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June 11, 2013 Agenda
AGENDA CITY OF DENTON CITY COUNCIL June 11, 2013 After determining that a quorum is present, the City Council of the City of Denton, Texas will nd convene in 2 Tuesday Session on Tuesday, June 11, 2013 at 4:00 p.m. in the City Council Work Session Room at City Hall, 215 E. McKinney Street, Denton, Texas at which the following items will be considered: nd NOTE: A 2 Tuesday Session is used to explore matters of interest to one or more City Council Members or the City Manager for the purpose of giving staff direction into whether or not such matters should be placed on a future regular or special meeting of the Council for citizen input, nd City Council deliberation and formal City action. At a 2 Tuesday Session, the City Council generally receives informal and preliminary reports and information from City staff, officials, members of City committees, and the individual or organization proposing council action, if invited by City Council or City Manager to participate in the session. Participation by individuals and members of organizations invited to speak ceases when the Mayor announces the nd session is being closed to public input. Although 2 Tuesday Sessions are public meetings, and citizens have a legal right to attend, they are not public hearings, so citizens are not allowed to participate in the session unless invited to do so by the Mayor. Any citizen may supply to the City Council, prior to the beginning of the session, a written report regarding the citizen’s opinion on the matter being explored. Should the Council direct the matter be placed on a regular meeting agenda, the staff will generally prepare a final report defining the proposed action, which will be made available to all citizens prior to the regular meeting at which citizen input is sought. The purpose of this procedure is to allow citizens attending the regular meeting the opportunity to hear the views of their fellow citizens without having to attend two meetings. 1. Receive a report, hold a discussion and provide direction on the development of a Public- Private partnership for a public access natural gas fuel station and the addition of natural gas as an alternative transportation fuel for a portion of the Solid Waste and Recycling Services collection fleet. 2. Receive a report, hold a discussion, and provide staff with direction regarding the pursuit of a prepaid utilities strategy. 3. Under Section 551.042 of the Texas Open Meetings Act, respond to inquiries from the City Council or the public with specific factual information or recitation of policy, or accept a proposal to place the matter on the agenda for an upcoming meeting AND Under Section 551.0415 of the Texas Open Meetings Act, provide reports about items of community interest regarding which no action will be taken, to include: expressions of thanks, congratulations, or condolence; information regarding holiday schedules; an honorary or salutary recognition of a public official, public employee, or other citizen; a reminder about an upcoming event organized or sponsored by the governing body; information regarding a social, ceremonial, or community event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a member of the governing body or an official or employee of the municipality; or an announcement involving an imminent threat to the public health and safety of people in the municipality that has arisen after the posting of the agenda. City of Denton City Council Agenda June 11, 2013 Page 2 Following the completion of the Work Session, the Council will convene into a Closed Session to discuss the following: 1. Closed Session A. Certain Public Power Utilities: Competitive Matters – Under Texas Government Code Section 551.086. 1.Receive a presentation from Denton Municipal Electric (“DME”) staff regarding public power competitive matters concerning power supply alternatives, purchase power agreement opportunities, future energy sources, renewable energy resources, and alternatives for generation resources, in order to supply the future energy needs of Denton Municipal Electric. Discuss, deliberate and provide staff with direction. B.Deliberations regarding Personnel Matters – Under Texas Government Code Section 551.074. 1.Review and discuss the duties and goals for the City Manager, City Attorney, and Municipal Judge. NOTE: The City Council reserves the right to adjourn into a Closed Meeting on any item on its Open Meeting agenda consistent with Chapter 551 of the Texas Government Code, as amended, or as otherwise allowed by law. C E R T I F I C A T E I certify that the above notice of meeting was posted on the bulletin board at the City Hall of the City of Denton, Texas, on the ________day of ___________________, 2013 at ________o'clock (a.m.) (p.m.) ____________________________________ CITY SECRETARY NOTE: THE CITY OF DENTON CITY COUNCIL WORK SESSION ROOM IS ACCESSIBLE IN ACCORDANCE WITH THE AMERICANS WITH DISABILITIES ACT. THE CITY WILL PROVIDE SIGN LANGUAGE INTERPRETERS FOR THE HEARING IMPAIRED IF REQUESTED AT LEAST 48 HOURS IN ADVANCE OF THE SCHEDULED