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Public Utilities 2016/05/25CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES May 25, 2016 The agenda having been posted on Thursday, May 19, 2016, the Public Hearing 1 Regular Meeting of the Public Utilities Board (Board) was called to order by Chairperson J. Machiavema at 5:05 p.m. on Wednesday, May 25, 2016, in the 1 l `h Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: Chairperson J. Machiaverna, Vice Chairperson S.E. Faessel, B. Hernandez, D. Wain, A. Abdulrahman, L. Cahill, E. Medrano Board Members Absent: None Staff Present: D. Lee, J. Lonneker, M. Moore, G. Bowen, B. Beelner, J. Lehman, L. Quiambao, P. Oviedo, A. KoM M. Seifen, 1. Macias, P. Hayes, L. O'Connell, A. Nguyen, F. Barvarz, T. McCarthy, L. Nugent, N. Miller, L. Tsoi, J. McBride, M. Li Guest(s) Present: A. Chung, Anaheim Family YMCA; K. Suarez, I Ph Grader - Gilbert High School AGENDA ITEM ACTION TAKEN 1. PUBLIC COMMENTS. There were no public comments. B. Beelner, AGM — Finance & Administration, introduced L. Nugent, Customer Service Manager. M. Moore, AGM — Water Services, introduced L. Tsoi, Assistant Engineer, and M. Seifen, Communications Supervisor, introduced N. Miller, Communications Specialist. 2. APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC UTILITIES BOARD MEETING OF APRIL 27, 2016. * 3, APPROVAL OF JUNE 22, 2016 AS THE PUBLIC HEARING DATE FOR 2016 PUBLIC HEALTH GOALS REPORT. ** J. Lehman, Chief Risk Officer, shared that last month the Board was presented with Anaheim's Annual Water Quality Report that confirmed that the water served by Anaheim Public Utilities met all State and Federal Drinking Water Standards. 2016-26 There being no public comments, Chairperson J. Machiavema closed the public comments portion of the regular meeting. B. Hernandez moved approval of the Minutes of the Regular Public Utilities Board Meeting of April 27, 2016. A. Abdulrahman seconded the motion. MOTION CARRIED: 5-0. ABSTAINED: 2 (L. Cahill, E. Medrano). ABSENT: 0. E. Medrano moved approval of the Public Hearing Date for 2016 Public Health Goals Report. B. Hernandez seconded the motion. MOTION CARRIED: 7-0. ABSTAINED: 0. AGENDA ITEM ACTION TAKEN As way of background, she indicated that every three years since ABSENT: 0. 1998, California water utilities servicing more than 10,000 customers are required to compare their water quality to the State's Public Health Goals and the Federal Government's Maximum Contaminant Level Goals and hold a Public Hearing to allow for comments on the results. Public Health Goals are set at the level at which there is essentially no health risk to the most sensitive populations; they are not enforceable limits, but water agencies must report on these results. Anaheim met 81 of the 87 Public Health Goals. The Public Health Goals that were not met, with one exception, were all from naturally occurring elements. The exception was Bromate which is a by- product of ozone disinfection of water that has naturally occurring Bromine. The presence of contaminants does not necessarily indicate that water poses a health risk. In order to ensure that tap water is safe to drink, the U.S. Environmental Protection Agency and the State Water Resources Control Board prescribe regulations that limit the amount of certain contaminants in the water provided by public water systems. J. Lehman requested the Board's approval to set the hearing to receive and respond to public comments on the 2016 Public Health Goals report for June 22, 2016. She stated that a hearing notice would be published in the newspaper on June 7'h and the 2016 Public Health Goals report would be posted on the Department's website. 4. RECOGNITION OF STUDENTS FOR WATER AWARENESS MONTH ACTIVITIES. The Department sponsored a digital art contest for students in 58h through 121h grades. This year's contest theme was "Save Water, Save the World" which aimed to educate students about the importance of everyday water conservation practices, not only in California, but throughout the world. 1. Macias, Resource Efficiency Specialist, recognized the winner, Kevin Suarez, an l 1'h grader from Gilbert High School. His artwork will be displayed at the Muzeo during the month of May. The Board recognized Kevin with a proclamation. The Anaheim -Family YMCA and students from Western and Katella high schools and Cypress College volunteered to develop a Public Service Announcement (PSA) for the Department. The PSA will be played on Cable TV Channel 3, www.anaheim.net/savewater website, and social media. Alex Chung, Program Supervisor from Anaheim Family YMCA, accepted the proclamations on behalf of the students. 