WEBVTT 00:00:00.000 --> 00:00:07.400 all right you're on it's nine o'clock on Monday August 24th we have a virtual 00:00:07.400 --> 00:00:12.280 quorum so we will call the public utilities board meeting to order the 00:00:12.280 --> 00:00:17.100 first item is the consent agenda does any board member wish to pull any items 00:00:17.100 --> 00:00:33.800 from A, B, or C? I do. Okay, Russ which one? B and C. All right do we have a 00:00:33.800 --> 00:00:41.400 motion to approve that item A? So moved. Second. All in favor second by saying aye? 00:00:41.400 --> 00:00:52.800 Aye. Opposed? And that carries. Item B. Yes, should I ask the question first? Yeah I 00:00:52.800 --> 00:00:56.640 think I'm gonna ask I think it's that's an acceleron I think that's Krista and 00:00:56.640 --> 00:01:00.280 she's here with us and so any question you have she'll be able to respond to. 00:01:00.280 --> 00:01:11.400 Okay, we're asked here to pay for a software program that will cost 00:01:11.400 --> 00:01:18.920 approximately $220,000 per year for five years each of five years and it serves 00:01:18.920 --> 00:01:27.040 about 575 customers so the city of Denton is paying on the average 00:01:27.040 --> 00:01:36.480 approximately $383 per customer per year for this program. My question is what 00:01:36.480 --> 00:01:42.840 benefits does the city of Denton receive for paying that much per customer per 00:01:42.840 --> 00:01:55.920 year? You're muted. Sorry the reason that you're seeing that value amount is not 00:01:55.920 --> 00:02:00.760 because that's our actual cost that's projected cost based on users as we 00:02:00.760 --> 00:02:06.680 would increase the utilization of the program. All of the cost of that program 00:02:06.680 --> 00:02:12.520 are captured in an increased facility rate only on the users of the program. 00:02:12.520 --> 00:02:19.560 It's basically a net zero cost to the city but we have to have the the spend 00:02:19.560 --> 00:02:23.440 approvals to be able to continue to collect those funds and pay them back 00:02:23.440 --> 00:02:30.160 out. The program itself allows our users to be able to take outstanding past due 00:02:30.160 --> 00:02:34.760 balances, written off debt, bring them into the program, be able to still get 00:02:34.760 --> 00:02:39.920 services without a deposit and the majority of our customers like it 70% of 00:02:39.920 --> 00:02:45.000 them are completely debt-free within about 60 to 80 days so it does serve a 00:02:45.000 --> 00:02:54.280 valuable purpose for our customers. So I think what you just said was the the 00:02:54.280 --> 00:03:00.160 people that use this actually pay for it by increased fees built into their rate 00:03:00.160 --> 00:03:06.400 structures is that right? That is correct. Okay that takes care of that. Are there 00:03:06.400 --> 00:03:13.080 are there really just 575 people? It says over 575. There are close to 600 at this 00:03:13.080 --> 00:03:20.160 point. Last year we did a educational campaign with the different apartment 00:03:20.160 --> 00:03:25.120 complexes and managements with about 410 different apartment complexes and we're 00:03:25.120 --> 00:03:29.520 now distributing information on the pay-as-you-go so that they can put that 00:03:29.520 --> 00:03:34.560 out there. We were working on a marketing campaign just about the time the 00:03:34.560 --> 00:03:39.360 pandemic started so we kind of had to back burner that but it is on our future 00:03:39.360 --> 00:03:45.760 goals for this coming year is to be able to continue to increase adoption rates. 00:03:45.760 --> 00:03:54.280 Okay. All right do we want to move on to C and then we can approve both B and C? 00:03:54.280 --> 00:04:08.440 So what's your question on C? Well concerning the the way that the this new 00:04:08.440 --> 00:04:13.560 device is going to be charged we're charging by the hour and not by the power 00:04:13.560 --> 00:04:20.720 that's dispensed. Is that true? So I'm gonna ask Chris Lutrik who's on the line 00:04:20.720 --> 00:04:30.600 to respond to that. Chris? Yes sir. Can you hear me? Yes. Yes sir you are correct so 00:04:30.600 --> 00:04:36.440 there's two methods to price or two standard methods for pricing EV charging 00:04:36.440 --> 00:04:42.520 by the actually the power that flows or or by the minute so a lot of the EV 00:04:42.520 --> 00:04:45.560 vehicles out there actually when you plug it in it tells you how many minutes 00:04:45.560 --> 00:04:50.240 it takes to charge so that's why we elected to go with that with that with 00:04:50.240 --> 00:04:56.600 that unit of charge there it's just more simple to understand so it comes out to 00:04:56.600 --> 00:05:01.280 four cents per minute the rate that that will be charging and that was the same 00:05:01.280 --> 00:05:07.400 rate structure that the blink system had so we're just keeping it consistent. 00:05:07.400 --> 00:05:15.040 Yes I have a question about that then without knowing all of the cost I think 00:05:15.040 --> 00:05:20.780 the city of Denton I think we should recover at least what it cost us to 00:05:20.780 --> 00:05:27.000 deliver that power to the vehicle does the four cents per minute cover the 00:05:27.000 --> 00:05:33.040 cost of doing that? Yes sir it covers our cost so it actually covers the cost of 00:05:33.040 --> 00:05:37.840 the power as well as our capital investment so the the four cents a minute 00:05:37.840 --> 00:05:44.400 we put that on about a six-year ROI for the for the equipment and and we had to 00:05:44.400 --> 00:05:48.720 go off just some standard usage rates so of course the more that they're 00:05:48.720 --> 00:05:53.880 utilized the quicker we'll pay those off but with the the limited data we had 00:05:53.880 --> 00:05:58.840 from the blink system we feel at this time that four cents is adequate and by 00:05:58.840 --> 00:06:03.120 putting it in the rate structure it can be addressed each year hopefully as the 00:06:03.120 --> 00:06:08.760 adoption rate grows we can bring forth more data and more exact pricing in 00:06:08.760 --> 00:06:15.800 future rate book updates. Okay thank you. Charlie has a question and then Ed has a 00:06:15.800 --> 00:06:22.080 question Charlie go ahead. Okay on the I see the charge per minute but that kind 00:06:22.080 --> 00:06:29.720 of omits the rate of charge what is the maximum rate of charge that is delivered 00:06:29.720 --> 00:06:44.520 by these new machines? That'd be a 7.2 kW. Okay so what do we work out in pennies 00:06:44.520 --> 00:06:56.920 per kilowatt hour on if somebody's at 7.2 kW? So could you phrase that one more 00:06:56.920 --> 00:07:06.160 time so somebody charged for an hour at the full 7.2 kW? Right obviously they'd 00:07:06.160 --> 00:07:15.520 use 7.2 kilowatt hours. Yes sir so at our I guess a way to look at that is if you 00:07:15.520 --> 00:07:24.120 put that into a residential rate which would be like ten and a half cents per 00:07:24.120 --> 00:07:33.360 KWH so you're looking at 70 75 cents 80 cents. Okay so we're covering our costs 00:07:33.360 --> 00:07:41.240 and then some on the rate I would suggest that since we're putting this in 00:07:41.240 --> 00:07:48.560 the form of a very formal document that we include the 7.2 kilowatt maximum rate 00:07:48.560 --> 00:07:55.000 in what we pass as an ordinance so that we aren't just charging four pennies per 00:07:55.000 --> 00:08:00.520 minute for whatever that way if we have you know more effective machines or 00:08:00.520 --> 00:08:04.440 machines that can deliver higher rates of charge we don't have to change our 00:08:04.440 --> 00:08:12.160 rates and then I have a couple of other questions on this I know that electric 00:08:12.160 --> 00:08:16.960 prices fluctuate hourly and wholesale and retail gasoline prices fluctuate 00:08:16.960 --> 00:08:23.200 hourly if we're trying to find an effective way to fill people up with gas 00:08:23.200 --> 00:08:30.440 in the form of electricity for electric cars don't we need the ability to 00:08:30.440 --> 00:08:36.480 vary this rate from time to time depending on our our cost obviously 00:08:36.480 --> 00:08:40.840 right now today there's plenty of flexibility into that but if power 00:08:40.840 --> 00:08:47.880 becomes more costly setting this in stone with no flexibility seems kind of 00:08:47.880 --> 00:08:56.240 problematic. Yes sir definitely in the future it could be more flexible 00:08:56.240 --> 00:09:01.040 interest interestingly we just completed a we put out a survey with our 00:09:01.040 --> 00:09:05.600 engineering department and Public Works our public information office for an EV 00:09:05.600 --> 00:09:10.640 survey and interest interestingly a lot of people wanted more the feedback we 00:09:10.640 --> 00:09:14.480 got was for a more standard rate as opposed to something that varies over 00:09:14.480 --> 00:09:20.280 time so this this rate is specifically for the public chargers that the city 00:09:20.280 --> 00:09:25.320 of Denton owns where that that rate structure would be most beneficial is 00:09:25.320 --> 00:09:29.440 majority of the charging is done at home so definitely as we move forward we 00:09:29.440 --> 00:09:34.880 brought a plan to you that phase three was within home charging and that's 00:09:34.880 --> 00:09:38.800 definitely something that that we will have or offer or hope to offer is a 00:09:38.800 --> 00:09:44.160 flexible rate where we can encourage our customers to charge at those off-peak 00:09:44.160 --> 00:09:50.120 times. Wonderful and that would be at home where they would charge at the 00:09:50.120 --> 00:09:54.900 off-peak times and charging at home would be at a lower price than using the 00:09:54.900 --> 00:10:02.040 machines? Yes sir I would I think that would be the preferred the preferred 00:10:02.040 --> 00:10:08.320 model there kind of those the chargers that we're putting around town they would 00:10:08.320 --> 00:10:12.560 the survey said hey we need more of these so more is a convenience and more 00:10:12.560 --> 00:10:16.120 as you know you're running out of gas and you're driving by a gas station you 00:10:16.120 --> 00:10:20.160 can always get gas so there will be you know most of that charging will be done 00:10:20.160 --> 00:10:24.720 during the day which is on the high peak or the high use time so I think we 00:10:24.720 --> 00:10:33.800 can help shape the the the activities of our EV chargers by incentivizing them to 00:10:33.800 --> 00:10:41.600 charge at home and off-peak time. Okay I would suggest that we include the 7.2 00:10:41.600 --> 00:10:48.320 kilowatt rate in the ordinance that we pass so that it's documented that you 00:10:48.320 --> 00:10:54.640 know the size of the pipe I think is very important in terms of the of the 00:10:54.640 --> 00:11:00.080 cost if we're going to publish this as as part of our rate book we ought to have 00:11:00.080 --> 00:11:05.160 7.2 kilowatts in there as the maximum charging rate so that somebody who reads 00:11:05.160 --> 00:11:12.680 it can quantify what they're paying per kilowatt hour. Yes sir we can do that it 00:11:12.680 --> 00:11:17.480 may be more beneficial to state that as a level 2 charger if we got a got a 00:11:17.480 --> 00:11:24.920 charger in it's slightly different at 7.3 KW or 7.5 I think the standard in 00:11:24.920 --> 00:11:30.840 the industry that's a level 2 it's a 240 volt 40 amp service would you be 00:11:30.840 --> 00:11:35.080 comfortable with that language? You bet I don't mind building a little 00:11:35.080 --> 00:11:39.840 flexibility into the language but I think to just say charge per minute 00:11:39.840 --> 00:11:46.080 leaves out something that's crucial. Yes sir thank you for the feedback. You bet. 00:11:46.080 --> 00:11:50.960 Ed did you have a question? Sort of a question and some observations I have a 00:11:50.960 --> 00:12:01.040 home charger and I it tells me exactly how many miles I'm going to get per hour 00:12:01.040 --> 00:12:11.680 of charge and I wondered if that is that differs with different models of cars or 00:12:11.680 --> 00:12:17.840 if it's the same with everybody if they fill up with the same amount of 00:12:17.840 --> 00:12:27.440 electricity at the same rate so if if I had a question it would be how many miles 00:12:27.440 --> 00:12:34.520 per hour would how many miles does one hour of our charging the city's charging 00:12:34.520 --> 00:12:41.440 provide the driver of the car is that is that a blanket figure for all electric 00:12:41.440 --> 00:12:46.040 cars or does it does it is is it different for different types of 00:12:46.040 --> 00:12:54.880 electric cars? Yes sir it's different I believe your car the battery capacity on 00:12:54.880 --> 00:13:02.600 a Tesla's are much much higher than say the Nissan Leaf so it depends on the 00:13:02.600 --> 00:13:07.560 size of battery that the the car is outputted with how much how fast it can 00:13:07.560 --> 00:13:14.920 take that power. Okay all right well this great I'm I'm very happy that this is 00:13:14.920 --> 00:13:22.080 going to be expanded through the city thanks. Billy I saw your hand up yeah 00:13:22.080 --> 00:13:30.840 okay so there's a nationwide discussion about user fees for electric cars and I 00:13:30.840 --> 00:13:35.000 think you know I think that electric cars and electric trucks hopefully are 00:13:35.000 --> 00:13:39.380 the wave of the future I mean big trucks not the not the 00:13:39.380 --> 00:13:46.840 spaceship that Elon's coming out with here pretty soon. My concern would be our 00:13:46.840 --> 00:13:50.920 user our return on investment franchise fee however you want to look at it's 00:13:50.920 --> 00:13:54.120 probably a little different than franchise fee it's a true user fee like 00:13:54.120 --> 00:14:00.680 a fuel tax is. Is there a discussion going forward on how we might implement 00:14:00.680 --> 00:14:06.840 something like that Chris? Yes sir Mr. Chief there is kind of if you think way 00:14:06.840 --> 00:14:11.340 back to the early days of the ATM card where a bank had a network and it gave 00:14:11.340 --> 00:14:16.160 you a card and you could go specifically to that bank and get cash out and it 00:14:16.160 --> 00:14:20.960 took the government to step in to say hey we need a unified network where you 00:14:20.960 --> 00:14:25.880 know your Wells Fargo card can work at a Bank of America or a Citibank so there 00:14:25.880 --> 00:14:32.200 is talk in the in the industry the EV industry of having a network where say 00:14:32.200 --> 00:14:36.260 for instance our customers will need to be a charge point customer that their 00:14:36.260 --> 00:14:40.720 charge point access could be used at Tesla it could be used at any of the 00:14:40.720 --> 00:14:44.440 other charging networks across the country but that's probably going to 00:14:44.440 --> 00:14:49.520 take some federal oversight and federal standardization to make that happen but 00:14:49.520 --> 00:14:55.760 it is being discussed. Right yeah and if anybody's not if I wasn't clear I think 00:14:55.760 --> 00:15:00.240 Chris knew what I was talking about but you know when you buy gas for your 00:15:00.240 --> 00:15:06.000 current vehicle or my current vehicle I pay a tax on it some of it goes to the 00:15:06.000 --> 00:15:10.960 federal government something goes to the state government that's what I was 00:15:10.960 --> 00:15:14.120 talking about is going forward how to how do we charge because electric 00:15:14.120 --> 00:15:20.300 vehicles currently don't have a path to charge for the use of the roads I'm 00:15:20.300 --> 00:15:24.480 sorry I completely missed your question there so you are correct that's like 00:15:24.480 --> 00:15:29.000 point you know nine cents tenths of a penny that goes to the highway fund 00:15:29.000 --> 00:15:34.220 there are often talks in the industry about making a registration you have to 00:15:34.220 --> 00:15:38.320 put your mileage on the vehicle so say you register your car this year and you 00:15:38.320 --> 00:15:43.560 said 9,000 miles and next year you're at you know 10,000 miles you would pay a 00:15:43.560 --> 00:15:47.880 tax on a thousand miles that you that you drove so I think that's about the 00:15:47.880 --> 00:15:52.320 only way being that electricity can come from anywhere there's no real real way 00:15:52.320 --> 00:15:56.000 that's a meter that they don't have to be the counties or the states through 00:15:56.000 --> 00:16:01.280 the registration of the actual mileage on the vehicle yeah that would be 00:16:01.280 --> 00:16:04.360 difficult as well trying to get it trying to get people to correctly state 00:16:04.360 --> 00:16:12.120 their mileage every year as well so well you get it inspected so maybe that's a 00:16:12.120 --> 00:16:16.120 way to do it Charlie you have another question I was just going to approve 00:16:16.120 --> 00:16:25.960 move approval of items B and C with the revision that I suggested and Susan I 00:16:25.960 --> 00:16:29.640 think I think we have to take individual motions on each one of those items yeah 00:16:29.640 --> 00:16:41.280 I agree why don't we I approve B I move B second okay all in favor say I I move 00:16:41.280 --> 00:16:49.280 approval of C with the revision specifying the kilowatt rate second okay 00:16:49.280 --> 00:16:59.400 we have a motion in a second all in favor say aye opposed all right next up 00:16:59.400 --> 00:17:03.640 is items for individual consideration consider the approval of the August 10th 00:17:03.640 --> 00:17:11.880 2020 minutes is there any corrections or changes okay do we have a motion to 00:17:11.880 --> 00:17:24.360 approve okay second all in favor say aye aye opposed okay next item is to 00:17:24.360 --> 00:17:28.720 consider the approval of the bill of sale an assumption agreement with 00:17:28.720 --> 00:17:33.760 Denton Power LLC in the amount of two million seven hundred and fifty thousand 00:17:33.760 --> 00:17:39.000 dollars plus an adjustment for August 2020 energy deliveries not to exceed 00:17:39.000 --> 00:17:53.240 150,000 you're on mute Terry good morning Terry Nolte assistant general 00:17:53.240 --> 00:17:58.680 manager bear with me a second I'll pull up the presentation 00:18:23.240 --> 00:18:47.240 [Silence] 00:18:47.240 --> 00:18:56.000 all right finally okay this this presentation is seeking approval to 00:18:56.000 --> 00:19:04.120 purchase the Denton Power LLC landfill generation facility from DTE biomass 00:19:04.120 --> 00:19:15.520 energy currently the facility is a 1.6 megawatt facility operated by the LLC 00:19:15.520 --> 00:19:23.600 DTE biomass energy and their Texas affiliate Denton Power LLC it did begin 00:19:23.600 --> 00:19:32.200 operation in 2009 the solid waste department receives 12.5 percent of 00:19:32.200 --> 00:19:38.200 gross energy revenues as a royalty payment and we entered into a power 00:19:38.200 --> 00:19:46.000 purchase agreement for 15 years at escalating prices that started at $68 a 00:19:46.000 --> 00:19:59.160 megawatt hour and and in 2024 at $112.84 per megawatt hour the the the 1.6 00:19:59.160 --> 00:20:04.440 megawatts actually runs at about 1.2 megawatts on average and that let 00:20:04.440 --> 00:20:11.160 represents less than 1% of our overall renewable energy supply here you can see 00:20:11.160 --> 00:20:18.680 the the above-market price of the of the power the red line represents the PPA 00:20:18.680 --> 00:20:25.760 price the blue line is the around-the-clock price for the North Hub and 00:20:25.760 --> 00:20:30.640 you can see it's significantly above market it's the second and the highest 00:20:30.640 --> 00:20:39.960 priced resource that we have in our in our fleet at between 96 and 112 dollars 00:20:39.960 --> 00:20:48.480 for the remaining term of the agreement we're proposing to purchase the assets 00:20:48.480 --> 00:20:56.600 for two point seven five million as you can see that represents savings to 00:20:56.600 --> 00:21:01.320 customers because if we were to stay in the contract we'd pay five point three 00:21:01.320 --> 00:21:06.080 five million dollars over the remaining term yet the energy only has a market 00:21:06.080 --> 00:21:14.600 value of 1.53 million the only way for us to achieve the savings is through the 00:21:14.600 --> 00:21:20.200 purchase and assumption of the agreements including the power purchase 00:21:20.200 --> 00:21:31.240 agreement so on a net present value this acquisition would save two point six 00:21:31.240 --> 00:21:39.280 million dollars in in power supply that assumes the shutdown of the facility and 00:21:39.280 --> 00:21:46.680 the flaring of the landfill gas as I mentioned that the future payments are 00:21:46.680 --> 00:21:53.360 five point three million three five million and net present value because 00:21:53.360 --> 00:22:00.760 we're a hundred percent renewable this and this represents less than 1% it will 00:22:00.760 --> 00:22:06.360 not move the needle on our 100% renewable objective by by shutting it 00:22:06.360 --> 00:22:12.120 down to the extent we don't shut it down and continue to operate it the NPV would 00:22:12.120 --> 00:22:22.520 be reduced now we'll talk a little bit about the beneficial reuse of the 00:22:22.520 --> 00:22:29.560 landfill gas you'll be receiving an update on on options for this in the 00:22:29.560 --> 00:22:35.320 coming month a month or so as solid waste is continuing to investigate 00:22:35.320 --> 00:22:45.880 alternatives to generating energy with the with the landfill gas there is 00:22:45.880 --> 00:22:52.040 currently a flare at the landfill that is run whenever there's excess gas 00:22:52.040 --> 00:22:58.120 produced or whenever the facilities on a forced outage and so flaring happens on 00:22:58.120 --> 00:23:11.520 a fairly regular basis and I last thing I'll say about the the the project is 00:23:11.520 --> 00:23:16.880 the issue of whether to run the facility or not run the facility after we purchase 00:23:16.880 --> 00:23:23.200 it is not really a part of this action that we're seeking today we're simply 00:23:23.200 --> 00:23:31.600 seeking your recommendation to move the ordinance forward to the council tomorrow 00:23:31.600 --> 00:23:36.440 to allow us to purchase the asset and with that I'd be glad to answer any 00:23:36.440 --> 00:23:42.480 questions I do have some additional slides on on the environmental attributes 00:23:42.480 --> 00:23:48.320 of flaring versus continuing