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1998-381 ORDnanCE NO 7/-Ja0/ AN ORDINANCE AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH LOUIS BERGER & ASSOCIATES, INC FOR SERVICES RELATING TO THE VALUATION OF ELECTRIC TRANSMISSION AND DISTRIBUTION SYSTEM, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR, AND PROVIDING AN EFFECTIVE DATE (RFSP #2286-VALUATION OF ELECTRIC TRANSMISSION & DISTRIBUTION SYSTEM AWARDED TO LOUIS BERGER & ASSOCIATES, INC IN THE AMOUNT OF $85,000 00) THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS ~ That the C~ty Manager m hereby authorized to execute a Professional Servlces Agreement w~th Lores Berger & Associates, Inc for service relating to the Valuation of Electric Transm~smon and Distribution System, a copy of whlch Agreement ~s attached hereto and incorporated hereto by reference SECTION II That the expanchture of funds as prowded m the attached agreement ~s hereby authorized SECTION III That thru ordinance shall become effective immediately upon ars passage and approval PASSED AND APPROVED tins the / 7~--'~dayof ~~, 1998 ATTEST JENNIFER WALTERS, CITY SECRETARY AP~t)VED AS TO LEGAL FORM HERI~ERT L PROUTY, CITY ATTORNEY RFSP 2286 PROFESSIONAL SERVICES AOREEMENT ORDINANCE PROFESSIONAL SERVICES AGREEMENT FOR CONSULTING SERVICES PERTAINING TO THE PREPARATION OF A VALUATION STUDY AND REPORT OF THE DENTON MUNICIPAL ELECTRIC TRANSMISSION AND DISTRIBUTION SYSTEM STATE OF TEXAS § CO T¥ oF DENTON § ./ __~EMENT ~s made and entered into as of the /7~-~'t/ day of C~~v , 1998, by and between the City of Denton, Texas, a Texas municipal corporation, w~th ~ts prmmpal office at 215 East McKlnney Street, Denton, Texas 76201, hereinafter called "OWNER", and Lores Berger & Assocmtes, Inc, w~th its pnnmpal office at 5840 Balcones Drive, State 200, Austin, Texas 78731, hereinafter called "CONSULTANT", acting hereto, by and through their respective duly-authorized officmls and officers WITNESSETH, that ~n consideration of the covenants and agreements herein contained, the part,es hereto do mutually AGREE as follows ARTICLE I EMPLOYMENT OF CONSULTANT The OWNER hereby contracts with the CONSULTANT, as an independent contractor, and the CONSULTANT hereby agrees to perform the serwces here~n in connection w~th the ProJect as stated ~n the Artmles to follow, w~th dthgence and ~n accordance w~th the htghest professional standards customarily obtained for such services ~n the State of Texas The professional serwces set out hereto are ~n connection with the following described project (hereinafter the "Project") The Project shall ~nclude, w~thout hm~tat~on, preparation of a valuation study and report regarding the Denton Mumc~pal Electric ("DME") transmission and d~stnbut~on system ARTICLE II SCOPE OF SERVICES The CONSULTANT shall perform the following services in a professional manner A The CONSULTANT shall perform all those Basic Services as are necessary and approprmte and as described m the OWNER's Request for Sealed Proposal No 2286 B To perform all those Basic Services set forth ~n CONSULTANT's Proposal, dated October 12, 1998, which Proposal ~s attached hereto and made a part hereof as Exhibit "A", and ~s incorporated herewith by reference C If there ~s any conflict between the terms of th~s Agreement and the exhibit attached to th~s Agreement, the terms and conditions of th~s Agreement shall control over the terms and conditions of the attached exhibit ARTICLE III ADDITIONAL SERVICES Addltxonal servmes to be performed by the CONSULTANT, ~f authorized by the OWNER, whmh are not ~ncluded m the above-described Basra Services set forth ~n Article II herelnabove, are described as follows A Any presentation made to the Denton City Council B Any professaonal servmes rendered by CONSULTANT ~nvolwng participation in negotiating act~wtles between Denton Mumc~pal Electric and other part,es ARTICLE IV PERIOD OF SERVICE This Agreement shall become effective upon executmn of this Agreement by the OWNER and the CONSULTANT and upon ~ssuance of a not,ce to proceed by the OWNER, and shall remmn ~n force for the period which may reasonably be reqmred for the completion of the ProJect, Including Additional Servmes, ff any, and any reqmred extensions approved by the OWNER Th~s Agreement may be sooner terminated m accordance w~th the prows~ons hereof T~me ~s of the essence ~n this Agreement The CONSULTANT shall make all reasonable efforts to complete the servmes set forth hereto as exped~tmously as possible and to meet the schedule estabhshed by the OWNER, acting through ~ts C~ty Manager or h~s designee ARTICLE V COMPENSATION A COMPENSATION TERMS 1 "Subcontract Expense" ~s defined as expenses ~ncurred by the CONSULTANT ~n employment of others In outside firms as subcontractors or subconsultants for servmes to assist CONSULTANT ~n the performance of the ProJect 2, "D~rect Non-Labor Expense" ~s defined as that expense for any assignment ~ncurred by the CONSULTANT for supplies, transportation and eqmpment, travel, commumcat~ons, subsistence, lodging away from home, and similar incidental expenses reasonably ~ncurred ~n connection w~th the ProJect Page 2 B BILLING AND PAYMENT For and in consideration of the professional services to be performed by the CONSULTANT heroin, the OWNER agrees to pay, based on the cost estimate detail at the hourly rates shown in Section 3, at page number 3-1 of Exhibit "A"(the Proposal) which is attached hereto and incorporated herewith by reference, a total fee, ~ncludmg reimbursement for direct non-labor expenses not to exceed $ 85,000 All d~rect non-labor expenses shall be billed by CONSULTANT to OWNER at actual cost Part,al payments to the CONSULTANT will be made on the basis of detailed monthly statements rendered to and approved by the OWNER through ~ts City Manager or his designee, however, under no c~rcumstances shall any monthly statement for services exceed the value of the work performed at the time a statement is rendered The OWNER may withhold the final ten pement (10%) of the contract amount until satisfactory completion of the Project Nothing contained ~n this Article shall reqmre the OWNER to pay for any work which is unsattsfactory, as reasonably determined by the C~ty Manager or his designee, or which ~s not submitted in comphance with the terms of this Agreement The OWNER shall not be mqmred to make any payments to the CONSULTANT when the CONSULTANT is in default under this Agreement It ~s speaifically understood and agreed that the CONSULTANT shall not be authorized to undertake any work pursuant to this Agreement which would reqmre additional payments by the OWNER for any charge, expense, or reimbursement above the maximum not to exceed fee as stated, without first having obtained written authorization from the OWNER The CONSULTANT shall not proceed to perform the servmes hsted in Article III "Additional Services," without obtalmng prior written authorization from the OWNER C ADDITIONAL SERVICES For additional servmes authorized in writing by the OWNER in Article III heremabove, the CONSULTANT shall be paid based on the Schedule of Charges at the hourly rates shown ~n Section 3, at page 3-1 of Exhibit "A" (the Proposal attached hereto Payments for additional services shall be due and payable upon submission by the CONSULTANT, with CONSULTANT's regular monthly statement as prowded for above Statements shall not be submitted more frequently than monthly D PAYMENT If the OWNER fails to make payments due the CONSULTANT for professional services and expenses w~thln 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 the said sixtieth (60th) day, and, ~n addition, the CONSULTANT may, after g~vang seven (7) days written notice to the OWNER, suspend services under this Agreement until the CONSULTANT has been paid in full all amounts then due and owing for services, expenses, and charges, prowded, however, nothing here~n shall require the OWNER to pay the late charge of one Page 3 percent (1%) set forth herein ff the OWNER reasonably determines that the work is u~tsatasfactory, in accordance wath thas Article V, "Compensation" ARTICLE VI OBSERVATION AND REVIEW OF THE WORK The CONSULTANT wall exercxse reasonable care and due diligence in discovenng and promptly reporting to the OWNER any defects or deficlencaes in the work of the CONSULTANT or any of CONSULTANT's subcontractors or 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 entatled to retain copaes of all such documents The documents prepared and furnished by the CONSULTANT are antended only to be applicable to this Project, and OWNEI~'s use of these documents in other projects shall be at OWNER's sole risk and expense In the event the OWNER uses any of the mformataon or materials developed pursuant to this Agreement an another project or for other purposes than specffied herein, CONSULTANT is released from any and all habthty relating to their use an that project ARTICLE VIII INDEPENDENT CONTRACTOR CONSULTANT shall provade servaces to OWNER as an independent contractor, not as an emplgyee of the OWNER CONSULTANT shall not have or claim any right arising from employee status ARTICLE IX INDEMNITY AGREEMENT ~he CONSULTANT shall lndemmfy and save and hold harmless the OWNER and its officials,i officers, agents, and employees from and agmnst any and all hablhty, claims, demands, damagesi losses, and expenses, ancludmg, but not hmlted to court costs and reasonable attorney's fees racom'ed by the OWNER, and mcludmg, without hmatatlon, damages for bodily and personallmjury, death and property damage, resulting from the neghgent acts or omissions of the CONSULTANT or 1ts officers, agents, employees, subcontractors or subconsultants in the execution, operataon, or performance of this Agreement Nothing an th~s Agreement shall be construed to create a llablhty to any person who is not a party t~ this Agreement, and nottung hereto shall waive any of the parties' defenses, both at law or eqmty, to any claim, cause of action, or htagatlon filed by anyone not a party to this Agreement, mcludang the defense of governmental immunity, which defenses are hereby expressly reserved Page 4 ARTICLE X INSURANCE Dunng the performance of the servmes under th~s Agreement, CONSULTANT shall mamtmn the following insurance coverage w~th an insurance company licensed to do business m the State of Texas by the State Insurance Commission or any successor agency that has a rating w~th A M Best Rate Carners of at least "A-" or above A Comprehensive or Commereml General Lmbthty Insurance w~th boddy ~njury hm~ts of not less than $500,000 for each occurrence and not less than $500,000 ~n the aggregate, and w~th property damage hm~ts of not less than $100,000 for each occurrence and not less than $100,000 m the aggregate B Automobile L~abfl~ty Insurance with bodily ~njury hm~ts of not less than $500,000 for each person and not less than $500,000 for each acmdent, and w~th property damage hm~ts of not less than $100,000 for each accldem C Worker's Compansatlon Insurance m accordance w~th statutory requirements, and Employers' Lmb~hty Insurance w~th hm~ts of not less than $100,000 for each accident D Professional Lmbfl~ty Insurance with hm~ts of not less than $1,000,000 annual aggregate E The CONSULTANT shall furmsh ~nsurance certificates or insurance pohmes at the OWNER's request to ewdence such coverage The ~nsurance pohcles shall name the OWNER as an addmonal insured on all such pohc~es to the extent legally possible, and shall contmn a prowslon that such ~nsurance shall not be cancelled or modffied w~thout thirty (30) days' prior written not,ce to OWNER and CONSULTANT In such event, the CONSULTANT shall, prior to the effective date of the change or cancellation dehver to OWNER ~nsurance pohc~es or certificates furmsh~ng the same coverage ARTICLE XI ARBITRATION AND ALTERNATE DISPUTE RESOLUTION The part,es may agree, but are not required to settle any d~sputes under this Agreement by submitting the d~spute to arbitration or other means of alternate d~spute resolution, such as medmt~on No arbitration or alternate dispute resolution arising out of or relating to th~s Agreement, ~nvolwng one party's disagreement, may ~nclude the other party to the d~sagreement without the other party's approval ARTICLE XII TERMINATION OF AGREEMENT A Notwithstanding any other pmws~on of th~s Agreement, e~ther party may terminate by glwng thirty (30) days' advance wmten not,ce to the other party P~e5 B This Agreement may be tenmnated in whole or ~n part an the event of eather party substantmlly failing to fulfill ats obhgataons under thas Agreement No such terunnatmn vail be affected unless the other party ~s gaven (1) written notice (dehvered by certified mml, return receapt requested) of intent to termanate and settang forth the masons specifying the non-performance, and not less than tharty (30) calendar days to cure the faalure, and (2) an opportunity for consultataon vath the terminating party prior to termination C If the Agreement as terminated prior to completion of the services to be provided hereunder, CONSULTANT shall lmmedmtely cease all services and shall render a final bill for services to the OWNER vathln thirty (30) days after the date of termination The OWNER shall pay CONSULTANT for all servmes properly rendered and satasfactorfly performed and for reimbursable expenses to termanatlon incurred prior to the date of termination, ~n accordance w~th Article V "Compensatmn" Should the OWNER subsequently contract with a new consultant for the cont~nuataon of services on the ProJect, CONSULTANT shall cooperate ~n providing information The CONSULTANT shall turn over all documents prepared or fumashed by CONSULTANT pursuant to thas Agreement to the OWNER on or before the date of termanataon, but may malntmn copaes of such documents for ~ts use ARTICLE XIII RESPONSIBILITY FOR CLAIMS AND LIABILITIES Approval by the OWNER shall not constitute, nor be deemed a release of the responsabfllty and habflaty of the CONSULTANT, ats officers, employees, agents, subcontractors, and subconsultants for the accuracy and competency of thear work, nor shall such approval be deemed to be an assumptxon of such responslbthty by the OWNER for any defect an the work prepared by the CONSULTANT, ~ts officers, employees, agents, subcontractors, and subconsultants .ARTICLE XIV NOTICES All notaces, commumcattons, and reports reqmred or permatted under th~s Agreement shall be personally dehvered or marled to the respeetave partaes by deposltang same in the Umted States mini to the addresses shown below, by means of certffied marl, remm receipt requested, unless othervase specffied herein Page 6 To CONSULTANT To OWNER Louis Berger & Associates, Inc City of Denton, Texas Steve Marsh, Manager of Energy Services City Manager 5840 Bal¢ones Drive, Suite 200 215 East McKlnney Austin, Texas 78731 Denton, Texas 76201 All notices shall be deemed effective upon receipt by the party to whom such notice is given ARTICLE XV ENTIRE AGREEMENT This Agreement, consisting of ten (10) pages and one (1) exhibit, 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, commumcatlons, 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 competent jurisdiction 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 replace such stricken provision with a valid and enforceable provision which comes as close as possible to expressing the intention of the parties hereto respecting the stncken provision ARTICLE XVII COMPLIANCE WITH LAWS The CONSULTANT shall comply with all federal, state, and local laws, roles, regulations, and ordinances applicable to the work covered hereunder as they may now read or be hereafter amended ARTICLE XVIII DISCRIMINATION PROHIBITED In performing the services reqmred hereunder, the CONSULTANT shall not discriminate against any person on the basis of race, color, religion, sex, national ongm or ancestry, age, or physical handicap Page 7 ARTICLE XIX PERSONNEL A The CONSULTANT represents that at has or will secure, at ~ts own expense, all personnel reqmred to perform all the professional services reqmred under th~s Agreement Such personnel shall not be employees or officers of, nor have any contractual relations w~th the OWNER CONSULTANT shall inform the OWNER of any conflmt of anterest or potentml conflmt of ~nterest that may arise dunng the term of th~s Agreement B All services reqmred hereunder will be performed by the CONSULTANT or under its direct superv~saon All personnel engaged an work shall be quahfied, and shall be authorized and pernntted, under state and local laws, to perform such services ARTICLE XX ASSIGNABILITY The CONSULTANT shall not assign any interest in th~s Agreement, and shall not transfer any interest an th~s Agreement (whether by assignment, novation, or otherwise) without the prior written consent of the OWNER ARTICLE XXI MODIFICATION No wmver or modffieat~on of this Agreement or of any covenant, condition, or hm~tat~on here~n contmned shall be vahd unless an writing and duly executed by the party to be charged therewath, and no ewdence of any watver or modfficataon shall be offered or received in evidence m any proceeding arising between the pames hereto out of or affecting th~s Agreement, or the rights or obllgat~ons of the part,es hereunder, and unless such wmver or modfficat~on is ~n wntang and duly executed by the part, es The part,es further agree that the prows~ons of this Amcle will not be wmved unless as set forth here~n ARTICLE XXII MISCELLANEOUS A The following exhibits are attached to and made a part of thas Agreement Exl~b~t "A" ---CONSULTANT's Proposal, dated October 12, 1998 B CONSULTANT agrees that OWNER shall, until the expiration of three (3) years after the final payment under thts Agreement, have access to and the right to examine any dtrectly pertinent books, documents, papers, and records of the CONSULTANT mvolwng transactions relating to th;s Agreement CONSULTANT agrees that OWNER shall have access dunng normal working hours to all necessary CONSULTANT facilities and shall be prowded adequate and appropriate working space ~n order to conduct andats Page 8 ~n comphunce w~th th~s section OWNER shall g~ve CONSULTANT reasonable advance not,ce of ~ntended audits C Venue of any stat or cause of action under thxs Agreement shall he exclusively ~n Denton County, Texas Th~s Agreement shall be governed by and construed in accordance w~th the laws of the State of Texas D For the purpose of th~s Agreement, the key person who shall perform most of the work hereunder shall be Steve Marsh, Manager of Energy Servmes of CONSULTANT Steve Marsh shall also serve as OWNER's pnnmpal point-of-contact on the ProJect However, nothing here~n shall hm~t CONSULTANT from using other quahfied and competent members of ~ts firm to perform the professional services reqmred here~n E CONSULTANT shall commence, carry on, and complete any and all projects w~th all apphcable d~spatch, m a sound, economical, and efficient manner and ~n accordance w~th the provisions of th~s Agreement In accomphsh~ng the ProJect, CONSULTANT shall take such steps as are approprmte to ensure that the work ~nvolved ~s properly coordinated w~th related work being camed on by the OWNER F The OWNER shall assist the CONSULTANT by placing at the CONSULTANT's d~sposal all avmlable ~nformat~on pertinent to the Project, lnclud~ng prewous reports, any other data relative to the ProJect, and arranging for the access thereto, and make all prows~ons for the CONSULTANT to enter m or upon pubhc and private property as reqmred for the