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Public Utilities 2015/11/18CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES November 18, 2015 The agenda having been posted on Thursday, November 12, 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, November 18, 2015, in the 11`h Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: Chair J. Machiaverna, B. Hernandez, D. Wain, E. Medrano, A. Abdulrahman Board Members Absent: Vice Chair S.E. Faessel, L. Cahill Staff Present: D. Lee, B. Beelner, J. Lonneker, M. Moore, G. Bowen, J. Lehman, A. Kott, L. Quiambao, P. Oviedo, M. Seifen, M. Jouhari, J. Wei, L. Davis, J. Greaney, T. Bass, F. Barvarz, A. Ramirez, A. Sporn Guest(s) Present: None AGENDA ITEM ACTION TAKEN 1. PUBLIC COMMENTS. There being no public comments, Chair J. No Public Comments. Machiaverna closed the public comments portion of the meeting. 2. APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC B. Hernandez moved approval UTILITIES BOARD MEETING OF OCTOBER 28, 2015. * of the Minutes of the Regular Public Utilities Board Meeting of October 28, 2015. D. Wain seconded the motion. MOTION CARRIED: 4-0. ABSTAINED: 0. ABSENT: 3 [S.E. Faessel, L. Cahill, A. Abdulrahman (arrived at 5:02 p.m.)]. 3. ADOPTION OF THE PROPOSED 2016 PUBLIC UTILITIES D. Wain moved approval of the BOARD MEETING SCHEDULE. ** adoption of the Proposed 2016 Public Utilities Board Meeting schedule. E. Medrano Seconded the motion. MOTION CARRIED: 4-0. ABSTAINED: 0. ABSENT: 3 [S.E. Faessel, L. Cahill, A. Abdulrahman (arrived at 5:02 p.m.)]. 2015-71 ITEM NO.01 AGENDA ITEM 4. APPROVAL OF THE REVOLVING CREDIT AGREEMENT BETWEEN WELLS FARGO BANK, NATIONAL ASSOCIATION AND THE CITY OF ANAHEIM. B. Beelner, AGM - Finance and Administration, introduced the five- year, $100 million Revolving Credit Agreement (Agreement) with Wells Fargo Bank, N.A. (Wells Fargo). He discussed how the Public Utilities Department (Department) has used a current line of credit agreement to bridge financing options for capital investment, refunding bonds associated with San Juan Generating Station, paying for decommissioning costs related to San Onofre Nuclear Generating Station (SONGS), and how it has provided flexibility to the Department's Iiquidity and cash reserves allowing the Department to keep less cash on hand. He explained that this Agreement provides the same functionality as unrestricted reserves. The new Agreement has a carrying fee of 0.20%, or $200,000 annually, as compared to the current agreement's 0.175% carrying fee ($175,000). B. Beelner explained that the higher annual carrying costs are due to the longer nature of this Agreement. The additional costs are justifiable as the extended length of the Agreement will provide the Department greater financial security by eliminating renewal risk over the additional two years of the Agreement. The interest rate charged on amounts drawn on the credit agreement remains the same as the current agreement, at 0.65% plus 80% of SIFMA, a major index of interest, which currently equates to approximately 0.67%. B. Beelner also clarified with the Board, that although the terms of the Agreement are set and will not change, there could be minor changes to the documents between the time of the Board's recommendation and the December 15, 2015 City Council meeting where the Agreement will be presented for City Council consideration. The Board commented that the line of credit has been helpful in keeping rates lower in Anaheim. D. Lee noted that some agencies keep upwards of 900 days of cash on hand, while Anaheim is closer to 150 days, and that the line of credit is one of the tools that facilitate keeping lower reserves. 5. PRESENTATION ON THE FIVE-YEAR ELECTRIC SUBSTATION IMPROVEMENT PLAN. L. Davis, Capital Projects Manager, presented to the Board an overview of the electric substation capital improvements planned over the next five years. The Five -Year Plan prioritizes electric substation improvements required to replace aging infrastructure and increase capacity of the electric system where needed. A schedule for these planned improvements was included in the presentation. 6. PRESENTATION ON MATCH FUND STREETLIGHTING PROGRAM. J. Greaney, Senior Electric Systems Designer in the Electric Transmission and Distribution division, presented to the Board an overview of the Match Fund Program for street lighting, a program coordinated with the Community Services Department, Community Development and Public Utilities. To date, 295 streetlights have been installed by the Department at a cost of approximately $600,000. 2015-72 ACTION TAKEN B. Hernandez moved approval of the Revolving Credit Agreement between Wells Fargo Bank, National Association and the City of Anaheim. E. Medrano seconded the motion. MOTION CARRIED: 5-0. ABSTAINED: 0. ABSENT: 2 (S.E. Faessel, L. Cahill). AGENDA ITEM ACTION TAKEN The Board asked about the use of other funding sources, and J. Greaney explained that Community Development Block Grant (CDBG) and Community Services funds are utilized in addition to match funds by the Department to accelerate street light installations at the request of the community. D. Lee commented that LED street lights have been standardized, and are being incorporated into new designs for typical street lights and that staff is working with manufactures to address other styles of street light fixtures. 