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Agenda Packet - November 28, 2011 - UB
- t • [— AZUSA LION, d. '',ATEk AGENDA REGULAR MEETING OF AZUSA UTILITY BOARD AZUSA LIGHT & WATER NOVEMBER 28, 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 1. Drought Tolerant Landscape Showcase Plaque Dedication Plaque Plaque-Graphic.pdf Dedication.pdf 2. Payment Drop Box on N. Azusa Avenue(Verbal) 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 October 24, 2011 as written. Oct Mins.pdf 2. Selection of Financial Advisor for Debt Refinancing. Recommendation: Approve the selection of Public Financial Management, Incorporated (PFM) as Financial Advisor to Azusa Light & Water in an amount not-to-exceed $40,000. FA Approval.pdf PFM Proposal.pdf 3. Additional Compensation to SA Associates for Protect W-266A Inspection Services. Recommendation: Approve the additional payment of $19,000 to SA Associates for additional time spent in their contract for the inspection of Water Main Replacement Project W-266A. SA Associates.pdf 2 002 4. December Utility Board Meeting. Recommendation: Cancel the Utility Board Meeting on December 27, 2011. Dec UB Mtg.pdf E. SCHEDULED ITEMS 1. San Juan Unit 3 Firming Agreement Between Azusa and Arizona Public Service. Recommendation: Authorize Staff to renew firming agreement for San Juan Unit 3 with Arizona Public Service (APS) and authorize the Director of Utilities to execute the final agreement with APS. Lif- SJ Firming Rpt.pdf SJ Firming Agmnt.pdf 2. Local Adoption of SBX1 2 Mandated Renewable Portfolio Standard (RPS) Enforcement Program. Recommendation: Approve the following resolution: A RESOLUTION OF THE AZUSA UTILITY BOARD ADOPTING A RENEWABLE PORTFOLIO STANDARD (RPS) ENFORCEMENT PROGRAM IN COMPLIANCE WITH STATE LAW (SBX1 2). RPS EP Rpt.pdf RPS EP Reso.pdf RPS EP.pdf 3. Recalculation of Azusa's Transmission Revenue Requirement and Updates and Revisions to Azusa Transmission Tariff. Recommendation: Approve the following resolution: A RESOLUTION OF THE AZUSA UTILITY BOARD REVISING AND UPDATING THE AZUSA TRANSMISSION TARIFF AND TRANSMISSION REVENUE REQUIREMENT. TRR Rpt.pdf TRR Reso.pdf FERC Tariff Apdx I.pdf Amdnt.pdf 4. Consideration of Athens Services' Proposal. Recommendation: Review proposal by Athens Services for automated residential trash collection services and organic waste collection program and provide guidance to Staff on this matter. 91- 1191- Athens'Proposal.pdf Athens Ltr Proposal.pdf 3 003 F. STAFF REPORTS/COMMUNICATIONS 1. San Juan Power Plant Matters 0311 SJGS Fact sheet update.pdf 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 Utility Board Meeting AZUSA LIGHT Sc WATER WA I F-.R CONSF:RVA I-ION PROJECT h r...ferrel,lrnr irriy..hi a.nam.nd reeelernn In coin garden area rcrreav ni a wale.eenaervallnn 21101 purge+ underbken he .4auaa L.ght es Water and the van t.ahrrel Valles Municipal Water District. This Project features innlallatron of water-efficient pipes,valve., nestles and syrinhler heads,to well as water-efficient vegetation that Includes California Native plant.These warn conservation effmawlll radars w.ter o.ogv,nave envrge and.ave money. 11.1a Im�rel,ao well as ntheru In the Citi of. made possible by a grant from the Can Cabalel Valley MunirIpel Water District_Our anal Is for restdenta.businesses and government agent..to observe the water-saving vegetation and technology exhibited here and to apply water-wise neineiples that Falb eon environment and improve now quality of life. October 2011 r.v vv.�►u/h *AZUSA November 28, 2011 Chair Keith Hanks \ LL SA Director' s miesimmomminnimuft AZUSA LIGHT & 'WATER WATER CONSCRA' VI'ION PROJCC'T ~'ez7Fie '� f.�f��E. ::t:/:, / The wahneffirlrnt lrrl;a1 .n ss•trm and at}etAlion+n thl•9tarcicn atr.e 7{ • !064 44 *+w• •1►-'. rep t a water rrmset�mann pilot pen;ram undertaken Mc Anita Light& Water and the San Gabriel%alles Mom/coal Wale,hra...i C' ",� l �' Tuts Prnlect restorer,installation of ssaeer•tiftrirni pipe~.salves °•s 4• a� * ,: trti ►F # nnyder and sprinkle,heeds,aa well As water•eft+cient seettalu+n tfe•t 'r •,' tstludes CAI lforniaS;attvt plants. These water conserearton cffo•t,.. t ► s " reduce water arage,ace energs and use inncs. 4. ` -+- t r J r- 1 _ ! ><; This Project,as well as others in the City o!Azusa was sande 1•^••,Ver++s w . _ + .'a i+f a grant bons the can Gahrlel Veil,,Vlurieipal lka'rr L etr r! hueana : •� ,� w '"' -•- i �,.,, residents,burin and government agencies'a o5scrvr t`�r water••as �+911Pu a ""`"` v' .;: .,.� - ,.4 - '�,, ergefaf►nn and technology exhibited hen and In appts warrr.r.,'i 's " ".'= Ti/i r ,11.11 incl les that.helpour environment enc Improve cur alit. .t `t �� ..... 3+. ' .,�1. .. October still k,. ;. �• J. 1 .t • '=f ,. a a +r �.�{r) 1 r ck\(0411P Itt T'4tt FT �♦ 1y r�r ar a . P, ir ,,,...„ , r, ,r . s se+ i _:,� "� .,,,,_ @ al, , 444114.444114.44. _ • ' /'x ,,, .,,,,,, ..,,, _ e - � ili , L "7 1111 f ' _ t +e..-2' ,. IF -.0 ,i, 's/ / a --- e.� .• ? y ,., . .`9-. rte • (f « �:W4lyS�N� R -,,,,"0.--e.), A.,,..- +-iY' 1 � ,h ` jt t"6. 1l \` /IP NR.,....-' l'' , / , , , • 1102212011 ' BITZ4n geW A j l.J r A 1 Z S A s Consent Agenda October 24, 2011 minutes Selection of Financial Advisor for Debt Financing (staff recommends pulling this item) Additional Compensation to SA Associates for Project 266A Inspection Services ($19K) Cancel December 27, 2011 UB Meeting San Juan Unit 3 F . " Agreement • • Y i zusa i � oar ovem er 4.0%,•%, AZUSA Background • Since 2004, Azusa has had contract with Southwest entities for "firmed" delivery of San Juan energy. • Benefits include improved operational stability, delivery certainty, enhanced marketing opportunities and cost stability. • Current contract expires at end of 2011. • Delivery fees range from $1.60 to $1.75/MWH with replacement energy priced at Dow Jones index • Thirty day cancellation clause 5 Recommendation That the Utility Board : — approve renewal of the firming arrangement with APS , and — authorize Director of Utilities to execute the contractual arrangement for same AZUSA Adoption of RPS Enforcement Program / I Azusa Utility Board November28 , 2011 do.", .Azusa Background California's latest RPS law becomes effective December 10, 2011. Regulations to implement the law are under development by CEC State law (SBX1 2) requires publicly owned electric utilities to adopt an RPS "Enforcement Program" by 1/1/12 [ RPS Enforcement Plan Simplistic at this point given the early stages of RPS rule development Establishes the Utility Board 's jurisdiction over the Azusa RPS program Requires staff to update Azusa's present RPS to comply with SBX1 2 As required , a 30 day notice of this item was posted in newspaper and L&W website .-„, .„,, ,.., AZUSA Recommendation That the Utility Board adopt proposed resolution to : — approve Azusa Light & Water's RPS Enforcement Program , and — authorize Staff to implement & administer same 10 AZUSA Azusa Transmission Tariff **,..v.,:iir opp, , _......,....6,.. ..i , lir illtirgIr ; -‘-. 44 Azusa Utility Board November 28, 2011 Background On January 1 , 2003 Azusa became a Participating Transmission Owner (PTO) under the CAISO tariff. This allows others to utilize Azusa's transmission assets when available and for Azusa to recover the costs of transmission through CAISO assessments To recover costs, a FERC accepted Transmission Tariff and a FERC approved Transmission Revenue Requirement (TRR) is necessary Azusa's prior TRR is out-of-date (about $500K per year) and a recalculation is recommended The cost to recalculate and file with FERC is about $50K 12 AZUSA Recommendation That the Utility Board adopt proposed Resolution to : — authorize recalculation of Azusa's TRR, — implement necessary changes in Azusa Transmission Owner Tariff, and — file both with the Federal Energy Regulatory Commission. AZUSA s N Athens Proposal , . „.... .. ,. ., L ,. . 1 i ' ir , , , • pjT 1 tt7��. � N,-',-;;;1,1 ,P-''':,,�_1�6 ,sM,. x +MN'M. w. 4 ,• w• 31 4 R'.,„, Ynr IA ■-_..aye... 5 8?+r •Y: lip.' {rrRL. k, .r.w 4 zusaut . l . toar November28 ,28 2011 . 14 AZUSA Background Athens Services is current trash collection service provider in Azusa Recently, Staff solicited Athens interest in developing a program for commercial organics recycling. In response, Athens proposed automated collection of mixed waste and yard waste in the community (2 barrels) Proposal Automated trash collection to residents using black & green 90 gallon barrels Mixed waste to Athens MRF and green waste to Puente Hills until closure then to Athens' organics facility in Victorville City to buy compost from Athens, if needed. Annual free compost giveaway for residents. Athens indemnify City against AB 939 fines if City does not reach 50% waste diversion requirement No additional cost except for extra barrels if needed Request for 4 year contract extension 16 AZUSA Pros/Cons • PROS CONS • Automated collection system would • Some residents will resist the use of improve the appearance of the City automated barrels at first (but most will . • Per barrel pricing for extra barrels is like them much better) more equitable to ratepayers • Residents that need additional black or • Residents would not have to buy their green barrels will pay more own trash ban-els or bags to contain • Other program options could be waste offered. i.e.. 3 automated barrels. with 1 • City would divert larger amount of yard for commingled recyclables — waste and organic waste using larger environmentally conscious people barrels would feel they are doing their part • Provides long term disposalirecycling • There may be other less expensive option for yard waste-moven after compost facilities that could be built Puente Hills closes within the contract term— so City • Added waste diversion from multiple should maintain right to direct yard sectors, residential, multifamily and waste flow commercial, is likely necessary to help • Proposal extends City's obligation to — the City comply with new 75% waste continue processing mixed waste at reduction goal of AB 341 Athens' MRF by 4 years; this may be a • Diversion of organic waste from cost issue after Puente Hills closes as multifamily and commercial sectors can Waste-By-Rail costs or Truck Transfer help control long term cost increases if costs will add significantly to MRF gate pass-through agreement terms stay in femme effect • There maybe lower cost tiIRPs • CNG powered trucks would be cleaner developed within proposed contract and quieter than current fleet term or other types of diversion • Automated collection will reduce noise facilities; City may want to secure right levels and perform the trash picicup to use these facilities by end of current function faster contract term 17 AZUSA Y . $I_ c ,,.. y I ~ * K 8 • ::;''. lit 4th" . ' X ,sem - t , k • y- .i itis, r I ! a .rorramormorom ea M§. .Fr w •.r IP I NM—. .. � q •� "4010411. YA - *Ili r.:-::::7 ,. a3 • le is 4 MO .. • , ,it . . i • • 14 eioi. 1 (11) 1 44 tj @\ I9 . , 1 i. ,, . , .. . ,.., .: . 1 . ? . I , :., -,.. _, . , ; . _ ., ...it - 1 b ac \IS • 11 ii4S.. . . ti 1,,,A,. '. t- , iti .4 .. ..F . . ,4. .. ...... i 11,,...:.. i > 5 ` • . Automated Pics „ ,,„„.„,,, .'7, ':'"F--,,,..;%!..,—:,,•:ct:Orr''''',:,`,7,,)..”' .'"'AP'‘'. 1,zr," . , . .. II.. • ,,,, ...... _ i i• ,11 1.11 1.1. lit .. 1 too t A= Illi '.•• i,,,I ni It, „, I tIllt 1 hut ii inn lk ' "1. - „ ,, 1 Co ' "”" gi. 1L-- A. 'ICA— . A:-.... . Ulf . tits.II 4 '4. ii. 1 ' ' 611.1 ' ii," Il—ot • ,Ifi. i --"- -- ...,. . , ..--- -'--**- .14t I i I litII A..?-' ii l'i I I, 61 1'i 1:II 't II 1 il111 l'il "L,.. il ...t: ...", .1 1 fitti I i 1 01 ' "n • . ._•,--,''' ""',4 , -;'•-•-'"- dim A-."' Ith iatt I im,.k IIIIII• .u. .-' . ,....-..------- • ,_ -- . - - • -,,t . • t . A . .. Hit • .•• , ... c torr ; ..., ,, ., ir- 1 • ' ilk ' Lv- .Y I , _ ..,, , - , , .:54., , . 0,„ irt....71, .. it,ti iii, ..,...-- - 1"- .0. .:,,,, ip, ...,*. „..., IA!\ . ,'..... • ,k41.6.I III .., -',..• 1 ' 1 , • , 2, v •0 „,,,. ..,... , 1111•11 ram . , .,, ... .. ,,. .... ... ,...... _ ~.4,0 ......i. .0%,..... AZUSA 1 Recommendation Staff is only soliciting input from the Utility Board on the concept of automated waste recycling at this time. . • • San Juan Power Plant Update "'N//p"'"s I* 8,,,' 4, ',•,`;' 047 ..,": ',.• . .,, :.*.4' •',,t- "'-... , •.. li,-. , ,,,,e.'''''. 1 0 0 „,• . . ":..::,7, •fit,, NE ... ,•., — *,.. #4 1 .. . . , s,'• , 0 . .. , ... s Irk. . pp 401- . -• '..- ,,,,,,x:. sti" , 44,,,,...., , . ., . . , , . • .. , • ..44,.'",; ,'.-. '; ." 00 „. . , ''f' • , •,. - re", ' , ilikitt 'N," . . ,j.,-.:i, •-. '4411t -1111-44 .,..., - , . \. r''' j- I•pail iiirit, ' - 1116 ., . " (''' , *V,,,4•41400.1, , 4.1611100110106114 , .6. . • #. . . , . .... .. : . ... ., . 1 . . ..,„ tit ,..* ' ' 4'..-%•-.,' ',,,4„,„,„41, ; • 11 91111 . 4, ',x; •!k:k',..,.,. ; .. I - 11 40 .1,.' .'^,., t'• • ,.. I . *.:741•. 7,411 Azusa Utility Board 1 201100%,„„-• di.•%0 21 AZUSA . 3/ ',•. A • Update Coal Mine Fire EPA "BART" Order Sierra Club Lawsuit New Coal Contract Negotiations UAMPS Agreement Or elinimmemsh AZLISA _ CH1 & WA( ti DIRECTOR'S ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES G DATE: NOVEMBER 28, 2011 SUBJECT: DROUGHT TOLERANT LANDSCAPE SHOWCASE PLAQUE DEDICATION This is a dedication of the Drought Tolerant Landscape Showcase plaque located in front of the Azusa Light & Water building. In 2009, San Gabriel Valley Municipal Water District (SGVMWD), the primary replenishment water provider for the City of Azusa, approved up to $50,000 in funding for Drought Tolerant Landscape Showcases throughout the City of Azusa. The primary purpose of these showcase projects is to provide examples of drought tolerant landscaping for the citizens and businesses within the City of Azusa. Four sites were selected for showcase projects for their ability to represent typical residential or business landscapes. The locations include the planter at the Azusa Chamber of Commerce office, the planter area in front of the Light & Water building, landscaped areas at the Gateway Center near the mouth of Azusa Canyon, and landscaped areas at the North Recreation Center (NRC) located at Memorial Park. The installation of the plant markers and the plaque dedications are the final steps in providing educational landscape demonstration showcases for the citizens and businesses within the City of Azusa. Prepared by: Paul Reid, Business Development/Public Benefit Programs Coordinator • 005 z( U ~Y C 3 d x: _ a A o � Z Y O m N W J cc W U U a 3 o N p, :� C v$ .A m m O O N H .. t iii vi V1 m O4 i W .g- U OP ._ Q1a O C o Q.) O p N .h N U C O ` o yr X to 0 +— i-- .0 —. m V L- 0 Y ' Z O a) 'v' a Q n0 Qy F-- U '-. C o -O Z Z n -0 - z O LL- N cL ry �— Z o I- Q Qa U .2 ui - x p) U o Q U cr 'O Q Ct; O N a) ,o p c v) O o UJ k../ CCmc c in -- . Q m a 0 a oa m N O L G Qs U m 41:1 V , .• S < W fa Sfi - 4, m w I- ,Qi ., v .. m 4 O ...y pQ y O i 7) 0t, i (� a m P 1.0 A it 74 O O 0 ci) 0 O • k k • 0. GO v • - O � o V v CA p y ,it: � ' G0,,, R▪ O tey ^' ,.. t- ' t C7 oLbc rO 1 " -,, � O `Laa * � di 'Qr flu m y �+ O 'CS z. oo `�z 2ooN cn M,„ 5 * . 0 cGS c v ° c� MM�'� � r0 S3+Mfr 0 .r CJ Q epi v e., Q Mei I Q CE.-, u •Q3 : t g • E O , mDn ; vim -O 01) , A'14 v Zp� 85 ~ O ca „ 4, .. — ' J z ..0v y � a7, vy y a � O e — • °0 cv a uv NV R pO `a v . : h.. m44.4.,>F ° .Y E4W Vv + �v II:t 44 1: i i Z 1 i 19 e5 et • v O O V . iy Kyw a . N .d Q<> . o h. et p >- U m N O • w . - ° ai Q M 006 ✓ � J-. Ai- -,sr 1 , „.,,,,,,,,,..., �i. JF4 „,,,,,,,,m, „.,,,,,,,,„, , _,:, „ , „,,,,,, „,,,,,„„ a s ' ''''s . : ""�`�� § Fes,rt i� :'-4-4.--, x-�,:;;41:,-;., '' ,-a{-' k r” ,2X1 4 V AZ US A LIGHT 4 WATER CITY OF AZUSA MINUTES OF THE REGULAR MEETING OF THE AZUSA UTILITY BOARD/CITY COUNCIL MONDAY,OCTOBER 24,2011 —6:30 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 Assistant Director of Utilities Kalscheuer led in the Flag Salute. Flag Salute ROLL CALL Roll Call PRESENT: BOARD MEMBERS: GONZALES, CARRILLO, HANKS, ROCHA ABSENT: BOARD MEMBERS: MACIAS ALSO PRESENT: Also Present City Attorney Ferre,City Manager Delach, Director of Utilities Morrow,Assistant to the Director of Utilities Kalscheuer,Assistant Director of Water Operations Anderson,Assistant Director of Resource Management Lehr,Associate Engineer Barbosa,Electric Engineer Vuong, Public Works Director/Assistant City Manager Haes, Captain Momot, City Clerk Mendoza, Deputy City Clerk Toscano. PUBLIC PARTICIPATION Pub Part Mr. Art Morales addressed the Board Members asking the feasibility of setting a Light and Water Bill Drop A. Morales Box on Azusa Avenue for easier access,placing a light at Senior center deposit for recyclables,set aside funds Comments to lend people in order to pay bills, and noted the courteousness of Light and Water employees. UTILITIES DIRECTOR COMMENTS Dir Comment Director of Utilities Morrow addressed the Board Members stating that the House of Representatives and Dir of Utilities Senate have approved a 30 year extension of contract with Hoover Dam, which is part of the renewable Comments portfolio. He responded to questions posed regarding upgrade. He stated that there will be an Athens' proposal at the next meeting regarding automated trash collection. Assistant Director of Water Operations Anderson introduced new Light and Water employee of the Water Division Melisa Barbosa Associate Engineer. 007 UTILITY BOARD MEMBER COMMENTS Brd Mbr Corn Board Member Rocha welcomed the new Light and Water employee Associate Engineer Melisa Barbosa to the Rocha City of Azusa. Comment The CONSENT CALENDAR consisting of Items D-1 through D-4, were approved by motion of Board Consent Cal Member Carrillo, seconded by Board Member Gonzales and unanimously* carried. Appvd 1. The minutes of the regular meeting of September 26, 2011, were approved as written. Minutes 2. Approval was given for the purchase of a new engineering plan copier/large document scanner from Purchase ARC Imaging Resources Company in amount not-to-exceed$14,201.98 including applicable tax and Engr Copier trade in value of old equipment. 3. Approval was given for the termination of contract with PMR Progressive,LLC collection agency and Term PMR authorization was given to issue a Request for Proposals for a new collection agency. New RFP 4. Approval was given for the purchase of a rugged handheld industrial thermal imager for Electric Purchase Division from B&K Electric Wholesale in amount not-to-exceed $9,475.32 plus applicable tax. Imager SPECIAL CALL ITEM Spec Call Item None. None SCHEDULED ITEMS Sched Items Financial Security Agreements with the ISO for Congestion Revenue Rights(CRR)Auction. Fin Sec Agmts Assistant Director of Resource Management Lehr addressed the item stating that Azusa Light and Water is Asst Dir Res working with the California Independent System Operator (ISO) to purchase Congestion Revenue Rights Mngmt Lehr (CRR). These rights allow Azusa to manage transmission congestion. Azusa routinely purchases additional Comments CRRs at the ISO auctions to protect against unforeseen transmission costs associated with importing energy from remote resources. This year the ISO is requiring a Security Agreement along with financial collateral via Certificate of Deposit or cash account to enable Azusa to participate in the ISO CRR auction. Moved by Board Member Carrillo,seconded by Board Member Rocha and unanimously*carried to authorize Financial the Director of Utilities to execute periodic Financial Security Agreements with the California Independent Security Agmts System Operator(ISO)in amount not-to-exceed$500,000;and authorize the City Treasurer to establish cash Approved deposits or other instruments sufficient to fulfill the agreement obligations on behalf of Azusa Light&Water. STAFF REPORTS/COMMUNICATIONS Staff Rpts Local Adoption of SBX 1 2 SBX 1 2 Assistant Director of Resource Management Lehr presented Renewable Portfolio Standard law that will Assist Dir Res become effective on December 10,2011. He stated that regulations regarding the law are not finalized yet,not Mngmt Lehr until June or July of 2012,but the law requires that governing bodies of publicly-owned electric utilities adopt Presentation an RPS "Enforcement Program" by January 2012. He stated that SBX 1 2 requires a 30-day notice be published in the local newspaper as well as posted on the Azusa L&W website to advise the public that on November 28,2011 the Board will be considering adoption of a RPS Enforcement Program,he advised that that will be completed. 