1 00:00:00,000 --> 00:00:10,880 Good morning and welcome to the City of Denton Public Utility Board meeting of July 22nd, 2024. 2 00:00:10,880 --> 00:00:17,920 It is 9 a.m. Here's the agenda. Are there any presentations from members of the public? 3 00:00:17,920 --> 00:00:23,520 Anybody signed up? No, okay. Then we'll move on to the Consent Agenda. 4 00:00:25,520 --> 00:00:30,080 Would anybody like to remove the item from the Consent Agenda? 5 00:00:30,080 --> 00:00:36,160 Seeing as there is no motion. I move approval of the Consent Agenda. 6 00:00:36,160 --> 00:00:42,800 We have a motion. Second. And a second from Lee. I heard them both. 7 00:00:42,800 --> 00:00:50,480 Any further discussion? All those in favor, please say aye. Aye. Any opposed, sign the same. 8 00:00:51,840 --> 00:00:56,400 All right. Moving on to items for individual consideration or consider the approval of the 9 00:00:56,400 --> 00:01:06,080 July 8th, 2024 minutes. We have a motion from Mr. Pluck. Second from Mr. Newquist. 10 00:01:06,080 --> 00:01:13,280 Any further discussion? There being none. All those in favor, please say aye. Aye. Any opposed, 11 00:01:13,280 --> 00:01:20,000 sign the same. All right. Moving on to item B. I'm sorry. Oh, are we going to the closed session? 12 00:01:20,000 --> 00:01:23,120 I'm sorry. All right. Sorry, I need to read my cheat sheet, don't I? 13 00:01:23,120 --> 00:01:33,600 All right. The Public Utility Board will now at 9.02 a.m. convene in a closed meeting to 14 00:01:33,600 --> 00:01:37,600 deliberate the closed meeting items set forth on the agenda, which include the following. 15 00:01:37,600 --> 00:01:45,360 Item A, PUB 24-144, deliberations regarding certain public utilities competitive matters 16 00:01:45,360 --> 00:01:53,120 under Texas government code section 551.086, consultation with attorneys under Texas government 17 00:01:53,120 --> 00:02:02,720 code section 551.071. Item B, PUB 24-150, deliberations regarding certain public power 18 00:02:02,720 --> 00:02:10,640 utilities competitive matters under Texas government code section 551.086, consultation with attorneys 19 00:02:10,640 --> 00:02:19,360 under Texas government code section 551.071. These two items will be presented together. 20 00:02:19,360 --> 00:02:22,000 We will have to vote on them separately. 21 00:02:29,520 --> 00:02:43,760 There we go. All right. Public Utility Board has now at 9.33 a.m. reconvene from the closed 22 00:02:43,760 --> 00:02:54,640 session and no official action was taken. So now, are there any more discussion on item B? 23 00:02:59,760 --> 00:03:02,080 Oh, the vote together? They're going to call them together, 24 00:03:02,080 --> 00:03:05,920 and then he's going to do a presentation. An open session. Okay. Got you. All right. All 25 00:03:05,920 --> 00:03:09,120 right. Let's do that then. So you need to call both of them? 26 00:03:09,120 --> 00:03:13,040 Items B and C for discussion and a presentation. Thank you. 27 00:03:13,040 --> 00:03:18,480 All right. Good morning, Mr. Chair Pro Tem, Bill Sheppard, DME. I'm here to talk to you about 28 00:03:18,480 --> 00:03:27,360 the WAAHA data center lease and PPA, which is the next two items in your agenda 136 and 137. 29 00:03:30,160 --> 00:03:37,040 So, to summarize this project, we were being approached by multiple different crypto type 30 00:03:37,040 --> 00:03:44,560 companies back in 2022 looking for some city-owned property to build a data center in. And in order 31 00:03:44,560 --> 00:03:50,480 to sort of levelize that field, we decided to put out an RFP for that piece of property that we had 32 00:03:50,480 --> 00:03:57,600 already identified as having both capacity and the space. And that was out at the airport industrial 33 00:03:57,600 --> 00:04:03,680 site at our RD Wells substation. It had about four acres of property that was usable around that 34 00:04:03,680 --> 00:04:08,960 substation. It was sort of sunk in the middle of the airport industrial park. It didn't really have 35 00:04:08,960 --> 00:04:15,920 much additional value to us at the time. So we put out that RFP. We got a lot of response. 