Aug 23, 2021 Public Utilities Board on 2021-08-23 9:00 AM

- Okay, it is nine o'clock, so we'll call to order the City of Denton Public Utilities Board for August 24th. - You may sign off and come back on. - Before we go into public comment period, we're going to change the agenda a little bit. We need to have the closed session before we do items for individual consideration and the work session. So we'll do the consent agenda, then we'll go into closed meeting, then we'll go into work session and then the final item will be the individual consideration. So public comment period, does anybody wish to speak? Is there anybody there, Billy? No? Kim, is there anybody on the line that wishes to speak? - She's shaking her head. - She's shaking her head, no, okay, all right. And we'll go into the regular meeting, consent agenda. Does any board member wish to pull either item A or B on the consent agenda? - Madam Chair, I would like to pull consent agenda item A so that we get a little bit of an update from staff on that, thank you. - Okay, we still can't see you Lee, can you? - I think my only option is to try to log back in. - Okay. - I will do that now. - Okay, thank you. All right, do we have a motion to approve item B then? - I'd actually like to pull B. - Oh, you wanna pull B, okay, all right. Very good, that'll make it easier. So until Lee can get back on, why don't we take item B first? We need to see Lee's-- - Okay. Really, just a quick question. So the facility was built over 50 years ago, it says, and we've been using it the whole time, of course. So I was curious what kind of what longevity might we get out of these proposed changes? - So Madam Chair, we should have Stephen Gay on the phone. Stephen. - Yes, Tony, this is Stephen Gay, Director of Water Utilities. The longevity, the useful life of these filters are approximately 30 to 40 years. Does that make sense? - Yeah, that's great, that's a long time. - Yes. - Okay, do we have a motion to approve item B? - So moved. - In a second? - Second. - Second. - Aye. - Aye. - Any nays? Okay, all right, then item A. We switched up the order, Lee, so you could get on. So what is your question on item A? - Yes, I was just wondering if we could get some background on item A, the added $1.98 million amendment. - So we have Danny Kramer on the line, PV member. So Danny, could you respond, please? - Oh, yes, can everybody hear me? - Yes. - Yes, sir. - Okay, Daniel Kramer, Deputy Director of Operations, so streets, traffic and drainage. And what we use this contract for is mainly our curb and gutter repair, our sidewalk repairs and any valley gutters or the miscellaneous concrete repairs that we use throughout the city. Utilities also uses it on utility cuts when they do curb cuts and any of the flowable fill that needs to be put in the trenches when we're going through. As stated in the AIS, we are going out for a new contract. This one expires in October. This is just to fill the gap 'cause we've spent the allotted money on the contract already. So this is to help us keep going in our repairs throughout the rest of the contract term so we can go out and get a new contract in place. - Alrighty, so this is merely an extension of the existing contract and it's for general repairs and work, nothing specific. - Correct, we do have a few that we listed in the AIS. The million dollars on the street side is some repairs that we're trying to finish up on Carroll Boulevard of some sunken panels, panel replacements for that, that we're just doing spot repairs on and miscellaneous water and wastewater cuts that we're doing there are the main culprits to the increase in costs. - Alrighty then, well, thank you very much. I didn't glean that from the documentation so I appreciate the updated information. So with that, Madam Chairman, I'm happy to move the approval of item A. - Okay, do we have a second? - Second. - All in favor say aye. - Aye. - Aye. - That carries. Okay, so next item is the closed session and I'll read the full thing here. - Then Karen, I mean, Susan, we'll move into this council room if you want to take a few minute break. - Okay, we'll go maybe five minutes. Would that be enough? - After. - Actually-- - Oh no, I'm sorry, I got it wrong, yeah. - Yeah. - You're gonna stay there? - They're gonna remain there and then once you go back into open, into the work session, then they'll go there. They'll go, okay. - Yes, ma'am. - All right, so here of course the closed session is. Any final action, decision or vote on a matter deliberated in a closed session will only be taken in an open meeting that is, oh, that's not the part I need to read, is it? Do I need to read that section, Tony? No. So the item is deliberations regarding certain public power utilities and competitive matters under Texas Code Section 551.086. Receive a presentation from staff containing public power information related to a proposed purchase agreement between the City of Denton as the seller of power and electricity energy services and Core Scientific Inc. Discuss and deliberate actions regarding the same. All right, now we can go into close. Okay, it is 10.01 and we'll go back into the open session of the Public Utilities Board meeting. The next item is the work session to receive a report, hold a discussion and give staff direction on the proposed water and wastewater rates for fiscal year 2021 and 2022. (indistinct) - Hate to