1999-356AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY
MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH
DIVERSIFIED UTILITY CONSULTANTS, INC, FOR CONSULTING SERVICES
PERTAINING TO THE DEVELOPMENT OF A NEW ELECTRIC SERVICE RATE DESIGN
FOR DENTON MUNICIPAL ELECTRIC, AUTHORIZING THE EXPENDITURE OF FUNDS
THEREFOR, AND PROVIDING AN EFFECTIVE DATE
WHEREAS, the City Council deems ~t m the public ~nterest to engage Diversified Utility
Consultants, Inc, a Corporation ("DUC"), to provide professional consulting services to the City
pertmmng to the development of a new electric service rate design for Denton Municipal Electric
("DME") m preparation for the expected transmon of the City into a competitive deregulated
electric marketplace, and
WHEREAS, the City staff has reported to the City Council that there is a substantial need
for the above-described professional consulting services, and that hmlted City staff cannot
adequately perform the services and tasks with its own personnel, and
WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional
Services Procurement Act", generally provides that a City may not select a provider of
professional services on the bas~s of competitive bids, but must select the prowder on the basis of
demonstrated competence, knowledge, and qualifications, and for a fair and reasonable price,
and
WHEREAS, the C~ty Council has provided ~n the City Budget for the appropnaUon of
funds to be used for the purchase of the professional consulting services, as set forth in the
Professional Services Agreement, NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION I That the Cxty Manager ~s hereby authorized to execute a Professional
Services Agreement w~th D~versffied Utility Consultants, Inc, a Corporation, for professional
consulting services pertmmng to the development of a new electric service rate design for
Denton Mtm~clpal Electric, m substantially the form of the Professional Services Agreement
attached hereto and incorporated herewith by reference
SECTION II That the award of this Agreement by the City is on the basis of the
demonstrated competence, knowledge, and quahfications of DUC and the ability of DUC to
perform the services needed by the City for a fmr and reasonable price
SECTION III That the expenditure of funds as provided in the attached Professional
Services Agreement is hereby authorized
SECTION IV That this ordinance shall become effective ~mmedlately upon its passage
and approval
PASSED AND APPROVED th,s the ,~-~dayof ~/~ ,1999
ATTEST
JENNIFERWALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORIVl
HERBERT L PROUTY, CITY ATTORNEY
S \Our Doeuments\Ord~nances\99\D~versffiodUtfi~ty Consultants PSA DME (rate design) doc
STATE OF TEXAS §
COUNTY OF DENTON §
PROFESSIONAL SERVICES AGREEMENT FOR CONSULTING SERVICES
PERTAINING TO THE DEVELOPMENT OF A NEW ELECTRIC RATE DESIGN
FOR DENTON MUNICIPAL ELECTRIC
~THIS AGREEMENT ts made and emered ~nto as of the ~ day of
~ 1999, by and between the Ctty of Demon, Texas, a Texas
Mumctpal Corporataon, w~th ~ts pnnc~pal offices at 215 E McKtnney Street, Denton, Texas 76201
(hereafter "OWNER") and Diversified Utdtty Consultants, Inc, Inc, a Texas Corporation, vath ~ts
offices m 12113 Rox~e Drive, State 110, Austin, Texas 78729 (hereafter "CONSULTANT"), the
part,es acting hereto, by and through thetr duly-anthonzed representatives and officers
WITNESSETH, that tn cons~deratton of the covenants and agreements here~n contained, the
part,es hereto do mutually AGREE as follows
ARTICLE I
EMPLOYMENT OF CONSULTANT
The OWNER hereby contracts vath CONSULTANT, as an independent contractor, and the
CONSULTANT hereby agrees to perform the serwces here~n ~n connection w~th the Project as
stated ~n the Artmles to follow, wtth dlhgence and m accordance w~th the professional standards
customarily obtmned for such servtces ~n the State of Texas The professmnal services set forth
here~n are tn connectton w~th the following described project (the "ProJect")
Professtonal consulting serwces pertmmng to the development of Phase II of a new electric service
rate design analysts and tmbundhng study for Denton Mumctpal Electric
ARTICLE II
SCOPE OF SERVICES
The CONSULTANT shall perform the following bas~c servmes m a professional manner
A To perform those servmes as set forth and resolved in the followmg three (3) letters
I OWNER'S Request for Proposal appended to the letter dated July 6, 1999 from
Cheryl Davenport, CPA, ("Davenport") a Utd~ty Rate Admamstrator of
OWNER, to Dan Lawton, a Pnnmpal of CONSULTANT (the "RFP"), winch
consists of three (3) pages, a copy of winch RFP is attached hereto and
incorporated herewith by reference as Attachmem"A"
2 CONSULTANT'S "Proposal to Rewew C~ty of Denton's Unbundhng and Rate
Destgn," appended to the letter dated August 11, 1999 from CONSULTANT to
Davenport (the "Proposal"), winch consists of 21 pages, a copy of winch
Proposal is attached hereto and incorporated herewith by reference as
Attachment"B"
3 CONSULTANT'S "Amended Proposal to Review and Perform City of Denton's
Unbundhng Study and Rate Design Analysis" made in the letter dated August
18, 1999 from CONSULTANT to Davenport (the "Amended Proposal"), wbach
consists of three (3) pages, a copy of wluch Amended Proposal is attached hereto
and incorporated by reference as Attachment"C"
B If there is any conflict between the terms of this Agreement and the three (3) Attachments
appended to this Agreement, the terms and conditions of tins Agreement shall control over
the terms and conditions of the Attachments
ARTICLE III
ADDITIONAL SERVICES
Any additional services to be performed by the CONSULTANT, if authorized by the
OWNER, which are not included as basic services in the above-described Scope of Services, set
forth as provided by Article II above, shall be later agreed-upon by OWNER and CONSULTANT,
who shall determine, in writing, the scope of such additional services, the amount of compensation
for such addatlonal services, and other essential terms pertaining to the provision of such additional
services by the CONSULTANT
ARTICLE IV
PERIOD OF SERVICE
This Agreement shall become effectave upon execution by the OWNER and the
CONSULTANT and upon the issuance of a notice to proceed by the OWNER, and shall remmn in
force for the period which may reasonably be required for the completion of the Project, including
Additional Services, if any, and any required extensions approved by the OWNER This
Agreement may be sooner terminated in accordance wath the provisions hereof Time is of the
essence in this Agreement CONSULTANT shall make all reasonable efforts to complete the
services set forth herein as expedltlously as possible and to meet the schedule reasonably
established by the OWNER, acting through its Director of Electric Utilities or her designee
ARTICLE V
COMPENSATION
A COMPENSATION TERMS
1 "Subcontract Expense" is defined as those expenses, if any, incurred by
CONSULTANT in the employment of others in outside firms, for services an the area
of professional consulting, or related services Any subcontract or subconsultant
billing reasonably incurred by the CONSULTANT in connection vath the ProJect shall
be invoiced to OWNER at the actual cost
2 "Direct Non-Labor Expense" is defined as that expense, based upon actual cost, for any
out-of-pocket expense reasonably incurred by the CONSULTANT in the performance
of flus Agreement for long d~stance telephone charges, telecopy charges, messenger
