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 now it is okay it is nine o'clock and we do have a quorum so a call to order the

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 Monday March 14th 2022 City of Denton Public Utilities Board the first item is

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 presentations from members of the public is there anyone from the public that

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 wishes to speak I see none okay we'll move on into the consent agenda does any

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 board member wish to pull an item from A through C I see none do we have a motion

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 to approve the consent agenda move approved very moved Barbara seconded all

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 in favor say aye aye opposed carries next item consider the approval of the

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 February 28th 2022 minutes were there any changes or corrections to the minutes

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 seeing none do we have a motion to approve the February 22 thank you and a

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 second Larry's second all in favor say aye aye opposed all right item B consider

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 recommending the adoption of ordinance with the City of Denton for Archer

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 Western Construction LLC and the amount of 13 million five oh nine to 21 sure

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 good morning my name is David Brown I am construction project manager for the

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 City of Denton utilities today I'm here to can bring to you consideration of a

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 project over at the Pecan Creek water reclamation plant this is called the

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 salts handling project phase 1a and it is covering the effluent filters the

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 aeration diffusers and the digester improvements we want to talk about today

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 is basically the plant and what's out there today the current flows we'll talk

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 about what tcq has as far as their recommendations and their requirements

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 and then we'll go into what the phase 1a is and the selection process for a

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 contractor let's look at the planet the plant is a is almost 60 years old so a

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 lot of the key components there are at that age there's separate facilities

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 there but it's all one big facility and and those extra things are getting old

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 those facilities are getting old so there's a multitude of things we want to

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 do and replace like the sand filters which are currently you sand media and

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 then of course the diffusers that are in this project and the anaerobic digester

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 lid so with this we're going to update it for the future with this starting of

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 this phase so if we look at the plant just what's going on there right now

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 it's a 21 mgd plant what's permitted through tcq and a peak factor of 46 mgd

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 so that's the peak that's the most that it can take permitted wise our flows

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 right now at 71 percent about 12 13 million gallons per day mr. Brown quick

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 question yes mgd is a million gallons yes sir that's many gallons per day thank

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 you yes sir you bet so the tcq talks about it's a 75 90 rule so it's 75

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 percent we are required to start design on improvements at the plant so we can

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 improve that capacity those permitted flows and at 90 percent we're need to be

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 in construction for those so right now we're at 71 percent we're trying we're

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 getting ahead of the curve one thing we're going to do is let's see here I'm

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 gonna click that one thing we're going to do is a sand filter rehabilitation

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 it's going to be replaced with what we call diamond cloth filters sit a new

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 technology so with that improvement we'll be able to with there's four basins

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 out there right now with sand filters with when we've improved this we'll be

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 able to go to a capacity of 46 mgd with one of the filters out and that's per

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 tcq so 23 mgd per basin with that we gain through the use of these diamond

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 cloth filters with that we have like I said a capacity increase and also

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 automatic cleaning and we're just preparing for a next phase these are

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 things that we're going to do to be prepared for the future improvements as

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 well so they'll coincide also we're going to change out the aeration diffusers

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 right now they are 20 plus years old these go in aeration basins feed

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 oxygen to the process one of the things the new diffusers they resist fouling

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 they're made out of a membrane of rubber latex type material instead of the old

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 ceramic so we have a longer lifespan of these membranes and also the O&M

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 operation maintenance costs are greatly reduced also with this phase 1a we're

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 going to replace aerum anaerobic digester lid so the both of the anaerobic

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 digesters will be cleaned and with that a new gas lid will be built on site and

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 installed with this lid we'll be able to capture the gas from the anaerobic

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 digester and we're going to put it into the gas line and eventually hook up to

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 a landfill project for Atmos gas so it would be reclaimed gas we went to

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 competitive seal proposal and two actually two only two construction

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 firms a bid on it and we selected Archer Western 13 million dollars five hundred

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 nine two two one three hundred ninety five days of construction so we would