CONSULTANT to perform servmes under th~s Agreement G The captions of th~s Agreement are for ~nformat~onal purposes only, and shall not ~n any way affect the substantive terms or conditions of this Agreement IN WITNESS WHEREOF, OWNER and CONSULTANT have hereby executed th~s Agreement m quadruphcate original counterparts, the OWNER acting by and through ~ts duly- authorized C~ty Manager, and the CONSULTANT acting by and through ~ts duly-authorized undersigned officer on th~s the /~-~ day of t~g/ffffff-,c~.A~/ ,1998 "OWNER" CITY OF DENTON, TEXAS MICHAEL r JE ,~ITt MANAOER Page 9 ATTEST, JENNIFER WALTERS, CITY SECRETARY By~ ']g- _ APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY "CONSULTANT" LOUIS BERGER & ASSOCIATES, INC By _~~~~- ATTEST F \shared\dept~LGL\Our Documents\Contractsk98\Valuat~on Study & Report doc Page 10 Loms Berger & Assoaates, Inc A Member of the Berger Group 5840 Balcones Drive, State 200, Austin, TX 78731 Tel 512 459 2126 · Fax 512 459 2138 Engineers · Economists · Planners · Appraisers October 12, 1998 Mr Ray Wells City of Denton Purchasing Department 901-A Te?cas Street Denton, TX 76201 Subject Valuation of Electric Transmission & Dlslxlbutlon System (RFSP # 2286) Dear Mr Wells Thank you for glvmg us this opportunity to respond to the Request for Proposal #2286 Vahtat~on of Electric Transmission &Dtstrtbutton LBA Energy Services ts a select group of professionals at Louis Berger & Associates, Inc (LBA), which has been involved tn the energy and management consulting business since 1989 LBA staff has extensive experience in performing cost of service and rate studies for large m~mlclpal electric uulmes, mcludmg those regulated by state regulatory bodies LBA is also extensively involved with industry deregulation and economic development issues Our services include sU'ateglc planning, economic and financial analyses, lxansmlsslon cost of service and rate unbundhng, regulatory support, restruc.tunng and power supply planning, gas supply planning, management assessments, competitive assessments, engineering design, strategic marketing planning, and utility valuation I have prepared an attachment and enclosures describing LBA and our approach to providing Denton Municipal Elect-nc (DME) with the requested services We propose to complete the specified work assignment within eight weeks and a total estimated not-to-exceed budget of $85,000, which includes all fees for protesslonal services and anticipated expenses The proposal ts organized into ten tasks From our perspective all ot the tasks are important and integral to a comprehenst',e approach to performing a valuation study of transmission and distribution assets The initial task ts a kickoff meeting the purpose of xvhlch is to establish the framework for working together The overarchtng goal of the kickoff meeting is to optimize the use of LB, A resources by beginning with clear statements of the questions to be ansxvered and the issues of co{~ekrn Too often, consultants tend to concentrate on addressing questions for which available techmques can provide relatively precise answers For LBA, the bottom line is that techniques are subordlrmte to the goals of the program The LBA team ~s prepared to facilitate discussions w~th DME staff to explore the practical implications of deregulattnn on DME bustnes~ policy Joining LBA on this assignment are two experts tn valuation methodology Mr Dennis DeeGear is V~ce President for Capital Appraisal Group the premier consulting firm ~peciahzlng ,,aluat~on studies for nearly every taxing authority in Texas Mr DeeGear brings more than two decades of experience assessing the value ot utthty systems Hfs expertise wdl prove useful for deterrnmmg EXHIBIT A October 12, 1998 Page 2 market value of the electric transmission and dismbutlon system and the fiber opttc telecommumcat~on system Dr Anthony Lawrence, an independent consultant ~s an cconom~st and econometrician with 25 years experience ~n the electric utility industry Dr Lawrence specializes m the development of mathematical methods of public utility planning and pncmg in a competmve environment He will provide leadership for the team with the implicit valuation of extant capital assets and determmatlon of customer value and system cost ot differential services We are committed to providing DME w~th the highest level of service We have included numerous examples of project experience, many of which were the result of follow-on assignments or referrals I, personally, have had leadership roles in the valuation studies for C~ty Pubhc Service of San Antonio, AusUn Energy, and Lubbock Power & L~ght We would be pleased to discuss our approach on this project and expand on our experiences from other projects as necessary Thank you again for g~wng us this opportunity I hope you can apprecmte how ~mportant it is to us to be among those considered to work with DME on th~s project If you require adthuonal reformation or discussion, please call me in Austin at (512) 459-2126 Manager of Energy Services Attachment ~' Section I Discussion of Approach INTRODUCTION With the advent of deregulation, the restructunng of the utfldy ~ndustry has caused every utlhty owner to rethink the ~'ad~tlonal relationships between supply and demand The prophecy that customers would one day have choices among multiple supphers ~s closer to reahty today than it ever has been before As a consequence, there is increased pressure being placed on s~xateglc decision making and the business of a mumcipal utthty Although tradmonal technical and economic valuation studies stdl bnng meaningful ~ns~ght into the decision making process, other factors are now comphcatmg the framework within which business strategies are formulated As deregulation m~tmt~ves advance and new entrants launch aggressive programs to capture market share, pubhc power utthtms m particular are faced with the mixed prospect of both opportumty and meonvemence This has become no place for a tim~d agenda Lores Berger & Assomates, Inc (LBA) ~s pleased to submit this proposal to provide strategic valuation services to Denton Mummpal Electric (DME) We arc certain there are positive opportunmes for DME to continue as a regional suppher and we are anxious to assist the utthty w~th making an orderly transition to a deregulated market In th~s proposal we bring together a unique blend o£ marketing, engmeenng, and management experience to assure DME that the program enwsloned by you is dehvered on budget and on t~me, and that the customer service and business management goals of DME are met LBA ~s a multl-d~sc~phnary international consulting firm specmhzmg m management and engmeenng servmes Our experience is extensive, ranging from compettuve assessments and resource planning to orgamzat~onal rewew and legislative and regulatory support We understand the competitive forces impacting the ~ndus~y and have successfully conceived and ~mplemented strategies that are responsive to the pressures of the marketplace Based on the ~ssues described m the Request for Proposal (RFP), we have developed a focused and ~nnovat~ve program for your consideration We believe this program can both influence change and help prepare DME to be successful m competing ~n a restructured elect'nc utd~ty ~ndus~ry APPROACH The approach we propose ~s grounded on our current understan&ng of the potential uses of the valuation information by the C~ty We plan to conU'ast the value of the DME transmission and distribution system from both pubhc and private ownership structures We are mindful that the results of th~s valuation study could be used by DME and the Denton commumty to assess the benefit of mumc~pal ownership The valuation assessment would be prepared considering two primary scenarios the continued operation of DME as a mumc~pal utility m a new competmve enwronment, and, a new uuhty structure featunng all or portions of DME sold to private entrees In describing the scenarios, the following stakeholder perspectives will be addressed · Value to the City of Denton · Value to the Denton commumty · Value to the customers LBA Energy Servtces Denton Municipal Ut#/ty Valuat/on Study 1-'1 Section 1 Discussion of Approach TABLE 1-1 Comparison of Benefits Pubhc versus Private Ownershtp Stakeholder and Vo!-afion Perspective Pubhc Ownershtp C~ty Perspective · General fund transfer · Franchise fees · Ad valorem taxes · Annmt7 for sale proceeds Commumty Perspective · DME employment · Area economic development · Other ad valorem taxes · Bus~ness/job retentton · ,,Profit" extraction from comrmmlt~ Customer Perspective · Rates · Services · Rellablbt~ Table 1-1 summarizes the stakeholder perspectives under two ownership scenarios The first scenario ts pubhc ownership as a mumctpal utthty The second scenario ts private ownershtp as an ~nvestor-owned utthty (IOU) The denvatton of value from these three stakeholder perspecttves under each ownership scenario would be addressed as follows The Ctty Perspectwe Estabhshtng a selhng prtce for potential buyers of the DME transmxsston and d~s~but~on system ts a major component of describing the City's perspeettve Conventtunal valuatton methodologtes wdl be used w~th consxderable emphasts placed on the benefits derived from "luture earnings" The esttmates wdl provtde the basts for contrasting the net benefit to the C~ty Ex~st~ng transfers and subsides prowdcd by DME, as a mumc~pal utlhty owned by the C~ty, wdl be compared to the potenttal tax and annmty ~ncome avadable through a private ownershtp structure The three valuation methodologtes prescribed by the RFP wtll be used to derive the sethng price esttmatc A thscusslon of the valuation methodologtes to be employed ~s presented below Informatton that may be avadable fi-om DME descnbmg any strategtc marketing mxttattves of the utthty wdl be used to estabhsh a foundation for exh'apolatmg the perspectives to the future DME business posttton Central to our analysts wdl be a focus on the quantifiable benefits of muntctpal ownershtp of an electric utthty contrasted to those derived from private ownership Thts analysts wdl tdentlfy address the many tssues, both tangible and mtang~ble, ofpubhc ownersfup of the DME transm~sston and dtstnbut~on system To the extent we can, we will quantify the tntang~ble benefits based on our understandmg of market dynamics and documentatton of actual DME pohcy and commumty aettvtty At mtmmum, our analysts wtll address these tssues on a comparable bas~s ~ LBA Energy Servtces Denton Mumctpal Ubhty Valuabon Study 1-2 Section 1 D scuss on of Approach A range of business pos~ttons will be assumed to promde a measure of sensitivity to future market condmons Valuation of the DME system will be made from two bustness-umt perspectives transmission and distribution, and distribution only Based on the results of discussion with DME staff at the project kink-off meeting, we will consider two different sale scenarios Key components of the transmission system and the entire transmission and dismbutton system If a more expanded analysis were reqmred by DME, we would be pleased to collaborate with you to frame the optional approach Our concern at this point Is that some components of the DME transmission system are not considered integral to the sale of generation assets currently owned by DME Similarly, some po~ons of the DME transmission system could be regarded as not integral to the reliable operation of the DME transmission and dtstrlbutmn system As mentioned above, three valuation approaches will be used to estimate the selhng price of the transmission and distribution system from the City perspective They are · Cost · Income, and · Comparable sales (market) A fundamental assumptmn is that there are true indicators of value for the purposes of our analysis Under the Cost Approach, the two conventional methods are the Reproduction Cost Method and the Replacement Cost Method Typically, both are evaluated and compared The Reproduction Cost Method would construct the asset exactly as it exists today and allo'~ for an assessment of observable condition for issues such as age, functional obsolescence, and ordinary wear and tear The useful life of the asset is also taken into considerat~on in the value estimate The Replacement Cost Method uses current technology and reconstructs an asset capable of promdtng the same generic function, but may not exactly reproduce the asset The Replacement Cost Is also adjusted for age and rernammg useful life Typically, the Replacement Cost method ts applied to older assets where exactly reproducing the asset for the purpose of determtmng value ts not practmal While some emphasis will be placed on the Cost Approach, we intend to use tt to establish a benchmark for value and will focus more on the Income Approach Therefore, we will construct value under the Cost Approach by relying on DME data as tt relates to book cost and information DME has on fixed assets The second approach to valuation ts the Income Approach This approach is used widely to take into accoant the business structure of operating a company We propose to value your t~o primary business units under the Earnings Stream Method We will use discounted c,~sh flow analysi~ We will develop value based on the earnings of DME We will include as many of the tangible and intangible components of value These can appear m the form of revenue, m-heu-of franchise elements, investment income, ad valorem taxes, and other items as can be identified which would add to the earning value or net worth of DME to the City, either from a sale or retained ownership scenario For the purpose of comparison, we will employ the proprietary methodology developed by the Capital Appraisal Group for assessing taxable value of faclht~es owned and operated by private utilities in Texas The third approach to be considered ts the Comparable Sales or Market Approach LBA will review the industry for recent sales of transmission and distribution systems comparable to DME and include this information in our report To supplement this mformatlon, we wdl rely on the extensive database of the Capital Appraisal Group to develop a statistically representative sample of comparative values ~ LBA Energy Services Denton Mumctpal Utihty Valuabon Study 1-3 Section '1 Discussion of Approach Once the three approaches are taken ~nto cons~deratton, a rc,~onclhat~on process wall take place which will determine whtch approach ~s the better mdmator of value and why we beheve so Based on our analys~s, we will provide an optmon of value of the transmission and d~stnbut~on system, and the d~stnbution system as a stand-alone entity The Communtty Perspecttve The communtty perspective would be quantified by assessing the d~rect and md~rect benefits of the transmission and d~strthut~on system functions of DME as a major business ~n Denton Employment, economm development, and local business commitments prowded by DME and the corresponding ~mpact on the commumty would be esttmated under both ownership scenarios By contrast, private ownership of the transmission and d~stnbut~on system could provtde a different approach to economm development plus additional ad valorem tax revenue to other governmental ent~ttes such as county government and independent school d~str~cts S~m~larly, the negative tmphcat~ons of profit being extracted from the commumty for the benefit of rem~,te ~nvestors would be tncluded m th~s assessment The Customer Perspecttve The customer perspective would be evaluated on a comparable basis of selhng or retaining the transmission and d~stnbutmn system Under mumc~pal ownershtp customers have d~stmct advantages through partm~pat~on m local governance structures to control policy on the avadabthty and scope of rates, servmes, and system rehabd~ty Under a private ownership scenario, decisions of pohcy will hkely be made remotely w~th the interest of the investor being a s~gmfieant contributing factor LBA wdl examine and quantify the economm attrtbutes derived by the customer under each scenario Rates, customer service, and rehabthty variables wdl be developed to portray the strengths and weaknesses of each SUMMARY The three stakeholder perspectives wtll be examined and &scussed ~nd~wdually Consideration w~ll be g~ven to quantify when possible and potentml overlap and ~mpact of perspectives on the value analyses Care wdl be taken to develop accurate esttmates of value based on the existing revenue streams The revenue from potential new markets wall be forecasted d~rectly from a business opportumty assessment, if one does not currently ex~st The last two sessions of the Texas Legislature have resulted ~n progress toward the restructunng ol the electric market m Texas The framework for deregulabon m Texas ~s being crafted now and the 76a~ Legislature promises to be dynamm and eventful Some of the questions to be addressed include · W~ll mummpal utilities and electrtc cooperatives be allowed to determine when Customer Choice would be allowed w~thm their service terntortes9 · Wdl the schedule for deregulation proposed m the Governor's Btll of the last session be adopted, or w~ll the diffieulbes experienced m Cahfom~a cause lawmakers to embrace a more dehberate t~metable9 · Wtll consumer protectmn ~nmabves reduce lawmakers to empower the Pubhc Utd~ty Commission to have expanded regulatory oversight of ut~hty operations9 · Wdl new rehabthty standards for d~stnbutmn system operation be useful or become a burden to mumc~pal utflmes9 · W~ll hm~ts be placed on the magmtude of stranded ~nvestment allowed for recovery9 · Wdl consumer advocate pos~t~ons cause guarantees of no over-recovery of stranded ~nvestment9 LBA Energy Servtces Denton Muntctpal Uttltty Valuatton Study '1-4 Section 1 D scuss,on of Approach · What method for calculating stranded ~nvestment will be adopted9 Will the Bush-Mauro governor's race cause new emphas~s to be placed on the mr ennss~ons of power plants grandfathered under the Clean A~r Act of 1978'> · Will clean mr compliance costs be included as part of stranded recovery, or become a component of wn:e charges9 · W~II new requirements be imposed on utd~t~es to guarantee that lowqncome customers have unrestricted access to energy efficiency options9 - Wdl renewable resources be excluded from the integrated resoume planning process'~ · Wall transmission planning continue to be a utility function or will emphasis be shifted to the Independent System Operator9 · Will home ut~httes continue to have control of the relationship with the customer, or will a new model for bdhng and metering be ~mposed9 · With the exit of many key players from the 75th Legislature, who will be the champion of deregulatton m the 76th Leglslamre'~ Although new law pertaining to deregulation of the electric ~ndustry was not enacted by the 754, Texas Legislature, restructuring mtuatlves were launched and, we believe, change is inevitable The difficulty being experienced by Cahfomla with Implementation of the Customer Choice experiment has g~ven cause for a more deliberate approach to be taken ~n Texas However, ~t is not clear yet ho~v legislators will heed the signal and react ~n the 76th Legislature Overall, the transition to Customer Choice ~n Texas does not have a predmtable course and, as a result, mformed demsions wdl reqmre constant research and tracking of issues Consistent with th~s thinking, we propose to incorporate a schedule for deregulation as part of our quant~ficatton of the long-term benefits of continued municipal ownership l'hls schedule wall feature an orderly transition to