Public Utilities 2020/12/16ITEM # 01
2. PRESENTATION: PROPOSED WATER RATE AND
WATER AND ELECTRIC UTILITIES RULE
MODIFICATIONS.
J. McBride, Strategic Planning Manager, gave a presentation on
the City of Anaheim Public Utilities Department's (APU)
upcoming proposed Water Rate adjustment and Water and Electric
Rule amendments.
J. McBride indicated that the Water utility is subject to
increasingly expensive water supply costs as a result of water
quality regulations issued in 2019. Those regulations required
APU to shut off most of its groundwater wells and APU has to
make up for the lack of groundwater supply by using imported
water. APU has access to imported water from the Metropolitan
Water District (MWD) because of strategic investments approved
by prior City Councils and Boards. However, the cost of imported
water is significantly higher than the cost of groundwater, resulting
in water supply costs that are forecasted approximately 41 % higher
than they would be under normal pumping conditions. As a cost -
of -service agency, a rate adjustment is necessary in order to
recover those higher costs.
J. McBride explained that the Water Commodity Adjustment
(WCA) is designed to recover all water supply costs. However, J.
McBride also noted that APU is proposing less than half the rate
increase that is necessary to fully recover the water supply costs in
order to mitigate the impact to customers' water bills. The Water
utility will rely on financial reserves to make up the difference in
the short term. J. McBride highlighted several other initiatives that
APU has undertaken to assist customers during the pandemic as
well as progress made to reduce APU's operating costs and
conserve cash, including budget reductions, project deferrals, and
staffing reductions.
J. McBride described proposed rule modifications that formalize
APU's authority to issue bill credits during declared emergencies,
enhance bill credits for electric utility customers who experience
unplanned extended electrical outages, and enhance the bill credits
issued to customers who elect to receive electronic utility bills and
set up automatic bill payments. These customer -focused proposals
enhance APU's ability to serve its customers in a meaningful way
both now and in the future.
The Board asked about how reserves are impacted and staff
explained that reserves will be reduced, but will still meet the 120
day target with the approach proposed. The Board further
discussed that APU is helping customers by mitigating the water
rate increase with the use of financial reserves and cutting costs but
expressed concern that doing so potentially provides funding
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challenges in the future. Given the circumstances with the ongoing
pandemic, the approach was discussed as a balanced approach.
The Board inquired whether the proposed water rates are
applicable to all water customers. D. Lee, Public Utilities General
Manager, explained that APU's water rates are the same for all
customer classes and therefore the proposed rates would apply to
all customers.
The Board expressed concern that some people may not fully
understand the rationale for the proposed water rate increases
based on the formal structure of the public hearing notice that was
distributed to Anaheim property owners and customers. The Board
recommended that APU provide additional community outreach to
explain why the rate increase is needed. D. Lee shared with the
Board that APU is preparing a bill insert that explains the situation
in less formal terms.
3. APPROVAL OF AN AGREEMENT WITH THE
R. Gaona moved approval of
METROPOLITAN WATER DISTRICT OF CALIFORNIA
an agreement with the
(MWD) AND MUNICIPAL WATER DISTRICT OF ORANGE
Metropolitan Water District
COUNTY (MWDOC) FOR IN -LIEU TREATED WATER
of Orange County for in -lieu
DELIVERIES TO RECEIVE WATER SUPPLIES TO
treated water deliveries for
PRESERVE GROUNDWATER SUPPLIES. *
water supplies and
groundwater preservation.
M. Moore, Assistant General Manager — Water Services,
A. Abdulrahman seconded
provided an overview of the proposed MWD in -lieu treated water
the motion.
deliveries to receive water supplies to preserve groundwater
MOTION VIA ROLL
supplies program and agreement. The proposed agreement would
CALL VOTE CARRIED:
allow APU to utilize MWD treated imported water instead of
6-0.
pumping groundwater. The program would preserve the
ABSTAINED: 0.
groundwater in years when there is excess imported water
ABSENT: 1 [Chairperson
available from northern California that would otherwise be
E. Medrano].
lost. The agreement allows APU to take the expensive imported
water at the same cost as groundwater during these wet years, so
there is no cost impact.
