AGENDA INFORMATION SHEET
DEPARTMENT: City Manager's Office
CM/ DCM/ ACM: Bryan Langley, Deputy City Manager
DATE: September 11, 2017
SUBJECT
Title
Receive a report, hold a discussion, and give staff direction regarding the Energy Management Organization Financial Review conducted by Deloitte.
Body
BACKGROUND
In 2014, Denton Municipal Electric ("DME") created an in-house division called the Energy Management Organization (EMO) to manage the utility's electric supply portfolio as well as to interface with the Electric Reliability Council of Texas ("ERCOT") to perform all required scheduling, regulatory, and settlement activities. A goal of implementing the EMO was to achieve cost savings compared to outsourcing the function to a third party, as had been done previously.
To compare costs to the previous contracted company and calculate savings, DME developed a methodology and assumptions. A cost savings estimate for FY2015 and FY2016 was developed and presented to the Strategy Committee / Operating Committee for review in February 2017.
In order to perform an independent assessment of the estimated savings and model, staff contracted with Deloitte and Touche, LLC ("Deloitte") to assess and analyze the reported savings of the EMO division. Deloitte, an independent audit and consulting firm, was selected based upon the depth of their team and experience with audit functions, the energy industry, and ERCOT regulations. The scope of work included a retrospective assessment to 1) assess the accuracy and completeness of the final FY2015 and FY2016 savings calculations performed by DME, and 2) assess the model used by DME including the model's inputs, exclusions, and assumptions.
Stephen Engler, Managing Director of Energy & Resources, and Timothy Metts, Senior Manager of Energy & Resources, of Deloitte will present their report and findings to the Public Utilities Board on Monday, September 11. The presentation related to this item is currently being finalize...
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