Aug 24, 2020 Public Utilities Board on 2020-08-24 9:00 AM

all right you're on it's nine o'clock on Monday August 24th we have a virtual quorum so we will call the public utilities board meeting to order the first item is the consent agenda does any board member wish to pull any items from A, B, or C? I do. Okay, Russ which one? B and C. All right do we have a motion to approve that item A? So moved. Second. All in favor second by saying aye? Aye. Opposed? And that carries. Item B. Yes, should I ask the question first? Yeah I think I'm gonna ask I think it's that's an acceleron I think that's Krista and she's here with us and so any question you have she'll be able to respond to. Okay, we're asked here to pay for a software program that will cost approximately $220,000 per year for five years each of five years and it serves about 575 customers so the city of Denton is paying on the average approximately $383 per customer per year for this program. My question is what benefits does the city of Denton receive for paying that much per customer per year? You're muted. Sorry the reason that you're seeing that value amount is not because that's our actual cost that's projected cost based on users as we would increase the utilization of the program. All of the cost of that program are captured in an increased facility rate only on the users of the program. It's basically a net zero cost to the city but we have to have the the spend approvals to be able to continue to collect those funds and pay them back out. The program itself allows our users to be able to take outstanding past due balances, written off debt, bring them into the program, be able to still get services without a deposit and the majority of our customers like it 70% of them are completely debt-free within about 60 to 80 days so it does serve a valuable purpose for our customers. So I think what you just said was the the people that use this actually pay for it by increased fees built into their rate structures is that right? That is correct. Okay that takes care of that. Are there are there really just 575 people? It says over 575. There are close to 600 at this point. Last year we did a educational campaign with the different apartment complexes and managements with about 410 different apartment complexes and we're now distributing information on the pay-as-you-go so that they can put that out there. We were working on a marketing campaign just about the time the pandemic started so we kind of had to back burner that but it is on our future goals for this coming year is to be able to continue to increase adoption rates. Okay. All right do we want to move on to C and then we can approve both B and C? So what's your question on C? Well concerning the the way that the this new device is going to be charged we're charging by the hour and not by the power that's dispensed. Is that true? So I'm gonna ask Chris Lutrik who's on the line to respond to that. Chris? Yes sir. Can you hear me? Yes. Yes sir you are correct so there's two methods to price or two standard methods for pricing EV charging by the actually the power that flows or or by the minute so a lot of the EV vehicles out there actually when you plug it in it tells you how many minutes it takes to charge so that's why we elected to go with that with that with that unit of charge there it's just more simple to understand so it comes out to four cents per minute the rate that that will be charging and that was the same rate structure that the blink system had so we're just keeping it consistent. Yes I have a question about that then without knowing all of the cost I think the city of Denton I think we should recover at least what it cost us to deliver that power to the vehicle does the four cents per minute cover the cost of doing that? Yes sir it covers our cost so it actually covers the cost of the power as well as our capital investment so the the four cents a minute we put that on about a six-year ROI for the for the equipment and and we had to go off just some standard usage rates so of course the more that they're utilized the quicker we'll pay those off but with the the limited data we had from the blink system we feel at this time that four cents is adequate and by putting it in the rate structure it can be addressed each year hopefully as the adoption rate grows we can bring forth more data and more exact pricing in future rate book updates. Okay thank you. Charlie has a question and then Ed has a question Charlie go ahead. Okay on the I see the charge per minute but that kind of omits the rate of charge what is the maximum rate of charge that is delivered by these new machines? That'd be a 7.2 kW. Okay so what do we work out in pennies per kilowatt hour on if somebody's at 7.2 kW? So could you phrase that one more time so somebody charged for an hour at the full 7.2 kW? Right obviously they'd use 7.2 kilowatt hours. Yes sir so at our I guess a way to look at that is if you put that into a residential rate which would be like ten and a half cents per KWH so you're looking at 70 75 cents 80 cents. Okay so we're covering our costs and then some on the rate I would suggest that since we're putting this in the form of a very formal document that we include the 7.2 kilowatt maximum rate in what we pass as an ordinance so that we aren't just charging four pennies per minute for whatever that way if we have you know more effective machines or machines that can deliver higher rates of charge we don't have to change our rates and then I have a couple of other questions on this I know that electric prices fluctuate hourly and wholesale and retail gasoline prices fluctuate hourly if we're trying to find an effective way to fill people up with gas in the form of electricity for electric cars don't we need the ability to vary this rate from time to time depending on our our cost obviously right now today there's plenty of flexibility into that but if power becomes more costly setting this in stone with no flexibility seems kind of problematic. Yes sir definitely in the future it could be more flexible interest interestingly we just completed a we put out a survey with our engineering department and Public Works our public information office for an EV survey and interest interestingly a lot of people wanted more the feedback we got was for a more standard rate as opposed to something that varies over time so this this rate is specifically for the public chargers that the city of Denton owns where that that rate structure would be most beneficial is majority of the charging is done at home so definitely as we move forward we brought a plan to you that phase three was within home charging and that's definitely something that that we will have or offer or hope to offer is a flexible rate where we can encourage our customers to charge at those off-peak times. Wonderful and that would be at home where they would charge at the off-peak times and charging at home would be at a lower price than using the machines? Yes sir I would I think that would be the preferred the preferred model there kind of those the chargers that we're putting around town they would the survey said hey we need more of these so more is a convenience and more as you know you're running out of gas and you're driving by a gas station you can always get gas so there will be you know most of that charging will be done during the day which is on the high peak or the high use time so I think we can help shape the the the activities of our EV chargers by incentivizing them to charge at home and off-peak time. Okay I would suggest that we include the 7.2 kilowatt rate in the ordinance that we pass so that it's documented that you know the size of the pipe I think is very important in terms of the of the cost if we're going to publish this as as part of our rate book we ought to have 7.2 kilowatts in there as the maximum charging rate so that somebody who reads it can quantify what they're paying per kilowatt hour. Yes sir we can do that it may be more beneficial to state that as a level 2 charger if we got a got a charger in it's slightly different at 7.3 KW or 7.5 I think the standard in the industry that's a level 2 it's a 240 volt 40 amp service would you be comfortable with that language? You bet I don't mind building a little flexibility into the language but I think to just say charge per minute leaves out something that's crucial. Yes sir thank you for the feedback. You bet. Ed did you have a question? Sort of a question and some observations I have a home charger and I it tells me exactly how many miles I'm going to get per hour of charge and I wondered if that is that differs with different models of cars or if it's the same with everybody if they fill up with the same amount of electricity at the same rate so if if I had a question it would be how many miles per hour would how many miles does one hour of our charging the city's charging provide the driver of the car is that is that a blanket figure for all electric cars or does it does it is is it different for different types of electric cars? Yes sir it's different I believe your car the battery capacity on a Tesla's are much much higher than say the Nissan Leaf so it depends on the size of battery that the the car is outputted with how much how fast it can take that power. Okay all right well this great I'm I'm very happy that this is going to be expanded through the city thanks. Billy I saw your hand up yeah okay so there's a nationwide discussion about user fees for electric cars and I think you know I think that electric cars and electric trucks hopefully are the wave of the future I mean big trucks not the not the spaceship that Elon's coming out with here pretty soon. My concern would be our user our return on investment franchise fee however you want to look at it's probably a little different than franchise fee it's a true user fee like a fuel tax is. Is there a discussion going forward on how we might implement something like that Chris? Yes sir Mr. Chief there is kind of if you think way back to the early days of the ATM card where a bank had a network and it gave you a card and you could go specifically to that bank and get cash out and it took the government to step in to say hey we need a unified network where you know your Wells Fargo card can work at a Bank of America or a Citibank so there is talk in the in the industry the EV industry of having a network where say for instance our customers will need to be a charge point customer that their charge point access could be used at Tesla it could be used at any of the other charging networks across the country but that's probably going to take some federal oversight and federal standardization to make that happen but it is being discussed. Right yeah and if anybody's not if I wasn't clear I think Chris knew what I was talking about but you know when you buy gas for your current vehicle or my current vehicle I pay a tax on it some of it goes to the federal government something goes to the state government that's what I was talking about is going forward how to how do we charge because electric vehicles currently don't have a path to charge for the use of the roads I'm sorry I completely missed your question there so you are correct that's like point you know nine cents tenths of a penny that goes to the highway fund there are often talks in the industry about making a registration you have to put your mileage on the vehicle so say you register your car this year and you said 9,000 miles and next year you're at you know 10,000 miles you would pay a tax on a thousand miles that you that you drove so I think that's about the only way being that electricity can come from anywhere there's no real real way that's a meter that they don't have to be the counties or the states through the registration of the actual mileage on the vehicle yeah that would be difficult as well trying to get it trying to get people to correctly state their mileage every year as well so well you get it inspected so maybe that's a way to do it Charlie you have another question I was just going to approve move approval of items B and C with the revision that I suggested and Susan I think I think we have to take individual motions on each one of those items yeah I agree why don't we I approve B I move B second okay all in favor say I I move approval of C with the revision specifying the kilowatt rate second okay we have a motion in a second all in favor say aye opposed all right next up is items for individual consideration consider the approval of the August 10th 2020 minutes is there any corrections or changes okay do we have a motion to approve okay second all in favor say aye aye opposed okay next item is to consider the approval of the bill of sale an assumption agreement with Denton Power LLC in the amount of two million seven hundred and fifty thousand dollars plus an adjustment for August 2020 energy deliveries not to exceed 150,000 you're on mute Terry good morning Terry Nolte assistant general manager bear with me a second I'll pull up the presentation [Silence] all right finally okay this this presentation is seeking approval to purchase the Denton Power LLC landfill generation facility from DTE biomass energy currently the facility is a 1.6 megawatt facility operated by the LLC DTE biomass energy and their Texas affiliate Denton Power LLC it did begin operation in 2009 the solid waste department receives 12.5 percent of gross energy revenues as a royalty payment and we entered into a power purchase agreement for 15 years at escalating prices that started at $68 a megawatt hour and and in 2024 at $112.84 per megawatt hour the the the 1.6 megawatts actually runs at about 1.2 megawatts on average and that let represents less than 1% of our overall renewable energy supply here you can see the the above-market price of the of the power the red line represents the PPA price the blue line is the around-the-clock price for the North Hub and you can see it's significantly above market it's the second and the highest priced resource that we have in our in our fleet at between 96 and 112 dollars for the remaining term of the agreement we're proposing to purchase the assets for two point seven five million as you can see that represents savings to customers because if we were to stay in the contract we'd pay five point three five million dollars over the remaining term yet the energy only has a market value of 1.53 million the only way for us to achieve the savings is through the purchase and assumption of the agreements including the power purchase agreement so on a net present value this acquisition would save two point six million dollars in in power supply that assumes the shutdown of the facility and the flaring of the landfill gas as I mentioned that the future payments are five point three million three five million and net present value because we're a hundred percent renewable this and this represents less than 1% it will not move the needle on our 100% renewable objective by by shutting it down to the extent we don't shut it down and continue to operate it the NPV would be reduced now we'll talk a little bit about the beneficial reuse of the landfill gas you'll be receiving an update on on options for this in the coming month a month or so as solid waste is continuing to investigate alternatives to generating energy with the with the landfill gas there is currently a flare at the landfill that is run whenever there's excess gas produced or whenever the facilities on a forced outage and so flaring happens on a fairly regular basis and I last thing I'll say about the the the project is the issue of whether to run the facility or not run the facility after we purchase it is not really a part of this action that we're seeking today we're simply seeking your recommendation to move the ordinance forward to the council tomorrow to allow us to purchase the asset and with that I'd be glad to answer any questions I do have some additional slides on on the environmental attributes of flaring versus continuing to operate if that would be of interest I'd like to see it like to see that okay all right so this is just a the considerations that we have if we were to purchase and operate the generation assets our our NPV goes down and we would only run that facility until an addition an alternative beneficiary uses in place if we flare the landfill gas we achieve the full 2.6 million it does improve the emission profile in terms of lower hydrocarbons and lower greenhouse gas there is an opportunity potentially to use what's called produce medium BTU gas we did not there that would be selling a low quality gas to a local manufacturing facility that could use the energy and there's a low probability because there's a lack of customers the preliminary report from the engineers is that a twenty three point eight million dollar capital investment whether that's made by the city or made by a third party could be used to clean up the gas and produce a high quality BTU gas and inject it into an Atmos pipeline we're still working on the business cases with solid waste on those and