servlcas, pnntmg and reproduction expenses, out-of-pocket expenses for purchased
computer ttme, prudently recurred travel expenses related to the work on the Project,
and sxrmlar incidental expenses recurred ~n connectmn wtth the Project
B BILLINO AND PAYMENT
For and m cons~deratton of the professmnal services to be performed by the CONSULTANT
hereto, the OWNER agrees to pay CONSULTANT, based upon the satisfactory completton
of the basra services tasks set forth ~n the Scope of Serwces as shown ~n Article II above, as
follows
1 CONSULTANT shall perform its work on thxs ProJect an hourly fee bas~s, plus
reimbursement for all reasonably recurred out-of-pocket expenses, billed monthly
CONSULTANT shall bill from time sheets, m munmum 'A hour increments, at the rates set
forth m CONSULTANT'S"Manpower and Cost Reqmrements to Prowde Rewew of C~ty of
Denton's Unbundhng and Rate Design on Behalf of the Cxty of Denton" schedules respecttng
compensatton and expense price structure, whmh are ldenttfied as Part III of the Proposal,
and as amended as Part III of the Amended Proposal, attached hereto as Attachment"B" and
Attachment "C", respecttvely, which have been ~ncorporated herewith by reference The
OWNER agrees to pay to CONSULTANT for ~ts professional services performed, and its
out-of pocket expenses ~ncurred m the ProJect, a total amount not to exceed $ 65,000 00
2 Partxal payments to the CONSULTANT will be made monthly based on the percent of
actual completion of the basic servmes, rendered to and approved by the OWNER through its
D~rector of Electric Uttht~es or her designee However. under no circumstances shall any
monthly statement for servmes exceed the value of the work performed at the ttme a
statement ~s rendered The OWNER may w~thhold the final ten (10%) percent of the above
not-to-exceed mount unttl sattsfactory completion of the Project by the CONSULTANT
3 Nothing contmned ~n this Article shall reqmre the OWNER to pay for any work which
xs unsatisfactory as reasonably determined by the D~rector of Electric Utdxt~es or her
desxgnee, or which Is not submitted by CONSULTANT to the OWNER ~n comphance wxth
the terms of th~s Agreement The OWNER shall not be required to make any payments to
the CONSULTANT at any t~me when the CONSULTANT is ~n default under th~s
Agreement
4 It ~s specffically understood and agreed that the CONSULTANT shall not be
authorized to undertake any work pursuant to flus Agreement which would reqmre addxttonal
payments by the OWNER for any charge, expense or reimbursement above the not-to-exceed
amount as stated heremabove, vathout first having obtained the prior written authonzatton
from the OWNER CONSULTANT shall not proceed to perform any services to be later
provided for under Artmle III "Add~ttonal Services" wtthout first obtmmng prior written
authorization from the OWNER
C ADDITIONAL SERVICES For add~taonal services authorized ~n writtng by the OWNER
~n Article III haremabove, CONSULTANT shall be prod based on a to-be-agreed-upon
Schedule of Charges Payments for additional services shall be due and payable upon
s,o~,s, con~.~euc, R.~,~.. ~.~ D~^~ Page 3 of 10
submission by the CONSULTANT, and shall be in accordance with Article V B
heremabove Statements for basic services and any additional services shall be submitted to
OWNER no more frequently than once monthly
D PAYMENT If the OWNER fools to make payments due the CONSULTANT for
services and expenses within sixty (60) days after receipt of the CONSULTANT'S
undisputed statement thereof, the amounts due the CONSULTANT will be increased by the
rate of one percent (1%) per month from and after the said sixtieth (60th) day, and in
addition, thereafter, the CONSULTANT may, after giving ten (10) days written notice to the
OWNER, suspend services under this Agreement until the CONSULTANT has been prod in
full for all amounts then due and owing, and not disputed by OWNER, for services, expenses
and charges Provided, however, nothing herein shall require the OWNER to pay the late
charge of one percent (1%) per month as set forth herein, if the OWNER reasonably
determines that the CONSULTANT's work is unsatisfactory, in accordance with Article V
B ofthis Agreement, and OWNER has notffied CONSULTANT of that fact In writing
ARTICLE VI
OBSERVATION AND REVIEW OF THE WORK
The CONSULTANT will exercise reasonable care and due diligence in discovering and
promptly reporting to the OWNER any defects or deficiencies in the work of the CONSULTANT
or any of its subcontractorsor subconsultants
ARTICLE VII
OWNERSHIP OF DOCUMENTS
All documents prepared or furnished by the CONSULTANT (and CONSULTANT's
subcontractors or subconsultants) pursuant to this Agreement are instruments of service and shall
become the property of the OWNER upon the termination of this Agreement The
CONSULTANT is entitled to retain copies of all such documents The documents prepared and
furnished by the CONSULTANT are intended only to be applicable to this project and OWNER's
use of these documents in other projects shall be at OWNER's sole risk and expense In the event
the OWNER uses the Agreement in another project or for other purposes than specified heroin any
of the information or materials developed pursuant to this agreement, CONSULTANT is released
from any and all liability relating to their use in that project
ARTICLE VIII
INDEPENDENT CONTRACTOR
CONSULTANT shall provide services to OWNER as an independent contractor, not as an
employee of the OWNER CONSULTANT shall not have or claim any right arising from
employee status
ARTICLE IX
INDEMNITY AGREEMENT
The CONSULTANT shall indemnify and save and hold harmless the OWNER and its
officials, officers, agents, attorneys and employees from and against any and all liability, claims,
s~.~.~,,,co~c~.,.~ ~. D,~^~ Page 4 of 10
demands, damages, losses and expenses, including but not hmlted to court costs and reasonable
attorney fees incurred by the OWNER, and including without limitation damages for bodily and
personal l~ury, death, or property damage, resulting from the negligent acts or omissions of the
CONSULTANT or ItS officers, shareholders, agents, attorneys and employees in the execution,
operation, or performance of this Agreement
Nothing In this Agreement shall be construed to create a liability to any person who is not a
party to this Agreement and nothing herein shall wmve any of the party's defenses, both at law or
equity, to any claim, cause of action or litigation filed by anyone not a party to this Agreement,
including the defense of governmental immunity, which defenses are hereby expressly reserved
ARTICLE X
INSURANCE
During the performance of the Services under th~s Agreement, CONSULTANT shall
maintain the following insurance with an msurance company hcensed to do business m the State of
Texas by the State Insurance Board or any successor agency, that has a rating with A M Best Rate
Carriers of at least an "A-" or above
A Comprehensive General Liability Insurance w~th bodily injury hm~ts of not less than
$500,000 for each occurrence and not less than $500,000 m the aggregate, and with property
damage limits of not less than $100,000 for each occurrence and not less than $100,000 in the
aggregate
B Automobile Liability Insurance with bodily injury hmlts of not less than $500,000 for each
person and not less than $500,000 for each accident and with property damage hmlts for not
less than $100,000 for each accident
