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Home My WebLink AboutAgenda Packet - June 28, 2004 - 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 CRISTINA C. MADRID BOARD MEMBER MONDAY, DUNE 28, 2004 6:30 PM DAVE HARDISON BOARD MEMBER IOSEPH R. ROCHA BOARD MEMBER 6:30 p.m. - Convene to Regular Meeting of the Azusa Utility Board and Azusa City Council • Call to Order • Pledge to the Flag • Roll Call 1. PUBLIC PARTICIPATION (Person/Group shell be allowed to speak without interruption up to five (5) minutes maximum time, subject to compliance with applicable meetingrules. Questions to the speaker or responses to the speaker's questions of comments, shall be handled after the speaker has completed his/her comments. Public Participation will be limited to sixty (60) minutes time.) The Consent Calendar adopting the printed recommended action will be enacted with one vote. if5taff or Counci/members wish to address any item on the Consent Calendar individua&,, it w111 be considered under SPECIAL CALL ITEMS. ,i t 1[. CONSENT CALENDAR �V A. Minutes. Recommendation: Approve minutes of regular �m eeting of ay 24, 2004, as written. II -A. UB Min-MayM.doc B. Minutes. Recommendation: Approve minutes of special meeting of June 1, 2004, as written. I ME II -B. UB Min-SpecJunel.doc C. Customer Issue - Casa Azusa 129 W. 9`" Street and 153 W. 91" Street. Recommendation: Recognize the amicable resolution of customer complaint at Casa Azusa, 129 W. 9" Street and 153 9`" Street. II -C. Casa Azusa Dispute Update. DDC D. Plan and Specifications for Project ED -2004-1 to Fumish and Install Under -ground Street Light Avenue Between 11 `" and 12" Street. Recommendation: Adopt plan and specifications for Project ED -2004-1 and authorize City Clerk's office to advertise public bid. Uw v II -D. Bid Spec for St. Ughts.doc E. Grant of Easement from State of California. Recommendation: Approve resolution accepting grant of easement from State of California and authorize the City Clerk's Office to file same with the Office of The Los Angeles County Recorder. Easement-Aninry.do v u Flex Your Power at the Pump. Recommendation: Declare support for the State's "Flex Your Power at the Pump" information campaign. WN I H -F. FlexYourPower.doc 002 M. SCHEDULED ITEMS A. Purchase of Customer Information System and Interactive Voice Response System Recommendation: (1) approve of the selection of Systems 8. Software to provide (a) new Customer Information System in amount of $515,710 and (b) Interactive Voice Response System in amount of $116,400; and (2) amend the 2003-04 Capital Improvement Projects budget in amount of $632,110 (not -to -exceed total expense), with an appropriation of $410,865 (65%) from the Water fund 32, and appropriation of $221,235 (35%) from the Electric fund 33, and authorize purchase using these budgeted funds. In III -A. CIS Report.DOC B. Procurement of Outage Insurance Coverage for San Juan Power Generation. Recommendation: Authorize the staff to procure outage insurance coverage from XL Capital/Indian Harbor Insurance Company for San Juan Unit 3 for coverage period commencing July 1, 2004 through June 30, 2005. IR -B. Outage Insurance.doc C. Public Information Outreach Regarding Construction of Underground Reservoir in Pioneer Park. Recommendation: Authorize Azusa Light & Water to begin public information outreach for construction of an underground reservoir in Pioneer Park. Mimi III{, Pioneer Park Reservolr.doc IV. STAFF REPORTS/COMMUNICATIONS A. City Yard Renovation Project at 1020 W. Tenth Street E IV -A. IDth St Yard Update.PPr B. Legislative Update Eli IV -B. Legislative Update.ppt 003 C. Monthly Power Resource Update E N{, Moy Power Res Update. ppt D. American Public Power Association (APPA) Report on Utility Support of State and Local Governments H N -D. APPA Report.doc E. 2003-2004 Residential Rebate Program Update IV -E. Rebate Program Update.doc Southern California Public Power Association's (SCPPA) Congressional Tour Evaluation IV -F. SCPPA Tour.doc G. Update on Property Appraisal of Cypress Street Water Property V. DIRECTORS' COMMENTS VI. ADIOURNMENT A. Adjourn. "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 meet/ng or time when special services are needed nil/ assist staff in assuring that reasonable arrangements can be made to provide access to the meeting." (10 4 Zj.A. CITY OF AZUSA MINUTES OF THE REGULAR MEETING OF THE AZUSA UTILITY BOARD/CITY COUNCIL MONDAY, MAY 24, 2004 - 6:30 P.M. The Utility Board Members of the City of Azusa met in regular session, at the above date and time in the Azusa Light and Water Department Conference Room, located at 729 N. Azusa Avenue, Azusa, California. Chairperson Chagnon called the meeting to order. Call to Order ROLL CALL Roll Call PRESENT: BOARD MEMBERS: HARDISON, STANFORD, ROCHA, CHAGNON, MADRID ABSENT: BOARD MEMBERS: NONE ALSO PRESENT: Also Present City Attorney Ferre, Director of Utilities Hsu, Assistant Utilities Director Kalscheuer, Assistant Director of Resource Management Tang, Assistant Director of Water Operations Anderson, Interim City Manager Person, Deputy City Manager Gutierrez, Administrative Technician Yang, Electric Engineer Langit, Deputy City Clerk Toscano, City Clerk Mendoza. Public Participation Pub Part None. The CONSENT CALENDAR consisting of Items II- A through II -D, were approved by motion of Consent Cal Board Member Rocha, seconded by Board Member Hardison and unanimously carried, with the Approved exception of item 11-D, which was considered under the Special Call portion of the Agenda. A. The Minutes of the regular meeting of April 26, 2004, were approved as written. Min Appvd B. Notice of Completion for the Northern Transmission Line, Project W-183, was approved; the NOC — project was accepted as complete and the City Clerk's office was directed to execute and file Northern same with the Los Angeles County Recorder's Office. Transmission Line 005 C. Notice of Completion for the Kirkwall Substation was approved; the project was accepted as NOC complete and the City Clerk's office was directed to execute and file same with the Los Kirkwall Angeles County Recorder's Office. Substation D. SPECIAL CALL ITEM. Spec Call Special Call Items Special Call Board Member Rocha addressed item regarding the request to dispose of real property located at Disp 16706 16706 Cypress Street, Covina, asking the statistics regarding the property, i.e. size, value, Cypress, Cov. amenities, etc. He suggested that the property be utilized as a means to obtain one time money Res. 04-C38 to offset funds lacking in the general fund. Director of Utilities Hsu responded stating that the Transfer property is approximately 11,433 sq. ft. and the house is 1752 sq. ft., there is a metal shed and it Policy Water Is an old house acquired from Azusa Valley Water Company. He stated that to remodel the Operations to property would be anywhere from $32,000 - $52,000. General Fund After discussion, it was moved by Board Member Rocha, seconded by Board Member Hardison Appraisal for and unanimously carried that the property be appraised and that the appraisal be brought back to 16706 the Board for discussion of the findings and recommendation. Cypress Scheduled Items Sched Items Policy Governing Transfers from Utility to the City. Board Member Madrid asked if there could be Pol. Govern minimum threshold of allocations transferred to the General Fund, something that is predicable. Transfers a She stated that the current is based on an annual procedure and she asked if it could be based on Madrid a five- year basis. Director of Utilities Hsu responded stating that this is based on support services that are received Dir of Utilities from Human Resources, Finance, etc. He stated that since the budget doesn't change much from Response year to year, the general fund and the employee number doesn't change, then the transfer will not change much from year to year. If the General Fund budget is reduced, then the transfer will also be reduced; the funding is based on proportions and level of service. Discussion was held. Board Member Stanford offered a Resolution entitled: A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, ESTABLISHING A Res. 04-C37 POLICY CONCERNING THE OBLIGATIONS OF THE CITY'S ELECTRIC UTILITY OPERATIONS TO Transfer COVER GENERAL FUND SUPPORT SERVICE COSTS AND OTHERWISE PAY ITS FAIR SHARE OF Policy Electric CAPITAL IMPROVEMENT COSTS FOR INFRASTRUCTURE IMPACTED BY UTILITY OPERATIONS. Operations to 05/24/04 PAGE TWO 1 General Fund Moved by Board Member Stanford, seconded by Chairperson Chagnon to waive further reading and adopt. Resolution passed and adopted by the following vote of the Board Members: AYES: BOARD MEMBERS: HARDISON, STANFORD, ROCHA, CHAGNON, MADRID NOES: BOARD MEMBERS: NONE ABSENT: BOARD MEMBERS: NONE Board Member Stanford offered a Resolution entitled: Res. 04-C38 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA. CALIFORNIA, ESTABLISHING A Transfer POLICY CONCERNING THE OBLIGATIONS OF THE CITY'S WATER UTILITY OPERATIONS TO Policy Water COVER GENERAL FUND SUPPORT SERVICE COSTS AND OTHERWISE PAY ITS FAIR SHARE OF Operations to CAPITAL IMPROVEMENT COSTS FOR INFRASTRUCTURE IMPACTED BY UTILITY OPERATIONS. General Fund 05/24/04 PAGE TWO 1 Moved by Board Member Stanford, seconded by Chairperson Chagnon to waive further reading and adopt. Resolution passed and adopted by the following vote of the Board Members: AYES: BOARD MEMBERS: HARDISON, STANFORD, ROCHA, CHAGNON, MADRID NOES: BOARD MEMBERS: NONE ABSENT: BOARD MEMBERS: NONE Ms. Suzanne Avila provided an update on the San Gabriel River Azusa Projects, which consisted of Update on the Forest Gateway Interpretive Center, Azusa Canyon River Park, San Gabriel Canyon Spreading River Projects Basins, Rio San Gabriel Bike Path Extension and Think Riverl Watershed Education Program. She detailed the Azusa River Projects Grants Awarded as follows: 1) RMC Supplemental Grant River Projects Agreement Number RMC -001-02 in the amount of $1,000,000.00, for land acquisition to create Detail the Azusa River Wilderness Park, utilized $443,670.45 to purchase APN 8684-027-007, the Taylor Parcel, reimbursement check not yet received by City, Grant expired May 2004, additional expenses incurred after May 2004 to be reimbursed from RMC Prop 40 Funds and there is the possibility of re -appropriating remaining $556,329.55. 2) RMC Grant Agreement Number 0302- 006, in the amount of $86,400.00, for an Azusa River Park Master Plan. 3) RMC Grant Agreement Number 03260 in the amount of $2,025,000.00, to purchase APN 8684-027-012 from Cool Water Springs — Grant Agreement - is unsigned and pending; property sold in January 2004 for $2.4 million to International Theological Seminary. 4) State of California, Resources Agency Grant Agreement Number 12107-01 in the amount of $2,017,000.00, for land acquisition to create the Azusa River Park, specifically APN 8684-027-004 and 8684-027-010, commonly known as Rainbow Canyon Ranch; the property was appraised in September 2003 and valued at $2,464,000.00, and owners claim appraisal is "too low", and there has been no further negotiations. She also detailed the Think advising that there will be a Youth Watershed Conference at Rincon Station Ma or 25'" d 2G ", and that 75 San Gabriel Valley y Teachers have signed up for the conferenc ith the ryrlty from Azusa Unified School District. Ms. Avila then expressed concern regarding her position as River Consultant being removed from the 2004-05 budget, stating that she without the position in the budget that she is concerned that grant monies awarded may be lost. She proposed utilizing some of the grant money to pay for the consultant position. It was consensus of the Board Members to hold a Special Meeting on Tuesday, June 1, 2004, in Policles re: order to conduct a workshop on Policies Regarding San Gabriel River Projects, i.e. liabilities, SG River maintenance, transactions regarding appraisals, funding/contract for consultants, etc. Projects 6/1 Director of Utilities Hsu presented the Azusa Light & Water Budget FY 2004-05 and answered Discussion questions posed by Board Members. Assistant Director of Utilities Kalscheuer responded to Re: Light & questions posed regarding the Solid Waste Contract with Athens Services. Lengthy discussion Water Budget was held regarding the San Juan Energy Plant, its problems and alternatives/options. Assistant 2004-05 Director of Resource Management Tang responded to questions regarding San Juan Plant. Discussion was held regarding the budgeting for the new filtration plant. It was consensus of the Board Members to direct staff to make final changes for approval at the June 14, 2004, City Council Meeting. Staff Reports/Communications Staff Rpts The Monthly Power Resource Update was noted but there were no questions or comments Monthly Pwr directed towards it. Resources 05/24/04 PAGE THREE 007 The Anomalous Bidding Investigation -Docket No. IN03-10-000, was noted, but not discussed at length. Office of Market Oversight and Investigation had conducted an investigation, last summer, on the bidding practices in the California markets during the period of May 1, 2000 through October 2, 2000 and the City of Azusa was one of the entities that was investigated. Staff recently received a letter from Mr. William F. Hederman, Director of the Office of Market Oversight and Investigations advising that, based on the information reviewed during the course of investigation, they were terminating the investigation as to Azusa. He thanked the City for their cooperation during the investigation. The FY 2003-04 3rd Quarter Work Plan Update was presented and it was consensus to receive and file the work plan update from Azusa Light and Water. Board Member Madrid questioned the format of the document, asking if it was regarded as the MAP formal. Staff responded stating that the current format is simple and electronically generated and has worked for staff administratively. Board Member Madrid asked that this be discussed at the Special Meeting of June 1'. Directors' Comments Director of Utilities Hsu reminded all of the Azusa Substation Opening to be held on Wednesday, May 26, 2004, at 5:00 p.m. Closed Session - The following scheduled item was not held. PUBLIC EMPLOYEE APPOINTMENT - Government Code Section 54957 Title: Office Specialist II Anomalous Bidding Investigation Quarterly Work Plan Director's Comments Substation Opening No Clsd Sess Chairperson Chagnon reminded the Board Members and -staff that the meeting for August 2004 August mtg may be cancelled. Dark Draft of Substation dedication plaque was presented for changes and/or corrections; there were Draft plaque none. Substation Board Member Rocha offered Azusa Youth Program tickets for sale. The dinner/dance will be held AYP tickets on Saturday, June 5, 2004. Rocha Board Member Madrid advised that she would like to attend the APPA conference in Seattle, APPA Con. Washington from June 19-23, 2004, and that she would work out the details with Administrative Technician Yang. It was consensus of Councilmembers to adjourn. TIME OF ADJOURNMENT: 8:13 P.M. SECRETARY NEXT RESOLUTION NO. 04-C39. 05/24/04 PAGE FOUR Adjourn Ire so, CITY OF AZUSA MINUTES OF THE SPECIAL MEETING OF THE AZUSA UTILITY BOARD TUESDAY, JUNE 1, 2004 - 6:30 P.M. The Utility Board Members of the City of Azusa met in Special 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. ROLL CALL PRESENT: BOARD MEMBERS: ABSENT: BOARD MEMBERS: ALSO PRESENT: HARDISON, ROCHA, CHAGNON. MADRID STANFORD City Attorney Powers of Best, Best, and Krieger, Interim City Manager Person, Director of Utilities Hsu, Chief of Police Davis, Captain Gonzales, Community Improvement Manager Rudisel, Director of Park Planning and Development Noriega, River Consultant Avila, City Clerk Mendoza, Deputy City Clerk Toscano. Public Participation None. Interim City Manager Person addressed the Board Members providing background information regarding the San Gabriel River restoration projects and advised that the Director of Utilities Hsu provided funding to hire the consultant and didn't know if there was a specific time limit, but that now they are in the third year of funding Consultant Suzanne Avila. He cited and detailed the projects as follows: Rio San Gabriel Bike Path Extension, Forest Gateway Interpretive Center, San Gabriel Canyon Spreading Basins, and Azusa Canyon River Wilderness Park and asked the following questions: Do we continue funding the River Consultant, and if we do, what sources do we use? He stated that in the past it's been the Water Fund, due to the nexus. He stated that Representation of the Rivers and Mountains Conservancy Belinda Celistino, has offered to use part of the grant money that the city has been awarded to fund the consultant for the coming year, but also he asked if Council would like to continue doing this as a city operation. Call to Order Roll Call Also Present Pub Part None City Mgr Person Introduction Ame a.6 CITY OF AZUSA MINUTES OF THE SPECIAL MEETING OF THE AZUSA UTILITY BOARD TUESDAY, JUNE 1, 2004 - 6:30 P.M. The Utility Board Members of the City of Azusa met in Special 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. ROLL CALL PRESENT: BOARD MEMBERS: ABSENT: BOARD MEMBERS: ALSO PRESENT: HARDISON, ROCHA, CHAGNON, MADRID STANFORD City Attorney Powers of Best, Best, and Krieger, Interim City Manager Person, Director of Utilities Hsu, Chief of Police Davis, Captain Gonzales, Community Improvement Manager Rudisel, Director of Park Planning and Development Noriega, River Consultant Avila, City Clerk Mendoza, Deputy City Clerk Toscano. Public Participation None. Interim City Manager Person addressed the Board Members providing background information regarding the San Gabriel River restoration projects and advised that the Director of Utilities Hsu provided funding to hire the consultant and didn't know if there was a specific time limit, but that now they are in the third year of funding Consultant Suzanne Avila. He cited and detailed the projects as follows: Rio San Gabriel Bike Path Extension, Forest Gateway Interpretive Center, San Gabriel Canyon Spreading Basins, and Azusa Canyon River Wilderness Park and asked the following questions: Do we continue funding the River Consultant, and if we do, what sources do we use? He stated that in the past it's been the Water Fund, due to the nexus. He stated that Representation of the Rivers and Mountains Conservancy Belinda Celistino, has offered to use part of the grant money that the city has been awarded to fund the consultant for the coming year, but also he asked if Council would like to continue doing this as a city operation. Call to Order Roll Call Also Present Pub Part None City Mgr Person Introduction ,1 1 ' He asked if they should find Suzanne Avila a model of where she can work and continue her City Mgr progress within an organization that has more experience with an open space acquisition. He Continued advised that Director of Park Planning and Development Noriega will be doing the construction management of the Bike Path, and Project Manager of the U.S. Forest Gateway Interpretive Center; further, that there is no activity on the Spreading Basins, and should they continue acquisition of Open Space? Ms. Anela of Congresswoman Hilda Solis' office addressed the issue stating that Ms. Avila has Rep of invaluable knowledge regarding the San Gabriel River. Hilda Solis' Mr. Chris Smith of Coldwater Way, addressed Board Members stating that he is apart of a non- C. Smith profit group that is attempting to purchase the Canyon Inn property; he described the project. Comments Ms. Melissa Martin of the Army Corp of Engineers, addressed Board Members stating that she is M. Martin interested in what is going on in the Canyon. Comments Dr. Ann Croissant, President of the Board of Directors of the San Gabriel Mountains Regional A. Croissant Conservancy,,,addressed Council detailing information regarding the Conservancy and answered Comments questions posed by Board Members. She expressed her appreciation to Suzanne Avila for her help in working with the Conservancy on Azusa Projects. She presented options for the establishment of and/or partnership of conservancy for the City of Azusa. Lengthy discussion was held regarding the feasibility of forming a conservancy, the appropriate Discussion place for a expert skilled knowledgeable person as Suzanne Avila, how to fund the position, what are the details, what support environment should she be in, what would best serve the City, how long would it take, and what would be needed. Ms. Belinda Celistino of the San Gabriel Valley River and Mountains Conservancy, suggested that B. Celistino the position be funded by existing grant funding, possible changing the scope of work, which Comments would encompass amendments to the existing grants. After additional discussion, it was moved by Chairperson Chagnon, seconded by Board Member Motion to Rocha and unanimously* carried that Suzanne Avila begin the job as River Consultant, again, as of Re -hire S. Wednesday, June 2, 2004, with the same terms and conditions as are in her existing contract. Avila as River Consult. It was consensus of Councilmembers to adjourn. TIME OF ADJOURNMENT: 8:26 P.M. SECRETARY NEXT RESOLUTION NO. 04-C39. *Indicates Stanford absent. 