Public Utilities 2012/02/22CITY OF ANAHEIM
PUBLIC UTILITIES BOARD
MINUTES
FEBRUARY 22, 2012
The agenda having been posted on Thursday, February 16, 2012, the Regular Meeting of the Public Utilities
Board (Board) was called to order by Chairperson Jordan Brandman at 5:05 p.m. on Wednesday, February 22,
2012, in the I I 1 Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim,
California.
Board Members Present: J. Brandman, D. Morgan, B. Hernandez, S.E. Faessel, C. Peltzer,
J. Machiaverna, P. Carroll
Board Members Absent: None
Staff Present: M. Edwards, D. Calkins, D. Lee, S. Sciortino, B. Beelner, J. Lehman,
A. Kott, G. Bowen, M. Samra, R. Dowell, M. Lopez, D. Albaugh,
V. Jones, V. Castillo, L. Quiambao, P. Oviedo
Guest(s) Present: David Wain, Resident; Stephen Faessel, Resident; Dr. Heywood, Resident;
May -Wah Chu and Brad Williamson, HP Enterprise Services; Sean Dunphy,
Systems & Software
AGENDA ITEM ACTION TAKEN
1. PUBLIC COMMENTS.
There were no public comments. J. Brandman closed the public
comments portion of the
meeting.
2. APPROVAL OF THE MINUTES OF THE REGULAR
PUBLIC UTILITIES BOARD MEETING HELD ON
JANUARY 25, 2012. *
3. APPROVAL OF AMENDED AND RESTATED SECOND
AMENDED SAN ONOFRE (SONGS) OPERATING
AGREEMENT AMONG SOUTHERN CALIFORNIA EDISON
COMPANY, SAN DIEGO GAS & ELECTRIC COMPANY,
CITY OF ANAHEIM, AND CITY OF RIVERSIDE. *
B. Hernandez moved approval
of the January 25, 2012, Public
Utilities Board Minutes. S.E.
Faessel seconded the motion.
MOTION CARRIED: 7 -0.
ABSTAINED: 0. ABSENT:
0.
M. Edwards shared with the Board that because of the complexity of
B. Hernandez moved approval
the staff reports, she would be reading prepared verbal summaries
of the Amended and Restated
like those presented to Council Members at City Council meetings in
Second Amended San Onofre
2012-9
AGENDA ITEM
an effort to gauge the depth and breadth of information presented to
anticipate Council Members' questions.
She began by sharing that in 1983, the City entered into an
agreement with Southern California Edison (SCE) to have an
ownership interest in the San Onofre Nuclear Generating Station
(SONGS). SONGS Units 2 and 3 began commercial operation in
1983 and 1984, respectively, and have a combined generation
capacity of 2,150 MegaWatts (MW). Anaheim's ownership interest
was 3.16% of SONGS Units 2 and 3 for a total of 69MW and
shared ownership with the City of Riverside, San Diego Gas &
Electric, and SCE who was the majority owner and operator of
SONGS with 75% ownership share. On December 20, 2005, the
City Council approved the transfer of Anaheim's ownership rights
in SONGS to SCE.
Under the terms of the SONGS Operating Agreement (Agreement),
an election to not participate in the steam generator replacement
project (Project) would result in the reduction of Anaheim's
ownership rights in SONGS in accordance with a formula in the
Agreement to zero. It was concluded that savings in
decommissioning costs, avoidance of capital costs associated with
the Project, and the savings in operating expenses, when taken
together, actually provided more benefit to Anaheim than continued
participation in SONGS. Therefore, on December 20, 2005, the
City Council approved Anaheim's transfer of ownership rights in
SONGS to SCE. The transfer of ownership was completed in late
2006.
Since 2007, SCE staff and the other SONGS owners, in conjunction
with our Assistant City Attorney, have been modifying the existing
SONGS Operating Agreement to reflect Anaheim's transfer of its
ownership rights and obligations under the Agreement to SCE. The
Agreement has been amended and restated (Amended Agreement)
to simply clarify and align Anaheim's very limited rights and
obligations under Agreement to comport with the terms of the
Settlement Agreement. Additionally, consistent with the Settlement
Agreement, it removes Anaheim's obligation for environmental
monitoring and the costs under the associated facility. The
Amended Agreement eliminates the "Extra Expense Insurance"
provisions that Anaheim was subject to, so that should any unit
suffer an outage, the costs for replacement energy will be
reimbursed by an insurance company. It also removes any
restoration cost liabilities associated with an outage of the units
such as the cost to fix the units in the event of an outage or
catastrophe. Finally, the Amended Agreement clarifies which
committees Anaheim still has rights to participate in. Even though
Anaheim has transferred its ownership interests to SCE, Anaheim
still remains an active participant in many areas of SONGS
operations.
