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 all right you're on it's nine o'clock on Monday August 24th we have a virtual

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 quorum so we will call the public utilities board meeting to order the

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 first item is the consent agenda does any board member wish to pull any items

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 from A, B, or C? I do. Okay, Russ which one? B and C. All right do we have a

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 motion to approve that item A? So moved. Second. All in favor second by saying aye?

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 Aye. Opposed? And that carries. Item B. Yes, should I ask the question first? Yeah I

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 think I'm gonna ask I think it's that's an acceleron I think that's Krista and

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 she's here with us and so any question you have she'll be able to respond to.

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 Okay, we're asked here to pay for a software program that will cost

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 approximately $220,000 per year for five years each of five years and it serves

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 about 575 customers so the city of Denton is paying on the average

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 approximately $383 per customer per year for this program. My question is what

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 benefits does the city of Denton receive for paying that much per customer per

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 year? You're muted. Sorry the reason that you're seeing that value amount is not

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 because that's our actual cost that's projected cost based on users as we

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 would increase the utilization of the program. All of the cost of that program

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 are captured in an increased facility rate only on the users of the program.

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 It's basically a net zero cost to the city but we have to have the the spend

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 approvals to be able to continue to collect those funds and pay them back

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 out. The program itself allows our users to be able to take outstanding past due

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 balances, written off debt, bring them into the program, be able to still get

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 services without a deposit and the majority of our customers like it 70% of

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 them are completely debt-free within about 60 to 80 days so it does serve a

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 valuable purpose for our customers. So I think what you just said was the the

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 people that use this actually pay for it by increased fees built into their rate

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 structures is that right? That is correct. Okay that takes care of that. Are there

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 are there really just 575 people? It says over 575. There are close to 600 at this

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 point. Last year we did a educational campaign with the different apartment

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 complexes and managements with about 410 different apartment complexes and we're

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 now distributing information on the pay-as-you-go so that they can put that

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 out there. We were working on a marketing campaign just about the time the

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 pandemic started so we kind of had to back burner that but it is on our future

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 goals for this coming year is to be able to continue to increase adoption rates.

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 Okay. All right do we want to move on to C and then we can approve both B and C?

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 So what's your question on C? Well concerning the the way that the this new

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 device is going to be charged we're charging by the hour and not by the power

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 that's dispensed. Is that true? So I'm gonna ask Chris Lutrik who's on the line

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 to respond to that. Chris? Yes sir. Can you hear me? Yes. Yes sir you are correct so

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 there's two methods to price or two standard methods for pricing EV charging

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 by the actually the power that flows or or by the minute so a lot of the EV

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 vehicles out there actually when you plug it in it tells you how many minutes

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 it takes to charge so that's why we elected to go with that with that with

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 that unit of charge there it's just more simple to understand so it comes out to

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 four cents per minute the rate that that will be charging and that was the same

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 rate structure that the blink system had so we're just keeping it consistent.

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 Yes I have a question about that then without knowing all of the cost I think

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 the city of Denton I think we should recover at least what it cost us to

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 deliver that power to the vehicle does the four cents per minute cover the

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 cost of doing that? Yes sir it covers our cost so it actually covers the cost of

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 the power as well as our capital investment so the the four cents a minute

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 we put that on about a six-year ROI for the for the equipment and and we had to

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 go off just some standard usage rates so of course the more that they're

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 utilized the quicker we'll pay those off but with the the limited data we had

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 from the blink system we feel at this time that four cents is adequate and by

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 putting it in the rate structure it can be addressed each year hopefully as the

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 adoption rate grows we can bring forth more data and more exact pricing in

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 future rate book updates. Okay thank you. Charlie has a question and then Ed has a

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 question Charlie go ahead. Okay on the I see the charge per minute but that kind

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 of omits the rate of charge what is the maximum rate of charge that is delivered

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 by these new machines? That'd be a 7.2 kW. Okay so what do we work out in pennies

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 per kilowatt hour on if somebody's at 7.2 kW? So could you phrase that one more

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 time so somebody charged for an hour at the full 7.2 kW? Right obviously they'd

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 use 7.2 kilowatt hours. Yes sir so at our I guess a way to look at that is if you

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 put that into a residential rate which would be like ten and a half cents per

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 KWH so you're looking at 70 75 cents 80 cents. Okay so we're covering our costs

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 and then some on the rate I would suggest that since we're putting this in

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 the form of a very formal document that we include the 7.2 kilowatt maximum rate

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 in what we pass as an ordinance so that we aren't just charging four pennies per

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 minute for whatever that way if we have you know more effective machines or

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 machines that can deliver higher rates of charge we don't have to change our

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 rates and then I have a couple of other questions on this I know that electric

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 prices fluctuate hourly and wholesale and retail gasoline prices fluctuate

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 hourly if we're trying to find an effective way to fill people up with gas

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 in the form of electricity for electric cars don't we need the ability to

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 vary this rate from time to time depending on our our cost obviously

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 right now today there's plenty of flexibility into that but if power

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 becomes more costly setting this in stone with no flexibility seems kind of

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 problematic. Yes sir definitely in the future it could be more flexible

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 interest interestingly we just completed a we put out a survey with our

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 engineering department and Public Works our public information office for an EV

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 survey and interest interestingly a lot of people wanted more the feedback we

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 got was for a more standard rate as opposed to something that varies over

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 time so this this rate is specifically for the public chargers that the city

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 of Denton owns where that that rate structure would be most beneficial is

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 majority of the charging is done at home so definitely as we move forward we

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 brought a plan to you that phase three was within home charging and that's

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 definitely something that that we will have or offer or hope to offer is a

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 flexible rate where we can encourage our customers to charge at those off-peak

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 times. Wonderful and that would be at home where they would charge at the

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 off-peak times and charging at home would be at a lower price than using the

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 machines? Yes sir I would I think that would be the preferred the preferred

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 model there kind of those the chargers that we're putting around town they would

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 the survey said hey we need more of these so more is a convenience and more

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 as you know you're running out of gas and you're driving by a gas station you

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 can always get gas so there will be you know most of that charging will be done

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 during the day which is on the high peak or the high use time so I think we

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 can help shape the the the activities of our EV chargers by incentivizing them to

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 charge at home and off-peak time. Okay I would suggest that we include the 7.2

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 kilowatt rate in the ordinance that we pass so that it's documented that you

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 know the size of the pipe I think is very important in terms of the of the

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 cost if we're going to publish this as as part of our rate book we ought to have

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 7.2 kilowatts in there as the maximum charging rate so that somebody who reads

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 it can quantify what they're paying per kilowatt hour. Yes sir we can do that it

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 may be more beneficial to state that as a level 2 charger if we got a got a

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 charger in it's slightly different at 7.3 KW or 7.5 I think the standard in

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 the industry that's a level 2 it's a 240 volt 40 amp service would you be

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 comfortable with that language? You bet I don't mind building a little

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 flexibility into the language but I think to just say charge per minute

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 leaves out something that's crucial. Yes sir thank you for the feedback. You bet.

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 Ed did you have a question? Sort of a question and some observations I have a

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 home charger and I it tells me exactly how many miles I'm going to get per hour

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 of charge and I wondered if that is that differs with different models of cars or

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 if it's the same with everybody if they fill up with the same amount of

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 electricity at the same rate so if if I had a question it would be how many miles

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 per hour would how many miles does one hour of our charging the city's charging

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 provide the driver of the car is that is that a blanket figure for all electric

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 cars or does it does it is is it different for different types of

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 electric cars? Yes sir it's different I believe your car the battery capacity on

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 a Tesla's are much much higher than say the Nissan Leaf so it depends on the

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 size of battery that the the car is outputted with how much how fast it can

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 take that power. Okay all right well this great I'm I'm very happy that this is

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 going to be expanded through the city thanks. Billy I saw your hand up yeah

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 okay so there's a nationwide discussion about user fees for electric cars and I

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 think you know I think that electric cars and electric trucks hopefully are

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 the wave of the future I mean big trucks not the not the

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 spaceship that Elon's coming out with here pretty soon. My concern would be our

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 user our return on investment franchise fee however you want to look at it's

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 probably a little different than franchise fee it's a true user fee like

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 a fuel tax is. Is there a discussion going forward on how we might implement

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 something like that Chris? Yes sir Mr. Chief there is kind of if you think way

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 back to the early days of the ATM card where a bank had a network and it gave

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 you a card and you could go specifically to that bank and get cash out and it

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 took the government to step in to say hey we need a unified network where you

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 know your Wells Fargo card can work at a Bank of America or a Citibank so there

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 is talk in the in the industry the EV industry of having a network where say

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 for instance our customers will need to be a charge point customer that their

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 charge point access could be used at Tesla it could be used at any of the

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 other charging networks across the country but that's probably going to

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 take some federal oversight and federal standardization to make that happen but

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 it is being discussed. Right yeah and if anybody's not if I wasn't clear I think

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 Chris knew what I was talking about but you know when you buy gas for your

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 current vehicle or my current vehicle I pay a tax on it some of it goes to the

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 federal government something goes to the state government that's what I was

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 talking about is going forward how to how do we charge because electric

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 vehicles currently don't have a path to charge for the use of the roads I'm

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 sorry I completely missed your question there so you are correct that's like

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 point you know nine cents tenths of a penny that goes to the highway fund

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 there are often talks in the industry about making a registration you have to

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 put your mileage on the vehicle so say you register your car this year and you

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 said 9,000 miles and next year you're at you know 10,000 miles you would pay a

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 tax on a thousand miles that you that you drove so I think that's about the

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 only way being that electricity can come from anywhere there's no real real way

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 that's a meter that they don't have to be the counties or the states through

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 the registration of the actual mileage on the vehicle yeah that would be

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 difficult as well trying to get it trying to get people to correctly state

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 their mileage every year as well so well you get it inspected so maybe that's a

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 way to do it Charlie you have another question I was just going to approve

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 move approval of items B and C with the revision that I suggested and Susan I

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 think I think we have to take individual motions on each one of those items yeah

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 I agree why don't we I approve B I move B second okay all in favor say I I move

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 approval of C with the revision specifying the kilowatt rate second okay

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 we have a motion in a second all in favor say aye opposed all right next up

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 is items for individual consideration consider the approval of the August 10th

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 2020 minutes is there any corrections or changes okay do we have a motion to

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 approve okay second all in favor say aye aye opposed okay next item is to

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 consider the approval of the bill of sale an assumption agreement with

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 Denton Power LLC in the amount of two million seven hundred and fifty thousand

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 dollars plus an adjustment for August 2020 energy deliveries not to exceed

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 150,000 you're on mute Terry good morning Terry Nolte assistant general

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 manager bear with me a second I'll pull up the presentation

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 [Silence]

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 all right finally okay this this presentation is seeking approval to

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 purchase the Denton Power LLC landfill generation facility from DTE biomass

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 energy currently the facility is a 1.6 megawatt facility operated by the LLC

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 DTE biomass energy and their Texas affiliate Denton Power LLC it did begin

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 operation in 2009 the solid waste department receives 12.5 percent of

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 gross energy revenues as a royalty payment and we entered into a power

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 purchase agreement for 15 years at escalating prices that started at $68 a

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 megawatt hour and and in 2024 at $112.84 per megawatt hour the the the 1.6

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 megawatts actually runs at about 1.2 megawatts on average and that let

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 represents less than 1% of our overall renewable energy supply here you can see

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 the the above-market price of the of the power the red line represents the PPA

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 price the blue line is the around-the-clock price for the North Hub and

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 you can see it's significantly above market it's the second and the highest

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 priced resource that we have in our in our fleet at between 96 and 112 dollars

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 for the remaining term of the agreement we're proposing to purchase the assets

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 for two point seven five million as you can see that represents savings to

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 customers because if we were to stay in the contract we'd pay five point three

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 five million dollars over the remaining term yet the energy only has a market

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 value of 1.53 million the only way for us to achieve the savings is through the

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 purchase and assumption of the agreements including the power purchase

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 agreement so on a net present value this acquisition would save two point six

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 million dollars in in power supply that assumes the shutdown of the facility and

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 the flaring of the landfill gas as I mentioned that the future payments are

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 five point three million three five million and net present value because

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 we're a hundred percent renewable this and this represents less than 1% it will

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 not move the needle on our 100% renewable objective by by shutting it

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 down to the extent we don't shut it down and continue to operate it the NPV would

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 be reduced now we'll talk a little bit about the beneficial reuse of the

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 landfill gas you'll be receiving an update on on options for this in the

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 coming month a month or so as solid waste is continuing to investigate

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 alternatives to generating energy with the with the landfill gas there is

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 currently a flare at the landfill that is run whenever there's excess gas

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 produced or whenever the facilities on a forced outage and so flaring happens on

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 a fairly regular basis and I last thing I'll say about the the the project is

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 the issue of whether to run the facility or not run the facility after we purchase

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 it is not really a part of this action that we're seeking today we're simply

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 seeking your recommendation to move the ordinance forward to the council tomorrow

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 to allow us to purchase the asset and with that I'd be glad to answer any

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 questions I do have some additional slides on on the environmental attributes

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 of flaring versus continuing to operate if that would be of interest I'd like

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 to see it like to see that okay all right so this is just a the

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 considerations that we have if we were to purchase and operate the generation

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 assets our our NPV goes down and we would only run that facility until an

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 addition an alternative beneficiary uses in place if we flare the landfill gas

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 we achieve the full 2.6 million it does improve the emission profile in terms of

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 lower hydrocarbons and lower greenhouse gas there is an opportunity potentially

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 to use what's called produce medium BTU gas we did not there that would be

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00:24:46,800 --> 00:24:51,200
 selling a low quality gas to a local manufacturing facility that could use

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 the energy and there's a low probability because there's a lack of customers the

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00:24:57,880 --> 00:25:01,040
 preliminary report from the engineers is that a twenty three point eight million

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00:25:01,040 --> 00:25:04,920
 dollar capital investment whether that's made by the city or made by a third

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 party could be used to clean up the gas and produce a high quality BTU gas

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 and inject it into an Atmos pipeline we're still working on the business

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 cases with solid waste on those and and that'll be part of what we bring back to

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00:25:21,320 --> 00:25:37,400
 PUB and council here's the environmental attributes if you see here for flaring

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 these are the non methane organic compounds you can see in flaring we get

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 about an 90 to 99 percent control efficiency for the halogenates

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 halogenated to species 91 to 99 and for the non halogenated 38 to 99 you can see

230
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 a pretty wide variation these are from the US EPA's AP 42 manual which is the

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00:26:07,320 --> 00:26:12,880
 go-to for characterization of emissions from various types of combustion

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 sources and control technologies you can see the the internal combustion engine

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 here lower efficiencies an average or typical efficiency that is lower than

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00:26:25,760 --> 00:26:31,760
 the flare and more importantly if you look at the actual emissions the flare

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00:26:31,760 --> 00:26:37,640
 emissions with the exception of carbon monoxide are significantly less than the

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 internal combustion engine the carbon monoxide carbon monoxide is a toxic gas

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 it is a minor ozone precursor it actually bonds with hydroxide radicals

238
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 and consequently it can reduce the by doing hydroxide radicals or you are

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00:27:07,040 --> 00:27:12,560
 actually beneficial and so when you bind those with carbon monoxide it reduces

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00:27:12,560 --> 00:27:20,600
 the the beneficial hydroxide so that's why it's a minor carbon it's a minor

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00:27:20,600 --> 00:27:28,840
 greenhouse gas but it's very very much less greenhouse potent as compared to

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 carbon dioxide so we're seeing that nitrogen oxide reductions which is an

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00:27:33,640 --> 00:27:41,360
 ozone precursor significant reduction in in nitrogen oxides and in particulate

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 matter as well so with that I'll answer any questions I have another question is

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00:27:49,560 --> 00:28:03,600
 there a slide on on how this would impact Denton's carbon footprint no I

246
00:28:03,600 --> 00:28:10,720
 have not I've not gotten with Kenny's folks to figure out what that whether

247
00:28:10,720 --> 00:28:15,920
 there would be a impact on on the carbon footprint my understanding is because

248
00:28:15,920 --> 00:28:23,080
 these are the degradation of waste in the landfill is not treated like a

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00:28:23,080 --> 00:28:29,720
 hydrocarbon emission from combustion of a fossil fuel it's it's a non fossil

250
00:28:29,720 --> 00:28:35,640
 carbon source and so it would have less impact on the carbon footprint it's not

251
00:28:35,640 --> 00:28:41,920
 included fully in our carbon footprint calculations is there any chance of just

252
00:28:41,920 --> 00:28:47,840
 exploring that with with dr. Banks's sure yeah thank you that'll be part of

253
00:28:47,840 --> 00:28:53,000
 the report that we come back to you with when we bring the business cases back to

254
00:28:53,000 --> 00:28:58,440
 you on the alternatives okay thank you Karen you had your hand up yeah quick

255
00:28:58,440 --> 00:29:04,320
 question I just wanted to know what a control efficiency was that's the that's

256
00:29:04,320 --> 00:29:09,760
 the removal percentage of the pollutant so the percentage of the pollutant that's

257
00:29:09,760 --> 00:29:16,040
 removed during the process correct okay so you want a high number yes ma'am okay

258
00:29:16,040 --> 00:29:22,480
 thank you Billy yeah there was a mention in one of the slides in the first

259
00:29:22,480 --> 00:29:30,040
 presentation Terry we talked about you'll still if we purchase this and I

260
00:29:30,040 --> 00:29:35,440
 think either way I'm on board with purchasing it that you would run the

261
00:29:35,440 --> 00:29:40,120
 facility but there wasn't really a set time of how long you would run the

262
00:29:40,120 --> 00:29:44,680
 facility what does that measure is that the ROI on it or what is that measure

263
00:29:44,680 --> 00:29:52,440
 that that assumed the 1.2 to 1.3 million NPV savings as compared to the 2.6

264
00:29:52,440 --> 00:29:56,440
 assumes that we would run it till the end of the contract life which is in

265
00:29:56,440 --> 00:30:04,480
 2024 okay so currently that additional cost is just passed on to the rate

266
00:30:04,480 --> 00:30:10,560
 payers as a whole and divided into our total production or sells yes it's

267
00:30:10,560 --> 00:30:18,640
 captured through the ECA the energy cost adjustment it is on the ECA okay okay

268
00:30:18,640 --> 00:30:24,800
 well I hate this I hate to burn things in the air but it is I know it's always

269
00:30:24,800 --> 00:30:28,800
 it's been a loser for us for a long time but we originally put this in there

270
00:30:28,800 --> 00:30:33,440
 because I think that was the measure was are we gonna flare this into the air or

271
00:30:33,440 --> 00:30:39,680
 at least get something out and if it is costing the rate payers more I get that

272
00:30:39,680 --> 00:30:45,320
 this is Tony Billy I would also point out that you know Terry alluded to this

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00:30:45,320 --> 00:30:50,360
 business case analysis that we're gonna come back to you on in the next month

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00:30:50,360 --> 00:30:55,000
 or so I think part of the issue here too is that you know the the facility also

275
00:30:55,000 --> 00:31:00,080
 needs some repair and also some ongoing maintenance and so there's there'll be

276
00:31:00,080 --> 00:31:06,640
 additional cost that we need to go through when we come back to you okay

277
00:31:06,640 --> 00:31:16,320
 thanks Jerry a quick question first of all I'm very much in favor of this sale

278
00:31:16,320 --> 00:31:22,840
 and secondly I'd like to maybe say something it's obvious to everybody but

279
00:31:22,840 --> 00:31:29,280
 when we the sort of underscores the risk that's involved in signing long-term

280
00:31:29,280 --> 00:31:36,720
 energy contracts long term being 15 years out and boy this shows the effects

281
00:31:36,720 --> 00:31:43,640
 of that adversely better than a lot of things can show I was wondering what

282
00:31:43,640 --> 00:31:51,600
 other long-term energy obligations do we have that go out this far they go out

283
00:31:51,600 --> 00:31:59,120
 15 years yeah we we do have some contracts in our portfolio that are

284
00:31:59,120 --> 00:32:04,200
 long-term contracts most of the very long-term contracts are more favorably

285
00:32:04,200 --> 00:32:12,240
 priced than these we do have our whitetail win contract which also

286
00:32:12,240 --> 00:32:18,600
 terminates in 2024 it's a way above market contract as well and then we have

287
00:32:18,600 --> 00:32:25,240
 our bluebell solar contract and I apologize mr. Baffert I don't know the

288
00:32:25,240 --> 00:32:29,200
 termination date off the top of my head on that but it is a long-term contract

289
00:32:29,200 --> 00:32:34,880
 and it is an above-market contract you have to remember though those contracts

290
00:32:34,880 --> 00:32:41,600
 are small volumes and were entered into at the onset of the renewable Denton

291
00:32:41,600 --> 00:32:49,280
 plan to achieve the hundred percent or at that time 70% removal so or 70%

292
00:32:49,280 --> 00:32:58,680
 environment 70% renewable supply and so we do take in all of our projections

293
00:32:58,680 --> 00:33:04,720
 when we look at our five-year ten-year plans we are taking into account the

294
00:33:04,720 --> 00:33:10,480
 out-of-moneyness of those contracts and as we mentioned to you we're not asking

295
00:33:10,480 --> 00:33:19,680
 for any rate case eight rate increases in the next year well as I remember and

296
00:33:19,680 --> 00:33:24,160
 Billy you may remember this too when we entered into those contracts those were

297
00:33:24,160 --> 00:33:29,200
 pretty good pretty good rates they just as things improved they became less

298
00:33:29,200 --> 00:33:35,040
 favorable yeah when they started giving natural gas away like they are today

299
00:33:37,720 --> 00:33:49,080
 alright any other questions all right do we have a motion to approve and then all

300
00:33:49,080 --> 00:33:58,120
 in favor say aye aye opposed motion carries management update so madam

301
00:33:58,120 --> 00:34:03,320
 chair and PB members we have a couple reports that we've provided to you you

302
00:34:03,320 --> 00:34:09,480
 have the deck report dashboard for the month of June certainly if you have any

303
00:34:09,480 --> 00:34:12,960
 questions we have folks here that can respond to that and then we the other

304
00:34:12,960 --> 00:34:19,160
 report that we've also provided to you is a memo from Frank Pugsley on the

305
00:34:19,160 --> 00:34:23,080
 hydroelectric plant that was a question I think that mr. Parker had posed and so

306
00:34:23,080 --> 00:34:27,000
 we did a little research and have provided that to you certainly if you

307
00:34:27,000 --> 00:34:30,400
 have any questions on either one of those items we'll be happy to address

308
00:34:30,400 --> 00:34:39,240
 those I had one question about the deck go ahead yeah this is probably a

309
00:34:39,240 --> 00:34:45,360
 profoundly stupid question so I apologize out front but it's just a

310
00:34:45,360 --> 00:34:51,200
 matter of clarification I am I am you know someone of the public who is who

311
00:34:51,200 --> 00:34:57,960
 is saying not particularly well versed in these aspects but I see if I look at

312
00:34:57,960 --> 00:35:05,880
 June 2020 I see that the engine runtime was 980 hours I look at over at the

313
00:35:05,880 --> 00:35:10,120
 graph on the right side and I see that there were some times where it was over

314
00:35:10,120 --> 00:35:20,880
 2,000 hours of operation now the stupid question is for example June has 720

