6560 executed contract - Enterprise Risk Consulting - Amendment 1
Docusign City Council Transmittal Coversheet
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City Council Target Date
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DocuSign Envelope ID: FDF2D120-5BF2-4E93-9B02-0E1854D8C211
PSA
no
6560
Rebecca Hunter
Enterprise Risk Consulting - Amendment No. 1
$299,000
10/10/17
N/A
2017-290
PSA 6560 – Amendment No. 1 Page 1 of 3
THE STATE OF TEXAS §
§
COUNTY OF DENTON §
FIRST AMENDMENT TO CONTRACT
BY AND BETWEEN THE CITY OF DENTON, TEXAS
AND ENTERPRISE RISK CONSULTING, LLC
CONTRACT NO. 6560
THIS FIRST AMENDMENT TO CONTRACT NO. 6560 (“Amendment”) by
and between the City of Denton, Texas (“City”) and Enterprise Risk Consulting, LLC
(“Consultant”);
The original Agreement provided by Enterprise Risk Consulting, LLC for
professional services related to Agreement for Denton Municipal Electric (“DME”)
Energy Center Resource Planning and Power Supply Strategy, as is contained in Contract
No. 6560. The initial agreement for the Basic Services was approved on August 23,
2017, in the not-to-exceed amount of $99,000.
The CITY deems it necessary to further expand the professional services provided
by CONSULTANT to the CITY;
NOW THEREFORE,
1. “ARTICLE II, SCOPE OF BASIC SERVICES, A.” of the Agreement is
hereby amended to read as follows:
C. “CONSULTANT shall perform all those services set forth in the individual
task orders as described in Exhibit 1 – Scope of Work and Cost Estimate
for Part II – Power Supply Hedge Strategy & Risk Management Process
Implementation, which shall be attached to this Agreement and made a part
hereof.
2. “ARTICLE V, COMPENSATION, B. BILLING AND PAYMENT” of the
Agreement is hereby amended to read as follows:
“BILLING AND PAYMENT: For and in consideration of the professional
services to be performed by the CONSULTANT herein, the OWNER agrees
to pay, based on the cost estimate detail shown in Exhibit “B” – Cost
Estimate of Professional Services and Reimbursement of Out-of-Pocket
Expenses and Exhibit “1” – Scope of Work and Cost Estimate for Power
Supply Hedge Strategy & Risk Management Process Implementation,
which are attached hereto and made a part of this Agreement as if written
DocuSign Envelope ID: FDF2D120-5BF2-4E93-9B02-0E1854D8C211
PSA 6560 – Amendment No. 1 Page 2 of 3
word for word herein, a total fee, not including out-of-pocket expenses, such
as airfare, hotel, ground transportation, and meals including reimbursement
for direct non-labor expenses and incidentals not to exceed $299,000 for Part I
and Part II of the Project.”
All other provisions of the contract, as heretofore amended, remain in full force and
effect.
IN WITNESS WHEREOF, the CITY and the CONSULTANT, have each
executed this Amendment, by and through their respective duly authorized
representatives and officers on this the _________________________.
“CITY”
CITY OF DENTON, TEXAS
A Texas Municipal Corporation
By: __________________________________
TODD HILEMAN
CITY MANAGER
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
By: __________________________________
APPROVED AS TO LEGAL FORM:
AARON LEAL, INTERIM CITY ATTORNEY
By: ___________________________________
DocuSign Envelope ID: FDF2D120-5BF2-4E93-9B02-0E1854D8C211
October 10, 2017
PSA 6560 – Amendment No. 1 Page 3 of 3
“CONSULTANT”
Enterprise Risk Consulting, LLC
A Limited Liability Corporation
By: _________________________________
AUTHORIZED SIGNATURE, TITLE
DocuSign Envelope ID: FDF2D120-5BF2-4E93-9B02-0E1854D8C211
President
9/21/17 Confidential Proposal of the City of Denton from Enterprise Risk Consulting, LLC 1
Exhibit 1 - Scope of Work for the Project
Power Supply Hedge Strategy & Risk Management Process Implementation (Part II)
I. Introduction
The objective of the consulting engagement is to provide strategic support to Denton by
providing strategic support in the implementation of a reengineered EMO function for power
supply trading and risk management, as well as the design and implementation of a long-term
power supply strategy, and assistance in revising Denton’s pro forma financial projections.
The proposed timeline for the scope of work is October 2017 to September 2018.
II. Scope of Work
Power Supply Hedge Strategy & Risk Management Process Implementation
Activities will include:
• Based on Denton’s risk assessment and best practice process gap analysis, ERC will
assist Denton with the implementation of changes to its trading and energy risk
management operational process as needed to meet best practice requirements and close
identified process gaps.
• ERC will work with Denton personnel to revise its energy risk management and credit
risk management governance documents to reflect the necessary changes identified in
the risk assessment and gap analysis, and to reflect implemented changes to Denton’s
organizational structure and management process.
