More than $302 million in electrical utility construction projects are needed in the next five years, including $208 million in substations and transmission lines, in order to avoid the future possibility of rolling blackouts locally, according to Denton Municipal Electric staff.
General Manager Phil Williams and other members of the utility staff briefed the City Council and the Public Utilities Board during a joint meeting Monday. The meeting was the second briefing for the board, according to its chairman, Dick Smith, but the first time the City Council heard the presentation.
Assistant City Manager Howard Martin first hinted to the council last month during a budget meeting that DME would be proposing a major capital improvement program. The city plans to issue $190 million in certificates of obligation, over five years, to help pay for the work, according to City Finance Director Bryan Langley.
DME has known for some time that major capital improvements were needed, Williams said. Some equipment in the electric grid is more than 50 years old. Last summer’s extraordinary heat wave notwithstanding, many factors pushed the project out of a holding pattern, including continued growth in number of customers, electricity usage and peak demand.
Peak demand is the high point of usage. Across the state last year, electricity providers saw new highs in peak demand, both in the winter and in the summer.
Moreover, the DME staff completed two planning reviews in 2011 and again in 2012, which have shown the need for the work. The reviews are required by the North American Electric Reliability Corp., an industry-founded organization certified by the federal government to set and enforce reliability standards.
About $100 million of the substation, transmission and feeder line projects are needed for reliability, DME staff said, otherwise local rolling blackouts would be a possibility in the near future.
Some of the transmission work also was needed because DME is part of the statewide grid. The city’s system can be affected by demands on the statewide grid.
For example, wind power from West Texas comes into the Krum West substation. Not all that power is used by DME customers. Some of it passes through to customers of other electricity providers. But the city is reimbursed for that pass-through usage.
Each residential customer would pay less than $3 more each month to pay for the upgrades, Williams said. DME did not expect that the capital improvements or other work would trigger an increase in the utility’s base rate.
However, DME already anticipates base rate increases of about 2.7 percent per year over the next few years because of the increased cost in purchasing electricity, Williams said.
Some neighborhoods will be affected by the work more than others. Nearly all the buried electrical cable in the Southridge neighborhood will need to be replaced, according to John Moore, DME’s executive manager for energy delivery.
When the neighborhood was built, a vendor convinced the utility that its cable could be buried directly underground without conduit, Moore said.
“It goes in about 20-25 years and it goes real fast,” Moore said. “It’s difficult. We’re going to be digging in people’s yards. We’re going to have to have some public involvement out there.”
Similarly, some of the upgrades in central Denton and some of the new lines and substations, both of which will require more land and easements to accomplish, may not sit well with the public, DME staff told the board and council.
Moore advised extensive public involvement in the project, similar to the way Texas managed the Competitive Renewable Energy Zones, a $5 billion upgrade to the state’s electric grid.
“When you add up all the pros and cons, the tough route usually falls out as the obvious route,” Moore said. “It’s the closest you can get to putting magic dust on it.”
PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is pheinkel-wolfe@dentonrc.com .