There are no foreseeable impacts to rates as funding for Anaheim's
share of the SONGS decommissioning has already been included in
ACTION TAKEN
(SONGS) Operating
Agreement among Southern
California Edison Company,
San Diego Gas & Electric
Company, City of Anaheim,
and City of Riverside. D.
Morgan seconded the motion.
MOTION CARRIED: 7 -0.
ABSTAINED: 0. ABSENT:
0.
2012- 10
AGENDA ITEM
the Department's budget over the period that Anaheim was a co-
owner.
M. Edwards concluded by mentioning that the Amended
Agreement was completed in the later part of 2011, reviewed by all
parties with ownership shares, and is before the Board for their
approval and recommendation to proceed to City Council for
approval. The Board asked a variety of clarifying questions which
culminated in their decision to support bringing forward the
amended agreement.
4. APPROVAL OF CARBON OFFSETS & CALIFORNIA
CARBON ALLOWANCES TRANSACTIONS. *
M. Edwards requested the Board's support to participate in the
Califomia Air Resources Board (CARB) Cap- and -Trade Program
and secondary Carbon Offsets and Allowance markets.
Assembly Bill 32 (AB 32) requires the Department, along with
every other electric utility in the state, to comply with CARB's
regulations to lower Greenhouse Gas (GHG) emissions to 1990
levels by 2020. To meet this mandate, CARB developed the Cap -
and -Trade Program (Program). The needed emissions reductions
will be achieved by allowing the Department to purchase carbon
Allowances as well as Carbon Offsets to meet its GHG compliance
obligation under the AB 32 mandate.
The Department has a variety of options at its disposal to help
mitigate the costs associated with the Program, including the option
to simply reduce operations of its generating units in a way that
their emissions are reduced. This is one end of the spectrum of
options; at the other end is the option to purchase all emissions
Allowances to cover expected levels of operations for each year. In
between these two options lie energy efficiency initiatives, and
renewable energy options such as: wind, solar, and geothermal,
under our Renewable Portfolio Standards Program, all of which the
Department intends to employ to meet its GHG obligations under
the AB 32 mandate.
In order to fully utilize this broad spectrum of options, it is vital that
the Department have the ability to quickly hedge the operation of its
resources by purchasing Allowances and Carbon Offsets in the
carbon auction and secondary markets. Participating in the Cap -
and -Trade Program and the secondary markets places the
Department in a position to effectively manage its GHG obligations
by allowing purchases of Allowances and Carbon Offsets in small
increments when needed to hedge day -to -day operations and real -
time operations as warranted.
The Board asked and had answers provided to a variety of
questions, including are renewables enhanced GHG, are any
chances of Anaheim getting back to the AB 32 requirement in
which amounts must be reduced back to 1990 limits of GHG, and
does the 1990 limit take into consideration the growth that has
ACTION TAKEN
P. Carroll moved approval of
the Carbon Offsets &
California Carbon Allowances
Transactions. J. Machiavema
seconded the motion.
MOTION CARRIED: 7 -0.
ABSTAINED: 0. ABSENT:
0.
2012-11
AGENDA ITEM
occurred.
In conclusion, M. Edwards mentioned that the Carbon Offsets and
California Carbon Allowances Transactions is being presented to
the Board for their approval and recommendation to proceed to City
Council for approval.
5. APPROVAL OF AGREEMENTS, AN AMENDMENT, AND A
SERVICE ENHANCEMENT REQUEST FOR THE
CUSTOMER INFORMATION SYSTEM REPLACEMENT
PROJECT, INCLUDING, (a) AN INFORMATION SYSTEM
AGREEMENT WITH SYSTEMS & SOFTWARE, INC., (b) A
PROJECT MANAGEMENT AGREEMENT WITH AAC
UTILITY PARTNERS, (c) AMENDMENT NO.3 TO THE
GENERAL AGREEMENT WITH eMETER CORPORATION
FOR THE METER DATA MANAGEMENT SYSTEM, AND
(d) A SERVICE ENHANCEMENT REQUEST WITH
HEWLETT- PACKARD STATE AND LOCAL SERVICES,
INC. FOR CIS IMPLEMENTATION TECHNICAL
SUPPORT SERVICES. *
M. Edwards shared with the Board that there are four agreements
for the Customer Information System (CIS) Replacement Project
(Project), the computer system used for managing functions
associated with billing and revenue for the Department. She
mentioned that the current CIS has been in operation for 17 years,
and is well overdue for replacement.
