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Public Utilities 2015/05/27CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES May 27, 2015 The agenda having been posted on Wednesday, May 20, 2015, the Regular Meeting of the Public Utilities Board (Board) was called to order by Chair J. Machiaverna at 5:02 p.m. on Wednesday, May 27, 2015, in the 11's Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: Chair J. Machiaverna, Vice Chair D. Singer, S.E. Faessel, B. Hernandez, D. Wain, L. Cahill Board Members Absent: None Staff Present: D. Lee, B. Beelner, J. Lonneker, M. Moore, G. Bowen, J. Lehman, A. Kott, L. Quiambao, T. Nelson, M. Seifen, S. Welch, A. Nguyen, C. Pereyra, M. Jouhari, J. Wei, F. Barvarz, P. Hayes, Deputy Fire Chief Pat Russell, R. Yuen, J. Romines Guest(s) Present: Jeremy Hutman, Renewable Funding; Crystal Crawford, Ygrene Energy Fund; Brent Neben, Ygrene Energy Fund; Steve Faessel, Incoming Anaheim Metropolitan Water District Director; Tim Thomas, Teacher at Salk Elementary School AGENDA ITEM 1. PUBLIC COMMENTS. ACTION TAKEN Crystal Crawford, Southern California Regional Director of Ygrene Energy Fund, stated her company had a statewide partnership with California Home Finance Authority, which offers an opt -in program to cities and counties throughout the state, similar to the Home Energy Renovation Opportunity (HERO) program, and would welcome Anaheim's participation in the program. Following Public Comments, D. Lee, Public Utilities General Manager, asked the Public Utilities Board (Board) for an opportunity to share two recognitions, the first being the appointment of Mr. Steve Faessel as the Metropolitan Water District (MWD) Board Director by City Council on May 5, 2015. S. Faessel will be sworn in at the MWD Board meeting on June 9, 2015. The Board congratulated Mr. Faessel on his appointment. The second is the recognition of Mr. Tim Thomas, an Anaheim school teacher at Salk Elementary school, who has supported various Department programs, including the annual Public Power week and the Solar program and also put in a water conservation garden at the school. Mr. Thomas will be retiring, and the Board thanked him for his service and wished him well in retirement. 2015-24 AGENDA ITEM 2. APPROVAL OF THE NIINUTES OF THE REGULAR PUBLIC UTILITIES BOARD MEETING OF MARCH 25, 201.5. * 3. RECEIVE AND FILE THE NOTICE OF ADJOURNMENT OF THE REGULAR PUBLIC UTILITIES BOARD MEETING OF APRIL 22, 2015. * J. Machiaverna encouraged Board members to notify staff of scheduling conflicts early enough to schedule an alternative meeting date. 4. PRESENTATION ON THE REAL PROPERTY EXCHANGE BETWEEN ANAHEIM PUBLIC UTILITIES AND THE ANAHEIM FIRE DEPARTMENT. D. Lee introduced Deputy Fire Chief Pat Russell who was available to answer any questions about the properties. Electric System Planning Manager, J. Wei, shared a presentation with the Board regarding the land exchange collaborative effort between the Public Utilities Department (Department) and Anaheim Fire and Rescue Department (Fire Department). The Department owns a parcel located along East La Palma Avenue, adjacent to Yorba Substation. The property was originally acquired for a future substation expansion. The building in the front area of the parcel is not needed for substation purposes and is being exchanged with a parcel that currently houses Fire Station No. 5 on Kraemer Boulevard, which is in front of Dowling Substation and Kraemer Power Plant. This exchange allows the Fire Department to improve response times by converting the La Palma building into a Fire Station, and the existing Fire Station No. 5 would be relocated further west. The Department would then be able to utilize the Kraemer parcel for a potential expansion of Dowling Substation and/or Kraemer Power Plant. The Board asked a series of questions pertaining to the property exchange and the timing. Staff responded and explained that the La Palma facility will undergo renovations in the upcoming fiscal year, and that the Fire Department is still reviewing available parcels to relocate Fire Station No. 5. 