and that'll be part of what we bring back to PUB and council here's the environmental attributes if you see here for flaring these are the non methane organic compounds you can see in flaring we get about an 90 to 99 percent control efficiency for the halogenates halogenated to species 91 to 99 and for the non halogenated 38 to 99 you can see a pretty wide variation these are from the US EPA's AP 42 manual which is the go-to for characterization of emissions from various types of combustion sources and control technologies you can see the the internal combustion engine here lower efficiencies an average or typical efficiency that is lower than the flare and more importantly if you look at the actual emissions the flare emissions with the exception of carbon monoxide are significantly less than the internal combustion engine the carbon monoxide carbon monoxide is a toxic gas it is a minor ozone precursor it actually bonds with hydroxide radicals and consequently it can reduce the by doing hydroxide radicals or you are actually beneficial and so when you bind those with carbon monoxide it reduces the the beneficial hydroxide so that's why it's a minor carbon it's a minor greenhouse gas but it's very very much less greenhouse potent as compared to carbon dioxide so we're seeing that nitrogen oxide reductions which is an ozone precursor significant reduction in in nitrogen oxides and in particulate matter as well so with that I'll answer any questions I have another question is there a slide on on how this would impact Denton's carbon footprint no I have not I've not gotten with Kenny's folks to figure out what that whether there would be a impact on on the carbon footprint my understanding is because these are the degradation of waste in the landfill is not treated like a hydrocarbon emission from combustion of a fossil fuel it's it's a non fossil carbon source and so it would have less impact on the carbon footprint it's not included fully in our carbon footprint calculations is there any chance of just exploring that with with dr. Banks's sure yeah thank you that'll be part of the report that we come back to you with when we bring the business cases back to you on the alternatives okay thank you Karen you had your hand up yeah quick question I just wanted to know what a control efficiency was that's the that's the removal percentage of the pollutant so the percentage of the pollutant that's removed during the process correct okay so you want a high number yes ma'am okay thank you Billy yeah there was a mention in one of the slides in the first presentation Terry we talked about you'll still if we purchase this and I think either way I'm on board with purchasing it that you would run the facility but there wasn't really a set time of how long you would run the facility what does that measure is that the ROI on it or what is that measure that that assumed the 1.2 to 1.3 million NPV savings as compared to the 2.6 assumes that we would run it till the end of the contract life which is in 2024 okay so currently that additional cost is just passed on to the rate payers as a whole and divided into our total production or sells yes it's captured through the ECA the energy cost adjustment it is on the ECA okay okay well I hate this I hate to burn things in the air but it is I know it's always it's been a loser for us for a long time but we originally put this in there because I think that was the measure was are we gonna flare this into the air or at least get something out and if it is costing the rate payers more I get that this is Tony Billy I would also point out that you know Terry alluded to this business case analysis that we're gonna come back to you on in the next month or so I think part of the issue here too is that you know the the facility also needs some repair and also some ongoing maintenance and so there's there'll be additional cost that we need to go through when we come back to you okay thanks Jerry a quick question first of all I'm very much in favor of this sale and secondly I'd like to maybe say something it's obvious to everybody but when we the sort of underscores the risk that's involved in signing long-term energy contracts long term being 15 years out and boy this shows the effects of that adversely better than a lot of things can show I was wondering what other long-term energy obligations do we have that go out this far they go out 15 years yeah we we do have some contracts in our portfolio that are long-term contracts most of the very long-term contracts are more favorably priced than these we do have our whitetail win contract which also terminates in 2024 it's a way above market contract as well and then we have our bluebell solar contract and I apologize mr. Baffert I don't know the termination date off the top of my head on that but it is a long-term contract and it is an above-market contract you have to remember though those contracts are small volumes and were entered into at the onset of the renewable Denton plan to achieve the hundred percent or at that time 70% removal so or 70% environment 70% renewable supply and so we do take in all of our projections when we look at our five-year ten-year plans we are taking into account the out-of-moneyness of those contracts and as we mentioned to you we're not asking for any rate case eight rate increases in the next year well as I remember and Billy you may remember this too when we entered into those contracts those were pretty good pretty good rates they just as things improved they became less favorable yeah when they started giving natural gas away like they are today alright any other questions all right do we have a motion to approve and then all in favor say aye aye opposed motion carries management update so madam chair and PB members we have a couple reports that we've provided to you you have the deck report dashboard for the month of June certainly if you have any questions we have folks here that can respond to that and then we the other report that we've also provided to you is a memo from Frank Pugsley on the hydroelectric plant that was a question I think that mr. Parker had posed and so we did a little research and have provided that to you certainly if you have any questions on either one of those items we'll be happy to address those I had one question about the deck go ahead yeah this is probably a profoundly stupid question so I apologize out front but it's just a matter of clarification I am I am you know someone of the public who is who is saying not particularly well versed in these aspects but I see if I look at June 2020 I see that the engine runtime was 980 hours I look at over at the graph on the right side and I see that there were some times where it was over 2,000 hours of operation now the stupid question is for example June has 720 hours in it the 30 days or whatever it is 30 days of June 24 hours a day equals 720 hours so I look at that and I say damn you know how did it run more hours when there are in the month Terry can provide a response I bet he can't that's a bring it on that is a that's a great question we actually totalize the hours for all 12 engines so when you see that number it's the total hours for the for the engine so it's 720 hours in a month if one engine ran it'd be 720 hours but if two engines ran for the whole month it'd be 1440 hours and that's why you see such a large number as compared to the hours in the month I would strongly recommend that that at some point on the website or as an another asterisk on this report that that that be indicated and in the future I'm sure maybe you already have it would be curious to see the the profiles of usage in terms of when how much few and few engines are used and how often there's there's a full compliment engaged and of course I know that has to do with the load and what's needed but just see percentages of how that's looking now yes sir yes sir we could put you know a utilization for the plant as a percent of the available hours in the month if that would be helpful probably be more informative without providing a level of detail that would make a lot of people uninterested any other questions all right and that brings us to concluding items does any board member wish to add anything to a future agenda or have any comments to make hearing none we'll go into work session the first item is to receive a report hold a discussion and give staff direction regarding the customer service water wastewater solid waste and elect fiscal year 2021 proposed budget capital improvement program rates and five-year financial forecast good morning PB members chair Nick Benson assistant director finance I'll do a brief introduction and I will turn it over to Krista Foster the customer service manager to review her proposed budget so as I said the first presentation day is customer service a few board members probably were on the board back when customer service was separated from the water fund but if not as a reminder and also to make everybody aware water and customer service were one fund prior to fiscal year 1718 we actually separated customer service from the water utility to increase the transparency of customer service and create an internal service fund out of it and following that presentation I'll walk you through the budget process explaining the current and the previous process that was in place I mean get your feedback and answer any questions you may have and then after that we will go through each the utility budgets and further our discussion regarding 2021 proposed budget each of the operational discussions for the utilities have been taken out of the presentations however the directors are on the phone today are present to answer any questions if you have regarding the operations of each utility and each PB member should have received an exhibit for a mini budget book for each of the utilities and this is to further the conversations for each utility and this is something we provide to the public utility board each year as part of the budgeting process so the numbers that you see in those mini budget books are supportive of the presentations that you will see today and then with that if you don't have any questions for me I will turn it over to Krista Foster to present customer service and madam chairs as she's getting ready to do that just a reminder got a message from Billy when you speak if you could get a little bit if people get a little bit closer to their microphone they're having a hard time hearing some of you thank you good morning madam chair board members Krista Foster customer service manager I'm here this morning to be able to give you a high-level overview of our budget and some of the things that we've done in the last year and where we're moving in the next year so we're gonna start with accomplishments and future goals there are a number of things that we've done in customer service a couple of the things I'd like to highlight is the first thing that we've done is we have implemented a customer reported first contact resolution prior to that it was something that we had to collect internally as part of our call coaching process but at this point we actually ask the customer at the end of their call they're allowed to take their survey in person or by telephone and they report was your issue resolved is this the first time you've contacted us regarding this instance of this issue another thing that we've done is we've deployed a self-service phone line for salt waste request so if a customer for instance on a Monday collection decides to go out and do some yard work on the weekend we don't want them to have to wait an entire week to schedule a collection they can use that line schedule it on the weekend we're gonna make sure that they're on that Monday collection schedule otherwise for all other callers they can opt in and out of the yard waste program they can schedule brush collections they can schedule the bagged leaf collections and they can do that 24 hours a day seven days a week then we've also done as I'd mentioned before the outreach with our apartment complexes to really start educating the public on the benefits of the pay-as-you-go program and we will continue doing that in the next year we're looking to implement a CRM which will allow us to increase the scope of what we can work on in the contact center and we're going to be moving toward the three one one environment as we introduce that and then we're also going to be looking at introducing language line services one of the things that I discovered and was a little bit surprised about is that we have two universities in this city which bring in lots of international students and we have no means to provide service in foreign language so that's part of what my budget for the next year includes is the funding to be able to provide better services to all of our customers and meet the diversity that we have in the city of Denton so there have been a lot of philosophical changes in customer service over the last year the biggest first change is that we have reworked the way that we measure our success what I'm looking at now is benchmark benchmarking against industry performers private public in the utility sector to see where are the top four tile performers in that industry we're realigning our metrics to match those same measurements to make sure that we can provide at least top quartile service or better and we're moving that direction one of the other things we've done that is huge is customer service has implemented a permanent telecommuting work structure we have given about 26 cubicles seven offices and we'll have our staff working from home at least 90% of the time for most positions it will vary based on the position but we have moved into that structure so operationally you can see prior fiscal year performance compared to others but the one thing that I really want to mention about this is even though the prior fiscal year you're seeing from FY 17 to FY 18 a decrease in call volume this year if you look at that current operational performance you're going to see that our call volumes have been a consistent fourteen point eight percent higher than the previous year and that has been from October all the way through current so we're seeing a significant increase in the number of people who are calling we are working very hard to make sure that we're taking care of those those folks but the ones that I'm most proud of is as I mentioned we've moved to customer reported first call resolution we also measure our very satisfied and very dissatisfied customers because those are the customers who drive your reputation in the public if they're very happy or they're very unhappy and as you can see I've compared our group the call center and the lobby against the top quartile average for those same metrics in the utilities industry and you can see that we're outperforming on both first call resolution and our very satisfied customers by more than 10% and our very dissatisfied rate we're at just below what would happen in the best performers in our industry our FTE summary we have eliminated as we've reorganized some of our division we have eliminated our administrative assistant position and we have removed our assistant customer service manager from our budget this has allowed us to produce some budgetary savings that we can carry through the next year it's also allowed us to have a little more flexibility in some of rearranging some of our workloads this is what our new organizational chart looks like it's just the two positions removed and we did reorganize to have our cash specialist falling under revenue assurance since they are a critical part of the revenue process we are making sure that there will be no conflict of interest between the two positions so that we can maintain all the financial security controls that are necessary for the positions so as Nick mentioned we are an internal service fund but this is a overview of our budget you'll notice that we've only we're only realizing about a hundred and ninety two thousand dollars in savings we actually cut about five hundred thousand dollars out of our budget however as we implement the new merchant service provider we do have to add that two hundred and twenty five thousand dollars back into our budget to accommodate for the credit card fees that we're going to be absorbing and we're also putting in our supplemental for the language line services and then we had a couple of other small things that increased in price but overall you're seeing about a hundred and ninety two thousand dollars in reduction this is what that will look like as it spread across the utilities so you can see how that will make us whole and that is it I'll be happy to answer any questions I'd just like to say I have the people you have working there that meet face-to-face every day or about the most courteous that I've run into they do a very good job they handle your business I'm always happy to talk to him and I'll extend that comment to the people in the field I'm very impressed with the professionalism that I encounter when somebody's you know