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HomeMy WebLinkAboutMinutes - July 28, 2004 - UBi CITY OF AZUSA MINUTES OF THE REGULAR MEETING OF THE AZUSA UTILITY BOARD/CITY COUNCIL MONDAY, JULY 26, 2004 - 6:30 P.M. The Utility Board Members of the City of Azusa met in regular session, at the above date and time in the Azusa Light and Water Department Conference Room, located at 729 N. Azusa Avenue, Azusa, California. Chairperson Chagnon called the meeting to order. Call to Order ROLL CALL Roll Call PRESENT: BOARD MEMBERS: HARDISON, ROCHA, CHAGNON, MADRID ABSENT: BOARD MEMBERS: STANFORD ALSO PRESENT: Also Present City Attorney Martinez, Director of Utilities Hsu, Assistant to the Utilities Director Kalscheuer, Assistant Director of Resource Management Tang, Assistant Director of Electric Operations Ramirez, Assistant City Manager Person, City Manager Gutierrez, Administrative Technician Yang, Assistant Director Customer Care/Customer Service Vanca, Electric Engineer Langit, City Clerk Toscano, City Clerk Mendoza. Public Participation Pub Part None. None The CONSENT CALENDAR consisting of Items II- A through II -L, were approved by motion of Consent Cal Board Member Hardison, seconded by Board Member Rocha and unanimously* carried, with the Approved exception of items II -B and 11 J, Mayor Madrid abstained from the minutes as she was not in attendance at that meeting. A. The Minutes of the regular meeting of June 28, 2004, were approved. Min Appvd B. SPECIAL CALL ITEM. Spec Call Item C. 3Approval was given to amend the refuse contract budget for fiscal year 2003-2004 for an Amend 03-04 additional $126,400, to. the refuse expense account and revenue account to allow for final Budget payment to Athens Services. Athens D. Approval was given to amend the fiscal year 2004-2005 Utility Department Budget to Amend 04-05 increase the Water Division budget by $260,600, Electric Division budget by $293,344, and Budget Customer Service Division budget by $11,000, all to cover omitted projected Utility overtime/standby time costs; approval of an increase in the Customer Services Division budget by $100,000 to cover omitted estimated regular time costs/benefits; and add Customer Service Representative 1 (1 fulltime of FT) position and two part-time customer Service Representative I (1 fulltime equivalent or FTE) positions together with an increase of $84,342 to the Customer Service Division budget to cover the cost of these positions. E. Approval was given to amend the Western System Power Pool Agreement (WSPPA) with Amend Agmt Panda Gila River, L.P. and authorize the Mayor to execute same. WSPPA F. A RESOLUTION OF THE UTILITY BOARD/CITY COUNCIL OF THE CITY OFAZUSAACCEPTING Res.04-055 CERTAIN GRANT EASEMENT AND DIRECTING THE RECORDING THEREOF. (Azusa Mobile Grant of Esmt Home Park LLC) G. Approval was given for a contract for mail -in utility payment processing with R T Lawrence Mail -in pymt Corporation, a three year contract and authorize Director of Utilities to sign the Professional Process Services Agreement. RT Lawrence H. A RESOLUTION OF THE UTILITY BOARD/CIN COUNCIL OF THE CITY OF AZUSAACCEPTING Res. 04-056 CERTAIN GRANT OF EASEMENT AND DIRECTING THE RECORDING THEREOF. (Heavenly Pet Grant of Esmt Resort for Fire Service Line — 1741 W. San Bernardino Ave, WC) I. Approval was given to award the contract for Destruction of Three Water Wells, Project W- Dest 3 wells 195, to Beylik Drilling, Inc. Beylik Drilling J. SPECIAL CALL ITEM. K. Approval was given to reject sole bid from C.T. 13_ F. Inc. in the amount of $287,540, for Bid Rejection Project LD 2004-1 to furnish and install underground electric street light system and Underground authorization was given to re -bid project. Elect St Light L. The Professional Services Contract for the Preparation of Complete Electric Distribution Prep Elect System Study, was awarded to RW Beck in the amount not -to -exceed $75,873.00 and the Dist Sys Sty City Manager was authorize to execute same. Special Call Items Spec Call Assistant Director of Electric Operations Ramirez responded to questions from Board Members Asst Dir regarding the rejection of sole bid for renovation to the electric yard at 1020 W. Tenth Street and Electric the requested authorization to re -bid the project. He noted reasons why there was only one bid Operations stating that the timing was not right; many contractors were busy doing summer or school jobs, Comments the bid time was a little on the short side, but also that there is definite interest in the project and Renovation that there will be more bidders the next time the project is presented for bid. He stated that he Elect Yard reviewed the project with the architect to try and cut down expenses, he listed the items and discussion was held between himself and Board Member Hardison regarding the issue. 07/26/04 PAGE TWO MoZed by Board Member Hardison, seconded by Board Member Rocha and unanimously* carried Bid Rejection to approve the rejection of sole bid from ABEAM Construction in the amount of $1,518,000, for Renovation the renovation to the electric yard at 1020 W. Tenth street and that authorization be given to re- Elect Yard bid the project. Chairperson Chagnon addressed item regarding the sale of Water Property at 16706 East Cypress Chagnon Street in Covina, suggesting that the City save money by not listing it with an agent and perhaps Comments utilizing a/the bidding process instead. Discussion was held between Board Members and. City Discussion Attorney Martinez regarding the issue. Assistant to the Utilities Director Kalscheuer suggested that staff investigate different realtors and Kalscheuer listing options and advised that he will make a recommendation at the September 7, 2004, Comments meeting. The Mayor suggested local realtors. Board Member Hardison offered a Resolution entitled: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, FINDING THAT Res. 04-054 THE PUBLIC INTEREST AND NECESSITY REQUIRE THE SALE OF SURPLUS PROPERTY, DECLARING Intent to ITS INTENT TO SELL RESIDENTIAL PROPERTY LOCATED AT 16706 EAST CYPRESS STREET Sell 16706 E. (ASSESSOR PARCEL NO. 8419-022-270) AND SETTING A HEARING FOR CONSIDERATION OF Cypress St PROTESTS. Surplus Prop Moved by Board Member Hardison, seconded by Board Member Rocha to waive further reading and adopt. Resolution passed and adopted by the following vote of the Board Members: AYES: BOARD MEMBERS: HARDISON, ROCHA, CHAGNON, MADRID NOES: BOARD MEMBERS: NONE ABSENT: BOARD MEMBERS: STANFORD Board Member Madrid asked questions regarding items II -F, Acceptance of Grant of Easement Madrid from Azusa Mobile Home Park, LLC. why an easement is needed at this time and item II -G, Questions Contract for Mail -In Utility Payments Processing with RT Lawrence Corp., with regard to living wage requirements; staff responded and the information regarding living wages would be provided in memo form as soon as possible. Scheduled Items Fund Transfer from Public Benefit Charge Fund to Wholesale Power Revenue Account. Director of Utilities Hsu advised that when the Board approved the Renewable Portfolio Standard for the electric utility to comply with Renewable Resource Legislation SB 1078, it was understood that the procurement may cause the electric utility to pay more for the energy and that it would have to be subsidized; it was recommended that it partially use Public Benefit Charge and recommended that $60,000 come from that account. Moved by Chairperson Chagnon, seconded by Board Member Hardison and unanimously* carried to approve the fund transfer in the amount of $60,000 from PBC Fund to wholesale power revenue account to mitigate the market cost of Renewable Resource Procurement and also approve an appropriation increase of $60,000 in capacity and energy account of the Light Fund to pay for the market cost of Renewable Resource Procurement. Sched Items Fund Trnsfr Pub Benefit To Wholesale Pwr Rev Acct Director of Utilities Hsu detailed the proposal of the San Juan Replacement Power Cost Recovery Dir of Util Mechanism, which consisted of the 1) Establishment of Base San Juan Replacement Power Cost Comments Budget, 2) Calculation of Actual San Juan Replacement Power Cost, 3) Comparison of the Cost San Juan Pwr Difference, and 4) Quarterly Cost Recovery Mechanism. Board Member Madrid expressed Cost Recover concern regarding the impact to the rate players with this type of process. Mechanism 07/26/04 PAGE THREE Assistant Director of Resource Management Tang and Director of Utilities Hsu addressed the issue detailing the mechanism and advantages of fuel cost adjustment and answered questions posed by the Board Members regarding time span expectation, Insurance cost, deductible, recovery, coverage, rate stabilization funds, minimum reserve, and reserve funds. Chairperson Chagnon offered a Resolution entitled: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA AMENDING THE SCHEDULE OF ELECTRIC RATES AND CHARGES TO ADD A SCHEDULE FOR RECOVERY OF SAN JUAN REPLACEMENT ENERGY COST VIA FUEL COST ADJUSTMENT CLAUSE. Moved by Chairperson Chagnon, seconded by Board Member Hardison to waive further reading and adopt. Resolution passed and adopted by the following vote of the Board Members: AYES: BOARD MEMBERS: HARDISON, ROCHA, CHAGNON, MADRID NOES: BOARD MEMBERS: MADRID ABSENT: BOARD MEMBERS: STANFORD Director of Utilities Hsu requested the Reclassification of Assistant Director -Power Resources to Assistant Director of Utilities; he advised that this is a request to begin the process and that it would come back for final approval. He stated that this is part of his plan for succession training. Moved by Board Member Hardison, seconded by Board Member Rocha and unanimously carried to approve the reclassification of Mr. Bob Tang from Assistant Director -Power Resources to Assistant Director of Utilities, with no change in salary. Staff Reports/Communications Res. 04-057 Amend Schedule Of Elect Rates San Juan Replacement Energy Cost Reclass. Assistant Director of Utilities Staff Rpts The Monthly Legislative and Regulatory Updates were presented, but, there were no comments or Legislative questions towards the document. Updates The Monthly Power Resource Update was presented, but, there were no comments or questions Monthly Pwr directed towards it. Resources Director of Utilities Hsu advised that the APPA Article: Industry Challenges in Changing Times is APPA Article for information purposes and the Annual Adjustment of Replacement Water Cost Adjustment RWCA Factor is also an information item. Directors' Comments Dir Cmmts Board Member Rocha invited all to attend the recognition ceremonial for Korean Veterans to be Rocha held tomorrow, July 27`" at the City Hall Flag pole. He also thanked the family of Jonathan D. Comments Jones, who achieved the Eagle Scout Rank. He advised that money will be coming from the office of Senator Hilda Solis for the purchase of land for the development of a passive park at 221 N. Soldano; he advised that he would come back with the specifics for the project. He talked about the alleys between V and Hollyvale. Discussion was held regarding the Park Master Plan, pocket parks, and maintenance after they are obtained. Board Member Madrid provided an update on the Sister City Zacatecas Youth Exchange program. Madrid/com Assistant City Manager Person advised that he will come up with an update on the status of Ms. Ass't City Mgr Suzanne Avila's transition over to the River and Mountains Conservancy and he was advised to Person provide that update at the regular City Council meeting of September 7, 2004. 07/26/04 PAGE FOUR City Manager Gutierrez advised that she would like to have a regular meeting on August 16thwhich City Mgr was formerly being considered for cancellation, as not having a meeting for four weeks would Comments adversely impact City business. She stated that the workshop meeting for August 9`h and Utility Board meeting of August 23rd will not be held, as proposed. It was consensus of Board Members to hold the regular meeting of August 161h. It was consensus of Board Members to recess to Closed Session to discuss the following: Closed Session Clsd Sess Conference with Legal Counsel — Existing Litigation Gov. Code Sec. 54956.9 (a) Conf w/Legal Kirkwall Substation Agreements Cnsl FERC Docket No. ER 04-667 Conference with Legal Counsel — Existing Litigation Gov. Code Sec. 54956.9 (a) Conf w/Legal California Energy Crisis Refund Proceedings Cnsl FERC Docket No. EL 00-95 The Board Member recessed at 7:29 p.m. and reconvened at 8:00 p.m. IRecess/rec City Attorney Martinez advised that there was no reportable action taken in Closed Session. City Attny No action It was consensus of the Board Members to adjourn. Adjourn TIME OF ADJOURNMENT: 8:01 P.M. SECRETARY NEXT RESOLUTION NO. 04-058. * Indicates Board Member Stanford absent. 07/26/04 PAGE FIVE AGENDA REGULAR MEETING OF AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL AZUSA LIGHT & WATER 729 N. AZUSA AVENUE AZUSA, CA 91702 AZUSA UTILITY BOARD DIANE CHAGNON CHAIRPERSON DICK STANFORD VICE CHAIRPERSON CRISTINA C. MADRID BOARD MEMBER MONDAY, JULY 26, 2004 6:30 PM DAVE HARDISON BOARD MEMBER IOSEPH R. ROCHA BOARD MEMBER 6:30 P.m. - Convene to Regular Meeting of the Azusa Utility Board and Azusa City Council • Call to Order • Pledge to the Flag • Roll Call . 1. PUBLIC PARTICIPATION (Person/Group shah be allowed to speak without interruption up to Bve (5) minutes maximum time, subject to compliance with applicable meeting rules. Questions to the speaker or responses to the speaker's questions or comments, shall be handled after the speaker has completed his/her comments. Public Participation will be limited to sirty (GO) minutes time.) The Consent Calendar adopting the printed recommended action will be enacted with one vote. if 5taff or Counci/members wish to address any item on the Consent Calendar individual/y, it will be considered under SPECIAL CALL ITEMS. 301 A. r: C. Q CONSENT CALENDAR r Minutes. Recommendation: Approve minutes of regular meeting of June 2�8, 2004, as wiitten. II-Minutes Minutes s fr28-04.d4.doc Request for Sale of Water Property at 16706 East Cypress Street in Covina. Recommendation: Approve the following resolution: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, FINDING THAT THE PUBLIC INTEREST AND NECESSITY REQUIRE THE SALE OF SURPLUS PROPERTY, DECLARING ITS INTENT TO SELL RESIDENTIAL PROPERTY LOCATED AT 16706 EAST CYPRESS STREET (ASSESSOR PARCEL NO. 8419-022-270) AND SETTING A HEARING DATE FOR CONSIDERATION OF PROTESTS. ' II -B. Sale of Cypress Propeity.doc Amendment of Refuse Contract Budget for Fiscal Year 2003-2004. Recommendation: Approve additional $126,400 to the refuse expense account and revenue account to allow for final payment to Athens Services. II -C. Refuse Service Budget Arrendnent.c Amendment of Fiscal Year 2004-2005 Utility Department Budget. Recommendation: Approve amendment of Utility Department's Fiscal Year 2004-2005 budget to cover for some costs unintentionally omitted from the Operating Budget adopted by the City Council on June 21, 2004. II -D. utility Budget Arnendnent.doc E. Amendments to the Western System Power Pool Agreement with Panda Gila River, L.P. Recommendation: Authorize Mayor to execute agreement amendments to the Western System Power Pool Agreement (WSPPA) with Panda Gila River, L.P. II -E. PGR WSPP. doc F. Acceptance of Grant of Easement from Azusa Mobile Home Park, LLC. Recommendation: Approve the following resolution: 2 002 RESOLUTION OF THE UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA ACCEPTING CERTAIN GRANT EASEMENT AND DIRECTING THE RECORDING THEREOF. to 1I -F. Elect_Easerrent.doc G. Contract for Mail -In Utility Payments Processing with R T Lawrence Corp. Recommendation: Award three-year contract to R T Lawrence Corp. to process mail -in utility payments and authorize Director of Utilities to sign the Professional Services Agreement. II -G. Lockbox. DOC H. Acceptance of Easement from Heavenly Pet Resort for Fire Service line - 1741 W. San Bernardino Avenue, West Covina, CA 91790. Recommendation: Accept easement granted by the owner of Heavenly Pet Resort to Water Division due to installation of a fire service line and backflow prevention device. II -H. Water Easement—SB Project W-195. Destruction of Three Water Wells. Recommendation: Award contract to Beylilc Drilling, Inc. for performance of Project -195, Destruction of Three Water Wells at 209 Grandview Drive Azusa; 16706 East Cypress Street, Covina; and 16106 East San Bernardino, Covina. II -I. Destruction of 3 WaterWells.doc / J J Reiection of Bid for Renovation of the Electric Yard at 1020 West Tenth Street. Recommendation: l/ Reject bid of $1,518,000 from ABEAM Construction, Inc. for the renovation of the electric yard and authorize staff to re -bid project. , p („, � 0_i, ,Q ­e -s nl. Bid Rejection—Elec Yard I K. Resection of Bid for the Installation of Underground Electric Street Light System. Recommendation: Reject bid of $287,540 from C.T. & F. Inc. for Project LD 2004-1 to furnish and install underground electric street light system and authorize staff to re -bid project. I ME II -IC Reject Bid--Lighting.doc 003 L. Professional Services Contract for Preparation of Complete Electric Distribution System Study. Recommendation: Award Professional Services Contract to RW Beck in the amount not -to -exceed $75,873.00 for preparation of an Electric Distribution Study and authorize the City Manager to sign the agreement. IWINI II -L Lled:rd4asterPla n. do 111. SCHEDULED ITEMS A. Fund Transfer from Public Benefit Charge Fund to Wholesale Power Revenue Account. Recommendation: Approve fund transfer in amount of $60,000 in order to mitigate the above market cost of renewable resource procurement. In III -A. PBC Fund Transfer.doc San luan Replacement Power Cost Recovery Mechanism. Recommendation: Approve the following resolution: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA AMENDING THE SCHEDULE OF ELECTRIC RATES AND CHARGES TO ADD A SCHEDULE FOR RECOVERY OF SAN JUAN REPLACEMENT ENERGY COST VIA FUEL COST ADJUSTMENT CLAUSE. Im III -B. San Juan FCA.doc C. Reclassification of Assistant Director -Power Resources to Assistant Director of Utilities. Recommendation: Approve reclassification of Mr. Bob Tang from Assistant Director -Power Resources to Assistant Director of Utilities, with no change in salary. III -C. RedassfF ation.doc IV. STAFF REPORTS/COMMUNICATIONS A. Monthly Legislative and Regulatory Update IV -A. Legislative Update.ppt 004 (� l B. Monthly Power Resources Update MW IV -B. Monthly Power Resources Update. pg C. APPA Article: Industry Challenges in Changing Times M N{. APPA Industry Chahenges.pdf D. Annual Adjustment of Replacement Water Cost Adjustment Factor IV -D. Replacerrent Water Cost 04-05.do V. DIRECTORS' COMMENTS VI. CLOSED SESSION A. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION Government Code Section 54956.9 (a) Kirkwall Substation Agreements FERC Docket No. ER 04-667 CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION Government Code Section 54956.9 (a) California Energy Crisis Refund Proceedings FERC Docket No. EL 00-95 VII. ADIOURNMENT A. Adjournment. in compliance with the Americans with Disabilities Act, if you need special assistance to participate in a city meeting„ please contact the City Clerk at 616-812-5229. Notification three (3) working days prior to the meeting or time when special services are needed will assist staff in assuring that reasonable arrangements can be made to provide access to the meeting. " 005 CONFIDENTIAL California Energy Crisis Briefing July 26, 2004 Issue: ■ To consider settlement proposal by California Parties (State Attorney General, Edison, PG&E, etc....) to settle issues related to California Energy -Crisis 2 Background: ■ The failed California deregulated electricity market produced astronomical power prices during the period of May 1, 2000 through June 20, 2001. ■ The economic consequences of this crisis forced PG&E to file bankruptcy and Edison was "saved" only by a political will of the legislature ■ In the aftermath of crisis, the California Parties forcefully demanded money back from the "bad" guys [in California Parties' view, any entity who financially benefited during this period is BY DEFINITION a "bad" guy] through refunds. ■ FERC, within its statutory authority, has ordered refunds for the period of October 2, 2000 through June 20, 2001. The refund for this period will apply through the recalculation of power prices for the period, and it will apply to ALL market participants regardless of "guilt". ■ However, FERC lacks statutory authority to order refunds for the period of May 1, 2000 through October 1, 2000. Nevertheless, California Parties have relentlessly pursued refunds for this early period in Courts. ■ FERC also instituted other proceedings to look into specific misbehaviors by individual market participants ■ Recently, there is a renewed political pressure on FERC to "do something". California Parties have proposed to settle all the outstanding energy crisis litigation with individual market participants for a "price" ■ California Parties have a settlement proposal for the City 9 City's financial exposures related to energy crisis: ■ The City's exposures related to energy crisis are in three components: 1. Specific Market Manipulations ■ None. The City. has been cleared of all existing market manipulations by the FERC. California Parties do not dispute this fact 2. Refund Liability for the period of October 2, 2000 through June 20, 2001 ■ The California Parties calculate and the staff confirms with our own verification that the City may owe about $100,000 in refunds. This is a no-fault refund that the City wil need to make to comply with FERC's directives 3. Refund Liability for the period of May 1, 2000 through October 1, 2000 ■ The City made substantial sales in the CAISO market during this period (about $3.5 million). California Parties are claiming that the City has substantial refund exposure of about $2 million and that California Parties offer to settle on 30 cents on the dollar, or about $600,000 with the City. ■ BOTTOM LINE: o California Parties want to settle with the City for $600,000 for energy crisis related litigation 0 What others are doing? ■ Three major power companies have already settled with California Parties (Duke, Dynegy and Williams), they are about 40% of refund universe ■ Other market participants have received confidential settlement proposals from California Parties on June 30th, 2004. Among them, Reliant, LADWP, Powerex, BPA represent another 30% of the refund universe, with the remaining 30% made up of smaller entities such as munis, smaller marketers etc.... 5 4 Options for the City 1. Dig in our heels and do nothing • Pros: No monetary exposure for the time being for the period of May 1 through October 1, 2000 • Cons: If the Court ultimately determines that refunds are due for the early period, Citys refund liability could be as high as $2 million plus interest payment The City should expect bad press coverage and intense political bashing if we are the only few holdouts in the settlement process 2. Pay Up What's being Demanded and Move On Pros: The City may once and for all close this chapter of energy crisis Cons: It's $600,000 that the City has to cough up. A lot of moneylll 3. Wait and See What the "Heavyweights" do and Gear Toward a Settlement for Lesser Amount • Pros: The City may well be able to negotiate down substantially the alleged refund amount for the eary period to a more reasonable amount If "heavyweights" don't settle, then there is no compelling reason for the City to settle early The City ma be entitled to some refunds for the early period from other settlements which n be used to - offset what thra e City may have to pay in refunds • Cons: It is not assured that the City will be able to negotiate a reasonable settlement. We may end up in 1 or 2. 0 STAFF'S SUGGESTION: ■ Wait for the time being ■ If there is a substantial movement from the "heavyweights" to settle, then the City should gear up to settle with the California Parties expeditiously to avoid litigating the issues for years to come with few "allies" It CITY OF AZUSA MINUTES OF THE REGULAR MEETING OF THE AZUSA UTILITY BOARD/CITY COUNCIL MONDAY, JUNE 28, 2004 - 6:30 P.M. The Utility Board Members of the City of Azusa met in regular session, at the above date and time in the Azusa Light and Water Department Conference Room, located at 729 N. Azusa Avenue, Azusa, California. Chairperson Chagnon called the meeting to order. Call to Order ROLL CALL Roll Call PRESENT: BOARD MEMBERS: HARDISON, STANFORD, ROCHA, CHAGNON ABSENT: BOARD MEMBERS: MADRID ALSO PRESENT: Also Present City Attorney Ferre, Director of Utilities Hsu, Assistant Director of Resource Management Tang, Assistant Director of Water Operations Anderson, Interim City Manager Person, Deputy City Manager Gutierrez, Administrative Technician Yang, Engineer Associate Vuong, Assistant Director Customer Care/Customer Service Vanca, Customer Service Representative Garcia, Human Resources Director Hanson, Business Development/Public Benefits Coordinator Reid, Deputy City Clerk Toscano, City Clerk Mendoza. Public Participation Pub Part None. The CONSENT CALENDAR consisting of Items II- A through II -F, were approved by motion of Consent Cal Board Member Stanford, seconded by Board Member Rocha and unanimously* carried. Approved Chairperson Chagnon noted a typographical error on minutes. A. The Minutes of the regular meeting of May 24, 2004, were approved, as amended Min Appvd B. The minutes of the adjourned regular meeting of June 1, 2004, were approved as written. Min Appvd Alms C. With regard to the customer issue - Casa Azusa, 129 W. 91" Street and 153 W. 9"' Street, Customer approval was given to recognize the amicable resolution of the Customer Complaint as Issue follows: waive all claims to past billings and costs incurred to purchase and install new water Resolved meters and registers. A clean slate started with the installation of new meters and registers on Wednesday, May 12, 2004. It was also agreed that Azusa Light & Water Field Services Supervisor Derek McFann will make an appointment with Home Owners Association President to observe the monthly meter read process until it is determined the observation is no longer needed. D. Plans and Specifications for Project ED -2004-1, to furnish and install underground Street Plans &Specs Light Electric Substructures and Accessories at an area bounded by Angeleno Avenue & Underground Orange Avenue between 1 1`" and W Street were approved and the City Clerk's office was Street authorized to advertise for bids. Lighting E. A RESOLUTION OF THE UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA ACCEPTING Res. 04-C48 CERTAIN GRANT OF EASEMENT AND DIRECTING THE RECORDING THEREOF. Grnt of esmt F. Approval was given that staff fill out the Declaration of Action form to the State to declare Flex Your Council/Utility Board support for the State's "Flex Your Power at the Pump" information Power campaign. Special Call Items Spec Call None. None Scheduled Items Sched Items Purchase of Customer Information System and Interactive Voice Response System. Moved by Purchase Board Member Stanford, seconded by Chairperson Chagnon and unanimously* carried to (1) Customer approve of the selection of Systems & Software to provide (a) new Customer Information System Information in the amount of $515,710 and (b) Interactive Voice Response System in the amount of System & $116,400; and (2) amend the 2003-04 Capital Improvement Projects budget In the amount of Interactive $632,110 (not -to -exceed total expense), with an appropriation of $410,865 (65%) from the Voice Water Fund 32, and appropriation of $221,235 (35%) from the Electric Fund 33, and authorize Response purchase using the budgeted funds. System Procurement of Outage Insurance coverage for San Juan Power Generation. Moved by Board Outage Ins Member Stanford, seconded by Board Member Hardison and unanimously* carried to authorize San Juan staff to procure outage insurance coverage from XL Capital/Indian Harbor Insurance Company for Power San Juan Unit 3 for coverage period commencing July 1, 2004 through June 30, 2005. Generation Public Information Outreach Regarding Construction of Underground Reservoir in Pioneer Public Info Park. Board Member Rocha voiced concern regarding the eucalyptus trees scheduled for removal Outreach as some were recently planted in that park and he was assured by staff that those trees were in a Re: Reservoir different area of the park. Board Member Hardison expressed concern regarding coordinating In Pioneer Pk projects between departments in order that projects would not have to be redone due to another project. Moved by Board Member Rocha, seconded by Board Member Stanford and unanimously* carried to authorize Azusa Light & Water to begin public information outreach for construction of an underground reservoir in Pioneer Park. Staff Reports/Communications Staff Rpts The City Yard Renovation Project Status Report was presented; there were no questions or City Yard comments directed towards it. Renovation Status Rpt 06/28/04 PAGE TWO 11 M The Legislative Updates were presented, but, there were no comments or questions towards the Legislative document. Updates The Monthly Power resource Update was presented, but, there were no comments or questions Monthly Pwr directed towards it. Resources Director of Utilities Hsu provided the report on Utility Support of State and Local Governments Rpt Utility provided by American Public Power Association (APPA), responding to a question of Board Support to Member Stanford that the median transfer or payment in the last year from California Municipal State & local Electric Utilities to their respective cities' general fund s ahs increased from 5.5 percent to 7.5 Governments percent. Chairperson Chagnon commented on the 2003-04 Residential Rebate Program Update asking if Chagnon everyone knew that when installing of new windows, people have to obtain a permit to do so. Comments Staff responded stating that they would include that information in the brochure regarding the Residential program. Rebates Director of Utilities Hsu presented the Southern California Public Power Association's (SCPPA) SCPPA Tour Congressional Tour Evaluation, and thanked Board Member Stanford for attending the Tour. He Evaluation noted the importance and significance of Board Members/Council Member's attendance at the event. Board Member Stanford expounded on the whole experience of attendance at the tour. Director of Utilities Hsu advised that the appraisal of Cypress Street Water property has been Cypress St received and that it is $286,000. He advised that the item regarding how to utilize the money Water prop would be brought back to the agenda at the July meeting. Update Directors' Comments Dir Cmmts Board Member Chagnon requested that an update on Suzanne Avila be brought back to the next Chagnon meeting. She is interested on how Ms. Avila is working out with the Conservancy. Request Moved by Board Member Stanford, seconded by Board Member Hardison and unanimously* Adjourn carried to adjourn. TIME OF ADJOURNMENT: 6:47 P.M. SECRETARY NEXT RESOLUTION NO. 04-C49. • Indicates Board Member Madrid absent. 06/28/04 PAGE THREE M CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIE� DATE: JULY 26, 2004 SUBJECT: AMENDMENT OF FISCAL YEAR 2003-2004 REFUSE CONTRACT BUDGET RECOMMENDATION It is recommended that the Utility Board/City Council approve of a Fiscal Year (FY) 2003-04 budget amendment to refuse expense account 10-40-750-000-6455, and revenue account 10-40-750-000-4722, in amount of $126,400 to allow for final payment to Athens Services for FY 2003-04. BACKGROUND Refuse contract requires City to pay Athens Services amounts billed through the Utility Billing System. Each year, these amounts are budgeted and the budget accounts are used to authorize payments to Athens Services. Due to a rate increase in middle of fiscal year to cover landfill cost increases, the amounts billed and owed to Athens Services for last year will exceed the original budgeted amount. At this time, therefore, it is necessary to amend the budget in amount of $126,400 to enable final payment to Athens Services for last fiscal year services. Since billing amounts also increased this last year with the rate adjustment to pay for the landfill cost increase, this amendment also increases the corresponding budgeted revenue account. FISCAL IMPACT There is no fiscal impact of this amendment on rate payers. This amendment is strictly a change to the budget to add $126,400 to both the revenue and expense accounts to enable final payment to Athens Services for last fiscal year services. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities 020 CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES/, DATE: JULY 26, 2004 SUBJECT: AMENDMENT OF FY 2004-05 UTILITY DEPARTMENT BUDGET RECOMMENDATION It is recommended that the Utility Board/City Council: 1. Approve of an amendment to the Utility Department's FY 2005 budget to increase Water division budget by $260,600, Electric division budget by $293,344, and Customer Service division budget by $11,000, all to cover omitted projected overtime/standby time costs; 2. Approve of an increase in the Customer Services division budget by $100,000 to cover omitted estimated regular time costs/benefits; and 3. Add Customer Service Representative 1 (1 fulltime or FT) position and two part-time Customer Service Representative 1 (1 fulltime equivalent or FTE) positions together with an increase of $84,342 to the Customer Service division budget to cover the cost of these positions. BACKGROUND After the adoption of the Operating Budget on June 21, 2004, staff noted that there were some costs unintentionally left off the adopted version. After some review, Utility and Finance Department staff determined that the following were omitted from the Utility budget which was approved by the City Council on June 21, 2004: • Overtime/standby costs of $564,944 for various Utility divisions • Salary and benefits for Fields Services (Meter Readers) was under -budgeted by $100,000 • One fulltime Customer Service position in amount of $54,338 and two part- time positions in amount of $30,004. These costs do not necessarily represent increases from prior year budget. Of the total overtime/standby time costs, 98% or $553,994 is for the Water and Electric divisions, most of 021 which is for emergency contingencies. The remainder of the proposed overtime budget amendment, $11,000, is for the Customer Service division and parallels actual costs this last year, which were $12,555 at the end of May 2004. The Customer Service positions omitted in the final City budget were previously approved by the Utility Board in May along with the $100,000 Finance omitted for Field Services. Last fiscal year, 91 % of the Water Division's standby/overtime budget of $207,000 was expended by the end of May 2004. By end of May 2004, 49.4% of the Electric Division's budget of $217,500 was expended. The higher percentage use of the Water division's overtime budget is attributable to increasing water leaks, which we are seeking to address with additional capital improvements. A staffing level study is also being conducted to determine if we have adequate staff to maintain a distribution system that is the size of ours. FISCAL IMPACT Customer Service budget, fund 31, will increase by $195,342; Water budget, fund 32, will increase by $260,600; Electric budget, fund 33, will increase by $293,344. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities Dave Nguyen, Acting Associate Director of Finance Attachments OT & Standby Amendment. pdf 022 OT & Standby Budget Amendment: CONSUMER SERVICES 31 -40 -711 - Field Services Salaries and Benefits 902 6033 Overtime Pay/Pre Customer Records & Collections Salaries and Benefits 903 6033 Overtime Pay/Pre Total Consumer Services FY 2003 -04 -Actuals FY 2004-05 thru May 31 '04 Budget $2,219.32 $ 9,000 $10,336.52 $ 2.000 $12,555.84 $11,000.00 023 OT & Standby Budget Amendment (cont) 024 FY 2003 -04 -Actuals FY 2004-05 thru May 31 '04 Budget WATER/PRODUCTION 32 -40 -722 - Salaries & Benefits 700 6030 Overtime Pay/Reg $5,481.17 $10,600.00 6033 Overtime Pay/Pre $21,422.87 $45,000.00 6039 Standby Pay/Prem $28,504.30 $45,000.00 WATER/TRANSMISSION & DISTRIBUTION 32 -40 -723 - Salaries & Benefits 750 6030 Overtime Pay/Reg $2,806.33 $5,000.00 6033 Overtime Pay/Pre $99,161:51 $110,000.00 6039 Standby Pay/Prem $30,054.23 $45,000.00 Total Water $187,430.41 $260,600.00 024 OT & Standby Budget Amendment (cont) FY 2003 -04 -Actuals FY 2004-05 thru May 31 '04 Budget ELECTRIC DISTRIBUTION - O&M 33 -40 -735 - FERC SUPERVISION&ENGINEERING 580 800 SALARIES & BENEFITS 6033 Overtime Pay/Pre $3,459.92 $13,825.00 OVERHEAD LINE EXPENSE 583 830 SALARIES & BENEFITS 6030 Overtime Pay/Reg $4,042.79 $5,000.00 6033 Overtime Pay/Pre $29,518.03 $100,000.00 6039 Standby Pay/Prem $14,995.97 $25,000.00 UNDERGROUND LINE 584 840 SALARIES & BENEFITS 6030 Overtime Pay/Reg $4,042.79 $5,000.00 6033 Overtime Pay/Pre $29,518.50 $100,000.00 6039 Standby Pay/Prem $14,995.97 $25,000.00 METER EXPENSES 586 860 SALARIES & BENEFITS 6030 Overtime Pay/Reg $1,091.34 6033 Overtime Pay/Pre $4,917.52 $12,276.00 MISC DISTRIB. 588 880 6033 Overtime Pay/Pre $0.00 $2,713.00 ENGINEERING 33 -40 -745 - FERC SUPERVISION & ENGINEERING 580 800 SALARIES & BENEFITS 6030 Overtime Pay/Reg $747.68 $4,530.00 Total Electric $107,330.51 $293,344.00 Total: $307,316.76 $564,944.00 025 ate. s,a AZ .CI", • C3A CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 26 2004 SUBJECT: APPROVAL OF AMENDMENTS TO THE WESTERN SYSTEM POWER POOL . AGREEMENT WITH PANDA GILA RIVER, L.P. RECOMMENDATION It is recommended that the Utility Board/City Council approve the amendments to the Western System Power Pool Agreement (WSPPA) with Panda Gila River, L.P. (PGR) and authorize the Mayor to execute the agreement amendments upon the preparation of execution copies. BACKGROUND The City has entered into various pro -forma enabling agreements in the past several years for the purchase and sale of wholesale electricity, among them the Western Systems Power Pool (WSPP) multi-party enabling agreement. Due to the ongoing potential for volatility in the wholesale spot market, market participants are becoming increasingly cognizant of the need to complement/revise certain terms and conditions to the pro -forma WSPPA. The amendment with PGR includes clarifications to the financial liability and confidential aspects of wholesale transactions conducted under the WSPPA with PGR. Staff has reviewed the proposed amendment and has found it acceptable; therefore staff is hereby recommending the execution of the amendment. FISCAL IMPACT No fiscal impact as a result of the actions taken in this agenda item is anticipated. Prepared by: Bob Tang, Assistant Director of Resource Management IR PGR W SPP Arrend 2-3-04.doc 026 AMENDMENT TO WESTERN SYSTEMS POWER POOL (WSPP) AGREEMENT Panda Gila River, L.P. ("PGR") and ("CounterParty") hereby agree effective as of the _ day of , 2004, to the following Amendment ("Amendment') to the Western Systems Power Pool (WSPP) Agreement ("Agreement") as amended from time to time. The WSPP, as modified by this Amendment, shall apply to all confirmed transactions (each a "Fransaction") between the Parties for the purchase and sale of electric capacity and/or electric energy (individually or collectively, "Power") under the WSPP Agreement. WHEREAS, PGR and are Members of the WSPP, and WHEREAS, PGR and agree to purchase and sell power under the terms of the WSPP Agreement, and WHEREAS, PGR and now desire to amend the Agreement, and Now THEREFORE, in consideration of the premises together with other good and valuable consideration, both Parties hereby acknowledge the receipt and sufficiency of which, PGR and here agree as follows: AMENDMENT 1. Unless otherwise defined in this Amendment, capitalized terms used in this Amendment shall have the same meaning as that given such terms in the Agreement. 2. The Parties agree to delete Section 21.2, under "LIABILITY AND DAMAGES" in its entirety and replace it with: 21.2 Notwithstanding any other provision in this Agreement, any Party due monies under this Agreement, the amounts of which are not in dispute or if disputed have been the subject of a decision awarding such amounts, (i) shall have the right to seek payment of such monies in any forum having competent jurisdiction and (ii) shall possess the right to seek relief directly from that forum without first utilizing the mediation provision of this Agreement and without exercising termination and liquidation rights under Section 22. 