Frequently Asked Questions

Environmental Questions:

How will the proposed Renewable Denton Plan impact emissions and gas usage?
How will the proposed Denton Energy Center emissions and gas usage compare with the ERCOT market?
What are the current annual CO2 and Greenhouse Gas emission levels from the Gibbon’ Creek coal fired plant? Are those levels expected to increase, decrease, or remain relatively constant should Denton divest in Gibbons Creek coal fired plant?
How much energy is expected to be produced by the gas plants per year for consumption by DME rate payers in Denton? What are the CO2 and greenhouse gas emission levels associated with this level of operation?
What’s the environmental impact of the project?
Will the Denton Energy Center use a lot of water?
Isn’t it in the best economic and environmental interests of Denton and Denton County’s future to wait until the appropriate studies have been done and the decision is made to shut down Gibbons Creek before you decide whether to approve these plants?
Denton’s ozone levels peak on hot summer afternoons when the demand for electricity is greatest. That is when the gas-fired peaker engines will be used. How will this fact affect our air’s drastic non-attainment status?
Has the city studied the impact of the air pollution from the plant(s) on the TCEQ air monitor located in the same area as the proposed facility? Was that analysis done with the new 70 ppb standard?
Have the impacts of the plant’s air pollution plume on surrounding, downwind communities been studied and ascertained?
Denton has reduced its municipal carbon footprint in 2011. The proposed gas plants will emit CO2e emissions. Is this the path to sustainability? Is this how Denton does its part to reduce GHG emissions to fight climate change? If Gibbons Creek is not retired there will be no offsets for emissions from the DME’s plants.
Do you realize that these plants will affect the air quality of Denton County, not just the City of Denton? Have you met with county officials about the health impacts of these plants?
Has the city calculated the cumulative impact of the toxic emissions of regional fracking with the air pollutants that will be emitted by the plants?
Have all emission sources including those from natural gas production, processing, compression and delivery been calculated?
Have health care costs due to increased air pollution been calculated?
Who will monitor the plants’ air emissions and what remedies are available for noncompliance?
I recall it being mentioned by staff that our investment in renewables up to 70% make the plants less risky. Did I hear that correctly?
Will the Denton Energy Center be safe?
NEW: Where is the presentation that The Brattle Group made to City Council about the Renewable Denton Plan?

All Questions:

What would the proposed facilities look like?

See the image below. Each plant is proposed to have several hundred feet of buffering in each direction.

What will be the noise impact of the proposed generating facilities?

See the images below for details on the projected noise impact of each facility that is proposed:

Green Valley Energy Center

Denton Energy Center

The numbers shown above are in decibels. The scale below, which was created by the Occupational Safety and Health Administration (OSHA), shows comparisons between decibel levels and common sources of noise.

How will the proposed Renewable Denton Plan impact emissions and gas usage?

The proposed plan will result in a reduction in emissions as well as the use of natural gas. See below for details.

How will the proposed Denton Energy Center emissions and gas usage compare with the ERCOT market?

The proposed facility will result in a decrease in emissions and gas usage as compared to the ERCOT market. See below for details

Have you carefully considered alternatives to the proposed Renewable Denton plan?

DME has spent several years researching potential solutions for making Denton a continued leader when it comes to renewable energy. We’ve compiled the details of that research for you here.

I have heard it stated by DME that the Renewable Denton plan was developed in response to specific direction given by council in January 2015. I have heard it stated in council and staff discussions that the Renewable Denton plan has been in development for many years. When exactly was direction given to staff and when exactly was the work to develop this plan begun?

Consideration of future power supply options is an ongoing activity for any electric utility. As previously detailed in a presentation to Council there have been close to 50 discussions with the PUB and Council since 2009. These discussions included various power supply related topics such as the renewable energy Purchase Power Agreements, current and future operations of TMPA, Combined Heating and Power plants, the need and configuration of larger scale generation sources to possibly replace Gibbons Creek generation and back up renewable energy sources. As the Council and the electric market has changed, the general direction has remained the same, “Obtain as much renewable energy as possible, while maintaining competitive rates and reliability.” This direction became more focused in 2015 as the market and technology evolved and provided the opportunity to propose the Renewable Denton Plan.

In staff’s opinion, is 100% renewable by 2030 a realistic and attainable goal?

100% renewable by 2030 is an attainable goal. Will the rates required to support being 100% renewable be realistic is a judgement to be determined by the Council.

Do we have any debt associated with our co-ownership of the Gibbons Creek coal fired plant? If so, how much debt?