MEETING. PLEASE CALL THE CITY SECRETARY'S OFFICE AT 349-8309 OR USE TELECOMMUNICATIONS DEVICES FOR THE DEAF (TDD) BY CALLING 1-800- RELAY-TX SO THAT A SIGN LANGUAGE INTERPRETER CAN BE SCHEDULED THROUGH THE CITY SECRETARY’S OFFICE. ©{;z AGENDA INFORMATION SHEET AGENDA DATE: June 11, 2013 DEPARTMENT: Solid Waste Department ACM: Jon Fortune ______________________________________________________________________________ SUBJECT Receive an update, hold a discussion and provide direction on the development of a Public- Private partnership for a public access Natural Gas fuel station and the addition of natural gas as an alternative transportation fuel for a portion of the Solid Waste and Recycling Services collection fleet. BACKGROUND The City staff has researched and examined the potential benefits of converting a portion of the Solid Waste and Recycling collection fleet to compressed natural gas (CNG) engines, and is considering the replacement of a portion of its new heavy duty vehicles with CNG engines. Though the cost of a CNG vehicle is slightly higher than a diesel vehicle, the long-term benefits far outweigh the added expense. For example, the use of CNG vehicles would allow the Solid Waste and Recycling Department and other City participating departments to substantially reduce their fuel costs; provide for increased stability of their transportation expenses; greatly improve air quality through reduced exhaust and fueling emissions; and additionally, potentially produce future revenues through the public/private partnership. Over the last few years, natural gas (NG) has evolved into a widely used, environmentally clean, and readily available fuel. The large reserves that are continuing to be discovered and developed will directly increase and speed up transition to natural gas fuel for vehicles in solid waste and other transportation based industries. Natural gas is the United States second most important energy source after oil. Natural gas has many advantages as a transportation fuel, as it has become recognized as a less volatile and less expensive alternative to diesel fuel. The number of CNG & LNG fueled vehicles and fueling stations has begun to increase at a significant rate, and are projected to continue to increase over the next several years. Today, nearly nine million NG vehicles are in use throughout the world, with roughly 130,000 in use in the United States that fill up at some 1,200 natural gas fueling stations. Natural gas is currently used in everything from passenger cars to heavy-duty trucks. The solid waste industry has been using CNG and LNG fueled trucks for more than fifteen years. Natural gas vehicles produce 20 to 30 percent less emissions than comparable gasoline vehicles, and 15 to 20 percent less emissions than comparable diesel vehicles. Fuel evaporation during refueling is significantly less, and the production of natural gas is less polluting than producing and refining crude oil based fuels. Agenda Information Sheet June 11, 2013 Page 2 One of the safety benefits related to natural gas is its reduced range of flammability (between 5 to 15% concentrations in air), which allows it to be considered generally safer than petroleum fuels. The long-term financial benefits are a major factor in our decision to consider adding CNG fueled vehicles to the Solid Waste and Recycling Department collection services fleet. The reduced and stabilized fuel expenditures will enable the Department to budget within a more accurate range, and in lower amounts. The Department may realize operational reductions through reduced maintenance of the CNG engines, and expects to see increased usage of CNG vehicles by other city departments and private businesses within the Denton area. The other City departments should expect the same operational benefits. James Woods General Motors dealership is selling light duty trucks that come from the factory to operate on CNG fuel and their facility is certified by the Texas Railroad Commission to repair CNG vehicles and install CNG conversion equipment on vehicles. In anticipation of transitioning to CNG, the Solid Waste and Recycling Department applied for two State of Texas grants associated with natural gas fueling. The first grant was a Texas construction of a CNG & LNG (Liquefied Natural Gas) fueling station within the Transportation Triangle, I-35 between DFW and San Antonio. The proposed fueling station site is adjacent to (biodiesel and E-85) station at the intersection of Mayhill Road and Spencer Road, the entrance to the Solid Waste Services Facility and the Wastewater Reclamation Plant. This location has an NG line within close proximity, which makes it a suitable site. The widening and expansion of Mayhill Road will provide for quicker access to the facility and will provide higher volumes of traffic driving by the fueling station. The City of Denton Solid Waste and Recycling Department was notified that the City was awarded the $400,000 grant for the fueling facility construction. The grant operational requirement is for the fueling site to be a public access station. The grant time period for completion of this project is