2020-013 DEC MaintenanceDate: February 6, 2020 Report No.
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Denton Energy Center – Projected Maintenance Costs
BACKGROUND:
During consideration of Individual Consideration item 20-350 for major overhaul parts from Wartsila, City
Council requested that staff provide a projection of anticipated major maintenance cost associated with
operation of the Denton Energy Center.
DISCUSSION:
Maintaining the generation equipment at the Denton Energy Center consistent with the Original
Equipment Manufacturer (OEM) specifications is critically important to ensure the units are available to
dispatch against the market when wholesale prices are high. Any outage experienced during high price
periods when the Energy Management Office (EMO) is relying on DEC generation to offset wholesale
power purchases results in costs that are passed through to DME rate-payers in the Energy Cost
Adjustment (ECA) component of the electric rate. The OEM of each major system recommends specific
inspection, replacement and rebuilding of critical components based upon the number of operating hours
on each individual generating unit. This is similar the recommendations from car manufacturers for oil
changes, tire rotations and replacement, timing chain replacement, brake pads and rotors, oxygen sensors,
shock absorbers/struts, etc. inspection and replacement.
DEC maintenance activities are broken into three categories.
1. Preventive maintenance (PM) is a fundamental, planned maintenance activity designed to
improve equipment life and avoid any unplanned maintenance activity. Preventive maintenance
is the foundation of the entire maintenance strategy consisting of systematic inspections,
detection, correction and prevention of equipment failures.
2. Predictive maintenance (PdM) activities are those that monitors the performance and condition
of equipment during normal operation to reduce the likelihood of failures. Predictive type
activities such as oil sampling, vibration analysis and thermography scanning are key activities in
a maintenance program to predict and avoid equipment failures.
3. Corrective Maintenance is any task that corrects an issue with an asset and returns it to working
order. These tasks can be both planned and unplanned. Planned being identified through
preventative or predictive maintenance activities or equipment failure.
Council ID 20-350 for the purchase of a “swing set” and the upcoming request for the purchase of
turbochargers ($418,061.60) are part of the preventative maintenance program. These parts will be used
during the OEM recommended major overhaul of equipment at 12,000 hours of operating hours for each
engine. As explained during the approval of the ID 20-350, having these spare parts on the shelf will
minimize downtime due to a forced outage where these parts are needed and permits the DEC to schedule
maintenance during times of the year when wholesale electric prices are predictably low. The “swing
set”, including the turbochargers, are capital maintenance items from a FERC accounting perspective.
Date: February 6, 2020 Report No.
The current estimate of when these swing-set parts will be used based upon expected hours of operation
of the units is provided in Table 1 below. The column labeled Major Maintenance specifies when the
units are taken out of service for weeks at a time to perform the overhauls recommended by the OEM and
when some of the swing set parts will be used.
Table 1 – Preventative Maintenance Schedule for DEC
In addition to the Major Maintenance activities, routine maintenance activities classified as preventative
maintenance is also performed to ensure high availability levels for each generating unit. Routine
maintenance activities do not involve the use of swing set parts but do require the purchase of non-capital
maintenance parts and services. Table 2 below shows the current estimated cost for routine maintenance
activities and the non-capital spare parts associated with minor and major maintenance activities.
Date: February 6, 2020 Report No.
Table 2 – DEC Budgeted Maintenance Spending
Calenda
r Year
Hour
Interval
forecast
Parts &
Consumables
Outside
Contractor
Rebuild / Repair
Labor
Estimated Total
Maintenance
Cost Major Items
2020 4000 $ 418,196.00 $ - $ 422,196.00
2021 6000 $ 390,000.00 $ - $ 396,000.00
2022 8000 $ 409,500.00 $ 65,000.00 $ 482,500.00
2023 10000 $ 535,900.00 $ 60,000.00 $ 605,900.00
2024 12000 $ 2,493,154.73 $ 387,208.00 $ 2,892,362.73
Rebuilding of 24
Turbos
2025 14000 $ 447,300.00 $ - $ 461,300.00
2026 15000 $ 2,239,000.00 $ 287,000.00 $ 2,541,000.00
Control Module
and Control
System
replacement
2027 18000 $ 469,665.00 $ - $ 487,665.00
2028 20000 $ 9,111,870.13 $ 1,314,937.00 $ 10,446,807.13 Engine Overhauls
2029 22000 $ 525,250.00 $ - $ 547,250.00
In addition to the above estimated costs, there are three known major capital investments that will be
made at the DEC.
1. Construction of a warehouse to store the swing set parts in. That capital expenditure is budgeted
at a cost of $100,000.
2. Purchase and implementation of the Computerized Maintenance Management System supported
by Wartsila technical services at an estimated cost of less than $275,000. Staff is also looking at
other vendor systems that would cost significantly less to determine if they will meet the DEC
needs.
Noise abatement capital expenditures. DME received a single response to the RFP that will not meet our
needs and we will have to issue a new RFP. Costs estimates for this expenditure, if approved by Council,
are likely to be in excess of $800,000.
STAFF CONTACT:
Terry Naulty, Asst. General Manager DME
Terry.naulty@cityofdenton.com
(940) 349-7565
REQUESTOR: Council Member Davis
PARTICIPATING DEPARTMENTS: DME
STAFF TIME TO COMPLETE REPORT: One hour