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Public Utilities 2013/02/27CITY OF i AxtiN t rlu w FEBRUARY 27, 2013 The agenda having been posted on Wednesday, February 20, 2013, the Public Utilities Board Meeting Workshop was called to order by Chairperson David Morgan at 3:06 p.m. on Wednesday, February 27, 2013, followed by the Regular Meeting of the Public Utilities Board (Board) at 5:25 p.m., in the 11 "' Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: Board Members Absent: Staff Present: Guest(s) Present: D. Morgan, J. Machiaverna, C. Peltzer, P. Carroll, B. Hernandez, S.E. Faessel, D. Singer None M. Edwards, D. Calkins, D. Lee, S. Sciortino, E. Zacherl, A. Kott, J. Lehman, L. Quiambao, P. Oviedo, B. Beelner, C. Godoy D. Wain, Resident & Chairperson of the East District Neighborhood Council R. Schwenk, Member of the Public AGENDA ITEM 1. PUBLIC UTILITIES BOARD PURPOSE AND RESPONSIBILITIES. A verbal summary of the Public Utilities Board (Board) purpose and responsibilities was provided by staff which included the establishment of the Board through Ordinance 3557; Ordinance 5851 outlining limitations on City Boards and commission service; Board Rules of Practice and Procedure; and Ordinance 5397 which created a Public Utility Hearing Board for disputed bills and Resolution 2010 -196 regarding certain aspects of renewable electric generation facilities. All of this information is publicly available. 2. UTILITIES SUCCESS INDICATORS. D. Lee, AGM of Electric Services, shared the Utility Success Indicators, summarizing the key high level attributes that the Public Utilities Department monitors, including customer satisfaction, operational excellence, financial health, enterprise risk, positive work environment, and alignment with City goals. The accompanying appendix provided additional details, including charts and graphs that further explain the result over the past review period. ACTION TAKEN Staff will incorporate update the next Success Indicators report, 2013-8 D. Lee, AGM of Electric Services, presented an overview of the Department's Regulatory Relief efforts. The presentation described how the Department is incorporating the findings that came out of the City Council- adopted Phase I Task Force Recommendations. The Department has two tracks - the first is for non -rule business practices such as taking credit cards in the field, providing permit assistance, and providing more information on- line. A separate handout was provided that described the various initiatives associated with non -rule business practices. The second track is the detailed review of Utility rules and regulations that define how electric and water service are provided to customers. Although the standardized terms of service provide uniformity in the application of rules, they do not always lend themselves to an individual's specific circumstances. Therefore, under the umbrella of Regulatory Relief, the rule modifications outline ways in which to provide increased flexibility in the implementation of rules, as well as reduced fees and simplified processes. The proposed rule changes fall under specific Task Force categories, and include: reviewing deposit criteria and developing the option for payment plans, providing the option for customers to install their own water lines or to separately serve electric vehicles, waiving plan check charges if the timeframe is de minimus, providing a courtesy credit for residential customers for billing errors, providing service connections at no additional cost if there is a missed appointment due to an emergency or unplanned event, waiving reconnection or returned check fees if no fault of the customer, offering to use credit cards as an alternative to cash deposits, and developing the ability to finance electric line extensions. F., �TeaT.97!_�I I�f3[IIi�; �7_TiT: J. Lehman, Chief Risk Officer, discussed what items she has been discussing with the legislators and staff that represent Anaheim. Dynamics of the current State legislature. Of APU's six elected state representatives, half are new. They are evenly split between Democrats and Republican. Meetings with legislators and staff review Utility concerns have been well received. Issues included the following: Utilities need time to implement existing mandates before introducing new ones, to see what works and what doesn't. The costs of mandates should be considered (sharing A.PU's legislative cost matrices, showing the estimated impacts of new laws on rates). Requirements should be technology neutral, so that there is flexibility in meeting mandates. 