As of September 30, 2015, there is a total of $141.4 million of principal and interest remaining related to TMPA. $69 million is scheduled to be paid off by September, 2018, and $72.4 million is scheduled to be paid off by 2025.

If we divest from the Gibbons Creek coal fired plant how would the mechanics of that action work? Would we be selling our portion of ownership and if so to whom? Would we be walking away from the plant?

An agenda item has been scheduled for both the Public Utilities Board and City Council in January to discuss the status and options for TMPA and Gibbons Creek Power Plant.

What happens to any debt that we have upon divesting from Gibbons Creek? If there is debt that we continue to carry how is it to be paid down?

Due to the structure of TMPA power sales agreement, it would be difficult to exit from Gibbons Creek before September, 2018. By that time (on 10/01/2018) the remaining debt could be offset by proceeds from selling some of the TMPA assets.

Is there a specific moment in time on the horizon that our city has to make a go/no go decision regarding our go forward contractual obligations as co-owners of the Gibbons Creek coal fired plant? What are the operational and financial implications of that decision?

An agenda item has been scheduled in January to discuss our future options concerning TMPA.

What is the known/stated operational future of Gibbons Creek over the next ten years (foreseeable future)? Will it continue to operate? Who will own/operate it? Will it operate as a coal fired plant or is it to convert to some other type of generating facility?

According to an engineering study, Gibbons Creek can mechanically run at least till 2030. From an economic viewpoint, this would be challenging as more efficient, cleaner technologies are expected to come on-line and there are also additional regulatory costs that are expected. The site has value as a new generating plant site since it has existing transmission line and water resource infrastructure.

What are the current annual CO2 and Greenhouse Gas emission levels from the Gibbon’ Creek coal fired plant? Are those levels expected to increase, decrease, or remain relatively constant should Denton divest in Gibbons Creek coal fired plant?

The most recent year of data available for the Gibbons Creek plant is 2014. During that year, Gibbons Creek emitted 2,981,204 tons of CO2 and the CO2equivalent was 2,981,234 tons. According to an engineering study, Gibbons Creek can mechanically run at least till 2030. From an economic viewpoint, this would be challenging as more efficient, cleaner technologies are expected to come on-line and there are also additional regulatory costs that are expected.

Have there been any historic reliability issues that can be directly attributed to our city’s power purchase agreements that have us at 40% renewable currently? If so, what are they and when have they occurred?

No, the connection that the DME system has to the ERCOT grid prevents loss of power reliability issues, but doesn’t prevent financial reliability issues. By Denton owning and operating this quick start generation we control the cost as well as the emissions of this back up energy. At a micro level, will the lights go out if Denton does not build these plants? No, but if everyone else in the ERCOT market took the approach of adding a significant amount of wind and solar and did not arrange for some physical backup energy source, then yes, at some point there would be operational issues.

Are there any anticipated issues with reliability if we increased our city’s purchase power agreements to 70% renewable right now (without bringing the gas plants online)?

DME staff interprets reliability to mean the “financial reliability” to provide our ratepayers power within acceptable financial terms and DME does not recommend any measureable increase in renewable capacity without the ability to back up the renewable generation with quick start generation, for reasons below in items a) and b).
a) No matter where energy is produced in ERCOT, it is delivered across the same transmission system through the same distribution system to the home.
b) There is a potential for drastic change in the “financial reliability” to the City of Denton. In order to understand this, one must first understand that the last time that the QSE function can physically schedule and financially settle before the Real Time Prices are computed is in the Day Ahead Market. This means that for every hour of Real Time operations, that decisions are made by 10:00 AM prior to the operating day. So for every single hour of operations, the decisions are made from 14 hours to 28 hours ahead of time. That, in turn, means that the QSE must rely on wind forecasts equally that far in advance. While wind forecasting is better than it used to be (5 – 10 years ago), it is impossible to forecast any one specific site with 100% accuracy. In fact, the published ERCOT third party consultant forecasts wind with two primary forecasts. One forecast is that there is a 50% probability “that the wind production will be at least” some value and one forecast that there is a 70% probability “that the wind production will be at least” some value.

Has the cost of renewable energy with our current purchase power agreements been historically lower, on par, or more expensive than the energy purchased from non-renewable providers? What has been the overall impact (+/-) on DME ratepayers?

