2003-018ORDINANCE NO. 2003-
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 THE DENTON MUNICIPAL ELECTRIC UTILITY;
AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN
EFFECTIVE DATE.
WHEREAS, the City Council deems it in the public interest to engage the firm of R. J.
Covington Consulting, LLC of Austin, Texas ("Covington"), to provide consulting services to
the City relating to the Denton Municipal Electric utility ("DME"), including, without limitation,
regulatory services and an investigation into the formation of a joint public power agency; and
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 over the past seven years,
and has proven to be a valuable, affordable, competent, dependable professional resource who
has expertise in and is well acquainted with the electric regulatory framework in Texas.
Covington and his staff are particularly familiar with the characteristics and operations 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 the Denton Municipal Electric Utility, in substantially the form of
the Professional Services Agreement attached hereto and incorporated herewith by reference.
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:
and approval.
PASSED AND APPROVED this the ~/~f-day of f(f/~,d~.Z~--~
EULINE BROCK, MAYOR
That this ord'mance shall become effective immediately upon its passage
,2003.
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
By:( ~/q ~ Y0~ f~'~L~
APPR( }VED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
S:\Our Documents\Ordinances\03\R J Covington Consulting LLC PSA-DME Ord 2003.doc
STATE OF TEXAS
COUNTY OF DENTON
PROFESSIONAL SERVICES AGREEMENT FOR CONSULTING SERVICES
PERTAINING TO DENTON MUNICIPAL ELECTRIC
THIS AGREEMENT is made and entered into as of the c-/~/'day of(/~Y-~, 2003,
· by and between the City of Denton, a Texas Municipal Corporation, with its ~6fincipal at'flee 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 13276 Research Blvd., Suite
201, Austin, Texas 78750, 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:
ARTICI.F. l
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 highest
professional standards customarily obtained for such services in the State of Texas.
ARTTCI.E 11
SCOPE OF SERVICES
A. COVINGTON shall provide to the CITY professional consulting services pertaining to the
assistance of City Staff in areas associated with operating in the competitive restructured electric
industry in Texas. COVINGTON agrees to perform the services and tasks more particularly
described in Task Order No. 03-A attached hereto and incorporated herewith by reference.
B. COVINGTON shall provide to the CITY professional consulting services pertaining to the
assistance of City Staff in areas associated with the investigation and evaluation into the formation
of a joint public power agency. COVINGTON agrees to perform the services and tasks more
particularly described in Task Order 03-B attached hereto, and incorporated herewith by reference.
C. 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.
ARTICI,E Ill
PERIOD OF SERVICE
This Agreement shall become effective upon execution by both the CITY and COVINGTON,
and shall remain in force for the period which may reasonably be required for the completion of the
work described in Paticle II herein, or at such time that the total fee provided for herein shall be
expended, whichever event shall first occur. 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.R 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,
ovemight 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 $100,000 for the services in Task Order No. 03-A and not to
exceed $25,000 for the services in Task Order No. 03-B; totaling a not to exceed amount of
$125,000.
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 minimtun 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 fees bills as
submitted shall be allowed by the Director of Electric Utilities; and they shall be examined
and approved by the Utility Attorney. 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
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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
(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.
ARTICI.E 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.
ARTICI,F~ Vl
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
Page 3
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.
ARTICI.E 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 limit of COVINGTON'S insurance 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.
ARTICI.E 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:
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.
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 $1,000,000 annual
aggregate.
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
Page 4
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.
ARTICT.E 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.
ARTTCI.F. 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.E 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.
ARTICI ,F. XIII
PROFF, S,qlONAI. STANDARDR
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 fumished 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.
This Agreement may be terminated in whole or in part in the event of either part), 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, remm receipt
requested) of intent to terminate and setting forth the reasons specifying the nonperformance,
Page s
and not less than ten (I0) business days in which to cure the failure; and (2) an opportunity for
consultation with the terminating party prior to termination.
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
the CITY within 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 mm 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.
ARTICI,E 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.
ARTTCI,E XVT
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:
To CITY:
R.J. Covington Consulting, LLC
Attn: Richard J. Covington
13276 Research Blvd., Suite 201
Austin, Texas 78750
City of Denton, TeXas
Atto: Michael A. Conduff, City Manager
215 East McKinneyStreet
Denton, Texas 76201
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.
ARTICI .E XV|I
ENTIRE AGREEMENT
This Agreement consisting of nine (9) pages, and eight (8) additional pages consisting of Task
Order No. 03-A and 03-B, constitutes the complete and final expression of the agreement of the
parties and is intended as a complete and exclusive statement of the temps of their agreements and
supersedes all prior contemporaneous offers, promises, representations, negotiations, discussions,
Page 6
communications and agreements which may have been made in connection with the subject matter
hereof.
