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Public Utilities 2014/07/23CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES July 23, 2014 The agenda having been posted on Thursday, July 17, 2014, the Regular Meeting of the Public Utilities Board (Board) was called to order by Chairperson John Machiaverna at 5:10 p.m. on Wednesday, July 23, 2014, in the l lth Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: Chair J. Machiaverna, Vice Chair D. Singer, B. Hernandez, S.E. Faessel, CHAIRPERSON, AND MEMBERS OF THE D.Wain, L. Cahill Board Members Absent: C. Monaco Staff Present. D. Lee, B. Beelner, S. Sciortino, D. Calkins, J. Lonneker, J. Lehman, A. Kott, A. Kott, Assistant City Attorney, opened the floor for nominations for R. Shintaku, G. Bowen, L. Quiambao, T. Nelson, R. Dowell, T. Sato, Chairperson. D. Singer nominated J. Machiaverna, who accepted the C. Thompson Guest(s) Present: Andrea Yamasaki, Relay for Life; Lorraine Grob, Relay for Life; S. Faessel, Cahill seconded the motion. By voice vote, the Board members resident elected J. Machiaverna as the Chairperson of the Public Utilities By voice vote, the Board AGENDA ITEM ACTION TAKEN 1. PUBLIC COMMENTS. Board Member D. Wain introduced Andrea Yamasaki and Lorraine Grob from the American Cancer Society; they thanked the Board and Anaheim Public Utilities for the donations and support provided to Relay for Life. The ladies presented the Board with a certificate of appreciation and encouraged the Board and staff to participate in the next Relay for Life event. Chairman J. Machiavema closed the public comments portion of the meeting. 2. ELECTIONS FOR BOARD CHAIRPERSON, VICE- By voice vote, the Board CHAIRPERSON, AND MEMBERS OF THE elected J. Machiaverna as UNDERGROUNDING SUBCOMMITTEE. ** Chairperson of the Public Utilities Board. A. Kott, Assistant City Attorney, opened the floor for nominations for MOTION CARRIED: 6 -0. Chairperson. D. Singer nominated J. Machiaverna, who accepted the ABSTAINED: 0. nomination. B. Hernandez moved to close the nominations and L. ABSENT: 1 (C. Monaco). Cahill seconded the motion. By voice vote, the Board members elected J. Machiaverna as the Chairperson of the Public Utilities By voice vote, the Board Board. A. Kott then opened the floor for nominations for the Vice- elected D. Singer as Vice - Chairperson. J. Machiaverna nominated D. Singer who accepted the Chairperson of the Public nomination. B. Hernandez motioned to close the nominations and S.E. Utilities Board. Faessel seconded the motion. By a voice vote, the Board members MOTION CARRIED: 6-0. elected D. Singer to the position of Vice - Chairperson of the Public ABSTAINED: 0. Utilities Board. ABSENT: 1 (C. Monaco). 2014-42 AGENDA ITEM A. Kott opened the floor for nominations. J. Machiavema nominated D. Singer, L. Cahill, and S.E. Faessel. Each accepted the nominations. J. Machiavema moved to close the nominations and S.E. Faessel seconded the motion. By a voice vote, D. Singer, S.E. Faessel, and L. Cahill were elected to serve on the Undergrounding Subcommittee. 3. APPOINTMENTS OF MEMBERS OF THE PUBLIC UTILITES HEARING BOARD AND THE LEGISLATIVE WORKING GROUP. * * Chairperson Machiavema made appointments to the Legislative Working Group as follows: B. Hernandez, D. Wain, and Chairperson J. Machiavema. Chairperson Machiavema made appointments to the Public Utilities Hearing Board as follows: C. Monaco, B. Hernandez, and Chairperson J. Machiavera as the standing members, and L. Cahill as the alternate. S. Sciortino, AGM of Joint Services, introduced M. Seifen as the new Communication Supervisor and Public Information Officer. 4, APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC UTILITIES BOARD MEETING OF JUNE 25, 2014. * 5. ENERGY STORAGE PRESENTATION AND APPROVAL OF A RESOLUTION DETERMINING A PROCUREMENT TARGET FOR ENERGY STORAGE SYSTEMS IS NOT APPROPRIATE DUE TO THE LACK OF COST- EFFECTIVE AND VIABLE OPTIONS. * T. Sato, Integrated Resources Planner, shared a presentation on the Department's Energy Storage System Plan and staff recommendation regarding energy storage procurement targets as required per Assembly Bill 2514 (AB 2514). She described the requirements of AB 2514, stating that the bill applies to all utilities in California and that utilities are to establish procurement targets if energy storage is found to be viable and cost - effective. T. Sato then briefly described what energy storage is, how it can be used, and the Department's processes for evaluating energy storage systems. Lastly, she presented the findings from the evaluation process, concluding that at this time, energy storage is not cost - effective or viable for the Department and that it is still premature to establish procurement targets. ACTION TAKEN By Voice vote, the Board elected D. Singer, S.E. Faessel, and L. Cahill to serve on the Undergrounding Subcommittee. MOTION CARRIED: 6 -0. ABSTAINED: 0. ABSENT: 1 (C. Monaco). S.E. Faessel moved approval of the Minutes of the Regular Public Utilities Board Meeting of June 25, 2014. L. Cahill seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 1 (C. Monaco). B. Hernandez moved approval of a Resolution determining a Procurement Target for Energy Storage Systems is not appropriate due to the lack of cost - effective and viable options. L. Cahill seconded the motion. MOTION CARRIED: 6 -0. ABSTAINED: 0. ABSENT: 1(C. Monaco). 