to operate if that would be of interest I'd like 00:23:48.320 --> 00:24:01.280 to see it like to see that okay all right so this is just a the 00:24:01.280 --> 00:24:07.640 considerations that we have if we were to purchase and operate the generation 00:24:07.640 --> 00:24:15.560 assets our our NPV goes down and we would only run that facility until an 00:24:15.560 --> 00:24:23.280 addition an alternative beneficiary uses in place if we flare the landfill gas 00:24:23.280 --> 00:24:30.720 we achieve the full 2.6 million it does improve the emission profile in terms of 00:24:30.720 --> 00:24:40.280 lower hydrocarbons and lower greenhouse gas there is an opportunity potentially 00:24:40.280 --> 00:24:46.800 to use what's called produce medium BTU gas we did not there that would be 00:24:46.800 --> 00:24:51.200 selling a low quality gas to a local manufacturing facility that could use 00:24:51.200 --> 00:24:57.880 the energy and there's a low probability because there's a lack of customers the 00:24:57.880 --> 00:25:01.040 preliminary report from the engineers is that a twenty three point eight million 00:25:01.040 --> 00:25:04.920 dollar capital investment whether that's made by the city or made by a third 00:25:04.920 --> 00:25:10.120 party could be used to clean up the gas and produce a high quality BTU gas 00:25:10.120 --> 00:25:16.120 and inject it into an Atmos pipeline we're still working on the business 00:25:16.120 --> 00:25:21.320 cases with solid waste on those and and that'll be part of what we bring back to 00:25:21.320 --> 00:25:37.400 PUB and council here's the environmental attributes if you see here for flaring 00:25:37.520 --> 00:25:43.120 these are the non methane organic compounds you can see in flaring we get 00:25:43.120 --> 00:25:52.680 about an 90 to 99 percent control efficiency for the halogenates 00:25:52.680 --> 00:26:00.920 halogenated to species 91 to 99 and for the non halogenated 38 to 99 you can see 00:26:00.920 --> 00:26:07.320 a pretty wide variation these are from the US EPA's AP 42 manual which is the 00:26:07.320 --> 00:26:12.880 go-to for characterization of emissions from various types of combustion 00:26:12.880 --> 00:26:18.080 sources and control technologies you can see the the internal combustion engine 00:26:18.080 --> 00:26:25.760 here lower efficiencies an average or typical efficiency that is lower than 00:26:25.760 --> 00:26:31.760 the flare and more importantly if you look at the actual emissions the flare 00:26:31.760 --> 00:26:37.640 emissions with the exception of carbon monoxide are significantly less than the 00:26:37.640 --> 00:26:45.280 internal combustion engine the carbon monoxide carbon monoxide is a toxic gas 00:26:45.280 --> 00:26:55.640 it is a minor ozone precursor it actually bonds with hydroxide radicals 00:26:55.640 --> 00:27:07.040 and consequently it can reduce the by doing hydroxide radicals or you are 00:27:07.040 --> 00:27:12.560 actually beneficial and so when you bind those with carbon monoxide it reduces 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 00:27:20.600 --> 00:27:28.840 greenhouse gas but it's very very much less greenhouse potent as compared to 00:27:28.840 --> 00:27:33.640 carbon dioxide so we're seeing that nitrogen oxide reductions which is an 00:27:33.640 --> 00:27:41.360 ozone precursor significant reduction in in nitrogen oxides and in particulate 00:27:41.360 --> 00:27:49.560 matter as well so with that I'll answer any questions I have another question is 00:27:49.560 --> 00:28:03.600 there a slide on on how this would impact Denton's carbon footprint no I 00:28:03.600 --> 00:28:10.720 have not I've not gotten with Kenny's folks to figure out what that whether 00:28:10.720 --> 00:28:15.920 there would be a impact on on the carbon footprint my understanding is because 00:28:15.920 --> 00:28:23.080 these are the degradation of waste in the landfill is not treated like a 00:28:23.080 --> 00:28:29.720 hydrocarbon emission from combustion of a fossil fuel it's it's a non fossil 00:28:29.720 --> 00:28:35.640 carbon source and so it would have less impact on the carbon footprint it's not 00:28:35.640 --> 00:28:41.920 included fully in our carbon footprint calculations is there any chance of just 00:28:41.920 --> 00:28:47.840 exploring that with with dr. Banks's sure yeah thank you that'll be part of 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 00:28:53.000 --> 00:28:58.440 you on the alternatives okay thank you Karen you had your hand up yeah quick 00:28:58.440 --> 00:29:04.320 question I just wanted to know what a control efficiency was that's the that's 00:29:04.320 --> 00:29:09.760 the removal percentage of the pollutant so the percentage of the pollutant that's 00:29:09.760 --> 00:29:16.040 removed during the process correct okay so you want a high number yes ma'am okay 00:29:16.040 --> 00:29:22.480 thank you Billy yeah there was a mention in one of the slides in the first 00:29:22.480 --> 00:29:30.040 presentation Terry we talked about you'll still if we purchase this and I 00:29:30.040 --> 00:29:35.440 think either way I'm on board with purchasing it that you would run the 00:29:35.440 --> 00:29:40.120 facility but there wasn't really a set time of how long you would run the 00:29:40.120 --> 00:29:44.680 facility what does that measure is that the ROI on it or what is that measure 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 00:29:52.440 --> 00:29:56.440 assumes that we would run it till the end of the contract life which is in 00:29:56.440 --> 00:30:04.480 2024 okay so currently that additional cost is just passed on to the rate 00:30:04.480 --> 00:30:10.560 payers as a whole and divided into our total production or sells yes it's 00:30:10.560 --> 00:30:18.640 captured through the ECA the energy cost adjustment it is on the ECA okay okay 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 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 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 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 00:30:39.680 --> 00:30:45.320 this is Tony Billy I would also point out that you know Terry alluded to this 00:30:45.320 --> 00:30:50.360 business case analysis that we're gonna come back to you on in the next month 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 00:30:55.000 --> 00:31:00.080 needs some repair and also some ongoing maintenance and so there's there'll be 00:31:00.080 --> 00:31:06.640 additional cost that we need to go through when we come back to you okay 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 00:31:16.320 --> 00:31:22.840 and secondly I'd like to maybe say something it's obvious to everybody but 00:31:22.840 --> 00:31:29.280 when we the sort of underscores the risk that's involved in signing long-term 00:31:29.280 --> 00:31:36.720 energy contracts long term being 15 years out and boy this shows the effects 00:31:36.720 --> 00:31:43.640 of that adversely better than a lot of things can show I was wondering what 00:31:43.640 --> 00:31:51.600 other long-term energy obligations do we have that go out this far they go out 00:31:51.600 --> 00:31:59.120 15 years yeah we we do have some contracts in our portfolio that are 00:31:59.120 --> 00:32:04.200 long-term contracts most of the very long-term contracts are more favorably 00:32:04.200 --> 00:32:12.240 priced than these we do have our whitetail win contract which also 00:32:12.240 --> 00:32:18.600 terminates in 2024 it's a way above market contract as well and then we have 00:32:18.600 --> 00:32:25.240 our bluebell solar contract and I apologize mr. Baffert I don't know the 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 00:32:29.200 --> 00:32:34.880 and it is an above-market contract you have to remember though those contracts 00:32:34.880 --> 00:32:41.600 are small volumes and were entered into at the onset of the renewable Denton 00:32:41.600 --> 00:32:49.280 plan to achieve the hundred percent or at that time 70% removal so or 70% 00:32:49.280 --> 00:32:58.680 environment 70% renewable supply and so we do take in all of our projections 00:32:58.680 --> 00:33:04.720 when we look at our five-year ten-year plans we are taking into account the 00:33:04.720 --> 00:33:10.480 out-of-moneyness of those contracts and as we mentioned to you we're not asking 00:33:10.480 --> 00:33:19.680 for any rate case eight rate increases in the next year well as I remember and 00:33:19.680 --> 00:33:24.160 Billy you may remember this too when we entered into those contracts those were 00:33:24.160 --> 00:33:29.200 pretty good pretty good rates they just as things improved they became less 00:33:29.200 --> 00:33:35.040 favorable yeah when they started giving natural gas away like they are today 00:33:37.720 --> 00:33:49.080 alright any other questions all right do we have a motion to approve and then all 00:33:49.080 --> 00:33:58.120 in favor say aye aye opposed motion carries management update so madam 00:33:58.120 --> 00:34:03.320 chair and PB members we have a couple reports that we've provided to you you 00:34:03.320 --> 00:34:09.480 have the deck report dashboard for the month of June certainly if you have any 00:34:09.480 --> 00:34:12.960 questions we have folks here that can respond to that and then we the other 00:34:12.960 --> 00:34:19.160 report that we've also provided to you is a memo from Frank Pugsley on the 00:34:19.160 --> 00:34:23.080 hydroelectric plant that was a question I think that mr. Parker had posed and so 00:34:23.080 --> 00:34:27.000 we did a little research and have provided that to you certainly if you 00:34:27.000 --> 00:34:30.400 have any questions on either one of those items we'll be happy to address 00:34:30.400 --> 00:34:39.240 those I had one question about the deck go ahead yeah this is probably a 00:34:39.240 --> 00:34:45.360 profoundly stupid question so I apologize out front but it's just a 00:34:45.360 --> 00:34:51.200 matter of clarification I am I am you know someone of the public who is who 00:34:51.200 --> 00:34:57.960 is saying not particularly well versed in these aspects but I see if I look at 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 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 00:35:10.120 --> 00:35:20.880 2,000 hours of operation now the stupid question is for example June has 720 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 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 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 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 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 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 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 00:36:08.560 --> 00:36:13.720 see such a large number as compared to the hours in the month I would strongly 00:36:13.720 --> 00:36:20.280 recommend that that at some point on the website or as an another asterisk on 00:36:20.280 --> 00:36:26.800 this report that that that be indicated and in the future I'm sure maybe you 00:36:26.800 --> 00:36:33.200 already have it would be curious to see the the profiles of usage in terms of 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 00:36:40.440 --> 00:36:44.760 full compliment engaged and of course I know that has to do with the load and 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 00:36:52.480 --> 00:36:59.840 we could put you know a utilization for the plant as a percent of the available 00:36:59.840 --> 00:37:10.320 hours in the month if that would be helpful probably be more informative 00:37:10.320 --> 00:37:16.280 without providing a level of detail that would make a lot of people 00:37:16.280 --> 00:37:35.520 uninterested any other questions all right and that brings us to concluding 00:37:35.520 --> 00:37:40.200 items does any board member wish to add anything to a future agenda or have 00:37:40.200 --> 00:37:49.200 any comments to make hearing none we'll go into work session the first item is 00:37:49.200 --> 00:37:53.520 to receive a report hold a discussion and give staff direction regarding the 00:37:53.520 --> 00:37:59.520 customer service water wastewater solid waste and elect fiscal year 2021 proposed 00:37:59.520 --> 00:38:04.480 budget capital improvement program rates and five-year financial forecast good 00:38:04.480 --> 00:38:08.760 morning PB members chair Nick Benson assistant director finance I'll do a 00:38:08.760 --> 00:38:12.600 brief introduction and I will turn it over to Krista Foster the customer 00:38:12.600 --> 00:38:16.360 service manager to review her proposed budget so as I said the first 00:38:16.360 --> 00:38:20.400 presentation day is customer service a few board members probably were on the 00:38:20.400 --> 00:38:24.520 board back when customer service was separated from the water fund but if not 00:38:24.520 --> 00:38:30.640 as a reminder and also to make everybody aware water and customer service were one 00:38:30.640 --> 00:38:36.280 fund prior to fiscal year 1718 we actually separated customer service from 00:38:36.280 --> 00:38:39.960 the water utility to increase the transparency of customer service and 00:38:39.960 --> 00:38:43.720 create an internal service fund out of it and following that presentation I'll 00:38:43.720 --> 00:38:46.800 walk you through the budget process explaining the current and the previous 00:38:46.800 --> 00:38:50.320 process that was in place I mean get your feedback and answer any questions 00:38:50.320 --> 00:38:55.000 you may have and then after that we will go through each the utility budgets and 00:38:55.000 --> 00:38:59.840 further our discussion regarding 2021 proposed budget each of the operational 00:38:59.840 --> 00:39:03.200 discussions for the utilities have been taken out of the presentations however 00:39:03.200 --> 00:39:07.000 the directors are on the phone today are present to answer any questions if you 00:39:07.000 --> 00:39:12.120 have regarding the operations of each utility and each PB member should have 00:39:12.120 --> 00:39:15.880 received an exhibit for a mini budget book for each of the utilities and this 00:39:15.880 --> 00:39:19.720 is to further the conversations for each utility and this is something we provide 00:39:19.720 --> 00:39:23.600 to the public utility board each year as part of the budgeting process so the 00:39:23.600 --> 00:39:26.120 numbers that you see in those mini budget books are supportive of the 00:39:26.120 --> 00:39:29.960 presentations that you will see today and then with that if you don't have any 00:39:29.960 --> 00:39:33.640 questions for me I will turn it over to Krista Foster to present customer 00:39:33.640 --> 00:39:40.880 service and madam chairs as she's getting ready to do that just a reminder 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 00:39:44.360 --> 00:39:47.400 get a little bit closer to their microphone they're having a hard time 00:39:47.400 --> 00:39:54.240 hearing some of you thank you good morning madam chair board members 00:39:54.240 --> 00:39:58.440 Krista Foster customer service manager I'm here this morning to be able to give 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 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 00:40:05.960 --> 00:40:09.600 with accomplishments and future goals there are a number of things that we've 00:40:09.600 --> 00:40:13.400 done in customer service a couple of the things I'd like to highlight is the 00:40:13.400 --> 00:40:16.800 first thing that we've done is we have implemented a customer reported first 00:40:16.800 --> 00:40:21.080 contact resolution prior to that it was something that we had to collect 00:40:21.080 --> 00:40:25.680 internally as part of our call coaching process but at this point we actually 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 00:40:30.320 --> 00:40:36.480 person or by telephone and they report was your issue resolved is this the 00:40:36.480 --> 00:40:41.360 first time you've contacted us regarding this instance of this issue another 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 00:40:45.720 --> 00:40:52.240 request so if a customer for instance on a Monday collection decides to go out 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 00:40:56.020 --> 00:41:00.480 entire week to schedule a collection they can use that line schedule it on 00:41:00.480 --> 00:41:03.240 the weekend we're gonna make sure that they're on that Monday collection 00:41:03.240 --> 00:41:07.320 schedule otherwise for all other callers they can opt in and out of the yard waste 00:41:07.320 --> 00:41:10.440 program they can schedule brush collections they can schedule the bagged 00:41:10.440 --> 00:41:15.400 leaf collections and they can do that 24 hours a day seven days a week then 00:41:15.400 --> 00:41:19.280 we've also done as I'd mentioned before the outreach with our apartment complexes 00:41:19.280 --> 00:41:23.680 to really start educating the public on the benefits of the pay-as-you-go 00:41:23.680 --> 00:41:27.920 program and we will continue doing that in the next year we're looking to 00:41:27.920 --> 00:41:32.840 implement a CRM which will allow us to increase the scope of what we can work 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 00:41:36.560 --> 00:41:42.000 environment as we introduce that and then we're also going to be looking at 00:41:42.000 --> 00:41:46.200 introducing language line services one of the things that I discovered and was 00:41:46.200 --> 00:41:51.960 a little bit surprised about is that we have two universities in this city which 00:41:51.960 --> 00:41:57.400 bring in lots of international students and we have no means to provide service 00:41:57.400 --> 00:42:01.620 in foreign language so that's part of what my budget for the next year 00:42:01.620 --> 00:42:06.200 includes is the funding to be able to provide better services to all of our 00:42:06.200 --> 00:42:12.200 customers and meet the diversity that we have in the city of Denton so there 00:42:12.200 --> 00:42:16.760 have been a lot of philosophical changes in customer service over the last year 00:42:16.760 --> 00:42:22.040 the biggest first change is that we have reworked the way that we measure our 00:42:22.040 --> 00:42:27.800 success what I'm looking at now is benchmark benchmarking against industry 00:42:27.800 --> 00:42:32.660 performers private public in the utility sector to see where are the top four 00:42:32.660 --> 00:42:37.280 tile performers in that industry we're realigning our metrics to match those 00:42:37.280 --> 00:42:42.840 same measurements to make sure that we can provide at least top quartile 00:42:42.840 --> 00:42:47.320 service or better and we're moving that direction one of the other things we've 00:42:47.320 --> 00:42:52.400 done that is huge is customer service has implemented a permanent telecommuting 00:42:52.400 --> 00:42:59.240 work structure we have given about 26 cubicles seven offices and we'll have our 00:42:59.240 --> 00:43:04.520 staff working from home at least 90% of the time for most positions it will vary 00:43:04.520 --> 00:43:12.200 based on the position but we have moved into that structure so operationally you 00:43:12.200 --> 00:43:18.160 can see prior fiscal year performance compared to others but the one thing that 00:43:18.160 --> 00:43:22.240 I really want to mention about this is even though the prior fiscal year you're 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 00:43:29.080 --> 00:43:32.440 that current operational performance you're going to see that our call 00:43:32.440 --> 00:43:37.680 volumes have been a consistent fourteen point eight percent higher than the 00:43:37.680 --> 00:43:42.240 previous year and that has been from October all the way through current so 00:43:42.240 --> 00:43:47.520 we're seeing a significant increase in the number of people who are calling we 00:43:47.520 --> 00:43:50.800 are working very hard to make sure that we're taking care of those those folks 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 00:43:55.840 --> 00:44:00.600 reported first call resolution we also measure our very satisfied and very 00:44:00.600 --> 00:44:05.880 dissatisfied customers because those are the customers who drive your reputation 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 00:44:10.160 --> 00:44:16.120 I've compared our group the call center and the lobby against the top quartile 00:44:16.120 --> 00:44:21.040 average for those same metrics in the utilities industry and you can see that 00:44:21.040 --> 00:44:25.080 we're outperforming on both first call resolution and our very satisfied 00:44:25.080 --> 00:44:33.080 customers by more than 10% and our very dissatisfied rate we're at just below 00:44:33.080 --> 00:44:40.060 what would happen in the best performers in our industry our FTE summary we have 00:44:40.060 --> 00:44:43.760 eliminated as we've reorganized some of our division we have eliminated our 00:44:43.760 --> 00:44:47.920 administrative assistant position and we have removed our assistant customer 00:44:47.920 --> 00:44:52.960 service manager from our budget this has allowed us to produce some budgetary 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 00:44:57.920 --> 00:45:03.200 little more flexibility in some of rearranging some of our workloads this 00:45:03.200 --> 00:45:07.440 is what our new organizational chart looks like it's just the two positions 00:45:07.440 --> 00:45:11.200 removed and we did reorganize to have our cash specialist falling under 00:45:11.200 --> 00:45:15.920 revenue assurance since they are a critical part of the revenue process we 00:45:15.920 --> 00:45:19.180 are making sure that there will be no conflict of interest between the two 00:45:19.180 --> 00:45:23.800 positions so that we can maintain all the financial security controls that are 00:45:23.800 --> 00:45:30.400 necessary for the positions so as Nick mentioned we are an internal service 00:45:30.400 --> 00:45:35.600 fund but this is a overview of our budget you'll notice that we've only 00:45:35.600 --> 00:45:40.080 we're only realizing about a hundred and ninety two thousand dollars in savings 00:45:40.080 --> 00:45:44.560 we actually cut about five hundred thousand dollars out of our budget 00:45:44.560 --> 00:45:51.520 however as we implement the new merchant service provider we do have to