May 21, 2018 Public Utilities Board on 2018-05-21 6:00 PM

May 21st 2018 public utility board meeting to order. Our first part of the meeting is in work session. Our first item in the work session is to receive a report, hold a discussion, and give staff direction regarding the wastewater and drainage fiscal year 2018-19 operating and capital improvement budget. Mr. Chairman, members of the PB, my name is Tony Puente, director of finance. We're gonna tackle this in two phases. We're gonna go ahead and go through the wastewater budget which excludes the drainage component and then we'll come back to you and we'll go through that particular budget so it'll be a two-part presentation here for you. And as you can see there's a number of staff members present. If there's some questions that I can't answer they'll quickly get up here and answer them for me. So just quickly I want to walk through the volume forecast again very similar to what we did with the water volume forecast. We 've kind of we've combined this together into this presentation. As you can see we've seen about a about a 2% 2.2% growth in our customers for wastewater, residential, commercial, wholesale. The total growth it's been about 2%. We did see a little bit of a spike there in 2016. You ever see the cursor up there? Yes. So in 2016 it was a little bit of a spike, 2.7%. This budget's kind of based on a 2.1% growth in customers going forward. A little bit about our treatment plan. I will, if you look, if you saw in your backup that is one of the major issues that's out there for us and we'll talk a little bit about that as far as the risk to this fund. That plan is currently out here in 2028. We anticipate the capacity expansion to that. About 8 MGDs is the kind of the next phase of that of that plant or it's a new plant, excuse me. We've seen kind of a you know levelized actual flow by year. Kind of came down a little bit this past year in 2017. But generally I think we're kind of on a good trend upwards with again we'll be keeping an eye on kind of where those volumes are going forward. Continue to evaluate the need for that treatment plant. There is a possibility that that plant could go out a little bit further than what we currently anticipate but we'll be evaluating as we go forward. Some of the assumptions that have gone into this budget and this forecast is that all rates are based on cost of service. Both options that we'll present to you today do maintain a 1.25 debt coverage ratio that's consistent with both our debt policy and also our bond covenants that we have. Annual revenue funded capital based on asset management program. Collection system replacement funding target is 100% revenue funded for treatment plant infrastructure is 25% revenue funding 25% debt funding. Those have been long established policies for the city as the board is aware. Reserves, there's no changes to the reserves. 100 to 140 day range that's about 28% to 39% of budget expenses. I'll show you in a forecast how we try to maintain those in both options. Continue to use a multi-year financial planning to minimize those rate increases that just simply means that we only issue the debt when we need and when that capital is coming forward. Rate revenue forecast is based on a 128 GPCD per day that's a gallons per customer per day that 'll be the kind of target that we'll be looking at evaluating as we go forward as far as the need for an expansion or a new plant. And then the one thing that almost very similar to what we did over on the water side with customer service. What we've done here is we're recommending to break out the drainage from the wastewater to better target what those reserves are for just a wastewater operation. We do plan to create a sub fund within the city's financial system to better account for those drainage operations and the drainage fee as well and any other revenues that are associated with that operation. We'll talk a little bit about that when we get to that presentation. For a long time we've maintained in the in the wastewater fund one million dollar drainage reserve and well the recommendation is to simply move that to this sub fund of drainage and then again just dedicated to that drainage keep it out of the wastewater operation. Some cost containment strategies over the last several months we've been looking at the CIP program not just for this fund but all funds across the city we've been working closely with the departments to understand what their needs are shortfalls any excess balances that may be there and how we can better utilize those going forward. We also included a salary savings budget again this is about one and a half percent it's very small a percentage but we do have turnover in that that it does explain some of the actuals in prior years compared to the budgets and we'll talk a little bit more about that here a little bit and then we do have a reduced revenue funded capital about 1.5 million and to level out the the five-year contributions that's just simply to keep some of the swings and to better kind of match what our cash flows are in our capital projects. Some of the future risks and mitigation as I mentioned there is this Hickory Creek basin new plant that is out there in that 10-year window it's about an 80 million dollar plant that's forecasted if you give me a second. Currently we're looking at about eight million dollars in 2024 that's for design and potential some land acquisition as well with the remainder to be issued 70 million in 2027 again we'll be evaluating the debt to revenue component of that and looking for opportunities again that's the current plan as we continue to look on an annual basis on the volumes that are going through our current plant we'll be determining what the exact timing of that facility will be. Contractor cost excuse me contractor cost for CIP again we continue to see increases in those costs and so that's something that we have to be cognizant about as we go forward. O&M costs we did go through last year and again this year pretty heavily on on that O&M cost evaluating what's there what's needed making reductions as appropriate. Additional regulatory requirements again that 's always something that's out there both with the TCEQ EPA so there 's some things that we're continually continuously monitoring as far as this operation is concerned. So the two options that we wanted to present to you option one as you saw in your backup is includes a five percent rate decrease that does draw down our reserves I'll show you a little bit of what the impact is of that option two very similar to what we did on the water side is a two percent rate decrease but what we've done is we've revenue funded more capital and and trying to reduce and the leverage if you will the the fund going forward from the amount of debt that is dedicated to it. So this is the financial forecast with the five percent decrease. I do want to point out that previously or last year the forecast did include a two percent two percent two percent for fiscal year 2020-2021-2022 along with this five percent rate decrease we are also proposing to eliminate those rate increases in the future. The current projection for our for our working capital and operating reserves is about twelve point seven million that's well within a well above the maximum target if you see here the 108 target is nine million the twelve million that's the range of our fund balance throughout this forecast under this scenario we stay above the minimum we go slightly a little bit lower here in 2022 but then we bump back up in 2023 our debt coverage ratios you can see here stay well above the 1.25 percent debt coverage requirement that we have in our debt policy. The option two scenario for wastewater as I mentioned is a two percent rate decrease this this decrease again also removes any planned future rate increases that were there last year again if you look at the operating reserves 11.3 million as well within that range and also going forward out to 2023 we're actually back up closer to the maximum of that particular range the the debt coverage ratio as well in this particular scenario stays above that 1.25 target that we have in our debt policy. The changes that you can see will be here in our debt service I'll go back a little bit you 'll see that in 2021 it's a seven a little bit over 7 million 6.5 million in 2021 and you can see kind of decrease here conversely to that we've increased the revenue debt funding for 2019 and also for 2020 that then mitigates those future debt debt issuances that have been backed out as a result of this forecast. Just going through the budget highlights this is the detail for you on the revenues these revenues are a reflection of option one. Staff's recommendation to the board today is option one is the five percent decrease as you can see here these are just the detailed three-year history of our revenues and what they've done. Same thing with on the expense side we again this matches our option one five percent decrease of projection for you a recommendation for you again three years worth of history of expenses and where they will be in 18- 19 under that particular scenario. So the impact the impact for you today here is the customer residential customer with 6,000 gallons currently the rate of that is about the $35.55 per month if option two is is opted that's a two percent decrease that would decrease that to about $34.85 and then of course option one you know gets you further to the left here at $33.79 option one would be approximately a $21 a year decrease to our customers in this particular scenario on a 6,000 gallon 50 gallon 50,000 gallon commercial customer that that that customer currently is paying about $284 per month under option two it would go to 278 and under option one is 269 dollars I apologize we didn't we didn't put that on there for you so if you need those numbers just let me know for a commercial wastewater customer 200,000 gallon that customer currently pays about 1,056 per month option two would go to 1,036 and under option one the recommendation would be a thousand and three dollars that wraps up my portion of the of this presentation I'll be happy to answer any questions you have or we can go to the departmental presentation and we can wait to the end whatever your pleasure might be questions on wastewater so the just question I had was the reserve targets are based upon on wastewater taking the drainage expenses out is that correct that's correct that's correct I'm asking yes ma'am if you want to go back to the rate reduction slides again do you have any concerns that you're showing negative net income for roughly five years at all I think certainly that that is that is a concern that's out there as part of this the risk we feel comfortable that based on the current reserve balances that we have and the fact that we'll be coming back to an annual base basis to reevaluate that again I think I think the fund is is well positioned within the reserve targets and the debt the debt coverages that we have long established and that our bond rating agencies routinely look at and and so I again I think we're in a good position with this particular recommendation it's really occurring because we're going to start spending down some of those reserves that yes a little bit too high okay thank you good evening mr. chair and members of the public utility board I'm here to give the departmental presentation for wastewater my name is Kenny banks and I'm the general manager of utilities want to go over a few accomplishments for for the wastewater department and I also have the environmental services department as a part of this presentation too so it's a lot of slides I'll try to paraphrase as much as I can we have completed the design of the Hickory Creek lift station replacement project and we plan on bidding this project in in 2018 the for actual construction we've completed the pecan Creek interceptor phase 4 project awarded a contract for the Cooper Creek interceptor phase 1 and phase 2 you'll see some of these occurring in the CIP update a little bit later in the presentation we did complete the update of our wastewater master plan model and then we are currently working through we've completed the acquisition of the consultant necessary for the study for the impact fees and we're currently working through those impact fees now we will hope to bring some of that information back to you in the late summer to early fall for the impact fee updates and then we have maintained our in-house construction and preventative maintenance cost to be substantially lower than our estimates of what it would cost us to contract those jobs out our goals for 1819 is to begin construction of the Hickory Creek and West peak flow detention facility projects these are both projects designed to help us shape off the peak flows of the wastewater to allow us to have a little bit more capacity in the system and and hopefully use that to push out some of those planned additional plant capacities that we talked about a little bit earlier begin construction of the Hickory Creek pump station replacement process project this is the old Alton station that we have out there the one that you may recall that we had some damage from a piece of concrete coming through it several months ago so we want to get that rehabilitated meeting and complete of course all of our EPA administrative order requirements continue to have our in-house construction be cost- effective and exercise our preventative maintenance costs so that we keep our overall system wide expenses down and then complete design and construction of a sludge handling project at Pecan Creek water reclamation plant this will be a big project for us we are hoping to be able to use this project to replace the existing gravity thickeners out there which will really help us on our solids handling and help our anaerobic digester be a lot more efficient than it is we've been having some challenges lately with the gravity thicken ers due to some of the changes that we've made to accommodate our lower phosphorus target and the resulting solids that have come from the change of that process so overall budget emphasis is to deliver cost-effective solutions that lower our asset lifecycle cost while continuing to reduce our impact on the environment preventing the overflows making sure that we're replacing these systems at the right time based on an actual assessment of the asset not just based on on an expected life we want to leverage technology and our work processes to enable our employees to be proactive and really service- oriented and by by service-oriented this I really see that as a means of being able to minimize the problems that we have in our system by using our asset management so if we can reduce our mainline service calls our sewer chokes our san itary sewer overflows that's a means of using that asset management program to increase our service to the community in terms of process improvements our asset management plan continues to be refined and updated and continues to be a very effective tool for us to reduce our O&M and combine that with our in-house construction and system maintenance we do want to install as I said the secondary sludge dewatering equipment out there for the solids handling at the wastewater treatment plant to help us out both with the solids and with the anaerobic digester so a couple of things about our position summary you'll notice a change in the 17 18 budget from 87.25 to the proposed 89. 