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Public Utilities 2015/02/25CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES FEBRUARY 25, 2015 The agenda having been posted on Friday, February 20, 2015, the Regular Meeting of the Public Utilities Board (Board) was called to order by Chair J. Machiaverna at 5:00 p.m. on Wednesday, February 25, 2015, in the 1 I' Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: Chair J. Machiaverna, Vice Chair D. Singer, S.E. Faessel, D. Wain, L. Cahill, B. Hernandez Board Members Absent: C. Monaco Staff Present: D. Lee, B. Beelner, D. Calkins, J. Lonneker, J. Lehman, A. Kott, M. Lopez, L. Quiambao, P. Oviedo, M. Seifen, S. Welch, A. Nguyen, M. Jouhari, M. Moore, M. Avelino - Walker, C. Pereyra Guest(s) Present: Ron Bengochea, Retired Employee MBC Seruathon Project; Jonathan Salazar, Magnolia High School (MHS), Junior Reserve Officers Training Corps ( JROTC); Ricky Gomez, MHS, JROTC; Karen Garcia, MHS, JROTC; Keila Caballero, MHS, JROTC; Lily Villegas, MHS, JROTC; Nikki Solomon, MHS, JROTC; Nathan Zug, Magnolia School Board, JROTC, Magnolia Baptist Church; Sergeant Toscano, MHS, JROTC Instructor AGENDA ITEM 1. PUBLIC COMMENTS. None. D. Lee, Public Utilities General Manager, shared that this will be D. Calkins, AGM of Water Services, last Public Utilities Board (PUB) meeting because he is retiring. The Board presented D. Calkins with a letter of recognition. 2. APPROVAL OF THE MINUTES OF THE PUBLIC HEARING/ REGULAR PUBLIC UTILITIES BOARD MEETING OF JANUARY 28, 2015. * 3. PRESENTATION ON MAGNOLIA HIGH SCHOOL STUDENTS' FIRE HYDRANT PAINTING PROJECT. M. Jouhari, Water Field Operations Manager, introduced Mr. Nathan Zug, Pastor at Magnolia Baptist Church and Board Member of the ACTION TAKEN There being no public comments, Chair J. Machiaverna closed the public comments portion of the meeting. B. Hernandez moved approval of the minutes of the Public Hearing / Regular Public Utilities Board Meeting of January 25, 2015. L. Cahill seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 1 (C. Monaco). 2015-9 AGENDA ITEM ACTION TAKEN Magnolia School District. Mr. Zug approached Department staff about a community service project by Magnolia High School students to make a difference in their community by painting fire hydrants in an area around their school. Sergeant Richard Toscano, JROTC, and Nikki Solomon, student project manager, introduced the student members in attendance and provided a presentation on the student's project. They painted nearly 100 fire hydrants, with Department staff providing the paint, brushes, and training. 4, PRESENTATION ON ANAHEIM PUBLIC UTILITIES STUDENT ENGAGEMENT OPPORTUNITIES. M. Avelino - Walker, Public Utilities Analyst, shared a presentation with the Board highlighting the Department's educational resources and programs for students in energy and water conservation. She shared the Department's interest in supporting a Science, Technology, Engineering, and Math (STEM) curriculum and the development of the Anaheim Pubic Utilities Educate Toolbox. The conclusion of the presentation included a review of the educate toolbox activities that have been implemented during this school year. Board members thanked staff for these educational programs and efforts to engage with local students. 5. APPROVAL OF AN AGREEMENT WITH THE MUZEO FOUNDATION FOR EDUCATIONAL OUTREACH PROGRAMS. * D. Lee, Public Utilities General Manager, shared information about the Agreement with the Muzeo, which will assist in supplementing the Department's outreach efforts with local education programs. The Agreement requires outreach and administration of programs, such as the student water poster contest, digital art contest, solar cup contest, and a new program to paint out of service fire hydrants. The Muzeo staff will organize participation in these programs as well as display the artwork entries in their lobby area. D. Singer moved approval of an Agreement with the Muzeo Foundation for Educational Outreach programs. B. Hernandez seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 1 (C. Monaco). 6. AUTHORIZE THE ISSUANCE OF NOT TO EXCEED B. Hernandez moved approval $50,000,000 AGGREGATE PRINCIPAL AMOUNT OF to authorize the Issuance of not CALIFORNIA MUNICIPAL FINANCE AUTHORITY to exceed $50,000,000 REVENUE BONDS, SERIES 2015 -A, CITY OF ANAHEIM Aggregate Principal amount of ELECTRIC SYSTEM DISTRIBUTION FACILITIES (SECOND California Municipal Finance LIEN QUALIFIED OBLIGATIONS); AND AUTHORIZE Authority Revenue Bonds, ISSUANCE OF NOT TO EXCEED $240,000,000 AGGREGATE Series 2015 -A, City of PRINCIPAL AMOUNT OF CALIFORNIA MUNICIPAL Anaheim Electric System FINANCE AUTHORITY REVENUE BONDS SERIES 2015 -B Distribution Facilities (Second (CITY OF ANAHEIM ELECTRIC UTILITY DISTRIBUTION Lien Qualified Obligations); SYSTEM REFUNDING AND IMPROVEMENTS). * and authorize issuance of not to exceed $240,000,000 B. Beelner, Assistant General Manager of Finance and Aggregate Principal amount of Administration, presented a verbal staff report on Agenda Items 6 and California Municipal Finance 7, which requested that the Board recommend to City Council that the Authority Revenue Bonds Department issue three separate bonds. He discussed how the bonds Series 2015 -B (City of ensure that each generation of