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HomeMy WebLinkAboutMinutes_GTEU_07.15.2021Minutes of the Meeting for the Georgetown Electric Utility Board Thursday, July 15th, at 2:00 PM at the Friends Room in the Georgetown Public Library, 402 W. 8th St. Georgetown, TX 78626 Board Members Present: Robert Case - Chairman, Rick Woodruff- Vice-Chairman, Sam Jones–Secretary, Mike Triggs, Ben Butler Staff Present: Daniel Bethapudi, Letica Zavala, Mike Westbrook, Cindy Pospisil, Jose Torres, Leigh Wallace, Laurie Brewer, Chris Bryce, David Morgan, Jennifer Flor, and Kress Carson Via Teleconference (Zoom): None Public Attendees: None Regular Session (This Regular Session may, at any time, be recessed to convene an Executive Session for any purpose authorized by the Open Meetings Act, Texas Government Code 551.) A. Call to Order -- Robert Case, Board Chairman • Meeting called to order at 4:00 pm by Case. B. Roll Call of Board Members -- Robert Case, Board Chairman. • All Board Members Present C. Introduction of Visitors -- Robert Case, Board Chairman D. Public Wishing to Address the Board • None present Legislative Session E. Review and Approval of Minutes- Kress Carson, Board Liaison • June 17th Meeting- Motion to approve by Jones, seconded by Woodruff • Minutes approved as read 5-0 F. SW Bypass Construction Cost Reimbursement- Mike Westbrook, Electric Operations Manager • This is a project is to be completed in association with PEC (Pedernales Electric Cooperative. The project came to fruition because PEC needed to relocate and extend a feeder to the new Hillwood development and simultaneously Georgetown needed a feeder to provide backfeed, or redundant feed capabilities to help provide grid stability in the area. Georgetown’s cost share of the project is $128,577.53 to be paid to PEC. If the project were to be completed by the City itself, the costs would have costed an estimated $275,000. PEC will be the owner of the poles in addition to the maintenance for the proposed. • Jones asks for clarification whether the design for the respective lines between the two utilities will be feeding different areas. o Westbrook confirms that this is the case. • Butler asks for confirmation whether Georgetown is the top circuit on the service line. o Westbrook confirms. Butler follows and asks how the maintenance costs are different from the top circuit compared to the bottom and why the placement of the circuits is as such. Westbrook answers there is not a difference in maintenance costs. The reason PEC is on the bottom circuit is because they own the poles and when their service comes off the pole from the riser to serve the development and they don’t want to come over the top of the City’s circuit. This is ultimately done to make ease in construction and eliminate clearance issues between the two utilities. Butler then follows if there are instances that we need permission from PEC to service our line. Westbrook confirms that this is not the case. • Motion to approve the costs associated with SW Bypass Project- Motion by Woodruff, seconded by Jones. Vote passes 5-0 G. Fiber Relocation Project- Mike Westbrook- Electric Operations Manager • TXDOT is widening, adding, and extending the frontage road along Interstate 35 and Airport Drive. Electric facilities have already been relocated, however, there is still a matter of relocating the City’s fiber facilities to allow TXDOT to continue their project. The City’s IT Department received a bid for a service to relocate the fiber from BryComm through a DIR contract to not exceed $80,000. This encompasses the wire, the contractor, and the road closure to complete the work. The important aspect that the costs that are taken by the city to fund this project will be fully refunded by TXDOT at the end of the project. • Case asks how long it would take to see the refund from the project, and that there is documentation to confirm these matters. o Westbrook answers that it typically takes a year receive compensation from these types of projects. He adds that all documentation has already been completed, and that the Utility is familiar in working on these projects with TXDOT. • Butler asks for clarification if this is the City’s owned fiber network. o Westbrook confirms that this is the case. This line in particular ties the Westside Service Center into the City’s IT fiber network. • Butler asks if TXDOT has any ruling considering there that this was a noncompetitive bid. o Westbrook explains that this was done through a DIR contract in which the State allows the City to contract straight through the vendor without having to offer competitive bids. Bethapudi further explains DIR is similar to a purchase co-op in which the vendors are previously vetted that are allowed to work through these types of projects. The rates and services performed by this vendor are inherently competitively bid through the State. Chris Bryce, IT Director, adds that they did compare the rates and services to others to verify that the DIR rate set by the vendor couldn’t be bested. The DIR contract through BryComm did indeed offer the cheapest services. • Motion to approve the Fiber Relocation Project- Motion by Woodruff, seconded by Butler. Vote passes 5-0. Regular Session (cont.) H. General Managers Monthly Report- Daniel Bethapudi- General Manager of Electric Utility • Customer Service and Billing- Leticia Zavala-Customer Care Director o Available Services: 87 new connections; total of 680 new connections of this fiscal year o 30,627 available services total; Active services are to be provided by the next board meeting o 29,358 Electric customers/accounts, 31 estimated “bad meter reads” o Overall Average June 2021 bills nearly $30 cheaper than June 2020 ▪ Billing numbers lower