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 like to recommend the entry contract with for the effluent filter aeration

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 diffuser digesting improvements for the pecan Creek water reclamation plant with

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 the Archer Western construction LLC now if there any questions be glad to answer

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 also have a couple of gentlemen here a lot of technical expertise we'll start

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 off here with mr. back thanks for that presentation just a quick question how

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 much gas that's getting regenerated that you're gonna pipe over the atmosphere are

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 we looking at what is it what kind of rate do you know exactly what you're

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 capturing right now this is a rusty Willard he is a superintendent of a

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 wastewater treatment okay a rusty go ahead you're flaring that off okay so

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 now you'll be actually capturing it okay so it's the same amount but we're

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 capturing now gotcha okay thank you I don't know if it's rusty and I had a

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 question about the selection on the bids yes sir so you said you only had two

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 bidders yes sir so what was your selection criteria the criteria was

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 based on a lot of it had to first 30% personnel 30% I'll have to get you the

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 numbers but I'll just give us a high level of the high level was that Archer

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 Western was there already over there on site they're doing currently doing our

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 detention facility and our pump station pecan Creek pump station there we've

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 worked with them that that exact management those guys over there and

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 we've had nothing but good good rapport with those guys and they have lots of

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 experience in doing slant sand filters and plant work so they're mainly a group

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 that does a lot of plant work okay so basically you've got a good working

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 relationship with yes sir so what was the rest of the criteria you were kind

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 of going criteria was on pricing they came in under bid on the main okay bid

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 and then also on the so they were within 25,000 on the the alternate so

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 Laurie Hill on the purchasing manager and it's an exhibit to list all the

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 criteria and how they scored them but we had the key personnel was 20% quality

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 reputation and ability to complete similar projects in on schedule and

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 within budget was 30% detailed schedule and written plan was 15 their safety

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 record was 5 and then the price was 30 okay I mean 25,000 on 13 million that's

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 a push thank you we excuse me we usually get to see that because it's kind of

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 hard to grasp I mean the confidence is sure is not questionable but we usually

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 get to just look at it yeah it was okay I like my mistake that's okay any other

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 questions I can help with are we gonna have any supply chain issues that you're

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 aware of I can't guarantee that but they are we've had some questions come in on

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 the pre-bid you know with questions like hey we need to jump on this and get some

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 lead time so I think they're and I know that he has put in the lead time on

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 there to get some equipment all right I know that's a problem it is just about

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 everything we're doing a lot of things even was projects that are going on

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 right now and can this postpone the next plant needing to be built can some of

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 this we are that's one of we will have another project of course this is a this

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 is a phased approach it's actually a solids handling and this is phase 1a of

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 it the next phase of that will be coming up shortly will be a first first more

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 solids handling for belt presses etc then there is going to be another project

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 coming up with a head works in the plant which will help with expansion as well

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 but this this is starts us off and will coincide with a technology coming forward

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 okay thank you other questions go ahead so you're looking at this phase 1a it's

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 13 and a half million dollars so what's your projection for the total refit of

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 the plant over phase 1 a B and I presume phase 2 I mean just ballpark give it

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 total first the total solids handling this is solids hanging project is around

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 54 million dollars okay this is about a third of it down yes sir

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 yeah I'm sorry that's also a small capacity upgrade for the plant yes we're

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 currently working on a wastewater master plan and we'll be getting that to y'all

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 the group soon and then also there's another project that will be coming on

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 this is is to start off our capacity upgrades and certainly you're aware that

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 this is going to be heading that way with all the growth so this is started

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 off couldn't plan ahead we appreciate it thank you all right do we have a motion

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 to approve item B motion so moved okay Lee moved Larry second all in favor say

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 I think I motion carries thank you management reports

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 madam chair and members of pub so a couple items on management report the

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 first one is on the future agenda items so the things that we've listed on here

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 is just to make you aware that we have budget presentations coming to you

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 generally speaking we'll have a couple of those we'll go through the budget for

