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Public Utilities 2015/07/22CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES July 22, 2015 The agenda having been posted on Wednesday, July 15, 2015, the Regular Meeting/Public Hearing of the Public Utilities Board (Board) was called to order by Chair J. Machiaverna at 5:00 p.rn. on Wednesday, July 22, 2015, in the l 1'h 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, A. Abdulrahman Board Members Absent: None. Staff Present: D. Lee, B. Beelner, J. Lonneker, M. Moore, G. Bowen, D. Wilson, A. Kott, D. Ballin, L. Quiambao, P. Oviedo, M. Seifen, F. Barvarz, M. Lopez, D. Cotton, T. McCarthy, J. McBride, T. Mardikian, L. Guzman Guest(s) Present: Stephen Faessel, City of Anaheim Metropolitan Water District Director AGENDA ITEM ACTION TAKEN 1. PUBLIC COMMENTS. There being no public comments, Chair J. None Machiaverna 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. Machiavema as UNDERGROUNDING SUBCOMMITTEE. ** Chairperson of the Public Utilities Board. A. Kott, Assistant City Attorney, opened the floor for nominations for MOTION CARRIED: 7-0. Chairperson. S.E. Faessel nominated J. Machiaverna, who accepted ABSTAINED: 0. the nomination. B. Hernandez moved to close the nominations and L. ABSENT: 0. Cahill seconded the motion. By voice vote, the Public Utilities Board members elected J. Machiaverna as the Chairperson of the Public By voice vote, the Board Utilities Board. A. Kott then opened the floor for nominations for the elected S.E. Faessel as Vice - Vice -Chairperson. S.E. Faessel self -nominated and accepted the Chairperson of the Public nomination. B. Hernandez motioned to close the nominations and L. Utilities Board. Cahill seconded the motion. By a voice vote, the Board members MOTION CARRIED: 7-0. elected S.E. Faessel to the position of Vice -Chairperson of the Public ABSTAINED: 0. Utilities Board. ABSENT: 0. A. Kott opened the floor for nominations for members of the By Voice vote, the Board Undergrounding Subcommittee. A. Abdulrahman self -nominated, L. elected A. Abdulrahman, S.E. Cahill self -nominated, and S.E. Faessel self -nominated. Each Faessel, and L. Cahill to serve accepted the nominations. B. Hernandez moved to close the on the Undergrounding nominations and D. Wain seconded the motion. By a voice vote, A. Subcommittee. Abdulrahman, S.E. Faessel, and L. Cahill were elected to serve on the MOTION CARRIED: 7-0. Undergrounding Subcommittee. ABSTAINED: 0. ABSENT: 0. 2015-40 AGENDA ITEM 3. APPOINTMENTS OF MEMBERS OF THE PUBLIC UTILITIES 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 Machiaverna made appointments to the Public Utilities Hearing Board as follows: S.E. Faessel, B. Hernandez, and Chairperson J. Machiaverna as the standing members, and L. Cahill as the alternate. 4. APPROVAL OF THE MIN TIES OF THE REGULAR PUBLIC UTILITIES BOARD MEETING OF JUNE 24, 2015. * 5. APPROVAL OF FISCAL YEAR 2014/15 WRITE-OFF OF UNCOLLECTIBLE UTILITY ACCOUNTS. * D. Cotton, Utilities Services Supervisor, shared details regarding the net and gross write off amounts for the Fiscal Year 2014/15 and the Department's continued plan to reduce write-off levels to the Board. General questions were answered pertaining to services provided and a member of the Credit and Collections staff, L. Guzman, was introduced. 6. PRESENTATION ON THE WATER RESOURCES CONTINGENCY PLANNING FOR DROUGHT. M. Moore, Acting AGM of Water Services, presented the Board with the Department's Water Contingency Plan. He shared that the Department relies on a combination of groundwater, imported water and recycled water during normal years. However, the current drought conditions has reduced the amount of groundwater and imported water the Department can utilize for supply. The State Water Resources Control Board has mandated the City reduce their demand during this drought by 20%, which can be met even with reduced supplies. During future droughts, the Department will evaluate how to meet a supply shortfall, by a combination of additional supply and/or demand reduction. The Department is planning additional supply projects, such as a recycled water expansion, and is evaluating other supply projects. The Water Contingency Plan provides a flexible and diversified response in case this drought continues or for the next drought. 