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HomeMy WebLinkAboutAgenda Packet - October 24, 2011 - UB Zpk A.ZUS.A V. tIGNT R '.ATFR AGENDA REGULAR MEETING OF AZUSA UTILITY BOARD AZUSA LIGHT & WATER OCTOBER 24, 2011 729 N. AZUSA AVENUE 6:30 P.M. AZUSA, CA 91702 AZUSA UTILITY BOARD KEITH HANKS CHAIRPERSON ANGEL CARRILLO JOSEPH R. ROCHA VICE CHAIRPERSON BOARD MEMBER URIEL E. MACIAS ROBERT GONZALES BOARD MEMBER BOARD MEMBER 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.) 1 001 B. UTILITIES DIRECTOR COMMENTS C. UTILITY BOARD MEMBER COMMENTS 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 September 26, 2011 as written. G11- UB Min 9-2011.pdf 2. Purchase of New Engineering Copier. Recommendation: Approve the purchase of a new engineering plan copier/large document scanner from ARC Imaging Resources Company in amount not-to-exceed $14,201.98 including applicable tax and trade in value of old equipment. 4 Engineering Copier.pdf 3. Termination of Contract with PMR Progressive, LLC. Recommendation: Approve the termination of contract with PMR Progressive, LLC collection agency and authorize issuance of Request for Proposals for a new collection agency. Collection Agency.pdf 4. Purchase of Industrial Grade Thermal Imaging Device. Recommendation: Approve the purchase of a rugged handheld industrial thermal imager for Electric Division from B&K Electric Wholesale in amount not-to-exceed $9,475.32 plus applicable tax. Thermal Imaging.pdf 2 002 E. SCHEDULED ITEMS 1. Financial Security Agreements with the ISO for Congestion Revenue Rights (CRR) Auction. Recommendation: 1) Authorize the Director of Utilities to execute periodic Financial Security Agreements with the California Independent System Operator (ISO) in amount not-to-exceed $500,000; and 2) authorize the City Treasurer to establish cash deposits or other instruments sufficient to fulfill the agreement obligations on behalf of Azusa Light & Water. ISO Security.pdf ISO Sample Sec Agnt.pdf F. STAFF REPORTS/COMMUNICATIONS 1. Local Adoption of SBX1 2 RPS Enforcement Program pdf 2. State Mandated Commercial Recycling Program Requirements Conmercial Recycling Requirements.pdf 3. Update on Vulcan Water Rights Transfers 119I- Vulcan Wtr Vulcan-Letter.pdf Leases.pdf 4. SCPPA Legislative Briefing SCPPA Leg Invite-SCPPA SCPPA Mayors Briefing.pdf Briefing.pdf Letter.pdf 3 003 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." 4 004 UtilityBoard 1, ,Nwsinat .40 October 24, 2011 Chair Keith Hanks AZUSA Consent Agenda September 26, 2011 minutes Purchase of New Engineering Copier ($14,202) Termination of Contract with Progressive Purchase of Thermal Imaging Device ($9,476) AZUSA • • II CAISO Fa . II Security Agreements ..... ,... ,..,......„... . . .. „: .....„. „,.... . ,,, \„:‘,:, ;,,,,,,,i..,:,.. ,i,.., ..el _ ... _ .. .... a -• . , ...,..... . .. ;. M _ d1 .• '.. .�.. .. fYMif.._., . �w+ 1V:if 11 IL,II 111111Mar_ . IX:7Z ,.„,;14"1411.16411.matil ,.., 11 • ft Mgr .{ rI y. : lfrh> .4 ''',.'4,4: .5:• ' I tier*. be i i h.; . 1::.111141:\ .R F MIP • Q{ \ _: IA • f a zusa Utilityoar October 011 ,,,„,,,, .„,,,,,„ 3 AzusA Background Congestion Revenue Rights (CRR) Used for hedging transmission congestion CAISO conducts annual CRR auctions Azusa has need for additional CRRs in 2012 California ISO AZUSA Security Beginning October 1 , 2011 , the ISO requires entities participating in CRR auction to post collateral Consistent with FERC Order 741 $500,000 collateral needed for Azusa 2012 CRR auction is November 8, 2011 California ISO Security Agreement Called "Certificate of Deposit Security Agreement" For pledge of CD or cash account Limited term until payment by Azusa of any auction purchases Collateral held by Wells Fargo locally California ISO SFao p e eww.ed r ,ro Recommendation Authorize Director of Utilities to execute periodic Financial Security Agreements with the ISO for up to $ 500K . Authorize City Treasurer to establish related collateral accounts . California ISO M' � AZUS ,4 Local Adoption of RPS (SBXI 2) ." ' 4 Azusa Utility Board October 24, 2011 8 Background Renewable Portfolio Standard (RPS) Detailed RPS regulations being developed by CEC RPS law (SBX1 2) effective on December 10, 2011 SBX1 2 requires POU governing bodies to adopt RPS Enforcement Program by January 1 , 2012 - RPS Enforcement Program Purpose is to create mechanism to enforce RPS obligations applicable to Azusa Will stipulate RPS types , targets , reporting requirements , provisions permitting delay or procurement limitations µ 10 AZUSA Next Light & Water will place 30 day notice in newspaper that Utility Board will be considering adoption of RPS Enforcement Program at next month ' s Utility Board meeting 11 azuSn Commercial Recycling Program Requirements Itta Azusa Utility Board October 24, 2011 AZUSA Background Assembly Bill 32 requires GHG emissions reduced to 1990 levels by 2020 Solid waste sector believed to be significant source of GHG Methane (CH4) remains in atmosphere for 9-15 years and is 20 times more "effective" for trapping heat in atmosphere than CO2 AB 32 regulations require mandatory commercial recycling by July 1 , 2012 AZUSA AB 32 Commercial Recycling Requires businesses generating >4 yards of waste to recycle ( MRF ok ) Requires City to provide education , outreach and monitoring of businesses AZUSA AB 341 Recently signed by Governor Brown Sets 75% recycling goal by 2020 Requires a local commercial recycling program by July 1 , 2012 Allows City to assess businesses for program implementation LU � A Conclusion Due to its MRF program , Azusa ahead of commercial recycling requirements although 75% waste diversion goal for 2020 may be a challenge AZUSA Update on Vulcan Water Rights transfers Azusa Utility Board October 24, 2011 AZliSA L - Background — __1 In 1996 , Vulcan granted a permit to maintain and operate City Well No. 1903119. Permit amended in 1999 to allow Vulcan to borrow water for up to 5 years Small amounts borrowed and repaid annually (cash or water return allowed ) Exception in FY01 (500 AF), FY02 (600AF) and FY03 (700 AF) FY01 repaid but no record of FY02 and FY03 repayment ,.w AZUSA Status Light & Water staff recently met with Vulcan to discuss outstanding water loaned in FY02 and FY03 At today's value , 1300 AF is worth $665 , 000 Vulcan is researching its records to see if payment(s) made AZUSA Report on SCP PA Leg . ! slat . lye . . B r 1 e f I ng • \\\„ ...