deregulation Estimates of at rlsk load w~ll be developed ~n full collaboration with DME staff and their first-hand knowledge of customer sensitivity to price, customer service, and rehabthty Sensitivity to competition will be estimated and the msult~ng potential impact on the value of the transnnss~on and d~stnbut~on system quantffied The results of the analysis wdl be summarized and presented in a draft report for review by DME staff The document will present the individual assessment components and summarize the findings for the t~o sale scenarios The outhned schedule assumes submission of a completed draft of the assessment for review and comment by DME We will make ourselves avmlable to present these findings ~n a meenng or workshop Following th~s meeting, DME staff comments will be incorporated into a final report for submittal and presentation to the DME Board and Denton C~ty Council OPTIONAL CONSULTING SERVICES LBA uses General Electnc's Market Assessment and Portfolio Strategics (MAPS) model for evaluating market-plannmg options Developed over the last 15 years by GE, MAPS captures the complex interaction of generation and transnnsslon systems MAPS mtegrates into a single model the detailed generation, load, and transnnsslon modehng The MAPS model reqmres no more system data than is used to run frecstandmg producV_on s~mulation and load-flow models However, through its integration of gencratlon and transn'usslon models, MAPS provides hour by hour simulation of thc power system In MAPS, transmission hne flows on actual or scheduled paths can be determined chronologically with ~dentlficatlon of hours where limits are reached S~mdarly, location-based market clearing prices (spot prices) can bc calculated hour by hour on a nodal or zonal basis MAPS does these s~mulat~ons for systems as large as ~ LBA Energy Servtces Denton Mun/ctpal Utthty Valuatton Study 1-5 Section 1 Discussion of Approach 20,000 nodes, 80 compames and 2,500 generating un]ts, thus making ~t unnecessary to s~mphfy or create "eqmvalence" studies of the areas of interest Many of the market scananos that will be considered m th~s project would benefit trom a MAPS evaluation In addition to providing a powerful market assessment tool, MAPS could be useful for spemfic apphcat~ons, such as Evaluating the sawngs derived from pooled economic d~spatch agreements, · Characterizing the impact of transmission pricing models by using representative point-to-point transaction data, · Analyzmg the ~mpact planned additions on future market prices, and, · Analyzmg the economics of potential power sales or purchases LBA ~s currently using MAPS to assist chents wtth plannmg and evaluating market strategies (e g, retad and wholesale transactions) ~n the complex retatl market of the New England Power Pool Although r~t yet used ~n Texas, the ERCOT database has akeady been developed by LBA If requested, LBA wdl make a formal presentation to DME on the potentml apphcat~ons of MAPS System Reliability Assessments As part of a Scenario Analys~s, LBA can assist DME w~th an assessment of transm~ssmn system and generation system rehabthty The transmission system rehahth~y ~s calculated by LBA through simulating thc mflhons of generator, hne, and substation failures that could occur m thc system In thc LBA approach, hnc overloads, low voltages, and system tslandmg are causes for loss of load and are characterized ~n terms of megawatt-hours (MWH) A s~mulatmn can be repeated any number of times to study the rehabd~ty of alternative generabon and load scenarms Fatlures hkely to cause lengthy loss of customer load and/or unduly interruption of power sales and purchases are ~dent~fied and ranked by their MWH s~mulatmn results The network m represented m detail for both the local load area and the large ~nterconnected network of the Electric Rehabthty Counctl of Texas The analys~s uses both generation performance data and ~ransmlssmn system elec~rmal and performance data The major part of thc transmission data ~s evadable m the public dommn The generation system rehabtl~ty ~s calcula~d by s~mulatmg thc mdhons of possible generation and transmlssmn fatlures that could occur ~n thc system The rehabtht~ of thc generation supply ~s first calculated without transmission constraints over a w~dc range of load levels Then transmission constraints are included to determine their relative effect on rehabd~ty over the same range of load levels Studies show that the Vcansmiss~on system ~s usually less rehable than generation at lower load levels The system components affecting rehabfl~ty are determined by th~s analys~s Transact~uns outside the local area causing a power flow through the local transm~ssmn system are ldentffied These may have a detrimental effect on the local rehabthty and abtl~ty of the local area to operate successfully m thc market Thc major part of the transmission data ts avatlable m the pubhc domain The results of rehabthty studies will be useful for characterizing power supply alternatives DME must consider ~n a deregulated enmronment For example, because there may be ~ransmlss~on system rehabdlty weaknesses ~n the Denton region, DME spmmng reserve may have greater importance to nmghbonng uttht~es than is recogmzed through current operating agreements LBA Energy Servtces Denton Mumctpal Utthty Valuatton Study 1-6 Section I Discussion of Approach New Products and Services A cornerstone of the LBA consulting philosophy Is a commitment to developing and applying the best data avadable to support planning funeUons enueal to our chents' strategic object,yes Accurate data on customer usage characteristics, preferences and behavior are only a part of the p~ctore Apphcatlon and integration of these data into a system which is dynamic and accessible provides the ultimate data leverage LBA engineers, economists, and mformat~on system professionals fluent w~th the various object~ves and issues m formulating methodological and software solutions are devoted to getting the best data to (and from) each system end-user The planmng areas most reliant on quahty market assessment data are program concepUon and desxgn of new products and services Clearly, a major component of all program-related plannmg ~s an accurate and up-to-date database on the potentml costs and revenues that could be expected from launching a new product or service Along with product marketing and penetration estxmates, these data are most essential to ~dentffymg and projecting economm and achievable results Depending upon the specific need of our chent, studies of market potential may vary m the resobaUon of the estxmates (e g, nat~on-wxde, service temtory, segment, region, district, or rate class), the coverage of thc product or service (e g, security systems, apphance maintenance serwce, Internet service), and the analytic methodology employed (e g, macro/m~cro estimation, or md~vidual benefit weighted estimation) The LBA product and screemng methodology ~s designed for flexxbdity required by such custom estimation of techmcal potential A precursor to launching new products and services ~s the development of an effecUve marketing strategy and plan In a deregulated market, margins can be expected to skunk and factors beyond price wall receive more emphas~s from consumers Image will be essenUal to an effecUve markem~g strategy LBA xs available to assist DME m developing a strong, ws~ble corporate ~denuty m response to changing market forces The corporate ~dentlty must be emphasized ~n the development of a marketing plan, which ~s designed to maintain and enhance utility revenue production, and ~mprove customer service In order to meet this ob.lect~ve, there are a number of related project act~vmes that must be completed · Conduct a marketing audit of DME current programs and plan Identify spemfic strengths, weaknesses, opporUmmes and threats, whmh ~mpact the utxhty's current and projected marketing efforts · Assess customer needs and atutudes to assess program opportumt~es and assess the perceptxons of the utility m the market · Usc (he audit data to determine a relevant portfoho of products and services 1 nked to meeting customer need · Incorporate a comprehensive communicataon plan to convey the market benefits and opportumtxes to customers and stakeholders · Work ~nteract~vely w~th DME to ensure common understanding and consensus on the approach and results of the study effort The LBA project team has developed a flexible project approach that ~s designed to provide DME w~th needed marketing support within a framework grounded m utihty objectives and market reahtles F~gure l-1 prowdes the general approach ~n mowng DME from ~ts current market pos~Uon to one that allows the utility to succeed A detailed dehneat~on of spemfic project acUv~t~es ~s presented ~n Section 3 of thxs proposal In developing th~s approach, there are a number of considerations that help ensure ~ts apphcabthty to DME These include the following ~ LBA Energy Services Denton Municipal Ubhty Valuabon Study 1-7 Section 1 Discussion of Approach · Flexibility -- The approach is designed to be flexlblc and qutckly modxfied and adapted to account for umque elements of the DME markets The lncluslon of initial project activities is geared to identify areas that require greater emphas~s and refinement of the process · Uuhty Team Involvement -- The project is structured to incorporate interaction with a utlhty market planning team The use of a team approach serves to permit comprehensive responses across utility perspectives and assists tn establishing an internal cntmal mass to champion the markettng cause for DME · Comprehenstve -- The project as proposed includes the full range of market elements These ~nclude customer needs, competttor tmpacts, regulatory issues, experiences from previously administered programs and commumcatlons Th~s ensures that all elements will be covered · Sequential -- The approach as proposed xs based on completing a series of sequential tasks, all destgned to pmvtde the necessary lnfonnatton to make reformed dectslons m subsequent tasks This ensures that the reformation in the process ts properly apphed and that the most recent and available data ts used The LBA project approach is designed to be flexthle m refining any of the proposed acttvittes to tailor the results to the needs of DME The approach incorporates the need to contmually assess project progress and identify opportumttes to modify the approach to cost-effectively address DME objectives Fxgure 1-1 Aonroach to Strategy Develooment Ma~eu:rPe~u'tltm n i Alternativei I Strateg'ei I Marketplace [~ · Orgamzat~onal Development · Nmhes Future Industry Structure · Innovation Pncmg,S~'ategy · Leg~slanve/Regulatory · Marketing, Sales & · New Products and Services Assessment Promotion · Learmng Curve Technology Assessment · Products and Servxces · Value Market Factors Con~'acts~· Dlfferenlatton · Customer Factors · Strategic~Allxances Compent~ve Factors BenchmarkmefBest Competitive Market Poq~tlon ~ LBA Energy Servtces Denton Mumctpal Utthty Valuabon Study 1-8 Section 2 Scope of Services TASK 1 KICKOFF MEETING A k~ckoff meeting would be held m your offices orgamzcd around a mutually developed agenda w~th duration not to exceed two full days The purpose of the meeting ~s to introduce thc key LBA team members to thc DME project management staff and thscuss how best to work together Clanficatmn of the LBA approach and d~scussmn of DME perspectives would be addressed at th~s t~mc We cnwslon an agenda that could be addressed m four separate sessmns Session I Deregulation Issues The purpose of the first session ~s to cstabhsh mutual understanding of what we behove to be thc current d~rectmn of electric industry reslructunng There arc three areas of interest Deregulatmn issues to be addressed by thc 76~h Legislature that arc of partmular interest to DME, · Recent activity by the investor-owned uttht~es, power marketers, ~ndcpendent power producers, or other compctmve ent~ttcs within EPCOT, and, · Natmnal deregulation mltlat~vcs Wc w~ll ~mttatc d~scusslon centered on where senmr management behcvcs DME should be posttluncd m thc new competitive market We will report on our knowledge of the actlvlt~es of various market interest groups and how we enwsmn they w~ll attempt to influence lcglslatmn m Texas and nationally Wc d~scuss how these elements would hkely impact thc dctcrm~nation of value of the lransm~ss~on and thstrthutlon system We will examine the scope of external pressures that may influence DME business pohc~es and discuss possible DME responses Session 2 Wholesale Market Plannin~, We wdl thscuss the status of the DME planning program, DME act~wty In the wholesale bulk power market, and regional rehabthty ~ssues We will match recent achtevements w~th prior ~mt~atlves to capture a profile of decision-making structures and processes The d~scuss~on w~ll be focused on · The DME resource plan and planmng process, · DME purchased power agreements, · Regional rehabthty issues, · DME system reliability and the transmisston planmng process, · The market charactenstms of ERCOT, and, L~kely business scenarios Session 3 Market Onuortumt~es Our proposal mctudes prov~slon for developing an estimate of future business opportumty Th~s session would be dedicated to discussion of the data that would be reqmred by the LBA Team to complete the analys~s The agenda would include the review of DME marketing mmat~ves, · ThelLBA data reqmrements to conduct a mm~ sttuat~on analys~s, · The,LBA approach to screening new products and services, LBA Energy Servtces Denton Muntctpal Uttltty Valuatton Study 2-1 Section 2 Scope of Serv,ces · The LBA approach to market assessment, · The LBA approach to orgamzatlonal assessment, · The LBA approach to information technology assessment, and, · Likely DME strategies Session 4 Business Matters The final session would be devoted to concludmg business act~vmes associated with the project These would include · Confn'm pnormes for LBA research activity, · Review the types and availability of data for collection, · Determine the data collection activities (e g, conduct interviews, tour facfllUes, transfer files, etc ) to meet the desired research objectives, · Establish a schedule and budget for research activity, · Identify points of contact and channels of communication, · Confn'm the scope, schedule, and budget of all planned acUvlty, · Prepare a memorandum of understanding of tasks, assignments and responsibilities, and, · Prepare the revised work plan Fmthngs from the kickoff meetmg would be summarized in a memorandum to DME, which would identify all agreed upon changes to the work plan A detailed description of each work assignment and the corresponding schedule and budget would be developed for DME review and authorization in a revised Scope of Servmes document Individual tasks would not be lnltmted by LBA wahout prior written authonzanon by DME During the course of the project, we anticipate there will be large volumes of information to be transferred fi.om DME to LBA To faelhtate conveyance, we suggest that a workspace be identified at DME for LBA to use to review and track relevant mformat~on We request that the space be large enough to accommodate 3-4 people who may be on-site at DME at various rimes during the project We would also appreciate hawng access to clerical support, telephones, fax machines, copy machines etc TASK 2 REVIEW DME DATA LBA will rewew data m the DME data room A hst of shared DME and City services will be developed and submitted to DME for review, edits and addltions TASK 3 DEVELOP pRELIMINARY VALUATION MODELS LBA will develop prehmmary models for the Reproduction Cost Approach, Income Approach, and Comparable Sales Approach TASK 4 RESEARCH LITERATURE FOR COMPARABLES LBA will conduct a review of ~ndustry hterature and known data sources to tabulate comparable sales ol transmission and distribution systems LBA Energy Services Denton Muntctpal Utthty Valuatton Study ~'1~ 2-2 Section 2 Scope of Services TASK 5 DEVELOP COST DATA LBA w~ll rewew available mformatton for DME to develop the assessment of cost Refine the comprehenswe list of shared DME and City serv:ees TASK 6 DEVELOP ESTLMATE OF FUTURE BUSINESS OPPORTUNITY Rewew marketing reformation and forecasts Develop estimate of achievable market potent:al Incorporate findings mto models TASK 7 DEVELOP COMPETITIVE IMPACT SENTIVITIES Interview DME staff Identify and quantify magmmde o£ at risk load Develop impact estimates Incorporate f'mdmgs into models TASK 8. DEVELOP ESTIMATES OF VALUE Fmahze models Identify income statement variations between mtanclpal and IOU ownership TASK 9 DRAFT REPORT AND PRESENTATION Prepare draft report Present findings to DME staff TASK 10' FINAL REPORT AND PRESENTATION Incorporate DME comments into final repor~ Present findings to DME Board and C~ty Council LBA Energy Servtces Denton Mun/ctpal Uttl~ty Valuation Study Section 3 Budget PROFESSIONAL FEES LBA beheves m the identification of a fair price for specific project dehverablcs LBA wdl commit to a fixed guaranteed not-to-exceed professional fee of $75,000 EXPENSES LBA understands the ~mportance of identifying the total cost of a project Unbkc any of our competitors, LBA wall ~dent~fy a fixed amount for expenses and will manage expenditures within that budget LBA estimates project related expenses to be no more than $10,000 Project expenses wdl be based upon actual cost ~ncurred TOTAL FIXED PRICE LBA wall agree to a total fixed price guaranteed not-to-exceed a contract amount of $85,000 COSTING CALCULATION Hourly Rate Average Average Hours Fees Bob Anderson $ ! 