2015-41 ACTION TAKEN D. Wain moved approval of the Minutes of the Regular Public Utilities Board Meeting of June 24, 2015. S.E. Faessel seconded the motion. MOTION CARRIED: 5-0. ABSTAINED: 2 (A. Abdulrahman, L. Cahill). ABSENT: 0. S.E. Faessel moved approval of the Fiscal Year 2015/15 write- off of uncollectible utility accounts. B. Hernandez seconded the motion. MOTION CARRIED: 7-0. ABSTAINED: 0. ABSENT: 0. AGENDA ITEM 7. UPDATED QUARTERLY STATUS REPORTS ON CAPITAL IMPROVEMENT PROJECTS, MASTER AGREEMENTS, GENERAL SERVICE AGREEMENTS, AND SPOT BID AWARDS FOR ELECTRIC UTILITY MATERIALS AND GENERATING PLANT REPAIRS. D. Lee shared a brief overview of the quarterly reports. He explained the reports on Capital Improvement Projects, Master Agreements, General Service Agreements, and Spot Bid awards for the Electric Utility material and Plant repairs, as well as capital improvement projects throughout the City. ACTION TAKEN The Board requested minor modifications to the quarterly reports to Staff will provide include a descending order of activities and a rolling 12 months in lieu modifications requested by the of 3 years of data. Boardin future updates. The Board asked if design -build projects are included in the reports. D. Lee informed the Board that design -build projects and other large capital projects are approved by City Council through the Department of Public Works, and not covered in the utility quarterly reports. 8. PUBLIC HEARING: PROPOSED MODIFICATIONS TO There being no further DECREASE THE POWER COST ADJUSTMENT (PCA) AND testimony or public comments, THE ENVIRONMENTAL MITIGATION ADJUSTMENT Chairperson J. Machiaverna (EMA) WITH CORRESPONDING INCREASES TO BASE received a motion from A. RATES OF THE ELECTRIC RATES, RULES AND Kott, who moved that all REGULATIONS, AND OTHER RATE ELIMINATIONS AND evidence, oral and written, MODIFICATIONS TO THE ELECTRIC RATES, RULES AND submitted by staff, including REGULATIONS. * the Prepared Testimony with exhibits of B. Beelner, and the The public hearing was called to order by Chairperson J. Affidavits of Publication of the Machiaverna. Notice of Public Hearing rate proposal. He explained that the first proposal is a rate become part of the record and D. Lee, B. Beelner, J. McBride, T. Mardikian, and F. Barvarz were moved into evidence. sworn in by the court reporter, after which Chairperson J. Chairperson J. Machiaverna Machiaverna outlined the procedures to be followed during the granted A. Kott's motion. hearing. to approve the determination Chairperson J. Machiaverna In his opening remarks, D. Lee, Public Utilities General Manager, next entertained A. Kott's explained that in accordance with the City Charter, the Utility reviews request to close the record of its rates, rate options, relevant costs recovered by rates, and the the public hearing because competitiveness of rates relative to neighboring utilities and has there were no further witnesses identified a variety of changes that will help maintain competitiveness or evidence to be submitted by and stability in rates and ensure costs are being recovered by the the Department for the Board's proper rates. consideration. Since there were no objections to Staffs B. Beelner, Assistant General Manager of Finance and request, Chairperson J. Administration, in his opening remarks, provided an overview of each Machiaverna closed the rate proposal. He explained that the first proposal is a rate electric rate public hearing, restructuring that will not result in material changes to customers' bills or to the Utility's overall revenues. B. Beelner explained that the The Board provided comments Department's electric rate structure consists of base rates, which after which S.E. Faessel moved recover structural fixed costs, as well as a Power Cost Adjustment to approve the determination (PCA) and an Environmental Mitigation Adjustment (EMA), which that the proposed modifications 2015-42 AGENDA .ITEM ACTION TAKEN are intended to recover costs to decrease the Power Cost Adjustment (PCA) and the associated with short-term changes in the Department's power supply, Environmental Mitigation environmental mitigation, and other