2005-204ORDINANCE NO. 2005- _W
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS
AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES
AGREEMENT WITH R. J. COVINGTON CONSULTING, LLC FOR CONSULTING
SERVICES RELATING TO TASK ORDER NO. 05-F; PROVIDING FOR SERVICES
RELATED TO FINAL COMPLETION OF THE TRANSMISSION COST OF SERVICE CASE
BEFORE THE PUBLIC UTILITIES COMMISSION OF TEXAS; AUTHORIZING THE
EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE.
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. 05-F; which includes,
without limitation, services related to the final completion of the transmission cost of service
case, before the Public Utilities Commission of Texas, being docketed as Docket Number 30358,
and entitled Application of Denton Municipal Electric to Change Rates for Wholesale
Transmission Service.
WHEREAS, the City staff has reported to the City Council that there is a substantial need
for the above-described specialized professional services, and that limited City staff cannot
adequately perform the services and tasks with its own personnel; 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 ably over the last nine
(9) 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 ("DME"), as well as its
relations with the PUC and ERCOT. Covington and his staff are familiar with the
characteristics, operations, and present rate structure of DME: 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: That the City Manager is hereby authorized to execute a Professional
Services Agreement with R. J. Covington Consulting, LLC of Austin, Texas, for professional
consulting services relating to Task Order No. 05-F, to the City and to Denton Municipal
Electric, in an amount of not to exceed $18,766; in substantially the form of the Professional
Services Agreement attached hereto and incorporated herewith by reference as Exhibit "A."
SECTION 2: That 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: That the expenditure of funds as provided in the attached Professional
Services Agreement is hereby authorized.
SECTION 4: That this ordinance shall become effective immediately upon its passage
and approval.
PASSED AND APPROVED this the 2(4L day of ~C 2005.
&C'L
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
B
APPROVED AS TO LEGAL FORM:
ED SNYDER, INTERIM CITY ATTORNEY
u.l
By:
S:\Our Documents\Ordinances\05\R 1 Covington Consulting LLC-DME-Ord Aprv TO 5-F 2005.doc
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STATE OF TEXAS §
COUNTY OF DENTON §
PROFESSIONAL SERVICES AGREEMENT FOR CONSULTING SERVICES
PERTAINING TO DENTON MUNICIPAL ELECTRIC
THIS AGREEMENT is made and entered into on the,ZtP~~( day of 12005,
by and between the City of Denton, Texas, a Municipal Corporation, with its fincipal 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 hereby AGREE as follows:
_ARTIC .F. I
EMPLOYMENT OF CONSULTANT
The CITY hereby contracts with COVINGTON, as an independent contractor, and
COVINGTON hereby agrees to perform the services herein in connection with the Scope of
Services as stated in the Articles to follow, with diligence and in accordance with the professional
standards customarily obtained for such services in the State of Texas.
ARTICLE 11
SCOPE OF SERVICES
A. COVINGTON shall provide to the CITY professional consulting services pertaining to
assisting Denton Municipal Electric in its final completion of Public Utility Commission of Texas,
Docket Number 30358, entitled Application of Denton Municipal Electric to Change Rates for
Wholesale Transn¢ission Service. COVINGTON agrees to perform those services and tasks more
particularly and specifically described in Task Order No. 05-F attached hereto and incorporated
herewith by reference.
B. To consult with the City Manager, Assistant City Manager/Utilities, the Director 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 effective on the date this Agreement is approved 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. 05-F; or upon the depletion and exhaustion of
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the $18,766 not to exceed amount provided for herein; or upon fifteen (15) day's written notice to
terminate, issued by the Director of Electric Utilities, DME. This Agreement may be sooner
terminated in accordance with 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
Director of Electric Utilities.
ARTICI F 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
with 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 $18,766 for those services described in Task Order No. 05-F.
2. The fee for the services described in this Agreement to be performed by COVINGTON
are to be billed the rates as set forth in Exhibit "A" attached hereto and incorporated herewith
by reference. Billing shall be reported in minimum one-quarter (1/4) hour increments.
3. Payments to COVINGTON will be made by the CITY on the basis of detailed monthly
statements rendered to the CITY through its Director of Electric Utilities. The fee bills as
submitted, shall be allowed and approved by the Director of Electric Utilities. 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 City Manager or the Director of Electric
Utilities, or which is not submitted in compliance with the terms 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.
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C. PAYMENT
If the CITY fails to make payments due COVINGTON for services and expenses within forty
(40) days after receipt of COVINGTON'S undisputed statement thereof, the amounts due
COVINGTON will be increased by the rate of one percent (1%) per month from the said forty
(40th) 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 with
this Article IV, Compensation, and the CITY notifies COVINGTON in writing of any such
defect.
_ARTIC'I F V
OBSERVATION AND REVIEW OF THE WORK
COVINGTON will exercise reasonable care and due diligence in discovering and promptly
reporting to the CITY any defects or deficiencies in his work or the work of any subconsultants
performed hereunder.
ARTICLE Yl
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 without 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 with the
release or any third party's use of the Work Products.
ARTICI F 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.
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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 any 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 Liability 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 Liability Insurance with policy limits of not less than 51,000,000 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.
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_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).
ARTICI F XII
CONSEQUENTIAL DAMAGES
In no event and under no circumstances shall COVINGTON be liable to CITY for any
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.
_ARTICI F 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 terminated 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 terminate and setting forth the reasons specifying 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 immediately cease all services and shall render a final bill for services to
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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 any sub-consultants of COVINGTON, for the accuracy and
competency of their designs or other work product.
