Feb 23, 2026 Public Utilities Board on 2026-02-23 9:00 AM

[00:00:07]

REGULARLY SCHEDULED MEETING OF THE DENTON PUBLIC UTILITIES BOARD. IT IS 9 A.M. ON FEBRUARY 23RD AND WE HAVE A QUORUM PRESENT. OUR FIRST ITEM OF BUSINESS IS PRESENTATIONS FROM MEMBERS OF THE PUBLIC. DO WE HAVE ANY PRESENTATIONS? MOVING ON. WE HAVE A CONSENT AGENDA.

[2. CONSENT AGENDA]

[A. Consider approval of the February 9, 2026 minutes.]

[B. Consider recommending adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation, authorizing the City Manager to execute a Construction Manager at Risk contract with Sundt Construction, Inc., for construction phase services for the Pecan Creek Water Reclamation Plant Expansion Project for the Water Utilities Department; providing for the expenditure of funds therefor; and providing an effective date (RFP 8289 - awarded to Sundt Construction, Inc., including the first Guaranteed Maximum Price in the partial not-to-exceed amount of $92,321,565.00).]

RECLAMATION PLANT EXPANSION. >> GOOD MORNING. BOARD. MY NAME IS DAVID BROWN. I'M A WATER UTILITIES PROJECT MANAGER. TODAY I'M HERE TO PRESENT TO YOU A VITAL, VITAL STEP IN OUR LONG TERM INFRASTRUCTURE STRATEGY AT THE PECAN CREEK WATER RECLAMATION PLANT. WE ARE SEEKING APPROVAL FOR A CONSTRUCTION MANAGER AT RISK CONSTRUCTION PHASE CONTRACT AND A GUARANTEED MAXIMUM PRICE. GMP WON CONTRACT. THE PACKAGE REPRESENTS OUR COMMITMENT TO PROACTIVE CAPACITY MANAGEMENT AND FISCAL RESPONSIBILITY THROUGH A DELIVERY METHOD DESIGNED TO MITIGATE RISK AND ENSURE COST CERTAINTY FOR THE CITY. THE PECAN CREEK EXPANSION PROJECT IS A IS EXCUSE ME IS A STRATEGIC NECESSITY. SUPPORT DENTON'S CONTINUED CONTINUED GROWTH. THE PROJECT WILL DELIVER NEW TREATMENT FACILITY TO REPLACE THE 60 OVER 60 YEAR OLD AT THE PECAN CREEK LOCATION, WITH A CAPACITY OF 30 MILLION GALLONS PER DAY. ALSO TO MEET FUTURE REGULATORY COMPLIANCES WILL BE USING MBR TECHNOLOGY. MEMBRANE BIOREACTIVE, WHICH CREATES QUALITY EFFLUENT AND SUPERIOR WATER DISCHARGE INTO THE PECAN CREEK AREA THERE. THE SCOPE OF THIS EXPANSION INCLUDES COMPREHENSIVE IMPROVEMENTS TO SOLIDS HANDLING, DISINFECTION PROCESSES, AND THE CONSTRUCTION OF A NEW INTERCEPTOR AROUND THE PLANT, AND ALSO HIGH EFFICIENCY HEADWORKS FACILITY AND ALSO A MODERN CONTROL OPERATIONS BUILDING. TO ENSURE THE BEST VALUE. WE WENT THROUGH A RIGOROUS THREE THREE PART CMAR PROCUREMENT METHODOLOGY TO ESTABLISH THE GMP WORK CATEGORIES. CATEGORIZATION. THE PROJECT WAS PARTITIONED INTO FOUR SPECIALIZED CATEGORIES OF WORK, INCLUDING TESTING AND INSPECTION, SITE SURVEYING, EARTHWORKS, EXCAVATION, SITE UTILITY, AND YARD PIPING. WE ALSO HELD A SCOPE CONFIRMATION WHEN WE HAD INTERVIEWS WITH THESE BIDDERS. THE CMAA CONDUCTED THIS INTENSIVE INTERVIEWS WITH ALL THE BIDDING FIRMS. IT ALLOWED US TO CONFIRM THE SCOPE AND THEY EACH KNEW WHAT THE WHAT THE SCOPE WAS ABOUT WITH THE BIDDERS. WE WANT TO MAKE SURE THERE WEREN'T ANY GAPS THAT EXISTED BETWEEN THE PACKAGES AND THE KNOWLEDGE OF THE THE SCOPE FOR EACH PACKAGE. WHEN WE CALCULATE THE GMP SUNT COMBINED ALL OF THIS TOGETHER AND GAVE US A GUARANTEED MAXIMUM PRICE. THIS GMP ACCOUNTS FOR ALL THE SUBCONTRACTOR BIDS, GENERAL CONDITIONS, BOND AND INSURANCE REQUIREMENTS AND A DEFINED C CONTINGENCY AND ALSO CONTRACTOR'S FEE. GMP ONE PACKAGE BREAKDOWN GMP ONE PACKAGE AWARDS REFLECT A BALANCE OF SPECIALIZED THIRD PARTY EXPERTISE AND EFFICIENCY OF SELF-PERFORMING THROUGH SUNT AS WELL. THE CONTRACTOR IS FOLLOWS. TESTING AND INSPECTIONS WERE AWARDED TO ALLIANCE GEOTECHNICAL GROUP 771,007 717 $0.30 AND THEN SITE SURVEYING AND ENGINEERING SURVEYING 89,001 9580. EARTHWORKS AND EXCAVATION, LIKE I SAID, WILL BE SELF-PERFORMING BOTH AS EARTHWORKS AND SITE UTILITY. THE EARTHWORKS ALONE IS $38,185,991 AND SITE, UTILITY AND YARD PIPING, WHICH INCLUDES THAT INTERCEPTOR LARGE

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COST OF WORK. THE TOTAL COST OF WORK THAT WILL BE GOING ON. THAT'S JUST THE ACTUAL CONSTRUCTION WORK IS 63,025,000 FOR 37 RISK. THE CME CMR RISK CONTINGENCY IS 2,000,004 43 308.

AND THE ALLOWANCE IS $3.1 MILLION AND SOME CHANGE AND THEN CONSTRUCTION FEE IS 7%.

THE CONSTRUCTION FEE WAS NEGOTIATED WHEN WE HIRED SUNDT. THAT WAS PART OF THEIR INITIAL BID OR INITIAL DOCUMENTS TO BECOME THE SEEMORE. THE 7% AT 5,000,008 39 532 GENERAL CONDITIONS 14,000,007 92 438. PAYMENT AND PERFORMANCE BOND 648 931 AND INSURANCE 1,066,006 74. TOTAL GMP THERE IS 89 261 424. WITH OUR OWN OWNER'S CONTINGENCY OF 3 MILLION 060141.

THE CONTRACT AMOUNT 92,000,003 21 565. >> SAY, BEFORE YOU MOVE ON.

YEAH. IF YOU COULD GO BACK A SLIDE. >> SEE IF I GO BACK. YES, SIR.

>> THANK YOU. JUST FROM A GENERAL LOOK AT THIS. I MEAN, I'VE BEEN AROUND CONSTRUCTION, SO I KIND OF KNOW WHAT SOME OF THESE THINGS ARE, BUT MAYBE IT WOULD BE HELPFUL IF YOU WOULD TALK TO US A LITTLE BIT ABOUT THE DIFFERENCE BETWEEN THE CONSTRUCTION FEE, GENERAL

CONDITIONS AND THE CM AT RISK CONTINGENCY? >> YES, SIR. A COUPLE OF THINGS.

THE. THE CONSTRUCTION FEE, THAT'S THE 7%. THAT IS THE COST OF THEM ACTUALLY MANAGING OUT THERE. ALL THEIR WORK INVOLVED IN MANAGING THE PROJECT, THAT'S THAT $5 MILLION. AND THIS IS FOR THIS GMP, WHICH WOULD BE, LIKE I SAID, WHAT I INCLUDED IN THE PACKAGE THERE, THAT'S THEIR PRICE TO DO THE WORK AS A CMR AT RISK. AND THEN YOU WOULD LIKE TO KNOW ABOUT THIS

CONTINGENCY. OKAY. THE CMR CONTINGENCY FEE. >> WELL THEY'VE GOT A FEE.

THEY'VE GOT A CONTINGENCY AND THEY'VE GOT GENERAL CONDITIONS. YES. SO I THINK IT MIGHT BE HELPFUL TO JUST GIVE US A LITTLE OVERVIEW OF WHAT THE DIFFERENCES ARE IN THOSE LINE

ITEMS. >> SURE CAN ON THE ON THIS SEEMA'S CONTINGENCY. THAT IS THE THE MONEY THEY CAN USE IF THEY ARE OUT THERE AND THEY DIG SOMETHING UP AND THEY FIND SOMETHING OUT THERE THAT'S UNKNOWN. WE DID GEOTECHNICAL OUT THERE. WE DID THE BEST WE COULD AS FAR AS THE THE AS BUILDS FROM BEFORE FROM 63 THE AS BUILDS THIS CONTINGENCY FUND, THE CONTINGENCY IS WHAT THEY CAN USE TO KEEP GOING. IF THERE'S STUFF IF THERE'S DURING CONSTRUCTION, SOMETHING COMES UP AND THEY DIG UP CONCRETE THAT WE DIDN'T KNOW WAS THERE, OR THEY GET INTO SOMETHING WHERE SUBCONTRACTOR, WHICH THERE'S ONLY TWO EXTRA BESIDES SUNT, BUT HAS SOMETHING GO WRONG OR BAILS OUT. WE CAN USE THAT MONEY TO KEEP MOVING

FORWARD. >> SO THEY CAN CONTINUE WITHOUT HAVING TO COME BACK FOR A

CHANGE. ORDER ADDITIONAL. >> FUNDS, NO CHANGE ORDER. AND THAT'S THAT IS THAT'S UP TO THEM TO HOLD. YOU KNOW, IT'S THEIR RISK THAT THEY'RE TAKING IT ON, BUT ALSO THEY'RE GOING TO TRY TO MITIGATE AS MUCH AS THOSE RISKS AS THEY CAN. AND A LOT OF TIMES THAT MONEY IS, IS IS SAFE TO MOVE ON TO THE NEXT GMP. IF IT'S NOT USED, WE CAN PUT IT ON THE NEXT GMP FOR ANYTHING THAT MAY COME UP. OKAY. SO THAT'S WHAT THAT'S FOR IS TO KEEP GOING ON THE CONSTRUCTION, THE ALLOWANCES. THE ALLOWANCES ARE ARE THINGS LIKE, YOU KNOW HAVE I CAN LIST THEM OUT FOR YOU. IT'S THE ALLOWANCES ARE LIKE CONSTRUCTION ESCALATION TARIFFS THAT MAY COME UP.

THAT'S AN ALLOWANCE THERE 90 TO 100% RECONCILIATION ALLOWANCE BETWEEN THE 90 AND 100% PLANS.

IF SOMETHING COMES UP. AND THEN ALSO OVER THERE AT PECAN, WE'RE DOING WE'RE REMOVING ALL THE OVERS WHICH ARE THAT'S PART OF THAT ALLOWANCE. OVERS ARE FROM THE THE DYNO DIRT PROCESS. AND IT'S LEFTOVERS THAT WE COULDN'T USE FOR YEARS. AND IT'S STACKED UP OVER THERE. THAT'S AN ALLOWANCE. IF WE GO OVER WHAT WAS PLANNED OVER ON THE OVERS, WE CAN GET RID OF THOSE. AND THEN ALSO STREET SWEEPING ALLOWANCE. WE'RE GOING TO MAINTAIN THE STREET OUT THERE.