10/24/11 PAGE TWO 008 State Mandated Commercial Recycling Program Requirements Com Recycle Assistant to the Director of Utilities Kalscheuer addressed the issue providing information on the regulatory Assist to Dir and legislative efforts by the State to mandate commercial recycling by 2012. Assembly Bill 32 requires GHG Util Kalscheuer emissions reduced to 1990 levels by 2020, and in the areas of solid waste sector it was determined that Presentations significant source of Greenhouse Gas emissions,mainly methane was emitted from landfills is 20 times more effective for trapping heat in atmosphere than CO2 and so is important to reduce. While the regulation was under development the State enacted AB 341 which parallels AB 32 and it sets a 75%waste diversion target by 2020. Regulations pertaining to commercial recycling have been under development with a targeted date of January 1,2012 and implementation by local jurisdiction and businesses by July 1,2012.In Azusa there is the MRF program where all the commercial materials are going through Athens Materials Recovery Facility which allows compliance with regulations. Utilities Director Morrow provided an Update on Vulcan Water Rights usage stating that in 1996 Vulcan Dir of Utilities granted a permit to maintain and operate City Well No. 19031 19,the permit was amended in 1999 to allow Update Vulcan Vulcan to borrow water for up to 5 years and small amounts were borrowed and repaid annually. However, Water Rights there was no record of repayment for FY02 and FY03. Light & Water staff recently met with Vulcan to Transfers discuss outstanding water repayments and Vulcan researched its records to see what payments were made. Utilities Director Morrow provided an update on SCPPA, Southern California Public Power Authority,and Dir of Utilities Legislative Briefing as he and Chairman Hanks attended a Legislative Lunch Briefing on September 30,2011. SCPPA He talked about projects, energy centers, financial activities, its speakers, etc. He responded to questions posed regarding Hoover Dam and invited Board Members to take a tour some time. He provided an update on San Juan stating there was a small fire there and it may be as long as April 2012 to be able to go into the coal mine and last week the MOU, Letter of Intent for the sale of San Juan was signed. It was consensus of Board Members to adjourn. Adjourn TIME OF ADJOURNMENT: 7:05 P.M. SECRETARY NEXT RESOLUTION NO. 11-C75. * Indicates Macias absent. 10/24/11 PAGE THREE 009 4.42 • i,-z .5 y -P .,°, ° 1.'C' '`de"x r'ert'^ " `s # " �^t :,:3 1 � r$g s ›,;e4.• AZUSA . CMT .Z41E1 CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIESiv( c j" DATE: NOVEMBER 28, 2011 SUBJECT: APPROVAL OF FINANCIAL ADVISOR SERVICES RECOMMENDATION It is recommended that the Utility Board approve the selection of Public Financial Management, Inc. (PFM) to serve as Financial Advisor to Azusa Light & Water in not-to-exceed amount of $40,000. BACKGROUND In September 2011, the Utility Board authorized staff to release a Request for Proposals (RFP) to evaluate cost savings that might be realized by refinancing outstanding long term debt issued by the water utility in 2003, and then assist the Utility to refund outstanding debt should the refunding analysis indicate the cost savings justifies a refinancing effort. The final RFP divided the Scope of Work into three phases: Phase 1 Analyze cost savings of refinancing the 2003 Series A water utility debt Phase 2 Assist to refinance the Series A debt Phase 3 Provide ongoing financial advisory services Five proposals were received in response to our RFP by the deadline of November 17,2011: Firm Name Phase 1 Phase 2 Phase 3 Phases 1 &2 Urban Futures No charge $21,750 $3,000/Yr# $21,750 Fieldman-Rolapp No charge $31,440 Hrly $34,440** PFM $2,500 $37,500 Hrly $40,000 PRAG* $8,125 $34,500 Hrly $42,625 Lamont $25,000 $50,000 $75,000/Yr# $75,000 *Public Resources Advisory Group **Includes$3,000 for Out of Pocket expenses. #Not to Exceed Amounts 010 Financial Advisor Services November 28,2011 Page 2 Four of the five firms that submitted proposals submitted preliminary analysis on potential savings associated with refunding the Series A Certificates of Participation (COP) debt of $13.965 million, and three proposals included some analysis of refunding the Series B debt of $5.47 million associated with construction of the Kirkwall substation. Below summarizes this preliminary analysis for Series A debt: Firm Name Series A-NPV Savings* PRAG $609,000-$1,266,000 PFM $673,000-$960,000 Urban Futures $705,000 Fieldman-Rolapp $620,000 *NPV=Net Present Value While each firm appears well qualified to provide the requested services, staff felt that the best proposals were submitted by PFM and PRAG; these two firms coincidentally articulated refunding options which harbored the greatest potential for NPV cost savings. While PRAG's proposal appeared to offer very strong analytic capabilities, PFM's proposal appeared stronger in terms of providing assistance to the Utility on maintaining and improving its credit rating, and in providing ongoing financial advisory services which are clearly delineated in PFM's proposal. Staff is recommending selection of PFM at a cost not-to-exceed $40,000 for phases 1 and 2 and for ongoing services as outlined in attached proposal. FISCAL IMPACT The cost of this approval would be $2,500 for phase 1 and if it is decided to pursue refinancing this fiscal year, an additional $37,500 would be necessary. If this item is approved, staff will process a budget amendment to cover the cost of this service in amount of$40,000 from water fund 32. Staff will administratively approve a budget amendment of$3,000 for phase 3 services if they become necessary later this fiscal year, and will budget funds for ongoing services next year. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities 011 W. The PFM Group p l NOV l 7 201 GI N ,CL, �I: 74"D- F.,Li.; '.A L'OF'T<< ,V ,:rt._. "4 1446r6 U ` � D litt ev- AZlSA City of Azusa Response to Request for Proposal Refunding Water Utility Debt and Ongoing Financial Advisory Services November 17,2011 Mike Berwanger and Brian Thomas Public Financial Management,Inc. 601 South Figueroa Street,Suite 4500 Los Angeles, CA 90017 (213)489-4075 Fax(213)489-4085 berwanaerm@ofm.com I thomasb@pfm.com 012 ,r 601 South Fiaueroc Strad ( 1�)4E9•4075(Phcne) suite 4500 (213)439-403.1 (Fax) e The PFM Group Los Angeles CA 90317 ti.rw.pfm.com Mr. George F. Morrow City of Azusa 729 N.Azusa Avenue Azusa, CA 91702 November 17,2011 Dear George, On behalf of the PFM Group we are very pleased to have this opportunity to present our proposal to serve as financial advisor to Azusa Light & Water ("AL&W"). We have very much appreciated our opportunity to work with you in various capacities over the years and with AL&W through the Southern California Public Power Authority("SCPPA") and Northern California Power Agency ("NCPA") for more than a decade. We would be eager to have the opportunity to work with AL&W and as such we have assembled a team of professionals who are the best in the business and who can offer expertise which can provide value to AL&W's ratepayers. PFM has successfully helped numerous clients like AL&W complete numerous financings exactly like the one we which AL&W is contemplating. For example, in the last week alone, PFM completed an almost identical advance refunding for the SCPPA Magnolia Power Project which resulted in over 8%savings. As you read through our response to the RFP, we would call your attention to the following attributes of PFM: • PFM has the ability to offer a full scope of services to AL&W. The ability of PFM to offer financial planning and financial modeling services, rating agency expertise, and investor outreach complements our core debt transaction services. • PFM's broad expertise and significant presence in the California water and power business is unmatched by any other firm. We bring a level of market understanding and financing considerations that will directly benefit AL&W in its interactions with a number of parties, including ratings agencies, investors, and underwriters. • PFM will dedicate its seasoned California public utility advisory team—Mike Berwanger, Brian Thomas, Will Frymann, Eric Espino, and Rian Irani—to this engagement. This team has over 55 years of municipal finance experience (much of it in California) and has completed many dozens of California water and power financings. • PFM's success, in large part, can be measured by the loyalty of its California municipal utility clients, and we strongly encourage AL&W to contact our references as part of the RFP evaluation process. The ability to provide superior value to our clients has allowed us to maintain lengthy financial advisory relationships with our California municipal utility clients and we are proud of these relationships. • PFM offers competitive fees, and we strongly believe that the net value of PFM will significantly exceed that which is offered by other financial advisory firms. PFM will pay for our fees many times over in interest cost savings, and PFM,amongst financial advisors,will represent the greatest value to AL&W. PFM is the largest independent financial advisory firm to municipalities and not-for-profit agencies nationally and in California, and is solely dedicated to the advocacy of our public sector clients. PFM is also a MSRB and SEC registered financial advisor, which is important to AL&W with the increased regulatory scrutiny of the municipal bond market. 013 PFM's utility group,of which our AL&W team is a part,is the most experienced public utility financial advisory team in the country. PFM's team is a team of people you know and,equally important,a team of people who know you. Our core team is a unique blend of local Southern California based,California based and nationally connected individuals whose breadth of experience is matched only by its local feel. Most importantly,we are 100%focused on the interests of AL&W and we have no conflicts of interest that limit our ability to advocate aggressively on behalf of AL&W and PFM will provide a guarantee to provide a premier quality of service that will result in tangible benefits to AL&W and its ratepayers. We look forward to the opportunity to continue to deliver on this promise. Please contact either one of us if you have any questions concerning this proposal. Sincerely, Public Financial Management,Inc. any v J%11 nn). Mike Berwanger Brian Thomas Managing Director Managing Director 601 South Figueroa Street,Suite 4500 601 South Figueroa Street,Suite 4500 Los Angeles,CA 90017 Los Angeles,CA 90017 (213)489-4075(phone) (213)489-4075(phone) (213)489-4085(fax) (213)489-4085(fax) berwangerm@pfm.com thomasb©pf m.com 014 op! \; Table of Contents Company and Staff/Qualifications 1 Work Plan 10 Data Request 20 Scope Exclusions/Addenda 20 Deliverables 20 Schedule 21 Lump Sum Not-To-Exceed Fee 22 Fee Schedule/Hourly Rates 24 Other Client Commitments 25 Appendices Refunding Cash Flows Debt Profile Series Reports 11 015 W Company and Staff/Qualifications a) Name of firm and mailing address, phone and fax number of the proposer's principle place of business. b) Mailing address, phone and fax number of the office in which the project team will work. The PFM Group is the nation's premier, independent municipal financial(Public Financial Management, Inc, "PFM")and investment advisory firm(PFM Asset Management LLC, "PFMAM') Firm Head!uarters Pro'ect Team Two Logan Square, Suite 1600 601 S. Figueroa Street,Suite 4500 50 California Street, Suite 2300 Philadelphia, PA 19103 Los Angeles, CA 90017 San Francisco.CA 94111 Tel: (215)567-6100 Tel: (213)489-4075 Tel: (415)982-5544 Fax: (215) 567-4180 Fax: (213)489-4085 Fax: (415) 982-4513 c, Mailing address, staffing and degree of participation in analysis/refunding by any other firm or subcontractor. N/A. PFM will not be using any other firm or subcontractor. d) Cverail company experience in utility infrastructure financings or debt refunding. PFM consistently ranks first among financial advisors. We hope it will be evident that no other firm can hold a candle to our level of experience with utility infrastructure financings and debt refundings. PFM has helped clients resolve the myriad of financial, legal, and structural concerns they confront during the capital formation process. Our national reputation and consistent growth ($5.0 billion in managed debt transactions in 1986 to $57.5 billion in 2010) reflect our clients' recognition of our capabilities and of the value we add. No other firm has anywhere near our experience when measured as a function of both the number and par amount of transactions executed. Managing the largest number of transactions gives us unrivaled experience in the capital markets. We know the preferences of the investor community and the financial and credit structures that are currently best accepted. We know which investors are active buyers, the types of securities they currently prefer, and the maximum price they are willing to pay for a given security. Besides managing a large number of transactions, PFM also serves as financial advisor on many of the largest transactions brought to market each year. These transactions often involve intricate financial plans, the sale of sophisticated securities, high-end quantitative modeling, and complicated tax analysis. Managing such transactions ensures that PFM remains on the cutting edge of the public finance industry. Our clients benefit from our ability to optimize their transactions using the complete array of structures, securities and techniques available. From 2006 to 3Q 2011 PFM has completed 508 water, sewer and gas transactions with a total par amount of$31 billion, consistently ranking first in term of dollar volume. Water. Sewer and Gas Long-Term Municipal New Issues 2006-2011 Third Quarter Water,Sewer&Gas Long-Term Municipal New issues Aa',ana't,bn r.r f'r rgg i)?e.d .. t ' r}.'n,- r, Lel Fb lAeworyf#awlir3 �r;'� ,t. ter f':1 v- ur.'. r.7d a,•-r Y f=?�� Seism The Ll aybr.8eem'tie,Doh Canaan, Dollar I tranta iowa arMut:m mI1;a,a Year Volume Rank Number Rank P �0 ($in mll) of Issues FlretSoulh eet 060 17,250.1 30 2011 $3,573.2 #1 70 #2 Lamont Rrandal 84 ,2.81.6 Sarvks,Corp 2010 $5,919.3 i #1 116 #2 Publs.Re-ources 101 6,905.17 r _ - - Ad,,,ry Group 2009 $5,0722 ' #1 83 #2 ,,,or„aoUe ,,,,b Araociatae LLC 42 6,428.8 2008 $4,889.9 ; #1 87 #2 2007 $6,761.9 #1 72 #2 RBC capnai Mertes 4,732.4 2006 SeeVla-lorthwaal $3,987.9 #1 79 #2 Se whits corp 92 38e1.2 1 016 Company and Staff/Qualifications From 2006 to 30 2011 PFM has completed 293 public power transactions with a total par amount of$37 billion—more than all competing firms combined. PFM has also been the leading public power advisor in California over the past five years. Public Power long-Term Municipal New issues 2006—2011 Third Quarter Public Power Long-Term Municipal New moues I,.WI'liar r_h')..�1d;Fu 1dr�..;A AOvr,,i!'y‘.1,a 15%•Li MeaavlAsakpaf F:r'roarAAsvy p Swap;The Bond6ulw.sacwgse Prig Sl:r:'n'P'ritE 1-1,',111 Ma'.N:.56i J'fLtS LL3N_�ih7l;aG1 ComOa'y Dollar ,nana.ouon, dollen, mama ;n m . Year Volume Rank Number Rank PFM of issues ,,,„� s 20 ($in mil) Arsadat s LLC e'47a.2 30 2011 $4,700.8 #1 33 #1 Barclays!Caa,al 24 4,800.0 2010 $9,465 7 #1 78 j #1 _.. ..._._ McDonald Partnere Inc 40 4.988.9 2009 $7,289.3 , #1 66 _ #1 PNC Financial Sarvkee 10 v. 4,285.8 2008 $8,431.8 #1 ' 59 #1 Group G wt Devabpmer8 8 9,607.7 2007 $4,284.1 i #1 ' 31 #1 Bank for Piano Rico Public Rim:Rare 2006 $3,073.7 #1 24 #141 3,328.0 Advisory Group From 2006 to 3Q 2011 PFM has completed 2,084 refunding transactions with a total par amount of$120 billion, consistently ranking first in term of dollar volume and par amount. Refunding Long-Term Municipal New Issues l unkOrd F �u -°or 55r Refunding Long-Term Municipal New LIMAS .N.711'„x"�11," r,tIFa,7-nar 4„',,::u• I--IJt, ;a source:The Bond&ojn S.c tilas Dab Comp.' ti,',:/,it ir,eM,nit tfi/ er.,St,c urmrs'Data 1.47,tipirn,' ttanaxt"a,s ddlara v,mations Dollar PHA F"" mis ' Year Volume i Rank Rank of issues Pub6cRnoursa ail6a96rr ($in mil) Advisory Grouo 3612011 $15,067.7 #1 306 #1 FkstSoathwest 1,077 54,ae1.8 2010 $18,2492 ! #1 405 #1 Kaufman Halt& 343 94,069.3 _ ... _ _ .. Assoolates Inc , 2009 $23,1682 #1 378 #1 Ponder&Co 22a 22,722 2008 n $24,512.5 � #1 _ 332 1 #1 ....-.. - .-. RBC Capital Markets Bei 26242.0 2007 $15,7891 #1 i 241 . #1 Montague o.Rosea 07 2006 $12,470.8 #1 260 #1 Asa.�dLL at*, C :5,1e55 Although rankings provide a shorthand method of measuring success, it adds credence to our top billing when coupled with the length of service and level of satisfaction we provide our clients. At PFM, we view our decade- long association with many clients as an affirmation of our ability to service their needs thoughtfully and efficiently. We are committed to developing long-term relationships with our clients to ensure that their interests are protected and their goals are achieved and we believe that no other firm can evidence a comparable level of advocacy for the interests of public utilities in California. PFM's Decade+Relationships with California Utility Clients ossk., raw ,/4CPA SCPPA a fit XD �r� Rv.� •�..•• TANG WAT”,L POWER 1.RUIY j14 years 1 13 years 12 years 11 years i 15 years t 13 years 1 22 years 1 10 years 13 years 1.12years i 22 years 1 PREMIER PUBLIC UTILITIES PRACTICE The financial advisory business is a business of ideas, and PFM's very culture is designed to develop financial ideas and to leverage the expertise of a national firm into focused business sectors such as public utilities. PFM's Public Utilities Group's sole focus is assisting municipal public power utilities, joint action agencies, water and wastewater systems, and combined utilities optimally develop and manage their debt, derivative and asset portfolios. 2 017 Company and Staff/Qualifications PFM has unmatched experience with municipal utilities and has worked on a broad range of financings.As shown earlier,we are the nation's leading financial advisor to public power,and water and wastewater, and have served as financial advisor on more public power,and water,wastewater,gas deals In terms of par amount and number of transactions than any other firm.PFM's public utility professionals have,at some point in their careers, worked in a meaningful capacity with over 90% of the 50 largest public power issuers and several of the largest water and wastewater issuers.In doing so,PFM has worked with clients to complete literally hundreds of transactions,and each transaction has been tailored to the needs of the client. PFM's experience offers the accumulated experience of the municipal markets and the accumulated experience of the public utility space, which our team has acquired by representing more such clients than almost all of our competitors combined. PFM's recent experience would offer AL&W unique insights and advantages in transacting the contemplated water system refunding of the 2003 Series A bonds. For example,PFM has within the last week priced a very similar advance refunding transaction,with an escrow to a 2013 call date,for the Southern California Public Power Authority("SCPPA"). A brief case study of that transaction is given below. CASE STUDY:SCPPA MAGNOLIA 2011-1 REFUNDING-S5 MILLION NPV SAVINGS PFM recently completed a returning of Series 2003-1 Magnolia Power Project bonds for the Southern California Public Power Authority("SCPPA") The transaction was an advance refunding which made use of an advance refunding escrow with a maturity in 2013 at which point the prior bonds will be called. The transaction was SCPPA priced by Morgan Stanley and going into the pricing,Morgan Stanley was showing indicated spreads to the MMD AAA GO benchmark index of 0.80%and was arguing that the pricing date,in the midst of the heaviest supply volume week of the year,combined with the recent bankruptcy filing of Jefferson County,justified such spreads PFM pushed Morgan Stanley to tighten the scale approximately 0 05%going into the pre-pncing period and advocated for even lower yields going into the pricing period at which point,Morgan Stanley lowered yields several basis points more. When orders came in,the transaction was roughly 3x oversubscribed which suggested that yields should be made slightly lower. However,PFM was able to argue for another 0.05%decrease in yields These adjustments were made in the context of increasing MMD MA GO benchmark rates,and so at the end of the day,SCPPA priced almost 0.20%through the original Morgan Stanley estimates notwithstanding the challenging issuance week and macroeconomic drivers. The 2011-1 Magnolia Power Project transaction produced over$5 million present value savings—more than 8%—and the transaction did substantially better than comparable deals For example,PFM was able to price the Magnolia bonds substantially better than Snohomish PUD bonds which were sold two weeks earlier This was true despite the market becoming more volatile and Snohomish PUD's higher ratings. In fact, if SCPPA had priced the 2011-1 Magnolia Power Project transaction at the same spread levels as the Snohomish PUD transaction,savings would have been$600,000 lower In addition to saving hundreds of thousands of dollars on the pricing levels, PFM was also able to obtain tens of thousands in additional savings by conducting a secunty-by-security bidding process for the refunding escrow which was ultimately composed of both Open Market Treasuries and SLGS. PFM also recently(in July 2011)completed a financing for Eastern Municipal Water District which was very successful. A brief case study of that transaction is given below. CASE STuov:EMWD 2011A REFUNDING PFM recently completed a retuning of Series 2001 A,2001C,20080 and 2008E Eastern Municipal Water District("EWMD")bonds. The transaction was a current refunding which was priced by Bank of America. Pm-pricing indications suggested competitive tax-exempt spreads to the MMD AAA GO benchmark index of 0.05%to 0.26% across the scale. As the pricing process progressed, PFM was able to argue for reductions in by an average of about 3 basis points,despite AA Revenue benchmark spreads in the market remaining perfectly constant. PFM was ultimately able to price the EMWD 2011A transaction with lower yields than Contra Costa Water District's issuance which was slightly better rated and was able to price with lower yields than San Bemardino's MA rated issuance. The EMWD 2011A refunding ultimately produced almost$6 million in present value interest cost savings—more than 13%— and reduced the variable rate exposure which EMWD previously had on the 20080 and 2008E bonds. 