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Public Utilities 2017/03/22CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES March 22, 2017 The agenda having been posted on Thursday, March 16, 2017, the Public Hearings / Regular Meeting of the Public Utilities Board (Board) was called to order by Chair J. Machiaverna at 5:00 p.m. on Wednesday, March 22, 2017, in the 2 Floor Gordon Hoyt Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: Chairperson J. Machiaverna, Vice Chair D. Wain, B. Hernandez, A. Abdulrahman, E. Medrano Board Members Absent: L. Cahill Staff Present: D. Lee, B. Beelner, G. Bowen, J. Lonneker, M. Moore, J. Lehman, A. Kott, L. Quiambao, P. Oviedo, J. McBride, T. Mardikian, D. Ballin, M. Seifen, M. Adams, J. Vu, M. Jouhari, P. Hayes, A. Kanzler, F. Barvarz Guest(s) Present: Jesus Villasenor, O. C. Translation & Interpretation; Michael Ko, Resident; Jahui Ko, Resident; Virginia Torres Sialer, Resident; Earl Kelso, Resident; Maria Lopez, Resident; Carolyn A. Rosenber, CSR; Victoria Asad, Student; Raymond Asad; Marise Asad, Parents; Valentina Asad, Sister AGENDA ITEM 1. RECOGNITION OF THE METROPOLITAN WATER DISTRICT (MWD) POSTER CONTEST WINNERS. The Board welcomed Victoria Asad, who is a 3`d grader at Fairmont Academy, and her family for a presentation on the selection of her poster as part of the Metropolitan Water District 2017 Water Conservation Poster Contest. 2. PUBLIC COMMENTS. J. Machiavema invited the public to speak on matters not related to the public hearings. 3. APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC UTILITES BOARD MEETING OF FEBRUARY 22, 2017. * 2017-19 ACTION TAKEN There being no public comments, Chairperson J. Machiaverna closed the public comments portion of the meeting. A. Abdulrahman moved approval of the Minutes of the Regular Public Utilities Board Meeting of February 4. PRESENTATION ON WATER VALVE MAINTENANCE AND REPLACEMENT PROGRAM. M. Adams, Water Field Maintenance Superintendent, gave a presentation on the Water Valve Maintenance and Replacement Program (Program). M. Adams described how water valves operate and the importance of regular maintenance. He gave an example of the impact that an inoperable valve has on customers during a water outage. M. Adams also explained the Program goals and objectives, which include having the crews on a three year cycle to exercise every valve, repair valves as needed, or replace valves as soon as possible if found inoperable. 5. PRESENTATION ON ELECTRIC SYSTEM INSPECTIONS. J. Vu, Assistant Power Engineer, gave a presentation on the Electric System Inspection Program (Program). J. Vu provided the Board with an overview of the standards and practices adopted by the Public Utilities Department (Department) for both overhead (five year detailed inspection cycle) and underground (three year detailed inspection cycle) electrical system. J. Vu provided examples of maintenance for underground vaults, electrical equipment, and structures and described how the Program proactively improves reliability of the electrical system. J. Vu also reviewed the new integration of inspection data with the Geographic Information System (GIS) and described the added benefit for operations, maintenance, and efficiencies gained with the new application for future projects. J. Vu explained the importance of periodic inspections and planned maintenance, and their direct impact on improved reliability for customers throughout the City. 6. JOINT PUBLIC HEARING: PROPOSED INCREASES TO THE SCHEDULE W -CA AND SCHEDULE W -SRA RATES AND MODIFICATIONS TO RULE NOS. 3, 4, 5, 7, 9, 11, 16, 17, 21, AND 23 OF WATER RATES, RULES AND REGULATIONS; AND DETERMINATION THAT THE MODIFICATIONS TO THESE RULES ARE EXEMPT FROM CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) IN ACCORDANCE WITH PUBLIC RESOURCES CODE SECTION 2108(B)(8) AND SECTIONS 15061(B)(3) 2017-20 22, 2017. D. Wain seconded the motion. MOTION CARRIED: 4-0. ABSTAINED: 1 (E. Medrano). ABSENT: I (L. Cahill). The Public Utilities Department presented prepared testimony and oral testimony in support of its proposed increase to the Water Commodity Adjustment (Schedule W - CA) and Water System Reliability Adjustment AND 15273(A) OF TITLE 14 OF THE CALIFORNIA CODE (Schedule W -SRA), and OF REGULATIONS. * modifications to Rule Nos. Department is proposing to increase