C Worker's Compensation Insurance in accordance w~th statutory requirements and Employer's
Llabihty Insurance with limits of not less than $100,000 for each accident
D Professional Liability Insurance w~th hm~ts of not less than $1,000,000 annual aggregate
E CONSULTANT shall furnish insurance certificates or insurance policies at the OWNER's
request to evidence such coverages The insurance pohc~es shall name the OWNER as an
additional insured on all such policies to the extent that ~s legally possible, and shall contain a
provision that such insurance shall not be cancelled or modified without thirty (30) days prior
written notice to OWNER and CONSULTANT In such event, the CONSULTANT shall,
prior to the effective date of the change or cancellation of coverage, dehver cop~es of any
such substitute pohelas, furnishing at least the same pohcy hmlts and coverage, to OWNER
ARTICLE XI
ARBITRATION AND ALTERNATE DISPUTE RESOLUTION
The parties may agree to settle any disputes under this Agreement by submitting the dispute
to arbitration or other means of alternate dispute resolution such as mediation No arbitrat~on or
alternate dispute resolution arising out of or relating to, this Agreement revolving one party's
d~sagreement may melude the other party to the d~sagreement w~thout the other's approval
s~,~,c~Duc~.~ ~.~ D~^~¢ Page 5 of 10
ARTICLE XII
TERMINATION OF AGREEMENT
A Notwithstanding any other provision of flus Agreement, either party may terminate this
Agreement by providing thirty- (30) days advance written notice to the other party
B Tlus Agreement may be terminated in whole or In part in the event of either party
substantially failing to fulfill its obligations under this Agreement No such termination will
be effected unless the other party is given (1) written notice (delivered by certified mall,
return receipt requested) of intent to terminate and setting forth the reasons specifying the
nonperformance or other reason(s), and not less than thirty (30) calendar days to cure the
failure, and (2) an opportunity for consultation with the terminating party prior to
termination
C If the Agreement is terminated prior to completion of the services to be provided hereunder,
CONSULTANT shall immediately cease all services upon receipt of the written notice of
termination from OWNER, and shall render a final bill for services to the OWNER within
twenty (20) days after the date of termination The OWNER shall pay CONSULTANT for
all services properly rendered and satisfactorily performed, and for reimbursable expenses
prior to notice of termination being received by CONSULTANT, in accordance with Article
V of this Agreement Should the OWNER subsequently contract with a new consultant for
the continuation of services on the ProJect, CONSULTANT shall cooperate in providing
information to the OWNER and to the new consultant If applicable, OWNER shall allow
CONSULTANT a reasonable time to transition and to turn over the ProJect to a new
consultant CONSULTANT shall mm over all documents prepared or furnished by
CONSULTANT pursuant to this Agreement to the OWNER on or before the date of
termination, but may mmntmn copies of such documents for its files
ARTICLE XIII
RESPONSIBILITY FOR CLAIMS AND LIABILITIES
Approval of the work by the OWNER shall not consutute nor be deemed a release of the
responsibility and hablhty of the CONSULTANT, its officers, employees, agents, subcontractors,
and subconsultants for the accuracy and competency of their designs or other work performed
pursuant to this Agreement, nor shall such approval by the OWNER be deemed as an assumption
of such responsibility by the OWNER for any defect an the design or other work prepared by the
CONSULTANT, ItS principals, officers, employees, agents, subcontractors, and subconsultants
ARTICLE XIV
NOTICES
All notices, communications, and reports required or permitted under this Agreement shall be
personally delivered to, or telecopled to, or mailed to the respective parties by depositing same in
the Umted ~States mail at the addresses shown below, postage prepaid, certified mall, return receipt
requested, unless otherwise specified herein
To CONSULTANT To OWNER
Diversified Utility Consultants, Inc City of Denton, Texas
Dan Lawton, Pnnclpal Sharon Mays, Director, DME
12113 Roxle Drive, Suite 110 901 -A Texas Street
Austin, Texas 78729 Denton, Texas 76201
Fax (512) 257-2243 Fax (940) 349-7334
All notices under this Agreement shall be effective upon their actual receipt by the party to
whom such notice is given, or three (3) days after mailing of the notice, whichever event shall first
OC¢llr
ARTICLE XV
ENTIRE AGREEMENT
This Agreement consisting of ten (10) pages and three (3) attachments constitutes the
complete and final expression of the Agreement of the parties and is intended as a complete and
exclusive statement of the terms of their agreements, and supersedes all prior contemporaneous
offers, promises, representations, negotiations, discussions, communications, understandings, and
agreements which may have been made in connection with the subject matter of this Agreement
ARTICLE XVI
SEVERABILITY
If any provision of this Agreement is found or deemed by a court of competentjunsdmtion to
be invalid or unenforceable, it shall be considered severable from the remainder of this Agreement,
and shall not cause the remainder to be invalid or unenforceable In such event, the parties shall
reform this Agreement, to the extent reasonably possible, to replace such stricken provision with a
valid and enfomeable provision which comes as close as possible to expressing the original
intentions of the parties respecting any such stricken provision
ARTICLE XVII
COMPLIANCE WITH LAWS
The CONSULTANT shall comply with all federal, state, local laws, rules, regulations, and
ordinances applicable to the work performed by CONSULTANT hereunder, as they may now read
or as they may hereafter be amended
ARTICLE XVIII
DISCRIMINATION PROHIBITED
In performing the services required hereunder, the CONSULTANT shall not discriminate
agmnst any person on the basis of race, color, religion, sex, national origin or ancestry, age, or
physical handicap
ARTICLE XIX
PERSONNEL
A CONSULTANT represents that at has or will secure at its own expense all personnel required
to perform all the services reqmred under tins Agreement Such personnel shall not be
employees or officers of, nor have any contractual relations with the OWNER
CONSULTANT shall immediately inform the OWNER in writing of any conflict of interest
or potential conflict of interest that CONSULTANT may discover, or which may arise dunng
the term of this Agreement
B OWNER requires that CONSULTANT carefully safeguard all documents, data, and
information provided by OWNER to CONSULTANT incident to this engagement
CONSULTANT recogmzes that such documents, data, and information involve sensitive,
competative issues, in some cases confidential information, an some cases proprietary
information, and the disclosure of such information by CONSULTANT to any third party,
without the express written consent of OWNER, is expressly prohibited by OWNER, and
would hkely cause slgnfficant economic loss and detriment to OWNER Any such disclosure
of information by CONSULTANT shall constitute a material default of this Agreement
CONSULTANT represents to OWNER that it will safeguard OWNER's mformat~on and
will, upon OWNER'S request, provide OWNER with CONSULTANT'S pohcles regarding
