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Public Utilities 2016/10/26CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES October 26, 2016 The agenda having been posted on Thursday, October 20, 2016, the Regular Meeting of the Public Utilities Board (Board) was called to order by Chairperson J. Machiaverna at 5:00 p.m. on Wednesday, October 26, 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 Chair S.E. Faessel, B. Hernandez, D. Wain, A. Abdulrahman, E. Medrano, L. Cahill Board Members Absent: None Staff Present: D. Lee, M. Moore, L. Quiambao, J. Lehman, A. Kott, B. Beelner, G. Bowen, J. Lonneker, P. Oviedo, T. McCarthy, M. Seifen, D. Schmidt, D. Algarme, D. Albaugh, P. Bogdanoff Guest(s) Present: Wendy Gumb, Spruce Finance Inc. AGENDA ITEM 1. PUBLIC COMMENTS. No Public Comments. 2. APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC UTILITIES BOARD MEETING OF SEPTEMBER 28, 2016. * 3. APPROVAL OF A RESOLUTION CONSENTING TO THE INCLUSION OF THE CITY OF ANAHEIM WITHIN THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (CSCDA) OPEN PACE PROGRAM AND AUTHORIZING THE CSCDA TO CONDUCT CONTRACTUAL ASSESSMENTS AND APPROVING PARTICIPATION AGREEMENTS WITH THE CSCDA AND ITS THIRD PARTY ADMINISTRATORS. * G. Bowen, AGM — Power Supply, provided the Board with an overview of the Resolution with CSCDA Open Property Assessed Clean Energy Program (PACE) for Water Conservation and Energy Efficiency 2016-63 ACTION TAKEN There being no public comments, Chairperson J. Machiaverna closed the public comments portion of the meeting. S. E. Faessel moved approval of the Minutes of the Regular Public Utilities Board Meeting of September 28, 2016, D. Wain seconded the motion. MOTION CARRIED: 5-0. ABSTAINED: 2 (E. Medrano and L. Cahill). ABSENT: 0. A. Abdulrahman moved approval of a Resolution consenting to include the City of Anaheim in the CSCDA Open PACE Program and authorizing contractual assessments plus approval of the participation agreements with CSCDA and its third party administrators. E. Medrano seconded the motion. MOTION CARRIED: 7-0. ITEM NO. 06 AGENDA ITEM ACTION TAKEN improvements. He indicated CSCDA uses private sector capital to fund ABSTAINED: 0. Energy Efficiency improvements for residential and non-residential ABSENT: 0. property owners and funding is repaid through an assessment on the property owner's tax bill. G. Bowen also pointed out that the Open PACE Program differs from the regular PACE program in that multiple vendors compete for customers' business versus a single program vendor which creates more competition for customer business. He also shared with the Board that CSCDA's Consumer Protection Policy was attached to the staff report and the Public Utilities Department (Department) has provided a link to the protection policy on its web page. 4. APPROVAL OF PUBLIC UTILITIES DEPARTMENT ORDERS 42 (AVOIDANCE OF PLANNED DISRUPTIONS OF SERVICE DURING EXTREME WEATHER EVENTS), 105 (PROCESSING CITY COUNCIL AND PUBLIC UTILITIES BOARD AGENDA ITEMS), AND 513 (DISASTER RESPONSE PLAN). D. Albaugh, Enterprise Administrative Services Manager, provided the Board with an introduction to the Department Orders (DOs) 42, 105, and 513. He discussed how DOs are related to broader control efforts, comparable to the City's Administrative Regulations, but with specificity to the Department's operation. D. Albaugh provided an overview of three DOs: (1) Department Order 42 — Avoidance of Planned Disruption of Service During Extreme Weather Events, which is to ensure that the Department will not perform disconnections or planned outages during extreme weather conditions and establishes the criteria necessary to declare an extreme weather condition; (2) Department Order 105 -- Processing City Council and Public Utilities Board Agenda Items, which establishes the Department's format, content guidelines, and submission/review procedures for staff reports and accompanying documents; and (3) Department Order 513 — Emergency Response Plan, which is the Department's policy related to the development and implementation of its Emergency Response Plan (ERP). The Board concurred with the need for DOs to provide necessary guidance for Department personnel. 