WEBVTT

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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.

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The red wintertime load is what we call a camelback double

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hop.

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Comes up in the morning, lays down a little bit during the

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day, comes back again in the evening when everybody goes

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home.

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Again, the wind production, the solar production, add those

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together and it gives me this supply.

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But again, a big supply when I don't need it, I'm selling

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it to the market.

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The time when I'm using the engines or buying from the

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market and then again, excess supply.

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So we flip back and forth all the time.

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And this is just an average.

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It can vary a lot by each day.

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But this is one of the risks and what we look at as far as

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buying renewable energy is why don't we buy more?

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Well, because I'm buying at a fixed price.

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And then we'll have to sell it back into the market

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whenever it comes at whatever price the market is that time

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.

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And so that's the risk involved in what some people are

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finding is when they go to sell it back into the market,

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they contract at a price of, say, $23 a megawatt hour.

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They're selling it back into the market at $18.

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So how much loss can they afford to take during those hours

00:15:04.580 --> 00:15:08.000
to offset the good times when it's the opposite way?

00:15:08.000 --> 00:15:13.759
And that's what we have to look for, do our forward curves

00:15:13.759 --> 00:15:19.690
and look at what the forward market is going to be like for

00:15:19.690 --> 00:15:21.000
the energy.

00:15:21.000 --> 00:15:25.629
So this is just one day actual forecast, the ERCOP forecast

00:15:25.629 --> 00:15:26.000
.

00:15:26.000 --> 00:15:28.000
Normal summertime load.

00:15:28.000 --> 00:15:31.509
Here's the wind production, wind forecast they had, dotted

00:15:31.509 --> 00:15:35.129
line, and the blue line, the saw line is where it actually

00:15:35.129 --> 00:15:36.000
showed up.

00:15:36.000 --> 00:15:39.379
That's just reemphasizing the same point of sometimes the

00:15:39.379 --> 00:15:41.000
wind's harder to predict.

00:15:41.000 --> 00:15:43.000
That's what they're finding.

00:15:43.000 --> 00:15:45.000
So good benefit of solar, it's easier to predict.

00:15:45.000 --> 00:15:48.000
But the wind is becoming more and more difficult.

00:15:48.000 --> 00:15:52.210
They're finding the Electric Reliability Council of Texas

00:15:52.210 --> 00:15:55.470
has even added a position that's all they do is weather

00:15:55.470 --> 00:15:57.000
forecast, wind forecast now,

00:15:57.000 --> 00:16:01.000
because it has such an impact on resources.

00:16:01.000 --> 00:16:03.669
And that's what we've added to our staff, is people to do

00:16:03.669 --> 00:16:05.000
the same forecast for us.

00:16:05.000 --> 00:16:12.210
Because we're incorporating so much wind and solar into our

00:16:12.210 --> 00:16:14.000
portfolio.

00:16:14.000 --> 00:16:17.000
The dotted lines here represent forecast.

00:16:17.000 --> 00:16:22.000
This is a wind forecast day ahead, two days.

00:16:22.000 --> 00:16:25.000
So this was a day earlier this month.

00:16:25.000 --> 00:16:29.360
So the white dotted line was forecast total, the solid bars

00:16:29.360 --> 00:16:31.000
is what was producing.

00:16:31.000 --> 00:16:35.000
These different colors are different flavors of wind.

00:16:35.000 --> 00:16:40.000
Panhandle wind, this is yellow on the bottom.

00:16:40.000 --> 00:16:42.000
The red is the coastal wind.

00:16:42.000 --> 00:16:44.000
The blue is the West Texas wind.

00:16:44.000 --> 00:16:47.750
On this day, all of them are underperforming, performing

00:16:47.750 --> 00:16:50.000
less than what they'd forecast.

00:16:50.000 --> 00:16:53.000
But panhandle wind is especially erratic.

00:16:53.000 --> 00:16:56.000
As you can see, it went to the bottom.

00:16:56.000 --> 00:16:58.549
And so those are the times we have to fill in, we have to

00:16:58.549 --> 00:17:03.889
scramble and fill in with a different resource so that you

00:17:03.889 --> 00:17:09.000
're not exposed.

00:17:09.000 --> 00:17:12.220
When I talk about not exposed, here's what I'm talking

00:17:12.220 --> 00:17:14.000
about not being exposed to.

00:17:14.000 --> 00:17:18.529
When you have these different market occasions, these are

00:17:18.529 --> 00:17:22.000
the prices that you can see because of the scale.

00:17:22.000 --> 00:17:25.910
You can barely see the price for every 15 minute interval

00:17:25.910 --> 00:17:30.000
because it's rocking along around $20 a megawatt hour.

00:17:30.000 --> 00:17:34.420
But you can have transmission congestion or the wind

00:17:34.420 --> 00:17:38.670
suddenly lay down or some other fossil fuel generator not

00:17:38.670 --> 00:17:43.000
show up or they just missed the load forecast that day.

00:17:43.000 --> 00:17:47.329
When those things happen, transmission congestion is what

00:17:47.329 --> 00:17:51.670
happened here because they sent a negative signal telling

00:17:51.670 --> 00:17:54.859
people in this area not to generate because it was costing

00:17:54.859 --> 00:17:56.000
them to push money on the grid.

00:17:56.000 --> 00:18:00.000
And then quickly turned around to a positive number.

00:18:00.000 --> 00:18:05.720
Instead of costing $20 a megawatt hour, it cost $373 a meg

00:18:05.720 --> 00:18:07.000
awatt hour.

00:18:07.000 --> 00:18:14.059
Again, it rocks along and the next day it got almost to $

00:18:14.059 --> 00:18:18.000
800 a megawatt hour.

00:18:18.000 --> 00:18:21.890
So for our load, those kind of excursions could cost you $

00:18:21.890 --> 00:18:27.000
100,000 pretty quick if you're not covered in some way.

00:18:27.000 --> 00:18:34.420
That's why having the five minute start engines covers us

00:18:34.420 --> 00:18:42.180
on that and balances out, protects us from our financial

00:18:42.180 --> 00:18:43.000
risk.

00:18:43.000 --> 00:18:48.650
The progress we're making on renewables, we're making it on

00:18:48.650 --> 00:18:53.759
our wholesale portfolio by taking into consideration those

00:18:53.759 --> 00:18:56.000
risks and how to balance them.

00:18:56.000 --> 00:18:58.950
How to balance them against each other contracts and how to

00:18:58.950 --> 00:19:01.849
balance them with our generation and making significant

00:19:01.849 --> 00:19:03.000
progress on that.

00:19:03.000 --> 00:19:06.000
But there's other things we can do.

00:19:06.000 --> 00:19:09.839
Community solar has been a goal and something in our sites

00:19:09.839 --> 00:19:14.000
that we've had our consideration for the last three years.

00:19:14.000 --> 00:19:17.170
But again, as we progress towards a contractor or coming up

00:19:17.170 --> 00:19:20.400
with a program, the market keeps changing and coming out

00:19:20.400 --> 00:19:22.000
with something better.

00:19:22.000 --> 00:19:25.859
But we are honing in on that now and intend to have an RFP

00:19:25.859 --> 00:19:29.000
of a question proposal later this year.

00:19:29.000 --> 00:19:31.809
We also intend to get details and have community

00:19:31.809 --> 00:19:36.220
involvement as far as what's wanted and what would fit with

00:19:36.220 --> 00:19:41.619
our community as far as a community solar project later

00:19:41.619 --> 00:19:43.000
this year.

00:19:43.000 --> 00:19:48.559
Storage, renewable, research and development, mainly this

00:19:48.559 --> 00:19:51.000
is batteries in our area.

00:19:51.000 --> 00:19:55.460
We've been talking to University of North Texas, University

00:19:55.460 --> 00:20:02.210
of Texas at Dallas, SMU, Sandia, National Laboratories, all

00:20:02.210 --> 00:20:03.000
these people.

00:20:03.000 --> 00:20:06.170
And from the perspective of us furnishing them the site of

00:20:06.170 --> 00:20:08.759
here's a site, here's the open land, here's the

00:20:08.759 --> 00:20:13.519
interconnection, here's a place for you to stage your new

00:20:13.519 --> 00:20:15.000
technology.

00:20:15.000 --> 00:20:18.000
And they're all very excited about that.

00:20:18.000 --> 00:20:20.990
What they're all doing is scrambling, looking for grant

00:20:20.990 --> 00:20:23.000
money to help fund those projects.

00:20:23.000 --> 00:20:26.460
And we've certainly left an open door for any of them to

00:20:26.460 --> 00:20:30.240
come forward and bring their projects forward and partner

00:20:30.240 --> 00:20:33.000
with them to do these kind of projects.

00:20:33.000 --> 00:20:37.359
We've set a record on rooftop solar. We passed 100 system

00:20:37.359 --> 00:20:40.000
mark a couple of months ago.

00:20:40.000 --> 00:20:45.619
So far we've provided rebates for those systems of a

00:20:45.619 --> 00:20:47.000
million two.

00:20:47.000 --> 00:20:50.000
Demand response.

00:20:50.000 --> 00:20:54.630
We've been talking to our top 200 customers, certainly

00:20:54.630 --> 00:20:57.000
making it available to them.

00:20:57.000 --> 00:21:00.180
Most of them as we look at the demand response programs

00:21:00.180 --> 00:21:03.480
that are in the market, and we provide them an avenue to

00:21:03.480 --> 00:21:05.000
take advantage of those.

00:21:05.000 --> 00:21:08.200
The response we get back from those customers, from those

00:21:08.200 --> 00:21:11.559
commercial large industrial customers is they don't want to

00:21:11.559 --> 00:21:14.750
interrupt their load. They don't want to interrupt their

00:21:14.750 --> 00:21:17.000
production to respond to the band.

00:21:17.000 --> 00:21:20.750
They'd rather pay the bill and our products that value by

00:21:20.750 --> 00:21:24.000
them that they won't continue their production.

00:21:24.000 --> 00:21:27.869
And so we haven't had a response yet or had the right

00:21:27.869 --> 00:21:31.000
customer to respond to demand response.

00:21:31.000 --> 00:21:37.160
Energy efficiency. The cleanest megawatt hour is the one I

00:21:37.160 --> 00:21:38.000
never have to produce.

00:21:38.000 --> 00:21:41.779
And that's what we look for in energy efficiency. We have a

00:21:41.779 --> 00:21:46.000
program that first is free in home audits.

00:21:46.000 --> 00:21:48.900
Those free in home audits are not available in other

00:21:48.900 --> 00:21:51.970
service areas and other service areas people have to pay

00:21:51.970 --> 00:21:53.000
for those.

00:21:53.000 --> 00:21:56.750
Matter of fact, there are businesses that come to Denton

00:21:56.750 --> 00:22:00.440
wanting to sell those and are disappointed when they find

00:22:00.440 --> 00:22:03.849
out that they can't sell them here because we already

00:22:03.849 --> 00:22:06.000
offered that service for free.

00:22:06.000 --> 00:22:09.210
Those audits produce results of telling people where they

00:22:09.210 --> 00:22:13.710
need to improve their houses, and we provide rebates for

00:22:13.710 --> 00:22:19.210
installation, thermostats, air conditioning change outs,

00:22:19.210 --> 00:22:21.000
and solar systems.

00:22:21.000 --> 00:22:24.750
And as far as I know, we're the only entity in the United

00:22:24.750 --> 00:22:29.000
States that provides rebate for battery storage systems.

00:22:29.000 --> 00:22:34.230
So we're ahead in that regard. We have our Green Sense

00:22:34.230 --> 00:22:37.000
renewable rate, 168 customers on that account.

00:22:37.000 --> 00:22:42.450
That first is renewable energy credits, and people pay for

00:22:42.450 --> 00:22:48.000
the difference in that to achieve 100% renewable.

00:22:48.000 --> 00:22:54.289
How do our rebates stack up against other utilities? Tied

00:22:54.289 --> 00:22:57.670
at third behind American Electric Power, which is the

00:22:57.670 --> 00:23:01.000
largest investor-owned utility in the United States.

00:23:01.000 --> 00:23:04.380
They have an entity in North Texas, which is the old West

00:23:04.380 --> 00:23:08.059
Texas Utilities, and the South Texas, the old Central Power

00:23:08.059 --> 00:23:09.000
and Light.

00:23:09.000 --> 00:23:12.000
And theirs are ahead of us other than that.

00:23:12.000 --> 00:23:16.210
We're first talking about with battery systems because as I

00:23:16.210 --> 00:23:20.059
said, we're the only ones that incentivize people to get a

00:23:20.059 --> 00:23:21.000
battery.

00:23:21.000 --> 00:23:23.759
The thing to note here is the number of cities, Bryan

00:23:23.759 --> 00:23:27.849
College Station, Georgetown, Lubbock, Greenville, that no

00:23:27.849 --> 00:23:32.000
longer offer solar incentives.

00:23:32.000 --> 00:23:36.349
And it's not that those people are against solar, but it's

00:23:36.349 --> 00:23:39.000
just you got to recognize the reasoning why you do rebates.

00:23:39.000 --> 00:23:43.990
Why you do rebates is to motivate people to take an action

00:23:43.990 --> 00:23:47.000
they would not otherwise take.

