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AGENDA
REGULAR MEETING OF
AZUSA UTILITY BOARD
AZUSA LIGHT&WATER JULY 22,2013
729 N. AZUSA AVENUE 6:30 P.M.
AZUSA, CA 91702
AZUSA UTILITY BOARD
URIEL E. MACIAS
CHAIRPERSON
ROBERT GONZALES JOSEPH R. ROCHA
VICE CHAIRPERSON BOARD MEMBER
EDWARD J.ALVAREZ ANGEL CARRILLO
BOARD MEMBER BOARD MEMBER
1
6:30 P.M. Convene to Regular Meeting of the Azusa Utility Board
• Call to Order
• Pledge to the Flag
• Roll Call
A. PUBLIC PARTICIPATION
1. (Person/Group shall be allowed to speak without interruption up to five(5) minutes maximum time,
subject to compliance with applicable meeting rules. Questions to the speaker or responses to the
speaker's questions or comments shall be handled after the speaker has completed his/her comments.
Public Participation will be limited to sixty (60) minutes time.)
B. UTILITIES DIRECTOR COMMENTS
C. UTILITY BOARD MEMBER COMMENTS
1
D. CONSENT CALENDAR
The Consent Calendar adopting the printed recommended action will be enacted with one vote. If Staff or
Councilmembers wish to address any item on the Consent Calendar individually, it will be considered under
SPECIAL CALL ITEMS.
1. Minutes. Recommendation: Approve minutes of regular meeting on June 24, 2013 as written.
E. SCHEDULED ITEMS
1. Approval of Annual Water Rights Leasing Transactions. Recommendation: Ratify the execution of
water rights lease agreements with California Domestic Water Company, Sunny Slope Water Company,
and MillerCoors.
2. Approval of Participation in the California Home Energy Renovation Opportunity (HERO)
Program. Recommendation: Adopt the following resolution approving an amendment to the WRCOG
Joint Powers Agreement to add the City of Azusa as an Associate Member in order to authorize the City's
participation in the California HERO Program.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA,
CONSENTING TO THE INCLUSION OF PROPERTIES WITHIN THE CITY'S JURISDICTION IN
THE CALIFORNIA HERO PROGRAM TO FINANCE DISTRIBUTED GENERATION RENEWABLE
ENERGY SOURCES, ENERGY AND WATER EFFICIENCY IMPROVEMENTS AND ELECTRIC
VEHICLE CHARGING INFRASTRUCTURE AND APPROVING THE AMENDMENT TO A
CERTAIN JOINT POWERS AGREEMENT RELATED THERETO.
3. Approval of "Ice Energy" Thermal Cooling for the Azusa City Library. Recommendation:
Approve (i) the installation of an Ice Thermal Energy Storage Cooling system for the Azusa City Library;
and (ii) an amendment of the FY 2013-14 electric fund budget in amount not-to-exceed $150,000 to pay
for this proposed capital improvement project.
4. August 26, 2013 Utility Board Agenda Schedule (Verbal)
F. STAFF REPORTS/COMMUNICATIONS
1. Solar Partnership Program Update
2. Water Supply Update
3. Update on Azusa Renewable Portfolio Standard (RPS)
4. Update on San Juan Divestiture Project
2
G. ADJOURNMENT
1. Adjournment.
"In compliance with the Americans with Disabilities Act, if you need special assistance to participate in a city
meeting, please contact the City Clerk at 626-812-5229. Notification three (3) working days prior to the
meeting or time when special services are needed will assist staff in assuring that reasonable arrangements
can be made to provide access to the meeting."
"In compliance with Government Code Section 54957.5, agenda materials are available for inspection by
members of the public at the following locations: Azusa City Clerk's Office - 213 E. Foothill Boulevard,
Azusa City Library- 729 N. Dalton Avenue, and Azusa Light& Water-729 N.Azusa Avenue,Azusa CA."
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APPROVED
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AZUSA
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SCHEDULED ITEM
TO: HONORABLE CHAIRPERSON AND MEMBERS OF TH USA UTILITY
BOARD
FROM: GEORGE MORROW, DIRECTOR OF UTILITIES
DATE: JULY 22, 2013
SUBJECT: ANNUAL WATER RIGHTS LEASING TRANSACTIONS CONDUCTED BY
WATER DIVISION
RECOMMENDATION
It is recommended that the Utility Board ratify the execution of water rights lease agreements
with California Domestic Water Company, Sunny Slope Water Company, and MillerCoors.