YOU KNOW, IF IT DOESN'T RAIN WE WON'T GET MUD OUT THERE. BUT IF THERE'S RAIN, WE DON'T KNOW

EXACT HOW MUCH WE'LL NEED TO DO THE STREET SWEEPING OUT THERE. >> SO THAT'S JUST A DERIVED

PERCENTAGE FROM THE COST OF CONSTRUCTION. >> YES, SIR.

>> OKAY. >> AND THEN OWNER CONTINGENCY IS BASICALLY DURING CONSTRUCTION. IT'S WE CONTROL THAT AS OUR OWNER AS WE THE CITY. IF SOMETHING COMES UP THAT AS FAR AS LIKE AN EQUIPMENT SAY EQUIPMENT GOES EQUIPMENT COMPANY GOES OUT OF

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>> SO IF NEITHER THE OWNER NOR THE CONSTRUCTION MANAGER AT RISK HAVE TO USE THEIR CONTINGENCY SO THOSE MONIES COME BACK TO THE CITY. YES, SIR. OKAY. AND HOW ABOUT THE GENERAL

CONDITIONS? >> THE GENERAL CONDITIONS, LIKE I SAID, ARE THINGS THAT ARE USED THAT THAT'S ACTUALLY WHAT THEY'RE USED FOR, ACTUALLY JUST DOING THE JOB OUT THERE. THE

GENERAL CONDITIONS ARE. >> WHAT ARE SOME EXAMPLES OF THAT LIKE THAT. I MEAN IT'S A

$15 MILLION LINE ITEM. IT'S ONE OF THE BIGGEST ONES. >> THE GENERAL CONDITIONS ARE PERFORMANCE BONDS, TRAILERS, ALL THEIR MANAGEMENT OUT THERE. ANYTHING THAT HAS TO DO WITH MANAGING THE ACTUAL SUBCONTRACTORS OUT THERE, THAT'S THEIR THAT'S WHERE THEIR

MONEY IS MADE. >> SO ESSENTIALLY THOSE ARE THEIR OVERHEAD COSTS FOR BEING AT THE SITE FOR THE FIVE YEARS OF THE PROJECT. YES, SIR. OKAY. THANK YOU.

>> YEAH. SO WE'VE KEPT A PRETTY TIGHT SCHEDULE LIKE WE COULD SEE HERE. THE THE DESIGN WAS APPROVED IN JUNE. WE DID GET APPROVAL FOR SEYMOUR IN FEBRUARY OF 24. AND NOW WE'RE LOOKING FOR A NOTICE TO PROCEED, APPROVAL FROM PB AND COUNCIL TO MOVE FORWARD. TO START WITH THE DIRT WORK OUT THERE ON APRIL 1ST. AND THEN THE ESTIMATED CONSTRUCTION COMPLETION IS QUARTER FOUR OF 2031. SO WITH THAT, I WOULD LIKE TO ASK FOR ADOPTION OF THE CONTRACT BETWEEN CITY DENTON SUNDT AND NOT TO EXCEED 92,000,003 21 565 ANY QUESTIONS? YEAH.

>> COULD YOU GO BACK TO SLIDE TWO FOR ME? I'M A VISUAL GUY, SO SHARE WITH ME THE EXISTING

VERSUS THE NEW. >> OKAY I CAN USE CAN THAT POINTER. YOU SEE THAT POINTER OKAY. YES OKAY. THIS IS THE EXISTING PLANT. SO THIS IS EXISTING PECAN CREEK WATER

RECLAMATION PLANT. AND THIS WILL BE THE NEW PLANT HERE. >> AND THE CONSTRUCTION TO THE

LEFT OF THAT ROAD OF THE EXISTING. WHAT IS THAT. >> THIS RIGHT HERE.

>> NO FURTHER UP. RIGHT OVER THERE. >> OH THIS IS ACTUALLY THE

BIOSOLIDS. I MEAN, BIOSOLIDS, DINO DIRT AREA. >> THAT'S OKAY. THANK YOU I WAS

CURIOUS. >> SO THAT KIND OF GIVES YOU A REFERENCE WHERE IT'S AT.

>> AND THEN COULD YOU GO TO SLIDE FOUR? >> YES.

>> THE VENDORS THAT YOU HAVE, WE'VE USED ALL OF THEM BEFORE. >> I BELIEVE. YES. WE'VE USED EVERYONE EXCEPT HANNAH I BELIEVE SO WE'VE USED ALLIANCE GEOTECHNICAL GROUP. I BELIEVE IN THE CITY BEFORE. I THINK WE MIGHT HAVE USED THEM ON 1 OR 2 JOBS THAT I CAN REMEMBER. AND THEN, OF COURSE, SUNDT HAS DONE A LOT OF WORK ON OUR STREETS OVER HERE AT THE CITY.

>> DO YOU RECALL? THANK YOU. DO YOU RECALL HOW MANY VENDORS DID THE BID FOR THE SITE SURVEY, OR

WAS THAT A PACKAGE? >> I DO HAVE THE NOTICE ON THAT. WE HAD EIGHT TOTAL BIDS FOR THESE ALL THESE PACKAGES TOGETHER, 41 I CAN JUST TELL YOU WE REACHED OUT TO 41 VENDORS FOR THESE PACKAGES. AND WITH THAT 11 WERE ACTIVE BIDDERS. AND WE ONLY RECEIVED EIGHT BIDS FOR THAT. SO AND THEN ON THE TESTING WAS ACTUALLY I BELIEVE TESTING AND INSPECTIONS ACTUALLY HAD FOUR AND ONLY TWO TWO BIDS ON SITE SURVEYING.

>> TWO. YEAH, ONE OF THEM LOCAL. >> I CAN'T I DON'T HAVE IT. >> LISTED RIGHT HERE. THAT'S FINE. THANK YOU. THEN COULD YOU GO TO SLIDE FIVE, PLEASE? I WAS INTRIGUED WHEN YOU TALKED ABOUT ON C ALLOWANCES. YOU HAD MENTIONED TARIFF COSTS. YES, SIR. IS THAT BASED WITH THE TARIFFS BE BASED ON THE EQUIPMENT, THE MATERIAL. WHAT WOULD THAT HAVE BEEN BASED ON.

>> BASED ON MATERIAL. >> AND I KNOW WE'VE HAD THIS IN THE PAST WHERE WHEN THE TARIFFS FIRST STARTED, WE HAD SOME ISSUES WITH SOMETHING DOWN IN MEXICO AND SUCH. AND WE WERE TOLD THAT YOU HAD LANGUAGE WITHIN THE CONTRACT THAT WOULD EVEN POSSIBLY CANCEL THE CONTRACT IF THE TARIFFS WENT TOO HIGH. I'M JUST CURIOUS IS THAT THE TARIFFS WERE GOING TO

BE PAYING FOR. >> THAT'S JUST THE ALLOWANCES IN CASE THE TARIFFS, WE HAVEN'T

SEEN ANY HIGHER TARIFF ESCALATION AS OF YET. >> BUT MY QUESTION IS IF THE IF

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>> THAT'S THROUGH THOSE ALLOWANCES. YES SIR. AND THAT'S BUILT INTO THE CONTRACT. SO THAT WOULD TAKE CARE OF THAT. I DON'T KNOW IF THAT ANSWERED THAT OR NOT.

>> WELL IT SEEMS TO BE RATHER LOW AS TO THE ALLOWANCE BECAUSE THE TARIFFS, IF WE'RE LOOKING AT TEN, 20% OF, WELL, LET'S SAY $10 MILLION, I'M JUST ASKING THAT QUESTION. JUST YEAH, THERE

IT IS. WHO WANTS TO COME UP? >> GOOD MORNING, KYLE PEDIGO, PLANNING ENGINEERING, PLANNING AND ENGINEERING DIVISION MANAGER. SO WERE YOU. LET ME REPHRASE YOUR QUESTION. WERE YOU ASKING, DO WE HAVE KIND OF AN OUT ON OUR CONTRACTS IF THE TARIFFS ESCALATE TOO FAR?

>> THAT'S ONE QUESTION. >> YES OKAY. I DO BELIEVE WE HAVE AN OUT ON THERE. THESE ARE ALLOWANCES JUST IN CASE THE TARIFFS ARE WITHIN THAT REASONABLE RANGE WHERE WE WOULD

PAY TO KEEP THE CONTRACT GOING. >> SO THE SECOND QUESTION WOULD BE WITH THE DO YOU HAVE A SUGGESTED OR DO YOU HAVE A PROJECTED TARIFF COST THAT THAT THREE BECAUSE THAT 3 MILLION IS

COVERING MORE THAN JUST THE TARIFFS. >> YES. THE ALLOWANCES WOULD COVER MORE THAN JUST THE TARIFFS I BELIEVE IN THE CALCULATIONS. I DON'T HAVE THE

CALCULATIONS IN FRONT OF ME, BUT IT'S A BASIC PERCENT. >> THAT'S FINE. NOW IF IT GOES OVER THAT PERCENTAGE AND WE DON'T CANCEL, CANCEL IT FOR WHATEVER REASON. ARE WE EATING

THAT TARIFF EXPENSE? THAT BEING THE CITY OF DENTON? >> YES. SO UNLESS LORI HAS A

DIFFERENT EXPLANATION. >> HOW ABOUT THAT? I GOT THREE. >> LORI FUEL PURCHASING MANAGER.

WE CAN LOOK INTO THESE QUESTIONS AND GET YOU A BETTER ANSWER. THIS IS OUR SMART CONTRACT, WHICH IS DIFFERENT FROM OUR STANDARD CONTRACT THAT WE TALKED ABOUT, WHERE WE HAVE LANGUAGE IN THERE TO TERMINATE AND GET OUT. SO I'D HAVE TO SINCE THIS IS CONSTRUCTION BASED OFF OF SEYMOUR, I'D HAVE TO GO RESEARCH THAT AND SEE EXACTLY WHAT WE HAVE IN THE LANGUAGE TO BE ABLE TO SEE IF WE COULD, WHEN WE CAN TERMINATE, OR WHEN WE CAN STEP OUT OF THE

CONTRACT. >> THIS IS A CREATURE THAT IS HAS NO BOUNDARIES, TARIFFS. AND THAT'S WHY I BRING THAT UP. BECAUSE IT COULD, IT COULD, IT COULD BE A LOT OF MONEY ALL OF A SUDDEN. AND I JUST WANT US TO BE READY AND CITIZENS BE READY AND THE COUNCIL BE READY. MR. CHAIRMAN, THAT'S THE REASON I THANK YOU FOR TAKING THE TIME TO GOING OVER THIS WITH ME.

>> ANY ADDITIONAL QUESTIONS? I DO HAVE ONE. OKAY. >> SO JUST.

>> HELP ME UNDERSTAND THIS PROCESS A LITTLE BIT IN TERMS OF OF OUR $63 MILLION HARD I'LL CALL IT HARD COST THERE. 61 MILLION OF IT IS BEING PERFORMED BY SUNDT, WHICH I ASSUME IN THEIR 61 MILLION THEY ALREADY HAVE OVERHEAD AND PROFIT. AND THEN THEY'RE CATCHING ANOTHER 7% CONSTRUCTION FEE ON WORK THAT THEY'RE ALREADY DOING. SO HELP ME, TO MY UNTRAINED EYE, I ALMOST FEEL LIKE, IS THAT A DOUBLE DIP SOMEWHERE? ARE WE HOW DOES THIS WORK FOR WORK THEY'RE ALREADY DOING AND THEY'RE CATCHING A FEE FOR WORK THEY'RE ALREADY DOING THAT ALREADY HAS OVERHEAD AND PROFIT IN IT, TO MY UNTRAINED EYE.