5. PUBLIC HEARING: ADOPTION OF THE 2015 URBAN B. Hernandez moved approval WATER MANAGEMENT PLAN. * of the adoption of the 2015 Urban Water Management During the Public Hearing for the Urban Water Management Plan Plan. E. Medrano seconded (Plan), T. McCarthy, Water Planning and Resources Manager, made a the motion. presentation to the Board about the Plan. T. McCarthy mentioned the MOTION CARRIED: 7-0. Plan is required by the State every five years to ensure water suppliers ABSTAINED: 0. are conducting long term water supply planning. Among other things, ABSENT: 0. the Plan projects 25 -years of water demands and documents the 2016-27 AGENDA ITEM supplies needed to meet projected demands under various hydrologic conditions. T. McCarthy then discussed the reason the projected demand in the current Plan has decreased is that the gallons per capita per day has decreased 24 percent since 2005. T. McCarthy addressed the City two primary water supplies (Metropolitan Water District (MWD) and the Orange County Groundwater Basin) and two key projects (Diamond Valley Reservoir and the Groundwater Replenishment System) that help the region maintain reliability and meet demands. The Plan further states that long-term investment in conservation, new wells, and enhanced groundwater recharge are necessary to maintain reliability, and that other water supply sources such as water banking, desalination and stormwater capture are other methods that may be employed in the future to further supplement supplies. T. McCarthy added that the next steps will be to seek City Council approval and then submit the Plan to the California Department of Water Resources, California State Library, County of Orange and neighboring cities. 6. APPROVAL OF A DESIGN -BUILD SERVICES AGREEMENT WITH ARNAZ ENGINEERING CONTRACTORS, INC. FOR THE DOWNTOWN ANAHEIM RECYCLED WATER EXPANSION PROJECT; AND DETERMINE THAT THIS PROJECT IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) PURSUANT TO SECTIONS 15301 AND 15303 OF TITLE 14 OF THE CALIFORNIA CODE REGULATIONS AND SECTION 21080.21 OF THE PUBLIC RESOURCES CODE. * L. O'Connell, Associate Engineer, made a presentation to the Board on the Downtown Anaheim Recycled Water Expansion Project (Project), the criteria, and evaluation process used for selecting the successful design -builder for the Project. As part of the presentation, she described the overall Project with the installation of pipeline and onsite tank and pump station, and how this system will be installed to irrigate approximately two-thirds of Pearson Park. She explained the value of the Project, such as how this Project will utilize all the unused recycled water produced by the Water Recycling Demonstration Facility saving over six million gallons of potable water a year; the benefit to the Community Services Department because the Pearson Park landscaping will not be subjected to water restrictions and can be maintained in good condition, even in a drought. She also highlighted the educational value of the Project to promote public awareness for recycled water. L. O'Connell discussed the design -build delivery method, and explained the evaluation process and the criteria staff used for the selection of the design -builder following Anaheim Municipal Code Chapter 10.06. Evaluation criteria for the Project includes project experience and qualifications, method, approach and delivery, technical proposal, preliminary engineering and concept drawings, 2016-28 ACTION TAKEN L. Cahill moved approval of a Design -Build Services Agreement with Arnaz Engineering Contractors, Inc. for the Downtown Anaheim Recycled Water Expansion Project and the determination that this Project is exempt from the California Environmental Quality Act (CEQA) pursuant to sections 15301 and 15303 of title 14 of the California Code Regulations and Section 21080.21 of the Public Resources Code. B. Hernandez seconded the motion. MOTION CARRIED: 7-0. ABSTAINED: 0. ABSENT: 0. AGENDA ITEM project schedule, and project cost. Based on the evaluation of proposals, staff recommends award to Arnaz Engineering Contractors, Inc. 7. APPROVAL OF THE ADOPTION OF THE PUBLIC UTILITIES DEPARTMENT'S FISCAL YEAR 2016/17 BUDGET. * B. Beelner, AGM — Finance and Administration, reviewed the Fiscal Year 2016/17 Proposed budget, noting that the Department's proposed operating expenses are approximately $4.2 million below the FY 2015/16 Adopted budget (Adopted), and the 8.8% overall increase to the Department's budget from Adopted is due to capital infrastructure investments. D. Lee added that the proposed new substation comprised most of the Department's increase from Adopted, and that the new substation is needed to relieve capacity constraints on existing substations. 