5. UPDATE ON THE UNDERGROUND CONVERSION PROGRAM AUDIT FINDINGS. J. Lonneker, AGM of Electric Services, introduced the City Audit Division Manager, J. Romines, and Senior Management Auditor, R. 2015-25 ACTION TAKEN S.E. Faessel moved approval of the Minutes of the Regular Public Utilities Board Meeting of March 25, 2015. L. Cahill seconded the motion. MOTION CARRIED: 4-0. ABSTAINED: 2 (D. Singer, B. Hernandez). ABSENT: 0. D. Singer moved approval to Receive and File the Notice of Adjournment of the Regular Public Utilities Board Meeting of April 22, 2015. D. Wain seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 0. AGENDA ITEM ACTION TAKEN Yuen to present the process and findings from the Department's Underground Conversion (UGC) Program audit. The audit of the UGC program and the Home Undergrounding (HUG) Program concluded in May 2015. The audit included evaluation of processes, transactions, funding and controls in place for managing approximately $20 million in UGC projects or 10% of the total projects since the Program's inception. A summary audit report was presented to the City Manager with results of no adverse findings from the audit. Some recommendations for documentation were noted, and the Department will be implementing those recommendations. 6. PRESENTATION AND RECOMMENDATION THAT THE B. Hernandez moved approval CITY COUNCIL ADOPT THE PUBLIC UTILITIES of the recommendation that the DEPARTMENT'S FISCAL YEAR 2015/16 BUDGET AS City Council adopt the Public PROPOSED. * Utilities Department's Fiscal ANAHEIM IN ACCORDANCE WITH THE CALIFORNIA Year 2015116 Budget as B. Beelner, AGM of Finance and Administration, provided an update proposed. D. Singer seconded of the Department's Fiscal Year 2015/2016 annual budget for the motion. approval by the Board and recommendation for City Council MOTION CARRIED: 6-0. approval. B. Beelner shared that electric retail revenues are ABSTAINED: 0. forecasted to be approximately 3% higher in Fiscal Year 201612017, ABSENT: 0. Iargely due to economic growth and development activities. a Participation Agreement for Expenditures are projected to be 2% lower due to lower spending on the CalifomiaFirst Program. electric capital projects as there are no large projects currently S.E. Faessel seconded that forecasted for Fiscal Year 201612017. Water retail revenues are motion. forecasted to be slightly higher to pay for higher water costs and MOTION CARRIED: 6-0. increased cash -funded capital investments. Staff is continuing to ABSTAINED: 0. monitor drought impacts on water revenues and expenditures. ABSENT: 0. 7. RECOMMENDATION THAT THE CITY COUNCIL D. Wain moved approval of the AUTHORIZE THE CALIFORNIA STATEWIDE recommendation that the City COMMUNITIES AUTHORITY TO CONDUCT Council authorize the CONTRACTUAL ASSESSMENTS WITHIN THE CITY OF California Statewide ANAHEIM IN ACCORDANCE WITH THE CALIFORNIA Communities Authority to STREET AND HIGHWAYS CODE AND APPROVING A conduct contractual PARTICIPATION AGREEMENT FOR THE assessments within the City of CALIFORNIAFIRST PROGRAM. * Anaheim in accordance with the California Street and D. Lee shared that the CaliforniaFirst is a property assessment Highways code and approving program marketed directly to customers who choose to utilize private a Participation Agreement for financing for energy and water efficiency improvements. the CalifomiaFirst Program. CaliforniaFlRST would be the third entity to be authorized to provide S.E. Faessel seconded that service offerings in Anaheim. The Department does not endorse any motion. of the entities, nor does this agreement obligate any Department MOTION CARRIED: 6-0. expenditures. Customers are still able to participate in rebate ABSTAINED: 0. programs, which will reduce the remaining financial obligation. ABSENT: 0. S. APPROVAL OF THE JOINT AUDIT AGREEMENT AMONG L. Cahill moved approval of THE BOULDER CANYON PROJECT CONTRACTORS, the Joint Audit agreement WHICH INCLUDES THE CITY OF ANAHEIM, AND among the Boulder Canyon SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY Project Contractors, which (SCPPA). * includes the City of Anaheim, and Southern California Public 2015-26 AGENDA ITEM D. Lee shared that the Department receives low-cost, emission -free energy from the Hoover Dam project. The existing 30 year agreement is set to expire and the participating agencies are seeking to enter into new agreements. A power purchase agreement will be brought forward to the Board next year. This recommendation is for a joint audit to be conducted to review operating costs and ensure that the terms in the future agreement are equitable. Since 10 of the 15 participating agencies are members of SCPPA, the joint audit will be managed by SCPPA. The Board asked if Anaheim is able to procure more power from Hoover Dam. Staff responded that the federal government is allowing additional agencies to join in the project, and therefore, Anaheim is unable to receive a higher allocation of energy. 