36 00:04:15,920 --> 00:04:21,680 We've been negotiating a lease and a PPA for the front runner from that response for the last 37 00:04:22,560 --> 00:04:29,840 12 to 18 months. So at this point, our steps are, the next steps are to go ahead and execute a PPA 38 00:04:29,840 --> 00:04:37,280 and a lease agreement with that company, as well as award them the bid. So that's sort of the summary. 39 00:04:37,280 --> 00:04:42,320 Just to give you another idea of the location of this property, again, it's out in the airport 40 00:04:42,320 --> 00:04:49,280 industrial site, our industrial complex. There's a modular data center that is a 20 megawatts load. 41 00:04:49,920 --> 00:04:58,000 This is for bitcone type operations. Relatively small footprint behind the substation. Can you 42 00:04:58,000 --> 00:05:04,480 see my mouse? Yeah. So that's the substation and then it'll occupy this territory behind. I'll have 43 00:05:04,480 --> 00:05:09,920 a closer up picture here in a second. That business down there, just to give you your bearings, 44 00:05:09,920 --> 00:05:16,480 that's Peterbilt. That's Tetra Pak. And of course, that's the airport. And then there's 45 00:05:16,480 --> 00:05:21,920 warehouse space and distribution centers over here too. And that's Western Boulevard. 46 00:05:21,920 --> 00:05:30,560 So it's a little ways off Western Boulevard in the back. It will adhere to the Denton's 47 00:05:30,560 --> 00:05:35,120 development code for noise and vibration for modular data centers. So that requirement is 48 00:05:35,120 --> 00:05:42,080 less than 60 dB or no more than 3 dB added to the ambient sound levels. 49 00:05:44,960 --> 00:05:50,400 So there's that little bit closer view of this project. So with those of the modular 50 00:05:50,400 --> 00:05:56,240 units that will be installed back there, they'll look very similar to that. And then you have, 51 00:05:56,240 --> 00:06:01,600 the majority of those will be behind the substation. And then you'll have some 52 00:06:01,600 --> 00:06:05,920 access and storage over here on this side. So it'll be an L-type arrangement. 53 00:06:05,920 --> 00:06:13,600 Okay, so the benefits to the city of Denton. Of course, it's aligned with Denton's economic 54 00:06:13,600 --> 00:06:19,440 development strategic plan. So we want to attract new investment in Denton, as well as attract some 55 00:06:19,440 --> 00:06:25,600 high electricity users. So this checks both those boxes. Estimated net income to DME is $2.8 million 56 00:06:25,600 --> 00:06:31,360 over the next five years. It is a 10-year agreement, so be effectively doubling that. 57 00:06:31,360 --> 00:06:36,880 That assumes an October 1st start date. It's a little aggressive, but we've been at this for a 58 00:06:36,880 --> 00:06:42,080 while. So hopefully they got a lot of stuff already ready then primed to go for Denton. 