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Public Utilities 2013/08/28CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES AUGUST 28, 2013 The agenda having been posted on Thursday, August 22, 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, August 28, 2013, in the 11' Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: D. Morgan, J. Machiaverna, B. Hernandez, S.E. Faessel, D. Singer, D. Wain, C. Monaco Board Members Absent: None Staff Present: M. Edwards, D. Calkins, S. Sciortino, D. Lee, E. Zacherl, J. Lehman, A. Kott, L. Quiambao, P. Oviedo, R. Shintaku, G. Bowen, M. DeSollar Guest(s) Present: None AGENDA ITEM ACTION TAKEN 1. PUBLIC COMMENTS. There were no public comments. 2. APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC J. Machiaverna moved UTILITIES BOARD MEETING OF JULY 24, 2013. * approval of the Minutes of the Regular Public Utilities Board Prior to the approval of the minutes, D. Calkins congratulated Meeting of July 24, 2013. D. Chairperson D. Morgan on his service to the Public Utilities Board, Singer seconded the motion. and read the following portion of the Proclamation presented by the MOTION CARRIED: 7 -0. Department: ABSTAINED: 0. ABSENT: 0. For dedicated service to the Anaheim community as a Public Utilities Board member from August 25, 2009 to August 28, 2013 as both Vice Chairperson and as Chairperson of the Board. For his commitment to securing Anaheim Public Utilities' financial future while maintaining competitive rates and reliable resource delivery, and for establishing high level indicators that measure the success of the utility; For his vision in support of creative solutions to address Iegislative mandates for controlling greenhouse gas emissions, while minimizing their cost impacts to customers; For supporting efforts to increase electric supply reliability by constructing the Canyon Power Plant locally; and the support of renewable energy technologies such as wind, geothermal, and landfill gas that diversify the energy portfolio and reduce dependence on fossil fuels; For supporting investments in rehabilitation and replacement of the Water Utilities' aging infrastructure to ensure a reliable water system, including the establishment of new wells, the new Nohl Canyon Water Storage 2013-46 AGENDA ITEM ACTION TAKEN Tank, and the replacement of the aging Linda Vista Reservoir; For his guidance in the development of the innovative Water Sustainability Campus and Water Recycling Demonstration Plant to showcase and educate the public about various ways to use water wisely, reducing our dependence on imported water and improving water supply reliability; For tireless dedication to improving service reliability of the Electric Utility as well as improving community aesthetics, through programs such as Underground Conversion and graffiti abatement; Therefore, on this 28th day of August 2013, on behalf of all Anaheim Public Utilities employees, the City of Anaheim, and the ratepayers of our community, Anaheim Public Utilities proudly recognizes and honors the counsel and accomplishments of Chairperson David M. Morgan, as he concludes his service on the Anaheim Public Utilities Board. D. Calkins introduced M. DeSollar to the Board, sharing that she will begin to split her time between Anaheim Public Utilities and Anaheim Fire Department, providing a senior strategic role in maintaining effective communications, messaging, and Public Information Officer connections with the Department. 3. PRESENTATION ON POSEIDON'S SEAWATER DESALINATION PLANT IN HUNTINGTON BEACH. R. Shintaku, Water Resources and Planning Manager, gave a presentation on Poseidon's efforts to build a seawater desalination plant at the AES Generating Station in Huntington Beach. Over the coming months, Poseidon will be working to obtain the last permit needed for the project, from the Coastal Commission, and entering into long term water purchase agreements with cities and water districts in Orange County. The proposed project would produce a new drought -proof supply of 50 million gallons per day (56,000 acre feet per year) for Orange County, which represents about 8% of the County's water supply. Poseidon's preliminary estimate of the cost of this water is $1,850 per acre foot, which includes the cost to distribute water away from the plant to potential retail agency customers. This compares to the current cost of treated imported water from the Metropolitan Water District of $950/acre feet (af). Staff will continue monitoring developments for this project, evaluate its potential benefits, risks, and costs, and develop a recommendation for the Board's consideration on whether Anaheim should purchase water from this plant. 4. APPROVAL OF CALIFORNIA ENERGY COMMISSION 1305 B. Hernandez moved approval REPORTS AND ATTESTATIONS, ASSEMBLY BILL 162 of California Energy REPORTS AND ATTESTATIONS, AND THE ANNUAL Commission 1305 Reports and POWER CONTENT LABEL AND ATTESTATIONS FOR THE Attestations, Assembly Bill CITY OF ANAHEIM AND CITY OF ANAHEIM — GREEN 162 Reports and Attestations, POWER PROGRAM. * and the Annual Power Content Label and Attestations for the The written, publicly available staff report detailing the item was City of Anaheim and City of verbally summarized by staff. Anaheim — Green Power Program. D. Singer seconded the motion. 