06/01/04 PAGE TWO Adjourn 010 AZUSA LIGHT R WATIR CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JUNE 28, 2004 SUBJECT: CUSTOMER ISSUE -CASA AZUSA, 129 W. 9TH STREET AND 153 W. 9TH STREET RECOMMENDATION It is recommended that the Utility Board/City Council recognize the amicable resolution of Customer Complaint at Casa Azusa, 129 W. 9th Street and 153 9h Street. BACKGROUND A billing dispute regarding Casa Azusa Home Owners Association's water bills was addressed at the April 2004 Utility Board meeting. The Utility Board requested staff to work with Home Owners Association Agent Bill Fox to resolve the issue and for staff to then report the status back to the Utility Board. On May 12 2004, new water meters and registers were installed at these properties. Staff had one meeting with Bill Fox and then a second meeting with both Bill Fox and Casa Azusa Home Owners Association President Barbara Ferrante. It was agreed by both parties to waive all claims to past billings and costs incurred to purchase and install new water meters and registers (agreement attached). Azusa Light & Water staff also agreed to install a new bypass valve at 153 W. 9th Street prior to the next meter test. This valve broke during the meter installation. The meters at both 129 W. 9th Street and 153 W. 9th Street will remain secured and monthly meter reads will be taken by Azusa Light & Water's field service supervisor. FISCAL IMPACT None. No additional direct costs are required to be paid by Azusa Light & Water for the period prior to May 12, 2004. Cost of new water meters and registers installed on May 12 was approximately $5,000, which is less than the $16,800 earlier requested by the Casa Azusa Home Owners Association to be refunded for billings from September 2000 through December 2003. Prepared by: Karen Vanca, Assistant Director Customer Care &Solution 1.; B. Ferrante Ltr. pdf 011 kZUSA IGHT 6 WATER For Qu.tity of Life The City of Azusa May 25, 2004 Ms. Barbara Ferrante, President Casa Azusa Home Owners Association 137 W. 9th Street, #17 Azusa, CA 91702 Dear Ms. Ferrante, Azusa Light & Water appreciates your time and interest in resolving the outstanding issues regarding Casa Azu4s past water bills. This letter is to confirm agreements made at our meeting on Thursday, May 20, 2004 regarding water meters at 129 and 153 W. 9th Street. At that meeting both Azusa Light & Water and Casa Azusa Home Owners Association agreed to waive all claims to past billings and costs incurred to purchase and install new water meters and registers. A clean slate started with the installation of new meters and registers on Wednesday, May 1.2, 2004. It was also agreed that Azusa Light & Water Field Services Supervisor Derek McFann will make an appointment with you as Home Owners Association President, to observe the monthly meter read process until you determine the observation is no longer needed. As you requested, Chet Anderson will have a new bypass valve installed prior to the next meter test at 153 W. 9th Street. We value you as a customer and appreciate that you were amicable to a give and take solution. If you agree that the above accurately describes the agreed upon solution, please sign a copy of this letter and return to me at: Karen Vanca, Assistant Director Customer Care & Solutions Azusa Light & Water 729 N. Azusa Ave. Azusa, CA 91702 Thanks again for your cooperation in resolving this issue. Please call me if you have any questions about this agreement. My number is (626) 812-5207. Karen Vanca 729 N. Azusa Avenue P.O. Box 9500 Azusa, California 91702 626/812-5208 (phone) 626/334,3163 (fax) utilities@azusa.ca.gov (e-mail) 012 Page 2 of 2 - Letter to Ms. Barbara Ferrante, President Casa Azusa Home Owners Association, May 24, 2004 cc: Chet Anderson, Assistant Director Water Division, Azusa Light & Water Bill Fox, Casa Azusa Home Owners Association property manager Joe Hsu, Director Azusa Light & Water Cary Kalscheuer, Assistant to the Director, Azusa Light & Water l Karen Vanca, Azusa Light & Water C,L924 , J Baz aza Ferrante, Pres' ent Casa Azusa Home Owners Association 013 CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JUNE 28, 2004 SUBJECT: ADOPT PLAN AND SPECIFICATIONS FOR PROJECT ED -2004-1 TO FURNISH AND INSTALL UNDERGROUND STREET LIGHT ELECTRIC SUBSTRUCTURES AND ACCESSORIES AT AN AREA BOUNDED BY ANGELENO AVENUE & ORANGE AVENUE BETWEEN 11 TH AND 12TH STREET. RECOMMENDATION It is recommended that the Utility Board/City Council adopt plan and specifications for Project ED2004-1 and authorized City Clerk's office to advertise public bid. BACKGROUND High voltage series'street light systems were designed in the past so that a single point controls the whole lighting system consisting of several light poles. If there is a break in the series wiring, the entire lighting system fails. Due to their age, the underground wirings have started to deteriorate to the point that they can fail at anytime. When the failure occurs, it is costly and unsafe to locate and fix the fault. The location bounded by 1 1"' Street, 12`" Street, Angeleno Avenue, and Orange Avenue, currently has this type of high voltage series street lighting system. As part of on-going efforts to improve safety and reduce operating costs, staff has determined a safer way to refurbish the high voltage street light system by converting to a more reliable low voltage system. This project plan and specifications for Project ED2004-1 specifies this low voltage conversion process. Project plan and specifications are available for public review at Light & Water offices at 729 N. Azusa Avenue. FISCAL IMPACT This project is included in Capital Improvement Projects budget and funds are available in Account # 73-001-F. Proiect costs will be reported at time of bid award. Prepared by: Hien K. Vuong, Associate Engineer 014 ffjr, AZUSA .ROI ♦ SA CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES^4/ G� iC DATE: JUNE 28, 2004 SUBJECT: ACCEPTANCE OF GRANT OF EASEMENT FROM STATE OF CALIFORNIA RECOMMENDATION It is recommended that the Azusa City Council/Utility Board accept Grant of Easement by attached Resolution for the subject location and authorize the City Clerk to file it in the Office of the Los Angeles County Recorder. Landowner is required to grant an easement to Azusa Light & Water for any electric facilities to be installed in his or her property. This grant of easement allows the Utility -owner the right-of-way for operation and maintenance of such facilities. Attached herewith is the grant of easement and its "Exhibit A, and B" for the electric facilities located within Parcels 1 of Tract # 24852 on Sierra Madre Avenue just west of Todd Avenue — future Azusa Armory site. This easement was secured and will be used for right-of-way access in the operation and maintenance of underground electric conduits, cables and related substructures installed at this property. FISCAL IMPACT All costs associated with the processing of these grants of easements are borne by the developer. There is no cost to the City. Prepared by: Hien K. Vuong, Associate Engineer I reso-armory.doc 015 RESOLUTION NO. A RESOLUTION OF THE UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA ACCEPTING CERTAIN GRANT OF EASEMENT AND DIRECTING THE RECORDING THEREOF. THE UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY RESOLVE AS FOLLOWS: SECTIONS 1. That certain Grant of Easement executed by State of California . Real Estate Services Division, under date of the 10' of June. 2004 to the CITY OF AZUSA a Municipal Corporation in Los Angeles County, State of California, its successors and assigns, the right of perpetual easement and right of way solely for the purpose of constructing, laying, maintaining, operating, using, altering, repairing, replacing, inspecting and relocating therein and thereupon and/or removing there from electrical utility lines and related'facilities, with any and all connections and devices necessary thereto for the transportation, distribution and/or supply of electricity to the property, in, on, over, under across and along the following described real properties situated in the CITY OF AZUSA, Los Angeles County, State of California, to wit: See Exhibit "A" and `B" attached hereto each Grant of Easement Said Grants of Easements are hereby accepted and the City Clerk is hereby authorized and directed to cause the same to be filed for record in the office of the County Recorder of said County. SECTION 2. The City Clerk shall certify to the adoption of this Resolution. PASSED, APPROVED AND ADOPTED THIS 28th day of June. 2004 Cristina C. Madrid, Mayor ATTEST: Vera Mendoza, City Clerk I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Utility Board/City Council of the City of Azusa at a regular meeting of the Azusa Light & Water Utility Board on the 28`s day of June, 2004. AYES: COUNCILMEMBERS: NOES: COUNCII.MEMBERS: ABSENT: COUNCILMEMBERS: Vera Mendoza, City Clerk ll, -ZI f' AZUSA CONSENT CALENDAR , TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES - DATE: JUNE 28, 2004 SUBJECT: FLEX YOUR POWER AT THE PUMP RECOMMENDATION It is recommended that the Utility Board/City Council declare its support for the State's "Flex Your Power at the Pump" information campaign. BACKGROUND In response to rising gasoline prices the State is promoting conservation by providing information to the public about ways to reduce gasoline consumption. California Municipal Utilities Association (CMUA) is requesting public utilities to endorse the State's public information campaign by filling out the attached Declaration of Action form. FISCAL IMPACT Filling out and sending in the declaration will have no fiscal impact. City will follow up with information to employees via email and other means that will have minimal fiscal impact. Prepared by: Cary ICalscheuer, Assistant to the Director of Utilities Attachments: ►. ..._ . /raY, LtrFrmGovr.pdf Dedaration.pdf 017 GOVERNOR ARNOLD SCHWARZENEGGER May 25, 2004 Dear California Leaders, Recent increases in gasoline and diesel fuel prices have hit everyone in the pocketbook. California businesses have been hit especially hard. Higher fuel prices mean higher operating costs and increases in prices for food, merchandise and services. Fortunately, we are not powerless. Over the past several years, we "flexed our power” and demonstrated that by working together, we can conserve significant amounts of energy. One out of every three California households, and more than one quarter of all businesses, saved more than 20% on their electricity bills. Together we saved hundreds of millions of dollars. Now we need to broaden this effort to conserve gasoline. I am writing to ask you and your company to participate in "Flex Your Power... at the Pump" by committing to several easy actions. 1) Adopt fuel-efficient operations. 2) Educate your employees about how to save energy. 3)Educate the public about how to save energy. By conserving energy (gasoline and electricity) we help the economy and save money ... and it is good for the environment. As we approach the summer months, I urge you to join other business leaders, state and local elected officials, and community organizations by committing to these voluntary measures to reduce California's energy demand. Please return the enclosed declaration and help "Keep California Rolling" Sincerely, Arnold Schwarzenegger STATE CAPITOL - SACRAMENTO, CALIFORNIA 95814 - (916) 445-2841 JIM DECLARATION OF ACTION Response Form Fax to (415) 775-4159 Yes, we will participate in the campaign by supporting the following: Step One: Adopt Fuel-efficient Operations Take immediate no- and low-cost conservation measures: 1. Properly maintain fleet vehicles. a. Keep tires inflated to the recommended pressure. b. Change air filters and get regular tune-ups. 2. Support fuel-efficient policies. a. Encourage ridesharing and use of public transportation and bicycles. b. Arrange flexible schedules to reduce rush hour idling. c. Encourage employees to combine multiple out -of -office errands and trips. d. Establish a fuel -efficient -vehicle procurement policy. e. Establish a fuel-efficient replacement -tires policy. Step Two: Educate Employees Communicate gasoline conservation information to employees by displaying and distributing Flex Your Power educational materials (including linking to FYPower.org). Messages should include: 1. Keep your tires inflated to the recommended pressure. 2. Use your air conditioning selectively. 3. Observe the posted speed limits. It's safer and saves gas. 4. Accelerate smoothly and brake gradually. It's safer and uses less gas. 5. Properly maintain your vehicle and replace your air and oil filters as recommended. 6. Minimize the amount of time your vehicle idles. Step Three: Educate the Public 1. Educate the public through materials and signage, websites, newsletters, and articles. 2. Participate in Flex Your Power ... at the Pump" events. 3. Help recruit partners to join the campaign. Name Address Title Company Telephone Email Signature City State2ip Fax Energy Efficiency Contact - for jollow up Date Please fax back your Declaration for Action. For more information, go to: www.fypower.org 019 Properly maintain your vehicle and replace your air and oil filters as recommended. Minimize the amount of time your vehicle idles. Step Three: Educate the Public 1. Educate the public through materials and signage, websites, newsletters, and articles. 2. Participate in Flex Your Power ... at the Pump" events. 3. Help recruit partners to join the campaign. By conserving energy (gasoline and electricity) we help the economy and save money ... and it is good for the environment. As we approach the summer months, we urge you to join other leading business leaders, state and local elected officials, and community organizations by committing to the voluntary measures to reduce California's energy demand. Please return the enclosed Declaration of Action and help "Keep California Rolling." For additional information, go to: www.fypower.org 020 T 9 AZUSA LIGHT i WATER AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES ^ DATE: JUNE 28, 2004 SUBJECT: AUTHORIZATION TO PROCURE SAN JUAN OUTAGE INSURANCE COVERAGE RECOMMENDATION It is recommended that the Utility Board/City Council authorize the staff to procure outage insurance coverage from XL Capital/Indian Harbor Insurance Company for San Juan Unit 3 for the coverage period commencing July 1, 2004 through June 30, 2005. BACKGROUND The City's San Juan unit 3 is the single largest resource in City's resource portfolio providing up to 75% of City's annual electric energy requirement. The operational availability of San Juan unit 3 and the cost of replacement power when the unit is not available due to forced outages could have significant adverse impacts to the electric utility's finances. For FY 04-05, staff assumed for budget purposes that the unit would have an availability factor of no less than 80% and a cost for the replacement power at $50/MWh, resulting in a budgeted San Juan replacement power cost of $2,628,000. However, if the unit availability turns out to be lower than 80% and/or spot market prices turn out to be significantly higher than $50/MWh, then the cost of replacement energy might turn out significantly higher than the budgeted amount causing adverse impacts to electric utility's finances. It is against this backdrop that staff has evaluated San Juan outage insurance coverage to mitigate such potential adverse financial impacts. Outage Insurance Coverage Typically, the outage insurance coverage has the following components: 1. A strike price for replacement power in $/MWh 2. A deductible amount in $ 3. A maximum coverage limit in $ 4. A premium payment in $ /27c 035 The following example illustrates how the insurance coverage would work: Assume the insurance coverage has the following structure: 1. Strike price = $30/MWh 2. Deductible amount = $1,000,000/year 3. Maximum coverage limit = $4,000,000 4. Premium payment = $250,000 Further assumes that San Juan unit is unavailable for 25% of the time during a year and the cost of replacement power is $60/MWh, thus the cost of replacement power above the strike price is 30 MW x 8,760 hours x 0.25 x ($60 - $30) = $1,971,000. Therefore, the insurer would pay the City $971,000 ($1,971,000 less deductible of $1,000,000) for cost of replacement power for San Juan outages. Please refer to the tables in the presentation material for the effect of insurance coverage. The benefits of the insurance coverage are (refer to cost tables in the presentation): 1. It reduces the cost of replacement power in a high spot market price environment, e.g., at 85% unit availability; the insurance coverage reduces the cost of replacement power from $2,759,000 without insurance coverage to $2,182,600 with insurance coverage if the spot market price is $70/MWh. 2. It significantly reduces, but not completely eliminates the adverse financial impacts if unit availability turns out to be lower than budgeted amount and spot market price for replacement power turns out to be substantially higher than the budgeted amount, e.g., the insurance coverage reduces the cost of replacement power from $5,518,800 without insurance coverage to $3,365,200 with insurance coverage if the spot market price is $70/MWh and unit availability is 70%. Although the resulting cost of replacement power is still higher than our FY 04-05 budgeted amount of $2,628,000, but it is about $2.2 million LESS than if no insurance coverage is procured. 3. In the "doomsday scenario", i.e., very high unavailability factor of the unit and very high spot market prices, the insurance coverage significantly reduces the possibility of cash flow problems to the electric utility's, e.g., the cost of replacement power of $8,409,600 without insurance coverage in case of 60% unit availability and $80/MWh for spot market price WILL MOST LIKELY PRESENT SIGNIFICANT CASHFLOW CHALLENGES TO THE ELECTRIC UTILITY, whereas the cost of replacement power of $4,153,600 with insurance although still very high but significantly more manageable in terms of cash flows. Thus, staff recommends the procurement of San Juan outage insurance coverage along the parameters specified above given the benefits of such outage insurance coverage in protecting the electric utility against severe financial dislocations that might result due to San Juan unit operational issues and/or severe spot market price run-ups. 036 FISCAL IMPACT Said insurance coverage will cost about $250,000 for the coverage period of July 1, 2004 through June 30, 2005. Funds remain available in FY 03-04 Electric Capacity and Energy Account to pay for the purchase of said insurance coverage. Prepared by: Bob Tang, Assistant Director of Resource Management Attachment: San Juan Outage Declarations.doc Outage Policy.doc Ins.ppt 037 San Juan outage Insurance Coverage Presented by Bob Tang June 28, 2004 IN Issue Statement • Mitigate Adverse Financial Impacts to the Electric Utility if City's San Juan Unit 3 Has Higher than Anticipated Forced Outage Rate and/or The Replacement Energy Costs Exceed the Budget 2 039 Historical San Juan Forced Outage Month %AVMIe01e CVAVG Je l 92.36% EtB2/MWO FeE-Ol 60.01% CY AVG Mer -01 98.5/ % 83.72% F.DW 98.35% Jul -02 Zol MCY01 86.19% 88.%% JunLt 90.91% pct -p2 ,UI-0199.27% 99.91% 61.69% Au" 14.70% Major Porcad Wle9e 3cµ01 37.69% Mglor Fo2cCGvfeye Gct-01 98.22% Nov -01 41.07% Dec -01 86.12% 76.41% TdN Reyfacemonl (:osl %AvallsMa CY AVG Et 1,293,000 Rep' fGof Fe m EtB2/MWO MOMb %Avellabla CY AVG JenL3 82.01% 83.72% F.DW 95.98% Jul -02 Mar -03 65.3t% 88.