5 and then in the 18 19 budget we're actually not adding positions there we're simply moving positions from our field service technical group that were housed in water over into wastewater to have that be a complete wastewater crew essentially the the transfer from water to cover the cost of those positions will make this a budget neutral decision we did add a point to five FTE you'll notice that that difference there that was to take a three- quarter time position that we had to a full-time position so five-year plan again a lot of details here I wanted to again point out the idea of the group assignments that you'll see here basically that that will let you go through the full budget that you've been given to understand where each one of these individual assignment categories are being costed out in the CIP plan basically this gives our overall CIP plan as well as our revenue sources and the major projects that have outlined here are basically the Hickory Creek detention facility and lift station as we've already talked about we talked about the solids handling the West wet weather peak flow we've got a large number of interceptor projects that are that are coming up basically all four phases of the Hickory Creek interceptor are planned within this five-year CIP so this will basically start out at the at 377 and basically take that Hickory Creek interceptor line in a variety of different pipe sizes all the way to the 380 crumb interceptor so quite a large series of changes basically just give you a sense of it interceptor one is a 1400 foot line replacement intercept interceptor two is eleven thousand two hundred feet interceptor three is eighty seven hundred and then interceptor four is ninety one hundred so quite a large number of big projects coming coming up provided you the CIP map similar to what we did with water this is color-coded by each of the individual C IP years so you can see exactly where that project has been planned where it's located in the city of what's the IP year it's it's assigned to so that's short and sweet on the wastewater presentation I 'd be glad to answer any questions anyone has yes ma'am yes under the the wastewater five-year capital plan slide this one the one it's before the ad right before that the category number 24 the miscellaneous category I was wondering if you could just say a little something to us in the public about what what what kinds of assignments would fall under that miscellaneous category yes do you have a sense of what the major ones would be under miscellaneous the short answer is it's everything that's not in any of the other the first beginning there are two projects that are really tied to this Street Department projects so they were not assigned as a capacity upgrade so they put them in a miscellaneous project there and beyond that you know we have there are times when we have the field service has to go out and do some some work on a sewer line that is not part of the CIP so we put some money out there for that anything you'd like to share anything worth sharing about the the variance you know from year to year anything interesting about the reasons for the on the collection system the upgrade projects are the ones you know which are the large interceptor sewer projects that can you talk about oh sorry sorry I'm sorry I mean under the miscellaneous category from year to year so for 2019 the projected for under 30,000 and then 2020 260 okay right here yeah all right yeah in this year right here you know that is where we have the street projects there that are tied to that beyond that it 's pretty consistent as you can see right about $260,000 so it's a certain amount of money we put in there so if you have to do something that is not funded through the collection system upgrade or field service replace we can you know manage to do those projects thank you so you're so you're saying PS as you get a little further out it gets harder to predict I mean these we know we're gonna have street repairs all wrong but there may or may not be wastewater expenditures associated with those until we your time about the miscellaneous yeah and the miscellaneous yes in generally you know after first two or three years it 's kind of hard to predict yeah what we have to do even that happens even with the major projects because we don't know capacity wise are we going to hit that where they we will need that project or not so it becomes a little more difficult okay any other questions I guess the the one question I had was kind of an overall goes back to Susan's comment about you know budgeting a loss and I'm all in favor of rate decreases whenever we can do it I just want to want to make sure that because you know we had a two point a two percent increase last year right and so or this year yes and so we're going that's a seven percent swing I guess if you will if we do a five percent this year and just to clarify your last last year we had a we had a zero rate increase we had projected a two percent okay that's okay yes okay and that's sort of the point of these budgets as we're looking out four and five years is you go back on an annual basis and you'll read you'll refine those estimates moving forward the strategy with wastewater is identical to that with water is we know we've got some significant capital projects coming down the road we 're trying to manage the debt service line item is as much as we can so you'll notice in the five-year rate decrease the debt service falls off down to about five point three million dollars going as high as seven point three million in 2022 that's really the number after we take a look at our policies the debt service coverage and and the and the reserves that we're most concerned about in both of those funds we know that in the next five years or so after out there that we've got major projects coming forward and we're trying to create as much capacity as we can so as to not have a situation in the mid 2020s where we get into a rate shock scenario because we're talking both those projects are going to be significant certain tens of millions of dollars so that's really what's driving us we'll go back in next year we're trying to we're trying to revenue fund as much capital as possible stay away from certificates of obligation and and then when we actually need those dollars to create the capacity in both water and wastewater treatment plants it's there and hopefully manage the rate increase that's going to be necessary at that time so the negative numbers don't bother us too much the the dollars are there to draw it down we're still having a fairly robust C IP and planning for for our next treatment plan expansion so we feel like we're in good this this fund in particular we're in really good shape yeah I know I guess the not too distant future we had we really had to step up the capital improvement program and wastewater because of the compliance with EPA requirements and right TCEQ and all that and so I just want to make sure we're not putting any of that at risk right well it is a self-correcting process every year we are looking at biggest miniatures on the on the water side we're looking at it's going to be close to with design and construction close to a hundred million dollars and on the wastewater side we're looking at about 78 million for the plant expansion that's that's planned I do think there's some capacity to push that out further on the wastewater side depending on how things go with solid solids handling and some of the things that we were doing with the PS of particulars do with his group and the in system storage capacity to be able to make the existing concrete plant last longer so it but those are two projects that are out there looming and we definitely have our eyes on them as we're going forward is that part of the collection collection capital improvements is it with that is a collection system or is that yes yes I mean it did the the the plant design and the and the actual construction of the plan is outside of this five-year IP but yes it would be in that in that category okay all right any other questions no okay talk real quick about the environmental services and sustainability department you have a question I was just gonna say I mean I support the five percent rate decrease it seems like a great idea for the ratepayers and and very sensibly planned for I'm not worried you know looking at how we're doing going forward so it seems like a great plan and thank you um I've been before the board and talked about environmental services and sustainability for the last several budget cycles it's a little bit of a of an odd division because it's kind of spread among the organization and so we thought we'd kind of just go through it in a fairly high pass level and kind of show you the major elements of it and then you can see the individual FTEs by functional area so now through some reorganizations we have landfill regulatory compliance as a as a component of environmental services generally speaking we that's the same approach that we've used on the water and wastewater side where environmental services handles the regulatory arm of the of the organization we've got the water laboratory wastewater laboratory industrial pretreatment and watershed protection that are all under either the water fund wastewater fund or the drainage fund watershed protection is also the group that does the stormwater compliance for the city and then we've got the sustainability department as well a couple of foot notes there the the FTEs by functional area are going to be a part as I've stated of the water wastewater solid waste fund FTE counts but there's a couple of other issues that I'd like to point out the reduction of the FTEs on the landfill regulatory compliance was due to the fact that we had basically cancelled the landfill mining operation and so there were two FTEs that were no longer needed there the sustainability increase of three FTEs was just simply a component of an environmental or an organization into the environmental services department so those positions do not represent new positions to the FTE new positions to the city rather they represent new positions just to environmental services basically this is the the arrangement of the reporting structure so there's two major arms one under the assistant director of environmental services Deborah Vieira that has the majority of the regulatory compliance the laboratory the pretreatment and watershed groups and then the sustainability side is under the management of Catherine Barnett and that includes keep it beautiful which is the main reason for the change the FTEs and sustainability and then also the sustainability recycling and marketing group so accomplishments for 1718 we achieved a three star certification star is a community rating for sustainability a three rating for a city our size is very very good so usually you don't see that except on larger cities so we're doing very well there completed review and final approval of sub chapter 17 of the development code regarding environmentally sensitive areas that was a very large project that Deborah Vieira oversaw and got through to completion we met or exceeded all our requirements to retain our designation of a high performing pretreatment program we've received a zero compliance history score which sounds really bad but that's actually really good I really would like to petition the TCQ to change that scoring because it sounds bad but zero zero means we didn't have any violations we implemented the energy star portfolio manager to track our municipal building energy use so we're doing that that's going to be an interesting project because it feeds in and gives us a little bit better data on our greenhouse gas inventory for the for the city as well as helping us track our energy usage and see where we might be able to implement some savings and then we coordinated with SECO the Texas State Energy Conservation Office to actually come here and help us conduct energy audits for 10 of our higher usage municipal buildings and we have a set of recommendations for for those some of our goals for 1819 is to revise our air quality action plan basically this plan is a component of our overall greenhouse gas emissions our idea there is to basically build that out further so it's not just dealing with greenhouse gas emissions we'll be working on that through the committee on the environment we do need to draft a stormwater ordinance for industrial sites and our utility inspections to basically address some of our new requirements for our MS4 municipal separate storm sewer permit we now have responsibility underneath the new permit to actually inspect linear projects which are typically franchises like gas utilities and cable utilities in addition to the inspections that we have to do for all the active construction sites in the city so it's a it's becoming a larger and larger program as the regulations continue to to evolve we want to draft and approve technical criteria manuals for managing environmentally sensitive areas this is one of the things that we said we would do with the committee on the environment for sub chapters 17 revisions complete our updates to the sustainability plan adopt and implement we've had several public meetings and public surveys on that so we're in process right now of working through that particular plan we're going to expand our sustainability education series to include some some youth programs we this one is one I had to look at my cliff notes on the roots and shoots program this is this is kind of an interesting one it's it's an outgrowth not pardon the pun of the of the sustainable schools program we've done a lot of work with community gardens and and school-based composting this one is basically community volunteerism school volunteerism and so it kind of gives the next level to incorporate some of our already existing recycling and community gardens and and programs along those lines so we've been working with the ISD to build that that program out it's actually a program that is from the Jane good all association so you may be familiar with it it's a it's a pretty neat what it looks like so we want to complete the gas well inspection contract haven't really gone over this too much with the public utility board the gas well inspections was also moved under the environmental services group so we have an outside contract right now that's performing a lot of those inspection services for us and we want to evaluate that program and make a recommendation to City Council that will be coming up here very shortly and then one of the things that we've continued to try to do is improve that public education for gas well inspections we've done a lot of revisions to the website a lot of additional information on our enhanced monitoring that you can access now on our mapping application on that website see any of that data for any well that you have an interest in so we have a lot of performance measures within the organization I won't bore you with going through all these except to say that we're generally on target our green sense rebating fund expenditure is still a little bit on the low side but we always make that up in the third quarter because almost all of the the requests for that and the request for audits come in during the summer months not too surprising so the illicit discharge reported per number resolved of course we want to to keep that at a at a hundred percent average turnaround time for results for residents