2014-43 AGENDA ITEM ACTION TAKEN Board Members asked a variety of questions regarding Energy Storage and Assembly Bill 2514. The cost impacts to the Department were discussed, and due to high capital costs, T. Sato explained that procurement of energy storage is cost prohibitive at this time. However, she explained that energy storage could help address the impact of solar and wind energy on the electric grid in the future as costs come down. 6. PRESENTATION AND APPROVAL OF THE SAN JUAN D. Wain moved approval of GENERATING STATION (SJGS) FUEL AND CAPITAL the San Juan Generating FUNDING AGREEMENT AND AUTHORIZATION TO Station (SJGS) Fuel and NEGOTIATE A RESTRUCTURED OWNERSHIP INTEREST Capital Funding Agreement IN THE SJGS BEYOND DECEMBER 31, 2017. * and authorization to accounts are deemed "uncollectible" and that once the Department has negotiate a restructured G. Bowen, Integrated Resource Manager, provided the Board with a ownership interest in the presentation on the San Juan Generating Station (SJGS) Fuel and SJGS beyond December 31, Capital Funding Agreement (Agreement). He described the issues that 2017. D. Singer seconded the Department faced with State and Federal regulations, including the the motion. Global Warming Solutions Act (AB 32) and Regional Haze and MOTION CARRIED: 6-0. Emissions Performance Standards. He outlined the strategic approach ABSTAINED: 0. for Anaheim's divestiture of its ownership interest in SJGS and the ABSENT: 1 (C. Monaco). operating cost savings that will be used for the Department's Renewable Portfolio Standards (RPS) program as a result of divestiture. He also outlined the financial terms of the Agreement to the Board and the next steps to complete the divestiture by 2017. The Board inquired about the cost and benefits of exiting the SJGS and the Agreement. G. Bowen addressed questions regarding the Department's resource plans to address the divestiture of SJGS in the future. 7. APPROVAL OF ANNUAL WRITE -OFF OF UNCOLLECTIBLE D. Singer moved approval UTILITY ACCOUNTS. * of the Annual Write -off of Uncollectible Utility B. Beelner, AGM of Finance and Administration, discussed the Accounts. L. Cahill Department's annual write -off of uncollected utility accounts in the seconded the motion. sum of $765,504. B. Beelner discussed the process with which these MOTION CARRIED: 6 -0. accounts are deemed "uncollectible" and that once the Department has ABSTAINED: 0. exhausted all methods of collection from customers that have ceased ABSENT: 1 (C. Monaco). paying their utility bills, they are to be written off per accounting rules. He also described the ways in which staff works with customer to try and help them pay their utility bills. The Board sought clarification pertaining to the courtesy call, what Staff will incorporate the charges are being written off, and whether staff is able to continue courtesy call into the collection efforts even after the accounts have been written off. A timeline attachment to the Board member requested that the courtesy call be placed in the staff report. attachment to the staff report. AGENDA ITEM 8. APPROVAL OF CALIFORNIA INDEPENDENT SYSTEM OPERATOR (CAISO) DYNAMIC SCHEDULING AGREEMENT FOR SCHEDULING COORDINATORS. S. Sciortino, AGM of Joint Services, described the Dynamic Scheduling Agreement for Scheduling Coordinators to allow the Department to take part in a procedural change in the California Independent System Operator (CAISO)'s scheduling process. Dynamic scheduling will allow the Department to make changes to the amount of power coming from out -of- -state resources, such as Intermountain Power Project or San Juan as quickly as five minutes rather than on an hourly basis. The modification will limit the amount of stand -by reserves that would be required for importing energy into California. The Department has estimated the savings it would realize by our participation in the new procedure to be about $2.5 million per year. 9. DISCUSSION REGARDING THE QUARTERLY STATUS REPORTS ON CAPITAL IMPROVEMENT PROJECTS, MASTER AGREEMENTS, GENERAL SERVICE AGREEMENTS, AND SPOT BID AWARDS. D. Lee, Public Utilities General Manager, invited the Board's attention to their packets that included the quarterly status reports on Capital Improvements Projects, Master Agreements, General Service Agreements, and Spot Bid Awards. 