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 Good morning and welcome to the regularly scheduled Public Utilities Board meeting.

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 It is September 29th at 9 a.m. and the meeting is called to order.

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 Do we have any presentations from the public?

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 Seeing none we'll move on to the consent agenda.

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 We need to pull items M and N to discuss and close session.

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 Does anybody have any other items they wish to pull?

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 I have a question.

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 I had requested some further information from the Director of Water and Wastewater about

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 items B through H because there were so many chemicals and didn't clarify which chemical

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 was for which process and I don't know if other members of the board would like to see

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 that before we vote on those things.

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 We sent them to everyone.

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 Oh you did send it out to everyone?

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 Yes sir, I emailed it to everyone.

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 Okay.

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 Yes sir.

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 But thank you very much.

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 Would anybody like to discuss the chemicals or is everybody good with the email we received?

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 If no one has an interest in it I will not ask to pull them from the consent agenda but

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 I thought I'd give everybody the chance if they wanted to have a look at that.

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 Thank you.

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 Okay seeing, I think everybody got the email this weekend so with that I'll consider approval

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 of items A, a motion for approval for items A through L.

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 So moved.

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 Second.

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 All in favor say aye.

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 Aye.

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 Motion carries unanimously.

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 Now moving on to our items for individual consideration.

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 First item for individual consideration is approval of the September 15th minutes.

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 We have a motion and a second.

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 That was, Lee was the second on that.

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 All in favor say aye.

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 Aye.

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 Any opposed?

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 Motion carries unanimously.

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 We are also going into closed session to discuss items B and C. So I guess we will start with

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 item D. Consider recommending approval of resolution for City of Denton for the City

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 of Denton Water Master Plan.

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 So good morning, I'm Kyle Pedigo, Planning and Engineering Division Manager for Water

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 Utilities.

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 I'm here today to present our update to the Water Master Plan.

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 The current Water Master Plan was adopted in December 2018 and was used as a planning

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 tool for the Water Utilities Department.

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 The Water Master Plan projects growth and identifies water infrastructure that is needed

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 to support that growth through the 5, 10 and 25 year development windows.

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 The Water Master Plan is updated regularly out of necessity when the prior Water Master

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 Plan no longer, is no longer accurate with what the city is seeing in growth and projected

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 infrastructure needs.

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 The 2018 Water Master Plan estimated lower growth in the outer regions and higher growth

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 in the infill, which is not accurate when compared to the growth trends that we've observed

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 over the last seven years.

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 The objective of the Water Master Plan update is to address the imbalance growth trends

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 seen from the 2018 Water Master Plan.

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 This imbalance is driving the need for additional treatments, treatment and conveyance infrastructure

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 that wasn't contemplated in 2018.

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 The current overall growth rate has exceeded projections in the western and northern parts

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 of the city, driven primarily by industrial land use initiatives south of US 380 and west

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 of I-35, as well as the hunter and coal developments in the west.

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 This heat map shows the change in the growth trend between the projections in the 2018

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 Master Plan and the observed rates over the past seven years.

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 The map is color coded where red represents areas where the growth has far exceeded the

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 2018 projections and blue represents areas where the growth is lower than the 2018 projections.

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 As you can see, the high growth area is concentrated around the perimeter of the city, while infill,

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 which is the expansion of the mostly developed core, has slowed.

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 The three growth charts shown here compare the observed population growth, which is the

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 solid line, in each service area to the projections from the 2018 Water Master Plan.

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 In Service Area 1A, we've seen a 65% reduction compared to the projection.

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 In Service Area 1B, we've seen a 185% increase from the projection.

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 And in Service Area 2, go ahead.

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 I just have a question.

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 These service areas, are they based on the current water production facilities and their

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 conveyance or are they just by percentage of growth?

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 So the service areas were established at the previous Water Master Plan and it's not specific

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 to the water facility since our entire system is interconnected.

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 So Lake Louisville water and Lake Ray Roberts water serve the entire city.

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 The service areas are established for specific growth regions.