315
00:35:20,880 --> 00:35:28,320
 hours in it the 30 days or whatever it is 30 days of June 24 hours a day equals

316
00:35:28,320 --> 00:35:35,320
 720 hours so I look at that and I say damn you know how did it run more hours

317
00:35:35,320 --> 00:35:41,600
 when there are in the month Terry can provide a response I bet he can't that's

318
00:35:41,600 --> 00:35:49,640
 a bring it on that is a that's a great question we actually totalize the hours

319
00:35:49,640 --> 00:35:56,360
 for all 12 engines so when you see that number it's the total hours for the for

320
00:35:56,360 --> 00:36:03,320
 the engine so it's 720 hours in a month if one engine ran it'd be 720 hours but

321
00:36:03,320 --> 00:36:08,560
 if two engines ran for the whole month it'd be 1440 hours and that's why you

322
00:36:08,560 --> 00:36:13,720
 see such a large number as compared to the hours in the month I would strongly

323
00:36:13,720 --> 00:36:20,280
 recommend that that at some point on the website or as an another asterisk on

324
00:36:20,280 --> 00:36:26,800
 this report that that that be indicated and in the future I'm sure maybe you

325
00:36:26,800 --> 00:36:33,200
 already have it would be curious to see the the profiles of usage in terms of

326
00:36:33,200 --> 00:36:40,440
 when how much few and few engines are used and how often there's there's a

327
00:36:40,440 --> 00:36:44,760
 full compliment engaged and of course I know that has to do with the load and

328
00:36:44,760 --> 00:36:52,480
 what's needed but just see percentages of how that's looking now yes sir yes sir

329
00:36:52,480 --> 00:36:59,840
 we could put you know a utilization for the plant as a percent of the available

330
00:36:59,840 --> 00:37:10,320
 hours in the month if that would be helpful probably be more informative

331
00:37:10,320 --> 00:37:16,280
 without providing a level of detail that would make a lot of people

332
00:37:16,280 --> 00:37:35,520
 uninterested any other questions all right and that brings us to concluding

333
00:37:35,520 --> 00:37:40,200
 items does any board member wish to add anything to a future agenda or have

334
00:37:40,200 --> 00:37:49,200
 any comments to make hearing none we'll go into work session the first item is

335
00:37:49,200 --> 00:37:53,520
 to receive a report hold a discussion and give staff direction regarding the

336
00:37:53,520 --> 00:37:59,520
 customer service water wastewater solid waste and elect fiscal year 2021 proposed

337
00:37:59,520 --> 00:38:04,480
 budget capital improvement program rates and five-year financial forecast good

338
00:38:04,480 --> 00:38:08,760
 morning PB members chair Nick Benson assistant director finance I'll do a

339
00:38:08,760 --> 00:38:12,600
 brief introduction and I will turn it over to Krista Foster the customer

340
00:38:12,600 --> 00:38:16,360
 service manager to review her proposed budget so as I said the first

341
00:38:16,360 --> 00:38:20,400
 presentation day is customer service a few board members probably were on the

342
00:38:20,400 --> 00:38:24,520
 board back when customer service was separated from the water fund but if not

343
00:38:24,520 --> 00:38:30,640
 as a reminder and also to make everybody aware water and customer service were one

344
00:38:30,640 --> 00:38:36,280
 fund prior to fiscal year 1718 we actually separated customer service from

345
00:38:36,280 --> 00:38:39,960
 the water utility to increase the transparency of customer service and

346
00:38:39,960 --> 00:38:43,720
 create an internal service fund out of it and following that presentation I'll

347
00:38:43,720 --> 00:38:46,800
 walk you through the budget process explaining the current and the previous

348
00:38:46,800 --> 00:38:50,320
 process that was in place I mean get your feedback and answer any questions

349
00:38:50,320 --> 00:38:55,000
 you may have and then after that we will go through each the utility budgets and

350
00:38:55,000 --> 00:38:59,840
 further our discussion regarding 2021 proposed budget each of the operational

351
00:38:59,840 --> 00:39:03,200
 discussions for the utilities have been taken out of the presentations however

352
00:39:03,200 --> 00:39:07,000
 the directors are on the phone today are present to answer any questions if you

353
00:39:07,000 --> 00:39:12,120
 have regarding the operations of each utility and each PB member should have

354
00:39:12,120 --> 00:39:15,880
 received an exhibit for a mini budget book for each of the utilities and this

355
00:39:15,880 --> 00:39:19,720
 is to further the conversations for each utility and this is something we provide

356
00:39:19,720 --> 00:39:23,600
 to the public utility board each year as part of the budgeting process so the

357
00:39:23,600 --> 00:39:26,120
 numbers that you see in those mini budget books are supportive of the

358
00:39:26,120 --> 00:39:29,960
 presentations that you will see today and then with that if you don't have any

359
00:39:29,960 --> 00:39:33,640
 questions for me I will turn it over to Krista Foster to present customer

360
00:39:33,640 --> 00:39:40,880
 service and madam chairs as she's getting ready to do that just a reminder

361
00:39:40,880 --> 00:39:44,360
 got a message from Billy when you speak if you could get a little bit if people

362
00:39:44,360 --> 00:39:47,400
 get a little bit closer to their microphone they're having a hard time

363
00:39:47,400 --> 00:39:54,240
 hearing some of you thank you good morning madam chair board members

364
00:39:54,240 --> 00:39:58,440
 Krista Foster customer service manager I'm here this morning to be able to give

365
00:39:58,440 --> 00:40:01,640
 you a high-level overview of our budget and some of the things that we've done

366
00:40:01,640 --> 00:40:05,960
 in the last year and where we're moving in the next year so we're gonna start

367
00:40:05,960 --> 00:40:09,600
 with accomplishments and future goals there are a number of things that we've

368
00:40:09,600 --> 00:40:13,400
 done in customer service a couple of the things I'd like to highlight is the

369
00:40:13,400 --> 00:40:16,800
 first thing that we've done is we have implemented a customer reported first

370
00:40:16,800 --> 00:40:21,080
 contact resolution prior to that it was something that we had to collect

371
00:40:21,080 --> 00:40:25,680
 internally as part of our call coaching process but at this point we actually

372
00:40:25,680 --> 00:40:30,320
 ask the customer at the end of their call they're allowed to take their survey in

373
00:40:30,320 --> 00:40:36,480
 person or by telephone and they report was your issue resolved is this the

374
00:40:36,480 --> 00:40:41,360
 first time you've contacted us regarding this instance of this issue another

375
00:40:41,360 --> 00:40:45,720
 thing that we've done is we've deployed a self-service phone line for salt waste

376
00:40:45,720 --> 00:40:52,240
 request so if a customer for instance on a Monday collection decides to go out

377
00:40:52,240 --> 00:40:56,020
 and do some yard work on the weekend we don't want them to have to wait an

378
00:40:56,020 --> 00:41:00,480
 entire week to schedule a collection they can use that line schedule it on

379
00:41:00,480 --> 00:41:03,240
 the weekend we're gonna make sure that they're on that Monday collection

380
00:41:03,240 --> 00:41:07,320
 schedule otherwise for all other callers they can opt in and out of the yard waste

381
00:41:07,320 --> 00:41:10,440
 program they can schedule brush collections they can schedule the bagged

382
00:41:10,440 --> 00:41:15,400
 leaf collections and they can do that 24 hours a day seven days a week then

383
00:41:15,400 --> 00:41:19,280
 we've also done as I'd mentioned before the outreach with our apartment complexes

384
00:41:19,280 --> 00:41:23,680
 to really start educating the public on the benefits of the pay-as-you-go

385
00:41:23,680 --> 00:41:27,920
 program and we will continue doing that in the next year we're looking to

386
00:41:27,920 --> 00:41:32,840
 implement a CRM which will allow us to increase the scope of what we can work

387
00:41:32,840 --> 00:41:36,560
 on in the contact center and we're going to be moving toward the three one one

388
00:41:36,560 --> 00:41:42,000
 environment as we introduce that and then we're also going to be looking at

389
00:41:42,000 --> 00:41:46,200
 introducing language line services one of the things that I discovered and was

390
00:41:46,200 --> 00:41:51,960
 a little bit surprised about is that we have two universities in this city which

391
00:41:51,960 --> 00:41:57,400
 bring in lots of international students and we have no means to provide service

392
00:41:57,400 --> 00:42:01,620
 in foreign language so that's part of what my budget for the next year

393
00:42:01,620 --> 00:42:06,200
 includes is the funding to be able to provide better services to all of our

394
00:42:06,200 --> 00:42:12,200
 customers and meet the diversity that we have in the city of Denton so there

395
00:42:12,200 --> 00:42:16,760
 have been a lot of philosophical changes in customer service over the last year

396
00:42:16,760 --> 00:42:22,040
 the biggest first change is that we have reworked the way that we measure our

397
00:42:22,040 --> 00:42:27,800
 success what I'm looking at now is benchmark benchmarking against industry

398
00:42:27,800 --> 00:42:32,660
 performers private public in the utility sector to see where are the top four

399
00:42:32,660 --> 00:42:37,280
 tile performers in that industry we're realigning our metrics to match those

400
00:42:37,280 --> 00:42:42,840
 same measurements to make sure that we can provide at least top quartile

401
00:42:42,840 --> 00:42:47,320
 service or better and we're moving that direction one of the other things we've

402
00:42:47,320 --> 00:42:52,400
 done that is huge is customer service has implemented a permanent telecommuting

403
00:42:52,400 --> 00:42:59,240
 work structure we have given about 26 cubicles seven offices and we'll have our

404
00:42:59,240 --> 00:43:04,520
 staff working from home at least 90% of the time for most positions it will vary

405
00:43:04,520 --> 00:43:12,200
 based on the position but we have moved into that structure so operationally you

406
00:43:12,200 --> 00:43:18,160
 can see prior fiscal year performance compared to others but the one thing that

407
00:43:18,160 --> 00:43:22,240
 I really want to mention about this is even though the prior fiscal year you're

408
00:43:22,240 --> 00:43:29,080
 seeing from FY 17 to FY 18 a decrease in call volume this year if you look at

409
00:43:29,080 --> 00:43:32,440
 that current operational performance you're going to see that our call

410
00:43:32,440 --> 00:43:37,680
 volumes have been a consistent fourteen point eight percent higher than the

411
00:43:37,680 --> 00:43:42,240
 previous year and that has been from October all the way through current so

412
00:43:42,240 --> 00:43:47,520
 we're seeing a significant increase in the number of people who are calling we

413
00:43:47,520 --> 00:43:50,800
 are working very hard to make sure that we're taking care of those those folks

414
00:43:50,800 --> 00:43:55,840
 but the ones that I'm most proud of is as I mentioned we've moved to customer

415
00:43:55,840 --> 00:44:00,600
 reported first call resolution we also measure our very satisfied and very

416
00:44:00,600 --> 00:44:05,880
 dissatisfied customers because those are the customers who drive your reputation

417
00:44:05,880 --> 00:44:10,160
 in the public if they're very happy or they're very unhappy and as you can see

418
00:44:10,160 --> 00:44:16,120
 I've compared our group the call center and the lobby against the top quartile

419
00:44:16,120 --> 00:44:21,040
 average for those same metrics in the utilities industry and you can see that

420
00:44:21,040 --> 00:44:25,080
 we're outperforming on both first call resolution and our very satisfied

421
00:44:25,080 --> 00:44:33,080
 customers by more than 10% and our very dissatisfied rate we're at just below

422
00:44:33,080 --> 00:44:40,060
 what would happen in the best performers in our industry our FTE summary we have

423
00:44:40,060 --> 00:44:43,760
 eliminated as we've reorganized some of our division we have eliminated our

424
00:44:43,760 --> 00:44:47,920
 administrative assistant position and we have removed our assistant customer

425
00:44:47,920 --> 00:44:52,960
 service manager from our budget this has allowed us to produce some budgetary

426
00:44:52,960 --> 00:44:57,920
 savings that we can carry through the next year it's also allowed us to have a

427
00:44:57,920 --> 00:45:03,200
 little more flexibility in some of rearranging some of our workloads this

428
00:45:03,200 --> 00:45:07,440
 is what our new organizational chart looks like it's just the two positions

429
00:45:07,440 --> 00:45:11,200
 removed and we did reorganize to have our cash specialist falling under

430
00:45:11,200 --> 00:45:15,920
 revenue assurance since they are a critical part of the revenue process we

431
00:45:15,920 --> 00:45:19,180
 are making sure that there will be no conflict of interest between the two

432
00:45:19,180 --> 00:45:23,800
 positions so that we can maintain all the financial security controls that are

433
00:45:23,800 --> 00:45:30,400
 necessary for the positions so as Nick mentioned we are an internal service

434
00:45:30,400 --> 00:45:35,600
 fund but this is a overview of our budget you'll notice that we've only

435
00:45:35,600 --> 00:45:40,080
 we're only realizing about a hundred and ninety two thousand dollars in savings

436
00:45:40,080 --> 00:45:44,560
 we actually cut about five hundred thousand dollars out of our budget

437
00:45:44,560 --> 00:45:51,520
 however as we implement the new merchant service provider we do have to add that

438
00:45:51,520 --> 00:45:54,600
 two hundred and twenty five thousand dollars back into our budget to

439
00:45:54,600 --> 00:45:59,160
 accommodate for the credit card fees that we're going to be absorbing and

440
00:45:59,160 --> 00:46:04,000
 we're also putting in our supplemental for the language line services and then

441
00:46:04,000 --> 00:46:07,760
 we had a couple of other small things that increased in price but overall

442
00:46:07,760 --> 00:46:16,320
 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

443
00:46:16,320 --> 00:46:29,360
 utilities so you can see how that will make us whole and that is it I'll be

444
00:46:29,360 --> 00:46:42,480
 happy to answer any questions I'd just like to say I have the people you have

445
00:46:42,480 --> 00:46:47,840
 working there that meet face-to-face every day or about the most courteous

446
00:46:47,840 --> 00:46:55,320
 that I've run into they do a very good job they handle your business I'm always

447
00:46:55,320 --> 00:47:00,160
 happy to talk to him and I'll extend that comment to the people in the field

448
00:47:00,160 --> 00:47:05,080
 I'm very impressed with the professionalism that I encounter when

449
00:47:05,080 --> 00:47:10,200
 somebody's you know draining a fire hydrant just doing their ordinary day

450
00:47:10,200 --> 00:47:14,760
 to day responsibilities you guys really do a good job of providing customer

451
00:47:14,760 --> 00:47:20,560
 service thank you and please thank them I will make sure that that is relayed

452
00:47:20,560 --> 00:47:30,840
 other questions and you're you're muted sorry could you go back to the slide

453
00:47:30,840 --> 00:47:37,560
 that shows the flowchart of the positions I just had a question about

454
00:47:37,560 --> 00:47:50,440
 the one thing let me make sure I can share this one what are billing

455
00:47:50,440 --> 00:47:56,760
 specialists and what is a billing supervisor okay the billing supervisor

456
00:47:56,760 --> 00:48:02,880
 oversees all of the processes overseas all of the staff that manage billing

457
00:48:02,880 --> 00:48:07,400
 those billing specialists we have billing specialists that focus on say

458
00:48:07,400 --> 00:48:11,720
 making sure that billing is done properly for all of our key accounts we

459
00:48:11,720 --> 00:48:15,240
 have billing specialists who work on just commercial services to make sure

460
00:48:15,240 --> 00:48:19,880
 that everything is there do we need to go out and check a read on a meter are

461
00:48:19,880 --> 00:48:25,020
 the right rates applied and doing all of that work they do order closeout they do

462
00:48:25,020 --> 00:48:29,280
 a lot of the different things that are the behind-the-scenes part of making

463
00:48:29,280 --> 00:48:45,000
 sure that customers can be billed accurately okay thank you very much

464
00:48:45,000 --> 00:48:55,280
 and I to applaud customer service we all because I'm a customer yep yes yes we

465
00:48:55,280 --> 00:49:00,880
 are so since I said if there's no other questions we can go on to the next

466
00:49:00,880 --> 00:49:14,800
 presentation okay that would be water then no yes so the next the presentation

467
00:49:14,800 --> 00:49:18,760
 chair will be a brief presentation of the current budget process compared to

468
00:49:18,760 --> 00:49:22,080
 previous years and then we'll get into discussion of each of the utility

469
00:49:22,080 --> 00:49:26,000
 starting with water there is a total of five presentations so Susan if you feel

470
00:49:26,000 --> 00:49:29,400
 like we need to take a break just let me know and be happy to take a break and

471
00:49:29,400 --> 00:49:39,080
 come back whatever you want to do so real quick I have a couple slides I know

472
00:49:39,080 --> 00:49:42,560
 a lot of this conversation August the third was focused about how we did it

473
00:49:42,560 --> 00:49:46,640
 previously in the budgeting process and what the current process is now so what

474
00:49:46,640 --> 00:49:49,800
 I wanted to do for all the PV members that are new or may have been on the

475
00:49:49,800 --> 00:49:52,880
 board previously is really kind of walk you through what the previous process

476
00:49:52,880 --> 00:49:57,600
 was and what the current process is so currently you can see we have a

477
00:49:57,600 --> 00:50:01,520
 comprehensive capital project planning implementation this has been the city's

478
00:50:01,520 --> 00:50:06,920
 focused over the last few years which is really obvious in the utility finances

479
00:50:06,920 --> 00:50:09,760
 and I'll point this out to you and some of the debt service decreases in each

480
00:50:09,760 --> 00:50:14,280
 of the funds some of the other focus has been cost containment transparency and

481
00:50:14,280 --> 00:50:19,360
 emphasis on the city's core values talk about that a little bit more and then

482
00:50:19,360 --> 00:50:23,200
 fiscal year 2021 so really what I wanted to do is create a table that really

483
00:50:23,200 --> 00:50:26,800
 summarized you know what the timeline looked like before and what it looks

484
00:50:26,800 --> 00:50:32,400
 like now and explain the two and ask or answer any questions that you may have so

485
00:50:32,400 --> 00:50:38,760
 the volume forecast previously prior to fiscal year 2017 the the staff did bring

486
00:50:38,760 --> 00:50:42,880
 a volume and load forecast forward to the public utility board usually around

487
00:50:42,880 --> 00:50:47,000
 January or February of each year as you can see the current process we do not

488
00:50:47,000 --> 00:50:49,920
 bring this forward in January and February this has been combined with the

489
00:50:49,920 --> 00:50:53,840
 budget discussions that start around July or August and so we did leave that

490
00:50:53,840 --> 00:50:56,600
 blank just to kind of point that out that that's not coming for the public

491
00:50:56,600 --> 00:51:01,680
 utility board currently in January and February the next group we want to talk

492
00:51:01,680 --> 00:51:05,360
 about was review the utility budgets and CIP so as I'd mentioned earlier we did

493
00:51:05,360 --> 00:51:09,920
 provide everybody a mini budget book and this is consistent with previous years

494
00:51:09,920 --> 00:51:13,520
 we are currently doing this so that book was provided to the public utility board

495
00:51:13,520 --> 00:51:19,320
 today a detailed budget presentation we did have these presentations in July to

496
00:51:19,320 --> 00:51:23,920
 talk about DME and then August the 3rd for the rest of the utilities previously

497
00:51:23,920 --> 00:51:27,420
 there were three meetings usually to talk about this these steps or this

498
00:51:27,420 --> 00:51:31,800
 budget with the public utility board the current process we have two

499
00:51:31,800 --> 00:51:36,000
 discussions built into the budget discussions and this is consistent with

500
00:51:36,000 --> 00:51:40,360
 the previous couple fiscal years and then we'll have meetings to review the

501
00:51:40,360 --> 00:51:44,920
 the proposed rate changes the proposed rate changes previously were discussed

502
00:51:44,920 --> 00:51:49,960
 around July of each year and this year we do plan to discuss those with the

503
00:51:49,960 --> 00:51:54,160
 public utility board in greater detail in September on September 15th or excuse

504
00:51:54,160 --> 00:51:57,880
 me September 14th we're planning to come back to the utility board the red line

505
00:51:57,880 --> 00:52:01,380
 rate ordinance I do want to point out though that you know the presentations

506
00:52:01,380 --> 00:52:05,240
 that we'll cover today does include the rate changes that we are proposing this

507
00:52:05,240 --> 00:52:09,360
 year but part of the process is to improve transparency of each of the

508
00:52:09,360 --> 00:52:13,000
 utilities we do bring a red line rate ordinance for you that really spells out

509
00:52:13,000 --> 00:52:17,480
 what those changes are for each utility and then finally we get to the budget

510
00:52:17,480 --> 00:52:21,480
 and rate approval previously it was around the August time period and like I

511
00:52:21,480 --> 00:52:25,600
 said this is September 14th this year it does change year to year but usually

512
00:52:25,600 --> 00:52:30,480
 it's around the end of August or September in the current process the

513
00:52:30,480 --> 00:52:33,200
 utility projects update this is something that was requested by the

514
00:52:33,200 --> 00:52:37,600
 public utility board on August the 3rd and we will be coming back to you in

515
00:52:37,600 --> 00:52:41,520
 September with this discussion to talk about the details of each of the

516
00:52:41,520 --> 00:52:46,080
 projects in the utilities I would like to point out you know that this would

517
00:52:46,080 --> 00:52:50,000
 include the initial project funding any anticipated completion date of the

518
00:52:50,000 --> 00:52:54,380
 projects any obstacles that may be out there that we can review with the public

519
00:52:54,380 --> 00:52:58,080
 utility board for these projects and then as previously mentioned on August

520
00:52:58,080 --> 00:53:02,260
 the 3rd the mid-year budget and rate update we do plan to come back with that

521
00:53:02,260 --> 00:53:06,040
 detailed discussion in December allowing us time to fully understand the COVID

522
00:53:06,040 --> 00:53:10,160
 impact on the utilities and also capture those high usage months for each of the

523
00:53:10,160 --> 00:53:13,840
 utilities in July and August so something that previously was not done

524
00:53:13,840 --> 00:53:18,280
 we do like this is a good process moving forward once we get those high usage

525
00:53:18,280 --> 00:53:25,640
 months rate increases or decreases so since 2018 the city's continued emphasis

526
00:53:25,640 --> 00:53:28,720
 on financial transparency cost containment really looking at those

527
00:53:28,720 --> 00:53:33,520
 projects to identify unallocated funding to reprioritize it have led to no rate

528
00:53:33,520 --> 00:53:37,240
 increases for the city didn't utilities so what I want to do is summarize it

529
00:53:37,240 --> 00:53:42,120
 from fiscal year 2017 through fiscal year 2021 as you can see for each of the

530
00:53:42,120 --> 00:53:47,160
 utilities from 2015 to 2017 we consistently had rate increases since

531
00:53:47,160 --> 00:53:51,520
 2017 starting in fiscal year 2018 we have had no rate increases so the city

532
00:53:51,520 --> 00:53:56,860
 didn't utilities we've actually had decreases at least one each year since

533
00:53:56,860 --> 00:54:04,360
 then and we'll talk about this a little bit more in the presentation but this is

534
00:54:04,360 --> 00:54:08,680
 the overall rate decreases we are proposing this year so in 2021 and you

535
00:54:08,680 --> 00:54:12,080
 can see the 2% rate decrease for water customers which equates to about a

536
00:54:12,080 --> 00:54:16,440
 dollar and eight cents and then the one dollar decrease for the standard solid