00:23:47.000 --> 00:23:50.750
So for years on air conditioning systems, when we first

00:23:50.750 --> 00:23:53.200
started doing rebates, that's where the main area we did

00:23:53.200 --> 00:23:55.670
was getting people to take a step to go for a more

00:23:55.670 --> 00:23:58.000
efficient air conditioning system.

00:23:58.000 --> 00:24:01.380
You recognize efficiency of air conditioning systems by the

00:24:01.380 --> 00:24:04.400
efficiency rating, which was when it first started was

00:24:04.400 --> 00:24:05.000
eight.

00:24:05.000 --> 00:24:09.710
And we incentivized people to go to 10. And then the market

00:24:09.710 --> 00:24:11.980
switched and everybody was doing 10 and we incentivized

00:24:11.980 --> 00:24:13.000
people to go to 12.

00:24:13.000 --> 00:24:16.920
And then we changed our program to incentivize people to go

00:24:16.920 --> 00:24:19.000
to 14, 16, so on.

00:24:19.000 --> 00:24:22.990
So you quit paying incentives for people to do what they

00:24:22.990 --> 00:24:25.000
were going to do anyway.

00:24:25.000 --> 00:24:27.470
That's kind of where some people are with the solar

00:24:27.470 --> 00:24:28.000
programs.

00:24:28.000 --> 00:24:31.430
We have people that even though we run out of rebate money,

00:24:31.430 --> 00:24:35.000
they go forward with their solar installations anyway.

00:24:35.000 --> 00:24:37.619
And so it makes you question if people are going to go

00:24:37.619 --> 00:24:40.670
forward with solar installations anyway, that's a policy

00:24:40.670 --> 00:24:45.279
question we need to bring back is do we still need to do it

00:24:45.279 --> 00:24:48.000
at the level we're doing it?

00:24:48.000 --> 00:24:51.170
Certainly in light of some people cutting back on these

00:24:51.170 --> 00:24:52.000
altogether.

00:24:52.000 --> 00:24:56.640
And so that's one of the things we need to look at as far

00:24:56.640 --> 00:25:00.000
as our solar program in the future.

00:25:00.000 --> 00:25:02.000
Next steps.

00:25:02.000 --> 00:25:06.210
We remain focused on increasing renewables. We understand

00:25:06.210 --> 00:25:08.000
the direction and charge.

00:25:08.000 --> 00:25:13.000
We anticipate being 88% renewable in 2019.

00:25:13.000 --> 00:25:16.170
We are pursuing means of increasing renewable energy

00:25:16.170 --> 00:25:19.680
through community solar, energy storage, demand response,

00:25:19.680 --> 00:25:23.000
and looking for opportunities and avenues to do that.

00:25:23.000 --> 00:25:27.720
If we go to 88%, going to the last pieces of that become

00:25:27.720 --> 00:25:32.480
more expensive and harder to do, but we keep trying to get

00:25:32.480 --> 00:25:34.000
closer to that.

00:25:34.000 --> 00:25:39.000
Additional renewable request proposal is issued this month.

00:25:39.000 --> 00:25:41.740
And we expect to return presentation for the end of the

00:25:41.740 --> 00:25:44.000
year after we get those responses back.

00:25:44.000 --> 00:25:49.869
And we'll come back to this board and into the council with

00:25:49.869 --> 00:25:54.000
the result of those responses.

00:25:54.000 --> 00:26:00.000
That's the state of the union on renewables. Any questions?

00:26:00.000 --> 00:26:19.000
[INAUDIBLE]

00:26:19.000 --> 00:26:22.750
So I see battery storage will certainly have a use in the

00:26:22.750 --> 00:26:26.619
electrical grid. What Guam is using it for is mainly just

00:26:26.619 --> 00:26:31.000
for a small percentage of their load to maintain frequency.

00:26:31.000 --> 00:26:35.680
California is pushing for more battery storage. It'll make

00:26:35.680 --> 00:26:39.240
sense there because they have a short window of peak load

00:26:39.240 --> 00:26:43.210
that they're not covering with renewables that they can get

00:26:43.210 --> 00:26:46.000
coverage for a couple hours, I would say, happening.

00:26:46.000 --> 00:26:50.420
In Texas, where we have the 75 to 80 degree nights, the

00:26:50.420 --> 00:26:54.269
amount of time you would have to charge the batteries and

00:26:54.269 --> 00:26:58.369
to discharge, that technology isn't there yet to charge it

00:26:58.369 --> 00:27:02.140
in a short period of time, usually over a long period of

00:27:02.140 --> 00:27:03.000
time.

00:27:03.000 --> 00:27:05.000
And that's where they've got to go.

00:27:05.000 --> 00:27:09.220
Certainly there's going to be some places in the electrical

00:27:09.220 --> 00:27:13.220
grid where they frequency response whenever frequency

00:27:13.220 --> 00:27:17.420
responses when something sudden happens on the grid and you

00:27:17.420 --> 00:27:20.430
need some kind of response to that to get it back up to

00:27:20.430 --> 00:27:21.000
speed.

00:27:21.000 --> 00:27:26.000
And that seems to be the first place that they'll be used.

00:27:26.000 --> 00:27:30.259
Right now the first project in Texas was a battery system

00:27:30.259 --> 00:27:34.670
that was put in in a place appropriately named No Trees out

00:27:34.670 --> 00:27:36.000
in West Texas.

00:27:36.000 --> 00:27:41.539
And that battery system, I believe, cycled out. It got cy

00:27:41.539 --> 00:27:45.250
cled so much that it ordered batteries out in three to four

00:27:45.250 --> 00:27:46.000
years.

00:27:46.000 --> 00:27:48.829
And so you have large capital investment like we're making

00:27:48.829 --> 00:27:51.569
in these engines, and you used it up in three to four years

00:27:51.569 --> 00:27:53.000
and had to replace it.

00:27:53.000 --> 00:27:58.230
And so that's the kind of research and development needs is

00:27:58.230 --> 00:28:03.160
how do you utilize those batteries and make it where they

00:28:03.160 --> 00:28:05.000
're economical.

00:28:05.000 --> 00:28:08.380
Right now, physically can they be used? Yes. Is it

00:28:08.380 --> 00:28:11.420
economical yet? No, because you put the batteries in, you

00:28:11.420 --> 00:28:14.000
still have to buy the power to put in them.

00:28:14.000 --> 00:28:17.759
You have some loss, and then you cycle enough time and it

00:28:17.759 --> 00:28:19.000
wears them out.

00:28:19.000 --> 00:28:24.000
And so to me, I see batteries where solar was 20 years ago.

00:28:24.000 --> 00:28:26.000
I think it will evolve.

00:28:26.000 --> 00:28:29.750
It may evolve quicker, but as far as evolving to the point

00:28:29.750 --> 00:28:33.420
of being a complete replacement for the entire generation

00:28:33.420 --> 00:28:42.000
grid, I don't see that happening overnight.

00:28:42.000 --> 00:28:51.000
That's all right.

00:28:51.000 --> 00:28:55.930
One other question as far as to the whole idea of when the

00:28:55.930 --> 00:28:58.000
sun doesn't shine.

00:28:58.000 --> 00:29:00.539
I know that when the sun doesn't shine, you still get a sun

00:29:00.539 --> 00:29:06.779
burn. Does that same, I mean, how much power is taken in

00:29:06.779 --> 00:29:10.000
when the sun doesn't shine?

00:29:10.000 --> 00:29:14.690
There is still some, but just as you can see the normal

00:29:14.690 --> 00:29:21.769
capacity for over a year for solar installation would be 30

00:29:21.769 --> 00:29:25.410
% of what you would get out of fossil fuel generation at

00:29:25.410 --> 00:29:27.000
that same capacity.

00:29:27.000 --> 00:29:29.000
About 30%? Yeah.

00:29:29.000 --> 00:29:33.460
So you're not going to get an average over a year. You're

00:29:33.460 --> 00:29:37.000
just not going to get all the sun shining all the time.

00:29:37.000 --> 00:29:43.000
Is there any research to try to increase the pull?

00:29:43.000 --> 00:29:46.380
The technology for the solar panels is getting better and

00:29:46.380 --> 00:29:50.000
more efficient and certainly has made great strides.

00:29:50.000 --> 00:29:52.809
And what they've made the greatest stride on is just

00:29:52.809 --> 00:29:55.960
getting cheaper and more efficient, but more on getting

00:29:55.960 --> 00:29:59.000
them built cheaper as they increase volume.

00:29:59.000 --> 00:30:03.210
And so that's what we're seeing is that they just keep

00:30:03.210 --> 00:30:07.349
getting their prices down from where they were two years

00:30:07.349 --> 00:30:08.000
ago.

00:30:08.000 --> 00:30:12.900
I mean, like, they've dropped by, since 2010, they've

00:30:12.900 --> 00:30:15.000
dropped over 100%.

00:30:15.000 --> 00:30:18.170
So, I mean, it's just dropped, that's not the right

00:30:18.170 --> 00:30:21.400
percentage, but anyway, it's dropped significantly since

00:30:21.400 --> 00:30:24.000
then from $200 a megawatt hour down below.

00:30:24.000 --> 00:30:30.000
Now we're seeing prices in the 30s and 40s.

00:30:30.000 --> 00:30:33.559
Back on battery storage. I read there are a couple of

00:30:33.559 --> 00:30:37.269
businesses out in California that installed that themselves

00:30:37.269 --> 00:30:39.000
from an R&D perspective.

00:30:39.000 --> 00:30:42.539
Is that something we can do here, maybe with the university

00:30:42.539 --> 00:30:45.000
or something, just to configure it?

00:30:45.000 --> 00:30:47.980
Well, we've provided a rebate for people to put in and we

00:30:47.980 --> 00:30:50.000
've had some people take us up on that.

00:30:50.000 --> 00:30:53.750
And are in the midst of doing of installing the battery

00:30:53.750 --> 00:30:56.000
pack home battery pack systems.

00:30:56.000 --> 00:31:00.500
Then also we've been in discussion with University of North

00:31:00.500 --> 00:31:03.680
Texas, UTD and SMU and looking for grant money for them to

00:31:03.680 --> 00:31:05.000
put in a facility to test that.

00:31:05.000 --> 00:31:09.359
And we look at the city of Austin has done experiment with

00:31:09.359 --> 00:31:13.670
one and now Guam is doing one and we'll certainly

00:31:13.670 --> 00:31:15.000
investigate those.

00:31:15.000 --> 00:31:17.000
Great.

00:31:17.000 --> 00:31:26.000
Phil, we're talking about now being at 88% by 2019.

00:31:26.000 --> 00:31:29.210
It's took quite a bit. I mean, it's pretty big jump from 70

00:31:29.210 --> 00:31:30.000
to 88.

00:31:30.000 --> 00:31:35.950
Not that much more of a jump to 100. I know the 2035 is the

00:31:35.950 --> 00:31:40.000
stated target, I guess, if you will.

00:31:40.000 --> 00:31:48.930
And I just want to, you know, what's the how much more of a

00:31:48.930 --> 00:31:52.000
job or what's going to have to happen for it to get to 100?

00:31:52.000 --> 00:31:55.210
Is it is it going to be new technologies such as battery

00:31:55.210 --> 00:31:57.000
storage? Is that where we're going to be?

00:31:57.000 --> 00:31:59.230
Because you certainly certainly all those technologies

00:31:59.230 --> 00:32:02.000
could, you know, and that's the, you know, I'd like to

00:32:02.000 --> 00:32:03.000
share what the board would like.

00:32:03.000 --> 00:32:05.470
What we'd like to be able to do sit down and say, OK, we're

00:32:05.470 --> 00:32:08.000
going to do this, this and this and we'll be in 100.

00:32:08.000 --> 00:32:12.210
And what we don't know is what technology breakthroughs are

00:32:12.210 --> 00:32:15.160
going to be, where the price is going to go next that will

00:32:15.160 --> 00:32:17.000
drive us to that.

00:32:17.000 --> 00:32:20.750
Right now, what's preventing us from going further is just

00:32:20.750 --> 00:32:23.670
the market prices of renewable energy compared to the

00:32:23.670 --> 00:32:27.339
market prices where I can sell that energy back into back

00:32:27.339 --> 00:32:30.000
into when I don't need it.

00:32:30.000 --> 00:32:34.210
You know, again, getting stuck in a situation where I got a

00:32:34.210 --> 00:32:38.000
contract price for twenty dollars a megawatt hour. But I've

00:32:38.000 --> 00:32:38.000
got all this excess.

00:32:38.000 --> 00:32:41.569
I got five hundred thousand megawatt hours of energy that I

00:32:41.569 --> 00:32:44.990
sell back into the market sometimes at a price that's not

00:32:44.990 --> 00:32:46.000
desirable.

00:32:46.000 --> 00:32:50.630
And so how to mitigate that risk, I think, is the next step

00:32:50.630 --> 00:32:53.000
to drive to seeing higher.

00:32:53.000 --> 00:32:56.980
But as far as driving us to the point where the about megaw

00:32:56.980 --> 00:33:01.049
att hours we buy is equal or more than the megawatt hours we

00:33:01.049 --> 00:33:03.000
use, we can get there.

