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Public Utilities 2013/10/23CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES OCTOBER 23, 2013 The amended agenda having been posted on Thursday, October 17, 2013, the Regular Meeting of the Public Utilities Board (Board) was called to order by Chairperson John Machiaverna at 5:00 p.m. on Wednesday, October 23, 2013, in the I P Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: J. Machiaverna, D. Singer, B. Hernandez, S.E. Faessel, D.Wain Board Members Absent: C. Monaco, L. Cahill Staff Present: S. Sciortino, E. Zacherl, D. Lee, D. Calkins, J. Lehman, A. Kott, P. Oviedo, L. Quiambao, R. Shintaku, M. DeSollar, R. Dowell, B. Beelner, T. Nelson, M. Robledo Guest(s) Present: None AGENDA ITEM 1. PUBLIC COMMENTS. 2. APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC UTILITIES BOARD MEETING OF SEPTEMBER 25, 2013. * Agenda item 5 was presented prior to Agenda item 3. 3. PRESENTATION ON THE BAY DELTA CONSERVATION PLAN. D. Calkins, AGM of Water Services, made a presentation on the Bay Delta Conservation Plan (BDCP). The Sacramento Bay Delta (Delta) is one of two major sources of imported water to Southern California. Supplies from the Delta have been significantly curtailed over the last five or six years. This year, supplies from northern California were cut 300,000 acre feet (AF), which is more than 30 %, due to regulatory restrictions in the Delta to protect fisheries. To put that quantity of water into perspective; 300,000 AF is nearly five times the amount of water the entire City of Anaheim uses each year. The BDCP is an extensive science -based plan to address the State's two co -equal goals of ecosystem recovery in the Delta and water supply reliability. The draft BDCP and the associated draft ACTION TAKEN B. Hernandez moved approval of the Minutes of the Regular Public Utilities Board Meeting of September 25, 2013. S.E. Faessel seconded the motion. MOTION CARRIED: 40. ABSTAINED: 0. ABSENT: 3 (D. Singer, C. Monaco, L. CahiIl). 2013-61 AGENDA ITEM Environmental Impact Report are scheduled for release to the public in mid- December. Then, there will be a 120 -day comment period during which time there will be an extensive outreach effort to educate the public and elected officials. The Board was provided two handouts that provide an overview of the BDCP: a four -page brochure entitled "California's Future Depends on Delta Water Supply" and a reprint of Sunday, October 20' article in the Orange County Register by Pat Brennan. Also, a 10- minute video on the BDCP, which was prepared by the California Department of Water Resources, was shown to the Board. The video and additional information are available at the BDCP website: www .baydeltaconservationplan.com. 4. PRESENTATION ON ELECTRIC SYSTEM RELIABILITY. D. Lee, AGM of Electric Services, made a presentation on Electric System Reliability. He provided background information about how circuits emanate from substations to customers. He explained the different causes of power outages, the types of metrics used to determine overall electric system performance, and how Anaheim compares with other utilities in California. He described the financial impacts to both customers and to the utility, and explained where resources are allocated to address both operational and capital improvements. (D. Singer arrived at 5:30 p.m.) 5. APPROVAL OF THE RENEWABLE POWER PURCHASE AND SALE AGREEMENT BETWEEN WESTSIDE ASSETS, LLC AND THE CITY OF ANAHEIM. * The written, publicly available staff report detailing the item was verbally summarized by staff. The Board asked a variety of questions which resulted in their decision to support the approval of the Renewable Power Purchase and Sale Agreement between Westside Assets, LLC and the City of Anaheim. 6. UPDATE ON THE UTILITIES SUCCESS INDICATORS. Staff provided an update on the Utilities Success Indicators (US[). The USI report provides a high level overview of key indicators that describe how the Anaheim Public Utilities Department (Department) is performing in the areas of customer satisfaction, operational excellence, competitiveness and financial health, risk management, workforce productivity, and alignment with City goals. A new speedometer style graphic was included to provide a quick visual summary. Staff constantly reviews all indicators and implements methods of continuous improvement. Where there are areas that are being watched more closely, a status of "watch" is identified, which is followed by descriptions of how improvements or mitigation measures are being implemented by the Department. ACTION TAKEN B. Hernandez moved approval of the Renewable Power Purchase and Sale Agreement between Westside Assets, LLC and the City of Anaheim. S.E. Faessel seconded the motion. MOTION CARRIED: 5-0. ABSTAINED: 0. ABSENT: 2 (C. Monaco, L. Cahill). 