its procedures for identifying conflicts of interest, and its procedures and safeguards which
are in place which would apply to CONSULTANT'S treatment and handling of OWNER'S
documents, data, and information during this engagement
C All services required hereunder will be performed by CONSULTANT or under its direct
supervision All personnel engaged in performing the work provided for in this Agreement,
shall he qualified, and shall be authorized and permitted under state and local laws to perform
such services
ARTICLE XX
ASSIGNABILITY
The CONSULTANT shall not assign any interest in this Agreement and shall not transfer
any interest in this Agreement (whether by assignment, novation or otherwise) wathout the prior
written consent of the OWNER CONSULTANT shall promptly noUfy OWNER of any change of
its name as well as of any significant change in ItS corporate structure or In ItS operations
ARTICLE XXI
MODIFICATION
No wmver or modification of this Agreement or of any covenant, condition, limitation herein
contained shall be valid unless in writing and duly executed by the party to be charged therewith
No evidence of any waiver or modification shall be offered or received in evidence In any
proceeding arising between the parties hereto out of or affecting this Agreement, or the rights or
obligations of the parties hereunder, unless such waiver or modfficatlon is in writing, duly
executed The parties further agree that the provisions of this Article will not be waived unless as
herein set forth
S~r~o~,n~,s~Co~,c,~m~*D~,~ ~'~ ~^~' Page 8 of 10
MISCELLANEOUS
A CONSULTANT agrees that OWNER shall, unttl the exp~ratlun of three (3) years after the
final payment made by OWNER under this Agreement, have access to and the right to
examine any d~reetly pertinent books, documents, papers and records of the CONSULTANT
mvolwng transactmns relating to th~s Agreement CONSULTANT agrees that OWNER
shall have access during normal working hours to all necessary CONSULTANT factlmes and
shalllbe prowded adequate and appropriate working space m order to conduct exammatmns
or audits m comphance w~th tbas Article OWNER shall g~ve CONSULTANT reasonable
advance nottee of all intended examlnatmns or auahts
B Venue of any stat or cause of actmn under th~s Agreement shall he exclusively m Denton
County, Texas Thts Agreement shall be governed by and construed m accordance wtth the
laws of the State of Texas
C For purposes of tbas Agreement, the parttes agree that Dan Lawton, Pnnc~pal of
CONSULTANT ("Lawton") shall serve as the Project Manager of CONSULTANT,
respecting thts engagement Thts Agreement has been entered tnto wtth the understanding
that Lawton shall serve as the CONSULTANT's Project Manager and the key person serving
the OWNER on thts Project Any proposed changes requested by CONSULTANT,
respectmg Lawton serving as the key person on the Project, shall be subject to the approval of
the OWNER, whmh approval the OWNER shall not unreasonably w~thhold Nothing hereto
shall~hm~t CONSULTANT from using other quahfied and competent members of tts firm to
perform the other servmes reqmred herem, under tts supervts~on or control
D CONSULTANT shall commence, carry on, and complete ~ts work on the Project w~th all
apphcable dtspatch, and m a sound, econommal, efficient manner, and m accordance w~th the
provlsmns hereof In accomphsbangthe Project, CONSULTANT shall take such steps as are
appropriate to ensure that the work mvolved ts properly coordinated wtth related work being
earned on by the OWNER
E The OWNER shall assist the CONSULTANT by placmg at the CONSULTANT's dtsposal
all avatlable mformatton pertinent to the ProJect, mclud~ng prevtous reports, any other data
relative to the ProJect and arranging for the access to, and make all prows~ons for the
CONSULTANT to enter tn or upon, pubhc and private property as reqmred for the
CONSULTANT to perform professional servmes under th~s Agreement OWNER and
CONSULTANT agree that CONSULTANT ~s entaled to rely upon tnformaUon furmshed to
tt by OWNER wtthout the need for further mqutry or lnvesttgatlomnto such ~nformatton
F The capUons of thts Agreement are for mformat~onalpurposes only and shall not ~n any way
affect the substantive terms or condmons ofthts Agreement
1N WITNESS WHEREOF, the C~ty of Denton, Texas has executed thts Agreement tn four
(4) original counterparts, by and through ~ts duly-authorized C~ty Manager, and CONSULTANT
has executed this Agreement by and through tts duly-authorized understgned officer and Pnnctpal,
on th~s the ,~TP~ dayof t~7~/~/ ,1999
"CITY"
CITY OF DENTON, TEXAS
ATTEST By '~li~el W~ez. City. er
JENNIFER WALTERS. CITY SECRETARY
APPROVED AS TO LEGAL FO~
HE~ERT L PROUTY, CITY A~O~EY
"CONSULTANT"
DIVERSIFIED UTILITY CONSULTANTS. INC
A Iex~atT~
By /~ /~ ~~
~a~on, Pnnc~pfl
A~EST
By S~ ~
July 6 1999
Dan Lawton
D~verslfied Utility Consultants.
12113 ROXm Drive
Austin. TX 78729
Dear Dan.
I have attached a scope of work for the rate design and a copy of the electric system
unbundhng study prepared by R W Beck We would hke to get th~s project moving very
quickly because ~t was budgeted in the current fiscal year Therefore we need to
encumber the funds before September 30 1999 Please return the unbundhng study w~th
your proposal ! look forward to hearing from you
Stnccrely,
Cheil Davenport, CPA
Utility Rate Administrator
(90,0) 349-8466
davenport~cltyo fdenton corn
REQUEST FOR PROPOSAL
CITY OF DENTON
DENTON, TEXAS
The scope of work provides services to the City ot Denton tn two separate tasks
· Task A - Unbundhng and Rate Design Services
· Task B - Presentauon, Education and Public Process Serv;ces to be provided to the City
Council and Pubhc Utthttes Board
lask A and Task B services wtH be intertwined during the course of the study in order to keep
the Board and C~ty Council current with study results
Task A should develop rates that would provide a smooth transition to retail competmon
Among the issues to be considered in developing rates are the sale of Denton s generaUon
Senate Bill 7 and results of the PUC distribution tariffs workshop
As Denton moves towards adoption of proposed rates developed in Task A the City will reqmre
presentation, education, facilitation, or other services to help decision-makers evaluate the
impact of proposed rates The education proces~ will be ongoing throughout the project and
involve the Public Utilities Board and C~ty Council Each meeting will be tutolia[ and
conducted tn a format to encourage questions and open dialogue Concepts as developed in thc
course of Task A will be presented'and discussed as it apphes to Denton s s~tuation
Proposals should price each task separately Task & should provide separate prices for each item
hsted Task B should provide a price per meeting
TASK A UNBUNDLING AND RATE DESIGN SERVICES
~ DEVELOPMENT OF TEST YEAR P~EVENUE REQUIREMENT
2 MARGINAL COST ANALYSTS AND PRODUCTION COST MODELING
3 UPDATERW BECK UNBUNDLING AND REVIEW RESULTS WITH CITY
4 DEVELOPMENT OF DAT,~BASE FOR RATE DESIGN AND PRICING ANALYSIS
5 RATE DESIGN
TASK 13 ~,~ PRIESENTATION, EDUCATION, AND PUBLIC PROCESS SERVICES
~,Rat¢ Desil~nJ01 for traditional cost ot service allocation including examples of rat~s ,n use
today t~y ~h or,he following
· City of Denton
· A Texas [OU
· ^ company currently operating m a deregulated environment
An additional one-day meeting with utihty staff as described in Task A 4 is included under the
cost estimate for this meeting
]~o MEETING