HELP ME UNDERSTAND THAT. >> YES, SIR. SEYMOUR PROCESS. WE ACTUALLY HIRE SUNDT AS A CONSTRUCTION MANAGER AT RISK THERE TO COME IN TO HELP US MOVE FORWARD WITH THIS PROJECT.

THE ADVANTAGE IS EARLY OUT PACKAGES. I'M JUST EXPLAINING THIS AS FAR AS THE SEYMOUR PROCESS. THEY THEY ALSO HELP US TO WORK WITH THE ENGINEER TO FOR CONSTRUCTABILITY SO WE CAN MITIGATE RISKS THAT WE DON'T HAVE A LONG DESIGN PERIOD AS WELL, BECAUSE A PROJECT LIKE THIS WOULD TAKE TWO YEARS TO DESIGN AND THEN GO OUT TO BID, ETCETERA, ABLE TO GET START ON IT PRETTY QUICK. THAT'S, THAT'S THAT'S WHY WE'RE USING SEYMOUR WITH THAT, SUNDT ACTUALLY GOES OUT AND REACHES OUT FOR THE BIDDERS. OKAY. LIKE I SAID, 41 COMPANIES WERE REACHED. THEY HAD AN OUT. THEY HAD AN OUTREACH PROGRAM AT THE CONVENTION CENTER TO GET THESE GUYS IN HERE ON THESE TWO BID PACKAGES. I KNOW THAT'S THAT'S IT LOOKS THIS WAY AS FAR AS THE EARTHWORKS AND ALSO ON THE YARD PIPE, ONE THING HAPPENED. THEY LOOK AT BEST VALUE SELECTION CRITERIA, WHICH IS SAFETY, PAST PERFORMANCE. MB, SB PARTICIPATION WITH THE MINORITY AND ALSO PRICING. SO THAT'S WHAT THEY LOOK AT. AND WE LOOKED AT THAT'S WHAT WE CAME UP WITH AS FAR AS EVALUATING THE BIDDERS WITH THAT CAME IN. AND I HOPE THAT'S ANSWERING THE QUESTION. I'M GOING TO TRY TO GO A LITTLE BIT FARTHER. SUNT WAS CHOSEN FOR BOTH OF THESE BECAUSE OF THE VALUE OF THE FOUNDATIONAL WORK THAT THEY'RE DOING. AND ALSO A LITTLE

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>> I'M SORRY. I THINK WE'RE GETTING A LITTLE INTO THE WEEDS. SO WITH THE WITH THE CMAA, IF YOU LOOK AT THE 7%, YOU CAN LOOK AT THAT AS THAT'S THE THE PROFIT THEY'RE TAKING. THAT'S THAT'S WHY IT'S NEGOTIATED DURING THE CMAA PROCESS. ALL OF THESE OTHER PACKAGES ARE COMPETITIVELY BID. SO WE HAVE THIS WE DON'T. SO BASICALLY SOLE SOURCE INCOME AND GIVE SOME OR GIVE THE CMAA WORK WITHOUT A COMPETITIVE BID PROCESS. WHEN WE LOOK AT THOSE BIDS WE ALSO LOOK AT BEST VALUE. SO IT'S NOT REALLY A DOUBLE DIP BECAUSE IT IS A COMPETITIVE BID.

SO THEY'RE NOT TAKING THIS AMOUNT OF PROFIT AND THEN GET GIVEN A BIG PACKAGE OF WORK. IT

ALL HAS TO BE SORTED THROUGH A COMPETITIVE BID PROCESS. >> THANK YOU.

>> ANY FURTHER QUESTIONS? >> WOULD IT BE FAIR TO SAY THAT IF WE DIDN'T HAVE THE 6 MILLION IN THE 14 MILLION, WE'D BE PAYING SOMEONE ELSE TO DESIGN THE PLANT FIRST AND THEN GOING

THROUGH A REGULAR PROCESS. >> AND GOING THROUGH A REGULAR PROCESS. AND PART OF THE PROBLEM WITH THAT ON A PROJECT THIS SIZE IS THE DESIGN NEVER CAPTURES EVERYTHING. YOUR CONSTRUCTABILITY BENEFITS, WHICH THE CMAA PROVIDES. SO DURING THAT DESIGN PROCESS, THEY HELP TO BRING THE OVERALL COST OF THAT. WE CATCH THOSE UPFRONT SO THAT WE DON'T PAY

MORE ON THE BACK END. >> THANK YOU. >> I DON'T SEE ANY MORE QUESTIONS. SO SO ENTERTAIN A MOTION. SO MOVED. WE HAVE A MOTION FOR APPROVAL. AND A SECOND. ALL IN FAVOR SAY AYE. ANY OPPOSED? MOTION CARRIES UNANIMOUSLY AND WE'LL MOVE ON

[C. Management Reports 1. Board Member Appointment Notification 2. Hickory Creek Road Phase 3 Memo 3. Future Agenda Items 4. New Business Action Items]

TO OUR NEXT ITEM OF BUSINESS MANAGEMENT REPORTS. >> MR. CHAIR, MEMBERS OF THE PUBLIC. SO WE HAVE A COUPLE OF FOLLOW UP ITEMS. THE FIRST ITEM IS FROM STEVEN JUST NOTIFYING YOU OF AN APPOINTMENT TO TO AWARD STEVEN IS HERE. SETH ALSO PROVIDED A FOLLOW UP ITEM MEMO REGARDING HICKORY CREEK ROAD PHASE THREE THAT WAS REQUESTED PREVIOUSLY BY MR. CHEEK. AND SO THAT'S THERE AND SET THIS HERE IF THERE'S ANY QUESTIONS. AND THEN JUST GO INTO THE FUTURE AGENDA ITEMS. IT'S THE FORM THAT WE PROVIDE TO YOU IS BLANK. BUT WE DID SEND YOU AN EMAIL ADVISING YOU OF SOME BUDGET DATES. I JUST WANT TO REMIND YOU HERE. SO JUNE 22ND, THERE WILL BE A BUDGET UPDATE FOR YOU. JULY 13TH WILL ACTUALLY BE A BUDGET WORKSHOP WITH YOU AND OUR AND OUR BUDGET TEAM. AND THEN JULY 27TH IS WHEN WE'RE SCHEDULED TO TO ASK YOU FOR APPROVAL OF RATES AND BUDGETS TO BE RECOMMENDED TO THE COUNCIL. SO, SO THOSE ARE SOME PRETTY IMPORTANT DATES COMING UP HERE FOR YOU. PLEASE, PLEASE MAKE NOTE OF THOSE. THERE'S ANY CONFLICTS. PLEASE LET ME KNOW AS QUICKLY AS POSSIBLE. AND WE CAN WORK WITH THE BUDGET OFFICE, SEE WHAT WE CAN DO. THE ON THE NEW BUSINESS ACTION MATRIX. WE STILL WE DO HAVE AN ITEM THAT WAS REQUESTED AT THE LAST MEETING I THINK WAS MR. RYBACK. IT LOOKS LIKE WHAT THE WATER DEPARTMENT WASTEWATER DEPARTMENT'S PLAN TO DO IS TO BRING TO YOU SEVERAL UPDATES IN MARCH, JUNE, SEPTEMBER AND IN DECEMBER ON SOME OF THOSE MAJOR PROJECTS THAT THEY'RE WORKING ON. THOSE WILL LIKELY BE EITHER WORK SESSIONS OR OR A MEMO TO YOU. SO YES, SIR.

>> I WILL NOT BE HERE FOR THE MARCH 23RD DATE. >> JUNE OH, MARCH 23RD. OKAY.

>> YEAH. I WONDERED IF YOU COULD PRESS THAT BACK TO THE. >> I'LL TALK. I'LL TALK TO

STEVEN. >> YES, SIR. THANK YOU. >> AND THEN QUICKLY, ONE ITEM THAT'S NOT ON HERE THAT I DID GET AN EMAIL WAS REGARDING BRIDGE PAY OUR ONLINE, ONE OF OUR ONLINE CREDIT CARD PAYMENT VENDORS. SINCE THAT WASN'T POSTED HERE TODAY FOR DISCUSSION, WE ARE GOING TO PUT THAT ON A MATRIX. AND ONCE WE HAVE A LITTLE BIT MORE INFORMATION FOR BRIDGE PAY ON EXACTLY WHAT HAPPENED, WE WILL BRING BACK AN ITEM FOR DISCUSSION WITH YOU. I WILL TELL YOU, WE HAVE IMPLEMENTED ANOTHER GATEWAY PROVIDER AND CREDIT CARD PROCESSOR. AND SO THAT ALL WENT LIVE LAST WEEK. WE'VE ADVISED ALL OUR OUR CUSTOMERS ABOUT THAT AND IT'S BEEN PERFORMING WELL. SO SO THAT'S EVERYTHING'S BACK UP BACK UP ONLINE JUST NOT WITH THE WITH THE PREVIOUS VENDOR. AND THEN THE LAST ITEM THAT I

[00:25:05]

SHE'S GOING TO BE OUR NEW CLIENT SERVICES SPECIALIST AT DME, DEALING WITH MANY OF OUR LARGE ACCOUNTS, BUT PRETTY MUCH ANYONE THAT CALLS US THAT NEEDS HELP WITH THEIR ACCOUNT, SHE'S ALSO GOING TO BE AVAILABLE TO TO HELP THEM. WE ARE LOOKING FOR HER REPLACEMENT SO SHE'S NOT QUITE GONE. SO THERE WILL BE SOMEONE TO TAKE HER SPOT AND AND CONTINUE TO BE THE ADMINISTRATIVE LIAISON FOR THIS BOARD. SO WITH THAT, HAPPY TO ANSWER ANY QUESTIONS THAT YOU

MAY HAVE. >> ARE THERE ANY QUESTIONS I WILL CHANNEL OUR ABSENT COMMISSIONER CHEEK TO ASK ON IN REGARD TO THE HICKORY CREEK ROAD PHASE THREE PROJECT? WHAT THIS SO THIS UNEXPECTED NATURAL GAS PIPELINE. IT DELAYED THE PROJECT ABOUT THREE YEARS. IS

THAT CORRECT? >> YEAH. SO GOOD MORNING, SETH GARCIA, DIRECTOR OF CAPITAL PROJECTS. SO NOT ONLY WERE WE FIGHTING WITH THE GAS LINE COMPANIES, THE MAIN CAUSE OF THE DELAY WAS THE RAILROAD AND THE RAILROAD MERGER THAT HAPPENED BETWEEN KANSAS CITY SOUTHERN AND CANADIAN PACIFIC. SO AS WE WERE WORKING THROUGH THOSE, WE IDENTIFIED TWO MORE GAS LINES, ONE IN IN LENGTH AND ONE IN EAGLE RIDGE REPLACEMENTS. ONE WAS TOO CLOSE TO A DRILL SHAFT, ROUGHLY LIKE THREE FEET TO A DRILL SHAFT. WE ACTUALLY SPOTTED THE LINE EXCAVATED AROUND IT, AND LINK HAD PERSONNEL OUT THERE THAT ALLOWED US TO DRILL THE DRILL SHAFT, AND THEN WE MOVED FORWARD WITH THE RELOCATION AFTER THE DRILL SHAFT WAS IN PLACE. THEY ARE OUT OF THE WAY. THERE WAS A SECOND LINE FOR EAGLE RIDGE THAT WAS RUNNING ALMOST PARALLEL WITH A LOT OF THE BENTS THAT HAD DRILL SHAFTS. WE WERE ABLE TO CLEAR THE MAJORITY OF THEM. THERE WAS FOUR THAT WERE IN CONFLICT ON THE FAR EAST ABUTMENT. AND I CAN CONFIRM AS OF FRIDAY, EAGLE RIDGE HAS RELOCATED THAT LINE AND IT IS NOW OUT OF SERVICE.

