May 23, 2022 Public Utilities Board on 2022-05-23 9:00 AM

>> Okay, it is nine o'clock and we do have a quorum. So we're called to order the May 23rd, 2022, public utilities board for the city of Denton. The first item on the agenda is presentations from the members of the public. Does anyone from the public wish to speak? Okay, seeing none, then we'll move into the consent agenda. We do have a placeholder for a closed session in the event that somebody has a question on item A. We would go into closed session and then reconvene after. So we'll move ahead with, is there any members wishing to pull any items off the agenda? >> I just have a question, a little clarification on A. >> On A, okay, so we'll pull item A. Any other items? All right, so do we have a motion to approve items B, C, D, and E? Moved? >> Mr. Rybeck moved and Mr. Jumper second, all in favor say aye. >> Aye. >> Okay, then we'll go into closed session. Do I need to do something special, Marcella? No, okay. >> Just, we're closed, huh? >> Okay, I'll wait until Kim tells me the cameras are off. >> Okay, it's nine oh three and we are reconvened. Go ahead. >> Okay, I'm sorry, I didn't know I was going to create all this confusion, but just, if I'm reading this right, it sounds like we're eliminating this risk management policy that was originally written to give DME pretty much the authority to deal with things that bypass certain leadership structures in the case of emergency for expediency. Is that right? >> I'm Smith Day, by the way. >> Okay, sorry. >> I'm the executive manager of regulatory and risk division. Good morning, PB. That isn't quite right, that we're not rewriting this and we're amending it, but there is nothing new about, the authorities are the same. This policy began in 2014 and under, the reason you see the ordinance which pulls over amends the previous ordinance and then every year we take this policy, part of our process is a, of course, is a systematic approach which forces us to look at it every year. So we look at it and we look at anything we can improve and it forces us to come to you and to council so that we can do iterative changes every year and make it a little bit better. So this is the same theme, the same approach that goes back almost eight years, nine years now. We just did some tweaks, this one's actually kind of boring, it's not that much we did this year, but that's what it is. This is just an iterative process to make this policy better. >> Okay, I can see that. Now, and I guess what I was concerned about, I didn't mind that if you all wanted to circumvent certain authorities in cases of emergency to expedite things, I'm okay with that. I think I was just going to ask was there going to be some review of it at the end of a period of time to accountable services? >> Annual review? >> Yeah, yeah, yeah. >> It's required. >> Okay, that's it, thank you, sorry for the delay. >> The other thing too that I'll mention, Mr. Beck, is that, and the chair of the POV is part of a separate risk management committee that gets together quarterly and we review kind of where we stand with our entire portfolio for purchase power and so that happens every quarter and then, you know, very similar to many other city policies that come, you know, to review and approve, re-approval, re-authorize, some of them are required by state law, others are simply required by ordinance like this one, we're required to come at least once a year and review and re-authorize the risk policy. And so that's why we're here for you, sir. >> Okay, thank you so much. >> All right. >> Madam Chair, if I may, so you attend these quarterly meetings? >> Yes. >> Okay, that's great, I didn't know. >> Oh, okay, yes. >> I was just wondering, would it be possible for you just to give us a brief update at the meeting after the quarterly meeting? >> How do we go about doing that, Tony? >> Yeah, I mean, I think that's probably within, looking at Marcella, but I think that's probably within context of our discussion here. We do provide the minutes to the council, I believe. I don't think they come to the POV, but we can certainly talk about that and we can start sending that to you on a quarterly basis as well. That way you have some idea of what we're talking about within that committee. >> Well, thank you, I think that'd be very helpful because here we are with questions maybe we don't need to ask if we knew a little more about kind of what the ongoing process is. >> Good enough. Oh, yes, go ahead, Devin. >> Thank you, Madam Chair. Along the same lines, looking at this, this is risk management policy and that oversight is important. And where is the risk management committee's role outlined? >> It's, actually in the policy, each role is defined in there. >> Okay, I didn't. >> And there's, of course, the general manager, there's the POV chair, and there's a representative city manager, and finance, all these roles from different parts of the city collectively come into that meeting or make up that committee. >> And I would also mention that there's two additional ex officio members. One's the city auditor and the other one is the city attorney or their designee. And so those individuals also attend those meetings on a quarterly basis. And I'll mention that in the