7. CAP AND TRADE PROGRAM UPDATE. G. Bowen, AGM - Power Supply, provided a summary on the Cap and Trade Compliance Report stating that as a result of the Global Warming Solutions act of 2006 (Assembly Bill 32), the Cap and Trade Program was developed. He informed the Board that the Department was in full compliance for the first Compliance Period, which started in 2013 and completed at the end of 2014. He also shared that the next Compliance Period is 2015 through 2017, at which time the Department would provide the Board with a status of the compliance activities once again. 8. SENATE BILL 1 SOLAR REBATE UPDATE. G. Bowen provided the Board with background information on the Solar Incentive Program (Program). He stated that the Program was introduced in 2008 with a State mandate, and the Department is required to make $35 million available in incentives for solar installations throughout the City. G. Bowen reported that in September 2015, the Department reached $35 million in incentives, and the Program has been closed to new participants. He also indicated that this incentive along with the Federal Government incentive has been responsible for the installation of a total of 2,000 systems in the City, equating to approximately 20 Megawatts (MW) of solar generation. He also shared that over the last two -years, the Department doubled the amount of solar usage since the Program was initiated nine years ago. The Board discussed how solar can still be encouraged in Anaheim, and G. Bowen shared that although the Program is officially closed, the Department will continue to monitor legislation in an effort to develop ways to further increase the value of solar for customers in the City. Currently, net metering is viewed as one such mechanism to provide value to solar customers. D. Lee reminded the Board that rebates are meant to stimulate the market and encourage early adopters until prices come down, and that the Program funds achieved those objectives. 9. UPDATE ON WATER SYSTEM ISSUES. M. Moore, AGM - Water, shared an update on the Walnut Canyon Reservoir repairs that are nearing completion. Once the repairs are completed, the reservoir will be slowly filled over the winter months and informational signs will be updated accordingly. The Board commented that some residents have stated that the lowering of the reservoir is due to the drought, and M. Moore said he and his staff educate and inform residents and that the signs around the perimeter 2015-73 AGENDA ITEM ACTION TAKEN of the reservoir have been helpful in explaining the maintenance M. Moore provided information on the Water Recycling Demonstration Plant adjacent to City Hall, which diverts sewage from a pipeline in the street behind Anaheim West Tower and treats water for outdoor irrigation and toilet flushing. The pump gets clogged by flushable wipes that are disposed in the toilets and causes premature failure of the equipment. To help alleviate this issue, postcards have been mailed to customers in the downtown Anaheim area to request they do not dispose of flushable wipes in their toilets. M. Moore commented that the Department has met the goal of 20% water conservation for the month of October. Overall, the City remains above the State mandated 20% conservation goal. However, customer conservation levels during the winter months are expected to be much lower because outdoor watering levels tend to be much lower. The City is still on track to meet the overall conservation level of 3.3 billion gallons of water saved by the end of February 2016. In terms of the City's imported water supplies, the Colorado River Basin is forecasted to have normal hydrology and water supply next year. The State Water Project deliveries will be severely cut back again due to low water storage levels in Northern California, and even with high Ievels of precipitation this winter, it will take several years for the water storage levels to recover to normal. 10. UPDATE ON ELECTRIC SYSTEM ISSUES. J. Lonneker, AGM - Electric Services, updated the Board about the recommended formation of Underground District 64 - Orangewood, an undergrounding project adopted in the Five -Year Underground Conversion Plan approved by the Board in June 2015. The proposed district will be presented to City Council at the December 15 City Council meeting. J. Lonneker informed the Board that the electric outage map underwent some improvements and is now available to the public directly from the Public Utilities website and from any mobile device. She reminded the Board that Public Utilities customers can also receive outage notifications in their area by text or e-mail by signing up for Anaheim Alerts. 