Public Utilities 1996/05/02 RECEIVED
PUBLIC UTILITIES BOARD CEP (0 3 t PM 'SS
MINUTES . orF :CE o CIT :riK
CITY OF 441 —.LIM
MAY 2, 1996
The agenda having been posted on Friday, April 26, 1996, the Regular Meeting of the Public Utilities
Board was called to order by Chairperson Dale Stanton at 3:30 p.m., on Thursday, May 2, 1996, in
the City Hall West, 1 lth Floor Conference Room, 201 S. Anaheim Blvd., Anaheim, California.
Board Members Present: D. Stanton, W. Wiseman, T. Kirker, D. McMillan, J. White,
P. Lem
Board Members Absent: R. Lawson
Staff Present: E. Aghjayan, M. Bell, L. Moses, H. Pepper, D. Tarkington,
Y. Boyajian, G. Broeking, J. Chavez, G. Corson, M. Flynn,
M. Garg, J. Gonzalez, P. Grimes, E. Gust, R. Howell,
M. Kazungu, M. Long, I. Pai, S. Stephens, J. Taghavi,
B. Templeton, L. Topaz, K. Welch, G. Wilbert, M. Houghtaling
Guests Present: None
1. PUBLIC COMMENTS
Chairperson D. Stanton asked for public comments. There being none, the Public Comments
portion of the meeting was closed.
E. Aghjayan introduced Dale Tarkington, Assistant General Manager of Electric Services.
2. 7.15.5 - APPROVAL OF THE PUBLIC UTILITIES BOARD MINUTES OF
MARCH 7. 1996
P. Lem requested correction of the minutes to include correcting the spelling of his name from
P. Lam to P. Lem (page 324, paragraph 10, line 3).
T. Kirker requested correction of the minutes by including his statement as follows: "Another
advantage for having photovoltaic renewable energy source is its use for alternate power in the
event of outages. The separate circuit for the photovoltaic power can provide critical backup
for users such as iron lung patients and for other such necessary items (page 321, last
paragraph)."
J. White moved approval of minutes of March 7, 1996, as corrected. T. Kirker seconded the
motion. MOTION CARRIED 5 -0. 2 ABSENT. (W. Wiseman arrived after Approval of
the Minutes).
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3. 5.55 - PROPOSED FIVE YEAR UNDERGROUND PLAN
J. Taghavi gave a presentation on the Proposed Five Year Underground Plan (Plan) for fiscal
years 1996 /97 through 2000/01. A memorandum, was distributed to the Board requesting that
the proposed Plan be modified to include Orange Avenue and place Sunkist Avenue on the
alternative project list for a future date. This modification was discussed and approved by the
Underground Conversion Subcommittee (Subcommittee) at its last meeting. Progress
summary: as of end of March, slightly over $25 million has been spent. Four and one -half
circuit miles of 69 kV and about 14 circuit miles of 12 kV have been removed. Eleven projects
have been completed and twenty underground districts have been declared.
The approved current Plan (1995/1996 through 1999/20001) funding is $45.9 million. The
proposed Plan (1996 /97 through 2000 /2001) funding is $45.2 million and includes three new
projects (Ball Road /West Street, I -5 Widening Project and Orange Avenue), to be done in
conjunction with the Public Works Department. A savings of $2.2 million was realized in the
current Plan by eliminating unnecessary sections of circuits through consolidating and re-
routing multiple circuits.
E. Aghjayan commended J. Taghavi and staff for keeping the undergrounding program on
schedule and within budget. He acknowledged the following: M. Garg, B. Templeton, J.
Pelegrino, G. Broeking, as well as Planning, Redevelopment, and Public Works Departments.
E. Aghjayan asked why the poles were not yet removed on Romneya Drive (west to Harbor
Boulevard). J. Taghavi said these are Pacific Bell's poles and that Pacific Bell expects to
remove them within five to six months. E. Aghjayan requested that J. Taghavi expedite
Pacific Bell's undergrounding as much as possible, and he suggested that completed projects be
defined as those with all poles removed, including those of other utilities, such as Pacific Bell.
D. McMillan asked what was wrapped around the pole (in the picture of Romneya). T. Kirker
said that is considered a ` nod" pole, which is a pole that has been hit by a vehicle, and
repaired with concrete so that a new pole doesn't have to be installed.
