Denton Municipal Electric officials say that more than $302 million in electric utility projects are needed in the next five years, including $208 million in new or replacement substations and transmission lines, in order to avoid the future possibility of local rolling blackouts.
Two planning reviews completed in 2011 and again in 2012 document the need for the work.
The city plans to issue $190 million in certificates of obligation over five years beginning in 2013 to help pay for the work.
Denton Municipal Electric officials say they have known for some time that major capital improvements were needed. Some equipment in the electric grid is more than 50 years old.
About $100 million of the substation, transmission and feeder-line projects are needed for reliability — a standard set by the North American Electric Reliability Corp., an organization certified by the federal government to set and enforce reliability standards.
Some transmission work is needed because Denton Municipal Electric is part of the statewide grid. Demands on the statewide grid can also affect Denton’s grid, officials say.
Continued growth, peak demand and electricity usage — not to mention last summer’s extraordinary heat wave — have pushed the issue out of a holding pattern and more in the “need to do now” column.
The peak demand was not only an issue in Denton, but across the state where electricity providers saw new highs both in the summer and winter months.
It is a prudent request in light of the city’s growth and stronger demand on the existing, yet aging, system.
And officials say the capital improvements are not expected to affect the customer’s pocketbook, though base rate increases of 2.7 percent are expected because of increased costs for buying electricity.
However, we would caution Denton Municipal Electronic and city officials to keep a close eye on tracking expenses as these projects are built.
Investigations in recent years have unveiled some spending practices called into question, including the plan to approve a quarter-million-dollar contract for a former Denton Municipal Electric manager to consult with the city and the cost overruns for an administration building.
In late 2010, a former manager withdrew his consulting contract after questions arose on the two-year, $256,000 proposed agreement to ensure compliance of federal electric reliability standards. City officials opted to hire a full-time employee instead.
In early 2009, an audit found the electric utility spent more than $800,000 to build an 8,448-square-foot administration building. Council members had never voted on the project, but had informally approved up to $450,000 to fund construction of a 7,749-square-foot building.
While we do believe the improvements are necessary, these two recent funding-related situations lead us to offer a cautionary warning for stronger oversight on the projects to come.
With strong oversight and timely citizen input, the projects might find a smoother path to fruition.