Okay, we do have a quorum, so let's call the December 11th
Public Utilities Board to order.
The first item on the agenda is to receive a report and
hold a discussion of the energy
management organization by Deloitte.
Good morning.
Brian Langley, Deputy City Manager.
I want to take a few minutes to provide a brief
introduction on this item.
As you know, we've hired Deloitte on a couple of different
occasions to help us work through
our energy management organization.
They've done a couple of different scopes of work for us.
On today's presentation, they're going to be talking to you
about the benchmarking work
that they did for FY 2016-17 and also the review that they
had of the energy management
organization and all of the procedures and policies
associated with that.
Stephen Engler and Tim Metz are here, and so at this point,
I'll turn over the presentation
to them.
Thank you, Brian.
Good morning, everybody.
Good morning, members of the board.
My name is Steve Engler, and I'm with Deloitte's energy
risk advisory practice, and my colleague
Tim Metz is here with me as well.
And we're here to talk about risk management, and Tim could
talk to you about the risks
of carrying a sleeping seven-year-old down the stairs.
So if he hobbles around a little bit, it's because he's got
a bit of an ankle issue.
So thank you for having us here this morning.
Happy to walk through our prepared remarks, but please feel
free to ask questions at any
time or save them to the end or both.
All right.
Okay.
I won't read the legal caveats.
Just to talk quickly on what we're going to discuss here,
the objectives of today, we're
going to kind of reframe the question that was asked to us
the last time we spoke to
you all.
We're going to talk a little bit about risk uncertainty and
how that relates to capabilities
or expectations of capabilities in an organization.
And then we'll go right into the results of the risk
assessment itself.
We'll tell you how we did the work and some of the outcomes
of that.
This presentation is kind of a summary of a more detailed
report that's been prepared
and presented to you all.
Then the next piece we'll talk about will be some
discussion of the benchmark and some
recommendations there, an idea for an alternative benchmark
, and then we'll talk about recommended
next steps.
So if that's clear, then we will move along.
So just to reframe and remind everybody what we were asked,
essentially one question that
came to us the last time we spoke was, what are the risks
that we've kind of taken on
as an organization by bringing the EMO activities in-house
where prior they were outsourced?
So that was the first part of the analysis was to frame,
and we'll talk about here in
a minute, what risks existed before and are there any new
or changing -- any changes to
that set of risks since the EMO go live.
Based on those risks identified and what's been brought in-
house and being managed by
DME, we then used that to form the basis of our assessment
and our benchmark analysis
and then following that, our recommendations.
And then I said the last piece of this was to take a look
at some different approaches
for establishing a new benchmark going forward and make
some recommendations as to how to
proceed.
Okay?
All right.
Let's talk a little bit about risks.
Kind of a very consulting-y slide, but I think it's good to
set the stage.
We sometimes mix up the words risk and uncertainty, and I
think it's important to understand kind
of the differences, but also how they interrelate.
A risk is really the possibilities of suffering an adverse
outcome, higher rates, higher fuel
prices, market changes, and the impact of that on the
organization.
Uncertainty while similar, it really refers to unknown
events where the probability is
difficult to quantify.
So the risk of prices falling is related to the uncertainty
of how much they could fall.
Okay?
While they both talk about expectations in the future, it's
important to remember that
risk can be mitigated.
On the other hand, uncertainty will always exist.
So it's that risk--it's that management or the mitigation
of the risks that really is
one of the charges of the EMO or DME more broadly.
And so that's, again, a very important underlying concept
for how we proceed, not just here,
but when we do this work at peer organizations as well.
And then related to that, and we're going to--you know,
there's been a lot of talk about hedging
and kind of optimization around the assets.
It's important to note that managing or mitigating a risk
does not necessarily mean forgoing
an opportunity.
And it's the infrastructure that enables all that, which is
really what we took a look
at as part of DME.
Does that make sense?
Okay.
So another consulting slide, if you will.
When we do an assessment like this at an organization, it's
important for us to understand what's
the objective, what's the transacting mandate is a phrase
we like to use a lot of the organization
because that helps us kind of frame the recommendations.
Just to explain this chart a little bit, if you look at the
x-axis on the bottom, we've
got price taker, asset optimizer, and proprietary trader.
And then the y-axis talks about the capabilities.
And the capabilities in this context would be things around
risk oversight, reporting,
governance, systems, people.
As you move on the x-axis from the left to the right, what
we always try to keep in mind
is that the risks really for all those organizations are
very similar, the types of risks that
they're--that organization is exposed to.
It's the implication on what that means in terms of where
do your capabilities need to
be will vary.
So if I'm all the way on the left as a price taker, meaning
that I've got a commodity to
sell or a commodity to buy, I'm just taking what the market
offers me in terms of prices.
And I'm not trying to do too much around that.
All the way on the right hand side, we're a proprietary
trader.
That's where you're taking probably more speculative
positions.
You're in the market.
You're--you know, an example would be large banks or the
very large integrated oil and
gas companies that really are, to use the word, trading.
So they've got some assets but they don't even necessarily
trade around those assets.
In the middle is where we find a lot of the clients that we
work with.
And that's probably where DME is or requires to be.
And that's to optimize around the assets and the positions
that you own.
So somewhere in between price taker and proprietary trader
is where we see your organization and
that's the context that we completed the assessment on.
Okay.
So now let's talk about the first question which is what
risks existed before the EMO
is established and what risks exist post.
And the takeaway to this slide, I apologize, it's a little
bit busy.
The takeaway to this slide is that from our perspective and
looking at the business before
and now, there really are no net new risks in our opinion
as to what the company or the
utility has been exposed to.
The difference is where were those risks managed.
And prior to establishing the EMO, a lot of the risks were
managed by the third party
through that contract that was established.
First go live or in the current state, those risks while
they existed before are now being
actively managed by DME.
All of the risks down the left-hand side, if you look in
kind of the bold or the big
categories and then some specifics underneath it, these are
very common to any company that's
exposed to the commodity markets, particularly the energy
commodity markets.
So when we look at a company or utility such as DME, it
could be bigger or smaller, those
risks are fairly common.
We have market risk in the sense of what's the price of the
commodity, what's the liquidity
of the products and the commodities that are out there.
Do we have to deal with congestion risk and does that have
an impact on pricing?
One of the things to point out here, just in terms of
changes with the anticipated move
to 70% renewable and then potentially 100% renewable, it
creates kind of a different load
serving risk in our perspective.
In other words, the availability of the renewable resources
is something that is different than
fossil fuel resources.
And so increasing the footprint of that type of resource in
your portfolio will probably
create a different type of maybe even a more complex price
risk than you've experienced
before and also load serving.
Do we know that the sun's going to shine tomorrow or is the
wind going to blow tonight?