11. UPDATE ON FINANCE ISSUES. B. BeeIner summarized the monthly dashboard with the Board, and discussed how the electric revenues were above budget by 3.6% for the fiscal year due to an extremely warm and humid August and September. Electric expenses were below budget by 8.8% due to a one to two month lag between the procurement of power and when the related invoices are received and paid; expenses are expected to increase as those invoices are paid. B. Beelner mentioned that year to date water revenues still remained below budget by 22.4% and expenses were 22.3% below budget, with a year to date positive net 2015-74 AGENDA ITEM ACTION TAKEN revenue of $600,000. However, he cautioned that the positive budget variance in the Water Utility will not continue, as the Department has experienced a $500,000 shortfall in October and shared that these types of shortfalls will continue through the balance of the fiscal year. The proposed rate change is to address this shortfall that is expected to continue even during a wet winter as outdoor water use and demand hardening are expected to have a long term impact on water revenues. 12. UPDATE ON POWER SUPPLY ISSUES. G. Bowen informed the Board that Bowerman Landfill Gas Project was near completion and that the Department would start receiving test energy in January 2016. The Department entered into a Power Purchase Agreement and is therefore not directly involved with construction. The developer is planning a ribbon cutting ceremony sometime in March 2016 and that the Board will be informed, if they would like to attend. 13. UPDATE ON ENTERPRISE RISK, COMPLIANCE, AND LEGISLATIVE & REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, shared that the State Legislature has held a number of workshops and hearings covering topics which include the mandated conservation measures if the drought continues, and ties directly into the Governor's recent Executive Order on the drought. They are looking at ways for the State to fund "unfunded mandates" such as the water quality issues of smaller systems and storm water capture, as well as the significant legal hurdles of imposing a water user fee. J. Lehman also highlighted that at the Federal level, a number of democratic State Senators have sent a letter of support to Senators Feinstein and Boxer on their drought bill (S. 1894) which would provide additional funding to California for various water related projects; however, they cautioned the Federal Senators not to degrade existing environmental protections and not to diminish existing water rights, or water rights laws which the letter cautions would be controversial and delay drought aid. 14. AGENDA ITEMS) FOR THE NEXT PUBLIC UTILITIES BOARD MEETING ON DECEMBER 16, 2015. D. Lee mentioned the following upcoming agenda items are currently scheduled: • Water Rate Public Hearing • Presentation on Emerging Renewable Technologies • Presentation on Stormwater Capture and Water Supply • Safety Consultant Agreement • Model Landscape Water Efficiency Ordinance 2015-75 AGENDA ITEM ACTION TAKEN • Regulatory Relief of Electric and Water Rule Modifications 15. ITEM(S) BY SECRETARY. D. Lee informed the Board that the Department is planning a rain barrel distribution event, which has been successful in other cities. The even would highlight how residents can prepare of El Nino and capture water on their properties for use in landscape irrigation. D. Lee stated that the agenda items prepared for the Board are meant to provide a wide breadth of topics affecting the Department, and that the Board is welcome to request topics of interest at any time. D. Lee requested that the meeting be closed in remembrance of Gordon Hoyt, former Public Utilities General Manager, who recently passed away. He read highlights of Mr. Hoyt's career in Anaheim as a pioneer for public power. 16. ITEM(S) BY BOARD MEMBERS. A. Abdulrahman thanked staff for the information conveyed in the presentations and division updates, as they help him to learn about the Department. D. Wain thanked staff for the information provided. He commented that he has an opportunity to meet Gordon Hoyt, and that he was a delightful, generous and sharp man. E. Medrano shared that he would like to continue the Department's tour of the water facilities to learn how water is provided to Anaheim customers. B. Hernandez shared his memories of Gordon Hoyt, who is remembered as someone who cares about employees, even from other departments. J. Machiaverna also commented on Gordon Hoyt, and the impact he had on Anaheim. 17. ADJOURNMENT IN HONOR OF MIL GORDON HOYT, TO B. Hernandez moved approval THE (PUBLIC HEARING/REGULAR MEETING ON to adjourn the Regular Meeting DECEMBER 16, 2015, AT 5:00 P.M., IN THE GORDON HOYT in Honor of Mr. Gordon Hoyt CONFERENCE CENTER, 2ND FLOOR, ANAHEIM WEST at 6:31 p.m., to the Board's TOWER, 201 S. ANAHEIM BOULEVARD, ANAHEIM, Public Hearing/Regular CALIFORNIA). Meeting date of December 16, 2015 at 5:00 p.m. D. Wain seconded motion. MOTION CARRIED: 5-0. ABSTAINED: 0. ABSENT: 2 (S.E. Faessel, L. Cahill). r ITEM ACTION TAKEN ZIC JsLitted, 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.