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And we'll go right into that with the first part which is

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item A.

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I guess Phil, this is the report regarding moving city of

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Denton toward 100% renewable energy.

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I think Phil Williams is going to make this presentation.

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Thank you.

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Thank you.

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This is an extremely exciting time in electric utility

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industry.

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I've been in the industry for 40 years.

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I've seen transitions from different fuel sources from fuel

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oil to coal to nuclear to gas and now to renewables.

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And these transitions are exciting times, challenging times

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, but exciting as we make these transitions to go forward

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with, in this case, more economical.

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And certainly more resources that will provide us better

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energy from sustainability standpoint.

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Just a quick background on the DME.

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Been in business since 1905.

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52,000 customers.

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I was noticing an article I read last week from Guam Power

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Authority.

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Guam is an interesting place to watch as renewables make an

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evolution there because it's on an island.

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It's about the same number of customers as Denton.

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So it's interesting to watch from our perspective of how

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they deploy renewables on their island.

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And use that to deploy energy sources now that have to all

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be shipped in.

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Whether it's fuel oil or heavy oil, everything is shipped

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in.

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As you can imagine, their power is 50 to 60% more expensive

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.

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So there they can certainly afford to take some stretch

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goals as far as what they do with renewables.

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Again, recognizing our customer base, 88% residential, 12%

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commercial industrial.

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If you look at the load side of it, our sales, 60% of our

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sales are those 12% of our customers.

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We've grown from small to medium, as I say.

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We're not ever going to be the size of San Antonio or

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Austin, the largest municipal utilities in the state.

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But we've certainly grown from a small municipal utility to

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one of the medium size and certainly stand out in the crowd

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.

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With our renewable portfolio.

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Annual budget, $176 million. This was last year's budget.

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The next presentation of CFDIS will be this year's budget.

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We'll be less than that.

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We operate within a grid of the Electrical Liability

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Council of Texas.

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And we operate on the purview of this board, the Public Ut

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ility Board, and Advisory Board to City Council, who is our

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governing body.

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That governing body gave us clear direction in 2016.

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As we adopted the renewable didn't plan, it certainly gave

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us direction that 70% was a goal and a marker along the

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journey.

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It was certainly not supposed to be the end point.

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Then they gave us clear direction that they still want us

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to pursue as much renewable as possible while continuing to

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offer competitive electric rates and ensure not only

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physical electrical liability, but financial electrical

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liability for our customers.

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And that's what this plan has done.

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And we'll continue to do.

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So key factors that I'm going to cover in more detail, but

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I'll hit the high points here.

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Up front, the pricing for wind and solar projects continues

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to be favorable.

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Matter of fact, it almost with solar, especially, it could

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drive us into paralysis a little bit because the price

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keeps going down.

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And so it drives you into a point of when do I pull the

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trigger to go forward more solar?

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I want to go more solar.

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We've been looking at more solar for years.

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And every time we think we're ready to pull the trigger on

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it, somebody walks in the door for a better price.

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And so things are shaping up.

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We have a new RFP going out that I'll refer to later.

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And we'll certainly get in a position to pull the trigger

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on the deal that we'll bring forward to the utility board

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and to the council later this year.

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One of the advantages of renewables is that we see as price

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consistency through long term contracts.

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We can lock in pricing to these contracts that we can't

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lock in with long term gas.

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And so it gives us a capability at this time to lock in

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long term wind power contracts and solar contracts that

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will provide us price consistency throughout their terms.

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The issue, of course, is the renewable output as compared

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to the load.

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Wind and solar come when wind and solar come.

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And not exactly when we have the load.

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I still need something to dispatch to match our load

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capability.

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And I have some charts to demonstrate that.

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Of course, the answer in a lot of people's mind for that

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and the future answer for that is grid scale storage.

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But that's at the pilot phase.

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I was talking earlier about Guam.

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Guam just issued a request for a proposal, I think, for 40

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megawatts of storage.

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And they're about the same size system we are.

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So about 350 megawatts system.

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And so they're just starting into it.

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And the problem they're solving with storage in their

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system is one they have because they don't have an ERCOT.

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They don't have a grid to back up on their own grid.

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And so they're going to use battery storage for frequency

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and to maintain the quality of electricity.

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Not exactly to provide a bulk of electricity, which is what

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we need.

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Wind doesn't always deliver according to forecast.

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I have some graphs that will show that.

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And because of that, it can cause prices to spike.

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And I also have a graph showing the spike of that.

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You have to contract on the megawatt capacity versus megaw

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att hour production.

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You have to contract for so much more capacity than you

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would otherwise as far as production.

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But what that can give you is an overabundance of renewable

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energy at some times and not enough at others.

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The research and development.

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We've been in discussions with universities, San Diego labs

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, to look at what other developments will be in the future.

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And to talk to them about and partner with some of them on

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what could come forward.

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So where have we been?

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A short period of time, we were at a very low -- we had a

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landfill gas project.

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We added the next era contract, the wind contract, that

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took us 40 percent.

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The latest plan that we passed was to take us up to 70

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percent.

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And what I'm here to tell you today is with the pricing we

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're seeing, we'll be able to go beyond that by 2019.

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We'll go well over 80 percent.

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And so we're going to achieve beyond that immediately in

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2019.

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And we still recognize that's not the end.

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We're achieving these different goals by these different

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resources.

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Coastal wind, west Texas solar, west Texas wind.

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We're looking at community solar, energy storage, demand

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response.

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All those to keep going towards the goal of having more and

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more renewables in our portfolio.

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And we're talking about physical renewable portfolio.

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Where we are right now, 263,000 megawatt hours.

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We're talking about in 2019, the original plan of the

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renewable project was to have close to a million megawatt

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hours of wind and 300,000 megawatt hours of solar.

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We're seeing the pricing and the shape of these plans come

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forward now.

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And we're talking about increasing that to almost a million

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three of wind and 357,000 of solar.

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So a significant increase from where we originally talked

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about.

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How does that come about?

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We're looking at originally we talked about 100 megawatts

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of solar and I believe 230 megawatts of wind.

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We've added 50 more of wind, 30 more of solar to the mix as

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far as the capacity of it we would generate.

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And we still have the energy center.

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The reason we have to go for that over amount of capacity

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is because as we've said, the wind doesn't always shine.

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The wind doesn't always blow, the sun doesn't always shine.

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Solar produces about 30 to 35%.

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You factor that size of solar times 8,760 hours a year

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times the percentage it does produce.

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And that gives you that amount of megawatt hours to fit in

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our portfolio.

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Same thing with wind.

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Wind 45 to 55% capacity factor and it produces almost a

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million three.

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The energy center, we're looking at producing depending on

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the year, what the weather is.

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We'll probably run about 20 to 30% of the time and produce

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about 488,000 megawatt hours.

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Now what's a little bit misleading here is this little sl

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iver down here I call market.

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And that's net.

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The reason that's misleading is because that's net of how

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much we're going to push out at times and how much we'll

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take in at times.

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There will be time for renewable energy is blowing, wind's

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blowing, the sun shining and the load is low.

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And we'll have more renewable energy coming in than we can

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use.

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And we'll be selling that on the market.

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We'll also have time for the market prices are high and we

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'll be running the generation not for ourselves but because

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the market demands it.

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Both those together have us pushing out 500,000 megawatt

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hours in a year.

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By the same, the other side of the equation, there will be

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times when load is high, the wind and solar resources are

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not producing,

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and we'll be going to the market and pulling in 500,000 meg

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awatts a year.

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And so it almost nets each other out.

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This is not the time.

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And that's the whole philosophy of our project.

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You know, what is 100%?

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Is 100% meaning that I'm going to buy as many megawatt

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hours of renewable energy as what I sell?

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Then we can get to 100%.

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And I'll still have the energy center to run.

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And somebody might look at that and go, why do you need the

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engines if you're able to buy as much as you sell?

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Because it doesn't come at the right time.

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And so we have to balance, have to have some asset that we

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can use to balance the load and the resource coming in.

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So in our trek to get to renewable energy,

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I'm going to mark her here, the original forecast for

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renewable didn't plan.

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We would open up at 78%.

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It is load grows that deteriorates down.

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We would add a block of solar energy and it would go back

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up, come back down, and we would always been above 70%.

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What we're saying it's today's pricing.

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Our plan today is we'll open up at 88%.

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It'll deteriorate down.

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We'll buy a block of solar.

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It'll deteriorate down.

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We'll buy another block of solar and that will be our

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future.

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And we'll never go below 80%.

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But it will go up and down each year depending on the

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weather, depending on how the renewable resources are

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provided.

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So to talk a little bit about, I'm going to have to ask you

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to focus on the different colors here one at a time.

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Otherwise it gets confusing.

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The red lines are load.

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This is a usual summertime load.

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Start off at early in the morning, 24 hours a day, wrapping

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up to late afternoon peak.

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So that's the red line.

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The orange line here, orange like the sun, that's the solar

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production.

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The blue line here is the wind.

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It blows when I don't need it at night, blows some, comes

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down during the day when I need it most, but then it ramps

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back up at night.

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So the orange and the blue together give me that green line

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of supply.

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You can see I have some hours, as I was discussing, that

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are over supply.

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They'll be selling that to the market.

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I'll have some other hours where it's under.

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And if the market's cheaper, I'll buy from the market.

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If it's a lot cheaper, we'll be running our engines.

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And then we'll have another hour where it's excess, another

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hour where we're looking at the market or looking at our

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engines.

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And this is during the summertime, averages.

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Wintertime, again, focus on the red for a minute.

261
00:13:45,000 --> 00:13:50,950
The red wintertime load is what we call a camelback double

262
00:13:50,950 --> 00:13:52,000
hop.

263
00:13:52,000 --> 00:13:55,750
Comes up in the morning, lays down a little bit during the

264
00:13:55,750 --> 00:13:59,350
day, comes back again in the evening when everybody goes

265
00:13:59,350 --> 00:14:00,000
home.

266
00:14:00,000 --> 00:14:04,990
Again, the wind production, the solar production, add those

267
00:14:04,990 --> 00:14:08,000
together and it gives me this supply.

268
00:14:08,000 --> 00:14:12,419
But again, a big supply when I don't need it, I'm selling

269
00:14:12,419 --> 00:14:14,000
it to the market.

270
00:14:14,000 --> 00:14:18,419
The time when I'm using the engines or buying from the

271
00:14:18,419 --> 00:14:22,000
market and then again, excess supply.

272
00:14:22,000 --> 00:14:24,000
So we flip back and forth all the time.

273
00:14:24,000 --> 00:14:26,000
And this is just an average.

274
00:14:26,000 --> 00:14:29,000
It can vary a lot by each day.

275
00:14:29,000 --> 00:14:33,490
But this is one of the risks and what we look at as far as

276
00:14:33,490 --> 00:14:38,000
buying renewable energy is why don't we buy more?

277
00:14:38,000 --> 00:14:41,000
Well, because I'm buying at a fixed price.

278
00:14:41,000 --> 00:14:43,559
And then we'll have to sell it back into the market

279
00:14:43,559 --> 00:14:46,649
whenever it comes at whatever price the market is that time

280
00:14:46,649 --> 00:14:47,000
.

281
00:14:47,000 --> 00:14:50,470
And so that's the risk involved in what some people are

282
00:14:50,470 --> 00:14:54,000
finding is when they go to sell it back into the market,

283
00:14:54,000 --> 00:14:58,000
they contract at a price of, say, $23 a megawatt hour.

284
00:14:58,000 --> 00:15:01,000
They're selling it back into the market at $18.

285
00:15:01,000 --> 00:15:04,580
So how much loss can they afford to take during those hours

286
00:15:04,580 --> 00:15:08,000
to offset the good times when it's the opposite way?

287
00:15:08,000 --> 00:15:13,759
And that's what we have to look for, do our forward curves

288
00:15:13,759 --> 00:15:19,690
and look at what the forward market is going to be like for

289
00:15:19,690 --> 00:15:21,000
the energy.

290
00:15:21,000 --> 00:15:25,629
So this is just one day actual forecast, the ERCOP forecast

291
00:15:25,629 --> 00:15:26,000
.

292
00:15:26,000 --> 00:15:28,000
Normal summertime load.

293
00:15:28,000 --> 00:15:31,509
Here's the wind production, wind forecast they had, dotted

294
00:15:31,509 --> 00:15:35,129
line, and the blue line, the saw line is where it actually

295
00:15:35,129 --> 00:15:36,000
showed up.

296
00:15:36,000 --> 00:15:39,379
That's just reemphasizing the same point of sometimes the

297
00:15:39,379 --> 00:15:41,000
wind's harder to predict.

298
00:15:41,000 --> 00:15:43,000
That's what they're finding.

299
00:15:43,000 --> 00:15:45,000
So good benefit of solar, it's easier to predict.

300
00:15:45,000 --> 00:15:48,000
But the wind is becoming more and more difficult.

301
00:15:48,000 --> 00:15:52,210
They're finding the Electric Reliability Council of Texas

302
00:15:52,210 --> 00:15:55,470
has even added a position that's all they do is weather

303
00:15:55,470 --> 00:15:57,000
forecast, wind forecast now,

304
00:15:57,000 --> 00:16:01,000
because it has such an impact on resources.

305
00:16:01,000 --> 00:16:03,669
And that's what we've added to our staff, is people to do

306
00:16:03,669 --> 00:16:05,000
the same forecast for us.

307
00:16:05,000 --> 00:16:12,210
Because we're incorporating so much wind and solar into our

308
00:16:12,210 --> 00:16:14,000
portfolio.

309
00:16:14,000 --> 00:16:17,000
The dotted lines here represent forecast.

310
00:16:17,000 --> 00:16:22,000
This is a wind forecast day ahead, two days.

311
00:16:22,000 --> 00:16:25,000
So this was a day earlier this month.

312
00:16:25,000 --> 00:16:29,360
So the white dotted line was forecast total, the solid bars

313
00:16:29,360 --> 00:16:31,000
is what was producing.

314
00:16:31,000 --> 00:16:35,000
These different colors are different flavors of wind.

315
00:16:35,000 --> 00:16:40,000
Panhandle wind, this is yellow on the bottom.

316
00:16:40,000 --> 00:16:42,000
The red is the coastal wind.

317
00:16:42,000 --> 00:16:44,000
The blue is the West Texas wind.

318
00:16:44,000 --> 00:16:47,750
On this day, all of them are underperforming, performing

319
00:16:47,750 --> 00:16:50,000
less than what they'd forecast.

320
00:16:50,000 --> 00:16:53,000
But panhandle wind is especially erratic.

321
00:16:53,000 --> 00:16:56,000
As you can see, it went to the bottom.

322
00:16:56,000 --> 00:16:58,549
And so those are the times we have to fill in, we have to

323
00:16:58,549 --> 00:17:03,889
scramble and fill in with a different resource so that you

324
00:17:03,889 --> 00:17:09,000
're not exposed.

325
00:17:09,000 --> 00:17:12,220
When I talk about not exposed, here's what I'm talking

326
00:17:12,220 --> 00:17:14,000
about not being exposed to.

327
00:17:14,000 --> 00:17:18,529
When you have these different market occasions, these are

328
00:17:18,529 --> 00:17:22,000
the prices that you can see because of the scale.

329
00:17:22,000 --> 00:17:25,910
You can barely see the price for every 15 minute interval

330
00:17:25,910 --> 00:17:30,000
because it's rocking along around $20 a megawatt hour.