May 2015. Solid Waste staff has received verbal interest from several private companies that are interested in constructing and operating a CNG/LNG fueling facility at the proposed site. Construction and operation of a CNG/LNG fueling facility is planned to be provided by a private sector partner. The second grant the Solid Waste and Recycling Department recently applied for, and have been awarded, is a in the amount of $200,000. This grant funding is for the purchase and installation of a skid mounted CNG fueling station. The grant timeline for completion of this project is December 31, 2013. on to utilize CNG as an alternative vehicle fuel would consist of the installation of a small skid-based CNG fueling station that would service the first two years of CNG vehicles scheduled for purchase (Phase 1). Phase 1 fueling skid station is expected to cost $582,000 in addition we will also include the necessary modifications to the Fleet Service building to meet the code requirements for servicing CNG vehicles, estimated to -based fueling station Agenda Information Sheet June 11, 2013 Page 3 and the building modifications at Fleet Services will be recovered within six years. The recovery of the increased costs of the CNG components on the refuse and recycling collection vehicles is just under three years, if no grant funds are used to cover the increased cost of the CNG trucks over the equivalent diesel trucks. Financial proformas have been developed for the Phase 1 scenario and several other possible scenarios in which a private sector partner may propose for the construction and operation of a public CNG and/or LNG fuel station. The RFP process will provide a method to evaluate whether it is financially viable to provide both the LNG and CNG fuels or whether only CNG will be available at this station. This public access station is estimated to have a cost of up to $4,200,000 if both fuels are provided. The RFP process will provide the flexibility to consider a variety of capital cost sharing and fuel pricing options between the City and a private partner. Funding of any portion of this project by the City will be funded with bonds. These bonds may be tax-exempt or taxable depending on the structure of the operating agreement with the private sector partner. Our preliminary financial proformas for the public access station have a pay-back ranging from five to seven years, depending on the possible options that may be developed. OPTIONS 1.If City Council supports the utilization of Natural Gas as an environmentally and financially preferable alternative vehicle fuel, the City Council may direct the Solid Waste Department to purchase the first group of Solid Waste Fund CNG vehicles and to work with the Purchasing Department to solicit proposals for the initial mobile, skid- based slow fill CNG fueling equipment. 2.If City Council supports the development of natural gas fueling for the community and local fleets in the area, the City Council may direct the Solid Waste Department to proceed with Option 1 and will work with the Purchasing Department to concurrently solicit proposals for the CNG and/or LNG public access fueling facility through our RFP process. 3.The City Council may direct the Solid Waste Department not to purchase CNG vehicles nor acquire any Natural Gas fueling facility or equipment. RECOMMENDATION The City staff recommends Option 1 and 2 to support transitioning a portion of the Solid Waste Collection fleet to CNG fuel. PRIOR ACTION/REVIEW (Council, Boards, Commissions) This item was presented, discussed and recommended by the Public Utilities Board at their meeting of October 22, 2012. This item was presented to the City Council in their work session on November 5, 2012. Agenda Information Sheet June 11, 2013 Page 4 EXHIBITS 1.NGT News: Texas City Ready to Add Natural Gas Refueling for Fleets 2.Waste 360: Progressive Waste Plans Major CNG Truck Investment 3.U.S. Department of Energy: National Clean Fleets Partner: Waste Management 4.Corvallis Gazette Times: Republic to Shift Corvallis Garbage Truck Fleet to Compressed Natural Gas 5.Bloomberg Businessweek: Why Natural Gas Vehicles are Catching On 6.City of Denton Natural Gas Fueling Presentation Respectfully submitted, A. Vance Kemler General Manager, Solid Waste and Recycling Services THIS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK ©{;z AGENDA INFORMATION SHEET AGENDA DATE: June 11, 2013 DEPARTMENT: Finance ACM: Bryan Langley SUBJECT Receive a report, hold a discussion, and provide staff with direction regarding the pursuit of a prepaid utilities strategy. BACKGROUND The ies customer base is rapidly becoming more comfortable with the utilization of self service tools provided via the internet, mobile telephone applications, and automated messaging systems. lities customer base now utilizes some form of self service to remit their utilities payments. In addition to the convenience of self service, modern consumers are becoming accustomed to flexible solutions that allow them to manage their services according to their needs. As Denton Municipal Electric continues to deploy components of the advanced