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HomeMy WebLinkAboutMinutes - May 27, 2014 - UBCITY OF AZUSA MINUTES OF THE REGULAR MEETING OF THE AZUSA UTILITY BOARD/CITY COUNCIL TUESDAY, MAY 27 2014 — 6:30 P.M. The Utility Board/City Council of the City of Azusa met in regular session, at the above date and time, in the Azusa Light and Water (AL&W) Conference Room, located at 729 N. Azusa Avenue, Azusa, California. Chairman Gonzales called the meeting to order. Call to Order Pledge to the flag was led by Police Chief Gonzalez. Flag Salute ROLL CALL: Roll call was taken by Secretary Cornejo. Roll Call PRESENT: BOARDMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ, ROCHA ABSENT: BOARDMEMBERS: NONE ALSO PRESENT Also Present Elected Officials: Secretary Cornejo. Staff Members: City Manager Makshanoff, City Attorney Martinez, Director of Public Works/Assistant City Manager Haes, Utilities Director Morrow, Police Chief Gonzalez, Finance Director Paragas, Recreation and Family Services Jacobs, Assistant Director of Resource Management Lehr, Assistant Director Customer Care Solutions Kalscheuer, Assistant Director Water Operations Anderson, Administration and Finance Services Graham, Business Development/Public Business Coordinator Reid, Assistant Director Electric Operations Langit, Senior Management Analyst Yang, Senior Administrative Technician Cawte, Budget Analyst Lam, Assistant/Deputy City Clerk Hernandez. PUBLIC PARTICIPATION Public Part Mr. Jorge V. Rosales addressed the Board stating that the preliminary budget was not posted online until J. Rosales two days after the agenda, which did not give him enough time to review it and submit his questions; prior Comments to the meeting, Finance Director Paragas briefly answered one of his questions; he expressed concern as this is the second year that the preliminary budget had not been posted online ahead of time for the public to review. City Manager Makshanoff responded to Mr. Rosales' comments stating that records dating back to 2008, J. Makshanoff show that posting the preliminary budget online has not been a practice; he discussed it with staff, and it Comments was decided to post it online on Saturday afternoon; the preliminary budget was available at the City of ' Azusa Library, and Boardmembers received copies as well; should Mr. Rosales submit his questions, they will be answered accordingly; he will ensure that in the future it is posted online. He further answered questions posed by Boardmembers Macias and Carrillo stating that typically members Discussion of the public submit requests for information directly to the employees, and if the matter is something that can be answered in a small amount of time, he leaves it up to the department head'sjudgment to respond to those requests, and he is usually copied on those requests; if the response takes longer, staff allocates themselves, as all employees have busy schedules and cannot drop everything to answer a request that is going to take a lot of time and effort; it is staffs duty to serve the public, but there are other things that go along with assisting the public; duties are prioritized as well as requests that come in; he further stated that he understood the Boardmembers' concerns regarding investing tremendous amount of staff time to answer elaborate questions that may require financial analysis; he will ensure that he is copied on records requests in order to avoid miscommunication or misunderstandings. UTILITIES DIRECTOR COMMENTS Director Morrow Utilities Director Morrow welcomed everyone to the meeting and announced that staff is proposing two Comments Drought Forums for the public, on June 24, 2014, at the Azusa Senior Center, and July 24, 2014, at Faith Community Church in West Covina; a flier with information on the forums will be mailed together with the next utility bill, and it will also be announced through other means of communication; the location outside Azusa was chosen to make it available for customers who reside outside the City limits; topics to be discussed will be: drought III program, water situation, tips to conserve water and the requirements; representatives from the San Gabriel Municipal Water District (SGMWD) will be at the meetings to give information, and there will be hand outs and light refreshments; should the Boardmembers have concerns on the location of the forums, staff can find alternative locations; additional forums can be scheduled as it is deemed appropriate. He responded to a question posed by Bourdmember Carrillo stating that the forums are far apart in dates due to Utility Bills being mailed every two months, and this is the best means of communicating with each customer, otherwise it would be costly to do it by other means. UTILITIES BOARD MEMBERS COMMENTS Board ' Comments Boardmember Rocha addressed the EIR (Environmental Impact Report) forthe new development on