Jul 22, 2024 Public Utilities Board on 2024-07-22 9:00 AM

Good morning and welcome to the City of Denton Public Utility Board meeting of July 22nd, 2024. It is 9 a.m. Here's the agenda. Are there any presentations from members of the public? Anybody signed up? No, okay. Then we'll move on to the Consent Agenda. Would anybody like to remove the item from the Consent Agenda? Seeing as there is no motion. I move approval of the Consent Agenda. We have a motion. Second. And a second from Lee. I heard them both. Any further discussion? All those in favor, please say aye. Aye. Any opposed, sign the same. All right. Moving on to items for individual consideration or consider the approval of the July 8th, 2024 minutes. We have a motion from Mr. Pluck. Second from Mr. Newquist. Any further discussion? There being none. All those in favor, please say aye. Aye. Any opposed, sign the same. All right. Moving on to item B. I'm sorry. Oh, are we going to the closed session? I'm sorry. All right. Sorry, I need to read my cheat sheet, don't I? All right. The Public Utility Board will now at 9.02 a.m. convene in a closed meeting to deliberate the closed meeting items set forth on the agenda, which include the following. Item A, PUB 24-144, deliberations regarding certain public utilities competitive matters under Texas government code section 551.086, consultation with attorneys under Texas government code section 551.071. Item B, PUB 24-150, deliberations regarding certain public power utilities competitive matters under Texas government code section 551.086, consultation with attorneys under Texas government code section 551.071. These two items will be presented together. We will have to vote on them separately. There we go. All right. Public Utility Board has now at 9.33 a.m. reconvene from the closed session and no official action was taken. So now, are there any more discussion on item B? Oh, the vote together? They're going to call them together, and then he's going to do a presentation. An open session. Okay. Got you. All right. All right. Let's do that then. So you need to call both of them? Items B and C for discussion and a presentation. Thank you. All right. Good morning, Mr. Chair Pro Tem, Bill Sheppard, DME. I'm here to talk to you about the WAAHA data center lease and PPA, which is the next two items in your agenda 136 and 137. So, to summarize this project, we were being approached by multiple different crypto type companies back in 2022 looking for some city-owned property to build a data center in. And in order to sort of levelize that field, we decided to put out an RFP for that piece of property that we had already identified as having both capacity and the space. And that was out at the airport industrial site at our RD Wells substation. It had about four acres of property that was usable around that substation. It was sort of sunk in the middle of the airport industrial park. It didn't really have much additional value to us at the time. So we put out that RFP. We got a lot of response. We've been negotiating a lease and a PPA for the front runner from that response for the last 12 to 18 months. So at this point, our steps are, the next steps are to go ahead and execute a PPA and a lease agreement with that company, as well as award them the bid. So that's sort of the summary. Just to give you another idea of the location of this property, again, it's out in the airport industrial site, our industrial complex. There's a modular data center that is a 20 megawatts load. This is for bitcone type operations. Relatively small footprint behind the substation. Can you see my mouse? Yeah. So that's the substation and then it'll occupy this territory behind. I'll have a closer up picture here in a second. That business down there, just to give you your bearings, that's Peterbilt. That's Tetra Pak. And of course, that's the airport. And then there's warehouse space and distribution centers over here too. And that's Western Boulevard. So it's a little ways off Western Boulevard in the back. It will adhere to the Denton's development code for noise and vibration for modular data centers. So that requirement is less than 60 dB or no more than 3 dB added to the ambient sound levels. So there's that little bit closer view of this project. So with those of the modular units that will be installed back there, they'll look very similar to that. And then you have, the majority of those will be behind the substation. And then you'll have some access and storage over here on this side. So it'll be an L-type arrangement. Okay, so the benefits to the city of Denton. Of course, it's aligned with Denton's economic development strategic plan. So we want to attract new investment in Denton, as well as attract some high electricity users. So this checks both those boxes. Estimated net income to DME is $2.8 million over the next five years. It is a 10-year agreement, so be effectively doubling that. That assumes an October 1st start date. It's a little aggressive, but we've been at this for a while. So hopefully they got a lot of stuff already ready then primed to go for Denton. And then the estimated revenue to the city and ROI and franchise fee is about $5.4 million for the first five years of that agreement. Major terms and condition, again, 10-year lease, 10-year renewal term on that lease, 10-year PPA as well. The lease rate's about $20,000 a year, and that's market-based. And