of projects.
You can see street, structural, vehicles, and then building construction, about a million.
So total, 6.7.
The electric utility, so you can see where the projects fit into the different categories.
You can see fiscal year 2022 in this column.
Some of the major categories that you see is distribution substations, distribution transformers,
feeder extensions and improvements, new residential and commercial.
And then, of course, we've got the street lighting, and it's been talked about the last
couple of fiscal years, and then the electric relocations.
So distribution total, $34.4 million.
Then you can see some transmission lines and transmission substations for $24.5.
So total capital projects, and all this added up is $58.9 million.
We then take that number and divide how it's going to be funded through the utility.
It's about $4.4 million in aid and construction, $52.9 million in CO issuances, and then $1.7
million in revenue funding from the rate revenue within the utility.
So the five-year capital total is $215.9 million.
I think the question was asked last time we were at PUB about, you know, does the PUB
adopt each one of these five-year capital plans?
The answer is no.
The only thing we're looking for your adoption in August or your approval for is 2022.
So just keep that in mind when you look at this five-year plan.
It's for planning purposes, but you will only adopt the 2022 budget.
So next steps, the DME presentation is scheduled to go to City Council on July the 20th.
Water and wastewater will be at the end of this month on July the 27th, along with solid
waste.
July 26th, probably should have put that before the 27th, but PUB will be looking for your
approval for the budget and start the rate conversation.
So the next meeting that PUB has will bring back the budgets for your approval to take
at the City Council, and then we'll start those rate conversations and start talking
about the rate structure itself.
August 2nd is the big City Council budget workshop where all the budgets in the city
will be talked about.
And then August 23rd, we'll come back to the PUB for that final rate approval.
And then September 21st, the City Council will adopt the budget, the tax rate, the utility
rates, and the capital plan for the utilities and the general fund.
And I'll take this presentation down and address any questions, and if there's operational
questions, the directors are here, too.
Just feel free to ask us anything you have for us today.
Questions?
You must have done a very good job.
Thank you.
Madam Chair, Board Members, Krista Foster, Customer Service Manager, and I'm here today
to present the customer service budget for FY21-22.
So first, I'm going to give you an overview of our division.
We have 46 wonderful, dedicated members of our team, and this is just a quick layout
of that group.
As we move into talking about our budget, the first thing we're going to look at is
accomplishments.
I'm not going to read every one of these to you.
I believe that each of you can read.
But I do want to capitalize at least a couple of items off of each slide.
The first thing that we're very proud of in customer service over the last year is we
have taken on agency assistance referrals for customers who have trouble paying their
utility bills.
So at this point in time, staff will identify that need and ask the customer if they would
like to have a referral to the agency, we'll fill out the basic screening intake paperwork,
provide that to the agency, we do a follow-up email to the customer with all of the requirements
that they're going to need to meet, and we give them a protected time window that their
services will not see an eruption because they're in that process.
And we're working closely with the agency.
So if the agency is saying, "Hey, it's going to take a little longer," they're giving
us a contact to say, "Please continue to take care of this customer."
So we're very proud of that process.
We actually have incorporated this so that the follow-up emails can be sent either in
English or in Spanish.
Additionally, we've offered translation services.
I was very surprised that that was something with as diverse a community as Denton is with
the universities and things that we didn't offer.
Translation services by phone, so we now do.
So if someone calls in and English is not their first language, we can identify that,
call a translator, and process a three-way call so that we can provide better assistance.
This is just a slide just because I wanted to brag on my guys.
We have in our Microsoft Teams group, we have a superstar channel, and that's where we do
shout-outs.
If customers say something great about people, the reps will go back in and say, "Hey, shout-out
to so-and-so.
This is what the customers are saying about you."
And I know that as board members, you get to hear sometimes the less productive conversations,
but we want you to know that there are plenty of positives out there.
So again, we have accomplishments, nope, I went wrong way, our goals for next year.
Customer service has some pretty lofty goals coming up over the next year.
The first of those is we are now actively working on the 311 implementation.
We are in the discovery process.
We are in the contract negotiation phase for a customer service software, customer relationship
management software, and we'll be implementing that over the next year.
Additionally, we will be coming back to you soon and talking about changing a payment
vendor.
We've had some problems with one of our payment vendors, and we've identified, we're putting
out an RFP to see if we can provide better services there, and we are in contract negotiations
for a new customer portal that will allow greater functionality.
Customers will be able to do things like truly set up and terminate services online.
Currently we offer terminations and moves, but they're self-service for the customer,
but they come in as an email and we have to process them manually.
So we'll be moving into things that will provide better automation and better efficiencies
and much greater scope of service for our customers.