It'll change a different dynamic for what the utility is
trying to manage on a day-to-day,
an hour-to-hour and really minute-to-minute basis.
So those risks existed before, for sure.
There's probably a different profile to those risks going
forward as you move towards the
more renewable plan.
We highlight operations risk here and by operations, I don
't mean running the power plant or the
transmission lines.
Really what this means is more the organizational
activities inside the EMO, forecasting the
load, forecasting the supply, looking at the market
dynamics, understanding the impact
of that on the position on a real-time and go-forward basis
, executing, entering and
settling transactions, all those things that have to happen
to support the EMO and the
transacting and the risk management activity.
There's a key focus of our assessment and some of the
recommendations will relate to
that as well.
A couple at the bottom that we think maybe are slightly
different than before, certainly,
and I mentioned already the variability risk of the
renewable resources is going to create
a different load profile for DME.
We talked a fair amount with staff around the Givens Creek
asset and prior to or I guess
up until this point, this is as we understand an asset that
's co-owned with three other
entities.
So there was, we say it was not actively managed prior to
go live and that's important to
point out because all those decisions weren't necessarily
always in DME's hands.
There had to be partner agreements as to how to move
forward.
I'll pause there to see if there's specific questions about
any of these risks or anything
I just mentioned.
So again, this is the context for the assessment that we
did.
We looked at DME as we do many other similar organizations
as to the capability to manage,
monitor and mitigate these risks and really understand
these risks.
And again, in the context of where the organization is in
terms of a transacting mandate or transacting
profile.
You're not trading, you're not market making, you're not
speculating.
So that was the context for our assessment.
Okay.
So what did we do?
As I said, we were engaged to understand the existing
energy and risk management program
within DME.
To do that, we were to collect and evaluate data, develop
findings and make recommendations
to this board and to the utility and those recommendations
are available in this report
and as well as a supporting detailed report.
The scope included a review of governance, people, process
and technology and we'll
talk about that and how it ties into our capability
maturity model.
We specifically looked at the risk policy and the
documentation supporting that.
We looked again at the operations inside of DME for things
like transacting processing
and the entire transacting lifecycle.
We talked a lot about where the utility is going in terms
of the renewable dent in plan
and the additions of those types of resources into the
portfolio and the specific requirements
that that brings.
We talk a lot about the middle and the back office and just
in terms of vernacular front
office is the folks, that's the commercial end of the
business.
Middle office we refer to as the risk oversight function
and then back office is typically
settlements and accounting probably credit.
We talked a lot with staff because as with other similar
organizations, this isn't
a very large organization so finding the appropriate way to
create segregation between those functions
is important and it sometimes poses challenges when there
are fewer people to do that because
sometimes you have people wearing multiple hats.
And then we talked about risk reporting.
The way we do the assessment is we talk to people, we
assemble as much documentation
as we can, we read the policies, the procedures, we ask
about where the future state is, where
is the utility going.
Of course there's been a lot of discussion of that as of
late and we were able to benefit
from many of those discussions in terms of feeding our
findings.
And then there was a vetting process where we developed
some initial recommendations,
talked through those with staff and largely to make sure
that we didn't get anything
wrong or we didn't miss any details that are pertinent to
the assessment, to our recommendations
and we talked through a lot of comments and discussion
around what we found.
So Deloitte loves three letter acronyms so we use a CMM, a
capability maturity model,
to perform these assessments.
And as I said we do it across four categories and that's
down the left, governance, process,
people and technology.
And then we talk about three maturity scales.
And I guess a couple things I'll point out on the scales.
Just like the decision to be a price taker versus an optim
izer versus a trader, neither
of those decisions is wrong.
It's just important to know where you are.
As far as the maturity stages for an organization, there's
nothing inherently wrong with being
in the developing category.
That's typically what we see for an organization and
generally speaking we see that kind of
evolution typically lasting a number of years.
So you don't just start out in the middle of this maturity
scale.
A lot of the clients that have been up and running for some
period of time, we find a
lot of their activities fall generally in the prevalent
scale and then leading would
include kind of integrating technology and doing things
more automated and more in a
much more robust way that would be indicative of someone
who's actively trading in the markets.
When we do the assessment, we look across these four
categories and in each of the categories
there's a number of different elements and I think it's the
last page in the report
is the actual specific details of what we look at.
We first look at where the organization is today and then
through discussion and understanding
of where the organization is going as well as our own
opinion of where these capabilities
need to be, we then make a recommendation as to what the
future state should be.
It's important again in the context of what the transacting
mandate is, we don't always
-- you might think that a consultant would say you always
need to be in the leading practice
category.
In this case that's not necessarily true because there's
not always return for the investment
to put in processes, to put in systems, to hire a bunch of
people to get to leading if
the transacting profile and the risk profile doesn't
warrant that.
So that's important to keep in mind as we talk through the
results in terms of where
you think the organization is today and where it needs to
be and all of that was informed
by the types of risk that we just talked about, the trans
acting profile that we talked about
both today and where the organization is going.
Anything I left out on that slide?
I think so.
Okay.
Questions from the board?
Let's get to the results.
Okay.
Now I'm going to hand it to Tim.
So I'm going to try not to knock him over.
Thanks Steve.
So very similar slide to what we were looking at before.
We've added a couple things here.
The next column over from leading are the recommendations.
So we've broken those recommendations out across each of
the categories.
And then we also prioritize them high, medium, and low
based on our understanding of the
direction that you're moving and our understanding of what
's common in the industry.
And then we also, to kind of link it back to the
conversation where we started in terms
of what are the risks inherent in the organization, also
wanted to link those categories, governance,
process, people, and technologies to the risks that those
recommendations are addressing.
I guess the last bit of context, you know, in the black
circle with the C in it, that's
where we plotted the current state.
And then the green circle is the future state.
And as Steve said, that future state was informed by our
conversations with staff, our understanding
of the future mandate for the energy and risk management
program.
So in terms of governance, you know, kind of right there in
the middle of the developing,
I think it's one more piece on that.
Where these, kind of where the current and where the future
state line up, it's certainly
not a science.
It's not quantitative.
What we'll do is, as Steve talked about, there are a whole
bunch of different subcategories
under each one of these.
What we'll do is we'll look at each of those subcategories.
So for example, risk management committee might be one of
them.
And we'll, you know, based on what we've read and
everything we've heard from everybody
we've talked to, we'll plot where the risk management
committee capabilities currently
are.
And we'll do that for each of the other subcategories.
And then we'll go back and we'll look at governance as a
whole and each of the individual
items and use that information to plot it kind of at the
overall governance level.
So as Steve mentioned, developing is not necessarily a bad
thing, especially for an organization
that has really just started down this path a little over
three years ago.
So it's, you're kind of right where we would expect you to
be in that evolution of developing
to prevalent.