state the obvious, but we got some feedback. (laughing) (indistinct) - I don't think this camera's working. The camera's not working. The camera's not working. Tess? (indistinct) Hey, Kim, can you tell him the camera's not working on this one? The video, the video, it won't work. It won't let me uncheck it, like it just marked out. (indistinct) Yep, the video doesn't need to work. Okay, okay, perfect, okay, good. - We can see you on the big screen. - Okay, perfect, I'll go ahead and get started. If everybody can hear me now, I think the microphone's working, so I'll speak up as loud as I need to. Nick Vinson, Assistant Director of Finance. It's my pleasure to be in front of you today as we continue our conversations regarding the fiscal year 2021-22 rate discussion for the utilities. So today we'll discuss water and wastewater. We do have individual consideration items for this later in the presentation for approval or the meeting. One thing I do wanna say before we get started, the electric rate ordinance this year will not come forward to you. If you remember the conversation we had, those rates will come back forward to you in December, along with the miscellaneous rate ordinance if there is any changes. So let me pull the presentation up. Okay, so really quick, what we wanted to do is just give an overview of the presentation that came forward to you. A few weeks ago in the conversation, we have a city council. So prior direction on July 26th, we did talk to the Public Utility Board regarding the water and wastewater rates and the rates quite frankly for each of the utilities. The direction we did get from the Public Utility Board at that time was to proceed with option three. And if you remember option three established a new tier from zero to 5,000 gallons. And it also combined that seasonal rate of that winter and summer block structures. We'll review that with you here shortly. We did go to city council the day after on July 27th. Presentation went well. The city council did request additional detail regarding the 11% of customers that would see a rate increase. So I'll review that with you here shortly. We have dived into that greater. But then their direction was the same as the Public Utility Board. A few questions was asked about the zero to 5,000 tier, where that came from. Staff was able to answer those questions. And their guidance they gave us was to proceed with that option. However, city council did ask for an additional tier or the possibility of additional tier between five and 15,000 gallons. So I'll review that with you also. Just a quick overview of the presentation. You can see the current rate structure. We'll review that here shortly. We'll look at the detailed analysis. We'll look at the 11% of customers and what our recommendation is to the Public Utility Board. Take my glasses off here, fogging up a little bit. So the current rate structure within water, as we talked about last time, there are two different fees within the water rate structure, the first one being a facility charge and the second one being a volume charge. As a reminder, that facility charge is a fixed fee based on the meter size that a residential customer has. The volume charge, of course, is the focus of today's conversation talking about the different volumetric rates within the water rate structure. The average consumption, as a reminder, previously was 9,200 gallons. We have seen that decrease from the last four or five years to 7,600 gallons. We'll talk a little bit more about that in our rate comparisons here shortly. So everybody, let me minimize it. Everybody saw this last time but just wanted to review it with a group again. So you can see the bill distribution of where that 11% is coming from. So currently, in our current tier structure from zero to 15,000, 89% of the bills fit into this tier. From 15,001 gallon to greater than 50,000 gallons, there's 11% of customers. And then those customers, as we discussed last time, actually see a rate increase with this new proposed rate structure. And we'll review that with you here shortly. And then this table just basically shows you the distribution of water consumption per 1,000 gallons. So you can see the majority of customers fitting in between 1,000, leading up to 13, 14, and 15,000 gallons. - Nick? - Yes, ma'am. - Could you give me an example of the 1%, the 50,000 plus? - So that's a great question, Ms. Russell. One thing we did look at is we looked at that, and I have a slide that I'll cover in just a second because we did try to break it into the size of partial. So is it a certain size partial that fits that 1% definition? And the answer is no. We did not find a correlation between water usage and partial size. So I think a lot of it has to do with habits, water consumption habits, and how people water their yards, maybe their irrigation systems are set, what type of appliances they have in their house. So I don't have a clear definition for you exactly who's in the 1% category. - I was just wondering, in the city of Denton, is there someone that uses 50,000 gallons? - There is. It does vary throughout the year. So for a residential customer, what we did see is there's 1% of the bills fit into that 50,000 gallon window. Now, what I will tell you is that varies throughout the year. So this year, for example, it just rained a couple inches last week, people tend to water less. So it may