Exhibit 1 - Agenda Information Sheet
City of Denton
_____________________________________________________________________________________
AGENDA INFORMATION SHEET
DEPARTMENT: Procurement & Compliance
ACM: David Gaines
DATE: December 14, 2021
SUBJECT
Consider adoption of an ordinance of the City of Denton, a Texas home-rule municipal corporation,
authorizing the City Manager to execute a design-build agreement with Beta Engineering, LLC, for the
design and construction of the Hickory Gas Insulated Substation (GIS) for Denton Municipal Electric;
providing for the expenditure of funds therefor; and providing an effective date (RFQ 7670 – awarded to
Beta Engineering, LLC, in the not-to-exceed amount of $40,469,000.00).
INFORMATION/BACKGROUND
Denton Municipal Electric (DME) is proposing a contract for the design and construction of the Hickory
Gas Insulated Substation (GIS) on a parcel of City-owned land located at 2600 West Hickory Street in
Denton, Texas. This substation project will replace the existing Hickory Substation built in the 1960s and
is now at its end of life and a safety hazard for DME employees. The new substation will initially be
constructed with two (2), 25 MVA distribution power transformers which provide 10MVA more load-
serving capacity than the existing Hickory Substation. The new substation is designed to accommodate an
additional two (2), 25 MVA distribution power transformers, for a total of four. The additional two (2)
transformers will be added to the new Hickory GIS Substation when needed based on load and
developments in the substation’s service area. The new Hickory GIS Substation, plus three transmission
line conversions, are the last major elements of the full conversion of DME’s 69kV transmission loop to
138kV. The Hickory GIS Substation project will be complete and in-service by October 25, 2024.
Starting in 2014, DME brought forward to the City Council plans to improve and expand its service capacity
in the downtown Denton/University of North Texas area. The original plan included the construction of a
new substation named Eagle Substation and rebuilding the current Hickory Substation. Both substations
were initially proposed to house two (2), 25 MVA transformers in an air-insulated configuration to provide
up to 100 MVA of service capacity to the area. In early 2020, DME reviewed the need for Eagle Substation
utilizing a consultant and internal studies and determined, with Hickory Substation built using GIS
technology and with a final load capacity of four (4), 25 MVA distribution power transformers for 100
MVA total capacity, Eagle Substation could be deferred until the Year 2034. The delay of Eagle Substation
provided a realized savings of approximately $17,447,500. On June 22, 2020, DME presented these findings
to the City Council during which Council directed DME to forgo constructing Eagle Substation and retain
the land for future use.
The Hickory GIS project includes the installation of 138kV gas-insulated switchgear and related control
equipment inside a GIS building. In traditional air-insulated electric substations (AIS), energized equipment
is insulated from other equipment using air. The AIS energized equipment is outdoors and requires an
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increased space required to meet National Electric Safety Code (NESC) requirements for insulation between
elements. The gas-insulated substation technology uses Sodium Hexafluoride (SF6) gas to insulate the
energized equipment rather than air like a traditional substation. This allows for a more compact footprint
than a traditional AIS and thus a smaller substation site. Currently, all DME substations use air-insulated
switchgear. Current DME substation sites with AIS equipment and similar capacity to Hickory GIS
Substation encompass around seven (7) acres. The Hickory GIS Substation site is approximately 2.1 acres.
GIS technology was preferred by the Council [ID 16-711] for this project to enable all needed equipment
fitting on the smaller substation site. Hickory GIS Substation will be the first gas-insulated substation DME
will own and operate.
The Hickory GIS project includes a 138kV gas insulated substation within by a 38-foot-tall GIS Building,
two (2), 25MVA power transformers, two (2), 15kV switchgear buildings; a 22 foot in height architectural
screening wall (façade) around the site; and underground transmission and distribution installation
associated with the conversion from overhead.
The two (2) power transformers and the two (2), 15kV switchgear buildings will match the specifications
and standards of existing power transformers and switchgear buildings currently used in DME substations.
The switchgear buildings have already been procured and will be moved and connected as a part of this
contract. The transformers will be procured as a part of this contract. This equipment will be located outside
the GIS building and be shielded from view by the perimeter architectural wall.
The visual aesthetics associated with the new Hickory substation was of some concern to the Council. On
December 2, 2014, a work session report (ID14-0764) directed DME to enlist input from citizens through
an Aesthetics Committee to establish the façade for the new Hickory substation.
