2008-171ORDINANCE NO. 2008- I7
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS
AUTHORIZING THE CITY MANAGER TO EXECUTE A FIRST AMENDMENT TO
PROFESSIONAL SERVICES AGREEMENT WITH R. J. COVINGTON CONSULTING, LLC
FOR FURTHER CONSULTING SERVICES RELATING TO TASK ORDERS NO. 07-C, BY
APPROVING FURTHER TASK ORDER NO. 08-13, PROVIDING FOR CONTINUING
REGULATORY AND PROFESSIONAL SERVICES AT THE ELECTRIC RELIABILITY
COUNCIL OF TEXAS ERCOT") AND THE PUBLIC UTILITIES COMMISSION OF
TEXAS ("PUCT") RELATED TO IMPLEMENTATION OF THE NODAL MARKET
DESIGN, THE DEVELOPMENT OF ADDITIONAL TRANSMISSION FACILITIES, TO
DELIVER WIND POWER TO ERCOT MARKETS, THE INCLUSION OF NEW SERVICE
TERRITORIES INTO ERCOT THAT MIGHT SIGNIFICANTLY AFFECT TRANSMISSION
COSTS, AND OTHER RELATED PROFESSIONAL SERVICES; AND TO KEEP DME
STAFF INFORMED OF THE STATUS OF THESE MATTERS AND TO ALERT DENTON
MUNICIPAL ELECTRIC REGARDING ANY ISSUES THAT MAY AFFECT THE ABILITY
OF DENTON MUNICIPAL ELECTRIC TO SERVE ITS CUSTOMERS IN A COST-
EFFECTIVE AND COMPETITIVE MANNER, AND OTHER RELATED PROFESSIONAL
SERVICES; AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; AND
PROVIDING AN EFFECTIVE DATE (TASK ORDER NO. 08-B - AN ADDITIONAL SUM
OF NOT-TO-EXCEED $40,000, AND WHEN TOTALLED WITH RELATED TASK ORDER
07-C, TOTALS $120,000).
WHEREAS, the City Council deems it in the public interest to continue to engage the
firm of R. J. Covington Consulting, LLC of Austin, Texas ("Covington"), to provide further
professional consulting services to the City relating to Task Order No. 07-C totaling $80,000; for
an additional not-to-exceed $40,000, which includes, without limitation, continued professional
and regulatory services at the Electric Reliability Council of Texas ("ERCOT") and the Public
Utilities Commission of Texas ("PUCT") related to those matters set forth with more
particularity in Task Order No. 08-13; and for other professional services; and
WHEREAS, the City staff has reported to the City Council that there is a substantial need
for the above-described specialized continued professional services, that limited City staff cannot
adequately perform the services and tasks with its own personnel, and that the nexus of
Consultant's services is in the City of Austin, Texas; and
WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional
Services Procurement Act," generally provides that a City may not select a provider of
professional services on the basis of competitive bids, but must select the provider on the basis of
demonstrated competence, knowledge, and qualifications, and for a fair and reasonable price;
and
WHEREAS, Covington has represented DME continuously and professionally over the
last eleven (11) years, and has proven to be a valuable, reliable, affordable, and competent
professional resource that has expertise in, and is well-acquainted with the electric operations as
well as the financial and regulatory framework of Denton Municipal Electric. Covington and his
staff' are particularly familiar with the characteristics, operations, and present rate structure of
DME. Covington's offices are located in Austin, Texas; and
WHEREAS, the City Council has provided in the City Budget for the appropriation of
funds to be used for the purchase of the professional services, as set forth in the Professional
Services Agreement; NOW, THEREFORE,
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS:
SECTION 1: The City Manager is hereby authorized to execute a First Amendment to
Professional Services Agreement with R. J. Covington Consulting, LLC of Austin, Texas, for
professional consulting services relating to Task Order No. 08-B relating to the City and to
Denton Municipal Electric, in the further amount of not-to-exceed $40,000, totaling $120,000
regarding Task Order No. 07-C and Task Order No. 08-13; in substantially the form of the
Professional Services Agreement that is attached hereto and incorporated herewith by reference
as Exhibit "A."