„.......„. I WA SHING1ON s . II It**7"-smr 7 lolt. ;04iwapo Rs . .' *IQ • / 40 Lot. )00101001 aivaltstre. ontoosedmik, ii4;'''-i- -7. . NEVADA ,, So. '.;ttl,• a rah hation r WYOMING .., kii0 vs r ii. 7 nw- uTAH se . •-....,,. r-vg.,vos us, I ,fik ylv13` a MN URI LW 5 a Fonnitcg41 wavevalifffe avow -"''WC-4, ,:-., ARIZONA.,,....: r ...s' 4 tiseParvies I NEW MEXICO.......„.,..ir . .,, ,....._,. _4 . ...... : 4,c,,,,nt *me hart te 1.sindaie - -I° ' Is P6.,',4X1r6 Ng Ammo Mow tok Ar9Imibs 1 ! f '..,. *Raps Iwo vcrnol i . : Pas Moil ; . - TEXAS . . ,„ ' Ar•I'ver•- - A0A11.9 • a1 . • 16 .....`0•Nr VNIV40/tt..r.' ' OnITI...' e,P*4•.V. '40A Azusa Utility Board October 245 _ 2011 A Z U S A _ . i & „,, A 7 i_ '0 •.0 Background SCPPA hosted a legislative briefing for Mayors on September 30. Mayor Pro Tem and Director of Utilities attended Speakers were: — Senator Alex Padilla, Chair of Senate Utilities Committee — Mary Nichols, CARB Chair — Debra Sliz, SCPPA Washington DC representative AZUSA Follow- up Mayors of Riverside and Pasadena enjoyed very much Suggested event be held annually Encouraged annual SCPPA report sent to Mayors Annual activity for Mayors , et . al . anticipated .-v 22 AZUSA „ j r_ Di . AZUSA ;IGIT d 'RATER CITY OF AZUSA MINUTES OF THE REGULAR MEETING OF THE AZUSA UTILITY BOARD/CITY COUNCIL MONDAY,SEPTEMBER 26,2011 —6:31 P.M. The Utility Board/City Council of the City of Azusa met in regular session,at the above date and time,at the Azusa Light and Water Conference Room, located at 729 N. Azusa Avenue, Azusa, California. Chairman Hanks called the meeting to order. Call to Order Mr. Art Morales led in the Flag Salute. Flag Salute ROLL CALL Roll Call PRESENT: BOARD MEMBERS: GONZALES, CARRILLO, MACIAS, HANKS, ROCHA ABSENT: BOARD MEMBERS: NONE ALSO PRESENT: Also Present City Attorney Ferre, Assistant City Manager Makshanoff, Director of Utilities Morrow, Assistant to the Director of Utilities Kalscheuer, Assistant Director of Customer Service Vanca,Assistant Director of Water Operations Anderson,Assistant Director of Resource Management Lehr, Administrative Services Director— Chief Financial Officer Kreimeier, Public Works Director/Assistant City Manager Haes, Assistant Library Director Strege,Assistant Director of Electric Operations Langit,Lieutenant Bertleson,City Clerk Mendoza, Deputy City Clerk Toscano. PUBLIC PARTICIPATION Pub Part Mr. Art Morales addressed the Board Members expressing his concern regarding the Edgewood Shopping A. Morales Center stating that people do not shop there due to vagrants,and crime.He thanked the Azusa Light and Water Comments employees for their quick response to a power outage in the area where he resides. He stated that people are taking shopping carts out of the Target parking lot and suggested that the curb by the alley where the Post Office is be painted red as it is hard to get in and out of the parking lot. Lieutenant Bertleson responded to comments made regarding the Edgewood Shopping Center stating that the Lt. Bertleson Service Area Officer is well aware of problems and is looking into the matter. Response 005 UTILITIES DIRECTOR COMMENTS Dir Comment Director of Utilities Morrow addressed the Board Members stating that the new Customer Information Billing Dir of Utilities System is now live, they have completed the installation of Ice Bear cooling system replacing the air Comments conditioning system in the computer room and they may install the same at North Recreation Center and City Hall, the Governor has signed Bills for heavier penalties for the theft of copper wire and allowing DMV to provide information on electric vehicle registration, and the EPA order SCR,selective catalytic reduction at San Juan new environmental system has been appealed. UTILITY BOARD MEMBER COMMENTS Brd Mbr Corn None. None The CONSENT CALENDAR consisting of Items D-1 through D-7, were approved by motion of Board Consent Cal Member Gonzales, seconded by Board Member Carrillo and unanimously carried. Appvd 1. The minutes of the regular meeting of July 25, 2011, were approved as written. Minutes 2. Approval was given to award of contract to Systems&Software in amount not-to-exceed$16,000 to Systems& automate the process of uploading/downloading payment files from Azusa Light & Water's three Software payment vendors. 3. Approval was given to ratify the award of contract to AAJ Incorporated in amount not-to-exceed AAJ Inc. $12,745 for urgent repairs of the underground electric conduit that runs along the north end of Repair of Avenida Conejo and onto the property of Azusa Greens Golf Course,north of Sierra Madre Avenue. Elect Conduit 4. Approval was given to award contract to Best Contracting Services in amount not-to-exceed$112,345 Best Contract for refurbishing the existing roof at the Electric Division Yard(1020 W. 10th Street). Svs roof repair 5. Approval was given to ratify the water rights leases to the Sunny Slope Water Company and Miller- Sunny Slope Coors and ratify signature of the leasing documents signed by Sunny Slope Water Company as Water ratify allowed by Resolution No. 09-C69 approved by the Utility Board on July 27, 2009. Wtr rights 6. The bid by Ironman was approved in the amount of$61,981.00 to retrofit four(4) Water Division Ironman diesel trucks with Particulate Matter(PM)Traps pursuant to Azusa Municipal Code 2-523. retrofit trucks 7. The proposal of Moss, Levy,& Hartzheim, LLP was approved in amount not-to-exceed$19,845 to Moss, Levy& provide auditing services to the Financing Authority for Resource Efficiency of California(FARECaI) Hartzheim pursuant to agreement with FARECaI approved by the Utility Board on November 22, 2010. audit sys SPECIAL CALL ITEM Spec Call Item None. None SCHEDULED ITEMS Sched Items Execution of Memorandum of Understanding for the Assignment of San Juan Unit 3 Entitlement Rights. MOU Assign San Juan Rghts Director of Utilities Morrow addressed the issue stating that the Utah Associated Municipal Power Systems Dir of Utilities (UAMPS)has been identified as a possible buyer of Azusa's San Juan Interests.He talked about the increased Comments cost for San Juan with declining performance and