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Public Utilities 2014/04/23CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES April 23, 2014 The agenda having been posted on Wednesday, April 16, 2014, the Regular Meeting of the Public Utilities Board (Board) was called to order by Chairperson John Machiavema at 5:01 p.m. on Wednesday, April 23, 2014, in the 11 `h 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, C. Monaco, L. Cahill Board Members Absent: None. Staff Present: D. Lee, D. Calkins, B. Beelner, S. Sciortino, J. Lonneker, A. Kott, J. Lehman, G. Bowen, R. Dowell, R. Shintaku, L. Quiambao, P. Oviedo, M. Lopez, S. Welch, M. DeSollar Guest(s) Present: Drusilla Stillinger, Cal Poly Pomona Student; Alejandra Soto, Cal Poly Pomona Student AGENDA ITEM D. Lee, Public Utilities General Manager, introduced the new AGM of Electric Services, J. Lonneker, to the Board; she shared a brief summary of her education and work experience. 1. PUBLIC COMMENTS. None. 2. APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC UTILITIES BOARD MEETING OF MARCH 26, 2014. * 3. PRESENTATION ON THE PROPOSED FISCAL YEAR 2014/15 BUDGET. B. Beelner, AGM of Finance and Administration, made a presentation to the Board of the Public Utilities Department's (Department) proposed budget for FY 201412015. He shared that ACTION TAKEN The Board welcomed J. Lonneker. 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 March 26, 2014. B. Hernandez seconded the motion. MOTION CARRIED: 7 -0. ABSTAINED: 0. ABSENT: 0. 2014-20 AGENDA ITEM at next month's meeting, staff will request the Board's approval for the proposed budget. B. Beelner presented the proposed operating and capital budgets along with the significant Department accomplishments in Fiscal Year 2013/14 and the Department priorities and proposed projects for Fiscal Year 2014/15. The total proposed Fiscal Year 2014/15 budget discussed consisted of $496 million for operations and $71 million for capital needs as compared to a respective $483 million for operations and $89 million for capital in Fiscal Year 2013/14. The Board asked a variety of questions about the proposed budget and was invited to contact staff with any further questions prior to the next meeting. 4. APPROVE AN AMENDMENT TO AN AGREEMENT BETWEEN THE CITY OF ANAHEIM AND INFOSEND, INC. FOR UTILITY BILL PRINTING AND MAILING SERVICES. * S. Sciortino, AGM of Joint Services, provided a brief summary on the proposed amendment for the InfoSend Agreement (Agreement). This Agreement with InfoSend is for bill print and mailing services to Utility customers who wish to receive paper bills. Roughly one third of the Department's customers have migrated to online services and staff will continue to promote online bill payment, but it's understood that some customers may not have access to computers or simply prefer to have paper bills, so the Department will continue to provide that flexibility. The proposed amendment would extend the current Agreement for an additional year, with the option to exercise four more one year extensions. Additionally, given the timing of the new Customer Information System (CIS) development that is currently underway, S. Sciortino suggested that bringing in a new vendor at the same time of going live with the new CIS could add additional complexity. The total five one -year options provide the Department with maximum flexibility to conduct business while being open to changes in customer needs. For example, the Department is planning to make monthly billing an option for customers in the coming year, so at that time there may be a short term increase in the number of bills printed. The Department will actively promote online bills and anticipates that this initial increase in paper bills will subside over time as more and more people move toward online billing. 5. DISCUSSION REGARDING THE UPDATED REGULATORY RELIEF TASK FORCE REPORT. M. DeSollar, External Affairs Manager, shared information with the Board about the City's Regulatory Relief Task Force ACTION TAKEN D. Singer moved approval of the Amendment to the Agreement between InfoSend, Inc. and the City of Anaheim. B. Hernandez seconded the motion. MOTION CARRIED: 7 -0. ABSTAINED: 0. ABSENT: 0. 2014 --21 AGENDA ITEM ACTION TAKEN recommendations to promote business- friendly initiatives within Anaheim. The Department developed an implementation plan to meet Utility- related objectives inspired by the principal strategies of these recommendations and prepares bi- annual reports summarizing these accomplishments. M. DeSollar shared the Department's Regulatory Relief highlights for the past six months from October 2013 through March 2014. The report includes two sections: initiatives that are process -based and exemplify a culture transformation within the Department and formal rule modifications that require the Board's review and recommendation, and approval by the City Council. 