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Okay, we do have a quorum, so let's call the December 11th

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Public Utilities Board to order.

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The first item on the agenda is to receive a report and

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hold a discussion of the energy

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management organization by Deloitte.

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Good morning.

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Brian Langley, Deputy City Manager.

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I want to take a few minutes to provide a brief

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introduction on this item.

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As you know, we've hired Deloitte on a couple of different

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occasions to help us work through

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our energy management organization.

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They've done a couple of different scopes of work for us.

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On today's presentation, they're going to be talking to you

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about the benchmarking work

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that they did for FY 2016-17 and also the review that they

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had of the energy management

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organization and all of the procedures and policies

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associated with that.

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Stephen Engler and Tim Metz are here, and so at this point,

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I'll turn over the presentation

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to them.

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Thank you, Brian.

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Good morning, everybody.

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Good morning, members of the board.

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My name is Steve Engler, and I'm with Deloitte's energy

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risk advisory practice, and my colleague

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Tim Metz is here with me as well.

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And we're here to talk about risk management, and Tim could

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talk to you about the risks

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of carrying a sleeping seven-year-old down the stairs.

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So if he hobbles around a little bit, it's because he's got

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a bit of an ankle issue.

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So thank you for having us here this morning.

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Happy to walk through our prepared remarks, but please feel

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free to ask questions at any

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time or save them to the end or both.

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All right.

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Okay.

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I won't read the legal caveats.

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Just to talk quickly on what we're going to discuss here,

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the objectives of today, we're

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going to kind of reframe the question that was asked to us

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the last time we spoke to

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you all.

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We're going to talk a little bit about risk uncertainty and

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how that relates to capabilities

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or expectations of capabilities in an organization.

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And then we'll go right into the results of the risk

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assessment itself.

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We'll tell you how we did the work and some of the outcomes

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of that.

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This presentation is kind of a summary of a more detailed

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report that's been prepared

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and presented to you all.

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Then the next piece we'll talk about will be some

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discussion of the benchmark and some

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recommendations there, an idea for an alternative benchmark

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, and then we'll talk about recommended

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next steps.

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So if that's clear, then we will move along.

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So just to reframe and remind everybody what we were asked,

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essentially one question that

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came to us the last time we spoke was, what are the risks

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that we've kind of taken on

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as an organization by bringing the EMO activities in-house

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where prior they were outsourced?

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So that was the first part of the analysis was to frame,

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and we'll talk about here in

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a minute, what risks existed before and are there any new

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or changing -- any changes to

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that set of risks since the EMO go live.

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Based on those risks identified and what's been brought in-

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house and being managed by

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DME, we then used that to form the basis of our assessment

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and our benchmark analysis

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and then following that, our recommendations.

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And then I said the last piece of this was to take a look

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at some different approaches

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for establishing a new benchmark going forward and make

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some recommendations as to how to

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proceed.

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Okay?

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All right.

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Let's talk a little bit about risks.

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Kind of a very consulting-y slide, but I think it's good to

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set the stage.

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We sometimes mix up the words risk and uncertainty, and I

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think it's important to understand kind

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of the differences, but also how they interrelate.

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A risk is really the possibilities of suffering an adverse

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outcome, higher rates, higher fuel

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prices, market changes, and the impact of that on the

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organization.

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Uncertainty while similar, it really refers to unknown

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events where the probability is

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difficult to quantify.

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So the risk of prices falling is related to the uncertainty

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of how much they could fall.

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Okay?

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While they both talk about expectations in the future, it's

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important to remember that

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risk can be mitigated.

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On the other hand, uncertainty will always exist.

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So it's that risk--it's that management or the mitigation

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of the risks that really is

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one of the charges of the EMO or DME more broadly.

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And so that's, again, a very important underlying concept

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for how we proceed, not just here,

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but when we do this work at peer organizations as well.

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And then related to that, and we're going to--you know,

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there's been a lot of talk about hedging

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and kind of optimization around the assets.

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It's important to note that managing or mitigating a risk

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does not necessarily mean forgoing

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an opportunity.

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And it's the infrastructure that enables all that, which is

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really what we took a look

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at as part of DME.

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Does that make sense?

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Okay.

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So another consulting slide, if you will.

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When we do an assessment like this at an organization, it's

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important for us to understand what's

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the objective, what's the transacting mandate is a phrase

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we like to use a lot of the organization

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because that helps us kind of frame the recommendations.

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Just to explain this chart a little bit, if you look at the

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x-axis on the bottom, we've

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got price taker, asset optimizer, and proprietary trader.

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And then the y-axis talks about the capabilities.

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And the capabilities in this context would be things around

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risk oversight, reporting,

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governance, systems, people.

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As you move on the x-axis from the left to the right, what

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we always try to keep in mind

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is that the risks really for all those organizations are

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very similar, the types of risks that

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they're--that organization is exposed to.

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It's the implication on what that means in terms of where

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do your capabilities need to

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be will vary.

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So if I'm all the way on the left as a price taker, meaning

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that I've got a commodity to

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sell or a commodity to buy, I'm just taking what the market

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offers me in terms of prices.

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And I'm not trying to do too much around that.

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All the way on the right hand side, we're a proprietary

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trader.

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That's where you're taking probably more speculative

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positions.

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You're in the market.

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You're--you know, an example would be large banks or the

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very large integrated oil and

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gas companies that really are, to use the word, trading.

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So they've got some assets but they don't even necessarily

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trade around those assets.

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In the middle is where we find a lot of the clients that we

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work with.

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And that's probably where DME is or requires to be.

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And that's to optimize around the assets and the positions

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that you own.

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So somewhere in between price taker and proprietary trader

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is where we see your organization and

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that's the context that we completed the assessment on.

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Okay.

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So now let's talk about the first question which is what

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risks existed before the EMO

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is established and what risks exist post.

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And the takeaway to this slide, I apologize, it's a little

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bit busy.

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The takeaway to this slide is that from our perspective and

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looking at the business before

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and now, there really are no net new risks in our opinion

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as to what the company or the

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utility has been exposed to.

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The difference is where were those risks managed.

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And prior to establishing the EMO, a lot of the risks were

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managed by the third party

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through that contract that was established.

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First go live or in the current state, those risks while

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they existed before are now being

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actively managed by DME.

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All of the risks down the left-hand side, if you look in

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kind of the bold or the big

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categories and then some specifics underneath it, these are

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very common to any company that's

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exposed to the commodity markets, particularly the energy

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commodity markets.

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So when we look at a company or utility such as DME, it

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could be bigger or smaller, those

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risks are fairly common.

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We have market risk in the sense of what's the price of the

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commodity, what's the liquidity

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of the products and the commodities that are out there.

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Do we have to deal with congestion risk and does that have

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an impact on pricing?

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One of the things to point out here, just in terms of

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changes with the anticipated move

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to 70% renewable and then potentially 100% renewable, it

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creates kind of a different load

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serving risk in our perspective.

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In other words, the availability of the renewable resources

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is something that is different than

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fossil fuel resources.

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And so increasing the footprint of that type of resource in

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your portfolio will probably

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create a different type of maybe even a more complex price

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risk than you've experienced

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before and also load serving.

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Do we know that the sun's going to shine tomorrow or is the

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wind going to blow tonight?

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It'll change a different dynamic for what the utility is

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trying to manage on a day-to-day,

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an hour-to-hour and really minute-to-minute basis.

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So those risks existed before, for sure.

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There's probably a different profile to those risks going

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forward as you move towards the

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more renewable plan.

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We highlight operations risk here and by operations, I don

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't mean running the power plant or the

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transmission lines.

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Really what this means is more the organizational

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activities inside the EMO, forecasting the

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load, forecasting the supply, looking at the market

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dynamics, understanding the impact

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of that on the position on a real-time and go-forward basis

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, executing, entering and

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settling transactions, all those things that have to happen

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to support the EMO and the

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transacting and the risk management activity.

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There's a key focus of our assessment and some of the

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recommendations will relate to

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that as well.

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A couple at the bottom that we think maybe are slightly

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different than before, certainly,

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and I mentioned already the variability risk of the

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renewable resources is going to create

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a different load profile for DME.

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We talked a fair amount with staff around the Givens Creek

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asset and prior to or I guess

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up until this point, this is as we understand an asset that

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's co-owned with three other

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entities.

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So there was, we say it was not actively managed prior to

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go live and that's important to

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point out because all those decisions weren't necessarily

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always in DME's hands.

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There had to be partner agreements as to how to move

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forward.

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I'll pause there to see if there's specific questions about

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any of these risks or anything

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I just mentioned.

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So again, this is the context for the assessment that we

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did.

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We looked at DME as we do many other similar organizations

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as to the capability to manage,

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monitor and mitigate these risks and really understand

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these risks.

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And again, in the context of where the organization is in

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terms of a transacting mandate or transacting

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profile.

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You're not trading, you're not market making, you're not

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speculating.

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So that was the context for our assessment.

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Okay.

267
00:11:25,720 --> 00:11:27,519
So what did we do?

268
00:11:27,519 --> 00:11:30,129
As I said, we were engaged to understand the existing

269
00:11:30,129 --> 00:11:32,000
energy and risk management program

270
00:11:32,000 --> 00:11:34,919
within DME.

271
00:11:34,919 --> 00:11:37,700
To do that, we were to collect and evaluate data, develop

272
00:11:37,700 --> 00:11:39,480
findings and make recommendations

273
00:11:39,480 --> 00:11:42,940
to this board and to the utility and those recommendations

274
00:11:42,940 --> 00:11:44,659
are available in this report

275
00:11:44,659 --> 00:11:48,240
and as well as a supporting detailed report.

276
00:11:48,240 --> 00:11:50,970
The scope included a review of governance, people, process

277
00:11:50,970 --> 00:11:52,159
and technology and we'll

278
00:11:52,159 --> 00:11:55,289
talk about that and how it ties into our capability

279
00:11:55,289 --> 00:11:56,559
maturity model.

280
00:11:56,559 --> 00:11:58,919
We specifically looked at the risk policy and the

281
00:11:58,919 --> 00:12:00,759
documentation supporting that.

282
00:12:00,759 --> 00:12:03,929
We looked again at the operations inside of DME for things

283
00:12:03,929 --> 00:12:05,720
like transacting processing

284
00:12:05,720 --> 00:12:09,240
and the entire transacting lifecycle.

285
00:12:09,240 --> 00:12:12,919
We talked a lot about where the utility is going in terms

286
00:12:12,919 --> 00:12:14,879
of the renewable dent in plan

287
00:12:14,879 --> 00:12:18,100
and the additions of those types of resources into the

288
00:12:18,100 --> 00:12:20,720
portfolio and the specific requirements

289
00:12:20,720 --> 00:12:22,379
that that brings.

290
00:12:22,379 --> 00:12:25,009
We talk a lot about the middle and the back office and just

291
00:12:25,009 --> 00:12:26,440
in terms of vernacular front

292
00:12:26,440 --> 00:12:30,250
office is the folks, that's the commercial end of the

293
00:12:30,250 --> 00:12:31,259
business.

294
00:12:31,259 --> 00:12:34,590
Middle office we refer to as the risk oversight function

295
00:12:34,590 --> 00:12:36,639
and then back office is typically

296
00:12:36,639 --> 00:12:40,200
settlements and accounting probably credit.

297
00:12:40,200 --> 00:12:44,029
We talked a lot with staff because as with other similar

298
00:12:44,029 --> 00:12:46,120
organizations, this isn't

299
00:12:46,120 --> 00:12:48,850
a very large organization so finding the appropriate way to

300
00:12:48,850 --> 00:12:50,940
create segregation between those functions

301
00:12:50,940 --> 00:12:53,909
is important and it sometimes poses challenges when there

302
00:12:53,909 --> 00:12:55,720
are fewer people to do that because

303
00:12:55,720 --> 00:12:58,559
sometimes you have people wearing multiple hats.

304
00:12:58,559 --> 00:13:01,799
And then we talked about risk reporting.

305
00:13:01,799 --> 00:13:05,269
The way we do the assessment is we talk to people, we

306
00:13:05,269 --> 00:13:07,559
assemble as much documentation

307
00:13:07,559 --> 00:13:12,200
as we can, we read the policies, the procedures, we ask

308
00:13:12,200 --> 00:13:15,519
about where the future state is, where

309
00:13:15,519 --> 00:13:16,519
is the utility going.

310
00:13:16,519 --> 00:13:18,860
Of course there's been a lot of discussion of that as of

311
00:13:18,860 --> 00:13:20,320
late and we were able to benefit

312
00:13:20,320 --> 00:13:24,019
from many of those discussions in terms of feeding our

313
00:13:24,019 --> 00:13:25,000
findings.

314
00:13:25,000 --> 00:13:27,990
And then there was a vetting process where we developed

315
00:13:27,990 --> 00:13:30,100
some initial recommendations,

316
00:13:30,100 --> 00:13:33,990
talked through those with staff and largely to make sure

317
00:13:33,990 --> 00:13:35,960
that we didn't get anything

318
00:13:35,960 --> 00:13:39,679
wrong or we didn't miss any details that are pertinent to

319
00:13:39,679 --> 00:13:42,279
the assessment, to our recommendations

320
00:13:42,279 --> 00:13:48,029
and we talked through a lot of comments and discussion

321
00:13:48,029 --> 00:13:50,679
around what we found.

322
00:13:50,679 --> 00:13:54,600
So Deloitte loves three letter acronyms so we use a CMM, a

323
00:13:54,600 --> 00:13:56,840
capability maturity model,

324
00:13:56,840 --> 00:13:59,860
to perform these assessments.

325
00:13:59,860 --> 00:14:02,120
And as I said we do it across four categories and that's

326
00:14:02,120 --> 00:14:03,840
down the left, governance, process,

327
00:14:03,840 --> 00:14:05,600
people and technology.

328
00:14:05,600 --> 00:14:09,240
And then we talk about three maturity scales.

329
00:14:09,240 --> 00:14:15,580
And I guess a couple things I'll point out on the scales.

330
00:14:15,580 --> 00:14:19,679
Just like the decision to be a price taker versus an optim

331
00:14:19,679 --> 00:14:22,080
izer versus a trader, neither

332
00:14:22,080 --> 00:14:23,399
of those decisions is wrong.

333
00:14:23,399 --> 00:14:26,059
It's just important to know where you are.

334
00:14:26,059 --> 00:14:29,059
As far as the maturity stages for an organization, there's

335
00:14:29,059 --> 00:14:30,960
nothing inherently wrong with being

336
00:14:30,960 --> 00:14:32,919
in the developing category.

337
00:14:32,919 --> 00:14:36,759
That's typically what we see for an organization and

338
00:14:36,759 --> 00:14:39,679
generally speaking we see that kind of

339
00:14:39,679 --> 00:14:43,120
evolution typically lasting a number of years.

340
00:14:43,120 --> 00:14:46,429
So you don't just start out in the middle of this maturity

341
00:14:46,429 --> 00:14:47,080
scale.

342
00:14:47,080 --> 00:14:50,389
A lot of the clients that have been up and running for some

343
00:14:50,389 --> 00:14:51,960
period of time, we find a

344
00:14:51,960 --> 00:14:54,909
lot of their activities fall generally in the prevalent

345
00:14:54,909 --> 00:14:56,480
scale and then leading would

346
00:14:56,480 --> 00:15:00,929
include kind of integrating technology and doing things

347
00:15:00,929 --> 00:15:03,120
more automated and more in a

348
00:15:03,120 --> 00:15:06,899
much more robust way that would be indicative of someone

349
00:15:06,899 --> 00:15:10,240
who's actively trading in the markets.

350
00:15:10,240 --> 00:15:12,460
When we do the assessment, we look across these four

351
00:15:12,460 --> 00:15:14,200
categories and in each of the categories

352
00:15:14,200 --> 00:15:16,659
there's a number of different elements and I think it's the

353
00:15:16,659 --> 00:15:17,679
last page in the report

354
00:15:17,679 --> 00:15:21,419
is the actual specific details of what we look at.

355
00:15:21,419 --> 00:15:24,250
We first look at where the organization is today and then

356
00:15:24,250 --> 00:15:26,320
through discussion and understanding

357
00:15:26,320 --> 00:15:28,940
of where the organization is going as well as our own

358
00:15:28,940 --> 00:15:30,919
opinion of where these capabilities

359
00:15:30,919 --> 00:15:35,539
need to be, we then make a recommendation as to what the

360
00:15:35,539 --> 00:15:37,840
future state should be.

