Jul 08, 2024 Public Utilities Board on 2024-07-08 9:00 AM

(indistinct) - Okay, it is nine o'clock and we do have a quorum. So we'll call to order the public utilities board for the city of Denton on Monday, July 8th, 2024. We do have a presentation from the public today. Mr. Ed Soph has requested to speak on the work item for the value of solar. So if you'd like to step up. He's a former PUB board member. - Is this mic working? - It should. (papers rustling) - And you have four minutes. - Okay. Thanks. Good morning. My name's Ed Soph. I live at 1620 Victoria Drive here in Denton. Lived here about over 30 years. I'm sure you know that by 2050, Denton County's population is projected to exceed two million and the electricity demand is expected to double by 2050. Texas's energy output must increase 26 to 59% by 2050. We are in a dire situation. Long-term decisions driven by societal, environmental and economic interests are essential if we are to have a livable and stable future. The value of solar study before you does not adequately address the long-term. It does not factor in the long-term societal benefits of rooftop solar for the environment, our health and wellbeing, and for the resilience of Denton's infrastructure and economy. By such omissions, it tacitly endorses current policies, gutting greensense incentives for solar installations, and future policies, should you endorse this study, that will kill net metering and further drastically discourage residential distributed generation. In 2023, 60% of ERCOT's power was generated with fossil fuels. Renewable energy returned to the grid by Denton's rooftop solar owners contributes to that remaining 40% of non-fossil fuel power. A grid-tied system is an investment in the grid itself. It's an investment in a livable future. The more solar distributed generation, the less DME will have to spend on infrastructure and electricity. Solar can reduce the economic impact of peak demand when electricity is most expensive, and the more solar power returned to the grid, the greener the grid becomes. The short-sighted solar compensation policies of non-competitive monopoly utilities have limited ERCOT's total installed rooftop solar capacity to less than 3% of its technical potential. To ensure that rooftop solar continues, pardon me, to contribute to ERCOT's reliability, utilities must provide fair compensation for the societal benefits that rooftop solar provides to the grid and the community. The VOS study before you denies any societal benefits of rooftop solar energy generation on the premise that DME already provides 100% renewable energy because it purchases renewable energy certificates and power purchase agreements to cover Denton's load. That renewable generated power is not directly transmitted to DME's customers from a solar or wind installation, but from the 60% fossil-fueled ERCOT grid. Do those recs and PPAs actually make Denton's air cleaner and healthier? Do they really combat the climate change that is costing us more and more to live? No, they don't. Not when the 12 natural gas-fired reciprocating generators of the DEC, the Denton Energy Center, are fired up. The DEC has admitted into our air between 2018, when it started, and 2023, over 1.5 billion, that's with a B, 1.5 billion pounds of CO2e emissions. That's the equivalent of emissions from 166,000 gasoline-powered vehicles driven for one year. You'd have to burn 767 million pounds of coal to match the DEC's CO2e emissions. DME's rooftop solar customers are consistently reducing greenhouse gas emissions. - Excuse me, Mr. Sulf, that was the timer. - Pardon me? - That was the timer going off. - Oh, I didn't hear it. Can I have 30 seconds? - You can have 30 seconds. - Thank you. These massive emissions don't go away. They will continue to warm the planet for tens of thousands of years. That's the real long-term. And this VOS study in discounting the societal, economic, and environmental benefits of rooftop solar in Denton does not expedite what should be done. More equitably incentivized and fairly compensated residential, community, and commercial distributed generation, as well as battery storage. I urge you to recommend to the City Council that net metering be maintained for all customers, and that the societal benefits of solar be recognized and included in the computation of a value of solar rate based upon the policy, neutral, and non-biased National Standard Practice Manual for Benefit Cost Analysis of Distributed Energy Resources. Thank you for your time. - Thank you. All right, then we'll move into the consent agenda. Does any board member wish to pull agenda items A through E? Okay, which one would you like to pull, Billy? E as in Edward. All right, any others? Do we have a motion to approve items A through D? - So moved. - Second. - All in favor say aye. - Aye. - Opposed? Motion carries. Item E. Here she comes. (dial tone) - Good morning. (dial tone) - And your question. - And if you have a question, I'm Tracy Beck, project manager, and would love to hear. I was gonna prep in case you needed a presentation. - I'd like to see that. - Excellent. And do you have a specific question while I pull it up? Might be able to answer the question and pull it up at the same time. - You first. - All right, you are very welcome. I might be able to pull it up at the same time. Let's see. There we go. Yeah, I did that twice, but I think I had something overlaying. All right, good morning, everybody. I'm Tracy Beck. I am the project manager for the CMAR Mingo project. And about a month or so ago, maybe two months at this point, time's flying. You have also seen the presentation for the design contract for Kimley-Horn. And this is for the pre-construction services for that project. This is the Mingo Riddell Quiet Zone project. It's a mouthful to say, so we're just kind of blending all the words together. The project background. It's a railroad quiet zone. It's an old bond program that you've seen before. We're adding one new railroad crossing, which is at Riddell. And then we're also impacting six additional existing railroad crossings. That includes removing two crossings more than likely. We'll take the direction of UPRR, the Union Pacific Railroad, and then improving the other ones for quiet zone components. The road, pedestrian, bike drainage portion of the project includes approximately 1,500 linear feet of roadway, bicycle, pedestrian facilities, as well as some photometric studies for lighting installation. Drainage study improvements for the area, because we also have some impacts to the service center. And we also have a service center project that's ongoing. So we want to watch what we're doing with the roadway projects overlapping with the other CIPs. And then utilities for what we're here for today is a public utilities board, is the 8,600 linear feet of water main replacement, about 5,000 linear feet of sanitary sewer. And part of what you're seeing here on the graphic is, let's see if I've got a pointer. We have roughly four components to the project. The Riddell widening, which is adjacent to TWU. The Riddell extension, which comes around the service center, if you're familiar from Texas, it's gonna be a new extension realignment that'll go around the new service center. And that's going to eliminate the withers crossing that currently gets you into the service center and make a really nice four-legged intersection. And then the green is going to be the mingo widening. And that's gonna be where you're gonna see the pedestrian improvements, water, utilities, are throughout all of these sections. And then the dots are gonna be the railroad crossings. The contract that we have for the pre-construction services is approximately, is not approximately, it's exactly now, $495,000. And this is for the lump sum services that come through cost modeling and the background work that the CMRs provide. That's an assistance with the engineering contract. So we take a look at the project, understand better of what can be designed, and then we work with the contractor to better understand how that construction can make more sense. And just do it wisely. See how their suggestions from construction frequently is we wouldn't have built it that way. So how would we build it better in cost savings? The additional hourly service, typically when you have a CMR, you have a GMP, the guaranteed maximum price. And several of our CMRs that you've seen come through and that are ongoing will have multiple packages. And this particular project, we're not sure how many packages we want. In order to look at cost savings, what we've asked is to reduce the main contract that originally came in at $585,000 back out at GMP and save $90,000 if we didn't need that GMP. So this additional services is just kind of a cost savings effort. If we decide to build it all in one package, we've saved the $90,000. Otherwise, the whole contract will be $585,000. To date, we're on schedule. We selected the design firm back in May. Today is the bolded area. We're here asking Public Utilities Board for the approval to move forward with the pre-construction project. We'll be taking it to city council as well. The design is gonna start as soon as we have approval for the engineering. We have not started with the engineering services. We did contract them earlier. They're out doing pre-data collection. So if you see any activity out there, just get in survey right away, things, but no design. And then we'll move into the real estate construction and then final closeout. We're looking at it taking approximately three years. No telling because we are working with Texas Women's University as well as the Union Pacific Railroad. Both of those can be a little complicated, but not impossible. So today's request would be the approval to take this to council for the amount of $585,000. And the team that we selected through our procurement review was Sunt Construction. We've worked with them in the past. There were four groups that applied and they came out on top with our evaluation. Questions? - Questions, Mr. Chief. - Okay, so I was hoping we had some detail of the 490, was it 490, 495, whatever it was. - What would you like to know? - The breakdown? - The breakdown, yeah. - I do not have that today, but I'll be glad to share that with you. But is it based on hours and people? And I guess probably pickups would be your only equipment cost. - Yeah, so Seth Garcia, Deputy Director of Capital Projects. So in the RFP, we do request their estimated hours for each phase. So at each deliverable, they'll give us hours estimated for their pre-construction team, for estimating, scheduling, putting together the construction management plan, quality plan. We've got all that broken out in the RFP that we could provide. - Okay, it's not in here, in our backup. - Correct, so our RFPs have two pieces. It's the cost proposal and the technical proposal. In the cost proposal, we get a breakout of those