8. PRESENTATION ON ELECTRIC INDUSTRY TRENDS AND IMPACTS ON RESIDENTIAL RATES. J. McBride, Strategic Planning Manager, presented an overview of trends within the electric utility industry, the impact of those trends on cost recovery and rates, and an overview of Anaheim's residential electric rates. He explained that the electric grid is undergoing a major transformation as new energy resources are integrated into the system. These new technologies help utilities meet renewable mandates and provide diversity to the mix of energy resources but are often very expensive and add complexity to the system. In an effort to reduce reliance on energy sales to recover costs, many utilities are restructuring rates and migrating to higher fixed customer charges, standby charges, minimum charges, etc. This also ensures all customers pay for a portion of fixed costs. Investor Owned Utilities (IOU) in California recently increased their minimum residential monthly charge based on a recent California Public Utilities Commission (CPUC) decision. California IOUs are also consolidating the number of residential tiered rates from four tiers to two tiers and implementing a Super User Energy (SUE) surcharge for customers who use excessive amounts of energy. IOUs will automatically default residential customers to Time -Of -Use rates in 2019. Anaheim has a relatively simple residential rate structure that customers can understand yet is agile enough to recover costs in a timely manner. Anaheim also offers residential Time -Of -Use, Electric Vehicle, and net metering rate options, in addition to its standard residential rate. These rates provide customers the freedom to adopt new technologies and choose the rate that makes the most sense for them based on their energy usage profile. Additionally, Anaheim's customers enjoy low fixed charges and benefit from rate adjustment mechanisms that provide for small incremental adjustments to electric rates when costs increase or decrease, thereby helping to avoid significant rate increases or decreases in any given year. J. McBride illustrated Anaheim's residential rates compared to 2016-29 ACTION TAKEN D. Wain moved approval of the Adoption to the Public Utilities Department's Fiscal Year 2016/ 2017 Budget. AB... seconded the motion. MOTION CARRIED: 7-0. ABSTAINED: 0. ABSENT: 0. AGENDA ITEM ACTION TAKEN several other utilities serving Southern California noting that Anaheim's residential rates are among the lowest in Southern California. 4. PRESENTATION ON THE OAK CANYON UTILITY POLE REPLACEMENT PROJECT. F. Barvarz, Transmissions & Distribution Manager, made a presentation about the Oak Canyon Utility Pole Replacement Project to the Board. He shared that after evaluating several options to address the deterioration of the wood poles in this environmentally sensitive Oak Canyon Nature Preserve, the Department determined that using ductile iron poles addressed those needs best. These poles are resistant to insects and woodpeckers, prevalent in this active wildlife area, and the leading cause of the deterioration of these wood poles. The discussion included the benefits of using ductile iron poles due to a longer lifecycle, easier to maneuver within a confined area, and more fire resistant. The Board asked if these poles were planned for other locations and were advised that was there could be situations where the new types of poles would be advantageous and staff will continue to evaluate applicability based on the performance of these poles. 