not be every month out of the year. It may just be a few months out of the year. But if we have a really dry year, there could be someone that uses over 50,000 gallons. Absolutely. Yeah. And we'll talk a little bit more about that in just a second. Yeah. Okay, let me... Sorry, I should have stopped sharing that. Okay, so this really dives into that 11%. Just wanted to really update the PEB on what staff did and the great job that the water utility helped us look at these customers. So the 11% equates to about 3,600 customers that use on an average over 15,000 gallons. As I'd said, that fluctuates throughout the year. One month, it could be a little bit more than that. Next month, it could be a little bit less than that. But we did sit on an average about 3,600. What we did is we took basically the water consumption data from customer service, all the water consumption in the city for every single meter within residential customers with the help of water. Really grateful for their help. We took that data and we plotted it by partials within Denton. And then what that did is that allowed us to look at the geographical map, right? And look at the area of town that those customers fit into. I will tell you that there is no correlation between lot size and water consumption, as I said, Ms. Russell, just a while ago. So what we did is to summarize the detail, we put together this bar chart just to kind of give you an example of how those customers fit into the different categories. So at the bottom, you can see consumption. So 10 to 5,000 gallons consumption. You can see 5,001 to 7,500, 7,500 to 15, 15 to 30, and then 30 to 90. You see this light blue color, that is the partial size for a 10 to 12,000 square foot piece of property. The orange is 12,000 to 20, that is the partial size for that color, and then so forth going down. So you can see a bigger partial, one acre above, is really this brownish orange color here that's at the very bottom. So if you start over here to the very left of the table, you can see a partial from 10 gallons of usage to 5,000 gallons. The partial size that had the most consumption or the most properties within that category were 10 to 12,000 square feet. As you get to the larger consumption categories, you look out here at 15 to 30, one would tend to think that a partial size plays a big role into that water consumption. One thing we did see within that data is that some of the smaller partials actually use more water than those bigger partials, even a one acre lot or bigger. So just really, you know, looking at the data staff was not able to tie it down to a certain partial size to say, you know, a half acre lot or a one acre lot meets the definition of someone using over 15,000 gallons. It's very possible for someone to have a 12,000 square foot lot and use 5,000 gallons worth of water. So we did dive into it. Just wanted to make sure we pointed this out. So rate options for the water utility. We talked about these last time, but we wanted to explore just put in front of the public utility board one additional option that we came up with after talking to city council. So as I'd said earlier, the public utility board did give us consent to move forward with option three. That is in front of you today for consideration. That is still staff's recommendation. And that's still consistent with the cost of service model that we completed a few months ago. One thing we did look at is we looked at an option four that would introduce an additional tier between the 5,000 and 15,000 gallon range. And I'll review that with you down here at the bottom. So starting the very left of the screen, you can see the current rate structure with the winter and summer blocks. You can see option three introduces a new tier from zero to 5,000 gallons, the rate being 363. And then that next tier being five to 15, 405. You can notice as you go up higher, 15 to 30 at 712, 30 to 50 at 953, and then over 50,000 gallons is 1179. So each one of these options are revenue neutral. That is achieved by decreasing the rates for the lower customer. So those customers will see a rate decrease under 15,000 gallons. And that revenue is being made up by a rate increase for customers over 15,000 gallons. So really meant to incentivize that water conservation within this utility. Option four, what it does, it does break up that five to 15,000 gallon tier, adding in an additional tier from five to 7,000 gallons. And that rate for that tier being $3.90. And this is achieved by further increasing that rate for those higher tier customers. So anyone over 15,000 gallons would even see more of a rate increase. Status recommendation now is to proceed with option three, which is the consultant's recommendation, and see how the movement between the tiers occurs in the coming months. And then come back to you possibly next year with some additional tiers of as the guidance we get. So each one of these options are revenue neutral. But one thing they currently, and this is pointed out later in the presentation, they do not consume is movement within the tiers. So for example, if a lot of customers, that 11% of customers start using less than 15,000 gallons, there is a possibility that this utility could see a revenue decrease. So we wanted to make sure we pointed that out to the Public Utility Board. Residential rate comparison. So same numbers, 89% are 29,197. Other residential customers will see a rate decrease. And those 11% of customers will see an increase. One thing I did wanna show the Public Utilities Board is, you know, what could a customer expect that they did use over 15,000 gallons? We don't want people to be surprised. We want them to know exactly what their bill is going to go to. And so you can see a 7,600 gallon customer using 7,600, which is that average per month is currently paying $46.62. You can see in the blue that customer paid $44.52. So a decrease of $2.10. 