pre-construction services, we get a breakout of estimated general conditions costs, and then we get our construction fee. Two of those things are tied into the contract. Of course, this pre-con fee and our construction fee, the general conditions cost is just their early estimate that we work through and negotiate during our pre-construction process. - Okay. Yeah, I like to see those things, but I don't know why they're not part of it, they were part of the bid package that could have been attached to this, right? - I would leave that to procurement if, I don't know that historically we've ever attached portions of the cost proposal to our presentations. We do receive that information. I know specifically for Sunt, I believe there was almost, there were hundreds if not thousands of hours that they were not billing us that they call free con. So basically we were covering the cost of a couple estimators and their senior project manager for the duration of the project, but that breakout does show. - I would imagine that cost is in there. - Yes, sir. - They'll recoup that at some point. - Hi, Lori Hill, purchasing manager. Yeah, we have not included that. We would just include what's in the contract, but we can easily send it to you. - It doesn't matter today. I mean, it's going to the council after us, so there's no reason to supply it now. Back to the engineering side of it, qualifications and experiences. You got experience of the firm. You've got Sunt at 17.6, Arch Western at 20, McCarthy at 15, Flatiron at 12.8. These are all four large companies, which I am confident have the experience and qualification to perform this project. I'm curious as to how a company like Flatiron gets a 12.8. You don't have the details, so I have to ask you. - Yeah, absolutely. So when we look at these, we're looking at the specific information provided in the RFP. So qualifications and experience also ties to the proposed personnel. A lot of those folks that were on, for instance, say the Flatiron or the Sunt, had much more significant at grade crossing and work with Union Pacific Railroad, which was one of the key items that we pointed out that we wanted to see in the RFP. - You said Flatiron, did you mean Sunt? - No, Flatiron. - You said Flatiron had more experience working with the railroad? - I'm sorry, Sunt did. Flatiron did not have the experience of Sunt and Archer-Western. I think Archer-Western's RFP had over 200 at grade crossings that they had worked on with that proposed project team. Sunt was right behind that. Flatiron's proposed project team did not have near the experience or qualification working with the railroad. - Okay, neither did, well, Archer looks like they had the most. - Correct. - But their price was crazy. I appreciate you looking at the price. - Yes, sir. And that is something that we talked through significantly with Archer-Western during their interview. And for them, it was the personnel that they felt they needed to be able to manage the project adequately. That was really driving up that cost. They had a third party or a subcontractor that they were gonna bring in to help with the railroad coordination. - Does some of that item, when it says experience of the firm have something to do with our, the city's experience with the firm? - So currently we don't have anything that allows us to bring in that direct, to tie it to points, if you will. So we're specifically basing it off of the proposed RFP. - Gotcha. Okay, so it's what they put on the RFP. - That is correct, is what we're basing it off of. And so we do have different page limits that go into those RFPs. I think for this one, we were at 25 or 30 pages. So again, that's what we're using to evaluate. And then we go through the interview process with up to the top three firms. - So it's all based on what they've submitted? - Correct. - I guess it's hard to verify some of those things, right? - It is, so we do call references. We do check around. And of course we do use the interview process to be able to ask questions. I believe for your son and Archer Western, we had an hour and a half long interview process that we went through these technical proposals and were able to ask questions with the full evaluation team. - And who's on the evaluation team? Is it engineering, procurement? - Yeah, so typically we make it up of capital project staff and then other stakeholders. So for this one, we had CIP staff as well as some streets traffic folks and utilities. - Other questions? Oh, yes, Mr. Williams. - If I could ask on, and it might've been discussed, as you said two months ago, the water and the sewer lines, are they gonna be the same size they are now? Are they gonna be larger? Do you, is it too early to ask for that number? - It's not too early to ask for that. We reached out to our stakeholders asking what utilities are out there do you need replaced, upsized? And we worked closely with our utilities department. They went through, scrutinized what they have internally in their long range plans, and then they came back and provided us with the limits of what those utilities, what ones they wanted to be included in this project, as well as any upsizing and any abandonments. So that was part of our scoping with the project. And that's where these numbers came from. - And what was the size if I could recall? - A variety of sizes. All four roads have different sizes. The majority of the sewer lines are eight inches. - But I'm thinking the residential would be lower, but I was wondering if eight or larger, that's what I was curious. - Correct, there's some that are 12 inches that are going through there. It's their master plan is what they were looking at is to see what their long-term vision, it wasn't just replacing like with like, they took a look at what they needed and then partnered with us. And those fees will be part of the utilities project is us working with them to design it, as well as other utilities that we're gonna be working with. - Wonderful, and then one other thing. - Yes, sir. - And I know it's not really ours, but I was just curious as you cross the railroad Ruedel, is it gonna stay a two lane all the way down to be connected or? - Crossing the road. - And the railroad that-- - On the south side of the service center. The intention is to make it as wide as possible so that we get into the railroad crossing with an ultimate crossing section. So it'll probably more than likely be four lanes. Nothing's designed at this point. We're gonna see what we can fit and what makes the best sense in drainage. But the intent is to have it widened out to be four lanes, two lanes in each direction, or turn lanes, or whatever we need to use those extra lanes for. And then it'll feather back into a two lane section as it continues back to the Texas existing Ruedel intersection. - Okay, so if you're coming-- - Going south-- - You're going south, it's two lane. Once we cross Mingo, then it's gonna go to a four lane. And then it's gonna feather back down to a two lane when it gets to McKinney? - We won't go all the way to McKinney. - Okay. - We're just getting around the service center at this point, so right to about Texas Avenue. - But then it'll be pinched back down to a two lane. - Correct, because we're meeting like with like at that point. No, that's fine, it's a good question. - Thank you. Thank you, Madam Chair. - Further questions? All right, do we have a motion to approve item E? - A motion to approve item E? - Oh, well I will. Ralph second. - Okay, all right, so it's gonna be Mr. Neuquist motioning and Mr. Rayner seconding. All in favor, say aye. - Aye. - Opposed? - Aye. - Okay, one opposed. Next item is consider the approval of the June 24th, 2024 minutes. Were there any changes or corrections? Okay, seeing none, do we have a motion to approve the minutes? - So moved. - Mr. Pluck moved. Do we have a second? - Second. - Mr. Cheek second. All in favor say aye. - Aye. - Opposed? Carries. Okay, the next item, consider recommending the adoption of an ordinance for the city of Denton, establishing the schedule of rates for electric service to be effective August 1st, 2024 and the ECA. - Okay. - Good morning. - Good morning. - Good morning, PEB. This is the Pantamong ADF Finance and I'm here to talk about Corley Energy Cost Adjustment. So just to recap, I wanted to talk about kind of what happened in the past. So March 19th, we went to city council with the ordinance that gave DME or the DME General Manager Authority to move up and down the ECA rate. And that balance can go basically up and down plus our $5 million. Changes to the ECA rate will be effective the following month once notified by two city council by consent agenda item. So what we looked at this time around was two months worth of actuals and projected seven months of projected energy costs. So here's, so this next slide here is a discussion or a graph of what the rates would look like. And the first one we looked at was 0.0515 with the projected of $2.7 million under collected if you look at the next few months. And we also looked at 0.0495 with the projected of under collection of 4.3 million. So looking at these two charts, the current rate is at 0.0447 cents per kilowatt. We recommend going up to 0.0515 cents per kilowatt, which will get us to about $2.8 million under collected by December. And again, here is kind of the same picture of at the two different rates that we looked at earlier in the previous slide. So when you look at residential at a thousand kilowatt, for average user, it's gonna increase about their monthly bill about $6.80. And there's some other non-residential, small, medium and large just for y'all to see there also. And that's it, any questions? Mr. Rayner first. - Could you go back one slide? - Yes, sir. - Could you give me a definition of, is that, oh my goodness, sorry. Just wonder who's obnoxious phone. So could you give me a breakdown on the, what is a non-residential, small, medium and large? - So I think I'll have to defer that to Bill. - Great. - Good morning, Madam Chair, PB members, Bill Sheppard, GME. So the small, medium and large breaks down as a small as 20 KW or smaller in size. So think of June's Beauty Supply or Barber, okay. And then a medium customer goes up to 200 KW. So think of that as a auto parts store or a convenience store. And then above 200 KW, think of that as a Walmart Supercenter or a hospital or a UNT. - So question, so where would a bank fall in? - Either in the small or the medium, most likely the medium if it's a large bank. - And offices and such, pretty much, I'm just trying to get an idea on. Small retail centers of 15,000 square feet probably fall within the medium and small, closer to the small maybe. - Yes. - Okay, thank you. - Mr. Cheek, you had a question? - No, not Bill. - Okay. - Could we go to the, you have this price projection here. I don't know that we have enough information yet as we've just started this process in, I think, March. I