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1999-011 Note: First Amendment - Ordinance No 99-18~8 Second Amendment - Ordinance No. 99-3 NOTE. Third Amendment - Ordinance No 2000-288 ORDINANCE NO q AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE A PROFESSIONAL SERVICES AGREEMENT WITH R J COVINGTON CONSULTING GROUP FOR CONSULTING SERVICES PERTAINING TO ELECTRIC RESTRUCTURING MATTERS AND THE POSSIBLE DIVESTITURE OF THE CITY'S ELECTRIC GENERATION AND DISTRIBUTION ASSETS, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR, AND PROVIDING AN EFFECTIVE DATE WHEREAS, the City Cotmml deems it in the public interest to engage R J Covington Consulting to provide professional consulting services to the City pertmmng to the electric restructuring matters and the possible divestiture of the City's electric generation and distribution assets, and WHEREAS, Chapter 2254 of the Texas Government Code, known as the "Professional Services Procurement Act", 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 and qualifications, and for a fmr and reasonable price, and WHEREAS, the professional fees as provided in the Profesmonal Services Agreement are fmr and reasonable, conmderlng all relevant factors, as well as the magnitude of the project for which R J Covington Consulting is being engaged, and smd professional fees do not exceed any maximum prowded by law for such professional services, and WHEREAS, the City Council has provided ~n the C~ty 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 I That the City Manager m hereby authorized to execute a Professional Services 'Agreement with R J Covington Consulting for professional consulting services pertaining to electric restructunng matters and the possible divestiture of the City's electric generation and distribution assets, in substantially the form of the Professional Services Agreement attached hereto and incorporated herewith by reference SECTION II That the award of tNs Agreement is on the basis of the demonstrated competefice and qualifications of R J Covington Consulting and the ability of R J Covington Consulting to perform the services needed by the C~ty for a fair and reasonable price SECTION III That the expenditure of funds as provided in the attached Professional Services Agreement is hereby authorized SECTION IV That this ordinance shall become effective immediately upon its passage and appr6val PASSED AND APPROVED th~s the ,~'-':--- day of TZJ'd~/~ ,1999 JACK~I~LER, MAYOR ATTEST JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY By '~)~ ~J~ S \Our Documcnts\Ordinances\98\RJCovington Consulting PSA (Divest RFP) doo PROFESSIONAL SERVICES AGREEMENT FOR CONSULTING SERVICES RELATING TO THE DENTON MUNICIPAL ELECTRiC UTILITY STATE OF TEXAS § COUNTY OF DENTON § THIS AGREEMENT IS made and entered tnto as of the s9r'~ day of L~-"~/t ,1999, by and between the Ctty of Denton, a Texas Muntctpal Corporatton, wlth~ts prlnctpal office at 215 E McKtnney Street, Denton, Denton County, Texas 76201 ("CITY") and R J Covtngton Consulttng, a sole propnetorshtp, with h~s prlnctpal office at 13276 Research Blvd, State 204, Austtn, Traws County, Texas 78750 hereinafter ("COVINGTON"), acting here~n by and through their respecttve duly authortzed representatives WITNESSETH, that tn constderatton of the covenants and agreements here~n contamed, the CITY and COVINGTON do hereby AGREE as follows ARTICLE I EMPLOYMENT OF CONSULTANT The CITY hereby contracts wtth COVINGTON, as an tndependent contractor, and COVINGTON hereby agrees to perform the services hereto tn connectton with the Scope of Servtces as stated tn the Arttcles to follow, with dlhgence and in accordance wtth the h~ghest professional standards customarily obtamed for such serwces ~n the State of Texas ARTICLE 11 SCOPE OF SERVICES A Covmgton shall prowde to the CITY professional consulttng servtces pertatmng to the p0tentml dtvestlture of part or all of the Ctty's elecmc uttltty COVINGTON shall work wtth Ctty staff and project team members tn gathenng mformat~on and developtng a Request For Proposals (RFP) to purchase the d~strlbutton system and/or generatmn assets COVINGTON wall assist tn the development of the Offenng Memorandum, the draft Purchase Power Agreement and other necessary agreements and documents COVINGTON wall asstst m the markettng of utdtty assets and the evaluation of proposals recetved ~n response to the RFP Detatls of these and related tasks to be provided under thts Agreement are set forth ~n Task Order 99-A B To consult wtth the Ctty Manager, Assistant Ctty Manager/Utdtttes, the Director of Elecmc Utdtttes, the Ctty Attorney, and other destgnated admtmstrattve personnel regardtng any and all aspects of the services to be performed pursuant to thts Agreement ARTICLE I!I PERIOD OF SERVICE This Agreement shall become effective upon execution by both the CITY and COVINGTON, and shall remain afl force for the period which may reasonably be required for the completion of the work described in Article I1 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 T,me ,s of the essence in this Agreement COVINGTON shall make all reasonable efforts to complete the services set forth here~n as expeditiously as possible and to meet the schedule estabhshed by the CITY, acting through its C~ty Manager or its Director of Electric Utilities ARTICLE IV COMPENSATION A COMPENSATION TERMS "Direct Non-Labor Expense" ,s defined as that expense for any assignment incurred by COVINGTON for supplies, long-distance telephone, telecop,er, reproduction expense, overnight cour,er, photocopy expense, transportation, travel, commumcations, subsistence and lodging away from home and similar incidental expenses reasonably recurred in connection with that assignment B BILLING AND PAYMENT 1 For and in consideration of the professional serv,ces to be performed by COVINGTON here,n, the CITY agrees to pay COVINGTON, a total fee, tncludtng reimbursement for d,rect non-labor expense, not to exceed Two Hundred Ninety-Eight Thousand One Hundred Dollars ($298,100) 2 The fee for the serwces described tn this Agreement to be performed by COVINGTON are to be billed at the rates as set forth in Exhibit A attached hereto and incorporated herewith by refere~mce Bflhng shall be reported m mimmum 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 and approved by the CITY through ,ts City Manager or the D,rector 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 tn this Article shall require the CITY to pay for any work which ,s unsatisfactory as reasonably determined by the City Manager or the Director of Electric Utilities, or which is not submitted in eomphance wtth the terms of th's Agreement The C,ty shall not be required to make any payments to COVINGTON when COVINGTON is in default under this Agreement 5 It is specffically understood and agreed that COVINGTON shall not be authorized to undertake any work pursuant to this Agreement which would reqmre additional payments by the Cov,ngton Professional Serwces Agreement Page 2 CITY for any charge, expense or reimbursement above the maximum not-to-exceed fee as stated, without first