6. DETERMINE THAT MODIFICATIONS TO RULE NOS, 2 B. Hernandez moved AND 22 OF THE ELECTRIC RATES, RULES AND approval of the Findings REGLATIONS AND APPROVAL OF THE ,STANDARD and Determination that GENERATION INTERCONNECTION AGREEMENT ARE Modifications to Rule Nos. EXEMPT UNDER THE CALIFORNIA ENVIRONMENTAL 2 and 22 contained in the QUALITY ACT, SECTION 15061 (B) (3) OF TITLE 14 OF Electric Rates, Rules and THE CALIFORNIA ADMINISTRATIVE CODE; AND Regulations are exempt APPROVE MODIFICATIONS TO RULE NOS. 2 AND 22 OF under the California THE ELECTRIC RATES, RULES AND REGULATIONS AND Environmental Quality Act, THE STANDARD GENERATION INTERCONNECTION Section 15061 (B) (3) of AGREEMENT BETWEEN THE CITY OF ANAHEIM AND Title 14 of the California GENERATING FACILITY OWNERS. # Administrative Code; and Approval of the D. Lee, Public Utilities General Manager, shared the premise of Modifications to Rules Nos. the modification to Rule Nos. 2 and 22 of the Electric Rates, Rules 2 and 22 of the Electric and Regulations with the Board. The rule modifications streamline Rates, Rules and the review and approval process for interconnecting non -solar Regulations and the customer - installed distributed generation, as well as eliminate Standard Generation outdated fees. Interconnection Agreement Between the City of Anaheim and Generating Facility Owners. C. Monaco seconded the motion. MOTION CARRIED: 7 -0. ABSTAINED: 0. ABSENT: 0. 7. APPROVE THE UNWINDING AND DISCONTINUATION B. Hernandez moved OF THE UNDERGROUND STORAGE TANK CLEANUP approval of the Unwinding OVERSIGHT PROGRAM AND AUTHORIZE THE and Discontinuation of the TRANSFER OF ANY OPEN UNDERGROUND STORAGE Underground Storage Tank TANK CLEANUP CASES TO THE STATE WATER Cleanup Oversight Program RESOURCES CONTROL BOARD. * and Authorize the Transfer of any open Underground J. Lehman, Chief Risk Officer, shared that over 20 years ago the Storage Tank cleanup cases Department took over the State of California's underground to the State Water storage tank program in order to protect water supplies. Since Resources Control Board. then, over 250 sites have been successfully remediated and L. Cahill seconded the 2014-22 AGENDA ITEM returned to useful purposes. Two years ago, an Assembly Bill (AB 1701) was passed into law standardizing the State's underground storage clean -up programs and requiring that each program be certified. This new law came at a good time for the Department, as the Underground Storage (UST) program was winding down and there were less than 20 cases remaining. The State gave the Department an extension of time and allowed the continuation of the program for a year while an additional eight sites were cleaned up. J. Lehman shared that the State Regional Water Quality Control Board is in a good position to handle the remaining clean- up cases, and will ensure that cleanups are done properly and that local groundwater is protected. As the local water agency, the Department will be contacted prior to a closure to have any of its concerns addressed. B. DISCUSSION REGARDING THE QUARTERLY STATUS REPORTS ON CAPITAL IMPROVEMENT PROJECTS, MASTER AGREEMENTS, GENERAL SERVICE AGREEMENTS, AND SPOT BID AWARDS. D. Lee, Public Utilities General Manager, discussed the quarterly status reports on the Capital Improvement Projects, Master Agreements, General Service Agreements, and Spot Bid Awards. He invited the Board's attention to the maps and summary report pertaining to equipment purchases, contractors, and consultant awards that follow Council policies. D. Lee also shared information regarding a minor change in the Department's consultant evaluation process in order to be consistent with the Department of Public Works, where proposals are evaluated based on a firm's experience and expertise prior to reviewing financial proposals. 9. DISCUSSION REGARDING THE CADIZ VALLEY WATER CONSERVATION, RECOVERY, AND STORAGE PROJECT. D. Calkins, AGM of Water Services, provided an overview of the information provided in the agenda package on the proposed Cadiz Water Conservation, Recovery, and Storage Project (Project). The Project would develop a new 50,000 acre -foot- per -year (AFY) water supply for Southern California by capturing groundwater beneath Cadiz's property in the Mojave Desert. Santa Margarita Water District has committed to purchasing 5,000 AFY of water from the Project and served as the lead agency for its Environmental Impact Report, which was approved in 2012. The Project is dependent upon approval by the Metropolitan Water District (MWD) to convey water through MWD's Colorado River Aqueduct. Project water is projected to cost between 40% and 90% more than MWD water -- depending on whether MWD provides any credits or financial incentives. Staff has analyzed the Project, and currently is not recommending the purchase of any of ACTION TAKEN motion. MOTION CARRIED: 7 -0. ABSTAINED: 0. ABSENT: 0. 2014 ­­23 AGENDA ITEM its water. Staff will continue reviewing developments in the Project, including completion of permits and resolution of litigation, and will provide updates to the Board as appropriate. 