2013-62 AGENDA ITEM 7. UPDATE ON REGULATORY RELIEF TASK FORCE IMPLEMENTATION PLAN. D. Lee, AGM of Electric Services, provided a summary of the Regulatory Relief Task Force Report. The report has two sections. The first section focuses on customer care and internal process improvements that streamline how services are delivered. The second section focuses on Electric and Water Rates, Rules and Regulations that require City Council approval, and help incorporate the Task Force recommendations on providing service using simplified approaches that reduce costs and developer timeframes. 8. QUARTERLY STATUS UPDATES ON SPOT BID PURCHASES AND CONSTRUCTION AND CONSULTING BID AWARDS AND CAPITAL IMPROVEMENT PROJECTS (CIP). D. Lee, AGM of Electric Services, provided an overview on the two quarterly reports provided to the Board. The first report summarizes the use of consultants, contractors and spot bid purchases to accelerate deployment of projects. The second report includes a map of ongoing capital projects for both electric and water systems. The reports both help to identify ways in which reliability and performance are enhanced through replacement of aging infrastructure or implementation of other system improvements. 9. DISCUSSION OF CITY CHARTER RECOMMENDATIONS TO THE CHARTER REVIEW COMMITTEE. Staff provided a summary of two proposed City Charter amendments. The first is the inclusion of the Public Utilities Board in the Charter, under Article IX — Appointive Boards and Commissions. The staff recommendation was well received by the Charter Review Committee, who unanimously voted to include the Public Utilities Board in the Charter and to retain the existing boards and commissions identified in the Charter. The second recommendation includes clarifications to Article XII Fiscal Administration. Minor revisions are being recommended to help clarify Charter language. For example, language regarding financial reserves is being clarified. 10. UPDATE ON WATER SYSTEM ISSUES. D. Calkins, AGM of Water Services, updated the Board on the City's efforts to annex the east end of Anaheim — the proposed Mountain Park development — into the Orange County Water District (OCWD) service territory. As discussed previously, annexation will allow Anaheim to pump lower cost groundwater for this area, which will help to keep water rates low for all customers. The Annexation Agreement was approved by our City Council on October 8, 2013 and prior to that by the OCWD Board on October 2, 2013. The final step is approval by the Orange County Local Agency Formation Commission (LAFCO), which is expected in the next few months. ACTION TAKEN 2013-63 AGENDA ITEM Annexing this area into OCWD was a very significant accomplishment. Staff worked diligently for three years with OCWD and the other agencies requesting annexation (Irvine Ranch Water District and Yorba Linda Water District) to conduct the necessary studies and prepare the Environmental Impact Report. While initially there were significant concerns expressed by a number of other cities and retail water districts that pump groundwater on how annexations would affect their availability and cost of groundwater, the annexation agreements were approved by a unanimous vote of the OCWD Board. D. Calkins thanked R. Shintaku and his staff, and the City Attorney's office, for working so diligently over the last three years to accomplish this annexation. D. Calkins also shared updated information with the Board on the Orange County Water District's Ball Road Basin property. Last week, the OCWD Board approved a request to allow access to their property by Anaheim's appraiser. This is the next step in Anaheim's effort to negotiate with OCWD to purchase the property. Also, it appears that OCWD is continuing negotiations in Closed Session with a private company, CPV, for the long -term lease of the site to construct a power plant. Related to this, T. Lowe, Director of Community Services, conducted a workshop on October 22, 2013 with the City Council on proposed Platinum Triangle Park Improvements. His recommendations included acquiring and developing the Ball Road Basin property as a sports park. 11. UPDATE ON ELECTRIC SYSTEM ISSUES. D. Lee, AGM of Electric Services, shared information about activities that took place during Public Power Week with the Board. Utility staff participated in the Downtown Farmer's Market with booths and displays on energy efficiency, electric materials, undergrounding, and safety education. Students from Maxwell and Salk Elementary Schools attended the event to learn about how electricity gets to their homes and took rides in bucket trucks. Students also walked to the Water Sustainability Campus and took a tour of the facility to learn about water treatment and conservation. 