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Home My WebLink AboutAgenda Packet - September 23, 2002 - UBAGENDA 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 CRI TINA C. MADRID BOARD MEMBER MONDAY, SEPTEMBER 23, 2002 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 1, (Person/Group shall be allowed to speak without Interruption up to frve (5) minutes maarmum time, subject to compliance with applicable meeting rules. Questions to the speaker or responses to the speaker's questions of comments, shall be handled after the speaker s time-) completed his/her comments. public Part/clpat/on will be limited to sixty (O)minutes The Consent Calendar adopting the printed recommended action will be enacted with one vote. if Staff or Councilmembers wish to address any item on the Consent Calendar Indiv/duaIt will be consldered under &, SPECIAL CALL ITEMS. 0 S Ill. CONSENT CALENDAR A. Minutes. Recommendation: Approve minutes of regular meeting of August 26, 2002, as written. In II -A. UB Min for 8-26-02. DOC B. Roadway Lighting on Azusa Avenue. Recommendation: Approve conceptual plan and specifications to refurbish existing roadway lighting on Azusa Avenue between 1' and 5th Streets, and authorize advance purchase of new light poles. II -B. St Light on Azusa.DOC C. Additional Compensation of ERS Industrial Services. Recommendation: Approve the additional payment of $2,000 to ERS Industrial Services, Inc. for work performed at Filtration Plant to cover prevailing wage costs. IIC. Payment to ERS Ind Svcs. DOC D. • Professional Services Contract with Wren S Associates. Recommendation: Approve professional services contract with Wren &Associates to perform inspection services on Project W-183, Northerr Transmission Line. ININI II -D. Wren Prof Svc Agnnt.DOC E. Additional Compensation of Wren &Associates Recommendation: Approve the additional payment of $2,000 to Wren &Associates for inspection services on Project W-170, Waterline Improvements. WINI II -E. Payment to Wren &Assoc.DOC V Human Resources Action Item Regarding Assistant Director of Resources Management Recommendation: Approve of appointment of Bob Tang to position of Assistant Director of Resources Management pending physical examine results. rI-F. HR Action Item re Asst Dir Res Mgt.d 002 111. SCHEDULED ITEMS A. Comprehensive Lone Ranee Capital improvement Program. Recommendation: Approve Comprehensive Long -Range Capital Improvement Program for Fiscal Year 2002-03. .H III -A. RC's Rpt re III -A. Spsht re CIP.DOC CIPA6 B. Pavement Management Program. Recommendation: Deliberate on deficiencies of existing street maintenance activities, and direct staff to prepare plan of correction including financing mechanism for future City Council meeting. III -B. Pavement Managerrent.doc C. Sewer and Street Sweeping Charges. Recommendation: Deliberate on proposed sewer and street sweeping charges and direct staff to prepare proposed rates for approval by resolution at future City Council meeting. III -C. Sewer & Street Sweeping Rat( D. Energy Conservation Education Program. Recommendation: (1) Waive formal bidding procedures for turnkey interactive conservation program for Azusa sixth graders; and (2) Award the purchase of a turnkey interactive conservation program for Azusa sixth graders to LivingWise. KIN I IIID. Conservation Education -Liv ingwise. E. Electric Transmission Control Agreement. Recommendation: Authorize the Mayor to execute a Transmission Control /agreement (TCA) with Independent System Operator and other Transmission Owners when agreement is complete. WWI III -E. Rpt re TCA Agreement.doc Utility Distribution Company Operating Agreement. Recommendation: Authorize Mayor to execute the Utility Distribution Company Agreement (UDC) with independent System Operator. III -F. Rpt re UDC Agreernent.doc 003 G. Resolution on City Transmission Owner Tariff and Revenue Requirement Recommendations: (1) Authorize Mayor to execute proposed Transmission Owner (TO) Tariff upon final completion; (2) adopt resolution establishing the City's Transmission Revenue Requirement. III -G. Rpt re Transm Rev Requlrernent.doc In III -G. Resp re Transm Rev Requiren H. Standard Operating Procedures for Emergency Reponses by Electric Operation Recommendation: Approve proposed changes to the City's Standard Operating Procedures and Emergency Response Procedures to be used as component of the City's Utility Distribution Company Operating Agreement with the Independent System Operator. In III -H. Rpt re Errgcy Res Prooedures.doc Water Supply Assessment for Monrovia Nursery Project. Recommendation: Approve of attached Water Supply Assessment and authorize staff to file the same with the Azusa Community Development Department. Inlu III -I. Rpt re Water III -I. Water Supply SuppyAssessment.d Assessment.DOC Option Agreement with Los Alamos County, New Mexico. Recommendation: Approve of Option Agreement with Los Alamos County (LAC) for Azusa's San Juan Entitlement, and authorize Mayor to execute same. Eaj -ELI III -J Los Alarms III -3. LAC Option OptionAgreement.DL Agreement.doc IV. STAFF REPORTS/COMMUNICATIONS A. Monthly Power Resources Update B. Staff/Board Interviews for Telecom Study IV -A. Covr Rpt re IV -A. PP Pres re Power Res Update.dc Power Res. ppt B. Staff/Board Interviews for Telecom Study V. DIRECTORS' COMMENTS A. Book Review—Boards That Make A Difference, by John Carver (Review of Chapters 3 and 4—notes attached) In V-A. Notes on Boards That Make A [ VI. ADIOURNMENT A. Adjournment. The City Council will adjourn to Monday, September 30, 2002, at 7:00 p.m. in the Azusa Auditorium in order to hold a joint Meeting with the City of Glendora City Council. (Please note that on September 30, 2002, the City Council will adjourn to Saturday, October 5, 2002, at 9 a.m. in the Light and Water conference room in order to hold interviews for City Board and Commission.) `7n compliance with the Americans with Disabilities Act, Ifyou need special assistance to participate In a city meeting, please contact the City Clerk at 626-812-5229. Notification three (3) working days prior to the meeting or time when 'Special services are needed wlll assist staff in assuring that reasonable arrangements can be made to provide access to the meeting. 005 CITY OF AZUSA MINUTES OF THE REGULAR MEETING OF THE AZUSA UTILITY BOARD/CITY COUNCIL MONDAY, AUGUST 26, 2002 - 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: COUNCILMEMBERS: HARDISON, STANFORD, ROCHA, CHAGNON, MADRID ABSENT: COUNCILMEMBERS: NONE Also Present ALSO PRESENT: City Attorney Ferre, Director of Utilities Hsu, Assistant to the Director of Utilities Kalscheuer, Assistant Director of Electrical Engineer Langit, Utilities Marketing Services Coordinator Torres, Director of Customer Care and Solutions Vanca, Deputy Water Operations Anderson, Assistant City Clerk Toscano, City Clerk Mendoza. Pub Part None Public Participation None An item of subsequent need arose regarding an Option Agreement with Los Alamos County, New by Councilmember Chagnon Item of Subsequent Mexico, and it was moved by Councilmember Stanford, seconded need and unanimously carried to agendize it as item 111-B. t was consensus of Councilmembers to removed item Iii -A from.the agenda regarding Transfer of Tr f r tr Water Rights. The CONSENT CALENDAR consisting of Item 11-A through 11-F, were approved by motion of Consent Councilmember Stanford, seconded by Councilmember Hardison, and unanimously carried with Calendar the exception of Items B, C, E iL F, which were considered under the Special Call portion of the `, Agenda. U A. C. The minutes of the regular meeting of July 22, 2002,.were approved as written. Min appvd, SPECIAL CALL ITEM. SPECIAL CALL ITEM. Spec Call Spec Call D. Letter of support regarding AB 2308, (Chavez), to Senator Gloria Romero, to remove inert Ltr support waste form disposal reporting system that is used to determine compliance with AB 939, was AB2308 approved. E. SPECIAL CALL ITEM. F. SPECIAL CALL ITEM— NO ACTION WAS TAKEN ON THIS ITEM. Special Call Items Director of Utilities Hsu and Electrical Engineer Langit addressed item 11-B, citing the benefits of employing an Engineering, Procurement 8- Construction (EPC) approach in constructing electric substations as follows: 1) It reduces the project timeline and administration burden to process multiple agreements on separate engineering, procurement &construction contracts. 2) Quality control and cost saving will accrue if one seamless vendor or firm will be doing the entire substation project as opposed to different parties dealing with uncoordinated portions of the project. "One -stop -shop" arrangement also eliminates potential design problems &delays that normally arise in this type of specialized construction. 3) EPC approach follows similar competitive arrangements in material procurement and construction services and the possibility of savings will encourage EPC vender to work efficiently without sacrificing design standards and quality construction. 4) The major electrical equipment such as high voltage circuit breakers, power transformers, control panels & relay equipments are not readily available but have to be ordered, manufactured then delivered. EPC approach advances the procurement process upon completion of detailed design and coordinates equipment installation during construction stage thereby eliminating delays and potential design conflicts with different vendors, suppliers and contractors. Director Hsu and Electrical Engineer Langit answered questions regarding other cities that have used this process, cost, and how the firm becomes the general contractor. Spec Call Spec Call Special Call Dir of Util & Elect Engr Comments Re: EPC for Azusa Substation Moved by Councilmember Stanford, seconded by Councilmember Rocha and unanimously carried Auth to to authorize staff to prepare a Request For Proposal/Qualifications (RFP/Q) and solicit a complete Solicit Engineering, Procurement and Construction (EPC) proposal for constructing the new Azusa RFP/Q Substation at 1 160 West Gladstone Street. EPC Chairperson Chagnon questioned item in the fiscal impact listed as "other parties" regarding the Chagnon Award of Contract for Project W-182, Northern Transmission Main. Question Utilities Director Hsu responded stating the "other parties" reimbursement noted in the fiscal Util Dir impact is an agreement that was entered into with a large commercial customer in Irwindale. Response V Moved by Councilmember Stanford, seconded by Councilmember Rocha and unanimously carried No. Trans to approve the award of the contract to Engineered Plumbing for the construction of Project W- Wtr Main 183, Northern Transmission Water Main. Assistant City Manager Person addressed item regarding Budget Amendment to cover river related Asst CityMgr expenses, clarifying that the budget amendment consists of carryover money from Suzanne Avila' Comments old contract from last fiscal year and money that has been allotted for river projects In addition to Suzanne Avila' new contract amount. 08/26/02 PAGE TWO 007 Mved by er Stanford, onded by ilmember Rocha and unanimously carried Budget too authorize anBudget bAmendment incthe mount ofc$200,000.00 to cover 2002/2003 River Amend Approved related expenses. Discussion was held regarding declaring certain property surplus and offer to sale pursuant to Discussion California Government Code. The property is a parcel acquired through the acquisition of Azusa Re: surplus Valley Water Company. There is an above ground water storage reservoir with appurtenant Item. No structure on the property. Utilities Director stated that Monrovia Nursery approached the City Action wanting to acquire the property, but it has to be declared surplus. It was consensus of Councilmembers not to declare it surplus at this time. Sched Items Scheduled Items Item regarding Transfer of Water Rights was removed from the Agenda. Item Rmvd This following item was an item of subsequent need. Utilities Director Hsu stated that one of the Item of main concerns staff has regarding existing power resource is the over -reliance on City's San Juan Sub -Sequent Unit 3 entitlement. Staff's strategy was to either assignor exchange part of the entitlement with Need another party, and replace the assigned amount with either a power resource (ownership) or a Option long-term contract. Los Alamos County in New Mexico showed interest in acquiring part of the Agreement entitlement and the negotiation process began. Mr. Hsu advised that LAC just received its Los Alamos board's approval to enter into an Option Agreement which would give LAC exclusive right during County, the Option Period, 60 days from September 16, 2002, they would have a right to exercise option New and enter into a Purchase Agreement or they could decide to walkaway from it. IAC is willing to Mexico pay $5,000 as a deposit; if they withdraw from the agreement, the City will receive the money and if they purchase the power they will use the $5,000 as credit. Within the 60 days the City of Azusa will not be able to negotiate with anyone else. He described the process for purchase and replacement of power. Lengthy discussion was held between Councilmembers and staff regarding the pros and cons of the issue. Councilmembers statements were to release the option so it's not binding, further that the City won't market and sale to anyone else within 60 days, but, any purchase and sale would be at the City's discretion. An update on this item is to be placed on the next agenda. Moved by Councilmember Stanford, seconded by Mayor Madrid and unanimously carried to Option Agmt approve the Option Agreement conditioned upon certain changes whereby the City would agree Approved. not to market to any third party during the Option Period. However, the determination of whether to enter into any agreement would be in the discretion of the parties. Staff Reports/Communications Staff Rpts Assistant -Director of Customer Care and Solutions Vanca presented the Flex Your Power Energy Flex Your Conservation Award the City received from Sacramento on August 20th. This was in response to Power Award the 2001 summer energy crisis and the Governor's request for energy reduction. The City To Azusa created a multi -pronged approach to reducing energy usage in Azusa. Utility Director Hsu, addressed item 5egarding Electric Utility Operating Cost and Revenue LIM Dir Projection for FY 03-08. He stated that operating costs have gone up and we can't rely on Re: Elect. wholesale revenue; operating cost should be covered by retail revenue. He stated that there is a Utility need for a 5% increase in electric rate and recommended that it be effective October 1, 2002; will Operating keep the $.01 per kilowatt hour surcharge implemented last January, 2001 to stay on until June Cost Rev 2003. Further, in future still need to increase to cover cost of the substation. He stated that with Project a 5% increase Azusa is still 40% below Edison for residential customers and the average customer increase will be about a $2.50. He responded to questions posed and noted that a Public Hearing on the increase will be placed on the Council Agenda on September 16, 2002. 8 �^ p 08/26/02 PAGE THREE v Mayor Madrid requested that she be furnished with a list of City assets and to see how to Mayor improve the amenities. She also asked where the City is on renewable energy, such as Solar. Comments Utilities Director responded and spoke about renewable energy. Councilmember Rocha advised that there are some power lines that need to be checked at the Rocha home on the corner of Rosalinda and Celeste, owned by Mrs. Franks, as the house has a Chinese Comments Elm in front and you can't see.the power lines and there is a need to have the tree trimmed away as they lights Flutter when its windy. Utilities Director Hsu and Assistant Director of Water Operations Anderson responded to Workplan questions posed by Chairperson Chagnon regarding the Workplan, i.e., Electric Construction of Presentation the office remodel, the Co -Gen project and repairs to Sierra Madre Reservoir. Utilities Marketing Services Coordinator Torres addressed Utilities Board presenting an update on Pwr Res the California Electricity Market. The Overview consisted of Federal Actions, State Actions, Mo Rpt Financial Stability of the Market, Spirit of Cooperation and Joint Planning, What the future holds Update for the City and What Azusa should do. He advised that FERC is continuing its quest of California promoting competitive electricity market, they intend to standardize the market structure Electricity throughout the nation, they appear to be getting "tougher" in monitoring the market and are Market enmeshed in many litigious proceedings regarding the fallout of California energy crisis. He advised that with regard to State actions there are contentious PG&E bankruptcy proceedings, they continue investigations of the causes of the energy crisis, the fervor of building electric Infrastructure has considerable cooled down, there is no direction in how to plan for the future and the over reliance in one fuel source is natural gas. He stated that the financial stability of the Electric Market is dominated by financially weak market participants, and there are no expectations of near term financial health of the market. In the spirit of cooperation and joint planning California pursues a California -centric approach with no substantial regional cooperation with western states or the region. He stated that the future holds higher volatility and' unpredictability in supply and demand balance, higher cost of doing business for traditional utilities and ultimately, higher costs to the consumers. Utilities Director Hsu provided the Quarterly Billing Report for April 2002 and the Monthly Qtly Billing Departmental Summary were provided as an information items and Assistant to the Director of Rpt &Mthly Utilities Kalscheuer answered questions posed by Councilmembers regarding the department Dept. Energy energy savings and City auditorium new lighting. Savings Utilities Director provided an update on San Juan Generation Project, Moody's Credit Rating, and Util Dir on Assistant Director's Recruitment and answered questions posed. Comments It was consensus of Councilmembers to recess to Closed to discuss the following: Closed CONFERENCE WITH LEGAL'COUNSEL—ANTICIPATED LITIGATION (Gov Code Sec 54956.9 (c)) Session One Potential Case. Recess: 8:12 p.m. Reconvened: 8:35 p.m. There was no reportable No Rpts action taken in Closed Session. Councilmembers conducted a Book Review — Boards That Make A Difference, by John Carver. Book Review r It was consensus of Councilmembers to adjourn. Adjourn TIME OF ADJOURNMENT: 8:50 P.M. SECRETARY NEXT RESOLUTION NO. 02-C87. 