HomeMy WebLinkAbout2000-288AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY
MANAGER TO EXECUTE A THIRD AMENDMENT TO THE PROFESSIONAL SERVICES
AGREEMENT FOR CONSULTING SERVICES PREVIOUSLY ENTERED INTO BY THE
CITY AND R J COVINGTON CONSULTING ON JANUARY 5, 1999, AND AS
PREVIOUSLY AMENDED BY FIRST AMENDMENT THERETO ON JUNE 1, 1999, AND
AS PREVIOUSLY AMENDED BY SECOND AMENDMENT THERETO ON OCTOBER 19,
1999, AND AS AMENDED FOR A THIRD TIME BY ADDING TASK ORDER NO 00-B
THERETO, WHICH THIRD AMENDMENT PROVIDES FOR ADDITIONAL ELECTRIC
INDUSTRY PROFESSIONAL CONSULTING SERVICES RELATING TO
RESTRUCTURING IMPLEMENTATION, TO BE PERFORMED FOR DENTON
MUNICIPAL ELECTRIC, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR,
AND PROVIDING AN EFFECTIVE DATE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION 1 That the City Manager is hereby authorized to execute a Third
Amendment to the "Professional Services Agreement For Consulting Services Relating to the
Denton Municipal Electric Utility" (the "Agreement"), heretofore entered into by and between
the City of Denton, Texas and R J Covington Consulting, Austin, Texas on the 5`" day of
January, 1999, (which Agreement was approved by the Council in Ordinance No 99-011,
enacted on January 5, 1999), providing for professional consulting services in the area of electric
restructuring and the potential divestiture of all or a part of the City's electric system, all as set
forth in Task Order No 99-A, and which Agreement was thereafter first amended to provide for
additional professional consulting services in the area of electric restructuring as set forth in Task
Order No 99-B, which First Amendment to the Agreement was approved by the Council in
Ordinance No 99-187, enacted on June 1, 1999, and which Agreement was thereafter further
amended for a second time to provide for additional professional consulting services in the area
of potential electric divestiture and restructuring as set forth in Task Order No 99-C, which
Second Amendment to the Agreement was approved by the Council in Ordinance No 99-388,
enactedlon October 19, 1999
SECTION 2 That the Agreement is now being amended for a third time to provide for
additional professional consulting services in the area of implementation of electric restructuring
as set forth more particularly in Task Order No 00-B, a copy of which Task Order is attached
hereto livid incorporated herewith by reference, and which Task Order constitutes the third
amendr cent document and provides that R J Covington Consulting shall perform additional
regulatory, technical, and related electric industry professional consulting services supporting the
City and Denton Municipal Electric, and which Task Order provides for the payment by the City
of additional fees and expenses in an amount not to exceed $ 100,000 00 respecting the
additional services to be performed by R J Covington Consulting pursuant to said Task Order
No 00�B
SECTION 3 That the award of this Agreement by the City is on the basis of the
demonstrated competence, knowledge, and qualifications of R J Covington Consulting and the
ability of R J Covington Consulting to perform the services needed by the City for a fair and
reasonable price, all in accordance with the provisions of Chapter 2254 of the Texas Government
Code, known as the "Professional Services Procurement Act "
SECTION TION 4 That the expenditure of funds as provided for in the attached Third
Amendment to Agreement, in the form of, and pursuant to Task Order No 00-B, is hereby
authorized
SECTION 5 This ordinance shall become effective immediately upon its passage and
approval
PASSED AND APPROVED this the 5-j day of �L�D&Mh&- 2000
C:fti rA Ci—
EULINE BROCK, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
By
APPROVED AS TO LEGAL FORM
HERBERT L PROUTY, CITY ATTORNEY
By
S \Our Documents\Ordmances\00\R J Covmgmn 3rd Amended PSA TO #00 B DME ord doc
THIRD AMENDMENT TO
PROFESSIONAL SERVICES AGREEMENT
DATED JANUARY 5,1999
BETWEEN THE CITY OF DENTON AND
R J COVINGTON CONSULTING
TASK ORDER NO 00-B
Restructuring Implementation Services
Tasks provided for in this Third Amendment are directed at continuing assistance to
City staff (Staff) in participation at the Public Utility Commission of Texas (PUC) and at
the Electric Reliability Council of Texas (ERCOT) on issues affecting the City The PUC
identified 36 projects for developing the rules and policies that will shape the electric
industry as retail access is implemented on January 1, 2002 New projects are being
added as new issues develop These projects will either directly affect the City's