00:33:03.000 --> 00:33:06.400
I think pretty quickly. I mean, I think that's that's going

00:33:06.400 --> 00:33:07.000
to happen.

00:33:07.000 --> 00:33:09.750
But, you know, people are going to look at it and go, OK,

00:33:09.750 --> 00:33:12.960
you're you say you're you're 100 percent renewable, but you

00:33:12.960 --> 00:33:15.000
still have these gas fired engines.

00:33:15.000 --> 00:33:19.640
How does that work? Well, you have to have them because it

00:33:19.640 --> 00:33:22.000
doesn't come at the same time.

00:33:22.000 --> 00:33:24.890
Well, even with a contract, you're going to pay for some

00:33:24.890 --> 00:33:27.950
type of insurance policy, if you will, from whoever you're

00:33:27.950 --> 00:33:29.000
buying it from.

00:33:29.000 --> 00:33:34.230
Right. If you don't have that. And that's what those

00:33:34.230 --> 00:33:37.000
engines provide.

00:33:37.000 --> 00:33:40.910
Just one other thing on the you mentioned something about

00:33:40.910 --> 00:33:45.000
the and I like the chart about the rebate program we have.

00:33:45.000 --> 00:33:49.269
That's very popular here. I think it gets funded on October

00:33:49.269 --> 00:33:50.000
1st.

00:33:50.000 --> 00:33:54.210
And if you don't if you're not in by October 15th, you're

00:33:54.210 --> 00:33:56.000
almost out.

00:33:56.000 --> 00:33:59.000
It didn't run out quite that fast this year.

00:33:59.000 --> 00:34:04.000
But I just again, that's that's a great chart.

00:34:04.000 --> 00:34:08.269
And I get a lot of comments from folks that are now

00:34:08.269 --> 00:34:13.150
thinking about, OK, I'm going to pull the trigger on solar

00:34:13.150 --> 00:34:14.000
at my house.

00:34:14.000 --> 00:34:18.699
And and what does push them over the top is being able some

00:34:18.699 --> 00:34:23.000
of the some of the grants, some of the rebates both locally

00:34:23.000 --> 00:34:24.000
and federal.

00:34:24.000 --> 00:34:28.340
And so I'd encourage us to keep keep those. I don't want to

00:34:28.340 --> 00:34:31.000
see those things go away.

00:34:31.000 --> 00:34:34.869
I think that's probably I mean, it's not it's not a large

00:34:34.869 --> 00:34:40.099
budget item, but it can be if you know, individually, if

00:34:40.099 --> 00:34:43.000
you break it down, it is a large percentage and a great

00:34:43.000 --> 00:34:43.000
incentive.

00:34:43.000 --> 00:34:48.000
For for people to do it individually. So I like that.

00:34:48.000 --> 00:34:52.989
Well, like I said, this this is a exciting time in the

00:34:52.989 --> 00:34:57.809
business to see this transition and to see us go to a plan

00:34:57.809 --> 00:35:05.000
that reduces emissions, reduces the use of gas, reduces.

00:35:05.000 --> 00:35:10.550
It just makes it more sustainable as far as resources. And

00:35:10.550 --> 00:35:15.000
we're just driving more towards that every day.

00:35:15.000 --> 00:35:18.170
And like I said, driving towards that without a rate

00:35:18.170 --> 00:35:19.000
increase.

00:35:19.000 --> 00:35:22.480
And so that I think that is a significant difference

00:35:22.480 --> 00:35:26.440
between us and and other cities that have gone towards this

00:35:26.440 --> 00:35:30.000
is ours is doing it with with competitive rates.

00:35:30.000 --> 00:35:35.000
And reliability and reliability.

00:35:35.000 --> 00:35:40.000
Any other questions.

00:35:40.000 --> 00:35:48.000
Thank you. Okay, thank you.

00:35:48.000 --> 00:35:52.510
Okay, next work session item we have is item B. And that is

00:35:52.510 --> 00:35:57.239
the to receive report, hold a discussion, give direction on

00:35:57.239 --> 00:36:02.000
the DME fiscal year 2017, 2018.

00:36:02.000 --> 00:36:08.050
Operating in capital budget and Chuck Springer is going to

00:36:08.050 --> 00:36:10.000
lead us in that.

00:36:10.000 --> 00:36:18.000
Randy.

00:36:18.000 --> 00:36:21.750
I'll start off. I won't still Phil Stunder, but his his

00:36:21.750 --> 00:36:25.619
favorite first slide in terms of the goals of DME rates,

00:36:25.619 --> 00:36:28.000
reliability and renewables.

00:36:28.000 --> 00:36:31.469
I think he's kind of covered some of those in his first

00:36:31.469 --> 00:36:36.670
presentation in terms of the goals, maintaining competitive

00:36:36.670 --> 00:36:38.000
rates.

00:36:38.000 --> 00:36:42.610
While adding that reliability or capacity to service all

00:36:42.610 --> 00:36:49.000
the customers, safety compliance with federal regulations,

00:36:49.000 --> 00:36:53.179
the maintenance of infrastructure, kind of replacement and

00:36:53.179 --> 00:36:58.000
growth and maximizing the use of renewable energy.

00:36:58.000 --> 00:37:02.719
Some of the more detailed goals in the upcoming year. I won

00:37:02.719 --> 00:37:07.650
't go through everything, but Phil's talked about executing

00:37:07.650 --> 00:37:11.900
additional wind and solar agreements and plan for the

00:37:11.900 --> 00:37:18.000
opening of the generation facility by the fall of 2018.

00:37:18.000 --> 00:37:21.000
Some substation completions.

00:37:21.000 --> 00:37:28.659
And look at, excuse me, filing a rate request with the PUC

00:37:28.659 --> 00:37:36.000
for additional transmission cost revenues to the city.

00:37:36.000 --> 00:37:40.210
In terms of accomplishments, paying off TMPA debt this

00:37:40.210 --> 00:37:44.199
upcoming budget year and I'll talk about that will be the

00:37:44.199 --> 00:37:47.000
last year of paying off that debt.

00:37:47.000 --> 00:37:53.000
Some of the savings from the energy management operation.

00:37:53.000 --> 00:38:00.739
As well as a reduction in October of the ECA rate and the

00:38:00.739 --> 00:38:06.000
amount of savings to the rate payers.

00:38:06.000 --> 00:38:10.900
Some other accomplishments. These are kind of construction

00:38:10.900 --> 00:38:15.289
related accomplishments in terms of, just highlight a few

00:38:15.289 --> 00:38:20.000
of them, the underground buried cable out at Southridge.

00:38:20.000 --> 00:38:24.420
Whenever you're impacting individuals yards and houses, it

00:38:24.420 --> 00:38:27.000
's always a challenging project.

00:38:27.000 --> 00:38:32.230
And they came through that very successfully. Exceeded the

00:38:32.230 --> 00:38:36.000
national average for system reliability.

00:38:36.000 --> 00:38:41.000
Recently passed the NERC audit and some of the others.

00:38:41.000 --> 00:38:47.719
In terms of the substations down at the bottom, you can see

00:38:47.719 --> 00:38:51.000
the completion of three.

00:38:51.000 --> 00:38:57.239
These are some of the other accomplishments. I won't go

00:38:57.239 --> 00:38:58.000
over them individually.

00:38:58.000 --> 00:39:01.170
But you can see down at the bottom when we were talking

00:39:01.170 --> 00:39:05.000
about the 6.4 million additional transmission cost.

00:39:05.000 --> 00:39:09.000
They recently received an additional 7.2.

00:39:09.000 --> 00:39:14.230
And when I get to the budget, you can see where that line

00:39:14.230 --> 00:39:18.000
item in terms of revenue is increasing.

00:39:18.000 --> 00:39:23.949
The performance measures in terms of the electric utility,

00:39:23.949 --> 00:39:29.599
it will just kind of highlight really reliability in terms

00:39:29.599 --> 00:39:34.000
of customer service hour that the system was available.

00:39:34.000 --> 00:39:39.579
Reducing the outage duration. Average number of interrupt

00:39:39.579 --> 00:39:42.000
ions, reducing those.

00:39:42.000 --> 00:39:47.949
Electrical outage due to vegetation or downed electrical

00:39:47.949 --> 00:39:49.000
lines.

00:39:49.000 --> 00:39:52.750
Percentage total electrical line is underground. Didn't

00:39:52.750 --> 00:39:56.000
have a very high percentage.

00:39:56.000 --> 00:40:00.630
And some of the new ones, percentage of renewable energy,

00:40:00.630 --> 00:40:04.000
the bottom two, and the EMO performance.

00:40:04.000 --> 00:40:09.000
There are some new performance measures that are proposed.

00:40:09.000 --> 00:40:16.269
I'll leave that up for a second, see if there's any

00:40:16.269 --> 00:40:20.000
questions on that one.

00:40:20.000 --> 00:40:26.380
In switching to cost containment within the budget, these

00:40:26.380 --> 00:40:30.000
are some of the proposals in the upcoming budget year.

00:40:30.000 --> 00:40:35.000
They've had challenges filling their engineering vacancies.

00:40:35.000 --> 00:40:40.480
So currently they have five. What they're proposing to do

00:40:40.480 --> 00:40:42.900
is to simply contract out for those engineering services

00:40:42.900 --> 00:40:45.000
instead of hiring in-house.

00:40:45.000 --> 00:40:51.000
They did eliminate two management positions in this budget.

00:40:51.000 --> 00:40:54.380
Also, like we've done for the other utilities, is

00:40:54.380 --> 00:40:58.000
recognizing salary savings and budgeting for that.

00:40:58.000 --> 00:41:01.460
It's about a percent and a half of total salaries and

00:41:01.460 --> 00:41:07.000
benefits. So within their budget this year, it's 308,000.

00:41:07.000 --> 00:41:11.429
Debt service is lower than projected. Some internally

00:41:11.429 --> 00:41:14.000
developed software packages.

00:41:14.000 --> 00:41:18.769
And implementation of the workforce management system to

00:41:18.769 --> 00:41:23.530
move toward a paperless environment in terms of their work

00:41:23.530 --> 00:41:25.000
order system.

00:41:25.000 --> 00:41:33.880
In terms of process improvements, the mydme.com application

00:41:33.880 --> 00:41:38.000
kind of through the customer service area.

00:41:38.000 --> 00:41:43.949
And you can see how often that was used by April of 2017,

00:41:43.949 --> 00:41:47.000
really to help customers become more aware of their usage,

00:41:47.000 --> 00:41:52.230
hopefully reduce usage by that awareness. It saves the

00:41:52.230 --> 00:41:57.550
customer funds, also helps reduce the demands on the system

00:41:57.550 --> 00:41:58.000
.

00:41:58.000 --> 00:42:02.619
Coordinating distribution system to automate power

00:42:02.619 --> 00:42:08.000
restoration, hopefully shortening the duration of outages,

00:42:08.000 --> 00:42:11.000
one of the performance measures.

00:42:11.000 --> 00:42:17.239
And RDIF system and standardizing their PC models for the

00:42:17.239 --> 00:42:19.000
department.

00:42:19.000 --> 00:42:23.210
Some other process improvements. They worked along with

00:42:23.210 --> 00:42:28.010
water and customer service in revamping the meter to

00:42:28.010 --> 00:42:30.000
billing process.

00:42:30.000 --> 00:42:34.989
They're using some temporary interns and programmers to

00:42:34.989 --> 00:42:39.960
help supplement staff and they converted one EMO operator

00:42:39.960 --> 00:42:46.159
position to an energy trading and risk management analyst

00:42:46.159 --> 00:42:47.000
position.

00:42:47.000 --> 00:42:53.400
And replacing their energy management trading system with a

00:42:53.400 --> 00:43:00.000
more robust system to more efficiently use their capacity.

00:43:00.000 --> 00:43:07.000
This is a chart that Phil has always shown historically,

00:43:07.000 --> 00:43:12.000
which kind of red talks about the annual peak demand.

00:43:12.000 --> 00:43:18.989
And then the blue is their kind of total sales. And you can

00:43:18.989 --> 00:43:24.349
see their projections in terms of peak demand a little bit

00:43:24.349 --> 00:43:25.000
lower.

00:43:25.000 --> 00:43:31.000
And their total sales at least in 2016 a little bit lower.

00:43:31.000 --> 00:43:35.300
Like the water utility, they're very dependent in terms of

00:43:35.300 --> 00:43:39.670
weather. And our last couple of summers have been a little

00:43:39.670 --> 00:43:42.000
rainier and a little cooler.

00:43:42.000 --> 00:43:45.170
Unfortunately, I don't know what this one will be like. It

00:43:45.170 --> 00:43:48.190
started out a little bit rainier, but we're all crossing

00:43:48.190 --> 00:43:51.000
our fingers that we'll have another cool summer.

00:43:51.000 --> 00:43:55.210
At some point that will turn around and we'll start to

00:43:55.210 --> 00:43:59.429
having one of those summers where we count the days in a

00:43:59.429 --> 00:44:01.000
row over 100.