BACKGROUND
The City of Azusa produces water from the Main San Gabriel Basin which is controlled by a
Judgment, entered into the Court records January 4, 1973, and which has been periodically
amended thereafter. The Judgment requirements are enforced by the Main San Gabriel Basin
Watermaster office, with Court oversight.
In 1993, the City of Azusa purchased the Azusa Valley Water Company along with the
substantial water rights owned and controlled by Azusa Valley. Furthermore, the City of Azusa
("City") has obtained additional water rights from the dissolution of the Azusa Agricultural
Irrigating Company ("Azusa Ag.") and by contract with the Miller-Coors Brewing Company, the
City controls those water rights belonging to MillerCoors that equal MillerCoor's demand on the
City's water system.
The City is the owner of record and otherwise beneficially controls, or is the duly authorized and
acting agent for, the ownership of 6.91287 percent of the Prescriptive Production Rights (not
including Miller-Coors) in the Main San Gabriel Basin as adjudicated in the case of"Upper San
Gabriel Valley Municipal Water District vs. City of Alhambra et al." In order to keep the Basin
replenished under the Judgment, each year in May the Watermaster Board sets the Safe Yield for
the following year and also sets the prices and assessments to be applied to the water produced in
the current year. This year the price of Upper San Gabriel Valley Municipal Water District
007
Water Lease Ratifications
July 22,2013
Page 2
(USGVMWD) replenishment water was set at $673/Acre-foot and the price of San Gabriel
Valley Municipal Water District(SGVMWD)replenishment water was set at $130/Acre-foot.
The amount of water rights in terms of acre feet (AF) that Azusa, Azusa Valley, and MillerCoors
possess varies with the Safe Yield for the Basin. For Fiscal Year 2012-2013, the Basin Safe
Yield was set at 200,000 AF. The City of Azusa has water rights to produce 6.91287 percent of
200,000 AF (13,825.7AF) plus 3,785 AF in Diversion Rights. Including Miller-Coors' water
rights this year, 1,535 AF, the City has approximately 19,145.7 AF of water rights. Next Fiscal
Year, 2013-2014, the Basin Safe Yield has been set at 180,000 AF, lowering Azusa's water
production right for next year by approximately 10%.
The Watermaster stipulation each year is that all temporary assignments or leases of water rights
forms (attached) be finalized and notarized by the end of day, June 30, and filed with
Watermaster by July 15.
The Water Division was successful leasing 2,000 AF of water rights to California Domestic
Water Company and 160 AF to Sunny Slope Water Company for a total of $1,191,682 or an
average price of about $552 per acre foot. Also, the water rights transferred to Azusa Valley
Water Company by MillerCoors for their water demand this year totaled 1,535 AF.
While the temporary water rights lease agreements with California Domestic Water Company,
and Sunny Slope Water Company were entered into by staff to effect the transaction by the
required deadline this year, the Utility Board's/City Council's ratification of this action, as
allowed by Resolution 09-C69 passed by the Utility Board at their July 27, 2009 meeting, is
desired at this time to fully authorize the agreements and Temporary Assignment filings with
Watermaster.
FISCAL IMPACT
The fiscal impact of ratifying the water rights leases with California Domestic Water Company
and Sunny Slope water Company is a receipt of$1,191,682, and 1,535 AF of water rights from
MillerCoors.
Including last month's leases, Azusa Valley has received a total of$2,128,498 for leases in fiscal
year 2012-2013.
Prepared by: Chet F. Anderson P.E., Assistant Director-Water Operations
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Information Item
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INFORMATION ITEM
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIE
DATE: JULY 22, 2013
SUBJECT: SOLAR PARTNERSHIP PROGRAM UPDATE
In 2006, Senate Bill 1 (SB 1) was enacted by then Governor Schwarzenegger as the Million
Solar Roofs Initiative. The bill was later expanded to the California Solar Initiative (CSI) and has
since been modified to become the current Energy Commission's New Solar Homes Partnership
(NSHP).
SBI mandated all electric utilities in California to make available up to $3.5 billion dollars in
rebates over a 10-year period to fund distributed solar power installations in California. It was
envisioned that this funding would spur technology innovations in the solar power industry and
ultimately would enable solar power to be cost competitive with conventional sources of
electricity. SB1 specifies that municipal utilities in aggregate shall be responsible for $750
Million in funding and was allocated among the municipal utilities proportionally to retail
electricity sales. Azusa Light and Water's budget allocation is about $3.2 Million by the end of
2017, or $327,100 per year for the ten year period.