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 So the heat map is based off the service areas, so you see 1A is the center, downtown, which

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 typically requires less infrastructure growth, versus 1B, which is the perimeter and 2, which

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 is the west.

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 Okay, so these are growth-based areas, not service-based areas.

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 Correct.

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 Okay, thank you.

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 And then Service Area 2, we've seen a 14% increase.

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 These are all compiled with data through the end of 2024, but the growth trends that we're

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 seeing in 2025 are aggressive and consistent with this trend.

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 So our consultants work with the city of...

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 I'm sorry, one more question.

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 Water service unit, is that a meter or is that like a million gallons a year or something?

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 The water service unit is based off of the meter size, which is based off of consumption.

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 So our base service unit is our 5/8 by 3/4 meter, which is enough for a single family

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 household.

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 So one unit might be a house, 50 units might be a house, or 50 houses, or like a small

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 commercial.

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 Yes, or like an industrial use or something like that.

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 So our consultant worked with the city of Denton's development service department to

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 create growth projections for the next 25-year window.

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 This projection helps to form the capital improvement plan to accommodate what the city

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 will see in development during that timeframe.

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 In the 0-5 year window, we see an 8.6% growth projection that tapers down to a 2.9% growth

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 in the 5-10 year window and down further to a 2% growth rate in the 25-year window.

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 To estimate growth, we used a multitude of internal data sources, such as existing water

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 meter data, plan developments in the 25-year development window, and the comprehensive

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 plan, which helps to determine future land use categories as well as associated population

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 projections.

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 Furthermore, we reviewed historic and current population projections from the North Central

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 Texas Council of Governments.

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 All of these sources are then combined and used to build the population base on which

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 the capital improvements are planned.

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 The master plan is a living document that changes to adapt the treatment and conveyance

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 systems according to the city's evolving needs, and to ensure that water efforts meet the

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 Texas Commission on Environmental Quality Planning and Permitting Standards.

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 The capital improvement plan prioritizes projects to optimize the city budget.

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 It utilizes existing capacity available in existing infrastructure to accommodate future

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 growth.

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 It improves the system operation by serving customers more efficiently and improving water

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 quality, and it ensures water reliability by guaranteeing water supply is adequate to

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 meet the anticipated demand and ensure redundancy in the system.

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 Because the population growth projections were lower in the 2018 water master plan,

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 the conveyance and treatment improvements of that capital improvement plan were less

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 intense compared to what we're seeing today.

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 So this shows the capital improvement plan projected cost for the 25-year window for

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 both the 2018 water master plan and today's update.

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 The 2018 water master plan anticipated $245 million worth of infrastructure over that

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 time period, while that's upped to $1.124 billion in today's update.

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 The reason for the large difference in the projected costs are material costs, which

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 have over doubled since 2018, primarily due to inflation and shortages through COVID.

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 The population growth in the outer regions is occurring much faster than anticipated,

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 so the city of Denton's water conveyance system must be expanded to those regions in order

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 to serve the customers.

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 And finally, the overall population growth exceeding expectations, more treatment capacity

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 is necessary, which causes further expansion of the water treatment plants.

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 So the next step is to bring this to city council tomorrow, September 30th for consideration

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 and adoption.

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 Any questions?

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 Could you go to slide 8 for me, so the 2018 you said it was lowered, what was the reason

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 for that?

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 So the 2018 didn't consider as much growth in the outer regions as we're seeing, so the

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 conveyance infrastructure was much smaller based on the growth projections that were

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 put together at that time.

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 And could you go to slide 7 for me?

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 So on the 10 year and the 25 year projections, is that based on interpolation with land availability

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 and zoning?

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 Yes, so with the comprehensive plan, so the shorter term projections, the 5 and 10 year

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 are based off of known developments and known areas where growth is going to occur.

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 When you get out to the 25 year window, that's based more on the comprehensive plan, which

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 looks at land usage and then estimates population based off of those usage types and acreage.

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 And so if we run into, let's say, another 2018 where there's been a decrease, what you're

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 presenting, is there a sliding scale as to how you will address those expenses?

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 We don't have a sliding scale established, but what we do is--

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 Pardon the expression, just you know what I mean by that.