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 each of the utilities the operating budget and the CIP budget as well and

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 hopefully affords you the opportunity to have some good discussion on that and

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 then around the 11th of July then we'll be asking you to to give a

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 recommendation to the council on on those budgets and also any rate

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 ordinances that may be applicable as as you may be aware we are required by

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 state law to furnish the the the adopter the city manager proposed budget to the

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 council by July 31st and so so that's kind of the time frame but our hope is

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 that we'll have all the information to you well in advance that you can review

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 it and we can go through those presentations it'll be a water

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 wastewater solid waste electric and also customer service which is primarily

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 funded by the utilities so that's what's kind of on your agenda over the next

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 you know couple of couple of months and then on future agenda items we still

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 have these two items we're still kind of actively working on those I can tell you

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 that on the DME side we've kind of run into a little bit of hiccups here and

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 trying to make sure that we get that information but but we are working on it

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 hope to get that to you I've been also the sustainability committee before too

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 long so with that happy to answer any questions that you may have on any of

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 that any questions okay then concluding items does any board member wish to have

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 something added to an agenda or have any public comments to be made looks like no

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 all right then we're on to the work session receive a report hold a

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 discussion and give staff direction regarding the audit project 0 to 5 energy

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 portfolio management renewable energy offset goals and if we start going

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 getting into an area where it's a competitive discussion we will go into

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 closed session well after after after talking with the city attorney we we

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 don't have the language in there but we oh we did to go into closed session but

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 we don't think that we will so we'll we'll try to stay away from that but if

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 but if something does come up we can always follow up through a legal status

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 report for you but medicine Rorschach the city auditor is is on zoom she was

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 unable to be here with us this morning but she'll be going through that

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 presentation and Terry Nolte and myself are here to you know go into any

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 questions that you may have that medicine is not able to respond to yes

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 hello can y'all all hear me yes okay great awesome I'm sorry I couldn't be

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 there I wish I could but it was unfortunate so as Tony said I'm

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 Madison Rorschach the city auditor I'm gonna present our findings so let me

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 just share my screen that way you all can see the presentation all right let's

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 green I'm having a little bit of trouble hearing this presentation Madison he

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 where he's having a little hard time hearing okay can you hear me better now

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 okay was that yes or no sorry that's a yes okay great all right so this this

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 report details our findings from the second phase of this project phase one

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 one which we presented to you earlier covered energy portfolio transaction

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 administration and so this one covers renewable energy offset goal so it as I

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 said we've generally evaluated compliance cities renewable energy offset

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 goal so historically city has issued have adopted a series of plans to achieve

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 that have been aimed at achieving a 100% renewable energy goal of achieving a

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 hundred percent renewable energy for all DME ratepayers achievement of which is

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 primarily the responsibility of DMEs energy management organization through

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 the management of the city's energy portfolio since the most recent plan the

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 Denton renewable resource plan was adopted the city has increased its

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 renewable energy production by almost 30% and so as part of this review we

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 evaluated how the room renewable energy goal energy goal is progress is

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 calculated monitored and reported so to begin we found that in general there's

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 no formal definition in a city policy or internal DME procedure for how renewable

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 energy off for how the renewable energy offset goal progress should be

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 calculated in addition DME has not established any standard operating

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 procedures outlining how the renewable energy offset goal should be monitored or

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 reported and so we recommended that they should define how the renewable energy

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 offset goal is calculated because it will help promote transparency and

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 simplify the monitoring and reporting process for DME staff in addition we

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 found that the Denton renewable resource plan should be updated to reflect

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 expected load increases and regulatory changes that for the future and then

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 finally we found that in the general electric industry renewable energy

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 certificates are generally used to account for and make renewable energy

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 power claims according to industry best practices institutions or companies

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 should retire recs or which means to formally remove them from the market in

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 order to ensure their renewable power usage claims are being properly

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 supported that being said the city of Denton is not required to retire recs as

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 part of the state's state of Texas's recs program and as a utility has

