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Home My WebLink About05-1980 ' i ,.l ~y;;;. ~1~ o, ~ { i ~ P\Oun.V~ i ~~~d m~~ tq~o,;r 7771 p~w~.r Su.pP y "9 9 ae~' C•nv~,s~tiv~j piv15'~0 r ps5oe,~a4es~ Z.nc.• goloAd v tlM. dr• i 0 4 CITY OF DENTON POWER SUPPLY PLANNING STUDY MAY 1980 MANAGEMENT CONSULTING DIVISION OF GILBERT ASSOCIATES, INC. r ~noen 1tom~e,«urtn pk, y, Jr V, r.. Th r`Qy d 'S1Y y/ ~i c~},Mt ! z llyp Y ,s Y i 1-7 t r '.q( ! ♦ P;<J: i~f ~{,T G~~+it i,,,~ e Y Yi fyi Y.: t,r ~g°4 )d l~ j6'yp;vYe~R~•F'• <oi,dl{Z~Cr s ! i^ ril~RkM S V v t y n 1! 7. r P \ 1 f~' ] }r I! '1 <1y r~' v Yy,i Y E r• ~,rlr kl` w r`4y, L!+'S' ' ) .,t 1 h~~.d a 11~V"' t Y I t .y ixy ~V' C r"t t>r.1~1 t`. Y I'•.. w.~ 1v "~°A f%r '"t . r :'i r<*~' ~'rT~t +~';p L~t" A~f~ Y¢ HR'~~ Y~..; k,Y' 1 i/., .t "a hf J~f1 '~Yr r r, '1r ll ° .Ot 9; ,r J' 411 aA f q' {vZ~Y SKY f 1 1 V °i (t "Y ~ ° r 5 Y Y ~ < i' K ~ 5~ 't m y.0 1nP ~ f. f ~ 'f v~' n• lr~ t', + ~ ~ Yly'a k a a ~ f Y~ t y / r R 1 ~ i ICY ~Y 1ti L ri ~1 r It,d 5 ' i 4 r r iMR,, P+ i r'~, s ,A k ~ ~y, r , n Ps 41 V.'~ t ~f ini ~g.(~lf,f t f 4f, t+ " ~ •.y i h `Y r I ' ' P¢~ v IY "~j "'I"~6 ~ ~ w' r ~y4 r If` 1 5J'~ °d r 4 n (~"R~ h 7• 1 14, 'r•1• r. .Y r .p ~ .r I+J t('•n h y r~,l r' Y' ~ ~ t i LETTER_ Of TRANSMITTAL • r 1 ~YY ryp~.~~N~ A `f ~ M~ p f }'v r t0 n ~ z Y ,1 Ollbert/Commonwealth enplmm and Go otwo _ GILBERT ASSOCkATEG, INC., P. 0. Box 1496, Reading, PA 49603/Tel. M775-2600/Cable Qlasocflalsx W431 May 10, 1960 Public Utilities Board rtty of Denton, Texas Penton, sexes 76201 Gentlemen: At your request, and with the cooperation and assistance of Denton's Electric Utility personnel, the ManaDcment Consulting Division of Gilbert Associates, Inc. has conducted a power oupply planning study for the City of Denton's Electric System. We are pleased to present herewita our findings. In any power supply planning activity, it must be recognized that we have attempted to provide the City of Denton with the direction in which the Electric Utility should proceed to provide your citizens with the least cost power. During the study we have investigated a number of available alternatives rhich were considered options for the Electric Utility. Included in +,hese options were the continued participation with the Texas Municipal Pover Agency, continued expansion of Denton's own generation facilities, joint ventures with other private utilities, purchased power from neighboring utilities, and the possible sale of the system to a private utility. During the course of the assignment many options to those particular alternatives were evaluated in arriving at our recommendations. I should like to express our appreciation for the time and interest of the many employees of the City of Denton, and we particularly appreciate the efforts of the Public Utilities Board and the management of the City of Denton's Electric System. We are especially indebted to the Public Utilities Board for providing us with guidance, and who served most effectively as liaison with our organization. We should also like to thank the many people connectLd with the public and private utilities within the State of Texas, with whom we discussed the power options for the City of Denton, for their interest a:.d candor in providing us with the informa- tion necessary to complete this assignmen;. We are prepared to discuss all aspects of this report or any other items considered essential by you, and please feel free to call upon us to amplify or clarify any information presented herein. Respectfully submitted; A. A. Herman, Jr. Project Manager 626 lwmw kwo^ Po ft FA/lAawLm Part Grw HIM. FW&V PA 7151162800 709 Bane waaNVm Awwt *hw Ae 611 1963000/60 Pa ewal New YK NY 717 040 r ~ ~+ar rf Y''r4 YJ' y,,~ tHp } {,.f l'~'~L J~l ,:~1 y3~r{A { x+!`12 MP 1 'a b rlnt i~?Enid. M~i Py d~° @ ww'Y., ~,1~:, w rR~ ~.r a d ~ J ~ r Ft 1 tiai L7h I a ~Vl}}~Y }1~h w.'; i ~ ~?~Y ty! I ~ r,* ~ f f~eAw'S~R _ % IJ~ e' Ir rA~ G ? f f ~ b~) w ~ L 1I ~I W _ ~JPt ! i~ w3_ y r 9C . I( A f + r w 4 .r , ML V ~ r I n n 1r ~ ~ .'r ,~J w ~ h N ,dal +,My n~ul r y r yw ',7~~ u n v~ Yt u~ir ,r ~ sL~n F.~. t t ~ h '!~1 v k h~. t~ Y u`' 4 i > /n 1 ~ Yr M1` ar! ~ ♦ y d 0i e 1 t f~F Y "i r Y. ~ ~ w A !'W i Ml I I~ 1 t{ 1 I i~+ w , .'r~fN r l l " ,I FI ?,w. r' +e ti l r r R' k, l~ 5 w r ,i I ~ I r a a Y1 n ! IJ r. o ~,L ~ t A ~ G ~ wfT t, ✓i'`.n ~ 1 . v f2 r ! ~y ° y ° I ~y a a C r' r,, 1 R~ 1 w w 7 q ~L t w e I 1 I~ ~ r wl 71 , ~ 7 r" -al a t rt FLT J .;,1 + ,wh ~r Y r •w ~ w i A[i~ 4 vL .I 1, j r +r A l a ' c r I ' ?ABLE Of CW~ ENTj r art bey 1, ~'r J a ~ TOLE OF CONTENTS LETTER OF TRANSMITTAL PREFACE E)MCL"rIVE SU1,Q°IARY SECTION I - INTRODUCTION Authorization Scope of Services Approach and methodology Organization of the Report SF=ION Ii - LOAD FORECAST Introduction Summary of Results Comparative Forecast Results ?:ethodology Analysis and Farecast Results Sensitivity Exhibits SECTION III - POWER SUPPLY ALTERNATIVES Introduction Discussion of Alternatives e Yajor Assumptions Case Descriptions of Denton Electric Utility Case A - Expansion Case B - Joint Venture ten ativeT2fPA with Case C - Continued Operation Case E _ kiternase. tivepower Ene Energy sources cast F SEC 1" IV - FINANCIAL ANALYSIS OF ALTERNATIVES Introduction case Descriptions A Financial Analysis Case A Case B - Financial Analysis Case C - Financ!.- Analysis Case E - Financial An3lysi4 SECTION V - COMPARISON OF ALTERNATIVES introduction Sensitivity Sensitivity alys System Case D - Sale of the Electric Findings and Conclusions Recommendations APPENDIC£S Append_-: A - Contract Appendix B - Trip Reports Appendix C - Sample Letters • 6~M1 ~~pn,npnraRn i, . y 1 4 1 3 1 s ,7 r-ltb, t` 1 r y 1! 111+ I ~ Tr < r r.. I, . Fy;., 1 s ~i t 4 ° + i 1. r f Jry~ i Y p F r t ~r if{'! 1 'M{ 'r 4 r Y;, y v R t r ,u4 j4 V r n• .r . b 'w r 4 I~ 1 ri,, r,~i- a z~ -17 vl 77 s J<+ "~^Y Vi VV . +7fy~,•::. '1 , q;:" \ n y: , ~ t,a+'Yti f F d y.+s1 4'} y~{,~k } "1 W s~ r t C f i k. r* t !~W" ~~t ~ F 1 + F+ "Ip C ~ 1!F 'i rl;i V 1 7 f ti. ~{.,w al N J,~ } t° 1 i fVr{{~ ~ \!V}•~~ 1 ~ ~:~>•d V,d I 1+.1 w i 4 fi, 1, ~i ~ V~ 9/U "+~~t o 1 t1'. J~FY rf fn p~; + .y It ''1 t•. n~ 1 'iix ~r ! s':r1 .M1': y~,l . f r ~ 4: r: w s ~ nr d. f is ~ N !'d 1 1 4,: + 'r N J An; t f JR~ + r s ' 1 S~~~ f i i .l ~ d e'• 11~' `.i ;r t r I i • 1 r I u( Ai' PREFACE • 5 Ti ' t"y~• J r i • PREFACE In 1977, Gilbert Associates, Inc. conducted a Management review for the City of Denton. As past of that Management Review, investigations were conducted into alternative power supply options as a check on the reasonableness of the decision to proceed with the Texas Municipal Power Agency. our findings in the earlier study indicated that while TMPA's proposed projects were cost competitive, that prior to the Denton decision to proceed, all of the possible alternatives were not investigated by TM.PA. A recommendation was made in that Report, that prior to proceeding with any other projects :•Sth T?PA, the City of Denton should investigate V-ower supply options on its own to determine if the proposed project of TWA is equal to alternatives available to the City. Recently, a power supply study was conducted for the Texas Municipal Power Agency which again only addressed itself to the ownership options and did not Include other • alternatives, such as purchase power or joint venture projects. The power supply study presented here, includes several viable options available to the City of Denton as an entity of and by itself. Since the Electric Utility of Denton is responsible for providing the citizens of Denton with reliable and economical power, it is intended that this power supply planning study should provide the City with the direction in which it should proceed over the next decade. • tow%I. OM'onV"" r~4` ~L ~~.u ki° 0~+5 r~'~~1~F"~~3i,a ~d~ ~i~~1 F~~ ~ ~ +'i ix~1 ~i~• 9;L 46U • TN' , ry n n' J, rnu r 7" s 6 r ar ~:e~~ y`Vty~~,yf~~~ :T, n S r. . ,rte MGUTIVE SUWWIY • e F~DYY Pr UV Rr ~PPEOX SO IF of Denton engaged the Management Consulting r, 197 91 the City comprehensive load forecast i Division of Gilbert Associates, lac. to perform a comp' for the period 1980-1990. The demand and and power s~;Ply planning stuc,y several mutu..lly exclusive energy forecast served as a basis for structuring ro ram could be identified power supply alternttives from which an optimal P g supp1Y for the to insure reliable and economical sources of electricity citizens of Denton FIh-DINGS AND CONCLUSIONS Loada Forecast - Fc,, the Period 1980-1990. it was v~,,,;lyded that the economic growth potential for the City of Denton ie~ strong an and electric sy " em g Total system energy requirements and should exceed national expectations. annual system peak load are forecast to grow at an equivalent population is fore- annual rate of approximately 6.3 percent. Total city ercent cast to grow at an annual rate of 3.6 percentr resulting in an 8.2 percent annual growth rate in residential sales, ratleeofi517a d Indtst ial Sales per- le are expected to grow at a compound annual sunsrarizes the forecast of electric demand and energy requirements for the City of Denton. TASLL 1 CITY OF DENTON Surmnary of Load Forecast Results Actual Predicted Growth Rate % 1979 _1?90_ - 1979-1990 ENERGY (KN'8 x 106) 316 8.2 133 Residential Sales 1,3 Commercial b Industrial sales 224 811 27 5.1 Lighting b Other Sales Sales for Resale 3 854 6,2 Total Sales 55 6 Losses 6 Unaccounted For 462 09 9 Total Energy Input 214 6.3 104 Ar*NL'ALt SYSTEM PEAK (m+' &ton rtoW*a~W" f Power Supply Alternatives - Based on the load Forecast and the identified • need for new generation capacity for those ease studies other than Case C, a number of mutually exclusive alternatives were structured for analysis. These alternatives includedt Case A - indeptndent expansion of Denton's Electric Utility System. Tlie three options developed consisted of a 100 Mw coal-fired unit, repowering Denton's existing gas-tired units, and the addition of combustion turbines. Case B - Joint venture between Denton and private or public utilities in presently planned new coal and lignite fired units. Case C - Continued Denton participation with Texas Municipal Power Agency as presently planned including I~srticiostion in Gibbons Creek No. 1 and Commanche Peak 1 & 2 and trcnsmission re'.atee projects. Case D - Sale of the Denton Electric Utility System to an investor- owned utility. Case E - Purchase Power options which included a 100 percent purchase of wholesale power from ave.ilable sources or a firm purchase contract far specific capacity amounts. Case F - A qualitative assessment of advanced technolcgies for power :.oductios with emphasis on refuse derived fuel. Thir was ntA developed for analytical comparisons to other alternatives. For each case, it was necessary to develop operating costs and as appropriate, annual carrying charges for indicated capital expenditures. Operating costs consist of fuel and operation and maintenance costs and were determined based upon the load forecast and a production costing model that simulated Denton's daily load shapes, generation capacity, raintenance schedules and equipment forctd outage rates. Debt service requirements associated with the capital expenditures for each alternative were combined with operating costs to determine total revenue requirements for each alternative. Cdawt rtemnanw.rt~ Y L r ".r v a ' T+ 't G Fl' .er ~n ' ' fN ` A' FtY .Jf. N~ ) sF' r 1 exciw iva alternatives are the outuslly The revenue requirements fora each tratefcost differences between study cases. • summarised in Table 2 to i lrequirements, the present worth of revenue The table presents capital requirements for the eleven year Period, and a levelieed unit cost for cost comparison purposes. The study results indicate that all aseofaeertainty competitive and attractive dependent upon rick and the degree associated with the study data. A joint venture with Lower Colorado River Authority (LCRA) had the lowest ;n the report, this cats doss not customer cost. gowever, as expanded upon onfid carry the degree of accuracy or cence level aWhilea the resultssindicate which has only a slig:.tly greater customer cost. Firm Purchase Contract) are within that all of the Cases (except Case ,the difference between case C and all 10 percent of the lowest cost case others if the study period were expanded past would most likely increase it is concluded that Denton participation in MA is 1940. Consequently, operation. the most attractive course for continued city TABLE 2 CITY OF DENTON Su= arv of Economic Comparisons 1980-1990 present Forth 11 Year Levelised Case Descriptions Capital Investment of Revenue Customer Cost Unit Requirements (2} ?Sills/Kwh (000's 55 CASE A 2049004 $344,485 65.65 .31 10 Mw coal-Tired Unit $ 881,9000100 348,180 Eb64.35 Repower Existing Units 331,416 Combustion Turbines 5g, 80 CASE 8 133,000 313,821 63.84 Joint Venture - LCRA 128,000 335,000 Joint Vent•sre - TP&L 315,591 60.14 WE C Operation-THPA 233,000(1) Continued Op 61.11 CAASSE`leE 0 320,692 72.16 kfiosale Power 0 318,688 Firm Purchase Contract Denton's Ap;roximate Share of TVPA's Capital Expenditures (1) (2) Based on a 7% Discount Rate • WonIwna~u f ~ L i 1 a ♦ i ~':.fit .4 ~~~x • tai' iiM r tan a C~~ w~+.. A A''} f. 1~ ti: p.5t1 44P 4':Y :k~~Ay ~t . • R ° YF' r'dY~ i > ~ y yin ,,yy~~ I ° i„ ",w y A, W~Yy. ~ Fly r 'f f a ¢ y +OP.~" ~k y YI l~r9ty 4~ r .'EV g. ~4.. v ~ p as ti IY~E~t~eit~ 7 d l'1•+3' ~.i~i3.~ #~M14t ~'YAjA ~~%r 6 ti t ~~yLAS~'~`Y~+y "F i1ij `..Y> ~ ♦vn T~P y~r'4 d 'N d.ggl~.il i~t ,~Y ,1'1 r>q' *ha analysis of alternative ~QV'tcs4 °f poKet supply Sale of tbi' S stem - tinued participation in resulted in the selection of case Cf action bsai gc°ntinved City economic course o • Tl~A, as the most operation of the electric system' the system to as external An investigatio., of the feasibility of selling party must center about the determination of a purchase price which would ers economically indifferent to continued opera- render the City's ratepay lion (in accordance with Case C) or a transfer of the franchise to another utility. outside Ownership are overwhelmingly rep.-ebented by Future costs under customer billings in accordance os ect veapurchaser. tariffs affect' with the chedule Of A'" h lesser proposed or projected for the prose ro ected costs under alternative om a:°hip are associated with extent, F j cem, the the assumed continued maintenance of the street increased burden of reallocated c°mmonof the e.ectric loss revenues the direct costs Or the other City 1epertments in the absence ected from that sources loss of income to the City otherwise prof . stem, the City's ratepayers would not, In the event of a sale of the sy station as exemplified of course, be faced with those benefitidirectly or indirectly from costs of by Case C. Additionally, they would aid to the City by the new owner and by the incrementel property taxes p edness, of funds otherwise release, after payment of outstanding indebt required for operation of the system or restricted on acc°unt of debt indenture requirements, ear horizon viewed in this study, discounted future costs Over the eleven y system by a margin the level margin exceeded discounted future benefits of a sale the established at $43 million and $;on depending upon Frice would then have rates assumed for the puzcnasing utility to serve as the balancing factor. GAVS ~ (,ylylgnNY ~M std it d a rt ~,%.~;n 4 C a RtiY if kF Zc- f t S nM.+. Z 'lW n°w " N. i {Ir ~V ~iFr,..* I>~ $iA +t r ~f/ t~•j i' Ir~'Ad~., 4 r ,I r yea y • ~ 1 r ~ I t ,)K r i a ~ e,, F yi r~ it ~/w f4 ~r~ 4 ` Xf K 4,T H r ~ Y f: iu~f'' ~ k r ^t~ Y ..H i rd ~ •N~ r 3~ ~yn~ i f Yy Y~. i ^C~ X1r 1.~rt' a 'tu' ~'.1+^'t 'i~. ~ 7 r M~ y a$9; I'~'t r F. P Y YF 10 ~ 'S~ ? ~ S~ A r 7 I ~i~. n ti r -iY e oC . ~.l~r g" - r f f {r re!r r tiS .r a ~v a a rt . 177 Stated otheiwises a sale price in the range of $43 million to $57 miliion would render Dedton's electric utility ratepayers indifl.-rent to continued operation by the City or sale of the system to either Texas Power 6 Light Company or Community Public Service Company, the two most likely candidates for such purchase. The two sale prices were established alternatively at rate levels under the Texas Utilities Commission's recent order with respect to the Texas M. Co. case and at the level represented in Texas PbL Company's original request for rate relief. An important note to consider is that no attempt was made to evaluate the effect of the sale on individual customer classes. Since no two utilities have the same mix of customers, or in fact, the same cost to serve a particular class of customer, it is anticipated that if a salmi should occur, some customers would inevitably be more impacted than others. For this and similar reasons, a decision to sell the electric system should be based on a consideration of many factors other than the base economics set forth in this study. RE CO`M%DAT F Oh S • The following actions are recorsnended to provide the citizens of Denton with continued economical and reliable electric power. o The City of Denton should continue to operate its Electric Utility as presently planned and executed with THPA. This does not include any additional projects proposed by the Agency unless it can be reasonably documented that the costs to Denton are lower than purchased power options or joint ventures in other lignite facilities. o Further discussions should be held with Texas Power d Light and Co=u- nity Public Service Company whereby the basic assumptions made in the analysis of the sale of the system are reviewed for comment. In this manner a further determination can be made as to their interest in a possible sale and their willingness to commit funds for an independent evaluation. In addition, it is also recommended that continuous monitoring of the situation be maintained so that evaluations can be made periodically if • cdu~ rto~*fr'awuw+ - r r r air tf f 1~. Fl.i~i y 1 ~~r 5 Y W t + Y~'~r}rY +i } q.7,4N V, ° e 7rr Ya a3' ? .M 4 T p h a r' l 1 _ y; Y y t i ! ~ '9 ~ v 'n A t5 r""v I r;Y a b"..a t A ~°?y~YYAI y1 n~ , F } > t 'a ~rt H , o n~1 F ~ ~ S ~~f I ~ s r47 l ~ r1 4'..~ I~r Y M~"1 { IY ~ Y1 i n l assurptioni described herein. The i c conditions change frata the bas , POW& b Light sensitive areas for raviem include the rates oA and on purchase O and other Texas utilitiess the fuel costs o red for the possible purchase of the power costst and the price tende electric utility$ I • 6~+Coh+mo^+'yw ckw ~ +Td.~ 9M s~ ~ • i5~' rY ~ ~YN iii 7$~ ~ i !fr ec s e ~ r[ ~ \ 2G vq~ f 9 r, a r ri V{~~ W i'a'' ~ ~ Y ti ~ f ~ ~ e1 ~ "L r ~ ~A i~ J ti1r~' r4~ r G "`^~r r ~i.~~ 1'S>r~d a v i~ f' r V r! 'y4 „'y h ~'S~~ r 1b ~ ^ , v ~ ~ r}~' ~ ~ n.~~t W ~ r F.G Et}~ r kn'.f»1 f w i y~ ~71t1 b ~ d~"' ~ r ~ r l6 ~.2 ~ ~ _ e6 J. r • ~ 1 s ~.ca. 5 " r fyl +'.ta F 7; "*"Fat Yry ~e~,~ 1 ~~.,i n~ 7,"x.! 1 yr IM i+.° Yi ¢ 1'~ f,i ~ ~~"Y .Cj~, y"n ~N G^ r)^w ~ x~4 rT 1" yrr'F~ 'k? ~ d . tf t i ^ k w f ! ! Cr S~ ~ .b ~ ~ oX N~ < yr[ e 4 ~l~ °}Y l,A ^;y,: r ' ;13 f t r p r ( 'h 0 y t~ '~a 1 i f v i `':d . + f Y F ! i SECTION I INTRODUCTION AUTHOR N the Public Utilities Board and approved by This assignment was authorized by 1979; of Deacon by, contract dated November 6, the City Council of the City Inc Proposal for a power supply thereby accepting Gilbert Associates, planning study of the Electric Utility System. SCOPE OF SERVICES As delineated in the Request for Proposal by the City of Denton Public the consultant is required to conduct a ,1980 electric Utilities Board, 1) a load forecast, and utility power supply study" Which consists of: ~ load forecast, the (2) a power supply study. For the demand and energy to electric power • consultant shall review all relevant issues reaaforecast of electrical demands and energy uses in Denton and develop 1990. For the power supply demand and energy requirements through the year the following areas for study, the consultant shall thoroughly investigate alternative power sources: a, expansion of wholly-owned generation facilities which are to Continued owering of the ~ include a coal fired unit of approximately 100 KW, rep the addition of gas turbines. The existing two 60 MW units, and third, size and timing of these units are t•j be determined o tthe load forecast requirements. These additions, existing Denton units, are to be considered without the committed MA units. era utility b. Purchase a share in major planned units of other eTexas are to companies, These purchased portions of future g be investigated without the committed MA units. sfinen reommo~ws+ro Continued participation in Texas Municipal Power Agency as presently executed and planned. • c d, A sale of the city-owned facilities to an investor owned utility. e. Purchase power from members of the Texas Inteer. Again, System is ito be existing generation as back up and peaking Pow investigated without the committed TKPA units. f, A qualitative assessment of advanced technologies, with emphasis on refuse derived fuel. APPROACH ArD KETHOI)OLOGy As the initial first step in the conduct of this assignment, Gilbert the consultants met with the Public Utilities Board and members Ofed fortaff of the Electric Utility System to discuss the alternatives select Team. An evaluation, and the data available for review by the Project determine independent review was then conducted by the consulting team e those power supply options which were considered available to the City of Denton. The first phase of this Project involved the conduct of a sdemand and tatistics eneegy load forecast. Typical historical and internal atterns operating between customer obtained and analyzed to determine usage p parameters were classifications, and external demographic and economic par apply to the service territory. To) the extent possible, obtained as they developed statistics, correlations and use was made of all Previously projections that underlie the long range forecast. The internal and rnally consistent electric external data was then integrated into an inte energy and &,.mand model, which took into consideration the basic basic relationships between demand and energy requirements, recognizing the between the major classe!: of electric customers within the interdependency service territory and the effects of various economic factors externs to the service territory. {,rpert ~(,~mmp*ruM Or 7, Upon review of the results of the load forecast, the power supply alternatives were again discussed with the Public Utilities Board and those alternatives deemed reasonable were selected for final evaluation. sources for system energy requirements were then supplied by various energy each of the cases on an annual basis. Maintenance schedules, operational limitations, City determining those energy so of Denton based on the previous four years of historical experience, and these profiles were incorporated into a production costing model to arrive at the power sources for each case. The production costing model then dispatched the units available under each care in an economical fashion, based on fuel costs, and operation and maintenance costs. For those alternatives which involved capital expenditures, estimated capital costs were prepared and incorporated into the financial forecast for each alternative. The production costs resulting from the production costing model were likewise used in the financial analysis. For each case, operating expenses other than furl and 0&m , including customer accounting, • administration and general, and miscellaneous expenses were developed to arrive at a total annual operating cost. Finally, the total capital and operating costs were developed on an annual basis to determine the revenue requirements required through the rates to the various customer classifications for the City of Denton. A comparison was then made between alternatives to arrive at the minimum revenue requirement case, This urccase was then compared to the possible sale of the system to develop a p price for the Electric Utility System. The calculated purchase price was then analyzed on an income approach of the purchasing utility to determine its reasonableness for the private utility under investigation. Finally, a recomendation was made as to the proper course of action for the City of Denton in providing its citizens with electric power through 1990. ORGAI,I2ATIOli OF TkiE REPORT The report is presented in five major sections with an Appendix. Section II covers the load forecast used for developing the system requirements for the • 6aprt Ifomnoe.sann 7 wry F ility of the City of Denton through the 1980.1990 time period; describes the power supply alternatives investigated to meet the irements; Section IV delineates the financial analysis and uirements for the various alternatives; Section V presents the of all of the alternative; and the sensitivity analyses conducted ne the possible changes in ranking; it also presents the Findings and Conclusions, along with Recommendations. The Appendix includes the contract between the City of Denton and Gilbert Associates, Inc., all correspondence conducted between the Consultant and other Private Utilities in requesting data needed for the evaluation, and other information as teemed appropriate. Included within each Section are Tables and Figures, included in the text, and Exhibits, at the end of each Section, which support the analysis conducted. • • Gd~rtlW"~+1a'V , f fk" }'~1{Y~:~ it hk': n. t y4 r t~`~+tq r LS~ P h a R 3 t '4 rp v t Y ~ i< f 1. V n T O ~ S -4r C c r r yy ,t ~,8a""ks`r of ~s„n 7777, SECTION 11 i LOAD F_ on. CAST INTRODUCTION within which the current total environment forecast utility i is essential afor two accurate and crelible system demand and energy basic reasons. The first reason lies t step tacsoundtc~a demand astructioa~ energy forecast represents the necessary firs operating and financial planning. Only after a reliable demand and energy forecast has been developed can critical areas of planning such as plant requirements be effectively dealt with. Considering the rapid escalation in the costs of new generation and the associated difficult problems regarding the financing for such construction, significant errors in the estimation/future requirements simply cannot be tolerated. The second reason for developing a sound demand and energy forecast can be found within the framework of credibility requirements. To as ever increasing extent, regulatory and siting agencies, financial institutions, and various consumer or public interest groups are demanding to know not only what the utility's forecast of requirements is, but upon 'bat considerations the utility bases such beliefs. The simple fact that, in general, growth in electric requirements subsequent to the 1913 Oil Embargo has repeatedly fallen short of expectation has led to very critical examinations of the overall utility planning process. It has become essential therefore to develop reliable demand and energy forecasts in a manner that will convince various outiandrasresultsspothat iat Of- is indeed reasonable from both an approach Given the above considerations and their impact upon the long range planning Given requirements for the City of Denton, Gilbert Associates Inc., has undertaken to prepare a forecast of system demand and energy requirements for the City 40 G~eas rtemRm~vu^-^ y" l ri p ,Y a tt t 7^ i I'Mp i of Denton through the year 1990. The results in this report are based Upon analysis of various demographic, economic, and electric system operating statistics as were made available by the City of Denton and various State and National level governmental agencies. SUltiiARy OF RESULTS Based upon this analysis, it is concluded that the economic and electric system growth potential for the City of Denton during the period 1980 through 1990 is strong and should exceed national expectations. This conclusion derives in large measure from the fact that the City of Denton, by virtue of its strategic locatiran within the Dallas-Fort Worth Metroplex and its proximity to the Dallas-Fo.-t Worth International Airport, should experience continued growth in the commercial and industrial base. Correspondingly, increased employmen•. opportunities resulting from an expanding economic base will lead to continued growth in the residential sector. In accordance with the above outlook, total system input energy requirements and annual system peak load Are forecast to grow at an equivalent compound annual rate of approximately 6.3 percent. At this predicted growth rate, total system input energy requirements will total 909 MWH by 1990, compared to the current 1979 level of 462 K%'H. Annual system Feak load by 1990 is expected to reach 214 V which represents an increase of 105 t1W above the current 1979 level of 109 14W. Total commercial and industrial sales are forecast o grow through equivalent compound annual rate of 5.7 percent during the period Total city population is forecast to grow at an annual rate of 3.6 percent compared to an annual growth rate of 1.8 percent for the total Dallas-Fort Worth SHSA. Total residential sales are forecast to grow at a compound annual rate of 8.2 percent. Table II.1, below, summarizes the forecast of electric demand and energy requirements for the City of Denton. TABLE II-1 CITY OF DENTON SUteMY OF FORECAST RESULTS Actual Predicted Growth Rate % 1979 1990 197 1_ 9-9= Energy (KWH X-1,06 - 133 316 8.2 Residential Sales 511 5.7 Commercial & Industrial Sales 276 24 27 3.3 Lighting & Other Sales Sales fer Resale 1 _ 434 854 6.4 Total Sales 28 55 6^2 Losses & Unaccounted For 462 909 6.3 Total Energy Input _ - Peak Demand (kw x 103) .484 - Annual System Load Factor, °b .484 109 214 6.3 Annual System Peak Load fable II-2 below summarizes the forecasted energy mix by major customer class. TABLE II-22 CITY OF DENTON ENERGY ?11X BY CLASS % 19 Energy Mi1_ 79 3] 37 Residential 64 60 Commercial and Industrial S 3 Lighting and Other Total 100 100 Exhibit II-1 presents the detailed forecast results by major customer class for the Predicted Case. UroM IG~*~~~ a~ r CO*JPARATIVE FORECAST R£Sl1LTS Table I1-3 below presents a comparison of the Gilbert Associates, Inc. • forecasted growth rates with a number of other forecasts which have been cently prepared for the City of Denton and which have been reviewed during re the conduct of this study. Also provided is the latest forecast of energy and maximum non-coincident demand in the trade journal Electrical p utility industry which appears World. TAB_3 CITY OF DENTON Cf,MPARATIVE FORECAST GROWTH RATES Annual Greuth Bates 1978-1990 Low Predicted High Svsttm Energy' Requirements 4.6 5.5 6.5 • Gilbert Associates, Inc. 6.5 Stone 6 Webster, Inc. (1) 6.1 Denton - Electric Utility (2) 3•F 'U.S.A. (3) Annual Peak Demand 6 4 Gilbert Associates, Inc. 4.7 5.4 6.5 Stone S Webster, Inc. 6.3 Denton - Electric Utility 4.0 U.S.A. Notes: (1) Stone and Webster Inc. Report, December 19Forecast, June 1919. (2) City of Denton, Electric Utility (3) September Industry Forecast, Electrical world, p Regarding the comparative forecast res6lts presented above, the following points are noteworthy, o The low and high growth rates shown f'oenathe lycisGilbert The;oireaintended to developed for purposes of sensitivity indicate the possible range in forecasted growth rates should various 6ab► t lcannana++V Yi ' . r assumptions made in the Predicted Case be altered. Amore detailed i discussion of the variables considered and the assumptions made in the lows and high growth scenarios fs presented in the Sensi_i vit_ Analy portion of this Section- o A comparison of the three forecasts prepared for the City of Denton show that both the Stone & Webster and the Denton In-house Forecasts correspond most closely to the Gilbert Associates high growth o All three forecasts for the City of Denton indicate stronger growth in energy and demand requirements than is forecast for the nation as a whole - as presented in the 30th Annual Electrical Industry Forecast which appeared in Electrical World, September 15, 1979. o The difference in predicted grtforecastbresultstprimarilytfrom As:tociates forecast and the Stone S Webster assumptions made regarding the magnitude of load associated with a possible new Texas Instrument plant which may be built within the City of Denton. The Stone & Webster forecast assumes that, when fully • operational by 1986, this new plant will require approximately 130 HWH per year. In contrast, the assumption made in the Gilbert forecast is that by 1986 this new plant will require only 42 Mk'H per year. The Gilbert assumption is based upon discussions held with personnel of the City of Denton, Electric Utility, though it must be stated that at this time considerable uncertainty exists regarding the actual magnitude of load of the possible new plant. METHODOLOGY Exhibit I1.2 presents the overall structure of the model employed to forecast energy and demand requirements for the City of Denton. In developing this model, recognition was given to the fart that the City of overallsSM,f~Anwere taken Denton lies within the Dl for F the Cityh andt for ltheand, relat!ve growth potentials urs rtanmor~.+~ro i into consideration. Addisfonaily, as with 911 forecasting effors+data • availabil:*%y constraints played a major role in the methodology employed- Maximum use was made of as many relevant historical statistics, as could pe obtained within the time period available for model development. Exhibit I1.3 lists key variables which were reviewed and analyzed in this study. £ner Re uirements Total electric energy requirements for the City of Denton were forecast on a disaggregated basis by major customer class. specific considerations pertaining to each major class of customer are as follows. Residential - Residential electric energy requirements were developed as a function of the number of residential customers and the average M use per residential customer. The number of residential customers were forecast as a function of city of Denton population and average household size. City population, in turn, was determinded as a function of Denton Coutny population and the total populaton of the Dallas-Fort Worth SMSA. ahsingle forecast of residential Kw'H per customer was generated by means of linear equation model in which use per customer was specified as 3 function of per capita means, electric price, weather, and a dummy attempted to capture the impact of apartment conversions from master-metered to single meter units. Commercial and Industrial - Due to availability of data considerations, the commercial and industrial sectors were forecast in the aggregate. The actual forecast was based upon an econometric specification relating total commercial and industrial M to City population, an income variable, a weather variable, and a variabwhich whichattempted were classified capture as commercial". master metered residential apartments Additionally, for the commercial and industrial sector, consideration was given to major known and anticipated load additions in the event that the anticipated loads were of such n noteforthy feature regarding thelusion into the forecast results. A higher Dtrt~Lomn+o~+t,nn 4., F and industrial model is that the specification used prodded for etween the residential and the commercial and industrial sectors ulation and income variables and thus provided for internal y between the industrial sector forecasts. nd Other Sales - The forecast of lightirforlthese s based upon the recent historical trend in energy consumption customer categories. Sales for Resale - During the forecast period it was assumed that there would be no sales for resale. Losses and Unaccounted For - The forecast of K1+'ii for Losses and Unaccounted For was generated by assuming that the energy so classified would amount to a constant 6 percent of Total System Input Energy Requirements. 6 percent level was based upon the observed 1919 historical level. PEAK Mlk',,D REQUIREMENTS The forecast of annual system peak demand was developed by applying an annual system load factor to the forecast of total system energy requirements. ANALYSIS Ah'D FORECAST RESULTS Exhibit II-1 presents the forecast of energy sales by customer class and total system energy and demand requirements for the period 1980 through 1990 for the Predicted Case. These results are based upon the following considerations: Residential population - In order to forecast residential customers and thus total residential WH sales, it was first necessary to forecast total population for the City of Denton. Exhibit II-4 presents historical and projected O 7 77 . populations for the l}allas•Forth Worth SHSA, Denton-County, and the City of • Denton. Sistorically, the population of Deaton County has been growing more rapidly than that of the SMSA. This trend can be demonstrated by the fact that in 1970 approximately 3.2 percent of the total SMSA population was contained in Denton County, while by 1979 the county population had City ofpopulation increased to approximately 4.4 percent tfor total Denton grew atAaa During the some period of time, population annual rate of 2.9 percent compared to an annual rate of 6 percent for the county. As a consequence of this difference in growth rates, the ratio of City population to County population has declined from 52.7 percent in 1970 to 40.4 percent in 1979. Given these historical trends, the following assumptions were made in order to forecast population for the City of Denton: o Population growth for the total Dallas-Fort Worth SMSA would be as indicated in the most recent available NCTCOG forecast of population. NCTCOG forecasts overall SMSA population to grow at an equivalent compound annual rate of 1.9 percent for the period 1979 through 1990. • o Denton County population will continue to grow at a faster rate than the SMSA and by 1990 County population will increase to approximately 5.3 percent of the total SMSA population. o The City of Denton population will brow in accordance to the county population with the ratio of City to County population maintained at a constant 40.4 percent. These assumptions result in an equivalent compound annual growth population in red City population of 3.6 percent. By 1990, total City p p to be 76,004 people compared to $1,750 people in 1979. Residential Customers - Exhibit I1.5 presents historical and forecast population and residential customers for the City of Denton. The forecast of residential customers was derived from the forecast of City population by Get fty„n-0n.unn L 77 assuming `a constant ratio of 2.3 between increases in population and • increases in residential customers. The ratio: population/ Customers = 2.3 was derived from the recently completed Stone & Webster Inc. study dated December, 1979. In this study residential customers were forecast as a function of non-institutional City population. Based upon the assumed relationship between population increases and residential customr increases the number of residential customers are projected to total 25,552 customers by 1990 compared to 14,515 in 1979. It should also be noted that the forecast of residential customers assumes a limited number of additional conversions from master metered to single meter apartments during the first two forecast years with no additional conversions thereafter. Also presented in Exhibit I1-5 are comparative historical and forecast trends of the ratio of total population to total residential customers for the City of Denton and for the United States in total. Residential h"4/Customer - Residential Mi/Customer were forecast based upon a single equation econometric model in which KWH/customer are specified as a function of real per capita income; real average electric price; cooling • degree days; and a dummy variable which attempts to account for the recent influx of lower use apartments which had formerly been master-metered. Exhibit II-6 presents the specific residential per customer use model employed; the historical data used to estimate model parameters; and the various statistical measures considered in model evaluation. In arriving at this particular customer usage model a major underlying hypothesis is that residential consumption of electric energy is a derived demand and as such is determinee by the stocks of end-use appliances on-line and the utilization rates of those appliances. Utilization rates of purchased appliances were assumed to be a function of the price of electric energy and cooling degree-days which impacts the use of air conditioners. As can be seen from the resul:e presented in Exhibit I1-6, the model selected possesses a high degree of explanatory power and its backcast results, i.e. its ability to reproduce historical KWH/customer levels, was quite good. All other normally considered statistical tests were judged to be acceptable. Exhibit II-7 presents the predicted Case forecast results for residential Mi/customer. Major assumptions underlying the Predicted Case forecast include a 2.0 percent annual growth rate in real per capita income and a 0.0 percent growth rate in real electric price. Based upon these assumptions, residential DIH/customer is projected to grow at an annual rate of 2.8 percent for the period 1979 through 1990. Residential Sales - Total residential sales were computed as a function of residential customers and residential KWH use per customer. Exhibit II-7 presents the Predicted Case forecast results. Based upon the projected growth rate of 5.3 percent for customers and 2.8 percent for customer usage, total sales are forecast to grow at an annual rate of 8.2 percent during the period 1979 through 1990. Commercial and Industrial Commercial and Industrial Model - Exhibit II-8 presents the specific model employed to forecast total commercial and industrial sales. Also presented • in Exhibit II-8 are the historical data used to estimate model parameters, and the various statistical measures considered in model evaluation. In arriving at the model specification presented in Exhibit I1-8 the following factors were taken into consideration: o Total Cocunercial and Industrial KWH sales statistics as maintained by the City of Denton, Electric Utility include sales to the following types of customers: 1) Universities, 2) Commercial establishments, 3) Industrial (manufacturing) establishments, and 4) Master-Metered residential dwelling units. Because the available data did not allow for the disaggregation of total commercial and industrial sales into sales by each of the above identified customer groups for the period 1965 through 1979 it was necessary to model and forecast commercial and industrial sales in the aggregate. Gant IComn+ar+iM i, o The 'exogenous variable `icluded in the model specification Were i ldirett linkage to selected based upon their direct or growth in the commercial and industrial classification. Assumptions regarding such linkages are as follows: 1. Growth in university sales is at least partiAlly dependent upon university enrollment. Because enrollments as contributed to the overall growth in city population a specification for total commercial and industrial sales should include a population variable. 2. The commercial sector represents a diverse group of customers which provide a wide variety of goods and services to the inhabitants of a particular area. Linkage should therefore exist between growth in this sector and growth in area population and real income levels. 3. Energy consumption for the industrial (manufacturing) sector is most directly related to output and the relative prices between O the various factors of production. Industrial output statistics, ho-aever, are generally unavailable for localized industries and a commonly used proxy is local manhours. hanhours in turn can be related to employment and if one assumes a relatively nteamastable nhours can relationship between employment and pop also be related to population. Based upon this reasoning, population was selected as a readily available, though indirect, measure of local area industrial activity. 4. Because the commercial and ndustrial statistics include sales to master-metered restd was included in the model specification in an attempt to account for sales to these customers. Exhibit II-9 presents the details of the derivation of the variable, HM. • Galin Ita~+un►• -777 4. r S. A final variable included in the model specification io cooling • degree-days which is required to account for the impact of weather variation upon air conditioning load. As can be seen from the results presented in Exhibit II-8 the model selected possesses a high degree of explantory power and its backcast results are good. All other test statistics were also judged to be acceptable. Commercial and Industrial Sales Forecast - Exhibit II-10 presents the resulting Commercial and Industrial DIR sales forecast for the predicted case. Forecasts of all exogenous variables - population; real per capita income; cooling degree-days; and the variable, MM, are identical to or consistent with the forecast results, total electric energy consumption for the c)mmercial and industrial sector is predicted to grow at an annual rate of 5.7 percent during the period 1979 through 1990. It should be noted that this forecast includes the specific addition of a new Texas Instrument plant which is assumed to be fully operational by 1986 with a load of 8 11W and an annual energy consumption of 42 MW. Lighting and Other Sales Exhibit II-11 presents historical and forecast KWH for lighting and other sales. For this particular energy grouping, sales have fluctuated considerably during the period 1970 through 1979 with the resulting annual growth being only approximately 1.0 percent per year. For purposes of this forecast, it was assumed that energy sales to this category would continue to grow at approximately the same rate as observed during the 1970 through 1979 period. Losses, Company Use, acid Unaccounted For Exhibit II-11 presents historical and forecast energy associated with losses, company use, and unaccounted for. The 1979 energy for these categories amounted to approximately 6 percent of total system energy Cacti ~CaMna+wuhR } requirements. For purpgses of this ftieCdst it was assumed energy for losses, company use, and unaccounted for would remain at 6 percent of total system energy requirements. System Peak Load Exhibit II-12 presents historical and forecast total system energy requirements, annual system peak load, and annual system load factor. As can be seen from the tabulated statistics, annual system load factor increased steadily during the period 1965 thorgh 1974. In more recent years, however, load factor has fluctuated somewhat and has generally followed a declining trend. Annual system load factor for 1979 was 48.4 percent. In order to forecast annual system peak demand it was assumed that, for the period 1980 through 1990, annual system load factor would remain at the 1979 level of 48.4 percent. Annual system peak demand was therefore developed for the forecast years by applying a constant load factor of 48.4 percent to the forecast of total system energy requirements. For the predicted case, the resulting forecast growth rate in annual system • peak demand is 6.3 percent per year. By 1990 annual system peak demand is forecast to reach 214 NW, which represents an increase of 105 !1W over the actual 1979 peak load of 109 W. SENSITIVITY ANALYSES In order to provide a indication of the possible variation in forecast results given different assumptions regarding key exogenous variables, two additional forecasts were developed, i.e. a low growth scenario and a high growth scenario. Exhibit II.13 presents the specific assumptions Wade for the low, predicted and high growth cases. It should be noted that in developing the low and high growth cases the only variables which were adjusted were real per capita income, residential electric price, and the number of master-metered apartments classified as commercial. No change was made in the population forecast as presented for the predicted case. Residen+:i:l customers are shown to change slightly ur_der each scenario, but these changes result only from the assu.ptions made regarding the number of master-metered apartments. • . Gas ICAMMV "M Exhibit II.14 presents the forecast results under the lows and high growth scenarios. As can be seen, given the assumptions presented in Exhibit 1I-13, the growth rate in total system energy requirements can vary from a low of 5.6 percent to a high of 1.4 percent during the 1919 to 1990 period. It should be emphasized that while either the low or high growth scenarios are considered to be within the range of future possibility, the Predicted Case is regarded as being more likely than either of the two extremes ind consequently system planning should be based upon this case. A•~rK rta+w+eMw~nn i. r ray r. t y rr♦:. r '.Ft S- '4. N ++,",s' W 'u, •A' f 'yr , f ' i 77, ~1 + 4 "r r» 4 R r J S~'r. rrt1 FC ^r , i. a d n1, p `r' Elpil8lT 2I-1 FORECASTSULfBPREDICTEO CASL isa,ul Growth Rata - % FORECAST RESULTS - PRE111CTE0 CASs' 1990 1419-1190 Actral 19J! ' 1980 1 it 191 19 3 198 Ins II - ItiT 19_ 19 ENERGY - K4M a 103 301,896 316,410 8.2 132,534 155,707 174,282 !91,649 209,845 221,656 241,635 261,269 271,312 287,890 301, . Reaideutisl Sales Coarerciat 6 Industrial Sales 276,199 293,272 713,336 341,154 371,083 401,073 4]6,680 450,021 464,485 479,476 494,636 510,710 1.3 147 26,468 26,790 27,111 1.184tine 5 Other Sales 27,579 23,900 24,221 24,542 24,963 25,184 25,505 25,126 26, _4 Total . Retail Sales X326312 _4721879 51111 I SSB, S .791 _SS il3 705:120-7. ]7.11 7 9 713 823 522 154 2) Sales for Resale 1,416 .9 4 793x834 623,522 154.231 TOTAL SALES T],12! 472,87! S!1 iil SS- 8.045 X5,791 655.113 705.120 777~ifb 1 4 4 6.2 Loses Unaccounted For 28,168 30,184 32,611 35,620 98,668 41,816 45,052 47,050 41,626 $0,670 52,565 54,326 - I !9b SOS 0~3 S4i 512 59I~6S-~4~59 96,929 7501872 1846166 117x770 8 4,5~~_ E7b~0lT 90ax7Si 6.3 TOTAL ENERGY INYt77 - -1 - 2 - PEAK OPJSANU KY !.103 484 .414 .414 Annual Load Factor, % .414 .484 .484 .484 .484 .414 .484 .411 .184 . 7 128 -4----- - AlIT1UAl. PEAK DEftAIiO 109.0 Y ~ a t} ` Cy. . Y y, e. ~ gyn.'JJ ~ v ll~ y + i:~ V a, Fyi Y 4 ~ it Vu'17 C * r~ t y;~ Y~1 ~hk ~ ~~~d'p .~1~ x 5 S i ~ ,i~ F (Y Y_ r k ( k +C t~x v ~7 b4 •4 ~.X f-MIJU U- CITT 91~ Cote K.c..~!+P.S's1~I h/Tw P(SA "m"ATIM rgTTOn (tltlwgv riDMnAT10N xr.S I Itr')ITTAI. • C1r<Tr1fr.P5 f.1TT gw twxroN miRAIM" RGS TIiF'lrrl A1. rill MIPS nr,(.-txlr. rxu:F. KrSIhF:fTT1A1, xc6thraIT1AI. _ KMIIJCPST KMIJI~tST _ Ix1rtK1. ~(XfIlI.1ITf. h-MTF Itx r'AMTA 11001W. ct1T hr nr.ITrltn mnnATtrxr axea.Kr IAI. AND MCF.W. W. IB AMIR1At. A"D r Fit rAr11A IMIOW.. R>nI Nt71rtI' 1K1AIS1KIAI, KMI ,,AI.7S F mum: b-PATS ANTICIrATfb ArK~ 1 T I n(s IIA5IT.K FIF.TTK Arts _ 1,11:011I+, R a mot KMI SAI,r% rnK xF»CAI.K ur.:Krst[A it1Nf'.rYN RlTTJt C _ TrrtAf rxrKr:r IMnYT I IM( Et-- MAK LOAD IM, 'ern t. .8 !-I(1 , ~ f1.Y ' f°4w •'3 c~ n fii 1 c.+~'[ ua -.ff Sri MflilT 11-3 CITY OF DENTON VARIABLES CONSIDERED DE40GRAPEIC - ECONOMIC Population Dallas-Fort Worth SMSA Denton County City of Denton Migration College Enrollment Labor Force and Employment Housing Characteristics Per Capita Personal Income Electric Drive Weather ELEC7KIC OPEP.ATING STATISTICS Residential Customers Res..dential, WH/Customer Resi4-!ntial, KYX lighting and Other, KWH Losses and unaccounted, r6li Annual System Load Factor Annual Peak Load, KW OT}CR Kn ou-n and Anticipated Load Additions, KW, WE Other Studies and Forecast Results r ' S a... - F t r. `r , yr e h l I.u ,u a v r ~r ~f.. ~i 7 w. > yF fif' • IN n F~'S v „.Y V rN3G cr"`5 ~5 i i y. 1J { : ^G 1~ a f... ~i ~ n .,..r„ ~ib'r y'~; k~:G ..•W ,8~ + .4'H.' ~1 lo: a, rv. n.l~ F.K - ua .,ngr~ai~'A. .}v.tiA[Yr rW~. ~,4~,4~~,.,, ~i 't.', ~J. yr: •e Vtlr"." ,¢j''a.YApp. +r,,.yyS~1~~ 4~.r~ ~f i,,: ~'kvY4V, •w ?r1.~7.i~~Tp'M'*~.. 13ir~,4 n~.7' .i vv Y~v kv+`r: "'~'A. ~°:e JR1v YJ4 v ~f ~ r e v r d v '.i Py^.k 1 ?~l ~ r Y r~ r ~ y o r~ J' ~f+ !M111f 114 c1 ntxral T IIIS20:ICAL kEAImu CASE RIST0111CAi; PIIPt!LATIOII OOPO07I0I1 RAT109 piluTiCM tnR TS 011W a•ai city Comat it DI ~ ,tam Cit off~'Cit o it) 44) r Y 1 3) ~ r l4) SItSA fourth, Denton 8M,9A ComtY SItSA~ foul peetop_ Deatoo` 1966 1,737.