50 20 $3,000 Steve Marsh $125 176 $22,000 Dennis DeeGear $125 128 $16,000 Frank Radigan $125 160 $20,000 Tony Lawerence $125 40 $5,000 Kris Rao $70 100 $7,000 Administrative support $40 50 $2,000 Total 674 $75,000 LBA Energy Servtces Denton Muntctpal Ut#try Valuation Study ~ 3-1 Section 4 Schedule LBA proposes ~ complete th~s work assignment w~th 8 weeks w~th ten defined ~sks SCHEDULE ACTIVITY, Week Task i K]ckgffmee~ng andrevlse plan 1~2~] 3 ~ 4 5 6 7 8 Task 2 Rewcw da~ Task 3 Develop prelmanmy models Task 4 Rese~ch hteramre for com~arables Task 5 Develo~p cost dam __ Task 6 Deve$op estunate of ~mxe business Task 7 Develop compe~ave unpacts Task 8 Deve!op values Task 9 Draft, repo~ and present,on Task 10 Final repo~ and present,on LBA Energy Sen~/cos Denton Municipal Ubhty Valuation Study #-1 Section 5 LBA Management Team LBA BACKGROUND AND pHII~OSOPHY Louis Berger &Assoctates, Inc is one of the largest multi-disciplinary consulting orgamzattons m thc world Founded by Dr Louis Berger in 1953, LBA professionals offer expertise m the areas of civil, structural, mechanical and environmental engineering, construction management, program management, planning, environmental sciences, cultural resources, economics, and information services With over 2,500 consultants, LBA has provided consulting and technical services for thousands of projects throughout the Untied states and over 140 nations worldwide Noted mostly for work in the transportation field, Engmeenng News Record consistently ranks LBA in the top 10 percent of engineering firms in the world LBA Energy Services, a select group of professionals at Louis Berger & Associates, Inc, provides a comprehensive range of energy related consulting services including economic and financial analyses, cost of service and rate design, regulatory support, restructunng and resource planning, management assessment, and utility valuatton LBA Energy Services provides services to electric customers and power users, electric, gas, water and wastewater utthttes and other parties involving municipal and investor qwned ut~llttes, public power agencies, independent power producers, private companies, law firms, regulatory agencies, financial mstltut~ons and others Our highly qualified team of economists, planners, engineers and appraisers has been extensively involved in providing support services to the utility industry, from financial analysis and engineering to regulatory support and economic investigations in a wide variety of applications LBA Energy Services currently has 13 employees at the consultant or senior consultant level who are experienced in the utility, energy and economic development fields LBA Energy Services recently won an $8 million multt-year contract with FERC to provide permitting services for power plants Our pnnmpal energy offices are located in Troy, New York, Austin, Texas, and Needham, Massachusetts The proposed engagement with DME would be managed out of our Austin office LBA's strength has always been that advice given to clients is based on sound engmeermg experience As the electric utility industry enters a new era of deregulation, our consulting philosophy derives the benefit of the years of experience of our staff working with nattonal and international clients We have addressed the diverse needs of investor-owned and public power utthttes, government agencies, and all sectors of energy customers The planning skills of our consultants have leceived national recognition by such organizations as the Electric Power Research Institute, the American Public Power Association and the Department of Energy This experience affords us the broadest possible perspective on the planning process and has prompted us to appreciate the importance of a balance in options in the utility resource portfolio Because every utthty has its own particular set of circumstances, each must decide what strategy is appropriate and how best to adopt it We believe that there are no prescriptive formulas and the LBA approach is tailored to helping each client achteve a balanced strategy WHY CHOOSE THE LBA TEAM'~ With the acceleratton of deregulatton nationwide, many consulting firms have positioned themselves for acquisition by large energy companies or utthty affiliates This strategy has caused these firms to styay from providing trathttonally strong services in spemfie areas to offenng an array of services with dimtmshed depth Others, wlule having broad-based planning experience, have not yet made the transition to prepanng clients for the change inherent to a market driven envtronment DME interests would be served best by a consultant with the depth of knowledge, expertise and breadth of experience gained over many years in the business This consultant should have a history of long-term commitment to clients, the sensltlwty to and understanding of municipal utility perspecttves, and the capability to assess market dynamics under several sets of cireunastanees LBA has all of these qualifications We have not encumbered our position with any LBA Energy Servtces Denton Muntc/pal Ot#tty Valuatton Study Section 5 LBA Management Team prior or ongoing contract with any entity or agency w,thin Texas or elsewhere that could be construed as conflict of interest LBA recognizes the need for DME to respond quickly and effectively to the market, regulatory, and pohtmal fomes in the Electric Rehabthty Council of Texas (ERCOT) and adjacent systenls With a staffof energy professionals that has demonstrated expertise in bnnging solutions to clients worldwide, LBA can support DME with some of the best consultants in the business Table 5-1 introduces the LBA team and the areas they would support on this project Table 5-1 LBA Experience Matrrx ~ ~ < ~ > Bob Anderson 4' 4' 4' 4' 4' 4' Steve Marsh 4' 4' 4' 4' 4' 4' Dennis GeeGear 4' 4' 4' 4' FrankRadlgan 4' 4' 4' 4' 4' 4' Dr AntonyLawerence 4' 4' 4' 4' 4' 4' Kris Rao 4' THE LBA MANAGEMENT TEAIVI LBA has assembled a team that will provide prompt, high-quality service to DME Figure 4-1 shows a schematic of the organization of the LBA team Mr Steve Marsh will provide overall project management and will serve as the DME point for contact for LBA He will attend all meetings involving project scoplng, project kdckoff, status reporting and final presentations He will handle all business and contact-related issues He, will be responsible for formulating the LBA tactical approach to serving DME need for assistance on specific projects He will organize project teams comprised of LBA personnel most appropriate for each assignment Mr Bob Anderson will be the principal-in-charge for all DME projects and will be responsible assuring DME expectations for quality and timeliness are met Mr Dennis DeeGear of Capital Appraisal Group will bring extensive expertise in valuation studies and determaration of market value Dr Anthony Lawrence, an independent consultant, will provide guidance for treatment of the uncertainty ,associated with competitive markets He will attend meetmgs, collect information, lead dlscusslons,,and propose strategy within the context of the LBA team LBA Energy Servtces Denton Mumc/pal Uttltty Valuatton Study 5-2 Section 5 LBA Management Team Figure 5-1 LBA Team Organ,zatlon I Pro,!ect DME Manager and Staff~ 1 Robert L Anderson I I LBA Pnnc~pa-~n-Charge II Steve Marsh LBA Project Manager Dennis GeeGear Valuabon Studies Capital Appraisal Group Dr Antony Lawerence Frank Rad~gan Economic Evaluabon Market Assessment Kris Rao I Analyst ~ LBA Energy Services Denton Municipal Ut#lty Valuation Study Section 5 LBA Management Team BIOGRAPHICAL SKETCHES OF KEY LBA PERSONNEL Robert Anderson Mr Anderson is a Senior Associate m the firm and D~rector of Utility Services for LBA Energy Services He received a Bachelor of Arts degree tn Economics, Accounting and Planning from Indiana University of Pennsylvania He also holds an MRP tn Public Administration from thc Syracuse University Maxwell School of Citizenship and Public Affairs as well as graduate studies tn Finance and Operations Management from Syracuse He has managed or served on numerous projects tncludmg efficiency studies, organizational rcwews, management assessments, competitive assessments, utlhty sU'ucture, and cost analysis He has considerable experience conducting audits and on-site interviews with utility policy makers, management, and staff at all levels of thc organization Mr Anderson's utility orgam×atlonal and development specialties span 20 years of experience Recently, Mr Anderson has been extensively revolved tn utihty restructunng ~ssues, including power supply investigation, economic development, rate unbundhng, and other issues Steve Marsh Mr Marsh is Manager of Market Planmng and Evaluation for LBA specializing in retail and wholesale marketing, utility restructunng, and the development of new products and services With over 20 years of professional management experience, Mr Marsh has more than 15 years planning, devcloptng, lmplemenhng and evaluating marketing strategies for utilities tn Texas and across the nation His consulting expense includes slrategm marketing planning and evaluation, wholesale and retail market assessment, asset valuation, competitive performance review, project feasibility analysis, telccommutncat~ons business planning, and technology research As a former manager with Florida Power & Light Company and the C~ty of Austin Electric Utility, he has received national recogmt:on for tnnovatlon m program planntng and development He has hands-on development and evaluation experience w~th rates and prtclng, demand-s:de management, load management, automatic meter readtng, load research, co-generation, economm development and key account services for commercial and industrial customers Mr Marsh's clients include electric and gas tndustry associations, tnvestor owned electric and gas utilities, pubhc power utilities, tndependent power producers, power marketers, and large commercial and tndustnal customers Mr Marsh has a Bachelor of Science degree in Physics and Master of Sctence degree in Physics from the University of North Texas Frank Radlgan Mr Rad~gan is Manager of Energy Planmng for LBA Energy Services W~th more than fifteen years experience, Mr Radlgan received his engtneenng degree from Clarkson Unlversity, and came to LBA from the staff of the New York Public Service Commlsstnn While with the Commission, Mr Radigan had responsibility over utility rate making and pohcy making with emphasis ~n restructunng, rate design and revenue allocation, wholesale and retail wheeling rates, analys~s of load pockets and market power, divestiture, and retail access LBA Energy Services Denton Muntctpal Ut#try Valuation Study Section 5 LBA Management Team In addition, Mr Radlgan has extensive experience in generation planning, fuel budget forecasting, avmded cost lorecastlng and power supply agreements He was the project manager m a Commission investigation to examine the pohc~es, plans, and processes for developing Integrated Resource Plans m New York State Also while w~th the New York Commtsslon, Mr Radlgan led several mvestlgatlons into the reasonableness of utdtty actions w~th respect to power supply contracts These investigations were spawned from the need to assess the reasonableness of entenng into contracts, buy-out of uneconomic contracts, and management of power supply contracts w~th IPPs Most recently, Mr Rad~gan negotiated a multi-year rate and restructunng agreement for Con Edison on behalf of the New York State Pubbc Service Commission Mr Rad~gan has served as an expert witness and proxqded testimony ~n over a dozen rate and other regulatory proceedings Mr DenmsDeeGear Mr DeeGear ~s V~ce President w~th the Capital App~msal Group (CAG) in Austin, Texas CAG ~s the principal consulting firm used by almost every taxing authority ~n Texas for assessing taxable value on real property Mr DeeGear has more than two decades of experience w~th the apprmsal of value of ~ndustnal, utfltty and commermal properties He ~s an expert ~n ~ncome valuation and market analys~s for the purpose of determining ad valorem taxes Mr DeeGear ~s a Registered Professional Appraiser w~th the Texas Board of Tax Professional Examiners Mr DeeGear graduated cum laude with a Bachelor of Arts degree from Tnmty Umverslty m San Antomo and holds a Masters of Pubhc Administration fi.om the Umvers~ty of Texas Dr Anthony Lawrence Dr Lawrence ~s an econom~st and econometrician with 25 years experience ~n energy issues and the electric ut~hty industry He received h~s doctoral degree ~n economic fi.om the State University of New York As a project manager w~th the Electric Power Reseamh lnstttute, he pubhshed research of the ~mphclt behavior of hedomc price structures of coal, oil and natural gas resulting from t~me-of-use rates Dr Lawrence ptoneered the development and apphcat~on of two m~cro- s~mulation models -- REEPS and COMMEND Dr Lawrence ~s currently ~nvolved w~th industry restmctunng issues including the determlnatmn of stranded assets and the valuation of transmission and generation properties Mr Kris Rao Mr Rao ~s a computer programmer and analyst w~th 10 years of professional experience workang ~n support of consulting projects for utd~ty, ~ndustnal, and commermal chents Using soph~stmated computer models, he has evaluated elecmc utd~ty load data, performed cost-of-service studies, and conducted revenue reqmrement and cash flow analyses Mr Rao has demonstrated expemse ~n developing and analyzing apphcat~on-based spreadsheets, reports, budgets, and tracking systems W~th th~s broad knowledge of computer programs, he has tracked and mmntalned accounting reports for a number of commercial and manufactunng firms Mr Rao ~s spemfically fam~har with local LBA Energy Servtces Denton Mumctpal Uttltty Valuation Study ~ 5-5 Section 5 LBA Management Team area network systems, date base development, and InU'anet and Intemet apphcat~ons Mr Rao holds , Bachelor of Smence degree m Computer Science and Apphed Mathematics from the State Umvers~ty of New York at Albany, New York LBA Energy Servtces Denton Muntc~pal Utility Valuatlon Study Section 6 Qualifications EXPERIENCE As prolect manager, led an evaluation of potential extension of distribution service lines to serve new lnduslnal loads for a New York munm~pal electric utd~ty Coordinated an engtneenng field evaluation and development of prehmmary cost estimates Evaluated the impact on utihty loads, and coordinated utdlty management pohcy formulation associated with additional service In a dual franchise area · ~.Conducted analyses o£ power supply economics thr ~everal New York manic,pal electric utihtleS cons~denng alternative supphers Project studies have included ut~hty and non-utility sources, replacements, restructunng of ex~sttng purchased power contracts and analys~s o£ transmission and wheeling costs · :. As project manager, d~rects load surveys and load research studies for eteclnc utihties throughout the United States Study actlwaes include determination o£ appropriate sample s~ze, random select~on of customers, by class, for load research, circuit monitoring, data collecttng, analysis and interpretation of data, and other actiwties · :.As project manager and setnor project investigator, has conducted numerous investigations associated w~th capital improvement pro. leers for utihties throughout the United States Activities include power supply economics, cost-o£-serv~ce analyses, and energy development projects · :. As Project Manager, conducting comprehensive rate analysis and rate restructuring £or a Rhode Island mumc~pal electric utihty The comprehensive study effort involves analysis of costs and determination of cost-causation, and mvestigat~on of rates, both current and what cost-based rates would be The study also includes a competitive assessment o£ market conditions ws-a-ws other utihties tn Rhode Island These analyses form a bas~s for preparation o£ the utlhty's Restructurtng Plan which were filed on January 1, 1997 .:. As lead project analyst, conducted a cost of service audit £or a Texas municipal electric utihty Performed a cost-of-service study to determine the fairness and pruriency of costs associated w~th a wholesale rate whmh was allocated for power purchases to three mutnclpal and cooperative utd~ties The analysis ~'ocused on the allocation of bulk power supply substattnn costs and other capital and operating costs · :. As Project Manager, conducted an audit of cost allocat~ons to various generation projects operated bY a Massachusetts joint action agency The purpose of the audit was to ~dentify general and administrative overhead budget items related to equity project power sales contracts, purchased power contracts, and member services costs, and how such costs are allocated, the analys~s also examined practices among other joint action agencies and helped to determine if allocations to four Massachusetts municipal electric utihttes were fair and proper · :. Served as Project Leader on a s~x-month effort to analyze load pockets and market power tn New York State The electric utlhty industry generally defines load pockets as a geographic area of elec~c load LBA Energy Services Denton Municipal Uttl/ty Valuatton Study Secbon 6 Qualifications that, because of transm~ss:on hmttatlons, must have generation resources placed wtth~n the area to ensure the reliable provtston of eleclrtclty Due to the need to operate these generating factlmes m a deregulated electric market the owners of the generators tn the load pocket could extract substantial price increases for energy, capacity, and ancillary servmes The analysis identified the load pockets m New York and then analyzed the potenttal for market power tn the tdenttfied load pockets Ftnally, the study tdenttfied both phystcal and fmanmal mltigatton measures that could mitigate market power (1995-1996) Served as Project Leader analyzing the ~mpact of the Federal Energy Regulatory Commission's (FERC's) so-called Mega NOPR and subsequent FERC Order Nos 888 and 889 on State The analysts examined the impact and interrelationship of FERC's and the State's electric tnduslry restructuring efforts, the mterrelatlonsMp between State and Federal junsdlctaon of electric utiht~es, and the rate design of the open access transnusston tariffs The analysts also provided an identification and quantification of ancillary services, and the techmcal, cost, and regulatory impacts of a strict segregation between transmission and distribution facthttes Finally, the analysis examined the ~mpact of FERC's Orders on siting new transmission lines tn New York (1995-1996) Served as Chair on the NYS PSC Proceeding on the Motion of the Commission to Examine the Plans for Meeting Future Eleclnmty Needs m New York State - Intrastate Wheebng The Commission estabhshed the proceeding to mvesttgate the costs, prices, terms, and conditions for wheehng power within New York The proceeding studied a variety of measures for estimating and allocating the costs of wheeling Among the methods studied were several embedded cost methodologies, short-run marginal cost methods, and a variety of long run incremental cost methods The study was designed to be a tool to quantitatively examine the d~ffemnt trvnsmtsslon pnmng methodologies As account manager and semor consultant, estimated the value of the elecmc and gas system of C~ty Public Service of San Antoine Developed three estimates of value fi'om purchaser's perspective using conventional cost, income, and market valuation approaches Itemized benefits of mumclpal or alternative ownership from city, community, and customer perspectives Characterized impact of sale on C~ty Payment, franchise fees, ad valorem taxes, sales tax from pumhased commodities, services provided by CPS, services purchased by CPS, and energy services Forecasted long-term quantifiable benefits of municipal ownership under several growth and competlUve scenarios Discussed non- quantafiable benefits of municipal ownership compared to alternative scenarios Summarized findings m a report to senior management As account manager and semor consultant, performed a competitive performance review of all functional areas and business umts of Austin Energy Developed performance matrix to benchmark activities against utthty mission and near-term and long-term strategm objecUves Final report included an assessment of · Sufficiency of customer service and marketmg management processes · Teamwork among functional areas · Functional ability of orgamzat~onal umts to respond to customer needs · Technical abthty of organizational units to respond to customer needs LBA Energy Sen/tees Denton Mumctpal Uttflty Valuatton Study Section 6 Quahflcations Data access and management practices · Relationship to service alhes · Methods of communication internally and w~th customers Operational effectiveness was characterized ~n terms of strengths, concerns, and areas for improvement · :. As project manager, assisted Texas Utilities Electrm Company wah the development of a restmcturlng transition plan filed w~th the Pubhc Utd~ty Commission of Texas Assessed program performance through interviews and collection and analys~s of data Per formed cost-benefit analyses and developed recommendations for cost recovery · :. As account manager and senior consultant, performed a competitive assessment of the Aumn Energy Prepared project work plan, developed and coordinated