ARTICI,E XVIIT
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.
ARTTCI,E 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.
P, RTICI ,E 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
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.
All services required hereunder will be performed by COViNGTON 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.
ARTICI .E XXII
ASSIGNABILITY
COVINGTON shall not assign any interest in this Agreement and shall not transfer any
interest in this Agreement (whether by assignment, novation or otherwise) without the prior written
consent of the CITY.
Page 7
ARTI~I,E XXTIT
MODIFICATION
No waiver or modification of this Agreement or of any covenant, condition, limitation heroin
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,E XXIV
MISCELLANEOUS
COVINGTON agrees that CITY shall, until the expiration of three (3) years after the final
payment under this Agreement, have access to and the fight 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.
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.
Co
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.
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.
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 original counterparts, by its duly authorized City Mangger; and COVINGTON has
executed this Agreement by its duly authorized officer on this thec~7/~ day of January, 2003.
Page 8
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
CITY OF DENTON, TEXAS
A Municipal Corporation
~t~a~ger
"COVINGTON"
R.J. COVINGTON CONSULTING, LLC
A Texas Limited Liability Corporation
ATTEST:
By:
Richard J. Covin~on,~
By: N,Jr~
S:\Our Document~\Contracts\03~d Covington Consulting LLC PSA 2003-DME.doc
Page 9
EXHIBIT A
FEES FOR SERVICES
Professional and support services, except for testimony, shall be billed at the following
Title Hourly Rate
Executive Consultant $195.00
Sr. Management Consultant $190.00
Management Consultant $170.00
Sr. Consultant $155.00
Consultant $140.00
Assistant Consultant $125.00
Technical Assistant $100.00
Research Assistant $ 80.00
Data Specialist $ 70.00
Administrative Assistant $ 55.00
The above rates shall be adjusted each year, commencing January 1, 2004, to reflect the
change in rates officially established by R. J. Covington Consulting.
Testimony shall be billed at not less than eight hours per day.
Reproduction, printing, communications, computer services, and other miscellaneous
support services shall be billed at rates for such services as determined from time to time
and officially established by R. J. Covington Consulting.
· All travel, food, lodging, and other work-related expenses, except automobile mileage,
associated with the provision of services hereunder shall be billed at cost. Automobile
mileage shall be billed at the mileage rate as published by the Internal Revenue Service
from time to time.
Client shall pay to R. J. Covington Consulting any applicable sales tax, if in fact there is
any sales tax lawfully owing, which arises from, and becomes due and owing regarding
services performed by R. J. Covington Consulting.
ATTACHMENT TO
PROFESSIONAL SERVICES AGREEMENT
DATED JANUARY 21, 2003
BETWEEN THE CITY OF DENTON AND
R.J. COVINGTON CONSULTING, LLC
TASK ORDER NO. 03-A
Regulatory Services
Tasks provided for in this Attachment are directed at assisting the City staff
(Staff) in areas associated with operating in the competitive restructured electric
industry in Texas. The regulatory and operating environment continues to
change. As issues are addressed at the Public Utility Commission of Texas
(PUC) and at the Electric Reliability Council of Texas (ERCOT), RJC will report
on these activities and will participate in representing the City on those issues
that may affect the City. RJC will also assist Staff by providing technical
analysis and assistance in addressing competitive issues requiring attention.
Following is an overview of each of the primary areas of services to be provided
under this Task Order.
Regulatory Support at PUC and ERCOT
The scope of services in Tasks A and B includes continuing participation at the
PUC and at ERCOT on issues affecting the City. During 2003, issues that require
attention include: 1) evaluation of direct assignment of intrazonal congestion,
including study of locational marginal pricing for transmission; 2) investigation
into generation adequacy in ERCOT and how the cost of reserves will be spread
begin market participants; 3) investigation into reliability must run units (RMR)
in ERCOT and how the cost of RMR will be determined; 4) PUC review of the
wholesale market design and possible changes that would affect costs and
service to the City; 5) other continuing changes in the ERCOT Protocols and the
PUC Substantive Rules.
As on-going changes and modifications are made to the operating protocols,
issues will continue to arise that can substantially affect the City's cost of doing
business. RJC effectively works with Staff and the City's attorneys to provide
notification, evaluation and intervention as needed to protect the City's interest.
These and other regulatory related activities will directly and indirectly affect the
Task Order 03-A
Regulatory Services
City's municipal electric system and its ability to contribute to the funding of
City operations.
Monitoring Activities and Technical Support
Tasks C and D allow RJC to augment Staff's efforts to process the wide range of
information that is needed to keep up with activities at the PUC and ERCOT and
to support staff in addressing the many issues that arise as the market changes.