08/26/02 PAGE FOUR 009 V , , <E3xR .MMM` w TO; HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES�W� DATE: SEPTEMBER 23, 2002 �� KK�� SUBJECT: APPROVE CONCEPTUAL PLAN &SPECIFICATIONS TO REFURBISH EXISTING ROADWAY LIGHTING ALONG AZUSA AVENUE BETWEEN 1" & 5" STREETS, AND AUTHORIZE STAFF TO PURCHASE IN ADVANCE NEW LIGHT POLES RECOMMENDATION It is recommended tha tility Board / City until: 1) Approve the Conc tual Plans pecifications for refurbishing roadway lighting along Azusa Avenue, and tho ' e our City Clerk to advertise & solicit bids for lighting improvements; and 2) Authorize staff to rchase ' advance the new light poles and fixtures from sole vendor/ manuf urer in the amo of to exceed $146,000. About 4 years ago, City of Azusa embarked on a downtown beautification project along Azusa Avenue between 5"' and 9"' Streets. The objective was to improve Azusa's downtown business center and nearby street corridors. As part of the beautification project, new light poles & fixtures were installed that combined adequate roadway lighting with enhanced sidewalk illumination during evening hours. The previous lighting Improvement was intended to encourage pedestrian traffic and help create a vibrant business atmosphere within Azusa's downtown. For reference, see, photographs of existing light poles and fixtures shown under Exhibit # 1. Azusa Light & Water proposes to refurbish existing roadway lighting along Azusa Avenue, by extending new lighting fixtures north of 1" Street up to 51 Street. Staff prepared a preliminary Conceptual Plan & Specifications (see Exhibit # 2), for consideration and approval by the Utility Board/City Council. The Plan involves removal of existing old light pole standards including a few that are attached as mast arms on power poles (see Exhibit # 3). The replacement high pressure sodium (hps) lighting will be the new light poles shown In Exhibit #2, but staggered and spaced more apart. New light poles will be painted with identical cobalt blue color to match existing fight poles installed In 1998. 010 FISCAL IMPACT Staff anticipates completing this project during fiscal year 2002-2003, and that budgeted funds are available under Account #3380-000-730-7145/73001. 1 PREPARED BY: 'F.'LANGIT, JR.PE, ELECTRICAL' ENGINEER AND H. VUONG, ASSOCIATE ENGINEER .`- < G11 I \��.1'�v��' is `� • � `�� k r S i 7 • ,,,,fy.iaiti.��..••r' � a N A iy li a 2y F-_ a :lig •�� i�� SII - VIP - !yi k I \��.1'�v��' is `� • � `�� k r S I \��.1'�v��' is `� • � `�� i 7 • ,,,,fy.iaiti.��..••r' � a N A iy li a 2y F-_ a I \��.1'�v��' is `� • � `�� EXHIBIT 2 FIFTH ST N J W E W �2 Q 0.1 Q A Q v7 W L7 7 f N Q Z Q Q 20C fINIPL (BY FILERS, FIRST AZUSA LIGHT & WATER W Q Q Q W Q J a ST v M— WIT (0 PIPE 3/8' 8.0 r 15/' VALL) PRE I SFS NF FACTORY PLL CAS1 IRON AND STEEL LILNI POLE PPFTS RE i0 AI EACTORx PRINE PAINTER REO p%f OC. f[NISH PPI i TO BE PPPLIEO Iry EIEIp BY OTHERS. u GP- 9' BASE DIA.. STEEL FLUTER WEKII POLL 0.14'/6. TAPER BRACKET U 1 IH• SLATS ACCEPTING 36' A30) LALVAM2EB ANCHOR BOLTS A36 STEEL PLATE R TI 2'm BOLT CIRCLE, BASC PLATE E SCALE, 2 2% BASE CULLAR UPPER BASE SECTION RENOVABLE ACCESS YOUR LOVER BASE SECTION VI-A/9-LI-P/2B'3' NOTE: LIGHT POLE SPACING IS 150 FEET ON EACH SIDE OF ROADWAY. ACTUAL LOCATION TO BE DETERMINED BASED ON FIELD CONDITIONS. PROPOSEDIMPROVEMENTS CONCEPTUAL PLAN ROADWAY LIGHTING ALONG AZUSA AVENUE BETWEEN 1ST AND STH STREET EXHIBIT 3 V MAST ARM ATTACHED TO EXISTING POWER POLE 0 APPROX. LOCATION ONLY TOTAL OF 23.250 WATT LAMPS AZUSA LIGHT 9 WATER Li FIRST ST ��A DHAMN: HV DATE: 087802 SCALE: 11a407 OLD TYPE CONCRETE POLE WITH OVERHEAD WIRING NEW OCTAGONAL CONCRETE WASH OUT POLE & V MAST ARM AND UG WIRING EXISTING ROADWAY LIGHTING ALONG AZUSA AVENUE BETWEEN I ST & STH STREET DWG. NO. ED SLS SHEET OF I P�7USA CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: SEPTEMBER 23, 2002 SUBJECT: ADDITIONAL COMPENSATION TO ERS INDUSTRIAL SERVICES FOR EXTRA COST RELATED TO PREVAILING WAGE REQUIREMENT RECOMMENDATION It is recommended that the Utility Board/City Council approve the additional payment of $2,000 to ERS Industrial Services for an extra to their contract to change the sand at the Filtration Plant. BACKGROUND In January, the Utility Board approved a contract with ERS Services, Inc. to change out the sand in Filter No. 2 at the Filtration Plant. The Standard City Contract which was sent to ERS for signature contained a requirement that ERS pay their workers prevailing wage. ERS claimed that they were not notified that they were to pay prevailing wage and that their bid price did not contain a price for the increased cost of labor. ERS was requested to provide proof that they paid their workers the wage rate called for by prevailing wage, and ERS submitted that proof in July, 2002. The extra compensation called for is $2,000. FISCAL IMPACT The fiscal impact of this payment is $2,000 to be paid from the maintenance budget V Prepared by: Chet Anderson, Assistant Director of Water Operations 015 CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES� DATE: SEPTEMBER 23, 2002 SUBJECT: APPROVAL OF A PROFESSIONAL SERVICES CONTRACT WITH WREN & ASSOCIATES TO PERFORM INSPECTION SERVICES ON PROJECT W-183, NORTHERN TRANSMISSION LINE RECOMMENDATION It is recommended that the Utility Board/City Council approve a Professional Services Contract in the amount of $40,000 to Wren & Associates to provide inspection services on Project W-183. BACKGROUND Construction on Project W-183, Northern Transmission Line, will begin shortly and will require inspection. Wren &Associate recently completed the inspection of W-170, on which they did an excellent job of inspecting the construction of neighborhood waterlines under sometimes trying conditions. As this project is being funded by a third party, the cost of inspection will be an expense that will be reimbursed to the City by that third party. FISCAL IMPACT The fiscal impact of this payment is zero because the payments to Wren & Associates for inspection services will be reimbursed by a third party. V Prepared by: Chet Anderson, Assistant Director- Water Operations CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES ��A-- DATE: SEPTEMBER 23, 2002 SUBJECT: ADDITIONAL COMPENSATION TO WREN l;_ ASSOCIATES FOR EXTRA COST RELATED TO EXTRA INSPECTION ON W-170 RECOMMENDATION It is recommended that the Utility Board/City Council approve the additional payment of $2,000 to Wren &Associates for an extra to their contract to inspect project W-170. BACKGROUND Project W-170, Waterline Improvements, installed by Simich Construction, was due to be complete on August 7, 2002. Simich actually completed the work on September 6, 2002, giving rise to an assessment of liquidated damages for the 30 calendar days the project extended over the contract limit. The cost of services of Wren & Associates during the overage period are damages that are collectible under the liquidated damages provisions. Between August 7, and September 6, a total cost of $8,800 in additional inspection costs accrued to liquidated damages, which will be billed to the Contractor. FISCAL IMPACT The fiscal impact of this payment is zero because the $2,000 payment to Wren &Associates will be recovered from the Contractor as liquidated damages. V Prepared by: Chet Anderson, Assistant Director- Water Operations V17 CONSENT CALENDAR TO: HONORABLE CHAIR AND MEMBERS OF THE UTILITY BOARD FROM: VICTORIA CROSS, DIRECTOR OF HUMAN RESOURCES/PERSONNEL OFFICER VIA: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: SEPTEMBER 23, 2002 SUBJECT: HUMAN RESOURCES ACTION ITEM RECOMMENDATION It is recommended that the Utility Board approve the following Personnel Action Requests in accordance with Section 3.3 of the City of Azusa Civil Service Rules and applicable Memorandum of Understanding. NEWAPPO/NTMENTS : The following appointments have been requested by department heads pursuant to the Rules of The Civil Service System. FISCAL IMPACT There is no fiscal impact, as the position listed is funded in the approved departmental budget. Salary savings realized from vacant positions are utilized to underfill positions with temporary hires and/or to offset overtime costs. 0118 TYPE OF ACTION RANGE/STEP DEPARTMEN NAME CLASSIFICATION EFFECTIVE DATE BASE MO. T SALARY Utilities Bob Asst. Director of Resources Rehire 3570/5 Tang Management Pending Phy $9,922.26 Results FISCAL IMPACT There is no fiscal impact, as the position listed is funded in the approved departmental budget. Salary savings realized from vacant positions are utilized to underfill positions with temporary hires and/or to offset overtime costs. 0118 M AGENDA ITEM Transmittal of the City Manager's Recommendations for the COMPREHENSIVE LONG-RANGE CAPITAL IMPROVEMENT PROGRAM for Fiscal Year 2002-03 September 23, 2002 Honorable Mayor and Members of the City Council: It is my pleasure to transmit to you recommendations for another important forward step in our Comprehensive Long -Range Capital Improvement Program for the City of Azusa. As noted last year, like most local governments in California, Azusa fell behind in maintaining, expanding and replacing our infrastructure and capital assets. During the period 1986-98, there were a number of important projects built (including the Senior Center, Slauson Pool, Azusa Light &Water headquarters and expanded Police Facility) along with d prudent program of reinvestment in facilities and equipment for Azusa Light & Water. But routine maintenance and reinvestment for other functions (parks, public buildings, sewers, streets, alleys, sidewalks, equipment, vehicles etc.) was postponed. In the fall. of 1998, a new start was made not only on cataloguing and prioritizing our community's capital needs, but also in beginning to systematically address long-delayed needs. Each year since, we have made progress in both catching up on deferred investment and planning ahead for preventative maintenance. 1 am particularly proud of the record of the past year: • The opening of the Canyon City Skatepark represents a $ ,000 in stment in the changing recreation needs of youngsters and adole n s and is the 019 largest ands best of its kind in the San Gabriel Valley. • Plans for a new Library that would replace our obsolete and inadequate existing facility with a 60,000 square foot landmark "lifelong family learning center" have been submitted to the State for funds to match the bond approved by Azusa voters by a margin of more than 3-1. • The Azusa Auditorium, placed this year on the National Register of Historic Places, finally saw a complete interior and exterior renovation for a facility that occupies a central place in the civic life of our community. • A new vision for Azusa's future contained in a new General Plan and Development Code is being completed for adoption by the City Council next spring. Involving hundreds of Azusa residents through the Citizens Congress, this comprehensive effort is the most ambitious effort of its kind undertaken by a city of our size in the entire state. • Keying off this effort, anew Park Master Plan is also being completed to guide an "Azusa Park Renaissance" involving improvements to existing parks, addition of new park land and facilities and greater shared use of public facilities throughout the community. • A major street and alley repair and sidewalk construction and repair effort was completed • just in time for the summer swim season, Slauson Pool received a complete overhaul to address deferred maintenance on the 9 year-old facility that left it as good as new. • Construction began on a major southern Gateway monument initiated by the residents of Neighborhood Improvement Zone 1. • A number of smaller neighborhood improvement projects were completed including beautification of the Vernon off -ramp, newly landscaped island north of i '` and San Gabriel, curb and parking improvements next to our historic train station and parkway improvements on Donna Beth. • A replacement oriupgrade of all the city's obsolete or inefficient heating, ventilation, air conditioning and lighting units with energy saving devices • Replacing almost all of the worn-out equipment and rolling stock for the new Public Works Department, along with continued upgrading of our computer hardware citywide. U4V 1 During the operating budget approval, we brought forward a continued equipment replacement program, along with carry-over of project not yet completed. Tonight, we are presenting new projects and amendments for the current fiscal year 2002-03. The major elements include: Azusa Light & Water Capital Investment: We will continue our long-term investment in ensuring reliable service to our customers. Azusa can be proud that the investments of the last fifteen years have paid off in avoiding the electric reliability and water quality crises facing many other public and private utilities. In the year ahead, we have the resources to devote an additional $6 million toward continuing this legacy which results in reliable and affordable resources for our homes and businesses. Among the high profile projects in this year's program is the construction of the. much-needed second substation to ensure reliable service to our growing customer needs. The land has been acquired and construction will commence in 2003. The Planning Commission has also approved plans for construction of a new Electric Division Yard at I Uh and Vernon. In addition to improved office and service facilities, the move will allow the new Public Works Department to expand and improve their support facilities at the City yard which is currently shared with Azusa Light & Water. - One of the highlights of the Water Division program is a conservation, demonstration project that will underwrite native landscaping in the highly visible gateway to the San Gabriel Canyon. The project scope expands a project approved earlier with MTA grant funds and local Gas Tax match to acquire and construct attractive medians in San Gabriel Canyon Road north of Sierra Madre. The demonstration project will expand the project to landscape the existing median south of Sierra Madre, the initial westbound median on Sierra Madre, the unimproved area of Canyon Park, the revegetation of damaged areas of Canyon Park along with appropriate amenities and signage. The Neighborhood Improvement and Pavement Management Plan: In the first Comprehensive Capital Improvement package, we funded a study of our street, alley and sidewalk deficiencies. The price tag was a staggering $36 million. A careful staff review of that program by our Director and Assistant Director of Public Works validates the scope of that report, but proposes a more cost-effective intervention. Moving ahead now will only cost one third as much, but will address 80% of the city's pavement deficiencies over the next five years. The recommended plan comprehensively coordinates sewer, water and repavement efforts to both shave and share costs. By fixing the needs in an entire neighborhood (streets, gutters, sidewalks, alleys — along with trimming street trees and other maintenance) we also minimize disruption and duplication. While this project does save millions of dollars, it will require a funding jumpstart. The plan includes options along with our recommendation for front -loading the required investment. The Azusa Park Renaissance Plan: Major work at Gladstone and Memorial Parks, 021 r along with modest improvements at Northside, Veterans Freedom and Zacatecas Parks have showcased the rebirth and expansion of Azusa's precious park resources. These recommendations add another $4 million in projects funded or anticipated from grant, endowment and community facility district sources. This unprecedented regreening of Azusa will upgrade every single park in the city and significantly expand park acreage for our residents. Sewer Master Plan: As part of the Neighborhood Improvement and Pavement Management Plan, we will implement a complete overhaul of the City's aging sewer system. This upfront investment in our sewers over the next five years will, like pavement management, save money in the long -run. We will be bringing detailed financing choices to the Council for how to recover this investment. Facilities Maintenance: An engineer's analysis of the Woman's Club has indicated safety and structural integrity concerns that should be addressed. The historic facility also deserves appropriate interior renovation and exterior repainting. The Public Works Endowment is recommended as the funding source for $400,000 to move forward with this project, subject to later adjustment as project specifications are finalized. A similar amount ($375,000) is recommended for long -deferred punch list of interior and exterior items at the Memorial Park Recreation Center, including air conditioning for the heavily - used basketball gym. Finally, a modest budget of $25,000 is recommended as a Phase IV for Auditorium renovation to address audio-visual equipment needs. Capital project management: As we have embarked on our ambitious effort to revitalize Azusa "one neighborhood" at a time, the scale and scope of our capital program has strained our capacity to plan, budget, oversee and complete projects on time and on budget. As a result, we have this year incorporated the overhead costs of project management, both in-house and under contract. Our recent experience has shown that a single manager for each project is essential, especially when multiple departments are involved in projects along with private contractors. We expect to further strengthen this function with a clearing house for all projects to ensure their satisfactory management from at every step from planning to completion. As an older city that continues to grow and revitalize, Azusa will continue to face long-term challenges in funding both needed new capital investment as well as ongoing replacement and maintenance. But with adoption and implementation of these recommendations, we