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Public Utilities 2013/05/22CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES MAY 22, 2013 The agenda having been posted on Thursday, May 16, 2013, the Regular Meeting of the Public Utilities Board (Board) was called to order by Chairperson David Morgan at 5:00 p.m. on Wednesday, May 22, 2013, in the 2 nd Floor Gordon Hoyt Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: D. Morgan, J. Machiaverna, P. Carroll, B. Hernandez, C. Peltzer, D. Singer Board Members Absent: S.E. Faessel Staff Present: D. Calkins, D. Lee, E. Zacherl, S. Sciortino, J. Lehman, M. Edwards A. Kott, D. Ballin, L. Quiambao, P. Oviedo, G. Bowen, J. Coe, B. Beelner, R. Shintaku, T. Mardikian Guest(s) Present: Nikki Howell, RPR, CSR No. 9426; several additional members of the Community sat in attendance, however, did not speak so their names are unknown. AGENDA ITEM 1. PUBLIC HEARING: PROPOSED MODIFICATIONS TO THE ELECTRIC RATES, RULES, AND REGULATIONS CONCERNING THE CREATION OF DEVELOPMENT SCHEDULE D -TOU -L (DEVELOPMENTAL TIlVIE -OF -USE — LARGE) AND DEVELOPMENTAL SCHEDULE D -EV (DEVELOPMENTAL DOMESTIC ELECTRIC VEHICLES) RATES AND MODIFICATION OF THE EXISTING DEVELOPMENTAL SCHEDULE D -FIT (DEVELOPMENTAL FEED -IN TARIFF). * The Public Hearing was called to order by Chairperson D. Morgan at 5:00 p.m. A verbatim transcript of the entire presentation with all prepared testimony with exhibits, and oral testimony that were a part of the public hearing was prepared by the Court Reporter. The certified original transcript is on file in the 11 m Floor Department Records, Public Utilities Department, Anaheim West Tower. A certified copy of the original transcript is on file in the City Clerk's office, 2 nd Floor, City Hall. D. Lee, Assistant General Manager (AGM), Electric Services, for the Anaheim Public Utilities was called as the Utilities only witness. D. Lee indicated that it is important to note that the proposed rate action before the Board does not raise electric rates in any fashion. He pointed out that the rates provide existing and potential customers with more rate options then they currently have available. He mentioned there are three actions the Utility is proposing during this electric hearing. ACTION TAKEN There being no further testimony or public comments, Chairperson D. Morgan received the following motion from A. Kott, who moved that all evidence, oral and written, submitted by staff, including the Prepared Testimony with exhibits of D. Lee and the Affidavits of Publication of the Notice of Public Hearing become part of the record and moved into evidence. Chairperson D. Morgan granted A. Kott's motion. There being no further witnesses or evidence to be submitted by the Department for the Board's consideration, A. Kott requested that the record of the public hearing be closed. Chairperson D. Morgan granted A. Kott's request and closed the Public Hearing. 2013-25 AGENDA ITEM ACTION TAKEN He mentioned the first is the adoption of a developmental rate option P. Carroll moved approval of for high efficiency customers that use over four megawatts of energy, the Public Hearing: Proposed with at least a 65 percent load factor, which is called the Modifications to the Electric Developmental Time- of-Use -Large rate. D. Lee mentioned that this Rates, Rules and Regulations rate recognizes that high volume energy customers that are also very concerning the creation of efficient in their energy use patterns results in less costs per unit Development schedule D- energy to serve. TOU -L (Developmental Time - D. Morgan introduced this item and asked whether staff had any of -use- Large) and The second, he indicated, is the adoption of a developmental rate for Developmental Schedule D -EV residential customers with electric vehicle charging stations in their (Developmental Domestic homes, which is called the Developmental Domestic Electric Vehicles Electric Vehicles) Rates and rate. D. Lee said the Utility would benefit in that this would Modification of the existing encourage customers to charge their vehicles during off peak times, Developmental Schedule D -Fit thereby mitigating any impacts on existing utility infrastructure that (Developmental Feed -In may arise from multiple electric vehicles charging in the same Tariff). B. Hernandez neighborhood during the high demand times which could result in the seconded the motion. need to upgrade the associated wires and transformers. MOTION CARRIED: 6 -0. ABSTAINED: 0. And third, he continued, is the amendment of an existing ABSENT: 1 (S.E. Faessel). Developmental- Feed -in Tariff to ensure our compliance with new state law. D. Lee indicated that the Utility currently allows small - scale renewable generators within Anaheim city limits, with the intent to sell the power generated back to Anaheim for a pre - determined price. He indicated the new law, Senate Bill 1332, now mandates that public owned utilities