I think in terms of moving forward, what we've heard in the
recommendations that we made
would really move you to the right-hand side of prevalent.
Seems like a big jump.
I think when we get into the recommendations on the next
slide, there are a lot of recommendations
that can be implemented or acted on fairly easily that will
have a lot of value and will
really significantly move you across that evolutionary
spectrum.
So we'll take a look at those in a second.
On the process, kind of right on the border of developing
to prevalent, again, I think
there are just a handful of recommendations here, only a
couple high priority ones, that
will have a lot of value and really help you move to the
right.
People, again, kind of right in the middle of developing, a
couple recommendations that
will help you take some big steps forward.
And then on the technology side, I think there's kind of
one primary recommendation that we'll
talk about in terms of the system infrastructure and the
tools available to staff that can
have a really profound impact on the program overall.
Any questions?
Sure.
Go ahead, if we ask the same question again.
Oh, boy.
Now, maybe you plan to answer this later, so if you do,
then you don't need to answer
this now.
So of these four categories, which would you say is the
biggest problem area in the status
quo and which is our greatest strength in the status quo?
I mean, I can get a sense just by looking at this, but
going into more detail.
On the other hand, if that's something you plan on talking
about later.
We'll go into a little bit more detail on the next slide.
But I think in terms of, I wouldn't describe it as a
weakness, but where I think you can
make a handful of small changes and really have a big
impact is on the governance side.
So in terms of kind of rethinking through the risk
management committee and kind of the
governance hierarchy.
So starting at the city council level, going down into the
organization and into the day-to-day
activities and oversight, I think there's a lot of benefit
that can be achieved there.
I think on the strength side, I think very clearly the
processes.
It's very clear to us that when DME started to go down this
path of wanting to go live
with the EMO, that there was a lot of thought given to kind
of the day-to-day processes
that would be needed in order to achieve that mission.
And that's very clear in all the risk policy and all of the
procedures manuals that we've
read in that area.
So it's very clear a lot of effort was put in that.
Yeah, I'll just add, I'm remiss that I meant to give you a
preview of the overall answer
to Tim.
When we started the assessment, there are certain basic
things that we look for.
We look forward with these assessments for an organization
that has some purview over
commodity price and liquidity risk management.
We look for segregation of duties.
We look for kind of a framework.
We look for, as Tim said, processes.
We look for people in certain spots.
And I think in general, all of that is there.
There were no gaping holes.
There was nothing that jumped out as an organization or in
terms of capabilities that gave us really
serious concern.
There are things, as Tim said, that I think can be pushed
along with relatively light lifting.
It seems to us that because there's been kind of an
evolution in where the organization
is going and the focus on renewables and there's been some
personnel changes, that some of
the documentation is just out of sync with what's actually
happening.
But again, the framework is there.
And I think a lot of the recommendations really are to
update the governance documentation,
the policies, some of the risk limits, some of the
reporting that's being done to match
what's already happening.
So just kind of getting that in sync and some of the things
that we'll talk about.
I guess the other -- I agree with Tim on core strength
being processed.
That's kind of the framework that we look for and that we
see in place.
And the people, I think, it's an experienced group.
They understand the market.
They understand the risks that are being managed.
And pretty much without exception, what we always talked
about in terms of objectives
for the organization, and maybe we get into this with the
benchmark a little bit, it's
all about managing the price risk that flows through to the
end-use customer.
That's a central focus of the organization, came out in
almost every discussion.
And I think the experience of the group that's doing that
will help as an asset to the utility,
to the city.
Any other questions?
Okay.
So now I want to take a couple minutes to walk through all
of the high-priority recommendations.
So again, most of them are focused in the governance area.
And I'll kind of talk about the governance recommendations,
I think, in four main groups.
The first is related to -- and Steve mentioned this --
related to the risk policy and the
governance hierarchy, the documentation that's in place,
and the risk management committee.
Going back and taking a fresh look at those, and really
tailoring it to what's actually
being done, what are the actual activities, kind of who's
doing what, who's overseeing
what and playing what oversight role.
I think all those things were envisioned at Go Live.
And over time, as the programs evolved and as you really
got into the day-to-day, those
things have changed a little bit.
So it's simply about going back and taking a fresh look at
them and understanding what
needs to change.
As it relates to the governance hierarchy, so currently
there's the city council plays
a role, you all play a role, and then within the
organization, within DME, there's the
strategy committee and there's the operations committee.
So kind of taking a look at that and understanding and
really making a decision as to what the
role of the strategy committee and the operations committee
are playing, and consider making
that a single committee.
There's a lot of overlap in who sits on both of those
committees.
It's our understanding that often those two committees will
jointly meet.
And if that's the case, recognizing the commitment of
everybody's time in these matters, think
about whether it just makes sense to kind of streamline
that process, have a single
committee with a single mission and oversight
responsibility, and then simply make sure
that that risk management committee regularly meets, has a
standard agenda and reporting
package that they follow, and just shore that piece up a
little bit.
The next group is update of Appendix A and Appendix E. So
Appendix A is to the risk policy
and it says, "Here are the limits.
Here are the things that the front office or DME can't do."
And Appendix E is here and talks about what the approved
products are.
So trading power or different fixed price instruments.
Both of those exist.
I think they can be built out a little bit more to be more
specific.
So everybody has a crystal clear understanding of what they
're authorized to do up to how
much they can do those types of things.
And it ties to the last bullet on here in terms of reconcil
ing the DOA memorandum.
So delegation of authority is DOA.
There's some inconsistencies in a memo that goes out on a
regular basis versus what's
actually in the ERMPs is the risk policy document.
So making sure that those two things are synced up so
everybody's on the same page.
And then I guess really the third group of these is the
three of the final four bullets.
So starting with designing and documenting a financial
hedge program, quantifying the
risk profile, and then establishing risk limits linked to
objectives.
So that's going back to the risks that Steve talked about a
little bit earlier in terms
of kind of the complexity of the price risk, the
uncertainty of the renewable supply, really
clearly understanding what risk that introduced into the
portfolio, tying it to something
specific like a rate at risk, and understanding what are
the types of activities or what financial
risk mitigation activities might we do to help manage that
supply and that price risk.
And that's something that we'll come back to here in a few
slides when we start to talk
about the benchmark as well.
On the process side, it's really about reporting and
communication.
So making sure that there's a singular risk metric or a set
of paired risk metrics that
help describe what the risk is and where you are relative
to that risk.
And then being able to communicate what that is and provide
daily reports to all stakeholders
and everybody responsible for oversight.
So each day everybody's on the same sheet of music.
From a technology perspective, there is currently a system
in place that doesn't have the capabilities
that DME needs in order to execute what they need to on a
day, their daily responsibilities.
