2003-192FILE REFERENCE FORM I 2003-192 I
Additional File Exists
Additional File Contains Records Not Public, According to the Public Records Act
Other
FILE(S), · Date Initials
First Amendment to Agreement - Task Order No. 05-B
(original is attached) 03/07/05 JP~
ORDINANCE NO. 2003- /qA
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. 03-F, REGARDING THE 2003
TRANSMISSION COST OF SERVICE FILING AT THE PUBLIC UTILITY COMMISSION
OF TEXAS RELATING TO DENTON MUNICIPAL ELECTRIC; AUTHORIZING THE
EXPENDITURE OF FUNDS THEREFOR; AND PROVIDING AN EFFECTIVE DATE.
WHEREAS, the City Council deems it in the public interest to engage the from ofR. J.
Covington Consulting, [,LC of Austin, Texas ("Covington"), to provide professional consulting
services to the City relating to Task Order No. 03-F, includ'mg, without limitation, services that
relate to transmission cost of service ("TCOS") filing schedules; analyze return component
alternatives for TCOS filing; preparation of TCOS testimony; TCOS filing discovery; and
participation in TCOS hearings before the Public Utility Commission of Texas; 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 competitiv9 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 past seven
years, and has proven to be a valuable, affordable, competent, dependable professional resource
that has expertise in and is well acquainted with the electric financial and regulatory framework
of Denton Municipal Electric ("DME"). Covington and his staff are 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 Consult'rog, LLC of Austin, Texas, for professional
consulting services relating to Task Order No. 03-F, to Denton Municipal Electric, 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 /7~ day of Off4q./~ ~, ,2003.
EULINE BROCK, MAYOR
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
By:~j~) ~../~
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
S:\Our Documents\Ordinances\03~R J Covington Consulting LLC-DME-Ord Aprv TO-3-F 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 day ,of June, 2003, by and
between the City of Denton, a Texas Municipal Corporation, 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 13276 Research BNd., Suite 20l,
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:
ARTIC!,E !
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.
ARTICI.E li
SCOPE OF SERVICES
A. COVINGTON shall provide to the CITY professional consulting services pertaining to the
preparation of a transmission cost of service filing for Denton Municipal Electric. COVINGTON
agrees to perform those services and tasks more particularly described in Task Order No. 03-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.
ARTICI,E 111
PERIOD OF SERVICE
This Agreement shall become effective upon execution by both the CITY and COVINGTON.
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. 03-F; or upon the
depletion and exhaustion of the $106,100 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.E 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
heroin, the CITY agrees to pay COVINGTON, a total fee, including reimbursement for direct
non-labor expense, not to exceed $106,100 for those services described in Task Order No. 03-
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.
Page 2
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 fi.om 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,lq, 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,E 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,E 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.
Page 3
ARTTCI,E VTll
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. COV1NGTON'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 pa~. '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.F. 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 Carders 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.
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
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.
Page 4
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
altemate 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.
ARTICI,E 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 XIT
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,E 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 X1V
TERMINATION OF AGREEMENT
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 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.
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 smwices to
Page 5
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 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.
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.
ARTICI .E XVI
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
Arm: Richard J. Covington
13276 Research Blvd., Suite 201
Austin, Texas 78750
City of Denton, Texas
Attn: Michael A. Conduff, City Manager
215 East McKinney Street
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 XVII
ENTIRE AGREEMENT
This Agreement consisting of nine (9) pages, and four (4) additional pages consisting of Task
Order No. 03-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.
Page 6
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,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.
ARTICI ,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.
AR TICI,F, 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 cona'actual 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
ARTIC. I .I~ 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.
ARTTCI ,F. 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 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.
Venue of any suit or cause of action under this Agreement shall lie exclusively in Demon
County, Texas. This Agreement shall be governed by, and construed in accordance with the
laws of the State of Texas.
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
carded on by the CITY.
The CITY shall assist COVINGTON by placing at COV1NGTON'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.
1N WITNESS WHEREOF, the City of Denton, Texas has caused this Agreement to be
executed in four original counterparts, by its duly authorized City Manager; and R.J. Covington
Consulting, LLC has executed this Agreement by its duly authorized officer on this the/q~/~ day of
June, 2003.
Page 8
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
By:
CITY OF DENTON, TEXAS
A Municipal Corporation
"COVINGTON"
R.J. COVINGTON CONSULTING, LLC
A Texas Limited Liability Corporation
ATTEST:
Richard J. Cov~gton, Pr~'~dent
By: Nqr'3x--
S:\Our Doc u ments\Contrac ~\03 ~d Covington Consulting LLC~PSA-TO 03-F-2003-DME.doc
Page 9
ATTACHMENT
PROFESSIONAL SERVICES AGREEMENT
BETWEEN THE CITY OF DENTON, TEXAS AND
R.J. COVINGTON CONSULTING, LLC
TASK ORDER NO. 03-F
2003 Transmission Cost of Service Filing
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 and R.J.
