Oct 26, 2020 Public Utilities Board on 2020-10-26 9:00 AM

- Nine o'clock and we have a quorum, a virtual quorum. So we'll call to order the October 26, 2020 public utility board meeting. The first item is the consent agenda items A through D. Does any board member wish to pull any item? Billy, go ahead. - I'd like to pull item A. - A. - Yes, A is an alpha. And then Ed, same one, okay. All right, how about motion to approve items B, C and D. - I move we approve those items. - All in favor say I. - I. - Opposed, item A. - Ed, go ahead. - Oh, you want me to go ahead? Okay, I just had a couple of questions. Are recyclables included in the total amount of disposed waste? - I'm gonna ask Brian Borner who should be on the line to respond to that. - Thank you. - Good morning, sir. This is Brian Borner, director of solid waste to the city of Denton. The fee or tax that the state charges is only for items that are disposed. So the material that actually enters the landfill, anything that we're able to divert, whether it's from our bins on the curb or the yard waste program, that tonnage is not accounted for in this calculation. - Okay, so would I be correct in assuming that if the city did ramp up a really comprehensive composting program that it would reduce this annual tax to the TCEQ? - If we did that, did something with relation to big metals, textile recycling, anything that diverts tonnage from the landfill, again, would reduce this. But again, this is not in addition to what the landfill pays. I can equate this to the taxes you pay when you purchase fuel for your vehicle. You pay, let's say, $2 a gallon, almost 45 cents of that is actually state and then federal fees. You never see it, there's not a tax for it. Same thing with our landfill gate rates. If we send zero to the landfill, we pay zero to the state. If we send 100 tons, then we pay the 94 cents per ton on that 100 ton valuation. - So conceivably then, if there were a robust food waste recycling or composting program would reduce that fee because the tonnage would be less going into the landfill. Is that a safe assumption to make? - That is a correct statement, but again, it's net neutral to the revenue of the city of Denton. - Okay, thank you. - Billy, did you have a different question? - Yes, I knew the heads would be smarter than mine, so I'll let him go first. I have a two-fold question. For that said quarter, I'm assuming that means there's around 450,000, 440 something thousand tons or 460,000 tons. What were the revenues for that said quarter and do we have an estimate of what the outside sourced material coming in from that quarter might be? - That's a really good question and in most quarters, about half is what is called outside waste, either from our third party haulers under contract or just your mom and pops that are coming, hauling material here coming across the scale. The remainder of it comes from within the city of Denton. And again, seasonally it ebbs and flows, but again the roughly 460,000 tons that this would equate to is about 100,000 tons on average per quarter. - It was 94 cents a ton, I thought. - That is correct. - So okay, I'm sorry, you're saying 100,000 tons of that is probably outside waste or mom and pop, we don't know where it came from. - Well, it's half of that. Again, half of our tonnage comes in from outside the city of Denton and it could just be the person that lives right across the city limits area. We have mom and pops and just residents of Lewisville and Aubrey and Pilot Point and Sanger and Valley View that put things in the back of their cars, their trucks and bring it here. And then we also have the contract waste haulers. So about half of any of the material that's coming in in any given quarter will be roughly waste from outside the city of Denton. - Okay, all right. I'm not a big fan of that. I realize it generates revenues, but I've always been a fan of prolonging the life of the existing landfill rather than letting other folks come in. Obviously there's a monetary factor there and there's an environmental factor as well. So anyway, thank you for your answers. - Thank you. - Karen, did you have a question? - You're muted. - You're muted, Karen. - Sorry, there we go. I just wanna say I had no idea the amount from outside was that much. I had no idea. That just changes the picture for me completely on those contracts that we just approved for the rates. I think we just changed the rates at which outside Denton people were bringing stuff to the landfill. We just approved, I think a rate increase, I don't remember exactly, but we addressed that at the PUB and I had no idea. It was so, thanks for bringing that up, Billy and Ed, because that's a game changer for me. I think it's half of what's going into our landfill is from non-City of Denton people for a municipal utility. Doesn't seem like our job to take care of Lewisville. So anyway, thanks to you guys for bringing that up. All right, do we have a motion to approve? - So moved. - Did you say second, Billy? - Will. - Second. - All in favor say aye. - Aye. - Opposed? Motion carries. Next item is consideration approval of the October 12th, 2020 minutes. Do we have a motion to approve those? Ed's motioned and a second? - Second. - Okay, we'll give it to Karen. You both said it at the same time. All in favor say aye. - Aye. - Opposed? Okay, then management reports. - So on your management reports, we didn't have any specific memos this week. Although I did send you guys a email on Friday regarding the transmission cost of service for DME and we'll be bringing you additional information on that on December 14th, when we come back to you and I do a year end wrap up discussion on where the utilities ended up. We will have a discussion with you about what potential impacts that may be having. Again, we're required by November of 2021 to submit that application to the Public Utility Commission of Texas. The other item that's on here for December 14th is an item from our engineering group to discuss construction specifications and standard details. There'll be a work session on that. And then the next item is the new business action items. I just wanted to make sure that we were all on board with the first item having been completed on the request for the lawsuit at DME. And so I just wanna make sure that we're all good with that. And then the only item that we have remaining is a discussion pilot project on recycling residential composting. So with that, that concludes our management report. If you have any questions. - Robert, do you have a question? You're on mute. - Here we go. That report that you have to file from the Public Utility Commission, that