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Public Utilities 2016/06/22CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES June 22, 2016 The agenda having been posted on Thursday, June 16, 2016, the Public Hearing / Regular Meeting of the Public Utilities Board (Board) was called to order by Chairperson J. Machiaverna at 5:01 p.m. on Wednesday, June 22, 2016, in the 11 `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 Board Members Absent: E. Medrano Staff Present: B. Beelner, J. Lonneker, M. Moore, G. Bowen, J. Lehman, L. Quiambao, P. Oviedo, A. Kott, M. Jouhari, D. Wilson, T. Bass, M. Seifen, F. Barvarz, M. Lopez, J. DeLa Torre, F. Cuevas, A. Vega Guest(s) Present: AGENDA ITEM 1. PUBLIC COMMENTS. There were no public comments. 2. APPROVAL OF THE MINUTES OF THE PUBLIC HEARING / REGULAR PUBLIC UTILITIES BOARD MEETING OF MAY 25, 2016. * 3. WATER SYSTEM RELIABILITY PRESENTATION. M. Jouhari, Water Field Operations Manager, presented the Board with the annual Water System Reliability report. An overview of the water system and a summary of the operations and maintenance activities were presented as it relates to providing reliable water service to the Public Utilities Department's (Department) customers. The Water System reliability metrics on main breaks compares favorably with the neighboring agencies and averages for nationwide utilities. The infrastructure's replacement methodology contributing to more reliable water service in Anaheim was also presented. 2016-35 ACTION TAKEN There being no public comments, Chairperson J. Machiaverna closed the public comments portion of the regular meeting. B. Hernandez moved approval of the Minutes of the Public Hearing 1 Regular Public Utilities Board Meeting of May 25, 2016. S.E. Faessel seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 1 (E. Medrano). AGENDA ITEM ACTION TAKEN M. Jouhari introduced the Board to representatives from the Water Operations and Maintenance staff with a brief description of their respective roles. The following four field personnel were present at the meeting: M. Lopez, Water System Operator; J. DeLa Torre, Troubleshooter; F. Cuevas, Maintenance Pipefitter; and A. Vega, Crew Supervisor. The Field staff was commended by the Board members for their dedication in operating, maintaining, and responding to water outages. 4. SUMMER ELECTRIC READINESS PRESENTATION. G. Bowen, AGM -- Power Supply, presented the Department's annual 2016 Summer Power Assessment to the Board. G. Bowen highlighted the effects of the Aliso Canyon gas storage facility on the State's ability to manage the electric grid during the summer and winter months. G. Bowen also pointed out that the City has more than enough generation to cover its expected peak load during the summer months and that if the City was required to load shed to prevent large scale outages and maintain the electric grid, it has a comprehensive and systematic plan to do so. 5. APPROVAL OF THE PROPOSED FIVE-YEAR B. Hernandez moved approval UNDERGROUND CONVERSION PLAN FOR FISCAL YEARS of the Proposed Five -Year 2016/17 TO 2020/2021. * Underground Conversion Plan SERVICES AT PARTICIPATING LOCAL SCHOOLS. * for Fiscal Years 2016/17 to J. Lonneker, AGM — Electric Services, introduced F. Barvarz, 2020/2021. S.E. Faessel Transmission & Distribution Manager, and shared that every year the seconded the motion. Underground Conversion Program's Five -Year plan is updated for MOTION CARRIED: 6-0. projects completed, added, and progress on other projects is reported. ABSTAINED: 0. develop a pilot Community Solar Project in Anaheim. G. Bowen ABSENT: 1 (E. Medrano). F. Barvarz presented the FY 2016/17 update to the Underground Conversion Program's (Program) Five -Year plan (Plan), previously approved by the Underground Subcommittee, for the Board's consideration and approval. As part of the presentation, he reviewed the Program benefits, and discussed the projects included in the Plan recently completed, under design or construction, one project that was added on La Palma / Anaheim Blvd., and those planned for future. F. Barvarz also discussed that the Plan included an update to the Program's scope to incorporate City Council's May 10, 2016 directive to evaluate options to underground Southern California Edison's overhead lines within Anaheim, with priority assigned to Beach BIvd. and East Street, and to expand the undergrounding criteria to qualify additional projects. 6. APPROVAL OF A SOLAR CONSULTANT SERVICES A. Abdulrahman moved AGREEMENT WITH ECOMOTION, INC. TO PROVIDE approval of a Solar Consultant SOLAR PROJECT FEASIBILITY ANALYSIS AND RELATED Services agreement with SERVICES AT PARTICIPATING LOCAL SCHOOLS. * EcoMotion, Inc. to provide solar project feasibility G. Bowen provided the Board with an overview of the Solar analysis and related services at Consultant Services Agreement (Agreement) with EcoMotion. He participating local schools. L. explained that the Agreement was the first in a series of steps to Cahill seconded the motion, develop a pilot Community Solar Project in Anaheim. G. Bowen MOTION CARRIED: 6-0. 2016-36 AGENDA ITEM further explained that the Department planned to install carport style solar structures in schools and provide the schools with a lease payment approximately equal to the value of the solar energy production from the facility on the school premises and that once the plans for community solar were fully developed, the Project will be brought to the Board for discussion and approval. 