The perimeter of the substation site will include a 22-foot-tall architectural screen wall to provide security
and hide the substation equipment. A photo simulation of the site and screen wall is provided. As
recommended by City Council, an Aesthetic Committee, which consisted of seven people, was appointed
to advise DME on the aesthetics of the new substation. The Aesthetic Committee gave direction on the
appearance and height of the wall. All other DME substations use a painted 10-foot-tall precast concrete
wall for security only and do not block all equipment from view. The architectural wall is another first for
a DME substation.
Included with this project is the conversion of existing overhead electric transmission and distribution
facilities to the underground in the general vicinity of the project and rerouting these facilities to the new
substation. Photo simulations of the project area are included. Duct banks have already been installed across
Bonnie Brae Boulevard and Hickory Street to aid in this effort and to avoid damaging these streets after
they are reconstructed through a future City of Denton Capital Improvement Project.
To date, a significant amount of work has been completed by DME to ensure Beta Engineering, LLC can
meet the energization date of October 25, 2024, for the substation. DME has demolished all above ground
and removed below ground facilities on the site, including the removal and capping of all water and gas
services at the street right of ways. Approval was received from the City for abandoning all easements on
the site, DME completed a replat of the site and a geotechnical investigation report. DME has obtained
approval from the City of the Civil Engineering Plans through Development Services for site grading,
drainage, street improvements, and underground duct banks.
On June 15, 2020, DME, Legal, and Procurement determined the Design-Build procurement method was
appropriate for this project. This method is described in Texas Government Code, Chapter 2269, Subchapter
G, and required DME to prepare and solicit a request for qualifications (RFQ) to qualify and select firms
capable of performing all the tasks required to complete the project. The design-build method requires DME
to designate an independent engineer to act as DME’s representative for the duration of the project and is
commonly referred to as “owner’s engineer.” On October 6, 2020, City Council approved an amendment
to Black & Veatch’s existing contract to serve as DME owner’s engineer. Black & Veatch prepared the
technical specifications for the RFP and assisted DME with the evaluations of the proposals.
Issuance of the RFQ was completed on April 6, 2021. After evaluating the RFQs, DME selected four firms
that met all the criteria. These four firms then received a request for proposals (RFP) on July 19, 2021,
including specifications for the project. The pricing is guaranteed until January 14th, 2022. Delays in
approval of the contract could result in an increase in pricing.
Request for Qualifications (RFQ) for design-builder for the design and construction of the Hickory Gas
Insulated Substation (GIS) for Denton Municipal Electric was sent to 1860 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. Seven (7) statement of qualifications (SOQ) were received.
The SOQs were evaluated based on published criteria including qualifications of the firm, proven project
success, and the firm’s stability. Based upon this evaluation, a short-list of the four (4) most qualified received
a Request for Proposal and an Interview Invitation. After scoring the interviews and the proposals received, the
Evaluation Committee recommended Beta Engineering, LLC as the most qualified of the candidates, subject
to successfully negotiating an agreement with terms acceptable to the City.
NIGP Code Used for Solicitation: 285, 691, 906, 909, 910, 912, 913,
914, 918, 925, and 936
Notifications sent for Solicitation sent in IonWave: 1,860
Number of Suppliers that viewed Solicitation in IonWave: 52
HUB-Historically Underutilized Business Invitations sent out: 174
SBE-Small Business Enterprise Invitations sent out: 752
Responses from Solicitation: 7
RECOVERY OF CAPITAL INVESTMENT IN THE HICKORY GIS SUBSTATION
The new Hickory GIS will contain both transmission and distribution assets. Pursuant to the Public Utilities
Reform Act (PURA) and enabling Electric Reliability Council of Texas (ERCOT) rules and protocols,
transmission investments made by Transmission and Distribution Utilities (TDU), of which DME is one,
are paid for by all users of the Texas transmission grid. Each TDU files a rate case with PUCT to determine
the allowable costs and rate of return that the investing TDU is authorized to recover from the ERCOT
market. For the Hickory GIS, approximately $27 million or 65% of the investment qualifies for recovery
under DME’s Transmission Cost of Service (TCOS) filings. The remainder of the capital investment is
considered distribution system investments which are recovered in the base rates of DME or via a
contribution to Aid in Construction if the distribution assets are being installed to serve a specific customer.
For the Hickory GIS, one of the main drivers of the need for additional capacity is the growing energy
demands of the University of North Texas (UNT). In recognition of the growing electric demand of UNT,
DME and UNT included provisions in the Power Purchase Agreement (PPA) governing the sale of electric
that address Aid in Construction. At the time that the PPA was agreed to by both parties, DME planned to
build both the Hickory GIS and the Eagle GIS to meet the needs of UNT and the other retail customers in
West-Central Denton. The delayed construction of the Eagle GIS Substation, as approved by City Council
in June 2020, included the contemporaneous construction of dedicated feeders from the new Hickory GIS
Substation and the existing Locust Substation to serve UNT. DME is in discussions with UNT on the
amount of Aid in Construction that UNT will be responsible for associated with this project. Aid in
Construction will be a lump-sum payment to DME by UNT and the balance of the distribution system assets
will be added to the DME rate base.