331
00:17:30,000 --> 00:17:34,420
But you can have transmission congestion or the wind

332
00:17:34,420 --> 00:17:38,670
suddenly lay down or some other fossil fuel generator not

333
00:17:38,670 --> 00:17:43,000
show up or they just missed the load forecast that day.

334
00:17:43,000 --> 00:17:47,329
When those things happen, transmission congestion is what

335
00:17:47,329 --> 00:17:51,670
happened here because they sent a negative signal telling

336
00:17:51,670 --> 00:17:54,859
people in this area not to generate because it was costing

337
00:17:54,859 --> 00:17:56,000
them to push money on the grid.

338
00:17:56,000 --> 00:18:00,000
And then quickly turned around to a positive number.

339
00:18:00,000 --> 00:18:05,720
Instead of costing $20 a megawatt hour, it cost $373 a meg

340
00:18:05,720 --> 00:18:07,000
awatt hour.

341
00:18:07,000 --> 00:18:14,059
Again, it rocks along and the next day it got almost to $

342
00:18:14,059 --> 00:18:18,000
800 a megawatt hour.

343
00:18:18,000 --> 00:18:21,890
So for our load, those kind of excursions could cost you $

344
00:18:21,890 --> 00:18:27,000
100,000 pretty quick if you're not covered in some way.

345
00:18:27,000 --> 00:18:34,420
That's why having the five minute start engines covers us

346
00:18:34,420 --> 00:18:42,180
on that and balances out, protects us from our financial

347
00:18:42,180 --> 00:18:43,000
risk.

348
00:18:43,000 --> 00:18:48,650
The progress we're making on renewables, we're making it on

349
00:18:48,650 --> 00:18:53,759
our wholesale portfolio by taking into consideration those

350
00:18:53,759 --> 00:18:56,000
risks and how to balance them.

351
00:18:56,000 --> 00:18:58,950
How to balance them against each other contracts and how to

352
00:18:58,950 --> 00:19:01,849
balance them with our generation and making significant

353
00:19:01,849 --> 00:19:03,000
progress on that.

354
00:19:03,000 --> 00:19:06,000
But there's other things we can do.

355
00:19:06,000 --> 00:19:09,839
Community solar has been a goal and something in our sites

356
00:19:09,839 --> 00:19:14,000
that we've had our consideration for the last three years.

357
00:19:14,000 --> 00:19:17,170
But again, as we progress towards a contractor or coming up

358
00:19:17,170 --> 00:19:20,400
with a program, the market keeps changing and coming out

359
00:19:20,400 --> 00:19:22,000
with something better.

360
00:19:22,000 --> 00:19:25,859
But we are honing in on that now and intend to have an RFP

361
00:19:25,859 --> 00:19:29,000
of a question proposal later this year.

362
00:19:29,000 --> 00:19:31,809
We also intend to get details and have community

363
00:19:31,809 --> 00:19:36,220
involvement as far as what's wanted and what would fit with

364
00:19:36,220 --> 00:19:41,619
our community as far as a community solar project later

365
00:19:41,619 --> 00:19:43,000
this year.

366
00:19:43,000 --> 00:19:48,559
Storage, renewable, research and development, mainly this

367
00:19:48,559 --> 00:19:51,000
is batteries in our area.

368
00:19:51,000 --> 00:19:55,460
We've been talking to University of North Texas, University

369
00:19:55,460 --> 00:20:02,210
of Texas at Dallas, SMU, Sandia, National Laboratories, all

370
00:20:02,210 --> 00:20:03,000
these people.

371
00:20:03,000 --> 00:20:06,170
And from the perspective of us furnishing them the site of

372
00:20:06,170 --> 00:20:08,759
here's a site, here's the open land, here's the

373
00:20:08,759 --> 00:20:13,519
interconnection, here's a place for you to stage your new

374
00:20:13,519 --> 00:20:15,000
technology.

375
00:20:15,000 --> 00:20:18,000
And they're all very excited about that.

376
00:20:18,000 --> 00:20:20,990
What they're all doing is scrambling, looking for grant

377
00:20:20,990 --> 00:20:23,000
money to help fund those projects.

378
00:20:23,000 --> 00:20:26,460
And we've certainly left an open door for any of them to

379
00:20:26,460 --> 00:20:30,240
come forward and bring their projects forward and partner

380
00:20:30,240 --> 00:20:33,000
with them to do these kind of projects.

381
00:20:33,000 --> 00:20:37,359
We've set a record on rooftop solar. We passed 100 system

382
00:20:37,359 --> 00:20:40,000
mark a couple of months ago.

383
00:20:40,000 --> 00:20:45,619
So far we've provided rebates for those systems of a

384
00:20:45,619 --> 00:20:47,000
million two.

385
00:20:47,000 --> 00:20:50,000
Demand response.

386
00:20:50,000 --> 00:20:54,630
We've been talking to our top 200 customers, certainly

387
00:20:54,630 --> 00:20:57,000
making it available to them.

388
00:20:57,000 --> 00:21:00,180
Most of them as we look at the demand response programs

389
00:21:00,180 --> 00:21:03,480
that are in the market, and we provide them an avenue to

390
00:21:03,480 --> 00:21:05,000
take advantage of those.

391
00:21:05,000 --> 00:21:08,200
The response we get back from those customers, from those

392
00:21:08,200 --> 00:21:11,559
commercial large industrial customers is they don't want to

393
00:21:11,559 --> 00:21:14,750
interrupt their load. They don't want to interrupt their

394
00:21:14,750 --> 00:21:17,000
production to respond to the band.

395
00:21:17,000 --> 00:21:20,750
They'd rather pay the bill and our products that value by

396
00:21:20,750 --> 00:21:24,000
them that they won't continue their production.

397
00:21:24,000 --> 00:21:27,869
And so we haven't had a response yet or had the right

398
00:21:27,869 --> 00:21:31,000
customer to respond to demand response.

399
00:21:31,000 --> 00:21:37,160
Energy efficiency. The cleanest megawatt hour is the one I

400
00:21:37,160 --> 00:21:38,000
never have to produce.

401
00:21:38,000 --> 00:21:41,779
And that's what we look for in energy efficiency. We have a

402
00:21:41,779 --> 00:21:46,000
program that first is free in home audits.

403
00:21:46,000 --> 00:21:48,900
Those free in home audits are not available in other

404
00:21:48,900 --> 00:21:51,970
service areas and other service areas people have to pay

405
00:21:51,970 --> 00:21:53,000
for those.

406
00:21:53,000 --> 00:21:56,750
Matter of fact, there are businesses that come to Denton

407
00:21:56,750 --> 00:22:00,440
wanting to sell those and are disappointed when they find

408
00:22:00,440 --> 00:22:03,849
out that they can't sell them here because we already

409
00:22:03,849 --> 00:22:06,000
offered that service for free.

410
00:22:06,000 --> 00:22:09,210
Those audits produce results of telling people where they

411
00:22:09,210 --> 00:22:13,710
need to improve their houses, and we provide rebates for

412
00:22:13,710 --> 00:22:19,210
installation, thermostats, air conditioning change outs,

413
00:22:19,210 --> 00:22:21,000
and solar systems.

414
00:22:21,000 --> 00:22:24,750
And as far as I know, we're the only entity in the United

415
00:22:24,750 --> 00:22:29,000
States that provides rebate for battery storage systems.

416
00:22:29,000 --> 00:22:34,230
So we're ahead in that regard. We have our Green Sense

417
00:22:34,230 --> 00:22:37,000
renewable rate, 168 customers on that account.

418
00:22:37,000 --> 00:22:42,450
That first is renewable energy credits, and people pay for

419
00:22:42,450 --> 00:22:48,000
the difference in that to achieve 100% renewable.

420
00:22:48,000 --> 00:22:54,289
How do our rebates stack up against other utilities? Tied

421
00:22:54,289 --> 00:22:57,670
at third behind American Electric Power, which is the

422
00:22:57,670 --> 00:23:01,000
largest investor-owned utility in the United States.

423
00:23:01,000 --> 00:23:04,380
They have an entity in North Texas, which is the old West

424
00:23:04,380 --> 00:23:08,059
Texas Utilities, and the South Texas, the old Central Power

425
00:23:08,059 --> 00:23:09,000
and Light.

426
00:23:09,000 --> 00:23:12,000
And theirs are ahead of us other than that.

427
00:23:12,000 --> 00:23:16,210
We're first talking about with battery systems because as I

428
00:23:16,210 --> 00:23:20,059
said, we're the only ones that incentivize people to get a

429
00:23:20,059 --> 00:23:21,000
battery.

430
00:23:21,000 --> 00:23:23,759
The thing to note here is the number of cities, Bryan

431
00:23:23,759 --> 00:23:27,849
College Station, Georgetown, Lubbock, Greenville, that no

432
00:23:27,849 --> 00:23:32,000
longer offer solar incentives.

433
00:23:32,000 --> 00:23:36,349
And it's not that those people are against solar, but it's

434
00:23:36,349 --> 00:23:39,000
just you got to recognize the reasoning why you do rebates.

435
00:23:39,000 --> 00:23:43,990
Why you do rebates is to motivate people to take an action

436
00:23:43,990 --> 00:23:47,000
they would not otherwise take.

437
00:23:47,000 --> 00:23:50,750
So for years on air conditioning systems, when we first

438
00:23:50,750 --> 00:23:53,200
started doing rebates, that's where the main area we did

439
00:23:53,200 --> 00:23:55,670
was getting people to take a step to go for a more

440
00:23:55,670 --> 00:23:58,000
efficient air conditioning system.

441
00:23:58,000 --> 00:24:01,380
You recognize efficiency of air conditioning systems by the

442
00:24:01,380 --> 00:24:04,400
efficiency rating, which was when it first started was

443
00:24:04,400 --> 00:24:05,000
eight.

444
00:24:05,000 --> 00:24:09,710
And we incentivized people to go to 10. And then the market

445
00:24:09,710 --> 00:24:11,980
switched and everybody was doing 10 and we incentivized

446
00:24:11,980 --> 00:24:13,000
people to go to 12.

447
00:24:13,000 --> 00:24:16,920
And then we changed our program to incentivize people to go

448
00:24:16,920 --> 00:24:19,000
to 14, 16, so on.

449
00:24:19,000 --> 00:24:22,990
So you quit paying incentives for people to do what they

450
00:24:22,990 --> 00:24:25,000
were going to do anyway.

451
00:24:25,000 --> 00:24:27,470
That's kind of where some people are with the solar

452
00:24:27,470 --> 00:24:28,000
programs.

453
00:24:28,000 --> 00:24:31,430
We have people that even though we run out of rebate money,

454
00:24:31,430 --> 00:24:35,000
they go forward with their solar installations anyway.

455
00:24:35,000 --> 00:24:37,619
And so it makes you question if people are going to go

456
00:24:37,619 --> 00:24:40,670
forward with solar installations anyway, that's a policy

457
00:24:40,670 --> 00:24:45,279
question we need to bring back is do we still need to do it

458
00:24:45,279 --> 00:24:48,000
at the level we're doing it?

459
00:24:48,000 --> 00:24:51,170
Certainly in light of some people cutting back on these

460
00:24:51,170 --> 00:24:52,000
altogether.

461
00:24:52,000 --> 00:24:56,640
And so that's one of the things we need to look at as far

462
00:24:56,640 --> 00:25:00,000
as our solar program in the future.

463
00:25:00,000 --> 00:25:02,000
Next steps.

464
00:25:02,000 --> 00:25:06,210
We remain focused on increasing renewables. We understand

465
00:25:06,210 --> 00:25:08,000
the direction and charge.

466
00:25:08,000 --> 00:25:13,000
We anticipate being 88% renewable in 2019.

467
00:25:13,000 --> 00:25:16,170
We are pursuing means of increasing renewable energy

468
00:25:16,170 --> 00:25:19,680
through community solar, energy storage, demand response,

469
00:25:19,680 --> 00:25:23,000
and looking for opportunities and avenues to do that.

470
00:25:23,000 --> 00:25:27,720
If we go to 88%, going to the last pieces of that become

471
00:25:27,720 --> 00:25:32,480
more expensive and harder to do, but we keep trying to get

472
00:25:32,480 --> 00:25:34,000
closer to that.

473
00:25:34,000 --> 00:25:39,000
Additional renewable request proposal is issued this month.

474
00:25:39,000 --> 00:25:41,740
And we expect to return presentation for the end of the

475
00:25:41,740 --> 00:25:44,000
year after we get those responses back.

476
00:25:44,000 --> 00:25:49,869
And we'll come back to this board and into the council with

477
00:25:49,869 --> 00:25:54,000
the result of those responses.

478
00:25:54,000 --> 00:26:00,000
That's the state of the union on renewables. Any questions?

479
00:26:00,000 --> 00:26:19,000
[INAUDIBLE]

480
00:26:19,000 --> 00:26:22,750
So I see battery storage will certainly have a use in the

481
00:26:22,750 --> 00:26:26,619
electrical grid. What Guam is using it for is mainly just

482
00:26:26,619 --> 00:26:31,000
for a small percentage of their load to maintain frequency.

483
00:26:31,000 --> 00:26:35,680
California is pushing for more battery storage. It'll make

484
00:26:35,680 --> 00:26:39,240
sense there because they have a short window of peak load

485
00:26:39,240 --> 00:26:43,210
that they're not covering with renewables that they can get

486
00:26:43,210 --> 00:26:46,000
coverage for a couple hours, I would say, happening.

487
00:26:46,000 --> 00:26:50,420
In Texas, where we have the 75 to 80 degree nights, the

488
00:26:50,420 --> 00:26:54,269
amount of time you would have to charge the batteries and

489
00:26:54,269 --> 00:26:58,369
to discharge, that technology isn't there yet to charge it

490
00:26:58,369 --> 00:27:02,140
in a short period of time, usually over a long period of

491
00:27:02,140 --> 00:27:03,000
time.

492
00:27:03,000 --> 00:27:05,000
And that's where they've got to go.

493
00:27:05,000 --> 00:27:09,220
Certainly there's going to be some places in the electrical

494
00:27:09,220 --> 00:27:13,220
grid where they frequency response whenever frequency

495
00:27:13,220 --> 00:27:17,420
responses when something sudden happens on the grid and you

496
00:27:17,420 --> 00:27:20,430
need some kind of response to that to get it back up to

497
00:27:20,430 --> 00:27:21,000
speed.

498
00:27:21,000 --> 00:27:26,000
And that seems to be the first place that they'll be used.

499
00:27:26,000 --> 00:27:30,259
Right now the first project in Texas was a battery system

500
00:27:30,259 --> 00:27:34,670
that was put in in a place appropriately named No Trees out

501
00:27:34,670 --> 00:27:36,000
in West Texas.

502
00:27:36,000 --> 00:27:41,539
And that battery system, I believe, cycled out. It got cy

503
00:27:41,539 --> 00:27:45,250
cled so much that it ordered batteries out in three to four

504
00:27:45,250 --> 00:27:46,000
years.

505
00:27:46,000 --> 00:27:48,829
And so you have large capital investment like we're making

506
00:27:48,829 --> 00:27:51,569
in these engines, and you used it up in three to four years

507
00:27:51,569 --> 00:27:53,000
and had to replace it.

508
00:27:53,000 --> 00:27:58,230
And so that's the kind of research and development needs is

509
00:27:58,230 --> 00:28:03,160
how do you utilize those batteries and make it where they

510
00:28:03,160 --> 00:28:05,000
're economical.

