Sep 14, 2020 Public Utilities Board on 2020-09-14 9:00 AM

All right, Susan. You're right. It is nine o'clock and we do have a quorum, so it's called to order the Public Utilities Board meeting for September 14th, 2020. The first item is the consent agenda. Does any board member wish to pull an item from A through E? Yes, Billy. I'd like to pull item C as in cat, just for my entertainment. C as in cat. Any others? Thanks, Billy. If there's no others, do we have a motion to approve items A, B, D, and E? I so move. Second. Okay, all in favor say aye. Aye. Okay, item C. Well, my question is just like I said, it's for entertainment purposes, but I didn't realize that we had to do this. I think it's interesting. And notice that we didn't get a lot of bids on it, but I would assume not a lot of people do this. Is that correct? Aye. Good morning, Madam Chair, members of the board. My name is Brian Burner, Director of Solid Waste, and you are correct. This is a very small pool of individuals who do perform this service, and as a result, the number of people who can do this and then have capacity within their existing system to manage additional work is extremely limited, and it's not inconsistent with other bids at other cities that I've encountered. You usually have between one and three individuals who are responding to requesting this nature. So, Brian, I just had a quick question. Do all contracts like this have a piggyback clause? I'm sorry, you broke up on my end. I did not get the full question. I apologize. It was meant for humor. Do all contracts like this have a piggyback clause? Again, I'm sorry. I did not get it from this end. Do all contracts have a piggyback clause? A piggyback clause? Come on, it's Monday, but wake up there. It is. I can't say that it does. I had a couple of other jokes myself, but I appreciate that one. All is good fat, and days get slaughtered. Any other questions? Go on all day. Do we know what they're going to do with all of these animals? That's up to them? We do. Brian, if you could hold off for one second. Let me see if we can find out from Billy. It looks like we're having some technical problems here. You're all frozen. If you could just give us one quick second here, let's get with Billy and find out if that's something on our side. It's 9.08, and we're back on. We were discussing consent agenda item C, the feral hawk. Are there any other questions of the board? None here. Do we have a motion? Move approval. Second. All in favor say aye. Aye. Motion carries. Now we are to recess the regular meeting and go into a work session. Is there anything else we need to do, Tony, other than just an answer? No, ma'am. We'll have Nick on the line. He'll be walking through the presentation. The first item is the work sessions. Receive a report, hold a discussion, and give staff direction regarding the proposed water, electric, solid waste, wastewater, and miscellaneous rates for fiscal year 2020 to 2021. Good morning, chair, PV members, Nick Vinson, assistant director of finance. As Tony said, I'll walk you through a brief presentation to talk about the 2021 proposed rate changes with you. Really quick, before we get started, just kind of as a recap for all the PV members, on September 4th, we did give each one of you a memo with supporting documentation that included the red line rate ordinances. And that memo and supporting documentation is really meant to be provided before this meeting to allow sufficient time for questions and comments from the public utility board members. So today we'll walk through a work session item really quick, have a brief discussion, see if you have any questions. There's plenty of staff members online from each of the utilities to address the questions if you have them. And if not, we will seek your approval later in this meeting through an individual consideration item for each of the utilities. With that, I will pull up the presentation and get started. Bear with me here. A little bit of difficulty finding my presentation. Hang on just a second. Tony, I don't know if I'll be able to share my screen here. Give me just a second. I may have to... Nick, if you want, we can pull it up here if you want. That'd be great if you wouldn't mind. Yeah, Cassie's coming up and she'll kind of pull it up on our side and drive for you. Perfect. Okay. Pull it up on our side and drive for you. Perfect. All right, Nick, it's up. Okay, perfect. Yeah, Cassie, if you want to blow it, thank you. And then just go to the first slide really quick. So real quick, just a high-level overview, then we'll walk through each of the changes again. So we'll discuss the water rate changes with you, electric rate changes, solid waste rate changes, really discuss those next steps, what's coming up here in the next month or two, and address any questions that you had as I previously stated. One thing I want to say before we get started, we are not talking about the wastewater rates today or the miscellaneous rates. There are no recommended changes to those rate ordinances, so they actually will carry forward, the existing ones will carry forward in the next year. So we'll only be talking about the three utilities today. Next slide, please. So proposed changes for water, as we discussed with the public utility board last week or a couple of weeks ago, actually on August 24th, there's a 2% rate decrease for inside the city, residential