361
00:15:37,840 --> 00:15:41,379
It's important again in the context of what the transacting

362
00:15:41,379 --> 00:15:42,879
mandate is, we don't always

363
00:15:42,879 --> 00:15:44,960
-- you might think that a consultant would say you always

364
00:15:44,960 --> 00:15:46,279
need to be in the leading practice

365
00:15:46,279 --> 00:15:47,279
category.

366
00:15:47,279 --> 00:15:49,299
In this case that's not necessarily true because there's

367
00:15:49,299 --> 00:15:51,259
not always return for the investment

368
00:15:51,259 --> 00:15:55,669
to put in processes, to put in systems, to hire a bunch of

369
00:15:55,669 --> 00:15:57,840
people to get to leading if

370
00:15:57,840 --> 00:16:00,980
the transacting profile and the risk profile doesn't

371
00:16:00,980 --> 00:16:02,000
warrant that.

372
00:16:02,000 --> 00:16:06,820
So that's important to keep in mind as we talk through the

373
00:16:06,820 --> 00:16:09,120
results in terms of where

374
00:16:09,120 --> 00:16:11,850
you think the organization is today and where it needs to

375
00:16:11,850 --> 00:16:13,399
be and all of that was informed

376
00:16:13,399 --> 00:16:16,940
by the types of risk that we just talked about, the trans

377
00:16:16,940 --> 00:16:19,279
acting profile that we talked about

378
00:16:19,279 --> 00:16:21,720
both today and where the organization is going.

379
00:16:21,720 --> 00:16:25,200
Anything I left out on that slide?

380
00:16:25,200 --> 00:16:26,200
I think so.

381
00:16:26,200 --> 00:16:27,200
Okay.

382
00:16:27,200 --> 00:16:28,200
Questions from the board?

383
00:16:28,200 --> 00:16:29,200
Let's get to the results.

384
00:16:29,200 --> 00:16:30,200
Okay.

385
00:16:30,200 --> 00:16:31,200
Now I'm going to hand it to Tim.

386
00:16:31,200 --> 00:16:36,200
So I'm going to try not to knock him over.

387
00:16:36,200 --> 00:16:37,200
Thanks Steve.

388
00:16:37,200 --> 00:16:40,240
So very similar slide to what we were looking at before.

389
00:16:40,240 --> 00:16:42,799
We've added a couple things here.

390
00:16:42,799 --> 00:16:46,279
The next column over from leading are the recommendations.

391
00:16:46,279 --> 00:16:49,120
So we've broken those recommendations out across each of

392
00:16:49,120 --> 00:16:50,120
the categories.

393
00:16:50,120 --> 00:16:53,759
And then we also prioritize them high, medium, and low

394
00:16:53,759 --> 00:16:56,080
based on our understanding of the

395
00:16:56,080 --> 00:16:59,460
direction that you're moving and our understanding of what

396
00:16:59,460 --> 00:17:01,159
's common in the industry.

397
00:17:01,159 --> 00:17:03,059
And then we also, to kind of link it back to the

398
00:17:03,059 --> 00:17:04,880
conversation where we started in terms

399
00:17:04,880 --> 00:17:09,089
of what are the risks inherent in the organization, also

400
00:17:09,089 --> 00:17:12,680
wanted to link those categories, governance,

401
00:17:12,680 --> 00:17:15,740
process, people, and technologies to the risks that those

402
00:17:15,740 --> 00:17:17,640
recommendations are addressing.

403
00:17:17,640 --> 00:17:20,980
I guess the last bit of context, you know, in the black

404
00:17:20,980 --> 00:17:23,000
circle with the C in it, that's

405
00:17:23,000 --> 00:17:24,880
where we plotted the current state.

406
00:17:24,880 --> 00:17:26,920
And then the green circle is the future state.

407
00:17:26,920 --> 00:17:29,740
And as Steve said, that future state was informed by our

408
00:17:29,740 --> 00:17:32,240
conversations with staff, our understanding

409
00:17:32,240 --> 00:17:35,880
of the future mandate for the energy and risk management

410
00:17:35,880 --> 00:17:36,720
program.

411
00:17:36,720 --> 00:17:39,849
So in terms of governance, you know, kind of right there in

412
00:17:39,849 --> 00:17:41,519
the middle of the developing,

413
00:17:41,519 --> 00:17:43,319
I think it's one more piece on that.

414
00:17:43,319 --> 00:17:45,700
Where these, kind of where the current and where the future

415
00:17:45,700 --> 00:17:47,079
state line up, it's certainly

416
00:17:47,079 --> 00:17:48,079
not a science.

417
00:17:48,079 --> 00:17:49,079
It's not quantitative.

418
00:17:49,079 --> 00:17:51,529
What we'll do is, as Steve talked about, there are a whole

419
00:17:51,529 --> 00:17:53,079
bunch of different subcategories

420
00:17:53,079 --> 00:17:54,079
under each one of these.

421
00:17:54,079 --> 00:17:56,660
What we'll do is we'll look at each of those subcategories.

422
00:17:56,660 --> 00:17:59,269
So for example, risk management committee might be one of

423
00:17:59,269 --> 00:17:59,680
them.

424
00:17:59,680 --> 00:18:02,200
And we'll, you know, based on what we've read and

425
00:18:02,200 --> 00:18:04,319
everything we've heard from everybody

426
00:18:04,319 --> 00:18:06,950
we've talked to, we'll plot where the risk management

427
00:18:06,950 --> 00:18:08,759
committee capabilities currently

428
00:18:08,759 --> 00:18:09,759
are.

429
00:18:09,759 --> 00:18:11,920
And we'll do that for each of the other subcategories.

430
00:18:11,920 --> 00:18:13,819
And then we'll go back and we'll look at governance as a

431
00:18:13,819 --> 00:18:15,079
whole and each of the individual

432
00:18:15,079 --> 00:18:19,000
items and use that information to plot it kind of at the

433
00:18:19,000 --> 00:18:21,319
overall governance level.

434
00:18:21,319 --> 00:18:24,859
So as Steve mentioned, developing is not necessarily a bad

435
00:18:24,859 --> 00:18:27,359
thing, especially for an organization

436
00:18:27,359 --> 00:18:30,750
that has really just started down this path a little over

437
00:18:30,750 --> 00:18:31,960
three years ago.

438
00:18:31,960 --> 00:18:34,210
So it's, you're kind of right where we would expect you to

439
00:18:34,210 --> 00:18:36,079
be in that evolution of developing

440
00:18:36,079 --> 00:18:37,079
to prevalent.

441
00:18:37,079 --> 00:18:40,619
I think in terms of moving forward, what we've heard in the

442
00:18:40,619 --> 00:18:42,920
recommendations that we made

443
00:18:42,920 --> 00:18:46,880
would really move you to the right-hand side of prevalent.

444
00:18:46,880 --> 00:18:47,880
Seems like a big jump.

445
00:18:47,880 --> 00:18:50,509
I think when we get into the recommendations on the next

446
00:18:50,509 --> 00:18:52,680
slide, there are a lot of recommendations

447
00:18:52,680 --> 00:18:56,930
that can be implemented or acted on fairly easily that will

448
00:18:56,930 --> 00:18:58,920
have a lot of value and will

449
00:18:58,920 --> 00:19:01,470
really significantly move you across that evolutionary

450
00:19:01,470 --> 00:19:02,079
spectrum.

451
00:19:02,079 --> 00:19:04,079
So we'll take a look at those in a second.

452
00:19:04,079 --> 00:19:07,619
On the process, kind of right on the border of developing

453
00:19:07,619 --> 00:19:09,599
to prevalent, again, I think

454
00:19:09,599 --> 00:19:12,750
there are just a handful of recommendations here, only a

455
00:19:12,750 --> 00:19:14,680
couple high priority ones, that

456
00:19:14,680 --> 00:19:18,390
will have a lot of value and really help you move to the

457
00:19:18,390 --> 00:19:19,119
right.

458
00:19:19,119 --> 00:19:22,930
People, again, kind of right in the middle of developing, a

459
00:19:22,930 --> 00:19:24,880
couple recommendations that

460
00:19:24,880 --> 00:19:27,119
will help you take some big steps forward.

461
00:19:27,119 --> 00:19:31,450
And then on the technology side, I think there's kind of

462
00:19:31,450 --> 00:19:34,480
one primary recommendation that we'll

463
00:19:34,480 --> 00:19:37,089
talk about in terms of the system infrastructure and the

464
00:19:37,089 --> 00:19:38,640
tools available to staff that can

465
00:19:38,640 --> 00:19:42,119
have a really profound impact on the program overall.

466
00:19:42,119 --> 00:19:43,119
Any questions?

467
00:19:43,119 --> 00:19:44,119
Sure.

468
00:19:44,119 --> 00:19:49,519
Go ahead, if we ask the same question again.

469
00:19:49,519 --> 00:19:50,519
Oh, boy.

470
00:19:50,519 --> 00:19:53,390
Now, maybe you plan to answer this later, so if you do,

471
00:19:53,390 --> 00:19:55,000
then you don't need to answer

472
00:19:55,000 --> 00:19:56,000
this now.

473
00:19:56,000 --> 00:20:02,539
So of these four categories, which would you say is the

474
00:20:02,539 --> 00:20:06,759
biggest problem area in the status

475
00:20:06,759 --> 00:20:11,680
quo and which is our greatest strength in the status quo?

476
00:20:11,680 --> 00:20:14,079
I mean, I can get a sense just by looking at this, but

477
00:20:14,079 --> 00:20:15,400
going into more detail.

478
00:20:15,400 --> 00:20:18,009
On the other hand, if that's something you plan on talking

479
00:20:18,009 --> 00:20:18,720
about later.

480
00:20:18,720 --> 00:20:20,960
We'll go into a little bit more detail on the next slide.

481
00:20:20,960 --> 00:20:23,490
But I think in terms of, I wouldn't describe it as a

482
00:20:23,490 --> 00:20:25,400
weakness, but where I think you can

483
00:20:25,400 --> 00:20:28,940
make a handful of small changes and really have a big

484
00:20:28,940 --> 00:20:31,460
impact is on the governance side.

485
00:20:31,460 --> 00:20:34,000
So in terms of kind of rethinking through the risk

486
00:20:34,000 --> 00:20:36,319
management committee and kind of the

487
00:20:36,319 --> 00:20:37,720
governance hierarchy.

488
00:20:37,720 --> 00:20:41,180
So starting at the city council level, going down into the

489
00:20:41,180 --> 00:20:43,240
organization and into the day-to-day

490
00:20:43,240 --> 00:20:47,029
activities and oversight, I think there's a lot of benefit

491
00:20:47,029 --> 00:20:49,000
that can be achieved there.

492
00:20:49,000 --> 00:20:51,609
I think on the strength side, I think very clearly the

493
00:20:51,609 --> 00:20:52,359
processes.

494
00:20:52,359 --> 00:20:57,140
It's very clear to us that when DME started to go down this

495
00:20:57,140 --> 00:20:59,400
path of wanting to go live

496
00:20:59,400 --> 00:21:02,470
with the EMO, that there was a lot of thought given to kind

497
00:21:02,470 --> 00:21:04,079
of the day-to-day processes

498
00:21:04,079 --> 00:21:07,200
that would be needed in order to achieve that mission.

499
00:21:07,200 --> 00:21:10,289
And that's very clear in all the risk policy and all of the

500
00:21:10,289 --> 00:21:12,079
procedures manuals that we've

501
00:21:12,079 --> 00:21:13,759
read in that area.

502
00:21:13,759 --> 00:21:16,759
So it's very clear a lot of effort was put in that.

503
00:21:16,759 --> 00:21:19,490
Yeah, I'll just add, I'm remiss that I meant to give you a

504
00:21:19,490 --> 00:21:21,759
preview of the overall answer

505
00:21:21,759 --> 00:21:23,640
to Tim.

506
00:21:23,640 --> 00:21:30,710
When we started the assessment, there are certain basic

507
00:21:30,710 --> 00:21:34,039
things that we look for.

508
00:21:34,039 --> 00:21:36,380
We look forward with these assessments for an organization

509
00:21:36,380 --> 00:21:37,460
that has some purview over

510
00:21:37,460 --> 00:21:43,160
commodity price and liquidity risk management.

511
00:21:43,160 --> 00:21:44,359
We look for segregation of duties.

512
00:21:44,359 --> 00:21:45,799
We look for kind of a framework.

513
00:21:45,799 --> 00:21:47,920
We look for, as Tim said, processes.

514
00:21:47,920 --> 00:21:50,200
We look for people in certain spots.

515
00:21:50,200 --> 00:21:53,920
And I think in general, all of that is there.

516
00:21:53,920 --> 00:21:56,599
There were no gaping holes.

517
00:21:56,599 --> 00:21:59,369
There was nothing that jumped out as an organization or in

518
00:21:59,369 --> 00:22:01,480
terms of capabilities that gave us really

519
00:22:01,480 --> 00:22:03,240
serious concern.

520
00:22:03,240 --> 00:22:07,819
There are things, as Tim said, that I think can be pushed

521
00:22:07,819 --> 00:22:12,160
along with relatively light lifting.

522
00:22:12,160 --> 00:22:14,630
It seems to us that because there's been kind of an

523
00:22:14,630 --> 00:22:16,599
evolution in where the organization

524
00:22:16,599 --> 00:22:19,730
is going and the focus on renewables and there's been some

525
00:22:19,730 --> 00:22:21,640
personnel changes, that some of

526
00:22:21,640 --> 00:22:24,670
the documentation is just out of sync with what's actually

527
00:22:24,670 --> 00:22:25,480
happening.

528
00:22:25,480 --> 00:22:28,200
But again, the framework is there.

529
00:22:28,200 --> 00:22:31,470
And I think a lot of the recommendations really are to

530
00:22:31,470 --> 00:22:33,960
update the governance documentation,

531
00:22:33,960 --> 00:22:36,789
the policies, some of the risk limits, some of the

532
00:22:36,789 --> 00:22:38,920
reporting that's being done to match

533
00:22:38,920 --> 00:22:40,039
what's already happening.

534
00:22:40,039 --> 00:22:43,440
So just kind of getting that in sync and some of the things

535
00:22:43,440 --> 00:22:45,079
that we'll talk about.

536
00:22:45,079 --> 00:22:48,539
I guess the other -- I agree with Tim on core strength

537
00:22:48,539 --> 00:22:49,960
being processed.

538
00:22:49,960 --> 00:22:53,180
That's kind of the framework that we look for and that we

539
00:22:53,180 --> 00:22:54,119
see in place.

540
00:22:54,119 --> 00:22:59,160
And the people, I think, it's an experienced group.

541
00:22:59,160 --> 00:23:00,160
They understand the market.

542
00:23:00,160 --> 00:23:02,880
They understand the risks that are being managed.

543
00:23:02,880 --> 00:23:06,339
And pretty much without exception, what we always talked

544
00:23:06,339 --> 00:23:08,039
about in terms of objectives

545
00:23:08,039 --> 00:23:10,299
for the organization, and maybe we get into this with the

546
00:23:10,299 --> 00:23:11,559
benchmark a little bit, it's

547
00:23:11,559 --> 00:23:15,700
all about managing the price risk that flows through to the

548
00:23:15,700 --> 00:23:17,319
end-use customer.

549
00:23:17,319 --> 00:23:20,369
That's a central focus of the organization, came out in

550
00:23:20,369 --> 00:23:22,000
almost every discussion.

551
00:23:22,000 --> 00:23:25,109
And I think the experience of the group that's doing that

552
00:23:25,109 --> 00:23:27,319
will help as an asset to the utility,

553
00:23:27,319 --> 00:23:30,319
to the city.

554
00:23:30,319 --> 00:23:33,319
Any other questions?

555
00:23:33,319 --> 00:23:34,319
Okay.

556
00:23:34,319 --> 00:23:35,319
Okay.

557
00:23:35,319 --> 00:23:39,160
So now I want to take a couple minutes to walk through all

558
00:23:39,160 --> 00:23:42,279
of the high-priority recommendations.

559
00:23:42,279 --> 00:23:45,839
So again, most of them are focused in the governance area.

560
00:23:45,839 --> 00:23:48,859
And I'll kind of talk about the governance recommendations,

561
00:23:48,859 --> 00:23:50,559
I think, in four main groups.

562
00:23:50,559 --> 00:23:53,390
The first is related to -- and Steve mentioned this --

563
00:23:53,390 --> 00:23:55,279
related to the risk policy and the

564
00:23:55,279 --> 00:23:59,220
governance hierarchy, the documentation that's in place,

565
00:23:59,220 --> 00:24:01,720
and the risk management committee.