having obtained written anthonzatlon from the CITY C PAYMENT If the CITY fails to make payments due COVINGTON for services and expenses wtthin forty five (45) 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-fifth (45th) day, and in addttion, COVINGTON may, after giving ten (10) days' written notice to the CITY, suspend services under this Agreement untd COVINGTON has been paid m full all amounts due for services, expenses and charges provided However, nothing herein shall requtre the CITY to pay the late charge of one p0rcent (1%) set forth herein if the CITY reasonably determines that the work of COVINGTON Is unsatisfactory, m accordance with this Article IV, Compensation ARTICLE V OBSERVATION AND REVIEW OF THE WORK COVINGTON will exercise reasonable care and due dlhgence tn discovertng and promptly reporting to the CITY any defects or deficiencies tn his work or the work of any subconsultants performed hereunder ARTICLE VI OWNERSHIP OF DOCUMENTS All documents prepared or furnished by COVINGTON (or COVINGTON's subconsultants) pursuant to this Agreement, are instruments of service and shall become the property of the CITY upon the termination of this Agreement COVINGTON is entitled to retatn copies of all such documents The documents prepared and furnished by COVINGTON are intended only to be applicable to this professional engagement and CITY'S use of these documents in other projects shall be at CITY'S sole rtsk and expense In the event the CITY uses the Agreement in another project or for other purposes than specified heretn for any of the tnformation or materials developed pursuant to this Agreement, COVINGTON is released from any and all liability relating to ~ts use m that project ARTICLE 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 clmm any right anstng from employee status ARTICLE VIII iNDEMNITY AGREEMENT COVINGTON shall indemnify and save and hold harmless the CITY and its officers, agents, and employees from and against any and all habihty, clatms, demands, damages, losses and expenses, including but not limited to court costs and reasonable attorney's fees incurred by Cowngton Professional Services Agreement Page 3 the CITY, and including w~thout limitation, damages for bodily and personal ~njury, death and property damage and damages for professional malpractice resulting from the neghgent acts or omiss~ons of COVINGTON or any subconsultants, ~n performance of th~s Agreement COV1NGTON's habthty under th~s Article VIII ~s expressly l~m~ted to the llm~t of COV1NGTON's ~nsurance as set forth m Article IX Nothing in this Agreement shall be construed to create a habthty to any person who ~s 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 ht~gation filed by anyone not a party to th~s Agreement, including the defense of governmental ~mmumty, which defenses are hereby expressly reserved ARTICLE IX INSURANCE During the performance of the Services under th~s Agreement, COVINGTON shall ma~ntmn the following insurance w~th an insurance company hcensed to do business ~n the State of Texas by the State Insurance Commiss~on or any successor agency that has a rating w~th Best Rate Carr;ers of at least an "A-" or above A Comprehensive General Llabthty Insurance with bodily injury hmits of not less than $500,000 for each occurrence and not less than $500,000 m the aggregate, and w~th property damage hm~ts of not less than $100,000 for each occurrence, and not less than $100,000 m the aggregate B Automobile Llabthty Insurance wxth bodily ~njury hmtts of not less than $500,000 for each person and not less than $500,000 for each accident, and w~th property damage hm~ts of not less than $100,000 for each accident C Professional Liability Insurance with pohcy hm~ts of not less than $1,000,000 annual aggregate D COVINGTON shall furmsh insurance certtficates or ~nsurance policies at the CITY's request to evidence such coverages The insurance policies shall name the CITY as an additional ~nsured 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, dehver substitute pohc~es furmshmg the same coverage to the CITY .ARTICLE X ARBITRATION AND ALTERNATE DISPUTE RESOLUTION The parties agree to settle any disputes under th~s Agreement by submitting the d~spute to arbitrat~on or other means of alternate dispute resolution such as mediation No arbitration or alternate d~spute resolution artsmg out of or relating to, th~s Agreement mvolwng one party's d~sagreement may include the other party to the d~sagreement wtthout the other's approval Covington Professional Servtces Agreement Page 4 ARTICLE XI TERMINATION OF AGREEMENT A Notwithstanding any other provision of th~s Agreement, etther party may tenmnate thts Agreement by g~vlng thirty (30) days advance written not,ce of termmaUon to the other party B Th~s Agreement may also 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 bo effected unless the other party is given (1) written notice (dehvered by certified marl, return receipt requested) of intent to terminate and setting forth the reasons specifying the nonperformance, and not less than ten (10) business days In which to cure the failure, and (2) an opportunity for consultation with the terminating party prior to termination C Ifth~s Agreement is terminated prior to completion of the serwces to be provtded hereunder, COVINGTON shall immediately cease all serwces 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 m 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 m providing ~nformatlon 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 ~ts use ARTICLE XII RESPONSIBILITY FOR CLAIMS AND LIABILITIES Approval by the CITY shall not constitute nor be deemed a release of the responsibility and hablhty of COVINGTON, or any subconsultants of COVINGTON, for the accuracy and competency of their work product ARTICLE Xlll NOTICES All notices, communications, and reports reqmred or permitted under this Agreement shall be personally delivered or marled to the respective parties by depositing same in the United States mall at the address shown below, certified mad, return receipt requested unless otherwise spemfled herein Marled notices shall be sent to the parties at the following addresses To COVINGTON To CITY R J Cowngton Consulting City of Denton ATTN Richard J Covington ATTN Sharon Mays, D~rector ofElecmc Utlht~es 13276 Research Blvd, Suite 204 901-A Texas Street Austin, Texas 78750 Denton, Texas 76201 Cowngtgn Professmnal Services Agreement Page All notices shall be deemed effective upon receipt by the party to whom such nottce is given ARTICLE XIV ENTIRE AGREEMENT This Agreement consisting of eight (8) pages 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, commumcatlons and agreements which may have been made m connection with the subject matter hereof ARTICLE XV 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 Agreemant and shall not cause the remainder to be invalid or unenforceable In such event, the party s~all 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 provis~on ARTICLE XVI COMPLIANCE WITH LAWS COVINGTON shall comply with all federal, state, local laws, rules, regulations, and