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What that $9K electricity trading day means to Denton

Two weeks ago, the Texas electricity market did something for a few hours that had not happened for five years — it traded electricity for as high as $9,000 per megawatt-hour.

Electricity from Texas wind farms had dropped. The market conditions encouraged all kinds of electricity generators to get busy. Denton’s new natural gas-fired power plant, the Denton Energy Center, made and sold electricity. The Spencer Generating Plant, Denton’s old natural gas-fired power plant now owned by the city of Garland, got in the game. Bloomberg reported prices around Victoria that suggested a few Gulf Coast plastics and chemical factories with on-site generators cut their own usage in order to sell electricity to the grid.

Statewide, most ratepayers can expect higher bills because of that extraordinary market frenzy.

How extraordinary? Monday was hot, perhaps the hottest day of summer. Yet even as temperatures soared to 102 degrees Monday afternoon, an approaching cool front kept things breezy. Texas was buying and selling electricity for less than $40 per MWh during the afternoon peak.

This chart outlines Denton’s financial settlement with ERCOT, the Electric Reliability Council of Texas, on behalf of Denton Municipal Electric customers from Aug. 12-16.

DescriptionMonday, Aug. 12Tuesday, Aug. 13Wednesday, Aug. 14Thursday, Aug. 15Friday, Aug. 16
Peak demand (megawatts)353354313326341
City load -$3,394,015-$8,689,311-$851,242-$9,111,438-$1,032,208
Denton Energy Center gross sales$2,095,517$5,387,675$552,938$6,162,641$628,148
Total revenue$2,911,706$8,038,573$843,062$9,250,004$626,509
Net cost-$482,309-$650,738-$8,180$138,566-$405,699

Settling with Denton Municipal Electric customers is a few months away. The Denton City Council has delayed a decision about folding the variable costs in local electric rates until fall.

“We plan to provide the City Council a budget update in November once we have final numbers for [the] fiscal year,” Chief Financial Officer Tony Puente said.

Denton closes its fiscal year Sept. 30. At that time, the Denton Energy Center also will have been running for 15 months and have many more weeks of performance data.

The power plant’s big money week Aug. 12-16 will surely be a part of that. According to the city’s settlement statements with the Electric Reliability Council of Texas, or ERCOT, the Denton Energy Center sold more than $15 million in electricity that week.

Trouble is, DME customers also used $23 million in electricity over those five days. Some, but not all, of the rest of the electricity bought and sold that week was provided by the city’s wind and solar contracts.

In 2016, some arguments for building the new power plant suggested that DME could make money with it. But the power plant’s only day in the plus column was Aug. 15. It didn’t happen when electricity was selling at $9,000 per MWH. Instead, it happened when the electric load was down locally and demand was high elsewhere. That day, the new power plant and the city’s renewable power contracts put DME in the black by $138,566.

As head of the finance department, Puente has been managing costs from DME and the new power plant. (DME continues to search for a general manager.) DME borrowed $265 million to build the power plant. The finance staff projected the plant would lose about $2.44 million this year, but as of the end of June, revenue was lagging expenses by $6.68 million.

The city can’t include financing costs into what it charges for electricity from the new power plant. However, ERCOT does pay a premium when the plant runs in times of scarcity.

Those few hours that electricity traded near $9,000 per MWh was one such time, Puente said. He estimated ERCOT paid Denton about $5,000 as a scarcity premium that day.

In July, the finance staff told the City Council that current electric rates appeared to be too low compared to costs. If trends continue — which the finance staff agreed could change — the council may be forced to increase electric rates 3% in 2020-21.

They recommended a phased approach to rate increases, with a 1.5% increase in the “energy cost adjustment” part of electric rates for 2019-20.

But the City Council said it wants more information about the new power plant’s performance before deciding on a rate increase.

Puente said he’ll want more information, too, after this month’s market swings.

“We’re resetting the button,” Puente said. “We’ll craft a new recommendations and options for the council to consider.

“We still need additional information to make that call,” he added.


Higher_education
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NCTC Denton now open for classes

As students entered North Central Texas College’s new Denton campus Monday morning for the first day of classes, staff were positioned throughout the first floor to help direct students to classrooms.

Class schedules with room numbers were printed and taped to the walls, and First State Bank employees tabling in the lobby helped direct first-time students to the right spots.

Formally called the First State Bank Exchange at NCTC Denton, the new 45,000-square-foot campus in the Denton Record-Chronicle‘s former building hosted classes and students for the first day of school Monday. This semester, more than 560 students have registered for classes at the campus — a number that could continue to rise this week, said Jessica DeRoche, senior director of the campus.

“We’re looking forward to working and meeting the students,” she said. “Each of our campuses has different personalities and different types of students, and we haven’t gotten to meet our students until today.”