the Water Commodity 3, 4, 5, 7, 9, 11, 16, 17, 21, The Public Hearing was called to order by Chairperson J. and 23 of Water Rates, Machiaverna at 5:43 p.m. Rules and Regulations. B. Beelner, Assistant General Manager — Finance and Upon the completion of the Administration, presented testimony explaining that the testimony and public Department is proposing to increase the Water Commodity comments, Chairperson J. Adjustment (WCA) and Water System Reliability Adjustment Machiaverna received the (WSRA) of the Water Rates, Rules and Regulations by $0.15 per following motion from A. 748 gallons and $0.075 per 748 gallons, respectively. B. Beelner Kott, who moved that all explained that the Department gets its water from two wholesale evidence, oral and written, water suppliers and the cost of purchasing, pumping, and treating submitted by staff, including that water is passed on to customers through the WCA. B. the Prepared Testimony with Beelner indicated that both water wholesalers have increased the exhibits from B. Beelner; rates they charge the Department and therefore the WCA needs to the Affidavits of Publication be increased in order to recover the cost increases from customers of the Notice of Public who use the water. Hearing; the Certificate of Mailing; and the written B. Beelner also explained that a portion of the rate increase from protests and the returned the WSRA will be used to fund water system infrastructure notices filed with the improvements. B. Beelner indicated that more than half of the Secretary of the Board City's 750 miles of water mains are over fifty years old and that become part of the record the Department needs to increase its investment in replacing aged and moved into evidence. pipelines and other system components in order to maintain a Chairperson J. Machiaverna reliable water distribution system. B. Beelner explained that granted A. Kott's motion. while the Department has relied heavily on debt to fund water system improvements, the goal is to cash fund the ongoing Chairperson J. Machiaverna maintenance and upkeep of the system while reserving new bond next entertained A. Kott's issuances for the purpose of funding major projects. B. Beelner request to close the record of explained that modest incremental rate increase will help the public hearing because accomplish that objective without causing rate shock to customers there were no further in future years, witnesses or evidence to be submitted by the B. Beelner indicated that a typical residential customer who uses Department for the Board's approximately 12,000 gallons of water per month would see a consideration. Since no monthly bill increase of $3.60 or $7.20 on a bi-monthly basis. B. objections to Staffs request Beelner indicated that the combined WCA and WSRA rate were interposed, increases are projected to generate approximately $5.4 million Chairperson J. Machiaverna annually, of which approximately $3.6 million will be used to pay closed the Public Hearing. the Department's water suppliers and the remaining approximately $1.8 million will be used to pay for water system The Board provided infrastructure improvements. B. Beelner mentioned none of the comments. After which, additional revenue will be used to fund salaries, administrative, or Chairperson J. Machiaverna pension costs. summarized the prior testimony of D. Lee, B. Beelner explained the Department's proposal to reduce, concluding that the number eliminate, and consolidate customer service fees and add billing of protests received did not credits to the list of fees and credits contained within the constitute a majority protest Department's Water Rates, Rules, and Regulations. He then to the proposed increases of 2017-21 highlighted several of the fee modifications and the impact those the Water Commodity changes may have on customers. B. Beelner also explained that a Adjustment (Schedule W - new service option is being added that will enhance customer CA) and Water System service by providing customers with connection or reconnection Reliability Adjustment services after hours for an additional charge. (Schedule W -SRA). During his oral testimony, D. Lee shared that approximately 83,541 Notice of Public Hearing were mailed, forty-four customer phone calls were received by customer service related to the Department's water