will have addressed our most glaring deficiencies. We will also have left a legacy for future generations to continue the tradition of building for the long- term prosperity and quality of life of Azusa residents. Finally, I would like to express appreciation to those responsible for the progress we have made and will be making. Our Finance Director Marcie Medina and Assistant City Manager Robert Person have spearheaded this effort during the past year, including the planning and preparation of these recommendations. Azusa Light & Water Director 022 I Joe Hsu and his staff along with Public Works Director Bill Nakasone, Public Works Asst. Director and City Engineer Nasser Abbaszadeh and Park Planning and Development Director designate Randy Noriega have all been instrumental in project planning. But it is not only City staff that have contributed, but the community as well. We are fortunate to have a far-sighted and fiscally prudent City Council, able commissioners and interested community activists and volunteers who can all take pride that their concerns are being addressed. From volunteers planting new trees in a street parkway to Purchasing staff processing vital paperwork, this effort to rebuild Azusa is truly a team effort and a team achievement. Sincerely, Rick Cole City Manager 023 City of Azusa CIP 2003 New Funding Requests by Element Description Element 2003 Funding Source Additional funding Proj#72102G - Distribution Upgrades Water 1,000,000 Water Fund Additional funding Proj#72102E - Pipeline Baseline Water 50,000 Water Fund Additional funding Proj#72102H - Pipeline Lakeview Water 475,000 Water Fund Additional funding Proj#721028 - Pipeline Dalton . Water 760,000 Water Fund Additional funding Proj#72101 P - Azusa Spreading Grounds Water 75,000 Water Fund Purchase of property from city of Pasadena Water 55,000 Water Fund Additional funding Proj#72101 N - Upsize Discharges Wells Water 400,000 Water Fund Fire Flow relief Gladstone/B9rranca Water 200,000 Water Fund Design and contruction of a Ranger station Water 700,000 Water Fund Emergency backup power generator Water 100,000 Water Fund Upgrade to the Canyon Filtration Plant Water 1,000,000 Water Fund Northern Transmission Main Water 500,000 Water Fund 5,315,000 Additional Funding - New Library Library 275,000 General Fund Loan Pavement Management Plan Public Works 1,289,000 To be determined Pavement Management Plan Public Works 850,000 Gas tax Remodeling of Light Building at the yard Public Works 180,000 Endowment Fund 210 Fwy soundwall Public Works 150,000 Endowment Fund New sidewalks and concrete repair Public Works Z22,222I Endowment Fund 2,669,000 Sewer Master Plan Construction Phase I Sewer 80,000 Sewer Fund New Signs Sewer 100,000 Sewer Fund 180,000 Page 1 of 2 City of Azusa CIP 2003 New Funding Requests by Element Description Element 2003 Funding source Veterans Freedom Park Imp. Recreation 50,000 MCCFD Memorial Park Improvements Recreation 212,000 Proposition 12 Memorial Park Improvements Recreation 46,500 MCCFD Northside Park Improvements Recreation 223,000 MCCFD Pioneer Park Improvements Recreation 246,000 MCCFD Slauson Park Improvements Recreation 4,500 MCCFD Zacatecas Park Improvements Recreation 350,000 Murray -Hayden Wilderness Park Acquisitiorr Recreation 500,000 Proposition 13 parks Plan Recreation 10,000 MCCFD SG River Bike Path Recreation Recreation 100,000 350,000 MCCFD LA County Proposition A SG River Bike Path Recreation 700,000 lwater Fund US Forest Service Station Rubberized Handicap Resurf. Recreation 19,000 MCCFD Interpretive Gardens Recreation 350,000 LA County Proposition A Angeleno Park Recreation 50,000 Quimby Zacatecas Park Matching Funds Recreation 150,000 Quimby Consultant for Des/Arch Recreation 51,000 MCCFD 3,412,000 Women's Club Improvements Public Works 400,000 Endowment Fund Memorial Park Rec Center Public Works 375,000 Endowment Fund Auditorium AN Upgrades Public Works 25,000 Endowment Fund 800,000 Total 112,651,0001 Page 2 of 2 City of Azusa CIP 2003 New Funding Requests by Funding Source Description Element 2003 Funding Source Remodeling of Light Building at the yard Public Works 180,000 Endowment Fund 210 Fwy soundwall Public Works 150,000 Endowment Fund New sidewalks and concrete repair Public Works 200,000 Endowment Fund Women's Club Improvements Public Works 400,000 Endowment Fund Memorial Park Rec Center Public Works 375,000 Endowment Fund Auditorium. AN Upgrades Public Works 25,000 Endowment Fund 1,330,000 Pavement Management Plan Public Works 850,000 Gas tax Pavement Management Plan Public Works 1,289,000 To be determined Additional Funding - New Library Library 275,000 General Fund Loan 275,000 SG River Bike Path Recreation 350,000 LA County Proposition A Interpretive Gardens Recreation 350,000 LA County Proposition A 700,000 Veterans Freedom Park Imp. Recreation 50,000 MCCFD Memorial Park Improvements Recreation 46,500 MCCFD Northside Park Improvements Recreation 223,000 MCCFD Pioneer Park Improvements Recreation 246,000 MCCFD Slauson Park Improvements Recreation 4,500 MCCFD Parks Master Plan Recreation 10,000 MCCFD SG River Bike Path Recreation 100,000 MCCFD Rubberized Handicap Resurt. Recreation 19,000 MCCFD _ Consultant for Des/Arch Recreation 51,000 MCCFD 750,000 r Zacatecas Park Improvements Memorial Park Improvements Wilderness Park Acquisition Angeleno Park Zacatecas Park Matching Funds Sewer Master Plan Construction Phase I New Signs Additional funding Proj#72102G - Distribution Upgrades Additional funding Proj#72102E - Pipeline Baseline Additional funding Proj#72102H - Pipeline Lakeview Additional funding Proj#72102B - Pipeline Dalton Additional funding Proj#72101 P - Azusa Spreading Grounds Purchase of property from city of Pasadena Additional funding Proj#72101N - Upsize Discharges Wells Fire Flow relief Gladstone/Barranca Design and contruction of a Ranger station Emergency backup power generator Upgrade to the Canyon Filtration Plant Northern Transmission Main US Forest Service Station Recreation 350,000 Murray -Hayden Recreation 212,000 Proposition 12 Recreation 500,000 Proposition 13 Recreation 50,000 Quimby Recreation 150,000 Quimby Water 200,000 Sewer 80,000 Sewer Fund Sewer 100,000 Sewer Fund Water 180,000 Water 1,000,000 Water Fund Water 50,000 Water Fund Water 475,000 Water Fund Water 760,000 Water Fund Water 75,000 Water Fund Water 55,000 Water Fund Water 400,000 Water Fund Water 200,000 Water Fund Water 700,000 Water Fund Water 100,000 Water Fund Water 1,000,000 Water Fund Water 500,000 Water Fund Recreation 700,000 Water Fund 6,015,000 Total th AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: BILL NAKASONE, DIRECTOR OF PUBLIC WORKS VIA: RICK COLE, CITY MANAGER JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: SEPTEMBER 23, 2002 SUBJECT: PAVEMENT MANAGEMENT PLAN RECOMMENDATION It is recommended that the City Council deliberate this subject matter and direct staff to prepare the necessary documents for official adoption of this plan along with a financing mechanism for a future City Council meeting. EXECUTIVE SUMMARY As part of developing a Comprehensive Long -Range Capital Improvement Program, Council approved a study of the costs of repairing the City's streets and alleys, as well as completing and repairing sidewalks. A thorough analysis was done and cost estimates applied that resulted in a $36,000,000 deficiency, far beyond the current capacity of the City's resources. Commencing in January 2002, Public Works staff re -analyzed the street network within the City of Azusa. The purpose ofWhe analysis was threefold; to confirm the deficiencies within the street network, design a systematic 10 year plan for pavement correction, and Identify viable funding sources for street correction. The City of Azusa currently has a street network composed on approximately 170 lineal miles of street (excluding alley way). The earlier study's evaluation of the current condition of the street network was essentially confirmed, as follows; 9% excellent condition, 17% good condition, 68% fair condition, and 6% poor condition. However, based on revised strategies 4 for addressing these deficiencies, the cost of bringing 100% of our pavement network up to "excellent condition" would be $13,784,876. The earlier cost estimates were based on very conservative assumptions about remedies, with the current approach focused on cost- effectiveness within the City's means. The recommended course of action would be to implement a (10) year Pavement Management Plan. In years 1-5, 85% of the pavement network could be corrected and brought up to "excellent condition" for a cost of $9,719,610. In years 6-10, the remaining 15% of the network could be brought up to "excellent condition" for a cost of $4,380,020. A unique feature of our pavement strategy is the holistic "neighborhood improvement" approach. We have divided the city into (19) distinct segments. It is our strategy to concentrate on 3-4 segments per fiscal year (with the expectation of completing all of the segments by year # 10). Not only will the entire chosen segment have their streets reconditioned and repaired, we will also perform the following tasks, funded separately; 1. trim all of the trees in the segment that require trimming 2. root prune all of the trees that are uplifting curb or sidewalk 3. repair all damaged curb and gutter 4. restripe and apply street legends where appropriate 5. install sidewalks (where feasible) upon request of the majority of residents or businesses 6. repair or replace water and sewer lines where needed in coordination with those master plans, sharing the cost of pavement replacement Although the focal emphasis of this program is the restoration of our street network, we must be equally cognizant of the other "utilities related" infrastructure that resides below the street surface such as sewer main lines, sewer laterals, water main lines, water service laterals, and natural gas piping. Like the street network, utilities infrastructure has a finite life span and must eventually be replaced. Each of the affected utilities was contacted and asked to provide year identification for system repair / replacement. This information was superimposed on our pavement repair grid map for each of the participating utilities (water, electric, natural gas, and sewer). For obvious reasons, a segment which will require, for example, a sewer main replacement, repavement will not occur until all necessary utilities repair / replacement work has been completed. Underground utility replacement and repair has been incorporated into a decision matrix for determining the order by which projects are done. Because costs will soar unless we intervene to sustain our streets from further deterioration, staff is recommending using o� both our current revenue stream as well as our fund reserves of $5.1 million dollars to jump-start the Pavement Management Plan. This option would draw down the $3.5 million dollars of the $5.1 million dollar Gas Tax Fund from the Highway 39 account established via Resolution 96-C188 passed on December 2; 1996. Since the pavement management plan would not only ensure the continued maintenance of Highway 39, but the rest of the street network as well, drawing on those funds now would actually be the best long-term protection for the purpose of segregating those funds. If the Council prefers to continue to earmark those funds solely for the former Highway 39 roadbed, another option would be to borrow $3.5 million dollars from the Water Fund. Based on a (20) nn UI. Z year repayment term at an interest rate of 4%, our annual principle and interest payment would be approximately $254,000 per year. Such a loah, however, would cost $2.54 million in interest payments. As of June 30, 200, the City of Azusa had $5.1 million dollars in their Gas Tax Reserve account. The City could use the reserves to "kick start" an aggressive pavement management program. Using the fund reserves, the city could fix our streets and still maintain prudent financial practices in terms of maintaining adequate fund reserves on hand, enabling fund solvency, and providing for adequate cash flow. The scenario would be as follows; Year Annual Expenditure Current 0 02-03 $2,1'38,879 03-04 $1,593264 04-05 $2,420,340 05-06 $1,949,010 06-07 $1,618,117 Fund Balance at Year End $5,150,000 $3,977,073 $3,344,076 $1,853,533 $817,274 $104,482 % of Excellent Streets 12% 32% 50% 65% 85% It is significant to note that by the end of year #5 (06-07), 85% of the entire surface area of our street network will be in "excellent condition" and our fund balance will be $104,482. With 85% of our system network restored to excellent condition, the remaining 15% of the network needing repair (at the cost of approximately $4,065,266 or $450,000 annually during years 6-10) could be financed from the anticipated Gas Tax revenue stream of $900,000 per year. FISCAL. IMPACT Earmarking all existing and future Gas Tax funds toward the pavement management program would allow the city to repair and maintain its entire street and alley network over the next decade, avoiding the costs of bond or other debt financing. However, it would limit the availability of these funds for other eligible activities such as new road construction, traffic signals etc. To the extent that water and sewer project coordination shares pavement costs, those reduced expenditures would free up additional funds to either accelerate the program or cover other eligible activities. 030 TO: FROM: VIA: DATE: AGENDA ITEM HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL BILL NAKASONE, DIRECTOR OF PUBLIC WORKS JOSEPH F. HSU, DIRECTOR OF UTILITIES SEPTEMBER 23, 2002 SUBJECT: PROPOSED SEWER AND STREET SWEEPING CHARGES RECOMMENDATION It is recommended that the Utility Board/City Council deliberate proposed sewer and street sweeping charges and direct staff to prepare proposed rates for approval by resolution at a future City Council meeting. BACKGROUND In May of 2002, the City of Azusa completed a "Cost of Services Study." This study segregated the myriad of services provided by the City into "stand alone" cost centers and identified the individual unit and aggregate costs for providing a specific service. Analysis of the Sewer operation revealed that the City of Azusa was only receiving partial cost recovery. Revenue and cost comparison analysis showed that the operational side of the Sewer enterprise was being met but there was no provision for a future set aside fund earmarked for replacement of infrastructure at the end of its useful life. The consultant recommended a rate study to determine the best method of recovering these costs. In the case of street sweeping, it was discovered that there was absolutely no cost recovery for this service. Simply stated, the City of Azusa was providing street sweeping services to its residents and business owners at "no charge." It was.recommended in the study that the City of Azusa investigate the feasibility of "charging" for street sweeping services. Staff has analyzed this problem and come up with the following recommendations: (1) charge residents and business operators of Azusa for street sweeping services; (2) increase the 031 current monthly charges for sewer to cover for future infrastructure replacement; and (3) place these additional charges on the monthly sewer bill. Additionally, utilize the current sewer fund reserves of $6.2 million dollars to "self fund" over $5,000,000 worth of sewer system improvements over the next 3-5 years. If these actions were to be implemented, the City would have to revise its current sewer rate structure for residential, commercial, industrial and Laundromat / car wash customers. The revised rate structure.is itemized in attachment #1. If the Council feels comfortable with this course of action, the next step would be to schedule a public hearing and officially adopt the proposed increased sewer rates. Our recommended rates would increase monthly billing in each of the four categories: Residential, Commercial, Industrial, and Laundromat / Car wash. There would be no change to the existing CCF usage charge in the categories of Commercial, Industrial, and Laundromat / Car Wash (other than the 4% annual rate increase already imposed via ordinance 02-02 on January 7, 2002). FISCAL IMPACT This rate structure would enable all operational costs, debt service costs, street sweeping costs, equipment capital replacement costs, and future capital improvement costs to be satisfied. At the end of 10 years, the remaining fund balance would be approximately $6.5 million which should be sufficient to meet future capital improvements and maintain an excellent credit rating if financing by debt is to be contemplated. Likewise, our bonding capacity and borrowing capacity would be excellent. Report Prepared by: Bill Nakasone, Director of Public Works 032 ATTACHMENT # 1 -PROPOSED RATE INCREASES 033 Residential Year Existing Monthly Flat Rate Rev/sed Month/vf/at2ate CCF charge 02-03 $5.69 $7.19 0 03-04 $5.92 $7.42 0 04-05 $6.15 $765 0 05-06 $6.40 $790 0 06-07 $6.66 $8.16 0 07-08 $6.92 $8.92 0 08-09 $7.20 $9.20 0 09-10 $ 7.49 $9.49 0 10-11 $ 7.79 $9.79 0 11-12 $8.10 $10.10 0 Commercial Year Existing Monthly Base Rate Revised Month/v Base Rate CCF charge 02-03 $7.32 $9.77 $.07 03-04 $7.61 $11.06 $.07 04-05 $7.92 $11.37 $.08 05-06 $8.23 $12.68 $.08 06-07 $8.56 $13.01 $.08 07-08 $8.91 $13.36 $.09 08-09 $9.26 $13:71 $.09 09-10 $9.63 $14.06 $.09 10-11 $10.02 $14.47 $.10 11-12 $10.42 $14.87 $.10 Industrial Year Existing Monthly Base Rate Revised Monthly Base Rate CCF charge 02-03 $8.93 $11.63 $.07 03-04 $9.29 $12.99 $.07 04-05. $9.66 $13.36 $.08 05-06 $10.05 $14.75 $.08 06-07 $10.45 $15.15 $.08 07-08 $10.86 $15.56 $•09 08-09 $11.30 $16.00 $•O9 09-10 $11.75 $16.45 $.09 10-11 $12.22 $16.92 $.10 11-12 $12.71 $17.41 $.10 Laundromat / Car Wash Year Existing Monthly Base Rate Rev/sed Month/v Base Rate CCF charge 02-03 $12.19 $14.64 $.07 03-04 $12.68 $16.13 $.07 04-05 $13.18 $16.63 $.08 05-06 $13.71 $18.16 $.08 06-07 $14.26 $18.71 $.08 033 07-08 $14.83 $19.28 $.09 08-09 $15.42 $19.87 $.09 09-10 $16.04 $20.49 $.09 10-11 $16.68 $21.13 $.10 11-12 $17.35 $21.80 $.10 034 0P.A. AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIESq , DATE: SEPTEMBER 23, 2002 1� SUBJECT: WAIVE FORMAL BIDDING PROCEDURES AND AWARD PURCHASE OF CONSERVATION EDUCATION PROGRAM TO LIVINGWISE RECOMMENDATION It is recommended that the Utility Board/City Council: Waive formal bidding procedures for a turnkey interactive conservation program for Azusa sixth grade students; and 2. Award the purchase of a turnkey interactive conservation program for Azusa sixth grade students to LivingWise. BACKGROUND During the 2000-01 school year, LivingWise conducted a turnkey interactive curriculum program for 834 sixth grade students throughout the City of Azusa. The program was so successful that we did it again last year for 963 students in Azusa's public and private schools. The overall goals for the Program were to generate immediate residential savings while building resource awareness and environmental responsibility in students and their families. Students learned about natural resources in their daily lives, reinforced by real-life activities. Each student received a Resource Action Kit containing a LimeLite NiteLite that uses 3/1 00th of a watt, an air filter alarm, a I6w flow showerhead, and a faucet aerator. Students Installed these items at home with parental involvement. Additionally, pre and post surveys were conducted to treasure the learning impact and the knowledge gained through the program. Students were also provided with a household report card and home checkup. 