Of the four agreements, the most significant is with Systems &
Software, Inc. for the new physical system, at a cost of $5.6 million,
including a 15% contingency. Additionally, this cost includes more
than just the core CIS software and implementation services. It also
includes a field mobile system to automate manual processes, a new
customer self - service website with on -line chatting, a new citywide
cashiering system, and organizational change management services
that are key to the success of this Project.
The second agreement is with AAC Utility Partners, in the amount
of $2.5 million, for project management services and includes a
10% contingency. This agreement will provide project management
resources with the right experience and skill sets to support the
project from beginning to end.
A third agreement is with Hewlett Packard State & Local Services,
Inc., who is currently familiar with the existing systems and whose
help will be critical in integrating the new system. This agreement
is for $2.25 million and will ensure that enough resources with the
right technical skill sets are available to support the project and not
overburden Department staff with competing assignments.
The fourth agreement is with eMeter Corporation for $200,000 and
is to ensure that the new system is effectively integrated with the
system that manages our meter data.
ACTION TAKEN
S.E. Faessel moved approval of
Agreements, an Amendment,
and a Service Enhancement
Request for the Customer
Information System
Replacement Project,
including, (a) an Information
System Agreement with
Systems & Software, Inc., (b)
a Project Management
Agreement with AAC Utility
Partners, (c) Amendment No. 3
to the General Agreement with
eMeter Corporation for the
Meter Data Management
System, and (d) a Service
Enhancement Request with
Hewlett- Packard State and
Local Services, Inc. for CIS
implementation technical
support services. D. Morgan
seconded the motion.
MOTION CARRIED: 7 -0.
ABSTAINED: 0. ABSENT:
0.
2012- 12
FTe] D1017:11 I Y Dlu'
M. Edwards shared with the Board that a considerable amount of
planning has gone into this Project to ensure success with a realistic
24 month Project schedule that allows sufficient time to design,
build, test, and go -live with the new system by May, 2014.
M. Lopez, Business Information Systems Manager, introduced the
representatives from the various contractors to the Board.
The Board, having had the opportunity over the last few years to
hear repeated presentations on the CIS topic overall, asked a few
final clarifying questions, prior to offering their support to take the
item forward to Anaheim City Council.
6. ADOPTION OF UPDATED MISSION STATEMENT AND
POLICIES FOR THE WHOLESALE ENERGY RISK
MANAGEMENT PROGRAM. *
M. Edwards began by sharing that this Program provides the
framework for managing risks associated with short-term energy
transactions. She further shared that short term deals are those that
are under a year, whereas longer term deals go to City Council for
approval.
The Program is continuously reviewed and updated as necessary to
ensure that it is relevant in the ever - changing energy markets. The
recommended changes would provide additional clarity to the
policies, which are the basis of the Program requirements and
would allow the Program's Risk Management Committee to
approve non - substantive policy changes in an effort to allow
expedient updates to the Program to address changing market
conditions in a timely manner. The City Attorney's Office would
make the determination as to what is, and is not, considered a non -
substantive change.
Recently, the Federal Energy Regulatory Commission (FERC)
required the participants of the California Independent System
Operator (CAISO), to develop energy risk management programs
that appropriately address their risks. The Department was easily
able to comply and the requested changes to the Mission Statement
and Policies will help to ensure that the Program allows the
Department to continue to effectively manage risk associated with
transactions.
J. Lehman, Chief Risk Officer, explained to the Board that the main
changes are clarifications to better explain the intent of each of the
policies, with the exception of a new concept that would allow the
City Attorney's office to approve non - substantive changes to the
Mission Statement and Policies. A member of the Board requested
the Board be informed on an annual basis whether there have been
changes that have been deemed un- substantive. M. Edwards
responded that they would be updated annually. The Board
reviewed and discussed each of the suggested changes prior to
offering their support.
ACTION TAKEN
P. Carroll moved approval of
the Adoption of Updated
Mission Statement and Policies
for the Wholesale Energy Risk
Management Program. C.