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 Right, we go through, so that's with this as a living document, we go through and do

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 regular updates to it to accommodate differences in growth trends.

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 So if suddenly we're seeing lower growth in an area, we can push some of that infrastructure

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 need out into the farther windows, which would change that final number.

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 And with this being the master plan, if something were to occur like that, then does that come

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 back to us for just the courtesy of knowing that there's going to be that kind of change

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 and then we can recalibrate costs and such at that time, or am I--

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 Yes, we can provide updates as we make changes, regular updates.

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 I would like that, if nothing else, just prudent.

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 Thank you very much.

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 Yes.

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 Are there any additional questions?

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 Could you move back to slide six?

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 So continuing on the vein of Mr. Rayner's comments, I've seen this over the last 20

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 years in other areas in the city.

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 We're growing really fast right now, 8%, 10%, whatever it is.

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 But in five years, we're going to curve down to like a 2% growth rate or 3% growth rate.

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 And of course, what happens is that 7%, 8%, 9% growth continues to the next decade.

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 So I realize that we don't want to over plan.

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 We don't want to make it where that line goes straight up.

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 And in 2040, we're looking at 700,000 population yet, and then put in a $5 billion plan.

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 But that's likely where we're headed.

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 If you look at the map over here, you have all the shaded areas where we're talking about

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 growth.

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 And then there's a whole lot of other stuff, other area that's just unmarked.

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 There's no growth planned at all kind of north of maybe Milam Road area.

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 But there are I don't know how many thousands of acres out there.

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 And then same thing on the southwest and the far south, maybe mostly built out, but there's

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 still areas of development there.

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 So I'm just making that comment to say that I know that we're going to come back in the

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 next five years.

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 That growth rate is going to continue.

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 And we're going to have to update it again to account for that additional growth.

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 I don't know what the balance is between being conservative, not over projecting, but also

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 making this realistic where we can plan 10 or 15 years in the future.

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 Because when we're talking about billion dollar water treatment plants and land acquisition

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 and new conveyance systems for entirely new wastewater treatment plants, you know, those

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 are 20 year processes.

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 And if we make our projections too low, then we're always racing to catch up to the growth.

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 So just my comment is we need this update.

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 And I would I would like to see how we can make the longer term forecasts as realistic

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 as possible to to really account for the fact that we're going to we're going to need like

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 this one point one billion dollars in infrastructure is kind of what we know we need basically

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 in the next probably 10 years, and then we're really going to need another one or two billion,

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 especially in 2040 dollars at that time.

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 We could provide that information with regular updates as well as it changes.

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 Are you suggesting they make some modifications to this?

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 I don't I think it's I think it's too late in this process.

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 And you know, there's like I said, there's I know there's this balance of we don't want

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 to overestimate.

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 We don't want to like make these huge, scary projections, but we tend to decide for the

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 last 20 years, I've seen on planning on city budget on, you know, utility budget, this

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 five years of growth, and then it's going to flatten out and it just kind of keeps having

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 this little the turndown that never happens really.

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 And it and it skews our planning and makes it where we're always behind because we're

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 really only planning for the next five years of growth and not the next 10 or 20 years

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 of growth, so just something that going forward, we want to be aware of and not and I think

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 everybody on the commission agrees, it's not really realistic that we're just going to

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 stop growing in 2030.

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 If there are no other questions or comments, chair would entertain a motion.

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 Second, we have a motion and a second.

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 For recommending approval of adoption of the new water master plan.

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 All in favor say aye.

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 Aye.

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 Any opposed?

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 The motion carries unanimously.

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 Thank you.

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 Thank you.

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 Now we'll move into management reports.

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 Mr. Chair, members of the board, we don't have any items on the new business section.

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 There's nothing pending.

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 I do want to point out on the future agenda items, there's two things that are coming

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 up for you on the 13th, we'll be bringing to you the 2026 schedule, so we'll try to

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 get that out to you.

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 So please look at that and if there's dates on there that may be a conflict, you know,

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 there might still be an opportunity here to try to reorder some of that schedule and then

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 I want to also remind everyone that on June 12th, we will be reelecting or electing officers

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 to this board, right?