cited many issues. He presented a Memorandum of Understanding regarding the acquisition of Rights in San Juan 3,and talked about UAMPS and its baseload needs, and detailed the MOU. 09/26/11 PAGE TWO 006 Moved by Board Member Carrillo,seconded by Board Member Rocha and unanimously carried to authorize MOU w/ the Director of Utilities to sign a Memorandum of Understanding(MOU) for the layoff and sale of Azusa UAMPS Light & Water's interest in the San Juan Project to the Utah Association of Municipal Power Systems Approved (UAMPS). Amendment to the Azusa Risk Management Policy. Amend RMP Assistant Director of Resource Management Lehr addressed the issue stating that Risk Management Policy Asst Dir Res was adopted in 1999 and amended once to allow for gas hedging. SBX 1 2, California Renewable Energy Management Resources,and AB 32 Global Warming Solutions Act were enacted and affect electric utilities which make it Lehr necessary to enhance the Risk Management Policy. The GHG regulation is an allowance to emit one metric ton of Nox equivalent gas,which offsets the need to reduce GHG or CO emissions. The RPS regulation is the Renewable Energy Credit which is the"renewable attribute"associated with generating one MWH of energy by the CEC certified renewable resource. Moved by Board Member Macias,seconded by Board Member Gonzales and unanimously carried to approve Risk Mngmt the amendments to the Azusa Risk Management Policy as shown in the attachments to this report, including Policy amend Exhibit A and Appendix D-1. Approved Authorization to Solicit Proposals for Financial Advisor. Prop Fin Advsr Assistant to the Director of Utilities Kalscheuer stated this is a request or proposals for a Financial Advisor to Asst Dir Util evaluate and facilitate refunding of long term debt for water utility. He talked about the revenue bonds issued Kalscheuer to buy Azusa Valley Water Company in 1993 that were refinanced in 2003 by the issuance of$20,370,000 in Certificates of Participation. He stated that recent bond market trends indicate possible savings by refinancing, and the current debt service is$1.255 million per year with an average yield of 4.78%. He highlighted the Scope of Work which would analyze the 2003 debt to validate savings, develop a strategy to implement refinancing,assist with selection of bond counsel to develop necessary documents,obtain updated rating from credit rating agencies and advise City during sale proceedings and closing. Moved by Board Member Carrillo,seconded by Board Member Macias and unanimously carried to approve RFP Financial Request for Proposal(RFP)scope of work and authorize staff to issue RFP to solicit proposals from Financial Advisors Advisors to consider options to refinance long term debt of water utility related to the purchase of Azusa Approved Valley Water Company. STAFF REPORTS/COMMUNICATIONS Staff Rpts Assistant to the Director of Utilities Kalscheuer presented the Fourth Quarter Budget Report for Electric and C. Kalscheuer Water Funds, FY 2010-2011. The Water utility ended FY 11 with $26.3M cash reserve($25M minimum, Water and quarterly sales dropped 6.0%from prior year and 26%from FY07,debt service coverage of 1.33 is adequate Electric Fourth (1.25 goal). The Electric fund has a positive cash flow of$323 K,reserve level is$11.7 million,debt coverage Quarter Budget of 5.6 is good and sales declined 2.8%from prior year through second quarter and 5.6%from two years ago. Report Moved by Board Member Carrillo,seconded by Board Member Gonzales and unanimously carried to adjourn. Adjourn TIME OF ADJOURNMENT: 7:18 P.M. • SECRETARY NEXT RESOLUTION NO. 11-C71. 09/26/11 PAGE THREE 007 Dip „igi„ .; Cy • t* t {r,r�4 744, 3 s 1,1z." .:t � y� 4 '3 A, '' -,;. str a`*bsl�Pbw L" x..s+^ e. msis 1. 6< 'ed i..affi {b 'iM 1,''a •'R°' 4yb^ AL U SA . CHT d W411., CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES DATE: OCTOBER 24, 2011 SUBJECT: APPROVE THE PURCHASE A NEW REPLACEMENT COPIER (OCE PLOTWAVE 300) FROM ARC IMAGING RESOURCES COMPANY RECOMMENDATION It is recommended that the Utility Board approve purchase of a new engineering plan copier / large document scanner from ARC Imaging Resources Company in the amount not-to-exceed $14,201.98 including applicable tax and trade in value of old equipment. BACKGROUND Azusa Light & Water has a large format engineering copier /scanner system (Xerox Synergix 510) which was purchased 8 years ago for $24,355. The Synergix 510 consists of three separate main components: scanner, printer, and a processor. Due to technological changes in office electronic document file management equipment, the old Synergix 510's features and functions are outdated. Due to this obsolescence, the annual cost of maintaining the old Synergix 510 has escalated over the past two years to almost $2,664 per year. In addition, this system is bulky and takes up a lot of limited office space. Only trained engineering staff is able to operate the old equipment which makes it cumbersome to use by others. Because of these deficiencies, staff looked at a more streamlined and simple to operate, low maintenance engineering plan copier / large document scanner suitable for use with online plan submittals, copying, scanning or printing in either electronic medium or multiple, varied size hardcopy formats. Staff found the Oce PlotWave 300 equipment to meet all of the above criteria. Consequently, staff solicited and received three written price quotes for the Oce PlotWave 300 from the suppliers listed on next page. 008 Approve Purchase—Engineering Plan Copier/Scanner October 24, 2011 Page 2 SUPPLIER NEW TRADE IN VALUE TOTAL EQUIPMENT OLD EQUIPMENT PURCHASE COST ARC IMAG. RES. $19,201.98 <$5,000> $14,201.98 CHOICE TECH SER $21,595.00 <$6,000> $15,595.00 SOURCE GRAPHICS $18,026.88 Did Not Offer $18,026.88 Based on the overall comparison and the newer, more efficient features, staff is recommending trade-in of old equipment and purchase of the new Oce PlotWave 300 from ARC Imaging Resources Inc., the lowest cost supplier. FISCAL IMPACT This purchase is covered by the FY 2011-12 approved Electric Division Capital Outlay budget and funds are available in Account # 3340743910-7150. The estimated equipment maintenance cost will be reduced to about $660 annually. Prepared by: Hien K. Vuong, Electrical Engineer Reviewed by: F. Langit Jr., Assistant Director of Electric Operations fl09 4. P„', ,��p " st a''t 4 T .... R,L #�": • s _.z..v .t�.ss.