2013-9 AGENDA ITEM She shared that in last month's meeting, Senate leader, Darrel Steinberg said he was looking at supporting a 50% Renewable Portfolio Standards (RPS) bill and that he believes that clean energy was the key to improving the California economy and creating jobs. In an effort to address cost concerns of future legislation, J. Lehman mentioned that through industry groups, a draft report on the cost of legislation has been prepared, very similar to APU's legislative cost matrices, and that meetings with the Governor's office on the report had been held, and other meetings were underway with key legislative staff to discuss the report before it is released. This effort seems to have at least given some legislators pause, and the report has at least more formally raised the issue of costs and provided some substance behind the concern. Legislative issues for this year: STATE: There are likely to be many of the same issues previously dealt with: • Usage of cap and trade funds. • 2014 water bond reduction — and depending on how this effort goes, the water usage surcharge legislation could resurface). • More renewable energy related legislation. As well as new issues, such as Proposition 39 implementation. FEDERAL: At the federal level, we are likely to see bills on: • Erosion, or elimination, of Tax exempt financing. • Implementation of the Wall Street Financial Reform Act (Dodd - Frank) — Unresolved issues remain that have the potential to impact APU, including transmission organization related issues involving the California Independent System Operator (CAISO). It may be necessary to support clean -up legislation to fix implementation problems. 1'11 r �, �•� '1 ��, 1 ', � Staff shared information regarding the Dodd -Frank Wall Street Reform and Consumer Protection Act (Dodd- Frank), which amended the Securities Exchange Act of 1934 to require municipal advisors to register with the Securities and Exchange Commission (SEC }. Interpretations differ as to whether appointed board members might qualify as municipal advisors as defined by the SEC and be subject to the registration requirements and various other qualifications if they provide advice on financial transactions presented to them for their review and input. Until the law and interpretation are final, the Department has taken a conservative approach in requesting approval for financial transactions only from the City Council as members of the Council are elected officials and are therefore excluded from the definition of municipal advisors and the municipal advisors provision of the Dodd -Frank Act. ACTION TAKEN 2013- 10 AGENDA ITEM ACTION TAKEN b. BUDGET DEVELOPMENT PROCESS. As part of the Board workshop, B. Beelner, Financial Planning Manager, shared the process of preparing the Department's annual budget. This process includes evaluating the legal, regulatory and financial constraints of the Department, and ensuring all mandates and contractual requirements are satisfied. B. Beelner shared each constraint and mandate, how the Department manages through them, how the Department prioritizes the resources available for investment in the system as well as how cuts are prioritized. D. Lee shared the Department's electric reliability statistics and how investments in the system and budget cuts can impact these numbers. B. Beelner concluded with a 10 year financial outlook of both the electric and water utilities and the projected growth in the Department's cost curve as compared to the 10 year revenue forecast. PUBLIC UTILITIES BOARD MEETING 1. PUBLIC COMMENTS. None. 2. APPROVAL OF THE MINUTES OF THE REGULAR B. Hernandez moved approval PUBLIC UTILITIES BOARD MEETING OF JANUARY 23, of the January 23, 2013 Public 2013.* Utilities Board Minutes. S.E. Faessel seconded the motion. MOTION CARRIED: 7 -0 ABSTAINED: 0 ABSENT :O 3. APPROVAL OF AN AMENDED RENEWABLE PORTFOLIO J. Machiaverna moved STANDARD POLICY WITH PROCUREMENT PLAN AND approval of an Amended ENFORCEMENT PROGRAM, 2013. * Renewable Portfolio Standard Policy with Procurement Plan The written publicly available staff report detailing the item was and Enforcement Program, verbally summarized by staff. 2013. B. Hernandez seconded the motion. The Board asked a variety of questions which culminated in their MOTION CARRIED: 7 -0 decision to support the approval of an Amended Renewable ABSTAINED: 0 Portfolio Standard Policy with Procurement Plan and Enforcement ABSENT: O Program, 2013, 4. UPDATE ON WATER SYSTEM ISSUES. D. Calkins, AGM of Water Services, invited the Board's attention to the Water Supply Conditions Update in the agenda package. He shared, that due to the Northern Sierras receiving double the normal precipitation in November and December, winter started with wet weather; however, it has been very dry in January and February. He stated that water supplies remain adequate due to the water placed in storage from a wet winter two years ago. D. Calkins referred to the