3. In addition to the rights and obligations of the Parties under Section 22.3(d) and Section 28 of the WSPP Agreement, after calculation of a Termination Payment in accordance with Section 22.3 of the WSPP Agreement, if the Defaulting Party would be owed the Termination Payment, the Non -Defaulting Party shall be entitled, at its option and it its sole discretion, to setoff, withhold and/or counterclaim against such Termination Payment any and all amounts due and owing by the Defaulting Party to the Non -Defaulting Party or any of its Affiliates under any other agreements, instruments or undertakings between the Defaulting Party and the Non -Defaulting Party or any of its Affiliates. 4. The Parties agree to amend Section 22.3(e)(i), under "LIQUIDATION CALCULATION OPTIONS" by deleting the following from the last sentence of Section 22.3(e)(i): AMENDMENT TO WSPP AGREEMENT Page I of 027 "with binding arbitration pursuant to Section 34.2 required for dispute as to the methodology if mediation is unsuccessful." and replacing it with, "and in accordance with this Amendment" 5. GOVERNING LAW: The Parties agree to amend Section 24 by deleting "Utah" in the second line thereof and replacing it with, "New York". 6. The Parties agree that Section 34.2, "BINDING DISPUTE RESOLUTION" is amended by deleting it in its entirety. 7. The Parties agree to delete Section 34.4, "CONFIDENTIALITY" in its entirety and replace it with: Any mediation under this Section 34 shall be conducted on a confidential basis and not disclosed, including any documents or results which shall be considered confidential, unless the Parties otherwise agree or such disclosure is required by law. 8. The Parties agree that Exhibit D Section II "ARBITRATION" is amended by deleting it in its entirety. 9. The Parties agree to delete Exhibit D, Section III "A. Confidentiality" in its entirety and replace it with: A. Confidentiality. Any mediation shall be confidential as provided in Section 34.4 of this Amendment. 10. The Parties agree that all references in the Agreement to binding dispute resolution shall be deleted and shall not be applicable. All disputes between the Parties shall be handled as set forth in Section 34.1 Informal Dispute Resolution. 11. Each Party shall indemnify, defend and hold harmless the other Party from and against any Claims arising from or out of any event, circumstance, act or incident first occurring or existing during the period when control and title to the electric energy is vested in such Party as provided in Section 33.2 of the WSPP Agreement. For purposes hereof, "Claims" means all third party claims or actions, threatened or filed and, whether groundless, false fraudulent or otherwise, that directly or indirectly relate to the subject matter of an indemnity, and the resulting losses, damages, expenses, attorneys' fees and court costs, whether incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or after the termination of this Agreement. AMENDMENT TO WSPP AGREEMENT Page 2 of 3 028 28 Except to the extent modified by the Amendment, the provisions of the Agreement remain the same. IN WITNESS WHEREOF, the authorized representatives of the parties have executed this Amendment in duplicate original copies to supplement and, where applicable, modify and supersede the Base Contract that governs the membership by and between the parties. Panda Gila River, L.P. By Panda Gila River I, LLC Its General Partner By: [COUNTERPARTY] By: ., (date) (date) AMENDMENT TO WSPP AGREEMENT Page 3 of3 029 CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 26, 2004 SUBJECT: ACCEPTANCE OF GRANT OF EASEMENT FROM AZUSA MOBILE HOME PARK LLC RECOMMENDATION It is recommended that the Utility Board/City Council accept Grant of Easement by attached Resolution for the subject location and authorize the City Clerk to file it in the Office of the Los Angeles County Recorder. BACKGROUND Landowner is required to grant an easement to Azusa Light & Water Department for any electric facilities to be installed in his or her property. This grant of easement allows the Utility -owner the right-of-way for operation & maintenance of such facilities. Attached herewith is the grant of easement and its "Exhibit A, B and C" for the electric facilities located within the mobile home park at 812 N. Loren Avenue. This easement was secured and will be used for right-of-way access in the operation & maintenance of underground electric conduits, cables and related substructures installed at this property. FISCAL IMPACT All costs associated with the processing of these grants of easements are borne by the developer. There is no cost to the City. Prepared by: Hien K. Vuong 9 r`". Reso_8121nren.doc Easement -Azusa Mobile Park pdf 030 RESOLUTION NO. A RESOLUTION OF THE UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA ACCEPTING CERTAIN GRANT OF EASEMENT AND DIRECTING THE RECORDING THEREOF. THE UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. That certain Grant of Easement executed by Azusa Mobile Home Park LLC, under date of the 8a` of July. 2004 to the CITY OF AZUSA a Municipal Corporation in Los Angeles County, State of California, its successors and assigns, the right of perpetual easement and right of way solely for the purpose of constructing, laying, maintaining, operating, using, altering, repairing, replacing, inspecting and relocating therein and thereupon and / or removing there from electrical utility lines and related facilities, with any and all connections and devices necessary thereto for the transportation, distribution and /or supply of electricity to the property, in, on, over, under across and along the following described real properties situated in the CITY OF AZUSA, Los Angeles County, State of California, to wit: See Exhibit "A", `B", and "C" attached hereto each Grant of Easement Said Grants of Easements are hereby accepted and the City Clerk is hereby authorized and directed to cause the same to be filed for record in the office of the County Recorder of said County. SECTION 2. The City Clerk shall certify to the adoption of this Resolution. PASSED, APPROVED AND ADOPTED THIS 26th day of July. 2004 Cristina C. Madrid, Mayor RVU- RU Vera Mendoza, City Clerk I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Utility Board/City Council of the City of Azusa at a regular meeting of the Azusa Light & Water Utility Board on the 260' day of July, 2004. AYES: COUNCILMEMBERS: NOES: COUNCILMEM 3ERS: ABSENT: COUNCILMEMBERS: Vera Mendoza, City Clerk 031 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: The City of Azusa THIS DOCUMENT IS FILED AT THE Light and Water Department REQUEST OF THE CITY OF AZUSA 729 North Azusa Avenue PURSUANT TO SECTION 6103 OF P.O. Box 9500 THE GOVERNMENT CODE. NO Azusa, CA 91702 FEE SHALL BE CHARGED THEREFOR. (SPACE ABOVE THIS LINE FOR RECORDER'S USE) GRANT OF PERMANENT EASEMENT FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, AZUSA MOBILE HOME PARK LLC, a California limited liability company ("Grantor"), does hereby grant to the CITY OF AZUSA, CALIFORNIA, a municipal corporation, its successors and assigns, and its and their employees, contractors and agents ("Grantee"), the permanent easement and right-of-way to construct, maintain, operate, use, repair, alter, replace, and remove electrical systems and communications systems consisting of, but not limited to, overhead power lines, poles and fixtures, guy wires, underground conduits, pull boxes, transformers, pads, vaults, cables, conductors and other fixtures and appliances, with the necessary appurtenances, for conveying electric energy to be used for light, heat, power and for transmitting data by electrical means and/or other purposes ("Systems") over, under, in, along, and across the following described parcel of real property situated in the City of Azusa, County of Los Angeles, State of California: As described in Exhibit "A" and Exhibit `B" and depicted in Exhibit "C" attached Hereto and made a part hereof. APN: 8605-015-400 Together with all necessary and convenient means of ingress and egress to and from said right-of-way or strip or parcel of land, free from any and all buildings, equipment, vegetation, combustible materials, or obstructions of any kind, for the purpose of constructing, reconstructing, maintaining, operating, repairing, renewing, replacing, using, altering, or removing in any manner the Systems together with any and all of the purposes hereinbefore mentioned. In the event that there is a change in use, and the trench or transformer pad easement described as Exhibit "B" are no longer needed, then the City agrees to abandon that portion of the easement no longer being used, through a quitclaim deed to property owner. All costs would be at property owner's expense. The pole and pullbox described in Exhibit "A" would remain a City easement in perpetuity. TO HAVE AND TO HOLD the above granted and described premises unto the CITY OF AZUSA, CALIFORNIA, its successors and assigns forever. IN WITNESS HERETO, Grantor has executed this Grant of Permanent Easement this 8`s day of July 2004. AZUSA MOBILE HOME PARK, LLC,. a California limited liability company By: a, Richard W. Bell Its: Manaeer 032 net genii Al 1 _ouRoncF ecKNewILEDGMENT State of County of l UC-D On Z�' ( before me, (� ate_ / e and Tnle of Officer (e.g., 'Jam personally appeared 6. 1�jJ��Jf Yamn/el n1 CnroNe1 Z -Personally known to me ❑ proved to me on the basis of satisfactory evidence to be the person(e)"whose name(s)'islaWsubscribed to the within instrument and acknowledged to me that heishaAhey- executed the same in hls/heFAhelF authorized capacity(iea); and that by hislher4he+r signatureKon the instrument the CYNIMAA ASA person(K, or the entity upon behalf of which the persorA< eemmbdon 4' 1442202 acted, executed the instrument. MWEW - - - - - - - - - /1 LOS No" CoiM WITNESS my hand and official sea almvcaffm—g—�� Si re of Notary Pubric OPTIONAL Though the information below is not required bylaw, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: Signer(s) Other Than Named Above: Capacity(les) Claimed by Signer(s) Signer's Name: LS M IMMM Individual Corporate Officer Title(s): Partner — ❑ Limited ❑ General Attorney -in -Fact Trustee Guardian or Conservator Other: Signer Is Representing: RIGHTTHUMBPRINT OF SIGNER M1 Number of Pages: Signer's Name: ❑ Individual ❑ Corporate Officer Title(s): IMM Partner — ❑ Limited ❑ General Attorney -in -Fact Trustee Guardian or Conservator Other: Signer Is Representing: RIGHT THUMBPRINT OF SIGNER 01995 National Notary Assodegon • 8236 Rennet Ave., P.O. Box 7184 • Canoga Pah CA 91309-7169 Prod. No. 5907 Reomer can iomrrae 1-nuWNM EXHIBIT "A" Part A A portion of land lying in Lot 42 of Subdivision No. 2 of Azusa Land and Water Company, in the City of Azusa, County of Los Angeles, State of California, as per map recorded in Book 43 Page 94 of Miscellaneous Records, in the Office of the County Recorder of said County, said portion lying in Parcel 2 as described in a Deed recorded on April 28, 2004 as Document 04-1048800, O.R., filed in the Office of the County Recorder of said County, said portion further described as follows: Beginning at a found railroad spike at the intersection of a transit line in 81° Street and the centerline of Coney Avenue as shown on a map and filed in Book 120, Pages 74 to 77 of Record of Surveys in the Office of the County Recorder of said County; thence along said transit line South 890 10' 39" West, 303.18 feet to a point at the intersection of said transit line with the produced easterly line of said Deed; thence North 000 34' 19" West 30.00 feet to the southeast corner of land described in said Deed as Parcel 2; thence continuing North 000 34' 19" West 326.23 feet along the easterly line of said Deed to the True Point of Beginning for this description; thence along the following numbered courses and distances: (1) North 000 34' 19" East, 8.00 feet; (2) South B90 25' 41" West, 8.00 feet; (3) South 000 34' 19" East, 2.46 feet, (4) South 890 58' 20" West, 3.60 feet; (5) North 000 01'40" West, 3.62 feet; (6) South 890 58'20" West, 11.42 feet; (7) South 000 00' 00" West, 4.70 feet, to a point designated Point *A* for purposes of this description, and shown on accompanying plat; (8) South 000 00' 00" West, 4.70 feet; (9) North 890 58' 20" East, 11.42 feet; (10) North 000 01' 40" West, 2.79 feet. (11) North 899 58' 20" East, 3.63 feet. (12) South 000 34' 19" East, 2.54 feet; (13) North 89° 25' 41" East, 8.00 feet. Said portion containing 182 square feet, more or less. JUL 0 8 2004 I 034 EXHIBIT "B" Part B A strip of land three feet wide lying in Lot 42 of Subdivision No. 2 of Azusa Land and Water Company, in the City of Azusa, County of Los Angeles, State of California, as per map recorded in Book 43 Page 94 of Miscellaneous Records, in the Office of the County Recorder of said County, said portion lying in Parcel 2 as described in a Deed recorded on April 28, 2004 as Document 041048800, O.R., filed in the Office of the County Recorder of said County, said strip lying 1.5 feet on each side of the following described centerline: Beginning at Point "A" described in Part A; thence along the following numbered courses and distances: (14) North 890 56' 10" West, 98.74 feet; (15) South 010 09' 27" West, 20.90 feet, to a point designated Point "B' for purposes of this description, and shown,on,accompanying plat. The sidelines of said strip to be extended or shortened to terminate at the westerly line of Part A and northerly line of Part C. Said strip containing 359 square feet, more or less. Part C A portion of land lying in Lot 42 of Subdivision No. 2 of Azusa Land and Water Company, in the City of Azusa, County of Los Angeles, State of California, as per map recorded in Book 43 Page 94 of Miscellaneous Records, in the Office of the County Recorder of said County, said portion lying in Parcel 2 as described in a Deed recorded on April 28, 2004 as Document 04-1048800, O.R., filed in the Office of the County Recorder of said County, said portion further described as follows: Beginning at Point "B" described in Part B above; thence along the following numbered courses and distances: (16) North 890 17' 29" West, 5.01 feet; (17) South 000 18' 08" West, 10.44 feet; (18) South 890 17' 29" East, 9.93 feet; (19) North 000 18' 08" East, 10.44 feet; (20) North 890 17' 29" West, 4.92 feet Said portion containing 104 square feet, more or less. JUL 0 8 200 035 EXHIBIT 'C' PAGE 2 OF 2 v I �} 15 17 16 18 — I PART C — VAULT L 20 I I 19 I I I I II I II I II 1.5' POR. I POR, LOT 42 OF SUBDIVISION NO. 2 OF AZUSA LAND & WATER CO. BOOK 43 PAGE 94 I I I 1q C 3' PARCEL 2 PART B — CONDUITS 04-1048800,0,R. I I I II I I II I II I I II I II I a 11�Q I E'LY LINE OF PART A 9 6 PARCEL 2 POWER POLE 10 I 5 CONDUIT 11 a — — — — PULL BOX 12� — 13 N00' 34' 19' W 326.23 1 LEGEND L Q = COURSE & DISTANCE PER EXHIBIT 'A' & 'B' 0 = POINT' ' PER EXHIBIT 'A' & 'B' CITY OF AZUSA LOS ANGELES COUNTY, CA, ---= EASEMENT LINE 1'=20' PARCEL 1 EASEMENT DAVID HOBBS JUN Oro 2004 036 I z W O J EXHIBIT 'C' PAGE 1 OF 2 I ----------=1 PARCEL 1 I T P p B --------------- I F -- I FASEMEN I I (SEE DETAIL I PAGE 2 OF 2) I I I I POR, LOT 42 OF SUBDIVISI❑N NO. 1") 2 OF AZUSA LAND I� & WATER CO. ICY)) BOOK 43 PAGE 94 13 I I PARCEL 2 la 04-1048800,0,R. I' E'LY LINE OF I PARCEL 2 IZ I \ I I I TRANSIT LINE SE. CDR PER R/S BK.120 PARCEL 2 I I I PG,74-77 I S89'100^'39'W Z�JI - 8TH ST - - - - o, S'LY LINE LOT 42 CITY OF AZUSA LOS ANGELES COUNTY, CA. DAVID HOBBS JUN 0 6 2004 1'=70' 303.18 P.D.B. FD RR SPIKE PER R/S BK,120 PG.74-77 r W z O u 037 AZUSA EIGHT t WATER CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 26, 2004 SUBJECT: REQUEST TO AWARD CONTRACT FOR A THIRD PARTY TO PROCESS MAIL -IN UTILITY PAYMENTS (UTILITY LOCKBOX SERVICE) TO R T LAWRENCE CORP. RECOMMENDATION It is recommended that the Azusa Utility Board/City Council award a three-year contract to R T Lawrence Corp. to process mail -in utility payments and authorize the Director of Utilities to sign the Professional Services Agreement. BACKGROUND Processing mail -in payments is a manual back office operation that receives and processes approximately 160,600 mail -in payments each year. The operation costs about $52,000 annually, and in an effort to save money, the Utility Board approved the release of a Request for Proposals (RFP) on April 26, 2004 to solicit proposals from qualified lockbox vendors that perform mail -in payment processing. The RFP requested only vendors that could process our mail -in payments for less than $40,000 per year to respond. Two vendor proposals were received. An evaluation of their processes by Azusa Light & Water staff and the City Treasurer found that the two vendors essentially process payments in the same manner. Staff recommends selecting R T Lawrence Corporation as it is the lower cost bidder by $6,500 per year, based on 160,600 mail -in payments per year. This is also $19,000 less than it costs Azusa Light 8 Water to process mail -in payments annually. Processing mail -in payments is a time consuming function and is the last back office operation that can be outsourced. Given the amount of workload In the morning and the present need for an additional Customer Service Representative, R T Lawrence's services will provide relief and likely help us spend more time answering customer calls and assisting walk- in customers during the morning hours. RT Lawrence's services will also help us to postpone recruitment of an additional CSR for the time being. 038 FISCAL IMPACT Annual cost is not to exceed $33,000 a year for three years plus a one-time set up programming charge of $1,200, however, the annual cost can vary based on the number of mail -in payments. There will be a direct annual savings of $8,000. This has been budgeted for 2004-05in Account 31-40-711-903-6493. Prepared by: Karen Vanca, Assistant Director Customer Care &Solutions 039 CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 26, 2004 SUBJECT: ACCEPTANCE OF EASEMENT FROM HEAVENLY PET RESORT FOR FIRE SERVICE LINE — 1741 W. SAN BERNARDINO AV., WEST COVINA, CA 91790 RECOMMENDATION It is recommended that the easement be accepted. BACKGROUND The Water Division installed a fire service line and backflow prevention device for Heavenly Pet Resort at the request of the property owner. Due to conflicts with the sidewalk, it was necessary to place the backflow prevention device further behind the curb than is normally anticipated. Because the installation of part of the fire service line to the backflow prevention device encroached onto the property of the owner, the property owner complied with the request of the'Water Division for an easement over the encroachment. FISCAL IMPACT Acceptance of these easements has no fiscal impact. Prepared by: Chet F. Anderson, P.E., Assistant Director- Water Operations Attachments: 101 92 Reso Easerre it Water_Easerrent.doc Exhibits.pdf IMI RESOLUTION NO. A RESOLUTION OF THE UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA ACCEPTING CERTAIN GRANT OF EASEMENT AND DIRECTING THE RECORDING THEREOF, THE UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. That certain Grant of Easement executed by Gloria E. Landaverde, under date of the 21st of June. 2004 to the CITY OF AZUSA a Municipal Corporation in Los Angeles County, State of California, its successors and assigns, the right of perpetual easement and right of way solely for the purpose of constructing, laying, maintaining, operating, using, altering, repairing, replacing, inspecting and relocating therein and thereupon and / or removing there from pipeline, water meter, backflow preventer and related facilities, with any and all connections and devices necessary thereto for the service of water to the property, in, on, over, under across and along the following described real property situated in the CITY OF WEST COVINA, Los Angeles County, State of California, to wit: See Exhibit "A" attached hereto a Grant of Easement Said Grant of Easement is hereby accepted and the City Clerk is hereby authorized and directed to cause the same to be filed for record in the office of the County Recorder of said County. SECTION 2. The City Clerk shall certify to the adoption of this Resolution. PASSED, APPROVED AND ADOPTED THIS 26h day of July. 2004 Cristina C. Madrid, Mayor ATTEST: Vera Mendoza, City Clerk I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Utility Board/City Council of the City of Azusa at a regular meeting of the Azusa Light & Water Utility Board on the 26b day of July, 2004. AYES: COUNCILMEMBERS: NOES: COUNCELMEMBERS: ABSENT: COUNCILMEMBERS: Vera Mendoza, City Clerk 041 JUNE 21, 2004 CITY OF AZUSA LIGHT AND WATER DEPARTMENT OFFER OF� WATER DISTRIBUTION EASEMEMNT A{ - sT-NO.8q`'>S-©Vs - © 4 c We hereby certify that we are the owners of the property included within the pespeses and we do hereby, and for our heirs, executors, administartors, successors, and assigns jointly and severally agree that prior to the transfer in fee of any lot/parcel as shown on l�PN a�F3s -ols —04 � that will notify the prospective fee owner in writing that an offer of a water disrtibution easment has been made to the City of Azusa and is an encumberance on the property even though the document has not recorded. Enclosed are executed copies of the proposed easements. GLORIA 042 CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT STATE OF CALIFORNIA jj,�,, )SS Y-) f COUNTY OF LU AVec cS ) On ,) – L.