Covington Consulting, on even date herewith, and approved by the Denton City Council.
The work provided for in this Task Order is for R.J. Covington Consulting, LLC ("RJC")
to assist staff in the development and filling with the Public Utility Commission of Texas
("PUC") a 2003 transmission cost of service study ("TCOS") based on a Fiscal Year
(FY) 2002 test year. The TCOS filing is necessary because of the City's increased
investment in transmission facilities and the need to recover those costs through the
Electric Reliability Council of Texas ("ERCOT") postage stamp transmission facilities
charges. The filing will also incorporate updated transmission plant records that more
accurately reflect the actual Denton Municipal Electric ("DME") transmission plant in
service. The updated plant records will increase the TCOS to a level more in line with
actual costs. The services performed by RJC will include preparation of all necessary
rate filing schedules and work papers, the preparation of testimony and exhibits to
support the filing, and testifying in support of the rate-filing package at the PUC. RJC
will work with the City in responding to Requests for Information ("RFI's") during the
discovery phase of the process, and will work the Staff and the City's attorneys during the
hearings to defend the City's position against other parties and the PUC staff.
Scope of Services
Task A
Prepare TCOS Filing Schedules
1. A data request for FY 2002 data needed to complete the TCOS filing will be
prepared and discussed with staff.
2. Data provided will be reviewed for anomalies, discussed with staff, and adjusted
as needed.
3. DME data will be adjusted for known and measurable changes for the rate year.
Task Order No. 03-F
2003 Transmission Cost of Service Filing
4. ILIC will prepare the TCOS rate filing schedules based on the latest approved
PUC TCOS rate filing package instructions.
5. All schedules will be reviewed for completeness and presentation appearance.
Task B Analyze Return Component Alternatives For TCOS Filing
1. In preparing the TCOS schedules, RJC will review and analyze the Schedule C
alternatives available to the City, which include:
a. Cash flow method
b. Rate of return method
c. Debt service method
RJC will discuss with staff and legal counsel the appropriate approach to use
based on dollars derived from each alternative, staff's past actions, and DME's
long-term approach to financing plan additions.
Task C
Preparation of TCOS Testimony
1. RJC will prepare pre-filed direct testimony to support the rate-filing package.
2. DME staff testimony will be reviewed and commented on for coordination with
RJC testimony.
3. Exhibits will be prepared to support the testimony and rate-filing schedules.
4. RJC will work with the City's attorneys to complete the rate-filing package and
file it at the PUC.
Task D
TCOS Filing Discovery
1. RJC will review all RFI's sent to City and will assist in determining best person to
respond.
2. 1LIC will work with attorneys and staff to respond to RFI's from PUC and other
parties, being sure that responses are consistent with filing.
3. If needed, RJC will prepare RFI's to serve on other parties to assist in evaluation
of other party's positions and gather inforu~ation needed tbr cross examination of
witnesses.
2 of 4
Task Order No. 03-F
2003 Transmission Cost of Service Filing
Task E TCOS Hearings
1. RJC will review testimony and exhibits filed by PUC staff and other parties.
2. The impacts of alternative positions of other parties will be evaluated.
3. Rebuttal testimony will be prepared and filed if needed to address issues raised in
other parties' pre-filed testimony.
4. With the City's attorneys, PJC will participate with parties in settlement
discussions to attempt to settle the case without going to hearings.
5. PJC will assist attorneys in preparing cross-examination of PUC staff and other
parties.
6. The hearings will be attended to present direct testimony and assist attorneys on
technical issues.
7. RJC will assist attorneys in preparing briefs.
8. The Administrative Law Judge's Preliminary Order will be reviewed in order to
assist attorneys in filing exceptions.
9. The Final Order and other docket related documents will be reviewed.
10. The TCOS numbers in the Final Order will be evaluated for accuracy and for
compliance with the Commission's final decisions.
Budget
The not-to-exceed amount for the above scope of services for labor and expenses
is $106,100. This budget will not be exceeded without prior approval of the City of
Denton. RIC will bill monthly with supporting documentation of activities performed.
The actual costs may vary based on problems encountered with DME accounting data
and the level of intervention from other parties in the TCOS filing. This budget will not
be exceeded without prior xvritten approval of the City of Denton.