566
00:24:01,720 --> 00:24:05,859
Going back and taking a fresh look at those, and really

567
00:24:05,859 --> 00:24:08,359
tailoring it to what's actually

568
00:24:08,359 --> 00:24:11,470
being done, what are the actual activities, kind of who's

569
00:24:11,470 --> 00:24:13,240
doing what, who's overseeing

570
00:24:13,240 --> 00:24:16,519
what and playing what oversight role.

571
00:24:16,519 --> 00:24:22,000
I think all those things were envisioned at Go Live.

572
00:24:22,000 --> 00:24:25,319
And over time, as the programs evolved and as you really

573
00:24:25,319 --> 00:24:27,359
got into the day-to-day, those

574
00:24:27,359 --> 00:24:28,640
things have changed a little bit.

575
00:24:28,640 --> 00:24:31,259
So it's simply about going back and taking a fresh look at

576
00:24:31,259 --> 00:24:32,720
them and understanding what

577
00:24:32,720 --> 00:24:34,220
needs to change.

578
00:24:34,220 --> 00:24:37,430
As it relates to the governance hierarchy, so currently

579
00:24:37,430 --> 00:24:39,240
there's the city council plays

580
00:24:39,240 --> 00:24:42,140
a role, you all play a role, and then within the

581
00:24:42,140 --> 00:24:44,759
organization, within DME, there's the

582
00:24:44,759 --> 00:24:48,200
strategy committee and there's the operations committee.

583
00:24:48,200 --> 00:24:51,839
So kind of taking a look at that and understanding and

584
00:24:51,839 --> 00:24:54,619
really making a decision as to what the

585
00:24:54,619 --> 00:24:57,359
role of the strategy committee and the operations committee

586
00:24:57,359 --> 00:24:59,000
are playing, and consider making

587
00:24:59,000 --> 00:25:00,480
that a single committee.

588
00:25:00,480 --> 00:25:03,000
There's a lot of overlap in who sits on both of those

589
00:25:03,000 --> 00:25:03,839
committees.

590
00:25:03,839 --> 00:25:07,240
It's our understanding that often those two committees will

591
00:25:07,240 --> 00:25:08,240
jointly meet.

592
00:25:08,240 --> 00:25:11,049
And if that's the case, recognizing the commitment of

593
00:25:11,049 --> 00:25:13,359
everybody's time in these matters, think

594
00:25:13,359 --> 00:25:16,220
about whether it just makes sense to kind of streamline

595
00:25:16,220 --> 00:25:17,799
that process, have a single

596
00:25:17,799 --> 00:25:21,089
committee with a single mission and oversight

597
00:25:21,089 --> 00:25:24,279
responsibility, and then simply make sure

598
00:25:24,279 --> 00:25:27,910
that that risk management committee regularly meets, has a

599
00:25:27,910 --> 00:25:29,720
standard agenda and reporting

600
00:25:29,720 --> 00:25:34,680
package that they follow, and just shore that piece up a

601
00:25:34,680 --> 00:25:36,039
little bit.

602
00:25:36,039 --> 00:25:39,500
The next group is update of Appendix A and Appendix E. So

603
00:25:39,500 --> 00:25:42,160
Appendix A is to the risk policy

604
00:25:42,160 --> 00:25:44,400
and it says, "Here are the limits.

605
00:25:44,400 --> 00:25:49,640
Here are the things that the front office or DME can't do."

606
00:25:49,640 --> 00:25:52,730
And Appendix E is here and talks about what the approved

607
00:25:52,730 --> 00:25:53,759
products are.

608
00:25:53,759 --> 00:25:59,799
So trading power or different fixed price instruments.

609
00:25:59,799 --> 00:26:00,799
Both of those exist.

610
00:26:00,799 --> 00:26:05,160
I think they can be built out a little bit more to be more

611
00:26:05,160 --> 00:26:06,319
specific.

612
00:26:06,319 --> 00:26:09,619
So everybody has a crystal clear understanding of what they

613
00:26:09,619 --> 00:26:11,279
're authorized to do up to how

614
00:26:11,279 --> 00:26:14,039
much they can do those types of things.

615
00:26:14,039 --> 00:26:17,500
And it ties to the last bullet on here in terms of reconcil

616
00:26:17,500 --> 00:26:19,160
ing the DOA memorandum.

617
00:26:19,160 --> 00:26:22,579
So delegation of authority is DOA.

618
00:26:22,579 --> 00:26:25,309
There's some inconsistencies in a memo that goes out on a

619
00:26:25,309 --> 00:26:26,720
regular basis versus what's

620
00:26:26,720 --> 00:26:31,880
actually in the ERMPs is the risk policy document.

621
00:26:31,880 --> 00:26:35,509
So making sure that those two things are synced up so

622
00:26:35,509 --> 00:26:37,819
everybody's on the same page.

623
00:26:37,819 --> 00:26:42,650
And then I guess really the third group of these is the

624
00:26:42,650 --> 00:26:45,720
three of the final four bullets.

625
00:26:45,720 --> 00:26:48,670
So starting with designing and documenting a financial

626
00:26:48,670 --> 00:26:50,480
hedge program, quantifying the

627
00:26:50,480 --> 00:26:54,240
risk profile, and then establishing risk limits linked to

628
00:26:54,240 --> 00:26:55,279
objectives.

629
00:26:55,279 --> 00:26:58,009
So that's going back to the risks that Steve talked about a

630
00:26:58,009 --> 00:26:59,339
little bit earlier in terms

631
00:26:59,339 --> 00:27:02,589
of kind of the complexity of the price risk, the

632
00:27:02,589 --> 00:27:05,900
uncertainty of the renewable supply, really

633
00:27:05,900 --> 00:27:09,589
clearly understanding what risk that introduced into the

634
00:27:09,589 --> 00:27:11,839
portfolio, tying it to something

635
00:27:11,839 --> 00:27:15,539
specific like a rate at risk, and understanding what are

636
00:27:15,539 --> 00:27:18,319
the types of activities or what financial

637
00:27:18,319 --> 00:27:21,869
risk mitigation activities might we do to help manage that

638
00:27:21,869 --> 00:27:23,759
supply and that price risk.

639
00:27:23,759 --> 00:27:26,230
And that's something that we'll come back to here in a few

640
00:27:26,230 --> 00:27:27,559
slides when we start to talk

641
00:27:27,559 --> 00:27:30,839
about the benchmark as well.

642
00:27:30,839 --> 00:27:33,450
On the process side, it's really about reporting and

643
00:27:33,450 --> 00:27:34,480
communication.

644
00:27:34,480 --> 00:27:40,029
So making sure that there's a singular risk metric or a set

645
00:27:40,029 --> 00:27:42,779
of paired risk metrics that

646
00:27:42,779 --> 00:27:47,289
help describe what the risk is and where you are relative

647
00:27:47,289 --> 00:27:48,599
to that risk.

648
00:27:48,599 --> 00:27:52,680
And then being able to communicate what that is and provide

649
00:27:52,680 --> 00:27:55,200
daily reports to all stakeholders

650
00:27:55,200 --> 00:27:58,059
and everybody responsible for oversight.

651
00:27:58,059 --> 00:28:02,680
So each day everybody's on the same sheet of music.

652
00:28:02,680 --> 00:28:06,220
From a technology perspective, there is currently a system

653
00:28:06,220 --> 00:28:08,799
in place that doesn't have the capabilities

654
00:28:08,799 --> 00:28:13,460
that DME needs in order to execute what they need to on a

655
00:28:13,460 --> 00:28:17,079
day, their daily responsibilities.

656
00:28:17,079 --> 00:28:20,190
And so taking a look at that, identifying what else is out

657
00:28:20,190 --> 00:28:21,859
there that might meet needs

658
00:28:21,859 --> 00:28:25,319
and finding the right fit for purpose system to support the

659
00:28:25,319 --> 00:28:26,960
day-to-day activities.

660
00:28:26,960 --> 00:28:29,880
And then finally on the people side, as was mentioned

661
00:28:29,880 --> 00:28:32,079
earlier, there's been some turnover

662
00:28:32,079 --> 00:28:34,339
roles or positions have changed.

663
00:28:34,339 --> 00:28:37,529
Making sure there's the right redundancy across the front

664
00:28:37,529 --> 00:28:39,319
and the middle and the back office

665
00:28:39,319 --> 00:28:43,640
such that nothing falls through the cracks and there's a

666
00:28:43,640 --> 00:28:46,119
consistent level of execution

667
00:28:46,119 --> 00:28:47,119
of the program.

668
00:28:47,119 --> 00:28:53,259
Can you explain a little bit more what you mean by the

669
00:28:53,259 --> 00:28:55,920
right redundancy?

670
00:28:55,920 --> 00:28:56,920
Sure.

671
00:28:56,920 --> 00:29:00,039
Because redundancy tends to have negative connotations.

672
00:29:00,039 --> 00:29:03,789
Here I see it's a positive, especially when you're talking

673
00:29:03,789 --> 00:29:05,079
about staffing.

674
00:29:05,079 --> 00:29:06,079
So if you could explain.

675
00:29:06,079 --> 00:29:07,079
Yeah.

676
00:29:07,079 --> 00:29:09,000
In this case, I think redundancy is meant to be positive.

677
00:29:09,000 --> 00:29:12,009
So from a middle office perspective, for example, if I've

678
00:29:12,009 --> 00:29:13,819
got one person that's responsible

679
00:29:13,819 --> 00:29:18,009
for always preparing the reports that go out on a daily

680
00:29:18,009 --> 00:29:20,440
basis or on a weekly basis, to

681
00:29:20,440 --> 00:29:23,660
the extent that that person isn't available for some period

682
00:29:23,660 --> 00:29:25,319
of time, I guess the question

683
00:29:25,319 --> 00:29:27,559
is who is going to provide those reports?

684
00:29:27,559 --> 00:29:31,019
So making sure that you've got staff cross-trained to step

685
00:29:31,019 --> 00:29:32,980
into a role that maybe is not their

686
00:29:32,980 --> 00:29:37,150
primary or day-to-day role, but that they can fill in the

687
00:29:37,150 --> 00:29:39,119
event that it's needed.

688
00:29:39,119 --> 00:29:42,440
And on the governance, it looks like a long list, but it's

689
00:29:42,440 --> 00:29:44,079
a lot of low-hanging fruit

690
00:29:44,079 --> 00:29:48,720
that we can implement rather quickly to get from developing

691
00:29:48,720 --> 00:29:51,839
to a higher level of an organization.

692
00:29:51,839 --> 00:29:57,130
So in reading the report, the whole report, I'm impressed

693
00:29:57,130 --> 00:30:00,359
with where they are for a three-year

694
00:30:00,359 --> 00:30:04,160
organization actually.

695
00:30:04,160 --> 00:30:06,799
And just a kind of overarching comment on that and to

696
00:30:06,799 --> 00:30:08,599
follow up on a couple of Tim's points,

697
00:30:08,599 --> 00:30:11,819
what we try to do is identify things here that stitch

698
00:30:11,819 --> 00:30:14,319
together, hopefully, logically.

699
00:30:14,319 --> 00:30:18,109
In my view of how this can work, you've got a policy that

700
00:30:18,109 --> 00:30:20,099
outlines what are the risks

701
00:30:20,099 --> 00:30:24,180
that we're exposed to and what's our appetite relative to

702
00:30:24,180 --> 00:30:25,319
those risks.

703
00:30:25,319 --> 00:30:28,950
What are the tools that are available to the organization

704
00:30:28,950 --> 00:30:30,119
to manage that?

705
00:30:30,119 --> 00:30:33,460
So the policy is kind of the, it's the enabler for the

706
00:30:33,460 --> 00:30:35,680
organization to go out and manage

707
00:30:35,680 --> 00:30:38,869
the risk within whatever boundaries the organization and

708
00:30:38,869 --> 00:30:41,240
the board and the city council ultimately

709
00:30:41,240 --> 00:30:42,920
set.

710
00:30:42,920 --> 00:30:47,089
The RMC can act as the body just to be the oversight of

711
00:30:47,089 --> 00:30:47,880
that.

712
00:30:47,880 --> 00:30:50,720
Is that happening according to how we've laid it out?

713
00:30:50,720 --> 00:30:54,000
Are we within our risk tolerances?

714
00:30:54,000 --> 00:30:57,089
If the organization says, well, there's a new type of

715
00:30:57,089 --> 00:30:59,039
instrument or a new transaction

716
00:30:59,039 --> 00:31:01,640
we want to do that's not previously authorized, that would

717
00:31:01,640 --> 00:31:02,960
be the body to review that and

718
00:31:02,960 --> 00:31:03,960
make recommendations.

719
00:31:03,960 --> 00:31:06,769
And I would also see that as kind of the conduit of

720
00:31:06,769 --> 00:31:09,319
information to both the board and the city

721
00:31:09,319 --> 00:31:14,069
council and establish kind of a more regular update and

722
00:31:14,069 --> 00:31:16,839
information flow as to where we

723
00:31:16,839 --> 00:31:19,569
are, where are we going, what have we done, did anything

724
00:31:19,569 --> 00:31:21,240
unusual happen, all those kinds

725
00:31:21,240 --> 00:31:22,240
of conversations.

726
00:31:22,240 --> 00:31:24,720
The RMC can really be the engine to do that.

727
00:31:24,720 --> 00:31:27,609
And then a lot of the other pieces like to mention the

728
00:31:27,609 --> 00:31:29,559
system, that's another part of

729
00:31:29,559 --> 00:31:33,190
the toolkit, if you will, just to enable the organization

730
00:31:33,190 --> 00:31:35,039
to, you come in in the morning

731
00:31:35,039 --> 00:31:38,839
and are we long, are we short, where are our prices, can we

732
00:31:38,839 --> 00:31:40,799
execute instruments and have

733
00:31:40,799 --> 00:31:43,710
them go into the system so it's all a complete system of

734
00:31:43,710 --> 00:31:44,359
record.

735
00:31:44,359 --> 00:31:46,789
Those are all the things that kind of enable that, but the

736
00:31:46,789 --> 00:31:48,240
governance and the policy piece

737
00:31:48,240 --> 00:31:52,140
of this and then executed through the RMC is really what

738
00:31:52,140 --> 00:31:54,079
will drive it, I think.

739
00:31:54,079 --> 00:31:57,240
Yeah, it's huge.

740
00:31:57,240 --> 00:32:03,480
And then I think we made these points a couple times.

741
00:32:03,480 --> 00:32:08,339
Basically, it's our observation that even though they're on

742
00:32:08,339 --> 00:32:10,400
the system side, there's

743
00:32:10,400 --> 00:32:13,000
some work that can be done there and some additional

744
00:32:13,000 --> 00:32:15,920
infrastructure that should be provided.

745
00:32:15,920 --> 00:32:18,789
The organization is generally well positioned, well

746
00:32:18,789 --> 00:32:20,920
structured in staff and highly capable

747
00:32:20,920 --> 00:32:25,079
of managing the risks that the utility faces.

748
00:32:25,079 --> 00:32:27,450
And then again, just kind of coming back to that technology

749
00:32:27,450 --> 00:32:28,839
infrastructure, putting that

750
00:32:28,839 --> 00:32:35,240
in place would go a long way to really supporting the day-

751
00:32:35,240 --> 00:32:36,559
to-day.

752
00:32:36,559 --> 00:32:40,019
And now we get to move on to the FY17 benchmark analysis

753
00:32:40,019 --> 00:32:41,960
and we'll walk through this kind

754
00:32:41,960 --> 00:32:42,960
of in two parts.

755
00:32:42,960 --> 00:32:47,200
One is looking at a couple of alternatives for FY17 that

756
00:32:47,200 --> 00:32:49,319
have been, I think have been

757
00:32:49,319 --> 00:32:52,279
proposed and then also providing an alternative view on

758
00:32:52,279 --> 00:32:54,279
what that benchmark might look like

759
00:32:54,279 --> 00:32:56,720
going forward.

760
00:32:56,720 --> 00:33:01,259
So first, the two alternatives that we looked at, one,

761
00:33:01,259 --> 00:33:04,480
option one, looks at what the day-ahead

762
00:33:04,480 --> 00:33:07,359
price for power was during the year in question.

763
00:33:07,359 --> 00:33:13,160
So in this case, we looked back starting October 1, 2016

764
00:33:13,160 --> 00:33:17,480
through September 30, 2017, would

765
00:33:17,480 --> 00:33:20,779
constitute the FY17 benchmark.

766
00:33:20,779 --> 00:33:22,759
And just what was the day-ahead price of power?

767
00:33:22,759 --> 00:33:27,549
So every day, ERCOT posts power prices for what they expect

768
00:33:27,549 --> 00:33:29,640
for the next day or the day

769
00:33:29,640 --> 00:33:30,640
ahead.