%% pp.p3 83.28% pct -p2 MCY03 99.91% 61.69% Ju,w 83.T % -03 79.93% =Jul 3 95.35% $aµ03 95.30% Dcl-03 69.06% Nov -03 81.17% Dec03 62.76% 81.99% Tdw Reye.. Cast 52,992,603 Menti %AvallsMa CY AVG Jan02 93.29% Fe m 109.00% Man02 96.39% Zy 2 9).63% Mgy-D2 83.72% Jun 02 97.35% Jul -02 94.03% pup.02 88.%% Sep -02 M06% pct -p2 99.9T% Nov{¢ 61.69% poc{Q 66.95% 99.38% TWel Feplecemwrf C , - 5735,D30 fld of Cezl 526.30/MWII Mo th %Available CVAVG JervM 80.36% FelrlM 99.91% Mer -06 5 % AOf.p6 8..3131 % 3c/letlu/W Wte9e Mey-09 85.94% Tote, ne#xMent Cost E1.138.W3 040 San Juan Issues • The performance of San Juan unit 3 has not been good due to certain equipment reaching their useful life • Public Services Company of New Mexico (PNM) has identified about $50 million worth of capital improvement projects over the next four years to substantially improve the unit's performance • It is likely that San Juan unit 3 will continue to have sub par performance due to the equipment problems until major refurbishment is completed by 2008 4 041 41 042 Financial Impacts of Forced San Juan Outages San Juan Replacement Power Costs San Juan Availability Market Price 100% 95% 900% 85% 80% 75% 700/6 65% 60% $30 $o $394,200 $788,400 $1,182,600 $1,576,800 $1,971,000 $2,365,200 $2,759,400 $3,153,600 $35 $0 $159,900 $919,800 $1,379,700 $1,839,600 $2,299,500 $2,759,400 $3,219,300 $3,679,200 $40 $0 $525,600 $1,051,200 $1,576,800 $2,102,400 52,628,000 $3,153,600 $3,679,200 $4,204,800 $45 $0 $591,300 $1,182,600 $1,773,900 $2,365,200 $2,956,500 $3,547,800 $4,139,100 $4,730,400 $50 $0 $657,000 $1,314,OOD $1,971,000 ". '828,00 $3,285,000 $3,942,000 $4,599,000 $5,256,000 $55 $0 $722,700 $1,445,400 $2,168,100 $2,890,800 $3,613,500 $4,336200 $5,058,900 $5,781,600 $60 $0 $788,400 $1,576,800 $2,365,200 $3,153,600 $3,942,000 $4,730,400 $5,518,800 $6,307,200 $65 $0 $854,100 $1,708,200 $2,562,300 $3,416,400 $4,270,500 $5,124,600 $5,978,700 $6,832,800 $70 $0 $919,800 $1,839,600 $2,759,400 $3,679,200 $4,599,000 $5,518,800 $6,438,600 $7,358,400 $75 $o $985,500 $1,971,000 $2,956,500 $3,942,000 $4,927,500 $5,913,000 $6,898500 $7,884,000 $80 $0 $1,051,200 $2,102,400 $3,153,600 $4204,800 $5,256,000 $6,307,200 $7,358,400 $8,409,600 Budgeted amount for San Juan replacement power cost for FY 04-05 •For FY 04-05, the budget for San Juan replacement energy cost is about $2,628,000 based on 20% forced outage rate and market price of $50/MW h. -Concern: Should San Juan forced outage rate turn out to be higher and the energy price is higher than budgeted than it will have adverse impacts to the Electric Utility's finances 41 042 San Juan Forced Outage Insurance ➢It will significantly mitigate adverse financial impacts due to San Juan forced outage beyond the budgeted amount Total San Juan Replacement Cost with Insurance Payout San Juan Availability Market Price 100% 95% 90% 85% 80% 75% 70% 650/6 60% $30 $0 $394,200 $788,400 $1,182,600 $1,576,800 $1,971,000 $2,365,200 $2,759,400 $3,153,600 $35 $0 $459,900 $919,800 $1,379,700 $1,839,600 $2,299,500 $2,759,400 $3,219,300 $3,679,200 $40 $0 $525,600 $1,051,200 $1,576,800 $2,102,400 $2,628,000 $3,153,600 $3,679,200 $4,153,600 $45 $0 $591,300 $1,182,600 $1,773,900 $2,365,200 $2,956,500 $3,365,200 $3,759,400 $4,153,600 $50 $0 $657,000 $1,314,000 $1,971,000 $2,576,800 $2,971,000 $3,365,200 $3,759,400 $4,153,600 $55 $0 $722,700 $1,445.400 $2,168,100 $2,576,800 $2,971,000 $3,365,200 $3,759,400 $4,153,600 $60 $0 $788,400 $1,576,800 $2,182,600 $2,576,800 $2,971,000 $3,365,200 $3,759,400 $4,153,600 $65 $0 $854,100 $1,708,200 $2,182,600 $2,576,800 $2,971,000 $3,365,200 $3,759,400 $4,153,600 $70 $0 $919,800 $1,788,400 $2,182,600 52,576,800 $2,971,000 $3,365,200 $3,759,400 $4,153,600 $75 $0 $985,500 $1,788,400 $2,182,600 $2,576,800 $2,971,000 $3,365,200 $3,759,400 $4,153,600 $80 $0 $1,051,200 $1,788,400 $2,182,600 $2,576,800 $2,971,000 $3,365,200 $3,759,400 $4,153,600 ➢For a reasonable insurance premium of about $250,000, the adverse financial impacts of San Juan forced outage beyond the budgeted amount can be substantially mitigated but not completely eliminated 043 Recommendation • Staff recommends that Utility Board approve the purchase of San Juan outage insurance coverage at a cost not to exceed $275,000 for FY 04-05 and direct the staff to finalize all necessary documentation to effectuate the purchase of the insurance coverage 7 041 INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 DECLARATIONS THIS IS A CLAIMS MADE INSURANCE POLICY. EXCEPT AS SPECIFIED HEREIN, THIS POLICY COVERS ONLY CLAIMS RECEIVED BY THE INSURER BEFORE THE CLAIMS DEADLINE. PLEASE READ THIS POLICY CAREFULLY. CAPITALIZED TERMS USED, BUT NOT DEFINED, HEREIN SHALL HAVE THE MEANINGS ASCRIBED TO THEM IN THE POLICY. Policy No.: ITEM 1. INSURED: PRINCIPAL ADDRESS: WIRE TRANSFER: ITEM 2. INSURER: ITEM 3. CONTACT FOR INSURER: WIRE TRANSFER: City of Azusa, California Attn: Asst. Director Rs. Management 729 N. Azusa Avenue Azusa, CA 91702-9500 Wells Fargo, City of Azusa Branch, Account N# 4950041244, ABA N# 1210-00248 Indian Harbor Insurance Company Joseph A. Leto Assistant Secretary Inidan Harbor Insurance Company 7300 College Blvd., Suite 300 Overland Park, KS 66210 Tel: (913) 253-8421 Fax: (913) 451-9846 Cell: (913) 485-0627 iletoC�xlwe.com BankOne ABA#071000013 Beneficiary: XL Specialty Account#1087691 ITEM 4. PERIL(S) INSURED AGAINST: Losses incurred to replace the power otherwise generated by Covered Unit(s) resulting from an Unplanned Event. ITEM 5. CURRENCY: ITEM 6. INCEPTION DATE: ITEM 7. EXPIRATION DATE: ITEM 8. POLICY TERM: United States Dollars July 1, 2004 June 30, 2005 July 1, 2004 through June 30, 2005 Page 1 of 2 �� Rr INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 ITEM 9. CLAIMS DEADLINE: ITEM 10. POLICY LIMIT: ITEM 11. PREMIUM: ITEM 12. PREMIUM DUE DATE: ITEM 13. LOSS TRIGGER PRICE: ITEM 14. SETTLEMENT TYPE: ITEM 15. POWER PRICE INDEX: ITEM 16. CAPACITY DEDUCTIBLE: ITEM 17. CAPACITY LIMIT: ITEM 18. OUTAGE DURATION LIMIT: ITEM 19. COINSURANCE: ITEM 20. ANNUAL DEDUCTIBLE: ITEM 21. ENDORSEMENTS: July 31, 2005 $4,000,000 $230,580 June 30, 2004 $30/MWh Daily for each of three (3) time periods For any On -Peak Hour, the lesser of (i) the Dow -Jones Electricity Price Index for "on -peak" firm energy delivered to Palo Verde, or (ii) $250/MWh. For any Off -Peak Hour on a Delivery Day that is not a Sunday or NERC Holiday, the lesser of (i) the Dow -Jones Electricity Price Index for "off-peak" firm energy delivered to Palo Verde, or (ii) $250/MWh. For any Off -Peak Hour on a Delivery Day that is a Sunday or NERC Holiday, the lesser of (i) the Dow -Jones Electricity Price Index for "24 hour" firm energy delivered to Palo Verde, or (ii) $250/MWh. 0. 30 MW 120 days 0 $1,000,000 None THESE DECLARATIONS, TOGETHER WITH THE INSURANCE APPLICATION AND THE POLICY (INCLUDING THE SCHEDULES, EXHIBITS AND ANY ENDORSEMENTS ATTACHED), CONSTITUTE THE INSURANCE POLICY. Page 2 of 2 Eff INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 POWER GENERATION OUTAGE INSURANCE POLICY THIS IS A CLAIMS MADE INSURANCE POLICY. EXCEPT AS SPECIFIED HEREIN, THIS POLICY COVERS ONLY CLAIMS RECEIVED BY THE INSURER BEFORE THE CLAIMS DEADLINE. PLEASE READ THE ENTIRE POLICY CAREFULLY. Throughout this policy, the words "you" and "your" refer to the Insured. The words, "we", "us" and "our" refer to the Insurer. Capitalized terms have special meanings; you should refer to Definitions (Section 2) and to the Declarations. SECTION 1. INSURING CLAUSE In consideration of receipt of the Premium by the Insurer, and subject to the Declarations, conditions, representations, exclusions, provisions and other terms of the policy, the Insurer agrees to indemnify and pay to you an amount equal to the Forced Outage Loss arising from each Unplanned Event. SECTION 2. DEFINITIONS The following capitalized terms shall have the meanings ascribed to them below, and those specifically set forth in the Declarations shall have the meaning set forth therein. A. Annual Deductible means the quantity specified in Item 20 of the Declarations. B. Business Day means each Monday, Tuesday, Wednesday, Thursday and Friday on which banking institutions in the State of New York are not authorized or obligated by law or executive order to close. C. Capacity shall mean the maximum sustainable power generation capacity of a Covered Unit, modified for any known ambient limitations, but in no event is to exceed the value specified in Exhibit A of this policy. D. Capacity Deductible is the quantity specified in Item 16 of the Declarations. E. Capacity Limit is the quantity specified in Item 17 of the Declarations. F. Claims Deadline is the date specified in Item 9 of the Declarations. G. Coinsurance is the pro rata share of losses that are not included in the calculation of Forced Outage Losses pursuant to Section 9A of this policy, and which quantity is specified in Item 19 of the Declarations. H. Contact For Insurer is the contact person specified in Item 3 of the Declarations. Page 1 of 12 047 INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 Covered Capacity shall mean the amount by which the Outage Capacity exceeds the Capacity Deductible. For the purposes of calculating Forced Outage Losses, in no event shall the Covered Capacity exceed the Capacity Limit. J. Covered Units means the power generating units listed on Exhibit A of this policy which can be subject to an Unplanned Event. K. Declarations means the attachment hereto headed "Declarations". L. Delivery Day means a day during the Policy Term. M. Expiration Date is the date specified in Item 7 of the Declarations. N. Forced Outage Losses means the costs, in U.S. dollars, incurred by the Insured during the Policy Term as a result of a loss of,power output from Covered Units that experience an Unplanned Event, and which is equal to the amount calculated in accordance with Section 9A of this policy. O. Inception Date is the date specified in Item 6 of the Declarations. P. Insurance Application means a completed application for insurance in accordance with the terms and conditions of this policy together with the quantitative analysis and data submitted by you supporting the application. O. Insured is the entity named in Item 1 of the Declarations. R. Insurer means the insurance company specified in Item 2 of the Declarations. S. Loss Trigger Price means the quantity specified in Item 13 of the Declarations T. Pacific Prevailing -Time (PPT) means the time in effect on the applicable Delivery Day in the Pacific Time Zone of the United States, whether Pacific Standard Time or Pacific Daylight Savings Time. U. On -Peak Hours means for each Delivery Day which is a Monday through Saturday, the hours beginning with the hour ending at 7:00 a.m. PPT and ending with the hour ending at 10:00 p.m. PPT V. Off -Peak Hours means all hours within the Policy Term that are (i) not On -Peak Hours. W. Outage Capacity means the power generation capacity, measured in MWh actually lost in respect of a Covered Unit or Covered Units due to Unplanned Event(s). For purposes of this policy, the Outage Capacity resulting from an Unplanned Event shall not be deemed to exceed the Owned Capacity of the relevant Covered Unit(s) as set forth in Exhibit A, and the Outage Capacity resulting from an Unplanned Derate shall not be deemed to exceed 0.061 multiplied by the amount of power reduced from the Capacity in respect of the Covered Unit due to such Unplanned Derate. X. Outage Duration Limit means the quantity specified in Item 18 of the Declarations. Y. Policy Limit means the amount specified in Item 10 of the Declarations. Page 2 of 12 W-!, INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 Z. Planned Outage means any outage that is, or could be, scheduled more than seven (7) days in advance. Losses arising from any Planned Outage are not covered by this policy. AA. Policy Term means the period of time specified in Item 8 of the Declarations. BB. Power Price Index means the source used for power prices specified in Item 15 of the Declarations. CC. Premium means the amount specified in Item 11 of the Declarations. DD. Premium Due Date means the date specified in Item 12 of the Declarations. EE. Proof of Loss means a signed, sworn affidavit in the form of Exhibit B hereto, which shall be subject to verification in accordance with Section 98 hereof. FF. Settlement Type means the period of time in which a unique value for the Power Price Index is determined, and which is specified in Item 14 of the. Declarations. GG. Unplanned Outage means a power generation outage event classified as a class U1, U2, U3 or SF unplanned outage under the North American Electricity Reliability Council's Generating Availability Data System as in effect on the Inception Date ("NERC GADS"), during which a Covered Unit is not capable of producing power due to unanticipated failure within the plant site, up to and including, the generator step-up transformer. Unplanned Outage does not include any Planned Outage, as defined herein. An Unplanned Outage will be deemed to have commenced at the top of the hour following the hour during which such power generation outage event first occurred. An Unplanned Outage will be deemed to have concluded at the earlier of (i) the top of the hour following the hour in which the cause of the event is corrected and the Covered Unit is phased on-line and producing energy, or (ii) the top of the hour following the hour in which the Unplanned Outage reaches the Outage Duration Limit, but in no event shall it conclude beyond the time that would be required to correct the cause of outage with exercise of due diligence. More than one Unplanned Outage may occur during the Policy Period. In no event shall an Unplanned Outage be deemed to include any unplanned power generation outage of the types described in Section 6D of this policy. HH. Unplanned Derate means a power generation derate event classified as a class D1, D2, or D3 unplanned derate under the North American Electricity Reliability Council's Generating Availability Data System as in effect on the Inception Date ("NERC GADS"), during which a Covered Unit capability to produce is reduced due to unanticipated failure within the plant site, up to and including, the generator step-up transformer. Unplanned Derate does not include any Planned Outage or Planned Derate, as defined hereof. An Unplanned Derate will be deemed to have commenced at the top of the hour following the hour during which such power generation outage event first occurred. An Unplanned Derate will be deemed to have concluded at the earlier of (i) the top of the hour following the hour in which the cause of the event is corrected and the Covered Unit is available for attempted start-up or (ii) the top of the hour following the hour in which the Unplanned Derate reaches the Outage Duration Limit as shown in ITEM 15 of the Declarations, but in no event shall it conclude beyond the time that would be required to correct the cause of outage with exercise of due diligence. More than one Unplanned Derate may occur during the Policy Period. In no event shall an Unplanned Derate be deemed to include any unplanned power generation outage of the types described in Section 6D of this policy. Page 3 of 12 049 INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 Unplanned Event means an Unplanned Outage or an Unplanned Derate as defined above. SECTION 3. PREMIUM The Premium with respect to this policy is fully earned by the Insurer on the Inception Date, except as otherwise provided in Section 5B herein. It is understood and agreed that no coverage shall attach under this policy prior to the Inception Date and the Insurer shall have no obligation or liability under this policy unless and until the Insurer actually receives all the Premium on or prior to the Premium Due Date. SECTION 4. POLICY LIMIT NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, THE INSURER'S MAXIMUM DOLLAR LIABILITY TO THE INSURED ARISING UNDER THIS POLICY FOR ANY AND ALL FORCED OUTAGE LOSSES SHALL NOT EXCEED THE POLICY LIMIT SPECIFIED IN ITEM 10 OF THE DECLARATIONS. SECTION 5. CANCELLATION AND NONRENEWAL A. This policy may be cancelled by the Insured by surrender of this policy to the Insurer or by mailing to the Insurer written notice stating when thereafter such cancellation shall be effective. Further, the Insurer may cancel this policy by mailing or delivering to the Insured, and to the authorized agent or broker, a written notice stating when, not less than upon thirty (30) calendar days thereafter, the cancellation shall be effective in the event of any of the following: 1. if there is a discovery of a material misrepresentation by the Insured to the Insurer, 2. if there is a substantial breach of contractual duties, conditions, or warranties, 3. if there is substantial change with respect to the Covered Unit (excepting the occurrence of one or more Unplanned Event(s) or changes in the price of power), unless the Insurer should reasonably have foreseen the change or contemplated the risk when issuing this policy, or 4. non-payment of the Premium on or prior to the Premium Due Date. B. At and after such date of cancellation, the Insurer shall have no liability or obligation to pay any claims for any Forced Outage Losses occurring on or after said date. If this policy is cancelled by the Insurer after the Premium has been received by the Insurer, within thirty (30) days of the effective date of cancellation, the Insurer shall return to the Insured a pro rata portion of said Premium equal to the total amount of Premium paid multiplied by a fraction, the numerator of which shall be the number of days, multiplied by the Covered Capacity for each day, remaining from the effective date of cancellation up to and including the Expiration Date, and the denominator of which shall be the number of days, multiplied by the Covered Capacity for each day, from the Inception Date to the Expiration Date. If this policy is canceled by the Insured after the Premium has been received by the Insurer, within thirty (30) days of the effective date of cancellation, the Insurer shall return to the Insured a short rate portion of said Premium to be determined by the Insurer. If this policy is cancelled by the Insurer, the notice of cancellation will contain the reason for cancellation. Payment or tender of any unearned premium by the Insurer shall not be a condition of cancellation, but such payment shall be made within thirty (30) days of such cancellation. Page 4 of 12 050 INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 SECTION 6. EXCLUSIONS This policy does not cover: A. any event, fact, loss or circumstance other than a Forced Outage Loss as defined by this policy; B. the cost to repair or replace property of the Insured or of any other person or entity or the cost to mitigate any damages to property of the Insured or of any other person or entity; C. any obligation, liability or accommodation of any kind to or of a third party; and D. Unplanned power generation outages caused by any of the following: 1. the recklessness, willful misconduct, dishonesty, or fraud of either (i) the Insured or its employees, agents, independent contractors or affiliates, or (ii) the owner or operator of any Covered Unit or its employees, agents, independent contractors or affiliates; 2. compliance with any local, state or federal laws, regulations or guidelines; 3. loss of supply of generating unit inputs; including fuel and supply of cooling water; or any control area intervention; 4. extension of a Planned Outage; 5. earthquake, tornado, flood, named storms, and any other natural disasters; 6. any riots, sabotage, domestic or foreign initiated terrorism, insurrection, declared or undeclared war, or civil disorder; 7. any strikes or labor actions SECTION 7. NOTIFICATION OF UNPLANNED EVENT A. The Insured shall notify the Insurer of the occurrence of an Unplanned Event no later than seventy-two (72) hours after the commencement of the Unplanned Event. In the event notification occurs later than as set forth in the preceding sentence, then no Unplanned Event shall be deemed to commence until notice is received by the Insurer. This notification shall be made by telephone, by confirmed facsimile transmission or by confirmed e-mail transmission to the Insurer to the following individual: Jim Hickman XL Weather & Energy Inc. 100 First Stamford Place, Suite 360 Stamford, CT 06902 Tel: 203-356-4063 Cell: 203-763-9002 Fax: 203-356-9839 Page 5 of 12 051 INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 jhickman @ xlwe.com