And so taking a look at that, identifying what else is out
there that might meet needs
and finding the right fit for purpose system to support the
day-to-day activities.
And then finally on the people side, as was mentioned
earlier, there's been some turnover
roles or positions have changed.
Making sure there's the right redundancy across the front
and the middle and the back office
such that nothing falls through the cracks and there's a
consistent level of execution
of the program.
Can you explain a little bit more what you mean by the
right redundancy?
Sure.
Because redundancy tends to have negative connotations.
Here I see it's a positive, especially when you're talking
about staffing.
So if you could explain.
Yeah.
In this case, I think redundancy is meant to be positive.
So from a middle office perspective, for example, if I've
got one person that's responsible
for always preparing the reports that go out on a daily
basis or on a weekly basis, to
the extent that that person isn't available for some period
of time, I guess the question
is who is going to provide those reports?
So making sure that you've got staff cross-trained to step
into a role that maybe is not their
primary or day-to-day role, but that they can fill in the
event that it's needed.
And on the governance, it looks like a long list, but it's
a lot of low-hanging fruit
that we can implement rather quickly to get from developing
to a higher level of an organization.
So in reading the report, the whole report, I'm impressed
with where they are for a three-year
organization actually.
And just a kind of overarching comment on that and to
follow up on a couple of Tim's points,
what we try to do is identify things here that stitch
together, hopefully, logically.
In my view of how this can work, you've got a policy that
outlines what are the risks
that we're exposed to and what's our appetite relative to
those risks.
What are the tools that are available to the organization
to manage that?
So the policy is kind of the, it's the enabler for the
organization to go out and manage
the risk within whatever boundaries the organization and
the board and the city council ultimately
set.
The RMC can act as the body just to be the oversight of
that.
Is that happening according to how we've laid it out?
Are we within our risk tolerances?
If the organization says, well, there's a new type of
instrument or a new transaction
we want to do that's not previously authorized, that would
be the body to review that and
make recommendations.
And I would also see that as kind of the conduit of
information to both the board and the city
council and establish kind of a more regular update and
information flow as to where we
are, where are we going, what have we done, did anything
unusual happen, all those kinds
of conversations.
The RMC can really be the engine to do that.
And then a lot of the other pieces like to mention the
system, that's another part of
the toolkit, if you will, just to enable the organization
to, you come in in the morning
and are we long, are we short, where are our prices, can we
execute instruments and have
them go into the system so it's all a complete system of
record.
Those are all the things that kind of enable that, but the
governance and the policy piece
of this and then executed through the RMC is really what
will drive it, I think.
Yeah, it's huge.
And then I think we made these points a couple times.
Basically, it's our observation that even though they're on
the system side, there's
some work that can be done there and some additional
infrastructure that should be provided.
The organization is generally well positioned, well
structured in staff and highly capable
of managing the risks that the utility faces.
And then again, just kind of coming back to that technology
infrastructure, putting that
in place would go a long way to really supporting the day-
to-day.
And now we get to move on to the FY17 benchmark analysis
and we'll walk through this kind
of in two parts.
One is looking at a couple of alternatives for FY17 that
have been, I think have been
proposed and then also providing an alternative view on
what that benchmark might look like
going forward.
So first, the two alternatives that we looked at, one,
option one, looks at what the day-ahead
price for power was during the year in question.
So in this case, we looked back starting October 1, 2016
through September 30, 2017, would
constitute the FY17 benchmark.
And just what was the day-ahead price of power?
So every day, ERCOT posts power prices for what they expect
for the next day or the day
ahead.
So that meant if we just went back and we looked at what
all of those power prices were
versus how much energy or load there was, that constitutes
the first part of the benchmark
one.
And then similarly to the contract that was previously in
place, there's a heat rate
adder or a premium that gets added into that to account for
risk and profit.
So option one, in a sense, is very similar to what the old
benchmark looked like, except
it's now based on the market price of power on a day-ahead
basis.
And so there's some advantages to this particular option.
One, it's very simple to quantify and to measure.
ERCOT posts those prices every day.
We can go back and we can very easily capture them.
We can add in the three and a half heat rate adder and we
can get to what the benchmark
is.
There are also a couple disadvantages to that.
One is that it does move with the day-ahead markets.
We can only calculate it after the fact, after we know what
all of those day-ahead prices
were in any particular year.
And it doesn't really require an active management.
Because the benchmark is moving with whatever the price of
power is for that year, if power
prices go up, overall the benchmark would go up.
If power prices go down, the benchmark would go down.
That and I think given the direction that you're moving,
moving further away from the previous
benchmark and getting away from the idea of a three and a
half heat rate adder probably
makes a lot of sense.
I mean, you're no longer in the situation where you have a
full requirements contract
with one counterparty and they're taking on a lot of those
risks.
You're managing those risks yourself now.
And so that three and a half heat rate probably doesn't
make as much sense as it used to.
The second option is more of a forward-looking benchmark.
So if we went out on the last day of September in 2016, we
can look to the forward markets
to understand what the expectation of power costs are going
to be all the way through
the fiscal year, all the way through September 2017 of the
next year.
And what we can do is we can take that forward curve and we
can multiply it by the load,
how much electricity you expect to need in that year.
And that serves as the benchmark for on that day what it
might cost to procure all of the
power or all the electricity that you need in that year.
And then as you go throughout the year and you buy in the
day ahead markets or you know,
the renewables, you have renewables at whatever the
contract price is, you can then compare
your actual costs back to that benchmark of what it would
cost, what it would have cost
to lock in all of your electricity on the day before the
beginning of that fiscal year
and you can get an understanding of how well you did
relative to that benchmark.
So again, this also has some advantages and disadvantages.
The advantages is that it's market-based and it also sets a
very clear target to be.
Going into the year, you for the most part know exactly
what it is you're managing to
and you can actively manage it.
The disadvantages, it doesn't consider what the objectives
of the utility are, the risk
or the uncertainty.
So for example, if we simply have that benchmark and you
know, set at the beginning of the
year, even if the DME and EMO is actively managing that
risk, if an event happens and
prices go up, then it's going to be more costly to procure
power and you may not be as accurately
measuring the value that they're adding or how well they're
managing those risks.
So I think both of these have some advantages and they both
have some flaws as well.
So what we wanted to do next was then kind of look at the
actual numbers.
So we went back and recalculated the benchmarks and took
the actual costs for the last fiscal
year in order to calculate what the savings are.
And similarly to what the news was the last time around,
the good news is that under either
benchmark there are savings.
And so just to orient everybody to the slide, the top half
is the calculation or the top
third is the calculation of the benchmarks.
And I'll come back to the one right there in the middle in
a second.
The middle of the slide is what the actual costs were as
provided by DME and then the
bottom third are the savings under each of the different
options.