-.d-}'�' shSLr�r ,.*}t AZUSA !IGNT d, 'WATER CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES DATE: OCTOBER 24, 2011 SUBJECT: APPROVE CONTRACT TERMINATION WITH PMR PROGRESSIVE, LLC COLLECTION AGENCY AND AUTHORIZE ISSUANCE OF REQUEST FOR PROPOSALS FOR COLLECTION AGENCY SERVICES RECOMMENDATION It is recommended that the Utility Board approve termination of contract with PMR Progressive, LLC collection agency and authorize issuance of Request for Proposals for a new collection agency. BACKGROUND In June 2009, the Utility Board awarded a five-year professional services agreement to PMR Progressive, LLC (PMR). Soon thereafter, PMR installed a new computerized system and has not yet recovered from their"Go Live"problems. 1. Over the past year we have been unable to connect with their web site to securely upload collection files. To rectify this, our IT Department opens a window for the data to be passed, but it is unsecured and puts us at risk if information is compromised. 2. Our IT manager has been trying to reach PMR about their web site security but gets no reply. 3. We are unable to view PMR's web site to see how much a customer has paid and still owes. This affects our processes and also if a prior customer moves back to Azusa, the bill in collections need to be paid prior to new service. We go to a collection agency's web site to view any payments made and remaining balance so customer knows payoff amount. 4. There is no answer at the PMR contact phone numbers. 010 Collection Agency October 24, 2011 Page 2 5. Some customers whose accounts have been turned over to the collection agency have called us and want to settle their accounts but cannot reach PMR. According to the Fair Debt Collection Practices Act (FDCPA), we are legally unable to accept these payments. At one point, PMR's President and Chief Operating Officer (COO) assured Azusa Light & Water that PMR's phone numbers were good, but they still are not working properly. Azusa Light &Water has reported these issues by e-mail to PMR's President and COO, however, no replies were received. On October 13, 2011, Assistant to the Director of Azusa Light & Water, Cary Kalscheuer, and the Assistant Director of Customer Care & Solutions made an unscheduled visit to PMR. The COO told us that last year PMR was sold and the new majority owner is not putting any improvements in the business during these economic times. In the meantime, PMR continues to have software and telecommunications problems that will not be fixed in the foreseeable future. The COO understands our desire to terminate our contract. We are requesting approval to give PMR the required seven days notice of contract termination per our professional services agreement, and issue a new RFP. We would like to leave unpaid closed accounts already assigned to PMR with them for collection. They have been collecting around 10%of the dollars assigned to them and that is similar to other utilities in our area. FISCAL IMPACT Since collection fees are added to the amounts due Azusa, there will be no fiscal impact. Prepared by: Karen Vanca, Assistant Director- Customer Care & Solutions 011 A ,„z S yt �� � x ''` �.��.t5`r �' � ''�•� :`":� :.zc!•-��`� � .xa. c ,c .��'s'� ...ase`�r.....,.�....... ..._._..,..._......� �.,�.m.a...a..�,,.....,r�; ' AZ USA r.ur 4 J.6rro CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES DATE: OCTOBER 24, 2011 SUBJECT: APPROVE THE PURCHASE OF AN INDUSTRIAL GRADE THERMAL IMAGING DEVICE FROM B&K ELECTRIC WHOLESALE RECOMMENDATION It is recommended that the Utility Board approve the purchase of a rugged handheld industrial thermal imager from B&K Electric Wholesale in an amount not-to-exceed $9,475.32 plus applicable tax. BACKGROUND The Electric Division construction and maintenance crews routinely perform visual inspection or patrol our electric distribution system as part of regular preventive maintenance. A visual inspection can only reveal obvious deteriorating conditions or defects on electric lines/equipment likely to fail. Another efficient way to perform the visual inspection is by using thermal imaging equipment on energized electric lines and equipment. The thermal image will reveal abnormal heating conditions on an object unseen by the human eyes. Thermal imaging equipment uses a patented infrared scan technology to show an image depicting varying temperature differences on an object or large surface areas being scanned. By analyzing the scanned image, any abnormal or uneven heating on a piece of equipment which can lead to potential electrical failure, is quickly identified without the need for further invasive examination. It is an effective inspection tool that is safe to use, saving time and effort in performing a visual inspection. In the past, when a suspected piece of equipment or electric line needed a thorough examination, an infrared scan service was contracted with an outside service provider. The scan costs as much as $800 to $1000 per day for the service to be performed on a limited scope. In view of this expense, staff budgeted funds to acquire its own thermal imaging equipment. 012 Purchase Thermal Imager October 24, 2011 Page 2 Research on commercially available thermal imaging products was done and found the FLUKE Ti32 Thermal Imager suitable for local needs due to its ruggedness, compact size, ease of use, and superior image quality which is essential to find problems fast. Subsequently, competitive quotes were solicited from vendors or suppliers of the thermal imager and the solicitation results are tabulated below. Vendor/ Supplier Total Amount (excluding tax) 1) B&K Electric Wholesale $ 9,475.32 2) Graybar $ 9,920.35 3) Grainger $11,066.00 Staff reviewed the lowest quote submitted by B&K Electric Wholesale and found it to be in compliance with the solicitation requirements. FISCAL IMPACT The purchase of a thermal imager is an approved Capital Outlay item in this Fiscal Year's Operating Budget. Sufficient funds were budgeted for this item. Prepared by: F. Langit—Assistant Director—Electric Operations K. Chagnon—Acting Distribution Supervisor 013 t OP 1 • .,`'. Jr` St ` r } n , c AZUSA LIGHT & WATFN AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES DATE: OCTOBER 24, 2011 SUBJECT: FINANCIAL SECURITY AGREEMENTS WITH THE ISO FOR THE CONGESTION REVENUE RIGHTS (CRR)AUCTION RECOMMENDATION It is recommended that the Utility Board authorize: (1) Director of Utilities to execute periodic Financial Security Agreements with the ISO in an amount not-to-exceed five hundred thousand dollars; and (2) authorize the City Treasurer to establish cash deposits or other instruments sufficient to fulfill the agreement obligations on behalf of Azusa Light & Water. BACKGROUND The California Independent System Operator (ISO) conducts annual auctions of CRRs. The auction for calendar year 2012 will take place on November 8, 2011. CRRs are financial instruments that an entity participating in the ISO markets can use to hedge financial exposure to the costs of transmission congestion. Azusa, as a Load Serving Entity(LSE), is allocated some CRRs by the ISO; however, the level of granted CRRs is not adequate to import all desired energy from Azusa external resources. Accordingly, Azusa routinely purchases additional CRRs at the ISO auctions to protect against unforeseen transmission costs associated with importing our energy from remote resources. CRRs are the only instruments available for congestion hedging in the ISO. 014 ISO Financial Security Requirement October 24, 2011 Page 2 Historically, due to its good credit rating, Azusa could participate in the ISO annual CRR auctions without posting any financial security instruments. However, on October 1, 2011 the ISO began implementing the Federal Energy Regulatory Commission's (FERC) Order 741 which, among other things, requires that all prospective ISO CRR auction participants post financial security with the ISO. Such collateral instruments are returned/released as a soon as the auction participating entity pays in full the awarded CRRs which happens during the first billing cycle after the finalization of the auction process. Attached is a form of financial security instrument which would allow Azusa to participate in future CRR auctions. Final instruments will be coordinated with the City Treasurer, the Finance Department and legal counsel prior to execution. FISCAL IMPACT There should be little or no fiscal impact of posting security with the ISO for CRR acquisition. Prepared by: Yarek Lehr, Assistant Director of Resource Management 015 Certificate of Deposit Security Agreement This Certificate of Deposit Security Agreement ("Agreement") is made as of this date , by and between: 1. California Independent System Operator Corporation (the "ISO"), a California nonprofit public benefit corporation having its principal place of business located in Folsom, California, and 2. City of Azusa (the "Congestion Revenue Rights ("CRR") Auction Participant") having its principal place of business located in Azusa, California (the CRR Auction Participant, and collectively, the "Parties"). WHEREAS: 1. CRR Auction Participant, who has entered into an ISO Congestion Revenue Rights Entity Agreement, desires to participate in the ISO's 2012 annual Congestion Revenue Rights auction in accordance with the ISO's Congestion Revenue Rights Entity Agreement and ISO Tariff; and 2. In order to meet its minimum auction credit requirements and secure a payment for its 2012 CRR purchases, if any, the CRR Auction Participant hereby agrees to grant to the ISO a security interest in a Certificate of Deposit in the amount of$500,000 (the "CD") maintained at Wells Fargo (the "Bank"); and 3. CRR Auction Participant desires to grant the ISO security interest in the CD hereto solely for the purpose of participating in the ISO annual auction of the 2012 Congestion Revenue Rights. No other use or purpose for security interest in the CD hereto is hereby granted nor intended; and 4. Parties agree that once the 2012 CCR auction has concluded, and the ISO has received full payment from the CRR Auction Participant for the 2012 CRRs, the ISO's interest in the CD security shall terminate automatically without any further action by Parties required or necessary. 1 016 NOW, THEREFORE, in consideration of the above premises and the mutual promises contained herein and in the Congestion Revenue Rights Entity Agreement, and intending to be legally bound hereby, the Parties hereby to agree as follows: Article 1 Grant of Security Interest 1. CRR Auction Participant hereby pledges and grants to the ISO a $500,000 security interest in the bank account represented by the CD and all proceeds therefrom (collectively, the "Collateral"). 2. This Agreement secures the payment to the ISO of the cost, if any, resulting from the ISO awarding to the CRR Auction Participant 2012 CRRs as a result of CRR Auction Participant's participation in the ISO conducted auction of 2012 CRRs. Without limiting the generality of the foregoing, this Agreement secures payment of such amount which would be owed by the CRR Auction Participant to the ISO but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization, receivership or similar proceeding involving the CRR Auction Participant. 3. Upon the CRR Auction Participant's payment in-full of the ISO's demand for the 2012 CRR auction amount, the ISO security interest in the CD hereto shall terminate automatically with no further or additional action by Parties required to effectuate such termination. Article 2 Delivery and Maintenance of the CD 1. CRR Auction Participant shall deliver the CD in the name of the "California Independent System Operator Corporation" and "City of Azusa, Congestion Revenue Rights Auction Participant"to the ISO, with interest payable to the CRR Auction Participant. 