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1986-1591461L NO _ZV AN ORDINANCE APPROVING AN AGREEMENT BETWEEN THE CITY OF DENTON AND MANAGEMENT APPLICATIONS CONSULTING, INC FOR CONSULTING SERVICES IN CONNECTION WITH THE 1986 RATE STUDY FOR ELECTRIC, WATER AND WASTEWATER SERVICES, AND PROVIDING FOR AN EFFECTIVE DATE NOW, THEREFORE, THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I That the Mayor and City Secretary are hereby authorized and directed to execute and attest, respectively, the agreement between the City of Denton, and Management Applications Consulting, Inc , providing for professional services in connection with the 1986 Rate Study for Electric, Water and Wastewater Services under the terms and conditions being contained in said agreement which is attached hereto and made a part hereof SECTION II The expenditure of funds is hereby authorized in an amount not to exceed $39,500 SECTION I That this ordinance shall become effective immediately upon its passage and approval PASSED AND APPROVED this the , day of 1986 1 X~~ RAY STE R S, MAYOR CITY OF ENTON, ThXAS ATTEST LO TE ALLEN, CITY SECRETARY CITY OF DENTON, TEXAS APPROVED AS TO LEGAL FORM DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY CITY OF DENTON, TEXAS BY 1461L THE STATE OF TEXAS S COUNTY OF DENTON 5 AGREEMENT BETWEEN THE CITY OF DENTON AND MANAGEMENT APPLICATIONS CONSULTING, INC This contract entered into this day of , 1986, by and between the City of Denton, Texas, i 'eina ter referred to as "Owner," acting by and through Ray Stephens, its Mayor, duly authorized to act, and Management Applications Consulting, Inc , Austin, Tx , a corporation duly authorized to transact business within the State of Texas, hereinafter referred to as "Consultant" WITNESSETH, that in consideration of the covenants and agreements herein contained, the parties hereto do mutually agree as follows I EMPLOYMENT OF CONSULTANT The Owner hereby employs the Consultant and the Consultant agrees to perform all necessary professional services as herein set forth in connection with the 1986 Rate Study for Electric, Water and Wastewater Services II CHARACTER AND EXTENT OF SERVICES The Consultant shall perform professional services as listed below in the Scope of Services and as further described in Consultant's proposal as submitted on July 15, 1986, attached hereto as Exhibit A SCOPE OF SERVICES A General Conduct a utility rate study to assure that present rates correctly reflect present cost of service Z Conduct a review of Owner's compliance with the Federal Public Utility Regulatory Policy Act, and the Texas Public Utility Commission, and develop a City of Denton, Electric System PURPA Compliance Guide that will outline present status and future requirements for PURPA and Texas PUC compliance 3 Conduct a review of Owner's compliance with the regulations and policies of the Texas Water Commission, American Water Works Association, and develop a City of Denton Water System compliance guide that will outline present status and future requirements for TWC compliance 4 Develop a Utility Rate Design Software Package for the microcomputer systems to be used by the Utility Department in future rate studies B Electric Rate Study 1 Financial Analysis The Consultant shall review the electric utility's historical and future revenue requirements and expenses The Study shall anticipate costs and revenue requirements and develop rates to be applied for the next fiscal year Projected future capital and operating expenditures will be provided by the Utility Staff, but shall be reviewed and analyzed by the Consultant The rates shall be designed to provide revenue such that bond rate covenants are met Bond covenants require that pledged revenues be 1 25 times average debt service requirements However, revenues shall also be such that net income is sufficient to allow an annual discretionary transfer from the Electric Fund to the General Fund equal to six percent (6%) of net investment (system equity) 2 Rate Design Structure The Consultant shall evaluate the cost associated with serving various identifiable classes of customers Rates shall be designed to recover such associated customer class costs as much as possible, however, recognizing such rate making principals as moderating any significant changes of historical rates Customer classes shall be of similar description to current rate-making practices of area utilities and the Texas Public Utility Commission, to the extent that such classes are applicable to the City of Denton's electrical system Rate structure design shall take into consideration applicable PURPA requirements of Title I, Subtitle B, Section 111(d)(1-6) a Cost of Service The rates charged for providing electrical service to each class of electric customers shall be designed, to the maximum extent PAGE 2 practicable, to reflect the costs of providing electrical service to such class b Declining Block Rates The energy component of a rate, or the amount attributed to the energy component in a rate, charged for providing electric service during any period to any class of consumers may not decrease as kilowatt hour consumption by such class increases during such period Exception to this principal occurs where such costs for providing electric service to such class are attributable to such energy component decrease as such consumption increases during such period c Time-of-Day Rates The Consultant shall consider an experimental time-of-day rate Such rate shall be available on a request basis to a maximum of 100 customers approved by the Director of Utilities Such time of day rate shall reflect the costs of providing electric service to such class of electric consumers at different times of the day unless such rates are not cost effective with respect to such class d Seasonally Adjusted Rates The Consultant shall review and consider rates charged for providing electric service to each class of electric consumer on