rate proposals, and nine written protests were received (five letters and four emails). Members of the Board asked staff several questions regarding alternative water supply options. D. Lee responded that currently the Orange County Water District (OCWD) and MWD provide nearly 100% of the Department's water supply and that both of these water agencies continue to make investments to help "drought proof' the water supply. D. Lee further explained that currently there are not any economically viable alternatives to other sources of water supply and that the Department is subject to the same rates as other water agencies served by OCWD and MWD. The Board asked how the record rainfall over the past few months will impact Anaheim's water supply. D. Lee explained that 75% of Anaheim's water comes from the local groundwater basin and that it will take multiple years of increased rainfall to fill the basin. D. Lee also stated that Southern California is a desert, and we cannot expect to receive record rainfall year after year and therefore we need to continue pursuing conservation and other options that are sustainable. The Board asked whether the Water Utility has financial reserves. D. Lee stated that the Department's goal is to maintain financial reserves sufficient to cover 120 days of operating expenses in the case of an emergency. During the public comment portion of the hearing one member of the public spoke concerning questions he had regarding his water bill. No additional members of the public spoke. The Chair closed the public hearing. The Chair then summarized the previous testimony of D. Lee as to the number of Notices of Public Hearing that were mailed to Anaheim property owners and customers and the number of written protests received. In comparing the number of written protests received to the number of Notices of Public Hearing that were mailed to Anaheim property owners and customers, he concluded that the written protests do not equal 50% plus 1 of the tenants or property owners of record in the service territory. Thus, as guided by applicable state laws, he stated that there was no majority protest to the 2017-22 As for the proposed Rule modifications, B. Hernandez moved approval that the Board recommend the City Council by motion determine that the modifications to the Water Rates, Rules and Regulations are exempt from CEQA and adopt the proposed modifications to Rule Nos. 3, 4, 5, 7, 9, 11, 16, 17, 21, and 23 of Water Rates, Rules and Regulations. A. Abdulrahman seconded the motion. MOTION CARRIED: 5-0. ABSTAINED: 0. ABSENT: I (L. Cahill). proposed rate actions. Therefore increases to the WCA and WSRA would become effective April 3, 2017. The Board next considered a motion to recommend to the City Council that it determine that modifications to the Water Rates, Rules and Regulations are exempt under CEQA and approve the proposed modifications to Rule Nos. 3, 4, 5, 7, 9, 11, 16, 17, 21, and 23. A verbatim transcript of the Joint Public Hearings with all testimony, exhibits, and public comments that were a part of the public hearings was prepared by the Court Reporter. The certified original transcript is on file in the 1 Ith floor Department Records, Public Utilities Department, Anaheim West Tower. A certified copy of the original transcript is on file in the City Clerk's office, 2nd floor, City Hall. 7. JOINT PUBLIC HEARING: PROPOSED The Public Utilities MODIFICATIONS TO SCHEDULE GS -1, SCHEDULE GS- Department presented 2, SCHEDULE TOU, DEVELOPMENTAL SCHEDULE prepared testimony and oral TES, DEVELOPMENTAL SCHEDULE D -FIT, AND testimony in support of its DEVELOPMENTAL SCHEDULE D-TOU-L RATES AND proposed modifications to RULE NOS. 3, 4, 5, 9, 1l, 16, 17, AND 23 OF ELECTRIC Schedule GS -1, Schedule RATES, RULES AND REGULATIONS; AND GS -2, Schedule TOU, DETERMINATION THAT THE MODIFICATIONS TO Developmental Schedule THESE RATES AND RULES ARE EXEMPT FROM TES, Developmental CALIFORNIA ENVIRONMENTAL QUALITY ACT Schedule D -Fit, and (CEQA) IN ACCORDANCE WITH PUBLIC RESOURCES Developmental Schedule D - CODE SECTION 21080(B)(8) AND SECTIONS 15061(B)(3) TOU-L Rates and Rule Nos. AND 15273(A) OF TITLE 14 OF THE CALIFORNIA CODE 3, 4, 5, 9, 11, 16, 17, and 23 OF REGULATIONS. * of Electric Rates, Rules and Regulations. The Public Hearing was called to order by Chairperson J. Machiaverna