9. PRESENTATION ON THE WATER REDUCTION PLAN AND TURF REMOVAL CUSTOMER ASSISTANCE PROGRAM. M. Moore, Acting AGM of Water Services, presented the Board with State, regional and local water restrictions being imposed on the City of Anaheim. The State is in the fourth year of a historic drought with 44% of the state in an extreme drought. The City is being required to reduce overall water demand by 20%, compared to 2013. The City's water reduction ordinance was approved by City Council on May 19th and set the mandatory restrictions at Plan 3. The mandatory restrictions include 2-day/week irrigation, no hosing off driveways or sidewalks, and other restrictions to conserve outdoor water use. These restrictions will be enforced with a 3 -step process that provides two warnings prior to fines up to $500. He also shared that the Department offers extensive rebates to help customers reduce water usage indoors and outdoors. The turf removal rebate program has continued to be very popular and provides rebates of up to $3/square foot. The City Council approved a Turf Removal Customer Assistance Program to provide a zero interest loan up to $5,000 for residential customers and $10,000 for commercial/ industrial customers. This Program will provide additional incentives to help customers participate in turf removal programs and conserve water. The Board requested that notification of the mandatory measures be conducted through various outreach efforts in order to properly inform residents and businesses of the restrictions and rebate opportunities. 10. UPDATE ON QUARTERLY STATUS REPORTS ON CAPITAL IMPROVEMENT PROJECTS, MASTER AGREEMENTS, GENERAL SERVICE AGREEMENTS, AND SPOT BID AWARDS. D. Lee shared a brief overview of the quarterly reports. He explained the reports on materials, construction and consulting contracts, as well as capital improvement projects throughout the City, 2015-27 ACTION TAKEN Power Authority (SCPPA). B. Hernandez seconded that motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 0. AGENDA ITEM 11. POWER GENERATION UPDATE. ACTION TAKEN J. Lonneker provided an update on the repairs made to the Combustion Turbine Generator (CTG) at the Kraemer Power Plant. She noted that the unit was taken out of service in November 2014, after a routine inspection revealed damage in the hot section. While the unit was entirely disassembled at the repair facility in New Zealand, damage to the top portion of the rotor shaft was discovered, requiring more time to procure replacement parts and added repair time. The unit was put back into service at the end of April 2015, at a total cost of $455,000. J. Lonneker also noted that the Department was not subject to financial penalties, which may be assessed by the California Independent System Operator (CAISO) as a result of the CTG being out of service. Timing for the unit to be out of service was favorable due to lower winter season regional energy demands. She also shared that, to shorten the time for repairs of the unit in the future, the City's Purchasing Agent was approved by City Council for an increased authorization level for expenditures up to $500K for parts and repair work on the CTG. The report on CTG repairs and expenditure levels will be included in the quarterly Master Agreements (MA), General Service Agreements (GSA), and Spot Bid reports going forward to the Board. The Board asked about the measures being taken to address turbine reliability in the future. J. Lonneker explained that the frequency of turbine inspections of the CTG will increase to every two years, and seals will be replaced at that time as preventative measure. 12. UPDATE ON WATER SYSTEM ISSUES. M. Moore shared that the annual Water Quality Report was completed and is available on the City's website and briefly reviewed the Report's information with the Board. Over 44,000 water quality tests were performed on the water last year and the City's water meets all State and Federal requirements. M. Moore reminded the Board that the Metropolitan Water District (MWD) tour of the Colorado River Aqueduct was planned for May 29-31, 2015 and the City's Save Water Expo would be held on June 6th. M. Moore provided an update on Orange County Water District (OCWD) activities. The Citizen Advisory Committee completed their report to the OCWD Board of Directors. The OCWD Board of Directors accepted their report and directed staff to continue studying the options for utilizing ocean desalination water. M. Moore concluded by sharing that the North Basin Groundwater Contamination project was discussed in the Orange County Register, located at their place settings, and that the Department is working with OCWD, Fullerton, and the U.S. Environmental Protection Agency (EPA) to evaluate alternatives to contain and cleanup the 2015 28 AGENDA ITEM ACTION TAKEN plume and additional information will be provided in future Board meetings. 