3 018 AdriF- .., Company and Staff/Qualifications PFM'S CALIFOFttULA WA1#_H A►10 WASTEWATER Ci.IENTS PFM'S CALIFOR A PUBLIC. POKIER CLIENTS' tSWah P+tao.r?Ia'4- Ib arrnr^`� ... . Am,talon of Calfomia / .0—.10-41.8 Finan s Authority Y.ratrApanciss'.JPIA t 1,it�•'abalr!. r r City usica ....................... _Reddnp Electric Cly 01of FortunaEsac ram tnt3 W!unbipal/ Utility utiit:,D`trn.t David We diene Wst.rSupply Prjc.i • / Saarerranic Suburban Waist Diatrbf Uty of Vattsjo\ r y or Rost•lpa Transmission City of Saris Rana \ r.......• ElDruidoMpat-nDletrt:.1 Ag4nCY Of NOrthefn Cohost is Conlin!Marin Sanitation Agan; Nlxtttern Cslifom - Agency ency at e * ..„..,,- Cry of Patsbesg Sacramento _.--- AmadorWafer Ap.nc, Municipal Roseville Electric North Coast County Watt OletrIct Comm Co^ta Water District Utility Dlddcl - Lad! Pima Vdie,%atm Mane airrani Apan•y a — Oakwood Lak•Waler Districtfon District , c ty of Moc c noAlesteeda Tcrbolt I�Be Mort vary R. I nal WafarPollution Cnrsro1Agency s TurlockkrigatbnDIst4,t MuniCipelPower cBurbanksnkN ----- card•n Merced ny of alum R�lonal liarity of District - WastWtds Wats District Palo�11tO // / N. i Cty:r3iardale 1", / Wag.utyo'3anLuiaCrbhpo �. Cltyof8nBernardino egum Municipal Wats.Dlatri_t ` S iColc Willy tiolsla wset S.r sty Dist ti.l �.�. • . ,— Chia B4,,n Leash w Authority Power Cantrai Basin Municipal Watr Dtstriet — .nlarxl Empire Alta:Agen-y West Basin Municipal Wat.r District --Z.: a Orange Gwen;Water Distnc' Lis Artgs�aa Ospeamentof Water and Rower �^ Yur�Ipa Val sy Vrator Di�!r�t BUrbt�r�c MINK Met Water District of Southern Daft �/ I e ''- Santa Margarita Winer Drys t and Prewar City of maids '// city of ii orates Imp.Aal Irrigittbn District Southern AUi►Oriy� aheim City of Lcng Bloch Rancho California Water District post Power • tiiarPow Water El Toro Water Dl trict --and Slush Coast Water Dain I t \ Lot Angeles Department e 3 _Anaheim Pi c Ol: rit aaln Municipal Water District Laucaobi WastMwla Vita Irrigation DIsU t of Water and Power L>diiltes City of S7iDiego Olatri(X Pada Dam MurWlpal Riverside Public Utilities Water District it Flresndsl Advisory and Mufrpie Services Clients Imperial kriQetlon amid A iemati a Services CNerrts COMPETITIVE BOND SALE EXPERTISE 2010 Year End Competitive Long-Term Municipal New Issues P atonal M.vikrgraf Financia!Advisory Rankhg PFM, as an independent financial advisory firm, places 3c a: nrasw,dagnansacr�vE.anaracoagr'arry considerable corporate emphasis on the professional and 0trartsaottiats dollars in millions skillful conduct of competitive issues. The public finance PFM MIIIIIIMIIIIIIIIIIIIIIIM departments of investment banks generate the vast majority ,'4,ilz. oarY of their revenues from negotiated bond issues and therefore Adwts°r„GtoaP ev �'' °''m� have a natural bias, both in attitude and experience, to Rretsouthwest ; .141414, 4,6M2 negotiated issues. As an independent financial advisor, we Spring:dad -225 $2132 have no vested interested in either method of sale so our 'ne°rp°rata a Northwest P 175 6 advice is based solely on the most beneficial structure for the s.at 5ecwritlesCorp. 24 issuer. It has always been PFM's position that independence Montsgue•D.Roaa& 14 1,714.1 and experience are at the core of good advocacy. While we Aeaxtee L0 possess the experience and resources of the largest national Ditert"SaCICiate6 31& 1.656.3 investment banks, we are independent and therefore have no Rose,Sinclalre& 780 1,647.9 Associates LLC conflicts of interest in representing clients; we also have the resources and market clout to properly represent clients in all Piper,Jathay&Co. 1 1,4173.6 markets. Davenport LLCport&Company45 1,426.1 PFM works on hundreds of competitive issues each year and, in fact, the team prides itself on successfully bringing non-general obligation issuers to the competitive markets. In addition to our number one rankings in total financings and power and water financings, PFM also leads the industry in number of competitive sales. In 2010 PFM advised on $15.1 billion in par—more than twice the total issuance value of the number two firm. While only 16.8% of all municipal bond transactions were issued on a competitive basis in 2010, 26.3% of all of the transactions managed by PFM were issued on a competitive basis. 4 01 9 Company and Staff/Qualifications e) Listing of recant financ,•nys or bond issuances managed by Financial Advisor of e similar nature to this RFP. 2006.to 3e, 011 PFM Advised Public Utili Fixed-Rate Refunding Transactions Issuer i .. Type of Financings Sale Date . Par Amount Southern California Public Power Authority Magnolia Power Project A,Refunding Revenue Bonds,2011-1 11/5/2011 : $62,265,000 Palo Alto,City of Utility Revenue Refunding Bonds,2011 Series A 9/8/2011 ' $17,225,000 Turlock Irrigation District First Priority Subordinated Revenue Refunding Bonds,Series 2011 7/27/2011 $206,940,000 l imperial Irrigation District Electric System Refunding Revenue Bonds,Series 2011 C 7/27/2011 $75,745,000 San Francisco Public Utilities Commission San Francisco Water Revenue Bonds,2011 Sub-Series D Bonds 7/21/2011 i $55,465,000 (SFPUC) (Refunding) Imperial Imgation District Water System Refunding Revenue Bonds,2011 Series 7/7/2011 $12,925,000 Eastern Municipal Water District Refunding Water and Sewer Revenue Bonds.Series 2011A 7/6/2011 $56,255,000 Contra Costa Water District Water Revenue Refunding Bonds,Series P 6/21/2011 $46,705,000 imperial Irrigation District Electric System Refunding Revenue Bonds,Series 2011B 6/8/2011 ! $75,485,000 South Placer Wastewater Authority Wastewater Revenue Refunding Bonds,Series 2011C 3/30/2011 $67,040,000 Watereuse Finance Authority Refunding Revenue Bonds 2011 Series A(Vallejo Sanitation and Flood 3/23/2011 $3,345,000 . Control District Refunding Program) Imperial Irrigation District Electric System Refunding Revenue Bonds,Series 2011A 2/14/2011 ± $78.065,000 Southern California Public Power Authority Transmission Project Revenue Bonds,2011 Subordinate Refunding 1/20/2011 $169,350,000 i Series A(Southam Transmission Protect) l Southern California Public Power Authority Transmission Project Revenue Bonds,2011 Subordinate Series B 1/20/2011 $27,640,000 (Federally Taxable)-(Southern Transmission Project) San Francisco Public Utilities Commission San Francisco Water Revenue Bonds,2010 Sub-Series F Bonds(Tax- 12/15/2010 $180,960,000 , (SFPUC),.City and County.of Exempt)_ : ..... .. ...... . I San Francisco Public Utilities Commission San Francisco Water Revenue Bonds,2010 Sub-Series G Bonds 12/15/2010 ' $351,470,000 ' (SFPUCZ,City and County of . (Federally Taxable-Build America Bonds-Direct Payment) ! Burbank Water and Power,City of ' Water Revenue/Refunding Bonds,Series of 2010A _ 10/2612010 ; $6,795,000 Imperial Irrigation District Water ri System Refunding Revenue RefundingB9!s,2010fes ies0 9/30/20i ii -- - , Roseville Finance Authority . El B 9% Company and Staff/Qualifications 2006 to 30 2011 PFM Advised Public Utility Fixed-Rate Refundin. Transactions Issuer _ Type of Financings Sale Date Par Amount Refunding Series D Northern California Power Agency Hydroelectric Project Number One Revenue Bonds 2008 Refunding 7/24/2008 $128,005,000 Series C Sacramento Municipal Utility District Electric Revenue Refunding Bonds,2008 Series U 5/29/2008 $521,730,000 Chino Basin Desalter Authority Deserter Revenue Refunding Bonds Series 2008 A 5/28/2008 $89,440,000 Redding,City of Electric System Revenue Certificates of Participation 2008 Series A 5/15/2008 $157,965.000 Southern California Public Power Authority Transmission Project Revenue Bonds,2008 Subordinate Refunding 5/7/2008 $48,025,000 Series A(Southern Transmission Project) Oakland Joint Powers Financing Authority Lease Revenue Refunding Bonds(Oakland Administration Buildings) 4/16/2008 $113,450,000 2008 Series B Southern California Public Power Authority Natural Gas Project A,2008 Revenue Bonds(Taxable)(City of Colton, 1/24/2008 $16,565,000 CA) Southern California Public Power Authority Natural Gas Project A,2008 Revenue Bonds(Taxable)(City of Anaheim, 1/24/2008 $80,795,000 CA) Southern California Public Power Authority Natural Gas Project A,2008 Revenue Bonds(Taxable)(City of Burbank, 1/24/2008 $43,700,000 CA) Chino Basin Regional Finance Authority Inland Empire Utilities Agency Revenue Bonds,Series 2008A 1/16/2008 $125,000,000 (Inland Empire Utilities Agency) SLO County Financing Authority Nacimiento Water Project Revenue Bonds,Series 2007A 9/10/2007 $157,845,000 SLO CountyFinancing AuthorityNacimiento Water Project Revenue Bonds,Series 2007B(Taxable) 9/10/2007 $38,565,000 i $.. 1 _Bonds, Contra Costa Water District Water Revenue Refunding Bonds,Series 0 6/14/2007 $67,710,000 Santa Rosa,City of Wastewater Revenue Bonds,Series 2007A 6/1/2007 $67,010,000 Vallejo,City of Water Revenue Refunding Bonds,Series 2006 7/10/2006 $45,790,000 Glendale Water&Power ' Electric Revenue Refunding Bonds,Series 2006 4/5/2006 $38,830,000 ' Amador Water Agency Revenue Certificates of Participation,2006 Series A 1/26/2006 $23,240,000 `) Re.erences from at least four receni clients, including financing managers' names, addresses and phone numbers, for which similar services have beon provided in the last three years, preiorably to municipal utilities, by the staff to be assigned to this:.iroject, l lite 't,1i1'. SCPPA *Km Eastern Municipal Water District Southern California t°Tublic Power Northern California Power Agency Chuck Rathbone Authority Donna Stevener Chief Financial Officer Bill Carnahan Assistant General Manager of Finance 2270 Trumble Road Executive Director 180 Cirby Way Perris,CA 92570 225 South Lake Ave,Suite 1430 Roseville, CA 95678 Phone:951-928-6154 Pasadena,CA 91101 Phone:916-781-4244 rathbonec®emwd.org Phone:626-793-9364 donna.stevener@ncpa.com bcamahanascppa.org rf.x) IsNAP:fg,m • witermarowar fidC. P1t lI1Ir it/WM*ff • Riverside Public Utilities Anaheim Public lltilitiF' Burbank Water and Power Reiki Kerr Ed Zacherl Bob Liu Assistant General Manager Assistant General Manager Finance Chief Financial Officer 3901 Orange Street 201 South Anaheim Blvd, Suite 1101 164 West Magnolia Boulevard Riverside,CA 92501 Anaheim,CA 92805 Burbank, CA Phone:951-826-5914 Phone:714-765-5273 Phone: (818)238-3739 rkerr@riversideca.gov ezacherl@anaheim.net bliu@buthank.ca.us 6 021 Company and Staff/Qualifications p)Names and positions of Financial Advisor tc he assigned to this financing. PFM has assembled a highly experienced team to best meet AL&W's needs. Mike Berwanger and Brian PRIMARY CONTACTS Thomas, both Managing Directors, will serve as the Mike Berwanger Brian Thomas primary contacts for AL6W. berwangerm0pfm.com thomasb@pfm.com Both Mike and Brian will be actively engaged in ALL 601 South Figueroa Street activities associated with the engagement and both will Suite 4500 be fully accountable for all communications and Los Angeles,CA 90017 engagements with AL&W. (213)489 4075(phone) (213)489-4085(1 ax) Mike and Brian co-head the firm's Los Angeles office and are jointly responsible for the majority of PFM's utility clients in the West. Mike is a former investment PFM'SAL&W Team banker who has an extensive utility background that includes over$20 billion in financings for utility clients, Day-to-Day Engagement Managers as well as swap,credit and even some M&A experience. He has over 15 years of experience serving almost Mike Berwanger Brian Thomas exclusively public utilities as either an investment banker Managing Director Managing Drector Los Angeles.CA Las Angeles,CA or a financial advisor. Brian served in the public sector for almost 30 years before joining PFM as a Managing Day-to-Day Engagement Support Director in the Los Angeles office in 2011. For the last Will Frymann Eric Espino ten and a half years, Brian was the Assistant General SeniorManaglog Consultant Senior Managing Consultant Manager and Chief Financial Officer for the Metropolitan S-)r,Franr:i;,co,CA La Ang..les,CA Water District of Southern California,the nation's largest Man Irani supplier of treated drinking water. In addition,Brian was csunant the Assistant General Manager for Finance and Sonfranciscc,CA Administration for the Public Utilities in the cities of Anaheim and Riverside. This senior engagement management team will be supported on a day-to-day basis by Will Frymann,Senior Managing Consultant,Eric Espino, Senior Managing Consultant,and Rian Irani, Consultant. Will has extensive experience with utility issuers in California, including most of the Southern California public power entities.He has worked on complex financings including gas prepayments and all forms of renewable project financings. Eric is joining PFM at the end of November from Fitch Ratings,where he served as an analyst for public utility credits, including many in California. Rian's focus is only utility clients in the West. Rian has provided transactional support on over$5.2 billion in financings including $1.6 billion of renewable energy financings. PFM offers AL&W something no other financial advisory firm has—a pricing desk dedicated to supplying real- time market intelligence to the firm and its clients. Todd Frazier, Managing Director,heads up our pricing desk and will be available before, during, and after pricing to advise the team of current market conditions. Todd and his team see,on average,sixteen deals a week priced by PFM in the primary markets. Escrow structuring services would be provided by Matt Eisei,Senior Managing Consultant. PFM's core team will remain consistent throughout the course of this engagement and the project team will be available whenever needed.To re-emphasize, Mike and Brian be personally involved in all engagement work on a day-to-day basis.The core project team will also ensure that the full resources of PFM are dedicated to serving AL&W and available as needed. 7 022 �y 111.01210 -- Company and Staff/Qualifications h) Estimate of the man- hours to be expended on this financing, and if necessary, tote, for each staff member participating in this fii!ancing, including staff from other tirm(s) subcontracting with the Financial Advisor. We have endeavored to estimate the total hours necessary to complete the tasks outlined under Phases I and II, inclusive of tasks which we believe are related to the those Phases but not necessarily listed explicitly. Our estimated man-hours are given below. Task Allocation and Work Hour Estimates b Task and Team Member Team Member Mike Brian i Will Eric Espino Ricin Irani Berwanger Thomas , Frymann Total ___.. .._..-- - _ .1- , Senior Senior T Estimated Managing ; Managing Team Member Title Director Director I Managing Managing Consultant Hours Consultant Consultant Preliminary Anelyaie i - - - -- -- - _ _ _ _ . __.. _._. and j 1 Hour(s) 2 Hour(s) 2 Hour(s) 1 Hour(s) 2 Hour(s) 8 Hour(s) Recommenda tions _ Develop the _..- 1 Hours) 2 Hour(s) 1 Hour(s) 4 Hour(s) Financing Timetable • Monitor the 4 Hour(s) I 6 Hour(s) 3 Hour(s) 1 Hour(s) 14 Hour(s) Transaction Process I - Assist In the i Selection of Service 1 Hour(s) , 1 Hour(s) 1 Hour(s) 3 Hour(s) 6 Hour(s) Providers I-- - - Provide Financial I Advice to the City Relating to Financing 4 Hour(s) , 8 Hour(s) 4 Hour(s) 2 Hour(s) 18 Hour(s) Documents -- ---, -- i ------ -- Compute Sizing and Design Structure of 1 Hour(s) 1 1 Hour(s) 2 Hour(s) 2 Hour(s) 6 Hour(s) Debt Issue Plan and Coordinate I Presentations to 6 Hour(s) 8 Hour(s) ' 6 Hour(s) 2 Hour(s) 22 Hour(s) Rating Agencies and , Investors Coordinate Negotiated or • Competitive Sale of 4 Hour(s) 4 Hour(s) 4 Hour(s) 6 Hour(s) 18 Hour(s) Bonds ._. _. . . ._. ... __ IRecommend and Award of Debt 4 Hour(s) 4 Hour(s) 1 Hour(s) 9 Hour(s) Issuance Coordination of Pre-- -�- — - -- -. ...._ . Closing Activities2 Hour(s) 2 Hour(s) 4 Hour(s) 2 Hour(s) i 10 Hour(s) Completion of Post -.. . - - - -- - -- - - -- ; -- -- - -- - - - -- p1 Hour(s) 1 Hour(s) 2 Hour(s) 4 Hour(s) . 8 Hour(s) issuance Activities lTotal Estimated i 29 Hour(s) 39 Hour(s) 23 Hour(s) Hour(s) Lours ; I 9 ( ) 23 Hour(s) 123 Hour(s) L .. --- - Any work contemplated under Phase III has not been included in these hours but PFM would be happy to provide a similar schedule based upon a work schedule described by AL&W. 8 023 Company and Staff/Qualifications ij General resumes, and relevant experience of the Financial Advisor and key staff. These should clearly demonstrate Financial Advisor's qud'ifications to perform required tasks to this RFP. SUMMARY OF EXPERIENCE OF CORE DAY-TO-DAY ENGAGEMENT MANAGEMENT Mike Berwanger Mike works exclusively with utility clients throughout the western region. As financial advisor and managing Diractor previously as a senior managing underwriter, Mike has assisted utility clients in obtaining more than $20 billion in financing. He has developed an expertise in the most complex forms of utility 301 South Figueroa Street financings including prepayment, tax-equity, and tax-credit financing structures used for the Suite 4500 acquisition of gas and renewable energy. Mike leads PFM's advisory relationships with a majority Los Angeles. CA 90017 of utilities in California. Clients Mike has worked with include Anaheim Public Utilities, Burbank Water and Power, City of Colton, Glendale Water and Power, Imperial Irrigation District, Los Telephone: (213) 189-4075 Angeles Department of Water and Power, Northern California Power Agency, City of San Diego, BerwanoerM@pfm.com Southern California Public Power Authority,and Transmission Agency of Northern California. Brian Thomas Brian served in the public sector for almost 30 years before joining PFM as a Managing Director in Managing Director the Los Angeles office in 2011. For the last ten and a half years, Brian was the Assistant General Manager and Chief Financial Officer for the Metropolitan Water District of Southern California, the 61". South Figueroa StrJet nation's largest supplier of treated drinking water. As the Assistant General Manager and Chief Suite 4500 Financial Officer, Brian was responsible for all financial functions, including treasury and debt Los Angeles, CA 90017 management, capital planning, financial reporting, the District's $1.8 billion expenditure budget, and water rates and charges. In addition, he was an important participant in negotiations involving Tolsphone: (213)489-4075 water transfers, water wheeling, and the development of local water resources, including work on ThomasB@pfm.com Metropolitan's local resource program and groundwater conjunctive use projects. SUMMARY OF EXPERIENCE OF CORE DAY-TO-DAY ENGAGEMENT SUPPORT Will Frymann Will provides transaction structuring, financial planning, and risk management services to utility Senior Managing Coneuttsn' clients in the western region. Will has worked with many of PFM's utility clients, including Anaheim Public Utilities, Burbank Water and Power, CPS Energy, Glendale Water and Power, Imperial San Francisco CA Irrigation District, Los Angeles Department of Water and Power, Northern California Power Agency, Teleparne: (415)t382-5544 Redding Electric Utility, Riverside Public Utilities, Roseville Electric, Southern California Public FrymannW@pfm.com Power Authority, and Transmission Agency of Northern California. Will has developed many of the quantitative models for PFM's prepayment efforts, as well as complex financing structures for project financings.Will has been directly involved in the issuance of$12 billion in utility bonds. Eric Espino Eric provides transaction structuring, financial planning, and rating agency advisory services to SeniorManagcitg Consultant clients in Southern California. Eric works with a number of PFM's clients in Southern California including a number of water utilities such as Eastern Municipal Water District and others. Prior to Los Angers,CA joining PFM Eric worked as a Director for Fitch Ratings serving as a credit analyst covering Telephone: (213) 159-4075 municipal electric systems,Joint Action Agencies, and electric cooperatives throughout the United EspinoE@pfm.com States, Guam, and Puerto Rico. Eric has a Master's Degree from Massachusetts Institute of Technology and a Bachelor's Degree in Public Policy from the University of Southern California. Rian Irani Rian provides analytical support to numerous municipal utilities in the western region by Consultant structuring, sizing, and pricing bond issues, and assessing issuers' outstanding debt. Clients Rian has worked with include Anaheim Public Utilities, Burbank Water and Power, Imperial Irrigation San Francisno, CA District, Long Beach Water Department, Los Angeles Department of Water and Power, Northern Telephone: (415)982-5544 California Power Agency, Redding Electric Utility, Riverside Public Utilities, Roseville Electric, IraniR@pfm.com Southern California Public Power Authority,and Transmission Agency of Northern California. Rian has supported over$5.2 billion in financings. Rian has a B.A. in Economics from the University of California,Berkeley. 