at 6:40 p.m. Upon the completion of the testimony and public B. Beelner presented testimony explaining that the Department is comments, Chairperson J. proposing modifications to five commercial and industrial rate Machiavema received the schedules, conversion of two developmental rate schedules to following motion from A. permanent rate schedules, modifying the time of energy delivery Kott, who moved that all periods of one rate schedule, and modifying Electric Rule Nos. 3, evidence, oral and written, 4, 5, 9, 11, 16, 17, and 23. submitted by staff, including the Prepared Testimony with B. Beelner explained that the proposed modifications to five exhibits from B. Beelner, commercial and industrial business rate schedules include the and the Affidavits of restructuring of rates within one rate schedule and that the Publication of the Notice of purpose of the changes is to provide consistency in the application Public Hearing filed with the of demand charges between rates and help ensure that all medium Secretary of the Board sized commercial, large commercial, and industrial customers become part of the record contain the same conditions thereby ensuring equitable treatment. and moved into evidence. B. Beelner explained that the rate modifications will not result in Chairperson J. Machiaverna a material increase in the Department's revenues. B. Beelner granted A. Kott's motion. 2017-23 noted that, although not part of the public hearing, the Department D. Wain moved approval is implementing an electric rate reduction of $0.0040 per kilowatt Chairperson J. Machiaverna hour that will take effect beginning April 3, 2017, which will next entertained A. Kott's provide a $2.00 per month electric bill reduction for a typical request to close the record of customer using 500 kilowatt-hours per month. the public hearing because testimony. there were no further Additionally, B. Beelner indicated that Developmental Schedule witnesses or evidence to be TES and Developmental Schedule D -FIT have been appropriately submitted by the refined and are now ready to become permanent rate schedules. Department for the Board's consideration. Since no B. BeeIner highlighted several of the proposed Rule modifications objections to Staffs request related to electric customer service fees and credits noting that the were interposed, proposed modifications provide regulatory relief and are Chairperson J. Machiaverna consistent with proposed water customer service fee and credit closed the Public Hearing. modifications. Developmental Schedule D - 8. DISCUSSION ON THE UTILITIES SUCCESS INDICATORS. A. Nguyen, Utilities Budget Administrator, provided highlights on the latest issue of the Utilities Success Indicators (UST) report for the six months ending December 31, 2016. He mentioned that the Department has been performing strongly in a number of areas, particularly reliability and customer service. A. Nguyen discussed how call wait times for the Department's call center have dropped significantly from roughly four minutes to 2017-24 D. Wain moved approval B. Beelner made one minor correction in his prepared testimony that the Board recommend to a Rule number referenced in proposed Rule No. 23 to change the City Council by motion the reference related to the Missed Appointment Courtesy Credit determine that the from "16" to "24" on pages 48 and 87 of Exhibit 2 to his prepared modifications to the Electric testimony. Rates, Rules and Regulations are exempt D. Lee provided oral testimony regarding the Notices of Public from CEQA and the Hearing and other foundational testimony. proposed modifications to Schedule GS -1, Schedule The Chair opened the floor to public comments but there were no GS -2, Schedule TOU, members of the public who spoke. Developmental Schedule TES, Developmental The Board considered a motion to recommend to the City Council Schedule D -Fit, and that it determine that modifications to the Electric Rates, Rules Developmental Schedule D - and Regulations are exempt under CEQA and approve the TOU-L rates and Rule Nos. proposed modifications to rates and rules. 