In 2009, Denton became a leader in renewable energy by contracting for more wind energy per capita than anywhere else in the United States, without increasing rates. This contract for backed-up renewable energy was on par with the market prices for renewable power at the time. Since that time market prices including for renewable power have decreased. While DME has decreased its ECA rate as of October, 2015, it could have decreased it more if we did not have this backed-up renewable contract.

What would be the impact (+/-) on DME ratepayers if we increased our renewable purchase power agreements from 40% to 70% (alone, not combined with natural gas plants)? Would projected rates increase, decrease, or hold steady over time?

The implementation of 70% renewables without quick-start backup results in rate increases totaling more than 9% from 2017 through 2019; this will be an increase of $12/month for average residential customers and $19,000/month for average of Top 20 large customers. This type of implementation would be approximately $400 Million more expensive than Renewable Denton Plan over a 20 year period, with increased market risk and with higher emissions than RDP.

What resources does the city have currently to satisfy “quick response” or “peak” energy needs? If any, what are they, where are they, and how do they work? If none, what have been the negative implications of not having them? What are the perceived future negative implications of not having them?

DME currently has the ability to ramp generation at 1 MW per minute (MW/min) with Gibbons Creek. Because of operation performance and changes throughout the day, it is a best practice to only rely on about 75% of this capability, so the operational ramp is more like 0.75 MW/min. Currently the only meaningful performance score that DME must meet to stay within ERCOT protocols is a 5 min generation performance requirement, that basically is the requirement that DME must be able to meet its load changes by its generation portfolio, which it has every month since QSE operations. Over the past 436 days (from 15 minute ERCOT settlement data since QSE operation), DME has computed the following load change variations as in shown Table 3 below. From Table 3, one can observe that DME is able to meet its load ramp capacity 99.7% of the time (sum from the bottom and add ½ of the top row).

The reason that DME does not have quick start generation in its current portfolio is that there is NO REQUIREMENT for DME to have this type of generation unless DME has more intermittent renewable sources. Once DME ventures into a higher installed capacity of renewable generation, this all changes due to the variability of renewable wind. From Table 2 above, it can be observed that with only 150 MW of real time generation (50% of the generating capacity in DME’s proposed RDP), that the computed MW/min of ramp is 0.14 MW/min. Comparing to Table 3, this would mean that DME would face not meeting its performance reliability criteria with ERCOT approximately 2% (0.6 + 1.1 %) of the time. However If one were to look at the upper end of the wind ramp possibilities in Table 2 (0.552 MW/min) that would mean that DME could be potentially not meeting its required ERCOT performance criteria about 7.5% of the time. That would mean that DME could be fined 7.5% of the time for failure to meet performance criteria. There are financial penalties for poor performance in the market. The potential fine for continued non-market performance is $10,000 per occurrence. Also note that the Solar forecast error has not been added into the calculation for the answer to this question. The proposed RDP has 200 MW of solar which will also have some addition uncertainty to forecast error.
In order to show the inherent complexity of adding wind energy into the existing portfolio, Figures 2 and 3, for the South/Houston zones and North/West zones respectively, are shown below. The wind forecast error is not constant by hour or month of the year. The figures below have been simplified to group similar operational hours into the month. The percentage of forecast error is shown on the vertical axis and month is shown on the horizontal axis.
On Figure 3, it can be observed that in July for hours 13 -24, that the wind forecast error can be as high as 30 – 35%.

Is increasing our city’s purchase power agreements with renewable energy providers (solar, wind) dependent upon building the quick start natural gas plants in Denton? If so why?

Yes, it is dependent. If the City of Denton wants to increase its percentage of renewable energy in its portfolio, because of the intermittent nature of the renewables, there will be a requirement for the ability to respond to the variability. Indeed, for major cities (Austin and San Antonio) that have added a large percentage of renewable to their portfolio, they have one thing in common – generation assets that can respond to the variability that is inherit in adding renewable resources. In fact, in ERCOT’s own market analysis, they have stated that: “If there is not sufficient ramping capability and operational reserves during periods of high renewable penetration, the need to maintain operational reliability could require the curtailment of renewable generation resources. The ability to curtail intermittent generation resources in real-time operations is a key backstop for maintaining the reliability of the system. Curtailment would reduce production from renewable resources*.”
* http://www.ercot.com/content/news/presentations/2015/ERCOT_Analysis_of_the_Impacts_of_the_Clean_Power_Plan-Final_.pdf, Conclusion.

How was the the solution of building two natural gas plants as a part of the Renewable Denton plan brought to staff’s attention? Referral, industry best practice, white paper, particular consultant(s)? When? How was the cost estimate of the gas plant construction determined?