In addition to reporting on on-going activities at the PUC and ERCOT, RJC will
provide technical assistance to analyze and evaluate the impact on the City of
various competitive issues. This support includes addressing customer rate
issues, competitive pricing questions, service area and business practices issues,
issues related to TMPA, issues related to the City's wholesale power supply
agreement, and other activities to assist Staff in responding to issues raised by
customers, the Utility Board, and by City Council.
One activity of particular importance for 2003 will be to work closely with City
staff to help identify and coordinate the FERC accounting systems and processes
needed for regulatory filings. By improving the accounting and reporting
process, the t~ansmission related costs can be better identified, leading to lower
costs to Denton's retail ratepayers.
Following is a detail list of services to be provided under this Task Order.
Scope of Services
Task A PUC Regulatory Support
Task A-1 Attending Workshops And Hearings At PUC
1. R~C will stay informed on activities at the PUC and will attend workshops
and hearings as needed.
2. When appropriate, RJC will participate in workshops and hearings to
represent interests of City based on directions of Staff.
3. RJC will work with Staff in developing positions which should be taken and
strategies for working with parties involved.
Task A-2 Analyze Proposed Rules and Policies
1. Proposed new rules and rule changes from the PUC will be analyzed.
2. RJC will discuss proposed new rules, and changes to existing rules with Staff
and legal counsel, helping to identify areas of concern and preparing positions
that represent the interests of the City.
2of5
Task Order 03-A
Regulatory Services
3. RJC will meet with PUC staff and other parties as appropriate to discuss
proposed rules, and present the City's concerns regarding such proposals.
Task A-3 Preparation of Comments
1. RJC will prepare or assist in preparing comments to be filed with the PUC
representing City's position on issues brought up in proposed rules, projects
and dockets.
2. These comments will be coordinated through Staff and the City's legal team.
3. RJC will assist the City's legal team as necessary in the preparation and filing of
comments and testimony in dockets that have been identified by Staff as
requiring intervention to protect the City's interest.
Task B Assistance With ERCOT
Task B-1 Attending Committee and Working Group Meetings At ERCOT
1. RJC will stay informed on activities at the ERCOT Independent System
Operator (ISO) and will attend meetings as directed.
2. RJC will participate in discussions in meetings to represent interests of City
based on directions of Staff.
3. RJC will work with Staff in developing positions which should be taken and
strategies for working with other ERCOT stakeholders.
Task B~2 Analyze Proposed Policies and Protocols
1. Proposed new policies and protocols from the ISO will be analyzed.
2. RJC will review proposed protocols with Staff, to identify areas of concern and
prepare responses that represent the position of the City on the issues before
the committees.
4. RJC will meet with ERCOT staff and other stakeholders to discuss proposed
protocols, and negotiate reconciliation of concerns.
Task B-3 Preparation of Comments
1. RJC will prepare or assist in preparing whitepapers and comments to be
submitted to the committees and be prepared to present such papers to
represent the City's position on issues.
2. These papers and comments will be coordinated through Staff and when
necessary, the City's legal team.
3 of 5
Task Order 03-A
P. egulatoD' Services
Task C Provide Staff With Technical Assistance On Competitive Issues
Task C-1 Technical Assistance
1. RJC will work with Staff as requested to review DME models and assist in
making changes to models to reflect changing market and operating
conditions.
2. RJC will discuss with and be available to Staff to assist in special projects to
evaluate impacts of changes in customers rates, the effect of competition on
customer related issues, and special analyses related to business practices that
may affect DME's competitive position.
3. RJC will provide, as directed, technical support to help quantify impact of
issues affecting DME. Examples of such issues may include: 1) issues
associated with TMPA; 2) issues associated with the Transition Power
Agreement; 3) analysis of opt-in versus opt-out issues; 4) load management
and energy efficiency measures; 5) retail rate issues; 6) load forecasting.
Task C-2 Industry Monitoring and Evaluation
1. RJC will have continuing communication with Staff and the City's legal team
in order to monitor proposed industry changes and address those issues
affectLng municipalities.
2. An on-going dialog will be maintained with Staff and the legal team in order
to evaluate changing operating and market requirements and conditions,
and evaluate potential effects on City operations.
3. Information necessary to supplement and support the decision making
process wil! be provided as requested.
4. A summary of activities at the PUC and ERCOT will be provided weekly.
Task D Special Projects
Task D-1 Coordination of FERC Accounting Systems and Transmission Cost
of Service
1. RJC will coordinate with Staff the development of FERC accounting
systems and reporting needed for regulatory filings at the PUC.
2. RJC will work with engineering staff in the identification and separation
of transmission costs from distribution costs in substations and in the
overall electric system.