noticed that the chart plunges pretty rapidly in the third quarter from June with a positive balance of about two million to August, September, a negative balance of about seven million. So we have seven million excess cost above what we collect in that three month period. And then it turns flat. It's kind of flat through September, through December. It was rising from April through June at a lower rate. So are we expecting to see this seasonality every summer? - Yes, I think Terry is coming up with that question. - Crystal Ball. - Good morning, Terry Nolte, Assistant General Manager, DME. Yeah, so what you see, Mr. Taylor, is the fact that the prices are seasonal. So we have much higher prices in the summer than we do in the rest of the year. And consequently, as we hold our ECA rate flat, we're going to under-collect in the summer the high demand, high price periods. The reason why we use a seven month forecast is to try to average out those costs so we don't see a lot of fluctuation in the ECA cost. Yes, we will expect to see fluctuations like this. Excuse me. However, our recommendation here is to set a rate that as we look forward, it should be pretty flat. As part of the budget process that we're working on now that will be for you in the next month, this is about the rate that we expect it to stay at for at least the next year or so. Hopefully that answers your question. - Yeah, I think so. And so just think this through, we could either try and aim for a seasonal rate, which means, and this is kind of a decision for the board, would be rates are higher in the summer and then lower in off seasons, winter and spring, or we will probably have a path where come August, the fund is negative five million, and then we wanna be positive five million or so by April for the next summer where we're gonna spend eight or 10 million extra dollars. So just kind of thinking through this is our first time seeing this. - And we did purposely when we adjusted the ECA last time, we didn't move it up all the way to where we thought the true cost would be in order to minimize the amount of rate shock immediately. So this level that we're recommending here is really a good approximation of where we think a good baseline is gonna be for at least the next 12 months. - And so if this forecast were to continue out, we would expect it to recover back into a positive fund balance by next spring, and then next summer-- - Yeah, that's the goal is to stay right around zero. - Yeah, okay. Thank you. - Other questions? All right, do we have a motion to approve the ECA adjustment? Mr. Cheek moved, do we have a second? Mr. Pluck seconds, all in favor say aye. - Aye. - Opposed? Carries, management reports. - Madam Chair, members of the PV, no changes to the future agenda items or the new business. So if there's any questions about what's on there or anything else, happy to respond. - Budget manager handed us a piece of paper that explained the first year budget for the miscellaneous item under wastewater. Like to see something on a memo that shows that entire five year projection and what those dollar amounts are. We were told that these are all related to the same items. Also like to see something on the memo that says what these items fall under our budget. - Yeah, we can get on the schedule and get that to you for the next meeting. - Okay, I realize it's going to council, but I'd like to see them. - Sure, we can do that. - Brings us to concluding items. Does a board member wish to have something added to a future agenda item or have anything to say to the public? All right, seeing none, we will go into work session. The first item is to receive a report, hold a discussion and give staff direction regarding the value of solar study. Okay. - I don't recall the answer, but are we using that microphone now or, okay. Good morning, Madam Chair, Bill Sheppard again, DME and POV members. So we've been discussing our solar net billing program for quite some time now, starting last February. And we've brought the conversation to the SFAC, the Sustainability Framework Advisory Committee, this body, as well as the city council. And now we're coming back to you after some comments and conversation about conducting a value of solar study. So we've engaged with NUGEN, who is the company that did the value of solar study for Austin Energy. And I've got Jill Schupach here that's gonna present her findings from that study. And then I'll come back at the end of that presentation for staff's recommendations. - Good morning, thank you for having me. So I'm gonna walk through the presentation. We'll talk about the methodology we used. Like Bill said, this is parallel to the methodology we used with Austin Energy. We'll talk about the findings of the study and our recommendations. We'll talk about billing impacts and how these changes and rates will affect customers. And then Bill will come up to discuss his recommendation again. So before we jump in, I just wanna talk about terminology a little bit. So for Austin Energy, they use a value of solar methodology. They use a value of solar rate. It includes an avoided cost and they also include additional compensation for the customers for societal benefits. They do a buy all, sell all billing and metering structures. So the customer buys all of their energy as if they didn't have solar. And then the utility buys back whatever energy the customer generates at this value of solar rate. So most often when you hear value of solar, it's usually associated with this buy all, sell all metering and billing model. There's a lot of different rate designs out there when it comes to distributed generation. And that's the one Austin Energy uses. Denton uses a net billing, metering and billing model. The net billing model is not changing. We're keeping the same model. What's changing or the information that's presented is the rate that customers are compensated for their energy. But the actual billing and model structure is not changing. It's still net billing. It's just what rate is the utility paying the customers for their energy. So for the value of solar study, the methodology includes three components. That's these three columns here. If you're avoided costs, your societal benefits and your policy driven incentives. The avoided cost is just what it says. Every time a customer generates energy, the utility does not have to buy that energy from the market or generate that energy. So there's a cost savings to the utility. It's the cost avoided by the customer generating. There's a lot of different ways to measure that. You can use the market if you're in a market like ERCOT. If you have power purchase agreements or you've gone out for a request for power purchase agreements, you can use that methodology. You know, five, 10 years ago, utilities used to use like a peaker methodology where you would say, oh, well, if we had to build a natural gas plant, here's the cost that we're avoiding. And so that's the cost the customer gets paid. So we did it two different ways. We did it based on Denton's power purchase agreements because they're actually purchasing solar contracts. And then we also did it based on ERCOT because you guys are in an organized market. And that analysis was an hourly analysis to capture the value of solar when it is generating. Societal benefits. This one, this is the estimated savings for reducing emissions. You're avoiding greenhouse gases. And there's multiple different ways that that has been estimated. The federal government has an estimate that they use. There's a market in the Northeast that they use. There's a lot of different markets and ways to estimate that. There is not a market in Texas for this, but there are different ways to estimate it. And so in the report, it includes all the different ways that it's estimated and what those amounts are. Generally, it varies from one cent to eight cents depending on whose study you're looking at. You know, the higher end is the EPA. They recently came out with an estimate that averages about eight cents kilowatt hour. But as I said, there's no federal or state market for greenhouse gases in Texas. And the greenhouse gases, because of prior city council policy, Denton is already 100% renewable. So they have already balanced out the greenhouse gases that they would be producing to serve their customer load. And then the last one is policy-driven incentives. There's federal policies, state policies all to promote renewables. Local policy, this third component is, is there a local policy to support rooftop solar? In Denton right now, there is not. And so for this one, you know, the value of solar rate is not being adjusted to promote rooftop solar, but there are other incentives offered by the utility. All right, so the first, this first, that first column, this first component, avoid a cost findings. As I said, we did an hourly analysis. So on this graph, the green line represents when solar is generating. It peaks around noon, which makes sense. That's when the sun is the strongest, right? The blue line represents ERCOT, the Organized Energy Market that Denton is in. That represents when the market is peaking. And you can see it tends to peak late afternoon and early evening, which makes sense. Everybody comes home, they turn on their air conditioner, they make dinner, right? And so we did an hourly analysis to look at how much solar is producing at the time of those ERCOT peaks and what the value of solar is in all those different hours. So on this table, the left column is the, if you calculate the avoided costs based on ERCOT market pricing, you can see it totals about seven cents, seven cents kilowatt hour. If you look at the amount that Denton pays for their solar purchase power agreements, that averages out to about four cents, which you can see in that bottom line. So the avoided cost, depending on how you wanna measure it or your point of view, is between four cents and seven cents. This does account for ancillary services in the ERCOT market that you're avoiding. It also accounts for line losses when the customers are generating, they're generating the power at the source. It's not being generated somewhere else and transmitted across transmission lines and distribution lines because there are losses, energy losses for that. So these numbers have been adjusted to account for losses. For societal benefits, as I said, there's a lot of different ways it's been measured. It's about $15 to $190 per ton of carbon, depending on the study that you look at. When you convert that into energy, it's about one cent to eight cents per kilowatt hour. So Denton, as I said, already is 100% renewable based on prior city council policy. So the cost of carbon for Denton is already being mitigated just with that power supply strategy. So as far as moving forward with the value of solar rate, because the carbon has already been balanced, we've recommended that it be set at $0 per kilowatt