draining a fire hydrant just doing their ordinary day to day responsibilities you guys really do a good job of providing customer service thank you and please thank them I will make sure that that is relayed other questions and you're you're muted sorry could you go back to the slide that shows the flowchart of the positions I just had a question about the one thing let me make sure I can share this one what are billing specialists and what is a billing supervisor okay the billing supervisor oversees all of the processes overseas all of the staff that manage billing those billing specialists we have billing specialists that focus on say making sure that billing is done properly for all of our key accounts we have billing specialists who work on just commercial services to make sure that everything is there do we need to go out and check a read on a meter are the right rates applied and doing all of that work they do order closeout they do a lot of the different things that are the behind-the-scenes part of making sure that customers can be billed accurately okay thank you very much and I to applaud customer service we all because I'm a customer yep yes yes we are so since I said if there's no other questions we can go on to the next presentation okay that would be water then no yes so the next the presentation chair will be a brief presentation of the current budget process compared to previous years and then we'll get into discussion of each of the utility starting with water there is a total of five presentations so Susan if you feel like we need to take a break just let me know and be happy to take a break and come back whatever you want to do so real quick I have a couple slides I know a lot of this conversation August the third was focused about how we did it previously in the budgeting process and what the current process is now so what I wanted to do for all the PV members that are new or may have been on the board previously is really kind of walk you through what the previous process was and what the current process is so currently you can see we have a comprehensive capital project planning implementation this has been the city's focused over the last few years which is really obvious in the utility finances and I'll point this out to you and some of the debt service decreases in each of the funds some of the other focus has been cost containment transparency and emphasis on the city's core values talk about that a little bit more and then fiscal year 2021 so really what I wanted to do is create a table that really summarized you know what the timeline looked like before and what it looks like now and explain the two and ask or answer any questions that you may have so the volume forecast previously prior to fiscal year 2017 the the staff did bring a volume and load forecast forward to the public utility board usually around January or February of each year as you can see the current process we do not bring this forward in January and February this has been combined with the budget discussions that start around July or August and so we did leave that blank just to kind of point that out that that's not coming for the public utility board currently in January and February the next group we want to talk about was review the utility budgets and CIP so as I'd mentioned earlier we did provide everybody a mini budget book and this is consistent with previous years we are currently doing this so that book was provided to the public utility board today a detailed budget presentation we did have these presentations in July to talk about DME and then August the 3rd for the rest of the utilities previously there were three meetings usually to talk about this these steps or this budget with the public utility board the current process we have two discussions built into the budget discussions and this is consistent with the previous couple fiscal years and then we'll have meetings to review the the proposed rate changes the proposed rate changes previously were discussed around July of each year and this year we do plan to discuss those with the public utility board in greater detail in September on September 15th or excuse me September 14th we're planning to come back to the utility board the red line rate ordinance I do want to point out though that you know the presentations that we'll cover today does include the rate changes that we are proposing this year but part of the process is to improve transparency of each of the utilities we do bring a red line rate ordinance for you that really spells out what those changes are for each utility and then finally we get to the budget and rate approval previously it was around the August time period and like I said this is September 14th this year it does change year to year but usually it's around the end of August or September in the current process the utility projects update this is something that was requested by the public utility board on August the 3rd and we will be coming back to you in September with this discussion to talk about the details of each of the projects in the utilities I would like to point out you know that this would include the initial project funding any anticipated completion date of the projects any obstacles that may be out there that we can review with the public utility board for these projects and then as previously mentioned on August the 3rd the mid-year budget and rate update we do plan to come back with that detailed discussion in December allowing us time to fully understand the COVID impact on the utilities and also capture those high usage months for each of the utilities in July and August so something that previously was not done we do like this is a good process moving forward once we get those high usage months rate increases or decreases so since 2018 the city's continued emphasis on financial transparency cost containment really looking at those projects to identify unallocated funding to reprioritize it have led to no rate increases for the city didn't utilities so what I want to do is summarize it from fiscal year 2017 through fiscal year 2021 as you can see for each of the utilities from 2015 to 2017 we consistently had rate increases since 2017 starting in fiscal year 2018 we have had no rate increases so the city didn't utilities we've actually had decreases at least one each year since then and we'll talk about this a little bit more in the presentation but this is the overall rate decreases we are proposing this year so in 2021 and you can see the 2% rate decrease for water customers which equates to about a dollar and eight cents and then the one dollar decrease for the standard solid waste customer of a dollar so overall the utility bill for customers could expect it on two dollars and eight cents for the average residential customer that concludes the budget process presentation I'll pull it down for questions that we can go into water if there's any questions no quick question yes sir slide number 11 that you had you just showed at the the bottom right corner you have something called and the ability to maximize spend when I see the term maximize spend I get an adverse physical reaction to that maximize spending and I'm wondering if having having done a lot of project stuff in the past I think we should be more concerned about getting projects completed on time rather than doing accounting gyrations to move money around to make it look like we spent all we had budgeted so I I guess I'd like to use a different term and maximize spend there if that's possible you see what I mean yes yes sir mr. Baffert we definitely can address that that term was simply meant to imply to look at those projects look at that funding is allocated and actually get those projects completed so we can get that terminology yes all right no questions Oh Billy's got a question sorry I was trying to get my mute button I was missing the slide on the right utility budget rate process that shows current meetings when we address the budget versus the previous meetings it's probably my it's my same question as a whole not one certain utility why the why the elongated time to wait for the current meetings versus how the previous meetings would go you're talking about the forecasting data start in January and February now discussing in July and August yes I think the majority to answer your question is that reliability of that forecast data so you know in the water utility looking at the volume forecast and DME looking at the load forecast that additional time allows staff to look at those forecasts for all the utilities and refine that budget appropriately so we did make that adjustment a couple of fiscal years ago from moving it from January to February to July and August to improve the reliability of those forecasts reach the utility so hopefully that answers your check your question mr. cheek as previously stated a couple three weeks you know whatever it was just I just feel like the more time that we have to look at the anticipated budgets the better advice we may be able to give for council and I think I would look at today's presentations of August 24th and then I see that that would be presented to council August 25th so if the PB did have some input in regards to changing something on the budget you'd have you know a little more than 24 hours for council to possibly even to see what that recommendation may have been and why it was recommended and Billy this is time that that's really not true if we needed to move the presentation back to council for even another month we could the only real urgency on the finances Nick if you could take that down the only the only real front urgency on the finances is the property tax levy so that's not necessarily the case and quite frankly the reason to kind of obviously this is a weird year in terms of the utilities and trying to assess in the city budget as a whole but we have watched the last two or three years our estimates be pretty wildly inaccurate in water electrics so what that means is that we've ended up with more money at times than we need that we can actually spend and so I think I think what they're trying to do is give you the best information as possible get through July and August where you've got the hottest months that can really swing those two utilities and that way you've got better information but with the utilities there's no urgency to have this done tomorrow I mean we could easily go into mid mid September and give you that additional time if you needed sure time and I understand that things fluctuate but we do know that July and August are going to be hot months and we can anticipate what those months will be obviously well let me let me give you a great example last year we went in showing a significant deficit in the electric fund had a lot of talks about whether we should be raising rates that sort of thing we ended up getting having four or five huge days with the deck and it completely in in one week changed the entire forecast for the year so we spent numerous meetings talking about rate increases change in the ECA that sort of thing and within one week it was all moot discussion so I think that's what we're trying to get you through is those those those months that we know can really swing the budgets at least get you up as close as we can through August and say okay this is the best information we have because the council got a little bit annoyed last year we had spent you know numerous hours talking about it and so we're just trying to think about how do we get through with those two utilities in particular how do we get through these months and try to get as good of information as possible you know based on what we've learned okay well your capital expenditures are more likely not going to change or your predicted capital expenditures are not going to change that much by the from May to August I wouldn't think but your but your your revenues could change significantly several millions of dollars which is just not something that you know why spend a lot of time talking about rate increases and getting people worked up when in fact if that happens again I mean we basically are building field goals now saying okay if we have a lean July and August here's what the budget looks like if we get into a situation like last year where you end up with my gosh you know 15 or 17 million more than we anticipated we you know there would have been absolutely zero reason to go in and raise rates which ended up happening and we were able to do some additional things to catch up and avoid that but it changes the policy discussion that the PUB and the council were having when we have better information okay I just don't see the harm in this if y'all are discussing it why can't we see the discussions I don't think there's anything that you can't see so I I'm not sure where that's coming from but we're absolutely we're happy to you know to make sure that we've got a schedule there and you can sort of see different iterations of the budget moving forward in terms of your capital investment that's been the other thing and I appreciate Russ's comments earlier about the verbiage being used but that has really been something that we've we've tried to do with the with all the CIP in general it took us about two years to lift all the information out of audits and books and it starts up on the spreadsheets so we can start measuring monthly spend I don't think it you know in order to see if we're if we are actually needing what we're asking for but really to that point with the capital project we had tens of millions of dollars you know somewhere between thirty and fifty million dollars sitting in unallocated miscellaneous accounts and we're continuing to raise rates so we basically stopped that approach until if we can't get the projects out the door we don't need the money we're not asking people to pay higher fees and so that's kind of how the process we're going through and I think we can based on the questions we're getting we probably just need to lay that out for you we're gonna be bringing back a lot more granular spreadsheet that rusted requested last time so you can see how we're looking at the capital side the expenses the revenues once we get through July and August become a lot less volatile so I think we can meet in the middle somewhere and give you all the information you want to see it's probably gonna be just more of a check-in on those two budgets throughout the summer okay well I sit on I sit on several boards of directors where we actually we're actually we are the last decision-making process and yeah we ask for a budget prediction and we're usually given them and they do fluctuate millions of dollars each one of them so I don't see the harm in having a discussion and especially with the capital expenditures we agree rates are going to raise right you can raise rates you go lower rates you can try to be the best taxpayer have no doubt right I think we're in agreement okay this is David Gaines assistant city manager I just wanted to touch on the capital expenses particularly you know as COVID this obviously was the different year and in the schedule that Nick showed is reflective of COVID and the changes that we had so if you recall in March and April and into the early part of the summer we were we had at least paused or reconsidered some of our capital projects just as we wanted to see what the true impacts on the revenue side would be to the utility funds and also the bond market the bond market was sporadic and all over the place so we didn't know what our ability to issue debt would be so that was another reason that we pushed the process back on the obviously the revenue side but also the capital side to try to understand what our CFP would look like over the next couple years so just wanted to point that out as we looked at the schedule this year it was largely impacted by the pandemic but I would just add to David's point that's all true we also had a council that immediately went in and turned off the you know the cutoffs and we did not know how long that was going on and how deep that was going to cut into all the fund balances that sort of thing so things ended up working themselves out over the last 90 days but it's been a it's been a very different and challenging budget year for us should we take maybe a five-minute break and come back okay it'd be fine thank you all right Susan you're on all right it's a 10 12 a.m. and we're back and we're going into water budget presentation good morning PB members let me pull back up the presentation to discuss water with you so as I said earlier the operational discussion has been taken out of each utility presentation however Frank Pugsley the water director is on the phone if you have questions regarding any operational items you'll be happy to speak to them otherwise I'll walk you through the proposed budget giving questions I'll be happy to answer within the presentation the presentation objectives really quick we'll review the financial assumptions the volume forecast the revenue and expense detail the financial forecast the capital