Todd Ave. and 10th St., which addresses turf as an option to enhance the landscape; he suggested looking into J. Rocha the possibility of adopting a resolution or a policy, to ask new businesses and new developments, to use Comments water resistant landscape or turf. CONSENT CALENDAR: Moved by Boardmember Alvarez, seconded by Boardmember Carrillo, to Consent Cal approve Consent Calendar Items D-1 to D-8, with the exception of Item D-2, which was handled under the Item 2 Spec Special Call Portion of the agenda, by the following vote of the Board: Call YES: BOARDMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ, ROCHA NOES: BOARDMEMBERS: NONE 1. The minutes of the regular meeting of April 28, 2014, were approved as written. Minutes 2. SPECIAL CALL Spec Call 3. A previous authorization for Azusa Light & Water Department to undertake a study of feasibility and AB 2514, economics of installation/procurement of energy storage systems, as required by California Assembly Energy Storage Bill 2514 Mandated Study of Energy Storage, was ratified; and the previous expenditure limit was authorized to be increased to $20,000. 4. A two year extension to the three-year HVAC system maintenance contract with Ontario Refrigeration HVAC ' Service, Inc., was approved. Contract 05/27/2014 PAGE TWO The plan and specifications for project LD2014-2 were approved, and staff was authorized solicit Plans & Specs proposals for the furnishing and installing underground electric substructures at 760 West Foothill Boulevard, as depicted in drawing ED2014-2. ' 6. The Notice of Completion for the installation of the precast concrete wall/fence along south perimeter NOC Wall/ of the Electric Yard by Concept Consultant Inc. was approved and staff was authorized to file the Fence Proj Notice at the Los Angeles County Registrar's Office; and the Contract Change Order g I in the amount not to exceed $16,696.99, in order to complete the precast concrete wall/fence project on a timely basis, was ratified. 7. The following Resolution No. UB -4-14, was adopted and entitled: Reso No. UB - 4 -14, Use Oil A RESOLUTION OF THE AZUSA CITY COUNCIL AND UTILITY BOARD OF THE CITY OF Prog AZUSA, CALIFORNIA, APPROVING PARTICIPATION IN USED OIL PAYMENT PROGRAM ADMINISTERED BY THE CALIFORNIA DEPARTMENT OF RESOURCES RECYCLING AND RECOVERY. 8. The lease of vacant Suite 2B office space in the Azusa Light & Water building to YWCA of San Lease L&W Gabriel Valley was approved, and the City Manager was authorized to sign the associated Lease Bldg to YWCA Agreement. SPECIAL CALL ITEM Spec Call Moved by Boardmember Alvarez, seconded by Boardmember Carrillo to approve the award of a Professional Services Agreement (PSA) to Black & Veatch from Sacramento, in the amount of $83,450 (plus necessary travel expenses) for assistance to develop an Integrated Power Resource Plan, and authorize the Director of Utilities to sign and administer the PSA, by the following vote of the Board: YES: BOARDMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ, ROCHA NOES: BOARDMEMBERS:NONE SCHEDULED ITEMS Sched Items Water Supply Update and Authorization to Pursue Strategic Options. Water Supply Update Utilities Director Morrow addressed the item stating that the drought is critical, the water levels and state water projects are low; Azusa relied on MWD (Metropolitan Water District) as a safety net, but due to the State Water Project's low water allocation, water will need to come from the Colorado River, which contains quagga mussels that cannot be introduced to the basin, as it would create problems with water ' treatment facilities, reservoirs and filters; in addition, the large basin has dropped considerably and a significant amount of water supply was lost by that reduction; staff has been searching for ways to increase the water supply and reliability; at one time, AL&W had seven wells in the main basin, many of those wells got old and inefficient, and/or impacted by contamination issues and they were put on reserve 05/27/2014 PAGE THREE Hire Black & Veatch to Develop an Integrated Power Resource Plan. Professional Services Utilities Director Morrow responded to a question posed by Boardmember Alvarez stating that the travel expenses by Black & Veatch, might be regional flights, meals and possible hotel stays, so that they can Agreement, Black & meet with L&W staff; the bid included their travel expenses for an approximate amount of $2,000 to Veatch for $3,000; a reasonable maximum amount of $3,000 was estimated, in order to avoid having to request Integrated additional funds later on in the process; the professional services agreement cannot be approved without Power the contractor's exact amount of their travel expenses. Resource Plan Moved by Boardmember Alvarez, seconded by Boardmember Carrillo to approve the award of a Professional Services Agreement (PSA) to Black & Veatch from Sacramento, in