metering infrastructure (AMI), staff has begun investigating a variety of projects that can leverage this their ratepayers. A project that staff believes will provide this mutual benefit while addressing customer needs is the implementation of a prepaid billing solution. Put simply, the prepaid billing model means, ng utilities service, waiting for a bill, and attempting to make payment prior to a utility enforced due date, prepaid utility customers are afforded the opportunity of prepaying for the amount of utilities they feel will be used. Instead of receiving a bill, prepaid customers monitor their own utilities usage, and when they observe that their payment is almost exhausted, they remit another prepayment. Utility providers are finding that advanced metering systems provide the ability to present near real-time usage data to their customers. It is this ability that enables the use of the prepaid billing model. Prepaid software utilizes data received from both AMI and a customer information billing system to track and present this data in a method that is easily understood by the end user. Presentment of usage trends, payments, and credit balances allows utilities customers to effectively manage their account. This information is readily available for customers to retrieve via the internet, mobile telephone, or by calling a toll free number. In addition, prepaid customers can elect to have customized notifications sent to them through text messaging, email, or automated telephone calls to alert them when their prepaid balance is low. Agenda Information Sheet June 11, 2013 Page 2 In addition to the benefits detailed above, utility systems that have adopted the prepaid model are reporting reduced electric consumption of 10-12% for participating customers. This is a cost savings for both the end user as well as the utility provider. Prepaid utilities also allow customers to avoid paying for service deposits, and because all usage is purchased in advance, cash flows, improved debt recovery, and reduced mailing and collection costs. Staff believes that such a system can have a positive effect on both the volume and dynamic of interactions Staff is asking that the City Council consider the pursuit of such a project. If the City Council is in agreement that a prepaid utilities strategy is beneficial for the City and its utilities customers, staff will craft a Request for Proposals and provide the Council with a vendor recommendation. RECOMMENDATION Staff recommends pursuing a prepaid utilities strategy. PRIOR ACTION/REVIEW (Council, Boards, Commissions) On March 25, 2013, the Public Utilities Board recommended that staff proceed with the prepaid utilities strategy. FISCAL INFORMATION Annual costs are projected to be approximately $84 per prepaid user. EXHIBITS 1.PowerPoint Presentation 2.Public Utilities Board Minutes March 25, 2013 Respectfully submitted: Chuck Springer, 349-8260 Director of Finance Prepared by: Ethan Cox Customer Service Manager MINUTES PUBLIC UTILITIES BOARD March 25, 2013 After determining that a quorum of the Public Utilities Board of the City of Denton, Texas is present, the Chair of the Public Utilities Board will thereafter convene into an open meeting on Monday, March 25, 2013 at 9:00 a.m. in the Service Center Training Room, City of Denton Service Center, 901A Texas Street, Denton, Texas. Present: Vice Chair Billy Cheek, Secretary Randy Robinson, Phil Gallivan, Barbara Russell, Leonard Herring and Lilia Bynum Absent: Chairman Dick Smith Ex Officio Members: Howard Martin, ACM Utilities; George Campbell, CM OPEN MEETING: CONSENT: 1)Consider a recommendation of an ordinance for adoption of the City of Denton authorizing the City Manager or his designee to execute contracts through the Buy Board Cooperative Purchasing Network and Houston Galveston Area Council of Governments for the acquisition of eight trucks for City of Denton Solid Waste departments; and providing an effective date (File 5114-Truck for Solid Waste Departments awarded to Rush Truck Center in the amount of $1,254,955, Mc Neilus Truck Mfg in the amount of $513,536 and DaDee Mfg in the amount of $447,353.46 for a total award amount of $2,215,844.46). Board Member Herring asked what happens to the used vehicles . Terry Kader, Fleets Superintendent, answered they are put in an on-line auction by Rene Bates Company. had been mentioned that $50,000 in cost would be made up over the eight years estimated life of the equipment . Vance Kemler, General Manager Solid Waste, stated that the cost analysis is based on fuel price for CNG and station costs. Staff will go to City Council and give them an update and talk about a permanent fuel station which would be a public private partnership with a private entity operating the station and providing a rate for the fuel. The other portion is there is a temporary mobile CNG compressor that will handle up to eight vehicles that will be used until a station is built. If there is not a station built that small unit will serve the first eight vehicles. That CNG mobile compressor will be used as back up if the station is built. Staff will go out for an RFP to