511
00:28:05,000 --> 00:28:08,380
Right now, physically can they be used? Yes. Is it

512
00:28:08,380 --> 00:28:11,420
economical yet? No, because you put the batteries in, you

513
00:28:11,420 --> 00:28:14,000
still have to buy the power to put in them.

514
00:28:14,000 --> 00:28:17,759
You have some loss, and then you cycle enough time and it

515
00:28:17,759 --> 00:28:19,000
wears them out.

516
00:28:19,000 --> 00:28:24,000
And so to me, I see batteries where solar was 20 years ago.

517
00:28:24,000 --> 00:28:26,000
I think it will evolve.

518
00:28:26,000 --> 00:28:29,750
It may evolve quicker, but as far as evolving to the point

519
00:28:29,750 --> 00:28:33,420
of being a complete replacement for the entire generation

520
00:28:33,420 --> 00:28:42,000
grid, I don't see that happening overnight.

521
00:28:42,000 --> 00:28:51,000
That's all right.

522
00:28:51,000 --> 00:28:55,930
One other question as far as to the whole idea of when the

523
00:28:55,930 --> 00:28:58,000
sun doesn't shine.

524
00:28:58,000 --> 00:29:00,539
I know that when the sun doesn't shine, you still get a sun

525
00:29:00,539 --> 00:29:06,779
burn. Does that same, I mean, how much power is taken in

526
00:29:06,779 --> 00:29:10,000
when the sun doesn't shine?

527
00:29:10,000 --> 00:29:14,690
There is still some, but just as you can see the normal

528
00:29:14,690 --> 00:29:21,769
capacity for over a year for solar installation would be 30

529
00:29:21,769 --> 00:29:25,410
% of what you would get out of fossil fuel generation at

530
00:29:25,410 --> 00:29:27,000
that same capacity.

531
00:29:27,000 --> 00:29:29,000
About 30%? Yeah.

532
00:29:29,000 --> 00:29:33,460
So you're not going to get an average over a year. You're

533
00:29:33,460 --> 00:29:37,000
just not going to get all the sun shining all the time.

534
00:29:37,000 --> 00:29:43,000
Is there any research to try to increase the pull?

535
00:29:43,000 --> 00:29:46,380
The technology for the solar panels is getting better and

536
00:29:46,380 --> 00:29:50,000
more efficient and certainly has made great strides.

537
00:29:50,000 --> 00:29:52,809
And what they've made the greatest stride on is just

538
00:29:52,809 --> 00:29:55,960
getting cheaper and more efficient, but more on getting

539
00:29:55,960 --> 00:29:59,000
them built cheaper as they increase volume.

540
00:29:59,000 --> 00:30:03,210
And so that's what we're seeing is that they just keep

541
00:30:03,210 --> 00:30:07,349
getting their prices down from where they were two years

542
00:30:07,349 --> 00:30:08,000
ago.

543
00:30:08,000 --> 00:30:12,900
I mean, like, they've dropped by, since 2010, they've

544
00:30:12,900 --> 00:30:15,000
dropped over 100%.

545
00:30:15,000 --> 00:30:18,170
So, I mean, it's just dropped, that's not the right

546
00:30:18,170 --> 00:30:21,400
percentage, but anyway, it's dropped significantly since

547
00:30:21,400 --> 00:30:24,000
then from $200 a megawatt hour down below.

548
00:30:24,000 --> 00:30:30,000
Now we're seeing prices in the 30s and 40s.

549
00:30:30,000 --> 00:30:33,559
Back on battery storage. I read there are a couple of

550
00:30:33,559 --> 00:30:37,269
businesses out in California that installed that themselves

551
00:30:37,269 --> 00:30:39,000
from an R&D perspective.

552
00:30:39,000 --> 00:30:42,539
Is that something we can do here, maybe with the university

553
00:30:42,539 --> 00:30:45,000
or something, just to configure it?

554
00:30:45,000 --> 00:30:47,980
Well, we've provided a rebate for people to put in and we

555
00:30:47,980 --> 00:30:50,000
've had some people take us up on that.

556
00:30:50,000 --> 00:30:53,750
And are in the midst of doing of installing the battery

557
00:30:53,750 --> 00:30:56,000
pack home battery pack systems.

558
00:30:56,000 --> 00:31:00,500
Then also we've been in discussion with University of North

559
00:31:00,500 --> 00:31:03,680
Texas, UTD and SMU and looking for grant money for them to

560
00:31:03,680 --> 00:31:05,000
put in a facility to test that.

561
00:31:05,000 --> 00:31:09,359
And we look at the city of Austin has done experiment with

562
00:31:09,359 --> 00:31:13,670
one and now Guam is doing one and we'll certainly

563
00:31:13,670 --> 00:31:15,000
investigate those.

564
00:31:15,000 --> 00:31:17,000
Great.

565
00:31:17,000 --> 00:31:26,000
Phil, we're talking about now being at 88% by 2019.

566
00:31:26,000 --> 00:31:29,210
It's took quite a bit. I mean, it's pretty big jump from 70

567
00:31:29,210 --> 00:31:30,000
to 88.

568
00:31:30,000 --> 00:31:35,950
Not that much more of a jump to 100. I know the 2035 is the

569
00:31:35,950 --> 00:31:40,000
stated target, I guess, if you will.

570
00:31:40,000 --> 00:31:48,930
And I just want to, you know, what's the how much more of a

571
00:31:48,930 --> 00:31:52,000
job or what's going to have to happen for it to get to 100?

572
00:31:52,000 --> 00:31:55,210
Is it is it going to be new technologies such as battery

573
00:31:55,210 --> 00:31:57,000
storage? Is that where we're going to be?

574
00:31:57,000 --> 00:31:59,230
Because you certainly certainly all those technologies

575
00:31:59,230 --> 00:32:02,000
could, you know, and that's the, you know, I'd like to

576
00:32:02,000 --> 00:32:03,000
share what the board would like.

577
00:32:03,000 --> 00:32:05,470
What we'd like to be able to do sit down and say, OK, we're

578
00:32:05,470 --> 00:32:08,000
going to do this, this and this and we'll be in 100.

579
00:32:08,000 --> 00:32:12,210
And what we don't know is what technology breakthroughs are

580
00:32:12,210 --> 00:32:15,160
going to be, where the price is going to go next that will

581
00:32:15,160 --> 00:32:17,000
drive us to that.

582
00:32:17,000 --> 00:32:20,750
Right now, what's preventing us from going further is just

583
00:32:20,750 --> 00:32:23,670
the market prices of renewable energy compared to the

584
00:32:23,670 --> 00:32:27,339
market prices where I can sell that energy back into back

585
00:32:27,339 --> 00:32:30,000
into when I don't need it.

586
00:32:30,000 --> 00:32:34,210
You know, again, getting stuck in a situation where I got a

587
00:32:34,210 --> 00:32:38,000
contract price for twenty dollars a megawatt hour. But I've

588
00:32:38,000 --> 00:32:38,000
got all this excess.

589
00:32:38,000 --> 00:32:41,569
I got five hundred thousand megawatt hours of energy that I

590
00:32:41,569 --> 00:32:44,990
sell back into the market sometimes at a price that's not

591
00:32:44,990 --> 00:32:46,000
desirable.

592
00:32:46,000 --> 00:32:50,630
And so how to mitigate that risk, I think, is the next step

593
00:32:50,630 --> 00:32:53,000
to drive to seeing higher.

594
00:32:53,000 --> 00:32:56,980
But as far as driving us to the point where the about megaw

595
00:32:56,980 --> 00:33:01,049
att hours we buy is equal or more than the megawatt hours we

596
00:33:01,049 --> 00:33:03,000
use, we can get there.

597
00:33:03,000 --> 00:33:06,400
I think pretty quickly. I mean, I think that's that's going

598
00:33:06,400 --> 00:33:07,000
to happen.

599
00:33:07,000 --> 00:33:09,750
But, you know, people are going to look at it and go, OK,

600
00:33:09,750 --> 00:33:12,960
you're you say you're you're 100 percent renewable, but you

601
00:33:12,960 --> 00:33:15,000
still have these gas fired engines.

602
00:33:15,000 --> 00:33:19,640
How does that work? Well, you have to have them because it

603
00:33:19,640 --> 00:33:22,000
doesn't come at the same time.

604
00:33:22,000 --> 00:33:24,890
Well, even with a contract, you're going to pay for some

605
00:33:24,890 --> 00:33:27,950
type of insurance policy, if you will, from whoever you're

606
00:33:27,950 --> 00:33:29,000
buying it from.

607
00:33:29,000 --> 00:33:34,230
Right. If you don't have that. And that's what those

608
00:33:34,230 --> 00:33:37,000
engines provide.

609
00:33:37,000 --> 00:33:40,910
Just one other thing on the you mentioned something about

610
00:33:40,910 --> 00:33:45,000
the and I like the chart about the rebate program we have.

611
00:33:45,000 --> 00:33:49,269
That's very popular here. I think it gets funded on October

612
00:33:49,269 --> 00:33:50,000
1st.

613
00:33:50,000 --> 00:33:54,210
And if you don't if you're not in by October 15th, you're

614
00:33:54,210 --> 00:33:56,000
almost out.

615
00:33:56,000 --> 00:33:59,000
It didn't run out quite that fast this year.

616
00:33:59,000 --> 00:34:04,000
But I just again, that's that's a great chart.

617
00:34:04,000 --> 00:34:08,269
And I get a lot of comments from folks that are now

618
00:34:08,269 --> 00:34:13,150
thinking about, OK, I'm going to pull the trigger on solar

619
00:34:13,150 --> 00:34:14,000
at my house.

620
00:34:14,000 --> 00:34:18,699
And and what does push them over the top is being able some

621
00:34:18,699 --> 00:34:23,000
of the some of the grants, some of the rebates both locally

622
00:34:23,000 --> 00:34:24,000
and federal.

623
00:34:24,000 --> 00:34:28,340
And so I'd encourage us to keep keep those. I don't want to

624
00:34:28,340 --> 00:34:31,000
see those things go away.

625
00:34:31,000 --> 00:34:34,869
I think that's probably I mean, it's not it's not a large

626
00:34:34,869 --> 00:34:40,099
budget item, but it can be if you know, individually, if

627
00:34:40,099 --> 00:34:43,000
you break it down, it is a large percentage and a great

628
00:34:43,000 --> 00:34:43,000
incentive.

629
00:34:43,000 --> 00:34:48,000
For for people to do it individually. So I like that.

630
00:34:48,000 --> 00:34:52,989
Well, like I said, this this is a exciting time in the

631
00:34:52,989 --> 00:34:57,809
business to see this transition and to see us go to a plan

632
00:34:57,809 --> 00:35:05,000
that reduces emissions, reduces the use of gas, reduces.

633
00:35:05,000 --> 00:35:10,550
It just makes it more sustainable as far as resources. And

634
00:35:10,550 --> 00:35:15,000
we're just driving more towards that every day.

635
00:35:15,000 --> 00:35:18,170
And like I said, driving towards that without a rate

636
00:35:18,170 --> 00:35:19,000
increase.

637
00:35:19,000 --> 00:35:22,480
And so that I think that is a significant difference

638
00:35:22,480 --> 00:35:26,440
between us and and other cities that have gone towards this

639
00:35:26,440 --> 00:35:30,000
is ours is doing it with with competitive rates.

640
00:35:30,000 --> 00:35:35,000
And reliability and reliability.

641
00:35:35,000 --> 00:35:40,000
Any other questions.

642
00:35:40,000 --> 00:35:48,000
Thank you. Okay, thank you.

643
00:35:48,000 --> 00:35:52,510
Okay, next work session item we have is item B. And that is

644
00:35:52,510 --> 00:35:57,239
the to receive report, hold a discussion, give direction on

645
00:35:57,239 --> 00:36:02,000
the DME fiscal year 2017, 2018.

646
00:36:02,000 --> 00:36:08,050
Operating in capital budget and Chuck Springer is going to

647
00:36:08,050 --> 00:36:10,000
lead us in that.

648
00:36:10,000 --> 00:36:18,000
Randy.

649
00:36:18,000 --> 00:36:21,750
I'll start off. I won't still Phil Stunder, but his his

650
00:36:21,750 --> 00:36:25,619
favorite first slide in terms of the goals of DME rates,

651
00:36:25,619 --> 00:36:28,000
reliability and renewables.

652
00:36:28,000 --> 00:36:31,469
I think he's kind of covered some of those in his first

653
00:36:31,469 --> 00:36:36,670
presentation in terms of the goals, maintaining competitive

654
00:36:36,670 --> 00:36:38,000
rates.

655
00:36:38,000 --> 00:36:42,610
While adding that reliability or capacity to service all

656
00:36:42,610 --> 00:36:49,000
the customers, safety compliance with federal regulations,

657
00:36:49,000 --> 00:36:53,179
the maintenance of infrastructure, kind of replacement and

658
00:36:53,179 --> 00:36:58,000
growth and maximizing the use of renewable energy.

659
00:36:58,000 --> 00:37:02,719
Some of the more detailed goals in the upcoming year. I won

660
00:37:02,719 --> 00:37:07,650
't go through everything, but Phil's talked about executing

661
00:37:07,650 --> 00:37:11,900
additional wind and solar agreements and plan for the

662
00:37:11,900 --> 00:37:18,000
opening of the generation facility by the fall of 2018.

663
00:37:18,000 --> 00:37:21,000
Some substation completions.

664
00:37:21,000 --> 00:37:28,659
And look at, excuse me, filing a rate request with the PUC

665
00:37:28,659 --> 00:37:36,000
for additional transmission cost revenues to the city.

666
00:37:36,000 --> 00:37:40,210
In terms of accomplishments, paying off TMPA debt this

667
00:37:40,210 --> 00:37:44,199
upcoming budget year and I'll talk about that will be the

668
00:37:44,199 --> 00:37:47,000
last year of paying off that debt.

669
00:37:47,000 --> 00:37:53,000
Some of the savings from the energy management operation.

670
00:37:53,000 --> 00:38:00,739
As well as a reduction in October of the ECA rate and the

671
00:38:00,739 --> 00:38:06,000
amount of savings to the rate payers.

672
00:38:06,000 --> 00:38:10,900
Some other accomplishments. These are kind of construction

673
00:38:10,900 --> 00:38:15,289
related accomplishments in terms of, just highlight a few

674
00:38:15,289 --> 00:38:20,000
of them, the underground buried cable out at Southridge.

675
00:38:20,000 --> 00:38:24,420
Whenever you're impacting individuals yards and houses, it

676
00:38:24,420 --> 00:38:27,000
's always a challenging project.

677
00:38:27,000 --> 00:38:32,230
And they came through that very successfully. Exceeded the

678
00:38:32,230 --> 00:38:36,000
national average for system reliability.

679
00:38:36,000 --> 00:38:41,000
Recently passed the NERC audit and some of the others.

680
00:38:41,000 --> 00:38:47,719
In terms of the substations down at the bottom, you can see

681
00:38:47,719 --> 00:38:51,000
the completion of three.

682
00:38:51,000 --> 00:38:57,239
These are some of the other accomplishments. I won't go

683
00:38:57,239 --> 00:38:58,000
over them individually.

684
00:38:58,000 --> 00:39:01,170
But you can see down at the bottom when we were talking

685
00:39:01,170 --> 00:39:05,000
about the 6.4 million additional transmission cost.

