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Public Utilities 2016/07/27CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES July 27, 2016 The agenda having been posted on Thursday, July 21, 2016, the Regular Meeting of the Public Utilities Board (Board) was called to order by Chairperson J. Machiavema at 5:02 p.m. on Wednesday, July 27, 2016, in the I I I Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: Chairperson J. Machiaverna, Vice Chairperson S.E. Faessel, B. Hernandez, D. Wain, E. Medrano, A. Abdulrahman, L. Cahill Board Members Absent: None Staff Present: D. Lee, B. BeeIner, F. Barvarz, M. Moore, G. Bowen, J. Lehman, A. Kott, L. Quiambao, P. Oviedo, M. Seifen, J. Pellegrino, L. Nugent, L. Guzman, J. Sanks, P. Hayes, M. Robledo, D. Wilson, D. Steele Guest(s) Present: L. McCormick, California Municipal Finance Authority, T. Libolt, Energy Efficient Equity AGENDA ITEM 1. PUBLIC COMMENTS. No Public Comments, D. Wilson, Environmental Services Manager, was recognized for his thirty (30) years of service with the City of Anaheim and was presented a plaque. 2. APPROVAL OF THE MINUTES OF THE PUBLIC HEARING / REGULAR PUBLIC UTILITIES BOARD MEETING OF JUNE 22, 2016 * 3. PRESENTATION ON INTEGRATED RESOURCES STRATEGIC PLANNING OVERVIEW. M. Robledo, Integrated Resources Manager, presented power supply procurement strategies intended to maintain reliability and competitive rates while transitioning to more environmentally sustainable resources and offering customers choices with regard to customer -owned generation and electric vehicles. Customers have access to alternatives to traditional electric utility service such as rooftop solar, and the Public Utilities Department (Department) is committed to serving the needs of 2016-42 ACTION TAKEN There being no public comments, Chairperson J. Machiaverna closed the public comments portion of the regular meeting. L. Cahill moved approval of the Minutes of the Public Hearing / Regular Public Utilities Board Meeting of June 22, 2016. S.E. Faessel seconded the motion. MOTION CARRIED: 6-1. ABSTAINED: 1 (E. Medrano). ABSENT: 0. AGENDA ITEM these customer -generators. Also, electric vehicle (EV) usage is expected to grow by 15% per year, which will increase customer demand. The Department plans to accommodate these fluctuations in customer demand by using flexible supply resources, energy efficiency, EV infrastructure programs, and rate incentives that reflect the cost of service. The Department plans to support resource sustainability by transitioning from coal powered generation by 2027 to reduce greenhouse gas emissions. This coal generation will be replaced with flexible renewable resources with a goal of achieving a 50% renewable energy portfolio by 2030 as required by Senate Bill 350, which will have upward pressures on electric rates to accommodate higher cost resources and grid requirements. The Department's strategic plan incorporates diversity in its resource mix to include market-based purchases rather than relying solely on long term investments to ensure that customer demands are met while maintaining stable and competitive electric rates. The Board asked a series of questions about electric resources and requested a cost breakdown of the various supplies. 4. APPROVAL OF PUBLIC UTILITIES DEPARTMENT ORDERS 350 (PROCUREMENT OF LONG-TERM ENERGY-RELATED RESOURCES); 110 (PROCESSING AND ADMINISTRATION OF AGREEMENTS); 151 (ISSUANCE AND USE OF MOBILE TECHNOLOGY); AND 501 (NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION AND WESTERN ELECTRICITY COORDINATING COUNCIL INTERNAL COMPLIANCE PROGRAM). D. Steele, Utilities Analyst III, gave a presentation that included a general introduction to Department Orders (DOs), background on how DOs are related to a broader controls effort, and an overview of each of four DOs for which the Board's approval was requested. D. Steele provided details about: (1) DO 110 — Processing and Administration of Agreements, which details the Department's policies and procedures for the development and administration of agreements, amendments, and renewal letters; (2) DO 151 — Issuance and Use of Mobile Technology, which governs the parameters for the issuance and use of mobile communication devices (e.g. cell phones, smart phones, web enabled tablets, air cards); (3) DO 350 — Procurement of Long -Term Energy - Related Resources, which establishes the Department's policy and procedure in the area of procurement or decommissioning of Energy - Related Resources, including transmission, capacity, renewable and non-renewable energy, distributed energy resources, and fuel supplies; and (4) DO 501 — North American Electric Reliability Corporation (NERC) and Western Electricity Coordinating Council (WECC) Internal Compliance Program, which details the Department's internal policies, procedures and guidelines for compliance with mandatory and enforceable NERC and WECC Reliability Standards in protection of the regional electric system. 