and commercial customers. And there were two different options that were presented to the public utility board, option one being a cost of service decrease that you can see in this table, and option two being a cost of board decrease. We did receive direction from the public utility board to proceed with option one. So the red line rate ordinances fronted you today is based on the cost of service model and assumptions. So as you can see, the facility charge for a residential customer with a three quarter inch meter will go to 16 to 1584. And then that first tier is zero to 15,000 gallons would go from 415 to 405. Commercial inside customers, same thing here. This was a cost of service decrease. The facility charge, a two inch meter is our most common meter for commercial customers. This would go from 5150 to 5131. And then the volume charge, there's not a tier structure in place. It does charge per thousand gallons. It's 445 going to 434. This decrease does vary based on the size of meter that a customer has and then which tier that they're in. And that's included in your backup material. Next slide. Water rate changes continued. These are contractual rates that we'll be adjusting this year. This is something we bring forward to the public utility board and city council each year based on those contractual agreements we have with these entities. So the first one would be the wholesale raw water service to the Upper Trinity Regional Water District. And the current rate is 0.7401. And this rate will go to 0.7578. This is based on 85% of the Dallas wholesale rate. And the second one being the Lake Chapman pass through rate. And this is adjusted each year based on the CPI adjuster for the month of June. And the current rate is 0.0270. That rate will be going to 0.0275. Next slide. Electric rate changes. The redline ordinance with electric utility was included in your backup. We'll be available to answer questions after this presentation if you have them. Really quick, we are looking to discontinue several rates. The first one being the residential renewable service rider, also referred to as RG. All customers are receiving 100% renewable energy. So we are looking to discontinue this rate. The next one being the weekend service, also referred to as WK. We're looking to discontinue this rate. A recent audit did reveal that customers are hitting their monthly demand peak outside of those designated weekend hours. Downtown decorative lighting, DDL, we are looking to do away with this also. The dark fiber rate, we are looking to discontinue this. Fiber is no longer a service under DME. And then the commercial renewable energy services, CGR, all customers similar to residential are receiving 100% renewable energy. So we are looking to discontinue this rate. And then independent wholesale generator, IWG. And then DME has never utilized this rate to purchase energy from non-renewable wholesale generators. So we're looking to do away with that. And as previously stated, there are 186 residential customers that will be impacted by the RG rate being discontinued with an annual savings of 47.36. Next slide, please. Solid waste proposed rate changes. I'll start at the top really quick and work our way down. The valid shared service for commercial customers, we are looking to decrease the tier two rate based on that cost of service model for the solid waste fund. The rate is currently 138.28. We're looking to take that rate to 74.16. Yard waste service, we are looking to implement that commercial yard waste collection service similar to residential. The rate is $75 per hour. We're looking to build that on 15 minute increments. And then the standard cart rate decrease, this is that 5% decrease or $1 a month for a standard cart customer. You can see that rate going from 21.51 to 20.51. And then a large cart customer going from 26.26 to 25.04. And then the additional large cart going from 17.38 to 16.57. And then a gate disposal rate for non-city-dent customers, we are looking to increase this based on the amount of volume coming into the city's landfill. So we're looking to increase this rate from $46 a ton to 48. And then sludge dewatered, we are looking to increase this from 46 to 50. And then there is a note here at the bottom, as previously communicated, we are looking to adjust those wholesale contract agreements based on those adjustments that are called out in that contract. It's 2.3% is the CPI adjuster, which is an additional 400,000 in revenue. Next slide, please. This is the table that summarizes the rate changes and the rate decreases for the water and solid waste utility. Starting at the top, you can see the average residential customer for electric service is paying $124.80 for water. Going forward into 2021, be paying $53.10. Wastewater based on 5,400 gallons of wastewater would be $31.52. Solid waste is $20.51 for a total of $2.29.93. So really overall, a decrease of $2.08 for both of those utilities. Next steps. So today is September 14th. We are looking for your feedback to address any questions during this work session item. This will go forward to the city council on September 22nd for adoption, along with the budget and the capital plan, and then circling back with the public utility board with that detailed rate and budget discussion in December as previously mentioned. And then that concludes the presentation. And we'll pull it down. And