686
00:39:05,000 --> 00:39:09,000
They recently received an additional 7.2.

687
00:39:09,000 --> 00:39:14,230
And when I get to the budget, you can see where that line

688
00:39:14,230 --> 00:39:18,000
item in terms of revenue is increasing.

689
00:39:18,000 --> 00:39:23,949
The performance measures in terms of the electric utility,

690
00:39:23,949 --> 00:39:29,599
it will just kind of highlight really reliability in terms

691
00:39:29,599 --> 00:39:34,000
of customer service hour that the system was available.

692
00:39:34,000 --> 00:39:39,579
Reducing the outage duration. Average number of interrupt

693
00:39:39,579 --> 00:39:42,000
ions, reducing those.

694
00:39:42,000 --> 00:39:47,949
Electrical outage due to vegetation or downed electrical

695
00:39:47,949 --> 00:39:49,000
lines.

696
00:39:49,000 --> 00:39:52,750
Percentage total electrical line is underground. Didn't

697
00:39:52,750 --> 00:39:56,000
have a very high percentage.

698
00:39:56,000 --> 00:40:00,630
And some of the new ones, percentage of renewable energy,

699
00:40:00,630 --> 00:40:04,000
the bottom two, and the EMO performance.

700
00:40:04,000 --> 00:40:09,000
There are some new performance measures that are proposed.

701
00:40:09,000 --> 00:40:16,269
I'll leave that up for a second, see if there's any

702
00:40:16,269 --> 00:40:20,000
questions on that one.

703
00:40:20,000 --> 00:40:26,380
In switching to cost containment within the budget, these

704
00:40:26,380 --> 00:40:30,000
are some of the proposals in the upcoming budget year.

705
00:40:30,000 --> 00:40:35,000
They've had challenges filling their engineering vacancies.

706
00:40:35,000 --> 00:40:40,480
So currently they have five. What they're proposing to do

707
00:40:40,480 --> 00:40:42,900
is to simply contract out for those engineering services

708
00:40:42,900 --> 00:40:45,000
instead of hiring in-house.

709
00:40:45,000 --> 00:40:51,000
They did eliminate two management positions in this budget.

710
00:40:51,000 --> 00:40:54,380
Also, like we've done for the other utilities, is

711
00:40:54,380 --> 00:40:58,000
recognizing salary savings and budgeting for that.

712
00:40:58,000 --> 00:41:01,460
It's about a percent and a half of total salaries and

713
00:41:01,460 --> 00:41:07,000
benefits. So within their budget this year, it's 308,000.

714
00:41:07,000 --> 00:41:11,429
Debt service is lower than projected. Some internally

715
00:41:11,429 --> 00:41:14,000
developed software packages.

716
00:41:14,000 --> 00:41:18,769
And implementation of the workforce management system to

717
00:41:18,769 --> 00:41:23,530
move toward a paperless environment in terms of their work

718
00:41:23,530 --> 00:41:25,000
order system.

719
00:41:25,000 --> 00:41:33,880
In terms of process improvements, the mydme.com application

720
00:41:33,880 --> 00:41:38,000
kind of through the customer service area.

721
00:41:38,000 --> 00:41:43,949
And you can see how often that was used by April of 2017,

722
00:41:43,949 --> 00:41:47,000
really to help customers become more aware of their usage,

723
00:41:47,000 --> 00:41:52,230
hopefully reduce usage by that awareness. It saves the

724
00:41:52,230 --> 00:41:57,550
customer funds, also helps reduce the demands on the system

725
00:41:57,550 --> 00:41:58,000
.

726
00:41:58,000 --> 00:42:02,619
Coordinating distribution system to automate power

727
00:42:02,619 --> 00:42:08,000
restoration, hopefully shortening the duration of outages,

728
00:42:08,000 --> 00:42:11,000
one of the performance measures.

729
00:42:11,000 --> 00:42:17,239
And RDIF system and standardizing their PC models for the

730
00:42:17,239 --> 00:42:19,000
department.

731
00:42:19,000 --> 00:42:23,210
Some other process improvements. They worked along with

732
00:42:23,210 --> 00:42:28,010
water and customer service in revamping the meter to

733
00:42:28,010 --> 00:42:30,000
billing process.

734
00:42:30,000 --> 00:42:34,989
They're using some temporary interns and programmers to

735
00:42:34,989 --> 00:42:39,960
help supplement staff and they converted one EMO operator

736
00:42:39,960 --> 00:42:46,159
position to an energy trading and risk management analyst

737
00:42:46,159 --> 00:42:47,000
position.

738
00:42:47,000 --> 00:42:53,400
And replacing their energy management trading system with a

739
00:42:53,400 --> 00:43:00,000
more robust system to more efficiently use their capacity.

740
00:43:00,000 --> 00:43:07,000
This is a chart that Phil has always shown historically,

741
00:43:07,000 --> 00:43:12,000
which kind of red talks about the annual peak demand.

742
00:43:12,000 --> 00:43:18,989
And then the blue is their kind of total sales. And you can

743
00:43:18,989 --> 00:43:24,349
see their projections in terms of peak demand a little bit

744
00:43:24,349 --> 00:43:25,000
lower.

745
00:43:25,000 --> 00:43:31,000
And their total sales at least in 2016 a little bit lower.

746
00:43:31,000 --> 00:43:35,300
Like the water utility, they're very dependent in terms of

747
00:43:35,300 --> 00:43:39,670
weather. And our last couple of summers have been a little

748
00:43:39,670 --> 00:43:42,000
rainier and a little cooler.

749
00:43:42,000 --> 00:43:45,170
Unfortunately, I don't know what this one will be like. It

750
00:43:45,170 --> 00:43:48,190
started out a little bit rainier, but we're all crossing

751
00:43:48,190 --> 00:43:51,000
our fingers that we'll have another cool summer.

752
00:43:51,000 --> 00:43:55,210
At some point that will turn around and we'll start to

753
00:43:55,210 --> 00:43:59,429
having one of those summers where we count the days in a

754
00:43:59,429 --> 00:44:01,000
row over 100.

755
00:44:01,000 --> 00:44:05,900
In terms of growth factors, this is a table I think we

756
00:44:05,900 --> 00:44:11,000
showed last year that shows the growth in customers.

757
00:44:11,000 --> 00:44:15,900
I highlight a couple things. You can see the outage events

758
00:44:15,900 --> 00:44:20,750
going down. You can see the significant increase in capital

759
00:44:20,750 --> 00:44:22,000
projects.

760
00:44:22,000 --> 00:44:26,210
And one of the things in terms of customers, some of the

761
00:44:26,210 --> 00:44:30,510
large commercial customers when they come online, they don

762
00:44:30,510 --> 00:44:32,000
't add to customer numbers.

763
00:44:32,000 --> 00:44:36,320
In terms of total usage, that can be significant. And we've

764
00:44:36,320 --> 00:44:40,289
had some growth in those over the last couple of years that

765
00:44:40,289 --> 00:44:43,000
are some pretty large customers.

766
00:44:43,000 --> 00:44:48,230
I'm not going to go over this part of the presentation. I

767
00:44:48,230 --> 00:44:54,000
'll leave this up for a second in terms of the definitions.

768
00:44:54,000 --> 00:44:58,000
But some of these you'll see within the budget.

769
00:44:58,000 --> 00:45:02,210
So I'll just go through these if you have a question on one

770
00:45:02,210 --> 00:45:07,000
of them. I think the board has seen this before.

771
00:45:07,000 --> 00:45:09,000
Yes, Barbara. I'm sorry.

772
00:45:09,000 --> 00:45:12,980
I have a question on your outages. Do you have any way of

773
00:45:12,980 --> 00:45:17,199
tracing how many of those are caused by squirrels and

774
00:45:17,199 --> 00:45:22,179
things that get into the line, which is a real problem in

775
00:45:22,179 --> 00:45:23,000
that area?

776
00:45:23,000 --> 00:45:30,000
Dang squirrels.

777
00:45:30,000 --> 00:45:34,000
You've hit enemy number one.

778
00:45:34,000 --> 00:45:38,250
Yes, squirrels are our top outage cause, followed by

779
00:45:38,250 --> 00:45:40,000
lightning and equipment failure.

780
00:45:40,000 --> 00:45:44,230
And we rest for each outage with the top cause and like I

781
00:45:44,230 --> 00:45:48,000
say, squirrels and wildlife is number one.

782
00:45:48,000 --> 00:45:51,860
We've just started using a new wildlife guard, put on

783
00:45:51,860 --> 00:45:56,119
equipment and we're ordering those and putting those on in

784
00:45:56,119 --> 00:45:59,690
the areas that are having the heaviest number of outages as

785
00:45:59,690 --> 00:46:04,000
we speak to guard against that in the future.

786
00:46:04,000 --> 00:46:10,030
But the other thing we're doing is a plan to start

787
00:46:10,030 --> 00:46:18,030
replacing some of the over 50 year old infrastructure. Our

788
00:46:18,030 --> 00:46:18,539
distribution system is in the same similar situation, not

789
00:46:18,539 --> 00:46:20,349
the same but similar situation as the streets in that we're

790
00:46:20,349 --> 00:46:23,000
needing to, it's time to replace some of those.

791
00:46:23,000 --> 00:46:26,000
And we're working on how to do that.

792
00:46:26,000 --> 00:46:33,550
And fortunately, a lot of those are in very crowded areas,

793
00:46:33,550 --> 00:46:40,690
people's backyards and we'll need to have someone house

794
00:46:40,690 --> 00:46:47,000
meeting to talk about how we do those in the future.

795
00:46:47,000 --> 00:46:53,889
In terms of the capital plan for the five year capital plan

796
00:46:53,889 --> 00:47:01,449
, you can see 368.8 million, 100.8 in the current fiscal

797
00:47:01,449 --> 00:47:02,000
year.

798
00:47:02,000 --> 00:47:06,619
I do want to stress again and I think it will show in a

799
00:47:06,619 --> 00:47:12,340
future slide, but Denton's charter requires us to re-budget

800
00:47:12,340 --> 00:47:17,730
any capital funds that are available that haven't been enc

801
00:47:17,730 --> 00:47:19,000
umbered.

802
00:47:19,000 --> 00:47:22,980
So when you're looking at this capital budget, some of

803
00:47:22,980 --> 00:47:26,000
these funds are currently available.

804
00:47:26,000 --> 00:47:30,000
It's not like it's an additional 100 million and you'll see

805
00:47:30,000 --> 00:47:32,000
the debt issuance each year.

806
00:47:32,000 --> 00:47:36,510
So a little bit of the capital program probably is overst

807
00:47:36,510 --> 00:47:41,190
ated because of the charter requirement that we have to re-

808
00:47:41,190 --> 00:47:44,000
budget those funds every year.

809
00:47:44,000 --> 00:47:48,489
So you can look here historically seeing what the capital

810
00:47:48,489 --> 00:47:53,000
program has been but the actual amount spent per year.

811
00:47:53,000 --> 00:47:57,210
For example, in '15-'16, the capital budget when we re-bud

812
00:47:57,210 --> 00:48:02,280
geted all the funds was about 105 million, but the actual

813
00:48:02,280 --> 00:48:10,000
expenditures the end of the year were 65 million.

814
00:48:10,000 --> 00:48:15,360
And this just gives, this table here, like for example in '

815
00:48:15,360 --> 00:48:20,000
16-'17 shows a five year of 647.

816
00:48:20,000 --> 00:48:25,760
This next table just shows it excluding the Denton Energy

817
00:48:25,760 --> 00:48:30,000
Center in terms of the capital program.

818
00:48:30,000 --> 00:48:36,719
This gives a breakdown of the capital program each year by

819
00:48:36,719 --> 00:48:39,000
different type.

820
00:48:39,000 --> 00:48:42,539
I've included in your packet and we've got another

821
00:48:42,539 --> 00:48:46,429
PowerPoint if you would like to have more details on the

822
00:48:46,429 --> 00:48:48,000
capital program.

823
00:48:48,000 --> 00:48:53,630
We've included that as another exhibit, but this just kind

824
00:48:53,630 --> 00:48:59,269
of breaks down the type of improvements by distribution and

825
00:48:59,269 --> 00:49:01,000
by transmission.

826
00:49:01,000 --> 00:49:05,230
And a reminder that transmission, that's where we receive

827
00:49:05,230 --> 00:49:08,860
the cost recovery through the state system is on the

828
00:49:08,860 --> 00:49:10,000
transmission.

829
00:49:10,000 --> 00:49:16,480
And then you can see what's planned in terms of debt sales

830
00:49:16,480 --> 00:49:23,000
over that period of time down on this bottom line here.

831
00:49:23,000 --> 00:49:26,800
And that's where I kind of emphasize, you know, the $100

832
00:49:26,800 --> 00:49:30,469
million program, some of that is carryover where it just

833
00:49:30,469 --> 00:49:33,000
takes time to complete those projects.

834
00:49:33,000 --> 00:49:36,380
So we kind of have to conservatively budget that to make

835
00:49:36,380 --> 00:49:38,000
sure we're re-budgeting.

836
00:49:38,000 --> 00:49:44,070
But if you look at the planned debt issuance of 208 million

837
00:49:44,070 --> 00:49:51,329
versus the 368 million, that gives you a little bit of idea

838
00:49:51,329 --> 00:49:54,000
of that carryover.

839
00:49:54,000 --> 00:50:00,980
And this is kind of simply a schematic of the capital

840
00:50:00,980 --> 00:50:09,300
program, the substations and transmissions versus some of

841
00:50:09,300 --> 00:50:16,000
the other written out details of the program.

842
00:50:16,000 --> 00:50:21,230
Just a couple of breakdowns, and I know Phil covered this

843
00:50:21,230 --> 00:50:25,960
before in terms of electric meters by category being

844
00:50:25,960 --> 00:50:29,000
strongly dominated by residential.

845
00:50:29,000 --> 00:50:33,250
But then you look at the usage, kind of what strikes you

846
00:50:33,250 --> 00:50:37,670
the most is the green area where you see here it's just a

847
00:50:37,670 --> 00:50:39,000
quarter of 1%.

848
00:50:39,000 --> 00:50:48,000
But you can see the usage is almost 40%.

849
00:50:48,000 --> 00:50:51,000
I'll start getting into the details of the budget numbers.

850
00:50:51,000 --> 00:50:56,230
What's proposed for the upcoming fiscal year is a 1%

851
00:50:56,230 --> 00:51:01,409
decrease in rates, base rates to stay the same, a very

852
00:51:01,409 --> 00:51:06,000
small adjustment to the transmission cost recovery factor.

853
00:51:06,000 --> 00:51:09,980
This is really what the city pays to the other communities

854
00:51:09,980 --> 00:51:14,000
around the state for part of the distribution system.

855
00:51:14,000 --> 00:51:17,469
If you remember a couple of years ago, that part of the

856
00:51:17,469 --> 00:51:20,000
rate was broken out along with ECA.

857
00:51:20,000 --> 00:51:24,000
So you really have the base rate ECA and TCRF.

858
00:51:24,000 --> 00:51:27,909
It's scheduled to go up a little bit in terms of what Dent

859
00:51:27,909 --> 00:51:29,000
on will pay.

860
00:51:29,000 --> 00:51:33,590
So we wanted to make that adjustment just to keep that rate

861
00:51:33,590 --> 00:51:36,000
matching with what we pay.