770
00:33:30,640 --> 00:33:33,079
So that meant if we just went back and we looked at what

771
00:33:33,079 --> 00:33:34,599
all of those power prices were

772
00:33:34,599 --> 00:33:38,990
versus how much energy or load there was, that constitutes

773
00:33:38,990 --> 00:33:41,400
the first part of the benchmark

774
00:33:41,400 --> 00:33:42,400
one.

775
00:33:42,400 --> 00:33:45,859
And then similarly to the contract that was previously in

776
00:33:45,859 --> 00:33:47,599
place, there's a heat rate

777
00:33:47,599 --> 00:33:52,130
adder or a premium that gets added into that to account for

778
00:33:52,130 --> 00:33:53,700
risk and profit.

779
00:33:53,700 --> 00:33:57,390
So option one, in a sense, is very similar to what the old

780
00:33:57,390 --> 00:33:59,640
benchmark looked like, except

781
00:33:59,640 --> 00:34:04,609
it's now based on the market price of power on a day-ahead

782
00:34:04,609 --> 00:34:05,559
basis.

783
00:34:05,559 --> 00:34:08,400
And so there's some advantages to this particular option.

784
00:34:08,400 --> 00:34:11,800
One, it's very simple to quantify and to measure.

785
00:34:11,800 --> 00:34:13,599
ERCOT posts those prices every day.

786
00:34:13,599 --> 00:34:16,639
We can go back and we can very easily capture them.

787
00:34:16,639 --> 00:34:18,860
We can add in the three and a half heat rate adder and we

788
00:34:18,860 --> 00:34:20,159
can get to what the benchmark

789
00:34:20,159 --> 00:34:21,159
is.

790
00:34:21,159 --> 00:34:23,559
There are also a couple disadvantages to that.

791
00:34:23,559 --> 00:34:28,380
One is that it does move with the day-ahead markets.

792
00:34:28,380 --> 00:34:30,989
We can only calculate it after the fact, after we know what

793
00:34:30,989 --> 00:34:32,400
all of those day-ahead prices

794
00:34:32,400 --> 00:34:34,719
were in any particular year.

795
00:34:34,719 --> 00:34:40,440
And it doesn't really require an active management.

796
00:34:40,440 --> 00:34:44,710
Because the benchmark is moving with whatever the price of

797
00:34:44,710 --> 00:34:47,119
power is for that year, if power

798
00:34:47,119 --> 00:34:50,199
prices go up, overall the benchmark would go up.

799
00:34:50,199 --> 00:34:54,320
If power prices go down, the benchmark would go down.

800
00:34:54,320 --> 00:34:59,000
That and I think given the direction that you're moving,

801
00:34:59,000 --> 00:35:01,639
moving further away from the previous

802
00:35:01,639 --> 00:35:04,730
benchmark and getting away from the idea of a three and a

803
00:35:04,730 --> 00:35:06,480
half heat rate adder probably

804
00:35:06,480 --> 00:35:07,480
makes a lot of sense.

805
00:35:07,480 --> 00:35:10,360
I mean, you're no longer in the situation where you have a

806
00:35:10,360 --> 00:35:11,840
full requirements contract

807
00:35:11,840 --> 00:35:14,449
with one counterparty and they're taking on a lot of those

808
00:35:14,449 --> 00:35:14,960
risks.

809
00:35:14,960 --> 00:35:17,360
You're managing those risks yourself now.

810
00:35:17,360 --> 00:35:20,090
And so that three and a half heat rate probably doesn't

811
00:35:20,090 --> 00:35:21,840
make as much sense as it used to.

812
00:35:21,840 --> 00:35:26,079
The second option is more of a forward-looking benchmark.

813
00:35:26,079 --> 00:35:30,769
So if we went out on the last day of September in 2016, we

814
00:35:30,769 --> 00:35:33,199
can look to the forward markets

815
00:35:33,199 --> 00:35:36,570
to understand what the expectation of power costs are going

816
00:35:36,570 --> 00:35:38,000
to be all the way through

817
00:35:38,000 --> 00:35:43,719
the fiscal year, all the way through September 2017 of the

818
00:35:43,719 --> 00:35:44,900
next year.

819
00:35:44,900 --> 00:35:48,900
And what we can do is we can take that forward curve and we

820
00:35:48,900 --> 00:35:51,159
can multiply it by the load,

821
00:35:51,159 --> 00:35:54,760
how much electricity you expect to need in that year.

822
00:35:54,760 --> 00:35:57,369
And that serves as the benchmark for on that day what it

823
00:35:57,369 --> 00:35:58,920
might cost to procure all of the

824
00:35:58,920 --> 00:36:02,760
power or all the electricity that you need in that year.

825
00:36:02,760 --> 00:36:05,769
And then as you go throughout the year and you buy in the

826
00:36:05,769 --> 00:36:08,400
day ahead markets or you know,

827
00:36:08,400 --> 00:36:12,340
the renewables, you have renewables at whatever the

828
00:36:12,340 --> 00:36:15,440
contract price is, you can then compare

829
00:36:15,440 --> 00:36:18,260
your actual costs back to that benchmark of what it would

830
00:36:18,260 --> 00:36:19,840
cost, what it would have cost

831
00:36:19,840 --> 00:36:23,469
to lock in all of your electricity on the day before the

832
00:36:23,469 --> 00:36:25,559
beginning of that fiscal year

833
00:36:25,559 --> 00:36:28,289
and you can get an understanding of how well you did

834
00:36:28,289 --> 00:36:30,000
relative to that benchmark.

835
00:36:30,000 --> 00:36:33,159
So again, this also has some advantages and disadvantages.

836
00:36:33,159 --> 00:36:36,789
The advantages is that it's market-based and it also sets a

837
00:36:36,789 --> 00:36:38,480
very clear target to be.

838
00:36:38,480 --> 00:36:41,110
Going into the year, you for the most part know exactly

839
00:36:41,110 --> 00:36:43,119
what it is you're managing to

840
00:36:43,119 --> 00:36:45,719
and you can actively manage it.

841
00:36:45,719 --> 00:36:50,619
The disadvantages, it doesn't consider what the objectives

842
00:36:50,619 --> 00:36:52,599
of the utility are, the risk

843
00:36:52,599 --> 00:36:53,599
or the uncertainty.

844
00:36:53,599 --> 00:36:56,690
So for example, if we simply have that benchmark and you

845
00:36:56,690 --> 00:36:58,639
know, set at the beginning of the

846
00:36:58,639 --> 00:37:04,059
year, even if the DME and EMO is actively managing that

847
00:37:04,059 --> 00:37:07,119
risk, if an event happens and

848
00:37:07,119 --> 00:37:10,960
prices go up, then it's going to be more costly to procure

849
00:37:10,960 --> 00:37:13,960
power and you may not be as accurately

850
00:37:13,960 --> 00:37:18,130
measuring the value that they're adding or how well they're

851
00:37:18,130 --> 00:37:19,960
managing those risks.

852
00:37:19,960 --> 00:37:23,210
So I think both of these have some advantages and they both

853
00:37:23,210 --> 00:37:24,840
have some flaws as well.

854
00:37:24,840 --> 00:37:27,059
So what we wanted to do next was then kind of look at the

855
00:37:27,059 --> 00:37:27,960
actual numbers.

856
00:37:27,960 --> 00:37:31,590
So we went back and recalculated the benchmarks and took

857
00:37:31,590 --> 00:37:34,079
the actual costs for the last fiscal

858
00:37:34,079 --> 00:37:36,519
year in order to calculate what the savings are.

859
00:37:36,519 --> 00:37:39,000
And similarly to what the news was the last time around,

860
00:37:39,000 --> 00:37:40,599
the good news is that under either

861
00:37:40,599 --> 00:37:43,360
benchmark there are savings.

862
00:37:43,360 --> 00:37:46,090
And so just to orient everybody to the slide, the top half

863
00:37:46,090 --> 00:37:47,519
is the calculation or the top

864
00:37:47,519 --> 00:37:50,239
third is the calculation of the benchmarks.

865
00:37:50,239 --> 00:37:53,380
And I'll come back to the one right there in the middle in

866
00:37:53,380 --> 00:37:54,119
a second.

867
00:37:54,119 --> 00:37:57,130
The middle of the slide is what the actual costs were as

868
00:37:57,130 --> 00:37:58,760
provided by DME and then the

869
00:37:58,760 --> 00:38:02,420
bottom third are the savings under each of the different

870
00:38:02,420 --> 00:38:03,300
options.

871
00:38:03,300 --> 00:38:07,280
So to kind of go back up to the top, that middle row here,

872
00:38:07,280 --> 00:38:09,320
what we did is we took option

873
00:38:09,320 --> 00:38:12,320
one, and as I mentioned before, about the three and a half

874
00:38:12,320 --> 00:38:13,840
heat rate adder, we simply

875
00:38:13,840 --> 00:38:17,300
took that out and said what would the day ahead benchmark

876
00:38:17,300 --> 00:38:18,760
have been if you didn't include

877
00:38:18,760 --> 00:38:22,719
that premium for risk and profit.

878
00:38:22,719 --> 00:38:26,500
And used that as just kind of another comparison or another

879
00:38:26,500 --> 00:38:28,280
alternative to look at.

880
00:38:28,280 --> 00:38:32,239
And as you can imagine, when you take that adder out, the

881
00:38:32,239 --> 00:38:34,400
savings on option one dropped

882
00:38:34,400 --> 00:38:37,539
from about 10.3 million to about 2.4.

883
00:38:37,539 --> 00:38:40,880
So the difference is purely related to that three and a

884
00:38:40,880 --> 00:38:42,420
half heat rate adder.

885
00:38:42,420 --> 00:38:46,179
And then when you compare that to the option two, which was

886
00:38:46,179 --> 00:38:48,239
the forward curve benchmark,

887
00:38:48,239 --> 00:38:54,539
the 10.3 savings under option one would have been $4

888
00:38:54,539 --> 00:38:55,800
million.

889
00:38:55,800 --> 00:38:57,679
So just a little bit over $4 million.

890
00:38:57,679 --> 00:39:01,920
So either way you look at it, there are savings relative to

891
00:39:01,920 --> 00:39:04,280
either of those benchmarks.

892
00:39:04,280 --> 00:39:05,280
So pause for a second.

893
00:39:05,280 --> 00:39:06,280
See if there are any questions.

894
00:39:06,280 --> 00:39:13,400
Okay.

895
00:39:13,400 --> 00:39:17,030
So I wanted to think about it a little bit differently for

896
00:39:17,030 --> 00:39:17,880
a second.

897
00:39:17,880 --> 00:39:22,420
And if we go back to what's the purpose of the cost savings

898
00:39:22,420 --> 00:39:24,719
calculation, is it simply

899
00:39:24,719 --> 00:39:25,719
to save costs?

900
00:39:25,719 --> 00:39:27,599
Is it to add value?

901
00:39:27,599 --> 00:39:30,409
So if you assume, and we talked to, Steve mentioned earlier

902
00:39:30,409 --> 00:39:31,780
, when we had conversations

903
00:39:31,780 --> 00:39:36,619
with staff, it was very clear that the objective was to

904
00:39:36,619 --> 00:39:40,800
manage the cost to end users, to customers.

905
00:39:40,800 --> 00:39:44,599
And so if you assume that in order to assess the

906
00:39:44,599 --> 00:39:48,000
performance and the value of DME, kind

907
00:39:48,000 --> 00:39:50,809
of what we think the benchmark calculation, this cost

908
00:39:50,809 --> 00:39:52,840
savings calculation is doing, well,

909
00:39:52,840 --> 00:39:55,139
then it probably makes a lot of sense to think about it in

910
00:39:55,139 --> 00:39:56,679
terms of what the desired outcomes

911
00:39:56,679 --> 00:40:02,050
are and how well DME and the EMO does achieving those

912
00:40:02,050 --> 00:40:03,480
outcomes.

913
00:40:03,480 --> 00:40:07,019
And so if we hypothesize a couple, what would be considered

914
00:40:07,019 --> 00:40:08,800
good outcomes, one might be

915
00:40:08,800 --> 00:40:12,320
stable electricity rates when prices rise.

916
00:40:12,320 --> 00:40:15,780
Another might be competitive and lower rates when prices

917
00:40:15,780 --> 00:40:16,320
fall.

918
00:40:16,320 --> 00:40:19,869
So in other words, if you're protecting your customers

919
00:40:19,869 --> 00:40:21,920
against rising prices, you don't

920
00:40:21,920 --> 00:40:25,750
want to be blind to the fact that prices might fall and now

921
00:40:25,750 --> 00:40:27,880
you're passing along a higher

922
00:40:27,880 --> 00:40:31,519
than market rate of electricity to your customers.

923
00:40:31,519 --> 00:40:36,320
So it's really managing the pair of those objectives.

924
00:40:36,320 --> 00:40:38,320
And so how do you go about accomplishing this?

925
00:40:38,320 --> 00:40:41,860
Well, one, you hypothesize a set of paired objectives and

926
00:40:41,860 --> 00:40:43,440
you make sure that they're

927
00:40:43,440 --> 00:40:44,440
market compatible.

928
00:40:44,440 --> 00:40:49,059
In other words, if I'm managing too aggressively to prevent

929
00:40:49,059 --> 00:40:51,519
higher prices, am I losing out

930
00:40:51,519 --> 00:40:55,530
on opportunities to pass along lower prices to my customers

931
00:40:55,530 --> 00:40:55,820
?

932
00:40:55,820 --> 00:40:58,550
And so the way that you make them market compatible is the

933
00:40:58,550 --> 00:41:00,599
second piece of this, which is by having

934
00:41:00,599 --> 00:41:03,809
a hedge strategy and risk limits that have been

935
00:41:03,809 --> 00:41:07,099
demonstrated to achieve those objectives.

936
00:41:07,099 --> 00:41:10,730
So you might do that by going back and looking over time

937
00:41:10,730 --> 00:41:12,960
and quantifying how a particular

938
00:41:12,960 --> 00:41:16,849
hedge strategy achieve those two objectives across a range

939
00:41:16,849 --> 00:41:18,199
of market prices.

940
00:41:18,199 --> 00:41:20,929
And the good news is that if we look back over the last 10

941
00:41:20,929 --> 00:41:22,320
to 15 years, we've got a

942
00:41:22,320 --> 00:41:25,519
number of times when prices were really high and they moved

943
00:41:25,519 --> 00:41:27,119
really low or they went from

944
00:41:27,119 --> 00:41:29,440
low to high and vice versa.

945
00:41:29,440 --> 00:41:32,530
So it gives you a lot of data with which to understand that

946
00:41:32,530 --> 00:41:32,800
.

947
00:41:32,800 --> 00:41:35,690
And then the last piece, the way that you accomplish this

948
00:41:35,690 --> 00:41:37,800
is by having the risk infrastructure.

949
00:41:37,800 --> 00:41:41,780
So the ability to capture transactions, understand,

950
00:41:41,780 --> 00:41:45,039
quantify your risk, monitor where you are,

951
00:41:45,039 --> 00:41:48,929
so that when the time comes, you know when to act and you

952
00:41:48,929 --> 00:41:50,239
know how to act.

953
00:41:50,239 --> 00:41:52,769
And so kind of taking it back to the benchmark, it's really

954
00:41:52,769 --> 00:41:54,199
the first two of these, one and

955
00:41:54,199 --> 00:42:00,989
two here, that would form the basis for the benchmark and

956
00:42:00,989 --> 00:42:04,599
how you assess performance.

957
00:42:04,599 --> 00:42:08,139
So the way that you do that is kind of taking it back to

958
00:42:08,139 --> 00:42:09,599
the objectives.

959
00:42:09,599 --> 00:42:12,599
And really, it's -- we talked about two, I guess it's

960
00:42:12,599 --> 00:42:14,320
really three of them, and I'll

961
00:42:14,320 --> 00:42:18,400
explain why in a second, but they kind of all work together

962
00:42:18,400 --> 00:42:20,559
in order to provide a balanced

963
00:42:20,559 --> 00:42:21,559
approach.

964
00:42:21,559 --> 00:42:24,780
So the first is setting an objective around what we call

965
00:42:24,780 --> 00:42:26,639
portfolio risk or managing the

966
00:42:26,639 --> 00:42:27,920
customer's rate of risk.

967
00:42:27,920 --> 00:42:31,699
So if we don't want to pass along more than a certain

968
00:42:31,699 --> 00:42:34,840
percentage rate increase to customers,

969
00:42:34,840 --> 00:42:37,239
how do we manage that?

970
00:42:37,239 --> 00:42:42,179
Recognizing that you're going to have a lot of fixed price

971
00:42:42,179 --> 00:42:44,480
supply and recognizing that

972
00:42:44,480 --> 00:42:47,360
you might hedge at really high prices and then prices fall.