T. Kirker asked if staff plans on routing cables through the bridge or under the bridge, over
Euclid because of the freeway interchange. B. Templeton said that Anaheim will be going
through the bridge, as Caltrans is providing some space on that bridge to put the cables and
conduits.
T. Kirker asked if capacitor banks will be installed. M. Garg said yes, if needed.
J. White noted at the Subcommittee meeting, the Planning Commission representative noted
that very little undergrounding is being done in West Anaheim, except for Western Avenue,
and moved that Orange Avenue be substituted for Sunkist in order to balance the projects. J.
White said he was in agreement and seconded that motion. However, Sunkist was to be
finished in 1998 and Orange now shows being completed in 2002 and will not assist West
Anaheim in the near future. E. Aghjayan said that the date for the undergrounding of Sunkist
had been shifted from the current plan of 1997/98 to the proposed plan of FY 2001/2002 due
to an undergrounding conflict with State College.
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D. Stanton said he believed that one of the reasons that the Planning Commissioner proposed
the change of having Orange Avenue replace Sunkist is that the unbundled underground charge
will be shown on the utility bills, and most people may notice that nothing is going on in their
area, so why should they pay the 4 %.
W. Wiseman asked why Euclid, from Crescent Street to the 91 Freeway, is not on the
alternative projects for undergrounding. E. Aghjayan said the areas that have substantial
Southern California Edison (SCE) facilities /lines are not included as SCE refuses to participate
in the undergrounding program. The City is currently in litigation with SCE arguing that SCE
must pay for the undergrounding of their own facilities/lines. It is not feasible to risk
approximately $2 million for some of these projects and pay for both SCE and Anaheim's
undergrounding costs. The only exception is the undergrounding of Kate11a, which the Public
Works Department is paying for, under protest, with funds allotted for the Resort Area with
the intention of being reimbursed through the litigation with SCE.
W. Wiseman asked if Anaheim is currently in litigation with SCE. L. Moses said SCE's
demurrer was sustained in Superior Court and Anaheim is in the Appeals Court, but because
of the `three strikes" legislation, civil litigation has been delayed.
P. Lem asked for clarification of the difference between telephone lines and communications
lines and is undergrounding being done on all the projects. J. Taghavi said yes, and an
example is Public Utilities communications lines, such as copper cables and fiber- optics that
have been undergrounded.
E. Aghjayan noted that the money shown in the plan is only the City's cost for undergrounding
the electric facilities. Telephone or cable utilities are required, under the Public Utilities
Commission (PUC) Rule 32, to do the undergrounding at their cost. SCE is required to
cooperate under PUC Rule 20, and SCE argues that they do not have funds set aside to
underground in Anaheim, even though SCE runs sixty miles of high voltage wires on the
City's streets to serve customers in other communities.
D. McMillan said he thought that SCE's rate structure included a 2% to cover
undergrounding. E. Aghjayan said that is true; however, SCE claims that it does not receive
any revenue from Anaheim customers and, therefore, is not required to pay for
undergrounding their facilities. One of the City's arguments is that revenue is received from
other communities, therefore, those revenues should be applied to Anaheim as SCE lines run
through Anaheim to reach those communities.
P. Lem asked why there is a construction cost difference of $238.10 per foot for Euclid and
$788.24 per foot for Lincoln (east to 57 Freeway). J. Taghavi said Euclid has a single 12 kV
and Lincoln has a 69kV and two 12kV lines. E. Aghjayan added that the difference is also the
number of circuit miles, such as there may be 500 linear feet, but there may be three circuits in
one area compared to one circuit in the other area. There is a savings by putting the lines all
in one duct bank but it is still three different circuits. Staff arrives at engineering estimates by
physically walking the line and taking into consideration such things as terrain characteristics,
obstacles, etc. J. Taghavi added that estimates of this year's costs are being revised
periodically based on the costs of previous projects.
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P. Lem asked what is the cost factor being used in present year dollars with respect to five
years out. J. Taghavi said this year includes present year costs, and costs for future years
includes the appropriate inflation factor for all projects.
T. Kirker noted the vast esthetic improvement in those areas that have been undergrounded and
commended staff for doing an exceptional job.
D. McMillan moved approval of the modified Five Year Electric Underground Conversion
Plan as presented. T. Kirker seconded the motion. MOTION CARRIED 6-0. 1 ABSENT.