537
00:54:16,440 --> 00:54:20,280
 waste customer of a dollar so overall the utility bill for customers could

538
00:54:20,280 --> 00:54:25,040
 expect it on two dollars and eight cents for the average residential customer

539
00:54:25,040 --> 00:54:29,320
 that concludes the budget process presentation I'll pull it down for

540
00:54:29,320 --> 00:54:33,800
 questions that we can go into water if there's any questions no quick question

541
00:54:33,800 --> 00:54:46,520
 yes sir slide number 11 that you had you just showed at the the bottom right

542
00:54:46,520 --> 00:54:52,580
 corner you have something called and the ability to maximize spend when I see the

543
00:54:52,580 --> 00:54:57,520
 term maximize spend I get an adverse physical reaction to that maximize

544
00:54:57,520 --> 00:55:04,800
 spending and I'm wondering if having having done a lot of project stuff in

545
00:55:04,800 --> 00:55:09,720
 the past I think we should be more concerned about getting projects

546
00:55:09,720 --> 00:55:15,560
 completed on time rather than doing accounting gyrations to move money

547
00:55:15,560 --> 00:55:22,480
 around to make it look like we spent all we had budgeted so I I guess I'd like

548
00:55:22,480 --> 00:55:30,400
 to use a different term and maximize spend there if that's possible you see

549
00:55:30,400 --> 00:55:34,680
 what I mean yes yes sir mr. Baffert we definitely can address that that term

550
00:55:34,680 --> 00:55:38,240
 was simply meant to imply to look at those projects look at that funding is

551
00:55:38,240 --> 00:55:42,120
 allocated and actually get those projects completed so we can get that

552
00:55:42,120 --> 00:55:56,760
 terminology yes all right no questions Oh Billy's got a question sorry I was

553
00:55:56,760 --> 00:56:06,560
 trying to get my mute button I was missing the slide on the right utility

554
00:56:06,560 --> 00:56:11,440
 budget rate process that shows current meetings when we address the budget

555
00:56:11,440 --> 00:56:17,200
 versus the previous meetings it's probably my it's my same question as a

556
00:56:17,200 --> 00:56:27,940
 whole not one certain utility why the why the elongated time to wait for the

557
00:56:27,940 --> 00:56:34,200
 current meetings versus how the previous meetings would go you're talking about

558
00:56:34,200 --> 00:56:37,800
 the forecasting data start in January and February now discussing in July and

559
00:56:37,800 --> 00:56:42,960
 August yes I think the majority to answer your question is that reliability

560
00:56:42,960 --> 00:56:46,560
 of that forecast data so you know in the water utility looking at the volume

561
00:56:46,560 --> 00:56:50,880
 forecast and DME looking at the load forecast that additional time allows

562
00:56:50,880 --> 00:56:55,520
 staff to look at those forecasts for all the utilities and refine that budget

563
00:56:55,520 --> 00:56:59,440
 appropriately so we did make that adjustment a couple of fiscal years ago

564
00:56:59,440 --> 00:57:04,160
 from moving it from January to February to July and August to improve the

565
00:57:04,160 --> 00:57:08,360
 reliability of those forecasts reach the utility so hopefully that answers your

566
00:57:08,360 --> 00:57:15,040
 check your question mr. cheek as previously stated a couple three weeks

567
00:57:15,040 --> 00:57:19,040
 you know whatever it was just I just feel like the more time that we have to

568
00:57:19,040 --> 00:57:27,480
 look at the anticipated budgets the better advice we may be able to give for

569
00:57:27,480 --> 00:57:38,200
 council and I think I would look at today's presentations of August 24th and

570
00:57:38,200 --> 00:57:44,800
 then I see that that would be presented to council August 25th so if the PB did

571
00:57:44,800 --> 00:57:51,760
 have some input in regards to changing something on the budget you'd have you

572
00:57:51,760 --> 00:57:56,800
 know a little more than 24 hours for council to possibly even to see what

573
00:57:56,800 --> 00:58:02,240
 that recommendation may have been and why it was recommended and Billy this is

574
00:58:02,240 --> 00:58:07,660
 time that that's really not true if we needed to move the presentation back to

575
00:58:07,660 --> 00:58:13,600
 council for even another month we could the only real urgency on the finances

576
00:58:13,600 --> 00:58:16,800
 Nick if you could take that down the only the only real front urgency on the

577
00:58:16,800 --> 00:58:21,160
 finances is the property tax levy so that's not necessarily the case and

578
00:58:21,160 --> 00:58:25,120
 quite frankly the reason to kind of obviously this is a weird year in terms

579
00:58:25,120 --> 00:58:30,520
 of the utilities and trying to assess in the city budget as a whole but we have

580
00:58:30,520 --> 00:58:36,000
 watched the last two or three years our estimates be pretty wildly inaccurate in

581
00:58:36,000 --> 00:58:40,060
 water electrics so what that means is that we've ended up with more money at

582
00:58:40,060 --> 00:58:44,200
 times than we need that we can actually spend and so I think I think what they're

583
00:58:44,200 --> 00:58:47,480
 trying to do is give you the best information as possible get through July

584
00:58:47,480 --> 00:58:50,680
 and August where you've got the hottest months that can really swing those two

585
00:58:50,680 --> 00:58:54,600
 utilities and that way you've got better information but with the utilities

586
00:58:54,600 --> 00:58:59,540
 there's no urgency to have this done tomorrow I mean we could easily go into

587
00:58:59,540 --> 00:59:04,680
 mid mid September and give you that additional time if you needed sure time

588
00:59:04,680 --> 00:59:09,160
 and I understand that things fluctuate but we do know that July and August are

589
00:59:09,160 --> 00:59:12,800
 going to be hot months and we can anticipate what those months will be

590
00:59:12,800 --> 00:59:17,720
 obviously well let me let me give you a great example last year we went in

591
00:59:17,720 --> 00:59:22,880
 showing a significant deficit in the electric fund had a lot of talks about

592
00:59:22,880 --> 00:59:27,120
 whether we should be raising rates that sort of thing we ended up getting having

593
00:59:27,120 --> 00:59:33,400
 four or five huge days with the deck and it completely in in one week changed the

594
00:59:33,400 --> 00:59:38,440
 entire forecast for the year so we spent numerous meetings talking about rate

595
00:59:38,440 --> 00:59:42,960
 increases change in the ECA that sort of thing and within one week it was all

596
00:59:42,960 --> 00:59:47,560
 moot discussion so I think that's what we're trying to get you through is those

597
00:59:47,560 --> 00:59:52,240
 those those months that we know can really swing the budgets at least get

598
00:59:52,240 --> 00:59:56,720
 you up as close as we can through August and say okay this is the best

599
00:59:56,720 --> 01:00:01,120
 information we have because the council got a little bit annoyed last year we

600
01:00:01,120 --> 01:00:04,960
 had spent you know numerous hours talking about it and so we're just trying

601
01:00:04,960 --> 01:00:08,280
 to think about how do we get through with those two utilities in particular

602
01:00:08,280 --> 01:00:11,960
 how do we get through these months and try to get as good of information as

603
01:00:11,960 --> 01:00:19,080
 possible you know based on what we've learned okay well your capital

604
01:00:19,080 --> 01:00:24,360
 expenditures are more likely not going to change or your predicted capital

605
01:00:24,360 --> 01:00:28,200
 expenditures are not going to change that much by the from May to August I

606
01:00:28,200 --> 01:00:34,640
 wouldn't think but your but your your revenues could change significantly

607
01:00:34,640 --> 01:00:39,840
 several millions of dollars which is just not something that you know why

608
01:00:39,840 --> 01:00:43,080
 spend a lot of time talking about rate increases and getting people worked up

609
01:00:43,080 --> 01:00:47,120
 when in fact if that happens again I mean we basically are building field

610
01:00:47,120 --> 01:00:52,120
 goals now saying okay if we have a lean July and August here's what the budget

611
01:00:52,120 --> 01:00:56,760
 looks like if we get into a situation like last year where you end up with my

612
01:00:56,760 --> 01:01:01,760
 gosh you know 15 or 17 million more than we anticipated we you know there would

613
01:01:01,760 --> 01:01:05,200
 have been absolutely zero reason to go in and raise rates which ended up

614
01:01:05,200 --> 01:01:09,240
 happening and we were able to do some additional things to catch up and avoid

615
01:01:09,240 --> 01:01:13,200
 that but it changes the policy discussion that the PUB and the council

616
01:01:13,200 --> 01:01:19,960
 were having when we have better information okay I just don't see the

617
01:01:19,960 --> 01:01:24,400
 harm in this if y'all are discussing it why can't we see the discussions I don't

618
01:01:24,400 --> 01:01:27,880
 think there's anything that you can't see so I I'm not sure where that's

619
01:01:27,880 --> 01:01:32,400
 coming from but we're absolutely we're happy to you know to make sure that

620
01:01:32,400 --> 01:01:35,640
 we've got a schedule there and you can sort of see different iterations of the

621
01:01:35,640 --> 01:01:39,680
 budget moving forward in terms of your capital investment that's been the other

622
01:01:39,680 --> 01:01:44,400
 thing and I appreciate Russ's comments earlier about the verbiage being used

623
01:01:44,400 --> 01:01:48,440
 but that has really been something that we've we've tried to do with the with

624
01:01:48,440 --> 01:01:52,120
 all the CIP in general it took us about two years to lift all the information

625
01:01:52,120 --> 01:01:55,960
 out of audits and books and it starts up on the spreadsheets so we can start

626
01:01:55,960 --> 01:02:00,740
 measuring monthly spend I don't think it you know in order to see if we're if we

627
01:02:00,740 --> 01:02:05,160
 are actually needing what we're asking for but really to that point with the

628
01:02:05,160 --> 01:02:09,800
 capital project we had tens of millions of dollars you know somewhere between

629
01:02:09,800 --> 01:02:13,960
 thirty and fifty million dollars sitting in unallocated miscellaneous accounts

630
01:02:13,960 --> 01:02:19,400
 and we're continuing to raise rates so we basically stopped that approach until

631
01:02:19,400 --> 01:02:22,760
 if we can't get the projects out the door we don't need the money we're not

632
01:02:22,760 --> 01:02:26,960
 asking people to pay higher fees and so that's kind of how the process we're

633
01:02:26,960 --> 01:02:29,680
 going through and I think we can based on the questions we're getting we

634
01:02:29,680 --> 01:02:34,280
 probably just need to lay that out for you we're gonna be bringing back a lot

635
01:02:34,280 --> 01:02:38,800
 more granular spreadsheet that rusted requested last time so you can see how

636
01:02:38,800 --> 01:02:42,360
 we're looking at the capital side the expenses the revenues once we get

637
01:02:42,360 --> 01:02:46,920
 through July and August become a lot less volatile so I think we can meet in

638
01:02:46,920 --> 01:02:49,640
 the middle somewhere and give you all the information you want to see it's

639
01:02:49,640 --> 01:02:52,560
 probably gonna be just more of a check-in on those two budgets throughout

640
01:02:52,560 --> 01:02:58,880
 the summer okay well I sit on I sit on several boards of directors where we

641
01:02:58,880 --> 01:03:04,400
 actually we're actually we are the last decision-making process and yeah we ask

642
01:03:04,400 --> 01:03:08,560
 for a budget prediction and we're usually given them and they do fluctuate

643
01:03:08,560 --> 01:03:13,240
 millions of dollars each one of them so I don't see the harm in having a

644
01:03:13,240 --> 01:03:18,720
 discussion and especially with the capital expenditures we agree rates are

645
01:03:18,720 --> 01:03:21,920
 going to raise right you can raise rates you go lower rates you can try to be the

646
01:03:21,920 --> 01:03:28,440
 best taxpayer have no doubt right I think we're in agreement okay this is

647
01:03:28,440 --> 01:03:31,720
 David Gaines assistant city manager I just wanted to touch on the capital

648
01:03:31,720 --> 01:03:35,880
 expenses particularly you know as COVID this obviously was the different year

649
01:03:35,880 --> 01:03:40,800
 and in the schedule that Nick showed is reflective of COVID and the changes that

650
01:03:40,800 --> 01:03:45,680
 we had so if you recall in March and April and into the early part of the

651
01:03:45,680 --> 01:03:50,400
 summer we were we had at least paused or reconsidered some of our capital

652
01:03:50,400 --> 01:03:54,240
 projects just as we wanted to see what the true impacts on the revenue side

653
01:03:54,240 --> 01:03:59,360
 would be to the utility funds and also the bond market the bond market was

654
01:03:59,360 --> 01:04:02,960
 sporadic and all over the place so we didn't know what our ability to issue

655
01:04:02,960 --> 01:04:07,360
 debt would be so that was another reason that we pushed the process back on the

656
01:04:07,360 --> 01:04:11,800
 obviously the revenue side but also the capital side to try to understand what

657
01:04:11,800 --> 01:04:14,960
 our CFP would look like over the next couple years so just wanted to point

658
01:04:14,960 --> 01:04:19,040
 that out as we looked at the schedule this year it was largely impacted by the

659
01:04:19,040 --> 01:04:24,440
 pandemic but I would just add to David's point that's all true we also had a

660
01:04:24,440 --> 01:04:29,960
 council that immediately went in and turned off the you know the cutoffs and

661
01:04:29,960 --> 01:04:32,800
 we did not know how long that was going on and how deep that was going to cut

662
01:04:32,800 --> 01:04:36,360
 into all the fund balances that sort of thing so things ended up working

663
01:04:36,360 --> 01:04:40,520
 themselves out over the last 90 days but it's been a it's been a very different

664
01:04:40,520 --> 01:04:50,320
 and challenging budget year for us should we take maybe a five-minute break

665
01:04:50,320 --> 01:04:57,000
 and come back okay it'd be fine thank you

666
01:04:57,000 --> 01:05:07,080
 all right Susan you're on all right it's a 10 12 a.m. and we're back and we're

667
01:05:07,080 --> 01:05:12,320
 going into water budget presentation good morning PB members let me pull back

668
01:05:12,320 --> 01:05:21,800
 up the presentation to discuss water with you so as I said earlier the

669
01:05:21,800 --> 01:05:25,760
 operational discussion has been taken out of each utility presentation however

670
01:05:25,760 --> 01:05:29,720
 Frank Pugsley the water director is on the phone if you have questions regarding

671
01:05:29,720 --> 01:05:34,040
 any operational items you'll be happy to speak to them otherwise I'll walk you

672
01:05:34,040 --> 01:05:36,600
 through the proposed budget giving questions I'll be happy to answer within

673
01:05:36,600 --> 01:05:41,120
 the presentation the presentation objectives really quick we'll review the

674
01:05:41,120 --> 01:05:44,800
 financial assumptions the volume forecast the revenue and expense detail

675
01:05:44,800 --> 01:05:48,240
 the financial forecast the capital improvement plan and then review those

676
01:05:48,240 --> 01:05:53,360
 rate changes with you that I discussed or mentioned earlier so the financial

677
01:05:53,360 --> 01:05:58,320
 assumptions on the volume forecast we are proposing a 2% growth and forecasted

678
01:05:58,320 --> 01:06:02,760
 volume in the out years and the hunter coal ranch development is included

679
01:06:02,760 --> 01:06:07,520
 starting in fiscal year 2024 this was a question I believe mr. Baffert and asked

680
01:06:07,520 --> 01:06:12,200
 last meeting we have included a chart to help explain when the hunter coal ranch

681
01:06:12,200 --> 01:06:15,320
 development is planned to come into the water utility and how it's being

682
01:06:15,320 --> 01:06:19,880
 forecasted on the revenue side 2% growth it's consistent with the volume

683
01:06:19,880 --> 01:06:24,360
 forecast that we have out there we are continuing to utilize impact fee funding

684
01:06:24,360 --> 01:06:27,880
 to revenue any eligible projects that may be out there on the horizon to

685
01:06:27,880 --> 01:06:32,280
 minimize that debt issuance and really be mindful of our debt service in the

686
01:06:32,280 --> 01:06:35,640
 out years we are showing a little bit of revenue for the hunter coal ranch

687
01:06:35,640 --> 01:06:40,160
 development as I mentioned expenses of 3% growth in the forecasted years and

688
01:06:40,160 --> 01:06:43,280
 then for this utility as previously discussed the public utility board we

689
01:06:43,280 --> 01:06:48,160
 are recommending a 2% rate decrease we will be seeking PB's feedback today on

690
01:06:48,160 --> 01:06:51,760
 how to implement that decreased on a couple couple different options that

691
01:06:51,760 --> 01:06:57,680
 we've come up with and we'll discuss that in a few slides so this chart does

692
01:06:57,680 --> 01:07:01,520
 show the hunter coal ranch development and growth in the city and within the

693
01:07:01,520 --> 01:07:06,120
 next 20 to 30 year period I apologize for being a little bit

694
01:07:06,120 --> 01:07:10,480
 fuzzy to see if we can email this out to the meeting if necessary but the main

695
01:07:10,480 --> 01:07:13,120
 thing is I wanted to point out that you can see that hunter coal ranch

696
01:07:13,120 --> 01:07:18,440
 development and start coming on 2024 which is consistent with the forecast I

697
01:07:18,440 --> 01:07:21,400
 know it's hard to see but the hunter coal ranch development is actually this

698
01:07:21,400 --> 01:07:26,840
 green line or this green bar that you see I'm coming up here in the future

699
01:07:26,840 --> 01:07:30,040
 years a couple of things I'll point out this chart does a great job of

700
01:07:30,040 --> 01:07:33,940
 summarizing growth in the community and separating out by the development so the

701
01:07:33,940 --> 01:07:38,320
 red line is actually just growth in the city's MMD and so as you can see you

702
01:07:38,320 --> 01:07:42,840
 going in the future years it does ramp up as you go out and the yellow line

703
01:07:42,840 --> 01:07:47,360
 happens to be the hunter ranch development and you can see it and then

704
01:07:47,360 --> 01:07:50,600
 the green one as I mentioned is that coal ranch development that you can see

705
01:07:50,600 --> 01:07:55,560
 in the future years if you see this this blue line it may be a little hard to see

706
01:07:55,560 --> 01:07:59,680
 on your screen and this is the master plan MMD line that you can see going in

707
01:07:59,680 --> 01:08:04,780
 the future years and then this dotted line is the treatment plant capacity so

708
01:08:04,780 --> 01:08:10,320
 you can see when that capacity meets the growth in these future years so we are

709
01:08:10,320 --> 01:08:14,040
 planning to issue that debt for the plan expansion out here to meet this and be

710
01:08:14,040 --> 01:08:17,560
 well in advance of it for planning for that growth to come into the community

711
01:08:17,560 --> 01:08:24,920
 Nick this is Charlie I've got a question yes sir you were talking about MMD and

712
01:08:24,920 --> 01:08:30,640
 MDD on your slide yes can you tell us what those acronyms mean yeah let me

713
01:08:30,640 --> 01:08:34,080
 Frank Pugsley's on the phone let him let me come you can come on and answer that

714
01:08:34,080 --> 01:08:38,040
 question really quick sure mr. Parker Frank Pugsley water and wastewater

715
01:08:38,040 --> 01:08:45,240
 utilities director and I think yeah MDD and MMD get a little tongue-tied the red

716
01:08:45,240 --> 01:08:52,440
 bar is our MDD which is the max day demand for the city's water system and I

717
01:08:52,440 --> 01:08:56,640
 think because Hunter and Cole have an MMD it just doesn't roll off the tongue very

718
01:08:56,640 --> 01:09:01,440
 easily when we're talking about both of those in the same slide great and what

719
01:09:01,440 --> 01:09:07,880
 is the night the municipal management district which is I think Todd might be

720
01:09:07,880 --> 01:09:13,480
 able to help us out a little bit further on that it's the taxing district that

721
01:09:13,480 --> 01:09:20,880
 both Hunter and Cole ranch set up for to pay for the infrastructure on their

722
01:09:20,880 --> 01:09:26,600
 developments so we're saying we see a lot in the extraterritorial areas of the

723
01:09:26,600 --> 01:09:30,160
 municipal utility district this is just a municipal management district so the

724
01:09:30,160 --> 01:09:34,520
 City Council had to sign off on having that created at the legislature it

725
01:09:34,520 --> 01:09:40,040
 essentially is another taxing within the city and then two more questions I

726
01:09:40,040 --> 01:09:46,120
 assume MGD is million of gallons per day and when you say out years is that the

727
01:09:46,120 --> 01:09:51,200
 same as future years yes sir it is yeah future years out years is consistent one

728
01:09:51,200 --> 01:09:59,840
 in the same that's correct thanks question yes go ahead yeah I looking at

729
01:09:59,840 --> 01:10:04,960
 the the increase in the use of water that's a great great graph going out as

730
01:10:04,960 --> 01:10:11,120
 far as it does and I meant this question is probably for for mr. Pugsley when we

731
01:10:11,120 --> 01:10:16,540
 did the tour of the wastewater plant no we were told about there are some I

732
01:10:16,540 --> 01:10:22,840
 believe called gray water lines that go to places like golf courses which is

733
01:10:22,840 --> 01:10:28,840
 recycled water and I wondered if there were any thoughts about increasing the

734
01:10:28,840 --> 01:10:36,880
 availability of of that type of water to meet obviously growing demands for

735
01:10:36,880 --> 01:10:42,520
 watering turf and parkland and that sort of thing especially in regard to the

736
01:10:42,520 --> 01:10:49,200
 what's going in the the amenities at Hunter Cole as they're presented now yes

737
01:10:49,200 --> 01:10:53,600
 sir the the reuse water system is what you're describing at the wastewater

738
01:10:53,600 --> 01:11:02,280
 plant and we do have pipelines to the big country club just south of 35 the

739
01:11:02,280 --> 01:11:06,480
 names escaping me right now and also to the city of Garland's electric plant

740
01:11:06,480 --> 01:11:11,360
 adjacent to the Lewisville water plant and while we have ample supply and

741
01:11:11,360 --> 01:11:17,280
 capacity the customer demand is what would drive our growth there we don't

742
01:11:17,280 --> 01:11:22,680
 have large users who would make the most benefit out of that that reuse water

743
01:11:22,680 --> 01:11:27,920
 system right now okay thank you

744
01:11:32,040 --> 01:11:43,040
 it's okay to go on the presentation system okay so revenue detail last time

745
01:11:43,040 --> 01:11:45,680
 we were in front of you in August the third we provided you with a financial

746
01:11:45,680 --> 01:11:50,320
 forecast or performer that really rolled up the revenues so we wanted to do is

747
01:11:50,320 --> 01:11:54,080
 to provide you additional detail what makes up our 49 million dollars in

748
01:11:54,080 --> 01:11:59,000
 revenue that you can see here so some of the major categories water residential

749
01:11:59,000 --> 01:12:02,360
 revenues 20.5 million in the proposed budget it's currently what we're

750
01:12:02,360 --> 01:12:08,160
 forecasting commercial revenue is about 17.6 and then you can see some impact

751
01:12:08,160 --> 01:12:12,360
 the revenue that we are bringing in from that reserve is 6.6 million so that's

752
01:12:12,360 --> 01:12:16,080
 the major categories that make up the revenue number within the water utility

753
01:12:16,080 --> 01:12:20,360
 we do have that planned use of reserves of 3.9 million as I previously discussed

754
01:12:20,360 --> 01:12:33,440
 to you on August the third for total resources about 52.9 water expenses this