2016-43 ACTION TAKEN Staff will provide cost breakdown of the supplies at a future meeting. S.E. Faessel moved approval of the Public Utilities Department Orders 350 (Procurement of Long -Term Energy Related Resources); 110 (Processing and Administration of Agreements); 151 (Issuance and Use of Mobile Technology); and 501 (North American Electric Reliability Corporation and Western Electricity Coordinating Council Internal Compliance Program). A. Abdulrahman seconded the motion. MOTION CARRIED: 7-0. ABSTAINED: 0. ABSENT: 0. AGENDA ITEM ACTION TAKEN 5. APPROVAL OF FISCAL YEAR 2015/2016 WRITE-OFF OF B. Hernandez moved approval UNCOLLECTIBLE UTILITY ACCOUNTS. * of Fiscal Year 2015/2016 Write-off of Uncollectible B. Beelner, AGM — Finance and Administration, presented the Utility Accounts. D. Wain Department's annual gross write-off amount to the Board for Fiscal seconded the motion. Year 201512016. B. Beelner explained that the increase in the write-off MOTION CARRIED: 7-0. amount was attributed in large part to the bankruptcy of Freedom ABSTAINED: 0. Communications and less -than -satisfactory performance of the ABSENT: 0. Department's current collection services vendor. B. Beelner explained that the Department is currently investigating the use of predictive software options designed to alert the Department when commercial customers are displaying activities identified as high risk, which would allow the Department to take the appropriate actions to mitigate risk. B. Beelner then explained that the Department's current collection services vendor had shown a significant decrease in its collection efforts, which had a negative impact on the net write-off amount, and the next agenda item was to seek approval of an agreement with a new collection services vendor. 6. APPROVAL OF AN AGREEMENT WITH RAY KLIEN, INC. S.E. Faessel moved approval of FOR COLLECTION SERVICES. * an agreement with Ray Klein, Inc. for Collection Services. B. B. Beelner requested the Board recommend that City Council approve Hernandez seconded the an Agreement with Ray Klein, Inc., DBA Professional Credit Service motion. for utility collection services. He explained this new company is MOTION CARRIED: 7-0. projected to increase the recovery of unpaid balances. ABSTAINED: 0. ABSENT: 0. B. Beelner outlined the vendor evaluation process, which follows Council Policy 4. 1, and he indicated that the Department took special care to ensure that the vendor selected understood the Department's requirement to treat all customers with dignity and respect during all recovery efforts. Questions from the Board were answered by both B. Beelner and L. Nugent, Customer Service Manager, regarding the selection process, including reference checks, technology capabilities, and commission structure. 7. APPROVAL OF A RESOLUTION CONSENTING TO THE E. Medrano moved approval of INCLUSION OF THE CITY OF ANAHEIM WITHIN THE a Resolution consenting to the CALIFORNIA MUNICIPAL FINANCE AUTHORITY (CMFA) inclusion of the City of OPEN PACE PROGRAM AND AUTHORIZING THE CMFA TO Anaheim within the California CONDUCT CONTRACTUAL ASSESSMENTS AND APPROVING Municipal Finance Authority A PARTICIPATION AGREEMENT WITH THE CtiiFA AND (CMFA) open PACE Program THIRD PARTY ADMINISTRATORS. * and authorizing the CMFA to conduct contractual G. Bowen, AGM - Power Supply, provided an overview of the California assessments and approving a Municipal Finance Authority Agreement for approval which allows Participation Agreement with participation in the Property Assessed Clean Energy Program (Program) the CMFA and Third Party for water conservation and energy efficiency improvements in the City of Administrators. D. Wain Anaheim. G. Bowen listed three other providers under the Program, seconded the motion. stating that these programs use private sector capital to provide funding MOTION CARRIED: 7-0. for residential and non-residential property owners allowing them to ABSTAINED: 0. secure upfront funding for energy efficiency improvements. He indicated ABSENT: 0. that the funding is repaid through an assessment lien on the participants 2016-44 AGENDA ITEM property tax bills. He added that approximately 800 residents have participated in the Program to date. The Board asked a series of questions, including how customers are made aware of available Programs. D. Lee responded that the Department makes information available on its website, but is not responsible for conducting outreach on behalf of the respective Program providers. 