DME is continually researching alternative technologies and the cost for implementing those technologies. As part of a continual evaluation to provide a higher concentration of renewables into DME’s portfolio, DME staff works from time to time to estimate the cost for multiple solution scenarios. City Council has previously stated that it is a continual goal to increase the renewable amount of MW in DMEs portfolio. As such DME developed a plan to attain 70% of the energy requirement through renewables, a combination of wind and solar. After this initial beginning point, then DME staff evaluated what type of resource would be needed to blend in this type of intermittent resource.
The units that have been proposed by DME have a faster ramp rate as compared to any of the traditional units in ERCOT. There are 57 similar units (STEC, Greenville, and Golden Spread) currently installed in Texas. The units also have the lowest minimum operating percentage MW of any traditional unit including the similar types of units, a 20% minimum versus 40% minimum for STEC’s and Golden Spread’s units. The DME proposed units also have some of the lowest emission levels of units in ERCOT.
The initial cost estimates for the construction of the gas plants was computed from indicative pricing. Final cost will be verified through RFPs.

I recall it being mentioned by staff in the 12/15/15 work session that our investment in renewables up to 70% make the plants less risky. Did I hear that correctly? Can you please further explain that dynamic?

All of the components of the Renewable Denton Plan work together to mitigate risk. We would mitigate risk of price increases in the wholesale energy market by having long term contracts for wind and solar energy. Having the quick start units enables DME to procure this energy in the most economical fashion. These units mitigate the operational risks of intermittent energy delivery from the renewable sources more economically and with less emissions than any other methods available.

Will the gas plants be used to generate energy for consumers other than commercial and residential DME rate payers in Denton (excluding emergency situations where ERCOT directs DME to run the plants to put energy into the grid)?

The plants would be required to operate like any other generation resource in the competitive ERCOT electricity market, including Gibbons Creek. DME would input energy offer curves into the ERCOT system that would be used to dispatch the facilities on an economic basis. The energy offer curves would contain the actual variable costs to produce electricity and would be audited by the Independent Market Monitor (IMM). Energy produced as a result would be used to both serve Denton load and provide energy to ERCOT. The plants would not be required to operate if they are not economical to run.

How much energy is expected to be produced by the gas plants per year for consumption by DME rate payers in Denton? What are the CO2 and greenhouse gas emission levels associated with this level of operation?

DME expects the facilities to provide about 13% of the energy needs of the City. This percentage equates to about 210,000 MWh. Annual CO2 emissions are expected to be about 99,755 tons and the CO2e would be about 99,864 tons. These amounts are based on maximum emission rates that are guaranteed by the engine manufacturers.

How much energy is expected to be produced by the gas plants per year for ERCOT or other entities? What are the CO2 and greenhouse gas emission levels associated with this level of operation?

DME expects the facilities to produce approximately 475,000 MWh for ERCOT or other entities, based on economic dispatch. Annual CO2 emissions would be about 226,553 tons and the CO2e would be about 226,801 tons. These amounts are based on maximum emission rates that are guaranteed by the engine manufacturers.

Is the price pKWH of electricity generated by natural gas expected to decrease, increase, or remain relatively flat over the next 5 years? 10 years?

DME uses the forward natural gas price chart for forecasting, and electricity prices in ERCOT closely track the price of gas.

Is the price of natural gas expected to increase, decrease, or remain relatively flat over the next 5 years? 10 years? Is there a price for natural gas that makes running our gas plants economically unviable (operate at a loss)? What is that price?

The forward NYMEX gas price is shown below. (CME group as of 01/05/2015)
No, there is not a foreseeable natural gas price that would make operating these plants economically unviable.

Including land purchases, how much will the gas plants cost to build? How much will the plants cost to operate per year?

The costs for the plants including land are estimated at $225 Million.
Operational costs are a Competitive Matter and have been discussed in a Closed Session with City Council and PUB.

Have any consultants (either already on retainer with Denton/DME or specifically contracted to advise on Renewable Denton) been used in the design, development, or review of the Renewable Denton plant to date? If so, who and in what capacity? If not, why not?