10. DISCUSSION REGARING DECOMMISIONING THE SAN ONOFRE NUCLEAR GENERATION STATION (SONGS). S. Sciortino, AGM of Joint Services, invited the Board's attention to a power point presentation on the Department's past involvement in the San Onofre Nuclear Generation Station (SONGS) facility, along with the current status on the decommissioning activities at SONGS. He shared that the Department's participation began in 1983, when construction of Units 2 and 3 was completed; the Department's share of the energy was 70 MW due to a 3.19% ownership share in those units. In early 2003, Southern California Edison (SCE) identified that the steam generators for both units would need to be replaced in 2009 to 2011, costing $725 million to complete; Anaheim's share of those costs would have been about $24 million. Because Anaheim was focused on procuring renewable energy resources needed to get to 15% by 2017, and was also planning on installing 200 MW of peaking power by 2010 at Canyon Power Plant, the Department sought to exercise an option in the Operating Agreement that allowed co- owners to opt out of the facility rather than make the major investment necessary to prevent the facility from shutting down. The Department and SCE reached an agreement in which Anaheim transferred its interests in SONGS to SCE under the terms of a Settlement Agreement approved by Council in late 2005. By the end of 2006, Anaheim was no longer an owner of the facility. One of the key provisions of the Settlement Agreement was that Anaheim maintained its decommissioning obligation for Units 2 and 3 for the years it was a co- owner. Since the outset of the facility's operation, Anaheim has put funds into a Nuclear Regulatory Commission (NRC) mandated (and as required by the Operating Agreement) Decommissioning Trust approved by Council so that when decommissioning actually took place, the Department would have decommissioning funds available. Based on SCE's tri- annual updates to the California Public Utilities Commission (CPUC) on the decommissioning cost estimates, the Department has been fully funded for its share of the project since 2003 through and including the present day. The Department stopped collecting funds from its ratepayers to fund the Trust since approximately 2004. With SCE's June 7, 2013 announcement of its intent to permanently shut down the facility as a result of the steam generator replacement project, decommissioning related activities have begun. Anaheim has been an active participant in developing an agreement among the other participants in the project (SCE, ACTION TAKEN 2014 -24 AGENDA ITEM SDG &E and Riverside) that will set forth the terms and conditions for the activities required to decommission SONGS. The negotiations for the Decommissioning Agreement are nearing completion and will be brought to the Board upon completion. One of the highlights include Anaheim's pro rata share of the decommissioning costs are being decreased as a result of exiting the facility in 2006. Based on a request from B. Hernandez at last month's meeting, S. Sciortino estimated the Department's savings since exiting the project to be close to $200 million. Those savings have been utilized to help fund the renewable resource plan and the Canyon Power Plant. 11. UPDATE ON WATER SYSTEM ISSUES. D. Calkins, AGM of Water Services, referred to the Water Supply Conditions Update indicating that there has been modest improvement in conditions since last month, but the drought continues. The Department of Water Resources recently increased the State Water Project (SWP) allocation from zero to five percent due to storms and reservoir inflow in February and March. This 5 five percent allocation means MWD will receive 100,000 acre -feet of SWP water this year, which is about one -tenth of the amount received in a typical year. As mentioned previously, MWD has enough water in storage for this year and into next, but appeals for conservation are just as important as before in case the drought continues into 2015. D. Calkins referred to the invitation about the upcoming annual Orange County Water Summit, which will be Friday, May 16th at the Grand Californian Hotel. The Department has reserved a table, and Board members were invited to attend. D. Calkins advised the Board that on May I3th, D. Lee and he will be presenting a workshop for City Council on the drought. Information to be covered, which has been previously discussed with the Board, will include the status of the drought, what it means to our customers, and the steps the Department is taking to improve water efficiency and address the drought. 12. UPDATE ON ELECTRIC SYSTEM ISSUES. There were no Electric System updates. 