3, 4, 5, 9, 11, 16, 17, and 23 of Electric Rates, Rules and A verbatim transcript of the Joint Public Hearings with all Regulations. E. Medrano testimony, exhibits, and public comments that were a part of the seconded the motion. public hearings was prepared by the Court Reporter. The certified MOTION CARRIED: 5-0. original transcript is on file in the 11th floor Department Records, ABSTAINED: 0. Public Utilities Department, Anaheim West Tower. A certified ABSENT: 1 (L. Cahill). copy of the original transcript is on file in the City Clerk's office, 2nd floor, City Hall. 8. DISCUSSION ON THE UTILITIES SUCCESS INDICATORS. A. Nguyen, Utilities Budget Administrator, provided highlights on the latest issue of the Utilities Success Indicators (UST) report for the six months ending December 31, 2016. He mentioned that the Department has been performing strongly in a number of areas, particularly reliability and customer service. A. Nguyen discussed how call wait times for the Department's call center have dropped significantly from roughly four minutes to 2017-24 approximately 1.8 minutes for the reporting period. He also mentioned that electric system reliability is improving, as the average duration of an outage was over 60 minutes three years ago and is now closer to a half hour. A. Nguyen concluded by indicating how the Department continues to engage with local students, hosting seniors from Loara High School for a Corporate Mentoring Initiative, providing an internship opportunity to students from Savanna High School, and hosting over 150 students from Maxwell and Olive Street Elementary schools during Public Power Week. 9. UPDATE ON WATER SYSTEM ISSUES. M. Moore, Assistant General Manager — Water Services, provided the Board with an update regarding the surface water reservoirs on the State Water Project. He indicated that the reservoirs are filling up quickly and reservoirs on the Colorado River are improving for the first time in several years. These are good signs indicating the emergency conditions of the drought are over. However, groundwater levels are still very low and will take several years of good rainfall to restore groundwater levels. M. Moore mentioned there are two upcoming events Board members are invited to attend. The AWWA Conference will be in Anaheim on April 11th - 12`h. The exhibit hall will be open both days and allow Board members to see many of the equipment and material being used in Anaheim's water system. In addition, a tour of the Colorado River Aqueduct and Hoover dam is scheduled for April 21" - 23ra 10. UPDATE ON ELECTRIC SYSTEM ISSUES. J. Lonneker, Assistant General Manager — Electric Services, informed the Board that the City Council approved the Design - Build contract award for Harbor Substation on March 21, 2017. She thanked the Board for their support of the capital project when presented in January. J. Lonneker indicated that a substation serves approximately 15,000 customers and this addition will provide the operational flexibility to re-route power during outages, with contingencies to reduce the risks of prolonged outages from significant events. The Design -Build contractor is ABB Inc., an experienced global firm who will design, procure, build, test, and commission the new substation. Construction is planned to begin in Fall of 2017, and will take approximately two years to complete. J. Lonneker discussed with the Board that City Council approved the construction bid award for the Underground Conversion District No. 64 - Orangewood. The underground conversion project will begin in April 2017 and is expected to be completed 2017 - 25 Staff will provide further information about the events to the Board. in late summer of 2018. The project is coordinated with the Public Works Department's street repaving and sidewalk repair and improvements on Orangewood and completion to coincide with the construction of the Ponderosa Park Family Resource Center. 11. UPDATE ON FINANCE ISSUES. B. Beelner discussed the monthly dashboard with the Board. The year to date electric revenue through February 28, 2017 was 4.2% higher than budget ($12.5M) with costs coming in below budget by 6.1% ($16.4M) causing a year to date net budget variance of $26M. B. Beelner discussed that this net positive budget variance is the primary driver for the upcoming electric rate decrease. He then mentioned that the year to date water revenue was 8.1 % ($4.OM) below budget due to continued conservation coupled with the significant recent rainfall, however costs were 17.4% below budget ($8.OM) causing a positive net $2.6M budget variance. 