Since inception of the Solar Partnership Program, Azusa Light and Water customers have
installed approximately 458 kW of solar photo voltaic (PV) systems and in turn received about
$1.3 Million in rebates. From 2006 through the end of fiscal year 2011-2012, only 103 kW were
installed and $273,000 of corresponding rebates were paid. Within the first five months of fiscal
year 2012-2013 over 314 kW and $769,000 were installed or committed.
Due to the overwhelming success and unprecedented response to the Azusa's Solar Partnership
Program, the entire SB 1 budget allocation through fiscal year 2013-2014 has been committed
and a waiting list was formed on November 14, 2012. By being on the waiting list, the 30
applicants are eligible for the rebate amount that was in place at the time their rebate application
was submitted and they will continue to move up the list in the order their applications were
received as projects ahead of theirs progress or are removed from the list.
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Solar Partnership Program Update
July 22, 2013
Page 2
It should also be noted that the program will be modified before "reopening" to incorporate
system electricity production efficiencies. This will ensure cost effectiveness of the rebates and
safeguard the customers from oversized system designs, due in part to east facing panels. Several
systems to date have been designed with east facing panels that produce far less electricity
during the winter months than the optimally situated south facing panels.
Prepared by: Paul Reid, Business Development/Public Benefit Programs Coordinator
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Information Item
Presented -7/ .-/ P-42,•
AZUSA 1111111
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INFORMATION ITEM
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES
DATE: JULY 22, 2013
SUBJECT: AZUSA WATER SUPPLY UPDATE
The Baldwin Park Key Well, a key indicator of the groundwater supply in the Main San Gabriel
Water Basin, is currently at elevation 201.5 feet. The historic low at the Key Well was 189.2 feet
on December 3, 2009. The elevation of the Key Well is decreasing at about 0.6 feet per week. It
is predicted that the Key Well may be as low as 190 feet by November 1 if no rain occurs prior
to that date. Watermaster deliveries from USG-3 beginning in October will slow the decline of
the Key Well, but rain is necessary for full recovery of the Key Well. (Rainfall to date is 10.76
inches, 48% of average.)
The Canyon Groundwater Basin, from which the City of Azusa draws the bulk of its water
supply, is holding steady at 2 feet below overflow at the North Pond and 41 feet below overflow
at the South Pond, and dropping. San Gabriel Valley Municipal Water District (SGVMWD) has
been delivering water to the North Pond at 40 cfs (17,592 gpm) since March, but the deliveries
will end August 1. Three Valleys Municipal Water District is scheduled to begin delivering
water to the Canyon Basin in the months of October,November and December.
The Watermaster River Connection, USG-3, is not yet on. Upper District deliveries for
Watermaster to the River will most likely begin in October, with some water being diverted to
the Canyon Basin and most of the water going to the Main Basin.
River inflow is currently 3.6 cfs and is expected to drop to 1 to 2 cfs in September. The River is
approaching its lowest flow since the 1890's. LA County Public Works is releasing water from
Morris Reservoir to the River which the Committee of Nine is diverting to the Canal. The
Pasadena Conduit from San Gabriel Reservoir is currently off for repairs but may be back in
service in 3-4 weeks. The Conduit will provide water from San Gabriel Reservoir to the
Committee of Nine Canal for the treatment plants (Azusa and Covina Irrigating)thus minimizing
river losses.
The water behind Morris Dam is below minimum pool, and the water behind San Gabriel Dam is
low but not yet at minimum pool. Cogswell Dam could run dry by the end of summer. The
maximum capacity of all three reservoirs is 83,478 AF; the current combined storage is 14,968
AF, 18 percent of capacity, including minimum pool. Usable storage above minimum pool is
3,100 AF.
023
Water Supply Update
July 22,2013
Page 2
River water is currently being diverted to the treatment plants (Azusa and Covina Irrigating) at
12 cfs. The Azusa Treatment Plant is delivering approximately 3 million gallons per day (MGD)
to the system. Current Azusa system demand is 21.3 MGD to 23.3 MGD which is being met by
the wells and the treatment plant.
The Canyon Basin is holding up with replenishment by SGVMWD, but Canyon Basin water
levels will decrease once San Gabriel Valley MWD deliveries cease, and will continue to
decrease until water is again being delivered to the Basins.