755
01:12:33,440 --> 01:12:37,400
 is by division so these are operational areas within the water utility so

756
01:12:37,400 --> 01:12:41,280
 starting at the top you can see water administration utility administration

757
01:12:41,280 --> 01:12:46,040
 this year we actually combined and separated this division so it was

758
01:12:46,040 --> 01:12:50,340
 divided between water administration and public outreach we separated out public

759
01:12:50,340 --> 01:12:54,360
 outreach to increase transparency of this group then you can see going down

760
01:12:54,360 --> 01:12:59,340
 the page we have production distribution metering lab and miscellaneous and I do

761
01:12:59,340 --> 01:13:03,800
 want to point out this miscellaneous category is your ROI your transfers are

762
01:13:03,800 --> 01:13:08,440
 we involving cost of service transfers and franchise fees so that number is

763
01:13:08,440 --> 01:13:11,920
 fairly large but that is what makes up that twenty one point two million dollar

764
01:13:11,920 --> 01:13:23,120
 number distribution increases 58 percent between this year and next year on the

765
01:13:23,120 --> 01:13:28,300
 slide you're just at what's the reason for the 58 percent increase in

766
01:13:28,300 --> 01:13:33,200
 distribution pull this down really quick mr. Bafford that is revenue funded

767
01:13:33,200 --> 01:13:36,960
 capital so what we do in each of those different operational areas if they have

768
01:13:36,960 --> 01:13:40,480
 a project coming up and we're revenue funding a portion of it we divide it out

769
01:13:40,480 --> 01:13:43,440
 by operational area so that increase that you're seeing is simply because

770
01:13:43,440 --> 01:13:48,200
 their revenue funding additional projects in their proposed budget okay

771
01:13:48,200 --> 01:14:01,840
 yeah okay water expense a detail this is by category what we call family so you

772
01:14:01,840 --> 01:14:05,440
 can see personal services materials and supplies maintenance and repairs

773
01:14:05,440 --> 01:14:09,800
 insurance moving down the page some you can see those franchise fees I called

774
01:14:09,800 --> 01:14:14,320
 out all ago debt service so I made a note to this several times in the

775
01:14:14,320 --> 01:14:18,800
 presentation but as the fund continues to look at available funding revenue fund

776
01:14:18,800 --> 01:14:22,520
 projects and really utilize any impact fee funding that may be out there for

777
01:14:22,520 --> 01:14:26,960
 eligible projects you can see that debt service decreasing so I'll point this

778
01:14:26,960 --> 01:14:29,880
 out to you on the financial forecast also I mean you see a little bit

779
01:14:29,880 --> 01:14:33,360
 administrative transfers to the general fund so total expenses for the water

780
01:14:33,360 --> 01:14:40,640
 utility and this fifty two point nine million this is the ten year forecast

781
01:14:40,640 --> 01:14:44,040
 you've seen previously so I'll walk you back there really quick this does

782
01:14:44,040 --> 01:14:47,320
 include the two percent rate decrease I'd mentioned earlier this does have an

783
01:14:47,320 --> 01:14:50,920
 emphasis on revenue funding capital pertaining to the water plant I'll point

784
01:14:50,920 --> 01:14:54,360
 that out to you so the adopted 2020 budget you can see here in this column

785
01:14:54,360 --> 01:14:58,920
 this is the current fiscal year we have 2.9 million that we originally budgeted

786
01:14:58,920 --> 01:15:04,160
 to use in reserves for total resources of 51 million expenses are 51 million

787
01:15:04,160 --> 01:15:09,120
 also for a balanced budget utilizing those reserves so 0% for the rate

788
01:15:09,120 --> 01:15:13,520
 increase or decrease in the current budget end of your estimate looking at

789
01:15:13,520 --> 01:15:16,880
 the end of the year we do have some revenue impact associated with the

790
01:15:16,880 --> 01:15:20,600
 pandemic of six hundred and seventeen thousand we will continue to refine this

791
01:15:20,600 --> 01:15:23,880
 number and bring it back to you in December updated once we fully

792
01:15:23,880 --> 01:15:28,080
 understand the impact of the pandemic on the utilities so we are forecasting

793
01:15:28,080 --> 01:15:33,960
 about 2.8 million in reserve usage just about equal to the budget and of course

794
01:15:33,960 --> 01:15:37,240
 zero percent rate increase or decrease the proposed budget you can see in this

795
01:15:37,240 --> 01:15:43,380
 column we have revenue of 49 million 20,000 as we previously reviewed reserve

796
01:15:43,380 --> 01:15:48,760
 usage of 3.9 for total resources of 52.9 the total expenses we saw on the

797
01:15:48,760 --> 01:15:54,560
 previous page of 52.9 million and this is that two percent rate decrease that I

798
01:15:54,560 --> 01:15:58,160
 had previously discussed with you moving down the page a little bit more as we

799
01:15:58,160 --> 01:16:02,000
 reviewed last time on the operating reserve for the water fund is currently

800
01:16:02,000 --> 01:16:08,160
 forecast to be 17.8 million ending fiscal year 2021 so next September we do

801
01:16:08,160 --> 01:16:12,400
 have a separate reserve for the impact fee of 9 million dollars I want to point

802
01:16:12,400 --> 01:16:15,880
 out as you go in the future years as I had mentioned above the emphasis on

803
01:16:15,880 --> 01:16:19,120
 revenue funding capital pertaining to the water plant this 9 million actually

804
01:16:19,120 --> 01:16:23,640
 goes away in 2025 we are using 9 million at the impact free reserve to revenue

805
01:16:23,640 --> 01:16:28,360
 fund the design of the Lake Ray Roberts plant expansion keep moving down the

806
01:16:28,360 --> 01:16:32,560
 page a little bit you can see the number of working days 122 and we have a little

807
01:16:32,560 --> 01:16:38,040
 bit of development plan lines impact the reserve is the 4 million and here's the

808
01:16:38,040 --> 01:16:40,600
 reserve targets this is what we're looking at every year we're looking at

809
01:16:40,600 --> 01:16:43,840
 each of the utilities to see the financial health of them so the minimum

810
01:16:43,840 --> 01:16:49,500
 for water 17.5 with the maximum of 26.5 what does that equate to in days or

811
01:16:49,500 --> 01:16:55,800
 percentages so the minimum is 120 days or 33% the maximum is 180 days at 50%

812
01:16:55,800 --> 01:16:59,960
 one of the thing I do want to point out to the PB members this debt service line

813
01:16:59,960 --> 01:17:04,440
 as we continue to utilize revenue funding and really look at those project

814
01:17:04,440 --> 01:17:08,600
 fundings we've been able to stabilize this debt service going into the out

815
01:17:08,600 --> 01:17:13,680
 years when you see this increase from 27 to 28 from the 11.6 million to the 18

816
01:17:13,680 --> 01:17:18,360
 million this is for the issuance of the construction money for the Lake Ray

817
01:17:18,360 --> 01:17:25,080
 Roberts plant expansion this is the five-year capital plan for the water

818
01:17:25,080 --> 01:17:29,280
 fund and fiscal year 2021 the proposed budget we have planned debt issuance of

819
01:17:29,280 --> 01:17:35,080
 35.5 million as I said previously we will evaluate the capital plan throughout

820
01:17:35,080 --> 01:17:39,280
 the fiscal year and see if we actually need to issue 35.5 million before we

821
01:17:39,280 --> 01:17:43,400
 actually go out and issue that money we have revenue funding to 12.9 million for

822
01:17:43,400 --> 01:17:48,040
 the water utility impact fee funding this is revenue funding of 2.7 a little

823
01:17:48,040 --> 01:17:52,240
 bit aiding construction and some vehicle replacement for 275 thousand so for a

824
01:17:52,240 --> 01:18:02,040
 total of 2021 CIP of 51.8 million in 2021 this is the detail of the five-year

825
01:18:02,040 --> 01:18:07,080
 capital plan I do want to point out this makes up 46.2 million of the 51.8

826
01:18:07,080 --> 01:18:10,600
 million you saw on the previous slide so some of the major projects that we have

827
01:18:10,600 --> 01:18:13,760
 planned for this upcoming fiscal year is the regulatory and performance upgrade

828
01:18:13,760 --> 01:18:19,520
 project of 18 million dollars currently we do have 14.6 million in debt plan for

829
01:18:19,520 --> 01:18:23,600
 this project and 3.4 million in revenue funding this project is important to the

830
01:18:23,600 --> 01:18:27,760
 water utility because this enabled us to push that plan expansion out into the

831
01:18:27,760 --> 01:18:31,520
 future years and minimize those rate increases that you saw last year we come

832
01:18:31,520 --> 01:18:36,840
 forward to you with the 2019-2020 budget annual field service replacements this is

833
01:18:36,840 --> 01:18:40,240
 something that is revenue funded in the water utility each year these are

834
01:18:40,240 --> 01:18:43,840
 replacements of infrastructure in existing streets we have a contracted

835
01:18:43,840 --> 01:18:48,400
 field service replacement of 3.9 we do plan to debt fund that one and the bond

836
01:18:48,400 --> 01:18:53,880
 election 2019 so the bond election that was passed this last year we have 3.2

837
01:18:53,880 --> 01:18:58,240
 million in there to support those projects the northwest transmission line

838
01:18:58,240 --> 01:19:04,120
 we have 3.35 million which is planned dead issuance text on I-35 and I-35

839
01:19:04,120 --> 01:19:08,640
 North three locations of 10.9 which is dead issuance and then Elm and Locus

840
01:19:08,640 --> 01:19:14,640
 phase 2 which is 4 million so these projects make up 46.2 million of the 51.8

841
01:19:14,640 --> 01:19:21,120
 million that's identifying the capital plan so proposed rate changes so as I

842
01:19:21,120 --> 01:19:24,000
 mentioned earlier we do have two options in front of the public utility board

843
01:19:24,000 --> 01:19:28,960
 today as we showed you last time we are recommending a 2% rate decrease so for

844
01:19:28,960 --> 01:19:32,080
 the average residential customer we do base that on a three-quarter inch meter

845
01:19:32,080 --> 01:19:37,200
 the current facility charge is $16 and the first tier and our water rates is 0

846
01:19:37,200 --> 01:19:43,000
 to 15,000 gallons this is currently $4 and 15 cents per thousand gallons option

847
01:19:43,000 --> 01:19:46,400
 one is based on our cost of service model this is the preferred option this

848
01:19:46,400 --> 01:19:51,440
 this is stash recommendation this was the option that the PV of City Council

849
01:19:51,440 --> 01:19:55,880
 both approved for wastewater and fiscal year 1819 when we did a 5% rate

850
01:19:55,880 --> 01:20:00,900
 decrease the emphasis in this option minimize the decrease to the facility

851
01:20:00,900 --> 01:20:05,920
 charge and decreases the volume charge more and option 2 it would actually this

852
01:20:05,920 --> 01:20:10,120
 is a 2% across the board actually decrease the facility charge more and

853
01:20:10,120 --> 01:20:14,920
 decrease the volume charge less so previous recommendations from our

854
01:20:14,920 --> 01:20:18,800
 consultants is to minimize the total changes to the facility charge so option

855
01:20:18,800 --> 01:20:23,280
 one does minimize that impact our facility charge it is important to note

856
01:20:23,280 --> 01:20:26,120
 that the decrease for residential customers under both of these options

857
01:20:26,120 --> 01:20:32,720
 would be the same which is $53 and 10 cents the commercial rate changes what

858
01:20:32,720 --> 01:20:36,320
 it would do for it so this is based on a two inch meter and we have per thousand

859
01:20:36,320 --> 01:20:39,720
 gallons are actually not grouped into tiers on the commercial side so the

860
01:20:39,720 --> 01:20:44,280
 current facility charge or two inch meter is 51 50 if PV gives us direction

861
01:20:44,280 --> 01:20:48,920
 to proceed with option one the facility charge go to 51 31 I'm under option to

862
01:20:48,920 --> 01:20:54,040
 go to $50 and 47 cents and the volume charge under option one to go to 434

863
01:20:54,040 --> 01:21:02,640
 and then under option to go to 436 proposed rate changes these are our

864
01:21:02,640 --> 01:21:06,720
 contracted rates so as I discussed with you previously we are looking to update

865
01:21:06,720 --> 01:21:10,920
 these agreements based on signed agreements that we have with them so the

866
01:21:10,920 --> 01:21:14,800
 upper Trinity regional water district our wholesale raw water service this is

867
01:21:14,800 --> 01:21:18,920
 based on 85% of the Dallas wholesale rate so currently their rate is point seven

868
01:21:18,920 --> 01:21:24,920
 four zero one per thousand gallon based on 85% of the Dallas wholesale rate that

869
01:21:24,920 --> 01:21:29,040
 rate would go point seven five seven eight and the next one is the pass the

870
01:21:29,040 --> 01:21:33,400
 rate the Lake Chapman and it is currently point zero two seven zero we do

871
01:21:33,400 --> 01:21:37,000
 update this annually based on the CPI adjuster for the month of June so this

872
01:21:37,000 --> 01:21:42,920
 rate would go to point zero two seven five these are grass we show to the

873
01:21:42,920 --> 01:21:45,560
 public utility board and City Council every year as part of the budget

874
01:21:45,560 --> 01:21:51,400
 adoption process we do base the water rates on 9,200 gallons so you can't see

875
01:21:51,400 --> 01:21:57,560
 our current rate is in this yellow bar of 54 18 if PB approves a 2% rate

876
01:21:57,560 --> 01:22:02,960
 decrease or water customers that rate would go to $53 and 10 cents and then

877
01:22:02,960 --> 01:22:06,720
 usually what we do want to point this out the public utility board we do submit

878
01:22:06,720 --> 01:22:10,400
 these back to you later this year once all these cities adopt their budget and

879
01:22:10,400 --> 01:22:14,200
 they update their rates we'll provide that to you as an ACM update later in

880
01:22:14,200 --> 01:22:18,920
 the year this is the commercial water service using a two-inch meters our

881
01:22:18,920 --> 01:22:24,480
 current charge would be 233 69 with the proposed rate decrease and he should be

882
01:22:24,480 --> 01:22:29,560
 excuse me back up our current rate is 268 31 with the proposed decrease it go

883
01:22:29,560 --> 01:22:36,320
 to 233 69 so these bars should be switched in position it doesn't yeah I

884
01:22:36,320 --> 01:22:40,520
 thought we'd caught that before the presentation I apologize for that next

885
01:22:40,520 --> 01:22:44,880
 step so we do plan to come back to you on September 14th to seek your approval

886
01:22:44,880 --> 01:22:48,680
 for the budget and rates we will submit the red line rate ordinances to you

887
01:22:48,680 --> 01:22:52,400
 during this meeting however we do plan to get them to you well in advance of

888
01:22:52,400 --> 01:22:57,120
 the September 14th date to allow you an adequate time to review them ask any

889
01:22:57,120 --> 01:23:02,240
 questions that you may have on the 14th prior to adoption we do plan to have the

890
01:23:02,240 --> 01:23:06,600
 public hearing on the budget and tax rates on September 15th and we will be

891
01:23:06,600 --> 01:23:10,880
 looking for City Council's approval for the budget the tax rate the capital

892
01:23:10,880 --> 01:23:15,680
 improvement plan and the rates reach to the utilities on September 22nd then as

893
01:23:15,680 --> 01:23:18,760
 I mentioned earlier in December we will come back with that major budget rate

894
01:23:18,760 --> 01:23:30,360
 discussion pull this down for questions go ahead Billy sheet number 22 on your

895
01:23:30,360 --> 01:23:39,800
 display yes sir let me get it pulled up really quick there yes sir their number

896
01:23:39,800 --> 01:23:46,960
 different on our what's on the online so I got a kind of float oh okay the slide

897
01:23:46,960 --> 01:23:52,800
 order yeah we have this individual budgets and y'all one long one yes sir

898
01:23:52,800 --> 01:23:57,600
 correct and I pull it up on the other screen okay my question is on the net

899
01:23:57,600 --> 01:24:05,580
 income and you may have said something I missed it could you explain the net

900
01:24:05,580 --> 01:24:14,120
 income why you show net income for future years and why not past years in

901
01:24:14,120 --> 01:24:19,440
 the in the forecast is that your question yes a lot of it has to do with

902
01:24:19,440 --> 01:24:24,680
 with revenue funded capital what is the debt service doing that year and then

903
01:24:24,680 --> 01:24:28,440
 what's the forecast I think your question so let me go up here really

904
01:24:28,440 --> 01:24:32,280
 quick so and the proposed fiscal year 2021 we have planned use reserves of

905
01:24:32,280 --> 01:24:38,320
 3.9 million as you can see down here we have in 2022 we have a net income of

906
01:24:38,320 --> 01:24:45,160
 553,000 the majority of this is twofold one of it you can see up here this

907
01:24:45,160 --> 01:24:48,720
 impact fee revenue funding and debt service we're pulling in a little bit

908
01:24:48,720 --> 01:24:53,560
 more in fiscal year 2022 we've actually identified less projects to revenue fund

909
01:24:53,560 --> 01:24:59,080
 impact with impact fee dollars so this is coming in to offset the eligible debt

910
01:24:59,080 --> 01:25:03,000
 service of impact fee project so it actually benefits the fund I mean you

911
01:25:03,000 --> 01:25:09,700
 can see this number jumping from the 3.8 to 5.4 to 5.4 6.5 4.7 so that's why

912
01:25:09,700 --> 01:25:13,760
 you're seeing that net income down here on the bottom line just to make a note

913
01:25:13,760 --> 01:25:17,360
 so with impact fee funding we can pull it in and use it for two different

914
01:25:17,360 --> 01:25:21,220
 purposes one purpose would be to revenue fund eligible projects that are not in

915
01:25:21,220 --> 01:25:25,400
 the ground yet that's when you see this number coming in this 2.7 million the

916
01:25:25,400 --> 01:25:30,440
 second purpose would be to debt pay eligible debt service of a completed

917
01:25:30,440 --> 01:25:33,760
 project that is already in the ground that's why you're seeing this 3.8

918
01:25:33,760 --> 01:25:37,840
 million so we try to revenue fund as much as possible but some years based on

919
01:25:37,840 --> 01:25:41,560
 the timing of projects and when they're eligible we we really can't you know do

920
01:25:41,560 --> 01:25:47,560
 2.7 million a year it decreases in the future years yeah I hear you I see we're

921
01:25:47,560 --> 01:25:55,080
 like I'm wouldn't through with that sheet oh I'm sorry Billy Billy I'm sorry

922
01:25:55,080 --> 01:25:58,680
 Billy in that in that final in that last year that's on there though the only

923
01:25:58,680 --> 01:26:03,080
 history is FY 19 you can see that revenues was forty four point three

924
01:26:03,080 --> 01:26:06,720
 million and expenses were forty seven so there was that you know three point six

925
01:26:06,720 --> 01:26:12,000
 million dollar of imbalance and that was actually a drawdown so that year on it

926
01:26:12,000 --> 01:26:15,720
 just in a revenue recurring revenue and current expenses it was it was a short

927
01:26:15,720 --> 01:26:21,240
 fall about three point six million okay all right yeah I was just it's just kind

928
01:26:21,240 --> 01:26:25,520
 of a it's a looks to me like we're just using that as a budget balancing item in

929
01:26:25,520 --> 01:26:30,200
 the meantime until we decide where it can go well there is a rate

930
01:26:30,200 --> 01:26:34,440
 stabilization component of that reserve and it's something that we're mindful of

931
01:26:34,440 --> 01:26:41,320
 and that's why we have those reserve targets okay okay it just threw me off a

932
01:26:41,320 --> 01:26:46,260
 little bit and I wouldn't wouldn't clear as to how that worked yeah next sheet is

933
01:26:46,260 --> 01:26:52,800
 23 yes sir your impact fee projections mm-hmm

934
01:26:52,800 --> 01:26:59,040
 seemed to go down in 2024 drastically and you'd mentioned or somebody had

935
01:26:59,040 --> 01:27:04,080
 mentioned on the utility projections that the the coal hunter coal ranch was

936
01:27:04,080 --> 01:27:10,600
 coming online that neck following year so I'm not clear why those impact fees

937
01:27:10,600 --> 01:27:14,320
 are down that much that's a great question mr. cheek so can I back up to

938
01:27:14,320 --> 01:27:18,260
 the previous slide answer your question again so this number you see the two

939
01:27:18,260 --> 01:27:21,640
 point seven the one point one the one point two and the forty five thousand

940
01:27:21,640 --> 01:27:26,120
 this number is actually up here in this revenue funding line and that you can

941
01:27:26,120 --> 01:27:30,800
 see so two point seven one point one one point two and forty five thousand we are

942
01:27:30,800 --> 01:27:35,160
 budgeting six point six million and impact the revenue coming into this fund

943
01:27:35,160 --> 01:27:38,600
 every single year the number that you're seeing on this slide this is just the

944
01:27:38,600 --> 01:27:42,920
 revenue funding of eligible projects so this number does decrease in the future

945
01:27:42,920 --> 01:27:46,320
 years as we have less projects so we can actually revenue fund or currently

946
01:27:46,320 --> 01:27:50,200
 planned to be constructed that can be revenue funding but we reevaluate this

947
01:27:50,200 --> 01:27:54,560
 every year so this could possibly go up if projects pop up that are eligible for

948
01:27:54,560 --> 01:28:01,000
 impact the funding so that 2025 couldn't go up exponentially absolutely based on

949
01:28:01,000 --> 01:28:04,040
 the timeline of projects and the ones that are eligible and identified in our

950
01:28:04,040 --> 01:28:08,520
 impact these study we use that document to guide us in this number and looking

951
01:28:08,520 --> 01:28:11,760
 at what projects are gonna go to construction to win and how much is

952
01:28:11,760 --> 01:28:18,600
 eligible for impact the funding okay very good thank you yeah we don't we

953
01:28:18,600 --> 01:28:22,500
 don't spend on that we don't currently anticipate any decrease in impact fee

954
01:28:22,500 --> 01:28:26,520
 revenue it's currently consistent at six point six million per year in the water

955
01:28:26,520 --> 01:28:30,440
 utility right you got to collect it before you can spend it that's correct

956
01:28:30,440 --> 01:28:39,200
 okay thank you all right any other questions I think they need direction on

957
01:28:39,200 --> 01:28:45,920
 the rate decrease for me I'd like to stay with the cost of service option one

958
01:28:45,920 --> 01:28:57,160
 I think that's the best route for the water fund I agree yes so we'll build

959
01:28:57,160 --> 01:29:00,360
 that into the red line rate ordinance that we bring back to you on September

960
01:29:00,360 --> 01:29:06,360
 14th it will be based on the cost of service rate decrease and those meter

961
01:29:06,360 --> 01:29:13,120
 decreases to those applied all the water rate classes are you talking about this

962
01:29:13,120 --> 01:29:16,880
 would be for residential and commercial inside customers there's two components

963
01:29:16,880 --> 01:29:20,400
 to their rate there's a facility charge and a volume charge that would imply to

964
01:29:20,400 --> 01:29:24,280
 all those rates so if you're inside the city didn't customer for residential or

965
01:29:24,280 --> 01:29:28,760
 commercial the 2% rate decrease would apply would apply to every rate class

966
01:29:28,760 --> 01:29:34,200
 for the residential yes inside city limits that is correct thank you yeah