%0 47,432 26,1144 .027 .566 1965 1,981,600 51,500 .029 19'19 2,980,512 IS,967 39,874 .032 .527 1971 2,427,155 19,854 41,356* .033 .518 1972 2,462,349 85,341 42,1137; .035 .502 1913 2,516,042 90,129 44,31" .036 .488 1974 2,571,085 96,415 45,800 .031 .477 1915 2,621,751 97,310 46,750 .011 .465 1976 2,676,845 99,410 47,000 .011 .456 1977 2,719,785 102,210 47,900 .031 .441 1978 2,821,250 114,000 51,550 .040 .452 1979 2,919,050 121,950 51,150 .044 .404 1980 .046 .404 3,002,578 136,611 55,193 55,193 1911 51,104 1982 61,016 1983 63,927 1984 66.939 1985 .051 .404 3,385,265 112,649 69,150 69,750 1986 .051 .404 71,001 1987 12,252 1988 13,502 1989 14,157 1990 .053 .404 3,549,599 688,129 16,004 16,004 Annual Growth Rates. % Period: 1979-1990 1.81 1.6% 3.61 (1) Dita Source: North Central Texas Council of Governrents (NCTCOG) (2) IIk11 Sources: 1960, 1970 U.S. Census; NC'rCOG s Interpolated for 1971, 1912, 1913 (3) Sourcc: NCTCOG forecast of population for 0/IV SNS4 (4) City of Denton population toreust interpolated between 1980-1985 and 1985-1990 ♦ r r~H ~ r x'. ~ s 'i ~ ti,'CJF' t i . 1 ^h ~bAt: ' J rY ,n y ~ r~4 R a'f~'tiN, ~W +,1~~ 1"e n~~N ~+~?~i •~~~"F .,r' ,'?~~(t•~" ± 'I, J„kF~tJY,3`11`,. M1STId1ICAL'~Lr~~~ ~ r ICyLD CASE Litt or DER101~_ RATSO (POPIRlA1 0N/COsTVMgwR33 4 A - s ltestdnetlal 3 Adjusted Cir1~r Mm U a (13 Total AMEM o u stlos Lo ulattat Customers Customers Customers 1970 39,874 9,633 4.14 3.3S 3.23 9,$37 4.20 3.19 1411 411356* 10,154 4.22 3.14 1912 42,637* 10,268 4.32 3.07 1973 44,319* IO,iSO 4.22 3.02 1974 45,800 11,030 4.24 3.37 2.91 1915 46,750 11,567 4.06 2.93 1916 47,000 12,445 3.1S 2.19 1977 41,900 12,931 3.99 3.32 2.84 1978 $1,550 1;,135 3.51 2.79 1979 51,150 1980 55,193 3,443 1,490 16,005 16,342 3.38 ].l4 22.14 .10 1911 51,104 2,911 1,260 17,265 IT,102 3'26 2.70 61,016 2,911 1,260 16,525 19,062 3.20 1983 2.64 1982 63,927 2,411 1,260 19,785 20,322 3.15 1984 66.939 2,911 1,260 22,045 2122,,5V 42 33.10 .OS 2.92 22.,55 61 2.58 1985 69,150 1,251 1,260 22,305 23,384 3.04 1986 71,001 1,2Sf 542 22,847 2.53 1981 72,252 1,251 S42 23,389 23,926 3.02 2.50 4.463 1988 73,502 1,251 542 23,931 25,010 2.94 2'48 1989 14,153 1,251 542 24,473 1990 76,004 1,251 542 25,015 25,552 2.07 2.11 2.46 Annual Gruvth Rate, % 5,1% S. 31L Period: 1979-1990 3.6% (1) Reference Exhibit 4 * Interpolated for 1971, 1972, 1913 (2) D customers derived (tom D populatlos based upon Stone and Webster, loc" 12/79 Report assumed Ratio: (D Population/D Customers) 3 2.3 (3) Historical residential customers - Data Source: City of Denton, Electric Utility as umed conversions from master-metered apartments 981 ste d due customers (4) Residential Customers sConversions: 1480 80 3 and customers, adjusted (5) Ratio: (Total City Population)/(Adjusted Residential Customers), Slone 6 Webster, lac., 12179 Report (6) Ratio: (Woo Institutional Populatioa)/(Residential Customets) for Period 1980-1990 (7) Nefeiea e: 30th Annuai Electrical Industry Forecast, Electrical World, September 15, 1979 r My ~ ~ a" ~`q'1 i ~ r a ~ ~ 4 r Kw ,z v, ~ Yt'` ~p~} ry.•. r}f rnr Y, t. a,+.F,4yc} i ~ tmRlr?Yig`0.~,,'r yk,F'.74Yf -"R~99"ni t~ YrEa h r,~7tY a~.v! `1.1,., . + ,'t 'q,:• ° ~.k~t', l~d~ ~'nS74 ',t ~..~b IM,.~~ 'P•i toy ~1IR~~:Y~ 6 5~ r~1 , P ~ .•j~" I°. ~ ra a~"' wr a _n c .r A 1 le of Pb i nbh Y r 'e .r„ '+AE h=~ t'Y f~. tiwr r 1~ V ^ r 1, 71'~lr.~.,t.~. aA al f ~ i i r ~ r •-5 C17 Mel lER Ip06L RESlDEM2__ 6AC[CAST R S]ORICAL 1 MTA S Y 7 t(2) Wp 3 00) Q Q ldw Dewstioa s T Cooling D-Dm ys [VII Cost Predicted Re~~ (T.0) Yulahle Person 5,161 (401) 1965 2,466 2.42 2,641 1.4 S 159 5.470 21 4.4 2.426* 1.0 5,491 391 5.1 1966 2,506 2. s 1.0 7,561 7,500 5.0 1961 2,531 1.111 7 2,St7 1.0 T."O 7,501 316 0.5 1966 2,793 1.96 2,s 1.0 7,431 1 6,396 35 (1.7) 1969 2,805 2.20 1.0 6,331 ,419 (142) (1•5) 1970 2,615 1.96 2,594 1.0 6,137 a."S (13'5) 2,432 213 2.1 1971 2,990 1. 1.0 10,361 10,166 1972 3,091 1.664 4 2,e7g 10,136 10,11e ( 40) (0.4) 1.65 2,411 1.0 10,112 (319) (3.7) 1971 3,295 1914 $.111 1.64 2,541 1.0 9,S33 9,837 (130) (3.0) 1.4 1975 3.346 1.92 . 1.0 9,127 9.597 597 3.1 1971 1976 2,516 2.16 2,417 10,763 10.444 319 3,691 2.33 2,969 1.0 0'7) 2,895 1.0 10,979 ,060 ( a) (0.0 197E 3,616 2.22 2,466 2.1 9,131 9,131 1979 2,812 2.11 (1) Denton County - Per Capits Personal income, Constant '67$, Source: U.S. Dept• of Commerce. Bureau of Ecocomie Analysis (2) Average Residential C/IVN, Constant 167$, Source: City of Denton, Electric Utility Station: D/ell international Airport (3) Annual Cooling Degree Days, Source: National Oceanic and Atmospheric Administration (NOW Slat + Estimated Cooling Degree Days based upon average soothly temperature, OF (4) Slummy vasiable to account for conversions from caster metered apartments (5) Average Residential INN/Customer. Source: City of Denton, Electric Utility (6) Predicted Q, based upon following model: Q = 3.553) y 265.0 a P * 1228 ) a CUI - 96465) i D s (133) T ndard Errur of the Estimate o 299.1 = 3.41% of the Mean of Q R (Adjusted) = 0.91 Durbin-Vatsou StAListic = 1.3 Autocorrelation of the Residuals a 0.3 t I v f 4 ~ EYMI8IT ll- CITYof DE"_ RlSULTS RES1 Tredlct de Ca ea l FORECAST RESULTS:------------ (4,5- FORfCAST 08 EYOCEWM YARIA8IES 2 RS ~l p V Total Sal;a Y 1' p,~Y Predicted Ilealdeatial a 10 Werson Jim Coolfa8 D pays Yy{5 Cwt. Casla!ern 14,SI5 132,534 2.7 9,131 1SS,701 812 2.11 2,466 2,7 9,528 16, V. 2 2 114,282 1979 ],31 2.11 2,578 2.7 9,790 17, 191,649 3 1910 1981 2,966 2.11 2,578 2.1 {0,024 Ni,322 209,845 1982 4,045 2.11 2,578 2.1 10,]26 11,582 226,656 1983 4,126 2.11 2,578 2.7 10,604 22,642 248,655 1984 4,209 2.11 2,578 2.7 10,885 21,U4 265,269 1985 4,293 2.11 2,578 2.7 11,1)3 23,926 214,312 1986 2,319 2.11 2,578 2.7 11,465 24,468 287,190 4,466 2.11 2,1 11,166 301,896 1987 2.11 2,578 12.071 25,010 St6,410 1988 4,556 2.11 2,578 2.1 12,383 25,552 647 1989 4,140 2.11 2,576 2.7 1990 8.2x 2.8% 5.3% Annual Growth Rate, 1 2 01 0.01 PerlOd: 1919-1990 ya Average cooling Degree Days, 1965-1919 Veatber Cooiia8 Deg' IIC o Reference (2) Q, Predicted per itesideat{al IMJCuatrer 5ludel, Rtecace fabibll b - Reference Exhibit S (3) /.;Iidential custOOec forecast (4) 'total Sales, RS = RC * Q •s, y yi x G ~iQ T ir ~ d w ~ v t) ~ r ~ ' ~ "d~'r~ ~r y , t i. t[ 6MIr 11-4 r CDfID:RCJALIIDb`41lIAL KYY M'tA III6TOf1CAL INPUT DATA -fACECAST USgT-S 2 3 (S 4 x Variable P0-p TV INN r 103 Pred(cte4 Realdwl riatl00 _ Population Person Total IsCOme Cooling aaYi 1965 32,644s 2,416 41.7 2,649 1,011 $0.577 61,213 ( 2,676) ( 3.2) 1966 34,253a 2,508 6S.9 2,424 1,155 97,007 451423 II,S14 13.6 J'Iso) 1.2) 1967 35,656a 21531 90.5 22.527 I'S38 101.163 102.410 ,252 1,966 107,620 121,010 (13.392) (11.1) 1966 37,062! 2,793 103.5 2,616 2,517 150,303 10,230 1,069 0.7 1969 31,4684 2,805 107.9 1910 39,874 2 675 114.6 2,594 3,147 113,054 190,570 12,419 1• 199,30 41,756 2,990 123.7 2,432 4,121 191,SS1 ,300 ( J,J17) ( 3.!) 1972 42,637 2,097 132.1 2,676 4,629 227,106 234,390 ( 6.66) ( 2.9) 2,413 5,231 236,135 251,960 .646) 5.5) 1973 45,100 3,211 147.0 2,513 5,136 251,315 267255,160 (13,440) ( 1.5) 1974 1915 46,750 3,340 156.1 2,147 5,215 276,16E ,520 1,452 3. 6 1976 41,000 3,516 165.3 2,411 4,991 286,156 265261,430 20,711026 7 3..2 1977 41,900 2,691 116.1 2,969 4,402 295,017 297,990 1, 1978 51,500 3,816 196.5 2,695 3,919 2h4,290 ,140 (12,455) ( 4.3) 1919 Si,1S0 3,812 191.3 2,466 3,517 27%.199 217,450 1,252) ( 0.53 (1) city of Denton - Total Population, Source: Reference Exhibit 4 a Estimated Population for yearn 1965, 1966, 1967, 1066, 1969 (2) Denton County - Per Capita PIrsonal ]avow. Constant 167x, Sourct: Reference Exhibit 6 (3) Estimated Total Income (Ss10 ) = POP a V. Constant '67) (4) Annual Cooling Jegrte Days, Source: Reference Exhibit 6 (5) 191 = Estimated total housing units which are Dot included in count of residential customers. For derivation see Exhibit 9 (6) Total Coomercial and Industrial Energy, 7tvli x 103, Data Source: City of OtmtoD, Electric Utility (7) Predicted Q, based upon following model: Q = 12[6.6 a TY r 26.1 a CDO + 22.1 s M - 114,395 (9.4) (1.1) (1.5) (2.8) S(fandard Error of the Estimate = 11,84S = 5.93% of the (lean of Q R (Adjusted) = 0.95 Uurbin-Vatson Statistic = 1.6 Aotocorrelation of the Residuals = 0.2 r. 77-- } 7S T.ytll{lam li''9 CITY DENTOM F_ST1MA?lOll of YAR1"Lg - MI Total (9) 8 City Dousiug ReslJeoti+,6) % Distribution Nousia Custosw:rs Total rr {3) stock otalg of 1lousit~) ~uit~ 4efU(1) permits _ 6,288 (4) a,sso (s) 1960 8,600 (S) 1961 9,050 (5) 1,011 1962 9,400 (5) 6,139 1ISS 1963 9,750 (5) 1,995 , 1,530 1964 10,150 (S) 9,070 1,986 1965 10,600 (5) 9,164 2,511 1966 11,150 (5) 9,333 3,147 {967 11,850 (5) 9,633 4,121 1966 12150 (6) 9,837 4,629 1969 1,178 13,95{ (7) 10,154 5,281 :9:0 .740 625 {4,783 (7) 10,268 5,136 1,089 .40 15,549 (1) 10,85E {910 162 766 15,986 (1) 5,2{5 1972 .221 411 11,030 4,697 70J 16,245 (6) 1913 126 260 11,511 4 402 404 .075 16,454 (6) 12,445 1914 239 16,841 (6) 3,916 {915 13,719 3,531 1976 17,637 (6) 14,515 1977 15,052 (1) 1918 1979 to the difference ({I Dats Suutcr: Regional Muala1l Nules, August {979, NCTCOG (2) UcriveA from tota l al tag Pe nits 1913, 1974 anJ 1915 eallealeJ by applyiab lbe = Distribution of 1lousiag permits (3) A Mousing units for years 1971, 1972, iu total Nuusing stock between 1910 and 1975, i.e. (16,245 - 12,750 etalius with (4) D112 Suur ervices, lac. in coup cc: 1960 Ceasus (5) Total Iluuaing Stoc! for years 1 196961 1 th thrOough estimated base, upon lnlrrpolatiou between years (960 and 1 of Denton ligh 1 1C969onprehenslve Planning Institute and Moore Diveratlle d S (6) hats Suurce: City---- gt- 0„ City Housing Units 1'arrington Associates, Inc., March 1979. (1) Total Nuusing Siockufor years 1971, i91UtllilY and 1914 estimated based up (8) Daia Suurce; City total Nrlidenti+l Custuoerx) (9) 1Pl = (total Nousing Stock) - C t~ a~tntlnr li_1Q _ C1TT_ OF DEW" COMMERCIAL 00'iR&ccea~T~-~ (9) (to) (4) (S) Q(6} Residual(7) Ql1) T 1 pisat (1) ~ 3 ~P(1) T(2) Tr D -DAYS Adjustaelt Adjuate~ 16N r 10 mm ra 10 It r 10 kw r l0 KYU a 10 YS ? _ a 10~~ Coo11e1 -DaY■ 0 276,144 Population Sleersoa Total - -r 2,466 3,531 277,450 (1,952) 93 276,199 0 291,272 291,212 3,112 197 2,518 3,200 294,210 ( 1) 309,13A 4,200 313,338 1979 51,750 1 888 218 3000 309,63 ( 625) 129,254 12,600 341,134 1980 $5,193 ,966 230 2,571 567 ( 313) 371,081 1981 58,104 3 2,518 30000 129, 0 350,083 21,000 1982 61,010, 4,045 247 2,578 38000 350,083 n 311,673 21,400 401,073 63,927 4.126 264 2.518 3,000 311,613 , 393,680 37,1[10 431,680 1981 66.839 4,209 211 2.578 3,000 393,880 42,000 450,021 .021 1984 69,750 4,293 299 2,518 3,000 408,021 0 4208 2 481 42.000 464,465 1985 4,319 311 3,000 422,465 419,476 1986 71+001 323 2,578 0 437,476 .000 7 72,252 4,466 2,518 3,000 437,416 0 452,136 42,000 494,836 196 40556 335 ],000 452,836 44 000 510,110 1988 73,502 4,641 347 2,578 3000 468,710 0 461,710 1989 74,753 4,740 360 2,518 1990 76,004 5.71 4.91 5.63 Annual Growth Rate, 1 3.61 2.01 Perlod: 1979-1990 (l) Reference Exhibit 4 (2) Reference Exhibit 6 6 7 l3) Total Income, Constant '678 : TT = POP a r (4) Reference Exhibit I (5) Reference Exhibit 9 (6) Reference Exhibit 8, Commercial and Industrial mm Model 111 Reference Exhibit 8, 8ackcast ReReaidualRAdjustment) (8) Q (Adjusted),' Q (predicted) Inc. Texas InstturentsI at New capacity Plant in d1986 Assuu~e: 8 IN load at full Assume: 601 Load Factor 6 760 hrs.) 41,000 klbl x 10 Z 2 (1 kW a 103) x (.6) 1 ( , (lu) Q lFiuat = Q (Adjusted) t (T. I. Add-On) LXRIB 2T I-II CITY of DENTO vrgj~E i1'g CATEON i ES (Iliatorica too Predicted) Losses 7< of d Total Enertfl7 Totoil) O as Uae(1~ Total LiBfitlnB anti) Requlrrasen Ss Salo 3 AP Y Re u{res,eula other Sal;s ►VN s 10 Unaccwc !°r -9-- E11N 10 KtAi a 10 _ year IS 14.5 136,544 23,070 6,216 179,614 26,913 15.0 1965 1966 179,490 152,577 7.0 ' 4 194,519 190,919 13,600 12,4 1967 8,200 222,405 194,931 21,466 12.4 1968 14,885 230,385 32,113 13,595 26],046 1969 305,814 305,777 2.9 {970 21,488 309,095 9,351 4.6 1471 111,475 316,146 358,319 11,061 15,403 5.4 1972 18,7.01 3 318,150 21,661 5.4 399,611 463,202 1973 20,604 27,817 5.S 513,089 1974 20,966 446,956 26,061 8 197S 21,106 47'a,019 469,903 18,714 0.2 17,835 468,617 802 1976 494,509 493,707 16,469 3.S 1971 2!,960 476,115 159,626 6.1 1478 23,106 461,896 433,726 26,166 6.0 1919 23,519 412,179 30.184 6.0 ,900 503,063 32,611 1980 23 544,512 511,641 35,620 6.0 1981 24,221 593,665 556,045 6.0 24,542 605,191 38,666 1982 644,459 6.0 1965 24,863 696,929 655,113 41,816 6.0 1984 25,184 705,620 45,u52 6.0 1985 25,505 750,872 117,116 47,050 25,626 764,166 48,826 6.0 1986 613,170 764,944 50,670 6.0 1987 26,147 844,504 793,834 6.0 !966 26,468 823,522 52,S65 6.0 26,19D 876,081 54,526 1969 908,757 854,211 1990 21,111 Annual croo h Rate, % 6.1% 6,4% 6.2% Period: 1479.1990 I.J% (1) Sourer of hislurieal data; City of 0ent01., Electric llttlitl' y r r ,t,p k W f w C v d.n MIT t ;`4 ~d~, ;;f a s '1 rn ~ C A~"7y ~ Fi, ~ it rc'l w i ~ t,.✓'_k+. ~?~i 74 17~4 1 EA'1'IIBIT 11.22 CITE' OF DENT02i SYSTEH PEAK LOAD HISTORICAL. AND FORECAST PREDICTED CASE Total Energl) Annual Annual Year Requirement r~ Peak Load (1) Load Factor KuH x ] 0 1Cr x 103 1965 159,614 56.6 32.1 1966 1790490 57.5 35.6 1967 194,579 $6.4 39.4 1966 222145 61.8 41.1 1969 263,098 70.0 42.9 1970 305,674 81,0 1971 318,446 43.1 1972 81.5 44.6 375,403 91.0 47.1 1973 399,611 ]914 93. 44.7 5I3,089 105.5 5 55.5 1975 475,019 106.0 51.2 1976 488,617 106.0 51.6 1977 494,509 112.0 50.4 1978 476,315 114.0 47.7 1979 462,896 109.0 48.4 1960 503,063 118.7 46.4 1981 544,512 128.4 46.4 1962 593,665 740.0 46.4 1983 644,459 152.0 46.4 1964 6969929 164.4 48,4 1465 750,572 177.1 45.4 1986 764,166 185.0 48.4 2967 613,770 291.9 4S.4 1986 644,504 299.1 46,4 1989 876,067 206.6 46.4 1990 908,757 214.3 46.4 Annu►1 Growth Rate, 4 Period: 1979.1990 6.34 6.34 Source of historic data: City of Denton, Electric Utility. i ingt`..,i4'i w . *i.`. 'a C 1 y. L r r re. 7 ~ `f 'f~ r 1k r. ~ , t ~ J,T.; 'L . a rf"9 ~ ' ~ 'h r.`: 'ir)~ a. ..r, d:~ u. ! sr~ h w!" ':,r'.;~ •~d' ~ ~ j. ,~~.g w ..,;n'~'r+ ~ 'ru~ry' ~'1 fart. ~ya. '~!at5r+} 'y....:.. a,Ni 5'~ ? f $ ~ ~ ~,Fp~ e r n ,L f ~ r r dx;..,.;4~~ * I.., rrY' ~ ~ H ~.^w 1ay1 i"., ,b . '4; ~~.e"'~L* T+'a `Tt~ 1 '~r. ~li• i~r .I~. aiYc..)ti J~~'. "rl~,:~~> ~Q '.i ~y v'6 > rV ' Ex~ilulr.irl_~a MY OF DKNTON SENSITIVITY ANALYSIS ASSIAIPTIONS ANNUM. GROIWI'll RAPES % 1990 YAItIARLE 1919 1919-1990 Iow- -Prccliclc( high low Pri•dictV41 - Ilipli Iti+I'I I I J1T I ON City or Ucnl.on 11,/50 761004 769004 7691104 3,6 3.6 3.6 Us 111F,N-r I AL Rcaidrnlial Ctiatomcr. 149515 2is0052 25,552 25,252 1.5 5.3 5.2 Per Capita Income ('67$) 70812 4,470 4,740 5,211 1.5 2.0 3.0 Electric 1'rice-C/KHII 2.11 2.35 2.11 2.11 1.0 0.0 0.0 COMIERCIAL Ft INDUSTRIAL Pc.- C:lpita Income ('67$) 3,812 4,7190 71,140 5,211 1.5 2.0 3.0 Non Res. Ihuschold5 3,537 21500 39000 30300 - - - I it I N/e<~t w -.7,, '.f •sw. s ;i, . H r , r ~ ~ M,~°J,. i ; ~ 1:.,, u~ ~~.II~+y.S.ti,..• o F '.R ,t, r, 7. "a. +ti 1✓' S~ ~ y fyt rora r w a "~t,.. ~ a ~;4 •"1 s a a~r'"'✓, '4::• ! .4^:" 1 s`,~ A. '~$';~'y' N' w :s lSi v.4 Ci ` y#. ,.t• P 1' s N r r ,S 4 1 ~ w i Y h i l~r r ~ ~ a 1'ry~ .r ~aJ j i s, „a r Y' , }At f N1 ;A.' ~ ,~~F i .A~ $ y`_ {A~~r ; s.`. :'a 1~•i , ° ~f d t ~~rr re TaN~e4r tt-14 C I Ty or I mKI stmiTIVIT? JWAMA, PUMUs FAV CW M N :u:r.RAR IO RICK I mIl 7:CERA11I0 _ Tnla .nerR~rl) na„;I "~G,n,~af ~oeal'f.nrrRrl) A~n~,,,T A,r~,r;.,i Rrgnlrcnrn~a Inad factor pralt 1A I Rrgniir.rlk% Load Factor lrak Ln.1d M s t0 KW ■ 10 klnl a 10 1777 461,806 ,484 (01.0 461,876 .484 I01.0 11A0 476,816 ,484 111.2 509,404 ,484 170.1 1191 579,411 .484 124.9 558,142 ,494 111.8 1782 S14,501 ,494 115.5 614,95{ .4R4 145.0 1781 620,000 .484 146.2 611,An1 .494 158.9 1984 666,721 .4A4 151.1 115,n1A ,494 1M 4 MA5 714,219 .4R4 1 6R.5 179,110 .494 1RA.S 1186 741,611 .494 114.9 R41.9 % .484 174.6 1797 164,810 .484 187.4 RA2, 1R6 .484 M.9 11RR 798,152 .494 185.9 924,166 ,4R4 211.1 1199 812,561 .04 191.6 967,926 .494 22A.1 1970 8.11,541 .494 191.5 1,011,610 .484 219.1 Annual CrowL Ra1r, % 1r,lnd: 1711-1700 5.6j S.Rx 1.48 - T.4~ (11 Tnlal EnrrB► Rrgnlrrr,rnU, rcaalllnA frnsis Ammet Irma per 6a6{Rll 11. i ~+a a~i~ v.M, ~ k ~ 'e -~'1°"~ ~r ~S`y'G•~ ~{;~'y{°"^C~o~i~~ Lr !°`"I° fir: ee Lr ,~f fi' :.y i yr v ~ rv1~V~ i ri~~' ::d 'rn1, ..e ~ ~ y e a f t, 4 ?OLQI w n rS rm r" N i " ¢ i.r it +L YY SECTION III • poWE,T SUPPLY ALTERNATIVES INTRO?` Generation requirements to reliably meet future system demands must be planned many years in advance due to the lead time required for the construction of the facilities. Basic to the generation planning process is the consideration of such variable factors as existing and future capacity requirements, fuel availability and associated costs for meeting fueling needs, and necessary engineering/ economic analyses of available energy generation/ supply alternatives which may be utilized to minimize power generation costs. The effect of VentoD's generation and distributio:) plans and the )peration of its existing and future capacity is of distinct importance to the residents of the City. There is a comple), interaction of the above factors, • and changes in these variables and their effects on the overall power supply plan must therefore be continually assessed. Since Denton is a participating entity of the Texas Municipal Power Agency (RIPA), increased importance is placed not only on the evaluation of Denton's osrn existing generation, but also the generation and transmis,ion facilities owned and operated by TMPA. The determination of capacity requirements is primarily predicated on a combination of four fundamental items: total a achy effects system demand of interchange, requirements; unit sizes and planned usage, the purchase and pooling agreements, and fuel availability and cost. The initial step in the estimation of capacity and fuel requirements is the preparation of demand/energy forecasts; from this, capacity requirements, fuel requirements, revenues, expenses, capital requirements, and financial plans are derived. The credibility of subsequent derivations and comparison of alternatives as a basis for generation planning are highly sensitive to the accuracy of the forecast. s d r_d. q: t d . , W `v '.Y t 'l r . y y'4 C WSN a .ei'!x ..r. 1 7'I r a C,. e 'TIAN~ S peckiie long range generation plans are formulated after consideration of any tor s, among which are cost, fuel supply and projected load. In a given year, in addition to meeting the expectid peak load, consideration must be given to the characteristics of the annual load duration curves, which indicate the fraction of time that. the load is equal to or greater than various output levels. For the City of Denton, in 1979, the minimum load was about 30 megawatts; the peak load was 109 megawatts. The guiding principle in a planned operation is to use the least cost? energy as much as possible, that is, for base load, and conversely, thehighestes cost energy sources as little as possible (peak load). For Denton, with itf previous decision to par 'cipate in the Texas Municipal Power Agency, no new generation addi':ions are required between now and 2990 to meet its projected loan requirements, plus its 25% reserve margin as dictated by the Texas Interconnected System. However, the decision has been made to evaluate whether that decision and subsequent decisions regarding additional projects by TMPA are reasonable in providing the citizens of Denton with the lowest cost power available. Denton could quite p,)ssible • assign its portion of TMPA to another utility if other alternatives a! -e to be mo;e beneficial to the City. Therefore, this power supply study is evaluating the other options available to the electric utility i system without the committed unit!; from TMPA. In addition, the continued participation with T11PA and also a potential sale of the system to a private utility has been evaluated. One final investigation for power supply alternatives is centered on a qualitative assessment of advanced technologies, including solar options and Refuse Derived Fuel. With a lower load growth projected for the 1980's, the increasing problems with natural gas as a fuel supply, and the rapidly increasing cost to provide electric service to the citizens, it is necessary that careful planning be conducted to ensure that adequate system margins and reliability for Denton's customers can be met. i warslcotmvr lssn r; o a ,9I` y DISCUSSIONS OF ALTERNATIVES • Gilbert consultants were to evaluate the the As defined in the proposal, resently available to public Utilities pre economics of power supply alternatives that are City of Denton. As a result of discussions held with sethe veral stn y d which would asically System, Board, and the staff of the Electric b alternatives were presented for review by the 1980 t rough 1990- provide the system requirements for the p provide 1 alternatives included: (A) additions or modifications to power supp Y A units and include: (1) a existing Denton units without the committedolexisting units, and (3) Bas 100 !Ib' coal-fired addition, (2) repower.ing ortions of future generation units without the turbines. (S) purchase p continued participation is THPA a. Pr esentlY committed TMpA units; (C) the sale of city-owned facilities to a private executed and planned; (D) existing generation as back-up y a ualitstive utility; (E) wholesale power purchases, using without the committed Tl1PA units; ( 4 for peaking power again, options and assessment of advanced technologies with emphasis on solar op refused derived fuel. • s presents clear information to It is believed that the choice of study cases alternatives and the the citizens of Denton of the mix °fuiilities today that have forced a associated economic problems facing practices nab costs. The from traditional electric generation p derstanding cf public un divergence presentation of such factors will be beneficial for pure the Denton Electric Utility System. As part of the investigation into the power supply alternatives, it was and approved by the public Utilities Board of the City Of deemed necessary Denton, that a numbex of personal visits should be made joint Lx~encute,ties to determine their interest in possible purchase power, projects, arrangement with the City of Denton. Prior to or a franchise red for approval by the Botheaserd. visits, a list of Texas utilities prepared by the ?Savor of Denton which Letters were prepared for signature. described the reasons for the visits to the utilities selected. Evaluations q, J W. p. • s wera made by the Project Teas as to the neighboring utilities' interest in the alternatives being evaluated. Included in the Appendix is a listius of the companies visited, the people in attendance for both the Project Team, the City of Denton, and the principals from the utility. Given the level of participants involved with each of the util'ties with whom discussions were held, it was apparent that the iverall relationship between public and private utilities within the State of Texas is of such a nature that facilitates cooperation and understanding of the problems faced by utilities in general. The high level of eiscussions centered on the philosophies of each utility regarding the particular alternatives being evaluated with that utility. The meetings were considered to be extremely worthwhile and provided the City of Denton with insight to the problems facing other Texas utilities in the next decade. As a result of the cooperation between the City of Denton and the other utilities, the data requested for evaluation provides the City of Denton with sufficient detail to compare the alternatives. Based on the .scussioris held with the various utilities, it was determined that for the study purposes, joint venture projects would be evaluated from Central & Southwest Corporation, Texas Power & Light, Houston Lighting & Power, and Lower Colorado River Authority. For purchase power options, Texas Power & Light, Central & Southwest Corporation, and Texas Electric Service Compatr, were selected as possible choices. The option regarding the sale of the system was discussed with both Texas Power & Light and Community Public Service Company. Based on the discussions held with each, it was determined that both would have a substantial interest in such a sale and would, on their own, evaluate such a sale given the interest on the part of the citizens of Denton to actually pursue this option. It should be clearly understood that certain of the power supply alternatives under investigation are, at the present time, constrained as legal options to the City of Denton. However, it is belie-ed that the Wen ~Canna+.+.+t~ q A ` ~n y~.7 M r:! econ5mic comparisons provided herein provide sufficient data for the Public Utilities Board; City Couocil, and the public to assess the electric utility's future power supplies. MAJOR ASSUMPTIONS For any study, there are certain key assumptions that are made which affect study results. Having defined the load forecast in terms of demand, energy and consumption profiles, the issue of supply was addressed by determining the least costly, yet feasible, electric energy production mode. The alternatives considered for the City of Denton have been previously identified. As in any analysis, certain boundary conditions and study constraints must be assumed to enable quantification of input data and measurability of results. For each case, individual assumptions are discussed. However, the following items are common to each of the cases under investigation and should be delineated at this time in order to set the stage for the individual case descriptions. Studv Horizon System energy sources have been developed for individual alternative cases for the years 1980 through 1990. The eleven year time frame is believed sufficient for this particular analysis. Any forecast past 1990 would be based on an unsupported demand and energy load. Further, the uncertainty in Federal Government actions with regard to availability and cost of power plant fuels for utility use would require assumptions that could overshadow and possible distort the eleven year results reported in this analysis. Finally, the computation of electric power costs in 20 to 30 year studies could lead to minunderstandings by the general public when confronted by data that grossly exceeds current day experience. Reserve Margin The retecve margin was assumed as 15 percent. There are two primary methods for determining installed reserve or capacity over and above the forecasted annual peak demand. They are Loss of Load Probability (LCLP) and percent • _J 6+otrtlLomrt~a+++tty+ r ws`v ' V reserve. LOLP'is a"probabilistic measure of the expected awatsr of days per year on which the available capacity %annot meet the load demand. This method was not used for this study primarily because the unit forced outage rate data, on which LOLP calculation depends, was not well defined. Also, LOLP indices are more applicable to larger systems with several thousand megawatts of capacity. The percent reserve index is an accepted industry standard for generation planning with 15 percent being the most common reserve level. Load Model Analysis The load model analysis served as an interface between the four years of hourly load data provided by the City of Denton and demand profiles used in calculating production costs. Hourly load data consisted of the hour-by-hour systeo demand over the past four years, 1976 to 1979. Statistical analysis of this data produced a fixes set of daily and annual load profiles for representing the City of Denton's system load characteristics. Two primary functions were served through processing of the hourly load data. First, single year inconsistencies had to be identified and removed for reasons of accuracy. Second, the data had to be normalized and structured in the proper format for the production costing computer prograu. In order to process over 35,000 hours (4 years x 8760 hrslyr) of data, a customized computer program was developed. This program read data hour-by-hour accounting for day, week, month, year, leap year, and holidays, and sorted the data into four basic day types: Saturday, Sunday, Peak Weekday, and Average Weekday. The Peak Weekday was found to be Wednesday based on a four year average of peak dsily load and average daily load as presented in Table III-1 below. This data was further processed into four year averages, divided Lito bi-hourly intervals (to save computer expense in the production costing - Goof,& rC MMV14" A analysis), and normalized by the four year average annual peak load. At • this point, the per-unit load model was created and written out in the exact format required by the production costing program. TABLE III-1 CITY OF DENTON PEAK AND AVERAGE DAILY LOADS (KW) Honda Tuesda Wednesday Thursda Friday 1976 611,192 64,586 64,557 64,018 63,037 1977 67,384 66,115 68,538 66,346 67,269 1978 719711 70,653 71,980 71,352 70,076 10179 66,415 66,653 68,076 66,384 67,307 Average 67,926 680002 68,288 66,025 660922 1976 511888 529311 52,181 51,804 51,243 1977 54,513 55,590 55,649 53,465 54,850 1978 56,979 57,172 57,665 579316 56,271 1979 54,437 55,243 55,271 55,272 54,206 Average 54,454 55,0711 55,242 54,964 541143 Taking four year averages on an annual basis was justified since all four years exhibited a constant monthly peak load distribution. Figure III-1 presents the monthly peak loads for each year plus the four year average per i unit monthly peak distribution. As can be seen, the average load profile is practically identical to the four year "band" of monthly peak loads. The reason for the four year average curve being below the individual year curves was that monthly peaks never fell or. the exact same hour each year. Consequently, when the peak load was averaged with three non-peak leads, a somewhat lower value resulted. This average value represents a "smoothing" of single year fluctuations and thus served as a true profile for extrapolation into the study years. The end result of this analysis was a per-unit load profile for monthly peaks and per-unit load profiles representing four day ty es for each month. These profiles were assumed to be constant over time which meant that even • - - GtDM ILon,ma+vunn 77 7777, IW 120 110 - - t - -I - - 7' '7 i 77 100 - ----F - _ r - - 90 s0 - ! = 11979- = • ~ _ - ; 7 7_ . _ z 976 977- 60 C177, OF -DENA Four 1e-tr " 40 June July Aug Sept Oct Nov Dec Jan Feb ".ar Apr May ...07 though the actual energy value changed y!ar to year, the shape or profile remained the same and was fitted to the peak load. Thus, multiplying the forecasted annual peak by the respective month's per-unit ratio produced the monthly peak and by multiplying this number by any hour's per-unit ratio produced the megawatt demand at that hour for example: o Suppose that in 1988 the annual peak load was 200 MW o This would become the peak load in August according to the monthly peak load profile o The peak load for every other month would then be a fraction of 200 ?iti. such that in January, the peak load would be 114.6 NN or 200 M, multlp'.'ed by Januari's ratio from the load profile of 0.574. o Since the study begins on a Saturday, the first bi-hourly load can be calculated using the Saturday day type profile for the month of January. The value for the first interval's load profile is 0.672 which multiplied times the monthly peak produces a demand of 77.15 W. It is this value which must be met by dispatching Denton's available generation capacity. In addition to the demand profiles, an energy profile by month was developed. Five years of historical energies (1975 to 1979) were averaged tr, determine a normalized profile which multiplied times the forecasted annual energies gave an energy "target" for each month. The word "target" refers to the production costing program's technique of adjusting daily load shapes iteratively to satisfy monthly energy requirements. Figure 1II-2 presents the energy profile used for this study. The computer program developed for load analysis was designed not only for preparation of demand and energy profiles required by the production costing program, but also to generate results which were useful in studying Denton's load characteristics. One of the extra functions was presenting a frequency of occurrence tabulation for different load levels. This data was used to • G'ro~rtlCommonwa~u i. - - - - M - _ - 0.9 = _ _ - - z - _ _ - u 1 - _ 0.7 Z 71 _ 0.6 = 7 7 0.5 - U.4 - 4 t NOV Dec C Jan Feb~..Mas ~'PT:..:.?!a}__June.. Jul~._ Aug Sapi' _ 77 -7 - - ~:n~Txi.Y..AL'~FAG~••-EaE~GY -PA! - =.1 71 P n i 7 r re'~ AUp{: Y M; 777 T r construct Load Duration Curves (LDC) for different time intervals. These curves served as graphical presentations of Denton's base to pea load • k relationship and helped in defining criteria for analysis of alternatives, namely the output level for future generation installations. Figure II1-3 shows the four-year average annual LDC. In any statistical tr.chnique, the accuracy of results is dependent on quantity and quality of input data. The City of Denton provided four years of actual operating data which vas completely satisfactory with respect to both criteria. For this reason, it is believed that the profiles produced in this analysis are representative of Denton's actual operating conditions. Monthly Production Simulation Another major assumption was that future operating costs would be calculated using a computer program simulation model for production costing. This is a state-of-the-art practice for power supply studies since ilia only other option is a manual exercise of "fitting" generation blocks unier the annual • load duration cu ve. The Monthly Production Simulation (MPS) computer program was used in this study for production costing analysis. As with any computer analysis, the accuracy of results was very much a function of the quality of input data. The key inputs to MPS were the load model data and the capacity model data. The form(,.r was comprised of load profiles, as presented in the load model analysis section, and annual peak loads as presented in the load model analysis section, and annual peak loads as presented in the load forecast section. Both of these items were the result of thorough analyses and can be accepted as accurate data, bearing in mind futurity and its associated uncertainty. On the other hand, the capacity model was composed of "order-of-magnitude" numbers which were best estimates without benefit of thorough analyses for each component. The inputs to this model are addressed in the sections corresponding to each case. • G~Een ~Carvro~+amr ti.ty~11,4^1 ti P .S J ' ~ ~1 3' I (I E I 1 1E 1r I + I I r I I E 1 iki l,, ili~! J II''1T; II, lifi,~j}i1!11~k~11j1~ I~l! ( ,,,I, I CITY OP DFNTON + !1 i t APPROXIMATE YF.AP?jY SHAD DU,RA ION C RY TI 1"I ! :III j (II,, I' !I1;I!IIII FIGl1P.R ~I~~Ii 1 I{ 1 t 1 VtIE'~11~ 1 I rrr"'... I 'I I + .I I 'I 1 1 ,,1 ~4 i I .r i1 ~ i' ! II ! i 11 I ~I~ .II I I llk !~I 111I I. 1 j 11 !i' 1 ' . ~I ; I~I .I I IIII ~II' II I I `4 E I}'~ ,~I Ell;i I I ;,II I ii 1 ,I ' l 'ij 11'' i.i { ~1' III' II, I li 1III 1 III IIi ~I,,,~ II', i I~ Ili! 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CC{I{II ~I ( IIII ~~I{ I I1 ` 1411{Ii I `{{`{`{IIII`{{11 II ~ " VVI, I Ili iI 1 11`1111I1 !f'.I I,i. " i 'I~I 1 1I i! 11 i ~ ~1 111 ! I1~1 ilil ~1~1 1 ~11 11~ Ili 'I~ Ij'i! !1 I 1 ~ ~li~ I.i I i rl I I ~ I I I Ii , I~ III II ~ ~ ~ ' 1000 2000 3000 4000 5000 6000 7000 CoOO 8160 11CURS °i J 4p , •7~ j Y 4 y I MPS simulates system operations by dispatching or allocating capacity to • meet load requirements on a lowest incremental cost basis. This is done bi-hourly recognizing spinning reserve area maintenance, and forced outages. In this manner, what their loading was, each bi-bourly interval, what units were on line, what the heat rate was, how ouch fuel was consumed and at what Der-unit price, and how much O&H cost was incurred. By signing all bi-hourly intervals in the year, the program produces the annual production costs in current year dollars. \atural Gas ni?_ty and Cost Analysis As per the gas sales contract executed on November 7, 1977 by the City of Denton and Lone Star Gas Company, certain quantities of gas are to be delivered to Denton based on Schedule A, presented in this contract. Each year on or before October 1, the City of Denton is to notify Lone Star Gas Company of the preliminary estimated quantities needed two years, three months in the future and the estimated quantities required one year, three months in advance. This contract effectively limits the amount of electric generation capable of being produced by the City's existing generation By 1962, the total energy requirements fcr the City of Denton are units. estimated at 593,000,000 YWH. The maximum annual fuel requirements per on the contract of 6,000 million cubic feet would only result of 531,000,000 011. Since the contract calls for decreasing amounts through 19841 on an annual basis, a substantial deficit in generating capability exists. On a maximum peak day basis, the 50,000,000 cubic feet allotment is sufficient to meet the peak: day requirements for the City of Denton through 1990. V;itb the phased in deregulation of natural gas and the incremental aivecing allowed for industrials and electric utilities, there appears to be good likelihood that the natural gas situation will alleviate, resulting in substantial amounts of natural gas available for power prod-ictn. the fact, during last year the Federal Government has actively supported of natural gas as a boiler fuel in order to offset imported quantities of • 6rort rcannwn+++'✓~ r 777. p. fuel pil. Recent publications by trade journals indicate that the reserve situation with natural gas is actually increasing instead of tut heretofore forecasted decreasing amount. Therefore, it is believed that the City of Denton will be able to obtain new sources of natural gas to supplement the Lone Star Gas Company contract up to the level required to meet its system generation requirements. As shown by Table III-2, the natural gas quantities available to the City of Denton are limited by the Lone Star contract Exhibit A amounts. Denton, for the 1981-1982 period, has requested from Lone Star, natural gas quantities amounting to 7,100 million cubic feet for 1981 and 4,800 million cubic feet in 1982. By October 1 of 1980, Denton must request the 1983 amount, which for study purposes has been increased to the contract amount. TABLE III-2 CITY OF DENTON NATURAL GAS QUANTITIES Annual Amounts (!Billion Cubic Feet) Per Lone Star Per Request Required for Year Contract by Denton-` 100% Generation Deficit 1980 71100 7,100 51850 1961 7,100 71100 69320 1982 61000 40800 61890 21090 5,000 7,480 29460 1963 5,000 4 200 81080 3,880 1984 4,200 81710 81710 1985 99100 91100 1966 91440 91440 1987 99800 91440 1988 10,160 109160 1989 I 10,540 10,540 yy~ * Up to Contract Amounts For the last year of the contract it has been estimated that Denton will request 4,200 million cubic feet as per the contract. In order to meet 100% of the system energy requirements for the period 1982-1984, Denton would have to secure additional gas supplies to eliminate the projected deficit as shown in Table III-2. L GA+'t r LanmonM~rtf• ,i e r r "1 r ! r l:, 1 n . v iCY rv .r. '~.FI ~ t G n 5a ^t ~ i , .p e d ,~1 . As previously discussed, it WAS assumed that i~enton would be able to obtain sufficient quantities of natural gas to eliminate this deficit. Table III-3 is the price forecast for natural gas to the City of Denton as per the contract with Lone Star Gas Company. TABLE 1I1-3 CITY OF DENTON NATURAL GAS PRICE FORECAST $/PIIHBTU Acquisition Gas Cost Year THPA Base Price _Cost Adjusted Total 1980 2.62 .32 .07 1.81 2.20 1981 2.83 .33 .08 2.11 2.52 1982 3.10 .35 .09 2.46 2.90 1983 3.42 .42 .11 2.86 3.39 1984 3.70 .42 .12 3.33 3.87 1985 3.94 4.07 (1) 1986 4.19 4.37 (1) 1987 4.46 4.69 (1) 1988 4,74 5.03 (1) 1989 5.04 5.40 1 1990 5.37 5.79 (1) Note: (1) As projected by Doe, Energy Information Administration, Annual Report to Congress 1978", Volume III New Intrastate Gas The total price has been separated into its three components as described in the Contract. For the 1982 to 1984 period, it was assumed that the purchase price of natural gas, to eliminate the deficit amounts, would be obtained at the contract price. After 1984, the assumption was made that the price of natural gas for electric power generation will rise to tb: n:: intrastate price as projected by DOE Energy Information Administrati^n in '.ts Annual Report to Congress 1918, Volume III. For the study, it has t1h-refore been basically assumed that natural gas is available to the City of Denton, although at a somewhat highe- price than previously projected. L~ GAtrt Itannrnwu*a 4 5 I A l '~1 777 > N , ~..'t Fined b. CAPACITY ` The priu.~ry determinant in long range capital budgeting for any industry is the relationship of production capacity to the sales forecast. For the electric utility industry in general and the City of Denton in particular, sales are measured by kilowatts and kilowatt-hours, and production capacity is kilowatt output of electric power plants. sales forecast has been defined for the ten-year study horizon and the assumption for the reserve margin has been stated. The discussion in this section addressts the balance of existing and future capacity with projected annual peak demand plus 15 percent reserve margin. Several scenarios were considered which covered the alternative power supply options for the City of Denton. Exhibit III-1 presents Denton's capacity position staying with TMPA through 1990. As can be seen, there were no anticiFated capacity deficits because of additional capacity from the Gibbons Creek and Comanche Peak units coming . on line in 1982 and 1983. Denton's share of TMPA capacity additions was j calculated using the "percentage share" allocation method Wined in the I Official Statement for Revenue Bonds, Series 1979. Through this method, each TIIPA city is credited with capacity based on the previous year's ratio of city energy consumption to total TMPA energy. Thus, total capacity for I the City of Denton will vary each year based on the previous year's operations. The net ef`.ect shown in Exhibit 121-1 is that percent reserve decreases each year but not below the 15 percent required reserve margin. Therefore, continued association with TMPA precludes additional generation requirements through 1990. I: capacity from Gibbons Creek and Comanche Peak were not ~tedited to Denton, then additional capacity would be required beginning in 1983. This scenario is presented in Exhibit I11.2 for all the alternatives except wholesale power. By 1990 capacity should be added not only to make up the projected deficit, but also to prevent existing high cost peaking and • J Wwm rC*MP WAIU L' xVn x 4 of ru intermediate load units from being bate loaded. This was done by examining Load Duration Curve data for an estimate of how much base load capacity would be required. The three self-generation options considered in Case A were a pulverized I coal fired plant, repowering the existing units, and additional combustion turbines. The estimated output for each was 100 Hw for the coal plant and I two 60 Mw units for both repowering and separate combustion turbines. Exhibit III.2 shows the addition of capacity for each &elf-generation option. The constraining criteria that dictated timing of new capacity was lead time fcr engineering and construction. The earliest that a coal plant could be brought an line would be 1988 which mean, that fer the years 1983 to 1987, the capacity deficit would have to be supplied from another ~ source. It was assumed that short term purchases will be the alternative source for the interim period. Thus, for the coal-fired option 50 Mw were required, the repowering option, 20 Mw, and the combustion turbine option, no short term power was required. The two joint venture options considered in Case B include sharing in a power plant with Texas Power and Light (TPL) and Lower Colorado River Authority (LCRA). The on-line date for each is 1988 and 1987, respectively. Because of the late starting year, short term power was assumed to be the capacity source for the years I98s through 1987. This method is the same as k that used for the pulverized coal fired plant in Case A. The two purchase power options considered in Case E are firm capacity and wholesale pcaer. The former has an on-line date of 1982 and the j latter 1981. Thus, in both options, short term power was not needed since capacity deficits are not shown until 1983. i Rates for short term purchased power required for peaking capacity during j maintenance outage periods for Cases A and B were estimted from the price i base rates developed for wholesale poser (See Case E description) and the ennual TP&L fuel costs for natural gas. brtart ~[aTmonam~ ,R .rf r:; e Y r :I f Y a F the self-generation and joint venture options both require short ® ase power as a back-up to the existing Denton units for the h options riod of 1983 througts 1987• long term purchase assumed to be available before 1983 w power. pp.fylGenrnon.un~ L r L 181 T 2.L[_ j CITY OF "ION 1^141 Yn. Cnrablllty _Swub ~I+rA2_ J 1186 ItfANW (1) 1FfA (6) RATTr1 nr AYd11AA1./ Arr1.tcAALE i*.xr W'4 nF.Nf)1N'5 1'RQIf1:Trn IN?YINn fArACllr urAj."I IXMCITY - FHF.raY M.ACY IM'.N1fW NIN "miter mr." WN TOTAI, I1Fri1Nn 1 151 1KS►.RYL 2rSF RYE IKf ICIT (1681) QMQ TO VWA C WITT MARK CAPACITY rArACIIV (1) (tfw) QI4) 11) (IM) (IN) (4) (f1V) ~.(S) 19An 501.Mr1 2.653.nn9 ,190 - - 1 MO 110.7 116,5 54.3 1'MI Shh,Sl2 2,845.010 •191 - - - IMP 178.4 141.1 44.6 55.1 0 1781 S71,G65 3,057,849 .194 A1l(2,]) .171 90.0 261.0 140,0 I61,0 125.0 A1.9 0 1781 fA4,459 1,255,796 .19A 542 ,194 105.1 210,1 157.0 114.0 176.1 Al.() 1) 1984 678,927 3,455,942 ,202 542 ,19A Int.) 280.1 164,4 187.1 115.9 10,5 n I745 705,1117 1.6 17,715 .205 542 .202 107.5 282.5 111.1 201,7 105.4 57,5 0 1706 744,166 ],1147,]14 .2M 542 ,205 111.1 284.1 IA5.0 717,6 97.1 51,6 n 17A1 AI1,1J0 4.011,129. .2102 542 ZrY, 110,6 281.6 19119 710,1 91,7 41,R 0 1)AR IV.h,sm 8,729,1049 .7010 542 .207 107.5 282.5 177.7 229,1 F1.1 41.A n 17107 816,nA1 4,421,791 ,194 542 ,200 In4,4 281.4 706,6 711.6 25.A 16,7 0 177r) 9118,757 4,671 Am .191 9A2 .,198 107 J 2An.3 214.1 144,4 66,0 in." 0 )AIF►i' (I) nrrn rra C.IMort An RocIn lrR "tkn.+al .+nd F,nerry rorrennt ror Ilv city at nrntnn" (2) Add111nnnl 11 IN (RoN (`aw+nCIW Pena NUCIeAr 11,1Il (6.21 of It 50POW) (1) Addltlnnil 4M fN Itm Clhl.onn Cter4 1.1gotta Ifnit (41 "Tr\trbinge 5I..+rr" nllrrnted nrrnrdlnA to rrevlnn+ Yrnt'n In.+A an TWA vynrrw (S) Ranrd nn CIfY or nrnlon InRlAIIrd enr.+rItY of 111 IM vlIle no lotIrrnrefn. (6) 1fIrA enotr.y rr7nlrrn+ent trd.rred by dlfrereme brlvrrn n111,ett Irrecant and Slav and Vrhnier (nrernnf a<alni>tir rtt_t ci r Iw oEttilN I.nnd VerRrte r.+rlillltr Yllbnul u1rA r PEAR IN7MMt IIF1NMn ni/If:IT IXML PI11NfS REI'1MLRIHIt.-_ f,If19175t11f1 1191RInIS flRll rIIR1:11A5E GIkfTMtl %.IIS 15% (1) Ad,lyd IMIIcII A.61rd I!rllrlt M1drd iMflrll Addrd Iwflclt -------------------------Glpacl~----(~1__- C~nnclt7-----~4)~_ c~raclt! 19An 114.1 111 O n 0 n - O 1901 174.6 l44 n n n n o 19RJ I4o.0 161 0 n 0 n in n 1791 141.n 11% 2 - 2 - 2 fiQ 0 - 0 I9n4 166.4 107 lA - IF - I6 - 0 - n 1901" 111.1 204 tl - 71 fin 0 - 0 1S n 19n6 In;." lit 60 - 60 n - n n 1991 111.9 221 An 100(1) An /41 n (10 0 in 19n01 199.2 229 56 ON 1) n n n 14 0 19019 2n6.6 214 64 - 0 - 0 - 0 - n 1990 214.1 2A ti 11 0 0 0 n tic ll iS: fll Rarr.f nn 111 IN of In+t.nllyd rarncltf vtf6 nn fel lrrarnle 111 Inn IN odd lllem uItIt LCnA, 0 drfrelt In 1901 111 1(01) l6r m61111nil ullh 1rf.l. and 100 ON nrntnn uall 14) Itrl frIt n efinvn nee wide Ill, ht Owrl frro rnll6nree ~tt•!T Ili-3 0121 a otMrtw auWr2 of pToduottoe Comte leput Pate per Gels 6 11tttT UNIT OMIT UNTt UNIT pl[.na Ina OOM61M1s Ct]Of0[TIOM JOUR JOi1R 1 S CO61 CTCI[ 1:1104110111 Y[MTU11 V9hT 2 3 urkw WAIT IT211 ttz"I Gas Cee Caa Coal Cee Pas Coal Lignite 1w<1 Type CAN c.e 12.6 12.4 22.0 60.0 6S.0 100.0 120.0 60.0 100.0 IOU.0 Main[ {76f1 .04 .04 .04 .04 .10 .01 .05 .10 IO ►mcaa Outage late •a' 5.5 ~.S 5.5 S.S 14.0 0.6 0.6 14.0 14.0 n.ea 11611 coot liJlvTrl s,s O.i 0,♦ 0.4 1.0 2.4 2.4 1.0 1.0 1.5 Ya table IXA Cost (7t3IIs/[m70 1.5 1 a. 1 24 [ 1 24 74 Nlntw DUMAIaM (Mrm) 1 1 [n.rerentst Heat lute 20,0 20.0 30.0 60.0 15.0 2$.0 rover rt 1 3.0 3.0 10,0 11'st late 1.7 13,650 12.703 10,400 10,600 10,600 10,{91 1,620 11,3x0 raw. Pt 2 12.6 12.6 15.0 10461.0 1.0 .0 104610 2060.0 120.0 60.0 50.0 50.0 11'at Rate 2.3 11.466 15.0 75.0 72.0 60.0 65.0 100.0 ruw•t M 3 heat late 3.4 100.0 100.0 r. wrr Pt 4 vi V 4 Yt ti 1 r=te t101)1..~. L~-. CiTT Or D[RT4ll SO.Ary Of Variable rroduttlon Cost Tarot lots A 1 t - rot it 1910 1911 1982 1161 1914 1965 1956 1967 )9611 1919 )910 r117D o6M COSTS 1S11u TT1 1. .00 19.1? 5.S S.id 6.06 i.1 1.13 5.0/ 6.71 9.43 110..111 9 19 1.51 . 6.42 24,00 2S.91 Denton Units - A1. 6, 1 (1) 5.5 5 94 30 . Al. Al 71.99 >14.0 15.12 16.)) 19.64 19.05 205! 10.15 1.07 Lil 1.70 1. 2olveriaed Cool Plant 0.6 0.65 0.10 0.76 0.12 1.20 1.30 c,abuttion Tut4lneo 0.6 0.65 0.70 0.16 0.11 0.16 OAS 1.01 25.11 21.99 10.22 lepow.rin/ 42.29 45,54 49.03 52.12 joint Venture - Im joint Venture - 1r1A I11 gA1[A b-" 06M (N1W a•' 2.20 2.11 2.51 2.11 7.00 1.24 .15 1.99 1.04 1.5 01.62 .43 1 0.41 0.30 0.34 0.59 0.61 0.49 0.14 0.10 0.56 Denton Units - 1. T 0.4 7.00 7.16 4. 5 1.0 L.01 1.11 1.26 1.)6 {.41 I.S! 1.11 1.65 2,4 7.59 7.60 f.02 3.2T 3.53 3.91 4.11 It 4.44 4.44 4.10 S.L6 Pr2vegtred Cal pilot 4,60 5.11 Combustion Turbines 1.4 2,S1 7.10 3.02 7.71 7.1) 3.11 41. .71 2,00 2.16 6epwerln/ 1.0 1.06 1.11 1.26 1.36 1.47 1.51) 1.77{ {.1S joint Venture . TrLttCRA l'um PI11C . 2.20 2.32 2.90 Ll9 3.11 4.07 4.37 4.61 5.03 5140 S.19 natural CAM 1.162 1.911 2.054 2.167 7.467 2.653 1,120 ).1i) 314115 3`.16 44.40 coal 1.63 1.13 1.12 1.92 Joint Venture - TPL 5.669 6.021 6.561 351 joint Venture - LCM 1.453 1,531 7.116 4.140 4.497 4.599 4.110 5. 10 11.011681• Puwr 17) 4.714 5.726 6.011 6.519 1.763 4.160 1.650 l.7j1 .799 10.52! 11.614 51ott Tom Power MttCS: (II 7rlalat{Dn rata of 511Teat aaaue:ed due to attrition of labor furca (7) Intl uJeo a nlieal let ""ge vh{cb eeulal16 at 7.1111ear Used on a w]c1 tanaratlun ttlc..let gate Of 10.000 1tu/Kvli ' . w ixyT n i t+v~ 7"'r-R RA A 't rUe. 