include the avoided costs the utilities would otherwise pay if energy were to come from more traditional power generation systems. The proposed modifications to the developmental rate schedule includes those avoided costs, and brings the Utility into compliance with this law. After D. Lee completed this presentation and testimony, D. Morgan asked if any member of the public would like to speak in favor or in opposition of the proposed modifications. There were no public comments. Thereafter, all of the following was submitted into the record: all evidence, oral and written, submitted by staff, including the Prepared Testimony with exhibits of D. Lee and the Affidavits of Publication of Notice of Public Hearing. D. Morgan closed the public hearing. 2. APPROVAL OF MODIFICATIONS TO RULE NOS. 1 B. Hernandez moved approval (DEFINITIONS) AND 12 (RATES, OPTIONAL RATES, AND of the Modifications to Rule DEVELOPMENTAL RATE SCHEDULES) OF THE ELECTRIC Nos. 1 (Definitions) and 12 RATES, RULES AND REGULATIONS. * (Rates, Optional Rates, and Developmental Rate D. Morgan introduced this item and asked whether staff had any Schedules) of the Electric additional information to add or discuss given the previous public Rates, Rules and Regulations. hearing presentation. D. Lee indicated he did not and that the reasons D. Singer seconded the motion, for the proposed modifications to Rules No. 1 and 12 were explained, MOTION CARRIED: 6 -0. and the reasoning behind them has already been addressed in the ABSTAINED: 0. previous presentation. ABSENT: 1 (S.E. Faessel). D. Morgan thereafter entertained motions for approval of the proposed modifications. The public hearing concluded at 5:30 p.m. 2013-26 AGENDA ITEM 3. PUBLIC HEARING: PROPOSED INCREASES TO THE WATER COMMODITY ADJUSTMENT AND WATER SYSTEM RELIABILITY ADJUSTMENT RATES AND CORRESPONDING REVISIONS TO THE SCHEDULE W -CA, AND SCHEDULE W -SRA, OF THE WATER RATES, RULES AND REGULATIONS. ** The Public Hearing was called to order by Chairperson D. Morgan at 5:30 p.m. A verbatim transcript of the entire presentation with all Prepared Testimony with exhibits and oral testimony that were a part of the public hearing was prepared by the Court Reporter. The certified original transcript is on file in the 11` Floor Department Records, Public Utilities Department, Anaheim West Tower. A certified copy of the original transcript is on file in the City Clerk's office, 2nd Floor, City Hall. D. Morgan mentioned that the purpose of the public hearing is to consider the adjustment of the Water Commodity Adjustment rate, and the corresponding revisions in the commodity adjustment clause scheduled W -CA, and the Water System Reliability Adjustment rate in the corresponding revisions of the schedule W -SRA of the Water Rates, Rules and Regulations. D. Calkins, Assistant General Manager, Water Services, for the Anaheim Public Utilities was called as the Utilities only witness. D. Calkins explained that there are four components to a water bill; two of these components are a Water Commodity Adjustment, or WCA, and Water System Reliability Adjustment, or WSRA. He explained that the WCA pays for the cost to purchase, pump, and treat water. As for the WSRA, he indicated that it pays for investment in water system infrastructure, including debt service cost. He mentioned that the proposed adjustments would increase the amount charged for every 748 gallons of water from $1.94 and a half cents to $2.11. This increase of 16 and a half cents for 748 gallons translates into an increase of approximately $3.30 per month or 7.5 percent for a typical residential customer occupying a single family home. D. Calkins stated that there were a number of reasons behind the proposed increases. First, the wholesale cost of water from the Metropolitan Water District continues to rise. Second, the Utility must continue to rehabilitate and replace Anaheim's aging local water infrastructure, which includes wells, pipelines, storage facilities, and pump stations. D. Calkins stated that the Utility operates on a not - for -profit basis, meaning that the Utility is only allowed to charge rates sufficient to cover its costs. These costs, he pointed out, include buying water for customers, treating that water to meet all drinking water standards, and operating and maintaining infrastructure sufficient to appropriately pump, store, and deliver that water to all of the Utility's customers. ACTION TAKEN There being no further testimony or public comments, Chairperson D. Morgan received the following motion from A. Kott, who moved that all evidence, oral and written, submitted by staff, including the Prepared Testimony with exhibits of Don Calkins and Affidavits of Publication of the Notice of Public Hearing, and the protest letters and a -mails filed with the Secretary of the Board become part of the record and moved into evidence. Chairperson D. Morgan granted A. Kott's motion. There being no further witnesses or evidence to be submitted by the Department for the Board's consideration, A. Kott requested that the record of the public hearing be closed. Chairperson D. Morgan granted A. Kott's request and closed the Public Hearing. B. Hernandez moved approval of the Public Hearing: Proposed Increase to the Water Commodity Adjustment and Water System Reliability Adjustment Rates and Corresponding Revisions to the Schedule W -CA, and Schedule W -SRA, of the Water Rates, Rules and Regulations. J. Machiaverna seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 1 (S.E. Faessel). 