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Public Utilities 2013/01/23CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES January 23, 2013 The agenda having been posted on Wednesday, January 16, 2013, the Regular Meeting of the Public Utilities Board (Board) was called to order by Chairperson David Morgan at 4:58 p.m. on Wednesday, January 23, 2013, in the 11 `h Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: D. Morgan, C. Peltzer, J. Machiaverna, B. Hernandez, S.E. Faessel, D. Singer Board Members Absent: P. Carroll Staff Present: M. Edwards, D. Calkins, D. Lee, S. Sciortino, E. Zacherl, D. Ballin, J. Lehman, L. Quiambao, G. Bowen, R. Dowell, P. Oviedo Guest(s) Present: D. Wain, Resident & Chairperson of the East District Neighborhood Council AGENDA ITEM 1. PUBLIC COMMENTS. None. D. Morgan welcomed D. Singer to the board, explaining that she will fill J. Brandman's term, through June 2015, at which point she will be eligible for an additional four year term. D. Morgan went on to briefly summarize D. Singer's biographical information, which is publicly available on the Utilities website. The Board members welcomed D. Singer and introduced themselves to her. 2. APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC UTILITIES BOARD MEETING OF DECEMBER 19, 2012. * 3. ELECTION OF PUBLIC UTILITY BOARD VICE CHAIRPERSON. ** I ACTION TAKEN S.E. Faessel moved approval of the December 19, 2012, Public Utilities Board Minutes. B. Hernandez seconded the motion. MOTION CARRIED: 6-0 ABSTAINED: 0 ABSENT: 1 (P. Carroll) B. Hernandez moved approval of the nomination of J. Machiaverna as Vice Chairperson to the Public ITEM NO. 01 D. Bailin, Utilities Attorney, indicated to the Board that as a result of Vice Chairperson D. Morgan being elected as Chairperson to the Public Utilities Board, a vacancy was created in the Vice Chairperson position. D. Ballin explained the nomination and election process to the Board. Thereafter, J. Machiavema was nominated as Vice Chairperson, and he subsequently accepted the nomination. No other nominations were made. 4. DISCUSSION OF THE REPLACEMENT OF A MEMBER OF THE PUB LEGISLATIVE WORKING GROUP. M. Edwards shared with the Board that this is an ad hoc group that provides guidance on Anaheim Public Utilities (APU's) legislative activities, ensuring that the interests of the ratepayers are included and is somewhat unstructured to enable the Board's flexibility regarding membership and who from the full Board participates. M. Edwards requested interest from Board members for the open seat on the Legislative Working Group (LWG) previously held by J. Brandrnan. After discussion, D. Singer volunteered and will be the new member of the LWG. 5. SCHEDULE A PUBLIC UTILITIES BOARD 2013 UTILITY GOALS WORKSHOP. M. Edwards shared that this was a request from the Board's Chairperson, and with all the recent changes in the PUB, now is a good time to revisit the fundamentals and authorities of the Board, including the major initiatives. M. Edwards continued that there will be two new members in June and some topics may be revisited at that time. D. Morgan indicated that with the Board's support, this meeting will be scheduled for February 27' at 3pm. Utilities Board. S.E. Faessel seconded the motion. MOTION CARRIED: 6-0 ABSTAINED: 0 ABSENT: 1 (P. Carroll) 6. REVISION TO ENERGY EFFICIENCY GOALS AS J. Machiavema moved REQUIRED BY AB2021. * approval of the Revision to Energy Efficiency Goals as The written, publicly available staff report detailing the item was Required by AB2021. B. verbally summarized by staff. Hernandez seconded the motion. The Board asked a variety of questions which culminated in their MOTION CARRIED: 6-0 decision to support brining forward this item to Anaheim City ABSTAINED: 0 Council. ABSENT: 1 (P. Carroll) 7. PRESENTATION ON OVERVIEW OF ANAHEIM'S CURRENT RESOURCE PORTFOLIO AND THE CHALLENGES WE FACE. ** The presentation detailing the item was verbally summarized by staff. Plans are to present this information to Council in the form of a workshop, currently scheduled for February 19, 2013. (Agenda item #7 was discussed after agenda item #8). 2013 -2 8. APPROVAL OF FIRM & NON -FIRM POINT TO POINT TRANSMISSION SERVICE AGREEMENTS (SHORT -TERM AND LONG -TERM) AND OPEN ACCESS TRANSMISSION TARIFFS WITH EACH OF THE FOLLOWING TRANSMISSION SERVICE PROVIDERS: ARIZONA PUBLIC SERVICE COMPANY (APS), LOS ANGELES DEPARTMENT OF WATER AND POWER (LADWP), PUBLIC SERVICE COMPANY OF NEW MEXICO (PNM), SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT (SRP), TUCSON ELECTRIC POWER COMPANY (TEP), AND THE WESTERN AREA POWER ADMINISTRATION (WAPA). * The written, publicly available staff report detailing this item was verbally summarized by staff. The Board asked a variety of questions which culminated in their decision to support bringing forward this item to Anaheim City Council. 