SECTION 2: The award of this Agreement by the City is on the basis of the
demonstrated competence, knowledge, and qualifications of Covington and the ability of
Covington to perform the professional services needed by the City for a fair and reasonable
price.
SECTION 3: The expenditure of funds as provided in the attached First Amendment to
Professional Services Agreement is hereby authorized.
SECTION 4: This ordinance shall become effective immediately upon its passage and
approval.
PASSED AND APPROVED this the day of )2008.
MA A. B GHS YOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
By:
APPROVED AS TO LEGAL FORM:
JOHN KNIGHT, INTERIM CITY ATTORNEY
B y:
U
I
STATE OF TEXAS §
COUNTY OF DENTON §
FIRST AMENDMENT TO
PROFESSIONAL SERVICES AGREEMENT FOR CONSULTING SERVICES
PERTAINING TO DENTON MUNICIPAL ELECTRIC
THI FIRST AMENDMENT TO AGREEMENT is made and entered into on the 5 day of
2008 (hereafter the "Agreement'), by and between the City of Denton; Texas, a Municipal
Corp ration; with its principal office at 215 East McKinney Street, Denton; Texas 76201 ("CITY'); and R. J.
COVINGTON CONSULTING; LLC, a Texas Limited Liability Corporation, with its principal office at 11044
Research Boulevard; Suite A-325, Austin, Texas 78759, hereafter "COVINGTON",; acting herein by and
through their duly authorized representatives.
WITNESSETH, that in consideration of the covenants, promises and agreements herein contained, the
CITY and COVINGTON do herebv AGREE as follows:
ARTICLE I
EMPLOYMENT OF CONSULTANT
Previously. on July 17, 2007 the CITY retained the COVINGTON firm to perform professional services
regarding relevant and necessary 2007 Electric Regulatory Services, by Professional Services Agreement
(hereafter the "Prior Agreement'), which was approved by the City Council, and which Agreement provided for a
not-to-exceed amount of $80,000: and
The CITY has further needs of the COVINGTON firm to perform professional services regarding relevant
and necessary 2008 Electric Regulatory Services, and hereby contracts with COVINGTON, as an independent
contractor, in the additional amount of not-to-exceed $40;000; and COVINGTON hereby agrees to perform the
services herein in connection with the Scope of Services as stated in the Articles to follow as well as the Task
Orders; with diligence and in accordance with the professional standards customarily obtained for such services in
the State of Texas.
ARTICLE II
SCOPE OF SERVICES
A. COVINGTON shall provide to the CITY professional consulting services pertaining to assisting Denton
Municipal Electric in continuing regulatory services at the Electric Reliability Council of Texas ("ERCOT"), as
well as the Public Utilities Commission of Texas ("PUCT" that relate to ever-changing developments that
pertain to the transmission costs and the rates paid by DME, in spite of the proposed transmission system
expansions; and also concerning priority dispatch issues to certain new market participants at the expense of other
market participants, including DME; and other relevant issues that may arise in the various rulemakings and
proceedings. RJC will also assist DME staff and legal counsel re interventions made in these proceedings. RJC
seeks to minimize anv extra costs that the existing members of ERCOT might have to pay upon the joinder into
ERCOT of new customers of ERCOT. COVINGTON agrees to perform those services and tasks more
particularly and specifically described in Task Order No. 08-B that is attached hereto and incorporated herewith
by reference.
B. To consult with the City Manager, Assistant City Manager/Utilities, the General Manager of Electric
Utilities; the Utility Attorney, and any other designated administrative personnel regarding any and all aspects of
the services to be performed pursuant to this Agreement.
ARTICLE III
PERIOD OF SERVICE
This Agreement shall become retroactively effective on the date of its approval, and upon the issuance of a
notice to proceed by Denton Municipal Electric ( DME The termination date of this Agreement shall be upon
the earliest to occur of the following events: completion of the work described herein and in the attached Task
Order No. 08-13; or upon the depletion and exhaustion of the additional $40,000 not-to-exceed amount provided
for herein; or upon fifteen (15) day's \Nntten notice to temunate, issued by the General Manager of DME. This
Agreement may be sooner terminated in accordance \Nith the provisions hereof. Time is of the essence in this
Agreement. COVINGTON shall make all reasonable efforts to complete the services set forth herein as
expeditiously as possible and to meet the schedule established by the CITY; acting through its General Manager
of DME.