The termination date of this Task Order shall be on the earliest to occur of the
following events: the date of completion of the work described herein; or upon depletion
and exhaustion of the $106,100 not to exceed amount; or upon fifteen (15) days written
notice to terminate, issued by the Director of Electric Utilities, DME. The work being
3 of 4
Task Order No. 03-F
2003 Transmission Cost of Service Filing
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 in four (4) original counterparts by a duly authorized officEr,of RJC and by
a duly authorized officer of the City of Denton, Texas on this the /'~t~,~ day of June,
2003.
AUTHORIZED BY:
CITY OF DENTON, TEXAS
Dated:
(/
ACCEPTED BY:
R. J. COVINGTON CONSULTING, LLC
By:
Dated:
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
ROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
S:\Our Docu ments\Contracts\03~RJ C TO 03-F 2003-TCOS Filing.doc
4 of 4
STATE OF TEXAS §
COUNTY OF DENTON §
FIRST AMENDMENT TO
PROFESSIONAL SERVICES AGREEMENT
BETWEEN THE CITY OF DENTON, TEXAS AND
R.J. COVINGTON CONSULTING, LLC
TASK ORDER NO. 05-A
Continuation of Services re Transmission Cost of Service Filing
This First Amendment to Professional Services Agreement is a Task Order
that is contemplated by and related to the Professional Services A~reement providing for
a not-to-exceed amount of $106,100 earlier entered into on the 17 day of June, 2003 by
and between the City of Denton, Texas ("City") and R.J. Covington Consulting, LLC,
("RJC"), and as approved by the Denton City Council in Ordinance No. 2003-192.
The work provided for in this Task Order 05-A is for RJC to continue to assist
staff and the City's attorneys in supporting the 2003 transmission cost of service study
("TCOS") before the Public Utility Commission of Texas ("PUC"). The TCOS filing is
requesting a rate increase from the City's current TCOS of $995,010 to the requested
TCOS of $3,955,195. This $2,960,185 increase is necessary because of the City's
increased investment in transmission facilities and the need to recover those costs through
the Electric Reliability Council of Texas ("ERCOT") postage stamp transmission
facilities charges. This filing also incorporates updated transmission plant records that
more accurately reflect the actual Denton Municipal Electric ("DME") transmission plant
in service.
RJC has worked extensively with City staff in developing supporting
documentation for the City's true investment in transmission facilities to file with the
PUC. Discussions with PUC staffhave been prolonged due to the extensive adjustments
proposed by the City to their plant, and the PUC staff's unfamiliarity with municipal
financing of the municipal utility plant. This task order includes additional work with
PUC staff, and the development of rebuttal testimony to respond to staff's
recommendations regarding the cost of capital that should be allowed as the result of the
City's use of the "Cash Flow Method" in developing its requested revenue requirement.
Scope of Services
Task A - TCOS Filing Schedules
1. Continue to update City's filed TCOS schedules based on information provided
by City staff.
Task Order No. 05-A
Continuation of Transmission Cost of Service Filing
2. Assist City's attomeys in the filing of revised schedules, as needed.
Task B - Development of Rebuttal Testimony
1. RJC will review the PUC stafffiled direct testimony and analyze it as compared to
the approach used by DME.
2. RJC will develop rebuttal testimony to address deficiencies in the PUC staff filed
direct testimony.
3. Working with staff and legal counsel, RJC will coordinate its rebuttal testimony
with that of other witnesses.
Task C - TCOS Hearings
1. With the City's attorneys, RJC will participate with parties in settlement
discussions to attempt to settle the case without going to hearing(s).
2. RJC will assist attorneys in preparing cross-examination of PUC staff and other
parties.
3. The hearings will be attended to present direct testimony and to assist attorneys on
technical issues.
4. RJC will assist attorneys in preparing briefs.
5. The Administrative Law Judge's Preliminary Order will be reviewed in order to
assist attorneys in filing exceptions.
6. The Final Order and other docket-related documents will be reviewed.
7. The TCOS numbers in the Final Order will be evaluated for accuracy and for
compliance with the Commission's final decisions.
Budget
The not-to-exceed amount for the above scope of services of Task Order No. 05-
A for labor and expenses is an additional $23,100. This budget will not be exceeded
without prior approval of the City of Denton, Texas. RJC will bill monthly with
supporting documentation of activities performed.
The termination date of Task Order No. 05-A shall be on the earliest to occur of
the following events: the date of completion of the work described herein; or upon
depletion and exhaustion of the $23,100 not to exceed amount; or upon fifteen (15) days
written notice to terminate, issued by the Director of Electric Utilities, DME. The work
2 of 3
Task Order No. 05-A
Continuation of Transmission Cost of Service Filing
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.
All other provisions of the Professional Services Agreement, between RJC and
the City, dated June 17, 2003 shall continue to be applicable except as specified
hereinabove.
