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PUBLIC UTILITIES BOARD
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MINUTES ('`' 1�, FF
JANUARY 4, 1996 ; } '
The agenda having been posted on Friday, December 29, 1995, the Regular Meeting of the
Public Utilities Board was called to order by Chairperson S. Dale Stanton at 3:45 p.m., on
Thursday, January 4, 1996, in the 1 lth Floor Conference Room, City Hall West, 201 S.
Anaheim Blvd., Anaheim, California.
Board Members Present: D. Stanton, D. McMillan, J. White, R. Lawson
Board Members Absent: T. Kirker, P. Lem, W. Wiseman
Staff Present: E. Aghjayan, E. Alario, M. Bell, G. Broeking, J. Chavez,
R. Howell, T. Lockhart, L. Moses, H. Pepper, D. Shackelford,
L. Topaz, K. Welch, M. Houghtaling
Guests Present: None
1. PUBLIC COMMENTS
There being no public comments, the Chairperson closed the Public Comments
portion of the meeting.
2. APPROVAL OF PROPOSED RULES OF ORDER FOR PUBLIC UTILITIES
BOARD MEETINGS
L. Moses, giving a brief overview of the proposed Rules of Order (Rules) for the
Public Utilities Board (Board) meetings, stated that the Rules are consistent with the
Rules utilized by the City Council (Council), the Telecommunications Policy Advisory
Commission (TPAC), the Charter Commission and Roberts Rules of Order. The
Rate Public Hearing Rules were also incorporated. The purpose is to formalize the
procedures currently being used by the Board.
D. McMillan said he would like objectives and guidelines for the Board in addition
to the Rules. L. Moses said that a package will be put together that includes the
Charter, the Municipal Code, and Council Policies that guide the Board in its
decision making process.
D. McMillan moved approval of the Rules of Order as presented. R. Lawson
seconded the motion. MOTION CARRIED 4 -0. 3 ABSENT.
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3. SET A PUBLIC HEARING FOR ELECTRIC RATE RESTRUCTURING ON
FEBRUARY 1. 1996
E. Aghjayan said that staff is requesting a Public Hearing for Electric Rate
Restructuring on February 1, 1996, which will propose a decrease for the City of
Anaheim's (City) Industrial /Commercial customers effective March 1, 1996. This
decrease will allow the City to continue to remain competitive with the Southern
California Edison (SCE) proposed rate decrease for Commercial /Industrial class.
J. White asked if the proposed rate decrease for Commercial /Industrial would affect
the residential rate in any way, and what is the difference between the City's and
SCE's current residential rate. E. Aghjayan said the City's residential rate would not
be affected and is currently 25 % lower than SCE's rate.
J. White moved approval setting the Public Hearing for Electric Rate Restructuring
for February 1, 1996, at 3:30 p.m. D. McMillan seconded the motion. MOTION
CARRIED 4 -0. 3 ABSENT.
4. PUBLIC UTILITIES DEPARTMENT BAD -DEBT WRITE -OFF OUARTERLY
UPDATE FOR SEPTEMBER THROUGH DECEMBER (FOR INFORMATION
ONLY, NO ACTION REQUIRED)
J. Chavez stated that a reduction in the bad -debt write -off is continuing, primarily
due to two factors: 1) the continued enforcement of the Utility deposit policy and
2) a leveling off of bankruptcies filings. The Department is projecting a 75%
decrease in the total bad debt write -off for Fiscal Year (FY) 1995/96 as compared
to FY 1994/95.
D. McMillan congratulated staff for a job well done, noting that the corrective action
taken for the past two years has substantially lowered the bad debt write -off.
5. RATING AGENCY PRESENTATION (INFORMATION ONLY, NO ACTION
REQUIRED)
M. Bell gave a slide presentation on the information recently presented to the rating
agencies of Standard & Poor's, Moody's and Duff & Phelps (Agencies). The
Agencies expressed concern over the coming electric industry restructuring, and what
the municipal utilities are doing to prepare for and remain competitive in the
changing market. Anaheim presented its strategy for remaining in competition. It
was noted that the City has maintained an "AA" credit rating with the Agencies.
M. Bell presented the following information.
1) Cost reductions have been achieved with San Onofre Nuclear Generating
Station (SONGS), Southern California Public Power Authority (SCPPA),
Intermountain Power Agency (IPA), San Juan Unit 4 (SJ #4) projects and other
power resources, such as hydro power.
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2) Future cost reduction measures will include further cost reductions in SONGS,
IPA, other power resources, regionalized activities (such as possible consolidation
with neighboring cities) and additional workforce reductions.
3) Strategies for debt management for the City and IPA were discussed along
with strategies for competition (the Powerful Partnership Program, the Key Accounts
Program, the New Customer Information System [CIS], and the proposed electric
rate reductions as of March 1, 1996).
4) The 1996 strategy for the City's rate restructuring includes a 5 % reduction in
Time of Use (TOU) industrial rate, a 2% reduction for other commercial and small
industrial rates, unbundling the 4% underground fee and developing /signing long-
term agreements, such as the seven year Economic Development Rate with a division
of Proctor & Gamble.