9 024 adstr— Work Plan This section should give an introduction and overview of the approach, list general objeciives, develop a work plan by break.'ng down the project into specific tasks or work elements clearly associated with the scope of work incl.lded in this RFP, and explain the methodology to be used to complete each task. The work plan shall provide an estimate of the moetings to be hold at AL&W, whc will be participating from the Financial Advisor's side, and what information the Finan jai Advisor expects AL&W to provide (See Data Request). APPROACH TO SCOPE OF SERVICES FOR AL&W Our general approach is to provide any and all services that AL&W requires in order to develop, evaluate and implement the most cost-effective financial plans. We see our role as working with AL&W to provide information, expertise and analysis that create a framework for informed decision-making. We will analyze alternatives, make recommendations, coordinate timing, and manage process, including assisting AL&W with the identification and selection of any required financing services. We see ourselves as an extension of AL&W's staff, and we will provide whatever resources, help and guidance that are useful to AL&W. We hope that the discussion of our approach provides not only a sense of our technical expertise and qualifications, but also a context that illustrates our understanding of the work to be performed. PFM believes the role of the financial advisor at the highest level goes well beyond the tasks involved in any scope of services. Certainly, we can and will perform all of the tasks requested. However, we believe AL&W is also hiring us to be an advocate, confidant and strategic sounding board. In other words, PFM sees our role as working with management to help craft a more comprehensive and long-term strategic plan for accomplishing goals and objectives. Our desire is to move our role beyond that of a transaction oriented consultant and strive to become an integral part of each client's team. We are here to offer AL&Ws management team the full benefit of our past experiences and the breadth and depth of knowledge which our diverse team can offer. r✓ Review of Existing Debt Structure i Management of Bond Proceeds Investment ✓ Analysis of Asset/Liability Balance 1 Anatysis of Forward Hedging Mechanisms ✓ Identification of Financing Alternatives ✓ Procurement and Pricing of Structured Investment and ✓ Development of Friendly Terms Derivative Products ✓ Analysis of Debt Structure Alternatives Compliance with Arbitrage Rebate Regulations ✓ Evaluation and Procurement of Credit Enhancement Reswestrner,t Options and Implementation ✓ Development of Ratng Presentations ✓ Structuring/Restructuring of Escrows ✓ Development of Financing Documents ✓ Development of Marketing Piens ✓ Preparation for and Execution of Competitive Sales d Assistance with Pricing of Bonds ✓ Optimization of Coupon Structure and Valuation of Cal Options ✓ Development of Capital Structure ✓ Analysis of Future Debt Capacity _ I - PHASE I —CONDUCT PRELIMINARY ANALYSIS/MAKE RECOMMENDATIONS Assuming a pro-rata allocation into new money and refunding bonds, up to $9.8 million of the 2003 Series A Bonds can be advance refunded. An advance refunding with current rate assumptions would generate savings of approximately $670,000 or 6.8% of refunded par. The negative arbitrage associated with this would amount to approximately $285,000. A maturity-by-maturity analysis suggests a more targeted refunding will produce greater savings as a percentage of refunded par; however, given the small transaction size, PFM would not recommend further reducing the size, in order to maintain transaction economics in light of costs of issuance. As we go into further detail below, option value is another consideration that PFM's proprietary refunding screen can analyze in detail. AL&W would be capturing a decent percentage of the Bonds' option value with a refunding transaction that would close at the end of the first quarter of 2012. 10 025 r`^ Work Plan Looking forward, rates would need to rise approximately 55 bps between now and when the bonds become currently callable on 7/1/2013 for an advance refunding today to have been the more economically beneficial option than waiting.All else equal,if AL&W were to wait,savings would amount to approximately$960,000 or 9.8%of refunded par Preliminary PFM Refunding Screen' Candidate New Refunding• Savings Results Option Escrow Value Cumulative Results Yield __- Maturity j Par Amount I Coupon Arbitrage PV,%of Par Svgs as% PV Savings %of Per 7/1/14_i 795,00000 j 4250% 0790%j_ (6.89275)__...1,91288 0241% 1(/023%' 1.912.88 0241% 711/15 j 830,000 00 4 400% 1 140%' (10,774.63) 23,230.22! 2 799% 53 273% 25,14310 1 547% 71.16 j j j 865,000 00 4 500% 1 460% I (14,624.69) 41,399.49 I 4.844% 56 550% 67,042 58 2 692% 7,1/17 .j. 905,000 00 4 600% 1 730% (18 289 74) 59.975 64 6 627"/, 59 746%._ 127,01822 3 741% 7/1/18 ,._ 945 000 00 4 750% 2 020% _ (22,448 67) 76,369 47 8.081% 60 939%' 203,387 70 _4 686% 7/1!19 990,000 00. 4 750%; 2 330% (27,225 12) 81 24198 8 206% 57 722% 284,629 fi7_ 5 340% 711/20 1,040,000 00 4 800% 2 580% ,. (31,738 17) 88,442 43 8 504% 55 989% 373,072 10 5 857% I 711121 1,085,000 00 4 875% 2 780% (35,735.09) 97,679 48 9.003% 54 652% 470,751 58 6.315% j 7/1,22 1,140,000 00 4 875% 2 930% (39.589 70);, 104,250 95 9 145% 54 369% 575,002 53 _ 6.690% 7/1:23 , 1,195,000 00 5 000% 3.130% (44,395 75". 98,094 06 8 209% 47 243% 673,096 59 6 875% `MMD AM G.O.Scale plus average of 0.36%as of 11/15/11.State and Local Government Series(SLGS)rates as of 11/15/11. Present Value Savings as of 4/18/12.PV Savings as a percentage of Refunded Par. Given the small transaction size, PFM would also evaluate a private placement alternative. Recently, while evaluating, SCPPA's 2001 Hoover refunding PFM solicited bids for both a public and private sale option,and there were few quite aggressive private placement offers. PFM has also looked at potential refunding of the 2003 Series B bonds—another small transaction where we would also like to evaluate private placement options. We bring a comprehensive and robust approach to analyzing any refunding opportunities. PFM's APPROACH To REFUNDING ANALYSES PFM employs a"funnel approach"to evaluate refundings, whereby each series, and then each outstanding maturity, is examined in progressively more and more detail to identify and analyze refunding opportunities. This approach recognizes that to identify the optimal universe of refunding candidates,the savings that may be realized by refunding a given bond must reach some threshold level,and that this threshold savings level must bear some defensible relationship to the theoretical value of the bond's embedded call option. PFM's approach to evaluating refundings also recognizes that these absolute and relative savings criteria must not be determined only on a maturity-by-maturity basis. Rather, if maximum value is to be realized,consideration must also be given to the dynamic effect that refunding several bonds or series of bonds at the same time may have on the escrow and/or bond structure. PFM begins its refunding analysis by categorizing each of an issuer's bonds based on each series' legal refunding status and the gross and present value savings that may be garnered by refunding a given maturity. PFM then continues to systematically analyze each maturity to determine why it generates its level of savings and whether these savings may be increased using a variety of techniques. Next, PFM provides option valuation analysis that permits an issuer to determine whether or not these resultant savings are sufficient to merit a refunding in consideration of the issuer's policies and goals. Finally, PFM calculates the marginal impact on savings produced by refunding a given bond as part of a larger transaction. SERIES ANALYSIS The first step in PFM's approach to refunding analysis requires the development of a comprehensive overview of an issuer's debt portfolio. We effectively recreate every series of bonds issued, noting its purpose, use of 026 11 Work Plan funds, bond structure and redemption provisions, and calculating the series' arbitrage yield. We determine which bonds have matured, which have been redeemed from non-bond proceeds, which were refunded, and by what refunding series. Multipurpose series are allocated to each purpose of the issue to maximize the option value of the callable bonds in that series, and the bonds so allocated are thereafter treated as separate series. Every series of bonds originally issued is then categorized as either current, advance or forward refunding candidates in consideration of the arbitrage regulations. Additionally, the proceeds of every series are tracked to determine whether they remain outstanding and to which series they are currently allocated. MATURITY-Ely-MATURITY ANAI YSIs Having identified which outstanding bonds may be legally refunded on a current or advance basis, PFM next determines which of these bonds may be economically viable refunding candidates. To do so, we first estimate the gross and present value savings produced by each outstanding bond at current market investment and borrowing rates. This maturity-by-maturity refunding screen is conducted using both the DBC Monitor program, which is currently the industry standard for such analysis, and PFM's proprietary refunding models. It is important to note that PFM's maturity-by-maturity refunding screen is significantly more robust than any other in the municipal finance industry, including that provided by DBC. Our refunding screens are designed to not only calculate the savings that may be garnered by refunding a given bond, but also why this is the attainable savings level. For example, a typical DBC Monitor run may show a given maturity produces 2.5% PV savings as a percentage of the refunded par amount. PFM's model, on the other hand, will calculate this same percentage savings, but will also determine, by maturity, the dollar amount of negative arbitrage and/or transferred proceeds penalty attributable to that maturity. In this way, PFM can analyze why a given bond is or is not achieving a specified target savings level. It is valuable to know our example bond would generate 2,5% if refunded today. It is even more valuable to know that this bond could generate 4.0% savings if the negative arbitrage it incurs could be mitigated. If a given maturity is not economically viable due to a transferred proceeds penalty, it is valuable to know that other refunding candidates produce sufficient negative arbitrage to offset this penalty. If certain refunding candidates incur negative arbitrage, it is valuable to know whether other bonds are refundable in consideration of the positive arbitrage they could now produce as part of the refunding. Only PFM's proprietary refunding screen provides this level of detailed analysis on a bond-by-bond basis, and we believe this approach is critical to determining the optimal universe of refunding candidates. OPTION VALUATION Ar4l`.LYSI> Having determined which bonds are legally refundable on a tax-exempt basis, which of these bonds are or are not economically viable, and why, PFM next attempts to determine whether a given level of realizable savings merits a refunding. To make this determination, PFM again uses a proprietary model which estimates the theoretical value of the call option retained by the issuer for a given bond. PFM's option valuation model uses a binomial process, based on historical volatility, and tied to today's implicit forward rates, to estimate the present dollar value of the call option for each of an issuer's callable bonds. We then compare the realizable savings calculated in our maturity-by-maturity analysis to this theoretical maximum to estimate how efficiently a given bond could be refunded under current market conditions. For example, through our maturity-by-maturity analysis, we may identify a refunding candidate that will generate 5.0% PV savings if its attendant negative arbitrage can be mitigated. However, through our bond-by-bond option valuation analysis, we may find that refunding this bond and garnering this 5.0% savings level realizes only 40% of the theoretical value of the option. Unless the issuer has a very high utility for the dollars saved, such a refunding may not be warranted despite the 5.0% savings level. On the other hand, a given bond that matures only 2 or 3 years after its call date may generate only 1.5% savings if refunded today. Using our option valuation model, however, PFM may find that this 1.5% savings level constitutes over 80% of the theoretical option value for that bond. In this case, a refunding may be merited despite the ostensibly low level of realizable savings. To aid an issuer in this regard, PFM will also estimate the theoretically optimal percentage 12 027 /11W Work Plan savings target for each of an issuer's outstanding bonds. For example, after much discussion, we may determine that a given issuer would be satisfied achieving 75-80% of the theoretical value of any given call option. PFM will then calculate, for each of that issuer's callable bonds, the requisite percentage savings target needed to achieve that option value target. OPTIMAL RLFUNDiNG J1RUCtUHt Having identified the optimal universe of refunding candidates, we develop the optimal plan of finance to fully realize the savings available in the refunding. PHASE II - ASSEMBLE FINANCING TEAM AND MANAGE REFUNDING PROCESS 1. DEVELOP THE FINANCING TIMETABLE PFM frequently assumes the role of coordinator and catalyst for the financing process and to that end PFM is accustomed to preparing Transaction and providing updated financing schedules. PFM would be able to Management work seamlessly with AL&W in helping to coordinate and schedule the various aspects of financings. 2. MONITOR THE TRANSACTION PROCESS Ultimately whether involved in the strategic planning or not, AL&W is hiring us to take on the role of advocate for you in the implementation ""A'"a Debt Sty u f,"`Atte ""`voa of your plan. We are an extension of AL&W and our purpose in that capacity is to best implement your strategic vision with our accumulated expertise in the applicable area, to accomplish what you Review existing Debtbitrucltie wish. We believe the best way to be successful is to foster a team 1 oriented working environment with your group of assembled experts. An environment where individual ideas are welcomed and thoughtfully Recomnrencttlegot*aleq or Catnpeutive Sale considered is highly beneficial to AL&W. This does not however mean ■ there should be a free for all. A portion of PFM's role for any bond transaction is coordinating the working group and keeping things Assist in Selpflron of Wnikrnq Grout)ttombe's on track At times our role is simply to play the heavy and more forcefully argue on AL&W's behalf (e.g. during bond pricing negotiations), but that is a last resort not a first and never done with Cie vetopTerme al the faranr.mq malice to the counterparty. In all cases, we are here to be AL&W's advocate not to satisfy our egos. PFM believes that the core of good advocacy lies in strong teamwork. Develop Financing [)ncaunent; We pride ourselves on working with our clients and their assembled J team of experts towards a common set of goals. Each party to the transaction is there for a good reason—their unique set of skills—why UevelopMarketing Plan wouldn't a good advocate want to take advantage of those skills for the betterment of the transaction? PFM and specifically our proposed team does riot just pay this lip service, we practice it, in all aspects of Develop Bating Presentation every one of our engagements. i 3. ASSIST IN THE SELECTION OF ADDITIONAL SERVICE PROVIDERS Assastwith Sale of Bonds PFM will assist AL&W, as needed, in identifying and procuring special financial related services that will be required over the course of its I financing program. PFM has extensive databases of various service Assist with Closing of Bonds providers as well as schedules of past costs. PFM provides detailed summaries of recommendations and proposals, provides insights and the recommendations and provides advice on selections. Perhaps 13 028 Work Plan most importantly however, PFM possess the size to leverage competitive fees and terms from third parties when necessary. 4. PROVIDE FINANCIAL ADVICE TO THE CITY RELATING TO FINANCING DOCUMENTS At PFM we take pride in our ability to contribute constructively and substantively to the document drafting process. Our experience in the realm of utility finance has given us insider knowledge, and it enables us to point to examples where different counsels have provided differing opinions, perspectives and approaches. PFM regularly coordinates with bond counsel, tax counsel, underwriters, banks, trust departments and other team members and their counsels throughout the preparation, review, and finalization of all bond documents and we are frequently able to contribute significant value which is not only cost saving but is also helpful in reducing risk and in making difficult objectives workable. We have strong working relations with AL&W's previous Bond Counsel. 5. COMPUTE SIZING AND DESIGN STRUCTURE OF DEBT ISSUE During the financing process we would seek guidance AL&W in regard to objectives, constraints and other considerations. We would then develop an evaluation of all of the financing options and formulate recommendations on the most efficient structures to consider. Working with other members of the financing team and AL&W staff, PFM will facilitate the formulation of the issue structure and the terms under which the bonds are to be offered. PFM's experience has given us an appreciation for this task and an awareness of how to ensure a successful execution of a transaction under varying market conditions while consistent with AL&W's objectives. PFM is well aware of municipal financing structures as will be clear throughout this proposal, and has all the sophistication and experience necessary to evaluate various financing options. 6. FLAN AND COORDINATE PRESENTATIONS Select fluent tlpgr'de 'nl PFM Ur:ity TO RATING AGENCIES AND INVESTORS pont Name 4 OidRating New RatMlg ! Rating The PFM team is extremely active in the A,Mf,dm Puck Utiltles A+ AA- AVMS&P � credit rating review process, ensuring Anandm Public Utilities - A+ AA- Fitch that our clients are wellpreparedGlendale to iB"'�nk WaterWater andand Power A+ AA- I S&P A4AA- S&P respond to Issues raised by rating 'ClictrxialeWater and Power _ I —Al I Aa3 .Moody's analSts and investors. As a result Of our ImperialPoDiet= _ __ S&P A+ (_=AA- Y Long Island Pwer Authority A- A Fitch ch frequent interactions, PFM has developed a 114. linaEaetemMunicl:PpowerAgency BBS+ A- S8P 'North Cardlna Eaetem Munbipal Power Agency ——_ BBB+_ A- Fitch clear understanding of the analytical North Carolina Municipal Power Agency Number 1 A- I A S&P methods utilized byeach ratingagency. 