B. In order to obtain coverage under this policy, you must have also submitted a fully completed and properly executed Proof of Loss, on or before the Claims Deadline substantiating Forced Outage Losses incurred by the Insured arising from an Unplanned Event. SECTION 8. PAYMENT OF LOSS Subject to Section 9 below, we shall, -within thirty (30) Business Days of receipt of a fully completed and properly executed Proof of Loss (accompanied by the documentation referred to therein), make payment to you in the amount of the Forced Outage Loss claimed in the Proof of Loss, as full settlement of such claim. SECTION 9. DETERMINATION OF LOSS AND VERIFICATION A. DETERMINATION OF FORCED OUTAGE LOSS. The Insurer will indemnify the Insured for the amount of Forced Outage Losses sustained by the Insured as a result of an Unplanned Event, as calculated in this Section 9A below, subject to the terms and conditions of this policy. If during any hour of a Delivery Day (i) an Unplanned Event occurs or is continuing, and (ii) the Power Price Index for such hour is greater than the Loss Trigger Price, then, for every hour of each Delivery Day while such conditions persist, the product of (A) the positive difference between the Power Price Index and the Loss Trigger Price, and (B) the Covered Capacity may, subject to verification of the Insured's resulting loss pursuant to Section 9B of this policy, be claimed by the Insured as part of the Forced Outage Losses payable hereunder. The amount of loss payments due to Insured by Insurer is the amount of the Forced Outage Losses for the Policy Term that are in excess of the Annual Deductible, such claim then being multiplied by (1- Coinsurance/100). The Insurer's aggregate liability cannot under any circumstances exceed the Policy Limit in any Policy Term for all Forced Outage Losses occurring in any Policy Term. B. VERIFICATION. Upon receipt of a Proof of Loss, the Insurer shall have the right to investigate, audit and otherwise verify the Forced Outage Loss and/or the claim for payment to the extent it deems reasonably necessary. The Insured shall reasonably cooperate with the Insurer in conducting any such investigation, audit and/or verification. Such right shall include, without limitation, the right to verify whether events, facts or circumstances giving rise to the Forced Outage Loss have occurred under this policy and the amount of Forced Outage Loss due hereunder. SECTION 10. CLAIMS DEADLINE All claims under this policy must be received by the Insurer no later than the Claims Deadline set forth in Item 9 in the Declarations. SECTION 11. SUBROGATION AND REFUNDS Page 6 of 12 052 INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 A. SUBROGATION. In the event of a payment of Forced Outage Loss, the Insurer reserves the right to pursue an action for recovery from any person, other than the Insured, at its sole discretion and in the name of the Insured or otherwise. If the Insurer makes any payment under this policy with respect to a Forced Outage Loss, the Insurer shall be subrogated, to the extent of such payment, to all the rights and remedies of the Insured, and the Insurer shall be entitled at its own expense (and not in reduction of the Forced Outage Loss) to sue in the name of the Insured. The Insured shall cooperate in all respects to assist the Insurer in exercising any subrogation rights hereunder. B. REIMBURSEMENT. If, after the making of any payment by the Insurer hereunder, the Insurer determines that the Insured was not entitled to all or part of a payment made by the Insurer hereunder because, without limitation, the Forced Outage Loss is either not covered or is excluded by the terms and conditions of this policy, or the amount of payment made by the Insurer is in excess of the Forced Outage Loss, the Insured shall pay any and all such amounts in immediately available funds to the Insurer within ten (10) Business Days of such determination by the Insurer. C. INTEREST ON AMOUNTS DUE. If either party fails to pay amounts due the other on a timely basis as specified in this policy or the Declarations, such amounts shall be paid with interest thereon at the rate per annum payable with respect to United States Treasury Bills with a one-year maturity plus 1% additional interest on the amount past due accruing from the date such payment is overdue. SECTION 12. MISCELLANEOUS MATTERS A. NO AMENDMENTS. No amendment, modification or change to this policy may be made except by written endorsement to this policy which has been executed by the Insurer and the Insured. B. NO ASSIGNMENT. This policy may not be assigned or transferred, and any rights that may arise under this policy (including any claims made or that may be made), without limitation, may not be assigned or transferred, in each case including by operation of law, unless agreed to by the Insurer in advance in writing. In the absence of such consent, any such assignment or delegation shall be null and void. C. SOLE BENEFIT. Except as otherwise provided herein, this policy shall inure only to the benefit of the Insured, and no person other than the Insured (or a permitted assignee or transferee pursuant to Section 12B above) shall have any legal or equitable right, remedy or claim under or in respect of this policy. D. FALSE OR FRAUDULENT CLAIMS. If any claim shall be made hereunder by the Insured knowing the same to be false or fraudulent, as regards amount or otherwise, then in such an event coverage for said claim shall be denied and all rights to coverage which otherwise would inure to the Insured shall be forfeited. E MATERIAL REPRESENTATIONS, ETC. 1. In General. The representations, warranties and covenants of the Insured contained herein and in the Insurance Application, and in any Proof of Loss, are the basis for this policy and a part hereof and are conclusively presumed to be material to the risk assumed by the Insurer under this policy. False warranty, misrepresentation, concealment or fraud in obtaining this policy, or in any notification of claim or in any Proof of Loss submitted in accordance with Section 7B of this policy shall cause coverage to be denied under this policy. Page 7 of 12 053 INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 2, Reformation. If, under applicable law or regulations, warranties as described herein are prohibited or not recognized, then, in conformity therewith, statements of the Insured in regard to this policy shall be accepted as representations. F. ENTIRE AGREEMENT. This policy (including the Declarations, Schedules, Exhibits and Endorsements hereto) and the Insurance Application constitute the entire agreement between the Insurer and the Insured with respect to the insurance provided hereby and supersede any other prior agreements or documents, whether written or oral, between them pertaining to the insurance provided hereunder. G. CURRENCY. Any amount paid in consideration hereof, or pursuant to the terms and conditions hereof, shall be paid in the Currency specified in Item 5 of the Declarations. H. NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power or privilege in respect of this policy, other than under Section 76, will not be presumed to operate as a waiver of that right, power or privilege. I. HEADINGS. The headings used in this policy are for convenience of reference only and are not to affect the construction of or to be taken into consideration in interpreting this policy. NO RELIANCE ON INSURER. The Insured has reviewed the terms, conditions and significance of this policy with legal and tax counsel, accountants, and/or insurance advisors of its choice, and is accepting this policy with full knowledge of its terms, conditions and significance. In accepting this policy, the Insured is not relying upon any representation or warranty by the Insurer regarding the legal, tax or accounting implications of this policy for the Insured. SECTION 13. GOVERNING LAW This policy shall in all respects be governed by, and construed in accordance with, the laws of the State of California, as applicable to insurance contracts entered into in California between citizens of that state and calling for performance in that state, and without reference to conflicts of law principles; provided, however, that the Declarations, conditions, exclusions, limits, provisions and other terms of this policy are to be construed in an evenhanded fashion as between the Insured and the Insurer. Without limitation, if the language of this policy is deemed to be ambiguous or otherwise unclear, the issues shall be resolved in the manner most consistent with the relevant terms, conditions and limits, without regard to the authorship of the language and without any presumption or arbitrary construction in favor of either the Insured or the Insurer. SECTION 14. NOTICES A. TO THE INSURED. Any notice or other communication to be given to the Insured shall be given effectively if made in writing and delivered to the Insured at its address specified in Item 1 of the Declarations. B. TO THE INSURER. Any notice or other communication to be given to the Insurer shall be given effectively if made in writing and delivered to the Insurer at its address specified in Item 3 of the Declarations. Page 8 of 12 054 INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 C. CHANGE OF ADDRESS. Either the Insured or the Insurer may by notice to the other in accordance with this Section 14, change the address at which notices or other communications are to be given to it. SECTION 15. ARBITRATION CLAUSE A. AGREEMENT TO ARBITRATE. Any action, dispute, demand or controversy arising out of or relating to this policy or the relationship established by this policy, any provision hereof, the alleged breach thereof, or in any way relating to the subject matter of this policy, involving the Insurer and the Insured and/or their respective representatives (collectively, "Disputes"), even though some or all of such Disputes allegedly are extra contractual in nature, whether such Disputes sound in contract, tort, or otherwise, at law or in equity, under state or federal law, whether provided by statute or the common law, for damages or any other relief, shall be subject to binding arbitration. B. CONDUCT OF THE ARBITRATION AND AUTHORITY OF THE ARBITRATOR. Arbitration shall be conducted in accordance with the rules of arbitration of the Federal Arbitration Act and, to the extent an issue is not addressed by the federal law on arbitration, by the Commercial Arbitration Rules of the American Arbitration Association. The validity, construction and interpretation of this policy, and all procedural aspects of the arbitration conducted pursuant thereto shall be decided by the arbitrators. In deciding the substance of any Disputes, the arbitrators shall refer to the laws of the State of California. It is agreed that the Arbitrators shall have no authority to award treble, exemplary or punitive damages of any type under any circumstances whether or not such damages may be available under state or federal law, or under the Federal Arbitration Act, or under the Commercial Arbitration Rules of the American Arbitration Association, the parties hereby waiving their right, if any, to recover any such damages. C. FORUM FOR THE ARBITRATION AND SELECTION OF ARBITRATORS. The arbitration proceeding shall be conducted in New York, New York. Within thirty (30) days of the notice of initiation of the arbitration procedure, each party shall select one arbitrator. The two arbitrators shall select a third arbitrator. The third arbitrator shall be a person who has over eight (8) years professional experience in the insurance business and who has not previously been employed by the Insurer and does not have a direct or indirect interest in the subject matter of the arbitration. While the third arbitrator shall be neutral, the two parry -appointed arbitrators are not required to be neutral, and it shall not be grounds for removal of either or the two party -appointed arbitrators or for vacating the arbitrators' award that either of such arbitrators has past or present minimal relationship with the party that appointed such arbitrator. D. CONFIDENTIALITY. To the fullest extent permitted by law, any arbitration proceeding and the arbitrators' award shall be maintained in confidence by the parties. E. FEES AND EXPENSES. Each party will pay the fees of its own attorneys, the arbitrator appointed by that parry, and all other expenses connected with the presentation of its own case. SECTION 16. OTHER INSURANCE A. If there is any other insurance payable to the Insured that covers the losses that are covered under this policy, whether prior to, subsequent to, or simultaneous with this insurance and by whomsoever effected, which, in the absence of this insurance, would cover the losses covered under this policy, Page 9 of 12 05 INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 whether the Insured can collect or not, then such other insurance shall be primary and this coverage shall be secondary so that the Insurer shall not be liable for more than the excess over and above such other insurance, but in no event will the Insurer's liability exceed any of the limits set forth in this policy. B. If the Insured have any other insurance subject to the same terms, conditions, and provisions that cover the losses that are covered under this policy and is payable to the Insured, then the Insurer shall pay its share of the covered loss in the proportion that or any other applicable limit bears to all the other limits of insurance that cover the same basis. SECTION 17. NO THIRD PARTY LIABILITY OR BENEFICIARIES This policy is being issued solely for the benefit of the Insured. No other person or entity shall have any rights or benefits under this policy, nor shall any such person or entity have the right to enforce any of its provisions against us. IN WITNESS WHEREOF, the Insurer has caused this policy to be signed by two (2) officers and signed on the Declarations by its duly Authorized Representative. ATTEST: Senior Vice President Charles S. Ernst Assistant Secretary Page 10 of 12 056 INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 EXHIBIT A Policy No.: Covered Unit Owned Capacity Ca aci San Juan Unit #3 30 MW 488 MW Page 11 of 12 057 Policy No.: INDIAN HARBOR INSURANCE COMPANY 70 SEAVIEW AVE. STAMFORD CT 06902 (800) 688-1840 EXHIBIT B PROOF OF LOSS 1. Covered Units experiencing Unplanned Event(s): 2. Date(s) and time(s) of Unplanned Event(s): 3. Cause of Unplanned Event(s): 4. Attach documentation of Forced Outage Loss. (invoices, ISO billing documents, or other analysis supporting economic loss) Page 12 of 12 7 AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JUNE 28, 2004 SUBJECT: PUBLIC INFORMATION OUTREACH REGARDING CONSTRUCTION OF UNDERGROUND RESERVOIR IN PIONEER PARK RECOMMENDATION It is recommended that the Utility Board/City Council authorize Azusa Light & Water to begin public information outreach for construction of an underground reservoir in Pioneer Park. BACKGROUND The Year 2000 Water System Master Plan Update recommends the addition of 2.5 Million Gallons of water storage near the existing Dalton and Sierra Madre Reservoir. The Master Plan Update also calls for the demolition of the Sierra Madre Reservoir due to its advanced age, constructed in 1904, and the growing difficulty that the Water staff has been having keeping the reservoir watertight and efficient. To replace the Sierra Madre Reservoir, the Master Plan recommends that the new reservoir (called the Pioneer Reservoir by the Master Plan) be located underground in Pioneer Park. In addition, the recently approved Monrovia Nursery development project is underway and appears to be on a fast track to buildout in 3 to 5 years. A viable reservoir will be necessary to work in tandem with the Dalton Reservoir to supply water to the Monrovia Nursery area and to continue service to the areas to the south of Sierra Madre Avenue. An aerial photo is attached of the area around the Sierra Madre Avenue- Dalton Avenue intersection, which depicts the fit of the new reservoir into Pioneer Park. There is currently an open field area near the south end of the park that will allow the construction of the underground reservoir with very little lasting impact on the park. Randy Noriega has indicated that the eucalyptus trees in the park are scheduled for removal due to the safety hazard they pose when their branches break off. If the construction of the underground reservoir requires the removal of any trees, they will be replaced with a more desirable species when the park area is regraded. 059 We are requesting the permission of the Utility Board to begin an information outreach to the neighbors of the park to address their potential concerns about the safety of the reservoir both during construction and after it is put into service. We will also explain the critical need for the reservoir; how the reservoir will be constructed; and how the park will be returned to its present appearance and purpose. FISCAL IMPACT No significant cost impact will result from approval of Public Information Outreach campaign. Prepared by: Chet Anderson, Assistant Director- Water Operations Attachment Proposed underground Reserv( 4 nits I F . j Sierra Madre�l�ue. II * 9 Ir if} w PROPOSED UNDERGROUND RESERVOIR^j WO 34 �� v R` 0 50 100 200 ._dt_' .��.� ♦ _ Feet. C) r AZUSA LIGHT & WATER City Yard Renovation Project 1020 W. Tenth Street Status Report JUNE 289 2004 062 Project Milestones • Utility Board approves conceptual design for building exterior 1/26/04 • Precise plan of design (building exterior) approved by Planning on 2/11/04 • Plan check submittal (detailed building drawings and specifications) to Building, Planning & Fire Department 2/26/04 • Fire Department approval 3/29/04 • Planning Division approval (landscape plans) 4/15/04 2 063 Project Milestones • Plan check 2nd submittal 4/20/04 (Building Division) • Utility Board approval of specifications 4/26/04 • Plan check 3,d submittal 5/26/04 (Building Division) • Building Division approval 6/10/04 • Advertised project for bid 6/14/04 3 064 Project Schedule • Bid opening 7/8/04 • Utility Board awards project 7/26/04 • Pre -construction conference/agreement review 8/2/04 • Notice To Proceed 8/20/04 • Start of construction 8/30/04 • Completion of construction 1/27/05 4 065 islative Update Prepared by Bob Tang June 28, 2004 N,. AB 2006 (Nunez) — Electricity Restructuring • Restructure State's electricity market in "core" and "non-core" customers • Provide "direct access" to "no -core" customers ("non-core" customers are those customers with electric demand above 500 kW) • Establish clearly defined cost recovery mechanisms for the IOUs for the recovery of prudently incurred generation procurement costs • Provide lengthy "log -in" period for "non-core" customers should they decide to stay with the IOUs (if "non-core" customers choose to stay with the IOUs, then they are to ed in for five years without the opportunity to leave the IOUs) • Passed the State Assembly on a 50-28 vote. Bill referred to State Senate. 067 SB 772 (Bowen) . Establishes a non -bypassable dedicated rate component (DRC) pa able b ratepayers to assist Pacific Gas & Electric by to emerge from the bankruptcy . The bill did not provide exemption to "Greenfield" muni customers. Broader exemptions were deferred to CPUC . Passed the State Assembly on a 69-2 vote. Passed State Senate on a 33-0 vote. . The Governor signed it into law on June 7 3 AB 426 (Cox and Richman) — Exit Fee Exemption . The proposed legislation exempts "Greenfield" customers served by municipal utilities from paying exit fees to Investor Owned Utilities for electric services . The bill is strongly supported by the municipal utility community in California, including the City . The bill has been amended on June 14th and will gather additional sponsors before going to Assembly and Senate for consideration . The legislation will have implications to the City in the future for new developments through annexation n 069 Azusa Utility Board Meeting June 28, 2004 AZUSA II..T . WATER 070 Power Resources Division Monthly Report • Status of Projects • Power Consumption Comparison • Wholesale Market Trend • Power Resource Budget Update 071 Status of Projects • FERC rejected Edison's proposed Kirkwall Substation Agreements, agreeing with City's position that such agreement is unnecessary • FERC set the costs of Kirkwall Substation to a settlement proceeding, the first settlement conference took place on June 9 at Washington D.C. Information exchanges were agreed to and additional settlement discussions are planned for early July • Settlement was reached in Edison's Wholesale Distribution Access Tariff (WDAT). The settlement agreement should be finalized by the end of this month • Evaluated a San Juan replacement power insurance product which staff is seeking Utility Board approval. Said insurance product will substantial mitigate the adverse budget impacts should San Juan performs sub -par 072 SEP ss`OCT j 440 532 2098%_ -NCN 38_9 36.8 331% DEC 34.4 35_1 2221i _ JAN _ ... 