5. PRESENTATION ON WATER ADEQUACY PLAN UPDATE. P. Bogdanoff, Principal Civil Engineer, gave a presentation on the Department's Water System Adequacy. He discussed how the Department employs long term planning to ensure the water system consistently meets and exceeds the needs of its customers. He further explained that demand forecasting, supply forecasting, and advanced capital improvement planning are all components of the Department's long term planning approach. P. Bogdanoff also discussed the various factors that have led to reduced water use per customer, including State regulations and conservation, involved in demand forecasting. P. Bogdanoff addressed the components of the Department's advanced planning process to prioritize capital projects. He indicated the Department has moved from basic outage and age -based replacement 2016-64 E. Medrano moved approval of the Public Utilities Department Orders 42, I05, and 513. L. Cahill seconded the motion. MOTION CARRIED: 7-0. ABSTAINED: 0. ABSENT: 0. AGENDA ITEM ACTION TAKEN schedules to an advanced planning model that considers the likelihood and the impact of a potential outage. The Board asked about the use of recycled water, and P. Bogdanoff explained that the Orange County Water District's Groundwater Replenishment System provides regional recycled water that recharges the basin, and that a future expansion is planned to increase its capacity. 6. PRESENTATION ON ANNUAL ELECTRIC RELIABILITY REPORT. D. Alganne, Electric Operations Manager, presented on the Department's Electric Reliability Report for 2015. He discussed the 2015 Reliability Metrics for frequency, duration, and response time which compared favorably against state, local, and national utility performance for 10 year averages. He also shared that the Department's improving reliability performance, over the last 25 years, is due to programs designed to mitigate common outages, such as Direct Buried Cable Replacement and Underground Conversion programs. The Department's comprehensive approach to improving reliability includes inspection/maintenance, infrastructure replacement, workforce training, and safety and automation, which are all necessary components to the electric system's performance. D. Algarme also provided an overview of the Department's efforts to grant customers' access to service information via smart phone apps and online resources. Additionally, he discussed future programs such as installing non -gas filled switches, further automation, LED streetlights, ductile iron poles, and Automated Metering Infrastructure which would add to the Department's continued investment in service reliability. 7. DISCUSSION ON ANNUAL EMERGENCY RESPONSE PLANNING REPORT. J. Lehman, Chief Risk Officer, provided the annual report on the Department's emergency response planning and preparedness activities. The Department's Emergency Response Planning program provides staff vital information and guidance on actions to be taken before, during, and after major emergencies and it supplements City-wide efforts to prepare for and respond to emergencies. She shared that during the past year there had been no major outages on either the electric or water services' systems that triggered the activation of the Department's Emergency Response Plan. She then highlighted the training and drills, including the annual exercise that had taken place during the year, as well as several changes to the plan. She thanked D. Schmidt and A. Torres for their participation in coordinating the drill. 8. DISCUSSION ON THE QUARTERLY STATUS REPORTS ON CAPITAL IMPROVEMENT PROJECTS, MASTER AGREEMENTS, GENERAL SERVICE AGREEMENTS, AND SPOT BID AWARDS. 2016-65 AGENDA ITEM ACTION TAKEN D. Lee, Public Utilities General Manager, discussed the quarterly reports, and highlighted that the spot bid awards were implemented when commodity costs were volatile, and have become more stable. As a result, the City's Purchasing Division is seeking to implement multi- year agreements. The capital improvement projects maps have been updated with Council district boundaries as an additional reference for the Board. M. Moore provided an update on Windy Ridge and La Palma Complex water storage projects, indicating that contractors are mobilizing in preparation for construction. 