look at proposals to develop a CNG and LNG natural gas station for the area. An accurate financial proforma is not available until staff knows what proposals come back. It would be about a four to five year break-even if you just count on the first eight vehicles. Cheek asked if the cost of the vehicles has increased because of the demand of natural gas vehicles or the cost of the equipment . Kemler answered it is the cost of the equipment. The engine is a special version of a modified diesel engine. It takes more expensive fuel tanks as Cheek asked if it takes longer to well. It seems like the cost are slowly coming down. Minutes of the Public Utilities Board Meeting March 25, 2013 Page 2 of 8 manufacture the CNG vehicles . Kemler answered not particularly. Garbage trucks take longer just because of the nature of the business. Cheek stated the cost difference on servicing the vehicle is the unknown . Kemler stated that will be better known with the proposers. Herring stated currently we do not have a facility that will refuel CNG vehicles . Kemler answered correct. Bynum asked when the vehicles would come on-line . Kemler answered about January 2014. Russell asked if DISD school buses use CNG . Kemler answered they have propane. Board Member Herring motioned to approve item 1 with a second from Board Member Robinson. The vote was 6-0 approved . 2)Consider the recommendation of an ordinance of the City of Denton authorizing the City Manager or his designee to execute contracts through the Buy Board Cooperative Purchasing Network for the acquisition of one bucket truck for Electric Operations; and providing an effective date (File 5209-Purchase a Bucket Truck awarded to Southwest International in the amount of $191,038.91). 3)Consider a recommendation for the acceptance of Bid No. 5171 to DCI Contracting, Inc. for the clearing of sanitary sewer easements and the installation of gates, in an amount not to exceed $318,860. 4)Consider recommending approval of Bid No. 5181 to Condie Construction Company, Inc. for the construction of the Cooper Creek Interceptor III project, in an amount not to exceed $990,958. 5)Consider recommendation of approval of a Professional Services Agreement in response to RFQ 5043 Development of the Denton Municipal Electric Facilities Master Plan for an amount not to exceed $98,179.38 between Denton Municipal Electric (DME) and Nelson + Morgan Architects, Inc. (NMA) for the meet the demands of an ever-increasing population, customer base, and increased demand for electric service. Board Member Russell motioned to approve items 2-5 with a second from Board Member Bynum. The vote was 6-0 approved . ITEMS FOR INDIVIDUAL CONSIDERATION: 6)Consider recommending approval of the Public Utilities Board Meeting minutes of: a)March 11, 2012 Approved with a change to page 7 7)Receive a report, hold a discussion, and provide staff with direction regarding the pursuit of a prepaid billing strategy. Ethan Cox, Customer Service Manager, made the PowerPoint Presentation. This item is regarding the possibility of pursuing a prepaid utility strategy. This strategy is gaining traction Minutes of the Public Utilities Board Meeting March 25, 2013 Page 3 of 8 around the country as the smart metering infrastructure starts to come up in communities. Prepaid utilities are pay as you go utilities. The customer as a consumer pays to establish a credit and service. They pay ahead and as they utilize usage it is deducted daily from the credit. The customer also monitors their usage on their own as well as their balance. As the balance draws down the customer pays as it becomes low. This strategy that staff is looking to deploy to residential customers only. Cox then went through how this would work. Currently customers come into the lobby or call on the phone to apply for service. Staff will screen and try to prevent fraud at this point. There are people that come in has past history with the City that credit will be reviewed at this time. If a previous customer comes in and has a past due debt; it will be pointed out at this time. If a customer has a previously unpaid debt, the customer would be asked to take care of that amount first. The other thing from a credit worthiness standpoint that is looked at is a service deposit required. If there is a past due amount and the average bill with deposit that could be a substantial amount for connection. A payment arrangement can be established but often times staff will see that the customer just cannot do that. From a utility standpoint that unpaid debt has not been addressed. If the back is paid and deposits are made as a utility staff is responsible for monitoring the usage on that account. The meter shop goes out on a monthly basis and conducts meter reads. For a lot of customers, the City provides five services. That information comes back to the customer service office and is responsible for billing. There is a due date that has to be adhered to. Most customers can comply with that but on occasion a customer cannot make the due date work. Another thing is if the customers do not adhere to the due date, a late fee is added. In extreme