59 00:06:42,080 --> 00:06:47,360 And then the estimated revenue to the city and ROI and franchise fee is about $5.4 million for 60 00:06:47,360 --> 00:06:52,480 the first five years of that agreement. Major terms and condition, again, 10-year lease, 61 00:06:52,480 --> 00:07:00,240 10-year renewal term on that lease, 10-year PPA as well. The lease rate's about $20,000 a year, 62 00:07:00,240 --> 00:07:06,080 and that's market-based. And we will revisit that on renewal. If we do go and have another 10 years, 63 00:07:06,080 --> 00:07:14,960 we'll bring that up to current market adjustment rate. And then the similar decor will be fully 64 00:07:14,960 --> 00:07:24,800 collateralized on this transaction. So there will be very little to no risk for DME and our 65 00:07:24,800 --> 00:07:31,760 customers because they will be fully collateralized and also prepay for their weekly invoicing moving 66 00:07:31,760 --> 00:07:40,960 forward. So the recommendation is to award the bid to Waha and execute the lease and the PPA 67 00:07:40,960 --> 00:07:48,080 for SPRE, which that is the company that they created as an LLC for this endeavor here in Denton. 68 00:07:48,080 --> 00:07:52,720 And that is all I have. Any questions? 69 00:07:52,720 --> 00:08:06,400 - We can go to slide 5. - Yes, sir. 70 00:08:06,400 --> 00:08:12,000 - The estimated income of 2.8 and then the revenues of 5.4, do we add those two together 71 00:08:12,000 --> 00:08:17,200 for a number for those five years or are they standalone numbers? I'm just looking for value 72 00:08:17,200 --> 00:08:22,160 for the city. - Yes, sir. No, they're additive. So 5.4 is the direct benefit to the city. 73 00:08:22,160 --> 00:08:27,680 And then DME gets a direct benefit at 2.8. - So as far as Denton is concerned, we could 74 00:08:27,680 --> 00:08:29,040 add the two numbers together. - Yes, sir. 75 00:08:29,040 --> 00:08:39,600 - Okay. That's what I was curious. Thank you. - Just to remind me, what is the added load 76 00:08:39,600 --> 00:08:42,000 from this client? - 20 megawatts. 77 00:08:42,000 --> 00:08:45,520 - 20 megs. Thank you. - Yes, sir. 78 00:08:45,520 --> 00:08:53,360 - Mr. Taylor. - Thank you, Chair. So I think DME's got a little bit of experience with these crypto 79 00:08:53,360 --> 00:08:59,360 miners. The demand-responsive load is really great. They go right next to a substation, 80 00:08:59,360 --> 00:09:06,080 they build their own connections, they turn off before a crisis occurs, hopefully, or definitely 81 00:09:06,080 --> 00:09:11,280 when a crisis occurs or when an energy shortfall occurs and are caught. So they remove a lot of 82 00:09:11,280 --> 00:09:21,120 risk from DME and they increase revenue without creating general peak loads on the grid or net 83 00:09:21,120 --> 00:09:27,040 peak loads on the grid. So I think these are great customers to have, no matter what you feel like 84 00:09:27,040 --> 00:09:33,280 about Bitcoin or other cryptocurrencies. So I think this is really good. 85 00:09:39,360 --> 00:09:44,400 I think there's a strange juxtaposition between this contract and our discussion last week 86 00:09:44,400 --> 00:09:52,960 regarding solar, where with our solar conversation, we're paying solar generators on our grid, 87 00:09:52,960 --> 00:09:58,720 like customers, commercial or residential customers, about four cents, maybe, per kilowatt 88 00:09:58,720 --> 00:10:04,880 hour, and then selling it for getting a net benefit or selling it for six to seven cents per 89 00:10:04,880 --> 00:10:13,600 kilowatt hour. So DME is making $20 to $30 a megawatt in profit on a commercial rooftop 90 00:10:13,600 --> 00:10:20,800 solar or residential rooftop solar. And in this case, we're making a fraction of a cent per 91 00:10:20,800 --> 00:10:31,760 kilowatt under $10 a megawatt in revenue off of these customers. And so I support this project, 92 00:10:31,760 --> 00:10:38,640 but I would like us to align all of our programs throughout the city to be more fair 93 00:10:38,640 --> 00:10:43,520 and cover DME's risk, but treat all those customers more fairly. 94 00:10:43,520 --> 00:10:55,280 Thank you. All right. Looks like that must be it. There seems to be no more questions. 