7. PUBLIC HEARING: RECEIVE AND RESPOND TO PUBLIC COMMENTS ON THE 2016 PUBLIC HEALTH GOALS REPORT. J. Machiaverna opened a public hearing on the City of Anaheim's (City) 2016 Public Health Goals Report (Report) for Water Quality. Each Board Member received a copy of the Report dated May 25, 2016. He indicated that the Report was made available for public review on the City's webpage and at the Water Engineering front counter located on the 6`h floor of Anaheim West Tower at 201 S. Anaheim Blvd., Anaheim, CA 92805. A Notice of Public Hearing was also placed in the newspaper. D. Wilson, Environmental Services Manager, gave a presentation providing an overview of the 2016 Public Health Goals Report. He reported that six out of eighty-seven substances exceeded their public health goals, but that five of those are naturally occurring; Anaheim's water met all State and Federal drinking water standards. Board Members questions were answered by staff and no public comments were made. J. Machiaverna closed the public hearing. 8. UPDATE ON WATER SYSTEM ISSUES. M. Moore, AGM — Water Services, provided the Board with an update on water conservation regulations which were revised by the State Water Resources Control Board in May, 2016. The Department is no longer required to reduce water demands by 20% to comply with the Governor's Executive Order. The revised water conservation recognizes slightly improved water supply in Northern California. Water agencies were required to perform a three year stress test of their water supply, assuming continued drought conditions. The analysis resulted in a 0% mandatory conservation requirement for the City due to emergency storage available from Metropolitan Water District (MWD), even if the drought continues. The City and the Department will still need to conserve water, because it is unknown if this is the end of a five year drought or the middle of a ten year drought. Staff will recommend to City Council on July 12, 2016 to change the City's Water Conservation Plan from level 3 to level 2. This will allow customers to irrigate three days per week. M. Moore shared that the Irvine Ranch Water District (IRWD) has filed a lawsuit against the Orange County Water District (OCWD) claiming that their water pumping rates are unfair. This claim would save IRWD $3 - $4 Million per year, which would increase costs for 2016-37 ACTION TAKEN ABSTAINED: 0. ABSENT: 1 (E. Medrano). J. Machiaverna received and filed all information received concerning the City of Anaheim's 2016 Public Health Goals Report. AGENDA ITEM ACTION TAKEN all other groundwater pumps, including Anaheim. M. Moore shared that MWD celebrated the 75`h Anniversary of the Colorado River Aqueduct Project on July 13, 2016. MWD presented Anaheim and the 12 other original member agencies with a plaque. 9. UPDATE ON ELECTRIC SYSTEM ISSUES. J. Lonneker shared with the Board that the Electric System performed well during the June heatwave with multiple small heat related outages over a three day period affecting, on average, less than 50 customers with a restore time around three (3) hours. The system peak was 562MW, well below the 596MW all-time system peak load. She shared that after an intemal/external competitive national recruitment, D. Algarme was selected to fill the Electric Operations Manager position. He is currently the Utilities Chief Operator, and has been with the Department for 27 years. J. Lonneker also shared that staff is meeting with Southern California Edison (SCE) management to discuss communication protocols between SCE and the Department for managing extended outages on the SCE 230kV transmission system interconnection that has the potential to impact service to Anaheim. This discussion is to ensure that SCE is committed to providing Anaheim with top level service when managing an unplanned event and that the Department has direct contact with SCE management at the decision level to coordinate response to minimize the potential impacts to Anaheim's electric system. 10. UPDATE ON FINANCE ISSUES. B. Beelner, Acting Public Utilities General Manager, discussed the Utilities Dashboard for May. He mentioned that electric revenues were down 1.2% year to date due to lower than expected wholesale revenue caused by softness in wholesale energy prices. B. Beelner also mentioned that water revenue was down 10.9% year to date due to customer conservation; however, May revenue was only down 3%. B. Beelner also discussed the upcoming Electric and Water bond issuances. He shared with the Board that the Department would be seeking Board approval in August for a not -to -exceed $250 million Electric bond, underwritten by Goldman Sachs. The Electric bond would fund $100 million for new capital investment, and would refund $150 million in outstanding Electric System debt. He also mentioned that the Department would also be seeking approval for a not -to -exceed $45 million Water bond, underwritten by Royal Bank of Canada, which would be used to solely fund new capital investment. 