2013-47 AGENDA ITEM ACTION TAKEN The Board asked a variety of questions which resulted in their MOTION CARRIED: 7 -0. decision to support approval of the California Energy Commission ABSTAINED: 0. 1305 Reports and Attestations, Assembly Bill 162 reports and ABSENT: 0. Attestations, and the Annual Power Content Label and Attestations for the City of Anaheim and the City of Anaheim - Green Power Program. 5. APPROVAL OF THE RENEWABLE POWER PURCHASE S. E. Faessel moved approval AND SALE AGREEMENT (AGREEMENT) AND THE of the Renewable Power INTERCONNECTION AGREEMENT BETWEEN ANAHEIM Purchase and Sale Agreement ENERGY LLC AND THE CITY OF ANAHEIM; AND (Agreement) and the CERTIFY THAT THE AGREEMENT COMPLIES WITH THE Interconnection Agreement CALIFORNIA ENERGY COMMISSION'S GREENHOUSE between Anaheim Energy LLC GASES EMISSION PERFORMANCE STANDARD AS and the City of Anaheim; and ENUMERATED IN SENATE BILL 1368. * Certify that the Agreement CHARGES), AND WATER RULE NO. 16 (SERVICE complies with the California The written, publicly available staff report detailing the item was Energy Commission's verbally summarized by staff. Greenhouse Gases Emission REGULATIONS. * Performance Standard as The Board asked a variety of questions which resulted in their Enumerated in Senate Bill decision to support the approval of the Renewable Power Purchase 1368. J. Machiaverna and Sale Agreement (Agreement) and the Interconnection Agreement seconded the motion. between Anaheim Energy LLC and the City of Anaheim; and certify MOTION CARRIED: 7 -0. that the Agreement complies with the California Energy ABSTAINED: 0. Commission's greenhouse gases emissions performance standard as ABSENT: 0. enumerated in Senate Bill 1368. Connections, Meters, and 6. FIND AND DETERMINE THAT MODIFICLATIONS TO RULE J. Machiavema moved NOS. 16 AND 24 CONTAINED IN THE ELECTRIC AND approval of the Findings and WATER RATES, RULES, AND REGULATIONS ARE EXEMPT Determination that UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY Modifications to Rule Nos. 16 ACT, SECTION 15061 (B)(3) OF TITLE 14 OF THE and 24 contained in the CALIFORNIA ADMINISTRATIVE CODE; AND APPROVE Electric and Water Rates, THE MODIFICATIONS TO ELECTRIC RULE NOS. 16 Rules, and Regulations are (SERVICE CONNECTIONS AND FACILITIES ON exempt under the California CUSTOMER'S PREMISES) AND 24 (ELECTRIC DIVISION Environmental Quality Act, CHARGES), AND WATER RULE NO. 16 (SERVICE section 15061 (13)(3) of Title CONNECTIONS, METERS, AND CUSTOMERS' FACILITIES) 14 of the California OF THE ELECTRIC AND WATER RATES, RULES, AND Administrative Code; and REGULATIONS. * Approval of the Modifications to Electric Rule Nos. 16 The written, publicly available staff report detailing the item was (Service Connections and verbally summarized by staff. The item recommends modifications to Facilities on Customer's the rules that cover electric and water service connections, and ways premises) and 24 (Electric in which to reduce regulatory burden to Anaheim businesses and Division Charges), and Water residents. Examples discussed included providing courtesy credits to Rule No. 16 (Service customers when an unplanned event causes crews to miss their service Connections, Meters, and appointment and relocation of overhead service wires crossing Customers' Facilities) of the residential swimming pools without having to pull permits. Electric and Water Rates, Rules, and Regulations. The Board asked a variety of questions which resulted in their MOTION CARRIED: 7 -0. decision to support the approval of the findings and determination that ABSTAINED: 0. the Modifications to Electric Rule Nos. 16 (Service Connections and ABSENT: 0. Facilities on Customer's Premises) and 24 (Electric Division 2013-48 AGENDA ITEM ACTION TAKEN Charges), and Water Rule No. 16 (Service Connections, Meters, and Customers' Facilities) of the Electric and Water Rates, Rules, and Regulations — are exempt under CEQA as well as the approval of the modifications themselves. 7. APPROVAL OF AN AGREEMENT WITH ORANGE COUNTY D. Morgan moved approval of WATER DISTRICT FOR THE ANNEXATION OF 2,355 an Agreement with Orange ACRES OF LAND IN THE EASTERN PORTION OF THE County Water District for the CITY OF ANAHEIM INTO THE BOUNDARIES OF ORANGE annexation of 2,355 acres of COUNTY WATER DISTRICT. land in the eastern portion of the City of Anaheim into the The written, publicly available staff report detailing the item was boundaries of Orange County verbally summarized by staff. Water District. C. Monaco seconded the motion. The Board asked a variety of questions which resulted in their MOTION CARRIED: 7 -0. decision to support the approval of an Agreement with Orange County ABSTAINED: 0. Water District for annexation of 2,355 acres of land in the eastern