15,000 gallons just showing that max that you can use and still receive a rate decrease. Currently paying 76.59. Under option three, which is staff's recommendation is 74.49, they would see a $2.10 decrease also. So when you get up into the 30,000 gallon water usage, they're currently paying 162.99. That bill would go to 181.29 for an $18.30 increase a month. If you were a customer and you used over 50,000 gallons, your bill is currently 321.99. That bill would go to 371.89 for a $50 increase a month, so $49.90. So just kind of want to point out some different examples across the spectrum, as you could see what those rate increases are. - Do you have a screen that shows the gross revenue change with these estimates? - Let me stop sharing this really quick. I think I forgot last time. Great question. So each option is currently revenue neutral. So if you see the ones increasing for the higher users and see it decreasing for the lower users, that's just revenue neutral to the fund. If we didn't increase those rates for the higher tier and we just let the fund take that revenue impact, it'd be six to 700,000 a year. - Okay. - Yeah. Yeah, if we just said, "Hey, we don't want to increase it for the higher tiers. "We just want to decrease it for the lower tiers." Six to 700,000, absolutely. - And then kind of follow up to that is, so thinking if usage, behavior changes and usage drops, obviously revenue would drop, but would that also mean that our costs drop? And so do you know what kind of impact that might have? I mean, obviously knowing how much usage drops is very variable. - Right. - But I wondered how those are related. - So that's a great question. And we actually had a follow up question very similar to that because if we see a big shift in usage within the water utility, could it possibly delay some of those plant expansions? And really after visiting with Stephen Gay, the director of water, is what we come to find out is we have to plan on the peak demand. So even if those usage and those consumption habits of the consumer change a little bit or decrease, we really wouldn't see too much of a decrease in expenses. We would still be planning for the peak demand. We'd still be planning for those chemicals or those different items to treat the water. So hopefully that answers your question is really, since we're planning on the peak, it really wouldn't decrease expenses very much. Okay, let me pull this back up. (mouse clicking) Okay, so commercial rate recommendations won't spend too much time on this. We visited about this last time. No recommended changes to the commercial rate structure for regular commercial water usage. Currently is not a seasonal rate. There is one fee for a facility charge based on the meter size and then one volume charge based on that water usage per thousand gallons. I was just looking to keep this the same. Just wanted to put this in front of the Public Utilities Board. Commercial irrigation to simplify this rate structure, we are recommending that we combine the winter and summer rate into one blended rate. And you can see currently for a winter, the volume metric rate is 434. For summer it's $6. And that combined, we're looking to introduce a 575 rate. And this would result in a decrease of approximately $10.65 for commercial customers. And if you recall, in our cost service study, commercial customers are over recovering. So this is a step in the right direction for cost recovery purposes. Wholesale rates, we reviewed these last time. I did want to point out to the Public Utility Board, we have made one update that is in the rate ordinance for your consideration today. It is our wholesale raw water pass-through rate. And this number has been updated based on the June CPI adjuster that's come available since the last time we talked. The last time we showed you the rate is 0.0282 proposed. We are looking to propose 0.0285 based on that adjuster. Wastewater rate changes. We talked a little bit about these last time. Dino-soil per cubic yard. We are looking to increase that from 30 to 35 based on cost of service of making this material and demand of it has been up here lately. And then you can see some discount rates if you were to buy 10 to 99 yards or a hundred plus yards getting 40% off. So rate changes, just a little bit of history back from fiscal year 2015 to current. We're not really showing a rate decrease this year. We're just redoing the rate structure. So it's something definitely we can add in the future. But you can see up to fiscal year 2017, we had annual rate increases since 2018. Actually had some rate decreases moving forward and no rate changes at all. So just rate recommendations, really quick one to recap it. So option three, as we talked about, this is staff's recommendation. The recommendation that was the guidance we received from the PV and city council. And is also consistent