DME has utilized the services and expertise from multiple outside entities over the course of several years to assist in the development of the Renewable Denton Plan.
 Burns & McDonnell
 Teague, Nall & Perkins
 Electric Reliability Council of Texas (ERCOT)
 ReSolved Energy Consulting
 Atmos Energy
 Brandt Engineering
 Enterprise Products
 EnLink Midstream
 Austin Energy (Mueller Generating Facility)
 LCG Consulting
Additionally, DME has discussed proposals for renewable projects with multiple companies.
 Lincoln Clean Energy
 NextEra Energy Renewables
 RES Americas
 Imergy – battery storage technology
 Sovereign Energy – battery storage technology
 Own Energy
 Invenergy
 Calpine
 Iberdrola
 E.ON
 SunEdison
 SunPower Corp. Systems
 Coronal Development Group
 OCI Solar Power
 NRG Renew
 Infigen Energy
 Tomlin Energy Infrastructure Group
 First Solar
 juwi Energy
 Toshiba
 JP Morgan Securities
 GridLiance
 Blue Sierra Power
 Hunt Power
 LCRA
 Energy Markets Consulting
 Direct Energy
 Infrareit Partners
 Municipal Energy Resource Corporation (MERC)
 Tenaska Power Services
 Koch AG & Energy Solutions
 First Southwest
 Deloitte Consulting
 Narrow Gate Energy
 Stanley Consultants
 Noble Americas
 Sharyland Utilities
 Martifier Solar
 Clean Energy Fuels
 Duke Energy

Have any energy storage firms been consulted regarding DME’s need for utility grade “quick response” or “quick start” access to energy? If so, who? If not, why?

Yes, NextEra, Sovereign Energy, and Imergy are energy storage firms that have been consulted regarding DME.

Are residential/commercial solar companies with leasing/power purchase agreement/net metering business models (examples: SolarCity and Vivint Solar) allowed to operate within Denton? If not, why? If not, what would it take to open our market up to them?

The Public Utility Commission of Texas determines the certified areas of services for electric utilities. Within most of the areas of Denton, DME is the only utility certified to provide electric service. So another entity is not allowed to install generation and sell electricity to customers. Customers are allowed to install their own solar generation for their use and DME will buy their excess generation. DME was one of the first in Texas to adopt a net metering policy to promote solar installations. Opening our market is an option available for any Municipally Owned Utility (MOU). If Denton chose that option we would be the first MOU (of 72 MOUs in state) to make that choice. It would take three years and cost millions of dollars to implement the systems to opt-in to the ERCOT de-regulated market.

Are there plans to improve Denton’s GreenSense program? In particular the marketing and promotion of the GreenSense program? For example: What would it take for DME customers to be able to go online to switch their electric service to the GreenSense 100% renewable rate?

Yes.
The ability for a customer to switch from the Residential Rate to the GreenSense Renewable Energy Rate was recently simplified from requiring an in-person visit in Customer Service to simply a phone call to a representative. An even more streamlined method of on-line form submittal is being explored. Additional promotional material for the GreenSense Energy Efficiency Rebate Program and the GreenSense Renewable Rate are currently being developed. Additionally, the Free In-Home Energy Audit Program will be promoted as well.

Why is Denton, the city that voted to ban hydraulic fracturing, proposing a natural gas plant?

Through our city’s public discussion of fracking it became apparent that Denton residents value clean air and local control. The Renewable Denton Plan delivers on both of these points by expanding local control and reducing emission. The plan expands local control by allowing us to produce some of our own energy. This will reduce our dependence on the energy market during its most volatile points.

The plan reduces emissions in two ways. First, by moving us from 40% to 70% renewable, we are replacing coal power with cleaner sources of energy such as wind and solar. Second, the Denton Energy Center will be one of the cleanest power generation facilities in the country. Every megawatt hour that it produces will replace a megawatt hour that would have been generated by an older, dirtier source of power.

We look forward to discussing this important issue with Denton residents over the following weeks.

I’ve heard of other cities going 100% renewable. Couldn’t Denton do the same?

DME staff are working to determine the projected rate impact of going 100% renewable compared to our current portfolio and the Renewable Denton plan. We expect to have this information available and posted to this website soon.

Additionally, DME offers the GreenSense Renewable Rate. This rate allows DME customers to receive 100% of their energy from renewable sources such as solar and wind. The GreenSense Rate adds approximately $5 to the monthly bill of an average, residential customer.

For more information, call (940) 349-8700 or visit: www.cityofdenton.com/GreenSenseRate

Is conservation and efficiency part of the plan?

DME has long offered rebates to customers who make energy efficiency improvements to their homes or businesses. Since 2003, DME has granted rebates for more than 4,600 items and rebated more than $2.6 million.

