2000-288 ORDINANCE N0
AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY
MANAGER TO EXECUTE A THIRD AMENDMENT TO THE PROFESSIONAL SERVICES
AGREEMENT FOR CONSULTING SERVICES PREVIOUSLY ENTERED INTO BY THE
CITY ~ R J COVINGTON CONSULTING ON JANUARY 5, 1999, AND AS
PREVIOUSLY AMENDED BY FIRST AMENDMENT THERETO ON ~LrNE 1, 1999, AND
AS PREVIOUSLY AMENDED BY SECOND AMENDMENT THERETO ON OCTOBER 19,
1999, AND AS AMENDED FOR A THIRD TIME BY ADDING TASK ORDER NO 00-B
THERETO, WHICH THIRD AMENDMENT PROVIDES FOR ADDITIONAL ELECTRIC
INDUSTRY PROFESSIONAL CONSULTING SERVICES RELATING TO
RESTRUCTURING IMPLEMENTATION, TO BE PERFORMED FOR DENTON
MUNICIPAL ELECTRIC, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR,
AND PROVIDING AN EFFECTIVE DATE
THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS
SECTION 1 That the City Manager is hereby anthonzed to execute a Third
Amendment to the "Professional Services Agreement For Consultang Services Relating to the
Denton Mumelpal Elecmc Unhty" (the "Agreement"), heretofore entered into by and between
the Caty of Denton, Texas and R J Covington Consultang, Austin, Texas on the 5th day of
January, 1999, (which Agreement was approved by the Council m Ordinance No 99-011,
enacted on January 5, 1999), providmg for profesmonal consulting services in the area of elecmc
restmctunng and the potential &vest~ture of all or a part of the C~ty's electric system, all as set
forth in Task Order No 99-A, and winch Agreement was thereafter first amended to provide for
addltlorml professional consulting services in the area of electric restructunng as set forth m Task
Order No 99-B, winch First Amendment to the Agreement was approved by the Council m
Ordinance No 99-187, enacted on June 1, 1999, and which Agreement was thereafter further
amended for a second time to provide for additional profesmonal consulting services an the area
of pote,tial electric divestiture and restmctunng as set forth m Task Order No 99-C, which
Second IAmendment to the Agreement was approved by the Council ~n Ordanance No 99-388,
enactedlon October 19, 1999
SECTION 2 That the Agreement is now beang amended for a third t~me to prowde for
addltaonal profesmonal consulting services in the area of implementation of elecmc restmctunng
as set forth more particularly m Task Order No 00-B, a copy of winch Task Order is attached
hereto knd incorporated herewith by reference, and winch Task Order constitutes the third
amendment document and provides that R J Covington Consultang shall perform addition~al
regulatory, teehmeal, and related electric industry professional consulting services supporting the
C~ty anti Denton Mumclpal Electric, and which Task Order provides for the payment by the C~ty
of additional fees and expenses m an amount not to exceed $ 100,000 00 respecting the
additional services to be performed by R J Cowngton Consulting pursuant to smd Task Order
No 00~B
S~CTION 3 That the award of tins Agreement by the C~ty ~s on the bas~s of the
demonstrated competence, knowledge, and quallfieatmns of R J Cowngton Consulting and the
ablhty of R J Covangton Consulting to perform the servmes needed by the C~ty for a fmr and
reasonable price, all m accordance w~th the prowmons of Chapter 2254 of the Texas Government
Code, known as the "Professmnal Servmes Procurement Act"
SECTION 4 That the expenditure of funds as prowded for ~n the attached Third
Amendment to Agreement, in the form of, and pursuant to Task Order No 00-B, ~s hereby
authorized
SECTION 5 Tins ordinance shall become effective ~mmedmtely upon ~ts passage and
approval
PASSED AND APPROVED tlus the ~-~-'-/~ dayof O~,0~m~/"- ,2000
EULINE BROCK, MAYOR
ATTEST
JENNIFER WALTERS, CITY SECRETARY
t./ --
APPROVED AS TO LEGAL FORIVl
HERBERT L PROUTY, CITY ATTORNEY
S\OurDocuments\Ordmances\00~RJCowngton 3rdAmendedPSA TO#00BDMEorddoc
THIRD AMENDMENT TO
PROFESSIONAL SERVICES AGREEMENT
DATED JANUARY 5, 1999
BETWEEN THE CITY OF DENTON AND
R J COVINGTON CONSULTING
TASK ORDER NO 00-B
Restructuring Implementahon Sermces
Tasks provided for m this Third Amendment are directed at continuing assistance to
City staff (Staff) m participation at the Pubhc Utihty Comrmsslon of Texas (PUC) and at
the Electric Rehabfllty Council of Texas (ERCOT) on issues affecting the City The PUC
identified 36 projects for developmg the rules and policies that will shape the electric
industry as retail access as implemented on January 1, 2002 New projects are being
added as new issues develop These projects wall either directly affect the City's