than last year due to a combination of lower average monthly temperatures and reduced PCA o Electric Revenue Breakdown and Receivables presented- roughly 66% of yearly budgeted amount collected. o Account receivables aging report presented- Receivables are down from May numbers o First full month of collections reported from Credit Systems International ▪ At the end of May roughly 2500 accounts were given to the collection agency for the amount of $1.4 million; the first check received from the agency was roughly $30,000 in June. o Next month there will be a report included those reviews credit card payments and collections • Case suggests that the City implement a convenience fee for customers who pay by credit card to pay their monthly bill. The reason for this being that this is used to cover the cost of the fee that is charged by credit card companies to the City and so that customers who pay by check or cash are not underwriting the cost of this in their rates. This also coincides with the Utility’s credit card payment processing renewal. • Zavala answers that this is something that is going to be reviewed by the Utility. Historically, the Utility has absorbed this fee, particularly due to the fact the City was much smaller. However, due to growth, the City has recognized that this is an issue that needs to be addressed as soon as possible. • Leigh Wallace, Finance Director, adds that the cost of such fees equates to $1.3 million total for the City. The number is doubled from what it was prior to the pandemic as online payments became mor in demand. The City is initiating a project in which all departments are implementing this recovery into their revenue. This process may take a couple of months as every department uses different credit card processors. • Zavala adds that they have asked their credit card processors to give proposals for appropriating this cost. This includes three proposals- one is the absorption model, of which the Utility currently utilizes and wants to move away from; another is the convenience fee model in which all customers are charged a convenience fee, and lastly a hybrid model that the Utility and customers share the costs. There are also models in which various splits between customer groups can be split. ▪ Woodruff asks if all card companies charge the same percentage fees. If so, how does the City go about recovering the fees appropriately. • Bethapudi answers that are multiple ways of covering the expense. One being that this is done through a convenience fee or consider the $1.3 million as a cost of doing business and recover the amount through the charged rates. ▪ Case asks if the Utility has seen how other cities have implemented convenience fees and how many other have adopted the model. • Zavala explains that this is mixed throughout the state when comparing to other municipalities. More research will be done on this in the coming months. • Electric Engineering and Operations Report- Mike Westbrook- Electric Operations Manager o Electric Reliability (SAIFI)- .57 (Good Metric) o Electric Outage Duration (CAIDI)-89.233(Good Metric) o Training- 100% (Good metric) o Safety, 100% attendance o Service Order Completion, 100% o Preventative Maintenance, 100% o Corrective Maintenance, 100% o Top 5 Outages Report ▪ In many cases the cause of outages was failed transformers, of which there were 4 instances in the month of June. I. FY 2022 Budget Overview- Daniel Bethapudi- General Manager of Electric Utility • CIP Budget- $7.4 million • Electric Sales Revenue- $85,541,593 o FY2021 Projected Budget is $84,818,619- this number is likely to be adjusted due to unusually mild weather in July, a typical yearly high sales month o Case asks if there are forecasting models in place to help predict revenues • Bethapudi answers that there is a model exist in which there is 10 years’ worth of data. However, this process is being refined as the model will reflect meter reports rather than weather. o Woodruff asks how much simulation plays in budget compilation. • Bethapudi answers the budget is developed on typical weather and yearly historical activity. 2019 numbers, rather than 2020 numbers, were used in developing the budget due to the odd nature of 2020. • Purchased Power- $55,493,445 o FY 2021 Projected Budget is $108,346,600. This includes the $48 million expense incurred due to Winter Storm Uri o Excluding the Storm, purchased power budget is on target with usual numbers when comparing to 2020 budgeted numbers • Budgeted amounts are expected to meet the Fiscal Policy mandated reserve requirements • Service Level Requests o Administration • $8,035 for training for 2 new analysts o Transmission and Distribution • $20,000 for remote disconnect meters, which are the standard in the industry • $150,000 for preventive maintenance of aging underground infrastructure • $10,000 for standby pay for lineman based on their hourly pay • $408,500 for an additional pressure digger for keeping up with growth and system improvement projects • Butler asks what the cost is of hiring a contractor or renting a pressure digger to perform work versus owning the pressure digger. ▪ Westbrook answers that the issue with a contractor in the nature of the electric business that the Utility needs to provide service on a 24/7 basis where the contractor does not. o Electric Engineering • $86,673.60 for an Engineering Analyst to provide adequate support and maintenance of AMI and MDM applications ▪ Case asks if this is a fully loaded cost ▪ Bethapudi answers that this is just the salary; a good rule of thumb that the fully loaded cost is 20- 25% higher than the salary o Electric Fund Review- Leigh Wallace- Finance Director • Case asks if storm expenses, and reserves are included in