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Public Utilities 2014/08/27CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES August 27, 2014 The agenda having been posted on Thursday, August 21, 2014, the Regular Meeting of the Public Utilities Board (Board) was called to order by Vice Chair D. Singer at 5 :00 p.m. on Wednesday, August 27, 2014, in the 11' Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: Vice Chair D. Singer, B. Hernandez, S.E. Faessel, D.Wain, L. Cahill, C. Monaco Board Members Absent: Chair J. Machiaverna Staff Present: D. Lee, B. Beelner, S. Sciortino, D. Calkins, J. Lonneker, J. Lehman, A. Kott, L. Quiambao, P. Oviedo, J. Lehman, D. Shen, L. O'Connell, A. Nguyen Guest(s) Present: S. Faessel, Anaheim Resident AGENDA ITEM ACTION TAKEN 1. PUBLIC COMMENTS, None. 2. APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC UTILITIES BOARD MEETING OF JULY 23, 2014. * 3. PRESENTATION ON THE WATER UTILITY'S AUTOMATION AND CONTROL SYSTEM REPLACEMENT PROJECT. Lisa O'Connell, Project Manager in the Water Engineering and Capital Projects Division, gave a presentation on the Water Utility's Automation and Control Replacement Project. She explained that the automation and control system is a vital component of the City's water delivery system and treatment plant, which allows the water system operators to remotely monitor, operate, and control the entire water system 24 hours per day. The hardware and software of the current system, which were installed in the mid 1990's, are no longer supported by the manufacturer. The new system will provide greater There being no public comments, Vice Chair D. Singer closed the public comments portion of the meeting. B. Hernandez moved approval of the Minutes of the Regular Public Utilities Board Meeting of July 23, 2014. D. Wain seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 1 (Chair J. Machiaverna). 2014-50 AGENDA ITEM speed and flexibility for real -time operations, a redundant hardware system, and additional security layers and protocols. This project was awarded by City Council last week, August 19th, and will be completed by June 2015. Board members asked questions on the longevity of the system, and staff responded that hardware is replaced every five years, consistent with other computer systems, but that the overall system is projected to last much longer with routine software updates. Board members also inquired about the functionality of the system, and D. Calkins shared that the project includes controls for water treatment, and due to the additional scope, the system requires different features than the Department's electric automation and control system can provide. 4. DISCUSSION ON THE UTILITIES SUCCESS INDICATORS. D. Lee, Public Utilities General Manager, asked the Board to review the Department's Success Indicators packets at their place settings. He pointed out that the indicators show several areas that the Department is watching closely, and he explained how the safety program is being updated with the addition of a new safety administrator. The Board inquired about the status of several metrics, and discussed long term plans for the Kraemer Power Plant, D. Lee responded that staff is reviewing different options for the plant since some of the components are nearing the end of their useful life. 5. APPROVAL OF THE ACCOUNT HOLDER REGISTRATION AGREEMENT WITH THE WESTERN ELECTRICITY COORDINATING COUNCIL FOR THE USE OF THE WESTERN RENEWABLE ENERGY GENERATION INFORMATION SYSTEM TO SERVE AS A QUALIFIED REPORTING ENTITY. * S. Sciortino, AGM of Joint Services, presented the Board with information and a staff report for the approval of the Account Holder Registration Agreement (Agreement) with the Western Electricity Coordinating Council ()WECC) for the use of the Western Renewable Energy Generation Information System (WREGIS) to serve as a Qualified Reporting Entity (QRE). S. Sciortino discussed the need for the Agreement to provide a means for the Department to register Renewable Energy Credits (REC) for the 2.4 Megawatt (MW) Convention Center solar project with WREGIS in order to ensure the RECs may be counted towards the Department's Renewable Portfolio Standard (RPS) obligation. Since the Department is the developer/ supplier of the Convention Center solar projectlenergy, staff's recommendation is to enter into this agreement due to the nominal cost and to alleviate having a third party provide QRE services. The cost to register as a QRE is $1,500 per year. ACTION TAKEN L. Cahill moved approval of the Account Holder Registration Agreement with the Western Electricity Coordinating Council for the use of the Western Renewable Energy Generation Information System to serve as a Qualified Reporting Entity. C. Monaco seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 1 (Chair J. Machiaverna). AGENDA ITEM ACTION TAKEN 6. APPROVAL OF THE CITY OF ANAHEIM ANNUAL POWER S.E. FaesseI moved CONTENT LABEL AND ASSEMBLY BILL 162 REPORTS AND approval of the City of AUTHORIZE THE ATTESTATION AND SUBMISSION TO Anaheim Annual Power THE CALIFORNIA ENERGY COMMISSION (CEC). * Content Label and Assembly Bill 162 Reports S. Sciortino, AGM of Joint Services, presented the Board with and Authorization for the information and a staff report for the approval of the City of Anaheim Attestation and Submission Annual Power Content Label and Assembly Bill 162 Reports and to the California Energy Authorization for the Attestation and Submission to the California Commission (CEC). Energy Commission (CEC). S. Sciortino indicated this is an ongoing D. Wain seconded the annual action item required by law in order to submit the reports of motion. energy used by retail customers by resource mix, with a particular MOTION CARRIED: 6-0. attention to energy coming from individual renewable energy types. In ABSTAINED: 0. addition to the general retail load, the law also requires a separate ABSENT: 1 (Chair J. reporting of those customers enrolled under our Green Power Program, Machiaverna). which allows customers to choose up to 100% of their energy needs designated as coming from renewable resources. 