4. 8.30 - PURCHASE OF 35 MEGAWATTS (MW) OF SHORT -TERM CAPACITY
FROM SOUTHERN CALIFORNIA EDISON (SCE)
E. Aghjayan said that the proposal to purchase 35 MW of short term capacity from SCE for •
1996/97 is covered in the staff report, as there is no presentation.
L. Topaz stated that the primary interest is to purchase short-term capacity now in order to
take advantage of the exceptionally low market price The market price a couple of years ago
was $4 and $5 per kilowatt (kW) month for the summer. The cost in this contract, delivered
at the point of attachment, including the transmission, is $1.66 per kW, for the first year,
$1.76 per kW for the second year. If we were not to purchase this, the cost with SCE would
be $9.54 per kW month. The reason the contract is for two years, is that SCE has a
restructuring coming up with the CPUC, and SCE may have to put all its power into the pool
in 1998. Another transaction for 1997/98 is in process and will be brought before the Board in
the near future.
D. McMillan asked if the contract covers capacity charge only and not usage cost. L. Topaz
said, in recent years, the City has never bought electricity under these capacity contracts, as the
purpose of the contract is planning reserves.
J. White asked what is the status of the Combustion Turbine Generating Plant (CTG). L.
Topaz said presently, under the operating agreement that was modified in 1992, it is available
to SCE for peak and midpeak periods, which gives the City more capacity credit. In most
cases the CTG doesn't run as SCE doesn't call upon it as it is not SCE's cheapest resource.
The CTG is runs about 150 hours per year.
J. White asked how does the City come out on the CTG financially. L. Topaz said the fact
that the plant sits there with 50 megawatts (MW) acts as if the City has put 50 MW into the
pot, so SCE has to furnish that 50 MW effectively and the City doesn't have to pay for the
capacity portion of any thing that is furnished. It is a very complicated agreement. For
example, integrating CTG for the midpeak period, the City netted about $130,000 in savings
during the first year.
E. Aghjayan asked J. White if he would like an economic analysis of the CTG. J. White said
it is not necessary, but he is curious as the Board voted for the CTG to be built. E. Aghjayan
said that project was in process when he came to the City, and there is significant advantage to
having that capacity available, and, in a restructured environment, having the ability to put 50
MW on -line within thirty minutes to an hour can have marketable potential.
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J. White asked if the City is currently running the CTG, and, if so, is it run only when SCE
makes a request. E. Aghjayan said that the City runs the CTG, and, other than a weekly test
run, the CTG is utilized only when SCE requests. E. Aghjayan added that another advantage
for the City to have the CTG is if there were a catastrophe to the transmission grid, the City
has the capability of providing 50 MW on site as an emergency backup supply to keep certain
important circuits on -line, such as hospitals.
P. Lem said he would like more information on the CTG, such as the economics, what it costs
the ratepayers by sitting idle and not generating electricity to reduce costs. E. Aghjayan said it
is getting capacity credits; it is as if it were running in terms of the economics. The CTG does
not need to run to make money. In terms of the revenue, there is economic benefit for the
City to not run the CTG when it is not necessary.
D. McMillan asked if the CTG isn't utilized, is the life cycle also extended. L. Topaz said
yes, and there is money saved annually for certain maintenance issues.
E. Aghjayan asked P. Lem if he has had a tour of the CTG. P. Lem replied that he had not.
E. Aghjayan said staff can arrange for a tour of the CTG along with an economic analysis of
the cost and of the benefit of the CTG to the City.
J. White asked what is the size of the crew, if a crew was required 24 hours a day. L. Topaz
said a 24 hour crew is no longer required; the crew consists of four staff and four part-time
interns on duty 14 to _16 hours per day to match SCE's peak period in SCE's contract.
W. Wiseman asked what the crew does during the time spent at the CTG. L. Topaz said the
crew runs the CTG and runs a series of small capital improvements on the demineralizers and
other such items to cut costs.
P. Lem said that page 1, line 10 of the agreement would be more clear to him if it read
'California Edison Company, a California business corporation" as Anaheim is referred to as
a municipal corporation. L. Moses said the term "a California business corporation" is not
analogous to the term ` nunicipal corporation ", and it has no legal significance.
P. Lem referred to page 5, line 110 (paragraph 5.1) and asked what is the Supplemental
Agreement referred to. L. Topaz replied that this is an agreement to change the current
Integrated Operations Agreement (IOA) with SCE. The Supplemental Agreement reduces the
time that the City must give SCE when it wants to start using a new resource of power (a
generating plant or a Power Purchase Agreement) from the current three years notice to a five
month notice. Under the terms of the IOA, this Supplemental Agreement must be filed with
the Federal Energy Regulatory Commission (FERC) for approval. D. Tarkington noted that
the Supplemental Agreement is described on page 3, line 75 of the IOA.