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On October 21, 2014, during a closed session meeting (ID 14-0625), DME presented to Council the sites
being considered for the new Hickory GIS Substation with citizen feedback from the public open house.
Five (5) sites were presented to Council for consideration and the Council directed DME to purchase the
site now owned by the City at 2600 West Hickory Street. This site had the least negative feedback from the
public open house and impacted the least number of homeowners.
On December 2, 2014, a City Council Work Session report (ID 14-0764), directed DME to enlist input from
citizens through the creation of an Aesthetics Committee to discuss the appearance of the façade for Hickory
Substation. Reviewing the City Council agenda for this date provided identification of item ID 16-711 to
“receive a report, hold a discussion, and provide staff direction regarding the DME Hickory Substation site,
…and concerning the options related to the station’s configuration and aesthetic treatment.” Direction given
at this meeting established an Aesthetic Committee to look at options for Hickory Substation’s façade.
The Aesthetic Committee consisted of seven people and was appointed to advise Denton Municipal Electric
on the aesthetics of the new substation. After initial discussion at a committee meeting, the architect
assisting the committee prepared two revised design concepts for Committee review. These two concepts
were shared electronically, using an online survey to obtain responses and feedback from Committee
members. The survey was distributed to all Committee members on July 28, 2015, with a request to
complete it by August 9, 2015. Five of the seven committee members replied. Ultimately, the current
appearance was chosen.
On June 21, 2016, the City Council (ID 16-711) was requested to provide DME staff direction regarding
the Hickory Substation site related to options to the station’s configuration and aesthetic treatment. The
presentation included background information on the Hickory Substation site, displayed the
recommendation of the Aesthetic Committee, and estimated construction costs. It was during this Council
meeting that DME was given direction to build the new Hickory Substation with GIS technology as well as
the Council’s preference for a façade/wall. Additional direction from this Council meeting included DME
to move forward with underground transmission circuits appropriate to the construction of this substation
as well as converting existing overhead distribution circuits, in the same general area, to underground.
On October 9, 2020, DME provided an Informal Staff Report (2020-086) to Council to update the status of
the Hickory Substation Gas Insulated Project including the estimated projected schedule, procurement
method, and estimated cost.
On June 4, 2021, DME provided an Informal Staff Report (2021-035) to Council with an overview of the
safety of Gas Insulated Switchgear (GIS) for the Hickory GIS Substation Project including a review of the
sites considered for the substation.
On October 22, 2021, DME provided an Informal Staff Report (2021-090) to Council describing the electric
infrastructure around the new Hickory GIS Substation and providing a photo simulation.
On December 13, 2021, this item will be presented to the Public Utilities Board (PUB) for consideration.
RECOMMENDATION
Award a contract with Beta Engineering, LLC, for the design and construction of the Hickory Gas Insulated
Substation (GIS) for Denton Municipal Electric, in a not-to-exceed amount of $40,469,000.
PRINCIPAL PLACE OF BUSINESS
Beta Engineering, LLC
Pineville, LA
ESTIMATED SCHEDULE OF PROJECT
This project will start upon approval from Council with a completion date of October 24, 2024.
FISCAL INFORMATION
Projected 5-Year Project Cost
FY21-22 FY22-23 FY 23-24 FY24-25 FY25-26 5 Yr Total
Total $7,781,227 $21,043,216 $10,867,230 $678,372 $0 $40,370,000
This contract will be funded using DME’s Capital Improvement Plan budget funds. The Utilities Extendable
Commerical Paper Program is being used as appropriation authority for this contract. The transmission
portion of the project costs will ultimately be recovered through the Public Utility Commission transmission
cost of service program (TCOS).
EXHIBITS
Exhibit 1: Agenda Information Sheet
Exhibit 2: Pricing Evaluation
Exhibit 3: Photo Simulations
Exhibit 4: LLC Members
Exhibit 5: Presentation
Exhibit 6: Ordinance and Contract
Respectfully submitted:
Lori Hewell, 940-349-7100
Purchasing Manager
For information concerning this acquisition, contact: Mark Zimmerer, 940-349-7169.
Legal point of contact: Marcella Lunn at 940-349-8333.