'Nor 'iii""nlPowerAger�(M,rdr"n"at Bae2 I A2 Moody's Phuadda,la oas wogs BBB- see - Rich Our team is trained to conduct in-depth :lauaatde Public LAIYiles A+ AA- —3,113 credit analyses to the 1de Public wormy A+ M- Fitch — Y comparablerating Sacrarr,er•o Mutticipal UI(IHy❑IatrlCt A A+ S&P agencies so that both credit strengths and s Ionia Public Power Authority(MA/MP Pi ct) Al _I Aa3 Moods weaknesses can be identified prior to any %otahem caldarw Pudic Power Authority(Magnoaa Project) A+ I AA- S&P soturern California Pudic Power Authorit�i(Palo Verde Project) A+ __ AA- $&P presentation of data to rating analysts. This sattMm Gaifumia Pudic Power Authority(STS Project) I A+ AA-_ S&P !Tallahassee Mlrnaeda Muilclpel Power Agency A2 Al Moody's experience has been utilized effectively TallahasseeConsdidated Utiatiee AA AA+ S&P to improve the credit ratings assigned to 'Ta"lahesae.e Energy AA- AA S&P iTrartsmiseion Agency cf Northam California _ Al f Aa3 _ Moody numerous issuers across the nation. - As AL&W is aware, credit ratings have never been more important. PFM is particularly well suited to help AL&W navigate the rating agency process. Veteran utilities rating analysts Alan Spen and Kathryn Masterson spent a portion of their careers at PFM, and their legacy of shared expertise at PFM further highlights our familiarity with rating analysts and their methodologies. And PFM very recently hired, Eric Espino, who served as analyst for public utility credits at Fitch Ratings. PFM considers participation in the creation and implementation of the credit strategy a vital part of our role as a financial advisor. We collaborate with the working group to determine the best approach to telling the "credit 14 029 IMO Work Plan story" of our clients and how to best convey that message. Each rating agency looks for specific yet different key data, and the benefit of our experience and understanding of your issues is that PFM can help devise the proper message for AL&W. We will work closely with the rating agencies to fully understand their concerns and methodology and to design the rating presentations to specifically address each agency's questions in a meaningful way while highlighting AL&W's strengths and putting in context its weaknesses. 7. CONDUCT MARKET ANALYSIS AND EVALUATE TIMING OF MARKET ENTRY We are also your independent market expert. We will provide kost mane sop 1: you with an honest assessment of the credit and capital markets and how they should treat your name and credit. .411 PFM has a dedicated, in-house bond pricing group that can join a core finance team to support the pricing. PFM's pricing group PFM "' operates completely independent of the underwriting of " " municipal securities by banks and securities dealers and has the tweeability to quickly and independently benchmark pricing ,6- ;,, eliIMMOO performance. PFM begins every pricing discussion with our own PFM PRICING GROUP independent pricing thoughts. W,,` sem PFM takes great pride in providing aggressive end informed ..r.�.. Sod Win Imo representation to its clients in the pricing of securities. For a negotiated financing, PFM would serve as AL&W's agent with respect to the pricing of the bonds. PFM would work with AL&W to establish the pricing parameters for the gross spread, the debt structure and target interest rates. We would actively monitor the sale of the debt during the order period. Recommendations would be made regarding re-pricing of all or a part of the debt structure based on preliminary orders and municipal and government market conditions over the course of the order period, and our own quantitative analysis of an appropriate yield schedule vis-a-vis the market. PFM would assemble and distribute a regularly updated pricing book containing comparable rate and spread information on other recent bond sales. This pricing book, along with our on-line-data and quantitative analysis, will then be used to provide a picture as to the reasonableness of the underwriter's pricing quotes. PFM would work with AL&W throughout the pricing, assisting in evaluating the efforts of the underwriting team. Our contact with other underwriting firms, tied to our own market analysis, gives us sufficient information to objectively evaluate the underwriter's performance, increasing the probability that AL&W would obtain the very lowest interest cost possible on its debt. PFM may also make recommendations regarding the"bond allocation" among underwriters, to ensure that those who are selling the bonds at the best rates are receiving a sufficient supply of bonds. PFM will perform a thorough evaluation of market conditions and other bids on comparable issues preceding the presentation of the bond purchase agreement for a negotiated sale. We are the only financial advisory firm, independent or not, actively providing this level of analysis for our clients. PFM clients go into pricings with an informed opinion about where their debt "should" price. We have found that this not only helps our clients to understand the bond pricing process, but also helps the underwriter in their discussions with the potential investors by providing a justification for a particular yield level or coupon structure. Away from transactions, PFM strives to ensure its clients are apprised of market activity and pricing levels. PFM has access to a full array of current and historical market data, which we use continually to ensure our clients receive accurate and timely pricing and rate information for all their debt and asset transactions. PFM also has a Marketing, Research, and Training Support ("MRTS") department which provides information on historic pricing levels, bondholders, comparable bond sales, and credit research as well as informative articles on utility finance. MRTS staffs a library, which our professionals use for research projects on the full spectrum of topics. 15 030 C , , Work Plan PFM is in the market advising on bond sales on average three times a day. PFM stands at the epicenter of the governmental and economic trends that must be analyzed and understood in order to provide appropriate advice to our clients. We not only track and analyze the information that is publicly available, but our presence gives us access to information and experience that often proves critical in assisting our clients. We would take full advantage of our extraordinary access to information and our ability to analyze that information to ensure that AL&W is fully aware of how emerging trends affect their finances and programs, and we will advise AL&W on how to best position itself with respect to these larger trends. In pursuit of the aforementioned goals, PFM publishes the following in-house publications that serve to detail market conditions and pricing information: PFM RESEARCH WORK PUBLICATIONS PFM Water and Wastewater Pricing Book IIIA weekly report prepared and distributed by PFM's Water and Wastewater Group. The report, in addition to 7ne PPM Gram encapsulating every major recent deal that has taken place, presents an overview of the economy and its leading drivers, reviews the fixed-income markets In general (yield curves, trends), and reviews municipal market conditions 4 in specific (yield curves, trends, spreads, taxable/tax-exempt ratios, visible supply). _�.— - PFM Public Power Pricing Book 4 A weekly report prepared and distributed by PFM's Public Power Group. The report, in addition to encapsulating every major recent deal that has taken place, presents an overview of the economy and its leading drivers, reviews the fixed-income markets in general (yield curves, trends), and reviews municipal market conditions in specific yik 1 i i (yield curves, trends, spreads, taxable/tax-exempt ratios, visible supply). mums 4 im Mrairipst Markel«ess The PFM Pricing Report . , A weekly report prepared and distributed by PFM's Pricing Group. it includes, for all relevant or major transactions, information on pricing performance and benchmarks it relative to current market levels. The report tabulates the yield-to-call, yield-to-maturity, re-offering yields, and the results of interpolated and non-interpolated scale analyses. PFM performs option-adjusted spread (OAS) analysis on every maturity, the results of which are also included in '• the PFM Pricing Report. .-- i The Quantitative Strategies Group Weekly Market Update A weekly report prepared and distributed by PFM's Quantitative Strategies Group. It provides a review of the capital markets - both fixed-Income and equity - including cash and swap market comparisons, and short-term and Investment rate summaries. The report also highlights the week's economic news. 8. COORDINATE COMPETiTiVE SALE OF BONDS 9. RECOMMEND AWARD OF DEBT ISSUANCE As highlighted earlier, PFM has immense experience in successfully executing competitive transactions and PFM can offer the assurance that AL&W's transactions would be completed with a strong showing from bidders. PFM can provide the confidence and comfort that AL&W should have in its financial advisor. PFM's unmatched resources allow it to help issuers determine the most appropriate bond structures prior to each competitive sale and therefore to lower the cost of borrowing through structure and pricing. We find that the competitive sale process demands a full-service and multi-resource approach from the financial advisor. PFM relishes this activist role in any transaction. We have also developed certain approaches that assure optimal pricing. These approaches center on maximizing the number of bidders for an issue, developing an appropriate bond structure and incorporating issuer flexibility. The PFM approach to developing and marketing a competitive issue relies not only on garnering the highest possible ratings (although much thought and energy is directed to this end), but also on broadening general market awareness of the issue, highlighting its special features and the attractive 16 031 Work Plan nature of the securities. This portion of the process involves reaching the key market opinion-makers in a way that ensures keen interest in the issuer's bonds. The structure of the issue plays an important role in the marketability of the issue. In a competitive sale,there is no opportunity to test the market for a particular bond structuring or credit feature. Therefore, broad experience with marketing debt of all types and features as well as frequent and recent participation in the current market is desirable. We serve a large number of issuers across the nation and are in the market sixteen times a week,on average. Consequently,we are constantly kept up-to-date on national market trends and overall credit market conditions. The active involvement will help to ensure that the timing and structure of the proposed sale is optimized to achieve the lowest possible interest costs. The financial advisor prepares a Notice of Sale ("NOS") which is created to detail the terms of the bonds, bidding parameters,and award process.The issuer reserves the right to modify the bid terms up until the day of the sale,to modify the size of the transaction and principal amortization,to cancel the sale at any time or to refuse all bids. PFM is constantly striving to provide the most flexible bid parameters for its clients that current market conditions will permit. PFM's bidding parameters table and NOS language allows: • Market Sensitivity - Flexibility to change the sale date • Resizing/Restructuring Flexibility - Alter the par amount maturity-by-maturity or in aggregate • Target Customers - Coupon bifurcation to satisfy institutional&retail investors • Optimal Refunding Conditions - Restrictions on coupon structure to ensure savings&future refundability PFM is experienced in developing and conducting informational meetings with underwriters and institutional investors. We are in daily contact with market makers and can help stimulate interest in AL&W's offering. Additionally, we will organize and conduct such a meeting if it is determined that it would improve the marketing of the proposed issue. Immediately prior to the competitive sale,we call a list of local and frequent national buyers,ensuring that all last minute questions are answered,that rating and insurance information is correct,and that the firm will bid at the sale. Information regarding the number of bidding syndicates and the members is also gathered at this time. After bids have been received,PFM verifies all bids and makes a recommendation as to the awarding of bonds to the lowest cost underwriter. 10.COORDINATION OF PRE-CLOSING AND CLOSING ACTIVITIES After each transaction, PFM customarily prepares a financial advisory memorandum that provides its clients with a summary of the transaction, including the financial alternatives considered,the financial impact of the transaction, and a comparison to similar deals that priced within the same timeframe. PFM will compile this information and will also identify the on-going administrative requirements over the life of the transaction. ARBITRATE RFEIAlf,Aur VERIriCAl ION.The PFM Arbitrage Rebate Group has been providing arbitrage rebate compliance services since 1989. We prepared in excess of 3,000 calculations in 2010 Including arbitrage rebate, yield restriction compliance, and spending exception compliance calculations for over 350 clients that have engaged our services through a separate contractual arrangement,and for the hundreds of participants that invest bond proceeds in the thirteen local government investment pool programs that we support. Additionally, BondResource Partners, which joined the PFM Group in April 2009, can provide Verification Agent Services—as it has since 1975. The firm is accepted by all major rating agencies and insurers. 17 032 altei. is . Work Plan POST-ISSUANCE COMPLIANCE. The IFAS Iias recently been directing its focus to Post Issuance Compliance. As a result, PFM has developed a customized approach and began marketing these services in 2010. PFM provides a customized approach that keeps you out of a one-size-fits-all-box. PHASE III -- ONGOING FA SERVICES SUMMARY OF AL&W DEBT. PFM is very familiar with AL&W's debt obligations. As such, PFM will not waste AL&W's time or money coming up to speed with AL&W's debt profile and financial situation—PFM is ready to immediately start working through the substantive issues. Water System Direct Debt Service Electric System Direct Debt Service ■2003 Series A II Series 2006 ■2003 Series B 2003 Series C $6 MM / - --- ,$1,000,000 Y ti- $5 MM AIN x.000 ,$4 MM �i EJEII .$3MM ';; �$2 MM$1 MM 1111 1 $0 MM , . . -, , -, - $o1 , 0 0 eeeee eeb1 "6\ 0 0 0 0 0 'fee," de e e AL&W's outstanding water system debt includes two series totaling $67.930 million in par with principal amortization from 2012-2038. On a bond year basis, AL&W's water system debt service averages $4.5 million over the next couple of years, $5.2 million for 2014-2023, and $3.7 million for 2024-2039. AL&W's outstanding direct electric system debt includes two series totaling $8.540 million in par with principal amortization from 2012-2023. On a bond year basis, AL&W's outstanding direct electric system debt service averages $960,000 2012-2023. PFM has looked at the economics of refunding the 2003 Series B Bonds. Summar of Outstandin• Direct Debt Series issue Size Outstanding Par interest Rates Next Call Final Maturity Water S stern 2003 Series A $20,370,000 $- ;'i,9e.,5.0f 0 4 000% - 5.000% 7/1/2C.113 7/1;2023 Sues 2306 $54,850,000 553,965.000 4-000% - 5.000% 1/1/2017 7/112039 Electrtt S�vstern 2003 Series B $5,470,000 .$5,470,000 ' 4.600% - 5.000°Ao- ,_ . _7/112013 7/1/2023 2003 Series C (Tx) _ $6,525,000 I $3.070,000 _1 5.170% - 5.570% __ Non Callable 7/1/2017 AL&W's electric system also has indirect obligations with SCPPA and NCPA. These are as follows: Summary of Outstanding indirect Debt Electric System Direct end Indirect Debt Service Venture AL&W's Share AL&W DS A!BW SCPPA DS AL&W NCPALEC DS Outstanding $2,800,000 SCPPA S2,400.000 1 Hoover $11,355,000 4.26% $483,191 $2,000,000 Palo Verde $69,100,000 1.00% $691,000 $1•600,000 2o - , Mead Adelanto $162,645,000 2.21% $3,592,177 $�,Seo 20 000o,00a I, s Mead Phoenix i $50,555,000 0.66% $334,219 e,jo,0001i_ . ° . .1111111 N CPA LEC (Ind. A) $254,955,000 4.99% $12,731 ,433 ` rye'6 ' I,V1I,,, I, 18 033 Work Plan RESPOND To REQUESTS. PFM is a full service financial advisor. We will craft responses to any and all requests from ratings agencies,bond insurance companies,banks,credit providers,Investors,or any other concerned parties. PFM will review and comment on any financial reports, press releases, rating agency reports, and other related materials relevant to AL&W. Our familiarity with AL&W's projects, debt, credit,and legal considerations only enhances our ability to provide the best,timely response. LEGISLATION. PFM is very in tune with the California energy markets. We participate on legislative committees for SCPPA, NCPA, the Large Public Power Council, and California Municipal Utilities Association and,as a result are well aware of the national, state and PUC regulatory developments which are under consideration at all times. REVIEW AND NEGOTIATION. PFM is able to assist AL&W in any review and negotiations relating to its financial matters. Our pervasive presence,sophistication,and experience in the municipal market place give us an understanding of Issues that allow us to contribute materially to any review process and strengthen our client's hand in any negotiation process. ANALYSES OF DEBT PORTFOLIO. PFM sees its primary role as a provider of information, expertise, and analysis, enabling AL&W to develop a framework for informed decision-making. PFM will analyze alternative debt structures and evaluate the merits and challenges associated with each strategy. PFM will provide the necessary analysis of the objective factors that will affect the conduct and outcome of a financing transaction, and make appropriate recommendations. We are already working with AL&W at SCPPA and NCPA. REVIEW UNSOLICITED PROPOSALS. PFM proactively monitors the market to inform AL&W about opportunities to reduce its debt service costs. We evaluate and Independently verify unsolicited proposals from investment banks concerning debt restructurings.Since PFM has a thorough understanding of AL&W's direct and indirect debt,we are able to generate ideas and respond to ones suggested by investment banks. INVESTOR RELATIONS. PFM is familiar with all of the major investors in AL&W bonds and all of the major investors in California public power bonds. Moreover, we have figured out what works in what contexts for getting investors engaged with bond issuers like AL&W. PFM maintains extensive mailing lists of all major investors and has assisted several clients in targeting these investors. For clients such as the MEAG Power, we have done international road show presentations for huge projects. For clients such as CPS Energy,we have conducted investor conferences in San Antonio to support large capital programs. For clients such as the San Francisco Public Utilities Commission,PFM has conducted internet roadshows for large competitive sales. For other clients, PFM has developed regular investor outreach programs. PFM has conducted investor outreach programs of almost every imaginable scale and format and we would craft an investor relations strategy for AL&W. 19 034 Data Request, Scope Exclusions/Addenda, Deliverables q This section of the proposal shall itemize all data the Financial Advisor expects AL&W to provide in carrying out this financing. PFM's standard practice is to act independently in procuring data and information necessary to provide the highest level of financial advisory service available. As we hope our proposal serves to illustrate, we know AL&W well and we have done our homework in advance so that AL&W will not need to expend time or resources bringing us up to speed. In assisting AL&W with the contemplated financing, it would be helpful if AL&W could provide certain pieces of information relating to utility operations and financial projections for the purposes of the rating presentations; however, such requirements should be fairly minimal and should not significantly exceed the information required anyway for a disclosure document. If AL&W were to pursue a private placement transaction, as discussed very briefly in prior sections of our response, even these requests could potentially be reduced significantly or eliminated. In reviewing this RFP, the Financial Advisor may encounter tasks, which, in the opinion of the Financial Advisor, may be unnecessary, or, may have been omitted. At tiro Proposor's discretion, Financial Advisoi mr-y identify these tasks, and include any tasks that are deemed necessary by the f=inancial Advisor, but a,e riot :'squired by this RFP. In reviewing this RFP, it is PFM's opinion that all of the tasks outlined by AL&W are appropriate tasks to be completed by AL&W's financial advisor. We believe that some additional tasks might also be appropriate to add to the anticipated task list. Those would include the following: 1) selection of or service as verification agent, 2) selection of or service as escrow agent, 3) coordination of any investor communications or marketing efforts, and 4) advising on the investment of reserve funds, amongst others. Deliverables are material produces such as the official statement, bond rating. underwriter agreements, trustee agreement, insurance, and other documents that may comprise this financing. This section shall contain a list of all proposed deliverables to socure necessary funding. Depending upon the financing which AL&W would contemplate, the deliverables and documentation would differ and PFM would assist in representing AL&W's interests in preparing or having various counsel prepare deliverables and documentation. Documentation which would be typical for a transaction, the like of which AL&W would contemplate, would include the following. • Preliminary Official Statement • Escrow Agreement (if necessary) • Official Statement or Alternative Offering • Bond Counsel Opinions Document • City Attorney Opinions • Bond Purchase Agreement • Trustee Counsel Opinions • Trust Agreement and Supplements • Underwriter's Counsel Opinions • Authorizing Resolution • Closing Certificate • Rating Letters and Rating Reports • Tax Certificate • Blue Sky Memorandum (if necessary) • Specimen of Insurance Policy (if necessary) • Continuing Disclosure Certificate 20 035 Schedule AL&VV prefers that Phase One of this RFP be completed within two weeks following issuance of a notice to proceed, and that Phase Two be completed within three months following City agreement to proceed with Phase Two. Financial :Advisor shall provide a refunding schedule for Phase Two with proposal which it believes is most appropriate to corrmpbte Phase Two activities of this RFP. The schedule section shall include at a minimum a table That displays schedule of major milestones to be accomplished in refunding existing debt. He schedule for each task and timing of each deliverable should be based upon the number of calendar days or weeks needed to complete the refunding. Please see following page. 21 036 L. -__M r Of ii,, City of Azusa _..