municipal electric system, or by shaping and defusing the competition, mdirectly affect
the way the City will conduct its electric business This, in turn, will affect the level
which the electric system can contribute to the funding of City operations
The developmental stage of industry restructuring is nearing completion and the
implementation phase is beginning Implementation requires coordination of policies
and rules being developed through PUC Projects leading to Rulemakmgs and ERCOT
ISO working groups The rules, policies, procedures and systems are to be in place by
June 1, 2001, the start of the customer choice pilot program This means there continues
to be multiple PUC projects and rulemakings , as well as, multiple ERCOT groups
working on implementation issues that will affect the City's electric system
Some of the key issues presently being addressed that directly affect the City include
• How will units be designated as must -run units and how will they be compensated?
This is a particularly critical issue as the City looks at making investments to meet
the State Implementation Plan (SIP) The outcome of dus and smular issues could
affect the value of the City's generation in the current sale of the assets
• How will the City structure itself to meet it load serving obligations?
• Will the City act as a Qualified Scheduling Entity or choose another to act in that
capacity for the City?
• How will those obligations differ if the City decides to "opt -in" to customer choice?
• Should the City opt-m and when?
• What type of settlement procedures will the City need in the restructured market
• How will the City be affected by the Non -IOU Code of Conduct being developed at
the PUCE
• Will the protocols being developed for the ISO retain the benefits on the issues the
City has worked to achieve in the working committees, such as dynamic scheduling
Task Order No 00-B
Restructuring Implementation Services
for Gibbons Creek, restricting allocation to opt -out utilities of Unaccounted For
Energy to zero except for transmission related actual losses, self provision of
ancillary services, recognition of the difference between municipalities and
cooperatives and IOUs?
• How will settlement work to track and reconcile costs and how will municipalities fit
into that process?
• What will be the cash flow impacts of weekly settlements and payments to the ISO?
Some of the issues that are currently being addressed that will indirectly affect the City
are
• How will the IOU's be unbundled into separate business units?
• What services will the unbundled entities offer, when, where and how much?
• How will the capacity auction be implemented and how will it affect power costs?
• How will reliability factors affecting the DFW area be addressed?
• How will moving from multiple control areas to a single control area affect the City?
RJC's role will be that of Staff liaison to the PUC to keep Staff informed on activities,
work with Staff in developing positions on issues, assist Staff in responding to issues
that affect City and provide technical support for Staff and City's legal experts on
regulatory issues RJC will supplement Staff on ERCOT activities to keep Staff informed
of operational procedures that will affect the City's electric system and assist Staff in
supporting positions before ERCOT management and standing committees as
requested RJC's activities will include,
1) attending workshops hosted by the PUC and ERCOT ISO,
2) participating on relevant PUC and ISO committees and panels to discuss issues and
work with Staff to ensure the City's interests are represented in the workshops,
rulemakings, and commuttee meetings,
3) analyzing proposed rules filed by PUC and policies presented by the ISO,
4) preparation of comments to be filed at the PUC to present the City's position on
issues,
5) analyzing comments filed by other parties on issues affecting City,
6) workmg with City Staff and legal team to develop responses to positions taken by
other parties adverse to the Cit} s positions,
7) providing technical support to Staff and the City's legal team on issues before the
PUC and the ISO, and,
8) maintaining information on activities at the PUC, ERCOT ISO and the Legislature
that supports effective representation on issues in these and related proceedings
associated with restructuring in Texas
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Task Order No 00-B
Restructuring Implementation Services
Scope of Services
Task A PUC And ERCOT Workshops and Committees