data collection plan, and mtervtewed senior executive staff Calculated book value of the utthty Performed present value analysis of mm. clpal ownership versus IOU ownership Elements of the analys~s included · The value of below-market cost of electricity to specific customer classes · The value of monetary transfers to support general government functions · The value of financml support for joint servmes provided by other C~ty departments · The value of d~scounted utility services to City operations · The value of the utlhty prowdmg various support servmes to other City departments · The value of utthty employment to the commuinty that might not exist under two altemaUve ownership scananos · The value of other programs and services provided by the utility to the commumty, such as economic development, community related support services, rebates and ~ncentlves for demand-side management programs beyond what an IOU m~ght offer, etc · :. Identffied and projected the value of new products and services lot Austin Energy that broaden the utdlty revenue base and reduce unit cost The assessment included · Cornmunlcat~ons and fiber optics services to retail institutional customers · Energy efficiency servmes to large commemlal and Industrial customers · Metenng, btlhng and Intemet serrates to other utlhttes within the service temtory · Meter reading, bflhng and Internet services to national, chain, and institutional accounts · Inside-the-fence cogeneratlon development services · Joint-use of utility facilities such as rights-of-way and pole-use · New technologies such as advanced lighting, ~ndustnal heat pumps, photovoltalcs, elecmc vehicles, Intemet services · Industrial energy parks and dlslnct systems LBA Energy Services Denton Muntctpal Utthty Valuatton Study ~1~ 6-,3 Section 6 Qualifications Results of the assessment were coupled with management audit to examine orgamzaUonal responstbdlttes, effectiveness, breakdowns and meffimenmes, and targets for improvement Comprehensive findings were used to determine whether to mtmn or sell the utility and at what price As project manager and pnnmpal techmcal consultant, designed and launched a d~rect load control program for Central Lomstana Electric Company ServlcesmcludedthedevelopmentofaDtrectLoad Control Manual descnbmg all program management acnwnes Evaluated commun~canon technologws ~nclud~ng VHF radio, power hne earner using h~gh-frequency lnjecnon, power llne camer using low frequency ~njecnon, hybrid radm/PLC, telephone, cable and fiber optics Addressed planning issues of cost, rehabthty and companbthty w~th ex~stmg voice, EMS and SCADA commtmmanon systems Program design included the development of target markets, incentive pohcy, procedures, forms, resource reqmrements and respons~bdlnes, trade ally ~nvolvement, ~mplementat~on schedules, budget, marketing materials, engineering design, eqmpment speclficanon and selection, system communications and mterfa¢ e, momtonng and evaluation plan, and tracking and reporting mechanisms Approach used reduced evaluanon expenses antic pated by client by $200,000, increased projected customer parncipation by 100%, and reduced total planned ~nvestment by 50% As pnnmpal techmcal consultant on an ~nterd~sciphnary team, analyzed the ftmcnonal and data collection reqmrements for eight DSM programs to be Implemented concurrently by an investor owned utlhty ~n Iowa Developed recommendanons for implementation gmdehnes, programs procedures, and accounting form content and design Specified programming design for data entry, review, processing, and reporting were consistent w~th operational and evaluanon objecnves Findings were used by client to collect appropriate mformanon, create logmal database, and estabhsh network of users As program manager and techmcal lead, designed and implemented an economic development program for the C~ty of Austin Electric Unhty Designed and marketed new services and altemanve pncmg structures for nme-of-use, ~ntermpnble servme, curtadable servme, demand cooperanves, economic development, and standby service Apphed rates as needed to respond to the challenge of cogeneratlon and fuel switching Represented the unhty m all commumty and Chamber of Commerce economic development acnvltles Prepared power servme proposals to prospective new or expanding manufacturing load Used rate and service options as a means of attracnng and retmmng h~gh load factor, h~gh technology industrial customers Plan was successful ~n attracnng or retaining every targeted customer to a service area with the highest mdusmal elecmc rates m the state · :- As program manager, researched and developed a comprehensive approach to power quahty servlce~ for the City of Austin Electric Utility Organized team of internal consultants to respond to specific concerns presented by customers Successfully diagnosed and solved customer problems with power quality Orgamzed a power quality parmershlp with the utdlty's largest, high technology customers Modified primary servme pohcy to insure local d~smbutton system would not cause lntermpnons to critical loads · ~. As pnnmpal technical consultant on an ~nterdlsmphnary team, performed a compennve performance remew of all functional areas of Lubbock Power & L~ght Personally mvest~gated all marketing, LBA Energy Services Denton Municipal Utthty Valuation Study 6-4 Section 6 Qualifications demand.side management and customer servtce business units Developed performance matrix to benchmark act~vtttes against utility mission and near-term and long-term strategic objectives Final report included an evaluation of · Sufficiency of customer service and marketing management process · Teamwork among functional areas · FuncOonal ability of orgamzatmn units to respond to customer needs · Techmcal ability of orgamzatlonal units to respond to customer needs · Relationship to service allies · Methods ofcommumcatlon internally and with customers Identified and projected value of new services that broaden the uuhty revenue base and reduce unit cost for Lubbock Power & Light including · Communications and fiber optms services to retail institutional customers · Energy efficiency services to large commercial and industrial customers · Metering and bflhng services to other utilities wlthm the service territory · Meter reading and billing services to national, chain, and institutional accounts · Inside-the-fence cogenerat~on development services · New technologtes such as advance lighting, industrial heat pumps, photovoltmcs, electric vehxcles · Industrial energy parks and dtstnct systems Results of the assessment were coupled with management audit to examine organizational responstbthtleS, effectiveness, breakdowns and meffictencies, and targets for tmprovement Comprehensive fmdmgs were used to determine whether to retmn or sell the utility and at what price LBA Energy Servtces Denton Mumctpal Utthty Valuatton Study ~ 6-5 Appendix A: Resumes Stephen A. Marsh Stephen A Marsh ts a semor consultant speclahz]ng ~n the evaluation of utlhty retail and wholesale business strategies arid the development of new products and services W~th over 20 years of professional experience, Mr Marsh has 18 years planning, developarg, implementing and evaluating electric utthty programs at Florida Power & L~ght Company, the City of Austin Elec~c Utility, and as a consultant with Xenergy, RMI, and Lores Berger & Associates His expertise includes technology research, bus~ness assessment, program development, and process and ~mpact evaluation He has recogmzed achievements in the areas of marketmg and sales, economic development, pricing and rotes, energy conservation, load management, load reseamh, cogenerat~on, bulk power marketmg, power quahty and key account services for commercml and ~ndustnal customers Recently, Mr Marsh introduced database management tools to the pubhc power COiTinlunlty that enable clients to access t~me dependent energy mformat~on using a conventional Web browser m Interact, Intranet, or Extranet enmronments Mr Marsh ~s author of Business Opportumttesfor Pubhc Power Utdttles A Cornprehenslve Guide for Understanding and hnplementmg New Products and Services published by the American Public Power Assocmtlon EDUCATION Bachelor of Smencc m Physms from the Umvers~y of North Texas Master of Smence m Physics fi.om the Umvers~ty of North Texas Nuclear Research Fellow at Florida State University Additional post-graduate study at Florida State Umvers~ty, the Cahforma Institute of Technology, the University of Texas, and the Umvemty of W~sconsm EMPLOYMENT Lores Berger & Associates, Manager of Energy Consulting Resoume Management International lnc, Executive Consultant XENERGY Inc, Senior Manager, Southwest Operations C~ty of Austin Electric Utthty Department, Diws~on Manager, Development Planmng D~ws~on Iqonda Power and Light Company, Marketing Program Manager and Commercml & Industrial Energy Management Spemahst Naval Weapons Center, Electromc Warfare Department, Radar Development Division, Project Engineer/Physicist LBA Energy Services Denton Mumctpal Utt#ty Valuation Study ~ ,4-1 Appendix A: Resumes Stephen A. Marsh MANAGEMENT CONSULTING Utthty Valuation Study As account manager and senior consultant, estimated the value o£ the elec~_c and gas system of City Public Service of San Antonio Developed three estimates of value £~om purchaser's perspective using conventional cost, income, and market valuation approaches Itemized benefits of munmlpal or alternative ownership ~'om mty, community, and customer perspectives Characterized impact of sale on C~t~ Payment, fi'anch~se tees, ad valorem taxes, sales tax from purchased commodities, services provMed by CPS, services purchased by CPS, and energy servlces Forecasted long-term quantifiable benefits of municipal ownership under several growth and competitive scenarios D~scussed non- quantifiable benefits of municipal ownership compared to alternative scenarios Sun'ananzed findings in a report to semur management Compet:ttve Performance Review As account manager and semor consultant, performed a competitive performance rewew of all functional areas and business umts of Austin Energy Developed performance matrix to benchmark act~wtles against utlhty mission and near-term and long-term strategic obi ~t~ves Fmal report included an assessment of Sufficiency of customer service and marketing management processes · Teamwork among funcUonal areas · Functional abdity of orgamzat~onal umts to respond to customer needs · Techmcal abd~ty of orgamzational units to respond to customer needs · Data access and management practices · Relatlonsh~p to service athes · Methods of commumcatlon ~ntemally and w~th customers OperaUonal effectiveness was characterized m terms of strengths, concerns, and areas for ~mprovement lransmonPlan As project manager, assisted Texas UtthUes ElecU'~c Company with the development of an energy efficiency plan as a component of the restructuring transmon plan filed w~th the Public Utility Commission of Texas Assessed program performance through ~ntervlews and collection and analys~s of data Performed cost-benefit analyses and developed recommendations for cost recovery Strategtc Assessment As account manager and semor consultant, performed a competitive assessment of the Austin Energy Prepared project work plan, developed and coordinated data collection plan, and interviewed senior executive staff Calculated book value of the utd~ty Performed present value analysis of municipal ownership versus IOU ownership Elements of the analysis included · The value of below-market cost of electnclty to specific customer classes · The value of monetary transfers to support general government functions · The value of fmancml support for joint services prowded by other C~ty departments · The value of discounted utility services to City operaUons · The value of the utthty prowdmg various support services to other City departments · The value of utd~ty employment to the community that m~ght not ex~st under two alternative ownership scenarios LBA Energy Servtces Denton Muntctpal Uttltty Valuation Study Appendix A: Resumes Stephen A. Marsh · The value of other programs and servlceo prowded by the utihty to the comnqunlty, such as economic development, commtmlty related support services, rebates and meenUves for demand-side management programs beyond what an IOU m~ght offer, etc Identified and projected the value of new products and servtces that broaden the utlhty revenue base and reduce umt cost The assessment included · Communmatlons and fiber opncs services to retail institutional customers · Energy efficiency services to large commercial and industrial customers · Metering, billing and Internet services to other utilities w~thm the service territory · Meter reading, billing and Interact services to nattonal, chain, and msUtutlonal accounts · Instde~the-fenee eogenerataon development services · Joint-use ofutthty f, tcilmes such as rights-of-way and pole-use · New technologies such as advanced hghtmg, industrial heat pumps, photovolta~cs, electric vehicles, Internet servtees · Industrial energy parks and district systems Results of the assessment were coupled w~th management audit to examine organizational responsIblhtles, effectiveness, breakdowns and meffictenctes, and targets for improvement Comprehensive findings were used to determine whether to retain or sell the utthty and at what price ENERGY SERVICE BUSI1NESS ASSESSMENT & PLANNING Strategic Marketing Plan As account manager and semor consultant, developed a strategic marketing plan for C:ty Pubhe Service of San Antomo The plan ~dentified marketing approaches and addressed thc business-related issues, risks, and opportumttes of offcnng new products and servmcs in wholesale and retail markets A working document was prepared to provide flexible guidelines for implementation ~ncluding an organizational audit, market assessment, marketing and sales strategies, and operations plan Results of thc plan were presented to utdity scmor management Personally supervised assessment and planning activities m the areas of new products and services, key account program development, marketing data base systems, bcnchmarkmg and performance ind~ces, and wholesale marketing program development Competition ,4ssessment As project manager, performed an assessment of aggregation pricing s~'atcgles and customer services provided by competitors to C~ty Pubhc Service of San Antomo Researched hteraturc and conducted mterwews of principals w~th other utllmes, regulators, chain accounts, and alternative energy service providers Characterized state-of-the-art marketing practices in the areas of load aggregation, pricing options, billing services, risk management services, financial services, and energy scrvmcs Developed recommendations for developing competitive solution Summarized findings m a report Strategic Marketlng Plan As project manager, assisted Georgetown UtIhtIcs with strategic market planning activities Devised a situation analysts that optlunzed the use of consulting services to ~dentffy areas of focused plarmmg effort The approach leverages existing city resources and assets to identify new business opportumt~es that improve service or produce new revenue Specific considcrat~ons include potential LBA Energy Services Denton Muntctpal Ut#try Valuatton Study Appendix A: Resumes Stephen A. Marsh appllcattons of a new broadband telecommumcattons system, the offering of new altemattve prlctng structures, and the resulting reqmrements for a new tnformation management system New Business Opportuntttesfor Pubhc Power Utthttes As project manager and prmmpal author, prepared a manual for the American Public Power Association and the Electric Power Research Institute to asstst utilities wtth the development of new products and servmes that increase revenue or tmprove value Indtvtdual business assessments were prepared for eqmpment purchase loans, green orlclng, apphance mamtenance, performance contracttng, environmental waste management, power quahty, power marketmg, bmldmg security systems, cable TV, and fiber optics tncludtng automaUc meter readmg and telecommunications services Prepared a procedure for screenmg prospecttve bustness units against ten criteria Developed case studies to dlustrate issues and perspectives The manual addresses all research, market, staffing, budgeting, tmplementatton and evaluation activtt~es Devoted one chapter to the lnstitutaonal tssues associated wtth the implementation of new products and services by pubhc power utdittes EPRI sponsored thts work Organtzed a steenng commtttee of marketing executwes at pubhc power utdmes to def'me the scope of tssues Developed an tntervtew guide for thscussmg tssues wtth managers of new programs Budt case studtes to tllustmte approach to various tssues Conducted workshop with steering commtttee to screen draft and confirm approach Results were presented at three national conferences and two state conferences Market Assessment As project manager for a confidential chent, assessed the market potenttal for a large corporatton to offer elecmc and gas utdmes a strategtc alliance to provide turnkey capabdtty in new retad energy products and services Evaluated the fourteen-state regtonal west of the Mtsslsstppl Rtver to developed sub-regtonal and state-by-state forecasts of market potential Workshop on Strategic Marketing tn the Commercial and Industrtal Sector As project manager and tnstructor, presented one-day workshop to marketing and executive management of member utdtttes of the Texas Public Power Assomatton The workshop responded to interest m the pubhc power commumty to am'act, retain and expand commermal and industrial customer base tn a competmve enwromnent The workshop provided attendees with prescnptave gmdehnes tn market research, market segmentatton, program development, program ~mplementatlon, and program evaluatton The workshop also provides a fundamental approach to enhanctng customer servtce in the commercial and industrial sector Workshops for Internattonal Utthty Executtves As techmcal consultant on tnterdlsmphnary team, developed ~rammg materials targettng electric utahty execunves fi.om several countries for workshops held tn Catro, Egypt and sponsored by the International Institute of Education Materials addressed customer servtce, lead,management, and commercial and tndustnal marketing strategies Conducted tratmng sesstons tn Dallas and Houston for vlsttmg executives from Russia and Ukrame TELECOMMUNICATIONS BUSINESS ASSESSMENT & PLANNING Telecommuntcat~on Bustness Plan As project manager, developed a strategic telecommumcatlons business plan for an ~vestor-owncd elect'ac utility The plan exammes local and regional opportumttes and threats to formulate an approach for the utibty to enter the telecommumcatlons business The intent was to leverage core competenmes wtth strategic parlnershlps to provtde an integrated range of new, non-tradmonal, unregulated,, and profitable business umts Specffically evaluated thc busmess attributes of long distance servtce, broadband voice, wdeo, and data services, and regtonal cellular scrvtce LBA Energy Servtces Denton Mumctpal Utthty Valuatton Study Appendix A: Resumes Stephen A. Marsh Telecommumcatton Strategy Review As project manager, reviewed the proposed implementation strategy between the City of Georgetown with Central and South West Communications specifying the provisions for installation of a fixed wireless automatic meter reading, SCADA, and information management