__ V i - - . $ FARECaI, Certificates of Participation, 2003 Series A Refunding -- ollk ','S '. ' Proposed Preliminary Financing Schedule ''•ftV4- ' Negotiated Financing Assumed j 1, As of November 15,2011 Januar Februa S MTWT F S S M T W 'Y F S 1 2 3 4 5 6 7 1 2 3 4 8 9 10 11 12 13 14 5 6 7 8 9 10 11 15 16 17 18 19 20 21 12 13 14 15 16 17 18 22 23 24 25 26 27 28 19 20 21 22 23 24 25 29 30 31 26 27 28 29 March A•ril S MTWIF S SMTWIFS 1 2 3 1 2 3 4 5 6 7 4 5 6 7 8 9 10 8 9 10 11 12 13 14 11 12 13 14 15 16 17 15 16 17 18 19 20 21 18 19 20 21 22 23 24 22 23 24 25 26 27 28 25 26 27 28 29 30 31 29 30 Relevant dates are highlighted in yellow.Holidays are highlighted in blue City Council meets first and third Mondays Board meets fourth Mondays Week of Activity Responsibility January 2"° • January 2�':Authorization to commence work • AL&W • January 6"': Provide refunding analysis/market update • PFM (provided weekly) January 9"' • January 11th: Provide draft of Underwriter RFP • PFM • January 13th: Provide revised draft of Underwriter RFP • PFM January 16"' • January 16"': Martin Luther King day holiday • January 17'h: Distribute Underwriter RFP • PFM January 23'' • January 27'": Receive Underwriter responses • PFM,AL&W January 30`h • January 311a: Provide summaryof Underwriter responses • PFM • February 2'": Select and notify Underwriter • AL&W, PFM February 6th • February 8t: Kick-off conference call • All February 13"' • February 1316: Special FARECaI meeting to set regular meeting . FARECai schedule • February 15"': Distribute initial draft of documents • BC • February 17"': Documents submitted for Azusa Utility Board • BC approval (1 week prior assumed) February 20th « February 201': President's day holiday • February 22nd: Conference call to discuss initial draft of documents • All 031 r City of Azusa �""� L; # flit › FARECaI, Certificates of Participation, 2003 Series A Refunding . :. ~,� Proposed Preliminary Financing Schedule i *Mt+.' I Negotiated Financing Assumed IAZUSIV As of November 15, 2011 Februar S M T W T F S SMTWT F s 1 2 3 4 5 6 7 1 2 3 4 8 9 10 11 12 13 14 5 6 7 8 9 10 11 15 16 17 18 19 20 21 12 13 14 15 16 17 18 22 23 24 25 26 27 28 19 20 21 22 23 24 25 29 30 31 26 27 28 29 March MIIIIIIIIILTIIIIIIIIIIIIII SMTWIF S SM TWT F S 1 2 3 1 2 3 4 5 6 7 4 5 6 7 8 9 10 8 9 10 11 12 13 14 11 12 13 14 15 16 17 15 16 17 18 19 20 21 18 19 20 21 22 23 24 22 23 24 25 26 27 28 25 26 27 28 29 30 31 29 30 Relevant dates are highlighted in yellow. Holidays am highlighted in blue City Council meets first and third Mondays Board meets fourth Mondays Week of Activity Responsibility February 27`h • February 27th: Documents approved at Azusa Utility Board • AL&W • February 27th: Distribute second draft of documents • BC • February 27th: Submit documents to rating agencies s PFM, BC 1. February 27th: Submit documents for City Council approval • BC, AL&W (1 week prior assumed) and any FARECaI authorizations • February 27th: Distribute first draft of rating agency presentation • PFM • March 2 : Conference call to discuss second draft of documents • All and first draft of rating agency presentation March 5th • March 5'": Documents approved at City Council and FARECaI • AL&W • March 7th: Provide third draft of documents and second draft of • BC, PFM rating agency presentation • BC, AL&W ✓ March 9th: Finalize ratingagencypresentation A PFM, AL&W March 12th • March 12th: Rating agency meetings AL&W, PFM, UW, RA March 19th e Follow up with rating agencies as required • PFM, AL&W • Documents finalized • BC March 26th • March 26th: Receive ratings • RA • March 27th: Conference call to sign-off on posting of Preliminary • All Official Statement and to receive market update e March 27th: Post Preliminary Official Statement • BC, UW April 2hd • • April 3"�: Pricing a UW, PFM, AL&W • April el: Structure Escrow • PFM c, April 3`": Verification of Cash Flows • VF O April 3r': Sign Bond Purchase Agreement • AL&W, BC, UW, UC April 9th . Finalize and post Official Statement r BC, UW • Prepare documentation for Closing • BC, UC 2 038 ar ? City of Azusa FARECaI, Certificates of Participation, 2003 Series A Refunding i 110111k )t. ', .. Proposed Preliminary Financing Schedule rt.t 4r.k Negotiated Financing Assumed -AZ U S A As of November 15,2011 Februa S MTWT F S SMTWT F S 1 2 3 4 5 6 7 1 2 3 4 8 9 10 11 12 13 14 5 6 7 8 9 10 11 15 16 17 18 19 20 21 12 13 14 15 16 17 18 22 23 24 25 26 27 28 19 20 21 22 23 24 25 29 30 31 26 27 28 29 March Aril S MTWT F S SM TWT F S 1 2 3 1 2 3 4 5 6 7 4 5 6 7 8 9 10 8 9 10 11 12 13 14 11 12 13 14 15 16 1? 15 16 17 18 19 20 21 18 19 20 21 22 23 24 22 23 24 25 26 27 28 25 26 27 28 29 30 31 29 30 Relevant dates are highlighted in yellow.Holidays are highlighted in blue City Council meets first and third Mondays Board meets fourth Mondays Week of Activity Responsibility April 16th • April 17m: Pre-Closing All • April 181h:Closing • All • April 18th: Fund Escrow T Party Abbreviation Issuer AL&W Bond and Disclosure Counsel BC Financial Advisor PFM Underwriter UW Underwriter Counsel UC Trustee T Verification Agent VF Rating Agencies RA 039 W----- Lump p Sum Not-To-Exceed Fee Consultant shall provide in table format, the cost for each task, including a listing of the personnel assigned to each task, hourly rates, and the number of hams each position is budgeted for each task. phis table shall include a lump-sum, not-to-exceed total cost for each Phase of this RFP. PFM proposes to provide AL&W with a full range of financial advisory services and in doing so, PFM will commit a significant portion of time from senior public utility specialists and guarantee the availability of Mike Berwanger, Brian Thomas,Will Frymann, Eric Espino, and Rian Irani, as AL&W's engagement team. PHASE I FEE PROPOSAL PFM proposes a not-to-exceed total fee of $2,500 for the completion of the tasks described under Phase L The table below provides the cost for each task under Phase I, and includes a listing of the personnel assigned to each task, hourly rates, and the number of hours each individual is budgeted for each task. PFM does not charge hourly fees for Associate or administrative staff time. The sum total is greater than $2,500, however, PFM would honor the $2,500 not-to-exceed figure for any anticipated or unanticipated time expenditures that would exceed our estimates for this Phase. Phase I: Task Allocation and Work Hour Estimates by Task and Team Member Mike Brian Will Team Member Berwanger Thomas i Fry mann Eric Espino Rian Irani i Managing Mana Senior Senior Total Team Member Title g g 9in9 I Managing , Managing Consultant Director Director ; Consultant ' Consultant Preliminary Analysis and � 1 Hour(s) 2 Hour(s) 2 Hour(s) 11 Hour(s) 2 Hour(s) i 8 Hour(s) Recommendations _ Hourly Rates II $375/Hour ' $375/Hour $300/Hour $300/Hour _$250/Hour LTotal Estimated Cost_ ' $375 $750 f $600 I $300 $500 ' PHASE It FEE PROPOSAL PFM proposes a flat fee of$37,500 for the completion of the tasks described under Phase Il assuming that PFM is also hired for Phase I. As requested, the table below provides a breakdown for each task under Phase I, and includes a listing of the personnel assigned to each task, hourly rates, and the estimated number of hours each individual is budgeted for each task. However, the flat fee of $37,500 would apply regardless of hours incurred. Phase II: Task Allocation and Work Hour Estimates by Task and Team Member Team Member Mike Brian Will Eric Espino I RI=Irani Thomas Berwanger 3 Frymann , Managing Managing Senior Senior - Total Team Member Title Director Director ! Managing Managing Consultant j Consultant Consultant Develop the 1 Hour(s) 2 Hours) 1 Hour(s) • Financing Timetable 4 Hour(s) Monitor 4 Hour( ) 6 Hour(s) 3 Hour(s) Hour(s) ' 1 Hour(s) 14 Hour(s) Transaction Process ? Assist in the — 7 —, Selection of Service 1 Hour(s) 1 Hour(s) 1 Hour(s) ' 3 Hour(s) I 6 Hour(s) Providers_— _ _Provide Financial I Advice to the City • 4 Hours) 8 Hour(s) 4 Hour(s) , 2 Hour(s) 18 Hour(s) Relating to Financing I ( ) Documents 22 040 Lump Sum Not-To-Exceed Fee Phase II: Task Allocation and Work Hour Estimates b Task and Team Member Team Member Mike Brian Will E Eric Espino I Ran Irani ! Berwanger Thomas Frymann Senior Senior Total Team Member Title pence l Managing Managing Managing ; Consultant Consultant i Consultant i Compute Slating and Design Structure of 1 Hour(s) 1 Hour(s) 2 Hour(s) 2 Hour(s) 6 Hour(s) Debt issue ....__._...._.. ..�--- _. Plan and Coordinate Presentations to 6 Hour(s) 8 Hour(s) 6 Hour(s) 2 Hour(s) 22 Hour(s) Rating Agencies and Investors • i Coordinate Negotiated or 4 Hour(s) 4 Hour(s) 4 Hour(s) 6 Hour(s) 18 Hour(s) Competitive Sale of Bonds Recommend and Award of Debt 4 Hour(s) 4 Hour(s) 1 Hour(s) 9 Hour(s) I.Issuance Coordination of Pre- Closing Activities 2 Hour(s) 2 Hour(s) 4 Hour(s) 2 Hour(s) 10 Hour(s) Completion of Post 1 Hour(s) 1 Hour(s) 2 Hour(s) 4 Hour(s) 8 Hour(s) Issuance Activities Total Estimated 28 Hour(s) I 37 Hour(s) 21 Hour(s) 8 Hour(s) 21 Hour(s) 115 Hour(s) Hours Hourly Rates I $375/Hour $375/Hour _$300/Hour $300/Hour $250/Hour_ Total Estimated Cost I $10,500 $13,875 $6,300 ' $2,400 $5,250 PHASE Ill FEE PROPOSAL Given the highly variable nature of the tasks which may be appropriate for AL&W under Phase Ill, PFM would propose the following hourly rates for PFM's team members for any tasks designated under that Phase. PFM does not charge hourly fees for Associate or administrative staff time. PFM would be glad to determine not- to-exceed fees as part of discussions with/UAW and we would welcome the opportunity to provide a proposal which would work best for AL&W. Title iRate/Hour ! Managing Director i $375 Senior Managing Consultant $300 I Consultant I $250 L- 23 041 Fee Schedule/Hourly Rates A schedule of hourly rates shall be included for all personnel classifications that will he utilized in this of study by Financial Advisor. PFM would propose the following hourly rates for PFM's team members according to title as shown in the resumes section above. PFM does not charge hourly fees for Associate or administrative staff time. Title 1RatelHour Managing Director $375 Senior Managing Consultant' $300 Consultant $250 24 042 Other Client Commitments Financial Adviser shall list other clients that it is c'irrently serving, including pending or anticipated clients that will be served, with staff that Financial Advisor anticipates using to fulfill its obligation to AL&W under this RFP. Financial Advisor shall further attest to the availeMMility of key staf; to fulfill the needs of this study in a professional and tjrnely manner. PFM has a large number of clients who are engaged in financings similar to the refunding transaction and other advisory work which AL&W has contemplated. The projects listed below are ones which PFM's team for AL&W is currently engaged. It is important to note however, that not all members of PFM's AL&W team are working on the same transactions and more importantly still a number of PFM's other advisors are also part of those engagement teams. As the financial advisor with the presence in California and the largest staffing level for municipal utility advisory, PFM has the capacity to guaranty the availability of our AL&W team while also simultaneously offering the benefit of being actively engaged in the municipal markets regularly and thus able to offer timely and relevant insights to AL&W. PFM not only guaranties the availability of our team but we are also confident that our other clients will testify to the best in class client service which PFM provides and the 100% availability of PFM's teams. PFM has assigned two Managing Directors, partners at PFM, two our team for AL&W and Mike and Brian attest to the availability of key staff to fulfill the needs of this study in a professional and timely manner. A list of current client projects which PFM is engaged in is given below. While various members of PFM's AL&W team are engaged in these projects, the entirety of our AL&W team is not collectively assigned to even one project on this list and PFM's full public utility advisory team of eight people in California alone is part of these teams as well. • Clark County Regional Flood Control District- $75 Million Revenue Bond • Clark County Water Reclamation District - 5 Year Finance and Funding Plan • Truckee Meadows Water Authority -Washoe County DWR Consolidation • City of Oxnard -Wholesale Water Rate Forecast and Seminar • Calleguas Municipal Water District - Long Range Finance Plan • Metropolitan Water District- Arbitration and Litigation Support and Expert Witness • Southern Nevada Water Authority - Rate Revenue Study • Northern California Power Agency-$90 Million Refunding Bond • Glendale Water and Power- $60 Million Water New Money Bond • Glendale Water and Power - $60 Million Electric New Money Bond • Imperial Irrigation District -$20 Million Refunding Bond • Southern California Public Power Authority— Magnolia LOC Substitution • Anaheim Public Utilities - Commercial Paper Program 25 0 4 3 Prepared by Public Financial Management, Inc. Page 1 REFUNDING CANDIDATES Azusa Light & Water Series 2012A - Refunding of 2003 Series A (All Dollar Amounts in Thousands) _-___- Candidate ----___=----- - - Individual _---_- --..-= Cumulative New Selected Series Maturity Par Rate Yield Refunding Savings Percent Refunding Savings Percent for Refund 2003A 07/01/2014 795 4.250% 0.791% 791 2 0.241% 791 2 0.241% Yes 2003A 07/01/2015 830 4.400% 1.141% 805 23 2.799% 1,596 25 1.547% Yes 2003A 07/01/2016 865 4.500% 1.461% 823 42 4.844% 2,419 67 2.692% Yes 2003A 07/01/2017 905 4.600% 1.731% 849 60 6.627% 3,267 127 3.741% Yes 2003A 07/01/2018 945 4.750% 2.021% 880 76 8.081% 4,147 203 4.686% Yes 2003A 07/01/2019 990 4.750% 2.331% 919 81 8.206% 5,066 285 5.340% Yes 2003A 07/01/2020 1,040 4.800% 2.581% 964 88 8.504% 6,030 373 5.856% Yes 2003A 07/01/2021 1,085 4.875% 2.781% 1,006 98 9.002% 7,036 471 6.314% Yes 2003A 07/01/2022 1,140 4.875% 2.931% 1,055 104 9.144% 8,091 575 6.690% Yes 2003A 07/01/2023 1,195 5.000% 3.131% 1,127 98 8.208% 9,218 673 6.875% Yes 9,790 9,218 673 Assumptions: Delivery Date 04/18/2012 Issuance Expenses 2.310% Refunding Series REF Escrow Size Based on 15NOV11 (SLG) Interest accrued through delivery is Funded by escrow Savings Expressed as a Percent of Par of refunded bonds The PPM Group Prepared by Public Financial Management, Inc. Page 1 SOURCES AND USES OF FUNDS Azusa Light&Water Series 2012A-Refunding of 2003 Series A Dated Date 04/18/2012 Delivery Date 04/18/2012 Sources: Bond Proceeds: Par Amount 9,095,000.00 Premium 1,453,100.45 10,548,100.45 Other Sources of Funds: Bond Fund 136,993.81 10,685,094.26 Uses: Refunding Escrow Deposits: Cash Deposit 0.86 SLGS Purchases 10,470,443.00 10,470,443.86 Delivery Date Expenses: Cost of Issuance 175,000.00 Underwriter's Discount 36,380.00 211,380.00 Other Uses of Funds: Additional Proceeds 3,270.40 10,685,094.26 The PPM Group 045 Prepared by Public Financial Management, Inc. Page 2 SUMMARY OF REFUNDING RESULTS Azusa Light&Water Series 2012A-Refunding of 2003 Series A Dated Date 04/18/2012 Delivery Date 04/18/2012 Arbitrage yield 2.465068% Escrow yield 0.089185% Bond Par Amount 9,095,000.00 True Interest Cost 2.555807% Net Interest Cost 2.806909% All-In TIC 2.833257% Average Coupon 5.000000% Average Life 7.103 Duration 6.145 Par amount of refunded bonds 9,790,000.00 Average coupon of refunded bonds 4.794086% Average life of refunded bonds 7.077 PV of prior debt to 04/18/2012 @ 2.465068% 11,376,603.91 Net PV Savings 673,070.42 Percentage savings of refunded bonds 6.875081% The PFM Group 046 Prepared by Public Financial Management, Inc. Page 3 SAVINGS Azusa Light&Water Series 2012A-Refunding of 2003 Series A Present Value Prior Prior Prior Refunding to 04/18/2012 Date Debt Service Receipts Net Cash Flow Debt Service Savings @ 2.4650685% 07/01/2012 230,456.88 136,993.81 93,463.07 92,213.19 1,249.88 564.78 07/01/2013 460,913.76 460,913.76 454,750.00 6,163.76 6,021.66 07/01/2014 1,255,913.76 1,255,913.76 1,179,750.00 76,163.76 72,198.29 07/01/2015 1,257,12626 1,257,126.26 1,178,500.00 78,626.26 72,741.61 07/01/2016 1,255,606.26 1,255,606.26 1,175,500.00 80,106.26 72,324.51 07/01/2017 1,256,681.26 1,256,681.26 1,175,750.00 80,931.26 71,304.83 07/01/2018 1,255,051.26 1,255,051.26 1,179,000.00 76,051.26 65,387.73 07/01/2019 1,255,163.76 1,255,163.76 1,180,000.00 75,163.76 63,056.68 07/0112020 1,258,138.76 1,258,138.76 1,178,750.00 79,388.76 64,982.45 07/01/2021 1,253,218.76 1,253,218.76 1,175,250.00 77,968.76 62,269.38 07/01/2022 1,255,325.00 1,255,325.00 1,179,500.00 75,825.00 59,082.41 07/01/2023 1,254,750.00 1,254,750.00 1,176,000.00 78,750.00 59,865.69 13,248,345.72 136,993.81 13,111,351.91 12,324,963.19 786,388.72 669,800.02 Savings Summary Dated Date 04/18/2012 Delivery Date 04/18/2012 PV of savings from cash flow 669,800.02 Plus: Refunding funds on hand 3,270.40 Net PV Savings 673,070.42 The PPM Group 047 Prepared by Public Financial Management, Inc. Page 4 BOND SUMMARY STATISTICS Azusa Light&Water Series 2012A- Refunding of 2003 Series A Dated Date 04/18/2012 Delivery Date 04/18/2012 First Coupon 07/01/2012 Last Maturity 07/01/2023 Arbitrage Yield 2.465068% True Interest Cost(TIC) 2.555807% Net Interest Cost(NIC) 2.806909% All-In TIC 2.833257% Average Coupon 5.000000% Average Life(years) 7.103 Duration of Issue(years) 6.145 Par Amount 9,095,000.00 Bond Proceeds 10,548,100.45 Total Interest 3,229,963.19 Net Interest 1,813,242.74 Total Debt Service 12,324,963.19 Maximum Annual Debt Service 1,180,000.00 Average Annual Debt Service 1,100,170.28 Par Average Average PV of 1 bp Bond Component Value Price Coupon Life change Serial Bonds 9,095,000.00 115.977 5.000% 7.103 6,246.00 9,095,000.00 7.103 6,246.00 All-In Arbitrage TIC TIC Yield Par Value 9,095,000.00 9,095,000.00 9,095,000.00 +Accrued Interest +Premium(Discount) 1,453,100.45 1,453,100.45 1,453,100.45 -Underwriter's Discount -36,380.00 -36,380.00 -Cost of Issuance Expense -175,000.00 -Other Amounts Target Value 10,511,720.45 10,336,720.45 10,548,100.45 Target Date 04/18/2012 04/18/2012 04/18/2012 Yield 2.555807% 2.833257% 2.465068% The PFM Group 048 Prepared by Public Financial Management, Inc. Page 5 BOND PRICING Azusa Light&Water Series 2012A-Refunding of 2003 Series A Maturity Yield to Call Cali Premium Bond Component Date Amount Rate Yield Price Maturity Date Price (-Discount) Serial Bonds: 07/01/2014 725,000.00 5.000% 0.790% 109.174 66,511.50 07/01/2015 760,000.00 5.000% 1.140% 112.104 91,990.40 07/01/2016 795,000.00 5.000% 1.460% 114.377 114,297.15 07/01/2017 835,000.00 5.000% 1.730% 116.200 135,270.00 07/01/2018 880,000.00 5.000% 2.020% 117.288 152,134.40 07/01/2019 925,000.00 5.000% 2.330% 117.606 162,855.50 07/01/2020 970,000.00 5.000% 2.580% 117.784 172,504.80 07/01/2021 1,015,000.00 5.000% 2.780% 117.912 181,806.80 07/01/2022 1,070,000.00 5.000% 2.930% 118.137 194,065.90 07/01/2023 1,120,000.00 5.000% 3.130% 116.220 C 3.260% 07/01/2022 100.000 181,664.00 9,095,000.00 1,453,100.45 Dated Date 04/18/2012 Delivery Date 04/18/2012 First Coupon 07/01/2012 Par Amount 9,095,000.00 Premium 1,453,100.45 Production 10,548,100.45 115.976915% Underwriter's Discount -36,380.00 -0.400000% Purchase Price 10,511,720.45 115.576915% Accrued Interest Net Proceeds 10,511,720.45 The PFM Group rf=kk CD Prepared by Public Financial Management, Inc. Page 6 BOND DEBT SERVICE Azusa Light&Water Series 2012A-Refunding of 2003 Series A Dated Date 04/18/2012 Delivery Date 04/18/2012 Period Ending Principal Coupon Interest Debt Service 07/01/2012 92,213.19 92,213.19 07/01/2013 454,750.00 454,750.00 07/01/2014 725,000.00 5.000% 454,750.00 1,179,750.00 07/01/2015 760,000.00 5.000% 418,500.00 1,178,500.00 07/01/2016 795,000.00 5.000% 380,500.00 1,175,500.00 07/01/2017 835,000.00 5.000% 340,750.00 1,175,750.00 07/01/2018 880,000.00 5.000% 299,000.00 