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2020-059 March and April 2020 DEC DashboardDate: June 19, 2020 Report No. 2020-059       INFORMAL STAFF REPORT TO MAYOR AND CITY COUNCIL SUBJECT: FY 2019-20 Denton Energy Center (DEC) YTD March and April 2020 Dashboards BACKGROUND: Attached are the March and April 2020 FY 2019-20 Dashboards for the Denton Energy Center. The dashboards are intended to give a snapshot of relevant DEC metrics. The dashboards highlight the following:  The Emission Charts (based on calendar year) display the March and April engine runtime hours, starts, stops, monthly and annual emissions totals and limits.  DEC MWh Generation and Gross Revenue for FY 2019-20 through April 2020. o The DEC ran 26,426 MWh less through April of FY 2019-20 compared to FY 2018-19. This resulted in $968,000 less in DEC Revenue.  A DEC financial summary showing March and April FY 2018-19 Actuals, FY 2019-20 Budget, Actuals as of March and April 2020 and the FY2019-20 end of year projections. o The FY 2019-20 year-end projections have been updated to show a $1.5 Million decrease in DEC fuel cost.  The Plant Monthly Run Hour Comparison Graph illustrates the monthly plant run times.  The Key Trends section explains variances in revenues and expenses. o Due to running fewer hours through April, fuel cost was approximately $1.56 Million lower. o The DEC Net Income through April ($6.48) which is expected for the first seven months of the fiscal year. o The DEC Gross Margin through April was $4.9 Million which is $3.4 Million higher than budgeted due to higher DEC Revenue in October and November. (The Gross Margin = DEC Revenue – Fuel cost –Variable Operating & Maintenance cost.) Gross Margin represents the component of revenue available to pay fixed cost including debt. ATTACHMENT(S): Denton Energy Center (DEC) Dashboard STAFF CONTACTS: Antonio Puente, Jr. CFO/DME General Manager (940) 349-8487 antonio.puente@cityofdenton.com Nick Vincent Assistant Director of Finance (940) 349-8063 nicholas.vincent@cityofdenton.com City of Denton, Texas FY 2019-20 Denton Energy Center YTD April 2020 Dashboard Key Trends For the first 7 months of FY 2019-20, the DEC produced 26,426 MWh less than the same period of FY 2018-19. This resulted in approximately $968,000 less in revenues and $2.3 Million more in total expenses for the same time period. This increase was due to the annual debt service payment increasing from $10 M to $18 M in FY 19-20. As of April 30, 2020, expenditures exceed revenues by $6.48 Million which is expected for this period of the fiscal year. The FY 2019-20 Estimate includes a $1.5 Million reduction in fuel cost based on fewer estimated run hours, and a $420,000 reduction in Personnel Services is anticipated as a result of vacancies. The FY 2019-20 Estimate for Insurance has increased by $580,218 as a result of an increase in the cost of DEC property insurance and the acquisition of outage insurance. Through April 2020 the DEC Gross Margin was $4.9 Million which is $3.4 Million higher than budgeted for the same period (Gross Margin = DEC Revenue –Fuel Cost –Variable Operating & Maintenance Cost). This is due to higher revenue in each month this fiscal year except December and January than anticipated. Updates in the DEC Revenue and Energy Expenses for FY 2019-20 year-end projections show a $(7.48) Million Net Income compared to the $(8.95) Million Net Income shown in the FY 2019-20 budget. Note: All dollar figures presented are in million of dollars. Month Revenue MWh $/MWh Oct-19 $2,043,727 16,344 $125.04 Nov-19 $1,152,356 16,168 $71.27 Dec-19 $126,950 2,159 $58.80 Jan-20 $239,366 2,671 $89.62 Feb-20 $676,548 9,466 $71.47 Mar-20 $1,561,657 18,209 $85.76 Apr-20 $889,878 8,765 $101.52 Total FY 2019-20 $6,690,482 73,782 $90.68 Generation & Gross Revenues Description Engine Runtime (hours)* Hot Starts Warm Starts Cold Starts Stops Description Nitrogen Oxides (NOx) Carbon Monoxide (CO) Volatile Organic Compound (VOC) Particulate Matter<10 microns (PM10) Particulate Matter<2.5 microns (PM2.5) Sulphur Dioxide (SO2) Ammonia (NH3) Carbon Dioxide Equivalents (CO2e) DEC Monthly Emissions Total (tons)1.25 1.19 0.76 0.54 0.54 0.01 0.11 4,319.00 DEC Annual Permit Limit Operations (tons)**29.78 93.52 48.16 69.72 69.72 1.45 60.90 Monthly Plant Emissions per DEC Permit Limit 4.19% 1.27% 1.58% 0.77% 0.77% 0.71% 0.18% Annual to Date Plant Emissions per DEC Permit Limit 20.20% 6.30% 8.50% 3.80% 3.80% 3.70% 0.80% * Over the past 12 months, the DEC engines ran 16% of the time. During the month of April, the DEC engines ran 9% of the time. **Operations Annual Limit accounts for Balance of Plant standard emissions April 2020 Engines (1-12)749 54 56 131 241 Emissions FY 2018-19 FY 2019-20 FY 2019-20 FY 2019-20 YTD ACTUALS **BUDGET YTD PROJECTION DEC REVENUE* 7.66$ 25.07$ 6.69$ 25.07$ EXPENDITURE SUMMARY Energy Expense - Fuel 3.25$ 12.48$ 1.69$ 11.00$ Personnel Services 0.91 2.22 1.03 1.80 Materials & Supplies 0.11 0.44 0.20 0.39 Maintenance & Repair 0.09 0.56 0.02 0.56 Insurance 0.01 0.50 0.01 1.08 Miscellaneous 0.00 0.00 0.00 0.00 Operations 0.12 0.48 0.12 0.38 Debt Service - Principal 2.99 7.47 4.33 7.47 Debt Service - Interest 3.37 9.80 5.74 9.80 Interfund Transfers 0.00 0.05 0.03 0.05 Transfer to Capital Projects - 0.02 - 0.02 DEC EXPENDITURES 10.85$ 34.03$ 13.17$ 32.55$ -$ -$ -$ -$ DEC NET INCOME (3.19)$ (8.95)$ (6.48)$ (7.48)$ *Preliminary, Unaudited Figures ** Represents same period (7 months) as FY 2019-20 YTD for comparison purposes. Total Net Income for FY 2018-19 was $14.22 M. City of Denton, Texas FY 2019-20 Denton Energy Center YTD March 2020 Dashboard Key Trends For the 2nd Quarter of FY 2019-20, the DEC produced 20,725 MWh less than the same period of FY 2018-19. This resulted in approximately $900,000 less in revenues and $2.5 Million more in total expenses for the same time period. This increase was due to the annual debt service payment increasing from $10 M to $18 M in FY 19-20. As of March 31, 2020, expenditures exceed revenues by $5.6 Million which is expected for this period of the fiscal year. Through March 2020 the DEC Gross Margin was $4.2 Million which is $2.8 Million higher than budgeted for the same period (Gross Margin = DEC Revenue –Fuel Cost –Variable Operating & Maintenance Cost). This is due to higher revenue in October and November than anticipated. Updates in the DEC Revenue and Energy Expenses for FY 2019-20 year-end projections show a $(6.48) Million Net Income compared to the $(8.95) Million Net Income shown in the FY 2019-20 budget. Note: All dollar figures presented are in million of dollars. Description Engine Runtime (hours) Hot Starts Warm Starts Cold Starts Stops Description Nitrogen Oxides (NOx) Carbon Monoxide (CO) Volatile Organic Compound (VOC) Particulate Matter<10 microns (PM10) Particulate Matter<2.5 microns (PM2.5) Sulphur Dioxide (SO2) Ammonia (NH3) Carbon Dioxide Equivalents (CO2e) DEC Monthly Emissions Total (tons)1.75 1.73 1.29 0.99 0.99 0.02 0.21 8,980.00 DEC Annual Permit Limit Operations (tons)*29.78 93.52 48.16 69.72 69.72 1.45 60.90 Monthly Plant Emissions per DEC Permit Limit 5.88%1.85%2.68%1.42%1.42%1.28%0.35% Annual to Date Plant Emissions per DEC Permit Limit 16.00%5.10%6.90%3.00%3.00%3.00%0.60% *Operations Annual Limit accounts for Balance of Plant standard emissions Emissions March 2020 Engines (1-12)1,489 177 66 162 405 Month Revenue MWh $/MWh Oct-19 $2,043,727 16,344 $125.04 Nov-19 $1,152,356 16,168 $71.27 Dec-19 $126,950 2,159 $58.80 Jan-20 $239,366 2,671 $89.62 Feb-20 $676,548 9,466 $71.47 Mar-20 $1,561,657 18,209 $85.76 Total FY 2019-20 $5,800,604 65,017 $89.22 Generation & Gross Revenues FY 2018-19 FY 2019-20 FY 2019-20 FY 2019-20 YTD ACTUALS **BUDGET YTD PROJECTION DEC REVENUE* 6.70$ 25.07$ 5.80$ 26.07$ EXPENDITURE SUMMARY Energy Expense - Fuel 2.87$ 12.48$ 1.51$ 11.00$ Personnel Services 0.75 2.22 0.88 2.22 Materials & Supplies 0.11 0.44 0.18 0.44 Maintenance & Repair 0.05 0.56 0.01 0.56 Insurance 0.01 0.50 0.01 0.50 Miscellaneous - - - 0.00 Operations 0.11 0.48 0.11 0.48 Debt Service - Principal 2.39 7.47 3.71 7.47 Debt Service - Interest 2.52 9.80 4.93 9.80 Interfund Transfers 0.00 0.05 0.03 0.05 Transfer to Capital Projects - 0.02 - 0.02 DEC EXPENDITURES 8.81$ 34.02$ 11.37$ 32.55$ -$ -$ -$ -$ DEC NET INCOME (2.11)$ (8.95)$ (5.57)$ (6.48)$ *Preliminary, Unaudited Figures ** Represents same period (6 months) as FY 2019-20 YTD for comparison purposes. Total Net Income for FY 2018-19 was $14.22 M.