absence of the POV chair, the vice chair usually attends, so Mr. Cheek has attended those as well. And one additional thing I noticed in the policy is it's very focused on Ford purchase, hedging, risk management, it does not include anything I could find about Denton's commitment to 100% renewable energy. And while we obviously have a lot of PPAs for renewable energy and we're on, you know, we're at 100% now, theoretically by the following the policy, the EMO could, you know, basically sell our energy from our PPAs and buy energy from, you know, on a thermal contract or something like that. Obviously, that's not what's going to happen. But I wonder if we could add in the executive summary or somewhere kind of at the top of the document the long-term commitment of Denton to 100% renewable energy. >> So we have a separate policy called Denton renewable resource plan that was adopted by the council in 2018 that sets out that goal. And so that policy already exists and so as we're managing the PPAs and the purchase power process through this policy, we always have to be cognizant of that 100% renewable goal, right? And so that policy is a policy that we're working on and we're committed to bringing back an update of that policy by the end of this calendar year. And so they are two separate policies, but obviously they work in tandem with each other. Yes, sir? >> Anything else? >> All right, do we have a motion to approve item A? >> I move. >> And a second? Mr. Redback? All in favor say aye. >> Aye. >> Thank you. >> Thank you. >> Thank you. >> Items for individual consideration, the May 9th, 2022 PUB minutes, were there any changes or corrections? Seeing none, do we have a motion to approve? >> So moved. >> Barbara moves. Do we have a second? >> Second. >> Mr. Peck, seconds. All in favor say aye. >> Aye. >> Okay, item B, consider issuance of a delivery of up to 121 million in certificates. >> Good morning. Randy Klingle, Treasury Manager. >> Madam Chair, I'm doing one presentation for this item and -- >> Okay. >> -- 074, so if you would mind reading that one too. >> Thank you. >> Mm-hmm. >> Does it mean to call that a second item? >> Oh, and then item C, consider recommending the adoption of an ordinance in all matters incident related to the issuance and sale and delivery up to 89 million in debt. >> Yes, thank you. >> Thank you. >> I have a brief presentation today about the upcoming bond sale, particularly the certificates of obligation for you to review. The total bond sale for the certificate of obligations is 120 million dollars. It encompasses general government CO utility projects -- excuse me, government -- general government projects, water, wastewater, electric utility system projects, as well as solid waste and some issuance costs. So it's 121 million dollars in total for the CO obligation for this summer sale. Last time I presented in front of you was the notice of intent, which you recommended, and it went to council on April 5th and was approved. With a notice of intent, we issue that publication in the Denton Record Chronicle, and we issued that on the 14th and the 21st as required. And the bond ordinance authorizing the sale of the COs is at least 46 days after the date of the first publication, and so this is the bond ordinance that we are bringing forth to you guys today for recommendations, and that will go forth to council on June 7th. So we meet all those parameters. Most of the presentation is a duplicate of the project lists that are in your AIS. They were budgeted items that you saw the list through the budgeting process, also through the notice of intent presentation. It was the same list, but I'm glad to say that list has been reduced in dollar amounts by almost 33 million dollars. All the departments went back and had the opportunity throughout this fiscal year with the budget process and looking at the funds available. And also timelines of their projects were able to reduce the total sale by almost 33 million dollars. So the first list we have is your water department was at 23.4 million dollars for the upcoming bond sale, and that is approximately 11 million dollars less than the budget, and I will not go over all of these projects, but you're more than happy at the end. If you have any questions about them in more detail, we do have staff here to assist me with that. Wastewater has a long list. It will take up two slides. And for wastewater, it's a 41.1 million dollar sale with three million reduced from its original budget. Electric, 33.9 million dollars, and this department reduced their notice of intent budget to bond sale by 19 million dollars. And last, we have solid waste, which kept their budget the same at 6.9 million dollars for this department. So the total project list for utilities and solid waste, project money only, water at 23.4, wastewater at 41.1, electric at 33.9, and solid waste at 6.9, which is a total of about 105.5 million dollars worth of projects. Along with this sale this summer, we're doing a refunding of the GEO bonds and their certificate of obligations from the 2012 series. We have outstanding debt of about 28 million dollars in that process. And we're hoping to save about 1.1 million dollars. That's based on market conditions of last week. We will keep an