system Presented findmgs m a report to senior management staff of the City Results were used m contract negotiations and the development of program lmplementatmn strategies Fiber Optics Technology Assessment and Business Strategy Development As technical consultant on an interdisciplinary team, assisted in assessing the use of fiber optics technology in non-traditional utility applications for a municipal utility m Florida Estabhshed hnsmess planning policies for the utthty's fiber optic telecommunication network Client used findings to make deployment decisions for investment in fiber optics INTERNET & INTRANET SERVICES Internet Product &Servtce Development As project manager, provided guidance for product development, integration and marketing of Intranet-based energy products and services for a large consultmg firm Products included Web-based display of bill history, energy consumption-weather correlation, multiple account consohdat~on and summary, multiple service provider consolidation and summary, load profiles, load research interval data, and other interactive services lnternet-Based Markettng Techniques tn the Energy lndustry As project manager, researched the use of thc Interact as a marketing tool by utthtles, power marketers, product manufacturers and retailers, and other participants m the energy industry Reported findings at the fall 1997 meeting of the ~nergy/Cu~tomer Service and Communication Workshop of the American Public Power Association and the spnng 1998 meeting of the Texas Public Power Assomat~on Marketing Strategy for Internet-Based Services A~ project manager, assisted Austin Energy with the development ora product design for Interact-based customer services DATA WAREHOUSING & DATABASE MANAGEMENT Functional Requirements Analysts for Marketing Program 3upport System As principal technmal consultant, analyzed the functional and data collection requirements for eight marketing programs to be implemented concurrently by Iowa Southern Utilities Developed recommendations for implementation gmdetmes, program procedures and accounting, and data collection form content and design Specified design for data entry, re,new, processing, archlvmg and reporting consistent with program operational and evaluabon objectives Client used findings to collect appropriate reformation, create logical database, and estabhsh network of users Load Research and End-Use Metering Database Development As division manager and techmcal lead for Austin Energy, created the first end-use metering and load research data base system of its kind in Texas Supervised all engineering and software development for a multi-channel end-use metering system and database to quantify impacts of marketing programs First m thc nabon to use statistically based methods to quantify the demand reduction impact of various direct load control cycling strategies on resident~al air conditioning and water heaters Program was eventually expanded to encompass all load rcsearch activities LBA Energy Servtces Denton Muntctpal Uttltty Valuatton Study ~ A-5 Appendix A: Resumes Stephen A. Marsh Database Comohdatton Consohdated load research data, bdlmg data and SCADA data to develop stat~sttcally representattve load shapes to forecast local feeder load for Austin Energy Work was funded tn part by the American Pubhc Power Assocmt~on Used load research and SCADA data to ldenttfy favorable load shapes for apphcatton of photovoltatcs for peak chpp~ng Work was funded ~n part by the Electric Power Research Instttute STRATEGY SCREENING Technology Screemng As techmcal consultant, examined the tmpact of external tree shading on restdentml and commereml mr condttmnmg and corresponding elect'nc load and energy for Florida Power &Ltght Company Combmed condtttonal demand analys~s w~th stattstlcally adJusted engineering model to predict load and energy impacts Interval load data for atr condtttomng from a stat~stmally representative sample of bmldmgs m South Mtam~ were used ~o estimate the tmpact of shading Random samples of load research program pa~c~pants wtll used to quantify differences m roof color on air conditioning load Result~ were extrapolated to the total populatton ustng stattst~cally adjusted engmeenng model, load research data, end- use metering, and mmro-chmate weather momtonng stations ScreentngofHeatmgandCoohngTechnologtesforCommerctalandlndustrtalMarketSector~ As project manager and pnnctpat techntcal consultant, evaluated the techmcal and economm performance charactenstms of competing heatmg and cooling technologies in commermal and ~ndustnal apphcattons for Austin Energy Performed trade-off analysis that compared the performance of a 500-ton natural gas cngme-dnven chdler to a conventional electric cenmfugal cfuller, a h~gh effimency elecmc centrifugal chdler, a high effictency electric cen~fugal heat pump Stmulated operat~un of each technology by developing hot day, cool day, average weekday, and average weekend day coohng and heating load profiles for every month for a 200,000 square-foot eommermal office bmldmg Used actual weather data, occupancy profiles, and eqmpment schedules to maintain accuracy of estimates and facdttate future correlatmn of data Prepared present value economm analys~s to characterize ~mmediate and near-term benefits of ownership of each technology Results were used to develop marketing strategies to re-positron elec~c technologtes and develop near-term as well as long-term marketing plans for the chcnt Marketing Program [mplementatton Assistance As pnnmpal techmcal consultant and contractor for the Elec~c Power Research Institute (EPRI), provided marketing program ~mplementa'~mn assmtance to Cmzens Utdlt~es Electric Company Audited workflow processes to develop recommendatmns for ~mproved program effectiveness and efficiency Prepared lmplemcntatmn manual targeting commercial and mdus~al customers Developed economic sereemng tools to determine the Investment thresholds for utd~ty partm~patmn m a fuel-swltchmg program mandated by the state commtsston Expanded the use o£ex~stmg ut~hty databases to screen utthty investment m md~wdual products and servmes as part of a shared savings program for eommermal and tndustnal customers Provided energy auditing tools and training for commermal and mdusmal field staff of performance contractor Chent used ~'mdmgs to launch new programs, modify ex~stmg program processes, and resolve differences wtth performance contractor Technology Screemng and Market Assessment As proJect manager and prmctpal technical consultant, assessed opportumttes new technology deployment tn residential, commercial, and industrial markets for Central Lom$~ana Electric Company Develop technology performance charactenstms and costs Performed cost-benefit analys~s to rank technologies Developed prehmlnary program ~mplementatlon gmdehnes Fmdmgs were used by chent to set priorities and make reformed decisions with regard to marketing issues LBA Energy Servtces Denton Muntctpal Utthty Valuatton Study ,4-6 Appendix A: Resumes Stephen A. Marsh PROGRAM DEVELOPMENT Load Research Program Development As pnnc~pal investigator and project manager, deslgned and imt~ated a load research program £or Ke~rvllle Pubhc Utlhty Board m central Texas Services included sample design, equipment spemfieat~on and select,on, software specification and selechon, data base design, data management, data analys~s and reporting, training, and development o£ the PC-Based Load Research Reference Manual An assessment of remote metering technology was performed to compare the capab~htles o£ a power hne earner system (e g, ABB EMETCON Load Management ~,ystem featunng Dtstrtbutton System Manager for 0S/2 by Cannon Technologies) to radio-based and fiber-based systems The study also addressed custom,zed software for load research versus off-the-shelf PC~based sot~ware £or stat~stmal analysts and data base management Findings were used by the chcnt to ~mplement a succcss£ul PC-based load research program Dtrect Load Control Program Development As project manager and principal techmcal consultant, designed and launched a duect load control program for Central Louisiana Electric Company Servmes ~ncluded the development of a Dlrect Load Control Manual describing all technologies and program management act~v~bes Evaluated commtnneat~on technologies ~ncludmg VHF radio, power hne carrier usmg h~gh-frequency mject~on, power hne carnet using low frequency ~nject~on, hybrid rad~o/PLC, telephone, cable, and fiber optms Addressed ~ssues of cost, rehab~hty, and compat~bd~ty w~th ex~st~ng vome, EMS and SCADA commumeatlon systems Program design included the development of target markets, mcent~ve policy, accounting procedures and forms, resource reqmrements and responsibilities, trade ally involvement, ~mplementat~on schedules, budgets, marketing materials, eng~neenng design, eqmpment spemficatlon and selectmn, system commumcat~ons and interface, momtor~ng and evaluation plan, and tracking and reporting mechanisms Approach used reduced evaluation expenses ant~mpated by chent by $200,000, increased projected customer partm~pat~on by 100 percent, and reduced total planned ~nvestment by 50 percent Technology Screentng, Market ,4ssessment and Program Development As project manager and principal tcchmcal consultant, assessed market opportumtles for residential, commercial, and ~ndustnal markets for the Kansas C~ty Board of Pubhc Utdltles Designed marketing pregrams £or all sectors that prowde rate and rebate ~nducements for e£fiment space heating and coohng, heat pumps, water heating, motors and dr~ves, hghtmg, and mdust~al electro-technologies Findings were used by chent to set priorities and make m£ormed dec,stuns w~th regard to marketing issues Strategtc Marketmg Plan Develop~nent As project manager and techmcal lead, designed and implemented a 15-year marketing plan for Austin Energy The plan was twice recogmzcd £or ~nnovat~on by the APPA, DOE, and the State of Texas Designed and ~mplemented a comprehensive set o£ marketmg programs, energy services and alternative energy technology strategies In~'oduced new marketmg concepts to promote energy efficiency ~n braiding envelope, hght~ng, coohng, motor, and refrigeration end-use market segments Designed program plans for commermal and industrial marketing, residential d~rect load control, and ~nnovat~ve rates for all sectors Program designs were the first o£ their kmd m the pubhc power com~tlnlty PROGRAM IMPLEMENTATION Economtc Development Program Implementatton As program manager and technmal lead, designed and ~mplemented an economm development program for Austin Energy Designed and marketed new services and alternative pncmg structures for t~me-of-use, mterrupt~ble service, curtatlable service, demand LBA Energy Servtces Denton Muntclpal Ubhty Valuabon Study ,4-7 Appendix A: Resumes Stephen A. Marsh cooperatives, economic development, and standby service Apphed rotes as needed to respond to the challenge of cogenerat~on and fuel switching Represented the utility in all commumty and Chamber ot Commerce economm development actlvlnes Prepared power service proposals to prospective new or expanding manufacturing load Used rate and servme options as a means of attracting and retaining high load factor, h~gh technology industrial customers Plan was successful In attracting or retaining every targeted customer to a service area with the h~ghest industrial electric rates m the state Power Quahty Program Implementatmn As program manager, researched and developed a comprehensive approach to power quahty services for Austin Energy Organized team of mtemal consultants to respond to specific conoerns presented by customers Successfully d~agnosed and solved customer problems w~th power quahty Organized a power quality partnership with the ut~iity's largest, high technology customers Modified primary servme pohcy to insure local thstnbut~on system would not cause interruptions to critical loads Thermal Storage Program Implementation As d~vislon manager and technical lead for Austin Energy, introduced the thermal storage concept to the Austin community Sponsored feas~bthty studies performed by local engineers for five commercml appheat~ons Developed a do-it-yourself design manual to assist local engineers, arctutects, and building owners w~th implementation Designed t~me-of-use rate stmetores by customer class and a compatible rebate program to promote acceptance Direct Load Control Program Implementatton As diwsion manager and technical lead, supervised all planning, engmeenng, marketing and evaluat~un activities for a residential and commercial VHF load management program for Austin Energy Successfully demonstrated customer acceptance of varmble incentive levels tied to cycling strategies Key Accounts Program Implementanon As d~wsion manager and technical lead for Austin Energy, created, organized and supervised a technical team of engineers to prowde responsive single point-of-contact services for 5,000 large commercial and industrial accounts Provided energy engmeenng, power quahty, load management, load research, and technical and economic assessments Personally imt~ated and fostered reciprocating working relataonshtps w~th h~gh facthty managers including the University of Texas, the State of Texas, IBM, Motorola, Advanced M~ero Devices, Texas Instruments, Sematech, Applied Materials, 3M Cogeneratlon Program Implementation As d~vls~on manager and techmcal lead for Austin Energy, performed feaslbdity evaluations of "inside-the-fence" cogeneratlon projects targeting Austin's commercial and industrial customers and totahng more than 500 Megawatts Assessed technical and economic feas~blhty from utility, customer, and thtrd-party perspectives Developed service proposals for customers promoting amovatave rate strategies and electro-technologies as altematives Researched federal and state gnidehnes to develop mterconneet~on gmdelmes, parallel operating procedures, service agreements and rates to provide supplemental servme, maintenance service, interruptible service and buy-back power Projects ranged m s~ze from one to 100 Megawatts Commercial and Industrial Markenng Program Implementatton As program manager in corporate general office for Florida Power & L~ght Company, developed and managed marketing programs for an electric utility with annual sales m excess of $4,000,000,000 Audttor Tralmng Program As program manager for Florida Power & Light Company, developed a training program for 50 field engineers to perform 15,000 commercial and industrial energy audits annually Trannng curnculum included theory and problem solwng techniques m metenng, rates, psychrometncs, heat loss and heat gain, building envelope, heating, ventilation and a~r cond~tioning, controls, thermal LBA Energy Services Denton Muntctpal Ut#lty Valuation Study Appendix A: Resumes Stephen A. Marsh energy storage, refrigeration, domestic water, heat recovery, motors and drives, hghtmg sources and design, energy management systems, and, energy economics Developed standardized algorithms for energy efficiency calculations PC-Based Energy Audits As program manager for Florida Power & Light Company, developed PC-based algorithms and analysis programs m BASIC to standardize and simplify report preparation for field engineers Thermal Storage Pdot Project As program manager at Florida Power & Light Company, launched a thermal storage pilot project at a Company office facility as a demonstration project of the FPL Quality Improvement Program Commerctal&IndustnalEnergyAu&ts As program manager, personally performed more than 100energy audits on large commercial and mdusmal faethties m Miami and south Florida Performed basic research m demand-s~detechnologtes Served as Execuhve D~rector of the South Flonda Energy Parmershlp Certified as State of Florida energy auditor PROGRAM EVALUATION Evaluation of Direct Load Control Program Impacts and Processes As project manager and pnnc~pal techmcal consultant, performed an evaluation of a residential air contht~omng cycling program for an investor owned electric utility Designed stratified samples of part~clpants for two geographic regions for installation of end-use metenng equipment Collected and analyzed five-minute interval data to describe duty cycle of various cycling strategies Developed methodology according to EPRI gmdehnes to quantify impact of 33, 50, 67, and 100 percent cycling slrategles Quantified success of program processes mcludmg marketing, data collection, system mstallatmn and operatmn, and customer satisfaction Summarized findings m a report for presentation to senior utility management and the state pubhc service commission System Load Shape Dtsaggregat~on As part of an integrated supply-side and demand-side approach to resource plamamg for South Plains Electric Cooperative, developed and installed a data collection system to capture pulse data from antiquated SCADA system and record 15-m~nute interval readings from 20 substation s~tes Correlated circuit population densities taken from bflhng files with interval data to develop representative load shapes for the system by customer class Quantified ~mpact of cycling ~mgat~on load dunng summer peak period Determined opportumty for alternative load management strategies with other customer classes Researched cost structures to develop innovative rate concepts for customers Developed filing for heanng and approval by the Pubhc Utility Commission of Texas Findings were used ~n developing strategies to retain valued customers Marketmg Program Review for Cost Recovery Testtmony m Rate Case F&ng As project manager and prmmpal techmeal consultant, rewewed rate filing testimony for legal counsel of Houston Llghung & Power Company Critiqued marketing program designs and implementation strategies Scmtlmzed reported expenditures, estqmated demand and energy impacts, projected demand and energy impacts, and proposed evaluation plans Prepared detailed report discussing findings which were used by regulatory legal counsel to vahdate and revise testimony m rate case filing Development of Marketing Program Evaluation Strategtes As principal techmcal consultant, developed evaluation slxateg~es for Carolina Power & L~ght Company Strategies set priorities and focused evaluation methods on the ~mpaet of marketing, conservatmn and load management programs that have evolved over a LBA Energy Servtces Denton Muntctpal Uttl/ty Valuatton Study ,4-9 Appendix A: Resumes Stephen A. Marsh 15-year period Analyzed program processes and ~dentlfied areas of additional research to address overlapping m~ss~ons, mcons~stenmes in data collection objecnves and data base design, possible market saturation, unmet program objectives, unmeasured program results, banners to acceptance, and m~sgmded resources Rewew included the development of recommendations for new operating strategies for time-of- use and direct load control Evaluation strategres were subsequently designed to reposttlon the utility to respond to new market, planning and regulatory challenges Incorporated state-of-the-art capabtht~es of utthty load research staff into evaluation ptanmng Findings were used by chent to reposmon programs Marketing Program Evaluanon Plan Development As semor techmcal consultant on an ~nterdlsciphnary team, developed marketing evaluation plans for Iowa Southern Utilities Company and Iowa Electric Company Specified methods for evaluating demand and energy impacts of resident~at, commercial and industrial marketing programs to be ~mplemented over a