2013-27 AGENDA ITEM ACTION TAKEN After D. Calkins completed his presentation and testimony, D. Morgan asked if any member of the Board had any questions to ask D. Calkins. P. Carroll asked for clarification regarding how the number of written- protests were calculated. B. Beelner referenced the different parcel numbers located on each letter and shared that each letter represents one protest, due to the different parcel numbers listed. Afterwards, D. Morgan asked if any member of the public would like to speak in favor or in opposition of the proposed modifications. There were no public comments. Thereafter, all of the following was submitted into the record: all evidence, oral and written, submitted by staff, including the Prepared Testimony with exhibits of D. Calkins, the Affidavits of Publication of the Notice of Public Hearing, the Certificate of Mailing, the Return Notices of Public Hearing, and the protest letters and emails filed with the Secretary of the Board. D. Morgan closed the public hearing. D. Morgan indicated that in comparing the number of written protests received to the number of Notices of Public Hearing that were mailed to the Anaheim property owners and customers, the written protests do not equal 50 percent plus one of the tenants or property owners of record in the service territory. Therefore, based on the foregoing, he indicated that there is no majority protest to the proposed rate actions. D. Morgan concluded that the increases to the Water Commodity Adjustment, and corresponding revisions to the Schedule W -CA, as well as the Water System Reliability Adjustment, and corresponding revisions to the Schedule W -SRA of the Water Rates, Rules and Regulations are effective June 1, 2013. 4. PUBLIC COMMENTS. There were no public comments. 5. APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC P. Carroll moved approval of UTILITIES BOARD MEETING OF APRIL 24, 2013. * the Regular Public Utilities Board Meeting of April 24, 2013, B. Hernandez seconded the motion. MOTION CARRIED: 5-0. ABSTAINED: 0. ABSENT: 2 (S.E. Faessel, C. Peltzer). 6. APPROVAL OF PROPOSED PUBLIC HEARING DATE TO B. Hernandez moved approval ACCEPT COMMENTS ON THE ANAHEIM PUBLIC of the proposed Public Hearing UTILITES DEPARTMENT 2013 PUBLIC HEALTH GOALS date to accept comments on the REPORT. Anaheim Public Utilities Department 2013 Public The Board approved the public hearing date of Wednesday, June 26, Health Goals Report. J. 2013 at 5:00 p.m. Machiavema seconded the motion. MOTION CARRIED: 5 -0. ABSTAINED: 0. ABSENT: 2 (S.E. Faessel, C. Peltzer). 2013-28 AGENDA ITEM ACTION TAKEN 7. APPROVAL OF THE PUBLIC UTILITES DEPARMENT B. Hernandez moved approval FISCAL YEAR 2013/2014 PROPOSED BUDGET. * of the Public Utilities Department Fiscal Year 2013 / The written publicly available information detailing this item was 2014 proposed budget. D. summarized by staff, with changes from the detailed budget Singer seconded the motion. presentation from the prior meeting noted in the staff report. MOTION CARRIED: 6 -0. ABSTAINED: 0. ABSENT: 1 (S.E. Faessel). 8. DISCUSSION REGARDING THE PROPOSED USE OF THE PROCEEDS FROM THE REVOLVING CREDIT AGREEMENT TO RETIRE THE ANAHEIM PUBLIC FINANCE AUTHORITY REFUNDING ELECTRIC REVENUE BONDS, SERIES 2002B. The written publicly available information detailing this item was summarized by staff and discussed by the Board. 9. UPDATE ON WATER SYSTEM ISSUES. D. Calkins, AGM of Water Services, invited the Board's attention to the informational memorandum, which compared staffing levels of Anaheim's water utility to that of other public utilities in Southern California. This information was requested by the Board during the discussion that followed the Water Utility Overview presentation at the March meeting. The data shows that Utility staff is quite efficient in that the Utility is able to serve about 50% more customers per full time employee, than the average Southern California utility. This information will be posted on the Utilities website. 