8. APPROVAL OF A FIRST AMENDMENT TO THE MASTER INTER UTILITY AGREEMENT BETWEEN THE SOUTHERN CALIFORNIA GAS COMPANY AND THE CITY OF ANAHEIM FOR ENERGY EFFICIENCY, RESOURCE SAVING AND RELATED ACTIVITIES. * G. Bowen provided an overview of the First Amendment to the Master Inter -Utility Agreement (Agreement) with Southern California Gas Company to conduct joint utility conservation programs in Anaheim. He stated that through this Agreement, the amount of assistance will increase from $200K to $600K annually. G. Bowen indicated that the Agreement provides one-stop shopping for residents wishing to take advantage of energy savings from gas, electricity, and water all at the same time through a single program. He also indicated that the Agreement will facilitate expanding the program from approximately 350 to 800 customers per year and that to date, customers who have participated in the program have saved on average $178 annually per household in utility savings. 9. DISCUSSION ON THE QUARTERLY STATUS REPORTS ON CAPITAL IMPROVEMENT PROJECTS, MASTER AGREEMENTS, GENERAL SERVICE AGREEMENTS, AND SPOT BID AWARDS. D. Lee, Public Utilities General Manager, provided an update on the Quarterly Status Reports related to capital projects and master agreements, general service agreements, and spot bid awards. The Quarterly Report highlights projects that are conducted throughout the City, as depicted in the map provided, which also shows the status of the various projects. 10. UPDATE ON WATER SYSTEM ISSUES. M. Moore, AGM - Water Services, provided an update on water services. The City Council approved the change in the water conservation plan at their July 12, 2016 meeting. Due to improved precipitation in northern California, the State and Metropolitan Water District reduced the conservation requirements to water retailers. The State Water Resources Control Board modified the regulations that affect water conservation. The City Council action changes the allowable irrigation days from two (2) days per week to three (3) days per week. All other mandatory requirements remain in effect. The Irvine Ranch Water District filed a lawsuit against Orange County Water District challenging their Water Production Assessments. The lawsuit seeks to require that recycled water considered in the calculation 2016-45 ACTION TAKEN B. Hernandez moved approval of a First Amendment to the Master Inter -Utility Agreement between the Southern California Gas Company and the City of Anaheim for Energy Efficiency, Resource Saving and Related Activities, L. Cahill seconded the motion. MOTION CARRIED: 7-0. ABSTAINED: 0. ABSENT: 0. AGENDA ITEM aiCTION TAKEN of the allowable pumping limits. The City Council authorized the City Attorney's Office to participate in the litigation as an "Interested Party". 11. UPDATE ON ELECTRIC SYSTEM ISSUES. F. Barvarz, Acting AGM — Electric Services, provided the Electric System updates. He indicated that the Electric System continued to perform well during the recent hot weather with .Friday, July 22, 2016, being the hottest day with temperatures of over 100 degrees, when the electric system load peaked at approximately 540 megawatts (MW). This is below the all-time system peak of 596 MW. He also discussed the recent approval by the City Council of the Five - Year Underground Conversion Plan. The Plan includes an update that expands the Program's scope by designating qualified neighborhood streets as collector so other utilities can participate in the undergrounding, to improve reliability, and as part of a development. F. Barvarz also discussed the progress on the replacement of direct buried (DB) cables, to new cables protected in conduits, to improve electric service reliability. He shared that the Department prioritizes these projects based on a criteria and to date, has replaced approximately 200 of the estimated 300 miles of DB cables within the City. 12. UPDATE ON FINANCE ISSUES. B. Beelner discussed the Utilities Dashboard for May, mentioning that electric revenues were down 2.7% for Fiscal Year 2017 due to lower than expected wholesale revenue caused by softness in wholesale energy prices. He also mentioned that water revenue was down 11.6% year to date due to customer conservation. B. Beelner also discussed the upcoming bond issuance, indicating that the Department would be seeking Board approval in August for a not - to -exceed $383 million in Electric Bond, with the potential for up to $72.5 million in interest savings due to refunding opportunities. He also mentioned that the Department would seek approval for a not -to -exceed $45 million in Water Bond which would be used to solely fund new capital investment to replace aging infrastructure. 