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 There are no term limits per se, but certainly if one of our incumbents is no longer wishing

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 to continue in a position, please let us know so that we can communicate that to the other

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 board members.

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 If somebody's interested, I can't remember the last time we had a contested race, you

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 know, but if there is that, there is a process for us to go through that as well.

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 I'm sure Marcella would love to help us kind of walk through that, but with that, that

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 is our management update, happy to answer any questions you may have.

237
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 Seeing no questions, I think we can go ahead and move on to our closed meeting.

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 So the Public Utilities Board will now at 918 a.m. convene into a closed meeting to

239
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 deliberate closed meeting items set forth in the agenda.

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 Item A, deliberations regarding certain public power utilities competitive matters, and item

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 B, deliberations regarding real property.

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 Do I need to call those as two separate ones or can we call it as one?

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00:18:51,400 --> 00:18:57,680
 The Public Utilities Board has now at 952 a.m. reconvened from the closed session and no

244
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 official action was taken.

245
00:18:59,680 --> 00:19:08,320
 We'll just mention that Commissioner Rayner was recused from the item B in the closed

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 session.

247
00:19:11,920 --> 00:19:23,880
 We will now consider items for individual consideration B, the recommendation of adoption

248
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 of an ordinance for a PPA for utility scale battery storage.

249
00:19:29,880 --> 00:19:30,880
 Thank you.

250
00:19:30,880 --> 00:19:34,640
 Good morning, Chairman, members of the PUB.

251
00:19:34,640 --> 00:19:40,200
 My name is Jose Gaitan, Executive Manager of Power Supply for DME and I'm here to provide

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00:19:40,200 --> 00:19:49,120
 you a presentation on one of the 1,300 proposals that we received as part of RFP 8678 that

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 was issued back in November of 2024 to continue to procure additional renewable sources for

254
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 the Denton Renewable Resource Plan.

255
00:20:02,560 --> 00:20:07,800
 Again as a summary for some of the challenges that both ERCOT and DME will be facing over

256
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 the next several years into the future is this concept of the duck curve.

257
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 When the duck curve is those hours between 6 and 9 p.m. as the sun goes over the horizon

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 solar production goes down to zero and wind will be ramping into the afternoon, could

259
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 be close to zero.

260
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 The reduction in renewable output and the demand still being high due to temperatures

261
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 whether it's high temperatures in the summer or low temperatures in winter creates price

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 volatility as the renewable production drops down into those hours.

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 And so the utility, our customers, could be impacted as more and more of our load is exposed

264
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 to those $5,000 prices.

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00:20:58,960 --> 00:21:08,440
 So as a way to mitigate those risks we're bringing forward is battery storage solution.

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00:21:08,440 --> 00:21:16,880
 Some of the details of this proposal is it's a 10-year term for 100 megawatts of capacity

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 with two hours of duration.

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 It's available starting June of 2026 and the pricing is inclusive of federal investment

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 tax credits.

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 It is a financial hedge for the utility, right, so it allows us to avoid having to go and

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 procure additional sources of energy over in the market.

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 It's a stop gap from those events where we have abnormally hot winters or abnormally

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 cold winters.

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 So it helps mitigate some of those cost increases to our utility while, you know, providing

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 us a stop gap for those additional costs that we've seen in the past like 2023 where we

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 saw a $30 million increase in costs for purchase power.

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 This facility is located in central Texas, just southeast of Waco, about 70 miles southeast.

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 This facility is owned and operated by Jupiter Power, one of the largest battery storage

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 owners in ERCOT and developer in North America.

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 They have over 11,000 megawatts of battery storage.

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 As we've mentioned, this facility, again, is a financial hedge for the utility.

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 It's available in June of 2026 and the majority of the project is not subject to tariffs,

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 which is great for us in reducing costs overall for this project.

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 Again, our staff recommendation is to provide a recommendation to City Council to approve

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 the Tudwell Prairie II PPA.

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 And that concludes my presentation.

287
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 Are there any questions?