with the consultant's recommendation of stepping into new tiers for the water utility. Commercial water service option one for the regular water service to maintain our current rate structure, no change. And then option two for the irrigation rates, which is combining the winter and summer rate structure. And then the wholesale water service adjustments in accordance with contracts. And then those wastewater, just those cost of service adjustments. And then lastly, just point out the risk associated with the new rate structures we talked about before. Each option is revenue neutral. It does not contemplate customers changing their consumption habits. If they drastically reduce their water usage, there is a risk of this fund to have a revenue decrease. So we can revisit that as next year, update you accordingly as we proceed through the next fiscal year. And then upcoming next steps. So this presentation will go to city council tomorrow. We are coming up on the public hearings, which are September 14th. So just a few weeks away. And in September 21st, we do have the budget adoption, the tax rate and the rates scheduled to be adopted by city council. And that concludes the presentation. I'll pull down for questions. - Madam chair, I don't have a question but I have a comment. I like the city council's approach of adding the additional tier. So I'm certainly would be in favor of that. - I think either way is good. I'd support either option. - Yeah, as somebody who's gonna be paying more because my husband loves his lawn, either arrangement would be fine with me. I want him to feel the pain of watering that stupid St. Augustine. So I'm totally in favor of the tier approach because we just use too much water. - I think the difference between the five and the five and $7,000 or 7,000 gallon tiers is so minimal. I don't even, I don't see much of a difference for the end user just to maybe a few cents. So either one. - And I'm good with either one too. But if the consultant is also saying option three, then I'd be more in favor of option three. - And then chair, if I may, the ordinances in front of you today is based on option three. Staff's recommendation would be is to adopt the ordinance as it is, circle back with the public utilities board next fiscal year once we understand the movement within the fund. And then we can really dial in where those tiers need to be created, so. - Okay. Yeah, that is on the second item on the individual consideration, so. Okay. Any other questions? Thank you, Nick. Okay, so let's go into items for individual consideration. The first item is consider approval of the August 9th, 2021 minutes. Do we have a motion to approve? - So moved. - Thank you, Karen. And do we have a second? - Second. - All in favor say aye. - Aye. - And I'm going to abstain that wasn't there, so. And I didn't watch it, so. Second item is consider recommending the adoption of an ordinance, establishing the rates for water and water service, providing for repealer, providing for several ability clause and providing for an effective date. - So do you want to make the motion including the comments from the PUB? Is that probably the appropriate way? - You can make the motion to adopt the ordinance as presented in front of you today if you wanted to at sports option three, that was previously the direction staff received. Any true question, Mr. Chief? - Yeah, I just know that we had a naysayer here and I wanted to see what we needed to do about that to pass the rate, Susan. - I would say we could pass it as it is presented today and with the following up in another year, 'cause I believe was suggesting that the extra. - Uh oh, you're out. I just froze. - You did, but you're back now. - Okay. Yeah, it's saying my internet connection is unstable. I don't know. Did you hear what I said? - No. - No, okay. What I said was we could approve it as it is with the comment to come back and review it after another year to see if the changes occurred. I just went out again, didn't I? - No, you're still here. - Okay. Everybody else was frozen on my end. - I'll make a motion to approve as presented. - I'll second. - Thank you, Karen. All in favor say aye. - Aye. - Opposed? Okay, that carries. Next item is consider recommending adoption of an ordinance establishing the rates for fighting for repealer, providing for a severability clause and providing for an effective date. - Chair, I don't have a present. I do have a presentation if you'd like to see it. I'd be happy to pull it up. Otherwise, just looking for your approval. - Yeah. Do we have a motion to approve? - So moved. - And a second. - Second. - I think that was Barbara. All in favor say aye. - Aye. - Opposed? Consider recommending an adoption of an ordinance of the city of Denton, Texas establishing for the rates for solid waste and recycling collection service, repealing ordinance number 20, 1551, providing for repealer, providing for severability clause and providing for an effective date. I think this is the same, right Nick, that presentation? - It is the same. I saw the presentation last time. If anybody wishes to see it, I can pull it up. Otherwise, I just need your approval. - We have a motion to approve. - Move approval. - Thank you. Thank you. Opposed? I'm back. - There you are. Did we all, call it again. Call the vote again. - Okay. Do we have a motion? No, we have a motion and a second. All in favor