if you have any questions, I can address them. If there's something I can't answer, Kenny's on the phone. We have Chris Lutruc. We have Terry Nalt. We have a bunch of people on the phone that can address your questions. I have a question. Yes, sir. The water rate, we charge Dallas compared to the water rate we charge Upper Trinity. Upper Trinity is 85% of the Dallas rate. What's the rationale for the disparity there? What's the reason for the difference? Why do we only charge a percentage of Dallas wholesale rated? Mr. Baffert, is that your question? Correct. Why do we charge the two different entities, different unit prices? So Kenny Banks on the phone, he may be familiar with the agreement. I know in the agreement, it does call out 85% of that wholesale rate. Kenny's on the phone or Frank Pugsley will be able to address that question also. Kenny, are you on the phone? And Mr. Baffert, if he's not on the phone, we can follow up with you and get you a response to that. Tony, did you want to say something different? Yeah. Let me send Kenny a text and if there's other questions, we can come back to this one. Okay. Of course. Can you hear me now? Yes. Yes, sir. Okay. Oh, great. Thank you. Sorry. Had a little technical difficulty there. Kenny Banks, general manager of utility. Good morning board members. Nick is correct. That wholesale rate was negotiated with the opportunity, and it was essentially a form of competitiveness. It was put in place many years ago, but essentially, they've got an opportunity to buy Dallas water. They've got an opportunity to buy water from the city of Denton. It was simply based on our overall water rights. And so we were essentially able to negotiate with them effectively in 85 percent of the total of the Dallas rate. So it really was just a contractual negotiation that had come before the board and council many years ago. And it was just an attempt to be competitive and ensure that the opportunity had an economic incentive to purchase the available wholesale water from the city of Denton first. Okay. Thank you. And how long is that contract? What is the term? That contract is currently in place, but we need to renegotiate it. And so we are actively in process of doing that now. Okay. So we've been kind of operating under the contract as it exists, but we definitely are in talks right now to renegotiate. Okay. Thank you. Other questions? I have a question about the landfill rates. You're not going to fund the Denton residences to take to the landfill. You're going on the non-Denton residents, correct? That's correct. Yes ma'am. The rate would only increase for non-city of Denton residents. The city of Denton residents rate would stay the same. Thank you. Charlie, go ahead. Okay. I have a question and a couple of comments. I'm fixating on the water rates. First of all, just an editorial comment for future years. It seems to me that we're micromanaging our customers if our water rates take 20 pages to list all the different water rates and tables. That seems like micromanagement to me. Second, I've mentioned this before, but I'll mention it again. It's my opinion that the top two tiers of residential are overly punitive. I agree we want to discourage waste, but some of our older neighborhoods, the houses just use more water. And if we're wanting to, let's say, I believe the Denton plan says we want to maintain the rural character of many of our neighborhoods. If we want to do that, we've got to make it possible for people to use water to irrigate at reasonable prices. And I think the comparison, if I read the 20-page document, we charge buckies and we charge Acme Brick a maximum of $6 per thousand for irrigation, and we charge them $4.34 per thousand, regardless of the amount of use. By comparison, some residential users are being charged $10.64. And I think one and a half times what luck is paying seems excessive to me. And the other comment that I want to make is that on our water bills, nobody sees the details of the calculation. All they see is a gallon amount and a price. If we're wanting to use the rates to motivate certain behaviors, we ought to show a little more clearly to our customers what happens to your rate when you go up. Anyway, that's all of my comments. My question is, it looks like our cheapest rate is $4.05 per thousand for anybody at a retail kind of level. Does that exceed the cost of our water production or are we subsidizing at that rate? Mr. Parker, no. It is believed that that rate covers our cost of water production, is sufficient to cover our cost of water production. And then what we plan to do is when we circle back, so we're right in the middle of a cost of service study now, we're actually wrapping that up. And when we come back to you, going back to your comment about the top two tiers that actually fits into that volume discussion that you're talking about with that rate. That is something we've discussed with the consultant previously, and we continue to discuss with them, and actually the board members have brought it before the city council members. So we do intend to address that with you this coming November, December, discussing those tiers and what the public utility board and the city council would like that to look like. But to answer your question, yes, that volume rate does recover our cost of producing water. That is correct. All right. Well, then we will reconvene into