'v'. k, iu a. i CASE DESCRIP'T'IONS 7 INTRO, nur ON In the following portions of section III, tb'e detailed descriptions of the power supply alternatives are presented for review. These basic are developed for each ostudy cases involving the f the results of the continued operation of the Denton forecast and include the analyses are based on the P The analysis for each case system requirements and sources of supply. includes the development of any capital expenditures ~asociated with the the fuel cost and quantities, and the estimated production particular case, operation and maintenance costs associated with the existing aped future generation. For purchased power options, the independently and treated as a separate unit on the Denton System for dispatching purposes. rintouts of the Monthly Production Simulation model are Th computer p summary exhibits are provided provided in fatal under separate cover. Only herein for each computer run. TherasuipFutsetotabulated the financialeanalysis in annual operating costs and are useA Section IV. Also provided for review are the basic input data for all cases'Exhibit II1-3 presents the Summary of Production Costs for all generating units investiFated. These include the five existing Deno ninvestigatedee alternatives considered under Case A, and the two coal plants as part of Case E. Exhibit I1I.4 shows the Variable Production Costs by year for all alternatives. This input data has been used in the development of Production Costs shown under each case. ram rta u*o~•u~^ 10 i ,i nc ~J tY ~q.7 Z -o 1 • CASE A - MANSION OF DENTON ELECTRIC UTILITY This alternative addresses the scenario of Denton as an independently operated utility without affiliation with TMPA. Energy requirements over the next decade (through 1990) must be satisfied with existing generation and self- developed future generation. Existing generation consists of the Denton Municipal Electric Generating Station which has a total output of 173 Mw from five units located at one site with natural gas as the primary fuel. Since all units have been on-line for at least seven years, sufficient data has been accumulated to define each unit's operating characteristics. The data on existing capacity was developed using information supplied by the City of Denton's Electrical Production Division. Production test input data for existing capacity was previously presented in Exhibits III-3 and III-4. The existing Denton units are identified as MT 1 through LNIT 5. Forced outage rate, incremental heat rate, maintenance requirements and O&M costs were all estimated based on hiFtorlcal data. The • 1930 fuel cost ($/:fmbtu) is shown and all future years were input separately in the calculational scheme. Exhibit III-3 also presents the production cost input for the three self- development options, a pulverized coal plant, repowering and combustion turbines. Forced outage rate data and ObY, costs were obtained from the EPRI Technical Assessment Guide and Gilbert developed standards. The operating data including minimum downtime and incremental heat rate was determined based on past experience plus information from manufacturers concerning state-of-the-art combustion turbine capabilities. Exhibit III-4 presented production costs that vary due to escalation. These include fixed and variable 06M, fuel prices, and purchase power costs. The fixed component of OW, for the existing Denton units was arsumed to escalate at 5% per year for cases where power generation was developed at a different site. The implication of this assumption is that although inflation will continue at 8% per year, there will be a lower net effect due to attrit on of • the labor force for the existing knits. Thus, for the case of building a new coal plant or purchasing long term power, Denton knits 1-5 will have fixed 06M 6+nn ILann+oiwulN • escalating at 5% per year, and for repowering or adding combustion turbines, the escalation rate will remain at 82 per year since a full staff will be required, "Order of Xagnitude" capital costs (end of year 1979 dollars) were developed for the alternatives described in this section. The estimates reflect a consistent basis of designs site conditions and costing philosophy. All of the factors used to evaluate costs are described, including scope, schedules, assumptions, labor rates, and associated uncertainties. The capital cost estimates exclude unusual conditions such as poor soil characteristics, unavailability of sufficient skilled craftsmen, and weather restrictions. The configuration of plant structures and systems are subject to further influence by ownorss regulatory authorities, vendors, and indivi- duals assigned to manage project development, The pricing is subject to many factors such as the purchasing policies, local economic conditions and adminis- trative practices, Thus, ultimate costs may vary from those presented herein. A general discussion of the three self-generation future capacity alternatives follows: 1. Pulverized Coal-Fired Plant In order to make capital cost estimates and calculate performance characteristics, certain assumptions had to be made with regard to plant design. The following discussion defines assumpticns for the 100 bN- pulverized coal fired plant considered as a self-generating option for the City of Denton. Specific sites were not selected for this study. Kajor factors in site selection are the availability of plant make-up water fro= a ;4A!Able water source, proximity to major railroads, highways, and the availability of suitable land area, The following assumed site conditions represent an average sitt which has been utilized for the purpose of site arrangement, cost estimates, and other illustrations of the plant concepts. The assumed site • conditions are not requisite to the application of the plant concepts, which are adaptable to virtually any site. 6+oen ~ta+wronrunr as Approximately 350 usable acres (not including ash/sludge disposal) in the vicinity of a metropolitan area, b. An adequate supply of well-trained construction labor within a seventy-five mile radius of the site. Labor conditions are such that a "Project Work Agreement" can be obtained from labor organizations and cop;.ractors. c. All commodities of bulk construction material are available locally and can be delivered within a reasonable period of time. d. The site is located on relatively flat land with a generally uniform slope. The maximum difference in elevation within i the site is 30 feet. The area surrounding the site is rolling hills with elevations within 2,000 yards not more than 300 feet rbove the site eleval.toc. e. The site is located within beismic Zone 1 as defined by the Uniform Building Code. f. Weather records are well established and the 100 year storm 1 a-ill cause charges in water elevation of less than three • feet in streams or bodies of water adjacent to the site. The water table is fifteen to twenty feet below ground level. Each plan is designed for the construction of one coal-fired installa- tion initially, with space allowed, and required support facilities, for the future addition of a second unit. Coal is delivered by rail in unit trains of 100 cars, The unloading facility is provided with thawing equipment, automated positioning and dumping with rotary car dumpers. It was assumed that the circulating water heat sink would employ a mechanical draft cooling tower since no sites were selected for the study. Flue gas desulfurization (FGD) is accomplished with scrubbers, using limestone as reaetaut. Make-up and potable water for plant use are filtered and treatzd en-site. Fly ash, bottom ash and FGD sludge are stored on-site for a thirty-year plant life. G+octlCanna,+ann Turbine ganaratora, steam generators, main and reheat steam systems, • feedwater equipment and pumps, circulating water systems, draft and dust collecting systems, flue gas desulfurization, and chimneys are designed on a single unit basis to eliminate the potential of communi- cation problems between units. Some less sensitive systems are designed on a plant basis, with common facilities serving both the initial unit plus the future second unit. These systems include auxiliary boilers and auxiliary steam distribution systems, cooling tower make-up and service cooling system, coal delivery, stacking and reclaiming, and ash collecting and dewatering systems. The expansion end of the plant is kept open for future construction. A consideration in location of the expansion end is the economical and practical development of the site track system with relation to the local railroad spurs. The overall arrangement provides for adequate spatial requirements of the contractors, including equipment and material laydovn and storage, • The general plant unit type, steam conditions, and rating ware desig- nated by Gilbert. This choice was made considering operating preference, experience, whether base or cycling duty is planned, and what units are cormonly ranufactured for a desired output. The front-ends of the turbine generator units were sized to generate the nominal net electrical output at WO (5% over pressure, where applicable). and 100X electrical load. This was the basic design floc: point, at which all the ocher componeuts were sized. The last stage bucket site was selected to give a back-end loading in the 85% to 95% range. All efficiencies, pressure drops, leakage flows, etc, were chosen based on standard General Electric heat balance procedures. Optimization of pressure drop variables requires considerable calculations and was not accomplished since this is normally done when specific units are chosen for design. The main steam turbine efficiency and the shape of tha expansion line were calculated by the computer program in accordance with • published CE procedures. CAM /CWMV%"V 71 7' 'T 4,. 'k 1} u, i:, e YV~~ ~w~~ 'jt ('1 ~4 i tc.~ " ,gyp SY o [ u Condenser'prassuree were dictated by the cooling toyer pezformance. n a plait site in Texas has not been chosen, a rap Teseiativa Since vacuum of 3.0 inches hg. Abs. was used. Single-tone eondensers ware used in this preliminary phase, hot water production models excepted, but multi-zoned condensers should bconsiOeae60Jor a particular plant. The circulating water was pumped foot head and experienced a 20°F temperature rise from 8)°F. The feedwater heater string forgeaehiunitas Tchosen bas on emperature differencesd practice for the duty p1 (TD's) and Drain collectors (DC's) were chosen by experience as the economic optimum. Extensive optmization is possible it heater sizing once a particular unit and site are chosen, but for these units We of 10°F and TD's were S°F unless there was eMsiderable superheat, in which case the feedwater heaters eontswerehsomewhat liriited by the TD's were smaller. The staging pressures experience on similar units. the turbine vendor and were chosen by e~ the size and extraction Final feedwater temperature was determined by 1 pressure of the highest heater. Since no extractions were taken above ` the cold reheat, the final feedwater temperature was always less than Soo F. A deaerating feedwater heater was placed in all of the heater strings. Its position in the string was determined considering part load performance. The boiler feed pump (BFP) was assumed to have no associated booster pump and was considered to be 80 percent efficient. Turbine-driven boiler feed pumps were used for greater cycle efficiency. :he BFP turbines used extracted cream from the IP-LP crossover, exhausted at 3.5 inches hg.Abs. and were 5; percent efficient. The condensate pump was assumed to be 80 percent efficient. It dis- charged at 100 psi above the deaerator pressure and was motor driven. 6~De11W~*mmwu!tn ITTIPM . temperature Since the feedwatex flow and tem$teauloads, the boiler Was tesized to . was fixed by the eIectricel and superheater, or rehester meet the demands of the economiser, boiler, sections. An additional two percent hest requirement cas added to eflect unaccounted heat losses, radiation and unburned carbon. Excess r air was held at 20 pezcenc, was cylculated by setting the outlet air The air heater performance SSO0F, and restricting temperature to the highest practical temperature, the minimum: to avoid cold end weeping and the flue gas outlet to 280°F, corrosion problems. A leakage of 7 percent was assumed. Auxiliary power requirements were representative of afaasTCdSte= turbine generatiin station. They included cooling tower fuel removal, precipitator, boiler auxiliaries, turbine auxiliaries, and ash handling, and transformer losses. All assumptions have been incorporated into and 111-4 ) includelthes to deterrine station heat Yates. Exhibits pulverized coal plant. . production cost data used for the p The capital cost estimates for the 100 TSw coal-fired plant are presented in table III-A-1 below. Ge~e+t lcomMOn+++r> 1 e , :7 - *,2 s~yi ir 4i'?.4 rte 1 r 4" n N i y ii TABLE III-A-1' CITY OF DENTON Base Load Pulverized Coal unit 100 bJw - Conceptual Ccst Summary 1450 psi(1000 F/1002 F Description Cost (14illioa S Direct Costs 11.1 Steam Generator 8.7 Turbine Generator 27,8 Mechanical Equipment 7.1 Piping Systems 1.6 Instrumentation 6 Control 6.4 Electrical 6.4 Concrete 8.7 Civil, structural, Architectural 1.6 Site Work 74.4 Subtotal Indirect Costs 1.6 © Temporary Construction 6.4 Engineering 8% 3,2 Construction Management 90.6 Subtotal 13.6 Contingency 104.2 (S 2/80) Total Direct and Indirect Costs 1042.0 S/KW Note: Eycluded - Escalation, allowance for funds during constructions owner's costs, sludge pond. Direct costs are shown by category code, a breakdown used by Gilbert Associates for most projects. This code is struct,:red to reveal the most essential cost elements of the estimates especially as they relate to the engineering disciplines, construction building trades, escalation indices and major purchasing groups. Each category code includes both material and labor costs (not shown in this report). W o f6ovaftuv Not shown in this report it s breakdown of costs by Federal Power Commission ' (FPC) accounts, Throughout the industry there are various interpretations of these accounts. However, a general conversion from the Gilbert Associates category code of accounts may be made by multiplying the total direct costs shown in this report by the percentages shown below. FPC Account comet x of-Direct Cost 311 Structures b Improvements 13 312 Boiler Plant Equipment 57 314 Turbine Generator Units 19 315 Accessory Electric Equipment 7 31! Misc. Power Plant Equipment 3 :53 Main Power Transformers I 010 The cost information shown was developed generally by adjusting knoun plant cost information. 1. Historical Costs - Recent estimates of similar coal-fired units were analyzed. Material and labor costs by category were identified. • These costs were compared to each other for variations and reasons. 2. Escalation - All prices were reviewed and adjusted to February 1990 prices wherever necessary. 3. Labor - Labor costs were adjusted using the average area wage rates. 4. Indirects - The costs for indirects were determined as a percent of direct costs. 5. Totals - All of the direct and indirect costs were totalled. These totals were reviewed for overall comparison Witt, existing industry data, previous studies, and specific relevant projects. Where differences were observed, they were investigated further and adjusted as deemed appropriate. Indirect costs include all other costs not readily identified as direct costs, including: Nan f [eftWWU.V C ~ 1. Temporary Cot.atruction Facilities - Often the owner will furnish • facilities to all contractors in order to mirimita duplication and waste, Thace costs are estimated at the rate of two (2) percent of direct costs. 2. Engineering - The costa of all consultants' home office fees is estimated to be eight (8) percent of direct eo:ts. Not included in these costs are Engineering and Environmental studies performed prior to the decision to build a plant and selection of sn A/E firm. 3. Construction Management - The estimated fees to perform the Construction Management services associated with the awarding and administration of lump sum subcontract packages is four (4) percent of direct costs. This is subject to change depending upon the involvement of the owners. j 4. Contino,ency - An allowance of III of direct and indirect costs has been i included to cover unknown cost elements associated with changes to the scope, allowances for variations in assumed pricing basis, rework due to oversights, omissions, and misunderstandings. Contingent} does not include changes to the schedule, variations to overall escalation rates, different size units, special site problems, major code or regulatory changes. The rate at which expenditures are made depends upon the magnitude of capital cost estir,ates, project management contractual arrangements, ant project schedules for the project. For purposes of this study, the pt.,%ration of an environmental report and approval of a specific site are estimated at fifteen m,„ths each for a total of two and one half years. Completion of the cash flow occurs at commercial operation. Revenues generated during testing of the units are not included in this study. The assumed project schedules that are utilized for cash flow projections are generally the same for base loaded or intermediate load plants. Inclucion of FGD systems into the schedules can affect the cash flow in a variety of ways since their construction is not on the critical path. Therefore, it is assumed that plants with FGD systems need not have a significantly different cash flow pattern from low sulfur units. The schedule below shows the project • duration used as the basis for cash flow profiles. 7 7-4 7777'7r7 d Year percent of Total Capital Cost 1 2 2 2 3 4 4 15 5 45 6 26 7 6 The capital costs for the 100 Mw pulverized coal-fired plant reflect reasonable expected costa for a completed plant. The approach used was based on the Gilbert standard design and was intended to be nei;her optimistic or pessi- mistic. For that portion of Case A which evaluates the construction of a 100 Mw coal- fired generating station used in concert with the existing gas fired units, several coal sources were evaluated to arrive at the lowest cost fuel supply. These sources included a western Kentucky coal, barged to Fort Stith, Arkansas, then shipped by rail to a plant site near Denton; a Vew Mexico coal, delivered entirely by rail; and an Oklahoma coal, eelivered by rail. The pricing for three coal options is as follows: 1. Western Kentucky Coal (12,000 Btu/lb., 3% S.) 1980 price F.O.B. mine - $27.00/ton 1980 barge cost - estimated at $5.00/ton 1980 tail cost - estimated at $12.00/ton 1980 handling cost - estimated at $2.00/ton 2. New Mexico coal (9,500 Stu/lb., 1-2x S.) 1980 price F.O.B. mine - $18.00/ton 2980 rail cost is estimated - $23.50/ton 3. Oklahoma coal (10,500 Btu/lb., 2-3k S) 1980 price F.O.B. mine - $23.00/ton 1980 rail cost is estimated - S14.00/ton Gftm 1CO* WW"tr ?1; TABLE III-A-2 CITY OF DEMN ® Coal ?rice Foreeaat $/Mmbtu Weotern Kentucky wel Rail Yandling Total Year Coal Cost Barge F.O.A. Mine - - .208 .500 .083 1.916 1980 1.125 .090 2.080 1981 1.215 .225 .550 .097 2.257 1982 1.312 .243 .650 105 2.450 1983 1.417 .262 .666 , 113 2.659 1984 1.531 .283 , 805 .122 2.886 .732 1985 1.653 .306 . 132 3.133 1986 1.785 .330 •886 . 3.400 1.928 .356 .974 .142 1987 .385 1.072 .154 3.693 1988 2.082 .166 4.010 1989 2.249 •416 1.179 ,179 4.354 1990 21429 .449 1.297 New Mexico Coal Year Coal Cost Rail Tota3 F.O.B. Mine 1980 .947 1.237 2.184 1981 1.023 1.361 2.364 1982 1.105 1.497 2.602 1983 1.193 1.646 2.839 1984 1.288 1.811 3.099 1985 1.391 1.992 3.383 1986 1.503 2.191 3.694 1987 1.623 2.411 4.034 1988 1.753 2.652 4.405 1989 1.893 2.917 4.810 1990 2.045 3.208 5.253 Oklahoma Coal Year Coal Cost Rail Total F.O.B__- Minn 1980 1.095 .667 1.762 1981 1.183 .734 11917 1982 1.277 .807 2.084 1983 1.379 .888 2.267 1984 1.490 .977 2.467 1985 1.609 1.074 2.683 1986 1.738 1.162 2.920 1987 1.877 1.300 3.177 1986 2.027 1.430 3.457 1989 2.189 1.573 3.762 1990 2.364 1.730 4.094 • ~ rco~o~•a~+ As indicated it' Table Iii-A-2, the Oklahoma coal results in the lowest • delivered cost over the time period. The coat advantage of the Oklahoma coal versus the Western Kentucky coal could partially be offset, both in capital and operating costs, given tho higher quality of the Western Kentucky coal. However, for the purpose of this analysis, the Oklahoma coal price projection was utilized. 2. LqK* ring There are two basic types of repowering, boiler repowering and steam turbine repowering. In boiler repowering, combustion turbines are added to an existing fossil fired thermal generating station as additional capacity and as a source of combustion air for the existing boilers, thus replacing the forced draft (FD) fans. In order to accommodate this new configuration, several changes must be made including major boiler alterations, adding a bypass stack, and replacing the air heater with some form of economizer. The size of the combustion turbines is limited by exhaust gas flow into the boiler. Typically, a 15X!85% ratio of combustion turbine output to steam turbine output is used to estimate what size combustion turbines are needed for boiler repowering. Pte- lim.inary calculations have shown that this approach would not be adequate for Denton's power supply needs. This conclusion was based on first, not being able to add sufficient capacity, and second, not gaining enough in heat rate (station efficiency) to offset capital expenditures. The second type of repowering, steam turbine repowering, involves the addition of combustion turbines and replacing the existing boilers with waste heat recovery boilers, thus creating a combined cycle. This new configuration would also necessitate major plant changes including removing the existing boiler and possibly several feeduater heaters to accommodate a waste heat boiler and low level economizers. Typically, steam turbine repowering is considered when boilers are old and in need of extensive repair. However, as fuel costs rise, the value of efficiency is more pronounced and replacement of boilers, which were only recently installed, may be economically feasible. Preliminary analysis bas shown that heat rate improvement me)- well reach 1700 $tu/Kwh which is signi- ficant and could well justify major capital expenditures. Also, because SoNgIcam w*u0 F6600 combustion turbine exhaust flow is being used as a heat source, and • an oxygen source, there are not the same capacity restrictions that ted for boiler repowering. For this study, it was assumed that a w combustion turbine would be added to both the Unit 4 and Unit S r. turbines creating two 120 Mra combined cycle units. ke the fossil fired alternative, repowering does not require a new site. This is a definite advantage in that capital costs are lower, time is saved by not having to perform ctte studies, and many environmental barriers are eliminated. The only site work associated with repowering would be an assessment of the existing Denton Municipal Electric Genera- ting Station. A study would be required to designate the layout of combustion turbines in an area adjoining the existing plant. This area should be as near as possible to Units 4 and 5 to minitiize losses associated with heat transfer from the combustion turbine exhaust to the waste heat boiler. The combined cycle operating conditions have been estimated based on unit data provided by the City of Denton and General Electric combustion turbine data as applied to the STAG combined cycle package. Specific studies would be required should this option be further analyzed. Interfacing the existing steam power turbines with the combined cycle components required information on combustion turbine exhaust conditions and steam turbine inlet conditions. A preliminary thermal cycle analysis i was performed for Unit 4 to deters ine approximate heat rate improvement on a plant basis. The results were assumed to be the same for Unit 5. The steam turbine has an output of 60,000 Mw at steam conditions of 446,575 lbs/hr, 9500F, and 1275 psi. It is being repowered with a combustion turbine having output of 60,000 Kw and exhaust conditions at full power of 1,984,000 lbs/hr and 9500T. The existing heat rates for both the steam turbine and the combustion turbine separately are approximately 11,100 Stu/Kwh. 6ioas Itanwnon«p1N 777 t Exhaust gas from the combustion turbine must be refired to a temperature of approximately 16700F in the ~•aate heat boiler. After passing through • the superheater, evaporator, and economizer sections of the boiler, exhaust gas will enter the stack at approximately 4350F for venting to the atmosphere. The repowered unit will require approximately 708 Mbtu/hr heat input to the combustion turbine and 443 Mbtu/hr heat input to the secondary burners. Gross output is 120,000 Kw (60,000 Kw from steam turbine and 60,000 Kw from combustion turbine) and net output is 116,000 Kw. Unit heat rate at full load was estimated to be 9,400 Stu/Kwh, an improvement of 1700 Stu/Kwh. This configuration has been adopted for Units 4 and 5. It was assumed that Unit 4 repowerinb could be completed in 1985 and Unit 5 in 1987. The repowering construction will require a six month downtime period for uni: conversion, at the and of the construction schedule. For produc- tion costing, this was simulated by retiring the existing 60 Mw unit six months prior to bringing the 120 Mw repowered unit on line. The repowering analysis is highly case specific since new equipment must be sized totally as a function of existing plan'. operating requirements. The objective of this preliminju y analysis was to determine if further analysis is warranted. Several broad assumptions were na s i the course of this preliminary analysis, and before any final made, a comprehensive cycle analysis should be performed. Repowering capital costs are presented in Table III-A-3. Unlike the previous alternative, repowering is a retrofit project which excludes many standard cost categories. Also since the repowering equipment is delivered in package form, most of the labor and materials were not site oriented and were already included in the delivered price. The two primary components in a repowered unit are the combustion turbine and waste heat boiler. As prsviousl+, discussed, auxiliary firing in the waste heat boiler is necessary to obtain the existing throttle steam conditions. It was assumed that all other equipment associated 4-ith this . combined cycle system was included in the above two items. A more Caen f~yumonwnn detailed analysis of this alternative. may show that other major pietas of equipment, such as another heat exchanger, would be required. In this case, an associated in-depth cost engineering analysis could be performed in order to develop more thorough capital costs. The indirect costs were rough estimates which were included primarily to recognise the existence of engineering fees and dismantling costs. The latter consists of labor associated with removal of the existing boilers and ancillary equipment. It was assumed that there will be some salvage value for the existing equipment. Contingencies were estimated at ten (10) percent of direct costs. The total capital cost estimate for repowering one unit was $24 million which has a payment schedule spread over three years where 10% is paid in each of the first two years and the remaining 80% paid on delivery in the third year. TABLE I1I-A-3 0 CITY OF DENTON Ease Load Repowered Unit 120 ?S: - Conceptual Cost Summary Description Cost Ul licn S) Direct Costs Combustion Turbine 9 Waste Beat Boiler with Auxiliary Firing 11 Subtotal 40 Indirect Costs engineering I Dismantling 1 Subtotal 2 Contingency 2 Total Direct and Indirect Costs 24 S/Kw 200 Omen ICanmonWe~tN 3. Combustion Turbines . The same combustion turbines considered in the repowering alternative were analyzed again, only on a "stand-alone" basis. Additional capa- city with relatively short lead time was the strong point of this alter- native, It was rssumed that two years would be sufficient lead time such that the first unit could be on line by 1983. As can be seen from Exhibit III-2, the combustion turbine option precludes the need for short tam purchase power since existing capacity was sufficient through 1982. The second unit has a scheduled on-line date of 1987. Like the repowering alternative, combustion turbine capacity does not require a new site. Furtherr.ore, locating the combustion turbine units on the existing site is not as critical aF with repowering since there are no thermal connections between the units and the main plant. The performance parameters for the combustion turbine units were iden- tical to those analysed in the repowering case. Heat rates were assumed to be approximately 11,000 Btu/Kwh for each unit. No cycling capabilities were assumed which means that the units are either full on or full off. Exhaust conditions were no longer a critical item since heat recovery was not considered. It was expected that the combustion turbine units would serve an inter- mediate/peaking function displacing Units 1 and 2, while Units 3,4, and 5 would carry the base load. As previously discussed, no additional staffing would be required since the combustion turbine units can be operated by tre existing labor force at the Denton plant. The input date for both repowering and combustion turbine units are included in Exhibits III-3 and III-4. Both cases were based on the same combustion turbine unit, but the repowering case also included equipmrit for waste heat recovery. Forced outage rate data was developed from industry standards as were the estimates for 06M costs. These values are prelinirnary estimates for the purpose of developing production costs. Any further analysis would require a gore precise formulation of system operating characteristics. • Wb~Kltemnenrwnr, t. t i Combustion turbine unit capital costs are presented in Table IIT-A-4. The cost of the combustions turbine is the same as'the one discussed in • the repowering alternative. The basic price of $9 million includes water injection, power transformer, EV breaker, erection labor, cartage and foundations. Ten (10) percent of the direct cost was assumed for contingency and other indirect costs. The total of direct and indirect costs came to $9.9 million. The pay- ment schedule covers 2 years where 10% of total cost is paid in the first year and the remainder is paid on delivery in the second year. TABLE III-A-4 CI.' OF DENTON Intermediate Load Combustion Turbine 60 Mw - Conceptual Cost Summary Description Cost (Pillion S e ~ Direct Cost Combustion Turbine 9 Indirect Cost Contingency 0.9 Total Direct and Indirect Costs 9.9 S ~n:w 165 Results of Analysis - The annual energy production, fuel coats aa4 Obl+ coats are presented in Exhibits III-A-l, III-A-2, and III-A-3 for the 100 My coal plant, repowering and combustion turbines, respectively. Fuel, Obl: and total production costs are in current day dollars, i _ 6ne,nrtrn~*o~+R+~ ,07777777~ It was expected that 'annual energy output would be the same for all three cases, ® however, this did not occur due to "night sales," As previously defined, tight sales occur vb en the system load falls below the lowest capacity operating point of the units on line. For the repowering case, the minimum load point was 60 M6, for each unit which was why the energy produced was higher than the other two cases. Short Term Purchase power was used for the 100 Mw Coal Plant alternative and the repowering alternative to meet deficits occurring in the early years before their respective on-line date. The combustion turbines alternative had an early on-line date which precluded the nee° for interim power needs. Exhibit I1I-A-1 shows that a relatively small amount of short term power was needed in 1985 through 1987 with the 100 Mw coal plant coming on line in 1988. As was expected, the Total Production Cost decreased in 1988 due to power production with less expensive fuel. Exhibit III-A-2 shows that short tom purchase power was required in the year preceding the on line date of each repowered unit. This was expected since a six month downtime was required in order to perform the repowering retrofit operations. It appears that the improved heat rate does not significantly reduce the system production costs. This was partially due to the excess energy generated for "night sales." Exhibit III-A-3 shows that combustion turbines have relatively little effect on the production costs. As was expected they provided a simple source of additional capacity without reducing fuel costs. In summary, the three alternatives anal, zed in Case A represent a spectrum of options ranging from simply adding capacity on-site in the form of combustion turbines to construction of a separate coal fired power plant at a new site. The cost/benefit of each alternative will depend on several external fav.ors, primarily the future of natural gas and coal. An in-depth, site specific analysis would be in order should further consideration of these alterantives be required by the City of Denton. • _J tines rGoTmo~.+~~ *,nA ,•r`r e~?r` ^Y 7+ , .i:- "{0 4Aw 4 7.,i- ',ti' 4+ P~,s', t t M ;I;,. H ry .lNd , 1 • t 4J7 j•v? 83U11dIT 111-A•1 ctrY a Darrow COMA-100m c"I P1441 sums 1lOOletlw_tm ern t.nnnrr.n....,... 1990 19x1 1la2 1981 19x4 ileS 19K 19x7 1118 7819 1990 21itACY (>OMS Uait 1 Unit 2 0 0 lot 1,319 1 $30 1,150 5,903 I! 3Sf 0 0 Unit 3 6 2,719 3,7:7 4;442 i,s2d 10,192 22;223 0 ,)K 8,113 37,47! 42,165 27,729 36,299 44,605 ° ° 0 Unit 4 207,149 232,71S 229,912 322,177 325,242 ))9,925 344,612 292266 511 1,009 7,453 Unit S 290,609 304,297 324,96! 216,190 341,4380 364,536 350'"D 111,361 79,!14 02,6 Cw I Plent 39 0 0 0 412,960 172,39! 190,111 208,639 Snort re o purchase 0 0 0 ° 0 0 0 560,051 607,447 6 0 ,571 Tote! 504,794 545,805 S% ,082 ° 736 S,l)3 4 tIS p "-$.576700.380 0 153.336 769,335 411,263 !4),150 I7d,776 912,067 PUk), OU6T (5x1031 Unit 2 Unit 2 0 0 4 65 is 246 361 120 0 0 105 169 275 400 371 0 p 0 Unit 3 164 262 1,702 1,686 1263 1,73! 2,292 1,752 0 0 0 Unit 4 Unit S 5,219 6,664 7,369 12,423 14,,317 13 4,01< 31 44 !49 Coal plant 7,349 8,781 10,730 10,664 ,711 17,011 IS,749 60130 ,126 4984 5,9% 0 0 0 0 0 0 15,0I 16,783 0 10,117 p 21,14! 1IS,061 Short r re r. hrc)u ee 0 !1,900 , 1r+) 21,,!15 ° 3 2s Total 12,732 0 0 64 15,771 1l, 699 25,007 ]0,905 34,9]1 3f,27< 43,910 36,695 42,x71_- 48,765 !"I Cogs (1,131 Units 1.1 1,727 Total P I alu 1,150 1,270 1,425 1,145 2,673 1,795 7,988 1,612 1,601 1,796 !,ISO 1,230 1,]27 1,473 1,543 1,673 1,795 1,954 5,24629 s lii _ 6, 6 00 TVIAL PICr1A)LrIUr (n6i5_(}si0}1 19,667 14,95a 21,026 26,432 32,430 36,610 41,069 4 5,046 4),)36 48,ST4 54,51) TIN pop"",- OUAOL~ ff e~ sr~IWI !1~ 19~l~ 1966 1!67 1!64 1965 tool 1!/] 1960 1!11 0 0 0 G 276 266 7,4SS 0 0 1920 9,616 104 1,313 16.019 li 401 10,110 920 ~ 0 Nf% t 1,717 13S 33,131 ).]1! O 0 0 1,711 14,171 4,317 0 0 0 0 0 17.41! 42,16S 0 0 itd% 451,111 ' .712 116,314 794 211.111 Unit 1 1.336 1,7all 75 ]22,177 l4l,096 76166 43 501 51S 0 Unit 1 231. 221.911 176,193 3951224 6w'.026 699.5'K 713 115,076 200. 0 Unit 3 207.649 104.297 324.169 0 0 0 p ,326 0 y34,993 Un1t 4 290.609 0 0 0 0 175.197 901 067 Unit 5 0 0 0 0 1 796,713 640,471 RerorXeceJ 4 0 0 0 700,40] 76S,W3 o'"Wred S 794 543, 66S 574,062 645.576 dNfe 0 0 51wrt Ten rur 0 0 0 1t Total 17 416 0 0 960 572 130 207 4 LS 1,172 11 IY0 17 1 303 1,720 0 0 0 p rUt~ 0 0 H , o 0 0 105 3 653 0 0 40,003 Unit 1 0 262 1,161 t= 42 6,5 66 1,2N 33.327 35.411 17.103 164 7.569 7.221 3.646 )1,%1 2115 14,433 17,N5 uOtt 2 0 ,219 1,684 10,7)1 10,661 1 0 1!.151 0 11,!55 5 0 0 0 0 0 0 Unit 3 i 6,761 0 p 38 47,617 53,145 Unlt 4 0 0 0 Unit S 0 0 0 TT.337 47,611 Repo.tcccd 4 0 0 0 31,669 33.339 Repot+trtd S 0 150121 19,699 25.001 j at 12 . 713 0$It 61 570 Stwrt T-11' Tvn 441 463 ) 067 ).537 total 956 115 1,161 2 1.526 1.495 1,511 1,719 GM 166 L~?2~ S S iyd[ CtvS7S +107 t,2Stl 7.361 0 0 0 0 9„613 5,141 1.150 0 0 7 564 4,139 Wits I'S 0 0 0 0 1.495 3.469 56.391 OA.008 51,450 0 u 1,366 1.526 4i 6pXa R'r,veled 4 1,258 36.606 40.901 RcruXnrtd S 1.150 37.364 Total i6,987 21,066 26,53) 662 TU[AL PF'cd*)'t1tM WS[S (1a111~] ll, rSMiY 1T Slt-~~3 cITTr a t1 TC a Cat~uatloa Sar►lnas ~.c~ati aannal~ll1171 6!m R1p04aZ 1000 COtT! 1995 1966 1967 !!tt 1989 1950 H10 1911 »et 1961 0914 MOO ll1M ) 0 0 0 0 0 0 0 0 104 0 0 0 0 0 Unit 1 0 0 2,119 0 0 ,766 46.240 75.712 67,611 66 0,,466567 16 ]65,5)5 Unit T 6,736 6,617 7),419 44,209 79.))0 17 3,5,116 292,756 169,052 36,361 491 unit 7 207,649 212,175 226,912 321.511 741 )25, 675004 340.692 310.661 33 21,466 31,115 Unit 4 790,609 106.297 324,66! 776,496 364.595 414,61! 417,004 421, ,!01 714 10,260 16,091 k Dolt s p 0 0 1,353 0 p p 0 7.756 6 196 10 611 l1,01 646.725 671,220 111, GILT 1 p 0 0 CWT 2 S04•Tyy 543,163 594,062 645,576 700,360 133,736 706,735 age'... Total suLL CST Oa1011 0 0 0 G 0 0 p 0 0 p 0 0 0 4 0 0 p 0 022 5.211 unit 1 0 0 LOS 0 1•601 2,375 4.169 4,619 042,,070 013.9 .917 Unit 2 I64 262 1,262 1.76s 1,334 Unit ] 6,666 1.569 12,471 14,11! 15.744 17.111 15,556 20.961 71,314 020 16,166 16,717 71,671 1!,697 TL ,9 5,719 LOSS unit 4 7 xy •,761 10,7]5 10,613 13'161 X461 161 l.76t 1,116 1'`76 Unit S 0 0 0 5l 0 0 0 66 46 752 51.616 5!.651 Ceres 1 0 0 0 0 603 19,050 43,404 CTaa 7 1'2,772 15,725 )9.699 24,967 10.153 34. Total 2 Orr COST l4"101 I'M 1.990 2,159 2•349 720 2,71561 0 240 1,150 1.259 1•10 1,516 {,669 60 50 60 90 120 270 Ito 122 110 Untu 1-5 p 0 p SO 7,897 19-~T'--3.196 U!'CT 1 p 0 0--------0-- 1.971 2,110 7,429 21619 sect 2 - 1,T 59 l,ttl6 1,566 1,779 50,930 56,311 Total 1,150 )l b7 ,151 16,9tl7 21,016 26,57! ,51! 16,176 41,270 45,177 13.582 To7uiAL Y9OOtL,'t1f*1 LOST {50103) n d ..f it $ y'~'~C R1~t 4,~. v ti u 4 1 ~d1 ' fy k 1 M1 7i r S ` i.j1 00*0 ~ i, r 7 ;fir i.. Ss, •t1' u ~ .'-.i ~6 • CASE B - JOINT VENTURE ALTERMTII'ES Denton's future capacity requirements, without continued participation in THPA, as shown in Exhibit III-2, are such that the prospect of joint ownership with another utility in a future generating unit in the late eighties warranted analysis. In order to assess the economic feasibility of a joint venture with another utility a number of personal visits, sanctioned by the Utility Board, were made to selected Texas utilities to both elicit interest of these itilities and obtain the necessary data and information required to analyze this option. The following summarizes the interest of the utilities visited l and data provided for assessing the joint venture alternatives. 1. Central L Southwest Corporation - The meeting with CSW addressed both joint venture and purchase power options with the City of Denton. With the intra, inter-state situation as it related to CSW the investigations were limited to both joint venture and 1 purchase power opportunities with Nest Texas Utilities and Central ` Power 6 Light, both being members of the Texas Interconnected System. For the joint venture option, it was understood that the City of ~ i • ! Denton could purchase a share in one or more of CSW's major late eighties units beginning in 1987. These units are nominal 640 Mw coal or lignite-fired units with one coming on-line each year beginning in 1987. To perform this analysis, the following data was requested from CSw: the year by year estimated capital expenditures for these units, including assumptions on escalation j and allowance for funds during construction, and operating data including heat races, capacity factors and 06Y, expenses. In addition, unit fuel cost projections were requested for all m+w units through 1990. Since the data requested from CSw' did not arrive until May 2, 1980, a joint venture with CSW was not considered for analysis under the Case B joint venture option. • Uten+Corowr ~urv " %"F4 b r ~ L~ ~ ~ u7 r 7 ;~rT~ ~ r ~ 'i• Sri' " r.. •d''' r ~ i i r r i 2. Lover Colorado River Authority = The meeting with.LCRA addressed • I both joint venture and purchase power options with the City of Lenton. Under the joint venture option, LCRA is planning a new i unit, Fayette 03, which is scheduled for commercial operation in ` the late 1986, early 1987 time frame. One prohibiting factor to 3 a joint venture is the option which the City of Austin has with f LCRA whereby they would participate at a 50% level with LCRA, given their particular load requirements. one possibility which does exist is the immediate construction of Fayette $4 which would ' come on-line approximately one year after Fayette 13 if the decision is made within the next year. I 3. Houston Lighting S Power Company - The only option pursued with HL6P is a joint venture alternative since HLO will experience a 1 deficit through 1957 and is actively seeking purchase power options of their o•+n. i 1 For the joint venture option, it appears that HL&P would be I . ! interested in a participatory arrangement for the late 1980's if their system requirements permit. They are planning to add one lignite plant every year after 1985 of approximately 750 Mv's in size. Data requested from HL&P included: the projected capital j and fuel costs associated with these new units along with the heat rate, and 06'4 expenses on a mills /kilowat thour basis. HP&L responded at a late date in a letter that Gilbert was as informed as HP&L on making such estimates and therefore HP&L had no reason I to provide the requested information. 4. Texas Power 6 Light Company - The •seeting with TP&L included investigations into all three possible power supply alternatives. They are the only utility which offers possibilities in all three j areas. Under the joint venture option, TP&L has a company policy which prohibits joint ventures outside cba TU System with any of the k System's lignite facilities. The most probatie choice for joint - G4,>MIcdew""In ~ f J i I .4Y! y. ~ ~ ~ 1~~ S venture would be participation in its western coal units using New Mexico coal and coming on-line in the late 1980'x- This particular option is contingent upon the ability of the potential partner in purchasing its own fuel for use in those units. Another possibility for joint venture would be in projects whereby conversions to western coal were mode at existing natura gas steam generation sites. These conversions would be in the 500 i to 100 Mw range. Information has been obtained fror T?6L concerning their estimated capital cost for the proposed western coal units and the estimated initial fuel cost for those units. - TP&L has been assigned as the 5, Texas Electric Service Company partlc!pating entity for Texas Utilities with the City of Denton ~k for any joint venture projects. 6. Gulf States Utilities - While intended only to pursue the purchase power aspects with GS:, it became apparent during the discussion i ~4.1th GSU that they are actively purusing joint venture projects with municipalities such as the City of Denton. i ` In regards to the joint venture option, GSL' is extremely interested in any arrangement of potential sharing of costs in the take Char%es Units (Nelson 5 and 6) and the River Send Unit in Louisiana. Another joint venture possibility is a lignite plant being built north of Huntsville, Texas. GSU is not a part of the Texas interconnect system at the present time, and since it appears that this issue will not be resolved before 1985, a detailed assessment of a joint venture with GSU is not practical from a planning standpoint at this time. Data received from GSU included: the estimated cost of the Nelson plants and the River Send Nuclear Unit {'•1. They have also provided their power supply program through 1990 and their estimated fuel costs for coal, lignite and #6 oil. • ~eM ~Lommnvrunr nr YJ t r ~ ti Selection of Joint Venture Candidatee•for Studv° , • t After a thorough assessment of the possible joint venture opportunities which may be available to Denton, each prospective participation was screened for I inclusion in Case B as an option. Houston Light 6 Power was eliminated since no specific cost and t operating data relating to the joint venture was provided. Central & Southwest data, although provided, was received too E late to be incorporated in the analysis. Gulf States Utilities was not included as an option because of t'..ie uncertainties associated with the Texas interconnect situation. I 1.''nile there are uncertainties with regard to participation opportunities in Fayette No. 3, LCRA was selected for analvsis since data was readily available to analyze this option. TP&L, whose transmission system interconnects with Denton's, was also selected as an option because of the availability of reasonable data and the proximity of the two systems, The possibility of a joint venture with TP&L involving one of the p:ospective gas/oil conversion units was not considered due to uncertainties and lack of data. It is important to note, however, that analyzing the TP&L and LCRA joint venture options provides a reasonable spectrum of fuels and plant locations of all the joint venture options. I i The resulting joint venture case therefore should be representative for comparison with the other four cases. Case _B__- LCRA - This joint venture case involves the City of Denton and the Lower Colorado River Authority participating in Fayette No. 3, a 400 ?!v lignite-fired unit scheduled for commercial operation in late 1986, sarly 1987. Denton would own a 25% or 100 Mw share in this unit. As mentioned previously, a major prohibiting factor to the joint venture is the option the City of Austin has with LCRA for first refusal on a 50% participation in new Fayette Units. There is also the possibility of the immediate construction of Fayette No. 4 which would come on-line approximately one year after Fayette No. 3 if a decision is made within the next year. For this to occur, LCRA has indicated that it would require a partner(s) and its ~ip~11(pnmpnNlhl . i ec'tiona must be of such a nature to warrant such a decision. load proj 3 • Undoubtedly, Denton's interest in a joint participation in Fayette No. could be a party to influencing such a decision on Fayette No. 4. Construction ` of the Fayette units could possibly be delayed if two of LCRA's cooperative customers form a joint venture for their own generation and transmission, I making available approximately 225 Mw of excess capacity in the LCRA system. Denton's 100 Mw share of Fayette No. 3 would serve as a base load power source `j 'or the City with a 701 capacity factor. Transmission losses of 3 percent have been assumed thereby yielding Denton 97 Mw of net capacity. During periods of maintenance and peak periods, Denton Units 1-5 will be run with E • short-term purchase power from TPSL as required. Exhibit III-B-1 indicates the system requirements from the various energy sou-ces. I j For the years 1980 through 1986, the operating expenses are the same for Case A - coal-fired unit, namely, operation of the Denton units and short term purchases from TP&L. Adjustments have been made in the production 1 costing program beginning in 1987 to reflect the joint participation unit k along with short term puzchaso' power from TP6L. Likewise, the fuel and 0 expenses for the Denton snits have been adjusted by the program to reflect reduced operations. Exhibit III-B-1 summarizes the operating expenses under Case B-LCP.4. The fuel costs for the joint participation have been developed using a full load heat rate of 1019DO Btu per net Rwh. LCRA did not provide lignite costs, therefore, the cost for this fuel was estimated to be the same E as the lignite costs for Gibbonf Creek adjusted to reflect a mining program coming on-line in 1986 and escalated at 8 percent per year instead of ! 7 percent. Variable and fixed non-fuel related O&M exp-uses for Fayette 1,,;. 3 are based on industry developed standards and are escalated at an annual rate of 8 percent. y Denton would be required to obtain a transmission agreement with TP&L in order to wheel the power from LCRA over TP&L's transmission system to the City's I, interconnection with TM. TT4A currently has a transmission agreement with the TU Corpanies which ,sent into effect in January 1979. In order to estimate f wheeling charges that TM would be required to charge Denton for the use of transmission facilities, the °Ikv developed from the TU.-MA Transmission { Asreeme:t was used as a basis. The annual transmission charge developed in - GnDtM1l;pmmptwutta - twr b..n r'r i. a~! 1 r, k1-.j i . this agreement amounts to $8.59/Kw/year based on plant investment as of ` December 31, 1977. In order to reflect increases in the return on transmission facilities and 064 expenses that TP&L would require for wheeling power in 1980, the annual transmission charge was estimated to incresse by 30 percent 1 to $11.17/Kw/year. E The transmission charge was increased by 7.3 percent per year for subsequent years in the study period and assumes that wheeling rates will exhibit the i same rate of increase as non-fuel unit revenue requirements for wholesale power developed in Case E. Table III-B-1 shows the TP&L annual transmission I charges and resulting costs to Denton. I ! TABLE III-B-1 f CITY OF DENTON i ESTIMATED WHEELING COSTS UNDER A TRANSMISSION AGREEMENT WITH TPdL 1987 - 1990 Wheeling Annual ` Charge Rate In''neeling $/Kw/Yr Costs - 51000 i 1 1987 $18.29 $1829 1989 19.63 1963 i 1989 21.06 2106 { 1990 22.60 2260 I` For production costing purposes, wheeling costs are added to fixed O&M and are included in the annual LCRA joint venture O&M cost dollars shown on Exhibit III-B-1. Capital Cost -stimates are presented in Section. IV, Case B for this option. j ~ Case E_ - TPL - The City of Denton and Texas Power 6 Light Company would participate in a joint venture arrangement for a 600 it: western coal-fired unit using New Mexico coal. Denton would own 16-213% or 100 Mw share in this ! unit which is planned for commercial operation in 1988. { The formation of the joint venture is contingent upon Denton obtaining its own fuel supply for use in the coal unit. It is assumed that Denton would be able to do so an' for purposes of analysis it is further assumed that fuel Gntlrt ~.•mmmrure 4 k _.y J k }A 1S . UYY ~ :a 1 S k~ ~ H i rl1~~S ~ A t ) i cos.,would be comparable to' that which TP&L will pay for the Nov hexico coal it is planning on purchasing from the Chaco Energy Company, a subsidiary of Texas Utilities. Denton's 100 ?!w share of the TPSL western coal unit would As in Case B - LCRA, servP as base load power source for the City with a capacity factor of 70%. Denton Units 1-5 and short term purebased rower from TP&L would provide power during peaks and zaintenance periods. Transmission losses haven been es tiiate8-2 ki at 1-112X, yielding Denton 98.5 Mw of net capacity. ' are the system requirements from the various energy sources. Operating expenses for the years 1980 through 1987 are from the operation of the Denton units and short term purchases from TP&L. 1 Exhibit III-B-2 summarizes the operating expenses under Case B-TP&L. The fuel ~I costs for Denton's participation. in the western coal unit have been developed k using a full load heat rate of 10,200 Btu per net W, fuel costs are based on TPbL's estimate of S3.85 per million Btu in 1988, which assumes an annut,l escalation rate of 8'. for the Nev Aexico coal. Non-fuel related 0614 costs for the western coal unit were estimated by Gilbert based on industry developed ' standards and escalated at an annual rate of 8%. Capital cost estimates are presented in Section IV, Case B for this alternative. 1 I ' I k ~ 1I I 1 r C~ian rtom+.,onw+,^. Nino ♦x , t~ if^. I,,yv4 ^~yl c" 1 7r.y,~! - rf t~.,c tC4,^J ,lll u' 7W7 MINIT I11-3 .L lai11~► Irl~ c9l to trltb Ix 8VfT121 IIEQ1100 M AM 1t000CTT011 COSTS 1990 1941 19e.2 1903 1994 1995 1946 I'M 1988 1909 Im ENFR(Y (1 MItZ Ilnlt 1 0 0 106 1,311 1,530 4,250 5,903 0 0 0 0 Unit 1 0 0 2,719 3,121 4,442 1,520 10,102 12 0 0 0 Unlt 3 6,136 0,613 31,419 42,165 21,129 36,296 44,605 605 113 1,009 3,053 14414 4 201,869 232,715 220,912 322,171 325,242 139,925 344,611 63,125 96,414 40,552 03,411 IMIt 5 290,609 3(K,297 324,069 276,19) 3AI,438 364,516 3AO,A60 196,776 161,041 192,561 111,646 UrAA lolnl Venivre 0 0 0 0 0 0 6 546,071 587,070 59'1,151 607,075 Alwrt Term P,nrl+tee 0 0 _ k 0 0 799 2,113 0 0 _0_ 0 TOW 504,794 545,085 594,092 645,576 100,)110 153,336 7A8,335 816,595 846,494 814,210 911,989 IUM CMT.i~wl03j 0n{r 1 0 0 4 65 65 146 366 0 0 0 0 M,It 2 0 0 105 169 225 400 970 1 0 0 O 14,1 t 3 1(A 262 1,262 1,606 1,263 1,738 2,292 33 IO 64 209 16,11 A 5,219 6,694 2,569 11,423 14,311 13,111 11,081 4,465 5161) 4,986 5,534 Unll 9 7,349 8,781 10,736 10,6(4 15,01) 16,783 18,771 10,201 9,598 12,494 14,619 1I:AA Jnlnt Vrotnre 0 0 0 0 0 0 0 10,060 11,)16 12,121 12,969 Slwtt Term rtirrhaee 0 0 0 0 0 60 777 0 0 0 0 TotAI 12,732 15,728 19,699 19,001 30,901 34,9)1 19,274 24,e20 26,551 29,671 33,190 0671 tw,-T it, loll 11n11e 1.5 1,150 1,230 1,321 1.425 1,545 1,61) 1,195 1,520 1,592 1,692 1,605 tl AA JAnt Venime (1) _ 0_ 0 0 0 0 0_ 0 LA) 660__ 6110) __6 395 Tot+) 1,150 1,2)z 1,321 -1,425 1,545 1,677 1,795 6,683 1,212 1.195 9; tq TOTAL rMUV IRM WST :10I13'm 16 95A 21,026 26,4)2 )7,450 36,610 41,069 31,507 3),189 31,466 41,190 ~tt~ 1:11 11,1111 ,r r 4 ,y:'.. a ,..w > i e 'r n ..~n+` 4 r d:5 r r„" r jt1' ^ t., .c s. 7 a r 'F• >,@F r,.':' T lip ? 4. r, u, r ":;~d~ f ..+.h. a.. •.a ~ a,~''~''., s2,r ~ ~.,Ir", r, "C".t s r.. ;.1: ,r ~ i r r°!o a. , (r •z3+,~~^'~E`4 .r }+,F r e~ ~ r t~a,~•^~~ t e 6 r w S>~1!~T~ illp 1,,mInT u1-1-s eellmtf CITY or C16e 1 • JILttt Teptwe vit% TM& S'tM 121017271133 AND POOM 10 aosTs 1980 1981 1962 1963 1984 1983 1966 1967 1788 1989 1990 WIG (I611~ hnlt 1 0 0 101 1,3U 1,530 4,250 3,90) 12,359 0 0 0 tMfl 7 0 0 2,719 1,721 4,462 7,521 10,162 22,221 0 0 0 IM1t ] 6,376 8,61) 37,479 42,165 21,729 34,298 44,6m 73,953 516 1,006 1,057 tlnlt 4 201,849 2)2,775 228,912 321,111 375,262 339,723 364,612 292,166 It4,013 80,140] 8),085 0„Il S 290,409 704,797 324,869 276,191 341,618 164,536 380,840 412,968 175,143 193,113 11),075 11x1. .loint VrnUne 0 0 0 0 0 0 0 0 531,161 603,367 612,162 Fhnrt Ter. MrchaRe 0 0 0 0 0 799 2,173 0 0 Tolnl 306,796 565,865 394,082 ,576 700,780 753,316 768,333 618,28181 7,108 578,285 111,994 ►VF.L C!7C7 (~slOlZ I>n I1 3 0 0 4 65 83 246 366 820 0 0 0 IMIt 2 0 0 103 169 I1S 400 $ib 1.152 0 0 0 11nlt 3 164 262 1,282 1,6% 1,267 1,138 1,292 1.074 31 64 209 Pnit 6 5,219 6,684 1,569 12,42] 14,111 15,711 11,087 IS,SSS 6,653 4,996 5,514 11n 11 S 1,349 8,761 10,738 10,664 15,013 16,183 18,171 21,149 10,287 12,211 14,191 Tr&L Iclnt Venlnre 0 0 9 0 0 0 O 0 12,2)7 25,778 28,434 St,nel Ter. Arlcklce 0 0 0 0 0 60 1)3 )1j 0 0_10 Tnlnl 12,74 15,728 29,679 25,007 30,903 14,937 )9,214 43,910 39,202 ~7,t1i2 48,571 Mt CCSTAu12!1 1,617 I,io2 1,602 8nlee 1-5 1,150 1,230 1,327 1,425 1,545 1,673 1,795 1.950 11x1, .1n lne renl ure _ O _ 0 0 0 0 0 0 _ 0 3,620 4.000 4,79 tn1~l 1,150 1,230 I,R 1 1,475 1,545 1,671 1,795 1,958 5,277 3,692 4,157 TOIAL I'M/blCl[lM p767 (}ti0~ 1),487 14,958 21,024 26,437 32,450 36,610 41,n69 65,666 44,641 48,974 S4,J2S . y o ~ r ~ - ' h P , d v ~ ~ Y. 4 4 w.j w n ~ iv~q`;. u.4 P r Ci v v 1 i s a ~`u ."a ~ i ii d h P ~ C~ ~ ; C _ ^ ~ tt~,,µ ,y t.. ~ ~ , L l f • Y p, -.777717, -F I W 77 7,~ . CASE C - CONTINUED OPERATION WITH 1'MPA In 1975, the Denton City Council elected to become a member of the Texas Municipal Power Agency (TMPA), which comprises the cities of Garland, Greenville, Denton, and Bryan. The basic objective in forming TMPA was to provide power supply resources through joint venture efforts which would be more economically attractive and electrically reliable than if the cities has acted independently. At this time there is no reason to restate the history of the organization or the reasons behind Denton's decision to particpate in this Agr~zcy. That the continued operation of Denton's electric utility is contingent upon the development and maturing of this Agency is a well established fact. It is necessary however, to establish the present situation with TMPA as it effects not only Denton but the other cities. The City of Denton along with the other three cities have approved three major projects in relationship to the Texas Municipal Power Agency. Utt e projects include: the construction of a 400 MW lignite fired power plant, along with the associated costs of mining and developing the fuel source; the participation in ownership with Texas Utili_ies Company in the Commanche Peak Nuclear Station; and system development and reliability espend'tures consisting mainly of costs relating to transmission and commwiicr•tion facilities. All of these projects are presently under construction with the first Commanche Peak unit scheduled for commercial operation in 1982. The second Commanche Peak unit is scheduled for late 1983 or early 1984, while the Gibbons Creek Project is scheduled for commercial operation in 1983. The three generating sources are tied to an elaborate transmission system to ensure a reliable supply of electricity to the participating entities. Once these projects are completed, TMPA does not anticipate any other major projects until the late 1980's or early 1990's depending upon the system requirements of the four cities. 