SO THEY'RE MOBILIZING BACK THE DRILLERS TO FINISH THE LAST DRILL SHAFTS. AND LUCKILY, WE WERE ABLE TO GET ENOUGH DRILL SHAFTS IN PLACE AND POUR CAPS THAT THEY'RE ACTUALLY HANGING BEAMS RIGHT NOW, THE STEEL BEAMS OVER THE CREEK. SO WE DIDN'T HAVE ANY FURTHER DELAY

DUE TO THE GAS LINE RELOCATIONS. >> OKAY. SO BUT SO I GUESS THE RAILROAD THE RAILROAD CONFLICT

WAS THE BIGGEST DELAY THERE. >> YES. YEAH, IT WAS THE MERGER OF THE TWO RAILROADS.

>> AND DO YOU HAVE AN ESTIMATE OF THE INCREASE IN COST FOR DELAYING THIS PROJECT THREE

YEARS. >> YEAH. SO THAT CHANGE ORDER ACTUALLY CAME BEFORE CITY COUNCIL BACK IN MAY OF LAST YEAR. THE NOT TO EXCEED ON THAT WAS ROUGHLY $9 MILLION.

>> OKAY. THANK YOU. >> YES, SIR. >> AND WHEN DO WE ANTICIPATE

COMPLETION OF SAID. >> GREAT QUESTION. SO I THINK IN THE MEMO IT SAYS APRIL OF 27 IS SUBSTANTIAL COMPLETION. MAY OF 27 WILL BE FINAL. WE DO ANTICIPATE WE'RE GOING TO HAVE TRAFFIC GOING ACROSS THE BRIDGE WELL BEFORE THAT. I WOULD EXPECT PROBABLY THIS FALL WINTER YOU'LL HAVE TRAFFIC GOING ACROSS THE BRIDGE. SO BACK OPEN FOR ACCESS AS WE FINISH OUT THE SIDEWALKS AND OTHER REMAINING SMALL PIECES. YES, SIR.

>> SO MOST IMPORTANT QUESTION. SO WE'LL BE ABLE TO GET TO KROGER ON TEASLEY USING THAT

ROAD. YES. OKAY. >> BACK TO KROGER. YEAH H-E-B YOU'LL GO THE OTHER WAY.

>> OH THAT'S RIGHT. >> SO YOUR ICE CREAM WILL NOT MELT.

>> ALL RIGHT. ANY OTHER QUESTIONS? THANK YOU. >> THANK YOU.

>> AND I BELIEVE THAT IS OUR LAST ITEM OF BUSINESS. AND WE STAND ADJOURNED. OH, NO. OH.

[A. Receive a report, hold a discussion, and give staff direction regarding the City’s utility billing process for electric service.]

UTILITY BILLING PROCESS FOR ELECTRIC SERVICE. >> SO, MISTER CHAIR MEMBERS, PB TONY PUENTE, GENERAL MANAGER. AS I THINK I MENTIONED PREVIOUSLY, THIS ITEM HAD BEEN SCHEDULED TO COME TO THE PUBLIC IN ADVANCE OF THE COUNCIL, BUT BECAUSE OF WINTER STORM FERN, WE COULDN'T MOVE THE SCHEDULE AROUND. SO. SO I DID PRESENT THIS TO THE COUNCIL LAST WEEK.

I DID ADVISE THEM THAT THAT WE WOULD BE COMING TO YOU TODAY. AND WHAT I, WHAT I MENTIONED TO THEM IS THAT SINCE WE LIKELY ANTICIPATE CHANGE TO AT LEAST ONE ORDINANCE, MAYBE TWO, THAT WILL COME BACK TO THE PUB BEFORE IT GOES BACK TO THE COUNCIL, THAT ANY CHANGES THAT THE PB RECOMMENDS THAT MAY BE DIFFERENT FROM WHAT THE COUNCIL DIRECTED WILL BE REFLECTED IN THAT ORDINANCE. SO, SO CERTAINLY THEY, THEY, THEY WANT TO MAKE SURE THAT THE PB HAS A DUE SAY ON THIS PARTICULAR ITEM. SO. OKAY, SO JUST GOING TO GO OVER A LITTLE BIT OF BACKGROUND

[00:30:07]

WE'RE ADDING ABOUT A THOUSAND ON AN ANNUAL BASIS. TOTAL METERS THAT WE'RE ADDING ON ON AN ANNUAL BASIS RANGES FROM 5 TO 7000, AGAIN, WITH THE VAST MAJORITY BEING RESIDENTIAL, MULTIFAMILY TYPE. SO FOR DEMAND CHARGES, WE'RE ABLE TO RECLASSIFY THESE COMMERCIAL ACCOUNTS UP OR DOWN OUR RATE CLASSES, DEPENDING ON OTHER ON THEIR DEMAND OR OR THEIR PEAK.

WE DO HAVE SOMETHING THAT WE DO THIS A LITTLE BIT DIFFERENT FROM OTHER UTILITIES, AND THAT YOU HAVE TO HIT THAT PEAK IN TWO CONSECUTIVE MONTHS OVER THAT 12 MONTH PERIOD, AND THAT THEN DETERMINES IF YOU MOVE UP OR DOWN. AND THEN THERE'S ALSO A RATCHET THAT WE'LL TALK ABOUT LOCK IN PERIOD. SO FOR OVERBUILD AND UNDER BUILD ELECTRIC ACCOUNTS, THIS WAS THE ISSUE THAT WE HAD HERE. WE'VE THROUGH A REVIEW THAT WE WERE DOING AND IMPLEMENTING WORKFLOW CHANGE BETWEEN CUSTOMER SERVICE AND OUR METERING GROUP. WE FOUND THAT 218 COMMERCIAL ACCOUNTS HAD NOT BEEN ADJUSTED FOR DEMAND OVER A 24 MONTH PERIOD, SO STAFF INITIATED THOSE ADJUSTMENTS. AGAIN, WE HAD SOME. WE'LL GO OVER THE DETAILS ON SOME THAT WERE UNDER BILL, SOME THAT WERE OVERBUILD WITH FULL INTENT THAT WE WOULD COMMUNICATE TO THE CUSTOMER IN ADVANCE OF OF US EVER MAKING THOSE ADJUSTMENTS. UNFORTUNATELY, SOME CUSTOMERS DIDN'T HAVE ACCURATE CONTACT INFORMATION, AND AT LEAST ONE CUSTOMER DID NOT RECEIVE ANY KIND OF NOTICE AT ALL. I WILL TELL YOU, I'VE SPOKEN WITH THAT CUSTOMER NO LESS THAN FOUR TIMES. I THINK WE'RE NOW IN A GOOD SPOT WITH WITH THAT CUSTOMER, I WILL. I WILL TELL YOU EXACTLY WHAT I TOLD THE COUNCIL. HIS REQUEST IS THAT WE NOT CHARGE THEM ANYTHING FOR ANY BILLING THAT WE MADE. CERTAINLY NOT OUR RECOMMENDATION. BUT I THINK BASED ON THE RECOMMENDED RECOMMENDATION THAT WE'RE GOING TO MAKE, THAT WILL CERTAINLY GREATLY REDUCE THE AMOUNT OF, OF UNDER BILLING THAT THAT WILL BE MAKING TO HIM. SO, SO JUST A LITTLE DETAIL ON THE ADJUSTMENTS. SO AGAIN, 218 COMMERCIAL ACCOUNTS REPRESENTING A NET BACK BILLING. SO THIS IS MONEY THAT WE RECOVERED $331,000. WE HAD 32 ACCOUNTS THAT WERE OVERBILLED. SO CUSTOMERS THAT WE OWED A REFUND TO AND 186 CUSTOMERS THAT WERE UNDER BILLED OF THE OVERBILLED ACCOUNTS, THE TOTAL THAT WE REFUNDED BACK TO THOSE CUSTOMERS WAS A LITTLE OVER $51,000. THAT RANGED FROM ANYWHERE FROM $21 TO $10,000, WITH THE AVERAGE CREDIT BEING ABOUT 15, ALMOST $1,600. THE AVERAGE ANNUAL BILLING FOR THESE CUSTOMERS IS ABOUT ABOUT $11,000. AGAIN, THAT'S SO THAT'S ONE YEAR. SO YOU REALLY HAVE TO LOOK AT IT ON A TWO YEAR BASIS. SO ABOUT $22,000 OVER A TWO YEAR BASIS, $1,500, ABOUT 7% IS THE IMPACT UNDER BILLED ACCOUNTS. THESE ARE ACCOUNTS WHERE WE WENT BACK AND HAD TO RECOVER. THE TOTAL OF THAT WAS A LITTLE OVER $382,000. THEY RANGE FROM $21.52 UP TO 26, ALMOST $27,000, WITH THE AVERAGE OF THOSE BEING ABOUT A LITTLE OVER $2,000. SO. SO THE

[00:35:04]

BUT THEN ON TOP OF THAT, THEY'RE ALSO PAYING A DEMAND CHARGE. NOW, ALL THESE ACCOUNTS ALSO PAY THE ENERGY COST ADJUSTMENT AND ALSO THE TRANSMISSION COST RECOVERY FACTOR. BUT TODAY WE'RE JUST TALKING ABOUT THIS PARTICULAR ASPECT WHICH IS THE BASE RATE.

SO SO PER THAT ORDINANCE, THIS SETS OUT THAT HOW WE APPLY AND HOW WE LOOK AT DEMAND, YOU HAVE TO HIT THE MAXIMUM DEMAND FOR YOUR RATE CLASS OR THE MINIMUM FOR YOUR RATE CLASS OVER TWO CONSECUTIVE MONTHS FOR US TO THEN MOVE YOU UP OR MOVE YOU DOWN. IT ALSO CALLS FOR A 12 MONTH LOCK IN PERIOD. SO IF YOU MOVE UP OR YOU MOVE DOWN A RATE CLASS, THEN YOU'RE LOCKED INTO THAT RATE CLASS FOR A 12 MONTH PERIOD. RIGHT. AND WE'LL TALK ABOUT A LITTLE BIT ABOUT SOME OF THE NUANCES OF THAT AND THE RECOMMENDATION THAT WE'RE MAKING. AND THEN THE CALCULATION. SO EVERY MONTH FOR EVERY CUSTOMER, WE BASICALLY DO THIS THREE STEP CALCULATION WHERE WE BUILD A CUSTOMER BASED ON THE GREATER OF THE MAXIMUM ACTUAL MONTHLY KW OR DEMAND IN A 15 MINUTE INCREMENT INTERVAL, THE MINIMUM KW FOR THE RATE CLASS, OR 70% OF THE MAXIMUM MONTHLY KW OR DEMAND DURING THE PREVIOUS MONTHS OF MAY THROUGH OCTOBER. SO EVERY MONTH WE'RE WE'RE LOOKING AT THESE THREE CALCULATIONS AND WE'RE BILLING CUSTOMERS BASED ON THE GREATER OF THOSE. ONE OF THOSE THREE I KNOW IT SEEMS COMPLICATED, BUT I WILL TELL YOU IT'S IT'S CUSTOMARY IN THE INDUSTRY. SO BEST PRACTICES WE DO HAVE A RATE CONSULTANT THAT WE WORK WITH. WE DID ASK THEM TO TO JUST TELL US WHAT THEY THINK ABOUT ABOUT THIS PARTICULAR MATTER. AND SO BASED ON THAT AND BASED ON SURVEY, COMMERCIAL DEMAND CHARGES ARE THE NORM IN THE INDUSTRY. BUT THE APPLICATION THE CALCULATION DOES VARY. YES, SIR.

>> MAY I PRESUME THAT THE OTHER BILLING OVER BILLING AND THESE CALCULATIONS YOU'RE TALKING ABOUT ARE APPLY ONLY TO COMMERCIAL ACCOUNTS, OR DO THEY ALSO APPLY TO RESIDENTIAL.