2. CRR Auction Participant shall pay all fees, charges and costs to establish, maintain and close the CD, including, but not limited to, processing fees, transaction fees, early redemption penalties and maintenance fees. CRR Auction Participant shall direct that Bank pay interest on the CD directly to the CRR Auction Participant, and CRR Auction Participant shall pay all taxes on interest income generated by the CD and receive all related tax information and forms directly from the bank. 2 oil Article 3 Remedies upon Default and Return of Collateral 1. For purposes of this Agreement, an "Event of Default" shall have occurred in the event that CRR Auction Participant is in default of payment due to the ISO as a result of CRR Auction Participant's purchase of 2012 CCR from the ISO. 2. Upon the occurrence of an Event of Default, the ISO shall deliver, by facsimile transmission, a Default Notice to the CRR Auction Participant signed by an authorized signatory of the ISO, stating that CRR Auction Participant is in default of a Fee due to the ISO and is in default under this Agreement subject to the terms of the ISO Tariff. 3. Upon electronic delivery of a Default Notice to the CRR Auction Participant, and without any further notice or action, ISO may redeem the CD and retain any amount due equal to unpaid 2012 CRR auction amount, and shall promptly return to the CRR Auction Participant any amounts collected in excess of such Fees. The ISO may also exercise in respect of the Collateral, in addition to the rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the Uniform Commercial Code in effect in the State of California at that time. 4. The CRR Auction Participant shall be liable for any and all prepayment or early withdrawal penalties charged by the Bank for any redemption for the CD performed by the ISO under this Article 3. Article 4 Disputed Amounts If any portion of the amount specified in the Demand Notice is in dispute with the CRR Auction Participant, the ISO shall redeem the CD in accordance with Article 3 hereof and shall retain the full amount set forth in the Demand Notice, in accordance with the ISO Tariff. Any amounts in dispute shall be addressed under the terms of the ISO Tariff. The CRR Auction Participant shall remain liable under Article 3, Part 5, for any penalties or charges for early withdrawal of the CD independent of the outcome of the amounts in dispute. 3 018 Article 5 Representations and Warranties CRR Auction Participant represents and warrants to the ISO as follows: a) The CRR Auction Participant is the legal and beneficial owner of the Collateral free and clear of any lien, security interest, option or other charge or encumbrance, except for the security interest created by this Agreement. b) The pledge, assignment and delivery of the CD representing the Collateral pursuant to this Agreement creates a valid and perfected first priority security interest in the Collateral, securing the payment of the Fees to the ISO. c) No consent of any other person or entity and no authorization, approval, or other action by, and no notice to or filing with, any governmental authority or regulatory body is required (i) for the granting of a security interest by the CRR Auction Participant in the Collateral pursuant to this Agreement for the execution, delivery or performance of this Agreement by the CRR Auction Participant, or(ii) for the perfection or maintenance of the security interest created hereby(including the first priority nature of such security interest). d) There are no conditions precedent to the effectiveness of this Agreement that have not been satisfied or waived. 4 010 Article 6 Notices Unless otherwise provided herein, all notices entitled or required to be given under this Agreement shall be in writing and shall be sent by (a) United States certified mail, return receipt requested, postage paid or (b) commercial courier services guaranteeing next business day delivery and requiring receipt of delivery (such as Federal Express) to the following addresses: If to CRR Auction Participant: Contact Person: Address: E-Mail Address: Phone: Fax: If to the ISO: Contact Person: Finance Department Address: 250 Outcropping Way Folsom, CA 95630 Fax: (916) 608-5071 Article 7 ISO Authorized Signatories The Authorized Signatory for the ISO is the Chief Financial Officer. 5 020 Article 8 Entire Agreement This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, whether written or oral. This Agreement may only be amended or modified by a written agreement signed by both of the Parties hereto. Article 9 Governing Law This Agreement shall be governed by and construed under the laws of the State of California without giving effect to the principles of conflict of laws thereof. Article 10 Assignments Either of the Parties may assign any or all of its obligation and rights under this Agreement only with the other Party's prior written consent, which shall not be unreasonably withheld. Article 11 Further Assurances The CRR Auction Participant agrees that at any time and from time to time, and at its own expense, the CRR Auction Participant will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the ISO may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby. Article 12 Confidentiality Parties shall not disclose the amount of the CD to any third party without the prior written consent of the other Party. 6 021 IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written. California Independent System Operator Corporation By: Title: CRR Auction Participant, City of Azusa By: Title: 7 022 AZUSA LIGH7 6 WAiEN INFORMATION ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES DATE: OCTOBER 24, 2011 SUBJECT: LOCAL ADOPTION OF SBX1 2 MANDATED RENEWABLE PORTFOLIO STANDARD ENFORCEMENT PROGRAM As noted in the September 26, 2011 RPS update to the Utility Board, two major pieces of legislation affecting electric utilities have been recently enacted in California. These laws are SBX1 2 also known as California Renewable Energy Resources Act (colloquially - Renewable Portfolio Standard or RPS) and AB 32 also known as Cap-and-Trade or Greenhouse Gas law. The RPS law becomes effective on December 10, 2011. Detailed regulations for implementing the RPS law (SBX1 2) are currently being developed by the California Energy Commission and are expected to be finalized early to mid 2012. However, irrespective of the status of the regulation writing process, the law requires that governing bodies of publicly-owned electric utilities (like Azusa Light & Water) adopt an RPS "Enforcement Program"by January 1, 2012. The general purpose of the Enforcement Program is to create and adopt a mechanism for enforcement of RPS legal obligations applicable to Azusa. The Enforcement Program, among other things, will stipulate the RPS procurement types, targets, reporting