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Public Utilities 2016/04/27CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES April 27, 2016 The agenda having been posted on Wednesday, April 20, 2016, the Regular Meeting of the Public Utilities Board (Board) was called to order by Chairperson J. Machiaverna at 5:00 p.m. on Wednesday, April 27, 2016, in the l 11h Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: Chairperson J. Machiavema, Vice Chairperson S.E. Faessel, B. Hernandez, D. Wain, A. Abdulrahman Board Members Absent: L. Cahill, E. Medrano Staff Present: D. Lee, J. Lonneker, M. Moore, G. Bowen, B. Beelner, J. Lehman, L. Quiambao, P. Oviedo, A. Kott, M. Seifen, I. Macias, P. Hayes, E. Lasley, A. Nguyen, D. Wilson, C. Pereyra, M. Avelino, M. Robledo Guest(s) Present: None AGENDA ITEM 1. PUBLIC COMMENTS. No Public Comments. 11 2. APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC UTILITIES BOARD MEETING OF MARCH 23, 2016. * 3. APPROVAL TO POST THE 2016 WATER QUALITY REPORT ON THE CITY OF ANAHEIM PUBLIC UTILITIES WEBSITE AND PROVIDE CERTIFICATION OF COMPLETION OF POSTING TO THE STATE WATER RESOURCES CONTROL BOARD DIVISION OF DRINKING WATER. ** J. Lehman, Chief Risk Officer, referred the Board to the Public Utilities Department (Department) Annual Water Quality Report in their packets, and shared that the Department has met or exceeded all State and Federal drinking water requirements. Over 44,000 samples are taken each year, and water is tested for approximately 180 constituents. These samples are taken on a regular basis, including 2016-19 ACTION TAKEN There being no public comments, Chairperson J. Machiavema closed the public comments portion of the regular meeting. B. Hernandez moved approval of the Minutes of the Regular Public Utilities Board Meeting of March 23, 2016. A. Abdulrahman seconded the motion. MOTION CARRIED: 5-0. ABSTAINED: 0. ABSENT: 2 (L. Cahill, E. Medrano). B. Hernandez moved approval to post the 2016 Water Quality Report on the City of Anaheim Public Utilities website and provide certification of completion of posting to the State Water Resources Control Board Division of Drinking Water. S.E. Faessel seconded the motion. MOTION CARRIED: 5-0. ABSTAINED: 0. AGENDA ITEM daily, monthly, quarterly, and annually to ensure that the Department remains in compliance with State and Federal water quality requirements. D. Wilson, Environmental Services Manager, explained that the majority of the tests are conducted at the Lenain Treatment Plant; however, more complex tests that require sophisticated equipment are sent out for testing. J. Lehman recognized those Department staff involved with preparing Water Quality Report, including R. Westergard (Water Quality Lab), M. Jouhari (Water Field and Operations), and D. Wilson (Environmental Services) and their respective staff members, as well as M. Seifen and M. Bradley (Communications). The Board requested that the report be made available on the Department's home page of its website. 4. PRESENTATION ON FISCAL YEAR 2016/2017 PROPOSED BUDGET. A. Nguyen, Utilities Budget Administrator, provided a presentation to the Board on the FYI Projected and FYI Proposed budget, including an overview of the budget process, comparing the budget request to the current year, and highlighting key accomplishments from the current fiscal year, as well as planned initiatives and projects for next fiscal year. He referred the Board to their budget binders that includes more detailed information. The Electric and Water Utilities' total expenditures for the current budget are lower than expected by approximately 9% and 33% respectively, due to carryovers from multiyear capital projects and reduced operating expenses. For the Water Utility, lower water supply costs were the result of drought mandates, which also reduced water revenue. For the Electric Utility, lower power supply costs resulted from reduced commodity pricing for fuel supplies as well as lower debt service costs resulting from refinancing of existing bonds. For the Proposed Budget, the Water Utility's total expenditures is proposed at approximately 6% below the current budget, even though wholesale supply costs are continuing to increase, reductions in other areas are helping mitigate the budgetary impact. The Electric Utility's total expenditures for current budget will be approximately 12% higher than the current year, primarily due to a capital project for a new substation and the additional circuits necessary to meet increasing demand. Of note, the Electric operating budget remains flat, as the Department has been managing wholesale power supply costs and the completion of the state -mandated solar rebate program. ACTION TAKEN ABSENT: 2 (L. Cahill, E. Medrano). Staff will provide a link to the report from its home page. The Board asked various questions about the budgeting process, the Staff will contact absent Board Proposed budget, and the planned substation, and was invited to ask members about the budget. any additional questions to staff prior to the next meeting. A. Nguyen indicated that staff will seek the Board's recommendation of the FYI 2016-20 AGENDA ITEM ACTION TAKEN Proposed budget at next month's meeting. D. Lee requested that staff reach out to the Board members who were unable to attend the meeting and offer to review the budget in detail with them. 5. PRESENTATION ON FUEL SUPPLY OUTLOOK. M. Robledo, Integrated Resources Manager, presented the Board with an overview of the Department's fuel supply portfolio. As part of the presentation he described the natural gas supply chain, including