Public Utilities 2019/12/18CITY OF ANAHEIM
PUBLIC UTILITIES BOARD
MINUTES
December 18, 2019
The agenda, including the Teleconference Notice, having been posted on Thursday, December 12, 2019,
the Regular Meeting of the Public Utilities Board (Board) was called to order by Vice-Chairperson
J.Seymour at 5:00 p.m. on Wednesday, December 18, 2019, in the 11th Floor Large Conference Room,
Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California.
Board Members Present: Vice-Chairperson J. Seymour, V. Baroldi, A. Abdulrahman, R. Gaona,
Board Members Absent: Chairperson E. Medrano, J. Showalter, R. Bhalla
City Staff Present: D.Lee, B. Beelner, G. Bowen, M. Moore, J. Lonneker, J. Lehman,
A.Kott, L. Quiambao, P. Oviedo, M. Seifen, J. McBride, C. Guss,
C.Parker, S. Smith, M. Gonzalez
Guest(s) Present: None.
AGENDA ITEM
PUBLIC COMMENTS.
1.APPROVAL OF THE MINUTES OF THE PUBLIC
UTILITIES BOARD REGULAR MEETING OF NOVEMBER
20,2019.*
2.BY RESOLUTION, AUTHORIZE AN ISSUANCE OF NOT
TO EXCEED $250 MILLION AGGREGATE PRINCIPAL
AMOUNT OF ANAHEIM HOUSING AND PUBLIC
IMPROVEMENTS AUTHORITY (AHPIA) REVENUE
BONDS, SERIES 2020-A (ELECTRIC UTILITY
DISTRIBUTION SYSTEM IMPROVEMENTS), REVENUE
REFUNDING BONDS, SERIES 2020-B (ELECTRIC UTILITY
DISTRIBUTION SYSTEM REFUNDING) (TAXABLE), AND
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ACTION TAKEN
There being no public
comments, Vice
Chairperson J. Seymour
closed the public comments
portion of the meeting.
A.Abdulrahman moved
approval of the Minutes of
the Public Utilities Board
Regular Meeting of
November 20, 2019. R.
Gaona seconded the motion.
MOTION CARRIED: 4-0.
ABSTAINED: 0.
ABSENT: 3 [E. Medr ano,
J.Showalter, R. Bhalla].
V.Baroldi moved to
authorize an issuance of not
to exceed $250 million
aggregate principal amount
of Anaheim Housing and
Public Improvements
Authority (AHPIA) Revenue
Bonds, Series 2020-A
ITEM # 03
REVENUE REFUNDING BONDS, SERIES 2020-C
(ELECTRIC UTILITY DISTRIBUTION SYSTEM
REFUNDING) (COLLECTIVELY, THE ELECTRIC
BONDS).*
BY RESOLUTION, AUTHORIZE AN ISSUANCE OF NOT
TO EXCEED $85 MILLION AGGREGATE PRINCIPAL
AMOUNT OF AHPIA REVENUE BONDS, SERIES 2020-A
(WATER SYSTEM PROJECT) AND REVENUE BONDS,
SERIES 2020-B (WATER SYSTEM REFUNDING)
(TAXABLE) (COLLECTIVELY, THE WATER BONDS).*
Brian Beelner, Assistant General Manager-Finance and
Administration, presented a verbal report on Agenda Item 2 which
requested the Board to recommend, by Resolutions, to City
Council that the Anaheim Public Utilities Department (APU) issue
two separate types of fixed rate bonds. The first being a not to
exceed $250 million fixed rate Electric Revenue Bond for three
purposes: first, to fund $75 million for the construction of
necessary electric distribution system investments; second, to
potentially refinance up to $125 million in older more expensive
debt; and third, to refinance an older variable rate bond with a
fixed interest rate in order to eliminate interest rate risk in a time of
increasing volatility in interest rates. The second bond issuance
request is for APU to issue not to exceed $83 million in Water
Revenue Bonds for two purposes: first, to fund $45 million for the
construction of necessary water system improvements; and second,
to refinance up to $38 million in older more expensive debt.
B.Beelner discussed how bonds ensure that each generation of
customer pays their equitable share of their respect use of an asset,
and prevents rate spikes when large capital assets are constructed.