13. UPDATE ON POWER SUPPLY ISSUES. G. Bowen provided the Board with an update on Southern California Public Power Authority (SCPPA) Bi -Annual expenditures. He discussed that 96 percent of the expenditures were related to generation, transmission, renewables, and natural gas project, with the remaining four (4) percent attributable to mostly Energy Efficiency programs. G. Bowen indicated that since the last update in January, the Department has added eight (8) agreements with SCPPA. He indicated to the Board that the Department saved approximately $2 million in operating costs for Intermountain Public Power (IPP), as a result of less operations and directly attributable to the increase in solar production in the state. G. Bowen shared that the Summer Ready Campaign, held over the last 2016-46 AGENDA ITEM ACTION TAKEN two months at the Lowes and Home Depots in Anaheim, were successful in helping customers get ready for the warmer summer weather. He indicated that the Department saw an increase in home utility checkup sign-up requests, as well as an increase in HVAC tune ups rebates. G. Bowen discussed that the customers learned a great deal about the various home incentive rebates and things they can do to prepare their homes for summer. Lastly, G. Bowen made the Board aware that the Westlands Solar project ribbon cutting ceremony took place and Department staff took part in the ceremony. Pictures of the facility were shown to the Board. 14. UPDATE ON ENTERPRISE RISK, COMPLIANCE, AND LEGISLATIVE & REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, provided an update on the Internal Compliance Report. She mentioned the two Notices of Violations that were received related to calibration occurrences at the power plants in the spring of 2015, both of which were self-reported to the South Coast Air Quality Management District. She explained that neither involved any air emissions exceedances and any penalties were likely to be minimal. The incidents have been reviewed with staff in order to avoid the potential for reoccurrence. She then invited the Board's attention to the Wholesale Energy Risk Management (ERM) Program's Quarterly Compliance report in their packets. 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 appropriately managed. J. Lehman reported that all transactions were in compliance with the ERM program, and there were no violations. She shared that the Department will be conducting its annual emergency response planning drill. This year's drill will be different in that it will emphasize evaluating and reinforcing staff understanding of the key fundamentals of the program in a class room type setting. She invited the Board to let her know if they were interested in observing the training. 15. AGENDA ITEM(S) FOR THE PUBLIC UTILITIES BOARD MEETING ON AUGUST 24, 2016, D. Lee stated the following items are planned for the following Board meeting: • Update on Utilities Success Indicators • Regulatory Relief Modifications to Electric and Water Rules • Electric Vehicle Charging Station Program * • Metropolitan Water District of Orange County (MWDOC) Contract for School Education and Water Resource Programs * • Ordinance Modifying Municipal Code - Undergrounding Program * • Water and Electric Bond Deals 2016-47 AGENDA ITEM ACTION TAKEN 16. ITEM(S) BY SECRETARY. D. Lee reported that public comments were made at the July 26 City Council meeting regarding the planned anaerobic digestion facility. As a reminder of the project details, a copy of the 2013 staff report was provided to the Board in their packets. D. Lee showed photos of a unique substation in Australia. The substation is located in a heavily urban area in the city of Sydney, and blended in with the surrounding buildings. The footprint of the substation is about half of the Anaheim Substation parcel. D. Lee attended the dedication of Little People's Park, which includes historic street lights provided by the Department that were refurbished and includes new LED light bulbs. He also congratulated J. Machiaverna for the dedication of the Boys and Girls Club at Manzanita Park. 17. ITEM(S) BY BOARD MEMBERS. A. Abdulrahman said that the topics presented by staff were interesting. D. Wain stated that the presentations provided at the meeting were informative. E. Medrano thanked staff for the presentations and items covered at the meeting. L. Cahill stated that he appreciated the information shared at the meeting. B. Hernandez commented that he appreciates the benefits of living in Anaheim. S.E. Faessel commented that Anaheim Public Utilities has demonstrated sensitivity to customer needs; she also appreciates the one stop shop service provided through the partnership with the Gas Company. J. Machiaverna thanked the Department staff for the customer service provided in regards to the utility bill for the Boys and Girls Club. He mentioned that the Department conducted research, came on-site, and offered solutions to conserve and he appreciated staff's efforts. 1$. ADJOURNMENT: (REGULAR MEETING ON AUGUST 24, 2016, D. Wain moved approval to AT 5:00 P.M., IN THE I Imo` FLOOR LARGE CONFERENCE adjourn the Regular Meeting at ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM 6:49 p.m., to the Board's BOULEVARD, ANAHEIM, CALIFORNIA). Regular Meeting date of August 24, 2016 at 5:00 p.m. B. Hernandez seconded motion. MOTION CARRIED: 7-0, ABSTAINED: 0. ABSENT: 0. AGENDA ITEM ACTION TAKEN 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.