967
01:29:34,200 --> 01:29:39,040
 and then I think in agreement yep and I think mr. cheek you had asked the

968
01:29:39,040 --> 01:29:42,680
 question about the hydrant fee last time we met that will be that will be called

969
01:29:42,680 --> 01:29:45,960
 out in the red line rate ordinance on September 14th but to give you the

970
01:29:45,960 --> 01:29:50,480
 current rate is currently $5.20 per thousand gallon and the facility

971
01:29:50,480 --> 01:29:56,200
 charges $1,100 so the per thousand gallon rate would go down to five dollars

972
01:29:56,200 --> 01:30:00,800
 and ten cents based on this 2% rate decrease okay yeah thank you you're

973
01:30:00,800 --> 01:30:12,320
 welcome let me skip over here all right so the next utility is wastewater the

974
01:30:12,320 --> 01:30:15,000
 presentation objective is the same as water will go over the financial

975
01:30:15,000 --> 01:30:18,760
 assumptions the revenue and expense detail the financial forecast the

976
01:30:18,760 --> 01:30:22,400
 capital plan and the proposed rate changes which were wastewater there is

977
01:30:22,400 --> 01:30:26,600
 no proposed rate changes currently being proposed so financial assumptions we do

978
01:30:26,600 --> 01:30:31,160
 have the 2% growth forecast in the out years we are continuing to utilize the

979
01:30:31,160 --> 01:30:34,720
 impact fee funding as we talked about in the water utility we do have the

980
01:30:34,720 --> 01:30:37,720
 hunter coal ranch rate revenue included as we looked at the chart in the water

981
01:30:37,720 --> 01:30:42,720
 utility and then as I said no rate increases for rate increases or

982
01:30:42,720 --> 01:30:47,320
 decreases for the wastewater customers this year this is revenue detail for the

983
01:30:47,320 --> 01:30:51,120
 wastewater utility some of the major categories as in water you can see

984
01:30:51,120 --> 01:30:57,700
 wastewater residential 11.5 million wastewater commercial 13.1 we have some

985
01:30:57,700 --> 01:31:01,840
 drainage fees coming in for residential commercial about 5.1 million drainage is

986
01:31:01,840 --> 01:31:06,560
 a part of this utility and then we have impact the revenue coming in a 4.2

987
01:31:06,560 --> 01:31:11,120
 million this impact fee revenue is consistent in each of the 10 years in

988
01:31:11,120 --> 01:31:16,280
 the forecast but the revenue funding component of the expense varies year to

989
01:31:16,280 --> 01:31:22,040
 year based on project timing this is the expense detail by category so some of

990
01:31:22,040 --> 01:31:25,400
 the major categories you can see personal services here at the top of 8.4

991
01:31:25,400 --> 01:31:30,480
 million capital outlays that revenue funding of projects is 6.5 and then our

992
01:31:30,480 --> 01:31:34,720
 debt service is 7 million so these expenses and all these categories add up

993
01:31:34,720 --> 01:31:42,200
 to 36.9 million in expenses expense by division same thing as in water we wanted

994
01:31:42,200 --> 01:31:45,240
 to show you the operational areas within wastewater so we have administration

995
01:31:45,240 --> 01:31:49,160
 reclamation collections filled service beneficial reuse the laboratory

996
01:31:49,160 --> 01:31:53,040
 industrial pretreatment drainage watershed protection we have some

997
01:31:53,040 --> 01:31:56,440
 miscellaneous as a reminder this includes return on investment franchise

998
01:31:56,440 --> 01:32:01,920
 fees and our cost of service transfers the drain is miscellaneous of 720,000

999
01:32:01,920 --> 01:32:07,760
 which houses the drainage debt service and then as a reminder I think I

1000
01:32:07,760 --> 01:32:10,800
 mentioned this in the water presentation but wastewater administration this year

1001
01:32:10,800 --> 01:32:14,320
 does show to be going away this has actually been combined with water

1002
01:32:14,320 --> 01:32:18,240
 administration so you'd see an increase in the transfer from wastewater to water

1003
01:32:18,240 --> 01:32:23,520
 to fund their portion of administration but staff felt it was necessary to

1004
01:32:23,520 --> 01:32:28,720
 combine these two groups so it's in your forecast for the wastewater utility

1005
01:32:28,720 --> 01:32:33,120
 starting just like water you can see the adopted 2020 budget here in this column

1006
01:32:33,120 --> 01:32:37,680
 we did have planned use of reserves of 1.6 million so we had zero rate

1007
01:32:37,680 --> 01:32:41,800
 increases or decreases in the current proposed budget into your estimate we

1008
01:32:41,800 --> 01:32:46,640
 are planning to come in fairly close to that adopted budget about 1.9 million in

1009
01:32:46,640 --> 01:32:51,480
 revenue usage and you can see a little bit of COVID impact up here for 389,000

1010
01:32:51,480 --> 01:32:54,800
 as I said about the water utility we'll refine this number and come back to the

1011
01:32:54,800 --> 01:32:58,760
 public utility board in December once we fully understand the impact of the

1012
01:32:58,760 --> 01:33:04,080
 pandemic to the utilities and then the proposed budget is in this column so we

1013
01:33:04,080 --> 01:33:08,000
 have thirty seven point one million in total revenue for the wastewater utility

1014
01:33:08,000 --> 01:33:12,560
 you can see expenses of thirty six point nine so for net income about two

1015
01:33:12,560 --> 01:33:16,960
 hundred ninety two thousand was zero rate changes so zero rate increases or

1016
01:33:16,960 --> 01:33:20,440
 decreases for wastewater customers moving down the page a little bit you

1017
01:33:20,440 --> 01:33:24,600
 can see operating and cap or the operating reserve of thirteen point four

1018
01:33:24,600 --> 01:33:29,640
 million it is within the reserve requirement of ten point three to fourteen

1019
01:33:29,640 --> 01:33:33,240
 point four the reserve requirement is a little bit different for wastewater and

1020
01:33:33,240 --> 01:33:36,760
 it's a hundred days for the minimum and a hundred forty days for the maximum so

1021
01:33:36,760 --> 01:33:39,760
 twenty eight percent on the minimum side and thirty nine percent on the maximum

1022
01:33:39,760 --> 01:33:44,440
 so we are well within that requirement going down to the future years you can

1023
01:33:44,440 --> 01:33:48,280
 see it does start to dip down a little bit slightly drop in below in fiscal

1024
01:33:48,280 --> 01:33:52,880
 year 2026 but we are currently not showing rate increases or decreases in

1025
01:33:52,880 --> 01:33:58,680
 the utility I think that's the major things on this slide I wanted to show

1026
01:33:58,680 --> 01:34:02,560
 you today come back to it if you may has any questions the drainage five-year

1027
01:34:02,560 --> 01:34:06,920
 forecast this is a component of the forecast you use to solve so there are two

1028
01:34:06,920 --> 01:34:12,120
 different major revenue sources for the drainage utility in 2021 you can see

1029
01:34:12,120 --> 01:34:16,200
 residential drainage fees equates to about one point nine million revenue

1030
01:34:16,200 --> 01:34:20,320
 non-residential which is the same thing as commercial counselor three point one

1031
01:34:20,320 --> 01:34:25,360
 so for a total of five point five here the major expense categories for the

1032
01:34:25,360 --> 01:34:29,800
 drainage utility personal services at one point nine capital outlay is really

1033
01:34:29,800 --> 01:34:33,600
 revenue funding those drainage projects of one point eight million so total

1034
01:34:33,600 --> 01:34:37,880
 expenses of five point five we do set one million dollars aside for a drainage

1035
01:34:37,880 --> 01:34:41,040
 reserve this is a component of the wastewater reserve but we do show it

1036
01:34:41,040 --> 01:34:46,360
 separately for transparency this is the five-year capital plan for the wastewater

1037
01:34:46,360 --> 01:34:51,920
 utility so similar to water we do have a debt issuance plan for wastewater for

1038
01:34:51,920 --> 01:34:55,760
 wastewater is thirty two point eight million as I said previously in water we

1039
01:34:55,760 --> 01:34:59,120
 will continue to evaluate projects and the amount of funding available for

1040
01:34:59,120 --> 01:35:02,760
 issuing this debt for the utility and determine the exact amount we need to

1041
01:35:02,760 --> 01:35:06,960
 issue in the future years revenue funding you can see five point three

1042
01:35:06,960 --> 01:35:10,480
 million this is coming from the operating fund impact fee funding of

1043
01:35:10,480 --> 01:35:14,320
 five hundred thousand this is impact fee funding eligible projects as we

1044
01:35:14,320 --> 01:35:17,480
 discussed in water a little bit of aid in construction and some vehicle

1045
01:35:17,480 --> 01:35:21,600
 replacement of one point two million so total CIP for the wastewater utility of

1046
01:35:21,600 --> 01:35:27,400
 forty million dollars in fiscal year 2021 so major projects for the

1047
01:35:27,400 --> 01:35:30,760
 wastewater utility this does make up twenty nine point nine million of the

1048
01:35:30,760 --> 01:35:34,520
 forty million dollars in proposed projects so going down the list here you

1049
01:35:34,520 --> 01:35:37,840
 can see the Clear Creek Basin pump station of three million dollars we are

1050
01:35:37,840 --> 01:35:41,740
 currently planning to debt fund this project the solids handling improvements

1051
01:35:41,740 --> 01:35:44,560
 of eight point three million we're planning to debt fund that project also

1052
01:35:44,560 --> 01:35:48,200
 we do budget for the annual field service replacement similar to water

1053
01:35:48,200 --> 01:35:52,560
 this is a revenue funded project which is two point six million and then we do

1054
01:35:52,560 --> 01:35:55,520
 have some contracted field service replacement which is consistent with

1055
01:35:55,520 --> 01:35:59,680
 water we are issuing this a debt so two point six million in debt issuance the

1056
01:35:59,680 --> 01:36:03,600
 bond election to support the recently approved bond package we do have two

1057
01:36:03,600 --> 01:36:06,840
 point nine million in debt issuance for that and then the Hickory Creek

1058
01:36:06,840 --> 01:36:10,940
 interceptor three three point five the Hickory Creek interceptor lining of two

1059
01:36:10,940 --> 01:36:15,040
 point three and the Elm Street sewer line replacement phase two two point nine

1060
01:36:15,040 --> 01:36:18,720
 then we got some textile relocation similar to water of one point eight

1061
01:36:18,720 --> 01:36:21,820
 million so total of twenty nine point nine million but these are the major

1062
01:36:21,820 --> 01:36:27,240
 projects included in the capital plan for next year this is the residential

1063
01:36:27,240 --> 01:36:31,560
 wastewater rate comparison as a reminder we did decrease this recently I think it

1064
01:36:31,560 --> 01:36:36,640
 was in fiscal year 18 19 from 6,000 gallons to 5,400 and based on the

1065
01:36:36,640 --> 01:36:40,360
 average water usage of residential customers so you can see the wastewater

1066
01:36:40,360 --> 01:36:48,160
 rate would be 26 23 based on 5,400 gallons commercial we based it on 50

1067
01:36:48,160 --> 01:36:54,880
 thousand gallons so you see the current fee would be 284 25 and then commercial

1068
01:36:54,880 --> 01:37:00,200
 we also show you a 200,000 gallon comparison that rate would be 707 86 and

1069
01:37:00,200 --> 01:37:04,080
 as previously said as these cities adopt their budget we will provide you a memo

1070
01:37:04,080 --> 01:37:07,640
 later this year with updated rate charts that provide updated rates for each of

1071
01:37:07,640 --> 01:37:11,800
 the cities the next steps we talked about previously we will get that

1072
01:37:11,800 --> 01:37:15,420
 redline ordinance to you well in advance of the September 14th meeting to

1073
01:37:15,420 --> 01:37:20,040
 allow for questions and then we can address those on September 14th and then

1074
01:37:20,040 --> 01:37:23,440
 going through you can see budget adoption on September 22nd for the City

1075
01:37:23,440 --> 01:37:33,120
 Council includes wastewater all right questions

1076
01:37:33,120 --> 01:37:43,040
 sorry I meant to ask this initial onset of the utility questions and maybe

1077
01:37:43,040 --> 01:37:48,920
 they're in here I can't find them do we have the impact fees as a price per each

1078
01:37:48,920 --> 01:37:54,640
 somewhere in there they're not provided in the material in your backup they will

1079
01:37:54,640 --> 01:37:59,640
 be part of the rate ornance when it comes forward to you we can provide that

1080
01:37:59,640 --> 01:38:03,000
 information to you on September 14th if you'd like to see that Billy we

1081
01:38:03,000 --> 01:38:07,760
 absolutely can okay I can wait till then on that one you bet I'm just this thank

1082
01:38:07,760 --> 01:38:17,440
 you anybody else Charlie go ahead one quick comment Nick on the schedules I

1083
01:38:17,440 --> 01:38:23,920
 see from this department the word for employment employee is often used

1084
01:38:23,920 --> 01:38:30,760
 personal services I wonder if we might consider calling that either personnel or

1085
01:38:30,760 --> 01:38:37,720
 payroll or something to me person personal services sounds like a pedicure

1086
01:38:37,720 --> 01:38:42,320
 or something yeah we have to jump you see the size of it and I'm pretty sure

1087
01:38:42,320 --> 01:38:48,280
 it's they're getting expensive sorry they're getting very expensive these

1088
01:38:48,280 --> 01:38:54,080
 days too our previous finance director brought that to my attention years ago

1089
01:38:54,080 --> 01:38:59,160
 but we are in the process of updating that the budget books if you go

1090
01:38:59,160 --> 01:39:02,000
 historically and did have that differences between the two so we're

1091
01:39:02,000 --> 01:39:05,240
 trying to convert over to personnel like you're talking about we just haven't got

1092
01:39:05,240 --> 01:39:12,840
 ice yeah so we're working on it we will get there mr. Parker thanks anyone else

1093
01:39:12,840 --> 01:39:24,000
 all right then solid waste okay so presentation objectives and similar to

1094
01:39:24,000 --> 01:39:26,840
 the other utilities will review the financial assumptions the revenue

1095
01:39:26,840 --> 01:39:31,040
 expense detail the financial forecast the capital improvement plan the proposed

1096
01:39:31,040 --> 01:39:34,360
 rate changes and address any questions that you may have regarding solid waste

1097
01:39:34,360 --> 01:39:38,400
 so revenue forecast consistent with the rest of the utility is a 2% growth

1098
01:39:38,400 --> 01:39:43,520
 forecast in the out years we are the anticipated wholesale agreements are

1099
01:39:43,520 --> 01:39:48,000
 currently projected to end in fiscal year 2023 pending re-approval by the

1100
01:39:48,000 --> 01:39:51,320
 public utility board and City Council we did take the conservative approach and

1101
01:39:51,320 --> 01:39:55,200
 actually back them out of the forecast the expense detail we have a 2% growth

1102
01:39:55,200 --> 01:39:58,840
 forecast in the out years and sale construction was moved from fiscal year

1103
01:39:58,840 --> 01:40:02,640
 22 to 21 I'll point that out to you on the financial forecast shortly and it's

1104
01:40:02,640 --> 01:40:07,040
 gonna be revenue funded and then rates we are proposing a 5% residential rate

1105
01:40:07,040 --> 01:40:11,360
 decrease this equates to a $1 decrease per month for the average residential

1106
01:40:11,360 --> 01:40:15,280
 customer with a standard cart we are looking to make minimum updates the

1107
01:40:15,280 --> 01:40:19,280
 contracted rates for example the wholesale agreements and then minimum

1108
01:40:19,280 --> 01:40:24,920
 updates to the valet rate commercial rate and gate disposal rate the solid

1109
01:40:24,920 --> 01:40:28,880
 waste revenue detail similar for the utilities you can see the detail

1110
01:40:28,880 --> 01:40:34,440
 expanded here in this page so the major categories residential revenue of 5.1

1111
01:40:34,440 --> 01:40:39,320
 million residential recycling revenue of 4.8 and you can see some front load and

1112
01:40:39,320 --> 01:40:43,480
 side load revenue so your commercial business revenue of 9.4 roll off open

1113
01:40:43,480 --> 01:40:49,960
 top revenue of 7.2 landfill gate disposal rate revenue which is 4.8 you

1114
01:40:49,960 --> 01:40:54,800
 can see that increasing from 3.2 to 4.8 as you continue to see the volume in the

1115
01:40:54,800 --> 01:40:59,320
 landfill increase and then you can see the landfill wholesale revenue increasing

1116
01:40:59,320 --> 01:41:03,440
 from the 2.5 to the 5.6 based on those agreements that were approved last year

1117
01:41:03,440 --> 01:41:09,720
 and then total revenue of 39.8 we do have some reserve usage in the solid

1118
01:41:09,720 --> 01:41:17,800
 waste fund of 4.3 for total resources of 44.1 this is expense detail by

1119
01:41:17,800 --> 01:41:21,640
 operational area similar to water and wastewater so you can see solid waste

1120
01:41:21,640 --> 01:41:24,840
 administration of 3.2 going down the page some of the bigger

1121
01:41:24,840 --> 01:41:29,200
 operational areas residential collections of 5.9 commercial collections

1122
01:41:29,200 --> 01:41:35,840
 of 4.8 solid waste disposal of 11.5 and then miscellaneous of 16.6 and as a

1123
01:41:35,840 --> 01:41:39,560
 reminder this is return on investment franchise fees and those cost of service

1124
01:41:39,560 --> 01:41:44,640
 transfers it's always expense detail by category you can see the personnel

1125
01:41:44,640 --> 01:41:51,480
 expenses 10.8 some of the major other categories franchise fees of 1.9

1126
01:41:51,480 --> 01:41:57,440
 operations of 6.8 the debt service is 6.9 which steadily decreases you can see

1127
01:41:57,440 --> 01:42:03,360
 it going from 18 19 to 18 8.9 million 8.4 decreasing to 6.9 is the fund

1128
01:42:03,360 --> 01:42:07,120
 continued continues to focus on revenue funding of projects and minimize the

1129
01:42:07,120 --> 01:42:10,640
 debt issuance the cost of service transfer as I mentioned earlier you can

1130
01:42:10,640 --> 01:42:15,400
 see a 1.8 million other cost of service transfers which would be tech services

1131
01:42:15,400 --> 01:42:20,480
 human resources and other ones would be 3.5 and your capital outlay is 10.7

1132
01:42:20,480 --> 01:42:26,160
 which does include that cell development construction five-year forecast with a

1133
01:42:26,160 --> 01:42:29,640
 solid waste fund you can see the adopted budget here in this column we did have

1134
01:42:29,640 --> 01:42:34,720
 an adopted budget with use of reserves of three million dollars total expenses

1135
01:42:34,720 --> 01:42:39,560
 of 38.4 moving in to the end of your estimate we do have a COVID revenue

1136
01:42:39,560 --> 01:42:43,640
 impact number of 280,000 we'll bring this back to you in December with a refined

1137
01:42:43,640 --> 01:42:50,080
 number total revenue of 38.1 million and total expenses of 36.6 so we are

1138
01:42:50,080 --> 01:42:53,840
 showing a net profit of 1.4 million currently forecasted in the end of year

1139
01:42:53,840 --> 01:42:58,800
 for 2020 the proposed 2021 budget is here in this dotted line you can see the

1140
01:42:58,800 --> 01:43:02,720
 reserve usage I mentioned to you on the previous slide of 4.3 million so total

1141
01:43:02,720 --> 01:43:09,680
 resources of 44.1 total expenses of 44.1 moving down the page and the operating

1142
01:43:09,680 --> 01:43:14,800
 reserve is 8.3 million this is in the reserve targets for the solid waste fund

1143
01:43:14,800 --> 01:43:19,880
 which is 6.2 million to 7.9 and the percentages are different for solid

1144
01:43:19,880 --> 01:43:25,480
 waste and air for water wastewater so 51 days being the minimum or 14% 65 days

1145
01:43:25,480 --> 01:43:30,640
 or 18% being the maximum so we are within that reserve target in in the

1146
01:43:30,640 --> 01:43:33,960
 current proposed budget as you go in the future years we do slightly drop below

1147
01:43:33,960 --> 01:43:41,680
 in 2025 you can see it slightly dropping below 5.635 to 5.673 one of the

1148
01:43:41,680 --> 01:43:45,000
 thing I want to point out this rate decrease is possible as I said you know

1149
01:43:45,000 --> 01:43:48,480
 with the funds continued emphasis on revenue funding and decreasing the

1150
01:43:48,480 --> 01:43:52,560
 amount of debt issuance and the solid waste fund you can see the debt service

1151
01:43:52,560 --> 01:43:57,240
 decreasing from 8.9 million to 6.9 and it does continue to decrease in the

1152
01:43:57,240 --> 01:44:00,720
 future years you can actually see it getting down to 3.9 million in the

1153
01:44:00,720 --> 01:44:05,000
 future so the fund is doing a great job at revenue funding projects and

1154
01:44:05,000 --> 01:44:08,800
 minimizing debt issuances this is something I reviewed with you on August

1155
01:44:08,800 --> 01:44:12,640
 the 3rd this is the five-year capital plan for the solid waste fund we do have

1156
01:44:12,640 --> 01:44:16,200
 one plan debt issuance of three million dollars this is for a fleet annexed

1157
01:44:16,200 --> 01:44:20,720
 building at the solid waste facility we do have six point two five million in

1158
01:44:20,720 --> 01:44:24,480
 revenue funding this is for that next cell development and design construction

1159
01:44:24,480 --> 01:44:28,240
 of that cell vehicle replacement the fund is looking to revenue fund the

1160
01:44:28,240 --> 01:44:32,840
 vehicles this upcoming fiscal year of 3.3 million so the total capital plan of

1161
01:44:32,840 --> 01:44:40,880
 12.6 million detailed five-year capital plan so each project detailed out you can

1162
01:44:40,880 --> 01:44:46,200
 see that landfill cell for construction of 4.9 4.5 million which is revenue

1163
01:44:46,200 --> 01:44:51,240
 funding landfill cell construction for quality assurance of 450,000 for revenue

1164
01:44:51,240 --> 01:44:54,840
 funding landfill equipment of 1.3 million which is gonna be revenue

1165
01:44:54,840 --> 01:44:58,960
 funding you can see that fleet building construction I had mentioned about debt

1166
01:44:58,960 --> 01:45:02,680
 issuance of three million dollars and then you can see the commercial group by

1167
01:45:02,680 --> 01:45:05,960
 different operational areas so you can see commercial equipment from one

1168
01:45:05,960 --> 01:45:09,360
 million thirty thousand some HCC equipment which is the home chemical

1169
01:45:09,360 --> 01:45:14,000
 collection of sixty thousand residential equipment of two point oh five two

1170
01:45:14,000 --> 01:45:17,880
 million and then landfill equipment of two hundred fifteen thousand so twelve

1171
01:45:17,880 --> 01:45:23,240
 point six total on capital plan these are the proposed rate changes for the

1172
01:45:23,240 --> 01:45:26,520
 solid waste funds as we discussed previously we are looking to decrease

1173
01:45:26,520 --> 01:45:30,080
 the valet shared service for commercial businesses that are currently in the

1174
01:45:30,080 --> 01:45:34,560
 tier two structure currently that rate is 138 28 we are looking to reduce it to

1175
01:45:34,560 --> 01:45:40,080
 74 16 based on our cost of service model this is the recommended rate yard waste