00:44:01.000 --> 00:44:05.900
In terms of growth factors, this is a table I think we

00:44:05.900 --> 00:44:11.000
showed last year that shows the growth in customers.

00:44:11.000 --> 00:44:15.900
I highlight a couple things. You can see the outage events

00:44:15.900 --> 00:44:20.750
going down. You can see the significant increase in capital

00:44:20.750 --> 00:44:22.000
projects.

00:44:22.000 --> 00:44:26.210
And one of the things in terms of customers, some of the

00:44:26.210 --> 00:44:30.510
large commercial customers when they come online, they don

00:44:30.510 --> 00:44:32.000
't add to customer numbers.

00:44:32.000 --> 00:44:36.320
In terms of total usage, that can be significant. And we've

00:44:36.320 --> 00:44:40.289
had some growth in those over the last couple of years that

00:44:40.289 --> 00:44:43.000
are some pretty large customers.

00:44:43.000 --> 00:44:48.230
I'm not going to go over this part of the presentation. I

00:44:48.230 --> 00:44:54.000
'll leave this up for a second in terms of the definitions.

00:44:54.000 --> 00:44:58.000
But some of these you'll see within the budget.

00:44:58.000 --> 00:45:02.210
So I'll just go through these if you have a question on one

00:45:02.210 --> 00:45:07.000
of them. I think the board has seen this before.

00:45:07.000 --> 00:45:09.000
Yes, Barbara. I'm sorry.

00:45:09.000 --> 00:45:12.980
I have a question on your outages. Do you have any way of

00:45:12.980 --> 00:45:17.199
tracing how many of those are caused by squirrels and

00:45:17.199 --> 00:45:22.179
things that get into the line, which is a real problem in

00:45:22.179 --> 00:45:23.000
that area?

00:45:23.000 --> 00:45:30.000
Dang squirrels.

00:45:30.000 --> 00:45:34.000
You've hit enemy number one.

00:45:34.000 --> 00:45:38.250
Yes, squirrels are our top outage cause, followed by

00:45:38.250 --> 00:45:40.000
lightning and equipment failure.

00:45:40.000 --> 00:45:44.230
And we rest for each outage with the top cause and like I

00:45:44.230 --> 00:45:48.000
say, squirrels and wildlife is number one.

00:45:48.000 --> 00:45:51.860
We've just started using a new wildlife guard, put on

00:45:51.860 --> 00:45:56.119
equipment and we're ordering those and putting those on in

00:45:56.119 --> 00:45:59.690
the areas that are having the heaviest number of outages as

00:45:59.690 --> 00:46:04.000
we speak to guard against that in the future.

00:46:04.000 --> 00:46:10.030
But the other thing we're doing is a plan to start

00:46:10.030 --> 00:46:18.030
replacing some of the over 50 year old infrastructure. Our

00:46:18.030 --> 00:46:18.539
distribution system is in the same similar situation, not

00:46:18.539 --> 00:46:20.349
the same but similar situation as the streets in that we're

00:46:20.349 --> 00:46:23.000
needing to, it's time to replace some of those.

00:46:23.000 --> 00:46:26.000
And we're working on how to do that.

00:46:26.000 --> 00:46:33.550
And fortunately, a lot of those are in very crowded areas,

00:46:33.550 --> 00:46:40.690
people's backyards and we'll need to have someone house

00:46:40.690 --> 00:46:47.000
meeting to talk about how we do those in the future.

00:46:47.000 --> 00:46:53.889
In terms of the capital plan for the five year capital plan

00:46:53.889 --> 00:47:01.449
, you can see 368.8 million, 100.8 in the current fiscal

00:47:01.449 --> 00:47:02.000
year.

00:47:02.000 --> 00:47:06.619
I do want to stress again and I think it will show in a

00:47:06.619 --> 00:47:12.340
future slide, but Denton's charter requires us to re-budget

00:47:12.340 --> 00:47:17.730
any capital funds that are available that haven't been enc

00:47:17.730 --> 00:47:19.000
umbered.

00:47:19.000 --> 00:47:22.980
So when you're looking at this capital budget, some of

00:47:22.980 --> 00:47:26.000
these funds are currently available.

00:47:26.000 --> 00:47:30.000
It's not like it's an additional 100 million and you'll see

00:47:30.000 --> 00:47:32.000
the debt issuance each year.

00:47:32.000 --> 00:47:36.510
So a little bit of the capital program probably is overst

00:47:36.510 --> 00:47:41.190
ated because of the charter requirement that we have to re-

00:47:41.190 --> 00:47:44.000
budget those funds every year.

00:47:44.000 --> 00:47:48.489
So you can look here historically seeing what the capital

00:47:48.489 --> 00:47:53.000
program has been but the actual amount spent per year.

00:47:53.000 --> 00:47:57.210
For example, in '15-'16, the capital budget when we re-bud

00:47:57.210 --> 00:48:02.280
geted all the funds was about 105 million, but the actual

00:48:02.280 --> 00:48:10.000
expenditures the end of the year were 65 million.

00:48:10.000 --> 00:48:15.360
And this just gives, this table here, like for example in '

00:48:15.360 --> 00:48:20.000
16-'17 shows a five year of 647.

00:48:20.000 --> 00:48:25.760
This next table just shows it excluding the Denton Energy

00:48:25.760 --> 00:48:30.000
Center in terms of the capital program.

00:48:30.000 --> 00:48:36.719
This gives a breakdown of the capital program each year by

00:48:36.719 --> 00:48:39.000
different type.

00:48:39.000 --> 00:48:42.539
I've included in your packet and we've got another

00:48:42.539 --> 00:48:46.429
PowerPoint if you would like to have more details on the

00:48:46.429 --> 00:48:48.000
capital program.

00:48:48.000 --> 00:48:53.630
We've included that as another exhibit, but this just kind

00:48:53.630 --> 00:48:59.269
of breaks down the type of improvements by distribution and

00:48:59.269 --> 00:49:01.000
by transmission.

00:49:01.000 --> 00:49:05.230
And a reminder that transmission, that's where we receive

00:49:05.230 --> 00:49:08.860
the cost recovery through the state system is on the

00:49:08.860 --> 00:49:10.000
transmission.

00:49:10.000 --> 00:49:16.480
And then you can see what's planned in terms of debt sales

00:49:16.480 --> 00:49:23.000
over that period of time down on this bottom line here.

00:49:23.000 --> 00:49:26.800
And that's where I kind of emphasize, you know, the $100

00:49:26.800 --> 00:49:30.469
million program, some of that is carryover where it just

00:49:30.469 --> 00:49:33.000
takes time to complete those projects.

00:49:33.000 --> 00:49:36.380
So we kind of have to conservatively budget that to make

00:49:36.380 --> 00:49:38.000
sure we're re-budgeting.

00:49:38.000 --> 00:49:44.070
But if you look at the planned debt issuance of 208 million

00:49:44.070 --> 00:49:51.329
versus the 368 million, that gives you a little bit of idea

00:49:51.329 --> 00:49:54.000
of that carryover.

00:49:54.000 --> 00:50:00.980
And this is kind of simply a schematic of the capital

00:50:00.980 --> 00:50:09.300
program, the substations and transmissions versus some of

00:50:09.300 --> 00:50:16.000
the other written out details of the program.

00:50:16.000 --> 00:50:21.230
Just a couple of breakdowns, and I know Phil covered this

00:50:21.230 --> 00:50:25.960
before in terms of electric meters by category being

00:50:25.960 --> 00:50:29.000
strongly dominated by residential.

00:50:29.000 --> 00:50:33.250
But then you look at the usage, kind of what strikes you

00:50:33.250 --> 00:50:37.670
the most is the green area where you see here it's just a

00:50:37.670 --> 00:50:39.000
quarter of 1%.

00:50:39.000 --> 00:50:48.000
But you can see the usage is almost 40%.

00:50:48.000 --> 00:50:51.000
I'll start getting into the details of the budget numbers.

00:50:51.000 --> 00:50:56.230
What's proposed for the upcoming fiscal year is a 1%

00:50:56.230 --> 00:51:01.409
decrease in rates, base rates to stay the same, a very

00:51:01.409 --> 00:51:06.000
small adjustment to the transmission cost recovery factor.

00:51:06.000 --> 00:51:09.980
This is really what the city pays to the other communities

00:51:09.980 --> 00:51:14.000
around the state for part of the distribution system.

00:51:14.000 --> 00:51:17.469
If you remember a couple of years ago, that part of the

00:51:17.469 --> 00:51:20.000
rate was broken out along with ECA.

00:51:20.000 --> 00:51:24.000
So you really have the base rate ECA and TCRF.

00:51:24.000 --> 00:51:27.909
It's scheduled to go up a little bit in terms of what Dent

00:51:27.909 --> 00:51:29.000
on will pay.

00:51:29.000 --> 00:51:33.590
So we wanted to make that adjustment just to keep that rate

00:51:33.590 --> 00:51:36.000
matching with what we pay.

00:51:36.000 --> 00:51:40.710
But the ECA, we're proposing for the upcoming budget year

00:51:40.710 --> 00:51:43.000
to decrease that by 1%.

00:51:43.000 --> 00:51:47.210
Also want to highlight there may be additional ECA

00:51:47.210 --> 00:51:52.099
reduction possible in the fall, kind of at the end of the

00:51:52.099 --> 00:51:57.000
year when the Denton Energy Center comes online.

00:51:57.000 --> 00:52:02.230
One of the big expenses that's built into this budget under

00:52:02.230 --> 00:52:06.000
the city charter DME is required to do kind of a complete

00:52:06.000 --> 00:52:10.000
management study on a 10 year rotation.

00:52:10.000 --> 00:52:14.000
And that 10 year period is coming up in 17, 18.

00:52:14.000 --> 00:52:18.909
So that 500,000 is built into the budget as an estimate of

00:52:18.909 --> 00:52:20.000
that study.

00:52:20.000 --> 00:52:25.000
And that's done by an external firm.

00:52:25.000 --> 00:52:30.400
This just kind of goes over some of the definitions, base

00:52:30.400 --> 00:52:36.000
rate, the transmission cost recovery factor, the ECA.

00:52:36.000 --> 00:52:39.000
I'll go over the TMPA coverage return.

00:52:39.000 --> 00:52:46.039
This is really where TMPA returns the access to their

00:52:46.039 --> 00:52:48.000
customers.

00:52:48.000 --> 00:52:50.000
That will be changing.

00:52:50.000 --> 00:52:53.500
I'll go over that when I show you that slide and the

00:52:53.500 --> 00:52:56.000
transmission cost of service.

00:52:56.000 --> 00:53:02.480
That's really the revenue that the city receives as part of

00:53:02.480 --> 00:53:07.000
that statewide transmission system.

00:53:07.000 --> 00:53:12.420
So in terms of revenues that's proposed for 17, 18, you see

00:53:12.420 --> 00:53:15.000
a slight decrease in base rate revenues.

00:53:15.000 --> 00:53:19.000
That's really just based on the projections of usage.

00:53:19.000 --> 00:53:22.750
The projections in the upcoming year are down a little bit

00:53:22.750 --> 00:53:25.000
from this year's projections.

00:53:25.000 --> 00:53:31.630
You can see the ECA revenues projected to be down a little

00:53:31.630 --> 00:53:37.000
bit because of that reduction in the ECA rate.

00:53:37.000 --> 00:53:41.320
And the coverage return, I mentioned, you can see in prior

00:53:41.320 --> 00:53:44.000
years, it was about 7 to 8 million.

00:53:44.000 --> 00:53:49.949
Because this 17, 18 is the last year of that debt for TMPA

00:53:49.949 --> 00:53:55.880
and the operation of that facility, the coverage return

00:53:55.880 --> 00:53:59.000
drops significantly.

00:53:59.000 --> 00:54:03.320
And then you can see, I mentioned the revenue that comes in

00:54:03.320 --> 00:54:05.000
to the city T-cost.

00:54:05.000 --> 00:54:14.449
You can see the jump in 16, 17 and the proposed jump in 17,

00:54:14.449 --> 00:54:16.000
18.

00:54:16.000 --> 00:54:20.460
In terms of expenditures, purchase power and fuel,

00:54:20.460 --> 00:54:24.000
transmission and personnel services.

00:54:24.000 --> 00:54:27.780
And I did want to mention we've put a closed session item

00:54:27.780 --> 00:54:31.969
if there's some questions specifically related to purchase

00:54:31.969 --> 00:54:35.000
power and fuel costs within the budget.

00:54:35.000 --> 00:54:39.210
There's a closed session if the committee has some

00:54:39.210 --> 00:54:41.000
questions on that.

00:54:41.000 --> 00:54:46.000
Operations and maintenance, the ROI, return on investment

00:54:46.000 --> 00:54:50.780
and franchise fees that are paid to the city's general fund

00:54:50.780 --> 00:54:51.000
,

00:54:51.000 --> 00:54:56.230
debt service, the inner fund transfers, mainly the cost of

00:54:56.230 --> 00:55:00.739
service from the general fund and from the technology

00:55:00.739 --> 00:55:02.000
services fund.

00:55:02.000 --> 00:55:07.230
And fixed assets is really a definition under accounting

00:55:07.230 --> 00:55:08.000
rules.