6~rt I tome+oe+~+~ • System Requirements , Based o,: the lnad forecast conducted by Gilbert Associates, the demand and I energy requirements for the City of Denton have been reduced substantially from the official statement presented in 1919. In addition, the load forecast conducted by Stone & Webster for their power supply study of TMPA f resulted in decreases for both Garland and Greenville from the previous 1 official statement. Only Bryan has experienced an increase in energy requirements from that statement. Incorporating Denton's load forecast along with the Stone & Webster projections presented in the power supply study, the new combined cities energy forecast is presented in Exhibit III-C-1. Beginning in 1983, with the commercial operation of I Commanche Peak, transmission losses amounting to 3% per year have been calculated for all cities except Bryan. The official statement prepared by ThPA did not recognize these losses, but with the reduction in the load forecast, the energy to be supplied remains rel&tively the same. I Sources of Supply in 1981, with the beginning of the economic dispitch system for the TMPA i participants, the City of Denton will not be required to generate substantial amounts of electricity for the Agency. Exhibit III-C-2 is presented to indicate the total amounts of Denton generation based on the credit from TIPA and the cost of Denton's generation. Specific data which k delineated Denton's generation was not available from the Agency's consultants. During 1981 and 1982 most of Denton's base load generation will be supplied by the City of Garland's more efficient units. Beginning in 1983 with the commercial operation of Commanche Peak, substantially less will be required of the City of Denton. The generation amounts do grow from that period requiring Denton to maintain its generation units. At no time during the decade is Denton required to supply more than 4% of its own requirements. Denton's units will be used primarily as peaking units for itself and the other cities. • 6doe+trcomnanratV. - 7777 F ptratiag Results 3f T3lPA o develop the total operating cost for the City of Denton, it is ssary to project THPA's operating costs through the 1990 period. 9 Official Statement, the Agency's Consultants, R. W. Beck and , presented Table A-20 which is a projection of THPA's total operating cost through 1988. From the date of that Official Statement until now, several major changes have occurred which affect the results presented therein. A request was made to the Agency's consultants to provide Gilbert with a new projected operating results fof TMPA. At the time of this report, changes were being made to the computer program used in developing that table, and as a result they were only able to supply the production expenses associated with the fuel and other variables for the Agency units and the City's units through 1990. Since those two items comprised over 90% of the total operating cost of IVA, the previously stated expense items were used from the Official Statement, and forecasted for the last two years based on the historical trend for those items. Since the total cost of power to the cities is a function of operating expenses plus financial costs, it was also necessary to make some assumptions regarding interest income, debt service, and renewals and replacements to arrive at a total cos: of power to the cities. Interest income was again based on the results shown in Table A-20 of the Official Statement through 1988. For the last two years it has been increased based on the relationship between interest income and net operating revenues. At the beginning of April a new Capital Cost Estimate was published by the Agency and is presented in Exhibit III-C-3. The total capital expenditures for the three major projects is estimated at $1,115,000,000. Based on that amount of capital costs, which includes the financing cost, it was assumed that the debt service requirements would be at the same rate as the previously issued bonds. The rate was then applied to the total capital cost resulting in a debt service requirement of $39,800,000 in 1984. The debt service requirements were then escalated at 2.5% per year in G+anlfan~+orwun~ ,*Q, 777777177, TA VT- T- 50 r,~ 41 1 •(4 7a'+ uLH f • recognition of continued 'growth of the Agracy. One final tree which was adjusted was the renewal's and replacements for the 1989-90 period. These amounts were increased by 3% per year from the 1988 figure. Exhibit III-C-4 is therefore presented to show the TMPA projected operating results through 1990. The total cost of power to the cities is based on the previously adjusted sales to the cities including transmission losses. The cost of power ranges from 30.83 mills/KWH to 54.07 mills/KW in 1990. There is a significant jump in the cost of power beginning in 1984, over the 1983 cost, as a result of the substantial increase in debt service requirements for the Agency's three major projects. As a result of this analysis, it is indicated that the cost of power to the cities will only increase by 12% from the 1984-1990 period. This is believed to be an accurate level of increase as lignite fuel and nuclear fuel replace the higher cost of gas requirements of the cities. The resulting cost per kilowatt hour for each year is then used in developing the purchased power cost for the City of Denton. The Gilbert . forecast plus the 3% transmission losses is used to arrive at the total s%stem requirements previously shown on Exhibit III-C-1. In developing the tc W operating expenses for the City of Denton, in addition to the purchased power expenses from TMPA, the fixed 00 expenses associated with Denton's generation were estimated on a year by year basis. In 1980 the fixed OEM has been estimated at $946,000. This was then escalated by 51 per },ear, which is a composite of higher labor increases with reducticiis in the staff, to account for the decreased use of Denton's generation. The ether operating expenses, transmission and distribution, customer accounts and sales, and administrative and general, have been provided by the City of Denton's staff and are based on dollar per customer amounts escalated and applied to the increase in customer numbers. Exhibit III-C-5 provides the '.otal operating expenses for the City of Denton under its continued operation with the Texas Municipal Power Agency. CmertfCoemonre~RA ¢ i t t. S r , 7-r6w'! iY!'hivf~„y'.'IV~ 9 r1 rj iw~'rk+~ff ;r,. w.'~.~. F yr, NS, y•.; ,~+,Y Jt ^ DF ~•xY 'j•., J "lr ,t 4.. gg r, r~ w Y",~' f ,~M, ,Y S, y g`ro r 'r ~ r ~ X e~ t f,~ ,F Fq „1''. t y"`~" ry v , y:, r y': ;1'Nr + r C;. Y i~ 'i ..9 Y Y ( y~,y..`. "t:,~,i 'it } r...°'~ _ ; Jr + > Y 1 cY1 S~ ;fti .f 7.~.i + 55 ~ r Yc,r i~ r + • +~,,1r ,1„ 7 R e r, T S'.. r + r +ti. • a lc~ ,S.', 1 , ^ ~ . +i ,~~~•R~kc Y~~. i +~',i'y i+ N8 (°~l~N., F' `'x}F ~';"~d'k'i4:.,: ( ~h `..~d 4 ~ 1 5 y T fJallhr 1u-e-► c[n n. oarn~r cl~di Ca*laed cit168 Gletrr ►ores~s► T11M Smw 51AL71912113PL'3 1960 1981 1912 198) M4 Ives 1986 1917 1988 1969 1990 LNF3L:Y ML LRI FXYS 496,146 $55,681 626,117 614,514 722,625 710,714 123,149 673,514 928,018 906,453 1,012,688 lkrctun 503,063 $44.512 593,665 644,459 696,429 750,872 764,166 513,710 644,504 116,011 901,751 I'.atl•+nd 1,405,615 1,469,906 1,576,259 1,664,309 1.754.496 1,846,025 1,940,099 2,035,255 21132.93S 2,73{,650 1,31),174 6 growl lie 246,262 254.111 243,45e 272,514 111.892 291,604 301,900 312,570 323,632 735,101 V.6,990 "PA Coney PtgolrtWAA 2.651,069 2,545.010 1,059.699 3.255.798 3,455,947 3.659.215 3.849,314 4,037,119 4,229.089 4,423.261 4,621,119 T.anwlsslwt L6asc. 17,431 12.000 86,655 90,185 94,648 99,012 103,215 101,661 T0i4L _C70x0Y TO 3l[ S2t710,11D 2,653,069 2,845,010 3,059,699 3,333,236 ),537,942 3,145,670 7,940,099 4,132,027 4,328,121 4,526,516 4,719,471 r r yT~ bY.l.' 5j P v' 1 y Y'~Sf, A .,+'Y S~'{',$' +r~ n.7M M1.T AAY.r, Vxa!' ' . V 1s [ C ~1 r r t w'44 l r ` 1 Nr J 'r y$, r k w r ..k K 1 ~t;r~, d4 n, :i;a x .I ;4:.~i r'v ,.eye w d orb r..,~i~ ,tiT. 1'7 _1$ rGy li~.~ c,A. a' IJ r,.e;A Y Y~'~ }r v, F Ilk u .x~ 4"~ Ciax } r1~0 rS t y Fr ;~j r~ 'f 'c., 'i v ~i+ .'~a'~1t p~r t'I YC rr rx~ ~ r 8i i 'F ! a !f 777 ~'r' ♦ S J ,0. f - s~. r~, ~ Yr > J 0116tT I11-C- urtao" City'e System R(Titremei7tn Source of 0102211y _ bFN1'OI Slsi'1'1.jF,0 BY I1FNW T(N ~r rSfINATFI) UWA AR ~ CR}~ F1tT F R11N IiFNTON RFQI11 RFIIFN'fS TNI'A COST/KNII (2) f•FNFRATION r PURAI'S) 544.5 42P.1 3,35701 28.8 115.8 198! 593.7 423.9 IO9(1) 33.35 lfi7.fl 1'182 2.8 663.11 661.0 1983 109(1) 38.99 5.3 717.8 112.5 938(1) /14.51 1784 5.4 713.4 768.0 19115 254(1) 116.81 9.1 881.7 198.0 11,'86 488(1) 50.26 838.2 870.8 1981 938(1) 53.94 17. PG9.8 841.6 192112(1) 57.85 22.2 1988 27.1 902.4 815.3 1789 I,683(7) 62.30 og6.0 30.0 936.0 1990 19998(2) 65.59 N(nFS: (1) Sui•p11ed by R. W. Beck (7) 1lcvetaped by CAI - Fuel Cost Only . uTr 77 77 e • E}~iiBI3 III-C-3 CI1Y OF DENTON T*?A Capital Ea-peaditures (000'x} PROJECTIITE?S GIBBONS CREEK COMANCHE SDR T07AL PEAK 591,696 122,499 71,209 78;1404 Capital Cost Ir.:erest Dti;ring Construction 147,332 32,958 10,966 191,256 66,862 15,350 71691 89,903 Reserve Fund 0 2,VOO 0 2,000 Cc: tinFenc.• Fund Working Capital 10,000 3,442 1,424 14,866 0 2,113 7rpac: ra7'aarts 21113 Tinancial, Legal L O:'ner 21,893 !4,664 2,777 29,394 639,E96 18.^,993 94,067 1,114,896 :orals • ,ter v J.,f r ^s a ft"}S./~' n N I p". ~'...,.rY.i°t9 i, it N t 1tnR.: ~'7+t r: ~,.iv r" f~'~~i';?~i •"X'x ,,r ''„1''.K~~~W ~ y„ l'F{"~'• w;.' ,:.~r,V f , qp e I [ , S M •T . J Y' i,':Y (C,"Y~' a >F a F. rr' ~'.•.+K. f ell .v rl.}Ycfa i , r J . i L': 'i 1'. ~t' I, . I •r" lYr, ..rl'. r.i, i. it L't '~~''~.J., `PJ 7• }..G '1, . u~Y-.;n of ,.rr'rtF .~i.',q y ,p1, 1', 1,;';4'y.~.Lvin '.''1 i'!r yr 'lia ,~d'.. "f '.,,A } '~'',L .Y}, ;..":a r ~Ir i'~'.,Tv~./D¢.6. {~1i,.. i~'?$ 1[ J,d_,hJ~ •~ry x.'71'+.rrl^!1da`1~, rk f '.~Y .~~~Y, ~i~'~~~. .~~[?T r ;,,~h ~ ,V'., .'y i w CS r R.~.. '0 , " . ~7t. , . n.. r ''17 ~ ' r I :a! ~ f'~ y, ~Y~~ 4 i t v t 'ri 2 'I ~ l ' 1 "r' D u ~ t rr,'.• , • R:'. f L n eY 'r r ; .,Yp If .NU~, , n! V i 'U. fi88 [ I eti•f ~ r' f i L .e it 4 Y n• y [ +4'. I r.ll I~.{ .'S A' r c 1 I 1 1 , [ i~ . SIIM frojecurd ra}Ia1 191 1913 - If~O 1,191 Ills H 1910 qTj- 191] 71 21Z,41S 104.844 220.051 21<,115 fS6,N1 f - ti 115 101,]71 137,N6 111.041 290.419 a.aa t1 TO 012114 ~ 9t SI,N) QT3)ASiNG [NI>t 1242L1 47.111 41,111 od„rlluqk Exprars/r 32,014 )7.752 76,112 71,,351751 10,004 10,109 17.454 The Agana wits - 7>A 1.44] T1,It1 1,635 1,110 11542 9 Twl sad Otber vatla6las 615 4.u1 6'~7 52,24! • /,162 Piled 1" 31 du :~.~a li•~+ ms L~-019 210 tattler Unit/ 1~ l 61,W7 ~I~ Purl sod OtAst vallalln 64'416 9 ,515 Total fruJuction Expect// 1 5µl 10,041 10.541 11,011 1,04E 1.543 7.131 1,24E 1,546 1 y 6 2,422 1,101 ' 2,121 floa•hoducl lot [a peatut 1.009 4,149 ,304 2.411 2.421 2.574 1.~06 Ttantalsstun, OEM 276 FA0 2 1S•iji I6,S99 II'm ln+ursne• ..1+ 11. 121 17 614 - 14.417 A datalatrs.iee ► General 2 101 Il j1i 14.706 1015,119 6,lµ 130,196 171,441 155,44E Total lloa•Pro)ud Iwr p,pensea 71,531 17,151 11,]76 86,171 17,51] 131,11] total Opetatln6 Dcduatlnnr S4 556 IDS,79T 108,101 110,662 I13.U1] 115.971 21`,O~ 6,21) 776 10.145 6,960 1,716 1,102 1.151 170.125 2,IH 5,615 6,417 115,06) 111,131 110,115 11).p7 131.000 {13,150 Net opeut{n6 Neveooea 912 59,913 t>a .100 l P1.'1: [nt retest lu•'naw 1,646 11,920 99,190 101.600 Total Anflallr for Debt $arvle/ 19.100 17,050 941750 16'300 1,33 1.15 1.15 1,316 10i]?( . 47,916 1.15 t,75 7.75 1.25 %.IS 1.25 24,115 35.400 26,01S Ge6t farvlu 14,{17 7.111 Coverage 11,995512 77,450 2),Oi) Z] 7.539 3,519 ),NS 10 o[ /vvenuua ]223 ) 51) ) 7.Sµ 5.7gt 1,717 7.4 566 23 21,1)5 22,19! 5a{arna 30,106 20,456 1{.756 less: Irrx Y.+IJ ud lrplacawnts 7 1,7)1 5.60) 19,166 19,1)0 N.I Aevenoe Aval6.Lle lut tx ber PutyCU t 220,057 336,716 756,191 377,415 81.716 106,336 IJ],e96 119,046 190.479 T04,ie1 2 .2~ - _ - (;(l irP TtA7lR Lt7 clrt[s _ 1 , 326, 2171 1,335576 , , 55376 ♦,2 t Ol. r+llnP Revvnu.r •--171. 41 (7{.191 131,471 lrn: hlw Y.ara Mavvuwt Awll+4le for O.P. O1,TIS 1011.)1 13{,175 5]1,947 1,145.110 7099 4 112 021 4']71,41.91 SL91 54.07 Gut of Pwer 7.645.010 ),055,699 1.7)),276 7. 43.7) 46.99 46 J9 )5.41 71.51 46.70 baler to Clrle/ 70,63 Covt of Pw" F M311t/Pu1. ~ n , '.i,~~: Y~f r. .R ^11~,$•.y i".A r,.•« + r' ~ ! i'`~v9 r.: G i ^y y?~'L~{t17 :~,1\ g4r~y~~~:5, rlb. 1. « F v,j~~•~, '.E .R•~ f`3:rr' ,Y Y « ~'t r"5.:: f i, x ,I~, d ' i19,.~., •C ' , 1L. i ~ ~n ~ v, 1., , Yr`• r' :y~'. L f SS q yn u kiri y, "w ,.v .11 i iFf 1e Sar -1.; « .1~A r~ .,i,{{1 el r-,~ R ,1« f .'Jd„v P$ ' 7C y y 1`._ p' F' r} I` i i.,.. p 4.:.~ h..:y.. « q, it r x. r\ly rin[1j^ t ~ it i. YI.L'1.r~ l' r,.... "{"1.':,,\ ~ 3, .^X, ~ . py.N. N. + fi'r' :7: r'Ri f. ~ V 'I Jul )r1.4 vn~'n! LV*'~~!'.,,: M1„rk~~ .F.~~4 JI,.\f ,k h ,a, ,'4,}~` r'Iy'~. d7. t Ai ~rv. l~ }Y,. ~ 1 Si.,Y!~r. irY en! ,i v.,....;;.~ a h ,w.. ~..4rJ s .t"~".., 5ay,'.• , ~,d!r ~rY ~~r ri V, ,f :C b i'~•.i ~ " r f f v d a v.l ~ n , IMUMULLU cill Silly 0 - c-M q-"A-PSlli11R11i'~M or►au~l f ~r_ _r.R rr)rsr.~ rtalocc(on rrrl A olbrr Ynrlnhlre 3,151 5,664 109 710 254 4111 914 1,787 I,h01 1,078 C,r,llt 1r,w 111rA (1,157) (3,664) (10'1) (216) (254) (AAA) (914) (1,241) (1,601) 11,97111 nlhrr (VII 991 1,041 1,095 1,150 1,201 1,768 1,111 1,198 1,46A 1,541 Twrbernl Trtrr lrrw 111rA 151701 211023 LWIJ X3`361 ~1_,7~) 40rS6s LbV? 46A/_4 SO i6 (1 3n1n1 rrrd„rllnn 11,180 22,0('6 21,168 33,614 36,514 39,221 41,491 44,810 40,144 17,117 3rnn•.wl%nlon A P)ettlh„Hon 1,04R 1,210 1,19) (,390 1,016 2,019 7,11( 7,444 2,710 1,OIM row,mr•r Arrnrlnln 6 Se10e 010 936 1,019 1,731 I,414 1,561 1,120 1,9011 1,101 7,11% A«Mllnlelrnl(rr 6 0rnrrnl 413 --A14 -5}0 _ 6JA 721 - Jgl --el ZJJ _1Lo014 Ir1715 fotoo l Orrr el ln0 r>. PC"? CS 20,049 24,690 30,170 39,144 40,515 41,600 46,111 50,14{ 34,741 SR,A67 u x'i a r r ~i. f `w ^ 'e. 1' x ki r1+ ♦ 4.''~A fsr M Ak V t V i of s h 1 rr Y' $ r If ' il ~ M ~ qi1' +l pp c 1 r A ( t ~ ~~r 7 v T ~ rl T: r 1"' f,' 1 .rvu M t1~ y~ t 'T ~ r y 'f .y a f}' x } ^"3 ~ 1k f :t! fd~ [ r ~r " ux 'V Wj f~'J v 1` ~ J~~ ~y A! ~ 1~ 4 1 tl d 1 ~ $ t V i 'ty 0~ v5 t~~ 4 v w r i 7',r f : V M1.1" n ! ~ ~ 1w ~ 1 n tr. ~ ~ c.' ° r I~ ~ '1~ . 1 ~ ! l Tr ~'l Y : 1• 1 ~ r ti . k„~ } : ~V~r d- . i •;1 i J✓tir' ~ ~a.:i dJ Mfr Ir ~~i MYJ 4 0 ',Fy7.E, iC l4 ',~i r '7F i~ c r~~~~bI~~J J~y~} a 1 r 1. n ~ r rcpr n~ ~,p V W~ i x a: t, r i ,C~, t f ~ rM1 ! ~ r [ , , t p,r} >i S y9 J 1.,a. 1"p + 5 M; ~Y~' J r N a~~~irj ~~~yy~j, t i r, J~Y~i D v v I ~ 4 6+ ~ ~:~i n " ~~r~, d " ° 1yk ~ «.e ♦ ~ ~ J 1`l i., k fM i r u~'- la."~tY"1•er ~.~J r f•~G{ ~n .r 11 ~f4 vrJ{q~~'~ M,d ~ a~'wl ~'rPr' '4 i. ,w Iit li.. f~" J~ ' l ,~t,~ : tbw o ItoN_s 10 Based on the demand/enet`Y forecast ana without continued Participati" ~n % TXt-E-~ ditiondi'` pa+rhr a~; t6r1y a1 1983. Tole T!lPA, aebt0W,V y1' `reQu3ira 64 1: 11, bs160 idekifies Denton,I power reduiroonts without on urd p6rtioigstioa in TWIA thrbushout the study Period$ TABU 111-R-1 CITY OF DR?M'OK .uiraoents " 1480-1440 Capacity ReA (Vithout THPA) Year Peak Demand Peak Demand Deficits Plug 15% Ragerves 1980 116,7 197 0 168 0 1981 128A 161 0 1982 140,0 2 1983 152'0 1171 75 16 1984 16414 204 31 1485 177,1 213 40 1986 18510 221 48 1987 191.9 224 56 1988 194.2 238 65 1989 206.6 246 73 1990 214.3 s Based on 173 Mw installed rapacity with no ratiremeuts, rot power supply analysis, three possible purchase power alternatives would be of interest to the City of Denton. These altarnatives ineluda: (1) firm power purchases of specific blocks of power; (2) wholeaala for resale whereby the complate requirements of Denton are supplied by another utility; and (3) short term power purchases as required. An analysis of Denton's capacity requirements indicates that block power purchases which best mast Denton's capacity deficits and minimum load require- ments are as foliowsi 1982-1984 so My 1985-1987 75 Mw 1988-1990 100 Mir AV 1, 7' In order to assess the feasibility and economics of the purchase power and wholesale power options, personal visits were made to selected Texas utilities to both elicit interest of these utilities and obtain the necessary data and information required to analyte these options. The following summarites the interest displayed and the information provided by the utilities on the purchase power options. 1. Dallas Power b Light Company - The meeting held with DPBL wax intended to pursue any purchase power arrangements which would be possible between the City of Dento-a and DP&L. From this discussion with DP&L, it was apparent that the Company would not be in a position to provide substantial. amounts of purchase power to the City of Denton through the stu6y period. Denton, through THPA, is a party to some economy power available in the early and mid 1980's. Denton itself would be placed in a lower priority than TI and would not, in all probability, be supplied this economy power. The economy rate schedule was requested from DP&L which Denton could possibly fall under given the availability of such power but never received. At the present time, DP 6L does not have any wholesale rate with other utilities or municipalities. Any purchase power received from DPbL would be based on the embedded cost of the particular transmission facilities plus the average embedded cost of its generation facilities at that time. Given that DP61 does not have any contract demand or wholesale rates at the present time, and the fact that economy power has little or no likelihood of being allocated to the City of Denton, it is the consultants' opinion that none of the power supply alternatives are feasible in connection with DP&L at this time, 2. Central 6 6 vthwest_Corporation - Under the purchase power options, CSW* is foreseen as providing two possible alternatives, These alter- natives would include either firm power purchases in blocks of firm frAxS ltaiwronwnna power, or wholesale POW $r whereby the complete requisemsOf Denton are supplied by one of CSW's ccmpsniss. Also$ during the short (1981-1984), CSh' is anticipating excess power and could possibly supply Denton during that period with small amounts of power.igThCiexist hg wholesale raft schedules for thewith or~y firm pear races which they corporation was requested along now have. Also requested was the annual generation mix and fuel mix through 1990 and the targeted capital structure of the corporation, The data requested we$ not received until May 10, 1980 and therefore it was too late to include C purchased power. However, a sensitivity analysis was performed on the existing wholesale rates of West Texas Utilities and Central Power & Light Company, 3, Lower rsdo River Authorit• - Under purchase power options involving LCRA, it was concluded that the legislative to Ecte~ipow~dandgenergyg the Authority prohibits the selling It does not, on t wholesale basis outside sales to outside powerCczrshort'termterritory. however, prohibit emergency utilities, One situation which could lead to excess power on the LCRA system is the recent investigation by two of LCRA's cooperative customers to form a joint venture of their own for generation and transmission. Tnis would lead to approximately 225 Mv's of excess power which could be delivered to a point within LCRA's territory and wheeled to the City of Denton. 4, Gulf States Utilities - The possibility of any purchase power with GSU was eliminated due to the between GSU and other of sub- stantial in Texas, This is stransmission costs in order for Denton to tie with GSU, 5, Texas Power b Light Cot~pan5' - Under purchase power options, TP&L, during the 1980 to 1984 period, is experiencing relatively high reserve margins and exhibited interest in an annual contract for purchase power during the earlier years, However, this energy would be based on oil or natural ye,n rcem~enr«h► k L r , x ;r AIM 1, 77 _ t 4ar ti; T• ' Y y r e7nou n~• .,c~ ! pn h,f 7_ ~ et r 4• .q G.'. 7 v f b• P During the letter Pitt of gee as a fuel for most periods of the year. the 1980's, TM would be interested in possible firm contracts glom the particulars surrounding their system requirements and reserve orslas. The wholesale power rates presently in affect, and used for analysis. 6. Texas Electric Service ComDanY - TESCO's wholesale power rates were compared against TP6L's. Each operates independently from the other and there does exist sus differential between their purchase power rates. ar TESCO does not have firm rates. a~ntoaevaluateith~purcha:edlpowmix for TESCO through 1990 ware received so options. ML Wholesale Rate Development A revenue requirements approach was used tg develop a reasonable estimate of the wholesala rates TM would charge Denton over the study period. The approach involved projecting additions aportionrofethe resulting natdplantn and transr.iasion plant and allocating e as a percentage of the to Denton based on Denton's peak load in each year corbined Denton and TF6L peak demand. A more complete detailed description of the revenue requirements approach can be found in section V of this report. Exhibit III-E-1 shows the resulting Ellocation of the portion of the TM transmission and production plant ''-located to Denton, along with future addi- tions to arrive at an approximate rate base and an estimate of the return TM would require each year. In order to arrive at the revenue requirements figures upon which wholesale rates would be based, prorated estimates of operating expenses and income taxes were made and aided to the calculated return estimates. Fuel cost estimates were based on TM fuel costs, the company's fuel mix projections, and escalated fuel cost estimates developed by Gilbert. The resulting weighted average annual fuel cost in mills/Kwhr wet then applied to Denton enargy requirements including distribution losses. 6~lUonurnn+ulN r;+M ir. .p~C1 Ll~i i~ ~Nxq 7^ ~ s' M t twl coats from the total t BY aubttacting the annual avenue xequiremeots gives thet► onion of the revenue Yegvlsamet►ta wrhieb covers °usto"s c arseis ' al that P .fuel related energy charges, This amount average nano demand charges and non requiramenta to arrive at a roximation divided by DentOn'a annual energy r• bass rate in millolXwh=. This puce bane rata would be an p4 4u would have to charge Denton for w'holesal• Pow! uitad of the average amount TpbL in order Cost of the to earn a fair retort' on the costs e eociated with thesetfacilitiasx to provide the power, and recover 06M costs ated 'p-500 on file with the Texas VUC er rate design provides to municipals for p&L has wholesale Pow T, applicable to existing power the com4esY power rate which is filed for an increase in the wholesale ortx resale. TPbL had the preparation of this report, the rate case which increase settled during wholesale rate was obtained, of the proyected The analysis assumes that based on al 1979 test Ye+ ! A prieeout The wholesale requirements, based or the proposed proposed income is In r. 1980 Dentou peak loads and energy average annual pure base rate of 16.15 mill! increase lyeSelds an early by the percents" sate filing. Y was increased yearly the required return, this ana,$ when this rata bL was earning which assumed TP since in the calculated base rate fuel were within 5 percent of each ot7 close to the the total rates including sic produced rates eased which were ver operating cost" were the revenue requirements ana ) e increase in the ]ant additions and incr Tp&L proposed rate wnen p early percenteg factored in, it was decided to apply the Y to the filed torputed base rate rate, distribution requirements inclu~!itost for the Table III-T-Z shows Denton 's annual energy and 9nn".- Cost for the e cnnuxl wholesale rate ed averag losses, the estimat 100., TP6L wholesale power case • C~ 1Ca~p^w'M 77 TABLE III-E-2 CITY OF DENTON Energy Requirements and Annual Costs for 100% Wholesale Power From TPdL - 1981-1990 Year Annual Average Annual TP&L Annual Wholesale Energy Wholesale Power Rate Power Cost Requirements (Mwh_)_,_ _ (Yd11s/Kwh) (51.000) 1981 544,512 35.31 199227 1982 593,665 38.76 239010 1983 644,459 41.40 26,681 1984 696,929 44.97 31,341 1985 705,872 45.99 34,533 1986 784,166 49.10 380503 1987 813,770 53.51 43,545 1988 844,504 56.69 47,875 1989 876,087 60.27 52,802 1990 908,757 65.61 59,624 a Includes distribution losses. Firm Purchased Power from TP&L a As previously stated, Denton's capacity requirements are such that block power purchases which beat meet the City's capacity shortfalls and minimum. load requirements are as follows: 1982-1984 50 Mso 1985-1987 75 Mw 1988-1990 100 Mw In order to deterr,ine an estimate of the firm power rates TP&L would be required to charge Denton for block purchases, a revenue requirements analysis similar to that performed for the wholesale rate development was utilized. Exhibit III-E-2 shows the development of the firm purchased power rates for the study period. The mechanics utilized for developing the annual revenue require- ments are the same as those described for the TP&L wholesale rate development. Since TM did not provide any firm purchased power rates, the average annual purchased power rates were developed directly from estimated revenue require- ments by dividing the annual revenue requirements figures by the annual energy to be received from the purchase. Fuel cost estimates for the firm purchase power case are based on TPdL natural gas price estimates providing this capa- city from its oil and gas fired units. Unit prices for fuel were based on the natural gas prices estimated for Denton's Units 1-5. Cnoert ltenm~a+rarcr A basic assumption in the developt*nt of the rate is that Denton would utilise the pow&% purchase around the clock 365 days a year which equates to a load factor of 100%, The estimated rates serve to input to the production costing program Oire the program distatthes the firm purchases as bass load power, The program assumes that the demand charge is paid monthly and fuel costa associated with the purchases are based on actual kilowatthours received. System requirements from the Denton Units and firm purchases beginning in 1982 are shown on Exhibit III-E-3 along with estimated production costs for the firm purchase cast. TESCO U"holesele Rate The Texas Electric Service Company has on file with the Texas PUC9 a Resale Rate which is applicable to "electric service provided to electric public utilities for resale to ultimate consumers in the State of Texas." Discussions with TESCO YAnagement revealed that an increase in this rate amounting to an increase in customer's bills of approximately 30% will be filed with the PUC shortly. A priceout of Denton's 1980 projected demand and energy requirements under the current resale rate yields an average annual pure base rate of 12.4 mills/Kwhr. When this rate is increased by 30%, it is approximately the sate as the TP&L pure base rate of 16.15 mills/Kwhr. It is assumed that T£SCO's production and transmission plant will grow at approximately the same rate as TPdL's and since the fuel mix of these sister companies are quite similar by the and of the ten year study period, it is estimated that there will be little difference in purchase power rates of both. Since TESCO does not intorccnne:t with Denton's transmission system, power from TESCO to Denton would be subject to a wheeling charge from TP&L. Based on the foregoing, it appears that purchased power from TM O whether it be whole- sale or other type of purchase, would ne more economical to Denton than purchases fra: TESCO. • tow Icenw WW" M F-W g i t r , 4', y s 1TU and CPL Purcl•gsd Power Opt_ onr situation, only two of the Central end Because of the Texts interconnect East Texas Utilities and Central Southwest System nwmber compani a , namely, purchased power 6 Light Company, could realistically be considered for supplyfag power to Denton. An previously mentioned, the data from CSw' was received too 8owavar, a late to permit a thorough analysis of purchased power options. power not indicates that sensitivity analysis was performed either of these companies could estimated for TPbL. The following shows the results of the sensitivity analysis. o Pricsout of Denton 1980 demand and energy requirements at current ` vholesala rates ` i,IU CPL a Average Annual Pure Base Rate 9.20 10.55 Mills/Xwh o Projected CSW Company Fuel Mix L,TU CPL 1980 1985 1990 19E0 1985 1L90 Gas 100.0 100.0 65.1 X84.3 71,1 56.7 Oil _ 27.7 15,7 14.3 19.4 Coal - 7.1 _ - 10.6 Lignite _ 8,0 13.1 Nuclear Total 100.0 100.0 lp0 0 100.0 100.0 1 o keighted Average Fuel Cost Estimates 1. Provided by CSR - escalation rate 8% Lignite at today's prices S .90/Btu x 106 Coe.l at today's prices 51.50/Btu x 106 2. Oil and gas cost estimates estimated at price of natural gas used for projecting City of Denton fuel coats, 3. Nuclear fuel costs based on 1984 nuclearMfuel Price of_$ 61/ to x 106 appearing in T)IPA Band Prospectus at 6%. C~eat rt~onwrrnn ~i{':~ n ney 'i~ ~ rTll,~r'~"~V' °y ~ e~, ~r Ui~..'~rti e ~ iii fiS ~ i~`~ • Lf ~ E yEstimated Vaighted Average Fuel Costs • $[etu x 10 wTU CPL 1980 $2.20 $2.20 1985 4,07 3.56 1990 4.82 4,23 o Total Rate Average Annual Wholesale Rate (!fills/Kwh) Pure Base Rate* Fuel Total Rate h*fU 1980 9.2 22.58 31.78 1985 13.4 36.75 50,09 1990 18.62 43.37 61.99 CPL 1980 10.55 22.47 33.02 1985 15.30 41.58 56.88 1990 21.35 49.25 70.60 * Pure base rate assumed to increase at same rate as pure base rate in TP U wholesale rate projection. These total average annual rates for wholesale power are compared to TP&L's rates for wholesale which are estimated to be: 1980 34.53 Mills/Kwh 1985 45.99 1990 65.61 TP6L wheeling charges would have to be added to either V-1TU or CPL rates to arrive at the actual cost of wholesale power into Denton's system. Based on the %heeling charge rates estimated for TH L under Case B, the rate would be approximately 5 Mills/Kwh in 1990, thereby making the TM wholesale rate the most economical choice for Denton. . It is assumed that similar analysis for long term firm purchased power and short term purchase power would also indicate TPSL to be the least costly for Denton. Girt IUMOWA M Jt~ tAel lid cttt o[- toe la} 1990 1914 1!/S 1916 1917 Ue0 1941 1912 1941 Sl SSl 60,146 70,701 61.071 94,64! 104,97/ 116,7]1 121,541 1]7,241 as trtuttON to Ol1Y Q[ pF M{'q4 2 966 3.415 /■timted Oentoa 1 0l SILL Ilaat ;7,036 4S,4L1 . Lµ2 2 081 2.41 2,596 4S! 447 (taclodtn6 Oletrl4uttou) 3,314 1,069 1,/71 11/ 405 441 522 Add: I,ti4 190 226 134 299 Stt 343 ; } 126 t10 245 -at u■ 411 L51 Allocettd rw1 lnwet1lu11f1 Iw! [apme) 1'~5 264 192 2{4 !7,417 lO6,W0 11!,749 Otter plat rr ul 6 6upp 53.11/ 42,211 72,411 22.6ri 13,161 Mv6ln1 t■p!t■l 47,373 ;6,911 t2,S9t .fi 11,073 Appruatra to late Iaee It. 541 {1.191 12,001 12.212 12,761 13:4!1 IS, 076 16, tt.211 tl.)6t 6.140 7,1]5 /,111 10,15! t2 ,044 ~,-~-utlt C4;it Cy 14NLY ♦,162 5,731 tqulred 9ature nerutl, KA7LK£T {3•]!3 15,726 IS•S26 17,]]9 N,113 21,571 21,5]42 3L O1,er ellon Maintenance 2 S60 {1,540 2 2.S1k 4`~" 2~ j''~'/07`~ Sl rroductton expense 1,931 39 600 22,341 450 411 /wl 16,901 11,61/ 344 41! to,77; 1 ,ebe !4,145 315 ))l Total 1999 9,1 217 t47 271 t -J~""-]t~ foul 162 779 4__-4 7 12.14 1i .1 f1,t 1 Tten■nlu/on [apense } S 17.11/ 17,110 19.951 2 962 S,7i1 3.12N Otlaa 10,094 10,901 1],091 IS,116 2,165 2,541 2,115 , 1,491 1.140 1,900 77.957 1523 LLLS ~~---t''iL "~'~1 -1,11] Total 911. 1.196 964 t'L,O ~.14s _ 29 1]3 )5•x19 4 7 43 20.254 31,54/ 24.210 27,115 , pu pt rc!■t tun [ol+nee 11,176 l7.Oli 15,547 19,021 O1S Taxle Other 1'1,41% tocura 1 794 ID.SS9 22.044 1],499 15,01E 166611 17,!49 Total Opeutlms [syen►et. 5,112 6,140 i,M . 4 776 5,755 5,910 Add: 4,eb2 1.910 ),i St 1.169 . 11,YU! 1,929 2,115 2,414 $0.489 S7 ,iH b lutn 71,7!6 ►1 .011 i6 ,079 Inauw Texao 2u,52U 74,14] 21.217 32.425 ]5,014 16.513 26.1% 19.152 37,619 31.91 36.41 _]Oi t] LYVIN'lu OU 'L I1 561 14,680 IJ .199 10,166 23.197 )1.13 34.14 C olqutaL A.wuot tacluJln/ Iuel !u% Cuat ooer 9,587 10,Y4U , 24.)1 21.279.1` t t1 ~ t.,}~ 16,76 19.79 2O•µ 72'71 0 21 / - SSa1.6t S i~IS 6/.SO Ci,ar Le, O.wo.ul CMr1r end hue rr atlY ~ i. 20.17 - 2 7 U 1 51~Si 5. M2ltaAml 10.06 41.11 5'17 roll cl.arpn . N111aft1Al 16.75--17.11 3S. total 1Ru.leaatr bate ■e caOputed 29.46 31.51 32,11 11.98 19.51 20.91 11.►? 150.41 '7.37 -~i~---- '~j1' 6021 45.61 a pet tote 4p•5W M111 rwil U .04 y 2 U yy__-_J 49.10 53.51 • 02 $9,624 pµnJ, l'uatw,er, fur [ner1T ,1 i9 l.ta.12.--~1--"'4~j'`'40 ; !1 45.99 ;),SyS 41.1}5 52.1 reel C4ar6e 34.57 ]5.11 71.76 T4,b41 11 ,fit 34,511 16,503 iolel NLIIW■rd tbvet Coat N11UJK1M 11.221 2),010 total product lon Coate a Lane catr a4calated at an[nt■1 rate oT In.nue o! c„■iputad rate M L%II{R1T Ik7-f.-2 Ct{TY l1~Ir.NTON Caere L._~f [rta Putcl,nrcd rover R+Ite Oc9rloy+-MunS Trlll~9 _TI'L t:DyNASiS~ AIJ, ti IN~ly01!0 - - 1982 1983 19RA - l9AS 1986 17111 1986 - NA9 ~ 199n - ►lRH rllmfilk;f, MI-Mr 11) M.Nt(N AT him." 47R,M10 476,"D RSI.DOD bS 1,011f1 R5),ODD 01 fi.oon R1R,nno 816,ow 10!li *o rACTt1_(1110V)_-_- 78,)59 VMIATIV bl'lftON 2 [N' Trl.f.'S "ANT 68,189 L%l UOINtRipC 41511!1}I7Tl_OM)_ - IA'766 29,850 21,510 75,564 40,499 56,212 61,518 . -1' A,1<I. 1 1,121 1,116 1,873 1,789 1,414 2,131 3,020219 20,1 A11nrn1rd 1-t,rl InvrnforT ,050 5a 1S 12 121 111 1116 201 44 - T81_. _ X72 - 211 6 in - 4 (on 0t1,er galerlnl 16 Snrr1lelr lli__j 0atlh,p f:nrllnl 19,6)) 2I,160 21,941 )1,598 40,171 X1,1811 6~,Sb~ _ 65.241 --W-751 )h Arrrn.lwite Rate Rare 12.001 12.217 12.161 (1.495 12.541 12.891 1),161 C(TIRY i6 Cl6i f MUT 2k.5R5 1{.195 S 8,2M) 8,)01 -4--- - - 2,210 2,491 2,157 h,s91 ,n10 5,4111 1,TS1 Nr4ul+rd Rrlatn Or1:MtINf, L%~L115L9 toil 42 51,161 h ndnrlinn rr1N'nnr" 17hµ IS,779 11,488 26, 3 70,414 12,912 816'7O1 2 2 50,1724 !A? } turf ~ lam)l ~ ~6G6 2,440 2,21r._.-_._.- 71 nll.rr (WI 74,622 49,65i Ho D 5),748 51,711 211 Too 1~,4ih 16,113 19,f%IG )0,131 X119 thli )6 161 65 6 q 9 ~0 t~ Tr.an+.I lelrn rrrrn+r 6 - 1,543 11.415 01 lrt 6 ih,4al1 16,611 29,1198 30,199 32,441 1~.,~716 49,818 1817 1,829 trl 91 511) 923 1,010 1,IN+0 1,481 hrrrrr lallml rrrrnar 574 SGO J 6 b+lg _ 695 -6j1 ~r--- ~r~ti-__ Sp~ I, 16,551 57,169 516,184 i,n,171 "11 "306 --156 70,019-- 31, )i.e 34,172 7nrre ro6w Ti,nn ln,n,•e IS. 7nlel rr,nt lnp F.rl.rnnr A N A 2A0 8,101 Add: 7 h91 7,1i5 4,591 3.010 5.418 ).014 11,457 print„ 7,90 '1191 I,0'11 1,971 1,987 1,144 7, 700 intent 1arr+ 61 194 61,851 )1.218 18,5M N ,2Ab 21,88) 7R,1A0 161,169 84.174 , RfVrIR1L RHr11Rr1fEflT, Clflit11r0 tt1IAI. Wit 111RCHASr17 41.36 AA,51 54.54 56.{1 62.66 61,16 12.14 11.00 p1.Sl n}trrtt_RAtL - IIIIlI11Kv_1~___---- 11.62 12.51 11.51 14.91 16.34 11.45 16.82 20.77 61.18 IMr•+n+l fnlf l,m 46.17 89.71 73.72 $7.74 70.14 15,94 ALOJ 41.14 rnrer,r rnetlnn RAltltT tt1-1-2 CITT or II37t0Et C450 R rln hl Chfft COOt(6CC SYSTEM ASWIR5MEM1 AND nNAWT20N COOT'S 1900 1911 1942 2917 1164 1901 1916 1967 1916 1919 1990 2NCIM:T l1nAt) Will t 0 0 0 0 0 0 0 0 0 O 0 volt 2 0 0 0 0 0 0 0 O 0 a 0 Wit 3 6,334 6.613 0 0 1,031 0 113 2,037 0 0 401 4ilt 4 201,649 2)2,775 49,166 69,040 10,IIS 49,411 54,636 17,566 51,657 45,559 50,607 UOIt S 290,609 306,217 192,216 119,791 247,264 111,649 190,261 205,421 114,259 135,056 151,151 twts T~•f1 rur.Mu 0 0 2S 0 ,771 350,166 6!4.712I&M Tut1l 504,134 54S,66S S! ,Sf1 5,410 39,03 1S ,00 1 ,391 115, 5,000 15,wo 9909,000 70U. COOT (11101) Unlt 1 0 0 0 0 0 0 0 0 0 0 0 t4,lt 2 0 0 .0 0 0 0 0 a 0 0 0 tlnlt 3 164 262 0 0 41 0 6 5) 0 0 16 wilt 4 S,210 6,664 1,611 3,512 3,112 2,302 2,141 3,066 3,015 2,615 3,362 (kilt 5 1,349 1,261 6,645 1,514 11,149 6,312 9,144 11,316 6,647 6,676 109420 Wn/ Tate hra1.111 0 ~...4,_~Z, _ 11.560 21621 )2.656 )5.1)1 31.IS4__2]~j~~j UAU Tm1l 12,7)2 15,721 24,166 29,746 35,637 41,273 411,)}1 $3,351 6,1,5 41 41,950 75,657 MN Co (611x)) Unlit 1 - 5 1,1so 1,210 1,151 I'm I,)2s 1,340 1,424• ISIS 1,124 1,614 1,716 J~~11 f1 I.nll Ulu 71,e11r11 _ a _ aAQ_--~~ ~44~ 0 Q Tuul 1,150 1,230 1,131 1,237 1,125 1,340 1 1,515 1,514 1 ,Nt 1,116 TUfM. VM1 AXT11>1( COST 1_101) 13,462 16,956 25,)24 30,961 !1,102 44,611 49,73! 54,646 64,091 70,764 17,)7s i r^ t 1 ~ ! Y, { ~l~! F_ASEF - ALTERNATIVE ENERGY SOURCES INTRODUCTION The power supply plan for the City of Denton is based on the utilization of conv mtioaal technologies, namely nuclear and fossil fired generation. Alternative energy technologies including refuse derived fuel (RDF), solar, 1 wind and biomass will be addressed in this section. The reasons for excluding these technologies from the power supply plan and quantifying the results are as follows: i 1. Conventional generation projects can be cancelled or postponed to facilitate the integration of developing technologies, if and when they become available and economical. 2. Inclusion of a new technology in the power supply plan would foreclose the option of installing a conventional facility should the new technology not develop. This is due to the long lead times associated with conventional generation alternatives (e.g. 10-12 years for nuclear). 3. New technologies are initially applied on a relatively small scale before expansion to commercial status. The process of development to full commercial status is long and uncertain, consequently, the planning criteria cannot be satisfied. l The discussion of new technologies will include a description of the process, perceived shortcomings, applicability in the southwestern region and comparative cost estimates. The technologies to be discussed are: Solar Energy - Thermal Electric Thermal Hybrid Repowered Photovoltaic - Biomass - Wind Refuse Derived Fuel • G~roe't 1Canuron+'urs. ~i.rwrf t •f; •;}.,i~ x y rqa n , 77,7777 SOLAR ENERGY. Alternative energy sources for the City of Denton undo: the category of "Solar Power Plants" consist mainly of three options: Solar thermal, solar photovoltaic and a hybrid solar thermal repowered system. Each of these concepts is in various stages of investigation and experimentation under a number of DOE study projects. Prototype systems have been developed and tested for small power plant applications and reliability and economic factors have been investigated. The DOE objective is to develop a solar program which can compete with conventional energy sources both economically and with an acceptable degree of reliability. Although a considerable amount of research effort has been devoted to solar development, the solar option will not be commercially available until at least the 1990'x. Smaller scale systems such as solar space heating has found limited applicability in the residential and commercial sectors but solar power plants in each of the three cases still must undergo additional testing and experimentation before they can be integrated into existing utility systems. In the following, a brief overview of the solar to thisrequirements willwill I electric process will be presented d doperating noted and discussed for each case. C progress remaining work to be completed will be outlined. i Solar Thermal Electric This process is basically identical to standard thermal cycles except the 1 heat source is solar radiation, replacing fossil fuel combustion or nuclear fission. Many conceptual designs for a solar thermal electric plant have been considered, ranging in size from ) to 100 HW. The system rays heliostats consists of a central tower surrounded oaitoprof that track the sun and concentrate the tower. Steam generated by the sun's heat is then piped to a conventional steam boiler or to a storage system designed to release energy during the evening or overcast periods. 6~Aen 1(,pnnan.unr ir1, The main requirements of a solar thermal system are sufficient Spp ce and isolation levels (insolati0n is a measure of solar intensity). lant siting is important since area must be reserved for a tvital he belrolea s an high solar insolation must be high. Wind can also hisince winds tend to disrupt the stability of heliostats; winds of greater than 23-30 mph can result in s total of shutdown land areatmustybe available for Mrs plant, approximately .6 sq for a 100 Mk' heliostat spacing. The tower is also a source of concern; plant, the tower height will be over 1000 ft. which may be offensive to rs if the site is relatively close to a residential area. homeowne DOE and Southern California Edison are currently building a 10 MWe solar thermal pilot plant near Barstow, California. Tentatively scheduled for 1961, this plant will operate in parallel with the Edison system and will permit system evaluation from both the scientific and utility perspectives. The plan calls for a five year test per'.od for development of operating experience and cost estimates covering operating and maintenance and design. Capital cost estimates for solar central receiver plans 10 to 100 W in size range typically from 1400 to 1600 $lk%%' in 1978 dollars. Based on oil 30 yeard these figures, the central tower sts with steam generation when total plant cos period. EYRI has chosen 1992 as the date for the first commercial orders for large scale central receiver plants; operation of these plants would begin in 1497. More optimistic ssolar predict in the early 1990's and suggest the competitive with coal fired generation. For solar to he competitive, volume production is essential. The main obstacle in terms of costs appear to be the costs of the beliostas. 6 aggressive industry program aimed at reducing the costs of Manufcturi these beliostats would greatly enhance the economic attractiveness of the central receiver concept. Other factors that will accelerate th econ sic attractivness of solar include decontrol of oil and gas prices, investment tax credits for industries involved in heliostat and solar • 6ae~t lSprnan,wnn equipment manufacturing, and a first national policy committed to the development of solar technology. Based on current development of solar thermal power plants and coat projections, the solar option could be feasible for the City of Denton 1 sometime in the 1990's; but near term applications appear to be remote, at I ~ best. In this time frame, solar could be used as peaking capacity. For the City of Denton, peak load patterns basically coincide with plant output so that solar could serve to levelize daily MM' loads. The major drawback, however, is that on days of low solar output, additional forms of operation capacity would be needed to meet load requirements. The additional plant capacity results in an added capital investment for the back-up generation. Thus, the primary benefit of the solar plant would be in terms of operational cost savings. Solar Thermsl Hybrid Repowered System The solar repowered plants operate via the same principle as a solar k thermal plant. The main difference is that an existing plant boiler is 1 used on a continued basis. During the day, steam is supplied to the existing boiler from the tower and in the evening conventional fuels are used to provide steam heat to the boiler, thus allowing the existing fuel system to act as a back-up. The advantage of this system lies in the reduction of capital cost outlay and fuel savings. Since the building housing and boiler already exist, integration of solar thermal repowered into the system involves constructing the tower and heliostats and retrofitting the steam boiler system. The need for a storage subsystem is therefore eliminated. The main disadvantage of this system is that there must be sufficient area adjacent to the plant to accommodate the tower and heliostats. The size of these systems will typically range from 10 to 100 11W. Since the Denton units are in this range, they could possibly be candidates for a solar repowering system, if space allows. s~+lcem~a~w,+iu 1, .2 r, . d ti Y t r'••'f , MOM' stud completed for DOE indicates that several candketsstudyrestiassteb A Y exist is southwestern states, including Texas' The mar 1490 and 106 MG' completed that 61 MW of repowering co%ild be completed by these studies were performed for a statistical aggregate, by 1495. while owering as a possible option. EPRI they indicate the potential of rep views repowering as a more promising option than the solar thermal contra'. ` The hybrid plant benefits in terms of I receiver stand-alone concept. Oil fired generation supplants the solar reliability since the back-up additional plant steam system on days of low solar output. Thus, k investment is not required. i i~ EPRI predicts large scbie commercialization in the mid 1990's with in 1997. As with the stand-alone system, more operation beginning But for the optimistic scenarios predict earlier commercial be peLceived as a Denton system short term availability should not be potential option. The same factors which af,ecto the hybridccontept- attractiveness of solar stand-alone also apply to 100 range are i Capital cost estimates for a hybrid plant in the 10 M kV'. These costs would also have also are in the order of 14fortthe6hybrid plant to compete against 1 to be considerably reduced i conventional generation. c 1 Solar Photovoltaic ~M solar Solar photovoltaic appears to be one of the more promising alternatives in terms of cost and availability. DOE cost projections indicate that with extensive mass production of solar panels, be able to compete with conventional sources soseimean photovol.aics may . when these systems the 1990's. The time frame is reduced considerably j evaluated for residential use. `I The basic process involves the direct conversion of sunlight to direct current electricity. Panels are fabricated witineither a lico Orto germanium structure which can transfo.m energy the form of sr electric when activated by sunlight, The direct current (de) is then • f~ovs l~,pnwnonuri~ .f, L 171^. P. rr » transformed to 60 Rz alternating current (ac) by a do/ac converter and can then be distributed to the utility network. Approximately 1 square meter of panel can produce 100 Watts of electricity. Simple calculations reveal that to produce 10 MW of electricity, 100,000 square meters of panel are needed. Thus, space is an important consideration in the evaluation of a photovoltaic system. Regions which have high insolation will also increase power output. Since the technology for photovoltaics has progressed to the demonstration plant stage, these systems may have some applicability to the Denton system. Reliability also poses a problem since a back-up power source will be necessary to provide power on days of low photovoltaic output. As with the solar thermal system, an energy storage subsystem must be incorporated in the photovoltaic system. This presents a major cost obstacle and oust be resolved for photovoltaics to be a practical alternative. One advantage of a photovoltaic system is that it can function under diffused light for partial operation. She absence of a cooling medium (water) is a critical benefit for areas with water supply problems. The primary economic concern regarding photovoltaics is the cost of solar panel fabrication. Similar to the ;sigh costs of heliostats for the solar thercal plants, panel costs must be reduced considerably before rhotovoltaics can compete with conventional generation. Cost estimates for a 1-10 I.V photovoltaic plant are typically in the 1400 to 1600 5/kW range. Sreakeven cost estimates are predicted at 1100 to 1300 $/kW in 1916 dollars, Significant penetration is not expected until the 1990's unless advanced design concepts are determined operationally and economically feasible. While photovoltaics may eventually have potential applicability, to the Denton system, current technological and economic uncertainties preclude photovoltaics as a near-term option. It is important to recognize, however, that photovoltaics may penetrate the market earlier in the residential sector, Moen 1{aner~aw~~nr Biomass technologies is One of the most promising near-term advanced energy within biomass. Currently yielding more energy than any other technology the loosely defined solar classification, biomass may make + significant contribution to the Natioo's energy needs by the turn of the century. s, from trees to walnut shells Constitute sugar Natural, organic substance and biomass. Agricultural refuse, including manure corn husks, rowth such as kelp, can be used to produce heat or he cane, and aquatic g materials are converted into gas, oil or alcohol. Above all, biomass plentiful and recoverable. Direct combustion of wood 1+ mited to heavily wooded aare&$- Otberumethods technique, practical implementaton is li producing intermediate fuels of extrapolating energy from biomass involve p from various organic substances through pyrolysis, gasification, liquefaction, anaerobic digestion and fermentation. Although these are not independently viable fuel sources, they can produce intermediate fuels, supplement existing energy sources or fulfill a specific site or equipment related need. Mobile pyrolysis systems, for example, convert slash and woodwaste to an Because forests are so dispersed, this economically transportable fuel. rolytic oil production takes optimum advantage of type of small-scale pY cannot be converted its site. When existing cif/g++ fired steam generators fuel. to burn woodwaste, gasification may produce the needed supplementary Idhatever the potential uses of biomass may be its major shortcoming ss a viable energy source involves locale. Expensive to transport in quantities large enough for generation, biomass resources, particularly wood, can only be efficiently used near sources of large supply- i~ t S For the present and short term, these technologies remain undeveloped, especially in terms of large scale production of fuel. i The potential for near term development of biomass for fuel in existing gas/oil boilers in Denton is limited. With transportation and availability of supply primary concerns in biomass development, the most i k promising regions for biomass convet in are the heavily wooded areas of the northeast and northwest and agricultural mid-west, where crop residues are abundant. i Grasses, and on a more regional basis, agricultural residues, may help Denton supply part of its energy needs on the long term. According to a study on the potential of providing liquid fuels from biomass, by the 1 University of Oklahoma, Texas contains enough agricultural residue to produce from 300-400 1012 Stu per year, depending on the season. The supply of such agricultural residue is regionalized and seasonal, however. Investigation of its availability, transportation and storage • costs would be necessary before conversion planning could begin. Several of the various liquefaction or gasification techniques might be f appropriate for installation at Denton, depending on the exact type of biomass available, its heat and moisture content. An air gasification system, for example, could be adapted to work with current oil/gas fired boilers in a "close coupled" or on-site system. To preliminarily consider biomass conversion and subsequent power generation from biomass fuel, it would be necessary for Denton to investigate feedstock availability as well as applicable technologies. Criteria for feedstock suitability, including sufficient quantities of appropriate quality, transportation and storage capabilities, not to mention cost, must be met. Compatibility of available technologies with type of feedstock and current generation facilities also constitutes part of a preliminary investigation. MIDI Y ltanna~Mlt~ • FUW7itthbioms8* conversion systems unrefined on the large scale, and availability of sufficient feedstock questionable, short-term dependence on this technology for Denton does not appear to be feasible. i kind Energy Conversion 1 Of all the solar electric technologies, wind energy conversion is the most advanced. The DOE in conjunction with several utilities and equipment i manufacturers has an extensive wind program through which significant I, experience and operating data have been obtained. This program addresses the key issues of wind energy conversion including development of hardware, utility network application, legal problems, environmental ! issues, and study of wind characteristics. 