862
00:51:36,000 --> 00:51:40,710
But the ECA, we're proposing for the upcoming budget year

863
00:51:40,710 --> 00:51:43,000
to decrease that by 1%.

864
00:51:43,000 --> 00:51:47,210
Also want to highlight there may be additional ECA

865
00:51:47,210 --> 00:51:52,099
reduction possible in the fall, kind of at the end of the

866
00:51:52,099 --> 00:51:57,000
year when the Denton Energy Center comes online.

867
00:51:57,000 --> 00:52:02,230
One of the big expenses that's built into this budget under

868
00:52:02,230 --> 00:52:06,000
the city charter DME is required to do kind of a complete

869
00:52:06,000 --> 00:52:10,000
management study on a 10 year rotation.

870
00:52:10,000 --> 00:52:14,000
And that 10 year period is coming up in 17, 18.

871
00:52:14,000 --> 00:52:18,909
So that 500,000 is built into the budget as an estimate of

872
00:52:18,909 --> 00:52:20,000
that study.

873
00:52:20,000 --> 00:52:25,000
And that's done by an external firm.

874
00:52:25,000 --> 00:52:30,400
This just kind of goes over some of the definitions, base

875
00:52:30,400 --> 00:52:36,000
rate, the transmission cost recovery factor, the ECA.

876
00:52:36,000 --> 00:52:39,000
I'll go over the TMPA coverage return.

877
00:52:39,000 --> 00:52:46,039
This is really where TMPA returns the access to their

878
00:52:46,039 --> 00:52:48,000
customers.

879
00:52:48,000 --> 00:52:50,000
That will be changing.

880
00:52:50,000 --> 00:52:53,500
I'll go over that when I show you that slide and the

881
00:52:53,500 --> 00:52:56,000
transmission cost of service.

882
00:52:56,000 --> 00:53:02,480
That's really the revenue that the city receives as part of

883
00:53:02,480 --> 00:53:07,000
that statewide transmission system.

884
00:53:07,000 --> 00:53:12,420
So in terms of revenues that's proposed for 17, 18, you see

885
00:53:12,420 --> 00:53:15,000
a slight decrease in base rate revenues.

886
00:53:15,000 --> 00:53:19,000
That's really just based on the projections of usage.

887
00:53:19,000 --> 00:53:22,750
The projections in the upcoming year are down a little bit

888
00:53:22,750 --> 00:53:25,000
from this year's projections.

889
00:53:25,000 --> 00:53:31,630
You can see the ECA revenues projected to be down a little

890
00:53:31,630 --> 00:53:37,000
bit because of that reduction in the ECA rate.

891
00:53:37,000 --> 00:53:41,320
And the coverage return, I mentioned, you can see in prior

892
00:53:41,320 --> 00:53:44,000
years, it was about 7 to 8 million.

893
00:53:44,000 --> 00:53:49,949
Because this 17, 18 is the last year of that debt for TMPA

894
00:53:49,949 --> 00:53:55,880
and the operation of that facility, the coverage return

895
00:53:55,880 --> 00:53:59,000
drops significantly.

896
00:53:59,000 --> 00:54:03,320
And then you can see, I mentioned the revenue that comes in

897
00:54:03,320 --> 00:54:05,000
to the city T-cost.

898
00:54:05,000 --> 00:54:14,449
You can see the jump in 16, 17 and the proposed jump in 17,

899
00:54:14,449 --> 00:54:16,000
18.

900
00:54:16,000 --> 00:54:20,460
In terms of expenditures, purchase power and fuel,

901
00:54:20,460 --> 00:54:24,000
transmission and personnel services.

902
00:54:24,000 --> 00:54:27,780
And I did want to mention we've put a closed session item

903
00:54:27,780 --> 00:54:31,969
if there's some questions specifically related to purchase

904
00:54:31,969 --> 00:54:35,000
power and fuel costs within the budget.

905
00:54:35,000 --> 00:54:39,210
There's a closed session if the committee has some

906
00:54:39,210 --> 00:54:41,000
questions on that.

907
00:54:41,000 --> 00:54:46,000
Operations and maintenance, the ROI, return on investment

908
00:54:46,000 --> 00:54:50,780
and franchise fees that are paid to the city's general fund

909
00:54:50,780 --> 00:54:51,000
,

910
00:54:51,000 --> 00:54:56,230
debt service, the inner fund transfers, mainly the cost of

911
00:54:56,230 --> 00:55:00,739
service from the general fund and from the technology

912
00:55:00,739 --> 00:55:02,000
services fund.

913
00:55:02,000 --> 00:55:07,230
And fixed assets is really a definition under accounting

914
00:55:07,230 --> 00:55:08,000
rules.

915
00:55:08,000 --> 00:55:14,000
So here's the proposed budget for 17, 18.

916
00:55:14,000 --> 00:55:22,000
You can see a reduction in the purchase power and fuel.

917
00:55:22,000 --> 00:55:27,719
And let me state this highlighted at the bottom, this does

918
00:55:27,719 --> 00:55:30,000
not assume any sale of TMPA.

919
00:55:30,000 --> 00:55:34,000
So it could be lower than that.

920
00:55:34,000 --> 00:55:39,639
And the energy center, if it comes online a little bit

921
00:55:39,639 --> 00:55:44,679
earlier than the end of the fiscal year, could also result

922
00:55:44,679 --> 00:55:46,000
in a little bit lower than that.

923
00:55:46,000 --> 00:55:50,519
So I think this is kind of a conservative assumption in

924
00:55:50,519 --> 00:55:52,000
terms of that.

925
00:55:52,000 --> 00:55:57,000
Personnel services are to stay about level.

926
00:55:57,000 --> 00:56:01,519
Operation and maintenance goes up mainly because of the

927
00:56:01,519 --> 00:56:03,000
energy center.

928
00:56:03,000 --> 00:56:07,000
The ROI and franchise fees stays relatively level.

929
00:56:07,000 --> 00:56:11,000
Debt service because of increased debt issuance.

930
00:56:11,000 --> 00:56:16,000
And inner fund transfers stay relatively level.

931
00:56:16,000 --> 00:56:21,000
Any questions on expenditures before I sneak on?

932
00:56:21,000 --> 00:56:25,000
This is the five-year forecast.

933
00:56:25,000 --> 00:56:27,000
So let me highlight a few things.

934
00:56:27,000 --> 00:56:30,809
You can see here we do have a planned use of reserves of

935
00:56:30,809 --> 00:56:33,000
about 7.5 million.

936
00:56:33,000 --> 00:56:38,480
As we've done in the past, we've built up funds to be able

937
00:56:38,480 --> 00:56:41,000
to pay down TMPA debt.

938
00:56:41,000 --> 00:56:46,239
So this is really kind of the last planned use of reserves

939
00:56:46,239 --> 00:56:49,000
relating to the TMPA debt.

940
00:56:49,000 --> 00:56:53,000
And I've gone over the other revenues and expenditures.

941
00:56:53,000 --> 00:56:58,000
And you can see projecting a 1% decrease.

942
00:56:58,000 --> 00:57:03,929
In terms of future years, we're projecting decreases at

943
00:57:03,929 --> 00:57:07,000
about 2% for the future years.

944
00:57:07,000 --> 00:57:12,000
I do want to highlight one area or a couple areas.

945
00:57:12,000 --> 00:57:17,389
You can see purchase power and fuel beginning in 2019 falls

946
00:57:17,389 --> 00:57:19,000
significantly.

947
00:57:19,000 --> 00:57:25,000
A lot of that is due to not paying TMPA debt or paying TMPA

948
00:57:25,000 --> 00:57:25,000
.

949
00:57:25,000 --> 00:57:31,000
And also kind of a transference with the energy center.

950
00:57:31,000 --> 00:57:35,650
The cost related to the energy center are kind of internal

951
00:57:35,650 --> 00:57:39,000
personnel cost and debt service cost

952
00:57:39,000 --> 00:57:43,000
versus actually buying power out on the marketplace.

953
00:57:43,000 --> 00:57:49,130
So you can see that while the purchase power and fuel goes

954
00:57:49,130 --> 00:57:53,000
down, you can see debt service going up.

955
00:57:53,000 --> 00:57:56,000
Revenues stay relatively steady.

956
00:57:56,000 --> 00:58:00,210
Kind of the growth and customer base is offset by that

957
00:58:00,210 --> 00:58:02,000
reduction in rates.

958
00:58:02,000 --> 00:58:07,909
I do want to highlight one other kind of abnormality in

959
00:58:07,909 --> 00:58:10,000
2019.

960
00:58:10,000 --> 00:58:19,159
If you look at the debt service, you can see it increases,

961
00:58:19,159 --> 00:58:23,000
but then you have a much larger jump in 2020.

962
00:58:23,000 --> 00:58:26,480
The way the debt service was structured for the energy

963
00:58:26,480 --> 00:58:30,000
center is we begin paying interest in 2019,

964
00:58:30,000 --> 00:58:36,590
but principal and interest doesn't fully kick in until 2020

965
00:58:36,590 --> 00:58:37,000
.

966
00:58:37,000 --> 00:58:43,929
And you can see a line below debt service, debt defeasance

967
00:58:43,929 --> 00:58:47,000
of 28.6 million.

968
00:58:47,000 --> 00:58:50,380
Because of the ramping up of debt service, but our

969
00:58:50,380 --> 00:58:54,000
reductions in purchase power and fuel,

970
00:58:54,000 --> 00:58:57,380
we would have excess revenues that year, revenues to

971
00:58:57,380 --> 00:59:00,000
expenditures of over 30 million.

972
00:59:00,000 --> 00:59:02,949
And I think Phil had discussed when he gave the

973
00:59:02,949 --> 00:59:07,000
presentation in March that that's kind of a policy decision

974
00:59:07,000 --> 00:59:07,000
.

975
00:59:07,000 --> 00:59:11,530
Would we like to in that one year pay off some debt or cash

976
00:59:11,530 --> 00:59:13,000
fund capital?

977
00:59:13,000 --> 00:59:16,739
What I've shown here is just one option that could be

978
00:59:16,739 --> 00:59:18,000
considered.

979
00:59:18,000 --> 00:59:21,380
I think it'll be a policy decision when that budget comes

980
00:59:21,380 --> 00:59:22,000
around.

981
00:59:22,000 --> 00:59:25,500
But this is really taking that excess and defeasing the

982
00:59:25,500 --> 00:59:29,000
outstanding debt that was issued for the scrubber.

983
00:59:29,000 --> 00:59:34,000
It was some refunding debt in 2010 that was issued.

984
00:59:34,000 --> 00:59:40,000
That debt becomes currently callable in February of 2019.

985
00:59:40,000 --> 00:59:44,989
So this 28.6 million, if we used it for that, it would

986
00:59:44,989 --> 00:59:47,000
eliminate that debt.

987
00:59:47,000 --> 00:59:51,710
And that saves us for about six years, about 5.3 million in

988
00:59:51,710 --> 00:59:53,000
debt service.

989
00:59:53,000 --> 00:59:56,849
So what's reflected here is the defeasance of debt and the

990
00:59:56,849 --> 00:59:59,000
impact on our debt service.

991
00:59:59,000 --> 01:00:04,000
It's about 5.3 million lower in each of those years.

992
01:00:04,000 --> 01:00:08,900
And that's one of the reasons we would be able to have

993
01:00:08,900 --> 01:00:11,000
those 2% decreases.

994
01:00:11,000 --> 01:00:20,000
Chuck, I'm looking at the debt coverage ratio in '18.

995
01:00:20,000 --> 01:00:24,639
At 119, is there a -- I know we've talked about benchmarks

996
01:00:24,639 --> 01:00:27,000
on debt coverage before.

997
01:00:27,000 --> 01:00:31,000
Is that -- I've always assumed it was one and a quarter.

998
01:00:31,000 --> 01:00:35,489
Well, our prior revenue bond coverage requirement in order

999
01:00:35,489 --> 01:00:38,000
to issue additional debt was one and a quarter.

1000
01:00:38,000 --> 01:00:41,480
But the new one we issued revenue bonds for the energy

1001
01:00:41,480 --> 01:00:47,300
center is 1.0 times coverage in order to issue additional

1002
01:00:47,300 --> 01:00:48,000
debt.

1003
01:00:48,000 --> 01:00:52,000
But you can see it kind of jumps back up the next year.

1004
01:00:52,000 --> 01:00:56,570
Really, you know, that's somewhat a reflection of drawdown

1005
01:00:56,570 --> 01:00:59,000
in reserves to pay TMBA debt.

1006
01:00:59,000 --> 01:01:02,829
We don't anticipate -- what we anticipate issuing is

1007
01:01:02,829 --> 01:01:05,000
certificates of obligation.

1008
01:01:05,000 --> 01:01:09,000
So we don't anticipate issuing revenue bonds in that.

1009
01:01:09,000 --> 01:01:13,000
We could still do that under that requirement.

1010
01:01:13,000 --> 01:01:17,210
Kind of the industry standard is one and a quarter or

1011
01:01:17,210 --> 01:01:18,000
higher.

1012
01:01:18,000 --> 01:01:22,369
A lot of utilities, you're looking at the, you know, 1.5 to

1013
01:01:22,369 --> 01:01:24,000
2 times coverage.

1014
01:01:24,000 --> 01:01:28,000
But you can see the coverage jumps back up.

1015
01:01:28,000 --> 01:01:31,750
And this coverage takes into account the certificates of

1016
01:01:31,750 --> 01:01:35,369
obligation issued for the utility as well as the revenue

1017
01:01:35,369 --> 01:01:36,000
bonds.

1018
01:01:36,000 --> 01:01:39,000
So it takes into account all of that.

1019
01:01:39,000 --> 01:01:41,969
Technically speaking, when you issue the revenue bonds, it

1020
01:01:41,969 --> 01:01:44,000
's just coverage on the revenue bonds.

1021
01:01:44,000 --> 01:01:49,739
But this really calculates coverage on all the outstanding

1022
01:01:49,739 --> 01:01:52,000
debt related to DME.

1023
01:01:52,000 --> 01:01:56,230
So in '19, if we don't defuse the debt, which I think we

1024
01:01:56,230 --> 01:02:00,670
should, that would be a different number on the debt

1025
01:02:00,670 --> 01:02:03,000
service coverage ratio.

1026
01:02:03,000 --> 01:02:06,000
It would be lower.

1027
01:02:06,000 --> 01:02:09,000
It's jumping up because we're defusing debt.

1028
01:02:09,000 --> 01:02:12,480
In '19, if we did not defuse, you're correct, we would have

1029
01:02:12,480 --> 01:02:14,000
more outstanding debt.

1030
01:02:14,000 --> 01:02:18,420
Now, you could -- policy decision, you could use that to

1031
01:02:18,420 --> 01:02:22,000
cash fund capital instead of issuing debt.

1032
01:02:22,000 --> 01:02:25,000
So that would have an impact on it too.

1033
01:02:25,000 --> 01:02:28,380
Probably the defusance has a stronger impact because it's

1034
01:02:28,380 --> 01:02:29,000
shorter.

1035
01:02:29,000 --> 01:02:32,000
It's just got about six years outstanding.

1036
01:02:32,000 --> 01:02:39,000
So it's shorter debt. So it would have more of an impact.

1037
01:02:39,000 --> 01:02:42,539
>> Yeah, I think that one of the main reasons it jumps in '

1038
01:02:42,539 --> 01:02:47,750
19 is because of the reduction in purchase power along with

1039
01:02:47,750 --> 01:02:52,000
interest only on the DEC debt.