035 A big plus for this program was the total annual resource savings from the installation of the conservation kit items in 2001-02: 3,870,297 kWh of electricity and 95,004,765 gallons of water and wastewater treatment avoided. This is a one-third improvement over the 2000-01 program. Ninety-five percent of participating students agreed that the conservation technologies were easy for students to use and their parents supported the program. One hundred percent of the participating teachers strongly agreed, if given the opportunity, they would conduct this program again and would recommend this program to other colleagues. Due to the overwhelming success of this program the last two years, staff recommends sole sourcing this program for the 2002-03 school year to the 1,190 sixth grade students in Azusa. FISCAL IMPACT The cost of this program for fiscal year 2002-03 of $57,967.88 has been included in the Public Benefit programs budget. Prepared By: Karen Vanca, Assistant Director Customer Care &Solutions 0 3, 6 Kel FROM: DATE: ur* E. ,?� ;V§A, AGENDA ITEM HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL JOSEPH F. HSU, DIRECTOR OF UTILITIES// SEPTEMBER 23, 2002 e SUBJECT: AUTHORITY TO EXECUTE TRANSMISSION CONTROL AGREEMENT UPON FINAL AGREEMENT BEING PREPARED RECOMMENDATION It is recommended that the Utility Board/City Council authorize the Mayor to execute a Transmission Control Agreement (TCA) among the Independent System Operator and Transmission Owners upon final completion. BACKGROUND This past April staff presented to Utility Board/City Council recommendations in joining the CAISO as Participating Transmission Owners (PTOs) to mitigate the anticipated transmission cost increases next year when Edison's transmission service rate freeze ends as of December 31, 2002. The anticipated cost increase is estimated to be approximately $500,000/year. By joining the CAISO as PTO the city's transmission cost is estimated to be REDUCED by more than $500,000/year, thus the incentive to become a PTO. The TCA is a multiparty agreement among CAISO, PG&E, Edison, SDG&E, Vernon and eventually Azusa and Anaheim, Riverside, Banning (these three cities are also applying to become PTOs at this time). The TCA sets out the terms and conditions under which CAISO will utilize the transmission turned over by aforementioned entities. Staff, together with its bond and legal counsel, is performing the necessary negotiations with the parties involved. Upon final agreement, the Independent System Operator will file the TCA at FERC. Staff's intent is to become Participating Transmission Owners by January 1, 2003. Due to FERC filing constraints, staff requests authority to execute agreement once finalized. G:,7 An electronic version of the latest 76 -page TCA agreement is available to Utility Board/City Council Members for review at htto://www.azusalw.cDm/ub: click on 020909 TCA Draft.pdf once at the website. FISCAL IMPACT There is no fiscal impact as a result of the actions taken in this agenda item. Prepared by: Richard Torres, Power Resources Coordinator v 'TCT arm AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: SEPTEMBER.23, 2002 SUBJECT: AUTHORITY TO EXECUTE UTILITY DISTRIBUTION COMPANY OPERATING AGREEMENT UPON BEING FINALIZED RECOMMENDATION It is recommended that the Utility Board/City Council authorize the Mayor to execute a Utility Distribution Company Operating Agreement (UDC) among the Independent System Operator and the City of Azusa BACKGROUND This past April staff presented to Utility Board/City Council recommendations in joining the CAISO as Participating Transmission Owners (PTOs) to mitigate the anticipated transmission cosincreases next year when Edison's transmission service rate freeze ends as of December 31, 2002. Among one of the agreements the City needs to effectuate its PTO status as a t Utility Distribution Company Agreement (UDC) with the CAISO. The UDC agreement will set out the terms and conditions under which the City will follow CAISO's operating procedures and instructions in order to maintain the reliable operation of the interconnected system. Staff is finalizing the necessary requirements to complete the agreement with the CAISO. Upon final agreement, the Independent System Operator will file the UDC at FERC. Staff's goal is to become a Utility Distribution Company as well as Participating Transmission Owners by January 1, 2003. Due to FERC filing constraints, staff requests authority to execute agreement once finalized. 039 An electronic version of the latest 36 -page UDC agreement is available to Utility Board/City Council Members for review at http://www.azusalw.com/ub; click on City of Azusa UDCOA 13sep2002 clean.pdf once at the website. FISCAL IMPACT There is no fiscal impact as a result of the actions taken in this agenda item. Prepared by: Richard Torres, Power Resources Coordinator 040 r-WW7-20�� AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: SEPTEMBER 23, 2002 SUBJECT: ACCEPTANCE OF CITY'S TRANSMISSION OWNER TARIFF AND TRANSMISSION REVENUE REQUIREMENT RECOMMENDATION It is recommended that the Utility Board/City Council authorize the Mayor to execute the proposed Transmission Owner (TO) Tariff upon final completion and accept the City's Transmission Revenue Requirement by attached Resolution. BACKGROUND This past April staff presented to Utility Board/City Council recommendations in joining the CAISO as Participating Transmission Owners (PTOs) to mitigate the anticipated transmission cost increases next year when Edison's transmission service rate freeze ends as of December 31, 2002. The anticipated cost increase is estimated to be approximately $500,000/year. By joining the CAISO as PTO the City's transmission cost is estimated to be REDUCED by more than $500,000/year, thus the incentive to become a PTO. The City's TO Tariff effectuates the contractual relationship with the CAISO in regards to the operational control of the transmission entitlements turned over to the CAISO grid. The TO Tariff specifies the City's annual Transmission Revenue Requirement (TRR) to be recovered from the CAISO. Staff engaged a consultant to prepare the necessary testimony in support of the City's TRR. The City's consultant is finalizing his testimony including the latest Transmission Revenue Requirement subject to minor final revisions. The testimony is being reviewed by the City's FERC counsel for final filing. Due to FERC filing constraints, staff requests authority to execute agreement once finalized. 041 An electronic version of the latest 23 -page Transmission Owner Tariff agreement is available to Utility Board/City Council Members for review at httr)://www.azusa[w.com/ub click on Revised Transmission Owner Tariff 0911.odf once at the website. A Resolution requesting adoption of the City's Transmission Revenue Requirement as well as the supporting testimony recommending the establishment of such Transmission Revenue Requirement are attached to this agenda item. FISCAL IMPACT No fiscal impact a's a result of the actions taken in this agenda item is anticipated. Rather it should reduce City's transmission costs. Prepared by: Richard Torres, Power Resources Coordinator U,42 RESOLUTION NO. A RESOLUTION OF THE UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA ESTABLISHING THE TRANSMISSION REVENUE REQUIREMENTS ASSOCIATED WITH AZUSA'S HIGH VOLTAGE (OVER 200KV) TRANSMISSION FACILITIES AND ENTITLEMENTS (ALL LOCATED OUTSIDE THE CITY) FOR THE PURPOSE OF BECOMING A PARTICIPATING TRANSMISSION OWNER WITH THE CALIFORNIA INDEPENDENT SYSTEM OPERATOR WHEREAS, the California state legislature adopted AB 1890 which created the California Independent System Operator ("ISO") and required ISO to file a Transmission Access Charge ("TAC") tariff with the Federal Energy Regulatory Commission ('FERC") to establish TACs for high voltage transmission service within the State of California; and WHEREAS, the FERC, on May 31, 2000, accepted ISO's proposed TAC tariff for filing, made provisions of the tariff subject to refund, and ordered [SO to make a compliance filing in accordance with its order; and WHEREAS, Azusa, in accordance with said tariff, provided its notice of intent to become a Participating Transmission Owner ("PTO") on June 3, 2002 and amended said notice on June 12, 2002; and WHEREAS, pursuant to said tariff, Azusa intends to turn over the operation and control of Azusa's transmission entitlements to ISO in return for ISO reimbursing Azusa its Transmission Revenue Requirement relating to such transmission entitlements; and WHEREAS, Albert E. Clark, an experienced FERC consultant with the firm of Fred Saffer and Associates, Inc. has submitted testimony before the Utility Board/ City 043 Council of the City of Azusa recommending the establishment of a Transmission Revenue Requirement; and WHEREAS, the Utility Board/City Council has heard and considered all evidence, both written and oral, presented in consideration of the establishment of Azusa's Transmission Revenue Requirement. NOW, THEREFORE, BE IT RESOLVED BY THE UTILITY BOARD/CIN COUNCIL OF THE CITY OF AZUSA AS FOLLOWS: SECTION 1: The Utility Board/City Council of the City of Azusa hereby finds and determines that the recitals contained herein are true and correct and that there are compelling reasons to justify the establishment of Azusa's Transmission Revenue Requirement. SECTION 2: The Utility Board/City Council of the City of Azusa hereby establishes the Transmission Revenue Requirement described in the testimony presented by Mr. Albert F. Clark, a copy of which is attached hereto as Exhibit "AZU - I" and made a part hereof. SECTION 3: The City Clerk of the City of Azusa shall certify to the passage of this resolution, and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 23' day of September, 2002. N, CRISTINA-CRUZ MADRID, Mayor 044 ATTEST: VERA MENDOZA, City Clerk STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I, Vera Mendoza, City Clerk of the City of Azusa, do hereby certify that the foregoing Resolution No. was duly introduced and adopted at a regular meeting of the Azusa Light & Water Utility Board on the 23rd day of September, 2002, by the following vote, to wit: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: Vera Mendoza, City Clerk C4 Exhibit AZU - 1 BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION City of Azusa, California ) Docket No. EL -02 -- Light & Water Department ) Direct Testimony of Albert E. Clark on behalf of the City of Azusa, California Light & Water Department September, 2002 1 Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. 2 A. My name is Albert E. Clark. I am an Executive Consultant with the firm 3 of Fred Saffer & Associates, Inc. - Financial, Engineering & Management 4 Consultants. My business address is 2111 East Michigan Street, Suite 5 219, Orlando, FL 32806. 6 7 Q. PLEASE DESCRIBE YOUR EDUCATIONAL BACKGROUND. 8 A. I received a Bachelor of Science degree in mathematics and secondary 9 education in 1966 from Towson State University, Baltimore, Maryland. In 10 1975 I received a Certificate in Data Processing, Summa Cum Laude, from 11 Anne Arundel Community College, Arnold, Maryland, where I also completed 12 selected courses in accounting. I have studied at Rollins College, 13 Winter Park, Florida, where I took graduate level courses in management 14 with a concentration in accounting. I also hold a Master of Accounting 15 degree from the George Washington University, Washington, D.C. 1' 16 17 Q. PLEASE DESCRIBE YOUR PROFESSIONAL EXPERIENCE IN THE FIELD OF PUBLIC 18 UTILITY REGULATION. 19 20 A. From 1972 through 1986 I worked for several consulting firms in the 1 046 I Washington, D.C. area and in Orlando, Florida. During those engagements 2 I participated in numerous rate proceedings before Federal.and state 3 regulatory agencies. I proceeded from assisting senior consultants in 4 the preparation of analyses related to fully allocated cost of service 5 and rate design studies to providing expert testimony and analyses to 6 clients in contested wholesale and retail rate cases. These cases 7 involved cost allocation, rate design and revenue requirements analyses. 8 In 1986 I participated in formation of another consulting firm 9 where I'was a Principal and a Vice President until I resigned in mid - 10 1997. At that firm my primary efforts were in the areas of cost of 11 service and revenue requirements studies in wholesale and retail rate 12 proceedings before Federal and State regulatory agencies. I also 13 assisted various clients - principally wholesale municipalities and 14 cooperatives -- with negotiations for power supply and transmission 15 services. In 1997 I formed Clark Utility Consulting, Inc. and performed 16 similar types of service for clients as I had previously done. In 17 January 2000 I joined the firm of Fred Saffer & Associates in Orlando, 18 Florida. 19 20 Q. WHAT TYPES OF CLIENTS HAVE YOU SERVED DURING YOUR REGULATORY CONSULTING 21 CAREER? 22 A. During the course of my regulatory consulting career, I have been 23 retained by state regulatory commissions, state consumer protection 24 agencies, Federal agencies, municipalities, industrial corporations, 25 trade associations, electric cooperatives and municipally owned electric 26 distribution systems. 27 28 Q, HAVE YOU TESTIFIED PREVIOUSLY IN PUBLIC UTILITY RATE PROCEEDINGS? 29 30 A. Yes, I have provided expert testimony on over 110 occasions in 16 jurisdictions in more than 75 separate proceedings. I have testified in 31 matters related toVfull and partial requirements electric service to 32 wholesale customers of investor owned utilities, open access 33 34 transmission of investor owned electric utilities, revenue requirements for interstate pipeline companies and revenue requirement, power supply 35 and gas supply issues for electric and gas utilities at the retail 36 level. 2 047 1 2 Q. ON WHOSE BEHALF ARE YOU TESTIFYING IN THIS PROCEEDING? 3 A. I am testifying on behalf of the City of Azusa, California Light & Water .4 Department ("Azusa" or "the Department"). 5 6 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS CASE? 7 A. This testimony and associated exhibits form a part of, and provide 8 support for, Azusa's petition, pursuant to the California Independent 9 System dperator's ("Cal ISO") FERC Electric Tariff, to establish Azusa's 10 Transmission Revenue Requirement ("TRR") for purposes of inclusion in 11 the Cal ISO Transmission Access Charge ("TAC"). The TRR is part of the 12 TAC charged to the Cal ISO's customers and used for purposes of payments 13 to Azusa by the Cal ISO for the use of Azusa's transmission facilities 14 as of the date that Azusa turns over operational control of those 15 facilities to the Cal ISO and thereby becomes a Participating 16 Transmission owner ("PTO"). In this testimony I set out the calculation 17 of Azusa's TRR, and address various principles that were utilized in 18 that calculation. I also describe some of the background of Azusa's 19 transmission facilities relevant to the calculation of the TRR. 20 My testimony and exhibits have been adopted by the Azusa City 21 Council as Azusa's TRR. Azusa's City Council is its official rate 22 setting body. 23 24 Q. WHAT MATERIAL HAVE YOU REVIEWED AS PART OF YOUR ASSIGNMENT IN THIS CASE? 25 A. I have reviewed Azusa's Notice of Intent and Application to the Cal ISO 26 for PTO status. I have also reviewed and analyzed documents that Azusa 27 provided to me for the purpose of determining its TRR for this case. I 28 have also reviewed this Commission's Orders in FERC Docket No. EL00-105- 29 000 which is the case filed by the City of Vernon, California to 30 establish its TRR for purposes of participating in the Cal ISO as a PTO. 31 V 32 Q. WHAT ARE SOME OF THE REQUIREMENTS FOR AZUSA TO BECOME A PTO? 33 A. Under Sections 4.1 and 4.2 of Appendix F of the CalISOFERC Electric 34 Tariff, an entity wishing to become a PTO must submit to the Cal ISO a 35 Notice of Intent by either July 1 or January 1 in order to become a PTO 36 on the following January 1 or July 1 respectively. Azusa submitted its 3 ij V 1 notice on June 3, 2002, as amended on June 12, to become a PTO on 2 January 1, 2003. Under the pro forma Transmission Control Agreement 3 Among The Independent System Operator and Transmission Owners ("TCA") q that is a part of the Cal ISO FERC Electric Tariff, an entity seeking to 5 become a PTO must next submit to the Cal ISO, and serve on certain other 6 parties, an Application containing certain information as set out in the 7 TCA. Azusa submitted its Application on June 3, 2002, as amended on g June 12, 2002. That Application describes Azusa's transmission 9 facilities and provides various information about them. A portion of 10 that Application is attached herein as Exhibit AZU - 3. The attached 11 portion describes the transmission facilities that Azusa will turn over 12 to the Cal ISO for operational control to the Cal ISO and includes maps 13 that show particular facilities. The Application is subject to a 60 day 14 review period. 