with drinking water complaints we had a less than 24 hour we've actually shaved that down to 18 so that's typically you'll get a response back before the end of the next business day the number of effluent discharge violations that regulated industrial sites we always like to keep it zero we're running about about two per quarter now which is not a bad number but one we need to work on a little bit and the number of on-site sanitary sewer facilities part of the pretreatment program actually regulates on-site sanitary se wers so you wouldn't think that there would be a lot of those in the city of Denton but our annexations have really incorporated quite a few of those so we're we're sitting at about 750 on-site sanitary sewer facilities that we go by and inspect and regulate so we're at a hundred percent right now of our complaints abated per number received so a couple of cost containment strategies just real quick we reviewed our water sample collection and analysis we tend to do this every few years because redundancies have this nasty habit of creeping in and so we're able to shave some of those off and save about nineteen thousand dollars in cost savings without comprom ising any of our quality control or pollution prevention responsibilities and then we reduce those two FTEs that I mentioned earlier under the landfill regulatory compliance with landfill mining so completed projects we finished the 301 East McKinney Street property remediation the property right across from us through the Texas Commission on Environmental Quality Voluntary Cleanup Program restructured the rates for private waste haulers to provide a little bit more equity there and bring us more in line with other municipalities we also increased opportunities for the smaller haulers there's a an adjustment that's been made that makes it that a little bit more a little bit easier to bear because they have a tendency to be obviously not a the larger more profitable businesses we consolidated the recycling education and outreach and keep it in beautiful under sustainability as I mentioned earlier we're currently renovating our renovated a building at the wastewater treatment plant into a field laboratory this really helps us improve our analytical efficiency and helps us keep the the high-end laboratory equipment from from the field equipment we installed a permanent odor control vapor system along the south and east perimeters of the landfill we were using portable units before you actually have an item tonight about about some of that odor control equipment that Ethan's going to bring forward future projects always looking to improve our mosquito surveillance and response plan that's also one that environmental services is responsible for continue to develop our laboratory information management system and really use that to produce information automated reports etc and then also streamline the transfer of information the TCQ is getting more and more up to speed on acceptance of digital reporting and so that's been a really nice system there's no lost in the mail lost in the building issues to deal with and then of course ensure the compliance with our new monitoring requirements under our landfill municipal solid waste permit so that's pretty much it for environmental services I'd be happy to answer any questions anyone has yes sir questions no I just oh okay I'm just gonna ask for questions from anybody no okay thank you thank Tony's gonna take the right image now well as I mentioned at the beginning of our presentation we 've kind of separated this out to just bring a little more transparency to it Daniel Kramer is our new deputy director of operations he's sitting right over there and he'll be coming up when we get to the department al section to go through that particular section I'll cover the the financial section of this presentation if you recall back a few months ago we did come to to the board with a recommendation to utilize some dollars that we had in our CIP that had accumulated as a result some of these transfers and we use that to bridge the gap of some more 2014 bond program projects that were drainage related the council did approve the use of those funds back on the 8th of May and so those projects one of them being the Hinkle project with Magnolia drainage project which is a major project with project that was very important to the citizens as part of that program we'll be one of those projects about 1.7 million will be coming from that drainage channel rehab fund to to bridge the gap on that and so anyways want to point out that for you so just a little bit of history here of the of the drainage believe it or not this predates me so I started with the city back in 99 so but anyways so this drainage program prior to 1999 was funded from the general fund it was subsequently moved from the general fund into the wastewater fund and it was a mixture of funding for for that function at that time about 70% of the funding came from water about the other the other 30% came from wastewater and then late in in 2000 there was a recommendation to implement a drainage fee identified the the actual program what the cost would be that would be included in that and and also established the the the level of revenue that would be needed to fund those some of the operations that were included it was of course the drainage operation maintenance component the stormwater program street sweeping program and also to fund a limited capital program these are minor capital projects where where maybe debt is infeasible or economical and it's easier to just utilize a revenue funding those projects and we'll talk a little bit about some of those projects going forward for you so in January of 2002 the council did approve a drainage free a drainage fee in the city of Denton that eliminated the need to to fund that these functions from water and wastewater and that has continued to today I will I will tell the board I will say to the board that since 2002 those fees have not increased and we are currently making no recommendations on increasing or decreasing those fees some of the cost containment strategies again these are very similar to what you've seen with water and wastewater we continue to look at turnover we have had turnover in in that particular operation again is just part of the management of that operation we also do fund small capital improvement program projects this year as I mentioned we did fund some some projects that related to the 2014 bond program and it also utilizing mapping to reduce personnel time so some of the assumptions again that have gone into into this forecast no change in the current fee schedule again that's been in place since 2002 and I'll recommend any changes the drainage fee is calculated based on a square footage of impervious surface and apologize that we had a misspell in there incorrect word but it's a surface drainage reserve as I mentioned earlier to you as part of the wastewater presentation we are showing it as a reserve in this particular function and then the drainage revenue for the drainage fee can only be used for drainage as I mentioned to you already the items that it could cover and there is no recommended changes for the use of that drainage fee revenue some of the risks and mitigations that we're doing of course we have aging infrastructure there are a number of channels and lines that need to be replaced and upgraded there's public safety concerns as well regarding some of the road crossings and pipes and relate to some of the smaller projects and contractor costs of course are always something for us to think about as as we look at these projects just quickly this particular function this particular cost center is a self balancing as you can see here the revenue that's generated either goes to pay for O&M any transfers that we may have for some of our internal service funds also to service the debt and in any any additional revenue goes into revenue funding of capital and it goes into our capital program again no rate increases no changes in the rates for that's being recommended at this time we do show the reserve of a million dollars here to my knowledge we've never used that particular reserve but it's something that we've maintained for just just in case so that is the the the forecast for you some of the budget highlights for 18 19 we're projecting about a four point seven million dollars of drainage fee revenue that will come into that to fund that operation we also have about three hundred thousand dollars of a transfer in that's to cover some of the cost of programs like mosquito abatement and some of these environmental services functions that dr. Banks just spoke with you about in a small amount related to auction proceeds that's when we sell surplus vehicles or vehicles that are no longer needed for the city and also miscellaneous equipment this gives you some of the budget highlights for for this function as I mentioned to you we do have turnover in this fund we have seen some turnover we've also moved previous costs that we had here for the street superintendent that is no longer overseeing this operation we've moved that those expenses out of there but again we also now have you know Daniel Kramer who's over that overseeing that area that his costs are embedded in this 1.8 million so that's pretty much it again I mentioned to you this is a self-balancing operation function cost center for the city any money above and beyond those normal operating costs are transferred over into our capital project fund to fund smaller capital projects and Daniel go through a little bit and talk to you about some of those planned projects so unless you have any questions or if you have any questions if you don't I can turn it over to Daniel yes ma'am I have a question under the future process improvement but I'm not sure if this a question for you or yeah Daniel will come up here he'll go through that he'll be happy to okay thanks evening ladies and gentlemen my name is Daniel Kramer I'm the deputy director of operations for the streets and drainage department here for the city of Denton okay so drainage goals and the compliment accomplishments some of the ones we've been working on for this physical year have been the Canton Berry excuse me can't Mary court storm drains expenses you know year-to-date we're sitting about eighty six thousand out of the budget 150 and that one's planned to be completed in June Kingswood expense the Kings wood court we also have expenses at about 31,000 and that one is complete out of a budget 50,000 and for the Rockwood we also is in design and that is scheduled as long as everything holds together be done in September with about 20 close to 27,000 out budgeted 350,000 for now for design some of the goals for 1819 will be the South Bell storm drains and that is in design for future starting at the first of 2019 and the Smith excuse me Smith storm drains and that is planned on being the in the fall have some we're waiting on atmosphere right now to move one of their gas lines for us for that one and the oak tree and Choctaw the jobs have not officially been set up but they're scheduled for the summer of 19 some of the budget emphasis for drainage is to improve the storm drain system to prioritize the citizens from potential flooding risk maintain the storm drain system reducing amount of silt and debris going to the lake so clean out our channels maintain our channels making sure they all stay clean we get all that out there reduce the standing water to minimize the mosquito population in the area and also maintain regulatory compliance with the TCEQ municipal separate stormwater system MS4 permit for the watershed protection some of the process improvements we've completed mapping the storm water system from Pecan Creek the guys have been out working on that when the weather has been a little off whatever they'll go out and verify all of our drains all of our stuff make sure that we have all the information in there all the pipe sizes and all that improve inlet inspection processes utilizing mapping same with that to verify that'll help us be able to create our work orders and keep all of our system digitalized so we know where everything is and what all of our systems are and what state they're in at all times and customer response tracking working on that if we have any issues or anything coming up from our customers we can get out there we can take a look at it document it all so that we have that there for us future process improvements is keep going forward on the mapping for the Cooper Creek and Hickory Creek to continue that process and utilize the mapping system to track stormwater assist inspections and analyze need for adding additional street sweeper for the future growth and then update the drainage CIP plan for current needs and future replacement of aging infrastructures for our position summary as Tony mentioned earlier in the 2017 2018 budget the reduction in the head was our street superintendent which was brought out of drainage and he's no longer over that and then for the addition of our one one FTE in the 18 and 19 is for the watershed stormwater protection super for the intern for that one so currently for our five-year capital plan our main ones that we're sitting at are the Choctaw drainage which the drainage project was not on the original list but it was triggered from some neighborhood associations recent out to the council the primos promos development designed the discharge from their detention pond onto the street and caused a lot of water flowing through the neighborhood so with the text that also improved highway 380 to create additional flow through the creek this neighborhood does not have an underground water system and Creek crossings are undersized so that's where that one comes into play we also had the the oak tree drainage system which has been on the list and was originally listed as white Creek drainage improvements the storm drain pipe beginning at Audrey Lane is a metal pipe that is failing the neighborhood does not have an underground system from the intersection of P aisley to Malky up to Oak Creek there's been numerous complaints over the years mostly in the summer and June storms so engineering has has done the preliminary analysis and costs for this project King's detention pond and out fall project analysis has also been determined for the structure is needed to help reduce the flow discharge from the pond to maximize the efficiency and also the main pecan which is main pecan project is starting preliminary design of the channel from downstream of sycamore Street which was built to the hundred year storm system up to frame Street this will this project is going to help determine the future funding to relieve the downtown flooding along Hickory McKenney Bell so some of the some of the 2014 bond funder projects that we've had which is only about ten point nine million dollars have been the Eagle Drive improvements Magnolia Street the peck for drainage H ickory Street drainage Oak Street and South Bell drainage most of those are still in in progress is also here's a map it's kind of a little hard to see up on the screen but we got some of the areas that we had from the bond funding projects for those and some of the future projects that we need to look at in the future on the next section which is unfunded we didn't have on the last bond but we got another twenty six point nine million of projects to help get the whole city out of the hundred year flood