we will revisit that on renewal. If we do go and have another 10 years, we'll bring that up to current market adjustment rate. And then the similar decor will be fully collateralized on this transaction. So there will be very little to no risk for DME and our customers because they will be fully collateralized and also prepay for their weekly invoicing moving forward. So the recommendation is to award the bid to Waha and execute the lease and the PPA for SPRE, which that is the company that they created as an LLC for this endeavor here in Denton. And that is all I have. Any questions? - We can go to slide 5. - Yes, sir. - The estimated income of 2.8 and then the revenues of 5.4, do we add those two together for a number for those five years or are they standalone numbers? I'm just looking for value for the city. - Yes, sir. No, they're additive. So 5.4 is the direct benefit to the city. And then DME gets a direct benefit at 2.8. - So as far as Denton is concerned, we could add the two numbers together. - Yes, sir. - Okay. That's what I was curious. Thank you. - Just to remind me, what is the added load from this client? - 20 megawatts. - 20 megs. Thank you. - Yes, sir. - Mr. Taylor. - Thank you, Chair. So I think DME's got a little bit of experience with these crypto miners. The demand-responsive load is really great. They go right next to a substation, they build their own connections, they turn off before a crisis occurs, hopefully, or definitely when a crisis occurs or when an energy shortfall occurs and are caught. So they remove a lot of risk from DME and they increase revenue without creating general peak loads on the grid or net peak loads on the grid. So I think these are great customers to have, no matter what you feel like about Bitcoin or other cryptocurrencies. So I think this is really good. I think there's a strange juxtaposition between this contract and our discussion last week regarding solar, where with our solar conversation, we're paying solar generators on our grid, like customers, commercial or residential customers, about four cents, maybe, per kilowatt hour, and then selling it for getting a net benefit or selling it for six to seven cents per kilowatt hour. So DME is making $20 to $30 a megawatt in profit on a commercial rooftop solar or residential rooftop solar. And in this case, we're making a fraction of a cent per kilowatt under $10 a megawatt in revenue off of these customers. And so I support this project, but I would like us to align all of our programs throughout the city to be more fair and cover DME's risk, but treat all those customers more fairly. Thank you. All right. Looks like that must be it. There seems to be no more questions. We take this for an individual vote, correct? Okay. We will entertain a motion for item B, PUB 24-136. We have a motion for Mr. Taylor. Mr. Ryback seconds. Thank you. Any further discussion? There being none. Seeing there is none. All those in favor, please say aye. Aye. Any opposed, sign the sign. All right. We'll move on to item C, PUB item 24-137. Try again. I was just deleting my presentations there. All right. I guess we don't need to discuss anymore on C since they went together, correct? Yes, sir. Okay. All right. So then. Do we need a motion to approve this item? I so moved. We have a motion for Mr. Ryback. Second. Second for Mr. Rayner. All those in favor, please say aye. Aye. Any opposed, sign the same. Passes unanimously. All right. Moving on to item D, management reports. Ms. Taylor. Good morning. Good morning, PUB. So we have several management reports in this section that look like came from questions from the board on the value of solar. We have Bill here who can answer any questions. That memo was included in the backup and then the follow-up question on the water utility project, specifically that miscellaneous category. Matt Hamilton is here if there are additional questions on either of those. Moving into the future agenda items, we have the five-year forecast miscellaneous item, which is answered through your backup. And the only outstanding item on new business actions is the comparison on the experiences with EVs. After the last meeting that I was at, I connected with fleet and environmental services. We're circulating a survey on the use of our departments that are operating those. So we should have it to you in a few weeks on how their experience has been. Any remaining questions? Any new business items or additional questions on the memos provided in the backup? So just following up on the EV item, I requested it for one year in the future from the date that program implemented. Also just to kind of understand operating costs. Yes. Okay. We're doing that. And then we're including in there what we're purchasing for next year, that percentage of fleet, and then the thought process on the type of vehicles we're focusing on. All right. All right. Thank you for the detail that was at my request and the others as well. So that moves us to the water utility. That's the memo you're discussing with those in general. Okay. Future agenda items? Covered all of them. So if there are any additional items that you'd like added, then we've covered one through four. Any new business action items? Doesn't appear to be any. All right. Concluding items. We have come in and out of closed meeting. So with that, we have a motion to adjourn. All those in favor, please say aye. That's it.