add that 00:45:51.520 --> 00:45:54.600 two hundred and twenty five thousand dollars back into our budget to 00:45:54.600 --> 00:45:59.160 accommodate for the credit card fees that we're going to be absorbing and 00:45:59.160 --> 00:46:04.000 we're also putting in our supplemental for the language line services and then 00:46:04.000 --> 00:46:07.760 we had a couple of other small things that increased in price but overall 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 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 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 00:46:42.480 --> 00:46:47.840 working there that meet face-to-face every day or about the most courteous 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 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 00:47:00.160 --> 00:47:05.080 I'm very impressed with the professionalism that I encounter when 00:47:05.080 --> 00:47:10.200 somebody's you know draining a fire hydrant just doing their ordinary day 00:47:10.200 --> 00:47:14.760 to day responsibilities you guys really do a good job of providing customer 00:47:14.760 --> 00:47:20.560 service thank you and please thank them I will make sure that that is relayed 00:47:20.560 --> 00:47:30.840 other questions and you're you're muted sorry could you go back to the slide 00:47:30.840 --> 00:47:37.560 that shows the flowchart of the positions I just had a question about 00:47:37.560 --> 00:47:50.440 the one thing let me make sure I can share this one what are billing 00:47:50.440 --> 00:47:56.760 specialists and what is a billing supervisor okay the billing supervisor 00:47:56.760 --> 00:48:02.880 oversees all of the processes overseas all of the staff that manage billing 00:48:02.880 --> 00:48:07.400 those billing specialists we have billing specialists that focus on say 00:48:07.400 --> 00:48:11.720 making sure that billing is done properly for all of our key accounts we 00:48:11.720 --> 00:48:15.240 have billing specialists who work on just commercial services to make sure 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 00:48:19.880 --> 00:48:25.020 the right rates applied and doing all of that work they do order closeout they do 00:48:25.020 --> 00:48:29.280 a lot of the different things that are the behind-the-scenes part of making 00:48:29.280 --> 00:48:45.000 sure that customers can be billed accurately okay thank you very much 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 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 00:49:00.880 --> 00:49:14.800 presentation okay that would be water then no yes so the next the presentation 00:49:14.800 --> 00:49:18.760 chair will be a brief presentation of the current budget process compared to 00:49:18.760 --> 00:49:22.080 previous years and then we'll get into discussion of each of the utility 00:49:22.080 --> 00:49:26.000 starting with water there is a total of five presentations so Susan if you feel 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 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 00:49:39.080 --> 00:49:42.560 a lot of this conversation August the third was focused about how we did it 00:49:42.560 --> 00:49:46.640 previously in the budgeting process and what the current process is now so what 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 00:49:49.800 --> 00:49:52.880 board previously is really kind of walk you through what the previous process 00:49:52.880 --> 00:49:57.600 was and what the current process is so currently you can see we have a 00:49:57.600 --> 00:50:01.520 comprehensive capital project planning implementation this has been the city's 00:50:01.520 --> 00:50:06.920 focused over the last few years which is really obvious in the utility finances 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 00:50:09.760 --> 00:50:14.280 of the funds some of the other focus has been cost containment transparency and 00:50:14.280 --> 00:50:19.360 emphasis on the city's core values talk about that a little bit more and then 00:50:19.360 --> 00:50:23.200 fiscal year 2021 so really what I wanted to do is create a table that really 00:50:23.200 --> 00:50:26.800 summarized you know what the timeline looked like before and what it looks 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 00:50:32.400 --> 00:50:38.760 the volume forecast previously prior to fiscal year 2017 the the staff did bring 00:50:38.760 --> 00:50:42.880 a volume and load forecast forward to the public utility board usually around 00:50:42.880 --> 00:50:47.000 January or February of each year as you can see the current process we do not 00:50:47.000 --> 00:50:49.920 bring this forward in January and February this has been combined with the 00:50:49.920 --> 00:50:53.840 budget discussions that start around July or August and so we did leave that 00:50:53.840 --> 00:50:56.600 blank just to kind of point that out that that's not coming for the public 00:50:56.600 --> 00:51:01.680 utility board currently in January and February the next group we want to talk 00:51:01.680 --> 00:51:05.360 about was review the utility budgets and CIP so as I'd mentioned earlier we did 00:51:05.360 --> 00:51:09.920 provide everybody a mini budget book and this is consistent with previous years 00:51:09.920 --> 00:51:13.520 we are currently doing this so that book was provided to the public utility board 00:51:13.520 --> 00:51:19.320 today a detailed budget presentation we did have these presentations in July to 00:51:19.320 --> 00:51:23.920 talk about DME and then August the 3rd for the rest of the utilities previously 00:51:23.920 --> 00:51:27.420 there were three meetings usually to talk about this these steps or this 00:51:27.420 --> 00:51:31.800 budget with the public utility board the current process we have two 00:51:31.800 --> 00:51:36.000 discussions built into the budget discussions and this is consistent with 00:51:36.000 --> 00:51:40.360 the previous couple fiscal years and then we'll have meetings to review the 00:51:40.360 --> 00:51:44.920 the proposed rate changes the proposed rate changes previously were discussed 00:51:44.920 --> 00:51:49.960 around July of each year and this year we do plan to discuss those with the 00:51:49.960 --> 00:51:54.160 public utility board in greater detail in September on September 15th or excuse 00:51:54.160 --> 00:51:57.880 me September 14th we're planning to come back to the utility board the red line 00:51:57.880 --> 00:52:01.380 rate ordinance I do want to point out though that you know the presentations 00:52:01.380 --> 00:52:05.240 that we'll cover today does include the rate changes that we are proposing this 00:52:05.240 --> 00:52:09.360 year but part of the process is to improve transparency of each of the 00:52:09.360 --> 00:52:13.000 utilities we do bring a red line rate ordinance for you that really spells out 00:52:13.000 --> 00:52:17.480 what those changes are for each utility and then finally we get to the budget 00:52:17.480 --> 00:52:21.480 and rate approval previously it was around the August time period and like I 00:52:21.480 --> 00:52:25.600 said this is September 14th this year it does change year to year but usually 00:52:25.600 --> 00:52:30.480 it's around the end of August or September in the current process the 00:52:30.480 --> 00:52:33.200 utility projects update this is something that was requested by the 00:52:33.200 --> 00:52:37.600 public utility board on August the 3rd and we will be coming back to you in 00:52:37.600 --> 00:52:41.520 September with this discussion to talk about the details of each of the 00:52:41.520 --> 00:52:46.080 projects in the utilities I would like to point out you know that this would 00:52:46.080 --> 00:52:50.000 include the initial project funding any anticipated completion date of the 00:52:50.000 --> 00:52:54.380 projects any obstacles that may be out there that we can review with the public 00:52:54.380 --> 00:52:58.080 utility board for these projects and then as previously mentioned on August 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 00:53:02.260 --> 00:53:06.040 detailed discussion in December allowing us time to fully understand the COVID 00:53:06.040 --> 00:53:10.160 impact on the utilities and also capture those high usage months for each of the 00:53:10.160 --> 00:53:13.840 utilities in July and August so something that previously was not done 00:53:13.840 --> 00:53:18.280 we do like this is a good process moving forward once we get those high usage 00:53:18.280 --> 00:53:25.640 months rate increases or decreases so since 2018 the city's continued emphasis 00:53:25.640 --> 00:53:28.720 on financial transparency cost containment really looking at those 00:53:28.720 --> 00:53:33.520 projects to identify unallocated funding to reprioritize it have led to no rate 00:53:33.520 --> 00:53:37.240 increases for the city didn't utilities so what I want to do is summarize it 00:53:37.240 --> 00:53:42.120 from fiscal year 2017 through fiscal year 2021 as you can see for each of the 00:53:42.120 --> 00:53:47.160 utilities from 2015 to 2017 we consistently had rate increases since 00:53:47.160 --> 00:53:51.520 2017 starting in fiscal year 2018 we have had no rate increases so the city 00:53:51.520 --> 00:53:56.860 didn't utilities we've actually had decreases at least one each year since 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 00:54:04.360 --> 00:54:08.680 the overall rate decreases we are proposing this year so in 2021 and you 00:54:08.680 --> 00:54:12.080 can see the 2% rate decrease for water customers which equates to about a 00:54:12.080 --> 00:54:16.440 dollar and eight cents and then the one dollar decrease for the standard solid 00:54:16.440 --> 00:54:20.280 waste customer of a dollar so overall the utility bill for customers could 00:54:20.280 --> 00:54:25.040 expect it on two dollars and eight cents for the average residential customer 00:54:25.040 --> 00:54:29.320 that concludes the budget process presentation I'll pull it down for 00:54:29.320 --> 00:54:33.800 questions that we can go into water if there's any questions no quick question 00:54:33.800 --> 00:54:46.520 yes sir slide number 11 that you had you just showed at the the bottom right 00:54:46.520 --> 00:54:52.580 corner you have something called and the ability to maximize spend when I see the 00:54:52.580 --> 00:54:57.520 term maximize spend I get an adverse physical reaction to that maximize 00:54:57.520 --> 00:55:04.800 spending and I'm wondering if having having done a lot of project stuff in 00:55:04.800 --> 00:55:09.720 the past I think we should be more concerned about getting projects 00:55:09.720 --> 00:55:15.560 completed on time rather than doing accounting gyrations to move money 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 00:55:22.480 --> 00:55:30.400 to use a different term and maximize spend there if that's possible you see 00:55:30.400 --> 00:55:34.680 what I mean yes yes sir mr. Baffert we definitely can address that that term 00:55:34.680 --> 00:55:38.240 was simply meant to imply to look at those projects look at that funding is 00:55:38.240 --> 00:55:42.120 allocated and actually get those projects completed so we can get that 00:55:42.120 --> 00:55:56.760 terminology yes all right no questions Oh Billy's got a question sorry I was 00:55:56.760 --> 00:56:06.560 trying to get my mute button I was missing the slide on the right utility 00:56:06.560 --> 00:56:11.440 budget rate process that shows current meetings when we address the budget 00:56:11.440 --> 00:56:17.200 versus the previous meetings it's probably my it's my same question as a 00:56:17.200 --> 00:56:27.940 whole not one certain utility why the why the elongated time to wait for the 00:56:27.940 --> 00:56:34.200 current meetings versus how the previous meetings would go you're talking about 00:56:34.200 --> 00:56:37.800 the forecasting data start in January and February now discussing in July and 00:56:37.800 --> 00:56:42.960 August yes I think the majority to answer your question is that reliability 00:56:42.960 --> 00:56:46.560 of that forecast data so you know in the water utility looking at the volume 00:56:46.560 --> 00:56:50.880 forecast and DME looking at the load forecast that additional time allows 00:56:50.880 --> 00:56:55.520 staff to look at those forecasts for all the utilities and refine that budget 00:56:55.520 --> 00:56:59.440 appropriately so we did make that adjustment a couple of fiscal years ago 00:56:59.440 --> 00:57:04.160 from moving it from January to February to July and August to improve the 00:57:04.160 --> 00:57:08.360 reliability of those forecasts reach the utility so hopefully that answers your 00:57:08.360 --> 00:57:15.040 check your question mr. cheek as previously stated a couple three weeks 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 00:57:19.040 --> 00:57:27.480 look at the anticipated budgets the better advice we may be able to give for 00:57:27.480 --> 00:57:38.200 council and I think I would look at today's presentations of August 24th and 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 00:57:44.800 --> 00:57:51.760 have some input in regards to changing something on the budget you'd have you 00:57:51.760 --> 00:57:56.800 know a little more than 24 hours for council to possibly even to see what 00:57:56.800 --> 00:58:02.240 that recommendation may have been and why it was recommended and Billy this is 00:58:02.240 --> 00:58:07.660 time that that's really not true if we needed to move the presentation back to 00:58:07.660 --> 00:58:13.600 council for even another month we could the only real urgency on the finances 00:58:13.600 --> 00:58:16.800 Nick if you could take that down the only the only real front urgency on the 00:58:16.800 --> 00:58:21.160 finances is the property tax levy so that's not necessarily the case and 00:58:21.160 --> 00:58:25.120 quite frankly the reason to kind of obviously this is a weird year in terms 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 00:58:30.520 --> 00:58:36.000 watched the last two or three years our estimates be pretty wildly inaccurate in 00:58:36.000 --> 00:58:40.060 water electrics so what that means is that we've ended up with more money at 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 00:58:44.200 --> 00:58:47.480 trying to do is give you the best information as possible get through July 00:58:47.480 --> 00:58:50.680 and August where you've got the hottest months that can really swing those two 00:58:50.680 --> 00:58:54.600 utilities and that way you've got better information but with the utilities 00:58:54.600 --> 00:58:59.540 there's no urgency to have this done tomorrow I mean we could easily go into 00:58:59.540 --> 00:59:04.680 mid mid September and give you that additional time if you needed sure time 00:59:04.680 --> 00:59:09.160 and I understand that things fluctuate but we do know that July and August are 00:59:09.160 --> 00:59:12.800 going to be hot months and we can anticipate what those months will be 00:59:12.800 --> 00:59:17.720 obviously well let me let me give you a great example last year we went in 00:59:17.720 --> 00:59:22.880 showing a significant deficit in the electric fund had a lot of talks about 00:59:22.880 --> 00:59:27.120 whether we should be raising rates that sort of thing we ended up getting having 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 00:59:33.400 --> 00:59:38.440 entire forecast for the year so we spent numerous meetings talking about rate 00:59:38.440 --> 00:59:42.960 increases change in the ECA that sort of thing and within one week it was all 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 00:59:47.560 --> 00:59:52.240 those those months that we know can really swing the budgets at least get 00:59:52.240 --> 00:59:56.720 you up as close as we can through August and say okay this is the best 00:59:56.720 --> 01:00:01.120 information we have because the council got a little bit annoyed last year we 01:00:01.120 --> 01:00:04.960 had spent you know numerous hours talking about it and so we're just trying 01:00:04.960 --> 01:00:08.280 to think about how do we get through with those two utilities in particular 01:00:08.280 --> 01:00:11.960 how do we get through these months and try to get as good of information as 01:00:11.960 --> 01:00:19.080 possible you know based on what we've learned okay well your capital 01:00:19.080 --> 01:00:24.360 expenditures are more likely not going to change or your predicted capital 01:00:24.360 --> 01:00:28.200 expenditures are not going to change that much by the from May to August I 01:00:28.200 --> 01:00:34.640 wouldn't think but your but your your revenues could change significantly 01:00:34.640 --> 01:00:39.840 several millions of dollars which is just not something that you know why 01:00:39.840 --> 01:00:43.080 spend a lot of time talking about rate increases and getting people worked up 01:00:43.080 --> 01:00:47.120 when in fact if that happens again I mean we basically are building field 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 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 01:00:56.760 --> 01:01:01.760 gosh you know 15 or 17 million more than we anticipated we you know there would 01:01:01.760 --> 01:01:05.200 have been absolutely zero reason to go in and raise rates which ended up 01:01:05.200 --> 01:01:09.240 happening and we were able to do some additional things to catch up and avoid 01:01:09.240 --> 01:01:13.200 that but it changes the policy discussion that the PUB and the council 01:01:13.200 --> 01:01:19.960 were having when we have better information okay I just don't see the 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 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 01:01:27.880 --> 01:01:32.400 coming from but we're absolutely we're happy to you know to make sure that 01:01:32.400 --> 01:01:35.640 we've got a schedule there and you can sort of see different iterations of the 01:01:35.640 --> 01:01:39.680 budget moving forward in terms of your capital investment that's been the other 01:01:39.680 --> 01:01:44.400 thing and I appreciate Russ's comments earlier about the verbiage being used 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 01:01:48.440 --> 01:01:52.120 all the CIP in general it took us about two years to lift all the information 01:01:52.120 --> 01:01:55.960 out of audits and books and it starts up on the spreadsheets so we can start 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 01:02:00.740 --> 01:02:05.160 are actually needing what we're asking for but really to that point with the 01:02:05.160 --> 01:02:09.800 capital project we had tens of millions of dollars you know somewhere between 01:02:09.800 --> 01:02:13.960 thirty and fifty million dollars sitting in unallocated miscellaneous accounts 01:02:13.960 --> 01:02:19.400 and we're continuing to raise rates so we basically stopped that approach until 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 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 01:02:26.960 --> 01:02:29.680 going through and I think we can based on the questions we're getting we 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 01:02:34.280 --> 01:02:38.800 more granular spreadsheet that rusted requested last time so you can see how 01:02:38.800 --> 01:02:42.360 we're looking at the capital side the expenses the revenues once we get 01:02:42.360 --> 01:02:46.920 through July and August become a lot less volatile so I think we can meet in 01:02:46.920 --> 01:02:49.640 the middle somewhere and give you all the information you want to see it's 01:02:49.640 --> 01:02:52.560 probably gonna be just more of a check-in on those two budgets throughout 01:02:52.560 --> 01:02:58.880 the summer okay well I sit on I sit on several boards of directors where we 01:02:58.880 --> 01:03:04.400 actually we're actually we are the last decision-making process and yeah we ask 01:03:04.400 --> 01:03:08.560 for a budget prediction and we're usually given them and they do fluctuate 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 01:03:13.240 --> 01:03:18.720 discussion and especially with the capital expenditures we agree rates are 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 01:03:21.920 --> 01:03:28.440 best taxpayer have no doubt right I think we're in agreement okay this is 01:03:28.440 --> 01:03:31.720 David Gaines assistant city manager I just wanted to touch on the capital 01:03:31.720 --> 01:03:35.880 expenses particularly you know as COVID this obviously was the different year 01:03:35.880 --> 01:03:40.800 and in the schedule that Nick showed is reflective of COVID and the changes that 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 01:03:45.680 --> 01:03:50.400 summer we were we had at least paused or reconsidered some of our capital 01:03:50.400 --> 01:03:54.240 projects just as we wanted to see what the true impacts on the revenue side 01:03:54.240 --> 01:03:59.360 would be to the utility funds and also the bond market the bond market was 01:03:59.360 --> 01:04:02.960 sporadic and all over the place so we didn't know what our ability to issue 01:04:02.960 --> 01:04:07.360 debt would be so that was another reason that we pushed the process back on the 01:04:07.360 --> 01:04:11.800 obviously the revenue side but also the capital side to try to understand what 01:04:11.800 --> 01:04:14.960 our CFP would look like over the next couple years so just wanted to point 01:04:14.960 --> 01:04:19.040 that out as we looked at the schedule this year it was largely impacted by the 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 01:04:24.440 --> 01:04:29.960 council that immediately went in and turned off the you know the cutoffs and 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 01:04:32.800 --> 01:04:36.360 into all the fund balances that sort of thing so things ended up working 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 01:04:40.520 --> 01:04:50.320 and challenging budget year for us should we take maybe a five-minute break 01:04:50.320 --> 01:04:57.000 and come back okay it'd be fine thank you 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 01:05:07.080 --> 01:05:12.320 going into water budget presentation good morning PB members let me pull back 01:05:12.320 --> 01:05:21.800 up the presentation to discuss water with you