mumclpal electric system, or by shaping and defaung the competitton, md~xectly affect
the way the City will conduct its electric business This, m turn, will affect the level
wtuch the electric system can contribute to the fundmg of City operations
The developmental stage of industry restructuring is nearmg completton and the
implementation phase is begmmng Implementataon requires coordmation of policies
and rules being developed through PUC Projects leadmg to Rulemakmgs and ERCOT
ISO working groups The rules, policies, procedures and systems are to be m place by
June 1, 2001, the start of the customer choice pilot program This means there continues
to be multiple PUC projects and rulemakmgs, as well as, multiple ERCOT groups
working on implementation issues that will affect the City's electric system
Some of the key issues presently being addressed that directly affect the City include
How will umts be demgnated as must-mn umts and how will they be compensated?
This as a parttcularly cratical ~ssue as the City looks at making investments to meet
the State Implementation Plan (SIP) The outcome of ttus and mrmlar issues could
affect the value of the City's generation m the current sale of the assets
· How will the City structure itself to meet it load serving obligations?
· Wall the City act as a Qualified Scheduhng Entity or choose another to act in that
capacity for the City?
· How will those obhgations differ ff the City decides to "opt-in" to customer choice?
· Should the City opt-m and when?
· What type of settlement procedures will the City need m the restructured market?
· How wall the City be affected by the Non-IOU Code of Conduct being developed at
the PUC*
· Wall the protocols bemg developed for the ISO retain the benehts on the issues the
City has worked to actueve m the working comrmttees, such as dynarmc scheduling
Task Order No O0-B
Restmcmnng Implementation Servtces
for Gibbons Creek, restricting allocation to opt-out utilities of Unaccounted For
Energy to zero except for transrmsslon related actual losses, self provision of
ancrilary services, recogrution of the drfference between munlclpahties and
cooperatives and IOU's?
· How will settlement work to track and reconcile costs and how will mumclpahties fit
mto that process?
· What wril be the cash flow impacts of weekly settlements and payments to the ISO?
Some of the issues that are currently being addressed that wril indirectly affect the City
are
· How will the IOU's be unbundled into separate business umts?
· What services wril the unbundled entities offer, when, where and how much?
· How will the capacity auction be mxplemented and how will it affect power costs?
· How will relmbrilty factors affecting the DFW area be addressed?
· How wril moving from multiple control areas to a single control area affect the City?
RJC's role will be that of Staff halson to the PUC to keep Staff reformed on activities,
work with Staff m developing pomttons on issues, assist Staff m responding to issues
that affect City and provide techmcal support for Staff and City's legal experts on
regulatory issues RJC will supplement Staff on ERCOT activities to keep Staff krfformed
of operational procedures that will affect the City's electric system and asmst Staff m
supporting positions before ERCOT management and standing comrmttees as
requested RJC's activlttes will include,
1 ) attending workshops hosted by the PUC and ERCOT ISO,
2 ) participating on relevant PUC and ISO committees and panels to discuss issues and
work with Staff to ensure the City's interests are represented m the workshops,
rulemakmgs, and committee meetings,
3 ) analyzing proposed rules fried by PUC and policies presented by the ISO,
4 ) preparation of comments to be fried at the PUC to present the City's position on
lSSUeS,
5 ) analyzm§ comments bled by other parties on issues affect:rog City,
6 ) working with City Staff and legal team to develop responses to positions taken by
other parties adverse to the C~ty's positions,
7 ) provldm§ techmcal support to Staff and the City's legal team on issues before the
PUC and the ISO, and,
8 ) maintaining mformat~on on achvlties at the PUC, ERCOT ISO and the Legnslature
that supports effective representation on issues m these and related proceedmgs
associated w~th restructuring m Texas
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Task Order No 00-B
Reslructurmg Implementation Services
Scope of Services
Task A ?UC And ERCOT Workshops and Committees
1 RJC will stay m~ormed on aci~vmes at PUC and ISO and will attend PUC and