ABSENT: 0. portion of the City of Anaheim into the boundaries of Orange County Water District. S. UPDATE ON WATER SYSTEM ISSUES. D. Calkins, AGM of Water Services, informed the Board that the Department will be receiving two trailers that will be available in an emergency to provide water to customers during a system outage. A total of 13 trailers are being provided to Orange County water utilities as part of a $430,000 UASI (Urban Area Security Initiative) grant. These trailers each have a capacity of 2,000 gallons and can be set up in neighborhoods that have lost water service. The 13 trailers are being distributed to 11 Orange County water agencies so they will be available throughout the County. M. Jouhari, Water Field Operations Manager, and his staff worked with the Water Emergency Response Organization of Orange County to secure these trailers for Anaheim and the County. M. Edwards, City Manager, provided information concerning Competitive Power Ventures, Inc. (CPV), an electric power generation development company headquartered in Maryland, who just obtained a six -month due diligence agreement with the Orange County Water District (OCWD) to evaluate developing a power plant in Anaheim on OCWD's Ball Road Basin property. The Ball Road Basin property is located south of Ball Road, between Phoenix Club Drive and the Santa Ana River. Anaheim expressed concerns to OCWD that the Ball Road Basin property is simply not a good location for a power plant because it would be incompatible with the surrounding commercial and residential land uses. The Community Services Department is interested in this property as a possible park and sports fields to serve the needs of the community. 9. UPDATE ON ELECTRIC SYSTEM ISSUES. D. Lee, AGM of Electric Services shared before and after photos of a recent undergrounding project on Brookhurst Street and Ball 2013-49 AGENDA ITEM Road. The photograph showed one of the tallest and most congested poles in Anaheim that was removed as part of the project. The undergrounding coincided with a street widening project. A public power primer document was distributed to Board members, which provides an overview of how electricity is delivered and the public power model. The document was developed by the American Public Power Association (APPA) for its member utilities. D. Lee informed the Board that Public Power Week will be in October 2013. One of the outreach activities is to host local elementary and junior high school students and teach them about electric safety, how power gets to their homes, and about different types of electric materials. Also, bucket truck rides will be provided to the students as part of the Downtown Farmer's Market event. 10. UPDATE ON FINANCE ISSUES. E. Zacherl, AGM of Finance and Administrative Services, invited the Board's attention to two Financial Dashboards provided at the meeting. The first dashboard represented the preliminary financial results for the fiscal year ending June 30, 2013. Electric revenues of $437 million were approximately $13 million over budget or 3 %. Electric expenses of $395 million were approximately $2.7 million under budget or slightly less than 1 %. Water revenues of nearly $60 million were $3 million or 5% over budget. Water expenses of nearly $54 million were almost $2 million or 3% under budget. E. Zacherl explained the second dashboard represented July's financial results. Electric revenues of $39 million were nearly $6 million or 17% over budget as a result of warmer than projected weather. Electric expenses were slightly over budget by $200,000 or 0.6 %, the primary reason being the cost of power purchases to serve the increased demand. Water revenues of nearly $7 million were $600,000 or nearly 9% over budget, also related to the warmer than projected weather. Water expenses of $4.4 million were $500,000 or nearly 10% under budget, due primarily to the use of more ground water to serve the increased demand rather than more expensive imported water. E. Zacherl also reported to the Board that the draw on the line of credit with Wells Fargo Bank used for the Cap and Trade auction held in May 2013 had been completely paid back earlier than projected. 11. UPDATE ON JOINT SERVICES ISSUES. S. Sciortino, AGM of Joint Services, discussed the most recent developments in the Cap and Trade auction. Since the required notification to the California Air Resources Board (CARB) of the change in the General Manager's position occurs was not processed, Anaheim Public Utilities (APU) was precluded from participating as a buyer in the auction. As part of the CARB regulatory oversight rules, any changes to the General Manager or City Council personnel require a 30 day notice in advance following personnel changes at that ACTION TAKEN 2013 50 AGENDA ITEM level in order to participate in an auction. Future actions will ensure that adequate notice will be provided. Since there is ample time to respond to what was planned for the August auction in later auctions during the year, APU was not materially harmed