00:55:08.000 --> 00:55:14.000
So here's the proposed budget for 17, 18.

00:55:14.000 --> 00:55:22.000
You can see a reduction in the purchase power and fuel.

00:55:22.000 --> 00:55:27.719
And let me state this highlighted at the bottom, this does

00:55:27.719 --> 00:55:30.000
not assume any sale of TMPA.

00:55:30.000 --> 00:55:34.000
So it could be lower than that.

00:55:34.000 --> 00:55:39.639
And the energy center, if it comes online a little bit

00:55:39.639 --> 00:55:44.679
earlier than the end of the fiscal year, could also result

00:55:44.679 --> 00:55:46.000
in a little bit lower than that.

00:55:46.000 --> 00:55:50.519
So I think this is kind of a conservative assumption in

00:55:50.519 --> 00:55:52.000
terms of that.

00:55:52.000 --> 00:55:57.000
Personnel services are to stay about level.

00:55:57.000 --> 00:56:01.519
Operation and maintenance goes up mainly because of the

00:56:01.519 --> 00:56:03.000
energy center.

00:56:03.000 --> 00:56:07.000
The ROI and franchise fees stays relatively level.

00:56:07.000 --> 00:56:11.000
Debt service because of increased debt issuance.

00:56:11.000 --> 00:56:16.000
And inner fund transfers stay relatively level.

00:56:16.000 --> 00:56:21.000
Any questions on expenditures before I sneak on?

00:56:21.000 --> 00:56:25.000
This is the five-year forecast.

00:56:25.000 --> 00:56:27.000
So let me highlight a few things.

00:56:27.000 --> 00:56:30.809
You can see here we do have a planned use of reserves of

00:56:30.809 --> 00:56:33.000
about 7.5 million.

00:56:33.000 --> 00:56:38.480
As we've done in the past, we've built up funds to be able

00:56:38.480 --> 00:56:41.000
to pay down TMPA debt.

00:56:41.000 --> 00:56:46.239
So this is really kind of the last planned use of reserves

00:56:46.239 --> 00:56:49.000
relating to the TMPA debt.

00:56:49.000 --> 00:56:53.000
And I've gone over the other revenues and expenditures.

00:56:53.000 --> 00:56:58.000
And you can see projecting a 1% decrease.

00:56:58.000 --> 00:57:03.929
In terms of future years, we're projecting decreases at

00:57:03.929 --> 00:57:07.000
about 2% for the future years.

00:57:07.000 --> 00:57:12.000
I do want to highlight one area or a couple areas.

00:57:12.000 --> 00:57:17.389
You can see purchase power and fuel beginning in 2019 falls

00:57:17.389 --> 00:57:19.000
significantly.

00:57:19.000 --> 00:57:25.000
A lot of that is due to not paying TMPA debt or paying TMPA

00:57:25.000 --> 00:57:25.000
.

00:57:25.000 --> 00:57:31.000
And also kind of a transference with the energy center.

00:57:31.000 --> 00:57:35.650
The cost related to the energy center are kind of internal

00:57:35.650 --> 00:57:39.000
personnel cost and debt service cost

00:57:39.000 --> 00:57:43.000
versus actually buying power out on the marketplace.

00:57:43.000 --> 00:57:49.130
So you can see that while the purchase power and fuel goes

00:57:49.130 --> 00:57:53.000
down, you can see debt service going up.

00:57:53.000 --> 00:57:56.000
Revenues stay relatively steady.

00:57:56.000 --> 00:58:00.210
Kind of the growth and customer base is offset by that

00:58:00.210 --> 00:58:02.000
reduction in rates.

00:58:02.000 --> 00:58:07.909
I do want to highlight one other kind of abnormality in

00:58:07.909 --> 00:58:10.000
2019.

00:58:10.000 --> 00:58:19.159
If you look at the debt service, you can see it increases,

00:58:19.159 --> 00:58:23.000
but then you have a much larger jump in 2020.

00:58:23.000 --> 00:58:26.480
The way the debt service was structured for the energy

00:58:26.480 --> 00:58:30.000
center is we begin paying interest in 2019,

00:58:30.000 --> 00:58:36.590
but principal and interest doesn't fully kick in until 2020

00:58:36.590 --> 00:58:37.000
.

00:58:37.000 --> 00:58:43.929
And you can see a line below debt service, debt defeasance

00:58:43.929 --> 00:58:47.000
of 28.6 million.

00:58:47.000 --> 00:58:50.380
Because of the ramping up of debt service, but our

00:58:50.380 --> 00:58:54.000
reductions in purchase power and fuel,

00:58:54.000 --> 00:58:57.380
we would have excess revenues that year, revenues to

00:58:57.380 --> 00:59:00.000
expenditures of over 30 million.

00:59:00.000 --> 00:59:02.949
And I think Phil had discussed when he gave the

00:59:02.949 --> 00:59:07.000
presentation in March that that's kind of a policy decision

00:59:07.000 --> 00:59:07.000
.

00:59:07.000 --> 00:59:11.530
Would we like to in that one year pay off some debt or cash

00:59:11.530 --> 00:59:13.000
fund capital?

00:59:13.000 --> 00:59:16.739
What I've shown here is just one option that could be

00:59:16.739 --> 00:59:18.000
considered.

00:59:18.000 --> 00:59:21.380
I think it'll be a policy decision when that budget comes

00:59:21.380 --> 00:59:22.000
around.

00:59:22.000 --> 00:59:25.500
But this is really taking that excess and defeasing the

00:59:25.500 --> 00:59:29.000
outstanding debt that was issued for the scrubber.

00:59:29.000 --> 00:59:34.000
It was some refunding debt in 2010 that was issued.

00:59:34.000 --> 00:59:40.000
That debt becomes currently callable in February of 2019.

00:59:40.000 --> 00:59:44.989
So this 28.6 million, if we used it for that, it would

00:59:44.989 --> 00:59:47.000
eliminate that debt.

00:59:47.000 --> 00:59:51.710
And that saves us for about six years, about 5.3 million in

00:59:51.710 --> 00:59:53.000
debt service.

00:59:53.000 --> 00:59:56.849
So what's reflected here is the defeasance of debt and the

00:59:56.849 --> 00:59:59.000
impact on our debt service.

00:59:59.000 --> 01:00:04.000
It's about 5.3 million lower in each of those years.

01:00:04.000 --> 01:00:08.900
And that's one of the reasons we would be able to have

01:00:08.900 --> 01:00:11.000
those 2% decreases.

01:00:11.000 --> 01:00:20.000
Chuck, I'm looking at the debt coverage ratio in '18.

01:00:20.000 --> 01:00:24.639
At 119, is there a -- I know we've talked about benchmarks

01:00:24.639 --> 01:00:27.000
on debt coverage before.

01:00:27.000 --> 01:00:31.000
Is that -- I've always assumed it was one and a quarter.

01:00:31.000 --> 01:00:35.489
Well, our prior revenue bond coverage requirement in order

01:00:35.489 --> 01:00:38.000
to issue additional debt was one and a quarter.

01:00:38.000 --> 01:00:41.480
But the new one we issued revenue bonds for the energy

01:00:41.480 --> 01:00:47.300
center is 1.0 times coverage in order to issue additional

01:00:47.300 --> 01:00:48.000
debt.

01:00:48.000 --> 01:00:52.000
But you can see it kind of jumps back up the next year.

01:00:52.000 --> 01:00:56.570
Really, you know, that's somewhat a reflection of drawdown

01:00:56.570 --> 01:00:59.000
in reserves to pay TMBA debt.

01:00:59.000 --> 01:01:02.829
We don't anticipate -- what we anticipate issuing is

01:01:02.829 --> 01:01:05.000
certificates of obligation.

01:01:05.000 --> 01:01:09.000
So we don't anticipate issuing revenue bonds in that.

01:01:09.000 --> 01:01:13.000
We could still do that under that requirement.

01:01:13.000 --> 01:01:17.210
Kind of the industry standard is one and a quarter or

01:01:17.210 --> 01:01:18.000
higher.

01:01:18.000 --> 01:01:22.369
A lot of utilities, you're looking at the, you know, 1.5 to

01:01:22.369 --> 01:01:24.000
2 times coverage.

01:01:24.000 --> 01:01:28.000
But you can see the coverage jumps back up.

01:01:28.000 --> 01:01:31.750
And this coverage takes into account the certificates of

01:01:31.750 --> 01:01:35.369
obligation issued for the utility as well as the revenue

01:01:35.369 --> 01:01:36.000
bonds.

01:01:36.000 --> 01:01:39.000
So it takes into account all of that.

01:01:39.000 --> 01:01:41.969
Technically speaking, when you issue the revenue bonds, it

01:01:41.969 --> 01:01:44.000
's just coverage on the revenue bonds.

01:01:44.000 --> 01:01:49.739
But this really calculates coverage on all the outstanding

01:01:49.739 --> 01:01:52.000
debt related to DME.

01:01:52.000 --> 01:01:56.230
So in '19, if we don't defuse the debt, which I think we

01:01:56.230 --> 01:02:00.670
should, that would be a different number on the debt

01:02:00.670 --> 01:02:03.000
service coverage ratio.

01:02:03.000 --> 01:02:06.000
It would be lower.

01:02:06.000 --> 01:02:09.000
It's jumping up because we're defusing debt.

01:02:09.000 --> 01:02:12.480
In '19, if we did not defuse, you're correct, we would have

01:02:12.480 --> 01:02:14.000
more outstanding debt.

01:02:14.000 --> 01:02:18.420
Now, you could -- policy decision, you could use that to

01:02:18.420 --> 01:02:22.000
cash fund capital instead of issuing debt.

01:02:22.000 --> 01:02:25.000
So that would have an impact on it too.

01:02:25.000 --> 01:02:28.380
Probably the defusance has a stronger impact because it's

01:02:28.380 --> 01:02:29.000
shorter.

01:02:29.000 --> 01:02:32.000
It's just got about six years outstanding.

01:02:32.000 --> 01:02:39.000
So it's shorter debt. So it would have more of an impact.

01:02:39.000 --> 01:02:42.539
>> Yeah, I think that one of the main reasons it jumps in '

01:02:42.539 --> 01:02:47.750
19 is because of the reduction in purchase power along with

01:02:47.750 --> 01:02:52.000
interest only on the DEC debt.

01:02:52.000 --> 01:02:53.000
>> Yeah, it's a lot of things.

01:02:53.000 --> 01:02:58.000
>> Yeah.

01:02:58.000 --> 01:03:02.000
Any other questions on this slide?

01:03:02.000 --> 01:03:04.000
Okay.

01:03:04.000 --> 01:03:08.420
This is just a comparison in terms of where our rates are

01:03:08.420 --> 01:03:11.000
at currently versus others.

01:03:11.000 --> 01:03:13.000
It's color coded.

01:03:13.000 --> 01:03:19.150
So the municipalities are kind of in the red here to

01:03:19.150 --> 01:03:24.000
compare some other municipalities.

01:03:24.000 --> 01:03:27.750
DME is in the green and the commonly known electric

01:03:27.750 --> 01:03:30.000
providers are in the purple.

01:03:30.000 --> 01:03:35.230
But you can see where we're at and you can see TXU is in

01:03:35.230 --> 01:03:39.000
the yellow, which is close up to us.

01:03:39.000 --> 01:03:47.000
And Cosserve is in this light color.

01:03:47.000 --> 01:03:49.000
Right here.

01:03:49.000 --> 01:03:56.000
Here's TXU. Here's us.

01:03:56.000 --> 01:03:58.000
I was trying to find the other.

01:03:58.000 --> 01:04:04.000
There's Georgetown and some of the others.

01:04:04.000 --> 01:04:06.000
Just a comparison.

01:04:06.000 --> 01:04:14.119
Again, we try to show this comparison for all the utilities

01:04:14.119 --> 01:04:21.889
, but as we begin to lower rates, we expect to move down on

01:04:21.889 --> 01:04:24.000
this curve.

01:04:24.000 --> 01:04:25.000
>> Check on that chart.

01:04:25.000 --> 01:04:31.000
It would be interesting to see the other TMPA.

01:04:31.000 --> 01:04:32.000
>> Folks.

01:04:32.000 --> 01:04:36.679
>> I don't know if you can see on there, but it would be --

01:04:36.679 --> 01:04:40.000
I hate to add one more color to this.

01:04:40.000 --> 01:04:44.710
But if we just saw what -- compared to TPA, because we've

01:04:44.710 --> 01:04:49.000
always looked at TMPA debt, retirement as one of the things

01:04:49.000 --> 01:04:53.000
that is an influence on our rates.

01:04:53.000 --> 01:04:56.000
I just think it would be interesting to see that.

01:04:56.000 --> 01:04:59.000
>> We can maybe do that and cut out a few of the others.

01:04:59.000 --> 01:05:07.789
A lot of these are on the 12-month rates on the open market

01:05:07.789 --> 01:05:15.000
, but a lot of them are very small, so to speak.

01:05:15.000 --> 01:05:17.000
With that, I'll open up to any more questions.