15 A TRR must be established for a new PTO so'that the Cal ISO TAC 16 can be adjusted to be effective when the entity becomes a PTO and the 17 Cal ISO takes over operational control of the facilities. The TRR also 18 is the basis on which the PTO receives payments for the Cal ISO, which 19 are essentially portions of the TAGS collected by the Cal ISO. The Cal 20 ISO FERC Electric Tariff, as it is presently effective, subject to 21 change in FERC Docket No. ER00-2019, provides that a new PTO may submit 22 its TRR for approval to the Cal ISO, or directly to the Commission for 23 approval. No specific procedures are set out for submitting the TRR to 24 the commission. Azusa submits its TRR to the Commission in this case. 25 Azusa understands that the Cal ISO will make filings under the 26 Federal Power Act for approval of its assuming operational control of 27 Azusa's transmission entitlements and for a revised TAC that includes 28 the TRR of Azusa and the other PTOs.' Azusa's priority is to become a 29 PTO on January 1, 2003. 30 31 Q. HAVE YOU DETERMINED AZUSA'S TRR FOR PURPOSES OF AZUSA BECOMING A PTO? `In addition to Azusa, the Cities of Anaheim, Riverside and Banning, California have taken the appropriate steps to become PTOs as of Jan 1, 2003. 4 0,49 I 1 A. Yes, I have. I have used conventional ratemaking concepts regarding 2 cost of service to develop Azusa's TRR. I will discuss each component 3 in turn in the testimony below. In summary, however, I first determined 4 the expenses applicable to the transmission lines. These expenses 5 include Azusa's•share of the debt service, the operation and maintenance 6 expenses, the authority and agency costs and the property taxes. 7 Additionally, Azusa is turning over operational control to the Cal ISO 8 of its contracts for transmission service and the expenses associated 9 with these contracts is included in Azusa's TRR. The final components 10 of Azusa's TRR are administrative and general expenses, regulatory 11 expense and a return allowance. 12 13 14 Q WHAT IS THE TEST YEAR FOR THE PURPOSE OF DETERMINING AZUSA'S TRR? 15 A. The test year in this case is an historical twelve months ended December 16 31, 2001, as adjusted for known and measurable changes that have 17 occurred or will shortly occur. These adjustmentsareexplained below. 19 19 Q. AZUSA PARTICIPATES IN TWO SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY 20 TRANSMISSION PROJECTS. WOULD YOU START BY EXAMINING AZUSA'S COSTS 21 RELATED TO THESE PROJECTS? 22 A. Yes, I will. Azusa participates in two transmission projects through 23 the Southern California Public Power Authority ("SCPPA"). These 24 projects are the Mead-Adelanto Project ("MAP") and the Mead -Phoenix 25 Project ("MPP"). I have reviewed the invoices from each of these 26 projects that Azusa received from July 2000 through December 2001. The 27 monthly costs are summarized, for each project, on Exhibit AZU-2 at 28 pages 4 and 5 of 7. The actual 2001 costs are $297,086 (MAP) and 29 $51,560 (MPP). 30 I then examined the costs associated with each project to 31 determine if the altual 2001 costs are appropriate to use in the TRR on 32 a forward looking basis. The costs of these projects change at the 33 beginning of each fiscal year on July 1. Therefore, to better match the 34 TRR to the time frame in which it. will become effective, I propose 35 certain adjustments to annualize the most recent known costs. These 36 adjustments are calculated on Exhibit AZU-2, page 2 of 7. 5 050 I For the MAP the adjustments are to debt service, authority and 2 agency costs, and property taxes. The annualized cost for each of the 3 components is measured as twelve times the currently effective monthly 4 cost as evidenced by the invoices received by Azusa as of July 2001. 5 The pro forma debt service cost is currently $224,748 as compared to the 6 actual 2001 cost of $284,910 - necessitating an adjustment that reduces 7 - the TRR by ($60,162). Similar calculations for the authority and agency 8 costs and the property taxes result is adjustments of ($264) and $264, 9 respectively. I have also removed the prior year correction from the pro 10 forma costs because, as indicated, it is related to a prior year. The 11 total pro forma annual cost to Azusa for the MAP system is $258,936. 12 I have performed essentially the same analysis for the MPP. For 13 the MPP, the total of the pro forma adjustments is ($7,376). The 14 resulting pro forma annual cost of the MPP is $44,184. 15 16 Q. AZUSA IS ALSO TURNING OVER OPERATIONAL CONTROL OF ITS TRANSMISSION 17 - CONTRACTS. WOULD YOU EXPLAIN THESE CONTRACTS AND THE ANNUAL. COSTS 18 ASSOCIATED WITH THEM? 19 A. Yes, I will. Azusa has six contracts with Southern California Edison 20 ("Edison"). These contracts, in the order in which they appear in 21 Exhibit AZU-2, at page 3 of 7 are: 22 1. Victorville/Lugo-Rio Hondo (4 MW) 23 2. Mead -Rio Hondo (8 MW) 24 3. Victorville/Lugo-Rio Hondo (14 MW) 25 4. Mead -Rio Hondo (4 MW) 26 5. Sylmar -Rio Hondo (10 MW/25 MW seasonal) 27 6. COB -Sylmar (15 MW - six months a year) 28 subsequent to January 1, 2003 all of these contracts will be billed on a 29 kW -month basis. I have been informed by Azusa that Edison intends to 30 use the Non -self Sufficient Access Charge as it is stated in its most 31 recent TO Tariff filing at FERC, Docket No. ER02-095. That charge is 32 $1.446 per kW -month. Therefore, on page 3 of Exhibit AZU-2, I have 33 repriced each of the Edison contracts at $1.446 per -kW -month at the 34 stated kW reservation for each. Repricing these contracts as indicated 35 is appropriate since these are costs that will be incurred subsequent to 36 January 1, 2003 when Azusa will become a PTO and turn over operational 6 r- 051 1 control of these contracts to the Cal ISO. The resulting adjustments 2 are calculated on Exhibit AZU-2 at page 3 of 7 and are carried forward 3 to Exhibit AZU-2, page 1 of 7. The total adjustment required for all 4 six contracts is $440,160. The total pro forma annual cost of these 5 contracts is $954,360. 6 Azusa also has a transmission contract with Burbank and Pasadena. 7 The Burbank/Pasadena contract is for service over the Pacific DC 8 Intertie. The historical costs for this contract are shown on Exhibit 9 AZU-2 at page 7 of 7. The Burbank/Pasadena contract experienced a 10 slight change as of July 1, 2001 and another as July 1, 2002 that are 11 based solely on an escalation factor built into the contract. The July 12 2002 increase is at the minimum level provided for under the contract. 13 The annualization of the latest known increase results in adjustments to 14 the historical costs of $5,683 for Burbank and $3,024 for Pasadena. 15 These calculations are shown on Exhibit AZU-2 at page 3 of 7. 16 The final set of transmission contracts that Azusa is turning over 17 to the CAL ISO are with the Los Angeles Department of Water and Power 18 ("LADWP"). The costs of these two contracts [Palo Verde -Sylmar for IOMW 19 and Adelanto-Victorville/Lugo for 18 MW) have been the same for several 20 years and are not expected to change. Therefore, no adjustment to the 21 historical level of costs is necessary. The annual cost of the two 22 contracts -is $293,520. 23 24 Q. WOULD YOU SUMMARIZE YOUR TESTIMONY AT THIS POINT AS IT RELATES TO 25 AZUSA'S DIRECT COSTS OF SCPPA PROJECTS AND TRANSMISSION CONTRACTS? 26 A. Yes, I will. Azusa participates in the Mead-Adelanto Project and the 27 Mead -Phoenix Project through SCPPA. The costs of these projects are 28 billed to the participants based upon their respective interests in each 29 of the projects individually. Azusa's annual, pro forma, forward 30 looking cost of these projects is $303,120 including debt service costs. 31 Azusa has transmisgion contracts with LADWP, Burbank, Pasadena and 32 Edison. The costs related to these contracts are billed to Azusa on a 33 monthly basis. Azusa's annual, pro forma forward looking costs for the 34 service under these contracts is $293,520 (LADWP), $954,360 (Edison) and 35 $115,993 (Burbank and Pasadena) for a total of $1,363,873. The total 36 costs directly billed to Azusa per contractual arrangements is nr-n 7 U04 1 $1,666,993 including debt service costs for the SCPPA projects. 2 3 Q. RAVE YOU INCLUDED AN ALLOCATED PORTION OF AZUSA'S ADMINISTRATIVE AND 4 GENERAL EXPENSES IN ITS TRANSMISSION REVENUE REQUIREMENT? 5 A. No, I have not, but an allocated portion of Azusa's A&G expenses would 6 be properly included in the TRR if a functional allocation of the costs 7 were available. Azusa's administrative personnel oversee and shepherd 8 Azusa's power supply contracts, transmission contracts and the 9 distribution system. Currently, however, Azusa does not have data 10 available that would provide a reasonable basis to allocate the costs 11 among the various functions. Rather than guess at the proper 12 allocation, Azusa has elected to forego an allocation or assignment of 13 any A&G costs to the TRR at this time. I have suggested to Azusa that, 14 perhaps for a future determination of the TRR, time logs be kept by the 15 various personnel responsible for more than one function - i.e. that 16 have responsibilities for power supply, transmission and distribution. 17 These logs could serve as an appropriate basis for allocation of 18 administrative and general costs to the transmission function in a 19 future proceeding. 20 21 22 Q. RAVE YOU INCLUDED AN AMOUNT FOR REGULATORY EXPENSE IN AZUSA'S 23 TRANSMISSION REVENUE REQUIREMENT? 24 A. Yes, I have. Azusa is responsible for a portion of the legal and 25 consulting services associated with this filing as well as its 26 participation in other proceedings related to the Cal ISO and the 27 transmission issuesinCalifornia. Most of Azusa's participation in 28 these matters is as part of a group and only Azusa's share of the total 29 costs are included in the TRR. 30 The costs that are included in this filing are well below what 31 Azusa has actuallyVexperienced in the past and will likely experience in 32 the future. This is so because the regulatory expenses included herein 33 reflect only one month of legal costs. Prior to July 2002, these costs 34 were not separated into functions - i.e: the portion of the total costs 35 assignable to the transmission function was not separately stated. As 36 of July, in anticipation of this case, these costs are being separately 053 8 P 1 stated so that their full inclusion in future cases will be facilitated. 2 In future cases, Azusa would fully expect to include a representative 3 annual level of cost for legal services related to the transmission 4 function. 5 Additionally, the regulatory expenses included in this case 6 reflect Azusa's share of consulting services only for the efforts 7 required to get this case filed. There are no estimated costs included 8 for post -filing efforts, nor for consulting services related to other 9 transmission issues. 10 The total amount included in the TRR for regulatory expense is 11 $11,137 and is supported by the calculations shown in Exhibit AZU - 3. 12 13 14 Q. HAVE YOU INCLUDED A RETURN REQUIREMENT IN AZUSA'S TRANSMISSION REVENUE 15 REQUIREMENT? 16 A. Yes, I have. 17 18 Q. PLEASE EXPLAIN HOW THE RETURN REQUIREMENT IS DEVELOPED. 19 A. A return requirement is measured by applying some measure of cost (a 20 rate of return) to some level of investment. In the case of Azusa, the 21 investment is measured by its net ownership interests in the SCPPA 22 projects plus an allowance for cash working capital. Azusa owns 23 percentage shares of the SCPPA projects as indicated on Exhibit AZU - 2, 24 page 2 of 7. These percentages are applied to SCPPA's net plant in 25 service as of March 31, 2002 which is the latest data available. The 26 resulting ownership interest for Azusa is $3,673,091. I have added a 27 cash working capital allowance of $177,542 which is based on 1/8th of 28 Azusa's relevant operation and maintenance expenses as indicated in 29 footnote (1) on Exhibit AZU-2, page 2 of 7. The total rate base is 30 $3,850,632. 31 The rate of return that is used is the overall rate of return that 32 - is embedded in Southern California Edison's transmission revenue 33 requirement - 9.29&. The resulting return requirement is $357,724. 34 35 Q. WHY DID YOU APPLY A RATE OF RETURN OF 9.29$7 36 A. First of all, because the facilities that are being turned over to the 9 054 1 Cal ISO are similar in function and risk as facilities that Edison has 2 turned over already. There should not be a distinction between the 3 incentive offered to Edison in the form of a rate of return and the q incentive offered to entities such as Azusa to invest in transmission 5 facilities. Indeed, Azusa's risks may exceed those of Edison. These 6 facilities are located outside the City's compact service territory. 7 They extend long distances in California and beyond. The mere fact that s a larger portion, on a percentage basis, extend to states beyond 9 Califorriia puts Azusa at more risk. Additionally, these facilities are 10 not wholly owned by Azusa. Azusa owns only small percentages of the 11 projects as indicated in Exhibit AZU - 2, page 2 of 7. The facilities 12 operate under a joint ownership committee that is controlled by others. 13 Secondly, these facilities are similar to the facilities that the 14 City of Vernon, California has previously turned over to the Cal ISO. 15 In Docket No. EL00-105-000, Vernon requested a rate of return that 16 equated to Edison's allowed return on equity since Vernon's facilities 17 were financed 100% by equity capital. The Commission agreed with Vernon 1s that the facilities were similar to Edison's and carried similar risks. 19 The Commission, however, disagreed that Edison's equity allowance was 20 the appropriate measure of that risk and ordered Vernon to apply 21 Edison's overall rate of return, thus imputing Edison's capital 22 structure and its other cost of capital components as well as the cost 23 of equity. Azusa is requesting similar treatment for its investment in 24 these same facilities. - 25 26 Q. EDISON HAS RECENTLY FILED A NEW TRANSMISSION REVENUE REQUIREMENT THAT 27 INCLUDES A REQUESTED OVERALL RATE OF RETURN OF 10.66%. WHY DO YOU NOT 28 APPLY THE 10.66% RATE OF RETURN? 29 A. The 10.66% requested overall rate of return has not yet been approved by 30 this Commission. In Docket No. EL00-105-000, Vernon proposed to use an 31 approved equity al;owance and the Commission ultimately ordered the use 32 of the then approved overall rate of return. Therefore, I propose to 33 use the latest approved overall rate of return of 9.29% rather than 34 Edison's proposed overall rate of return, to be conservative, but still 35 provide Azusa the appropriate incentive for turning over its facilities 36 to the Cal ISO. r, .' C 10 UDI) 1 2 Q. WHEN YOU ADD A RETURN COMPONENT TO AZUSA'S TRANSMISSION REVENUE 3 REQUIREMENT DO YOU NEED TO MARE OTHER CHANGES? 4 A. Yes, I do. A return requirement will subsume the debt service component 5 of Azusa's payments to SCPPA. In other words, these payments will be 6 made out of the return requirement. Therefore, I have removed all debt 7 service costs from Azusa's TRR. If these costs were not removed, Azusa 8 would recover these debt service costs twice. 9 Fihally, when ownership of the net plant is included in the TRR, a 10 depreciation expense allowance must also be included in the TRR. The 11 SCPPA projects in which Azusa participates are being depreciated at an 12 annual rate of approximately 2.68 (which equates to a service life of 13 38+years). This is very reasonable depreciation rate for these 14 facilities especially when one compares it to Edison's overall 15 transmission plant depreciation rate of 3.28 which was used by the City 16 of Vernon in Docket No. EL00-105-000 and approved by this Commission for 17 use for these very same facilities. 18 Theannualdepreciation expense allocable to Azusa is calculated 19 on exhibit AZU - 2, page 2 of 7. The depreciation expense included in 20 the TRR is $113,864. 21 22 23 Q. WHAT IS AZUSA'S TOTAL GROSS TRANSMISSION REVENUE REQUIREMENT AT THIS 24 TIME? 25 A. With the understanding that the TRR that is proposed in this case is 26 conservative - because the regulatory expense does not reflect a full 27 year of costs and there is no allocation of internal administrative and 28 general expenses to the transmission function - Azusa's gross TRR is 29 $1,891,922. This amount is shown on Exhibit AZU - 2, page 1 of 7, line 30 24. 