5) Future strategies for rate restructuring include a cost of service study, the
formation of a Citizens Advisory Committee, adjustment of residential rates in 1997
while remaining competitive with the market, continued decrease in
commercial /industrial rates, and unbundling of the 4% General Fund transfer and
the 1.5% right -of -way fee.
6) Benefits of the Telecommunications Project and the anticipated results of rate
changes to the City were discussed along with a current electric rate comparison with
Southern California Edison (SCE).
M. Bell closed the presentation by stating that by offering electric customers a unique
combination of competitive rates, demand -side management programs, economic
development incentives, responsive customer service and access to
telecommunications, Anaheim can maintain a competitive edge.
D. McMillan asked how the SONGS savings occurred. M. Bell said by working with
the other participants, particularly SCE, savings were largely achieved by cutting back
on capital program costs. Costs are continuing to be scrutinized for further savings.
D. McMillan asked if the $600,000 cost reduction for SJ #4 is a true savings or
$600,000 less than the original estimate and budget. M. Bell said it is both, as costs
have been lowered through renegotiating existing contracts, such as coal contracts by
lowering cost of coal per ton.
D. Stanton asked if some of the power cost reductions are due to the fact that, about
ten years ago, people started building additional power plants which weren't needed.
M. Bell said since the time that excess capacity was built and transmission sources
have been freed up, the City's ability to access areas with excess capacity has been
increased. Additionally, savings are available through short term power contracts.
D. Stanton asked how far east can the City access power. M. Bell said we can access
power as far as New Mexico and Colorado, with transmission lines being the limiting
factor. Other possibilities would be the states of Idaho, Montana and British
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Columbia. Occasionally, power is received from Canada through the Bonneville
Power Administration.
D. McMillan asked what is the purpose of unbundling the underground conversion
charge. M. Bell said this would allow the City to show the fee as a local distribution
charge, and, should an outside supplier want to utilize the facilities, a fee could be
charged and the City would not lose funds for its underground conversion program.
6. TELECOMMUNICATIONS UPDATE (INFORMATION ONLY. NO ACTION
REQUIRED)
E. Aghjayan stated that the staff report approved by the TPAC is on the City Council
agenda on January 9, 1996, requesting authorization of staff to develop necessary
agreement(s) with SpectraNet International (SNI) to be the City's partner in the
development of a public - private universal telecommunications system for the City.
The final agreements will be reviewed by TPAC and submitted to the City Council
for review and approval by mid 1996. SNI has arranged for private financing and
has created an alliance with NORTEL. The due diligence process with SNI is
expected to take from four to six months.
E. Aghjayan said that in the near future, telecommunications will create many
opportunities for the community. The City already has some companies that see the
advantage of a fiberoptics system in relation to their businesses. The City, a pioneer
in this field, is being carefully observed by other cities and agencies throughout the
state.
D. Stanton emphasized how important it is that the City be involved in this program.
7. AGENDA ITEMS FOR NEXT MEETING (INFORMATION ONLY. NO ACTION
REQUIRED)
E. Aghjayan advised that the following items will be brought to the Board at the
February 1, 1996, Board meeting.
- Public Hearing for the Electric Rate Restructuring
- Partnership for Safe Water
- Water Supply Outlook Presentation
8. ITEMS BY SECRETARY (INFORMATION ONLY, NO ACTION REQUIRED)
E. Aghjayan noted that a presentation will be made to the City Council on January
9, 1996, in the Council Chambers at 3:00 p.m. to review the recent Public Utilities
Commission (PUC) decision, to discuss the City's strategy in dealing with the rate
restructuring and how it fits into the direction of the industry. Also, a status report
on the Federal Energy Regulatory Commission (FERC) will be given. The Board
will be given an update at the next PUB meeting. The Board is invited to attend the
presentation.
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9. ITEMS BY BOARD MEMBERS
R. Lawson said he is impressed by the progress within the Public Utilities
Department (Department) in regard to the new developments taking place that are
moving the City forward.
J. White said an article appeared in the newspaper stating that Code Enforcement
is offering security lights, and asked if the Department is involved with supplying the
security lights. L. Topaz said that, although the Department offers the Security
Lighting Program, Code Enforcement selects where the lighting will be installed and
oversees the installation.
J. White asked when a tour of the Lenain Water Treatment Plant (Plant) will be held
and suggested that the Department do a press release on when the official dedication
is going to be held. H. Pepper said the official dedication will be held sometime in
March 1996. E. Aghjayan said a press release will be made giving a official
dedication date and updating the status of the Plant.
E. Aghjayan asked the Board to check their calendars for availability to tour the
Plant. The Board expressed a desire to tour the Plant during a weekday.
D. McMillan said he is amazed at the sale of water at vending machines and asked
if the City has considered installing its own water machines. E. Aghjayan said the
possibility of a bottled water project is being investigated.
J. White requested an update covering legislature and regulatory current events.
E. Aghjayan said staff could give the Board a legislative update every other month,
starting next month.
D. Stanton submitted a letter from T. Kirker listing agenda items for consideration
at future Board meetings (copy attached).
10. ADJOURNMENT (NEXT REGULAR MEETING: FEBRUARY 1, 1996
A motion to adjourn was approved. MOTION CARRIED 4 -0.3 ABSENT.
Respectfully submitted,
Edward . • :hjayan
Secreta ' ublic Utilities Board
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