Over time, however, APU's long run financial planning calls for
increased cash funding capital as there are fewer large capital
projects in its Capital Improvement Plan that typically require
bond funding. In order to remain financially flexible, APU plans
to cash fund its routine capital needs by the mid 2020's and
become less reliant on debt. This will allow APU to become more
nimble to better handle the changing nature of the utility industry.
B.Beelner discussed how refunding the existing 2016 Electric and
Water Bonds would generate approximately $67 million in interest
savings under current interest rates. Additionally, the proposed
structure of the refinancing of these bonds would shorten the
respective lengths of the Water and Electric debt by 5-7 years
thereby allowing APU to pay these bonds off faster than would
occur otherwise.
The Board discussed the importance of the long-term plan to
reduce reliance on debt for routine capital improvements as well as
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(Electric Utility Distribution
System Improvements),
Revenue Refunding Bonds,
Series 2020-B (Electric
Utility Distribution System
Refunding) (Taxable), and
Revenue Refunding Bonds,
Series 2020-C (Electric
Utility Distribution System
Refunding) (collectively, the
Electric Bonds). R. Gaona
seconded the motion.
MOTION CARRIED: 4-0.
ABSTAINED: 0.
ABSENT: 3 [E. Medrano,
J. Showalter, R. Bhalla].
A.Abdulrahman moved to
authorize an issuance of not
to exceed $85 million
aggregate principal amount
of AHPIA Revenue Bonds,
Series 2020-A (Water
System Project) and
Revenue Bonds, Series
2020-B (Water System
Refunding) (Taxable)
(collectively, the Water
Bonds). V. Baroldi
seconded the motion.
MOTION CARRIED: 4-0.
ABSTAINED: 0.
ABSENT: 3 [E. Medrano,
J.Showalter, R. Bhalla].
the need to avoid deferred maintenance bubbles that result from
under-investment in infrastructure.
3.APPROVAL OF AGREEMENT FOR COMMERCIAL
CUSTOMER ENERGY ASSESSMENT PROGRAM AND
RELATED SERVICES WITH RICHARD HEATH &
ASSOCIATES, INC. FOR A TERM OF THREE YEARS
WITH UP TO TWO ONE-YEAR EXTENSIONS IN AN
ANNUAL NOT TO EXCEED AMOUNT OF $301,812.86
WITH A TWENTY PERCENT (20%) CONTINGENCY.*
Graham Bowen, Assistant General Manager -Power Supply,
discussed the proposed Energy and Water Efficiency Assessment
Program Agreement (Agreement) with Richard Heath and
Associates (RHA). APU has offered commercial customers with
no cost utility assessments since 1999. The Energy and Water
Assessments are comprised of a detailed review of the company's
energy and water consumption, assessing major electrical and
water components, and analyzing the cost associated with running
the equipment. The assessment provides customized short-term
and long-term options to increase water and energy efficiency for
the customer. G. Bowen explained that Richard Heath &
Associates ranked the highest with the current provider of the
services to APU, AllianceProject, ranked second. RHA is
currently providing APU with services for the Small Business
Direct Installation program, and have garnered favorable feedback
from Anaheim's small business customers.
The Board discussed the cost difference between the top proposals,
and G. Bowen explained that RHA's proposal was lower in cost
than the current provider's proposal.
4.BY RESOLUTION, (1) AUTHORIZE THE CITY OF
ANAHEIM TO PARTICIPATE IN THE STATEWIDE
CLEAN FUEL REWARD PROGRAM FOR POINT-OF
PURCHASE ELECTRIC VEHICLE REBATES; (2)
APPROVE THE FORMS AND AUTHORIZE THE
EXECUTION OF JOINDER AGREEMENT AND DEPOSIT
ACCOUNT AGREEMENT; (3) APPROVE ACTIONS IN
CONNECTION THEREWITH; AND (4) DETERMINE THAT
SAID ACTIONS ARE EXEMPT FROM THE CALIFORNIA
ENVIRONMENTAL QUALITY ACT (CEQA) PURSUANT
TO SECTIONS 15060(C)(3) AND 15378(B)(4) OF TITLE 14
OF THE CALIFORNIA CODE OF REGULATIONS.*
G.Bowen discussed the Clean Fuels Rewards (CFR) Program
Agreement (Agreement) noting that as part of the Agreement, APU
would be required to sign a Joinder Agreement and assign 20% of
its Low Carbon Fuel Standard (LCFS) proceeds to fund the state
wide Electric Vehicle (EV) rebate and outreach program
administered by Southern California Edison. By signing onto this
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V.Baroldi moved approval
of an Agreement for
Commercial Customer
Energy Assessment Program
and related services with
Richard Heath & Associates,
Inc. for a term of three years
with up to two one-year
extensions in an annual not
to exceed amount of
$301,812.86 with a twenty
percent (20%) contingency.