requirements, and provisions/measures that may permit delaying or limiting the RPS procurement. As per the requirements of SBX1 2, a 30-day notice will be posted in the local newspaper as well as on the Azusa L&W website to advise the public that on November 28, 2011 (the regularly scheduled Utility Board meeting), the Board will be considering adoption of a RPS Enforcement Program. Prepared by: Yarek Lehr, Assistant Director of Resource Management 023 P. 2 4 V:00), .. ' .. , . rift. ,V AZUSA .IaHT R Y,'ATER INFORMATION ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES DATE: OCTOBER 24, 2011 SUBJECT: STATE MANDATED COMMERCIAL RECYCLING PROGRAM REQUIREMENTS This report is written to provide the Utility Board with some background information on the State's effort to require commercial waste generators to establish recycling programs. The regulatory and legislative efforts by the State to mandate commercial recycling emerged out of Executive Order S-03-05 and AB 32. The 2005 Executive Order established targets to reduce Greenhouse Gas Emissions to 1990 levels, and then in 2006, the California Global Warming Solutions Act of 2006 (AB 32) was adopted mandating a reduction in statewide GHG emissions to 1990 levels by the year 2020. The solid waste sector was believed to be a significant source of GHG emissions, mainly because of the methane gas emissions at landfills that result from the decomposition of organic materials such as yard waste and food waste. Methane (CH4) is a GHG that remains in the atmosphere for approximately 9-15 years, and is over 20 times more effective in trapping heat in the atmosphere than carbon dioxide (CO2) over a 100-year period. Methane and is emitted from a variety of natural and human-influenced sources, including landfills, natural gas and petroleum systems, agricultural activities, coal mining, stationary and mobile combustion, wastewater treatment, and certain industrial process. Through the State's scoping plan process to implement AB 32, it was determined that a mandatory commercial recycling measure should be put into place that would reduce 5 million metric tons of carbon dioxide (CO2) equivalents. To achieve these emission reductions, it was estimated that about 2 to 3 million tons of additional solid waste must be diverted from landfills. The commercial sector was targeted because there was widespread belief that AB 939 did not specifically target commercial waste. Moreover, statewide waste characterization studies showed that the commercial sector generated more than half of the solid waste in the state. 024 Commercial Recycling Program Requirements October 24, 2011 • Page 2 AB 32 initiated various processes to develop regulations by different State agencies. As an electric utility, we have seen draft rules regarding renewable energy requirements that have been developed by the California Energy Commission (CEC). The development of regulations pertaining to commercial recycling have been under development by the California Department of Resources Recycling and Recovery (CalRecycle) since 2009 and targeted an effective date of January 1, 2012, with a schedule of July 1, 2012, for implementation by local jurisdictions and businesses. While below summarizes the mandatory requirements, it should be noted that finalizing the regulations was suspended recently when AB 341 was signed into law by Governor Brown. AB 341 sets a 75 percent recycling goal for California which is to be achieved by 2020. AB 341 also requires every commercial business, institution and apartment building to implement recycling programs. AB 32 —Commercial Recycling Regulations • Requires businesses generating at least 4 cubic yards of waste or more per week to subscribe to a recycling service, source separate materials and self-haul to a recycling facility, or send waste to a material recovery facility (MRF) where recyclables can be removed equal to what would be removed through source separation. • Requires each jurisdiction to provide education, outreach, and monitoring of businesses regardless of whether the jurisdiction diverted 50% of waste from landfills as required by AB 939. • Establishes general criteria for education and outreach to provide information explaining the requirements of commercial recycling regulations as well as the recycling opportunities available. • Establishes general criteria for monitoring of businesses. • Identifies commercial recycling program options that maybe used to implement the regulations. • Allows jurisdictions the flexibility to implement a commercial recycling program that meets their local needs and works with their existing infrastructure. • Protects existing franchise agreements, contracts, licenses, and the right of businesses to sell or donate recyclable materials. AB 341 - Requirements • Sets a 75% recycling goal to be accomplished by the year 2020. • Requires jurisdictions to update all information required to be included in nondisposal facility element (NDFE). • Requires businesses generating waste of at least 4 cubic yards or more per week or a multifamily dwelling of 5 units or more to arrange for recycling services on and after July 1, 2012. • Requires a jurisdiction, on and after July 1, 2012, to implement a commercial solid waste recycling program meeting specified elements. • Authorizes a jurisdiction to charge and collect a fee from businesses to recover its costs incurred in complying with the commercial recycling program requirements. • Requires CalRecycle to review a jurisdiction's compliance with above requirements. • Changes the AB 939 annual report submission due date from September 1St to May 1St 025 Commercial Recycling Program Requirements October 24, 2011 Page 3 of each year, for prior calendar year waste diversion reporting and program implementation reporting. Due to Azusa's MRF program, Azusa is ahead of these requirements in terms of actual program implementation. Azusa is also in the process of providing waste audits to businesses. Meeting the 75% waste diversion goal for 2020, however, may be a challenge, depending on what methodologies are used to calculate this figure in the future. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities Feliza Cawte, Sr. Administrative Technician 026 pm ., 3 2 " z mak; � „ �� � ` ��£�` ;'�'��} �� <� `` ��.._...,...