1,179,000.00 07/01/2019 925,000.00 5.000% 255,000.00 1,180,000.00 07/01/2020 970,000.00 5.000% 208,750.00 1,178,750.00 07/01/2021 1,015,000.00 5.000% 160,250.00 1,175,250.00 07/01/2022 1,070,000.00 5.000% 109,500.00 1,179,500.00 07/01/2023 1,120,000.00 5.000% 56,000.00 1,176,000.00 9,095,000.00 3,229,963.19 12,324,963.19 The PFI croup 050 Prepared by Public Financial Management, Inc. Page 7 PRIOR BOND DEBT SERVICE Azusa Light&Water Series 2012A- Refunding of 2003 Series A Period Ending Principal Coupon Interest Debt Service 07/01/2012 230,456.88 230,456.88 07/01/2013 460,913.76 460,913.76 07/01/2014 795,000.00 4.250% 460,913.76 1,255,913.76 07/01/2015 830,000.00 4.400% 427,126.26 1,257,126.26 07/01/2016 865,000.00 4.500% 390,606.26 1,255,606.26 07/01/2017 905,000.00 4.600% 351,681.26 1,256,681.26 07/01/2018 945,000.00 4.750% 310,051.26 1,255,051.26 07/01/2019 990,000.00 4.750% 265,163.76 1,255,163.76 07/01/2020 1,040,000.00 4.800% 218,138.76 1,258,138.76 07/01/2021 1,085,000.00 4.875% 168,218.76 1,253,218.76 07/01/2022 1,140,000.00 4.875% 115,325.00 1,255,325.00 07/01/2023 1,195,000.00 5.000% 59,750.00 1,254,750.00 9,790,000.00 3,458,345.72 13,248,345.72 The PFM Group 051 Prepared by Public Financial Management, Inc. Page 8 UNREFUNDED BOND DEBT SERVICE Azusa Light&Water Series 2012A- Refunding of 2003 Series A Period Ending Principal Coupon Interest Debt Service 07/01/2012 910,000.00 4.000% 92,184.38 1,002,184.38 07/01/2013 945,000.00 4.100% 147,968.76 1,092,968.76 07/01/2014 190,000.00 4.250% 109,223.76 299,223.76 07/01/2015 195,000.00 4.400% 101,148.76 296,148.76 07/01/2016 205,000.00 4.500% 92,568.76 297,568.76 07/01/2017 215,000.00 4.600% 83,343.76 298,343.76 07/01/2018 225,000.00 4.750% 73,453.76 298,453.76 07/01/2019 235,000.00 4,750% 62,766.26 297,766.26 07/01/2020 245,000.00 4.800% 51,603.76 296,603.76 07/01/2021 255,000.00 4.875% 39,843.76 294,843.76 07/01/2022 270,000.00 4.875% 27,412.50 297,412.50 07101/2023 285,000.00 5.000% 14,250.00 299,250.00 4,175,000.00 895,768.22 5,070,768.22 The PFM Group 052 Prepared by Public Financial Management, Inc. Page 9 ESCROW REQUIREMENTS Azusa Light&Water Series 2012A-Refunding of 2003 Series A Period Principal Ending Interest Redeemed Total 07/01/2012 230,456.88 230,456.88 01/01/2013 230,456.88 230,456.88 07/01/2013 230,456.88 9,790,000.00 10,020,456.88 691,370.64 9,790,000.00 10,481,370.64 The PPM Group 053 Prepared by Public Financial Management, Inc. Page 10 ESCROW COST Azusa Light&Water Series 2012A-Refunding of 2003 Series A Type of Maturity Par Total Security Date Amount Rate Cost SLGS 07/01/2012 228,624.00 228,624.00 SLGS 01/01/2013 225,870.00 0.050% 225,870.00 SLGS 07/01/2013 10,015,949.00 0.090% 10,015,949.00 10,470,443.00 10,470,443.00 Purchase Cost of Cash Total Date Securities Deposit Escrow Cost Yield 04/18/2012 10,470,443.00 0.86 10,470,443.86 0.089185% 10,470,443.00 0.86 10,470,443.86 The PPM Group 41k_ 054 Prepared by Public Financial Management, Inc. Page 11 ESCROW SUFFICIENCY Azusa Light&Water Series 2012A-Refunding of 2003 Series A Escrow Net Escrow Excess Excess Date Requirement Receipts Receipts Balance 04/18/2012 0.86 0.86 0.86 07/01/2012 230,456.88 230,456.59 -0,29 0.57 01/01/2013 230,456.88 230,457.01 0.13 0.70 07/01/2013 10,020,456.88 10,020,456.18 -0.70 10,481,370.64 10,481,370.64 0.00 The PFM Group 055 Prepared by Public Financial Management, Inc. Page 12 ESCROW STATISTICS Azusa Light&Water Series 2012A-Refunding of 2003 Series A Modified Yield to Yield to Perfect Value of Total Duration PV of 1 bp Receipt Disbursement Escrow Negative Cost of Escrow Cost (years) change Date Date Cost Arbitrage Dead Time Global Proceeds Escrow: 10,470,443.86 1.169 1,224.16 0.089185% 0.089185% 10,185,319.33 285,124.51 0.02 10,470,443.86 1,224.16 10,185,319.33 285,124.51 0.02 Delivery date 04/18/2012 Arbitrage yield 2.485068% Composite Modified Duration 1.169 Ilk The PPM Group 056 Prepared by Public Financial Management, Inc. Page 13 ESCROW DESCRIPTIONS Azusa Light&Water Series 2012A-Refunding of 2003 Series A Type of Type of Maturity First Int Par Max Security SLGS Date Pmt Date Amount Rate Rate Apr 18,2012: SLGS Certificate 07/01/2012 07/01/2012 228,624.00 SLGS Certificate 01/01/2013 01/01/2013 225,870.00 0.050% 0.050% SLGS Note 07/01/2013 07/01/2012 10,015,949.00 0.090% 0.090% 10,470,443.00 SLGS Summary SLGS Rates File 16NOV11 Total Certificates of Indebtedness 454,494.00 Total Notes 10,015,949.00 Total original SLGS 10,470,443.00 The PFM Group 057 8 8 88 8 ‘7 7 R. 8 .a o I'- m '4 ! m Co iil I N O _ f7 M 1 11 11 7 Co e 1 fAl ., • h 9 H rt Q O 45. N N NN A A O N M �t 1A 9G A OD Qie �° [4. CV 7C1- s 1- p.. � n Attni:r�1• A1�AAArktii: I� da to m 111 41 < N -A O -07e- gt m j n n 4 000 E0 666 .L, ii Af E a< ec< as < assa« « : sa <SagiSZSISESIII ! 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A A A h , , A A A A h A A A A A P M1 ti A A i 058 City of Azusa Series-by-Series Analysis 2003 Series A(Tax-Exempt) CerMlcsfea of Purfnceaton Undararre. 11135 Bond Bond Price Bond Insurance Redemption Optional Outstanding Bond Year Debt Service Ns of 11/15/11 Pate Tann Comp par Amount Net Yield price MMD ' Insurer Pram Status Qat Date Prke Year PrInd�l tie. Fee Nat Debt Couaon tltlAccr. Service 7/1/04 711134 Serial 840,000 2.000% 0.950% 100.903 1.00% AMBAC Matured 7/1/04 7/1/05 7/1/05 Serial 735,000 2.000% 1.430% 101.045 1.39% AMBAC Matured 7/1/05 7/1/06 7/1/06 Serial 750,000 2.000% 1.870% 100.360 1.88% AMBAC Matured 711/06 711/07 7/1107 Serial 765,000 3.000% 2.470% 101.941 2.33% AMBAC Matured 7/1/07 7/1/08 7/1108 Serial 790,000 3.000% 2.750% 101.129 2.68% AMBAC Matured 711/08 711109 7/1109 Serial 815,000 3.500% 3.150% 101.858 3.01% AMBAC Matured 7/1/09 7/1/10 7/1/10 Serial 840,000 3.750% 3.550% 101.206 3.36% AMBAC Matured 7/1/10 7/1/11 7/1/11 Serial 670,000 4.000% 3.830% 101.141 3.61% AMBAC Matured 7/1/11 7/1/12 7/1/12 Serial 910,000 4.000% 4.000% 100.000 3.78% AMBAC Non-Callable 7/1/12 910,000 645,283 1,555,283 7/1/13 7/1/13 Serial 945,000 4.100% 4.130% 99.754 3.91% AMBAC Non-Callat a 7/1113 945,000 608,863 1,553,883 7/1/14 711/14 Serial 985,000 4.250% 4.320% 99.393 4.03% AMBAC Advance Refundable 7/1/14 985,000 570,138 1,555,138 7/1/15 7/1/15 Serial 1,025,000 4.400% 4.470% 99.356 4.13% AMBAC Advance Refundable 771/15 1,025,000 528,275 1,553,275 7/1/18 7/1/16 Serial 1,070,000 4.500% 4.570% 99.319 4.23% AMBAC AdvanoeRefundable 711/16 1,070.000 483,175 1,553,175 711/17 7/1117 Serial 1,120,000 4.600% 4.840% 99.588 4.34% AMBAC Advance Refundable 7/1117 1,120,000 435,025 1,555,025 7/1118 7/1/18 Serial 1,170,000 4.750% 4.770% 99.783 4.44% AMBAC Advance Refundable 7/1/18 1,170,000 383,505 1,553,505 7/1/19 7/1/19 Serial 1,225,000 4.750% 4.820% 99.224 4.54% AMBAC AdvenoeRehmdable 7/1/19 1,225,000 327,930 1,552,930 7/1/20 7/1/20 Serial 1,285,000 4.800% 4.680% 99.081 4.63% AMBAC Advance Refundable 7/1120 1,285,000 269,743 1,554,743 7/1/21 7/1121 Serial 1,340,000 4.875% 4.930% 99.345 4.71% AMBAC Advance Refundable 7/1/21 1,340,000 208,063 1,548,063 7/1/22 7/1/22 Serial 1,410,000 4.875% 4.980% 98.719 4.78% AMBAC Advance Refundable 7!1122 1,410,000 142,738 1.552,738 7/1/23 711(23 Serial 1,480,000 5.000% 5.040% 99.495 4.84% AMBAC Advance Refundable 7/1/23 1,480,000 74,000 1,554,000 Issuance Par. 20,370,000 Outstanding Per 13,965,000 Average Lite: 11.61 years Average Life: 6.66 years Purpose of Issue Dates Saurves of Funds Uses of Funds Par Amount: 20,370,000.00 SLGS Escrow: 20,190,693.00 Refund Series 1993 A Bonds Dated Date: 8119/03 Plus:OIP/(OID)c (8,028 20) Delivery Date: 8/19/03 Sale Date: 811103 Total Proceeds 20,361,971.80 First Interest Payment 1/1/04 Costs of Issuance: 483,513.00 First Maturity Date: 7/1/04 1,874,391.00 7ebtService Reserve Fund: 1,562,157.00 Accrued Interest Total Sources $22,236,362.60 Total Uses $22,236,363.00 Cil Pvtlic Financia/A7anegemenr,Inc Page 1 of 1 II/16/2011,11:47AM,Debr_Profilev5 An/saslsm,Series Repovf City of Azusa 2003 Series B(Telt Se�s-by-Series Analysts -Exempt) Certarcateso�fParb on, tlnderxthter L S _ n -' . Bond Bond Price Bond insurance Redemption Optional Outstanding Bond Year Debt Service as of 11/16/11 flu Tiro Como Par Amount NIL DIM Price NMD Dower Prem Stats/ Rik Dam Edo L =gm Not f!! Net Debt coupon IftJAccr, sit& 7/1/04 7/1/05 7/1/04 7/1108 7/1/05 711/07 7/1/06 7/1/08 711/07 7/1/09 7/1/08 7/1/10 7/1/09 7/1/11 7/1/11 711112 7/1/11 7/1/13 7/1/12 263,438 283,438 7/1/14 7/1/13 263,438 283,438 711115 7/1/14 263,438 263,438 7/1118 7/1/15 263,438 283,438 7/1/16 263,438 263,438 7/1/17 7/1/17 Serial 565.000 4.600% 4.640% 99.589 4.34% MBIA Advance Refundable 7/1/17 565,000 283,438 828,438 7/1/18 7/1/18 Serial 725,000 4.700% 4.770% 99.255 4.44% MBIA Advance Refundable 7/1/18 725,000 237,448 982,448 7/1/19 7/1/19 Serial 760,000 4.750% 4.820% 99.224 4.54% MBIA Advance Refundable 7/1/19 780,000 203,373 963,373 7/1/20 7/1/20 Serial 795,000 4.800% 4.880% 99.081 4.63% MBIA Advance Refundable 711/20 795,000 167,273 962,273 7/1/21 7/1/21 Serial 835,000 4.875% 4.930% 99.345 4.71% MBIA Advance Refundable 7/1/21 835,000 129,113 964,113 7/1/22 711122 Serial 875,000 4.875% 4.980% 98.719 4.78% IIIA Advance Refundable 7/1/22 875,000 88,406 963,406 7/1/23 7/1/23 Serial 915,000 5.000% 5.040% 99.495 4.84% MBIA Advance Refundable 7/1/23 915,000 45,750 960,750 Issuance Par 5,470,000 Outstanding Par. 5,470,000 Average Life. 17.13 years Average Life: 8.89 years Purpose of Issue Dates Sources of Fundy 1/see of Funds Acquisition,construction,and installation of Kirkwall Substation Par Amount: 5,470,000.00 Dated Date: 8/19/03 Plus:OIP/(OID): (42,225.80) Delivery Date: 8/19/03 Project Fund: 4,685,021.00 Sale Date: 8/7/03 Total Proceeds: 5,427,774.20 First Interest Payment: 1/1104 Coats of Issuance: 195,753.00 First Maturity Date: 7/1/17 )ebt Service Reserve Fund: 547,000.00 Accrued Interest Total Sources $5,427,774.20 Total Uses $5,427,774.00 C;) Tl . h/l hYnwciaf Mhrragrnvenf,Inc. Page I of) 11/162011,11:48 AM Debt Profrlev5 Acusa.xism,Serres Report CD V City of Azusa Series-by-Sertee Analysis 2003 Series C(Taxable Municipal) Come:en aP pfbn Lw.pp:.,c. ( - _ --,n , Bond Bond Price Bond Insurance Redemption Optional Outstanding Bond Year Debt Service as of 11/13/11 gl g Term Comp par Amount Net Yield price MMD Insurer Pram Status Date Date MOP Year Princlpai Net Debt Coupon L SsMce 7/1/04 7/1/04 Serial 345,000 1.460% 1.460% 100.000 1.00% MBIA Matured 7/1/04 7/1/05 7/1/05 Serial 400,000 2.220% 2.220% 100.000 1.39% MBIA Matured 7/1/05 7/1/06 7/1/06 Serial 410,000 2.820% 2.820% 100.000 1.88% MBIA Matured 7/1/06 7/1107 7/1/07 Serial 425,000 3.440% 3.440% 100.000 233% MBIA Matured 7/1/07 7/1/08 7/1/08 Serial 435,000 3.960% 3.950% 100.000 268% MBIA Matured 7/1108 7/1/09 7/1/13 Term 13 455,000 5.170% 5.170% 100.000 3.91% MBIA Matured 711/09 7/1/10 711/13 Term 13 480,000 5.170% 5.170% 100.000 3.91% MBIA Matured 7/1/10 7/1/11 7/1/13 Term 13 505,000 5.170% 5.170% 100.000 3.91% MBIA Matured 7/1/11 7/1/12 7/1/13 Term 13 530,000 5.170% 5.170% 100.000 3.91% MBIA Non-Callable 7/1/12 530,000 166,659 696,659 7/1/13 7/1/13 Term 13 555,000 5.170% 5.170% 100.000 3.91% MBIA Non-Callable 7/1/13 555,000 139,258 694,258 7/1/14 7/1/17 Term 17 585,000 5.570% 5.570% 100.000 4.34% MBIA Non-Callable 7/1/14 585,000 110,565 695,565 7/1/15 7/1/17 Term 17 820,000 5.570% 5.570% 100.000 4.34% MBIA Non-Callable 7/1/15 620,000 77,980 697,960 7/1/16 7/1/17 Term 17 650,000 5.570% 5.570% 100.000 4.34% MBIA Non-Callable 711/16 650,000 43,446 693,446 7/1/17 7/1/17 Term 17 130,000 5.570% 5.570% 100.000 4.34% MBIA Non-Callable 7/1/17 130,000 7,241 137,241 Issuance Par: 6,525,000 Outstanding Per 3,070,000 Average Lire: 7.66 years Average Life: 2.85 years Purpose of Issue bates Soames of Funds Uses of Funds Par Amount: 6,525,000.00 Acquisition,construction,and Installation of improvements to SoCal Edison sys.ad),to Kirkwall Dated Date: 8/19/03 Plus:OIP/(OID): Delivery Date: 8/19/03 Project Fund: 5,681,834.00 Sale Date: 8/7/03 Total Proceeds: 6,525,000.00 First Interest Payment: 1/1/04 Costs of Issuance: 190,666.00 First Maturity Date: 7/1/04 lebt Service Reserve Fund: 652,500.00 Accrued Interest: Tote!Sources $6,525,000.00 Total Uses $6,525,000.00 O) Pbb/ic Financial kfanagernesl,Inc. Page 1 of 1 11/162011,11,46 AM Debr_Prilev5 Azusa xtin,Series Report City of Azusa Series-by-Series Analysts Series 2006(Tax-Exempt) Revenue Bonds w.�w ,! flrttier»tller UBS at*r _ Bond Bond Price Bond Insurance Redemption Optional Outstanding Bond Year Debt Service as of 11(15111 to Term Como Par Amount Net Yield Price MMD, Insurer Prem Status Date Qb alia Year Principal NO_ Fee Net Debt Coupon Jrrt.JAeer. .P1M121 7/1/07 7/1/07 7/1/08 7/1108 7/1/09 711(09 Serial 280,000 4.000% 3.400% 101.442 3.48% FSA Matured 711/09 711110 7/1/10 Serial 295,000 4.000% 3.420% 101.912 3.48% FSA Matured 7/1/10 7/1/11 7/1/11 Serial 310,000 4.000% 3.450% 102.287 3.48% FSA Matured 7/1/11 7/1/12 7/1/12 Serial 320,000 4.000% 3.500% 102.493 3.48% FSA Non-Callable 711/12 320,000 2,656,788 2,976,788 7/1/13 7/1/13 Serial 330,000 4.000% 3.550% 102.601 3.51% FSA Non-Callable 7/1/13 330,000 2,643,988 2,973,988 7/1/14 7/1/14 Serial 1,045,000 5.000% 3.800% 109.161 3.55% FSA Non-Callable 7/1/14 1,045,000 2,630,788 3,675,788 7/1/15 7/1/15 Serial 890,000 4.000% 3.880% 102.471 3.58% FSA Non-Callable 7/1/15 1,090,000 2,578,538 3,668,538 7/1/15 7/1/15 Serial 200,000 5.000% 3.660% 109.741 3.58% FSA Non-Callable 7/1/15 7/1/16 7/1/16 Serial 1,145,000 5.000% 3.700% 110.359 3.82% FSA Non-Callable 7/1/18 1,145,000 2,532,938 3,677,938 7/1/17 7/1/17 Serial 1,200,000 5.000% 3.770% 110.192 3.67% FSA Advance Refundable 7/1/17 1,200,000 2,475,688 3,875,688 7/1/18 7/1/19 Tenn 19 1,265,000 5.000% 3.920% 108.884 3.75% FSA Advance Refundable 7/1/18 1,265,000 2,415,688 3,680,688 7/1/19 7/1/19 Tenn 19 1,330,000 5.000% 3.920% 108.884 3.75% FSA Advance Refundable 7/1119 1,330,000 2,352,438 3,682,436 7/1/20 7/1/21 Term 21 1,395,000 5.000% 3.980% 108.366 3.81% FSA Advance Refundable 7/1/20 1,396,000 2,286,938 3,680,938 7/1/21 7/1/21 Term 21 1,470,000 5.000% 3.980% 108.386 3.81% FSA Advance Refundable 7/1/21 1,470,000 2,216,188 3,686,188 7/1/22 7/1/23 Term 23 1,545,000 5.000% 4.010% 108.108 3.85% FSA Advance Refundable 7/1/22 1,545,000 2,142,688 3,687,688 7/1/23 7/1/23 Term 23 1,625,000 5.000% 4.010% 108.108 3.85% FSA Advance Refundable 711/23 1,625,000 2,065,438 3,690,438 7/1/24 7/125 Term 25 1,700,000 4.2.50% 4.380% 98.380 3.89% FSA Advance Refundable 7/124 1,700,000 1,984,188 3,684,188 7/1/25 7/1125 Term 25 1,775,000 4.250% 4.380% 98.380 3.89% FSA Advance Refundable 7/1/25 1,775,000 1,911,938 3,686,938 7/1/26 7/1/31 Tenn 31 1,855,000 5.000% 4.090% 107.424 3.96% FSA Advance Refundable 7/128 1,855,000 1,836,500 3,691,500 7/1/27 7/1/31 Term 31 1,950,000 5.000% 4.090% 107.424 3.96% FSA Advance Refundable 7/1127 1,950,000 1,743,750 3,693,750 7/1/28 7/1/31 Term 31 2,055,000 5.000% 4.090% 107.424 3.96% FSA Advance Refundable 7/1/28 2,055,000 1,646,250 3,701,250 711/29 7/1/31 Term 31 2,160,000 5.000% 4.090% 107.424 3.96% FSA Advance Refundable 7/1/29 2,160,000 1,543,500 3,703,500 7/1/30 7/1131 Term 31 2,270,000 5.000% 4.090% 107.424 3.96% FSA Advance Refundable 7/1/30 2,270,000 1,435,500 3,705,500 7/1/31 7/1/31 Term 31 2,385,000 5.000% 4.090% 107.424 3.96% FSA Advance Refundable 7/1/31 2,385,000 1,322,000 3,707,000 7/1/32 7/1/35 Term 35 2,505,000 5.000% 4.130% 107.084 4.00% FSA Advance Refundable 7/1132 2,505,000 1,202,750 3,707,750 7/1/33 7/1/35 Term 35 2.635,000 5.000% 4.130% 107.084 4.00% FSA Advance Refundable 7/1/33 2,635,000 1,077,500 3,712,500 7/1/34 7/1/35 Term 35 2,770,000 5.000% 4.130% 107.084 4.00% FSA Advance Refundable 7/1/34 2,770,000 945,750 3,715,750 7/1/35 7/1135 Term 35 2,915,000 5.000% 4.130% 107.084 4.00% FSA Advance Refundable 7/1/35 2,915,000 807,250 3,722,250 7/1/36 7/1(39 Term 39 3,065,000 5.000% 4.150% 108.914 4.00% FSA Advance Refundable 7/1/36 3,065,000 661,500 3,726,500 7/1/37 7/1/39 Term 39 3,220,000 5.000% 4.150% 106.914 4.00% FSA Advance Refundable 7/1/37 3,220,000 508,250 3,728,250 7/1/38 7/1/39 Term 39 3,385,000 5.000% 4.150% 106.914 4.00% FSA Advance Refundable 7/1/38 3,385,000 347,250 3,732,250 7/1/39 7/1/39 Term 39 3,560,000 5.000% 4.150% 106.914 4.00% FSA Advance Refundable 7/1/39 3,560,000 178,000 3,738,000 Issuance Par: 54,850,000 Outstanding Par. 53,965,000 Average Life: 22.22 years Average Life: 17.62 years Purpose ofIssue Dotes Sources of Funds Uses of Funds Par Amount: 54,850,000.00 Capital improvements Dated Date: 1220/06 Plus:OIP/(OID): 3,704,266.00 Delivery Date: 12120/06 ProJect Fund: 50,000,000.00 Sale Date: 12/13/06 Total Proceeds: 58,554,266.00 Underwriters'Discount: 160,235.94 First interest Payment: 7/1/07 Costs of Issuance: 392,733.50 First Maturity Date: 7/1/09 rebt Service Reserve Fund: 3,849,875.00 Other Uses: 4,351,421.56 Accrued Interest: Total Sources 58,554,268.00 Total Uses $58,554,266.00 Cr) IND Public Financial Management,Inc. Page 1 of I II/16/2011,II:47AM,,Debt_ProJllev5 Arnsaslam,Series Report �ye4g OrIra Y zb:3.wi ** q9 4qd �, ' y ,� i a „z �z'4. 3" �.+ S:c r� n a`a � - P`f .�,�,.,.•a:._.�. _ :_a�„�.�€.,�-sEr..k..s, W<d _,�..�.s,zu.t,�..a,::.�.re.>.,..,.,�....t..,.....,..,,..i„p..,..., AZUSA LIGHT & 'A'ATER CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES Git Gr^ DATE: NOVEMBER 28, 2011 SUBJECT: ADDITIONAL COMPENSATION TO SA ASSOCIATES FOR EXTRA COST RELATED TO ADDITIONAL INSPECTION ON MAIN REPLACEMENT PROJECT W-266A RECOMMENDATION It is recommended that the Utility Board approve the additional payment of $19,000 to SA Associates for additional time spent on their contract to inspect project W-266A. BACKGROUND The construction contract for Hilltop, Workman & San Bernardino Rd. Water Main Replacement Project W-266A, was awarded at the March 28, 2011, Utility Board meeting. At the April 25, 2011, Utility Board meeting, following a Utility Board approved RFP process, a contract in the amount of$58,000 was awarded to SA Associates to provide inspection services for Project W- 266-A. Subsequently, during construction, site conditions differing from those shown in the W- 266A construction Plans and Specifications were discovered and additional time was required to complete the work. Due to these excusable delays in the completion of the construction contract, it has been necessary for SA Associates to spend an additional 36 calendar days on the project inspection. FISCAL IMPACT The fiscal impact of the additional hours to the SA Associates' contract is $19,000 to be funded from approved Capital Budget Account 32-80-000-721-7145/7211A-7145. Prepared by: Chet Anderson, Assistant Director- Water Operations (16 4. AZ LISA G01 6 k'iilR CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD CAS ti— FROM: `FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES (G M DATE: NOVEMBER 28, 2011 SUBJECT: CANCELLATION OF DECEMBER UTILITY BOARD MEETING RECOMMENDATION It is recommended that the Utility Board cancel the scheduled Utility Board meeting of December 27, 2011. BACKGROUND Historically, the Utility Board does not meet in December and due to the holiday schedule, i.e., Christmas falling on Sunday and the City of Azusa closing on Monday, December 26th in recognition of the holiday, staff is recommending that the Utility Board cancel its next scheduled meeting on Tuesday, December 27. Any urgent items requiring action by the Board will be placed on the regular City Council agenda in December. FISCAL IMPACT None. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities 064 E to a { a �; Y �" � a::-x...+...�e...w Vi.�",. x.a. AZUSA LIGHT 8 WATER CONSENT CALENDAR TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD AND AZUSA CITY COUNCIL FROM: GEORGE MORROW, DIRECTOR OF UTILITIES a' ( Gh DATE: NOVEMBER 28, 2011 SUBJECT: APPROVAL OF SAN JUAN UNIT 3 FIRMING ARRANGEMENT BETWEEN AZUSA AND ARIZONA PUBLIC SERVICE (APS). RECOMMENDATION It is recommended that the Utility Board authorize Staff to renew the firming arrangement for San Juan Unit3 with Arizona Public Service (APS) and authorize the Director of Utilities to execute the final agreement with APS. BACKGROUND Since 1998 Azusa has been actively managing its power resources, to include optimization of deliveries and forward mitigation of contingencies. Due to the operational nature of the San Juan and importance of San Juan energy to Azusa, since 2004 Staff has "firmed" - San Juan delivery arrangements. Such arrangements improve operational stability, provide for delivery certainty and enhance cost stability of our resource portfolio. Our current contractual arrangement for San Juan energy firming with APS will expire at the end of 2011. Accordingly, Staff has inquired with several companies about the possibility of San Juan firming in 2012 - only APS showed interest. As a result, Staff proceeded with development of a potential San Juan firming arrangement with APS for calendar 2012 (agreement attached). Under the terms of this proposed transaction, Azusa will pay APS a fee in the amount of $1.75/MWh for Q3 and $1.60/MWh for Q 1, Q2 and Q4 for each firmed MWH. The replacement power, when needed, shall be priced at Dow Jones Palo Verde index + 0.95 $/MWH. It should be noted that there are provisions for substantial operational flexibility — a 30 day "no fault" unilateral termination clause and a monthly determination of firmed generation level for the Jan 1, 2012 —May 31, 2012 period. 