Peltzer seconded the motion.
MOTION CARRIED: 7 -0.
ABSTAINED: 0. ABSENT:
0.
2012- 13
AGENDA ITEM
7. DISCUSSION OF UTILITIES SUCCESS INDICATORS.
M. Edwards shared that comments provided by the Board have been
incorporated into the Utilities Success Indicators report. The
indicators will continue to be monitored, and an updated report will
be brought forward to the Board in six months. ,Staff is also
developing a regulatory relief document that encompasses the
recommendations by the task force commissioned by the City
Council to make improvements to the regulatory environment for
residents and businesses, and that the document will be distributed
to the Board as well as the City Council.
8. UPDATE ON WATER SYSTEM ISSUES.
Monthly Water Supply Conditions Update
D. Calkins shared that the weather remains significantly dryer than
normal. Yesterday, the State Department of Water Resources
reduced the allocation on the State Water Project, which means less
imported water will be received from Northern California. As a
result, the Metropolitan Water District (MWD) will get about
200,000 acre feet less water this year from Northern California.
Overall, water supplies for Anaheim and the Southland remain
strong due to last winter's wet weather, and water that was placed
into storage. Even though it's been dry, water supplies should
remain adequate for the next year or two.
D. Calkins shared with the Board that the cost for Anaheim to
obtain water from wholesalers will be increasing. The cost of
imported water was increased by MWD 7.5% in January of this
year. MWD staff has proposed further increases of 7.5% next
calendar year and 5% the following year. The primary reason for
these increases is that demands are down and a significant part of
MWD's costs are fixed. In addition, the Orange County Water
District (OCWD) staff has proposed a slight increase in the
Replenishment Assessment (i.e. the charge to pump groundwater).
Both Boards of MWD and OCWD are scheduled to vote on these
rate increases in April.
Lenain Water Treatment Plant
D. Calkins referred to his comments at the Board meeting last
month that the Lenain Water Treatment Plant would be taken out of
service for several weeks for maintenance and repair work. He
reported that the work is being wrapped up and the Plant will be
back in service next week.
Metropolitan Water District (MWD) Connections
D. Calkins said Anaheim has eight MWD connections around town
where the Department is able to take imported water from MWD
into our piping network. He shared that staff has been in contact
with MWD and they have scheduled painting and repair work for
this April for the structure on Santa Ana Canyon Road east of
Imperial Highway in response to community concerns about its
appearance.
ACTION TAKEN
2012-14
AGENDA ITEM
9. UPDATE ON ELECTRIC SYSTEM ISSUES.
D. Lee provided an update on the power outages that occurred last
month in specific areas and the impact they had on those customers.
He thanked the staff from the Business and Community Group for
canvassing the area affected and assisting one small business with
replacement bulbs damaged during the outage and providing an
energy audit to another small business.
10. UPDATE ON FINANCE ISSUES.
B. Beelner invited the Board's attention to the January Financial
Dashboard. He mentioned that the Intermountain Power Project
power outage experienced last month will cause continued
softening in wholesale sales for the electric utility. There will be
some mitigating measures taken from reserves to help manage
through the balance of the fiscal year. Water revenue costs are 7%
below budget and are helping to stabilize the water budget overall.
He shared that there is some activity on the bonds that are currently
outstanding for refinancing, and that the Utility budget is still being
worked on and will be presented at the April Board meeting.
11. UPDATE ON JOINT SERVICES ISSUES.
S. Sciortino shared with the Board that out of 34 cities in Orange
County, the City of Anaheim was awarded first place by the United
States Green Building Council and was recognized for being the top
Eco City in Orange County.
12. UPDATE ON RISK & LEG ISLATIVE/REGULATORY
AFFAIRS ISSUES.
J. Lehman provided the Board with an update on the status of the
Canyon Power Plant emission event. The Air Quality Management
District (AQMD) was contacted and a permit modification was
filed. The modification should be completed by the AQMD in the
next few weeks and sent to the Environmental Protection Agency
for a 45 day review and will then be sent to the California Energy
Commission for the license to be amended. No further information
on the Notice of Violation has been received.
She also mentioned that on the legislative side, next Friday is the
last day for bill introduction. On the electric side, a State Fund is
being proposed to allocate certain Cap- and -Trade revenue. On the
water side, the proposed water fee bill, SB 34, was dropped and
appears to have been replaced by a bond bill.