seemed rather extensive. Do they usually not give you much? I would think you would get more time for that. Is that short of short notice or? - Well, we did not get a notice. I happened to find out two days before that hearing that that actually had been filed. And so we had a pretty robust conversation with our consultants about making sure that they're keeping an eye on that for us going forward. But we did participate in that. Terry Nolte provided a little bit of testimony to the commission, requested additional time and that was denied. The chair of the commission was pretty clear in her opening remarks on that item that we were gonna be called in for a full rate case. And so that's been decided. And so we're gonna be working with some extra consultants to go through that process. It has been 15 years since DME has done a full rate case, although we've been pretty diligent on submitting interim rate filings every year, at least once a year. And so they know what we're doing and they're very familiar. But unfortunately, that 28% rate of return, which is really a product of the method that's being utilized is somewhat deceiving. And I think they've kind of hung on to that. It wouldn't be a surprise for you to hear that the commission staff was intent of getting rid of that methodology that we've been using, but they weren't successful. And so we're gonna work with someone to come in and help us kind of go through the various methodologies, make sure that we protect our utility and also our rate payers as best we can and then take that forward. - It seemed like it was short notice. - Yes, ma'am. - Thank you. - Billy? - Just to follow up on that. In our history, I have been told through staff, of course, not my education. That we were always worried about going back for rate case study, because we thought that we were getting a pretty good return with what we were getting without producing new transmission lines. But is that a concern that that 28, is it 28.5? - It's 28.05. I would tell you that our effective rate of return has really been more like 16 to 19%. So we've certainly been well below that. So I think there's probably some room there that if they were to come down, we'd probably be a revenue neutral impact to us. I think where those statements have come from has really been what other IOUs and MOUs, non IOUs have seen recently in single digit rate of returns. And so I think that's where the potential danger is. But again, we're one of very few, as I understand, entities that use this cashflow methodology. So I think once we look at the other methodologies, there's one methodology that only IOUs can utilize so that won't be available to us. But we'll go through all three of them. There's a potential here that from a cashflow standpoint, it may still be a net neutral, even if it's a lower rate of return. I think at the end, if that's what happens, we'll probably be in good footing. But until we go through those calculations, Billy, still unknown. - Got a question? - Thanks, Tony. - Go ahead. - Tony, for the sake of people who might be watching this and might not know, what basically is this cost of service study about and what is its purpose? - Well, so the city invests in transmission assets that go to benefit the entire Archive grid. And so all users of that system pay for a portion of those transmission assets. And so this is really a return on the city's investment for making these types of asset investments that go to benefit all the ERCOT system, not just the municipal electric. And so it gets passed through to everyone. Likewise, there's assets that we utilize that don't belong to the city of Denton that we also compensate. And you'll see some of those payment authorizations coming to you here in the next meeting or so. So we invest in transmission assets that benefit the system, but we also benefit from investments of others. And so it's a way for us to kind of improve the overall system. - Thanks. - Yes, sir. - Then it's concluding items. Does any board member wish to have a future agenda item or have any comments to make at this point? Go ahead, Billy. - Thank you, Susan. Okay, so in the discussion of the outside waste of the landfill, and I think maybe, and I will, obviously the council may want to look at this as well, but I'd like to be able to give them a good recommendation going forward of what we might want to do about the outside waste, what that effect is on the life of the landfill, number one. Number two, what's the effect of revenues? Because I realized that will cost the current taxpayers more. That's the downfall of eliminating or reducing outside waste. And obviously, if we are gonna take outside waste, should we raise those rates? And the effect of raising those rates on whether they'll come or not. - And will that be a part of the solid waste management plan update that we're currently working on? - I think I'll-- - This is Brian Burner. - No, go ahead, Brian. - Yeah, this is Brian Burner again. Revenues and cost of service will be evaluated as part of the solid waste strategy and looking at where our waste is coming from and how it's managed from a waste shed standpoint, that will be part of the evaluation of the solid waste management strategy. - Okay, does that satisfy you, Billy? - I think so. I just like to make sure it's specific to that category and hopefully that's taken out into a separate category because I know that's a big deal and it was a discussion we had 15 years ago as well. - I have a question. - Yes, go ahead. - Correct me if I'm wrong, the current contracts with outside haulers are for three years. Is that correct? And how many? - That is correct. - And how many, I know there was, how many are there? How many haulers? - There are six contracts that we have, four haulers and two municipalities. - And I remember I recall asking quite a while ago and I don't think the matter had not been settled but no one could tell at that point which haulers were bringing recycled material and which haulers weren't or if the materials had not been recycled. You said somebody, perhaps it was you, I don't recall, I apologize, but said that that was something that had to be worked out. So basically what I'm asking in a broad way is are there any recycling requirements for this outside garbage? Does that make any sense? - It does, Ed, we can certainly get you that information as part of bringing this back. - Okay, I appreciate it greatly. Thank you. - I guess there are no other items. Do we have a motion to adjourn? - I move we adjourn. - All right. - Second. - There we go. See you later. - Thank you all. - Thank you, special records. - Thank you. - Take care.