hour as part of the value of solar rate. Now, city council can change that, they can increase it. That is a policy decision by them, but as far as a cost basis, this requirement for balancing your carbon has already been met. Policy-driven incentives, like I said, there's federal policy, state policy, state has some property tax exemptions and things like that. Right now, the city and Denton policies do not require local solar. So we have not recommended any inclusion in the value of solar for that, because there's not a policy to support it. Obviously that can change, city council can change policies. Other ways that you can support local solar, it doesn't have to be through a value of solar rate that the customer is paid every month. You can also support it by streamlining the installation process, permits, inspections, waive some of the fees to help customers be able to afford it. You can provide grants or rebates to customers, and I've also seen some utilities provide low-cost loans. So in summary, the range of avoided costs, like I said, is about 4 cents to 7 cents. That's the actual real cost that the utility can avoid. The societal benefits and policy-driven benefits, we have set at zero, but that can be adjusted or changed by city council. Those are policy decisions that city council can make. The actual avoided measurable costs that Denton saves immediately is the 4 to 7 cents. So what does this look like for customers? So this first column, well, so on the left is the title of all the different rates. And you have a facility charge and energy charges, and then you also have your fuel pass through the ECA, which you guys just discussed, and then RCA, which is an additional compensation to the customer for solar. So the first column is a non-solar customer. Let's say you're using 1,365 kilowatt hours a month. Your bill would be about $181. This does have the, this does have a 5.8 cent ECA and TCRF. It has not been updated for the 5.15 that just passed. And that billing customer under the current rates is that second column over. And so you can see the rates that are included in there, and the rate that the customer is paid for the energy they produce is that 6.8 cents and that 3.8 cents. It's around 11 cents. So remember, like we said, the actual cost avoided, if you're looking at a purchase power agreement is 4 cents, if you're looking at the market is 7 cents. And currently the customers are being paid around 11 cents. And so if city council decides to go with an approach that's more related to avoided costs, the cost the utility is actually avoiding, then the 11 cents will go down, somewhere between 7 cents and 4 cents. If city council decides they want to incentivize people building solar and support solar, then they can make that decision as to how much they want to increase it. But right now the customer is receiving about 11 cents for every kilowatt hour they produce. If the rate that the customer is compensated is set at the avoided cost using the power purchase agreements, that 4 cents, you can see that currently the bill would be $139.94, moving forward, it would be the $166.70. And then if you use the ERCOT market price, excuse me, their bill would be about $154. So that is how it would affect a customer that uses about 1,400 kilowatt hours a month. The very last line, this is annual savings from the current rate. So because the customers are paying more money for their total bill, because they're being compensated less for their energy, that brings in another $463,000 if we use the purchase power agreement rate, the solar purchase power agreement rate. And then for the ERCOT market rate, it's about $236,000. And the recommendation, these numbers will come up again because the recommendation from staff is gonna be to take that difference in revenue that Denton is receiving 'cause the utility is receiving more revenue now and put that into their green sense program. - Thank you, Jill. So we've made this same presentation to ESFAC and you'll see in your AIS that ESFAC came back and asked us to, or recommended a blended rate between that PPA rate of DME and the ERCOT market rate. Staff, however, is continuing with our recommendation that we made to them, which is to make the value of solar the same as the avoided PPA cost of DME, which is the 3.79 cents and take the offset, that savings, and apply that to what we're already funding for energy incentives of the million dollars. So that'll bring the million dollars up to 1.46 million moving forward. So that is staff's recommendation to this body. - All right, questions? - Remind me of ESFAC. - Sustainability Framework Advisory Committee. - And that's ours? - Yes. - City of Denton. - They just asked for it, right? - Correct. - Which side are we gonna start on? Mr. Newquist, you go first. - What do we have or use to measure up and monitor engagement with green sense and the money that we have in there and how people use it and how we let them know to use it and things like that? - Sure, so the sustainability group tracks those rebates, how they give rebates based on air conditioning upgrades, installation upgrades, window upgrades. It is going very well this year, is my understanding. That's a different group than DME. We just provide the funding source, but they do track the efficacy of those programs. As a matter of fact, I do have a slide that shows, so one of the things that have come up in the past is on a dollar for dollar, which is sort of the better bang for the buck, and we did some analysis on that last year, and this will give you that, sort of the bottom line is, for every dollar spent in energy efficiency programs, there's about a 19 kilowatt hour reduction of usage across the city, versus every dollar spent for solar rebates at that time, it was 3.5 kilowatt hours per dollar spent. So again, from a bang for the buck, we felt that the Green Sense programs are a much wiser avenue to spend those dollars. So we took that to the next level, and the savings that we're recommending coming back from this change also fund those energy efficiency programs. - And Mr. Newquist, just because you're new, but so right now, it's about a million dollars, a million dollars that DME's sending to these programs used to be half a million. Once we eliminated the solar rebates, that additional half a million went to energy programs, so it's a total of a million dollars currently. Certainly, depending on the recommendation here, if the board, certainly also if the council wants to shift any of those savings, that would be added to that million dollars. And just as a reminder, that million dollars is available to all residents, all DME customers in our service territory, not just those that have rooftop solar. - Other questions? Billy? - Okay, so we don't do the solar rebate program anymore, right? - Correct. - So how long ago did we start the solar rebate program? - I believe it was 2009, is when that program started. Kat, do you remember? - About 15 years ago. - It was quite-- - Yeah. Was it closer? Yeah, I thought we did it real early, but. I'm gonna kick myself for asking this question. Has any consideration been given to the fact that we've made a commitment to some of these people that have already done this? - So that has come up. Grandfathering is the terminology for that. So there is no guarantee that those customers received when they signed their interconnection agreement that rates were gonna stay level forever, or their incentive, or our programs were not gonna change. It's just not feasible for the utility to do that. However, those customers that did install back when have been taking advantage of a very lucrative program, a very lucrative credit they received for that generation that they had, as well as most likely a rebate for their system. So that certainly factors into their economics, but we cannot make a guarantee in anybody that signs back then or now, moving forward, that nothing's gonna change. - Well, of course, yeah. I mean, they made a decision, and it was kind of a business decision, if you will. They're probably not in business. But you are cutting, basically you're looking at their savings or their refund, however you wanna look at it. You're cutting it in less than half, about 40% of what they were being refunded. - Yeah, so what we really need to keep in mind is, out of the 1,200 systems that we have rooftop currently, and they're still moving forward, by the way. They haven't stopped, and we're not stopping them from putting rooftop solar on their homes. But we also have to think of the other 64,000 customers that we have and the amount of money that we spend for energy. And we need to spend it wisely, and to keep their rates as reasonable as possible. And to Mr. So's comment about growth in the city, I mean, we just signed a PPA for another 100 megawatts of solar, which is much more cost effective than the rate that we're paying now, or even the rate moving forward, if this is to get approved. But again, it's an effort to try to make an equitable payment for that energy coming back to us. Quite honestly, every kilowatt hour that they use on their side of the meter is 100% offset. So if you think about it, that's 100% retail credit for that amount of energy they're using. So it may encourage customers to maybe look into a battery system. So instead of sending that energy to us, they're storing it and using it back. - We've already had a discussion about battery system. I didn't think you liked it. - Oh, no, it's perfectly fine for the battery. So there's nothing that DME has proposed and move it forward other than paying a more equitable rate for that energy. - I agree that the money is better, more sensibly spent in the Greensense program. I don't think there's any question about that. I'm just worried about maybe the past, like I said, sort of a commitment that we might have ethically made to them, and I don't mean you. I mean the city as a whole. Anyway, okay, well, that answers my question. Thanks, Phil. - Yeah, and if I may add one more thing to that too, and back in 2009, again, I think it was around that time, DME wasn't 100% renewable. - No. - A lot has changed. There's been a lot of investment to make us 100% renewable and the city's in a different spot right now than it was then. So again, we don't wanna disincentivize folks from putting rooftop solar on, they can still do that. And if they do it properly, then they use the energy inside their four walls. But our portfolio looking forward is 100% renewable. So that's a huge thing we need to be proud of. - Like you said, paying them 11 cents when our avoided cost isn't even close - Correct. - Is not fair to the other 60,000 customers that we have. Mr. Taylor. - Thank you. Thank you, Madam Chair. I'm trying to think of how to put all this. I have a few, I guess I'll start with your grandfathered, question about grandfathering and people who made a 20 year, perhaps got a 20 year loan to