01:05:17.000 --> 01:05:21.210
We've got a lot of additional backup in terms of all the

01:05:21.210 --> 01:05:25.000
numbers and line items are within the packet.

01:05:25.000 --> 01:05:29.000
And just so the board is aware, there's no action.

01:05:29.000 --> 01:05:35.730
We'll come back next meeting, which is the 26th, for actual

01:05:35.730 --> 01:05:41.389
consideration of budget recommendations for all four

01:05:41.389 --> 01:05:43.000
utilities.

01:05:43.000 --> 01:05:49.000
>> Okay.

01:05:49.000 --> 01:05:51.000
Questions?

01:05:51.000 --> 01:05:52.000
No?

01:05:52.000 --> 01:05:56.000
>> I'll get going.

01:05:56.000 --> 01:05:57.000
>> I have a question.

01:05:57.000 --> 01:05:58.000
I'm just trying to find --

01:05:58.000 --> 01:05:59.000
>> Okay.

01:05:59.000 --> 01:06:00.000
Sorry.

01:06:00.000 --> 01:06:01.000
>> It's okay.

01:06:01.000 --> 01:06:03.000
I won't find it.

01:06:03.000 --> 01:06:06.750
The engineering positions that you were decreasing, is that

01:06:06.750 --> 01:06:09.570
-- again, because we couldn't recruit people, so we're

01:06:09.570 --> 01:06:12.000
going out to consulting?

01:06:12.000 --> 01:06:16.989
I mean, is it -- I know the engineering industry is pretty

01:06:16.989 --> 01:06:20.000
difficult to recruit right now.

01:06:20.000 --> 01:06:23.000
>> It's just difficult to keep up with the market.

01:06:23.000 --> 01:06:25.880
We've made adjustments in our salary plans to where we

01:06:25.880 --> 01:06:29.059
could recruit people and get people, but then we had a

01:06:29.059 --> 01:06:31.000
problem retaining them.

01:06:31.000 --> 01:06:35.989
And so we have retained some, and we'll still recruit some

01:06:35.989 --> 01:06:40.480
openings, but we're going to try -- engineering consulting

01:06:40.480 --> 01:06:42.690
firms seem to have a little more flexibility of what they

01:06:42.690 --> 01:06:46.179
can do for people to get them, and we want to try that

01:06:46.179 --> 01:06:47.000
route also.

01:06:47.000 --> 01:06:49.469
>> Do you think we're paying a premium by going to a

01:06:49.469 --> 01:06:52.230
consulting firm, or do you think really it's about the same

01:06:52.230 --> 01:06:54.000
when you consider benefits?

01:06:54.000 --> 01:06:56.619
>> Well, when you consider the benefits and you consider

01:06:56.619 --> 01:06:59.230
the management time it's requiring to try to go capture

01:06:59.230 --> 01:07:02.000
these people and get them and train them, then we'll see.

01:07:02.000 --> 01:07:04.559
But I mean, I guess we want to try this, and then if we see

01:07:04.559 --> 01:07:07.320
that it is more economical, see if we hire these people

01:07:07.320 --> 01:07:09.360
ourselves, then we'll come back and make a business case

01:07:09.360 --> 01:07:10.000
for doing that.

01:07:10.000 --> 01:07:12.840
But at least try another method here because we're

01:07:12.840 --> 01:07:15.969
certainly not getting the positions filled on a long-term

01:07:15.969 --> 01:07:17.000
basis now.

01:07:17.000 --> 01:07:18.000
>> Yeah.

01:07:18.000 --> 01:07:19.000
Okay.

01:07:19.000 --> 01:07:22.000
Thank you.

01:07:22.000 --> 01:07:25.000
>> Okay.

01:07:25.000 --> 01:07:31.000
Okay, Chuck, item C.

01:07:31.000 --> 01:07:33.000
>> Time for the water budget.

01:07:33.000 --> 01:07:38.000
>> Water budget.

01:07:38.000 --> 01:07:40.000
Again, I'm not going to hit on everything.

01:07:40.000 --> 01:07:42.000
I'll try to hit the highlights.

01:07:42.000 --> 01:07:46.000
Feel free to stop me at any point.

01:07:46.000 --> 01:07:47.000
Accomplishments.

01:07:47.000 --> 01:07:50.780
And actually this is one of the reasons that the water

01:07:50.780 --> 01:07:55.000
budget's coming to you now instead of a little bit earlier

01:07:55.000 --> 01:07:58.690
because of the condition assessment of that 30-inch raw

01:07:58.690 --> 01:08:01.730
pipeline that goes from Lake Louisville to the water

01:08:01.730 --> 01:08:03.000
treatment plant.

01:08:03.000 --> 01:08:05.000
That's been completed.

01:08:05.000 --> 01:08:10.000
The final report's due in June, and we have what we think

01:08:10.000 --> 01:08:15.099
is a pretty good estimate of the cost of repairs along that

01:08:15.099 --> 01:08:16.000
line.

01:08:16.000 --> 01:08:20.000
And you'll see that in the capital program.

01:08:20.000 --> 01:08:25.229
Tested the water treatment plant after the improvements and

01:08:25.229 --> 01:08:29.960
rehabilitated the ozone generators at the Lake Ray Roberts

01:08:29.960 --> 01:08:31.000
plant.

01:08:31.000 --> 01:08:36.550
In terms of goals for the upcoming year, completing design

01:08:36.550 --> 01:08:41.359
for phase two plant upgrade, trying to improve the zebra

01:08:41.359 --> 01:08:46.180
muscle control as we learn more as to what's effective in

01:08:46.180 --> 01:08:47.000
that.

01:08:47.000 --> 01:08:52.229
Communication system, skater protocol, the southwest

01:08:52.229 --> 01:08:57.270
booster pump station line, and complete water line repl

01:08:57.270 --> 01:09:01.000
acements as we work on Hickory Street.

01:09:01.000 --> 01:09:06.949
Kind of the next section up of Hickory Street to stay ahead

01:09:06.949 --> 01:09:10.000
of that reconstruction.

01:09:10.000 --> 01:09:12.000
Performance measures.

01:09:12.000 --> 01:09:14.770
You can see the current measures that are in place

01:09:14.770 --> 01:09:17.000
proposing to add a couple new ones.

01:09:17.000 --> 01:09:22.869
Main breaks per 100 miles of lines and unbilled water

01:09:22.869 --> 01:09:24.000
volume.

01:09:24.000 --> 01:09:27.750
What's our kind of water loss through the system from the

01:09:27.750 --> 01:09:31.000
plants all the way until we build water volume.

01:09:31.000 --> 01:09:35.210
You know, part of that is the kind of the meter replacement

01:09:35.210 --> 01:09:36.000
program.

01:09:36.000 --> 01:09:39.880
And as we continue to do that, how effective is the meter

01:09:39.880 --> 01:09:43.000
replacement program in capturing that.

01:09:43.000 --> 01:09:49.090
In terms of the cost containment strategies, eliminated

01:09:49.090 --> 01:09:55.000
some FTEs for savings of a little under 50,000.

01:09:55.000 --> 01:09:58.890
Again, like with the other funds, we budgeted salary

01:09:58.890 --> 01:10:01.000
savings due to vacancies.

01:10:01.000 --> 01:10:05.909
They went through the same process in terms of looking at

01:10:05.909 --> 01:10:11.069
all of their individual line items from fiscal year '17 to

01:10:11.069 --> 01:10:12.000
'18.

01:10:12.000 --> 01:10:15.000
Reduced about 615,000.

01:10:15.000 --> 01:10:19.000
You can see where those are areas.

01:10:19.000 --> 01:10:23.210
Part of that I think is just kind of matching what we're

01:10:23.210 --> 01:10:27.670
projecting in revenues in terms of more of an average year

01:10:27.670 --> 01:10:31.000
versus an average year of expenditures.

01:10:31.000 --> 01:10:34.760
You can imagine that the division managers are always

01:10:34.760 --> 01:10:38.489
concerned about having enough capacity in their budget when

01:10:38.489 --> 01:10:41.000
they have a real dry year.

01:10:41.000 --> 01:10:44.010
But what we've tried to talk to them about is if we have a

01:10:44.010 --> 01:10:47.279
real dry year, our revenues are going to be up, we'll come

01:10:47.279 --> 01:10:52.689
back and amend the budget to make sure that you have the

01:10:52.689 --> 01:10:55.000
capacity for that.

01:10:55.000 --> 01:10:59.310
We've tried to do the same type of balancing in terms of

01:10:59.310 --> 01:11:03.800
issuing debt when we need to for the CIP projects and also

01:11:03.800 --> 01:11:08.590
leveling the revenue funded capital over a five year period

01:11:08.590 --> 01:11:12.000
versus some of the peaks and valleys.

01:11:12.000 --> 01:11:18.890
And all of these impacts together equate to about 2.5% in

01:11:18.890 --> 01:11:20.000
rates.

01:11:20.000 --> 01:11:24.479
Process improvements, I won't go over the process that we

01:11:24.479 --> 01:11:29.000
did again with electric, water, and utilities customer

01:11:29.000 --> 01:11:30.000
service.

01:11:30.000 --> 01:11:33.000
Some of their future process improvements.

01:11:33.000 --> 01:11:37.000
Capital project coordination.

01:11:37.000 --> 01:11:41.000
The system distribution master plan.

01:11:41.000 --> 01:11:45.989
Look at their work order system and reliability and just

01:11:45.989 --> 01:11:51.000
continue to improve their asset management program.

01:11:51.000 --> 01:11:57.000
Kind of some of the future risks in terms of water.

01:11:57.000 --> 01:11:59.000
The raw water transmission line cost.

01:11:59.000 --> 01:12:02.430
We talked about the one we've done an evaluation on after

01:12:02.430 --> 01:12:05.000
those rehabilitations are complete.

01:12:05.000 --> 01:12:08.409
It'll probably be time to do an evaluation on the other

01:12:08.409 --> 01:12:11.000
parallel line from Lake Louisville.

01:12:11.000 --> 01:12:17.000
The dam repair due to the flooding a couple years back.

01:12:17.000 --> 01:12:20.000
We're working with the Army Corps of Engineers.

01:12:20.000 --> 01:12:24.260
We've budgeted what they've given us in terms of our

01:12:24.260 --> 01:12:29.000
proportion of the repairs on their current estimate.

01:12:29.000 --> 01:12:33.539
But always when they get into a project like that, there's

01:12:33.539 --> 01:12:37.000
some risk that those numbers may change.

01:12:37.000 --> 01:12:40.899
Other transmission line replacement funding as we go

01:12:40.899 --> 01:12:44.000
through the asset management program.

01:12:44.000 --> 01:12:48.000
The age and condition of the Lake Louisville pump station.

01:12:48.000 --> 01:12:52.619
Like the electric utility, some of the water utility major

01:12:52.619 --> 01:12:55.000
assets are starting to age.

01:12:55.000 --> 01:12:58.000
And then just a declining per capita water usage.

01:12:58.000 --> 01:13:01.380
I know that's been a discussion within this budget in terms

01:13:01.380 --> 01:13:03.000
of revenue projections.

01:13:03.000 --> 01:13:06.949
They've really started to adjust down their projections of

01:13:06.949 --> 01:13:11.000
per capita water usage beginning in about 2020.

01:13:11.000 --> 01:13:16.229
So this budget does take into account that we think that

01:13:16.229 --> 01:13:21.000
declining per capita water usage is permanent.

01:13:21.000 --> 01:13:27.000
So we're starting to build that in beginning in 2020.

01:13:27.000 --> 01:13:33.000
The assumptions, trying to maintain their coverage.

01:13:33.000 --> 01:13:38.000
Annual revenue funded capital is based on depreciation.

01:13:38.000 --> 01:13:43.310
So we've leveled it out, but we're still funding it at 100%

01:13:43.310 --> 01:13:48.000
of replacement and 25% of plant infrastructure.

01:13:48.000 --> 01:13:51.460
So still fully funding it, just kind of a little bit

01:13:51.460 --> 01:13:53.000
different method.

01:13:53.000 --> 01:13:57.000
Reserves, maintaining them within the reserve balance.

01:13:57.000 --> 01:14:04.000
And kind of looking at the long term financial planning.

01:14:04.000 --> 01:14:07.979
I'll pull up the numbers here so you can see what's being

01:14:07.979 --> 01:14:09.000
proposed.

01:14:09.000 --> 01:14:14.000
Again, there's a backup in your packet in terms of detail.

01:14:14.000 --> 01:14:22.689
You can see for 2018 revenues and expenses at about 47.9

01:14:22.689 --> 01:14:24.000
million.

01:14:24.000 --> 01:14:29.760
You can see that's a little bit below the total expenses in

01:14:29.760 --> 01:14:31.000
'17.

01:14:31.000 --> 01:14:36.949
But you can see we had a drawdown of about 3.3 million in

01:14:36.949 --> 01:14:39.000
use of reserves.

01:14:39.000 --> 01:14:42.000
And that went to revenue funded capital.

01:14:42.000 --> 01:14:52.000
You can see the revenue funded capital in '17 at 12.4.

01:14:52.000 --> 01:14:53.000
Right here.

