2025-038 Sale of Transmission System Assets April 4, 2025 Report No. 2025-038
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Sale of Transmission System Assets by the Texas Municipal Power Agency("TMPA")to the City
of Bryan, Texas.
EXECUTIVE SUMMARY:
On March 13, 2025, the TMPA Board of Directors approved Resolution No. 2025-3-4 (attached)
approving the sale of certain transmission assets to the City of Bryan, Texas pending approval by
the governing bodies of each member city.In accordance with the 2016 Joint Operating Agreement
between TMPA and the Member Cities, approval of the sale of transmission assets having an
aggregate net book value in excess of$500,000 in any fiscal year but must approved by member
cities. The proposed assets to be sold have a net book value of$3,238,620. In conjunction with
this sale but under separate action not requiring approval from member cities,TMPA will purchase
certain transmission assets from the City of Bryan, Texas have a net book value of$2,260,339 and
also own additional transmission assets valued at $4,786,000 which are under construction.
Consideration and approval of this item is schedule for April 14'h for the Public Utilities Board
and May 61h for the City Council.
DISCUSSION:
The City of Bryan owns the Dansby and Bryan East substations. TMPA owns equipment in these
substations. The TMPA and Bryan equipment in the Dansby and Bryan East substations have,over
the years, been comingled together to such an extent, that the situation has created operational,
maintenance, and regulatory issues for Bryan and TMPA.
The Resolution that is proposed for consideration and action would resolve these issues by
transferring ownership of the substation equipment to Bryan. The following is a summary of the
terms and conditions of the proposed Asset Purchase Agreement:
-Bryan would purchase from TMPA the substation assets for net book value, $3,238,620.
-TMPA would reserve the right to construct new transmission lines connecting to the substations.
-TMPA would purchase from Bryan the Gibbons Creek to Greens Prairie 138 kV transmission line
for net book value, $251,648. Bryan would reserve and continue to operate its electric distribution
system that is built under the transmission line.
-TMPA would purchase from Bryan equipment (consisting mainly of poles) owned by Bryan in
the Agency's Gibbons Creek to Bryan East 138 kV transmission line for net book value,
$2,008,691.
April 4, 2025 Report No. 2025-038
-Bryan has initiated a project to reconductor the Gibbons Creek to Greens Prairie 138 kV
transmission line (the "Gibbons Creek to Greens Prairie 138 kV Reconductor Project"). TMPA
will acquire this Project. At closing, TMPA would reimburse Bryan for actual costs incurred as of
the date of closing. Thereafter, Bryan would continue to construct the Project to completion with
the costs of the Project being borne by TMPA. The Resolution appropriates $4,786,000 for this
Project.
Since the net book value of the transmission assets being sold to Bryan exceed $500,000 in the
aggregate, TMPA is required under the Joint Operating Agreement to obtain approval of this
transaction from the four Member Cities.
CONCLUSION:
In conjunction with the purchase and ownership of transmission system assets by TMPA from the
City of Bryan, Texas, the value proposition for TMPA is beneficial to the City of Denton. These
transactions add $3,807,719 in additional value to TMPA and since the City's ownership share is
21.3%, it'll add an additional $811,044 in value compared to the current transmission system
value. This incremental increase in value will create additional transmission revenue that will be
allocated annually to the City of Denton.
DME staff recommends approval of the sale of transmission system assets by TMPA to the City
of Bryan, Texas.
ATTACHMENTS:
Staff Presentation.
STAFF CONTACT:
Tony Puente
DME General Manager
Antonio.Puente(&,,cityofdenton.com
940-349-8487
REOUESTOR:
Staff Initiated
STAFF TIME TO COMPLETE REPORT:
1 hour.
- Sri� ,�. +7r, y '� t ��`.�,r.� .;aa�;,t` � � V •
CL; HALL
la
sa,
Tony Puente
DME General Manager �.
May 6, 2025-
g •L
-tam
Legistar ID #25-596
it:na. •. .._
N
M U N I C I P A L
About TMPA ELECTRIC
• Texas Municipal Power Agency (TMPA)
➢A ""Joint Powers Agency" owned by the cities of Denton, Bryan, Greenville and
Garland .
➢Created in 1975.
➢ Purpose: the qeneration and sale or exchange of electric energy; or the
provision of wholesale transmission service.
➢Generation Assets - Sold the Gibbons Creek Steam Electric Station and all
generation assets to a private party in January 2021 .
➢ Mine Proper — Sold approximatel 11,000 acres to a private party in
December 2021 . Approximately 7 3 acres remain which are currently being
marketed for sale. Kemaininq acreage was never mined, has highway
frontage, and is likely value higher on a per acre basis.
➢Transmission Assets — Possible unbundling and transfer of ownership to each
member city. May lead to dissolution of agency if no assets remain.
CITY � �y -,sr i� • Lq. . y� -.�•
DENTON File ID `
U
NjON
M U N I C I P A L
Asset Sale E L E C T R I C
Transmission
• Background —
➢The City of Bryan owns the Dansb and Bryan East substations, but TMPA owns
some assets in these substations. his comin lin has created operational.,
maintenance and regulatory issues for Bryan�and TMPA. p
9 Y
• Asset Purchase Agreement Terms and Conditions —
➢ Bryan would purchase TMPA assets at Dansby. and Bryan East substations for a net
book value of 3 238 620. This is the only item for City Council consideration
➢ TMPA would purchase Bryyan assets related to Gibbons Creek infrastructure for a net
book value of $2,260 339. In addition TMPA would reimburse Br an for the
construction o a related transmission project valued at 4 786 000.
p J $
C1T'Y
W
DENTON File ' `
PTO N
M 0 X I t I P A l
Action Required E L E C T R I C
• Per the Joint Operating Agreement, effective September 1,
2016, Member Cities must approve the sale of transmission
assets having a net book value, in the aggregate, in excess of
$500,000 in any fiscal year.
• As such, staff recommends approval of the resolution approving
the sale of transmission assets to the City of Bryan, Texas.
nor N
DENTON FileID25-596