ordinances applicable to the work covered hereunder as they may now read or hereinafter be amended ARTICLE XVII 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 XVIII PERSONNEL COVINGTON represents that he has secured, or will secure at his own expense any additional personnel required to perform all the services reqmred under this Agreement Such personnel shall be subconsultants of COVINOTON, 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 th~s Agreement Cownston Professional Servsces Agreement Page 6 All servtces requtred hereunder will be performed by COVINGTON or under his supervtslon All personnel engaged tn work shall be quahfied and shall be authortzed and permttted under state and local laws to perform such services ARTICLE XIX AS SIGNABILITY COVINGTON shall not asstgn any interest tn thts Agreement and shall not transfer any interest tn thts Agreement (whether by asstgnment, novatmn or otherwise) wtthout the prior written consent of the CITY ARTICLE XX MODIFICATION No wmver or modfficatton of thts Agreement or of any covenant, condition, hmttatton here~n contatned shall be vahd unless tn writing and duly executed by the party to be charged therewith and no credence of any watver or modfficatmn shall be offered or recetved tn ewdence ~n any proceeding artstng between the parttes hereto out of or affecttng thts Agreement, or the rights or obhgattons of the parttes hereunder, and unless such wmver or modfficatton ~s tn writing, duly executed, and, the parttes further agree that the provtstons ofth~s sectton will not be watved unless as herem set forth ARTICLE XVI MISCELLANEOUS A COVINGTON agrees that CITY shall, until the expiration of three (3) years after the final payment under thts Agreement, have access to and the right to examine any d~rectly pertinent books, documents, papers and records of COVINGTON tnvolwng transactions relattng to this Agreement COVINGTON agrees that the CITY shall have access dunng normal working hours to all necessary COVINGTON facthttes and shall be provtded adequate and approprmte working space tn order to conduct audits ~n comphance wtth th~s sectton The CITY shall gtve COVINGTON reasonable advance nottce of any intended audtts B Venue of any stat or cause of action under thts Agreement shall he exclustvely ~n Denton County, Texas Thts Agreement shall be governed by, and construed tn accordance w~th the laws of the State of Texas C For the purpose of thts Agreement, the key person who will perform most of the work hereunder shall be Rtchard J Comngton However, nothtng heretn shall hm~t COVINGTON from ustng other quahfied and competent members of hts firm to perform the services reqmred here~n D COVINGTON shall commence, carry on, and complete the work reqmred by thts engagement wtth all apphcable dispatch, tn a sound, economtcal, effictent manner and tn accordance wtth the provtstons hereof In accomphshmg the work, COVINGTON shall take such steps as are appropriate to ensure that the work ,nvolved ~s properly coordtnated wtth related work betng earned on by the CITY Covington Professional Services Agreement Page 7 E 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 reqmred for COVINGTON to perform services under this Agreement F The captions of this Agreement are for informational purposes only and shall not tn any way affect the substantive terms or condmons 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 Manager, and COVINGTON has executed this A~reement by its ff~-~ day of ~.~-~Z,/9/2F)~.~ duly authorized, 1999undersigned owner and proprietor on this the "CITY" CITY OF DENTON, TEXAS A ~c~al~rporatlon ~,/ JENNIFER WALTERS, CITY SECRETARY AP~PA~OVED AS TO LEGAL FORM By "COVINGTON" R J COVINGTON CONSULTING By Rmhard J Covm~n - Presl ~t' Comngton Professional Services Agrcemeat Page EXHIBIT A FEES FOR SERVICES ProfesSional and support services, except for testimony, shall be billed at the following rates Executive Consultant $150 00 per hour Sr Management Consultant $140 00 per hour Management Consultant $130 00 per hour Sr Consultant $120 00 per hour Consultant $105 00 per hour Assistant Consultant $ 90 00 per hour Technical Assistant $ 65 00 per hour Research Assistant $ 55 00 per hour Adm~mstratlve Assistant $ 4:5 00 per hour The above rates shall be adjusted each year, commencing January 1, 2000, to reflect the change in rates officially estabhshed by R J Covington Consulting Testimony shall be billed at not less than eight hours per day Repro~luet~on, 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 estabhshed 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 City shall pay to R J Cowngton Consulting any apphcable sales tax, if in fact there is any sales tax lawfully owing, whmh arises from, and becomes due and owing regarding services performed by R J Cowngton Consulting ATTACHMENT TO PROFESSIONAL SERVICES AGREEMENT DATED JANUARY 5, 1999 BETWEEN THE CITY OF DENTON AND RJ COVINGTON CONSULTING TASK ORDER NO 99-A DISTRIBUTION AND GENERATION RFP This Task Order sets forth specific services to be provided by R J Covington Consulting (RJC) to the City of Denton (City) pursuant to the Professional Services Agreement dated January 5,1999 Tasks provided for in this Amendment are for consulting services to work with the City and other Project Team members in obtaining bids for sale of the City's electric system Separate bids will be solicited for the distribution system and the City's genera'non assets Bids will be evaluated and presented to the City Upon a decision by the City to sale the distribution system, the generation assets, or the total electric system, negolaataons will be held with the successful bidder/bidders RJC will assist the City throughout the process, supporting and augmenting City staff and working with the City's other consultants and attorneys on specific tasks The tasks which RJC will be involved in are listed in the attached Scope of Services Scope of Services (See Attachment A) Budget The budget for the above scope of services for time and expenses is estimated at $298,100 This budget will not be exceeded without prior approval of the City RJC will bill monthly with supporting documentation of activities performed EXECUTED th, s of , CITY CONSULTANT CITY OF DENTON, TEXAS / R J COVINGTON CONSULTING / ~' ~l~hael 7e~ .