01:14:53.000 --> 01:14:56.380
So when we talk about leveling out the revenue funded

01:14:56.380 --> 01:14:59.000
capital, you can see leveling it out.

01:14:59.000 --> 01:15:03.449
This jump in revenue funded capital was really due to that

01:15:03.449 --> 01:15:08.000
one time refunding we did of revenue bonds, which released.

01:15:08.000 --> 01:15:13.000
You can see about 7.5 million in one time money.

01:15:13.000 --> 01:15:16.000
So we use that for revenue funded capital.

01:15:16.000 --> 01:15:19.170
And part of this leveling out is we've built up some

01:15:19.170 --> 01:15:22.000
balances in that revenue funded capital.

01:15:22.000 --> 01:15:26.630
So that allows us to level that out and still have funding

01:15:26.630 --> 01:15:28.000
as we need it.

01:15:28.000 --> 01:15:33.449
In terms of projected rate increases, this is kind of the

01:15:33.449 --> 01:15:37.000
zero rate increase forecast, the base forecast.

01:15:37.000 --> 01:15:42.689
So you can see as we go out in the outer years, you start

01:15:42.689 --> 01:15:48.000
seeing drawdowns or drawdowns in cash balance.

01:15:48.000 --> 01:15:52.600
And you can see that last year in yellow, we kind of fall

01:15:52.600 --> 01:15:57.000
below the target of 120 to 180 days.

01:15:57.000 --> 01:16:02.930
So due to that, the recommended increase, again, with

01:16:02.930 --> 01:16:09.000
option one, kind of the base reserves would be withdrawn

01:16:09.000 --> 01:16:10.000
about 5 million.

01:16:10.000 --> 01:16:13.000
Again, this is the five year projections.

01:16:13.000 --> 01:16:16.170
Once you get out to those outer years, these are simply

01:16:16.170 --> 01:16:17.000
projections.

01:16:17.000 --> 01:16:20.829
What the committee will be recommending is just the one

01:16:20.829 --> 01:16:22.000
year budget.

01:16:22.000 --> 01:16:28.000
But we want to show the impacts in the future.

01:16:28.000 --> 01:16:31.510
So what we've come up with is an option two, a five year

01:16:31.510 --> 01:16:42.000
forecast that shows some 2% rate increases in future years.

01:16:42.000 --> 01:16:47.840
And this is the proposed there are excuse me, there's 2%

01:16:47.840 --> 01:16:51.000
rate increases in 2021 and 22.

01:16:51.000 --> 01:16:56.779
We still have a little bit of a drawdown projected on the

01:16:56.779 --> 01:16:59.000
working capital.

01:16:59.000 --> 01:17:03.899
But it's maintained within that 120 to 180 days by the

01:17:03.899 --> 01:17:05.000
third year.

01:17:05.000 --> 01:17:16.000
We're relatively level in 2022.

01:17:16.000 --> 01:17:19.380
And in terms of budget highlights, this just gives a little

01:17:19.380 --> 01:17:26.229
bit of breakdown in detail on the revenues, residential and

01:17:26.229 --> 01:17:30.000
commercial kind of by line item.

01:17:30.000 --> 01:17:34.539
That cost of service, that's really where the customer

01:17:34.539 --> 01:17:38.000
service is housed in the water utility.

01:17:38.000 --> 01:17:41.000
But their costs are allocated out to the other utilities.

01:17:41.000 --> 01:17:46.229
So that cost of service is transfer from the other

01:17:46.229 --> 01:17:52.000
utilities back to the water for the customer service.

01:17:52.000 --> 01:17:57.000
And you can see impact fee revenue utilization.

01:17:57.000 --> 01:18:01.670
And I mentioned in 1617, we do project some use of reserves

01:18:01.670 --> 01:18:05.000
, but again, from that one time refunding.

01:18:05.000 --> 01:18:13.000
And here is highlights or the summary in terms of expenses.

01:18:13.000 --> 01:18:17.510
You can see personnel services goes up slightly, but it's

01:18:17.510 --> 01:18:22.949
really a little bit below the budget for 1617 due to those

01:18:22.949 --> 01:18:25.000
minor FTE reductions.

01:18:25.000 --> 01:18:31.029
And again, we projected some salary savings in that line

01:18:31.029 --> 01:18:32.000
item.

01:18:32.000 --> 01:18:37.000
Most of the others stay relatively steady to the estimate.

01:18:37.000 --> 01:18:42.000
Our debt service increases based on the issuance this year.

01:18:42.000 --> 01:18:48.319
And the transfer to capital projects, that last line, that

01:18:48.319 --> 01:18:52.000
's that revenue funded capital.

01:18:52.000 --> 01:18:55.000
Here's the five year capital plan.

01:18:55.000 --> 01:18:57.000
And we've listed at the bottom.

01:18:57.000 --> 01:19:04.090
I mentioned that existing certificates of obligation and

01:19:04.090 --> 01:19:05.000
new.

01:19:05.000 --> 01:19:09.210
Again, we have to re-budget estimating any funds that aren

01:19:09.210 --> 01:19:12.000
't spent at the end of the fiscal year.

01:19:12.000 --> 01:19:17.699
And you can see that revenue is the use of revenue funded

01:19:17.699 --> 01:19:19.000
capital.

01:19:19.000 --> 01:19:22.850
And part of that are balances that are already in that

01:19:22.850 --> 01:19:25.000
revenue funded capital.

01:19:25.000 --> 01:19:29.000
In that fund, it's a separate capital project fund.

01:19:29.000 --> 01:19:33.899
I'll gladly call up any members of the water utility to

01:19:33.899 --> 01:19:38.000
answer questions on their capital program.

01:19:38.000 --> 01:19:42.989
So we're thinking the Lake Louisville dam repairs, 15

01:19:42.989 --> 01:19:44.000
million.

01:19:44.000 --> 01:19:46.000
That's an estimate.

01:19:46.000 --> 01:19:50.000
Our share, we're going to.

01:19:50.000 --> 01:19:51.000
I'm getting nods.

01:19:51.000 --> 01:19:53.000
Nods, okay.

01:19:53.000 --> 01:19:55.000
Okay, thank you.

01:19:55.000 --> 01:19:57.000
Nods got there before I did.

01:19:57.000 --> 01:19:58.000
Yeah.

01:19:58.000 --> 01:20:03.000
9% of 150 million.

01:20:03.000 --> 01:20:05.000
9% of 150?

01:20:05.000 --> 01:20:06.000
Is it?

01:20:06.000 --> 01:20:13.000
Okay.

01:20:13.000 --> 01:20:17.000
Any other questions?

01:20:17.000 --> 01:20:19.000
No?

01:20:19.000 --> 01:20:26.060
This is just kind of a depiction in terms of where some of

01:20:26.060 --> 01:20:28.000
those projects are at.

01:20:28.000 --> 01:20:34.000
And color coded by the years of the projects.

01:20:34.000 --> 01:20:38.340
I mentioned the improvements to the raw water transmission

01:20:38.340 --> 01:20:39.000
line.

01:20:39.000 --> 01:20:41.000
You see that down on the bottom.

01:20:41.000 --> 01:20:42.000
And red.

01:20:42.000 --> 01:20:46.210
And then you see a blue in 2022 where we're looking at the

01:20:46.210 --> 01:20:50.720
other kind of parallel line to look at that one a few years

01:20:50.720 --> 01:20:53.000
out and do those repairs.

01:20:53.000 --> 01:20:56.000
Can you go back to the previous?

01:20:56.000 --> 01:20:59.000
So which line is that then under?

01:20:59.000 --> 01:21:01.000
Is that the transmission line?

01:21:01.000 --> 01:21:04.000
The 12.2 million?

01:21:04.000 --> 01:21:05.000
Yes.

01:21:05.000 --> 01:21:06.000
Okay.

01:21:06.000 --> 01:21:09.000
And then again the 10.6 on the other.

01:21:09.000 --> 01:21:10.000
Okay.

01:21:10.000 --> 01:21:15.000
Thank you.

01:21:15.000 --> 01:21:19.359
And you can see on this one the debt issuance about 48.5

01:21:19.359 --> 01:21:20.000
million.

01:21:20.000 --> 01:21:25.000
Over that five year period.

01:21:25.000 --> 01:21:29.699
I mean I have to say as someone coming into the movement

01:21:29.699 --> 01:21:33.670
toward revenue funded capital when you look at their debt

01:21:33.670 --> 01:21:37.000
service going forward stays relatively level.

01:21:37.000 --> 01:21:40.899
And by doing that revenue funded capital it's really

01:21:40.899 --> 01:21:45.270
starting to have a long term impact on what's necessary for

01:21:45.270 --> 01:21:46.000
debt.

01:21:46.000 --> 01:21:49.380
And I think over the long term it's really good for the

01:21:49.380 --> 01:21:52.000
customers of Denton to be doing that.

01:21:52.000 --> 01:21:56.930
Over the shorter term sometimes it's a little painful but

01:21:56.930 --> 01:22:01.479
over the long term I think Denton's water rates will

01:22:01.479 --> 01:22:05.000
continue to become more competitive.

01:22:05.000 --> 01:22:10.000
And in terms of water rates here's where we compare.

01:22:10.000 --> 01:22:14.750
And again we usually show this now and then after all of

01:22:14.750 --> 01:22:19.850
the budgets are passed you can see here's the current rate

01:22:19.850 --> 01:22:24.000
at residential kind of right in the middle.

01:22:24.000 --> 01:22:29.739
A commercial for 50,000 gallons in the middle or slightly

01:22:29.739 --> 01:22:35.689
below the middle and about the same place in terms of 200,

01:22:35.689 --> 01:22:37.000
000 gallons.

01:22:37.000 --> 01:22:41.979
With that I'll open it up to any questions and allow staff

01:22:41.979 --> 01:22:46.000
to come up and answer any of the tough ones.

01:22:46.000 --> 01:22:50.210
You said earlier that water use was going down and that we

01:22:50.210 --> 01:22:54.000
're kind of okay it's just going to de-apply is that?

01:22:54.000 --> 01:22:59.460
The usage per capita I think a lot of it is in terms of

01:22:59.460 --> 01:23:05.689
just usage in residential or commercial when you think of

01:23:05.689 --> 01:23:11.000
any appliance that you change out how much more efficient

01:23:11.000 --> 01:23:12.000
use of water.

01:23:12.000 --> 01:23:17.619
You think of the shower heads anytime the washing machines

01:23:17.619 --> 01:23:20.000
those kind of things.

01:23:20.000 --> 01:23:23.000
I think it's really just kind of due to efficiencies.

01:23:23.000 --> 01:23:30.470
I mean there's local and national campaigns to also become

01:23:30.470 --> 01:23:35.000
more efficient in terms of that.

01:23:35.000 --> 01:23:38.380
You know I really think it's that I'll open it up to

01:23:38.380 --> 01:23:42.039
anybody else on a national basis but we've kind of become

01:23:42.039 --> 01:23:45.779
aware of that and within homes even when they build newer

01:23:45.779 --> 01:23:50.640
homes they tend to be more energy efficient and more water

01:23:50.640 --> 01:23:52.000
efficient.

01:23:52.000 --> 01:23:54.000
The better toilets.

01:23:54.000 --> 01:23:59.850
Oh yeah when you think of from 15 or 20 years ago those of

01:23:59.850 --> 01:24:05.260
us who remember those days it's just amazing how much usage

01:24:05.260 --> 01:24:09.560
I think yeah just in toilets it's probably a quarter of

01:24:09.560 --> 01:24:13.029
what they used to use in water 15 years ago so just those

01:24:13.029 --> 01:24:14.000
kind of things.

01:24:14.000 --> 01:24:17.210
Irrigation systems that can detect its raining so don't go

01:24:17.210 --> 01:24:18.000
on please.

01:24:18.000 --> 01:24:24.000
Yeah.

01:24:24.000 --> 01:24:26.000
Okay, any other questions.

01:24:26.000 --> 01:24:30.210
Again, all of the budgets. The other two items are just for

01:24:30.210 --> 01:24:34.109
questions I think I attached the presentations and the

01:24:34.109 --> 01:24:38.420
number for numbers for solid waste and wastewater, but

01:24:38.420 --> 01:24:42.659
those are just on for questions I'm not going to force you

01:24:42.659 --> 01:24:46.000
into another couple of presentations on that.

01:24:46.000 --> 01:24:49.850
But those are for questions and then we'll come back on the

01:24:49.850 --> 01:24:54.000
26th for recommendations on all of the four budgets.

01:24:54.000 --> 01:24:56.000
Okay.

01:24:56.000 --> 01:25:02.000
Any questions on wastewater solid waste.

01:25:02.000 --> 01:25:04.000
From previous.

01:25:04.000 --> 01:25:06.000
No. Okay.

01:25:06.000 --> 01:25:17.000
All right. Thank you, Chuck. Thank you. Appreciate it.

01:25:17.000 --> 01:25:19.000
Sure.

01:25:19.000 --> 01:25:24.000
Yeah.

01:25:24.000 --> 01:25:27.000
Okay.

01:25:27.000 --> 01:25:30.949
All right, that concludes the work session, and at this

01:25:30.949 --> 01:25:34.859
time we have, we're going to go ahead rather than go right

01:25:34.859 --> 01:25:36.000
into close.