Pate Design for an Industry preparing for deregulation including new types of rates that would
be necessary Examples should include rates specifically for Denton
3r° MEETING
Ne~ Rate Design 'I heory for a Competmve Market including marginal cost and pricing Again
specific examples for Denton should be included m the presentation with an emphasis on
marginal costing and what ~t means
4TM MEETING
Porttoho of tools needed in a deregulated market ~ncludmg the kind ot tool,~ available and the
ones that woutd most benefil Denton
STII MEETING
Presentation of rate design for Denton
6~' MEETING
Open meeting to revt¢,~ topics previously presented or d:~cus.-, ~lev~ top:c
CONSULTAIW~P$. INC
August ! 1, 1999
Cheryl Davenport, C P A
Utility Rate Administrator
901-A Texas Street
Denton, Texas 76201
RE Pro p os. aLt o .Re,.v.t cw__Cjl,~ .o. LD en ton;s, jJ. nbundl~ Ra~g~Des~gn
Dear Ms Davenport
Diversified Utihty Consultants, Ine ("DUCI') Is pleased to submit this proposal to the C~ty
of Denton ("City") to analyze the unbundhng and rate design ~ssues
DUCI Is a Texas Corporation located m Austin, Texas, with an intemat~onal client base The
principals of DUCI, Messrs Pous and Lawton, have over forty (40) years of utility rate and
regulation experience In particular, Messrs Pous and Law, on have testified and/or made formal
presentatmns before federal, state, municipal, and provincial regulatory bodies, REA Cooperative
boards and U S £nvlronmenta[ Protection Agency revtew boards on all aspects of unhty cost of
service, ratemakmg, and rate design
DUCI is well quahfled to perform the various services necessary to complete a thorough
analysis of the C~ty's unbundhng and rate design issues DUCI's personnel have the extensive,
current and relevant utility rate regulatlon experience necessary to re'~lew the accounting,
engineering and economic ~ssues reflected m the Cltys request In add~uon, Messrs Pous and
Lawton have been revolved m more than 200 different utility rate regulatmn proceedings and,
moreover, have been project leader, negotiator and/or expert witness for the vast majority of such
engagements
As shown on the resumes of Mr Lawton and Mr Pous they are very famfimr with these
types of issues As DUCI has been involved in numerous s~mfiar past reviews, DUCI has an
excellent understanding of the numerous underlying methods, procedures and theories that most
likely will be needed to perform the necessary studies
DUCI's prior experience is set forth tn Part I of this proposal Based in part on thts pr]or
experience, DUCI has set forth m Part II of this proposal ~ts understanding o£the scope of work
necessary for this ease DUCI has further enumerated m Part II a detailed plan of action to complete
the necessary tasks associated with a comprehensive rate review in a timely and cost efficient
Ba~ort our understanding of the Company's pnor practices, DUCI has set forth tn Part III
anestlmate~/pnce~of$16,625 to complete Task A m the proposal This.price mcludesall;out-of-
pocket exp~o,~s, but does not include tho charge~ associated with any services or expenses that have
or will be defined as additional services Also included In Part Ill is a breakout to complete Task
B included m the proposal DUCI ha~ set forth an estimated total cost orS10,000 to prepare for and
attend thc 8 meetings It Is our .intent and desire to provide thc City with the baghcst quahty analysc~
and work product at the most economical cost DUCI is prepared to modify the scope ofserv~ce and
corresponding costs in order to meet any appropnate changes proposed by the C~ty
As can bc seen from the resumes in Part 1 of this proposal, the personnel who will be
avmlable to the C~ty for the analyse,s, discussions and educational meetings have substantial
experience In the areas of cost ofservlc~ for electric, gas, water, and other types of utilities These
staffmembers also have expenencc tn rate design analyses, cost allocations, corporatc auditing, as
well as substantial expenencc with regard to review of revenue requirement issues DUCI personnel
have testified before venous regulatory comm~ssions and arc very well experienced In working with
electric utilities
We would like to thank you for allowing DUCI to submit this Proposal We are prepared
to commence work on this project immediately upon selection, and would complete the project in
a timely and efficient manner Should you have any questions with regard to this proposal or other
matters, please feel free to contact Dan Lawton at (:~ 12)257-2600
Sincerely, ,
Diversified Utfltty Consultants, Inc
Enclosure
'~,~}LE OF CONTENTS
PART I - QUALIFICATIONS
General Descnpnon
Prior Experience
In&v~dual Expenence
Personnel
Ref~'ence L~st
PART II - WORK PLAN
Project Summary
Tasks
Add~tmnal Services
PART III - PRICE PROPOSAL
General
Manpower
Materials, Supphes and Other Itemtzed D~rect Costs
PART I
QUALIFICATIONS
Cent~l Power & Light Co (~) Noahwestem Utlhne~ Lmuted (2)
null S~e UttlR~es (7) Per~enales El~mc Coo~rattve
Mid Syste~,~ergy ~ourccs, Inc Pubhc Sew~ce Co.any of Oklahoma
Hawaiian Blanc Company Sou~west Oas
~n~ ~s Albe~ ~c Pubhc S~tce l~a
CtW ofNo~ Lt.lc Rock Elccmc Sou~ Caml~ Elccmc ~ G~ (3)
Um~ I~gn~on D~s~ct Nova ~ Tr~s~sston Lm~d
~o~hwest Power Co~ratwn ~onton Power (2)
El Pun Elcc~c Co (3) Sou~cm Umon Gas Company (7)
West Texas U~hues (2) Engeras Company (4)
Southwcsmm Pubhc Sew,ce Co (4) Indiana G~ Company
Lower Colorado R,ver Authon~ (2) W~star Gas Trnnsmtss~on Co
Louisiana Power ~ Light Co R~o Grande Gas Company
Texas-N~w Mexico Power Co (3) Entex ~s Company (2)
Tcx~ Utllmes Elec~tc Co (Z) Lone S~r Gas Company (5)
Southern Gahfo~a Edt~n Elecmc United Cities Oas Company
Flon~ Power ~ Light Co ' C~n~a Gas Limited
Deve~ Canal System (2) C~ of Austin (5)
Marne Ya~ Atomic Power Co (2) Indianapolis Water Company
Carol~ Power & LngM Co CI~ of Round Rock Texas Water System
Ste~ Pacific Power Co (4) Sccmc Oaks Water Supply Co
Montana Power Company (3) United Imgahon Dish,ct
Nevada Power Company (2) Hidalgo Coun~ I~igat~on Dtamct
I~dtana Michigan Power Company Canadian Weste~ Na~ral Gas Company
Albe~ Po~ ~m~d (3) Southern Uttht~ea Company
Tr~Alta U~httes (3) El Paso ~un~ WCID-Wes~ay
WCtD-~20
2
PART I
QUALIFICATIONS
PART I
Q~ } ~ ~ IFICATION$
~ DE$C RIP_I I1 ~.1~
DUCl ~ lll~.orporated in the S~e o~ Tex~ and prowd~s
mto~t~onsl chant b~ DUCI w~ fotm~ on November 26. 1986, by ~e ~o pnnc~pal~ et the
fi~, ~ la~b Pouz ~d Mr D~oI ~ La.on Both ptm~pal~ o~lh~ fi~ have extensive utility
regulato~ b~kgo~ds, having work~ for a pubhc ~c~c~ co~sston ~ld an el~ttic utthtv
company. ~ w~ll as an mtemattonfl utility comultmg fi~ r~pr~entmg th~ pubhc (non-mwstot
ownS) utility sector PUt I'~ chent~ ore predominantly 8ove~ental ~nt~tt~s
Slnc~ it's m~vpt~Otl, DUCI has oxpmd~ 1~ operation The cu~nt ~tztt hz~ obtained
~onpt thcm 7 under~aduat~ m~d g~aduat~ d~grees m engmeenng accounting, econom,c%
busings ~d law ~ ~ h~ ~ oxt~nstw m~;m;omputet ~y~t;m to assist n In t~; perfo~ce
of t~ks ~d eo~atlOn wgh oh~nts ~ n~oss~ to ;ompl~t~ ~y ~ugag*m~t~t wh;r~ such
capaBllltt$~ ar~ r~qtured
Thc relev~t come, at* ~p~t~;tt~; o~DUCI 1~ analyzing a uttlltV
Dunng th~ l~t twelve (12) y~s DUCI has b~e. d.;ctlv revolved m ~he following rote cage~ or
rate-r~lamd mv~otigatton~ (th~ figure ~ tthm th~ '( )' mdlcat;s d~ff;~m
pAKT [
QUALIFICATIONS
The professional pcrsonnel assigned to this pwject are as follows
Dan Lawton
Jack Pous
Sara Coleman
Ruth Runyon Wenz¢l
The resumes of these individuals are provided at the end of this sectmn In addmon to the