1176
01:45:40,080 --> 01:45:43,440
 collection for commercial businesses this is currently not being offered to

1177
01:45:43,440 --> 01:45:46,800
 be concerned consistent with residential we are looking to implement this at

1178
01:45:46,800 --> 01:45:52,360
 seventy five dollars per hour built on 15 minute increments and the standard

1179
01:45:52,360 --> 01:45:58,120
 cart rate would go from 21 51 to 20 dollars and 51 cents with that 5% or 1

1180
01:45:58,120 --> 01:46:02,160
 dollar decrease or residential customers as we talked about the large cart

1181
01:46:02,160 --> 01:46:07,720
 customers would go from 26 26 to 2504 which equates to about a dollar 22 so if

1182
01:46:07,720 --> 01:46:10,860
 you had a large cart you'd actually see a little bit more of a decrease an

1183
01:46:10,860 --> 01:46:16,800
 additional large cart would go from 1738 to 1657 and this is based on the cost

1184
01:46:16,800 --> 01:46:20,360
 of service and we would be looking to decrease that point eight one cents

1185
01:46:20,360 --> 01:46:24,160
 landfill gate disposal rate for residential and businesses that are

1186
01:46:24,160 --> 01:46:28,600
 non-city of Denton we are looking to increase this from 46 a ton to 48 we do

1187
01:46:28,600 --> 01:46:32,560
 continue to see that increased volume coming into the landfill and then the

1188
01:46:32,560 --> 01:46:37,360
 sludge disposal rate dewatered landfill looking to increase them 46 to 50 so an

1189
01:46:37,360 --> 01:46:41,320
 increase of four dollars one other thing I want to point out as I did last time

1190
01:46:41,320 --> 01:46:43,600
 with the Public Utility Board we are looking to increase the wholesale

1191
01:46:43,600 --> 01:46:49,280
 agreements by 2.3% which is a CPI rate adjuster identified in the contracts for

1192
01:46:49,280 --> 01:46:57,080
 those agreements so this does equate for $400,000 in additional revenue in 2021 so

1193
01:46:57,080 --> 01:47:00,880
 residential rate comparison you can see our current rate here in this column

1194
01:47:00,880 --> 01:47:06,680
 since the 2151 with that one dollar decrease to be $20 and 51 cents we will

1195
01:47:06,680 --> 01:47:09,640
 update these rates after budget adoption by these other cities and bring that

1196
01:47:09,640 --> 01:47:14,480
 back to you in a memo with the rest of the utilities and then the future dates

1197
01:47:14,480 --> 01:47:17,800
 I mean September 14th as we talked about the red line rate ordinance with these

1198
01:47:17,800 --> 01:47:21,080
 rate changes will come forward to you for your approval then we'll send those

1199
01:47:21,080 --> 01:47:24,680
 to you well in advance and then budget adoption is currently scheduled for

1200
01:47:24,680 --> 01:47:46,960
 September 22nd alright could you go back to slide 49 please yes okay what

1201
01:47:46,960 --> 01:47:59,600
 accounts for the drop in commercial recycling revenue a lot of this is based

1202
01:47:59,600 --> 01:48:05,680
 on what the market is doing mr. self so from 1.7 to 870,000 it would be what

1203
01:48:05,680 --> 01:48:10,240
 we're getting paid for those recycling commodities and then also the city did

1204
01:48:10,240 --> 01:48:15,400
 previously in prior years recycle some metal material but I believe Brian

1205
01:48:15,400 --> 01:48:24,200
 burner is on the phone too and he can speak to this a little bit more that is

1206
01:48:24,200 --> 01:48:28,960
 that is correct we are there are several things that go into the residential

1207
01:48:28,960 --> 01:48:34,880
 with the excuse me the commercial recycling drop part of that has to do

1208
01:48:34,880 --> 01:48:43,880
 with just the general value but we also had I believe in the original rate

1209
01:48:43,880 --> 01:48:49,200
 structure we had it and we had an element in there for disposal when we

1210
01:48:49,200 --> 01:48:54,760
 went in and redid the rates last year we removed that so I took away a little bit

1211
01:48:54,760 --> 01:49:00,800
 of an overcharge that was occurring in previous years we see that right now all

1212
01:49:00,800 --> 01:49:06,760
 they're paying for is the collection and the sale not the disposal piece of that

1213
01:49:06,760 --> 01:49:16,760
 okay thank you could you go to go to slide 51 please just a question what what

1214
01:49:16,760 --> 01:49:23,720
 what are the what is what does landfill closure mean what is that encompass so

1215
01:49:23,720 --> 01:49:29,280
 this is a dedicated reserve the city has set up to close the landfill facility

1216
01:49:29,280 --> 01:49:33,600
 when that date will come in the future we do transfer this money from the

1217
01:49:33,600 --> 01:49:37,920
 operating reserve to that dedicated reserve each year what we've seen with

1218
01:49:37,920 --> 01:49:41,840
 the with the landfill recently bought some new compactors they've increased

1219
01:49:41,840 --> 01:49:46,640
 their capacity of compaction at the landfill so looking at that cost of

1220
01:49:46,640 --> 01:49:51,840
 service model that closure model and it tells us if we're fully funded or not it

1221
01:49:51,840 --> 01:49:55,040
 actually does say we're fully funded this fiscal year so we're not looking to

1222
01:49:55,040 --> 01:49:59,160
 make that transfer however we are continuing that transfer in the future

1223
01:49:59,160 --> 01:50:02,520
 years it will not be removed from the budget but we did have a one-time

1224
01:50:02,520 --> 01:50:07,720
 decrease or one time not transferring that money this fiscal year so hopefully

1225
01:50:07,720 --> 01:50:10,920
 the answer is your question this is a transfer to a dedicated reserve to close

1226
01:50:10,920 --> 01:50:16,800
 that facility when the date comes in the future okay thank you and one more I know

1227
01:50:16,800 --> 01:50:23,640
 that we have the solid waste strategic management plan on the horizon and are

1228
01:50:23,640 --> 01:50:30,360
 these budget figures given to the consultant who will be doing this plan

1229
01:50:30,360 --> 01:50:37,440
 and with a with the idea of make a plan that the budget that is friendly to our

1230
01:50:37,440 --> 01:50:44,040
 budget or is this budget subject to change based upon what based upon the

1231
01:50:44,040 --> 01:50:50,360
 findings of the strategic plan I'm gonna ask Brian to speak to the strategic plan

1232
01:50:50,360 --> 01:50:56,280
 he is the one that is the city's liaison liaison for that yeah Brian

1233
01:50:56,280 --> 01:51:02,800
 burner director of solid waste and again this is a strategy this is not a plan so

1234
01:51:02,800 --> 01:51:07,200
 this is what we have to consider before we go back into making the plan you are

1235
01:51:07,200 --> 01:51:12,000
 correct that part of this the development of the strategy will be

1236
01:51:12,000 --> 01:51:17,560
 reviewing previous both operational and fiscal constraints and as and as we move

1237
01:51:17,560 --> 01:51:23,400
 forward using those to determine exactly you know what impacts are going into the

1238
01:51:23,400 --> 01:51:27,600
 system so we can make proper decisions moving forward in a plan to how we're

1239
01:51:27,600 --> 01:51:32,880
 going to implement you know increase diversion control cost minimize

1240
01:51:32,880 --> 01:51:38,840
 environmental impact so that will be part of the the evaluation as we're

1241
01:51:38,840 --> 01:51:43,320
 looking forward here and in the next budget year well you will probably see

1242
01:51:43,320 --> 01:51:50,440
 the impacts of that evaluation now this the the the approval this strategy should

1243
01:51:50,440 --> 01:51:57,680
 be on your I believe the September 14th or the meeting following so we'll have

1244
01:51:57,680 --> 01:52:03,040
 an opportunity to discuss that a little more in depth thank you very much

1245
01:52:03,040 --> 01:52:10,560
 you're welcome question question on the list of capital projects for this there

1246
01:52:10,560 --> 01:52:15,920
 was something called a fleet building construction can you explain what that

1247
01:52:15,920 --> 01:52:22,320
 is is that a new structure for working on equipment is it an addition to an

1248
01:52:22,320 --> 01:52:27,280
 existing one or just what is that this would be for a new facility at the

1249
01:52:27,280 --> 01:52:31,720
 solid waste site for working on heavy-duty equipment out there so it is

1250
01:52:31,720 --> 01:52:36,120
 not expansion of an existing facility being new construction all right thank

1251
01:52:36,120 --> 01:52:46,320
 you other questions just want to thank solid waste for the way they take care

1252
01:52:46,320 --> 01:52:52,640
 of people who need assistance with their carts and their trash and the recycling

1253
01:52:52,640 --> 01:52:57,240
 I for one thank you very much I don't have to drive across town every Monday

1254
01:52:57,240 --> 01:53:03,640
 anymore and it is it is great that and I think the ratepayers are happy to pay

1255
01:53:03,640 --> 01:53:07,240
 that over is that it costs to help out people who need assistance and thank you

1256
01:53:07,240 --> 01:53:17,440
 for doing it it's a nice service yeah thank you all right then the electric

1257
01:53:17,440 --> 01:53:21,400
 utility is next and this is a two-part presentation so the first part of the

1258
01:53:21,400 --> 01:53:24,680
 presentation I'll walk through the budget information with you then Terry

1259
01:53:24,680 --> 01:53:28,920
 Nolte will come up and present the deck financial pro forma and some supporting

1260
01:53:28,920 --> 01:53:42,080
 slides so presentation objectives similar to the utilities probably need

1261
01:53:42,080 --> 01:53:45,960
 to go through these again with you again but load forecast we'll look at really

1262
01:53:45,960 --> 01:53:50,680
 quick financial forecast the capital improvement plan the CIP questions that

1263
01:53:50,680 --> 01:53:54,280
 you have at the end we're currently not proposing rate changes for the electric

1264
01:53:54,280 --> 01:54:00,360
 utility this fiscal year so financial assumptions the average load growth of

1265
01:54:00,360 --> 01:54:05,680
 3.2 percent over the first five years is included in the forecast we have

1266
01:54:05,680 --> 01:54:09,800
 decreased the t-cost allowed rate of return which is included in other

1267
01:54:09,800 --> 01:54:13,000
 revenue on the pro forma and I'll show that to you so it continues at twenty

1268
01:54:13,000 --> 01:54:17,960
 eight point zero four percent through fiscal year 2022 it does decrease to 16

1269
01:54:17,960 --> 01:54:22,680
 percent in fiscal year 2023 and I'll point that out to you on the pro forma

1270
01:54:22,680 --> 01:54:28,560
 expenses the ROI to the city to the general fund from electric is currently

1271
01:54:28,560 --> 01:54:32,160
 at six percent in the proposed budget this was a direction the City Council

1272
01:54:32,160 --> 01:54:36,480
 and this does go through the end of fiscal year 2022 and then it does return

1273
01:54:36,480 --> 01:54:40,920
 to 3.5 percent in fiscal year 2023 and the current performance that you're

1274
01:54:40,920 --> 01:54:44,600
 looking at does not anticipate any sale that Gibbons Creek facility however we do

1275
01:54:44,600 --> 01:54:48,280
 have 21 million dollars in decommissioning expenses accounted for in

1276
01:54:48,280 --> 01:54:52,720
 the pro forma and then we have 1.7 million per year in payroll reduction

1277
01:54:52,720 --> 01:54:57,920
 costs versus the 2020 budget out of those due to the program that was just

1278
01:54:57,920 --> 01:55:01,920
 recently completed and so on this table here you can see the end of your estimate

1279
01:55:01,920 --> 01:55:10,000
 2019 you can see in this green line cross 2020 you can see residential seven

1280
01:55:10,000 --> 01:55:14,400
 point seven percent commercial is six point four percent and industrial four

1281
01:55:14,400 --> 01:55:19,000
 point eight percent and then other three point three so this is the load forecast

1282
01:55:19,000 --> 01:55:21,800
 for the electric fund and what supports the revenues in the current proposed

1283
01:55:21,800 --> 01:55:28,600
 budget the electric revenue detail so you can see the non-deck base rate

1284
01:55:28,600 --> 01:55:32,640
 revenue of eighty eight point eight million you can see the ECA revenues I

1285
01:55:32,640 --> 01:55:36,280
 think mr. cheek had mentioned earlier fifty three point four million you can

1286
01:55:36,280 --> 01:55:39,960
 see the non-operating revenues of sixty four million and you can see some

1287
01:55:39,960 --> 01:55:44,400
 interest income of six hundred and fifty thousand so total revenue non-deck related

1288
01:55:44,400 --> 01:55:47,960
 is two hundred and six point eight million and then you can see the deck

1289
01:55:47,960 --> 01:55:51,640
 room revenues being put in there of twenty four point five bringing the

1290
01:55:51,640 --> 01:55:55,720
 total revenues to two hundred and thirty one point four use reserves you know

1291
01:55:55,720 --> 01:55:58,920
 having playing use reserves in the proposed budget so you can see total

1292
01:55:58,920 --> 01:56:04,620
 resources are equal to the revenue electric expenses by divisions these are

1293
01:56:04,620 --> 01:56:07,720
 operational areas similar to the utilities we wanted to show these to you

1294
01:56:07,720 --> 01:56:12,280
 you can see administration was sixty seven point two power supply

1295
01:56:12,280 --> 01:56:15,440
 administration this upcoming fiscal year will be combined with electric

1296
01:56:15,440 --> 01:56:19,600
 administration so it does go to zero energy management of four point three

1297
01:56:19,600 --> 01:56:23,240
 some of the major other operational categories you can see is wholesale

1298
01:56:23,240 --> 01:56:27,000
 power expense this is in a separate division we do keep this separate for

1299
01:56:27,000 --> 01:56:31,560
 purchase power ninety two point two million the Denton Energy Center of thirty

1300
01:56:31,560 --> 01:56:34,920
 three point four million and then moving down the page a little bit you can see

1301
01:56:34,920 --> 01:56:38,560
 operation and maintenance of six million and then some of the other ones

1302
01:56:38,560 --> 01:56:43,320
 engineering a three point nine so total expenses of two thirty one point one

1303
01:56:43,320 --> 01:56:50,600
 million expenses by detail so for my category you can see dropping down the

1304
01:56:50,600 --> 01:56:54,000
 page here you can see the personnel expenses of twenty point eight million

1305
01:56:54,000 --> 01:56:58,120
 some of the other major categories this is that return on investment that I

1306
01:56:58,120 --> 01:57:02,320
 mentioned you can see it going from six point six million in the current adopted

1307
01:57:02,320 --> 01:57:06,100
 budget to eight point eight this does reflect the increase this current

1308
01:57:06,100 --> 01:57:08,880
 fiscal year so we are planning to come in over budget for the return on

1309
01:57:08,880 --> 01:57:12,720
 investment and then this is the true six percent for the entire fiscal year of

1310
01:57:12,720 --> 01:57:17,320
 eleven point nine million franchise fees and you can see nine point nine million

1311
01:57:17,320 --> 01:57:22,360
 for franchise fees operations is seven point three and then the DME non-debt

1312
01:57:22,360 --> 01:57:26,680
 other debt is thirty point five and then we have separated out the deck debt for

1313
01:57:26,680 --> 01:57:30,240
 transparency is seventeen point two taking all these different expense

1314
01:57:30,240 --> 01:57:33,360
 categories we do come up with two hundred thirty one point one million in

1315
01:57:33,360 --> 01:57:39,320
 expenses it's the five-year forecast electric fund you can see there is no

1316
01:57:39,320 --> 01:57:43,240
 rate increases we do have that reduced t-cost revenue that I pointed out a

1317
01:57:43,240 --> 01:57:47,680
 couple slides ago so the adopted 2020 budget is here in this column we did

1318
01:57:47,680 --> 01:57:51,880
 have an adopted budget with planned use of reserves of six point nine million for

1319
01:57:51,880 --> 01:57:55,840
 total resources of two hundred and twenty nine point two expenses are two

1320
01:57:55,840 --> 01:58:00,180
 hundred and twenty nine point two with those zero rate increases or decreases in

1321
01:58:00,180 --> 01:58:05,320
 2020 and the budget included a forty eight point seven million dollar ending

1322
01:58:05,320 --> 01:58:08,880
 operating reserve interviewer estimate we are planning to come in a little bit

1323
01:58:08,880 --> 01:58:12,920
 better about three point four million so total resources of two hundred and

1324
01:58:12,920 --> 01:58:17,400
 twenty nine point five that was zero rate increases or decreases the proposed

1325
01:58:17,400 --> 01:58:21,200
 budget is twenty twenty one is here in this dotted line you can see total

1326
01:58:21,200 --> 01:58:24,880
 revenue is equal to total resources of two hundred and thirty one point four

1327
01:58:24,880 --> 01:58:30,600
 total expenses are two thirty one point one so for a net income of just about three hundred thousand so a

1328
01:58:30,600 --> 01:58:34,640
 balanced budget and then the zero zero rate increases for the upcoming fiscal

1329
01:58:34,640 --> 01:58:38,640
 year ending operating reserve is seventy three point five million in the electric

1330
01:58:38,640 --> 01:58:41,920
 fund and the reserve requirements of this fund are different than the other

1331
01:58:41,920 --> 01:58:46,420
 utilities minimum of sixty days or sixteen percent the maximum or seventy

1332
01:58:46,420 --> 01:58:50,120
 five days or twenty one percent so that minimum amount being thirty six point

1333
01:58:50,120 --> 01:58:55,120
 nine million that maximum amount being forty eight point five going into the

1334
01:58:55,120 --> 01:58:58,400
 future years what I want to point out is the reserve does stay above the minimum

1335
01:58:58,400 --> 01:59:02,120
 reserve requirement in each of the five years getting to forty five point two

1336
01:59:02,120 --> 01:59:07,220
 million in the future years jumping back up the page really quick what I wanted

1337
01:59:07,220 --> 01:59:10,560
 to point out you see this non-rate revenue this is the decrease that you

1338
01:59:10,560 --> 01:59:14,480
 see from sixty four point six million in the proposed twenty twenty one budget to

1339
01:59:14,480 --> 01:59:18,020
 the forty eight point two million you see in twenty twenty three this is the

1340
01:59:18,020 --> 01:59:21,840
 decrypt decrease in that t-cost rate of return that we discussed a couple slides

1341
01:59:21,840 --> 01:59:26,480
 ago one of the important thing I want the PB to see is the return on investment

1342
01:59:26,480 --> 01:59:30,040
 or franchise fees you can see in the proposed budget or twenty one point eight

1343
01:59:30,040 --> 01:59:33,720
 million you can see that decrease back down to three point five percent for

1344
01:59:33,720 --> 01:59:37,580
 the ROI to the general fund going back down to sixteen point three in fiscal

1345
01:59:37,580 --> 01:59:43,920
 year twenty twenty three it's a five-year capital plan for the electric fund so in

1346
01:59:43,920 --> 01:59:47,840
 twenty twenty one the proposed budget we have a total of thirty two point two

1347
01:59:47,840 --> 01:59:51,800
 million in distribution projects transmission which just does include the

1348
01:59:51,800 --> 01:59:55,880
 Hickory Creek substation facility of twenty point eight million so thirty two

1349
01:59:55,880 --> 02:00:01,240
 point eight million total grand total would be sixty five million dollars in

1350
02:00:01,240 --> 02:00:04,920
 projects similar to the other utilities we will look at this utility throughout

1351
02:00:04,920 --> 02:00:08,480
 the year look at available funding see what projects are scheduled to go to

1352
02:00:08,480 --> 02:00:12,320
 construction before issuing this debt amount aid in construction nine hundred

1353
02:00:12,320 --> 02:00:17,400
 sixty five thousand CEO issuance sixty one point five with a little bit of

1354
02:00:17,400 --> 02:00:20,800
 revenue funding of two point six million is how that sixty five million

1355
02:00:20,800 --> 02:00:27,720
 breaks down five-year capital plan this is on multiple slides I will go through

1356
02:00:27,720 --> 02:00:30,440
 here and hit a couple of the major projects if you have any questions we

1357
02:00:30,440 --> 02:00:32,920
 can address them afterwards and Terry's here to help me walk us through these

1358
02:00:32,920 --> 02:00:38,600
 also so the CI CIS enterprise system of one point five million is currently

1359
02:00:38,600 --> 02:00:42,840
 included in the capital plan moving down the page to point out some other large

1360
02:00:42,840 --> 02:00:46,880
 items you can see transformers and equipment of one point nine feeders and

1361
02:00:46,880 --> 02:00:50,400
 extension and improvements of nine million new residential and commercial

1362
02:00:50,400 --> 02:00:53,720
 development of three million and overhead to underground conversions of

1363
02:00:53,720 --> 02:00:57,400
 two million so this page makes up a total of eighteen point two million in

1364
02:00:57,400 --> 02:01:05,040
 projects the next page you can see the Hickory Creek substation facility that I

1365
02:01:05,040 --> 02:01:08,360
 mentioned on the previous couple slides of seventeen point four million is

1366
02:01:08,360 --> 02:01:12,040
 accounted for in this budget and there are some transmission lines associated

1367
02:01:12,040 --> 02:01:15,880
 that substation you can see a three point seven million and then you can see

1368
02:01:15,880 --> 02:01:20,840
 the Eagle transmission line three point nine million Cooper Creek and Brinker

1369
02:01:20,840 --> 02:01:28,440
 transmission line of one point seven million is also in the budget and Hickory

1370
02:01:28,440 --> 02:01:31,320
 Creek substation facility of four point eight million you can see that here

1371
02:01:31,320 --> 02:01:35,640
 under distribution city streetlight program this is something I pointed out

1372
02:01:35,640 --> 02:01:38,560
 to the public utility board previously and Tony has discussed the public

1373
02:01:38,560 --> 02:01:42,160
 utility board and City Council in the past we do have three million dollars

1374
02:01:42,160 --> 02:01:46,000
 accounted for in each year the five-year CIP for street lighting so you will see

1375
02:01:46,000 --> 02:01:51,040
 that three million in each of the years single-fade meter maintenance and growth

1376
02:01:51,040 --> 02:01:59,040
 of 435,000 so for a total of 65 million thirty three thousand one fifty four

1377
02:01:59,040 --> 02:02:02,600
 proposed electric rate changes so there are no increases or decrease for

1378
02:02:02,600 --> 02:02:06,020
 residential customers but we are proposing to make minimum updates to the

1379
02:02:06,020 --> 02:02:09,840
 rate ordinance this fiscal year the first rate we're looking to discontinue

1380
02:02:09,840 --> 02:02:13,640
 is the residential renewable energy services writer also referred to as RG

1381
02:02:13,640 --> 02:02:17,760
 all customers currently receive a hundred percent renewable energy so we

1382
02:02:17,760 --> 02:02:21,840
 are looking to discontinue this rate the weekend service also referred to as WS

1383
02:02:21,840 --> 02:02:25,600
 we are looking to discontinue this a recent audit did reveal that the weekend

1384
02:02:25,600 --> 02:02:29,240
 customers were hitting their monthly demand outside of the designated hours

1385
02:02:29,240 --> 02:02:33,560
 the downtown decorative lighting DDL the rate is no longer applicable to the

1386
02:02:33,560 --> 02:02:37,680
 downtown customers and then the dark fiber we're looking to discontinue this