10. DISCUSSION OF THE STATE WATER RESOURCES CONTROL BOARD WATER CONSERVATION EMERGENCY REGULATIONS. D. Calkins, AGM of Water Services, provided an overview of the Emergency Water Conservation Measures just approved by the State Water Resources Control Board to ensure all Californians reduce water use further. The regulations require all urban water agencies in the State to implement the following mandatory restrictions on outdoor potable water use within 30 days: • Outdoor irrigation that causes excess runoff • Washing a vehicle unless the hose is fitted with a shut -off nozzle • Washing down driveways and sidewalks • Using potable water in a fountain unless it's recirculated Due to the State Board's 30 -day deadline, the Department has to take this to City Council for action in August before the next meeting of the Board. Failure by water agencies to comply with these regulations subjects them to penalties of up to $10,000 per day. The State Board included with these regulations a provision that failing to comply with regulations is an infraction, punishable by a fine of up to $500 for each day the violation occurs. However, during the last drought, the Department was successful using a strong outreach effort and assisting customers with rebates and incentives, without imposing fines or penalties. At this time, the Department plans to continue with that ACTION TAKEN B. Hernandez moved approval of the California Independent System Operator (CASIO) Dynamic Scheduling Agreement for Scheduling Coordinators. S.E. Faessel seconded the motion. MOTION CARRIED: 6 -0. ABSTAINED: 0. ABSENT: 1 (C. Monaco). 2014 45 AGENDA ITEM approach. Staff will continue to monitor conditions, and if things change will bring this matter back to the Board for further discussion. 11. UPDATE ON WATER SYSTEM ISSUES. D. Calkins, AGM of Water Services, shared with the Board of the recent increase in its turf removal rebate to $3 per square foot (up from $1 per square foot earlier this year), which is one of the highest rebates in the region. A press release will be issued, and this information is also going out to all customers as a bill insert this month and next. The Metropolitan Water District (MWD) is leading a region -wide media outreach campaign called "Don't Waste Another Minute Wasting Water" to promote the need to further reduce water use. This is a comprehensive media campaign throughout the six - county MWD service area that will continue until October. The Board asked the Department to increase Anaheim customer awareness of our rebates and incentives through a stronger outreach effort. D. Calkins shared with the Board that the Department will be taking to the City Council an award of a construction contract to replace the water system's outdated Supervisory Control and Data Acquisition ( SCADA) system. This is the hardware and software system that is used to monitor the entire water distribution system, as well as the Lenain Treatment Plant, and to remotely control equipment throughout the city as needed to maintain flows and pressure. The old SCADA system was installed in 1995, and neither the hardware nor software is supported any longer by the vendors. The overall cost of this project will be $3.3 million. Construction will begin in September, and will be completed by early summer next year. D. Calkins asked the Board's attention to a recent email about a Water Policy Forum and Dinner on July 30, hosted by the Municipal Water District of Orange County. The speaker at this event will be the newly - elected Chairman of the Board of MWD, Randy Record. If Board members would like to attend, please notify the Department by July 24, so reservations can be made. 12. UPDATE ON ELECTRIC SYSTEM ISSUES. J. Lonneker, AGM of Electric Services, shared a presentation with the Board on the completion of the Lewis Substation 230kV circuit breaker replacement project. The presentation highlighted the reliability benefits gained from the equipment upgrade. Additionally, the presentation highlighted the knowledge transfer and apprentice training opportunities gained by performing the planning, engineering and installation of the six circuit breakers using internal utility staff as well as the cost savings associated with performing the work internally. 13. UPDATE ON FINANCE ISSUES. B. Beelner, AGM of Finance and Administration, shared information about the monthly financial dashboard, which showed that the ACTION TAKEN 2014-46 AGENDA ITEM Department performed very well in relation to the adopted budget. Preliminary Fiscal Year 2014 water revenue were approximately 8.4% above budget and preliminary electric revenue were 4.9% above budget. These positive revenue variances were coupled with positive variances for both water and electric expenditures. Preliminary Fiscal Year 2014 operating expenses were 0.9% below budget while preliminary water operating expenses were 9.1 % below budget. These numbers are all subject to change as the finance team closes the Fiscal Year in anticipation of the annual audit. B. Beelner also discussed the timeline for the 2014 Electric Revenue Refunding Bonds recommended by the Board on June 25, 2014 and approved by the City Council on July 15, 2014. He mentioned that he would be pricing the bonds at the end of September and does not expect significant movement in interest rates before pricing. 