1040
01:02:52,000 --> 01:02:53,000
>> Yeah, it's a lot of things.

1041
01:02:53,000 --> 01:02:58,000
>> Yeah.

1042
01:02:58,000 --> 01:03:02,000
Any other questions on this slide?

1043
01:03:02,000 --> 01:03:04,000
Okay.

1044
01:03:04,000 --> 01:03:08,420
This is just a comparison in terms of where our rates are

1045
01:03:08,420 --> 01:03:11,000
at currently versus others.

1046
01:03:11,000 --> 01:03:13,000
It's color coded.

1047
01:03:13,000 --> 01:03:19,150
So the municipalities are kind of in the red here to

1048
01:03:19,150 --> 01:03:24,000
compare some other municipalities.

1049
01:03:24,000 --> 01:03:27,750
DME is in the green and the commonly known electric

1050
01:03:27,750 --> 01:03:30,000
providers are in the purple.

1051
01:03:30,000 --> 01:03:35,230
But you can see where we're at and you can see TXU is in

1052
01:03:35,230 --> 01:03:39,000
the yellow, which is close up to us.

1053
01:03:39,000 --> 01:03:47,000
And Cosserve is in this light color.

1054
01:03:47,000 --> 01:03:49,000
Right here.

1055
01:03:49,000 --> 01:03:56,000
Here's TXU. Here's us.

1056
01:03:56,000 --> 01:03:58,000
I was trying to find the other.

1057
01:03:58,000 --> 01:04:04,000
There's Georgetown and some of the others.

1058
01:04:04,000 --> 01:04:06,000
Just a comparison.

1059
01:04:06,000 --> 01:04:14,119
Again, we try to show this comparison for all the utilities

1060
01:04:14,119 --> 01:04:21,889
, but as we begin to lower rates, we expect to move down on

1061
01:04:21,889 --> 01:04:24,000
this curve.

1062
01:04:24,000 --> 01:04:25,000
>> Check on that chart.

1063
01:04:25,000 --> 01:04:31,000
It would be interesting to see the other TMPA.

1064
01:04:31,000 --> 01:04:32,000
>> Folks.

1065
01:04:32,000 --> 01:04:36,679
>> I don't know if you can see on there, but it would be --

1066
01:04:36,679 --> 01:04:40,000
I hate to add one more color to this.

1067
01:04:40,000 --> 01:04:44,710
But if we just saw what -- compared to TPA, because we've

1068
01:04:44,710 --> 01:04:49,000
always looked at TMPA debt, retirement as one of the things

1069
01:04:49,000 --> 01:04:53,000
that is an influence on our rates.

1070
01:04:53,000 --> 01:04:56,000
I just think it would be interesting to see that.

1071
01:04:56,000 --> 01:04:59,000
>> We can maybe do that and cut out a few of the others.

1072
01:04:59,000 --> 01:05:07,789
A lot of these are on the 12-month rates on the open market

1073
01:05:07,789 --> 01:05:15,000
, but a lot of them are very small, so to speak.

1074
01:05:15,000 --> 01:05:17,000
With that, I'll open up to any more questions.

1075
01:05:17,000 --> 01:05:21,210
We've got a lot of additional backup in terms of all the

1076
01:05:21,210 --> 01:05:25,000
numbers and line items are within the packet.

1077
01:05:25,000 --> 01:05:29,000
And just so the board is aware, there's no action.

1078
01:05:29,000 --> 01:05:35,730
We'll come back next meeting, which is the 26th, for actual

1079
01:05:35,730 --> 01:05:41,389
consideration of budget recommendations for all four

1080
01:05:41,389 --> 01:05:43,000
utilities.

1081
01:05:43,000 --> 01:05:49,000
>> Okay.

1082
01:05:49,000 --> 01:05:51,000
Questions?

1083
01:05:51,000 --> 01:05:52,000
No?

1084
01:05:52,000 --> 01:05:56,000
>> I'll get going.

1085
01:05:56,000 --> 01:05:57,000
>> I have a question.

1086
01:05:57,000 --> 01:05:58,000
I'm just trying to find --

1087
01:05:58,000 --> 01:05:59,000
>> Okay.

1088
01:05:59,000 --> 01:06:00,000
Sorry.

1089
01:06:00,000 --> 01:06:01,000
>> It's okay.

1090
01:06:01,000 --> 01:06:03,000
I won't find it.

1091
01:06:03,000 --> 01:06:06,750
The engineering positions that you were decreasing, is that

1092
01:06:06,750 --> 01:06:09,570
-- again, because we couldn't recruit people, so we're

1093
01:06:09,570 --> 01:06:12,000
going out to consulting?

1094
01:06:12,000 --> 01:06:16,989
I mean, is it -- I know the engineering industry is pretty

1095
01:06:16,989 --> 01:06:20,000
difficult to recruit right now.

1096
01:06:20,000 --> 01:06:23,000
>> It's just difficult to keep up with the market.

1097
01:06:23,000 --> 01:06:25,880
We've made adjustments in our salary plans to where we

1098
01:06:25,880 --> 01:06:29,059
could recruit people and get people, but then we had a

1099
01:06:29,059 --> 01:06:31,000
problem retaining them.

1100
01:06:31,000 --> 01:06:35,989
And so we have retained some, and we'll still recruit some

1101
01:06:35,989 --> 01:06:40,480
openings, but we're going to try -- engineering consulting

1102
01:06:40,480 --> 01:06:42,690
firms seem to have a little more flexibility of what they

1103
01:06:42,690 --> 01:06:46,179
can do for people to get them, and we want to try that

1104
01:06:46,179 --> 01:06:47,000
route also.

1105
01:06:47,000 --> 01:06:49,469
>> Do you think we're paying a premium by going to a

1106
01:06:49,469 --> 01:06:52,230
consulting firm, or do you think really it's about the same

1107
01:06:52,230 --> 01:06:54,000
when you consider benefits?

1108
01:06:54,000 --> 01:06:56,619
>> Well, when you consider the benefits and you consider

1109
01:06:56,619 --> 01:06:59,230
the management time it's requiring to try to go capture

1110
01:06:59,230 --> 01:07:02,000
these people and get them and train them, then we'll see.

1111
01:07:02,000 --> 01:07:04,559
But I mean, I guess we want to try this, and then if we see

1112
01:07:04,559 --> 01:07:07,320
that it is more economical, see if we hire these people

1113
01:07:07,320 --> 01:07:09,360
ourselves, then we'll come back and make a business case

1114
01:07:09,360 --> 01:07:10,000
for doing that.

1115
01:07:10,000 --> 01:07:12,840
But at least try another method here because we're

1116
01:07:12,840 --> 01:07:15,969
certainly not getting the positions filled on a long-term

1117
01:07:15,969 --> 01:07:17,000
basis now.

1118
01:07:17,000 --> 01:07:18,000
>> Yeah.

1119
01:07:18,000 --> 01:07:19,000
Okay.

1120
01:07:19,000 --> 01:07:22,000
Thank you.

1121
01:07:22,000 --> 01:07:25,000
>> Okay.

1122
01:07:25,000 --> 01:07:31,000
Okay, Chuck, item C.

1123
01:07:31,000 --> 01:07:33,000
>> Time for the water budget.

1124
01:07:33,000 --> 01:07:38,000
>> Water budget.

1125
01:07:38,000 --> 01:07:40,000
Again, I'm not going to hit on everything.

1126
01:07:40,000 --> 01:07:42,000
I'll try to hit the highlights.

1127
01:07:42,000 --> 01:07:46,000
Feel free to stop me at any point.

1128
01:07:46,000 --> 01:07:47,000
Accomplishments.

1129
01:07:47,000 --> 01:07:50,780
And actually this is one of the reasons that the water

1130
01:07:50,780 --> 01:07:55,000
budget's coming to you now instead of a little bit earlier

1131
01:07:55,000 --> 01:07:58,690
because of the condition assessment of that 30-inch raw

1132
01:07:58,690 --> 01:08:01,730
pipeline that goes from Lake Louisville to the water

1133
01:08:01,730 --> 01:08:03,000
treatment plant.

1134
01:08:03,000 --> 01:08:05,000
That's been completed.

1135
01:08:05,000 --> 01:08:10,000
The final report's due in June, and we have what we think

1136
01:08:10,000 --> 01:08:15,099
is a pretty good estimate of the cost of repairs along that

1137
01:08:15,099 --> 01:08:16,000
line.

1138
01:08:16,000 --> 01:08:20,000
And you'll see that in the capital program.

1139
01:08:20,000 --> 01:08:25,229
Tested the water treatment plant after the improvements and

1140
01:08:25,229 --> 01:08:29,960
rehabilitated the ozone generators at the Lake Ray Roberts

1141
01:08:29,960 --> 01:08:31,000
plant.

1142
01:08:31,000 --> 01:08:36,550
In terms of goals for the upcoming year, completing design

1143
01:08:36,550 --> 01:08:41,359
for phase two plant upgrade, trying to improve the zebra

1144
01:08:41,359 --> 01:08:46,180
muscle control as we learn more as to what's effective in

1145
01:08:46,180 --> 01:08:47,000
that.

1146
01:08:47,000 --> 01:08:52,229
Communication system, skater protocol, the southwest

1147
01:08:52,229 --> 01:08:57,270
booster pump station line, and complete water line repl

1148
01:08:57,270 --> 01:09:01,000
acements as we work on Hickory Street.

1149
01:09:01,000 --> 01:09:06,949
Kind of the next section up of Hickory Street to stay ahead

1150
01:09:06,949 --> 01:09:10,000
of that reconstruction.

1151
01:09:10,000 --> 01:09:12,000
Performance measures.

1152
01:09:12,000 --> 01:09:14,770
You can see the current measures that are in place

1153
01:09:14,770 --> 01:09:17,000
proposing to add a couple new ones.

1154
01:09:17,000 --> 01:09:22,869
Main breaks per 100 miles of lines and unbilled water

1155
01:09:22,869 --> 01:09:24,000
volume.

1156
01:09:24,000 --> 01:09:27,750
What's our kind of water loss through the system from the

1157
01:09:27,750 --> 01:09:31,000
plants all the way until we build water volume.

1158
01:09:31,000 --> 01:09:35,210
You know, part of that is the kind of the meter replacement

1159
01:09:35,210 --> 01:09:36,000
program.

1160
01:09:36,000 --> 01:09:39,880
And as we continue to do that, how effective is the meter

1161
01:09:39,880 --> 01:09:43,000
replacement program in capturing that.

1162
01:09:43,000 --> 01:09:49,090
In terms of the cost containment strategies, eliminated

1163
01:09:49,090 --> 01:09:55,000
some FTEs for savings of a little under 50,000.

1164
01:09:55,000 --> 01:09:58,890
Again, like with the other funds, we budgeted salary

1165
01:09:58,890 --> 01:10:01,000
savings due to vacancies.

1166
01:10:01,000 --> 01:10:05,909
They went through the same process in terms of looking at

1167
01:10:05,909 --> 01:10:11,069
all of their individual line items from fiscal year '17 to

1168
01:10:11,069 --> 01:10:12,000
'18.

1169
01:10:12,000 --> 01:10:15,000
Reduced about 615,000.

1170
01:10:15,000 --> 01:10:19,000
You can see where those are areas.

1171
01:10:19,000 --> 01:10:23,210
Part of that I think is just kind of matching what we're

1172
01:10:23,210 --> 01:10:27,670
projecting in revenues in terms of more of an average year

1173
01:10:27,670 --> 01:10:31,000
versus an average year of expenditures.

1174
01:10:31,000 --> 01:10:34,760
You can imagine that the division managers are always

1175
01:10:34,760 --> 01:10:38,489
concerned about having enough capacity in their budget when

1176
01:10:38,489 --> 01:10:41,000
they have a real dry year.

1177
01:10:41,000 --> 01:10:44,010
But what we've tried to talk to them about is if we have a

1178
01:10:44,010 --> 01:10:47,279
real dry year, our revenues are going to be up, we'll come

1179
01:10:47,279 --> 01:10:52,689
back and amend the budget to make sure that you have the

1180
01:10:52,689 --> 01:10:55,000
capacity for that.

1181
01:10:55,000 --> 01:10:59,310
We've tried to do the same type of balancing in terms of

1182
01:10:59,310 --> 01:11:03,800
issuing debt when we need to for the CIP projects and also

1183
01:11:03,800 --> 01:11:08,590
leveling the revenue funded capital over a five year period

1184
01:11:08,590 --> 01:11:12,000
versus some of the peaks and valleys.

1185
01:11:12,000 --> 01:11:18,890
And all of these impacts together equate to about 2.5% in

1186
01:11:18,890 --> 01:11:20,000
rates.

1187
01:11:20,000 --> 01:11:24,479
Process improvements, I won't go over the process that we

1188
01:11:24,479 --> 01:11:29,000
did again with electric, water, and utilities customer

1189
01:11:29,000 --> 01:11:30,000
service.

1190
01:11:30,000 --> 01:11:33,000
Some of their future process improvements.

1191
01:11:33,000 --> 01:11:37,000
Capital project coordination.

1192
01:11:37,000 --> 01:11:41,000
The system distribution master plan.

1193
01:11:41,000 --> 01:11:45,989
Look at their work order system and reliability and just

1194
01:11:45,989 --> 01:11:51,000
continue to improve their asset management program.

1195
01:11:51,000 --> 01:11:57,000
Kind of some of the future risks in terms of water.

1196
01:11:57,000 --> 01:11:59,000
The raw water transmission line cost.

1197
01:11:59,000 --> 01:12:02,430
We talked about the one we've done an evaluation on after

1198
01:12:02,430 --> 01:12:05,000
those rehabilitations are complete.

1199
01:12:05,000 --> 01:12:08,409
It'll probably be time to do an evaluation on the other

1200
01:12:08,409 --> 01:12:11,000
parallel line from Lake Louisville.

1201
01:12:11,000 --> 01:12:17,000
The dam repair due to the flooding a couple years back.

1202
01:12:17,000 --> 01:12:20,000
We're working with the Army Corps of Engineers.

1203
01:12:20,000 --> 01:12:24,260
We've budgeted what they've given us in terms of our

1204
01:12:24,260 --> 01:12:29,000
proportion of the repairs on their current estimate.

1205
01:12:29,000 --> 01:12:33,539
But always when they get into a project like that, there's

1206
01:12:33,539 --> 01:12:37,000
some risk that those numbers may change.

1207
01:12:37,000 --> 01:12:40,899
Other transmission line replacement funding as we go

1208
01:12:40,899 --> 01:12:44,000
through the asset management program.

1209
01:12:44,000 --> 01:12:48,000
The age and condition of the Lake Louisville pump station.

1210
01:12:48,000 --> 01:12:52,619
Like the electric utility, some of the water utility major

1211
01:12:52,619 --> 01:12:55,000
assets are starting to age.

1212
01:12:55,000 --> 01:12:58,000
And then just a declining per capita water usage.

1213
01:12:58,000 --> 01:13:01,380
I know that's been a discussion within this budget in terms

1214
01:13:01,380 --> 01:13:03,000
of revenue projections.

1215
01:13:03,000 --> 01:13:06,949
They've really started to adjust down their projections of

1216
01:13:06,949 --> 01:13:11,000
per capita water usage beginning in about 2020.