Process improvements, clearly we've got a lot of them, but the one that we're this year
most proud of is that we implemented remote reconnections.
So when a customer's service is interrupted and they call and take care of that payment,
we can actually go into the system and process it to have them turned on in 30 minutes or
less.
That is for 90 plus percent probably of our customers at this point.
Occasionally electronics have their issues and we have to actually send someone to a
site, but by and large we're getting those customers turned on faster than ever.
Next year we're going to be working, just like I mentioned before, on more automation
of our self-service and better efficiencies for customers and staff.
These are a few of our metrics.
These are some metrics that we use to gauge how effective are we fiscally.
So you can see that's what's our overhead cost versus the revenue that we're collecting
for the organization, our collection rate versus what becomes uncollectible debt, self-service
adoption, because if we can get customers to be able to do some of the simpler things
on their own, it frees staff to dedicate the time that's necessary for those customers
who really have those complex problems, and then first contact resolution.
We'll talk about that in just another moment going forward, because these are some of the
metrics that we use to gauge where are we and where are we going.
So the first thing you'll notice is we're seeing almost a 10% change over the last four
years just in the number of accounts.
Over the last ten years, you know, it seems like it's a small amount, and I think it was
only maybe 54,000 ten years ago, but that small change because we produce monthly bills
means that billing staff is currently producing 170,000 more bills than they were ten years
ago.
So it's a lot of change even though it seems like a small number.
The other is you can see that our call center volume has gone up dramatically.
We're currently at the end of May, over 180,000 calls already this year with the busiest months
left to go.
We're anticipating reaching or exceeding 250,000 calls this year.
So we've seen a lot of change there.
Again, first call resolution, and we also track our very satisfied and very dissatisfied
customer bases for telling us how effective we are.
First call resolution is obviously we don't want someone to have to call us 100 times,
but the very satisfied, very dissatisfied, these are the people who drive our image in
the community.
And these numbers, all three of these are customer reported.
At the end of every contact, the customer is given the opportunity to participate in
a three-question survey.
So this is what our customers are saying about our effectiveness.
All right.
So as we move into the budget highlights, first we are an internal service fund.
So this is just a breakout of where is the money coming from within the organization
to fund our budget.
And I'll give you just a moment.
I don't want to go through all of them, but give you a second to be able to look.
And then I'm going to give you our actual budget, our estimates and preliminaries.
So the first thing with our budget is you'll notice that the budgeted amount versus our
estimate do not match.
During the pandemic, we end with raising all the call volumes that you saw that have gone
up.
We had to shoulder $483,000 in unbudgeted costs between additional assistance that we're
providing people and some of the staffing changes that we had to make.
Of that, we look like we are maybe going to end up having to come back for a budget amendment,
but it will not be for $483,000.
It'll be somewhere in the $200,000 range.
All right.
Then again, the FTE summary, we have 46 headcount.
And so because 311 and CRM is a little complicated, it's complicated for people because 311 can
look very differently depending on where you go and who set it up.
So we wanted to take some time to walk you through this as we're bringing in a supplemental
request for the actual contact center side of the things that are going to have to happen
with that.
The first thing was just to give you a good definition, this is the only thing I'm going
to redirect and that's that a 311 center utilizes centralized staff and customer relationship
software to streamline access to city services, increase departmental efficiencies and provide
citizens a single point of contact for all of their needs.
Basically, you'll see below that decentralized structure, that's kind of where we are today.
A resident has to understand and know how the city operates in order to find the correct
division.
A lot of times that involves a lot of transfers.
So what we're going to be moving to is the 311 center.
We're going to utilize this customer relationship software to make sure that we can have real
time communication to the different divisions.
So you have one point of contact that can take talk to that customer, enter their needs
into the appropriate work order system and get them the resolutions that they need.
How does it work?
This is kind of that layout of that structure.
We have multiple contact channels that will come through one set of staff who deal with
talking to customers when we're placing information into the system, we're going to be placing
that into the CRM software and it's going to automatically break things out into the
areas they need to go with.
We can also have milestones.
So as these things go through the process, it can send that customer back notification
that this is what's happened, the status of your work order has changed and this is where
we are.
This has now been completed.
That is difficult to do currently.
And then it gives us a great wealth of information so that we can just make good business decisions
as we move forward.
So this is our timeline.
We started working on some of the development as far back as the summer of 2019.
We had a little bit of a lag as we did some process stuff and had a pandemic.
But we've now gotten into the procurement phase for the CRM.
We have a finalist and we're in contract negotiations.
We've already begun mapping processes with all of the different divisions and identified
some of the groups that will be coming in as part of our phase one development.