cases the utilities are disconnected. With prepaid utilities, a customer will still apply if they are a new customer or if they are moving residences. For example if an established customer has heard about pre-paid and wants to convert to a pre-paid status it just means they apply for prepaid service. A deposit will not be asked for. If there is a back debt it will not be asked for at one time. The only thing that would be asked is the initial pre-payment. A portion of the prepayment would be applied to the back debt and the utilities would be turned on. Each payment that is made after that original payment a portion will go to the debt until it is satisfied. Instead of a monthly meter read there will be a daily meter read. This is where the advanced metering infrastructure comes into play. The daily meter reads are presented to the customer so they can monitor their usage. A monthly bill would not be sent. Herring asked how the daily meter read is provided to the customer. Cox answered it is through the advanced metering system for DME. Staff is able to pull a read from the field back into the office and it is presented to the customer through the prepaid system. Cheek added that it is only for people that have electronic metering . Cox agreed. Cox went on to say without a monthly bill the customer will monitor and pay on their own schedule. Minutes of the Public Utilities Board Meeting March 25, 2013 Page 4 of 8 Bynum asked if existing customers have to go in to get the prepaid service . Cox stated you can call as well. Cox showed an example from Oklahoma Electric Cooperative regarding the on-line usage page. It shows the daily usage, account information and recent alerts. Since a utility bill is not being sent out monthly a customer can elect to receive via e-mail or text message alerts based on the thresholds they establish. There is a web application for smart phones and a customer can customer service call as well. Instead of getting payment on a monthly basis, the City runs the possibility of getting payments weekly or daily. One thing that would be important to managing the volume that these payments would generate is to have Kiosk. Have one outside of the lobby doors at customer service and at retail locations throughout the city. There are operating hours at customer service, there are no worries when you use the Kiosk. Prepayment has a huge benefit for the City and for the consumer when utilities are disconnected for non-payment. Currently we are billing in arrears working on a credit basis by sending out bills. Usually by the time the utilities are disconnected there is approximately 60 days of unpaid utilities. That is why it has been critical for service deposits. College students may leave and we may never hear from them again. If a customer comes home and the lights are out because of an unpaid bill and it is after hours, the options are very limited. Normally the customer would have to go to customer service to get the utilities reconnected. The big question is how much money is needed to reconnect. Normally that would be the past due amount. For some customers that is service fees to contend with as well. If a service deposit was not needed originally, it may be needed at this point. If everything is taken care of reconnect is normally within one business day. Prepayment changes this scenario dramatically. Prepaying utilities, when the money runs out the lights go off. Normally that would be on one day of unpaid utilities. That negates the need for a deposit. Instead of the customer needing to come into the office, they can go to a Kiosk and pay at any time. Communication will go from the Kiosk to the prepaid system and the utilities can be reconnected remotely. Reconnect normally takes between 15 and 30 minutes. There has not been a vendor selected but the prepaid system talks to two different systems to get the data that it needs to present to the customer. The first system is the billing system. This contains our consumer information as well as meter information. The other system is the advanced meter system. Specifically will pull read data from that meter and can read in 15 minute intervals. The system will be looking for daily usage. The system will take the read and challenge for us is we do not just have one utility. In a lot of cases we are billing five services; electric, water, wastewater, drainage and solid waste. The only one that uses the AMI system is electric. The City will have non-metered and non-AMI services. That will be managed by putting all the services in the package. For solid waste, wastewater and drainage most of the cost for the consumer is fairly predictable. The total amount will be prorated over a 30 day period and charge daily. Water meters are manually read so monthly meter reads will still be completed. Staff has looked at how to get to proration on water. Staff will estimate use on a Minutes of the Public Utilities Board Meeting March 25, 2013 Page 5 of 8 previous read. That amount will be prorated daily basis. If the amount is less than the estimate that amount will be trued up on the next month with a new estimate. Benefits