Good morning and welcome to the regularly scheduled Public Utilities Board meeting.
It is September 29th at 9 a.m. and the meeting is called to order.
Do we have any presentations from the public?
Seeing none we'll move on to the consent agenda.
We need to pull items M and N to discuss and close session.
Does anybody have any other items they wish to pull?
I have a question.
I had requested some further information from the Director of Water and Wastewater about
items B through H because there were so many chemicals and didn't clarify which chemical
was for which process and I don't know if other members of the board would like to see
that before we vote on those things.
We sent them to everyone.
Oh you did send it out to everyone?
Yes sir, I emailed it to everyone.
Okay.
Yes sir.
But thank you very much.
Would anybody like to discuss the chemicals or is everybody good with the email we received?
If no one has an interest in it I will not ask to pull them from the consent agenda but
I thought I'd give everybody the chance if they wanted to have a look at that.
Thank you.
Okay seeing, I think everybody got the email this weekend so with that I'll consider approval
of items A, a motion for approval for items A through L.
So moved.
Second.
All in favor say aye.
Aye.
Motion carries unanimously.
Now moving on to our items for individual consideration.
First item for individual consideration is approval of the September 15th minutes.
We have a motion and a second.
That was, Lee was the second on that.
All in favor say aye.
Aye.
Any opposed?
Motion carries unanimously.
We are also going into closed session to discuss items B and C. So I guess we will start with
item D. Consider recommending approval of resolution for City of Denton for the City
of Denton Water Master Plan.
So good morning, I'm Kyle Pedigo, Planning and Engineering Division Manager for Water
Utilities.
I'm here today to present our update to the Water Master Plan.
The current Water Master Plan was adopted in December 2018 and was used as a planning
tool for the Water Utilities Department.
The Water Master Plan projects growth and identifies water infrastructure that is needed
to support that growth through the 5, 10 and 25 year development windows.
The Water Master Plan is updated regularly out of necessity when the prior Water Master
Plan no longer, is no longer accurate with what the city is seeing in growth and projected
infrastructure needs.
The 2018 Water Master Plan estimated lower growth in the outer regions and higher growth
in the infill, which is not accurate when compared to the growth trends that we've observed
over the last seven years.
The objective of the Water Master Plan update is to address the imbalance growth trends
seen from the 2018 Water Master Plan.
This imbalance is driving the need for additional treatments, treatment and conveyance infrastructure
that wasn't contemplated in 2018.
The current overall growth rate has exceeded projections in the western and northern parts
of the city, driven primarily by industrial land use initiatives south of US 380 and west
of I-35, as well as the hunter and coal developments in the west.
This heat map shows the change in the growth trend between the projections in the 2018
Master Plan and the observed rates over the past seven years.
The map is color coded where red represents areas where the growth has far exceeded the
2018 projections and blue represents areas where the growth is lower than the 2018 projections.
As you can see, the high growth area is concentrated around the perimeter of the city, while infill,
which is the expansion of the mostly developed core, has slowed.
The three growth charts shown here compare the observed population growth, which is the
solid line, in each service area to the projections from the 2018 Water Master Plan.
In Service Area 1A, we've seen a 65% reduction compared to the projection.
In Service Area 1B, we've seen a 185% increase from the projection.
And in Service Area 2, go ahead.
I just have a question.
These service areas, are they based on the current water production facilities and their
conveyance or are they just by percentage of growth?
So the service areas were established at the previous Water Master Plan and it's not specific
to the water facility since our entire system is interconnected.
So Lake Louisville water and Lake Ray Roberts water serve the entire city.
The service areas are established for specific growth regions.
So the heat map is based off the service areas, so you see 1A is the center, downtown, which
typically requires less infrastructure growth, versus 1B, which is the perimeter and 2, which
is the west.
Okay, so these are growth-based areas, not service-based areas.
Correct.
Okay, thank you.
And then Service Area 2, we've seen a 14% increase.
These are all compiled with data through the end of 2024, but the growth trends that we're
seeing in 2025 are aggressive and consistent with this trend.
So our consultants work with the city of...
I'm sorry, one more question.
Water service unit, is that a meter or is that like a million gallons a year or something?
The water service unit is based off of the meter size, which is based off of consumption.
So our base service unit is our 5/8 by 3/4 meter, which is enough for a single family
household.
So one unit might be a house, 50 units might be a house, or 50 houses, or like a small
commercial.
Yes, or like an industrial use or something like that.
So our consultant worked with the city of Denton's development service department to
create growth projections for the next 25-year window.
This projection helps to form the capital improvement plan to accommodate what the city
will see in development during that timeframe.