7. APPROVAL TO UTILIZE PROCEEDS FROM THE C. Monaco moved approval REVOLVING CREDIT AGREEMENT WITH WELLS FARGO to utilize proceeds from the BANK, NATIONAL ASSOCIATION TO FUND ELECTRIC Revolving Credit CAPITAL PROJECTS AND RELATED EXPENSES. * Agreement with Wells Fargo Bank, National B. Beelner, AGM of Finance and Administration, shared information Association to fund Electric and a staff report requesting the Board recommend that the City Capital Projects and related Council approve and authorize the Department to draw up to $30 expenses. million from the $100 million Revolving Credit Agreement with Wells S.E. Faessel seconded the Fargo to fund electric capital projects. B. Beelner discussed how using motion. the Revolving Credit Agreement is a much less expensive option to MOTION CARRIED: 6 -0. fund capital over the short term than to issue debt while still protecting ABSTAINED: 0. the Department's cash reserves. Currently, the interest rate for ABSENT: 1(Chair J. proceeds drawn from the line of credit agreement is set at 0.65% - Machiaverna). 0.8% compared to the 4.25% - 4.5% interest rates currently associated with 30 year fixed rate bonds. B. Beelner then discussed how short term debt is not necessarily a viable long term strategy considering the significant risk in the event of rising interest rates. He discussed how the Department plans to use these proceeds as a bridge financing mechanism until the Department does in fact issue 30 year debt later this fiscal year, which will be used for capital needs as well as to pay off any proceeds drawn from the line of credit. B. Beelner further explained that the Public Utilities Board recommends and City Council must approve the capital spending plan in the budget and must approve construction bid awards through city policies before they are awarded, which means significant controls are in place before proceeds may be spent. D. Lee then discussed how previously the Department could only use cash reserves or long term bonds to fund capital, and how this line of credit agreement gives the Department a third option to protect financial reserves without obligating ratepayers to long term debt before it is necessary. The Board discussed the plan and the financial flexibility the line of credit provides. 2014-52 AGENDA ITEM 8. UPDATE ON WATER SYSTEM ISSUES. D. Calkins, AGM of Water Services, shared with the Board that on August 12th, City Council approved mandatory outdoor conservation measures consistent with the State Water Resources Control Board's recent requirement for all urban water agencies in the State. In addition, Anaheim's new restrictions limit irrigation to before 9 am and after 6 pm in order to reduce water loss from evaporation. A copy of the City Council staff report and resolution, plus a copy of the associated presentation were provided to the Board members. D. Calkins indicated information on these new conservation measures is on the Department's website, and staff is increasing the ways the message is being delivered to our customers. D. Calkins shared with the Board that the Department was recently awarded a grant of approximately $250,000 from the State Department of Water Resources for Anaheim's turf replacement rebate. This grant was an important consideration with the recent increase of our rebate to $3/square foot for replacing live turf with artificial turf or California - friendly landscaping. This grant will allow the Department to provide more customer rebates during the drought than would be possible otherwise. D. Calkins indicated the drought is affecting the Department in a number of ways. A request for bids to drill a new water production well near Ninth Street and Cerritos Avenue, and to replace an old inactive well was issued. Only one bid was received, and it was $1 million over the Engineer's estimate. Due to the drought, well drillers are extremely busy with an increased demand for drilling new wells — mostly in the Central Valley. The Department decided to not award this construction contract. Instead, staff will monitor the situation, and plans to rebid this project in early 2015. D. Calkins invited the Board's attention to an article about Anaheim's Water Utility, which was published earlier this month in the Municipal Sewer and Water magazine. A copy of the article was provided to the Board members. 