customers pays their equitable share of Anaheim Electric Utility the asset and prevents rate spikes when large capital assets are Distribution System Refunding 2015-10 AGENDA ITEM constructed. B. Beelner also discussed how bond rates, which are currently very low, make the timing for a new bond issuance advantageous for customers. Item 6 involves a $50 million Floating Rate Notes (FRN's), and fixed rate electric bonds not to exceed $240 million. The Department proposed to issue $50 million in FRN's, which are variable in nature. The current rate for FRN's is 0.4% vs 3.5% for traditional fixed rate debt. The 3.1% in interest rate savings will be used by the Department to pay principal on existing more expensive debt. The Board and staff discussed the risk of rising interest rates, and how the Department's cash reserves will be used as a natural hedge. If the FRN's rates increase, the interest earned on the Department's cash reserves would earn a corresponding higher interest rate on the balances thereby protecting ratepayers against the risk of rising interest rates. The Department always has the ability to fix these bonds out if interest rates become too volatile. The Board asked how it was determined to use the $50 million value for the FRN's. He mentioned that since this was the Department's first FRN bond issuance, he felt it prudent to act cautiously to see how they perform, so limiting the Department's exposure to less than 10% of its debt portfolio is recommended. Regarding the proposed $240 million fixed rate electric bonds, $35 million would be issued at a 20 year term at a rate of 2.75% as opposed to 30 year bonds at 3.5 %; this saves ratepayers approximately $12 million in interest payments. The remaining $205 million will be used to refinance existing more expensive bonds saving ratepayers an additional $25 million in interest payments and shortening the terms of the older bonds by four years. 7. AUTHORIZE THE ISSUANCE OF NOT TO EXCEED $120,000,000 AGGREGATE PRINCIPAL AMOUNT OF CALIFORNIA. MUNICIPAL FINANCE AUTHORITY REVENUE BONDS, SERIES 2015 -A (CITY OF ANAHEIM WATER SYSTEM REFUNDING AND EMPROVEMENTS). Item 7 involves the structure of the proposed $120 million water bond; $40 million would be used for the construction of new assets, $14 million would be used to refund the $14 million owed on the Department's Letter of Credit facility used to construct water capital assets in anticipation of this bond issuance, and the remaining would be used to refinance more expensive debt to lower cost debt, which will save the Department approximately $10 million. The Board asked a series of questions on whether these issuances would impact current electric or water rates, and B. Beelner explained that the bond issuances have been built into the budget and would not require an additional rate increase for capital improvements. He then explained the timelines of the respective bond issues. ACTION TAKEN and Improvements). D. Singer seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 1 (C. Monaco). 2015-11 AGENDA ITEM 8. DISCUSSION ON THE UTILITIES SUCCESS INDICATORS. D. Lee provided an overview and summary of the latest version of the Utilities Success Indicators. He explained the metrics on customer satisfaction, and that although the Department has a high goal of 90 %, there were several months that the Department did not meet that goal. The reason had to do with water conservation and how staff tries to work with private property owners to reduce waste, but that it does take time to work with customers on a resolution. Also, there was increased activity in the Call Center when the new Customer Information System was being implemented and that resulted in high call volume and increased wait times. Those metrics have improved in recent months, with call wait times averaging under five minutes. D. Lee described that electric reliability metrics show that response times are very good compared to other utilities; however, the number of outages currently is above the top 25% benchmark. The leading causes of outages are due to direct buried cables and metallic balloons. Water main breaks have improved recently and the metric shows the Department is below the benchmark. Valve and fire hydrant maintenance numbers are not quite at the benchmark and staff is working to improve on these metrics. D. Lee explained that although financial metrics, such as the cash reserves are healthy, they can change very quickly. He shared that power supply costs will continue to increase in the future as new renewable projects come online, but staff would work to mitigate rate impacts as much as possible. D. Lee shared that the safety metrics have improved, and reflect that in the past six months; they decreased from the prior fiscal year. 9. UPDATE ON A PROPOSED OCEAN DESALINATION PROJECT. D. Calkins, AGM of Water Services, invited the Board's attention to the handouts at their place setting consisting of copies of information on the proposed Poseidon Seawater Desalination Plant (Plant) that was provided to the Board over the last few years, which was recently requested by Board Member Hernandez. As mentioned last month, the Orange County Water District (OCWD) Board of Directors voted in January to start negotiating a term sheet for purchasing the