P. Lem said then that Supplemental Agreement is already available. L. Topaz said the
document, in its form, is available, but must have these details entered and SCE must file with
FERC along with the Agreement. It is similar to a transmittal stating that this is what the
parties are doing.
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P. Lem said Appendix B is discussed in the staff report before Appendix A, and asked if the
Appendices should be re- lettered. L. Topaz said the language is compiled by SCE, and, even
though it is awkward, it is correct.
P. Lem said he has concerns with page 9, line 218, paragraph 10.2 and paragraph 10.3 and
proceeded to read the text. These paragraphs described payment procedures, including interest
on late payments. P. Lem asked if the City pays SCE before the twenty day period is up,
shouldn't the City have a discount equal to the interest at the prime bank loan rate. D. Stanton
said he believed that Mr. Lem had brought up the same issue a couple months ago, and, at that
time, it was explained why that is not done.
J. White moved approval to recommend that the City Council approve the Purchase of 35
Megawatts of Short-Term Capacity from Southern California Edison Company as stated in the
staff report dated May 2, 1996. W. Wiseman seconded the motion. MOTION CARRIED 5-
1. P. LEM VOTED NO. 1 ABSENT.
D. Stanton asked if L. Topaz could get the appropriate staff together with P. Lem to go over
the contract in order that P. Lem may understand it.
E. Aghjayan said the reasons these conditions are in the contract is that the City has received
something of value from SCE, and SCE is not receiving any benefit until the City pays the
bill. The City has received and used power, at which point SCE sends the City a bill. The
contract states that no interest will be charged if the bill is paid in twenty days, and if paid
within twenty days, interest will be paid, which the City feels is a reasonable request. This
provision is also in any agreement when the City sells power. Staff knows that the billing will
always be paid within the twenty day period. If the City insists on changing the contract, SCE
may retract their offer and the City may lose $500,000 a year in benefits. If P. Lem has
concerns regarding the standard contract, staff would be glad to explain it to him.
P. Lem referred to section 11, regarding an underpayment or an overpayment, by a City audit
or audit by SCE, if the City is billed by SCE within a twenty day period, the City should get
the same discount as SCE would charge the City, if SCE were late in paying an overpayment.
P. Lem asked, for a month of billing, what would be an approximate amount that the City
would pay within twenty days. D. Tarkington said approximately $70,000 a month.
M. Bell said the way the language reads, if the City makes an overpayment to SCE, SCE is
required to pay the City back, with interest (paragraph 11.2). Also, in paragraph 11.2, if an
audit discloses that the City has underpaid SCE, the City must pay SCE what it owes, no
interest included. Under paragraph 11.3, if SCE audits and discovers either an underpayment
or an overpayment, the party who has made the mistake will correct it, with no interest either
way.
E. Aghjayan commended L Topaz and S. Stephens for the excellent job in negotiating the
contract and getting the price down.
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W. Wiseman asked if this is a standard legal document that is used all over California and the
United States for agreements of this sort. L. Moses said yes, it is.
E. Aghjayan said that staff would be glad to discuss the issue with P. Lem and suggested that
P. Lem call staff to do so.
5. 3.15.6 - UTILITIES DEPARTMENT 1996/97 PROPOSED BUDGET
G. Broeking gave a presentation on the Department's 1995/96 Adopted and Projected versus
1996/97 Proposed Budgets. He added that staff is available to meet with the Board on May
16, 1996 if the Board chooses to hold another meeting to discuss the budget before the final
budget presentation to the Board on June 6, 1996 for recommendation to the City Council.
Overall, the adopted 1995/96 Department budget was about $319 million and about $303
million is being proposed for 1996/97, a reduction of about $16 million.
Full time positions from the 1991/92 adopted budget to the 1996/97 proposed budget were
reduced by 43, with a proposed reduction of another 7 positions for the 1995/96 to 1996/97
budget period.
The Water Utility projected expenditures for 1995/96 are approximately $36 million with
proposed expenditures for 1996/97 of $44 million. This increase is due to additional water
sampling requirements and additional staff required; Water Division reclassifications, and
additional cost for the 24 hour standby.