say aye. - Aye. - And opposed? That carries. Consider recommending adoption of an ordinance of the city of Denton, a Texas Home Rural Municipal Corporation, authorizing the city manager to execute a lease with Core Scientific Inc. for approximately 30 acres of city owned property located in the Moses H. Davis Survey, abstract number 377, in the Johnson Green Myers and Brumlett Survey, abstract number 1699, all in the city and county of Denton, Texas and providing for an effective date. - Good morning, Madam Chairman. It's Terry Nolte, DME Assistant General Manager. I think if it's all right with the city attorney, if you could call both that item and the following item, we could take them both up to same time. - All right. Consider recommending the adoption of an ordinance with the city of Denton, a Texas Home Rural Municipal Corporation approving a purchase power agreement between the city and Core Scientific, a Delaware corporation providing for the expenditure of funds and providing for an effective date. Okay. - Okay, let me share my screen real quick. - One moment, please. Okay, can everyone see that presentation? - Yes. - Okay. - Thank you. - Thank you. - Thank you. Is this presentation? - Yes. - Okay, I apologize. My computer is telling me I needed to update Zoom into the latest version at the same time. Okay, today we're here to talk about the proposed lease between the city of Denton and Core Scientific. Core Scientific is the proposed owner of the new data center. Should you and the council approve it, council is taking this up tomorrow. And I do have some participants from Core Scientific. Jeff Pratt is with us with Core Scientific and Chris Hemshot with Tanaska is with us as well to answer questions. So the proposed data center project that we've been in discussion with the city council, VME is proposing to lease two parcels of property at the Denton Energy Center. On the exhibit to the left, you can see the sites are both north and south of the existing Denton Energy Center. This is the Denton Energy Center here. Site two is on the north, site one is to the south. The airport is over here on the right-hand side. And this is a substation that's owned by Encore. This is the old Jim Crystal substation and here's Jim Crystal Road. The property was rezoned to light industrial last week by action of the city council. The total lease area is to be 30 acres. It consists of both of these two parcels. And as the development will include development of two phases on the site down here and then a third final phase on the north site here. The term lease is a seven-year lease with one seven-year extension term. The lease is co-terminus with the power purchase agreement and the lease and the power purchase agreement have cross-default provisions so that a default under either agreement would result in a default under the other agreement. Likewise, with respect to terminations, a termination of either agreement would result in a termination of the other agreement. The lease rate is $10,075 per month. It is subject to escalations based on CPI adjustments every two years. And it is a market-based rate that was determined by the real estate department. One thing that's important is that as you all are aware, the debt energy center as well as the substation adjacent to the center have tight access controls and the lease prohibits and restricts access to those controlled areas on the site. The bulk of the terms and conditions of this transaction have to deal with the disposition of equipment, improvements that are made on the property during the term of the agreement. And with that, we would recommend adoption. And as I said earlier, Madam Chair, we do have someone here, Mr. Pratt, from Course Scientific Online who's available to answer questions. And I've got a few slides that we could go over with. - Questions. Barbara, I think you had a couple of questions. - Yes, I did, thank you. How old is your company and how long, what is the length of time at your various locations? What length of time have you been in operation there? - Sure, that's a great question. We actually have one slide kind of on our timeline. Our founders started working in this area back in 2012, but Course Scientific as a legal entity was opened in December of 2017. And that's 2017 would be the year we expanded and opened in North Carolina. We followed in 2018 in Georgia. And in 2019, we expanded into Kentucky. Here in 2021, we're expanding into North Dakota. And hopefully, we're excited about this relationship and opportunity with the city of Denton to move into Texas as well. So this would be our fourth real full year of operation entering our fifth year. - Thank you. - So the very next slide actually shows that timeline. And I'm happy to flip back and forth and answer any questions. I'm happy to give a short overview. I wanna use your time. I know everybody's always busy on time. So whatever is most useful to this committee or board, I'm happy to use the time that would make it helpful to you. - Are there questions? - I do have a few questions. This is really about the land layout and some more for probably VME staff. Is it possible to pull back up the map in the presentation showing the parcels for trucks? - Sure. - And I'm suspecting that site one and site two are chosen for the proximity to the switch gear there, the 138KV substation. - That's correct. This is the substation, the