�.¢ 4 - _ooW � � AZLJS A LIGHT R. WATER INFORMATION ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES DATE: OCTOBER 24, 2011 SUBJECT: UPDATE ON PAYMENT FOR WATER RIGHTS TRANSFERS TO VULCAN ROCK In 1996, under Resolution 96-C194, the Azusa City Council granted a permit to CALMAT Co. (a Division of Vulcan Materials Co.) to operate the City's Water Well No. 1903119. In 1999, under Resolution 99-C75, the City Council amended the permit to allow CALMAT to use water rights owned by the City for a period of up to five years without payment for the use of those water rights. At the end of that five year period, "CALMAT must have settled their account with the CITY by either transferring the water back to the CITY, or providing the CITY a cash payment equal to the price of replacement water as outline(d) [sic] below, at the price designated by the Watermaster for that year from the Upper San Gabriel Valley Municipal Water District." In the Fiscal Years following the 1999 Amendment, water rights exchanges between Vulcan and the City of Azusa have taken place each year, the vast majority of which have been for relatively minor amounts of water rights. On average, approximately 17 acre-feet per year were transferred with Vulcan repaying those transactions with water rights of its own. However, for Fiscal Years 2000-2001, 2001-2002, and 2002-2003, Vulcan leased from Azusa 500 Acre-Feet, 600 AF and 700 AF respectively. Research by the Finance Department indicated that only the payment for FY 2000-2001 had been received when due. Light & Water met with Vulcan to discuss the apparent non-payment for 1300 AF of water rights leased by Vulcan in FY's 2001-2002 and 2002-2003. At the meeting, Light & Water agreed to have the Finance Department search their records one more time before an invoice was submitted to Vulcan. Again, no evidence of payment could be found. Subsequently, an invoice for a total amount of $665,000 ($512/AF) was sent to Vulcan on October 11, 2011 (see attached). As of the date of this agenda report, Vulcan has not responded. Prepared by: Chet Anderson, Assistant Director- Water Operations 027 r t er • immirrill AZ LISA . CBI & W'irtt INFORMATION ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES e:e, --"-‘ DATE: OCTOBER 24, 2011 SUBJECT: REPORT ON SEPTEMBER 30 SCPPA LEGISLATIVE BRIEFING FOR MAYORS Mayor Pro Tem Hanks and the Director of Utilities attended a legislative briefing on September 30, 2011 in Ontario hosted by the Southern California Public Power Authority. Speakers for the event included State Senator Alex Padilla who Chairs the Energy, Utilities & Communications Committee; Mary Nichols who is the Chair of the California Air Resources Board (CARB is responsible for implementing the new climate law in California) and Deborah Sliz who is SCPPA's legislative/representative in Washington, D.C. As an outgrowth to this activity, two of the Mayors (Pasadena and Riverside) were moved to send a letter to the other Mayors suggesting that this type of briefing be held annually. They also suggested that the Executive Director of SCPPA make annual presentations on legislative issues to each member's city council, if they desire and ensure an annual SCPPA Report is prepared/distributed. Attached is this letter, as well as the agenda for the recent September 30 briefing. Prepared by: G. Morrow, Director of Utilities 028' SCPPA You are cordially invited to attend a Legislative Lunch Briefing for Mayors of SCPPA Member Cities Friday, September 30, 2011 10:30 a.m. to 2:30 p.m. DoubleTree Hotel Ontario Airport 222 N. Vineyard Avenue Lake Silverwood Room Ontario, California 91764 (909) 937-0900 Mayors from member utility cities in Southern California are invited to participate in a lunch briefing to learn more about energy policy issues currently impacting our municipal electric utilities. Speakers will present timely updates on the latest legislative and regulatory developments at the State level. Speakers for this event will include: Senator Alex Padilla Chair, Energy, Utilities & Communications Committee Mary Nichols Chair, California Air Resources Board Representative from Governor Brown's Office (TO BE NAMED LATER) RSVP: If you would like to be included in this event, please respond directly to Geri Mitchell at gmitchell@scppa.org no later than September 22. Lunch will be hosted by SCPPA. Free parking is available at the DoubleTree. SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY 225 S.Lake Ave.,Suite 1250,Pasadena,California 91101•(626)793-9364•www.scppa.org 029 Office of the Mayor Diverse • Inclusive • Committed ad. , , CITY OF RIVERSIDE l.{� 4 y,,: October 13,2011 3 ff .3 - Dear Mayor Rocha: ': The SCPPA elected membership, city managers, utility directors and staff met in Ontario on Friday, ;' September 30 for a productive and informative flagship gathering. It is the first such meeting in our memory, and highlights the importance of using this opportunity to launch a more active connection and ;i 7 relationship of the membership and staff in these challenging times. We would like to ask about your interest in, and your possible support of, a request to SCPPA to consider doing three things each year: * Hold an "Annual Summit"to educate and engage the membership mayors,including them in the crafting of the agenda and allowing them to rotate hosting of the meeting. * Make annual presentations reviewing pending legislative issues to each membership city council,if interest is expressed,by the Executive Director. * Submit an annual report designed for the elected representatives in our membership. It is our belief that great benefit will come from these regular practices, and we would appreciate your support of these proposals. If you have comments or questions,please contact Maureen Kane at mkane92506(a&.aol.com, or(951) 789-8319. We look forward to your response, if possible,by the end of October. In advance,thank you! Sincerely, Bill Bogaard Ronald O. Loveridge Mayor, City of Pasadena Mayor,City of Riverside • cc: Bill Carnahan, SCPPA Executive Director City Managers of SCPPA Cities Utility Directors of SCPPA Cities Maureen Kane 3900 Main Street • Riverside,CA 92522 • 951.826.5551 • fax 951.826.2543 • www.riversideca.gov 030