• Based on the chosen renewable power supply resource plan, ERC will develop an
integrated hedge strategy to meet Denton’s chosen renewable resource goals.
o ERC will work with Denton to determine its risk tolerance and to develop
measurable risk management and risk reduction objectives.
o Based on Denton’s risk tolerance and risk reduction objectives, ERC will
develop an actionable hedge strategy including hedge targets specifying
quantities, durations, transaction triggers, and transaction deadlines. These will
include power market targets for hedging and balancing DME’s power supply
portfolio, along with natural gas supply and hedge targets (to be determined by
the operational and monetization plan developed for the DEC).
o Based on the hedge strategy, ERC will translate the hedge strategy, its targets
and deadlines, into a risk limit structure for control and policy compliance
purposes.
EXHIBIT 1
DocuSign Envelope ID: FDF2D120-5BF2-4E93-9B02-0E1854D8C211
9/21/17 Confidential Proposal of the City of Denton from Enterprise Risk Consulting, LLC 2
• Based on the renewable resource plan and integrated hedge strategy, ERC will develop a
set of risk and performance metrics.
• Based on the new renewable power supply resource plan and hedge strategy, ERC will
assess Denton’s risk information system requirements including deal capture and
transaction and exposure database needs, system security, risk and performance
measurement functionality, and settlement and accounting functionality.
• ERC will work with Denton staff to incorporate the revised risk management objectives,
risk and performance metrics, risk management strategies, and risk limit structure in
Denton’s risk management governance documents.
• Knowledge Transfer - Ongoing interaction between Denton personnel and ERC staff
will help to develop skills to allow Denton to independently and efficiently operate a
functional market-based power supply and risk management program.
• Pro Forma Support – ERC will assist Denton in revising its pro forma financial
projections for expenses related to wholesale electric power and fuel supply costs
resulting from its revised renewable resource power supply plan, and revised budgets for
its EMO operations.
III. Deliverables
Deliverables will include written documents submitted by email, information communicated in
meetings and teleconferences, and PowerPoint presentations.
IV. Cost Estimate
The cost estimate is presented as a range of minimum to maximum estimated amounts. The
range is a function of several elements of uncertainty. How much time on-site will be required,
and how many trips to Denton will be required? How many best practice gaps (and how large)
will be identified in the risk assessment and gap analysis? Based on Denton’s to-be-determined
risk tolerance, how transaction heavy or light will be the new hedge strategy? How many
resource nodes will be involved in the revised resource plan (this will affect the number amount
of analysis and bidding preparation needed to manage congestion hedging)? How cooperative or
resistant will existing staff act? How much training will be required for new staff or existing
staff who take on new roles? What is the current state of Denton’s credit risk management
process, and how many counterparties are on the books (this can either speed up or slow down
the transaction planning process).
It is anticipated that Larry Lawrence (President), Neil McAndrews (Senior Principal), and Tom
Lord (Senior Principal) will perform the majority of the work under this contract, assisted by
ERC’s analytical support staff.
DocuSign Envelope ID: FDF2D120-5BF2-4E93-9B02-0E1854D8C211
9/21/17 Confidential Proposal of the City of Denton from Enterprise Risk Consulting, LLC 3
Scope of Work Minimum Estimate* Maximum Estimate*
Power Supply Hedge Strategy
& Risk Management Process
Implementation
$135,000 $182,250
Out of Pocket Expenses
Travel costs such as airfare, hotel, ground transportation, and meals will be billed at out-of-
pocket cost, without additional markup. Air travel will be purchased at coach class fares, with
advance purchase discounted tickets used when scheduling permits. Travel time is not billable
unless project-specific work is performed in route. Expense reports detailing all expenses, along
with receipts, will be presented for reimbursement.
We estimate that the scope of work could involve several trips to Denton for Neil McAndrews
and Larry Lawrence, and a few for Tom Lord. Thus, we would need an adder to the cost
estimate to cover travel expenses.
DocuSign Envelope ID: FDF2D120-5BF2-4E93-9B02-0E1854D8C211
Certificate Of Completion
Envelope Id: FDF2D1205BF24E939B020E1854D8C211 Status: Completed
Subject: Please DocuSign: City Council Contract -Enterprise Risk Consulting - Amendment No 1
Source Envelope:
Document Pages: 7 Signatures: 4 Envelope Originator:
Certificate Pages: 6 Initials: 0 Rebecca Hunter
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Time Zone: (UTC-08:00) Pacific Time (US & Canada)
rebecca.hunter@cityofdenton.com
IP Address: 10.102.101.12
Record Tracking
Status: Original
10/5/2017 7:00:24 AM
Holder: Rebecca Hunter
rebecca.hunter@cityofdenton.com
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Rebecca Hunter
rebecca.hunter@cityofdenton.com
Assistant Purchasing Manager
City of Denton
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Larry Lawrence
llawrence@enterprise-risk.com
President
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Jennifer DeCurtis
jennifer.decurtis@cityofdenton.com
Deputy City Attorney
City of Denton
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Contracts Administration Supervisor
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Todd Hileman
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City Manager
City of Denton
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City Secretary
City of Denton
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Assistant City Secretary
City of Denton
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Electronic Record and Signature Disclosure created on: 7/21/2017 1:59:03 PM
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