improvement plan and then review those rate changes with you that I discussed or mentioned earlier so the financial assumptions on the volume forecast we are proposing a 2% growth and forecasted volume in the out years and the hunter coal ranch development is included starting in fiscal year 2024 this was a question I believe mr. Baffert and asked last meeting we have included a chart to help explain when the hunter coal ranch development is planned to come into the water utility and how it's being forecasted on the revenue side 2% growth it's consistent with the volume forecast that we have out there we are continuing to utilize impact fee funding to revenue any eligible projects that may be out there on the horizon to minimize that debt issuance and really be mindful of our debt service in the out years we are showing a little bit of revenue for the hunter coal ranch development as I mentioned expenses of 3% growth in the forecasted years and then for this utility as previously discussed the public utility board we are recommending a 2% rate decrease we will be seeking PB's feedback today on how to implement that decreased on a couple couple different options that we've come up with and we'll discuss that in a few slides so this chart does show the hunter coal ranch development and growth in the city and within the next 20 to 30 year period I apologize for being a little bit fuzzy to see if we can email this out to the meeting if necessary but the main thing is I wanted to point out that you can see that hunter coal ranch development and start coming on 2024 which is consistent with the forecast I know it's hard to see but the hunter coal ranch development is actually this green line or this green bar that you see I'm coming up here in the future years a couple of things I'll point out this chart does a great job of summarizing growth in the community and separating out by the development so the red line is actually just growth in the city's MMD and so as you can see you going in the future years it does ramp up as you go out and the yellow line happens to be the hunter ranch development and you can see it and then the green one as I mentioned is that coal ranch development that you can see in the future years if you see this this blue line it may be a little hard to see on your screen and this is the master plan MMD line that you can see going in the future years and then this dotted line is the treatment plant capacity so you can see when that capacity meets the growth in these future years so we are planning to issue that debt for the plan expansion out here to meet this and be well in advance of it for planning for that growth to come into the community Nick this is Charlie I've got a question yes sir you were talking about MMD and MDD on your slide yes can you tell us what those acronyms mean yeah let me Frank Pugsley's on the phone let him let me come you can come on and answer that question really quick sure mr. Parker Frank Pugsley water and wastewater utilities director and I think yeah MDD and MMD get a little tongue-tied the red bar is our MDD which is the max day demand for the city's water system and I think because Hunter and Cole have an MMD it just doesn't roll off the tongue very easily when we're talking about both of those in the same slide great and what is the night the municipal management district which is I think Todd might be able to help us out a little bit further on that it's the taxing district that both Hunter and Cole ranch set up for to pay for the infrastructure on their developments so we're saying we see a lot in the extraterritorial areas of the municipal utility district this is just a municipal management district so the City Council had to sign off on having that created at the legislature it essentially is another taxing within the city and then two more questions I assume MGD is million of gallons per day and when you say out years is that the same as future years yes sir it is yeah future years out years is consistent one in the same that's correct thanks question yes go ahead yeah I looking at the the increase in the use of water that's a great great graph going out as far as it does and I meant this question is probably for for mr. Pugsley when we did the tour of the wastewater plant no we were told about there are some I believe called gray water lines that go to places like golf courses which is recycled water and I wondered if there were any thoughts about increasing the availability of of that type of water to meet obviously growing demands for watering turf and parkland and that sort of thing especially in regard to the what's going in the the amenities at Hunter Cole as they're presented now yes sir the the reuse water system is what you're describing at the wastewater plant and we do have pipelines to the big country club just south of 35 the names escaping me right now and also to the city of Garland's electric plant adjacent to the Lewisville water plant and while we have ample supply and capacity the customer demand is what would drive our growth there we don't have large users who would make the most benefit out of that that reuse water system right now okay thank you it's okay to go on the presentation system okay so revenue detail last time we were in front of you in August the third we provided you with a financial forecast or performer that really rolled up the revenues so we wanted to do is to provide you additional detail what makes up our 49 million dollars in revenue that you can see here so some of the major categories water residential revenues 20.5 million in the proposed budget it's currently what we're forecasting commercial revenue is about 17.6 and then you can see some impact the revenue that we are bringing in from that reserve is 6.6 million so that's the major categories that make up the revenue number within the water utility we do have that planned use of reserves of 3.9 million as I previously discussed to you on August the third for total resources about 52.9 water expenses this is by division so these are operational areas within the water utility so starting at the top you can see water administration utility administration this year we actually combined and separated this division so it was divided between water administration and public outreach we separated out public outreach to increase transparency of this group then you can see going down the page we have production distribution metering lab and miscellaneous and I do want to point out this miscellaneous category is your ROI your transfers are we involving cost of service transfers and franchise fees so that number is fairly large but that is what makes up that twenty one point two million dollar number distribution increases 58 percent between this year and next year on the slide you're just at what's the reason for the 58 percent increase in distribution pull this down really quick mr. Bafford that is revenue funded capital so what we do in each of those different operational areas if they have a project coming up and we're revenue funding a portion of it we divide it out by operational area so that increase that you're seeing is simply because their revenue funding additional projects in their proposed budget okay yeah okay water expense a detail this is by category what we call family so you can see personal services materials and supplies maintenance and repairs insurance moving down the page some you can see those franchise fees I called out all ago debt service so I made a note to this several times in the presentation but as the fund continues to look at available funding revenue fund projects and really utilize any impact fee funding that may be out there for eligible projects you can see that debt service decreasing so I'll point this out to you on the financial forecast also I mean you see a little bit administrative transfers to the general fund so total expenses for the water utility and this fifty two point nine million this is the ten year forecast you've seen previously so I'll walk you back there really quick this does include the two percent rate decrease I'd mentioned earlier this does have an emphasis on revenue funding capital pertaining to the water plant I'll point that out to you so the adopted 2020 budget you can see here in this column this is the current fiscal year we have 2.9 million that we originally budgeted to use in reserves for total resources of 51 million expenses are 51 million also for a balanced budget utilizing those reserves so 0% for the rate increase or decrease in the current budget end of your estimate looking at the end of the year we do have some revenue impact associated with the pandemic of six hundred and seventeen thousand we will continue to refine this number and bring it back to you in December updated once we fully understand the impact of the pandemic on the utilities so we are forecasting about 2.8 million in reserve usage just about equal to the budget and of course zero percent rate increase or decrease the proposed budget you can see in this column we have revenue of 49 million 20,000 as we previously reviewed reserve usage of 3.9 for total resources of 52.9 the total expenses we saw on the previous page of 52.9 million and this is that two percent rate decrease that I had previously discussed with you moving down the page a little bit more as we reviewed last time on the operating reserve for the water fund is currently forecast to be 17.8 million ending fiscal year 2021 so next September we do have a separate reserve for the impact fee of 9 million dollars I want to point out as you go in the future years as I had mentioned above the emphasis on revenue funding capital pertaining to the water plant this 9 million actually goes away in 2025 we are using 9 million at the impact free reserve to revenue fund the design of the Lake Ray Roberts plant expansion keep moving down the page a little bit you can see the number of working days 122 and we have a little bit of development plan lines impact the reserve is the 4 million and here's the reserve targets this is what we're looking at every year we're looking at each of the utilities to see the financial health of them so the minimum for water 17.5 with the maximum of 26.5 what does that equate to in days or percentages so the minimum is 120 days or 33% the maximum is 180 days at 50% one of the thing I do want to point out to the PB members this debt service line as we continue to utilize revenue funding and really look at those project fundings we've been able to stabilize this debt service going into the out years when you see this increase from 27 to 28 from the 11.6 million to the 18 million this is for the issuance of the construction money for the Lake Ray Roberts plant expansion this is the five-year capital plan for the water fund and fiscal year 2021 the proposed budget we have planned debt issuance of 35.5 million as I said previously we will evaluate the capital plan throughout the fiscal year and see if we actually need to issue 35.5 million before we actually go out and issue that money we have revenue funding to 12.9 million for the water utility impact fee funding this is revenue funding of 2.7 a little bit aiding construction and some vehicle replacement for 275 thousand so for a total of 2021 CIP of 51.8 million in 2021 this is the detail of the five-year capital plan I do want to point out this makes up 46.2 million of the 51.8 million you saw on the previous slide so some of the major projects that we have planned for this upcoming fiscal year is the regulatory and performance upgrade project of 18 million dollars currently we do have 14.6 million in debt plan for this project and 3.4 million in revenue funding this project is important to the water utility because this enabled us to push that plan expansion out into the future years and minimize those rate increases that you saw last year we come forward to you with the 2019-2020 budget annual field service replacements this is something that is revenue funded in the water utility each year these are replacements of infrastructure in existing streets we have a contracted field service replacement of 3.9 we do plan to debt fund that one and the bond election 2019 so the bond election that was passed this last year we have 3.2 million in there to support those projects the northwest transmission line we have 3.35 million which is planned dead issuance text on I-35 and I-35 North three locations of 10.9 which is dead issuance and then Elm and Locus phase 2 which is 4 million so these projects make up 46.2 million of the 51.8 million that's identifying the capital plan so proposed rate changes so as I mentioned earlier we do have two options in front of the public utility board today as we showed you last time we are recommending a 2% rate decrease so for the average residential customer we do base that on a three-quarter inch meter the current facility charge is $16 and the first tier and our water rates is 0 to 15,000 gallons this is currently $4 and 15 cents per thousand gallons option one is based on our cost of service model this is the preferred option this this is stash recommendation this was the option that the PV of City Council both approved for wastewater and fiscal year 1819 when we did a 5% rate decrease the emphasis in this option minimize the decrease to the facility charge and decreases the volume charge more and option 2 it would actually this is a 2% across the board actually decrease the facility charge more and decrease the volume charge less so previous recommendations from our consultants is to minimize the total changes to the facility charge so option one does minimize that impact our facility charge it is important to note that the decrease for residential customers under both of these options would be the same which is $53 and 10 cents the commercial rate changes what it would do for it so this is based on a two inch meter and we have per thousand gallons are actually not grouped into tiers on the commercial side so the current facility charge or two inch meter is 51 50 if PV gives us direction to proceed with option one the facility charge go to 51 31 I'm under option to go to $50 and 47 cents and the volume charge under option one to go to 434 and then under option to go to 436 proposed rate changes these are our contracted rates so as I discussed with you previously we are looking to update these agreements based on signed agreements that we have with them so the upper Trinity regional water district our wholesale raw water service this is based on 85% of the Dallas wholesale rate so currently their rate is point seven four zero one per thousand gallon based on 85% of the Dallas wholesale rate that rate would go point seven five seven eight and the next one is the pass the rate the Lake Chapman and it is currently point zero two seven zero we do update this annually based on the CPI adjuster for the month of June so this rate would go to point zero two seven five these are grass we show to the public utility board and City Council every year as part of the budget adoption process we do base the water rates on 9,200 gallons so you can't see our current rate is in this yellow bar of 54 18 if PB approves a 2% rate decrease or water customers that rate would go to $53 and 10 cents and then usually what we do want to point this out the public utility board we do submit these back to you later this year once all these cities adopt their budget and they update their rates we'll provide that to you as an ACM update later in the year this is the commercial water service using a two-inch meters our current charge would be 233 69 with the proposed rate decrease and he should be excuse me back up our current rate is 268 31 with the proposed decrease it go to 233 69 so these bars should be switched in position it doesn't yeah I thought we'd caught that before the presentation I apologize for that next step so we do plan to come back to you on September 14th to seek your approval for the budget and rates we will submit the red line rate ordinances to you during this meeting however we do plan to get them to you well in advance of the September 14th date to allow you an adequate time to review them ask any questions that you may have on the 14th prior to adoption we do plan to have the public hearing on the budget and tax rates on September 15th and we will be looking for City Council's approval for the budget the tax rate the capital improvement plan and the rates reach to the utilities on September 22nd then as I mentioned earlier in December we will come back with that major budget rate discussion pull this down for questions go ahead Billy sheet number 22 on your display yes sir let me get it pulled up really quick there yes sir their number different on our what's on the online so I got a kind of float oh okay the slide order yeah we have this individual budgets and y'all one long one yes sir correct and I pull it up on the other screen okay my question is on the net income and you may have said something I missed it could you explain the net income why you show net income for future years