do a home improvement with an expected kind of return. And I'm sure anybody that did that got a 20 or 30 or $40,000 solar array, they did the math on what it would cost them and how it would pencil out payback. COSR, for example, has a grandfathered rate. I think they, 2022, if you installed before like June 2022, you have your solar buyback is one rate. If it's after that, it has a different dollar value. And I know other rural utilities in Texas do. You know, I was just looking at the benchmarks in the value of solar report on page five dash four. You know, we're showing this staff is recommending about a three and a half cent value for energy generated, but Austin energy is 9.9 cents. Pet analysis, 6.96, six, seven point, just running through these. They're all somewhere between six and a half and 10 cents except Georgetown and DME. And DME's recommendation of 3.8 is the lowest pretty substantially. And this doesn't show that COSR and several of these others have a grandfathered rate. I think that it would be best for our rate payers who followed our green sense program and made this commitment, this 20 year commitment potentially to not have a sudden shock going from 11 cents to 3 cents or 3.8 or whatever it is. But it would be more correct to have a grandfathered rate maybe with a taper down over five years or something like that. So that existing systems before a date, whether that's today or, you know, I don't know. I don't know how retroactively we could go. I don't know when the last solar installs were that they have a five year period of adjustment down to whatever this value of solar rate is. I think that would be fair, more fair so that they can adjust their, you know, they can realize their bill is basically gonna be going up slowly for the next five years as opposed to a shock. The second, this, I understand that we have signed some really good PPAs with a really good effective rate. Just looking at this comparison, and these are all munis or regulated co-ops. They're valuing, they're kind of sore at the high end, like at the basically the ERCOT market rate. Or very similar or a little bit higher even. And I think it's, if we are really able to keep signing PPAs for three and a half cents solar and sell it for seven cents, then, you know, we wouldn't be having the discussion we had 30 minutes ago about having a $10 million seasonality and needing to raise our ECA because we, 5.5 cents per the energy rate when we're saying we can buy it at 3.7 or whatever it was. So I think, I really feel like this is, this is pushing for the conclusion of a 3.8 cent rate. But we see evidence on this board that that's a artificially low rate for energy in ERCOT. - You look like you have a response. - Yeah, so a couple of things that I'm gonna defer to Marcella here in a second. I think when you're looking at those comparative utilities, I think it's important to understand that they don't have a 100% mandate that we have here in the city of Denton, right? That makes it inherently different. And so I would just point that out when you're looking at those, just kind of remember, I think at the end of the day-- - As a former Georgetown electric customer, Georgetown's 100% renewable as well. - Yeah, and that's the other exception is Georgetown, and I think he pointed that out, and that's why the rate is where there is. And so again, I would just kind of float that out there. Staff's making a recommendation, ultimately. We know that the board's gonna make a recommendation to the council, just like the SFAC did as well. We'll communicate it to the council. Again, this is purely based on our consultants' recommendations and how they look at our total energy portfolio and how we arrive to the recommendation. Ultimately, the council will set the final priority. So, but you had some questions about grandfathering. I'll kind of defer to Marcella to see how she wants to answer that. - Yeah, so we're happy to send you a memo with some more information on this, confidentially, but we did receive an opinion from our legal council that grandfathering in our circumstance and not making a comment on anyone else who does potentially use grandfathering is a discriminatory rate for our rate payers. So their opinion is that we would be unable to implement a grandfathered rate because of the legal restrictions. So again, I'll send a memo with some more details on that, but there is that opinion that we have from our outside council. - That's good to know. - Appreciate that, but you know, sometimes when you shake somebody's hand and say you're gonna do something, you gotta do it, and I don't really care what y'all say. - Two more points I just wanted to cover. So we do say we have 100% renewable. We have a 100% renewable plan, but we also at the same time buy energy from ERCOT, which is, you know, has emissions portion, and we overproduce green energy. I don't know if it's exactly 110, 115% of our total debt and load is, we buy that in wind and solar and put it into ERCOT, and then we take back what our 100% we need, and then we also run the Denton Energy Center, which emits as well. So we keep saying, oh, it's 100%, but there's 100% with an asterisk, and I understand why the asterisk is there. We don't currently have the capability of 100% minute per minute matched, but there's still that asterisk. So saying that like, it's the same, it's clean energy, it's not necessarily a behind the meter renewable generator does, is 100% of that generation is greenhouse gas, where whenever it's coming off of the ERCOT grid, it may or may not be. And finally, this isn't, I wish that this could have included, and Greensense could include behind the meter storage as a value. That's, it's its own topic, but it's often interwoven with solar, because a lot of times you get solar and a battery, a storage unit to go with your solar unit. And I think we know DME has looked at grid scale storage and the prices are not there yet. It's not cost effective. But for customers that wanna have solar and their own storage, that does benefit. It doesn't have the same peak distribution expectation, perhaps, it has, if we look at the more forward thinking REPs, which not in the regulated side, but in the deregulated market, they are, they have agreements with their customers to manage those storage resources. They pay the customers to use the energy out of those batteries at much less than whatever the ERCOT price is, but much more than, like it's enough of a reward that customers willingly let their utilities cycle their batteries to save them money or get a check or things like that. And so I think the next phase of this, and currently Greensense has no incentives at all for battery storage. So I think the next phase of this would be battery storage in Greensense. And then is DME capable of implementing their own or partnering with somebody to do some of this smart resource, smart demand reduction, storage management? - Yeah, I think the short answer is yes to all that, right? So the sustainability group is looking at how to incorporate incentivizing batteries within the dollars that they have. Certainly, any additional dollars that go there can certainly help that, but I think what they've seen is they've seen a lot of interest in HVAC systems and weatherization, you know, insulation. I think that's where a lot of the dollars are going to currently, and there's a lot of people in the community that have that need versus people that need battery storage, right? But again, that is something that's there. As far as using battery storage in a demand side type of program, it is something that we're looking at. Bill's working on an RFP to try to implement some type of program that targets some level of our total load to try to reduce. So those are ongoing projects that we have, and we hope to bring that back to the board here in the near future. - I'm probably the biggest advocate for green energy that there is. However, the main problem that we have with green energy and even the programs that we had in the past is that everybody, regardless of income, is subsidizing the program for those that may not need or may not see the benefits. Wealthier customers tend to be the ones that get solar, tend to be the ones that get EVs, and they're often subsidized through programs that all of us are paying for, even those that can't afford it. So I understand the importance of solar energy. I think it's a good thing to have, but we have to do it correctly. And I think that the Greensense program is capable of benefiting more customers at various income levels. And until we can properly democratize the distribution of the green energy savings, I think that we have to be much more considerate of that fact. Who's benefiting from solar? And it's not our customers who need to benefit from it the most. It's the wealthier customers who don't see the benefits, or who don't see as much of a benefit as our lower income customers would. Just my two cents. - Yes, go ahead. - To dovetail with that. Well put, my concern was, so it's a net billing, so everybody's paying. What savings do the non-solar people get? Are they subsidizing those? So the question I have is, right now we're looking at about a million dollars, roughly, so that's with this number of solars. Do you have a projection, or is that fair to say? This is my concern, a projection for five years from now, I doubt if it'll be a million dollars, because to offset that, we're gonna have to have rate increases, or am I wrong with that? Possibly. - 1.46. - That's what I'm asking, is that number going to stay the same? Is it going to increase? And if it does, does that mean more cost for the, that's my question. It's a caveat, let's look at the crystal ball. What are we looking at further down the road? This looks nice now, but are we gonna have to increase it because of all of this? And if we do, we've gotta be careful how we do that. - Right. - So, give me a crystal ball, please. - Well, I can't give you the crystal ball, but I can tell you when we came back last year having this conversation, we did have some projections on what continuing down the path we were on was gonna cost us. We can retool that now with these new assumptions in there and come back to you with some information, but I can tell you anecdotally, we sort of draw the line in the sand with giving this differential to the Greensense programs, and it socializes that benefit across more customers versus just a small amount for the solar customers. So, to answer your question specifically, right now, it doesn't benefit our current rate payers by doing this shift. What it does benefit is those future systems that come online that we're paying more equitably will no longer have an upward impact on their rates. Does that make sense? - Yes, I think. So, to come back with you, we were doing 0.3 cents versus the nine or whatever the number is, is that the conservative, and I'll call it that, the conservative