So to kind of go back up to the top, that middle row here,
what we did is we took option
one, and as I mentioned before, about the three and a half
heat rate adder, we simply
took that out and said what would the day ahead benchmark
have been if you didn't include
that premium for risk and profit.
And used that as just kind of another comparison or another
alternative to look at.
And as you can imagine, when you take that adder out, the
savings on option one dropped
from about 10.3 million to about 2.4.
So the difference is purely related to that three and a
half heat rate adder.
And then when you compare that to the option two, which was
the forward curve benchmark,
the 10.3 savings under option one would have been $4
million.
So just a little bit over $4 million.
So either way you look at it, there are savings relative to
either of those benchmarks.
So pause for a second.
See if there are any questions.
Okay.
So I wanted to think about it a little bit differently for
a second.
And if we go back to what's the purpose of the cost savings
calculation, is it simply
to save costs?
Is it to add value?
So if you assume, and we talked to, Steve mentioned earlier
, when we had conversations
with staff, it was very clear that the objective was to
manage the cost to end users, to customers.
And so if you assume that in order to assess the
performance and the value of DME, kind
of what we think the benchmark calculation, this cost
savings calculation is doing, well,
then it probably makes a lot of sense to think about it in
terms of what the desired outcomes
are and how well DME and the EMO does achieving those
outcomes.
And so if we hypothesize a couple, what would be considered
good outcomes, one might be
stable electricity rates when prices rise.
Another might be competitive and lower rates when prices
fall.
So in other words, if you're protecting your customers
against rising prices, you don't
want to be blind to the fact that prices might fall and now
you're passing along a higher
than market rate of electricity to your customers.
So it's really managing the pair of those objectives.
And so how do you go about accomplishing this?
Well, one, you hypothesize a set of paired objectives and
you make sure that they're
market compatible.
In other words, if I'm managing too aggressively to prevent
higher prices, am I losing out
on opportunities to pass along lower prices to my customers
?
And so the way that you make them market compatible is the
second piece of this, which is by having
a hedge strategy and risk limits that have been
demonstrated to achieve those objectives.
So you might do that by going back and looking over time
and quantifying how a particular
hedge strategy achieve those two objectives across a range
of market prices.
And the good news is that if we look back over the last 10
to 15 years, we've got a
number of times when prices were really high and they moved
really low or they went from
low to high and vice versa.
So it gives you a lot of data with which to understand that
.
And then the last piece, the way that you accomplish this
is by having the risk infrastructure.
So the ability to capture transactions, understand,
quantify your risk, monitor where you are,
so that when the time comes, you know when to act and you
know how to act.
And so kind of taking it back to the benchmark, it's really
the first two of these, one and
two here, that would form the basis for the benchmark and
how you assess performance.
So the way that you do that is kind of taking it back to
the objectives.
And really, it's -- we talked about two, I guess it's
really three of them, and I'll
explain why in a second, but they kind of all work together
in order to provide a balanced
approach.
So the first is setting an objective around what we call
portfolio risk or managing the
customer's rate of risk.
So if we don't want to pass along more than a certain
percentage rate increase to customers,
how do we manage that?
Recognizing that you're going to have a lot of fixed price
supply and recognizing that
you might hedge at really high prices and then prices fall.
The second piece of it is managing the hedges that have
been executed.
So if I bought power at $80 and the price of power today is
$50, what should I do about
that?
How do I manage that or how do I prevent that outcome from
occurring?
And then the way that you do that is by having an options
budget available to manage the
tension between the two.
And so what we mean is that, you know, every hedge that I
place to protect against higher
prices creates a likelihood or a probability that I might
have been wrong.
So options are the way in which you can balance those
things out.
And so when, you know, when you kind of take it through
that process in the end, you know,
this is, if you will, the benchmarks that you establish.
So I might have my--the first piece of my benchmark might
be I'm going to manage my
energy cost adjustment so that the cost of serve customers
don't increase by more than
X percent with some confidence, with some level of
confidence.
The second piece of it is I'm going to manage my fixed
price transactions that so customer
rates aren't more than X percent above whatever the market-
based rate is.
So that's the competitive objective.
And then finally, I'm going to set aside, you know, $500,
000 in options premiums to
manage the tension between the two.
And so you set these at the beginning of the year.
Everybody--you know, there's general agreement as to what
those limits are and what you're
managing to.
And at the end of the year, as you go back and you take a
look at it, you can very clearly
measure, "Well, this year, you know, I said I was going to
manage to a 3 percent rate
increase.
I actually only had to pass along a 1 percent year over
year rate increase.
And here's why, because these are the activities that I did
.
Here's the outcomes that we realized as a function of them
."
In some years, it might be that prices fell.
And so, you know, what you'll be able to say in that case
is, "Well, the market fell by
5 percent.
And because I was actively managing my portfolio and my
exposure, I was able to pass along
4.5 percent of that 5 percent drop in market prices."
And then you can also very clearly say, "I spent $200,000
in options to do so, you know,
less than the $500,000 that I budgeted at the beginning of
the year."
And so then each year, you'd come back and you'd reconsider
these objectives, you'd reset
the limits of what you're managing to, and at the end of
the year, you can very clearly
measure where you are relative to those objectives and
those limits.
And so this is the direction that we would recommend moving
.
You know, it's more -- it provides a very clear benchmark
across multiple dimensions.
It's -- you know, you can come to agreement on what those
inputs are prior to the beginning
of the year, and then you can very clearly measure them
after the fact as well.
Steve, anything you'd add?
All right.
So in terms of next steps, this is one that we had talked
about at the last meeting we
presented.
I think if you -- you know, if you think about what the FY
17 benchmark, you know, is now
and what you -- the direction you might take it, maybe for
FY18, this would be what we
would recommend -- the process we would recommend going
through in order to be able to come
to agreement on what those objectives are and then set
realistic and market-compatible
risk limits.
So it would be about understanding what the exposure of the
current portfolio of supply
and load is, understanding how different hedge strategies
help you manage the exposure in
supply and load, and then using that hedge strategy to set
risk limits, update those
objectives so that everybody, you know, has a known set of
objectives and limits that
they're managing to as you go into the next fiscal year.
Okay.
Discussion?
Well, I just want to say I appreciate the board's indul
gence for fairly detailed information.
I also want to thank Stephen and Tim for all their work on
this and our staff.
They've been great to work with, very professional and
comprehensive in their approach.
We've got a number of things to bring back to the board and
the City Council and talk
about that.
We're going to be doing that in pretty quick order, in
particular on the governance issues.
This is something on the management policy that we have.
We created that back in 2014, but really hadn't had a
discussion with the board or council
since that time.
So we want to have a good discussion of what's appropriate,
what are the recommendations
that we want to put in there, and then on at least an
annual basis come back and talk
about that every year of what do we need to tweak, what are
areas that we can improve
on and how can we manage that differently, and to keep that
really front and center for
both the board and the City Council.