36:5 _-,_ 34.6 FEB 335 35_7 .. _ 43.9 i .._.. M4R -,402 -_ 939% APR 39.0 53.6 ,_ - 3761% _ for peak of 581 NPN established on September 1 1998. 073 CITY OF AZUSA ENERGY CONSUMPTION COMPARISON I E1.ErGV CONS111.1P110N W MWH __..... -.PERCENT M]NIH FY 02-03 FY00.0=1() C}'}/GE, _ _. JU. - 235M. _... 26,154........ 1094/ ._ j •r:-, 26,714 SEP 23.047� _ 24354. OCi 20270 23,357 15.12% .. _ •. 78,5!7 _--�__-..__._.._19..--__. 4A0% DEC 18784 20.207 .. 757% FEB 17296. _. i.._.. ... 18.875 _.. 5.35% .. _. 1087% .. ...,.._J APR 18425 .... ..__ 20,417 1081 h _... .... ___. ..'i _._ ,. _.......__ .. }_—_... _ 22.4 ..�.... _._.. 1240°/ JW 20,310 TOTAL .... 'Newhghs have been set for each rrnnWyretall sal -s ,.,. _ I4 CRY OF A2USA PEAK DEMAND COMPARISON SEP ss`OCT j 440 532 2098%_ -NCN 38_9 36.8 331% DEC 34.4 35_1 2221i _ JAN _ ... 36:5 _-,_ 34.6 FEB 335 35_7 .. _ 43.9 i .._.. M4R -,402 -_ 939% APR 39.0 53.6 ,_ - 3761% _ for peak of 581 NPN established on September 1 1998. 073 a Gi AuLit WHOLESALE ELECTFucrry iiPdf MARKET PRICES IN CALIFORNIA $59.69 AVERAGE AVERAGE , . . . PEAK PRICE OFF PEAK PRld—E- APRO3 _$42.09 .. $30.40 MAY03 $44.49 $21.44 JUN03 $50.59 $27.39 JUL03 $59.69 $39.84 AUG 03 SEP $43.95 . . $33.75 bpT63 $4517 --.9,7- . $56.22 $-,2-"-9.'36- DEC CO3 $43.77 56- JAN 04 $4521 $3443 FEB 04 $42.75 A& MAR 64 $4122 $31.65 APR 04 $4537 MAY04 $5126 ALL PRICES IN $/MWH I 074 Power Resource Cost Accounting -� FY '03-'04 tll(Q ._ _ LONGTERM SHOHTTERM-TRPN341SSKN .. AIJdLLhA'/ µ'X1jH CCNrtil4:TS `PURCIl45ES COSTS SEilY10E CO5B (5) (61 m-- SCHEWUNG TOTA: --DISFATCHIN[;CC6T5 CC615... RE�£NNIJE9 CC6T5 JUL031n 02T,68174; 1,789296.72 261,849.96 21102)2 NJG03 991,35411---1.481,98139 28887)]2 16,52339 33886.40 2929,817.50 (1553.54890) 1,3]6$68.66 -�- 36291.38 2,T149339] (1,401,>D'!E6) -1,361.126.1, _ SEP 03 981,621281 76491544 — 26]207.62 11,808 BB 33213.05 2,OSB,fi6429 (65192725) 1206.73].03 OCT031m 973.408961 1265543.37 263.015.15 1381].15 31$2].86 2$4],4122) (,,037,709.83) 1,509.702.44 NW 03 1,9T/,89498-: b76,E8891 21&560.42 16686.50 1461.66 2,858,31253 1833945.77) 222436&76 DEC031O' 869,959981 1,036.780.77 219.65827 13371.81 25117.50 226399B.31 (8,72.1 1,445859.16 _ JIN O6 9')2,01896 82022235 219,IX .12 10.47487 FE80414 96]91fi 96, 586665,6 52230fi 41 1065212 M/A 04 --97123096 85530105—YOipB026 - �-12.85538 irRW 9869H.961 ) .W5.OD.. _ 1956/440 .. .-2000000 .. �Ya .___1.15596" fi6558583 20696520 ....._20.00DAO ,_.27,38].88 2069,139.08 (82345191) 1225.68].17 2640].61 2093,72022 (6)9,089.82) 14, 4,83640 - _ 29,888.47- 2.0nR 6.14-_IO2G1022B) 1251_15365 —. ......_ 20581.fb 1994390.M (174.44550) 1,019946$6 24,893[6 1,690¢789? �l9].7C9.00) 1.D92.830.07 JUNG D00 000 T0,7L 311537,108.82 i $IOAMNO.791 WA52MaS51 $151,190.fi2 1 $317981.61 $25.537232.fi5 (M502,B1J.3� $15.93431535 ___ ��_.._.__L^r Na mOnN MJWY2003, San Juan lJn1103 Replacement CPSltluebunll auta9e amounts m$266,702.30. rtbnPlWCtm. ...3_San Juan UPtp3Replacerlwnt Coat tlua munteubBe amou 6m$26850/.18 (C) Pie monm olNwember2003 SCPPASan Jabn dnlluallNe1p ce6615$960315. ( _ _for (D) Far Ple moroA otDdympar2003, San Juan Utit R3 Flapammenl Cast tluemwltauM9a amwn6 m5301,099.81 __ (q 0latlme rebrMmbe CNSOma0ml by Pg ole�Wlledetl bansml6blM mvamre n!glARmeN(RiF9tlWiri9 Januaryl0iou9fl Q.,oDar2003 par TRflseNemem agreement 0INCLUDESSCPPALCTJG TEPMCCERRRCiS INCLUDE50118HOR>TERMPURCWSESFORHEG(3NG MD L�BNNJCING RRP .__..._(3) INCLUDESNISHCRTTERMN4D (4)_ CC6i5 CH%AGED BYC/UiURMAINDEPEl6]FM SYSlB.1—OPERRTCQ FCR SV5IEM RELIOBILNYft1NCf6JNS _ _ ..— _ (5) INCLUDES CC6TS FGR SCHET)UUNGNJD pSPATCHING6ELECiRICRV � _ C71_ _RE'.ENUEB DEFOYID FRCfdSAI cc OFE�ESS WFER PfOBENEFRS (91... DIFFERENCE6(6) MD M. 075 INFORMATIONAL ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JUNE 28, 2004 SUBJECT: AMERICAN PUBLIC POWER ASSOCATION (APPA) REPORT ON UTILITY SUPPORT OF STATE AND LOCAL GOVERNMENTS Attached report from APPA is provided for your information and shows that publicly owned utilities contributed about 5.8 percent of their electric operating revenues to government entities whereas investor-owned utilities paid a median of 4.9 percent of their operating revenues to state and local governments. A supplemental article is also attached regarding same issue. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities Attachment: td `I6 -»;t APPA REPORT. I.pdf Supp Article. pdf 076, M iftopAn Affile M90APRI June 3, 2004 MEMORANDUM TO: Officials of Public Power Systems FROM: Alan Richardson, President & CEO SUBJECT: Payments & Contributions to State and Local Governments As an APPA member service, I am enclosing for your information APPA's report Payments and Contributions by Public Power Distribution Systems to State and Local Governments, 2002. The report summarizes the value and type of payments and contributions made by public power systems, and includes selected breakdowns by revenue size class and geographical region. This report serves two primary industry needs: • The information can assist utility managers in assessing their payments and contributions relative to other public power distribution systems, and The results clearly show that there is no validity to the claim that "investor-owned utilities provide a benefit to their communities by paying taxes that the publicly owned utilities do not." In fact, the median contributions by publicly owned utilities in 2002 was 18 percent higher than that of the investor-owned utilities (5.8% vs. 4.9% of annual electric operating revenues). Any comments or questions on the report can be directed to Scott Choate, Manager of Statistics (at 202-467-2969) or schoate0appanet.org. SC:cb Enclosure o77 Payments and Contributions by Public Power Distribution Systems to State a n d Local Governments, 2002 Data Published June 2004 AM 01% A American Public Power Association 2301 M Street NW Washington, D.C. 20037-1484 202/487-2900 960 Payments and Contributions by Public Power Distribution Systems To State and Local Governments, 2002 Data Executive Summary Public power systems provide a direct benefit to their communities in the form of payments and contributions to state and local government. The total value of the contributions made by the publicly owned utilities often comes in many forms and is not always easily recognized. In addition to payments such as property -like taxes, payments in lieu of taxes, and transfers to the general funds, many of the utilities make other contributions in the form of free or reduced cost services provided to states and cities. APPA calculated net payments and contributions for 573 public power systems in the most current data year of 2002 and determined that the median amount contributed was 5.8 percent of electric operating revenues. In 2002, investor-owned utilities paid a median of 4.9 percent of electric operating revenues in taxes and fees to state and local governments. It is a common misconception that investor=owned utilities provide a benefit to the local communities by paying taxes that the publicly owned utilities do not. This report demonstrates just the opposite. When all taxes, tax equivalents and other contributions to state and local government are considered, the median amount contributed by public power systems in 2002, as a percent of electric operating revenues, was 18.4% higher than investor-owned utilities (5.8% vs. 4.9%). 079 Overview Public power systems provide a direct benefit to their communities in the form of payments and contributions to state and local government. Using the most current data year, APPA calculated net payments and contributions for 573 public power systems for fiscal year 2002 and determined that the median amount was 5.8 percent of electric operating revenues. The payments are property -like taxes, payments in lieu of taxes, and transfers to the general funds. The contributions are made in the form of free or reduced cost services provided to states and cities. Many communities are not fully aware of the payments and total value of contributions made by their publicly owned electric utility, and some utilities do not quantify all their payments and contributions. APPA conducted a detailed survey of public power systems in order to get a more accurate estimate. The results are presented in this report, which focuses on the "rate" and "type" of payments and contributions made by public power distribution utilities. The report includes: • Summaries by revenue size class and region of the country for both publicly owned and investor-owned utilities; • Details on which types of payments and contributions are most common; • A listing of the typical methods used by utilities to calculate the amount of payments in lieu of taxes or transfers to the general fund of the city. Caution should be used when making direct comparisons with the previous reports (1992, 1994, 1996, 1998 and 2000 data) because the utilities included in each year's report are not identical. Appendix 1 describes the data sources and methodology used for this study and Appendix 2 defines the geographic regions. II Payment and Contribution Rates by Revenue Size Class Net payments and contributions as a percent of electric operating revenue are summarized for seven revenue classes. Medians by revenue class range from 5.0 percent to 6.6 percent, as compared to the national median of 5.8 percent. The median is defined as that value where 50% of the utilities had payment and contribution ratesrg eater than the median and 50% contributed less than the median. Quartiles are another common tool used in analysis. By definition, one-half of utilities fall between the first and third quartiles. For example, 50% of the 573 systems in this report made payments & contributions between 3.2% and 8.5% of electric operating revenue. TABLE 1 Owned Systems by Revenue Class - Number First Third Revenue (in millions) of Utilities Median Quartile Quartile . Less than $2 62 6.2 4.0 12.0 $2-$5 56 5.2 3.2 9.7 $5-$10 67 5.0 2.6 7.4 $10-$20 139 5.6 3.2 8.4 $20-$50 147 5.8 3.1 7.7 $50-$100 55 6.4 3.2 8.6 $100 or more 47 6.6 4.4 8.8 TOTAL 573 5.8 3.2 8.5 Median Net Payments and Contributions as Percent of Electric Operating Revenue, 2002 ---- Publicly Owned Utilities --- e% 6.4% 6.6% ° 6.2 /0 5.2% 5.0% 5.6% 5.8% s% � 4% y ' 2% 0% Less than $2-$5 $5-$10 $10-$20 $20-$50 $50-$100 $100 or $2 Revenue Class (in millions of dollars) more III. Payment and Contribution Rates by Region Regional variations in median net payments and contributions range from 3.3 percent in the Northeast to 8.8 percent in the West South Central. Regional definitions are included in Appendix 2. Region Northeast Atlantic East North Central East South Central West North Central West South Central Mountain Pacific Northwest Pacific Southwest TOTAL TABLE 2 -Publicly Owned Systems by Region - Number First Third of Utilities Median Quartile Quartile 51 3.3 1.8 6.2 66 7.0 2.8 10.7 92 3.5 2.5 4.9 101 6.5 6.0 7.4 134 5.7 3.6 9.1 43 8.8 4.6 12.8 24 7.9 4.7 13.8 41 5.6 3.9 8.6 21 4.6 2.7 8.4 573 5.8 3.2 8.5 Median• Contributions as Percent of Operating 1 1 PubliclyOwned 0• VIP Vim INS. I 4 082 IV Comparison with Investor -Owned Utilities (IOUs) In 2002, investor-owned distribution utilities paid a median of 4.9 percent of electric operating revenues in taxes and fees to state and local governments. The 50 percent of utilities in the middle range made payments ranging from 3.3 to 6.7 percent. In comparison, publicly owned distribution utilities paid a median of 5.8 percent in net payments and contributions as a percent of electric operating revenue, with a middle range of 3.2 to 8.5 percent. In this study, most IOUs (88%) had more than $100 million in operating revenues while most of the publicly owned systems had less than $100 million (92%). The median values of taxes paid by IOUs and tax payments and contributions by publicly owned systems (as a percentage of electric operating revenue) vary by utility size and are summarized below: Investor -Owned Publicly Owned Large Utilities (over $100 Million) 5.1% 6.6% Small Utilities (under $100 Million) 2.9% 5.8% The median value for investor-owned systems was the largest in the Atlantic and West North Central regions, and smallest in the East South Central and Pacific Northwest. Table 3, on the following page presents data grouped by geographic region for investor-owned utilities. The number of investor-owned utilities has fallen from 144 in the 2000 study to 126 in the 2002 study. This is primarily the result of mergers and the elimination of several utilities in Maine and Texas that no longer report sales to consumers. Retail choice laws in those two states changed how utilities account for sales. 5 F • TABLE 3 Net Taxes as Percent of Electric Operating Revenue. 2002 —investor -Owned Systems by Region— Quartiles not provided for fewer than 9 responses. Hawaii is included in the totals, but not in any of the regions Number Median Net Payments and Contributions First Third Region of Utilities Median Quartile Quartile Northeast32 4.4 2.8 6.2 Atlantic Region 18 5.6 4.2 7.2 East North Central 27 4.2 3.2 6.2 East South Central 8 3.2 ' West North Central 14 5.5 4.4 7.0 West South Central 12 5.0 3.7 5.9 Mountain NA NA NA NA Pacific Northwest 5 3.4 " Pacific Southwest 7 5.1 " TOTAL 126" 4.9 3.3 6.7 Quartiles not provided for fewer than 9 responses. Hawaii is included in the totals, but not in any of the regions 2 Median Net Payments and Contributions as Percent of Electric Operating Revenue, 2002 ---- Investor -Owned Utilities --- 10% B% 6% 4% IN 0 2% 0% r NE Atl ENC ESC WNC WSC Mtn PNW PSW Region 2 V Summary of Amounts and Types of Payments & Contributions One of the data sources used for this study is a survey sent by APPA to all publicly owned utilities. The next two sections (sections V and VI) of the report summarize results for the 314 public power systems that completed the survey. (Excluded from the summaries is Tennessee Valley Authority distribution utilities because these utilities' payments and contributions are limited under the terms of their wholesale power contract with TVA.) These 314 systems made a total of $1.16 billion in total payments and contributions to state and local government in 2002. As shown in Table 4, the overwhelming majority is payments in lieu of taxes (also called transfers to the general fund). The second largest category is gross receipts taxes; these taxes are collected by the utility, included in the utility's operating revenue and expense accounts, and remitted to the state or local government. In some states the gross receipts tax may be called a public utility tax or privilege tax. Table 4 Net Payments & Contributions to State & Local Governments . Net Payments & Contributions $1,161.6 The number of utilities making each type of payment or contribution is detailed in Table 5. 1 The 314 utilities that completed the survey received $1.7 million in contributions and services from the municipality. This amount does not include any contributions or services for which the city has been reimbursed, either through direct billing or a transfer of funds. Free or reduced cost office space and water are the major services provided, while operations & maintenance, legal service, information technology services, engineering services and financial service employees are the predominant type of employee contributions received by the utility. The $1.7 million in free or reduced cost contributions and services provided by the municipality to the utility Is subtracted from the $1,163.3 million in payments and contributions from the utility to state and local government. The result is $1,161.6 million In net payments and contributions by the 314 survey utilities in 2002. 7 '•i Amount Percent Millions of Total Payments in Lieu of Taxes $715.6 61.5% 15.8% Gross Receipts Tax $183.5 14.1% Property Taxes Free or Reduced Cost Electric Services $164.1 "$46.9 4.0% Other Taxes and Fees $34.7 3.0% Use of Employees $15.9 1.4% 0.2% Use of Vehicles, Equipment, Materials & Supplies $2.6 Total $1,163.3 100.0% Less: Services & Contributions RECEIVED 1.7' by the Utility FROM the Municipality Net Payments & Contributions $1,161.6 The number of utilities making each type of payment or contribution is detailed in Table 5. 1 The 314 utilities that completed the survey received $1.7 million in contributions and services from the municipality. This amount does not include any contributions or services for which the city has been reimbursed, either through direct billing or a transfer of funds. Free or reduced cost office space and water are the major services provided, while operations & maintenance, legal service, information technology services, engineering services and financial service employees are the predominant type of employee contributions received by the utility. The $1.7 million in free or reduced cost contributions and services provided by the municipality to the utility Is subtracted from the $1,163.3 million in payments and contributions from the utility to state and local government. The result is $1,161.6 million In net payments and contributions by the 314 survey utilities in 2002. 7 '•i Table 5 Types of Payments & Contributions (2002) Percentage of Number of Survey Utilities Utilities Payment & Contributions Provided Payments in Lieu of Taxes 80.3% 252 Taxes and Fees 50.6% 159 Gross Receipts Tax 22.0% 69 State Public Utility Assessments 18.50k 58 Franchise Fees 13.4% 42 Property Taxes 13.1% 41 Other - 8.0% 25 Free or Reduced Cost Electric Services 51.9% 163 Streetighting 44.3% 139 Lighting for Municipal Buildings 26.4% 83 Recreational Facilities 20.1% 63 Traffic Signals 16.9% 53 Water Pumping 14.6% 46 Water or Sewer Treatment Facilities 14.3% 45 Other 12.7% 40 Use of Employees 66.9% 210 Installation of Temporary Lighting 46.2% 145 Putting Up City Signs & Banners 44.9% 141 Electrical Repair for Other Departments 29.0% 91 Traffic Signal Maintenance 23.6% 74 Tree Trimming for Other Departments 22.3% 70 Other Services 17.2% 54 Rewiring Municipal Buildings 13.4% 42 Non -Utility Locates 11.8% 37 Technical Expertise 10.8% 34 Reading Water Meters 9.9% 31 Other Resources 36.0% 113 Use of Vehicles & Equipment 29.0% 91 Use of Materials & Supplies 14.3% 45 Other 92% 29 IL Services & Contributions RECEIVED 24.8% 78 (by the Utility FROM the Municipality) Use of Employees 14.0% 44 Use of Vehicles & Equipment 12.7% 40 Free or Reduced Cost Services 9.6% 30 Use of Materials & Supplies 6.1% 19 086 VI Methods Used To Determine Amount of Payments in Lieu of Taxes Payments in lieu of taxes are generally thought of as payments to local government. However, some utilities, particularly those in Kentucky and Washington, make payments in lieu of taxes to the state government. Of the 314 utilities defined in Section V, over 80% (252) made payments in lieu of taxes (also called transfers to the general fund) and the median transfer as a percent of electric operating revenue was 3.7 percent. The most common method used to determine the amount of payments in lieu of taxes was percent of gross electric operating revenue, as shown in the table below. TABLE 6 Methods Used to Calculate Payments in Lieu of Taxes Percent of Number Utilities of Utilities Percent of Gross Electric Operating Revenue 27% 69 Property Tax Equivalent. 