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Public Utilities 2023/03/22 CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES MARCH 22, 2023 The agenda having been posted on Friday, March 17, 2023, the Regular Meeting of the Public Utilities Board (Board) was called to order by Chairperson Seymour at 5:00 p.m. on Wednesday, March 22, 2023, in the Gordon Hoyt Conference Center, 2nd floor, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: Chairperson J. Seymour, Vice-Chairperson A. Abdulrahman, M. Lee, A. Pham, A. McMenamin, T. Bilezikjian, T. Ibrahim Board Members Absent: None City Staff Present: D. Lee, A. Kott, B. Beelner, P. Starr, J. Lehman, J. Lonneker, C. Parker, M. Seifen, J. Sanks, J. Wei, P. Bogdanoff. T. Castaneda, A. Lee, E. Krause, T. Chen Guest(s) Present: Mohamed Ibrahim, Nina Ibrahim, Olvar Ibrahim AGENDA ITEM ACTION TAKEN 1. OATH OF OFFICE: NEW PUBLIC UTILITIES BOARD MEMBER. ** A Kott, Assistant City Attorney, administered the Oath of Office to the newly elected member of the Board, Talab Ibrahim (District 4). 2. PUBLIC COMMENTS. There being no electronic or oral public comments, Chairperson J. Seymour closed the public comments of the meeting. 3. APPROVAL OF THE MINUTES OF THE PUBLIC UTILITIES M. Lee moved the approval of BOARD PUBLIC HEARINGS / REGULAR MEETING OF the Minutes of the Public FEBRUARY 22, 2023. * Utilities Board Meeting Public Hearings/Regular Meeting of February 22, 2023. A. McMenamin seconded the motion. MOTION CARRIED: 7-0. ABSTAINED: 0. ABSENT: 0. 2023 - 22 4. APPOINTMENT(S) TO THE AD HOC LEGISLATIVE WORKING GROUP. ** Chairperson J. Seymour indicated he was seeking volunteers to serve on the ad hoc Legislative Working Group. Board Members M. Lee and T. Bilezikjian volunteered. Chairperson J. Seymour indicated he would continue to serve, s to the ad hoc Legislative Working Group. 5. APPOINTMENT OF UP TO 3 MEMBERS TO THE BOTTLED WATER ART AD HOC SELECTION COMMITTEE. ** D. Lee, Public Utilities General Manager, indicated that he was seeking up to three Board Members to volunteer to serve on the Bottled Water Art ad hoc Selection Committee. Board Members T. Ibrahim and A. McMenamin volunteered. Chairperson J. Seymour confirmed their appointments to serve on the Bottled Water Art ad hoc Selection Committee. 6. APPOINTMENT OF UP TO 3 MEMBERS TO THE STUDENT SCHOLARSHIP AD HOC SELECTION COMMITTEE. ** Chairperson J. Seymour indicated he was seeking up to three members to volunteer to serve on the Student Scholarship ad hoc Selection Committee. Vice-Chairperson A. Abdulrahman and Board Members A. Pham and T. Bilezikjian volunteered. Chairperson J. Seymour confirmed their appointments to serve on the Student Scholarship ad hoc Selection Committee. 7. PRESENTATION: COLORADO RIVER UPDATE. C. Parker, Assistant General Manager Water Services, introduced P. Bogdanoff, Engineering Manager, to present the Colorado River update. P. Bogdanoff discussed the history of water supply from the Colorado River Basin and Lake Mead. He shared current water supply conditions and proposed reductions in the Colorado River Basin. P. Bogdanoff made the Board aware of the potential steps in response to evolving drought conditions and possible impacts to Anaheim Public Utilities (APU). and staff explained that any such interactions with another country would be handled through the federal government, in this case, the U.S. Bureau of Reclamation. The Board inquired about federal funding to help address the Colorado River, and staff explained that drought relief projects are being evaluated, including conservation as well as storage pr options if water from the Colorado River is decreased, to which staff responded that greater reliance on groundwater and increasing the 2023 - 23 Basin Pumping Percentage are vital to long term sustainability of watersupplies to Anaheim. The Board inquired about desalination, and staff explained that desalination is a higher cost option, but one that could be considered in the future if prices decrease. The Board inquired about the date at which time the federal government may make a determination, and staff responded that 2026 is the expected timeframe. 8. PRESENTATION: PHYSICAL SECURITY OF ELECTRICAL FACILITIES. J. Lonneker, Assistant General Manager Electric Services, introduced J. Wei, Electric Systems Planning Manager, to present on the Physical Security of Electrical Facilities. J. Wei shared recent incidents that made the national news headlines regarding physical attacks on power substations. He explained that AP protect from similar incidents. He went over additional security measures that APU has in place today such as substation security cameras that are continuously monitored. J. Wei shared a recent substation upgrade project that included replacing an existing chain link fence with a more secured composite wall. APU is currently in the bidding process to upgrade existing perimeter walls at another substation and at the Edwards Utility Complex. Additionally, APU is in the process of upgrading the existing substation camera system to enhance its advanced monitoring capability. He presented an investment plan to improve physical security of electrical facilities for the next five years. The Board inquired about escalations in criminal activity, and J. Lonneker explained that the increase is across different region nationally. The Board expressed that having a mobile substation is an effective backup in case there is an emergency at an APU substation. 