Denton Municipal Electric has kept meeting the city's goal of offsetting 100% of its power use with renewable energy, but four years after an audit flagged it, the city still has no written rule for how that claim is counted, according to a follow-up review the city auditor brings to the City Council this afternoon.
City Auditor Madison Rorschach's office is scheduled to present the review at the council's 2 p.m. work session. It revisits two audits of the utility's energy portfolio management issued in March 2022, one on how power trades and contracts are handled and one on the renewable offset goal.
Two items still open
Of 16 recommendations, the review counts 14 as implemented and two as in progress, both tied to the renewable goal. One calls for updating the 2018 Denton Renewable Resource Plan to reflect growing retail demand and changing ERCOT conditions.
The other calls for written procedures spelling out how renewable energy certificates, compliance premiums, customer generation and power purchase agreement output count toward the goal, so no megawatt-hour is counted twice.
The report says DME proposed a Renewable Energy Policy and an Integrated Resource Plan to the council in June 2025. Council members directed the utility to gather public input but did not give specific direction or signal they were ready to adopt the policy, the report states. The auditor's slides describe the result as "critical compliance questions" left unanswered "due to Council-directed delay."
Under DME's proposal, the city would retire every certificate counted toward the goal, sell any extras and buy same-year certificates when needed. The auditor found that approach in line with federal guidance and best practices. The original audit found nearly 800,000 certificates and compliance premiums owned by the city had been allowed to expire unsold.
Until a policy is adopted, the review says, DME keeps applying certificates to the goal without retiring or selling them. In its response, DME said it needs formal council direction because the certificates carry significant value that would be lost if retired each year.
Since 2023 DME has issued an annual report on the prior year's goal and has met it each year through contracted renewable production plus certificate purchases, according to the review. A note on the auditor's chart says the load figures do not include DME's large-load customers.
On the trading side, the review found transactions now carry documented approval in the utility's trading software and invoices from power suppliers are checked against a written manual, including payments for curtailed hours. Staff recommend closing the project until an informal follow-up, likely in fiscal 2027-28.