Continued water conservation will be necessary to reduce demand on what will be very limited
water supply availability this summer.
Prepared by: Chet F. Anderson P.E., Assistant Director- Water Operations
024
Information Item
Presented 1/01-a-/9191
•
AZUSA
LIGHT 8 WATII
INFORMATION ITEM
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES
DATE: JULY 22, 2013
SUBJECT: UPDATE ON AZUSA'S RENEWABLE PORTFOLIO PROGRAM
On June 12, 2013, the California Energy Commission (CEC) adopted the Enforcement
Procedures for the Renewables Portfolio Standard for Local Publicly Owned Electric
Utilities ("POU Enforcement Program"). It is anticipated that the procedures will become
effective in October 2013 after the CEC prepares and files the Final State of Reasons (FSOR) for
review and approval with Office of Administrative Law and subsequently files the procedures
with the Secretary of State.
Renewable Portfolio Standard(RPS) or SBX12 became law in 2011. SBX 1 2 mandates that all
electric utilities and entities serving electric load in California produce and/or procure specific
volumes of renewable energy products, as measured by percentage of retail electricity sales.
Procurement(s) of renewable energy products must be made during three specific compliance
periods beginning on January 1, 2011. The law further stipulates the minimum volume of
renewable energy has to be derived from resources interconnected within, or scheduled directly,
into California. The remaining portion of the SBX 1 2 required procurements may be satisfied by
a combination of imported renewable energy and/or by "unbundled" renewable energy credits
("RECs").
At the time the Board approved the SBX 1 2 required Azusa RPS Enforcement Program (2011)
and Azusa RPS Procurement Plan (2012), there were still uncertainties about the details of the
RPS program. Now with the CEC's RPS Enforcement procedures finalized many, but not all,
uncertainties affecting Azusa were clarified. The following are the clarified provisions of the
CEC's POU Enforcement Program affecting Azusa:
1. Energy derived from Azusa's share of Hoover repowering project will not count toward
RPS compliance.
2. Azusa's "grandfathered" contracts - Garnet wind, Solano wind, MWD small hydro, San
Dimas small hydro will only "count in full". "Count in full" means that the "Bucket 1"
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RPS Update
July 22,2013
Page 2
attributes (the most desirable and expensive RPS attributes) that would have been
otherwise associated with the above contracts will not count because contracts with the
above facilities were signed before June 1, 2010.
3. The new Historic Carryover (HCO) provision of the POU Enforcement Program will
allow Azusa to take partial credit for the generation from grandfathered contracts that
occurred during the 2004 — 2010 period and apply it toward any RPS compliance year or
period.
4. The issue of"unmet long-term generation needs" still remains unresolved. Just to recap,
SBX1 2 requires the publicly owned utilities (POUs) to procure specific volumes of the
renewable energy products only to the extent that "unmet long-term generation resource
needs" exist [PUC Section 399.30 (a)]. The CEC, however, continues ignoring what
appears to be a very clear provision. The meaning of this particular section of the statute
is that if a utility does not have any long-term generation needs the utility need not buy
bundled RPS products (energy plus associated environmental attributes). It should be
noted that in the Board approved Azusa RPS procurement Plan, Azusa determined that
until at least year 2015 Azusa will not have any unmet generation needs. This
determination would entail NOT procuring any bundled (energy + associated renewable
attributes).
Staff would like to take this opportunity to recap our current RPS contract status and plans.
Azusa current grandfathered contracts (all CEC compliant but"count in full")
1. Garnet Wind - 6.5 MW capacity
2. Solano County Wind - 6.0 MW capacity
3. Small hydro with Metropolitan Water District - 3.72 MW capacity
4. Small hydro with San Gabriel Valley MWD - 1.05 MW capacity
Azusa Recently executed contracts through (all Bucket 1)
Last January Azusa executed (through SCPPA) two 3.5 MW contracts for solar energy
with Martifer/Silverado. Deliveries are scheduled to commence in 2015. Expected annual
production—8000 MWh, each.
Prospective new RPS contracts
Azusa has indicated interest in:
1. 3 MW contract with NorthStar in a PV facility ("Cherry Valley") to be
constructed east of the City of Colton in San Bernardino County (through
026
RPS Update
July 22, 2013
Page 3
SCPPA). Target Commercial Operation Date - end of CY 2015. Expected annual
production—7000 MWh.