-~}~ra~a get Richard J Co~gton Attachmant A CITY OF DENTON DISTRIBUTION AND GENERATION RFP TASK ORDER DEN99-A ~ Task II Reap Parties ITaskll#11 , I II II II Devqlop Project Plan A 1 Assl; t in preparation of schedule ~EED/RJC A 2 Ident flcatlon of project team REED/RJC A 3 Estal ,llsh responslblltles and milestones REED/RJC/ClTY Genffral -n -nc,-,mentatlon B 1 Determine sources for various documents RJC B 2 Work with City staff to assemble documents ClTY/RJC B 3 Prepare supplemental documentabon ~EED/RJC Envl~'onmental A~-~e-~-~ments C 1 Coordinate environmental evaluat~ons RJC C 2 Rew~w Phase I Report - D~stribution System REED/RJC/ClTY C 3 Revlgw Phase I Report-Generation REED/RJC/ClTY C 4 Revi@w with project team need for Phase II Assessments REED/RJC/CITY C 5 ~Vnteup of environmental ~ssues for OM REED/RJC/CITY C 6 Develop outline Identltying air quality constderabons RJC/ClTY/REED C 7 Revl~)w proposed changes regarding a r quality impac?ng ?.t.y. plan~ . RJC/CITY/REED C 8 Review proposed changes regarding a r quality mpac[~ng [~IDDOnS ~.ree~ RJC/ClTY/REED C 9 Provlde wrltaup of air quality issues for OM RJC/ClTY/REED C 10 Rewgw with City and Legal TEAM EvaliJatlon of Water Suppl¥1Dlacharge for Generation Plants D 1 Iden~if~ issues related to water supply/wastewatar RJC/ClTY D 2 Eval~Jate discharge nghts and ability to transfer RJC/ClTY D 3 Detarmlne rate City will sell water to plant RJC/ClTY D 4 Deta)'rnlne rate City will charge for wastawatar treatment RJC/ClTY D 5 DevgloP agreement for water & wastewater supply RJC/CITY D 6 Review with City and Legal TEAM Fuel(Transportation E 1 Review fuel and transportation contracts RJC E 2 Iden{ifl/Issues RJC E 3 Research and document transferability RJC RJC E 4 Document gas supply considerations RJC/REED E 5 Revl~)w coal transportation issues E 6 Coordinate coal pile assessment RJC/REED E 7 Review hydro water release contracts RJC E 8 Review with City and Legal TEAM Purohaaed Power Agreement (PPA) F 1 Eval~Jata power requirements under different sale scenarios RJC F 2 Revlpw lOad forecast RJC RJC/ClTY/REED F 3 Develop pricing approaches for full and part~al requirements F 4 Develop performance standards for unit contingent sales RJC F 5 Address ancillary services, control area considerabons RJC F 6 Address transmission issues related to VAMM/Losses RJC F 7 Eval~ata TMPA generation !~-,,~ RJC/ClTY/REED RJC/ClTY F 8 Review TMPP Agreement and address issues F 9 Address other ERCOT/ISO/PUC issues RJC F 10 Develop Transmission Interconnect A~reements RJC Page 1 Attechment A CITY OF DENTON DISTRIBUTION AND GENERATION RFP TASK ORDER DEN99-A Task Reap Parties ITaskll#11 II II , F 11 Develop schedules for PPA RJC F 12 Prepare draft PPA RJC F 13 Rewew PPA wih Cit~ and Legal TEAM F '14 F~nallze draft PPA RJC C)GG SubcontroI Area G 1 Rew~w DOG relationship with members RJC/ClTY G 2 List qssets and costs RJC G 3 Dev(~lop description of operabons RJC G 4 Devqlop plan regarding Garland investment RJC/ClTY G 5 ~ev~w with City and Legal TEAM Develop Communications Plans H 1 Develop informational presentation - PUC RJC/REED H 2 Devqlop informational presentation - Legislature RJC/REED H 3 Review with Clb/and Legal TEAM Flna~ctal Issues I 1 Evaluate issues related to abillb/to separate TMPA transmission ~n sale REED/RJC/CITY Develop Offering Memorandum (OM) J 1 Work with C~t~ to fill In templates for OM RJC/ClTY J 2 Develop description of assets REED/RJC J 3 Prepare Introduction/overview to process REED/RJC J 4 D~scuss projected operating statements for G~bbons Creek RJC J 5 Discuss O&M projections for Gibbons Creek RJC J 6 Descriptions of fuel supply ~JC/REED J 7 DesorIptlons of water supply RJC J 8 DesCribe expansion opportunities F~JC J 9 L~st I~eneflta of Spencer site ~JC J 10 Provide envlrnomental overview F~JC/REED J 11 Pmv!de Legislatlve/PUC/Ercot Market overview ~JC J 12 Dev,,lop overview of plant operahons and DGG F~JC J 13 Dew, lop investment highlights REED/RJC J 14 Dew, lop financial information (h~stonc & projected) REED/RJC J '15 Revl~sw with CIt./and Legal TEAM Purc:hase and Sale Agreement (P&S) K 1 Con~Juct Terms of Sale issue analysis REED/RJC K 2 Revi~sw TMPA-speciflc Issues RJC/REED K 3 Revl~sw Cit.-specific ~ssues RJC/REED K 4 Evaluate position regarding wholesale contracts (Bowie ) RJC K 5 Detailed boundary specifications/maps REED/RJC K 6 Work with City staff In developing P&S schedules RJC K 7 Intarconnectton and Operahon Agreements for plants RJC/REED/CITY K 8 P&~ draft review ClTWRJC K 9 Review with C~ty and Legal TEAM Page 2 Attachment A CITY OF DENTON DISTRIBUTION AND GENERATION RFP TASK ORDER DEN99-A Task II # II Task Reap Parties Marl, sting & Sale L 1 DevE lop target market list REED/RJC L 2 DevE lop marketing approach for each site REED/RJC L 3 DevE lop Earl}, Interest Letter REED/RJC L 4 Deve~lop Request For Statement of Intent (RFSI) REED/RJC L 5 Develop new confidentiality agreement REED/RJC L 6 Rewpw with City and Legal TEAM L 7 Issu(RFSI REED/RJC L 8 Pub[i3ize RFSI REED/RJC L 9 Dbta n qualifying pmposals/indmatlve bids REED/RJC L 10 Evaleata quaflfylng proposals/ind~cative bids REED/RJC L 11 Selegt ahortltst REED/RJC REED/RJC L 12 Develop final bidding Instructions L 13 Issu~ final RFP/bid instructions REED/RJC REED/RJC L 14 Receive bidders' fee L 15 DeliVer offering memorandum & CD Roms REED/RJC L 16 Identify key personnel, brief on role in marketing plant REED/RJC REED/RJC L 17 Develop tours for shortlst L 18 Site clean-up and preparation REED/RJC L 19 Comtnence tours REED/RJC L 20 Final proposals evaluated - P&S ~EED/RJC L 21 Final; proposals evaluated - PPA RJC/REED L 22 Fmalwlnnlng proposal/proposals announced REED/RJC REED/RJC L 23 Negc~tlatlons L 24 Finalize PPA RJC/ClTY Cloa lng M 1 Flna dued~li~lence REED/RJC M 2 Pre~ are necessary documentahon REED/RJC M 3 Clos ng REED/RJC Coo~'dlnatlonlAdmlnlst ration N 1 Coordinate activities between City, other TMPA C~bes, TMPA RJC/ClTY N 2 cooldlnata activities between departments w~thln City RJC/CITY N 3 Con'~munlcatlons between Utlllt}', Board~ City Mgr & Council REED/RJC N 4 Administration of budgets, personnel and outside consultants CITY/RJC Page 3 AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE A FIRST AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT FOR CONSULTING SERVICES PREVIOUSLY ENTERED INTO BY THE CITY AND R J COVINGTON CONSULTING ON JANUARY 5, 1999, BY ADDING TASK ORDER. NO 99-B THERETO, PROVIDING FOR ADDITIONAL PROFESSIONAL SERVICES TO BE PERFORMED RELATING TO THE POTENTIAL DIVESTITURE OF ALL OR A PART OF THE CITY'S MUNICIPAL ELECTRIC UTILITY, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR, PROVIDING FOR RETROACTIVE EFFECT OF THE AGREEMENT, AND PROVIDING AN EFFECTIVE DATE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I. That the City Manager is hereby authorized to execute a first amendment to the "Professional Services Agreement For Consulting Services Relating to the Denton Municipal Electric Utility", heretofore entered into by and between the City of Denton, Texas and R J Covington Consulting, Austin, Texas on the 5th day of January, 1999, (which Agreement was approved by the Council in Ordinance No 99-011, enacted on January 5, 1999), providing for professional consulting services in the area of electric restructunng and the potential divestiture of all or a part of the City's electric system, which first amendment is set forth in Task Order No 99-B ("Task Order"), a copy of which is Task Order is attached hereto and incorporated herewith by reference, and which Task Order provides that R J Covington Consulting shall perform additional professional consulting services to the City, and which Task Order provides for the payment by the City of additional fees not to exceed $ 12,000 00 respecting the additaonal services to be performed by R J Covington Consulting SE~CTION !I. That the expenditure of funds as provided for in the attached Task Order No 99-B is hereby authonzad