� —fiiA and acknowledgedm me that he/she/they executed the Vsam iu�chis/her/thew authorized caeviden-TIO be —the p$c the Person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. This area for official notarial A. instrument CAPACITY CLAIMED BY SIGNER Though statute does not require the Notary to fill in the data below, doing so may p document. rove invaluable to persons relying on the [ ] INDIVIDUAL [ ] CORPORATE OFFICER(S) [ I PARTNER(S) - I I LDETF,D t I GENERAL [ ] ATTORNEY-IN-FACT [ ] TRUSTEE(S) . [ ]GUARDIAN/CONSERVATOR [ ] OTHER _ SIGNER IS REPRESENTING Name of Person or Eotity TITLE(S) Name of Personor Entity Though the date requested here is not required by law, it could prevent fraudulent reattachment of this form. THIS CERTIFICATE MUST BE ATTACHED TO THE DOCUMENT DESCRIBED BELOW TITLE OR TYPE OF DOCUMENT: b3 jj [4-ke f l ll t" -- \� _ _ NUMBER OF PAGES DATE OF DOCUMENT SIGNER(S) OTHER THAN NAMED ABOVE 43 RECORDING REQII$$TED BY AND WEtEN RECORI)ED MAIL TOt The City of Ansa - THIS DOCUMENT ra FSPD AT TUB Light and Wear Departmwt REQUEST OF THIS CnT of AZUSA 729 North Azusa Avenue PURSUANT TO SBCrION 6103 OF P.O. Box 9500 THE GOVERNMENT COM NO Ansa, CA 91702 FBS SHALL BE CHARGED THEREFOR. (SPACE AEOVSTiM T M MVR RECORDER'S USS) GRANT' OF PERMANENT BASEMENT FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, t GLORIA E • LANDAVERDE ("Grantor"), does hereby grant to the CITY OF AZUSA, CALIFORNIA, a municipal corporation, its successors and assigns, and its and their employees, contractors and agents ("Grantee"), the permanent ton feet easement and right-of-way to construct, maintain, operate, use; repair, alter, replace, and remove at any time and from time to time underground water supply systems and fire protection systems (" Systems'), consisting of, but not limited to, underground conduits, vaults, manholes, handholes and including above -ground enclosures, markers and fire hydrants and other appurtenant fixtures and equipment necessary or useful for distributing water on, over, under, in, along and across the following described parcel of real property situated in. the City of - WST co NA County of Los Angeles, State of California: As described in Exhibit "A" and depicted in Exhibit "B" attached hereto and made a part hereof, Together with all necessary and convenient means of ingress and egress to and from said right- of-way or strip or parcel of land, free from any and all buildings, equipment, vegetation, combustible materials, or obstructions of any kind, for the purpose of constructing; reconstructing, maintaining, operating, repairing, renewing, replacing, using, altering, or removing in any manner the Systems together with any and all of the purposes hereinbefore mentioned. TO HAVE AND TO HOLD the above granted and described premises unto the CITY OF AZUSA, CALIFORNIA, its successors and assigns forever. IN WITNESS HERETO, Grantor has executed this Grant of Permanent Easement this 21st day Of June 2Q.04. By: St nature r1 Its: T. OWMM 044 EASEMENT PREPARED BY. V/LLARRUEL ANDASS=AMS PROVECT ENGINEER: EDUARDO V/LLARRUEL 7340 FLORENCE AVENUE, SUITE 218 DOWNEY, CA 90240 (562) 928-6006 TEL (562) 928-6037 FAX rQ No. CQ2so64 z r,rM LLI 0- .r) -t cr_ Zi SOCAL /NVESTMENTPIiOPER77ES/NC, MCNAEL MCVAL" 1741 W. SAN BERNARDINO AVE WEST COVINA CA 91790 (552) 244-7476 TEL. ENGINEER Pablo B. Sanchez RCE 29664 EXP. 3-31-07 f,a Date APPROVED BY, CITY ENGINEER, R.C.E DATE EASS90VT ADDRESS: 7741 W. SAN BERNARDINO AVE WEST COVINA, CA 91790 i'-50' 1 DRAWN BY.- JV VAMC 123 CHECKED BY PBS 0rrY0FW'ESTC0MVA 11A l CXII,AVT is q f EASEMENT LEGAL DESCRIPTION THE EAST 10 FEET OF THE WEST 12 FEET OF THE SOUTH 22 FEET OVER THAT PORAON OF THE FR9C77ONAL NORTH HALF OF SECTION 16, TOWNSHIP 1 SOUTH, RANGE 10 WEST, SAN B£RNANDINO MERIDIAN, IN THE CITY OF WEST COVINA, IN THE COUNTY OF LOS ANGELES, STATE OF CAUFORNlA, ACCORDING TO THE OFRCIAL PLAT OF THE SURVEY OF S41D LAND ON FILE IN THE BUREAU OF LAND MANAGEMEAff DESCRIBED AS FOLLOWS: BEGINNING AT THE INTERSECTION OF THE NORTHERLY LINE OF COVINA BOULEVARD 66 FEET WIDE Wl1FI THE EASTERLY UNE OF THE LAND DESCRIBED IN THE DEED TO HOWARD M. HADLEY, ET UX., RECORDED ON MARCH 18, 1927 AS INSTRUMENT ND. 30 /N BOOK 6944, PAGE 18 OF OFFICIAL RECORDS OF SAID COU N7Y, SAID INTERSEC710N BEING DISTANT SOUTH 87' EAST 352.47 FEET, MORE OR LESS, MEASURED ALONG S4/D NORTHERLY LINE FROM THE EAST LINE OF AZUZA CANYON ROAD 60 FEET WIDE,• THENCE NORTH 1 °3i ' EAST 360 FEET TO A SOUTHERLY UNE OF THE LAND DESCRIBED IN THE DEED TO BEN RINGER RECORDED ON JULY 27, 1944 AS INSTRUMENT NO. 744, IN BOOK 21121, PAGE 130 OF OMC14L RECORDS OF SAID COUNTY' THENCE ALONG THE BOUNDARY OF SND LAND OF RINGER SOUTH 87' EAST 74 F££f, MORE OR LESS AND SOUTH 131' WEST 360 fEET TO SAID NOR7HERLY UNE OF COWNA BOULEVARD; THENCE NORTH 87' WEST ALONG SAID BOULEVARD 74 FEET, MORE OR.LESS, TO THE POINT OF BEGINNING. 11c� o o. co 66 4 'z LEI $ x.17 IST cJIiE- ENGINEER Pobl B Sanchez RCE 29664 Dote SHEET I OF 2 EXP. 3-31-07 m i C) 1� m AZUSA CANNON AD ELY LINE OF THE LAND DESCRIBED IN THE DEED HOWARD M. HADLEY, ETUX, RECORDED ON MARCH M NO1'06 00'E COUNTY. 1927 AS INSTRUMENT NO. 30, IN BOK4 \ 0 PATO GE18 OF OFFICIAL RECORDS OF SAID Z w o I o Q14 33' SLY LINE OF THE LAND DESCRIBED IN THE DEED otoo N TO BE RINGER RECORDED ON JULY 27, 1944 AS INSTRUMENT NO. 744, IN BOOK 21121, PAGE 130 COUNTY. o vI OF OFFICIAL RECORDS OF SAID Z I ` \ N 01'31 '00" E 360.00' 00'L W o a(P� 0 o o �o 0 w OZE m w EASEMENT NO 1'31 00 E 360.00' 00 re o'zz n 33' ro\ I o 1 x I s\ o o a �c< _ m m o N o o C) 1� CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT STATE OFC IFORNIA COUNTY OF��e 1 P )SS Oa U Vl f '2 ) Peisona y app before me, . personally known to me (or prove m me the �� P and ackmwled ed m asxs o saps cm moi' B me that he/she/they executed the, ry evs ence N e e person s w ose name s We persons) or the entity upon behalf of which We same m mer/theta authorized capacf ) y � he scn u e wt msuument persons) acted, exewted the ins ty6es and that b his/her/Weir signaNre(s) on the instrument mment. �T �Y nd official se GEORGE R REYES Si we NOTARY Ptlall -CA6 FOMMD Q LOSANGEOCg1Nry Coin. E3q, Nay 17.1006 This area for official notarial seal. CAPACITY CLAUKED BY SIGNER Though statute does not require document. the Notary to fill in the data below, doing so may Prove invaluable to persons relying on the ] INDIVIDUAL I ] CORPORATE OFFICER(S) TfrLE(S) I ] PARTNER(S) - [ 1 LIMITED I ] GENERAL I ] ATTORNEY-IN-FACT I ] TRUSME(S) / I ]GUARDIAN/CONSERVATOR I ] OTHER SIGNER IS REPRESENTING: Name of Person or Endry Name of Person or Entity Though the date requested bere is not required by law, it Could prevent fraudulent reattachment of this form. THIS CERTIFICATE MUSTT BE ATTACHED TO THE DOCUMENT DESCRIBED BELOW TITLE OR TYPE OF DOCUMENT: l /y� j� f J _ NUMBER OF PAGES 4 ���` Ems- ... �y DATE OF DOCUMENT SIGNER(S) OTHER THAN NAMED ABOVE MM CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 26, 2004 SUBJECT: AWARD OF CONTRACT FOR PROJECT W-195, DESTRUCTION OF THREE WATER WELLS RECOMMENDATION It is recommended that the Utility Board/City Council approve the award of contract to Beylik Drilling, Inc. for the performance of Project W-195, Destruction of Three Water Wells. BACKGROUND Solicitation of proposals for the destruction of three wells was approved at the October 27, 2003 Utility Board meeting for the following locations: 209 Grandview Drive, Azusa; 16706 East Cypress Street, Covina; and 16106 East San Bernardino Road, Covina. During the proposal period for this project, two additional wells were discovered at the Cypress Street site, and so proposals for the additional wells were requested. Because of the specialized nature of this work, proposals were solicited directly from four well drillers. However, one of the drillers solicited, So Cal Pump & Well, declined to offer a proposal for this project. The Water Division accepted proposals from Layne Christensen, Rottman Drilling, and Beylik Drilling on July 15, 2004. The prices submitted are $130,020.00 from Beylik Drilling; $133,308.00 from Layne Christensen Company; and $156,685.10 from Rottman Drilling Company. FISCAL IMPACT A budget item for this project was approved by the City Council on July 19, 2004, as part of the FY 2004-2005 Capital Improvement Program (CIP) budget, however, a CIP project number has not been issued as of the writing of this report. Prepared by: Chet Anderson, Assistant Director - Water Operations M • CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 26, 2004 SUBJECT: REJECT THE SOLE BID RECEIVED FOR PROJECT LD 2004-1 - FURNISH AND INSTALL UNDERGROUND ELECTRIC STREET LIGHT SYSTEM AT AREA BOUNDED BY 1 1 TH, 12TH, ORANGE, AND ANGELENO. RECOMMENDATION It is recommended that the Utility Board/City Council reject the only bid for Project LD 2004-1 and authorize the City Clerk's office to re -advertise project for public bid. BACKGROUND On June 28, 2004, the Azusa Utility Board approved the plans and specification for Project LD2004-1 and authorized City Clerk's office to advertise this project for public bid. On July 19, 2004, bid opening was held at City Clerk's office. There was only one bid submitted by C. T. & F. incorporated in the amount of Two Hundred Eighty Seven Thousand Five Hundred Forty Dollars ($287,540.00). Staff has reviewed the sole bid submitted by C.T. l;_ F., Incorporated. Although the bid meets the bid requirements and specifications, staff recommends rejection of the bid because the amount is higher than the Engineer's estimate, and without additional bids it is difficult to gauge whether the bid is competitive. AL&W reserved the right to accept or reject any or all bids submitted and waive any formalities in order to best meet the interest of the City. Delay in construction for another month will not pose an operational problem with the replacement of the lighting system. FISCAL IMPACT Project costs will be reported at time of bid award. This project in the Capital Improvement Project (CIP) budget as project #73-001-F. Prepared by: Hien K. Vuong 051 AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 26, 2004 SUBJECT: PROFESSIONAL SERVICES CONTRACT FOR PREPARATION OF COMPLETE ELECTRIC DISTRIBUTION SYSTEM STUDY RECOMMENDATION It is recommended that the Azusa Utility Board/City Council: a) Award Professional Services Contract to RW Beck for the preparation of an Electric Distribution System Study, in the amount not -to -exceed Seventy Five Thousand, Eight Hundred Seventy Three Dollars ($75,873). b) Authorize the City Manager to sign the Agreement with RW Beck after favorable review by City Attorney. BACKGROUND Azusa Light & Water (AL8.W) regularly prepares an Electric Distribution System Study as part of it's mission to provide safe, low cost and reliable electricity in the City of Azusa. An independent electric system study is used to assess the condition of the electric system and assist in long term planning of major capital projects. The study is also used to identify short range improvement projects necessary to sustain the efficient operation of the electric distribution system over a very long period of time. Past electric system studies were performed in 1971, 1987, 1993 and 1997, and resulted in the completion of significant improvement projects, namely the revamping of Azusa Substation's 12kV lines, upgrade of power transformers at Azusa Substation, and most recently, the construction of the Kirkwall Electric Substation. Since the last study was conducted in 1997, there were several electric projects and numerous customers added to the electric system. Moreover, after building the new Kirkwall Substation and subsequent initial re -configuration of existing electric circuits, a system study is now due and warranted to determine the most efficient way to operate the two substations and twenty distribution circuits. 052 Staff solicited proposals from consulting companies to perform a complete electric distribution system study for ALB.W. The following proposals and fee amounts were received in response to the RFP/Q solicitation: Company: Fees: 1) RW Beck $75,873 2) Black & Veatch $82,500 3) Navigant $93,434 Staff have reviewed the submitted proposals, determined that the lowest fee proposal submitted by RW Beck meets the requirements and is in the best interest of ALB.W. FISCAL IMPACT Preparation of an electric distribution system study is budgeted this fiscal year in the Electric Operations Operating Budget and adequate funds are available to cover the contract cost of $75,873. Prepared by: F. Langit Jr., PE Senior Electrical Engineer 053 CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES ^ DATE: JULY 26, 2004 SUBJECT: REJECTION OF BIDS FOR RENOVATION OF THE ELECTRIC YARD AT 1020 W. TENTH STREET, AND AUTHORIZE STAFF TO RE- BID THE PROJECT RECOMMENDATION It is recommended that the Utility Board/City Council reject the bid from ABEAM Construction, Inc., in the amount of $1,518,000 for the renovations to the electric yard at 1020 W. Tenth Street and authorize staff to re -bid the project. BACKGROUND On July 8, 2004, with the approval of Utility Board/City Council, the Light & Water Department held a bid opening at City Clerk Office for the Electric Yard Renovation Project No 73001 G. One bid was received from ABEAM Construction in the amount of $1,518,000; this bid is substantially higher than the existing budget of $ 700,000. While it was anticipated that bids would exceed the budget for the project, it was not expected to more than double the amount. Staff recommends that the project be re -bid in an effort to get at least more one bid in establishing the fair market price for this project. Staff will review the project with our architect Mr. Henry Woo, in an effort to identify some cost saving measures, prior to re- bidding the project. FISCAL IMPACT The fiscal impact to re -advertise the project in the San Gabriel Tribune will be minimal. Prepared by: D. Ramirez, Assistant Director - Electric Operations 050 qlw . CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 26, 2004 SUBJECT: SALE OF WATER PROPERTY AT 16706 EAST CYPRESS STREET IN COVINA RECOMMENDATION It is recommended that the Azusa Utility Board/City Council adopt the attached resolution: (1) finding that the public interest and necessity require the sale of public property; (2) declaring its intent to sell the residential property located at 16706 East Cypress Street in an unincorporated area of Covina; and (3) setting a public hearing date for September 7, 2004, to consider public protests of the sale of this property pursuant to California Government Code 37421. BACKGROUND The property owned by the Utility at 16706 East Cypress Street was used in the past as a water well site. The wells have not been operational for a number of years and the Utility is presently seeking bids to seal off the wells. Since this is a residentially zone parcel with an existing home situated on the lot, it makes sense to sell the parcel as such and to use the proceeds for other public purpose projects. In order to sell the property, the Utility Board/City Council is advised to adopt the attached resolution which makes a public declaration of intent to sell and invites protests. Protests may be made in writing or at the public hearing, which is scheduled for September 7, 2004, pursuant to this resolution. Aftei the City Council considers the protests, it may direct staff to sell the property by a 4/5 vote. FISCAL IMPACT According to an appraisal report prepared in June 2004, the property's value is $286,000. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities 99 Cypress Property Description.pdf 009 RESOLUTION NO. _ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA FINDING THAT THE PUBLIC INTEREST AND NECESSITY REQUIRE_ THE SALE OF SURPLUS PROPERTY, DECLARING ITS INTENT TO SELL RESIDENTIAL PROPERTY LOCATED AT 16706 EAST CYPRESS STREET (ASSESSOR PARCEL NO. 8419-022-270) AND SETTING A HEARING DATE FOR CONSIDERATION OF PROTESTS. WHEREAS, California Government Code Section 37421 provides that when the legislative body of a city finds that the public interest and convenience require the sale of public buildings and sites dedicated to public use, it may adopt a resolution of its finding and intention to sell such property; and WHEREAS, the City of Azusa ("City") owns a surplus piece of property containing approximately 11,43 7 square feet, generally located at 16706 East Cypress Street, Covina, California; and WHEREAS, the City wishes to declare its intent to sell this surplus piece of property, fix a time for the hearing of any protests to the sale and fix the time for final action; and WHEREAS, all other legal prerequisites to the adoption of this Resolution have occurred. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF AZUSA: SECTION 1. The City Council of the City of Azusa hereby finds that the public convenience and necessity require the sale of surplus public property generally located at 16706 East Cypress Street, Covina, California (Assessor Parcel No. 8419- 022-270), more particularly described in Exhibit "A" attached hereto and made a part of this resolution. The factors demonstrating that the public convenience and necessity require the sale include: 1. The surplus property contains approximately 11,437 square feet of residential zoned property outside of the City limits which can no longer be used as a water well site. A SECTION 2. The City Council of the City of Azusa hereby declares its intent to sell the property identified in the attached Exhibit "A" and fixes September 7, 2004 at 6:30 p.m. as the time for hearing any protests to the proposed sale and as the final action date. The hearing will be held in the City of Azusa City Council Chambers located at 213 East Foothill Avenue, California. SECTION 3. City staff are hereby directed to publish this resolution at least once in a daily newspaper prior to the hearing of any protests and to post this resolution for not less than 10 days in at least three conspicuous places upon the property to be sold. SECTION 4. The City Council hereby finds and determines that it can be seen with certainty that there is no possibility that selling this surplus piece of property will have a significant adverse effect on the environment. Thus, the adoption of this resolution of intent is exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the CEQA Guidelines. Staff is directed to file a Notice of Exemption with the County Clerk's Office within five (5) working days of adoption. SECTION 5. Effective Date. This Resolution shall become effective upon its adoption. PASSED, APPROVED AND ADOPTED this day of 2004. Cristina Cruz -Madrid Mayor ATTEST: Vera Mendoza City Clerk APPROVED AS TO FORM: City Attorney 011 EXHIBIT A DESCRIPTION OF SUBJECT PROPERTY 16706 East Cypress Street, Covina, California Assessor Parcel No. 8419-022-270 012 AZUSA VALLEY WATER COMPANY 16706 EAST CYPRESS STREET COVINA, CALIFORNIA SUBJECT PROPERTY GENERAL: We were not provided with a title report for the subject property in the course of this evaluation. It is from the available Public Records, from information provided us by the Azusa Light and Water, and our property inspection, which took place on June 7, 2004, where the ownership, legal description and site descriptions contained herein were obtained. The photographs contained herein were taken at the time of our property inspection. OWNER APPARENT/APPRAISED OWNER/ASSESSED OWNER: Azusa Valley Water Company c/o Mr. Joseph Hsu Director of Utilities Azusa Light and Water P. O. Box 9500 Azusa, California 91702-9500 (626) 812-5219 SALES HISTORY: The Los Angeles County Public Records do not indicate the last transfer of this property, but we have been led to believe that the Azusa Valley Water Company, which pre -dates the Azusa Light and Water has owned this property for several decades. We are not aware of any other transactions ... past, present or pending, regarding the subject property. PROPERTY LOCATION: 16706 East Cypress Street Covina, California 91722-2426 The subject property is located on the south side of Cypress Street, 221.62 feet west of Aspan Avenue, in Los Angeles County territory just to the west of the City of Covina western boundary, in the east central part of the San Gabriel Valley area of the County of Los Angeles, State of California. Thomas Brother Guide: Page 598; Grid H4 (Los Angeles County - 2004) Census Tract No.: 4057.00 (Los Angeles County SMSA - 2000) 18 BOZNANSKI & COMPANY 013 AZUSA VALLEY WATER COMPANY 16706 EAST CYPRESS STREET COVINA, CALIFORNIA LEGAL DESCRIPTION: The subject property is situated in the State of California, County of Los Angeles, and is described as follows: Official plat of said land filed in the District Land Office April 21,• 1877 and shown on map riled in Book 46, Page 15 of Record of Surveys, in the office of the Recorder of the County of Los Angeles, and further described as Parcels 2 and 3 in Deed to Azusa Valley Water Company, recorded as Document No. 1271, on April 14, 1958 in Book 970, Page 984 of Official Records, in the office of the Recorder of the County of Los Angeles. ASSESSOR'S DATA (2003-04): Assessor's Parcel No.: Assessed Values (Full Value): 1 Tax Rate Area: IV.%MOM Taxes: PHYSICAL DESCRIPTION - LAND: Shape: Dimensions: 8419-022-270 Land: $115,218 Improvements: $ 40,325 Total: $155,543 12033 $1.062471 per $100 Assessed Value (2003-04) $242.92 (2003-04) These taxes are reflective of the public agency ownership of this property and are not open market taxes. Rectangular (See attached Assessor's Map and Plat Map for further definition) 110.5 foot net frontage on Cypress Street 103.5 foot uniform depth along east and west property lines 110.5 feet along south property line. 19 BOZNANSKI & COMPANY 014 AZUSA VALLEY WATER COMPANY 16706 EAST CYPRESS STREET COVINA, CALIFORNIA PHYSICAL DESCRIPTION — LAND (Cont.): Area Content: 11,437s or 02626+/- acres (This area and dimensions are as presented on the Azusa Valley Water Company Plat Map which follows) Topography: The subject property is flat and level, the normal amount above street grade and at the grade of adjacent parcels. Soils: We were not provided with a soils report in the course of this investigation. We assume that the site's soil conditions are adequate to allow for full development of the subject site to its highest and best use. It should be noted that the immediately adjacent parcels have been fully developed for many decades, with no noticeable soils problems. However, a soils report would have to be reviewed in order to confirm this. EPA Superfund (CERCLIS): No Hazardous Substances: Unless otherwise stated in this report, the existence of hazardous substances, including without limitation asbestos, polychlorinated biphenyl's, petroleum leakage, or agricultural chemicals, which may or may not be present on the property, or other environmental conditions, were not called to the attention of nor did the appraiser become aware of such during the appraiser's inspection. The appraiser has no knowledge of the existence of such materials nor in the property unless otherwise stated. The appraiser, however, is not ' qualified to test such substances or conditions. If the presence of such substances, such as asbestos, urea formaldehyde foam insulation, or other hazardous substances or 20 BOZNANSKI & COMPANY 015 AZUSA VALLEY WATER COMPANY 16706 EAST CYPRESS STREET COVINA, CALIFORNIA PHYSICAL DESCRIPTION — LAND (Cont.): environmental conditions, may affect the value of the property, the value estimated is predicated on the assumption that there is no such condition on or in the property or in such proximity thereto that it would cause a loss in value. No responsibility is assumed for any such conditions, nor for any expertise or engineering knowledge required to discover them. Access: The subject property has one vehicular access driveway from Cypress Street in the middle of its site. Utilities: We have been led to believe that the subject property has all normal utilities, which are available in the adjacent public thoroughfares. Verification is contingent upon review with the appropriate government agencies. Easements: As -we have not received a title report, we are not aware of any easements along or across the subject property that would inhibit its highest and best use. A visual inspection of the site does not reveal such easements. Offsite Improvements: The subject property has fully asphalt paved street, concrete curbs and gutters immediately adjacent. However, there are no sidewalks here. Flood Hazard: The Federal Emergency Management Agency (FEMA), through the National Flood Insurance Program, publishes flood insurance rates maps. The subject property is located in Flood Zone C, which represents an area determined to be outside a 100 year flood zone. This is in accordance with Community -Panel Number 0650430860 B, dated July 6, 1988. 21 BOZNANSKI & COMPANY 016 AZUSA VALLEY WATER COMPANY 16706 EAST CYPRESS STREET COVINA, CALIFORNIA PHYSICAL DESCRIPTION — LAND (Cont.): Earthquake Hazard: The subject property, as well as the entire city of Covina, is not located within and is affected by an Earthquake Fault Zone as specified by the Alquist-Priolo Earthquake Fault Zoning Act. However, verification of specific faults affecting the subject property await official notification. PHYSICAL DESCRIPTION - IMPROVEMENTS: The subject property is improved with a single -story single-family residence originally constructed in 1919, with a rear addition that we estimate was completed in the mid -1950's. Including the addition, we estimate the subject improvements have an area of 1,570 sf. The building is oriented to the easterly side of the site as depicted on the Site Plan which follows. The home has an overall depth of 68 feet and a maximum with of 27.5 feet. It is set in a rectangular pattern, with the rear addition being a rectangular addition with a width of 12.5 feet. The home has three bedrooms and two bathrooms along with a living room, kitchen and family room. The original portion of the home is built on a raised perimeter foundation, with the rear addition being a concrete slab at grade. The home is of wood frame and wood siding construction with stucco siding on the addition. The home has a low pitched hip roof with asphalt shingle cover. The front of the home has a raised porch that is covered with a permanent roof that has an area of 98+ sf. The interior flooring is carpet, linoleum or vinyl tile over wood or concrete. Counter tops are in poor condition. The ceiling shows signs of leakage. The kitchen sink is in poor condition. There are no other kitchen facilities here. The windows and doors are wood framed. Built-in cabinets are inexpensive. The home and its site is in fair to poor condition and appears to need a significant amount of internal and external maintenance to bring it up to a fully habitable condition. On the west side of the site.are two metal clad buildings with metal hip roofs, a front one that encompasses 598 sf and the rear one that has 595 sf for a total of 1,193 s£ They are connected in between by a metal canopy carport area that contains 236 sf that has one open side. These buildings are built on a concrete slab foundation. We did not enter into these structures, but were told that they were used as part of the water well that apparently still exists on this site, but which is to be formally abandoned. 22 BOZNANSKI & COMPANY 017 AZUSA VALLEY WATER COMPANY 16706 EAST CYPRESS STREET COVINA, CALIFORNIA PHYSICAL DESCRIPTION — IMPROVEMENTS (Cont.): The entire site (430+ 10 is encompassed by a chain link fence, with a 16+ foot wide chain link sliding gate. Between the water facility structures and the single family residence is an asphalt paved parking lot that is in poor condition, showing cracks with weeds growing through. The rear most part of the property has a lawn cover that is not maintained along with heavy shrubs. Likewise, there is a hedge row of shrubs immediately in front of the residence between the residence and street right-of-way. These hedges rise to a height of approximately •10 feet. The site like the home is in need of maintenance. ZONING: Al -6000 (Light Agriculture) as per County of Los Angeles Zoning Ordinance. This zone permits single family residences on lots with a minimum site size of 6,000 s£ It was originally part of a larger agriculture land use that is no longer existent in this area. It limits building height to 35 feet and requires two covered parking spaces per residence. Minimum site area in this zone'is 5,000 sf. Properties developed with single family residences are subject to the same requirements as the RI zone. It calls for a front yard setback of 20 feet, a rear yard setback of 15 feet, side yards of 5 feet. PRESENT USE AND OCCUPANCY: At the time of our property inspection the subject property was not occupied and it appears that any most recent occupancy was very casual, not reflective of a homestead. HIGHEST AND BEST USE: Definition Highest and best use is defined as that reasonable and probable use that will support the highest present value, as presently defined, as of the date of the appraisal. Alternately, it is that use, from among reasonably probable and legal alternate uses found to be physically possible, appropriately supportive, financially feasible, and which results in highest land value. 23 BOZNANSKI & COMPANY 0 p AZUSA VALLEY WATER COMPANY 16706 EAST CYPRESS STREET COVINA, CALIFORNIA HIGHEST AND BEST USE (Cont.): Physically Possible The subject site, with an area of 11,437 sf in a rectangular pattern is readily available for development. According to the County Zone, which calls for a minimum site size of 6,000 sf, although there are some adjacent properties that are slightly smaller than that, with proper representation, we believe that this property could be developed with two separate single family residences. The site is unusual in that it does not have a sidewalk but it shares those characteristics with two adjacent properties. This site is a pre-existing non -conforming site in that regard and we would argue that it should be maintained in this condition in perpetuity. Legally Permissible The subject is located within the Al -6000 zone, which permits single family residential uses. There are no other uses, either commercial or agricultural in this immediate area. Financially Feasible Pending review of a title report and verification of the availability of utilities, we believe that this site is feasible to be developed with two single family residences. However, this process could take a considerable period of time to obtain the proper permits. Highest and Best Use - "As Though Vacant Land" We conclude that the subject property as vacant land has its highest and best use for residential purposes. Highest and Best Use — "As Improved" We have been told that the existing metal buildings on the site are to be removed. The older residence, which dates back more than 80 years, is nominally considered to be contributory to the highest and best use of this site. 24 BOZNANSIQ & COMPANY O1b AG Uw56a AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES,1� DATE: JULY 26 2004 SUBJECT: APPROVAL OF FUND TRANSFER FROM PUBLIC BENEFIT CHARGE (PBC) FUND TO WHOLESALE POWER REVENUE ACCOUNT RECOMMENDATION It is recommended that the Utility Board/City Council approve the fund transfer in the amount $60,000 from PBC Fund to wholesale power revenue account to mitigate the above market cost of renewable resource procurement. It is further recommended that the Utility Board/City Council approve an appropriation increase of $60,000 in capacity and energy account of the Light Fund to pay for the above market cost of renewable resource procurement. BACKGROUND In May 2003, the Utility Board adopted a Renewable Portfolio Standard (RPS) for the electric utility to comply with renewable resource legislation SB 1078. It was understood that the procurement of renewable resources may cause the electric utility to pay more for power that would otherwise be available in the wholesale market. The adopted RPS limited the impact to retail rates of such additional costs to no more than 5% and authorized a partial funding from PBC Fund in the amount of $60,000 to mitigate the above market costs of renewable resource procurement if necessary. In September 2003, the City entered into a 20 -year contract to procure windpower from Highwinds Project at a price of $53.5/MWh. The power delivery under this contract commenced on September 1, 2003. At the end of FY 03-04, staff determined that the above market cost incurred under the contract is $134,171 as outlined in Attachment 1 and thus the cost mitigation from the PBC Fund is warranted. 0-514 FISCAL IMPACT The above market cost of renewable resource procurement is mitigated by $60,000 from PBC Fund transfer to wholesale power revenue account. The remaining cost of $74,171 is funded through retail rate increase approved in June 2003 and remains at approximately 0.3% of retail revenue, thus within the 5% threshold established in the RPS. Prepared by: Bob Tang, Assistant Director of Resource Management Attachment Attachrrent 1. pdf 055 Attachment 1 Renewable Energy Subsid MONTH ABOVE / (BELOW) MKT Sep -03 $13,631.20 Oct -03 $16,818.56 Nov -03 $22,470.88 Dec -03 $13,911.52 Jan -04 $11,733.44 Feb -04 $13,241.92 Mar -04 $17,335.20 Apr -04 $12,104.64 May -04 $4,894.88 Jun -04 $8,028.80 TOTAL $134,171.04 L AZUSA GXl A WA,FII AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 26 2004 SUBJECT: APPROVAL OF THE SAN JUAN REPLACEMENT POWER COST RECOVERY MECHANISM RECOMMENDATION It is recommended that the Utility Board/City Council approve the San Juan replacement power cost recovery mechanism described below, and the resolution for the applicable rate schedule to Light and Water Rules and Regulations incorporating such a mechanism. It is further recommended that the Utility Board/City Council direct the staff to implement the San Juan power cost recovery mechanism commencing October 1, 2004. BACKGROUND The City's San Juan Unit 3 resource is its single largest resource providing up to 75% of City's annual energy requirement. Due to the sunk cost nature of San Juan resource, the cost incurred in procuring replacement power when the unit is derated, or unavailable due to scheduled or forced outages is an addition to the power resource cost. Normally, the electric utility budgets additional funds in the budget process to account for the forecast replacement power cost in the ensuing fiscal year, but the precise forecast is becoming increasingly challenging due to (1) more frequent forced outage episodes of San Juan, and (2) increasingly volatile and upward trended spot market prices when the purchases of replacement power take place. Thus, staff hereby proposes a rate adjustment mechanism by utilizing Fuel Cost Adjustment (FCA) provision in the e)dsting electric schedule that would ensure more timely and prudent recovery of all power procurement costs taking into account the variable nature of San Juan cost structure. The following describes the proposed rate adjustment mechanism via FCA. 057 RATE ADJUSTMENT MECHANISM: Step 1: Establishment of Base San Juan Replacement Power Cost Budget It is recognized that San Juan unit 3 is a unit contingent resource, thus it is reasonable to assume that the unit will from time to time have scheduled and forced outage episodes and the City would incur certain amount of replacement power costs during such times. In establishing the base San Juan replacement power cost budget, we will assume a unit availability factor of 85% on a monthly basis and an average replacement power cost of $40/MWh. The choice of 85% availability and $40/MWh is predicated upon the economic consideration when the City first purchased the unit output, at that time it was assumed that unit would have 85% annual availability factor and the market price for power would be close to $40/MWh. The existing electric rate structure is to large extent set based on these assumptions. Step 2: Calculation of Actual San Juan Replacement Power Cost As the San Juan unit operates and the replacement power cost is incurred, the actual cost incurred in replacing San Juan resource will be tracked and totaled each month. Step 3: Comparison of the Cost Difference Once the base replacement power cost and the actual replacement power cost are calculated, a comparison will be done on a monthly basis for cost recovery considerations. Also, any San Juan outage insurance premium will be recovered on an equal 12 -month installment basis, and any San Juan insurance coverage payout will be appropriately credited. Step 4: Quarterly Cost Recovery Mechanism On a quarterly basis, the accumulated cost difference taking into account San Juan insurance coverage adjustments will be computed for potential recovery or crediting. To avoid de minimums or excessive adjustments, it is suggested that a bandwidth be used in establishing the adjustments. Initially, it is proposed the following criteria be used in establishing the bandwidth: a. If the quarterly accumulated cost difference (either a credit or a charge) is less than $100,000, then such accumulated cost difference will be carried over to the immediately succeeding quarter for crediting or recovery. No adjustment will be made in the immediately succeeding quarter. b. if the quarterly accumulated cost difference (either a credit or a charge) is more than $750,000, then only $750,000 in either credit or charge will be assessed to the immediately succeeding quarter in the form of "fuel cost adjustment" as computed by the following formula: Fuel Cost Adjustment = $750,000/Forecast Retail Sales in MWhs in the immediate succeeding quarter. AM Q Any amount above $750,000 that remains to be credited or recovered will be carried over to the succeeding quarter for crediting or recovery. The $750,000 threshold is chosen to approximately equate to a 10% adjustment of the current base retail rate, i.e., the adjustment to the base retail rate is to remain within 10% to avoid excessive rate adjustment. c. If the quarterly accumulated cost difference (either a credit or a charge) is between $100,000 and $750,000, then the entire accumulated cost difference in either credit or charge will be assessed to the immediately succeeding quarter in the form of "fuel cost adjustment' as computed by the following formula: Fuel Cost Adjustment = Accumulated cost difference/Forecast Retail Sales in MWhs in the Immediate succeeding quarter. Further the Utility Board may establish from time to time, at the recommendation of the Director of Utilities, a minimum threshold of carried over credits to minimize the prospective fluctuations in the fuel cost adjustment. The application of the above adjustment mechanism is illustrated in the attachment 1. The applicable resolution for rate schedule to Light and Water Rules and Regulations incorporating such a mechanism is in attachment 2. FISCAL IMPACT The actual fiscal impact the proposed adjustment mechanism will depend on the actual San Juan availability throughout the fiscal year and the spot market price for power to replace San Juan power. Had the adjustment mechanism been in place during FY 03-04, the electric utility would have assessed approximately $680,000 in FCA charges to retail customers or about 2.6% increase in retail revenues. Prepared by: Bob Tang, Assistant Director of Resource Management Attachments: , Attachment l.pdf Attachrrent Change.doc 2--Resolution.doc 059 Attachment 2 -Rule RPC Pres. ppt Change.doc 059 ATTACHMENT 1 The application of the proposed adjustment mechanism is illustrated by the following examples: Example l: The actual San Juan output in M Whs and the actual incurred San Juan replacement power cost were used for FY 03-04. a. At the end of the first quarter of FY 03-04, the accumulated cost difference taking into account San Juan insurance coverage adjustment is a charge of $18,983, thus no adjustment is made. b.At the end of the second quarter of FY 03-04, the accumulated cost difference taking into account San Juan insurance coverage adjustment is a charge of $406,988 and combined with the previous quarter's charge of $18,983 yields a charge $425,971 to be recovered. The quarterly adjustment is computed as: $425,971 /Forecast retail sales in MWhs in the immediate succeeding quarter = $425,971/ (19,905+18,856+21,338) = $7.10/MWh or 0.71 cents/kWh in fuel cost adjustment charge. c. At the end of the third quarter of FY 03-04, the accumulated cost difference taking into account San Juan insurance coverage adjustment is a credit of $50,679. Thus no adjustment is made. d. At the end of the fourth quarter of FY 03-04, the accumulated cost difference taking into account San Juan insurance coverage adjustment is a charge of $533,037 and combined with the previous quarter's credit of $50,679 yields 0.62 cents/kWh in fuel cost adjustment charge. The above recovery and crediting mechanism will yield a recovery of $908,329 above the base San Juan replacement power cost of $1,572,336, of which $230,000 is for the recovery of San Juan insurance premium. Example 2: It is assumed that San Juan has very high availability factor of 95% and market price of $50/MWh for replacement power. The adjustment mechanism will yield credits of 0.27/kWh, 0.29/kWh, 0.26/kWh, and 0.22/kWh in the applicable quarters for a total credit of $687,196 for the twelve month period. ME Example 3: It is assumed that San Juan has very low availability factor of 75% and high market price of $65/M Wh for replacement power. The adjustment mechanism will yield charges of LI5/kWh, 0.98/kWh, 0.24/kVA, and 0.20/kWh in the applicable quarters for a total charge of $1,623,084 for the twelve month period, with $1,292,990 of insurance payout offsetting the overall total charge. 