eye on that with our FA as we go along. We can do the refunding. If it makes sense for us, we can also pull it. We also have the opportunity to, you know, only refund portions of the 2012 that makes sense for us. So right now, the majority of the savings is in the utilities, the solid waste, water, wastewater, and electric. Next steps, with your recommendation, I'll be going to council on June 7th to consider this bond ordinance for the CO and the GEO debt. And June 16th would be the sale date. And then we would receive proceeds around July 21st. And that is all I have. If we have any questions specific to that or the projects? Questions? >> I have one regarding, excuse me, electric bonds. Do any of those proceeds go to anything other than our own construction? Like TNPA, for instance, if you don't-- >> I'll have to defer to Mr. Puente. >> That'd be separate. >> Yeah, so any of the projects that are TNPA related, obviously, we get reimbursed. We have to upfront that. But we do use that resolution that TNPA passes as our funding source. So we've gotten away from using our own bonds to fund those projects. Obviously, we're using, you know, inter-fund cash, but we're not using-- issuing any bonds for those projects any longer. So unless, of course, if we're going to do the project and we're going to keep the asset, then that-- we fund ourselves. And then we include that in our transmission cost of service filing. >> Okay. >> Mr. Taylor? >> Thank you. If you could go back to the slide regarding refunding. I'm not very familiar with this process. So the existing 28 million are bonds that were issued 8 or 10 years ago and they're at the 4.26% rate, is that-- >> That's the average. They're over 9 years old. That's the callable time is 9 years. And the average of those is 4.26 and we're projecting that we can get 3.34. >> Okay. And that's just-- we have to wait 9 years before we can-- >> Yes. Before they become callable. >> Yep. Okay. >> Yes. >> All right. And then-- okay, thank you. >> Other questions? All right. And we'll have to have separate motions. Do we have a motion to approve item B? >> Yes. >> Mr. Jumper moved. In a second. Mr. Beck, all in favor say aye. >> Aye. >> And then on the refunding item C, do we have a motion to approve? Mr. Taylor? >> So-- >> May I second? Mr. Jumper? All in favor say aye. >> Aye. >> Motion carries. Item D, recommend considering adoption of an ordinance to execute professional service agreement with Kimley, Horn and Associates. [ Pause ] >> Good morning. My name is David Brown. I'm a construction project manager for Denton Water Utilities. Today, I'm going to bring you an exciting project, a headworks project over at our plant, our water reclamation plant. So, let's talk about what's at the plant right now. We've talked about it before. 21 MGD on the daily annual flow and 46 on the peak MGD. We are going to request a rerate for 30 MGD and up to 69 on the peak flow. So, the existing wastewater plant is over 60 years old. The headworks, the headworks facility is actually where all the influence comes in from the city into the plant. It is the start of the process at the plant. Currently, it's over 40 years old and it's out of date. It's later technology that's going through the process. So, this is where it first comes in and where it's screened and where it starts processing into the plant. It's undersized and it's out of life. Of course, let's talk about the 75/90 real TCEQ. At 75% of max flows that we have, our permitted flows on the annual daily, that's when we need to start an upgrade or an expansion. And at 90%, we need to be in construction of those. So, the design at 75% and construction at 90%. So, with that, we have the headworks. Headworks, this new design will include lots of new technology, mechanical screening, wet well station and grit removal. And what this does, this allows to be able to start the process with a good system of removing these items that are in wastewater. We remove them and that takes the pressure off other equipment inside the plant. This will improve the process of cleaning the water, return to the environment, ultimately the community. Also included, we do have some issues over there in the piping that comes into the headworks, existing headworks. So, with this design, we'll also have a 60-inch gravity main coming in from location coming in from Pecan Creek and Cooper Creek and also from our state school interceptor, the Hickory Creek line. So, 60-inch gravity main also is a 48-inch force main, which this force main will allow us from the pump station, from our lift station in the headwork facility, allow us to facilitate moving that screened water into other areas of the plant. We can go to a diurnal basin, we can go to other items to be ready to process that water. We use the RFQ 7574, a pre-qualification list with engineering firms. We had interviews with all of these firms and we would like to recommend that we enter in a contract for design of the Pecan Creek headworks station over at Pecan Creek Reclamation Plant with Kim Lee Horne and Associates for $3,828,700. Any questions? >> What's your current estimate for the construction of this facility? >> On the OPCC is $32 million. >> Our engineering is about 11%, stopped at my end, right? >> Yeah. >> All