But we've got a lot of work to do.
We'll be bringing this back in future meetings with you.
Again, just want to say thank you for your time, and Tim
and Stephen, thank you for all
your work.
Thank you.
Just in terms of I'm thinking what's a good nutshell bumper
sticker takeaway for me to
explain to a layperson who doesn't have time to read all of
this.
And I haven't yet been asked, so what do you, by the public
, what do you think of this report?
And I just wanted to run by you what I was thinking of
saying, and so you could let me
know if this was a correct assessment or not.
My sense, and I think this is a little different than what
Susan's sense of it, but maybe this
is just two sides of the same coin, I'm not sure.
From reading the report and from hearing your presentation
that this is not a diagnosis of
a terminal illness, right?
It's not, so this is not your, this is a sick organization
and it's in serious trouble,
but rather, and this is what I was planning on telling
people if this is correct, rather,
you're in pretty good health, but you don't have a doctor
and you need a doctor and a
health plan in place and you're very lucky that you've been
doing well so far and we're
going to be fine as long as we have these things in place
that we need.
And so anyway, is that, or if you would want to tweak that,
I mean, I'm not interested
in hearing that that's a good example.
I'm just thinking is this right and if it's not, well, what
would be good, you know, in
one sentence, kind of analogy for somebody who really doesn
't have the time to go into
this at the level of detail that we do.
I think it's a fair comment and, you know, in the doctor
analogy, that's the kind of
the governance and the policy infrastructure that needs a
refresh.
I think that's accurate.
I think in general what I suggested, the assessment of the
capabilities and then the benchmark
discussion, they come together in terms of as an
organization and as, you know, what
are the objectives of DME as an organization through the
city and what's the ultimate kind
of metric or measurement of success.
And if as an organization you can define that and that
might be, you know, what are the
rates that our citizens ultimately pay for electricity and
there are other factors as
well as where does that electricity come from and all those
discussions around renewable
are built into it as well.
But I think gaining consensus on that ultimate objective
can help then drive, you know, what's
the framework within which we're going to expect the DME
and the EMO to operate and
as an aside, we started just talking about DME and then
kind of this EMO is a separate
entity I think should go away as a concept.
I think it's all within, you know, the utility.
If we can define the objective that will enable as a risk
oversight function you to define
what are the parameters within which they are going to
operate and it also will help
define how do we do and all those discussions kind of after
the fact in the first part of
the work that we did which is, you know, kind of digging
into a calculation and you can
always debate like the different variables that are used to
do that calculation.
Our recommendation to think about a performance-based
benchmark is, you know, in some ways a departure
from the cost-based benchmark that I think has been in
place to date but maybe gets the
organization back into the singular focus of we're trying
to protect our rate payers
and the citizens and they're not paying, you know, above a
certain amount or that they
can benefit from, you know, from market moves that are in
our favor.
I think that kind of as a goal post is the key takeaway for
me and I think in order to
get there, back to your question, the framework is there,
the people are there, that, you
know, it's kind of -- it's there.
I think the goal is to identify what ultimately are we
measuring and that will fill in some
of the blanks.
Very long-winded answer to your question.
And, Deb, we're more in agreement than not.
Yes.
And I think I would just add one, you know, one piece to
that and it's -- I don't think
it's everything's your way or because you've been lucky.
I think it's -- to date it's been a lot of individual, you
know, a lot of individual
effort and I think the governance recommendations I think
will help make it less of an individual
effort and more an organizational effort which I think will
streamline and make that process
easier and more transparent.
We're lucky that we have the people who have been able to
make these decisions on staff.
That's all we have for you.
All right.
Thank you very much.
Thank you.
And I've been told that we are going to pull the closed
meeting item and so that brings
us down to the consent agenda and I've been asked to pull
item B. That should -- oh, I'm
sorry.
Just curious how come we're pulling that.
Larry, how come we're pulling the closed meeting?
We can't put in a note, sir, so we decided years ago we'd
take off those agendas.
Okay.
So it's a -- will be discussed by Council tomorrow?
No.
It's not.
They're getting their -- they're going back to the old
first.
Thank you.
Okay.
Consent agenda.
Then we've been asked to pull item B off the consent agenda
because that should have been
an item for individual consideration.
So that leaves one item A on the consent agenda.
Does anybody wish to pull it?
Or a motion to approve the consent agenda item A?
I move.
Okay.
Do I have --
Second.
Okay.
All in favor?
Aye.
Okay.
Items for individual consideration.
Should we take B first?
Okay.
So we'll be taking, well, the consent agenda item B. I don
't know how to say it, so --
All right.
Tidistus, City Engineer.
I've also got the project manager, Lee Perry, here.
I'm bringing to you today a project that is currently on
our CIP.
It was a bond funded project, I believe.
Pack four, phases one and two, you've actually seen before.
We came last month and actually got council to -- and you
all to award the contract to
move forward with construction on that piece of the project
.
Ultimately, this was all supposed to be one project.
But for a lot of different reasons, funding being one piece
of it, we were -- we weren't
able to do all of that project at one time.
Time has just not been our friend on some of these projects
.
So what we have today is the second phase of that project
asking for the design contract
to go forward.
So this project in general -- let me go back a little bit
here.
It's a project that, like I said before, connects to the
project that's currently going to construction.
It'll start construction shortly after the first of the
year, which runs primarily through
downtown.
And let's skip past a couple of slides here and get to the
map.
It's a little easier to follow.
So phases one and two, the creek itself, peck four, Pecan
Creek, tributary four is what
that really stands for.
Ties into Pecan Creek, a little bit off the screen here,
comes up, crosses Locust and
Elm and then follows to the north.
And the creek itself actually runs through a couple of
channels up north of Oak.
No, we didn't make it that far, sorry.
Up to Mulberry and then it goes just north of Mulberry,
comes back across Carroll and
all the way back over through this neighborhood.
Is that Prairie Street?
Bernard, sorry.
It gets all the way back over to Bernard.
Part of what happens here, and you don't see it on this map
, is there is a floodplain that
takes in a very large amount of this entire area, trying to
outline it here as best I
can so you can get a sense of the area.
It takes into account a very large area of downtown and it
inundates quite a few homes
in the neighborhood back to the west of Carroll, this area
back in here.
So a lot of homes drain into this creek.
What this project will do is it will remove a good number
of those homes, I think all
of the homes out of the floodplain, and then it removes the
vast majority of the businesses
out of the floodplain by taking everything into a box
instead of it being an open channel.
It brings it into a box so all those buildings, all the
vacant land that's there for development
in the downtown area on that south side is now available to
be developed.
We can do a lot more with it since it will be out of the
floodplain and the floodway.