the amount of $83,450 (plus necessary travel expenses) for assistance to develop an Integrated Power Resource Plan, and authorize the Director of Utilities to sign and administer the PSA, by the following vote of the Board: YES: BOARDMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ, ROCHA NOES: BOARDMEMBERS:NONE SCHEDULED ITEMS Sched Items Water Supply Update and Authorization to Pursue Strategic Options. Water Supply Update Utilities Director Morrow addressed the item stating that the drought is critical, the water levels and state water projects are low; Azusa relied on MWD (Metropolitan Water District) as a safety net, but due to the State Water Project's low water allocation, water will need to come from the Colorado River, which contains quagga mussels that cannot be introduced to the basin, as it would create problems with water ' treatment facilities, reservoirs and filters; in addition, the large basin has dropped considerably and a significant amount of water supply was lost by that reduction; staff has been searching for ways to increase the water supply and reliability; at one time, AL&W had seven wells in the main basin, many of those wells got old and inefficient, and/or impacted by contamination issues and they were put on reserve 05/27/2014 PAGE THREE and/or retired; the paper water rights that Azusa owns, need to be turned into wet water to increase the water supply; in addition, there are a number of untested interconnections with neighboring cities in the southern part of the system, these can be tested and fixed to have them work again, so that water can be ' shared; options that staff is considering: the well located at the Gladstone yard has been tested for contamination, and there is the possibility that it might be used again; the Aspan well has not been operated for 20 years, it is a good well and has a large capacity for storage; purchase water from some of the sale agencies, if needed; evaluating reclaiming water a little more formally, it may not be able to be delivered economically "up the hill" to Azusa, but it might be useful to some parts of our southern system. He responded to a question posed by Boardmember Carrillo, stating that an example of a formal procurement process is that instead of advertising through the traditional venues such as the newspaper, which may take longer, a scope of work is put together and sent directly to potential companies, phone calls are made, requests are due back within few days instead of the traditional 30 days, they are reviewed and the most qualified is presented to the Board for approval, an agreement is signed and the project moves forward. Moved by Boardmember Macias, seconded by Boardmember Carrillo, to authorize staff to move forward on an urgent/emergency basis to identify, validate, and implement strategic options to improve water supply reliability/availability as described in the report, and to make related expenditures as long as they can be supported within approved budgets and purchasing authority thresholds, or are reported back to the Utility Board for approval/ratification on a timely basis as may be required by applicable policies, by the following vote of the Board: YES: BOARDMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ, ROCHA ABSENT: BOARDMEMBERS: NONE I Professional Seryices Agreement with Civiltec Engineers for the Design of Supervisory Control and Data Acquisition (SCADA)/Piping to Complete SGVMWD Pipeline Interconnection at Hsu Canyon Water Treatment Plant. Utilities Director Morrow addressed the item stating that staff is looking into implementing an emergency inter connection between the water treatment plant and the Four Cities pipe -line; currently the four cities pipe -line comes to Azusa and dumps all the water into the ponds, that water has lower value, as everyone has access to it and is costly to pump out, compared to the water that goes to the treatment plant, which Azusa owns; staff is asking for assistance from the four cities, they have signaled that they may be able to assist in the process; Civiltec has previous experience with such projects and may be able to move the project forward quickly. Moved by Boardmember Macias, seconded by Boardmember Alvarez, to waive the formal proposal process and award a Professional Services Agreement to Civiltec Engineers to provide engineering services for the design of SCADA and piping to complete the SGVMWD pipeline interconnection at the Hsu Canyon Water Treatment Plant (WTP) for a not -to -exceed price of $39,178, by the following vote of the Board: YES: BOARDMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ, ROCHA NOES: BOARDMEMBERS: NONE Seek the Services ofa Hydrogeologist and a Well Driller to Provide Geologist Services and Well Drilling Services. 