three-year period Developed sampling plan for optimizing apphcation of existing load research database and selecting end-use metering sites to quantify the ~mpact of a dlrect load control pdot program Leveraged findings from evaluaUon of marketing programs of s~ster utility to reduce expense of evaluation Findings were used by client to comply with state ~eg latory requrrements, optimize the use of staff resources, and ~mprove the probabd~ty of program ~mplementatlon success Marketing Program Evaluanon Plan Development As pnnc~pal techmcal consultant on an tnterdlsmphnary team, developed marketing evaluatxon plans for Iowa-lllmots Elecmc & Gas Company Plans specify methods for evaluating market ~mpacts, program processes, and demand and energy impacts of marketing programs to be implemented over a three-year period Developed englneenng algorithms for estimating demand reduction and energy savings of mdlwdual measures by program Specified data collection plan for data base development Leveraged findings from previous work to reduce expense of evaluation Findings were used by chent to comply with state regulatory reqmrements, opUm~ze the use of staff resources, and improve the probabthty of program ~mplementation success Apphance Saturatton Survey Plan Development As pnnc~pal techmcal consultant on an interdisciplinary team, analyzed requirements for apphance saturation survey of residential customers for Iowa Southern Utilities Company Developed recommendations for sample design and survey instrument design Fxndmgs were used by client to develop efficient sample size and reduced anticipated metenng expense Sample Destgn for Restdenttal End-Use Metering and Evaluation Issues for Dtrect Load Control As pnnmpal technical consultant on an ~nterdismphnary team, developed sampling plan for selecting end-use meters to quantify the impact ora dn'ect load control pdot for Iowa Southern Utdmes Company Rewewed status of ex~stmg load researeh database Developed correlanon between ex~stlng load research sample and total customer population using bill frequency distribution Developed requirements for expanding ex~stmg load reseamh data base to improve confidence and accuracy of ex~stmg data base and prowde a robust baseline sample for evaluation of pa~mpant samples from Marketing programs Designed sample and spemfied data collection plan for data base development Resolved marketing evaluataon issues for Iowa regulators regardmg the vahdat~on of demand impacts, statistical concepts of the d~fference between two means, the use of pan'ed observations, and expansion of results with known confidence and accuracy Th~s work was the first of its kind in the nat~on Markettng Program Evaluatton Plan Development As pnncipal technmal consultant on an mterdlsc~phnary team, developed marketing evaluation plans for Iowa Southem Uttht~es Company Researched regulatory reqmrements and reviewed statew~de lnitmtlves Developed detailed plans to specify methods for evaluating market impacts, program processes, and demand and energy impacts of eight Marketing programs to be implemented over a three-year period Developed engineering algorithms for est'tmat~ng LBA Energy Servtces Denton Muntctpal Ut#tty Valuation Study A-lO Appendix A: Resumes Stephen A. Marsh demand reduction and energy savings of md~vlduaI measures by program Findings were used by chent to comply w~th state regulatory reqmrements, optimize the use of staff resources, and ~mprove the probabd~ty of program tmplementat~on success Much of tbas work was the first of ~ts kind m the nanon Bastc Research tn Dtstnct Coohng and Heating As d~wsmn manager and techmcal lead for Austin Energy, evaluated the techmcal and economic feasibility for the apphcat~on of d~stnct cooling and heating in Austin Used bdlmg and load research data to construct cooling load shape profiles Used billing data, load research data and state-plane XY-coordmate system to tdent~fy the locatton of thermal ~slands tn Austin Evaluated the feas~bthty of a variety of source and d~stnbut~on configurations including central coohng and heatmg (conventional and heat pump) w~th and w~thout thermal storage and chdled and hot water thstnbut~on, cogenerat~on w~th central absorption chillers w~th chdled water and steam d~stnbut~on, and, cogenerat~on w~th steam d~stnbut~on with dtspersed absorption chillers Work was funded by the APPA DEED Grant and DOE Electromc Warfare -Foretgn Radar Development As project manager and radar development physicist for the Naval Weapons Center m China Lake, Cahforma, researched mtelhgence data to define Fleet reqmrements for radar s~mulators Performed the scop~ng study and developed the program design for a $22,000,000 radar development effort Managed a $5,000,000 sub-program to design, fabricate, test and operate remotely controlled radar transmitters Balanced resource and scheduling acttwties to meet project performance object~ves Momtored and controlled electrical and mechamcal budget expenditures Designed fiber optm commumcat~un tnterface between central control computer and h~gh voltage modulators to reduce exposure to local interference Designed EMI and RFI sh~elthng enclosure Designed remote facilities, HVAC system and utthty servme Developed FORTRAN software to design low voltage and htgh voltage mductors and transformers for power supplies and modulators BULK POWER M.MIKETING Wholesale Bulk Power Market Assessment As project manager, recently completed a comprehenstve strategm assessment of the wholesale bulk power market for a large out-of-state corporanon Created a worlong document to describe regulatory and market characteristics and the tmpact of recent legislation on various wholesale business opportumt~es Power Supply Proposal Development Assistance As project manager and principal investigator, assisted an independent power producer (IPP) w~th the development of a multi-phased power supply proposal to Magm Valley Electric Cooperative (MVEC) Collected data and developed techmcal, econom~c and pohcy descriptions of ancillary services avadable from local control areas Screened and interviewed prospective servtce provtders (e g, fuel supply, power marketing, DSM) for possible strategic alliances Facthtated negottaUons among panes Developed descnptton of rulemakmg assoctated with transmission access, ancdlary services and determination of excess cost over market Evaluate multtple locattons for project s~tmg Performed several power flow studies to optimize s~te for service rehabthty and merchant plant opportumb, es Developed complete techntcal and econom~c descnpttons ofreqmmd upgrades to the 138-kV transmlsston system to enable mterconnectton w~th various plant capacities Summarized fin&ngs m a report tncluded m each phase of the submittal Bulk Power Market Assessment and Project Feastbthty Study As project manager and prmctpal techmcal consultant, performed an assessment of the bulk power market in South Texas, the Electric Rehabthty Council of Texas (ERCOT), and northeast Mexico Several site and generation plant altemanves were modeled under various transmission, fuel supply, enwronmental, and polmcal configurations Site- LBA Energy Servtces Denton Mumctpal Utthty Valuatton Study A-11 Appendix A: Resumes Stephen A. Marsh generatton comb]nations were presented in an attribute matcx to facd~tate strategic planmng actlv]ttes and project negotiations The study updated the forecasts of future power reqmrements and planned capacity additions of all major generating utthtms tn South Texas, ERCOT, and Mexmo Impact of DSM and purchased power agreements by uttht]es were factored ~nto the market assessment Statewxde wholesale power costs and other sales mformatton were developed Transmission issues were addressed mcludtng the current status of transmission wheeltng rule development, pricing methodologies, and rates All power market tssues tn Texas were addressed including recent state legislation impacting the Public Ut0~ty Regulatory Act, competition, pubhshed philosophy of commissioners on competmon, current and proposed status of NUGs, the IRP process, and other market changes antmlpated dunng the next legislative session Both suppher and purchaser perspectives were evaluated Findings were used by client to develop a bus~ness plan to secure £mancmg and initiate implementation The prospect of selhng power to Mexico was examtned using the maqmladora load as a likely first target Addressed the technical, economic, and pohtlcal bamers to selling power to Mexico Tested the receptiveness of power supply proposals through d~seuss]ons with national utthty decision makers in Mexmo City Power Supply Assessment As pnnc]pal techmcal consultant, tnvest]gated power supply options for South Platnns Electric Cooperative Momtored regulatory activity, ~dent~fied issues and tracked pubhc correspondence between the two suppliers that serve the cooperative and have conflicting NOIs for the construction of new power productton famhtles Evaluated alternative power supply strategies mcludtng new wholesale rate design, new DSM ltnt~at~ves, and new supply contracts from independent power producers Ftndmgs were used to strengthen the position of the cooperative in negotiations with supphers Texas Power Supply Market Assessment As pnnmpal techmcal consultant, assessed the techtncal and economic attributes of the electric power supply market tn ~1 exas for several tndependent power producers Summanzed the forecasts of future power reqmrements and planned capamty additions of all major generating ut~ht~es tn the state Factored impact of DSM and purchased power agreements tnto plantnng processes Researched and summarized statewide wholesale power costs and other customer tnformat~on Prepared a revmw of transmission issues tneludmg wheehng roles, pricing methodologies, and wheeltng rates Prepared discussion of regulatory issues m Texas tncludtng an overview of pubhshed Phd°s°phy °f commissioners, proposed legislattnn, the current and proposed status of NUGs, and the IRP process Chent studies were confidential and vaned tn scope and purpose Both suppher and purchaser perspectives were evaluated Findings were used by chents to set priorities for bus~ness plan ~mplementanon Power Resource Proposal Support Phases I H and Ili As project manager and pnnc~pal techtncal consultant, screened potential sites ~n Austin for Southern Flecmc Internatim, al for the purpose of locating a proposed 300-MW, multiple un]t, combustion turbine generating famhty Calculated transmtss~on power flow constraints and est]mated single and double hne contingency impacts Developed engmeertng design reqmrements transmission switch gear, transmission system upgrade, relay protection, fiber-based commumcatlons, fuel supply, and environmental safe-guards Developed pubhc xnvolvement plan to address siting, nmse, emissions, and EMF Identified and coordtnated m~nonty and women-owned bustness subcontractors Identtfied and coordtnated contact w~th commercml real estate firm Lobbied decis~on- makers on behalf of chent Information was used by chent to develop winntng proposal Power Opttons Assessment As principal techmcal consultant, evaluated the power supply options for the City of Denton mummpal utility Examined all comb]naUons of purchased and generated power options ~nclud~ng rematn tn an ex~st~ng jmnt action agency, form new wholesale supply relationships with local power pools and suppliers, repower ex]sting central stat]on generation, and purchase excess power from local and remote quahfytng fac]lines Findings were used by cbent to ~nformed dec~sions relative to proposed new plant construction program LBA Energy Servtces Denton Muntctpal Ut#tty Valuatton Study A-12 Appendix A: Resumes Stephen A. Marsh Power Supply Evaluation for Plant tn Sebree, Kentucky As pnnc]pal technical consultant, lnvesngated power supply options for the Hudson Foods meat processing and dlstnbunon faclht~es located at multiple sites m Kentucky Developed load profiles and forecasts from available data Performed trade-off analyses of rate and serwce options including transmission voltage level services, redundant and dedicated primary supply, primary feeder configuration and protection schemes, ]ntermptlble service, self-generation, fuel swltchtng, conventional and economic development rates, and various DSM initiatives Assisted client w~th negotlattons for h~gh quahty, low cost electric service with the flexibility of access to an open market when retail wheeling is available Sale oJ Generattng Eqmpment As independent project developer, represented the sale of 20 used, Allison 501-k mobile turbine generators for Internattonal Business Machines Developed and implemented marketing strategy which included sales brochure, deseript~ve literature, operating statistics, and photographs and video of lndiwdual units Prepared all materials for joint venture partnerships, sales agreements, s~te visits, check-out tests, manufacturers statement, transportation and insurance, set-up and testing support, operations and maintenance support, spare parts, frequency conversion from 60 hertz to 50 hertz, hlgh temperature operatmn modification, and dual fuel conversion Negotiated agreements for sale with prospectwe domestic and international purchasers LBA Energy Services Denton Mumctpal Utthty Valuatton Study A-13 DENNIS M. DEEGEAR Master of Pubhc Attalrs 1975, Lyndon B Johnson School of Public Attalrs Umvers~ty, of Texas at Austin Bachelor of Arts 1972 (Cum Laude), Trlmty Umvcrsay, ban Amomo Texaq APPRAISAL COURSES/PROFESSIONAL DESIGNATIONS American,institute of Peal Estate Appraisers Real Estate Appraisal Prmctple~ Intetnat~onal Association of A~s~ssmg Officerq Fundamentals of Property Appraisal. Income Approach to Valuation, Development and Writing of Narrative Appraisal Reports. Income Approach to Valuation Il, Industrial Property Appraisal Mass Appraisal of Incom~ Producing Property DesignatiOn Reg~qtered Professional Appraiser (R. PA), Texas Board of Tax Professio~lal Exatnmer~ PROFESSIONAL EXPERIENCE 1998-Present Vice President, Complex Properties, Capitol Appraisal Group, 1nc , Austin. lexas l-.ullctlon ab assistant director of the industrial d~mqmn responsible for workload management client relations, and recrumng hiring and training protessmaal and clerical personnel Professional duties include appralslrlg industrial, utility (electrical, gas, ptpehne and cable television) mineral and commercial properties, real and personal, including Inghest and best uqe analysis, and tesnfymg as an expert wltneqs ln-houqe speclahst for income valuaUon, market analysis and Uniform Standards of Plofesslonal Apprmqal Practme (USPAP) compliance Frequent ~peakcr at a~bOClatlOll conferences and chaptel meetings 1984-Present Instructor Taught ~ourse~ on Appraisal of Personal Property, Income Approach to Value, and Mass Appraisal Conccpt~ for various protesstona[ organizations and educational mst~tunons including the Texas Assocmtlon of Assessing Officers and the Texas Assoc~atum of Appraisal Dlstr,cts 1981-1997 Appraiser, Capitol Appraisal Gioup, Inc , Austin, lcxas Responsible for appraising a wide range of utd~ty, industrial, mineral, and commercial properties tot ad ~alorem tax purpo~e~ DENNIS M DEEGEAR Page 2 1980-1981 Assistant Director for Valuatmn of Complex Properties, Texas State Property Tax Board, Austin, Texas R~.sponsible for statewlde appraisal of utility, industrial, rmneral and commercial properties Fdttor of and contributor to the General Appraisal Manu~ (1981) Conducted and supervised research into approprmte appraisal methods for all types o! taxable properties tn Texas I978-1980 Valuation Speciahst, Texa~ State Property Tax Board Appraised and reviewed appra~al~ of utility, mineral and industrial properties 1975-1978 Research Associate, Public Atta~rs Research Council of Lomsmna Responsible tot re~earchmg and writing reports on problems and l~sues confronting state and local government m Lomsiana 1974-1975 R~search Asnlntant Legislative Property Tax Committee Texas Legislature Responsible for researching and producing a report on statewlde market value ~tuc~,es conducted by the tiRy states ACCOMPLISHMENTS Have reappraised annually approximately $10 b~lhon of utihty property, including all types of power plants u~mg both umt valuation and replacement cost new less depreciation, and over 100 industrial plants and ~pec~al purpose commercial propertles using all three'approaches to value Oversaw the development ot the personal property apprm~al ~y~tem used at Capitol Appraisal Group, lnc Developed varioua m~.ome approach models used at Capitol Appraxsal Group, lnt,, including cost of capital, umt appraisal and discounted cash flow Co.developer of a bank stock valuation model for the Texas Association ot Appra~sa~ Districts Member, Internatmnal Association ot Assessing Off~ers (IAAO) Chair, Public Utility Section, IAAO, 1998-99 Member, lndustrml Lm~son Committee, Texas Association ot Appraisal D~tricts, !.998 1999 CURRICULLq~ ¥ITAE ANTHONY G L4;VRFNCE 9 John Brov~-n Road Post Office Box 711 Lake Placid, NY 12946 (518) 523 -8205 EDUCATION PhD 1973 State University of New York at Buffalo (Economics) D~ssertat~on Prtczng and Planmng tn the U S Natural Gas Industry 4n Econometric and Programming Study, Arno Press-New York Times, 1979 M A 1970 State Unl,,ers~ty ot New York at Buffalo (Econonucs) Thesis A Lt~ea~ ]>rog~ammtng Model of Yugoslavta'~ Development Prospect, State Um~erstty of New York at Buifalo 1970 B A 1968 State Umverstty of New York at Buffalo (Economics) FMPL 0 Y, glENT EYPER1ENCE--CONSUL TING, RESEdRCH, 4ND TE,4 CHING 1994-present Qumcunx, Principal Researched staU~ucal and mathematical method~ tot public mlhty planning and pricing in a competitive environment production and cost functmn analyses energy-supply substitution, strategic investment planmng real-time pricing ~mphc~t valuation ot extant capital asse~, customer value and system cost of d~fferentlated servmes, and market research Developed mlcros~mulatlon methods to mcasurc the impact of eqmpment-vendor, efficiency-incentive programs apphed smd methods to esnmate the ~mpact of three demand- management programs for a major pubhc unhty ~,ompany 989 - 1991 [ rated States Department ot the Treasury, Pohcy Econom~st Responsible for econometric research on economm gro,~th investment savings, productlwty ~nfrastructure, and the monetary structure of the economy Reviewed and critiqued htcrattzre on money markets, monetary theory and monetmy economemcs pertaining to the determination and control of the money supply and relationship to economm activity Developed several potentml pohcms tor the Lmted States to increase the domestic sox mss rate via specific altera';ton$ in the Federal tax structure such as ~w~chmg to a conaumpnon-based value-added tax (VAT) Re'~lewed and critiqued the extant economic and econometric hteratme lelated to the lcwl of gro~s investment and the relative valuatmn of corporate cqmty compared to replacement or book valuatmn (e g To, bra's q) Remewed and debtmked the popular economic htetature tin pubhc~ln~rastructme investment a~ the causal deterrmnant of productivity growth CURRICULUM VITAE ANTHONY G LAWRENCE 1981-present AngelEconomlc Reports, President Developed non-parametric econometrxc methods to obtain robust esttmates ct the impact of commercial-industrial programs for a major public utthty company Developed integrated survey-research method~ for apphcatton to multiple sample feeds pertalmng to several seemingly-unrelated demand-management