plan that we'll be looking at coming up in the future for the next bond election that we're going through so I just want to throw some of that out you know the Cooper Creek improvements for Mingo Road Sherman Drive peck for drainage three and four and also pe can Creek and those are some of the locations for those areas up there okay are any questions yeah the 2014 projects that you just listed are those all complete no sir not all of them we are still working on some of those are in process for those can you tell us a little bit about their completion and I do not have those all those numbers in front of me at the moment I can't get back to you on that sir I can tell you that Magnolia's in the process progress right now I'll combine that with the Hinkle Road projects that would be started I 'm hoping this fall and I believe peck for council just amended the budget for that but what the peck for is it's the the major trunk line downtown basically we've got we had enough money to get to from the east to get to Elm Street so that is under will be under construction this year we just put a put together a engineering contract to take that major project from Elm to Carroll and to get it designed so it's ready for the next bond package so ran out of funding in order to build that however we'll get the design on this on the books and if we've got a way to we can find it before funded before the next bond package you will otherwise it'll be one of the very first things that we recommend the other ones are all either in Southville also was under construction so several of those are in the works right now and we just actually evil I can tell you we just had a a couple of easement swaps orchestrated by a City Council in order to make that project move forward as well so almost all of those are either in design under construction will be completed the next year or two okay okay I have one more question yes sir you mentioned the mapping of the assets that you had there were some accomplishments there and then future efforts would be to continue mapping do you have a any kind of percentage estimate about how many of the assets you have mapped or how many are left un mapped or anything like that well what we have we've mapped the whole pecan Creek I don't have the exact number of percentage versus the whole city versus what we have and have not done with me I can't get back to you on that but we're doing it as in sections so we can get a full complete section one at a time okay thank you sir I have a question that's as much for us here on pub is for anyone from the public watching and that is you mentioned that that a number of the drainage project were initiated by neighborhood associations or residents or businesses in the area coming forward and you know calling these issues to your attention is there you know if there's anybody listening who who has a drainage concern in their area what would you say is the best way to see that that's addressed by the city to go through council and for them to directly contact their council people to directly contact the department some combination of both deformant neighborhood association going as an individual etc just based on you know what you've seen and which which squeaky wheels have you know most quickly gotten it gotten the grease and gotten the attention what we normally do is our calls will come in to our our drainage manager Clark Olson doll he does get a lot of the calls for any kind of issues or anything that we have going on he will document all those and put them in a file and we'll look at the the cost analysis based on what it is and you know where it's at if we have funding for it if it 's something that we can easily take care of or if we have to go out and put it on an actual bigger project for bonds or you know we'll do that basic analysis you know that's probably one of the best ways that we can get a hold of it that way is just call through the department you know or it can go through council members and it will trickle down through the through the ranks and we will get a hold of that and go through there okay thank you thank you I had a second question go ahead then my second question is a more specific question about I'm under the future process improvement one of the items was to analyze the need for adding additional streets street sweeper due to anticipated growth yes and I was just wondering you know if you have any projection for that in terms of the likelihood that that that will be needed and the timeline for the the process of analyzing that need right okay um currently we are we are looking into it there's a lot of new subdivisions that are being built in in the system and they do not turn over to us normally till they're building out the final phase and towards the end because as that time goes on as construction still going on there's still a lot of construction debris that gets all up in the machines and we get all the drainage and runoff and everything from the construction sites so those usually come in on the last phase so I don't have those numbers for you right now but we are looking at all the roads that are coming in and it kind of bears into is you know us as you know the council and staff how often we want these streets swept you know what's the you know do we want them once a month do we want them twice a month three times a month you know how often we want right now we run to two street sweepers and they run five days a week I think four or five days a week constantly on that to do all the street sweeping that we have right now we can still get more capacity out of them it just means some that we will not hit as often as we normally do so I will have to get those numbers for you can tell you how many streets that we will be having come up and how many we hit on a regular basis and what kind of numbers we can look at for that I know that you know that to determine the cost if it's decided that another street sweeper is necessary you'd have to do an RFP but what just roughly you know would you estimate is the cost of it the range of it cost for those numbers I can't tell you an exact number right now I prefer not to say being this is a new environment I don't want to throw out that number I will get that information thank you this is this is a fun part of the reason that we didn't recommend any changes to the fund balances it probably hasn't been as managed as aggressively as we would like the past and so a lot of questions you're asking they're asking and we're putting together specific plans in terms of ways which should be the service level in the community you know do we have a strong management plan maintenance plan we're viewing this is just an area where the crews historically there's even turnover they've gotten moved over to other things and it's probably not it's not not as much of a specific plan in there as we would like to see so that's really their charge over the next year is to get all those questions and answer it in a plan a better plan in place me it seems like this is really headed in the right direction big it's a big project to tackle it's city wide but it looks really good this place this may seem absurd but I'm gonna say it anyway when you're evaluating your streets street sweeper the future purchase if you've decided to make a future purpose purchase you might look at one that can get close enough to cul-de-sacs because they don't really actually make it through the cul-de-sac and that debris ends up staying there because they can't get close enough to the curved road and then the other thing you might do is publish when you're gonna be on somebody's street so they could like move their car so that all the leaves would get street swept instead of him just going around them and then they just leave the leaves there sorry I just streets we want to get the debris off because it plugs up everything else so it's not to keep the street clean it's to keep the stormwater system clean it's a very visual service so yes you see the street sweeper coming I have one question on this may be a Tony question but on the five- year forecast drainage forecast we're showing in 2023 and obviously the debt service is going down every year but it's zero in 2023 but we just we're just not doing the 2014 CIP projects and those are bond funded so is that are we saying that that debt service associated with that is going away or is that being paid somewhere else the debt service that's associated you know with with this payment here we're CEOs and some Geos that were issued some time ago so so they're in the 2014 bond program that is all paid out of the general debt service fund and and the tax rate currently we left that at zero one of the things that we did talk with the council briefly about when we discussed the use of the channel rehab money is the possibility of issuing some limited debt in the future but I think that goes with better evaluating this operation making sure that we understand what all the needs are out there certainly if there's an opportunity to revenue fund something we would obviously would prefer that especially for some of these smaller projects right but but again it's currently there are no plans to issue an additional debt and so we just left that at zero for now okay so it's these are larger projects that really fall under a general obligation traditionally that's been traditionally that's been that's been the case simply because of the magnitude of those projects from a from a dollar perspective all right very good well mr. chairman and members of the board that that concludes our our presentation for for the wastewater fund that includes drainage as I mentioned what what we are seeking from you is direction you know our recommendation again is is a five percent decrease in rates with no increases in the future at least planned currently addition to that we are recommending no changes to the drainage fee the the next steps for us would be to come back to the board sometime in July to have you formally approve this budget and also the corresponding rate ordin ances that will detail out what the actual rate impacts would be of this this forecast or this this budget so if you have any questions I'll be happy to entertain any questions you may have questions I didn't have a question I have more of a comment of when we were gonna get back to five or two so yeah we know that that says five I'm still nervous about five versus two percent but I I trust you've run the numbers and like you said you're gonna come back next year I hope it doesn't swing five percent the next time I don't think it will so I don't think we keep our customers money any longer than we should so I'll support the five percent other comments I think I said before I'm all for any kind of any kind of rate reduction we could do and if we could do five percent still maintain the integrity of the wastewater system where we're we're not any anything we've done from a compliance accomplishment over the last few years you I don't want to interrupt the program and you've already told me we weren't so so as long as that's is that I you know again I think it's a it's a healthy fun we made some arrangements to take some of the operating expense out of wastewater and so that that puts our puts our reserves at a better really a high level I think based upon what it looks like going forward and we're freeing up room for debt service if we need to do something in the future important same very similar to what we get on the on the water side yes ma'am right okay all right thank you Tony and Daniel and Daniel and Daniel thank you okay next item we have in the work session is to receive a report hold a discussion and give staff direction regarding the Denton municipal electric fiscal year 2018-19 operating budget capital improvement program and renewable resource plan so mr. chairman members of the board again Tony pointed director finance again very similar presentation but quite a bit more slides we we we do have George Morrow our general manager will be is here and we'll be walking through a number of sections of this slide he and I did have to arm wrestle a little bit for you know for all the good slides I told him next year will be different but we also have some consultants here from ERC that are also gonna assist us in walking through the deck performer as well we've asked him to come in and and evaluate that to provide at least a second pair of eyes not just for for the board but also the council and certainly our citizens so just really quickly want to you may have a lot of questions on some of these items so I wanted to let you know just right here on slide one that they're coming up right and so I just want to give you kind of the order certainly if we need to get out of order I will be happy to do that I will be going through the load forecasts for this fund also with our financial assumptions we did have some requests regarding commercial and residential rates and how those compare and George will come up here and and talk through that there's also some some recommendations that we're gonna be making to the board to the council regarding the ECA and and also the related to that is the the TCRF the transmission cost recovery factor that we'll be discussing with you again we'll go through the financial forecast talk a little bit about about the debt for this fund where the fund was as of 930 17 and where we anticipate it would be at the end of 19 930 19 based on the recommendations that we're making to you today George will then come back up here talk to you a little bit about purchase power some of the changes in that that are frankly driving some of this forecast we'll talk to you as well about the the deck performer that's the debt energy center and then finally George will go through the departmental presentation section including the capital improvement program so just very quickly here for you again our customers by class we see about a 2% increase in our in our customers there's been certainly some spikes that have been slowed down a little bit because of the recession and some of the slows down in the housing market as that continues to to increase we're likely to see continued increases in our customer base just quickly we are projecting 361 megawatt peak for 2019 I think you're familiar with some of the some of the articles and some of the news stories about what's anticipated for the summer this year so we are ramping up and anticipating some heavy usage of electricity this this coming year some of the financial assumptions and and again we'll go through some of the details we part of part of this this forecast that does include the payoff of 28.6 million dollars of what's called the scrubber debt it was debt that we issued back in 2010 that's related to the TMPA facility if approved by both the board and the council we would come back sometime in February to call that debt provide notice to to investors so that they're aware that we'll be calling that debt and then cash fund that in in the first part of 2019 we will send that cash payment to to our paying agent who then will disperse that out to the investors and then that debt will will be paid off we are recommending no changes to the base rates for for this fund there is a suspension of the TCRF that is driving what our customers will see as far as their rates and a decrease the ECA will be maintained at the current level and again that is the level that we reduced last year if you recall and the so we are recommending to maintain