relevant operational costs. He Adjustment (EMA) with also explained that, over time, the costs being recovered through the corresponding increases to PCA and EMA mechanisms have stabilized and become largely fixed base rates of the Electric Rates, in nature and should now more appropriately be recovered through Rules ° and Regulations (ERRR), base rates, which are intended for that purpose. and other rate eliminations and modifications to the ERRR are B. Beelner highlighted that the second proposal will increase the exempt from California residential basic lifeline allocation, which is the amount of energy Environmental Quality Act provided to residential customers at the lowest rate (tier 1), in (CEQA) pursuant to Public consideration of the expanded reliance on electricity for basic Resources Code Section household needs. This proposal will help ensure that residents have 21080(b)(8) and Title 14 of the their basic energy needs offered to them at the lowest residential rate. California Code of He explained that all residential customers will benefit from this Regulations, Section 15273(a); proposal. and to approve the modifications to decrease the B. Beelner discussed the third proposal, which is to eliminate an PCA and EMA with outdated residential lifeline allocation of up to 125 kWh per month for corresponding increases to electric water heaters, explaining that doing so will more equitably base rates of the ERRR, and recover costs among residential customers, and the impacts to other rate eliminations and customers will be partially mitigated by the additional basic lifeline modifications of the ERRR. allocation. D. Singer seconded the motion. MOTION CARRIED: 7-0 B. Beelner explained that the fourth proposal will extend the income- ABSTAINED: 0. qualified energy discount currently offered to senior and long-term ABSENT: 0. disabled customers to military veterans. He stated that the Utility's program, which offers a 10% energy discount, is consistent with a mandate by the state of California to offer public benefit programs, including funds to be allocated for income qualified customers. Veterans who qualify would save approximately $100 per year as a result of participation in the program. B. Beelner also explained the fifth proposal, which will support the Department's regulatory relief efforts by simplifying the Department's rate structure, improving consistency, and facilitating new technologies by consolidating the street Iight and outdoor light rate schedules into a single lighting schedule. He explained that the current rate schedules are not structured to accommodate new technologies, resulting in new, more efficient lighting fixtures being billed at the same rate as older, less efficient technologies. The new consolidated rate schedule will be technology neutral by basing charges on the amount of energy consumed. B. Beelner concluded by explaining that the proposed modifications are in line with the Department's commitment to provide reliable electric service, maintain low rates, and recover costs from customers based on the nature and causation of the costs incurred. He stated that the recommendation is for the proposed modifications to become effective September 1, 2015, pending Board and City Council approval. 2015-43 AGENDA ITEM ACTION TAKEN During his testimony, D. Lee shared that two phone calls were received from people who are not Anaheim Public Utilities customers with general inquiries about the notice published in the newspaper and that staff answered the questions and provided the requested information. D. Lee concluded by reiterating that the Department is a not-for-profit organization and is only allowed by City Charter to charge rates sufficient to recover costs to operate and maintain the utility system, and comply with legislative and regulatory mandates. Chairperson J. Machiaverna solicited public comments but there were no public comments offered with regard to the rate proposals, so Chairperson J. Machiavema closed the public hearing. Chairperson J. Machiavema then indicated that an action item was required by the Board concerning the proposed modification of base rates and the proposed eliminations and modifications to the lighting rate schedules. Chairperson J. Machiavema asked if there would be any impacts to credit ratings as a result of the actions, to which B. Beelner informed him that this is viewed as credit positive to rating agencies. L. Cahill commented that the matter of utility rates has been reviewed by the Board, and the recommendations make sense. 