and why not past years in the in the forecast is that your question yes a lot of it has to do with with revenue funded capital what is the debt service doing that year and then what's the forecast I think your question so let me go up here really quick so and the proposed fiscal year 2021 we have planned use reserves of 3.9 million as you can see down here we have in 2022 we have a net income of 553,000 the majority of this is twofold one of it you can see up here this impact fee revenue funding and debt service we're pulling in a little bit more in fiscal year 2022 we've actually identified less projects to revenue fund impact with impact fee dollars so this is coming in to offset the eligible debt service of impact fee project so it actually benefits the fund I mean you can see this number jumping from the 3.8 to 5.4 to 5.4 6.5 4.7 so that's why you're seeing that net income down here on the bottom line just to make a note so with impact fee funding we can pull it in and use it for two different purposes one purpose would be to revenue fund eligible projects that are not in the ground yet that's when you see this number coming in this 2.7 million the second purpose would be to debt pay eligible debt service of a completed project that is already in the ground that's why you're seeing this 3.8 million so we try to revenue fund as much as possible but some years based on the timing of projects and when they're eligible we we really can't you know do 2.7 million a year it decreases in the future years yeah I hear you I see we're like I'm wouldn't through with that sheet oh I'm sorry Billy Billy I'm sorry Billy in that in that final in that last year that's on there though the only history is FY 19 you can see that revenues was forty four point three million and expenses were forty seven so there was that you know three point six million dollar of imbalance and that was actually a drawdown so that year on it just in a revenue recurring revenue and current expenses it was it was a short fall about three point six million okay all right yeah I was just it's just kind of a it's a looks to me like we're just using that as a budget balancing item in the meantime until we decide where it can go well there is a rate stabilization component of that reserve and it's something that we're mindful of and that's why we have those reserve targets okay okay it just threw me off a little bit and I wouldn't wouldn't clear as to how that worked yeah next sheet is 23 yes sir your impact fee projections mm-hmm seemed to go down in 2024 drastically and you'd mentioned or somebody had mentioned on the utility projections that the the coal hunter coal ranch was coming online that neck following year so I'm not clear why those impact fees are down that much that's a great question mr. cheek so can I back up to the previous slide answer your question again so this number you see the two point seven the one point one the one point two and the forty five thousand this number is actually up here in this revenue funding line and that you can see so two point seven one point one one point two and forty five thousand we are budgeting six point six million and impact the revenue coming into this fund every single year the number that you're seeing on this slide this is just the revenue funding of eligible projects so this number does decrease in the future years as we have less projects so we can actually revenue fund or currently planned to be constructed that can be revenue funding but we reevaluate this every year so this could possibly go up if projects pop up that are eligible for impact the funding so that 2025 couldn't go up exponentially absolutely based on the timeline of projects and the ones that are eligible and identified in our impact these study we use that document to guide us in this number and looking at what projects are gonna go to construction to win and how much is eligible for impact the funding okay very good thank you yeah we don't we don't spend on that we don't currently anticipate any decrease in impact fee revenue it's currently consistent at six point six million per year in the water utility right you got to collect it before you can spend it that's correct okay thank you all right any other questions I think they need direction on the rate decrease for me I'd like to stay with the cost of service option one I think that's the best route for the water fund I agree yes so we'll build that into the red line rate ordinance that we bring back to you on September 14th it will be based on the cost of service rate decrease and those meter decreases to those applied all the water rate classes are you talking about this would be for residential and commercial inside customers there's two components to their rate there's a facility charge and a volume charge that would imply to all those rates so if you're inside the city didn't customer for residential or commercial the 2% rate decrease would apply would apply to every rate class for the residential yes inside city limits that is correct thank you yeah and then I think in agreement yep and I think mr. cheek you had asked the question about the hydrant fee last time we met that will be that will be called out in the red line rate ordinance on September 14th but to give you the current rate is currently $5.20 per thousand gallon and the facility charges $1,100 so the per thousand gallon rate would go down to five dollars and ten cents based on this 2% rate decrease okay yeah thank you you're welcome let me skip over here all right so the next utility is wastewater the presentation objective is the same as water will go over the financial assumptions the revenue and expense detail the financial forecast the capital plan and the proposed rate changes which were wastewater there is no proposed rate changes currently being proposed so financial assumptions we do have the 2% growth forecast in the out years we are continuing to utilize the impact fee funding as we talked about in the water utility we do have the hunter coal ranch rate revenue included as we looked at the chart in the water utility and then as I said no rate increases for rate increases or decreases for the wastewater customers this year this is revenue detail for the wastewater utility some of the major categories as in water you can see wastewater residential 11.5 million wastewater commercial 13.1 we have some drainage fees coming in for residential commercial about 5.1 million drainage is a part of this utility and then we have impact the revenue coming in a 4.2 million this impact fee revenue is consistent in each of the 10 years in the forecast but the revenue funding component of the expense varies year to year based on project timing this is the expense detail by category so some of the major categories you can see personal services here at the top of 8.4 million capital outlays that revenue funding of projects is 6.5 and then our debt service is 7 million so these expenses and all these categories add up to 36.9 million in expenses expense by division same thing as in water we wanted to show you the operational areas within wastewater so we have administration reclamation collections filled service beneficial reuse the laboratory industrial pretreatment drainage watershed protection we have some miscellaneous as a reminder this includes return on investment franchise fees and our cost of service transfers the drain is miscellaneous of 720,000 which houses the drainage debt service and then as a reminder I think I mentioned this in the water presentation but wastewater administration this year does show to be going away this has actually been combined with water administration so you'd see an increase in the transfer from wastewater to water to fund their portion of administration but staff felt it was necessary to combine these two groups so it's in your forecast for the wastewater utility starting just like water you can see the adopted 2020 budget here in this column we did have planned use of reserves of 1.6 million so we had zero rate increases or decreases in the current proposed budget into your estimate we are planning to come in fairly close to that adopted budget about 1.9 million in revenue usage and you can see a little bit of COVID impact up here for 389,000 as I said about the water utility we'll refine this number and come back to the public utility board in December once we fully understand the impact of the pandemic to the utilities and then the proposed budget is in this column so we have thirty seven point one million in total revenue for the wastewater utility you can see expenses of thirty six point nine so for net income about two hundred ninety two thousand was zero rate changes so zero rate increases or decreases for wastewater customers moving down the page a little bit you can see operating and cap or the operating reserve of thirteen point four million it is within the reserve requirement of ten point three to fourteen point four the reserve requirement is a little bit different for wastewater and it's a hundred days for the minimum and a hundred forty days for the maximum so twenty eight percent on the minimum side and thirty nine percent on the maximum so we are well within that requirement going down to the future years you can see it does start to dip down a little bit slightly drop in below in fiscal year 2026 but we are currently not showing rate increases or decreases in the utility I think that's the major things on this slide I wanted to show you today come back to it if you may has any questions the drainage five-year forecast this is a component of the forecast you use to solve so there are two different major revenue sources for the drainage utility in 2021 you can see residential drainage fees equates to about one point nine million revenue non-residential which is the same thing as commercial counselor three point one so for a total of five point five here the major expense categories for the drainage utility personal services at one point nine capital outlay is really revenue funding those drainage projects of one point eight million so total expenses of five point five we do set one million dollars aside for a drainage reserve this is a component of the wastewater reserve but we do show it separately for transparency this is the five-year capital plan for the wastewater utility so similar to water we do have a debt issuance plan for wastewater for wastewater is thirty two point eight million as I said previously in water we will continue to evaluate projects and the amount of funding available for issuing this debt for the utility and determine the exact amount we need to issue in the future years revenue funding you can see five point three million this is coming from the operating fund impact fee funding of five hundred thousand this is impact fee funding eligible projects as we discussed in water a little bit of aid in construction and some vehicle replacement of one point two million so total CIP for the wastewater utility of forty million dollars in fiscal year 2021 so major projects for the wastewater utility this does make up twenty nine point nine million of the forty million dollars in proposed projects so going down the list here you can see the Clear Creek Basin pump station of three million dollars we are currently planning to debt fund this project the solids handling improvements of eight point three million we're planning to debt fund that project also we do budget for the annual field service replacement similar to water this is a revenue funded project which is two point six million and then we do have some contracted field service replacement which is consistent with water we are issuing this a debt so two point six million in debt issuance the bond election to support the recently approved bond package we do have two point nine million in debt issuance for that and then the Hickory Creek interceptor three three point five the Hickory Creek interceptor lining of two point three and the Elm Street sewer line replacement phase two two point nine then we got some textile relocation similar to water of one point eight million so total of twenty nine point nine million but these are the major projects included in the capital plan for next year this is the residential wastewater rate comparison as a reminder we did decrease this recently I think it was in fiscal year 18 19 from 6,000 gallons to 5,400 and based on the average water usage of residential customers so you can see the wastewater rate would be 26 23 based on 5,400 gallons commercial we based it on 50 thousand gallons so you see the current fee would be 284 25 and then commercial we also show you a 200,000 gallon comparison that rate would be 707 86 and as previously said as these cities adopt their budget we will provide you a memo later this year with updated rate charts that provide updated rates for each of the cities the next steps we talked about previously we will get that redline ordinance to you well in advance of the September 14th meeting to allow for questions and then we can address those on September 14th and then going through you can see budget adoption on September 22nd for the City Council includes wastewater all right questions sorry I meant to ask this initial onset of the utility questions and maybe they're in here I can't find them do we have the impact fees as a price per each somewhere in there they're not provided in the material in your backup they will be part of the rate ornance when it comes forward to you we can provide that information to you on September 14th if you'd like to see that Billy we absolutely can okay I can wait till then on that one you bet I'm just this thank you anybody else Charlie go ahead one quick comment Nick on the schedules I see from this department the word for employment employee is often used personal services I wonder if we might consider calling that either personnel or payroll or something to me person personal services sounds like a pedicure or something yeah we have to jump you see the size of it and I'm pretty sure it's they're getting expensive sorry they're getting very expensive these days too our previous finance director brought that to my attention years ago but we are in the process of updating that the budget books if you go historically and did have that differences between the two so we're trying to convert over to personnel like you're talking about we just haven't got ice yeah so we're working on it we will get there mr. Parker thanks anyone else all right then solid waste okay so presentation objectives and similar to the other utilities will review the financial assumptions the revenue expense detail the financial forecast the capital improvement plan the proposed rate changes and address any questions that you may have regarding solid waste so revenue forecast consistent with the rest of the utility is a 2% growth forecast in the out years we are the anticipated wholesale agreements are currently projected to end in fiscal year 2023 pending re-approval by the public utility board and City Council we did take the conservative approach and actually back them out of the forecast the expense detail we have a 2% growth forecast in the out years and sale construction was moved from fiscal year 22 to 21 I'll point that out to you on the financial forecast shortly and it's gonna be revenue funded and then rates we are proposing a 5% residential rate decrease this equates to a $1 decrease per month for the average residential customer with a standard cart we are looking to make minimum updates the contracted rates for example the wholesale agreements and then minimum updates to the valet rate commercial rate and gate disposal rate the solid waste revenue detail similar for the utilities you can see the detail expanded here in this page so the major categories residential revenue of 5.1 million residential recycling revenue of 4.8 and you can see some front load and side load revenue so your commercial business revenue of 9.4 roll off open top revenue of 7.2 landfill gate disposal rate revenue which is 4.8 you can see that increasing from 3.2 to 4.8 as you continue to see the volume in the landfill increase and then you can see the landfill wholesale revenue increasing from the 2.5 to the 5.6 based on those agreements that were approved last year and then total revenue of 39.8 we do have some reserve usage in the solid waste fund of 4.3 for total resources of 44.1 this is expense detail by operational area similar to water and wastewater so you can see solid waste administration of 3.2 going down the page some of the bigger operational areas residential collections of 5.9 commercial collections of 4.8 solid waste disposal of 11.5 and then miscellaneous of 16.6 and as a reminder this is return on investment franchise fees and those cost of service transfers it's always expense detail by category you can see the personnel expenses 10.8 some of the major other categories franchise fees of 1.9 operations of 6.8 the debt service is 6.9 which steadily decreases you can see it going from 18 19 to 18 8.9 million 8.4 decreasing to 6.9 is the