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Public Utilities 2014/03/26CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES March 26, 2014 The agenda having been posted on Thursday, March 20, 2014, the Regular Meeting of the Public Utilities Board (Board) was called to order by Chairperson John Machiaverna at 5:00 p.m. on Wednesday, March 26, 2014, in the 1 P FIoor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: J. Machiavema, D. Singer, B. Hernandez, S.E. Faessel, D.Wain, C. Monaco, L. Cahill Board Members Absent: None. Staff Present: D. Lee, D. Calkins, B. Beelner, S. Sciortino, F. Barvarz, A. Kott, J. Lehman, G. Bowen, R. Dowell, R. Shintaku, L. Quiambao, P. Oviedo, I. Macias, A. Shaikh, M. DeSollar, D. Payne Guest(s) Present: None. AGENDA ITEM 1. PUBLIC COMMENTS. 2. APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC UTILITIES BOARD MEETING OF FEBRUARY 26, 2014. * A. Kott, Assistant City Attorney, introduced D. Payne as the new Deputy City Attorney, explaining that he will be working with the Public Utilities Department (Department). The Board members welcomed D. Payne. 3. PRESENTATION ON POWER RESOURCE PORTFOLIO UPDATE. G. Bowen, Integrated Resources Manager, shared a presentation on the Department's Resource Portfolio with the Board. He described the State and Federal regulations the Department is faced with, including Cap- and - Trade, Renewables Portfolio Standard (RPS), Regional Haze and Emissions Performance Standards. He outlined how the potential increase of RP targets from 33% to 40 %, and up to 51% could affect the Department's Resource Portfolio from a fiscal perspective. G. Bowen also provided an outline of why the Cap -and- Trade program might struggle to reach its targets as a result of ACTION TAKEN There being no public comments, Chairman J. Machiaverna closed the public comments portion of the meeting. D. Singer moved approval of the Minutes of the Regular Public Utilities Board Meeting of February 26, 2014. D.Wain seconded the motion. MOTION CARRIED: 6 -0. ABSTAINED: 1 (C. Monaco). ABSENT: 0. 2014 -14 AGENDA ITEM ACTION TAKEN population growth in California over the next 30 years. G. Bowen also provided a brief summary of the overall fiscal impact of both Cap- and -Trade and RPS ranging from no changes in current policies and practices to the most probable and expected changes in the State's polices. Lastly, G. Bowen provided a high level summary of the next steps to the Board. The Board asked questions regarding the potential utility rate impacts and mitigation strategies presented by staff. 4. PRESENTATION ON WATER USE EFFICIENCY MASTER PLAN. R. Shintaku, Engineering Manager, presented the Board with the Utility's Water Use Efficiency Master Plan (Master Plan). He shared the purpose of the Master Plan is to cost effectively: (1) develop a roadmap to ensure Anaheim meets the State mandated 20% reduction in per capita demand by 2020 (SBx7 -7); and (2) increase Anaheim's reliability of long -term water supplies, including the ability to respond to drought conditions. Anaheim's Master Plan was developed to address the current drought emergency and implements recommendations received from various stakeholder groups. 5. APPROVAL OF THE DECLARATION OF OFFICIAL C. Monaco moved approval INTENT TO REIMBURSE CERTAIN EXPENDITURES FROM of the Declaration of Official THE PROCEEDS OF ELECTRIC UTILITY BONDS OR Intent to Reimburse Certain OTHER OBLIGATIONS. * Expenditure from the Proceeds of Electric Utility B. Beelner, AGM of Finance and Administration, shared staff report Bonds or other Obligations. information on the Reimbursement Resolution. He mentioned the L. Cahill seconded the Treasury Department's rules regarding bond issuances and the need motion. for the City Council to approve a resolution authorizing the MOTION CARRIED: 7 -0. Department to reimburse itself from a future bond issue for capital ABSTAINED: 0. related expenditures being made before bonds are issued. Without the ABSENT: 0. resolution the Department would have no vehicle it could use to reimburse itself from a future bond for capital projects related to design, engineering, and material acquisition costs currently underway. He then described why bonds are issued for large capital projects to help spread the costs over the life of 30 -year investments, and that the Department uses bonds to match cash flows from the rate- payers that actually benefit from the project. If the Department were 100% cash funded, then it would case higher rates for current ratepayers. 