01:25:36.000 --> 01:25:41.000
We're going to go to the consent agenda.

01:25:41.000 --> 01:25:43.000
The consent agenda.

01:25:43.000 --> 01:25:49.000
There are six items.

01:25:49.000 --> 01:25:53.210
Through F, is there any member who would like to excuse me,

01:25:53.210 --> 01:25:57.069
I'm sorry, item number see any to point that out has been

01:25:57.069 --> 01:26:00.689
pulled from the consent agenda by staff or it needs a

01:26:00.689 --> 01:26:02.000
little more.

01:26:02.000 --> 01:26:04.000
We'll see that next time.

01:26:04.000 --> 01:26:09.000
At a future meeting so actually on the consent agenda.

01:26:09.000 --> 01:26:11.000
I'm sorry.

01:26:11.000 --> 01:26:13.000
Okay, good, good.

01:26:13.000 --> 01:26:18.680
So item A, B, D, E, and F on the consent agenda, would

01:26:18.680 --> 01:26:24.689
anybody any member like to see any of those pulled for

01:26:24.689 --> 01:26:27.000
individual consideration.

01:26:27.000 --> 01:26:29.000
Item B.

01:26:29.000 --> 01:26:31.000
Okay.

01:26:31.000 --> 01:26:35.000
Anyone else.

01:26:35.000 --> 01:26:41.100
Hearing none. And is there a motion then to approve consent

01:26:41.100 --> 01:26:42.000
agenda.

01:26:42.000 --> 01:26:49.000
Items A, D, E, and F.

01:26:49.000 --> 01:26:52.000
Motion and a second. Any discussion.

01:26:52.000 --> 01:26:55.000
All in favor say aye.

01:26:55.000 --> 01:26:58.000
Any opposed same sign.

01:26:58.000 --> 01:27:00.000
Item B harbor.

01:27:00.000 --> 01:27:05.229
We just haven't seen anything like this and since we were

01:27:05.229 --> 01:27:07.000
in the.

01:27:07.000 --> 01:27:16.000
Okay.

01:27:16.000 --> 01:27:17.000
Morning.

01:27:17.000 --> 01:27:18.000
Morning.

01:27:18.000 --> 01:27:20.000
Even Cox director of solid waste services.

01:27:20.000 --> 01:27:22.470
This is under local agreements for a couple of different

01:27:22.470 --> 01:27:23.000
things.

01:27:23.000 --> 01:27:26.000
One is the ground mulch that you referenced, Ms. Russell.

01:27:26.000 --> 01:27:29.000
That ground mulch is used in our composting operation.

01:27:29.000 --> 01:27:32.750
It's my understanding that Irving has kind of a surplus

01:27:32.750 --> 01:27:34.000
supply of this.

01:27:34.000 --> 01:27:37.170
So at least from an initial stage we would be accepting

01:27:37.170 --> 01:27:40.000
some of their ground mulch on an as needed basis.

01:27:40.000 --> 01:27:43.000
If we have an excess of mulch, we would have the same.

01:27:43.000 --> 01:27:45.000
They would have the same opportunity from us.

01:27:45.000 --> 01:27:48.810
There's also some provisions in here for share sharing of

01:27:48.810 --> 01:27:52.000
emergency equipment, the use of landfill.

01:27:52.000 --> 01:27:55.560
If there's a natural disaster emergency, they can't get

01:27:55.560 --> 01:27:57.000
used to the use of their landfill.

01:27:57.000 --> 01:27:59.000
Likewise for us, we can also go to their side.

01:27:59.000 --> 01:28:04.000
So that's kind of the nuts and bolts of it. If you have

01:28:04.000 --> 01:28:04.000
specific questions, I'm happy to answer those.

01:28:04.000 --> 01:28:08.210
That's sort of a mutual aid, but I was just, you know, how

01:28:08.210 --> 01:28:09.000
did it come about?

01:28:09.000 --> 01:28:12.000
Because we've not seen this enough.

01:28:12.000 --> 01:28:14.859
I believe we have some mutual aid, at least some interlocal

01:28:14.859 --> 01:28:17.000
agreements with like Cockroos Cove.

01:28:17.000 --> 01:28:19.130
I'll check with staff to see if we have any additional if

01:28:19.130 --> 01:28:22.000
you want to know that this one is a little bit unique

01:28:22.000 --> 01:28:24.000
because it contains the ground mulch element.

01:28:24.000 --> 01:28:26.569
We have a closed session item where we may be able to exp

01:28:26.569 --> 01:28:28.000
ound on that a little bit.

01:28:28.000 --> 01:28:30.779
But there is a specific use for that in our composting

01:28:30.779 --> 01:28:34.000
operation and we have a real deficiency of it at our side.

01:28:34.000 --> 01:28:37.000
Thank you very much.

01:28:37.000 --> 01:28:40.000
Motion to approve. Is there a second?

01:28:40.000 --> 01:28:41.000
Second.

01:28:41.000 --> 01:28:44.000
Item B and a second from Susan.

01:28:44.000 --> 01:28:47.000
Any discussion?

01:28:47.000 --> 01:28:49.000
All in favor say aye.

01:28:49.000 --> 01:28:50.000
Aye.

01:28:50.000 --> 01:28:52.000
Any opposed? Same sign.

01:28:52.000 --> 01:28:55.000
Thank you. Item B is approved.

01:28:59.000 --> 01:29:03.000
Okay. So now I guess we can go back to closed session.

01:29:03.000 --> 01:29:06.000
Or you want to finish the whole thing?

01:29:06.000 --> 01:29:09.000
All right. Great.

01:29:09.000 --> 01:29:14.000
Item number two then is consider approval of public utility

01:29:14.000 --> 01:29:19.000
board meeting minutes of May 22nd, 2017.

01:29:19.000 --> 01:29:22.000
Those have been distributed in advance.

01:29:22.000 --> 01:29:25.000
Any comments, changes?

01:29:25.000 --> 01:29:31.000
Hearing none, those stand approved as submitted.

01:29:31.000 --> 01:29:38.000
And next we have item B which is the ACM updates.

01:29:38.000 --> 01:29:46.000
Okay. Mario, are you going to do this one?

01:29:46.000 --> 01:29:47.000
Well.

01:29:47.000 --> 01:29:50.000
Maybe you ought to. You've met everybody I'm sure.

01:29:50.000 --> 01:29:52.000
Yes, sir. We have.

01:29:52.000 --> 01:29:56.210
Actually I would like to lean over to my finance director,

01:29:56.210 --> 01:29:58.600
Chuck Springer, to be able to present the information about

01:29:58.600 --> 01:30:02.000
the financial report.

01:30:02.000 --> 01:30:05.000
I'm happy to answer any questions.

01:30:05.000 --> 01:30:10.000
The second quarter financial update based on the estimates.

01:30:10.000 --> 01:30:15.000
It's usually very close for the utilities to the budget.

01:30:15.000 --> 01:30:17.770
Kind of for the water and electric fund, one of the

01:30:17.770 --> 01:30:20.000
challenges is always there.

01:30:20.000 --> 01:30:23.189
The big sales time is summertime so we're just kind of

01:30:23.189 --> 01:30:26.000
still estimating what that's going to be.

01:30:26.000 --> 01:30:28.000
We're kind of based on an average year.

01:30:28.000 --> 01:30:32.000
But overall the utilities seem to be performing well.

01:30:32.000 --> 01:30:35.750
And the general fund side, our sales tax has been very

01:30:35.750 --> 01:30:37.000
strong this year.

01:30:37.000 --> 01:30:40.000
So we're looking at a surplus in terms of the general fund.

01:30:40.000 --> 01:30:46.000
But other than that, things seem to be going well.

01:30:46.000 --> 01:30:48.000
Okay. Questions?

01:30:48.000 --> 01:30:54.000
Chuck? No. Thank you, Chuck.

01:30:54.000 --> 01:30:58.000
Okay. Next.

01:30:58.000 --> 01:31:04.000
We have solid waste department.

01:31:04.000 --> 01:31:07.000
Yes. In your backup material you should have a memorandum

01:31:07.000 --> 01:31:11.500
to Tamario that basically outlines the full time equivalent

01:31:11.500 --> 01:31:15.000
comparison, employee comparison for solid waste to

01:31:15.000 --> 01:31:19.000
a number of similar municipal solid waste entities.

01:31:19.000 --> 01:31:21.069
I believe you received similar reports from both the

01:31:21.069 --> 01:31:23.270
electric department as well as the water and wastewater

01:31:23.270 --> 01:31:24.000
departments.

01:31:24.000 --> 01:31:27.000
And so this is a follow up to that end.

01:31:27.000 --> 01:31:28.000
I apologize for the delay on this.

01:31:28.000 --> 01:31:31.170
What we found is it's really not necessarily an apples to

01:31:31.170 --> 01:31:34.680
apples comparison when we're comparing solid waste entities

01:31:34.680 --> 01:31:35.000
.

01:31:35.000 --> 01:31:37.880
And so what you'll have in that first table is a little bit

01:31:37.880 --> 01:31:40.000
of a breakdown on services provided.

01:31:40.000 --> 01:31:43.170
And then in the second table we tried to provide kind of

01:31:43.170 --> 01:31:47.239
some analysis based on what we really see as the drivers

01:31:47.239 --> 01:31:50.420
behind productivity for our FTE employees or for our solid

01:31:50.420 --> 01:31:51.000
waste employees.

01:31:51.000 --> 01:31:58.220
So I'll stand for any questions if you have any regarding

01:31:58.220 --> 01:32:00.000
that data.

01:32:00.000 --> 01:32:03.000
Questions?

01:32:03.000 --> 01:32:05.000
Well, I think I need clarification.

01:32:05.000 --> 01:32:08.939
It looks like Irving is the one that's most closely like us

01:32:08.939 --> 01:32:11.000
for the types of services.

01:32:11.000 --> 01:32:12.000
Yes.

01:32:12.000 --> 01:32:14.470
We have more FTEs and that's in part because of the mining

01:32:14.470 --> 01:32:16.000
that we're going to be doing.

01:32:16.000 --> 01:32:18.000
Is that inaccurate?

01:32:18.000 --> 01:32:19.000
In part, yes.

01:32:19.000 --> 01:32:22.000
The mining operation on the back page or the second page,

01:32:22.000 --> 01:32:26.000
we have about 10 FTEs dedicated to that operation right now

01:32:26.000 --> 01:32:26.000
.

01:32:26.000 --> 01:32:27.000
We are very unique.

01:32:27.000 --> 01:32:31.250
One of the only MSWs in this area that is pursuing that

01:32:31.250 --> 01:32:33.000
type of endeavor.

01:32:33.000 --> 01:32:37.000
I'm not quite sure in terms of like Keep Denton Beautiful.

01:32:37.000 --> 01:32:39.770
I don't believe Irving's has that component in there either

01:32:39.770 --> 01:32:40.000
.

01:32:40.000 --> 01:32:42.000
So there's a few differences there.

01:32:42.000 --> 01:32:44.640
Some of those ancillary operations like Keep Denton

01:32:44.640 --> 01:32:47.619
Beautiful, the mining, home chemical collection, those are

01:32:47.619 --> 01:32:50.670
the ones that we really had a hard time finding a

01:32:50.670 --> 01:32:53.000
comparison among other cities.

01:32:53.000 --> 01:32:58.000
Okay.

01:32:58.000 --> 01:32:59.000
All right.

01:32:59.000 --> 01:33:01.000
Any other questions?

01:33:01.000 --> 01:33:04.000
Thank you.

01:33:04.000 --> 01:33:10.000
And finally, we have the new business matrix.

01:33:10.000 --> 01:33:13.420
And we did the board a couple of updates on the coal plants

01:33:13.420 --> 01:33:16.930
and the update on the transmission line installation off

01:33:16.930 --> 01:33:18.000
loop 288.

01:33:18.000 --> 01:33:21.750
And I believe Phil will be putting together informal staff

01:33:21.750 --> 01:33:23.000
reports on those.

01:33:23.000 --> 01:33:25.600
So we'll get those out to you sometime in the next week or

01:33:25.600 --> 01:33:26.000
two.

01:33:26.000 --> 01:33:30.000
Okay. Great.

01:33:30.000 --> 01:33:35.789
Any members like to add anything to the matrix or anything

01:33:35.789 --> 01:33:37.000
that's come up?

01:33:37.000 --> 01:33:39.000
No.

01:33:39.000 --> 01:33:43.000
Okay.

01:33:43.000 --> 01:33:44.000
All right.

01:33:44.000 --> 01:33:48.000
So that clears the consent and regular the regular meeting.

01:33:48.000 --> 01:33:53.000
So we can.

01:33:53.000 --> 01:33:56.000
Before we go into we close.

01:33:56.000 --> 01:33:59.000
Does anybody need a break or?

01:33:59.000 --> 01:34:00.000
No.

01:34:00.000 --> 01:34:02.000
Just go keep going through it.

01:34:02.000 --> 01:34:04.000
All right.

01:34:04.000 --> 01:34:05.000
Refill.