973
00:42:47,360 --> 00:42:50,090
The second piece of it is managing the hedges that have

974
00:42:50,090 --> 00:42:51,019
been executed.

975
00:42:51,019 --> 00:42:55,579
So if I bought power at $80 and the price of power today is

976
00:42:55,579 --> 00:42:58,159
$50, what should I do about

977
00:42:58,159 --> 00:42:59,159
that?

978
00:42:59,159 --> 00:43:01,659
How do I manage that or how do I prevent that outcome from

979
00:43:01,659 --> 00:43:02,360
occurring?

980
00:43:02,360 --> 00:43:05,670
And then the way that you do that is by having an options

981
00:43:05,670 --> 00:43:07,679
budget available to manage the

982
00:43:07,679 --> 00:43:08,679
tension between the two.

983
00:43:08,679 --> 00:43:11,289
And so what we mean is that, you know, every hedge that I

984
00:43:11,289 --> 00:43:12,760
place to protect against higher

985
00:43:12,760 --> 00:43:16,599
prices creates a likelihood or a probability that I might

986
00:43:16,599 --> 00:43:17,920
have been wrong.

987
00:43:17,920 --> 00:43:24,110
So options are the way in which you can balance those

988
00:43:24,110 --> 00:43:25,920
things out.

989
00:43:25,920 --> 00:43:28,539
And so when, you know, when you kind of take it through

990
00:43:28,539 --> 00:43:30,440
that process in the end, you know,

991
00:43:30,440 --> 00:43:34,000
this is, if you will, the benchmarks that you establish.

992
00:43:34,000 --> 00:43:37,070
So I might have my--the first piece of my benchmark might

993
00:43:37,070 --> 00:43:38,440
be I'm going to manage my

994
00:43:38,440 --> 00:43:41,980
energy cost adjustment so that the cost of serve customers

995
00:43:41,980 --> 00:43:43,639
don't increase by more than

996
00:43:43,639 --> 00:43:47,550
X percent with some confidence, with some level of

997
00:43:47,550 --> 00:43:48,800
confidence.

998
00:43:48,800 --> 00:43:51,429
The second piece of it is I'm going to manage my fixed

999
00:43:51,429 --> 00:43:53,460
price transactions that so customer

1000
00:43:53,460 --> 00:43:56,690
rates aren't more than X percent above whatever the market-

1001
00:43:56,690 --> 00:43:57,679
based rate is.

1002
00:43:57,679 --> 00:44:00,360
So that's the competitive objective.

1003
00:44:00,360 --> 00:44:03,519
And then finally, I'm going to set aside, you know, $500,

1004
00:44:03,519 --> 00:44:05,199
000 in options premiums to

1005
00:44:05,199 --> 00:44:07,559
manage the tension between the two.

1006
00:44:07,559 --> 00:44:10,840
And so you set these at the beginning of the year.

1007
00:44:10,840 --> 00:44:13,449
Everybody--you know, there's general agreement as to what

1008
00:44:13,449 --> 00:44:14,880
those limits are and what you're

1009
00:44:14,880 --> 00:44:15,880
managing to.

1010
00:44:15,880 --> 00:44:18,360
And at the end of the year, as you go back and you take a

1011
00:44:18,360 --> 00:44:20,079
look at it, you can very clearly

1012
00:44:20,079 --> 00:44:22,690
measure, "Well, this year, you know, I said I was going to

1013
00:44:22,690 --> 00:44:23,960
manage to a 3 percent rate

1014
00:44:23,960 --> 00:44:24,960
increase.

1015
00:44:24,960 --> 00:44:28,050
I actually only had to pass along a 1 percent year over

1016
00:44:28,050 --> 00:44:29,440
year rate increase.

1017
00:44:29,440 --> 00:44:32,980
And here's why, because these are the activities that I did

1018
00:44:32,980 --> 00:44:33,239
.

1019
00:44:33,239 --> 00:44:36,449
Here's the outcomes that we realized as a function of them

1020
00:44:36,449 --> 00:44:36,800
."

1021
00:44:36,800 --> 00:44:39,079
In some years, it might be that prices fell.

1022
00:44:39,079 --> 00:44:41,639
And so, you know, what you'll be able to say in that case

1023
00:44:41,639 --> 00:44:43,239
is, "Well, the market fell by

1024
00:44:43,239 --> 00:44:44,519
5 percent.

1025
00:44:44,519 --> 00:44:47,590
And because I was actively managing my portfolio and my

1026
00:44:47,590 --> 00:44:49,599
exposure, I was able to pass along

1027
00:44:49,599 --> 00:44:55,000
4.5 percent of that 5 percent drop in market prices."

1028
00:44:55,000 --> 00:44:58,820
And then you can also very clearly say, "I spent $200,000

1029
00:44:58,820 --> 00:45:00,559
in options to do so, you know,

1030
00:45:00,559 --> 00:45:03,039
less than the $500,000 that I budgeted at the beginning of

1031
00:45:03,039 --> 00:45:03,599
the year."

1032
00:45:03,599 --> 00:45:06,610
And so then each year, you'd come back and you'd reconsider

1033
00:45:06,610 --> 00:45:08,280
these objectives, you'd reset

1034
00:45:08,280 --> 00:45:10,420
the limits of what you're managing to, and at the end of

1035
00:45:10,420 --> 00:45:11,760
the year, you can very clearly

1036
00:45:11,760 --> 00:45:14,860
measure where you are relative to those objectives and

1037
00:45:14,860 --> 00:45:15,880
those limits.

1038
00:45:15,880 --> 00:45:19,690
And so this is the direction that we would recommend moving

1039
00:45:19,690 --> 00:45:20,000
.

1040
00:45:20,000 --> 00:45:24,539
You know, it's more -- it provides a very clear benchmark

1041
00:45:24,539 --> 00:45:27,159
across multiple dimensions.

1042
00:45:27,159 --> 00:45:30,239
It's -- you know, you can come to agreement on what those

1043
00:45:30,239 --> 00:45:32,159
inputs are prior to the beginning

1044
00:45:32,159 --> 00:45:35,260
of the year, and then you can very clearly measure them

1045
00:45:35,260 --> 00:45:36,840
after the fact as well.

1046
00:45:36,840 --> 00:45:43,320
Steve, anything you'd add?

1047
00:45:43,320 --> 00:45:47,239
All right.

1048
00:45:47,239 --> 00:45:51,489
So in terms of next steps, this is one that we had talked

1049
00:45:51,489 --> 00:45:53,760
about at the last meeting we

1050
00:45:53,760 --> 00:45:54,760
presented.

1051
00:45:54,760 --> 00:45:57,570
I think if you -- you know, if you think about what the FY

1052
00:45:57,570 --> 00:45:59,619
17 benchmark, you know, is now

1053
00:45:59,619 --> 00:46:02,750
and what you -- the direction you might take it, maybe for

1054
00:46:02,750 --> 00:46:04,599
FY18, this would be what we

1055
00:46:04,599 --> 00:46:08,559
would recommend -- the process we would recommend going

1056
00:46:08,559 --> 00:46:11,000
through in order to be able to come

1057
00:46:11,000 --> 00:46:13,869
to agreement on what those objectives are and then set

1058
00:46:13,869 --> 00:46:15,800
realistic and market-compatible

1059
00:46:15,800 --> 00:46:16,960
risk limits.

1060
00:46:16,960 --> 00:46:20,050
So it would be about understanding what the exposure of the

1061
00:46:20,050 --> 00:46:21,639
current portfolio of supply

1062
00:46:21,639 --> 00:46:25,809
and load is, understanding how different hedge strategies

1063
00:46:25,809 --> 00:46:28,000
help you manage the exposure in

1064
00:46:28,000 --> 00:46:32,000
supply and load, and then using that hedge strategy to set

1065
00:46:32,000 --> 00:46:33,960
risk limits, update those

1066
00:46:33,960 --> 00:46:38,260
objectives so that everybody, you know, has a known set of

1067
00:46:38,260 --> 00:46:40,320
objectives and limits that

1068
00:46:40,320 --> 00:46:45,079
they're managing to as you go into the next fiscal year.

1069
00:46:45,079 --> 00:46:47,199
Okay.

1070
00:46:47,199 --> 00:46:49,800
Discussion?

1071
00:46:49,800 --> 00:46:54,139
Well, I just want to say I appreciate the board's indul

1072
00:46:54,139 --> 00:46:57,639
gence for fairly detailed information.

1073
00:46:57,639 --> 00:47:00,269
I also want to thank Stephen and Tim for all their work on

1074
00:47:00,269 --> 00:47:01,440
this and our staff.

1075
00:47:01,440 --> 00:47:04,050
They've been great to work with, very professional and

1076
00:47:04,050 --> 00:47:05,800
comprehensive in their approach.

1077
00:47:05,800 --> 00:47:08,090
We've got a number of things to bring back to the board and

1078
00:47:08,090 --> 00:47:09,199
the City Council and talk

1079
00:47:09,199 --> 00:47:10,199
about that.

1080
00:47:10,199 --> 00:47:12,090
We're going to be doing that in pretty quick order, in

1081
00:47:12,090 --> 00:47:13,599
particular on the governance issues.

1082
00:47:13,599 --> 00:47:18,519
This is something on the management policy that we have.

1083
00:47:18,519 --> 00:47:20,980
We created that back in 2014, but really hadn't had a

1084
00:47:20,980 --> 00:47:22,559
discussion with the board or council

1085
00:47:22,559 --> 00:47:23,559
since that time.

1086
00:47:23,559 --> 00:47:26,429
So we want to have a good discussion of what's appropriate,

1087
00:47:26,429 --> 00:47:28,019
what are the recommendations

1088
00:47:28,019 --> 00:47:30,309
that we want to put in there, and then on at least an

1089
00:47:30,309 --> 00:47:31,800
annual basis come back and talk

1090
00:47:31,800 --> 00:47:34,840
about that every year of what do we need to tweak, what are

1091
00:47:34,840 --> 00:47:36,280
areas that we can improve

1092
00:47:36,280 --> 00:47:38,570
on and how can we manage that differently, and to keep that

1093
00:47:38,570 --> 00:47:39,719
really front and center for

1094
00:47:39,719 --> 00:47:41,480
both the board and the City Council.

1095
00:47:41,480 --> 00:47:42,960
But we've got a lot of work to do.

1096
00:47:42,960 --> 00:47:45,239
We'll be bringing this back in future meetings with you.

1097
00:47:45,239 --> 00:47:48,260
Again, just want to say thank you for your time, and Tim

1098
00:47:48,260 --> 00:47:50,039
and Stephen, thank you for all

1099
00:47:50,039 --> 00:47:51,039
your work.

1100
00:47:51,039 --> 00:47:54,039
Thank you.

1101
00:47:54,039 --> 00:48:00,179
Just in terms of I'm thinking what's a good nutshell bumper

1102
00:48:00,179 --> 00:48:02,880
sticker takeaway for me to

1103
00:48:02,880 --> 00:48:09,440
explain to a layperson who doesn't have time to read all of

1104
00:48:09,440 --> 00:48:10,480
this.

1105
00:48:10,480 --> 00:48:15,380
And I haven't yet been asked, so what do you, by the public

1106
00:48:15,380 --> 00:48:19,199
, what do you think of this report?

1107
00:48:19,199 --> 00:48:21,739
And I just wanted to run by you what I was thinking of

1108
00:48:21,739 --> 00:48:23,440
saying, and so you could let me

1109
00:48:23,440 --> 00:48:28,760
know if this was a correct assessment or not.

1110
00:48:28,760 --> 00:48:31,500
My sense, and I think this is a little different than what

1111
00:48:31,500 --> 00:48:33,280
Susan's sense of it, but maybe this

1112
00:48:33,280 --> 00:48:37,519
is just two sides of the same coin, I'm not sure.

1113
00:48:37,519 --> 00:48:41,929
From reading the report and from hearing your presentation

1114
00:48:41,929 --> 00:48:44,760
that this is not a diagnosis of

1115
00:48:44,760 --> 00:48:46,400
a terminal illness, right?

1116
00:48:46,400 --> 00:48:51,619
It's not, so this is not your, this is a sick organization

1117
00:48:51,619 --> 00:48:54,480
and it's in serious trouble,

1118
00:48:54,480 --> 00:48:59,340
but rather, and this is what I was planning on telling

1119
00:48:59,340 --> 00:49:02,639
people if this is correct, rather,

1120
00:49:02,639 --> 00:49:06,530
you're in pretty good health, but you don't have a doctor

1121
00:49:06,530 --> 00:49:08,360
and you need a doctor and a

1122
00:49:08,360 --> 00:49:13,000
health plan in place and you're very lucky that you've been

1123
00:49:13,000 --> 00:49:15,199
doing well so far and we're

1124
00:49:15,199 --> 00:49:19,500
going to be fine as long as we have these things in place

1125
00:49:19,500 --> 00:49:20,840
that we need.

1126
00:49:20,840 --> 00:49:24,469
And so anyway, is that, or if you would want to tweak that,

1127
00:49:24,469 --> 00:49:26,280
I mean, I'm not interested

1128
00:49:26,280 --> 00:49:27,800
in hearing that that's a good example.

1129
00:49:27,800 --> 00:49:30,409
I'm just thinking is this right and if it's not, well, what

1130
00:49:30,409 --> 00:49:31,760
would be good, you know, in

1131
00:49:31,760 --> 00:49:34,940
one sentence, kind of analogy for somebody who really doesn

1132
00:49:34,940 --> 00:49:36,320
't have the time to go into

1133
00:49:36,320 --> 00:49:39,280
this at the level of detail that we do.

1134
00:49:39,280 --> 00:49:41,889
I think it's a fair comment and, you know, in the doctor

1135
00:49:41,889 --> 00:49:43,360
analogy, that's the kind of

1136
00:49:43,360 --> 00:49:46,989
the governance and the policy infrastructure that needs a

1137
00:49:46,989 --> 00:49:47,719
refresh.

1138
00:49:47,719 --> 00:49:49,519
I think that's accurate.

1139
00:49:49,519 --> 00:49:53,150
I think in general what I suggested, the assessment of the

1140
00:49:53,150 --> 00:49:55,480
capabilities and then the benchmark

1141
00:49:55,480 --> 00:50:00,070
discussion, they come together in terms of as an

1142
00:50:00,070 --> 00:50:03,760
organization and as, you know, what

1143
00:50:03,760 --> 00:50:07,840
are the objectives of DME as an organization through the

1144
00:50:07,840 --> 00:50:10,280
city and what's the ultimate kind

1145
00:50:10,280 --> 00:50:12,960
of metric or measurement of success.

1146
00:50:12,960 --> 00:50:15,429
And if as an organization you can define that and that

1147
00:50:15,429 --> 00:50:17,079
might be, you know, what are the

1148
00:50:17,079 --> 00:50:20,619
rates that our citizens ultimately pay for electricity and

1149
00:50:20,619 --> 00:50:22,159
there are other factors as

1150
00:50:22,159 --> 00:50:24,489
well as where does that electricity come from and all those

1151
00:50:24,489 --> 00:50:25,800
discussions around renewable

1152
00:50:25,800 --> 00:50:27,360
are built into it as well.

1153
00:50:27,360 --> 00:50:31,780
But I think gaining consensus on that ultimate objective

1154
00:50:31,780 --> 00:50:34,800
can help then drive, you know, what's

1155
00:50:34,800 --> 00:50:38,260
the framework within which we're going to expect the DME

1156
00:50:38,260 --> 00:50:39,800
and the EMO to operate and

1157
00:50:39,800 --> 00:50:43,019
as an aside, we started just talking about DME and then

1158
00:50:43,019 --> 00:50:44,760
kind of this EMO is a separate

1159
00:50:44,760 --> 00:50:47,000
entity I think should go away as a concept.

1160
00:50:47,000 --> 00:50:51,480
I think it's all within, you know, the utility.

1161
00:50:51,480 --> 00:50:55,380
If we can define the objective that will enable as a risk

1162
00:50:55,380 --> 00:50:57,880
oversight function you to define

1163
00:50:57,880 --> 00:51:00,739
what are the parameters within which they are going to

1164
00:51:00,739 --> 00:51:02,360
operate and it also will help

1165
00:51:02,360 --> 00:51:05,269
define how do we do and all those discussions kind of after

1166
00:51:05,269 --> 00:51:06,760
the fact in the first part of

1167
00:51:06,760 --> 00:51:10,309
the work that we did which is, you know, kind of digging

1168
00:51:10,309 --> 00:51:12,280
into a calculation and you can

1169
00:51:12,280 --> 00:51:15,449
always debate like the different variables that are used to

1170
00:51:15,449 --> 00:51:16,679
do that calculation.