9. DETERMINE THAT MODIFICATIONS TO RULE NOS. 1, 2, D. Singer moved approval of AND 26 OF THE ELECTRIC RATES, RULES AND the determination that the REGULATIONS ARE EXEMPT UNDER THE CALIFORNIA modifications to Rule Nos. 1, 2 ENVIRONMENTAL QUALITY ACT, SECTION 15061(b)(3) OF and 26 of the Electric Rates, TITLE 14 OF THE CALIFORNIA CODE OF REGULATIONS; Rules and Regulations (ERRR) AND APPROVE MODIFICATIONS TO RULE NOS. 1, 2, AND are exempt from CEQA, 26 OF THE ELECTRICRATES, RULESAND REGULATIONS.* pursuant to Section 15061(b)(3) of Title 14 of the B. Beelner provided an overview of the proposed rule modifications, California Code of stating the proposed modifications serve to update definitions, Regulations; and approval of facilitate the elimination and consolidation of the lighting rate the modifications to Rule Nos. schedules, and extend the energy discount to income -qualified 1, 2, and 26 of the ERRR. military veterans. S.E. Faessel seconded the motion. Chairperson J. Machiaverna then stated that there was a MOTION CARRIED: 7-0. recommendation before the Board that it determines that ABSTAINED: 0. modifications to Rule Numbers 1, 2, and 26 of the Electric Rates, ABSENT: 0. Rules and Regulations are exempt under the California Environmental Quality Act (CEQA), and approve the proposed modifications to Rule Numbers 1, 2, and 26 of the Electric Rates, Rules and Regulations. 10. UPDATE ON WATER SYSTEM ISSUES. M. Moore, Acting AGM of Water Services, shared that the probability of drought on the Colorado River reduced to 0% after significant rain in Colorado and that some rainfall in Orange County was captured and is being recharged into the local groundwater basin; however, the region is still in a severe drought due to low water supply from the State Water Project. He also shared that the Department will continue to comply with the Governor's mandate to conserve water, and so far, the City has responded to the water conservation measures with a 25% reduction in water demand in May 2015-44 AGENDA ITEM ACTION TAKEN and June. He mentioned that the Metropolitan Water District (MWD) has stopped their $2/square foot rebate turf rebate. The Department will continue the $1/square foot rebate as long as funds are available. In addition, he shared that the Department will continue the zero interest loan program for turf removal. 11. UPDATE ON ELECTRIC SYSTEM ISSUES. J. Lonneker, AGM of Electric Services, shared with the Board that the Anaheim electric system performed well over the 4th of July holiday and also during the recent rain storms. No outages were reported during either of these times, although they will remain still watchful over the next few weeks after the rain, given that moisture in the ground may result in cable outages. J. Lonneker shared that the City Council adopted the annual Underground Conversion Program 5 -year Plan, with the Board. The Council's comments were very positive, and included recognition of the Department's progress and accomplishments over the past 25 years. 12. UPDATE ON FINANCE ISSUES. B. Beelner, AGM of Finance and Administration, shared with the Board that the 2015 B Electric Revenue bonds sold at an interest rate of 2.98% for a term of 20 years with $8 million in savings from the refunding. The Board and B. Beelner discussed how this bond sale compared to those of other local electric utilities. He presented the monthly dashboard to the Board and discussed how both electric and water revenue was above budget for the fiscal year while expenses were below budget. He did caveat this report with the fact that numbers are still fluid as the accountants are still determining final year end results as we record invoices from vendors that apply to Fiscal Year 2015. 