4. APPROVAL OF AN AGREEMENT WITH HENKELS &
R. Bhalla moved approval of
MCCOY, INC. FOR UNDERGROUND AND SURFACE-
an agreement with Henkels
MOUNTED ELECTRIC SYSTEM INSPECTION SERVICES
& McCoy Inc. for
IN THE AMOUNT OF $3,861,100 PLUS A 15%
underground and surface
CONTINGENCY FOR AS -NEEDED EXTRA SERVICES,
mounted electric system
AND DETERMINE THAT THESE SERVICES ARE
inspection services. A.
CATEGORICALLY EXEMPT FROM THE CALIFORNIA
Abdulrahman seconded the
ENVIRONMENTAL QUALITY ACT (CEQA) PURSUANT
motion.
TO SECTION 15301(B) OF TITLE 14 OF THE CALIFORNIA
MOTION VIA ROLL
CODE OF REGULATIONS. *
CALL VOTE CARRIED:
6-0.
J. Vu, Assistant Power Engineer, discussed APU's electric system
ABSTAINED: 0.
inspection process with the Board. J. Vu indicated that it is good
2020 - 75
industry practice to proactively identify degradation in electrical
systems before they affect service reliability. J. Vu also explained
that the inspection data and photos are stored in the City's
Geographic Information System (GIS) for real-time access by
engineering, field crews, and operations for routine maintenance
and emergency restoration work, and to provide a basis to
prioritize upgrades under the capital program.
5. APPROVAL OF A LICENSE AGREEMENT WITH THE
ORANGE COUNTY TRANSPORTATION AUTHORITY
(OCTA) FOR A WATER MAIN CROSSING AT TUSTIN
AVENUE BETWEEN MIRALOMA AVENUE AND
JEFFERSON STREET FOR A ONE-TIME LICENSE FEE OF
$1,500.
M. Moore, Assistant General Manager — Water Services, indicated
that OCTA is adding an additional rail line in Anaheim that will
cross through APU's water pipelines. He explained the one-time
license fee is needed to re -design APU's pipeline.
6. UPDATE ON ELECTRIC SYSTEM ISSUES.
J. Lonneker, Assistant General Manager — Electric Services, made
the Board aware that there were several outages resulting from the
wind storm that occurred December 3, 2020. She indicated that
the duration of the outages were less than six hours resulting from
tree branches falling and damaging the overhead power lines.
7. UPDATE ON WATER SYSTEM ISSUES.
M. Moore provided an overview of the water supply dashboard.
He indicated that the region is in dry conditions and could be
heading into a drought this year. However, water storage levels
are still healthy.
M. Moore updated the Board on a water outage that occurred in a
residential neighborhood near Lakeview Avenue/Riverdale Road
on December 5, 2020 that effected approximately 80 customers.
The outage was due to a severe pipeline break that was deeper
underground than normal. M. Moore explained that the nearest
pipeline isolation valves were broken, so the outage was extended
due to the valves not working properly. He mentioned customers
that were affected would be given a bill credit due to the duration
of the outage. M. Moore indicated that nearby customer was able
to assist APU by lending staff his welding machine. In addition to
the bill credit, APU staff thanked the customer with a small gift
bag. The Board asked what preventative measures APU has in
place to repair or replace broken valves in an effort to minimize
ABSENT: 1 [Chairperson
E. Medrano].
R. Bhalla moved approval of
a license agreement with the
Orange County
Transportation Authority for
a water main crossing and
the one-time license fee. R.
Gaona seconded the motion.
MOTION VIA ROLL
CALL VOTE CARRIED:
6-0.
ABSTAINED: 0.
