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Public Utilities 2015/09/23CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES September 23, 2015 The agenda having been posted on Wednesday, September 16, 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, September 23, 2015, in the 11"' Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: Chair J. Machiaverna, Vice Chair S.E. Faessel, B. Hernandez, D. Wain, L. Cahill, A. Abdulrahman, E. Medrano Board Members Absent: None Staff Present: D. Lee, B. Beelner, J. Lonneker, M. Moore, G. Bowen, J. Lehman, A. Kott, L. Quiambao, P. Oviedo, C. Pereyra, S. Marsh, A. Nguyen, P. Hayes, M. Seifen, A. Shaikh, J. McBride, Y. Domingo, T. McCarthy, L Macias Guest(s) Present: Art Montez, Centralia School Board Member and Member of the Air Quality Management District Advisory Home Rules Committee AGENDA ITEM ACTION TAKEN 1. PUBLIC COMMENTS. There being no further public comments, Chair J. Chair J. Machiaverna welcomed E. Medrano to the Board. Machiaverna closed the public comments portion of the Mr. Art Montez, Centralia School Board (Centralia) member and meeting. Member of the Air Quality Management District (AQMD) Advisory Home Rules Committee, addressed the Board and supported E. Medrano's appointment. He requested that the Public Utilities Department (Department) work together with Centralia on utility - related programs including solar, water conservation, and fiber. He shared that there may be various funding opportunities to address needs at local schools, and he is available to explore utility programs in greater detail. 2. APPROVAL OF THE MINUTES OF THE REGULAR B. Hernandez moved approval MEETING OF THE PUBLIC UTILITIES BOARD MEETING of the Minutes of the Public OF AUGUST 26, 2015. * Utilities Board Meeting of August 26, 2015. S.E. Faessel seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 1 (E. Medrano). ABSENT: 0. 2015 -55 AGENDA ITEM 3. UPDATE ON DROUGHT RESPONSE. ACTION TAKEN M. Moore, AGM - Water Services, provided an update to the Board concerning the City's response to its Water Reduction Program that was implemented in May 2015. The State Water Resources Control Board mandates that the City implement water conservation measures and reduce water consumption by 20% by February 28, 2016. The City quickly responded with amendments to its Anaheim Municipal Code 10:18 (Water Reduction Ordinance) and by implementing a new program that includes incentives for water conservation and enforcement for water waste. There has been an overwhelmingly positive response to the conservation efforts with hundreds of rebates being issued this year and water reduction over 25% compared to 2013. The water conservation team has been working with customers about how to comply with the new water mandates and staff has contacted over 2,000 customers since May. Employees involved with water conservation were recognized by the Board for their efforts in helping the City meet its water conservation goals during the drought. 4. PRESENTATION ON WATER SUPPLY ALTERNATIVES. T. McCarthy, Strategic Engineering Manager, made apresentation of alternative water supplies that either improve regional water supply reliability or diversify the City's supply portfolio to address potential dry year water needs. Six potential water supply projects were presented that could improve regional reliability, portfolio diversity, or both. These projects included the following: Joint Water Pollution Control Plant Water Reuse Project, Groundwater Replenishment System Expansion Project, Huntington Beach Desalination Project, Cadiz Valley Water Conservation, Recovery and Storage Project, Strand Ranch Water Banking Project, Orange County Groundwater Basin Storage Project, and local recycled water projects. T. McCarthy shared that each supply project was qualitatively analyzed based on cost, reliability, timing, and location. Additionally, these projects involve regional wholesale suppliers (Metropolitan Water District and Orange County Water District) or other water agencies that have resource supply objectives similar to Anaheim. At this time, the Department is considering its options and water needs to ensure we reduce probability of any supply gaps while diversifying the portfolio. 5. DISCUSSION ON DEPARTMENT FINANCES AND RATES. J. McBride, Strategic Planning Manager, made a presentation to the Board about the Department's financial performance, forecasts, and rates. He shared that the Electric Utility's financial status is currently forecasted to remain stable over the next several years. Electric sales are below the 20 -year average sales volume, but are in-line with the most recent historical trends. He provided examples of how the Department's electric rates compare to other agencies serving Orange County, noting that Anaheim residents continue to benefit from electric bills that are below those charged by investor-owned agencies. 