1217
01:13:11,000 --> 01:13:16,229
So this budget does take into account that we think that

1218
01:13:16,229 --> 01:13:21,000
declining per capita water usage is permanent.

1219
01:13:21,000 --> 01:13:27,000
So we're starting to build that in beginning in 2020.

1220
01:13:27,000 --> 01:13:33,000
The assumptions, trying to maintain their coverage.

1221
01:13:33,000 --> 01:13:38,000
Annual revenue funded capital is based on depreciation.

1222
01:13:38,000 --> 01:13:43,310
So we've leveled it out, but we're still funding it at 100%

1223
01:13:43,310 --> 01:13:48,000
of replacement and 25% of plant infrastructure.

1224
01:13:48,000 --> 01:13:51,460
So still fully funding it, just kind of a little bit

1225
01:13:51,460 --> 01:13:53,000
different method.

1226
01:13:53,000 --> 01:13:57,000
Reserves, maintaining them within the reserve balance.

1227
01:13:57,000 --> 01:14:04,000
And kind of looking at the long term financial planning.

1228
01:14:04,000 --> 01:14:07,979
I'll pull up the numbers here so you can see what's being

1229
01:14:07,979 --> 01:14:09,000
proposed.

1230
01:14:09,000 --> 01:14:14,000
Again, there's a backup in your packet in terms of detail.

1231
01:14:14,000 --> 01:14:22,689
You can see for 2018 revenues and expenses at about 47.9

1232
01:14:22,689 --> 01:14:24,000
million.

1233
01:14:24,000 --> 01:14:29,760
You can see that's a little bit below the total expenses in

1234
01:14:29,760 --> 01:14:31,000
'17.

1235
01:14:31,000 --> 01:14:36,949
But you can see we had a drawdown of about 3.3 million in

1236
01:14:36,949 --> 01:14:39,000
use of reserves.

1237
01:14:39,000 --> 01:14:42,000
And that went to revenue funded capital.

1238
01:14:42,000 --> 01:14:52,000
You can see the revenue funded capital in '17 at 12.4.

1239
01:14:52,000 --> 01:14:53,000
Right here.

1240
01:14:53,000 --> 01:14:56,380
So when we talk about leveling out the revenue funded

1241
01:14:56,380 --> 01:14:59,000
capital, you can see leveling it out.

1242
01:14:59,000 --> 01:15:03,449
This jump in revenue funded capital was really due to that

1243
01:15:03,449 --> 01:15:08,000
one time refunding we did of revenue bonds, which released.

1244
01:15:08,000 --> 01:15:13,000
You can see about 7.5 million in one time money.

1245
01:15:13,000 --> 01:15:16,000
So we use that for revenue funded capital.

1246
01:15:16,000 --> 01:15:19,170
And part of this leveling out is we've built up some

1247
01:15:19,170 --> 01:15:22,000
balances in that revenue funded capital.

1248
01:15:22,000 --> 01:15:26,630
So that allows us to level that out and still have funding

1249
01:15:26,630 --> 01:15:28,000
as we need it.

1250
01:15:28,000 --> 01:15:33,449
In terms of projected rate increases, this is kind of the

1251
01:15:33,449 --> 01:15:37,000
zero rate increase forecast, the base forecast.

1252
01:15:37,000 --> 01:15:42,689
So you can see as we go out in the outer years, you start

1253
01:15:42,689 --> 01:15:48,000
seeing drawdowns or drawdowns in cash balance.

1254
01:15:48,000 --> 01:15:52,600
And you can see that last year in yellow, we kind of fall

1255
01:15:52,600 --> 01:15:57,000
below the target of 120 to 180 days.

1256
01:15:57,000 --> 01:16:02,930
So due to that, the recommended increase, again, with

1257
01:16:02,930 --> 01:16:09,000
option one, kind of the base reserves would be withdrawn

1258
01:16:09,000 --> 01:16:10,000
about 5 million.

1259
01:16:10,000 --> 01:16:13,000
Again, this is the five year projections.

1260
01:16:13,000 --> 01:16:16,170
Once you get out to those outer years, these are simply

1261
01:16:16,170 --> 01:16:17,000
projections.

1262
01:16:17,000 --> 01:16:20,829
What the committee will be recommending is just the one

1263
01:16:20,829 --> 01:16:22,000
year budget.

1264
01:16:22,000 --> 01:16:28,000
But we want to show the impacts in the future.

1265
01:16:28,000 --> 01:16:31,510
So what we've come up with is an option two, a five year

1266
01:16:31,510 --> 01:16:42,000
forecast that shows some 2% rate increases in future years.

1267
01:16:42,000 --> 01:16:47,840
And this is the proposed there are excuse me, there's 2%

1268
01:16:47,840 --> 01:16:51,000
rate increases in 2021 and 22.

1269
01:16:51,000 --> 01:16:56,779
We still have a little bit of a drawdown projected on the

1270
01:16:56,779 --> 01:16:59,000
working capital.

1271
01:16:59,000 --> 01:17:03,899
But it's maintained within that 120 to 180 days by the

1272
01:17:03,899 --> 01:17:05,000
third year.

1273
01:17:05,000 --> 01:17:16,000
We're relatively level in 2022.

1274
01:17:16,000 --> 01:17:19,380
And in terms of budget highlights, this just gives a little

1275
01:17:19,380 --> 01:17:26,229
bit of breakdown in detail on the revenues, residential and

1276
01:17:26,229 --> 01:17:30,000
commercial kind of by line item.

1277
01:17:30,000 --> 01:17:34,539
That cost of service, that's really where the customer

1278
01:17:34,539 --> 01:17:38,000
service is housed in the water utility.

1279
01:17:38,000 --> 01:17:41,000
But their costs are allocated out to the other utilities.

1280
01:17:41,000 --> 01:17:46,229
So that cost of service is transfer from the other

1281
01:17:46,229 --> 01:17:52,000
utilities back to the water for the customer service.

1282
01:17:52,000 --> 01:17:57,000
And you can see impact fee revenue utilization.

1283
01:17:57,000 --> 01:18:01,670
And I mentioned in 1617, we do project some use of reserves

1284
01:18:01,670 --> 01:18:05,000
, but again, from that one time refunding.

1285
01:18:05,000 --> 01:18:13,000
And here is highlights or the summary in terms of expenses.

1286
01:18:13,000 --> 01:18:17,510
You can see personnel services goes up slightly, but it's

1287
01:18:17,510 --> 01:18:22,949
really a little bit below the budget for 1617 due to those

1288
01:18:22,949 --> 01:18:25,000
minor FTE reductions.

1289
01:18:25,000 --> 01:18:31,029
And again, we projected some salary savings in that line

1290
01:18:31,029 --> 01:18:32,000
item.

1291
01:18:32,000 --> 01:18:37,000
Most of the others stay relatively steady to the estimate.

1292
01:18:37,000 --> 01:18:42,000
Our debt service increases based on the issuance this year.

1293
01:18:42,000 --> 01:18:48,319
And the transfer to capital projects, that last line, that

1294
01:18:48,319 --> 01:18:52,000
's that revenue funded capital.

1295
01:18:52,000 --> 01:18:55,000
Here's the five year capital plan.

1296
01:18:55,000 --> 01:18:57,000
And we've listed at the bottom.

1297
01:18:57,000 --> 01:19:04,090
I mentioned that existing certificates of obligation and

1298
01:19:04,090 --> 01:19:05,000
new.

1299
01:19:05,000 --> 01:19:09,210
Again, we have to re-budget estimating any funds that aren

1300
01:19:09,210 --> 01:19:12,000
't spent at the end of the fiscal year.

1301
01:19:12,000 --> 01:19:17,699
And you can see that revenue is the use of revenue funded

1302
01:19:17,699 --> 01:19:19,000
capital.

1303
01:19:19,000 --> 01:19:22,850
And part of that are balances that are already in that

1304
01:19:22,850 --> 01:19:25,000
revenue funded capital.

1305
01:19:25,000 --> 01:19:29,000
In that fund, it's a separate capital project fund.

1306
01:19:29,000 --> 01:19:33,899
I'll gladly call up any members of the water utility to

1307
01:19:33,899 --> 01:19:38,000
answer questions on their capital program.

1308
01:19:38,000 --> 01:19:42,989
So we're thinking the Lake Louisville dam repairs, 15

1309
01:19:42,989 --> 01:19:44,000
million.

1310
01:19:44,000 --> 01:19:46,000
That's an estimate.

1311
01:19:46,000 --> 01:19:50,000
Our share, we're going to.

1312
01:19:50,000 --> 01:19:51,000
I'm getting nods.

1313
01:19:51,000 --> 01:19:53,000
Nods, okay.

1314
01:19:53,000 --> 01:19:55,000
Okay, thank you.

1315
01:19:55,000 --> 01:19:57,000
Nods got there before I did.

1316
01:19:57,000 --> 01:19:58,000
Yeah.

1317
01:19:58,000 --> 01:20:03,000
9% of 150 million.

1318
01:20:03,000 --> 01:20:05,000
9% of 150?

1319
01:20:05,000 --> 01:20:06,000
Is it?

1320
01:20:06,000 --> 01:20:13,000
Okay.

1321
01:20:13,000 --> 01:20:17,000
Any other questions?

1322
01:20:17,000 --> 01:20:19,000
No?

1323
01:20:19,000 --> 01:20:26,060
This is just kind of a depiction in terms of where some of

1324
01:20:26,060 --> 01:20:28,000
those projects are at.

1325
01:20:28,000 --> 01:20:34,000
And color coded by the years of the projects.

1326
01:20:34,000 --> 01:20:38,340
I mentioned the improvements to the raw water transmission

1327
01:20:38,340 --> 01:20:39,000
line.

1328
01:20:39,000 --> 01:20:41,000
You see that down on the bottom.

1329
01:20:41,000 --> 01:20:42,000
And red.

1330
01:20:42,000 --> 01:20:46,210
And then you see a blue in 2022 where we're looking at the

1331
01:20:46,210 --> 01:20:50,720
other kind of parallel line to look at that one a few years

1332
01:20:50,720 --> 01:20:53,000
out and do those repairs.

1333
01:20:53,000 --> 01:20:56,000
Can you go back to the previous?

1334
01:20:56,000 --> 01:20:59,000
So which line is that then under?

1335
01:20:59,000 --> 01:21:01,000
Is that the transmission line?

1336
01:21:01,000 --> 01:21:04,000
The 12.2 million?

1337
01:21:04,000 --> 01:21:05,000
Yes.

1338
01:21:05,000 --> 01:21:06,000
Okay.

1339
01:21:06,000 --> 01:21:09,000
And then again the 10.6 on the other.

1340
01:21:09,000 --> 01:21:10,000
Okay.

1341
01:21:10,000 --> 01:21:15,000
Thank you.

1342
01:21:15,000 --> 01:21:19,359
And you can see on this one the debt issuance about 48.5

1343
01:21:19,359 --> 01:21:20,000
million.

1344
01:21:20,000 --> 01:21:25,000
Over that five year period.

1345
01:21:25,000 --> 01:21:29,699
I mean I have to say as someone coming into the movement

1346
01:21:29,699 --> 01:21:33,670
toward revenue funded capital when you look at their debt

1347
01:21:33,670 --> 01:21:37,000
service going forward stays relatively level.

1348
01:21:37,000 --> 01:21:40,899
And by doing that revenue funded capital it's really

1349
01:21:40,899 --> 01:21:45,270
starting to have a long term impact on what's necessary for

1350
01:21:45,270 --> 01:21:46,000
debt.

1351
01:21:46,000 --> 01:21:49,380
And I think over the long term it's really good for the

1352
01:21:49,380 --> 01:21:52,000
customers of Denton to be doing that.

1353
01:21:52,000 --> 01:21:56,930
Over the shorter term sometimes it's a little painful but

1354
01:21:56,930 --> 01:22:01,479
over the long term I think Denton's water rates will

1355
01:22:01,479 --> 01:22:05,000
continue to become more competitive.

1356
01:22:05,000 --> 01:22:10,000
And in terms of water rates here's where we compare.

1357
01:22:10,000 --> 01:22:14,750
And again we usually show this now and then after all of

1358
01:22:14,750 --> 01:22:19,850
the budgets are passed you can see here's the current rate

1359
01:22:19,850 --> 01:22:24,000
at residential kind of right in the middle.

1360
01:22:24,000 --> 01:22:29,739
A commercial for 50,000 gallons in the middle or slightly

1361
01:22:29,739 --> 01:22:35,689
below the middle and about the same place in terms of 200,

1362
01:22:35,689 --> 01:22:37,000
000 gallons.

1363
01:22:37,000 --> 01:22:41,979
With that I'll open it up to any questions and allow staff

1364
01:22:41,979 --> 01:22:46,000
to come up and answer any of the tough ones.

1365
01:22:46,000 --> 01:22:50,210
You said earlier that water use was going down and that we

1366
01:22:50,210 --> 01:22:54,000
're kind of okay it's just going to de-apply is that?

1367
01:22:54,000 --> 01:22:59,460
The usage per capita I think a lot of it is in terms of

1368
01:22:59,460 --> 01:23:05,689
just usage in residential or commercial when you think of

1369
01:23:05,689 --> 01:23:11,000
any appliance that you change out how much more efficient

1370
01:23:11,000 --> 01:23:12,000
use of water.

1371
01:23:12,000 --> 01:23:17,619
You think of the shower heads anytime the washing machines

1372
01:23:17,619 --> 01:23:20,000
those kind of things.

1373
01:23:20,000 --> 01:23:23,000
I think it's really just kind of due to efficiencies.

1374
01:23:23,000 --> 01:23:30,470
I mean there's local and national campaigns to also become

1375
01:23:30,470 --> 01:23:35,000
more efficient in terms of that.

1376
01:23:35,000 --> 01:23:38,380
You know I really think it's that I'll open it up to

1377
01:23:38,380 --> 01:23:42,039
anybody else on a national basis but we've kind of become

1378
01:23:42,039 --> 01:23:45,779
aware of that and within homes even when they build newer

1379
01:23:45,779 --> 01:23:50,640
homes they tend to be more energy efficient and more water

1380
01:23:50,640 --> 01:23:52,000
efficient.

1381
01:23:52,000 --> 01:23:54,000
The better toilets.

1382
01:23:54,000 --> 01:23:59,850
Oh yeah when you think of from 15 or 20 years ago those of

1383
01:23:59,850 --> 01:24:05,260
us who remember those days it's just amazing how much usage

1384
01:24:05,260 --> 01:24:09,560
I think yeah just in toilets it's probably a quarter of

1385
01:24:09,560 --> 01:24:13,029
what they used to use in water 15 years ago so just those

1386
01:24:13,029 --> 01:24:14,000
kind of things.

1387
01:24:14,000 --> 01:24:17,210
Irrigation systems that can detect its raining so don't go

1388
01:24:17,210 --> 01:24:18,000
on please.

1389
01:24:18,000 --> 01:24:24,000
Yeah.

1390
01:24:24,000 --> 01:24:26,000
Okay, any other questions.

1391
01:24:26,000 --> 01:24:30,210
Again, all of the budgets. The other two items are just for

1392
01:24:30,210 --> 01:24:34,109
questions I think I attached the presentations and the

1393
01:24:34,109 --> 01:24:38,420
number for numbers for solid waste and wastewater, but

1394
01:24:38,420 --> 01:24:42,659
those are just on for questions I'm not going to force you

1395
01:24:42,659 --> 01:24:46,000
into another couple of presentations on that.