the regular meeting. The first item is to consider the approval of the August 24th, 2020 minutes. Does anybody have any changes or corrections? I move we approve. Second. All in favor, say aye. Next item is consider recommending the approval of the water fiscal year 2020-2021 operating in capital budget. Chair, PB members, Nick Vinson again. I have several items on the individual consideration for your approval today. Walking through, I do have a short presentation if you'd like to see that pro forma again for the water utility, be happy to pull it up. If not, we are looking for your approval today regarding the 2020-2021 budget. Does the board member want to see it again or? I think this is the same thing we've seen before, is it not? Correct. Yes, sir, Mr. Baffert is. You did see this before on August 23rd and August 24th. It's a 10-year forecast for the water utility, so absolutely you did see it before. I move we approve. All right. Do we have a second? Oh, Ed seconds. All in favor, say aye. Aye. Motion carries. All right, the next item is consider recommending the adoption of an ordinance. I'm sorry. You're on C. Yeah. Wastewater. Wastewater drainage. Sorry, my pages got mixed up here, sorry. Yeah, consider approval of wastewater drainage fiscal year 2021 operating in capital budgets. Again, is this the same? This is the same presentations we've seen. That is correct, yes ma'am. Any board member wish to have any further discussion? Do we have a motion? Move approval. Second. All in favor, say aye. Aye. Aye. Opposed? Motion carries. Consider recommending the approval of the electric fiscal year 2021 operating in capital budgets. Any further discussion on this item? I guess my comment on all these would be what's changed? Have any of these presentations changed since we saw them last time? Sir, and I'll be happy. Cassie, are you available to pull up the presentation really quick or I can just show them the performance if you're available to pull it up? I don't think it's on my screen here. Yes, Mr. Baffert, let me let me walk you through really quick just to reassure you. So if you wouldn't mind just going back to the beginning really quick. Cassie, I think we can start there maybe. So the water pro forma, this is the 10-year forecast. Nothing has changed. You can see the proposed 2021. We have that 2% rate decrease and the reserves are sufficient to be above those minimum reserve requirements. The debt coverage ratio is 1.25 in the proposed budget or above. Actually, it's 2.69. And then wastewater really quick, the next one. Same thing here, no change. There are no rate adjustments to the wastewater utility. You can see that 5% rate decrease we had in 2029. You know, in this utility is similar to water. The reserve is above the minimum reserve requirement of 13.3 with that minimum being 15.4 and the debt coverage ratio of 2. So it is well above that 1.25. And the next one I believe is a solid waste. This one will be considered for approval here shortly. No changes here. This is just consider the 5% or $1 decrease for a standard solid waste customer. So no changes to the solid waste 5-year forecast. Could I say something here, Nick? Yes, sir. I appreciate how you've highlighted the line that says use of reserves. Yes, sir. That's an important piece of information and I appreciate seeing that and how you've highlighted it like that. Okay. You're welcome. And then Cassie, if you don't mind, electric pro forma really quick. So to answer your question, Mr. Bafford, there are no changes to electric pro forma. This does not consider any rate changes. We have that no sell the TMP facility included in this pro forma. We do have that $21 million in decommissioning costs associated with that facility. And then that return on investment increasing from three and a half to 6%. And it does return back down starting in the fiscal year 2023 to 3.5%. So there are no changes to the electric pro forma either. And then that's it. I think that concludes this short presentation. Just talking about the adoption. So city council will adopt the budgets, the rates, everything on September 22nd, allowing that time for citizens input on September 15th, and then circling back with you in December with that detailed rate, cost of service and budget discussion. So there are no changes to the reform as to answer your question. I move we approve. All right. Second. Seconds. All in favor say aye. Aye. Motion carries. Since we've already seen the presentation, do we have a motion to approve the solid waste fiscal year 2021 operating in capital budget? So I'll move. Second. Okay. All in favor say aye. Aye. Aye. Opposed? Motion carries. Consider recommending the approval of the customer service fiscal year 2021 operating budget. That wasn't in the presentation. But we have the presentation available and Christa's on the phone today if you have questions. Like I previously stated, customer service used to be part of the water utility. We did break it out for transparency. At that time, we did communicate to the public utility board. We continue to bring it back to you. So it is in front of you today for approval before going to city council. Do you wish to see the presentation board? Nope. I'm good. I move we approve. Thank you. All in favor say aye. Aye. Motion carries. Now we'll go into the various rates. Item G is consider recommending the adoption of an ordinance establishing