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Public Utilities 2010/04/28CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES APRIL 28, 2010 The Agenda having been posted on Friday, April 23, 2010, the Regular Meeting of the Public Utilities Board was called to order by Chairperson Lon Cahill at 5:00 p.m. on Wednesday, April 28, 2010, in the 1 lth Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: L. Cahill, J. Brandman, J. Machiaverna, K. Murray, D. Morgan Board Members Absent: C. Peltzer, P. Carroll Staff Present: M. Edwards, D. Calkins, E. Zacherl, M. Long, M. Ward, A. Kott, D. Lee, B. Beelner, R. Shintaku, S. Sciortino, J. Lehman, R. Watkins, M. Samra, S. Welch, G. Turner, M. Lopez, R. Dowell, R. Westergard, A. Nguyen, L. Quiambao, P. Oviedo Guest(s) Present: S. FaesseI, Planning Commission Member and Resident; P. Bos, Resident; D. Wain, Resident and Member of the East Anaheim Neighborhood Council AGENDA ITEM 1. PUBLIC COMMENTS. K. Murray acknowledged R. Westergard, Water Quality Laboratory Supervisor, for the exemplary customer service that he provided to an Anaheim resident. S. Faessel congratulated M. Long on her retirement and expressed thanks on behalf of the community for all the ways that she has made Anaheim a better place with the various projects that she and her staff have worked on over the years. 2. APPROVAL OF THE MINUTES OF THE REGULAR PUBLIC UTILITIES BOARD (PUB) MEETING HELD ON MARCH 24,2010.* 3. IMPLICATIONS OF AB 32: GLOBAL WARMING SOLUTIONS ACT PRESENTATION. M. Edwards stated that this would be a joint presentation by S. Sciortino and J. Lehman. M. Edwards added that this presentation is meant to be informative to facilitate a discussion ACTION TAKEN There being no further public comments, L. Cahill closed the public continents portion of the meeting. D. Morgan moved approval of the March 24, 2010, Public Utilities Board Meeting Minutes. K. Murray seconded the motion. MOTION CARRIED: 5 -0. ABSTAINED: 0. ABSENT:2 (C. Peltzer, P. Carroll). 2010 -22 AGENDA ITEM between Board Members and staff. There is no action to be taken on this item. J. Lehman began with an overview of the Global Warming Solutions Act of 2006. The presentation was divided into five parts. The status, Anaheim's involvement, potential impacts and the options for remediation, and the sustainability information management system. J. Lehman stated that AB 32 was passed in September of 2006 with the goal to reduce Green House Gas Emissions to 1990 levels by 2020, which is about a 30% reduction in statewide greenhouse gas emission levels. Utilities overall will end up with the largest emission reductions because they are easier to regulate and the reductions are easier to measure than in other industries. All electric companies are required to comply with this program. For the electric utility industry, the reductions will come in two prongs. There are measures that must be implemented, and there is a cap and trade system that Anaheim Public Utilities will have to participate in. Staff has been actively involved in the development of this for several years. The final regulations have to be developed by the California Air Resources Board by January 1, 2011. J. Lehman stated that the first way in which reductions will be achieved is through a set of prescriptive measures. The solar program, energy efficiency, and the renewable portfolio standards (RPS), are all measures that Anaheim has underway. In September 2009, Governor Schwarzenegger issued an Executive Order that increased the State's RPS from 20% to 33% by 2020. As one of the statewide programs, entities are allowed to use renewable energy credits to offset individual RPS. Credits are separate from energy; for example, if a utility has excess renewable energy, that utility can use the energy to meet its load, but it can sell its credits to another utility so that utility can meet their RPS. J. Lehman stated the Department can meet part of its renewable standards with credits. The reporting standards are very strict. Anaheim subscribes in a group called Western Renewable Energy Generation Information System (WREGIS) that tracks our renewable energy use. The program serves as a certification of our renewable credits on an annual basis for reporting purposes. J. Lehman stated the penalties for noncompliance are significant, $75,000 a day. J. Lehman indicated that the second part of the presentation will be about Cap and Trade. By 2012, only utilities and large industrial customers will have to participate in Cap and Trade. By 2015, other small commercial users will have to participate. Under Cap and Trade, allowances are issued at the level of the Cap. Allowances have to be surrendered to cover emissions. J. Lehman indicated that on March 23, 2010, the California Air ACTION TAKEN 2010 -23 AGENDA ITEM Resources Board (GARB) issues its recommendation which stated no allowances should be allocated on a "grand fathered" basis but that they should all be obtained through an auction process. The Governor sent a letter the next day indicating that a transition period was needed and that allowances should be allocated. This issue of allowance allocation has yet to be settled. M. Edwards asked if there had been any feedback to the Governor's letter. J. Lehman indicated nothing official, but that the draft regulations on Cap and Trade that were to have come out this month have been delayed until May 2010. M. Edwards referenced a graph showing the rate of impact to Anaheim if Anaheim has to purchase 100% of its emission allowances and impact if Anaheim is freely allocated 100% of the emissions allowances. The customer rate impacts range from about 0% to 40 %, depending upon how many allowances are allocated to Anaheim at no cost. There were a variety of questions posed by various Board members and substantial discussion insued on the likely timing and impacts of how CARB will implement AB 32. 