10. UPDATE ON ELECTRIC SYSTEM ISSUES. D. Lee, AGM of Electric Services, shared with the Board the Department's process of testing artificial ivy on utility equipment to help mitigate graffiti. As part of the testing process, a contractor will be responsible for placing artificial ivy on transformers, switches, and other equipment at approximately 30 utility equipment locations. This testing will allow staff to evaluate, among other things, potential heating and ventilation issues. In addition, the contractor will be applying a sealant on 30 street light poles, which will help to protect the poles and make it easier to remove graffiti through power spraying. A Board member inquired about vandalism at Toyon (Ronald Regan) Park affecting park lighting and requested staff to follow up. D. Lee said that on May l Oth, alleged vandalism involving utility cables took place in the Resort area resulting in a power outage. Over 500 customers were affected by the outage, but within six minutes, the Utility restored power to 80% of the affected customers through switching. Utility staff has been working with Police and Risk Management to secure any evidence relating to the alleged vandalism. The Utility mailed letters to all Anaheim customers to notify them of the Anaheim Alert messaging service. The service is free and allows customers to pick the types of notification such as power outages, 20 t 3 - 29 AGENDA ITEM traffic, or other significant events. Power notifications will include street boundaries to better identify the area affected. The letter is translated into Spanish for the Utility's Span ish - speaking customers. 11. UPDATE ON FINANCE ISSUES. E. Zacherl, AGM of Finance and Administrative Services, invited the Board's attention to the Utilities Dashboard. He shared that year -to- date revenues for both electric and water continue to be over budget through the month of April, both attributable to the warmer than normal weather last summer. Specifically, he indicated year -to -date electric revenues of $361.6 million were over budget by $11.8 million or 3.4% and that electric expense for that period of $327.2 million was over budget by $5.0 million or 1.6 %. Power supply costs exceeded the budget by $13.0 million and were partially offset by lower expenses in labor, operation and debt. Electric revenues for the month of April were $24.3 million which was under budget by $0.3 million or 1.4 %. E. Zacherl reported to the Board that the year -to -date water revenues through April were $49.2 million and were over budget $2.6 million or 5.6 %. Year -to -date water expenses through April of $44.2 million were under budget by $03 million or 0.6 %. This was a result of reduced labor, operating, and maintenance. Water revenues for the month of April were also over budget by 5.6% due to a Iack of rain from the end of December to the warmest April on record over the past 20 years. This resulted in increased irrigation demands. E. Zacherl shared with the Board that revenues for the remainder of the fiscal year are not projected to continue to run favorable to the budget and that it is very likely all of the favorable revenue variance will be eliminated by the end of the fiscal year. He also reported that cost containment will continue to be monitored closely throughout the balance of the year. 12. UPDATE ON JOINT SERVICES ISSUES. S. Sciortino, AGM of Joint Services, presented the US Green Building Coalition (UCGBC) recognition award for the Canyon Power Project's Silver LEED certification. S. Sciortino shared that the award ceremony included Los Angeles and Orange counties, and that the Canyon project was the only recipient in all of Orange County. He also presented pictures taken at the Water Awareness poster contest award ceremony held at Angel Stadium on Wednesday, May 15th. S.E. Faessel of the Board led the award ceremony. There were also pictures presented of the Solar Cup race in Temecula featuring students from Anaheim, Canyon, and Savanna High Schools. S. Sciortino shared that Savanna and Canyon High School teams placed first and third overall, out of 40 schools competing and Canyon High School also won the Sprint Division Race. Anaheim High School won the Teamwork Award. This was the fifth year in a row that an Anaheim High School won the overall competition. ACTION TAKEN 2013-30 AGENDA ITEM 13. UPDATE ON ENERGY RISK & LEGISLATIVE / REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, reported on several items. The first item was in regard to Anaheim Public Utilities Quarterly Wholesale Energy Risk Management (ERM) Report. She shared that for this quarter there were three violations of the ERM program requirements, detailed further below, and that all other ERM requirements were met for the quarter. J. Lehman reported that two of the violations were related to inadvertent trades by a consultant, and the lack of proper reporting. This is a prohibited activity and was taken very seriously, as the dollar impacts can potentially be significant; fortunately this did not result in significant costs and it provided an opportunity to further refine the Utility's procedures and educate. As a measure to better prevent future occurrences, a system testing protocol was developed and all applicable staff were trained on it. The third violation involved offering