12. UPDATE ON POWER SUPPLY ISSUES. G. Bowen, Assistant General Manager — Power Supply, provided the Board with an update on student outreach and engagement activities for March. G. Bowen indicated that the Department in collaboration with Orange County Department of Education, Municipal Water District of Orange County, and the Discovery Science Center, hosted three educational events for the month of March for Anaheim students grades Kindergarten through 12th. Activities with students ranged from water and energy conservation classes to mini debates on water waste issues. G. Bowen also provided an update on the Department's power supply portfolio indicating that Magnolia Power Plant was returned to service after its planned outage on time. He also mentioned that one unit at Canyon Power Plant is affected by a vibration issue and the cause will be investigated at the next maintenance opportunity. Lastly, G. Bowen made the Board aware that renewable power generation for the month of March was responsible for supplying 44% of the Department's retail energy over the last 30 days. 13. UPDATE ON ENTERPRISE RISK, COMPLIANCE, AND LEGISLATIVE & REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, provided the Board with an update on the Wholesale Energy Risk Management (ERM) Program's Quarterly Compliance report. She explained that this report, while simple in format, represents an in-depth review and analysis of the transactions and key programs associated with energy resource procurement, including the Greenhouse Gas, and 2017-26 Renewable Portfolio Standard programs. J. Lehman reported that all transactions were in compliance with the ERM program, and there were no violations. In addition, J. Lehman made the Board aware that the Public Utilities Board Legislative Working Group (Group) reviewed key bills with the potential to impact the Department's operations, as well as the Legislative Platforms that were approved by Council on March 7. The City's Legislative Platforms include the Department's 2017 Legislative Guiding Principles that were developed by the Group. 14. AGENDA ITEM(S) FOR THE PUBLIC UTILITIES BOARD MEETING ON APRIL 26, 2017. D. Lee indicated the following items are planned for the following Board meeting: • Proposition 1 Bond Funds Update • FY17 Projected and FYI Proposed Budget Presentation • Business & Community Program's Annual Report • Approval to Post the Annual Water Quality Report 15. ITEMS) BY SECRETARY. D. Lee informed the Board that the Department received a state grant for approximately $750,000 that will help reduce the cost of extending recycled water lines from the Water Recycling Demonstration Facility to Pearson Park. D. Lee provided the Board with an overview of items in the City Manager's Update, which included addition of LED street lights to the Palm Lane area at the request of the neighbors, and an employee volunteer clean-up effort at an elderly customer's home, who was having trouble keeping up with landscape maintenance. 16. ITEM(S) BY BOARD MEMBERS: A. Abdulrahman thanked staff for keeping the Board informed and was pleased with the information that was provided during the meeting. E. Medrano stated that the Department's actions taken to assist customers through rule modifications are proactive and thanked staff for being informative and clear about the rate increase. B. Hernandez mentioned that Design -Build helps keep the cost of new projects low and thanked staff for their efforts. D. Wain thanked staff for their efforts and highlighted the hard 2017-27 work of the Department's field crews during the storm. J. Machiaverna mentioned that the rate increase affects the Board members, as well as the public, and appreciates all the effort that is made by the Department to minimize cost impacts on behalf of its customers. 17. ADJOURNMENT: (REGULAR MEETING ON APRIL 26, 2017, AT 5:OOP.M., IN THE 11TH FLOOR LARGE CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). Mecu mitted, Dukku Lee Public Utilities General Manager B. Hernandez moved approval to adjourn the Public Hearings 1 Regular Meeting at 7:22 p.m., to the Board's Regular Meeting date of April 26, 2017 at 5:00 p.m. E. Medrano seconded the motion. MOTION CARRIED: 5-0. ABSTAINED: 0. ABSENT: 1 (L. Cahill). * 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.