the purpose of the Aliso Canyon gas storage facility in the Los Angeles basin. Although the Department has a diverse portfolio of fuel supplies, including natural gas, the issues facing potential power shortages are the result of the slow moving nature of natural gas, which may be impacted during peak demand days. Since the Department is part of the regionally -connected electric grid, should it receive orders to drop load by the California Independent System Operator, it is required to do so, or face significant penalties. M. Robledo explained the various state agencies involved with oversight and regulating authority over the Aliso Canyon storage facility. He then articulated the Department's action plan which includes planning activities to minimize the need for gas storage through imported power, and available programs to lower summer customer air conditioning usage through rebates, as well as voluntary demand reduction programs to minimize rotating outage durations. 6. PRESENTATION ON BUSINESS AND COMMUNITY PROGRAMS ANNUAL UPDATE. P. Hayes, Business & Community Programs Manager, presented the Board with a summary of FY 14115 accomplishments for customer efficiency programs and student engagement. He explained that energy efficiency and water conservation are both legislatively required, and that the City's Greenhouse Gas Reduction Plan also supports complementary sustainable initiatives. P. Hayes shared with the Board that the Department met the State's 20% water conservation goal and exceeded the State's energy savings goal by 28%. The update included an overview of commercial and residential water and energy savings by program and the associated utility bill savings that directly benefit Anaheim customers. He also shared the extensive drought response efforts and community outreach that occurred during the prior fiscal year that included participating in 86 community outreach events. The Department also extended programs to promote student engagement, including energy and water education and career path opportunities. The total impact to the community as a result of the conservation programs resulted in over $3.6M in customer bill savings. P. Hayes also provided a brief overview of new programs currently under development. 2016-21 AGENDA ITEM ACTION TAKEN 7. DISCUSSION ON THE QUARTERLY STATUS REPORTS ON CAPITAL IMPROVEMENT PROJECTS, MASTER AGREEMENTS, GENERAL SERVICE AGREEMENTS, AND SPOT BID AWARDS. D. Lee referred the Board to the quarterly reports in their packets. The Capital Improvement Plan maps for both electric and water projects have been modified to reflect the six City Council districts for reference purposes. S. UPDATE ON WATER SYSTEM ISSUES. M. Moore, AGM — Water Services, shared the water supply conditions in California have improved considerably this year, leading to a State Water Project water pumping allocation of 60%, which is the highest level it has been in four years. Storage in the State's major reservoirs has rebounded, and more water is available for Metropolitan Water District {M)vVD) to import into Southern California to replenish storage facilities. The State Water Resources Control Board will meet in mid-May to consider removing the emergency conservations measures. May is Water Awareness Month, and the Department has numerous activities planned in May which are addressed in more detail in the memo provided to the Board. The Orange County Water Summit will be held on May 20th in Costa Mesa. Board Members should contact P. Oviedo if they are interested in attending the event. 9. UPDATE ON ELECTRIC SYSTEM ISSUES. J. Lonneker, AGM — Electric Services, shared with the Board that the Lineman Rodeo hosted in Los Angeles is this Saturday, April 30, 2016, and any Board Members wishing to attend will have arrangements made for them to travel from Anaheim. J. Lonneker discussed with the Board the successful implementation of one of the Department's Smart Grid initiatives with the objective to reduce the number of customers impacted during an outage using advanced communication methods that control automated switches. Fewer customers were impacted during an actual outage caused by mylar balloons due to the advanced automated switch capability to isolate a portion of the affected power line while leaving the remaining line intact to continue serving electricity to two-thirds of the customers served by that power line. The Department continues to implement advanced electrical equipment, which is one of many programs to achieve high reliability of the electric system in Anaheim. 2016-22 AGENDA ITEM 10. UPDATE ON FINANCE ISSUES. ACTION TAKEN B. Beelner, AGM — Finance and Administration, went over the monthly dashboard. He discussed how the electric revenues were 1.7% above budget for the fiscal year to date due to a warm and humid summer while expenses were below budget by 12.4%. B. Beelner then mentioned that year-to-date water revenues have come in below budget by 10.0% while expenses were 12.5% below budget. B. Beelner discussed the current fundamentals behind the continued low interest rate market and how the Department can take advantage of these continued low interest rates to help keep electric and water rates lower than other Orange County cities. 