1171
00:51:16,679 --> 00:51:20,219
Our recommendation to think about a performance-based

1172
00:51:20,219 --> 00:51:23,480
benchmark is, you know, in some ways a departure

1173
00:51:23,480 --> 00:51:26,500
from the cost-based benchmark that I think has been in

1174
00:51:26,500 --> 00:51:28,320
place to date but maybe gets the

1175
00:51:28,320 --> 00:51:31,389
organization back into the singular focus of we're trying

1176
00:51:31,389 --> 00:51:32,840
to protect our rate payers

1177
00:51:32,840 --> 00:51:35,849
and the citizens and they're not paying, you know, above a

1178
00:51:35,849 --> 00:51:37,119
certain amount or that they

1179
00:51:37,119 --> 00:51:41,369
can benefit from, you know, from market moves that are in

1180
00:51:41,369 --> 00:51:42,400
our favor.

1181
00:51:42,400 --> 00:51:47,309
I think that kind of as a goal post is the key takeaway for

1182
00:51:47,309 --> 00:51:49,559
me and I think in order to

1183
00:51:49,559 --> 00:51:52,670
get there, back to your question, the framework is there,

1184
00:51:52,670 --> 00:51:54,599
the people are there, that, you

1185
00:51:54,599 --> 00:51:57,960
know, it's kind of -- it's there.

1186
00:51:57,960 --> 00:52:00,849
I think the goal is to identify what ultimately are we

1187
00:52:00,849 --> 00:52:02,920
measuring and that will fill in some

1188
00:52:02,920 --> 00:52:03,920
of the blanks.

1189
00:52:03,920 --> 00:52:06,119
Very long-winded answer to your question.

1190
00:52:06,119 --> 00:52:08,079
And, Deb, we're more in agreement than not.

1191
00:52:08,079 --> 00:52:09,079
Yes.

1192
00:52:09,079 --> 00:52:12,269
And I think I would just add one, you know, one piece to

1193
00:52:12,269 --> 00:52:13,840
that and it's -- I don't think

1194
00:52:13,840 --> 00:52:18,079
it's everything's your way or because you've been lucky.

1195
00:52:18,079 --> 00:52:20,690
I think it's -- to date it's been a lot of individual, you

1196
00:52:20,690 --> 00:52:22,039
know, a lot of individual

1197
00:52:22,039 --> 00:52:24,849
effort and I think the governance recommendations I think

1198
00:52:24,849 --> 00:52:26,760
will help make it less of an individual

1199
00:52:26,760 --> 00:52:29,780
effort and more an organizational effort which I think will

1200
00:52:29,780 --> 00:52:31,559
streamline and make that process

1201
00:52:31,559 --> 00:52:37,280
easier and more transparent.

1202
00:52:37,280 --> 00:52:42,190
We're lucky that we have the people who have been able to

1203
00:52:42,190 --> 00:52:46,000
make these decisions on staff.

1204
00:52:46,000 --> 00:52:48,960
That's all we have for you.

1205
00:52:48,960 --> 00:52:49,960
All right.

1206
00:52:49,960 --> 00:52:50,960
Thank you very much.

1207
00:52:50,960 --> 00:52:51,960
Thank you.

1208
00:52:51,960 --> 00:52:56,670
And I've been told that we are going to pull the closed

1209
00:52:56,670 --> 00:52:59,199
meeting item and so that brings

1210
00:52:59,199 --> 00:53:02,440
us down to the consent agenda and I've been asked to pull

1211
00:53:02,440 --> 00:53:04,000
item B. That should -- oh, I'm

1212
00:53:04,000 --> 00:53:05,000
sorry.

1213
00:53:05,000 --> 00:53:06,000
Just curious how come we're pulling that.

1214
00:53:06,000 --> 00:53:07,000
Larry, how come we're pulling the closed meeting?

1215
00:53:07,000 --> 00:53:07,570
We can't put in a note, sir, so we decided years ago we'd

1216
00:53:07,570 --> 00:53:08,000
take off those agendas.

1217
00:53:08,000 --> 00:53:09,000
Okay.

1218
00:53:09,000 --> 00:53:10,000
So it's a -- will be discussed by Council tomorrow?

1219
00:53:10,000 --> 00:53:11,000
No.

1220
00:53:11,000 --> 00:53:12,000
It's not.

1221
00:53:12,000 --> 00:53:13,000
It's not.

1222
00:53:13,000 --> 00:53:21,469
They're getting their -- they're going back to the old

1223
00:53:21,469 --> 00:53:24,000
first.

1224
00:53:24,000 --> 00:53:25,000
Thank you.

1225
00:53:25,000 --> 00:53:26,000
Thank you.

1226
00:53:26,000 --> 00:53:27,000
Okay.

1227
00:53:27,000 --> 00:53:28,000
Consent agenda.

1228
00:53:28,000 --> 00:53:30,039
Then we've been asked to pull item B off the consent agenda

1229
00:53:30,039 --> 00:53:31,119
because that should have been

1230
00:53:31,119 --> 00:53:34,039
an item for individual consideration.

1231
00:53:34,039 --> 00:53:36,840
So that leaves one item A on the consent agenda.

1232
00:53:36,840 --> 00:53:42,679
Does anybody wish to pull it?

1233
00:53:42,679 --> 00:53:45,679
Or a motion to approve the consent agenda item A?

1234
00:53:45,679 --> 00:53:47,679
I move.

1235
00:53:47,679 --> 00:53:48,679
Okay.

1236
00:53:48,679 --> 00:53:50,679
Do I have --

1237
00:53:50,679 --> 00:53:51,679
Second.

1238
00:53:51,679 --> 00:53:52,679
Okay.

1239
00:53:52,679 --> 00:53:53,679
All in favor?

1240
00:53:53,679 --> 00:53:54,679
Aye.

1241
00:53:54,679 --> 00:53:55,679
Aye.

1242
00:53:55,679 --> 00:53:56,679
Okay.

1243
00:53:56,679 --> 00:53:57,679
Items for individual consideration.

1244
00:53:57,679 --> 00:53:59,679
Should we take B first?

1245
00:53:59,679 --> 00:54:00,880
Okay.

1246
00:54:00,880 --> 00:54:08,420
So we'll be taking, well, the consent agenda item B. I don

1247
00:54:08,420 --> 00:54:09,400
't know how to say it, so --

1248
00:54:09,400 --> 00:54:10,400
All right.

1249
00:54:10,400 --> 00:54:32,840
Tidistus, City Engineer.

1250
00:54:32,840 --> 00:54:36,719
I've also got the project manager, Lee Perry, here.

1251
00:54:36,719 --> 00:54:40,860
I'm bringing to you today a project that is currently on

1252
00:54:40,860 --> 00:54:41,719
our CIP.

1253
00:54:41,719 --> 00:54:45,320
It was a bond funded project, I believe.

1254
00:54:45,320 --> 00:54:48,440
Pack four, phases one and two, you've actually seen before.

1255
00:54:48,440 --> 00:54:51,309
We came last month and actually got council to -- and you

1256
00:54:51,309 --> 00:54:52,840
all to award the contract to

1257
00:54:52,840 --> 00:54:57,349
move forward with construction on that piece of the project

1258
00:54:57,349 --> 00:54:57,679
.

1259
00:54:57,679 --> 00:55:01,159
Ultimately, this was all supposed to be one project.

1260
00:55:01,159 --> 00:55:04,789
But for a lot of different reasons, funding being one piece

1261
00:55:04,789 --> 00:55:06,480
of it, we were -- we weren't

1262
00:55:06,480 --> 00:55:09,360
able to do all of that project at one time.

1263
00:55:09,360 --> 00:55:12,130
Time has just not been our friend on some of these projects

1264
00:55:12,130 --> 00:55:12,400
.

1265
00:55:12,400 --> 00:55:16,119
So what we have today is the second phase of that project

1266
00:55:16,119 --> 00:55:18,320
asking for the design contract

1267
00:55:18,320 --> 00:55:20,559
to go forward.

1268
00:55:20,559 --> 00:55:26,360
So this project in general -- let me go back a little bit

1269
00:55:26,360 --> 00:55:27,320
here.

1270
00:55:27,320 --> 00:55:29,719
It's a project that, like I said before, connects to the

1271
00:55:29,719 --> 00:55:31,960
project that's currently going to construction.

1272
00:55:31,960 --> 00:55:34,500
It'll start construction shortly after the first of the

1273
00:55:34,500 --> 00:55:36,000
year, which runs primarily through

1274
00:55:36,000 --> 00:55:37,000
downtown.

1275
00:55:37,000 --> 00:55:39,219
And let's skip past a couple of slides here and get to the

1276
00:55:39,219 --> 00:55:39,559
map.

1277
00:55:39,559 --> 00:55:41,920
It's a little easier to follow.

1278
00:55:41,920 --> 00:55:45,949
So phases one and two, the creek itself, peck four, Pecan

1279
00:55:45,949 --> 00:55:48,159
Creek, tributary four is what

1280
00:55:48,159 --> 00:55:50,519
that really stands for.

1281
00:55:50,519 --> 00:55:54,150
Ties into Pecan Creek, a little bit off the screen here,

1282
00:55:54,150 --> 00:55:56,079
comes up, crosses Locust and

1283
00:55:56,079 --> 00:55:58,159
Elm and then follows to the north.

1284
00:55:58,159 --> 00:56:01,699
And the creek itself actually runs through a couple of

1285
00:56:01,699 --> 00:56:03,519
channels up north of Oak.

1286
00:56:03,519 --> 00:56:09,599
No, we didn't make it that far, sorry.

1287
00:56:09,599 --> 00:56:12,210
Up to Mulberry and then it goes just north of Mulberry,

1288
00:56:12,210 --> 00:56:13,679
comes back across Carroll and

1289
00:56:13,679 --> 00:56:16,920
all the way back over through this neighborhood.

1290
00:56:16,920 --> 00:56:19,320
Is that Prairie Street?

1291
00:56:19,320 --> 00:56:20,320
Bernard, sorry.

1292
00:56:20,320 --> 00:56:24,400
It gets all the way back over to Bernard.

1293
00:56:24,400 --> 00:56:27,130
Part of what happens here, and you don't see it on this map

1294
00:56:27,130 --> 00:56:28,760
, is there is a floodplain that

1295
00:56:28,760 --> 00:56:32,760
takes in a very large amount of this entire area, trying to

1296
00:56:32,760 --> 00:56:34,480
outline it here as best I

1297
00:56:34,480 --> 00:56:37,000
can so you can get a sense of the area.

1298
00:56:37,000 --> 00:56:39,730
It takes into account a very large area of downtown and it

1299
00:56:39,730 --> 00:56:41,079
inundates quite a few homes

1300
00:56:41,079 --> 00:56:44,389
in the neighborhood back to the west of Carroll, this area

1301
00:56:44,389 --> 00:56:45,400
back in here.

1302
00:56:45,400 --> 00:56:48,800
So a lot of homes drain into this creek.

1303
00:56:48,800 --> 00:56:51,320
What this project will do is it will remove a good number

1304
00:56:51,320 --> 00:56:52,599
of those homes, I think all

1305
00:56:52,599 --> 00:56:55,059
of the homes out of the floodplain, and then it removes the

1306
00:56:55,059 --> 00:56:56,539
vast majority of the businesses

1307
00:56:56,539 --> 00:56:59,630
out of the floodplain by taking everything into a box

1308
00:56:59,630 --> 00:57:01,800
instead of it being an open channel.

1309
00:57:01,800 --> 00:57:04,690
It brings it into a box so all those buildings, all the

1310
00:57:04,690 --> 00:57:07,039
vacant land that's there for development

1311
00:57:07,039 --> 00:57:10,679
in the downtown area on that south side is now available to

1312
00:57:10,679 --> 00:57:11,800
be developed.

1313
00:57:11,800 --> 00:57:13,739
We can do a lot more with it since it will be out of the

1314
00:57:13,739 --> 00:57:15,079
floodplain and the floodway.

1315
00:57:15,079 --> 00:57:17,599
The floodway is the key factor there.

1316
00:57:17,599 --> 00:57:20,329
On the map there is a floodway, the FEMA map today, there's

1317
00:57:20,329 --> 00:57:21,440
a floodway that runs through

1318
00:57:21,440 --> 00:57:23,880
downtown, prevents a lot of development.

1319
00:57:23,880 --> 00:57:26,880
Not put a structure in the floodway.

1320
00:57:26,880 --> 00:57:30,769
So what this project does, phase one and phase two, is this

1321
00:57:30,769 --> 00:57:32,320
green and blue line.

1322
00:57:32,320 --> 00:57:35,260
That is ongoing right now, we'll be going to construction

1323
00:57:35,260 --> 00:57:35,719
soon.

1324
00:57:35,719 --> 00:57:38,159
Phase three and four, there's a couple of lines here.

1325
00:57:38,159 --> 00:57:41,469
This yellow line is the original projection of phase three

1326
00:57:41,469 --> 00:57:43,360
and phase four goes from Carroll

1327
00:57:43,360 --> 00:57:46,300
back to the west to tie into the open channel just through

1328
00:57:46,300 --> 00:57:47,599
this neighborhood.

1329
00:57:47,599 --> 00:57:49,820
Now this, it's kind of a misnomer through here, I believe

1330
00:57:49,820 --> 00:57:51,039
this is just a little drainage

1331
00:57:51,039 --> 00:57:54,400
ditch, is that correct?

1332
00:57:54,400 --> 00:58:03,679
That picks that up.

1333
00:58:03,679 --> 00:58:06,329
It's a bit of a channel, but it is out of the floodplain by

1334
00:58:06,329 --> 00:58:07,760
the time we get in there.

1335
00:58:07,760 --> 00:58:11,139
So what we're looking to do with this project, and you'll

1336
00:58:11,139 --> 00:58:13,159
see a dashed purple line here.

1337
00:58:13,159 --> 00:58:16,050
As we originally looked at this project, it was remove the

1338
00:58:16,050 --> 00:58:17,719
floodplain, putting the boxes

1339
00:58:17,719 --> 00:58:20,969
in underneath the road, which is a lot easier for us to

1340
00:58:20,969 --> 00:58:23,079
access because you know you're not

1341
00:58:23,079 --> 00:58:25,110
going to get buildings, you're not going to get a lot of

1342
00:58:25,110 --> 00:58:26,519
structures or homes or businesses

1343
00:58:26,519 --> 00:58:28,360
that we got to interrupt to get in there.

1344
00:58:28,360 --> 00:58:31,130
It's bad enough to interrupt traffic, we definitely don't

1345
00:58:31,130 --> 00:58:32,960
want to do that on private property.

1346
00:58:32,960 --> 00:58:35,730
The problem we're running into is you still have what's

1347
00:58:35,730 --> 00:58:37,440
left of this channel that we can't

1348
00:58:37,440 --> 00:58:40,440
completely take away because you still have to allow those

1349
00:58:40,440 --> 00:58:42,300
homes and those businesses that

1350
00:58:42,300 --> 00:58:45,139
have traditionally not had anywhere to drain other than

1351
00:58:45,139 --> 00:58:46,920
that creek, we can't completely

1352
00:58:46,920 --> 00:58:47,920
take it away.

1353
00:58:47,920 --> 00:58:50,750
So we're still going to catch that water in this channel

1354
00:58:50,750 --> 00:58:52,360
left on the north side here.

1355
00:58:52,360 --> 00:58:55,420
So an alternative proposal, and that's part of the reason

1356
00:58:55,420 --> 00:58:57,400
why the contract for basic services

1357
00:58:57,400 --> 00:59:01,860
is just over $900,000, is to look at both the yellow ph

1358
00:59:01,860 --> 00:59:04,000
asing and the purple to say that

1359
00:59:04,000 --> 00:59:07,650
may be a better alignment from the standpoint that it still

1360
00:59:07,650 --> 00:59:10,119
provides a lot better and potentially

1361
00:59:10,119 --> 00:59:13,800
a lot less construction cost to us by leaving this drainage

1362
00:59:13,800 --> 00:59:15,519
channel in place as much as

1363
00:59:15,519 --> 00:59:17,000
possible.

1364
00:59:17,000 --> 00:59:19,989
By the time we take the vast majority of the floodplain out

1365
00:59:19,989 --> 00:59:21,559
, this really just becomes a

1366
00:59:21,559 --> 00:59:22,800
little collector ditch.

1367
00:59:22,800 --> 00:59:25,760
It's not a floodplain prone area.

1368
00:59:25,760 --> 00:59:28,280
So that's why you see these two alternatives here.