ARTICLE IV
COMPENSATION
A. COMPENSATION TERMS:
"Direct Non-Labor Expense" is defined as that expense for any assignment incurred hereunder by
COVINGTON for supplies; long-distance telephone; telecopier, reproduction expense; overnight courier;
photocopy expense; transportation; travel, communications; subsistence and lodging away from home and
similar incidental expenses reasonably incurred in connection Nvith that assignment.
B. BILLING AND PAYMENT:
1. For and in consideration of the professional services to be performed by COVINGTON herein, the
CITY agrees to pay COVINGTON, a total fee, including reimbursement for direct non-labor expense, not
to exceed an additional $40.000 for those services described in Task Order No. 08-B. The cumulative
amount of expenditures for Task Orders 07-C and 08-B are $80;000 and $40;000; respectively, totaling
$120,000.
2. The fee for the services described in this Agreement to be performed by COVINGTON are to be
billed at the rates previously agreed to. Billing shall be reported in minimum one-quarter (1/4) hour
increments.
3. Payments to COVINGTON Mill be made by the CITY on the basis of detailed monthly statements
rendered to the CITY through its General Manager of DME. The fee bills as submitted, shall be allowed
and approved by the General Manager of DME. However, under no circumstances shall any monthly
statement for services exceed the value of the work performed at the time a statement is rendered.
4. Nothing contained in this Article shall require the CITY to pay for any work which is
unsatisfactory as reasonably determined by the Assistant City Manager for Utilities or the General
Manager of DME; or which is not submitted in compliance with the terns of this Agreement. The City
shall not be required to make any payments to COVINGTON when COVINGTON is in default under this
Agreement.
5. It is specifically understood and agreed that COVINGTON shall not be authorized to undertake
any work pursuant to this Agreement which would require additional payments by the CITY for any
charge, expense or reimbursement above the maximum not-to-exceed fee as stated, without first having
obtained written authorization from the CITY.
C. PAYMENT
If the CITY fails to make payments due COVINGTON for services and expenses within forty (30) days
after receipt of COVINGTON'S undisputed statement thereof. the amounts due COVINGTON Neill be
increased by the rate of one percent (19/o) per month from the said forty (30th) day, and in addition,
COVINGTON may, after giving ten (10) days' written notice to the CITY; suspend services under this
Agreement until COVINGTON has been paid in full all amounts due for services; expenses and charges
provided. However, nothing herein shall require the CITY to pay the late charge of one percent (1%) set
forth herein if the CITY reasonably determines that the work of COVINGTON is unsatisfactory; in
accordance Nvith this Article IV, Compensation; and the CITY notifies COVINGTON in Nyriting of any
such defect.
ARTICLE V
OBSERVATION AND REVIEW OF THE WORK
COVINGTON will exercise reasonable care and due diligence in discovering and promptly reporting to
the CITY anv defects or deficiencies in his work or the work of any subconsultants performed hereunder.
ARTICLE VI
OWNERSHIP OF DOCUMENTS
All documents, analyses and other data prepared by COVINGTON under this Agreement (`Work Products'") are
instruments of service and are and shall remain the property of CITY. COVINGTON shall have the right to
make and retain copies and use all Work Products; provided, however, the use shall be limited to the intended use
for which the services and Work Products are provided under this Agreement. COVINGTON may use and may
copyright certain non-sensitive Work Products as property of COVINGTON; provided that prior written
approval is obtained from CITY; whose approval shall not be unreasonably withheld; and providing that
copywriting will not restrict CITY'S right to retain or make copies of the Work Products for its information;
reference and use on the Project or services under the Agreement.
The Work Products shall not be changed or used for purposes other than those set forth in this Agreement
without the prior written approval of COVINGTON. If CITY releases the Work Products to a third party
NvIthout COVINGTON'S prior written consent, or changes or uses the Work Products other than as intended
hereunder. CITY does so at its sole risk and discretion and COVINGTON shall not be liable for any claims or
damages resulting from or connected NVI'th the release or any third party's use of the Work Products.
