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Tomas Gonzalez

Power plant vote delayed one week

Profile image for By Peggy Heinkel-Wolfe
By Peggy Heinkel-Wolfe
Tomas Gonzalez
Tomas Gonzalez

Update 3:08 p.m.

Council member Keely Briggs shared a year's worth of city emails she obtained through an open records request with the Denton Record-Chronicle on Wednesday. We have uploaded the emails and their attachments to DocumentCloud in chronological order, but the documents have also been made machine-readable and searchable. Briggs was interested, in particular, in how much city employees communicated with the Brattle Group both before and after the City Council agreed with the city manager's recommendation to hire them. The Brattle Group ostensibly provided council members an independent analysis of the staff's recommendation that the city replace its coal-fired power purchases with natural gas-fired power plants. Any notes, redactions or highlights on the documents were made by Briggs.

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A divided City Council postponed until next Tuesday its vote for several items related to the construction of a gas-fired power plant in far west Denton.

Denton Municipal Electric needs council approval before buying the land and issuing the purchasing and construction contracts. General Manager Phil Williams said if the plant is generating electricity by summer 2018, it could save $7 million for ratepayers.

Council members Kevin Roden and Joey Hawkins didn’t want to delay the vote. But other council members agreed to council member Keely Briggs’ request they take one week to review how the deal has come together. She said she has been reviewing hundreds of pages of internal communications related to the project in the past few weeks.

Some of the exchanges troubled her, she said.

Nearly a year ago, DME said it could greatly increase its purchase of renewable energy if the city walked away from its partnership in a coal-fired power plant and built two gas-fired power plants.

The City Council eventually agreed to build one plant on the city’s west side, authorizing $265 million in revenue bonds to fund the deal.

DME’s plans for a new power plant are unfolding similar to another project, albeit a much smaller one, that Greenville built several years ago, Briggs said in an interview after Tuesday’s meeting. Greenville bought Wärtsilä engines and contracted with Burns & McDonnell engineering firm for the design and construction of the 25-megawatt Greenville Engine Plant.

DME has proposed a plant about eight times larger than Greenville’s. City documents related to the deal are heavily redacted, but according to sources familiar with power plant construction, DME probably is spending about $100 million on Wärtsilä engines and another $100 million with Burns & McDonnell.

DME hired Burns & McDonnell last year to submit the air quality permits it needed to build the plants. The Greenville project and the preliminary engineering services likely gave the Missouri-based firm the inside track for the project.

Engineering firms can get contracts under different purchasing rules that score them on their qualifications to complete the job.

Typically, a general contractor, not an engineering firm, takes the lead in bidding construction projects on the scale DME has proposed, sources say. That’s because engineering makes up a small part of the job’s costs. Two of the three companies that submitted their qualifications to build Denton’s plant were experienced general contractors, one in Minnesota and the other in Farmers Branch. They were not engineering firms like Burns & McDonnell.

Both contracts — the construction contract and the engine purchases — are in a holding pattern with the council’s delay. So is the council’s purchase of land for the plant near Denton Enterprise Airport.

Williams said DME needs to make payments when the contracts are executed, but he did not say if it was one contract or both that had the payment requirement. At least one of the agreements needs payment by Sept. 23 or DME must renegotiate the terms, Williams said.

He did not say which agreement was time-sensitive.

Finland-based Wärtsilä builds its engines in Italy, which makes at least one contract subject to the dollar-to-euros exchange rate. However, that exchange rate has remained fairly stable since about January 2015, with euros trading at about $1.12 since January 2016.

DME asked for approval to use $23 million from its operating revenues to make the contract payments. Although the council already has approved revenue bonds for the deal, those proceeds won’t be available until October, staff said.

The council voted 4-3 to postpone that budget transfer decision until next week. Roden, Hawkins and council member Dalton Gregory opposed.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881 and via Twitter at @phwolfeDRC.