Jim Crystal substation. Phase one and two will be fed out of the substation. You'll notice along the edge here, you can't see 'em exactly, but we have 138KV transmission lines that run north to south. And then there's the substation here with Encore. There's a transmission line that runs through the Encore substation as well. - And I just wanna, I'm curious if there's been any work to lay out this potential future tracks so that as additional leases or additional development or potentially solar or other uses go in here that we have good, consistent layout with access and noticing the distance between my future Luke 288 and the eastern edge of both of these lease contracts. It's fairly small, if we were to have another potential leaser on the east side of future 288 or southern property and so forth, is there a plan to kind of... - Yeah, the site is actually quite constrained by easements due to the fact that we have so many transmission lines, distribution lines, and gas supply pipelines crossing the site. And so there really isn't additional available property for development on the deck site. The Luke 288 will hive off a pretty good section of the east side of the property. And then on the east side of the future 288 loop is airport property and the city is actually in discussions or working on design for the use of that property for other city functions. - Okay, so it sounds like there isn't much other opportunity for future leases. - No, there's a small segment up against Jim Crystal Road that could be leased, but it's, you have to transact a couple environmentally sensitive areas to get to that property. - Thank you. - All right, other questions? All right, do we have a motion then to approve the lease agreement? - I'll move to approve. - Second. - Second. - I froze, so who moved it? - Benjumper moved to approve. - Okay. - And I guess Devin, you seconded? - I'll second, yeah. - All right, so all in favor say aye. - Aye. - Aye. - Opposed? Sorry about this internet connection. That carries. - Thank you, the court. - Verification, you had two items for consideration, which one was just moved in here? - Just the lease, I'm sorry. - Okay, thank you. - You're welcome. - Madam Chairman, I do not have a formal presentation on the power purchase agreement, but I'd be glad to answer any questions that you might have. - Okay, are there further questions on the power agreement? I'm seeing none, all right, do we have a motion? Oh, I'm sorry, go ahead. (phone ringing) - I'm asking here, I wondered if they could comment about the internet connection agreement and their plans for that, since we have them here. - All right. - I apologize, there was a phone ringing when you asked that question. Mr. Rybak, could you please repeat? (phone ringing) - It's still ringing and I can't do much about it. - Hello, you've reached line four zero. - I was hoping that you might be able to give us a little sense of your operation of the agreement, since you guys are gonna be handling that interconnection. Since you're here, I thought we should take advantage of your presence. - Okay, I'm gonna repeat what I think is the question. So I think you're interested to hear about how we're going to handle the construction of the interconnection and work with Denton to build up the interconnection and then a smaller substation for each of the phases that were discussed. So the three phases, as Terry mentioned, the first phase is only 22 megawatts, that will be at distribution, so that will be all, any of the construction there will be handled by DMA. Moving into phase two, which will be hopefully starting up quickly assuming approval of council, that we will then be putting in a 158 megawatt transformer from 138 out of 34.5, and that will be on the south edge, the south track of the property. We have an EPC agreement with the SHIELD, who has done quite a bit of our construction for us in the past. They've worked on other substations for us and some of our other power plants. So they've been working on the site and been in contact, and we've had several meetings with Denton and the electrical engineers to coordinate and make sure that that is all coordinated well. We haven't started, we haven't finished, I would say the planning for phase three yet, but that will be quickly followed after we get started on phase two. - All right, thank you. I just thought we should take advantage of your presence today, so I appreciate that. - Absolutely, any other questions, please let me know. - The questions? All right, do we have a motion to approve the power purchase agreement between the city of Denton and Core Scientific Inc? - So moved. - I'll second. - All in favor say aye. - Aye. - Aye. - Opposed? - Opposed? Okay, parries. Management reports, am I frozen again? - No, Susan, you're fine. - All right. - So Madam Chair, members of the Board, Tony Puente, the DMV General Manager. In your management reports, we provided to you the DECK dashboards for the month of May and June. Certainly our folks from finance are here and available if you have any questions on either one of those reports. - Question, all right. - Okay, going to the future agenda items. Obviously today you've already approved the rates for wastewater and solid waste, I think Nick was clear that we've not brought to you the electric rate ordinance, the rate ordinance that was approved last year will continue to remain in