ARTICLE VII
INDEPENDENT CONTRACTOR
COVINGTON shall provide services to the CITY as an independent contractor; not as an employee of the
CITY. COVINGTON shall not have or claim any right arising from employee status.
ARTICLE VIII
INDEMNITY AGREEMENT
COVINGTON shall indemnify and save and hold harmless the CITY and its officers, agents, and
employees from and against any and all liability, claims, demands, damages; losses and expenses, including but
not limited to court costs and reasonable attorney's fees incurred by the CITY; and including without limitation,
damages for bodily and personal injury, death and property damage, and damage for professional malpractice
resulting from the negligent acts or omissions of COVINGTON or any subconsultants, in performance of this
Agreement. COVINGTON'S liability under this Article VIII is expressly limited to the amount of
COVINGTON'S insurance coverage as set forth in Article IX.
Nothing in this Agreement shall be construed to create a liability to anv person who is not a party to this
Agreement and nothing herein shall waive any of the party's defenses; both at law or equity; to any claim, cause
of action or litigation filed by anyone not a party to this Agreement; including the defense of governmental
immunity; which defenses are hereby expressly reserved.
ARTICLE IX
INSURANCE
During the performance of the Services under this Agreement, COVINGTON shall maintain the following
insurance with an insurance company licensed to do business in the State of Texas by the State Insurance
Commission or any successor agency that has a rating with Best Rate Carriers of at least an "A-" or above:
A. Comprehensive General Liability Insurance with bodily injury limits of not less than $500,000 for each
occurrence and not less than $500,000 in the aggregate; and with property damage limits of not less than
$100,000 for each occurrence, and not less than $100;000 in the aggregate.
B. Automobile Liabilitv Insurance with bodily injury limits of not less than $500,000 for each person and not
less than $500,000 for each accident; and with property damage limits of not less than $100;000 for each
accident.
C. Professional Liabilit}, Insurance with policy limits of not less than $1,000,000 annual aggregate.
D. COVINGTON shall furnish insurance certificates or insurance policies at the CITY's request to evidence
such coverages. The insurance policies shall name the CITY as an additional insured on all such policies
to the extent legally possible, and shall contain a provision that such insurance shall not be canceled or
modified without thirty (30) days prior written notice to CITY and COVINGTON. In such event;
COVINGTON shall; prior to the effective date of the change or cancellation; deliver substitute policies
furnishing the same coverage to the CITY.
ARTICLE X
ARBITRATION AND ALTERNATE DISPUTE RESOLUTION
The parties agree to settle any disputes under this Agreement by submitting the dispute to arbitration or
other means of alternate dispute resolution such as mediation. No arbitration or alternate dispute resolution
arising out of or relating to. this Agreement involving one party's disagreement may include the other party to the
disagreement without the other's approval.
ARTICLE XI
LIMITATION OF LIABILITY
To the extent permitted by law; the total liability of COVINGTON to CITY for any and all claims arising
out of this Agreement; whether caused by negligence, errors, omissions, strict liability, breach of contract or
contribution; or indemnity claims based on third-party claims; shall not exceed one million dollars ($1;000,000).
ARTICLE XII
CONSEQUENTIAL DAMAGES
In no event and under no circumstances shall COVINGTON be liable to CITY for anv interest, loss of
anticipated revenues; earnings, profits, or increased expense of operations, or for any consequential, indirect or
special damages.
ARTICLE XIII
PROFESSIONAL STANDARDS
COVINGTON will perform services under this Agreement with the degree of skill and diligence normally
practiced by professional engineers or consultants performing the same degree of similar services. No other
warranty or guarantee, expressed or implied; is made with respect to the services furnished under this Agreement
and all implied warranties are disclaimed.
ARTICLE XIV
TERMINATION OF AGREEMENT
A. Notwithstanding any other provision of this Agreement; either party may terminate this Agreement by
giving thirty (30) days advance written notice of termination to the other party.