DME’s solar rebate program is the most generous in the state of Texas, offering up to $30,000 to offset the cost of purchasing and installing photovoltaic solar panels.

DME also offers free energy audits to every customer. These audits give home and business owners personalized information about how they use energy and how to conserve. Through this program, over 1,500 free energy audits have been performed in the past ten years.

For more information, call (940) 349-8202 or visit www.sustainabledenton.com

Will the Denton Energy Center be safe?

The proposed plan calls for a state-of-the-art facility that uses the best available control technologies (BACT). Compared to the Spencer Generating Plant, a natural gas fired plant that was built in Denton in 1955 that is owned by the City of Garland, the Denton Energy Center is planned for the outskirts of the city.

When and why will the Denton Energy Center be built?

If the Renewable Denton Plan is approved by City Council, the proposed schedule calls for the Denton Energy Center to be operational by 2019. It will be owned and operated by the City of Denton and will enable us to increase our renewable power from 40% to 70% while maintaining competitive rates.

What’s the environmental impact of the project?

The Renewable Plan would reduce the emissions from Denton’s energy portfolio by 75%. It will increase Denton’s renewable power to 70% by the year 2019. It will be one of the cleanest gas-fired plants in the U.S.

Where will the Denton Energy Center be located?

The proposed plan calls for two sites, one on the west side of town and the other to the north.

How will it affect my electric rates and my taxes?

The proposed plan will not be a driver for a rate increase, and will not impact the taxes paid by Denton citizens.

Will the Denton Energy Center use a lot of water?

The proposed plan calls for a type of generation facility that has very low water usage – approximately 12 gallons per week.

Can I still give input, or is this a “done deal?”

The City Council has not yet voted on the Renewable Denton Plan, and it will remain a proposed plan until they do.

Will the Gibbons Creek coal-fired power plant that Denton now utilizes continue to operate and provide power to the grid after the proposed gas plants are operating? Has a decision been made to retire the plant?

As one of four Member Cities comprising the Texas Municipal Power Agency (TMPA), Denton does not have the full say in whether Gibbons Creek continues to operate and provide power to the grid, particularly in the proposed scenario in which Denton no longer participates in TMPA generation. Through the Renewable Denton Plan, Denton has stated its intention to replace the energy received from Gibbons Creek with renewable energy. The Member Cities are currently reviewing their options regarding the future of TMPA and the Gibbons Creek plant.

Isn’t it in the best economic and environmental interests of Denton and Denton County’s future to wait until the appropriate studies have been done and the decision is made to shut down Gibbons Creek before you decide whether to approve these plants?

No, it is not in the best economic and environmental interests of Denton and Denton County’s future to wait. Appropriate studies have been completed that show the proposed natural gas plants will provide an immediate economic benefit of the ability to lower rates beginning in 2020 and an immediate environmental benefit of reducing emissions associated with serving the City of Denton load. As one of four member cities controlling the Gibbons Creek plant, Denton cannot shut it down without the approval of the other member cities. We can, however, divest ourselves from Gibbons Creek and let others take on the future environmental risks of operating a coal plant, should someone choose to do so.

What percentage of the time will these plants be profitable?

These plants will be profitable 100% of the time that they operate. These plants will offset present purchases of energy and ancillary services from the wholesale market. We expect that they will operate 35 to 40 percent of the time on an annual basis and will be dispatched only when profitable. These plants allow for more favorable pricing terms for the purchase of renewable energy.

How many years will these plants be frequently dispatched before they are displaced by more efficient and less polluting plants? How is profit realized after the good years are over?

Fossil fuel and nuclear plants will be needed to maintain grid reliability for the foreseeable future. Even if a new technology became proven and economical in 5 years (which is highly unlikely), it will take decades for the fossil fuel fleet in ERCOT to be displaced. Below is a sample calculation that assumes the replacement of 50,000,000 kW of installed ERCOT fossil fueled capacity:

50,000,000 kW * $1,200 /kW = $60 billion in capital costs

As one can imagine, this will not happen within a few years. It will happen gradually and the most inefficient fossil fuel units will be the first to be displaced. This means that our proposed plants would be some of the last fossil fuel units to be retired.

Has DME negotiated a contract guaranteeing natural gas cost? If so, what is the duration of that contract?

No, a contract for natural gas will not and cannot be executed until the Renewable Denton Plan is approved by the City Council. Further, long-term contracts are subject to City Council approval. DME has been in discussions with multiple natural gas transporters and suppliers and they have indicated that there is sufficient capacity available, from existing natural gas supplies, to meet our needs.