9. PRESENTATION ON WATER OVERVIEW SYSTEMS. Moved to a later date. 10. UPDATE ON WATER SYSTEM ISSUES. D. Calkins, AGM of Water Services, requested the Board's attention to the Water Supply Conditions update in the Agenda package. This is the first monthly update for the winter; these updates will be provided through May. This information is significant because it determines the strength of Utilities water supplies, and would give a forewarning if a drought were predicated. Although the weather has been dry this month, water supplies for the Southland remain strong due to near record amounts of water in storage from a very wet winter two years ago. 11. UPDATE ON ELECTRIC SYSTEM ISSUES. D. Lee, AGM of Electric Services, shared an update on two quarterly reports provided in the Board packet. The first was for pre- qualified contractors, consultants, and spot bid equipment purchases, which grants the Department the ability to quickly issue small construction projects, or purchase materials in support of ongoing maintenance and capital projects. The second quarterly report was for capital projects either in construction or in the design stage. Two maps highlight the locations of electric and water projects throughout the City. Residents also have access to a website which has the same information, but is updated more frequently and includes all City projects. City staff also uses the Project Tracker tool to coordinate their projects between Departments. D. Morgan moved approval of Firm & Non -Firm Point to Point Transmission Service Agreements and Open Access Transmission Tariffs with each of the following Transmission Service providers: Arizona Public Service Company, Los Angeles Department of Water and Power, Public Service Company of New Mexico, Salt River Project Agricultural Improvement and Power District, Tucson Electric Power Company, and Western Area Power Administration. C. Peltzer seconded the motion. MOTION CARRIED: 6-0 ABSTAINED: 0 ABSENT: 1 (P. Carroll) 2013 -3 12. UPDATE ON FIANCE SERVICES ISSUES. E. Zacherl, AGM of Finance and Administrative Services, drew the Board's attention to the Utilities Dashboard. He shared with the Board that the year -to -date revenue through December 2012, was $217.4 million for the electric utility, which is $14.3 million or 7.0% over budget. The year -to -date favorable variance is a result of the warmer than normal weather experienced during the summer months. Year -to -date expenses through December for the electric utility were $188.8 million, which is $2.6 million or 1.4% less than budgeted, as a result of reduced operating expenses. E. Zacherl also shared with the Board that year -to -date revenue through December 2012, for the water utility was 533.0 million, which is $2.8 million or 9.3% over budget. Continuing to share that weather is also the primary factor for the favorable variance. Year -to -date expenses through December 2012, for the water utility were $25.9 million, which is $900,000 or 3.3% less than budgeted. The favorable variance was a result of reduced operating and maintenance expenses, which were partially offset, by an increase in water supply expense due to the increase in demand. E. Zacherl then shared that revenue information for the remainder of the fiscal year is not projected to continue to run favorable to the budget, and is expected to come in at the end of the fiscal year at potentially below budgeted levels. He also reported that cost containment will continue to be monitored closely throughout the balance of the year. E. Zacherl moved on and provided Board Members with copies of the audited financial statements for both the electric and the water utility. He shared that the external auditor issued an unqualified audit opinion, which accompanies the statements indicating they fairly represent the financial position of both utilities as of June 30, 2012. E. Zacherl reported that there were no audit findings as a result of the process, also sharing that the financial statements have been posted to the City's web page to make them available to everyone. E. Zacherl informed the Board that the Department will be requesting authorization from the City Council to enter into a Revolving Line of Credit Agreement with Wells Fargo Bank National Association. He shared with the Board the reasoning for not presenting the Agreement to the Board, due to the Department's conservative interpretation of the legal restriction imposed by the Dodd Frank Wall Street Reform and Consumer Protection Act (Act). The Act requires that municipal advisors providing financial advice on items, such as the Agreement, are required to register with the Securities and Exchange Commission (SEC) and meet certain onerous qualifications. Until the law and interpretation are final, the Department has taken a conservative approach in requesting approval for financial transactions only from the Council, as members of the Council are elected and are therefore excluded from the definition of municipal advisors in the municipal advisor provision of the Act. 2013 -4 13. UPDATE ON JOINT SERVICES ISSUES. S. Sciortino, AGM of Joint Services, shared information with the Board in response to a request by C. Peltzer during the November Board meeting. S. Sciortino provided a handout that summarized the monthly net wholesale revenues generated by the Canyon Power Project (CPP) for the last calendar year. The data included