'Utilities Director Morrow addressed the item stating that staff is looking at the possibility ofa new well in the main basin on the east side of the system; before any drilling can be planned, a hydrogeologist would have to assess the ground conditions; once staff feels comfortable with the conditions, a drilling company can be hired; the goal is to move quickly on this project and finalize it within a year. 05/27/2014 PAGE FOUR Civlitc Eng Professional Services Agreement, Pipeline Inter- connection, Hsu Water Plant RFP Hidro- geologist Services J �"i He responded to a question posed by Boardmember Macias stating that the process involved in building a well would be to first look at the recommendations from the hydrogeologist, to find out if contamination exists and the type of underground materials in the region, to determine if it can be drilled and how deep; the State Water Board, WaterMaster and other agencies in the region would need to be notified; acquire the required permits, hire a drilling company, move materials, etc.; the estimated one year would be a quick process, the goal is to have it done by June 2015 , as the summer season is the most critical time; a well in the eastside of the basin is the best option, it can be used for many years, and in addition, the City has the ability to pump water using water rights it already owns. Moved by Boardmember Rocha, seconded by Boardmember Carrillo, to waive the formal Request for Proposals process and authorize staff to solicit proposals as expeditiously as possible for the professional services of hydrogeologist and a well drilling company, staff expects to return with a recommendation for review/approval by the Utility Board at its June 23, 2014 meeting, by the following vote of the Board: YES: BOARDMEMBERS: GONZALES, CARRILLO, MACIAS, ALVAREZ, ROCHA ABSENT: BOARDMEMBERS: NONE STAFF REPORTS/COMMUNICATIONS Treatment of Proceeds from Sales of Greenhouse Gas (GHG) Allowances. Utilities Director Morrow gave information on the sale of some of the GHG last summer in the amount of $322,644; State Law requires that this be returned to the rate payers; there is an adopted policy in place for returning these funds, Azusa Utility Board is to be notified of the process. Regulatory Reporting. Utilities Director Morrow gave information on the mandatory regulatory reporting by the state; it takes a lot of staff time to put together; there will be a meeting on June 2, 2014, in Sacramento, where several utilities, including Azusa, will be attending, to talk to CEC Commissioners and staff and this reporting is one of the key topics to be addressed. Staff Rprts GHS Regulatory Reporting Notification of Potential Procurement of (1) SP 15 Energy Hedge(s) for 3`d Quarter 2014 and (2) Physical Energy Update Energy for Summer 2015 to Replace a Terminating Contract. Utilities Director Morrow gave information regarding the market for power, stating that it is getting more volatile as there is more demand for electricity; prices are going up, and during the summer super peak, prices can be high; staff is considering a hedge purchase (buying in advance) 10 MW (Megawatt) with the goal of promoting rate stability; for 2015, staff had a long-time Shell summer purchase that will expire after this year; other plans are in place for 2016, and it is prudent to start considering a replacement for at least one summer period. Status of San Juan Divestiture. San Juan Update Utilities Director Morrow gave an update stating that staff continues to move forward to divest the San Juan Project; Azusa staff no longer sits at the negotiating table, there is only a small team that negotiates and all communications are funneled through them; they are very tough negotiations, but an agreement between the departing and remaining participants appears to be closer, Azusa being one of the departing as well as all the California entities; April 30, 2014, the EPA (Environmental Protection Agency) agreed to a plan to shut down two of the units to help reduce the regional haze and to install less costly environmental controls on the remaining two units; there will be a 30 day comment period on the plan, and it is estimated that the EPA will make a final approval in October, 2014; staff has made arrangements to replace a sizeable amount of the San Juan power. 