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Exhibit 1 - Agenda Information SheetCITY OF DENTON ______________________________________________________________________________ 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.