061 Example 1 San Juan Replacement Energy Cosi Reoovary Spreadsheet Total 208.266 $2.250.665 262.056 53,790 20.53% 222.748 39,308 15.00% $1.572,336 5876.329 $230.000 $0 3908.329 3908.329 26,151 26,700 24.356 0,62 0.62 0.62 Jul Aug Sep Oe Nav Dec Jan Feb Mar Apr May Jun Actual SJ Output 17.840 20.572 19,098 15,415 17,533 14,008 18,829 20,862 18,798 1,796 21.413 21.302 Actual SJ Replan Energy Cori $266,702 $43.943 $39,494 $260,677 $137,151 5341,100 $146,432 $765 $137,744 $809.033 $43.572 $16,052 Ma.mum Output 22,320 21.575 20.080 22,320 21,600 22,320 22,320 20.880 22.320 21.600 22.320 21,600 Unavalleble SJ Output 4,480 1,004 982 6,905 4,067 8,312 3.491 18 3.522 19.804 907 298 %Outage Rate 20.07% 4.65% 4.70% 30.94% 1B.M% 37.24% 15.64% 0.09% 15.78% 9169% 4.06% 1.38% Ban SJ Output Q 85% 16.972 18.340 17,748 18,972 18.360 18,972 18.972 17.746 18,972 18,360 18.972 18.360 Ub afthfc SJ Output 3.348 3236 3,132 3,348 3.240 3,348 3.346 3,132 3.348 3,240 3.348 3,240 %Oal9ge Rate 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% Ban Si Replea Energy Cast@340IMWh $133,920 $129.456 $125.280 5133,920 $129,600 $133.920 $133,920 $125.280 S133,920 $129,600 $133,920 $129,600 Actual- Base SJ Replac Enepy Cost $132,782 -$85,513 •385,786 $134,757 $7,551 $207,160 $12.512 4124,515 $3.824 $679.433 -$00.348 -$113.548 San Juan lnlurance Premium Recovery $19.157 $19,167 $19,167 $19,167 $19,167 $19,167 $19,167 $19,187 $19,167 $19,167 $19.167 $19.167 San Juan baumnce Payout $0 30 $0 So so $0 $0 $0 $0 so $0 50 CuawleBva Duadi DiRerenca(COD) $18,983 $406,988 450.679 S533,037 I!l(LQDI'E100.000, then sdjustme i-0 I!I(COD)1>3750.000, then adjustment=x$760,000 0 5425,971 80 3482.350 or eln adjustment = COD Retail Sales (1 26,151 26,700 24.356 23.374 19.400 20.200 19.905 18.856 21.336 20.500 22,485 22,407 Adjustment(eants/kWh) 0.71 0.71 0.71 Q00 0.00 0.00 Total 208.266 $2.250.665 262.056 53,790 20.53% 222.748 39,308 15.00% $1.572,336 5876.329 $230.000 $0 3908.329 3908.329 26,151 26,700 24.356 0,62 0.62 0.62 Example 2 San Juan Replacement Energy Cast Recovery Spreadsheet Total 248,953 $655,140 262.056 13.103 5.00% 222,748 39.308 15.00% 51.572.336 -$917.196 $230,000 so -3687.198 -3687.196 26,151 26,700 24,356 x,22 -0.22 -0.22 11 Jut Aug Sep Oct Nov Dec Jan Feb Mar Apt May Jun Actual SJ Output 21,204 20.497 19,836 21,204 20.520 21,204 21.204 19.836 21204 20,520 21,204 20,520 Actual SJ Replac Energy Cos( $55.800 $53.940 $52,200 555,600 354.000 $55,800 $55.600 $52,200 555,800 S54,000 $55.800 $54.000 Maxanum Output 22,320 21.576 20,880 22.320 21.600 22.320 22.320 20.660 22.320 21,500 22,320 21,600 Unavailable SJ Output 1,116 1,079 1,044 1.116 1.080 1.116 1.116 1.044 1.116 1,080 1,118 1,080 % Outage Rate 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.001A Bess SJ Ouipm a 85% 16,972 18,340 17,748 18,972 16.350 19,972 18.972 17.748 18,972 18.360 18.972 18,360 UnavaAable SJ Output 3.346 3,236 3,132 3,346 3.240 3,34B 3.348 3,132 3,348 3,240 3.348 3,240 %Outage Rete 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% 15.00% Base $J Replac Energy Cost®54WMWh $133.920 $129.456 1125.280 $133.920 $129.600 $133.920 $133,920 $125,280 $133,920 $129,600 $133,920 3129.600 Actual- Base Si Replec Energy Coss 478,120 375,516 -373,080 -$78,120 -375,600 578,120 -$78,120 -173,080 -378.120 .375,600 378,120 475,600 San Juan Insurance Premium Recovery $19,167 $19,167 319,167 $19,157 $19.167 $19,167 $19,167 $19,167 519.167 319.167 $19.167 $19.167 San Juan Insurance Payout 10 $0 $0 $0 30 5g SD so so 30 SD 50 Cumulative Ouaned7 Difference (COD) -5189,216 -3174,340 -5171,820 .5171,820 it (COD)16100,000, men 001wtment=D 81(CQD)l4750W00. men adJuatmenl=-5750,000 -$169.216 -3174,340 4171.820 -$171,820 cr else etlrystment = CQD ReteA Sol"(MWh) 26.151 26,700 24,356 23,374 19.400 20,200 19,905 18,956 21,338 20.500 22,465 22,407 Atlluelment (unLllkWh) 3027 -50.27 3027 �2 -029 -0.29 -D 26 -025 -026 Total 248,953 $655,140 262.056 13.103 5.00% 222,748 39.308 15.00% 51.572.336 -$917.196 $230,000 so -3687.198 -3687.196 26,151 26,700 24,356 x,22 -0.22 -0.22 11 Example 3 San Juan Replacement Energy Cost Recovery $preadeMee( Total 196,542 $4.258.410 262,056 65,514 25.00% 222,748 39,308 15.00% $1.572,336 $2.680.074 $230.000 41.292.990 $1,623.084 26,151 26,700 24.356 020 020 0.20 Jul Aug Sep Oct Nov Dec Jan Fab Mar Apr May Jun Actual SJ Output 16.740 16,182 15,660 16.740 16,200 16,740 16.740 15,660 16,740 18,200 16.740 16,200 Actual SJ Replac Energy COM 5362,700 $350,610 $339,300 $362.700 5351,000 5362,700 $362.700 3339.300 $362.700 $351,000 $362.700 $351.000 M"Mum Output 22.320 21.578 20,880 22,320 21,600 22,320 22.320 20,860 22,320 21,600 22,320 21.600 1.1"VallebIs SJ Output 5.580 5,394 5,220 5.580 5,400 5,580 5,580 5,220 5,580 5.400 5,580 5,400 %Outage Rete 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 2500% 25.00% 25.00% Base SJ Output ®85% 18.972 18,340 17,748 16,972 18.360 18.972 18,972 17,748 10.972 18,360 18,972 18.360 Onavailable SJ OuttW 3,348 3238 3,132 3,348 3,240 3.348 3.348 3,132 3.348 3,240 3,3411 3240 %Outage Rate 15.00% 15.00% 15.00% 15.00% 15.00% 1500% 15.00% 15.00% 15.00% 15.00% 1500% 15.00% Base SJ R-Plac Energy CogG$4WMWh 4133.920 3129.456 $125,280 $133,920 $129,600 $133,920 1133.920 51252811 $133,920 3129,600 5133,920 $129,600 A al- Base SJ Replac Energy Cost $226,780 $221,154 $214.020 $228,780 $221,400 $228,780 $228,780 $214.020 5228,780 5221.400 $226,780 $221,400 San Juan Insurance Premium Recovery $19,167 $19.187 519.167 $19,167 $19,167 519,187 $19,167 $19.187 $19,167 $19.167 $19,167 $19,167 San Juan Insurance Payout $0 $0 50 10 $0 -3146,390 3195.300 3182,700 •5195,300 -$189,000 4195,300 -$189.000 Cumulative Ouadedy Ddkrence(COD) 5721.454 3590,070 $155,780 $155,760 ifI(COD)14100.0w,loansdjusmmt c Ifl(COO)1>3750.000. then adjustment=.4750,000 $721.454 3590,070 $155,780 $155,780 or else adjustment = COD Retell Solos (MVM) 26,151 26,700 24,356 23,374 19.400 20,200 19.905 16.856 21,338 20.500 22,485 22,407 Adjustment(mnts&Wh) 3,]¢ 1.15 1.15 0.98 0.98 0.98 9.84 0.24 0.24 Total 196,542 $4.258.410 262,056 65,514 25.00% 222,748 39,308 15.00% $1.572,336 $2.680.074 $230.000 41.292.990 $1,623.084 26,151 26,700 24.356 020 020 0.20 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA AMENDING THE SCHEDULE OF ELECTRIC RATES AND CHARGES TO ADD A SCHEDULE FOR RECOVERY OF SAN JUAN REPLACEMENT ENERGY COST VIA FUEL COST ADJUSTMENT CLAUSE. WHEREAS, pursuant to Section 78-36 and Section 78-37 of the Azusa Municipal Code, the rates and charges of the City of Azusa electric utility are set by a Resolution passed by the Council; and WHEREAS, the City incurs additional replacement power cost during the periods when City's San Juan resource is unavailable; and WHEREAS, the precise forecast of such additional costs has been increasingly difficult to ascertain due to increased level of San Juan unavailability and increasingly volatile market price for power when replacement power purchases take place; and WHEREAS, the City Council desires recover prudently incurred San Juan replacement power cost in a timely and efficient way. NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The City's schedule of rates and charges for its Electric Utility are hereby amended to include the schedule shown in Exhibit A which is attached to this Resolution and made a part of it; and Section 2. The amended rates and charges of the City of Azusa Electric Utility shall take effect for all bills rendered on or after October 1, 2004; and Section 3. The City Clerk shall certify the adoption of this Resolution. PASSED, APPROVED AND ADOPTED THIS 26th DAY OF JULY, 2004. MAYOR cM M11 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the City Council of the City of Azusa at a regular meeting thereof, held on the 26th day of July, 2004 by the following vote of the Council: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: City Clerk M• EXHIBIT "A" FUEL COST ADJUSTMENT - SAN JUAN RESOURCE JULY 26, 2004 067 EXHIBIT A SCHEDULE FCA -SJ FUEL COST ADJUSTMENT — SAN JUAN RESOURCE Background: The City's San Juan Unit 3 resource is its single largest resource providing up to 75% of City's annual energy requirement. Due to the sunk cost nature of San Juan resource, the cost incurred in procuring replacement power when the unit is derated, or unavailable due to scheduled or forced outages is an addition to the power resource cost that must be recovered. This rate schedule would ensure timely and prudent recovery of the replacement power costs for San Juan Unit 3 resource. Applicability: Applicable to all electric services. Territory: Within the electric service territory of the City of Azusa. Rate: Energy Charge As determined by the methodology below Rate Determination: The Azusa Light and Water shall determine the fuel cost adjustment component associated with its San Juan unit 3 resource pursuant to the following methodology each quarter. The Director of Utilities shall notify the City Council of the new fuel cost component associated with its San Juan unit 3 each quarter. It shall be applied to all electric bills beginning the first billing cycle of each quarter. 1. Determine the base San Juan replacement power cost for the quarter through the following calculation: (A) = Base San Juan Replacement Power Cost in $ = 30 x (N# of days during the quarter) x 24 x 0.15 x 40 Determine the actual San Juan replacement power cost in $ incurred during the quarter (B) M•: 3. Determine other San Juan associated costs (+) or credits(-), e.g. outage insurance premium payment (+), outage insurance payout (-) incurred during the quarter (C) 4. Derive the amount of Replacement Power Cost (RPC) eligible to be recovered through the following calculation: RPC = (A) — (B) + (C) 5. Adjust the RPC in accordance with the following to derive Adjusted Replacement Power Cost (ARPC): (i) If RPC< -$750,000, then ARPC= -$750,000 (ii) If-$750,000<RPC<-$100,000, then ARPC=RPC (iii) If-$100,000<RPC<+$100,000, then ARPC=$0 (iv) If $100,000<RPC<+$750,000, then ARPC=RPC (v) If RPC>+$750,000, then ARPC= +$750,000 6. Derive Replacement Power Cost Balancing Account (RPCBA) by subtracting ARPC from RPC, i.e., RPCBA=RPC-ARPC 7. Forecast the retail sales for the immediately succeeding quarter (R) 8. Derive the fuel cost adjustment associated with the San Juan unit 3 resource by dividing AR -PC by (R) 9. Any balance remaining in RPCBA shall be added to the RPC of the immediately succeeding quarter for recovery or credit. Subject to City Council's approval, the Director of Utilities may establish a minimum RPCBA threshold to be retained for the purposes of reducing the fluctuations in fuel cost adjustment. This rate schedule is applicable to San Juan energy resource only. To the extent a need arises to apply FCA provision to energy resources other than San Juan, the Director of Utilities may implement it with the approval of the Utility Board. Nal SAN JUAN REPLACEMENT POWER COST RECOVERY VIA FUEL COST ADJUSTMENT JULY 26, 2004 1 070 ISSUE: o TO ENSURE TIMELY AND PRUDENT RECOVERY OF SAN JUAN REPLACEMENT POWER COST 071 2 Historical San Juan Forced Outage Rate TBIp ABpbCemenf Cmf 52.062030 Averepe Aegeromenr CBBf E43.99/MWe Feb -01 80.01% %AvylB le CY20O2AVG J. MBS -01 99.55% 100.00% Mer02 Ap-01 96.38% B5.43% B6.M% May -01 BB.16Ye 5. 933% Jun -01 90.55% Aug -02 Jul -01 86.25% 58.06% Au0-Ot 14.45% Major Force00u[e9B 6ep-Ot 3769% MW-F.d W.1O G -01 96.22% N 1 41.05% Gm01 98.12% 59.atx SBrer Reperomene Cme 51293.000 Ave20e RepleclmBnr COef $182/MWM1 CY 20M MMtll %AvelleMe CY 2003 AVG Jen -04 82.O1x FetrW 85.96% Mer04 66.34% Apr04 83.28% Ze 99.91% Jun -04 83.55% Jul -W 59.93% pup06 5$.35% GBp'W 98.30% Oc[-W 69.08% N -04 81.15% IJx-os 6z.56x 81.99% TBIp ABpbCemenf Cmf 52.062030 Averepe Aegeromenr CBBf E43.99/MWe Tafel Repacemem Cmf CY 2002 MpMO %AvylB le CY20O2AVG J. 99.29% Feb02 100.00% Mer02 9"9% Apr -02 B5.43% B6.M% 93.52% 2 . J..m 5. 933% JuF02 94.03% Aug -02 BB.M% p 2 58.06% GC 0. May -01 u 2z % 61.69sl.w% Ds -02 D - BB.BB% 99.36% Tafel Repacemem Cmf 5535,000 Avempe Aedecemefrt Coef 526.30/MWS CY 20M Mon\0 %Avelleble CY 2006 AVG Jen00 B6.M% FBR06 99.91% MerM 8% ApM 8..31 31 % GMeWlep 0ule9e May -01 98.94% Tafel ReperorrienfCwr 51,138.000 Ave �e pe Aegeeemenr COer 561/MW6 3 072 Replacement Power Cost Recovery Mechanism: Sten 1: Establish Base San Juan Replacement Cost Sudaet o Assumptions: (a) San Juan has an availability of 85% throughout the fY (b) Cost of replacement power = b40/MWh Step 2: Document the Actual San Juan Replacement Power Cost o Track the actual cost of replacement power for San Juan on a monthly basis Sten, 3: Compare the Cost Difference o Compare the budgeted San Juan replacement power cost vs. the actual San Juan replacement power cost on a monthly basis Step 4: Recover on a Ouarterly Basis the Cost Difference i. Accumulate the monthly cost differences in a quarter for recovery or credit I. Set bandwidth to avoid de minimums (<1.5%) or excessive recovery or credits (>10%). Avoid rate shocks Ill. Calculate the amount of fuel cost adjustment dividing the amount to be recovered or credited by the forecast quarterly retail sales 4 073 Example 1: San Juan Cost Recovery Using Replacement Energy Actual FY 03-04 Data JJAQ 5w Od Ney Oec Jen 2e8 Wr %n 7d W OuPIA 17MOJ Mb721 1438: 15,115 17433 11M 1B.BAI MM:: 18,1881 1,796 21,113 Z= 237fi5 SJflB91ec&-KL ___.. $5.52 513,913 0.04:. &685]! $137,151 V1.100 S148WSI65 513],114 58 AM S4i $16,052 S2i50,665 21576 SJ50'. 2255 M'M 22,330: MMO MM] 2M-M 2%XO 22}A 21500 Z62A% UienB�b SJOu�B 1, _ 1/p1 9BZ: 695 4061 8,3t2i 3191 181 3 19M 57 278 59,50 YOud Fele MOM 4M% ITl%': 3.91% 18.83% 3721%' 1561% UM! 1576% 9159% 4.06% IJ SSf96 Bess Sl 085% 18$72 18X 11,718: 18J02 IB 1 m 1 2 %7.746' 18$]2 16 18$12 18360 222)18. UmvebCk SJ WbA 331 3 3132• 3W3, 318 131 918 324 k8 310 3308 %aeawfltl sm LSim 1500961 15$096 1500% 1500%: 15W% ISM 1500% 15 150D% 15.IIJ% 150V6 Base Sl Pellet 6mipyC OS40IB4YB. $13y2U.515456 $15.50'.515$5 SIM.. s1349ai:'133,95..5115791 SI3,95 41553 513;95.EIS,fi[0 _. $1$721318 PDB9 Bam Sf Paphc.6egyGB9 SenJmiUminire PwOun Pemery 5132 0513 385.786, 513115! 57$51 519.18 519,161 519.1fi]I 519,167 $19182 55715. 512.512 3124.515: $3.BM M79A33 ,30.318 5113,518 ..6)8329 519161 V9.1671 519,15, $14167 fi9187 S19.1671 $19,167 S50Aoo Sm Jum Ueunnce PolwB 5 50: $0 3 $1 3 3i 5• 5 W1 3 5 QInApL1e DUNaMQllemynlNO 518,983:.; 5104951 350.6 _ =A37 30835 II�ON6100,Oo0,Blen _ _ rt 75i31W B9n ,QO 6: f12 f� 3. EIaz,35B 308 ore5sejua6ra MD fl0el Sales 151 3,]00 21,3561 5 74 19400 57001 19,915MM 185 2;101 5151 �000 0.00 J 074 Example 2: Assumes availability (95%) and replacement power high San Juan $50/MWh for 2 AI Od flm' Dec Jan Feb Mar Na Jn T& S1Pp41 212%1 2D,497 19,fl10 21204 29,520 21, X 212D4: 19,01 21ZC 21529; 21201: 2D5Mj 24BM SI - Cad 0=1 55189 59290: $55,07% 554.WD 555901 55BIDI S520 55800_ 551ADD S55XO. 554,0 555.149 I _ i 22.729 215M 2DM 2W 22551 27j51 29,060 2239'; 21400 22MM 21 Uam9AB¢$J 1,116 1,079 1"! 1,116 I.WD 1,116: 1,116' 1,944 1,1161 IJB01 1,1161 1000 13,101 %PA�e PAI¢ 5. 500% 55% 5D0% SOM 5,N%. SNR. 5.911% 500V 5.00%! SNR! 50D% 590% Baa SI ®85% 18972 18,340 17748; 16,972 IBM IBM ISMi 17.746 160 189601 IM 18X M740 UaretaNB SI Oupa 3 M 3,1321 3,316 9240 3,348: 3,3481 3,132 3,346; 32%1: 3,348' 3140 39,378 % Pak 15 M 75O—D% 1500%1 ISM 1500% 1500%! MOMI IS.UM6 1500%! 1500%: ISM! IS.N% 1500% Bees Sl Re* F!M Cad BSWMBT - $137 $129,45 $15,296. $1330 $129 00 $133MI $13=j $125,2601 SIM= $129.501 $13=1 $129,873 $IAT4238 AdW-Baa Sl Pegac Cad dM,120 M516 -MOBO 518.120 5756DO 379120 578,1201 371M WM6 375,6001 37$129'' moo 13917,15 Sm,hen Nsnena Pmraml4ero.E1y $19.167 $19,161 $19,160 $19,161 $19,167 519167':. 519,167' $19,167 $191671 £1916. $19,1671 $19167 7510,IDD SanJuzr,kanela 5 $0 5'. $a 5 Si, SD $0 5! .51 5'. $D $0 QIdJa5Y2-DA¢Id¢¢ 315116; 517/,3/0'. 31715291 13171,0 3567,15 H 5,50, to 9 i I IIKg5575,50,Hen egitlmal--a575DA00 -$I69P6 3174,340: 3171,87➢. i 13171 ,561.15 ache =CUD i I I Peki Saks 21151 5,700 24,150 23,311 19,109- 20200'. 19ikffiol 21,3381 20,479':: 22,185' 22,407 28.151 I _ A*drW(whd91Po1Q L_W .W21 .Vtl 4n1 ea AS, :M 016 :UM 6 075 Example 3: Assumes availability (75%) and replacement power low San Juan $65/MWh for &M lkeik� EMWCW AISM Od 2pv DW .Fm Feb Mar AM WY A. TOW SI - 14110 141 IS 14740: 74100 16.710 14710 1 14740 14200 14710' 16290 IKW SIP Fre Coo 552700 592961 5739 511,7001 1151.000 5362700 M700 f392,700 53516= 552700 $351M $/254410 Q1001 1 2L331 21,5! 20A80 22M1 21,50 11,331 Tt,3Z1 20,680 22,3A 21,600 22=, 21,600 262056 Uiard�5le Sl 5,580' S 5210 S.SB7; 6.400 SMI 4581 52M 4560 4400 5XI 5AI 45,511 %Nape Rap 1500% 25 25=1 25.0051 3500% 25MI 1500% am 25m% 25.00% 25.OrA 25.00% 25005 eases147mw1oas% 14971 18610 n24et 149n: 18,767 1e,9n 749rz 17.7u 18,972 SIM 1B.9r1 18mi 22274e ftal eSl w4d R318 3,132 3,k8 3243 1'118 3,318 3,1 3,316 3240 3,318 3240 3M % Pep 1500% ISM 1500% 15005 1500% 15.00% 1500% 15M 15.00% 15W% 15.00% 15.00% 1500% St Caa05W57'M S1i 9 5129, $1252BO SIAM $129 5134931 PAM 113209 S131910 $129,600 S7 $729,600 57572.376 Mld.eMS1 Re Cam 1 SM780 01,1 1214631 119,780'': 5121,400 S1$7W SM780 5214= $229. $221,400 $2=2 5291.a $2684014 Sm Jean pslydxe Radon Pamay SI I1 51811 219,161 $1%1671 $19,1 119,167 $19.167 SI9I61 $19,167 518167 SIR11 519,167 5M.= ban Aen papa%g 9 W W 5D',, m SN430 ,m= $162700 3195,300 4188000 5195,309 y189600 5129M 1 Qmupme OBem�im $711,151 1 S59DM $155,787 $155,7611 $1,623081 8 C00 04009, man LLanan-0 — tl OOD SQODD Pel WWMIo'S160DID I 5590,010 si5x1B0 $1$780 a dma4�maD•D3D !