10. UPDATE ON WATER SYSTEM ISSUES. M. Moore, AGM -- Water Services, provided the Board with the following update regarding the Water Conservation Requirements. On May 10` , the Metropolitan Water District (MWD) Board voted unanimously to rescind water supply allocations for FY 2015- 2016. This is based on improved conditions in Northern California, with a 60% of the State Water Project allocation, and a strong conservation response from the public. These conditions avoided the need to continue with allocations. However, although MWD is moving out of allocation, they still plan to promote the importance of water awareness and conservation. Therefore, as part of the MWD Board action, MWD will downgrade from a "Condition 3 — Implement Water Supply Allocations" to a "Condition 2 — Water Supply Alert," which calls for continued awareness and heightened conservation within Metropolitan's service area. The City will be required to self -certify to the State whether Anaheim needs to have mandatory conservations targets. May is the National Water Awareness Month. The Department had many events each week throughout the City. An overview of these events was provided to the Board. 11. UPDATE ON ELECTRIC SYSTEM ISSUES. J. Lonneker, AGM — Electric Services, provided the Board with an update on the recent field training completed over the last quarter by Department's field crews which included "Hurt Man Rescue" and "Vault Retrieval" training, which are part of a series of mandatory training to meet federal, state, and local safety requirements. 2016-30 AGENDA ITEM ACTION TAKEN J. Lonneker shared with the Board that three Grade Separation Agreements were amended and signed by the Orange County Transportation Authority (OCTA) and are now ready for Council approval. These three agreements outlined the scope of work to be performed by the Utility and reimbursed by the OCTA at three separate locations within the City of Anaheim where the railroad crossings are being reconfigured. Additional work was added requiring further expenditures by the Department for relocation and undergrounding work, requiring an amendment to the original agreement to increase the amount of reimbursement by $700,000 to the Department. Due to the time -sensitivity of the item, approval will be sought from City Council prior to the end of the fiscal year. 12. UPDATE ON FINANCE ISSUES. B. Beelner discussed recent and upcoming bond refundings detailing the $72.5 million in interest the Department will save due to four recent bond refinancings. B. Beelner then discussed current long term interest rates, and how they are continuing to drop despite recent and forecasted increases in short term interest rates by the Federal Reserve Board. He then mentioned that the current ultra-low interest rate environment will allow the Department to refinance additional outstanding debt potentially saving customers an additional $50 million. 13. UPDATE ON POWER SUPPLY ISSUES. G. Bowen, AGM — Power Supply, provided an update on the Westlands Solar Park advising the Board that the facility had declared commercial operation on May 10, 2016 and that the total output of the facility is approximately 2 megawatts which represented approximately 1% of the Department's renewable power portfolio. G. Bowen provided an update on Aliso Canyon, advising the Board that there were weekly calls held by the California Energy Commission (CEC) to discuss the proposed action plan, which now includes 19 mitigation measures including energy storage, increased coordination amongst the California Independent System Operator (CAISO) and SoCal Gas, as well as increasing Demand Response efforts. G. Bowen also provided the Board with an update on the activities taking place in May as a result of May being Water Awareness Month. He showed before and after photos of the Water Smart Landscape Award Recipients which included three residential and three commercial properties. He also provided the Board with an update on the twenty four winning posters for the Water is Life Poster Contest; eight of which would be selected to be entered into Metropolitan Water District of Southern California's regional Water Conservation Poster Contest next month. Additionally, G. Bowen advised the Board that on May 13 — May 15, the annual Solar Cup Boat Race was held at Lake Skinner in 2016-31 AGENDA ITEM ACTION TAKEN Riverside, California. He shared that the Department sponsored two schools, Savanna High School and Anaheim High School. Lastly, he shared that the Department is rolling out its Beat the Heat campaign for summer where Department staff will be at the Home Depot and Lowes over the course of the next two months offering increased incentives on various items including HVAC tune ups, lighting and fans for homes. G. Bowen also identified a new program that will be rolled out this summer in light of the Aliso Canyon gas facility closure where customers who save 20% of their energy usage between July and October as compared to the same times the previous year, will receive $20 credit to their bill for each period. D. Lee added that customers do not have to sign up for the program as every customer will be automatically included in the program. 