resumes, a hsttng of prior cases ~n which testimony has been presented is provided
The prtmary work assignments for each individual are as follows
Dan Lawton, a pnnctpal m DUCI, wRh an undergraduate and graduate degree m economics
and a law degree, will be responsible for d~rectmg analyses of the unbundhng and rate design
.Tack Pous, a pnnc~pal m DUC[, with an undergraduate degree tn engineering and a masters
m management, wdl be responsible for dtrecting analyses ofengmeenng and accounting ~ssues Mr
Pous will conduct the workshops discussed m Task B of your proposal to the C~ty Councd and
Pubhc Utthtles Board on the development of the study, sale of generating units, Senate BAll 7 and
the outcomes of workshops held by the PUCT regardmg d~stnbut~on tariffs
Sara Coleman and Ruth Runyon Wenzel, Certified Pubhc Accountants wtth undergraduate
degrees tn business admmtstratton, wall be responsible for analyzing accounting ~ssues
t
Mom important than the overall number of cases m which Messrs Pous ~d Lawton have
b~ ~gag~ is ~ ~e ~d level of involvement The roles ~d duties of e~h of the proj~t
1~ ~n ~s proposal have been ~ proj~t leader, at.al ncgot~ato~ an&or as expe~ w~tnesses m
~e vast majonW or.ese c~es, ~d exclustvely m thee roles and positrons ~n all c~es under.eh
m the p~t ~etve (12) years Most of these c~es revolved the remew ~d analysts of uttht~es' cost
of semee Issues, depr~tatton studies, cost of capital, and rate de~ ~ssues
We beheve thru the above noted mfomatwn details DUCI's quahficanons to analyze and
~s~st the Ctty ofD~nton mtts Unbundhng ~d Rate Des~ Se~m~ Fu~her confimatmn of
DUCI's quahfieat~ons c~ be obtained ~om a review of the following professional resumes and
testimony hatmgs of the key md~wduals ass~ to thts project, as well ~ by contacting the
references m~luded m th~s s,ctmn of ~e proposal
PART I
QUALIFICATIONS
The professional personnel assigned to this project are as follows
Dan Lawton
Jack Pous
Sara Coleman
Ruth Runyon Wenzei
The resumes of these individuals are provided at the end of this section In addition to the
resumes, a listing of prior cases m which testimony has been presented is provided
The primary work assignments for each mdiwduai are as follows
Dan Lawton. a pnnclpal m DUCI, with an undergraduate and graduate degree m economics
and a law degree, will be responsible for d~rectmg analyses of the unbundhng and rate design
Jack Pous, a pnnclpa[ In DUCI, with an undergraduaIe degree ~n cngmecnng and a mas~ers
m management, wdl be responsible for dlrecnng analyses ofengm~nng and accounting ~ssucs Mr
Pous will conduct the workshops discussed In Task B of your proposal to the City Council and
Public Utdities Board on the development of the study, sale of generating umts. Senate Bill 7 and
the outcomes of workshops held by the PUCT regarding distnbuuon tmaffs
Sara C~leman and Ruth Runyon Wenzel, Certified Public Accountants with undergraduate
degrees in business administration, will be responsible for analyzing accounting issues
PART 1
QUALIFICATIONS
hlall~lost all cases listed above, expert tasttmony was filed In tho rate proceeding b~fore a
state, provlrt~:tal, or Federal regulatory agency DUCI and/or its personnel have relied upon their
specific and general knowledge of the utihty operation involved, including gas distribution systems
The key personnel Involved ii1 the above cases are those assigned to this project
The two project leaders, Messrs Pous and Lawton, have analyzed well tn excess of 200
different rate fihngs of utthty compames wltlun the past 12 years In addmon, the number of
mumc~pal, cooperative and/or state agency rate filings either developed and/or reviewed,
substantially mcres~es the number of rate.related engagements in which Messrs Pous and Lawton
have participated
More unportant than the overall number of cases in which Messrs Pous and Lawton have
been engaged ts the type and level of involvement The roles and duties of each of the project
leaders {n this proposal have been as project leader, actual negotiators and/or as expert witnesses In
the vast majority of these cases, and exclusively in these roles and positions in all cases undertaken
in the past twelve (12) years Most of these cases involved the review and analysis of utilities' cost
of service issues, depreciation studies, cost of capital, and rate design issues
We beheve that the above noted information details DUCI's qualifications to analyze and
assist thc City of Denton in its Unbundhng and Rate Design Services Further confirmation of
DUCI's qualifications can be obtained from a review of the following professional resumes and
testimony listings of the key individuals assigned to this project, as well as by contactmg the
references included ill this section of the proposal
3
PART I
I ~l QUALIFICATIONS
The following hst of references Is comprised oflfidlvlduals thoroughly familiar with DUCts
pro fessiomil quahficatlons and capabflRles Each of these ind,viduals can aRest to our abdltY to meet
taght deadlines wtule still provtdmg a suponor work product
Mr Metal Nunn Mr Norman Gordon
Ctty Attorney Diamond Rash
City of Amanllo 300 E Mare Street
P O Box 1971 7th Floor
Amanllo, Texas 79186 E1 Paso, Texas 79901
(806)378-3000 (915)533-2277
Mr Harry Wright Mr Jim Boyle
CRy Attorney Law Offices of bm Boyle
Ctty of Port Neches 1005 Congress Ave
1221 Duncanvflle Street Ste 550
Port Neches, Texas 77651 Austin, Texas 78701
(409)722.0~,86 (512)474-1
Mr Dave Cook John Michael Adrogna, Esq
'~ C~ty of Datles Miller, Bahs & O'N'etl, P C
City Controller's Office 1101 14th St'r, N W #1400
Revenue and Taxation Division Washington, D C 20005
1500 Mar'ilia 2BS (202)789-1450
Dallas. T~xas 75201
(21 n)670-3,~A2
Mr J~m Horwood Mr J' Alan Bryan
Spiegel & McDtarm~d 2600 Manuhfe Place
1350 New York Avenue, N W 10180-101 Street
Washington D C 20005 Edmonton, Alberta T6J 3Y2
(202)879-~,003 (403)423-5730
5
DANIEL J. LAWTON
~ PRINCIPAL, DIVERSlI~iED UTILITY CONSULTANTS, INC
B A. ECONOMICS, MERRIMACK COLLEGE M.A ECONOMICS, TUFTS UNIVERSITY
Prior to begmmng his own consulting pracuce, D~v~rslfied Utility Consultants, Inc, m 1986,
Mr Law, on had been In the utility consulting business with a national engmeenng and consulUng firm
In addmon, Mr Lawton has been employed as a senior analyst and statistical analyst with the
Department of Pubhc Service of Minnesota Prior to Mr Lavaon's involvement in utlhty regulation
and consulting he taught economics, econometrics, stausucs and computer science at Doane Colloge
Mr Lawton has conducted numerous financial and cost of capital smdres on electric, gas and
telephone utilities for various tntervenors before local, state and federal regulatory bodies In add~tion,
Mr Lawlon has provided studies, analyses and expert testimony on statisncs, econometrics,
accounting, forecasting, and cost of service issues Other projects In whlch Mr Lawton has been
revolved include rate design, analyses for electric, gas and telephone utilities Mr Lawton has
developed software systems, data bases and management systems for cost of service analyses
In addition, Mr Law~on has developed and reviewed numerous forecasts of energy and demand
used for utfllty generation expansion studies as well as mumc~pal financing Mr Lawton has
represented numerous mumeipahues as a negouator in utility related matters Such negotiations ranged
fi.om the settlement of electric rate cases to the negotlanOn of provisions in purchase power contracts
