Exhibit 1 - Agenda Information Sheet - PUBCity of Denton
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AGENDA INFORMATION SHEET
DEPARTMENT: Procurement & Compliance
CFO: Antonio Puente, Jr.
DATE: January 13, 2020
SUBJECT
Consider recommending adoption of an ordinance of the City of Denton, a Texas home-rule municipal
corporation, authorizing the City Manager to execute a contract with Pastore Houldsworth & Co., LLC, for
the development of an Advanced Forecast Model for DME as set forth in the contract; providing for the
expenditure of funds therefor; and providing an effective date (RFQ 7167 – awarded to Pastore
Houldsworth & Co., LLC, for development of an Advanced Forecast Model awarded for DME, in the three
(3) year not-to-exceed amount of $288,000).
RFQ INFORMATION/BACKGROUND
DME in establishing its annual and five-year energy purchase budget uses price forecasts for power
(electricity), natural gas, energy production from its portfolio of intermittent renewable resources, the
Denton Energy Center (DEC) and Denton city load. Commodity forecasts are the current market value for
future deliveries and natural gas and power that willing buyers and sellers could transact upon. Commodity
forecasts are greatly influenced by market fundamentals such as weather and supply and demand which
change on a daily basis. The power output from intermittent renewable resources are a function of wind
speed and solar irradiance at the location of the facilities which cannot be accurately predicted one day in
advance let alone five years in advance. City load demand is a function of temperature, economic
development and economic activity which are all significant variables that impact the ultimate load demand
that is realized. Generation from the DEC is a function of the five-minute price of the ERCOT market and
the price of delivered natural gas.
The budgeted expense for purchasing power to serve the city of Denton’s load is currently done using static
models that utilize a single price patch and a profile of energy output from resources and city energy
demand. There are much better computational models that exist to provide budget forecasts that have the
ability to vary all the dependent and independent variables and produce projected results that are not static
but rather are probabilistic. These advanced models use both stochastic (MonteCarlo) and neural (artificial
intelligence) algorithms to produce a series of probability-based outcomes and will allow DME, the PUB
and the City Council to determine the level of certainty upon which the budget for purchase power will be
based. The forecasting model that will be developed will permit DME to change each of the variables
independently or multiple variables to evaluate potential market outcomes and the resulting projected
impact to DME’s annual purchased power expense. The model will permit forecast for a period of ten (10)
years and will be a key component of developing DME’s future renewable strategy and DEC monetization
efforts. It will produce probability distributions and sensitivity analysis of expected energy revenues and
expenses associated with DME’s portfolio of renewable resources, the Denton Energy Center (DEC), the
load served by DME and any other contract or traded positions.
City Hall
215 E. McKinney Street
Denton, Texas
www.cityofdenton.com
Request for Qualifications (RFQ) for professional development services was sent to 251 prospective firms
for these services. In addition, the RFQ was placed on the Materials Management website for prospective
respondents to download and advertised in the local newspaper. Two (2) statement of qualifications (SOQ)
were received. The SOQs were evaluated based on published criteria including identification and
understanding of the City’s requirements, past performance and experience, qualifications of key personnel,
and schedule to complete tasks. Based upon this evaluation, the recommended award is to Pastore
Houldsworth and Co., LLC, and is determined to be the most qualified firm for the City with significant
experience developing a similar model for investor-owned electric utilities and commodity trading
companies. The not to exceed price is based upon a negotiated scope of work.
NIGP Code Used for Solicitation: 961-Miscellaneous Services, No. 1
Notifications sent for Solicitation sent in IonWave: 251
Number of Suppliers that viewed Solicitation in IonWave: 5
HUB-Historically Underutilized Business Invitations sent out: 20
SBE-Small Business Enterprise Invitations sent out: 102
Responses from Solicitation: 2
RECOMMENDATION
Award a contract with Pastore Houldsworth & Co., LLC, for professional services for the development of
an Advanced Forecast Model for Denton Municipal Electric, in a three (3) year not-to-exceed amount of
$288,000.
PRINCIPAL PLACE OF BUSINESS
Pastore Houldsworth & Co., LLC
Houston, TX
FISCAL INFORMATION
These services will be funded from Denton Municipal Electric account 600003.7854.5750A. Requisition
#145213 has been entered into the Purchasing software system in the amount of $96,000. The budgeted
amount for this item is $288,000.
EXHIBITS
Exhibit 1: Agenda Information Sheet
Exhibit 2: Pricing Evaluation
Exhibit 3: LLC Members
Exhibit 4: Ordinance and Contract
Respectfully submitted:
Lori Hewell, 940-349-7100
Purchasing Manager
For information concerning this acquisition, contact: Terry Naulty, 940-349-7565.
Legal point of contact: Mack Reinwand at 940-349-8333.