right, thank you. >> Other questions? >> I have a question just in general terms. I'm selecting Kim Lee Horne, Kim Lee Horne. Your contract amount, was that in line with the others or did they put this together after you selected them? >> This is put together after selecting them. One of the things we brought them in, they brought us a vision. They brought us a vision of this location. It really allows us to be able to move forward. It's a good location and they brought that vision to us. >> Very good. >> Lori Hewlett, Purchasing Manager. I just wanted to add that on request for qualifications, you cannot ask for price until after you have went to the top rank person. >> Right, so it was an RFQ. >> Yeah, it was an RFQ. >> Okay, thank you. >> Other questions? >> Yes. >> Oh, go ahead. >> So at the beginning you were saying how old everything was. >> Yes, sir. >> What's typical, like what's an expected life for some of this? >> Forty years is probably expected life. I mean, 40 years, we have, you know, we have done some upgrades to it throughout the time, but yeah, 40 years is about the max on it. Of course, the plant is 60 years old. >> Right. >> So we're going to do some improvements to be able to move forward at that location. >> And then you talked about 75% and 90% design and construction. What capacity are we at currently? >> Right now we're at about 71% of our average daily flows. >> Other questions? All right, do we have a motion to approve item D? >> Second. >> Barber moved. Lee seconds. All in favor say aye. >> Aye. >> Thank you. >> Management reports. >> So Madam Chair and members of the POV. So for the management report we do have a follow up memo that we sent to you for Brian Borner on the composting program. Certainly Brian's here and I just want to first kind of open up to see if anyone has any questions regarding that memo. >> I do have one quick one. It mentions food peelings in there. So is that limited, what if, Brian's coming up. >> Okay. Anything food related or just the peelings? In other words, say I cooked some squash and didn't want it all. So could I dump that in there with it? >> And that's a very good question. Again, Brian Borner, I am the Director of Solid Waste and Recycling for the City of Dent and appreciate the opportunity to respond to your question. Currently with our partners at wastewater and through beneficial reuse, we're composting biosolids and the organic material that we collect curbside which includes yard trimmings and things of that nature. As a result, and the way they're permitted and their operation is set up, we cannot have any post-consumer materials put in. So anything on the front end of cooking, so peels, watermelon rinds, cantaloupe, you know, seeds, things like that, that can all go in there. But the minute we start cooking and adding spices, oils, fats, greases, that's where it sort of turns the system to where it can't be used. So, you know, we can collect a good portion of this in our existing yard waste and organics collection program. So again, you know, before it's cooked, during the preparation process, raw, you know, peels, you know, you buy that bag of salad and it sits in your refrigerator and, you know, this green slimy thing you want to get rid of, we'll take that. But again, the minute you put salad dressing on top of it or try to cook it, then, you know, that cannot go into the yard waste cart or the bag. >> Great, great, thank you. >> Thank you. >> Go ahead. >> So, the memo mentioned the downtown area pilot program for restaurants. Is that the same rules or does that go to-- >> No, that will be a different-- two things. First of all, that pilot has yet to be set up. We've run into some supply chain issues and the critical piece of equipment that we need to procure currently is unavailable and the one person who said that they could has come in with an exorbitant price so we're going to be going back out to try to find that piece of equipment. But secondarily, what we're wanting to do is actually take any food waste, whether it's pre-consumer, post-consumer, fats, oils and greases, things of that nature, be able to grind it up and actually put it into the aerobic digesters at the wastewater plant. They get this material anyway, they want this material, generate the methane off the top, you know, recycle that material and then through the biosolid program, I'd be able to compost the rest. So again, it's using existing equipment with the capacity that we have. And once we can prove that up and that it doesn't affect either wastewater systems or our system to be able to collect it, then we can expand that to a much larger program. >> And that would probably be some kind of special cart or container picked up either daily or on a special day of the week? >> I'm not even going to start to speculate on what that's going to look like. But what I can tell you is, you know, in here, we go back into our comprehensive solid waste management strategy. We did our waste characterization. Probably 80% of the big hit that we can take off of this is going to be in the commercial sector, okay? So again, that's where we're going to focus, that's where we're going to start. And then from a residential standpoint, going back into the common sense