In the 0-5 year window, we see an 8.6% growth projection that tapers down to a 2.9% growth
in the 5-10 year window and down further to a 2% growth rate in the 25-year window.
To estimate growth, we used a multitude of internal data sources, such as existing water
meter data, plan developments in the 25-year development window, and the comprehensive
plan, which helps to determine future land use categories as well as associated population
projections.
Furthermore, we reviewed historic and current population projections from the North Central
Texas Council of Governments.
All of these sources are then combined and used to build the population base on which
the capital improvements are planned.
The master plan is a living document that changes to adapt the treatment and conveyance
systems according to the city's evolving needs, and to ensure that water efforts meet the
Texas Commission on Environmental Quality Planning and Permitting Standards.
The capital improvement plan prioritizes projects to optimize the city budget.
It utilizes existing capacity available in existing infrastructure to accommodate future
growth.
It improves the system operation by serving customers more efficiently and improving water
quality, and it ensures water reliability by guaranteeing water supply is adequate to
meet the anticipated demand and ensure redundancy in the system.
Because the population growth projections were lower in the 2018 water master plan,
the conveyance and treatment improvements of that capital improvement plan were less
intense compared to what we're seeing today.
So this shows the capital improvement plan projected cost for the 25-year window for
both the 2018 water master plan and today's update.
The 2018 water master plan anticipated $245 million worth of infrastructure over that
time period, while that's upped to $1.124 billion in today's update.
The reason for the large difference in the projected costs are material costs, which
have over doubled since 2018, primarily due to inflation and shortages through COVID.
The population growth in the outer regions is occurring much faster than anticipated,
so the city of Denton's water conveyance system must be expanded to those regions in order
to serve the customers.
And finally, the overall population growth exceeding expectations, more treatment capacity
is necessary, which causes further expansion of the water treatment plants.
So the next step is to bring this to city council tomorrow, September 30th for consideration
and adoption.
Any questions?
Could you go to slide 8 for me, so the 2018 you said it was lowered, what was the reason
for that?
So the 2018 didn't consider as much growth in the outer regions as we're seeing, so the
conveyance infrastructure was much smaller based on the growth projections that were
put together at that time.
And could you go to slide 7 for me?
So on the 10 year and the 25 year projections, is that based on interpolation with land availability
and zoning?
Yes, so with the comprehensive plan, so the shorter term projections, the 5 and 10 year
are based off of known developments and known areas where growth is going to occur.
When you get out to the 25 year window, that's based more on the comprehensive plan, which
looks at land usage and then estimates population based off of those usage types and acreage.
And so if we run into, let's say, another 2018 where there's been a decrease, what you're
presenting, is there a sliding scale as to how you will address those expenses?
We don't have a sliding scale established, but what we do is--
Pardon the expression, just you know what I mean by that.
Right, we go through, so that's with this as a living document, we go through and do
regular updates to it to accommodate differences in growth trends.
So if suddenly we're seeing lower growth in an area, we can push some of that infrastructure
need out into the farther windows, which would change that final number.
And with this being the master plan, if something were to occur like that, then does that come
back to us for just the courtesy of knowing that there's going to be that kind of change
and then we can recalibrate costs and such at that time, or am I--
Yes, we can provide updates as we make changes, regular updates.
I would like that, if nothing else, just prudent.
Thank you very much.
Yes.
Are there any additional questions?
Could you move back to slide six?
So continuing on the vein of Mr. Rayner's comments, I've seen this over the last 20
years in other areas in the city.
We're growing really fast right now, 8%, 10%, whatever it is.
But in five years, we're going to curve down to like a 2% growth rate or 3% growth rate.
And of course, what happens is that 7%, 8%, 9% growth continues to the next decade.
So I realize that we don't want to over plan.
We don't want to make it where that line goes straight up.
And in 2040, we're looking at 700,000 population yet, and then put in a $5 billion plan.
But that's likely where we're headed.
If you look at the map over here, you have all the shaded areas where we're talking about
growth.
And then there's a whole lot of other stuff, other area that's just unmarked.
There's no growth planned at all kind of north of maybe Milam Road area.
But there are I don't know how many thousands of acres out there.
And then same thing on the southwest and the far south, maybe mostly built out, but there's
still areas of development there.
So I'm just making that comment to say that I know that we're going to come back in the
next five years.
That growth rate is going to continue.
And we're going to have to update it again to account for that additional growth.
I don't know what the balance is between being conservative, not over projecting, but also
making this realistic where we can plan 10 or 15 years in the future.