A list of case~ in which Mr Lawton has provided testimony Is attached
IACOB POUS, P E PRINCIPAL,
DIVERSIFIED UTILITY CONSULTANTS, INC
B S INDUSTRIAL ENGINEERING M.S MANAGEMENT
I graduated from the University of Missouri m 1972, recmvmg a Bachelor of Science Degree
tn £ngmeerlng, and I graduated w~th a Master of Science in Management from Rollins College in
1980 I have also completed a. senes of deprecmUon programs sponsored by Western Michigan
Umverstty. and have attended numerous other uuhty related seminars
Since my graduauon from college, I have been continuously employed m various aspects
of the utility business I started w~th Kansas City Power & Light Company, working in the Rate
Department, Corporate Planning arid Economic Controls Department, and for a short time tn a
power plant My responsibilities included preparation of testimony and exhibits for retail and
wholesale rate cases I part,clpated m cost of service studies, a loss of load probability study, fixed
charge analys~s, and economic comparison studies I was also a pnncipal member of prolect teams
that wrote, installed, maintained, and operated both a computerized series of depreciation
programs and a computerized financial corporate model
I joined the firm of R V~ Beck and A~soclates an international consulung engineering firm
w~th over 500 employees performing predominantly utility related work m i976 as an Engineer
in the Rate Department of ~ts Southeastern Regional Office While employed vath that firm
._. prepared and presented rate studies for various electric gas water, and sewer systems prepared
and assisted in the preparation of cost of service studies, prepared depreciation and
decommissioning analyses for wholesale and retail rate proceedings, and assisted in the
development of power supply studies for electric systems I resigned from that firm m November
1986 in order to co-found Divers;fled Utility Consultants, Inc At the time of my resignat,on,
held the titles of Executive Engineer, Associate and Super'asor o£ Rates m the Austin office of R
W Beck and Associates
As a principal of the firm of Diversified Uuhty Consultants, Inc, I have presented and
prepared numerous electric, gas, and water analyses in both retail and wholesale proceedings
These analyses have been performed on behalf of clients, including public utility commissions
throughout the United States and Canada
I have been revolved ~n over I00 different utility rate proceedings, many of which ha~e
resulted tn settlements prior to the presentation of testimony before regulatory bodies
I am registered to pracuce as a Professional Engineer m the states of Florida Texas
M~ssissippi, North Carohna Anzm~a, New Mexico, Ark,ms,~s Oklahoma and
SARA COL£ ,
DIVERSIFIED UTILITY CONSULTANTS, INC~
B B.A. - ACCOUNTING
I graduated from the Umverstty of St Thomas ~n 1990, recmvmg a Bachelor of
Business Admm~strauon m Accounung I am a Cemfied Pubhc Accountant hcensed to
pracuce m the State of Texas I am a D,plomate of the American Board of Forensic
Examiners I have also attended utility related seminars including the "Annual
Regulato~ Studies Program" sponsored by the National Associauon of Regulatory
Uuhty Commissioners and admm,stered by M~chigan State Umversity's Graduate
School of Business
I began worPung for the public accounting firm of Arthur Andersen & Company
m Houston, Texas m July 1990 During my employment wxth Arthur Andersen &
Company. I provided financial and audit services to public and pnvate corporations My
respons,bflmes included all aspects of finanmal reporting, fmanc,al statements and
footnote preparation Tl~,s included evaluauon of compliance w~th technical
requirements and the Security Exchange Comm~ssion's reporung regulauons At the
ume of my res~gnaUon. I was an Experienced Senior Auditor
In July 1993, I lomed the Public Uuhty Commission of Texas as a Regulatory
Accountant While employed at the Public Utility Commiss~on of Texas, I reviewed and
analyzed various uuhty appl,cauons as they related to accounting ,ssues My
respons,b~hues also included prepar,ng and testifying on accounting issues m various
ut,hty hearings I resigned from the Pubhc Uul,ty Comm,ssmn of Texas in December
~996 I have been revolved tn several rate proceedings, many of which have resulted in
settlements prior to the presentation of test,mony before regulatory bodies
I lomed the firm of Diversified Uuhty Consultants, Inc as a Senior Consultant
My responsibthttes include analyzing regulatory ~ssues m various uuht~ rate proceedings
A hst of cases tn whtch I have provided tesumony is attached
RUTH RUN'YON WENZ£L, C P A
BBA, ACCOUNTING
Msl Wenzel received a Bachelor of Business Admimstrauon degree uath a malor
in Accounting from the Umvers~ty of Texas at Austin in 1981 She is a Certified Public
Accountant licensed to pracuce in the State of Texas and has attended continuing
professional education cotirses sponsored by the Texas Society of Certified Public
Accountants
In January 1982, Ms Wenzel began employment wath the public accounting
firm of Gibson, Johnson & Co She was involved in areas of taxauon, audmng and
management advasory semces In 1986 she ]omed the firm of Gibson, Melvin &
Paddock where she continued her public accounting practice
In 1987 Ms Wenzel was employed by the Pubhc Utility Commission of Texas
as a regulatory accountant Her responsibdiues w~th the Texas Commission included
preparation and analyses of studies revolving cost of serrate issues related to rate
proceedings of elecmc utdtues She served as a tesufymg w~mess on behalf of the
Commission through 1994
Ms Wenzel began employment wath Diversified Uuhty Consultants Inc m
June, 1994 where she has participated m the analysis of numerous uul~ty rate
proceedings before both state and federal regulatory authorities
A list of cases tn which Ms Wenzel has provided testimony is attached
PA~T II
WOI~K PLAN
The scope o£servlces necessa.~y to properly lnvesligate the numerou~ and complex fin~al,
~nomwal, ~bundhng, rate d~[~, ~d a~ountmg ~ssues r~m~s a ~nsult~t that ~ p~v~ously
~d success~lly perfo~ed m~y s~mfl~ ~alyses Th~s concur of extensive prior specffic
experience ~s c~cml m t~s p~cul~ s~matmn due to the ~nd~ent~l &~les that are o~umng
m ~he utility mdus~ ~d the C~W of Denton specifically
The series oft~ dehneated m th~s s~t~on of the proposal reflect what DUCI beheves ~s
necess~ to comply w~th a review of the C~ of Denton's ~b~dhng ~d rate des~ ~ssues ~d
ad.ce on the pwper ~lato~ pomtwn~ m the changing re~lato~ env~w~ent Also w make
reco~endat~ons ~d provide ~ucatmn~ d~scuss~ons w~th the C~W Council ~d the Pubhc Utilities
Board re~dmg the rate des~ sludy, ~set sales, Senate Bill 7, ~d deregulation m the mdust~
Specifically, how these ~ssu~ effect the C~ty of Denton
Once not~fied of selectton by the C~ty, a detailed review of the C~ty's unbundhng and rate
desl~ ~d available cu~ent tin.oral mfomatmn will be conducted ~d d~scussed wtth the staffed
offietals of the Ctty The City will pwmde ~ts revenue r~mrement and bflhng dete~mant
frequency, by class The following ~s a general outhne ~d synopsts of the major tasks that we
am~eipat~ by the C~ty m perfommg a comprehensive analysis for T~k A m the proposal
TASK A MAN HOURS DESCRIPTION
I ~2 Review and m~ke recommenda~mns on the C~t~ final revenue r~mrament
2 26 Review and utd~e R W Beck s unbundhng study and remew revision wRh City
3 64 Rat~ D~gn for Geaco, Transco, D~sco ~d Provider of Lut Resort (PLR) Services
TASK.1.