2015-56 AGENDA ITEM ACTION TAKEN J. McBride also explained that Senate Bill (SB) 350, "Clean Energy and Pollution Reduction Act of 2015" requires that the Department increase the amount of energy it obtains from renewable resources to 50% by 2030, which will place pressure on electric rates in the future. J. McBride explained that water revenue is being impacted by the ongoing drought. Rather than solely turning to rate increases, the Department has developed a four-part strategy. First, the Department will continue to control expenditures by keeping staffing levels at an efficient level, and seeking opportunities to streamline and defer costs. As an example, vehicle replacements have been deferred and there have been no increases to the number water personnel. Second, capital projects are prioritized in a manner that will minimize the draw on financial resources as much as possible without reducing the reliability and integrity of the water supply and distribution system. Third, management is projecting to use $3 million of the approximately $6 million in the Water Utility's water rate stabilization reserve. B. Beelner emphasized that depleting this reserve by approximately 50% is a one-time event. Future contributions to build the reserve back up are limited to miscellaneous credits. Finally, the fourth component is to adjust the fixed customer charge billed to all customers. This will help insure revenues are adequate to maintain the water distribution system even during conservation periods when water sales are low. The combination of this four-part strategy will mitigate the financial impact resulting from conservation and the reduction in water sales. J. McBride illustrated how customers can continue to save on their water bill through conservation. Anaheim's water rates will remain approximately 20% lower than the Orange County average. A timeline for the proposed rate adjustment was discussed in which the Board will hold a rate hearing during the regularly scheduled meeting in December and, if approved by the Board, the Department would seek City Council approval in January 2016 meeting. Subject to approval by the City Council, the proposed increases to Customer Charges would become effective on February 1, 2016, and would coincide with the Water Commodity Adjustment (WCA) and Water System Reliability Adjustment (WSRA) changes that were previously approved in January 2015 as part of a two-year rate adjustment. The Board asked a number of questions regarding the need for the rate increase and ensuring that residents have the opportunity to lower their bills through conservation. The Board expressed the need for the Department to continue to provide reliable water service and invest in capital improvements to prevent water main breaks and other reliability issues seen in other cities. D. Lee explained that customers are provided water service and fire protection, as opposed to purchasing a water commodity. 2015-57 AGENDA ITEM ACTION TAKEN 6. DISCUSSION ON OPEN MEETING LAWS (BROWN ACT). A. Kott, Assistant City Attorney, provided an overview of the Opening Meeting Laws, more commonly referred to as the Brown Act (Gov. Code Section 54950, et seq.). She explained that compliance with the Brown Act is mandated by state law for all legislative bodies, which includes the Public Utilities Board (PUB). A. Kott discussed the purpose of the Brown Act, explaining why the PUB is subject to Opening Meeting laws, and provided details about the types of information required by the Brown Act to ensure the public is informed about the matters pending before a legislative body in order to ensure there is transparency in conducting the People's business. She discussed meeting requirements, including: quorums, voting requirements, the public's First Amendment rights, and the resulting consequences for a failure to follow the Brown Act. 7. UPDATE ON WATER SYSTEM ISSUES. M. Moore shared that Anaheim received about 1.5 inches of rain in September. This was much higher than normal for the month and the storm water runoff was captured in the Santa Ana River for recharge. The region is in a drought and is expecting higher than normal rainfall due to El Nino conditions. M. Moore shared that the State of California completed their inspection of the Department's water system. They inspected 44 sites for compliance with health and safety standards. The inspection was completed and there were no corrections required by the State. He continued that the Walnut Canyon Reservoir requires maintenance of the slope wall near the bottom of the reservoir. The water level continues to be lowered to allow construction crews to perform repairs. It is anticipated the repairs will be completed in October and the reservoir can begin refilling during the remainder of the Fall. 8. UPDATE ON ELECTRIC SYSTEM ISSUES. J. Lonneker, AGM - Electric Services, updated the Board on the electric system performance during recent heat wave. She also reported there were relatively few heat related outages and the electric system performed well overall. J. Lonneker reported that there was a significant outage on September 8"' on Knorr Avenue, north of Ball Road due to a vehicle hitting a utility pole causing the pole to be severed and resulting in the roadway being closed. Initially 3,500 customers were affected, but within 40 minutes 90% of those customers were restored, by isolating the problem area that required the pole to be replaced. The remaining customer's service was restored in the early afternoon of that same day. 2015 -58 AGENDA ITEM 9. UPDATE ON FINANCE ISSUES. ACTION TAKEN B. Beelner, AGM - Finance and Administration, provided an overview of the new format of the monthly dashboard and how the Department will now be presenting the monthly variances along with the annual budget variance. He discussed how both electric and water revenues were below budget for the fiscal year while expenses were also below budget. 