Denton Energy Center on Jim Christal Road, where crews are working to supply Texas' power grid as more than 60 power plants are unable to function due to below freezing temperatures statewide, Tuesday, Feb. 16, 2021, in Denton, Texas.

Updated at 8:15 a.m. Saturday: Denton has canceled its citywide boil-water notice.

Denton Municipal Electric has spent $207 million since Tuesday to buy electricity, and officials now have to borrow the same amount to make the company whole in a crisis they didn’t create.

“This is a situation that no one could have predicted, obviously,” said David Gaines, an assistant city manager and Denton’s chief financial officer, during the Denton City Council’s virtual meeting Friday morning. “Our power expenses on a single day exceeded the expenses for the entirety of last year.”

DME is the city’s electricity provider.

“The immediate concern we have is what this means to our fund,” Gaines said after the meeting.

The DME budget is about $231.4 million.

“The $207 million we spent is for buying power off the grid,” he told the Denton Record-Chronicle later. “The immediate concern is that depleted our reserves. We had $100 million fund balance in the electric fund, but we had $200 million in unexpected costs. We’ve got to make up that whole $200 million just for immediate cash flow needs.”

Council member Deb Armintor called it a “statewide financial crisis.”

“This is very serious,” she said. “And a lot of ratepayers are wondering how … this will affect them.”

During the meeting, Armintor pressed DME Assistant General Manager Terry Naulty for answers on whether DME customers will be impacted by increased utility rates. But when Armintor mentioned how Flower Mound is mitigating the effects on utility customers, Denton Mayor Gerard Hudspeth told her that city staff members “have been working 20-hour days” and told her to refer questions to them in writing.

“The fund itself is going to have to recover the cost,” Gaines said. “We have to have the cash to make these payments. A lot can change from today to two months from now. State or federal aid could come. We just cannot say what the magnitude, what rate changes will be at this time.”

According to city documents, the average price of energy per megawatt-hour in February was $23.73. During the rotating outages that began around the state on Monday morning, that increased to $2,400 per megawatt-hour.

“Obviously, the fact of the matter is it’s huge and we need to finance it,” council member Paul Meltzer said.

Birdia Johnson, the District 1 representative, said council members’ focus should be less on increased utility rates and more on providing adequate supply.

“Since the rates are not going to change, that should not affect the bill being higher at this point,” she said. “What we have now, today, with the [outages] is less electricity was used. We need to make a decision on paying our bills so we can continue to have our electricity.”

District 3 member Jesse Davis thanked staff members for their “quick footwork.”

“This is one of those times you want your power company and city council in the same hands,” he said.

Hudspeth agreed.

“I thank staff,” he said. “It’s been a lot of long days and short nights on all fronts. I really appreciate all of their efforts.”

The Electric Reliability Council of Texas, the primary operator of the state’s power grid, declared an Energy Emergency Alert Level 3 early Monday morning, forcing rolling power outages that continued through Wednesday night. But those have since stopped, with ERCOT dropping its alert to Level 2.

Denton’s water infrastructure continues to be stable after officials issued a citywide boil-water notice on Wednesday night. City officials said Friday that the notice may be lifted on Sunday, but by Saturday morning, residents received notice that the alert was cancelled and water no longer needed to be boiled for consumption or any use.

An earlier CodeRED alert was issued asking residents not to allow their faucets to drip — a common practice during extreme cold weather to prevent pipes from bursting. However, city officials have warned that boil-water notices always pose a risk to customers.

Denton receives its drinking water from Ray Roberts Lake and Lewisville Lake.

PAUL BRYANT can be reached at 940-566-6881 and via Twitter at @paulbryant_DRC.

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