Because when we're talking about billion dollar water treatment plants and land acquisition
and new conveyance systems for entirely new wastewater treatment plants, you know, those
are 20 year processes.
And if we make our projections too low, then we're always racing to catch up to the growth.
So just my comment is we need this update.
And I would I would like to see how we can make the longer term forecasts as realistic
as possible to to really account for the fact that we're going to we're going to need like
this one point one billion dollars in infrastructure is kind of what we know we need basically
in the next probably 10 years, and then we're really going to need another one or two billion,
especially in 2040 dollars at that time.
We could provide that information with regular updates as well as it changes.
Are you suggesting they make some modifications to this?
I don't I think it's I think it's too late in this process.
And you know, there's like I said, there's I know there's this balance of we don't want
to overestimate.
We don't want to like make these huge, scary projections, but we tend to decide for the
last 20 years, I've seen on planning on city budget on, you know, utility budget, this
five years of growth, and then it's going to flatten out and it just kind of keeps having
this little the turndown that never happens really.
And it and it skews our planning and makes it where we're always behind because we're
really only planning for the next five years of growth and not the next 10 or 20 years
of growth, so just something that going forward, we want to be aware of and not and I think
everybody on the commission agrees, it's not really realistic that we're just going to
stop growing in 2030.
If there are no other questions or comments, chair would entertain a motion.
Second, we have a motion and a second.
For recommending approval of adoption of the new water master plan.
All in favor say aye.
Aye.
Any opposed?
The motion carries unanimously.
Thank you.
Now we'll move into management reports.
Mr. Chair, members of the board, we don't have any items on the new business section.
There's nothing pending.
I do want to point out on the future agenda items, there's two things that are coming
up for you on the 13th, we'll be bringing to you the 2026 schedule, so we'll try to
get that out to you.
So please look at that and if there's dates on there that may be a conflict, you know,
there might still be an opportunity here to try to reorder some of that schedule and then
I want to also remind everyone that on June 12th, we will be reelecting or electing officers
to this board, right?
There are no term limits per se, but certainly if one of our incumbents is no longer wishing
to continue in a position, please let us know so that we can communicate that to the other
board members.
If somebody's interested, I can't remember the last time we had a contested race, you
know, but if there is that, there is a process for us to go through that as well.
I'm sure Marcella would love to help us kind of walk through that, but with that, that
is our management update, happy to answer any questions you may have.
Seeing no questions, I think we can go ahead and move on to our closed meeting.
So the Public Utilities Board will now at 918 a.m. convene into a closed meeting to
deliberate closed meeting items set forth in the agenda.
Item A, deliberations regarding certain public power utilities competitive matters, and item
B, deliberations regarding real property.
Do I need to call those as two separate ones or can we call it as one?
The Public Utilities Board has now at 952 a.m. reconvened from the closed session and no
official action was taken.
We'll just mention that Commissioner Rayner was recused from the item B in the closed
session.
We will now consider items for individual consideration B, the recommendation of adoption
of an ordinance for a PPA for utility scale battery storage.
Thank you.
Good morning, Chairman, members of the PUB.
My name is Jose Gaitan, Executive Manager of Power Supply for DME and I'm here to provide
you a presentation on one of the 1,300 proposals that we received as part of RFP 8678 that
was issued back in November of 2024 to continue to procure additional renewable sources for
the Denton Renewable Resource Plan.
Again as a summary for some of the challenges that both ERCOT and DME will be facing over
the next several years into the future is this concept of the duck curve.
When the duck curve is those hours between 6 and 9 p.m. as the sun goes over the horizon
solar production goes down to zero and wind will be ramping into the afternoon, could
be close to zero.
The reduction in renewable output and the demand still being high due to temperatures
whether it's high temperatures in the summer or low temperatures in winter creates price
volatility as the renewable production drops down into those hours.
And so the utility, our customers, could be impacted as more and more of our load is exposed
to those $5,000 prices.
So as a way to mitigate those risks we're bringing forward is battery storage solution.
Some of the details of this proposal is it's a 10-year term for 100 megawatts of capacity
with two hours of duration.
It's available starting June of 2026 and the pricing is inclusive of federal investment
tax credits.
It is a financial hedge for the utility, right, so it allows us to avoid having to go and
procure additional sources of energy over in the market.
It's a stop gap from those events where we have abnormally hot winters or abnormally
cold winters.
So it helps mitigate some of those cost increases to our utility while, you know, providing
us a stop gap for those additional costs that we've seen in the past like 2023 where we
saw a $30 million increase in costs for purchase power.
This facility is located in central Texas, just southeast of Waco, about 70 miles southeast.