a seasonal basis which reflects the costs of providing service to such class of consumers at different seasons of the year to the extent that such costs vary seasonally for the electric system e Interruptible Rates The Consultant shall consider and develop an interruptible rate applicable to industrial and commercial electric customers of appropriate size The interruptible rate shall reflect the cost of providing such service to the class of consumer receiving such service f Load Management Techniques The Consultant shall review Owner's load management techniques and make recommendations for improvement Rate structure design will also take into consideration the following additional factors and rate design elements g Cogeneration The Consultant shall consider and develop a cogeneration rate Such rate shall PAGE 3 consider customer-owned and operated energy production systems that may provide energy for the customer, plus generating excess energy that may be fed into Owner's electric system h Stand By Power or Back Up Power The Consultant shall review the applicability of a rate to provide stand by or back up power for cogenerators or small power producers This change reflects purchased power costs to the City of Denton The Consultant shall confirm whether such charge conforms to generally accepted practices of similar charges of other area utilities, and that such charges are in compliance with appropriate laws and regulatory agencies 1 Wheeling Rate The Consultant shall consider and develop a wheeling rate Such rate shall consider customer-owned and operated energy production systems that may provide energy for the customer, plus generating excess energy that may be transferred through Owner's electric system to customers of the cogenerator located within or outside the Owner's system 3 Rate Making Standards The Consultant shall review, evaluate and make appropriate recommendations as to Owner's compliance with PURPA rate making standards contained Title I, Subtitle B, Section 111(d)(1-6) regarding Cost of Service Declining Block Rates Time-of-Day Rates Seasonally Adjusted Rates Interruptible Rates Load Management Techniques Additional rates and rate factors to be considered are Cogeneration Energy Cost Adjustment Sand By or Back Up Power Wheeling Rate 4 Consideration and Determination of Standards The Consultant shall review, evaluate and make appropriate recommendations as to Owner's compliance with PURPA's request to consider and determine such standards as PAGE 4 described in Section 111 of PURPA regulations if necessary, the City of Denton Public Utility Board will plan to hold public hearings and take testimony relating to the above-referenced standards (see section II A 3 above) Public hearings will be held at the conclusion of the rate study prior to final adoption of the rates C Water and Wastewater Rate Study 1 Financial Analysis The Consultant shall review the water and wastewater utility's historical and future revenue requirements and expenses The Study shall anticipate costs and revenue requirements and develop rates to be applied for the next fiscal year Projected future capital and operating expenditures will be provided by the Utility Staff, but shall be reviewed and analyzed by the Consultant 2 Rate Study The Consultant shall review the revenue requirements and the cost allocations of the Water and Wastewater divisions The study shall encompass the following areas Departmental capital requirements, operating expenses and return on investment Payments, revenue expectations, revenue requirements and allocation of expenses Rate structures The report shall consider the Water and Wastewater divisions as totally separate for expense and revenue purposes except as combined expenses such as administrative, might be allocated on a pro rata basis The Consultant will evaluate the cost associated with serving various identifiable classes of customers Rates shall be designed to recover such associated customer class, recognizing such rate making principals as moderating any significant changes of historical rates Customer classes shall be of similar description to current rate-making practices of area utilities and the Texas Water Commission, to the extent that such classes are applicable to the City of Denton's water and wastewater system PAGE 5 3 Department Capital Requirements, Operating Expenses, and Return on Investment Payments The Consultant shall analyze carefully the future revenue requirements, taking into consideration planning and technical reports prepared by Freese $ Nichols The capital requirements and operating expense of the eventual wastewater treatment plant expansion shall be considered Analysis of future operating costs must be conducted, taking into consideration state and national water quality regulations, energy costs, etc Return on investment of 6% per annum shall be included in the revenue requirements The Consultant shall conduct a cost of service study for the Water and Wastewater divisions to determine the proper rate structure for each class of customer Proper consideration shall be given to past facility extension policies as they relate to the allocation of costs to customer classes Rates shall be recommended that properly establish user charges and industrial cost recovery Such rates shall conform to the regulations set out by the Environmental Protection Agency in Part 35 of Title 40 relating to user charges and industrial cost recovery, pursuant to section 204(b) of the Federal Water Pollution Control Act Amendments of 1972, PL92-500 Rate structure design shall take into consideration applicable Texas Water Commission requirements a Residential The rates charged for providing water service to each class of water customers shall be designed, to the maximum extent practicable, to reflect the costs of providing water service to such class b Commercial The Consultant shall review the current commercial water rate schedule and