The Denton campus offers many basic core requirement classes and pathways to degrees in education as well as associate degree programs in arts and science.

Mark Finley / Kevin Bond/For the DRC 

Students exit the first classes held Monday at North Central Texas College’s new downtown Denton campus.

Gilianna Vega, a freshman from Corinth, said she chose this branch of NCTC because of the clear track to get a degree in education.

“I want to be an elementary school teacher, and I saw this campus specialized in education, so I was interested because of that,” she said.

While hanging out in the lounge area, she said she really liked the building’s interior and the advanced classroom technology that enabled her to follow every step of the lesson during her college algebra class Monday morning.

“The technology is pretty advanced, so I understood what I was being taught because it was all on the board,” Vega said. “It was a really good first experience.”

In addition to the classroom tech, NCTC Denton also has information technology support on-site and the Mane Stop — a student service center with all of the in-house support services from advising to financial aid. There’s also a lounge area, which DeRoche thinks will help students connect more with the campus.

“When we were looking at the space and designing it, that front area toward Hickory Street is very open and can be more multipurpose,” she said. “Students feel like they can stay on campus; they don’t have to get up and go.”

A few classic college campus staples are missing, though. This campus doesn’t have a bookstore or library, but NCTC has partnered with Denton’s nearby Emily Fowler Central Library and the bookstore at Texas Woman’s University. Students can order books online to be delivered to their homes or TWU, and the city library’s resources are available to NCTC students.

Classes at TWU and the University of North Texas also kicked off Monday, marking the first day of school for all three of the higher-education institutions in town.


Francois Mori/AP  

U.S. President Donald Trump and French President Emmanuel Macron shake hands during the final press conference during the G-7 summit Monday in Biarritz, France. Macron orchestrated a high-stakes gamble to invite the Iranian foreign minister during the summit.


News
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DPS lines getting longer

So far this year, the average wait time for North Texas drivers hoping to renew their licenses at DPS offices is 1 hour and 16 minutes, the state says.

That’s a far cry from the arduous visits in the summer heat that some fed-up motorists described last week at “mega centers” run by the Texas Department of Public Safety.

But what appears indisputable is that the waits are getting worse, despite an increase in manpower and funding from the Legislature.

Average year-to-date wait times for DPS Region 1, which includes Dallas-Fort Worth, are worse compared with numbers provided for fiscal year 2018 (57 minutes) and fiscal year 2017 (45 minutes).

This year’s average includes waits as long as 3 hours and 59 minutes at the Carrollton Mega Center, and as short as 15 minutes in Paris, according to data from DPS. The Denton DPS office shows an average 66-minute wait time this year compared with 39 minutes in 2017.

Average wait times, however, reflect only the wait from the time a customer checks in at a kiosk to the time they are called to the service counter, according to DPS.

At the McKinney DPS center last week, several people in line told KXAS-TV (NBC5) that they waited over five hours to get inside the office. Allen resident Al Smith told the station that customers waiting outside saw a 16-year-old girl pass out from the triple-digit heat and hit her head on the concrete.

DPS did not confirm to NBC5 that the girl collapsed from the heat.

Last week, Flower Mound Republican state Sen. Jane Nelson wrote to Col. Steven McCraw, executive director of DPS, to ask when Texas residents could expect to see better customer service at DPS centers.

In her letter, Nelson cited $212.4 million in new financing for DPS that is intended to fill 762 vacancies, bringing the program’s funding to an all-time high of $490.6 million. That new funding includes $8 million for a new DPS office in Denton.

In a statement to The Dallas Morning News, DPS said, “We are grateful to state leaders for providing DPS with additional funding during the recent legislative session. This funding will be used to help address the growing demand on the driver license program as the state’s population continues to rapidly expand.”

DPS noted, however, that the funding will not be available to DPS until Sept. 1. Before that funding kicks in, DPS said it has begun an “aggressive hiring plan” to have employees in place and ready to begin working for the agency as soon as funds are available.

Employees must be trained first for eight weeks, so ideally they will begin working by November or December, according to DPS.

“These wait times are too long and do not even account for time people spend outside waiting to get into the building,” Nelson told The News on Friday. “The Carrollton center needs reinforcements right away, and I still want to see an action plan from DPS that will solve this problem.”

DPS has been given $1 million to conduct a study to prove it deserves to keep operating the license centers. If the agency fails to prove this to the 2021 Legislature, the Texas Department of Motor Vehicles will take over the operations.

For those hoping to avoid a long wait at a DPS center, the agency cautioned that summer is the busiest time of the year, and that Mondays and Fridays are the busiest days of the week.

The agency also encouraged customers to renew online whenever possible, and that they take advantage of the “Get in Line Online” option, which allows customers to check in online before going to a center.