that particular level of the ECA there is an update to these ECA ordinance that will include the net expenses of the deck as part of the purchase power portfolio for the city and George will come up here and talk a little bit about that as well as ERC reduced purchase power cost we're seeing that as a result of some of our more recent contracts for solar and wind energy and so those are reflective here and then one of the major items is a reduction in the overall CIP program for for the Electric Department we'll talk to you in conjunction tonight there'll be a consideration for a budget amendment seeking authority to draw down 34 million dollars to fund a 34 million dollar capital improvement program in in the current year that includes also 10 million dollars of excess revenue bonds to the system revenue bonds from the deck facility that have that we do not anticipate using those for the deck facility that we're planning to use use for other electric system improvements that's part of your budget amendment for your consideration later tonight and part of this forecast that is a reduction of a plan 54 million dollar CEO issuance that was originally planned for for this fund again now we plan to utilize 34 million dollars George will talk a little bit about that when he comes up here and then to debt fund portion of the transmission system going forward but to continue to draw down rate stabilization to cash fund the remainder of the CIP and so there'll be a huge decrease in the planned debt issuances for this fund compared to what we presented to you last year so how are we able to do this so for 2018-19 what's included is a decrease of about 33 million dollars in in purchase power costs some of those are attributable to a a projected net income to the deck facility about 20 million dollars part of it is related to the fact that we are still currently not paying debt on that facility George again I'll walk through that performer with you and also a reduced TMPA related expenses about 22 million dollars we have a reduced CIP program that carries forward not just in 18-19 but the five years of this program but for 2018-19 we are projecting a decrease from 45 million dollars to about 23 million dollars in that program and then finally as I mentioned just a few minutes ago we part of the recommendation is to fund cash fund 24 million dollars in in currency IP we've not included any of this and the CEO issuance at the council will consider tomorrow but we also recommend utilizing about 10 million dollars that we 're currently projecting in savings from the deck operation we issued those utility system revenue bonds that are eligible and not just for the deck operation but for any other utility system electric system projects as we're planning the recommendations to shift those to fund the normal CIP for this fund some of the future emphasis is you know continued management of the transmission distribution system expansion program we'll talk to you a little bit further about that O&M of the deck energy center is certainly something that will continue to evaluate we are staffing up to run that facility update the energy risk management policy that's phase two of that process also to bid and acquire modern a modern energy trading and risk management system this ETRM and then the next item is the acquisition of new renewable energy products to meet the 100% renewable goal that you're very familiar with continue to to monitor and enhance the reliability of our system including circuit swe eps that's done by our DME distribution crews and then to manage the overall power supply portfolio you know under constraints of course by ERCOT so what you have up here is what the impact would be of what we're proposing in this forecast the DME currently for a residential customer for that utilizes about twenty twelve hundred kilowatt hours pays about $129.26 under this recommendation that would decrease to $124.24 a month about 3.5% decrease in your backup we did not include the city of Georgetown we did have a request to include that so that's here now and certainly city of Georgetown is to the right even of our current rates certainly going forward yes ma'am so that there's no anticipated base rate increase but what about can you say speak to the any anticipated changes in cost of service adjustment I realize that you that that can't be predicted that far out so so that is part of our one of our other slides and George will talk about that there will be an update to that so this gives you you know this was this was as of May 3rd where DME currently is is this this green line just want to note that but you know about 26 entities five of those being cities certainly fall to the right of where our current rates are certainly if we move forward with the with the with the current recommendation that would add on about another seven that would be to the right of this and that's based on the current rates that are published out there yes ma'am does that include commercial and residential rates is that lumping those together this is just residential yes correct but there but there would also be an impact on non-commercial rates yes ma'am so I asked George to come up here and kind of walk you through kind of the next few slides Tony thank you good evening George moral general manager of DME I just want to make a few comments about the cost of service and the rate design we're not making any recommendations at this point to change anything on the rate design once you change some things on the rate design then what you run into is some folks that do very well I call them winners and then you'll have some losers it will have a zero sum revenue requirement but when you would start playing and moving the rates around then we're gonna have some folks that will be impacted pretty significantly I looked at the 2013 cost of service study and we have a draft or early stage 2018 cost of service study and what I found is what I mentioned in that second bullet is that the residential customers are paying less than what you would call their full cost of service their mathematically calculated cost of service be honest with you that's no different than any other place I've been I've been with quite a few municipal utilities and especially municipal utilities that tends to be we we tend to be sympathetic to the residential customers and and they tend to get favored in the in the rate design process and of course if they're getting favored that means the commercial are paying probably a little bit more than the cost of service so both of those studies it seems that gap has closed a little bit and how you do that cost of service is you're looking at the contributions of the of the customer profiles when they use their electricity how they use it and the costs that we incur during those different time periods and the and and and trying to do an analysis of what what's a fair share for the residential customers and commercial so that's what I had to offer today in this particular slide we do have a in the wintertime we do have this declining block rate once you use so much in the wintertime you'll get a break that in part is to recognize that we have some residential customers that do use electric heat and they can be significantly impacted in the wintertime without that kind of a cost break and so when we did a survey of an about a dozen utilities out there we found it broke every which way maybe a third had a rate design similar to us where they differentiated winter summer and gave a declining block discount which is what we give to residential customers others had a flat rate you know probably goes back to what they've been doing for a long time they just decided to go that way and some have the increasing block rate so as you use more electricity your price goes up so there's actually no perfect way to do it but our customers I think at this point are what I'm saying that they're used to our rate design and if we move it let's say we were to move the residential rates up you know that would have a significant impact on some parts of that class questions so when you say that the commercial customers paying more than their pure pure share versus yes for the cost of service excuse me versus some residential customers are paying less are these customer commercial customers and residential customers kind of considered equal in terms of their importance as customers to DME or our residential customers considered more important because the residents you know including those residents that are you know business owners etc because they're the the citizen owners of DME or is that not factored in it's it just looked at in terms of you know share of DME's cost I be surprised if that was a factor I think all of our customers are important to us and rate design is more of an art than a science and I think you know back when they these rates were designed they've probably been this way for a long long time that was you know that was the policy at the time maybe even the cost of service showed these were the appropriate rate design at the time but it's over time maybe that's that's changed a bit so that the residential customer rates could be higher based on the cost of service that's a policy decision we're not making that recommendation and I can tell you again just celebrated my 40th year in the business we've never really gone and try to do anything dramatic with respect to rate design because of what I said folks get used to there's certain paying a certain amount of their bill and once we you know favor one one direction that it in a zero-sum game then it gets made up someplace else well so that's the trickiness of playing with the rate design yeah I was thinking more you know in terms of making the in the future you know as we've we've talked about recently when looking to the the study that's going to be done of the whole I forget the name of the study but the you know financial structure of DME and for our various utilities looking at that you know the cost effectiveness and management and risk and so on looking into the possibility of reversing the rate structure so that the commercial users have a have a higher rate versus residential users having a lower rate like what we have in water because even even if it measures and I mean that makes sense to me because the commercial users use more and that residential users use less but it would certainly encourage conservation and be be better for our residential customers although of course like you said you know then the commercial customers would be would end up paying more so on a pure cents per kilowatt hour basis that commercial customers pay less but they still pay that's what you're saying I just for the everybody so but their cost of service they could actually pay even less than that so based on their their usage profile when they're using how much they use they tend to have higher load factors or capacity factors they tend to use power you know during times when it's less expensive so they get that break and also what you mentioned economies of scale so yes you know I think when you when you start looking at cost of service there's so many things that go into it that like you say it could be the time the time of the day that is being used it could just be the sheer volume that there that people use commercial versus residential that drives down the cost per delivery of a kilowatt hour not a pure cost but cost of like like you say the pure share of the cost which includes all fixed cost infrastructure and all that so that's exactly correct thank you and it is more of an art than a science it is an art and it's you know it's it can be local desires you know you can provide that input to us and the council can provide that input and and we can you know look at other scenarios if that was important if that accomplished something that the board or the council wanted to come now you said the gap is closing so that is something that we can look at in the future is if that's the policy that we want to get that gap closer we can do that but you would never do that in one year you would do that over time that would be because the impact is just too much thank you so we we do a cost of service analysis every five years and the 18 do we know when that's going to be I'd say we have something in a couple of months okay we have some draft results and preliminary results we're kind of vetting through it making sure yeah it makes less so I had one other slide that I'm going to talk about here I think I'll turn it back over to Tony for a minute so we have an ECA energy cost adjustment every place I've been has had energy cost adjustments because of the nature of power costs they're extremely volatile and the energy cost adjustment makes sure customers pay no less nor any more than our actual cost of power so when we looked at that closely in conjunction with this budget we noticed it did not really reference a project like the deck the debt and energy center didn't include you know clearly that deck debt and operating expenses so we'd like to come back at a later date update that rate schedule that would include the deck and and reaffirm I think our desire that we're going to look at that on a regular basis quarterly and to the extent costs go down see if we can share that on a quarterly basis if the cost go up and we need to go the other direction so all of that what I remember from my time in designing I've designed a couple of these in places I've been the rating agencies require these basically they love them especially for municipal utilities because of the volatility again of that purchase power market they so it's important that we have one but it's important also that we operate it and I've been talking to folks here about that operated as if it's you know if it goes up it goes up if it goes down it goes down and and I think that in the long run that's how we're planning to operate the ECA there 's a little bit of a balance there right now we're planning to draw that down and that's part of the strategy for keeping the ECA fixed as long as we can right now it's at point zero three four one we'd like to keep it there and that will generate with the suspension of the TCRF factor that will generate that three and a half percent rate decrease for for residential customers going forward wanted to show the formula also I guess with this conversation so it's your projected energy costs and revenues and the balancing account so if it costs less than a prior period then you credit that to the ECA and reduce it that way and if it costs more than the balancing cap will be positive and you add that back in you divide it by kilowatt hours and that's the that's the ECA now the proposed calculation is the same but we'll just add the deck expenses in there and it will include all the revenues and that's going to be particularly attractive for a few years because as was mentioned we have little or no debt service in 19 I think we have about 4 million and then it goes up after that so there's going to be a significant amount of revenues this year next year associated with the deck operation so that could be credited back in that particular formula for instance question I just want to clarify you're going to treat it as a strict pass-through so when we are when we need more money we're going to get more money when we have more than we need we're going to give it back so you're going to treat it as a past that's my philosophical recommendation I think we're gonna it