31 Q. DOES THIS CONCLUDE YOUR DIRECT TESTIMONY AT THIS TIME? 32 A. Yes, it does. 1' 0rrr El-_ AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES/\, DATE: SEPTEMBER 23, 2002 V' SUBJECT: APPROVAL OF PROPOSED CHANGES TO STANDARD OPERATING PROCEDURES AND EMERGENCY RESPONSE PROCEDURES RECOMMENDATION It is recommended that the Utility Board/City Council approve the proposed changes to the City's Standard Operating Procedures and Emergency Response Procedures to be used as component of the City's Utility Distribution Company Operating Agreement with the Independent System Operator. BACKGROUND This past April staff presented to Utility Board/City Council recommendations in joining the CAISO as Participating Transmission Owners (PTOs). Among one of the agreements the City needs to effectuate its PTO status as a Utility Distribution Company Agreement (UDC) with the CAISO. The CAISO requires a UDC to maintain both operating and emergency procedures in the event of load shedding events. Per the existing procedures in place, the City Manager has the discretion if firm load needs to be shed in emergency situations. The CAISO objected to this subordination. The current procedure reflected the reality during the crisis that the City was forced to unfairly shed firm load because the IObs (San Diego Gas & Electric, Southern California Edison, and Pacific Gas & Electric) were unable to provide enough power to their customers. Therefore, the logic of the City's operating procedure is to give City Manager the discretion of differentiating between blackouts caused by "economic considerations" and true "system emergencies." The City's implicit Intent is to participate in load shedding if it is caused by true "system emergencies" but not necessarily if it is caused by "economic considerations." CAISO objected since it cannot give such operational authority to any third party and be expected to maintain the reliable operation of the interconnected system on a real time basis. The Federal Energy Regulatory Commission recently approved CAISO Amendment 46 to the Tariff. The significance of this amendment is CAISO will distinguish from now on between blackout events caused by "economic considerations" and by "system emergencies." Amendment 46 states that UDCs are not required to shed load if (1) they have enough power to serve their customer loads, and (2) if the blackout is caused by resource deficiencies due to financial distress of some market participants. This amendment substantially lessens the City's initial concerns about load shedding. CAISO has shown due diligence in implementing the Amendment 46 provisions by including the City in the implementation discussions. Staff and the CAISO have been working together to revise the City's existing procedures to address both parties' needs. Staff believes both parties' concerns have been accommodated without threatening the City's reliable electric operations. Standard Operating Practice and Emergency Response Procedures will be provided to Utility Board/City Council Members on a request basis. FISCAL IMPACT There is no fiscal impact as a result of the actions taken in this agenda item. Prepared by: Richard Torres, Power Resources Coordinator v::8 AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: SEPTEMBER 23, 2002 SUBJECT: WATER SUPPLY ASSESSMENT FOR MONROVIA NURSERY PROJECT RECOMMENDATION It is recommended that the Azusa Utility Board/City Council approve the attached Water Supply Assessment and authorize staff to file the same with Azusa Community Development Department. BACKGROUND Azusa Light & Water, as the water supplying agency to the proposed Monrovia Nursery Development (the "Project"), is mandated by Senate Bill 610 to prepare a Water Supply Assessment as part of the Project's CEQA process. The intent of Water Supply Assessment which is required for large residential and commercial developments is to ascertain that sufficient water is available to meet the demands of the Project for the next twenty years - based on normal, single dry, and multiple dry years. Assessment must identify the existing water supply entitlements and/or water rights; Identify other entities that have rights tgg the same source; and if the source for the project includes groundwater, factors and specii:tcations related to groundwater source must be included. Water Supply Assessment has been completed and a copy Is attached for your reference. The findings and conclusions of the Assessment are: (1) Azusa Light & Water has sufficient physical capacity to produce the amount of water the Project will need; (2) Monrovia Nursery has sufficient water rights from the same water production basin which are being used to supply water to its nursery operations; (3) Azusa Light & Water has to purchase replacement water every year to meet its current demands; and (4) Azusa Light & Water believes 05g Page 2: Water Supply Assessment for Monrovia Nursery Development it will have water of sufficient reliability to serve the Project based on the assumption of the dedication to Azusa Light & Water the Monrovia Nursery adjudicated water rights commensurate with its development. FISCAL IMPACT There is no fiscal impact by approving the Water Supply Assessment report. Prepared by: J. Hsu Attachment UO AZUSA LIGHT & WATER WATER SUPPLY ASSESSMENT Prepared by: Michael T. Fife HATCH AND PARENT 21 East Carrillo Street Santa Barbara, California 93101 (805)963-7000 September 2002 SB 311092 v"10435.0001 061 TABLE OF CONTENTS I. Applicability of Water Code § 10910...............................................................................1 II. Demand of the Project.......................................................................................................1 III. Azusa Light & Water's Facilities to Serve the Project...................................................2 IV. Azusa Light & Water's Historical and Current Water Supply....................................2 A. Description of Main San Gabriel Basin Water Supply ..................................... 2 B. Description of Judgment Governing Water Use in the Main San GabrielBasin......................................................................................................... 3 1. Description of Adjudications Generally .................................................. 3 2. Description of Main San Gabriel Basin Judgment ................................ 4 C. Description of Supply Specific to Azusa Light & Water ................................... 5 V. Reliability Assessment of Imported Water Supplies......................................................7 A. MWD Water Code § 10910, et seq. Reliability Report ...................................... 7 B. Department of Water Resources State Water Project Water Code § 10910, et seq. Reliability Report .......................................................................................... 8 VI. Monrovia Nursery Water Supply Availability ................................................................8 VII. Azusa Light & Water Water Supply Assessment...........................................................8 TABLE1.........................................................................................................................................9 TABLE2.......................................................................................................................................10 TABLE3.......................................................................................................................................12 A' SB 311092 x1:010435.0001 By letter dated August 2, 2002 the Monrovia Nursery, through its consultants Vandermost Consulting Services, hic., requested that Azusa Light & Water provide a Water Supply Assessment ("WSA") in compliance with Water Code § 10910, et seq. (also known as Senate Bill 610). Pursuant to Water Code § 10911(b), this WSA shall be included in the environmental documentation for the project which is currently in preparation by the City of Azusa. I. Applicability of Water Code § 10910 Water Code § 10910 requires a public water supplier to provide an assessment of the availability of water supplies for any qualifying development. This assessment must provide a determination of the projected demand for the proposed project and must analyze the sufficiency of the total water supplies available to the public water supplier in comparison to the existing and new demands associated with the proposed project. The analysis must provide an evaluation of the water supply sufficiency in normal, single -dry and multiple -dry year scenarios over a 20 -year horizon. The proposed development on the Monrovia Nursery site consists of single-family and multi -family residences, parks and open space, and a school ("Project"). Azusa Light & Water has been informed that the scope of the Project is such that it will include greater than 500 homes. Thus, the Project qualifies as a "project" under Water Code § 10912(a)(1). Since the Project has been determined to be subject to the California Environmental Quality Act ("CEQA" ), a WSA must be performed. (Water Code § 10910(a).) Azusa Light & Water is providing an assessment of the availability of water for the Project even though the exact elements of the Project remain to be defined because the magnitude of the water demand can be estimated relatively accurately. The applicability and veracity of this WSA is contingent on the water demand estimates used in the WSA remaining equal to or greater than the demands associated with the final Project to be presented for approval by the City of Azusa. In addition, Monrovia Nursery will be required to obtain a Senate Bill 221 (Government Code § 66473.7) verification of water availability from Azusa Light & Water when the Project is more precisely defined. II. Demand of the Project In its request letter of August 2, 2002, Monrovia Nursery described anticipated footprints for each of the various land uses contemplated by the Project. According to these estimates, the Project will involve 83.7 acres of single-family residential units, 51.2 acres of multi -family residential uses, 8.7 acres for school use, and 108.3 acres of parks/open space. Typical average demand factors for each proposed land use have been calculated based on these estimates. While the exact acreage of each land use may change slightly due to engineering refinement of the Project, the estimates provide a close approximation of the anticipated water demand of the entire Project. SH 311092 0:010435.0001 According to the preliminary demand projections described above, the estimated annual average day demand of the Project is anticipated to be approximately 354 gallons per minute ("gpm"). The maximum day demand is projected to be 674 gpm and the estimated peak hour demand is projected to be 1,347 gpm. It must be emphasized that these preliminary demand estimates are based solely on information provided by Monrovia Nursery in its August 2, 2002 letter. Azusa Light & Water cannot confirm the accuracy of these estimates and, in fact, believes that the actual demand of the Project will be higher than estimated. However, Azusa Light and Water's assessment of water supply availability contained below in Part VII will still be applicable even if the actual demand of the project is greater than that estimated by Monrovia Nursery. Azusa Light & Water anticipates that this uncertainty will be resolved by the time that Monrovia Nursery requests a Verification of water supply availability under Senate Bill 221. III. Azusa Light & Water's Facilities to Serve the Project Azusa Light & Water has in existence the facilities necessary to serve water to the Project. System -wide, Azusa Light & Water has the ability to produce 47,794 acre-feet of water per year. Since some of this capacity is redundant backup capacity Azusa Light & Water lacks the system capacity to actually produce this much water, but Azusa Light & Water's facility capacity is still well in excess of the current or projected system -wide demand. These facilities, along with Azusa Light & Water's current and project demand, are described in greater detail in Azusa Light & Water's Year 2000 Water System Master Plan Update and the Year 2000 Urban Water Management Plan (described in more detail below). Metered connections to the Azusa Light & Water system already exist at the property. These connections are sized to accommodate a delivery of 1,095 acre-feet of water per year. This amount is well in excess of the demands associated with the Project, though this amount has never been delivered to the connection. In fact, deliveries to these connections have averaged less than 80 acre-feet per year. A sample accounting of such water deliveries is detailed in the attached Table 1. Thus, while capital improvements will be necessary to properly and reliably meet the demands of the Project, Azusa Light & Water does not believe that there are any facilities -based constraints that will prevent it from providing sufficient water to the Project. IV. Azusa Light & Water's Historical and Current Water Supply A. Description of Main San Gabriel Basin Water Supply The proposed development is located in the San Gabriel Valley, which is underlain by the Main San Gabriel Groundwater Basin (`Basin"). The Basin is a large groundwater basin replenished by stream runoff from the adjacent mountains and hills, by rainfall directly on the SB 311092 x1:010435.0001 ;;s4 surface of the valley floor, subsurface inflow from Raymond Basin and Puente Basin, and by return flows from water applied for overlying uses. Additionally, the Basin can be replenished using purchased imported water. The Basin serves as a natural storage reservoir, transmission system and filtering medium for wells that produce water from it. Water use from the Basin and from the San Gabriel River is governed by the stipulated judgment entered in Upper San Gabriel Valley Municipal Water District v. City of Alhambra, et al., Los Angeles County Superior Court Case No. 924128 ("Judgment"). The original Judgment was signed and filed on December 29, 1972, was entered on January 4, 1973, and was amended on August 24, 1989. The details of the operation of the Judgment and its impact on this WSA are described in detail in Part IV, below. A copy of the Judgment is attached here as Attachment "A" as required by Water Code § 10910(f)(2). There are three municipal water districts, which overlie or partially overlie the Basin and its relevant watershed: (1) the Upper San Gabriel Valley Municipal Water District ("USGVMWD"), (2) the San Gabriel Valley Municipal Water District ("SGVMWD"), and (3) the Three Valleys Municipal Water District ("TVMWD'�. These districts cooperate with the Main San Gabriel Basin Watermaster to fulfill their responsibilities to provide imported water for recharge of the Basin and for direct use by public water purveyors throughout the Basin. USGVMWD has historically acted on behalf of the TVMWD for its make-up water obligations in the Basin. Both the USGVMWD and the TVMWD are member agencies of the Metropolitan Water District and, thus, receive imported water from the same source. SGVMWD is a State Water Project contractor which was formed in 1959 to bring supplemental water to the cities of Alhambra, Azusa, Monterey Park and Sierra Madre. SGVMWD has a contract entitlement for 28,800 acre-feet per year of State Water Project water. B. Description of Judgment Governing Water Use in the Main San Gabriel Basin Description of Adjudications Generally The San Gabriel River and the underlying Main San Gabriel Groundwater Basin have been the subject of a comprehensive ground and surface water adjudication. The principal function of an adjudication is to control the use of a water source to ensure that the water source is utilized in an optimal manner. For the purposes of a groundwater adjudication, the central feature of the adjudication is the determination of the safe yield of the groundwater basin, and to place controls on the use of basin groundwater to ensure the long term integrity and reliability of the water resource. The safe yield of a groundwater basin has been defined as the amount of water that can be withdrawn from it annually without producing an undesired result. Such undesired results can include the depletion (mining) and eventual exhaustion of the groundwater reserves, the intrusion of water, of undesirable quality, surface subsidence and property damage, the contravention of existing water rights, and the deterioration of the economic advantages of pumping. When the SB 311092 0:010435.0001 v6E collective use of a groundwater basin exceeds the basin safe yield, the basin is described as being in "overdraft." The central purpose of a groundwater adjudication is to create an institutional structure that is protective of the long-term sustainable use of the groundwater resources so that the use of the basin resources do not result in long-term overdraft conditions. To implement this objective, adjudications employ a number of devices. First, while adjudications result in a final court judgment, the court typically retains continuing jurisdiction to oversee ongoing implementation of a physical solution that controls use of the basin water resources. Typically, a "watermaster" is appointed to oversee this management effort. The watermaster can take a number of forms, including a single individual, or a committee or board. One of the specific functions of a watermaster is often to set what is called the "operating safe yield" for the basin. The operating safe yield of a basin is the year -specific amount of water that can be produced from the basin under the particular conditions of that year. Operating parameters may vary from year-to-year because of climate conditions, demand variations and the implementation of specific management objectives. However, the overarching goal is to preserve the long-term capabilities of the basin. Therefore, by their very nature, adjudicated water rights satisfy the reliability standards sought by Water Code § 10910, et seq. An adjudicated right is based upon long-term technical studies whose purpose is to protect the long-term functionality of the water source. These rights are coordinated in an established and binding manner with all the other users of that source and are overseen by an entity with the authority to mandate and proscribe activities whose purpose is to protect the water source. Numerous successful examples of this method of coordinated water management exist in California, and this management regime was recently identified in a report commissioned by the State Water Resources Control Board as perhaps the best method of comprehensive water management. (Sax, Review of the Laws Establishing the SWRCB's Permitting Authority Over Appropriations of Groundwater Classified as Subterranean Streams and the SWRCB's Implementation of those Laws, S WRCB No. 0-076-300-0 (January 19, 2002).) 