And we're planning to have our kickoff later this summer or early fall.
We're expecting the implementation to be done sometime during the next fiscal year.
And this is what it costs.
So what we're looking for in our supplemental, the CRM software has already been debt funded
and it is paid for.
We have our consultants that we have on board helping us with that.
This is for the cost of some of the positions that are going to be necessary to be able
to bring in those additional calls as well as getting our equipment so that we have the
correct number of computers and phones and things of that nature.
So the one-time cost is $84,700.
That includes a contingency of $74,000.
Just in case, timelines may tweak just a little bit.
But the total cost for next fiscal year, $373,510, with an ongoing recurring cost of $505,000.
The reason that you're seeing it a little bit lower in year one is because we're prorating
salaries because we're not anticipating needing these people October 1.
So we've prorated those salaries.
And that is it.
People will be happy to answer any questions.
So what departments are going to be part of phase one implementation of 311?
Well, we didn't include them in this just in case something changes, but right now what
we're looking at for phase one are animal services simply because of the huge call volume.
And it's very difficult for them to maintain.
Something else we're looking at right now is community improvement and all utility infrastructure
areas because those are the areas where customers really have to have a degree in city government
before they know where they're trying to go.
We're taking all those things that tend to overlap one another so that we can try to
make things as easy as possible for customers.
And does that include like streets?
It would include things like streets, water, wastewater.
We already do utilities, so we do them.
But it's going to have like water, wastewater, engineering, the other part of public works.
So it's all those infrastructure groups.
And will this work?
Oh, sorry.
I'm sorry.
Permitting.
I'm just...
Not at this time.
Okay.
Permitting is a little different because it requires you to interpret code.
And when you have someone that's that broad a generalist, code interpretation tends to
be a little bit much.
Yeah, a little difficult.
Sorry.
Go ahead.
And will the system work with or replace the current engaged Netton app?
Yes.
The CRM software will actually have a fully functional mobile app.
And as a matter of fact, any of the things that we build for customer service as knowledge
based articles or any division that's using it can build knowledge based articles that
have both public and private information.
Any of that public information can be on our website.
So we have one document that provides the public a place that they can search a knowledge
base as well.
You can place in links so that if they read the knowledge base article and say, oh yeah,
this is my issue, and it's something that they can create a work order for themselves,
the link can be right there in the knowledge base article.
Nice.
And is there a plan to transition from engaged Netton app to the future app?
There will be a plan.
I don't know that we're quite to that place yet, because we're going to be learning a
little bit about this software as we get into the implementation phase.
Right now we're really doing all of that ground work and doing that discovery of what are
all the things that we're going to need to replace from the engaged Netton?
What are we going to be transitioning?
How are we going to interface with these different work order applications?
So we're in that discovery phase at the moment.
I have a question.
So how will this affect existing city staff, whether that be customer service or whatever
else?
You know, the only thing it will affect with my staff is that we're going to have a broader
base of information that we're going to be supplying and much better tools to do it.
If we find that we're moving a tremendous amount of call load and we're taking three
people's worth of work out of a division, then we can look at moving staff there.
Because that's obviously going to be our first goal before going out and adding new FTE to
the budgets.
Right?
But we're going to be evaluating it as we go.
So it should be nothing more than just really some changing and shuffling of staff.
I have to say, I really appreciate the direction here.
That's systematizing and automation is near and dear to my heart.
I do a lot of that in my job.
So I'm excited to see where this goes.
Yes.
I'm very excited.
Is the training included in the budget as well?
Is what?
The training?
For the staff?
Yes.
Okay.
Yeah.
Okay.
As a person who really likes the voice that I get, and I have an opportunity to talk with
them many times, managing property, having utilities on and off and things done, it's
great staff.
They are friendly.
They are helpful.
Thank you.
They take care of it.
And I just can't say enough good about your department.
We have some really great frontline representatives.
You do.
They're very dedicated and they work really hard.
As a property manager, you're probably going to find that our new customer portal will
be wonderful for you because it will allow you to be able to have, right off the get-go,
all of your bills under the one login, and you'll be able to make a single payment for
all of them.
Wow.
Yeah.
Like I said, we have some very exciting things planned.
Do you have training for customers?
I promise this one is very, very user-friendly, very intuitive.
I'll be excited for you guys to get to see it soon.
Yeah.
And your metrics are amazing.
Thank you.
We are very proud of them.
Any other questions?
All right.
Thank you.
And that is it.
Correct?
All right.
Okay.
It is 10.05.
Do we have emotion to adjourn?
So moved.
There you go.
Adjourned.