This facility is owned and operated by Jupiter Power, one of the largest battery storage
owners in ERCOT and developer in North America.
They have over 11,000 megawatts of battery storage.
As we've mentioned, this facility, again, is a financial hedge for the utility.
It's available in June of 2026 and the majority of the project is not subject to tariffs,
which is great for us in reducing costs overall for this project.
Again, our staff recommendation is to provide a recommendation to City Council to approve
the Tudwell Prairie II PPA.
And that concludes my presentation.
Are there any questions?
I see no questions.
I just want to have a comment.
This is a good way for DME, I think, to begin operating a battery.
It'll be built and operated by Jupiter, but we will have control of it.
That's correct.
So this will be a good way for DME to get that experience.
It has a cost, but it has a risk benefit, a pretty good risk benefit.
And I expect that we'll be seeing more of these in the coming decade as they become
more common and are caught as prices come down.
With that comment, I would entertain a motion recommending adoption.
I recommend it's adoption and I second your comments.
We have a motion.
Do we have a second?
I'll just second the motion.
All right.
I think Mr. Neuquist second.
All in favor say aye.
Aye.
The motion carries unanimously.
We'll move on to item for individual consideration C, recommending adoption of an ordinance for
a PPA for the Blue Summit 1 wind generation.
Good morning, Chair, members of the Public Utility Board.
My name is Jose Gaitan, Executive Manager, Power Supply for DME.
I'm here to present to you the proposal for Blue Summit 1 wind generation facility as
part of RFP 8678 that was issued in November of 2024 to procure additional renewable energy
sources to continue our 100% goal of having renewable energy as part of the Dention Renewable
Resource Plan.
Some of the details of this proposal is it's a 15-year term for about 140 megawatts of
capacity.
The good thing is that this facility is available now.
The prices for this project are inclusive of current federal production tax credits.
So because it's already producing energy, it's more than likely going to be grandfathered
in should there be any changes in the future for the PTC.
On top of that, this facility, it provides us a diversification of generation production
as we have a lot of solar projects currently.
This facility will, again, allow us to generate power at night and into the afternoons, which
is where we believe what we'll have a need due to the duck curve and other issues that
we see as nighttime prices start to increase, as we see in more and more development of
data center load, which will start absorbing a lot more of that cheaper nighttime power.
So we see in the future increases in nighttime power costs going forward.
Again, this facility is owned and operated by Nextera, one of the largest generators
of clean power in not just ERCOT, but North America.
They have over 119 projects in the U.S. and Canada.
The Blue Summit One Wind Facility is located near Vernon, Texas, near the Panhandle, and
so we have a great source.
Production will be relatively high.
Again, this is a repowered facility with more modern blades and modern turbines.
So great location, great facility, great owner, actually.
So now we kind of take a look at what our portfolio of renewables looks like.
If Council were to approve this facility, that would bring us to about 594 megawatts
of energy.
The 15-year term for this facility will take us all the way to January of 2040.
So again, just recapping what we've gone over, again, this facility helps us by diversifying
the renewable production over the day and years going out.
We have production at night, which is one thing that we're not seeing as much of is
development of wind farms.
So this may be one of the last abilities to get some additional wind.
Again, this facility is available now.
It doesn't really provide us 100% price mitigation, but again, the diversity we believe is a value
to this facility, and it helps us continue our renewable goals.
So with that, the staff recommendation is that the PUB provide a recommendation to Council
to approve the Blue Summit One Wind PPA.
And with that, that concludes my presentation.
Are there any questions?
>> I just have a comment, I really appreciate the complementary nature of these two proposals
together.
>> Absolutely.
>> Excellent work by staff.
>> Thank you.
>> Any further questions?
I'll entertain a motion.
We have a motion.
And we have a second.
All in favor say aye.
And the motion carries unanimously.
And now we'll move on to our last two items pulled from the consent agenda.
And we will bid Commissioner Rayner farewell for the day.
Now, item M, consider of the consent agenda, consider recommending adoption.
Do we consider them both together or do we have to vote on them individually?
>> On them individually.
>> Okay.
Consider adopting, recommending adoption of an ordinance to purchase 3.682 acres of land
for the DME, near the DME campus.
>> So moved.
>> We have a motion.
Do we have a second?
>> Second.
>> Commissioner Newquist.
All in favor say aye.
>> Aye.
>> Motion carries.
Now, item N, recommended adoption of an ordinance purchasing 9.218 acres of land along Shady
Oaks Drive.
>> So moved.
>> We have a motion.
And another second.
All in favor?
>> Aye.
>> Motion carries unanimously.
I believe we are adjourned.