288
00:23:14,360 --> 00:23:16,080
 I see no questions.

289
00:23:16,080 --> 00:23:17,280
 I just want to have a comment.

290
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 This is a good way for DME, I think, to begin operating a battery.

291
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 It'll be built and operated by Jupiter, but we will have control of it.

292
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 That's correct.

293
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 So this will be a good way for DME to get that experience.

294
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 It has a cost, but it has a risk benefit, a pretty good risk benefit.

295
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 And I expect that we'll be seeing more of these in the coming decade as they become

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 more common and are caught as prices come down.

297
00:23:49,200 --> 00:23:53,360
 With that comment, I would entertain a motion recommending adoption.

298
00:23:53,360 --> 00:23:56,880
 I recommend it's adoption and I second your comments.

299
00:23:56,880 --> 00:23:57,880
 We have a motion.

300
00:23:57,880 --> 00:23:58,880
 Do we have a second?

301
00:23:58,880 --> 00:23:59,880
 I'll just second the motion.

302
00:23:59,880 --> 00:24:00,880
 All right.

303
00:24:00,880 --> 00:24:01,880
 I think Mr. Neuquist second.

304
00:24:01,880 --> 00:24:02,880
 All in favor say aye.

305
00:24:02,880 --> 00:24:03,880
 Aye.

306
00:24:03,880 --> 00:24:04,880
 The motion carries unanimously.

307
00:24:04,880 --> 00:24:16,880
 We'll move on to item for individual consideration C, recommending adoption of an ordinance for

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 a PPA for the Blue Summit 1 wind generation.

309
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 Good morning, Chair, members of the Public Utility Board.

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 My name is Jose Gaitan, Executive Manager, Power Supply for DME.

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 I'm here to present to you the proposal for Blue Summit 1 wind generation facility as

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 part of RFP 8678 that was issued in November of 2024 to procure additional renewable energy

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 sources to continue our 100% goal of having renewable energy as part of the Dention Renewable

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 Resource Plan.

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 Some of the details of this proposal is it's a 15-year term for about 140 megawatts of

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 capacity.

317
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 The good thing is that this facility is available now.

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 The prices for this project are inclusive of current federal production tax credits.

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 So because it's already producing energy, it's more than likely going to be grandfathered

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 in should there be any changes in the future for the PTC.

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00:25:30,560 --> 00:25:37,040
 On top of that, this facility, it provides us a diversification of generation production

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 as we have a lot of solar projects currently.

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00:25:41,960 --> 00:25:48,840
 This facility will, again, allow us to generate power at night and into the afternoons, which

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 is where we believe what we'll have a need due to the duck curve and other issues that

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 we see as nighttime prices start to increase, as we see in more and more development of

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 data center load, which will start absorbing a lot more of that cheaper nighttime power.

327
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 So we see in the future increases in nighttime power costs going forward.

328
00:26:13,880 --> 00:26:23,240
 Again, this facility is owned and operated by Nextera, one of the largest generators

329
00:26:23,240 --> 00:26:28,320
 of clean power in not just ERCOT, but North America.

330
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 They have over 119 projects in the U.S. and Canada.

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 The Blue Summit One Wind Facility is located near Vernon, Texas, near the Panhandle, and

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 so we have a great source.

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 Production will be relatively high.

334
00:26:46,720 --> 00:26:55,160
 Again, this is a repowered facility with more modern blades and modern turbines.

335
00:26:55,160 --> 00:27:00,960
 So great location, great facility, great owner, actually.

336
00:27:00,960 --> 00:27:06,900
 So now we kind of take a look at what our portfolio of renewables looks like.

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00:27:06,900 --> 00:27:12,740
 If Council were to approve this facility, that would bring us to about 594 megawatts

338
00:27:12,740 --> 00:27:13,900
 of energy.

339
00:27:13,900 --> 00:27:22,240
 The 15-year term for this facility will take us all the way to January of 2040.

340
00:27:22,240 --> 00:27:33,600
 So again, just recapping what we've gone over, again, this facility helps us by diversifying

341
00:27:33,600 --> 00:27:40,400
 the renewable production over the day and years going out.