A.Abdulrahman seconded
the motion.
MOTION CARRIED: 4-0.
ABSTAINED: 0.
ABSENT: 3 [E. Medrano,
J.Showalter, R. Bhalla].
R.Gaona moved to
authorize the City of
Anaheim to participate in
the statewide Clean Fuel
Reward Program for Point
of-Purchase Electric Vehicle
Rebates; (2) approve the
forms and authorize the
execution of Joinder
Agreement and deposit
account agreement; (3)
approve actions in
connection therewith; and
( 4)determine that said
actions are exempt from the
California Environmental
Quality Act (CEQA)
pursuant to Sections
l 5060(C)(3) and
Agreement, APU would have access to the remaining funds from
the LCFS Program to be allocated for Anaheim-specific EV
charging rebate programs, personal EV charging rebates and,
income-qualified programs, and public education.
The Board discussed what would happen if APU did not
participate in the statewide program, and G. Bowen explained that
if Anaheim elects to forego participation in the Clean Fuels
Rewards Program, it would forfeit nearly all of its state funding.
5.APPROVAL OF SB 859 SALES AGREEMENT, IN
SUBSTANTIAL FORM, WITH THE SOUTHERN
CALIFORNIA PUBLIC POWER AUTHORITY FOR THE
ROSEBURG BI OMASS PROJECT FOR APPROXIMATELY
$157,000 ANNUALLY OVER FIVE YEARS. *
G.Bowen explained that with the passing of Senate Bill 859 in
2016, all utilities including APU, serving more than 100,000
customers, are required to support the removal of High Fire Hazard
forest materials through the procurement of biomass electric
generation. The legislation requires APU to procure 1.3
Megawatts (MW) of biomass energy, as its proportionate share, of
the statewide goal. Under the proposed agreement between
Southern California Public Power Authority (SCPP A) and
Anaheim related to the Roseburg Biomass Project, APU would
procure 0.49 MW, which would complete APU's current
compliance obligation. For this Agreement, only the capacity
attributes are being acquired to meet the compliance obligations of
SB 859. The Roseburg Biomass Project agreement was part of a
competitive solicitation through SCPPA that began in April 2018.
G.Bowen noted that APU would share the Roseburg capacity with
other municipal utilities in California. SCPP A will manage the
agreement and administrative activities on behalf of all SCPP A
participants and that the cost of the Agreement would be $157,000
annually over five years.
6.PRESENTATION: PROPOSED ELECTRIC AND WATER
RATE AND RULE MODIFICATIONS.
B.Beelner presented proposed Electric and Water Rate and Rule
modifications that are the subject of public hearings scheduled for
January 22, 2020. The proposed rate and rule modifications
modernize electric rates; ensure high-quality water service that
meets State requirements; provide a discount for income-qualified
customers and emergency bill assistance to those in need; and
expand the billing options available to customers.
B.Beelner described proposed modifications to the Electric Net
Energy Metering (NEM) rate and how the proposed rate is
structured to align with market price fluctuations and grid
conditions.
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15378(B)(4) of Title 14 of
the California Code of
Regulations.
A.Abdulrahman seconded
the motion.
MOTION CARRIED: 4-0.
ABSTAINED: 0.
ABSENT: 3 [E. Medrano,
J.Showalter, R. Bhalla].
A.Abdulrahman moved
approval of SB 859 Sales
Agreement, in substantial
form, with the Southern
California Public Power
Authority for the Roseburg
Biomass Project for
approximately $157,000
annually over five years.
R.Gaona seconded the
motion.
MOTION CARRIED: 4-0.
ABSTAINED: 0.
ABSENT: 3 [E. Medrano,
J.Showalter, R. Bhalla].
B.Beeler described proposed modifications to the Electric
Thermal Energy Storage (TES) rate that align the time-of-use
(TOU) periods with grid demands in order to properly incentivize
customers to use discretionary energy when energy is most
abundant. The TES rate will close to new customers but existing
TES customers will be grandfathered.