D. McMillan asked if the standby personnel are at home or on -site. H. Pepper said standby
personnel are required to be available, and, if called, be at the plant within 35 to 40 minutes. If
called in, the personnel are paid overtime in addition to the standby pay. M. Bell added that
there are 24 hour operations at the Lenain Filtration Plant (Lenain), which did not exist
previously.
W. Wiseman asked what is the difference between Capital Outlay and Capital Projects. G.
Broeking said that Capital Projects are for large construction projects, such as Lenain, and
Capital Outlay covers smaller items, such as equipment needs (computers, etc.), and noted that
the 5.8% increase in the projected Other Operating is due to Lenain coming on -line later than
expected, requiring chemicals and supplies to run the plant.
D. McMillan asked, regarding capital projects dollars, does this refer to Anaheim's dollars,
and not other agencies, such as Caltrans. G. Broeking said yes, and noted that the 108%
increase in Water Capital is almost entirely a result of accelerating the I -5 Widening.
In the Water Utility FY 1996/97 proposed budget, Water Supply decreases from 40% in the
projected FY 1995/96 to 33 %; and Capital increases from 18% to 31 %. These two
components represent almost two-thirds of the total expenditures.
The Water Rate outlook is 1) no planned base rate increases; 2) continue restructuring rates
based on cost of service study, with the next restructuring scheduled for July 1, 1996; 3) Water
Commodity Adjustment (WCA) increase of 0.65 % planned for FY 1996/97; 4) WCA increase
of 1.56% planned for FY 1997/98.
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In the Electric Utility Projected Expenses for 1995 /96, almost two-thirds of every dollar is for
Power Supply, and the three biggest components are 89% of the expenditures - Power Supply,
Debt Servicing and Capital.
The FY 1995/96 Projected Expenses compared to the FY 1996/97 Proposed Expenses, show
the grand total is pretty much flat. The Power Supply shows 4.7% increase with roughly 2%
of that resulting from increased sales projected for FY 1996/97.
D. McMillan said that 2% of the 4.5% is directly related to volume change, and 2.5% is kind
of a hedge in saying the Department will not do as well next year in negotiating price cost
increases for power. G. Broeking said that staff is cautiously optimistic that it will match this
year's expenditures, but for budgeting purposes, it shows a slight increase.
D. McMillan said the reason he asks is his concern is that the City doesn't maintain the rates at
the sacrifice of capital projects. If the City expects to pay a little more next year than this year
for power costs, volume wise, and there will be no rate change, then the only way to get that
money is to reduce expenditures of capital projects. Since part of that Capital is, by definition,
about $9 million of undergrounding, then is maintenance of the infrastructure with capital
project maintenance and improvements going down. D. McMillan said he is concerned that
rates are not being artificially held at the expense of capital projects maintenance and
improvements.
T. Kirker said, according to the Department's expenditures, Summary by Category, the Power
Supply for FY 95/96 was 61 % and Capital was 14%, where Power Supply increased by 3%
and Capital has decreased by 3% for the coming year, with everything else remaining about
the same.
E. Aghjayan said that the reason power supply cost has gone up as much as it has is primarily
because the Utility is buying more power, and, as a result, there is an increase in revenue.
D. McMillan said that 2% of the Capital went to volume, which is more customers and more
power consumption. However, if 2.5% of the 4.5 % increase of Power Supply is paying more
in power purchases, then that 2.5 % is being absorbed in other areas, which may, or may not
be, in Capital Projects.
E. Aghjayan said there is a slight distortion here because the question relates to comparing the
Proposed FY 1996/97 to the Projected FY 1995/96; and in the Projected, the Power Supply
Cost is less than the actual budget for 95/96, due to significant savings in the short term power
supply cost area. It means that there is probably a $2 million to $3 million dollars surplus,
which may be used in the buy -down of San Onofre Nuclear Generating Station (SONGS).
M. Bell said, for example, part of the Power Supply Costs at Intermountain Power Agency
(IPA) are going to be used to attempt to further restructure the future year costs, so that IPA
may become more competitive as we move toward deregulation. As part of this process of
going through the annual budget, an analysis of the Five Year Capital Plan (Plan) is made. In
reviewing that plan, staff looks at those things that are deemed necessary for the system, both
from the engineering and growth standpoint. In addition, there has been increasing problems
with direct buried cable, which has been previously mentioned to the Board, and that program
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has been stepped up with additional funds in the 96/97 budget to address that particular
problem.