12. UPDATE ON FINANCE ISSUES. E. Zacherl, AGM of Finance and Administrative Services, invited the Board's attention to the Utilities Dashboard. He shared that year -to- date revenues for both electric and water remain over budget through the month of September, both attributable to the warmer than normal weather. Year -to -Date electric revenues of $114.1 million were $9.3 million or 8.9% over budget. Electric expenses for that period of $103.3 million were $1.9 million over budget or 1.9 %. Power costs exceeded budget by $4.5 million due to increased demand and were partially offset by lower expenses in labor, operating and debt. Electric retail revenues for the month of August of $32.3 million were slightly over budget by $.9 million or 2.9 %. In addition, transmission revenue, gas and wholesale revenues were $6.7 million. E. Zacherl also reported to the Board that the year -to -date water revenues through September were $19.6 million, $0.6 million or 3.0% ACTION TAKEN 2013-64 AGENDA ITEM over budget. Year -to -date water expenses through May of $14.0 million were $1.6 million or 10.5% under budget primarily due to a greater portion of the water supply being supplied by pumped ground water. This favorable variance will decline in the future as the mix of pumped to purchased water is adjusted to conform to the Department's Basin Pumping Percentage of 70 %. Water revenues for the month of September of $6.5 million were slightly under budget by 2.0% due to a reduction in residential use but somewhat mitigated by strong commercial sales. 13. UPDATE ON JOINT SERVICES ISSUES. S. Sciortino, AGM of Joint Services, shared that the next Cap and Trade Auction is scheduled for November 19, 2013 and reminded the Board that Anaheim Public Utilities was unable to procure credits in the August Auction due to the General Manager's change in position. The oversight regulations require entities to notify the California Air Resources Board (CARB) when there are changes in the City Council and/or Executive Management 30 days prior to an auction and given the timing of M. Edwards's appointment to the City Manager's office, the Department was unable to make the CARB notification in sufficient time to participate. This will not be a problem for the November Auction. S. Sciortino indicated that the plan is to procure allowances required for wholesale transactions for the balance of the calendar year. We currently have enough allowance through June 2014 and will focus on needs for the remaining six months. Monies collected through our bidding strategy should cover the cost of the allowances that will be necessary. CARB allotted to the City the allowances for 2014. There will be a surplus of allowances based on carryovers from this year that will be sold in the 2014 auctions; the revenue from that activity will be used to offset costs of renewable energy. CARB allows entities to use revenues from allowances to procure additional renewable energy since that energy is typically carbon -free, helping to reduce the overall carbon footprint. 14. UPDATE ON ENERGY RISK & LEGISLATIVE / REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, shared that on the legislative front, there were few bills passed which directly impacted Anaheim Public Utilities Department (Department) operations. Two of the more significant new laws address the protection of consumer information, but they are expected to require minimal changes to our existing procedures. However, she reported, a number of bills impacting the Investor Owned Utilities (IOUs) did pass that may indirectly impact the Department, as they may have influence on the environment the Department operates in. The most significant of these new laws were in regard to renewables energy related requirements. These new laws included the IOU Shared Renewables program (SB 43), which is similar to Department's existing Green Power program, and new law addressing IOU rates, (AB 327). She stated that staff will watch the development of the implementation measures for these new laws carefully and evaluate if we want to make any changes to our ACTION TAKEN 2013-65 AGENDA ITEM programs or rates. J. Lehman shared that she expected next year to be the big legislative year — on the table for the water related services will be the 2014 water bond, the resolution of the issue regarding which state agency should direct the State Drinking Water program, and water recycling provisions. On the electric services side, she reported that we are likely to see at least one bill proposing an increase to the State's Renewable Portfolio Standards, changes to the Greenhouse Gas (GHG) Cap and Trade Program, and maybe a few bills on special rates for renewable technologies — everything we missed this year. It's still unclear if California Environmental Quality Act (CAEQ) reform will be on the table — it was quite contentious this year, and few, if