>> ONLY COMMERCIAL ACCOUNTS AND ONLY THOSE TWO THE THE MEDIUM AND AND THE LARGE.

>> OKAY. >> THANK YOU. SO AND WHAT I WAS GOING TO SAY TOO WAS THAT PARTS OF THE NORTHERN STATES OF THE COUNTRY, THEY DO USE DEMAND ON RESIDENTIAL. IT'S NOT SOMETHING THAT WE GENERALLY DO DOWN HERE IN THE SOUTH. RIGHT. OR CERTAINLY NOT HERE AT, AT DME.

SO WE DID A SURVEY OF FIVE OTHER CITY OWNED ELECTRIC UTILITIES, CPS ENERGY IN SAN ANTONIO, AUSTIN ENERGY, GARLAND POWER AND LIGHT, BRYAN, TEXAS UTILITY, AND GEORGETOWN, THE LATTER THREE. YOU KNOW, WE KIND OF CONSIDER OUR SISTER UTILITIES JUST BECAUSE WE'RE RELATIVELY THE SAME SIZE AND IN RATE CLASSES. SO THE NUMBER AND THE PARAMETERS DO VARY. SOME UTILITIES, YOU KNOW, MAY ONLY HAVE TWO, SOME MAY HAVE THREE. AS AN EXAMPLE, UP UNTIL I THINK 22,000, DME ONLY HAD A SMALL AND A LARGE RATE CLASS. THE DME THEN ADDED THAT MEDIUM RATE CLASS TO REALLY TRY TO PINPOINT KIND OF WHERE WHERE THESE CUSTOMERS REALLY WERE DEMAND APPLICATION KIND OF THROUGHOUT. NOBODY CHARGES SMALL COMMERCIAL CUSTOMERS A DEMAND CHARGE. AND THEN ONE MONTH TENDS TO BE THE THE NORM WHEN IT COMES TO EVALUATING SOMEONE'S PEAK LOAD, RIGHT. REMEMBER WE DO TWO MONTHS, TWO CONSECUTIVE MONTHS. THE NORM OUT THERE IS ONE MONTH.

AND SO IF YOU HIT THAT MAXIMUM FOR YOUR RATE CLASS OR THE MINIMUM IN ONE MONTH, YOU AUTOMATICALLY GET ADJUSTED THAT THAT TENDS TO BE THE NORM. I WILL TELL YOU GARLAND POWER AND LIGHT ALSO DOES A TWO CONSECUTIVE MONTHS. THE OTHER THING TOO, THAT THAT I'LL MENTION IS THAT WE WE DO NOT OFFER ONLY ONE UTILITY BTU THAT WE COULD FIND OFFERS A DEMAND

[00:40:08]

AND MAKING THOSE KINDS OF ADJUSTMENTS, THEY ALL HAVE A 12 MONTH LOCK PERIOD. AND THE ONE THING THAT DOES VARY A LITTLE BIT HERE IS THAT. SO AFTER THE 12 MONTH PERIOD AT THE 13TH MONTH, WHAT WE DO IN DENTON IS WE THEN EVALUATE THAT ACCOUNT PROSPECTIVELY, RIGHT? WE DON'T TAKE INTO ACCOUNT WHAT HAPPENED IN THAT PREVIOUS 12 MONTHS. MOST OF THE UTILITIES, MOST OF THESE OTHER UTILITIES DO THAT. SO AT THE END OF THE 12 MONTH, THEY AUDIT WHAT HAPPENED DURING THAT LOCK IN PERIOD. AND SO DURING THAT LOCK IN PERIOD, IF YOU HIT TWO CONSECUTIVE MONTHS WHERE YOU WERE HIGHER, THEN YOU CAN MOVE TO THE TO THE HIGHER RATE. IF IT'S LOWER THEN YOU CAN MOVE. SO THEN THAT TAKES EFFECT IN THE 13TH MONTH. THAT'S NOT SOMETHING THAT WE DO THAT SEEMS NORM. AND WE'LL TALK A LITTLE BIT ABOUT THAT IN MY RECOMMENDATION ON ON WHY WE RECOMMEND THAT. AND IN THE DEMAND CALCULATION AGAIN THIS PRETTY STANDARD. THERE'S A THREE STEP PROCESS. WHAT DOES VARY IS REALLY THE PERCENTAGE ON THE HIGHEST DEMAND AND HAS AND HOW THAT SPECIFIED, WHETHER IT'S THE ACTUAL DEMAND IN THE PERIOD OR ITS INSTALLED CAPACITY. THE OTHER ITEM THAT I'LL THROW IN HERE, AND JERRY TOLD ME HE'D HE WOULDN'T BE HAPPY IF I SAID POWER FACTOR, BUT I'M GOING TO SAY POWER FACTOR. RIGHT. BUT BUT SO EVERY UTILITY ACROSS THE STATE IS MANDATED TO HAVE A POWER FACTOR OF 97%, RIGHT? WE BUILD OUR SYSTEM TO 97% WITH SOME OF THESE OTHER UTILITIES. DO IS IF A CUSTOMER GOES BELOW SOME STATED POWER FACTOR, IT COULD BE 97% OR SOME LOWER. IF THEY GO BELOW THAT, THEN THEY ADD ON TOP OF THIS CALCULATION BASICALLY A PENALTY RIGHT? A POWER FACTOR PENALTY AS WELL.

USUALLY IT'S 1% ADDITIONAL FEE ON TOP OF ON TOP OF THE DEMAND FOR EVERY 1% THEY GO BELOW THAT STATED. RIGHT. BUT WE DON'T DO THAT HERE. BUT I JUST WANT TO MENTION TO YOU THAT IT DOES KIND OF VARY. AND THEN FOR OVERBILLING. SO THESE ARE THE BACK CREDITS OR, OR THE REFUNDS THAT WE GIVE PEOPLE AND OTHER UNDER BILLINGS. REMEMBER WE'RE AT TWO YEARS FOR BOTH. WHAT WE FOUND IS THAT FOR OVERBILLING THE RANGES ANYWHERE FROM ONE YEAR TO THE INITIATION OF WHENEVER THE ERROR HAPPENED FOR UNDER BILLINGS RANGES FROM SIX MONTHS TO ONE YEAR. SO IT TENDS TO CAP RIGHT. SO THE UTILITY MADE A MISTAKE. AND THEN AND THEN BILL YOU CORRECTLY WERE ONLY THEY'RE ONLY GOING TO GO BACK AS MUCH AS ONE YEAR OR SIX MONTHS. AND THEN THE PUC SUBSTITUTE RULE THIS APPLIES TO RETAIL ELECTRIC PROVIDERS. SO TO PRIVATE ENTITIES THEY'RE LIMITED TO SIX MONTHS FOR UNDER BILLINGS. RIGHT. AND THEN THE ENTIRE PERIOD FOR OVERBILLING.

SO IF IF WE OWE A CUSTOMER A REFUND, WE'RE GOING TO GO BACK ALL THE WAY TO WHERE THE ERROR HAPPENED. BUT IF WE UNDER BILLED YOU, YOU WOULD ONLY GO BACK SIX MONTHS. THAT THAT TENDS TO BE THE WHAT WHAT THE REPS DO OUT IN THE INDUSTRY. SO GOING TO TO OUR FINDINGS AND OUR STAFF RECOMMENDATIONS. SO FOR OVER BILLINGS AND BUILDINGS I MENTIONED AGAIN WE HAVE A TWO YEAR PERIOD. WE ARE RECOMMENDING TO MAKE A CHANGE TO THAT SO THAT IF WE OWE A CUSTOMER MONEY, WE WOULD NO LONGER JUST GO BACK TWO YEARS. WE'RE GOING TO GO BACK THE ENTIRE PERIOD ROUND, ALL THE WAY BACK TO THE ERROR. BUT IF WE'VE UNDERBID THE CUSTOMER, THEN OUR RECOMMENDATIONS NO LONGER GO BACK TWO YEARS TO ONLY GO BACK SIX MONTHS FOR DEMAND APPLICATION OF TWO CONSECUTIVE MONTHS. WHILE IT'S NOT GENERALLY IN LINE WITH THE SURVEY UTILITIES OTHER THAN I MENTIONED, GARLAND DOES DO THIS AS WELL. WE'RE NOT RECOMMENDING ANY CHANGES TO THAT. WE THINK THAT THAT'S A PRETTY BIG THRESHOLD FOR CUSTOMERS TO MEET.

AND AND WE DON'T ALSO DON'T BELIEVE THAT A POWER FACTOR ADJUSTMENT NOR DEMAND FORGIVENESS IS NEEDED. SO NO, NO CHANGES TO THAT. THE RATE CLASS LOCK PERIOD OF 12 MONTHS, AS I MENTIONED A LITTLE BIT AGO, THAT'S PARTIALLY IN LINE. SO EVERYBODY DOES A 12 MONTH LOCK IN PERIOD. BUT WHAT WE DO DIFFERENTLY HERE IS WE WE WE START LOOKING AT THAT COUNT PROSPECTIVELY AFTER THE 13TH MONTH WHEN EVERYBODY ELSE IS DOING AN AUDIT. SO WE ARE RECOMMENDING TO CHANGE WHAT WE DO TO ACTUALLY DO THAT AUDIT. RIGHT. SO AT THE END OF THAT 12 MONTH PERIOD, WE'RE GOING TO GO BACK AND WE'RE GOING TO LOOK AT WHAT HAPPENED TO THAT ACCOUNT OR THAT TOTAL PERIOD AND THEN MAKE ADJUSTMENTS IF NEEDED. FOR THE DEMAND CALCULATION. AGAIN THIS IS THE THREE STEP PROCESS. AND I MENTIONED THOSE DO VARY. WE'RE WE'RE COMFORTABLE WITH

[00:45:03]

AND SO WE'RE NOT RECOMMENDING ANY CHANGES TO THAT. AND AS IT RELATES TO TO THE BILLING ADJUSTMENTS FOR THIS PARTICULAR REVIEW. SO THESE 218 ACCOUNTS. SO IF YOU WERE ONE OF THOSE 32 ACCOUNTS WHERE WE REFUNDED YOU MONEY, WE'RE NOT GOING TO ASK YOU. WE'RE NOT GOING TO GO BACK AND RESTATE THAT. WE'RE GOING TO LEAVE IT THE WAY IT IS. BUT FOR THESE 160 SOMETHING CUSTOMERS, THE RECOMMENDATION IS THAT WE'RE GOING TO GO BACK AND WE'RE GOING TO LOOK FROM JULY 25TH WHEN THIS STARTED. WE'RE ONLY GOING TO GO BACK SIX MONTHS, REEVALUATE THOSE ACCOUNTS AND THEN MAKE ADJUSTMENTS IN THE PARTICULAR CUSTOMER THAT I MENTIONED THAT CUSTOMERS INITIAL BILLING UNDER BILLING WOULD HAVE BEEN ABOUT $2,900. THAT WOULD GET REDUCED TO ABOUT $1,000, BECAUSE THEY DID HIT THAT TWO CONSECUTIVE MONTHS WITHIN THAT SIX MONTH PERIOD. SO WITH THAT, THAT CONCLUDES MY PRESENTATION. HAPPY TO ANSWER ANY QUESTIONS.

>> WE HAVE A QUESTION. >> COULD YOU GO TO SLIDE SEVEN? FOR ME I WAS CURIOUS. SO ON THE LOCKING PERIOD 12 MONTHS LOCKED IN. EXCUSE ME, BUT THE FACTOR THAT GIVES US WHAT THAT AMOUNT IS GOING TO BE IS ANY PARTICULAR CONSECUTIVE TWO MONTHS OF AN INCREASE. IS THAT.