342
00:27:40,400 --> 00:27:45,440
 We have production at night, which is one thing that we're not seeing as much of is

343
00:27:45,440 --> 00:27:48,200
 development of wind farms.

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00:27:48,200 --> 00:27:53,320
 So this may be one of the last abilities to get some additional wind.

345
00:27:53,320 --> 00:27:56,960
 Again, this facility is available now.

346
00:27:56,960 --> 00:28:05,680
 It doesn't really provide us 100% price mitigation, but again, the diversity we believe is a value

347
00:28:05,680 --> 00:28:12,120
 to this facility, and it helps us continue our renewable goals.

348
00:28:12,120 --> 00:28:20,360
 So with that, the staff recommendation is that the PUB provide a recommendation to Council

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 to approve the Blue Summit One Wind PPA.

350
00:28:24,120 --> 00:28:26,840
 And with that, that concludes my presentation.

351
00:28:26,840 --> 00:28:27,840
 Are there any questions?

352
00:28:27,840 --> 00:28:36,080
 >> I just have a comment, I really appreciate the complementary nature of these two proposals

353
00:28:36,080 --> 00:28:37,080
 together.

354
00:28:37,080 --> 00:28:38,080
 >> Absolutely.

355
00:28:38,080 --> 00:28:39,080
 >> Excellent work by staff.

356
00:28:39,080 --> 00:28:42,080
 >> Thank you.

357
00:28:42,080 --> 00:28:43,080
 >> Any further questions?

358
00:28:43,080 --> 00:28:47,480
 I'll entertain a motion.

359
00:28:47,480 --> 00:28:52,600
 We have a motion.

360
00:28:52,600 --> 00:28:53,600
 And we have a second.

361
00:28:53,600 --> 00:28:55,960
 All in favor say aye.

362
00:28:55,960 --> 00:28:59,200
 And the motion carries unanimously.

363
00:28:59,200 --> 00:29:08,200
 And now we'll move on to our last two items pulled from the consent agenda.

364
00:29:08,200 --> 00:29:21,040
 And we will bid Commissioner Rayner farewell for the day.

365
00:29:21,040 --> 00:29:32,400
 Now, item M, consider of the consent agenda, consider recommending adoption.

366
00:29:32,400 --> 00:29:35,880
 Do we consider them both together or do we have to vote on them individually?

367
00:29:35,880 --> 00:29:36,880
 >> On them individually.

368
00:29:36,880 --> 00:29:37,880
 >> Okay.

369
00:29:37,880 --> 00:29:43,000
 Consider adopting, recommending adoption of an ordinance to purchase 3.682 acres of land

370
00:29:43,000 --> 00:29:47,440
 for the DME, near the DME campus.

371
00:29:47,440 --> 00:29:48,440
 >> So moved.

372
00:29:48,440 --> 00:29:49,440
 >> We have a motion.

373
00:29:49,440 --> 00:29:50,440
 Do we have a second?

374
00:29:50,440 --> 00:29:51,440
 >> Second.

375
00:29:51,440 --> 00:29:52,440
 >> Commissioner Newquist.

376
00:29:52,440 --> 00:29:53,440
 All in favor say aye.

377
00:29:53,440 --> 00:29:54,440
 >> Aye.

378
00:29:54,440 --> 00:29:55,440
 >> Motion carries.

379
00:29:55,440 --> 00:30:02,320
 Now, item N, recommended adoption of an ordinance purchasing 9.218 acres of land along Shady

380
00:30:02,320 --> 00:30:03,320
 Oaks Drive.

381
00:30:03,320 --> 00:30:04,320
 >> So moved.

382
00:30:04,320 --> 00:30:06,120
 >> We have a motion.

383
00:30:06,120 --> 00:30:07,120
 And another second.

384
00:30:07,120 --> 00:30:08,120
 All in favor?

385
00:30:08,120 --> 00:30:09,120
 >> Aye.

386
00:30:09,120 --> 00:30:10,880
 >> Motion carries unanimously.

387
00:30:10,880 --> 00:30:13,320
 I believe we are adjourned.