number that you're using help keep the, I'll use the term inflation number of going up every year, even though it's not profitable now, but it could be something that we are being due diligent on in protecting our other clients with this low number, only because as we increase it, which we will have to, at least we'll be adult about it. - Yes, it's-- - Does that make sense, what I said? - I think so, yeah. - 'Cause sometimes my wife just doesn't know, and it's encouraging. All right, thank you very much. And I'm in the same boat with Mr. Plotkin. You know, exact same boat. - So, can we get that projected, then? You said that. - Yes, I'll work on it. - All right. - Yes, so just a matter of chairman of the board. So, what the SFAC recommended was about a five cent blended rate is what they recommended. In addition to that, they also recommended shifting the savings bill. It was about, what, 250 at that to half a million? Or 350? - It was 350, yes. - So, shifting that to energy programs. And of course, they also had, the other recommendation was to give some consideration to some type of grandfathering. They didn't necessarily specify what that needed to be, but those were really their three recommendations. And what we're asking the board today, certainly you have staff's recommendation. You have the SFAC's recommendation. We're looking for the board's recommendation to provide that to the council. - Yes. - To ask the attorney, and you can stop me in mid-sentence. When we talk about grandfather clause, how is that different from a grandfather clause on zoning issues? - So, there's just two different bodies that review those. So, rates are reviewed by the PUCT and by kind of that regulatory body, whereas zoning is under a statutory program, under Chapter 212, under the local government code. So, they're just, they're two very different concepts, legally, and the statute allows for grandfathering in the zoning case, but it does not, from our legal council's opinion, allow for that in the case of rates. - What a shame. - I have a question. If they recommended the five cents, the blended rate, why is staff opposed to that? - So, what we had was a target window. We had the amount that we already know is equitable from what we pay for our PPAs. So, we have a clear avoided cost for that. Now, our whole portfolio isn't solar. We have wind, we work in the market. We do what's best to be an overall value for our customers, but we do exactly know what we pay for PPAs for solar. So, we had that mark. Then, the other extreme is that ERCOT market, which is everything together blended. So, it would make sense to have a middle line there just for conversation purposes, but we feel, as DME, that the most equitable part to pay solar for solar is to use the PPA avoided cost. - I agree. - And just Madam Chair, so that avoided PPA is all of our PPAs together, right? Where we were, if we look at when our latest contract was, then that five cents probably closer to the latest contract that we signed. So, again, we're not opposed to that or any recommendation the council makes, but again, our recommendation is based on what our total portfolio is at currently and it's closer to that four cents. - Okay, go ahead. - So, my inclination is to go with the ERCOT market price simply because DME exists today. DME has 64,000 customers. They've made their power planning. Now, a single customer installs solar. They self-generate some and then they sell back excess. Just the counterfactual of that customer not installing solar versus installing solar for DME is now there's an extra 4KW or something coming back onto the grid for a few hours every afternoon. The net benefit is that approximately seven cents. So, and then allowing that 100% of that benefit to flow back to that customer is encourages that solar installation. If we go with the five cents and that customer adds that additional solar panel like the new customer installs that solar array, then DME is effectively collecting a little bit of additional profit there. Now, I understand there are other charges to having a customer, but to just ERCOT is not 100% renewable. So, even having that customer add their little 4KW array does have a benefit for the ERCOT system. So, that's why I think my recommendation would be to go with the ERCOT avoided cost. I also feel if we cannot have a separate customers installed before a date rate, then we apply a taper for a few years to bring existing customers down to that rate. And that'd be all customers, all solar. If we can't separate the rate cases of those installed before July 1st, 2024. - And with that, you think that would help? Oh, if I may. - Microphone, please. - So, you think that will help with the, what we were talking about, the grandfather, so that they understand the decrease is gradual? Is that what you're referring to, then? - Yeah, and so, like, if we're going, go one cent less per year. So, if we're currently at 11 and go 10, nine, eight, seven, I don't know, something like that. - Would council think that's within the boundaries of one of those committees? - I think the answer is that we can certainly try to set an ordinance, a rate ordinance that sets that out. But remember, today's council cannot bind a future council, right? So, that plan could be there, but it could change. So, yeah, so just be aware. But I think Terry did want to respond to a comment you made about the solar. Go ahead, Terry. - Yes, Terry Nalte, DME. So, I just want to remind the board here that one of the aspects of the study was to look at the avoided costs, excuse me. And I think, Mr. Taylor, one of the things that you said that kind of heightened my awareness was the fact that, you know, if someone builds another rooftop solar unit, that it lowers the cost to DME and to the ERCOT market, and it helps with the emission profile. I'm not disputing it reduces the emission profile. However, I would just remind you that if you build a home in Denton today, you must connect that home to the distribution system of DME. You can't get an occupational permit unless you're connected to the DME system. We, as a utility, have a fiduciary responsibility to provide energy to that home at all time based upon the demand of the home. So, when that solar unit is not running, during the peak, which Jill showed in one of her slides, which takes place three or four hours after the peak surplus energy generation that's taking place at around noon or one o'clock, and it's seven or eight o'clock at night, that solar facility has no value to the overall ERCOT grid because we still have to meet that demand. We still have that cost. And so, I think rightfully so, the study says, let's value solar for the true value that it provides. And it is not providing value to us from a power supply perspective when we need it the most. And we have to then go out and buy more energy, whether it's market energy or whether it's running the deck, which we do in what I'll characterize as the most responsible way to back up our renewable portfolio with the lowest emission profile of any type of fossil fuel generator that we can. And so, I think we all read a lot of stuff in the media, and we hear that, hey, this solar resource is going to avoid additional generation that would emit carbon. And that's just not the truth. I can tell you from someone who operates the system that it just doesn't work that way. - So, I just wanna, you've said, you said that this solar array doesn't have this value, but if the solar array, if you just ignore in your planning that there's a solar array on that roof, and you just, you buy power for it, you buy PPAs for it, you do all those things, and then it is, and you let those extra generation just be sold back on our COTS market, it's worth seven cents. So that's, I understand that there's more to a grid than just that net generation, and that you need to have the capability to meet those demands in off hours. - Yeah, those-- - But you just said, like, if you just plan as if that's not there, and then you sell back the excess to ERCOT, which in the past has been like the worst, least efficient, lowest value thing you could do, it's still worth seven cents. So, because that's the average price during a solar curve in ERCOT. Because, sure, in October, the peak's at eight p.m. In July, August, and September, the peak's at five p.m. or four p.m. And so that curve that shows that 50-- - Except seven p.m., seven or eight p.m. - Peak price, perhaps, not peak load. - Peak load. - And peak price. - The last four CPs for the last five years have all been between like four 30 and five 30 p.m. And that's the coincident peaks in the ERCOT grid. So, while the annual average hourly peak might be at eight p.m., the true peaks in summer are in daytime hours. - And fair enough, but that's because large industrials reduce their load during those peak demand times because the prices are so high. And so, you as a homeowner, a rooftop solar owner, you're not necessarily reducing your demand unless you own a battery and you've stored that energy for later use. So, I understand what you're saying. I'm just saying from a practical perspective, I still have to have sufficient resources that I've purchased. And so, it's not worth seven cents at one or two o'clock in the afternoon. It's worth probably one cent or two cent. I can show you the hourly curves that we, if we sell that back into the ERCOT market, that's what it'd be. So, if we have, let's just say we have a four cent average solar price from our long-term PPAs. At one or two o'clock in the afternoon, if we're in a surplus situation, we're selling that energy back for one cent. We're losing three cents on that energy. That's the reality of how the market works. So, when these rooftop solar units are producing surplus energy, pushing it back into our grid, it's worth the lease to us at any other time of the day. Now, we don't reflect that. Jill's analysis did look at hourly prices, but at the end of the day, it's looking at what the, as you compare it, to the price of our portfolio of solar resources, which benefits every customer in the service territory. And so, just from an economic perspective, if I'm debating on whether to build a solar resource on the top of my home or to buy it from DME, on a dollar per KW hour, DME can do it much cheaper than that resource can do it on its own. That homeowner still gets the full value of the 12 1/2 cents avoided payment it would have made to DME. But the surplus that it's pushing back to us is only worth one or two cents when it's pushing back. - So, it was my understanding the seven cents rate was the hour per hour matched, or caught price. - I don't know. - Was that not correct? - Yeah, it's an hourly, it's a full year's hourly analysis, and it looks at how much the solar's producing, and it ties it to the, or caught market price every hour, plus it accounts for ancillary services, plus it accounts for any credit for not