any, of the bills came close to the stated goal of streamlining the regulations; however, it may be introduced later in the session. A legislative wrap up report will be provided next month, as there are still several key bills that are active despite all deadlines being passed (two of the 2014 water bond bills, and a bill on GHG capture and storage requirements). J. Lehman shared with the Board that on October 22, 2013, the Department hosted a group of 29, mostly legislative staffers, as part of a regional effort through one of Department's industry groups (Southern California Public Power Authority — SCPPA) to show the State Legislature how Department's resources support not only Iocal needs, but also the State's many initiatives and the electric grid system reliability for California. The tour included the Canyon Power Plant (thanks were expressed to M. Robledo, the Electric Services Manager, for his excellent efforts supporting the tour), and the Disney Thermal Energy Storage project, and explained to the legislative staffers how these facilities work together to support the State's green initiatives, as well as electric system reliability. At the end of the tour, several staffers came up to J. Lehman and offered to help Department address some of its specific issues, and many more expressing their appreciation of the tour. J. Lehman invited the Board's attention to the quarterly compliance report at their place settings. She explained that the quarter went quite well, thanks to the outstanding efforts of staff. She pointed out that there were minor issues with the power plants; and that the report erred on the side of providing too much information on the events at the power plants, however she wanted to report these so that the Board can be aware of the activities going on at the power plants and also get a feel for the level of activity that goes into implementing these requirements. J. Lehman shared with the Board that next month, the PUB Legislative Working Group Meeting would be meeting, and that she would be providing the quarterly report on Energy Risk Management as well as the Legislative Wrap up Report for 2013. ACTION TAKEN 2013-66 AGENDA ITEM 15. AGENDA ITEMS) FOR THE NEXT PUBLIC UTILITIES BOARD MEETING ON NOVEMBER 20, 2013. • Utility Rates Workshop • Update of Utility Pole Lease Agreement to incorporate AB 1027 Provisions * • Regulatory Relief — Modifications to Electric & Water Rules 9, 11, and 17 * • Second Amendatory to Power Sales Agreement between Intermountain Power Agency and the City of Anaheim * • Approval of additions and revisions to the Transmission Owner Tariff entitled City of Anaheim, California Federal Energy Commission EIectric Tariff * 16. ITEM(S) BY SECRETARY. S. Sciortino shared that the General Manager recruitment closed at the end of September, and that he will continue to serve as Acting General Manager until November 15, at which point, D. Calkins will serve as Acting General Manager until the permanent position is filled. 17. ITEM(S) BY BOARD MEMBERS. D. Wain congratulated D. Lee on the Public Power Week presentation at the Farmer's Market, and suggested expanding the presentation in additional City events. S. E. Faessel mentioned the resilience, integrity and response by the staff, either when communicating with the Board or to customers. She stated that she has great faith in the competence of Anaheim Public Utilities staff, especially when she thinks about the knowledge that is integrated in the various events that the Public Utilities Department participates in. B. Hernandez inquired about the next City Council Audit Committee meeting for the outside audit review. E. Zacherl explained it was to be in the later part of November, to be published December. He also requested a presentation on the Energy Field Park and the Park Substation, for the new Board members. D. Singer shared that she enjoyed the metrics of D. Lee's presentation, because it is proof that Utilities knows what to do and thanked staff. J. Machiaverna shared that this organization is always looking forward to make the proper decisions, but what he finds impressive and appreciates is that the organization also Iooks back to measure what has been done, to correct and grade itself. ACTION TAKEN 2013 --- - - - - -- 67 AGENDA ITEM 18. ADJOURNMENT: (TO THE REGULAR MEETING ON NOVEMBER 20, 2013, AT 5:00 P.M., IN THE 1 V FLOOR LARGE CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). Respectfully submitted, Stephen J. Sci ino, Acting Public Utilities General Manager ACTION TAKEN B. Hernandez moved to adjourn the Regular Meeting at 6:44 p.m. to the Board's next Regular Meeting date of November 20, 2013 at 5:00 p.m. S.E. Faessel seconded the motion. MOTION CARRIED: 5-0. ABSTAINED: 0. ABSENT: 2 (C. Monaco, L. Cahill). * 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.