If these plants cannot generate enough revenue to meet debt obligations where would the shortfall come from, increased consumer rates?

Our analysis has shown that utilizing the quick start generating plants will not result in a financial shortfall. Inherent in this analysis is that the proposed plants must be used in conjunction with the deployment of renewable energy. That is, the RDP has interdependent components and as such, using only specific parts of the Plan is not doable and will not be effective in realizing the $500,000,000 in savings over 20 years. The renewable energy contracts will only provide these savings if we back up the wind and solar energy ourselves.

Has DME had an independent study done to compare the price of the two natural gas-fired generation plants to the price of just buying that energy from ERCOT? Before the city spends millions of dollars shouldn’t it evaluate the cost of those new facilities to simply buying the
power, especially in the very real possibility that these plants will be obsolete before their debt has been paid off?

An independent study has not been performed as DME personnel working on the RDP have over 300 man-years of power experience and possess the expertise to perform these types of studies. DME is also more familiar with the unique City load profile, customer base
and existing Power Purchase Agreements than outside parties. As previously discussed, power plants do not automatically become obsolete because of newer technology becoming available. This is reflected in the generation mix of power facilities currently being utilized in ERCOT. Replacing this type of infrastructure would cost tens of billions of dollars and therefore would take place over many decades.

What is the projected lifespan of these plants? Who pays for remediation when they are shut down? Will the land be able to be used for residential or commercial development?

The typical lifespan of these facilities is approximately 30-40 years. DME is proposing that facility financing be amortized over a 20 year period. The City Council has the final say over how long these plants will be in operation. There would be no remediation except for demolition and recycling. Moreover, the engines that are located at the two plant sites are modular in nature, meaning that they could be sold, disassembled and shipped to a new purchaser. The land can be completely reclaimed and used for any purpose that it could
be used for today. For example, the site of the old Dallas power plant that was near downtown Dallas is now the American Airlines Center.

What about the very real prospect of natural gas price spikes? How many price hikes do you project over the next 20 to 30 years? Won’t such price hikes affect DME’s ability to sell the power on the market?

The prospect of natural gas price spikes is very real. In fact, they are almost guaranteed to happen because natural gas prices are currently very low. Denton will be very well insulated from natural gas price spikes due to the fact that 70% of our energy needs will be met by fixed-price renewables and we will have quick start generation that has a fixed heat rate. Further, DME could enter into future natural gas purchases to lock in natural gas prices over a specific period which would ensure price certainty. In the ERCOT market, natural gas is “on the margin” which means that natural gas prices dictate electricity market prices. This means that when natural gas prices increase, electricity
prices typically increase as well. DME’s ability to sell power on the market will not be compromised by volatility of natural gas prices. If natural gas prices do spike, the ERCOT market will increase and any excess renewable energy would be sold back into the market at
a corresponding higher price.

Opponents of the EPA’s methane rules say that the rules will drive up the costs of gas production. Won’t those higher fuel costs make renewables and other technologies more cost effective?

Yes, higher fuel costs will make renewable energy technologies more cost effective, and that is one of many reasons why DME is proposing to increase our renewables from 40% to 70%. Also, as previously mentioned, higher natural gas prices means higher electricity prices. The Renewable Denton Plan performs even better from a financial perspective if natural gas prices move higher.

Has DME studied the demand side management potential savings for its largest industrial customers?

With that in mind, utility scale efficiency programs are projected to achieve savings of on average 0.72% of utility peak load.

Source: Page 25 of – The Future of Utility Customer-Funded Energy Efficiency Programs in the United States: Projected Spending and Savings to 2025; report from ERNEST ORLANDO LAWRENCE BERKELEY NATIONAL LABORATORY, January 2013

The potential savings from demand side management are insufficient to offset the expected growth in load forecast for Denton Municipal Electric.

Denton’s ozone levels peak on hot summer afternoons when the demand for electricity is greatest. That is when the gas-fired peaker engines will be used. How will this fact affect our air’s drastic non-attainment status?

The creation of ozone requires the right conditions and takes hours or sometimes days to form. Mobile sources, and point sources south of Denton County are the major contributors to Denton’s ozone concentration. The proposed quick start generating facilities will not affect the air monitor located at the airport.

Has the city studied the impact of the air pollution from the plant(s) on the TCEQ air monitor located in the same area as the proposed facility? Was that analysis done with the new 70 ppb standard?

Please see the response to the preceding question. The proposed quick start generating plants will be a non-perceivable contributor to the 70 ppb standard.