13. UPDATE ON ELECTRIC SYSTEM ISSUES. J. Lonneker shared with the Board that the Underground Conversion's Five -Year plan was presented to the Underground Subcommittee at the quarterly meeting and will be presented to the Board at the June Board meeting and to City Council for approval in July. J. Lonneker also shared that staff is looking into several capital improvement projects, which include system upgrades, direct buried cable replacements, and infrastructure modernization and will be planning for those projects within the next few months. 14. UPDATE ON FINANCE ISSUES. Because of the detailed information provided during the Budget presentation, no additional updates were provided. 15. UPDATE ON POWER SUPPLY ISSUES. G. Bowen, AGM of Power Supply, shared that the Business and Community Program's team participated in Youth in Government Day. The team presented the Department's goals for sustainability, environmental stewardship, and reducing the carbon footprint in the community to the students. As part of the program, high school students prepared a mock City Council presentation on how they were going to create a program that reduced the carbon footprint in the community and help to keep Anaheim green. 16. UPDATE ON ENTERPRISE RISK, COMPLIANCE, AND LEGISLATIVE / REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, provided the Board with an update on several legislative issues and highlighted that the PUB Legislative Working Group met just prior to the regular Board meeting and reviewed bills with the potential to impact the Department. She shared that Friday, June 5, 2015, is the last day for a bill to pass out of their house of origin; otherwise it can't be addressed again until next year. She shared that it was likely that many of the bills being tracked would become two year bills. J. Lehman shared that the bills to implement the Governor's 50/50/50 plan highlighted in his inauguration speech were being monitored closely. She mentioned that there was concern for Senate Bill (SB) 350 as it would create an additional layer of oversight for Publicly Owned Utilities (POU) by the California Energy Commission (CEC) of Renewable Portfolio Standards (RPS) standards and increase the RPS to 50% by 2050. The Department has been working with other utilities to address this bill, including both Investor Owned Utilities (IOU) and POUs who share similar concerns. 2015-29 AGENDA ITEM ACTION TAKEN On the water side, there have been a number of beneficial bills related to drought assistance programs that include rebates, income tax credits for landscape water efficiency improvements, and turf replacement, as well as California Environmental Quality Act (CEQA) streamlining for drought related projects. 17. AGENDA ITEM(S) FOR THE NEXT PUBLIC UTILITIES BOARD MEETING ON SUNE 24, 2015. • Electric Rate Modification Presentation • Underground Conversion Five -Year Plan • Summer Readiness Presentation • SCPPA Overview Presentation • Green House Gas Reduction Plan Presentation 18. ITEM(S) BY SECRETARY. D. Lee shared that Board Member C. Monaco has resigned. He welcomed G. Bowen as the new AGM of Power Supply. He thanked M. Jouhari for his term as acting AGM of Water Services, and introduced M. Moore, who will be acting while a recruitment takes place. 19. ITEM(S) BY BOARD MEMBERS. L. Cahill thanked staff for the diverse information shared at the meeting. B. Hernandez thanked staff for creating an environment that continues to attract tourists and for overcoming challenges having to do with the drought. D. Singer shared her appreciation for the thoughtful and reasonable measures that will be implemented to conserve water. D. Wain thanked S.E. Faessel and L. Cahill for their work on the OCWD ocean desalination advisory committee. S. E. Faessel congratulated the Department on the efficient use of finances by working with the Fire Department on expansion projects. She thanked staff for developing the Save Water Expo to be a positive and fun event for the community. She thanked the City Council for the appointment of S. Faessel as the Anaheim MWD Director. J. Machiaverna thanked Board members for their participation in the Advisory Committee, and congratulated S. Faessel for his appointment and G. Bowen on his new position. 2015-30 AGENDA ITEM 20. ADJOURNMENT: (REGULAR MEETING ON JUNE 24, 2015, AT 5:00 P.M., IN THE 11TH FLOOR LARGE CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA), Dukku Lee Public Utilities General Manager ACTION TAKEN B. Hernandez moved approval to adjourn the Regular Meeting at 6:59 p.m, to the Board's Regular Meeting date of June 24, 2015 at 5:00 p.m. D. Singer seconded the motion. MOTION CARRIED: 6-0. 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.