will stay flat at the moment for this I'm going to try to keep it flat for this next budget year we were starting with a positive balance and when we ran all the numbers that looked like we couldn't keep it flat but it but as soon as we burn it through the money we have then I'd like to I'd like to go to a more exacting call it a pure ECA yeah I think I think in the past we've we used to call it over collected and under collected and that's essentially what we're same thing we're talking about is you're over collected if you've collected more than what your energy cost actually is for this period and so and there's always been a target I can't remember at some point we put a target on it where we didn't get let it get over yeah there was a band there was it was if I recall it was plus five and minus five like a ten million dollar window we never wanted to be under collected more than negative five million nor over collected more than five million right and so so we may be looking at a different band or different way of looking at that yeah I'm open-minded that just as long as it does self adjust to some regular degree and I think I think like say it's good for both the financial security of the agency as well as the customers they're they're getting back in real time anything we can save if the market turns in our favor for instance and our power costs go down then we can share that on a real-time basis is is now the appropriate time to ask about the TCRF sure suspension of that so kind of I know that's kind of walked through that I know so the TCRF revenue that's the TCRF revenue we collect from our customers is that correct right so a couple of years ago you established the TCRF because we were our expenses were going up for transmission and we really didn't have a pot of money to compensate for that so establish the TCRF which I think was great we just at this point in time felt like we could afford to suspend it for this year where there's a couple of different ways we could have accomplished the same thing but we didn't really want to play with the base rates or touch the base rates and it was the right amount of money was in that pot there's about five and a half million dollars in the T CRF for FY 19 that now we can return to customers basically and not collect it this next year we're hoping we can go forward the same way and I think that's in our plan but we'll be revisiting that each and every year if we can continue to do that we would if they do go up and we're not able to continue the suspension that one possibility is that we could roll it into the ACA at some point or leave it out there by itself I think that'd be a decision you guys we talk about it some later date and you could help me make a recommendation in that regard so so just to be sure the TCRF that's not that has nothing to do with T cost reimbursements no that's on the flip side that's our share of the T cost that we pay other utilities right yes and it's rising and it will be continuing to project it to rise right the amount we're being assessed for our share of the grid out there in air cot so folks like us are putting in new projects and charging that back to the to the electric utilities in the state so there's a reduction because I know a lot of the the capital projects I guess are classified as transmission cost so it is a reduction in those play in hand-in-hand with suspension of that of that fee are you saying our transmission projects for our CIP yes it's being reduced has no effect so these are our share of what the other utilities in state are investing well I'm talking about our TCRF right right that we charge that piece of the right right it was meant to compensate for our expenses for the state allocation of cost to us our our transmission costs that we were charged correct yes so versus what we charge others that's a different pot so this would be what we're paying to use maybe some expenses and transmission at City of Austin put in for instance or encore or others we get our fair share of that right build each year so that's what that was nothing to do with our particular CIP investment okay all right we'll keep we'll keep marching on I'll let Tony back okay so so which have here in front of you we provide in your backup it's just our current forecast for this fund again as as George mentioned this does include the suspension of the TCRF going forward no proposed changes to to base rates and we do attempt at least you know over the next couple years to to try to maintain that that ECA and and and hopefully in the future look at a more mathematical calculation of of that ECA adjustment the 19 proposed budget does include this 28 point million dollars to defuse the debt that's the 2010 scrubber debt we did also talk to you about the decrease in purchase power that you'll that you see here this plan does include a drawdown of of reserves in 1718 to about 13.8 million and in 19 another 27.6 million we are targeting that reserve the operating reserve for this fund to about 40 million dollars is what we would target over the plan year again in some of these years we're certainly a little bit above that but that's that is the plan or the recommendation for you the debt coverage for this fund per our debt policy is 1.25 similar to all other utilities and this plan certainly projects to maintain us above above that particular measure and just just as a note with some of the revamping that we did of our revenue bond ordinance the rainy bomb ordinance on the utility system a revenue debt for the deck only requires a one-t imes coverage so this is certainly well above that that requirement I guess my eyes drawn down to 1.01 in 18 in 18 yeah yeah mr. Chairman we had we had looked at this we probably need to go back and take a closer look at that calculation to make sure that that that there's no error in that so there might be an error in that that's good that's correct so so for for a bond covenant requirements we do look at the entire utility system that's made up of electric water and wastewater the three combined utilities are you know are above the 1.25 but we'll certainly take a look at that at that calculation a little bit closer make sure it's correct and the debt coverage I'm sorry and the debt coverage for the deck kicks in and 19 or 20 the debt cover the debt coverage service the debt service for 19 20 is when it really goes up to just under 18 okay so as I mentioned earlier this is the the picture for you what the total debt for DME was at 930 17 this does not include any of the the recommendations that are being made we just wanted to let you know just as a reference point where we were so that include about nine hundred and thirty nine million of principal and interest for our our operation there's an additional sixty point five million of TMP a debt that's paid through our purchase power expenses on our in our budget and so this is where we were in that in that budget as of 930 17 slightly over a billion dollars so I know this is a very busy spreadsheet for you but I did want to just for reference point 1718 here's a nine nine hundred and thirty nine million of principal and interest that would be out that was outstanding at the beginning of the fiscal year we are at the end of fiscal year 18 19 with the proposed pay down of the of the scrub ber debt 28.6 million we will be down to about 848 million dollars in debt does not include the 60 million that is out there and TMP a that's paid through purchase power I did want to point out that one of the positive things of paying down this 28.6 million is that we will save about 3.7 million dollars in interest that the city will not have to pay on that debt by by paying it off early so so again that was part of our recommendation last year and and and we still think economically it makes sense for us to to recommend this for your consideration today and George will come back up here and talk to you about the purchase power unless you have questions about the debt could you say a little something about how the DME the total DME debt compares to the total debt for the city just so people can you know the public and kind of put that in in perspective certainly by far the the the largest amount of our outstanding debt I don't have the exact percentage for you today but it's certainly you know the largest amount of debt that we have out there primarily as a result of the 200 million that we had issued for the deck for the deck yeah yeah so close to a billion I mean it's gone down citywide from a billion to under a billion but but for DM in for DME itself it's still close to a billion so yeah that's and part of the strategy here too and the recommendation for the forecast and in moving to more of a cash funding of our of our of our CAP program is to continue to deliver this fund just like we're doing with some of the other funds and so over over the over the five-year forecast if you look at a 2010 20-year projection you'll see continual decrease of that I think once we get to a more reasonable level of debt then we'll you know we may come back in a future day to look at additional debt in debt issuances but that would be in the future but for the next five years the plan would be to minimize the amount of debt that's being issued and brought on at the same time you'll continue to see debt to decrease and as opportunities come up to potentially pay down additional debt we'll certainly be looking at that as well and so tell me if this is skipping ahead too much but it's applying to the to the debt excuse me it looks like you know based on what we saw in the backup for today that the deck will be bringing in net about 10 million a year so you know originally we had been told that the deck would end up paying for itself you know in relatively short time but at that rate it this rate now you know given these new figures it looks like it wouldn't be for you know I don't know 20 22 23 years something like that so whatever is gonna make up that debt service it's not gonna be primarily from the deck and and a couple of slides we'll certainly dig into that with you probably answer your questions a little bit more succinctly okay thank you so you know the most significant part of our budget is purchase power you know figuring out what the markets are gonna do and and you know we buy our load from the market and all of our resources are sold to the market so there's kind of a netting thing going on so the keys key assumptions in the purchase power forecast was the deck being operational by July and we're hoping earlier than July Gibbons Creek will be operational through September and I recall you were with me to recommend we continue that at least through September we use forward air cod market prices as per the standard and pours global forecast and we try to match it up with past market profiles to map out the costs and revenues going forward we have the bluebell solar one project operational by January of 2019 that's be our first solar Santa Rita wind became operational in April that's gonna be a nice resource for us particularly this summer we have gas prices as per NYMEX forward curve and the other transportation and adders that you're familiar with also all of our resources are pretty well locked in per contract so all of our renewables so we know what those prices are and you mentioned talked earlier Tony did about the load forecast which we updated and we had that validated by an outside entity so it was mentioned earlier about the the revenue assumptions how much the deck might generate how much TMP a might generate as well as all of our resources what's the you know what is the value of all those that operate going forward and right now we're forecasting a fairly high market it's you've heard about the scarcity of power this summer so market prices have gone through the roof so to speak question because what will actual prices be the day of will they be the same as the forwards we're looking at right now what they decline so there's a whole lot of subjectivity there we're doing our best and and we consulted with our outside council also our outside consultants on this so one thing we did is we ran a scenario where we soften the market forecast we reduced the deck revenue by about 11 million dollars just to see what would happen everything else reduced okay the cost of our load that we purchased as well as all of our other resources and we found there was only a very nominal increase in the net purchase power budget about 2 million and 18 and 2.6 million and 19 if it turned out to be a lot bigger or worse than that and we probably would have come in with a more of a conservative forecast so right now we're sticking with the market forwards that we're seeing out there that have been validated to us and knowing that if for some reason the market doesn't develop like they're predicting that the impact will be fairly modest and will you know probably come back at some point in time and make an adjustment on our budget some of the deck assumptions you've heard us talk before average heat rate of 8300 BTUs per kilowatt hour tests so far make that look good we're going to be coming in under that talked about natural gas prices we're not predicting any maintenance or forced out ages for 19 brand-new unit like having a brand-new car I think it's going to operate we reserve a part of the deck capacity for providing ancillary services in the market we have an ancillary service requirement and we're going to use the deck for that talked about forward market price profiles deck operating hours limited as you know by the missions permit that will be about 3100 hours we're not predict that would be about 35% capacity factor our presumption for this next year is a substantially less than that so even in the best case where we're looking at a lot of revenue for 18 and 19 we're going to be well under that 3100 hours we look at variable O&M so what are all the costs that are impacting the deck such as the the SCR catalyst the ammonia that you approved recently the lube oil contract you approve some of that gets consumed and all of the other variable expenses out there we add that to the fuel price and we say okay this is the number we have to get when we sell power to the market we have debt service and of course we talked about that already and there's other deck related expenses the the people who are going to be there operating the plant and other types of expenses at the plant so all that's rolled together in the pro forma and this is what resulted out of that at the top you see the revenue and that includes energy revenue as well as ancillary services and then you have all the expense categories below we talked in FY 19 about the debt and you can see the 4.4 million there that would be what what our schedule is for debt that year and then moving forward we broke out principal and interest in two pieces you'll see that's that will be about 17.6 million pretty well fixed going forward so we incorporated that and you can see then we sum up all the expenditures you've got a kind of a net income board member referenced earlier that first two years we look pretty good at this time we're seeing predicting that you know all of the debt cannot be covered by the market revenues but a substantial part can in 1920 for instance the third column we're predicting not being able to cover 1.8 million with the current crystal ball that we have forward but we're still covering the other part of that 17.6 million debt service so we're covering quite a bit