YES, SIR. DID I HEAR THAT RIGHT, SIR. OKAY. >> BUT BUT DURING THAT LOCK IN PERIOD, EVEN IF YOU HIT THAT, WE'RE NOT MOVING YOU BECAUSE YOU'RE IN THAT LOCK IN PERIOD.

>> FOR 12 MONTHS. FOR 12 MONTHS, THEN THE 13TH MONTH. >> IF YOU DID, THEN WE'LL MAKE

THAT ADJUSTMENT IN THE 13TH MONTH. >> AND THAT'S BASED PRIMARILY

ON THAT TWO MONTH PERIOD. >> YES, IT HAS TO BE TWO CONSECUTIVE MONTHS.

>> SO I WOULD THINK AND JUST FOR. THINKING THE SUMMER MONTHS MIGHT BE THE ONES THAT WOULD BE, WOULD THEY BE THE ONES THAT YOU WOULD SEE THOSE SPIKES SOMEWHAT. YEAH. GENERALLY SPEAKING YEAH.

>> ACTUALLY WE WELL SORT OF YEAH. WE ACTUALLY LOOKED AT THE DATA AND WE HAD AS MANY CUSTOMERS THAT HIT THAT PEAK DURING THE SUMMER AS THEY HIT THE PEAK DURING THE WINTER,

JUST REALLY ALL OVER THE PLACE. YES, SIR. >> THANK YOU.

>> AND SO AND SO TO SO IF YOU TWO CONSECUTIVE MONTHS YOU GET BUMPED UP TO A MEDIUM COMMERCIAL CUSTOMER AND THEN IF EVERY OTHER MONTH YOU HIT THE PEAK BUT YOU DON'T DO TWO MORE CONSECUTIVE MONTHS, YOU'LL FALL BACK DOWN AFTER 12 MONTHS. IS THAT OR IS IT OR YOU HAVE TO

HAVE YOUR ENTIRE DEMAND FOR THE NEXT 12 MONTHS BELOW 20 KW. >> SO IN THE SCENARIO YOU MENTIONED, THAT CUSTOMER WOULD REMAIN IN THAT MEDIUM RATE CLASS.

>> SO TWO CONSECUTIVE MONTHS TO GO UP AND THEN. >> OR TWO CONSECUTIVE MONTHS

BELOW TO GO DOWN. >> THE NEXT. >> YEAR OKAY. SO TWO. SO OKAY.

YEAH IT'S COMPLICATED. >> AND AND I THINK WHAT I'LL MENTION AGAIN IS YOU KNOW SO YOU KNOW WE'RE DOING 80 TO 100. THE THE VAST MAJORITY ARE NEW. SO THE ONES THAT THAT'S HAPPENING TO IS A VERY SMALL POPULATION OF CUSTOMERS. AND WE GENERALLY KNOW WHO THEY ARE.

>> YEAH. >> YEAH. SO JUST KIND OF LOOKING AT FLIPPING THROUGH THE RATES, THE, THE SMALL THE SMALL RATE IS THE PEAK THAT 21 KW IS ABOUT 90 AMPS, 90 AMPS FOR 15 MINUTES. SO THAT WOULD BE LOTS OF AIR CONDITIONERS OR SOME KIND OF EQUIPMENT, YOU KNOW, PERHAPS A COMMERCIAL KITCHEN WITH SOME KIND OF ELECTRICAL EQUIPMENT IN IT, BIG AC OR I THINK IN THE WINTER IT WOULD BE ELECTRIC HEAT, LIKE LOW COST ELECTRIC FURNACES OR ELECTRIC HEATING WOULD HIT THAT IN 15 MINUTES REALLY EASILY. WHEN YOU GO TO MEDIUM, YOUR KILOWATT HOUR RATE GOES DOWN. BUT YOU YOU HIT THIS DEMAND CHARGE. SO I GUESS THIS IS REALLY THE CUSTOMERS THAT GET HURT THE MOST ARE SMALL CUSTOMERS THAT HAVE SOMETHING REALLY INEFFICIENT AND SET A PEAK, BUT HAVE A VERY LOW LOAD FACTOR. SO THEY'RE GENERALLY VERY LOW BILLS, BUT THEY HAVE ONE PEAK. THEY HAVE TO PAY $200 A MONTH FOR THAT DEMAND CHARGE WHEN THEIR NORMAL ELECTRIC BILLS, $50 A MONTH OR SOMETHING, JUST KIND OF WALKING THROUGH WHAT WHO WHO GETS HIT THE WORST BY THIS. AND THEN LIKE YOU SAID, IF YOU HAVE ONE CUSTOMER WHO DOES THAT AND THEY GET A $200 A MONTH DEMAND CHARGE FOR SIX MONTHS, THAT'S 1200 BUCKS, THAT'S $1,000 EXTRA FEE. THEIR $100 A MONTH BILL WENT DOWN BY 15%. BUT THEY'RE BUT THEY NOW PAY A DEMAND CHARGE. AND IT LOOKS LIKE OUR DEMAND CHARGES INCREASE AS YOU GET LARGER. UP TO 11 ALMOST $11 PER IN THIS CASE KVA, BUT BASICALLY KW, WHICH IS I WOULD EXPECT IT TO GO DOWN INSTEAD OF UP. SO THAT'S THAT'S JUST KIND OF AN INTERESTING THING I SEE. I'D LIKE TO I THINK THIS MAKES SENSE. WE GIVE WE SO OUR RATES ARE IN THE RIGHT CASE. IF YOU

[00:50:04]

>> YES. >> SO A COUPLE OF THINGS JUST GOING BACK HERE. SO OF THAT 7600 CUSTOMERS, THE WAY THAT THAT BREAKS OUT. SO WE HAD ABOUT 1900 OF THOSE ARE ACTUALLY CLASSIFIED AS SMALL. 5500 OF THOSE CUSTOMERS ARE MEDIUM AND 196 ARE LARGE. SO THAT KIND OF JUST GIVES YOU KIND OF WHERE, WHERE THAT IS. AND AND SO WHY. YES. YOU KNOW, THE WAY THAT, THAT OUR, THAT OUR RATES ARE STRUCTURED IN SOME CASES. RIGHT. DEPENDS REALLY ON YOUR DEMAND. IF YOU'RE IN A SMALL IT COULD BE MORE BENEFICIAL FOR YOU BEING A MEDIUM. BUT IT ALSO COULD BE THE REVERSE. RIGHT. AND SO SO SO REALLY KIND OF DEPENDS ON ON KIND OF WHAT'S GOING ON WITHIN WITHIN YOUR FACILITY. AND REGARDING THE RATE COMPARISONS, WHAT WE DO THAT ON AN ANNUAL BASIS. YOU KNOW, THE INTERESTING THING IS THAT UNLIKE RESIDENTIAL RATES, COMMERCIAL RATES WITH, WITH WITH IOUS TEND TO BE CONFIDENTIAL. RIGHT. AND SO THOSE THOSE GENERALLY DON'T GET PUBLISHED. BUT WE DO DO COMPARISONS WITH OTHER AREAS. AND I'D HAVE TO LOOK AT, AT COSERV ON WHETHER OR NOT THERE'S PUBLISHED OR NOT, BUT THOSE TEND TO BE A LITTLE BIT MORE COMPETITIVE JUST BECAUSE OF THE NATURE OF THOSE BUSINESSES. RIGHT. AND THE AMOUNT OF REVENUE THAT'S GENERATED. SO ESPECIALLY WHEN YOU'RE DEALING IN IN AREAS THAT ARE MULTI CERTIFIED AND WE'RE WE'RE LOOKING AT COMPETITIVENESS. BUT BUT WE CAN CERTAINLY BRING THAT BACK TO

YOU OKAY. >> THANK YOU. YEAH. >> GO AHEAD.

>> SIR I JUST QUICK QUESTION IS SO WHERE DOES THIS GO NEXT. IS IT GOING TO THE COUNCIL FOR REVIEW. THAT THE NEXT STEP IN THIS PROCESS OF CHANGE THAT YOU'RE WORKING ON.

>> WELL, I. >> GUESS BEFORE I TELL YOU, UNLESS YOU ALREADY KNOW WHAT WHAT THE COUNCIL DIRECTED, WE WOULD LIKE TO GET SOME DIRECTION FROM, FROM THE PPB AS TO THE RECOMMENDATIONS THAT WE'VE MADE. AND THEN. YES, THEN IF THERE IS A DIFFERENCE BETWEEN WHAT THE PPB RECOMMENDED AND WHAT THE COUNCIL RECOMMENDED, WHAT WE TOLD THEM IS THAT WHEN WE BRING BACK THE ORDINANCE TO TO THE PPB, IT WILL REFLECT THE PUB'S DIRECTION AND THAT'S WHAT IT WILL TAKE FOR THE COUNCIL WILL POINT THAT OUT. IF THERE IS A A VARIANCE BETWEEN WHAT THEY DIRECTED AND WHAT THE PPB RECOMMENDS.

>> TO DOVETAIL WITH YOUR. COME ON. YEAH, DOVETAIL WHAT YOU HAD SAID. AT WHAT POINT HAVE WE STEPPED OVER OUR BOUNDARY BY TRYING TO HELP THOSE CUSTOMERS THAT NEED TO HAVE NEW UNITS IN FOR EFFICIENCY, IF THEY REALIZE THAT THEIR COST IS GOING TO BE MUCH LOWER, INSTEAD OF CALLING AND BEING UPSET OVER THIS, WHERE WHERE CAN WE BE HELPFUL AND WHERE DO WE JUST STAY MUTE?

I. >> YEAH, I DON'T KNOW. I DON'T KNOW IF IT WOULD VIOLATE SOME KIND OF CUSTOMER CONFIDENTIALITY FOR DME TO DO SOME SORT OF OUTREACH, SAYING WE'VE NOTICED YOU HAVE A VERY LOW LOAD FACTOR. WOULD YOU, WOULD YOU CONSIDER, YOU KNOW,

GREEN SENSE PROGRAMS LIKE ENERGY AUDIT OR SOMETHING? >> OR DO WE WAIT UNTIL.

[00:55:02]

>> WE. GET THE POWER FACTOR PENALTY WOULD COME IN HANDY? SORRY, JERRY. YEAH.

>> BUT, YOU KNOW, I'M CURIOUS AS TO. DO WE WAIT FOR THAT PHONE CALL AND THEN CASSEY, YOU'RE GOING TO HAVE TO HANDLE IT, AND THEN YOU'LL BRING IT BACK TO TONY. WELL, I DON'T WANT TO SEE IT AGAIN. I'M TEASING, BUT, I MEAN, THAT'S WHERE. HOW DOES THAT WORK? CAN

THAT BE PROCESS BE VETTED OUT A LITTLE MORE? >> YEAH.