B. This Agreement may- be terninated in whole or in part in the event of either party substantially failing to
fulfill its obligations under this Agreement. No such termination will be effected unless the other party is
given: (1) written notice (delivered by certified mail, return receipt requested) of intent to terrmumate and
setting forth the reasons speciffiing the nonperformance; and not less than ten (10) business days in which
to cure the failure; and (2) an opportunity for consultation with the terminating party prior to termination.
C. If this Agreement is terminated prior to completion of the services to be provided hereunder,
COVINGTON shall immediatelv cease all services and shall render a final bill for services to the CITY
within thirty (30) days after the date of termination. The CITY shall pay COVINGTON for all services
properly rendered and satisfactorily performed and for reimbursable expenses to termination incurred prior
to the date of termination in accordance with Article IV, Compensation. Should the CITY subsequently
contract with a new consultant for the continuation of services on the Project; COVINGTON shall
cooperate in providing information. COVINGTON shall turn over all documents prepared or furnished
by COVINGTON pursuant to this Agreement to the CITY on or before the date of termination; but may
maintain copies of such documents for its use.
ARTICLE XV
RESPONSIBILITY FOR CLAIMS AND LIABILITIES
Approval by the CITY shall not constitute nor be deemed a release of the responsibility and liability of
COVINGTON, or anv_ subconsultants of COVINGTON. for the accuracy and competency of their designs or
other work product.
ARTICLE XVI
NOTICES
All notices, communications; and reports required or pernmitted under this Agreement shall be personally
delivered or mailed to the respective parties b}. depositing same in the United States mail at the address shown
below, certified mail, return receipt requested unless otherwise specified herein. Mailed notices shall be sent to
the parties at the following addresses:
To COVINGTON:
R.J. Covington Consulting, LLC
Attn: Richard J. Covington, President
11044 Research Blvd.. Suite A-325
Austin, Texas 78759
To CITY:
City of Denton, Texas
Attn: City Manager
21 East McKinney Street
Denton, Texas 76201
and to
City of Denton, Texas
Attn: General Manager, DME
169 Spencer Road
Denton, Texas 7620
All notices shall be deemed effective upon receipt by the party to whom such notice is given or within three
(3) days after the date of mailing.
ARTICLE XVII
ENTIRE AGREEMENT
This First Amendment to Agreement consisting of~ ( pages, plus three (3) additional pages
consisting of Task Order No. 08-13, constitutes the complete and final expression of the agreement of the parties
and is intended as a complete and exclusive statement of the terms of their agreements and supersedes all prior
contemporaneous offers, promises; representations, negotiations, discussions; communications and agreements
which may have been made in connection with the subject matter. hereof.
ARTICLE XVIII
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 party 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 stricken provision.
ARTICLE XIX
COMPLIANCE WITH LAWS
COVINGTON shall comply with all federal, state, local laws; rules, regulations; and ordinances
applicable to the work covered hereunder as thev may now read or hereinafter be amended.
ARTICLE XX
DISCRIMINATION PROHIBITED
In performing the services required hereunder, COVINGTON shall not discriminate against any person on
the basis of race, color; religion, sex: national origin or ancestry, age, or physical handicap.
ARTICLE XXI
PERSONNEL
A. COVINGTON represents that he has secured; or Ntill secure at his own expense any additional personnel
required to perform all the services required under this Agreement. Such personnel shall be subconsultants
of COVINGTON. and shall not be employees or officers of. nor have any contractual relations with the
CITY. COVINGTON shall inform the CITY of any conflict of interest or potential conflict of interest
that may arise during the term of this Agreement.
B. All services required hereunder will be performed by COVINGTON or under his supervision. All
personnel engaged in Nvork shall be qualified and shall be authorized and pernutted under state and local
laws to perform such services.
ARTICLE XXH
ASSIGNABILITY
COVINGTON shall not assign any interest in this Agreement and shall not transfer any interest in this
Agreement (whether by assignment; novation or othernise) without the prior written consent of the CITY.