fund continued continues to focus on revenue funding of projects and minimize the debt issuance the cost of service transfer as I mentioned earlier you can see a 1.8 million other cost of service transfers which would be tech services human resources and other ones would be 3.5 and your capital outlay is 10.7 which does include that cell development construction five-year forecast with a solid waste fund you can see the adopted budget here in this column we did have an adopted budget with use of reserves of three million dollars total expenses of 38.4 moving in to the end of your estimate we do have a COVID revenue impact number of 280,000 we'll bring this back to you in December with a refined number total revenue of 38.1 million and total expenses of 36.6 so we are showing a net profit of 1.4 million currently forecasted in the end of year for 2020 the proposed 2021 budget is here in this dotted line you can see the reserve usage I mentioned to you on the previous slide of 4.3 million so total resources of 44.1 total expenses of 44.1 moving down the page and the operating reserve is 8.3 million this is in the reserve targets for the solid waste fund which is 6.2 million to 7.9 and the percentages are different for solid waste and air for water wastewater so 51 days being the minimum or 14% 65 days or 18% being the maximum so we are within that reserve target in in the current proposed budget as you go in the future years we do slightly drop below in 2025 you can see it slightly dropping below 5.635 to 5.673 one of the thing I want to point out this rate decrease is possible as I said you know with the funds continued emphasis on revenue funding and decreasing the amount of debt issuance and the solid waste fund you can see the debt service decreasing from 8.9 million to 6.9 and it does continue to decrease in the future years you can actually see it getting down to 3.9 million in the future so the fund is doing a great job at revenue funding projects and minimizing debt issuances this is something I reviewed with you on August the 3rd this is the five-year capital plan for the solid waste fund we do have one plan debt issuance of three million dollars this is for a fleet annexed building at the solid waste facility we do have six point two five million in revenue funding this is for that next cell development and design construction of that cell vehicle replacement the fund is looking to revenue fund the vehicles this upcoming fiscal year of 3.3 million so the total capital plan of 12.6 million detailed five-year capital plan so each project detailed out you can see that landfill cell for construction of 4.9 4.5 million which is revenue funding landfill cell construction for quality assurance of 450,000 for revenue funding landfill equipment of 1.3 million which is gonna be revenue funding you can see that fleet building construction I had mentioned about debt issuance of three million dollars and then you can see the commercial group by different operational areas so you can see commercial equipment from one million thirty thousand some HCC equipment which is the home chemical collection of sixty thousand residential equipment of two point oh five two million and then landfill equipment of two hundred fifteen thousand so twelve point six total on capital plan these are the proposed rate changes for the solid waste funds as we discussed previously we are looking to decrease the valet shared service for commercial businesses that are currently in the tier two structure currently that rate is 138 28 we are looking to reduce it to 74 16 based on our cost of service model this is the recommended rate yard waste collection for commercial businesses this is currently not being offered to be concerned consistent with residential we are looking to implement this at seventy five dollars per hour built on 15 minute increments and the standard cart rate would go from 21 51 to 20 dollars and 51 cents with that 5% or 1 dollar decrease or residential customers as we talked about the large cart customers would go from 26 26 to 2504 which equates to about a dollar 22 so if you had a large cart you'd actually see a little bit more of a decrease an additional large cart would go from 1738 to 1657 and this is based on the cost of service and we would be looking to decrease that point eight one cents landfill gate disposal rate for residential and businesses that are non-city of Denton we are looking to increase this from 46 a ton to 48 we do continue to see that increased volume coming into the landfill and then the sludge disposal rate dewatered landfill looking to increase them 46 to 50 so an increase of four dollars one other thing I want to point out as I did last time with the Public Utility Board we are looking to increase the wholesale agreements by 2.3% which is a CPI rate adjuster identified in the contracts for those agreements so this does equate for $400,000 in additional revenue in 2021 so residential rate comparison you can see our current rate here in this column since the 2151 with that one dollar decrease to be $20 and 51 cents we will update these rates after budget adoption by these other cities and bring that back to you in a memo with the rest of the utilities and then the future dates I mean September 14th as we talked about the red line rate ordinance with these rate changes will come forward to you for your approval then we'll send those to you well in advance and then budget adoption is currently scheduled for September 22nd alright could you go back to slide 49 please yes okay what accounts for the drop in commercial recycling revenue a lot of this is based on what the market is doing mr. self so from 1.7 to 870,000 it would be what we're getting paid for those recycling commodities and then also the city did previously in prior years recycle some metal material but I believe Brian burner is on the phone too and he can speak to this a little bit more that is that is correct we are there are several things that go into the residential with the excuse me the commercial recycling drop part of that has to do with just the general value but we also had I believe in the original rate structure we had it and we had an element in there for disposal when we went in and redid the rates last year we removed that so I took away a little bit of an overcharge that was occurring in previous years we see that right now all they're paying for is the collection and the sale not the disposal piece of that okay thank you could you go to go to slide 51 please just a question what what what are the what is what does landfill closure mean what is that encompass so this is a dedicated reserve the city has set up to close the landfill facility when that date will come in the future we do transfer this money from the operating reserve to that dedicated reserve each year what we've seen with the with the landfill recently bought some new compactors they've increased their capacity of compaction at the landfill so looking at that cost of service model that closure model and it tells us if we're fully funded or not it actually does say we're fully funded this fiscal year so we're not looking to make that transfer however we are continuing that transfer in the future years it will not be removed from the budget but we did have a one-time decrease or one time not transferring that money this fiscal year so hopefully the answer is your question this is a transfer to a dedicated reserve to close that facility when the date comes in the future okay thank you and one more I know that we have the solid waste strategic management plan on the horizon and are these budget figures given to the consultant who will be doing this plan and with a with the idea of make a plan that the budget that is friendly to our budget or is this budget subject to change based upon what based upon the findings of the strategic plan I'm gonna ask Brian to speak to the strategic plan he is the one that is the city's liaison liaison for that yeah Brian burner director of solid waste and again this is a strategy this is not a plan so this is what we have to consider before we go back into making the plan you are correct that part of this the development of the strategy will be reviewing previous both operational and fiscal constraints and as and as we move forward using those to determine exactly you know what impacts are going into the system so we can make proper decisions moving forward in a plan to how we're going to implement you know increase diversion control cost minimize environmental impact so that will be part of the the evaluation as we're looking forward here and in the next budget year well you will probably see the impacts of that evaluation now this the the the approval this strategy should be on your I believe the September 14th or the meeting following so we'll have an opportunity to discuss that a little more in depth thank you very much you're welcome question question on the list of capital projects for this there was something called a fleet building construction can you explain what that is is that a new structure for working on equipment is it an addition to an existing one or just what is that this would be for a new facility at the solid waste site for working on heavy-duty equipment out there so it is not expansion of an existing facility being new construction all right thank you other questions just want to thank solid waste for the way they take care of people who need assistance with their carts and their trash and the recycling I for one thank you very much I don't have to drive across town every Monday anymore and it is it is great that and I think the ratepayers are happy to pay that over is that it costs to help out people who need assistance and thank you for doing it it's a nice service yeah thank you all right then the electric utility is next and this is a two-part presentation so the first part of the presentation I'll walk through the budget information with you then Terry Nolte will come up and present the deck financial pro forma and some supporting slides so presentation objectives similar to the utilities probably need to go through these again with you again but load forecast we'll look at really quick financial forecast the capital improvement plan the CIP questions that you have at the end we're currently not proposing rate changes for the electric utility this fiscal year so financial assumptions the average load growth of 3.2 percent over the first five years is included in the forecast we have decreased the t-cost allowed rate of return which is included in other revenue on the pro forma and I'll show that to you so it continues at twenty eight point zero four percent through fiscal year 2022 it does decrease to 16 percent in fiscal year 2023 and I'll point that out to you on the pro forma expenses the ROI to the city to the general fund from electric is currently at six percent in the proposed budget this was a direction the City Council and this does go through the end of fiscal year 2022 and then it does return to 3.5 percent in fiscal year 2023 and the current performance that you're looking at does not anticipate any sale that Gibbons Creek facility however we do have 21 million dollars in decommissioning expenses accounted for in the pro forma and then we have 1.7 million per year in payroll reduction costs versus the 2020 budget out of those due to the program that was just recently completed and so on this table here you can see the end of your estimate 2019 you can see in this green line cross 2020 you can see residential seven point seven percent commercial is six point four percent and industrial four point eight percent and then other three point three so this is the load forecast for the electric fund and what supports the revenues in the current proposed budget the electric revenue detail so you can see the non-deck base rate revenue of eighty eight point eight million you can see the ECA revenues I think mr. cheek had mentioned earlier fifty three point four million you can see the non-operating revenues of sixty four million and you can see some interest income of six hundred and fifty thousand so total revenue non-deck related is two hundred and six point eight million and then you can see the deck room revenues being put in there of twenty four point five bringing the total revenues to two hundred and thirty one point four use reserves you know having playing use reserves in the proposed budget so you can see total resources are equal to the revenue electric expenses by divisions these are operational areas similar to the utilities we wanted to show these to you you can see administration was sixty seven point two power supply administration this upcoming fiscal year will be combined with electric administration so it does go to zero energy management of four point three some of the major other operational categories you can see is wholesale power expense this is in a separate division we do keep this separate for purchase power ninety two point two million the Denton Energy Center of thirty three point four million and then moving down the page a little bit you can see operation and maintenance of six million and then some of the other ones engineering a three point nine so total expenses of two thirty one point one million expenses by detail so for my category you can see dropping down the page here you can see the personnel expenses of twenty point eight million some of the other major categories this is that return on investment that I mentioned you can see it going from six point six million in the current adopted budget to eight point eight this does reflect the increase this current fiscal year so we are planning to come in over budget for the return on investment and then this is the true six percent for the entire fiscal year of eleven point nine million franchise fees and you can see nine point nine million for franchise fees operations is seven point three and then the DME non-debt other debt is thirty point five and then we have separated out the deck debt for transparency is seventeen point two taking all these different expense categories we do come up with two hundred thirty one point one million in expenses it's the five-year forecast electric fund you can see there is no rate increases we do have that reduced t-cost revenue that I pointed out a couple slides ago so the adopted 2020 budget is here in this column we did have an adopted budget with planned use of reserves of six point nine million for total resources of two hundred and twenty nine point two expenses are two hundred and twenty nine point two with those zero rate increases or decreases in 2020 and the budget included a forty eight point seven million dollar ending operating reserve interviewer estimate we are planning to come in a little bit better about three point four million so total resources of two hundred and twenty nine point five that was zero rate increases or decreases the proposed budget is twenty twenty one is here in this dotted line you can see total revenue is equal to total resources of two hundred and thirty one point four total expenses are two thirty one point one so for a net income of just about three hundred thousand so a balanced budget and then the zero zero rate increases for the upcoming fiscal year ending operating reserve is seventy three point five million in the electric fund and the reserve requirements of this fund are different than the other utilities minimum of sixty days or sixteen percent the maximum or seventy five days or twenty one percent so that minimum amount being thirty six point nine million that maximum amount being forty eight point five going into the future years what I want to point out is the reserve does stay above the minimum reserve requirement in each of the five years getting to forty five point two million in the future years jumping back up the page really quick what I wanted to point out you see this non-rate revenue this is the decrease that you see from sixty four point six million in the proposed twenty twenty one budget to the forty eight point two million you see in twenty twenty three this is the decrypt decrease in that t-cost rate of return that we discussed a couple slides ago one of the important thing I want the PB to see is the return on investment or franchise fees you can see in the proposed budget or twenty one point eight million you can see that decrease back down to three point five percent for the ROI to the general fund going back down to sixteen point three in fiscal year twenty twenty three it's a five-year capital plan for the electric fund so in twenty twenty one the proposed budget we have a total of thirty two point two million in distribution projects transmission which just does include the Hickory Creek substation facility of twenty point eight million so thirty two point eight million total grand total would be sixty five million dollars in projects similar to the other utilities we will look at this utility throughout the year look at available funding see what projects are scheduled to go to construction before issuing this debt amount aid