4. FY 2010/2011 PROPOSED BUDGET PRESENTATION. E. Zacherl presented the proposed FY2010/2011 budget. He indicated that the budget was developed with direction to staff that there would be no increase in the Department's budget from the current budget year to the next budget year. The result is a proposed budget that is actually less than the current adopted budget. The total proposed Department budget for FY2010/2011 is 19.4 million or 3.8 percent less than the Department's current adopted budget. E. Zacherl indicated that that there are signs that the economy may be leveling out, but expenses continue to be monitored closely, and caution is being maintained in the use of funds and estimates for growth. He also indicated that the budget assumes no increases in Anaheim's electric demand or water usage. Budget binders were prepared for each Board Member with additional details on the Department's budget. E. Zacherl welcomed all questions that the Board Members might have. Indicating that all questions and answers will be compiled and distributed to all of the members. M. Edwards indicated that the Board was not expected to immediately present all of their questions and inquiries. Other than immediate clarifying questions, the Board will phone /email in to staff all of their questions, and those questions will be ACTION TAKEN 2010 -24 AGENDA ITEM ACTION TAKEN accumulated and responded to in writing as a group prior to the next Board Meeting. Further, binders will be provided to the absent Board Members with staff providing individualized budget presentations as needed. 5. PRESENTATION REGARDING LANDSCAPE WATER EFFICIENCY GUIDELINES. M. Edwards recommended to the Board that the presentation regarding Landscape Water Efficiency Guidelines be deferred until the May 26, 2010 meeting due to the lateness of the hour to which the Board had no objections. 6. DISCUSSION OF THE SACRAMENTO MUNICIPAL UTILITIES DISTRICT (SMUD) STAFF REPORT REGARDING "THE IMPACT OF PROPOSITION 16, `THE NEW TWO - THIRDS REQUIREMENT FOR LOCAL ELECTRICITY PROVIDERS' TO SMUD'S BUSINESS OPERATIONS" AND POTENTIAL BOARD REQUEST FOR CITY COUNCIL POSITION.* After a lengthy discussion about Proposition 16, the Board L. Cahill moved approval of a decided that a subcommittee of its members be formed with the subcommittee of no more than subcommittee to meet with individual City Council members to three members of the Public discuss Proposition 16 to suggest that City Council consider Utilities Board be authorized to taking a position in support or opposition to Proposition 16. meet with City Council members. J. Machiaverna seconded the motion. MOTION CARRIED: 5 -0. ABSTAINED: 0. ABSENT-2 (C. Peltzer, P. Carroll). 7. UPDATE ON WATER SYSTEM ISSUES. Water Supply Conditions Update D. Calkins indicated that the water supply conditions look good for the past winter and have improved from last month. The Department of Water Resources (DWR) increased the amount of water that will be delivered by the State Water Project by increasing its allocation to 30% of requested deliveries. D. Calkins added that Metropolitan Water District (MWD) is anticipating, based on snow pack and precipitation data, to potentially increase allocations to 35 or 40 %. If DWR increases the allocations to 40 %, MWD supplies would almost equal demand, resulting in little draw from our local groundwater supply. D. Calkins indicated that by the end of the year, total water usage in Anaheim should be about 7% below the MWD allocation (i.e., rationing) target. 2010 -25 AGENDA ITEM Wholesale Water Rates for 2010/2011 D. Calkins reported that the MWD Board recently established water rates for 2011 and 2012. Rates will increase 7.5% in each of the next two years. MWD extended the Stage 2 Supply Allocation or rationing of imported supplies for the coming fiscal year. In addition, the Orange County Water District set the pumping percentage and pump tax for the coming fiscal year; there will be no change from the current fiscal year. Overall, these actions are in line with assumptions made in the proposed Budget, which the PUB members were presented with earlier in the meeting. K. Murray added that MWD had originally proposed a budget with rate increases upwards of 20 %. The MWD Board did not support this recommendation and challenged MWD staff to look at options for reducing costs, which led to a series of budget workshops and committee meetings. As a result, MWD staff proposed four options for MWD Board's consideration: ranging from a 7.5% rate increase up to a 12.4% rate increase. MWD staff recommended the 12.4% rate increase as it allowed for a full cost of service