things, you know, don't buy what you don't need, don't buy too much of it. Like your mom said, clean your plate so you don't have anything extra. Spoil and go after. But then finally, you know, if you've got this organic material, you know, at home composting. So again, you know, reevaluating and revitalizing those programs so that, you know, you have material, you know, at your disposal in your yard that you can use for that beneficial reuse. >> And once supply chain issues are resolved and you can purchase the equipment, what's the timeline to start with the commercial? Would it be like within six months of getting it set up, you'd have one route or something, or do you have some kind of plans along the lines? >> Well again, you know, we've got a six-month program to evaluate it in the valley area downtown. And then from that, we'll be taking the -- we'll be taking that data and then evaluating and answering those questions. I think, you know, as we get ready to roll out our comprehensive solid waste management strategy, year one is going to be mostly administrative, getting our codes, ordinances and everything. And RFQs, RFIs in line to identify, you know, third-party contractors and everything else we need to do it. Year two, which is, you know, we're already thinking two and three years ahead of time, that's when we start looking at the physical stuff. So we may still be a couple of years out before we do some industrial level commercial organics waste management, but again, it's getting everything in line and not jumping too soon so that we're not putting ourselves in a situation that is high cost, low return. >> All right, thank you. >> Thank you. >> All right, thank you. >> Thank you. >> So the next item is your future agenda items. And as we mentioned before, we have a number of budget items that are coming up here for you in the next couple of meetings and ultimately leads to a recommendation from this board to the council regarding the budget and the rates and all that. Obviously today, there's a presentation today that the finance department will be making that's related to the budget. And then the future action items, obviously we think we've now completed item one, which I know was part of the question that you had at the last meeting, that's been completed. The next item is regarding solar installations. That is an item that we're working on. The plan is to take that discussion along with a broader discussion about the solar program and what we're doing with a number of other programs that we have at DME to the sustainability committee first and then we'll bring that back to the PUB. So again, I know it's an old request. I can assure you we are working on it along with all the myriad of other things that we're working on, so we've not forgotten about it. It's still on here for that purpose. And then there was a question the last time about potentially going to once a month meeting. I can tell you that we've had an internal discussion about that and that discussion will be coming back to you at a near meeting that we're planning through. And I think the purchasing and compliance department will be bringing a discussion to you with a number of different options for you to have a conversation about and provide us some direction. So anyway, so with that, that is our management update. Happy to answer any questions you have. >> Go ahead, Billy. >> Is this where we should discuss the next meeting? >> No, that's under concluding items. >> Okay, all right. Any questions? All right. Onto concluding items, I do have one item. Both Billy and I will be gone on June 13th, so we need to make sure that we do have a quorum. Is anyone else going to be missing on June 13th? Barbara will be chair as the secretary, so all right, I guess we do have a quorum. Any other concluding items from any board members? Okay, I see none. Let's move into the work session. Receive a report, hold a discussion, and give staff direction regarding fiscal year 2022-23 utility budget forecasts. >> Good morning, PUB. I'm Danielle Stanford. I'm the interim budget manager, and this morning we're going to be talking about the utility forecast for our budgets. So we'll talk about the budget process overview. We'll share a forecast for each utility, and then we'll go over the next steps. This is the team that makes up the utility budget team. We have Jennifer Gonzalez, this is assigned to our solid waste and recycling department. Our senior financial analyst, Dan Galizia, is assigned to water, wastewater, and drainage. And then Lauren Price is assigned to DME. We do have one vacancy that we're working to fill, and that analyst is a support role for all of the utilities. Our 2022-23 budget cycle in March, we kicked off the budget from March to May. The budget continued to develop, and we're planning that still. June and July, we'll be sharing the budgets with you all and city council. Our budget workshop with city council is in August. Our public hearings are in September, and the budget adoption is also in September. This is a high-level overview of our budget calendar. As you can see, there are two different tracks. The first track is the CIP budget, and on the right is the operating budget calendar. We've come to a point now where those are