SECTION III. That the above-referenced first amended Agreement is hereby ratified and retroacttvely approved, and shall be effective from and after May 2, 1999 SECTION IV. That tlus ordinance shall become effective immediately upon its passage and approval., PASSED AND APPROVED this the /~- dayof (~~ ,1999 ATTEST JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY S \Our Do~uraent~\Otdln~ae,~s\99~UC I st Amended PSA TO 99-B DME doc FIRST AMENDMENT TO PROFESSIONAL SERVICES AGREEMENT DATED JANUARY 5, 1999 BETWEEN THE CITY OF DENTON AND R.J. COVINGTON CONSULTING TASK ORDER NO 99-B Tasks provided for m this Amendment are to assist the city of Denton (City) by reviewing regulatory mformation received from the City's attorneys as it pertains to the electnc utility industry Because of the large amount of reformation related to the electric industry restructunng and other industry changes, and the need to determine those issues for which trmely intervention or part~opation by the City is important, RJC will review data provided, file as appropriate, and keep the Director of Electric Utihties (Director) mforrned of issues requmng actions by the Caty and schedules for actions SCOPE OF SERVICES Task A Catalog Information Provided By City and By C~ty's Attorneys On Regulatory Issues RJC will catalog reformation received from the City and its attorneys for reference purposes A file system will be matntamed of documents received for quick reference and retrieval of mformation related to spec~c projects and dockets The documents wdl be available to City upon request Task B Review Of Information RJC wdl review documents received from the City and its attorneys and notify Dtrector when new dockets or projects are received For those dockets and projects which are identified by the Director for close watch, RJC wdl provide a weekly status of activities m these projects and dockets. Task C Consultin8 Se~kes Based on RJC's experience In the industry and with the Pubhc Ut~hty Comnusslon (PUC), RJC w/Il review with the Director how issues may affect the City and whether the Caty should intervene RJC will coordinate chscusslons with City's attorneys when so chrected by the D~rector Task D $ched~sl~g Services RJC wdl assist m mamtemmg a schedule of projects and workshops at the PUC and at ERCOT of wl~ch the D~rector needs to be aware Informatmn from RJC can be combined wtth mformahon from other sources to keep an updated schedule of acOvthes needing the D~rector's attention Information from RJC wdl be updated weekly and wdl be prowded to D~rector m an agreed upon format Budget The budset for the above scope of serwces for t~me and expenses is eettmated at $12,000 for the period May 2,1999 through May 1, 2000 Th~s scope of serwces ts for tush level rewew of documents and does not include m-depth rewew or analyses Such addiUonal serwcee will be provided to C~ under separate Task Orders and budgets at the chrec~on of the C~ty, The budset established m this Task Order wdl not be exceeded w~thout prior approval of the Caty RJC wdl bdl monthly w~th supporUn§ documentaUon of acUwUes performed ~.x~c~'rtso ~s_~day of ~'ZdZ/?,~ .1999 CITY CONSULTANT CIT~F EENTgN, TEXAS R J COVINGTON CONSULTING l~chardl Covington V 2 AN ORDINANCE OF THE CITY OF DENTON, TEXAS AUTHORIZING THE CITY MANAGER TO EXECUTE A SECOND AMENDMENT TO THE PROFESSIONAL SERVICES AGREEMENT FOR CONSULTING SERVICES PREVIOUSLY ENTERED INTO BY THE CITY AND R J COVINGTON CONSULTING ON JANUARY 5, 1999, AND AS PREVIOUSLY AMENDED BY FIRST AMENDMENT THERETO ON JUNE 1, 1999, BY ADDING TASK ORDER NO 99-C THERETO, PROVIDING FOR ADDITIONAL ELECTRIC INDUSTRY PROFESSIONAL SERVICES TO BE PERFORMED RELATING TO THE POTENTIAL DIVESTITURE OF ALL OR A PART OF THE CITY'S MUNICIPAL ELECTRIC UTILITY AND OTHER RELATED MATTERS, AUTHORIZING THE EXPENDITURE OF FUNDS THEREFOR, PROVIDING FOR RETROACTIVE EFFECT OF THE AGREEMENT, AND PROVIDING AN EFFECTIVE DATE THE COUNCIL OF THE CITY OF DENTON HEREBY ORDAINS SECTION I That the City Manager is hereby authorized to execute a Second Amendment to the "Professional Services Agreement For Consulting Services Relating to the Denton Municipal Electric Utthty" (the "Agreement"), heretofore entered into by and between the Ctty of Denton, Texas and R J Covington Consulting, Austin, Texas on the 5th day of January, 1999, (which Agreement was approved by the Council ~n Ordinance No 99-011, enacted on January 5, 1999), providing for professtonal consulting services in the area of elecmc restructuring and the potential d~vestlture of all or a part of the City's electric system, all as set forth m Task Order No 99-A, and whtch Agreement was thereafter first amended to provide for additional professional consulting services in the area of elecmc restructuring as set forth tn Task Order No 99-B, which First Amendment to the Agreement was approved by the Counctl in Ordinance No 99-187, enacted on June 1, 1999 The Second Amendment to the Agreement is set forth m Task Order No 99-C (the "Task Order"), a copy of whmh Task Order is attached hereto and incorporated herewith by reference, and which Task Order provides that R J Covington Consulting shall perform additional regulatory, technical, and related support electric industry professional consulting services to the C~ty, and which Task Order prowdes for the payment by the Cxty of addmonal fees and expenses not to exceed $100,000 00 respecting the additional services to be performed by R J Covington Consulting pursuant to Task Order No 99-C SECTION II That the expenthture of funds as provided for tn the attached Second Amendment to Agreement pursuant to Task Order No 99-C is hereby authorized SECTION III That the above-referenced Second Amended Agreement is hereby ratified and retroactively approved, and shall be effective from and after September 1, 1999 SECTION IV That th~s ordinance shall become effective lmmedmtely upon its passage and approval PASSED AND APPROVED this the ](~ ~5_~ day of t~7~ ,1999 ATTEST JENNIFER WALTERS, CITY SECRETARY APPROVED AS TO LEGAL FORM HERBERT L PROUTY, CITY ATTORNEY S \Our DocumCnta\Ordinlm~:¢$\99W, JC2n{I Amended PSA-TO 99 C DME doc SECOND AMENDMENT TO PROFESSIONAL SERVICES AGREEMENT DATED JANUARY 5, 1999 BETWEEN THE CITY OF DENTON AND R J COVINGTON CONSULTING TASK ORDER NO 99-C Elect-nc Industry Serwces Act~vlt~es to be performed under ti'us Task Order by R J Covington Consulting (RJC) are for the purpose of providing regulatory, techrucal and analybcal support to the City on act~vlbes assocmted with electric restructuring m Texas and on issues relatmg to the City's parhclpat~on m the Denton, Garland, Greenvdle sub-control area (DGG) RJC w~II provide professional consulting serwces and techrucal support for City staff (Staff) related to various regulatory and operatuonal act~vit~es affechng the City Tasks provided for m flus Task Order include part~clpabon m projects, workshops and rulemakmgs at the Pubhc Ut~ty Comnusslon of Texas (PUC) RJC wdl act as Staff halson to the PUC to keep Staff reformed on achvihes at the PUC, work with Staff and their attorneys m developing poslt~ons on issues, assist