ARTICLE XYI
NOTICES
All notices, communications, and reports required or permitted under this Agreement shall be
personally delivered or mailed to the respective parties by 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
11044 Research Blvd., Suite A-325
Austin, Texas 78759
To CITY:
City of Denton, Texas
Attn: Michael A. Conduff, City Manager
215 East McKinney Street
Denton, Texas 76201
and to
City of Denton, Texas
Attn: Sharon Mays
Director of Electric Utilities
901-A Texas Street
Denton, Texas 76205
All notices shall be deemed effective upon receipt by the party to whom such notice is given
or within three days after the date of mailing.
ARTICLE XVII
ENTIRE AGREEMENT
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This Agreement consisting of nine (9) pages, and two (2) additional pages consisting of Task
Order No. 05-F, 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.
ARTICI F XIX
COMPLIANCE WITH LAWS
COVINGTON shall comply with all federal, state, local laws, rules, regulations, and
ordinances applicable to the work covered hereunder as they 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 will 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 COVING'f ON or under his supervision.
All personnel engaged in work shall be qualified and shall be authorized and permitted under
state and local laws to perform such services.
ARTICLE XXII
ASSIGNABILITY
COVINGTON shall not assign any interest in this Agreement and shall not transfer any
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interest in this Agreement (whether by assignment, novation or otherwise) 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 duly executed by the party to be charged therewith and
no evidence of any 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 will not be waived unless as herein set forth.
ARTICI F XXIV
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 any suit or cause of action under this Agreement shall lie exclusively in Denton
County, 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
with 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 with 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. Covington
Con It' LLC has executed this Agreement by its duly authorized officer on this the ' P day of
V U 2005.
.
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"CITY"
CITY OF DENTON, TEXAS
A Municipal Corporation
B /
Michael A. Conduff, nager
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
M. SNYDER, INTERIM CITY ATTORNEY
By:
"COVINGTON"
R.J. COVINGTON CONSULTING, LLC
A Texas Limited Liability Corporation
By:
Richard J. Covin n, Presi t
S:\Ou, Documents\Con1recis\05\RJ Co, ington Consulting LLC-PSA-TO 05-F Completion of TCOS-DM Edoc
ATTACHMENT
PROFESSIONAL SERVICES AGREEMENT
BETWEEN THE CITY OF DENTON, TEXAS AND
R.J. COVINGTON CONSULTING, LLC
TASK ORDER NO. 05-F
Transmission Cost of Service - Final
This Attachment is a Task Order contemplated by and appended to the Professional
Services Agreement entered into by and between the City of Denton, Texas ("City") and
R.J. Covington Consulting, LLC, ("RJC") as approved on this day by the Denton City
Council.
Discussion
The work provided for in this Task Order is for the completion of the transmission cost of
service rate filing ("TCOS") that was filed on behalf of Denton Municipal Electric before
the Public Utility Commission of Texas ("PUC"). The TCOS filing requested a
transmission rate increase from the City's current TCOS of $995,000 to a requested TCOS
of $3,955,195. The final approved TCOS for this proceeding, which includes
reimbursement of the rate case expenses, is $4,021,887. These costs will be recovered
through the Electric Reliability Council of Texas ("ERCOT") " postage stamp transmission
facilities charges."
This Task Order includes RJC final billing for services performed and work associated
with Docket 30358, Application of Denton Municipal Electric to Change Rates for
Wholesale Transmission Service. The following is a detailed list of services to be provided
under this Task Order:
Scope of Services
Tasks - TCOS Hearings
RJC will assist attorneys in preparing cross-examination of PUC staff and other
parties.
2. The hearings will be attended by RJC to present direct testimony and assist DME's
attorneys on technical issues that arise.
3. RJC will assist attorneys in preparing briefs.
4. Staffs briefs will be reviewed by RJC.
5. Reply Briefs will be prepared by DME's attorneys, and reviewed by RJC and filed.
Task Order No. 05-F
Transmission Cost of service - Final
6. The Administrative Law Judge's Preliminary Order will be reviewed by RJC in
order to assist DME's attorneys in filing Exceptions.
7. The Final Order and Staffs exceptions will be reviewed and RJC will work with
DME's attorneys in preparation of the Reply to Exceptions.
8. The TCOS numbers in the Final Order will be evaluated for accuracy and for
compliance with the Public Utilities Commission's final decisions.
9. RJC will attend the PUC Open Meeting for the final decision, and be available to
respond to the Commissioners' questions, if needed.
Budget
The not-to-exceed amount of the professional fee, for the above scope of services
for labor and out-of-pocket expenses is not to exceed $18,766. RJC will bill this Task
Order monthly, with supporting documentation of activities performed. The work
performed will be under the supervision of the Director of Electric Utilities, and may be
modified at any time, by a written document, executed by both DME and RJC. This is the
final Task Order for the TCOS rate filing case before the PUC.
EXECUTED in four (4) original counterparts by a duly authorized officer, of RJC
and by a duly authorized official of the City of Denton, Texas on this the LW11- day of
2005.
V 61
AUTHORIZED BY: ACCEPTED BY:
CITY OF DENTON, TEXAS
A Texas Municipal Corporation
ByL/%t
Michael A. Conduf
City Manager
Dated: a I IZ J5-
R. J. COVINGTON CONSULTING, LLC
A Texas Limited Liability Corporation
By: rCG~' °
R.J. Covingto
President
i
Dated: 4/1 y Pf
ATTEST:
JENNIFER WALTERS
CITY SECRETARY
By. C
Dated: j7&
APPROVED AS TO LEGAL FORM:
EDWIN M. SNYDER
INTERIM CITY ATTORNEY
By: ~
Dated: r71116-S
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