of it and we're only not recovering a part and then it gets a little worse going forward because we're we're seeing the market getting back to more normal condition there'll be some incentives for folks to put in more power plants out there try to manage their load because there's going to be very costly summer this year and next year and and we think eventually that market's going to get back to normal so there's going to be a bigger gap out there but even at the far end look at 2021 22 and 2022 23 we're still covering at that point even about 6 million of the debt we're upside down the 12 was also mentioned long term it's about things about 17 years out there because that the debt service didn't start right away so it's a 20- year revenue bond but the debt didn't start to like the third year so there's only going to be 17 more years at that point in time that 18 million dollars disappears so that helps the economics at that point we'll go back to you know where it probably flips the other direction and we're making more money than we're then we're taking in the other thing is you know be honest with you who can predict the markets even one year this you know we have to do we have to make a projection and projections are going to be what they're going to be wrong and so yes I think I'm going back to Deb's question about that we were going to save so much money I think that's maybe a better word this is how much we're going to be able to cover the debt but if we didn't have the deck we'd be at the mercy of the markets and I what's that piece it I think that's where they were trying to make those assumptions when we were looking at the deck that's missing from here this is what it's costing us but what could it have cost us if we had to go to the market for everything so you know the answer to that yeah yeah who knows now in our in our forecast that top line is sort of what we're getting the value for the deck so if we needed that to offset like our load purchases that would be what we would end up paying is that top line so we did try to account for that when we did that net income at the bottom but again who can predict right you know it probably wouldn't take many hours of the maximum price at aircott to generate a tremendous amount of money and I don't think that's going to happen this year but there's some folks that think it could and so as more and more these big units retired so this year we had over 5,000 meg awatts of conventional power plants retiring who knows what the next shoe will drop and that that's what's generating the crisis right now in the market and it could happen again others say hey we can't afford to compete with that that cheap natural gas can't afford to compete with the deck for instance or some of the renewables that are coming in and other other generation may may disappear so I I don't think any of us will know I I think she had a good question and I'm just trying to put the pieces together so we have did a sort of a straightforward income cost analysis but the jury's out exactly how the deck will perform this is certainly more conservative than what was probably predicted way back when yeah George what can I go back to that just a second so the revenue the deck revenue at the top goes from you know 31 million this primarily this summer I guess it is yes part year part year and then to 19 in 2022 23 so is that is that a function of the price we think we're trying to project with the price of it was what that electricity generation be worth right or is it volume is there a constant volume here is it all 3100 hours no the volume when you read out there's probably only half of what it is in the 19 timeframe because it reacts to the market and when the market says it will make a profit it runs and so we basically we got back to a normal and these are projections that others are making for us and helping us when we got out there ways we thought it we went back to the market that we saw in 15 16 and 17 much more normal market and who knows and so you're not being called on as much because the market doesn't need you market does not need us and then the pricing doesn't support a lot operating a lot less as much as a half yeah you're not producing at a profit correct I'm just trying to get a sense of how conservative this is if it's conservative realistic or middle of the road it gets more conservative as we go out okay and right now we think there's some haze on the crystal ball but we see it pretty good for this summer and next year yeah you know based on what everybody is saying and we 're gonna watch it pretty carefully and and I'm sure we'll be back talking to you about how that deck actually did this summer including all our resources you know how's the how's the coal plant can operate we're kind of counting on it also to generate some revenue and and operate and it has started up it's going through its testing for summer it all seems to be well but we really need that unit also to run to you know to get the kind of performance that we need for our budget for this next year so and that's why we talked so much about the purchase power and some of the and some of the budget stuff got a few other slides if I jump to them and I'll happen to answer any more questions but so here's our our position summary we're adding two positions to the deck right now it can only operating two shifts and we'd like to be able to if we find out this summer it supports it to add a couple of additional positions gives us 24 hour coverage right now we'll have to you know run some overtime with people in order to get to that 24 hour coverage I think normally well we're gonna find out how how that's needed and then we've shifted a number of other positions to some centralized city functions about nine other positions have moved have moved elsewhere a few other slides that you saw probably in some of the other presentations today and I think Tony touched on these one of the biggest objectives we have is to implement the Denton renewable resource plan get us to 100% renewable by 2020 everything is on target for that where you've recommended approval and the council did approve blue bales solar - that's going to be a great resource for us we're in the final stages of evaluating the proposals from the New Bronzeville's RFP they look they look really good and so we're excited about that and then we'll have one other tranche that will be looking at some coastal wind and we'll be going forward with that here when we close the door on the on the New Bronzeville's continuing to work on the as Tony mentioned our T&D program we've as you saw in the report we've downsized our capital program we tried to live within the financial realities that we have we're trying to put more cash into it over the budget horizon we're actually funding a hundred million dollars of cash to carry that budget plus the 24 million that Tony talked about for this year that you'll be asked to approve that transfer to us a little later in the in your in your program and and and really the key here is maintaining competitive rates we're actually getting more attractive every day the competitive suppliers are hurting out there because a lot of them are not hedged quite as well as we are we're gonna actually be hedged quite well this year they're gonna be going to the face of that heavy market I have one company that I'm familiar with very well a private supplier that their rate piece other than the T&D part has gone up 48% in the last two months and I think we're gonna start seeing a lot of these other competitors start moving to the left of us and we're going to be moving to the to the other side of the of the rate thing and getting much more attractive so that's a key driver for us is to keep costs down which means we can keep rates down Denton Energy Center has reached mechanical completion we're running all of the tests right now performance tests heat rate tests emissions tests preliminary basis look really really good much more testing to go and we've continued our T&D group our engineering group to put in into service many more pieces of the T&D expansion program we actually have a wonderful T&D system out there it's going to be a great system that's going to stand the stead for Denton for many many many years and and very proud to be a part of that there's a lot of great work that has gone on there's been a massive amount accomplished over the last five years and folks involved in that deserved a quite a bit of credit it's it to get this thing done and then you heard about us moving to the platinum level for reliability and that's going to be even more of a focus for us going forward because we think that's what the customers see and that's what they want is increased reliability we have budgeted some money to do a LED streetlight retrofit program talk with the folks just even today we want to come back to the PUB and get your input of hey where might we spend that money we're probably looking at main thoroughfares and maybe some other residential areas to start with but maybe there's some priorities that you have or some thoughts you have about where increased lighting levels and more efficient lighting levels would make sense to you just I think that that can really be a beneficial program for that for the utility and for the customers so I'm gonna just move past this or actually something that you said during the last slide you I think if I heard you correctly you mentioned something about the preliminary emissions testing being underway so if you could clarify because there had you know had been some confusion about what yeah so if you could say you know what the difference is between this preliminary emissions testing and the emissions testing versus just testing the engines because we had emailed back and forth and yeah if you could just clarify that right and maybe we weren't clear way back when so when we were talking about the engines testing starting but testing includes tune-ups for emissions and tune-ups of the engine so there is an element of that before you run the official formal emissions tests you do run some some informal testing and we're seeing some really incredible results of NOx being eliminated from the the a irstream as a result of this SCR system we have out there so I you know we'll see the official results and I think I think we're all gonna be pretty happy about that but let's wait and see what how that turns out okay so what so we'll see the results of that preliminary those that preliminary emissions testing that that comes with the testing of the engines I mean I'll tell you what I what I was told so Chris you're here you can validate so we took a look at the air emissions right from the deck 88 parts per billion NOx and then after the treatment by the SCR's less than one part per billion so we went from 88 to less than one so I've that just seemed like a dramatic result but let's see how the official test turn out so that kind of gives us some indication that the engines and the system is working and that's for NOx for not you said and did you do for VOC's no I don't know do we will come up who's this young man his limit yes sir we've started the the emission testing so if you we sent out the the testing plan so all of the eight or nine components that are in our air permit are all being tested at the same time so at this point we've completed the hundred percent test which is required by the TCEQ so some of the data is preliminary you can see it coming out they still have to do some calculations and make those official and we'll have that in about ten days ten days the some of the tests the particulate matter actually has to dry in a lab for eight days so that's why there would be about a two-week turnaround till we'll get the draft report so we'll get that all back and then we'll present that to the PEB and the council when we can get on the agenda there but but that testing is ongoing we'll have about eight more days so we're actually testing some of the other engine loads in the same manner that we had to do for the TCEQ so we'll have a full spectrum of tests that we'll be able to report that data okay thank you thank you that makes sense thanks everything's looking good so the numbers are coming in there have been no concern so we have as you know Wardzilla has to make ready they have to make right they have to meet the limits there have been no issues there they're they're coming in at numbers that are that are incredible so so they're meeting the numbers that's specified in the contract excellent things see why I don't have to actually know everything because we have somebody like Chris on staff okay so I was moving along and here's our capital plan and I think the rest of this report will talk about the capital program 169 million over the five-year planning horizon 107 of it paid for by revenue and that means about 35% of it at this point we're looking at needing to finance and we're gonna try to be minimizing that because as was pointed out earlier that you know we have a significant debt load out there and and part of it is not spending as much and what you do spend we 're trying to write the check for and not borrow that money so it's kind of a two-part strategy and and again I appreciate all the folks at DMA that are working with us hard to try to recast the program in a way that doesn't adversely impact our our transmission distribution system and I think we've kind of accomplished that at this point I'm glad you said that because that was going to be my question right that's a pretty large reduction but it is not going to impact reliability right so that's also my concern and I've tried to evaluate that every different approach that I could and I feel good at this point that a lot of the program was getting us ready for five ten and even twenty years down the road and we could you know it just made sense to do a lot of things at the same time if you could if you had a big bank account and there's some efficiencies and and just going forward and building a lot of substations and and lines and so forth but at the end of the day I think at the end these are this will be a cost-effective way to do this because we're not actually paying rent on facilities that aren't really critical to serving customers for that five ten and twenty year period so but there's still a lot to do our folks will be busy for the next five years so I think we have some nice copies of these maps Mary so it might be a little difficult to see so we've got a couple of maps for you this you probably used to this if you've had our budget presentations in the past these are our feeder extensions and improvements so by color coding you're looking at the seven different major feeder improvement programs the one I like is this one this shows our planned residential and commercial developments sometimes you might be wondering hey what's going on in Denton and this second map is actually very interesting you can look at the key on the left and residential commercial programs that are being planned out there so let's see Jerry anything you want to add about what you have to you good okay all right well there's a lot of work here and there's a lot of planning you know our number one priority beyond keeping the lights on almost every minute of the day is serving new customers so if you look at the map that that's the red the green and the blue you can actually see the things that are happening right now all the different new customers that our CIP budget needs to extend