that have been relayed from other utilities are reduced electric consumption (10-12%). Customers are more aware of how much electric they are using so they tend to use less. It improves cash flow for the City. It improves debt recovery as well. There are reduced mailing and collection costs and fewer adversarial interactions. Benefits for the customer are they are no monthly bills, flexible payment schedule, no deposits, no late fees and more control of usage and account. This does not work for every customer but is an option. For customer service the customer bases has grown about 2% over the last five years. Every month customer service talks to 47% of the customer base. Requests for payments, balance inquiries, fees/deposits, arrangements and reconnect service are responsible for 53% of time. Cost and cost recovery for the kiosks. Again a vendor has not been chosen but there are some qualities that staff knows it wants. Staff wants the vendor to host the information. Many of the models that are being looked at, charges by the customer that adopts the system. On average it is Gallivan asked how many about $72 on an annual basis. About 7-15% will use this model. customers that would be . Cox stated it would be about 3,000 customers could be up to 10,000. Gallivan then asked how large the customer base is . Phil Williams, General Manager Electric, answered it is about 48,000. Oklahoma has had theirs on line for about five years and is not approaching 20%. It has been very successful for residential they are looking at commercial at the same time. as well. Is it too much an undertaking as far as customers go . Cox stated that it is the demand that you have to contend with for commercial customers. There are complexities in that area. In terms of cost recovery, since it is only 7-10% on the customer base on the residential side. This is not something all rate payers should pay for. Staff suggests that the City recoup some of those costs through an elevated facility fee. There is a facility charge currently for meter maintenance and upkeep of the system, a new rate would be suggested to cover this new cost. It Gallivan asked if this would be a fixed charge would be about $6 per month. . Cox agreed. The next steps are if the PUB is agreeable, the next presentation will be with City Council. It will be worked in to the budget process if Council is agreeable. An RFP will be put out to see what vendors are offering. PUB and Council will consider the proposals and then a pilot program would be launched. This would last about 30-60 days before it goes live. Herring stated he visited another utility that uses this concept and like it but they charge based upon how many times a customer uses the Kiosk. That amount is about $1.50 per use. Will that be a charge with these Kiosk as well. Cox stated it is. A lot of the vendors use a convenience fee model. The city currently has about 40 remote payment locations. Those remote locations charge about $1 to $1.50 for the service. There are about 1,000 customers that use that service. The Kiosk that is at customer service would not have a charge associated. Herring added that when you use a credit card there is also a charge, who would pay. Cox answered if it at the customer service Kiosk, the City would pick up the charge. If it is at one of the remote locations, the consumer would pay. Bynum asked if there are online payments. Cox stated there will be Minutes of the Public Utilities Board Meeting March 25, 2013 Page 6 of 8 online payments. Credit card costs are expensive. A lot of the utilities that staff talked to stated they are 98% cash. These are the customers that typically pay cash. Gallivan asked how you finance the Kiosk. Cox stated they are leased. The City would not be responsible for the usage. Cox agreed. Robinson asked if this is something that is anticipated every requiring someone to use. Cox stated that he believes we will stick to this being an option. One concern is the credit card costs. The City pays about $1 per transaction on the residential side. Cheek asked if that cost can be passed on the consumer. Cox stated about three years the convenience fee model was removed. Since that time staff went from a 15% adoption rate to a 40% adoption rate. The lobby traffic has been cut by about 10%. The customers seem to adopt system as well. Cox added that the customer will need to have electric service to be able to use this system. Russell asked about automatic draft . Cox stated there is about 8% having the automatic draft and some have EFT. Herring asked how this would work for people with budget billing . Cox answered that llenge. This system will go into the billing system and see what the usage is. It will get the info from the AMI service. This is something that will be considered. Williams added that if someone is on budget billing and have collection problems they come off of budget billing. Cox stated there is allowed a couple of delinquencies in a 12 month period. Herring stated that in the next steps it is mentioned being added to the budget process. How much of a dollar impact will this play on the budget . Cox