effect. We'll certainly have a discussion with you later on this calendar year, but by the end of the calendar year, if there's any changes at the end of the year, if there's any changes at that point, then we'll bring that ordinance to you. But coming up on September 13th, we do have a draft of the comprehensive solid waste management strategy discussion that'll be brought to you by Brian Borner and the consultants that he's been working with. I know many of you have a lot of interest in that and we look forward to discussing that with you. And then going on to the new business action items, obviously, we've talked about the comprehensive solid waste report that'll include any discussions on recycling for, or composting for residential use. We're also still working on a recap of legislative items associated with the electric industry. And we're also working on an ISR for this issue of the solar installations and this 4CP issue that I think Terry already talked to you a little bit about. We are working on that for the council as well. We'll be providing that to you. As you know, the legislative, the governor, they call a second special session. I think they now have a quorum and they've started to meet. And so we'll see what comes out. If any of that, that may impact not just the DME, but any of our other utilities. We'll certainly keep you abreast of that information. So with that, happy answering questions on any of these items. I did mention, I did want to mention that we did send to you the latest bond rating for the utility system on Friday. Hopefully you received that in your email. If you didn't, please let me know. But again, happy to answer any questions on that as well. - Questions. All right. - Yes Madam Chair, I have a question. - It's just delayed, I'm so sorry. I'll be back next time. (laughing) - Well, we love technology when it works and we dislike it so much when it does. Anyway, my questions, Terry or Tony, my comment would be that on the bond ratings, I've noticed that both standard and poor and fixed seem to have come to the same conclusions and had almost identical comments. I just found that kind of interesting. Is that the norm? - Yeah, I think they both sometimes look at different metrics and different financial issues going on that may be impacting, but yes, you're exactly right. Previous to this time, we actually had different ratings from each one of the rating agencies. But yeah, so it's not uncommon, but I will tell you that they don't always look at the same things, but again, not uncommon. - Okay, and my follow-up would be the ratings to me based on all of our interesting problems in the past year didn't look that bad, so what was your take on them? Or what is our official take on them? Are they good, bad, and different? - Well, and I don't see David Gaines on here, so I'll have to speak on his behalf, but I think overall we still have a very good rating. It's still certainly above some of the B-rated entities that may be out there. Obviously, it's always a little bit disappointing when you get a downgrade, but again, we understand that that's happening across the Texas market, and so it wasn't necessarily a surprise, but certainly I think deals like the one that you approved today and certainly some of the conservative budgeting that we do at DME, we hope that going forward that will be well received. Hopefully, we'll also, by the end of the year, have the transmission cost of service study and filing behind us, so we'll have a better feel of what the impact's gonna be. So I think overall it wasn't unexpected. I think, from my perspective, the utility's in a very good financial position, and we hope that going forward things will continue to improve and maybe kind of get back to a rating that we think is more commensurate of kind of where we believe our utility system is. - Okay, sir. Well, thank you for that. Again, I thought under the circumstances it wasn't that bad, so thanks for the additional background. - Yes, sir. - All right, any other questions? All right, on to concluding items. Does any board member have anything they wish to have add to a future agenda or any comments to make at this time? - Just want to thank Karen for her service very much. It's been such a pleasure getting to know you. I think you're another one of those people that proved to me, no matter how big our town gets, it's still kind of a small town. - Absolutely, Pam. - Thanks, Billy. - I hope Billy's saying too. I'll miss you. - Oh, I'll be around. - I know. - Yeah, I just wanted to say thank you for, well, thank you to the staff for teaching me how the city government works. Utilities are a huge part of what City of Denton does, and I feel like I've got a better grasp of a very complicated animal now. So thanks to the staff, and I also appreciate all the creative thinking that goes on with the staff. Kudos to them. If Terry at all can pass that along to people who've presented to us. And thanks to the other board members. I think that this board has a real, very productive variety of points of view. We all bring something different, and I am very appreciative of how well we work together. Thank you, Susan, for keeping us in line. I'll be around. - I know you will. Anything else? All right, do we have a motion to adjourn? - Thank you. - So adjourned. - Billy? - Second. - All right. And you're second? Okay, we are adjourned. Thanks.