4 kind Turbines illy There are two basic types of wind turbine, horizontal and vertical axis. Most of the experience and data collected to date has been for the • horizontal axis wind turbine generation, and this discussion will address these results. Three types of experimental machines included in the DOE Wind Energy Program are the MOD-OA, MOD-I,. and MOD-2 which are 1 ` depicted in Figure II3-F-1. Although the three machines differ greatly in size and output, their operations are essentially identical. The wind turbine is engaged when wind speeds reach a range of 7 to 11 mph (at 30 ft. height). As wind speed increases so does power output, until the rated power is reached. This output level is constant up to the maximum wind speed of 35 mph (at 30 ft), at which point the turbine is disengaged to prevent damage. The following is a brief description of each machine type: 1. MOD-OA (200 }C4d) - The objective of this program was to gain operating experience at utility sites. Three turbines are currently operational, at Clayton, New Mexico, Culebra, Puerto Rico, and Block Island, Rhode Island. The Clayton machine has had no utility Groin lLanna~wuh~ LARGE WIND TURBINES I wlNo 555' ' 300 20t7 ~ 125' 135' lppr ~ . MOD-O MOD-OA MOD-1 MOD-2 WASHINGTON MONUMENT MAX. POWER OUTPUT: 100.200 kW 2000 kW 2500 kW FIGURE III F -1 ~d, i~'~~i4~+~M~' 9 4i a r irz~ 1p • s p . • F terface problems and generates approximately 3 percent of the ayton power. D-1 (2000 KW) - This machine is a scaled-up version of the Nod-OA, d its objective is also for utility operating experience. There is one NOD-1 currently in operation at Boone, North Carolina, but f the interim progress report and supporting data are currently I unavailable. 3. MOD-2.2 (3000 ham') - This is the first attempt at a cost effective machine. The 100th MOD-2 is expected to generated power at approximately 4t/KWH. Its design is for moderate wind (14 mph annual average at 30 ft) application. Scheduled to begin this October near Goldendale, Washington, the HOD-2 program is planned as a three-unit (7.5 !1M) demonstration. Environmental Issues As is the case for all energy sources, wind energy conversion systems 1 are not without a certain degree of environmental interference. Because 4 of early concern, wind poster system design has been structured and policies implemented to minimize adverse effects. Some of the key issues are discussed below. Interference with Electromagnetic Transmission - This occurs when a direct radio wave signal reflects off of wind turbine blades causing a 1 secondary interference signal. These signals have a disruptive effect ~I on television pictures, air navigation systems, and microwave ` communication. Analysis has shown that proper siting practices with regard to television transmitters, VOR systems, and microwave transmitters will eliminate interference. Definition of an "interference zone" around a wind turbine site will minimize or eliminate this environmental barrier. Groh Ita>~om+~nt- - u d' ' ~;-ind Noise - Tests have shown that the audible se ound at of disc ace of • turbine is indistinguishable from beck8below the human hearing 800 feet. Infrasouwii, acoustic energy danger levels. levels- threshold, was 2160 measured and found to be below any Therefore, according to current research, sound is not an environmental hazard. 1 Safety - Since the wind turbine blades are featured and o;=eda in t winds of 35 mph and greater, the chances of blade flyaway zero. Wind turbine design includes the ability to withstand winds of up to 150 mph in the feathered Position- Any structural collapse i limited to a very small area in the immediate vicinity t would be an { turbine. Thus, from a safety standpoint, wind turbines do not Pose environmental threat. ned to and Ecology - Several investigations have been perfo to environment, the effect of wind power systems on the ecological 1 The flora and fauna will be minimally impacted with observance of possible problems which are site careful work practices. Two • involve deforestation and potential for birds' nocturnal ~ specific, collisions into turbine blades. i conversion systems is expected ;he environmental effect of wind energy considering the impact of to be a minor problem, especially c conventional energy sources such as coal's pollution problem and nuclear's waste problem. Legal Issues all other legal issues associated Except for the issue of wind rights, with wind energy conversion systems are similar or identical those problems associated with conventional energy sources. Most of the specific to the particular state or municipality in which the individual utility is located. The following discussions apply to specific problems associated with wind power. wm,~ Itanma+rutn Wind Rights - Upwind obstructions can seriously impede the~Aov of wind to a turbine site thus reducing the energy potential. Currently there are no statutes regarding apportionment of wind rights, which means that wind system users must purchase preclos'-mary interests in 1 the surrounding land. This problem is particularly important in urban areas. I Zoning - Particular areas may have statutes restricting wind turbines because of imposing physical dimensions or lack of aesthetic appeal. Since wind power turbines would probably be associated with a utility, they may not be subject to most of these regulations. f Land Requirements - Large wind power systems may require substantial acreage since spacing of towers ranges up to 10 rotor diameters which I iI for large turbines could be a spacing of over 1/2 mi. Fortunately, most areas suitable for wind turbine siting are unsuitable foe other functions. i • Site and Local Codes - Building and safety codes that govern electrical wiring and construction practices may impose a burden on the wind power system user. I Environmental Impact Statements - Similar to other energy sources, wind power systems must justify their environmental effects through review by state or federal agencies. This effort, although not uncommon, does impose an additional burden on the user. Legal issues may cause specific siting problems but should not undermine the project as a whole. The costs of these issues are no higher than those associated with conventional energy services. Denton's Mind Power Potential The annual average wind power potential by region is shown in Figure I11-F-2. Denton has a fair potential with an average of over 300 Watts per square meter. This translates to approximately 2 KV of output for a ~ WroeM1ltpnmon.u~V' M , J t fi r C f Pi f 6',,•r 1 .y,awr'• c... 'i,.):, in } t aJ "`a ~ •.~~~p.'~ '~~~fiay "'~.>~kli w 1~,, r f M Q y ~ v... Y.x ~ Y9 kJ ti a1 ~xY: 4iF4x s.'I i} rayy# ~ ~ n~, 1 aS~ . .v,• . "R• a..• v ~ dr } n t^~'~ r 7 x a 1 J~.~ 6' ~ ~A ~ ,1;1'wx Z f. .1. ! , r" ~ 'J"'{ a ~4 ~R~"4~. ~dA. ~y ANNUAL AVERAGE WIND POWER IWATTSIM2) AT 50 M Loo IGy , . 100 too; ~ 100 x~ X4 100 • >So C/ fo0 >o0 1 750 S00 700 4M 10a Lao ,M 1 Tao c` . .•2 40 ne So Mn !oe Am 730 77ao 1fno 7os ~~f SOD > S0o 100 / Soo )M PA X"I sae + X1100 700 1a0 1 Loo `rlD\ I vie 300 xo YX 100 1 St00 Tao ~ ~ Lao 700 ✓ tM NO )So DI tQ1 4M/ I M 700 %1 + % SSe 100 1S0 t00 700 I / 4%1 l / 100 l.a tee j Ise ~ U4 YA 10e_ IMM N ~ ~ r--,t I .M~ 111.1 7I AA xf~ b I V4~ a,J~ Q ,n ` I X)a X0 r•. Its va I e ,a .N ■it, .q 100 I FIGURE III F-2 Annual mean wind power (w/m2) estimated at 50 m above exposed areas. The shaded areas indicate mountainous ter- rain in which the wind power estimates represent lower limits for exposed ridges and mountain tops (Elliott 1977). 7, 71 T HOD-2 machine. Since Denton's surrounding areas are mostly flat there should be several sites with good exposure necessary for realization of potential power. The actual capacity would depend on how many units could be installed at a site. In conclusion, wind energy is expected to displace small amounts (on the order of 10 11W) of high priced gas or oil-produced electricity when the HOD-2 type wind turbines become commercial. However, this will not occur for several years. In the meantime, the City of Denton may want to perform preliminary investigations with regard to potential sites, local environmental restrictions, legal barriers, and economic trade-offs. REFUSE DERIVED FUELS Two areas of responsibility shared by all municipalities are electric power supply and waste disposal. Whether by direct means or subcontracting to private enterprise, the municipal authority must provide its citizens with electricity and refuse removal. It seems only logical that if refuse can be burned, why not use it for production of electric power? This question is being answered by several cities that are sponsoring some form of a l waste-to-energy system. However, in each specific Lase, there must be economic justification for development of a system. The refuse-derived fuels (RDF) technology is still in its infancy and any commitment to developing a system is not without a good deal of financial risk. The discussion in this section presents a general.overviet, of the RDF technology as it exists today. Key economic parameters which must be evaluated to determine feasibility, are identified. Refuse _and RDF Municipal waste or mixed municipal refuse (1L"iFi) varies in composition according to season, region of the country, and neighborhood. Feasibility studies incorporate analysis of a specific municipality's 1W to determine Gran ICo~+wnen+u~ percent combustibles aad recoverables. A typical analysis might look like the following: E Paper and paper products (40x) Other combustibles - wood, food and yard waste (15x) Water (25x) Glass (10x) Iron and steel (7.2x) Aluminum (0.8x) - miscellaneous minerals (2x) Some value of MM lies in its recoverables such as glass and metals which can be sold, but the primary value is beat content of combustibles which can be converted to energy. A processing plant should be able to extract over 80 percent of mlfR in the form of fuel and recoverables with the tailings being disposed of in landfills. ?IF is produced by processing KMR to obtain a fuel form which can be fired in a utility boiler. The degree of processing is variable and can be categorized by the following classifications: • RDF-1 as-discarded waste • RDF-2 as-discarded wastes processed to coarse particle size - RDF-3 combustible waste fraction processed into particle size RDF-4 combustible waste fraction processed into powder form RDF-5 combustible waste fraction processed into pellet form RDF-6 combustible waste fraction processed into liquid fuel RDF-7 combustible waste fraction processed into gaseous fuel There exists a tradeoff between processing cost and quality of fuel which must be analyzed to determine applicability to a specific municipality. RDF-1 and RDF-2 require a minimum amount of processing, but are unsuitable for combustion in utility boilers without extensive modifications. RDF-S, 6 and 7 are very suitable, but processing costs are unrecoverably high. RDF-3 and RDF-4 are currently the most attractive options. • Gran ICann+onMlhl~ Alternative Methods of ProducinA RDF or Re.overing Energy From Waste Before discussing the alternatives, it is aetessary to understand the requirements for a successful energy recovery system. To be successful, any system for deriving energy from waste requires the following secure arrangements: I - Assured market(s) for the product which can be in the form of RDF, energy such as steam, electricity or some combination therof ~I - Continuing supply of solid waste which is both consistent and sufficient in quantity for the end-use prescribed Production capability, both organizational and technical to consistently derive a satisfactory product from the waste supply. ! The implication of these criteria is that the process is vulnerable to fuel and commodity market conditions. RDF Production Processes ~I The three basic fuel forms and processes for preparing a "refined fuel fraction" from MIR for the City of Denton are: i Dry processing - double screened (D.S.) RDF-3 Dry processing - powdered (RDF-4) Wet processing - pulped fibre RDF All three concepts are described to provide a basis of understanding and comparison. The powdered RDF-4 concept can be considered an extension of the RDF-3 concept whereas the wet processing system is an alternative, and mutually exclusive concept. • It is axiomatic that the performance of any fuel burning system is materially enhanced if the fuels can be processed to make them reliably predictable in regard to their physical and chemical properties. However, it is recognized that the degree of refinement should be limited to only that required for practical economic utilization in each particular fuel using system. D.S. RDF-3 I D.S. RDF-.1 should provide the necessary degree of practical fuel refinement for r, proposed fossil unit if adeluste accommodations are provided therein. The Americology processing plant in Milwaukee produces a similar RDF product for co-firing with coal at Wisconsin Electric's, Oak Creek Station, as does the City of Chicago for Commonwealth Edison's, Crawford Station. The Monroe County (Rochester, New fork) facility is also expected to provide a similar RDF product to fk Rochester Gas & Electric's, Russell Station. In each case these subcritical twin tangential furnace fired steam generators were i retrofitted to accommodate RDF. The Russell Station will be equipped with power-operated dumping grates just beneath the furnace hopper 1 bottom throat and above the ash hopper water level. With this provision the denser combustibles dropping to the furnace bottom will be consumed, recovering their energy values and minimizing the flostables in the eater filled ash hoppers and ash lagoons. Powdered RCF-4 Powdered RDF-4 is a more highly refined fuel having only 5 percent moisture, 12 percent ash and 7500 Btu per pound. The process yields 7,500,000 Btu/ton of HMR equivalent or approximately 83 percent of the potential energy value in the as-discarded waste. The fuel utilization efficiency is enhanced as a result of the lower moisture and lower ash content. The powdered RDF also avoids loss of combustibles in the ash hopper. The very low entrained glass constituent minimizes fluxing or deposits on the boiler surfaces. The powdered RDF having only 5 percent Grout 7Cann~on+unn ;•,1x t5 „ ~ryy f.' F M . 'i ,i rr d iY y d^.. ♦~n moisture and approximately twice the volatile matter of coal should be highly reactive, with burning characteristics similar to the result of additional and However, the superior MY fuel quality is more complex refinement. The process is more sensitive to operating ~ probably is less forgiving of operator error and management and ` equipment malfunction. ` this powdered fuel, RDF-49 has An 1800 TPD.MMR facility producing * Trials are recently completed shakedown in Bridgeport, Connecticut. l 6 01 in the cyclone furnace fired i : lI now underway co'firing RDF-4 with Fo. Another I boilers at the llnitee Illuminating Bridgeport Harbour Station. in Newark, -Sew Jersey to provide a similar refined project is underway fuel to Public Service Electric and Gas Company' Pulped Fibre RDF TJlping technology employed in the paper pulped fibre RDF utilizes the Provide an exceptionally contaminant-free refuse ` industry and could p ic material would require derived fuel. However, the pulped organ toyed, d and the mechanical dewatering usually emp j moisture reduction bey This process would and subsequent size reduction (fiberization)' ration into the similarly provide "washed" material commodities for laratiou of the secondary materials industry and would facilitate sep denser combustible fraction for possible utilization. This concept was introduced in 1969 for the small municipality of in a 2000 TPD-W integrated facility Franklin, Ohio and subsequently which is not yet considered in for the Town of Hempstead, Long Island, I but larger 3000 TPD integrated commercial operation. A similar, Florida. ~t facility is under construction in Dade County, I *Under contract to the Connecticut Resources Authority • f~orK 1Ga~~^•unr f,ri n Y,'✓t ~ i ~SY~~~~~ r ~ . h .t.'S A ~"r!r Fry . These two integrated facilities, consuming the contaminant free, 50 percent moisture product on-site in semi-suspension fired boilers, specifically designed for this application, supply turbine generators to provide power for in-house use and export to the power grid for sale to the local power company (Long Island Lighting and Florida Power). 1 Conceivably, this pulped fuel product could be dried down to 25 percent moisture and easily fiberized to suit fossil fuel type utilization. Although the facilities at Iranklia, Hempstead and Dade were, or are being installed and operated by Black-Clawson (manufacturers of the pulping equipment), competitive pulping equipment is available from others who are not interested in the owning or operating aspects as is B-C. To date, however, the experience in the U.S. with M as feedstock for pulping is entirely with B-C. The debugging programs are still underway at Bridgeport and Hempstead. Significant commercial scale operating time at capacity is still to be • anticipated. However, it must be acknowledged that not only are the concepts innovative but are of major size. There are no other comparable size resource recovery facilities of any type in commercial operation in the U.S. Real performance data is yet to become available. Waste-To-Energy Conversion Systems (i+-T-E) This concept has had the widest application in part because it is less vulnerable to external influences and because the nature and quality of the energy form produced can be more readily controlled and the user better accommodated. Provisions for cogeneration of both steam and electric energy can ensure that there is no imbalance between energy demand and the fundamental requirement of waste processing or disposal. Energy demand in a cogeneration system means satisfying all steam user's needs with the balance of steam generated in producing electric power to • 6Akrt f(.enunonraM r 4i .pax l+,`' yd ,v, ~x t~ dd )rN .'F ti.,tir f Q": ; i .1:ii ~ d?c d fti,~; . .y r aJ ..,y ~ ~ v♦ *r' ki7ii , 4evt t5 1 the transmission grid an infinite energy sink This arrangement accommodates the variation in steam demand, summer vi. winter, weekday vs. weekend, etc. W-T-E systems have been found to be viable for refuse processing particularly when equipped for cogeneration of steam to nearby facilities for heating/cooling or process use. The two concepts which can be employed to directly recover the energy values in refuse by generating high temperature hot water or steam for ` heating, process or cogenerston of electric power are: - Consuming some form of fuel prepared from refuse (RAF) on-site in steam generators designed specifically for the nature of the refuse fuel produced. Depending on the degree of fuel refinement these steam generators can have furnaces for either semi-suspension or full-suspension firing. - Thermal processing the refuse en masse, essentially as received (virtually no pretreatment) in onsite steam generators designed i specifically for the purpose. This concept is. commonly referred to as 1 mass burning. Mass Burning ?lass burning is the predominant concept of existing installations world wide. The mass burning of as-discarded household waste is accomplished directly in steam generators with water cooled furnace wails. These fundamental integrated systems are devoid of the complexities associated with refining heterogeneous waste materials into a reasonably predictable fuel. However, to cope with the variable and unpredictable nature of MIS, an elaborate furnace burning grate system is required to provide the necessary agitation and stoking of the deep fuel bed as it is moved 6rHnlLaMnonurtn . t'Y' e a r w:! i,f. Y progressively through the furnace of burnout and residue discharge. The severe duty imposed on tht grate system is the focus for wajor maintenance and periodic replacement. Although the special furnace design and construction required does permit incorporating auxiliary gas and/or oil burners as back-up above the refuse-grate bed, coal firing cannot easily be accommodated. This type of integrated facility generally has the lowest total in-house power demand. F f~ In the U.S., the smallest mass burning steam generating system installed I at the Portsmouth Naval Shipyard is comprised of two trains each rated at BO TPD of shipyard trash and residential refuse. Others are located at Norfolk Naval Station, Braintree Municipal, Nashville, Harrisburg, CLIcago and Saugus, Massachusetts The latter installation has two furnace trains each rated at 750 TPD. Althougb many of these facilities utilize turbines for mechanical and Oceanside plants in Hempstead, they do cogenerate steam/power for in-house use only. These facilities are mass burning refractory incinerators with waste heat boilers and turbine k generators. Semi-Suspension (spreader) Semi-suspension firing systems in steam generators having open furnaces with water cooled walls can utilize a crudely prepared fuel from refuse with minimum need for contaminant removal. The furnace system is simpler than that required for mass burning. However, a traveling grade surface is employed as the furnace floor upon which a thin (5-10 mi.) fuel-ash bed is accumulated and consumed before discharge. Since so little burning takes place directly on the grate surface, maintenance and replacement is less frequent. This system does require front-end processing facilities for preparing a coarse-sized refined fuel fraction RDF-2 from MS with usually only ferrous metal separation. There is less sensitivity to inclusion of the fines and entrained glass. This type of burning system can accommodate the spectrum of fuel sizes passing a screen with six inch square openings. The steam generators i G+DrtlCmnma~ruM J\ .n t "ti s I ti 1 J 1 1~ rp ~/16~ t4nr. r 'I,i Y`L T` 1 J•°1 I ~ im ~ .b 9 4 designed for the application and can be arranged to must bespecifically as as auxiliary fuels. accommodate coal, oil or g Ohio, and Niagara Falls, New Ontario, Akron, Installations at Hamilton, designed for firing RI Tnatallations of York were specifically des with Ames, Iowa were retrofitted to accommodate RDF-2 for co-firing coal. Full Suspension require a more highly refined fuel Full suspension firing systems There are many industrial size installations of than these fraction. and GM-Buick, Flint, liichig ,i notably at Kodak Park, Rochester, ial-fired facilities initially designed for l particular tangent era when on-site power generation multi-fuels were installed during the for process, heating was not encouraged. They generate steam only facility was designed for combination firing and/or cooling. The Kodak flash dried utilizing 1 of an RDF from in-plant wastes, deiatered sluges ( 6 oil or waste oils and solvents, as well as No. boiler flue gases), larger and also arranged gas. The Flint installations are similar but for pulverized coal firing. Iowa for 620,000 Pounds f front wall The large unit currently being erected at Ames, through four rows o steam/h. is being arranged for PC firing circular burners and three levels of side wall all nozzles for firing RDg' oat with dumpin and will incorporate a wide furnace hopper water level. grates between the throat and ash hopper rated ~,'aste-to-Energy systems. indication that the All the (rs but theseoshouldebenan integrated Thera are others, vagaries of the k'-T-E concept provides significant insulation from the 20 years) - for economy, the unpredictable nature of the feedstock and its impact on the RDF product and the future direction of fuel use. ir, t~ ' L,! . v y ~o i.~ RDF Feasibility Studies A cost/benefit economic analysis would be required to determine feasibility of an RDF facility. Revenues and expenditures would have to be identified on an annual basis and present wortbed to one point in time for comparison. Key parameters that must be addressed are as follows: Costs - `DF Processing Plant finance costs (up-front) ` - Interest during construction - Operating expenses Interest on debt Disposal of tailings operations and maintenance of plant Landfill charges Benefits Sale of RDF Sale of Iron and Steel i Sale of Aluminum Sale of Glass - Tipping Fees i The economic analysis must reflect the specific municipality's financial position as well as general financial parameters, particularly inflation. The entire operation is dependent on reliable supply of h"M plus a market for sale of fuel and other recoverables. These multiple dependencies necessitate imposition of a high contingency factor since any fluctuation of market will have a severe effect on profitability of the RDF option. To date, no RDF facilities have proven to be economically justifiable, ~I however, as operating experience is accumulated and conventional fuels 1 continue to escalate, RDF is expected to become competitive. I 1 f E ~ y N `~i M.r Cr1¢ pfP Cpl f f ~ ~ i ♦ ~i n' w K ~ Nti r,~p i ~ e1p . r 1 l 1 r r i r^t t~, r ~ ter 'pT s 4 Y P i t e r y r r A , SECT D_N IV FINANCIAL AMySIS OF ALTEnATIVES INTRODUCTION supply options under investigation, the ` In order to compare the power revenue requirements for each case were developed from theele nancal Power ased on these total revenue requirements, for the City of ` analysis. 8 ll supply alternative for continued operation will be selects which Denton. There are several common lassociatedlwith the refinancing of the include; the existing debt service ission, old revenue bonds; the proposed capital expenditures for muss establish" by distribution and general plant; and the funding requirements the refinancing bond covenants. Exhibit I\'-1 presents the existing debt service requirements provided to 's Financial Director. In addition to the existing Gilbert by Dentanonestimate has been made for additional capital expenditures the System), which are necessary common to each case except Case D (Selling These L rade or maintain the system is a reasonable fashion. The in order to upg ro3ects. expenditures include some planned transmission and substation projects- expenditures are based on customer growth data. For financing remaining improvements enditures, and 50 percent of purposes, it was assumed that all of the T&I} exP resents the remaining expenditures would be bondable items. Exhibit TV-2 P these capital expenditures on a year-by-year basis. The total bondable amount. have been subtracted from the total capital generated by expenditures to identify he amounts which should be internally Five bond issues have the City of Denton through its electric revenues. period. These been assumed to cover all bondable items through erhyear. The debt service issues commence in 1951 and are issued every • ywri rco+*aa~+~' io" . requirements for the common proposed projects are presented in Exhibit IV-3. • The total saausl debt service require meats for these projects are included 1n the Financial Analysis voder each case except Case D. As a result of the refinancing conducted in 1978, there are several bond indentures establishing funds which affect future bond issues, and which must be addressed in the Financial Analysis. For the purpose of this analysis, all funds with the exception of the retirement fund, are financed according to the indentures of the 1978 bonds. This required that the Reserve Fund and Contingency Fund be augmented based on the size of the new on the gross powerrevenues issues. The Improvement Fund is based Improves,eateFundc system minus the cost of fuel and/o: purchased is used for needed capital expenditures except as otherwise noted. One final item considered common to all the cases where continued operation of the electric system is being evaluated, is the transfer of from ,the electric utility to the General Fund of the City. As a the electric utility need only to set its rates at a level to generate sufficient monies to cover the Debt Service Requirements at a 1.4 coverage ratio. However, precedence has been established and has now become an operating reality for the electric utility whereby some funds are transferred to the General Fund. For this analysis therefore, revenues are generated at a level sufficient to allow continued transfers. Based on the 1980 estimated amount of $1,255,000, transfers to the General Fund have been increased at 6.3 percent/year. This increase is based on the levelized growth rate of electric energy through the study period, and is common to all cases. It is also used in evaluating the cost/benefit of selling the system. CASE DESCRIPTIONS The financial analysis of each of the cases is conducted to develop the annual revenues from the sales of electricity. These revenue requirement are determined based on an amount necessary to cover the operating exp roan1WRW U" ~,rl; i ~xtlnsine uirements of 11"h mutually were and funding req the operating expenses the financing evaluation. For eacb case, . alternative under developed in section 111 under the Power Supply Alternatives discussion, enditures additional capital exp cases requiring Sinancing are In this section, for those the capital costs and method that of the method of ~ described, it should be noted those al, from review. entirely the consultant's discussed and presented for uirements is later daft. financing the additional cap~tal reqfinancial advisors at some are reasonable, and should be reviewed by Denton's the financing bed the tbat the assumptions regarding und and the funds establis believed al F It is to the Gener a are the transfer s y l bond indentures, by back-calculating from } case are developed b. debt for each funding reouirements, The revenues from sales all transfers, the analysis begins the amounts required to cover sion of expenses. The Progres To this amount, the service, and operating the General Fund' partially amount to be transferred to Reserve with the ca ital expenditures are The added, which Contingenc can yRebe ad p internally generated p vement Fund. venues. For offset by the ImPrO arrive at the Balance of or completely to arri I irements are added next be paid into the retirement fun • Funds requ assumed to analysis, no monies are ency fund this Ve fund and coating ade regarding the reserve of b°nds, assumption is m pn addii 1:'1 amount one major assu~aP ro}ects. order to for the major capital intensive P will not be ~s~eb in ital expenditure the interest earned is and above the cap those funds. However, since over fore, no t for the provide the monies for the net result is zero. There equal to the interest owed, funds in the financial analysis excep The ivea to those a capital expenditures. recognition is 8 the common propose and contingency existing refinancing and earnings from the Reserve Fund while that the serest owed from those monies, difference being exceed ttie in. of current ope-ations. Fund for the ref~nancl°8 were partially funded out the common proposed issues y ufrements are added to The Balance of Revenues and Total Debt Service Req other Income is arrive at the Balance for rebt Service. F'o' thancome is'derived from the subtracted to give Net operating Income. other Capital plus the interest earned on t eIncome interest earned on Working and CoctiagencY Fund. other Retirement Fund, Reserve Fund, bond issues is and common proposed from interest earned from the refinanc Jug shown on Exhibit IV-w. Working Capital ,as assumed to be $6 million at the so for the of 1980. This amount was considered to be eXenerated capital beginning s used to provide the Improvement g rovemeat period 1980-1983, it ws period no payments were made to the expenditures. During that Fund, effectively reducing the Revenue Requirements. Expenses were added to arrive at Total 1jet Operating Income and Operating were deducted to give operating Revenues, from which Miscellaneous Revenues from Sales. Miscellaneous Revenues were developed by the needed Revenue collection for charged off accounts, taking the estimated penalties, and miscellaneous reconnection fees, house moves, sale of scrap material, for 1980. These were then escalated at 5 percent per year. ed in the same canner, with are made between Section develop • The revenues from Sales for each case adjustments made as required. the cases and are described in greater detail. is the use of a higher escalation rate in developing the One item for note, or total capital expenditures for the alternatives in Cases A in past studies. The reason behind this is twofold. reviously been running at a higher rate than p inflation has generally s tended to be on the Second, past capital estimates have alway ensate forecasted. It is intended therefore to comp low side upon protect her escalation rates in the earlier for these items through the use evaluated. years of the alternatives being • GAti ILaN^onr'uM T;L 5 Y q A k 1a E)41IbIT IV-1 CITY OF DEN'tON Existing Debt Service Requirements (00018 DEBT PRINCIPAL INTEREST TimacE TRANSFERS FOR V.S. YEAR ,01+ERNTTNT OBLIGATION PURCHASES 1,035 1,886 0 198ri 850 0 1,036 11b52 1981 816 0 11037 1,817 781 1,783 1982 0 1,036 1983 747 0 1,036 10747 1984 711 0 19036 1,722 1985 686 855 11016 1$871 0 1986 970 2,105 0 1,135 1987 916 20080 0 1,165 1988 10200 856 2,058 0 1989 799 1,999 0 1,200 1990 1 l 1 l EXHIBIT IV- 2 C1TY OF DgNTON CaPlt~ ditures Com~,to" to All cases 1988 1989 1990 C-AL yEAR 1986 1987 1984 1985 1982 1983 2,848 1,412 1,344 1980 1981 2,974 2, 1 1,513 19656 1,965 2,514 ,953 1,649 1,111 ,rovements 1,450 10766 'Total fnpital Imp 200 900 1,412 19111 10524 10082 11144 Transmtesion 6 Substations 19573 19656 1,765 10614 10953 1,644 Sub-Total 20212 2,307 672 706 787 82A 1,083 1,707 977 825 556 541 612 706 B F, "Tranamisa~inns ~(5ob, 762 786 828 882 807 916 824 555 1,160 internally Generated 30000 3,000 19500 41000 Bonds sold f:7M15~ i~ Feve~we 6onA rlµarln{ Or,pt svlc• 0~0 i u 0~*. 17{1~L5 P 1 IVTA'-' J 000 1 {969 ,00,000 @ f1 ,000• - P 7j ►967 nc lateseet 1955 rslne a Interest ~ 120.000 f,00p~000 P 1957 Interest l9Fl t M - rr "Cl a 297,600 J~ nt n inLeseet 120'(w 407.400 1911' 564.650 60.000 771,600 tool {05,000 70 000 212,100 676.500 19111 205,250 ~ fylp 226.400 50.0m 52,50 706.150 1991 90 000 219,600 60,0M 206,400 104,700 960.1 511 600 199.550 20.000 110,000 1995 ,000 2 12. 000 70.000 1.1Vt.n50 1994 90,000 194.600 102,550 216,900 107,b00 00 100,100 100.000 40,600 1,k67.400 1997 11(.000 Ow 155,630 40,0 M1, 110.000 260,150 1.)21,100 1995 120,000 119464,,400 400 100,IM1<1 162,000 50.000 30.E 96,'960 120,000 261,100 70.000 60.500 1990 10,000 110.000 176,650 1910 110,000 11)'00 mi I S' NNW Xi118~- l-- Tom- 4 C1T BEN Existing other lncome 'RETIRFlSFNT FLING TOTAL OvFR INCOl1E RFSF.RYR 5 f.ONTINGF.NCY EARNINGS 6 ("RTINGENC . Y FUND EARNINGS ON RESERVE COPIlION FROPOSED WORKING CAPITAL INGS ON YCA FUND EARN 706 EARNINGS REVINANCSN~ 0 0 570 r-- - 145 0 19P,0 561 145 10 0 470 1981 415 21 420 145 0 1982 304 145 30 0 400 1983 245 11+5 39 0 405 1984 216 145 44 312 722 1985 216 145 49 623 wills 1986 216 145 fit E23 10062 1987 216 149 74 623 19069 1988 216 152 18 623 10075 1989 216 81 155 216 1990 wRil, ri :67 i.n "nR 7F viGi r 5 's r 4 ~ ~ ! w ~ ~ ti .r t. A< ~ : ~ 'w M A ~ ~ , ; 9b *d s • ; . ~ ~ ' • CASE A - FINANCIAL ANALYSIS Three alternative s have been evaluated in regards to the continued expansion of Denton genera'.ion. The first involves the construction and operation of a 100 MW coal-fired unit. The second alternative is an evaluation of repowering the existing units, with the third option being the addition of gas turbines. The following paragraphs describe the capital requirements of each alternative and the financing of the capital costs. Coal Unit - The 1960 capital cost for this alternative was previously described in Section Ill. The total cost was estimated to be 5104,2001000, which includes both direct and indirect costs. Since these are 1980 dollars, it is necessary to escalate the costs based on the expenditure schedule presented in Section III. Table IV-A-] below shows the actual current dollar estimates during the construction period. TABLE IV-A-1 • CITY OF DENTON Capital Cost Estimate-Coal-Fired Unit (Million IDC Percent of Constant Current Cumulative @ Year Total Expenditures Dollars Escalation Dollars Costs 8% 1981 2 2.1 12 2.4 2.4 1982 2 2.1 12 2.6 5.0 .3 1983 4 4.2 10 5.8 10.6 .6 1984 15 ]5.6 10 23.7 34.5 1.8 ]985 45 46.9 8 76.9 111.4 5.8 1986 26 27.1 8 48.0 159.4 10.8 ]987 6 6.2 8 1].9 171.3 13.2 Total 100 104.2 ]71.3 32.6 For this analysis, it was assumed that an 8% first montage bond would be issued at the end of 1980 for the sum of $204,000,000 to cover the capital and financing costs of this plant. Table IV-A-2 below presents the financial procedures for this issue over the construction period. • MonlCWMV "V, r . r T!T s i Si r 7- 77" TABLE Ili-A-2 • CITY OF DENTON Financing for 8%, $2041000,000 Bonds (ifillion Remaining Unused Earned lnterest Balance Capital Ba lance Iat~= Ex-~SE Princi al Draw_OS 16.3 208.5 Year 16.2 198.6 2 4 201.6 16.0 16'3 192.2 1981 204.0 2.6 198.9 15.7 16.3 166.6 1982 201.5 5.8 192.8 14.4 16.3 83.7 1983 196.6 23.7 168.5 10.3 16.3 24.2 1984 192.2 76.9 835.7 9.7 4.B 16.3 (2.5)'` 1985 166.6 48.0 12.3 1.5 16.3 M 1986 24.2 11.9 out of current aid 1+~987 The outstanding amount of $2.5 millioa is to be p operations is 1987• will commence' commence- debt service requirements for this project Beginning in 1988, rincipal Payments are made on A grace period of one year 1s assumed before p principal payments are hatk-ended resulting in bonds. The oration. Exhibit IV-A-1 the outstanding the initial years of op lower payments during Of this alternative over the summarizes the operating and financial results ration of the coal-fired unit, Prior to the commercial ope study period. lied by a mix of the existing stem requirements are supp applicable Denton's sY power. Other than the directly generation plus purchased resented in Section 111 and the iona financing costs, the operating expenses as p ad ustment to the improvement fund as ass described iadthe associated j sts, the other line items are the s financing co Introduction of this section, ed for Units - 1980 capital costs have been develop Re oweria the Existin repowering Based on the results of the loa Denton's existing units. X983 with the the repowering alternative would be needed by required for lead time is ui red in 1987• 80 percent seforeccond ast, unit req A three year 10'10" construction, with an estimated expenditure schedule of Table IV-A-3 below sets forth the estimated capital during construction. including escalation. costs for repowering two units, town tU"WW%JV nw X 3 Ya! ? , • TABLE IV-A-3 CITY OF DENTON Capital Cost Estimate-Repoweriug (Million Total Capital IDC 11980 Dollars Cost Cumulative @ Year Unit l Unit 2 Escalation Current Dollars Costs 8 1980 1981 12 1 1982 2.4 12 3.0 3.0 1983 2.4 10 3.3 6.3 .4 1984 19.2 2.4 10 32.8 39.1 1.8 1985 2.4 6 3.9 43.0 3.3 1986 19.2 8 34.0 77.0 4.8 Total 24.0 24.0 77.0 10.4 As with the coil-fired unit, an 8 percent first mortgage bond would be E issued at the end of 1981 to cover the capital cost and financing costs of 1 repowering. Table IV-A-4 presents the financial procedure over the ' construction period. I TABLE IV-A-4 CITY OF DENTON Financing for 8%, $88,000,000 Bonds Nillion Capital Unused Earned Interest Remaining nct Year Principal Down Time Balance Interest Exvense Bala 1982 88.0 3.0 85.0 6.9 7.0 84.9 1983 84.9 3.3 81.6 6.7 7.0 46.7 1984 81.3 32.8 48.5 5.2 710 1985 46.7 3.9 42.8 3.6 7.0 39.4 1986 39.'4 34.0 5.4 1.8 7.0 Added to Other Income in 1987 e+aerc ira~mwrrs nv ti r-~ x r ,~e The debt ervite requirements begin in 1987, and again, a grace presents for • one year was assumed for principal payments. Exhibit IV-A-2 sents the financial analysis ae;sociated with this repowering alternative. Combustion Turbines The combustion turbines have been scheduled for installation in 1983 and 1987 to meet Denton's projected deficit. The 1980 capital cost has been estimated at $9.9 million, with a two year expenditure schedule. The expenditure schedule has been estimated at 10 percent for the first year, and 90 percent for the second year. As with the other two alternatives associated with Case A, Table IV-A-5 provides the Capital Cost estimates including escalation during the construction period. TABLE IV-A-5 CITY OF DENTON Capital Cost Estimate-Combustioo Turbines (Million Total Capital Interest Cost During 1980 Dollars • Year Unit 1 Unit 2 Escalation Current Dollars Construction 12 1.0 0 1981 •9 1962 9.0 11.3 •5 - 1 12 2 - 1983 10 - - 1984 - 1g 1.5 1 1985 '9 1986 4.0 8 15.9 •8 Total 9.9 9.9 29.1 An 8 percent first mortage bond is issued for $12.8 million at the end of 1980 to cover the capital and financing costs associated with the first phase of this alternative. Another bond issue for $18.3 million is to be issued at the end of 1984 for the second phase. Table IV-A-6 presents the financing costs during construction. G~lotr~ 1~enwnan.a+dn Tr~ r . TABLE IV-A-6 1 CITY OF DENTON 3 Financing for 8%, $12,800,000 Bonds and $18,300,000 Bonds (Million Capital Unused Earned Interest Remaining Year Principal Drawdovns Balance Interest Expenses Balance 1981 12.8 1.0 11.8 1.0 1.0 11.8 1982 11.8 11.3 .5 .5 1.0 0 1985 18.3 1.5 16.8 1.4 1.5 16.7 Ij 1986 16.7 15.9 14.0 .7 1.5 0 Like the other alternatives comprising this case, a one year grace period on principal payments is assumed. Debt service payments for pbase one begin in 1983 with principal payments back-ended to keep costs lower in the beginning years. The debt service on phase two begins in 1987. Exhibit IV-A-3 presents the financial projections for this alternative. Gown ICVW*1%UV to SIT 1x-2-t fl*T or eeliO gee, rt - -u IIIIAMOUL AtN1 M tfeo 1981 1982 1917 1966 11611 1921 ife) 1182 1919 1990 6~R 1),999 21,876 26,616 ]1,601 40,262 ii ,111 H,746 Se,lll 111 ,{N )1,110 85,40! Revenues from [eves 741 1119 212 216 300 315 )3L 348 ]611 163 402 Mlau ltu,eous Revenues - 2.615 _ 2.111 T 75,5]4 81.161.581 [,cell to Revs,u,ea - prior years Total Operating }avenues 11,246 27,135 26,186 ] ,117 60,562 45,126 50,071 51,455 - E SIwI l Y■Tlefle 06M 12,976 15,965 19,917 25,731 51,300 ]5,403 79,101 46,511 39,1.7 61,111 49,%54 hrclused rover 09% 1.150 1,201 1,261 1,171 3,589 4,141 4,561 ptoduct loo 06M 946 991 1,047 I, Transmission 6 Olattlbutioo 819 1,046 1,210 1.75] Ir59e 1,126 1,015 2,2)1 7,46► 2,120 7,006 Customer sects. It gales 619 Il0 916 1,071 1,237 1,414 1,563 1,7t9 1,901 l,QOl 2,324 3111 41! 411 _ }2 2 ,454S4 15,91 40,ST1 ♦5,448 50,108 41,2 1 34,471 61,03 AO■utetrstlw 6 Gana nl lS 611 H,22) 27.650 29 S Total Operaling [xpenaee I~ OPTRATI)10 IIKx?li 2,473 2,906 3,216 1,433 4,646 4.555 4,629 ).l Sl 26,25] 2),225 17,541 IMtER 884:5918 106 570 470 420 400 405 722 1.046 1,062 1.041 1,075 3,141 3,476 1,106 7,857 3,046 4.960 5,15L 1,799 21,315 16,198 2&,624 MIANC[ FOR OUT 512IYTCE I U "Ity 1,866 1,152 1,011 1,163 1.147 1,112 1,671 2,81 2,011 2,458 1,99 Refinancing poscJ 120 298 401 $65 5611 617 106 8661 1,110 L 700 1,127 700 1,000 rtlnclpAL Interest _ 2.$00 ,-ki, 10 .~1;L. Rrv /sclllty 2 312 1,349 2,517 3,466 {9,511 20,217 20,446 fugal Debt Service 1,8,6 10912 2,115 2,190 , 1.67 1.76 1.)11 5.16 2.11 tell 2,06 1.51 L40 1.10 1.40 Coverage Patio KAIA14LE tx NOVAILS TO: 1,255 1,506 1,591 1,667 1,734 2,611 2,714 7,1)) 7,104 1,0115 6,174 2etieencut fund 56 Itcserve Tvnd - 11111 L55 140 lis 1, 738 120 120 S$ S Cl nlingeocy ►nmd 11 11 711 Isp rovicee nt fund 42) (411) (579) (5901 MI) (1124) (5001 ({'~62f li, u 1) (3'6)1) (7,706) Inter "I Capital Expenditures 786(13 628(0 68211) 976 916 S 104 5,811 1,761 7,041 2,176 1,713 Traosfor to Ctntral fund 1,255 1,314 1,419 1,506 1, 3211 211 1,13(7 5,661 2,711 164 CACeas In Impruvtment IonJ - " E,cen used to RtJaCV 041ee In 2,615 2,117 2,614 follovlog Yeat esCept as rwled NIrt CS: (Il few Excess Oocglne Caplrel Ito hmJsnre"tee""'d trowut, Nod (11 lupruvt.ent rood used lot lntarnally te )fisl eirand T: r add i.F a e - gin or mmm JIG><e A - laawwartu i]MA7EM ANAL M 1910 191! 1982 H!3 {984 If15 1116 1117 1111 1419 2790 LYf1SE1 Ievenuee fr,r $site 17,949 21,9OS 26,613 32,102 41,116 44,809 41,36] W,7S/ 70,771 J7,12S 1),115 Nlscellanewu tevenuse 247 ISO 212 1" 300 111 331 341 US 3q 402 Incest Ia geveaoes . hfor Tears Total Operating levenwee 11,746 22,164 26,!65 37,961 41,476 45,124 49,194 64,607 71,460 71,043 14,4 u rLx56s ?met 6 9•rta614 OLM 12,936 IS,f64 19,979 25,360 12,016 IS,S96 39,807 rurclwktd ruwer 46,114 $1,703 S7,545 63,116 Prodoctlon 0611 - rd end 946 1,02) I, 106 1,193 1,218 1,012 1,0% 672 141 107 III Tr ion a Distl►utloo ; 1,; G 1,210 1,193 Cnstuawl uarr Ac 1,578 1,124 2,010 2,231 2,464 2,120 3,006 Ajoialbtrative 6 Central cts, 6 at936 1,019 1,231 1,414 1,541 1,128 1,906 2,101 2,324 Total operating ]S{ 1 1 11 476 $50 Ell 121 747 162 }1] _ 1.074 U layeaees 13,611 49,256 2],709 29,1023 36,130 40,569 45,210 SI,S),795 64,291 1 ,523 N t'f Ort:MTlM1: I(k 2,415 2,901 ],2)6 3,431 4,646 4,55S 4,614 12,960 13,NS 1),I00 11,885 Olllt'g ]146114] 706 210 410 420 400 405 122 1,048 1,062 1,069 1,073 BAtANCA rt81 DART Spyltg 3,141 3,476 3,706 3,85) 5,046 4,960 S,116 14,008 14,121 14,849 U ,960 Ieflruacing 1,886 1,852 1,811 1,763 1,141 1,172 1,611 2,105 3.1X31 2,056 1,999 Cuown Proposed - 120 298 401 565 627 706 861 1,110 Prlnclpl Interest 1,143 1,721 Mcw Facility 300 100 - 500 Total Deft Service 1,186 1,972 2,115 2,190 2,)12 2,349 1,571 10,006 - 1~!- _2.000 C uv, ra ga Ratio 1.67 1.76 3.15 1.76 2.11 2.11 2,07 1.40 10,519 {O,f 71 10x686 1.40 1.40 1.40 et(ANtg OF 1IM"Ut9 To, 1,255 1.5% 1.591 1,643 2.734 : ell 2 Ietlrcaant F,114 ,759 4,002 4,206 4,241 4,214 Ivarn rr ►w,J - 15S 153 140 140 i3 73 190 Cuntingency ►wtd - li i7 IS 190 50 SO LptavreKnt rund 210 8 8 20 20 S S tut er,ul Capttal IdpwWoltures (481) (542) 45953 (643) (784) (793) (643) X1,563) (1,666) 17,716) 11 786) 186(1) 721(1) 162{1) e010U 976 Iii Central Fund M 162 $41 672 ~70G Trv na7er to I,iSS 1,134 1,419 1,508 1,60) 1,704 1,111 I,91S 2,047 2116 2,)11 6'xee a In Iayrovraent rund 310 1,11) ,1]7 1,, SSS 4,186 Incest Used to RrJore Rate in 2,337 rollowlns Year - - 3(y, 213 791 111 Nurtg; (l) "'n' Iecras Vur)InI Capita) No fun Js transferred to tapruveauatt pond (2) l.ptuveaent rund useJ for gm ertmlly genwtated carnal expenditures eacipt as noted 6"r 4v 4N, V< r e r l ~y ii.~ ~t , a. Y'N ~,i 1 tc'' r r i l~ 7 77, ' Il9LIIt7 19,A.] ~`U't d' 17rYlOI! filll~~~\lOell~,a 1r,►Ityr Lltl~l~I. A2~SLY116;1 R if 1161 l91 1f 3 H6 1l65 1566 1917 {!L 1!f) ( EiYP~t,I Revenuer fr.a Salee 17,999 71,905 26 617 , Nlaeallaasoua Reve,n,ss 71,724 40,576 46,146 31,7)/ Si,7)I Total 06eratla6 Revenues 64,365 20.051 U 16 1 11,101 2,264 26,!47 34.01 40,6 46 167 R . Sl, 36 36,46! 64,9) 91,11 7m. so) r~w3f1 66 VatyaLie 06M 12,936 IS 964 , p„rcl,e acs paver , If f7! 25,297 )1,745 ]S,li9 )9,603 44 065 productlan 00-It - rlaed - - , 49,011 54.415 60,611 Traaulaaion % Olstributlon a 1! si 1'021 1,106 1,231 1,737 1,497 - Ce6401k, Ac4ts. E. sales 6 1,046 1,210 1,617 I Tct 1,35] I,S96 I,A26 2,017 2,271 3•Lµ 2,0µ 2,200 Adalnlsirative 6 Cenral 669 610 576 1,393 ) 2)) 2,464 1,120 1,006 _~S1 41) 47E 1,414 I,SS) I'm t,l01 2.707 1,)24 Total operating Ispe nser IS,III I7, 716 17,7C! 2f•$y$a --X71 221 791 Gal ,j~~ 16,041 I0,771 45,54`3 -y6-jt7 u,416 H,1di M O%#A71)IC [1K*_ 2,4)) 1,906 7,776 4,451 4,790 3,126 3,959 I'm 6,654 1,126 OUR l~ 706 170 470 120 20 !,1 )7 400 407 727 1,O41 1,062 1,065 1,01) LAtAMC.X 17 SITYICC 7,141 3,474 7,706 4,179 5,190 6,271 6,611 9,044 5,716 9'ev5 lu,IlT koaf 7uY~1 ClaMMMun proposed 11,652 1,111 1,18) 120 3'717 1,122 1,171 2,105 2,176E 2,051 1,999 prlncl7.a1 Interest 298 401 565 627 7D6 661 Ilev h,.ltitp - - 100 ISO 700 250 3,110 I,ti) 1,923 rt lnc lyal Interest 1,024 1,020 1.010 996 )00 )SO 4;a total Dtbt Service - _ _ 571 9% 030 900 Coverase Aatlo 7.166 2,472 2,111 ),2E1 1,472 - - 1-J64 1 f•4 6 ~M 1.67 1.76 1.75 3'509 3,777 5,. 6 0 651 4,107 6,271 6 ))0 1.32 I.SI 1,76 1.)7 1 SAIJVICR w eivt2,E is Tv, 1,775 1,59 LSf 1.61 Reltr Z7. fund _ 7,506 I,S9: 1,663 1.711 2,772 2.901 J.186 Reserve runt 7.617 7,651 3,111 Cont Insencr fund - 777 155 140 140 )y _ iep,c.n-aeut 11md (2) I7 If is is 77 IYU 190 S0 50 ] 6 ntu nal Ca pits! ixpe nJl (461) tures (542) 1 !66(11 (595) 6 70 70 17) U (799) (975) (1,014) 5 S Trin of er to (x rr rsl funJ 176(1) 662(l) 60711) !7i 124 551 (1,25U (1,7567 (1,427) (11514) Lau sa In Iwpto vea„nt Fund 1,255 1,734 1.419 {,5(70 1,60) 161 $41 611 1,704 1,611 1,975 706 4.041 t 114 S71 I,10) .176 7.917 1,999 7,14: 1,945 Iar7es; (1{ ? I'tonceax workIng Capital - Ito Linde tranaf er-+d to Lytovemmut rand (]1 IWure~enl Vianund used for Inten.,ily Leneteled Cepitel expeodlh,res except as ,wtei ~ F~ nt: n i~r r ~ i~ ,i ~ r .~3 u, ~~r %~V~ ~~r'1i ~ ~ ^ ~ T S i _ 1. ~ '~~r ~ . - Y ~ ~ ~ r i.'• i d r r f ~ • 1 ~~~~1 -A ice; ` r r r,e~ ~rP~ t. h CASE B - FINANCIAL ANALYSIS The two cases selected `:o evaluate this option are descr?.bed in detail in Section 111. The capital cost estimate was obtained from the participating utility and adjusted to reflect the higher escalation rates used in this analysis. The operating costs were likewise developed in the previous Section sad are shown in the Financial Results Exhibits. Lower Colorado River Authority - As one of the utilities which offers a joint venture possibility, LCRA has planned for a 400 MW lignite fired ado~ii coining on line in 1987. The 1980 estimated capital costs for that unit and Denton's 25 percent ownership are presented in Table IV-B-1 below. TABLE IV-B-1 CITY OF DENTON Joint. Venture Capital Costs LCRA Willion Annual Cost Percent of Current Dollars 1980 Current Denton's Year Total Expenditures UCRA) Dollars Escalation Dollars Portion 1980 2 6.0 8.0 - 8.0 2.0 1981 2 6.0 7.4 12 8.3 2.1 1962 4 16.0 13.7 12 17.2 4.3 1983 15 60.0 47.6 10 65.7 16.4 1984 45 180.0 132.3 10 200.8 50.2 1985 26 104.0 70.6 6 116.1 29.0 1986 6 24.0 15.1 8 26.7 6.7 Total 400.0 294.9 442.8 110.7 As indicated by the Table, LCRA had estimated the total capital cost at 51000/01. In order to recalculate the capital costs using the higher escalation rates used in the analyses, the original estimate was deflated at LCRA's escalation rate of 8 percent per annum, and then escalated at the assumed rate. Denton's portion of the total capital costs plus interest during construction is provided in Table IV-B-2. • sarrtlCnn+mawnhn 777 TABLE IV-B-2 CITY OF DENTON Capital Cost Estimate-Joint Venture LCRA Year Current Dollars Cumulative Costs IDC @ 1980 2.0 2.0 •1 1981 1.1 4.1 .2 1982 4.3 8.4 .5 1983 16.4 24.8 1.3 1964 50.2 75.0 4.0 1985 29.0 104.0 7.2 1 1986 6.7 110.7 8.6 Total 110.7 21.9 Like the other cases involving capital expenditures, an S percent first mortgage bond was assumed. The total of $133,000,000 would cover the capital and financing costs. Table IV-B-3 indicates the financing procedure during construction. I j TABLE IV-B-3 V CITY OF DENTON Financing for 8%, $133,000,000 Bonds Capital Unused Earned Ioterest Remaining Year Principal Drawdown Balance Interest Expense Balance 1980 133.0 2.0 131.0 10.6 10.6 131.0 1951 131.0 2.1 128.9 10.4 10.6 128.7 1982 128.7 4.3 124.4 10.1 10.6 123.9 1983 123.9 16.x+ 107.5 9.3 10.6 106.2 1984 106.2 50.2 56.0 6.5 10.6 51.9 1985 51.9 29.0 22.9 3.0 10.6 15.3 1986 15.3 6.7 8.6 1.0 10.6 (1. Wr * Paid Out of Current Operations in 1986 A one year grace period and back-ending the principal payments was assumed for this project. Exhibit IV-B-1 shows the overall financial results of this joint venture. A tM iA K ,.r 75 M, J . Fhhas Light - The other alternative available to Denton for a roject is the western casl units presently planned by TPSL. ated the total capital cost for the first unit to be $540 commercial operation begins in 1988. To be consistent in the any, estimate is deflated and then escalated at the rate used throughout the report for capital costs. Table IV-B-5 presents the new capital cost estimate and Denton's portion of the project (16.67x). TABLE IV-B-5 CITY OF DENTON Joint Venture Capital Cost - TPU (Million 5) Annual Cost Current Deoton's Percent of Current Dollars Do1980 llars Escalation Dollars Portion - Year Total Exve es TPBI' 1981 0.5 2.7 2.5 12 2.8 .5 1982 5.0 27.0 23.7 12 29.0 4.8 1983 19.8 106.9 84.9 10 117.1 19.5 1984 49.4 266.8 196.1 10 297.6 49.6 j 1985 19.8 106.9 72.8 6 119.3 19.9 30.1 5.0 1986 5.0 2~ 17.0 8 -3-1 ~5 1987 0.5 2. 1.6 8 540.0 398.0 599.0 9918 Total The Total capital cost include Interest During Construction is shown in Table IV-B-6. TABLE IV-B-6 CI'T'Y OF DENTON Capital Cost Estimate-Joint Venture TPU Year Current Dollars Cumulative Costs I1?