2. Description of Main San Gabriel Basin Judgment The Main San Gabriel Basin Judgment is consistent with this general adjudication template and utilizes the management techniques described above. The Judgment defines the Natural Safe Yield of the Basin as, "[tjhe quantity of natural water supply which can be extracted annually from the Basin under conditions of long term average annual supply, net of the requirement to meet downstream rights as determined in the Long Beach Case (exclusive of Pumped export), and under culthral conditions as of a particular year." (Judgment ¶ 10(p).) The Natural Safe Yield of the Basin was set at 152,700 acre-feet under Calendar Year 1967 cultural conditions. (Judgment ¶ 13.) Thus, the safe yield of the Main San Gabriel Basin is not only based on the reliability features described above, but it was established over 30 years ago. The 5B 311093 0:010435.0001 U06 management regime that has been built around it has therefore had the opportunity to be tested through many different water supply scenarios including single -dry and multiple -dry years. The Judgment also utilizes the concept of an Operating Safe Yield which is defined as, "[t]he quantity of water which the Watermaster determines hereunder may be Pumped from the .Basin in a particular Fiscal Year, free of the Replacement Water Assessment under the Physical Solution herein." (Judgment ¶ 10(q).) Generally, the Operating Safe Yield has averaged approximately 200,000 acre-feet per year. The attached Table 2 provides detailed aggregate pumping information for the Basin since adoption of the Judgment. The Judgment also creates a Watermaster. (See Judgment 1128-37.) One of the purposes of the Watermaster is to collect an assessment to pay the costs associated with the acquisition of replacement water which is made necessary by a parties' production in excess of its adjudicated right. The Judgment does not prohibit a party from producing more water than its adjudicated right. However, to the extent that such overproduction occurs, that party will be assessed a Replacement Water Assessment. (Judgment ¶ 45(b).) This assessment is then used to purchase imported water to mitigate the deficit caused by the overproduction. If such supplemental water were not acquired, then overproduction by the parties would result in a condition of overdraft of the Basin and would have a deleterious effect on the long-term health and reliability of the Basin. Under the Judgment it is the responsibility of the water districts whose service area includes the Basin to acquire sufficient supplemental water to satisfy the replacement water needs. This water can be acquired from a variety of sources, but the primary source is the Metropolitan Water District of Southern California ("MWD"), whose sources include the State Water Project and the Colorado River. C. Description of Supply Specific to Azusa Light & Water Azusa Light & Water prepared an Urban Water Management Plan ("UWMP") in compliance with Water Code § 10610, et seq. The most recent update was adopted by Azusa Light & Water on December 18, 2000 ("2000 UWMP"). In addition, in 1995, Azusa Light & Water completed a Water System Master Plan ("WSMP") to govem the future development and operations of the water distribution system. The WSMP was updated in 2000 ("2000 WSMP"). The 2000 UWMP cites to the original WSMP as the source for the data used to determine future water demand. (2000 UWMP, p.12.) Both the 1995 WSMP, as well as the 2000 WSMP project future water demand, including the demand associated with the Project. Thus, under Water Code § 10910(c)(2), the information provided in the UWMP and the 2000 UWMP, and by reference the information provided in the WSMP and the 2000 WSMP, may be incorporated into this WSA. The UWMP, the 2000 UWMP, the WSMP, and the 2000 WSMP are all hereby incorporated by reference into this WSA. Azusa Light & Water's water system has been in operation since 1899, relying primarily on groundwater sources to supply deliverable water. The system currently relies on nine wells and the Canyon Filtration Plant for water supply. The system also consists of nine storage $B 711092 v"10435.0001 ,,r7 reservoirs with a capacity of 28.1 million gallons, six booster pump stations, and just under 300 miles of distribution mains with pipeline sizes ranging from 2 to 30 inches in diameter. The system is divided into four pressure zones based on the hydraulic gradient throughout the service area. Azusa Light & Water pumps water from an area that is at the upper portion of the Main San Gabriel Basin known as the San Gabriel Canyon Basin. The area functions as a sub -basin, though the Main San Gabriel Basin Watermaster does not treat it as a separate sub -basin for management purposes. The capacity of the Basin is approximately 27,000 acre-feet, and three pumpers account for almost all of the production from this area. These are Azusa Light & Water, the City of Glendora and the California -American Water Company. A plan is currently being proposed to Watermaster under which the San Gabriel Canyon Basin would be managed under a separate safe yield calculation of approximately 8,000 acre-feet per year. Institutionally, Azusa Light & Water has various supply options under the Judgment. It exercises what is known as an "integrated" pumping right which means that it can exercise its rights either through pumping from the Basin or through direct diversion from the San Gabriel River, or through any combination of these two methods. Integrated production rights have two historical components: (1) a fixed component based on historical surface water diversion for direct use, and (2) a mutually prescriptive pumper's share component based on groundwater production during the period 1953 through 1967. Azusa Light & Water exercises rights that were adjudicated to the City of Azusa. In addition, it owns an 83% stock interest in the Azusa Agricultural Water Company ("AAWC"), and in 1996 acquired the Azusa Valley Water Company ("AVWC"). Azusa Light & Water's surface rights consist of the diversion rights of AAWC and AVWC. The diversion rights of AAWC are 1,000 acre-feet per year. The 83% ownership interest in AAWC thus yields a right to 830 acre-feet per year. The rights originally associated with AVWC entitle Azusa Light & Water to divert 2,422 acre-feet per year. The total fixed component of Azusa Light & Water's integrated right is thus 3,252 acre-feet per year. Azusa Light & Water's pumper's share of the Operating Safe Yield of the Basin is 6.76387%. This amount is the total of three components. The City of Azusa has an adjudicated right to 1.84988% of the Operating Safe Yield. Ownership in the AAWC provides another 0.72747%, and rights from the acquisition of AVWC provide another 4.18652%. In a year in which the Operating Safe Yield is 200,000 acre-feet, Azusa Light & Water's pumper's share would therefore be 13,528 acre-feet. Over the years, the totAights exercised by Azusa Light & Water have ranged from as little as 12,677 acre-feet per year in dry years, to as much as 18,748 acre-feet per year in wet years. SB 311092 0:010435.0001 U68 As described in the 2000 UWMP, Azusa Light & Water currently has a service area of approximately 10,163 acres. The City of Azusa represents the majority of the land area that is served, but service is also provided to areas of West Covina, Covina, Irwindale, Glendora, and a portion of unincorporated Los Angeles County. Production necessary to supply its service area is currently approximately 22,000 acre-feet annually. The 2000 UWMP projects that water production in the year 2020 will be approximately 25,000 acre-feet annually. (2000 UWMP, P. 12.) Thus, Azusa Light & Water is currently required to pump more water from the Basin than is represented by its water rights under the Judgment. The result of this is that Azusa Light & Water must pay a Replacement Water Assessment every year as required by the Judgment. The 2000 UWMP accounts for the demand associated with the Project both in terms of growth projections for Azusa Light & Water's customer base, and in its acknowledgment that Azusa Light & Water must acquire additional water rights (under the Judgment or otherwise) to maintain its service reliability as customer demand grows. (2000 UWMP, P. 14.) V. Reliability Assessment of Imported Water Supplies Absent a dedication of Monrovia Nursery's water rights (discussed below in Part VI) to Azusa Light & Water, any water supplied to the Project would incur a Replacement Water Assessment and would therefore need to be replaced through the purchase of imported water. To the extent that supply for the Project depends upon groundwater production in excess of production rights established under the Judgment, an analysis of the reliability of the supply for the purposes of Water Code § 10910, et seq. must also include an analysis of the reliability of such imported water supplies. As noted above, imported water to the Main San Gabriel Basin comes primarily from the State Water Project directly and MWD, through it member agencies. MWD supplies are largely dependent on the State Water Project, the Colorado River, along with a multitude of local water development projects, including recycled and desalinated water. A. MWD Water Code § 10910, et seq. Reliability Report MWD has issued a report titled Report on Metropolitan's Water Supplies, dated February 11, 2002 ("MWD Report"). The MWD Report is hereby incorporated by reference into this WSA. The purpose of the MWD Report is to'provide an assessment of the availability of water from MWD to the water suppliers within the MWD service territory. The MWD Report finds that if MWD's currently proposed supply programs are implemented under its comprehensive resource plan, and if current trends for retail demands and local supplies continue, MWD would have the capability to reliably meet projected water demands through 2030. (MWD Report, p.18.) These proposed supply p(ograms include, in addition to the continued reliance on State Water Project and Colorado River water, proposals for the construction of desalination facilities, proposals for the use of recycled water, and proposals for increased use of available underground storage capacity. SB 311092 vl:010435.0001 U69 B. Department of Water Resources State Water Project Water Code § 10910, et seq. Reliability Report The California Department of Water Resources has also issued a draft report titled, The State Water Project Delivery Reliability Report ("DWR Report"). This draft DWR Report is hereby incorporated by reference into this WSA. This draft report is dated August, 2002. This draft report analyzes the projected delivery probability of State Water Project water under a variety of different supply and demand projections. The draft DWR Report notes that in addition to the objective numerical frequency that measures reliability, water delivery reliability, "indicates an acceptable or desirable level of dependability of water deliveries to the people receiving the water." (DWR Report, p. 4.) VI. Monrovia Nursery Water Supply Availability The Monrovia Nursery pumps water from the Basin through rights established under the Judgment. It also produces water under the Azusa Agricultural Water Company. Information provided to Azusa Light & Water indicates that Monrovia Nursery has since 1981 been able to produce between approximately 828 acre-feet per year to 1,516 acre-feet per year without incurring a Replacement Water Assessment. Documentation of Monrovia Nursery's historical water production is detailed in the attached Table 3. Azusa Light & Water anticipates that, as a part of the development approval process, the in -Basin water rights associated with Monrovia Nursery will be dedicated to Azusa Light & Water. VII. Azusa Light & Water Water Supply Assessment Based upon the foregoing analysis and assumptions, including the dedication to Azusa Light & Water of the Monrovia Nursery adjudicated rights, Azusa Light & Water believes that it will have water of sufficient reliability to serve the proposed Project during normal, dry and multiple -dry years. An official transfer of Monrovia Nursery's adjudicated water rights to Azusa Light & Water has not yet occurred. This WSA is thus necessarily conditional upon the future completion of such a transfer. Documentation of the removal of this conditionality will be possible when Monrovia Nursery submits a request to Azusa Light & Water for a Verification of water supply availability pursuant to Senate Bill 221. SB 311092 v1010435.0001 070 TABLE 1 Monrovia Nursery Water Consumption Data From May 1999 to May 2002 Account No. Water Used(ccfl Acre-foot Equivalent 165-1490-01-1 41396 95 165-1390-01-7 22621 51.93 165-1190-01-8 742 1.7 165-1110-00-1 8 .02 143-0280-01-6 2 ------ 165-1590-01-6 647 1.49 174-8850-01-0 36358 83.46 Average Consumption per year: 77.87 Ac -Ft. r SB 711092 4:010475.0001 G U7I TABLE 2 MAIN SAN GABRIEL BASIN ANNUAL OPERATING SAFE YIELD, PRODUCTION RIGHTS, WATER PRODUCTION AND REPLACEMENT WATER REQUIREMENTS (ACRE-FEET) C? SB 311092 0;010435.0001 10 Carry Over Key Well Riehts From Lost Replacement Fiscal Elevation Operating Previous Carry Over Production Water Water Year In Feet 1/ Safe Yield Year Rights Rights Production Requirement 1973-74 247.4 226,800 0.00 238,132.94 235,460.40 14,518.98 1974-75 238.4 210,000 17,191.52 203.36 237,913.46 225,221.86 8,421.93 1975-76 234.8 200,000 20,908.91 131.06 231,391.95 242,246.36 24,744.88 1976-77 221.1 150,000 13,759.41 861.12 174,193.45 212,995.30 48,650.71 1977-78 211.4 150,000 9,980.67 1,198.54 170,473.30 198,257.23 36,818.25 1978-79 270.4 170,000 8,950.43 18.11 189,439.67 218,405.64 34,404.83 1979-80 266.6 220,000 6,745.88 81.54 237,226.13 226,279.89 9,896.39 1980-81 282.4 230,000 21,960.87 202.89 262,445.19 233,963.01 5,477.08 1981-82 252.4 210,000 35,642.01 280.30 255,281.37 223,245.24 10,582.35 1982-83 245.5 200,000 43,261.87 304.02 253,049.93 212,205.73 3,293.23 1983-84 292.7 230,000 45,378.26 80.10 287,394.98 238,586.29 2,151.85 1984-85 267.1 210,000 51,594.26 344.48 272,050.11 244,835.13 12,475.69 C? SB 311092 0;010435.0001 10 1985-86 245.8 190,000 40,395.40 198.50 240,319.81 1986-87 250.8 200,000 25,403.49 106.93 235,923.93 1987-88 236.5 190,000 22,457.73 143.63 222,985.31 1988-89 224.0 180,000 21,710.19 61.61 214,810.57 1989-90 219.8 180,000 19,741.33 282.28 210,268.35 1990-91 206.5 170,000 17,837.99 387.33 199,467.55 1991-92 200.3 140,000 18,796.02 345.83 169,575.74 1992-93 236.9 180,000 13,478.79 189.05 204,009.40 1993-94 267.8 220,000 31,718.29 462.81 262,029.85 1994-95 248.8 200,000 50,290.41 1,065.79 260,802.71 1995-96 269.0 220,000 44,262.41 737.28 274,608.47 1996-97 248.9 210,000 35,484.68 863.84 256,011.19 1997-98 241.3 220,000 28,965.55 704.70 263,725.27 1998-99 267.8 230,000 34,016.10 124.28 277,282.73 1999-00 244.8 220,000 40,633.83 592.51 274,824.14 2000-01 228.5 220,000. 33,774.80 570.83 267,126.29 2001-02 220.8 210,000 32,015.15 252,000.00 2/ AR 199,545 28,084.15 382.24 237,750.48 AVERAGE 1/ As of July 1, 2001 2/ Estimated value including Carry-over Rights and Diversion Rights. 11 SB 311092 v1-010435.0001 248,824.38 256,117.22 251,852.84 257,421.07 253,851.86 234,825.54 223,690.83 239,155.14 246,830.55 246,657.49 272,100.40 282,785.85 257,431.98 268,505.37 282,195.44 274, 204.43 243,148.30 33,774.82 41,828.86 51,989.89 59,384.99 62,582.4,9 41,232.39 31,214.19 15,858.66 8,915.59 30,194.77 32,526.05 55,236.24 26,362.42 30,499.32 39,749.83 38,317.35 M TABLE 3 MONROVIA NURSERY HISTORIC WATER PRODUCTION (ACRE-FEET) Replacement Lost Carry Over Fiscal Carry Production Water Water Carry Over to the Year Over Rights Production Requirement Rights Next Year Rights - 1981-82 338.72 1,516.35 1,516.35 0.00 0.00 0.00 1982-83 0.00 1,094.14 1,094.14 0.00 0.00 0.00 1983-84 0.00 1,292.83 1,292.83 0.00 0.00 0.00 1984-85 0.00 1,150.05 1,150.05 0.00 0.00 0.00 1985-86 0.00 958.00 898.77 0.00 0.00 59.23 1986-87 59.23 1,017.23 1,263.07 245.84 0.00 0.00 1987-88 0.00 1,423.90 1,526.93 103.03 0.00 0.00 1988-89 0.00 1,423.90 2,242.63 818.73 0.00 0.00 1989-90 0.00 1423.90 1,828.70 404.80 0.00 0.00 1990-91 0.00 1,339.73 1,541.82 142.09 0.00 0.00 1991-92 0.00 1,339.00 1,895.14 556.14 0.00 0.00 1992-93 0.00 958.00 1,966.30 1,008.30 0.00 0.00 12 SB 311092 v1:010435.0001 1993-94 0.00 1,470.15 2,208.14 737.99 0.00 0.00 1994-95 0.00 1,426.00 2,088.15 662.15 0.00 0.00 1995-96 0.00 1,495.81 2,243.97 748.79 0.00 0.00 1996-97 0.00 1,481.56 2,604.40 1,122.84 0.00 0.00. 1997-98 0.00 958.00 1,692.17 734.17 0.00 0.00 1998-99 0.00 1,968.50 1,306.50 0.00 0.00 662.00 1999-00 662.00 2,090.00 827.85 0.00 0.00 1,262.15, 2000-01 _ 1,262.15 890.15 992.92 102.77 0.00 0.00 AVERAGE 1,335.86 1,609.04 369.38 0.00 Note: Table includes production under Azusa Agricultural Water Company 13 SB 311092 v1--010435.0001 d0ff . 3- AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: SEPTEMBER 23, 2002 SUBJECT: OPTION AGREEMENT WITH LOS ALAMOS COUNTY, NEW MEXICO RECOMMENDATION it is recommended that Azusa Utility Board and Azusa City Council approve the attached Option Agreement with the Incorporated County of Los Alamos, New Mejdco (LAC) for Azusa's San Juan entitlement, and authorize the Mayor to execute the same. BACKGROUND This item was presented to Utility Board in August board meeting. Your direction was to revise the provisions in the proposed Option Agreement to give Azusa the final right to accept or reject the proposed assignment agreement if the terms and conditions do not meet Azusa's need. Revisions to the prior draft Option Agreement have been reviewed and incorporated in the latest draft as attached. As part of the City's long-term power resource strategic plan staff recommended to the Utility Board and City Council recently that it is prudent to diversify the City's resource portfolio. One of the main concerns staff have regarding existing power resource is the over -reliance on City's San Juan Unit 3 entitlement. Th s San Juan recommended strategy was to either assign or exchange part City's ) entitlement with another party, and replace the assigned amount with either a power resource (ownership) or a long-term contract. 