Review of City's existing revenue requirement and a review of historical and pro forma
adjustments to the revenue requirement Propose necessary adjustments to be comphant w~th current
regulatory reqmrements of the City
Review prior year unbundhng study and make adjustments where necessary Throughout
the process, keep the staff informed
6
PART II
WORK PLAN
D¢~¢lop and .~nal¥~'¢ thc price ~malys~s and rate destgn alternattves and dov¢lop a rake d~tgn
for the Ctty taking into account the compcttttve changes taking place m the industry
DUCI will provide the vanou.q work~hops and pre~e'ntation serv~c~ delmeatod m Section B
of the proposal
A 13DITTONAL~ RR~VT~-~
DUCI will provtde additional servtces as requested by the C~ty Additional services may
Include, but are not limited to additional analyses, addttional cop~¢s, attendanc~ at additional
meetings Charges for these services ar~ not included m the cost estimate set forth hereto
Add~Uonal servtces will be charged at the hourly rates for the individual personnel set forth m Part
III, plus out-of-pocket expenses Requests for additional servtces of an,~ member of DUCI should
be made tn written form. ff time constraints pen'mt
7
PART III
PRICE PROPOSAL
DUC[ proposes to be compensated on an hourly fe~ basis plus reimbursement for all out-of-
pocket expenses reasonably incurred DUCI proposes to invoice the City on a monthly basis for
services rendorext and all out-o.f-pockct expenses incurred dunng that month
The tables at the end oftlus Part sets forth the personnel, hourly fees and esttmated number
of hours for each individual who will parttclpate m th~s project DUCI recognizes the C~ty's need
to schedule public meetings and DUCI will attend such meetmss at a mutually agreed to time and
date
MATEP~k~,~I~s~.,A.~ELO_T~,R ITEMIZED DIRECT CO~TS
The tables at the end of this Part hsts the various non-labor related costs anticipated to be
incurred in the prosecunon of this project
PART III
PRICE PROPOSAL
MANPOWER AND COST R~, QUlREMENTS
' TO PROVIDE REVIEW OF
CiTY OFIDENTON'S UNBUNDMNG AND RATE DESIGN
ON BEHALF OF THE CITY OF DENTON
I..ABOR REQUIREMENTS - TASK A
COLEMAN/
LAW'TON POUS WENZEL TOTAL TOTAL
TASK ($1~1hrl ~ r$1~5~hrl HOURS AMOUNT
I 24 8 10 42 $5 000
2 16 10 0 26 $3,250
Hours 88 27 18 133
ESTIMATED EXPENSES - TASK A
Pnnt~ng $300
Postage & Oehvery $75
Phone
Total Expenses $450
GRAND TOTAL - TASK A
LABOR REQUIREMENTS - TASK B
POU$/
LAV,rrON TOTAL
TASK (_~ 12,~/nr I ,~
S~x Mee~ngs 05 $8,125
ESTIMATED EXPENSES - TASK B
PnntJng $150
Poatags $30
Trsnsportaflon $245
Hotel & Meals $250
Nr Travel s1.200
Total Expenses $1 875
GRAND TOTAL - TASK A
GRAND TOTAL - TASKS A & B ~' ~' ~ ~ ~ ~*'
August 18, 1999
Cheryl Davenport, C P A
Uuhty Rate Adnumstrator
901-A Texas Street
Denton, Texas 76201
RE Amended Proposal to Kevlew and Perform C~ty of Denton's Unbundhng
~dy 8.nd P,.~4e OesLen Analvs~s
Dear Ms Davenport
Per our telephone conversauon earher th~s week, DUCI ~s submitung this
amended proposal to the City of Denton ("City") to include the following addmonal
~emce~ that we discussed
The follo~ng ~s a general descnpuon of addmonal settees to be performed m
Task A
· Task 4 - A Producuon Cost Model ~qll be developed ff generauon
or producuon CGENCO") rates are reqmred to be calculated The
Producuon Cost Analys~s ~ll review the opumal supply m,x to
C~ty power supply costs Th~s analyms s~ll assist the Oty ;n
budgeting for ~ts power supply m the compeuuve enwronment
Th~s analys~s ~s esumated at 100 hours of labor ume
· Task 5 - Development of the C:ty ~te Demgn and Pricing ~alysxs
using ~e developed revenue reqmrement Th~s database, based on
the C~ty's h~stoncal bill frequent, ~11 be used to analyze various
rate dem~ "demand ults" m conluncuon ~th the unbundled
revenue reqmrement by funcuonahzed costs and rate classes TNs
~s esumated at 120 hours
· Imual consultauon ~th the C~W regarding detailed scope of each
"c"
task and development of informauon required to be provided by the
City to the coflsultants for each task, This is esumated at 16 hours
It{ DUel's original proposal, it estimated 6 meetings for Task B Given that the
City Co~lncll and Regulatory Board meet on ~iifferent days, DUCI has included an
additional 6 meetings as requested per our discussion Based on our understanding of
the City's request, DUCI has set forth as Alternative B, its price proposal to include
these additional semces DUCI has estimated a price of $45,000 to complete Task A
and a price of $20,000 to complete Task B
These are only meant to provide a general outline of DUel's analysis I hope this
has provided enough detail for the additional services we discussed on the phone
Once again we would like to thank you for allowing DUCI to submit thxs Proposal
to the C~ty We are prepared to commence work on this project immediately upon
selection, and would complete the prolect in a timely and effzcient manner Should you
have any questxons w~th regard to this proposal or other matters, please feel free to
contact Dan Lawton at (512)257-2600
Sincerely,
PART Ill
~ ~ ~ ~ ~ RIGE PROPO~L
cl~ o~ ~fi,~ u..u~fl~~'~ ~O ~; O~ON
ALTERNAT~E B
~R~ RE~UIREMENT~ . T~KA
PcmtaOe & Oellver/ $75
Phone $75
TOTAL EXPENSES
~D TOTAL . T~K A
~BOR RE~UIRPMFNT~. TA~K B
POUS/
~ON TOT~
TASK ~ ~OUNT
fSTI~TEO PXPI~NRI~R . TASK B
T~ - ~ Mee~
TOT~ ~PENGES
G~D TOT~ - T~K B s;o DOD
G~D TOTAL - T~K A &