the rates for water and water service providing for repealer and providing for severability cause and providing for an effective date. Any questions from the board? Do we have a motion to approve those rates? I move we approve. Do we have a second? I have seconds. All in favor say aye. Aye. Aye. Any opposed? Motion carries. Consider recommending the adoption of an ordinance establishing the rates for electric service providing for a repealer providing for a severability clause and providing for an effective date. Are there any questions on those rates from the board? Do we have a motion to approve? I move. And a second? I have seconds. All in favor say aye. Aye. Aye. Opposed? Motion carries. Consider recommending the adoption of an ordinance establishing rates for solid waste and recycling collection service repealing ordinance 192523 providing for a repealer and providing a severability clause and providing for an effective date. Any questions? Do we have a motion to approve? So moved. Thank you Karen. Second. All in favor say aye. Aye. Aye. That one carries. And item J consider recommending the adoption of an ordinance of the City of Denton Texas amending the fiscal year 2019-2020 budget an annual program of services of the City of Denton to offer the adjustments to the electric fund of three million dollars for the purpose of purchasing the gas to energy facility and increase the general fund return on investment declaring a public purpose providing the severability clause and an open meetings clause in an effective date. And then Susan I do have one slide to walk the PUB members through this budget amendment. I will pull that up for you. So we are looking to amend the 1920 adopted budget today for the electric utility. Staff has been evaluating and each year what we do is we go through each of the budgets in the current fiscal year about this time to make sure that each fund has sufficient appropriations to get through the remainder of September leading up to the end of the fiscal year. Staff does feel like after looking at the electric fund and looking at purchase power and looking at some of the increases we had this actual fiscal year that wasn't included in the original budget we feel like we do need a budget amendment for the electric utility. So as stated on the slide we are looking to increase expense authority for the electric fund by three million dollars and this will increase the expense authority from 229.2 million to 232.2 million. This will go towards funding and in providing that expense authority for the increased ROI that was mentioned on the 10-year forecast from 3.5 percent to 6 percent. So 1.9 will go towards that and then 1.1 will go towards the DTE's facility purchase and this was considered for approval by the Public Utility Board and City Council a few weeks ago and that purchased it till 2.75. So staff feels like we can find appropriation authority within the budget to fund the remainder of that facility but we do feel like we need to increase expense authority for 1.1 million. And then next steps this will go to City Council each year we do take the budget amendments if there is one necessary to City Council usually on the date of budget adoption for the next fiscal year. So we will take this forward to City Council on September 22nd for approval. Now I'll pull this down and address any questions you may have. Thank you. Are there any questions? All right do we have a motion to approve this item? I move we approve. Thank you Russ. Do we have a second? I'll second. All in favor say aye. Aye. Opposed? Carries. Management reports. So Madam Chair we do have a couple items or few items on there. The first one is a memo following up with the PB on a request for this root cost analysis on various issues that may occur from time to time. Frank Pugley's put that together you have that in front of you. If you have any questions I think he's on the line but also Kenny Banks on the line can talk a little bit further if there's any questions from the members. Yes I have a question and this is something I initially brought up and I wondered if we could see the actual template that has been created to do this. I assume it's a spreadsheet of some kind but I don't know that. We can certainly follow up with you and get that to you for you to review. Okay one other thing that's important in doing this kind of thing is to have some kind of a tracking mechanism to follow up on the progress of any action items that come out of this analysis and that's important. It doesn't really do as much good to have a report and stick it in a drawer and never look at it again but if there's something that we need to do differently we need to be able to track the action that we take toward that toward that end and then after this is done I think it should be periodically I don't want to tell you what kind of frequency it should be but periodically the results of this should be shown to the utility board so we can look at it talk about it a little bit yeah we can certainly follow up with you you know I think we're customarily do things on an annual by annual basis you know and so we can certainly follow up with you on that okay okay if there's uh no other questions the uh the next items that you have in front of you are just future agenda items um certainly if there's any questions on those and then did want to mention that uh on the one outstanding