Staff m responding to issues that affect the City and provide techrucal support for Staff and City's legal experts on regulatory issues At the Electric Rehab~hty Counc~l of Texas (ERCOT), RJC wdl momtor and report on activlbes that are m progress to define and develop systems for retad access as mandated m Senate Bill 7 RJC wdl part~opate on cormmttees and working groups to assist Staff m representing the interest of the City and DGG RJC w~ll also conduct techrucal analyses and studies as d~rected by DGG that wdl assist DGG m evaluating poslt~ons and respondmg to market changes related to on-going restructuring act~vR~es Background The PUC has, m Project 20970 - Plan For Implementing Senate Bill 7, identified 36 projects for developing the rules and pohc~es that wdl shape the electric industry leading up to retad access on January 1, 2002 These projects will e~ther directly affect the City's muruc~pal electric system and DGG operabons, or by shaping and defining the compet~tton, indirectly affect the way the City and DGG WLII conduct its electric business The shaping of the industry is taking place at several levels on a very fast paced schedule This includes, 1 ) PUC Projects leading to Rulemakmgs, 2 ) Other PUC Dockets 1 of 5 and Actavlt~es, and 3 ) IS(3 Activities The rules, pohcles, procedures and systems are to be m place by June 1, 2001, for the start of the customer choice pilot program This means that there are mulbple projects and associated rulemakmgs, as well as, multiple ERCOT groups working on addressing lmplementabon issues that will affect the City's electric system Often these projects and working groups are proceeding srmultaneously and at a rapid pace Some of the key issues presently being addressed that directly affect mumclpahbes include · When and under what rules wtll muruclpals be required to make transrmsslon costs of service filings Tlus will affect the City's recovery of its investment m transnusslon plant for current as well as future fflmgs · Wdl mttmcapals have access to transrmssion to transport power from existing resources, or w~ll they have to go to the market and purchase specual congestuon management r~ghts to transport that power on a f~rm basis · Will murucapals have to purchase renewable energy credits ff it decides to opt-m to retail access and at what price will those credits be available · Will mu_mclpals have to purchase credits for natural gas generabon to meet state mandates that favor natural gas over coal? · How will umts be designated as must-run u_ruts and how wtll they be compensated · The costs associated w~th maplementmg customer choice, who pays, how much, and when~ Some of the issues that are currently being addressed that wdl indirectly affect mttmclpaht~es are · How is stranded costs allocated to customer classes for the IOU's · How will the IOU's be unbundled mto separate business trruts? · What services will the unbundled ent~laes offer, when and where? · What Code of Conduct will be adopted for IOU's and how will the PUC determine the Code of Conduct for munac~pahbes that opt-m to retaal access Some of the other activities at ERCOT that will a~fect mumclpal~bes and DGG operataons mclude · Movmg from multiple control areas to a single control area · How scheduling of loads and generabon wtll work m a retail environment · How settlement will work to track and reconcile costs and how muruclpahbes will fit mto that process · How can the City and DGG best posdnon Itself m the evolvmg market'~ RJC's work w~ll focus on acbwt~es at the PUC and at ERCOT to address restructuring and regulatory ~ssues RJC's aclavdaes will include 1 ) Attending workshops hosted by PUC and ISO 2of5 2 ) Address issues at ERCOT that affect City and DGG costs, such as ERCOT policies on redlspatch of generahon due to transrmsslon constramts 3 ) Participating on relevant PUC and ISO committees to discuss and debate issues and develop poslt~ons 4 ) Analyzing proposed rules filed by PUC and policies presented by ISO 5 ) Preparation of comments to be filed at the PUC to present the City's poslhon on issues 6 ) Analyzing comments flied by other part~es on ~ssues affecting City 7 ) Working with City Staff and legal team to develop responses to poslt~ons taken by other part~es adverse to the City's poslt~ons 8 ) Providing techrucal support to Staff and the City's legal team on issues before the PUC and the ISO 9 ) Maintaining mformat~on on activities at the PUC, ERCOT ISO and the Leg~alature that supports effective representation on issues m these and related proceedmgs associated with restructuring m Texas 10 )Meeting with ERCOT staff to chscuss operational concerns of City and DGG 11 )Meeting with representahves of other utaht~es and other market segments to dLscuss proposed rules and procedures that may Lrnpact the City and DGG 12 )Keep Staff reformed of issues needing their attenhon and assisting Staff m preparing for deregulatmn Scope of Services Task A Attending Workshops At PUC And ISO 1 RJC wdl stay reformed on activities at PUC and ISO and will attend workshops as needed 2 When appropriate, RJC wdl part~clpate m workshops to represent interest of City based on d~rect~ons of Staff 3 Staff WLll be briefed on issues addressed and poslhons taken by parties at workshops Ta~k B Partlc~pat~on On Committees, Task Forces, and Worlong Groups 1 RJC will participate on PUC and ERCOT comrmttees, task forces and working groups, as approved by Staff, m order to evaluate rssues and support solutions to the larger group that will reflect the City's and DGG's poslt~on on ~ssues being addressed 2 Staff wffl be kept reformed of ~ssues being addressed m comrmttees and poslt~ons of part~es 3 RJC wffl drscuss w~th Staff posit~ons wluch should be taken and strategies for working with part~es revolved 3of5 Task C Analyze Proposed Rules and Policies 1 The proposed new rules and rule changes from the PUC and associated proposed pohaes from the ISO wdl be analyzed 2 RJC will chscuss proposed new rules and changes to ex~stmg rules with Staff, helping to identify areas of concern and preparing pomhons on rules that represent interests of C, ty 3 RJC will meet with PUC staff as appropriate to discuss the proposed rules and present the City's concerns regarding PUC staff proposals Task D Preparation of Comments 1 RJC will prepare or asmst m preparing comments to be fred with PUC representing City's pomt~on on ~ssues brought up m proposed rules 2 These comments wdl be coorchnated through Staff and the City's legal team 3 RJC will assist the City's legal team as necessary m the preparation of and fflmg of com_r~er~ts Task E Work With Staff And Legal Team 1 RJC will have continuing communication w~th Staff and the City's legal team m order to momtor proposed industry changes and address those msues affecting muruclpahhes 2 An on-going chalog will be maintained with Staff and the legal team m order to evaluate changing proposals and evaluate potenhal effects on City operahons 3 Inforrnat~on necessary to supplement and support the deamon making process will be provided as requested 4 RJC ~ be available to chscuss with the