Public Utilities 2018/11/28CITY OF ANAHEIM
PUBLIC UTILITIES BOARD
MINUTES
NOVEMBER 28, 2018
The agenda having been posted on Tuesday, November 20, 2018, the Regular Meeting of the Public
Utilities Board (Board) was called to order by Chairperson E. Medrano at 5:00 p.m. on Wednesday,
November 28, 2018, in the 11th Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim
Blvd., Anaheim, California.
Board Members Present: Chairperson E. Medrano, Vice -Chairperson J. Seymour, A. Abdulrahman,
R. Nelson, J. Showalter, V. Baroldi, V. Ramirez
Board Members Absent: None
City Staff Present: D. Lee, L. Quiambao, M. Moore, B. Beelner, A. Kott, G. Bowen,
J. Lehman, P. Oviedo, J. Lonneker, B. Fruchter, J. Sanks, J. McBride,
M. Seifen, P. Hayes, J. Kornoff, V. Castillo, C. Paiz
Guest(s) Present: None
AGENDA ITEM
1. PUBLIC COMMENTS.
P. Hayes, Business and Community Programs Manager, was
recognized on his upcoming retirement for his 25 years of service
and commitment to the Public Utilities Department (Department).
2. APPROVAL OF THE MINUTES OF THE PUBLIC
UTILITIES BOARD MEETING OF OCTOBER 24, 2018.
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ACTION TAKEN
There being no public
comments, Chairperson E.
Medrano closed the public
comments portion of the
meeting.
A. Abdulrahman moved
approval of the Minutes of
the Public Utilities Board
Meeting of October 24,
2018. J. Seymour seconded
the motion.
MOTION CARRIED: 7-0.
ABSTAINED: 0.
ABSENT: 0.
3. ADOPT THE PROPOSED PUBLIC UTILITIES BOARD
REGULAR MEETING SCHEDULE FOR THE 2019
CALENDAR YEAR, * *
4. PRESENTATION: SAFETY SERVICES PROTECTING
EMPLOYEES AND THE PUBLIC.
J. Sanks, Environmental Services Manager, gave a presentation on
the Department's safety program, summarizing the hazards
associated with utility work, the measures in place to better ensure
employee and public safety, annual performance metrics, and the
Department's safety culture. J. Sanks discussed training and
equipment improvements that had been implemented during the
past year.
The Board commented that the performance metric show an
improvement from the previous year. D. Lee stated that low
metrics are not always indicative of a safe work culture as too
much emphasis on numbers will dissuade employees from
reporting incidents.
J. Seymour moved approval
of the proposed Public
Utilities Board Regular
Meeting schedule for the
2019 calendar year. V.
Baroldi seconded the
motion.
MOTION CARRIED: 7-0.
ABSTAINED: 0.
ABSENT: 0.
The Board asked if the Department surveys its employees Staff will provide the safety
regarding its safety program, and asked to see the results of those survey results to the Board.
surveys. D. Lee responded that surveys are collected, and the
results will be sent to the Board.
5. PRESENTATION: CYBERSECURITY UPDATE.
B. Fruchter, Enterprise Information Technology Manager, gave a
presentation on Cybersecurity, which included information on
cybersecurity threats, how the Department protects its information
systems and customer data, and new cybersecurity initiatives.
B. Fruchter discussed common threats that the City and
Department face and cited examples of breaches at other public
agencies. B. Fruchter reviewed the security controls that are in
place to protect the confidentiality, integrity, and availability of
data and information systems as well as new initiatives to improve
the City's and Department's security posture.
The Board inquired if cybersecurity training was available to
Department staff. D. Lee responded that cybersecurity training is
available to staff through online videos on the City intranet. The
Board also inquired if the Department or City had a policy about
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paying ransomware. B. Fruchter responded that the City does not
have a written policy about this and further explained that based on
his experience there is no certainty paying a ransom would result
in a positive outcome and doing so could increase the risk of future
attacks.
6. PRESENTATION: UTILITY FINANCIAL STRATEGIC
OVERVIEW.