19% 48 38 Assessment of Electric Utility and City Budgets 15% Flat Amount Paid Annually 14% 36 Charge per Kilowatt-hour Sold 6% 16 Percent of Income, (Net, Operating or Total) 3% 7 Percent of Net Utility Plant in Service 2% 6 Other 13% 32 The category "assessment of electric utility and city budgets" includes utilities whose payments are set by the city council, the mayor, or a utility commission, and utilities that make payments on an as needed basis. The most common responses in the "other" category are utilities whose payments are based on more than one criterion. Tennessee Valley Authority distribution utilities are not included in the data above. State law determines the payments in lieu of taxes for utilities in the state of Tennessee. The calculation is composed of two parts: (1) percentage of three year average operating revenue less power cost, and (2) property tax rate applied to net utility plant. M APPENDIX 1 METHODOLOGY AND DATA SOURCES FOR STUDY Study results for publicly owned utilities were calculated from four sources: data collected on APPA's "2002 Survey of Local Publicly Owned Electric Utilities Tax Payments and Contributions to State and Local Government," data submitted by publicly owned utilities to the Department of Energy/Energy Information Administration (EIA) on Form EIA412, "Annual Report of Public Electric Utilities" and on Form EIA -861, "Annual Electric Utility Report;" and data provided by the Tennessee Valley Authority (TVA). A total of 347 utilities completed the APPA survey; 226 additional utilities filed the Form EIA - 412 which collects total net payments and contributions on Schedule IV; and TVA provided supplemental data for 85 TVA distributors. Form EIA -861 provided information on electric operating revenue. Payments and contributions for TVA distributors include an amount equal to 5 percent of the cost of power purchased from TVA—this payment is made by TVA—plus any payments in lieu of taxes or contributions made by the distribution utility. TVA's wholesale power contracts with municipalities limit payments in lieu of taxes to an amount not exceeding the state and local taxes that the system would pay if privately owned. Study results for investor-owned systems were calculated from data submitted on the 2002 Federal Energy Regulatory Commission (FERC) Form 1, "Annual Report of Major Electric Utilities, Licensees and Others." The report includes only distribution utilities that are defined here as those with approximately fifty percent or more of their total kilowatt-hour sales going to retail customers. A total of 573 responding publicly owned systems and 126 investor-owned systems that file FERC Form 1 fell into this category. The investor-owned systems included in the study provide 95 percent of all kilowatt-hour sales to investor-owned utility customers, and the publicly owned systems included in the study provide 82 -percent of all kilowatt-hour sales to publicly owned utility customers. Public power's payments and contributions to state and local governments include taxes and fees such as gross receipts taxes, property taxes (generally on property outside the city limits), franchise fees, payments to state public utility commissions, environmental fees, and licenses. Also included are payments in lieu of taxes (also called transfers to the general fund), and the value of services, such as free or reduced cost electricity, the use of electric department employees and the use of electric department materials and equipment. Federal taxes, Social Security taxes, similar contributions to state unemployment insurance, and other payroll taxes are excluded. The value of free or reduced cost services contributed by the local government to the utility is deducted from total payments and contributions to arrive at net contributions. The net amount is then divided by electric utility revenue. Net taxes for investor-owned utilities include state and local taxes and fees as reported on pages 262-263 of FERC Form 1. Federal taxes, Social Security taxes, similar contributions to state unemployment insurance, and other payroll taxes are excluded. 10 APPENDIX 2 REGIONS The regions specified in Table 2 and Table 3 are comprised of states as shown below. Hawaii is not included in any of the nine regions, but is included in national totals and in summaries by revenue class. Northeast Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont Atlantic Washington, D.C., Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia East North Central Illinois, Indiana, Michigan, Ohio and Wisconsin East South Central Alabama, Kentucky, Mississippi and Tennessee West North Central Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota West South Central Arkansas, Louisiana, Oklahoma, and Texas Mountain Colorado, Montana, New Mexico, Utah and Wyoming Pacific Northwest Alaska, Idaho, Oregon, and Washington Pacific Southwest Arizona, California and Nevada 11 M: Cities Eye Munis for New Revenues (UtiliPoint - Mar. 24) 83 21, 3004 - po..'rrr f"erers tnduatry Pabaralions By Ken Silverstein Director, Energy Industry Analysis The balancing act that state and local governments must perform is having an immediate effect on public power companies. Because these governments arc strapped for cash, they are forced to look for revenues where they can get them. While municipal utilities typically provide "payments in lieu of taxes" to city coffers, some are now under pressure to give more. This issue is most pronounced in California. California's niwaticn is uncommon. The difficulty of raising revenues then; often puts the state and local governments in a hind. Some California cities that tun their own electric systems arc able to underwrite city services and it may be appropriate to increase transfers- But, it might also be sticky if such demands become excessive. Thal could harm the credit quality ofpuhlic power or prevent adequate investment in much-needed infrastructure improvements—all a time when there is a focus on reliability. "It takes forbearance on behalf of city leaders," says Alan Richardson, CEO of the American Public Power Association in Washington, D.C. "They are the leaders and they have the fiduciary responsibility for the financial health of the public power enterprise." The challenge. of course, is to find the "sweet spot;' says Richardson. To do so, city Icaders have to look at the current electric rates and compare those to surrounding communities. If it is determined that higher assessmcriis are a possibility, the next question is the effect that any increase would have on a utility's competitiveness. And, it comes down to personal philosophy and whether the proceeds from any rate hike would be used wisely and in such areas that serve the greater good. Ultimately, cities have to take responsibility for their decisions and understand how bond ratings and future investment decisions would be affected. says Richardson. While all communities are different. Richardson says transfers that get into the "double-digit range" -- operating revenues that are switched into a city's general fund—am "problematic." In the past, he says that sonic cities relied too heavily on their public power companies to underwrite their budgets. Levies have been as high wi 20-25 percent, he says. Balancing Act The national average for transfers is 5.7 percent of operating revenues. In California, it is more. According to Filch Ratings, the median transfer or payment in the last year from California municipal electric utilities to their respective citive general funds has increased from 5.5 percent to 7.5 percent. While the increase is relatively minor and is only one aspect of a utility's financial performance, it is a credit risk that Fitch has cited over the past year in several public power reports on California issuers. Fitch says that it believes that pressure to mise ilia transfer will escalate in certain cities because of significant spending reductions announced in Gov. Schwarzeneggees proposed 2005 budget. Pasadena, for example, just passed an i ncrease of 0.95 percent for the next four _years. '"their electricity rates we their major source of support." says Lina Santoro, credit analyst in the public power sector for Fitch Ratings in New York City. "If there is continued pressure to increase the city transfer, at some point it could start to affect the rate and financial flexibility of a utility:' She adds that many California municipals hold higher cash reserves than before restructuring, which serves to improve their ability to make the higher payments. Moreover, many city charters cap the amount of transfer that can be made, although those with caps in the 7-9 percent of gross operating revenue range still pose a credit risk, she says. While Fitch expects no near-term change in the credit ratings for California public power utilities, the trend 090 of rising electric utility transfers becomes of greater concern, particularly in the coming months as city councils review their budgets. Increases have thus far been modest, it says. But, if such hikes should escalate, public power companies may lose Their financial flexibility and rely increasingly on debt financing for capital expenditures. Or, they will have to increase their rates and the effects of that arc difficult to gauge, although commercial and industrial businesses would be hardest hit. - "When you are dealing with local control, there is no ultimate solution," says public power's Richardson. "It is what works for the utility and the city—and what is in the best interest of all concerned." City transfers are always touchy. And while Fitch does raise a rod flag it also says that it expects municipal power providers nationally will maintain their'A' and 'A+' ratings because of successful risk management techniques that also include reducing debt hweis. That has allowed the sector generally to handle rising natural gas prices and to guard.agaiast other unexpected developments. Meanwhile, the liquidity of those companies has increased, which has permitted them to easily meet their operating needs. Despite their aversion to risks, municipal utilities.—and all others too--do face risk management challenges such as wholesale electricity and gas price volatility. They will furthermore have to deal with increased invesnncncs in transmission, all to improve reliability. And, they must continue to be vigilant when it comes to counter party risks. Take gas prices: If power contracts are not properly managed, companies could be subjected to wide price swings in the wholesale market. That could force cities to drain their reserves and borrow more mcmcy, if they wanted To minimize rate increases to consumers.. Needless-to-say, balancing state and local budgets requires foresight. Marry concerns compete for limited dollars and the tendency could be overwhelming to dun public power companies. But, if those companies are stretched too thin, the ripple effect across communities might he more palpable than figuring out other ways to raise new revenues. 091 http://www.utilipoint.comlissucalerVprintmp?id=2063 Back to Article Cities Eye Munis for New Revenues - By Ken Silverstein The balancing act that state and local governments must perform is having an immediate effect on public power companies. Because these governments are strapped for cash, they are forced to look for revenues where they can get them. While municipal utilities typically provide "payments in lieu of taxes" to city coffers, some are now under pressure to give more. This issue is most pronounced in California. California's situation is uncommon. The difficulty of raising revenues there often puts the state and local governments in a bind. Some California cities that run their own electric systems are able to underwrite city services and it may be appropriate to increase transfers. But, it might also be sticky if such demands become excessive. That could harm the credit quality of public power or prevent adequate investment in much-needed infrastructure improvements—all a time when there is a focus on reliability. "It takes forbearance on behalf of city leaders," says Alan Richardson, CEO of the American Public Power Association in Washington, D.C. "They are the leaders and they have the fiduciary responsibility for the financial health of the public power enterprise." The challenge, of course, is to find the "sweet spot," says Richardson. To do so, city leaders have to look at the current electric rates and compare those to surrounding communities. If it is determined that higher assessments are a possibility, the next question is the effect that any increase would have on a utility's competitiveness. And, it comes down to personal philosophy and whether the proceeds from any rate hike would be used wisely and in such areas that serve the greater good. Ultimately, cities have to take responsibility for their decisions and understand how bond ratings and future investment decisions would be affected, says Richardson. While all communities are different, Richardson says transfers that get into the "double-digit range"—operating revenues that are switched into a city's general fund—are "problematic." In the past, he says that some cities relied too heavily on their public power companies to underwrite their budgets. Levies have been as high as 20-25 percent, he says. Balancing Act The national average for transfers is 5.7 percent of operating revenues. In California, it is more. According to Fitch Ratings, the median transfer or payment in the last year from California municipal electric utilities to their respective cities' general funds has increased from 5.5 percent to 7.5 percent. While the increase is relatively minor and is only one aspect of a utility's financial performance, it is a credit risk that Fitch has cited over the past year in several public power reports on California issuers. Fitch says that it believes that pressure to raise the transfer will escalate in certain cities because of significant spending reductions announced in Gov. Schwatzenegger's proposed 2005 budget. Pasadena, for example, just passed an increase of 0.85 percent for the next four years. "Their electricity rates are their major source of support," says Lina Santoro, credit analyst in the public power sector for Fitch Ratings in New York City. "If there is continued pressure to increase the city transfer, at some point it could start to affect the rate and financial flexibility of a utility." She adds that many California municipals hold higher cash reserves than before restructuring, which serves to improve their ability to make the higher payments. Moreover, many city charters cap the amount of transfer that can be made, although those with caps in the 7-8 percent of gross operating revenue range still pose a credit risk, she says. While Fitch expects no near-term change in the credit ratings for California public power utilities, the trend of rising electric http://www.utilipoint.conYssuealert/print.asp?id=2063 (1 of 2) [6/21/2004 8:32:00 AM] 092 http://www.utilipoint.comlissucatert/print.mp?id=2063 utility transfers becomes of greater concern, particularly in the coming months as city councils review their budgets. Increases have thus far been modest, it says. But, if such hikes should escalate, public power companies may lose their financial flexibility and rely increasingly on debt financing for capital expenditures. Or, they will have to increase their rates and the effects of that are difficult to gauge, although commercial and industrial businesses would be hardest hit. "When you are dealing with local control, there is no ultimate solution," says public power's Richardson. "It is what works for the utility and the city—and what is in the best interest of all concerned." City transfers are always touchy. And while Fitch does raise a red flag it also says that it expects municipal power providers nationally will maintain their'A' and'A+' ratings because of successful risk management techniques that also include reducing debt levels. That has allowed the sector generally to handle rising natural gas prices and to guard against other unexpected developments. Meanwhile, the liquidity of those companies has increased, which has permitted them to easily meet their operating needs. Despite their aversion to risks, municipal utilities—and all others too—do face risk management challenges such as wholesale electricity and gas price volatility. They will furthermore have to deal with increased investments in transmission, all to improve reliability. And, they must continue to be vigilant when it comes to counter party risks. Take gas prices: If power contracts are not properly managed, companies could be subjected to wide price swings in the wholesale market. That could force cities to drain their reserves and borrow more money, if they wanted to minimize rate increases to consumers. Needless -to -say, balancing state and local budgets requires foresight. Many concerns compete for limited dollars and the tendency could be overwhelming to dun public power companies. But, if those companies are stretched too thin, the ripple effect across communities might be more palpable than figuring out other ways to raise new revenues. IssueAlert Archive Click here to receive UtiliPoint's daily IssueAlert via a -mail. UtiliPoint's IssueAlerts are compiled based on the independent analysis of UtiliPoint consultants. The opinions expressed in UtiliPoint's IssueAlerts are not intended to predict financial performance of companies discussed, or to be the basis far investment decisions of any kind. UtiliPoint's sole purpose in publishing its IssueAlerts is to offer an independent perspective regarding the key events occurring in the energy industry, based on its long-standing reputation as an expert on energy issues. Copyright 2004. UtiliPoint International, Inc. All rights reserved. Privacy ® 2004 UtiliPoint International, Inc. http://www.utilipoint.comrissuealerVprint.asp?id=2063 (2 of 2) [6/21/2004 8:32:00 AM] 093 AZUSA t'6Ni 6 M A INFORMATIONAL ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JUNE 28, 2004 SUBJECT: 2003-2004 RESIDENTIAL REBATE PROGRAM UPDATE This report provides an overview of Azusa Light & Waters residential rebate programs that are used to promote energy conservation. Azusa Light & Water offers three different Residential Rebate Programs to the residential electric customers within our service territory that are very similar to those being offered by neighboring utilities: Refrigerator Rebate, Replacement Air Conditioner Rebate and the Home Weatherization Rebate program. See attachments for a detailed description of each program and its benefits. During fiscal year 2003-2004, program participation increased substantially. Comparing to the same period last year (excluding the month of June) the participation has doubled from 77 to 156 participants. This dramatic increase can be attributed to the increased advertising in the months of March and April during the "Cleaner, Greener, More Beautiful Azusd' campaign. To date, 90 customers have received $100 toward the purchase of Energy Star rate refrigerators, 39 customers have received an average of approximately $200 for replacement air conditioners with SEER ratings of 10 or greater for window units and 12 or greater for central air units, at a funding level of $50 and $70 per ton respectively, and 27 customers received an average of a little over $100 each for various weatherization actions. Prepared by: Paul Reid, Business Development/Public Benefit Programs Coordinator Attachments: 004 Summary of Program \Refrigerator Rebate Air condRbning Weatherizatbn stats.xts Pgm doc rebate pgmdoc Programdoc 004 O Cz :Jn Refrigerator Rebate Replacement Air Conditioner Rebate Home Weatherization Rebate Program # of Qualified Program # of Qualified Program # of Qualified Total Funds Funding Applicants Funding Applicants Funding Applicants Paid 2003/2004 July $600.00 6 $1,000.00 4 $0.00 $1,600.00 August $1,700.00 17 $960.00 5 $461.25 4 $3,121.25 September $1,000.00 10 $630.00 3 $283.00 1 $1,913.00 October $400.00 4 $750.00 3 $397.00 4 $1,547.00 November $300.00 3 $425.00 2 $299.00 2 $1,024.00 December $400.00 4 $800.00 4 $216.50 2 $1,416.50 January $300.00 3 $425.00 3 $25.00 1 $750.00 Februray $100.00 1 $250.00 1 $0.00 $350.00 March $400.00 4 $460.00 2 $265.75 3 $1,125.75 April $2,100.00 21 $1,575.00 7 $903.00 9 $4,578.00 May $1,700.00 17 $780.00 5 $50.00 1 $2,530.00 June $0.00 $0.00 $0.00 $0.00 Total Funds Paid $9,000.00 90 $8,055.00 39 $2,900.50 27 $19,955.50 O Cz :Jn Azusa Light & Water Refrigerator Rebate Program A Public Benefits Program June 2003 ,1' CONTENTS Program Introduction & Summary................................................................ Program Overview.......................................................................................... Program Participation Goals......................................................................... Projected Program Start /Stop Dates ..................................................... Participation & Eligibility Criteria........................................................ Refrigerator - Energy Efficient Labeling ............................................... Target Budget & Duration of Program AB1890 Funding Category.......................................................................... Promotion & Marketing 2 Program Procedures and Rebate Amounts .............................................. 3 Application procedures...................................................................... 3 Rebate Amounts, Processing and Tracking ........................................ 3 Follow-up Inspections....................................................................... 3 Similar Utility Programs Administration Monitoring and Evaluation......................................................................... Y Customer Satisfaction......................................................................... 4 Cost Effectiveness............................................................................. 4 Customer Complaint Resolution................................................................ 4 Accounting Procedures............................................................................... Implementation............................................................................................. 4 Program Timeline....................................................................................... 097 PROGRAM INTRODUCTION AND SUMMARY Assembly Bill 1890, which passed on August 1996, mandated that publicly owned utilities establish a charge for public benefits program starting January 1, 1998. AB1890 directed these funds to be used in the community on conservation programs for: ! Low Income Customer Assistance ! Energy Efficiency programs ! Research Development & Demonstration Projects ! Renewable Resource Technology Projects Rebate programs encourage customers to purchase energy efficient equipment that reduces customer's energy bills and uses resources wisely. In order for Azusa's residential customers to benefit from the "Public Benefits Program," Azusa Light & Water is introducing incentives for replacement of older and inefficient refrigerators. PROGRAM OVERVIEW Utility rebate programs have become an effective means to increase consumer awareness and encourage purchase of energy efficient appliances. Azusa's Refrigerator Rebate Program will provide $100.00 per rebate to Azusa Light & Water electric customers for the purchase of new high efficiency ENERGY STAR® rated refrigerators 14.3 cubic feet or larger. To ensure the most energy efficient products are promoted, Azusa Light & Water will use ENERGY STAR® standards to qualify appliances and products for incentives. ENERGY STAR® is a standard the U. S. Department of Energy uses to identify highly energy efficient products, exceeding minimum Federal Standards by a substantial percentage. Results of a recent study comparing energy usage of an old refrigerator and an ENERGY STAR® refrigerator found the ENERGY STAR® refrigerator used 60% less energy than the old refrigerator. PROGRAM PARTICIPATION GOALS Azusa's Refrigerator Rebate Program will be offered to all Azusa Light & Water residential electric customers. There are over 12,500 households in the City of Azusa and all of these homes have refrigerators. With the average life of these appliances of about 20 years, an estimated 625 refrigerators are replaced in Azusa each year. For the first program year Azusa Light & Water's goal is for 300 households to apply and qualify for the Refrigerator Rebate Program. Projected Program Start/Stop Dates Azusa's Refrigerator Rebate Program will be retroactive to January 1, 2001 and continue through June 30, 2003. The program will be evaluated on a monthly basis to ensure benefits to the customers and Azusa Light & Water. The rebates can be discontinued at any time upon recommendation of Azusa Light & Water staff and approved by the Azusa Light & Water Utility Board. 098 Participation & Eligibility Criteria Participation will be on a first come first served basis for all Azusa Light & Water residential electric customers. An applicant must: 1. be a resident of the City of Azusa for at least 6 months prior to applying for this program. 2. purchase a 14.3 cubic foot refrigerator or larger with the ENERGY STARO label between January 1, 2001 and June 30, 2004. complete an Azusa Refrigerator Rebate Program application and submit it with receipts of purchase and Energy Star label to Azusa Light & Water. There are a limited amount of funds for incentives. Applications will be taken until funds are depleted or when the programs ends on June 30, 2004. After the application has been verified and approved, Azusa Light & Water will process the rebate payment. TARGET BUDGET & DURATION OF PROGRAM Public Benefits funding for Azusa's Refrigerator Rebate Program will be as follows: Program Duration Amount January 1, 2001 to June 30, 2004 $30,000 Funds will be available until depleted by participating residential customers or program closes on June 30, 2004. Applications will not be accepted after June 30, 2004. AB 1890 FUNDING CATEGORY Demand side management services to promote energy -efficiency and energy conservation. PROMOTION & MARKETING Success will depend on effective promotion and marketing of Azusa's Refrigerator Rebate Program. General promotion and marketing will rely on standard recognized venues and tools such as: Program brochures Azusa Tomorrow newsletter Azusa Light & Water web site Promote at strategic locations and community event throughout the City Local Businesses In addition to general promotion and marketing activities, Azusa's Refrigerator Rebate Program brochure will be mailed directly to customers who have made requests for the program. The brochure will summarize the program and have a mail back application with basic instructions on proper application completion and an Azusa Light & Water telephone number to call for assistance. 4 099 PROGRAM PROCEDURES AND INCENTIVE AMOUNTS Application Procedures Customers fill out the Refrigerator Rebate Program application and submit with receipts and appropriate energy efficiency documentation to Azusa Light & Water. If program funds are available, the application is then approved and the customer will be sent a rebate payment. Rebate Amounts, Processing and Tracking Rebates will be $100.00 per application. Azusa Light & Water will process the applications and will track incentives to meet program reporting requirements. Reports will be produced to provide monitoring of program participation and success. Follow-up Inspections A minimum of 10% of all homes participating in the Refrigerator Rebate Program will be inspected to verify installation and qualification of any and all refrigerators. The inspection will be a critical component of the incentive program in order to deter fraud and to ensure that anticipated savings are achieved. Inspection results will be documented in the tracking database and be part of available reports. SIMILAR UTILITY PROGRAMS Anaheim Public Utilities: Offers $100 rebate for ENERGY STAR@ refrigerator purchase. Pasadena Water and Power (PWP): Offers rebates from $50 - $550 based on cost of the Energy Star@ label refrigerator. Southern California Edison (SCE): SCE offers $125 rebate for ENERGY STAR@ refrigerator purchase. ADMINISTRATION Assistant Director of Customer Care and Solutions is responsible for overall program operation, including review and approval of final program design. Public Benefit Program Coordinator, under the general direction of the Assistant Director of Customer Care and Solutions, is responsible for program design and implementation, including promotion and outreach, accounting and budgeting, development and review of management reports, monitoring of promotion and outreach activities, and monitoring and evaluating program performance. Azusa Light & Water interns and additional staff support will work cooperatively with the Public Benefits Manager in the delivery of individual program benefits. 100 MONITORING AND EVALUATION Customer Satisfaction Azusa Light & Water's goal is to reach a high percent of customer satisfaction for this program. This will further strengthen our long-term customer relationship. Among the critical issues will be the proper measurement through evaluation of the estimated number of participants to support and determine the success of the program. Cost Effectiveness Cost effectiveness is one of the key factors that will determine the success of the program. The cost per customer ratio will support future allocation of funds and the types of incentives that will be given to similar future programs. CUSTOMER COMPLAINT RESOLUTION Customers will be able to call the Customer Service number for any comments and or changes they would like to see in future programs. Written complaints can be addressed to the Assistant Director of Customer Care & Solutions. A resolution will be determined within 30 days of receipt. ACCOUNTING PROCEDURES Azusa Light & Water will ensure the most accurate accounting procedures to make sure that Public Benefit funds are well spent. Quarterly reports will be developed and kept for final review. IMPLEMENTATION 1. Produces application and marketing collateral materials specific to this program and maintains adequate supply. 2. Distributes materials to local retail sales outlets. 3. Receives and date stamps incentive applications from electric customers. 4. Certifies that applicant has been an Azusa Light and Water electric customer for 6 months. 5. Verifies receipt is dated between January 1, 2001 and June 30, 2004. 6. Verifies Energy Star label. 7. Schedules inspections of 10% of units. 8. Conducts inspection of installation, checking model. 9. Signs off on application forms where noted. 10. Inputs customer data into Programs and Services database. 11. Processes incentive payment. 12. Supplies monthly Summary Report of Application Fulfillment. TIMELINE Program Development Program Procedures Program Brochures Program Start Program End Final Program Report October 2001 October 2001 October 2001 November 2001 June 30, 2004 August 2004 101 .e Azusa Light & Water Air Conditioner Replacement Rebate Program A Public Benefits Program June 2003 102 CONTENTS Program Introduction & Summary................................................................ Program Overview Program Participation Goals......................................................................... Projected Program Start /Stop Dates ..................................................... Participation & Eligibility Criteria........................................................ Air Conditioner - Energy Efficient Labeling ......................................... Target Budget & Duration of Program 2 AB1890 Funding Category............................................................................ 2 Promotion & Marketing................................................................................ Program Procedures and Rebate Amounts .............................................. Application procedures..................................................................... Rebate Amounts, Processing and Tracking ...................................... Follow-up Inspections....................................................................... Similar Utility Programs............................................................................ 4 Administration............................................................................................ 4 Monitoring and Evaluation........................................................................ Customer Satisfaction......................................................................... CostEffectiveness.............................................................................. Customer Complaint Resolution............................................................... AccountingProcedures....................................................................... Implementation..................................................................................... ProgramTimeline................................................................................. 103 PROGRAM INTRODUCTION AND SUMMARY Assembly Bill 1890, which passed on August 1996, mandated that publicly owned utilities establish a charge for public benefits program starting January 1, 1998. AB1890 directed these funds to be used in the community on conservation programs for: ! Low Income Customer Assistance ! Energy Efficiency programs ! Research Development & Demonstration Projects ! Renewable Resource Technology Projects Rebate programs encourage customers to purchase energy efficient equipment that reduces their energy bills and uses resources wisely. In order for Azusa's residential customers to benefit from the Public Benefits Program, Azusa Light & Water is introducing incentives for replacement of older and inefficient air conditioners and central air systems. PROGRAM OVERVIEW Utility rebate programs have become an effective means to increase consumer awareness and encourage purchase of energy efficient appliances. Azusa's Air Conditioner Replacement Rebate Program will give rebates of up to $250.00 dollars for the purchase of a replacement energy efficient air conditioner or central air system to lower utility bills and increase conservation awareness. To ensure the most energy efficient products are promoted, Azusa Light & Water will use ENERGY STAR® standards to qualify appliances for rebates. ENERGY STAR® is a standard the U. S. Department of Energy uses to identify energy efficient products exceeding minimum Federal Standards by a substantial percentage (see the incentive table for details). Following these standards will ensure expected savings are achieved and appliances rebated will meet current energy efficiency standards. PROGRAM PARTICIPATION GOALS Azusa's Air Conditioner Replacement Rebate Program will be offered to all Azusa Light & Water residential electric customers. There are over 12,500 households in the City of Azusa and about half of these homes have air conditioners and/or central air systems. With the average life of these appliances of about 20 years, an estimated 625 of the units are replaced in Azusa each year. For the first program year, Azusa Light & Water's goal is to have 300 of these households apply and qualify for the program. Projected Program Start/Stop Dates Azusa's Air Conditioner Replacement Rebate Program will be retroactive to January 1, 2001 and continue through June 30, 2004. The program will be evaluated on a monthly basis to ensure benefits to the customers and Azusa Light & Water. The incentives can be discontinued at any time upon recommendation of Azusa Light & Water staff and approved by the Azusa Light & Water Utility Board. iin Participation & Eligibility Criteria Participation will be on a first come first served basis for all Azusa Light & Water residential electric customers. An applicant must: 1. be a resident of the City of Azusa for at least 6 months prior to applying for this program. 2. purchase a replacement air conditioner with a SEER of 10.0 or above or a central air system with a SEER of 12.0 or above with the ENERGY STAR@ label between January 1, 2001 and June 30, 2004. 6. complete an Azusa Rebate Program application and submit it with receipts of purchase, Energy Star label, and SEER documentation to Azusa Light & Water. There are a limited amount of funds for incentives. Applications will be taken until funds are depleted or the programs ends on June 30, 2004. After the application has been verified and approved, Azusa Light & Water will process the rebate payment. Air Conditioners - Energy Efficiency Labeling Azusa Light & Water will use the ENERGY STAR@ rating standards. These are recognized authoritative standards for identifying energy efficient products available for purchase by consumers. Only ENERGY STAR@ rated air conditioners and central air systems will be eligible for incentives. The use of ENERGY STAR standards ensures easily verifiable energy savings. Customers will be required to provide copies of the purchase receipts, ENERGY STAR@ label, and SEER documentation. TARGET BUDGET & DURATION OF PROGRAM Public Benefits funding for Azusa's Air Conditioner Replacement Rebate Program will be as follows: Program Duration Amount January 1, 2001 to June 30, 2004 $75,000 Funds will be available until depleted by participating residential customers or program closes on June 30, 2004. Applications will not be accepted after June 30, 2004. AB 1890 FUNDING CATEGORY Demand side management services to promote energy -efficiency and energy conservation. PROMOTION & MARKETING Success will depend on effective promotion and marketing of Azusa's Air Conditioner Replacement Rebate Program. General promotion will rely on standard recognized venues and 105 tools such as: Program brochures Azusa Tomorrow newsletter Azusa Light & Water web site Promote at strategic locations throughout the City Local Businesses In addition to general promotion and marketing activities, Azusa's Air Conditioner Replacement Rebate Program brochure will be mailed directly to customers who have made requests for the program. The brochure will summarize the program and have a mail back application with basic instructions on proper application completion and an Azusa Light & Water telephone number to call for assistance. PROGRAM PROCEDURES' AND REBATE AMOUNTS Application Procedures Customers fill out the Azusa Rebate Program application and submit with receipts and appropriate energy efficiency documentation to Azusa Light & Water. If program funds are available, the application is then approved and the customer will be sent a rebate payment. Rebate Amounts, Processing and Tracking Azusa light & Water will process the applications and will track incentives to meet program reporting requirements. Reports will be produced to provide monitoring of program participation and success. Below is a list of the rebate amounts. AIR CONDITIONING AND CENTRAL AIR SYSTEMS REBATES EQUIPMENT SEER (EER) INCENTIVE Air Conditioner 10.0 Or Greater $50 per ton Central Air 12.0 Or Greater $70 per ton Rebate amounts are based on the unit's size rating - Seasonal Energy Efficiency Ratio (SEER), as defined by California Title 24 codes. The higher the SEER rating of the unit, the more energy efficient the unit is. Follow-up Inspections A minimum of 10% of all homes participating in the Air Conditioner Replacement Rebate Program will be inspected to verify installation and qualification of any and all units prior to rebate payments. Inspections will be a critical component of the program in order to deter fraud and to ensure that anticipated savings are achieved. Inspection results will be documented and be part of available reports. 106 SIMILAR UTILITY PROGRAMS Anaheim Public Utilities: Offers rebates for ENERGY STAR® appliance purchases, including air conditioners and central and room air conditioners. Los Angeles Department of Water & Power (LADWP): Offers rebates to its customers who purchase high -efficiency air conditioners units. . Pasadena Water and Power (PWP): Offers rebates to its customers who purchase products and appliances that have the ENERGY STAR® label, central and window air conditioners, and air conditioners. Southern California Edison (SCE): SCE offers rebates to customers for ENERGY STAR® products and appliances, including air conditioners and central and room air conditioners. ADMINISTRATION Assistant Director of Customer Care and Solutions is responsible for overall program operation, including review and approval of final program design. Public Benefit Program Coordinator is under the general direction of the Assistant Director of Customer Care and Solutions, responsible for program design and implementation, including promotion and outreach, accounting and budgeting, development and review of management reports, monitoring of promotion and outreach activities, and monitoring and evaluating program performance. MONITORING AND EVALUATION Customer Satisfaction Azusa Light & Water's goal is to reach the highest percent of customer satisfaction for this program. This will further strengthen our long-term customer relationship. Among the critical issues will be the proper measurement through evaluation of the estimated number of participants to support and determine the success of the program. Cost Effectiveness The cost effectiveness is one of the key factors that will determine the success of the program. The cost per customer ratio will support future allocation of funds and the types of incentives that will be given to similar future programs. CUSTOMER COMPLAINT RESOLUTION Customers will be able to call the Customer Service number for any comments and or changes they would like to see in future programs. Written complaints can be addressed to the Assistant Director of Customer Care & Solutions. A resolution will be determined within 30 days of receipt. 