ARTICLE XXIII
MODIFICATION
No waiver or modification of this Agreement or of any covenant; condition, limitation herein contained
shall be valid unless in writing and dul}- executed by the party to be charged therewith and no evidence of an-
waiver or modification shall be offered or received in evidence in any proceeding arising between the parties
hereto out of or affecting this Agreement; or the rights or obligations of the parties hereunder; and unless such
waiver or modification is in writing, duly executed; and, the parties further agree that the provisions of this
section \tiill not be waived unless as herein set forth.
ARTICLE XXN
MISCELLANEOUS
A. COVINGTON agrees that CITY shall, until the expiration of three (3) years after the final payment under
this Agreement, have access to and the right to examine any directly pertinent books; documents; papers
and records of COVINGTON involving transactions relating to this Agreement. COVINGTON agrees
that the CITY shall have access during normal working hours to all necessary COVINGTON facilities
and shall be provided adequate and appropriate working space in order to conduct audits in compliance
with this section. The CITY shall give COVINGTON reasonable advance notice of any intended audits.
B. Venue of an}, suit or cause of action under this Agreement shall lie exclusively in Denton Count}, Texas.
This Agreement shall be governed by, and construed in accordance with the laws of the State of Texas.
C. COVINGTON shall commence; carry on, and complete the work required by this engagement Ntiith all
applicable dispatch, in a sound, economical; efficient manner and in accordance with the provisions hereof.
In accomplishing the work; COVINGTON shall take such steps as are appropriate to ensure that the
work involved is properly coordinated w1th related work being carried on by the CITY.
D. The CITY shall assist COVINGTON by placing at COVINGTON's disposal all available information
pertinent to the work required by this engagement; including previous reports; any other data relative to the
project and arranging for the access to, and make all provisions for COVINGTON to enter in or upon,
public and private property as required for COVINGTON to perform services under this Agreement.
E. The captions of this Agreement are for informational purposes only and shall not in any way affect the
substantive terms or conditions of this Agreement.
IN WITNESS WHEREOF; the City of Denton, Texas has caused this Agreement to be executed in four
(4) original counterparts; by its duly authorized City Manager, and R.J. ovington Consulting; LLC has executed
/Y da} of 2008.
this Agreement by its duly authorized officer on this the
"CITY"
CITY OF DENTON, TEXAS
A Municipal Corporation
By: George C. Campbell, City Manager
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
By:
APPROVED AS O LEGAL FORM:
JOHN KNIGHT, INTERIM CITY ATTORNEY
B,. r.
I
U
"COVINGTON"
R. J. COVINGTON CONSULTING; LLC
A Texas Limited Liability Corporation
Bv_ :
W. C. Starnes, Vice-President
ATTEST:
By:
EXHIBIT A
FIRST AMENDMENT TO
PROFESSIONAL SERVICES AGREEMENT
BETWEEN THE CITY OF DENTON, TEXAS AND
R.J. COVINGTON CONSULTING, LLC
TASK ORDER NO. 08-B
Regulatory Services
This Task Order is for continuing assistance to Denton Municipal Electric staff ("Staff") as they address the
continuing changes to the electric industry. Task Order No. 08-B specifically focuses on activities at the Public
Utility Commission of Texas ("PUCT"). The PUCT is currently addressing issues that will affect the way DME
conducts it business. It is important for DME to be aware of changes to remain in compliance with Texas
regulations and to protect its interests and the interests of its ratepayers. In particular, the PUCT is now
addressing issues related to the implementation of the nodal market design; development of additional
transmission facilities to deliver wind power to ERCOT markets and inclusion of new service territories into
ERCOT that may also significanthr affect transnnission costs. Covington ("RJC") «7111 work with DME staff to
develop and present the DME position on those issues that may affect DME and the City of Denton; Texas.