9. UPDATE ON WATER SYSTEM ISSUES. M. Moore, AGM — Water Services, provided an update on groundwater levels, which have remained level for the past year; however, the amount of overdraft remains critical and is being monitored closely. Due to a significant amount of rain, both regional State Water Project reservoirs and local storage reservoirs like Diamond Valley Lake are filling up and increasing the region's water supply. M. Moore also indicated that water conservation efforts throughout the State continue to be a significant reason for the decrease in demand compared to the year 2013. Since June, the State has reduced demands 23.3% and the Department has reduced demands 20%. M. Moore provided an update in reference to the Orange County Register article regarding the North Basin Cleanup Project. The article stated the Environmental Protection Agency and Orange County Water District (OCWD) have formally executed a contract to work together to develop a plan to contain the volatile organic compounds in the groundwater basin. This new effort will result in collaboration on a cleanup plan with the responsible parties or the contamination that impacted wells in Anaheim and Fullerton over the past decade. Lastly, he addressed the articles written in the Orange County Register regarding the bacterial infections that occurred at a dental office in Anaheim. The Department has been working closely with the County Health Department to understand the cause of the contamination, which the County Health Department acknowledged was not caused in any way by the Department's water system. It appears the on-site water treatment system at the dental office was the likely cause affecting patients. Proper backflow protection prevented any contamination from leaching from the dental facility to the City water system. 10. UPDATE ON ELECTRIC SYSTEM ISSUES. J. Lonneker, AGM -- Electric Services, updated the Board on recent outages resulting from the severe lightning storm and rain. She reported that nearly 1,500 customers were affected due to the substation circuit outage. The sustained outages lasted about one minute and the majority of the impacted areas were restored less than four hours in duration. J. Lonneker also updated the Board regarding the status of one lineman's and an apprentice's injuries and recovery. The lineman was discharged and is recovering at home, and the apprentice was discharged on the same day of the incident. 2016-66 AGENDA ITEM ACTION TAKEN J. Lonneker informed the Board of the results of the Department's team of linemen who participated in the 2016 International Lineman Rodeo. The City's linemen team placed 60' in the municipal utility category and came in 22nd place out of 200 teams competing nationwide. 11. UPDATE ON FINANCE ISSUES. B. Beelner, AGM — Finance and Administration, discussed the recent pricing of Anaheim Housing and Public Improvements Authority (AHPIA) Series 2016 A and B Electric and Water revenue bonds. The bonds sold with a yield of approximately 1.59% with Electric bonds receiving $2.2 billion in total orders which was seven times more than the bonds available. This oversubscription allowed the Department to reduce the interest rates paid by an additional seven basis points. He also mentioned since the bonds were priced, interest rates have gone up by 31 basis points thereby saving customers more money due to the fortunate timing of the sale. B. Beelner also discussed the recent downgrade of Water Utilities credit rating by Standard and Poor's. He addressed the rationale behind the downgrade which did not affect the interest rates paid on new bonds and stated that Anaheim Public Utilities Water credit rating is still the highest of all Metropolitan Water District (MWD) member agencies. Lastly, he provided an update regarding the September 2016 Dashboard, explaining that due to continued warm weather through the summer, Electric revenue was approximately 7% higher than budget ($9M) with costs below budget by 11 % ($11.5M). He indicated Water revenue was 7% ($1.5M) below budget due to continued conservation, however costs were 21.1 % below budget ($16M) causing a positive net budget variance. 12. UPDATE ON POWER SUPPLY ISSUES. G. Bowen, AGM -- Power Supply, provided an update on outage of the Kraemer facility, which was due to a boiler tube leak that lasted an additional six days from last month's report and the Magnolia facility was out for a routine water wash lasting three days. G. Bowen indicated the Canyon facility was in a forced outage due to a ground fault on the generator which also lasted three days. G. Bowen reported that in terms of retail sales, 34% of supplies came from renewable energy, with the majority coming from biogas and the balance primarily from wind and geothermal generation. G. Bowen advised the Board that the Federal government executed the Boulder Canyon agreement for power from the Hoover Dam. fie indicated to the Board that the agreement will provide the Department an additional 50 years of low-cost and reliable energy starting on October 1, 2017. Lastly, he mentioned the Department's participation in Disney's Endless Summer Celebration in September. He shared that nearly 9,000 residents were in attendance and over 200 residents signed up for Home 2016-67 AGENDA ITEM ACTION TAKEN Utilities Check -Ups. G. Bowen thanked the staff who participated in coordinating and helping Anaheim customers at the event. 