so as I said earlier the 01:05:21.800 --> 01:05:25.760 operational discussion has been taken out of each utility presentation however 01:05:25.760 --> 01:05:29.720 Frank Pugsley the water director is on the phone if you have questions regarding 01:05:29.720 --> 01:05:34.040 any operational items you'll be happy to speak to them otherwise I'll walk you 01:05:34.040 --> 01:05:36.600 through the proposed budget giving questions I'll be happy to answer within 01:05:36.600 --> 01:05:41.120 the presentation the presentation objectives really quick we'll review the 01:05:41.120 --> 01:05:44.800 financial assumptions the volume forecast the revenue and expense detail 01:05:44.800 --> 01:05:48.240 the financial forecast the capital improvement plan and then review those 01:05:48.240 --> 01:05:53.360 rate changes with you that I discussed or mentioned earlier so the financial 01:05:53.360 --> 01:05:58.320 assumptions on the volume forecast we are proposing a 2% growth and forecasted 01:05:58.320 --> 01:06:02.760 volume in the out years and the hunter coal ranch development is included 01:06:02.760 --> 01:06:07.520 starting in fiscal year 2024 this was a question I believe mr. Baffert and asked 01:06:07.520 --> 01:06:12.200 last meeting we have included a chart to help explain when the hunter coal ranch 01:06:12.200 --> 01:06:15.320 development is planned to come into the water utility and how it's being 01:06:15.320 --> 01:06:19.880 forecasted on the revenue side 2% growth it's consistent with the volume 01:06:19.880 --> 01:06:24.360 forecast that we have out there we are continuing to utilize impact fee funding 01:06:24.360 --> 01:06:27.880 to revenue any eligible projects that may be out there on the horizon to 01:06:27.880 --> 01:06:32.280 minimize that debt issuance and really be mindful of our debt service in the 01:06:32.280 --> 01:06:35.640 out years we are showing a little bit of revenue for the hunter coal ranch 01:06:35.640 --> 01:06:40.160 development as I mentioned expenses of 3% growth in the forecasted years and 01:06:40.160 --> 01:06:43.280 then for this utility as previously discussed the public utility board we 01:06:43.280 --> 01:06:48.160 are recommending a 2% rate decrease we will be seeking PB's feedback today on 01:06:48.160 --> 01:06:51.760 how to implement that decreased on a couple couple different options that 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 01:06:57.680 --> 01:07:01.520 show the hunter coal ranch development and growth in the city and within the 01:07:01.520 --> 01:07:06.120 next 20 to 30 year period I apologize for being a little bit 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 01:07:10.480 --> 01:07:13.120 thing is I wanted to point out that you can see that hunter coal ranch 01:07:13.120 --> 01:07:18.440 development and start coming on 2024 which is consistent with the forecast I 01:07:18.440 --> 01:07:21.400 know it's hard to see but the hunter coal ranch development is actually this 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 01:07:26.840 --> 01:07:30.040 years a couple of things I'll point out this chart does a great job of 01:07:30.040 --> 01:07:33.940 summarizing growth in the community and separating out by the development so the 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 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 01:07:42.840 --> 01:07:47.360 happens to be the hunter ranch development and you can see it and then 01:07:47.360 --> 01:07:50.600 the green one as I mentioned is that coal ranch development that you can see 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 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 01:07:59.680 --> 01:08:04.780 the future years and then this dotted line is the treatment plant capacity so 01:08:04.780 --> 01:08:10.320 you can see when that capacity meets the growth in these future years so we are 01:08:10.320 --> 01:08:14.040 planning to issue that debt for the plan expansion out here to meet this and be 01:08:14.040 --> 01:08:17.560 well in advance of it for planning for that growth to come into the community 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 01:08:24.920 --> 01:08:30.640 MDD on your slide yes can you tell us what those acronyms mean yeah let me 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 01:08:34.080 --> 01:08:38.040 question really quick sure mr. Parker Frank Pugsley water and wastewater 01:08:38.040 --> 01:08:45.240 utilities director and I think yeah MDD and MMD get a little tongue-tied the red 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 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 01:08:56.640 --> 01:09:01.440 easily when we're talking about both of those in the same slide great and what 01:09:01.440 --> 01:09:07.880 is the night the municipal management district which is I think Todd might be 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 01:09:13.480 --> 01:09:20.880 both Hunter and Cole ranch set up for to pay for the infrastructure on their 01:09:20.880 --> 01:09:26.600 developments so we're saying we see a lot in the extraterritorial areas of the 01:09:26.600 --> 01:09:30.160 municipal utility district this is just a municipal management district so the 01:09:30.160 --> 01:09:34.520 City Council had to sign off on having that created at the legislature it 01:09:34.520 --> 01:09:40.040 essentially is another taxing within the city and then two more questions I 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 01:09:46.120 --> 01:09:51.200 same as future years yes sir it is yeah future years out years is consistent one 01:09:51.200 --> 01:09:59.840 in the same that's correct thanks question yes go ahead yeah I looking at 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 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 01:10:11.120 --> 01:10:16.540 did the tour of the wastewater plant no we were told about there are some I 01:10:16.540 --> 01:10:22.840 believe called gray water lines that go to places like golf courses which is 01:10:22.840 --> 01:10:28.840 recycled water and I wondered if there were any thoughts about increasing the 01:10:28.840 --> 01:10:36.880 availability of of that type of water to meet obviously growing demands for 01:10:36.880 --> 01:10:42.520 watering turf and parkland and that sort of thing especially in regard to the 01:10:42.520 --> 01:10:49.200 what's going in the the amenities at Hunter Cole as they're presented now yes 01:10:49.200 --> 01:10:53.600 sir the the reuse water system is what you're describing at the wastewater 01:10:53.600 --> 01:11:02.280 plant and we do have pipelines to the big country club just south of 35 the 01:11:02.280 --> 01:11:06.480 names escaping me right now and also to the city of Garland's electric plant 01:11:06.480 --> 01:11:11.360 adjacent to the Lewisville water plant and while we have ample supply and 01:11:11.360 --> 01:11:17.280 capacity the customer demand is what would drive our growth there we don't 01:11:17.280 --> 01:11:22.680 have large users who would make the most benefit out of that that reuse water 01:11:22.680 --> 01:11:27.920 system right now okay thank you 01:11:32.040 --> 01:11:43.040 it's okay to go on the presentation system okay so revenue detail last time 01:11:43.040 --> 01:11:45.680 we were in front of you in August the third we provided you with a financial 01:11:45.680 --> 01:11:50.320 forecast or performer that really rolled up the revenues so we wanted to do is 01:11:50.320 --> 01:11:54.080 to provide you additional detail what makes up our 49 million dollars in 01:11:54.080 --> 01:11:59.000 revenue that you can see here so some of the major categories water residential 01:11:59.000 --> 01:12:02.360 revenues 20.5 million in the proposed budget it's currently what we're 01:12:02.360 --> 01:12:08.160 forecasting commercial revenue is about 17.6 and then you can see some impact 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 01:12:12.360 --> 01:12:16.080 the major categories that make up the revenue number within the water utility 01:12:16.080 --> 01:12:20.360 we do have that planned use of reserves of 3.9 million as I previously discussed 01:12:20.360 --> 01:12:33.440 to you on August the third for total resources about 52.9 water expenses this 01:12:33.440 --> 01:12:37.400 is by division so these are operational areas within the water utility so 01:12:37.400 --> 01:12:41.280 starting at the top you can see water administration utility administration 01:12:41.280 --> 01:12:46.040 this year we actually combined and separated this division so it was 01:12:46.040 --> 01:12:50.340 divided between water administration and public outreach we separated out public 01:12:50.340 --> 01:12:54.360 outreach to increase transparency of this group then you can see going down 01:12:54.360 --> 01:12:59.340 the page we have production distribution metering lab and miscellaneous and I do 01:12:59.340 --> 01:13:03.800 want to point out this miscellaneous category is your ROI your transfers are 01:13:03.800 --> 01:13:08.440 we involving cost of service transfers and franchise fees so that number is 01:13:08.440 --> 01:13:11.920 fairly large but that is what makes up that twenty one point two million dollar 01:13:11.920 --> 01:13:23.120 number distribution increases 58 percent between this year and next year on the 01:13:23.120 --> 01:13:28.300 slide you're just at what's the reason for the 58 percent increase in 01:13:28.300 --> 01:13:33.200 distribution pull this down really quick mr. Bafford that is revenue funded 01:13:33.200 --> 01:13:36.960 capital so what we do in each of those different operational areas if they have 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 01:13:40.480 --> 01:13:43.440 by operational area so that increase that you're seeing is simply because 01:13:43.440 --> 01:13:48.200 their revenue funding additional projects in their proposed budget okay 01:13:48.200 --> 01:14:01.840 yeah okay water expense a detail this is by category what we call family so you 01:14:01.840 --> 01:14:05.440 can see personal services materials and supplies maintenance and repairs 01:14:05.440 --> 01:14:09.800 insurance moving down the page some you can see those franchise fees I called 01:14:09.800 --> 01:14:14.320 out all ago debt service so I made a note to this several times in the 01:14:14.320 --> 01:14:18.800 presentation but as the fund continues to look at available funding revenue fund 01:14:18.800 --> 01:14:22.520 projects and really utilize any impact fee funding that may be out there for 01:14:22.520 --> 01:14:26.960 eligible projects you can see that debt service decreasing so I'll point this 01:14:26.960 --> 01:14:29.880 out to you on the financial forecast also I mean you see a little bit 01:14:29.880 --> 01:14:33.360 administrative transfers to the general fund so total expenses for the water 01:14:33.360 --> 01:14:40.640 utility and this fifty two point nine million this is the ten year forecast 01:14:40.640 --> 01:14:44.040 you've seen previously so I'll walk you back there really quick this does 01:14:44.040 --> 01:14:47.320 include the two percent rate decrease I'd mentioned earlier this does have an 01:14:47.320 --> 01:14:50.920 emphasis on revenue funding capital pertaining to the water plant I'll point 01:14:50.920 --> 01:14:54.360 that out to you so the adopted 2020 budget you can see here in this column 01:14:54.360 --> 01:14:58.920 this is the current fiscal year we have 2.9 million that we originally budgeted 01:14:58.920 --> 01:15:04.160 to use in reserves for total resources of 51 million expenses are 51 million 01:15:04.160 --> 01:15:09.120 also for a balanced budget utilizing those reserves so 0% for the rate 01:15:09.120 --> 01:15:13.520 increase or decrease in the current budget end of your estimate looking at 01:15:13.520 --> 01:15:16.880 the end of the year we do have some revenue impact associated with the 01:15:16.880 --> 01:15:20.600 pandemic of six hundred and seventeen thousand we will continue to refine this 01:15:20.600 --> 01:15:23.880 number and bring it back to you in December updated once we fully 01:15:23.880 --> 01:15:28.080 understand the impact of the pandemic on the utilities so we are forecasting 01:15:28.080 --> 01:15:33.960 about 2.8 million in reserve usage just about equal to the budget and of course 01:15:33.960 --> 01:15:37.240 zero percent rate increase or decrease the proposed budget you can see in this 01:15:37.240 --> 01:15:43.380 column we have revenue of 49 million 20,000 as we previously reviewed reserve 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 01:15:48.760 --> 01:15:54.560 previous page of 52.9 million and this is that two percent rate decrease that I 01:15:54.560 --> 01:15:58.160 had previously discussed with you moving down the page a little bit more as we 01:15:58.160 --> 01:16:02.000 reviewed last time on the operating reserve for the water fund is currently 01:16:02.000 --> 01:16:08.160 forecast to be 17.8 million ending fiscal year 2021 so next September we do 01:16:08.160 --> 01:16:12.400 have a separate reserve for the impact fee of 9 million dollars I want to point 01:16:12.400 --> 01:16:15.880 out as you go in the future years as I had mentioned above the emphasis on 01:16:15.880 --> 01:16:19.120 revenue funding capital pertaining to the water plant this 9 million actually 01:16:19.120 --> 01:16:23.640 goes away in 2025 we are using 9 million at the impact free reserve to revenue 01:16:23.640 --> 01:16:28.360 fund the design of the Lake Ray Roberts plant expansion keep moving down the 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 01:16:32.560 --> 01:16:38.040 bit of development plan lines impact the reserve is the 4 million and here's the 01:16:38.040 --> 01:16:40.600 reserve targets this is what we're looking at every year we're looking at 01:16:40.600 --> 01:16:43.840 each of the utilities to see the financial health of them so the minimum 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 01:16:49.500 --> 01:16:55.800 percentages so the minimum is 120 days or 33% the maximum is 180 days at 50% 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 01:16:59.960 --> 01:17:04.440 as we continue to utilize revenue funding and really look at those project 01:17:04.440 --> 01:17:08.600 fundings we've been able to stabilize this debt service going into the out 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 01:17:13.680 --> 01:17:18.360 million this is for the issuance of the construction money for the Lake Ray 01:17:18.360 --> 01:17:25.080 Roberts plant expansion this is the five-year capital plan for the water 01:17:25.080 --> 01:17:29.280 fund and fiscal year 2021 the proposed budget we have planned debt issuance of 01:17:29.280 --> 01:17:35.080 35.5 million as I said previously we will evaluate the capital plan throughout 01:17:35.080 --> 01:17:39.280 the fiscal year and see if we actually need to issue 35.5 million before we 01:17:39.280 --> 01:17:43.400 actually go out and issue that money we have revenue funding to 12.9 million for 01:17:43.400 --> 01:17:48.040 the water utility impact fee funding this is revenue funding of 2.7 a little 01:17:48.040 --> 01:17:52.240 bit aiding construction and some vehicle replacement for 275 thousand so for a 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 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 01:18:07.080 --> 01:18:10.600 million you saw on the previous slide so some of the major projects that we have 01:18:10.600 --> 01:18:13.760 planned for this upcoming fiscal year is the regulatory and performance upgrade 01:18:13.760 --> 01:18:19.520 project of 18 million dollars currently we do have 14.6 million in debt plan for 01:18:19.520 --> 01:18:23.600 this project and 3.4 million in revenue funding this project is important to the 01:18:23.600 --> 01:18:27.760 water utility because this enabled us to push that plan expansion out into the 01:18:27.760 --> 01:18:31.520 future years and minimize those rate increases that you saw last year we come 01:18:31.520 --> 01:18:36.840 forward to you with the 2019-2020 budget annual field service replacements this is 01:18:36.840 --> 01:18:40.240 something that is revenue funded in the water utility each year these are 01:18:40.240 --> 01:18:43.840 replacements of infrastructure in existing streets we have a contracted 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 01:18:48.400 --> 01:18:53.880 election 2019 so the bond election that was passed this last year we have 3.2 01:18:53.880 --> 01:18:58.240 million in there to support those projects the northwest transmission line 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 01:19:04.120 --> 01:19:08.640 North three locations of 10.9 which is dead issuance and then Elm and Locus 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 01:19:14.640 --> 01:19:21.120 million that's identifying the capital plan so proposed rate changes so as I 01:19:21.120 --> 01:19:24.000 mentioned earlier we do have two options in front of the public utility board 01:19:24.000 --> 01:19:28.960 today as we showed you last time we are recommending a 2% rate decrease so for 01:19:28.960 --> 01:19:32.080 the average residential customer we do base that on a three-quarter inch meter 01:19:32.080 --> 01:19:37.200 the current facility charge is $16 and the first tier and our water rates is 0 01:19:37.200 --> 01:19:43.000 to 15,000 gallons this is currently $4 and 15 cents per thousand gallons option 01:19:43.000 --> 01:19:46.400 one is based on our cost of service model this is the preferred option this 01:19:46.400 --> 01:19:51.440 this is stash recommendation this was the option that the PV of City Council 01:19:51.440 --> 01:19:55.880 both approved for wastewater and fiscal year 1819 when we did a 5% rate 01:19:55.880 --> 01:20:00.900 decrease the emphasis in this option minimize the decrease to the facility 01:20:00.900 --> 01:20:05.920 charge and decreases the volume charge more and option 2 it would actually this 01:20:05.920 --> 01:20:10.120 is a 2% across the board actually decrease the facility charge more and 01:20:10.120 --> 01:20:14.920 decrease the volume charge less so previous recommendations from our 01:20:14.920 --> 01:20:18.800 consultants is to minimize the total changes to the facility charge so option 01:20:18.800 --> 01:20:23.280 one does minimize that impact our facility charge it is important to note 01:20:23.280 --> 01:20:26.120 that the decrease for residential customers under both of these options 01:20:26.120 --> 01:20:32.720 would be the same which is $53 and 10 cents the commercial rate changes what 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 01:20:36.320 --> 01:20:39.720 gallons are actually not grouped into tiers on the commercial side so the 01:20:39.720 --> 01:20:44.280 current facility charge or two inch meter is 51 50 if PV gives us direction 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 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 01:20:54.040 --> 01:21:02.640 and then under option to go to 436 proposed rate changes these are our 01:21:02.640 --> 01:21:06.720 contracted rates so as I discussed with you previously we are looking to update 01:21:06.720 --> 01:21:10.920 these agreements based on signed agreements that we have with them so the 01:21:10.920 --> 01:21:14.800 upper Trinity regional water district our wholesale raw water service this is 01:21:14.800 --> 01:21:18.920 based on 85% of the Dallas wholesale rate so currently their rate is point seven 01:21:18.920 --> 01:21:24.920 four zero one per thousand gallon based on 85% of the Dallas wholesale rate that 01:21:24.920 --> 01:21:29.040 rate would go point seven five seven eight and the next one is the pass the 01:21:29.040 --> 01:21:33.400 rate the Lake Chapman and it is currently point zero two seven zero we do 01:21:33.400 --> 01:21:37.000 update this annually based on the CPI adjuster for the month of June so this 01:21:37.000 --> 01:21:42.920 rate would go to point zero two seven five these are grass we show to the 01:21:42.920 --> 01:21:45.560 public utility board and City Council every year as part of the budget 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 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 01:21:57.560 --> 01:22:02.960 decrease or water customers that rate would go to $53 and 10 cents and then 01:22:02.960 --> 01:22:06.720 usually what we do want to point this out the public utility board we do submit 01:22:06.720 --> 01:22:10.400 these back to you later this year once all these cities adopt their budget and 01:22:10.400 --> 01:22:14.200 they update their rates we'll provide that to you as an ACM update later in 01:22:14.200 --> 01:22:18.920 the year this is the commercial water service using a two-inch meters our 01:22:18.920 --> 01:22:24.480 current charge would be 233 69 with the proposed rate decrease and he should be 01:22:24.480 --> 01:22:29.560 excuse me back up our current rate is 268 31 with the proposed decrease it go 01:22:29.560 --> 01:22:36.320 to 233 69 so these bars should be switched in position it doesn't yeah I 01:22:36.320 --> 01:22:40.520 thought we'd caught that before the presentation I apologize for that next 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 01:22:44.880 --> 01:22:48.680 for the budget and rates we will submit the red line rate ordinances to you 01:22:48.680 --> 01:22:52.400 during this meeting however we do plan to get them to you well in advance of 01:22:52.400 --> 01:22:57.120 the September 14th date to allow you an adequate time to review them ask any 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 01:23:02.240 --> 01:23:06.600 public hearing on the budget and tax rates on September 15th and we will be 01:23:06.600 --> 01:23:10.880 looking for City Council's approval for the budget the tax rate the capital 01:23:10.880 --> 01:23:15.680 improvement plan and the rates reach to the utilities on September 22nd then as 01:23:15.680 --> 01:23:18.760 I mentioned earlier in December we will come back with that major budget rate 01:23:18.760 --> 01:23:30.360 discussion pull this down for questions go ahead Billy sheet number 22 on your 01:23:30.360 --> 01:23:39.800 display yes sir let me get it pulled up really quick there yes sir their number 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 01:23:46.960 --> 01:23:52.800 order yeah we have this individual budgets and y'all one long one yes sir 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 01:23:57.600 --> 01:24:05.580 income and you may have said something I missed it could you explain the net 01:24:05.580 --> 01:24:14.120 income why you show net income for future years and why not past years in 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 01:24:19.440 --> 01:24:24.680 with revenue funded capital what is the debt service doing that year and then 01:24:24.680 --> 01:24:28.440 what's the forecast I think your question so let me go up here really 01:24:28.440 --> 01:24:32.280 quick so and the proposed fiscal year 2021 we have planned use reserves of 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 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 01:24:45.160 --> 01:24:48.720 impact fee revenue funding and debt service we're pulling in a little bit 01:24:48.720 --> 01:24:53.560 more in fiscal year 2022 we've actually identified less projects to revenue fund 01:24:53.560 --> 01:24:59.080 impact with impact fee dollars so this is coming in to offset the eligible debt 01:24:59.080 --> 01:25:03.000 service of impact fee project so it actually benefits the fund I mean you 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 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 01:25:13.760 --> 01:25:17.360 so with impact fee funding we can pull it in and use it for two different 01:25:17.360 --> 01:25:21.220 purposes one purpose would be to revenue fund eligible projects that are not in 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 01:25:25.400 --> 01:25:30.440 second purpose would be to debt pay eligible debt service of a completed 01:25:30.440 --> 01:25:33.760 project that is already in the ground that's why you're seeing this 3.8 01:25:33.760 --> 01:25:37.840 million so we try to revenue fund as much as possible but some years based on 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 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 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 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 01:25:58.680 --> 01:26:03.080 history is FY 19 you can see that revenues was forty four point three 01:26:03.080 --> 01:26:06.720 million and expenses were forty seven so there was that you know three point six 01:26:06.720 --> 01:26:12.000 million dollar of imbalance and that was actually a drawdown so that year on it 01:26:12.000 --> 01:26:15.720 just in a revenue recurring revenue and current expenses it was it was a short 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 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 01:26:25.520 --> 01:26:30.200 the meantime until we decide where it can go well there is a rate 01:26:30.200 --> 01:26:34.440 stabilization component of that reserve and it's something that we're mindful of 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 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 01:26:46.260 --> 01:26:52.800 23 yes sir your impact fee projections mm-hmm 01:26:52.800 --> 01:26:59.040 seemed to go down in 2024 drastically and you'd mentioned or somebody had 01:26:59.040 --> 01:27:04.080 mentioned on the utility projections that the the coal hunter coal ranch was 01:27:04.080 --> 01:27:10.600 coming online that neck following year so I'm not clear why those impact fees 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 01:27:14.320 --> 01:27:18.260 the previous slide answer your question again so this number you see the two 01:27:18.260 --> 01:27:21.640 point seven the one point one the one point two and the forty five thousand 01:27:21.640 --> 01:27:26.120 this number is actually up here in this revenue funding line and that you can 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 01:27:30.800 --> 01:27:35.160 budgeting six point six million and impact the revenue coming into this fund 01:27:35.160 --> 01:27:38.600 every single year the number that you're seeing on this slide this is just the 01:27:38.600 --> 01:27:42.920 revenue funding of eligible projects so this number does decrease in the future 01:27:42.920 --> 01:27:46.320 years as we have less projects so we can actually revenue fund or currently 01:27:46.320 --> 01:27:50.200 planned to be constructed that can be revenue funding but we reevaluate this 01:27:50.200 --> 01:27:54.560 every year so this could possibly go up if projects pop up that are eligible for 01:27:54.560 --> 01:28:01.000 impact the funding so that 2025 couldn't go up exponentially absolutely based on 01:28:01.000 --> 01:28:04.040 the timeline of projects and the ones that are eligible and identified in our 01:28:04.040 --> 01:28:08.520 impact these study we use that document to guide us in this number and looking 01:28:08.520 --> 01:28:11.760 at what projects are gonna go to construction to win and how much is 01:28:11.760 --> 01:28:18.600 eligible for impact the funding okay very good thank you yeah we don't we 01:28:18.600 --> 01:28:22.500 don't spend on that we don't currently anticipate any decrease in impact fee 01:28:22.500 --> 01:28:26.520 revenue it's currently consistent at six point six million per year in the water 01:28:26.520 --> 01:28:30.440 utility right you got to collect it before you can spend it that's correct 01:28:30.440 --> 01:28:39.200 okay thank you all right any other questions I think they need direction on 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 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 01:28:57.160 --> 01:29:00.360 that into the red line rate ordinance that we bring back to you on September 01:29:00.360 --> 01:29:06.360 14th it will be based on the cost of service rate decrease and those meter 01:29:06.360 --> 01:29:13.120 decreases to those applied all the water rate classes are you talking about this 01:29:13.120 --> 01:29:16.880 would be for residential and commercial inside customers there's two components 01:29:16.880 --> 01:29:20.400 to their rate there's a facility charge and a volume charge that would imply to 01:29:20.400 --> 01:29:24.280 all those rates so if you're inside the city didn't customer for residential or 01:29:24.280 --> 01:29:28.760 commercial the 2% rate decrease would apply would apply to every rate class 01:29:28.760 --> 01:29:34.200 for the residential yes inside city limits that is correct thank you yeah 01:29:34.200 --> 01:29:39.040 and then I think in agreement yep and I think mr. cheek you had asked the 01:29:39.040 --> 01:29:42.680 question about the hydrant fee last time we met that will be that will be called 01:29:42.680 --> 01:29:45.960 out in the red line rate ordinance on September 14th but to give you the 01:29:45.960 --> 01:29:50.480 current rate is currently $5.20 per thousand gallon and the facility 01:29:50.480 --> 01:29:56.200 charges $1,100 so the per thousand gallon rate would go down to five dollars 01:29:56.200 --> 01:30:00.800 and ten cents based on this 2% rate decrease okay yeah thank you you're 01:30:00.800 --> 01:30:12.320 welcome let me skip over here all right so the next utility is wastewater the 01:30:12.320 --> 01:30:15.000 presentation objective is the same as water will go over the financial 01:30:15.000 --> 01:30:18.760 assumptions the revenue and expense detail the financial forecast the 01:30:18.760 --> 01:30:22.400 capital plan and the proposed rate changes which were wastewater there is 01:30:22.400 --> 01:30:26.600 no proposed rate changes currently being proposed so financial assumptions we do 01:30:26.600 --> 01:30:31.160 have the 2% growth forecast in the out years we are continuing to utilize the 01:30:31.160 --> 01:30:34.720 impact fee funding as we talked about in the water utility we do have the 01:30:34.720 --> 01:30:37.720 hunter coal ranch rate revenue included as we looked at the chart in the water 01:30:37.720 --> 01:30:42.720 utility and then as I said no rate increases for rate increases or 01:30:42.720 --> 01:30:47.320 decreases for the wastewater customers this year this is revenue detail for the 01:30:47.320 --> 01:30:51.120 wastewater utility some of the major categories as in water you can see 01:30:51.120 --> 01:30:57.700 wastewater residential 11.5 million wastewater commercial 13.1 we have some 01:30:57.700 --> 01:31:01.840 drainage fees coming in for residential commercial about 5.1 million drainage is 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 01:31:06.560 --> 01:31:11.120 million this impact fee revenue is consistent in each of the 10 years in 01:31:11.120 --> 01:31:16.280 the forecast but the revenue funding component of the expense varies year to 01:31:16.280 --> 01:31:22.040 year based on project timing this is the expense detail by category so some of 01:31:22.040 --> 01:31:25.400 the major categories you can see personal services here at the top of 8.4 01:31:25.400 --> 01:31:30.480 million capital outlays that revenue funding of projects is 6.5 and then our 01:31:30.480 --> 01:31:34.720 debt service is 7 million so these expenses and all these categories add up 01:31:34.720 --> 01:31:42.200 to 36.9 million in expenses expense by division same thing as in water we wanted 01:31:42.200 --> 01:31:45.240 to show you the operational areas within wastewater so we have administration 01:31:45.240 --> 01:31:49.160 reclamation collections filled service beneficial reuse the laboratory 01:31:49.160 --> 01:31:53.040 industrial pretreatment drainage watershed protection we have some 01:31:53.040 --> 01:31:56.440 miscellaneous as a reminder this includes return on investment franchise 01:31:56.440 --> 01:32:01.920 fees and our cost of service transfers the drain is miscellaneous of 720,000 01:32:01.920 --> 01:32:07.760 which houses the drainage debt service and then as a reminder I think I 01:32:07.760 --> 01:32:10.800 mentioned this in the water presentation but wastewater administration this year 01:32:10.800 --> 01:32:14.320 does show to be going away this has actually been combined with water 01:32:14.320 --> 01:32:18.240 administration so you'd see an increase in the transfer from wastewater to water 01:32:18.240 --> 01:32:23.520 to fund their portion of administration but staff felt it was necessary to 01:32:23.520 --> 01:32:28.720 combine these two groups so it's in your forecast for the wastewater utility 01:32:28.720 --> 01:32:33.120 starting just like water you can see the adopted 2020 budget here in this column 01:32:33.120 --> 01:32:37.680 we did have planned use of reserves of 1.6 million so we had zero rate 01:32:37.680 --> 01:32:41.800 increases or decreases in the current proposed budget into your estimate we 01:32:41.800 --> 01:32:46.640 are planning to come in fairly close to that adopted budget about 1.9 million in 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 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 01:32:54.800 --> 01:32:58.760 public utility board in December once we fully understand the impact of the 01:32:58.760 --> 01:33:04.080 pandemic to the utilities and then the proposed budget is in this column so we 01:33:04.080 --> 01:33:08.000 have thirty seven point one million in total revenue for the wastewater utility 01:33:08.000 --> 01:33:12.560 you can see expenses of thirty six point nine so for net income about two 01:33:12.560 --> 01:33:16.960 hundred ninety two thousand was zero rate changes so zero rate increases or 01:33:16.960 --> 01:33:20.440 decreases for wastewater customers moving down the page a little bit you 01:33:20.440 --> 01:33:24.600 can see operating and cap or the operating reserve of thirteen point four 01:33:24.600 --> 01:33:29.640 million it is within the reserve requirement of ten point three to fourteen 01:33:29.640 --> 01:33:33.240 point four the reserve requirement is a little bit different for wastewater and 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 01:33:36.760 --> 01:33:39.760 twenty eight percent on the minimum side and thirty nine percent on the maximum 01:33:39.760 --> 01:33:44.440 so we are well within that requirement going down to the future years you can 01:33:44.440 --> 01:33:48.280 see it does start to dip down a little bit slightly drop in below in fiscal 01:33:48.280 --> 01:33:52.880 year 2026 but we are currently not showing rate increases or decreases in 01:33:52.880 --> 01:33:58.680 the utility I think that's the major things on this slide I wanted to show 01:33:58.680 --> 01:34:02.560 you today come back to it if you may has any questions the drainage five-year 01:34:02.560 --> 01:34:06.920 forecast this is a component of the forecast you use to solve so there are two 01:34:06.920 --> 01:34:12.120 different major revenue sources for the drainage utility in 2021 you can see 01:34:12.120 --> 01:34:16.200 residential drainage fees equates to about one point nine million revenue 01:34:16.200 --> 01:34:20.320 non-residential which is the same thing as commercial counselor three point one 01:34:20.320 --> 01:34:25.360 so for a total of five point five here the major expense categories for the 01:34:25.360 --> 01:34:29.800 drainage utility personal services at one point nine capital outlay is really 01:34:29.800 --> 01:34:33.600 revenue funding those drainage projects of one point eight million so total 01:34:33.600 --> 01:34:37.880 expenses of five point five we do set one million dollars aside for a drainage 01:34:37.880 --> 01:34:41.040 reserve this is a component of the wastewater reserve but we do show it 01:34:41.040 --> 01:34:46.360 separately for transparency this is the five-year capital plan for the wastewater 01:34:46.360 --> 01:34:51.920 utility so similar to water we do have a debt issuance plan for wastewater for 01:34:51.920 --> 01:34:55.760 wastewater is thirty two point eight million as I said previously in water we 01:34:55.760 --> 01:34:59.120 will continue to evaluate projects and the amount of funding available for 01:34:59.120 --> 01:35:02.760 issuing this debt for the utility and determine the exact amount we need to 01:35:02.760 --> 01:35:06.960 issue in the future years revenue funding you can see five point three 01:35:06.960 --> 01:35:10.480 million this is coming from the operating fund impact fee funding of 01:35:10.480 --> 01:35:14.320 five hundred thousand this is impact fee funding eligible projects as we 01:35:14.320 --> 01:35:17.480 discussed in water a little bit of aid in construction and some vehicle 01:35:17.480 --> 01:35:21.600 replacement of one point two million so total CIP for the wastewater utility of 01:35:21.600 --> 01:35:27.400 forty million dollars in fiscal year 2021 so major projects for the 01:35:27.400 --> 01:35:30.760 wastewater utility this does make up twenty nine point nine million of the 01:35:30.760 --> 01:35:34.520 forty million dollars in proposed projects so going down the list here you 01:35:34.520 --> 01:35:37.840 can see the Clear Creek Basin pump station of three million dollars we are 01:35:37.840 --> 01:35:41.740 currently planning to debt fund this project the solids handling improvements 01:35:41.740 --> 01:35:44.560 of eight point three million we're planning to debt fund that project also 01:35:44.560 --> 01:35:48.200 we do budget for the annual field service replacement similar to water 01:35:48.200 --> 01:35:52.560 this is a revenue funded project which is two point six million and then we do 01:35:52.560 --> 01:35:55.520 have some contracted field service replacement which is consistent with 01:35:55.520 --> 01:35:59.680 water we are issuing this a debt so two point six million in debt issuance the 01:35:59.680 --> 01:36:03.600 bond election to support the recently approved bond package we do have two 01:36:03.600 --> 01:36:06.840 point nine million in debt issuance for that and then the Hickory Creek 01:36:06.840 --> 01:36:10.940 interceptor three three point five the Hickory Creek interceptor lining of two 01:36:10.940 --> 01:36:15.040 point three and the Elm Street sewer line replacement phase two two point nine 01:36:15.040 --> 01:36:18.720 then we got some textile relocation similar to water of one point eight 01:36:18.720 --> 01:36:21.820 million so total of twenty nine point nine million but these are the major 01:36:21.820 --> 01:36:27.240 projects included in the capital plan for next year this is the residential 01:36:27.240 --> 01:36:31.560 wastewater rate comparison as a reminder we did decrease this recently I think it 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 01:36:36.640 --> 01:36:40.360 average water usage of residential customers so you can see the wastewater 01:36:40.360 --> 01:36:48.160 rate would be 26 23 based on 5,400 gallons commercial we based it on 50 01:36:48.160 --> 01:36:54.880 thousand gallons so you see the current fee would be 284 25 and then commercial 01:36:54.880 --> 01:37:00.200 we also show you a 200,000 gallon comparison that rate would be 707 86 and 01:37:00.200 --> 01:37:04.080 as previously said as these cities adopt their budget we will provide you a memo 01:37:04.080 --> 01:37:07.640 later this year with updated rate charts that provide updated rates for each of 01:37:07.640 --> 01:37:11.800 the cities the next steps we talked about previously we will get that 01:37:11.800 --> 01:37:15.420 redline ordinance to you well in advance of the September 14th meeting to 01:37:15.420 --> 01:37:20.040 allow for questions and then we can address those on September 14th and then 01:37:20.040 --> 01:37:23.440 going through you can see budget adoption on September 22nd for the City 01:37:23.440 --> 01:37:33.120 Council includes wastewater all right questions 01:37:33.120 --> 01:37:43.040 sorry I meant to ask this initial onset of the utility questions and maybe 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 01:37:48.920 --> 01:37:54.640 somewhere in there they're not provided in the material in your backup they will 01:37:54.640 --> 01:37:59.640 be part of the rate ornance when it comes forward to you we can provide that 01:37:59.640 --> 01:38:03.000 information to you on September 14th if you'd like to see that Billy we 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 01:38:07.760 --> 01:38:17.440 you anybody else Charlie go ahead one quick comment Nick on the schedules I 01:38:17.440 --> 01:38:23.920 see from this department the word for employment employee is often used 01:38:23.920 --> 01:38:30.760 personal services I wonder if we might consider calling that either personnel or 01:38:30.760 --> 01:38:37.720 payroll or something to me person personal services sounds like a pedicure 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 01:38:42.320 --> 01:38:48.280 it's they're getting expensive sorry they're getting very expensive these 01:38:48.280 --> 01:38:54.080 days too our previous finance director brought that to my attention years ago 01:38:54.080 --> 01:38:59.160 but we are in the process of updating that the budget books if you go 01:38:59.160 --> 01:39:02.000 historically and did have that differences between the two so we're 01:39:02.000 --> 01:39:05.240 trying to convert over to personnel like you're talking about we just haven't got 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 01:39:12.840 --> 01:39:24.000 all right then solid waste okay so presentation objectives and similar to 01:39:24.000 --> 01:39:26.840 the other utilities will review the financial assumptions the revenue 01:39:26.840 --> 01:39:31.040 expense detail the financial forecast the capital improvement plan the proposed 01:39:31.040 --> 01:39:34.360 rate changes and address any questions that you may have regarding solid waste 01:39:34.360 --> 01:39:38.400 so revenue forecast consistent with the rest of the utility is a 2% growth 01:39:38.400 --> 01:39:43.520 forecast in the out years we are the anticipated wholesale agreements are 01:39:43.520 --> 01:39:48.000 currently projected to end in fiscal year 2023 pending re-approval by the 01:39:48.000 --> 01:39:51.320 public utility board and City Council we did take the conservative approach and 01:39:51.320 --> 01:39:55.200 actually back them out of the forecast the expense detail we have a 2% growth 01:39:55.200 --> 01:39:58.840 forecast in the out years and sale construction was moved from fiscal year 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 01:40:02.640 --> 01:40:07.040 gonna be revenue funded and then rates we are proposing a 5% residential rate 01:40:07.040 --> 01:40:11.360 decrease this equates to a $1 decrease per month for the average residential 01:40:11.360 --> 01:40:15.280 customer with a standard cart we are looking to make minimum updates the 01:40:15.280 --> 01:40:19.280 contracted rates for example the wholesale agreements and then minimum 01:40:19.280 --> 01:40:24.920 updates to the valet rate commercial rate and gate disposal rate the solid 01:40:24.920 --> 01:40:28.880 waste revenue detail similar for the utilities you can see the detail 01:40:28.880 --> 01:40:34.440 expanded here in this page so the major categories residential revenue of 5.1 01:40:34.440 --> 01:40:39.320 million residential recycling revenue of 4.8 and you can see some front load and 01:40:39.320 --> 01:40:43.480 side load revenue so your commercial business revenue of 9.4 roll off open 01:40:43.480 --> 01:40:49.960 top revenue of 7.2 landfill gate disposal rate revenue which is 4.8 you 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 01:40:54.800 --> 01:40:59.320 landfill increase and then you can see the landfill wholesale revenue increasing 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 01:41:03.440 --> 01:41:09.720 and then total revenue of 39.8 we do have some reserve usage in the solid 01:41:09.720 --> 01:41:17.800 waste fund of 4.3 for total resources of 44.1 this is expense detail by 01:41:17.800 --> 01:41:21.640 operational area similar to water and wastewater so you can see solid waste 01:41:21.640 --> 01:41:24.840 administration of 3.2 going down the page some of the bigger 01:41:24.840 --> 01:41:29.200 operational areas residential collections of 5.9 commercial collections 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 01:41:35.840 --> 01:41:39.560 reminder this is return on investment franchise fees and those cost of service 01:41:39.560 --> 01:41:44.640 transfers it's always expense detail by category you can see the personnel 01:41:44.640 --> 01:41:51.480 expenses 10.8 some