Have the impacts of the plant’s air pollution plume on surrounding, downwind communities been studied and ascertained?

In the state of Texas, the Texas Commission on Environmental Quality (TCEQ) is the responsible agency for the issuance of air permits for generating facilities. The TCEQ has reviewed DME’s permit request, as developed by DME’s consultants, and has issued a Standard Permit for Electric Generating Units. The TCEQ has ascertained that any project that is eligible for, and receives a Standard Permit, would have minimal effect on air quality.

Denton has reduced its municipal carbon footprint from 137,449 TPY in 2006 to 102,783 TPY in 2011. The proposed gas plants will emit 706,835 TPY of CO2e emissions. Is this the path to sustainability? Is this how Denton does its part to reduce GHG emissions to fight climate
change? If Gibbons Creek is not retired there will be no offsets for emissions from the DME’s plants.

The Community Greenhouse Gas inventory is more appropriate for use in these comparisons as the plant will provide electricity for more than just Municipal Operations, which are included in the Community Inventory. The City of Denton reduced its community carbon footprint from 1,925,920 TPY in 2006 to 1,709,902 TPY in 2011. Emissions from the electricity only component of the inventory, using the RDP 2019 projections, will be reduced by 73 percent from Business as Usual. Divesting DME of Gibbons Creek and more efficiently using natural gas than is currently being done in the market will reduce overall emissions associated with providing electricity our community.

Do you realize that these plants will affect the air quality of Denton County, not just the City of Denton? Have you met with county officials about the health impacts of these plants?

Denton County is currently in a non-attainment area. The TCEQ has determined that these facilities will be a minor source of pollution and have issued the associated official air permits.

Has the city calculated the cumulative impact of the toxic emissions of regional fracking with the air pollutants that will be emitted by the plants?

The proposed plants will not result in the increased use of natural gas. Because generation must meet demand perfectly at all times, the proposed plants would decrease the use of natural gas for generation of electricity elsewhere. There is also no guarantee that “fracked gas” would be used in the plants. Fracking is not part of the project. Only air emissions associated with the project are required to be included in the air permit for the facility.

Have all emission sources including those from natural gas production, processing, compression and delivery been calculated?

No, these processes would occur with or without our proposed plants for the reasons stated above. Each of the stages mentioned above has its own individual permit requirements.

Have health care costs due to increased air pollution been calculated?

Overall emissions associated with Denton’s load will decrease 75 percent, and ERCOT emissions as a whole would decrease, not increase, for the reasons stated above.

Are there additional costs to the city for first responder training and equipment in the event of a gas plant fire or explosion?

No, a gas fire in a power plant is extremely unlikely. However, first responders are trained for and have the equipment to respond to a similar accident such as from the integrity of a major gas pipeline being compromised. The City of Denton has been home to fuel oil and natural gas-powered power plants for over 110 years. Though very rare, most explosions at power plants are the result of coal dust clouds and
subsequent ignition or rapidly expanding water (steam). Reciprocating engine gas plants do not use coal or a steam system and are therefore not susceptible to these hazards. It is true that some potential hazard may occur from the use of natural gas in the facility. However, standard plant design accounts for these types of hazards in the following ways:

1. Adherence to applicable codes, including International Building Code, International Fire Code, NFPA 37, NFPA 101, and NFPA 850.
2. Use of gas detectors in the engine hall. Detectors will shut off gas flow if gas concentration is detected at 20% of the lower explosive limit. This means that there will not be enough gas in the atmosphere to cause an explosion when gas flow is shut off to the area.
3. Use of sprinklers in the engine hall and mechanical equipment rooms, which helps ensure that any fires do not spread and become greater hazards (i.e. explosions).
4. Use of explosion-proof or properly rated electrical components and panels in hazardous locations.
5. Emergency stops for each engine that allow for immediate operator intervention to shut down the facility in the event of an emergency.
6. Air in the engine hall is exchanged 60 times per hour.

Who will monitor the plants’ air emissions and what remedies are available for noncompliance?

Denton will be required to test every engine every 3 years or 8,760 hours of operation per the New Source Performance Standards set by the TCEQ. Further, the facility will be required to keep records of hours of operation, start-ups/shutdowns as well as calculate emissions. The facility has overall emissions caps for each criteria pollutant and will test the engines and keep records of operation to determine compliance with the air permits.

Where is the presentation that The Brattle Group made to City Council about the Renewable Denton Plan?

You can view the presentation here.