in construction nine hundred sixty five thousand CEO issuance sixty one point five with a little bit of revenue funding of two point six million is how that sixty five million breaks down five-year capital plan this is on multiple slides I will go through here and hit a couple of the major projects if you have any questions we can address them afterwards and Terry's here to help me walk us through these also so the CI CIS enterprise system of one point five million is currently included in the capital plan moving down the page to point out some other large items you can see transformers and equipment of one point nine feeders and extension and improvements of nine million new residential and commercial development of three million and overhead to underground conversions of two million so this page makes up a total of eighteen point two million in projects the next page you can see the Hickory Creek substation facility that I mentioned on the previous couple slides of seventeen point four million is accounted for in this budget and there are some transmission lines associated that substation you can see a three point seven million and then you can see the Eagle transmission line three point nine million Cooper Creek and Brinker transmission line of one point seven million is also in the budget and Hickory Creek substation facility of four point eight million you can see that here under distribution city streetlight program this is something I pointed out to the public utility board previously and Tony has discussed the public utility board and City Council in the past we do have three million dollars accounted for in each year the five-year CIP for street lighting so you will see that three million in each of the years single-fade meter maintenance and growth of 435,000 so for a total of 65 million thirty three thousand one fifty four proposed electric rate changes so there are no increases or decrease for residential customers but we are proposing to make minimum updates to the rate ordinance this fiscal year the first rate we're looking to discontinue is the residential renewable energy services writer also referred to as RG all customers currently receive a hundred percent renewable energy so we are looking to discontinue this rate the weekend service also referred to as WS we are looking to discontinue this a recent audit did reveal that the weekend customers were hitting their monthly demand outside of the designated hours the downtown decorative lighting DDL the rate is no longer applicable to the downtown customers and then the dark fiber we're looking to discontinue this and then the banner install fee we are looking to discontinue and then that fee was transferred to building safety commercial renewable energy services writers similar to the RG rate all customers do receive a hundred percent renewable energy so we are looking to discontinue this independent wholesale generator IWG we are looking to discontinue this rate also so the RG by discontinuing this rate there are 186 residential customers that would be impacted with an annual savings of forty seven dollars and thirty six cents so residential rate comparison for electric utility you can see the city of Denton in the middle on this green bar so over the average customer based on 1200 kilowatt hours a month would be 124 80 and we'll bring this back to the public utility board once the rest of these cities adopt their 2021 budget and then this is a summary slide of the proposed rate decreases for all the utilities together so as I'd said electric there are no proposed rate changes for the average residential customer water based on 9200 gallons the customer could expect a one dollar and eight cents decrease which equates to a 2% rate decrease for water customers wastewater there is no rate decrease or increase proposed for residential and then solid waste for the standard car customer they would see that one dollar decrease which equates to five percent future dates so we will bring back the red line rate ordinance to you on September 14th we will submit that to you prior to that to allow you adequate time to review it and ask any questions on September 14th before approval and then we will have our public hearing on September 15th City Council budget adoption is scheduled for September 22nd and then we'll be circling back with you in December with that mid-year budget rate discussion and then that gets us to the deck Susan if it's okay I'll open if you're okay with opening up now before Terry takes over for my part of the presentation that'd be great I have three questions but before I go anybody else have questions go ahead Billy and then you Ed so on the increase in ROI for DME how is the revenue shown for that item work where is that being specified in the rates the the revenue so the ROI is transferred from the electric fund to the general fund a couple months ago the City Council did make that decision to increase that ROI through 2022 right so where is that shown in the revenue so Billy that's this is Tony sorry so this is built into your base rates it's an operating expense okay so we show no rate increase that's why I'm confused so it essentially is a drawdown on reserves it's a drawdown I'm sorry electric reserves it is okay yeah thank you oh one more question I didn't I was looking at the capital expenditure or scaffold capital budget and it didn't total out the transmission separately and that would should equate to revenue correct you're talking about the assets that are put into the t-cost rate of return mr. cheek is that what you're talking about yeah and as it equates to the capital electric five-year capital plan okay let me ask so the answer the answer of that Billy's no you know that those assets what shows up on the expense side is the debt service and so those revenues are recovered over the the life of those assets okay okay well I didn't total the transmission separately from those so okay we can look at that yeah you just met it now we can we can make that adjustment mr. cheap yeah cuz you know t-cost is good that's that's good expense because it generates revenue correct this gives me an idea what it is so I can add about don't worry about it just didn't say that's all I got yeah and I guess to that point mr. cheek if you go back to the let me see what slide it is on the presentation here it'd be slide number 67 in the slide role it may be slide number nine in your presentation and you can't see the transmission total on this slide but we can also add it to the detail okay 32.8 don't worry about I was just having a hard time locating the total I got a calculator but alright thanks okay and you had a question yeah regarding the 21 million that's budgeted for the decommissioning of Gibbons Creek is there actually a time framework on the sale is or is this going to drag on forever this is this is Tony there there is no update at this point they're still ongoing negotiations going on by the board and TMPA staff and so at this point there's there's really no movement other than both TMPA and the cities have included the decommissioning expenses in their budgets for next year is there any deadline on these negotiations you know now it's just non-going negotiations an open thank you sir go ahead just a quick quick follow-up on Ed's question will that contract come before us if there is a contract to sell Gibbons Creek absolutely I think as we as TMPA continues to to move forward at some point if if we see a path forward then we'll likely come back to the PB into the council in closed session and give you a little more specifics before the contract ever comes to you okay thanks this man okay anybody else I've got three if we go the load forecast one I didn't write it down slide we're showing in 2019 a decrease I'm assuming that is because of COVID and some of the low was probably decreased because people aren't in business yeah so we're seeing probably about a five to seven percent decrease in overall load here in the city so okay all right and then on page 66 if you could remind me what is our required debt service coverage is it 1.2 1.25 1.25 so I know there are just projections and you refine them but it does show that in 2023 and 2024 we will drop below our debt service coverage ratios but we we have opportunity to change that before those years correct yeah the future five-year forecast shows us dropping below the 1.25 and 2023 and 2024 but you know we'll continue to refine this bring it back to the public utility board every single year as things change in the load forecast with the electric utility so I bet you are correct it does currently show us going below and Susan this is Tony I'll just point out that the city's debt policy is where that 1.25 is found for bond covenant standpoints the only bonds that require that times coverage are the outstanding revenue bonds that we issued in 2017 for the deck and that actually only requires a one-time coverage ratio so for bond company standpoint we're fine either way it's the internal debt city debt policy that they will need to address and I was more concerned about the bond covenant so thank you yes and then my last one is simple what is dark fiber that we're discontinuing so Chris Lutrix on the phone I'll ask him to explain the dark fiber really quick if he's not Terry's here quick explanation dark fiber is just a fiber optic cable that is dark or not lit up on either end and that's we don't provide that service any longer okay typically on a dark fiber product the customer would install the equipment at its end and light it up and maintain that equipment I didn't want to assume that that's what it was okay thank you I thought it was a conspiracy theory any other questions all right all right I'll turn it over to Terry to review the deck finances with you good good morning again Terry Nolte assistant general manager madam chairman I didn't want to be presumptive but if you wanted to take a break we could certainly do that at any time now would be good before we get into this deck this is gonna be one isn't it okay well that's it'll take it'll take about 15 minutes to go through the presentation okay what do you five minutes ten minutes what do y'all need five five okay five minute break 11 26 a.m. and we're back we're going to go over the deck mr. Nolte okay I'm gonna pull up the presentation this is a presentation that I put together for City Council we discussed with them last week in general what we're trying to do here is show that the deck on a standalone basis when we look at the deck pro forma we look at expenses and revenues for the deck on a standalone basis and we're projecting for the next five years as we did this year negative net income for the deck on a standalone basis however there are additional sources of revenue and savings I shouldn't say revenue additional sources of value that the deck brings to the overall supply portfolio that explained the Nate why a negative net income on a standalone basis is a very viable solution so you can see the deck oh sorry and get the presentation up okay so the biggest additional source of value is the fact that were it not for the deck we would have to purchase significantly more renewable energy and I'll just point out the deck in my research was a component of the overall renewable Denton plan to achieve the 70% renewable and then a hundred percent under the Denton renewable resource plan currently have 460 megawatts contracted if we were to go to a hundred percent renewable without the deck we'd have to put under contract 800 to 900 megawatts this is the same approach that Georgetown Texas has used and as you may be aware as a result of that oversupply their their electric rates are the highest in the state the other source of value so so for us in today's market it was it's about 18 to 20 million of incremental annual energy purchases that we would have to make if we did not have the deck the original pro forma in 2016 predicted that to be nine nine to 20 million dollars we also achieve significant savings in being able to arbitrage the day ahead market and the real-time market the original pro forma projected 2.3 million and in the first full year of operation we were able to achieve 3.3 million of actual day ahead to real-time arbitrage here you see the pro forma and here are the negative net income numbers that we're speaking to if we add these additional sources of value now you see the 3.3 million of the day had real-time come in and the avoided energy reap any avoided renewable energy purchases that we'd have to make and you can see they get larger out here in time and that's due to the to the forward curve shape and if you add those sources of value in now the the true adjusted net income becomes positive from 14 4.7 million for this fiscal year moving up some years to 11 million and 7.8 million and 23 24 now if we look at the shutdown has been suggested by members of council if we take out all the energy expenses and all of the energy and capacity and ancillary service revenues and all we have is the debt you would see that the debt net income would be the exact debt burden 17.2 million dollars a year now if we add in those additional renewable energy purchases that we'd have to make and the lost gross margins because in our five year forecast we have gross margins being achieved by the deck which would be lost if the deck were shut down we ended up with these adjusted gross adjusted net income numbers at 28 to 35 million over the next five years and then if you put the adjusted net income with the deck the lost net income with the deck you end up with these large numbers of the decks value true value is between 36 and 43 million a year over the next five years and then to put this in terms that ratepayers can get their arms around if we were to not have the deck these would be very large rate increases that we'd have to impose on the energy cost adjustment 65 82 74 69 percent annual increases that's those are standalone numbers not compounded and then for the average homeowner that would be you can see 27 dollars a month up to 35 dollars a month and annually it would be 334 up to 421 dollars per year in additional energy cost so that that was a theoretical forward look if we look at the actual performance of the last two some of the last summer and then this summer so last summer I think earlier today we mentioned the fact that you know Todd mentioned we made 17.8 million dollars in a five-day period and a 17.3 million dollars of gross margin we had mild temperatures up until mid-August then we had the price spikes our purchase power costs for the overall portfolio of which the deck is a component of 11.1 million without the deck if we run this analysis and we would comply with the risk policy that's been approved by PUB and Council we would have had to purchase a hedge a financial hedge is 7 by 16 that's a 7 days a week the on peak hours from 7 in the morning until 11 at night well our purchase power costs would have been 29.4 and the deck effectively saved 18.3 million for last summer if we look at this summer through the 13th of August again we're spearing mild temperatures we have had no price spikes to say we did have a couple on the 17th but that's not included in this temporal period our purchase power cost today 5.8 million through the 13th and without without the deck with that same hedge it would have cost us 18.2 million for a savings of 12.4 million so with that I'll open it up to any questions you might have I think there was some discussion about this in the past but considering a scenario where where federal regulations come in environmental regulations come in that that would not probe that would prohibit further co2e emissions and that sort of stuff does do you all have a contingency plan in place yet if should that occur where the the decks operation would be severely curtailed by that sort of regulation we haven't formalized a plan there are a couple of options for us you know I think it's impractical to think that that would be a like a light switch where you turn it on and emissions would be limited it'd be a long runway to a final end state where you know you'd have a five to ten year runway of time to make those kinds of changes so we have plenty of time to make those plans one of the new technologies that's being considered is using surplus renewable energy at night to generate hydrogen and then and inject that hydrogen into natural gas pipeline and use that to combust in in units like the deck the deck actually is designed to be able to handle that type of fuel and any any regulatory paradigm that would come out of such legislation would most likely include like I say an on-ramp to allow for the industry to change and to accommodate that type it's impractical to think that Texas as a market would be able to go away from fossil fuels completely just the nature of the intermittency of wind and solar necessitate having backups or else we'd be seeing what California saw last week which was rotating outages of 200,000 people per day so that's kind of a personal opinion but again I think the thing the