informational memorandum in the agenda package on the seawater desalination plant Poseidon is proposing in 2013-11 Huntington Beach. The Department has not made any commitment to take water from the project, and staff is still analyzing whether water from this plant could be conveyed to Anaheim, and whether purchasing this water would strengthen our long term supply portfolio. Once staff completes the analysis, we will come back to the Board with a recommendation; likely in about two months. D. Calkins then gave an update on the construction of the Hidden Canyon Pump Station Expansion project, which is located next to the intersection of Serrano Avenue and Hidden Canyon Road. This project, replaces old water pumps, provides a new standby engine generator, and enhances site aesthetics. This investment is part of the Department's ongoing program to rehabilitate or replace aging infrastructure. Project construction will be completed in two months. 2013- 12 ACTION TAKEN AGENDA ITEM E. Zacherl also shared with the Board that year -to -date revenues through January for the water utility was $36.8 million, which is $2.7 million or 7.8% over budget. Again, weather being the primary factor for the favorable variance. Year -to -date expenses through January for the water utility were $30.3 million, which is $1.3 million or 4.1 % less than budget. The favorable variance was a result of reduced operating and maintenance expenses, which were partially offset by an increase in water supply expenses due to the increase in demand. He shared that revenues for the remainder of the fiscal year for both water and power are not projected to continue to run favorable to the budget and are expected to be maintained at budgeted levels. He closed by sharing that cost containment will continue to be monitored closely throughout the balance of the year. 7. UPDATE ON JOINT SERVICES ISSUES. None. 8. UPDATE ON ENERGY RISK & LEGISLATIVE / REGULATORY AFFAIRS ISSUES. J. Lehman, the Chief Risk Officer, shared a brief update on the Department's compliance, risk and legislative /regulatory related activities. She invited the Board's attention to the quarterly report on the Wholesale Energy Risk Management (ERM) program at their place settings, and shared that all transactions were within the ERM program requirements, and that the Department was in full compliance with all aspects of the ERM program. J. Lehman stated that the ERM program's risk management committee, which includes the City's Finance Director and the City Attorney, would be meeting tomorrow to approve the revisions to the ERM program, to provide requirements and limits for transactions related to the implementation of both the State's Greenhouse Gas cap and trade program and the renewable portfolio standard program. 9. AGENDA ITEMS) FOR THE NEXT PUBLIC UTILITIES BOARD MEETING ON MARCH 27, 2013. • Anaheim Rapid Connection (ARC) Presentation by Public Works • Presentation on Business and Community Programs Annual Report on Energy Efficiency Accomplishments • Construction Status Update on Anaheim Water Recycling Demonstration Project • Water System overview 10. ITEM(S) BY SECRETARY None. ACTION TAKEN 2013- 13 AGENDA ITEM ACTION TAKEN 11. ITEM(S) BY BOARD MEMBERS. J. Machiaverna thanked the staff for the presentations and commented on the Workshop being an excellent way to help build a stronger foundation and provide the Board with more knowledge to make decisions. P. Carroll thanked the staff for the Workshop and mentioned that Form 700 was missing from the packet. C. Peltzer referenced the discussion about in -town generation from last month's meeting and restated his support of local generation. He also shared that when he travels, he notices the transmission corridors, and inquired about the level of advance preparation for repairs if needed S.E. Faessel thanked staff for the Workshop handbook, and mentioned its helpfulness in understanding how the Utility operates. She also wished those celebrating this week a Happy Birthday, D. Morgan thanked the staff and Board Members for the day's extra effort, and mentioned that due to the Workshop, the regular Board meeting was a little shorter than normal to offset the extra time. 12. ADJOURNMENT: (TO THE REGULAR MEETING ON D. Singer moved to adjourn the MARCH 27, 2013, AT 5A0 P.M., IN THE I FLOOR LARGE regular Meeting at 6:02 p.m. to CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. the Board's next meeting date ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). of March 27, 2013, S.E. Faessel seconded the motion. MOTION CARRIED: 7 -0 ABSTAINED: 0 ABSENT: 0 Respectfully sub tted, Marcie L. Edwards Secretary, Public Utilities Board Indicates item(s) that will be forwarded to City Council for o n recommendation by thBoard- Indicates