output of the Plant. A term sheet would be the predecessor to a water purchase agreement, and would provide all stakeholders with a better understanding of the cost and risks associated with the project if OCWD were to buy the output. In January, the OCWD Board also voted to establish a Citizens Advisory Committee, but last week they voted to defer the actual formation of the Committee until their second meeting in March. OCWD is currently planning to bring a draft term sheet to their Board for information — not action — in March. ACTION TAKEN L. Cahill moved approval to authorize the issuance of not to exceed $120,000,000 Aggregate Principal Amount of California Municipal Finance Authority Revenue Bonds, Series 2015 -A (City of Anaheim Water System Refunding and Improvements). D. Wain seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 1 (C. Monaco). 2015-12 AGENDA ITEM 10. PRESENTATION ON ELECTRIC PUBLIC UTILITIES BOARD AGENDA PACKAGES AND THE CALIFORNIA PUBLIC RECORDS ACT. D. Lee shared information on the tablet device that will be available to interested Board members. He demonstrated the device and explained that Board members would have the option of remaining with mailed agendas, accessing information on a secure website, or using the tablet device until such time that they are no longer on the Board. A. Kott made a brief presentation about the California Records Act (PRA) (Gov. Code § §6250- 6270), which is the law governing the public's right to access information relating to the conduct of the public's business prepared, owned, used or retained by any Iocal agency. A. Kott explained the rate PRA applies to information prepared, owned, used, or retained by City employees and those individuals performing official business for the City, which includes Board members. There was a discussion about the applicability of the PRA to information, including emails, retained or stored on City equipment and potentially personal equipment if used to conduct City business. 11. UPDATE ON WATER SYSTEM ISSUES. D. Calkins updated the Board on the recent weather and water supply conditions. While December was reasonably wet, January was the driest on record. The first part of February brought some good precipitation up north, but the last couple weeks have been dry. The State Water Project reservoirs are at about 50% of capacity, and the State Water Project (SWP) Allocation remains at 15 %, which is quite low. The SWP Allocation determines how much imported water the Metropolitan Water District (MWD) will get from northern California — and is the key indicator on whether MWD will "allocate" or ration imported supplies. The MWD Board will decide, in April, whether imported water will be allocated for the coming fiscal year. Staff is preparing contingency plans in case MWD does allocate water for the coming year. D. Calkins informed the Board that the national American Water Works Association Conference will be held this year in Anaheim. A save - the -date notice for the conference was provided to the Board members. The Conference will be June 7 to 10, 2015, at the Anaheim Convention Center. Last year, the conference was in Boston, and was attended by over 11,000 water professionals. Attending the exposition (i.e., the exhibits) would provide Board members with information on water utility operation and maintenance. If interested, please notify P. Oviedo in the next few months. 12. UPDATE ON ELECTRIC SYSTEM ISSUES. J. Lonneker, AGM of Electric Services, reported that the Department has completed the Miraloma Way undergrounding project, which is the first phase of a larger project that extends on Miraloma Avenue. ACTION TAKEN 2015-13 AGENDA ITEM The project was accelerated to coordinate with the Miraloma Park And Family Resource Center, which is currently under construction. J. Lonneker showed before and after photos of the project. A Board Member requested an update on the Kraemer Power Plant. J. Lonneker reported that the repairs were delayed due to the contractor working through terms and conditions with the City. An update on the repairs will be provided at the next Board meeting. D. Lee requested that J. Lonneker provide an update to the Board on the proposed exchange of properties between Anaheim Fire & Rescue and the Department at a future Board meeting. 13. UPDATE ON FINANCE ISSUES. B. Beelner, AGM of Finance and Administrative Services, shared that the Department's Annual Report is located on the Department's website, and he guided the Board through the steps to its location. B. Beelner then shared that Southern California Public Power Authority (SCPPA) recently refinanced their 2008 bonds, which Anaheim has an approximate 17% share, for a savings of approximately $30 million in total over the remaining term of the bond thereby saving Anaheim customers approximately $5 million (Anaheim's 17% share of the $30 million in savings). B. Beelner also discussed the monthly dashboard indicating that due to the continued warm, dry conditions Anaheim is experiencing the Department's retail electricity revenue for the Year to Date through January 31, 2015 was 3.5% above budget with water revenue at 8.8% above budget. 