107 ACCOUNTING PROCEDURES Azusa Light & Water will ensure the most accurate accounting procedures to make sure that Public Benefit funds are well spent. Quarterly reports will be developed and kept for final review. IMPLEMENTATION 1. Produces application and marketing collateral materials specific to this program and maintains adequate supply. 2. Distributes materials to local retail sales outlets. 3. Receives and date stamps incentive applications from electric customers. 4. Certifies that applicant has been an Azusa Light and Water electric customer for 6 months. 5. Verifies receipt is dated between January 1, 2001 and June 30, 2003. 6. Verifies Energy Star label and SEER rating. 7. Schedules inspections of 10% of units. 8. Conducts inspection of installation, checking model. 9. Signs off on application forms where noted. 10. Inputs customer data into Programs and Services database. 11. Processes incentive payment. 12. Supplies monthly Summary Report of Application Fulfillment. TIMELINE Program Development October 2001 Program Procedures October 2001 Program Brochures October 2001 Program Start November 2001 Program End June 30, 2003 Final Program Report August 2003 KIM Azusa Light & Water Home Weatherization Rebate Program A Public Benefits Program June 2003 109 Program Introduction & Summary................................................................ Program Overview.......................................................................................... Rebate Measures.................................................................................... Program Participation Goals......................................................................... 2 Projected Program Start /Stop Dates ..................................................... 3 Participation & Eligibility Criteria........................................................ 3 Weatherization - Energy Efficient Labeling .......................................... 3 Target Budget & Duration of Program........................................................ 3 AB1890 Funding Category........................................................................... 3 Promotion & Marketing................................................................................ 3 Program Procedures and Rebate Amounts .............................................. Application procedures...................................................................... Rebate Amounts, Processing and Tracldng........................................ Follow-up Inspections........................................................................ Similar Utility Programs............................................................................. Administration............................................................................................. Monitoring and Evaluation......................................................................... Process & Outcomes Evaluation & Program Changes ....................... Cost Effective Evaluation.................................................................... Customer Complaint Resolution......................................................... Accounting Procedures.................................................................................. Implementation................................................................................................ Program Timeline 2 6 110 PROGRAM INTRODUCTION AND SUMMARY Assembly Bill 1890, which passed on August 1996, mandated that publicly owned utilities establish a charge for public benefits program starting January 1, 1998. AB 1890 directed these funds to be used in the community on conservation programs for: I Low Income Customer Assistance Energy Efficiency programs Research Development & Demonstration Projects Renewable Resource Technology Projects Rebate programs encourage customers to purchase energy efficient equipment that reduces their energy bills and uses resources wisely. In order for Azusa's residential customers to benefit from the "Public Benefits Program," Light & Water is introducing incentives for energy saving measures in and around the home to increase energy efficiency and reduce customer's monthly electric bills. This program is a whole house approach to improving the energy efficiency of residences in Azusa. The package of conservation measures installed will work together effectively to reduce energy use. PROGRAM OVERVIEW Utility rebate programs have become an effective means to increase consumer awareness and encourage purchase of energy efficient appliances. Azusa's Home Weatherization Rebate Program will give rebates of up to $250.00 to each qualifying Azusa Light & Water electric customer for the purchase and installation of energy efficient weatherization measures. It is the intention of this program to lower residential electric bills and increase energy conservation awareness. To ensure the most energy efficient measures are used, Azusa Light & Water will use basic energy saving rating scales and standards to help qualify for the incentives. Current building code compliance, choice of improvements, selection of dealers, purchases of items and acceptance of materials used, work performed and the payments thereof are the customer's responsibility. (See the rebate table on page 2 for details). With this full range of measures, customers have a menu of choices that are proven to reduce energy usage. Incentives are based on similar programs that are currently offered by other utilities. The following is a list of upgrades included in the Azusa Light & Water Home Weatherization Rebate Program. Rebate Measures Attic Insulation: Adding insulation is the most cost effective energy saving measure that can be done, with savings up to 40%. Insulation is measured in R -value. A higher the R -value corresponds to a higher value of the insulation. Wall Insulation: Wall insulation is also cost effective with potential savings up to 15%. Wall insulation is also measured in R -values. ill Duct Testing / Sealing: Testing and repairing leaky duct systems can improve up to 20-40% of cooling and heating energy. Window Replacement: ENERGY STAR® windows are twice as efficient as the average window and can save up to 15% on cooling and heating costs. Whole House Fans: Whole house fans use outside air to cool. Whole house fans can cut cooling costs up to 50%. Attic Fans: Attic Fans cool your attics by sucking the hot air out. Attic fans can cut cooling costs up to 10-25%. Programmable Thermostats: ENERGY STAR® programmable thermostats can save 20-30% on cooling and heating bills when used properly. Below is a list of rebate amounts with a limit of $250.00 dollars per electric account. REBATE TABLE Attic Insulation $0.15 per square foot. If pre -retrofit is less than R-12, final insulation must be at least R-30. If not enough space, at least R-19. Wall Insulation $0.15 per square foot. Existing walls must be un -insulated and installed must be at least $43. Duct Testing $50.00 maximum. Duct Sealing $50.00 maximum. 112 Window Replacement $1.00 per square foot for ENERGY STAR@ labeled windows. Whole House Fans $150.00 for permanently installed in attic. Attic Fans - electric powered - solar -powered $50.00 $150.00 Programmable Thermostats $25.00 per ENERGY STAR@ rated thermostat (limit 2) Door and Window Weather Stripping $25.00 maximum. PROGRAM PARTICIPATION GOALS Azusa's Home Weatherization Rebate Program will be offered to all Azusa Light & Water residential electric customers. The goal is to have 100 households participate by installing energy measures. There are over 12,500 households in the City of Azusa and many of these need weatherization of some type to increase energy efficiency. For the first program year, Azusa Light & Water anticipates 100 of these households will apply and qualify for the Home Weatherization Rebate Program. Projected Program Start/Stop Dates Azusa's Home Weatherization Rebate Program will be retroactive to January 1, 2001 and continue through June 30, 2004. The program will be evaluated on a continuous basis to ensure benefits to the customers and Light & Water. The rebates can be discontinued at any time upon recommendation of Azusa Light & Water staff and approval by the Azusa Light & Water Utility Board. 113 Participation & Eligibility Criteria Participation will be on a first come first served basis for all Azusa Light & Water residential electric customers. An applicant must have been a resident of the City of Azusa for at least 6 months prior to applying for this program. There area limited amount of funds for incentives. Applications will be taken until funds are depleted. If a customer meets the program requirements, then he or she must complete a rebate program application and submit it with receipts of purchase and energy savings labels to Azusa Light & Water. After the application has been verified and approved, Azusa Light & Water will process the rebate payment. TARGET BUDGET & DURATION OF PROGRAM Public Benefits funding for Azusa's Home Weatherization Rebate Program will be as follows: Proeram Duration Amount January 1, 2001 to June 30, 2004 $25,000 Funds will be available until depleted by participating residential customers. All 1890 FUNDING CATEGORY Demand side management services to promote energy -efficiency and energy conservation. PROMOTION & MARKETING Success will depend on effective promotion and marketing of Azusa's Home Weatherization Rebate Program. General promotion and marketing will rely on standard recognized venues and tools such as: Program brochures Azusa Tomorrow newsletter Azusa Light & Water web site Promote at strategic locations and community event throughout the City In addition to general promotion and marketing activities, Azusa's Home Weatherization Rebate Program brochure will be mailed directly to customers upon request. The brochure will summarize the program and have a mail back application with basic instructions on proper application completion and an Azusa Light & Water telephone number to call for assistance. PROGRAM PROCEDURES AND INCENTIVE AMOUNTS Application Procedures Customer fills out the Home Weatherization Rebate Program application and submits it to Azusa 114 Light & Water. When the application is submitted with receipts and appropriate energy efficiency documentation of the energy measures, the application is then approved and the customer will be sent an incentive payment. Follow-up Inspections A minimum of 50% of all homes participating in the Home Weatherization Rebate Program will be inspected to verify installation and qualification of any and all measures. The inspection will be a critical component of the incentive program in order to deter fraud and to ensure that anticipated savings are achieved. Inspection results will be documented and be part of available reports. Incentive Tracking Azusa Light & Water will track incentives to meet program reporting requirements. Reports will be produced to provide monitoring of program participation and success. SIMILAR UTILITY PROGRAMS Pasadena Water and Power (PWP): Offers rebates to its customers who purchase products and appliances that have the Energy Star® label, windows, doors, and skylights. Southern California Edison (SCE): SCE offers rebates to customers for Energy Star® windows, and wall and attic insulation. Riverside Public Utilities (RPU): RPU offers a menu of measures for customers to install in their home to improve energy efficiency. ADMINISTRATION Assistant Director of Customer Care and Solutions is responsible for overall program operation, including review and approval of final program design. Public Benefit Program Coordinator is under the general direction of the Assistant Director of Customer Care and Solutions, responsible for program design and implementation, including -promotion and outreach, accounting and budgeting, development and review of management reports, monitoring of promotion and outreach activities, and monitoring and evaluating program performance. MONITORING AND EVALUATION Azusa Light & Water's goal is to reach 100 percent customer satisfaction of this program. This will further strengthen our long-term customer relationship. 115 Process & Outcomes Evaluation and Program Changes Among the critical issues will be the proper measurement of program success. This can be taken in the context of energy conservation and as well as customer satisfaction. We will evaluate the estimated energy savings and the number of program participants. These evaluations will support the processes that can help make the program more efficient and effective by implementing them on intervals within the duration of the program to ensure that program goals are reached. Cost Effective Evaluation The cost effectiveness is one of the key factors that will determine the success of the program. The cost per customer ratio will support future allocation of funds and the types of incentives that will be given to similar future programs. Customer Complaint Resolution Customers will be able to call the Customer Service number for any comments and or changes they would like to see in future programs. Written complaints can be addressed to the Assistant Director of Customer Care & Solutions. A resolution will be determined within 30 days of receipt. ACCOUNTING PROCEDURES Azusa Light & Water will ensure the most accurate accounting procedures to make sure that Public Benefit funds are well spent. Quarterly reports will be developed and kept for final reviews. IMPLEMENTATION 1. Produces application and marketing collateral materials specific to this program and maintains adequate supply. 2. Distributes materials to local retail sales outlets. 3. Receives and date stamps incentive applications from electric customers. 4. Certifies that applicant has been an Azusa Light and Water electric customer for 6 months. 5. Verifies receipt is dated between January 1, 2001 and June 30, 2004. 6. Verifies documentation of rebate measure. 7. Schedules inspections. 8. Conducts inspection of installation. 9. Signs off on application forms where noted. 10. Inputs customer data into Programs and Services database. 11. Processes incentive payment. 12. Supplies monthly Summary Report of Application Fulfillment. TIMELINE Program Development Program Procedures Program Brochures Program Start Program End Final Program Report October 2001 October 2001 October 2001 November 2001 June 30, 2004 August 2004 116 AZUSA CHT N INFORMATIONAL ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: JOSEPH F. HSU, DIRECTOR OF UTILITIES DATE: JUNE 28, 2004 SUBJECT: SOUTHERN CALIFORNIA PUBLIC POWER ASSOCIATION'S (SCPPA) CONGRESSIONAL TOUR EVALUATION Attached information is provided for your perusal regarding SCPPAs Congressional Tour. The attached generally reports feedback provided by those that participated in this years tour. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities IR SCRATourFeedback .DOC 117 all McRuire LLC Memorandum TO: SCPPA Board FROM: Lori J. Pickford, Senior Vice President, 202-661-6196, 1pickford@morganmeguire.com DATE: June 15, 2004 RE: Staff Evaluations from this Year's Congressional Tour This year's SCPPA Congressional staff tour included 15 staffers, the largest of any SCPPA trip to date. Upon return, Morgan Meguire circulated an evaluation form soliciting feedback from the group, in an effort to better tailor the next trip to meet SCPPA Board objectives. Below is a summary of their comments and suggestions. Question # 1: What do you think went well on the tour? The group had high marks for how well the trip was organized and felt the mix of people participating (GMs, Mayors, Counsel Members, and staff) made learning easy and enjoyable. For example, one staff said "the trip was relaxed, but very well planned." Many commented on the fact that they learned more about public power than they ever expected, and appreciated the hands-on learning. In addition, it was the first time we took the group to the Port of Los Angeles (and since a few staffers represent members of Congress who have large ports in their District) they found the addition of the LADWP Alternative Maritime Power Tour fascinating. Hoover, as always "wows" them, and even though we only drove through the Magnolia Power Plant site (because of time constraints), many staff commented on the enthusiasm of the engineers working on the project. We had seven Republicans and nine Democrats (representing a wide range on the political spectrum) on this year's trip. Interestingly, a number of staff noted how the mix of staff from "the other party" allowed them to interact with the "other side", which would not have occurred but for this organized setting. "I can easily work with them in the future!" one staffer commented. All staff indicated that the logistics, including meals, lodging, airline accommodation and length of trip were "excellent". 1225 I Street, NW Suite 300 Washington, DC 20005 202.661.6180 phone 202.661.6182 fax 118 Question # 2: What would you change on the trip to improve it? Besides getting more sleep, it was suggested that we provide a general backgrounder on electricity markets and the California energy situation early on in the trip, to provide a better foundation for the rest of the tour and avoid confusion later on. We also received mixed reviews on the Walt Disney Concert Hall. Some folks suggested we nix it, while others felt it was a good break from "the power stuff." Lastly, most staff did not seem to understand how the fuel cell project at Terminal Island fit into the larger picture. Question # 3: What made the trip worthwhile for you? Staff appreciated gaining a better understanding of energy issues in general, and public power in particular. One staffer said, she was "highly impressed by the personal dedication and commitment of SCPPA members to their residents." All appreciated having SCPPA members available to answer questions in an informal setting. One staffer's comment's summed it up: "Not only did [the trip] give me the opportunity to see parts of the U.S. I have always dreamed of seeing, but I also saw where my boss's district gets the majority of power they use from. It was also very beneficial to know how much pollution comes from the ships at the Port of L.A. Seeing Hoover Dam and realizing what type of distress our nation was in as well what the workers went through during the Dam's conception was fascinating and was something I will never forget. Also, the experience of meeting Hill staff as well as SCPPA, LADWP, and Morgan Meguire staff that I knew from D.C. helped me put two and two together on the mission of all of our entities together. I was most fascinated with the small cities representatives on our trip and how they do so much with so little." Question # 4: How might your experience on the tour help you with future staff work? A number of staff said the trip provided "good substantive contacts for future issues," while one commented on how it would help influence her when addressing energy, environment and conservations concerns in the region. Increasing staffs basic knowledge of our industry was also considered beneficial, with one staffer noting that "This trip took me from a 35-40% of understanding of energy issues, especially in my district, to an 80-90% understanding. Plus, now I know that WHENEVER I have a question or a problem, I can call anyone that was on this trip. That is the most important asset I gained, ACCESS." Question # 5: If you have been on other kinds of staff trips like this, what were the best things about it and why? Conversely, what about them made them unsuccessful? A few folks commented that on other staff trips they have participated they were over- booked, fast paced, and thus did not allow staff enough time to enjoy the trip outside of the business itinerary. All said the SCPPA trip did an excellent job of being informative, yet fun. 1225 I Street, NW Suite 300 Washington, DC 20005 202.661.6180 phone 202.661.6182 fax 119