10. UPDATE ON POWER SUPPLY ISSUES. Graham Bowen, AGM - Power Supply, shared a status update about the municipal solid waste -to -energy project located in Anaheim. An outreach event was event held by the developer on September 14, and eleven members of the public attended. Common questions were about noise levels, traffic flow, and aesthetics. Which were addressed by the developer, who is responsible for the project construction. He also shared that there will be one more developer sponsored community outreach event in early 2016. The project developer will go through a Planning Commission public hearing to be held in February 2016, and construction is scheduled to start June 2016. G. Bowen also reminded the Board about the California Independent System Operator tour on October 15, 2015. 11. UPDATE ON ENTERPRISE RISK, COMPLIANCE, AND LEGISLATIVE / REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, invited the Board's attention to the Wholesale Energy Risk Management (ERM) Program's Quarterly Compliance report in their Board packet. This Program sets criteria under which certain energy related transactions can be made providing the framework for transactions to be made in an efficient manner while ensuring that the Department's interests are protected and risks are identified and appropriately managed. J. Lehman shared that all transactions were in compliance with the ERM Program; there were no violations. She then shared that the PUB Legislative Working Group met prior to the PUB meeting and discussed the key bills that passed the Legislature and made it to the Governor's desk this year, as well as their likely impact to the Department. She thanked the members of the working group for their time and effort on this working group. She discussed several legislative issues and highlighted the following: on the water side, the drought was a significant issue that was addressed by the Legislature and that the bills were for the most part beneficial to Anaheim. On the energy side, the Legislature passed Senate Bill 350, which contained two of the three parts of the Governor's three part Greenhouse Gas (GHG) emission reduction plan, including renewable energy and building conservation. The fossil fuel component related to the transportation sector was excluded from the bill. 2015-59 AGENDA ITEM ACTION TAKEN J. Lehman indicated that at next month's meeting, the Board will be provided with the Legislative Wrap -Up report which summarizes the key bills that passed into law and their likely impacts on operations. 12. AGENDA ITEM(S) FOR THE NEXT PUBLIC UTILITIES BOARD MEETINGS ON OCTOBER 15, 2015 AND OCTOBER 28, 2015. D. Lee mentioned the following upcoming agenda items: • Facilities Inspection and Discussion regarding the CAISO Folsom Control Center • Update on Environmental Protection Agency (EPA) North Basin • Electric Reliability Report • Annual report and Presentation on Emergency Response Plan Activities • Safety Consultant Agreement • Quarterly Status Reports on the CIP, MA, GSA, and Spot Bid Awards • SONGS Decommissioning Trust Agreement 13. ITEM(S) BY SECRETARY. D. Lee welcomed E. Medrano to the Board. He provided an updated roster to the Board members. He reminded the Board of upcoming events including Public Power Week to be celebrated on October 8 at the Downtown Farmer's Market, and the Latino Utility Coalition meeting to be held on September 30 at the Miraloma Park Family Resource Center. He also shared that the Department would be participating with local high school students in a mentoring program as part of the P21 (Partnership of 21s` Century Skills) initiative. 14. ITEM(S) BY BOARD MEMBERS. A. Abdulrahman appreciated the updates and presentations, and shared that the alternative water supply options are important considerations for the future. D. Wain said that he appreciated the opportunity to attend the Solar Power International event at the Anaheim Convention Center and thanked M. Brownrigg, Product Development Specialist as they toured the many solar vendor booths. He also reported that he attended the emergency preparedness exercise as well as the community meeting for the waste -to -gas project. E. Medrano said he looks forward to working with everyone and the being able of participate in the upcoming tours to learn more about the utility. L. Cahill said he was also looking forward to attending the tour of the California Independent System Operator. 2015-60 AGENDA ITEM S. E. Faessel welcomed E. Medrano to the Board and thanked A. Kott for the Brown Act overview. She sent well wishes on behalf of the Board to the Linemen participating in the Linemen's Rodeo. She expressed her appreciation to the drought response team's plans and follow up actions with customers. J. Machiaverna welcomed E. Medrano to the Board. He expressed that the work the Board and staff are doing is important to provide essential services to the city. 15. ADJOURNMENT: (FACILITY INSPECTION, CALIFORNIA INDEPENDENT SYSTEM OPERATOR CORPORATION, 250 OUTCROPPING WAY, FOLSOM, CALIFORNIA 95630 IN CONFERENCE ROOM PW1540 ON OCTOBER 15, 2015 AT 10:30 A.M.). Respectfully submitted, Dukku Lee Public Utilities General Manager ACTION TAKEN D. Wain moved approval to adjourn the Regular Meeting at 7:46 p.m., to the Facility Inspection, California Independent System Operator Corporation on October 15, 2015 at 10:30 a.m. S.E. Faessel 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. 2015-61