The floodway is the key factor there.
On the map there is a floodway, the FEMA map today, there's
a floodway that runs through
downtown, prevents a lot of development.
Not put a structure in the floodway.
So what this project does, phase one and phase two, is this
green and blue line.
That is ongoing right now, we'll be going to construction
soon.
Phase three and four, there's a couple of lines here.
This yellow line is the original projection of phase three
and phase four goes from Carroll
back to the west to tie into the open channel just through
this neighborhood.
Now this, it's kind of a misnomer through here, I believe
this is just a little drainage
ditch, is that correct?
That picks that up.
It's a bit of a channel, but it is out of the floodplain by
the time we get in there.
So what we're looking to do with this project, and you'll
see a dashed purple line here.
As we originally looked at this project, it was remove the
floodplain, putting the boxes
in underneath the road, which is a lot easier for us to
access because you know you're not
going to get buildings, you're not going to get a lot of
structures or homes or businesses
that we got to interrupt to get in there.
It's bad enough to interrupt traffic, we definitely don't
want to do that on private property.
The problem we're running into is you still have what's
left of this channel that we can't
completely take away because you still have to allow those
homes and those businesses that
have traditionally not had anywhere to drain other than
that creek, we can't completely
take it away.
So we're still going to catch that water in this channel
left on the north side here.
So an alternative proposal, and that's part of the reason
why the contract for basic services
is just over $900,000, is to look at both the yellow ph
asing and the purple to say that
may be a better alignment from the standpoint that it still
provides a lot better and potentially
a lot less construction cost to us by leaving this drainage
channel in place as much as
possible.
By the time we take the vast majority of the floodplain out
, this really just becomes a
little collector ditch.
It's not a floodplain prone area.
So that's why you see these two alternatives here.
It's also partially why you see a little bit higher
contract cost than we potentially would
have seen.
We also have, I need to go backwards, we got our slides a
little bit out of order, I'm
sorry about that.
Some project costs as we estimate right now are looking at
1.2 million for design, which
is what you have before you right now.
That takes into account quite a few items.
Now if you look at what that really runs on a project that
's not that unusual to see it
running in the 10 to 12% range, when you also consider that
there's a lot of potential properties,
there's a couple of different scenarios we need to look at.
And we've got some construction costs or construction
administration services built
into that contract.
So the consultant will be working with us hand in hand
through the construction phase
to make sure this project gets done timely and effectively.
A little bit spent on that will usually, by and large, save
you quite a bit during the
construction phase.
We are looking at potentially $300,000 in property acquis
itions.
That's that purple line that you saw.
We're meant to continue to get some easements.
We are working with the county to try to get some
additional aid and help there.
And then the construction costs right now are currently
projected at $9.3 million.
So it's an expensive box.
Anytime you start putting boxes of this size in, they're
always expensive.
We are going through the process.
What's in that number is a contingency factor.
So we're trying to give you the worst case scenario of what
we think this is going to
be.
Of course, we will analyze all options to try to keep that
cost down as much as possible.
We are proposing to have Fris and Nichols, who did the
design for phases one and two,
they picked up where T. Nolan Perkins did the study for the
entire street stretch of
this creek.
They picked up and did the design for the PEK4 phase one
and two construction.
So that is part of the reason why we selected them for
three and four, is it's just a natural
extension of this project.
So instead of getting somebody else on board which would
have taken longer, we'd potentially
have some conflicts between the two, just trying to get
them to marry up their designs.
It kept this in one shop and kept it moving forward.
They were very qualified.
We used them on multiple occasions and they are known
throughout the state for this type
of work and more.
We ran through quite a bit of that.
So our recommendation is that we would ask you to approve
this contract or recommend
approval to counsel this contract for $1.2 million with Fr
is and Nichols.
If you have any questions, I'm here to answer any questions
you might have.
I'm going to leave Perry's here as well.
Yes sir.
So the way I see this is by doing this, you talk about
removing the floodplain.
Which allows land to be developed.
So you have the cost side, but now you're going to have a
revenue side.
Because then with the developed land, you'll have increased
property taxes.
You'll be able to basically pay for over time the cost of
doing this.
And to the homeowners, it would seem like if they can even
get insurance, their insurance
cost, at least in that area, is going to go down because
they're not being paid enough
floodplain.
Yes sir.
So a lot of benefits for all of this.
It also improves our rating standing with the Federal
Emergency Management Agency.
Okay.
Thank you.
Go ahead, Dan.
I just want to clarify the construction costs.
Yes sir.
So is this, they've been approved or not approved?
For this project, no.
This is three and four.
For phase one and two, yes.
That contract asks.
So you're going to present these in the 2020 bond package?
Unless we can find other sources of funding, yes sir.
We're constantly looking for other ways to fund this work.
Grants, wherever we can find out their partnerships, we're
constantly looking.
But yes, right now the only source of funding we know of
would be a 2020 debt program.
So Derek, the one and two, the phase one and two was
supposed to do the same things that
you're saying the three and four is doing.
Yes.
So when did we realize that one and two wasn't going to do
exactly what we thought it was
going to be?
I'm not sure how far back that history goes.
I know when I got here in July, we went through and started
going through every single project
to look on how far they can go.
And this was one of the first ones we looked at and said, "
We're not going to get that
far."
I knew that, but to answer your question on how far back
that went, I don't know.
Okay.
Thank you.
Deb, did you have a question?
Oh yes, I did.
Well first I wanted to say thank you for this and thanks
for pulling this from the consent
agenda.
I was going to ask to have it pulled and I was already
planning on voting yes for it,
but because of the cost, but also because it's such an
important and timely issue.
And I think it's important that the public see what the
city is doing for flood preparedness.
Yes.
As most of you probably saw, there was a recent article in
the Denton Record Chronicle about
flood preparedness in Denton and a lot of people in the
community were expressing concerns
about that.
So it's really reassuring to see that we have such plans in
place moving forward.
And it is a big expense, but it is extremely important as
Alan was saying in all kinds
of ways and in addition to the ways that Alan said it, save
lives and save homes.
And my question was, how is this plan connected to, or is
this plan connected to a larger
city-wide flood preparedness plan moving forward as
considering all the growth that we're having
in other parts of town, for instance around Bucky, the B
ucky's area there was a lot of
concern about the drainage of the homes around there.
Is this tied into a larger plan for flood preparedness city
-wide or is that something
that would be created at a later date?
It is something that we're working on and developing.
It is one of those key components that after the 2007
floods that this was one of those
areas that was identified real quickly that it was an issue
.
So yes, you have some revenue benefits on this, but the
primary cause of this was a
safety project and that's where this comes from.
We are looking at all of our floodplains.
We are required to do so annually.