B.Beelner discussed APU's Water rate structure and explained
how changing water quality regulations regarding
Perfluorooctanoic acid (PFOA) and Perfluorooctanesulfonic acid
(PFOS) will result in higher water supply costs. These two organic
chemicals are the most common of the thousands of synthetic
organic chemicals in the Per-and polyfluoroalkyl substances
(PF AS) group of compounds. Due to the presence of these PF AS
compounds in the local groundwater supply, APU will temporarily
cease to operate multiple groundwater wells used to serve APU
customers and replace that lower-cost groundwater with higher
cost imported water until such time that treatment options are
available. B. Beelner explained that APU has both a short-term
and a long-term strategy to deal with PF AS. In the short-term,
APU will cease to operate groundwater wells in locations where
the presence of PF AS exceeds the State's response limit. In the
long-term, APU will utilize a portion of its reserve funds, identify
groundwater treatment sites, evaluate treatment options, and
potentially pursue litigation against responsible parties. B. Beelner
explained that the Orange County Water District (OCWD) will
likely reimburse APU for a portion of the capital and operating
cost of new groundwater treatment facilities. As a not-for-profit
agency, APU must recover the higher cost of procuring water on
behalf of APU cu stomers through a Water Commodity Adjustment
(WCA) increase in the meantime.
B.Beelner also provided an overview of APU's Water System
Reliability Adjustment (WSRA) that recovers capital-related costs,
including debt service on bonds issued to pay for infrastructure
improvements. B. Beelner illustrated that APU's water
distribution system is aging and requires ongoing investment to
maintain reliability. B. Beelner explained that the proposed
WSRA adjustment will help reduce reliance on debt by directly
funding a portion of necessary capital investment.
B.Beelner described multiple alternative options to the proposed
rate changes, highlighting the pros and cons for each alternative
and explaining why the proposed strategy is being recommended.
Board members discussed the importance of maintaining a reliable
water distribution system and ensuring water quality and
acknowledged how the proposed strategy contributes to those
objectives. Board members additionally stated how important it is
to explain the situation to customers and reviewed a Frequently
Asked Questions (FAQ) handout. Staff indicated that the FAQs
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will be made available at the public hearing and online, and other
methods of communications including Anaheim Magazine and the
utility bill insert would also be used.
B.Beelner described a proposed new water rule that establishes a
water bill discount for income-qualified seniors, long-term
disabled, and military veterans and also offers emergency
assistance to customers, similar to the current electric bill discount
and emergency assistance programs. B. Beelner described
additional rule modifications that provide customers more billing
options to help them pay their utility bills including a level pay
program that offers a recurring monthly bill amount based on prior
bill history, with a periodic true-up and modifications that provide
customers more time to evaluate and formally dispute a utility bill.
7.PRESENTATION: TRANSPORTATION
ELECTRIFICATION UPDATE.
Charles Guss, Principal Integrated Resource Planner, provided the
Board with an update on APU's Transportation Electrification
initiative. This initiative is aimed at supporting customers who are
interested in moving from high carbon fuels to low carbon
electricity as a transportation fuel. C. Guss reviewed the
Transportation Electrification initiative highlights for 2019 and
provided a look at some programs that APU is developing in 2020.
8.UPDATE ON ELECTRIC SYSTEM ISSUES.
Janet Lonneker, Assistant General Manager-Electric Services,
made the Board aware of a power outage that initiated on Friday,
December 6, 2019 at 5 p.m. due to a vehicle colliding into an
above ground switch enclosure located at the intersection ofNohl
Ranch Road and Scout Trail Road. Initially, the power outage
affected 1,480 customers, however operators and field crews were
able to restore power to approximately 80% of these customers
within 1 hour, and 90% within another 2 ½ hours. The remaining
128 customers were without power for an extended period while
crews replaced the damaged switch and made additional repairs
after ascertaining the damage to the electric cables and
connections. Costs for the damages will be billed to the vehicle
owner and their insurance company.
J.Lonneker shared with the Board the finished and framed picture
and hand-prints of the Roosevelt Elementary School students that
participated at the Harbor Substation dedication in November
2019.
9.UPDATE ON WATER SYSTEM ISSUES.
Michael Moore, Assistant General Manager -Water Services,
provided an update on the water supply. So far this season, there is
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normal precipitation in California. The local groundwater basin
has nearly recovered from the drought four years ago. The State
Water Project reservoirs were drawn down significantly this
summer. The State has issued the initial water allocation of 10%
for water agencies, which means MWD will start this calendar
with the guarantee of receiving only 10% of their State Water
Project allocation. This number will likely go up over the winter
as more precipitation is expected. Most of MWD's reservoirs are
full and ready should another drought occur.