9. UPDATE ON ELECTRIC SYSTEM ISSUES. J. Lonneker, AGM of Electric Services, shared that Kraemer Power Plant has been out of service as of Monday, August 25, 2014, due to tube leaks in the economizer (boiler). The unit was idle to cool down and repairs will begin Thursday, August 28 with an estimated time to restore the unit back into service by Tuesday, September 2, 2014. Although Kraemer Power Plant is an aging plant, the current solution is to continue with repairs to the unit while staff evaluates different long term options in the future. ACTION TAKEN 2014-53 AGENDA ITEM 10. UPDATE ON FINANCE ISSUES. B. Beelner, AGM of Finance and Administration, reviewed the monthly financial dashboard which showed that the Department performed very well in relation to the adopted budget. In July 2014, water revenue was approximately 18.7% above budget and electric revenue was 6.7% above budget. These positive revenue variances were coupled with positive variances for both water and electric expenditures. 11. UPDATE ON JOINT SERVICES ISSUES. S. Sciortino, AGM of Joint Services, announced the commercial operation date for the Solar Project on the Convention Center was August 19th and that the official dedication in a cooperative effort with the Anaheim Convention Center is scheduled for October 7' 2014. The Board will be receiving an invitation to the event. He also identified the Communications staff's efforts with the Water Conservation campaign during the drought. He showed a short 30 second video that will play on channel 3 and remind the public of the ongoing drought conditions and what can be done to conserve water. There are also several water conservation visuals in the form of street light banners that will be placed throughout the city, posters at bus terminals, and magnetized posters to be placed on the Department's vehicle fleet. 12. UPDATE ON ENTERPRISE RISK, COMPLIANCE, AND LEGISLATIVE & REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, invited the Board's attention to the Wholesale Energy Risk Management (ERM) Program's Quarterly Compliance report at their place settings. This program sets criteria under which certain energy related transaction can be made providing the framework for transactions to be made in an efficient manner while ensuring that the Department's interests are protected and risks are identified and managed. J. Lehman reported that all transactions were in compliance with the ERM program, and there were no violations. She reported that the new $7.2 billion water bond was passed by both houses of the State legislature in mid - August and will be Proposition 1 on the ballot in November. She indicated that the water bond will help better ensure reliable water supplies, which will benefit all of California, including Anaheim residents and businesses. J. Lehman shared that it was nearing the end of the legislative session, and that there were bills that are being watched closely, including: SB 113 9 (Hueso — Imperial Valley Area, D), a bill which would mandate additional geothermal energy procurement requirements for the investor owned utilities above and beyond their existing renewable mandates. This would impact the Department because ACTION TAKEN 2014-54 AGENDA ITEM the new geothermal resources would need new transmission to interconnect to the California Independent System Operator (CAISO) and these transmission costs would be shared by the other utilities that are in the CAISO, such as the Department. She referenced the opposition letter that was sent out and copied the Board. AB 1739 (Dickenson -- Sacramento Area, D) and SB 1169 (Pavley - Ventura/Los Angeles Area, D), these are two conjoined groundwater management bills. These bills were introduced mid - session and were ground breaking in that there are no regulations or laws covering the state -wide management of groundwater. Initially the bills were introduced as two rival bills, and through work with the Governor's office, were developed into two joint bills. At this time, the bills provide a balanced approach to managing groundwater basins, and appear to favorably consider basins that are well managed, such as the one that serves the Department. 13. AGENDA ITEM(S) FOR THE NEXT PUBLIC UTILITIES BOARD MEETING ON SEPTEMBER 24, 2014. • Public Power Week • OCWD Ground Water Cleanup Project presentation • SONGS Decommissioning Agreement * • Amendment and Conformation of the Ventyx Agreement 14. ITEM(S) BY SECRETARY. D. Lee, Public Utilities General Manager, reminded the Board of the Edwards Utilities Complex dedication event taking place on Thursday, August 28, 2014, at 3pm. 15. ITEM(S) BY BOARD MEMBERS. D. Wain thanked staff for the various presentations and items. S.E. Faessel stressed that the concept of continuous improvement in the Department's efforts conveys a positive image to residents and businesses. L. Cahill thanked staff for the presentations and commented on the importance of resource planning. D. Singer thanked the Board members and staff for the meeting. ACTION TAKEN KIN i AGENDA ITEM ACTION TAKEN 16. ADJOURNMENT: (TO THE REGULAR MEETING ON S. Faessel moved to adjourn SEPTEMBER 24, 2014, AT 5:00 P.M., IN THE 10 FLOOR the Regular Meeting at 6:28 LARGE CONFERENCE ROOM, ANAHEIM WEST TOWER, p.m.. to the Board's next 201 S. ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). Regular Meeting date of September 24, 2014 at 5:00 p.m. L. Cahill seconded the motion. MOTION CARRIED: 6 -0. ABSTAINED: 0. ABSENT: 1 (Chair J. Machiaverna). Respectfully s miffed, Dukku Lee Secretary, Public Utilities Board * 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.