6. APPROVE AND AUTHORIZE THE PUBLIC UTILITIES GENERAL MANAGER TO EXECUTE TWO REIMBURSEMENT AGREEMENTS BETWEEN THE CITY OF ANAHEIM AND BRYANT MANAGEMENT COMPANY AND TELMA M. KANAWYER LIVING TRUST U/A DATED 11/2/89 FOR COSTS ASSOCIATED WITH WATER FACILITIES IN THE EAST SANTA ANA CANYON AREA. D. Calkins, AGM of Water Services, provided an overview of the proposed reimbursement agreements. The proposed agreements are for reimbursement of costs associated with water facilities constructed twenty -five years ago to serve the far -east end of Anaheim, the East 2014-15 L. Cahill moved to approve and authorize the Public Utilities General Manager to execute two Reimbursement Agreements between the City of Anaheim and Bryant Management Company and Thelma M. Kanawyer Living Trust U/A Dated 11/2/89 for costs associated with water facilities in the East Santa Ana Canyon area. AGENDA ITEM Santa Ana Canyon Area (Area). Before the Area could be developed in the early 1980's, water storage tanks and transmission pipelines had to be constructed to provide water service. Because multiple developers would be developing the Area, the first developers were responsible for constructing water tanks and transmission lines to serve the ultimate built -out development. According to Rule 15C of the Water Rates, Rules and Regulations, these original developers would be paid back from an acreage fee paid by subsequent developers. This approach was quite common at the time because it avoided having existing customers pay for the new facilities, and it spread the cost of the major system improvements proportionally among the developers in the Area. As a result, the City entered into reimbursements agreements with the original developers, with the role of the Department to collect acreage fees from the later developers in the Area and reimburse it back to the original developers. The proposed agreements would simply extend for another 10 years the length of time the agreement holders can be paid back by subsequent developers that benefit from the tanks and pipelines. Staff answered questions from the Board on the planned development in the Area. The Department is recommending this extension because development in the Area is significantly smaller and has occurred much slower than envisioned twenty -five years ago. Further, there are no financial impacts to the Department for extending these agreements. 7. UPDATE ON WATER SYSTEM ISSUES. D. Calkins, AGM of Water Services, referred to the Water Supply Conditions Update, which shows the drought conditions in California. He also invited the Board's attention to the March 6, 2014 Drought Response memorandum, which details how the Department is increasing efforts to encourage customers to voluntarily conserve as much water as possible, and to remind them of the various conservation programs and incentives available. Two drought - related handouts were provided to the Board: a Fact Sheet from the Public Policy Institute about California's Latest Drought, and a March 4, 2014 article from the Wall Street Journal (WSJ). The WSJ article explains the reasons Southern California is in better shape to respond to the drought than some other areas of the State. The reason for this is the water agencies and customers in Southern California have invested billions of dollars over the last 20 years in conservation and storage — much more than most other regions. D. Calkins informed the Board of the Spring conference of the California- Nevada Section of the American Water Works Association currently being held at the Disneyland Hotel. This conference is attended by 1,200 water utility professionals and consultants. Mayor Tait welcomed the attendees at the Opening Session. Because the conference was here in Anaheim, the Department was responsible for a number of host activities. M. Jouhari, Water Field and Operations Manager, was chair of the Local Arrangements Committee with responsibility for organizing over 100 volunteers to assist with conference logistics. Department staff provided five technical papers ACTION TAKEN S.E. Faessel seconded the motion. MOTION CARRIED: 7 -0. ABSTAINED: 0. ABSENT: 0. 2014-16 AGENDA ITEM including several on recent capital projects, the cross connection program, and performance indicators. D. Calkins informed the Board that Metropolitan Water District (MWD) Board Chair, Jack Foley, passed away on Friday after battling cancer. Mr. Foley was the retired General Manager of the Moultan Niguel Water District in south Orange County, and represented the Municipal Water District of Orange County on the MWD Board of Directors. 8. UPDATE ON ELECTRIC SYSTEM ISSUES. F. Barvarz, Acting AGM of Electric Services, discussed an April 2013 incident where transformers at a California -based transmission substation were targeted. F. Barvarz discussed the Department's major electrical facilities and indicated that joint security reviews will be conducted with an Orange County task force that includes Anaheim police and fire staff, to assess any vulnerability. 