a transaction related service that was not covered under an existing agreement. This was mitigated by establishing an agreement to cover the services. This incident provided an opportunity to reaffirm the services covered in the various agreements currently in place, and to identify additional agreements that may be necessary to have in order to address new needs as the market evolves. J. Lehman mentioned that the annual water quality report, which is required by both State and Federal regulations, had been completed and was posted on the Department's website. She indicated that the regulations were modified this year to allow water utilities to provide the report on -line rather than printing and mailing it to all residents (providing a savings of approximately $35,000 annually). The Department provided notices to customers regarding the availability of the report on their bills and in the customer newsletter. As an additional notification effort, she reported that the following week an email would be sent out with a link to the report to the 65,000 customers that have provided their email address. A hard copy of the report will be given to anyone who requests one. And for the third item, J. Lehman highlighted that the Department's continuous efforts to improve and maintain relationships with Regulators are yielding results. Specifically, she reported that due to Utility staffs efforts, the California Air Resources Board (CARB) affirmed certain definitions in new regulations that address changes in contracts in a manner that will be beneficial to Anaheim if it were to terminate certain of its coal agreements. Staff worked closely with the California Energy Commission (CEC) to ensure that the Utility's cost limitation provisions included as part of the Renewable Portfolio Standard Program were understood and in -line with CEC thinking, as the CEC is still developing final regulations for the Investor Owned Utilities (IOUs). This effort should better help prevent CEC challenges to the Utility's cost limitation provisions at some later date. ACTION TAKEN 2013-31 AGENDA ITEM The City Attorney's Office and Utility staff worked with the South Coast Air Quality Management District (AQMD) to lower the penalty settlement amount related to one violation at one of the Utility's power plants (a minor incident occurring over a year ago). This settlement was accomplished because of good relations with AQMD, where they recognize and appreciate our culture of compliance. 14. AGENDA ITEM(S) FOR THE NEXT PUBLIC UTILITIES BOARD MEETING ON JUNE 26, 2013. • Public Hearing for the Public Health Goal Report • Summer Load Assessment Presentation • Generation Resources Portfolio Planning Presentation • Proposed Fiscal Year 2014 update on the Five Year Underground Conversion Plan * • Amendment to Rules Nos. 6 and 7 for Electric and Water • Information on the Convention Center Solar Project • Annual Write -off of Uncollectible Utility Accounts 15. ITEMS) BY SECRETARY. D. Calkins shared that over the next few months, he and D. Lee will alternate as Acting General Manager for the Utilities Department, while M. Edwards is Interim City Manager. For the month of June, D. Lee will be the Acting General Manager. 16. ITEM(S) BY BOARD MEMBERS. P. Carroll indicated that the Water Recycling Demonstration Plant next to City Hall was nicely done and is a beautiful project, and he believes that these are the types of projects that will generate water and power closer to where it is being used. J. Machiaverna apologized for missing the Water Recycling Demonstration Plant's dedication, and agrees with P. Carroll's comment, adding that resources generated close to where they will be used is the way of the future, and complimented staff on a great meeting. D. Singer appreciated all the presentations. B. Hernandez inquired if any of the Board members were solicited by Southern California Association of Governments for their email address. B. Hernandez commented on efforts within the State Legislature concerning ground water contamination. D. Morgan thanked staff for an excellent job on the meeting and the rate hearings, adding that this meeting was an example of the Utilities reputation of quality, service, and professionalism. He thanked the members of the public who participated in the rate hearings, along with the Board members and staff. ACTION TAKEN 2013-32 AGENDA ITEM 17. ADJOURNMENT: (TO THE PUBLIC HEARING / REGULAR MEETING ON JUNE 26, 2013, AT 5:00 P.M., IN THE 11 FLOOR LARGE CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). Respectfully submitted, Donald C. Calkins Acting Public Utilities General Manager ACTION TAKEN P. Carroll moved to adjourn the Public Hearing / Regular Meeting at 6:35 p.m. to the Board's Public Hearing / Regular Meeting date of June 26, 2013 at 5:00 p.m. C. Peltzer seconded the motion. MOTION CARRIED: 6 -0. ABSTAINED: 0. ABSENT: I (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. r