and likely ensured strong bond ratings. A compromise was reached resulting in the lower rate increase of 7.5 %, but with direction from the MWD Board to MWD staff to further reduce budgeted expenditures for full cost of service and not to draw on reserves to prevent, MWD's bond ratings from being jeopardized. Orange County Water Summit D. Calkins mentioned the Orange County Water Summit, which will be held on May 14, 2010 and asked the Board Members to reply to staff if they are interested in attending. Water Awareness Month D. Calkins indicated that May is Water Awareness Month and that an informational memo was given to the Board Members identifying all activities staff planned for the month. Nohl Canyon Tank D. Calkins reported on the Nohl Canyon Water Storage Tank project. The tank has been partially backf'illed and the leak testing and the disinfection have been completed. The finished storage tank will be online in approximately four months. 8. UPDATE ON ELECTRIC SYSTEM ISSUES Canyon Power Plant M. Ward indicated that the mobilization has begun on the Canyon Power Plant Project with the site being prepared for construction. ACTION TAKEN 2010 -26 AGENDA ITEM Proposed Roadway Projects in Anaheim M. Ward commented that at the last PUB meeting, Board Members asked for more information about roadway projects being monitored through the City's roadway work coordination and tracking database. M. Ward indicated that he included in their packets a map referencing the projects that have been entered into the database and are being coordinated by all City departments, including Utilities. M. Ward indicated that the project map is a snapshot, and that the Iist of projects could change. D. Morgan asked about the large generators that were purchased for Canyon Power Project. M. Ward indicated that two are on site and two are at the Utility Service Center. 9. UPDATE ON FINANCE ISSUES. M. Edwards indicated that members of the finance staff and the Mayor will be going to New York to make rating agency presentations for the Canyon Power Plant Bonds. 10. UPDATE ON JOINT SERVICES ISSUES. California Municipal Utilities Association Award M. Long commented on the Award that Anaheim received from the California Municipal Utilities Association (CMUA) for accomplishments of the Energy Programs for the Green Connection. Taste of Anaheim M. Long reported that the Utilities will have an information booth at the Taste of Anaheim on May 13, 2010. M. Long indicated that this would be her last Board meeting as she was retiring and thanked the Board for their support for all the programs indicating that she felt grateful to have worked in Anaheim. 11. AGENDA ITEM(S) FOR THE NEXT MEETING ON MAY 26, 2009. • Water Supply Conditions Update • Water Rate Public Hearing • Underground Conversion Five -Year Plan* • Schedule a Public Hearing Date for Public Health Goals Report • Recommendations for the Proposed 2010/2011 Budget* • Landscape Guidelines Presentation ACTION TAKEN 2010 -27 AGENDA ITEM *Indicates item(s) will be forwarded to City Council for action after presentation to the PUB. 12. ITEM(S) BY SECRETARY. M. Edwards spoke about M. Long and her level of contribution to the City of Anaheim. M. Edwards indicated that S. Scionino would be the Acting AGM, Joint Services. M. Edwards discussed the Neophyte Guide to the Changing EIectric Utility Industry, which has been given to the Board Members. M. Edwards indicated that this guide will provide a global understanding of Electric Utility, and recommended it to the Board members for their review. M. Edwards introduced A. Nguyen, Utilities Analyst 1, who is participating in the City Perspective Program. 13. ITEM(S) BY BOARD MEMBERS. L. Cahill thanked M. Long for her hard work over the years and expressed that she will be missed. J. Machiaverna spoke about the article in the National Geographic edition on Water, and that the article on California, to the Groundwater Replenishment System Project. J. Machiaverna also commented that M. Edwards and staff have done a tremendous job on the AB 32 issues and is confident that Anaheim will be able to handle it. J. Machiaverna expressed that he will miss M. Long. J. Brandman indicated that he would miss M. Long. D. Morgan thanked M. Long for her contribution to Joint Services. K. Murray thanked M. Long and commented that it has been an incredible honor to have worked with her. K. Murray added that it is fun participating with J. Brandman at the Solar Flag Dedications, and acknowledged Principal Finley from Orange County Christian School. L. Cahill requested a motion to adjourn the meeting. ACTION TAKEN 14. ADJOURNMENT: (TO THE PUBLIC J. Brandman moved to adjourn the HEARING/REGULAR MEETING DATE OF MAY 26, meeting at 7:30 p.m. to Regular 2010, AT 5 :00 P.M., IN THE 2 " FLOOR GORDON HOYT meeting/Public Hearing date of 2010 -28 AGENDA ITEM CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM BLVD., ANAHEIM, CALIFORNIA.) Respectfully submitted, �ftype�� Marcie L. Edwards Secretary, Public Utilities Board ACTION TAKEN May 26, 2010 at 5:00 p.m. in the 2 Floor Gordon Hoyt Conference Room of Anaheim West Tower, 201 S. Anaheim Blvd, Anaheim, California. K. Murry seconded the motion. MOTION CARRIED: 5 -0. ABSTAINED: 0. ABSENT: 2 (C. Peltzer, P. Carroll).