Denton council OKs construction contract, purchase of engines
Denton Municipal Electric hit the ground running Wednesday morning after squeaking out the City Council’s approval of a new $265 million, natural gas-fired power plant on the city’s west side.
The entire project should help stabilize and hopefully lower electric rates, according to DME officials. Electric bills have risen in Denton even as renewable energy, particularly from wind farms, drives down electric costs elsewhere in Texas.
Some questions linger in how the city-owned utility continues to put the deal together and whether ratepayers will ultimately benefit.
Calls for comment from DME officials were not returned Wednesday.
Council members Kathleen Wazny, Kevin Roden, Dalton Gregory and Joey Hawkins voted for the deal. Mayor Chris Watts and council members Keely Briggs and Sara Bagheri voted no.
Overnight Tuesday, the council approved a construction contract for Burns and McDonnell, a Missouri engineering firm, after seeking qualified firms, not bids.
The final contract price was not publicly disclosed, but power industry sources estimate construction will cost about $100 million. (Whether the three firms that sent qualifications later bid the project remains unclear. An open records request by the Denton Record-Chronicle for documents related to the contract remains pending.)
City leaders also approved the purchase of 12 natural gas-fired engines from Wärtsilä. Three other manufacturers also submitted bids, General Electric, Mann and Rolls Royce, but the Finnish company is believed to have had an inside track on the project for a year or more.
At least one other bid was as competitive as Wärtsilä, but DME staff told Bagheri that Wärtsilä had the most experience for the project.
At capacity, the plant is expected to generate 225 megawatts of electricity. One megawatt can power 400 to 600 homes.
The cost of the Wärtsilä contract, too, was not disclosed. Industry sources say that contract likely totals about $100 million.
The only deal with a known price Tuesday night was the land. The council approved the purchase of about 340 acres near Denton Enterprise Airport, even though only a fraction of the parcel is needed for the Denton Energy Center.
City leaders approved the $11.5 million price tag, knowing some of the land will likely be transferred to the airport for future expansion and any remaining land sold on the open market.
On Wednesday morning, talks began for yet another major contract with the project. Representatives from more than a dozen engineering firms gathered for a workshop on how to bid to become the “owner engineer,” a service that looks over the shoulder of the project engineer, Burns and McDonnell, on behalf of DME.
Typically, this type of engineer is hired much earlier in the project. Owner engineers help a company develop a project before the company makes purchases and issues contracts.
Executive manager Mike Grim said the city-owned utility planned to begin construction in mid-November and be generating electricity by July 2018.
Any possible award of an owner-engineer contract wouldn’t come before the end of November, according to Rebecca Hunter, senior buyer in the purchasing department.
DME says the investment in a new natural gas-fired power plant should pay off in the long run. DME plans to make and sell electricity by summer 2018. And the utility plans to get even more of its electricity from wind and solar farms by 2019.
As a result, Denton should soon be able to walk away from buying coal-fired power, which has become costly.
Denton is still part of a four-city partnership that owns and operates a coal-fired power plant near Bryan. The power plant has been offered for sale, but negotiations with a potential buyer remain ongoing.
PEGGY HEINKEL-WOLFE can be reached at 940-566-6881 and via Twitter at @phwolfeDRC.