10.UPDATE ON FINANCE ISSUES.
B.Beelner discussed the monthly dashboard with the Board. The
year to date electric revenue through November 30, 2019 was 3.9%
below budget ($7.9M) due primarily to a temperate summer
causing low retail demand coupled with lower than expected
wholesale revenue driven by lower than expected wholesale prices.
Electric costs for the fiscal year fell below budget by 7. 7%
($14.8M), also due to lower than expected demand and lower than
expected wholesale power prices causing a positive net budget
variance of $6.9M. Year to date water revenue was 5.2% ($2.lM)
below budget due to weaker than anticipated customer demand as a
result of the temperate summer. Water costs were below budget as
well by 4.3% (I.SM) causing a negative net budget variance of
$0.6M.
11.UPDATE ON POWER SUPPLY ISSUES.
G.Bowen provided the Board with a summary of APU's Power
Supply Portfolio for November. APU provided the Southern
California Air Management District with notification of cessation
of operations for the Kraemer Power Plant as of December 18,
2019. Wholesale sales has been much higher than expected as a
result of the California Independent System Operator (CAISO)
dispatching APU's coal fired power plant, IPP, in the off-peak
hours. This was due to gas prices exceeding the price of coal in
November.
12.UPDATE ON ENTERPRISE RISK AND COMPLIANCE.
Janis Lehman, Chief Risk Officer, provided two updates to the
Board. The first was on the Wholesale Energy Risk Management
(ERM) Program's Quarterly Compliance report. During this
period there were two minor violations of the California
Independent System Operator (CAISO) tariff related to resource
adequacy submittals. Appropriate corrective actions have been
taken and staff training was conducted to ensure that they do not
occur again, as well as modifications to the ERM Program will
specify that CAISO tariff requirements must be met.
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J.Lehman shared that the annual audit of the ERM Program was
completed for the period covering calendar year 2018. The audit
determined that APU was in compliance with the ERM Program's
transaction control and risk management protocols. While there
were no findings or recommendations for 2018, the improvements
to address the CAISO tariff violations will be included in the next
revision of the ERM.
A brief overview was provided of the upcoming legislative year,
and some of the issues that are likely to be addressed, including
additional wildfire related bills, resource procurement mandates,
water quality standard setting processes, and a potential ban on
metallic balloons. The next meeting of the Legislative Working
Group will be scheduled in February 2020.
13.ITEM(S) BY SECRET ARY.
D.Lee shared with the Board the items scheduled for the following
Board meeting include:
•Water and Electric Rate and Rule Public Hearings
•Recognition of the MWD Poster Contest Winner
•Electric Reliability Presentation
•Consulting Agreement with Orange County Water District
related to PF AS Treatment Testing
D.Lee shared photos from Board Member Showalter regarding her
family at the Packing House and her daughters in front of their new
home in Anaheim.
He showed photos of a tour provided to students from Westmont
Elementary School. They visited the Water Recycling
Demonstration Facility and the Electric Operations Control Room.
He informed the Board that Mayor Pro Tern Kring recognized
students from the Harbor Substation dedication event at City
Council.
He described that a customer with a water issue over the
Thanksgiving holiday was assisted by Water Maintenance
Pipefitters.
Lastly, D. Lee requested that the meeting be adjourned in the name
of William Blake, Electric Systems Operator, who passed away.
14.ITEM(S) BY BOARD MEMBERS.
Board members wished everyone Happy Holidays.
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15.ADJOURNMENT: (NEXT REGULAR MEETING ON
JANUARY 22, 2020, AT 5:00 P.M., IN THE 2ND FLOOR
GORDON HOYT CONFERENCE CENTER, ANAHEIM
WEST TOWER, 201 S. ANAHEIM BOULEVARD,
ANAHEIM, CALIFORNIA).
DukkuLee
Public Utilities General Manager
Vice-Chairperson J.
Seymour moved to adjourn
the Regular Meeting in
Memory of William Blake at
7:01 p.m., to the Board's
Regular Meeting date of
January 22, 2020 at 5:00
p.m. in the 2nd Floor
Gordon Hoyt Conference
Center of Anaheim West
Tower. R. Bhalla seconded
the motion.
*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.
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