D. Stanton asked if the Capital Outlay increase to 46 %, is due to the I -5 Widening. G.
Broeking said no, that is the result of a Capital Improvement at the San Juan Plant (the
limestone converter). L. Topaz added that the project is converting from a chemical based
approach for emission control to a limestone based process. M. Bell said that conversion
project has an approximate two year payback.
G. Broeking noted the Electric Utility FY 1996/97 (96/97) Proposed Budget, Power Supply is
the largest component of 64 %. The top three, Power Supply, Debt Service and Capital, added
together is right at 89 %, which is what is projected for 95/96. The 95/96 adopted budget is
$276 million and $268 million (6% lower) is proposed for 96/97, with the two largest
percentage reductions being Capital Outlay (San Juan) and the Electric Capital Expenditures.
The Electric Rate outlook is: 1) maintain competitive rate structure; 2) no planned rate
increases; 3) continue to lower commercial/industrial rates through additional cost savings; and
4) restructure the rates.
D. McMillan said he is very impressed every time he reads the budgets because, in today's
environment, the labor is basically constant, as far as cost is concerned, which says that, even
with increases in everything else, other things are being done to keep that constant.
D. Stanton asked what is the time frame for approval of the budget. E. Aghjayan said the
budget is scheduled to go to Council June 11, 1996, with a final budget review with the Board
on June 6, 1996. The Board may also meet at an earlier date if it is necessary.
D. Stanton suggested that the Board do a final budget review on June 6, 1996.
P. Lem asked, regarding position control, for clarification of `a total of five positions that are
not Utility funded." G. Broeking said in the 346 total, there are some employees that are
funded by the General Fund or by the GIS project, a citywide mapping project. The City
asked the Department to take over the citywide mapping project because the Department had
an interest in it. The City funds the programs that relate to the City phase of the project.
Therefore, the City funds a number of positions and the Department manages the project for
the City.
M. Bell added that if any of the Board members would like to meet with staff and go over any
questions they may have within the next month, please call to schedule an appointment, and
staff would be glad to answer any questions the Board may have. It was requested that the
Board give staff advance notice of questions in order to be prepared for the next Board
meeting.
E. Aghjayan thanked M. Bell, G. Broeking and staff for putting together a tremendous budget
involving more productivity with the same or fewer number of positions.
M. Bell acknowledged L. Topaz, J. Taghavi and S. Albright for working together to reach
resolution in having a proper balance in the Electric Utility budget between the Capital, the
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Operating and the Maintenance issues that D. McMillan mentioned earlier in the absence of an
Assistant General Manager - Electric Services.
D. Stanton asked if four Board members, having questions on the budget, showed up in M.
Bell's office, is a violation of the Brown Act (Act). L. Moses said it would be preferable for
the Board members to not all meet at the same time to avoid a potential violation of the Act.
E. Aghjayan said it would be more efficient for staff to meet with Board members on an
individual basis to answer questions.
W. Wiseman said that labor costs appear to be very low, and would it be difficult to cut
expenses further, considering fixed costs are set. E. Aghjayan said that other opportunities
arise to further cut expenses, such as enhancing regionalization of dispatching and scheduling
with the City of Riverside, renegotiating coal price agreements, and careful auditing of
SONGS with SCE.
W. Wiseman asked if the distribution of expenses is comparable with other utilities. E.
Aghjayan said at this time accurate, comparative data is not available, as a management audit
has not been done in several years. Staff is discussing building an actual, by category of cost
incurred, comparison with SCE, PG &E, Riverside, LADWP and other agencies. Although
agencies figure costs differently in some areas, it will be important to have a good data base
from which to work because, eventually, the rates will be unbundled and the City will have to
know where costs may be high.
T. Kirker commended staff for their diligence and many extra hours to derive the highly
complex, balanced budget. He remarked that when the Department puts together the budget,
especially for electrical, staff is working in conjunction with Departments, such as Public
Works, Redevelopment and Traffic Engineering, and outside agencies, such as, Caltrans, and
OCTD, in order to coincide with the goals and objectives of those Departments projects.
The final review of the budget was scheduled for final review at the Board meeting of June 6,
1996.