13. UPDATE ON ENTERPRISE RISK, COMPLIANCE, AND LEGISLATIVE & REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, invited the Board's attention to the Internal Compliance Report at their place settings. She highlighted the Department's water quality lab, which provides valuable water quality testing services on behalf of Anaheim customers, had passed its annual performance testing required to maintain accreditation from the State. J. Lehman then provided the Board with the Legislative Report for 2016, which highlighted significant legislative outcomes from the past year. She thanked the Public Utilities Board's (PUB) Legislative Working Group for their time and efforts this year for providing guidance and support for positions that protect Anaheim customers. She explained the PUB Working Group addressed a variety of bills including those that would have required disclosure of non-residential customer water use, mandated procurement of certain types of water, and the expansion of the net energy metering program. 14. AGENDA ITEM(S) FOR THE PUBLIC UTILITIES BOARD MEETING ON NOVEMBER 16, 2016. D. Lee stated the following items are planned for the following Board meeting: • Amendment to Urban Water Management Plan • Fraud Awareness Presentation • Adoption of proposed 2017 PUB meeting schedule 15. ITEM(S) BY SECRETARY. D. Lee stated that the Department would be participating in the Veteran's Day event, and M. Seifen explained that green LED bulbs would be provided to allow residents to honor the military by placing the green bulbs at the front porch or other area of their home during Veteran's Day. D. Lee informed the Board of a loan program where City departments are able to make energy and water efficiency improvements and pay back their loans on their utility bills. Park lighting, park restroom lights, and City Hall lighting will be the first locations to participate. D. Lee stated that the Anaheim Sustainability Center developer is looking for alternate locations for their facility, both in and outside of Anaheim. 16. ITEM(S) BY BOARD MEMBERS: A. Abdulrahman appreciated the information conveyed in the Water Adequacy Plan presentation and is looking forward to the upcoming San Gorgonio Wind Farm tour. 2016-68 AGENDA ITEM ACTION TAKEN D. Wain acknowledged the effort made by staff members during Public Power Week, and indicated that he participated in the bucket truck ride that was offered to the public. He also appreciated the presentation made at the neighborhood council meeting regarding the Groundwater Replenishment System, and found it to be educational for the attendees. E. Medrano commented on the importance of taking immediate safety actions concerning the injured employees, and thanked staff for keeping the Board informed. B. Hernandez commended B. Beelner for his continued efforts regarding the Department's finances related to refinancing opportunities that save money for Anaheim ratepayers. S. E. Faessel thanked the Department for making customer service a top priority. She also mentioned how important safety training is for the Department's employees and appreciated the updates on important issues and upcoming events. J. Machiaverna thanked staff for all the information that was provided and reminded everyone that next month's meeting will be one week earlier due to the Thanksgiving holiday. 17. ADJOURNMENT: (REGULAR MEETING ON NOVEMBER 16, B. Hernandez moved approval 2016, AT S:OOP.M., IN THE 11TH FLOOR LARGE CONFERENCE to adjourn the Regular ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM Meeting, at 6.41 p.m., to the BOULEVARD, ANAHEIM, CALIFORNIA). Board's Regular Meeting date of November 16, 2016 at 5:00 p.m. E. Medrano seconded the motion. MOTION CARRIED: 7-0. ABSTAINED: 0. ABSENT: 0. Rpe titted, 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.