Exhibit 1 - Agenda Information SheetCITY OF DENTON
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AGENDA INFORMATION SHEET
DEPARTMENT: Procurement & Compliance
CFO: Antonio Puente, Jr.
DATE: June 23, 2020
SUBJECT
Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal
corporation, authorizing the City Manager to execute a contract with Allegro Development
Corporation, for Energy Trading Risk Management (ETRM) Software for Denton Municipal
Electric; providing for the expenditure of funds therefor; and providing an effective date (RFP
6804 – awarded to Allegro Development Corporation, for a term ending on December 31, 2023,
in the not-to-exceed amount of $861,998.91).
INFORMATION/BACKGROUND
DME currently uses several different systems, tools, and spreadsheets to manage Denton’s energy
portfolio. As recommended by DME’s outside consultant (Deloitte), as DME moves forward with
the implementation of the Council approved comprehensive hedging plan, it is important for DME
to acquire fit-for-purpose technology solutions to help track portfolio positions and movements in
market prices, quantify the risk associated with hedging activities and provide appropriate level of
internal controls and oversight needed to support DME’s Energy Risk Management Policy.
Additionally, Section 4.2 of the Risk Policy calls for certain reporting capability to enable the Risk
Committee to more clearly examine DME’s energy portfolio, these include:
Controls Compliance
Identification of any activities that have exceeded permissible limits. The General Manager
or his/her designee will provide details of the causes of any limit violations, the measures
taken to mitigate future violations and a report of any disciplinary actions taken as a result
of such violations.
Hedge Target Compliance
Provides an update on progress on executing latest hedge plan execution timetable.
City Hall
215 E. McKinney Street
Denton, Texas
www.cityofdenton.com
Portfolio Competitiveness
Provides a comparison of latest 12-month cost/MWH vs ERCOT spot markets (Day-Ahead
and Real-Time Market) and compares the market value of renewable resources to their
contract costs.
Credit Exposure
Identifies the credit limit for each counterparty, current level of exposure with the
counterparty, and remaining available credit. Also includes an update on current ERCOT
credit requirements and thresholds.
DME selected Allegro’s proposal for a web-hosted solution that provides a suite of software
components listed below as a basic framework and first phase of an integrated ETRM
system. Additional phases to complete the system will include one or more sources of market price
data, financial data on existing/potential counterparties and (potentially) system integration
programming to connect to other existing DME systems. DME expects to return to the Council for
approval of these additional costs in the near future.
Modules Description
1 Power Basic risk reporting. Calculates economic dispatch, physical power scheduling
2 Natural Gas Manage natural gas contracts
3 Environmental Products Capture, value and settle ERCOT renewable energy credit data
4 Credit Calculate credit exposure
5 Market Connect Import market price data
6 Power Connect Import ERCOT market & settlement data
7 Extension Manager Manage customer-specific customizations
Requests for Proposals was sent to 32 prospective suppliers of this item. In addition, specifications
were placed on the Materials Management website for prospective suppliers to download and
advertised in the local newspaper. Eleven (11) proposals were received with four (4) meeting
specifications and evaluated based upon published criteria including delivery, compliance with
specifications, and price. Based upon this evaluation the top 2 firms, Open Access Technology
International (OATI) and Allegro Development Corporation (Allegro) were asked to provide a
best and final offer. The OATI system in its base configuration differed in capability, but it is
expandable to match capability with the Allegro product. The final evaluation was based upon
both systems priced with like capability. Based on the information provided regarding price and
capability, Allegro Development Corporation was ranked the highest and determined to be the best
value for the City.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On June 22, 2020, this item will go to the Public Utilities Board (PUB) for recommendation.
RECOMMENDATION
Award a contract with Allegro Development Corporation, for Energy Trading Risk Management
(ETRM) Software for Denton Municipal Electric, for a term ending on December 31, 2023, in a
not-to-exceed amount of $861,998.91.
PRINCIPAL PLACE OF BUSINESS
Allegro Development Corporation
Dallas, TX
ESTIMATED SCHEDULE OF PROJECT
This contract has a term ending on December 31, 2023.
FISCAL INFORMATION
These services will be funded from ETRM project account 604142497. These products and
services will be funded through the using department’s budget on an as needed basis. The budgeted
amount for this item is $861,998.91.
EXHIBITS
Exhibit 1: Agenda Information Sheet
Exhibit 2: Pricing Evaluation
Exhibit 3: Ordinance
Respectfully submitted:
Lori Hewell, 940-349-7100
Purchasing Manager
For information concerning this acquisition, contact: Philip DiPastena, 940-349-7517.
Legal point of contact: Mack Reinwand at 940-349-8333.