1369
00:59:28,280 --> 00:59:30,829
It's also partially why you see a little bit higher

1370
00:59:30,829 --> 00:59:32,840
contract cost than we potentially would

1371
00:59:32,840 --> 00:59:34,119
have seen.

1372
00:59:34,119 --> 00:59:37,469
We also have, I need to go backwards, we got our slides a

1373
00:59:37,469 --> 00:59:39,320
little bit out of order, I'm

1374
00:59:39,320 --> 00:59:41,619
sorry about that.

1375
00:59:41,619 --> 00:59:44,840
Some project costs as we estimate right now are looking at

1376
00:59:44,840 --> 00:59:47,079
1.2 million for design, which

1377
00:59:47,079 --> 00:59:49,639
is what you have before you right now.

1378
00:59:49,639 --> 00:59:51,360
That takes into account quite a few items.

1379
00:59:51,360 --> 00:59:55,059
Now if you look at what that really runs on a project that

1380
00:59:55,059 --> 00:59:57,019
's not that unusual to see it

1381
00:59:57,019 --> 01:00:01,010
running in the 10 to 12% range, when you also consider that

1382
01:00:01,010 --> 01:00:03,320
there's a lot of potential properties,

1383
01:00:03,320 --> 01:00:05,519
there's a couple of different scenarios we need to look at.

1384
01:00:05,519 --> 01:00:07,980
And we've got some construction costs or construction

1385
01:00:07,980 --> 01:00:09,480
administration services built

1386
01:00:09,480 --> 01:00:10,480
into that contract.

1387
01:00:10,480 --> 01:00:12,920
So the consultant will be working with us hand in hand

1388
01:00:12,920 --> 01:00:14,519
through the construction phase

1389
01:00:14,519 --> 01:00:18,000
to make sure this project gets done timely and effectively.

1390
01:00:18,000 --> 01:00:21,539
A little bit spent on that will usually, by and large, save

1391
01:00:21,539 --> 01:00:23,000
you quite a bit during the

1392
01:00:23,000 --> 01:00:25,280
construction phase.

1393
01:00:25,280 --> 01:00:28,469
We are looking at potentially $300,000 in property acquis

1394
01:00:28,469 --> 01:00:29,000
itions.

1395
01:00:29,000 --> 01:00:30,440
That's that purple line that you saw.

1396
01:00:30,440 --> 01:00:32,199
We're meant to continue to get some easements.

1397
01:00:32,199 --> 01:00:36,099
We are working with the county to try to get some

1398
01:00:36,099 --> 01:00:38,920
additional aid and help there.

1399
01:00:38,920 --> 01:00:41,530
And then the construction costs right now are currently

1400
01:00:41,530 --> 01:00:43,280
projected at $9.3 million.

1401
01:00:43,280 --> 01:00:44,940
So it's an expensive box.

1402
01:00:44,940 --> 01:00:48,340
Anytime you start putting boxes of this size in, they're

1403
01:00:48,340 --> 01:00:49,699
always expensive.

1404
01:00:49,699 --> 01:00:51,400
We are going through the process.

1405
01:00:51,400 --> 01:00:53,920
What's in that number is a contingency factor.

1406
01:00:53,920 --> 01:00:56,320
So we're trying to give you the worst case scenario of what

1407
01:00:56,320 --> 01:00:57,360
we think this is going to

1408
01:00:57,360 --> 01:00:58,360
be.

1409
01:00:58,360 --> 01:01:01,480
Of course, we will analyze all options to try to keep that

1410
01:01:01,480 --> 01:01:03,320
cost down as much as possible.

1411
01:01:03,320 --> 01:01:07,559
We are proposing to have Fris and Nichols, who did the

1412
01:01:07,559 --> 01:01:10,019
design for phases one and two,

1413
01:01:10,019 --> 01:01:13,309
they picked up where T. Nolan Perkins did the study for the

1414
01:01:13,309 --> 01:01:14,760
entire street stretch of

1415
01:01:14,760 --> 01:01:16,559
this creek.

1416
01:01:16,559 --> 01:01:19,699
They picked up and did the design for the PEK4 phase one

1417
01:01:19,699 --> 01:01:21,260
and two construction.

1418
01:01:21,260 --> 01:01:23,659
So that is part of the reason why we selected them for

1419
01:01:23,659 --> 01:01:25,559
three and four, is it's just a natural

1420
01:01:25,559 --> 01:01:26,719
extension of this project.

1421
01:01:26,719 --> 01:01:29,139
So instead of getting somebody else on board which would

1422
01:01:29,139 --> 01:01:30,880
have taken longer, we'd potentially

1423
01:01:30,880 --> 01:01:33,659
have some conflicts between the two, just trying to get

1424
01:01:33,659 --> 01:01:35,360
them to marry up their designs.

1425
01:01:35,360 --> 01:01:38,119
It kept this in one shop and kept it moving forward.

1426
01:01:38,119 --> 01:01:39,119
They were very qualified.

1427
01:01:39,119 --> 01:01:42,329
We used them on multiple occasions and they are known

1428
01:01:42,329 --> 01:01:44,559
throughout the state for this type

1429
01:01:44,559 --> 01:01:47,559
of work and more.

1430
01:01:47,559 --> 01:01:50,719
We ran through quite a bit of that.

1431
01:01:50,719 --> 01:01:53,840
So our recommendation is that we would ask you to approve

1432
01:01:53,840 --> 01:01:55,440
this contract or recommend

1433
01:01:55,440 --> 01:01:58,349
approval to counsel this contract for $1.2 million with Fr

1434
01:01:58,349 --> 01:01:59,239
is and Nichols.

1435
01:01:59,239 --> 01:02:01,460
If you have any questions, I'm here to answer any questions

1436
01:02:01,460 --> 01:02:02,159
you might have.

1437
01:02:02,159 --> 01:02:05,159
I'm going to leave Perry's here as well.

1438
01:02:05,159 --> 01:02:06,159
Yes sir.

1439
01:02:06,159 --> 01:02:11,650
So the way I see this is by doing this, you talk about

1440
01:02:11,650 --> 01:02:14,480
removing the floodplain.

1441
01:02:14,480 --> 01:02:18,400
Which allows land to be developed.

1442
01:02:18,400 --> 01:02:20,670
So you have the cost side, but now you're going to have a

1443
01:02:20,670 --> 01:02:21,400
revenue side.

1444
01:02:21,400 --> 01:02:25,190
Because then with the developed land, you'll have increased

1445
01:02:25,190 --> 01:02:26,440
property taxes.

1446
01:02:26,440 --> 01:02:30,710
You'll be able to basically pay for over time the cost of

1447
01:02:30,710 --> 01:02:31,920
doing this.

1448
01:02:31,920 --> 01:02:35,760
And to the homeowners, it would seem like if they can even

1449
01:02:35,760 --> 01:02:38,039
get insurance, their insurance

1450
01:02:38,039 --> 01:02:40,389
cost, at least in that area, is going to go down because

1451
01:02:40,389 --> 01:02:41,719
they're not being paid enough

1452
01:02:41,719 --> 01:02:42,719
floodplain.

1453
01:02:42,719 --> 01:02:43,719
Yes sir.

1454
01:02:43,719 --> 01:02:44,719
So a lot of benefits for all of this.

1455
01:02:44,719 --> 01:02:47,449
It also improves our rating standing with the Federal

1456
01:02:47,449 --> 01:02:49,159
Emergency Management Agency.

1457
01:02:49,159 --> 01:02:50,159
Okay.

1458
01:02:50,159 --> 01:02:51,159
Thank you.

1459
01:02:51,159 --> 01:02:52,159
Go ahead, Dan.

1460
01:02:52,159 --> 01:02:55,159
I just want to clarify the construction costs.

1461
01:02:55,159 --> 01:02:56,159
Yes sir.

1462
01:02:56,159 --> 01:02:59,079
So is this, they've been approved or not approved?

1463
01:02:59,079 --> 01:03:00,519
For this project, no.

1464
01:03:00,519 --> 01:03:01,519
This is three and four.

1465
01:03:01,519 --> 01:03:03,239
For phase one and two, yes.

1466
01:03:03,239 --> 01:03:04,239
That contract asks.

1467
01:03:04,239 --> 01:03:09,280
So you're going to present these in the 2020 bond package?

1468
01:03:09,280 --> 01:03:12,159
Unless we can find other sources of funding, yes sir.

1469
01:03:12,159 --> 01:03:15,320
We're constantly looking for other ways to fund this work.

1470
01:03:15,320 --> 01:03:18,050
Grants, wherever we can find out their partnerships, we're

1471
01:03:18,050 --> 01:03:19,159
constantly looking.

1472
01:03:19,159 --> 01:03:22,190
But yes, right now the only source of funding we know of

1473
01:03:22,190 --> 01:03:24,519
would be a 2020 debt program.

1474
01:03:24,519 --> 01:03:28,409
So Derek, the one and two, the phase one and two was

1475
01:03:28,409 --> 01:03:31,039
supposed to do the same things that

1476
01:03:31,039 --> 01:03:32,880
you're saying the three and four is doing.

1477
01:03:32,880 --> 01:03:33,880
Yes.

1478
01:03:33,880 --> 01:03:36,380
So when did we realize that one and two wasn't going to do

1479
01:03:36,380 --> 01:03:37,840
exactly what we thought it was

1480
01:03:37,840 --> 01:03:38,840
going to be?

1481
01:03:38,840 --> 01:03:40,880
I'm not sure how far back that history goes.

1482
01:03:40,880 --> 01:03:43,159
I know when I got here in July, we went through and started

1483
01:03:43,159 --> 01:03:44,760
going through every single project

1484
01:03:44,760 --> 01:03:48,719
to look on how far they can go.

1485
01:03:48,719 --> 01:03:50,719
And this was one of the first ones we looked at and said, "

1486
01:03:50,719 --> 01:03:51,800
We're not going to get that

1487
01:03:51,800 --> 01:03:52,800
far."

1488
01:03:52,800 --> 01:03:55,170
I knew that, but to answer your question on how far back

1489
01:03:55,170 --> 01:03:56,440
that went, I don't know.

1490
01:03:56,440 --> 01:03:57,440
Okay.

1491
01:03:57,440 --> 01:03:58,440
Okay.

1492
01:03:58,440 --> 01:03:59,440
Thank you.

1493
01:03:59,440 --> 01:04:00,440
Deb, did you have a question?

1494
01:04:00,440 --> 01:04:01,440
Oh yes, I did.

1495
01:04:01,440 --> 01:04:04,579
Well first I wanted to say thank you for this and thanks

1496
01:04:04,579 --> 01:04:06,639
for pulling this from the consent

1497
01:04:06,639 --> 01:04:07,639
agenda.

1498
01:04:07,639 --> 01:04:10,250
I was going to ask to have it pulled and I was already

1499
01:04:10,250 --> 01:04:11,800
planning on voting yes for it,

1500
01:04:11,800 --> 01:04:14,530
but because of the cost, but also because it's such an

1501
01:04:14,530 --> 01:04:16,159
important and timely issue.

1502
01:04:16,159 --> 01:04:20,329
And I think it's important that the public see what the

1503
01:04:20,329 --> 01:04:23,559
city is doing for flood preparedness.

1504
01:04:23,559 --> 01:04:24,559
Yes.

1505
01:04:24,559 --> 01:04:27,789
As most of you probably saw, there was a recent article in

1506
01:04:27,789 --> 01:04:29,880
the Denton Record Chronicle about

1507
01:04:29,880 --> 01:04:34,150
flood preparedness in Denton and a lot of people in the

1508
01:04:34,150 --> 01:04:37,199
community were expressing concerns

1509
01:04:37,199 --> 01:04:38,199
about that.

1510
01:04:38,199 --> 01:04:41,170
So it's really reassuring to see that we have such plans in

1511
01:04:41,170 --> 01:04:42,599
place moving forward.

1512
01:04:42,599 --> 01:04:46,829
And it is a big expense, but it is extremely important as

1513
01:04:46,829 --> 01:04:48,960
Alan was saying in all kinds

1514
01:04:48,960 --> 01:04:54,989
of ways and in addition to the ways that Alan said it, save

1515
01:04:54,989 --> 01:04:57,599
lives and save homes.

1516
01:04:57,599 --> 01:05:04,659
And my question was, how is this plan connected to, or is

1517
01:05:04,659 --> 01:05:08,639
this plan connected to a larger

1518
01:05:08,639 --> 01:05:13,460
city-wide flood preparedness plan moving forward as

1519
01:05:13,460 --> 01:05:17,559
considering all the growth that we're having

1520
01:05:17,559 --> 01:05:22,030
in other parts of town, for instance around Bucky, the B

1521
01:05:22,030 --> 01:05:24,320
ucky's area there was a lot of

1522
01:05:24,320 --> 01:05:28,440
concern about the drainage of the homes around there.

1523
01:05:28,440 --> 01:05:34,599
Is this tied into a larger plan for flood preparedness city

1524
01:05:34,599 --> 01:05:37,480
-wide or is that something

1525
01:05:37,480 --> 01:05:42,400
that would be created at a later date?

1526
01:05:42,400 --> 01:05:44,800
It is something that we're working on and developing.

1527
01:05:44,800 --> 01:05:48,429
It is one of those key components that after the 2007

1528
01:05:48,429 --> 01:05:50,440
floods that this was one of those

1529
01:05:50,440 --> 01:05:54,739
areas that was identified real quickly that it was an issue

1530
01:05:54,739 --> 01:05:55,079
.

1531
01:05:55,079 --> 01:05:57,710
So yes, you have some revenue benefits on this, but the

1532
01:05:57,710 --> 01:05:59,039
primary cause of this was a

1533
01:05:59,039 --> 01:06:02,079
safety project and that's where this comes from.

1534
01:06:02,079 --> 01:06:04,719
We are looking at all of our floodplains.

1535
01:06:04,719 --> 01:06:06,400
We are required to do so annually.

1536
01:06:06,400 --> 01:06:10,570
We are in a, because we are members of the community rating

1537
01:06:10,570 --> 01:06:12,519
system with FEMA, we have

1538
01:06:12,519 --> 01:06:15,320
to go through an annual audit process.

1539
01:06:15,320 --> 01:06:18,489
And usually the five-year audit, because a five-year is a

1540
01:06:18,489 --> 01:06:20,480
very detailed audit of everything

1541
01:06:20,480 --> 01:06:23,349
we've done from a permitting standpoint with developers,

1542
01:06:23,349 --> 01:06:24,920
with homeowners that have come

1543
01:06:24,920 --> 01:06:27,800
in, they're wanting to build a brand new home.

1544
01:06:27,800 --> 01:06:30,409
And on an annual basis, we just do a double check, make

1545
01:06:30,409 --> 01:06:32,079
sure are we still doing everything

1546
01:06:32,079 --> 01:06:33,199
that we thought we would do?

1547
01:06:33,199 --> 01:06:35,829
And it requires us to look forward on what are we going to

1548
01:06:35,829 --> 01:06:37,400
do over the next five years.

1549
01:06:37,400 --> 01:06:40,619
So yes, this is a part of that plan, but it's an ongoing

1550
01:06:40,619 --> 01:06:42,440
process for us of what needs to

1551
01:06:42,440 --> 01:06:43,440
be done next.

1552
01:06:43,440 --> 01:06:44,440
Yes, ma'am.

1553
01:06:44,440 --> 01:06:46,960
Okay, any further questions?

1554
01:06:46,960 --> 01:06:55,800
Do we have a motion to approve?

1555
01:06:55,800 --> 01:06:56,800
And a second?

1556
01:06:56,800 --> 01:06:57,800
Second.

1557
01:06:57,800 --> 01:06:59,800
All in favor?

1558
01:06:59,800 --> 01:07:00,800
Aye.

1559
01:07:00,800 --> 01:07:02,800
Any further discussion?

1560
01:07:02,800 --> 01:07:07,039
Let's see, then.

1561
01:07:07,039 --> 01:07:10,349
Item A, consider the approval of the public utility board's

1562
01:07:10,349 --> 01:07:11,079
minutes.

1563
01:07:11,079 --> 01:07:16,639
Were there any changes that anybody saw?

1564
01:07:16,639 --> 01:07:22,559
Okay, then it's approved as presented.

1565
01:07:22,559 --> 01:07:27,730
And item for individual consideration B, receive a report

1566
01:07:27,730 --> 01:07:30,920
and discussion, hold a discussion

1567
01:07:30,920 --> 01:07:33,530
and provide staff direction concerning the approval of a

1568
01:07:33,530 --> 01:07:34,960
contract for the radio network

1569
01:07:34,960 --> 01:07:41,800
design and installation services.

1570
01:07:41,800 --> 01:07:42,800
Good morning.