J. McBride, Strategic Planning Manager, provided an overview of
the Department's financial position and strategy. J. McBride
discussed the importance of financial stability for maintaining
affordable rates and reliable water and electric service during
economic downturns, natural disasters, or significant changes in
customer consumption of water and electricity. J. McBride
highlighted the Department's strategy to continue providing
affordable rates and reliable service by reducing reliance on debt,
adequately recovering costs in a timely manner, and maintaining
prudent reserves.
J. McBride illustrated the increasing water supply costs paid to
wholesale water suppliers and noted potential future increases
resulting from major projects that the Metropolitan Water District
(MWD) and Orange County Water District (OCWD) are
undertaking to enhance water supplies.
J. McBride highlighted that debt levels have grown since the depth
of the recession and management anticipates two additional debt
issuances for each of the water and electric utilities. J. McBride
explained that debt levels would decline thereafter as the
Department moves to fund a greater portion of necessary capital
improvements through cash funds and reduce the Department's
reliance on debt.
B. Beelner, Assistant General Manager — Finance and
Administration, indicated that the Department has refunded bonds
to take advantage of low interest rates over the past few years. B.
Beelner noted that the Department shortened the duration of the
bonds and saved customers approximately $70 million of interest
expense. B. Beelner mentioned that the goal is to pay down bonds
as quickly as possible in order to provide flexibility in the future.
B. Beelner noted that other agencies may reduce their current
payments and this results in large outstanding debt payments in
future years; the Department's approach is to keep current payment
levels the same and create as much flexibility in the future to
address regulations or catastrophic events.
The Board inquired about the magnitude of the Department's debt
levels. B. Beelner explained that the debt -to -asset ratio is a
common metric used to measure the degree of leverage of an
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organization and is used by ratings agencies when determining
credit ratings. The debt -to -asset ratio reflects debt as a percentage
of net assets. B. Beelner noted that the Department's debt -to -asset
ratio is approaching the maximum allowed for current credit
ratings. Therefore, the Department's strategy to gradually adjust
rates in order to fund necessary capital improvements and reduce
reliance on debt is important to maintaining current credit ratings.
Therefore, the Department's strategy to modestly adjust rates in
order to fund necessary capital improvements and reduce reliance
on long term debt is important in maintaining financial health to
manage a stable and reliable utility.
7. UPDATE ON ELECTRIC SYSTEM ISSUES.
J. Lonneker, Assistant General Manager — Electric Services,
discussed with the Board that substation site inspections were
conducted by the California Public Utilities Commission (CPUC)
in early September 2018, at all substation sites. J. Lonneker
indicated the report received by the CPUC on October 9, 2018 had
no significant findings. J. Lonneker noted that the Department
conducts substation maintenance inspections on a monthly basis to
ensure issues are addressed and repaired in a timely manner.
Additionally, J. Lonneker reiterated to the Board that Publically
Owned Utilities (POUs) like the Department are not subject to the
jurisdiction of, nor regulated by the CPUC. However, the
Department welcomes opportunities to ensure the integrity of its
electric system and these voluntary inspections by the CPUC help
further the Department's commitment to system excellence. The
Board asked about other types of inspections and J. Lonneker
mentioned system inspections are conducted by third party
contractors for the transmission and distribution system on a 3-5
year cycle.
J. Lonneker shared that employees from the Department
volunteered with International Brotherhood of Electrical Workers
(IBEW) to assist with construction and electrical upgrades of the
GOALS Academy clubhouse in Anaheim.
S. UPDATE ON WATER SYSTEM ISSUES.
M. Moore, Assistant General Manager — Water Services, provided
an update on the Department's water supply. M. Moore indicated
that the water storage levels are below normal for this time of year
and that the Metropolitan Water District (MWD) is proposing a
drought contingency plan in order to decrease withdrawals from
the Colorado River. M. Moore mentioned that staff would provide
a presentation on this plan at the December Public Utilities Board
meeting.
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M. Moore made the Board aware of a company that was
misrepresenting themselves as City employees and soliciting water
samples from Anaheim customers. M. Moore noted the City
Attorney's Office was made aware of the solicitations and sent a
cease and desist letter.
Lastly, M. Moore mentioned that Anaheim students participated in
a water art contest facilitated by MWD. The winner of the contest,
Grace Li, from Acaciawood Elementary School will have her art
included in MWD's annual calendar. M. Moore invited the Board
to attend the award ceremony hosted by MWD on Tuesday,
December 4, 2018.