14. UPDATE ON JOINT SERVICES ISSUES. M. Lopez, Acting AGM of Joint Services, gave a brief update related to the new Customer Information System (CIS). He shared that more customers are using the redesigned web portal, My Account, to manage their accounts and pay their bills online. M. Lopez reported that the number of the My Account users has almost doubled, from 25,000 to 48,000, since implementing the new CIS in June 2014. He shared that over the next nine months, additional features will be rolled out, including a Mobile App for customers, a more streamlined process for Field Service Representatives to take payments in the field, a new tool that the Call Center Customer Service Representatives can use to provide customers a more precise estimated time of when their services will be turned on, and new bill payment options, including level payment plans and monthly billing. 15. UPDATE ON ENTERPRISE RISK, COMPLIANCE, AND LEGISLATIVE / REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, reported that the annual certifications for the Federal Reliability Standards were filed this month. She recognized the efforts by the Electric Services and Power Supply Divisions in completing this, as well as the compliance staff for ACTION TAKEN 2015-14 AGENDA ITEM coordinating and managing the effort. J. Lehman also shared that the Department is assisting the Fire Department in updating both the City's Hazard Mitigation Plan and Emergency Response Plan. These need to be updated every five years, and certain types of grants can be accessed for projects listed in these plans. On the legislative arena, she shared that the Department Legislative Working Group met and reviewed a number of bills with the potential to impact the Department. She explained that this coming Friday was the last day to formally introduce State bills, and with only approximately 600 bills introduced to date, out of an expected 2500, that many bills are likely to be introduced in the next several days. She also highlighted that the Department is reviewing the suite of bills introduced by the State Senate to implement the Governor's 50/50/50 plan highlighted in his inauguration speech — 50% renewables by 2030, 50% energy efficiency, and a 50% reduction in the usage of transportation fossil fuel usage. The key bill, SB 350, just came out in print. She mentioned several other bills that could have significant impact on electric operations that are being reviewed. She stated that on the water side, so far, no legislation with significant impacts had been introduced, but that it's likely there will be an extension of the emergency drought regulations by the State Water Resources Control Board and that there was a hearing earlier in the month that identified potential mitigation measures, such as watering restrictions. The next Legislative Working Group Meeting will be in March. 16. AGENDA ITEM(S) FOR THE NEXT PUBLIC UTILITIES BOARD MEETING ON MARCH 25, 2015. • SONGS Decommissioning Agreement * • San Juan Capacity Options and Funding Agreement • Water System Reliability Presentation • Advantage Services Annual Update Presentation 17. ITEM(S) BY SECRETARY. D. Lee provided a copy of an organizational memo to the Board describing changes. The Assistant General Manager of Joint Services has been revised to the Assistant General Manager of Power Supply and a recruitment is underway. Customer Services will be combined under the Assistant General Manager of Finance and Administration. A Board member requested a copy of the Department's organizational chart. D. Lee stated that he has requested staff to prepare an overview of the Southern California Public Power Authority (SCPPA) at a future meeting in order to explain to the Board about the types of projects and services that the Department participates in through SCPPA. ACTION TAKEN 2015-15 AGENDA ITEM ACTION TAKEN D. Lee acknowledged D. Calkins and stated he appreciated his 19 years of service to the City. He reminded the Board of a retirement celebration scheduled for March 12, 2015, 18. ITEM(S) BY BOARD MEMBERS. D. Wain D. Calkins for all his efforts and advice throughout the years and wished him well in retirement. S.E. Faessel thanked D. Calkins for being an expert, advisor, mentor and friend. She stated that she appreciated that the Department is always available to keep the Board organized and educated on utility matters. L. Cahill shared that he will miss D. Calkins, has enjoyed working with him over the years, and wished him well in his retirement. B. Hernandez wished D. Calkins well, and that his friendship, expertise, willingness and patience will be missed. J. Machiaverna thanked staff for the information and presentations throughout the meeting. He shared that D. Calkins has always been able to explain water information in a way that is easily understood and added that he will be sorely missed. 19. ADJOURNMENT: (REGULAR MEETING ON MARCH 25, B. Hernandez moved to 2015, AT 5:00 P.M., IN THE 11' FLOOR LARGE adjourn the Regular Meeting at CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. 7:14 p.m. to the Board's ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). Regular Meeting date of March 25, 2015 at 5:00 p.m. L. Cahill seconded the motion. MOTION CARRIED: 5-0. ABSTAINED: 0. ABSENT: 2 (D. Singer, C. Monaco). R ectfull sub itted, Dukku Lee Public Utilities General Manager * 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.