05/27/2014 PAGE FIVE Results of the California Air Resources Board's May 16 2014 Auction of Greenhouse Gas (GHG) GHG Auction A I lowances. ' Utilities Director Morrow gave information on staff s participation in a GHG allowance auction on May 16, 2014, they purchased and sold 35,000 allowances at a clearing price of $11.24, and totaling $402,500; most of the buyers were compliant entities who compete to have the required allowances for the emissions of the power plants; staff is required to report back to the Utility Board on the activities of the auction. Foam Recycling Program Update Foam Recycling Utilities director Morrow gave an update on the foam recycling program, stating that the recycling team is Program proposing September 20, 2014, 9:00-12:00 P.M. at the AL&W parking lot, and to also have an electronic waste collection on the same day; it will be open to all residential customers, including outside the City limits, and to Azusa business customers only; there are plans to do a lot of promotion. FY 2014-2015 Utility Preliminaryyet Review, Preliminary Budget Review Utilities Director Morrow presented the budget: BUDGET BACKGROUND: Emphasis on providing reliable, customer -oriented affordable high quality service; Keep the status -quo operating budget; no plans to add any full-time positions. He explained that due to the water drought, it was difficult to project sales, and it was decided to use the lowest sales level of the last 10 years, which is 10% below the recent 12 month period; there was no change in sales revenue; the newest project is the proposed Reservoir Rehabilitation, a detailed inspection has been recently conducted, and work will need to be done, starting with the Sierra Madre Reservoir; staff will continue with the pipeline replacement program; funds were budgeted for the four -cities pipeline connection; currently there is a good reserve, and a positive debt service. ELECTRIC: Electric Budget Sales increase is predicted due to the new homes; power supplies are going up due to the economy getting better; supply costs are increasing, and costs are going up due to the divestiture of the San Juan unit; currently there are some capital projects, and in this budget, staff is proposing a distribution system master plan, one is conducted every so many years and is time to do it again; there will be Goldline expenditures due to the parking structure; old equipment will need to be replaced to keep the proper voltage; and the purchase of software for equipment accounting/inspection purposes out on the field. 'KEY FUTURE ITEMS: Key Future The water supply and Drought Management will keep the department busy; staff continues to move Items forward with the modernization of the Utility System ("Smart Grid") where investments will need to be made, as it is the way of the future, and staff will continue to work on an RFP for this system. 05/27/2014 PAGE SIX WATER: Water Budget Used lowest sales level of last 10 years, 10% below recent 12 month period; Operating budget cashflow $ 3,500,000 ' Lease Revenue Key Capital Projects: 2,000,000 Reservoir Rehabilitation 500,000 Pipeline Replacement Program 1,000,000 SCADA and SGVMWD Connections 100,000 Truck Replacements 45,000 Approximate Cash Reserves 20,000,000 Debt Coverage of 1.43 (1.25 minimum) He explained that due to the water drought, it was difficult to project sales, and it was decided to use the lowest sales level of the last 10 years, which is 10% below the recent 12 month period; there was no change in sales revenue; the newest project is the proposed Reservoir Rehabilitation, a detailed inspection has been recently conducted, and work will need to be done, starting with the Sierra Madre Reservoir; staff will continue with the pipeline replacement program; funds were budgeted for the four -cities pipeline connection; currently there is a good reserve, and a positive debt service. ELECTRIC: Electric Budget Sales increase is predicted due to the new homes; power supplies are going up due to the economy getting better; supply costs are increasing, and costs are going up due to the divestiture of the San Juan unit; currently there are some capital projects, and in this budget, staff is proposing a distribution system master plan, one is conducted every so many years and is time to do it again; there will be Goldline expenditures due to the parking structure; old equipment will need to be replaced to keep the proper voltage; and the purchase of software for equipment accounting/inspection purposes out on the field. 'KEY FUTURE ITEMS: Key Future The water supply and Drought Management will keep the department busy; staff continues to move Items forward with the modernization of the Utility System ("Smart Grid") where investments will need to be made, as it is the way of the future, and staff will continue to work on an RFP for this system. 05/27/2014 PAGE SIX m Finance Director Paragas stated that for the Utility Budget, new projects and operating expenses internal service funds are included; the budget on the Utility side is of $76,000,000. ' She responded to questions posed by the Boardmembers, stating that the internal service fund is the cost for customer service funded by water and electric; water provides 65% of the cost and the electric 35% , which are already projected in the budget; the deficit reflects an increase in power supply and decrease in sales; San Juan is a big portion of the expenses. n It was consensus of the Board to adjourn the meeting. TIME OF ADJOURNMENT: 7:31 P.M. ' W NEXT RESOLUTION NO. UB -5-14. 05/27/2014 PAGE SEVEN Adjourn