service to those customers and it's a lot of information in a short period so down the road if there's questions and you guys want to talk any more about some of these things we can we can program that for you this one's a little more clear up there you've seen this before this is our the major transmission and substation facilities you know the biggest change in our system was moving from 69 kb to 138 that was a massive undertaking required us to upsize a lot of facilities you know replace older 69 kb substations that were not capable of being run at the 138 so and as we talked before the big purpose of this particular arrangement is for Denton to be a conduit of power to folks to the east of us when you look at the growth rates of the you know the Prosper's and the Frisco's and it 's a pretty amazing and I think Denton is slowly moving in that direction our growth rates are are moving forward as you can tell from that when that one map that showed all of the new things happening in town so so still a lot of work out there I like this thing this is in your packet today it's also in the presentation if you want to know when a certain substation is going to be built what's the time frames for that you can follow the money you can see Hickory will be starting hard toward that in 2019 I think Hickory is going to be a major important substation that's going to help us you know enhance the capacity and reliability of the inner city in Denton and so I'm looking forward to seeing that project moving forward I'm gonna ask a question wasn't maybe I'm getting my substations mixed up wasn't the Hickory gonna be a larger price tag than that am I am I mixing up my substations oh gotcha good point very good question so so all this information is there I it wouldn't make sense for me probably to go through it at this point in time but we're always available to you have questions you know shoot them to us and we'll get you the responses so I say still a lot of a lot of work that we're going to be undertaking going forward so and with that I'll turn it back to Tony so mr. chairman and board members just as a reminder we do have our consultants here they're available if you if you have any questions I do want to go back to the slide again just to reiterate our recommendations today for you include the payoff of twenty eight point six million dollars in that TMPA related callable debt what we call the scrubber debt that would be part of the recommendation no changes to to the base rates there is a recommendation recommended suspension of the tcrf that as we talked about the impact to residential customers is about three and a half percent decrease in rates maintaining the ECA at zero three four one and in addition to that we would recommend making a change to these ECA rate ordinance that would allow us to include the net deck expenses in that calculation so and and finally the the other recommendation that's included in the forecast is that we would cash fund certainly all of the distribution related projects for DME and then we would use a combination of revenue funding and debt funding of the transmission debt going forward at least within that five- year window so that that wraps up our recommendations for you certainly if you have any questions of staff or of our consultants we're here to for that purpose chairman questions I know that's and that's a lot of a lot of information this is not the last time we'll see this either before we that's correct and just so the board knows we will be presenting this to the council tomorrow night along with the with the budget amendment that we're also proposing for you tonight the council will also consider that tomorrow we did let the council know that we were making this presentation and any recommendation from the board we would let them advise them of that tomorrow okay yes I like to ask the consultants just because because they're here I'd be curious to know your take on the role of the deck in debt reduction versus the role of our solar and wind contracts and paying into that that debt reduction good evening specifically with regard to the debt reduction that's not something that we've looked at we were asked to look at projections for deck revenue and the net effect of that so that's what we looked at and we had some discussions with regard to financial projections related to market expectations and forward prices going out into time so any translation of that into the effect on debt is something that your staff has done so that wasn 't that wasn't sort of an arm-per-tip yeah yes so what so what what do you see as the cycle for the life cycle of this kind of gas plant in terms of profitability that depends on where prices are going to go in our discussions with the staff you know one of the points we made is that this is probably the greatest period of uncertainty we've seen in the market about 20 years George had indicated you've had 5,000 megawatts of generation that has been retired or threatened to be retired a lot of changeover in the technology I think this is a point that Neil has made recently which is that 20 years ago you had a substantial change in technology when gas was coming in to really compete with coal now you've got renewables coming in competing with gas and coal is going out so that uncertainty makes it very challenging to do financial projections and if you look at some of the projections that were in the in the presentation those reflect sort of the lower gas case that was in the Brattle report the lower gas case that was in our renewable resource presentation as well so I think that's something that is likely to be sustained there's a lot of gas that doesn't even have a place to go right now in West Texas because so much the the pervian is just a huge activity of new drilling so I think that low gas case that we had integrated into our presentation in our projections I think is the best case to be considered going forward right now you've got this uncertainty a lot of fear in the market that's driving prices up over the next couple of years in the foreign markets that can always happen again but I think how George's projections had gone to resolving to a lower gas case I think is the best estimation going forward okay thank you thanks a lot Mr. Chairman any other questions or questions from anyone any suggestions directions we want to give at this point I think do you want to see these easy come back more often in the future yes ma'am certainly our recommendation is that that would come back to you quarterly and also to the council on a quarterly basis yes correct yeah I think that probably has been the ECA has been such a stable at a such a stable level for so long and it really had didn't did not need to be addressed often and I think that's a good suggestion I think we'll see a lot more volatility so we may be forced to look at it okay all right thank you Tony thank you bonus points for anybody who can refold the maps I could very good okay okay so we can now go into the regular meeting unless I'll let y 'all make the call if you want to take a break and then come back in about 10 minutes or if y'all just want to push through the agenda push through okay very good okay in our regular meeting then we have a consent agenda we have four items on the consent agenda for consideration is there any member of the board that would like to have any of these items pulled for individual consideration don't throw anything at me B it's a quick question okay all right so B is pulled any individual member who would like to pull items a C or D off the consent okay hearing none is there a motion then for the remaining consent agenda items a C and D move approval have a motion and the second any discussion all in favor say aye any opposed okay item B you said who's here for B anybody here for B it's a really quick question Ken the price differential was so huge how do we know they can really do it for 297,000 those are usually always a mystery for all of us also but this company in city form was formed in 1980 and they have done millions and millions of feet of this all over the US and outside the country so we have absolutely no doubt and they're from Missouri I'll move approval okay quick question was answered and Susan's made a motion to approve is there a second second Charlie any discussion all in favor say aye any opposed same side okay under items for individual consideration we have the minutes of the public utility board of May the 7th 2018 that it part of your backup are there any changes questions suggestions on those minutes hearing none is there a motion then to approve the minutes as presented recommend approval and a second second and a second any discussion on those all in favor say aye any opposed same sign item number B which is to consider a recommendation to adopt an ordinance of the city of Denton Texas amending the fiscal year 2017 18 budget an annual program of services of the city of Denton to allow for an adjustment to the electric fund of 24 million dollars for the purpose of funding capital improvement projects and solid waste fund of seven hundred and seventy four thousand six hundred eighty two dollars for the purpose of funding a reimburse ment to electric declaring a municipal purpose providing a severability clause providing an open meetings clause providing for an effective date so mr. chairman Tony pointed director finance just really quickly we talked at length about the 24 million dollars we would have to amend the budget to have the authority to then transfer that from the operating budget to the capital improvement program if part of your backup we've included with you the detailed listing of the projects that would be funded total of 34 million the remaining 10 million would come from the the excess revenue bonds from the deck to complete that that program of 34 million many of those projects are actually already underway and are in desperate need of this funding in addition this budget amendment also amends the solid waste fund to have the appropriation to be able to transfer the portion of the substation project that does not include these missus primarily the land back over to the electric fund slightly or slightly over seven hundred thousand dollars and just so the board knows that's already factored into the performer for electric again a small amount but it's already part of that as well so if you have any questions I'll be happy to answer any questions you may have just a question on the the original 54 million dollars what was the what was the plan as far as how much of that was debt how much was revenue funded on that the entire amount would have been CEOs okay that was the plan so we're basically taking that essentially to 10 million we're training we're using the decks CEO that's 10 million of that revenue bonds revenue bonds yes sir we would use that to fund that CIP okay so that's a net savings of 44 million dollars in debt basically that's correct all right any other questions no is there a motion then on item B approval we have a motion and to approve in a second any discussion all in favor say aye opposed same sign okay item C is to consider recommending adoption of an ordinance in the city of Denton Texas the Texas Home Rule municipal corporation authorizing the city manager to execute a contract for odor neutralizer chemicals with probe America ink for the landfill providing for the expenditure funds therefore and providing an effective date in the three-year not to exceed amount of 130 thousand dollars good evening members of the board my name is Ethan Cox I'm the director of solid waste this is an item that we had brought forward for your consideration about a month ago it 's backed by popular demand I appreciate you have some very informative questions last time and I apologize for not being prepared to answer those so we did go back and review some of the safety and concerns regarding the use of this chemical the chemical again is is aero pure it's brought forward by a firm known as probe America what I've included in your packet tonight is the safety data sheet that that's basically put together for any firm that manufacturers or utilizes chemicals there's a few sections in there that if you're interested I would emphasize kind of taking a look at namely that section two that is basically identifying is this a hazardous substance it is most definitely not in addition sections eight which requires personal protection for handling this material this material requires no personal protection for use of our staff and then section 11 which is all the toxicological information just to kind of briefly go through some of the high points here the arrow pure mixture is 100% biodegradable it's non carcinogenic non-acid non acidic non hazardous non-irritant it's also safe for use in the food industry there was one other firm that put in for this I do not have the SDS sheet for them but one of the reasons our firm selected arrow pure is because it was much safer than what we've used in the past and they feel confident that this is the best option for us moving forward so with that I'll be happy to stand with stand for any questions that you might have so it was more pure appropriate in this case is this product aerated typically what we'll do you do have some some machines on site that can spray this into the air a lot of times we mix it with the water for our water trucks so we're doing dust suppression and odor suppression at the same time we found with some of the the stuff that we were spraying into the air it just wasn't quite as effective as we would like so essentially what we're doing is a two-prong approach we have the perimeter wall or the perimeter fence that sprays some mist to try to knock it down on the perimeter this is used more in direct contact with the waste and on the roads surrounding the active working face in terms of the MSDS that though the SDS my understanding and I may have to refer to dr. Banks on this a little bit most of the SDS is done through laboratory testing I believe in the SDS sheet that you have there or the packet that I gave you there are some testing firms in the back part of that so laboratory reports etc that are included in that you see that in your packet it is this this firm the firm is based out of the UK Aerop ure America is their North American arm of the organization I notice we first just berry yes it's kind of like going to the dentist you get a mix of I don't know if there is a taste taste testing or anything like that but we'll give it a shot I just want to say thank you very much for going back and doing that going through that due diligence I really appreciate it it does relieve my mind quite a bit certainly appreciate that to prove second Mr. Chairman members of the board I'll be real quick really the only thing to report is in your in your agenda packet is the PCW RP wet article that was provided by PS Aurora if you have any questions mr. or is here to answer those but other than that nothing else to report very good closing items and a section 551 to take a look at the public specific facts and information the recitation policy or accept the proposals place the matter on the agenda for upcoming saw the ACM for future guess for me I would just like to see and for the public the results of their preliminary emissions testing that they've done with the with the engine testing you know item by item knocks VOCs and that would just be interesting be good to see for the public thanks I move we adjourn I'll second