as a result of not being able to participate. The next auction will be held in November 2013. S. Sciortino suggested providing the Board with a presentation as to how the auction process has been working and what the Division's success has been sometime early next year. 12. UPDATE ON ENERGY RISK & LEGISLATIVE 1 REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, reported on two items. For the first item, J. Lehman referred the Board to the quarterly report on the Wholesale Energy Risk Management (ERM) program in their Board packages, and stated that all applicable transactions were within the ERM program requirements, and that Anaheim Public Utilities (APU) was in compliance with all aspects of the ERM program. She also confirmed that the counterparty credit quality was stable during this reporting period. J. Lehman also reported that the compliance reports associated with the Greenhouse Gas Emission Reduction and Renewable Portfolio Standard programs have been finalized. She also mentioned that APU had provided the California Independent System Operator (CAISO) with the required information so that APU's CAISO transactions will not be considered Swap transactions and therefore will not be under the Commodity Futures Trading Commission's (CFTC) jurisdiction. This is important because the CFTC's regulation of Swap transactions is very cumbersome and involved. The second item J. Lehman discussed was a brief summary of the Public Utilities Board (PUB) Working Group meeting, which was held just prior to the PUB meeting. 13. AGENDA ITEM(S) FOR THE NEXT PUBLIC UTILITIES BOARD MEETING ON SEPTEMBER 25, 2013. • Nominations for the Board Chairperson, Board Vice Chairperson, Undergrounding Subcommittee and Hearing Board Members. ** • Presentation on a Streetlight Monitoring Pilot Project. • Reimbursement Agreement with the Irvine Company Annexation of Mountain Park into the Orange County Water District.* • Property Assessment Clean Energy (PACE).* • Agreement with Southern California Gas Company to market Master Inter - Utility.* 14. ITEM(S) BY SECRETARY. D. Calkins, Acting General Manager, referred the Board to the informational memorandum on the nomination and election process for the Board officers and committee members. This item will be placed on the agenda for the next meeting. ACTION TAKEN 2013-51 AGENDA ITEM D. Calkins mentioned the Board that the Human Resources Department just announced the recruitment for the Utilities General Manager. Copies of the recruitment flier were distributed. Until the selection of a General Manager is completed, the Acting General Manager duties will continue to be rotated on a monthly basis. D. Lee will be Acting General Manager for the month of September, and S. Sciortino for October. D. Calkins mentioned that C. Monaco and D. Wain will be touring the Electric System on Friday, September 6th. He extended an offer to Board members to arrange a tour of the Water System as their schedules allow. 15. ITEM(S) BY BOARD MEMBERS. D. Singer thanked D. Morgan for his leadership, spirit, and insight. B. Hernandez mirrored D. Singer's well wishes for D. Morgan. J. Machiaverna shared that it has been a pleasure serving with D. Morgan and appreciated his insight. C. Monoco thanked the group for the meeting and also wished D. Morgan well. D. Wain echoed the congratulations to D. Morgan and wishing him every success in the future. S. E. Faessel thanked D. Morgan for his leadership on the Board. She added that although the Public Utilities Department's goal is to meet expectations, it often exceeds expectations to those serving the community. She was pleased with the Utility's flexibility in serving the different areas of Anaheim. Lastly, she shared that she enjoyed the undergrounding presentation as an example of a program she supports. D. Morgan expressed his appreciation to the Board and staff. He said he believes that one of M. Edwards' greatest accomplishments as the Utility General Manager is reflected in the staff, sharing that his most important job as a City Manager was in appointing department heads, and M. Edwards has done a great job. D. Morgan also shared his admiration for Anaheim's Customer Service orientation compared to other bureaucracies, which he attributes it to enterprises, such as the Convention Center, the Stadium, the Water Utility, and the Electric Utility. He believes that as the new City Manager, M. Edwards', background will serve her well and will impact the rest of the organization. ACTION TAKEN AGENDA ITEM 16. ADJOURNMENT: (TO THE REGULAR MEETING ON SEPTEMBER 25, 2013, AT 5:00 P.M., IN THE I V h FLOOR LARGE CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). Respectfully submitted, Don Calkins, Acting Public Utilities General Manager ACTION TAKEN J. Machiaverna moved to adjourn the Regular Meeting at 6:57 p.m. to the Board's next Regular Meeting date of September 25, 2013 at 5:00 p.m. S.E. Faessel seconded the motion. MOTION CARRIED: 7 -0. ABSTAINED: 0. ABSENT: 0. * 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.