9. UPDATE ON FINANCE ISSUES. B. Beelner, AGM of Finance and Administration, invited the Board's attention to the monthly dashboard at their place settings, sharing that both water and electric continue to trend above budget primarily due to the wane and dry winter. B. Beelner also discussed the planned refunding of the Department's 2003A and 2004 electric revenue bonds. He mentioned that JP Morgan Chase & Co. was selected as the underwriter. The refunding is expected to save the Department between $17 and $20 million over the life of the bonds and could potentially shorten the life of the bonds by 6 -8 years. 10. UPDATE ON JOINT SERVICES ISSUES. S. Sciortino, AGM of Joint Services, in response to a query from a Board Member, shared that the Department does not offer incentives for solar landscaping lighting systems because those systems do not allow the Department to claim energy savings from the installation. In addition, there is little energy savings associated with those systems and it would be difficult to economically justify the investment. The Department surveyed other California utilities and none of those contacted offer rebate programs for solar landscape lighting. S. Sciortino also addressed the Department's outreach efforts with schools to discuss potential conservation projects. Thus far, no specific projects have been identified, however, staff continues to reach out to see if schools have plans for projects that may qualify for utility rebates. In addition, S. Sciortino briefly discussed the Community Engagement Panel coordinated by Southern California Edison (SCE) to help with the dissemination of information and plans to interested and concerned communities and groups regarding the San Onofre Nuclear Generating Station's (SONGS) decommissioning ACTION TAKEN 2014-17 AGENDA ITEM activities. The purpose of the panel is to provide transparency to the public regarding the action plans and cost estimates for SONGS decommissioning. 11. UPDATE ON ENERGY RISK & LEGISLATIVE / REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, provided a brief update this month, reporting that the Public Utilities Board Legislative Working Group met to review the current bills for the 2014 legislative year, including the water bond bills, the two recently passed drought measures, and the carbon tax bill for fuels. In addition, she indicated the compliance and risk areas were going well and that she would provide the fourth quarter Compliance Report next month. 12. AGENDA ITEM(S) FOR THE NEXT PUBLIC UTILITIES BOARD MEETING ON APRIL 23, 2014. • Fiscal Year 2014/15 Budget Presentation • InfoSend Agreement Amendment • Regulatory Relief Update • SONGS Decommissioning Agreement • 2003104 Bond Refunding * 13. ITEM(S) BY SECRETARY. D. Lee, Public Utilities General Manager, provided a capital projects book to Board members commemorating the significant investments made in electrical and water infrastructure. He reminded the Board that the Form 700 is due April 1 D. Lee also shared the recruitment for the AGM of Electric services is being finalized and the new AGM should be announced at the April 23` Board meeting. Lastly, he congratulated S.E. Faessel along with S. Faessel on receiving the President's Award at the Anaheim Beautiful 43` Annual Fiesta Gala. 14. ITEM(S) BY BOARD MEMBERS. C. Monaco thanked P. Hayes, Resource Program Specialist, and the Department's retained contractors for analyzing his home utility usage under the Department's program. He received the report and is looking forward to receiving his next bill to view the impact of the savings. D. Wain thanked P. Oviedo, Administrative Assistant, for emailing the Board packet. He also mentioned that he is looking forward to 1. Macias, Resource Program Specialist, presentation on water conservation at next month's Neighborhood Council meeting. S. E. Faessel shared a positive experience she had with an Anaheim employee who needed to access her neighbor's meter. She also mentioned that she enjoyed reading the Success Indicator, sharing that it is a tangible way to keep the community updated and know what's going on within the Department. S. E. Faessel also thanked staff for the book on major projects in the Department. ACTION TAKEN Staff will verify the necessity of providing Form 700 wet signatures to the City Clerk. 2014-18 AGENDA ITEM ACTION TAKEN J. Machiaverna stated that education and understanding of the key utility issues is a critical part of the Department's future. He also thanked staff for the book of major projects. 15. ADJOURNMENT: (TO THE REGULAR MEETING ON APRIL D. Singer moved to adjourn 23, 2014, AT 5:00 P.M., IN THE 11" FLOOR LARGE the Regular Meeting at 6:38 CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. p.m. to the Board's next ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). Regular Meeting date of April 23, 2014 at 5:00 p.m. S.E. Faessel seconded the motion. MOTION CARRIED: 7 -0. ABSTAINED: 0. ABSENT: 0. Respectfully sub"ed, Dukku Lee Secretary, Public Utilities Board * 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. z ,my,