6. TELECOMMUNICATIONS UPDATE (INFORMATION ONLY. NO ACTION
REQUIRED)
E. Aghjayan said some discussion took place at the last Telecommunications Policy Advisory
Committee (TPAC) meeting, and, as there was no quorum, no action was taken. Staff is
continuing to negotiate with SpectraNet (SNI) in working through the due diligence process.
SNI has hired The San Francisco Consulting Group, a division of Peat Marwick, to do the
extensive business case analysis, which is about a $400,000 contract, and staff is continuing to
look at all elements of the agreement. As expected, there are a few areas that do not have any
precedent, and, in some cases, ways are invented to look at particular issues that come up
among the parties. An example is how to compensate the Electric Utility for its investment in
the cable and payment of pole attachment fees, etc. The revised estimated timeline for this
phase of the project is now six to eight months.
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D. Stanton said SpectraNet International (SNI) has plans for an interesting demonstration set
up on the fifth floor in CHW, which is a marketing and educational tool, of how
telecommunications would work in a business, a home, a school and a bank.
7. AGENDA ITEMS FOR NEXT MEETING (INFORMATION ONLY. NO ACTION
REQUIRED)
E. Aghjayan said the agenda for the next meeting will include the budget. The Key Partners
Program, a new program, may be ready for June, in addition to the State and Federal
Legislative and Regulatory Update.
8. ITEMS BY SECRETARY (INFORMATION ONLY. NO ACTION REQUIRED)
E. Aghjayan said information has been sent out on Project XL, which was awarded to the City
by the Environmental Protection Agency (EPA), which allows the City to defer spending
approximately $250,000 on a required monitoring system at the CTG. Anaheim is the first
municipality in the nation to be accepted into this program. Anaheim is currently negotiating
the terms of a project agreement with the EPA. He added, as a result of this award, he
attended an environmental technology briefing and workshop session at the White House with
Vice President Al Gore, who worked with the group for about an hour.
The American Public Power Association (APPA), which represents almost 2000 publicly
owned systems, announced that Anaheim is one of three winners in the 1996 Energy Innovator
Award Program for the Efficiency Menu for Schools Program, which has saved the school
district a lot of money. That award will be presented at the APPA Annual Conference to be
held in June in Atlanta, Georgia.
Regarding P. Lem's inquiry of the policy with respect to Board members attending meetings,
such as the APPA Annual Conference in Atlanta, E. Aghjayan thought it best to review that
policy with the Board to see if the Board wanted to modify the current policy. He noted that
the conferences are very helpful, and the APPA Annual Conference also includes a weekend
seminar for governing boards along with the regularly scheduled meetings on current issues.
The Department has limited funds budgeted for the Board to attend conferences, the cost for
one person to attend the APPA Conference would use up the entire budget. Generally, the
Chairperson has made decisions on these requests, and, in the past, have focused on local
conferences. E. Aghjayan requested guidance from the Board in regard to how the Board
would like to budget for these meetings.
D. Stanton said that in the nearly twenty years that he has been on the Board, B. Kazarian
went to Seattle, Washington, and, he thinks meetings or conferences held in Washington,
Oregon or California and, possibly Reno and Las Vegas, would be beneficial, but any farther
than that may not be worth the expense.
J. White said the most beneficial trip he attended was the meeting held at the Intermountain
Power Project (IPP) in Utah to see the plant and how it operated.
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T. Kirker said he felt that local meetings are more beneficial as he attended a water meeting in
Santa Barbara and met a lot of people from the local area and created a network, and local
meetings have information that is more relevant to Anaheim.
W. Wiseman said he felt meetings of that kind can be very valuable to the Board, particularly
to people like him who do not have an engineering background, and he also agreed that one
could get the same technical information from a local meeting.
E. Aghjayan said upcoming trips include: the Metropolitan Water District (MWD) Colorado
River Trip, which is a two day trip and is paid for by MWD; and the California Municipal
Utilities Association (CMUA) Annual Conference which will be held next year in the San
Francisco Bay area, which includes a Governing Board session.
P. Lem said if APPA is actively providing information, it would be foolish of the City of
Anaheim, with its image, to not have a policy to send its Board members and the Utilities
Department staff to attend those national conferences and there should be a policy set on this.
D. Stanton suggested the Board appoint three members to define a policy on what the Board
should do and establish a figure the budget.
T. Kirker said that if any Board member attends any event which is paid for by the City, a
spouse or guest attending must be paid for by the Board member.