stated it may be about $500,000 long term. As the program gets rolling they hope for it to be less. Hopefully the $6 per month for the consumer will cover the cost associated. Bynum asked if you have the mobile app on your phone would you be able to make a payment . Cox answered it will depend on the vendor. Today you can pay through a website and hope that will work with the new system as well or link up and be able to pay. Williams appreciated Cox for working on this prepaid system. Gallivan asked how the lease works Gallivan asked how we regulate the vendors from raising the revenue received unused. . Cox answered there are a lot of vendors out there right now and are very competitive. The challenge is getting a Kiosk that will work with real time information that is needed to make this system work. Herring asked how many smart meters are in place now . Williams stated there are approximately 20,000 in place currently. By the end of the fiscal year we will have the mesh Minutes of the Public Utilities Board Meeting March 25, 2013 Page 7 of 8 network set up so any site can be communicated with. If someone comes in and wants this feature but there meter set is two years, out DME can go ahead and set the new meter. The first places that the smart meters have been installed have been the areas with a lot of turn over; apartments and mobile homes. is and all the research he has done. Cheek asked if the Board was on-board with this system. All agreed. 8)ACM Update a)Denton LLWTP Construction Activities Report #18 b)Report Natural Gas Fueling Station 9)Discussion of the Matrix representing items for discussion for future Public Utilities Board meetings. No changes 10) Under Section 551.042 of the Texas Open Meetings Act, respond to inquiries from the Public Utilities Board or the public with specific factual information or recitation of policy, or accept a proposal to place the matter on the agenda for an upcoming meeting. AND Under Section 551.0415 of the Texas Open Meetings Act, provide reports about items of community interest regarding which no action will be taken, to include: expressions of thanks, congratulations, or condolence; information regarding holiday schedules; an honorary or salutary recognition of a public official, public employee, or other citizen; a reminder about an upcoming event organized or sponsored by an entity other than the governing body that was attended or is scheduled to be attended by a member of the governing body or an official or employee of the municipality; or an announcement involving an imminent threat to the public health and safety of people in the municipality that has arisen after the posting of the agenda. Herring asked if it would be feasible to add to the budget for attendance by at least one of the Board members for a Statewide Association convention, primarily Electric Utilities. CLOSED MEETING : A. CONSULTATION WITH ATTORNEYS --- Under Texas Government Code, Sec. 552.071. 1) styled: The City of Denton, Texas v. The University of North Texas, Cause No. th 2008-20043-158, now pending before the 158 Judicial District Court of Denton County, Texas, having been remanded to the trial court by the Fort Worth Court of Appeals for further proceedings; and the status of settlement negotiations thereon; Minutes of the Public Utilities Board Meeting March 25, 2013 Page 8 of 8 discuss, recommendations regarding such legal matter. A public discussion of this legal the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas. B. DELIBERATIONS REGARDING CERTAIN PUBLIC POWER UTILITIES: COMPETITIVE MATTERS --- Under Texas Government Code Sec. 551.086; 1) regarding public power competitive matters concerning power supply alternatives, purchase power agreement opportunities, future energy sources, renewable energy resources, and alternatives for generation resources, in order to supply the future energy needs of Denton Municipal Electric. Discuss, deliberate and provide Staff with direction. C. DELIBERATIONSREGARDINGREALPROPERTY --- Under Texas Government Code §551.072; CONSULTATION WITHATTORNEYS --- Under Texas Government Code §551.071. 1)Discuss, deliberate, and receive information from staff and provide staff with direction pertaining to that certain Lease Agreement existing by and between the City of Denton, Texas and Tetra Point Fuels, LLC, pertaining to the terms of a proposed lease of Tetra Point Fuels, LLC, pertaining to certain 3.5 acre tract of land situated in the G. Walker Survey, Abstract Number 1330, City of Denton, Denton County, Texas; and additional information regarding the option to lease additional real property by said Assignee, also situated within said survey. Consultation with the assignment of the real property described above where a public discussion of these legal matters would City Council under the Texas Disciplinary Rules of Professional Conduct of the State Bar of Texas, or would jeopardize th 11) Official Action, if necessary, on Closed Meeting item(s) under §551.071-551.088 of the Texas Government Code, as amended. 12) Adjournment 10:53 a.m. Richard E. Smith, Chair Howard Martin, ACM Utilities Administrative Supervisor