1396
01:24:46,000 --> 01:24:49,850
But those are for questions and then we'll come back on the

1397
01:24:49,850 --> 01:24:54,000
26th for recommendations on all of the four budgets.

1398
01:24:54,000 --> 01:24:56,000
Okay.

1399
01:24:56,000 --> 01:25:02,000
Any questions on wastewater solid waste.

1400
01:25:02,000 --> 01:25:04,000
From previous.

1401
01:25:04,000 --> 01:25:06,000
No. Okay.

1402
01:25:06,000 --> 01:25:17,000
All right. Thank you, Chuck. Thank you. Appreciate it.

1403
01:25:17,000 --> 01:25:19,000
Sure.

1404
01:25:19,000 --> 01:25:24,000
Yeah.

1405
01:25:24,000 --> 01:25:27,000
Okay.

1406
01:25:27,000 --> 01:25:30,949
All right, that concludes the work session, and at this

1407
01:25:30,949 --> 01:25:34,859
time we have, we're going to go ahead rather than go right

1408
01:25:34,859 --> 01:25:36,000
into close.

1409
01:25:36,000 --> 01:25:41,000
We're going to go to the consent agenda.

1410
01:25:41,000 --> 01:25:43,000
The consent agenda.

1411
01:25:43,000 --> 01:25:49,000
There are six items.

1412
01:25:49,000 --> 01:25:53,210
Through F, is there any member who would like to excuse me,

1413
01:25:53,210 --> 01:25:57,069
I'm sorry, item number see any to point that out has been

1414
01:25:57,069 --> 01:26:00,689
pulled from the consent agenda by staff or it needs a

1415
01:26:00,689 --> 01:26:02,000
little more.

1416
01:26:02,000 --> 01:26:04,000
We'll see that next time.

1417
01:26:04,000 --> 01:26:09,000
At a future meeting so actually on the consent agenda.

1418
01:26:09,000 --> 01:26:11,000
I'm sorry.

1419
01:26:11,000 --> 01:26:13,000
Okay, good, good.

1420
01:26:13,000 --> 01:26:18,680
So item A, B, D, E, and F on the consent agenda, would

1421
01:26:18,680 --> 01:26:24,689
anybody any member like to see any of those pulled for

1422
01:26:24,689 --> 01:26:27,000
individual consideration.

1423
01:26:27,000 --> 01:26:29,000
Item B.

1424
01:26:29,000 --> 01:26:31,000
Okay.

1425
01:26:31,000 --> 01:26:35,000
Anyone else.

1426
01:26:35,000 --> 01:26:41,100
Hearing none. And is there a motion then to approve consent

1427
01:26:41,100 --> 01:26:42,000
agenda.

1428
01:26:42,000 --> 01:26:49,000
Items A, D, E, and F.

1429
01:26:49,000 --> 01:26:52,000
Motion and a second. Any discussion.

1430
01:26:52,000 --> 01:26:55,000
All in favor say aye.

1431
01:26:55,000 --> 01:26:58,000
Any opposed same sign.

1432
01:26:58,000 --> 01:27:00,000
Item B harbor.

1433
01:27:00,000 --> 01:27:05,229
We just haven't seen anything like this and since we were

1434
01:27:05,229 --> 01:27:07,000
in the.

1435
01:27:07,000 --> 01:27:16,000
Okay.

1436
01:27:16,000 --> 01:27:17,000
Morning.

1437
01:27:17,000 --> 01:27:18,000
Morning.

1438
01:27:18,000 --> 01:27:20,000
Even Cox director of solid waste services.

1439
01:27:20,000 --> 01:27:22,470
This is under local agreements for a couple of different

1440
01:27:22,470 --> 01:27:23,000
things.

1441
01:27:23,000 --> 01:27:26,000
One is the ground mulch that you referenced, Ms. Russell.

1442
01:27:26,000 --> 01:27:29,000
That ground mulch is used in our composting operation.

1443
01:27:29,000 --> 01:27:32,750
It's my understanding that Irving has kind of a surplus

1444
01:27:32,750 --> 01:27:34,000
supply of this.

1445
01:27:34,000 --> 01:27:37,170
So at least from an initial stage we would be accepting

1446
01:27:37,170 --> 01:27:40,000
some of their ground mulch on an as needed basis.

1447
01:27:40,000 --> 01:27:43,000
If we have an excess of mulch, we would have the same.

1448
01:27:43,000 --> 01:27:45,000
They would have the same opportunity from us.

1449
01:27:45,000 --> 01:27:48,810
There's also some provisions in here for share sharing of

1450
01:27:48,810 --> 01:27:52,000
emergency equipment, the use of landfill.

1451
01:27:52,000 --> 01:27:55,560
If there's a natural disaster emergency, they can't get

1452
01:27:55,560 --> 01:27:57,000
used to the use of their landfill.

1453
01:27:57,000 --> 01:27:59,000
Likewise for us, we can also go to their side.

1454
01:27:59,000 --> 01:28:04,000
So that's kind of the nuts and bolts of it. If you have

1455
01:28:04,000 --> 01:28:04,000
specific questions, I'm happy to answer those.

1456
01:28:04,000 --> 01:28:08,210
That's sort of a mutual aid, but I was just, you know, how

1457
01:28:08,210 --> 01:28:09,000
did it come about?

1458
01:28:09,000 --> 01:28:12,000
Because we've not seen this enough.

1459
01:28:12,000 --> 01:28:14,859
I believe we have some mutual aid, at least some interlocal

1460
01:28:14,859 --> 01:28:17,000
agreements with like Cockroos Cove.

1461
01:28:17,000 --> 01:28:19,130
I'll check with staff to see if we have any additional if

1462
01:28:19,130 --> 01:28:22,000
you want to know that this one is a little bit unique

1463
01:28:22,000 --> 01:28:24,000
because it contains the ground mulch element.

1464
01:28:24,000 --> 01:28:26,569
We have a closed session item where we may be able to exp

1465
01:28:26,569 --> 01:28:28,000
ound on that a little bit.

1466
01:28:28,000 --> 01:28:30,779
But there is a specific use for that in our composting

1467
01:28:30,779 --> 01:28:34,000
operation and we have a real deficiency of it at our side.

1468
01:28:34,000 --> 01:28:37,000
Thank you very much.

1469
01:28:37,000 --> 01:28:40,000
Motion to approve. Is there a second?

1470
01:28:40,000 --> 01:28:41,000
Second.

1471
01:28:41,000 --> 01:28:44,000
Item B and a second from Susan.

1472
01:28:44,000 --> 01:28:47,000
Any discussion?

1473
01:28:47,000 --> 01:28:49,000
All in favor say aye.

1474
01:28:49,000 --> 01:28:50,000
Aye.

1475
01:28:50,000 --> 01:28:52,000
Any opposed? Same sign.

1476
01:28:52,000 --> 01:28:55,000
Thank you. Item B is approved.

1477
01:28:59,000 --> 01:29:03,000
Okay. So now I guess we can go back to closed session.

1478
01:29:03,000 --> 01:29:06,000
Or you want to finish the whole thing?

1479
01:29:06,000 --> 01:29:09,000
All right. Great.

1480
01:29:09,000 --> 01:29:14,000
Item number two then is consider approval of public utility

1481
01:29:14,000 --> 01:29:19,000
board meeting minutes of May 22nd, 2017.

1482
01:29:19,000 --> 01:29:22,000
Those have been distributed in advance.

1483
01:29:22,000 --> 01:29:25,000
Any comments, changes?

1484
01:29:25,000 --> 01:29:31,000
Hearing none, those stand approved as submitted.

1485
01:29:31,000 --> 01:29:38,000
And next we have item B which is the ACM updates.

1486
01:29:38,000 --> 01:29:46,000
Okay. Mario, are you going to do this one?

1487
01:29:46,000 --> 01:29:47,000
Well.

1488
01:29:47,000 --> 01:29:50,000
Maybe you ought to. You've met everybody I'm sure.

1489
01:29:50,000 --> 01:29:52,000
Yes, sir. We have.

1490
01:29:52,000 --> 01:29:56,210
Actually I would like to lean over to my finance director,

1491
01:29:56,210 --> 01:29:58,600
Chuck Springer, to be able to present the information about

1492
01:29:58,600 --> 01:30:02,000
the financial report.

1493
01:30:02,000 --> 01:30:05,000
I'm happy to answer any questions.

1494
01:30:05,000 --> 01:30:10,000
The second quarter financial update based on the estimates.

1495
01:30:10,000 --> 01:30:15,000
It's usually very close for the utilities to the budget.

1496
01:30:15,000 --> 01:30:17,770
Kind of for the water and electric fund, one of the

1497
01:30:17,770 --> 01:30:20,000
challenges is always there.

1498
01:30:20,000 --> 01:30:23,189
The big sales time is summertime so we're just kind of

1499
01:30:23,189 --> 01:30:26,000
still estimating what that's going to be.

1500
01:30:26,000 --> 01:30:28,000
We're kind of based on an average year.

1501
01:30:28,000 --> 01:30:32,000
But overall the utilities seem to be performing well.

1502
01:30:32,000 --> 01:30:35,750
And the general fund side, our sales tax has been very

1503
01:30:35,750 --> 01:30:37,000
strong this year.

1504
01:30:37,000 --> 01:30:40,000
So we're looking at a surplus in terms of the general fund.

1505
01:30:40,000 --> 01:30:46,000
But other than that, things seem to be going well.

1506
01:30:46,000 --> 01:30:48,000
Okay. Questions?

1507
01:30:48,000 --> 01:30:54,000
Chuck? No. Thank you, Chuck.

1508
01:30:54,000 --> 01:30:58,000
Okay. Next.

1509
01:30:58,000 --> 01:31:04,000
We have solid waste department.

1510
01:31:04,000 --> 01:31:07,000
Yes. In your backup material you should have a memorandum

1511
01:31:07,000 --> 01:31:11,500
to Tamario that basically outlines the full time equivalent

1512
01:31:11,500 --> 01:31:15,000
comparison, employee comparison for solid waste to

1513
01:31:15,000 --> 01:31:19,000
a number of similar municipal solid waste entities.

1514
01:31:19,000 --> 01:31:21,069
I believe you received similar reports from both the

1515
01:31:21,069 --> 01:31:23,270
electric department as well as the water and wastewater

1516
01:31:23,270 --> 01:31:24,000
departments.

1517
01:31:24,000 --> 01:31:27,000
And so this is a follow up to that end.

1518
01:31:27,000 --> 01:31:28,000
I apologize for the delay on this.

1519
01:31:28,000 --> 01:31:31,170
What we found is it's really not necessarily an apples to

1520
01:31:31,170 --> 01:31:34,680
apples comparison when we're comparing solid waste entities

1521
01:31:34,680 --> 01:31:35,000
.

1522
01:31:35,000 --> 01:31:37,880
And so what you'll have in that first table is a little bit

1523
01:31:37,880 --> 01:31:40,000
of a breakdown on services provided.

1524
01:31:40,000 --> 01:31:43,170
And then in the second table we tried to provide kind of

1525
01:31:43,170 --> 01:31:47,239
some analysis based on what we really see as the drivers

1526
01:31:47,239 --> 01:31:50,420
behind productivity for our FTE employees or for our solid

1527
01:31:50,420 --> 01:31:51,000
waste employees.

1528
01:31:51,000 --> 01:31:58,220
So I'll stand for any questions if you have any regarding

1529
01:31:58,220 --> 01:32:00,000
that data.

1530
01:32:00,000 --> 01:32:03,000
Questions?

1531
01:32:03,000 --> 01:32:05,000
Well, I think I need clarification.

1532
01:32:05,000 --> 01:32:08,939
It looks like Irving is the one that's most closely like us

1533
01:32:08,939 --> 01:32:11,000
for the types of services.

1534
01:32:11,000 --> 01:32:12,000
Yes.

1535
01:32:12,000 --> 01:32:14,470
We have more FTEs and that's in part because of the mining

1536
01:32:14,470 --> 01:32:16,000
that we're going to be doing.

1537
01:32:16,000 --> 01:32:18,000
Is that inaccurate?

1538
01:32:18,000 --> 01:32:19,000
In part, yes.

1539
01:32:19,000 --> 01:32:22,000
The mining operation on the back page or the second page,

1540
01:32:22,000 --> 01:32:26,000
we have about 10 FTEs dedicated to that operation right now

1541
01:32:26,000 --> 01:32:26,000
.

1542
01:32:26,000 --> 01:32:27,000
We are very unique.

1543
01:32:27,000 --> 01:32:31,250
One of the only MSWs in this area that is pursuing that

1544
01:32:31,250 --> 01:32:33,000
type of endeavor.

1545
01:32:33,000 --> 01:32:37,000
I'm not quite sure in terms of like Keep Denton Beautiful.

1546
01:32:37,000 --> 01:32:39,770
I don't believe Irving's has that component in there either

1547
01:32:39,770 --> 01:32:40,000
.

1548
01:32:40,000 --> 01:32:42,000
So there's a few differences there.

1549
01:32:42,000 --> 01:32:44,640
Some of those ancillary operations like Keep Denton

1550
01:32:44,640 --> 01:32:47,619
Beautiful, the mining, home chemical collection, those are

1551
01:32:47,619 --> 01:32:50,670
the ones that we really had a hard time finding a

1552
01:32:50,670 --> 01:32:53,000
comparison among other cities.

1553
01:32:53,000 --> 01:32:58,000
Okay.

1554
01:32:58,000 --> 01:32:59,000
All right.

1555
01:32:59,000 --> 01:33:01,000
Any other questions?

1556
01:33:01,000 --> 01:33:04,000
Thank you.

1557
01:33:04,000 --> 01:33:10,000
And finally, we have the new business matrix.

1558
01:33:10,000 --> 01:33:13,420
And we did the board a couple of updates on the coal plants

1559
01:33:13,420 --> 01:33:16,930
and the update on the transmission line installation off

1560
01:33:16,930 --> 01:33:18,000
loop 288.

1561
01:33:18,000 --> 01:33:21,750
And I believe Phil will be putting together informal staff

1562
01:33:21,750 --> 01:33:23,000
reports on those.

1563
01:33:23,000 --> 01:33:25,600
So we'll get those out to you sometime in the next week or

1564
01:33:25,600 --> 01:33:26,000
two.

1565
01:33:26,000 --> 01:33:30,000
Okay. Great.

1566
01:33:30,000 --> 01:33:35,789
Any members like to add anything to the matrix or anything

1567
01:33:35,789 --> 01:33:37,000
that's come up?

1568
01:33:37,000 --> 01:33:39,000
No.

1569
01:33:39,000 --> 01:33:43,000
Okay.

1570
01:33:43,000 --> 01:33:44,000
All right.

1571
01:33:44,000 --> 01:33:48,000
So that clears the consent and regular the regular meeting.

1572
01:33:48,000 --> 01:33:53,000
So we can.

1573
01:33:53,000 --> 01:33:56,000
Before we go into we close.

1574
01:33:56,000 --> 01:33:59,000
Does anybody need a break or?

1575
01:33:59,000 --> 01:34:00,000
No.

1576
01:34:00,000 --> 01:34:02,000
Just go keep going through it.

1577
01:34:02,000 --> 01:34:04,000
All right.

1578
01:34:04,000 --> 01:34:05,000
Refill.