~_ - - .5 1981 4.8 5.3 1.2 1982 19.5 24,8 4.0 1983 1986 49,6 74.4 6.1 1984 19.9 94.3 7'7 1995 5.0 99'3 8.0 1987 5 99.6 27.8 lota1 99.8 'OVA ~UMMWWSSIL% ♦ r r dh L An 8 percent first mortgage bond was assumed in the amount of $126,0001000. • Table IV-B-7 presents the financing during construction for this alternative. TABLE IV-B-1 CITY OF DENTON Financing for 8%, $128,000,000 Bonds Capital Unused Earned Interest Remaining Year Princi al Drawdown Balance Int-rest Exnsa_ Balance 10.2 10.2 127.5 i 198982 1 128.0 12].5 •58 122.7 10.0 10.2 122.5 1 ` 1983 122.5 19'5 103.0 9,0 10.2 101.8 6.2 10.2 48.2 1964 101.8 49.6 52.2 10.2 21.2 1985 48.2 19.9 28.'3 3.1 2 1.5 .6 10.2 (2.5 1986 21.2 5.5 16.2 1 10. 196] ].5 * Paid Out of Current Operations in 1987• Exhibit Ii'-B-2 indicates the financial projection through 1990 for this again assuming a one year grace period on principal payments alternative, and back-ending the principal payments to keep costs lower in the earlier years. V I 1 Mort Iton.~ on+e~ mCLLa~ !„j CITY 0/ Patf11Q11 Cite I - Joint tentwte UKUKIAL AMIYSII 1960 1961 1952 194) 1964 loss 1966 3917 )gas 1961 1390 tIVIND[ 6evenoex (room sales 11,999 72,&16 26,614 32,601 '40,262 44,111 $0,133 $2,411 55,291 59,169 64,191 Miscellaneous hvanwea 241 759 211 266 300 315 131 344 365 361 401 axceee In tsvanues - friar Yrar - - 11- Total Oporatl.tg Revenues 16,246 22,111 26,666 ]2,167 40,162 45.126 !110.4 52,761 56, 610 As 161665.U1 p F4NSt9 Mull & variable ONe 11,936 41,965 19,961 25,331 31,100 35,403 39,601 24,361 26,071 29,161 ]2,812 P+rclu sed rower - - - - ft odwc ti on M8 9+.4 99] 1,04) 1,095 I'm 1,201 2.261 5,560 5,952 6,111 6,121 Tnvrsiselon 6 Distribution 669 1,046 1,210 1.)93 I,s9/ 1,626 1,019 2,211 2,464 1,120 3,006 Cust!aeer Acctt. & Sales 669 Ito 936 1,079 1,131 1,414 1.543 1,124 1,906 1,101 1,124 Adalalettative & Central -M 413 _ 415 150 611 711 791 441 91j__{.0I4 _jc" Total Opertttns txpeneea 15,611 19,271 21.650 29,454 35,916 40.511 51,441 34,761 31,163 41,415 4t.110 NIT OfZKATlW; LWAW 2,435 7,9(4 ),2)6 ),t.33 4,646 4,555 5,)14 18,000 19,242 39,3)] 39,311 lYClltit lmx 106 570 470 410 400 4D$ !22 1,048 1,062 1.(W9 1,015 MLAWZ jlR 1*41 SMlCt 3,141 ),414 3,706 3,811 5,046 4,960 6,436 19,(X.6 20,104 20,4112 20,446 Ltbl SYJty I Ilrfinau.1nS t, 6vfi 1.666 1,611 1,161 1.141 1,129 1,111 2,101 2,061 2,0St 1,999 Cancan rropuned - 120 296 407 SO 621 106 461 1,110 1.163 1,22) Principal loteresl - - - - 700 600 900 New laallity -r. 1.000 JRO 0 0 1a 01_.S._101 Total D.6t 6ervive 1.$Ni 1.972 2,115 196-- 2,]12 2,349 3,577 11,0 14,501 5)1 -14,6-10 CaV¢rm%6 Aatla I,al 3,76 Lis I.74 2.11 2.11 1.50 1.40 1.44 1.40 1.40 J44U11179 Of AINES!f19 70: 1,255 1,506 1,591 1,661 2.134 2,611 2,661 5,442 5,601 S,R9 5,642 lletlriv «,nt rund 190 50 50 140 75 75 190, tirserva ►und - 115 155 140, tbwtlnseney rund - 1? 11 IS IS 6 8 20 20 5 5 lopru•irwenl rund (2) (461) 019) (590) (4l6) (171) (810) (967) (2,311) e2,52/) (2,614) (217u)) internal Capital Ixpcuditutee 106(1) 924(1) 882(1) 007(1) 914 824 SSS 162 541 611 706 Trane(ve to Cenetsl fun.! 1,255 1.334 1,419 1,506 1,601 1,104 1,111 1,921 2,047 2,176 2,71) Excess In Imptavemeat tonal - - - 412 2,012 4,161 6,194 6,1]9 axcNa Oe9J to ttdOCe eaten to vollowing Years - - - - 95: 1,0Ib 1,45 711 N17trS: 1t) t'tcw txre a 110111n6 Capital - No (wide transfetred to loprovirso"t Fiend (2) Isgto(eaenl rood used for internally generated tuade except a noted i •rr{ ,T 1M •t •1 OUR-Has, ~ ~ JJL:sa-wLwu1 19n 19ee 39e2 1907 t,e4 1960 se,:►+ 16,141 27'ie! 401 Af.A r 40.162 44.111 49.146 y 1 la , 16,614 12,eK 315 m 1f ,Y 9f 71,126 212 100 67.5 1 )1' 9 II LYCM4!>1S 1ST 01 SS,S47 241 --4-0. ' S Z eYretwas Ism Sales 3t,Qi 562 64,111 SO,IS7 Kisca{tareoua Iaveouee to[ 10412 7 iU b' 44,531 40, 4S3 . 11,24 C ease 1s ore vew+wa lot s 6 35,403 1!.101 Tutal ofalatlal 261 4,566 ,!61 iS,)]i 11'300 1,331 1' t $88 l,004 1 15,96S 19 2,107 l,iN 1,211 1.01 2,)14 L3Y [ 11,!16 ► 095 2.15ti 2,017 ►'90e I, oga ►o'3 1,0111'0 3,197 1.5v1 I,e26 3,561 2,111 !!1111 /w1 6 Yatl•1le 0671 9L6 6 1,337 1,414 1)5 1.140 parch! aed ryw t ea9 !,0)9 2 45,446 50.101 --49.15 54. r"Juctloa 04d1 669 610 ~iR SSO 60. 15,749 Ttmrlseloct 4 Dldttbutton 4{]~ 29,454 1S 916 1,65! 12.141 1e,717 Cwtoae[ Acc u. 4 ealea 1S 2),450 6,555 4.429 221 4,►1b 1,06! I,OlS A J.l nl al r•tla 4 Cen.•ra1 jy.ell 79, t 1,061 eu[lM laps nses 1,41S 2,906 3,716 1.411 1,0&0 total 0p 470 420 4110 405 722 6,101 11,607 {9,150 19.644 cwCMT L7r {11C1NR 70b $70 6,960 5.151 3,411 3,706 3,e 57 5,046 1,999 OTIP.it iw;kw 3.LO5 2, ull ► 110 Io143 1,211 J ,l4l IRIJ•6t'.9 f "6T LRV t•C toil) 706 161 '7o0 100 07 1,741 1,613 1,7 545 617 l ) 0 I,xeb I130 290 401 2 bW 0 2 o 24,114 1LC1 LRY C 5,566 {1.4j1 1.40 _ .40 1 2,577 1.40 ( fe[lns nc ln6 2,]11 ,'14! 1,De 1.60 C.ae•un h upo lord t90 1,16 5.771 , S,b70 principal Interest l,ee{,91115 5 451 L le 2.11 NYV /acllltp 1.16 ►,15 3,611 1,714 1.1'1 _ SO Total Dent Service 1.67 1,663 1')14 I,S9l 140 190 50 % Rallo ►'SOb - 75 75 20 Cava (1lM ,255 1 140 f 20 1'251) 13,1 671 75N 11,106 1*.~ vLSO 155 155 1140 15 a 106) l S41 2 11 l1 S (111) (110) (555 11'162 1,1)6 ,311 Reelcetaent f,tnJ 17 (6161 114 sit ►,915 2,041 b,S40 Ieevlto ron8 (519) 1590) 10711) 916 1 )04 bel 2.5s? 4.460 Con1ln6Ync7 hmJ (461) 626011 60311) 1,SUe 1,601 325 191 LptarYrnt fWJ (2) II40) 1 334 2'419 044 {,0)4 ell lme rna{ "I'ttal lapenJltures 1,755 - Yuvalet to Corners! To" Cacc as In [rpcuve,ICnt funJ f.ar see Used to leduca Rates In ,rv Ynent lard fallovlnY TWO transferr lrttdaoeaco'r ► n6 t a no luJ Co pll al [t" I"PdS 71(73 E6: (I1 frw lasers Vol 41 (21 laq[ovs nt ed [or lntertaliT send" I,md us ,oil l i 4 1°;t a~T 1 t a?.~ ~'4 Mptf CJ.~ , 1 A ~ t k~ r r. x a • pp N 7at'4 P: x r ' i 7 .J.~i3au n., W 777 FCA A INANCIAL ANALYSIS are represents the present course of action being undertaken by the re are no enton in meeting its future power req uirements. Thedescrited in ed capital expenditures other than those previously duction portion of this Section, and which are common to all the cases involving continued operation. The substant_al capital requirements of the Agency itself are incorporated is the rates charged by the Agency to its members. There is an element of risk involved in that if the units do k not operate, the City is obligated to pay its portion of the financing and 1 any other electric ` operating costs of TKPA. This is no different than ant I utility except for the magnitude of the exposure and the fact that the Agency's financing costs are approximately 5 to 10 times greater than Denton's existing financial costs. As indicated in Exhibit IV-C-1, the purchase power costs from Tl1PA developed in Section lII, represent between 10'80 power percent requirements suppliedabys However, over 95 percent of the City's p are IM PA. The coverage ratio for Denton's existing debt service is i substantially higher than the 1.4 requirement in the bond covenant due primarily to the need to increase revenues so tranfers can be made to the General Fund. Exhibit IV-C-2 indicates the Revenues from Sales if the coverage ratio of 1.4 is met. Glen rton+ewe.++M pr qua. tax ~y ~1.F j~l e,C ~ r ff ebb ram 2989 1990 tie? 9988 t9as t9a< t9a) 1984 1960 1481 N62 4T,U7 51.162 SS,H2 5!.]06 61,911 J ~6 "`-S!, !8 66,]11 'A I 4).690 66.)75 yj its 2T ,1S4 31'z6~ 300 - 6S 68,2 51,110 ,798 11.999 22 31!-"t'3 41 e s lrw Salsa t1 166 22,951 27.!26 - U,422 N,676 Nltcallanaoue 50,61 Ralevsnuce 40,560 1 total operating )♦,528 35•361 37,03 1.731 1,193 1 120 ).006 1.124 ),464 2,10? 12.116 9S1 73,p2) 11 095 1,150 1,201 2,019 1.111 76,161 1,043 ,o9S I S!8 1,8]6 1 2. 06 Sj,661 F2a YntlsD7e 06" SNFA (1) 6 11]9) 7,211 7.414 6'563 t„_....jI.]_~- F 54.147 u relJ ee u' Fwer !tow 9,046 1'236 1,01! ~q~ 50.165 689 I10 !)6 g U m 41,73: Fs oduct loo 06M 669 19,144 40,515 3.444 5,641 t[an wlao Alct►s. DL 6 t said& 77 5 24,670 30.390 4,919 5,397 CuHuwer Acc rat IS, It 20,049 4,646 4,555 6.602 I,OIS ne /ylolet utlvt 3.41] 1.043 1,067 3'27'. Total Ppt[al In$ L*IKnaea 1,046 6 co 122 2,415 2,909 420 400 605 122 6.454 6,511 6, RCt 0 k_6A[1 $10 170 5,124 6,027 706 7,1D6 ],8S] 3.046 4,960 2.058 1.999 0ni1 N ),741 3.416 2,105 !.OBI 1,161 1.221 1,77t 1,811 Wt 7,110 - y,~[ FOIL 4F8 1.781 1.741 N7 706 1 b66 772 565 3,191 1.852 1.617 407 2 .02 2.09 12.01 DEgt [lY C I, 120 298 _ 2.511 .966 2 02 2 2.0 2,712 2.]49 2.01 2.03 Sefinaucing --,115 2,190 2.11 Ell 1.500 Cr,.wan Frupoacd • 1.912 x 7116 1,061 1,261 7.291 Wu Facility 1.16 1.15 2,611 2.141 SO tutal Debt Service 1.67 1,663 2,114 - 790 5 Coverage Ratio 1,506 1,591 i5 190 20 5S 70 l6 ,troll (1,1171 1,255 , - - 140 b 15 8 106 155 940 1S (926) 541 612 6ASARLVt.NU 2S T01 155 11 IS (609) 985)) 162 (1 541 2 116 2,113 9ellTe+ae'nt rued 11 (6]6) 111)) 92414) SSS 2.041 1 Re '440 1,961 7,611 1,975 acrre Fcmd (579) (590) SO7(21 91614) .104 982 Cuntt Turd (4611 628121 b67(~) 1,603 9 296 iB] w+d 911 1.166121 ►,)34 1.419 1,SM - IwpaoveCa y ndltu[to _ interna1l G pit al Tape _ t[onatec to Cenarat Fmd Laceaa In lwpaovewent rued nt Fund neorlon [uv.wr: t u nutcJ wags : 911 c Ilot - ,w (.m S• t[onetetrad /0 ZapJlturaa excep t nc Judea DentYor►Sn~lt Pot C' tea c,pilot tape,, dlt ure■ (2) from Fxceu „aed lot intor w11Y Iseen ca ltal aap O) laprovewenl FunJ Mel tnlernal car at Into to (g) 8a la nee of revenues it, glow ~ i~.ll1L(Y-C-2 Est G as l: - Cont(owsd Ooeratlat KU TNYA r2NARCtAL AM1.111R - ALRRN6TIY1 1 l,4 Caver,Iu Ratio (6) 1990 1911 ll/i 1!6) 1914 SSIS {916 {917 1111 1969 1,990 IEVH8119 tevalwea fro. Sales 17,491 21,911 26,909 72,7'4 41,601 47,104 46,155 49,417 53,705 51,304 61,701 Nlacel!►ne w+a Rsveaws ?47 2#! !72 100 )tS 3S1 ]t1 KS___. 62,1OS total Opaldtlnl !lavers 17,745 22,240 21,111 17,0)6 41.181 47,41! 46,416 U,US 53,570 31,6e7 St s lur;haasd hat WA (1) t2.936 16.767 21,02) 26,171 74,521 35,36! 77,93) 40,360 4],422 41.611 S0, 1 rro.lucttoa OJ4 946 993 1,043 1,095 1,{SO 1,201 1,261 1,3)1 1,79! 1,401 1,541 Tranrtuton 6 Distribution 609 1,046 1.210 1,307 1,596 1.126 I'mit 1,231 2,464 2,120 7,006 Customer Accts. 6 S•Ls 669 610 976 1,019 1,237 1,414 1,561 1.726 I,9M 2,101 2.724 A Jrtnlal rattvs 6 Oene,al )SI 4ll 416 SSO 611 7jy_ 7!) all X11-~.~D.t Total Operalla/ lapenasa 13,111 20,049 24,690 7!!,390 19,144 40,53S 4),600 46.711 50,165 31, 41 S ,667 NL ti '[jN~_fitt' 1,934 2,H1 2,491 '1,646 2,631 2,164 2,666 1,104 1,403 7,440 ],476 706 510 470 420 400 40S 122 1,041 1,042 1,049 1,J75 lttOe.R ylk%M,~ IMAWK ?uR D1:3 S1RV1C6 2,640 2,161 2,961 ),0~6 3,237 ),219 3,606 4,152 4,467 4,50! 4,511 OCRT ELY CI 1,172 1,111 2,10S 2,011 2,051 1,999 teflnanclnl 1,666 1,652 1,017 1,70] 1,147 6 5.23} .ewn hupeseJ 121 2)1 _ 40,Z S6S 621 7116 861 Ito I.L . G Its 2,190 2,)12 7,749 2,571 2,966 3,301 7,211 3,221 Tctsl lbbt Iirsvlce 1,666 1,977 2 Ccvvrsla Raao 1.40 1.40 1.40 L 40 1.40 1.40 1.40 1.40 1.40 1.40 1.40 OA IAII'L l1L_ ILrd-Rl_r.•9 9 754 7419 846 e76 923 %0 1,031 1,106 1,716 1,261 1,209 lettrewcnt rand 11 17 O Ss Reserve fool - 15; 140 140 7; 73 190 190 S cone lnee,ky rw,d - 17 17 lS lS 1 8 20 20 S Lepe uveevnL rw,d (1) (441) (402) (5]0) (95) (621) (611) 11{S) (116) (641) (9001 (95y lnlernslly cenerated Capital ruod■ 106(2) 1121(7) Will) 6(1)(2) 916(4) 074 SSS 162 541 612 106 71 21) 200 219 771 Ti antler to t:enenl turd 134 6U E14 721 lay 16S S04 161 1,071 2,Less In 1063rvvtwnt FW44 ' tRll'!9: (I) Includes Denton credit for lvnetatlon (2) Prue lxuess Mm Lln9 Capital - IN funds •ransferred to Improveacnt runJ (1) Iaprove,,ot runJ used for Internally teoetaleJ capital espendltures except as outed (4) $S1,000 butruue4 (rase other funds Y a t f ~,r Y ? ~k~ f % E t v c 4t e,f f ♦.w }+{yA ~ p~ , ,h 1 v f ! ! !f ~Iri4 4 r i t 1 a: ~ tr iQwii!~~ -=f i 0, ~111'1 Y~ CATFIN ANCIA L ANALYSIS ot the purchase poser alternatives do n require • Much like the TMPA option, 311 any additional capital expenditures except for those which arc COated into the cases. The expenses were developed in Sectiu~c~8seapower o~ions Purchase a the financial analysis presented herein. Both Light and represent the two extremes of this I involve Texas Power and ' the Financial results of 100 pfrcent 1 alternative, Exhibit IV-E-1 provides wholesale purchases. Exhibit IV-E-2 presents the results of a Firm Purchase Contract. I I . Y'.5 o'RR'. No : n r NPI. 1.. g7II116it V"L'~ C itt.SZ' 007 rwwt ~t *so s y~ tt7vitC__!~`L-~Lt6~' 19F9 191W J----- 19F1 1966 6).690 17, 1963 402 3960 }96r..- ►1,0JJ 52.951 SF,160 w 071 71. l0i s} 42,73A 331 2 ya Si 31.650 )7I. i ]t 41.364 $S, 30 14,145 26.596 166 r- -2v k).04.9 11 949 T ! ! ~1 'U6 S1,62A 1 47.%1$ 52,602 '14 6 R£Yf 1A~fS C",,, lj 146 14•404 1F.SOS 43.315 006 V jevenuew ~rrrnnt■ 1►,SS] 'i 1x161 22 2 Nlrcellwir' gerrnnrw 2h,661 St,341 _ 2,231 tnt el PPa H Sn6 1!.121 73,010 L'o19 11716 11900 1,074 1 66..1124 x l1,lJ6 1,SIR 1,414 t,yM13 [6t ..1'0 SR,10] S]9 .56 {;tT{M56} 1,110 1'!9) 1 T)t 53.12 370 9wtiahle 446 1,pA6 L,079 6~1r1-Aq4 42 66 ►,at 6 a" 916 3! 5,325 o lo {ut<b"ted fowl 610 16~~60i 4,917 1,05 Tr n,lort Inn 0111 l6nf loo 659 413 1!.103 It. 4,661 3•06 Tr"n~leelnn 6 0lett LS It 71.496 25.614 4,333 3 OA0 1,061 ) r w. Rn1ew ,4]3 4,646 172 6 Rrtt 1; .1 Cn•t„+e P. {,enetel 3,276 1 403 6,311 R UO . Rd..leiwl t"tt" meet 1,Wft 400 5,965 tnlwl 1h'rt"l1nF fap 2,455 410 ►2b 5.704 1 ,960 %.999 iNU?4 706 S1b 3,653 5 IW6 2,061 7,036 1,121 lb, 611 1.105 1,150 3,171 1.141 3 X16 (,122 061 7.19 5.211 !.°R trT11LF. lll['111L 1,711 621 , 706 _ 1,767 M67 66F'r1t:[ 1,611 565 T,2.7f01 d 1.00 FFh 2.00 401 2, 1 62l p1!!'Ntf_,ft1._ 1,551 296 I 25~= 3.210 120 A.; t DY61 6Y]tY1Gt fill 1 7.16 h71 7,99, 3'19x, Sn 11x .are lnl' s9f, 1.15 2,1,1% 7' 19a 11 n ft°I,nard _ so 03) l:r.."!' 1 hi 1.16 y.t41 7,17A 1S 190 20 ( N,.wfwel hll KNvIN 1,591 _ 75 9 20 15411 677 (l . h'><+ 2,11 Lrl"t fN 1.755 1 ,51%', _ 160 6 (P641 541 1 {nvrrefr 6elto _ 1h0 15 (1)5) 762 S 1. 351 155 15 Ilth) S55 1 n25 2.047 },U 47 VUyfM'S SO_ 17 (350) (66 n3U R2h Ito 1.07 bhtAn! OF _ - _ l1 (506) 1.311 197 [,mA (460) 607111 1 h 1.70'' 116 fro tr,.not (4653 6F211) 1,30E roetre [undhmd 7F6111 62610 1.A t9 {..ntt'Re {.n+d l2) 1,255 1,]]A 1M'tnrer C" IVt1 ,%ren~tusre fon! 1 of trd I't"'ll pCrnrt rr,ernt t,n ttanwlet to r,.knl f+n'd aneler,,A `o lot! i~ItntH trr.p~ r41n6 CePN"t ' l1" Irndy tr Cwtrwe to Iwo all 6rnr rwted twDl lKtif,6s L11 frrwlwnl rto,d nsrA I°t lnterw 7 (T1 imorto' , r14 .L•'~tr' ~1r-- Sctfl1--~~ Ce1_l 6 =--t!lr±g_l~hu~--t 11V,11C 41"'- 1990 --."_'---~•199A! 1157 {956 30,112 31,152 , D SI 011 64,119 11,999 21,1116 2114 X-5.214 53,129 TS,e7i IV 271 241 l1,vfJRIW 11.+1ne IS 2A 31!'4M 62,615 69,076 ravrmr,e hr+ 45,4115 53,515 1,ski 0 43•406 1,195 1.465 pl rctllanrnue er~rm' erne ,o06 12 Tot.S lti.rrrllre 1.q,4R8 ]6, Ir131 1,110 1 11,967 24,2111 _ 11207 1,268 2,1)1 ;,464 211 7 2,314 11,936 1,00 7,026 21019 1,126 , .216 76 4AS 1.041 1,511, 1,561 U1~ 9erSeAtr rYll qh6 493 1,210 12'11) 1,23! 1,416 ie7 ' 6 - ss+r ~6t1 nit lt.nAe4 fCm 589 1'066 1'4+79 5,102 on ( 936 s4,1I2 r, nd„rt l 'x- 4e ti i S.M11 b ,Slbotlnn 659 $10 34.(05 40, 013 5,146 M 7, en Fel.+lnr 6 ale► 21.x11 626 4,629 1, 1.075 C.otreM'r Acd Y. lS,-.- 19,221 4.616 2,555 1,062 AddnUUrtlee 8 General 3,453 I ln11 e.rn"Ree 5,136 405 722 b 6,127 lnlrl ('rerat 1.435 2,91,.9 420 400 5.151 6.0112 6.wl .5A1 L A!0 1.119 MIT_Ot,MTI M, IN !06 S10 3,}S) SIM% 16'"0 1.106 2,0e1 2,055 1.711 0RH_,R 1N~1 Y 1,141 3,4111 1,411 1'105 1,110 1,16) Y itZ 1.14 ! 1,117 1tlF 5,121 f 7.227 M~1 SER_- 1,787 SAS F17 --5.191 11A1TM:C IlM 1.111 -'j,'W4 %,SRA 401 PCeT bT.KY3GL _ 120 2,1911 - 1,112 , 3,555 __0r1 ln:.nc lnR _ 1,711 1,V.A , n erd 1 9012 it 1.16 ).111 Cr.r.nn r, rn j,F96 t,16 1.17 1.714 50 Ftfv fnr.lllrf 1,67 2,134 1,F11 t9o 7 Tnrr1 Pebt Srrvl<r 1,171 1,FF7 - NJ S . 5,t io 1,Srb 15 1S 20 20 (1.(151 (1,11%11 1•r:r r. Fr 1,1SA 340 A (1.060) M• 140 D 1960) 6!2 tK'1 M FJVTM'FS Tp_: 155 415 11 77 l5 33 (Nr) (11P5 162 1,5,41 1 ' t16 I'm 1 ,247 NV!_-_---`•"`"• - I1 ( 611 11A1 9rtl~r►r nt JIM,, 11 (590) (616) q76 024 1.1111 {,925 1,125 {,07 Rrrerve r~md (1511 (1791 80211) bo {1W 1,701 325 SfiM1 Cnnt lnnrnef 1'nd A2R111 ,A19 1,10a 5 18F(I1 t 1„ptnvr..rnt Tmd ( (11 nlltnree 1,155 r.l•r' . inlr, n.) Ce pi tel ,)lA Tr+ ►e to Cone rel Im+dd acorn! fvnd no mvrwrr! TIM r,^A to InPre r. rcrPt ae n„t rd frrree In 1"C Ce ltwl - Mn h.rulr tterrh l 1, e.M'ndlt ntcr r,,.e Rr•ere Vnt11n8 P mere led car lenrs: 1» lTfevr,.rnt fund u.c3 rot Intrrn+'lif R 1( ill i -VIVOINK y> s T t 3, '~.i4 y AA 1~4}a i'. tltd ~ ~ ~ 'i x \lbr~p ~~+i~FrP ,1 .•i ~i` ( ! i i ~ i '1 r n ~ 4* P COY ~ 1 y ~;M1,>ti Z ~5.?':' ~liv 1 y ~ '~1 y Sv e~°q S~ M1i ~1 7~ v .a t 9 }~}i AN9~y. ! ti Ir `h~ µv ~ f'a Y i 1 ~ 1 i Y ff ~ r,= a<l i4 ti~ r~ l }tp nC ~i .IJ 77 4't i` e ( k.,. ..,r 7 . C M ARISON OF ALTERNATIVES INTRODUCTION As a result of the analyses conducted in Sections III and 7V, it is now possible to compare the alternatives under investigation. For each case, comparisons ware made where options existed in Section III and the alter- native selected which provided, it the consultants' opinion, the most logical choice to the City of Denton. In Section IV, the financial analyses were conducted for the alternatives selected undei each case. Revenues, operating expenses, debt service requirements, and t%•:ding requirements were developed for the cases involving, the continued operation of the Denton Electric Utility. The selection of the alternatives best suited to meet the system requirements of the City under continued operation is based primarily on the revenues derived from the sale of electricity. Other non-quantifiable factors, such as ease of operation, were considered within the selection proceKs, Rowever, all the cases were believed to be within the operating ability of the existing staff of the Electric Utility and therefore did not effect the results indicated by the quantifiable costs. ,'he use of the Minimum Revenue Requirement is the accepted industry standard for selecting the preferred altesizative. Na attempt was made however, to further identify the revenues required under the individual customer classifi- cations. The rate philosophy which would generate the revenues is a matter to be decided by those running the utility with the consent of the citizens. COMPARISON. Of THE CONTIN'U'ED OPERATING CASt•S Cases A, d. C, and E are those which offer the variations available to the City of Denton for continued operation of the electric utility. Descriptions of each are provided in Section 111. The financial results we-.* nonducted in Section 1V, and are summariatd herein. Cf . is Y,"~ f < 4 7ir-PF"iE s R The annual and total eleven years of Revenue Requirements (Revenues from 5alis) are presented in Exhibit V-1 for each case and the options included under each. The Current dollars indicate that the Joint Venture with LCRA results in the lowest eleven year total Revenue Requirements. The second lowest option is the continued operation with TlfPA, with 100 percent wholesale power ranking third. While the Joint Venture-LCRA resulted in the lowest cost, it is not recommended over the continued operation with THPA for several reasons. First, if the analysis was carried out beyond 1990, the total costs would change the rankings, probably in 1991 and certainly by 1992. As indicated by the annual costs (Revenue Requirements), beginning in 1986 the Joint Venture exceeds Case C by several millions of dollars for each year up to 1990. Prior to 1986, the annual Revenue Requirements for the Joint Venture are lower than TMPA. This is strictly due to the fact that during tha early years of TMPA's formation, Denton could operate its own units cheaper than by yurchasing power from TliPA. It is the difference in costs during the 1981-1985 period which determine the rankings over the eleven year period. The second reason for not selecting the Joint Venture-LCRA is from a reliability standpoint. If the LCRA unit goes down for any reason, Denton would only have its own units as back-up plus any emergency poster it could obtain. Whereas if 71TA loses a unit, even the Gibbons Creek lignite plant, there is sufficient reserve in the T1PA system to provide Denton with adequate power. A final reason for not recommending the Joint Venture-LCRA is based on the fact that this option may not be available to Denton In the first place. The City of Austin has the first option on this plant, and also, if some of the co-ops presently served by LCRA form their own joint venture, the need for that unit would be delayed for several years. Therefore, it is the consultants' opinion that continued operation with TMPA offers the Iowost cost to Denton over the eleven year study period. For those options under Case A, the addition of combustion turbines results in the lowest cost of the three evaluated. However, there is a significant difference in total costs .hen compared to Case C. The difference is due primarily to the continued emphasis on high priced natural gas as a fuel source. The ether Joint Venture option evaluated was a western coal unit with Texas y ♦ery4 Y h y M1 , ;rt 4 1 .S, .PF 1 tl~ ,~j-N ?y 4'T '.3~.~ ~1 Aye 0 ? s i .kCNa r, n I n4^r ,n! ~?;~'is hY 741 R 4 r i'ti} 1 'Power a Light. This altartative does not compare favorably with Case C or with the Joint Venture-LCRA because the western coal costs are about twice that of lignite. Under Case E, the 100 percent wholesale power option, ranks x±ght behind the continued operation with TXPA, while the Firm Purchase Contract is the highest cost of the alternatives investigated. The wholesale power option is lower in costf through 1986. After 1986, the effects of the higher fixed charges on TP&L's system result in a higher wholesale rate. To eliminate the time value of money in the comparisons, the current dollar revenue requirements have been discounted to present the results in constant 1980 dollars. A seven percent discount rate was used, which is believed to be the long term opportunity cost (cost of money) for Denton. Exhibit V-2 presents the results of this analysis. The rankings between alternatives are not changed as a result of discounting the current dollar figures. I A final comparison between alternatives is presented in Exhibit V-30 where the levelized costs over the eleven year period in rills/Kwh are calculated. This figure represents that rate which if charged over the period, would result in a revenue stream that if discounted would give the net present value shown in Exhibit V-2. Again, the rankings remain the same. On the basis of the aforementioned comparisons, Case C has been selected as the most logical choice for continued operation of the Electric Utility. It is this case which was used as the base in order to evalutte the sale of the system. The analysis regarding the sale of the system is presented in subse- quent portions of this saction. I SENSITIVITY ANALYSIS Vhile the assumptions made during the various analyses were considered to be the "most logical and best estimates," it is recognized that several factors have an unduly high influence on the predicted results. Those which would have a substantial bearing on the results include the capital cost estimates, the fuel cost projections, and the purchased poser costs. In the situation 6aoet Itonrnonwly. regarding purchased poweti, the rate bate determination and fuel costs, along ' with the use of a proposed rate, have the moat direct influence on 'the results of Case E. To measure the differences between the cases, as the result of changes to the items mentioned above, sensitivity analyses were conducted between the optimum case (Case C) and the others. Changes were made to each case, for each major variable, to that the results would be equalized. In this manner the results can be tested and the likelihood of changes in the rankings determined from a qualitative standpoint. Case A. Versus Case C Since the lowest cost option under Case A was the combustion turbines, this alternative was evaluated against Cast C. It was determined that the only variable which was sensitive to the results was fuel costs. The continued reliance on natural gas was the primary reason behind the difference in costs between the two alternatives. Beginning in 1986, natural gas prices would have to be reduced as shown in Table V-A-1 in order for the combustion turbine alternative to approximate the total • revenue requirements of Case C. No recognition was given to the reduc- tion in total costs for Case C if TMPA or the member communities obtained their gas at the reduced level. TABLE V-A-1 CITY OF DENTON Sensitivity Analysis - Case A Versus Case C Reduction in Natural Gas Prices Year Original Gas Price Reduced Gas Price Percent Decrease 4.37 3.99 8.7 1986 4.69 3.43 16.2 1987 5.03 4.06 M3 1988 5140 4.24 21.5 1999 1980 5.79 4.41 23.8 • CdorslCamnanwann - % As indicated by the Table, gas prices would have to be substantially reduced in order to equalize these two cases. It is tte consultants' opinion that this magnitude of price reduction is highly unlikely. 't'herefore, the probability of combustion turbines or repowering the existing units competing s-ith THPA is extremely high. For the coal-fired unit to be competitive with Case C, the capital cost and/or the fuel cost estimates would have to be virtually zero. The magnitude of the differences between the two cases is approximately equal to the debt service requirements associated with the coal unit, while the total fuel cost of the coal unit is only slightly greater than the differences. Therefore, no probability exists that this alternative could ever compete with Case C. Case B Versus Case C The Joir.t Venture with LCRA was previously shown to be cost competitive with Case C in the direct comparisons of Revenue Requirements over the study period. However, as mentioned earlier, ttie costs associated with just the Joint Venture were slightly higher during the later year of the analysis. During the 1987-1990 time frame, this alternative would be equal to Case C if the capita`, cost estimate was reduced by approximately 20 percent. Since most capital cost estimates tend to be understated rather than high, this probability is not considered to be likely. Da t`e other hand, fuel costs would have to be reduced slightly more in percentage terms :n order to equalize the two alternatives, Table V-5-1 presents the roduced fuel cost levels of the lignite unit to compete with Case C over the 1987-1990 period. coos 1'O*W M"1O „ d TABLE V-B-1 CITY OF DENTON ' Case C Sensitivity Analgsis - Case B Versu's Reduction in Li ite Prices S/tkk!R Percent Year Original Lignite Price Reduced Lignite Pcice Reduction 1.22 26.1 1987 1165 1.44 16.6 1988 1673 1.52 16.5 1989 1.62 1.57 18.2 1990 1.92 is large While the percent of reduction in the fuel price , the possibility axistc that lignite fuel could bof this evaluation is the coafirmationaofd in the Table. The major result generation. The important the use of lignite as a fuel source for power g point to be stressed is not thet LCRA or IVA offer lower costs when ompared e decisions to proceed with a lignile unit to 4sch other, but rather that th does, in fact, result in the lowest costs to the ratepayers. The western coal unit (Joint Venture-TYSL) debt service requirements are less than the Revenue Requirements differences between this alterantive and Case C. Therefore, the capital cost estimate is insensitive to the analysis. Fuel costs would have to be reduced substantially in order to equalize these alternatives. !able V-B-2 indicates the price reductions for review. TABLE V-B-2 CITY OF DENTON Case C Sensitivity n in y Western Case B Versus Coal Prices Reductio Original Coal Price Reduced Coal Price Percent Yaar R duct_ion .f 1.78 53.8 1988 3,85 2.07 50.2 1989 4.16 2.18 51.4 1990 4,49 61+Kt Ita~rnawNM ~n b b .r... The resulting reductions in western coal prieeo are below current 1980 dollar estimates. Therefore, little likelihood is given to this altsr- native ever achieving parity with Case Co Case_ E Versus ~ Of the purchased power alternatives, wholesale pcvtr reculted in the lowest cost. This alternative was based on the return--requirements generated by the coriplete financial analysis of Texas Power 6 Light. This analysis was based on TP&L's proposed rate increase before the Texas Commission. Subsequently, the Commission allowed TP61, only two-thirds of their criginal request. This recent development could have a measurable impact on the wholesale power alterantive. Since the proposed wholesale power rate (WP-500) served as the base from which future increases were developed, any change to that base would result in a difference in the estimated revenue requirements. For this sensitivity analysis, the proposed wholesale rate has been decreased to reflect the reduced rate increase allowed by the Texas Coamlission. It was assumed that the rate reduction was an across the board reduction in all rates. The impact on the total revenue requirements is presented in Table V-E-l below. TABLE V-E-1 CITY OF DENTON Sensitivity Analysis - Case E Versus Case C Wholesale Power Rate Reduction - ReVLnUe Requirements 000'sSZ edRate CaseC Year Original Proposed Rete Peduc - 17,999 179999 170999 19 23,197 22,698 19881 1 24,145 27,470 27,654 28,598 31,541 1982 33,537 1983 32,850 37,578 43,490 1984 3942,,153 734 109886 449775 1985 450362 470871 1986 47,033 500643 51,362 1987 52,954 55,604 559192 1988 58,180 60,913 59$08 1989 63,690 68,260 63,912 1990 71,497 (1 497 . (11967) Tottaluatments 477.1.• 144 457,956 465,831 To - 6b~t!{grnTOnw~N - --.rr~sir ~f t 77 As indicated by this "fable', the total revenue requiraments over the et+idy ® period are reduced b6lov the lev6l antieipated by THPA by approNimstalp eight million dollars. This should be tempered somewhat bq two factorsp one, toward the later years, this alternative does exceed TWA's aaaua3 revenue requirements and if the analysis would continue beyond 1990, the results could change back in favor of THPA. Second, by changing the base rate to reflect the reduced level of rates allowed by the Couniasion, assumes that the portion of the rate increase not allowed is lost to TP&L and never recovered, it, reality, TP6L would request that amount plus its anticipated needs in future rate proceedings. The sensitivity analysis does indicate, however, that this alternative is within the realm of forecasting error and could quite probably serve as an alternative power source to the City of Denton. The firm purchase alternative resulted in the highest cost of the alter- natives investigated. The basic assumption made regarding this option was that the fuel source would be natural gas. If, however, a contract could be obtained which utilizes the fuel mix of tLe contracting utility, in this case, MY., the results could prove to be beneficial to Denton. Table V-E-2 presents the original estimate, the results fr= a change in the fuel nix, and Case C. TABLE V-E-2 CITY OF DENTON Sensitivity Analysis - Case E Versus Casa C Firs Purchase Contract - Change in Fuel Yix Revenue Requirements (000's Year Origin e1 Estimate Change in Fuel MY Case C 1980 179999 171999 17,999 1981 210876 21,876 22,698 1982 30,912 26,853 27,654 1983 37,152 3111,81 33,537 1984 44,974 37,551 43,490 1955 529814 400770 1,4,775 19 589430 450178 47,871 6w,171 50,223 51,362 1 74,517 559372 55,192 L 81,580 609985 590308 19::1 89,190 670408 63,912 Aciustment _ (2,243) (21243) (1,967) 'focal Rev. . Requiremanti 571,572 455,696 4650831 a Y V Vhile the change in fuel mix for a Firm Purchase Contract results in the optimum alternative, it is the consultants, 4 inioo that the real anever lies sozewhere in between the maximum and minimum revenue requirements, The contracting utility might offer a firm puretsee based on the incre- mental costs to its own system which is dependent on its load shape throughout the year. During peak periods, gas fired generation would be used while in off-peak periods, it would offer its highest cost unit on- line at that tire. This incremental approach could be competitive and should remain as an alternative for future power requirements. I • an11T r•1 (W ~Pgw" lueretP of lewerew le"lee ate Wreat F _ _ 2iib'rTfJT-•_ T~Bi-`~fli~_- Ii'1I . - 1=66- l~ftiT_ ~►ii' ZiTf' iN rulsl ]9YO.1ls4 CAS_ t 6 4!746 S!,{Il IS.IN 71,110 H.i07 (66,]15) 319,!26 17,Y99 !1,116 26,61/ 32.601 LO,T6t i1,Y11 , 0041 32/,012 100 It,, C.w6•Plred Unit TS1 10,7!1 11,425 Y7,71S (S, le powetlnl Eetet4q Ilnitr 17,999 21,Y05 26,61] 32,702 61,116 14,/09 4l,S6] M, ,WSI 506,755 61,'165 70,Y51 ,10{ 'l 13, 4o.Luetluo etb2eu !7,999 ll,9GS T1,611 33,124 10,136 L6,246 31,271 50,121 44 WE Y 4M1,26T Li,/lt 50,871 53,995 31,060 •1,]Ol 66,212 11,611) 161,011 joint Ventura IA:YA 11,99! 21,116 26,!{1 32,601 1W1 501,141 i1,5n1 U. 17,9v9 21,116 26,41/ 32,601 40,262 44,611 49,746 51,211 61,lb2 12,145 - LV6I. lalot Venlwre CASE C 44,115 41,111 51,362 55,192 59,301 6'.1,917 (1,Y11) 465,171 11,999 27,695 21,b54 31,531 c"'ti,wed Operettas with MPA CASE E 42,734 41,011 52,954 S4,110 67,690 11,705 (1,4917 411,144 _ 11,999 24,144 1!,591 72.150 ,1 9,15] 19,190 17,247) 511,572 tbdl Vhole.ele rover l1,Y9Y 71,1 N 30,!12 3!,152 44,911 51,114 $1,470 61,711 14,511 61,5 f,,mlrect !'ltv IV Uheee ~valttt~l~~. 7777777-7, r , 111th, v-2 C1TT a_ "C" luetrtry of leveeue Rn4ulfweel,t Coen laet 1!b DO' Let' {000, 71 Pf____~ ~t1 og W 19960.199M -low tw f1R10!/ ;Nn now ,1770 .6661 .6231 5520 .5419 506) 5011 . . . _ . N 14 1161 .162! I.OCAO .4346 MfSCNt 4tMM TA'ItrR @ 7t ]1 9S0 31 141 ]6,116 6).741 41,110 41.410 (3.712) 341,155 CASE ► 42 111 41,551 (21544) 141,150 10,716 1 1,999 20,445 2),16 243 76,611 ' 511 11,319 39,69! If ,965) )37,47L lU0 !N coal -W94 unit 11,994 20,4)2 3),2 26,695 ]0$1.411 11,!49 ]7,014 40, 04])lh 41 ,100 Rrpouerln5 4letlnl Unlt 11,91! 20.471 13.196 17,529 , 926 71, 917 74 , 17) 36, )1, C.wbuHlat TUrhleu 70,121 .170 ]3,621 17.209 )3.142 31.696 (A "b) .145) 315.000 CASE -9 it 141 7!.941 {7 26,612 30,716 1t, 950 )3 1s$ 19.011 77,199 20.445 33,245 3 J Uf et venture - UA 11,999 70,445 27,243 26.412 30,716 1,150 $L 141 16, JU1ot venture • Tf6L 951 12,112 12.250 11,446 o.ww1 175,591 G9! C 925 11,196 71, ll, I7, 149 11,216 14,153 21,776 33.179 ()pUfar.ton r l ll. 1;unl lnucJ 71121 GS[ c 71,066 71.616 31.01) 14,605 16,262 (761) 520,697 1,240) 371.68! )0,441 1T 449 17,649 24,911 26,500 11,905 656 36,912 40,084 4),N9 44.171 4S, US 1004 kmoluale fwef 1),•999 20.445 26.991 10.121 14,111 11, Yl n Niches COntYact 7!- , , ~l ~ I 1 l sr i ttlllRtt VA CItT ( Cu~nary nt Rrrenue R~T~ynn~^tx I.connatc Cyr "K _ .'~~~ulV fe n nt~entutc t„nllnur "er _ - _ h,tt on Srm. lli'er~tlon ~antrrct I,FSI'Rjr-TI -twtM RrpriurInR ti sAlnet 1Jam Mlles--------- fnnl.Yirrd runitsnR ~ n ra[1taRUt 11Ntlt~tllKfi 128.0m 2t3,b111111? 1.000 lm.(Nx) KK,a+o t:aplln) Invrnln,rnt (Ow'" S) )IK,hltK )tfl,hot 5) S ,Ixt<1 144,405 )4t1,1ttn 31t,4t6 51),K21 115,591 1'rrsrur Vnr11~ tt Kerrmirn (tW lt1's ~1 6i.11 12.16 61,64 68.14 64.71 59.111 6ti.6% h6.1S 11 Yrnf l.rr~llrrd grotrarr l,nll I,nnl - 11111t16A, tin 1r.e Ill M•nlnn r nrrrrtlr+[te nl`hte of 711T1t'h Cn91M1 r.tprndltu[r~. jr. ~ l \ r B, ,fir F Iii w~ J ~~F t-~ Vr y ~ ~'6ry S 4 i ~r 77777 CASE D: SAL1 Or THE ELECTRIC SYSTEM Introduction Those cases previously addressed have investigated alternative means of supplying power for the municipally operated Electric Utility as presently constituted. Case D examines the feasibility of a direct sale of the electric system to an external I-arty along with the concomitant franchise to provide electric service to those present and prospective consumers who would otherwise be supplied by the City's Electric Departmett. This analysis has not in any way considered legal or other constraints, if any, which would obviate the possibility of such sale, nor does the result represent a recommendation either to sell or to retain the system. Rather, should this course of action be a viable and otherwise attractive option available to the Utility Board, the data developed herein provides a perspective against which to focus an evaluation of that prospect. Potential Purchasers During the course of the series of meetings held by represen+.atives of the City of Denton and the Consultants with both privately and publicly owned electric utilities in Texas and adjacent states, the subject of a possible sale of the system was introduced, as appropriate, along with the other issues addressed. Either because of the nature of their business, the relative isolation of the City of Denton from their service territories and facilities or the converse objectives of management, the purchase of Denton's system and the acquisition of the franchise to provide service in and adjacent to the City was not considered to be a serious prospect by all but two of the companies interviewed. While not in all other cases dismissed out of band, it is apparent, both by proximity and inclination, that the most likely candidates I bdbrtJCornma~waRn for acquisition are Texas power & Light Company and Community Public Service Company. Consequently, the potential impact of a sale of the City's electric function has been measured in terms of the specific circumstances associated with operation by hither of those companies. This of course implies no commitment by either, and in any case would be subject to an independent evaluation of the economics of the situation based on considerably more detailed information than that available to the consultant. Comparison of Rate Levels Although only one of several factors ultimately to be considered, the most immediate and most directly significant impact of any sale of the electric system would be the effect of the purchasing company's schedule ersfforriffs on the relative levels of charges to the City's present electric service. In the case both of Texas Power & Light Company and Community Public Service Company, revised schedules of proposed tariffs have been file4 with the Public Utility Commission of Texas in January and February, 1980 respectively. At the time this study was underway, a Commission decision with respect to either set of proposed rates, while imminent, had not been handed down. Consequently, although the tariffs proposed may be considered to be the ` upper limit of rate levels as finally adopted, there was no basis, nor would 1 it have been appropriate to speculate as to what effect those decisions might have on either company's rates as finally approved. Consequently, for purposes of comparison, the respective rate schedules are those most recently proposed. 6+ortilW~o~.a~ - - J.X Fy, Residential Service proposed by both Texas Power & The basic Residential Service rates recognize seasonal Light Company and Community Public Service company respective periods differentials slthough the months included in the chedules have vary slightly. For the summer period, the following been filed. RESIDENTIAL SERVICE - SUMMER SEASON Texas Power & Light Co. Public Service Co. (Months of May through October) Community (Months of 3une through October $6.00 which includes 25 kWh $3,00 which includes 20 kWh 3,71C per kWh for all additional kWh 3.4c per kWh for all additional kWh in each case, fuel costs are recovered in sales accordance with in addition, lied to total energy a Fuel Cost Adjusuient Factor apP Rider PCA provides for an , In the case of Community public Service CompanYt purchased adjustment to reflect changes ilevel applieshto salesyto all Power Costs. Each of these adjustments customer classes. The respective companies provide for residential service in the non-peak season in accordanc_ with the following filed schedule: IDrnl, SERVICE - NONPEAK SEASON RES Texas Power & Light Co. Community Public Service Co (Months of November through AP-TI-111 (Months of November throe h ikyl) $6,00 which includes 25 kWh $5.00 which includes 20 kWh 2.76C per kWh for all additional kWb 3.4C per kWh fer the next 680 kWh 1.9C per kWh for all additional kWh graphically representative bills for rative COOP' $ Exhibit V-D-1 illustrates residential service under alternative City s of Dentotts presently purposes, relative billings uad effective residential rate schedule are also reflected in this exhibit. ywifTA WW*WN 11 ~117 Ia addition to the general rate for Residential Service', Texas Power & Light Co. also ptovida separate riders which, with certain restrictions, are available to customers with electric space heating and water heating. However, because it was not possible to identify Denton customers in each of these categories, the effect of these riders could not be introduced in this analysis. Since, in the case of space heating, monthly use ranging from 3,000 to 50500 kWh, and water heating, monthly blocks of ?DO to 500 kWh are billed under the respective riders of 1.35C per kWh, the net effect would be to reduce the average cost for residential service in these categories. 2. General Service The proposed schedule of tariffs for both Community Public Service and Texas Power & Light include separate rates for large and small General Service customers. In the latter case, comparative rates are as follows: GENERAL SERVICE - SMALL ® ublic Service Co. Texas Power & Light Co.GS Community P $8.00 which includes 25 kWh $7.00 which includes n20 ext kWh 480 kWh 6.80C per kWh for the next 275 kWh 2.5C per kph for the ne 4.45C per kWh for the next 700 kWh 2.N per for the next 4000 kWh 3,000 per kWh for the next 1000 kWh 2.OC (June-Oct) or 1.6C (Nov.-May) h 1.85C per kWh for the next 4400 kWh pez kWti for r all additional kMfi 1.55C per kWh for all additional kWh For each kW demand in excess of 4, Texas P&L adds $0 cents and 100 kWh to the 6.80C block. Community PS adds 200 kWh for months June through October and 100 kWh for all other months to the 4.5C block for each kW of demand in excess of 5 W. Services for ;arge General Service customers is proposed under the following respective structures: row rca„ nm ou" y r r"11 C ,~i u t N ~ F~ M d ut i 4 , r J~ d, yx lY 7 1. ~ r w~~r~ + t, F r ~a zPs rihr z"~ t ar t N GENERAL $ MICE-- LARGE LP-20 ht Co. Texas Power & Li Communi: Public Service Co. or less, of $ 135.00 for first 20 kW, kV 0 Demand W, all additional kW, and $260.00 foc z1radditioaaI kW ofnd $4,93 per k the first 8,000 kWh $3.30 for each 1 85C per kWh for 00 kW'h* Demand, and 1.55C per kWh for the next 4210 } OC per kW, for the first 200 000 kWh per kWh for all additional kWh 1. 1 per kW but not .11 additional kWh 0.52C pe 0.7C per kWh *Add 100 kWh for each kl,' in excess o 20 kW as the relevant Denton rates are 3 ash 4 for a The above rate schedules as cell a reflected for different load a respectively- CIn each'cece, although 5 kV, 50 kW and 500 kW, custom no recognition of this factor has been fuel cost adjustment applies, levels. It should be noted however that incorporated in average cost above and community rates have been illustrated both as represented ivirg effect to an estimated Purchastbe average rate } again after g the basis fur Adjustment. Typical bills formia8 comparisons are developed in Exhibit V-D'S• • bases detailed above that the level of i` k it is apparent from the billing is considerably ` Community Public Service company however, rates proposed by ht Co, Sioce, below that introduced by Texas Power & Light Community is principally supplied at wholesale by Texas Power & Light, s proposed rates do not reflect nity it is pertinent to note that C0°`a'eesenteb by revised Resale power olesale suppPly rep presently the cost of wh c,lrrent filing- Schedule FP-5o0 as included in TP&L s effective and currently pzDPoseb Wholesale power for Resale rates ate as follows! W410LESAI.L POWf:R FOR RE A 00) Texasas P~T,isht Co. •b Increase Curr___ e~V Pro osed 1}.9a 00 customer charge 52 1% L34 lEff1 400 5.52 pet, hW of Demand, plus 21.0% rckWtofeDemand, Plus 0.49- per kWh Per kW'h ,..,_.J s ~ ~ y s7 slm. A. s sC r 1. YEA 1. 1 s ~ a n e"F Y d r. ~ rti aq ~ 4t r WYa dti .~Nk ~d(s a~"ir t.s ~5 `ti s~ 4`~s `W p s•,1 * 1, J. swt as'heretofore, dexignaEed rates relate to`capacitq aob Although, costs only, the eEf¢c t of an estimated purchased Power customer c Adjustment based oa the mbove cevisom is rates s more nearly in tariffs is line to bring Community Public Service Companp Company Exhibits V-D-21 3 with those proposed by Texas power & Light and 4 illustrate the effect of this adjustment n mme c isladjustment otherwise proposed for General Service. The would be similar for all other classes of service, 1 Service to public schools and the county government is provided by the are city of Denton at a preferential rate and statistics for such sa ethere latter included with the commercial classificatiOnCo~UII the for is no apparent special provision either by overnm°_nt buildings. For purposes of this analysis, service to county g it has been assumed that regular General Service rates apply. Each company, however, provides for service to schools in the following specific manner: SC1i00L SERVICE Power & Light CO- (PSI C ommu Texas , n, i public Servic Co. $15,00 per meter, plus 57.00 which includes 20 kWh 2.27C per kWh 26C* ler kWh for all additional kWh ~1.6C for months hovember-May The availability of community's School Service rate may be subject to an exclusion limiting this rate to those Itsis installations oaoteworthytthats receiving service before October, 1976. Texas Power & Light specifically indicates that this service is secondary or high schools and is not restricted to public elementary, uaior colleges. applicable to universities, colleges or j f+axtIUNWOW%% it r r ~ A~r died '~9 V ~ ( {{'y .f li i'. + v i i ~ tr r e 4 Y 7! 4 J t 5~ i ry .k 1 1' Kid ~e 1 I 1 .i ;1 t i } ~r "+y~g: 3, Other of DeutOn~i requirements for the City 681e5 C6 other As included in the forecast of Accounts, Electric Utility, other services inc an !Lighting Accounts. utilities ("later and Sewage Plants) Both Community and Texas P&L provide special rates as 'ad'csted below for municipal water and sewage pumping service. SE4"ERAGE PING SERVICE MUNICIPAL WATER A21D Texas Powf LiQ-~'_-- Community Publicc Serves $0.50 per " connected 1.441 per kWh $12,00 which includes 20 kW'h additional kWh 2.0C per kW'h for all addition$ as for all The usual fuel Cost Adjustment applies an3 in Cost Adjustment clause covers e purchased power power costs. Giving classes of service, unity's wholesale es in the level of Comm 5ent and proposed wholesale rates changes Communitv's per Vol rate would effect to the difference in pie detailed above, a 21% adjustT0eat in Yield an effective rate of 2.420 per 1W'h Service (except for specific Street Lighting rates) is other "Municipal proposed as follows: (i1~C£L+LAr?-E0~ 111J17I~ VICE Texas Ligiitco- Communit' Public Service Co. 3,054 per k 57.00 which includes ?0di~ionsl k ,.5t* per kW'h for all d ;;2.5C for montbi November-bBv (Estimated 4.2C and 3.OC respectively with Purchased Power Adjustment) wnership• For purp rates vaxy depending upon o event al Street Lsght1ng that even in the tlunicip arison, it bar, been assumed oses of this comp } x~ 5, w 1 i ✓ 11 r,v Ax PIP of a sale of systems the city would retain ownership of the'e1~eLxi Whether or not this would be the case, the Street Lighting, igcilities. However, of course, a matter to be decided by the Utility Board. for purposes of this review, the following monthly rate levels have been assumed. STREET Ab'D HIGHWAY LIGHTING I, Texas Power 6 Li CoQnaunity Public Service Co. Energy & $10.75 per point of delivery, Lasap Size Energy in Watts Onh_ Lamp Repl plus 1.80C per kWh . 175 $1.20 $2.20 llercury 250 1.60 2.60 Vapor 400 2.75 3.75 11000 5.50 7.50 100 S .75 $2.25 150 .80 230 Sodium 250 1.60 3.10 400 2.40 3.90 indicated above do not represent a complete • ` The proposed rates or the respective company's schedule of tariffs. In some summation o, i cases where riders apply for service to customers with certain specific water heating), etc. it has not been F appliances (space heating, possible to implement such riders because relevant data is not isolated for Denton's consumers. In other cases, indicated rates are assumed to be not applicable. In every case, the application in this analysis of specific rate schedules, while believed to be reasonable representation of probable circumstances, is subject to interpretation and may therefore vary somewhat in actual application. However, the effect of such variation should have no major impact on the conclusions otherwise developed. timer: itannw~++nr L 77714k v VF r k zq d'! } l `.r, `kR t y5~i It ny" `X 9F~j 'y g w ri~~ ,1 y I y ~i n 1; b ~~`{~"q e,~~F ~'l:~ i~~s~.yy ~r,~. '}~d f1•ir. r,~' _ ,;I qt4 ajr dale 1q w,i t v x, s '24 : n , M : 1 rt i S i. i 4 r ;t' o n e5 t rt ; ~z ) Feasibility of the ale of the Electric Utility, - Cost/Benefit Analysis , 1 The feasibility; of the potential sale of the City's electric system to Comounity Public Service Company, Texas Power & Light Company or any other Interested parties is conditioned upon a weighing of the pros and cons as they impact the ultimate electric customers (and citizens) of the City of Lemon. As in most alternative courses of action, there are both costs and benefits to be considered in evaluating the feasibility of a sale of the electric system. In some cases, such consideration involves intangible factors which bear weigl,t in any ultimate decision but which essentially defy quantificati.ion for direct analysis. Such elements as customer satisfaction, reliability of service, perceived pride of ownership or the indifference thereto are among those considerat?ons to be evaluated in addition to those defined here. To the extent, however, that certain tangible results can be anticipated, they are addressed in this analysis. Here again, those factors represented are considered to be among the most significant but may not be exhaustive even in terms of tangible consequences of a sale of the system. ~k Costs Associated with the Sale of the Electric System 1. Cost of Electricity Under Alternative Rates Viewed from the perspective of the ratepayer, the most direct consequence of the sale of the electric system is that his monthly bills will be based on rates normally applied by the purchasing utility to its electric customers. Inevitably, these rates, as illustrated abov, for the two companies considered most likely candidates for purchase, will depart, in some cases materially, from those presently in effect under City operation. However, even the City's rates, particularly as the obligations assumed under THPA materialize, are subject to substantial modification. Cr4tKt ILom~,nnruhn ~v ! y s,1 r n:. 