being on peak for transmission at that time, and then it is adjusted for losses because there's the savings and losses 'cause it's not going across the system. And also to follow up on your comment earlier, looking at that table five one, a lot of those avoided costs are right in that seven cent range because a lot of it is based on the or caught market. And Austin Energies is the same thing. It's a similar six, seven cent rate, and then they did include it in addition on their first societal benefits 'cause they're not 100% renewable. - And we are. - Yes, and you are. And so, and again, so yes, so like on average, these utilities that are doing just the avoided costs are looking at or caught average of around seven cents. For Denton, the solar generating, if we go back to that graph, the power purchase agreements Denton's buying is this exact green profile. They're producing the most at noon around lunch. And so from an avoided cost perspective, that is the most comparable because it's the exact same resource. It produces the same way. It's all dependent on the sun. But these larger solar, not community solar, but like these larger solar installations are definitely much more economical than rooftop solar. So that's why it comes out to about four cents. - Thank you. - I'm not sure we're gonna come to consensus. So what direction do we want to go? I know for me, I wanna go with the cost of service for the PPAs. And I agree with going into green cents because the vast majority of the public will benefit from that versus the people that can afford to put a solar panel on their house. I'll go over to Aaron. - Yeah, I think that's one item we have to tackle on this. So yes, I feel similar to you on that. - I think I know where you're going. - Yeah, I agree with you. When solar is producing on a rooftop, it's producing everywhere else simultaneously. So the cost of solar, the benefit of solar is only occurring at that point. And that's the point in which the price savings for our perspective comes into play is when is at peak generation. We're not producing solar at 2 a.m. in the morning, but we're still paying people as if they are getting that 2 a.m. in the morning rate. So it doesn't make sense to me. So I have to agree. The model, the three cent model makes the most sense. - Almost four cents. - Yeah, 3.7, yeah. I think it makes the most sense for right now with the hope that more people benefit from green cents at varying income levels as opposed to what it is now. Maybe we could look at ways to lower the cost of solar for people in lower income brackets. That might be nice, but it still doesn't fundamentally solve the problem that we're not making solar at 2 a.m. in the morning. - Mr. Cheek. - Yeah, we talked at consideration about industries running, turning down their usage at peak hours, but we don't charge them any different. We charge them on 12 cents at six, and we charge them 12 cents at six o'clock in the morning. So, I mean, for us, we obviously measure that on our purchase, right? We're trying to get it cheap as we can, and we're always trying to get everything as cheap as we can, but anyway, I think Tony actually summed it up best at the beginning of this last conversation. We'll just, we'll bring forward to them. You know, some of the members of the PUB suggested that we make a consideration for people who have made this commitment 20 years ago, and others didn't. - Tony's sticking with it. - So the value of solar in the ERCOT market is seven cents. So for us to pay solar rooftop owners through three and a half cents means DME is profiting by about, you know, three point whatever cents per kilowatt that a customer chooses to put solar on their rooftop. You could talk about, oh, well, in 2019, we signed this deal for some $20 megawatt solar. Well, you can't buy that in ERCOT today. And so we got a really good price back then, but to offset your new solar roof today based on a PPA from six years ago at a really good price, to me just seems unfair. If we pay the market price, that just seems inherently fair and doesn't have a net added cost to DME. So that's why I stick with the seven cents. - Would you go back to the chart again with the seven foreign? No, next one. One we had broken down with it. - The one that shows the savings. - Oh. - And the blended. - Oh, the blended, hold on, sorry. - This one? - No, one more. - Thank you. - Okay. - That one. - I would agree with going with a PPA, the three cents or four cents has been brought up. But I'd like to ask, I'd like for that to go forward. But then I really would like the idea of, not the grandfather, but some kind of stair step. And I'm curious as to when can that be brought up? Can that be included in this or does it need to be separate? - It kind of depends on the direction the board would like to go and staff and council. I mean, ultimately I can only give, you know, an opinion and it's ultimately up to y'all's decision. - I'm in agreement with chair. - I'd be in agreement with that, yeah. - Thank you. - I think we have consensus on that, right? Yes, okay. Wow, this is the liveliest discussion we've had in a long time. It's been fun. Do you have what you need? - I think we do. - Okay. - Thank you. - All right. - Okay. - Did you have something else to say? - So just for my understanding, we're going with the, oh, sorry. - Microphone, yeah. - From my understanding, we're going with the 3.79 with a conversation continuing on the grandfathering. - Yes. - And the savings also going towards-- - Green cents. - Green cents. - Yes. - Okay, thank you. - All right, thank you. - We'll get you that projection, thank you. - Yeah, thank you. Okay, next item, receive a report, hold a discussion and give staff direction on the proposed solid waste water, wastewater and electric rates for 2024, 2025. Hopefully it's not as long, but maybe it is. - It may be. - All right. Good morning, Madam Chair, members of the board, Matt Hamilton, Budget Manager. Here to present this morning, the preliminary fiscal year 24, 25 utility rates. So today we'll talk a little bit about the rate change history and then get into the specific proposed utility rates for each of the four utilities and then talk a little bit about next steps and what the calendar looks like going forward. So this is a slide that we had brought forward, I believe last time, showing the history of rate increases for the four utilities and as we discussed, we really haven't had many rate increases over the last several years, in particular for water and solid waste. We haven't had rate increases in over five years. In fact, particularly for solid waste, we saw some significant decreases in 2019, 2020 and 2021. And during this time, as you know, what we've seen in the economy is an increase in prices, an increase in inflation, an increase in the cost of personnel and equipment. So what we are looking at for 2025 are rate increases for each of the four utilities to try and meet the revenue sufficiency requirements that we believe will be necessary going into the next fiscal year. So starting with solid waste and recycling, what we are proposing is a one and a half percent increase to residential service and commercial service. As you'll see the rate increase, whether you have a 65 gallon cart or a more typical 95 gallon cart, a residential bill would increase either 31 cents or 30, oh, sorry, 31 cents or 38 cents. Additionally, we're proposing an increase in the roll-off and compactor rates per poll of $25 for each and then a small increase in the monthly container rentals for each of those. When we did our analysis and we have received some preliminary information from our consultant who is conducting the solid waste cost of service study that the landfill is significantly under recovering. And so part of what we've looked at, not just with solid waste, but all the utilities is really trying to right size the rates to align with full cost recovery. And so when we looked at the landfill in particular, we felt that $1.50 across all utilities rates with the exception of shingles would be appropriate to increase the revenue to meet the expenditures associated with the landfill. One item that we are proposing to add is a non-resident electronics disposal fee. So currently, whether you are a resident or non-resident, you'll pay $10 per item. What we are proposing is a $20 non-resident fee. And then in regard to commercial trash, proposing a 1.5% increase. So in summary, a 1.5% increase for residential and commercial cart service, the $25 increase for the roll-off and compactor rates along with small increases for the rental of the containers and a flat. (silence) (silence) (silence) (silence) - It looks like it's back on. - Oh, looks like we're back on, okay. - Yeah, it doesn't look like it's still, yes. - Yeah, it's still not on. - Are you able to advance the slides? - I believe I am, I think at this point, we may just not be able to get the screen down. - That's okay. - You didn't say it's back on. - Okay, all right, well let's, we can see it just fine. - Okay. - I have a quick question on this slide. - Sure. - Were we on the next slide a second ago? - The previous? - We were on the summary. - We just finished up, yeah. - Does that $1.50 increase, is that expected to cover the cost of the length of operation? - We believe it will, get very close to covering the cost of the landfill operation next fiscal year. Looking forward, I think those details will be part of the full cost of service conclusions, but, yes. Okay, so just taking a look at, the preliminary rates in regard to residential solid waste and recycling bills. So as we look at 96 gallon cart rates for municipal providers in the Metroplex, what you'll see is Denton is kind of middle of the road, and the proposed 36 cent, I believe it was, increase, still keeps us in the middle. These preliminary rates for the other cities do not include any rate increase that they may be proposing in fiscal year 2025. And so we would anticipate that Denton would remain kind of middle of the road for municipal providers. Okay, taking a look at water and wastewater. Starting with water, we're proposing a 3% rate increase for residential water service and commercial water service. This does include the customers that are outside of the corporate limits, which would also see their rates increase 3% as well. You'll see in the percent change column there, 2.8% to 3%, and really that's just due to rounding the pennies. But on average, a 3% increase. Additionally, we're proposing an increase in the wholesale raw water rates for the Upper Trinity Regional Water District. The rate is currently 90 cents. However, our agreement contract currently states that the rate should be 85% of Dallas's rate. And so by increasing it to 96 cents, it aligns with the existing contract, which would put the rate at 85% of the city of Dallas's rate. Yep. - So does that all fall within the 3% of what we saw in the slide