$721,� Sips a,I51 247005 31,3/11 19,100 31200 19,565 1485 21}'9 31500 22485 Tt./07 24151 I=WkW11) �_— 11 — ]y,,4',' 1.15 1.7 am 0.98 0.98 QZ4 0241 024{ 031 7 076 AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JULY 26, 2004 SUBJECT: RECLASSIFICATION OF ASSISTANT DIRECTOR — POWER RESOURCES TO ASSISTANT DIRECTOR OF UTILITIES RECOMMENDATION It is recommended that the Azusa Utility Board/City Council approve in principle the reclassification of Mr. Bob Tang from Assistant Director — Power Resources to Assistant Director of Utilities, with no change in salary. BACKGROUND Azusa Light & Water has come a long way to have its current management structure and staff of capable managers. It is one of my recent goals to establish not just a capable management team but also an executive transition plan that will better serve the interest of the City and Azusa Light & Water. This plan involves promotion of a viable candidate who can stay in constant touch with all issues that this organization is involved in, and be ready to step up to the helm on a temporary or interim basis when the need arises to serve as its Director. 1 have been working with Mr. Tang for almost ten years. He has been a very dedicated employee and a tremendous resource to my management team. Ever since the period of electric deregulation in California, Mr. Tang has shown a real passion and commitment to his job with the City and Azusa Light & Water. Mr. Tang's integrity was demonstrated throughout the energy crisis, and his intellect for grasping fast shifting industrial dynamics has enhanced the overall strength of Azusa Light & Water. 077 The proposed position will not only be responsible for Power divisions with Azusa Light & Water during normal operations; acting director when I am out of the office. No salary change FISCAL IMPACT There is no fiscal impact of this action. Prepared by: J. Hsu Resources, but also over other Mr. Tang will also serve as is provided through this action. W"7 gislative Update Prepared by Bob Tang July 26, 2004 079 SB 1478 (Sher) — Renewable Portfolio Standard 1. Passed out of the Assembly Utilities and Commerce and Assembly Natural Resource Committees z. All attempts by these two committees to subject municipal utilities to an RPS requirement were avoided s. As a compromise to a mandate Senator Sher agreed to language that merely requires publicly owned utilities to provide the information regarding their renewable resource mixes that they currently provide to their ratepayers to the California Energy Commission (CEC) a. In addition, SB 1478 authorizes renewable energy credits (REQ to be sold by municipal utilities under a new REC trading program if they are in compliance with the same RPS standards as other retail providers s. Significant victory to the muni community in forestalling CPUC and CEC jurisdiction M VI,AB 426 (Cox) — Exit Fees 1. The bill would exempt "Greenfield" muni load in annexed areas from paying exit fees 2. Passed out of the Senate Energy, Utilities and Communication Committee 6-0 and now moves to the Senate Floor. 3. The bill will be held on the Senate Floor until August to see if the CPUC takes any action as it relates to "greenfields" and exit fees 4. Significant victory to the muni community so far 3 081 AB 2006 (Nunez) — Industry Restructuring �. The bill would reinstate direct access under a core/non-core market structure z. Passed Senate Committee on Energy, Utilities and Communications on a procedural vote by 5-2 margin 3. The bill will need to go back to the .same committee for amendments in August IM 130 Power Resources Division Monthly Report • Status of Projects • Power Consumption Comparison • Wholesale Market Trend • Power Resource Budget Update • Preliminary FY03-04 Light Fund Operating Result Status of Projects • Settlement discussions regarding Kirkwall Substation contractual arrangements were held on June 9th and July 7th. Several issues resolved and some remaining issues yet to be resolved. Next settlement conference will be held on July 22nd • Initial evaluation of various settlement agreements related to California energy crisis is completed. Continue to monitor the settlement discussions and may recommend joining on some of the settlement agreements at the opportune time • Initial draft of a San Juan replacement power cost recovery mechanism has been prepared. Will be presented to Utility Board for consideration and possible implementation • Continue to participate in various CAISO market redesign activities, among them: — CAISO Tariff amendment 60 — change in minimum load cost allocation methodology — CAISO Transmission Control Agreement (TCA) amendments — to accommodate additional Participant Transmission Owners (PTOs). Amendments are expected to require Utility Board approval in September — CAISO market redesign activities — allocation of Congestion Revenue Rights (CRRs), treatment of existing transmission contracts, uninstructed energy penalties etc... • Continue to work on power resource optimization for the summer and fall seasons M CITY OF AZUSA ENERGY CONSUMPTION COMPARISON __ , .� _ - � 1, ___ _­'. . 3.81% } DEC 344 t 351222% .._: ENERGY CON6U1.P11JNIN A1wF1 � PERCENT tAAf�li __ FY02-03 ; _... FY03-06 r) CFVNGE 939% APR ...__. 390- K Jt.l 23,576 � �._ 26.154 1094h .. 563 _. JW ;rt c. .. AUG 22,502 � 26,714 1872% .. .. .. _ ,PEAKDEMANDMMW SEP._ 23047 ... ... �.. 24,354 _. ..... -..... CH:,r 20,290 ! .. 23,357 . . NOV 18,57/ 19.391 DEC 18784 1. 20207 - 19911 _ 757% 792%_ ,. FEB I ._..18.875. i......._ 5,313% .......... :. ...... .. _ AMA19 _ ....... .. .17294 ................ ._ _ . 21,338 1087°h APR 16,425_ I x,477 1081% my 20,07122,493 1240% ! JW 20.370 i 22.505 10.81% TOTAL 241 631 265718 953% .- _. 1 _ _ .1 'Newhgts have beenset foreach rtnraNy 2lal sales CITY OF AZUSA PEAK DEMAND COMPARISON M __ , .� _ - � 1, ___ _­'. . 3.81% } DEC 344 t 351222% .._: 348 _ _-a -514% _ ..._ MAR _335 402 .._ _-. 939% APR ...__. 390- __.439 536 I,.,. 37.61% _ MAY 50.3 563 ._ 11.90% -- JW 47.0 47.4 1 0.69% j_... I .. ..... _. _ _ 1 .. .. .. _ ,PEAKDEMANDMMW .' Surpassing all-time high for peak of 581 MW established on September), 1998 M . ,eKllv irsf+'-�✓� �P 'WHOLESALE ELECTRICITY SPOT MARKET PRICES IN CALIFORNIA AVERAGE AVERAGE I- mor ON PEAK PRICE _ OFF PEAK PRICE $44_49 $21.44 MAY03 JUN 03—$50 _ 59 $27.39 JUL 03 $59.69 _ $39.84 AUG 03 _ $36.87 SEP 03 $43.95 _ $33.75 _. $30.22 97 $45.21_... _. ...$34.43-._ -- FEB 04 _... .._$4275__... $36.66 _._---- _� i_ MAR 04 $41.22 APR 04 .... $4577.... $34.66 _ r $51.26.. .... . $37.31 _.. JUNE04 $5076 $3232 ALLPRICESIN$iM1Mi_ .__ - 087 Power Resource Cost Accounting FY'03-'04 (2) (3) —A—L jmmlN I�M.74 i 21.IM.M 33,M.Q 2jm.817� (1$53,59880) 1.378268.64 --._.-991,35411-. .1 -36�2�.W 97 �,BM2 16,5nM SEP03 881,621291 764915." 26720T62 1190698 33.213.M 2=66428 (851.82]25) 1206.737.03 CIC W- 973408961 12655433] 263,015.15 1391715 31,527.84 2.547.41227 (1.37,7091509.]02.94 NDV 0314 1,927.84,966m,68891 218.560,Q 10,606m 24.481.64 2,858,312.53 (833945.77) 2224.366.M DEC 0319 969959962263.098.31 1_1 21%M�7 la37111 25,117.W(817291 1."5958A4 JMN W 27X7.98 2,049,139.08 (823.45121) _-.-1228881.1) FEB ��16N 5M.645.16 22,306.41 1045202 2840]87 2,�3,J2fi2 ---- --- --- -- - - N ---- --------.,. ...-_..91123096 ---1�2W� M.371.W. M7.9W28 129553829,931.71 cql,3��.W R7 .. < RN .- 986,86496 1 811,59819 2(N,OM.12 ll.IMM 30,011.61 2043.6n.n (10,31554) _1.874.36422 971.155,98208,99529 20.=,00 24,892.78 I.8905M.57 (M7,74800) 1.092,30.57 JUN04 9]1202.33! 156195].42 208,89520 20M.00 24,892.7B 73 (1,687,620.50) 1IJ982]1231 $12A08311AS. 312074,396.M 1 430/0.457.471 S172A19.50 I $348.46.121 528,473,533.09 1 ($11.2 88,124.43 (A) (B) - ------5268.50718--_-___._..------ (C)... Forma --- -Sm arT.—W Fui�p cast ft �Al (E) mallet r�perMRsW9nWagmment nma..td —. (3) INCLUDES ILLSIICl9TTEFM NN Ll3NGTiWJSMS510NCC94BVLTC0635 _.__.- (4) ODM_CHPAGEDBYGNIPoRNIAINDEPENDEIJTSYSTEMOPEMTMFOR SVSIQAREIIMCITY RINC . . .... .... (5—)— INCLUDES CC6MFOR WH�uDISPATCHING WHISCD6C ...IBI SUMOF It)THRCUGH (5) m - =7 087 Preliminary FY 03-04 Light Fund my Result (Subject to Audit Estimated retail sales: $ 27,250,000 GF transfer at 10%: ($ 2,725,000) Power resource costs: ($17,400,000) Bond payments: ( 650,000) Operating costs: ($ 5,520,000) Estimated Net Income (**): $ 955,000 (**) The above result does not include depreciation Notables: o Monthly retail sales established all-time highs for l l out of 12 months with the exception of June2004 o A record high peak was established on September 5th 2003 at 59.1 MW o The retail sales grew at an annual rate of 9.7% substantially higher than the forecast. Compound year-to-year retail sale growth rate for the past five years is about 1.5% o San Juan performed at 79.5% for the F7 o Transmission and hedging costs are higher than forecast Im A1rw21%A f'ty Industry Challenges in Changing Times: You Can Count on APPA Remarks of Alan H. Richardson, President & CED, American Public Power Association Presented to the 2004 APPA National Conference, Seattle, Washington on June 21, 2004 Members of the APPA Board of Directors, ladies and gentlemen, good morning welcome to Seattle and to the 2004 APPA annual conference. I want to offer a special welcome to the 128 first- time national conference attendees. I hope you find the conference both professionally rewarding and personally enjoyable. Glenn, thankyou for the introduction. But more than that thanks for your great service to APPA over the past year as Chair of the Board. You have been Florida authorizing the creation of a public power system; and release of yet more evidence revealing the crude language and crass behavior of Enron energy traders who manipulated the western energy markets three years ago. With respect to these recent revelations about Enron, we are indebted to the efforts of the Snohomish County Public Utility District. Without their Persistence and perserverance, the secret" tapes, protected from public view by FERC and DOR, might never have been released. captured by the concept of electric utility deregulation. Indeed, there was a global infatuation with the presumed ability of the market to meet all of society's. electric needs without government interference. Ken Lay of Enron once observed that "an imperfect market is better than a perfect regulator." In a similar vein, FERC Chairman Pat Wood told an APPA audience a couple of yes aggo that markets on an average day arwill do better than regulators on their best. Well, not exactly. a great spokesperson for public power, and an outstanding advocate for issues that you embrace and that should be embraced leaders Many believed that deregulation by public power across the country—environmental would be the demise of public leadership, a commitment to research, and a commitment to public power's most valuable power. It was argued that we p asset, its employees. weren't big enough or smart I also want to thank our host utility, Seattle City Light, the rVembers of the local arrangements committee, and in particular CiLight Superintendent Jorge Lrasco and Deputy Superintendent Jim Ritch for the time spent preparin for the invasion of nearly 2,000g public power partisans. You and all those who have contributed to the success of this event have done an incredible job. enough to prosper in the brave new world of a competitive environment. Things didn't turn out as these pundits predicted — public power is prospering while private power has faltered. Finally, I want to thank all of the companies and firms who are sponsors of this conference, and who are exhibiting at the Public Power Expo. This has. been yet another remarkable .year for our industry. Over the last 12 months, we've witnessed: a huge blackout in the upper Midwest and Northeast; so -far unsuccessful conressional efforts to enact a compregensive energy bill; skyrocketing natural gas prices; a host of FERC decisions and proposals; an overwhelming vote in Winter Park, There is so much to talk about and so little time. With both of these facts in mind, this morning I'll focus on three general areas: first, an assessment of the state and direction of the industry; second, an evaluation of how public power is doing; and third, some challenges we face and how APPA activities andservicesare designed to address them. Industry Restructurina Not long ago, federal and state policymakers and regulators were It was assumed that markets would work, new players would displace electric utility monopolies, and only the largest, private, for- profit companies would survive. Many believed that deregulation would be the demise of public power. It was argued that we weren't big enough, fast enough or smart enough to prosper in the brave new world of a competitive environment. Things didn't turn out as these pundits predicted—public power is prospering while private power has fartered. In 2003, Standard & Poor's credit rating agency downgraded 139 private power companies, while upgrading only 11. In contrast, five public power systems were upgraded, and only five were downgraded. —' This wasn't a one-year anomaly. In 2002, there were 10 public power upgrades and 12 downgrades, while private power companies earned 15 upgrades compared to 182 downgrades. These IOU downgrades are the result of failed investments and failed business strategies pursued with the expectation that deregulation would succeed. It hasn't. Public power credit ratings remain exceptionally strong. And fortunately for our economy and our country, private utilities are coming out of their economic nosedive. However, their painful and still only partial return to 1 financial stability is a consequence of a dramatically revised business strategy focusing on back -to -basics attention to their core business. Falling credit ratings for private power companies aren't the only evidence that utility deregulation is struggling if not failing. Indeed, the list is long, and it includes California's disastrous deregulation experiment, Enron's collapse, several utility bankruptcies and near bankruptcies, manipulation of power markets, and the abuse of market power, higher prices and reduced reliability—the exact opposite of what the proponents of deregulation promised .just a few years ago. Deregulation was premised in large Part on the expectation that the electric industry of the future belonged to ener traders and independent power produYcers. Utilities would be relegated to wires -only business. That hasn't happened. The mass exodus from energy trading began with the collapse of Enron. As for independent power producers, a veteran energy analyst for Standard & Poor's noted in an article in theJanuary/February 2004 issue of The E ectricity journal that "in less than 10 years, U.S. energy merchant companies haveggone from the cradle to the graveside, if not the grave itself." The model on which they built their companies depended on rapid and debt -funded growth, which was itself "premised upon rapid deregulation of the U.S. electricity industry and open competition." I won't predict the demise of independent power producers. In fact, I believe they can play a very important role in the industrybut under a considerably different business strategy than the previous one of highly leveraged financing with the output of generation projects unsupported by Long-term contracts. As or electric utilities, evidence is mounting that they are following a new strategy—it's back to the basics. As the portfolio manager of The Kinetic Utility Review recently observed, "Talk of back -to - basics approach is on the mark because it means we screwed up .... It is not so much a strategy as a white flag or an admission of defeat." The back - to -the -basics strategy of utility owned generation, utility obligation to serve, with prices based on cost of service is precise] the strategy that proved so successfyul for public power over the tumultuous last few years. We had it right all along. Yet proponents of the deregulated utility model continue their quest, although with shifting rationales. Last year, the chief executive of the Center for the Advancement of Energy Markets and a strong supporter of electricity competition stated that "the biggest mistake the pro-com etitive movement made was that we lied" about lower prices. Instead, competition should have been sold on the proposition that it will bring innovation and new technologiearders. That, I would suggest, is a much hsell. Other competition advocates suggest that low prices are frustrating competition. Higher prices will bring more competitors into the market and over time this will push prices down. Hard to believe, I know, but true. The back -to -basics strategy of utility owned generation, utility obligation to serve, with prices based on cost of service is precisely the strategy that proved so successful for public power over the tumultuous last few years. We had it right all along. Federal Energy Regulatory Commissioners remain committed to comppetition. FERC Commissioned oe Kelliher recently addressed a meenng of the Large Public Power Council. He and at least two of his fellow commissioners view the Energy Policy Act of 1992, with its open transmission access provisions and partial repeal of the Public Utility Holding Company Act of 1935, as fundamentally chan&ing FERC's focus. In his words, today the primarymission of the Commission is competition." It seems that perhaps the underlying purpose of the Federal Power Act, ensuring just, reasonable and non-discriminatory electric service, has somehow been displaced. FERC Commissioner Nora Brownell recently observed that "[w]e want the stability of the regulatory model, but once the market picks up, it is not necessary to stay in that model. ....We can make sure investors take the risks and not ratepayers." I don't question the worthiness of Commissioner Brownell's goal, or her commitment to it. I do question whether it can be achieved. It is far from clear to me that we can ever have the stability of the regulatory model in an open market environment for something as essential and as difficult to manage as electricity. As Joe Swidler, Chairman of the Federal Power Commission in the 1960s, observed manyyears ago, "electricity isn't a commodity, it's a phenomenon." As for shifting the risk, so far, ratepayers, not investors, have shouldered most of the risk and most of the cost. Jacqueline Lang Weaver, professor of law at the University of Houston Law Center, published an article in the Houston Business and Tax Law Journal early this year entitled "Can Energy Markets Be Trusted?" She provides a detailed analysis of many of the major events in the deregulation ofour industry and draws a number of conclusions, the most important of which, to me, is that, "in electricity, markets have met their match [because] ... electricity cannot be stored...incumbents still hold substantial monopoly power ... power markets operating in real time are so complex, regulators cannot assure that markets will operate effectively ... [and] electricity is an essential good.' Energy markets, Prof. Weaver concludes, cannot be trusted. Restructuring was intended to displace regulation with competition. Ironically, it has ushered in an entirely new regulate rryy environment that is every bit as difficult and intrusive as the cost -of -service regulatory environment of the past; and so far, at least, no more, effective or efficient. Federal regulatory decisions seem more about protecting the market and the marketers than protecting consumers. For example, ppower suppply contracts executed at the E othe Western energy crisis when prices were excessively high as a result of market manipulation by Enron and others are, according to FERC, sacred. On the other hand, long-standing firm transmission agreements freely entered into by parties in the Midwest might not be sacred if they somehow interfere with the development of the wholesale market in that region. Still, the faith in the benefits of electric utility deregulation persists. This is an ideological position, almost a religious one, not a pragmatic one. Proponents continue to argue the 1 