9. UPDATE ON FINANCE ISSUES.
B. Beelner, Assistant General Manager — Finance and
Administration, discussed the monthly dashboard with the Board.
B. Beelner indicated that electric revenue for the current fiscal year
to October 31, 2018 was 6.0% above budget ($10.1 M) with
electric costs coming in above budget as well by 4.5% ($6.1M)
causing a net positive budget variance of $4.OM. B. Beelner
explained that electric costs have trended higher due to higher than
expected wholesale power costs driven by higher natural gas
prices. B. Beelner then mentioned that the fiscal year to date of
October 31, 2018 water revenue was 1.9% ($0.6M) below budget
due to cooler than expected temperatures driving to lower outdoor
water use. Lastly, B. Beelner indicated that water costs were
below budget by 3.4% ($0.8M) causing a net positive budget
variance of $0.2M.
10. UPDATE ON POWER SUPPLY ISSUES.
G. Bowen, Assistant General Manager — Power Supply, gave an
update on the Department's Power Supply Portfolio for the month
of October. G. Bowen noted that following the September trend,
the month of October was one of the coolest since the early 1990's.
G. Bowen indicated that the cooler weather coupled with higher
gas prices resulted in less retail load than normal, but allowed the
Department's generation assets to operate at a much higher level
than normal resulting much higher wholesale sales than forecast.
G. Bowen shared with the Board that the California Energy
Commission provided positive feedback and accepted the
Department's Integrated Resources Plan (IRP), which the Board
approved earlier in the year, after 6 -months of review. G. Bowen
also made the Board aware that the next IRP submission would be
towards the end of 2021.
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11. UPDATE ON ENTERPRISE RISK AND COMPLIANCE.
J. Lehman, Chief Risk Officer, mentioned that possible legislation
might be introduced in December related to further wildfire
provisions above what was contained in Senate Bill (SB) 901 that
was passed in September of this year. J. Lehman mentioned that
the legislation might provide additional cost recovery mechanisms
for the investor owned utilities for the recent wildfires that have
affected both Pacific Gas & Electric Company (PG&E) and
Southern California Edison (SCE) service territories. The reason
for this is that SB 901 only contained financial relief for cost and
expenses related to the 2017 wildfires for PG&E, and for all three
investor owned utilities beginning on January 1, 2019. J. Lehman
shared that the introduction of any such legislation would be
watched carefully to ensure that it did not contain additional
measures that are applicable to the Department.
12. ITEM(S) BY SECRETARY.
D. Lee shared with the Board the items scheduled for the following
Board meeting include:
• Annual report on customer efficiency programs
• Fleet vehicles
• Agreement for energy transaction software
D. Lee informed the Board that the Department is working on a
temporary homeless shelter at the Salvation Army site near Lewis
and Cerritos as directed by the City Manager.
D. Lee informed the Board that the holiday light exchange
program is underway allowing residents to receive a string of LED
holiday lights by turning in an older set of incandescent lights. He
also mentioned that Council Member Stephen Faessel would be
attending the December Board meeting.
13. ITEM(S) BY BOARD MEMBERS.
J. Showalter expressed her concern regarding projects that are
Citywide responsibility being assigned to the Department.
V. Baroldi stated he received a pamphlet from a solicitor claiming to
work for Sempra Energy and possibly affiliated with the
Department. D. Lee asked the flyer be provided so the Department
can further investigate.
A. Abdulrahman noted he appreciated the information that was
presented on the Department's financial overview.
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R. Nelson also appreciated the financial overview presentation and
thanked the Department for taking on the homeless shelter project.
J. Seymour mentioned the upcoming terms for Board members with
respect to the recent election, indicating that it takes a significant
amount of time to learn about the many facets of the utility industry.
D. Lee stated that there would be an application process since each
district now has a seated Council member. J. Seymour encouraged
the effected members to re -apply.
14. ADJOURNMENT: (NEXT REGULAR MEETING ON
DECEMBER 19, 2018, 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
A. Abdulrahman moved
approval to adjourn the
Regular Meeting at 7:01
p.m., to the Board's Regular
Meeting date of December
19, 2018 at 5:00 p.m. J.
Seymour seconded the
motion.
MOTION CARRIED: 7-0.
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.
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