9. PRESENTATION: PROTECTING EMPLOYEES AND THE PUBLIC, ANNUAL SAFETY PERFORMANCE UPDATE. J. Lehman, Assistant General Manager Administration & Risk Services, introduced J. Sanks, Environmental Services and Safety Manager, to provide a presentation of the APU Safety Program, and discuss workplace hazards and public safety in construction zones. J. Sanks described the elements of a safety program, which includes training, inspections, incident review, and process revisions. A recent safety survey showed employees desired additional training, more safety communications, and a focus on inspecting facilities and employee workstations for ergonomics. 2023 - 24 J. Sanks discussed APUs safety performance in 2022, highlighting the importance of reporting close calls and near misses. J. Sanks shared information on the nature of lost-time injuries, and gave examples of injuries that had occurred in the last year. He shared several goals for next year, which included providing additional training, a focus on reporting near misses, working on joint training opportunities, and assessing safety at contractor sites. The Board asked how APU cultivates a culture of safety, and J. Sanks responded that near miss reporting is a good indicator that staff is seeing safety as a learning opportunity rather than a punitive process. The Board inquired about the status of an employee who sustained injuries from a vehicle incident. Staff explained that the employee is recovering and was working modified duties until he fully recovers. 10. APPROVAL OF THE FIRST AMENDMENT TO RENEWABLE A. Pham moved the approval POWER PURCHASE AND SALES AGREEMENT of First Amendment to (AGREEMENT) BETWEEN SAN GORGONIO FARMS, INC. Renewable Power Purchase AND THE CITY OF ANAHEIM WHICH REDUCES THE and Sales Agreement between AGREEMENT AMOUNT BY $1.2 MILLION ANNUALLY San Gorgonio Farms, Inc. and RESULTING IN IN AN OVERALL APPROXIMATE SAVINGS the City of Anaheim. M. Lee OF $24 MILLION OVER THE AGREEMENT TERM, AND seconded the motion. INCLUDES AN OPTION FOR THE CITY TO PURCHASE MOTION CARRIED: 7-0. FUTURE ENERGY STORAGE SERVICES WITH THE FIRST ABSTAINED: 0. RIGHT OF ACCEPTANCE OF ALL ADDITIONAL CAPACITY ABSENT: 0. AND PROJECT ATTRIBUTES; AND AUTHORIZE THE PUBLIC UTILITIES GENERAL MANAGER OR DESIGNEES, ON BEHALF OF THE CITY, TO EXECUTE THE FIRST AMENDMENT, OTHER RELATED AGREEMENTS, AND ANY OTHER RELATED DOCUMENTS; TO ACCEPT ENERGY STORAGE PRODUCT OPTIONS; INCORPORATE AMENDED EXHIBIT B TO THE AGREEMENT AS A MATTER OF ADMINISTRATION; AND TAKE ALL ACTIONS AS ARE NECESSARY OR ADVISABLE TO IMPLEMENT AND ADMINISTER THE FIRST AMENDMENT. * B. Beelner, Assistant General Manager Finance and Energy Resources, provided the Board with information regarding the request to amend an existing agreement between the City of Anaheim (City) and San Gorgonio Farms, Inc. (San Gorgonio). The amendment stipulates both parties mutually agree to amend the current agreement so that San Gorgonio will continue to provide 31 MW of wind energy to the City for an additional ten years through December 31, 2033, with an option to extend the agreement for ten years past the new termination date at a reduced cost. Additionally, San Gorgonio will offer the City the first right of acceptance for battery storage services if San Gorgonio develops and makes such services available. The savings for APU customers is 2023 - 25 approximately $1.2 million per year for at least ten years and potentially 20 years. The Board complemented staff for the 43% savings in costs, and inquired about the basis for the reduction. Staff responded that San Gorgonio was willing to reduce their price in exchange for an extension in the term, which gives them the ability to invest in their wind power facility. The Board inquired about the cost difference between building and purchasing power, and staff responded that there are many factors that need to be considered, including location, transmission access, and other project attributes. 11. APPROVAL TO AUTHORIZE AN AMENDMENT OF A. Abdulrahman moved the approval to authorize an Amendment of Anaheim BUDGET, INCREASING APPROPRIATIONS BY $48,000,000 FOR POWER SUPPLY EXPENSES, WHICH ARE 2022/23 Budget. RECOVERED THROUGH CORRESPONDING WHOLESALE T. Bilezikjian seconded the REVENUE AND DO NOT REQUIRE CUSTOMER RATE motion. INCREASES. * MOTION CARRIED: 7-0. ABSTAINED: 0. B. Beelner provided the Board with information regarding the request ABSENT: 0. to approve and authorize an amendment of the APU Fiscal Year 2022/23 Budget, incr million for power supply expenses. B. Beelner shared with the Board that APU has experienced significant cost increases due to the spike in natural gas prices and wholesale energy prices earlier in the fiscal year. These increases, APU capitalized on higher wholesale energy prices for the sale of its excess energy to the broader market. This increase in wholesale revenue allowed for APU to recover its increase in natural gas and wholesale energy costs so that APU will not require an increase in customer electric rates to recover these costs. The Board sought confirmation that this is an administrative action and does not require customer rate increases. Staff explained that because the authorized budget would be exceeded, the amendment is necessary, and confirmed that the increased revenue will offset the higher costs such that a customer rate increase is avoided. The Board asked if there is any impact to commercial customers, and staff explained that both residential and commercial customers are not affected, and that other wholesale entities pay for power from the grid, allowing APU to recover its costs. 