before? - It does not. This would be-- - An addition. - Yes, yeah, each of these lines are specific rate, rate lines and rate book, yeah. - And just for these Upper Trinity rates, are these per 1,000 gallons to the Upper Trinity? - They are, yep. - And then the, is treated cheaper than-- - It is, and that's our next recommendation. And so as we took time and did an analysis of all our rates, what we found is that the current wholesale treated water rates to Upper Trinity is at 61 cents, which is lower than you'll notice, the wholesale raw water. And so the treated water includes the chemical, the energy, the infrastructure needed to treat the water, and we have been selling it at a price lower than the raw water. So our proposal is to raise that to $1.25, which we believe does cover the cost of treating the water, which would be a 64 cent increase to that rate. - Even that seems like a very low rate, especially with our multi-hundred million dollars in planned expenses. There's also a capital cost to deliver treated water, and we're paying a capital cost now to fill out our plan. So I just want to make sure that $1.25 per thousand gallons, I just want to keep an eye on that in the near future, 'cause I feel that's a very low rate. - Yeah, and we-- - And is that also included in the cost of service study, the treated wholesale? - It will be reviewed, yeah. - Okay. - Next year. - Next year, okay. Thank you. - Yes. - I mean, the thing is, you have no maintenance on it, they're metering it themselves. - We were treating it, and we've got to-- - Well, yeah, but I mean, it's gonna come to all the fire hydrant treatment, unless you go to, it's more difficult to go find wholesale raw, right? For anybody. Yeah, I mean, yeah, if you're, okay, so in construction, you're only gonna use something that geographically makes sense, you're not gonna pump it out of the lake and send it through mouth of the road. - Well, just for the Upper Trinity Water District, which is another water district that purchases water from us. - Right. - So, if they're buying it out of the lake, they're just pumping it out of the lake. - Well, yeah, right. - But then, if they're tied into our system, they're paying a dollar per thousand gallons. It's a very good rate for treated water. - So, we do believe the dollar 20, oops. - They're all on, they won't go off. (audience laughing) - Do they go off now? - All off. - Okay, so we do believe that the dollar 25 is sufficient for 2025, but we'll certainly keep an eye on. Additionally, we're recommending an increase in the fire hydrant meter deposit from $1,100 to $3,000. The current cost of replacing a fire hydrant meter is approximately $3,000. We have seen some fire hydrant meters not be returned, and those expenses are then eaten by the utility to replace those. So, we are recommending the $3,000 just to be able to fully recover the cost if a meter is not returned. Backflow testing, we're proposing an increase of $9.05 to $25. This is really just to align the cost and labor associated with backflow testing. The backflow service fee is a proposed new monthly fee of $4.16 to those customers with backflow assemblies. And this $4.16 would recover the cost associated with the administration of backflow testing. So, sending notices, reviewing, tracking. - When you're through. - Okay, the backflow service. - So, who would fall into the backflow service fee? Example. - Good morning, Stephen Gay, Director of Water Utilities, not as tall as Matt. It's mainly commercial businesses. Any type of water use on the downstream side of the meter that could potentially cause a threat to the integrity of the water supply. - So, would this be irrigation only or? - Not just irrigation. Say, if you think of a mortuary who uses the water in their processes, we'd want to prevent that from coming back into our system. So, we put this mechanical device at the service connection and it's a requirement that it be tested and maintained on a regular basis. So, we have to monitor that. So, it would be those types of businesses. Chemical manufacturing or things like that. - Great example. - That's the best example I could think of. (laughing) - So, are residential customers impacted by this at all with backflow irrigation systems, things like that? - No, sir, those aren't covered under this currently. - Okay. - And finally, under meters, what we're proposing is a $25 meter test fee for any non-City of Denton water meters. And so, we do receive requests from other municipalities in the Metroplex to test meters because we have the equipment to do the testing. Currently, we provide that service for free. And so, we are proposing the $25 to cover the labor associated with testing the meters. Turning to commercial irrigation rates. Currently, the rate is $6.61 for any amount of gallons. And what is being proposed is moving to a tiered structure. So, the 661, we are proposing to increase 3%. However, as you'll see here, adding three additional tiers of 7,000 to 20,000 gallons, 20,000 to 40,000 gallons, and then a final tier of over 40,000 gallons, really to encourage conservation and, yeah. - And making sure your irrigation isn't on when it's raining. - Right, yeah. - Okay, meter, I'm sorry, water tap and meter fees. We are proposing an increase. Each of these increases are really just due to the actual costs of tapping. And so, as you'll see here, whether it's paved or unpaved, and the size of the tap, you know, it ranges from $441 up to an increase of $2,400. And then any taps four inches and larger, what we're proposing is to assess it on a per project basis. What we found is that it's very difficult just to assign a flat fee and have it recover the costs when every project may have different environmental conditions, depth of the pipes, groundwater, other factors that influence the expense associated with those larger taps. Okay, turning to wastewater, we're proposing an 11% increase to residential service, as well as an 11% increase for commercial service. We're proposing an increase from $1.67 to $2.50 on the sale of treated effluent. And then just as we saw on the water tap fees, to assess the wastewater tap fees for taps greater than, you know, four inches to be assessed on a per project basis, just to be reflective of the actual cost associated with that work. And finally, we're proposing an increase in the waste transportation manifest. This is a printed book that the city produces. We print the books at a cost of $165, and we sell them for $40. And so this proposal would be to remove that $125 subsidy and recover the full cost of the waste transportation manifest books. So taking a look at water and sewer rates as a comparison to other metroplex cities, which you'll see is that we have, even with these increases, some of the lowest rates in the metroplex, both for water and for sewer. And then this is a table which outlines what those dollar amounts look like. So again, you know, based on 9,000 gallons for water and 6,000 gallons for wastewater, you know, we're still very competitive within the metroplex. And again, these comparison cities don't include any potential rate increases or, you know, rate increases for 2025. These are reflective of their current rates. - Any, before we move on to DMA, any questions on water or wastewater? - So who do you think in that, those bar charts, and I know we have a lot of agreements with Dallas, right? Or a lot of our capacity is based on agreements with Dallas. Who else would be a similar community or city that has the same type of agreements, you know, like we do with Louisville and Ray Roberts and? - Yeah. Stephen Gay, Director of Utilities. Can you restate the question? - So we've always kind of based our rates on Dallas' rates. - That's the raw water rate. - Yes, yeah, and well, we have, 'cause we have agreement, a lot of agreements with Dallas. I imagine that would be it. - Yes sir, it's woven into the agreement. We have an operating agreement with Dallas, but that doesn't influence the agreement we have with UTRWD, so the rate that we charge UTRWD isn't agreement. - I'm not asking about UTRWD. I'm just saying what other city would you say might be a comparison or a community or city? - I would say that Louisville purchases water. I believe they purchase water from Dallas as well. The distinction is that Dallas and Denton own the rights in Louisville and Ray Roberts and none of the other utilities in the area. - So there's not a good comparison. - There's really not a good comparison. - That's probably a simpler question, thank you. - Thank you, sir. - I'm just curious, the waste transportation manifest, what is that, who buys that in the book? (laughs) That's a good question. How many of these things do you sell? - Jessica just asked that question and it's actually from our industrial pretreatment group and so those are more or less our significant industrial users so they purchase that manifest and that's about all I can tell you about the book. We just knew that the cost, we were significantly under recovering and we asked if we could just include it in the increases. - Not to tie in but it may sound like it. Water oil separators that we have for let's say automotive. Where's the charge for that? How does that fall in wherever it falls in? - That actually would be something that would fall under environmental services and sustainability. They're responsible for managing our industrial pretreatment program and so those fees would fall underneath their purview. - So we won't see that? - No, sir. - Thank you. - How many books do you sell a year? I'm sorry. How many books do you sell a year? - How many do I sell? - Books. - Books, I have no idea, I can find out though. - No, no. - Your microphone wasn't on. (laughing) - Any other questions before he moves on? - Okay, so as we had mentioned at the previous meeting, DME is currently undergoing a cost of service study. We do anticipate that the results of that study will be available here this month and so we intend to bring that back to the board we do anticipate a base rate increase of one and a half percent to be included as part of the study recommendation but we'll bring that forward here in a couple weeks. So taking a look at the calendar, we'll be bringing forward the utility budgets and the rates that the board has seen over the last couple weeks to city council for their feedback on July 23rd and then we'll also discuss the rates on August 10th during the budget workshop and then we'll return to PUB on August 28th for the utility budget and rate approval so that will include any changes or recommendations or discussion that had come out of the meetings with city council and then we'll bring that back to city council and to public hearings on September 10th and September 17th for final adoption. Any questions? - Any further questions? I'm assuming we're all in agreement to just move forward, right? - I have a motion to adjourn please. (laughing) - Okay. 1052.