7iar ssess the impact on individual classes and for all present customers collectively, alternative rate structures have . For this purpose, it was accessary to establish in some usage characteristics for Denton's customers in the lassifications. ty's utilization of computer and related facilities is somewhat in a stage of transition, certain discrepancies, which are currently being adjusted, were apparent in the historical data necessarily applied in this analysis. To the maximum extent possible we have adjusted for these inconsistencies. Residential Service Both Texas Power b Light and Community Public Service reflect seasonal differences in rates for residential service. ronsequently, residential bill frequencies were provided by the City for the months of January and August as typical consumption patterns for the • y respective seasons. Usage characteristics are as follows: RESIDENTIAL CLASS Bill Fre uenc * F.nal sis August January - - Bills k_ 1i~ Bills kWh Use Block 68,331 14,436 66,711 0- S kWh 14, 13,313 199,126 6- 20 13,6646 45 203,911 21- 25 13,231 66,103 13,544 67,672 13.231 1,497,639 26-100 13,512 6,321,965 5,721,095 8,660 7,985,314 Over 700 L+935 15,814,893 Total 1273829980 Utilizing this data, typical billings are developed for the respective months by applying rates for residential service as proposed by both companies surveyed in the following manner: Ga»niCanm ,c.' 6.r7 2 i ,y,sw °'1 DEVELOPMENT OF CUSTOMER BILLINGS UNDER ALTERNATIVE RATES Residential Service Texas Power Light Co. Community Public Service Co. Schedule RS Residential Service Unit Cost Total Unit Cost Total January Number of Bills 14,436 $6.00 86,616 $5.00 720180 kWh Use 0- 20 kWh 2729248 - - - - 21- 25 kWh 67,672 - - .034 21301 26-700 kWh 61321,965 .0276 174,486 .034 2149947 ~I Over 700 kWh 5,721,095 .0276 157,902 .019 1089701 Total 129382,980 .0268 3329388 .0263 325,949 .0338 429,004 .0322 398 129 August Dumber of Bills 14,436 6.00 86,616 5.00 729180 kWh Use 0- 20 kWh 265,837 - - - - - 21- 25 kWh 66,103 - .038 2j512 j 26-700 kWh 7,497,639 .0371 278,162 .038 284,920 Over 700 kWh 7,985,314 .0371 296,255 .036 303,442 Total 15,814,893 .0363 574,417 .0374 590,864 fi I _ .0418 66],033 .0419 663,044 In order to implement composite seasonal rates developed above, reported residential consumption during the fiscal year ended September 30, 1979 was summarized by months and segregated into seasonal totals as appropriate for the respectively designated periods. As developed in Exhibit V-D-6, the composite annual cost per kWh (excluding Customer Cost and Fuel Cost Adjustment) is 3.23C per Wh under Community Public Service rates and 3.24C on the Texas Power & Light Co. basis. It should be noted, however, that application of the presumed Purchased Power Adjustment previously referred to in Ggwi ! LonaeamntN connection with Cogaaunity Public Service Co. rates would increase the average per kWh cc$i (again excluding Fuel Cost) from 3.230 to 3.91C. In reference to Exhibit V-D-6, it may be noted that TY 1976-79 total Residential sales differ from the total indicatsldeatialC(as ity's llnual Residential Report. The annual figure reported for total other class') sales of electricity was adjusted to eliminate some redundancy in computer summaries. honthly summaries were, however not similarly adjusted, and because of the necessity to establish seasonal usage, the originally reported monthly summaries were necessarily applied. It is our understanding that although adjusted in total, the original data properly reflects the distribution of sales throughout the year, the essential characteristic of its application in this connection. General Service Alternative costs associated with General Service sales (Commercial/ • Industrial) have been developed in four segments. Denton's designation of Rates B-1 and B-2 has been utilized to distinguish between small and large General Service classifications. In addition, separate rates have been applied for school service and sales covering County facilities. As with Residential Service, a bill frequency analysis uas generated by the City to summarize kw'h consumption in usage blocks relevant to pricing alternative service for the Small General Service (B-1) rate classification. Similarly, since seasonal variations again apply, data was developed for a typical winter (January) and summer (August) month. Independent of demand blocks, the following usage patterns resulted: • Diners ~w+«na+++uv r u P 'k K : f GETTERAL SERVICE SHALL (Denton 'Rate B-1 Bill reguency Analysis Janus August Bills kWh Bills kWh Use, Block 798 534 372 0- 20 kWh 358 473 6 139 21- 25 20 253 35,471 ` 26- 300 380 57,564 324 204,758 I 301- 1,000 429 250,902 262 384,831 1,001- 2,000 309 683446,,916071 323 1,009,534 1 29001- 5,000 225 22 121,037 45 250,497 59001- 69400 33 231,725 1 6,401- 89000 6 44,013 26 270,814 f l 51001-159000 11 1031516 1 17,040 4 67,247 15,001-25,000 _ 1 33,770 259001-50,000 19811 21489,158 1,761 197259861 *Demand Blocks not shown but available. Cumulative bills are calculated for each month in Exhibit V-D-7- The following composite average costs per kWh result: 1 GEA'ERAL SERVICE - SHALL • ' Composite Average Rates j Texas Pbh Co. Community YS Co. 4 76C/kt+'h 4.53C/kWh E January 4.000/kWh 4.11C/kWh August The average cost in August is lower in each case because of the substantially greater usage in that month. However, the differential is minimized under Community's rates because of the seasonal feature incorporated thecein. As before, developed average costs are exclusive of Fuel Costs and in the case of Community Public Service do not include th.e aforementioned Purchased Power adjustment. On the basis of a 21°x, adjustment in kk'h costs 35 previously estimated for this factor, composite rates under Community's rates would be 5.33C and 4.87; for January and August respectively. • 6doenl~prttmonvtrlrtn y an I as implicit in the determiuation of monthly rates, Because of the delman is not directly applicable as was the case with seasonal kWh weighting the Residential Class. However, based on Fiscal Year 1978-79 statistics, August consumption was approximately 1.15 times) he average monthly consumption for B-1 customers. On the other hand, (1980) usage was 85% of tea ib uweightedgaveragehofftheatwoe ~ this basis, months we have assum k this results in as I` results for further application. For Texas aQ unadjusted average of i average of 4.310 per kWh and for Community, Illly 4.320 per kWh. I In a similar fashion, data for typical months of record were analyzed i to develop a basis for the determination of representative composite average costs for large general service customers under rates proposed 1 1 by both Texas Power & Light Co. and Community Public Service Co. Detailed customer summaries provided by the City were reviewed in order overnment and other categories of use to exclude schools, local g includes' in the • classified with the "B-2" rate but not properly application of alternative Large General Service Rates. Purged data was further processed by the Consultant to merge individual usage into relevant blocks as required to price out historical consumption under alternative rate schedules. Details of this calculation are shown in Exhibits V-D-SA and V-D-8B for the respective months analyzed. The average of the composite rate established in these Exhibits was used to represent Large General Service costs: Texas_ P_ . Community PS Co. 2.190 A 2.72C B 2 700 2.13c . 2.1bc 1 Average L 2.710 In determining prospective costs for Public Schools, complete 12 months data was compiled on a seasonal basis as shown in Exhibit G-D-9A. The yaocn rton~on++++u 1y44S~V f ~ ~ c' ~ ~ ♦ L ~ ,y ~ A ~ . 1 qi ~ A ~ f Y 1 Y ' _ ~ A ° ~ R , i ~ ~ dal V i ~ ~A ~ A" ~ } ~ ° LY p ~'N S~ T~ yy t °C ~i~~ e ti'. ~~.d., development of the average costs of 2.760 per,RWh under the TP&L bib s • and 2.0C reflecting Community's rates is detailed in Exhibit V-D-9B. Note that although there is some question concerning Den ton's eligibility for the latter rate basis, such eligibility has baen assumed in this analysis. The final component of the General Service group is service to the county government included herein because it is so classified by the City's Electric Department. Based on a 12 months analysis of use by the County Court House and similar facilities, average costs of 3.140 and 2.10C per kWh are developed under the TP&L and Community basis I E respectively in Exhibit V-D-10. In order to develop a composite average cost for General Service as a class, individually developed rates ^aere weighted against actual City of Denton kWa sales for fiscal year 1978-79 in the following manner: FS 1978•79 Texas M Co. Basis Community PS Co. Sasis_ kWh Sales 6ats/k'h To___ tal _ Cents/kWh Total GS-Small 22,7719416 4.310 $ 981,448 4.28C $ 974,61. i Large 242,435,O81 2.71 61569,991 2.16 5,236,598 i Schools 8,6269924 2.76 24 288 2,100 175,989 Cty. Govt. _ 2,365,867 3.14 1 49,683 Total 27691999288 $7,863,838 $6,436,867 wtd. Average 2.85c 2.33c 1 For each category and in the composite, the average cost per Wh is substantially lower under Community Public Service Co. proposed rates. 1 However, as developed above, no recognition has been given for the effect of Texas Power & Light Company's filed Wholesale Rate (WP-500) on Community's Purchased Power Adjustment. Although somewhat more complex in actual application, a 21% adjustment (as previously developed per kWh) would result in a composite rate o: 2.820 per kWh, essentially equal to that reflected on the TPU basis. y,~rt 1Ca„ iro,,.anr~ r d. r N ; "mss ~~~P r 5 i Vv I ~,w 'M W ~b6 f M ~yfy r. ST~ f f + e i ..4 i eyt d ~ w W h ~ ap 7y" ~ ~ ,"d f P, f I 3:rWY a M.( f r r trr n F ~ u~`Mr~ ,kt' 4•X "SSi 49 4 ii! ES } t `t ~fki s i~ f r7,. b p r L 3 yM 4 L W~.•j < 1: n .'f fY ~t V{: s I*' yi Jir' rtiyf e: t ',la v r Va• .V~ 7 =V 1 ":u a,y ii ,1 L re 5.;i r." r,; + i V .~.p~. " r Ail other Service ate the following accounts: Included within this category City accounts Electric service to the taster Plant ice to the sewage Plant Electric serv Municipal Street Lighting Interstate Highway Lighting Dusk to Dawn Lighting e costs per kb'h for City accounts, Alternative billings and average and D,ask to Dawn Municipal Pumping' Street and Highway Lighting Li hting are developed in Exhibits V-D-11, 12, 13 and 14 respectively- 8 e costs developed against actual F1 1978.79 Weighing individual averag or ,All Other Service." oStiE sales results in the following COmP Communit PS Co. Basis Texas P&L Co. Basis Total P1 1978-79 Total Cants/ Wh k Sales Cents ki'h 2.92c $221,763 c $231,636 2.00 209,014 City Accounts 7,594,628 1r89197,518 1.66 739458 Pumping 101450,708 1.80 790654 2.50 6,037 41425,266 1.80 49347 St . Lighting 7 _:.91? 241,474 14,937 8.18 Hay. Lighting 867,322 8.64 $581,219 Dusk to Dawn $588,092 2,4bc Total 23,579,338 2.49~ Adjustment previously employed, the Applying the Purchased power Public Service Company rates adjusted average cost under Community would be 2.98c per kWb- , P r o ected Annual Costs Undtr Alternative hates 2 by therrespectivespotentialmers The estimated cost levels established reflect tariff schedules recently y filed ~~~n„monrs+en x "P 71, ~ Avi N~f€ h a a Fa ° 9 e purchasers of the Denton system; and as such ar xepreseatative of current price levels' of this study is to present a perspective However, since the purpose to "rm some judgment as to over a ten year horizon, it is necessary rice levels as the effect future circumstances may have on present p proposed. Public Service Company purchases all or essentially all Since CO munity producers (principally Texas Power of its power requirements from other rice levels may 6 Light Co.), the effect of future costs on current P significant best be introduced into this analysis by a projection of act Denton ratepayers if operations within the factors which would imp Texas Power & Light Company' City were to be assumed by requirements of an investor owned utility are dictated by a The revenue erating Expenses and Return Or' Rate combination of two factors: OP it is necessary to project '+1ase. In order to assess future conditiofor the period 1980 these two key elements as has been attempted 18 through 1990 in Exhibits V-D-15 through It must be emphasized that although certain. basic information was pr data contained within these exhibits has provided by TP&L personnel, y ose been developed independently by the Consultant for the i°cti ons of represented herein. It represents neither the internal proje Texas Power & Light Company nor their endorsement of the factors Tdeveloped. ;.he development of weighted annual Estimated construction costs early balances in Construction Wort in projections of Electric Plant embedded costs of money std y Progress are included in Exhibit G-D-15. of portion of relevant TP&L Co. facilities ir, Service, the allocation atlon of the City's present and to Denton operations, the in.orPoi 80 projected Set Distribution plant d wia.hnTP&LsLo.loperstions in Denton are approximate Rate Base associate detailed in Exhibit V-D•16- . +_a r~. n.,. I ya ~✓r cv y! ~ i , r ~~.~r r y ~ y r ~ I s ~•~4~' .'r • By applying the Rate of Return (represented by the composite cost of money) to allocated Denton Rate Base, aanual levels of Return are also developed in this exhibit. As the basis for the allocation of TP&L Co. facilities to Denton operstionA, projected City demands have been expressed as a percentage of projected TP&L peak demands including service to the City. I Annual Revenue Requirements are estimated in Exhibit V-D-17 as a combination of projected Operating Expenses and the Return developed in the previous exhibit. Fuel costs and Production operation and maintenance expenses are premised on TP&L's projected plant mix and j estimated fuel cost and other expense levels as merged in Exhibit ?f it is assL;.med that rates currently proposed by Texas Power & Light Company meet current cost levels, projected Revenue Requirements should serve as an index of future price level adjustments. It is exactly for this purpose that a projection of these requirements has been • undertaken. Since fuel costs are separately recovered, future adjustments in base rates, as applied in this analysis, are projected in accordance with the following index. The index is developed on the basis of per kWh costs in order to eliminate the effect of growth. Revenue Req. Denton Requirement Index Year Excl. Fuel Sales Per MAh (1979=1.000) ($1,000) WH) (Cents) k 1979 12,934 433,728 2.982 1.000 E i980 14,421 412,879 3.050 1.023 I 81 16,250 5110841 3.175 1.065 82 189387 558,045 3.295 1.105 83 21,219 605,791 3.503 1.175 84 24,120 655,113 3.682 1.235 85 280314 7059820 4.012 1.345 86 31,756 737,116 4.308 1.445 87 34,815 764,944 4.553 1.526 88 38,561 7939834 4.858 1.629 89 420461 823,522 5.156 1.729 1990 459467 8549231 5.334 1.789 • 6do~nlCa'mon+s,hr 4 •s i r , t, I; ~ Y r~ ti ti iE aJ ~ r r I r i t p ~ A.A. l r~r' Fdeveloped ying this index uniformly to coiaposite rate levels as previously for the three principal clasc•es of customerc, annual base service as & Texas Pow vels and the total coats of electricteaear timt fraa~e is er & o. franchise are projected over the Y t V-D-19. 9, Other Costs Associated with the Sale of the Electric System a, Loss of Income Generated from Electric Operations Previous sections of this Report have dealt with various alternatives of power supply associated with the continued I operation of the Electric Utility as a Municipal System. In the 1 event the system were to be sold to an outside party, income to the City otherwise deriving from electric op--_rations would be } foregone. For purposes of this analysis, such income has been assumed at levels projected in connection with the most favorable case previously developed for continuation of City operations. b. Maintenance of Street Lighting System re uirements have been The basis on which Street Lighting energy system priced assumes continued ownership of the Street Lighting sy by the City. Whether or not this should actually be the case is a matter to be decided by City management. in order to be consistent in the development of this However, analysis, it is necssary to include estimated future costs associated with the maintenance of Street Lighting facilities. In Fiscal Year 1978-79, the City's Street Lighting maintenance costs approximated $14,000. From this base, future costs have been developed at an annual escalation rate of 8%. °~nr7Cv~ to yi- vy yTiNa 1inH ti.i a "4 c~ii~. i e' .i A c. Contribution of Electric Department Toward Common Services It is anticipated that although some administrative costs may be eliminated in the absence of electric operations by the City, the greatest portion of the cost of common st.vices will merely be shifted to other City operations. The City has estimated the basis on which 1980 budgeted expenditures would be reallocated to other Departments or eliminated in the event the Municipal Electric System would cease to function. The $441,000 reallocated in Exhibit V-D-20 has been adopted as the cost for the year 1980 and future costs have been based on an escalation rate of 8% per annum. .d. Loss of Revenues Generated by Other City Utilities from Sales to the Electric Utility Utilization of water and sewage effluent by the City's generation • plant has historically resulted in revenues to the Water and Sewer Utilities. The extent to which this has been the case is demonstrated in Exhibit V-D-21. I I Continued operation by the City's Electric Department would necessitate some future generation even in the TMPA envirjnment and as a result further reveries would accrue to the associated Departments. However, should the system be acquired by either potential purchaser, it is assumed that further utilization of the City's generation plant would be unlikely. In this event, revenues to the other utilities, which would otherwise result, would be foregone. The magnitude of this loss is estimated as follows: • 6bvt 1Comn~om.ntNi E u i ♦u~ 7a LATIW KOM Cost Per Revenue to Fiscal hWH Other utilities Year Genex Actual $42,977 1977-78 322,691 13.32C 40,938 1478-79 284,589 14.38 Projected 503,000 15.530 199 $,116 1979-80 ,000 16.77 81 1152800 30,751 82 169,800 18.11 1]1 548 2,800 19.57 83 21.13 11120 94 50300 1,232 5,400 22.82 85 2,390 9,700 24.64 86 4,632 87 17,400 28.72 6,383 88 22,200 21.75 8,415 89 27,100 31. 33.553 3 10,059 90 30,000 e. Debt Retirement The indebtedness incurred by the Electric utility° consists of Revenue Bonds. In the absence of continued revenues in the event . of a sale of the system, the total outstanding debt is assumed to be due and payable. 1 Obviously, circumstances have not remained static during the course of this study. However, it is necessary to relate to a specific point in time and for that purpose, the outstanding indebtedness of $19,255,000 effective at the end of the most recent fiscal year has been assumed in this analysis. 4. Summary of Costs Those costs enumerated above are considered to be among the most significant associated with the potential sale of the system. Certainly, they do not encompass even all tangible considerations, and as previously mentioned, an evaluation of the intangible consequences of such sale is beyond the scope of this study. i 6. Release of Working Capital ca ital would be obviated by a sale of the T7~,e necessity for working p system. At the end of Fiscal Year 1978-79+ the excess of Current Assets (less Fuel Inventory) over Current Liabilities amounted to $9,110,979. - Determination of Prelimina purchase ~ Co orison of Benefits and Costs l Price Measurable costs and benefits associated with the potential sale of the system (in this case to Texas Power S. Light C°mapny) are summarized electric in Exhibits V-D-22 and 23 respectively. could earn 9p (a relatively conservative If it is assumed that the City net cash flow generated by the sale of estimate in today's market) on any the system, the present worth of net benefits projected over the ten year horizon may be developed as follows: Present Worth @ 9% • Net N Benefits Costs Be Factor ($11 ne_ Year $(131298) S 45,485 5(13,296) 9117 7 1.0 ( 51760) 1980 $ 32,187 051 ( 61281) ( 41760) 81 22,770 29, 051 5,653) '842 ( 31574) 82 27,729 339382 ( 41630) .772 ( 415) 83 33,615 38,245 ( 586) .708 44,157 . 43 706) ,571 . 84 48,683 ( 3,824) 59 9 66 3, 85 47,956 $4,177 ( 1680) 547 ( 5 ,333) 86 60,133 ( 81502 S7 51,453 65,910 (10'624) .460 ( 60258) 88 55,286 (13,605) .460 6.8011 801 59,406 80,1 422 89 29 (_16L1~ 014 _571131 1990 64 89 515 - S( Total $48~._.s8. 9 S572 363 ~-u---~ However, one important factor At this point, costs far outweigh benefits, ual to the present worth of has not been considered. A purchase price eq otherwise negative net benefits would render Dstem, sBased on ethe results economically' indifferent to the sale °{l sin excess of $51,000,000 would established above, a purchase price slig Y •e indicsted. y M , ft" S 1 4 d 1 v M1t v M +h ~i t 1 C fe R ~ A9}~, it 1 '~1 t ~~~+J S'~ • Modificati)n of Conclusions and Sensitivity Mely$is The conclusions developed in this ndent sassaumptionsnandtestimatesubs7tantial ilnumber of independent or interdependent every effort has been made to achieve a realistic projection of future this forecast, like all forecasts is subject to the infirmities ` events, i inherent in the process. For this reason, it is prudent to assess the impact a measured change in significant factors has on conclusions as otherwise developed. The largest single factor in both benefits and -:osts is the level of revenue requirements associated either with continued operation by the City or projected operation by a purchasing utility. 1 In the latter case, alternative costs of electric servicrates e beer recently developed through a fairly detailed procedures to apply filed by each company considered to be potential purchasers. In the • currently normal course of the regulatory process, it would be somewhat unusual if a filing utility were to be granted the full amount requested in a rate proceeding. As this study is concluded, the anticipated Commission hasPower 1 order addressing the reque~ith°Lherate beea granted resule that the CompaayTexas Company has been released approximately 2/3 of the amount sought. Since this analysis has been based on rates designed to provide the maximum amount requested, it is essential that conclusions previously developed be modified to reflect this change in circumstances. In the process, the sensitivity of such conclusions to variations in this most significant factor may be measured. It is our understanding that as originally proposed the increase requested by Texas Power S Light Company represented an adjustment of approximately 15.4%. The effect of the Commissions order is to grant an increase of approximately 10.3k so that in terms of the rates applied iu this analysis, • G~ ~Gon„r,o~.unn t 5 ~vi~rf er ~r+ h" ro 'aw r y~4aeat equal to 110.3 115.4 or 95.6% is in order. That is, the as adjustm der alternative (TP&L) rate levels projected cost of electric service4x should be reduced by approximately factor is the inclusion of construction work one other potentially sensitive While this in Progress in projected TP&L Co. Rate Base in =~cedfull. ent indicates that it is may represent a conservative measure, current p more likely that 50-64;6 of the balance is Construction Work in Progress will be allowed, Consequently, an adjustment to reflect this circumstaac! is also is order. The adjustments is accomplished is Exhibit V-D-25. The effect of these two the change in rate levels as a adjustment to annual net benefits recognizing 4.4% 100x_45 6} of Commission's order is developed result of the Texas ly developed. The present worth the annual costs of electricity as originally this adjustment is of net benefits as reestablished after reflecting ~g(43,178,000)• Work Changes in the level of Construction ar the index developeddto results Progress affect • only to the extent that such changes impact future cost esca]atioa. The net effect is represented in the following table: Revised Vs. Cost` lecxtricAdlusted00D) Ori iaal Esca_ lr, Index 1_r Or_ iia= Revs "d 4riQi lad-ex 23,366 66 23,062 1.010 .987 25,845 269672 1980 1.023 1,099 1.032 81 1.065 1.015 29,954 34,938 82 1.105 1.122 1,015 34,422 399616 39006 63 1.175 1.193 ,990 43 ,40 43,446 64 1,235 1.223 ,403 1.346 1.001 48,473 48,425 85 1.345 1,444 .999 53 52,947 B6 1.445 ,984 ,808 58$546 87 1.526 1.501 .841 59,078 650312 88 1.629 1.614 ,993 65,772 89 1.129 1.717 ,974 72,3D6 70,426 1990 1.789 1.743 *Adjusted for Rate order. 'I 1 }tF+ Y ~w, M 'F a~ 1 LY'. • The adjustment for Construction Work in Progress (in Exhibit V-D-26) is the difference between the original and adjusted cost of electricity shown above. The present worth of net benefits as finally developed including this adjustment is $(42,389,000). It may therefore be deduced that a change in the rate structure of the purchasing Company has, as might be expected, a major impact on the conclusions of this study; a change of 4.4% in the rates produced a difference of approximately $14,000,000 in net benefits. A change in revenue requirements as projected under continued City operation would have essentially the same effect. On the other hand, the change attributable to a reduction in the basis on which CWIP is included in (TP&L CO.) Rate Base has a relatively minor impact; a change of 40% affecting net benefits by less than $800,000 or less than 2%. • Justification of Purchase Price_ As finally modified, a sale price of approximately $42,400,000 has been derived above. The question then arises as to whether an investment of this magnitude could conceivably be justified by the potential purchaser. This determination would, of course, be made through an analysis of projected results based on the detail and specific information available only to the interested party. An analysis of that specificity cannot be presumed here. However, it is possible to form a reasonable assessment of the general feasibility of purchase from the purchaser's perspective. Exhibit V-D-26 projects Operating Income associated with sales of electricity by Texas Power & Light Company to present and prospective customers otherwise served by the City of Denton. In order to establish the present worth of this future return, a discount rate of 13.5%, consistent wir:h the composite cost of money assumed for new investments in Exhibit . V-L-15 was applied. - - Corn ~ ComnrmwalN .C,r, 4y~ L 7, v x1 ..itiY Bch ' s ~0 .Gr. ~ '..f iy , ' '£e' 1"~. On this basis, the cumulative present worth of future returns approximate the indicated sale price of $42,400,000 after including Operating Income for the year 1986. This represents a recovery of the initial investment after seven years, a payback period which may be marginally accepta`,le. Basis for Sale of the System to Community Public Service Co. The rate comparisons and applications developed earlier in this analysis covered both Texas Power & Light Company and Community Public Service Company. However, because of the uncertainty associated with the effect of TP&L Co's wholesale rates on Community's ultimate rates, the analysis has, 4 to this point, been carried to a conclusion only for Texas Power & Light Company Ia order to establish some relative basis for the evaluation of a sale of the system to Community Public Service Company, the effect of the adjustment in TP&L's wholesale rates must be introduced. . The composite base rates for the three classes of service into which Denton's sales are classified in this study are restated below for the i respective companies: Composite Rate per kWh Texas P&L Co. Community PS Co. i Residential 3.24C 3.230 General Service 2.85 2.33 All Others 2.49 2.46 Assuming fuel costs passed through by Community to be equal to those directly charged by TP&L Co., a basis for comparison excluding fuel costs can be developed as follows using 2980 sales data: 6+een rcann+on.ann . f, * 1 471 c j + j A i Y ® $1,000 Cost of Service - 1980 Texas P&L Co: Community PS Co. Residential (155,707 MWH) $ 51045 $ 5,00281 Customers (16,342)*` 1'177 6,833 i Commercial (293,272 M) 8,358 All Other (23,900 MW) 595 588 Fuel Cost 8,933 8 933 2$ 4,108 2$222,364 *TP&I. @ $6.00/Mo.; Community PS @ $5.00/Mo. The Community total must however be adjusted to reflect the purchased power cost increment resulting from Texas Power & Light Company's approved rate increase. Since no other basis has been indicated to date, it must be assumed that the Commissions adjustment of filed rates applies across the board and that wholesale rates as approved would include an increase equal I to approximately 2/3 of that claired. Ignoring the customer charge (one wholesale customer), the originally requested and adjusted wholesale rate increase would then be as follows: E Adjusted Presently Originally Increase ` Effective Proeoseu_ Increase @ 2/3 per kW Demand $3.63 $5.52 $1.89 $1'26 per kWh .4050 .49C .085c .057; I Assuming that Denton's monthly peak demand is coincident with Community's demand on TF&L's system, the summation of monthly peak demands for Denton (projected 1980) is approximately 962 MW. At $1.26 per kw', the purchased power capacity related adjustment would be approximately $1,225,000. Denton's estimated 1980 sales plus native and other system losses are estimated at 510,724 INIH. Applying the .057C/kWh adjustment from above yields a purchased power energy adjustment of approximately $291,000. 96r. I COW* MIP rr~rr d b Community Public Service The adjusted cost of electric service provide by 3649000 plus $1,225,000 Company in the test year (1980) would then x $22, plus $291,000 or $23,880,000 which is approximately 99'b of the $24+108,'J00 `I established cn a Texas Power & Light Company basis. 1 Since, as demonstrated in the sensitivity analysis, a 4.4% change in electric rates produced a difference of approximately $149004,000 in discounted net benefits, the 1% difference between Community and TP&L arcs I would represent an approximate $3,2009000 decrease in (negative) net benefits. On this basis, a sales price of $39,200,000 would be indicated. Conclusion The results of this analysis indicate that a minimum sales price of approximately $42,400,000 in the case of Texas Power & Light Company =eager the $39,200,000 in the case of Community 101.c Service Company would customers of the City's electric uti.l.. indifferent to the sale or retention of the system. l The difference in indicated sales prices is predicated upon the fact that • I projected Community Public Service Company revenue requirements are Although it has ! approximately 99% of those for Texas Power & Light Company. 1 been demonstrated that a relatively minor difference in revenue levels makes a substantial impact on discounted net benefits, a 1`019 difference in the future cost of electricity is a very fine distinction to make from the rather gross applications of this analysis and particularly as they power incorporate the somewhat speculative second hand effect of a purchased cost adjustment. Consequently, a more conservative conclusion might be that the higher sale% price be maintained as the minimum price in the case of a sale to either party. Since this price represents an indifference or break even level an actual selling price sbould be somewhat greater to provide an incentive and to cover the costs associated with tLe transition. i i FlInn an y a aethe conclusion of this analysis is devei~ped on the arsuoption at fucnds tele~aed by or resulting from any sale of the system would be suitably investe3 and the proceeds applied to defray costs that the electric customers woul,i otherwise incur in some other fashion as citizens of the community. It is only in this context that a sale of the system can be justified even at the sale price indicated, since in the absence of this somewhat more obscure secondary benefit, the legacy of the ratepayers would merely be electric rates that are and would probably remain somewhat higher than those they are presently paying. _J receK 1CaMrmwnn 35 NOr-MAV CITY OF DENTON 00 30 POWER SUPPLY STUDY - CASE 0 loo~ COMPARISON OF ALTERNATIVE RATES L RESIDENTIAL SERVICE MAY4CT, /xoooo~ Nor-APR. NOV-APR. 25 REGULAR oo~ ozo All ELECTRIC H J m 20 oor J O 15 10 TEXAS POWER & LIGHT CO. COMMUNITY PUBLIC SERVICE CITY OF DENTON 5 0 100 200 300 400 500 600 700 800 900 1000 MONTHLY USE - KIN w, t 8 7 CITY OF DENTON POWER SUPPLY STUDY - CASE D COMPARISON OF ALTERNATIVE RATES GENERAL SERVICE - 5 KW DEMAND =5 CL. H 4 m 3 GENERAL SERVICE - 5 KW DEMAND CITY OF DENTON b 2 TEXAS POWER & LIGHT CO. _ COMMUNITY PUBLIC SERVICE CO. - - - - COMMUNITY PS CO. ADJUSTED 1 10 20 30 40 50 60 70 80 90 10 LOAD FACTOR - x T 8 1 CITY OF DENTON POWER SUPPLY STUDY - CASE D 7 COMPARISON OF ALTERNATIVE RATES GENERAL SERVICE - 50 KIM DEMAND 6 \ 5 Cie CL. W 4 3 GENERAL SERVICE - 50 KW DEMAND 2 CITY OF DENTON TEXAS POWER & LIGHT CO. COMMUNITY PUBLIC SERVICE CO. - - - COMMUNITY PS CO. ADJUSTED 1 10 20 30 40 50 60 70 80 90 100 LOAD FACTOR - 5 ~.t Y .r ,f r~ to X. v t 8 CITY OF DENT4~ CASE D 40'NER SUPPLY STUDY - C4MPARIS4N OF AISER~00VKWR0E4~AN0 GENERAL SERVICE 7 6 5 \ GENERAL SERVICE - 544 KM 4ENAN4 H CITY 6f 4ENT4N C4. w \ TEXAS POVIER 6 LIGNT " 4 C6RRUNITY PUBLIC SERVICE C4. _ PS C4. A4IUSTE4 C04AUNITY m b 2 100 80 9d 60 70 40 50 10 20 30 LoAO fACIOR - x 1 r .;,7.,~!' y rw r {r4a' , t q ~9 ~ ,pW~. c ~l. r Pr 4 `rV' , 4{ryi d r';h r~' i1- Tll L>. "~`~;17+'q r. ~4'q'^'P, rf..J'~j"; M' 4"4.:t i `Y. '.:k . ~~h5`~S"g 1. i• ' bM,~~r: ia~'~"7"~ ^~1 ~'i,h i~'r('l J'r.'~^•„ .N r 73 .4. r P.4 'r+~:,n Jt ii "'1 ~~y,.y.♦ ii' r.., i't ~i :f~ ~r r~ F(. r •,4v~f QIIYIIR V-0- = wgv PQW 0 4elr Italy - CAN* 0 TYPICAL BILLS UWA ALTU*TIYB BATIB feeetrrtal a taduNrlal PAID nms KM a LUNT CO. lf"WiTT ML1C 80BYIC0 O0. B,$ FACTOR BIM ichelule CB ecWule P-20 Comm{ Betvlc• Cemta1 Ietvtce-Lane Al1w6t6/ Total c Per Total c Ter Total 0 Per Total C Per Total 9 hr Total it Per Bwh 0wh 0vh Kwh [a Nth i0 5 KM )6S 36.89 10.11 22.53 6.11 19.27 1.02 17.11 4.06 20 7)0 $1.14 1.21 )0.9S S.34 46.91 6.71 13.19 4.55 30 1,095 N.00 6,11 51.29 4,1/ 66,12 6.05 47.16 4,31 40 1.460 78.95 3.41 61.61 4.22 16.44 S.24 60.12 4.13 50 1,025 49.90 4.91 10,08 3,14 66.b6 4.15 13.21 4,01 60 2,190 91.61 4.31 11.47 ).S8 96.16 6.42 86.23 3.94 10 2,555 105.42 4.12 16.81 3.40 107.10 4.11 99,19 3.10 00 2,920 112,11 3.64 95.26 ).26 111.12 4.02 112,15 ).04 90 3,28S 118,93 3.62 103.66 1.16 121.54 1.11 114.)) 3.71 100 7,650 125.48 3.44 112,05 3.07 117,16 ).71 1)6,31 3.71 10 20 lu 1,460 I13,S8 7.16 162,01 11.10 71.60 4.92 61.40 6.03 11.61 $.S9 20 2,970 184.25 6.31 189.02 6,41 311.50 4.71 167.24 5.71 121.22 4.22 30 4,100 219.06 5.00 216.0) 4.9) 194.84 4.45 116,20 $.19 164.8) 3.16 40 5.540 246.09 4.21 24).04 4.16 221,43 3.91 211.08 4.14 206,44 3.51 SO 7,100 213.10 3.14 270.05 ).70 267,00 3,59 111.96 4,16 216,15 1,24 60 1,760 297,13 1.40 794.11 ),17 293.30 1.35 355,10 4.06 264,12 ).02 70 10,220 )20.46 3 14 311.41 ).11 )22.50 3.16 190.64 1,82 290.11 2.85 80 11,650 343,09 2.94 340.04 2,91 IS1.10 3.01 425.61 3.65 111.44 2.60 90 11.140 365.72 2.11 161.67 2,76 380.90 2190 460.92 1,31 )16,01 2.56 too 14,600 388.)$ 2.66 385.)0 2.64 410.10 2.61 495,96 3.40 358.10 2.46 t0 50 KM ),650 350,41 9.60 116.$0 8.61 466.00 12.64 189.01 5.11 20 7,)00 417.95 5.)3 353.00 4.64 $12,60 1.02 293,05 4.01 30 10,950 416,63 4.35 186.65 3.53 552,60 5.0S 191.51 ).55 40 14,600 53).20 3,65 412.20 2,12 581.60 3.98 459,70 3.15 $0 18,250 589.30 ).23 411.73 2,40 611.00 3.)5 510.11 2,91 60 21,900 646,35 2.95 461.30 2.12 640,20 2,92 602.65 2,75 70 25,550 702.93 2,75 456.15 1.91 669.40 2.62 673.21 2,61 110 29,700 )N.SO 2.60 514.40 1.76 696.60 2,39 144.40 2,55 90 12.850 816.08 2.46 519.95 1.64 111,80 2.22 615.50 3,48 IW 36, SOU 872.65 2.39 565.50 1.55 75).00 2.07 856.15 3.43 10 SW Kw 16,500 3, U9I.I$ 8.41 2,1)0,00 5.84 ),11).00 1.51 1,462.15 4.06 20 7),000 ),656,90 5.01 2,495.00 3.47 3,551.00 4,06 2,161.50 2.99 30 109,500 4,104.20 1.15 2,031.50 2,59 1,951.00 3.61 2,141.15 2.51 40 146,000 4,294.00 2.94 ),007.00 2.11 4,241.00 2.91 3,113.00 1,21 50 tot.wo 4,461.50 2.46 3,342.50 3.41 4,515.00 2.48 3,846,25 1.12 60 219,000 4,67).60 2.13 3,398.00 1,64 4,627.00 2.20 4,395.50 2,01 ?a 255,5016 4,861.40 1.90 3,657.511 1.51 5,119.00 2,00 4,924,15 1.93 DU 292.400 5.05).2U 1.11 4,309.00 1.41 5,411.00 I.85 5,454.00 1,11 90 328,500 5,24).00 1.60 4,164,50 1.13 5,701.00 I,)4 5,983.15 1.62 100 365,0()/ 5,412.80 1.49 4,620,00 1.27 5,995.00 1.64 6,511,50 1.16 ,~1^,w IVA 77 ,1 0~ .`~l ,p,~ y erf J-i}}try} iJ'"~ `~lyB 6,~.• ~'S Ax.. t:hl , .w EXHIBIT V-D-6 CITY QF DEN'1'ON Power Supply Study - Case D DEVELOPMENT OF COMP0h4ITE AVERAGE COST PER KNIT Residential Service RESIDENTIAL AVERAGE PEVEWPF.D Denton Code RATE COST A-1 A-2 Total PER KNII Year Ended Sept. 30, 1979 October, 1978 6289337 1599159496 169 543,833 November 6520899 71972,203 836259102 December 8121761 699930427 798069188 January, 1979 1,487,599 99771,747 119259,346 February 1,9089402 9,639,443 111547,845 March 2,104,252 992799010 11,3830262 April 29917,772 805161770 11,434,542 May 1,6249747 696959990 8,3209737 Jiine 771,583 139092,312 130863,895 July 881,395 169218,225 179105,620 August 8399037 1696719391 1765100428 September 1,023,621 16,371,593 17,3951214 Total 15,658,405 137,137,697 15297969012 Community Public Service Company Basis June - October .92,418,990 .0374 390829470 November - May 70,3779022 .0263 1,850,916 Total 1529796,012 .0323 4,933,386 Texan. Power b Light Company Basis May - October 9097390727 .0363 3,2930852 Nnvember - April _0561285 .0268 1,6631108 Total 152,796,012 .0324 4,956,960 ` • r' a 77' , ~ l • EXHI IT 0-D-7 CITY OF DENTON Power SuDVly Stud)• _-case. D DEVELOPMENT OF CUSTOMER BILLINGS UNDER ALTERNATIVE RATES General Service - Small TEXAS POWER 6 LIGHT CO. COAMUNITy P~IJ3. SERt'. CO. Schedule GS General Service Unit Cosc Total Unit Coai Total January (1980) Dumber of Bills 1,161 $8.00 $14,088 $7.00 $ 129327 ),WH Use First 20 KWH 28,858 Next S 6,988 - Next 275 323,889 .049 342 Add for Excess Kw (35,700) 0680 22,024 .049 15,811 Next 700 5249002 •0680 2,428 ,049 Next 1000 .0445 23,316 1,749 Next 3000 353402,,911 907 .0300 12,078 , .027 02i7 25,676 870 Next 1400 369237 '0185 6,541 .027 10, 9,556 All Additional 49.369 0185 670 .020 Total .0155 765 .020 725 1,725,861 .0393 67 834 987 Excess n, 357 .0381 65,716 .50 179 Total January 1 125 861 Kwh .0479 S82 097 .0453 S 78 103 Au ust Number of Bills 11811 $8.00 $140488 $7,00 $ 12,677 Kh`H Use First 20 KWH 25,912 Next 5 69374 - - Next 215 304,096 049 .0680 21 019 . 312 Add for Excess M, (421500) '049 I%,146 Next 700 5939358 ,0680 2,890 Add for Excess K6' .0445 26,404 .049 Next 1000 (850000) 29,075 - - .049 Next 3000 694,831 .0300 160645 .027 4,185 Next 1400 690,534 .0185 12,775 .027 14,984 All Additional 115,Q97 .4185 20129 18,644 193.956 .0155 '024 2,762 Total 2,489,158 3 006 .024 4 655 .0341 84,868 ,0361 8 ,739 Excess KW 425 .SO 213 Total August 2 489 158 KRh .0400 $99 569 ,0411 5102.416 ~M~ 7- on x ~r,~a r o 1rr . , d e' C Amy ,I 1F . 1.' EXHIBIT' V-D-SA, • CITY OF DENTON Power Su ply Study - Cate D DEVELOPMENT OF CUSTOMER BILLINGS UNDER ALTERNATIVE RATES General Service - Large (Denton _Rate "B-2") TEXAS POWER & LIGHT CO. COMMUNITY PUB. SERV. CO. Schedule 12-20 Large General Serv. Unit Cost Total Uoit Cost Total Number of Bills 529 $135.00 $ 71,415 $280.00 $1489120 Capacity Charge First 20 KW 81861 in minimum - in minimum - Next 30 70431 4,93 360635 in minimum - Over 50 KW 32,147 4.93 158,485 3.30 106,085 Total 42.403 + Energy Charge First 8000 KWH 3,248,444 .0185 60,096 Next 42000 512200636 .0155 80,920 Over 50000 KWH 10,4531530 .0052 549358 Add 100 KWH for each KW in excess of 20 3,3681156 .0155 52,206 • Tirst 200 WFAW not less than 10000 KWH 901480051 .010 91,481 All Additional KWH 9,774,559 .007 68,422 Total 18,922,610 247,580 159,903 Total Bills 514,115 414,108 Average Cost per KWH 0472 0219 NOTES; Based on January, 1980 Billing Data • t i riiNJ e J J. , rl Vv ! y iy hu N 'r t. j1 ;f r'. yr i ElHIBT~ pD. ~b CITY OF DENTON Prover Sutp__v_ Sd D DBt LOPY4,vIOF CUSTQHER BILLINGS UNDER ALTERNATIVE RATES General Service - Lar a Denton Rate "B-2" TEXAS POWER 6 LIGHT CO, CJF9;i1NITY PUB, SERV, CO, Schedule LP-20 LarRe General Sarv, Unit Coet Total Onit Cost Number of Bills Total 49 Capacity Charge 4 $135.00 $280.00 $138,320 First 20 KW Next 30 8'323 in minimum Over 50 KW 6,937 4.93 - in minimum _ 36.245 34,199 in miaimua: Total 51.505 4'93 178 688 3030 119 609 Energy 21 119.60 Charge - First 8000 KWH 30068,811 Next 42000 •0185 569774 Over 50000 5,021,341 .0155 719831 Add 100 n H for each 12,094,490 .0052 629891 • M' in excess of 20 4,318,200 First 200 KWH/Kw' not .0155 66,932 less than DODO Y,WH 9,969,113 Add Additional nji 10 215 589 .010 99,691 Tote2 20,1_ 84 702 264 .007 71 509 ,428 171200 Total Bills 544,005 429 129 Average Cost per n?H . 02703 NOTES: Based on March, 1980 Billing Data • EXI118ST Y-D-9A CITY OF DENTON Per Su } Stud - Case 11 PUBLIC SCIi00L KILOWATTNOUR CONSUMPTION Calendar Year 1919 E ota CT 8 rst d t ona KAI t ona ota K4{ 20 KW11 NUMBER ~ rst KHfi Kiill 20 KWH 4499620 449,760 351,520 140 891,260 891,400 lop 351,420 791,20Q 140 21306 2,446 r 2546-03-2 791,100 2545-71 -1 100 3,}14 1,234 140 35,500 350640 Denton lligli Annex -08-2 100 100 31,100 140 _ 69 Denton High FIB 3},000 38 69 3,872 4,012 Denton High School District 3721 2545-78-1 38 - 49954 140 2,934 3,074 Denton Public schools 1243-05-0 40854 21617 140 516,800 Denton Public Schools 1111-16-1 100 2$11 140 516,660 350,720 100 n School Tax Office 1111-15-1 330,620 330,720 140 350,580 13,076 Dento School Tax office 2546-00-2 1 100 25},740 251,840 120936 }43,200 Denton 20017 140 1430060 Frank Dorman School 2545-99-3 80 11937 180,000 140 8,573 Ginnings Elementary 2546-09-1 179,900 }40 8,433 290,400 Jefferson Davis School 2545-84-1 10 1 00 44,414 44,514 140 220,260 -83-1 ,780 182,8 140 620,500 6200540 Jefferson Davis School 2545-83-1 100 182 4}9,840 g00 46,040 Jefferson Davis School 2545-77-1 100 419,740 400 140 45,},347,040 Newton Rayzor School 2546-13-1 3BO 903,360 140 19346,900 230520 2545-95-1 2O 903,260 23,380 Robert E. Lee School 2545-94-2 1fl4 3,880 140 224 700 224y44 Strickland Jr. High 3,iY10 560 140 g7 250 Strickland Jr. High 2546-06-2 80 151 460 151 6 2 g 9 8 80 Strickland Jr. Iligh 2545-79-1 10 B 3 6-505 Woodrow Wilson School , Total 'T T r M 11v X1 T.:1 ! { i,~' y 1.~r I i 1. 9. { •l, l J~ E7~ilICIT V-D-9B • CITY OF DENTON Power SuPPIY Study --.Cast D DEVELOPMENT OF CUSTOMER BILLINGS UNDER ALTERNATIVE RATES puolic Schools . TEXAS p01dER b LIGBT W. C0'4ht n.SER(1)CO School ServIC& Schedule PS Unit Cost Total Unit cost Total Number of Bills (Annual) 216 $15.04 $ 3,240 $7.00 $ 19512 (18 x 12) Energy Charge (2) 4,067 .0272 ill in minimum Firct 20 1.'h'H/Mo. Additional 1CH 9,6549056 .0272 49,390 .026 95,005 June - October 4,968,801 .0272 1350151 .016 79,501 November - May 816260924 2340652 174,506 Total $237,892 $176,018 Total Bills i Average Cost per KWH ,0276 .4244 NOTES: (1) Restriction clause may preclude Denton's eligibility (2) All data on annual basis (Calendar Year 1979) N'w 6 , T x w N, ~~'Ti ~1'Y Ad`'~,gl~ 1 1. rl+~•d: hyal~6ri y~ 1`~r ".w ~ [~r '{t" gJ Y1 '1 V r i r 7. 1 ej u' iJ s- fV UNIBIT V-D-10 i CITY OF DVTON Pcwer Supply Study - Cake D DEVELOPMENT OF BILLING UNDER ALTERNATIVE RATES County Government ANNUAL TEARS POSTER b LIGHT COtPltJNITY PUBLIC SERVICE TOTAL General Service General Service Unit Coat Total Uait Cost Total SMALL Number of Bills 36 $8.00 $ 288 (Annual) $7.00 $ 252 Mi Use First 20 KS.'H 720 - Next 5 160 - 045 - Next 275 . 90900 .0680 8 Next 700 673 .045 446 Next 7000 2 21,919 .0300 50191 .0445 1,121 .045 1,134 658 Next 3000 18,517 .0185 .023 504 Next 1400 _ 343 .023 426 All Additional - - - Total 76,427 .0366 2,795 .0329 2,518 Total Cost $ 3 3,083 5 2.770 Cost per KWH .0403 .0362 LARGE Demand Charge First 20 KW/N,o. (Bills) 46 $135.00 $ 6,480 Ne..r 30 KS /lSo $280.00 $13,440 . 11431 4.93 71055 All Additional KW 4,163 4,93 20,524 Total 34,059 3.30 13,738 27,178 Energy Charge First 8000 Ki.'H 384 000 .0185 7,104 Next 42000 1,122,100 ,0155 179377 Add for Excess KW 559,400 .0155 81671 All Additional 784,340 .0052 49079 First 20 K6'H/KW 1,310,800 010 13,108 All Additional 978,640 , 007 Total 2 284,440 .0163 37.231- ..0087 6.850 19,956 Total Cost 71 290 47.13b Cost -per 1`'533 .0311 ,0206 COMPOSITE COST 74 373 19" =6 • COST PER KWH 0~,:4~s yy pp ';f ti ~7;riR f rMT.J Pl 'ndT ~ Qi 1. @. .t . i r r r ~ C Y rn t k. r. EXHIBIT v-D-11 ® CITY OF DENTON Power .,U)Dlv Study - Case D DEVELOYM=T GF BILLING UNDER ALTERNATIVE RATES City Accounts Including Signal Lights FISCAL TEIiAS POWER b LIGHT C}O~~4ilSNIH icipal SSERVICE ervice YEAR Schedule MS Total 1978-1479 Unit Cost Total Uni- t~Cost CITY ACCOUNTS (INCLUDING SIGNAL LIGHTS $7.00 S 26100 300 0 S - Number of Bills (Annual) KWH Use 6,000 .0305 183 - First 20 yC1f*HIMo. 105,144 All Additional WE 0305 920148 .0354 June - October 39021,252 , ,0305 139,285 .0250 114,168 November - May 415660719 0305 231,616 .0289 219,912. Total 79593,971 5231,616 $222,012 Total Cost 5.0292 $ 5 _ Average Cost per KWH - ~rr,° 99 TM" FRI, { y K" ? M Z 1, 4 ~ • 4 e~ Fy 2 , ~ v 2 r'4".^ HY At'i ' n , rw ,,S'k 'a6"¢'yw~{{•^c ~..'.$r.~{~" ''~',~'~ia~'"~ i1,}` }~x ;~?1 ~['1} f}!i'~ "YP"}'?~gP { r .F ~e,r ads W7. lip BIWA" sw.M.sm roar M,wlalwl fv~elPf eetAa xLd i L1G1R CO, i i ~n1 T> aaflrtR CO. Irlal lenica ~1n y Opxy0tl _ Total water 6eMOT -sit tiS 9n!! COp L°lal pewrtt+e L at 44).600 745.100 119,100 January 7!!,000 311,400 111.400 pel'TuAwy 476,440 344,400 620,040 NA TcA 402.150 315,600 717,!50 April 445,550 519,200 764,750 Kay 636,050 310,600 946,650 June 641,750 342,100 1,190.150 July 627,000 332,200 955,200 August 106,150 320,500 1,036,250 September 612,150 321,100 955,150 Oct Ober 435,750 301,300 177,050 752_.01 November jJ2. aso M-100 December 6,466 ~ 1919 iQ 372.14 Total ,0144 149,355 E~r~6 460 Laaa 20 KWAW. included to sib," ,07n 207,437 10,)11.660 Net 63A1 6.00(1) 46,693 3,246.5 Hp 2,561 6p 1,6l .S 11p 266 IMMSE PNE6 CUM 12.00(2) M1M1M16t atAAt:t 1!6.732 20 2 t OCAL P ,0200 AU" y1tRA(A C&*? !ER MAI wn ES: (1) 0 10.50 perr setter (2) per . th pe T`~~51~'~`v~'t~q',ry''7~,Y ""o - wey,pe.C~f+T's:!ii~•o ie a'" i Y1~141LIt Y;p-1] CITY or 11811/011 Nwr luwly Stedv - Celle 10 OBVKLOMW OF SILLINO ttNOAI Ii V=MTIV8 ltATT8 Street Do /111111110 -mV4 VAPM K1CU1T VA KIN TOTAL MAI oo~w 115 1jY 1'(A, $03, CO, 110i11S 10011 25011 17511 25011 400V 100011 e u d VA GYP. LtdstIPA ter, halt Celt Total Veit Vest Total "ICIPAL Sing mmLl& Quantity 137 23 2,249 110 1,115 12 3,650 Nutt lpller ,138 .305 ,205 ,190 ,450 1,100 KV 18,9% 8,235 461.045 31.900 501.750 13.200 1,031,036 K 11w64 tM>ura 4,308 81,446 35,478 1,906.183 131,426 2,161,541 16,865 4.458.939 .0160 8J,261 Coeaaunlly Public Service Monthly Charge per Lamp .15 1,60 1.20 1,60 2,25 5.50 Total Cott Per Month 102.11 43.20 21698.10 176.00 3,066,21 66,00 61,13 Annual Coat (a 12) Average Coat Per KWU )3,016 ,0266 I)MRSTAT4 I11CWAV LICWtXG QuantItV 42 34 16 Nultlpiter .450 1,100 xw 11.900 37,400 56,300 xlluNO n hours 4.V% 01,421 111,119 242,540 ,0180 4,366 Cousounity Public Sttvlce 1lunthly Charge Per Laat, 2,71 5,50 Total Cott Pet Korth 317,63 141,00 504.63 Anooul Cua (a 12) Averete Coat Per KMI 6' .0750 y EK'd78IT V-D-14 CITY OF DENTON Power Supply Study - Case D DEVELOP?ITT OF BILLING UNDER ALTERNATIVE RATES Dusk to Dawn Lichtinc SIZE QUANT.ITT FY 1976-79 TEXAS POVETi b LMT Co'i'SL~NITT PUBLIC SERCICE (12-?1'79) AVERAGE Schedule GL Outdoor Licr.tinc k'h'h/MONTE Unit Cost Total Unit _Cost Total 1001 10 $6.95 70 S5.20(1) 52 1751; 680 6.95 41726 6.05 40114 2501 27 6.95 188 6.90(1) 186 4C01 161 6.95 11258 8.60 1,557 Total 898 72.277 6.242 5,909 tveraga Cost per Ml .0864 OEIS NOTES: (1) Estimated a'W t M s ~ a. L - x ixt ~ e Y .a• ail '1~3 r ~ ?~,.n ~ `1„ p. fa, 1 ~ ~d •.i`~ r ~ I x, u Y ! t~ Y~ err ~ :a 't 6, F.r ~ 4 r v l• ''e~~~t•a\h'+,' vT " l'7`~'t' r 1 + ) t 1~ ° I ~,pt~ r guilliT lli-is gin tower suwly Slimly - CON DCVMM W Ot WINAT1a CM Q HOMY AM C(1II378tonI N WK 14 !8001188! Texas Powt & Light CO. (All Dollar, In 1000) - M ON. TO PIO38Lm YPSU 1960 1,11110 15111 19112 1983. 1984 lies 1966 1911 1968 1119 1990 OUNSTKLCT)ON OOb'1 trral"tfon Plant $endow - 545 7117 111,000 31,000 Forest crone - 150 567 11,000 100 200 1,600 12,)00 2s,500 35,000 19,100 Twlo Oak - 562.5 1a 3),000 7,200 46,900 97,400 133,500 15,600 562.5 167 - 1,100 6,200 47,500 96,700 113,300 76,600 Martin Lake - 225 767 8,500 2,500 16,400 34,200 46,800 26,600 Cwt - 600 W - - - 2,700 21,000 106,900 266,600 106,900 21,000 2,700 600 HW - - - 2,400 24,000 95,000 231,100 95,100 24,000 2,400 Other 2.600 29.000 1)5.000 404,000 577.000 600,000 WO 000 Total stare, 240,500 44,900 67,!00 161,400 320,700 396,x00 502,600 498,100 526,100 5S9.700 602,400 600,000 N.a: l ear Cu ncl,e Peak - 363.3 )N 206,400 82,100 41,100 343.) MW 117.600 30.300 30.300 30.300 16.100 Total Nucleat 384.000 111.400 71.400 30.300 15.100 Total ttwlwtluo Plant 624.500 160,300 139,300 211,700 335,100 396,700 102,600 496,100 $26,100 SS9,700 602,400 600000 Tranwlaatao Plant 20.000 20,000 22,000 22.000 24.000 25,000 26,000 21.000 21,000 30,000 12,000 D(rtrlbutlon Plant (Denton) 350 361 363 398 413 430 441 465 484 503 $24 crucral Plant 1,600 1,100 1,600 I'm 1,100 1,600 1,900 2,000 2,000 2,000 2,100 Total 182,250 161,367 237,683 359,196 422,911 529,810 $21,144 555.s65 590,184 6)4,90) 634,624 cum.lrtlve Total 142,250 30.617 581,300 941,196 1,364.111 1.19).941 2.411.089 2,9)6,6$4 3,566,138 4,201,14 1. 1 4,1)6.365 Seturo 0 13.51 Coat of Money 24,604 46,)66 18,476 121,062 164,155 255,682 326,141 401,141 481,N) 561,2)3 65!,909 C1r1N.51Tt 115 sr OF "my flint l+ 12-3t-79 1,400,000 (VIP @ 12.31.79 630,000 Total 7,030,000 2,010,000 2,030,(W 2.030.000 2,030,000 2,030,000 2,0)0,000 2,030,000 2,030,0011 2,030,000 2,0)0,000 1.0)0,000 lrturn 44 111 Coat of 7(uuuy 223,300 223,)00 223,300 223.300 221,300 22).300 22).)00 22),300 223,300 223,300 21),300 Total InVeatsoL 2,212,150 7.313.611 2.611,300 1,911.198 3,394.111 3.931.941 4.451,069 5,006.654 5.596.8)6 6,231.741 6.866.165 Total Neturn lleol"Itcd 247,904 249,666 301,116 3s0.367 401.455 418.962 550.141 615.241 704.823 790,S)S 814,209 C.npuilt9 COAL tat 7tnney 11.211 11.361 11.561 11.791 12.001 12.211 11.361 12,492 12.591 12,691 12,762 0*6TRULTION %AiNK IN "Ol;KKSS 6eNlnn1n6 of Pcrtod 624.500 784.600 376,500 590.200 642,400 1.019,100 1,012,900 1,146,100 1.559.700 1.519.400 1.101.600 AJJ 0,naLt,Kt1v. Cuat 182,250 161,367 2)7,683 )59,698 422,913 529,830 521,148 555.565 590,164 634,903 614,624 D-J"k Plant Cloatu Kr Steam Ptuductluu PIntL (216,000) (518,8170) (365,600) (112,500) (540,11010) (460,000) Nuclear Pruduetluo Plant (I29,600) (283,600) All Other Plant _ (21.9sn) (22 0`61) (73.981) (24.096) (16.113) 117.2 ) (20,146) (29,465)- A)0.464) tv 50)1 _ kjA-2A Kalan,e lnJ of PetluJ 6624,500 784,800 376,500 590.200 642,400 2,039.100 1,012.900 1,146.100 1.559,700 1,579,400 1,701,600 2.301.800 IWII~IT ~-ai6 CITY Of oanw Pwsr Iuoolr IruN . C460 11 0[Y[1AMM OF UTIMT[D MTN MR AND I MAN It'MN Teul PAL Co. Operations In City of Dsatm (All Dollars to 1000) ACTUAL "AWRCM TTd1 1979 1960 1981 1962 1917 1984 I98s 1986 1411 19" 1919 1990 TUAS rMIL a LuM 00. lu„ to Electric plant IQ 80"[C* SCONO Production Pilot 938,5$1 916.600 I,1S6,600 1,154,600 1,154,600 1,156,600 1,685,400 2,051,000 2,163,500 2,703,500 1,183,500 3,187,500 Mucletr prodoctloa Plant - - 329,600 129,600 611,200 617,200 611,200 613,200 613,200 611,200 617,200 617,200 OtLtr Product ton Plant l)l 1800 4311 100 1600 1,600 t,600 #x800, 400__ _1,4083 j.100 1-120 1.600 Total Production Plant 1,771,665-1.77 ,7,,400-66"j,000~~2,~77i_,500 3,3)1,500 7,111,500 7,Tf8,S~ Transmission Plant 796,092~1 416,000 436,000 460,000 481,000 506,000000 S16a1,0~00 557,000 564,000 643,000 612,600 704,000 Cdoetal !(ant i 'T3 2 sba :6 t 440 14. 76.104 Total { Plant In tervln , 7 . . . , , . , , , 3, 9 ,00 3, 37,500 1,012,500 4,554,5W 500 4,518,600 Ace,aaplated Provision lot Depreciation 262,981 30 200 11:M 2 21 45 00 1 2 700 20q ~7j'100 l,I1j,00. I tb Met 61ecttlc pilot in service 1,111,269 1,101,700 1, 1 1,513,700 1.82 1131:41% I,T73, 00 2,144,100 2.510,70G 2, 73,7 3,05F .Tod 3.444_F,600 -3,33-3, Add: Conattuctfon Work In Progress 674.500 764,600 316,500 540.100 647,400 l.Oll.100 1 Oil 900 11146 100 1.55! 7W S19,400 1+701,600 2 ]O1 600 lkt Tens pLL Co. (Pact. Distribution) ~1SS.76! 1/6!1,500 2,001.600 2.115.900 2.4651800 2,612.700' f 0~ ) MI q 4.411.000 C CNQ ~.~aa AL,OGITIOM TO CITY Of IEW" [attiated Denton 7. of TP&L leak 2,141 2,771 2.271 7.361 2.441 2.501 2,561 2.571 2.541 2.511 2,411 2,447. Allocated TP&L plant 37,574 42,036 45,441 51,351 40,166 10,306 84,011 94,699 104,976 116,711 12J,S41. 111,267 Denton Dlstelbut(on Plant (Met) 4.840 9 194 9 S61 9144 10 742 10.15S If 135 111677 t2 D96 12 587 11 065 131609 Net Dvoloo Plant 46,414 31,3 5 Sab~f0 - , T , , ,s3titt`,att~-ue;tt5-tta`>ias--Isam Add; Allocated Fuel Inveatoty 132 1,066 1,144 1,386 1,609 1.671 1.662 2.087 2.)90 2.596 7.946 1,415 Other Kiteriais 4 iuppltes 630 650 102 758 sit 884 955 1,031 1,114 1,20) 2,299 1,401 Wutk[ng Capital 417 462 $26 594 666 1$0 451 9H 1.014 1.172 _1,23j J14 Apprual"re late sate 48.19) $7.400 51.374 64.21S 13,604 641511 98,685 110,760 171.599 131.676 l4i,~2 157.04! CUKKIS11[ aaT IN 7ttx+IT Ill ft.211 1{.361 [1.561 ILIA 12.0m t2,21% 12,161 12.491 12,591 12,691 17.741 rtRUTAID PF1U6M 5,101 5.917 6.516 7,402 8,110 10,14) 12.074 13.641 15,166 {6,650 16.541 24),oip 4;` •~.,'c d~Y y e~T','+ }GIt•Yby~ a `y 1~Mnlr r-11-11 OITT of 61EIITOM rover SUPPI9 iltde - CAse 0 DLYL1QWVT or yi'TI7IATED AMIAL 1f:r PNX 1111K)UM "ti Total ML Co. Ooerstlons to Cloy of Destoo (All Dollars is 1000) nw9CTr9 Tree 1910 1911 1942 1911 1964 1083 1486 1917 M111 19x9 it" PROlIL7t]t EMaaGT IID1.WIt37OM City of Denton - 1111 Sales 472,179 511,641 $56,045 605,791 635,113 101,620 131,116 764,944 793,134 123,322 154,231 tat imated losses 345 MN 30,114 32,671 31,620 38,661 41,116 45,052 47,050 41,126 50,670 52,56S 54,126 - MI. Transmission 1,661 1,292 9.041 9.114 IO.6U 112' !10171 11442 II 649 12 160 11,341 13,09 Requirement at Tf6L Generator 510.724 552.104 602,106 654.273 101.542 162.N17 796.100 421,419 157,364 saf.41/ 922.1!6 ATtAAct MI141LA W cust~Rs 19,366 20,901 22,235 23,511 14,909 26,249 16,112 27,499 21,123 21,752 29,360 UNIT tx2EN.tE LSTIMAT18 Fuel Cost per rW-Nllls 17,49 17.33 19.19 20.47 21.52 20.37 21.76 24.03 23.11 11.51 30.51 Ftudraiion 06M Per IMI-hills 1.94 2.07 2.61 2,25 2.37 2.61 2.64 3.06 3.37 1.42 3,99 Transwiselon 06M per SFlast Olt 019 020 025 022 023 024 025 026 027 019 Cult owe r Accts. 6 avee. Exp, per Customer 31.14 31,63 36.32 39.22 42,36 45.15 41.93 32.39 56.05 59.91 64.17 Adds. 6 Consist Expense per Customer 54. DO 54,50 $5.00 55.50 16.00 56.50 37.00 51.50 WIND 58.10 39.00 Of17rATIMG tL1911S[3 Operatlon 6 Matntenancs production tapenae fuel 1,931 9,160 11,560 13.391 15,226 1S.S28 17,319 19,635 21.577 24,530 26,167 Other 06M 991 1,144 1,106 6.472 1,677 1.990 2,261 2.526 2,689 _ 3,273 1.661 Total 9,924 10,124 12,161 14,863 16,903 17,511 17,600 22,361 24,416 27,103 11,64• Transmission Tapenes 167 179 211 247 278 315 144 371 419 450 461 Distribution Expense 869 1,041 1,210 1.393 1.598 1,826 2,019 1,111 1,464 1,120 3,006 Customer Aecle, 6 Svc*. Expense 601 703 401 924 LOSS 1,201 1,315 1,440 1,516 1,124 1,115 Administrative 6 General txpemt _ 1.046 1.111 1,221 1.101 I M5 1,411 1332 L581 1.6)1 1.682 law Total 12,629 11,791 16,376 18,737 21,229 22,141 24.110 27,964 30,514 34,379 31,933 Depreciattun Irpense Allocated TpsL Cu, fldnt 901 1,196 1.492 1.140 1,900 2.165 2.542 2.715 1,962 3.