11. UPDATE ON POWER SUPPLY ISSUES. G. Bowen, AGM — Power Supply, updated the Board on the State of California's Cap and Trade Program explaining that the Department regularly auctions off its excess allowances in the market to help 2016-38 AGENDA ITEM ACTION TAKEN offset its renewable energy costs. He discussed with the Board that this Quarter's participation levels were low, resulting in very low proceeds which resulted in the State receiving only $10 million of the $500 million they were expecting from the sale of allowances in the auction. He explained that there are two more auctions this year which the Department will participate in to sell its allowances that were not sold in the previous auction and that if the Department is unable to sell the allowances in the next two auctions, it will hold them and use them for compliance purposes in the future. G. Bowen discussed with the Board that the warm weather built over the past weekend culminated in the hottest week in June on record in Anaheim peaking at 107 degrees, with Ioads peaking at 561 megawatts. G. Bowen stated that at the same time last year, the City's load was 100 megawatts lower. He also informed the Board that the last time temperatures were this high in June, the City's load reached an all-time high was back in 2006. Further, G. Bowen stated that the State's electric grid held up well and that no withdrawals from the Aliso Canyon Gas storage facility were necessary to maintain grid reliability. Lastly, G. Bowen discussed with the Board that the Department was presented with the Golden Hub of Innovation award for Energy and Environmental Quality by the Association of California Cities - Orange County for its Greenhouse Gas Reduction Plan. G. Bowen explained that one of the most important criteria in receiving the award was the ability to replicate the plan in other cities. 12. UPDATE ON ENTERPRISE RISK, COMPLIANCE, AND LEGISLATIVE & REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, reported that the auditors had completed their review of the Wholesale Energy Risk Management (ERM) Program for 2015, and that there were no Findings or Recommendations. The audit was very thorough taking several months to complete. It looked at transactions, the trade capture and settlement systems, the processes and procedures, as well as adherence to the requirements in the ERM program. The audit found the ERM program to be comprehensive, robust and effective in identifying and mitigating potential risks. J. Lehman also provided an update on the grid regionalization activities associated with State Bill (SB) 350 that passed last year. She said that as part of the new law, the State must Iook at expanding the California Independent System Operator (CAISO) to become a regional entity that includes other states as full participants. She mentioned that currently other states participate in the CAISO, but only on a limited basis, not turning over any of their transmission to increase the physical foot print of the CAISO. One of the key and controversial issues is how the access costs associated with an expanded grid would be priced, and that there could be significant cost implications to California if the cost allocations are not set properly, as this will be a model for other states and entities to join the CAISO in the future. 2016-39 AGENDA ITEM ACTION TAKEN J. Lehman shared that the PUB Legislative Working Group met prior to this meeting and reviewed the key bills remaining that have the potential to impact operations. However, she indicated that after the Legislature comes back from vacation at the end of July, it's likely that either new bills will be introduced through the "gut and amend" process, or amendments will be made to existing bills on SB 350 "clean-up" language regarding the grid expansion efforts, mentioned above, and also on the extension of SB 32, the Greenhouse Gas (GHG) emission reduction law. Currently, the existing law only covers up until 2020, and to continue these certain key GHG emission reduction programs beyond this time, additional legislation appears to be required. 13. AGENDA ITEM(S) FOR THE PUBLIC UTILITIES BOARD MEETING ON JULY 27, 2016. B. Beelner indicated that the following items are scheduled for the upcoming Board meeting: • Department Order Approvals • Integrated Resources Strategic Planning Overview • Write-off of Uncollectible Utility Accounts * 14. ITEM(S) BY SECRETARY. B. Beelner, Acting Public Utilities General Manager, discussed with the Board that the Department is now working with the City's Code Enforcement division to enforce the Anaheim Municipal Code regulations regarding illegal Short Term Rentals (STRs). 15. ITEM(S) BY BOARD MEMBERS. A. Abdulrahman thanked staff for the informative presentations. He asked about his earlier request for a presentation on Energy Storage. Staff let him know that it will be included in next month's presentation on Integrated Resources Strategic Planning Overview, D. Wain shared that he attended the Southern California Water Committee Water Energy Task Force event at the Grove and found the connections between water and energy use very informative. He acknowledged B. Beelner for a job well done in leading the meeting while D. Lee was on vacation. L. Cahill shared that last year's educational tour of the CAISO was worthwhile, as related issues are brought forward to the Board for consideration. J. Machiaverna thanked his colleagues and staff for an informative and productive meeting. 2016-40 AGENDA ITEM 16. ADJOURNMENT: (REGULAR MEETING ON JULY 27, 2016, AT 5:00 P.M., IN THE 11TH FLOOR LARGE CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). Respectfully submitted, Brian Beelner Acting Public Utilities General Manager ACTION TAKEN D. Wain moved approval to adjourn the Public Hearing/ Regular Meeting at 7:18 p.m., to the Board's Regular Meeting date of July 27, 2016 at 5:00 p.m. A. Abdulrahman seconded motion. MOTION CARRIED: 5-0. ABSTAINED: 0. ABSENT: 2 (E. Medrano, S.E. Faessel). * 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.