2. 3 MW contract with an existing solar-thermal facility located by Adelanto in San
Bernardino County (through SCPPA). Target Commercial Operation Date —
January 2017. Expected annual production—6000 MWh.
3. Azusa is in talks to contract for renewable energy from a small hydro facility
planned by the San Gabriel Valley Municipal Water District (approximately 1.00
MW with potential annual delivery of 4000 MWh).
Prepared by: Yarek Lehr, P.E., Assistant Director of Resource Management
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Information Item
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AZUSA
LIGHT 6 WATER
INFORMATION ITEM
TO: HONORABLE CHAIRPERSON AND MEMBERS OF E AZUSA
UTILITY BOARD
FROM: GEORGE MORROW, DIRECTOR OF UTILITIE
DATE: JULY 22, 2013
SUBJECT: UPDATE ON SAN JUAN DIVESTITURE PROJECT
As you know, Azusa Light& Water initiated activities several years ago to divest itself of
its 30 MW interest in San Juan Unit 3.
The basis for this strategic objective included poor plant performance, high project costs,
complexities and liabilities related to coal supply, the implementation of Green House
Gas regulation in California, exposure to Federal environmental regulations including the
BART NOx mandates, difficulties with transmitting San Juan power to California, the
utility's excess capacity position, compliance with the investment restriction in SB 138
(the anti-coal bill) and the new need add resources to comply with California's newly
adopted Renewable Portfolio Standards.
One of the outcomes of this process was the execution of a Memorandum of
Understanding with the Utah Association of Municipal Power Systems (UAMPS) for the
layoff and sale of Azusa's San Juan interests following negotiation of a definitive
agreement. Significant progress was made toward a definitive agreement, but this activity
stalled due to the uncertainty associated with the EPA order requiring the installation of a
$1 billion of NOx controls by 2016 and with the San Juan coal mine fire.
Following protracted negotiations with many entities including EPA, the Governor of
New Mexico, the New Mexico Environmental Improvement Board and various
environmental justice organizations, an agreement was reached allowing the San Juan
participants to shut down Units 2 and 3 by no later than December 31, 2017 in return for
installing much less costly (— 1/5th the cost) NOx controls on the remaining two San Juan
units. The process for finalizing this deal involves regulatory proceedings in New Mexico
and at EPA with an expected final EPA order as "early" as November 2014. One of the
unfortunate results of this environmental compliance plan is that Azusa no longer has a
marketable commodity given the fact that Unit 3 is proposed to be shut down by 2018.
028
San Juan Divestiture Update
July 22,2013
Page 2
Currently, the San Juan participants are engaged in a very difficult negotiation to define
the business and operational terms related to operating the generating station both pre and
post closure of Units 2 and 3. For information, all California participants (including two
in Unit 4 which is continuing beyond 2018), and one Colorado participant, plan to leave
the project.
Some of the more significant issues under negotiation include:
• How to minimize/share capital and operating costs of units being retired pre-
2108?
• How to socialize the costs/benefits of Units 3 and 4 for departing participants pre-
2018?
• What are the departing participants' obligations for the eventual cost of unit
decommissioning?
• How are pre-2018 environmental liabilities shared between those participants
departing and remaining?
• How should remaining coal inventory be handled and priced?
• How will departing participants be compensated for common plant facilities that
will continue to benefit remaining participants?
• What is the value of the retired units to the participants remaining?
• Since the coal contract expires at the end of 2017, how are costs to negotiate a
new deal and to develop alternative supplies handled pre-2018?
• The negotiated arrangement for NOx control requires expenditures prior to 2018.
How is this handled from a cash flow and perhaps reimbursement standpoint?
• Which participant(s) will agree to pick up the surplus capacity in Unit 4 due to the
desired departure of the California agencies owning a piece of that unit?
From a financial standpoint, the debt service for San Juan bonds in due to be paid off by
2020. In anticipation of shutting down Unit 3 by 2018, Azusa and the other SCPPA
participants in San Juan plan to escrow sufficient funds prior to 2018 to pay off any
residual debt service.
Azusa's plan for replacing this resource includes power from the Lodi Energy Center
supplemented by the acquisition of additional renewable energy which will also enable
Azusa to comply with RPS requirements and with state GHG goals.
Please let me know if any clarification or further information is desired.
Prepared by: George F. Morrow, Director of Utilities
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