13. UPDATE ON POWER SUPPLY ISSUES. G. Bowen, AGM of Power Supply, provided the Board with an update on the Bowerman Landfill Gas Project. He shared that the project is on schedule and that the transmission lines will be interconnected by Southern California Edison (SCE) in October. He also shared the engines were shipped from the manufacturer in Germany and will arrive in Long Beach in early part of August and the facility should go commercially operational in early January 2016. He shared that the Board will be notified when the dedication ceremony will take place, if they would like to attend. G. Bowen also provided an update on the Hilton Hotel lighting retrofit in its main lobby and hallway areas, sharing that rebate for energy conservation counts towards the Department's efficiency goals and are reported to the state. 2015-45 AGENDA ITEM ACTION TAKEN Lastly, G. Bowen provided an update on the decommissioning of the San Onofre power plant. He stated that the Decommissioning General Contractor will be selected in the first quarter of 2016 that will perform site decommissioning. He also shared that all of the fuel from the spent fuel pools will be moved to dry cask storage by mid - 2018. 14. UPDATE ON ENTERPRISE RISK, COMPLIANCE, AND LEGISLATIVE / REGULATORY AFFAIRS ISSUES. D. Wilson, Acting Chief Risk Officer, provided the quarterly compliance report to the Board, sharing that the Department remained in compliance with hundreds of laws and regulations. He also noted that the power plants did not have a single breakdown or excess emission report the entire quarter. D. Wilson shared that the Department's annual emergency response training exercise would be conducted on August 27th and if anyone is interested in observing the event to inform P. Oviedo. D. Wilson shared that the State Legislature is on summer recess and will reconvene on August 17, 2015. Also, the PUB Legislative Working Group will meet just after the State legislature reconvenes, on August 26, 2015. 15. AGENDA ITEM(S) FOR THE NEXT PUBLIC UTILI'T'IES BOARD MEETING ON AUGUST 26, 2015. D. Lee mentioned the following upcoming agenda items: • Hannum Substation Transformer Replacement Presentation • Revenue Protection Presentation • Utilities Success Indicators • Bowerman Landfill Gas Facility SB1368 Filing • Iberdrola Renewables Amended Long -Term Power Purchase Agreement * • Annual Power Content Label and Energy Supply Report to CEC 16. ITEM(S) BY SECRETARY, D. Lee informed the Board that Paul Emery was selected as the permanent City Manager. He welcomed AB Abdulrahman to the Board. He provided a brief update on the injured employee who has returned home and is making progress in his recovery. He informed the Board he will be out of the office from August 7 through August 14, and that B. Beelner would be in charge during that time. Lastly, he requested the meeting be adjourned in the memory of Mike Baltes, Senior Electric Meter Technician for Anaheim who recently passed away. 17. ITEM(S) BY BOARD MEMBERS. L. Cahill thanked staff for the information provided during the meeting. 2015-46 AGENDA ITEM B. Hernandez thanked staff and indicated how he appreciated all of the Department's accomplishments given the regulations and rules that are set in place by the Legislature. D. Singer stated she also appreciated the information provided during the meeting. AB Abdulrahman said it is a pleasure to serve on the Public Utilities Board and that he looked forward to working with staff. D. Wain thanked staff for sending out the Rate Hearing binder prior to the meeting. S. E. Faessel congratulated those appointed to Board positions and to subcommittees; she welcomed AB Abdulrahman to the Board and recognized the Department on the Turf Removal Program and efforts to minimize write-offs. J. Machiaverna thanked the Board for reappointing him as Chairperson, congratulated everyone on their appointments, and welcomed AB Abdulrahman to the Board. He asked that the meeting be closed in honor of M. Baltes. 18. ADJOURNMENT: (REGULAR MEETING ON AUGUST 26, 2015, AT 5:00 P.M., IN THE 11T" FLOOR LARGE CONFERENCE ROOM, ANAHEIM WEST TOWER., 201 S. ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). u mitted, Dukku Lee Public Utilities General Manager ACTION TAKEN -74 U I WMETJ TT r the Regular Meeting at 7:01 honor of Mike Baltes, hii.6 Q& wk p.m. B. Hernandez seconded the motion. MOTION CARRIED: 7-0. ABSTAINED: 0. ABSENT: 0. 0 of