of the major other categories franchise fees of 1.9 01:41:51.480 --> 01:41:57.440 operations of 6.8 the debt service is 6.9 which steadily decreases you can see 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 01:42:03.360 --> 01:42:07.120 continued continues to focus on revenue funding of projects and minimize the 01:42:07.120 --> 01:42:10.640 debt issuance the cost of service transfer as I mentioned earlier you can 01:42:10.640 --> 01:42:15.400 see a 1.8 million other cost of service transfers which would be tech services 01:42:15.400 --> 01:42:20.480 human resources and other ones would be 3.5 and your capital outlay is 10.7 01:42:20.480 --> 01:42:26.160 which does include that cell development construction five-year forecast with a 01:42:26.160 --> 01:42:29.640 solid waste fund you can see the adopted budget here in this column we did have 01:42:29.640 --> 01:42:34.720 an adopted budget with use of reserves of three million dollars total expenses 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 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 01:42:43.640 --> 01:42:50.080 number total revenue of 38.1 million and total expenses of 36.6 so we are 01:42:50.080 --> 01:42:53.840 showing a net profit of 1.4 million currently forecasted in the end of year 01:42:53.840 --> 01:42:58.800 for 2020 the proposed 2021 budget is here in this dotted line you can see the 01:42:58.800 --> 01:43:02.720 reserve usage I mentioned to you on the previous slide of 4.3 million so total 01:43:02.720 --> 01:43:09.680 resources of 44.1 total expenses of 44.1 moving down the page and the operating 01:43:09.680 --> 01:43:14.800 reserve is 8.3 million this is in the reserve targets for the solid waste fund 01:43:14.800 --> 01:43:19.880 which is 6.2 million to 7.9 and the percentages are different for solid 01:43:19.880 --> 01:43:25.480 waste and air for water wastewater so 51 days being the minimum or 14% 65 days 01:43:25.480 --> 01:43:30.640 or 18% being the maximum so we are within that reserve target in in the 01:43:30.640 --> 01:43:33.960 current proposed budget as you go in the future years we do slightly drop below 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 01:43:41.680 --> 01:43:45.000 thing I want to point out this rate decrease is possible as I said you know 01:43:45.000 --> 01:43:48.480 with the funds continued emphasis on revenue funding and decreasing the 01:43:48.480 --> 01:43:52.560 amount of debt issuance and the solid waste fund you can see the debt service 01:43:52.560 --> 01:43:57.240 decreasing from 8.9 million to 6.9 and it does continue to decrease in the 01:43:57.240 --> 01:44:00.720 future years you can actually see it getting down to 3.9 million in the 01:44:00.720 --> 01:44:05.000 future so the fund is doing a great job at revenue funding projects and 01:44:05.000 --> 01:44:08.800 minimizing debt issuances this is something I reviewed with you on August 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 01:44:12.640 --> 01:44:16.200 one plan debt issuance of three million dollars this is for a fleet annexed 01:44:16.200 --> 01:44:20.720 building at the solid waste facility we do have six point two five million in 01:44:20.720 --> 01:44:24.480 revenue funding this is for that next cell development and design construction 01:44:24.480 --> 01:44:28.240 of that cell vehicle replacement the fund is looking to revenue fund the 01:44:28.240 --> 01:44:32.840 vehicles this upcoming fiscal year of 3.3 million so the total capital plan of 01:44:32.840 --> 01:44:40.880 12.6 million detailed five-year capital plan so each project detailed out you can 01:44:40.880 --> 01:44:46.200 see that landfill cell for construction of 4.9 4.5 million which is revenue 01:44:46.200 --> 01:44:51.240 funding landfill cell construction for quality assurance of 450,000 for revenue 01:44:51.240 --> 01:44:54.840 funding landfill equipment of 1.3 million which is gonna be revenue 01:44:54.840 --> 01:44:58.960 funding you can see that fleet building construction I had mentioned about debt 01:44:58.960 --> 01:45:02.680 issuance of three million dollars and then you can see the commercial group by 01:45:02.680 --> 01:45:05.960 different operational areas so you can see commercial equipment from one 01:45:05.960 --> 01:45:09.360 million thirty thousand some HCC equipment which is the home chemical 01:45:09.360 --> 01:45:14.000 collection of sixty thousand residential equipment of two point oh five two 01:45:14.000 --> 01:45:17.880 million and then landfill equipment of two hundred fifteen thousand so twelve 01:45:17.880 --> 01:45:23.240 point six total on capital plan these are the proposed rate changes for the 01:45:23.240 --> 01:45:26.520 solid waste funds as we discussed previously we are looking to decrease 01:45:26.520 --> 01:45:30.080 the valet shared service for commercial businesses that are currently in the 01:45:30.080 --> 01:45:34.560 tier two structure currently that rate is 138 28 we are looking to reduce it to 01:45:34.560 --> 01:45:40.080 74 16 based on our cost of service model this is the recommended rate yard waste 01:45:40.080 --> 01:45:43.440 collection for commercial businesses this is currently not being offered to 01:45:43.440 --> 01:45:46.800 be concerned consistent with residential we are looking to implement this at 01:45:46.800 --> 01:45:52.360 seventy five dollars per hour built on 15 minute increments and the standard 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 01:45:58.120 --> 01:46:02.160 dollar decrease or residential customers as we talked about the large cart 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 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 01:46:10.860 --> 01:46:16.800 additional large cart would go from 1738 to 1657 and this is based on the cost 01:46:16.800 --> 01:46:20.360 of service and we would be looking to decrease that point eight one cents 01:46:20.360 --> 01:46:24.160 landfill gate disposal rate for residential and businesses that are 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 01:46:28.600 --> 01:46:32.560 continue to see that increased volume coming into the landfill and then the 01:46:32.560 --> 01:46:37.360 sludge disposal rate dewatered landfill looking to increase them 46 to 50 so an 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 01:46:41.320 --> 01:46:43.600 with the Public Utility Board we are looking to increase the wholesale 01:46:43.600 --> 01:46:49.280 agreements by 2.3% which is a CPI rate adjuster identified in the contracts for 01:46:49.280 --> 01:46:57.080 those agreements so this does equate for $400,000 in additional revenue in 2021 so 01:46:57.080 --> 01:47:00.880 residential rate comparison you can see our current rate here in this column 01:47:00.880 --> 01:47:06.680 since the 2151 with that one dollar decrease to be $20 and 51 cents we will 01:47:06.680 --> 01:47:09.640 update these rates after budget adoption by these other cities and bring that 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 01:47:14.480 --> 01:47:17.800 I mean September 14th as we talked about the red line rate ordinance with these 01:47:17.800 --> 01:47:21.080 rate changes will come forward to you for your approval then we'll send those 01:47:21.080 --> 01:47:24.680 to you well in advance and then budget adoption is currently scheduled for 01:47:24.680 --> 01:47:46.960 September 22nd alright could you go back to slide 49 please yes okay what 01:47:46.960 --> 01:47:59.600 accounts for the drop in commercial recycling revenue a lot of this is based 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 01:48:05.680 --> 01:48:10.240 we're getting paid for those recycling commodities and then also the city did 01:48:10.240 --> 01:48:15.400 previously in prior years recycle some metal material but I believe Brian 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 01:48:24.200 --> 01:48:28.960 that is correct we are there are several things that go into the residential 01:48:28.960 --> 01:48:34.880 with the excuse me the commercial recycling drop part of that has to do 01:48:34.880 --> 01:48:43.880 with just the general value but we also had I believe in the original rate 01:48:43.880 --> 01:48:49.200 structure we had it and we had an element in there for disposal when we 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 01:48:54.760 --> 01:49:00.800 of an overcharge that was occurring in previous years we see that right now all 01:49:00.800 --> 01:49:06.760 they're paying for is the collection and the sale not the disposal piece of that 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 01:49:16.760 --> 01:49:23.720 what are the what is what does landfill closure mean what is that encompass so 01:49:23.720 --> 01:49:29.280 this is a dedicated reserve the city has set up to close the landfill facility 01:49:29.280 --> 01:49:33.600 when that date will come in the future we do transfer this money from the 01:49:33.600 --> 01:49:37.920 operating reserve to that dedicated reserve each year what we've seen with 01:49:37.920 --> 01:49:41.840 the with the landfill recently bought some new compactors they've increased 01:49:41.840 --> 01:49:46.640 their capacity of compaction at the landfill so looking at that cost of 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 01:49:51.840 --> 01:49:55.040 actually does say we're fully funded this fiscal year so we're not looking to 01:49:55.040 --> 01:49:59.160 make that transfer however we are continuing that transfer in the future 01:49:59.160 --> 01:50:02.520 years it will not be removed from the budget but we did have a one-time 01:50:02.520 --> 01:50:07.720 decrease or one time not transferring that money this fiscal year so hopefully 01:50:07.720 --> 01:50:10.920 the answer is your question this is a transfer to a dedicated reserve to close 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 01:50:16.800 --> 01:50:23.640 that we have the solid waste strategic management plan on the horizon and are 01:50:23.640 --> 01:50:30.360 these budget figures given to the consultant who will be doing this plan 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 01:50:37.440 --> 01:50:44.040 budget or is this budget subject to change based upon what based upon the 01:50:44.040 --> 01:50:50.360 findings of the strategic plan I'm gonna ask Brian to speak to the strategic plan 01:50:50.360 --> 01:50:56.280 he is the one that is the city's liaison liaison for that yeah Brian 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 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 01:51:07.200 --> 01:51:12.000 correct that part of this the development of the strategy will be 01:51:12.000 --> 01:51:17.560 reviewing previous both operational and fiscal constraints and as and as we move 01:51:17.560 --> 01:51:23.400 forward using those to determine exactly you know what impacts are going into the 01:51:23.400 --> 01:51:27.600 system so we can make proper decisions moving forward in a plan to how we're 01:51:27.600 --> 01:51:32.880 going to implement you know increase diversion control cost minimize 01:51:32.880 --> 01:51:38.840 environmental impact so that will be part of the the evaluation as we're 01:51:38.840 --> 01:51:43.320 looking forward here and in the next budget year well you will probably see 01:51:43.320 --> 01:51:50.440 the impacts of that evaluation now this the the the approval this strategy should 01:51:50.440 --> 01:51:57.680 be on your I believe the September 14th or the meeting following so we'll have 01:51:57.680 --> 01:52:03.040 an opportunity to discuss that a little more in depth thank you very much 01:52:03.040 --> 01:52:10.560 you're welcome question question on the list of capital projects for this there 01:52:10.560 --> 01:52:15.920 was something called a fleet building construction can you explain what that 01:52:15.920 --> 01:52:22.320 is is that a new structure for working on equipment is it an addition to an 01:52:22.320 --> 01:52:27.280 existing one or just what is that this would be for a new facility at the 01:52:27.280 --> 01:52:31.720 solid waste site for working on heavy-duty equipment out there so it is 01:52:31.720 --> 01:52:36.120 not expansion of an existing facility being new construction all right thank 01:52:36.120 --> 01:52:46.320 you other questions just want to thank solid waste for the way they take care 01:52:46.320 --> 01:52:52.640 of people who need assistance with their carts and their trash and the recycling 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 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 01:53:03.640 --> 01:53:07.240 that over is that it costs to help out people who need assistance and thank you 01:53:07.240 --> 01:53:17.440 for doing it it's a nice service yeah thank you all right then the electric 01:53:17.440 --> 01:53:21.400 utility is next and this is a two-part presentation so the first part of the 01:53:21.400 --> 01:53:24.680 presentation I'll walk through the budget information with you then Terry 01:53:24.680 --> 01:53:28.920 Nolte will come up and present the deck financial pro forma and some supporting 01:53:28.920 --> 01:53:42.080 slides so presentation objectives similar to the utilities probably need 01:53:42.080 --> 01:53:45.960 to go through these again with you again but load forecast we'll look at really 01:53:45.960 --> 01:53:50.680 quick financial forecast the capital improvement plan the CIP questions that 01:53:50.680 --> 01:53:54.280 you have at the end we're currently not proposing rate changes for the electric 01:53:54.280 --> 01:54:00.360 utility this fiscal year so financial assumptions the average load growth of 01:54:00.360 --> 01:54:05.680 3.2 percent over the first five years is included in the forecast we have 01:54:05.680 --> 01:54:09.800 decreased the t-cost allowed rate of return which is included in other 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 01:54:13.000 --> 01:54:17.960 eight point zero four percent through fiscal year 2022 it does decrease to 16 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 01:54:22.680 --> 01:54:28.560 expenses the ROI to the city to the general fund from electric is currently 01:54:28.560 --> 01:54:32.160 at six percent in the proposed budget this was a direction the City Council 01:54:32.160 --> 01:54:36.480 and this does go through the end of fiscal year 2022 and then it does return 01:54:36.480 --> 01:54:40.920 to 3.5 percent in fiscal year 2023 and the current performance that you're 01:54:40.920 --> 01:54:44.600 looking at does not anticipate any sale that Gibbons Creek facility however we do 01:54:44.600 --> 01:54:48.280 have 21 million dollars in decommissioning expenses accounted for in 01:54:48.280 --> 01:54:52.720 the pro forma and then we have 1.7 million per year in payroll reduction 01:54:52.720 --> 01:54:57.920 costs versus the 2020 budget out of those due to the program that was just 01:54:57.920 --> 01:55:01.920 recently completed and so on this table here you can see the end of your estimate 01:55:01.920 --> 01:55:10.000 2019 you can see in this green line cross 2020 you can see residential seven 01:55:10.000 --> 01:55:14.400 point seven percent commercial is six point four percent and industrial four 01:55:14.400 --> 01:55:19.000 point eight percent and then other three point three so this is the load forecast 01:55:19.000 --> 01:55:21.800 for the electric fund and what supports the revenues in the current proposed 01:55:21.800 --> 01:55:28.600 budget the electric revenue detail so you can see the non-deck base rate 01:55:28.600 --> 01:55:32.640 revenue of eighty eight point eight million you can see the ECA revenues I 01:55:32.640 --> 01:55:36.280 think mr. cheek had mentioned earlier fifty three point four million you can 01:55:36.280 --> 01:55:39.960 see the non-operating revenues of sixty four million and you can see some 01:55:39.960 --> 01:55:44.400 interest income of six hundred and fifty thousand so total revenue non-deck related 01:55:44.400 --> 01:55:47.960 is two hundred and six point eight million and then you can see the deck 01:55:47.960 --> 01:55:51.640 room revenues being put in there of twenty four point five bringing the 01:55:51.640 --> 01:55:55.720 total revenues to two hundred and thirty one point four use reserves you know 01:55:55.720 --> 01:55:58.920 having playing use reserves in the proposed budget so you can see total 01:55:58.920 --> 01:56:04.620 resources are equal to the revenue electric expenses by divisions these are 01:56:04.620 --> 01:56:07.720 operational areas similar to the utilities we wanted to show these to you 01:56:07.720 --> 01:56:12.280 you can see administration was sixty seven point two power supply 01:56:12.280 --> 01:56:15.440 administration this upcoming fiscal year will be combined with electric 01:56:15.440 --> 01:56:19.600 administration so it does go to zero energy management of four point three 01:56:19.600 --> 01:56:23.240 some of the major other operational categories you can see is wholesale 01:56:23.240 --> 01:56:27.000 power expense this is in a separate division we do keep this separate for 01:56:27.000 --> 01:56:31.560 purchase power ninety two point two million the Denton Energy Center of thirty 01:56:31.560 --> 01:56:34.920 three point four million and then moving down the page a little bit you can see 01:56:34.920 --> 01:56:38.560 operation and maintenance of six million and then some of the other ones 01:56:38.560 --> 01:56:43.320 engineering a three point nine so total expenses of two thirty one point one 01:56:43.320 --> 01:56:50.600 million expenses by detail so for my category you can see dropping down the 01:56:50.600 --> 01:56:54.000 page here you can see the personnel expenses of twenty point eight million 01:56:54.000 --> 01:56:58.120 some of the other major categories this is that return on investment that I 01:56:58.120 --> 01:57:02.320 mentioned you can see it going from six point six million in the current adopted 01:57:02.320 --> 01:57:06.100 budget to eight point eight this does reflect the increase this current 01:57:06.100 --> 01:57:08.880 fiscal year so we are planning to come in over budget for the return on 01:57:08.880 --> 01:57:12.720 investment and then this is the true six percent for the entire fiscal year of 01:57:12.720 --> 01:57:17.320 eleven point nine million franchise fees and you can see nine point nine million 01:57:17.320 --> 01:57:22.360 for franchise fees operations is seven point three and then the DME non-debt 01:57:22.360 --> 01:57:26.680 other debt is thirty point five and then we have separated out the deck debt for 01:57:26.680 --> 01:57:30.240 transparency is seventeen point two taking all these different expense 01:57:30.240 --> 01:57:33.360 categories we do come up with two hundred thirty one point one million in 01:57:33.360 --> 01:57:39.320 expenses it's the five-year forecast electric fund you can see there is no 01:57:39.320 --> 01:57:43.240 rate increases we do have that reduced t-cost revenue that I pointed out a 01:57:43.240 --> 01:57:47.680 couple slides ago so the adopted 2020 budget is here in this column we did 01:57:47.680 --> 01:57:51.880 have an adopted budget with planned use of reserves of six point nine million for 01:57:51.880 --> 01:57:55.840 total resources of two hundred and twenty nine point two expenses are two 01:57:55.840 --> 01:58:00.180 hundred and twenty nine point two with those zero rate increases or decreases in 01:58:00.180 --> 01:58:05.320 2020 and the budget included a forty eight point seven million dollar ending 01:58:05.320 --> 01:58:08.880 operating reserve interviewer estimate we are planning to come in a little bit 01:58:08.880 --> 01:58:12.920 better about three point four million so total resources of two hundred and 01:58:12.920 --> 01:58:17.400 twenty nine point five that was zero rate increases or decreases the proposed 01:58:17.400 --> 01:58:21.200 budget is twenty twenty one is here in this dotted line you can see total 01:58:21.200 --> 01:58:24.880 revenue is equal to total resources of two hundred and thirty one point four 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 01:58:30.600 --> 01:58:34.640 balanced budget and then the zero zero rate increases for the upcoming fiscal 01:58:34.640 --> 01:58:38.640 year ending operating reserve is seventy three point five million in the electric 01:58:38.640 --> 01:58:41.920 fund and the reserve requirements of this fund are different than the other 01:58:41.920 --> 01:58:46.420 utilities minimum of sixty days or sixteen percent the maximum or seventy 01:58:46.420 --> 01:58:50.120 five days or twenty one percent so that minimum amount being thirty six point 01:58:50.120 --> 01:58:55.120 nine million that maximum amount being forty eight point five going into the 01:58:55.120 --> 01:58:58.400 future years what I want to point out is the reserve does stay above the minimum 01:58:58.400 --> 01:59:02.120 reserve requirement in each of the five years getting to forty five point two 01:59:02.120 --> 01:59:07.220 million in the future years jumping back up the page really quick what I wanted 01:59:07.220 --> 01:59:10.560 to point out you see this non-rate revenue this is the decrease that you 01:59:10.560 --> 01:59:14.480 see from sixty four point six million in the proposed twenty twenty one budget to 01:59:14.480 --> 01:59:18.020 the forty eight point two million you see in twenty twenty three this is the 01:59:18.020 --> 01:59:21.840 decrypt decrease in that t-cost rate of return that we discussed a couple slides 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 01:59:26.480 --> 01:59:30.040 or franchise fees you can see in the proposed budget or twenty one point eight 01:59:30.040 --> 01:59:33.720 million you can see that decrease back down to three point five percent for 01:59:33.720 --> 01:59:37.580 the ROI to the general fund going back down to sixteen point three in fiscal 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 01:59:43.920 --> 01:59:47.840 twenty twenty one the proposed budget we have a total of thirty two point two 01:59:47.840 --> 01:59:51.800 million in distribution projects transmission which just does include the 01:59:51.800 --> 01:59:55.880 Hickory Creek substation facility of twenty point eight million so thirty two 01:59:55.880 --> 02:00:01.240 point eight million total grand total would be sixty