1387
02:02:37,680 --> 02:02:42,640
 and then the banner install fee we are looking to discontinue and then that fee

1388
02:02:42,640 --> 02:02:46,440
 was transferred to building safety commercial renewable energy services

1389
02:02:46,440 --> 02:02:50,160
 writers similar to the RG rate all customers do receive a hundred percent

1390
02:02:50,160 --> 02:02:54,040
 renewable energy so we are looking to discontinue this independent wholesale

1391
02:02:54,040 --> 02:02:59,960
 generator IWG we are looking to discontinue this rate also so the RG by

1392
02:02:59,960 --> 02:03:03,080
 discontinuing this rate there are 186 residential customers that would be

1393
02:03:03,080 --> 02:03:11,320
 impacted with an annual savings of forty seven dollars and thirty six cents so

1394
02:03:11,320 --> 02:03:14,880
 residential rate comparison for electric utility you can see the city of Denton

1395
02:03:14,880 --> 02:03:19,080
 in the middle on this green bar so over the average customer based on 1200

1396
02:03:19,080 --> 02:03:24,400
 kilowatt hours a month would be 124 80 and we'll bring this back to the public

1397
02:03:24,400 --> 02:03:30,000
 utility board once the rest of these cities adopt their 2021 budget and then

1398
02:03:30,000 --> 02:03:33,480
 this is a summary slide of the proposed rate decreases for all the utilities

1399
02:03:33,480 --> 02:03:36,720
 together so as I'd said electric there are no proposed rate changes for the

1400
02:03:36,720 --> 02:03:40,800
 average residential customer water based on 9200 gallons the customer could

1401
02:03:40,800 --> 02:03:44,480
 expect a one dollar and eight cents decrease which equates to a 2% rate

1402
02:03:44,480 --> 02:03:48,360
 decrease for water customers wastewater there is no rate decrease or increase

1403
02:03:48,360 --> 02:03:52,200
 proposed for residential and then solid waste for the standard car customer they

1404
02:03:52,200 --> 02:03:58,800
 would see that one dollar decrease which equates to five percent future dates so

1405
02:03:58,800 --> 02:04:02,200
 we will bring back the red line rate ordinance to you on September 14th we

1406
02:04:02,200 --> 02:04:06,920
 will submit that to you prior to that to allow you adequate time to review it and

1407
02:04:06,920 --> 02:04:11,760
 ask any questions on September 14th before approval and then we will have

1408
02:04:11,760 --> 02:04:15,320
 our public hearing on September 15th City Council budget adoption is scheduled

1409
02:04:15,320 --> 02:04:19,400
 for September 22nd and then we'll be circling back with you in December with

1410
02:04:19,400 --> 02:04:24,680
 that mid-year budget rate discussion and then that gets us to the deck Susan if

1411
02:04:24,680 --> 02:04:28,080
 it's okay I'll open if you're okay with opening up now before Terry takes over

1412
02:04:28,080 --> 02:04:32,880
 for my part of the presentation that'd be great I have three questions but

1413
02:04:32,880 --> 02:04:43,160
 before I go anybody else have questions go ahead Billy and then you Ed so on the

1414
02:04:43,160 --> 02:04:52,520
 increase in ROI for DME how is the revenue shown for that item work where

1415
02:04:52,520 --> 02:04:58,640
 is that being specified in the rates the the revenue so the ROI is transferred

1416
02:04:58,640 --> 02:05:03,080
 from the electric fund to the general fund a couple months ago the City

1417
02:05:03,080 --> 02:05:07,800
 Council did make that decision to increase that ROI through 2022 right so

1418
02:05:07,800 --> 02:05:12,480
 where is that shown in the revenue so Billy that's this is Tony sorry so this

1419
02:05:12,480 --> 02:05:18,600
 is built into your base rates it's an operating expense okay so we show no

1420
02:05:18,600 --> 02:05:24,600
 rate increase that's why I'm confused so it essentially is a drawdown on

1421
02:05:24,600 --> 02:05:31,280
 reserves it's a drawdown I'm sorry electric reserves it is okay yeah thank

1422
02:05:31,280 --> 02:05:37,480
 you oh one more question I didn't I was looking at the capital expenditure or

1423
02:05:37,480 --> 02:05:44,240
 scaffold capital budget and it didn't total out the transmission separately

1424
02:05:44,240 --> 02:05:51,120
 and that would should equate to revenue correct

1425
02:05:51,120 --> 02:05:59,920
 you're talking about the assets that are put into the t-cost rate of return mr.

1426
02:05:59,920 --> 02:06:03,760
 cheek is that what you're talking about yeah and as it equates to the capital

1427
02:06:03,760 --> 02:06:09,040
 electric five-year capital plan okay let me ask so the answer the answer of that

1428
02:06:09,040 --> 02:06:14,240
 Billy's no you know that those assets what shows up on the expense side is the

1429
02:06:14,240 --> 02:06:18,360
 debt service and so those revenues are recovered over the the life of those

1430
02:06:18,360 --> 02:06:24,800
 assets okay okay well I didn't total the transmission separately from those so

1431
02:06:24,800 --> 02:06:30,400
 okay we can look at that yeah you just met it now we can we can make that

1432
02:06:30,400 --> 02:06:34,520
 adjustment mr. cheap yeah cuz you know t-cost is good that's that's good

1433
02:06:34,520 --> 02:06:40,000
 expense because it generates revenue correct this gives me an idea what it is

1434
02:06:40,000 --> 02:06:46,760
 so I can add about don't worry about it just didn't say that's all I got yeah

1435
02:06:46,760 --> 02:06:53,960
 and I guess to that point mr. cheek if you go back to the let me see what slide

1436
02:06:53,960 --> 02:07:02,000
 it is on the presentation here it'd be slide number 67 in the slide role it may

1437
02:07:02,000 --> 02:07:05,120
 be slide number nine in your presentation and you can't see the

1438
02:07:05,120 --> 02:07:10,520
 transmission total on this slide but we can also add it to the detail okay 32.8

1439
02:07:10,520 --> 02:07:14,020
 don't worry about I was just having a hard time locating the total I got a

1440
02:07:14,020 --> 02:07:22,200
 calculator but alright thanks okay and you had a question yeah regarding the

1441
02:07:22,200 --> 02:07:30,840
 21 million that's budgeted for the decommissioning of Gibbons Creek is there

1442
02:07:30,840 --> 02:07:37,760
 actually a time framework on the sale is or is this going to drag on forever

1443
02:07:37,760 --> 02:07:41,960
 this is this is Tony there there is no update at this point they're still

1444
02:07:41,960 --> 02:07:48,360
 ongoing negotiations going on by the board and TMPA staff and so at this

1445
02:07:48,360 --> 02:07:53,860
 point there's there's really no movement other than both TMPA and the cities have

1446
02:07:53,860 --> 02:07:59,000
 included the decommissioning expenses in their budgets for next year is there any

1447
02:07:59,000 --> 02:08:04,520
 deadline on these negotiations you know now it's just non-going negotiations an

1448
02:08:04,520 --> 02:08:16,240
 open thank you sir go ahead just a quick quick follow-up on Ed's question will

1449
02:08:16,240 --> 02:08:20,200
 that contract come before us if there is a contract to sell Gibbons Creek

1450
02:08:20,200 --> 02:08:25,280
 absolutely I think as we as TMPA continues to to move forward at some

1451
02:08:25,280 --> 02:08:29,720
 point if if we see a path forward then we'll likely come back to the PB into

1452
02:08:29,720 --> 02:08:33,920
 the council in closed session and give you a little more specifics before the

1453
02:08:33,920 --> 02:08:41,800
 contract ever comes to you okay thanks this man okay anybody else I've got

1454
02:08:41,800 --> 02:08:49,440
 three if we go the load forecast one I didn't write it down slide we're showing

1455
02:08:49,440 --> 02:08:56,680
 in 2019 a decrease I'm assuming that is because of COVID and some of the low was

1456
02:08:56,680 --> 02:09:04,320
 probably decreased because people aren't in business yeah so we're seeing

1457
02:09:04,320 --> 02:09:08,440
 probably about a five to seven percent decrease in overall load here in the

1458
02:09:08,440 --> 02:09:17,760
 city so okay all right and then on page 66 if you could remind me what is our

1459
02:09:17,760 --> 02:09:28,320
 required debt service coverage is it 1.2 1.25 1.25 so I know there are just

1460
02:09:28,320 --> 02:09:33,960
 projections and you refine them but it does show that in 2023 and 2024 we will

1461
02:09:33,960 --> 02:09:38,760
 drop below our debt service coverage ratios but we we have opportunity to

1462
02:09:38,760 --> 02:09:44,480
 change that before those years correct yeah the future five-year forecast shows

1463
02:09:44,480 --> 02:09:49,840
 us dropping below the 1.25 and 2023 and 2024 but you know we'll continue to

1464
02:09:49,840 --> 02:09:52,940
 refine this bring it back to the public utility board every single year as

1465
02:09:52,940 --> 02:09:56,600
 things change in the load forecast with the electric utility so I bet you are

1466
02:09:56,600 --> 02:10:00,320
 correct it does currently show us going below and Susan this is Tony I'll just

1467
02:10:00,320 --> 02:10:07,840
 point out that the city's debt policy is where that 1.25 is found for bond

1468
02:10:07,840 --> 02:10:12,440
 covenant standpoints the only bonds that require that times coverage are the

1469
02:10:12,440 --> 02:10:17,160
 outstanding revenue bonds that we issued in 2017 for the deck and that actually

1470
02:10:17,160 --> 02:10:22,440
 only requires a one-time coverage ratio so for bond company standpoint we're

1471
02:10:22,440 --> 02:10:27,040
 fine either way it's the internal debt city debt policy that they will need to

1472
02:10:27,040 --> 02:10:31,600
 address and I was more concerned about the bond covenant so thank you yes and

1473
02:10:31,600 --> 02:10:38,160
 then my last one is simple what is dark fiber that we're discontinuing so Chris

1474
02:10:38,160 --> 02:10:47,360
 Lutrix on the phone I'll ask him to explain the dark fiber really quick if

1475
02:10:47,360 --> 02:10:59,440
 he's not Terry's here quick explanation dark fiber is just a fiber optic cable

1476
02:10:59,440 --> 02:11:07,440
 that is dark or not lit up on either end and that's we don't provide that service

1477
02:11:07,440 --> 02:11:14,520
 any longer okay typically on a dark fiber product the customer would install

1478
02:11:14,520 --> 02:11:20,360
 the equipment at its end and light it up and maintain that equipment I didn't

1479
02:11:20,360 --> 02:11:24,640
 want to assume that that's what it was okay thank you I thought it was a

1480
02:11:24,640 --> 02:11:34,320
 conspiracy theory any other questions all right all right I'll turn it over to

1481
02:11:34,320 --> 02:11:45,840
 Terry to review the deck finances with you good good morning again Terry Nolte

1482
02:11:45,840 --> 02:11:52,360
 assistant general manager madam chairman I didn't want to be presumptive but if

1483
02:11:52,360 --> 02:11:57,640
 you wanted to take a break we could certainly do that at any time now would

1484
02:11:57,640 --> 02:12:03,120
 be good before we get into this deck this is gonna be one isn't it okay well

1485
02:12:03,120 --> 02:12:08,080
 that's it'll take it'll take about 15 minutes to go through the presentation

1486
02:12:08,080 --> 02:12:14,480
 okay what do you five minutes ten minutes what do y'all need five five okay

1487
02:12:14,480 --> 02:12:17,440
 five minute break

1488
02:12:17,440 --> 02:12:28,800
 11 26 a.m. and we're back we're going to go over the deck mr. Nolte okay I'm gonna

1489
02:12:28,800 --> 02:12:37,440
 pull up the presentation this is a presentation that I put together for

1490
02:12:37,440 --> 02:12:43,140
 City Council we discussed with them last week in general what we're trying to do

1491
02:12:43,140 --> 02:12:48,080
 here is show that the deck on a standalone basis when we look at the

1492
02:12:48,080 --> 02:12:53,840
 deck pro forma we look at expenses and revenues for the deck on a standalone

1493
02:12:53,840 --> 02:13:00,560
 basis and we're projecting for the next five years as we did this year negative

1494
02:13:00,560 --> 02:13:04,440
 net income for the deck on a standalone basis however there are additional

1495
02:13:04,440 --> 02:13:11,320
 sources of revenue and savings I shouldn't say revenue additional sources

1496
02:13:11,320 --> 02:13:17,920
 of value that the deck brings to the overall supply portfolio that explained

1497
02:13:17,920 --> 02:13:23,000
 the Nate why a negative net income on a standalone basis is a very viable

1498
02:13:23,000 --> 02:13:37,680
 solution so you can see the deck oh sorry and get the presentation up

1499
02:13:51,120 --> 02:14:01,360
 okay so the biggest additional source of value is the fact that were it not for

1500
02:14:01,360 --> 02:14:06,320
 the deck we would have to purchase significantly more renewable energy and

1501
02:14:06,320 --> 02:14:12,040
 I'll just point out the deck in my research was a component of the overall

1502
02:14:12,040 --> 02:14:19,080
 renewable Denton plan to achieve the 70% renewable and then a hundred percent

1503
02:14:19,080 --> 02:14:25,320
 under the Denton renewable resource plan currently have 460 megawatts contracted

1504
02:14:25,320 --> 02:14:30,080
 if we were to go to a hundred percent renewable without the deck we'd have to

1505
02:14:30,080 --> 02:14:37,040
 put under contract 800 to 900 megawatts this is the same approach that

1506
02:14:37,040 --> 02:14:44,920
 Georgetown Texas has used and as you may be aware as a result of that oversupply

1507
02:14:44,920 --> 02:14:50,880
 their their electric rates are the highest in the state the other source of

1508
02:14:50,880 --> 02:14:57,800
 value so so for us in today's market it was it's about 18 to 20 million of

1509
02:14:57,800 --> 02:15:02,320
 incremental annual energy purchases that we would have to make if we did not have

1510
02:15:02,320 --> 02:15:09,080
 the deck the original pro forma in 2016 predicted that to be nine nine to 20

1511
02:15:09,080 --> 02:15:15,840
 million dollars we also achieve significant savings in being able to

1512
02:15:15,840 --> 02:15:21,320
 arbitrage the day ahead market and the real-time market the original pro forma

1513
02:15:21,320 --> 02:15:27,400
 projected 2.3 million and in the first full year of operation we were able to

1514
02:15:27,400 --> 02:15:37,320
 achieve 3.3 million of actual day ahead to real-time arbitrage here you see the

1515
02:15:37,320 --> 02:15:44,660
 pro forma and here are the negative net income numbers that we're speaking to if

1516
02:15:44,660 --> 02:15:49,400
 we add these additional sources of value now you see the 3.3 million of the day

1517
02:15:49,400 --> 02:15:55,360
 had real-time come in and the avoided energy reap any avoided renewable energy

1518
02:15:55,360 --> 02:16:00,320
 purchases that we'd have to make and you can see they get larger out here in time

1519
02:16:00,320 --> 02:16:08,880
 and that's due to the to the forward curve shape and if you add those

1520
02:16:08,880 --> 02:16:16,040
 sources of value in now the the true adjusted net income becomes positive

1521
02:16:16,040 --> 02:16:25,280
 from 14 4.7 million for this fiscal year moving up some years to 11 million and

1522
02:16:25,280 --> 02:16:34,600
 7.8 million and 23 24 now if we look at the shutdown has been suggested by

1523
02:16:34,600 --> 02:16:41,520
 members of council if we take out all the energy expenses and all of the

1524
02:16:41,520 --> 02:16:47,000
 energy and capacity and ancillary service revenues and all we have is the

1525
02:16:47,000 --> 02:16:53,960
 debt you would see that the debt net income would be the exact debt burden

1526
02:16:53,960 --> 02:16:59,280
 17.2 million dollars a year now if we add in those additional renewable energy

1527
02:16:59,280 --> 02:17:06,280
 purchases that we'd have to make and the lost gross margins because in our five

1528
02:17:06,280 --> 02:17:11,120
 year forecast we have gross margins being achieved by the deck which would

1529
02:17:11,120 --> 02:17:16,320
 be lost if the deck were shut down we ended up with these adjusted gross

1530
02:17:16,320 --> 02:17:25,960
 adjusted net income numbers at 28 to 35 million over the next five years and

1531
02:17:25,960 --> 02:17:31,840
 then if you put the adjusted net income with the deck the lost net income with

1532
02:17:31,840 --> 02:17:39,080
 the deck you end up with these large numbers of the decks value true value is

1533
02:17:39,080 --> 02:17:46,120
 between 36 and 43 million a year over the next five years and then to put this

1534
02:17:46,120 --> 02:17:51,680
 in terms that ratepayers can get their arms around if we were to not have the

1535
02:17:51,680 --> 02:17:56,080
 deck these would be very large rate increases that we'd have to impose on

1536
02:17:56,080 --> 02:18:05,920
 the energy cost adjustment 65 82 74 69 percent annual increases that's those

1537
02:18:05,920 --> 02:18:11,880
 are standalone numbers not compounded and then for the average homeowner that

1538
02:18:11,880 --> 02:18:18,560
 would be you can see 27 dollars a month up to 35 dollars a month and annually it

1539
02:18:18,560 --> 02:18:31,120
 would be 334 up to 421 dollars per year in additional energy cost so that that

1540
02:18:31,120 --> 02:18:36,880
 was a theoretical forward look if we look at the actual performance of the

1541
02:18:36,880 --> 02:18:42,560
 last two some of the last summer and then this summer so last summer I think

1542
02:18:42,560 --> 02:18:47,960
 earlier today we mentioned the fact that you know Todd mentioned we made 17.8

1543
02:18:47,960 --> 02:18:53,440
 million dollars in a five-day period and a 17.3 million dollars of gross margin

1544
02:18:53,440 --> 02:18:58,960
 we had mild temperatures up until mid-August then we had the price spikes

1545
02:18:58,960 --> 02:19:03,680
 our purchase power costs for the overall portfolio of which the deck is a

1546
02:19:03,680 --> 02:19:10,520
 component of 11.1 million without the deck if we run this analysis and we

1547
02:19:10,520 --> 02:19:15,800
 would comply with the risk policy that's been approved by PUB and Council we

1548
02:19:15,800 --> 02:19:21,160
 would have had to purchase a hedge a financial hedge is 7 by 16 that's a 7

1549
02:19:21,160 --> 02:19:29,480
 days a week the on peak hours from 7 in the morning until 11 at night well our

1550
02:19:29,480 --> 02:19:35,120
 purchase power costs would have been 29.4 and the deck effectively saved 18.3

1551
02:19:35,120 --> 02:19:42,280
 million for last summer if we look at this summer through the 13th of August

1552
02:19:42,280 --> 02:19:48,320
 again we're spearing mild temperatures we have had no price spikes to say we

1553
02:19:48,320 --> 02:19:55,640
 did have a couple on the 17th but that's not included in this temporal period our

1554
02:19:55,640 --> 02:20:01,920
 purchase power cost today 5.8 million through the 13th and without without the

1555
02:20:01,920 --> 02:20:07,240
 deck with that same hedge it would have cost us 18.2 million for a savings of

1556
02:20:07,240 --> 02:20:15,800
 12.4 million so with that I'll open it up to any questions you might have

1557
02:20:21,720 --> 02:20:28,680
 I think there was some discussion about this in the past but considering a

1558
02:20:28,680 --> 02:20:36,680
 scenario where where federal regulations come in environmental regulations come

1559
02:20:36,680 --> 02:20:45,880
 in that that would not probe that would prohibit further co2e emissions and that

1560
02:20:45,880 --> 02:20:53,800
 sort of stuff does do you all have a contingency plan in place yet if should

1561
02:20:53,800 --> 02:21:01,000
 that occur where the the decks operation would be severely curtailed by that sort

1562
02:21:01,000 --> 02:21:08,120
 of regulation we haven't formalized a plan there are a couple of options for

1563
02:21:08,120 --> 02:21:14,960
 us you know I think it's impractical to think that that would be a like a light

1564
02:21:14,960 --> 02:21:18,920
 switch where you turn it on and emissions would be limited it'd be a

1565
02:21:18,920 --> 02:21:25,760
 long runway to a final end state where you know you'd have a five to ten year

1566
02:21:25,760 --> 02:21:30,800
 runway of time to make those kinds of changes so we have plenty of time to

1567
02:21:30,800 --> 02:21:35,880
 make those plans one of the new technologies that's being considered is

1568
02:21:35,880 --> 02:21:44,800
 using surplus renewable energy at night to generate hydrogen and then and inject

1569
02:21:44,800 --> 02:21:52,120
 that hydrogen into natural gas pipeline and use that to combust in in units like

1570
02:21:52,120 --> 02:21:58,360
 the deck the deck actually is designed to be able to handle that type of fuel

1571
02:21:58,360 --> 02:22:06,360
 and any any regulatory paradigm that would come out of such legislation would

1572
02:22:06,360 --> 02:22:11,640
 most likely include like I say an on-ramp to allow for the industry to

1573
02:22:11,640 --> 02:22:16,280
 change and to accommodate that type it's impractical to think that Texas as a

1574
02:22:16,280 --> 02:22:22,720
 market would be able to go away from fossil fuels completely just the nature

1575
02:22:22,720 --> 02:22:29,400
 of the intermittency of wind and solar necessitate having backups or else we'd

1576
02:22:29,400 --> 02:22:37,440
 be seeing what California saw last week which was rotating outages of 200,000

1577
02:22:37,440 --> 02:22:45,440
 people per day so that's kind of a personal opinion but again I think the

1578
02:22:45,440 --> 02:22:49,760
 thing the way to think about this is it to be a very long transition period yeah

1579
02:22:49,760 --> 02:22:57,320
 I agree completely and in the when the when the deck was initially discussed

1580
02:22:57,320 --> 02:23:05,400
 years ago there was we were told that a certain amount of land was going to be

1581
02:23:05,400 --> 02:23:12,840
 left available around the deck to possibly install some sort of solar

1582
02:23:12,840 --> 02:23:18,640
 installations I don't know if you if you are aware of that or if and if that is

1583
02:23:18,640 --> 02:23:26,200
 of any that validity in terms of consideration well the the the land at

1584
02:23:26,200 --> 02:23:31,280
 the deck while we do have a significant amount of land out there it's actually

1585
02:23:31,280 --> 02:23:36,520
 not sufficient to get the economies of scale that we're achieving in the

1586
02:23:36,520 --> 02:23:42,440
 utility solar purchases that we're making of the utility solar purchases

1587
02:23:42,440 --> 02:23:47,280
 that we're making are you know in a hundred megawatt increments and that

1588
02:23:47,280 --> 02:23:56,160
 requires between 700 and a thousand acres for that level of production okay

1589
02:23:56,160 --> 02:24:08,680
 thank you Terry Karen okay I have a rookie question for a Terry can you let

1590
02:24:08,680 --> 02:24:11,480
 me just think out loud a minute I'm trying to figure out how the deck

1591
02:24:11,480 --> 02:24:18,680
 reduces our dependence on buying renewables and is it because when we

1592
02:24:18,680 --> 02:24:23,600
 sell the deck energy to the market we get a credit which is then coming back

1593
02:24:23,600 --> 02:24:31,440
 into our system as a renewable here and I have the same rookie question yeah so