'V !6 FISCAL IMPACT No direct fiscal impact. However, Azusa can realize reduced risk exposure In its power resource management in the coming years if LAC does exercise its option. Prepared by: J. Hsu Attachment 077 OPTION AGREEMENT RECITALS WHEREAS the City of Azusa, California ("Azusa") is a member of the Southern California Public Power Authority, a joint powers agency and a public entity organized under the laws of the State of California ("SCPPA'); WHEREAS SCPPA and its five members, including Azusa, entered into the San Juan Unit 3 Purchase Agreement in 1993 to purchase 41.8 % of the San Juan Unit 3 (approximately 204 MW) from the Century Power Corporation; WHEREAS SCPPA issued $237,375,000 in San Juan Power Project Revenue Bonds, 1993 to finance the San Juan Unit 3 purchase; WHEREAS Azusa has entered into a Power Sales Contract with SCPPA to purchase a share of the San Juan Unit 3 capacity and the associated energy and Azusa's share is 14-7070358% or approximately 30 MW; WHEREAS upon termination of the Power Sales Contract, SCPPA will transfer an undivided ownership interest of San Juan Unit 3 to Azusa pursuant to the provisions of the Power Sales Agreement; WHEREAS Azusa is obligated to purchase such San Juan Unit 3 capacity and energy monthly on a take or pay basis, whether or not San Juan Unit 3 is operating or is operable, or its output is suspended, curtailed, intemrpted, or terminated, in whole or in part; WHEREAS pursuant to the Assignment and Amendment No. 1 to Amended and Restated Interco mection Agreement between Tucson Electric Power and Century Power Corporation ("Interconnection Agreement"), SCPPA's share of San Juan Unit 3 We�energy is delivered to SCPPA at either (i) the San Juan 345kV Switchyard, (n) g Switchyard, (iii) the PVNGS Switchyard, or (iv) at the Four Corners Generating Station 345kV Switchyard, upon completion of the Shiprock to Four Comers transmission line conversion to 345kV; WHEREAS Azusa has the authority to assign its Power Sales Contract provided that it complies with certain notification and counter party requirements pursuant to Sections 15.1 aM 15.2 of the Power Sales Contract; WHEREAS the Incorporated County of Los Alamos, New Mexico ("Count}') is interested in acquiring all or part of Azusa's share of San Juan Unit 3 capacity and associated energy; 678 NOW BE IT RESOLVED that Azusa and County, collectively referred to herein as the `Parties" agree as follows: Section 1. Option to Purchase 1.1 For a period of sixty (60) days from the effective date of [his Option Agreement ("Option Period"), and subject to the limitations of the Azusa's contracts with SCPPA involving granting the fust right of refusal to other SCPPA members, the County shall have the exclusive right ("Exclusive Right") to determine that it wishes to acquire two-thirds of Azusa's contractual rights to capacity and energy under the Power Sales Contract, as well as associated power exchange services under the Interconnection Agreement, collectively referred to herein as the "Contractual Rights". Such Contractual Rights would entitle the County to approximately 20 MW of capacity and energy from Azusa's interest in San Juan Unit 3. During the Option Period, Azusa will not sell, convey, or market said Contractual Rights to any third party. During the Option Period, if the County determines that it wishes to acquire said Contractual Rights, Azusa will provide the County with all information and access to such books and records as the County may reasonably request to enable the County to evaluate the merits of the potential acquisition. The Parties may negotiate an agreement ("Agreement') for the purchase and sale of said Contractual Rights. The extent of the negotiations, the terms and conditions of the Agreement, and the decision as to whether to enter into the Agreement, shall be subject to the sole discretion of each of the Parties. 1.2 In consideration of this Exclusive Right, the County agrees to pay Azusa the amount of $5,000, which will be credited back to the County if and when the Parties execute the Agreement. Section 2. Ownership Entitlement in San Juan Unit 3 2.1 In the event the Parties execute an Agreement, and: L11upon the termination or expiration of the Power Sales Agreement,;_ or j2Ztbe date that SCPPA's existing bonds used to oere aneea: , - - purchase ownership in San JuUnit 3 are no longer outstanding, whichever of (11 or (2) occurs fast, Azusa will assign to the County and the County will assume two-thirds, or approximately 20MW, of the undivided ownership interest of the Azusa's Juan Unit 3 entitlement pursuant to the provisions of the Power Sales Agreement. Section 3. Payment of Costs After Exercise of Option 3.1 In the event the Patties execute the Agreement, Azusa will bill the County and the County will promptly pay to Azusa two-thirds of the costs that Azusa is billed by SCPPA in connection with the Power Sales Contract. Such costs are specified in Section 4.22 of the Power Sales Agreement. 079 Section 4 Contract Between City and County 4.1 In the event the Parties elect to negotiate the terms and conditions of an Agreement, the form of a potential Agreement will be based upon the form of the Power Sales Contract that Azusa has executed with SCPPA, subject to such modifications as the Parties may mutually agree on. The Parties agree to negotiate the terms of any potential Agreement promptly and in good faith, subject to the sole discretion of the Parties as set forth in this option Agreement. Section 5 Delivery Points For San Juan Unit 3 Capacity and Ene 5.1 In the event the Parties execute an Agreement, the delivery points for the County's share of the San Juan Unit 3 capacity and energy shall be those delivery points specified in Service Schedule C of the Interconnection Agreement. Section 6 Special Conditions 6.1 In the event the Parties execute an Agreement, Azusa will bear sole responsibility for payment of all of the costs of the buyout of the San Juan Coal Contract which are attributable to Azusa 's share of SCPPA's San Juan Unit 3 entitlement. Azusa agrees to promptly reimburse the County for any of these costs paid by the County. 6.2 The Parties anticipate that there may be some mitigation costs associated with the threatened litigation by the Sierra Club against the owners and operator of the San Juan Generating Station To the extent these costs can be determined with reasonable certainty, prior to the execution by Azusa and the County of an agreement for the sale of part of Azusa's share of San Juan Unit 3 to the County, the Parties shall negotiate in good faith to allocate responsibility for these costs If such costs cannot be determined with reasonable certainty prior to the effective date of an agreement to purchase part of Azusa's San Juan Unit 3 interest, then all such costs in connection with the threatened litigation shall be borne one-third by Azusa and two-thirds by the County. 6.3 During the option Period, Azusa shall have the right to continue to sell its San Juan output to third parties under short term contracts which do not extend beyond September 30, 2003. Section 7. Confidentiality 7.1 The Patties agree that all information concerning the details of this Option Agreement and any terms or conditions for the We of part of Azusa's interest in San Juan Unit 3 to the County shall be treated as confidential, to the extent permitted by law, and not disclosed to third parties without the mutual consent of the Parties except as may otherwise be remiired by law. J Section 8. Authority To Execute Agreement 8.1 Each Party to this Option Agreement represents to the other that it has the authority to enter into this agreement and to undertake the further transactions contemplated herein. DATED CITY OF AZUSA COUNTY OF LOS ALAMOS By: Its: u81 1� d TO: FROM: DATE: SUBJECT: INFORMATIONAL ITEM HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL JOSEPH F. HSU, DIRECTOR OF UTILITIES SEPTEMBER 23, 2002 v w POWER RESOURCES UPDATE RECOMMENDATION It is recommended that the Utility Board/City Council receive the attached power resource update for current fiscal year for review and comment. BACKGROUND The period for the power resources update is current for this fiscal year. Among the customary items presented to Utility Board/City Council are energy consumption and peak demand comparisons, average on and off peak prices, and power resource cost accounting. FISCAL IMPACT There is no fiscal impact as a result of the actions taken in this agenda item. Prepared by: Richard Torres, Power Resources Coordinator 082 Azusa Utility Board Meeting Power Resources Update September 23, 2002 AZUSA M yMI •+ 11 AZLTSA 083 Power Resources Division Monthly Report • Power Consumption Comparison • Wholesale Market Trend • Power Resource Budget Update 084 1' CITY OF AZUSA ENERGY CONSUMPTION COMPARISON PERCENT MONi}i FY01-02 CHANGE ,A JUL 21,524 - 23,581 9.56% AUG ..._ 22,908 22,502 -1.77% SEP ..00T _ _ _._ ......,.. NOV .. DEC JAN I .. .._.__ .... ----- .... , "...._ .. FEB _ _...... .. ..... MAR APR_ ___... ......._ _ .. ___...... MAY JUN TOTAL ........ ., _...._... 44,432.- _.. ..... 46.083_.._ ._.......3.72% ENERGY CONSUMPTION N MVM CITY OF AZUSA PEAK DEMAND COMPARISON ." .._ _.. PERCENT ' 1' 08 AUG 02 $30.96. ._...._....: - - 1 C36 Power Resource Cost Accounting ..� FY '02-'03 . U`37 Azusa Stakeholder Interview Schedule C:\DOCUME-1\CKALSC-2\LOCALS-1\Temp\lntervii.xis 9/23/2002 Day Time Title or Organization Contact Phone Number Date 10/1/2002 Tuesday 8-10 A.M. City Information Services Manager Kevin Morningstar 626-812-5288 1 Police Department Information 10/1/2002 Tuesday 8-10 A.M. Services Manager Lysell Wofford 626-812-3230 1 10/1/2002 Tuesday 8-10 A.M. GIS Technician Jaime Prado 626-812-5186 1 Information Services Manager Ann Graf 10/1/2002 Tuesday 8-10 A.M. Adminstrative Services Support 626-812-5024 1 x. oa „�, Assistant Director of customer 2 10/1/2002 Tuesday 1-3 P.M. Care and Solutions Karen Vaca 626-812-5207 Field Service Supervisor ( Meter 2 10/1/2002 Tuesday 1-3 P.M. Reading) Derek McFann 626-812-5170 e ��= 17,771'""111171111 3 � 0�� 10/1/2002 T111111:17, Tuesday 3-5 P.M. OPEN 3 3 3 3 3 =. "; 3,C. Albert Tovar 626-812-5277 4 10/2/2/ 2002 Wednesday 7-45-9:00 A M City Librarian 71 � � � - .te13 6 10/2/2002 Wednesday 9 11 A.M. )� ( ry gineer Electrical Engineer 626-812-5213 Asst. Director Electric 5 10/2/2002 Wednesday 9-11 A.M. Operations Dave Ramirez 626-812-5218 10/2/2002 Wednesday 9-11 A.M. Sr. Electric Test Technician Clark Getty 626-812-5217 5 5 10/2/2002 Wednesday 9-11 A.M. ( added at Cary K.'s request) Dan Kjar 5 10/2/2002 Wednesday 9-11 A.M. Electrical Test Technician Ed Beterbide 626 812-5368 FF ter Wednesday 11-12 A.M. Public Works Director Bill Nakasone 626-812-5248 6 10/2/2002 ( in place of Nasser Abbaszadeh 10/2/2002 Wednesday 11-12 A M City Engineer Lance Miller King Davis 626-812-3250 7 10/2/2002 Wednesday 1-3 P.M. Police Chief Police Captain ( possible) Bob Garcia 626-812-3250 7 10/212002 Wednesday 1-3 P.M. C:\DOCUME-1\CKALSC-2\LOCALS-1\Temp\lntervii.xis 9/23/2002 Number Date Day Time Title or Organization Contact Phone 8 10/2/2002 Wednesday 3-5 P.M. OPEN 8 8 8 9 10/3/2002 1 nursoay �-� � � �• �• • Joe Hsu 626-812-5219 9 10/3/2002 Thursday 1-3 P.M. Asst. Director of Water Operations Chet Anderson 626-812-5209 9 7_ sn ams 11 10/3/2002 Thursday 1-3 P.M. Asst. Superintendent of Business Steve Seffer 626-812-5225 ' 10 10/3/2002 Thursday 9-11 A.M. Services (School District) Brad Frick 626-858-6161 10 10/3/2002 Thursday 9-11 A.M. Director of MIS Technology Sara Shankin 626-858-6145 12 10/3/2002 Thursday 9-11 A.M. ? Sandy Franks 626-812-5178 10 10/3/2002 3-5 P.M. Public Information Officer Martin Quiroz •_ 11 10/3/2002 Thursday 1-3 P.M. Director of Utilities Joe Hsu 626-812-5219 10/3/2002 Thursday 1-3 P.M. Asst. Director of Water Operations Chet Anderson 626-812-5209 11 Water Utility Operations 11 10/3/2002 Thursday 1-3 P.M. Supervisorf4k Steve Seffer 626-812-5225 ' .e ,,.,.• � �. ., .,. ..e ,;. . ,�,a, ,� o� P.M. o,. e e��,„ o..,d� �o•° e City Manager gee<�.- a �° �.• Rick Cole ,� , .-, 626-812-5238 12 10/3/2002 Thursday 3-5 3-5 P.M. CM's Secretary Tina Cravens 626-812-5239 12 10/3/2002 Thursday Thursday 3-5 P.M. Asst. City Manager Robert Person 626-812-5178 12 10/3/2002 3-5 P.M. Public Information Officer Martin Quiroz 626-812-5178 12 10/3/2002 Thursday C:\DOCUME-1\CKALSC-2\LOCALS—lkTempklntervil.xls 9/23/2002 Boards That Make A Difference Chapter Three Designing Policies That Make a Difference A policy approach prevents a flurry of events from obscuring what is really important. Yet it is rare to find a board that seriously attends to policy more than to the various details of policy implementation. Making a major investment in board policymaking means first establishing principles and formats to guidepolicy content: Explicitness — Policies must exist in written form. Currentness — Up-to-date policies are the only ones that work. Literalness -- Policies must mean what they say. Central availability — Keep board's policies in a central location. Brevity — Boards need to seek the compelling elegance of simplicity. Comprehensiveness — Board policy framework must encompass the entire range of corporate possibilities. Policies come in sizes Logical containment of policies: Board policy is always more specific than if it had not been said and less specific than it might have been. Board policies should address the largest issues but in broadest scope. By attending to the largest issues in each category, the board can responsibly limit its work and leave the detail and interpretation to CEO. Board policy versus staff policy: Starting with big questions first, and defines the boundaries between itself and its executive. Board's job differs from staff jobs, then not by topic but by levels within topics. Principles in defining board's policies: The board should resolve the broadest or largest issue in each category before dealing with smaller issues in each category. If the board wishes to address smaller levels, it should never skip levels but should move to the next smaller levels in sequence. The board should grant the CEO authority to make all further choices as long as they are "within" the board's Ends and Executive Limitations policies. ;;as Plainly speaking, board should have a budget policy rather than a board approved budget; a board approved policy on the treatment of personnel rather than a board personnel policy; a board policy on compensation rather than a board approved wage and salary administration plan. The Approval Syndrome – from the traditional norm of governance: Reactivity – board can do little but approve the measure. Sheer volume of material – must read every item come before the board, hence may overlook important items. Mental misdirection – A strategic leader must struggle against smallness but be more attentive to subjective issues. Letting staff off the hook—By approving staff recommendation board becomes the owner of the document. Short-term bias – Dealing with what is presented by staff but lacks the basis of high-level values. Lack of clarity in the board's contribution – By approving staff recommendation does not necessary express the value of the board. Subsequent staff agility – Lack of clarity creates most uncertainty as to the true direction of the board, hence more questions afterwards. Fragmentation – All of the above will result in more disconnected and unmanageable voluminous policy issues later. Therefore, the traditional board governance sets the stage for the board to do unnecessary work for the staff level or for the staff to wield undue influence at the board level. The former result is perceived as detailed, trivial, burdensome, or involved. The latter is perceived as rubber-stamping, staff dominance, or comfortable passivity. Policy Development: Governing by policy means governing out of policy in the sense that no board activity takes place without reference to policies. Policy development is not an occasional board chore but its chief occupation. Policies can and need to be changed as board's values and perspectives change. Change of policy can be initiated anywhere in the organization, but the responsibility rests on the board. s W• Boards That Make a Difference Chapter Four Focusing on Results — Clarifying and Sustaining the Organization's Mission Transcending the Organization: Organizational existence is the production of worthwhile results — satisfaction of human needs: whose needs, which needs, and what constitutes "satisfaction". Leadership for results begins, outside from creation of mission and results -related (End) policies built on mission. Leadership differs from non -leadership only in that leadership views the world with a slightly wider lens and taller perspective (Larger context). Reasons for organizational existence: (1) the world is richer, happier, and less in pain because of the care, knowledge, cure, or support produced; and (2) the world is poorer, more depleted, and more in pain because of the talent, capital, and space consumed. There two impacts on the world, corresponding to benefit and cost, should be the chief interest, even obsession, of the governing board. Confusing Ends and Means: Means Mistaken for Ends — Activities, conditions, structure, and technology are all means to ends. External outcomes, results, and impacts are ends, whether or not they are part of a broader end. Mission as Mega -Ends Policy: Mission, defined as the broadest and briefest Ends statement, does not determine everything about an organization's intended results, but it tells us the range within which all further results will occur. A mission defines the arena and answers these simple questions: "What is this organization for? How will the world be different as a result of our being in business?" V. A powerful mission is a broad Ends statement with six critical characteristics: 1. Results terminology — change itself is the mission 2. Succinctness — stated in a few words. 3. Authoritative generation — 4. Horizontal integration — all community boards speak the same mission. Ubiquity — Vertical integration — be the theme and backbone of the organization. Expanding on the Mission: From the mission statement the board's policy begin to expand from the broadest and moving toward the more discrete. The articulation of results into separable, descending parts yields a "value map" that both boards and staffs find instructive. Mission statements are to encompass a wide range of potential products — benefits to be produced. Mission statements are to encompass wide range of potential benefits and beneficiaries. Mission statements may put cost limits in providing units of the benefits. After determining the mission, then establishing the aspects of products, consumers, and costs, the next step is subjecting those issues to analysis, debate, and vote. Policy-making stops at whatever point the majority of the board is willing to allow the CEO to make further decisions. Long -Range Planning: Creating Ends policies with a long-range perspective is the greatest board contribution to long-range planning. It is important that organizations have long-range plans. However, except for planning the improvement of governance, boards should not do the actual long-range planning. Evaluating Ends: Evaluation of Ends is important to leadership for three reasons: 1. It discloses unacceptable deviation from the desired values; 2. Enables the board to relax about the present so it can keep its mind on the future; 3. keeps the policies constantly in spotlight and to be amended as they grow out of date. - The best approach a board can take in program evaluation is to stick rigorously to the results, not to cop out by pr6scribing means. C91