12. UPDATE ON ELECTRIC SYSTEM ITEMS. J. Lonneker shared with the Board a more sophisticated approach to power theft discovered by the APU staff. She shared pictures of an automated meter that was tampered with, and staff responded to an 2023 - 26 alert to the power theft by monitoring the historical power usage and also by physical indications at the meter panel. 13. UPDATE ON WATER SYSTEM ITEMS. C. Parker shared the current water supply conditions. The OC Groundwater Basin is in good condition, the State Water Project is now in good condition due to heavy rain season, and the Colorado River is still strained. C. Parker then made the Board aware of the upcoming required notification to the City Council regarding Perfluorohexane sulfonate (PFHxS) in the groundwater water supply. The notification is required by the State Division of Drinking Water, but no response such as treatment is needed at this time. The notification will be provided to the City Council next month. C. Parker also indicated that the Water Quality Laboratory located at Lenain Water Treatment Plant has been approved for recertification by the State. The Board inquired about how weather patterns are reviewed to make determinations on water supplies. C. Parker explained that short term weather modeling is very accurate, but for the long term, investments in water supply strategies are needed to take advantage of periodic wet weather. The Board asked which groundwater treatment site will be operational next, and C. Parker responded that the Linda Vista Complex is scheduled to be returned to service in the next month or so. 14. UPDATE ON FINANCE & ENERGY RESOURCES ITEMS. B. Beelner discussed the monthly finance dashboard through February 2023. He shared that year-to-date electric revenue was 12.5% ($34.6M) above budget due to higher than projected wholesale energy sales as discussed in Agenda Item 11. Electric operating costs were above budget by 13.5% ($36.3M) causing a net positive negative budget variance of $1.7M. B. Beelner then shared that the year-to-date water revenue was 3.9% below budget ($2.7M) due to the drop in water consumption by drought, followed by the reduced outdoor water use due to the significant rainfall recently received. Water costs for the fiscal year were above budget by 2.9% ($1.6M) as APU had to purchase more treated imported water from the Metropolitan Water District (MWD) while APU constructed groundwater treatment facilities, causing a net negative budget variance $4.3M. The Power Supply Dashboard indicates a recent drop in wholesale revenue as the Intermountain Power Project (IPP) has reduced its 2023 - 27 capacity to minimal levels, reducing the amount of power APU has to sell in the wholesale market. B. Beelner indicated this will continue through the balance of the fiscal year. B. Beelner then shared the status of evaluation concerning of a battery storage system, indicating that other opportunities have made themselves available. APU staff is analyzing these new opportunities and negotiating with developers, which may eliminate the need for APU to build a battery storage project as previously discussed. APU is currently working on two tracks analyzing both arrangements; APU building and owning a battery system, or APU purchasing energy from a developer who would build and operate a battery system. 15. UPDATE ON ADMINISTRATION & RISK SERVICES ITEMS. J. Lehman shared that customer disconnections have resumed, and call volumes have increased. She also shared that new customer arrearage funding opportunities are available through Community Services for qualified low-income renters, and staff is working to apply funding to qualifying accounts. J. Lehman provided a brief summary of a safety incident, in which a gas line was damaged resulting in a fire that destroyed a backhoe. The Board asked about obtaining more information about the incident, and J. Lehman explained there is an ongoing investigation at this time, and more information will be provided to the Board on the backhoe incident after the incident investigation has been completed. 16. ITEMS BY SECRETARY. D. Lee shared agenda items planned for next month: FY24 Proposed Budget Presentation 2023 Integrated Resource Plan Update Demand Response Program for Electric Vehicle Chargers and License Agreement Posting the 2023 Water Quality Agreement for maintenance of utility-owned solar panel systems D. Lee invited the Board to a tour of the Sycamore Undergrounding, which is currently under construction. There is a boring underneath the railroad tracks if the members of the Board are interested in viewing the construction. D. Lee updated the Board about a resident who attended the rate hearing last month. The resident asked about a water construction on her street, and APU explained the project and need to improve fire flows. The resident was also provided efficiency program and bill assistance opportunities. 2023 - 28