We are in a, because we are members of the community rating
system with FEMA, we have
to go through an annual audit process.
And usually the five-year audit, because a five-year is a
very detailed audit of everything
we've done from a permitting standpoint with developers,
with homeowners that have come
in, they're wanting to build a brand new home.
And on an annual basis, we just do a double check, make
sure are we still doing everything
that we thought we would do?
And it requires us to look forward on what are we going to
do over the next five years.
So yes, this is a part of that plan, but it's an ongoing
process for us of what needs to
be done next.
Yes, ma'am.
Okay, any further questions?
Do we have a motion to approve?
And a second?
Second.
All in favor?
Aye.
Any further discussion?
Let's see, then.
Item A, consider the approval of the public utility board's
minutes.
Were there any changes that anybody saw?
Okay, then it's approved as presented.
And item for individual consideration B, receive a report
and discussion, hold a discussion
and provide staff direction concerning the approval of a
contract for the radio network
design and installation services.
Good morning.
My name is Tim Fisher.
I'm director of water utilities.
I've got a brief presentation on this project.
The water production division uses licensed and unlicensed
microwave radios for communications
between their various facilities.
Some of those are permanent or are staff 24/7, others are
unstaffed.
We use that communication system for the supervisory
control and data acquisition or SCADA system,
but we also use them for the security cameras and then for
access control.
The existing system tended to center around the northwest
elevated storage tank up near
loop 288 and interstate 35 on the northwest side of TAN.
That tower was our highest tower and gave us the best line
of sight to all the various
locations until recently when we added the elevated storage
at the southwest upper pressure
plain, so that's a similar height location.
Basically this is a shot of the northwest tower.
Radio equipment is very small, compact.
It's not real visible unless you look hard for it.
Very directional from point to point.
Arcadis Engineering, which is actually at the time was
Malcolm Kearney, Arcadis later
bought them out, did a SCADA master plan for us in 2012.
One of the purposes of that study was to give us some
assistance in how we sustain, maintain,
and improve that system and then also how to budget for
capital projects.
A critical component of this was trying to develop improved
reliability through redundancy.
This is basically a redundant radio based system and a plan
.
This is the existing system.
It all tends to direct its signal to northwest and then to
each one of the various locations.
The revised system will basically add a duplication in
pathways and provide the redundancy that
we're looking for reliability.
So that helps us eliminate a single point of failure and
gives us additional redundancy.
We're proposing to use Johnson Technical Services.
They're a Dallas-Fort Worth based area, a radio network
provider.
They are used by Denton County, DISD, City of Denton.
They're also I think used by the Upper Trinity recently.
They had a fiber based system.
They were getting fiber cuts so they went to a radio based
backup system.
Project budget was 220.
This is being procured through a Texas Department of
Information Resources contracting mechanism
very similar to a buy board so it meets the legal
requirements for bidding.
And with that I'll answer any questions that you might have
.
Is the water service or is that the only communication that
happens on this?
It is specific to the water department's needs, yes sir.
And it's very focused on the security camera systems that
we have.
That was one of the bigger bandwidth issues that we needed.
But then also for the control system.
Some of our pump stations have supervisor decisions turn
pumps on and off as opposed
to having things automated.
So those are run at the two treatment plants where we have
staff and operations staff.
Thank you.
Any further questions?
Move approval.
Okay.
Motion to approve.
Move.
Oh, he moved.
We need a second.
I'm sorry.
All in favor?
Aye.
Okay.
Thank you.
ACM, you're on, Maureen.
All right.
Thank you.
Members of the board, in your packet there is a memorandum
from George Morrow.
He's our new general manager of DME and here to provide you
with information about the
Tesla roof tiles.
If you have any specific questions related to what's in the
memorandum, George is here
to answer those questions if you have them.
I'm just so surprised with all the roofs that had to be
replaced that nobody replaced it
with a solar roof.
As far as, oh, I'm sorry.
I would just like to just to say welcome to George and we
're so happy to have you here.
Yeah, if you wouldn't mind saying a little something to us
and to the public about this
memo.
Thank you for that opportunity, George Morrow, general
manager of DME.
Yeah, I'm very happy to be here in Denton.
This is the start of my third week.
I'm fighting down the urge to think I know everything
already because every day I learn,
wow, I'm so far down the learning curve.
There's a huge process here.
It looks like you were in competent hands in the interim
period.
I want to compliment the work that Brian has done.
Everyday amazed that he is carrying all these different
buckets of projects and things and
he's done an extremely great and competent job.
I think our staff very much appreciated his leadership
during the interim period.
They're also looking forward to the new general manager.
There's a lot of prescriptive things that we want to get
moving forward that I've learned
from looking at some of the public utility board background
and hope to be in front of
you many times as we move forward the organization during
this transition period.
Thank you all for your support during that pretty complex
interview process.
One of these days my goods will get here.
Thank you again.
I'd like to thank Brian too for the -- I know how hard that
is to wear that many hats.
So thank you.
Thank you.
Appreciate it.
I'm glad George is here.
And then the only other thing I'd just bring your attention
to is this is the last meeting
of the calendar year for the PUB.
Our next meeting will be January the 8th at 9 a.m.
And then again, just a reminder that we'll be moving to an
evening meeting on the second
meeting of the month.
So the January 22nd meeting will be at 6 p.m.
We're actually going to be in this room.
We're able to make arrangements with another conflict,
another committee that meets in
this room.
So we'll be in this meeting room from here on out as far as
evening and morning meetings.
Okay.
Demetrius.
I believe with the exception of the DME substation costs,
which I know George is working on and
will be bringing forward some information to the board here
in the near future, I believe
everything is covered on the matrix from the things that
have been requested in the past.
I think, Brandon, I still owe you some information
regarding metrics on viewership and downloads.
And we've been working on that.
And so we'll get that to you, get that to the board under
separate cover.
And then we'll add that to the as part of an update at the
next board meeting on the
matrix just so you have that information so the public can
have it as well.
Okay.
Then we're on to concluding items.
Is there any items that?
Deb?
Yes.
I had a suggestion.
I know that we have a policy where we don't turn off the
power for people in conditions
of extreme weather.
And that's a very good thing.
And I was wondering if we could consider in the future
having some kind of grace period
at universal times of extreme financial difficulty as well,
meaning specifically this time of
year, the December, the holiday season, you see a lot of
people, spending goes up, consumption
goes up, and everybody is enjoying the holidays, but it's
also a really stressful time financially
for a lot of people.
And even poor people are buying gifts for their families.
And I think it would make a big difference with not much of
a loss, as I understand it,
to consider a grace period of December for people who pay
deposits.
We can certainly bring back a discussion of that item.
Any other items?
All right.
Approval to adjourn?
So moved.
Second?
Second.
Okay.
We're adjourned.
[end of transcript]