1594
02:24:31,440 --> 02:24:36,220
 so the way that the way that the council has set the ground rules for

1595
02:24:36,220 --> 02:24:39,840
 determining whether we're a hundred percent renewable as we look at the

1596
02:24:39,840 --> 02:24:44,960
 total energy we serve for the year and then we look at the number of renewable

1597
02:24:44,960 --> 02:24:49,480
 energy credits that we have for that same temporal period so what happens is

1598
02:24:49,480 --> 02:24:55,240
 our generation of renewable energy at night from the wind units and surplus

1599
02:24:55,240 --> 02:25:01,160
 solar generation in the shoulders shoulder hours building up to the the

1600
02:25:01,160 --> 02:25:05,960
 peak demand at five six o'clock in the afternoon those are sold into the market

1601
02:25:05,960 --> 02:25:11,200
 we we derive revenues from it but we also derive renewable energy credits

1602
02:25:11,200 --> 02:25:16,960
 from those and so those surplus hours are used to offset those hours where

1603
02:25:16,960 --> 02:25:21,040
 we're actually generating power from the deck and that's the way the accounting

1604
02:25:21,040 --> 02:25:31,960
 works okay yeah thank you Billy okay yeah just a soapbox moment here but yeah

1605
02:25:31,960 --> 02:25:40,240
 I'm all all for all renewable energy we can use and use it accordingly I just

1606
02:25:40,240 --> 02:25:47,920
 think as a nation especially just in our little community we're in transitional

1607
02:25:47,920 --> 02:25:52,880
 period coal makes no sense anymore coal's a dying breed it's of course

1608
02:25:52,880 --> 02:25:56,280
 people that's all they have available to produce electricity and their

1609
02:25:56,280 --> 02:26:03,680
 transmission lines and how that works up they've got to use it I get it but the

1610
02:26:03,680 --> 02:26:09,800
 transportation costs killed coal to too expensive to dig that's obvious it was

1611
02:26:09,800 --> 02:26:17,240
 easy to make the decision on you know where we were going on the TMPA and

1612
02:26:17,240 --> 02:26:22,920
 coal-fired plant down there and given screen but I think we're just we're

1613
02:26:22,920 --> 02:26:28,640
 gonna have to kind of sweat this one out with natural gas it's our best option

1614
02:26:28,640 --> 02:26:45,840
 until we can get there we're not there yet that's it I agree my wife never

1615
02:26:45,840 --> 02:26:53,280
 tells me to unmute Terry this is the question one of the very first

1616
02:26:53,280 --> 02:27:00,360
 presentations you made in today's meeting had to do with the a couple of

1617
02:27:00,360 --> 02:27:06,680
 numbers in there that were somewhat amazing to me and I think you cited a

1618
02:27:06,680 --> 02:27:15,520
 number that right now in Texas there's over 31,000 megawatts of excess renewable

1619
02:27:15,520 --> 02:27:22,000
 generation capacity if I read that right in one of your earlier maybe one of your

1620
02:27:22,000 --> 02:27:27,920
 first presentations and back when Denton was contemplating going to a hundred

1621
02:27:27,920 --> 02:27:33,920
 percent renewable that number instead of being 31,000 megawatts of excess

1622
02:27:33,920 --> 02:27:42,280
 capacity was like six or eight hundred megawatts so any thought we have of

1623
02:27:42,280 --> 02:27:51,760
 adding more generation capacity using solar or wind we need to take into mind

1624
02:27:51,760 --> 02:28:00,580
 that there's already 31,000 plus megawatts of capacity that is beyond the

1625
02:28:00,580 --> 02:28:07,480
 demand did I get that right the numbers are correct it's not actually surplus

1626
02:28:07,480 --> 02:28:13,160
 it's it is installed capacity so that's the amount of stock installed wind

1627
02:28:13,160 --> 02:28:20,960
 capacity in in ERCOT the peak demand of ERCOT is around 76,000 megawatts so you

1628
02:28:20,960 --> 02:28:27,680
 know at 35,000 megawatts or so of renewables it's just under 50% of the

1629
02:28:27,680 --> 02:28:36,280
 makeup of the supply capacity in in ERCOT that is predicted to go up the

1630
02:28:36,280 --> 02:28:42,580
 biggest increases that we're gonna see today we have about 3,000 megawatts of

1631
02:28:42,580 --> 02:28:47,880
 solar we're expecting solar to be at 7,000 megawatts by the end of next year

1632
02:28:47,880 --> 02:28:56,320
 and so we're seeing significant increases in solar generation wind

1633
02:28:56,320 --> 02:29:01,560
 generation is slowing down a bit because the production tax credits will be

1634
02:29:01,560 --> 02:29:09,720
 phased out after 2023 so but we are still seeing I think this year ERCOT

1635
02:29:09,720 --> 02:29:16,840
 projects some 7,000 megawatts of additional wind over the next two years

1636
02:29:16,840 --> 02:29:23,280
 and again the the the the issue that we struggle with is until we can come up

1637
02:29:23,280 --> 02:29:27,900
 with an economical way to to store that power so that we can shift it from the

1638
02:29:27,900 --> 02:29:33,560
 periods of time when it's in surplus to the times when we need it we're still

1639
02:29:33,560 --> 02:29:41,280
 gonna have to rely on gas primarily in Texas in order to keep the lights on so

1640
02:29:41,280 --> 02:29:46,660
 to speak right okay thank you for clearing that up

1641
02:29:46,880 --> 02:29:59,840
 other questions all right thank you Terry you're welcome last item we we do

1642
02:29:59,840 --> 02:30:06,760
 still have this item correct the energy management organization thought yes so

1643
02:30:06,760 --> 02:30:10,960
 that concluded the the budgetary as we do have item B if you want to get us

1644
02:30:10,960 --> 02:30:15,600
 started on that and Terry will take that over and it will also have a gentleman

1645
02:30:15,600 --> 02:30:18,440
 from Deloitte on the line that'll kind of walk through the presentation as well

1646
02:30:18,440 --> 02:30:23,040
 okay all right so then item B receiver report hold a discussion and give staff

1647
02:30:23,040 --> 02:30:27,300
 direction regarding the energy management organization financial review

1648
02:30:27,300 --> 02:30:31,700
 conducted by Deloitte I wanted to interrupt and point out real quick the

1649
02:30:31,700 --> 02:30:37,760
 Deloitte portion of what you all received from legal is actually available to the

1650
02:30:37,760 --> 02:30:52,000
 public thanks Larry I've just in case it was inadvertently placed I wanted to

1651
02:30:52,000 --> 02:31:16,040
 bring it up before the meeting but as long as it's public no problem it's on

1652
02:31:16,040 --> 02:31:22,440
 the desktop where is the desktop

1653
02:31:46,040 --> 02:31:53,040
 all right okay so we have item B receiver report hold a discussion and give staff direction.

1654
02:31:53,040 --> 02:32:21,240
 All right okay apologize for the technical difficulties I'm gonna turn it

1655
02:32:21,240 --> 02:32:25,580
 over to Steve Engler with Deloitte he's gonna walk through the first few of

1656
02:32:25,580 --> 02:32:31,800
 these slides. Thanks Terry hope everybody can hear me okay I'm Steve Engler I'm

1657
02:32:31,800 --> 02:32:37,480
 managing director with Deloitte's energy risk advisory practice so good morning to

1658
02:32:37,480 --> 02:32:42,480
 chair madam chair and the board members thanks for your time I'm gonna kind of

1659
02:32:42,480 --> 02:32:48,360
 co-present this next section with with Terry Terry you can flip ahead to the

1660
02:32:48,360 --> 02:32:53,480
 kind of past the legal stuff yeah here we go so Deloitte was asked to do

1661
02:32:53,480 --> 02:32:58,440
 basically two things one to re perform a benchmark analysis around the

1662
02:32:58,440 --> 02:33:03,800
 performance of the financial performance of DME in a way similar that we've done

1663
02:33:03,800 --> 02:33:08,200
 it previously and had presented to PUB and council and then the second piece

1664
02:33:08,200 --> 02:33:15,480
 was to perform an analysis or basically a check-in of where DME staff is as it

1665
02:33:15,480 --> 02:33:20,040
 relates to a number of recommendations that we had made in a prior project

1666
02:33:20,040 --> 02:33:26,560
 across the aspects of hedging and risk oversight so with respect to the first

1667
02:33:26,560 --> 02:33:33,400
 component of work again this is a benchmark looking at the performance of

1668
02:33:33,400 --> 02:33:40,520
 DME from a financial perspective as compared to the market you may recall

1669
02:33:40,520 --> 02:33:47,040
 and Terry skip ahead if you wouldn't mind two slides you may recall that we

1670
02:33:47,040 --> 02:33:51,640
 had done an analysis prior it was shortly after the the Emo is established

1671
02:33:51,640 --> 02:33:58,120
 and when you had had a recently quoted full requirements supply contract for

1672
02:33:58,120 --> 02:34:04,080
 the for the energy requirements for the to serve your load given that there had

1673
02:34:04,080 --> 02:34:10,320
 been a number of years since that contract had been quoted and initially as

1674
02:34:10,320 --> 02:34:13,780
 well there have been a number of changes to the basically the underlying

1675
02:34:13,780 --> 02:34:20,520
 portfolio that DME and the Emo manages specifically a significant addition of

1676
02:34:20,520 --> 02:34:24,080
 long-term purchase power agreements some of those renewable agreements that

1677
02:34:24,080 --> 02:34:29,480
 Terry's mentioned it was agreed that the the methodology that we had followed

1678
02:34:29,480 --> 02:34:36,080
 the first time was no longer relevant and so we had to think about adjustments

1679
02:34:36,080 --> 02:34:39,840
 to that methodology and how we would come up with a fair comparison so the

1680
02:34:39,840 --> 02:34:45,320
 first thing that do I did with with management with staff was to basically

1681
02:34:45,320 --> 02:34:49,760
 agree on the methodology that would be followed in order to calculate the

1682
02:34:49,760 --> 02:34:54,520
 benchmark comparison another element that was discussed where there were some

1683
02:34:54,520 --> 02:35:01,120
 financial obligations for example with the debt service related to MPA a number

1684
02:35:01,120 --> 02:35:06,680
 of things that predated the establishment of the Emo so that also

1685
02:35:06,680 --> 02:35:11,680
 caused some challenges in terms of getting apples to apples comparison so

1686
02:35:11,680 --> 02:35:15,360
 what we agreed on the focus of the assessment of the focus of the

1687
02:35:15,360 --> 02:35:19,720
 benchmark comparison should be on that portion of the energy and the related

1688
02:35:19,720 --> 02:35:24,720
 costs that are actually manageable by the Emo so things like the TMPA debt

1689
02:35:24,720 --> 02:35:29,040
 service and things like the the costs related to those long-term purchase

1690
02:35:29,040 --> 02:35:34,360
 power agreements that are part of the renewable dent and plan were were

1691
02:35:34,360 --> 02:35:39,480
 identified and calculated but separated from from the analysis and then finally

1692
02:35:39,480 --> 02:35:42,920
 that what I would point out is where we essentially ended up as a recommendation

1693
02:35:42,920 --> 02:35:48,240
 for the benchmark was to to use the observable day ahead ERCOT electricity

1694
02:35:48,240 --> 02:35:52,480
 prices that are that are available and published in the market and we would use

1695
02:35:52,480 --> 02:35:58,040
 that as the benchmark comparison to the performance of the of the Emo for the

1696
02:35:58,040 --> 02:36:09,160
 for the given time period of the study so the you can look to think about the

1697
02:36:09,160 --> 02:36:15,160
 analysis really in three components the first and I guess the overarching or the

1698
02:36:15,160 --> 02:36:20,920
 all-in analysis looked at all load as valued at the day ahead market prices

1699
02:36:20,920 --> 02:36:28,680
 plus the adders for ancillary services QSE costs other components were included

1700
02:36:28,680 --> 02:36:36,320
 and calculated consistent with the between the FY17 and FY18 approach this

1701
02:36:36,320 --> 02:36:42,200
 is really an all-in cost to serve the dent and load the next piece of the

1702
02:36:42,200 --> 02:36:48,880
 analysis was to identify isolate and then ultimately separate those renewable PPA

1703
02:36:48,880 --> 02:36:54,440
 contracts that that that you are in so identifying the portion of the load

1704
02:36:54,440 --> 02:36:59,240
 that served served by those PPAs the cost associated with that and then

1705
02:36:59,240 --> 02:37:03,320
 separating that out from the overall there would be all-in costs and what

1706
02:37:03,320 --> 02:37:07,960
 you're left with really is the remainder or what we described as the manageable

1707
02:37:07,960 --> 02:37:14,640
 portion of the load for which we identified the the forecasted costs as

1708
02:37:14,640 --> 02:37:19,000
 well as the performance of DME specific to that manageable portion of the

1709
02:37:19,000 --> 02:37:25,680
 portfolio so what Deloitte was engaged to do essentially we did a

1710
02:37:25,680 --> 02:37:32,080
 re-performance if you will of the analysis so we as I said work with with

1711
02:37:32,080 --> 02:37:39,520
 staff to agree on the methodology and the data required in order to calculate

1712
02:37:39,520 --> 02:37:48,160
 the benchmark we agreed on that and then DME staff actually developed a model and

1713
02:37:48,160 --> 02:37:53,920
 calculated the benchmark and the comparison costs separate to that and

1714
02:37:53,920 --> 02:37:58,960
 independent of that Deloitte obtained all of the relevant cost and benchmark

1715
02:37:58,960 --> 02:38:04,200
 data and all those things that were components of the model and we

1716
02:38:04,200 --> 02:38:10,960
 separately obtained ERCOT pricing data and essentially re-performed or

1717
02:38:10,960 --> 02:38:16,320
 independently re-performed the the the model assessment and validated the

1718
02:38:16,320 --> 02:38:21,200
 results that were obtained both by the Denton approach the Denton DME staff

1719
02:38:21,200 --> 02:38:28,120
 approach which was then repeated and validated by by Deloitte you can see

1720
02:38:28,120 --> 02:38:32,520
 that the components of the of the analysis down below there was the actual

1721
02:38:32,520 --> 02:38:36,520
 cost component the benchmark calculation is as compared to the original

1722
02:38:36,520 --> 02:38:41,840
 calculation we reviewed and agreed upon those exclusions from the methodology

1723
02:38:41,840 --> 02:38:47,640
 that I mentioned before validated the ancillary service components of the

1724
02:38:47,640 --> 02:38:53,040
 charges and then as I said reviewed the file and the aggregation of those costs

1725
02:38:53,040 --> 02:39:00,720
 across that whole methodology so the the re-performance was really front front to

1726
02:39:00,720 --> 02:39:05,400
 back in terms of the establishment of the assumptions in the model the cost

1727
02:39:05,400 --> 02:39:09,040
 and the data components of the model and in the execution of the calculation

1728
02:39:09,040 --> 02:39:16,120
 itself. Terry do you want to summarize what we came up with in terms of the

1729
02:39:16,120 --> 02:39:21,640
 DME calculation that was validated also by Deloitte? Sure, working with Deloitte

1730
02:39:21,640 --> 02:39:28,640
 it was a very detailed effort here there's a lot of a very complex analysis

1731
02:39:28,640 --> 02:39:35,160
 and we've tried to boil it down into its summary pieces here but in the

1732
02:39:35,160 --> 02:39:41,960
 first block first table here shows that the we take the total load that we

1733
02:39:41,960 --> 02:39:48,120
 served for the year and we dispatched the load against the market using that

1734
02:39:48,120 --> 02:39:55,960
 day ahead metric. You can see that the actual performance we we were able to

1735
02:39:55,960 --> 02:40:04,160
 supply the load for 58 million versus a projected metric of 64.4 for a benefit of

1736
02:40:04,160 --> 02:40:11,160
 6.2 million. Then we look at the PPA performance and the same analysis was

1737
02:40:11,160 --> 02:40:17,320
 done but here you see the PPAs actually cost us about 5.5 million and that's

1738
02:40:17,320 --> 02:40:23,080
 primarily due to the fact that PPAs are a fixed price contract and they're

1739
02:40:23,080 --> 02:40:30,000
 selling that fixed priced energy into a market. That market is the actual market

1740
02:40:30,000 --> 02:40:38,080
 at the time and that resulted in a 5.5 million dollar loss. That's just the

1741
02:40:38,080 --> 02:40:43,160
 nature of our position. The wind shows up at night when the prices are very low

1742
02:40:43,160 --> 02:40:50,320
 and then when we take the non PPA performance which which would be the

1743
02:40:50,320 --> 02:40:54,040
 dispatchable part we call it dispatchable but it's when we think

1744
02:40:54,040 --> 02:41:00,080
 about a wind resource we have a projected profile of output for that

1745
02:41:00,080 --> 02:41:06,960
 wind resource on a daily basis for each hour of the day by month and from that

1746
02:41:06,960 --> 02:41:15,960
 we have to assess a probability of actually getting that energy and we have

1747
02:41:15,960 --> 02:41:22,840
 normalized that into what we think is a reasonable confidence interval and

1748
02:41:22,840 --> 02:41:27,600
 optimizing that against the day ahead market we were able to achieve about

1749
02:41:27,600 --> 02:41:37,560
 11.7 million dollars of benefit. A couple of things that are important

1750
02:41:37,560 --> 02:41:42,320
 to the analysis when we look at congestion and that's the difference in

1751
02:41:42,320 --> 02:41:47,040
 prices between where we deliver energy into the market from our renewables

1752
02:41:47,040 --> 02:41:53,160
 versus where we buy it at to serve the load we have congestion and we buy

1753
02:41:53,160 --> 02:42:00,240
 congestion rights as three years out in the future. There is a settlement of

1754
02:42:00,240 --> 02:42:07,160
 surplus revenues that are in the market called card that's the leftover money

1755
02:42:07,160 --> 02:42:12,060
 from auctions that we participated in and other market participants

1756
02:42:12,060 --> 02:42:18,760
 participated in that are then refunded back to to each of the participants on a

1757
02:42:18,760 --> 02:42:25,240
 pro rata share so it decreases the benchmark cost it's actually a positive

1758
02:42:25,240 --> 02:42:35,440
 benefit for ratepayers. We also had a PPA forecast versus the day ahead market

1759
02:42:35,440 --> 02:42:41,320
 price so that this is that variability that I was mentioning to you in the

1760
02:42:41,320 --> 02:42:49,480
 output of the of the renewables and then without the TMPA debt exclusion and we

1761
02:42:49,480 --> 02:42:55,760
 also to be intellectually honest with the with the analysis here we assessed a

1762
02:42:55,760 --> 02:43:04,160
 penalty of 50 cents per megawatt hour for optimization and that's basically a

1763
02:43:04,160 --> 02:43:12,120
 cost that we think for each megawatt hour you can even unskilled people given

1764
02:43:12,120 --> 02:43:22,640
 some direction could good achieve 50 cents of savings. So with that I'll turn

1765
02:43:22,640 --> 02:43:29,200
 back over you Stephen. Okay thanks Terry and so then the second part of the the

1766
02:43:29,200 --> 02:43:34,960
 analysis that Deloitte was asked to perform was essentially an update or a

1767
02:43:34,960 --> 02:43:39,480
 calibration of where DME is as it relates to a number of recommendations

1768
02:43:39,480 --> 02:43:44,080
 that we provided in the previous engagement so you may recall that we

1769
02:43:44,080 --> 02:43:47,240
 were asked to do kind of a benchmark or leading practice assessment of

1770
02:43:47,240 --> 02:43:56,240
 capabilities across DME specific to the commodity risk management capabilities

1771
02:43:56,240 --> 02:44:01,960
 so we did that benchmark or that leading practice analysis several years ago we

1772
02:44:01,960 --> 02:44:06,040
 made a number of recommendations across the dimensions of people process

1773
02:44:06,040 --> 02:44:12,680
 governance and technology and management was interested in basically us

1774
02:44:12,680 --> 02:44:18,280
 assessing where where DME is in terms of progress against those recommendations

1775
02:44:18,280 --> 02:44:24,400
 so what we did is we made data requests we reviewed documentation and processes

1776
02:44:24,400 --> 02:44:28,480
 and policies that have been put in place since the original assessment and we

1777
02:44:28,480 --> 02:44:32,840
 were able to for each of the recommendations we made ascertain

1778
02:44:32,840 --> 02:44:36,640
 whether we not whether or not we felt that the recommendation was complete

1779
02:44:36,640 --> 02:44:41,600
 whether it was still in progress or whether it had yet to be begin so in the

1780
02:44:41,600 --> 02:44:46,960
 next slide we can show you kind of a in a graphical way you see the four

1781
02:44:46,960 --> 02:44:51,320
 dimensions that our recommendations were grouped into governance process people

1782
02:44:51,320 --> 02:44:57,400
 and technology you can say at the time of the assessment we did a an evaluation

1783
02:44:57,400 --> 02:45:03,280
 as to the current state of capabilities and then the desired future state so the

1784
02:45:03,280 --> 02:45:07,720
 recommendations that we made were all intended to essentially close those gaps

1785
02:45:07,720 --> 02:45:11,600
 between the black circles and the green and then all the way to the right if you

1786
02:45:11,600 --> 02:45:16,040
 can make out the font you can see that the recommendations were grouped into

1787
02:45:16,040 --> 02:45:22,320
 high medium and low priority categorizations and then across each of

1788
02:45:22,320 --> 02:45:26,680
 the dimensions how many recommendations we made and in the final column under

1789
02:45:26,680 --> 02:45:31,240
 status you can see that in the column under C those are the recommendations

1790
02:45:31,240 --> 02:45:36,760
 that have been completed the under IP are in progress you can see that there

1791
02:45:36,760 --> 02:45:40,320
 are some recommendations that are in that state as well and then there was

1792
02:45:40,320 --> 02:45:45,320
 one that was deemed not relevant by management and so therefore that was

1793
02:45:45,320 --> 02:45:50,880
 that was kind of set aside so the next slide shows even a more summarized

1794
02:45:50,880 --> 02:45:55,820
 version of this we had 60 recommendations in total 27 of them in

1795
02:45:55,820 --> 02:46:02,160
 our view are completed and 32 are in process or ongoing I would say the

1796
02:46:02,160 --> 02:46:07,760
 majority of those either in process or ongoing recommendations are either

1797
02:46:07,760 --> 02:46:12,260
 enabled by or relate directly to the implementation of a commodity trading

1798
02:46:12,260 --> 02:46:19,760
 and risk management system which on an interim basis DME is now using a Deloitte's

1799
02:46:19,760 --> 02:46:26,040
 cloud hosted commodity reporting and reporting system and there is also a

1800
02:46:26,040 --> 02:46:31,220
 plan which perhaps Terry can speak to to implement a permanent solution which

1801
02:46:31,220 --> 02:46:36,400
 will and already has in fact addressed a lot of those that we noted were in

1802
02:46:36,400 --> 02:46:45,360
 progress recommendations happy to take questions or comments Terry anything I

1803
02:46:45,360 --> 02:46:52,640
 missed or left out I think you covered it okay that's gins

1804
02:46:52,640 --> 02:47:03,600
 all right I guess there are no questions thank you thank you all right that

1805
02:47:03,600 --> 02:47:11,160
 concludes all the items do we have a motion to adjourn some move okay

1806
02:47:11,160 --> 02:47:18,560
 second we are adjourned y'all next bye bye