request that we had um there is a briefing tomorrow with the city council and call session of our legal department uh on on the pub's request on that lawsuit information and so we hope that once we get direction legal we'll be providing to the pub kind of the outcome of that thank you thank you so with that susan that that uh concludes that section question please oh I'm sorry go ahead yeah this is sort of I could be under new business but it's a question and this might be for dr banks um I'm curious to know if if there the city has or utilities have any information um forecasting or regarding possible climate change impacts in the future to city and utility assets and operations board members can you hear me yes good um yes uh we um we do have information regarding climate projections uh ed I'm sorry you I wasn't able to catch the last part of your question could you repeat it again just so I'd be sure that I'm being thorough on this sure sure just basically what what you find are potential climate change impacts to city services and and assets operations that sort of thing right um we are working right now on the beginnings of a of a resiliency project which is I believe what you're you're kind of uh going towards with regards to the idea of impact right we are we're taking the results from our initial uh basically greenhouse gas management and initial work that we've done on emissions combining that with projections regionally and then looking on with regards to resiliency for things like weather impacts changes in rainfall patterns etc we still got some work to do on that it's a big project but it is something that we're working on right now and we could bring back to the public utility board when we're a little bit closer to completion yeah I think that'd be great if you could share with us uh just progress reports basically uh along the way and especially if there's anything that we can provide in the way of input um but I would like to you know be informed about the progress and target dates and that sort of thing so thanks yes we can definitely do that thank you very much I agree yeah all right any other questions then we're into concluding items does any board member wish to acknowledge a staff member or ask for something to be placed on the agenda I have an acknowledgement I received a flyer in the mail detailing all the road construction when it be finished and etc and I think that that's terrific that kind of communication with with with the residents is is just exactly the sort of thing that that needs to be done to so that everybody knows what's been done and what's going to be done so thanks to the folks who put that together thank you yes Karen I I just had a quick question I wasn't able to make the tour Ray Roberts I had a death in the family um is there going to be I mean I don't want to drag the staff through that again but if anybody else had to miss it would there be a chance for another tour we're certainly happy to schedule something if um you know if there's a couple of you that would like to have a do-over on that not not if it's just me but I wasn't sure how many people were able to make it I didn't make it either Karen I my daughter's making me behave if she wants to see me I think we only had two oh three three okay all right is that family of trolls still live up there in the system that's why I didn't go I'm afraid of trolls and oh yes Charlie go ahead I will add there's one of the three that did make the tour thanks to staff for accommodating us and um but seems like a neat facility and I enjoyed the opportunity to see it so thank you yeah I'll definitely agree with that it was a very good tour very good explanation and very beneficial for me I could understand what they were talking about that was really great I also would like to piggyback on that on the streets that every time I try to get out of my neighborhood I remind myself how wonderful it's going to be because these guys are working six days a week to get these streets finished and they're working very hard so it's it's a it is a challenge now but it will be so much better and I'm excited about it okay and and I want to thank the staff I was one of the people who got the pass-due call for my automatic payment on my utility bill and I want to thank Krista and staff for getting a memo out to us so quickly addressing the issue and um I got it paid that's the important thing so all right anybody else okay closed meeting um deliberations regarding the certain public power utilities competitive matters under Texas government code section five five one point zero eight six consultation with attorneys under Texas government code five five one point zero seven one receive information from staff about and discuss and deliberate the city's current renewable energy resources portfolio to the opportunities to add additional renewable resources to the portfolio consultation with the city's attorneys regarding legal issues associated with the procurement of additional renewable energy resources including but not limited to agreements related to the above where discussions of these legal matters in an open meeting would conflict with the duty of the city's attorneys to the city of Denton and the Denton city council under Texas disciplinary rules of professional conduct of the state board of Texas so with that we're in closed session and susan if you could just give us