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Cost of Denton’s new gas plant raises concerns about transparency

Cost of Denton’s new gas plant raises concerns about transparency

Denton Council approved a new gas plant to stabilize electricity bill prices and promote renewable energy for the community. Kelsey Shoemaker

Cost of Denton’s new gas plant raises concerns about transparency
March 22
18:14 2017

Worries over the cost of Denton’s new $227 million gas plant have come up in recent weeks, with concerns that the total cost may balloon to over $1 billion after adding in other expenses. The figure takes into account the expenses of other infrastructure, property cost and substations.

Denton Municipal Electric’s Capital Improvement Plan

At a March 7 work session, Denton Municipal Electric’s general manager Phil Williams gave a presentation to explain the costs of the project and break down DME’s expenditures.

The presentation included a capital improvement plan budget, which is a chart that shows what is spent on replacing and building infrastructure. It shows the spending on these items from 2011-2021, as well as the total for the Denton Energy Center, all of which total to over $1.1 billion. DME spokesperson Brian Daskam said the substations and transmissions systems included in this budget were planned anyway, and are separate from DEC.

“We’re going to build that regardless of the Denton Energy Center,” Daskam said. “That’s not included in the budget [for the DEC] because it wouldn’t make any sense to.”

Williams also hit on that difference in the work session and said these are items separate from the DEC and have nothing to do with the plans for it.

A diagram showing Denton’s substation locations has seven new areas around Denton listed as “proposed.” Denton resident and UNT associate professor Deborah Armintor noted these plans have not appeared on any other CIP.

When talking property costs of these substations, Armintor mentioned how Denton has historically paid 2 to 4 times more than the appraisal value when buying property, which she worries may balloon the total more than has been reported, especially if these properties have not been procured.

These properties include projects not directly related to DEC. Daskam said these would have been bought regardless.

Another question several citizens have asked is how the rates will go down despite spending going up. Phil Williams admitted it sounds counter-intuitive, but said the money spent on these projects would be spent anyway, it would just be going to another plant rather than Denton’s own.

“It’s the ‘own vs. lease’ question,” Williams said. “Am I better off to own it myself rather than pay someone else’s plant?”

According to DME data, rates are expected to increase until 2021, but decrease through 2026.

Williams also confirmed at the meeting that the DME is “on schedule, and under budget” in its CIP.

But Armintor also expressed frustration at the lack of information given to the community about the gas plant.

“Am I an expert in electricity production and gas stations and substations? Hell no,” Armintor said. “But I know how to read a map and I know how to ask questions. And they’re not answering my questions.”

The Denton Record-Chronicle released details regarding information being withheld from the public back in January, which showed parts had been blacked out including several details about Denton’s contract and payments to Wärtsilä and Burns & McDonnell, the two companies Denton is working with to build the plant.

Williams noted the plant will allow DME to decrease its money spent on purchasing power and fuel, which is their highest expense, by $60 million. Those funds will be allocated to operational costs and paying off DME’s debt.

The DEC’s Background

The DEC was approved by council back in September of 2016 by a 4-3 vote. It was DME’s answer to protect and reduce rates, as well as continue the goal of 70 percent renewable energy by 2019, despite the potential controversy.

“This is the best way to do it,” Daskam said. “We thought, we have to present the best solution, even if it’s controversial.”

Pollution has been another concern some citizens have had. Denton has the highest amount of air pollution in the state of Texas and the numbers detailing the level of pollution DEC would emit have not been released. Despite this, Daskam and Williams have both said the plants would lower overall emissions.

Williams added during the presentation that the DEC will pave the way for emissions to lower by 74 percent and gas usage by 38 percent once renewable energy is increased.

Daskam said the plant is expected to run 37 percent of the time, and provide about 13 percent of the city’s energy needs. About a quarter of the plant’s time will be dedicated to creating a supply of power that will go to power areas outside of Denton.

Williams concluded saying the DEC is a “piece” of the renewable Denton plan.

“Without that piece – it’s critical. Because without that piece I can’t go get the larger prize,” Williams said. “Which is a significant increase in physical renewable energy that locks in pricing and lowers emissions.”

Featured Image: Denton Council approved a new gas plant to stabilize electricity bill prices and promote renewable energy for the community. Kelsey Shoemaker

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James Norman

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