1 RJC will stay informed on activities at PUC and ISO and will attend PUC and
ERCOT workshops and committees as needed
2 When appropriate, RJC will participate in the committees and workshops to
represent interest of City based on directions of Staff
3 Reports will be provided to Staff detailing issues addressed and positions taken by
parties
4 RJC will discuss with Staff positions which should be taken and strategies for
working with parties involved
5 RJC will coordination coverage with Staff and other parties with similar interest to
maintain effective coverage on the numerous issues affecting the City
Tasl4 B Evaluate Proposed implementation Rules and Policies
1 The new rules being proposed by the PUC to implement restructuring will be
evaluated as to their effect on the City
2 When requested by Staff, RJC will develop spreadsheet models and perform other
analysis as required to evaluate the economic impact of proposed rules on the City
3 RJC will discuss proposed new rules and changes to existing rules with Staff, helping to
identify areas of concern and preparing positions on rules
4 When necessary, RJC will meet with PUC staff to discuss issues of particular concern to
the City, particularly where the stakeholder process at ERCOT fails to recognize
significant adverse impacts on the City from policies and rules being adopted
Task C Preparation of Comments
1 RJC will prepare or assist in preparing comments to be filed with PUC representing
City's position on issues brought up in proposed rules and in the ERCOT Certification
process
2 These comments will be coordinated through Staff and the City's legal team
3 RJC will assist the City's legal team as necessary in the preparation of and filing of
comments and letters to the PUC, the ISO and to the Legislature
Task D Coordination of Work Effort
RJC will have continuing communication with Staff and the City's legal team in order
to morutor proposed industry changes and address those issues affecting
municipalities
An on-gomg dialog will be maintained with Staff and the legal team in order to
evaluate changing proposals and evaluate potential effects on City operations
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Task Order No 00-B
Restructuring Implementation Services
3 Information necessary to supplement and support the decision making process will be
provided as requested
4 RJC will be available to discuss with the Utility Board and City management to discuss
activities at the PUC and the ISO as requested from time to time by Staff
5 As directed by Staff, RJC will coordinate and support other consultants, attorneys, and
lobbyists used by the City in order to msure coordination of planning and other
activities
Task E Technical Supyort For Implementation Phase
RJC will provide technical support to the City's legal team to assist in the evaluation
of rules, policies and procedures being adopted by the PUC and the ISO and the
potential impact on the City under different scenarios
RJC will provide technical support to Staff, providing information as requested from
time to time to assist Staff in its evaluations and planning processes
The evaluations and planning process assistance shall include such issues as how
restructuring is affecting power costs, what activities the City needs to be looking at
to prepares for the Implementation Date, how will the competitive changes be
affecting the City's ability to retain and attract customers in the future
RJC will evaluate scenarios and proposals from perspective of City utility and as a
member of TMPA
Presentations to Staff will be made as appropriate to discuss results of analyses and
recommended strategies based on the results
Budget
The budget for the above scope of services for labor and expenses is difficult to estimate
due to the fact that the policy development and implementation phases are just
beginning Based on prior experience in working with these issues, RJC recommends a
budget of $100,000 for labor and expenses This budget will not be exceeded without
prior approval of the City RJC will bill monthly with supporting documentation of
activities performed The work being performed will be under the supervision of the
Director of Electric Utilities and may be modified at any time upon appropriate notice to
RJC
'p^ ao�
EXECUTED this 5 day �v of � . '
AUTHORIZED BY
U410
M-7!v/��►.
ACCEPTED BY
R J COVINGTON CONSU/LTING
00' or
By
Dated 7 moo
4of5
ATTEST
JENNIFER WALTERS
CITY SECRETARY
By
D d
Task Order No 00-B
Restructuring Implementation Services
APPROVED AS TO LEGAL FORM
HERBERT L PROUTY
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