14. UPDATE ON JOINT SERVICES ISSUES. S. Sciortino, AGM of Joint Services, provided the Board with a brief status of the San Onofre Nuclear Generating Station (SONGS) Decommissioning Agreement. Negotiations concerning the agreement terms among the four participants are expected to conclude in the next several months. S. Sciortino announced that the solar panel installation project on the Convention Center roof is nearing completion. The 2.3 megawatt (MW) project will be operational in August. There will be a ribbon cutting ceremony planned. Staff will provide ceremony date to Board members, and a tour will be provided as well. S. Sciortino reported on the conversion from the old to the new Customer Information System (CIS) that went live on June 23. This is the culmination of three years of planning, installation, testing, and training. S. Sciortino recognized the Customer Service staff who have been instrumental in achieving this milestone. A billing issue did occur, as the on -Iine vendor posted a double payment on over 700 customers. Staff worked to notify customers of this issue and provided a $10 courtesy credit to those affected. Also, the on -line vendor agreed to reimburse the Department for any insufficient fund fees applied by customers' banks. 15. UPDATE ON ENTERPRISE RISK & LEGISLATIVE / REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, provided an update on several programs, including implementations by CAISO that will affect the California energy markets. She also mentioned that next month, the Department will conduct a Department wide exercise of the new Emergency Response Plan (Plan); the Plan has many new elements including customer outreach, mutual assistance elements, and mirrors what the California Public Utilities Commission (CPUC) requires for the Investor Owned Utilities. ACTION TAKEN 2014-47 AGENDA ITEM J. Lehman reported that the PUB Legislative Working Group met to discuss several legislative issues. In particular, there are still currently nine water bond bills ranging from $8B to $11 B, but that the Governor commented that he would like a $6M bond on the November ballot. She also mentioned that there was an effort to regulate groundwater and that there were currently two bills: AB 1739 and SB 1168 under consideration. Efforts to merge the two bills are underway. J. Lehman stated that SB 1156 has been introduced, which would create a carbon tax instead of requiring the transportation fuel sector to participate in the cap and trade market, and now with AB 69 newly introduced in July would give this sector a three year delay. Either measure would impact the liquidity of the cap and trade markets, potentially increasing costs for utility customers. J. Lehman invited the Board's attention to the quarterly compliance report. She stated that several reports were sent to the South Coast Air Quality Management District (AQMD) regarding the generation plants, including a response to a notice of violation received for a day in 2012 when a report was inadvertently not sent to the AQMD. The information was subsequently provided to the AQMD, and there were no emission related issues, however it's unclear if there will be a fine or not. She also reported that the six remaining cases in the Department's underground storage tank clean -up program were transferred to the State's Regional Water Resources Control Board effective July 1. 16. AGENDA ITEM(S) FOR THE NEXT PUBLIC UTILITIES BOARD MEETING ON AUGUST 27, 2014. • Utilities Success Indicators • Ventyx Settlement Agreement * • WREGIS Amended Terms of Use • Electrical Capital Letter of Credit (LOC) Draw • California Energy Commission AB 162 Reports 17. ITEM(S) BY SECRETARY. D. Lee, Public Utilities General Manager, invited the Board to the Edwards Utilities Complex dedication, on Thursday, August 28, 2014, at 3pm. Staff will send emailed invitations to the Board that they were asked to response to. D. Lee invited the Board to attend the Latina Utility Coalition meeting scheduled for September 9, 2014, which will focus on student engagement, translation of information, and educating attendees on utility rates and addressing any questions. Staff will send an invite email as the date draws closer. He discussed an off consent item that was presented to City Council regarding Charter Section 1221, which have been previously discussed with the Board. ACTION TAKEN 2014-48 AGENDA ITEM ACTION TAKEN 18. ITEM(S) BY BOARD MEMBERS. D. Wain thanked staff for the diverse topics presented at the meeting. S.E. Faessel recognized the Department's foresight about new technologies and its focus on providing excellent service to customers. She congratulated everyone on their elected positions on the Board and appointments. L. Cahill shared that he appreciated the meeting discussion and recognized S. Faessel, former chairperson for his attendance at the meeting. D. Singer stated that the Department's continued research in various technologies will help to address future issues and strategies. J. Machiaverna thanked the Board for the vote of confidence and staff for their hard work. He shared that the Department is fortunate not to have too many legislative obstacles at this time. He stated that he appreciates the Board's involvement in developing collaborative strategies with staff as topics are discussed. 19. ADJOURNMENT: (TO THE REGULAR MEETING ON D. Singer moved to adjourn AUGUST 27, 2014, AT 5:00 P.M., IN THE 11"' FLOOR LARGE the Regular Meeting at 7:11 CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. p.m. to the Board's next ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). Regular Meeting date of August 27, 2014 at 5:00 p.m. S.E. Faessel seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 1 (C. Monaco). * 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.