>> SO SO CERTAINLY I THINK CASSEY IS GOING TO PLAY A BIG ROLE IN THAT. RIGHT? THAT'S GOING TO BE PART OF HER JOB. BUT I'LL TELL YOU AGAIN, DEMAND CHARGES ARE NOT UNIQUE TO DME, RIGHT? THIS IS ACROSS THE INDUSTRY WHEREVER YOU GO. SO IF YOU'RE IF YOU'RE A BUSINESS THAT YOU HAVE MULTIPLE LOCATIONS, YOU KNOW, ACROSS THE STATE OR ACROSS THE COUNTRY, YOU'RE GOING TO BE VERY FAMILIAR WITH DEMAND CHARGES. WHAT I WILL TELL YOU IS, AND WE DID YOU KNOW, THAT WAS A QUESTION THAT I HAD FROM MAYOR. YES, I THINK WE I THINK DOING SOME ADDITIONAL EDUCATION, PROVIDING ADDITIONAL INFORMATION. CERTAINLY WE CAN DO THAT. I WILL TELL YOU, THE FOLKS THAT CALL US TO TALK TO US ABOUT THEIR DEMAND CHARGES, KNOW EXACTLY WHAT'S GOING ON. THEY UNDERSTAND. RIGHT. AND THEY'RE ACTUALLY IN MANY CASES ASKING FOR DEMAND FORGIVENESS. RIGHT. THEY DON'T WANT TO GO INTO THAT NEXT RATE CLASS BECAUSE THEY DON'T WANT TO PAY MORE. RIGHT. BUT AGAIN, THESE DEMAND CHARGES ARE ARE HOW DME ALLOCATES COSTS FOR THE INFRASTRUCTURE THAT WE'RE HAVING TO PUT IN. RIGHT. AND MUCH OF THAT IS BEING DRIVEN BY CUSTOMERS THAT HAVE POOR POWER FACTORS. RIGHT. AND SO SO THE MORE INVESTMENT WE'RE MAKING IN OUR SYSTEM, RIGHT. THIS IS THIS IS ACTUALLY AN INDUSTRY BEST PRACTICE IN HOW YOU ALLOCATE COST BETTER TO THOSE CUSTOMERS THAT ARE ACTUALLY DRIVING THE

NEED FOR THAT INVESTMENT. >> WELL, IT SOUNDS TO ME FROM OUR CONVERSATION THAT WE'RE REALLY TALKING ABOUT A RELATIVELY SMALL UNIVERSE OF COMMERCIAL CUSTOMERS WHO ARE REALLY AFFECTED BY THIS. AND, YOU KNOW, TO ROBERT'S POINT, BE HELPFUL IF WE AS A GROUP COULD BE MORE HELPFUL IN GETTING THEM OUT OF CAUSING THESE PEAKS, WHICH CAUSE PROBLEMS FOR YOUR MANAGEMENT OF THE TRANSMISSION SYSTEMS AND, YOU KNOW, UTILITY DISTRIBUTION. BUT IT'S A PRETTY SMALL UNIVERSE OF CUSTOMERS WHO ARE AFFECTED BY THIS AND WHO ARE AFFECTING THE UTILITY THAT

A FAIR STATEMENT. >> CORRECT. AND WHEN WE MEET WITH THESE CUSTOMERS, WE TALK TO THEM ABOUT, YOU KNOW, STAGING THEIR EQUIPMENT, RIGHT. NOT TURNING EVERYTHING ON, WHETHER IT'S THEIR HVAC SYSTEM OR IT'S THEIR MANUFACTURING SYSTEMS, RIGHT. SO THAT THEY'RE STAGING THEM AND THEY'RE NOT DRIVING THOSE PEAKS. RIGHT. THERE'S ALSO INVESTMENTS THAT YOU MADE IN GREEN AND AND WE REFER THEM TO MICHAEL GARNER'S GROUP TO LOOK AND SEE IF ARE THERE THINGS THAT THEY COULD BE DOING WITHIN THEIR OPERATION AS WELL. YOU KNOW, THERE'S ALSO REMIND ME, CHRIS, WHAT IT'S CALLED. YEAH. SO CAPACITOR BANK IS ALSO SOMETHING ELSE THAT THEY COULD BE DOING. YOU KNOW, DEPENDING ON THE SIZE OF YOUR BUSINESS, THAT CAN RANGE ANYWHERE FROM 500 TO $50,000. RIGHT. AND SO THESE BUSINESSES ARE HAVING TO MAKE THOSE ECONOMIC CALCULATIONS AS TO WHETHER OR NOT MAKE SENSE. BUT CERTAINLY THERE'S SOME THINGS THAT THESE BUSINESSES CAN BE DOING WITHIN THEIR SYSTEM, RIGHT, TO IMPROVE THE QUALITY OF THEIR. THE WORSE YOUR POWER FACTOR, THE MORE POWER WE HAVE TO PROVIDE TO YOU, RIGHT? SO THAT YOUR YOUR EQUIPMENT CAN OPERATE. RIGHT. AND SO SO WE TALK ABOUT THIS THIS LOSS OF POWER. RIGHT. THAT'S 97% POWER FACTOR IS PREDICATED ON A 3% KIND OF LOSS OF POWER IN THE SYSTEM. RIGHT. YOU KNOW, SO YOU WANT TO HAVE A SYSTEM THAT'S AS EFFICIENT AS POSSIBLE. AS FOR THOSE CUSTOMERS THAT HAVE POWER FACTORS BELOW THAT, RIGHT, THERE'S A LOT OF INEFFICIENCY THERE. RIGHT? SO THERE'S A HAS TO BE A WAY FOR US TO CAPTURE THAT. AND THE DEMAND IS HOW YOU

DO THAT. >> SO SO WITH THESE CUSTOMERS, THE SMALL UNIVERSE OF CUSTOMERS

PRIMARILY BE MANUFACTURING CLIENTS. >> I DON'T THINK SO. IT'S

REALLY IT'S REALLY. >> ALL OVER THE BOARD. PB MEMBER BUT AGAIN, WE KNOW WE KNOW WHO THESE CUSTOMERS ARE. AND AND WE HAVE, YOU KNOW, LOTS OF CONVERSATIONS WITH THEM.

>> I HAVE A QUESTION. >> I THINK I THINK IT'S GREAT THAT IF WE OVERBILL THEM, WE'RE GOING TO GO BACK FOR THE LIFE OF THE ISSUE TO CORRECT IT. WHY ARE WE REDUCING THE BILLING PERIOD TO SIX MONTHS? IS IT OUT OF THE KINDNESS OF OUR HEART? AND IF IT IS, AREN'T THE REST

OF THE RATEPAYERS SUBSIDIZING THAT UNDERPAYMENT? >> WELL.

>> TWO ANSWERS. ONE, THAT'S KIND OF THE STANDARD OUT THERE. CERTAINLY FOR OUR EPS. THAT'S WHAT THE PUC LIMITS FOR THOSE CUSTOMERS. BUT YES, IF IF WE UNDER RECOVER FROM SOMEONE. YES.

ULTIMATELY THAT'S BEING PASSED ON RIGHT NOW. THAT'S INCUMBENT UPON US AS A UTILITY TO MAKE SURE WE'RE STAYING ON TOP OF THOSE BILLING ERRORS. ANDCULAR T HAVING GONE, HAVING GONE BASICALLY 24 MONTHS WITHOUT MAKING THOSE ADJUSTMENTS, THAT WAS AN ERROR ON US. AND CERTAINLY I OWN THAT. BUT BUT AGAIN, GENERALLY, WE DON'T WANT TO BE IN A SITUATION WHERE WE

[01:00:05]

HAVE UNDER BUILT SOMEONE. >> AND I AGREE. BUT AGAIN, I JUST I JUST DON'T UNDERSTAND WHY ALL RATEPAYERS WILL SUBSIDIZE THESE LARGE COMMERCIAL CUSTOMERS DUE TO THE

FACT THAT THEY WERE UNDER BILLED. >> WELL. SO SO IF WE.

>> MAKE THIS CHANGE, THIS THIS APPLIES TO ALL CUSTOMERS, NOT JUST COMMERCIAL CUSTOMERS. AND IT'S NOT JUST ELECTRIC CUSTOMERS, IT'S WATER, WASTEWATER, SOLID WASTE. ANY BUILDINGS THAT THE CITY WOULD DO WOULD FALL UNDER THIS PARTICULAR ORDINANCE. THIS APPLIES TO EVERYTHING THAT WE BUILD THROUGH OUR CUSTOMER SERVICE DEPARTMENT.

>> OKAY. >> DID I HEAR YOU CORRECTLY THAT A LOT OF THE UNDER BILLINGS HAVE TO DO WITH ACCOUNTS THAT WEREN'T SET UP IN THE RIGHT RATE CATEGORY TO

BEGIN WITH? >> THE DEMAND, DEMAND ADJUSTMENTS?

>> OKAY. >> YEAH. SO SO AGAIN, YOU HAVE YOU HAVE SOMEONE THAT'S COMING INTO AN EXISTING COMMERCIAL SPACE AND THEY TELL YOU WHEN WE INITIALLY GOING TO SET THEM UP DURING THE PROCESS, WE HAVE LOTS OF CONVERSATIONS WITH THEM. THEY TELL US WHAT THEY ANTICIPATE THEIR ENERGY TO BE. AND THEN ONCE THEY GO IN THERE, RIGHT, WHETHER WE CLASSIFY THEM AS A MEDIUM OR SMALL, THEN THEY DON'T BECOME THAT AND A LOT OF DIFFERENT REASONS. MAYBE THEY DON'T FULLY BUILD OUT THE SPACE. MAYBE THEY PUT IN MORE ENERGY EFFICIENT APPLIANCES THAT THEY ORIGINALLY THOUGHT. SO THERE'S A LOT OF REASONS WHY OUR INITIAL SETUP ISN'T ACCURATE.

BUT AGAIN, MY MY VIEWPOINT IS YOU'RE TALKING ABOUT LESS THAN 10%, RIGHT? AND I THINK WE DO A

PRETTY GOOD JOB OF CLASSIFYING THOSE CUSTOMERS FROM THE OUTSET. >> WHEN WE SURVEYED THE OTHER AREAS, WE LOOK AT THEIR PROCESS THAT THEY GO THROUGH TO MAKE THAT INITIAL ASSESSMENT OF WHAT KIND OF CUSTOMER THAT'S GOING TO BE AND HOW IT COMPARES TO OUR PRACTICE. IS THERE ANYBODY BETTER AT IT THAN US? ARE WE NOT AS GOOD AS SOMEBODY ELSE? AND MAKING THAT INITIAL DETERMINATION TO TRY TO GET IT RIGHT THE FIRST TIME, TO THE BEST OF OUR ABILITY?

>> YEAH. >> NO, WE DIDN'T AND I DIDN'T ASK THOSE QUESTIONS. I THINK FROM MY PERSPECTIVE, YOU KNOW, I THINK ANYWHERE LESS THAN 10% YOU'RE DOING PRETTY GOOD, YOU KNOW? SO I REALLY DIDN'T SEE A NEED FOR US TO, TO MAKE ANY HOLISTIC CHANGES THERE. YES,

SIR. >> SO WE WENT 24 MONTHS. WHAT ARE WE GOING TO DO DIFFERENT TO MAKE SURE THAT WE'RE DOING IT QUICKER SO THAT WE'RE NOT LOSING A LOT OF BILLING IN SIX

MONTHS? >> YES, I HAVE CHRISTA FOSTER. THAT'S THAT'S THE DIFFERENCE.

>> OKAY. >> SO SO CHRISTA FOSTER. >> AND HER TEAM, THIS IS WHAT THEY DO, RIGHT? AND THEY ARE EXPERTS AT IT. YOU KNOW, THEY WORK A LOT OF MAGIC IN HER AREA.

RIGHT. BUT BUT THE BIG THING IS THAT KRISTEN, HER FOLKS ARE VERY GOOD AT AUTOMATING AND USING TECHNOLOGY. THIS PROCESS OVER ON OUR METERING SIDE HAD PRETTY MUCH BEEN A MANUAL PROCESS. RIGHT. AND SO THAT'S REALLY WHAT WE'RE REALLY KIND OF KICK STARTED ALL THIS RIGHT, IS WE'RE HAVING THOSE CONVERSATIONS. AND THEN WE FOUND THIS PARTICULAR ISSUE

THROUGH THAT PROCESS. >> ALL RIGHT. >> THANK YOU.

>> DID I HEAR YOU CORRECTLY ON BECAUSE I THOUGHT WE WERE JUST TALKING ABOUT ELECTRICAL. BUT YOU MENTIONED WATER WASTEWATER AS, AS THIS FORMULA BEING USED FOR THAT AS WELL.