Utrhty Board and City management act~vR~es at PUC and the ISO as requested from tune to trine by Staff 5 As d~rected by Staff, RJC will coordinate and support other consultants, attorneys, and lobbyists used by the City m order to insure coordination of planning and other achvdles Task F Technical Support 1 RJC will provide techrucal support to the City's legal team to asmst m the evaluahon of proposals and the potential n'apact on the City under different scenarios 2 RJC will prowde techrucal support to Staff, providing mformahon as requested from t~me to twne to assrst Staff m its evaluations and planning processes 3 RJC w~l evaluate scenarios and proposals from perspechve of City utility and as a member of TMPA 4 Workpapers wdl be developed to support the analysis and will be provided to City upon request 4of5 5 Presentatmns to Staff will be made as appropriate to discuss 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 estimate due to the fact that the lmplementahon rulemakmg proceedings are just beginning There are 36 PUC projects that have been identified to implement retail compet~hon, and numerous ERCOT comrmttees working to address the details of how retail access will work Costs for RJC labor and expenses under the Task Order will be shared with the Cities of Garland and Greenville based on percent sphts as approved by the three Cities RJC recommends a budget of $100,000 for labor and expenses be approved This budget will not be exceeded without prior approval of the City RJC will bill monthly with supporting documantat~on of activities performed The work being performed will be under the supervision of the Director of Electric Uhhhes and may be modified at any hme upon appropriate not~ce to RJC AUTHORIZED BY ACCEPTED BY CITY OF DENTON, TEXAS R J COVINGTON CONSULTING DBa~ed'- ~5)~//~ /~./~)q B~ated ATTEST APPROVED AS TO LEGAL FORM JENNIFER WALTERS HERBERT L PROUTY CITY SECRETARY CITY ATFORNEY 5of5 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 AND R J COVINGTON CONSULTING ON JANUARY 5, 1999, AND AS PREVIOUSLY AMENDED BY FIRST AMENDMENT THERETO ON JUNE 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 MLrNICIPAL 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 authorized to execute a Third Amendment to the "Professional Services Agreement For Consulting Services Relating to the Denton Municipal Electric Utility" (the "Agreement"), heretofore entered into by and between the City of Denton, Texas and R J Covington Consulting, Austin, Texas on the 5th day of January, 1999, (which Agreement was approved by the Council in Ordinance No .t99-011, enacted on January 5, 1999), providing for professional consulting services in the area of electric restmctunng and the potential divestiture of all or a part of the City's electric system, all as set forth in Task Order No 99-A, and which Agreement was thereafter first amended to provide for additional professional consulting services m the area of electric restructunng as set forth in Task Order No, 99-B, which First Amendment to the Agreement was approved by the Council in Ordlnanco No 99-187, enacted on June 1, 1999, and which Agreement was thereafter further amended for a second time to provide for additional professional consulting services in the area of potentlgl electric divestiture and restmctunng as set forth in Task Order No 99-C, wtuch Second Amendment to the Agreement was approved by the Council in Ordinance No 99-388, enacted on October 19, 1999 SI~CTION 2 That the Agreement is now being amended for a third time to provide for additional professional consulting services in the area of implementation of electric restructunng as set forth more particularly in Task Order No 00-B, a copy of which Task Order is attached hereto and incorporated herewith by reference, and which Task Order constitutes the third amendment document and provides that R J Covington Consulting shall perform additional regulatory, technical, and related elecmc industry professional consulting services supporting the City and Denton Mumclpal Electric, and which Task Order provides for the payment by the City of additional fees and expenses in an amount not to exceed $ 100,000 00 respecting the additional services to be performed by R J Covington Consulting pursuant to smd Task Order No O0-B SECTION 3 That the award of tlus Agreement by the City ~s on the bas~s of the demonstrated competence, knowledge, and quahfieat~ons of R J Cowngton Consulting and the abthty of R J Cowngton Consultang to perform the services needed by the C~ty for a fmr and reasonable price, all m ae¢ordanee w~th the prows~ons of Chapter 2254 of the Texas Government Code, known as the "Professional Serweas Procurement Act" SECTION 4 That the expenditure of funds as provided for m the attached Third Amendment to Agreement, m the form of, and pursuant to Task Order No 00-B, ~s hereby authorized SECTION 5 Tlus ordinance shall become effective ~mauedlately upon ~ts passage and approval PASSED AND APPROVED th~s the :~-~-/~ day of C~ZgZLg/7~ ~ ,2000 EULINE BROCK, MAYOR ATTEST JENNIFER WALTERS, CITY SECRETARY ~/ -- APPROVED AS TO LEG~ FO~ HE~ERT L PROUTY, CITY ATTO~Y S \Our Documents\Ordmanees\00\R J Covington - 3rd Amended PSA TO #00 B DME ord doc 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 Implementation Sennces Tasks prowded for m this Tturd Amendment are directed at contmumg assistance to City staff (Staff) m parhcxpataon at the Pubhc Uhhty Coranuss~on of Texas (PUC) and at the Electric Rehabfllty Council of Texas (ERCOT) on issues affecting the City The PUC ldentxfled 36 projects for developing the rules and policies that will shape the electrac mdustry as retail access is implemented on January 1, 2002 New projects are being added as new issues develop These projects will either directly affect the City's mumclpal electric system, or by shaping and defining the compeht~on, indirectly affect the way the C~ty will conduct its electric busmess This, m turn, will affect the level which the electxlc system can contribute to the fundmg of City operations The developmental stage of mdustry restructurmg is nearmg completion and the lmplementataon phase is beginning Implementahon requires coordmatxon of policies and rules being developed through PUC Projects leadmg to Rulemakmgs and ERCOT ISO working groups The rules, pohcles, procedures and systems are to be m place by June 1, 2001, the start of the customer choice pilot program Th~s means there contanues to be multaple 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 bemg addressed that directly affect the City mclude · How will umts be designated as must-run uruts and how will they be compensated? Tl~s xs a partacularly critical issue as the City looks at making mvestments to meet the State Implementation Plan (SIP) The outcome of this and smular 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 obhgat~ons? · Will the City act as a Qualified Scheduling Enttty or choose another to act m that capacity for the City? · How will those obhgat~ons differ ff the City decides to "opt-re" to customer choice? · Should the C~ty opt-m and when? · What