WEBVTT 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. 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? 00:00:17.920 --> 00:00:23.520 Anybody signed up? No, okay. Then we'll move on to the Consent Agenda. 00:00:25.520 --> 00:00:30.080 Would anybody like to remove the item from the Consent Agenda? 00:00:30.080 --> 00:00:36.160 Seeing as there is no motion. I move approval of the Consent Agenda. 00:00:36.160 --> 00:00:42.800 We have a motion. Second. And a second from Lee. I heard them both. 00:00:42.800 --> 00:00:50.480 Any further discussion? All those in favor, please say aye. Aye. Any opposed, sign the same. 00:00:51.840 --> 00:00:56.400 All right. Moving on to items for individual consideration or consider the approval of the 00:00:56.400 --> 00:01:06.080 July 8th, 2024 minutes. We have a motion from Mr. Pluck. Second from Mr. Newquist. 00:01:06.080 --> 00:01:13.280 Any further discussion? There being none. All those in favor, please say aye. Aye. Any opposed, 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? 00:01:20.000 --> 00:01:23.120 I'm sorry. All right. Sorry, I need to read my cheat sheet, don't I? 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 00:01:33.600 --> 00:01:37.600 deliberate the closed meeting items set forth on the agenda, which include the following. 00:01:37.600 --> 00:01:45.360 Item A, PUB 24-144, deliberations regarding certain public utilities competitive matters 00:01:45.360 --> 00:01:53.120 under Texas government code section 551.086, consultation with attorneys under Texas government 00:01:53.120 --> 00:02:02.720 code section 551.071. Item B, PUB 24-150, deliberations regarding certain public power 00:02:02.720 --> 00:02:10.640 utilities competitive matters under Texas government code section 551.086, consultation with attorneys 00:02:10.640 --> 00:02:19.360 under Texas government code section 551.071. These two items will be presented together. 00:02:19.360 --> 00:02:22.000 We will have to vote on them separately. 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 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? 00:02:59.760 --> 00:03:02.080 Oh, the vote together? They're going to call them together, 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 00:03:05.920 --> 00:03:09.120 right. Let's do that then. So you need to call both of them? 00:03:09.120 --> 00:03:13.040 Items B and C for discussion and a presentation. Thank you. 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 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. 00:03:30.160 --> 00:03:37.040 So, to summarize this project, we were being approached by multiple different crypto type 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 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 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 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 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 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. 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 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 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. 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 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. 00:04:49.920 --> 00:04:58.000 This is for bitcone type operations. Relatively small footprint behind the substation. Can you 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 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, 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 00:05:16.480 --> 00:05:21.920 warehouse space and distribution centers over here too. And that's Western Boulevard. 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 00:05:30.560 --> 00:05:35.120 development code for noise and vibration for modular data centers. So that requirement is 00:05:35.120 --> 00:05:42.080 less than 60 dB or no more than 3 dB added to the ambient sound levels. 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 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, 00:05:56.240 --> 00:06:01.600 the majority of those will be behind the substation. And then you'll have some 00:06:01.600 --> 00:06:05.920 access and storage over here on this side. So it'll be an L-type arrangement. 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 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 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 00:06:25.600 --> 00:06:31.360 over the next five years. It is a 10-year agreement, so be effectively doubling that. 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 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. 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 00:06:47.360 --> 00:06:52.480 the first five years of that agreement. Major terms and condition, again, 10-year lease, 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, 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, 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 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 00:07:24.800 --> 00:07:31.760 customers because they will be fully collateralized and also prepay for their weekly invoicing moving 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 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. 00:07:48.080 --> 00:07:52.720 And that is all I have. Any questions? 00:07:52.720 --> 00:08:06.400 - We can go to slide 5. - Yes, sir. 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 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 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. 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 00:08:27.680 --> 00:08:29.040 add the two numbers together. - Yes, sir. 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 00:08:39.600 --> 00:08:42.000 from this client? - 20 megawatts. 00:08:42.000 --> 00:08:45.520 - 20 megs. Thank you. - Yes, sir. 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 00:08:53.360 --> 00:08:59.360 miners. The demand-responsive load is really great. They go right next to a substation, 00:08:59.360 --> 00:09:06.080 they build their own connections, they turn off before a crisis occurs, hopefully, or definitely 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 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 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 00:09:27.040 --> 00:09:33.280 about Bitcoin or other cryptocurrencies. So I think this is really good. 00:09:39.360 --> 00:09:44.400 I think there's a strange juxtaposition between this contract and our discussion last week 00:09:44.400 --> 00:09:52.960 regarding solar, where with our solar conversation, we're paying solar generators on our grid, 00:09:52.960 --> 00:09:58.720 like customers, commercial or residential customers, about four cents, maybe, per kilowatt 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 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 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 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, 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 00:10:38.640 --> 00:10:43.520 and cover DME's risk, but treat all those customers more fairly. 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. 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, 00:11:02.640 --> 00:11:10.000 PUB 24-136. We have a motion for Mr. Taylor. 00:11:10.000 --> 00:11:24.480 Mr. Ryback seconds. Thank you. Any further discussion? There being none. Seeing there is 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 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. 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? 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. 00:12:07.440 --> 00:12:12.160 We have a motion for Mr. Ryback. Second. Second for Mr. Rayner. All those in favor, 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, 00:12:19.440 --> 00:12:26.000 management reports. Ms. Taylor. Good morning. Good morning, PUB. So we have several management 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. 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 00:12:35.920 --> 00:12:41.040 the follow-up question on the water utility project, specifically that miscellaneous category. 00:12:41.040 --> 00:12:44.720 Matt Hamilton is here if there are additional questions on either of those. 00:12:45.680 --> 00:12:51.920 Moving into the future agenda items, we have the five-year forecast miscellaneous item, 00:12:51.920 --> 00:12:58.720 which is answered through your backup. And the only outstanding item on new business actions 00:12:58.720 --> 00:13:04.560 is the comparison on the experiences with EVs. After the last meeting that I was at, 00:13:04.560 --> 00:13:08.640 I connected with fleet and environmental services. We're circulating a survey on 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 00:13:13.120 --> 00:13:20.000 on how their experience has been. Any remaining questions? Any new business items or additional 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 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 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 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 00:13:40.480 --> 00:13:47.280 focusing on. All right. All right. Thank you for the detail that was at my request 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 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 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? 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. 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.