savings associated with reduced capacity payments for the California Independent System Operator's ( CAISO) local capacity requirements. Additionally, the table included the debt service and fixed O &M costs. The net revenues were calculated as total wholesale revenues generated in the CAISO market minus the cost of gas and variable O &M costs. The purpose of the table was to summarize the net profit of operating the Project last year in consideration of all costs associated with the facility, including fixed costs. The table demonstrated the Project had surplus revenues of $ I million for the year. 14. UPDATE ON ENERGY RISK & LEGISLATIVE / REGULATORY AFFAIRS ISSUES. Quarterly Internal Compliance Report J. Lehman, Chief Risk Officer, shared the Department's compliance activities by inviting the Board's attention to the Quarterly Internal Compliance Report located at their place settings. She began with the reporting quarter mentioning the Department's compliance with the applicable regulations. She continued that last month the South Coast Air Quality Management District (AQMD) rescinded the Notice of Violation for the Canyon Power Plant (CPP), that was related to the non - submittal of emission reports during the CPP construction (all other reports were submitted). J. Lehman also shared that the tri- annual lead and copper monitoring was conducted during this quarter. This monitoring takes place at the customer's tap to help verify that the water does not cause any damage to the customer's water delivery pipes. Continuing that all lead and copper results were well below the limits. Additionally, she reported that the sewer permit was received for the recycled water project, which is gearing up for operation later this year. Well Destruction Report J. Lehman invited the Board's attention to the Well Destruction Report and shared that under a State Proposition 84 grant, the Department received approximately $290,000 to properly destroy abandoned wells throughout the City. All abandoned wells known at the time were destroyed, ten in all. She continued that four of those wells were associated with former water companies and one was at Esperanza High School, continuing that this was an important effort to help remove potential conduits for water contamination. Legislation Activities J. Lehman reported that the meetings in Sacramento last week went well; she was able to meet with the elected representatives and their staff to discuss potential upcoming issues that the Utility may be facing this session. The meetings went very well and support was expressed for the potential issues in addition to concerns that may impact ratepayers. 2013 -5 In conclusion, J. Lehman shared that the next PUB Legislative Working Group Meeting will be in April. 15. AGENDA ITEM(S) FOR THE NEXT PUBLIC UTILITIES BOARD MEETING ON FEBRUARY 27,2013: • PUB 2013 Utility Goals Workshop • Presentation by Public Works on Anaheim Rapid Connection (ARC) • Reimbursement Agreement with the Irvine Company for Mountain Park Annexation of the Orange County Water District (OCWD) • Renewables Portfolio Standard Annual Procurement Plan (SBX 12) 16. ITEM(S) BY SECRETARY. Annual State of the City event is on February 5 1h atl2:00 noon - 2:00 p.m. at the Grove of Anaheim. 17. ITEM(S) BY BOARD MEMBERS. C. Peltzer addressed D. Singer, commenting that she received a good start into the Public Utilities Board. S.E. FaesseI shared her comments on the change of times, in reference to all discussed tonight and how we reflect back to the past and how the past is being treasured in a different way. B. Hernandez shared the Ducks have won three in a row. J. Machiavema welcomed D. Singer to the Board and thanked the Board for the nomination and the vote of confidence as the Board's Vice Chairperson. J. Machiavema complimented the customer service provided by Ramon Castellon, who assisted him with a power outage he experienced at his home; Ramon had also provided excellent customer service a few years back with another issue. J. Machiaverna also thanked Barbara Gonzalez, Real Estate Agent, for the 2013 Anaheim Historic Districts calendar that was provided to all of the Board Members. D. Singer shared that she is excited to work with such smart people and finds the information thus far to be both fascinating as well as interesting. She is looking forward to her Board involvement. D. Morgan thanked D. Singer for joining the Board and cornmented that with her background, she will not only bring a technical background, but excellent perspective in dealing with people as well. He also thanked the staff for a great presentation. 2013 -b 18. ADJOURNMENT: (TO THE PUB WORKSHOP ON FEBRUARY 27, 2013 AT 3:00 P.M., IN THE 11" FLOOR LARGE CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). Respectfully sAnutted, Marcie L. Edwards Secretary, Public Utilities Board B. Hernandez moved to adjourn the Regular Meeting at 7:10 p.m. to the Board's next meeting date of February 27, 2013 at 3:00 p.m. S.E. Faessel seconded the motion. MOTION CARRIED: 6 -0 ABSTAINED: 0 ABSENT: 1 (P. Carroll) * 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.