five million dollars in 02:00:01.240 --> 02:00:04.920 projects similar to the other utilities we will look at this utility throughout 02:00:04.920 --> 02:00:08.480 the year look at available funding see what projects are scheduled to go to 02:00:08.480 --> 02:00:12.320 construction before issuing this debt amount aid in construction nine hundred 02:00:12.320 --> 02:00:17.400 sixty five thousand CEO issuance sixty one point five with a little bit of 02:00:17.400 --> 02:00:20.800 revenue funding of two point six million is how that sixty five million 02:00:20.800 --> 02:00:27.720 breaks down five-year capital plan this is on multiple slides I will go through 02:00:27.720 --> 02:00:30.440 here and hit a couple of the major projects if you have any questions we 02:00:30.440 --> 02:00:32.920 can address them afterwards and Terry's here to help me walk us through these 02:00:32.920 --> 02:00:38.600 also so the CI CIS enterprise system of one point five million is currently 02:00:38.600 --> 02:00:42.840 included in the capital plan moving down the page to point out some other large 02:00:42.840 --> 02:00:46.880 items you can see transformers and equipment of one point nine feeders and 02:00:46.880 --> 02:00:50.400 extension and improvements of nine million new residential and commercial 02:00:50.400 --> 02:00:53.720 development of three million and overhead to underground conversions of 02:00:53.720 --> 02:00:57.400 two million so this page makes up a total of eighteen point two million in 02:00:57.400 --> 02:01:05.040 projects the next page you can see the Hickory Creek substation facility that I 02:01:05.040 --> 02:01:08.360 mentioned on the previous couple slides of seventeen point four million is 02:01:08.360 --> 02:01:12.040 accounted for in this budget and there are some transmission lines associated 02:01:12.040 --> 02:01:15.880 that substation you can see a three point seven million and then you can see 02:01:15.880 --> 02:01:20.840 the Eagle transmission line three point nine million Cooper Creek and Brinker 02:01:20.840 --> 02:01:28.440 transmission line of one point seven million is also in the budget and Hickory 02:01:28.440 --> 02:01:31.320 Creek substation facility of four point eight million you can see that here 02:01:31.320 --> 02:01:35.640 under distribution city streetlight program this is something I pointed out 02:01:35.640 --> 02:01:38.560 to the public utility board previously and Tony has discussed the public 02:01:38.560 --> 02:01:42.160 utility board and City Council in the past we do have three million dollars 02:01:42.160 --> 02:01:46.000 accounted for in each year the five-year CIP for street lighting so you will see 02:01:46.000 --> 02:01:51.040 that three million in each of the years single-fade meter maintenance and growth 02:01:51.040 --> 02:01:59.040 of 435,000 so for a total of 65 million thirty three thousand one fifty four 02:01:59.040 --> 02:02:02.600 proposed electric rate changes so there are no increases or decrease for 02:02:02.600 --> 02:02:06.020 residential customers but we are proposing to make minimum updates to the 02:02:06.020 --> 02:02:09.840 rate ordinance this fiscal year the first rate we're looking to discontinue 02:02:09.840 --> 02:02:13.640 is the residential renewable energy services writer also referred to as RG 02:02:13.640 --> 02:02:17.760 all customers currently receive a hundred percent renewable energy so we 02:02:17.760 --> 02:02:21.840 are looking to discontinue this rate the weekend service also referred to as WS 02:02:21.840 --> 02:02:25.600 we are looking to discontinue this a recent audit did reveal that the weekend 02:02:25.600 --> 02:02:29.240 customers were hitting their monthly demand outside of the designated hours 02:02:29.240 --> 02:02:33.560 the downtown decorative lighting DDL the rate is no longer applicable to the 02:02:33.560 --> 02:02:37.680 downtown customers and then the dark fiber we're looking to discontinue this 02:02:37.680 --> 02:02:42.640 and then the banner install fee we are looking to discontinue and then that fee 02:02:42.640 --> 02:02:46.440 was transferred to building safety commercial renewable energy services 02:02:46.440 --> 02:02:50.160 writers similar to the RG rate all customers do receive a hundred percent 02:02:50.160 --> 02:02:54.040 renewable energy so we are looking to discontinue this independent wholesale 02:02:54.040 --> 02:02:59.960 generator IWG we are looking to discontinue this rate also so the RG by 02:02:59.960 --> 02:03:03.080 discontinuing this rate there are 186 residential customers that would be 02:03:03.080 --> 02:03:11.320 impacted with an annual savings of forty seven dollars and thirty six cents so 02:03:11.320 --> 02:03:14.880 residential rate comparison for electric utility you can see the city of Denton 02:03:14.880 --> 02:03:19.080 in the middle on this green bar so over the average customer based on 1200 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 02:03:24.400 --> 02:03:30.000 utility board once the rest of these cities adopt their 2021 budget and then 02:03:30.000 --> 02:03:33.480 this is a summary slide of the proposed rate decreases for all the utilities 02:03:33.480 --> 02:03:36.720 together so as I'd said electric there are no proposed rate changes for the 02:03:36.720 --> 02:03:40.800 average residential customer water based on 9200 gallons the customer could 02:03:40.800 --> 02:03:44.480 expect a one dollar and eight cents decrease which equates to a 2% rate 02:03:44.480 --> 02:03:48.360 decrease for water customers wastewater there is no rate decrease or increase 02:03:48.360 --> 02:03:52.200 proposed for residential and then solid waste for the standard car customer they 02:03:52.200 --> 02:03:58.800 would see that one dollar decrease which equates to five percent future dates so 02:03:58.800 --> 02:04:02.200 we will bring back the red line rate ordinance to you on September 14th we 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 02:04:06.920 --> 02:04:11.760 ask any questions on September 14th before approval and then we will have 02:04:11.760 --> 02:04:15.320 our public hearing on September 15th City Council budget adoption is scheduled 02:04:15.320 --> 02:04:19.400 for September 22nd and then we'll be circling back with you in December with 02:04:19.400 --> 02:04:24.680 that mid-year budget rate discussion and then that gets us to the deck Susan if 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 02:04:28.080 --> 02:04:32.880 for my part of the presentation that'd be great I have three questions but 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 02:04:43.160 --> 02:04:52.520 increase in ROI for DME how is the revenue shown for that item work where 02:04:52.520 --> 02:04:58.640 is that being specified in the rates the the revenue so the ROI is transferred 02:04:58.640 --> 02:05:03.080 from the electric fund to the general fund a couple months ago the City 02:05:03.080 --> 02:05:07.800 Council did make that decision to increase that ROI through 2022 right so 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 02:05:12.480 --> 02:05:18.600 is built into your base rates it's an operating expense okay so we show no 02:05:18.600 --> 02:05:24.600 rate increase that's why I'm confused so it essentially is a drawdown on 02:05:24.600 --> 02:05:31.280 reserves it's a drawdown I'm sorry electric reserves it is okay yeah thank 02:05:31.280 --> 02:05:37.480 you oh one more question I didn't I was looking at the capital expenditure or 02:05:37.480 --> 02:05:44.240 scaffold capital budget and it didn't total out the transmission separately 02:05:44.240 --> 02:05:51.120 and that would should equate to revenue correct 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. 02:05:59.920 --> 02:06:03.760 cheek is that what you're talking about yeah and as it equates to the capital 02:06:03.760 --> 02:06:09.040 electric five-year capital plan okay let me ask so the answer the answer of that 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 02:06:14.240 --> 02:06:18.360 debt service and so those revenues are recovered over the the life of those 02:06:18.360 --> 02:06:24.800 assets okay okay well I didn't total the transmission separately from those so 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 02:06:30.400 --> 02:06:34.520 adjustment mr. cheap yeah cuz you know t-cost is good that's that's good 02:06:34.520 --> 02:06:40.000 expense because it generates revenue correct this gives me an idea what it is 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 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 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 02:07:02.000 --> 02:07:05.120 be slide number nine in your presentation and you can't see the 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 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 02:07:14.020 --> 02:07:22.200 calculator but alright thanks okay and you had a question yeah regarding the 02:07:22.200 --> 02:07:30.840 21 million that's budgeted for the decommissioning of Gibbons Creek is there 02:07:30.840 --> 02:07:37.760 actually a time framework on the sale is or is this going to drag on forever 02:07:37.760 --> 02:07:41.960 this is this is Tony there there is no update at this point they're still 02:07:41.960 --> 02:07:48.360 ongoing negotiations going on by the board and TMPA staff and so at this 02:07:48.360 --> 02:07:53.860 point there's there's really no movement other than both TMPA and the cities have 02:07:53.860 --> 02:07:59.000 included the decommissioning expenses in their budgets for next year is there any 02:07:59.000 --> 02:08:04.520 deadline on these negotiations you know now it's just non-going negotiations an 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 02:08:16.240 --> 02:08:20.200 that contract come before us if there is a contract to sell Gibbons Creek 02:08:20.200 --> 02:08:25.280 absolutely I think as we as TMPA continues to to move forward at some 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 02:08:29.720 --> 02:08:33.920 the council in closed session and give you a little more specifics before the 02:08:33.920 --> 02:08:41.800 contract ever comes to you okay thanks this man okay anybody else I've got 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 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 02:08:56.680 --> 02:09:04.320 probably decreased because people aren't in business yeah so we're seeing 02:09:04.320 --> 02:09:08.440 probably about a five to seven percent decrease in overall load here in the 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 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 02:09:28.320 --> 02:09:33.960 projections and you refine them but it does show that in 2023 and 2024 we will 02:09:33.960 --> 02:09:38.760 drop below our debt service coverage ratios but we we have opportunity to 02:09:38.760 --> 02:09:44.480 change that before those years correct yeah the future five-year forecast shows 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 02:09:49.840 --> 02:09:52.940 refine this bring it back to the public utility board every single year as 02:09:52.940 --> 02:09:56.600 things change in the load forecast with the electric utility so I bet you are 02:09:56.600 --> 02:10:00.320 correct it does currently show us going below and Susan this is Tony I'll just 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 02:10:07.840 --> 02:10:12.440 covenant standpoints the only bonds that require that times coverage are the 02:10:12.440 --> 02:10:17.160 outstanding revenue bonds that we issued in 2017 for the deck and that actually 02:10:17.160 --> 02:10:22.440 only requires a one-time coverage ratio so for bond company standpoint we're 02:10:22.440 --> 02:10:27.040 fine either way it's the internal debt city debt policy that they will need to 02:10:27.040 --> 02:10:31.600 address and I was more concerned about the bond covenant so thank you yes and 02:10:31.600 --> 02:10:38.160 then my last one is simple what is dark fiber that we're discontinuing so Chris 02:10:38.160 --> 02:10:47.360 Lutrix on the phone I'll ask him to explain the dark fiber really quick if 02:10:47.360 --> 02:10:59.440 he's not Terry's here quick explanation dark fiber is just a fiber optic cable 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 02:11:07.440 --> 02:11:14.520 any longer okay typically on a dark fiber product the customer would install 02:11:14.520 --> 02:11:20.360 the equipment at its end and light it up and maintain that equipment I didn't 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 02:11:24.640 --> 02:11:34.320 conspiracy theory any other questions all right all right I'll turn it over to 02:11:34.320 --> 02:11:45.840 Terry to review the deck finances with you good good morning again Terry Nolte 02:11:45.840 --> 02:11:52.360 assistant general manager madam chairman I didn't want to be presumptive but if 02:11:52.360 --> 02:11:57.640 you wanted to take a break we could certainly do that at any time now would 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 02:12:03.120 --> 02:12:08.080 that's it'll take it'll take about 15 minutes to go through the presentation 02:12:08.080 --> 02:12:14.480 okay what do you five minutes ten minutes what do y'all need five five okay 02:12:14.480 --> 02:12:17.440 five minute break 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 02:12:28.800 --> 02:12:37.440 pull up the presentation this is a presentation that I put together for 02:12:37.440 --> 02:12:43.140 City Council we discussed with them last week in general what we're trying to do 02:12:43.140 --> 02:12:48.080 here is show that the deck on a standalone basis when we look at the 02:12:48.080 --> 02:12:53.840 deck pro forma we look at expenses and revenues for the deck on a standalone 02:12:53.840 --> 02:13:00.560 basis and we're projecting for the next five years as we did this year negative 02:13:00.560 --> 02:13:04.440 net income for the deck on a standalone basis however there are additional 02:13:04.440 --> 02:13:11.320 sources of revenue and savings I shouldn't say revenue additional sources 02:13:11.320 --> 02:13:17.920 of value that the deck brings to the overall supply portfolio that explained 02:13:17.920 --> 02:13:23.000 the Nate why a negative net income on a standalone basis is a very viable 02:13:23.000 --> 02:13:37.680 solution so you can see the deck oh sorry and get the presentation up 02:13:51.120 --> 02:14:01.360 okay so the biggest additional source of value is the fact that were it not for 02:14:01.360 --> 02:14:06.320 the deck we would have to purchase significantly more renewable energy and 02:14:06.320 --> 02:14:12.040 I'll just point out the deck in my research was a component of the overall 02:14:12.040 --> 02:14:19.080 renewable Denton plan to achieve the 70% renewable and then a hundred percent 02:14:19.080 --> 02:14:25.320 under the Denton renewable resource plan currently have 460 megawatts contracted 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 02:14:30.080 --> 02:14:37.040 put under contract 800 to 900 megawatts this is the same approach that 02:14:37.040 --> 02:14:44.920 Georgetown Texas has used and as you may be aware as a result of that oversupply 02:14:44.920 --> 02:14:50.880 their their electric rates are the highest in the state the other source of 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 02:14:57.800 --> 02:15:02.320 incremental annual energy purchases that we would have to make if we did not have 02:15:02.320 --> 02:15:09.080 the deck the original pro forma in 2016 predicted that to be nine nine to 20 02:15:09.080 --> 02:15:15.840 million dollars we also achieve significant savings in being able to 02:15:15.840 --> 02:15:21.320 arbitrage the day ahead market and the real-time market the original pro forma 02:15:21.320 --> 02:15:27.400 projected 2.3 million and in the first full year of operation we were able to 02:15:27.400 --> 02:15:37.320 achieve 3.3 million of actual day ahead to real-time arbitrage here you see the 02:15:37.320 --> 02:15:44.660 pro forma and here are the negative net income numbers that we're speaking to if 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 02:15:49.400 --> 02:15:55.360 had real-time come in and the avoided energy reap any avoided renewable energy 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 02:16:00.320 --> 02:16:08.880 and that's due to the to the forward curve shape and if you add those 02:16:08.880 --> 02:16:16.040 sources of value in now the the true adjusted net income becomes positive 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 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 02:16:34.600 --> 02:16:41.520 members of council if we take out all the energy expenses and all of the 02:16:41.520 --> 02:16:47.000 energy and capacity and ancillary service revenues and all we have is the 02:16:47.000 --> 02:16:53.960 debt you would see that the debt net income would be the exact debt burden 02:16:53.960 --> 02:16:59.280 17.2 million dollars a year now if we add in those additional renewable energy 02:16:59.280 --> 02:17:06.280 purchases that we'd have to make and the lost gross margins because in our five 02:17:06.280 --> 02:17:11.120 year forecast we have gross margins being achieved by the deck which would 02:17:11.120 --> 02:17:16.320 be lost if the deck were shut down we ended up with these adjusted gross 02:17:16.320 --> 02:17:25.960 adjusted net income numbers at 28 to 35 million over the next five years and 02:17:25.960 --> 02:17:31.840 then if you put the adjusted net income with the deck the lost net income with 02:17:31.840 --> 02:17:39.080 the deck you end up with these large numbers of the decks value true value is 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 02:17:46.120 --> 02:17:51.680 in terms that ratepayers can get their arms around if we were to not have the 02:17:51.680 --> 02:17:56.080 deck these would be very large rate increases that we'd have to impose on 02:17:56.080 --> 02:18:05.920 the energy cost adjustment 65 82 74 69 percent annual increases that's those 02:18:05.920 --> 02:18:11.880 are standalone numbers not compounded and then for the average homeowner that 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 02:18:18.560 --> 02:18:31.120 would be 334 up to 421 dollars per year in additional energy cost so that that 02:18:31.120 --> 02:18:36.880 was a theoretical forward look if we look at the actual performance of the 02:18:36.880 --> 02:18:42.560 last two some of the last summer and then this summer so last summer I think 02:18:42.560 --> 02:18:47.960 earlier today we mentioned the fact that you know Todd mentioned we made 17.8 02:18:47.960 --> 02:18:53.440 million dollars in a five-day period and a 17.3 million dollars of gross margin 02:18:53.440 --> 02:18:58.960 we had mild temperatures up until mid-August then we had the price spikes 02:18:58.960 --> 02:19:03.680 our purchase power costs for the overall portfolio of which the deck is a 02:19:03.680 --> 02:19:10.520 component of 11.1 million without the deck if we run this analysis and we 02:19:10.520 --> 02:19:15.800 would comply with the risk policy that's been approved by PUB and Council we 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 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 02:19:29.480 --> 02:19:35.120 purchase power costs would have been 29.4 and the deck effectively saved 18.3 02:19:35.120 --> 02:19:42.280 million for last summer if we look at this summer through the 13th of August 02:19:42.280 --> 02:19:48.320 again we're spearing mild temperatures we have had no price spikes to say we 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 02:19:55.640 --> 02:20:01.920 purchase power cost today 5.8 million through the 13th and without without the 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 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 02:20:21.720 --> 02:20:28.680 I think there was some discussion about this in the past but considering a 02:20:28.680 --> 02:20:36.680 scenario where where federal regulations come in environmental regulations come 02:20:36.680 --> 02:20:45.880 in that that would not probe that would prohibit further co2e emissions and that 02:20:45.880 --> 02:20:53.800 sort of stuff does do you all have a contingency plan in place yet if should 02:20:53.800 --> 02:21:01.000 that occur where the the decks operation would be severely curtailed by that sort 02:21:01.000 --> 02:21:08.120 of regulation we haven't formalized a plan there are a couple of options for 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 02:21:14.960 --> 02:21:18.920 switch where you turn it on and emissions would be limited it'd be a 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 02:21:25.760 --> 02:21:30.800 runway of time to make those kinds of changes so we have plenty of time to 02:21:30.800 --> 02:21:35.880 make those plans one of the new technologies that's being considered is 02:21:35.880 --> 02:21:44.800 using surplus renewable energy at night to generate hydrogen and then and inject 02:21:44.800 --> 02:21:52.120 that hydrogen into natural gas pipeline and use that to combust in in units like 02:21:52.120 --> 02:21:58.360 the deck the deck actually is designed to be able to handle that type of fuel 02:21:58.360 --> 02:22:06.360 and any any regulatory paradigm that would come out of such legislation would 02:22:06.360 --> 02:22:11.640 most likely include like I say an on-ramp to allow for the industry to 02:22:11.640 --> 02:22:16.280 change and to accommodate that type it's impractical to think that Texas as a 02:22:16.280 --> 02:22:22.720 market would be able to go away from fossil fuels completely just the nature 02:22:22.720 --> 02:22:29.400 of the intermittency of wind and solar necessitate having backups or else we'd 02:22:29.400 --> 02:22:37.440 be seeing what California saw last week which was rotating outages of 200,000 02:22:37.440 --> 02:22:45.440 people per day so that's kind of a personal opinion but again I think the 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 02:22:49.760 --> 02:22:57.320 I agree completely and in the when the when the deck was initially discussed 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 02:23:05.400 --> 02:23:12.840 left available around the deck to possibly install some sort of solar 