She reminded the Board of the upcoming Legislative Working
Group meeting that is scheduled prior to the Board meeting in
March.
M. Edwards added that J. Lehman is in the midst of preparing an
American Public Power Association (APPA) platform that will
include a listing of the federal issues that is meaningful from a
ACTION TAKEN
2012- 15
AGENDA ITEM
legislative perspective and will be provided to the Legislative
Working Group at their next meeting.
13. POTENTIAL AGENDA ITEM(S) FOR THE NEXT PUBLIC
UTILITIES BOARD MEETING ON MARCH 28, 2012,
• Presentation on Business & Community Programs Annual
Report.
• Presentation on Water Capital Program.
• Agreement for Consulting Services to Develop Anaheim's
Water Use Efficiency Master Plan. *
• Master Agreement to Offer Assistance to Customers on
Backflow Devices Installation. *
• Energy Storage System Plan.
14. ITEMS BY SECRETARY.
Advanced Metering Deployment Program
M. Edwards mentioned to the Board that a memo regarding
advanced metering funding will soon be provided. She shared that
although there are federal funds available for advanced meters,
there is also customer resistance. After careful review, staff has
proposed deferring the Department's current advanced metering
deployment. By doing so, it will allow time to confirm that this
deployment is appropriate and will not inadvertently strand the
Utility with a problematic system, as well as address customer
concerns. This deferral is expected to last from six to eighteen
months, depending upon potential legislation, the readiness and cost
of the technology, and customer acceptance of the technology.
The Department will continue to monitor the technological needs of
its Smart Grid including the advanced metering technology. Once
assured that the related hardware and software is stable and cost
effective, and budgeted resources are available, the advanced
metering deployment program will resume with the opt -out option
available for those residential customers that choose that option.
This deferral will also allow more time to move an opt -out
mechanism through City Council for customers who prefer not to
have automated metering.
Intermountain Power Plant
M. Edwards shared with the Board that they will be provided a
memo regarding the impacts of the recent loss of Intermountain
Power Plant (IPP) Unit 1. She mentioned that the IPP facility is one
of the largest resources in our entire portfolio. It is coal based and
heavily utilized. The loss of an IPP unit is what the rate
stabilization fund was set around when it was first established.
S. Sciortino responded to a member of the Board who asked about
IPP Unit 2, by sharing that currently there are no issues found that
would result in a similar problem as IPP Unit 1; however, there
were some minor repairs made during the week it was inspected.
The outage for IPP Unit 2 was moved from April 2012 to January
2013, and to six weeks instead of a one month outage.
ACTION TAKEN
2012- 16
AGENDA ITEM
15. ITEM(S) BY THE BOARD
J. Machiaverna complimented staff indicating that he felt that all
the recent changes have been seamless by staff's efforts.
B. Hernandez commended M. Edwards for the manner in which she
and her team have addressed various utility matters for the benefit
of Anaheim customers.
D. Morgan indicated that lie thought that Anaheim tends to be less
bureaucratic than other municipal organizations.
S.E. Faessel concurred with her colleagues concerning all that had
been said. She also shared that she is one of the 7,000 customers
who has received a Smart Meter and complimented staff on the
process.
C. Peltzer indicated that he was impressed with the comments by D.
Morgan and B. Hernandez. He added that staff is always top notch
and offered his kudos.
P. Carroll shared he is looking forward to the Canyon Power Project
Dedication. He thanked staff for the invitation to the Orange
County Business Council dinner and shared that he liked the new
bottled water design.
J. Brandman indicated that he agreed with everything his colleagues
said about Anaheim projects and staff.
16. ADJOURNMENT: (TO THE REGULAR MEETING ON
MARCH 28, 2012, AT 5:00 P.M., IN THE I V FLOOR LARGE
CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S.
ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA).
Respectfully submitted,
%�4
Marcie L. Edwards
Secretary, Public Utilities Board
ACTION TAKEN
D. Morgan moved to adjourn
the Regular Meeting at 7:30
p.m. to the Board's neat
Regular Meeting date of March
28, 2012 at 5:00 p.m. B.
Hernandez seconded the
motion. MOTION
CARRIED: 7 -0.
ABSTAINED: 0. ABSENT:
0.
* Indicates item(s) that will be forwarded to City Council for action upon recommendation by the Board.
** Indicates item(s) that will be forwarded to City Clerk and City Council for informational purposes.
2012-17