ERCOT workshops and coranuttees as needed
2 W'nen appropriate, RJ£ will parbclpate m the comn~ttees and workshops to
represent interest of City based on d~recbons of Staff
3 Reports will be provided to Staff detaflmg issues addressed and poslhons taken by
part~es
4 RJC will discuss with Staff positrons wtuch should be taken and strategms for
workmg with partms revolved
5 RIC wffl coordmahon coverage with Staff and other parties with mrmlar interest to
mamtam effecbve coverage on the numerous issues affecting the City
Task B Evaluate Proposed Implemon*atlon Rules and Policies
1 The new rules being proposed by the PUC to implement restructuring will be
evaluated as to thmr effect on the City
2 When requested by Staff, RJC will develop spreadsheet models and perform other
analysis as reqmred to evaluate the econormc nnpact of proposed rules on the City
3 RJC will chscuss proposed new rules and changes to erastmg rules with Staff, helpmg to
identify areas of concern and preparing positions on rules
4 When necessary, RJC will meet with PUC staff to discuss issues of particular concern to
the City, partmularly where the stakeholder process at ERCOT fads to recogruze
$1gmficant adverse mapacts on the City from policies and rules being adopted
Task C Preparation of Comments
1 RJC will prepare or assist m preparing comments to be filed with PUC representing
City's potation on ~ssues brought up m proposed rules and m the ERCOT Certffmatmn
process
2 These comments will be coordinated through Staff and the City's legal team
3 RJC will assmt the City's legal team as necessary m the preparabon of and fflmg of
comments and letters to the PUC, the ISO and to the Legislature
Task D Coordination of Work Effort
1 RJC will have continuing commumcabon with Staff and the City's legal team m order
to momtor proposed industry changes and address those ~ssues affecting
mumclpahttes
2 An on-going dmlog wffl be maintained with Staff and the legal team m order to
evaluate changing proposals and evaluate potential effects on City operabons
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Task Order No 00-B
Restructuring Implementation Serwces
3 Informataon necessary to supplement and support the dec,sion making process wdl be
provided as requested
4 RJC wffl be available to chscuss w~th the Utthty Board and City management to dtscuss
act~vlt~es at the PUC and the ISO as requested from tune to t~me by Staff
5 As dtrected by Staff, RJC wal coordinate and support other consultants, attorneys, and
lobbyists used by the City m order to insure coordination of plarmtng and other
acttvlhes
Task E Teohmcal Support For Implementation Phase
1 RJC will provide technical support to the City's legal team to assist m the evaluatton
of rules, pol~czes and procedures being adopted by the PUC and the ISO and the
potenttal unpact on the City under different scenarzos
2 RJC will provide techrucal support to Staff, providing mformataon as requested from
t~me to t~me to assist Staff m its evaluahons and plannmg processes
3 The evaluattons and planning process assistance shall include such ~ssues as how
restructurmg is affecting power costs, what act~vlhes the City needs to be looking at
to prepares for the Implementatmn Date, how will the compehQve changes be
affecting the City's ablhty to retain and attract customers m the future
4 RJC will evaluate scenarios and proposals from perspectrve of City ut~hty and as a
member of TMPA
5 Presentations to Staff will be made as appropriate to chscuss results of analyses and
recommended strategies based on the results
Budget
The budget for the above scope of services for labor and expenses is difficult to esttmate
due to the fact that the pohcy development and lmplementatton phases are lust
beginning Based on prior experience m working with these issues, RJC recommends a
budget of $100,000 for labor and expenses Th~s budget wdl not be exceeded without
prior approval of the C~ty RJC will bill monthly with supporting documentation of
activities performed The work bemg performed wtll be under the supervision of the
Director of Electric Utaht~es and may be modified at any t~me upon appropriate not~ce to
RJC
EXECUTED ff--day o l b, ? mb X
AUTHORIZED BY ACCEPTED BY
CITX/'~jOF DENTON, TEXAS R J COVINGTON CONSULTING
Dated ~,/~r~_.. ',: Dated
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Task Order No O0-B
Restructunng Implementataon Services
ATTEST APPROVED AS TO LEGAL FORM
JENNIFER WALTERS HERBERT L PROUTY
CITY ATTORNEY_
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