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 different reasons for making renewable power usage claims than a company would

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 for example and so for that reason we're recommending that the city evaluate the

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 costs and benefits of retiring recs specifically retirement of recs would

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 likely simplify the reporting process and increase transparency as annual

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 retirements would be publicly reported by ERCOT okay and maybe this isn't time

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 to ask but I don't understand retiring recs can you elaborate on that just a

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 little bit because my understanding is once we purchased them they're in motion

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 and to retire them did we did we not fully use them or yeah so the rec

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 program is essentially accounting system that the state of Texas's

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 uses to require most energy providers to support renewable energy production so

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 most people in on in most market participants in ERCOT's market are

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 required to purchase and retire which is basically to tell ERCOT hey we purchase

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 these and we were saying we're using them and nobody else can use them so when

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 you retire a rec it takes it out of circulation so that it can't be

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 purchased by anybody else and they can't make a claim that that's it's been used

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 by them but it's still a functional item that can be used by the person who

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 purchased it it's so it's kind of Tony or Terry step in please if you would like

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 to but it's it's kind of like a receipt that just says okay I'm sorry it's like

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 it's like math to me I always had a hard time with that good morning at Terry

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 and all thesis at DME so the rec program was established as part of the the

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 competitive retail market in Texas we don't participate in the competitive

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 retail market work what's called a non opt-in entity so we don't participate

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 in competitive retail but in competitive retail markets they are required to have

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 a certain percentage of the energy that they supply to their customers to be

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 renewable and so the rec program is the mechanism that ERCOT uses to certify

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 compliance with that renewable percentage so when a rec is awarded to a

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 renewable resource for each megawatt of generation from that resource it's

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 deposited into an account for that resource in our case they're they're

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 into the generators resource account and then transferred to us as we take power

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 off the resource and actually happens quarterly those are awarded by ERCOT

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 based upon the actual generation of the renewable resource so the rec once it's

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 in the once it's issued has a three-year life and for those competitive retailers

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 because they have a compliance requirement every year they must retire

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 them in the year or after the year that they serve the load that they served

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 because we don't participate in that competitive retail market there is no

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 such requirement for us to retire the rec so we have traditionally just let

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 them expire at the end of three years rather than to make the actual

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 retirement request so if they're retired does that mean we can't count them in as

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 part of our energy offset we do count them as part of our energy or offset we

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 just internally track them to make sure that in the year they were generated

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 they're counted against the energy that we actually consumed in that year okay

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 and mr. Beck what I'll what I'll what I'll say is too so in in this rewriter

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 or this update to the dental renewable resource plan we do plan to make that a

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 topic of discussion and so I want to be clear that DME has not sold any of the

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 wrecks that it owns as part of our PPAs right we retain them and we hold them

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 until they expire we do not actually go in and physically retire them in this

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 account right and so I wanted to make sure that that you're clear about that

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 what I will tell you is that there is a monetary value to those wrecks right as

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 Terry has mentioned we are not required by Urquhart to retire them so in the

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 event that we wanted to monetize them we could but you could be in a situation

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 potentially where we've counted them towards our hundred percent goal and

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 then we sell them to company X or entity X and then they also count them so

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 there's a potential for double counting of those wrecks right and so that's part

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 of the consideration is that you know there's a there's a monetary value to

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 them that could potentially be beneficial to to our ratepayers and but

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 once you retire them that you no longer have that opportunity so that's what

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 we're saying is we're gonna bring that up bring that back for discussion and

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 get direction and certainly if it's the policy makers decision for us to retire

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 them and no longer do what we've been doing then we will certainly do that just

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 understand that now you've taken potentially one more tool budgetary tool

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 out of that toolbox for us the policy maker being being the PB and City

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 Council ultimately I am presuming that an REC or REC is a renewable energy credit

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 correct okay and that renewable energy credit is issued by Urquhart yes sir

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 okay thank you yep okay go ahead Madison okay and I just want to say we're we