>> SO, SO THIS. >> THIS ORDINANCE IN CHAPTER 26 APPLIES TO THE ENTIRE CITY. AND SO THIS ORDINANCE IS WHAT WE WOULD BRING BACK. AND WE WOULD CHANGE THIS FROM TWO YEARS TO SIX MONTHS FOR UNDER BILLINGS AND IN THE ENTIRE PERIOD FOR BILLINGS.

>> BUT THOSE BILLINGS ARE WATER AND SEWER AS WELL. DID I UNDERSTAND THAT.

>> ANY BILLING THAT WE DO THIS ORDINANCE WOULD APPLY TO? >> SO GENERALLY WATER AND WASTEWATER BILLING WOULD BE A METER ERROR OR SOMETHING LIKE THAT.

>> THAT'S CORRECT. >> SO ELECTRICITY IS THE ONLY ONE WHERE YOU GET BUMPED INTO A

NEW DEMAND CATEGORY. >> AND THAT WAS MY QUESTION. WATER. THERE'S NOT DIFFERENT

DEGREES. IT'S WATER IS WATER. ELECTRIC IS DIFFERENT. >> WATER DOES.

>> WATER DOES HAVE. AND IT'S SOMETHING THAT YOU YOU YOU ALL APPROVED RIGHT. WAS CHANGES TO THE LEAK ADJUSTMENT ORDINANCE. RIGHT. SO WE HAVE A LEAK ADJUSTMENT ALMOST LIKE A DEMAND.

SO IF THERE'S AN ISSUE OUT THERE YOU MEET THE QUALIFICATIONS. YOU KNOW WE DO GIVE YOU A DISCOUNT AGAIN. BUT IT HAS TO ALL BE SUBSTANTIATED WITHIN WITHIN THE PARAMETERS OF

THAT ORDINANCE. >> AND THIS IS ALL COMMERCIAL. >> THIS IS.

>> THAT THAT CODE OF ORDINANCE IS JUST THE COMMERCIAL. >> THAT APPLIES TO.

>> EVERY ACCOUNT, INCLUDING RESIDENTIAL. SO IF WE MAKE AN ERROR, RIGHT, IF WE OVERBILL YOU. RIGHT, AND WE STARTED THAT BACK IN 2002, WE'RE GOING TO GO BACK ALL THE WAY TO 2002 AND GIVE YOU A REFUND. BUT IF WE UNDER BILL YOU, IF WE MADE A MISTAKE WE UNDER BILL YOU WE'RE

ONLY GOING TO GO BACK SIX MONTHS. >> WELL YOU'RE CHARGED AND SUCH

WERE BASED ON COMMERCIAL. >> YES. CORRECT. BECAUSE THE ISSUE HERE IS IS REGARDING THOSE DEMAND CHARGES AND THOSE ADJUSTMENTS. BUT IN ADDITION TO THAT, IS THIS UNDER BILLING? OVER BILLING THAT APPLIES NOT JUST TO COMMERCIAL ACCOUNTS, BUT TO RESIDENTIAL AND ALL

OTHER ACCOUNTS THAT WE BILL. >> THANK YOU. >> ANY FURTHER QUESTIONS? SO I MY COMMENTS ON RECOMMENDATIONS I THINK ALL OF THESE RECOMMENDATIONS GENERALLY MAKE SENSE. I THINK THAT MOST CUSTOMERS DON'T REALLY INTERPRET THEIR ELECTRIC BILL

[01:05:06]

IT'S LIKE YOU RATCHET UP AND THEN AT SOME POINT YOU FALL DOWN. IS IT 12 MONTHS OF NOT HITTING THAT 21 OR 12 MONTHS WITHOUT TWO MONTHS IN A ROW HITTING THE 21?

>> SO THE EXAMPLE I'LL GIVE YOU. SO SO YOU'RE SO YOU'RE SMALL, YOU HIT TWO MONTHS ABOVE 21.

YOU GET MOVED UP TO A MEDIUM. NOW YOU'RE LOCKED IN FOR 12 MONTHS. RIGHT. THE RECOMMENDATION THAT WE'RE MAKING IS AT THE END OF THAT 12 MONTHS. WE'RE GOING TO LOOK BACK AT WHAT HAPPENED IN THAT 12 MONTHS. SO IF IN THAT 12 MONTHS YOU HAD TWO CONSECUTIVE MONTHS WHERE YOU WERE BELOW 21, IN THAT 13TH MONTH, WE'VE DROPPED YOU DOWN TO A SMALL.

BUT IF DURING THAT 12 MONTH PERIOD, RIGHT, IF YOU WERE ABOVE THE 240 RIGHT, THEN YOU MOVE UP TO LARGE AND NOW YOU'RE IN A 12 MONTH PERIOD. SAME THING. IF YOU DROP DOWN, YOU'RE

IN A 12 MONTH PERIOD, RIGHT. SO THAT RATCHET STARTS AGAIN. >> WELL OKAY. SO BUT IF YOU'RE SIX MONTHS HIGH DEMAND, SIX MONTHS LOW DEMAND SAY LIKE AIR CONDITIONERS, SEASONAL LOAD AT THE END OF 12 MONTHS, YOU'VE GOT SIX MONTHS HIGH DEMAND AND SIX MONTHS LOW DEMAND. THE

RATCHET KEEPS YOU IN THE MEDIUM, RIGHT? >> CORRECT.

>> OKAY. SO YOU HAVE TO HAVE 11 MONTHS LOW OR TWO CONSECUTIVE MONTHS OF LOW AND NOT MORE, NOT TWO CONSECUTIVE MONTHS OF MEDIUM. LIKE I MEAN, THIS IS SO I'D LIKE TO I'D LIKE TO GET A

LITTLE CLARITY ON THAT. LIKE. >> YES. SO. >> SO, SO DURING THAT 12 MONTH PERIOD. RIGHT. YEAH. YEAH. THERE COULD BE TWO CONSECUTIVE MONTHS WHERE YOU WERE BELOW AND TWO CONSECUTIVE MONTHS THAT YOU WERE ABOVE. RIGHT. THAT'S CERTAINLY WITHIN THE REALM OF POSSIBILITIES. RIGHT. AND YOU KNOW, I THINK WHAT WE WOULD HAVE TO DO IN THAT PARTICULAR CIRCUMSTANCE IS LIKELY GO WITH WHATEVER THE GREATER OF THE TWO IS.

>> SO BASICALLY THAT TWO CONSECUTIVE MONTH RATCHET IF YOU, IF YOU TWO CONSECUTIVE MONTHS ABOVE THE DEMAND, YOU RATCHET IT UP. IF YOU THEN GO 12 MONTHS WITHOUT TWO CONSECUTIVE MONTHS ABOVE YOU FALL ANYWAY. SO LIKE I SAID, THAT'S THAT'S NOT SUPER CLEAR.

JUST BY THIS, YOU KNOW, PRESENTATION LANGUAGE. >> I THINK IT'S THE LEAD TIMES.

WHAT WE'RE LOOKING FOR AFTER THE RATCH UP. I'M LOOKING AT IT. IT'S A YEAR THEN THE 13TH MONTH ALL THE WAY TO THE NEXT YEAR. YOU'RE GOING TO BE PAYING THAT SAME WAY I SEE IT, YOU'RE PAYING THAT SAME AMOUNT AS YOU WERE WITH THE RATCHET, BECAUSE THEN THAT YEAR IS GOING TO TELL YOU IF THE NEXT 13TH YOU'RE GOING TO BE LOWERED. SO YOU'RE GOING TO PAY IN A SENSE, FOR POSSIBLY TWO YEARS OF THIS RATCHET UP BEFORE YOU CAN SHOW ANY KIND OF IMPROVEMENT.

>> IF WE NEED TO, WE NEED TO ALMOST DRAW. >> IT OUT. SO NOW YOU SEE. YEAH.

YEAH. YES. >> SO SO SO JUST AGAIN BRIEFLY. SO SO AT THAT AT, AT THE END OF YOUR 12TH MONTH, WE'RE GOING TO BASICALLY DO AN AUDIT. RIGHT. WE'RE GOING TO REVIEW WHAT HAPPENED IN YOUR ACCOUNT. RIGHT. AND SO IF YOUR ACCOUNT HAD TWO CONSECUTIVE MONTHS THAT SAYS YOU SHOULD HAVE BEEN AT A LOWER RATE, RIGHT. AT A LOWER CLASS, WE WILL MOVE YOU IN THE 13TH

MONTH, RIGHT. >> AND LOCK YOU IN FOR 12. >> AND THEN LOCK YOU IN AGAIN

FOR 12 MONTHS. >> THAT'S WHAT. THANK YOU. >> OKAY.

>> IT'S NORMAL UTILITY BILLING. >> BUT. >> SO SO I'M USED TO I'M USED TO A NORMAL UPWARD RATCHET. AND IF YOU DON'T HIT THE UPWARD RATCHET YOU FALL DOWN. BUT IF YOU GO THREE MONTHS AT THE LOW RATE AND THEN YOU HIT TWO CONSECUTIVE MONTHS, ARE YOU SAYING YOU'RE NOW LOCKED IN AT A LOW RATE AT THE LOW TIER, EVEN THOUGH YOU'VE. BECAUSE IT SEEMS LIKE EVERY TIME YOU HIT THAT TWO CONSECUTIVE MONTHS, YOU RATCHET BACK UP.

>> OR YOU RATCHET OR YOU GO DOWN AND SO, SO, SO AGAIN, IT'S PRETTY CUSTOMARY. I WILL TELL YOU, THOUGH, AGAIN, BE COGNIZANT THAT MOST UTILITIES RIGHT MOVE YOU BASED ON ONE MONTH. RIGHT. WE DO TWO MONTHS. RIGHT. AND SO SO YOU COULD HAVE A CUSTOMER LIKE WE'VE SEEN.

RIGHT. YOU HAVE A CUSTOMER THAT HITS HITS THAT HIGH IN IN MONTH ONE AND DOESN'T HIT IT AGAIN IN MONTH THREE. IT DOESN'T HIT IT AGAIN IN MONTH SIX. RIGHT. MY YOU KNOW MY VIEW RIGHT. IF YOU HAVE A SMALL CUSTOMER THAT KEEPS HITTING ABOVE 21 MULTIPLE TIMES A YEAR, SOMETIMES AS MANY AS FOUR TIMES A YEAR, I'M I'M HARD PRESSED TO SAY THAT THAT CUSTOMER ISN'T A MEDIUM, RIGHT.

AND MOST UTILITIES DO IT THAT WAY. AND AGAIN BACK TO TO MR. MR. YOU KNOW STATED IS THAT FOR

[01:10:07]

THAT RECOMMENDATION OR NOT. >> ARE THERE ANY OTHER COMMENTS ON THE RECOMMENDATIONS?

>> I'M COMFORTABLE WITH RECOMMENDATIONS. >> I'M GOOD.

>> DO YOU HAVE ENOUGH DIRECTION FROM US? >> YES, AND THAT'S CONSISTENT WITH WHAT? THE DIRECTION THAT THE COUNCIL GAVE US AS WELL. AND SO BUT WHEN WE COME BACK, WE'LL, WE'LL TRY TO BRING YOU MAYBE A GRAPHIC OR SOMETHING TO KIND OF GO THROUGH ON HOW THAT'S GOING TO WORK, AND WE'LL SEE IF WE CAN UPDATE OUR COMMERCIAL COMPARISONS AS WELL.

>> THANK YOU. >> YES, SIR. >> OKAY. I BELIEVE THE COMMISSION HAS NOW COMPLETED ITS BUSINESS

* This transcript was compiled from uncorrected Closed Captioning.