3. RJC will work with Staff to improve recovery of Transmission Costs of
Service as the electric system continues its growth in transmission facilities
to serve Denton and the surrounding area.
4 of 5
Task Order 03-A
Regulatory Services
Budget
RJC recommends a not to exceed budget of $100,000 for labor and expenses. This
budget will not be exceeded without prior approval of the City. RJC will bill
monthly with supporting documentation of activities performed. 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 fi~/~day of January, 2003.
AUTHORIZED BY:
ACCEPTED BY:
CITY OF DENTON, TEXAS
~cipal Corporation
Dated: January 21, 2003
R.J. COVINGTON CONSULTING, LLC
Dated: January 21, 2003
ATTEST:
JENNIFER WALTERS
CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY
CITY ATTORNEY
Dated:
January 21, 2003
S:\Our Documents\Contracts\03XR J Covington TO No 03-A DME-PSA.doc
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ATTACHMENT TO
PROFESSIONAL SERVICES AGREEMENT
DATED JANUARY 21, 2003
BETWEEN THE CITY OF DENTON AND
R.J. COVINGTON CONSULTING, LLC
TASK ORDER NO. 03-B
Investigation Into Formation of Joint Public Power Agency
Tasks provided for in this Attachment are directed at Phase I of the formation of
a Joint Public Power Agency (JPPA). Phase I includes the investigation and
evaluation of the City's potential participation in the JPPA. The JPPA would
jointly secure power supply resources to serve municipal load in over 120
municipalities in ERCOT, as well as the load for participating municipal utility
systems such as Denton Municipal Electric (DME). The goal of the JPPA is to
combine the purchasing power of a number of loads in ERCOT to gain
bargaining leverage and to increase control over fuel and power costs to serve
customers. The advantage to DME of participating in the JPPA is that much of
the municipal load served is street lighting. The relative high percentage of
street lighting to total load provides a better load profile for power suppliers
looking to serve that load. Another benefit of participation in the JPPA is to gain
more control over power supply costs, as compared to going to the market which
is heavily influenced by market events which can have no bearing on actual cost
to serve. Overall the goals of DME will be to lower costs while having more
control over the factors affecting those costs.
Following is a detail list of services to be provided under this Task Order.
Scope of Services
Task 1 Evaluate Economics of Public Power Agency
1. RJC will develop and evaluate the City's load profile along with that of other
participants.
2. Based on the load profiles, RJC will construct a draft proposed generation
supply portfolio to serve the load. This will include considerations of unit
and fuel diversity, loss of generation contingencies, transmission congestion
issues and QSE services.
Task Order 03-B
Investigation Into Formation of JPPA
3. RJC will work with interested power supply entitles to explore options for
supplying the power, including equity participation in new units, purchase
of older units, entering into long term power supply contracts or tolling
arrangements, and other options as appropriate.
4. Fuel market risks and opportunities to control fuel purchases and avoid fuel
market volatility will be investigated and summarized.
5. Once a draft plan is developed, RJC will estimate a preliminary power
supply cost to the JPPA participants.
Task 2 Work With JPPA Participates on Organizational Issues
1. Working with representatives of the various groups, RJC will develop a
proposed organizational plan.
2. The organizational plan would address possible responsibilities of entities,
list legal considerations among entities, propose a voting structure, and
suggest administrative and operating approaches.
Task 3 Develop Preliminary Assessment Report
1. Based on discussions with parties and potential suppliers, and the
preliminary economic assessment, RJC will develop a report for JPPA
participate members. The report will address the preliminary evaluation of
costs/benefits and risks associated with the JPPA.
2. The report will make a recommendation with respect to whether or not to
proceed to Phase 2 of the development of the JPPA.
Budget
RJC recommends a not to exceed budget for Phase ! of $25,000 for labor and
expenses. This budget will not be exceeded without prior approval of the City.
City will be billed for activities based on its relative load ratio share of all
participates. RJC will bill monthly with supporting documentation of activities
performed. It is anticipated that the initial costs for Phase I and Phase II for
development of the JPPA may be partially or fully recovered through
membership fees to new entities wanting to join the JPPA in the future.
EXECUTED this ~/?~ day of January, 2003.
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Task Order 03-B
Investigation Into Formation of JPPA
AUTHORIZED BY:
ACCEPTED BY:
CITY OF DENTON, TEXAS
A Texas Municipal Corporation
R.J. COVINGTON CONSULTING, LLC
Dated' January 21, 2003 ~
· Dated: January 21, 2003
ATTEST:
APPROVED AS TO LEGAL FORM:
JENNIFER WALTERS
CITY SECRETARY
ated: January 21, 2003
HERBERT L. PROUTY
CITY ATTORNEY
Dated: January 21,
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