1571
01:07:42,800 --> 01:07:43,800
My name is Tim Fisher.

1572
01:07:43,800 --> 01:07:45,280
I'm director of water utilities.

1573
01:07:45,280 --> 01:07:51,360
I've got a brief presentation on this project.

1574
01:07:51,360 --> 01:07:55,590
The water production division uses licensed and unlicensed

1575
01:07:55,590 --> 01:07:58,320
microwave radios for communications

1576
01:07:58,320 --> 01:08:00,800
between their various facilities.

1577
01:08:00,800 --> 01:08:05,280
Some of those are permanent or are staff 24/7, others are

1578
01:08:05,280 --> 01:08:06,360
unstaffed.

1579
01:08:06,360 --> 01:08:09,579
We use that communication system for the supervisory

1580
01:08:09,579 --> 01:08:12,480
control and data acquisition or SCADA system,

1581
01:08:12,480 --> 01:08:16,439
but we also use them for the security cameras and then for

1582
01:08:16,439 --> 01:08:17,880
access control.

1583
01:08:17,880 --> 01:08:22,779
The existing system tended to center around the northwest

1584
01:08:22,779 --> 01:08:25,319
elevated storage tank up near

1585
01:08:25,319 --> 01:08:32,399
loop 288 and interstate 35 on the northwest side of TAN.

1586
01:08:32,399 --> 01:08:35,300
That tower was our highest tower and gave us the best line

1587
01:08:35,300 --> 01:08:36,760
of sight to all the various

1588
01:08:36,760 --> 01:08:41,770
locations until recently when we added the elevated storage

1589
01:08:41,770 --> 01:08:44,479
at the southwest upper pressure

1590
01:08:44,479 --> 01:08:50,079
plain, so that's a similar height location.

1591
01:08:50,079 --> 01:08:55,720
Basically this is a shot of the northwest tower.

1592
01:08:55,720 --> 01:08:58,960
Radio equipment is very small, compact.

1593
01:08:58,960 --> 01:09:03,380
It's not real visible unless you look hard for it.

1594
01:09:03,380 --> 01:09:08,279
Very directional from point to point.

1595
01:09:08,279 --> 01:09:11,819
Arcadis Engineering, which is actually at the time was

1596
01:09:11,819 --> 01:09:14,000
Malcolm Kearney, Arcadis later

1597
01:09:14,000 --> 01:09:18,159
bought them out, did a SCADA master plan for us in 2012.

1598
01:09:18,159 --> 01:09:22,000
One of the purposes of that study was to give us some

1599
01:09:22,000 --> 01:09:25,399
assistance in how we sustain, maintain,

1600
01:09:25,399 --> 01:09:29,670
and improve that system and then also how to budget for

1601
01:09:29,670 --> 01:09:31,439
capital projects.

1602
01:09:31,439 --> 01:09:36,090
A critical component of this was trying to develop improved

1603
01:09:36,090 --> 01:09:39,159
reliability through redundancy.

1604
01:09:39,159 --> 01:09:45,390
This is basically a redundant radio based system and a plan

1605
01:09:45,390 --> 01:09:45,819
.

1606
01:09:45,819 --> 01:09:48,119
This is the existing system.

1607
01:09:48,119 --> 01:09:54,060
It all tends to direct its signal to northwest and then to

1608
01:09:54,060 --> 01:09:58,039
each one of the various locations.

1609
01:09:58,039 --> 01:10:02,239
The revised system will basically add a duplication in

1610
01:10:02,239 --> 01:10:05,520
pathways and provide the redundancy that

1611
01:10:05,520 --> 01:10:09,159
we're looking for reliability.

1612
01:10:09,159 --> 01:10:14,220
So that helps us eliminate a single point of failure and

1613
01:10:14,220 --> 01:10:17,560
gives us additional redundancy.

1614
01:10:17,560 --> 01:10:21,600
We're proposing to use Johnson Technical Services.

1615
01:10:21,600 --> 01:10:26,579
They're a Dallas-Fort Worth based area, a radio network

1616
01:10:26,579 --> 01:10:27,800
provider.

1617
01:10:27,800 --> 01:10:32,399
They are used by Denton County, DISD, City of Denton.

1618
01:10:32,399 --> 01:10:35,159
They're also I think used by the Upper Trinity recently.

1619
01:10:35,159 --> 01:10:37,479
They had a fiber based system.

1620
01:10:37,479 --> 01:10:41,840
They were getting fiber cuts so they went to a radio based

1621
01:10:41,840 --> 01:10:43,319
backup system.

1622
01:10:43,319 --> 01:10:46,399
Project budget was 220.

1623
01:10:46,399 --> 01:10:50,119
This is being procured through a Texas Department of

1624
01:10:50,119 --> 01:10:53,560
Information Resources contracting mechanism

1625
01:10:53,560 --> 01:10:57,100
very similar to a buy board so it meets the legal

1626
01:10:57,100 --> 01:10:59,359
requirements for bidding.

1627
01:10:59,359 --> 01:11:03,640
And with that I'll answer any questions that you might have

1628
01:11:03,640 --> 01:11:03,960
.

1629
01:11:03,960 --> 01:11:07,500
Is the water service or is that the only communication that

1630
01:11:07,500 --> 01:11:08,720
happens on this?

1631
01:11:08,720 --> 01:11:13,319
It is specific to the water department's needs, yes sir.

1632
01:11:13,319 --> 01:11:17,960
And it's very focused on the security camera systems that

1633
01:11:17,960 --> 01:11:18,880
we have.

1634
01:11:18,880 --> 01:11:21,920
That was one of the bigger bandwidth issues that we needed.

1635
01:11:21,920 --> 01:11:25,159
But then also for the control system.

1636
01:11:25,159 --> 01:11:31,210
Some of our pump stations have supervisor decisions turn

1637
01:11:31,210 --> 01:11:34,079
pumps on and off as opposed

1638
01:11:34,079 --> 01:11:35,079
to having things automated.

1639
01:11:35,079 --> 01:11:38,710
So those are run at the two treatment plants where we have

1640
01:11:38,710 --> 01:11:40,680
staff and operations staff.

1641
01:11:40,680 --> 01:11:42,479
Thank you.

1642
01:11:42,479 --> 01:11:45,720
Any further questions?

1643
01:11:45,720 --> 01:11:47,960
Move approval.

1644
01:11:47,960 --> 01:11:48,960
Okay.

1645
01:11:48,960 --> 01:11:51,960
Motion to approve.

1646
01:11:51,960 --> 01:11:52,960
Move.

1647
01:11:52,960 --> 01:11:54,680
Oh, he moved.

1648
01:11:54,680 --> 01:11:55,680
We need a second.

1649
01:11:55,680 --> 01:11:56,680
I'm sorry.

1650
01:11:56,680 --> 01:11:57,680
All in favor?

1651
01:11:57,680 --> 01:11:58,680
Aye.

1652
01:11:58,680 --> 01:11:59,680
Okay.

1653
01:11:59,680 --> 01:12:00,680
Thank you.

1654
01:12:00,680 --> 01:12:01,680
Thank you.

1655
01:12:01,680 --> 01:12:02,680
ACM, you're on, Maureen.

1656
01:12:02,680 --> 01:12:03,680
All right.

1657
01:12:03,680 --> 01:12:04,680
Thank you.

1658
01:12:04,680 --> 01:12:12,090
Members of the board, in your packet there is a memorandum

1659
01:12:12,090 --> 01:12:14,960
from George Morrow.

1660
01:12:14,960 --> 01:12:18,350
He's our new general manager of DME and here to provide you

1661
01:12:18,350 --> 01:12:20,079
with information about the

1662
01:12:20,079 --> 01:12:21,359
Tesla roof tiles.

1663
01:12:21,359 --> 01:12:24,430
If you have any specific questions related to what's in the

1664
01:12:24,430 --> 01:12:26,039
memorandum, George is here

1665
01:12:26,039 --> 01:12:28,039
to answer those questions if you have them.

1666
01:12:28,039 --> 01:12:30,430
I'm just so surprised with all the roofs that had to be

1667
01:12:30,430 --> 01:12:32,000
replaced that nobody replaced it

1668
01:12:32,000 --> 01:12:37,800
with a solar roof.

1669
01:12:37,800 --> 01:12:41,520
As far as, oh, I'm sorry.

1670
01:12:41,520 --> 01:12:45,449
I would just like to just to say welcome to George and we

1671
01:12:45,449 --> 01:12:47,640
're so happy to have you here.

1672
01:12:47,640 --> 01:12:52,539
Yeah, if you wouldn't mind saying a little something to us

1673
01:12:52,539 --> 01:12:54,880
and to the public about this

1674
01:12:54,880 --> 01:12:57,880
memo.

1675
01:12:57,880 --> 01:13:01,159
Thank you for that opportunity, George Morrow, general

1676
01:13:01,159 --> 01:13:02,239
manager of DME.

1677
01:13:02,239 --> 01:13:05,640
Yeah, I'm very happy to be here in Denton.

1678
01:13:05,640 --> 01:13:07,119
This is the start of my third week.

1679
01:13:07,119 --> 01:13:10,239
I'm fighting down the urge to think I know everything

1680
01:13:10,239 --> 01:13:12,399
already because every day I learn,

1681
01:13:12,399 --> 01:13:14,199
wow, I'm so far down the learning curve.

1682
01:13:14,199 --> 01:13:16,000
There's a huge process here.

1683
01:13:16,000 --> 01:13:18,829
It looks like you were in competent hands in the interim

1684
01:13:18,829 --> 01:13:19,439
period.

1685
01:13:19,439 --> 01:13:23,239
I want to compliment the work that Brian has done.

1686
01:13:23,239 --> 01:13:26,439
Everyday amazed that he is carrying all these different

1687
01:13:26,439 --> 01:13:28,520
buckets of projects and things and

1688
01:13:28,520 --> 01:13:31,800
he's done an extremely great and competent job.

1689
01:13:31,800 --> 01:13:34,300
I think our staff very much appreciated his leadership

1690
01:13:34,300 --> 01:13:35,720
during the interim period.

1691
01:13:35,720 --> 01:13:40,039
They're also looking forward to the new general manager.

1692
01:13:40,039 --> 01:13:42,460
There's a lot of prescriptive things that we want to get

1693
01:13:42,460 --> 01:13:43,720
moving forward that I've learned

1694
01:13:43,720 --> 01:13:48,939
from looking at some of the public utility board background

1695
01:13:48,939 --> 01:13:51,119
and hope to be in front of

1696
01:13:51,119 --> 01:13:55,979
you many times as we move forward the organization during

1697
01:13:55,979 --> 01:13:58,319
this transition period.

1698
01:13:58,319 --> 01:14:02,970
Thank you all for your support during that pretty complex

1699
01:14:02,970 --> 01:14:04,880
interview process.

1700
01:14:04,880 --> 01:14:06,920
One of these days my goods will get here.

1701
01:14:06,920 --> 01:14:08,920
Thank you again.

1702
01:14:08,920 --> 01:14:12,619
I'd like to thank Brian too for the -- I know how hard that

1703
01:14:12,619 --> 01:14:14,520
is to wear that many hats.

1704
01:14:14,520 --> 01:14:15,520
So thank you.

1705
01:14:15,520 --> 01:14:16,520
Thank you.

1706
01:14:16,520 --> 01:14:17,520
Appreciate it.

1707
01:14:17,520 --> 01:14:20,520
I'm glad George is here.

1708
01:14:20,520 --> 01:14:25,470
And then the only other thing I'd just bring your attention

1709
01:14:25,470 --> 01:14:27,560
to is this is the last meeting

1710
01:14:27,560 --> 01:14:30,359
of the calendar year for the PUB.

1711
01:14:30,359 --> 01:14:33,760
Our next meeting will be January the 8th at 9 a.m.

1712
01:14:33,760 --> 01:14:36,489
And then again, just a reminder that we'll be moving to an

1713
01:14:36,489 --> 01:14:38,039
evening meeting on the second

1714
01:14:38,039 --> 01:14:39,039
meeting of the month.

1715
01:14:39,039 --> 01:14:42,039
So the January 22nd meeting will be at 6 p.m.

1716
01:14:42,039 --> 01:14:43,399
We're actually going to be in this room.

1717
01:14:43,399 --> 01:14:46,529
We're able to make arrangements with another conflict,

1718
01:14:46,529 --> 01:14:48,399
another committee that meets in

1719
01:14:48,399 --> 01:14:49,399
this room.

1720
01:14:49,399 --> 01:14:54,460
So we'll be in this meeting room from here on out as far as

1721
01:14:54,460 --> 01:14:57,640
evening and morning meetings.

1722
01:14:57,640 --> 01:14:59,640
Okay.

1723
01:14:59,640 --> 01:15:01,640
Demetrius.

1724
01:15:01,640 --> 01:15:07,859
I believe with the exception of the DME substation costs,

1725
01:15:07,859 --> 01:15:11,800
which I know George is working on and

1726
01:15:11,800 --> 01:15:15,159
will be bringing forward some information to the board here

1727
01:15:15,159 --> 01:15:16,920
in the near future, I believe

1728
01:15:16,920 --> 01:15:20,380
everything is covered on the matrix from the things that

1729
01:15:20,380 --> 01:15:22,600
have been requested in the past.

1730
01:15:22,600 --> 01:15:26,399
I think, Brandon, I still owe you some information

1731
01:15:26,399 --> 01:15:30,159
regarding metrics on viewership and downloads.

1732
01:15:30,159 --> 01:15:31,760
And we've been working on that.

1733
01:15:31,760 --> 01:15:34,529
And so we'll get that to you, get that to the board under

1734
01:15:34,529 --> 01:15:35,520
separate cover.

1735
01:15:35,520 --> 01:15:39,600
And then we'll add that to the as part of an update at the

1736
01:15:39,600 --> 01:15:41,520
next board meeting on the

1737
01:15:41,520 --> 01:15:45,329
matrix just so you have that information so the public can

1738
01:15:45,329 --> 01:15:46,560
have it as well.

1739
01:15:46,560 --> 01:15:48,520
Okay.

1740
01:15:48,520 --> 01:15:49,960
Then we're on to concluding items.

1741
01:15:49,960 --> 01:15:51,960
Is there any items that?

1742
01:15:51,960 --> 01:15:52,960
Deb?

1743
01:15:52,960 --> 01:15:53,960
Yes.

1744
01:15:53,960 --> 01:16:00,319
I had a suggestion.

1745
01:16:00,319 --> 01:16:04,819
I know that we have a policy where we don't turn off the

1746
01:16:04,819 --> 01:16:07,600
power for people in conditions

1747
01:16:07,600 --> 01:16:09,800
of extreme weather.

1748
01:16:09,800 --> 01:16:12,560
And that's a very good thing.

1749
01:16:12,560 --> 01:16:19,060
And I was wondering if we could consider in the future

1750
01:16:19,060 --> 01:16:23,159
having some kind of grace period

1751
01:16:23,159 --> 01:16:30,159
at universal times of extreme financial difficulty as well,

1752
01:16:30,159 --> 01:16:34,119
meaning specifically this time of

1753
01:16:34,119 --> 01:16:38,399
year, the December, the holiday season, you see a lot of

1754
01:16:38,399 --> 01:16:41,640
people, spending goes up, consumption

1755
01:16:41,640 --> 01:16:45,649
goes up, and everybody is enjoying the holidays, but it's

1756
01:16:45,649 --> 01:16:48,539
also a really stressful time financially

1757
01:16:48,539 --> 01:16:50,960
for a lot of people.

1758
01:16:50,960 --> 01:16:58,239
And even poor people are buying gifts for their families.

1759
01:16:58,239 --> 01:17:04,210
And I think it would make a big difference with not much of

1760
01:17:04,210 --> 01:17:07,119
a loss, as I understand it,

1761
01:17:07,119 --> 01:17:12,829
to consider a grace period of December for people who pay

1762
01:17:12,829 --> 01:17:14,159
deposits.

1763
01:17:14,159 --> 01:17:22,960
We can certainly bring back a discussion of that item.

1764
01:17:22,960 --> 01:17:25,960
Any other items?

1765
01:17:25,960 --> 01:17:30,159
All right.

1766
01:17:30,159 --> 01:17:31,159
Approval to adjourn?

1767
01:17:31,159 --> 01:17:32,159
So moved.

1768
01:17:32,159 --> 01:17:33,159
Second?

1769
01:17:33,159 --> 01:17:34,159
Second.

1770
01:17:34,159 --> 01:17:35,159
Okay.

1771
01:17:35,159 --> 01:17:36,159
We're adjourned.

1772
01:17:36,159 --> 01:17:44,159
[end of transcript]