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 brought this up as part of our audit report because in the industry most

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 people are required to retire RECs in order to count them towards their

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 renewable energy goal offset goal but that's not true for the city so I just

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 wanted to make that clear but we also found the same costs and benefits that

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 Tony just outlined and so that's why it's not our recommend it is not our

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 recommendation at the city retire RECs only that we evaluate the cost and

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 benefits because there are some transparency benefits and simplify

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 potential simplification of the reporting process if we do retire RECs

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 I'll share my thank you for that clarification all right okay so just

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 moving on to the next slide due to kind of this lack of clarity in the policy

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 about how the renewable energy offset goal progress is calculated we

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 calculated it in three different ways and compared it to D&E's total load as

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 shown in the figure on the slide so the direct generation line which you can see

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 my mouse is this red line down here the bottom line it was based on all of the

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 megawatt hours that the city paid its renewable PPA generators so that line

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 captures only energy delivered to the grid are really purchased by us from

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 pure renewable energy providers the second line the all RECs line which is

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 this kind of gray line that is right here if you can see it was calculated

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 based on the total number of RECs in the city's ERCOT REC account so that line

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 captures all of the RECs transferred to the city from his PPA generators

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 including RECs that the city did not actually receive physical energy from

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 and then finally the D&E's calculation line which is this yellow line that's

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 kind of you can see those follows the blue line which is the load and is a

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 little bit above at the end is how D&E calculates its renewable energy offset

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 is there a question yes there's another question Madison go ahead Lee so I'm

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 assuming from this graph that this is where D&E is using the RECs is in these

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 calculations and this is pretty much your only utilization of them well so so

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 the the REC is is in essence the evidence of the renewable energy that

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 was producing what we state is that you know for every one megawatt of renewable

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 energy we get one REC right I think what what's important in this graph to

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 understand is that that red line the actual generation the difference between

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 the actual generation and the RECs and this was likely before before you came

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 on but back in 2019 we had a discussion with the council that we have 30

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 megawatts in a in a PPA where we where it's not tied to energy that we've

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 contracted for right and so so we asked the council to allow us to count that

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 towards our energy towards our renewable energy goal and in essence that

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 difference between the generation and the REC is those 30 megawatts about 300

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 megawatt hours right Terry a year that that we're counting currently because of

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 that contract and in essence what we told the council is we can go out there

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 and we can contract for it for direct energy but we've already paid for these

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 30 megawatts of RECs right so that's about a two million dollar if I recall

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 of additional cost that we would be incurring for rate payers as the

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 council was good with us counting that towards our goal understanding that that

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 contract is going to expire probably in 2023 and 2023 and so we're already

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 actively looking to replace that with actual energy that's tied to RECs all

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 right thank you yes sir go ahead

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 Madison you may be on mute sorry about that as Tony mentioned some of the the

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 yellow line accounts for PPA generators differently their generation so some of

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 them are measuring direct generation from the red line and then some of them

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 are measuring are measured using RECs from the city's account because some of

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 them don't actually have generation direct generation associated with those

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 RECs and so actually based on our assessment of DME's calculation it

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 ensures that megawatt hours of electricity are not double counted and

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 it is likely the most accurate method given this the structure of the city's

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 current PPA agreements that Tony mentioned and then and including some

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 potential data discrepancies that we noticed noted in our previous

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 presentation to you all and so using DME's calculation practice to measure

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 renewable offset the city's offset offset a hundred and one percent of their of

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 its total load during calendar year 2021 so in summary we issued a total of four

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 recommendations to DME all of which were concurred and based on their responses

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 we believe the identified risk will be appropriately addressed and we're

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 planning to conduct a follow-up review in 18 to 36 months in conjunction with

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 the first phase of this audit project so we'll have one follow-up report at the

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 end of this and that is the end of my presentation other questions all right

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00:29:48,600 --> 00:29:56,160
 thank you all right thank you so much well that is it do we have a motion to

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 adjourn 931 oh very good thank you