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