type of settlement procedures will the City need m the restructured market? · How will the City be affected by the Non-IOU Code of Conduct bemg developed at the PUC? · Will the protocols bemg developed for the ISO retain the benefits on the issues the City has worked to acl'ueve m the working comrmttees, such as dynarmc schedulmg Task Order No 00-B Restructuring Implementatton Servxces for Gibbons Creek, restnctmg allocatton to opt-out ut~httes of Unaccounted For Energy to zero except for transn,asmon related actual losses, self provision of ancillary sermces, recogrutmn of the difference between mumclpahhes and cooperattves and IOU's? · How will settlement work to track and reconcile costs and how will mumclpahttes fit mto that process? · What wril be the cash flow unpacts of weekly settlements and payments to the ISO? Some of the issues that are currently bemg addressed that will indirectly affect the City are · How will the IOU's be unbundled into separate busmess umts~ · What services will the unbundled enht~es offer, when, where and how much? · How wffl the capacity auctmn be implemented and how will it affect power costs? · How will rehabrilty factors affecting the DFW area be addressed? · How will 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 achvlt~es, 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 acttvlt~es to keep Staff reformed of operatmnal procedures that will affect the City's electric system and assist Staff m supporting positrons before ERCOT management and standing corrtrmttees as requested RJC's actimhes will include, 1 ) attendmg workshops hosted by the PUC and ERCOT ISO, 2 ) parttclpatmg on relevant PUC and ISO comrmttees and panels to discuss issues and work with Staff to ensure the City's mterests are represented m the workshops, rulemakmgs, and cormmttee meetings, 3 analyzing proposed rules fried by PUC and policies presented by the ISO, 4 preparahon of comments to be fried at the PUC to present the City's positron on 5 analyzing comments filed by other par~es on issues affecting City, 6 workmg with City Staff and legal team to develop responses to positrons taken by other parhes adverse to the City's poslt~ons, 7 promdmg techmcal support to Staff and the City's legal team on issues before the PUC and the ISO, and, 8 mamtammg mformatmn on aciamtms at the PUC, ERCOT ISO and the Legislature that supports effective representation on issues m these and related proceedings associated with restructuring m Texas 2of5 Task Order No O0-B Restructuring Implementation Services Scope of Services Task A PUC And ERCOT Workshops and Commlttees 1 RJC wdl stay reformed on achvlt~es at PUC and ISO and will attend PUC and ERCOT workshops and comrmttees as needed 2 When appropriate, RJC will participate m the comrmttees and workshops to represent mterest of City based on d~rect~ons of Staff 3 Reports w~ll be provided to Staff detailing issues addressed and poslt~ons taken by parlaes 4 RJC wtll chscuss w~th Staff poslttons wluch should be taken and strategies for working w~th part~es revolved 5 RJC will coordination coverage with Staff and other part~es with smular interest to maintain effective coverage on the numerous issues affecting the C~ty Task B Evaluate Proposed Implementation Rules and Policies 1 The new rules being proposed by the PUC to unplement restructuring will be evaluated as to their effect on the City 2 When requested by Staff, RJC will develop spreadsheet models and perform other analysis as reqtured to evaluate the econormc unpact of proposed rules on the City 3 RJC will chscuss proposed new rules and changes to exlstmg rules with Staff, helping to identify areas of concern and preparing positrons on rules 4 When necessary, RJC will meet w~th PUC staff to discuss ~ssues of particular concern to the C~ty, partacularly where the stakeholder process at ERCOT fails to recogmze slgruficant adverse ~npacts on the City from pohc~es and rules bemg adopted Task C Preparation of Comments 1 R~C wtll prepare or assist m preparing comments to be filed with PUC representmg Clty's posmon on issues brought up m proposed rules and m the ERCOT Certrflcat~on process 2 These comments will be coordinated through Staff and the City's legal team 3 R~C ~ assist the City's legal team as necessary m the preparalaon of and f~mg of comments and letters to the PUC, the ISO and to the Legnslature Task D Coordination of Work Effort 1 RJC will have continuing commumcat~on with Staff and the City's legal team m order to momtor proposed mdustry changes and address those issues affecting muruopahttes 2 An on-gomg chalog wffl be maintained with Staff and the legal team m order to evaluate changing proposals and evaluate potential effects on C~ty operatmns 3of5 Task Order No O0-B Restructuring ImplementaUon Services 3 Informataon necessary to supplement and support the decaslon making process will be prowded as requested 4 RJC will be available to chscuss wath the Utahty Board and City management to drscuss aciav~t~es at the PUC and the ISO as requested from trme to tmae by Staff 5 AS chrected by Staff, RJC will coordinate and support other consultants, attorneys, and lobbyists used by the C~ty m order to msure coordination of plannmg and other act~wt~es Task E Techmcal Support For Implementatmn Phase 1 RJC wffl prowde techmcal support to the City's legal team to assist m the evaluation of rules, pohc~es and procedures bemg adopted by the PUC and the ISO and the potentaal mapact on the C~ty under different scenarios 2 RJC will provade techmcal support to Staff, providing mformat~on as requested from tune to time to assist Staff m its evaluations and planning processes 3 The evaluatmns and planning process assistance shall include such ~ssues as how restructurmg m affecting power costs, what act~vltaes the City needs to be looking at to prepares for the Implementataon Date, how wall the compeht~ve changes be affecting the City's abahty to retam and attract customers m the future 4 RJC will evaluate scenarios and proposals from perspective of City unity and as a member of TMPA 5 Presentahons to Staff wall be made as appropriate to chscuss results of analyses and recommended sl:rategaes based on the results Budget The budget for the above scope of servaces for labor and expenses ~s difficult to estamate due to the fact that the pohcy development and amplementahon phases are just beginning Based on prior experience m workmg with these issues, RJC recommends a budget of $100,000 for labor and expenses Ttus budget will not be exceeded wathout prior approval of the Caty RJC will ball monthly with supporting documentahon of activities performed The work bemg performed will be trader the supervls~on of the Director of Electrac Ut~htaes and may be modified at any tune upon appropriate not~ce to RJC EXECUTED tlus~.~J~day of (~,Z)~ttZ~b~"' ,~_f0W AUTHORIZED BY ACCEPTED BY CIT~OF DENTON, TEXAS R J COVINGTON CONSULTING 4of5 Task Order No O0-B Restmcturmg Implementation Services ATTEST APPROVED AS TO LEGAL FORM JENNIFER WALTERS HERBERT L PROUTY CITY SECRETARY . crrY ATTORNEY Di/(j~t ~/~-'ff/) t~) -- - Dated ~///~t~) / / 5of5