95 00:10:56,320 --> 00:11:02,640 We take this for an individual vote, correct? Okay. We will entertain a motion for item B, 96 00:11:02,640 --> 00:11:10,000 PUB 24-136. We have a motion for Mr. Taylor. 97 00:11:10,000 --> 00:11:24,480 Mr. Ryback seconds. Thank you. Any further discussion? There being none. Seeing there is 98 00:11:24,480 --> 00:11:32,080 none. All those in favor, please say aye. Aye. Any opposed, sign the sign. All right. We'll move 99 00:11:32,080 --> 00:11:51,520 on to item C, PUB item 24-137. Try again. I was just deleting my presentations there. 100 00:11:53,120 --> 00:11:58,880 All right. I guess we don't need to discuss anymore on C since they went together, correct? 101 00:11:58,880 --> 00:12:07,440 Yes, sir. Okay. All right. So then. Do we need a motion to approve this item? I so moved. 102 00:12:07,440 --> 00:12:12,160 We have a motion for Mr. Ryback. Second. Second for Mr. Rayner. All those in favor, 103 00:12:12,160 --> 00:12:18,560 please say aye. Aye. Any opposed, sign the same. Passes unanimously. All right. Moving on to item D, 104 00:12:19,440 --> 00:12:26,000 management reports. Ms. Taylor. Good morning. Good morning, PUB. So we have several management 105 00:12:26,000 --> 00:12:30,880 reports in this section that look like came from questions from the board on the value of solar. 106 00:12:30,880 --> 00:12:35,920 We have Bill here who can answer any questions. That memo was included in the backup and then 107 00:12:35,920 --> 00:12:41,040 the follow-up question on the water utility project, specifically that miscellaneous category. 108 00:12:41,040 --> 00:12:44,720 Matt Hamilton is here if there are additional questions on either of those. 109 00:12:45,680 --> 00:12:51,920 Moving into the future agenda items, we have the five-year forecast miscellaneous item, 110 00:12:51,920 --> 00:12:58,720 which is answered through your backup. And the only outstanding item on new business actions 111 00:12:58,720 --> 00:13:04,560 is the comparison on the experiences with EVs. After the last meeting that I was at, 112 00:13:04,560 --> 00:13:08,640 I connected with fleet and environmental services. We're circulating a survey on 113 00:13:08,640 --> 00:13:13,120 the use of our departments that are operating those. So we should have it to you in a few weeks 114 00:13:13,120 --> 00:13:20,000 on how their experience has been. Any remaining questions? Any new business items or additional 115 00:13:20,000 --> 00:13:26,720 questions on the memos provided in the backup? So just following up on the EV item, I requested 116 00:13:26,720 --> 00:13:31,200 it for one year in the future from the date that program implemented. Also just to kind of understand 117 00:13:31,200 --> 00:13:36,880 operating costs. Yes. Okay. We're doing that. And then we're including in there what we're purchasing 118 00:13:36,880 --> 00:13:40,480 for next year, that percentage of fleet, and then the thought process on the type of vehicles we're 119 00:13:40,480 --> 00:13:47,280 focusing on. All right. All right. Thank you for the detail that was at my request 120 00:13:47,280 --> 00:13:56,640 and the others as well. So that moves us to the water utility. That's the memo you're discussing 121 00:13:56,640 --> 00:14:03,440 with those in general. Okay. Future agenda items? Covered all of them. So if there are any additional 122 00:14:03,440 --> 00:14:08,000 items that you'd like added, then we've covered one through four. Any new business action items? 123 00:14:09,840 --> 00:14:19,360 Doesn't appear to be any. All right. Concluding items. We have come in and out of closed meeting. 124 00:14:19,360 --> 00:14:29,040 So with that, we have a motion to adjourn. All those in favor, please say aye. That's it.