14. UPDATE ON ENTERPRISE RISK, COMPLIANCE, AND LEGISLATIVE & REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, Provided an update on the transmission grid regionalization efforts to expand the footprint of the CAISO that are mandated as part of legislation that passed last year. The law mandates for this to go forward by the end of 2017, and the Governor must provide the legislature with studies to support the grid regionalization effort along with the new bylaws of the expanded regional transmission organization. She mentioned that there are significant cost implications to California and to the Department if the transmission cost allocations are not set properly, and that this will also be a model for other states and utilities to join the CAISO. The Department is working with industry groups on efforts to mitigate the potential cost impacts of regionalization. J. Lehman then advised the Board that the PUB Legislative Working Group met and reviewed bills with the potential to impact utility operations. She mentioned that June 2nd will be a key milestone where bills must pass out of their house of origin and many bills are expected to die. The PUB Legislative Working Group will meet again in June; there will not be a meeting in July as the Legislature will be on Summer recess. 15. AGENDA ITEM(S) FOR THE PUBLIC UTILITIES BOARD MEETING ON JUNE 22, 2016. D. Lee, Public Utilities General Manager, indicated that the following items are scheduled for the upcoming Board meeting: • Public Hearing: Public Health Goals Report • Summer Readiness Presentation • Water System Reliability Presentation • FY16/17 Underground Conversion Five Year Plan* • Solar for Schools Design/Estimating Engineer * 2016-32 AGENDA ITEM 16. ITEM(S) BY SECRETARY. D. Lee thanked M. Moore for meeting with state officials regarding grant applications for recycled water projects in Anaheim. He informed the Board that Councilmember Brandman requested that the Department seek to expand undergrounding throughout Anaheim at the May 10 City Council meeting, and that program enhancements will be presented to the Board as part of the annual program update. He also informed the Board that the Department is assisting the Planning Department on service disconnections related to unlawful short term rentals. 17. ITEM(S) BY BOARD MEMBERS. L. Cahill thanked staff for the information provided at the meeting. S.E. Faessel shared that the presentations provided demonstrate the very important services the Department provides to the public, such as the recycled water project at Pearson Park. ACTION TAKEN A. Abdulrahman thanked staff for preparing the budget presentation Staff will request a copy of the and shared that it was very informative. He mentioned that he and D. presentation from the OC Wain attended the Orange County Water Summit and requested a Water Summit. copy of a presentation that was given. D. Wain shared that the Orange County Water Summit was interesting and mentioned that he also attended two Water Wise workshops and said the presenter did an excellent job and was very knowledgeable. He inquired about the Department educating the public on the information provided in the electric industry trends and impacts on future rates. D. Lee responded that the Department would look for opportunities to provide information to customers. E. Medrano said that the information provided at the meeting is innovative and the Department is setting a trend for the industry in the public and private sectors. B. Hernandez requested a report on the Water Adequacy Plan. J. Machiaverna thanked his colleagues and staff for the informative presentations and said he appreciates that the Department reaches out to residents to educate them on water conservation. 18. ADJOURNMENT: (REGULAR MEETING ON JUNE 22, 2016, AT 5.00 P.M., IN THE 1111H FLOOR LARGE CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). 2016-33 Staff will provide an update on the Water Adequacy Plan at a future meeting. L. Cahill moved approval to adjourn the Regular Meeting at 7:32 p.m., to the Board's Regular Meeting date of June 22, 2016 at 5:00 p.m. E. Medrano seconded motion. MOTION CARRIED: 7-0. ABSTAINED: 0. AGENDAITEM FcOZ k�— Dukku Lee Public Utilities General Manager ACTION TAKEN 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.