The PUCT has been actively hearing a number of various rulemakings and contested case hearings that «rill have
significant impacts on ERCOT transmission rates paid by DME and RJC is currently working with DME staff
and legal counsel representing DME interests in these proceedings to insure that transmission rates in ERCOT
remain reasonable in spite of the proposed transmission system expansions. Current proceedings may result in
transmission costs that are twice as high as current costs to load serving entities. Future proceedings are
anticipated to address assigning priority dispatch to wind generators; a concept that runs entirely counter to the
current method of operating the ERCOT transmission system, where all transmission system users have equal
access to capacity. Expansion of this doctrine; should it be established in these proceedings, may have
detrimental impacts on the future value of DME owned generation. Additionally; the PUCT is considering
expanding the ERCOT footprint by incorporating non-ERCOT Texas utilities into ERCOT. RJC has been
assisting DME staff and legal counsel in DME interventions in these proceedings. To date; RJC has discovered
that while it appears that these efforts may improve costs for the customers being incorporated into ERCOT,
these new customer benefits come by imposing additional costs on existing ERCOT customers; such as DME.
Task Order 08-B, executed on the date herewith, allows RJC to supplement DME staff s efforts to keep track of
the vast amount of information that is needed to keep up with activities at the PUCT and the Electric Reliability
Council of Texas ("ERCOT"). RJC will assist the DME staff in identifying those issues needing DME's
attention. In addition to surveving and reporting on ongoing activities at the PUCT and ERCOT, RJC is a
resource providing extensive regulatory experience to assist DME's staff in the evaluation of the impact on DME
of various issues.
Task Order No. 08-B addresses regulatory issues at the PUCT. Market issues at ERCOT are provided for in a
separate task order (No. 08-A). All work performed at the PUCT is conducted under the direction of the General
Manager of Denton Municipal Electric.
Scope of Services
Task A PUCT Regulatory Support
Task A-1 Attending Workshops and Hearings at PUCT
1. RJC will stay informed on activities at the PUCT and will attend workshops and hearings as
directed by DME.
2. When appropriate; RJC will participate in workshops and hearings to represent interests of DME
and the City in accordance with the directions of DME.
3. RJC will work with DME staff in development of positions that should be taken; and strategies for
working with parties involved; during the nodal system design and implementation.
Task A-2 Analyze Proposed Rules and Policies
PUCT proposed new rules and rule changes will be analyzed.
2. RJC will discuss proposed new rules, and changes to existing rules with DME staff and legal counsel;
helping to identify areas of concern and preparing positions that represent the interests of the City.
3. RJC will meet with PUCT staff and other parties as appropriate to discuss proposed rules; and present
DME's concerns regarding such proposals.
4. RJC will work with DME to develop strategies and positions.
Task A-3 Preparation of Comments
RJC will prepare or assist in preparing continents to be filed with the PUCT representing the City's
position on issues brought up in proposed rules, projects and dockets.
These comments will be coordinated through DME staff and legal counsel.
RJC will assist the City's legal counsel as necessary in the preparation and filing of comments and
testimony in dockets that have been identified by DME staff as requiring intervention to protect DME
and the City's interest.
Task B Industry Monitoring and Evaluation
RJC will maintain continuing communication with DME staff and legal counsel in order to monitor
proposed industry changes on a regional, state and federal level and address those issues affecting
municipalities.
An ongoing dialogue will be maintained with DME staff and the legal counsel in order to evaluate
changing operating and market requirements and conditions, and evaluate their potential effects on
DME operations.
Information necessary to supplement and support the decision-making process will be provided as
requested.
A summary of activities at the PUC and ERCOT will be provided weekly.
Budget
This Task Order provides for a not to exceed amount of $40,000 for professional fees and expenses. This
Task Order will not be exceeded without the prior written approval of the City. RJC will bill monthly with
supporting documentation of activities performed and expenses incurred. The work being performed will
be under the supervision of the Director of Electric Utilities and may be modified at any time upon
appropriate notice to RJC.
EXECUTED this the day of 'zaw'r .2008.
AUTHORIZED BY: ACCEPTED BY:
`CITY"
==RJC:,
CITY OF DENTON, TEXAS R.J. COVINGTON CONSULTING, LLC
A Texas Municipal Corporation
10
Bv:
George C. Campbell
City Manager
By:
W. C. Starnes, Vice-President
9C~~
Dated:Lt~ ~ Dated: 07
ATTEST:
JENNIFER WALTERS
CITY SECRETARY
Bv:
APP VEDAS TO LEGAL FORM:
JOHN KNIGHT. INTERIM CITY ATTORNEY
a~ ~
11