way to think about this is it to be a very long transition period yeah I agree completely and in the when the when the deck was initially discussed years ago there was we were told that a certain amount of land was going to be left available around the deck to possibly install some sort of solar installations I don't know if you if you are aware of that or if and if that is of any that validity in terms of consideration well the the the land at the deck while we do have a significant amount of land out there it's actually not sufficient to get the economies of scale that we're achieving in the utility solar purchases that we're making of the utility solar purchases that we're making are you know in a hundred megawatt increments and that requires between 700 and a thousand acres for that level of production okay thank you Terry Karen okay I have a rookie question for a Terry can you let me just think out loud a minute I'm trying to figure out how the deck reduces our dependence on buying renewables and is it because when we sell the deck energy to the market we get a credit which is then coming back into our system as a renewable here and I have the same rookie question yeah so so the way that the way that the council has set the ground rules for determining whether we're a hundred percent renewable as we look at the total energy we serve for the year and then we look at the number of renewable energy credits that we have for that same temporal period so what happens is our generation of renewable energy at night from the wind units and surplus solar generation in the shoulders shoulder hours building up to the the peak demand at five six o'clock in the afternoon those are sold into the market we we derive revenues from it but we also derive renewable energy credits from those and so those surplus hours are used to offset those hours where we're actually generating power from the deck and that's the way the accounting works okay yeah thank you Billy okay yeah just a soapbox moment here but yeah I'm all all for all renewable energy we can use and use it accordingly I just think as a nation especially just in our little community we're in transitional period coal makes no sense anymore coal's a dying breed it's of course people that's all they have available to produce electricity and their transmission lines and how that works up they've got to use it I get it but the transportation costs killed coal to too expensive to dig that's obvious it was easy to make the decision on you know where we were going on the TMPA and coal-fired plant down there and given screen but I think we're just we're gonna have to kind of sweat this one out with natural gas it's our best option until we can get there we're not there yet that's it I agree my wife never tells me to unmute Terry this is the question one of the very first presentations you made in today's meeting had to do with the a couple of numbers in there that were somewhat amazing to me and I think you cited a number that right now in Texas there's over 31,000 megawatts of excess renewable generation capacity if I read that right in one of your earlier maybe one of your first presentations and back when Denton was contemplating going to a hundred percent renewable that number instead of being 31,000 megawatts of excess capacity was like six or eight hundred megawatts so any thought we have of adding more generation capacity using solar or wind we need to take into mind that there's already 31,000 plus megawatts of capacity that is beyond the demand did I get that right the numbers are correct it's not actually surplus it's it is installed capacity so that's the amount of stock installed wind capacity in in ERCOT the peak demand of ERCOT is around 76,000 megawatts so you know at 35,000 megawatts or so of renewables it's just under 50% of the makeup of the supply capacity in in ERCOT that is predicted to go up the biggest increases that we're gonna see today we have about 3,000 megawatts of solar we're expecting solar to be at 7,000 megawatts by the end of next year and so we're seeing significant increases in solar generation wind generation is slowing down a bit because the production tax credits will be phased out after 2023 so but we are still seeing I think this year ERCOT projects some 7,000 megawatts of additional wind over the next two years and again the the the the issue that we struggle with is until we can come up with an economical way to to store that power so that we can shift it from the periods of time when it's in surplus to the times when we need it we're still gonna have to rely on gas primarily in Texas in order to keep the lights on so to speak right okay thank you for clearing that up other questions all right thank you Terry you're welcome last item we we do still have this item correct the energy management organization thought yes so that concluded the the budgetary as we do have item B if you want to get us started on that and Terry will take that over and it will also have a gentleman from Deloitte on the line that'll kind of walk through the presentation as well okay all right so then item B receiver report hold a discussion and give staff direction regarding the energy management organization financial review conducted by Deloitte I wanted to interrupt and point out real quick the Deloitte portion of what you all received from legal is actually available to the public thanks Larry I've just in case it was inadvertently placed I wanted to bring it up before the meeting but as long as it's public no problem it's on the desktop where is the desktop all right okay so we have item B receiver report hold a discussion and give staff direction. All right okay apologize for the technical difficulties I'm gonna turn it over to Steve Engler with Deloitte he's gonna walk through the first few of these slides. Thanks Terry hope everybody can hear me okay I'm Steve Engler I'm managing director with Deloitte's energy risk advisory practice so good morning to chair madam chair and the board members thanks for your time I'm gonna kind of co-present this next section with with Terry Terry you can flip ahead to the kind of past the legal stuff yeah here we go so Deloitte was asked to do basically two things one to re perform a benchmark analysis around the performance of the financial performance of DME in a way similar that we've done it previously and had presented to PUB and council and then the second piece was to perform an analysis or basically a check-in of where DME staff is as it relates to a number of recommendations that we had made in a prior project across the aspects of hedging and risk oversight so with respect to the first component of work again this is a benchmark looking at the performance of DME from a financial perspective as compared to the market you may recall and Terry skip ahead if you wouldn't mind two slides you may recall that we had done an analysis prior it was shortly after the the Emo is established and when you had had a recently quoted full requirements supply contract for the for the energy requirements for the to serve your load given that there had been a number of years since that contract had been quoted and initially as well there have been a number of changes to the basically the underlying portfolio that DME and the Emo manages specifically a significant addition of long-term purchase power agreements some of those renewable agreements that Terry's mentioned it was agreed that the the methodology that we had followed the first time was no longer relevant and so we had to think about adjustments to that methodology and how we would come up with a fair comparison so the first thing that do I did with with management with staff was to basically agree on the methodology that would be followed in order to calculate the benchmark comparison another element that was discussed where there were some financial obligations for example with the debt service related to MPA a number of things that predated the establishment of the Emo so that also caused some challenges in terms of getting apples to apples comparison so what we agreed on the focus of the assessment of the focus of the benchmark comparison should be on that portion of the energy and the related costs that are actually manageable by the Emo so things like the TMPA debt service and things like the the costs related to those long-term purchase power agreements that are part of the renewable dent and plan were were identified and calculated but separated from from the analysis and then finally that what I would point out is where we essentially ended up as a recommendation for the benchmark was to to use the observable day ahead ERCOT electricity prices that are that are available and published in the market and we would use that as the benchmark comparison to the performance of the of the Emo for the for the given time period of the study so the you can look to think about the analysis really in three components the first and I guess the overarching or the all-in analysis looked at all load as valued at the day ahead market prices plus the adders for ancillary services QSE costs other components were included and calculated consistent with the between the FY17 and FY18 approach this is really an all-in cost to serve the dent and load the next piece of the analysis was to identify isolate and then ultimately separate those renewable PPA contracts that that that you are in so identifying the portion of the load that served served by those PPAs the cost associated with that and then separating that out from the overall there would be all-in costs and what you're left with really is the remainder or what we described as the manageable portion of the load for which we identified the the forecasted costs as well as the performance of DME specific to that manageable portion of the portfolio so what Deloitte was engaged to do essentially we did a re-performance if you will of the analysis so we as I said work with with staff to agree on the methodology and the data required in order to calculate the benchmark we agreed on that and then DME staff actually developed a model and calculated the benchmark and the comparison costs separate to that and independent of that Deloitte obtained all of the relevant cost and benchmark data and all those things that were components of the model and we separately obtained ERCOT pricing data and essentially re-performed or independently re-performed the the the model assessment and validated the results that were obtained both by the Denton approach the Denton DME staff approach which was then repeated and validated by by Deloitte you can see that the components of the of the analysis down below there was the actual cost component the benchmark calculation is as compared to the original calculation we reviewed and agreed upon those exclusions from the methodology that I mentioned before validated the ancillary service components of the charges and then as I said reviewed the file and the aggregation of those costs across that whole methodology so the the re-performance was really front front to back in terms of the establishment of the assumptions in the model the cost and the data components of the model and in the execution of the calculation itself. Terry do you want to summarize what we came up with in terms of the DME calculation that was validated also by Deloitte? Sure, working with Deloitte it was a very detailed effort here there's a lot of a very complex analysis and we've tried to boil it down into its summary pieces here but in the first block first table here shows that the we take the total load that we served for the year and we dispatched the load against the market using that day ahead metric. You can see that the actual performance we we were able to supply the load for 58 million versus a projected metric of 64.4 for a benefit of 6.2 million. Then we look at the PPA performance and the same analysis was done but here you see the PPAs actually cost us about 5.5 million and that's primarily due to the fact that PPAs are a fixed price contract and they're selling that fixed priced energy into a market. That market is the actual market at the time and that resulted in a 5.5 million dollar loss. That's just the nature of our position. The wind shows up at night when the prices are very low and then when we take the non PPA performance which which would be the dispatchable part we call it dispatchable but it's when we think about a wind resource we have a projected profile of output for that wind resource on a daily basis for each hour of the day by month and from that we have to assess a probability of actually getting that energy and we have normalized that into what we think is a reasonable confidence interval and optimizing that against the day ahead market we were able to achieve about 11.7 million dollars of benefit. A couple of things that are important to the analysis when we look at congestion and that's the difference in prices between where we deliver energy into the market from our renewables versus where we buy it at to serve the load we have congestion and we buy congestion rights as three years out in the future. There is a settlement of surplus revenues that are in the market called card that's the leftover money from auctions that we participated in and other market participants participated in that are then refunded back to to each of the participants on a pro rata share so it decreases the benchmark cost it's actually a positive benefit for ratepayers. We also had a PPA forecast versus the day ahead market price so that this is that variability that I was mentioning to you in the output of the of the renewables and then without the TMPA debt exclusion and we also to be intellectually honest with the with the analysis here we assessed a penalty of 50 cents per megawatt hour for optimization and that's basically a cost that we think for each megawatt hour you can even unskilled people given some direction could good achieve 50 cents of savings. So with that I'll turn back over you Stephen. Okay thanks Terry and so then the second part of the the analysis that Deloitte was asked to perform was essentially an update or a calibration of where DME is as it relates to a number of recommendations that we provided in the previous engagement so you may recall that we were asked to do kind of a benchmark or leading practice assessment of capabilities across DME specific to the commodity risk management capabilities so we did that benchmark or that leading practice analysis several years ago we made a number of recommendations across the dimensions of people process governance and technology and management was interested in basically us assessing where where DME is in terms of progress against those recommendations so what we did is we made data requests we reviewed documentation and processes and policies that have been put in place since the original assessment and we were able to for each of the recommendations we made ascertain whether we not whether or not we felt that the recommendation was complete whether it was still in progress or whether it had yet to be begin so in the next slide we can show you kind of a in a graphical way you see the four dimensions that our recommendations were grouped into governance process people and technology you can say at the time of the assessment we did a an evaluation as to the current state of capabilities and then the desired future state so the recommendations that we made were all intended to essentially close those gaps between the black circles and the green and then all the way to the right if you can make out the font you can see that the recommendations were grouped into high medium and low priority categorizations and then across each of the dimensions how many recommendations we made and in the final column under status you can see that in the column under C those are the recommendations that have been completed the under IP are in progress you can see that there are some recommendations that are in that state as well and then there was one that was deemed not relevant by management and so therefore that was that was kind of set aside so the next slide shows even a more summarized version of this we had 60 recommendations in total 27 of them in our view are completed and 32 are in process or ongoing I would say the majority of those either in process or ongoing recommendations are either enabled by or relate directly to the implementation of a commodity trading and risk management system which on an interim basis DME is now using a Deloitte's cloud hosted commodity reporting and reporting system and there is also a plan which perhaps Terry can speak to to implement a permanent solution which will and already has in fact addressed a lot of those that we noted were in progress recommendations happy to take questions or comments Terry anything I missed or left out I think you covered it okay that's gins all right I guess there are no questions thank you thank you all right that concludes all the items do we have a motion to adjourn some move okay second we are adjourned y'all next bye bye