theoretical benefits of deregulation, looking for ways to measure success that have little to do with the real world. I'm more skeptical, and more pragmatic. I tend to measure success by results as seen, felt and enjoyed by the intendedbeneficiariesofderegulat on— consumers. Deregulation promised lower rates and better service, but hasn't yet delivered. It promised greater efficiency than could be achieved through regulation but delivered bills to consumers of staggering proportions due to such things as stranded -cost recovery charges and higher prices due to market manipulation. And for consumers, the worst may be yet to come. Almost every state that deregulated electric service imposed limited -time price caps or reductions. Time is running out and consumers soon will be exposed to higher prices. Deregulation didn't necessarily promise greater reliability, but it certainly wasn't supposed to be a threat to reliability. But reliability has been threatened. It was threatened by market manipulation, with California as the prime but by no means the only example. While deregulation was not the immediate cause of the cascading blackout last August 14, it clearly created an environment in which the focus on reliability was displaced by a focus on the bottom line. Public Power Prospers In the mist of this turmoil, public Power has prospered, as is evident Crom the credit rating numbers I cited earlier. Here is what credit analyst Peter Murphy of Standard & Poor's had to say regarding the financial health of public power. "The stability of the public power Today, public power is healthy and strong. Our focus is the same as it has been over our 120 year history — resource adequacy for both the short and long term; reliability, and most important, responsibility to our communities. sector in the past year resulted from the continued commitment by public power utilities to conservative business strategies, and prudent responses to volatile commodity prices for both fuel and power, including improved hedging activity that helps mitigate the impact of price swings. Public power utilities nationwide continue to adapt both operationally and financially to new challenges, which bodes well for credit quality." Public power remains the low-cost electricity provider. Based on 2002 data, the latest available, privatepower company rates were 13 percent higher than rates paid by consumers of publicly owned utilities. We respond to the requests of our communities. Communities want green power programs and we have responded. Earlier this year, the National Renewable Energy Laboratory released "top ten" lists measuring utility performance in four areas of involvement in green power prorams. Public power systems accounteT for a disproportionate share of top spots in each of these lists. There are other indices of success as well, including the tremendous interest in public power that we see today in communities throughout the country. The logical question is why have we done so well? In thego-go days of the late '90s, we didn't lose focus on our primary mission. We were not distracted by the siren song of higher profits through diversification. We recognized, accepted and indeed welcomed our responsibility as load -serving entities while others in the industry were abandoning their customers in pursuit of what they thought would be more profitable strategies. Today,ppublic power is healthy and strong. &r focus is the same as it has been over our 120 year history— resource adequacy for both the short and long term; reliability, and most important, responsibility to our communities. While we are doing well today, there are many challenges ahead. Challenges The apparent back -to -the -basics trend in our industry doesn't signal a return to the good old days, which, looked at objectively, were not always so good. As private power companies abandon their diversification strategies pursued in hopes of higher profits, they will search for other ways to grow their business. They will almost certainly turn to mergers and acquisitions, and will likelydo so with a vengeance if the Publc Utility Holding Company Act of 1935 is repealed. Financially strong public power systems are likely acquisition targets. As private power companies abandon their diversification strategies pursued in hopes of higher profits, they will search for other ways to grow their business.... Financially strong public power systems are likely acquisition targets. The wholesale market has changed dramatically and, in some cases, irreversibly. Publicpower systems that depended on wholesale power purchases to meet all or some of their power supply needs are finding fewer options and higher prices. For many public power systems, the perennial problem of transmission access has not been resolved. In some areas, transmission access is still denied while in others access may be assured but at an uncertain and unpredictable price. Self-help is one answer. Public power systems finding they can't rely on the wholesale market are once again looking at meeting their own power - supply needs. Some are doing so on their own, like Springfield, Missouri, which is in the process of developing a new 250 mW coal-fired power plant. Others are working collectively through their joint action agencies to build new units on their own, such as AMP -Ohio, or by taking a partnership position with private power companies or other partners, as is happening in Indiana and Illinois. The creation of a new, super joint action agency is being discussed in the upper Midwest, where there are more than 400 public power systems in Iowa, Minnesota and Nebraska. Coal is once again an attractive fuel source. New technologies hold great 091 promise for cleaner, more efficient coal-fired generation. However, there are huge questions for which we have no answers; including, in particular, the prospect of carbon taxes or car emission controls. You Can Count on APPA APPA's mission is to help its members address the challengges of today and tomorrow. We fulfill that mission in a number of ways. As an organization, APPA articulates public power's message of locally owned and controlled load serving entities. We sponsor conferences and other education and training programs for members. We help members undertake research projects. We — conduct surveys and produce reports that allow members to benchmark their performance against others in our industry. And we create national networks for public power employees to ask questions and share ideas. I would like to identify just a few of the challenges we face, and what APPA is doing. an energy bill. If it does not, we will be forced to address these issues next year. were engaged in one way or another in telecommunications activities, up from about 500 at the end of 2002, and less than 100 just five years earlier, and number continues to grow. One of most exciting developments is the d advancement of technologies to ide broadband Internet access over er lines. APPA and public power systems are playing an important role here. bon Over the last year, APPA has the participated in a broad range of the proceedings at the Federal Energy rapi Regulatory Commission. While in prov each case we have responded to specific pow APPA's mission is to help its members address the challenges of today and tomorrow. We fulfill that Over the last severalyears, through three Congresses and under two different Administrations, we have struggled to protect and advance public power's interests in the development of comprehensive energy and elecvicity legislation. We have sought to restrain Congressional effortsto subject Public power to FERC jurisdiction, to improve the hydroelectric licensing process, to promote reliability, and receive incentives for the development of renewable and clean energy technologies comparable to those provided to private power companies. And the fight isn't over yet. Indeed, in spite of the fact that comprehensive energy legislation has passed both the House and the Senate, enactment is in doubt. At this point, it seems highly unlikely that Congress will pass mission in a number of ways. policy proposals advanced by the Commission, our overriding goal is to help FERC define its role. I agree with FERC Commissioner Kelliher that the 1992 Energy Policy Act required FERC to be more attentive to promoting competition. While the 1992 Act clearly emphasized competition, it did not displace the Commission's primarryy role of protecting the interests of load - serving entities and the consumers they serve by requiring just, reasonable and non-discriminatory rates, terms and conditions for wholesale sales and transmission access. Competition can be a means to this end, but it isnt the end itself. APPA has been active as well in the Federal courts. Earlier this year, we were a participant in a case before the U.S. Supreme Court .regarding the interpretation of a provision of Telecommunications Act of 1996. We argued that Congress had directed the Federal Communications Commission to override state legislation that created barriers to entry to offering telecommunications services by public power systems. While members of the Court felt our offeringg — such services was good public policy, eight of the nine members disagreed with our interpretation of the statute. We are now gearing up for this issue to have return to the Congress next Over the last several years, through three Congresses and under two different Administrations, we struggled to protect and advance public power's interests in the development of comprehensive energy and electricity legislation. year. P r o v i d i n g telecommunications services has become, for hundreds of public power systems, a fundamental part of their local mission. At the end of last year, nearly 600 public power systems Through DEED, APPA's research program, we provided a grant to Manassas, Virginia, to help it explore the feasibility of BPL. The pilot project we helped finance has been successful almost beyond the sponsor's wildest dreams, and Manassas is moving forward to provide this service to its entire community. At the same time, it is using this technology to meet its internal utility communications needs, resulting in more efficient and reliable electrical service. Over the next few years, I am convinced that we will see a significant increase in the number of electric utilities offering broadband access over power line. This technology can dramatically improve the efficiency of the electric distribution system while simultaneously providipg high speed Internet access through every electric socket. I am very,proud that the public power system in Manassas is playing a leadership role in demonstrating the viability of this technology, and I'm proud that APPA, through our DEED program, was a partner in this effort. Public Power systems need products and services to remain strong and viable businesses. APPA has taken steps to help its members meet this need. Six years ago, APPA created Hometown Connections whose fundamental mission is to aggregate the needs and purchasing power of the nation's public power systems and by doing so make the public power community more attractive to national vendors of products and services. In those six years, it has provided various products and seryices to APPA members at substantial cost savings. One of Hometown's newest partners is Main. Net, the provider ofbroadband-over- owerline technology to Manassas. BPL may not be right for your utility today. But I can almost guarantee that you will get questions about it. You can find out how this technology works, and equally important, how it can work for your utility and your community at the Hometown Connections booth here at the Conference. 092. Public power has a very strong commitment to a clean and healthy environment. Dealing with environmental issues is a huge challenge for public power and for APPA. APPA is helping members understand complicated environmental rules and regulations proposed by the Environmental Protection Agency. - And we have created an electronic communications network to help environmental experts at public power systems ask questions of each other and exchange information. (I -his is, by the way, just one of almost 20 electronic exchanges managed by APPA. You can find more information on these exchanges by visiting our Web site at www.aooanet.org.) We have been working with Congress and industry stakeholders to establish a new environment in which reliability standards are mandatory and enforceable and those, who violate them will be punished. In Whshington, APPA is working with the Environmental Protection Agency and members of Congress to help them understand the real- world consequences of regulatory and legislative proposals. We want to help EPA find solutions that address real environmental problems in ways that are the least disruptive for public power systems and the communities and citizens that depend on them for reliable, low cost service. Another environmental challenge facing public power is global warming. Pursuing the adage think globally, act locally," APPA created the TREE POWER program in 1991. Trees beautify the community. Participation in TREE POWER is a high -visibility, high -reward proposition. Beyond that benefit, however, trees sequester CO2, thus helping to address global warming. Properly placed, they can help conserve energy used for home cooling. Today, TREE POWER is a nationally recognized program. Over the last I S months, it has experienced an almost 30 percent increase in participation and now has more than 225 members. This spring, the Sacramento Municipal Utility District employees developed the Tree Benefits Estimator, designed to enable utilities to quantify and track the environmental and energy savings of tree planting programs. This tool is available on the APPA web site. Security of our industry's infrastructure has come to the forefront of industry priorities following the attack on America on September 11, 2001. Today, the newlycreated Department of Homeland Scurity is up and running, and soon its proposals will directly or indirectly touch every APPA member. Some examples of how this might occur include the reporting of critical infrastructure information, mandated vulnerability assessments, and the development of cyber security standards. APPA staff have been workingwith DHS, DOE, FERC, NERC and formally and informally with other industry working groups on all of these issues. Reliability is now a critical issue for the industry and APPA. Unfortunately, deregulation has shifted the focus of Private utility management to bottom- ne considerations. An industry that used to share information and work cooperatively to keep the lights on has become an industry in which generation and transmission facilities are pushed to the limits, maintenance is deferred, and information is withheld on the grounds that it is competitively sensitive. We have been working with Congress and industry stakeholders to establish a new environment in which reliability standards are mandatory and enforceable and those who violate them will be punished. One of the many lessons learned over the last few years is how much our customers value reliability. Price is important, but reliability is equally important and for some customers even more important than price. At the local level, public power has a well deserved reputation for reliability and rapid response for service restoration. We needy to be sure our customers recognize this fact. To assist you in this effort, APPA is looking at creating a new program—Reliable Public Power Provider, or RP3. At the heart of this program is formal recognition by APPA of members that meet certain criteria in areas such as safety, reliability and employee training. You can learn more about this exciting initiative at the concurrent session - on reliability tomorrow morning. In each of these areas, and many more, APPA keeps members of the public power community informed through our daily and weekly newsletters and our bi-monthly magazine and our web site. The Internet has dramatically enhanced our ability to communicate with you. In addition to our electronic forums, we have created a network of public power government relations professionals.Thenearly 250individuals connected to this network, called the Government Relations Working Group, or GRWG, receive almost daily e-mail messages on legislative and regulatory developments. Since the beginning of the 108' Congress last year, nearly 500 e-mails have been sent to group. Let me address one final challenge facing public power—the public power workforce. Your employees are your most valuable asset, many of them are approaching retirement, and you will be challenged as you plan for succession and of necessity reach into the labor market to replace retirees. You can meet those challenges only if you are providing attractive employment opportunities, including attractive compensation packages. Unfortunately, the compensation of public power professionals hasn't kept pace with the compensationppackages offered by other employers. So a major focus of APPA over the last couple of years, and a major focus over the next several, will be to help public power policymakers understand the workforce challenges we face, and encourage them to pursue courses of action to address them. Concluslon Over the last few minutes, I hope I've been able to give you an overview of where our industry has been and where it is heading, how public power has fared, the challenges we face and how APPA can help you address them. APPA has much to offer. Take advantage of it. We wouldn't exist without you. We exist only to serve you. Have a great conference. 1 093 AZUSA INFORMATION ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: July 26, 2004 SUBJECT: ANNUAL ADJUSTMENT OF REPLACEMENT WATER COST ADJUSTMENT FACTOR The existing water rates for the Azusa Water Utility include an annual adjustment factor called the "Replacement Water Cost Adjustment Factor (RWCAF). This adjustment factor was implemented following the severe drought that occurred around 1990. The drought forced the Watermaster to set the Operating Safe Yield in the San Gabriel Basin very low, which in turn increased our replacement water costs far above those normally anticipated in a so- called normal water year. In 1992, the City Council adopted a rate methodology which included a RWCAF, which was incorporated into the City's regular water tariff. This resulted from a water rate review in which the replacement water cost component was analyzed separately. The adjustment factor that the City Council adopted, and which was recommended by staff, is similar to the Fuel Cost Adjustment Factor for electricity that was first introduced in the 1970's during the oil embargo when energy costs fluctuated regularly due to the unpredictable oil supply and costs. The RWCAF, by tariff adopted in 1992, requires annual review, and if necessary, is adjusted. Whenever an adjustment is required, the Director of Utilities is required to inform the Utility Board/City Council. This memorandum provides notice of that adjustment. The RWCAF will be adjusted for fiscal year 2004-2005 to an amount of $0.13 per ccf (hundred cubic feet), effective for all bills rendered after July 31, 2004. So far this year, the water supply from the San Gabriel River has been very low due to a record low winter rainfall. Consequently, the Main San Gabriel Basin remains at low levels, and therefore the Operating Safe Yield has been kept at the same level as last year in response to the lower levels. The current conditions have required, and will continue to require, the purchase of a higher than normal amount of replacement water; the adjusted RWCAF must therefore be continued. In addition, the carryover water right available to offset pumping for this fiscal year is low due to last year's lowered Operating Safe Yield. This year's RWCAF of $0.13 is an increase from last year's RWCAF of $0.09. The Operating Safe Yield as established by the Main San Gabriel Basin Watermaster for this fiscal year is 170,000 acre-feet, the same as last year. Prepared by: Chet Anderson, Assistant Director- Water Operations