ABSENT: 1 [Chairperson
E. Medrano].
2020 - 76
future outages. M. Moore indicated that staff would be replacing
the broken valves next year using the new design -build Master
Construction Agreement.
M. Moore then mentioned that the State Water Project identifies
how much water MWD can import from northern California each
year based on snowpack and water in reservoirs. The State
notified MWD to initially plan for only 10% of their normal
allocation due to dry conditions in northern California and that the
allocation may increase over the winter if conditions improve.
8. UPDATE ON FINANCE ISSUES.
B. Beelner, Assistant General Manager — Finance and
Administration, shared with the Board that Fitch Ratings (Fitch)
downgraded their rating for the Water utility from AAA to AA+.
B. Beelner mentioned that Fitch discussed revenue softening,
increased costs, the need for increased capital investment as the
primary drivers for the decreased rating. B. Beelner then assured
the Board that there would be no immediate change to the water
utility's interest costs due to this rating change as APU currently
only has fixed rate bonds with no variable rate debt in its water
portfolio.
9. UPDATE ON POWER SUPPLY ISSUES.
S. Smith, Integrated Resources Manager, provided an update on
the Power Supply Portfolio for November. S. Smith discussed that
the total generation was slightly down to projection, mainly due to
the Bowerman Landfill Gas outage, which also accounted for the
significant portion of the renewable generation drop. S. Smith
indicated that the Bowerman outage began on October 26 and
returned to service November 30, 2020. S. Smith discussed
wholesale sales were slightly above budget because of increased
gas prices, and that sales for the year are ahead of budget.
10. UPDATE ON ENTERPRISE RISK AND COMPLIANCE.
J. Lehman, Chief Risk Officer, provided a brief update to the
Board. She shared some of the new bills that have already been
introduced as part of the 2021-22 legislative session. Additionally,
she mentioned that COVID-19 continues to be forefront in the
issues that APU is addressing. J. Lehman noted that comments
were submitted on CalOSHA emergency rules, and that staff was
working closely with the City to implement these new
requirements that were passed as well as those of the new COVID-
19 related laws that were recently passed during this last legislative
session.
11. ITEM(S) BY SECRETARY.
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D. Lee shared with the Board the items scheduled for the following
Board meeting include:
• Water Rate Public Hearing
• Water and Electric Rule Modifications
• Presentation on Transformer Replacement Program
• Rebate Management Software System
D. Lee shared photos of the artwork created by students for APU
facemasks. D. Lee then shared photos of the holiday light
exchange event.
D. Lee recognized additional employees who participated in the
City's Accelerated Separation Program. He then recognized L.
Quiambao, Executive Assistant, for her many years of service, and
shared that she would be retiring at the end of the month.
12. ITEM(S) BY BOARD MEMBERS.
R. Gaona wished staff happy holidays and to stay safe.
R. Bhalla wished staff a Merry Christmas and happy holidays.
A. Abdulrahman wished staff happy holidays and congratulated
staff on their retirements.
J. Showalter congratulated L. Quiambao on her retirement and
wished staff happy holidays.
V. Baroldi also wished staff happy holidays and happy retirement.
J. Seymour wished everyone happy holidays and to stay safe.
13. ADJOURNMENT: (NEXT REGULAR MEETING AND
A. Abdulrahman moved to
PUBLIC HEARING ON JANUARY 27, 2021 AT 5:00 P.M.
adjourn the Regular Meeting
PLEASE BE ADVISED THAT SOME BOARD MEMBERS
at 6:54 p.m. to the Board's
WILL PARTICIPATE IN THIS MEETING REMOTELY.)
Regular Meeting and Public
Hearing date of January 27,
2021 at 5:00 p.m. R. Bhalla
seconded the motion.
MOTION VIA ROLL
CALL VOTE CARRIED:
6-0.
ABSTAINED: 0.
ABSENT: 1 [Chairperson
E. Medrano].
2020 - 78
Respectfully su mitted,
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.
2020 - 79