lining back up. So from May to July, we'll be presenting those to you all and to council. And then, again, in August 6th is the budget workshop followed by the public hearings and adoption in September. So our financial assumptions, all of the utilities share a couple of common assumptions. One being that there's consistent growth across all the utilities. The second is that the Hunter Coal development is accounted for beginning in 2024. The solid waste forecast is based on customer accounts, the tonnage that's coming into the landfill and the service frequency. And staff plans to discuss the wholesale contracts with you all in the coming weeks. For water, wastewater, that's a volume-based forecast. We continue to utilize the impact fee funding to revenue fund projects. And the Lake Ray Roberts plant expansion is accounted for beginning in 2028. Finally, electric is a forecast based on retail sales and megawatt hours or MWH. This is the solid waste forecast. There are four different lines. The blue line is the residential customer count. The yellow line and the gray line are the pickup counts. And then the purple line is the landfill transaction count. This is the water wastewater growth projection. The yellow line is our drainage projection. It stays flat, as you can see. The blue line is the water wastewater. We're averaging a 2% growth up to 23. And then we increase to 3.4 for the Hunter Coal Ranch. After that, it jumps up to 3.85, and then it normalizes at that standard growth rate. This slide shows our water production based on what we've budgeted. So the blue line is the budget. The red line is where we currently are. So we're staying right there with our budget. This is the water demand slide. So the orange line shows the total growth. That black line shows the expansion plans in the future. So we're staying right above that growth as we plan to continue to expand. This is our electric forecast. These are in the megawatt hours. This includes residential service and general service. The 2023 numbers are highlighted there in the middle of the table. And this is the same information in graph format. And with that, I'll take any questions. >> Thank you, Chair. Go back to one -- yeah. Right there. On these electrical forecasts, are you factoring in any solar panel usage with that? With the residential land commercial? >> Tony, can you help with that? >> Yeah, so residential right now makes up about 7 megawatts. So it's not a huge factor, to be honest with you. I think once we start getting into the, you know, 30 or 40, you know, kind of megawatts then potentially. But at this point, I would say it's very, very minimal. It's probably within kind of a margin of error. So I would say probably doesn't -- isn't included here. >> Okay. But you're not anticipating growth in that, especially with commercial? >> No, absolutely. We fully anticipate growth, and we see that every single year. >> With solar? >> Yes, sir. And we continue to incentivize it both through our rates and also through the rebate that we have. So that will continue to grow. >> Okay. Thanks, Tony. >> Yes, sir. >> I also have a question related to this particular chart. I noticed that the general service forecast appeared to be falling rather than increasing. And I was curious about that if there was a particular reason for it. >> Yeah. Let me see if Jose -- Jose Gaitan and our EMO can come up here and maybe speak to that question. >> So my name is Jose Gaitan, a manager of analytics. Can you repeat the question, please? Can you repeat the question? >> I was just curious. It seemed this general service number, it's at 744 in 2019, it falls to 718, 721. It doesn't -- I was just curious about where those numbers came from and why it appeared to be falling. >> Sure. There are anomalies in the weather pattern. Some years you have hotter summers, which leads to higher consumption of power. And then we have anomalies like 75 degrees in May. So I'll take it where I can, but typically it's all weather related. And so we try to forecast going forward based on a normal weather pattern, but obviously there's deviations from that normal. So the addition of hunter coal ranch developments is going to add an awful lot of load, and I don't see a huge jump in the number there anywhere, so -- >> Correct. Yeah, and it's hard to predict how much growth we'll see based on demand for residential homes, right? So it's there, obviously, but how quickly will it come on and, you know, how much response for demand in the housing will there be, which will lead to overall demand? So that's kind of difficult to estimate, but we are in the works of trying to get our hands around what to expect in the near term. >> Yeah, Mr. Robbeck, what I'd say -- remember, you know, hunter coal ranch, the full build-out is over 30 years as well, right? And we don't serve all of the development options, so the majority of it, but again, that's a 30-year build-out. So on an annual basis, you know, the changes are going to be very minimal. >> I did not realize the build-out was that long. >> Yes, sir. >> Okay. Well, good to know. Thank you. >> Yes, sir. >> Any other questions? All right. Thank you. >> Good job. >> All right. It is 938. Do we have a motion to adjourn? >> Mr. Beck, we are adjourned.