EXECUTED in four (4) original counterparts by a duly authorized o~cer of RJC
a~ by r} duly authorized official of the City of Denton, Texas on this the r/~ day of
I ~ I~ Cc,~ ,2005.
AUTHORIZED BY:
ACCEPTED BY:
CITY OF DENTON, TEXAS
R. J. COVINGTON CONSULTING, LLC
Dated: ~ I-~1 o< Dated:
[ I --
ATTEST:
JENNIFER WALTERS, CITY SECRETARY
APPROVED AS TO LEGAL FORM:
HERBERT L. PROUTY, CITY ATTORNEY
By:
S:\Our Documents\Contracts\05~RJC TO 05-A DME,doc
3 of 3
MEMORANDUM
TO:
Tom Shaw, Purchasing Agent
FROM: Michael S. Copeland, Utility Attorney
SUBJECT:
First Amendment to Professional Services Agreement (T.O. No. 05-A)
City of Denton, Texas/R.J. Covington Consulting, L.L.C. (RJC)
Letter of Clarification - Task Order Number No. 05-B (fi.om 05-A)
DATE: March 18, 2005
The above First Amendment to Agreement (the "Agreement") was considered by the City
Manager, within his delegated authority, on March 7, 2005, and approved on the same date. The
City Manager has signed the above First Amendment - Task Order No. 05-A, with a NTE
$23,100 amount.
However, it has come to my attention this week that there akeady is a Task Order No. 05-A,
which I was unaware of. It is on Order Number 121507 000 OP - a $4,400 purchase order,
within the Director's authority. Enclosed herewith for your file is an executed original of the
Letter of Clarification signed by Howard Martin, as Acting City Manager on March 18, 2005.
This corrects and clarifies the Task Order lettering.
The $4,400 Task Order No. 05-A will remain unchanged. However, the $23,100 Task Order
(which apparently in the process of being issued) has been re-lettered for administrative and
billing purposes as "Task Order No. 05-B." There are no other changes being made.
By copy of this memorandum I am providing Jan Hill, Denton Municipal Electric with one copy
of the original executed Letter of Clarification. Jan will retain that original for her contract
administration file. I will mail an original of the above Letter of Clarification to Rick Covington
of the Firm. The City Secretary will be furnished an original of the above Letter of Clarification
for her records.
Task Order No. 05-B will be administered through Denton Municipal Electric (Jan Hill/Sharon
Mays). I have copied Jan with this memorandum and am hereby requesting that her department
make the appropriate changes on her records and secure the issuance of a purchase order
regarding the Agreement. Thank you for your assistance in this matter.
MSC/mc
Attachment
CCi
4/_~oward Martin, Assistant City Manager/Utilities
unifer Walters, City Secretary (w/executed original of letter)
Rick Covington, R.J. Covington Consulting, LLC., Austin, Texas (w/executed original)
Jan Hill, Administrative Assistant, DME (w/executed original of letter)
S:\Our Doeuments\CorrespondenceWiemos\05~Shaw-RIC TO 05-B-Letter of Clarification- DME.doc
Mr. Mike Copeland, Utility Attorney
Utility Administration
City of Denton, Texas
215 East McKinney Street
Denton, Texas 76201
De. Mike:
It has come to my attention that we have inadvertently used the same task order number
("T.O. No. 05-A") for two projects. Both of these projects are associated with work on
the City's transmission cost of service filing, but for different areas of support for that
filing.
The first task order was for "Regulatory Support for Fixed Asset Cost Separation Study".
I have received the purchase order, Order Number 121507 000 OP, for that task order.
That project has a budget of $4,400 as was within the Director's signature authority.
The other task order is "Continuation of Services re Transmission Cost of Service
Filing." The budget for that task order is $23,100. I have not received a purchase order
for this one, but did get a copy of the signed task order from you, by memo dated March
7, 2005. This is the T.O. that I propose changing the description on.
I am requesting that we change the description on the $23,100 task order to "T.O. No. 05-
B" rather than T.O. No. 05-A as was approved by the City Manager. The $4,400 task
order will remain unchanged. This will only change the task order number on the larger
task order to include the "B" designation rather than the "A" designation. If this is
acceptable to the City of Denton, I will make that change in our accounting and billing
records. If you agree to this change of description, please sign below and return a signed
copy to me. I apologize for the oversight and hope this will not inconvenience you or the
City.
Sincerely,
Richard Covington
Acceptance:
CITY OF DENTON, TE~24.S
11044 Research Blvd., Suite A-325
Amen, ~ 78759
Date:
(512) 331-4949
Fax: (512) 331-5743
www. RJCovington. com