2001-229 O IN CENO
AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY
MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT IN THE FORM
OF TASK ORDER NO 01-C WITH R J COVINGTON CONSULTING FOR SERVICES
RELATING TO TRANSITION SERVICES FOR 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 firm of R J
Covington Consulting, of Austin, Texas ("Covington"), to provide consulting services to the City
relating to Denton Mummpal Electric, mcluchng, without limitation, transition services, and
WHEREAS, the City staffhas reported to the City Council that there is a substantial need
for the above-described professional services, and that lnnlted 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 promdes 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, 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 m the form of Task Order No 01-C by and between the City of Denton,
Texas and R J Covington Consulting, of Austin, Texas, for professional consulting services
relating to Denton Municipal Electric m the area of transition services, m substantially the form
of the Task Order No 01-C attached hereto and incorporated herewith by reference
SECTION 2 That the award of ttus 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 expanchture of funds as provided in the attached Professional
Services Agreement is hereby anthonzed
SECTION 4 That this orchnanee shall become effective immediately upon its passage
and approval
EULINE BROCK, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
By ~ _
~,ROV~r~ ^S ~0 ~E~,~ ~0~
HERBERT L PROUTY, CITY ATTORNEY
By ~~~
S \Our Doeumonts\Ordmanees\01\Cowngton Consulting PSA-DME-TO No 01 Cord doe
Task Order O1-C
ATTACHMENT TO
PROFESSIONAL SERVICES AGREEMENT
DATED JUNE, 2001
BETWEEN THE CITY OF DENTON AND
R.J COVINGTON CONSULTING
TASK ORDER NO 01-C
Transztion Services
Tasks provided for in this Attachment are directed at assisting the City staff
(Staff) in areas associated with the continuing restructuring of the electric
industry in Texas and assistance m maintaining and improving the analytical
tools used by Staff to evaluate and project financial results for budgeting and
operating purposes Following is a discussion of each of the primary areas of
assistance
Regulatory Support at PUC and ERCOT
This area of activity includes continuing participation at the Public Utility
Comrrusslon of Texas (PUC) and at the Electric Reliability Council of Texas
(ERCOT) on issues affecting the City During the first part of 2001, crlhcal issues
that arose included protecting the cities' grandfathered congestion management
rights and commenting on the move to charge lntrazonal congestion, ~ssues in
the new transnusslon rule regarding retail access over municipal distribution
facilities and requirements to physically unbundle operations, and DFW
reliability concerns, as well as other issues As the restructuring legislation is
transformed into new rules and 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 City's municipal electrm
system and its ability to contribute to the funding of City operations
Audit of Transzhon Power Agreement
This Task Order will also provide for assistance to Staff to implement the
appropriate monitoring functmns for the new Transition Power Agreement
(TPA) Implementation activities can include resolving issues associated with
billing, metering, settlement and other Qualified Scheduling Entity (QSE) issues
RJC will assist in monitoring the wholesale supplier costs to insure it meets the
1 of 4
Task Order O1-C
TPA terms until Staff financial personnel are familiar with the mechanics of the
billing under the TPA
Assist Staff in Updating of Financial Model
RJC will work with Staff m updating the financial model to incorporate the new
power supply arrangements, as well as looking at other changes that may be
needed to incorporate recent changes as a result of new ERCOT protocols and
PUC regulations RJC will work with new staff that will be taking on the
modeling function to assist them m becoming familiar with the models and their
inputl requirements RJC may also work on other activities as identified by the
Director of Electric Utilities
Scope of Services
Task :A Regulatory_ Support at PUC and ERCOT
Task ,A-1 Attending Workshops At PUC And ERCOT
1 RjC will stay informed on activities at the PUC and ERCOT Independent
System Operator (ISO) and w~ll attend workshops as needed
2 When appropriate, RJC will participate in workshops to represent interests of
City based on dlrectmns of Staff
3 RJC will work with Staff in developing positions which should be taken and
s~ategles for working with parties involved
Task'A-2 Analyze Proposed Rules and Pohc~es
1 Proposed new rules and rule changes from the PUC and associated proposed
policies from the ISO will be analyzed
2 RJC w~ll discuss proposed new rules and protocols, and changes to existing
rules and protocols w~th Staff, helping to ~denhfy areas of concern and
preparing poslhons that represent the interests of the City
3 RJC will meet with PUC staff and other parties as appropriate to discuss
proposed rules and protocols, and present the City's concerns regarding such
proposals
Task A-3 Preparation of Comments
1 RjC will prepare or assist m preparing comments to be filed with the PUC
represenhng City's position on issues brought up in proposed rules and
dockets
2 These comments will be coordinated through Staff and the City's legal team
2of4
Task Order O1-C
3 RJC will assist the City's legal team as necessary in the preparation and fdmg of
comments
Task A-4 Work W~th Staff And Legal Team
1 RJC will have contmumg commurucat~on with Staff and the City's legal team in
order to morutor proposed industry changes and address those issues affecting
muruclpaht~es
2 An on-going dialog will be maintained with Staff and the legal team m order to
evaluate changing operating and market requirements and condlt~ons, and
evaluate potential effects on City operations
3 Informatmn necessary to supplement and support the decision making process
will be provided as requested
Task A-5 Techmcal Support
1 RJC will provide technical support to the City's legal team to assist in the
evaluation of proposals and the potential impact on the City under different
scenarios
2 RJC will provide technical support to Staff, providing information as
requested from t~me to time to assist Staff in its evaluations and planning
processes
3 RJC will evaluate scenarios and proposals from perspective of City utility and
as a member of TMPA
Task,B Audit of Transition Power Agreement
Task, B-1 Audit of TPA Billing
I RJC will monitor the bdlmg from supplier for the first few months to insure
the bilhng terms are properly implemented between City and power suppher
2 RJC w111 assist Staff in developing auditing procedures for auditing monthly
billing and work with Staff in automating the audit process
Task C Assist Staff in Updating of Financial Model
Task C-1 Rewew of Financial Model
1 RJC will work with Staff to review the DME financial model and incorporate
changes needed to model and forecast power bflhng under the TPA
2 RJC will also discuss with Staff other possible changes needed to reflect
changing ERCOT operations and market conditions, particularly in the area of
how changing gas prices will affect power bflhng to DME, new ERCOT fees to
look for, and new loss allocations within ERCOT
$ of 4
Task Order O1-C
Budget
RJC recommends a not to exceed budget of $60,000 for labor and expenses This
budget will not be exceeded wzthout 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 UQhtles
and may be modified at any time upon appropriate notice to RJC
AUTHORIZED BY ACCEPTED BY
CITY OF DENTON, TEXAS R J COVINGTON CONSULTING
Dated 0~7//'//0 / Dated ~'/~ /
/ ~
ATI'EST APPROVED AS TO LEGAL FORM
JENNIFER WALTERS HERBERT L PROUTY
CITY SECRETARY CITY ATTORNEY
Dat~ ~/[q/l'J[ -- Dated
4 of 4