programs, applied said methods to three residential demand-management programs for a major public utd~ty company Developed hedomc-pnce models for primary restdential energy-u~ng durables to esnmate the ~mphclt price ct energy effictency Developed survey research methods to estimate the energv-efficmncy dlstnbutton of the primary energy-using dm ables offered for-sale m the marketplace, apphed said methods/or majoI pubh~ utlhty companies Researched the eeonomm mot~vaBon tot the Gulf war Developed econometric methods for the esnmatmn ct the tmpact ol conservatton and demand-management programs for application to tlme-serms ct cross-sections of pubhc-tmhty customers' bdhng h~storles w~th matching weather stat~stms and essenual customer survey data, applied satd methods to esttmate the impact ct demand-management programs for several pubhc utlhty compames Reviewed and synthesized pubhshed studies from a large sample ct pubhc utlhttes on customer responses to t~me-of-use rates, real-time prlctng and d~rest load control p~ ograms w~th espe0ml emphas~s on the level of monetary incentives and the marketmg methodology Surveyed econometric models of residential energy use Analyzed customer attltudeb and responses to electric Lttl[lly load management Developed scenarios of filmre energy demand Prepared Nonrestdenttal Bmldtngs Energy Consumption Survey (NBECS) for analvsts Estimated condttlonal probability models of conservation actions tn the commercml sector ° 1984 - 1985 American University in Cairo, Associate Professor Taught undergraduate and graduate mtcroeconom~c theory Research on economic problems of the M~ddle East 1980 - 1981 Applied Forecasting and ~naiysls, Vice President Consulted on energy demand mid lomca~tmg Developed staBstlcal models of end-use energy conqumpt~on m the resldentml sector Surveyed utthty torecasung methods 1980 - 1981 Lmverslty of California at Berkeley, Visiting Professor Lectured on econometrics and taught macroeconomlc theory to honor students 1979 - 1980 Cambridge Systematics, Inc, D~reetor of Economics Responsthle for business development m economics Consulted on the effect of weather on electricity ~ales Researched the factors determining the energy consumptton of mdlvtdual electrtcal CURRICULUM VITAE ~,NTHONY G LAWRENCE apphances using loud research and survey data Estimated condmonal demand modelq for req~dentml gaq ~nd elecn lcgy use 1975 - 1979 Ele[trlc Power Research Institute, ProJect Manager lmtmted ~ernmal EPRI research programs m several areas Tlme-oI>use pricing and diurnal energy-puce elastm~nes and ~ubstltutton poss~blht~es, res~dentml and commercial end-use energy modeling mmros~mulat~on ustng both real and syntheuc sample data, load modelling w~th modem t~me-senes methods and cubic sphnes analyses o~ potentml future market for elecmc vehicles and their air quality impacts, and transfer o! EPRI-sponsored research to utdity members via regular ~ndustry workshops Managed research projects on energy demand and conser,~atlon Designed projects including research objeCtlvea, economic theory, statistical methodology, econometric modelhng, data collectton and survey research Shepherded projects through EPRI-~ndustry appro', al process Wlote requests for ploposals and quahficat~ons Rewewed competmve proposals and ~clected contractors Collabolated wtt[t and managed research contractors academic consultants and industry advisors Arranged, managed and chmred various research workshops and industry seminars Edited reseat'ch reports and conference and workshop proceedings Conducted ~ndependent m-house research wrote professional articles and research ~ummarms, and pre,anted results at varmuq professmnal meetings on demand analys~s quahtat~ve choice, aggregation, and demand systems applied to the demand for energy-using durables and coal production Did m-housc~orccastmg of U S energy demands Ran workshops and seminars to transfer research results to the utfllW ~ndustry 1974 - 1975 Umvers~ty of Kentucky, Assistant Professor Taught stat~stical dectmon analysz~ and economm development Researched the Kentucky coal industry (subszdtzed by the Institute ~or M~mng and Minerals) e~aluated the causes and effects of thc ownership pattern of Kentucky coal m~nes Developed cross ~ect~onal data lrom confidcnuaI tax records m order to estimate a production functxon for Kentucky mines Researched substitutability and lags tn adjustment tot both res~denrlal and steam-electric demands 1972 - 1974 Bureau of Labor Statistics, Econom~st, Cost of 1 ~vmg Project Researched the theory ot demand behavior, the economeUtcs ot complete ssstems of demand equations and their relation to the theory of a cost of hwng ~ndex Reqearched the theory and empmcal measmement ot quaht5 change and hedomc puce functions Stud~ed empmcally rater-fuel substitution m the electric power mdustr? and resldentml CIJRRIC[rLUM VITAE 4.NTHONY G LAWRENCE energy markets 1969 - 1972 Governor Herbert H Lehman Fellow m Ecanomtcs at State Lmvers~t) of New York at Buffalo As doctoral research developed a pnmng and planmng model for the U S Natural Gas Industw For Master's thesis, developed a hnear programming model fm ~ ugoslama Researched random coetfictent methods tar regression analy sis of pooled rimes-series ct asa-section data Stu&ed quantttatxve economic planning, operations research, economic growth theory, operatlon~ research, and advanced econometrics Taught maeroeconomms, economic growth and business cycles, and mmroeconomtc theory 1968 - 1969 National Defense Education Act Fellow m Economies at State Un,vers~t~ of New York at Buffalo 8tudled econometrics, mathematical economics ~uld economic theory Taught economms at M~llard Ftltmore College and statmncs at £ amsms College PAPERS, PUBLICATION$, AND PRESENTATIONS "~ Linear Programming Model of Yugoslavta's Development Proqpects" M A ihes~s qtate [ mvers~tw of New York at Buffalo, 1970 "Interfuel gubst~tutton The S~eam Electric Industry's Demand for Fucl" BLS Winking Papcr 8, presented at wrater meetings, Econometric Somety Foronto December 28 1972 Prtctng and Planntng tit the U S Natu~ al Gas Industry 4n F~onome~ tc and Prog~ ammmg .¥tt~dv Arno Press New York 1979, Ph D Dtssertatmn State Umvers~ty of'New York at Buffalo February 1973 "The Asymptotm Bras and Varmnce at a Computed True Cost of Lt,.mg Index The Case at the Klein Rubtn Constant Utd~ty Index", BLS Wo~kmg Papc~ 20 p~e~ented at Vve~tcm Economtc A~oclatlon Meetings Las Vegas June 20 i974 ' Regional Res~dentml Energy Demand m the U S" pre~cntcd at Western kconomlc Assoc~anon Meeting, Las Vegas, June 20, 1974 ' Ag~egate CES Input Demand w~th Polytomous Yhcro Demand" ~th R McDonald Econometrtc~l March 1978 presented at wtnter meeungs Economemc Society, San Franc~sco December 29 1974 "The Causes and Consequenceq al' the Changing Pattern of Coal Mine Ox~er~h~p" Institute for M~nmg and Minerals Research, IMMR-PD3-75 Lmverstty at Kentucky, September 1975 4 CURRICULLrM VITAE ANTHONY G LAWRENCE "The Role o5 Prmes in Quahtatrve Chorce Models" presented at Econometric Somety September 16-18 1976 "M~cro FoundaB. ons of Dmcrete Chome Modehng for Itousehold Fuel Demsmn" ~,~th J Boyd, presented at Econometrm Socmty, September 16-18, 1976 "The Resrdenttal Demand for Electrmrty by T~me-ot-Dav An Fconometnc )aaalyslq", ,a ~th Steven Bra~thwmt, presented at Pubhc Ut~ht~es Forecasting Conference ~pon,,ored by Bell-Canada and Umve~srt5 of Lancaster, Mar~.h 22-25, 1977, and presented at EPRI workshop on Methodologies tor ForecastmgTrme-of-dayandSeasonalEleetr~cltyLoads, ~spen, t. olmado March39-Apnl 1 1977 "Tecbaiologlcal Change and Transportation Energy Forecasting% w~th R T Crow, m Proceedings of Work,hop on Long Run Energy Demand MTR 726'~ The M~rre Corporatmn, May 1977 "T~me of Day and Seasonal Load Forecasting", EPRI.lournal, August 1977 "Esttmat~on of an Aggregate Industry Productron Functmn Using the Etfictency D~strlbutron ot Mmro Umts M~dwesternCoaI"presentedatWestemEconomicMeet~ngs, June20-22, 1977andthe Econometric Somety wrater meenngs, New York C~ty, December 1977 Fo~ eca~tmg and Modeltng T~me-of-Dal and Sea~'onal Electricity Demands, editor, EA 578-SR, Electric Pow~:~ Research In~trtute, De~.ember 1977 "The Restdentral Demand for Elei. mc~tv by Tmae-of-Day" wah C, teven Brmthwmt, Journal o./ Econometrtcs, 9, 1979, pp 50-77 "Developtng a Method for Weather AdJustment ot Energy Sales by Class ot Customer", presented at EPRI Demand & Conservauon Workshop, October 1980 "Econometric. Est~manon of Resrdentral Apphance Lint Energy Conqumptlon" presented at EPRI Workshop, Atlanta, Georg,a, tn Proceedings End-Lse Models and Cons~rvatmn Analys~s, EPRI EA2509 Project 1050, Flectnc Power Research lnstrtute, Palo Alto CA July 1982 "A Survey of Electrrc Ut~hty Load Forecasting Methods" mlmeo tot EPRI project RPIS15 August 1981 "l_lnrt Energy Consumptron (UEC) ,Mnaly~ ot Resldentral Electric and Gas Applmnces for the Pacific Gas and Electric Company 1979", Angel Economic Reports May 1982 "Umt Energy Consumption Analysis o1 the National Interim Energy Consumptmn Survey Data", w~th M Robinson June 1082, Apphed Forecasting and Analys~s lnc under subcontract to A D L~ttle, Inc for Elecmc Power Research Institute project RP1587 CURRICULUM VITAE AX~THONY G LAWREtNCF Surve~ of Condtt~onal Energy Demand Models/or Eattrnat~lg Ro ~d~ntm/ Utltt lz~erk, v c~m~umptum (UEC) Coefficients wtt~ M Pam~, final report for EP~ research project RP576 3 August 1983 Electrtc Power Research Instt~te, Palo Alto, CA C~tomers' ~ttttude~ and Customers~ Reaponae to Load Management, final rcpo~ for Electric Rate Design S~dy, topm IV 1, November 1983, Elecmc Po~ver Research Institute "Develop~ a Umfied Research QuahW Database at Nmgara Mohawk Power Co~oranon", Research Memorandum for Nmg~a Mohawk Power Co~orat~on, Februa~ 1986 "Comments on RTI', Pdot Study Des~ Issues", Rese~ch Memo~ andum for Nmgara Mohawk Power Co.matron Febma~ 1986 "Heating and Coohng Reqmrements Functmns", Research Memorandum for Nmgara Mohawk Power Co~oratton, September 1986 "Hedomc Price Models tot Energ5 Using D~ables lrom the Sellm s' Perspecm e" Working Paper Prepared for N~ag~a Mohawk Power Co¢ora~on, May 1987 "Res~dentml Energy Utxhzatlon Indexes for Nmgara Mohawk Condmonal Demand Results tm 1979, 1985 and 1986", Working Paper Prepared for Nmgara Mohawk Powex Co~orat~on, November 198v "A Test for EndogenctW ofApphances ~n a Cond~tmnal Demand Model ot Res~dennal Energy Use ' Working Paper Prepared for Nmgara Mohawk Powe~ ( o~orat~on December 1987 "The Price ot Etfimency lmphed bv Hedomc Price Funcuons of Res~denual Energy Using Apphances" Working Paper Prepped for ~agara Mohawk Power Co¢orat~on, Dccember 1987 "~e Value of Semce for Commercml Elecmc~ty Customers ~ Econome~c Approach," Working pape~ ~or private chent using s~ev data from a major elecmc utih~ company December 1988 ' the Value of Se~ce for Remdentml Elecmc~q, Customers An Economemc Approach" Working paper ior private chent using su~ey data from a major elecluc utth¢ company Januau 1989 "The Value o f Settee for Res~dentml Elec~c~ Custome~ ~ An P conometnc approach," Working paper tot private chent using cu=tomer data from a Bonne~ dle Poxver Admm~strauon sursey, April 1989 "~ltemat~ve Poltctes to E~ance Domesnc Sasmg,' Trcasur~ memorandum ~or working ~oup on sawngs and the cost ot capttal, May 1989 'MetaMoney the Role ol Money, Credit and Promtses," %easuD working paper tot Ot~ce ot Economm Pohcy, August 1 ogo "A ( ~ttlque of Bamett's Monetau Aggregate," Treasmy ~orkmg paper tot Office of Pcononuc Pohcy 6 CURRICULUM VITAE 4aNTHONY G LAWRFNCF Novembm 1989 "A (. nncal Evaluation of Altemanve Money Aggregates," q reasuq' x;orkmg paper for Office of Economm Pohcy April 1990 "A Critique of Aschauer's lnIrasmlcture-Productlvlty Work" lreasury working paper fol Office of Economm Pohey, August 1990 "The Economic Reasons for the War An American Economist's Peispecttve," Paper prepared tot presentation to the Faculty of the School o~ E¢onomms and Business Umvers~ty of Rome ~ebruarx 1991 "The Productlmty-lnfrastructure-Grmvth Nexus An Review of the Econometric Ewdence" Treasury worMng paper tor Office ot Economic Policy, June 1991 "Impact Evaluatmn of 1991 Dealer Incentive Programs and ( ompact Fluorescent Light Bulb Pro.am" Aspen Systems Corporation lot Con Edison 1993 "Impact Evaluation of 1992 Dealer Incentive Programs and Compact Fluorescent Light Bulb Program ' Aspen Systems Corporation for Con Edison, 1994 *'Impact of Demand Management Program for Large Commetcml-Industnal Customers' Aspen Systems Corporation 1oi Boston Edmon, 1994 "Impact Evaluation of 1993 Dealer Incentive Plo.re'ams and Compact Fluorescent Ltght Bulb Program," Aspen Systems Corporation for Con Edison, 1995 TO Ho,~ard Mamn &~ststant Cltx Manager tot k uhtte~ FROM Sharon Mal, s Elecmc Lttht', Director DATE October 27, 1998 SUBJECT PUC Effort to Implement Retail Deregulation Without Legislative Action Attached are two newspaper amcles and a letter from Pat Wood to the other PUC Commissioners The Pat Wood letter lays out his present vision for a deregulated Texas electric utility market The news paper articles describe a new tnmative for opening the retail electric market to competition wthout any involvement of the legislature Former Governor Mark White has begun a campaign to use the PUC's ability to issue multiple electric utility cemficatton as a mechanism to allow retad elecmc access Mr White's position ,s that any group can form a utility, go the PUC for cert,ficat~on to provide retail electric service in an area and begin serving customers His argument ts that the PUC has always had the ability to grant multiple certifications and that they can create competmon by simply granting certifications to anyone w~shing to serve an area The PUC Is actively pursuing this approach through two different rulemakmg proceedings One proceeding (Project 18876 - Investigation into Sw~tchover Issues) was originally designed, to correct problems customers tn existing dual certified areas ',,,ere having svatchmg from one prowder to another For example today, ifa TU electric customer in the Denton city hrmts wanted to change to DME, that customer has to get TU to remo',e or abandon,their distribution faclhties, which were installed to deliver power to that customer, and get DME to mstall new facilities It ts not uncommon for the unhty that was losing the customer to try to charge large fees to the customer for removmg their facilities and/or take a long time getting the facilities removed The proposed rule to correct these abuses was published August 28 It did not apply to mumclpalmes or address retail wheeling over another utihty's sl, stem However, the Commission revised the proposed rule after the comment period to include a requirement that the utfl,ty ,,,ath the existing facilities sev, mg a customer who w~shes to sw~tch must deliver the competitor's pov, er to the switching customer over ,ts facilities This is retail wheeling which creates deregulation at the retail level The Commission ,s also attempting to broaden the apphcauon of this proposed rule to cover mumclpalltles In addition to the effort described abo~e the Commission has incorporated the same concept into their proposed new rules govermng the pro~,lston of wholesale transmission setw~ce (Project 18703- Re~,lev, ot Transmtsston &ccess Rules) The dratt ne~ rule~ include a pro',~ston that state> h transmisston sen tce pro~, ~der shall also pro', ide access at the distnbuuon le~ el to another electric utd~t~ m order to transmtt pou, er to a customer tn an area tn 'ahtch the other electric utda5 has a certificate to pro,,lde elecmc senlce Such ser,.~ce shall be pro~tded under the same pricing and other term> and condtnons a,~allable to the transmission >er~lce pro~,lder m serving similar customers Once again this creates retail customer b', customer competition in any area ~here more than one utlht'~ ts certified to pro'ride electric ser-,tce Ob,,~ou~l', it the Commisston is successful in tts efforts these roles v, ould ha~e an tmmedtate impact on DME. stnce we are dual or trtple certified tn much of our c~t5 hmtts It is doubtful that the Commtssion has the legal authority to order a mumctpal utthtv to provtde retml wheeling The only authority the Commtssion has over our operation is In the area of wholesale transmission service Tlus nan'ow authority was given to the PUC under PUP, ak 95 However, even if we were to be successful tn preventing the Comm~ssion from tmposmg retail wheeling requirements dtrectly on munlcipaltt~es absent leg~slatton actton, the lmphcatlons of what the Conumsston is trvtng to accomphsh are huge If they are successful, Texas would have retail deregulanon without addressing ~ssues such as reliability, stranded investment, or the abthty of the Texas Independent System Operator to operate the ERCOT system The legislature would be lel~ ennrel~ out of the process All members of the traditional electric service provider commumty, mvestor owned utilities, co-operatives, and municipal utilities are oppostng this effort by the PUC I have been in contact with Jun Boyle and he assures me that he will carry our message to our legislators We w~ll also participate actively tn the comment process on both Projects We have already filed comments on Project 18876 C4~tInued from J1 t*ee I*~r ,,he service Corpus Ch.r~stL no~ sev. ed by Ls,ngCP&Lsequlpme'~t~$not CP&L ~ut~mesmusthavesu~ as ou~sh ~ ~dea as 1[ m~ght ce~cates to se~ ~er to re~ seem %~lte ~ened It to ~e tele c~tome~, mclu~g homes ~d phone md~ m w~ch Sou~ ~usmessesot~ aues weste~ ~U Telephone Co zs re For ye~ ~o~ ce~fficates qu=~ to let im new compet~tor~ ~o~dbe com~tltors The ~ ~eut~l~co~m~lonrecenU} phctt b~galn was that a utg~t~ proposed ne~ ~es uhat ~o~d ~o~d get a ce~cate to se~e a ~ongo~er~wgs makeltea~ler p~lc~ =ea ~d, wt~ a few for c~omers to sw~tch ~er exceptions would face no com~leswheremore~onels co~tttors ce~ffi~ %~ l~out having to add or But ~ebb ~e~ ~ op~umW rep~ce ~we~ lines (For tot mine leg~ m~euver~ ~at c~ re~ns, a~ut ~ ~rcent of the ~o~d enable the ~ C~lsti sure s ~ h~ two or more utd~ ~ouE ~ compete by ~R~g a t~ ce~ffi~ to se~e ) the ~ to ~n up ~e Co~i ~fa~n- mono~hes sidemble ~ ~n~ ~d ~u~ ~e sure constitution, Webb W~t m no p~hover It had ~ve ~d, b~ state ~d lo~ ~ve~ nu~ l~t ye~ of ~ 2 b~lon men~ ~m aw~ exclusive 'Rl~tnow~ey rew~mgand ff~ch~es J~t ~a~ CP~ has a celeste [o ~e a ~ we re ~ot," ~lte said "But we're =ea d~ not p~vent o~en Imm no~ ~o~h fighting ~o ~, he said Ea ~te is ~t~, Webb said ~ C~fl Power ~ L~t co~d ~gm ~ c~tomers d~s wo~d be subj~t to ~m ml~ton approve, ]~t M CP&L's Robe~n at Cen~ ~d ~u~ the ~w to ~Y ~t ~e o~er ~m~Y ~s it ~ show he mid Even w~ a ~m~, bower er where wo~ ~e c~enge~ get ~ el~mci~ ~ how wo~d ~y debar It~ ~er ~ CP&L. l~e m~ ut~, h~ ~nt ~es ~ b~om of 1~ bufld~8 l~ ~wer s~te~ No problem, ~te said The morley si~atloR oR ~ls doesn~ requ=e $I~ m~lon" ~ere s no n~ to buy ~er p~ wires or ~ie~ he ~d b~au~ the~ ~e ~e~dy m p~ce ~te, m facL hel~ fo~ Power Choice ~c, ~ oust ~at to buy ~wer on ~e whol~e m~ket for rede ~ ~e new Cot pus G~stl Power & ~e ~wer ~es ~ ~e~ rtv~ ~ TEXAS JOURNAL 17ze Wall Street Journal -- . ... IA edne~day, y' C - ~e S~ ~ ~e ~UC ~ ~o~ ~e S~*te ~lc ['~ ~ ~ s ~c~ say fvea P~C torove~p~t~ ~u~ ~ ~ S~a [ ~ t ~mer once s ~ ~ ~ ~a ot ~ ~: ~ ~ ~o~ m~u c~ ~m~q~ofl ~e~P~r ~* Sb~l ~ Met ~ or ~ ~ ~d ~ '~' ~re~at ~ ~ ene~ se~ce by as~e~e~tvero~tch no.uti ~clr~lteo ~f~l ~Cel cqe S~ce s '4 C~pem~s '~s ~n ~ ~nr r~o~ ot ,~e su,* P~ty -nic~ ~m~a