E. Aghjayan said that is policy and any incremental cost that is incurred by a staff member for
a guest must be paid for by the individual. He feels that P. Lem's comments about educational
value, in terms of assisting to make better recommendations, is a valid concern.
W. Wiseman moved that Chairperson D. Stanton appoint a subcommittee of three Board
members to review and make recommendations to establish a policy regarding continuing
education for the Board members. J. White seconded the motion. MOTION CARRIED 6
1 ABSENT. The following Board members volunteered to be on the subcommittee: W.
Wiseman, P. Lem and T. Kirker.
9. ITEMS BY BOARD MEMBERS
W. Wiseman said he read in the L.A. Times last week that the San Diego County Water
Authority (SDCWA) was involved in litigation with the Municipal Water District (MWD)
about water rights and whether or not the SDCWA is being treated fairly by the MWD. As
the article was very brief, he would like comments on how that may affect the City and its
water supply.
E. Aghjayan suggested that Henry Pepper make a presentation on this which would cover the
big picture as to why, suddenly, there are a lot of people selling water, what the City can
expect to happen, as well as include what is occurring between MWD and SDCWA,
marketing of water, etc., at a future Board meeting. H. Pepper said, regarding the SDCWA,
the Bass Brothers have been buying up land in the Imperial Valley to construct a new
aqueduct, and another proposal is use of the current MWD Aqueduct to transmit water to
SDCWA from other sources.
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P. Lem referred to the City of Anaheim Annual Report the Orange County Bankruptcy
(Bankruptcy) receivables for Water is $559,000 and Electric is $4,602,000. His question is
where is this $3.745 million in the Bankruptcy in the Electric balance sheet. P. Lem said
would like some clarification of these two balance sheets, and notes to explain the Bankruptcy.
M. Bell said the notes to the financial statements actually address the dates and amounts that
the activities took place with respect to transactions of the City. The actual statement itself, the
$559,000 for Water and the $4.602 million for Electric, are the amounts that are still due in
receivables to the City as of June 30, 1995, and those are the amounts that are being carried,
and will continue to carry, as long as the City is pursuing collection of those amounts from the
County. It was identified as a separate line item in the annual financial statement, so that
readers of the statement recognize what the extent of the bankruptcy impact was on the
Utilities Department, and, with regard to the overall, both restricted and unrestricted cash
levels, these impacts are not overwhelming. From a disclosure standpoint, both staff and the
auditors felt that it needed to be identified as a separate line item. Staff will have a similar
presentation for FY 1995/96, because these issues still will not have been resolved, and it may
be another year or two before any resolution. But, the note refers to the actual activity within
the City in the consolidation of the accounts of the City.
J. White said the mass of information regarding restructuring is very confusing and would like
staff to give a good report to clarify this and the effects on rates. E. Aghjayan said the best
guess is that large commercial/industrial rates are going to decrease, as they will have the
marketing power, and residential is basically staying stable in the current market. E. Aghjayan
said a restructuring update report will be given to the City Council at a workshop session on
Tuesday, May 21, in the afternoon, which the Board can attend. Staff can also prepare a
presentation and an update for the Board. A FERC /NOPR report and SCE's filing regarding
the ISO was received recently, and is being evaluated by staff. He added that while in
Washington, DC, a few weeks ago, he met with four of the five FERC Commissioners to
discuss how the Commission is going to approach the proceedings at the Federal level, and
was heartened by the discussion. L. Moses said that it is appropriate for all the Board
members to attend the presentation at Council as that workshop is a publicly noticed meeting.
P. Lem said the Southern California Public. Power Authority dinner meeting on restructuring
helped to get an idea of what people are thinking about in regard to restructuring and where its
going in the next five years. M. Bell added that presently staff is reviewing restructuring the
SONGS debt to shorten the outstanding debt by three or four years, so the City is matching
what is being done in the investor owned sector through depreciation of assets to make sure
that the plant is on a competitive footing with the Investor Owned Utilities (IOUs) come the
year 2003 forward.
D. Stanton inquired if there were funds in the budget for a trophy case for all the awards the
Department has received. It was noted that the cost of a trophy case and an appropriate
location is being discussed
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10. ADJOURNMENT (NEXT REGULAR MEETING: JUNE 6. 1996)
J. White moved adjournment of the meeting at 6:05 p.m. D. McMillan seconded the motion.
MOTION CARRIED 6-0. 1 ABSENT.
Respectfully submi
go AI
Edward K. . yan
Secretary, ' I , c Utilities Board
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