%l 3,464 Denlun Distribution M $14 597 6,31 645 411 94 716 7 5 _ X Total 1.531 1,110 7,069 1,361 2,145 1,656 3,240 3,441 3,711 4.126 16 4,301 30{ Taxes Other Ttwn Incoea Taxes T rni. Fur 11041 647 970 984 1,110 1,166 1,521 1,116 1,119 1,011 1,245 2,1)1 Denton Property Taxes 181 116 210 224 240 237. 273 294 -ilk 316 L Tu141 _ or- 1.166 1.194 1,194 1.406 1 71 1.991 7.911,_ 2.581 1.4JJ Total (lw-nllng Expenaos oetots incotne Tna 14,917 16,727 19,609 22.492 15.160 26'M 30,04113,Dl )6,564 41`"_T-4-5 R? Add: Return 5,941 6.516 1.402 8,618 10.143 12,014 11,64) 15,141 16,450 18,546 20,039 LrllWle'J tncuea Tucs Including Current Tax. DeterreJ Tax 6 IIC 2,313 2,581 1.936 1,442 4.02) 4,719 1.411 6.024 ►,614 MtYFlbJI Rt RIMME 27,}~A 15.1)0 79.947 34.612 19.146 4].442 _~4 699,650 68.0224_. _ 66~491._._-A.j}y 7 Ya {b kyV f F ti~ 1 4. ~ " ~ A ~1 ~5n Y 1 1 ~ A. i:~~~'. 1~ ~ p r.~}.; P "4iU' ~'.y.~~~'y het f..~ A 'tT ,h.. 0 ~ 1 ~ 4~~t~N'"• 7 1. KiliT r-D-u CITT IM Dp110M racer iatelr Sill - t',N D 0T9tLOhe::11T Or 1811PATFP AMMML re0DWTIOM [81Mjj Tess', rover 6 Llahl C'-`- May lt7e 2!1! 1110 L711 1992 1911 MWZMD TZAR 1914 1lIS 1116 N97 1916 Ime k99o rttCfMTUM W Til cvmIAT[011 (A-ft us ts) Cee1011 $4.51 411 4e.11 41.41 42.9E 41.611 39.n 29.2% t9, n 29.01 22,11 21.04 16.41 Lil lte - 19rirtia9 45.5 31.7 51.1 41.4 43.1 43.1 40,6 78.3 76.2 New - - K.1 12.2 30.4 111.6 Nuc Lear 6.9 6.0 4.6 6.0 11,1 21,2 23 .4 2S,1 24,4 23.3 S.4 10.7 0.6 14,1 13.3 12,4 11.6 10.9 10.3 Weil Leta Coal Tat rl 100.E 100.0!, IOO.Q2 l00 02 10-0.6 100.0% 100.01 100 OL 100.0% 100 0! 1 01 I00 nr inn 0 Ltt LlN1tD COOT ![R "T KW CEUILA"D IM31].e/tVM) rueI C.rtoIt 11.11 19,{0 71.94 30.11 31.06 36.41 39.46 41.40 46.60 50.01 57.64 37,59 61"74 Lil lte - trtrtiae 3.22 1.01 1.51 8.11 1,67 9.54 10.30 11.11 12.01 lI.m 14.02 13.17 16.X Muclart - New - - a 10,09 lo." 11.71 12,11 17,13 14.12 16.01 11.29 11.60 20.11 - - Wert era Coal q 5.71 $.10 6,05 6.41 6.70 7,20 1,63 8.09 4.59 9.09 - - Im Mt NR MN NI M8 NO 77 44 40.41 Alm AL Ll~ W. I86t ed ArrreBe 11.74 It.41 11 H 11 33 l! 11 20.47 21 52 20 21 )1 _ 71.03 , ISM 21,51 70 }L OtIM r OM trpcaeer "I/Oil I.15 1.76 1.34 1.45 1.56 1.69 1.82 1,91 2,13 7,30 2.48 2.66 2150 Slaalte Lrlrelni 2,14 3.11 2.30 1.70 2,91 3.14 3.40 3,61 3.96 4.21 4.62 4,99 5,39 - N`v Na 2.05 2,21 2,40 2.59 2,19 ).02 3,26 3.52 1.90 4.10 Nuclear - - 11% 0.61 0,12 0.19 0.94 0,91 0.91 Wr+teta Coa L NN NR 1.06 1.24 1.24 1. )1 W~16Aled Average NA Nil $.26 7 52 1,80 4.10 _1.1e _ 7,56 I !4 2.01 2.17 2.25 211 2761 1 54 _ 3,06 ),)7 1,65 ) 9~ m r +-✓.N r ~,~w^, f'~' '+~r }7 i, tv Y'e 3 j f Y w r + „ n Y t ,~'t I 3 1., . r k l , 4 k , r" y~ rf , ^~TP +1~•,~' X77' 1 own-MAL CITY OY 66Mm • v--'r 14+dv • d b ~~CT¢b OOST 0/ 11I,C11 0 6 c Tems boar 6 Ltd t Co Mlls 6AS[ e2 y ! 16,141 11,602 19,062 20,722 21,562 22,647 11,364 71,926 24,466 15,010 2%,552 R 1 4 696 716,410 No. of customers 155.107 114,202 191,649 209.645 226,656 74004 6 :6104661 :7.0494 2170590 folosto 0560 MM Sales 04124 O)fl .03115 .0356 .0161 .0400 M is 0759 0271 0216-- +Q .DTf! 0636 0910 A••S• Cost per 34501 Due nuo 0467 0207 ,0221 0232 .0220 0703 01S1 - fuel ,0320 .0572 .0565 0601 06)7 0656 456 27.002 25,901 71,797 - Total 6,0%1 9.212 10,626 12,611 14,464 16,720 76,667 70, 7L2 1 0Dl I,K9 Annual KW Cost (11,000) 202 5 22 17! 14 7W 27 104 SO,L17 Ao,,et Custowc Coat @ Sit/Cost. 200 14 096 76 010 17 95} lO.D51_ T1 0 Total [etdrottsl (11.000) ~3, 293,212 1t) 136 341,654 311,08) 401,073 4)1,61!0 450.011 464,465 419,476 494,6)1 $1D,710 CtTao:SC .0435 .0464 .0497 0570 10A1 Sale ,0165 .0792 .0)04 ,0)15 .0)75 .0752 .0701 'Oils 92 07 01 MOM 11 .1 5 0711 .0640 Avg. Cost per 1344 - 6465 &112 011 072 07 2 0210 ;OF 41 1104x 021 • /uel (401 .0491 OST2 .oSS OSe4 0603 Total 20 672 77 41) 16,030 7114 235 1S 241 39.14;~~ • Anowl cost (11,000) 11.106 15.765 _ ALL (n1t 23,900 24,221 24,54: 74,661 25,164 1%,505 15,626 t1°180 7.04oi 2.0411 t10Ns !661 Sates •0265 .0215 .0797 .0)06 .0315 .0360 02)l a0~.19 .0249 .0255 0201 0721 0112 0220 MIS All .0715 Avg. Cost per MAI 6aa 010 - 0161 OS9S 0619 0611 • fuel ,04452 0407 ,0514 0540 0M 611 1,197 1.957 2,101 • Total ,0464 .0444 1,095 1,107 1,216 1,)60 1,416 1,531 1. 1.061 Annual Cost (11,000) 56 165 8 191 66 S 6 4il 34 2434 76 006 0 60 45 01 0 r 2} 4 TOTAL ? p " Zt OPT 77, T7 4 EX111b1T V-U-20 CITY OF UENTOf! rower Su, 1 _ Study Cage O REALLOCATION OF A11111NISTRATIYE COSTS PRESENTLY BORNE BY 171E ELECTRIC WILIT'Y REALLOCATION -_~__rAl*-I NiSTRA1 YE f1F.i'AR1'11FN't C1IRREN'I A1,1AXATION T~ ~ Total CMIS F.i,EC_ rRIC DEPARTTIENT leneral water snni tnt{nn > o[ Total Amount lk att~nt Department Reallocated lLilILNATEp 24,563 - - 24,563 - I:enel.0 Covernment 8.5x 240563 10,696 10,696 11ul1dlnT, Klintenas,re 6.0 10,096 409195 - Encri;y Gnone.rvatlorr 300.0 h0,185 40,185 13,129 - 10.7 130329 139329 AlCr,nrcy _ - 17,96✓i Eup.lneer l 5.8 17,964 17 ;':64 726 16,441 - "F i'crrrnu,e) 14.0 16,441 139802 1r912 _ 118,146 - 79,734 38,412 lfB,ihG 0ntn rroceanir,l; 40.6 - 170167 5,134 22,401 17.5 220901 - 1711042 70,000 I:nehicrin~ 121,042 - 191,042 - Ceatomer Service 60,3 10.0 51096 5,096 _ 5,076 - Finnnce. Adminisztrnllon 4,092 1,204 19,055 1'urchnninr 24.9 18'5p5g 12.22,,18754 22,875 7,397 2,281 320554 28.7 32,5/, 7,425 Acrounlinl; _ - 22.5 79425 - AridIt ----21,2 59 440 972 17,415 518397 150511 ~Ori0 Toth 1 s \ 3k :~4y 'Q'r l*w ff•,T . r~. R ~"1 Y.~ r • ? v f d" . i A 7 77 y .t ip : +t E)YISII V-D 21 CITY OF DENTOT' Power Supply Study Cate D OTY.ER CITY lTILIT1 RE1'EKUES FROM %r ELECTRIC UTILITY MOA'TH TRU EL WATER RAM' uATE~_ Meal, Amoynt MGal. SEWAGE EFFLUENT Amount Meal, nount 1977 - 1915 October 253 70.64 October 110 5,146 926.28 25,386 2,030.68 N vember 11 30.80 2,047 366.46 i4620 i 109 30.51 o 169.60 3taua r,• 170 47.60 7,237 1,068.66 10,425 834,00 February 466 335.52 5o251 1,305.18 12,543 11003.44 Parch 145 4,837 670.66 9,170 733.60 March 6 41.44 9,396 1,691.26 YAY p 1 115 204 33.32 12,091 2,176.38 11 242 516.56 A 57.12 16,947 3,050,46 2 899.36 • June 115 ,947 18,402 1,4)1.16 July 106.85 109160 29899.20 140 129,35 261775 3,213.00 14,393 1,717.16 August 322 293.15 30,534 3 664.06 September 317 288.65 28 1685 55 4,642,20 69540 )54,80 . Total ? 491 1 265.16 176 151 25 590,36 10 696 1 263.52 li0 433 16 121.16 19)5 - 1979 October 295 R,vcrber 265.85 18,168 20254.56 70291 116 107.35 674.92 December 125 215.55 6'S80 789,60 11,979 1,43737,46 January 248 2,455 294,60 14,438 l732.56 January 1)9 1226.55 64.45 2'512 301.44 17,144 ' 1 263.52 21057,28 Fetruary Marl 106 98.75 1,1196 533 303.96 12'002 11440.24 14,322 11718.64 119 110,45 3 68 464.16 XA 133 123.05 4,701 564.12 12,514 1,501.64 June 332 32.1.15 12,8E5 i $46.20 July 286 260.15 91011 1,086.52 25,976 3,117.12 Au st , 12,660 19519.20 ' 322 293.15 13,9)0 1 676,40 45,642 3,727.47 September 128 115.55 13 475 32,065 30847,80 7atal 2 412 2 21G.oQ 92 04 1 617.00 21 322 1 586.74 11,137,06 217 760 27 390.09 Ito" +1 All ~ Ott 1. 11 ~ 0 S L01 150.104 }Si,feS 161.7fJ lie 191 175.6)1 124 ,!!L }21,01< 1)1 ,72e 1)6.006 }40,eo1 H , ' r fro Secttd Co+l of tltetr lily ~ aIt*["it.0 e+u 4v+1+ 2,061 ),2i2 3,792 1,755 1,506 1,5li 1.667 7,1N 7,611 7,111 r olret.d Net loco" to CttY Ooe.r 2e )l Contlnutd 0"T'" (10r+eoo`1 21 24 1L u 1f 71 tS tk J4lntttuMt of Strett Ltrht/nt $Y+te 152 lsk rli at 600 6!e 700 SlL SSi yro Sect ed fo[tlat Of Cut0wt et[vtcaa 441 476 em na by eltctttc Utility 6 e to 1 2 S t t et fe it It 0lected W+t Of f Doe CO Utility ]t lty Ut ltlty U++6e by e l 39,255 t 360 12) 1if !10 11) 011 so lit Ua pt rel tt s"at S4 11 14S 465 }29 051 1)).269 Se 74 ~4 151 14e foul Co rt+ cart a ot~itcll tV flub C41i4 q//1►/9 a /owtTf (All Aaountt In p Q441 c a / / 1t/P 199° e7 ~ fN' i 51.767 {S5.1t7 {S 1, 7o/ {e9,tU ytolected Cott of /laculelty WuNt {17,999 {27,690 {77,654 co {7I,S71 {47,490 {46.715 44i,U! { nt lrwed City 0peratlon 94 9/ (/7 9l /1 17 75 1/ 69 Inctemntat propcit9 Taaet /eloaa of 0ettelct4d punch Okt 7,461 LIa4l litlaa paya►la) $31 Ya 1ot o1 }ta terlalt Stodt 1,004 Value of rue! Inve nt oty 9,111 Vul►lur Capital 4 5 y{6a-S9~ 4~s+ l ~ 0S9 95 -1i 779 1 6tS 7 S 77 1!7 ---j M rulal 61P 13 x r r ae: f r r~~' r i t ek rr ry 5 wk. EXEII~~ CITY OF DENTON Case D Stud - power Su 1 ELECTRIC PLANT IN SERVICE 6 TEDKYROp-RTY TAX J19 AND DEVELOPMENT 0 ESTI ACbjHa.ATED NET ELECTRIC YRCVISION FOR PLANT PLANT IN BOM VALl3E_ SERVICE DEPRECIATION ELECTRIC PLANT IN SERVICE 62,115 Steam Production Plant $ 620115 $10 027 857 15 597 337 Land 25 625 194 10,027,857 15,659,452 Other 251687,:49 Total 64,175 Other Production Plant 64,175 3 251 857 126 565 Land 3 37---W352 22 1901740 597 , 51,857 Other 3442, Total 7630593 11653,989 Transmission Plant 2,417,582 5,9019774 7'288'725 13,190,499 Distribution Plant 165,039 General Plant 1659039 494 926 92 232 Land 587 158 494,92b 257,271 Other 752,197 Total S20 440 007 S25 050 177 545 490 184 Total Electric Plant 9,234,043 Total Land, Transmission end Distribution Plant only 4 426 5,5 0, Assessed Valuation @ 607. S 68,701 Annual Tax 0 1,241$100 • I r t EXHIB '25 CITY OF DENTON Power SUDDIV Studv.- CaSe_D DEVELOPMENT OF ADJUSTED NET BENEFITS Texas P6L Co. Basis - All Amounts in $1,000 U ED N U WORTH U T &TH FOR NET R BENEFITS FOR RATE NET CWIP BENEFITS @ 9S ORIGINAL ORDER, BENEFITS 9x 304 S(919) S(111919) 1980 $(13,298) S 1,075 S(12,223) 5(12,223) S (827} {5,919) (50428) 1981 (6,281) 15189 (5,092) (4,669) 1982 (51653) 11374 (49279) (3,603) (449) 4,728) (31981) 1983 (49630) 11584 (31046) (21352) (516) (39562) (2,750) 856 390 11599 11132 19 B4 (586) 1,795 1,209 19998 (1,826) (1,187) (43) (1,869) (112)5) 1985 (3,824) 4B (3,940) (2,348) 1986 (6,219) 21231 (3,988) (2,377) 861 (51342) (21922) 1967 (8168D) 2,477 (6,203) (3,393) 532 (73373) (31701) 1988 (10,624) 2►719 (7,905) (3,968) 460 (10,118) (4,654) 1989 (139605) 3,027 (109578) (49866) 1990 (16015) 39328 (12,787) (5,396) 1,880 (10,907) (4,603) a - 5151 f 2, f 8 • t i E}GiIBITT V--26 CI F 0~ Polder Suvyly Studv ~ Ca!ee D ESTIMATED OPERATING INCM13 AND PAYBACK PERIOD Texas PQ Co Basis All Amunts in $11000 OPERATING EXPENSES OPERATING PRESrna rvr REVENUE 4oeratina Tacoma INCOME Factor For Year Cumulative YEAR FROM Except Income SALES Income Taxes Taxes 2 292 51778 1.000 50778 5,778 1980 239062 140992 + 881 b+274 129052 2,824 7+121 1981 26,672 16,727 31037 7,657 .776 51942 17,991 1882 30,303 19+609 24,089 22,492 31535 81911 .684 61095 1953 34,938 40620 .603 59801 29,890 1984 38,616 25,180 30816 49677 119790 .531 61260 3E,150 1985 43,446 26,919 468 6,160 42_ 31: 1986 48,425 30,041 51221 130163 { 4 C r iFfn ; IFhD~ e b L` fF $Y~ tFr.. iv~t n? ~I~ 9 'f\,'' n,~ rl,. MW N RCC C7 N s w r 1 ~ i z 7 1 . ~r ,4\ 2 a r q 4 ."m N ~~r yr ~'7 1."1 h~~4,A r 4 ~,I l. r FINDINGS AND CONCLUSIONS continued Operation of Desaion's Electric Utility Szotem As a result of the analyses which were conducted in sections III and IV, and compared in this Section, it was found that the continued operation with Texas Municipal power Agency offers the ratepayers of Denton a reasonable and cost competitive power supply option through 1990. Of the other options investigated as part of this Power Supply Study, three resulted in total revenue requirements, either in the direct comparison with Case C or as a result of the sensitivity analysis, which were competitive with Case C. The other three options considered to be cost competitive have a somewhat different level of confidence associated with them. These three includes 1. A joint venture with Lower Colorado River Authority in a lignite fired generating unit; 2. Wholesale power from Texas Power 6 Light; and 3. A firm purchase contract with Texas Power & Light if a change in the fuel mix could be obtained. The total revenue requirements for all four alternatives is shown in Table V-S-1. These revenue requirements are those resulting from the Revenues from sales over the eleven year study period. TABLE V-S-1 CITY OF DENTO% s Revenue Requiremmeent 5980-1990 Continued Operation Joint Veennture Wholesale Power PuP&Lrchase - Total Revenue Requirements 465,831 464,031 457,956(1) 455,696(1) Difference from 10800 79875 10,135 Cast C 0.4% 1.7% 2.2% Percent Diff. " NOTE: (1) From Sensitivity Analysis • Gaon 1C W400"n► a r' I r . r i .rte t s ' SI The differences between Casa c and the other alW MAtivss is considered to • be to small as to be virtually equal. It is important two ;tote that the one common item inherent in each of the alternatives is the emphasis on lignite as a fuel source. This confirms the decision by each utility that lignite does provide the lowest cost power generation. Under Case A, the three alternatives for the continued expansion of Denton's own generation resulted in significantly higher revenue requirements over the study period. The joint venture with Texas Power 6 Light likewise resulted in higher revenue requirements primarily due to the high cost of western coal relative to the cost of lignite. However, it should be noted that as mine mouth lignite options run out, western coal options should become attractive alternatives for future power generation. It is concluded that of the alternatives evaluated for continued operation of Denton's Electric Utility System, the continued operation with THPA is a low cost power source under the project's approved to date. However, other alternatives are cost competitive and shosild be continually evaluated as future power sources when Denton's requirements indicate a need for addi- tional sources. At this time, it is necessary to interject a recent development which has core to the consultants' attention. A recent study conducted for Texas Xunicipal Power Agency recommends that a second unit be installed at the Gibbons Creek site in 1987. This additional project has not been evaluated as part of this assignment and could result in substantive changes in the results provided herein. Further comment on this item will be made in the Recommendations portion of this Section. Sale of the System Case D examined the basis on which a sale of the electric system might be economically feasible to the citizens of Denton. This evaluation was premised purely on economic factors independent of any consideration for legal constraints or other circumstances which might preclude such sale. tow ?CV%%"W1W From the perspective of the ratepayer, the essence of a sale of the system is the immediate impact it makes on his electric bill. However, One long term effects can be measured only through an evaluation of relative rate levels as projected under continued municipal operation or alternative ownership. In the former case, future revenue requirements previously established under Case C were applied as a base. No attempt was made 'co justify a sale on the basis of the differences in rates applied to the separate customer classifications. Since no two utilities have the same mix of customers or ir. fact, the same cost to serve a particular class of customers it is anticipated that if a sale should occur, a particular group of customers may be at an economic disadvantage. In other words, a sale e..ould result in a benefit to some ratepayers at the expense of others in the same system. In addition to a consideration of relative rate levels, the analysis detailed earlier in this section identified certain other benefits and costs associated with the sale of the electric system. In the aggregate, it was concluded that a sale price in excess of $43 million would render the City's ratepayers econor.ically indifferent to continued operation by the City or the transfer of the franchise to either Texas Power Light Company or Community Public Service Company. On the other hand, had rates as recently proposed by Taxes Power b Light Company been approved by the Public Utility Commission of Texas as filed a sale price of approximately $97 million would be required to establish the same indifference level. Since it may be reasonably assumed that Texas Power b Light Company will resume its efforts to achieve the revenue levels previously requested. 4 sale price approaching this upper level may be indicated. This range of purchase prices has been calculated strictly on the data presented in this report. It is based on the consultants' approach in developing a reasonable purchase price which may or may not coincide with the approach which either potential purchases might use, It does, ho .ver, provide Denton with an indication of a level of worth for its electric ® utility system. c~mMrceTn►~ % s k C,pNDATIOKS with economical rovidia$ tha citizens of Deatop Giver the impcrtaACe plsced on P adedi reeoa~e ollowi and reliable power, the fng actions are d d contirue to operate its Electric Utility o The City of U2ntoa sho A, This does not include as presently Planned and "acutes C~ unless it can be lower than pur- any additional prolart$ proposed by Agency reasonably documented that the costs to Denton are facilities. chased power options or loiat ventures in other lignite r b Light and o Further discussions should be held YebyT thesbasi owec assumptions made it• Public Service Company nt. In Community analysis are reviewed for come in the sale of the system further uetermination can be made as to f their efct interest this manner a ~,illingness to coT=i in a possible sale and their independent evaluation. ' the recommendation to proceed with o Denton should revie4 independently, There appears to be some conflict between the and previous Gibbons Creek Unit 42• as to the need for addition"e5its over Provided in the most recent evaluation Verification of the reports, including this one. rt p A cannot be made at this Executive Summary of the Repo time. nded In addition to the specific -recommendation' made above, is is also recommended that if of the situation be required e ®l o ions can bemade conditions that continuous monitoring described herein, Texas Power change from the basic The sensitive areas for review include andtDenton, purchase Periodicielly. the fuel costs of 6 Light and other Texas utiliti es; u the price for the Electric Utility. power costs, and any Possible P 6~"+ ILy,Rq~„yaM ~V ~ ~ e~ i~ r yl w~ V m Z rm m 4: ,y a 1r « r_., M1.~,~ytj.e r J w 1 C+i a k v(. y trr n tie ~y, ~ 4 f• y'4~'1 ~ti i i f,) ra J , i~ e +7 d r 7^" r.t~?y' r ~f. } x 4 ky ',~a 5~'1 e J J e w ~ x 'M « ~ .peS W Y ~ a` } :r Y~ ~ r ~YJ> eG. ~1.r r ~ " r, F g~4 ~Nr AAS ~lii f uy .r~..,)r 4r ~ f ~?r'~S e t 7e~r rk.: vy, rf a;,:,r ~ ~f ur Pt v 4' !tf ) Y5 ly ~y )t rer ~ ~ i,,R{t ) v St r pi ~r~'' ry :'r ~~ev« A Gt a~ i a it r1~TIG raid 2rd~w 9 i~rr yr e~~ ~J: ~mw e, f~i.~~r yf )E~'rf~S':ti 1.4 t4 l ) Ar .tyy a fr v d J. e~ ;.i 1' 11Rr . ' , n r rr N Jt. i V, 14 r5xl: 0. h~: !i N 1r''.r, n yr»°r rj +H ii oy ~ t r e a. ~ t~ J nl r~ ~3 ~ ri-. [I ~ x r 4 v , , fi i APPENb1X A - Contract for 1980 Electiic,Otilit}► Power;,Supply Study ,r r `k 7 9 dOPENDIX $ Vip 'ROOM + ApvtmjX C - `swle,- utters to Private Bad Public utilities a ^ MOM J yy. e s • -47jv- ".W;7f mmur Ilk . . . . . . . . . . . 17 OMUCT FOR 1980 Ell=C UTILITY iNMR #PPLY S= d, {"r~:•+f1'r1 ~'Y(wp r"~.91~e 7 ,~y F a 1.? { a~j5 5 P.~' X 4. 1 ~ ~+i .v .W ~ uh m u .wla ,FM i 1y yk 4 ' 1, r _ it a ^k y, r J 9fyd„kC.L ~Xr w4hl n'Y i % a-: hi: r 6 fy. k F U Ci]H•C lt1~t"i' eoR 190 ELECTRIC lIT[Lf'ry PCJ%:ER SUPPLY STITY Contract made this Gth d.3y of. tl^,?mber, 19 7'~ _i•{ and 11nt4'. ~n the City of Denton, Texas, ,1 mun ici~il cormrntinn orn,tnl7n'1 and existing 13n1@r the ifr?rl°. Rstle AmendMent tn F, he fnn:Ftitntion of Texas, (hereinafter referred to as Denton) nnrl Gilbert/Commona'eilth, Engineers and Consultants, Coirrnnv, a corporation duly authorized to transact businO'ss within the State of Texas (hereinafter refPrrcti to as Cor=uttnnt). t'1I'i14 V-S!" ".1i : MiEREAS, Denton wishes to employ Consultant for tl,r, r orrr of • conducting a "193n Electric Utility Power Surrly S'-'tt'Y" ,s contemplated, consirting of or 1) Load fklrrCOst, ancl; 2) Power purply t~0d, TIIERBFORF, kli^ rarti-S herntr r!o hereh'7 ~7rnn {n11r.;ti: SECTIO'l T Consult?nt ~;ilil4 r•Fcf~trm t h ~ r atl t, lilt Attaf:If01'ilt_ 1 i1Cfr.tkti 111J l3 furl~F.,f d?.^C[il'r" 1. proposal aS ::'fl rll tt n1l Cfl UCt .1. 1 , 11 7. • t•I H e X ant nr Sp~ftt);i-.. ( nt{ tt~~ l~r p1!iUS t 151f~ Ist ra:n:;il'.t:r•a, il.st f r this, Cnntr•tct p'-1ttr'. r,^S A •;I In n•: Of c":?"1t`•'L'~ eL~ff p,n[Sli~ Charge, f.Or profc^sionai ~r titl n },,o ;n .1cc ninri t.ll mw i,,, ~sni.9n^-'~ to t'1^ Fr ;.iritxl, 1 rnllt'r, ~:L~tn' .~rd ' with t'on,n .I. in *t ,•„f nr r~n!ln^{ '1 ern of Ile Hilt, i'~ t,n? for r r' •,:n;n ~,r.Lualt.~ at oror''• r`11 th'. •n rOr in h,)urs. ~nY Fill'n Cjln.n r~r^ Frofr.~sion~l ';rrvic j^nt. 1 •,'t.. n.: ~Ii con lttt•~tir•, t:{}•, I C^.r t.1 1R R. cut Off- to cost In ;,doltion F r trO Lo, trw^t her ^vprrl s^5 C' !!..i itlnn ' .nn Y. n .,F Gi thn1. t arnl 1tvin'1 ~`~F n ,.r(}--n, and `'"7'~ tn, f;ll~']7^'~ Ctn F - •^,r {1} 1•n tii 11 n,7 .7t lnrl fnlt.•~f 1, ln r. nr. rjl ,t•1'l t^lnC?1Ql print ten, YnCC^'~'1CLln. hi lled in l^cut `gin` n r ,,r n a.; r~.wirect 'ai 1 1 t C n<, rn'rRj l iP'1 AL tfin t.l gh.9nriard fnt ~_t ..tl r,r'. t,.il,•r rll)l} 1•n rnnAr±r~''. 'r':.,, il!"`• cf C!`n^lllt~''-' tr t;t Tr Ct.lp r!1rl at Si r 1r, fl^n~ tl ' 1Y.al r•~• Y 1~1r rt U Ct,n ;ul tant,., r . tlr''lr itit. 01, Itr`nt: n tli l l ! ^ } i t t,• autoTnhil^~ hilt 1 ^ hiller •nt t. • '..1 ?i~ .R'64 , 4 n~ r 1'tV 'ter ~F" •'r(~r, Y.; r „1~~' ..,d.. jrll~ Unless authorized by Denton, !:nnsultrnt's cOnponsntion lmdir Paragraph A of this Section shall not exceed $58,000 and Consultant's compensation under Paragraph R of this Section shall not exceed $10,000. SECTION III Method of Billing: Billings will FM rendered monthly for the preceding month's service:; performer] and n:,pAnses incurred on Denton's behalf, and will he d,ie and payable thirty day, after receipt of the incoici. SECTION IV Consultant will utilize its own personnel in the consideration of the financial, loan `precasting and other sr,;~cialization areas and under no circumstances shall Consultant he authorizers • to enter into any contract with another whir;h :rnulri ohlig,itn Denton to pay all or part of the •anount due urnler any sur_h contract irrespective of whether rccove:v niaht ur`-n an express or implied contract (quantum reruit). SNTION V Denton may terminate this Contract uperi thirty Oi.:s prior written notice to Consul Gant. In the ovent of ternination, Denton shall -.,)ay Consultant for full sr,rvices r-nr~,reri ani expenses incutrod to date of termination ~n,l [)-ntf !i ::brill receive all completeri onaly3in C1'mpnrltinns, and vorl; dvne to thc, date of termination and any worle in nrnir-r or 4nr7oTnlnto reports will he delivered to Denton. • n .'~J„ J 4~ r.Y~ y I'~~N , Irrd t,;~ w ~r~ 1'~ T:,.. K M •.a vvr .=T r ~~n1 p i t ;<„i} R. r~ " j b r r A '~r~.: SECTION: VI Consultant will complete its' services under this Contract within one-hundred eighty days of the date of execution of this Contract. SECTION VII In no event shall Consultant he liable in any cause of action for special, indirect or consequential damages of any nature. SECTION VIII The provisions of this Contract constitute the entire agreement between the parties and supersede all prior cnrmunir_atinns, representations, and agreements, oral or written, hntwoon the parties hereto with respect to the suhject of this Contract. IN WITIIcSS V111F.REOF, tie parties hernanto s^t their hands • and seals the day and year first ON-)ve written. Attest: Gilbert/C07monw,?a0th, Fnginr+rs and Consultants, Cnmpanv (1k i 4-e Title _[t1 c Title. r Attest: City of D- ntnn, Toxin Ry By Title Title MAY r(r, C11 Of I1 11TOII i .7 rl lC. V t F y4d"~ „~F \.~y1. LF a;f0.1.S ' tv ,i 1 +kx'3T i-, S'.~,:' ` r e 3 rye r i r n At(acl,ment 1. Al SCOPE OF SIRVICES ELECIRICAL IAAD FORII-15 relating an The Consultant shall review all relees insDentonlan electrical power demands and energy develop a forecast of electrical deed and energy requirements through the year 2. ALTERNATIVE POWIR SOURCES The consultant shall tiNoroughly investigate the following areas for alternative power sources: a. Continued expansion of wholly-ouned generation facilities by repowering existing two 60 mw units with gas turbines in 1983 and a new combined cycle unit on E►~el oil in 1986. b. Purchase share in major planned units of other Texas utility companies. c. participate in Texas Ktnicipal Power Agency as • presently executed and planned. d. Sale of existing facilities and assets to an Investor-owned utility. e. Purchase power from members of the Texas lntercennected System. f. Othcr alternatives such as Solar, Hydro-electric, Wind, Bio-IMbss, Solid Waste, Etc. Each alternative above shall be analyzed under two situations: l) Considering no power and energy to be available from DIPA, and; Z) Considering Denton's planned allocation of power and energy to be available from IMPA. 3r. 4.T h ,J'1 S 1 A 1' n t ..pr. R I f 1 .f tlr letal nntl 1'resc~+ted to it is desired that t 1rd p.'~udtt 1be C011", e City Cou+cil +iithin si c At the completi~~+ Of tile the public Utility ,,,hli; mectine". months of `++constliantn shalt. present, In 1 oC t1,e stn % to Stud)', the nssL1npticros, anti conclusions Cons~+l t:mt the findi+lgsl lloa+po Ce+tnCil andips'ofCtl c+ f final report. tt+e city shall. furnish 25 cop QJ D1<1v,' IGCIt uhi i cct rilnnger tll : S c e co+n+cil person, 1[:ith tIv, {b,,ltrman of The City l+as ecluslo e u it ;utid the Utilities Utility 1103rd P as the contact person, the Board serving Staff available for asststa Lc,r' ACCESS ~ to tl+e available ~I~tsullrtment ty of Denton will n~eo +redby. the l;lectric 1x4' the a.re st ply ct+xlics ma~1e "I The Ciprevious load forecasts P P' m maoement Gtlh°rt staff; load Eorecas~nt~St+~`` made by staff; manavem• t report of a 10"3d forcc.1 and Consultants in 107; dreaf for 1?1PA 11?, 7tone ;r+J PCI t power ture 1'cnot+ to st+Rly Of E~s • supply study PT Paced Completed 1979; and tl+c recently housing requirements. Ott r 8 f d; t 2 Y r'. ° y "C tj„ r w Jr' < y~V ~I I e'r+9' { M% ?`+v'~dy S r ~f;i~i~ }y~Ladl u %1 ~ r y'~ iAy~w'111 I•r W' f Ip f~Yirtt° t ,4 n~l~ 5"} iir~ ~ (p},Mt y S 1L; r x ,'~N I r Y!'NY r .M f ` *i w Y T T } f x r t V ',i1 f ~ r,t ~ ( i~V t r,° f I F f . ~1'.y,,, tg 7^ . 'f rp#^~~' r ka is y 4y.~4:; v a 4 W ° ri 1 ] R r n f r Y f 'h.~ T F n~ 1 f{ 'ti i f t ~tlx 1 ,ytk r t" 7It4 F 4 ~ f 1' ~ t P 'J.n.Yr~' 7 f '~s ti 'n ,~1 'I~ r ~t ~a i P r ,.Yr n'0 n 6 ~ r rL : tl J f t r.' r 7 I r 1 G-!i t Y ~ ( ~16 l M1 V ~ ~ WI $ ~ Ld yr YV ~ ~ j t ~yS t ♦ Ft ~ V{w y J M 1 y. ~ I VY ~ ~ ~p K NJ1' Y ! ~t 1i { ~.A, r ~t +.rat .f ~ rY y7% t ' v.~ 1 v I Y v~ ° kt w t h . + va '4 5 9 r P s a~ yy.. ett r y A~ ,i ~ ~6 / A m , ^ ~ f l ~ h 1 t l t ~ ° (S.,V h A f: . . 1. - APP B T.Up `REPORTS • Y Iti, F C „ LLIA 04 ra 'Z- " S REDAssociates, Inc. 1NTR conducted by City of Gilbert Denton a number over supply pro3ect being of the City of it interest in with of As part of personal visits P the Public Utilities Board meat witn and as approved by made to Texas utilities to a f anchise earrange visited determine rp ects, or a In addition, a urchase power r + i joroitont the vi venture Psits, a list of texas utilities to possible were e P royal by the 8oard- tiashl be the City of Denton• ect manager for app util~lieamsected Ci•t:, re ared by the pro, for signature by May • was P pf sample letters were the Preas made to number o erscna} visits were of Denton, which described reason ford u eight P to the iscuss.the alterna- the State offT thosetutilities, the rincipa people Is During the week of ublih 3 utilities through in march of Denton+ and the P both private and p Following is s a the list City o ro~ect team an fives under inithe on • in attendance from involved from the utilities visited. utility Participants City of Denton i Date/Company Participants Inc~no GAI Vice President N,ax Tanner, March g~ 1980 C. Hartung Dallas POwer 6 Light R. Nelson • E. Cooms A. Herman 0. Chalker, Chairr,1an March 1990 C. Hartung 8 J. Harris, Preside ident ~e}ls, Centra 1'& Southwest Corp. R, Nelsen vice E. Cooms A. Herman w. Seifert W. Goodwin chairman* President R,D wofter, march 3, 1980 C, Hartung y Chief Executi,,e officerer Public Service R, Nelson D•R, Bernard, V.P., Lomrnity p„ Contracts R• Stewart j.M. Taroley, V ` W. Goodwin &Regulations . Seifert y~ D Nuckols, V.p. w 6 Chief Engineer r G. VonHuben, V'.P•, Secretary i A. Herman 5 General Counsel i` :lof Soderberg, Chief Engineer 1960 C• Hartung March 5, Lower Colorado River R, Nelson Authority R. Stewart A. HertMn Goodwin • ~,oen leen~urt~ 1 10.1 -17 N .y ~a 'j. ~ i ~ n Sri , r.~ i s. 6 i@ . Date/Company City of Denton Utility Participants Participants Includine GA1 March 6, 1980 Power W. Nash D.E. Simmons, Y.P. Corporate Houston Lighting b C, Hartung Planning R. Nelson A. Herman W. Goodwin March 7, 1980 Mike Spence, Vice President Texas Power 6 LtghL W. , Nash Hartung Joe Nelson Louis Howard R. Nelson A. Herman J. Nash W. Goodwin W. Seifert March 7, 1980 C. Hartung W.G. Marquardt, President and Texas Electric Service Co. R Nelson Chief Executive Officer A. Herman Ed Scarth, Y-P.9 operations w. Nash J. Nash W, Goodwin 1980 R, J.E. Bondurant, Sr. Vice President March 79 A.E. Naylor, Manager, Power Gulf StatC Utilities A. Nelson Herman Interconnection W. Goodwin Virgil Shaw the me below, for the Board's oevijhQ is a brief resultediinoa rnumbere fnitems Provided held Given the level of parti- during that week of March 3, 198 standpoint. it was apparent that, the which should be discussed from a generic riv we met, within the State of cipants invol'ted with each of the utilities we m " private overall relationship between public and bogged dowr. Texas is of such a nature that facilitates cooperati son ties and understanding a the discussiodetail ns Cer which problems faced by utilities in 9eneral. The high level of on the philosophies of each utility and did not get me it is our belief that t ht he eCitygofwDentont withyin- night have been expected. As a result in the next decade. worthwhile and provided not only to 0 sights o the plibetweenrtheiCityeo Deand h t utishoulderesultiinethe of the obvious Cooperation Following is we believe that the data requested will be forthcoming accurate assessmeft the the parti Mars discussed withyeaclity. the description o • rapes 1Ua~+,s»pM } 16 ~ .'.y I T ~A ~T S r.'1,1 ~B~y f i m 1 r. l t M1 ~ u ase power arrangements gwhhli ich would Del was intended any purcLicht • possible to pursuePower between the City of Denton and DP6L. From our discussions with Max Tanner, Vice President, it was apparent that the Dallas Power b Light Company would not be in a position to provide substantial amounts of purchase power to the City of Denton through this time period. Denton, through T14PA is a party to some economy power available in the earl and mid 1980`s. Denton itself would be placed in a lower priority than TMPA, and would not, in all probability, be supplied this economy power. We have, however, requested from DP6L, the economy rate schedule which Denton could possibly fall under given the availability of such power. At the present time, DP6L does not have any wholesale rate with other utilities or municipalities. Any purchase power received from DP6L would be based on the embedded cost of the particular transmission faci- lities plus the average embedded cost of its generation facilities at that time. We have also requested the generation additions to its system through this decade and the anticipated fuel mix in meeting their load requirements through 1990. Given that DP6L does not have any contract demand or wholesale rates at the present time, and the fact that economy power has little or no likeli- hood of being allocated to the City of Denton, it is our opinion that none of the power supply alternatives are feasible in connection with DPR at this time. However, once the data is received from DP6L, we will evaluate it in connection with the other utilities where power would be available for purchase. • 2. Central 6 Southwest Corporation - The meeting with CSW addressed both , joint venture and purchase power options with the City of Denton. With the intra, inter-state situation as it relates to CSW we have limited our investigations for both joint venture and purchase power opportunities with West Texas Utilities and Central Power 6 Light. On the joint venture option, it is our understanding that the City of Denton could purchase a share in one or more of CSW's major units beginning for service in 1987. These units are nominal 640 N-coal or lignite fired units with one coming on-line each year beginning in 1987. For the joint venture option, we believe that Denton could purchase 100 Mw of one unit ` or a progressive amount beginning in 1987 through 1990, depending on the projected deficits. In our analysis we will measure the sensitivity of one purchase versus a series of purchases. To assist us in our analysis we have requested from CSW, the year by year estimated capital expenditures for those units, including assumptions on escalation and allowance for funds during construction, and the operating data including heat rates, capacity factors and O&M expenses. In addition, unit fuel cost projections have been requested for all new units through 1990. Under the purchase power options, we foresee two possible alternatives. These alternatives would include either firm power purchases in blocks of firm power, or wholesale power whereby the complete requirements of Denton uoai rce~ner..onn Y t MI R t M. IRS t F an! es. Also, during the short term are of by one of CS1t s comp wer'and could 4~feshave yaskedlfgr 11931-1984), CSK is anticipating excess po power., Denton during that period with small amounts of er tto designated now have* the existing wholesalale o 9 ratwithhanylfirm Po er rateswhic io nix and fuel by the corporation„ In that regard, we have also requested the annual gent mix through 1990 and the targeted tapital strutturehwestheit wasrdeter- While not a major consideration with Central b nchise Se does not mined that they would have an interest in a franchi arrangement with the . C1ty of Denton as a third option in that regard This interest hold other power options. d the same level of interest with CSw as the For the purposes of our analysis we have concluded that CSI offers u in three areas: (l) short term purchases between now and the opportunity ear basis through 1990 1985; (2) a possible joint venture on venture project r cin the unt wen of nIDO ding beginning in 1987+ orfi a domandcontracorwholesale dependi m Y;; and (3) either on their reserve situation. The only interest the City of Denton Public Service Coman - reement whereby they 3, CoRmunit is or a possible franchise Bgree initial meeting with wou d have w th C This would purchase the electric system of the City. and indicates a serious CPS interestiindthall of the is option officers of their company in Denton's generation 'ihe items discussed with CPS included butialso thesexistingn9y transmission and uf Dent o em,They would also be interested in capabilities of the he City O o given that the legal constraints Denton's 20: share of the TMPA projects, Other items dis- are removed such that this could become a possibility. ussed inclined: the fact that they the citizens would no' of Denton wouldtfall under CPS 's ule t have a separaterate sched c lighting existing rate schedules and based on the purchased price of the electric system; th purchase the street ! would fall under an either/or category whereby CPS would lighting and provideto dtfietother rcommunities schedules theirvsystem, to Denton at a rat available has been established at 18R as airesu t of their istest the return on equity rate Increase, with an overall cost of mosey of 121, 14R preferred and SOt a targeted capitalization structure of 40% equity, 520 improvements per roximately amounts iI' aPp ~Dital latestratefiling, bonds. One h final between im ~owsand ` 1990 with CPS program which received from CPS, their with contract which they have year. Ater the meeting, we urchase power and h Texas ePowereb Light. P As a result of this meeting we believe that CPS is definitely interested in a franchise arrangement with the City of Denton and must be compared against IM under that option. + < r & ~ viti ~~Y • -0 1' Uxf y a ; fie.,: .`A F r 4. Low r CC~lorado River Aufhorit~ - Tlie meeting with LCRA addressed both joint venture Cr PListplanninghathewCuit of nits Faayette.#3~,nwhichhis joint venture option, scheduled foincoafineo ratoopero ionvinture iste1986 tionrwhhich8theiCityrof One prohibiting Austin has with LCRA whereba nt the op y they would participate at a 50X level with LCRA, given their particular load requirements. One possibility which does exist is the immediate construction of Fayette #4 which would come on-line approximately one after Fayette the City ofeAustiniandiLCRAde within the next year, load projections must be of such a nature to warrant such a decision. Under purchase power options, it was concluded that the legislative act creating and regulating the authority prohibits the selling of firm long and ener of LC term PoItrdoes not,gy on orRshort trvic ermepower sale i- tory. sales to outside utilities. One situation which could lead to excess power recent on thmersRtosformmaijoint ventureiofetheirtown fort LCPAon'sandcooperativcusto e This would lead to approximately 225 Mws of excess power which could be delivered to a point within LCRA's territory and wheeled to the City of Denton. For the purposes of our power supply investigation, we will incorporate LCRA's situation as a sensitivity type analysis when compared to the other alternatives. 5. Houston LiahtPower ino HL&P will experiencesaedeficitHthrough a joint venture 1987 and is actively seeking purchase power options of their own, For the joint venture option, it appears that HLbP would be interested in 1 one clannthe inlate add8one lignitetheir planteeveryuyearr will1985allofowapproxiit. are 9 to and 750 tUs in size. We have requested from HLbP, thwitnoLhetheatarate, and fuel costs associated with those new units along O&M expenses on a mill s/kil owatthour basis. be the oionlandeasialresult,nweianticipatebevaluatingtHL&P ventu other pt utilities which have this possibility. 5, Texas Power S Liaht Comoanv - The meeting with TP&L included investigations rrto a tnree possib a power supply alternatives. They a only Utility which offers possibilities in all three areas. Under the joint venture option, TP&L has a company policy which prohibits joint ventures outside the TU system with any of the lignite facilities. for The erntcoalbunitscusing New Pi xicovcoaleanducomingpontlSneainothenlate waste potentiallpartnertinupurchasing itscown fueltforousehin thoseyunits.e be in Another Qsesiernicoalowereimadeeatuexistino naturalrgascsteamegenerationr sites to w west sites. These conversions would be in the 500 to 700 Mw range. 6art l Cv"*""N S ~t p r t x:i t i _ f 1 77 '4 x r v+ t i a W h )P f ry_i f n ( 7 Vnder purchase power option, TP&L, during the 1980 to 1984 period, is experiencing re latively high reserve margins and would be interested in an annual contract for purchase power during the earlier years. However, this energy would be based on oil or natural gas as a fuel for most periods of the year. During the latter part of the 1980's, TP&L would be interested in possible firm contracts given the particulars surrounding their system requirements and reserve margins. In that regard, we have requested from TPbL, the wholesale power rates which are presently in effect, along with ar,y firm contract demands which they might have. The third power option is the franchise agreement whereby TM would pur- chase the transmission and distribution facilities of the City of Denton. There is sufficient interest as long as the legal constraints are elimina- ted and that the purchase price results in economic benefits to its stockholders. Just recently TP&L purchased the electric system of the City of Commerce and their evaluation included both the income approach, 1 evaluation of the system and a fair market assessment. Additional information has been requested from TP&L concerning their gene- ration and fuel mix on an annual basis through 1990, along with the esti- mated capital cost for the proposed western coal units and the estimated initial fuel cost for those units. TP8L offers the most probable alterna- tives for the various options to the City of Denton, especially in the purchase power and franchise arrangements. The joint venture aspects will be compared against others as previously discussed. From a purchase power standpoint, it would appear that TP&L's initial reaction of possible 100 to 150 MW of purchase power is a bit unreasonable given that their • system will have in the neighborhood of 7,000 to 10,000 K4's of capacity 1 by the end of 1990. Also, inasmuch as TP&L's service territory is conti- guous to the City of Denton, it appears that they would actively seek a franchise arrangement with the City. 7. Texas Electric Service Company - Since TP&L has been assigned as the parti- cipating entity with the City of Denton for any joint venture projects, we have only investigated possible purchase power options with TESCO. Although TP&L and TFSCO are "sister companies", we have requested the wholesale and firm demand rates in effect for TESCO as a comparison against TP&L. Each operates independently from the other and there should be some differential between their purchase power rates. We have requested the generation addi- tions and fuel mix for TESCO through 1990 so as to evaluate the purchase power options. S. Gulf States Utilities - While we had intended only to pursue the purchase power aspects with U, it became apparent during our discussion with them that they are actively pursuing joint venture projects with municipalities such as the City of Denton. Also, we have eliminated the possibility of any purchase power with GSU due to the interconnect situation between GSU and other utilities in Texas. This is based primarily on the estimation of substantial transmission costs in order for Denton to tie with GSU. ~i in regards to the joint venture option, GSU is extremely interested in any arrangement of potential sharing of costs in the Lake Charles Units (Nelson 5 and 6) and the River Bend Unit in Louisiana. Another joint venture possibility is a lignite plant being built north of Huntsville, Texas. Although GSU is not a part of the Texas interconnect system at the row IWIROWU" t 71 t 1 s. ' present time, it would appear that this issue will be resolved by 1985. We will therefore analyze the possible joint ventures with GSU as a sensitivity to the other opportunities under this option. We have presently received from GSU, the estimated cost of the Nelson plants and the River Bend Nuclear Unit 11, They have also provided us with their power supply program through 1990 and their estimated fuel costs for coal, lignite and =6 oil. SUMARY OF MEETINGS As a result of our meetings with the various utilities, we are proposing that the joint venture and purchase power options to be analyzed as part of our power supply planning study be limited to the following companies for each alternative: (1} Joint Venture - Central b Southwest Corporation, Lower Colorado River Authority, Houston Lighting 3 Power, and Texas Power 6 Light. (2) Purchase Power - Central S Southwest Corporation, Texas Power S Light I~ and Texas Electric Service Company. These options are, in our opinion, those which are reasonable and which could possibly result in reduced costs to the City of Denton when compared against continued operation with TMPA or expansion of Denton's own generation capab-' bilities. It is recognized however, that as the data becomes available from the utilities, these options could change. We are therefore remaining flexible in our analyses in order to ue absolutely certain that all aspects of the power supply study will be covered. i Concerning the possible sale of the system, we believe that sufficient interest has been expressed by both Community Public Service Company and Texas Power 6 Licht to warrant a continued investigation of that option between those two private utilities. In addition, Central b Southwest Corporation has expressed a limited interest and if the decision is reached to proceed with the sale of the systen, it would be beneficial to the City to include them as a third option. Included in the Appendix of this progress report is a copy of the letters sent to the utilities following our meetings. In them, we have restated the items discussed and the data requested from them to assist us in our analysis. I &tertlo» O 1 .1 I 3 W i ~~7 '".t r f~er eta I "~d ~ + ~ :S,'af ` 'I~ °r~✓' aye. oT1Y . iT Y, s i It ! t n lfa 5 i a r~s a ~ ~~d}~.~', t ~i1 + '~~'a q,t ~ + a o~,` ~e•, s' 'tt r~.}~"er ~ !f, '~'i S» , , 4 a k l' t'~ 'k" s a k 1 p •'e" ~1 ~tf ~ iNn itv , e'iv~ ~ 1y~~,1 f~'e,t Lr ri ~r~, -~4 ~'d 'jv~'~ " fi y : stn v t t . ~ 1 A 11 a- . t + t x m,n y ''r N 1 v h.. s F~ r- fir' S. t' s, z 1~.. ♦n b r,.'; 4 yg a e, [ i r e`, a r~' C x t f I ti - ~y y d, 1 ~ ~ i ~ ~ h. 1f{ s ~{S; I ~I 'i,i 9 , s~ K. 4 ti el i 4 Ira a ~ ~ ~ Iv s r ~~Y f n11, Vi y NF u 1 i ?yy ` i t } l ' + is, M 11 c: 11d ! F i 5y fi S ~I k' 7 A [ . a ar'~i c ~'1 a~tss i 7;r ♦i ~ f4 Y [ .r a ~ ~ , r ~ r ~ i a u + ~ . y,.. I ?`N~ n. ti~ ~ S: i ! i ~ a i" + 7 L r 4"~~ n>< ~ ,~a Ar. 7 J' n r r + ip,~ ~ f" ? .rrv ` y ~r x i r , ~ ~e~. T t k J S 2.'~ w y1 4t i_ r+ta J .e s r s 0 t~ } F r r '4 { ~'y 44~, ..W •'J° ~ 1~ t v'+~ j ~ w / '-cf ~z N. ~ v ~ :ul e r MI y?. {A fu i' r~ 5 ~ r s { . r ~E 'S . F~1`~ ~ r: tj 1 T,~.).Y'I v Y irf r e k rv 1 1 wµ M1wl. 1 s ~~Y IIp7 i. I e i 1 Ye .p~ l_ > + Y'Vt YY'. N IY r ~ J F Y 1 ff. i [ 1 lti!' ~'i4~ • 1.f "C L~, t r ~s4 i ~'y p ~ ~ F ~ '~i [ 1 ~ r o t~,~ I t ~ ~Q'NF v ~ a r r+ t sF [ 7 ,,tls v 71V r i 1' e'I 1 10 7 [ ~ ~u ~~n G;~~}~r ~ ~ 6 i~[ i. it 'i~4 43° r. ~ti, r 5 r f , i ~ 1 t. ~ p y^ 1 hr I Kn/'y l i ~ 1 W~ i ~ l Y 4 1 ' 1 n tr !►PPEND C . 51►LE LETTER§ TO PRIVATE AtiD' PUBLIC MUTIES 1` 1'1 i, I ~ .I n ' H1vt l± r 1 ' I ~ c• . y ' . w. I flu s ~ r ~ ~ ~ Y 1 : N - i. 4 1 y~ r 7t i E'M' ~J n. y~ 5"; "4 i 'r 4~ t. } v , SAMPLE LETTER TO I'll WEST'TEXAS UTIWIES SOUTHWEST ELECTRIC POWER COMPANY GULF STATES UTILITIES FOR PURCHASE POWER Dear Sir: The City of Denton, Texas is presently evaluating a number of options to meet its future electric power needs through 1990. The City has engaged Gilbert Associates, Inc. to conduct this study. Among the alternatives being investigated is purchase power. For your information, we are presently structuring this alternative at a level of approximately 100 megawatts of firm power. The actual amount will depend upon the optimum combination of purchased power and self- generation presently available to us. Other amounts or types of purchased power could be considered, depending upon the economics of the situation. Representatives of Gilbert Associates, Inc. and the City of Denton would like to meet with representatives from (appropriate company name) on (date to be established) to discuss this possibility. If this is of interest to you or if you have any questions in regard to this matter, please contact Mr. George Kreiper, Chairman, Public Utility Board or Robert Nelson, Director of Utilities, City of Denton, Texas. Thank you for your consideration. Very truly yours, Mayor William Nash ~ y M1i J"_ a r ti` .r ~ :A 'J'rt•M y '7 Ee r,,.:,.. . 5 ~`~w ~'F ya ° s ,.9 ~~1^ 3 Syr ~`I f~ ~ti " I*~,. ;''y 44 SAMPLE LETTER TO CENTRAL & SOUTHWEST CORPORATION FOR JOINT VENTURE Dear Sir: The City of Denton, Texas is presently evaluating a number of options to meet its future electric power needs through 1990. The City has engaged Gilbert Associates, Inc. to conduct this study. Among the alternatives being considered is the joint participation with a private utility in a future power generating plant. The size of Denton prohibits to some extent, the independent pursuit of self-generation due to the present economics of scale associated with power generation. Representatives of Gilbert Associates, Inc. and the City of Denton would like to meet with you on (date to be established) to explore the possibility of • the City of Denton joining with Central S Southwest in a future unit. If this is of interest to you or if you have any questions in regard to this matter, please contact Mr. George Kreiger, Chairman, Public Utility Board or Robert Nelson, Director of Utilities, City of Denton, Texas. Thank you for your consideration. Very truly yours, Mayor William Nash Y a9 5 Apr tv i4 } 1~ "5a ♦ Sri ( t +F ' ~C,~1y r~~ `F~2M6 aS\~p 77- i "t Y i r '•.'A Y rt " V "r 1 Y~ ~ +'A r a r 1 SAMPLE LETTER TO TEXAS POWER 3 LIGHT COMPANY FOR SALE OF SYSTEM, PURCHASE POWER A JOINT VENTURE Dear Sir: The City of Denton, Texas is presently evaluating a number of options to meet its future electric power needs through 1990. The City has engaged Gilbert Associates, Inc. to conduct this study. Among the alternatives being evaluated is the possibility of purchase power and/or a joint venture in a future generating unit. Also, we are considering the economic viability of possibly selling the electric utility system and offering an operating franchise to a private utility. Because of your location and previous interest in such a sale, we would like to establish your criteria by which you would consider this possibility. In order to conduct a realistic evaluation of options, representatives from the City of Denton and Gilbert Associates would like to meet with representatives of TP&L to discuss this in greater detail on (date to be established). If this is of interest to you or if you have any questions in regard to this matter please contact Mr. George Kreiger, Chairman, Public Utility Board or Robert Nelson, Director of Utilities, City of Denton, Texas. Thank you for your consideration. Very truly yours, Mayor William Nash `c i M1 7WIF z SAMPLE LETTER TO COMMUNITY PUBLIC SERVICE COMPANY FOR SALE OF SYSTEM Dear Sir: The City of Denton, Texas is presently evaluating a number of options to meet its future electric power needs through 1994. The City has engaged Gilbert Associates, Inc., a firm of Engineers and Consultants, to conduct this study. Among the alternatives being considered is the possible sale of the City's electric utility system. Although there are at present some legal constraints to this option, we are of the opinion that this potential sale could be economically viable to the City of Denton. In order to explore this possibility and compare it on a realistic basis to the other options available, representatives of the City of Denton and • Gilbert Associates would like to meet with representatives of Community Public Service Company to establish the criteria which we would need to develop from your viewpoint. As a result of the analysis, a purchase price will be established based on a combination of factors such as return on investment, valuation of existing facilities, and other factors yet to be determined. We would like to meet with you on (date to be established) to discuss this matter. If this is of interest to you or if you have any questions in regard to this matter, please contact either Mr. George i:t-t,ger, Chairman, Public Utility Board or hubert Nelson, Director of Utilities, City of Denton, Texas. Thank you for your consideration. Very truly yours, Mayor William Nash -T" SAMPLE LETTER TO ' TEXAS ELECTRIC SERVICE COMPANY DALLAS POWER &,LIf,HT COMPANY LOWER COLORADO RIVER`AUTHQRITY. HOUSTON LIGHTING b POWER COMPANY PURCHASE POWER AND JOINT VENTURE Dear Sir: the City of Denton, Texas is presently evaluating a number of options to The City has engaged meet its future electric power needs through 1990 Among the alternatives Gilbert Associates, Inc. to conduct this study. being investigated is the possibility of purchase power and a Joint the load forecast venture in a new generating unit. At the present time, indicates a need for approximately 100 megawatts of additional generation in order to conduct a realistic by 1990. To explore these possibilities, evaluation, representatives from the City of Denton and Gilbert Associates, (appropriate Inc. would like to rwet with representatives of - company name) on ! (date to be established). uestions in regard to If this is of interest to you or if you have anSlChairman, Public Utility this natterp please contact Mr. George Kreiger, Board or Robert Nelson, Director of Utilities, City of Denton, Texas. Thank you for your consideration. rs, Very truly you Yayor William Nash