determine whether the existing schedule is designed to conform to generally accepted practices of similar charges of other area utilities, and determine whether Owner's schedule and practices are in compliance with Texas Water Commission rules and regulations c Seasonally Adjusted Rates The Consultant shall review and consider rates charged for providing service to each class of water consumer on a seasonal basis which reflects the costs of PAGE 6 providing service to such class of consumers at different seasons of the year to the extent that such costs vary seasonally for the water system d Wholesale Rates The rates charged for providing water and wastewater service to each class of water consumer shall be on a basis which reflects the costs of providing service to such class of consumers at different seasons of the year to the extent that such costs vary seasonally for the utility system e Rate Design Software for Microcomputers The Consultant shall submit as part of the Study, a comprehensive rate design software package, tailored to the needs of the City of Denton, and structured to address all relevant factors included in current rate design methodology III EXPERT TESTIMONY The Consultant shall anticipate that personnel involved and/or responsible for the development of the electric rates and PURPA compliance guide may be, at a later time, required to give expert testimony Professional service fees for such testimony shall be considered to be in addition to the fees for the Utility Rate Study and shall be listed separately as designated in Section VIII(B) of this request for proposal IV REPORTING A Presentation of Report The Consultant shall provide the City C copies of the final report and the PURPA Compliance Guide the final report, the Consultant shall to a joint meeting of the City Council Board B Rate Study Steering Committee er of Denton with Utility Rate Study After delivery of present the report and Public Utility A steering committee will be established by the Public Utility Board THis committee will be composed of a representative from the Council, Public Utility Board, City Manager's Office, and the Director of Utilities and Finance Director The purpose of the committee will be to meet periodically with the Consultant to review the progress of the Study and provide input as desired by the Consultant ity-f ive X1) PAGE 7 V FEES A Charges for Professional Services The Consultant shall charge for professional services of staff who may be assigned to the project in accordance with Consultant's standard hourly rates for the various categories of personnel as follows Principal Sr Consultant Consultant Technical Asst $80. 0(1 per $ 5 00 per our $45 00 per hour $25 00 per hour $ per $ per hour our hour Time charges will be made for personnel only while they are actually at work on the assignment and for travel time during normal working hours Unless authorized by Owner B Out of Pocket Expenses In addition to the cost of professional services, travel and living expenses while engaged on a project away from the home office, such as commercial travel fares, meals, lodging, telephone and rented automobiles, and such other expenses as telephone, reproduction, postage, freight and data processing will be billed at cost Use of a personal car to make a trip in the Owner's interest will be billed at 23 cents per mile Outside services or extraordinary expenses, when specifically authorized and incurred on the Owner's behalf, will be billed at cost C Maximum Charges The maximum charges for services for the two project segments shall be Electric Rate Study $24,500 Water/Wastewater Rate Study 15,000 Total Charges Shall Not exceed $39,500 D Method of Billing Invoices shall be rendered monthly for the preceding month's services performed and expenses incurred on PAGE 8 Owner's behalf, and such invoices shall be due and payable ten days after receipt of the invoice VI SOFTWARE RIGHTS Any software developed in the course of this assignment will ?1 " be provided to Owner for its exclusive use in conducting its own R lf business The consultant shall retain all rights to sell, reproduce and market the software.. VII ASSIGNED PERSONNEL Consultant will utilize its own personnel in the consideration of all required studies and under no circumstances shall Consultant be authorized to enter into any contract with another which would obligate Owner to pay all or part of the amount due under any such contract irrespective of whether recovery might be based upon an express or implied contract VIII TIME OF COMPLETION Consultant shall complete its services by October 28, 1986, and a final report shall be ready to submit to the Public Utilities Board and City Council by November 4, 1986 IX TERMINATION OF CONTRACT Consultant's services may be interrupted or terminated at any time without further liability other than for the charges and expenses incurred up to the date of such interruption or termination Owner shall receive all work done by Consultant to the date of termination X SUCCESSORS AND ASSIGNMENTS The Owner and Consultant each binds himself, his successors, executors, administrators and assigns of the other party to this Agreement, and to the successors, executors, administrators and assigns of such other party in respect of all covenants of this Agreement Neither the Owner nor the Consultant shall assign, sublet or transfer his interests in this Agreement without the written consent of the other This AGREEMENT is executed in three counterparts PAGE 9 IN TESTIMONY HEREOF, they have executed this Agreement, the day and year first above written CITY OF DENTON, TEXAS, OWNER BY / R Y I N PAY OR ATTEST CHARLOTTE ALLEN, CITY SECRETAK-1 CITY OF DENTON, TEXAS APPROVED AS TO LEGAL FORM DEBRA ADAMI DRAYOVITCH, CITY ATTORNEY CITY OF DENTON, TEXAS BY 46"~ 19 b6V(ZieL MANAGEMENT APPLICATIONS CONSULTING, INC , CONSULTANT BY e,ZOHN WAGNER, JR FRINCIPAL ATTEST 041 TTKLLEN, CITY OF DENTON, TEXAS PAGE 10