13. UPDATE ON FINANCE ISSUES. B. Beelner, AGM of Finance and Administration, shared the monthly dashboard, which showed revenue for both water and electric continuing to trend above budget, primarily due to a warm and dry winter. ACTION TAKEN 2014-25 AGENDA ITEM 14. UPDATE ON JOINT SERVICES ISSUES. S. Sciortino, AGM of Joint Services, updated the Board regarding two events associated with May's Water Awareness Month. The first was the Water Awareness Poster Contest where the winners of the contest are recognized at an Angeles baseball game and will receive their awards on May 19th. The second was the Solar Cup Boat event in Temecula over the weekend of May 16 -18. The Board was invited to attend both events. S. Sciortino also distributed a handout on the Department's Green Power Supply. The document identified the Department's renewable portfolio along with the legislation directing the Renewable Portfolio Standards (RPS). The document represents an update to the website with the same information. 15. UPDATE ON ENERGY RISK & LEGISLATIVE REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, invited the Board's attention to the quarterly compliance report. She discussed water sampling at the Water Recycling Demonstration Plant following its operations in March 2014, and the completion of an annual Self - Certification to meet North American Electric Reliability Corporation (NERC) Electric Reliability requirements. J. Lehman discussed several legislative issues, stating that a revised water bond bill may be placed on the November ballot. She mentioned that the Legislature has until mid -June to pass a bill either amending or delaying the existing bill. She also highlighted that for the first time a bill to manage groundwater basins has been introduced. In its current version, SB 1168 (Pavely) would require groundwater basins to adopt sustainable groundwater basin management plans but at this point the bill does not state who is to develop the plans. J. Lehman discussed SB 1139 (Perez), which would require the procurement of additional renewable resources from geothermal resources. The additional renewable resources would not count toward the Renewable Portfolio Standards (RPS) requirements and a utility's procurement plan would have to be approved by the California Energy Commission (CEC) — creating new and additional jurisdictional authority over publicly owned utilities and adding an additional layer and costs to planning processes. This bill is being strongly opposed by the utility community — with the exception of the utility in the Imperial Valley who would potentially directly benefit from it. She also shared that a tour was provided to a staff member, M. Hicks, who works for Assembly Member Daly. The tour was arranged to provide a key staff member a better understanding of ACTION TAKEN 2014-26 AGENDA ITEM how Anaheim supports and meets both customer needs and statewide initiatives. 16. AGENDA ITEM(S) FOR THE NEXT PUBLIC UTILITIES BOARD MEETING ON MAY 28, 2014. • Customer Information System update • 2014115 Update to Underground Conversion 5 -Year Plan • Fiscal Year 2014115 Budget Recommendations* • CAISO Metered Substation Agreement* • SONGS Decommissioning Agreement • 2003104 Bond Refunding * 17. ITEM(S) BY SECRETARY. D. Lee, Public Utilities General Manager, congratulated M. DeSollar for being recognized by State Senator Lou Correa as a "Woman Making a Difference" in celebration of Women's History Month. He also shared two articles with the Board; the first article was in regards to Solar Technology, and the second article was in regards to the impacts of renewables on Germany. D. Lee stated that staff will send out invitations to the Anaheim Beautiful Awards ceremony to honor S.E. Faessel and S. Faessel. 18. ITEM(S) BY BOARD MEMBERS. D. Wain thanked staff and said the meeting was informative. S. E. Faessel congratulated M. DeSollar for being named a Woman Making a Difference by Senator Correa's office and welcomed J. Lonneker to Anaheim. L. Cahill thanked staff for the presentations and subjects covered at the meeting. B. Hernandez welcomed J. Lonneker and congratulated M. DeSoIlar. D. Singer welcomed J. Lonneker and congratulated M. DeSollar. She also shared that she would like the Utilities to have a program similar to the Police Department Cadets, where Anaheim youth can volunteer and be trained in the utilities field to provide them a learning experience and possibly a future job opportunity. J. Machiaverna welcomed J. Lonneker and provided a brief overview of the role the Board to oversee utility matters and represent customers. He congratulated S.E. Faessel and M. DeSollar on their achievements and thanked staff for the presentations. ACTION TAKEN 2014-27 AGENDA ITEM 19. ADJOURNMENT: (TO THE REGULAR MEETING ON MAY 28, 2014, AT 5:00 P.M., IN THE 11 FLOOR LARGE CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). ACTION TAKEN D. Singer moved to adjourn the Regular Meeting at 7:14 p.m. to the Board's next Regular Meeting date of May 28, 2014 at 5:00 p.m. B. Hernandez seconded the motion. MOTION CARRIED: 7 -0. ABSTAINED: 0. ABSENT: 0. * 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.