11. UPDATE ON POWER SUPPLY ISSUES. G. Bowen, AGM -- Power Supply, reported that the Bowerman Landfill Gas Project declared commercial operation and that the Department was scheduling the energy as part of its Renewable Portfolio. He also shared that Bowerman's operation will facilitate the Department's divestiture from the San Juan Generating Station in 2017. G. Bowen shared photographs of the Tree Power Program ceremony at Olive Street Elementary School with the Board, where a free shade tree was planted marking the 50,000'' tree to be planted in Anaheim since the inception of the program in 1992. G. Bowen shared that the Orange County Water District's (OCWD) Children's Water Education Festival was held March 23 and 24, 2016. He indicated that the Water Festival is the nation's largest celebration, celebrating its 201h anniversary of educating students about water and the environment. He also shared that over 7,000 students took part in the two day event and more than 110,000 students over the last 20 - years since the event's inception. G. Bowen referred the Board to a letter provided to the California Energy Commission Chair, Robert Weisenmiller, in response to his request to understand what Anaheim is doing as a destination city to further electric transportation and renewable resources as part of Senate Bill (SB) 350. The letter reflects that the Department has significant accomplishments in the areas of clean and sustainable transportation and power resources. 12. UPDATE ON ENTERPRISE RISK, COMPLIANCE, AND LEGISLATIVE & REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, invited the Board's attention to the Internal Compliance Report. The updated drinking water permit was received from the State for the federal drinking water program. It provides the testing and operational requirements for the water system, and will be in effect until the State Water Resource Control Board (SWRCB) either amends, revises, or re -issues it. 2016-23 AGENDA ITEM ACTION TAKEN Additionally, the Water Utility's water conservation target was lowered by the SWRCB from 20% to 13% based on our investment and use of water from the Ground Water Replenishment System. Additionally, there was a minor exceedance at Canyon Power Plant (CPP) where a control valve did not work properly on the pollution control system for Nitrogen Oxide (NOX); however, no violation is expected. J. Lehman Informed the Board that the Department was contacted by the SWRCB regarding costs to remove underground storage tanks removed at the Edwards Utilities Complex approximately 18 years ago. Due to the time constraints to submit updated documents, the Department sought City Council approval for the potential reimbursement which is estimated at $50,000. Finally, she mentioned that Saturday, April 30'h, was National Pharmaceutical Collection Day, where any unused medicines can be turned in, rather than disposing them in the landfill or toilet where they can potentially impact water supplies. This information is posted on the Department's website, along with information about how to find the closest collection point. Staff will post this information on social media, as well. 13. AGENDA ITEM(S) FOR THE PUBLIC UTILITIES BOARD MEETING ON MAY 25, 2016. D. Lee, Public Utilities General Manager, indicated that the following items are scheduled for the upcoming Board meeting: • Presentation on Anaheim's Electric Rate Structure and how the Department compares to other utility companies • Oak Canyon Pole Replacement Project • Urban Water Management Plan • Public Hearing Date for Public Health Goals • FYI 6/17 Budget Recommendation • Design -Build for the Downtown Recycled Water System 14. ITEM(S) BY SECRETARY. D. Lee informed the Board that a career path symposium will be held on April 28s, with students from Canyon High School scheduled to attend. A meeting with Orange Unified School District will take place to discuss various conservation, solar, and educational programs available for their students and facilities. He also informed the Board that the Mayor requested a review of financial controls as a result of the alleged issues in Placentia. B. Beelner provided a brief overview based on information from news media outlets, and how the Department's processes have checks and balances in place to address the potential for illegal activities. The Department will coordinate with the City Manager's Office to respond to the Mayor's request. 2016-24 AGENDA ITEM ACTION TAKEN 15. ITEM(S) BY BOARD MEMBERS. A. Abdulrahman stated that the information presented during the meeting was informative. He requested additional information on energy storage that staff will provide at an upcoming meeting. D. Wain reported that he attended the tree planting ceremony at Olive Street Elementary School and he attended the Bowerman Landfill Gas Project Dedication. He inquired on the differences between a power purchase agreement or ownership arrangement for power projects, and staff explained that ownership also requires the burden of decommissioning and that in the case of Bowerman, they held the rights to the fuel supply at the landfill. B. Hernandez inquired about energy storage and solar. Staff explained the concepts of the technologies, and will provide more detailed information about power supplies at a future meeting. J. Machiaverna thanked staff for the extensive information provided during the meeting. 16. ADJOURNMENT: (REGULAR M EETMG ON MAY 25, 2016, D. Wain moved approval to AT 5:00 P.M., IN THE 11' FLOOR LARGE CONFERENCE adjourn the Regular Meeting at ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM 7:56 p.m., to the Board's BOULEVARD, ANAHEIM, CALIFORNIA). Public Hearing/Regular Meeting date of May 25, 2016 at 5:00 p.m. B. Hernandez seconded motion. MOTION CARRIED: 4-0. ABSTAINED: 0. ABSENT: 3 (L. Cahill, E. Medrano, S.E. Faessel). RWctfuufitted, Dukku Lee Public Utilities General Manager * 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.