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 02:23:18.640 --> 02:23:26.200 of any that validity in terms of consideration well the the the land at 02:23:26.200 --> 02:23:31.280 the deck while we do have a significant amount of land out there it's actually 02:23:31.280 --> 02:23:36.520 not sufficient to get the economies of scale that we're achieving in the 02:23:36.520 --> 02:23:42.440 utility solar purchases that we're making of the utility solar purchases 02:23:42.440 --> 02:23:47.280 that we're making are you know in a hundred megawatt increments and that 02:23:47.280 --> 02:23:56.160 requires between 700 and a thousand acres for that level of production okay 02:23:56.160 --> 02:24:08.680 thank you Terry Karen okay I have a rookie question for a Terry can you let 02:24:08.680 --> 02:24:11.480 me just think out loud a minute I'm trying to figure out how the deck 02:24:11.480 --> 02:24:18.680 reduces our dependence on buying renewables and is it because when we 02:24:18.680 --> 02:24:23.600 sell the deck energy to the market we get a credit which is then coming back 02:24:23.600 --> 02:24:31.440 into our system as a renewable here and I have the same rookie question yeah so 02:24:31.440 --> 02:24:36.220 so the way that the way that the council has set the ground rules for 02:24:36.220 --> 02:24:39.840 determining whether we're a hundred percent renewable as we look at the 02:24:39.840 --> 02:24:44.960 total energy we serve for the year and then we look at the number of renewable 02:24:44.960 --> 02:24:49.480 energy credits that we have for that same temporal period so what happens is 02:24:49.480 --> 02:24:55.240 our generation of renewable energy at night from the wind units and surplus 02:24:55.240 --> 02:25:01.160 solar generation in the shoulders shoulder hours building up to the the 02:25:01.160 --> 02:25:05.960 peak demand at five six o'clock in the afternoon those are sold into the market 02:25:05.960 --> 02:25:11.200 we we derive revenues from it but we also derive renewable energy credits 02:25:11.200 --> 02:25:16.960 from those and so those surplus hours are used to offset those hours where 02:25:16.960 --> 02:25:21.040 we're actually generating power from the deck and that's the way the accounting 02:25:21.040 --> 02:25:31.960 works okay yeah thank you Billy okay yeah just a soapbox moment here but yeah 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 02:25:40.240 --> 02:25:47.920 think as a nation especially just in our little community we're in transitional 02:25:47.920 --> 02:25:52.880 period coal makes no sense anymore coal's a dying breed it's of course 02:25:52.880 --> 02:25:56.280 people that's all they have available to produce electricity and their 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 02:26:03.680 --> 02:26:09.800 transportation costs killed coal to too expensive to dig that's obvious it was 02:26:09.800 --> 02:26:17.240 easy to make the decision on you know where we were going on the TMPA and 02:26:17.240 --> 02:26:22.920 coal-fired plant down there and given screen but I think we're just we're 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 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 02:26:45.840 --> 02:26:53.280 tells me to unmute Terry this is the question one of the very first 02:26:53.280 --> 02:27:00.360 presentations you made in today's meeting had to do with the a couple of 02:27:00.360 --> 02:27:06.680 numbers in there that were somewhat amazing to me and I think you cited a 02:27:06.680 --> 02:27:15.520 number that right now in Texas there's over 31,000 megawatts of excess renewable 02:27:15.520 --> 02:27:22.000 generation capacity if I read that right in one of your earlier maybe one of your 02:27:22.000 --> 02:27:27.920 first presentations and back when Denton was contemplating going to a hundred 02:27:27.920 --> 02:27:33.920 percent renewable that number instead of being 31,000 megawatts of excess 02:27:33.920 --> 02:27:42.280 capacity was like six or eight hundred megawatts so any thought we have of 02:27:42.280 --> 02:27:51.760 adding more generation capacity using solar or wind we need to take into mind 02:27:51.760 --> 02:28:00.580 that there's already 31,000 plus megawatts of capacity that is beyond the 02:28:00.580 --> 02:28:07.480 demand did I get that right the numbers are correct it's not actually surplus 02:28:07.480 --> 02:28:13.160 it's it is installed capacity so that's the amount of stock installed wind 02:28:13.160 --> 02:28:20.960 capacity in in ERCOT the peak demand of ERCOT is around 76,000 megawatts so you 02:28:20.960 --> 02:28:27.680 know at 35,000 megawatts or so of renewables it's just under 50% of the 02:28:27.680 --> 02:28:36.280 makeup of the supply capacity in in ERCOT that is predicted to go up the 02:28:36.280 --> 02:28:42.580 biggest increases that we're gonna see today we have about 3,000 megawatts of 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 02:28:47.880 --> 02:28:56.320 and so we're seeing significant increases in solar generation wind 02:28:56.320 --> 02:29:01.560 generation is slowing down a bit because the production tax credits will be 02:29:01.560 --> 02:29:09.720 phased out after 2023 so but we are still seeing I think this year ERCOT 02:29:09.720 --> 02:29:16.840 projects some 7,000 megawatts of additional wind over the next two years 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 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 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 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 02:29:41.280 --> 02:29:46.660 to speak right okay thank you for clearing that up 02:29:46.880 --> 02:29:59.840 other questions all right thank you Terry you're welcome last item we we do 02:29:59.840 --> 02:30:06.760 still have this item correct the energy management organization thought yes so 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 02:30:10.960 --> 02:30:15.600 started on that and Terry will take that over and it will also have a gentleman 02:30:15.600 --> 02:30:18.440 from Deloitte on the line that'll kind of walk through the presentation as well 02:30:18.440 --> 02:30:23.040 okay all right so then item B receiver report hold a discussion and give staff 02:30:23.040 --> 02:30:27.300 direction regarding the energy management organization financial review 02:30:27.300 --> 02:30:31.700 conducted by Deloitte I wanted to interrupt and point out real quick the 02:30:31.700 --> 02:30:37.760 Deloitte portion of what you all received from legal is actually available to the 02:30:37.760 --> 02:30:52.000 public thanks Larry I've just in case it was inadvertently placed I wanted to 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 02:31:16.040 --> 02:31:22.440 the desktop where is the desktop 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. 02:31:53.040 --> 02:32:21.240 All right okay apologize for the technical difficulties I'm gonna turn it 02:32:21.240 --> 02:32:25.580 over to Steve Engler with Deloitte he's gonna walk through the first few of 02:32:25.580 --> 02:32:31.800 these slides. Thanks Terry hope everybody can hear me okay I'm Steve Engler I'm 02:32:31.800 --> 02:32:37.480 managing director with Deloitte's energy risk advisory practice so good morning to 02:32:37.480 --> 02:32:42.480 chair madam chair and the board members thanks for your time I'm gonna kind of 02:32:42.480 --> 02:32:48.360 co-present this next section with with Terry Terry you can flip ahead to the 02:32:48.360 --> 02:32:53.480 kind of past the legal stuff yeah here we go so Deloitte was asked to do 02:32:53.480 --> 02:32:58.440 basically two things one to re perform a benchmark analysis around the 02:32:58.440 --> 02:33:03.800 performance of the financial performance of DME in a way similar that we've done 02:33:03.800 --> 02:33:08.200 it previously and had presented to PUB and council and then the second piece 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 02:33:15.480 --> 02:33:20.040 relates to a number of recommendations that we had made in a prior project 02:33:20.040 --> 02:33:26.560 across the aspects of hedging and risk oversight so with respect to the first 02:33:26.560 --> 02:33:33.400 component of work again this is a benchmark looking at the performance of 02:33:33.400 --> 02:33:40.520 DME from a financial perspective as compared to the market you may recall 02:33:40.520 --> 02:33:47.040 and Terry skip ahead if you wouldn't mind two slides you may recall that we 02:33:47.040 --> 02:33:51.640 had done an analysis prior it was shortly after the the Emo is established 02:33:51.640 --> 02:33:58.120 and when you had had a recently quoted full requirements supply contract for 02:33:58.120 --> 02:34:04.080 the for the energy requirements for the to serve your load given that there had 02:34:04.080 --> 02:34:10.320 been a number of years since that contract had been quoted and initially as 02:34:10.320 --> 02:34:13.780 well there have been a number of changes to the basically the underlying 02:34:13.780 --> 02:34:20.520 portfolio that DME and the Emo manages specifically a significant addition of 02:34:20.520 --> 02:34:24.080 long-term purchase power agreements some of those renewable agreements that 02:34:24.080 --> 02:34:29.480 Terry's mentioned it was agreed that the the methodology that we had followed 02:34:29.480 --> 02:34:36.080 the first time was no longer relevant and so we had to think about adjustments 02:34:36.080 --> 02:34:39.840 to that methodology and how we would come up with a fair comparison so the 02:34:39.840 --> 02:34:45.320 first thing that do I did with with management with staff was to basically 02:34:45.320 --> 02:34:49.760 agree on the methodology that would be followed in order to calculate the 02:34:49.760 --> 02:34:54.520 benchmark comparison another element that was discussed where there were some 02:34:54.520 --> 02:35:01.120 financial obligations for example with the debt service related to MPA a number 02:35:01.120 --> 02:35:06.680 of things that predated the establishment of the Emo so that also 02:35:06.680 --> 02:35:11.680 caused some challenges in terms of getting apples to apples comparison so 02:35:11.680 --> 02:35:15.360 what we agreed on the focus of the assessment of the focus of the 02:35:15.360 --> 02:35:19.720 benchmark comparison should be on that portion of the energy and the related 02:35:19.720 --> 02:35:24.720 costs that are actually manageable by the Emo so things like the TMPA debt 02:35:24.720 --> 02:35:29.040 service and things like the the costs related to those long-term purchase 02:35:29.040 --> 02:35:34.360 power agreements that are part of the renewable dent and plan were were 02:35:34.360 --> 02:35:39.480 identified and calculated but separated from from the analysis and then finally 02:35:39.480 --> 02:35:42.920 that what I would point out is where we essentially ended up as a recommendation 02:35:42.920 --> 02:35:48.240 for the benchmark was to to use the observable day ahead ERCOT electricity 02:35:48.240 --> 02:35:52.480 prices that are that are available and published in the market and we would use 02:35:52.480 --> 02:35:58.040 that as the benchmark comparison to the performance of the of the Emo for the 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 02:36:09.160 --> 02:36:15.160 analysis really in three components the first and I guess the overarching or the 02:36:15.160 --> 02:36:20.920 all-in analysis looked at all load as valued at the day ahead market prices 02:36:20.920 --> 02:36:28.680 plus the adders for ancillary services QSE costs other components were included 02:36:28.680 --> 02:36:36.320 and calculated consistent with the between the FY17 and FY18 approach this 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 02:36:42.200 --> 02:36:48.880 analysis was to identify isolate and then ultimately separate those renewable PPA 02:36:48.880 --> 02:36:54.440 contracts that that that you are in so identifying the portion of the load 02:36:54.440 --> 02:36:59.240 that served served by those PPAs the cost associated with that and then 02:36:59.240 --> 02:37:03.320 separating that out from the overall there would be all-in costs and what 02:37:03.320 --> 02:37:07.960 you're left with really is the remainder or what we described as the manageable 02:37:07.960 --> 02:37:14.640 portion of the load for which we identified the the forecasted costs as 02:37:14.640 --> 02:37:19.000 well as the performance of DME specific to that manageable portion of the 02:37:19.000 --> 02:37:25.680 portfolio so what Deloitte was engaged to do essentially we did a 02:37:25.680 --> 02:37:32.080 re-performance if you will of the analysis so we as I said work with with 02:37:32.080 --> 02:37:39.520 staff to agree on the methodology and the data required in order to calculate 02:37:39.520 --> 02:37:48.160 the benchmark we agreed on that and then DME staff actually developed a model and 02:37:48.160 --> 02:37:53.920 calculated the benchmark and the comparison costs separate to that and 02:37:53.920 --> 02:37:58.960 independent of that Deloitte obtained all of the relevant cost and benchmark 02:37:58.960 --> 02:38:04.200 data and all those things that were components of the model and we 02:38:04.200 --> 02:38:10.960 separately obtained ERCOT pricing data and essentially re-performed or 02:38:10.960 --> 02:38:16.320 independently re-performed the the the model assessment and validated the 02:38:16.320 --> 02:38:21.200 results that were obtained both by the Denton approach the Denton DME staff 02:38:21.200 --> 02:38:28.120 approach which was then repeated and validated by by Deloitte you can see 02:38:28.120 --> 02:38:32.520 that the components of the of the analysis down below there was the actual 02:38:32.520 --> 02:38:36.520 cost component the benchmark calculation is as compared to the original 02:38:36.520 --> 02:38:41.840 calculation we reviewed and agreed upon those exclusions from the methodology 02:38:41.840 --> 02:38:47.640 that I mentioned before validated the ancillary service components of the 02:38:47.640 --> 02:38:53.040 charges and then as I said reviewed the file and the aggregation of those costs 02:38:53.040 --> 02:39:00.720 across that whole methodology so the the re-performance was really front front to 02:39:00.720 --> 02:39:05.400 back in terms of the establishment of the assumptions in the model the cost 02:39:05.400 --> 02:39:09.040 and the data components of the model and in the execution of the calculation 02:39:09.040 --> 02:39:16.120 itself. Terry do you want to summarize what we came up with in terms of the 02:39:16.120 --> 02:39:21.640 DME calculation that was validated also by Deloitte? Sure, working with Deloitte 02:39:21.640 --> 02:39:28.640 it was a very detailed effort here there's a lot of a very complex analysis 02:39:28.640 --> 02:39:35.160 and we've tried to boil it down into its summary pieces here but in the 02:39:35.160 --> 02:39:41.960 first block first table here shows that the we take the total load that we 02:39:41.960 --> 02:39:48.120 served for the year and we dispatched the load against the market using that 02:39:48.120 --> 02:39:55.960 day ahead metric. You can see that the actual performance we we were able to 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 02:40:04.160 --> 02:40:11.160 6.2 million. Then we look at the PPA performance and the same analysis was 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 02:40:17.320 --> 02:40:23.080 primarily due to the fact that PPAs are a fixed price contract and they're 02:40:23.080 --> 02:40:30.000 selling that fixed priced energy into a market. That market is the actual market 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 02:40:38.080 --> 02:40:43.160 nature of our position. The wind shows up at night when the prices are very low 02:40:43.160 --> 02:40:50.320 and then when we take the non PPA performance which which would be the 02:40:50.320 --> 02:40:54.040 dispatchable part we call it dispatchable but it's when we think 02:40:54.040 --> 02:41:00.080 about a wind resource we have a projected profile of output for that 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 02:41:06.960 --> 02:41:15.960 we have to assess a probability of actually getting that energy and we have 02:41:15.960 --> 02:41:22.840 normalized that into what we think is a reasonable confidence interval and 02:41:22.840 --> 02:41:27.600 optimizing that against the day ahead market we were able to achieve about 02:41:27.600 --> 02:41:37.560 11.7 million dollars of benefit. A couple of things that are important 02:41:37.560 --> 02:41:42.320 to the analysis when we look at congestion and that's the difference in 02:41:42.320 --> 02:41:47.040 prices between where we deliver energy into the market from our renewables 02:41:47.040 --> 02:41:53.160 versus where we buy it at to serve the load we have congestion and we buy 02:41:53.160 --> 02:42:00.240 congestion rights as three years out in the future. There is a settlement of 02:42:00.240 --> 02:42:07.160 surplus revenues that are in the market called card that's the leftover money 02:42:07.160 --> 02:42:12.060 from auctions that we participated in and other market participants 02:42:12.060 --> 02:42:18.760 participated in that are then refunded back to to each of the participants on a 02:42:18.760 --> 02:42:25.240 pro rata share so it decreases the benchmark cost it's actually a positive 02:42:25.240 --> 02:42:35.440 benefit for ratepayers. We also had a PPA forecast versus the day ahead market 02:42:35.440 --> 02:42:41.320 price so that this is that variability that I was mentioning to you in the 02:42:41.320 --> 02:42:49.480 output of the of the renewables and then without the TMPA debt exclusion and we 02:42:49.480 --> 02:42:55.760 also to be intellectually honest with the with the analysis here we assessed a 02:42:55.760 --> 02:43:04.160 penalty of 50 cents per megawatt hour for optimization and that's basically a 02:43:04.160 --> 02:43:12.120 cost that we think for each megawatt hour you can even unskilled people given 02:43:12.120 --> 02:43:22.640 some direction could good achieve 50 cents of savings. So with that I'll turn 02:43:22.640 --> 02:43:29.200 back over you Stephen. Okay thanks Terry and so then the second part of the the 02:43:29.200 --> 02:43:34.960 analysis that Deloitte was asked to perform was essentially an update or a 02:43:34.960 --> 02:43:39.480 calibration of where DME is as it relates to a number of recommendations 02:43:39.480 --> 02:43:44.080 that we provided in the previous engagement so you may recall that we 02:43:44.080 --> 02:43:47.240 were asked to do kind of a benchmark or leading practice assessment of 02:43:47.240 --> 02:43:56.240 capabilities across DME specific to the commodity risk management capabilities 02:43:56.240 --> 02:44:01.960 so we did that benchmark or that leading practice analysis several years ago we 02:44:01.960 --> 02:44:06.040 made a number of recommendations across the dimensions of people process 02:44:06.040 --> 02:44:12.680 governance and technology and management was interested in basically us 02:44:12.680 --> 02:44:18.280 assessing where where DME is in terms of progress against those recommendations 02:44:18.280 --> 02:44:24.400 so what we did is we made data requests we reviewed documentation and processes 02:44:24.400 --> 02:44:28.480 and policies that have been put in place since the original assessment and we 02:44:28.480 --> 02:44:32.840 were able to for each of the recommendations we made ascertain 02:44:32.840 --> 02:44:36.640 whether we not whether or not we felt that the recommendation was complete 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 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 02:44:46.960 --> 02:44:51.320 dimensions that our recommendations were grouped into governance process people 02:44:51.320 --> 02:44:57.400 and technology you can say at the time of the assessment we did a an evaluation 02:44:57.400 --> 02:45:03.280 as to the current state of capabilities and then the desired future state so the 02:45:03.280 --> 02:45:07.720 recommendations that we made were all intended to essentially close those gaps 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 02:45:11.600 --> 02:45:16.040 can make out the font you can see that the recommendations were grouped into 02:45:16.040 --> 02:45:22.320 high medium and low priority categorizations and then across each of 02:45:22.320 --> 02:45:26.680 the dimensions how many recommendations we made and in the final column under 02:45:26.680 --> 02:45:31.240 status you can see that in the column under C those are the recommendations 02:45:31.240 --> 02:45:36.760 that have been completed the under IP are in progress you can see that there 02:45:36.760 --> 02:45:40.320 are some recommendations that are in that state as well and then there was 02:45:40.320 --> 02:45:45.320 one that was deemed not relevant by management and so therefore that was 02:45:45.320 --> 02:45:50.880 that was kind of set aside so the next slide shows even a more summarized 02:45:50.880 --> 02:45:55.820 version of this we had 60 recommendations in total 27 of them in 02:45:55.820 --> 02:46:02.160 our view are completed and 32 are in process or ongoing I would say the 02:46:02.160 --> 02:46:07.760 majority of those either in process or ongoing recommendations are either 02:46:07.760 --> 02:46:12.260 enabled by or relate directly to the implementation of a commodity trading 02:46:12.260 --> 02:46:19.760 and risk management system which on an interim basis DME is now using a Deloitte's 02:46:19.760 --> 02:46:26.040 cloud hosted commodity reporting and reporting system and there is also a 02:46:26.040 --> 02:46:31.220 plan which perhaps Terry can speak to to implement a permanent solution which 02:46:31.220 --> 02:46:36.400 will and already has in fact addressed a lot of those that we noted were in 02:46:36.400 --> 02:46:45.360 progress recommendations happy to take questions or comments Terry anything I 02:46:45.360 --> 02:46:52.640 missed or left out I think you covered it okay that's gins 02:46:52.640 --> 02:47:03.600 all right I guess there are no questions thank you thank you all right that 02:47:03.600 --> 02:47:11.160 concludes all the items do we have a motion to adjourn some move okay 02:47:11.160 --> 02:47:18.560 second we are adjourned y'all next bye bye