the electric fund ▪ Bethapudi answers that some of these numbers are built into the operations expense numbers, He adds that an advantage that the Utility has in storm situations in which disasters are declared is that cost incurred during such events can be reimbursed through FEMA. This is a reason why a large reserve fund isn’t created for this. • Butler asks where is the 48 million purchase power expense referenced in the electric fund. ▪ Wallace answers that this found in purchased power operating expenses and in non-operating revenue in bond proceeds accounts. The first payment for this amount is going to be made in FY2022 which is a $5 million principal payment. • Butler asks if there is a disconnect in collection of funds in which all Georgetown residents do not use services provided by the Electric Utility and use other utilities such as PEC and that the Utility also serves areas outside of Georgetown. ▪ David Morgan, City Manager, answers that an advantage of City-owned Utility is that they collect a return on investment from investor-owned utilities in which their customers pay city taxes on their utility bill. This is called Payment in Lieu of Taxes that are then paid towards the City. This return on investment from investor-owned utilities are tied into the City’s rate structure. In the fall, there will be City-wide allocation study by a consultant in which the City will view recommendation upon allocation of funds. • Butler asks for clarification of the Utility customers who are outside of the city limits. ▪ Morgan answers that there are customers in Round Rock in which Georgetown pays a franchise fee to the City of Round Rock; just as PEC pays a franchise fee to Georgetown. • FY 2022 will be 3rd year in 4-year plan in which fiber property is transferred from the Electric Fund into the IT fund. Which lies in a Sale of Property account. • Georgetown is no longer on negative credit watch according to S&P. This means the City funds will not be reviewed every 90 days by S&P, but more likely to be review annually. The City still remains on negative outlook. These terms are not exclusive to just Georgetown in reaction to the winter storm in February as its effects affected the State. The participation in the ERCOT market in general is the largest reason for the low credit rating. • The credit rating change is mostly due to the Utilities use of a renewed risk management policy and portfolio. • Woodruff asks for clarification for what negative outlook means. ▪ Wallace answers the actual rating held at A+ and remains on negative outlook which is a long-term scenario view of the industry. J. Energy Risk Management Policy Updates- Daniel Bethapudi- General Manager of Electric Utility • In January 2021 evaluation was provide by ACES to improve Georgetown’s Risk Management Policy. They were tasked with provide high level recommendations to bring policy in line with best practices in the industry and that fit the structure of the Utility. • This includes modifying and enhancing the governance and responsibilities of those involved, enhancing hedging guidelines, define authorized trading activity, develop a credit policy, credit exposure monitorization, and incorporate stochastic portfolio modeling. • This includes creation Risk Oversight Committee consists of Electric Manager and Staff, City Manager, Assistant City Manager, and the Finance Director. This committee is responsible for policy itself and for some of the portfolio related decisions. • Below this is the Risk Management Committee. Which consists of the QSE/ Energy Manager, which is Shell Energy, the Electric Manger and Staff, and an independent consultant which is Crescent Power. This group handles more of the day-to-day activities of risk management. • ACES Recommended a change in governance in which this includes the Risk Oversight Committee being served by the Electric Board, reporting to this group is the general manager led portfolio management team consisting of an energy risk management support services provider, an energy portfolio provider, and an External Energy Manger or QSE. This group will be performing the actual day to day energy portfolio management tasks. • The other reporter to the ROC is the Internal Risk Oversight Committee. This consists of the City Manager, Assistant City Manager, Finance Director, General Manager, and a senior Utility staff member. This group performs the independent risk management function. • The combination of the Internal Risk Oversight Committee and portfolio management team reports to the ROC who then will recommend actions and policies to the City Council. • Case asks if Shell has approved of the Risk Management Policy. o Bethapudi answers that Shell is obligated to abide to the risk management policy MOTION by Woodruff, second by Butler to adjourn the Regular Session and move into Executive Session. APPROVED 5-0 at 5:26 PM Executive Session In compliance with the Open Meetings Act, Chapter 551, Government Code, Vernon's Texas Codes, Annotated, the items listed below will be discussed in closed session and are subject to action in the regular session. K. Section 551.086: Competitive Matters • Purchased Power Update MOTION by Jones, second by Woodruff to adjourn Executive Session. APPROVED 5-0 at 6:25. Regular Session (cont.) • Bethapudi gives an ERCOT update- to ensure there are not any winter storm like events they have significantly increased the obligation for non-spin reserves up to 6MW. In contrast this used to be less than a megawatt. These resources tend to be expensive, the cost associated with these non-spend reserves average $1000. Adjournment MOTION by Jones, second by Woodruff to adjourn the Board Meeting. APPROVED 5-0 Electric Board Meeting Adjourned at 6:28 PM.