065 San Juan Firming Arrangement November 28,2011 Page 2 FISCAL IMPACT Sufficient funds are budgeted for January 1, 2012 through June 30, 2012 and will be budgeted for July 1, 2012 through December 31, 2012 accordingly. Prepared by: Yarek Lehr, Assistant Director of Resource Management Attachment: APS Firming Agreement ., cry APS Contract No. DRAFT Energy Exchange Confirmation between Arizona Public Service Company and City of Azusa , 2012 Product Arizona Public Service Company ("APS") and the City of Azusa ("Azusa") wish to create an energy exchange whereby, the City of Azusa delivers a unit commitment product in exchange for Arizona Public Service Company delivering a firm product. Specifically, Azusa will deliver up to 30 MW, as described below, of unit commitment energy from San Juan Unit #3 pursuant to WSPP Service Schedule B and during the same hours APS will deliver up to 30 MW, as described below, of firm energy back to Azusa at Palo Verde 500kV pursuant to WSPP Service Schedule C. APS and Azusa are also individually referred to as "Party" or collectively as the "Parties". Service Fee: Azusa will pay APS a fee in the amount of $1.75/MWh for Q3 and $1.60/MWh for Q1, Q2 and Q4 for all MW up to 30 MW, as described below, 24 hours per day for the Term of this transaction. Term January 1, 2012 — May 31, 2012, Azusa will notify APS of the specific monthly exchange amount, not to exceed 30 MW per hour, no later than 5 business days before the start of the prompt month. The monthly specified amount shall remain unchanged for all hours in the specified month. Azusa's once a month notification shall be made to the APS Day- Ahead Trading desk at (602)250-4511. June 1, 2012 — December 31, 2012, the exchange shall be 30 MW, excluding the period from September 29 — November 18 (51 days), due to San Juan Unit 3 planned maintenance outage. Unit Commitment Product Provider- Azusa Recipient- APS Amount- January 1, 2012—May 31, 2012: To be determined as described in the"Term" section above. June 1, 2012— December 31, 2012: 30 MW per hour, all hours Hours - On-Peak hours: 6x16, HE 0700 through HE 2200 (PPT) Monday thru Saturday (16 hours each day), excluding Sundays and NERC holidays. Off-Peak hours: 6x8 + 1x24; HE 2300 through HE 0600 (PPT) Monday through Saturday (8 hours each day) and HE 0100 through HE 2400 (PPT) Sundays and NERC Holidays (24 hours each day). Page 1 of 4 IX:\Utility Board Agenda\UB Agenda 2011\UB Agenda 2011-11-28\CAK Approved\E.Agenda(Schedule Items)\E-1.SJ Firming Agmnt.dock'\Fred\B als\azusaV\PS 067 APS Contract No. DRAFT Agreement— WSPP Service Schedule B effective June 3, 2011; Unit Commitment at San Juan Unit 3 Delivery Points— San Juan 345kV, Westwing 500kV, or Palo Verde 500kV via resource contingent transmission per the Tucson Electric Power Company ("TEP") and Century Power Corporation Interconnection Agreement, dated October 7, 1992, Section C.6 (APS' sole daily option), and Four Corners 345 kV contingent upon TEP's rights and ability to deliver to Four Corners 345 kV. Environmental Impact The sole purpose of this energy exchange is to firm a unit commitment resource. Provision Furthermore, the City of Azusa will retain responsibility for any environmental costs that are a result of owning or producing generation from the San Juan Coal facility Unit #3 for dispatch or consumption in the states of New Mexico and California. Special Conditions - Azusa will notify TEP that APS will be scheduling Azusa's specified exchange amount , per hour San Juan Unit 3 supply entitlement on a daily basis for the Term and will retain Azusa's delivery point flexibility. APS shall schedule Azusa's San Juan Unit 3 output directly with TEP. The Parties shall notify each other as soon as practicable of any interruption or curtailment of San Juan Unit 3 affecting this transaction. Azusa should notify APS by calling 602-250- 3585 and APS should notify Azusa by calling 626-812-5138. It is further understood that energy deliveries to Westwing 500 kV, Four Corners 345, or Palo Verde 500 kV are solely from San Juan Unit 3, (i.e., if San Juan Unit 3 is de-rated or forced out, such deliveries shall be adjusted in accordance with such de-rates or forced outages, and the underlying transmission from San Juan bus to Palo Verde 500 kV, Four Corners 345, or Westwing 500 kV cannot be used for any other resource). Scheduling - Scheduling will be done on a day-ahead prescheduled basis per WECC trading timelines. APS will coordinate with Azusa any scheduling, tagging, and unit de-rates related to San Juan Unit 3. APS will perform generator and control area checkouts for day-ahead, hour- ahead, and real-time schedule changes and prepare necessary tagging changes. APS will notify Azusa on a daily basis of any prior day San Juan Unit 3 de-rates to facilitate accounting for replacement energy costs and reconciliation. Both parties will schedule for all hours and all amounts, no partial amounts or hours will be allowed, except as set forth in Curtailments below. Curtailments - Azusa can curtail energy deliveries to APS in the event of a unit outage or de-rate at San Juan Unit 3. Curtailments may not occur for economic reasons. Replacement Cost- In the event San Juan Unit 3 is de-rated or trips offline, Azusa will reimburse APS for replacement energy in Q3 at the Daily Firm Dow Jones Index for Palo Verde ("DJI @ PV") plus $0.95/MWh, for the respective On/Off-Peak index for the delivery day, for megawatts not made available to schedule 45 minutes prior to the respective operating hour or for megawatts not generated. Azusa will reimburse APS for replacement energy in Q1, Q2 and Q4 at the Daily Firm Dow Jones Index for Palo Verde ("DJI@PV") plus $0.75/MWh, for the respective On/Off-Peak index for the delivery day, for megawatts not made available to schedule 45 minutes prior to the respective operating hour or for megawatts not generated. The Replacement Price calculation is as follows for Q3: MW not generated X (Applicable DJI @ PV + $0.95/MWh). The Applicable DJI @ PV is defined as follows: (i) for Monday Page 2 of 4 X:1Utility Board Agenda1UB Agenda 2011\UB Agenda 2011-11-28\CAK Approved\E Agenda(Schedule Items)\E-1.SJ Firming Agmnt.docK:\Fred\Beals\azusa\APS ; ' I 0. APS Contract No. DRAFT through Saturday (excludes NERC holidays) use the DJI @ PV respective On/Off-Peak index; and (ii) for Sundays and NERC holidays use the DJI @ PV 24-hour index. In the event the Daily Firm Dow Jones Index for Palo Verde is no longer published and made available, the parties will utilize a mutually agreed upon substitute index. Timely Checkouts - To ensure timely checkouts of the amount of San Juan Unit 3 provided and the replacement energy purchased by Azusa, the Parties shall attempt to check out once a week. The Parties shall endeavor to use a common format for check out purposes and try to resolve any discrepancies as soon as practicable. Firm Product Provider- APS Recipient- Azusa Amount- January 1, 2012 — May 31, 2012: To be determined as described in the "Term" section above. June 1, 2012 — December 31, 2012: 30 MW per hour, all hours Hours - On-Peak hours: 6x16, HE 0700 through HE 2200 (PPT) Monday thru Saturday (16 hours each day), excluding Sundays and NERC holidays. Off-Peak hours: 6x8 + 1x24; HE 2300 through HE 0600 (PPT) Monday through Saturday (8 hours each day) and HE 0100 through HE 2400 (PPT) Sundays and NERC Holidays (24 hours each day). Agreement — WSPP Service Schedule C effective June 3, 2011 Delivery Points— Palo Verde 500kV Curtailments - In the event of a curtailment, APS will be obligated to pay damages pursuant to Service Schedule C of the WSPP Agreement. Scheduling - Pre-scheduling shall be exchanged for all deliveries of energy, including identifications of receiving and generating control areas under this Energy Exchange Confirmation by 11:00 a.m. Pacific Prevailing Time ("PPT") on the last work day observed by both Parties prior to the scheduled date of delivery. Notices - All written notices under this Energy Exchange Confirmation shall be deemed properly sent if delivered in person or sent by facsimile, or registered or certified mail, postage prepaid to persons specified below: Early Termination - Parties may either individually or mutually terminate this agreement by submitting a 30 day written termination notice to the other Party or mutually agree to terminate on an agreed to Page 3 of 4 X:\Utility Board Agenda UB Agenda 20111UB Agenda 2011-11-28\CAK Approved\E.Agenda(Schedule Items)1E-1.SJ Firming Agmnt.doc - 069 APS Contract No. DRAFT date, provided that such mutually agreed to termination date shall not be earlier than 30 days from the date the agreement to mutually terminate is reached. Other Than Confirmations of Transactions - If to Azusa: If to APS: City of Azusa Light&Water Arizona Public Service Company 729 North Azusa Avenue 400 North Fifth Street, Mail Sta. 9842 City of Azusa, CA 91702 Phoenix, AZ 85004 Attn: Assistant Director of Resource Mgt. Attn: Contracts Manager Fax: 626-334-3163 Fax: 602-371-5256 Confirmations of Transactions - If to Azusa: If to APS: Telephone: 626-812-5138 Telephone: 602-250-2780 Payments - All payments shall be made by electronic wire transfer as follows: To Azusa: To APS: Wells Fargo Bank Wells Fargo Bank ABA#: 102000076 ABA#: 121000248 Account No. 4950041244 Account No. 4159540921 Disputes - Any disputes between the Parties shall be resolved using binding arbitration, pursuant to Section 34.2 of the WSPP Agreement. Confidentiality - All terms and conditions described in this proposal are confidential between APS and Azusa. City of Azusa Arizona Public Service Company By: By: Printed Name: Printed Name: Dennis Beals Title: Title: Director Date: Date: Page 4 of 4 X:\Utility Board Agenda\UB Agenda 20111UB Agenda 2011-11-281CAK Approved 1E,Agenda(Schedule Items)\E-1.SJ Firming Agmnt.doc City of Azusa Energy ExchangeConfirmation(11 22 11)1.doc� `0y 0 1101 (26, E - ,4-ftve,' , , , . "„._ , rwAil t*,, • r « ,,i,... .,t,„„ .,,,t,., '444 '''''' � USA :,,,i ,,, AZ LIGHT d WATER AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES ,c,oc M DATE: NOVEMBER 28, 2011 SUBJECT: LOCAL ADOPTION OF SBX1 2 MANDATED RENEWABLE PORTFOLIO STANDARD ENFORCEMENT PROGRAM RECOMMENDATION It is recommended that the Utility Board adopt the attached resolution approving the SBX1 2 Enforcement Program. BACKGROUND 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. As further noted in the October 24, 2011 Board memo, 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. Accordingly, the purpose of this Enforcement Program is to create and adopt a mechanism for enforcement of SBX1 2 provisions applicable to Azusa. Among other things, this Enforcement Program: establishes the Utility Board's jurisdiction of the program; directs staff to devise and bring for the Board's approval an RPS procurement 071 Adoption of RPS Enforcement Program October 28, 2011 Page 2 plan; and directs Staff to modify current Azusa RPS Program to ensure its compliance with SBX1 2. It is important to note that the Enforcement Program can be modified at any time under the jurisdiction of the Utility Board. As per the requirements of SBX1 2, a 30-day notice was posted in the local newspaper as well as on the Azusa L&W website to advise the public that on November 28, 2011, the Board would be considering adoption of a RPS Enforcement Program. Attached is a copy of the proposed SBX1 2 Enforcement Program and a Resolution adopting the program. FISCAL IMPACT There is no direct fiscal impact at this time. However, future noncompliance with this enforcement program may lead to assessment(s) of penalties under applicable California state laws and regulations. Prepared by: Yarek Lehr, Assistant Director of Resource Management 072 RESOLUTION NO. A RESOLUTION OF THE AZUSA UTILITY BOARD ADOPTING A RENEWABLE PORTFOLIO STANDARD ("RPS") ENFORCEMENT PROGRAM IN COMPLIANCE WITH STATE LAW (SBX1 2) WHEREAS, the City of Azusa's Light & Water Department ("AL&W") maintains an electric generation and distribution system for furnishing electricity to residents and businesses of the City of Azusa ("Azusa"); and WHEREAS, AL&W, a publicly-owned utility, provides reliable, low cost, environmentally responsible power to residents and businesses in the Azusa community; and WHEREAS, under prior laws, publically owned utilities were required to adopt their own Renewable Portfolio Standard consistent with the state policy to encourage renewables, but were not subject to the same numerical goals as investor owned utilities; and WHEREAS, in 2003, consistent with Senate Bill 1078, Azusa Utility Board approved a Renewable Portfolio Standard ("Azusa RPS") that would allow Azusa to serve twenty percent (20%) of its retail load with renewable power by December 31, 2017; and WHEREAS, in 2007, consistent with Senate Bill 107, the Azusa Utility Board approved a revised City of Azusa RPS to adopt renewable energy goals of twenty percent (20%) by 2010 and thirty three percent (33%) by 2020, after taking into consideration market conditions, renewable project availability, feasibility of delivery, and rate impacts; and WHEREAS, on April 12, 2011 Governor Brown signed the California Renewable Energy Resources Act (SBX1 2) with an effective date of December 10, 2011, which establishes the state's renewable portfolio standard by requiring California's investor- owned utilities, as well as publicly-owned utilities, to procure twenty percent (20%) on average of their energy from renewable sources during the years 2011-2013, twenty five percent (25%) by 2016, and thirty-three percent (33%) by 2020 and thereafter; and WHEREAS, SBX 1 2 sets interim targets for RPS compliance, expands the roles of the California Energy Commission and the California Air Resources Board, and places requirements on the types of renewable resources eligible for compliance; and 1 073 WHEREAS, the Azusa Utility Board is the governing body of its local publicly- owned electric utility with the authority to adopt and implement the requirements of state law. NOW, THEREFORE, THE UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY FIND AS FOLLOWS: Section 1. The Utility Board of the City of Azusa hereby directs the City of Azusa Light & Water Department to modify the existing City of Azusa RPS to comply with applicable provisions and permissible considerations of SBX1 2, subject to this Utility Board's approval and jurisdiction as provided and permitted by law. Section 2. The Utility Board of the City of Azusa hereby approves and adopts the attached City of Azusa Renewable Portfolio Standard Enforcement Program. Section 3. The Director of Utilities, or his designee, is hereby authorized and directed to implement and administer the RPS Enforcement Program. PASSED, APPROVED AND ADOPTED this 28th day of November, 2011. Joseph R. Rocha, Mayor I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the City Council/ Utility Board of the City of Azusa at a regular meeting thereof held on the 28th day of November, 2011. AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: Vera Mendoza, City Clerk 2 074 California Renewable Energy Resources Act (SBX1-2) Azusa, CA Light & Water Renewable Portfolio Standard Enforcement Program NOTE: As of the effective date of the program being established herein, California regulations governing implementation of SBX1 2 are not finalized. However, the law requires that electric utilities implement an SBX1 2 Enforcement Program by 1/1/2012. Accordingly, the enforcement program herein is intended to be consistent with the law but at the same time provide sufficient flexibility to accommodate future applicable regulations. 1. Establishment of Renewable Portfolio Standard Enforcement Program Consistent with applicable provisions and requirements of the California Senate Bill No. 2 (SBX1 2), as codified in Section 399.30 (e) of the California Public Utilities Code, the City Council/Utility Board approves and directs implementation of this Renewable Resources Enforcement Program ("Program"): 2. Program approval, implementation and jurisdiction Except to the extent applicable law and/or regulations dictate otherwise or explicitly prohibit, this Program and all its provisions shall be approved by and implemented under the jurisdiction of the Azusa Light & Water Utility Board. 3. Program administration This Program shall be administered by Azusa Light & Water Department under the direction and sole jurisdiction of the Azusa Light & Water Utility Board. 4. Determination of compliance with this Program Azusa Light & Water's compliance with this Program will be determined by the Azusa Light & Water Utility Board. 5. Program compliance verification 1 November 28, 2011 075 Azusa Light&Water iii newable Portfolio Standard Enforcement Program To the extent allowed by applicable provisions of the law and/or regulations,the California Energy Commission may verify Azusa Light&Water's compliance with this Program. 6. Program compliance enforcement To the extent allowed by applicable provision(s)of the law and/or regulations,the California Air Resources Board may take action(s)to enforce Azusa Light&Water's compliance with this program(to include rendition of penalties,if any). 7. Determination of"unmet"long-term generation resource needs Consistent with Section 399.30(a)of the Public Utilities Code,the Azusa Utility Board may adopt specific definition(s),and a mechanism for determination of unmet long-term generation resource needs. 8. Special Program measures that may be adopted Consistent with Sections 399.30(d)of the Public Utilities Code,the Azusa Utility Board may adopt measures including rules permitting applying excess procurement in a compliance period to the subsequent compliance periods;defining conditions that allow for delaying timely program compliance;and cost impact limitations for RPS expenditures.Other operational and/or cost impact containment measures may be adopted by the Board provided such measures are not in conflict with applicable laws. 9. Changes to this Program Changes to this Program may be implemented under the direction of the Azusa Utility Board.Consistent with Section 399.30(e)of the Public Utilities Code,not less than 10 day's notice shall be given to the public before any meeting is held by the Board to make substantive changes to this Program. 10.Establishing a Procurement Plan Within 90 days from the time that SBX1-2 regulations are finalized,but no later than October 31,2012,Azusa Light&Water shall devise and present to the Board for 2 November 28,2011 076 approval a renewable resources procurement plan ("Renewable Procurement Plan'). The plan shall be reviewed on an annual basis thereafter. The Renewable Procurement Plan shall be consistent with applicable provisions of Section 399.30 of the Public Utilities Code and shall be subject to the enforcement hereto. Azusa's Renewable Procurement Plan will include the following elements: • Determination of unmet needs & methodology for establishing same • Compliance periods, targets & methodology used for compliance accounting • Procurement categories or "buckets" • RPS resource qualifications • Rules and calculation methodology for banking "excess" RPS procurement and applying such toward forward compliance periods The Renewable Procurement Plan shall be reviewed annually. Appropriate advisories and notifications of plan reviews shall be posted consistent with the applicable law. 11. Relationship to Azusa current RPS program This Enforcement Program, in conjunction with the Renewable Procurement Plan when adopted, shall replace and supersede the existing Azusa RPS program established by Azusa Light & Water and previously approved by the Azusa Utility Board for the purpose of compliance with Senate Bills 1078 and 107. To the extent allowed by law, all renewable resources approved by Azusa Utility Board under the current Azusa RPS program shall count in full for the purpose of accounting for and achieving compliance with SBX 1-2. 12. Reporting Azusa Light & Water shall report to the Azusa Utility Board, on an annual basis, its SBX1-2 compliance status, progress, and forward plans. All other reporting shall be consistent with Section 399.30 of the Public Utilities Code. 3 November 28, 2011 077 ?gyp t' 3 I C/Vs, 7E4 etli3,441.And t.41441 +i" +�� AZUSA LIGHT 8 WATER AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD —�,Pe FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES �M DATE: NOVEMBER 28, 2011 SUBJECT: AUTHORIZE RECALCULATION OF AZUSA'S TRANSMISSION REVENUE REQUIREMENT AND APPROVAL OF UPDATES AND REVISIONS TO AZUSA TRANSMISSION TARIFF RECOMMENDATION It is recommended that the Utility Board authorize Staff to recalculate Azusa's Transmission Revenue Requirement and make revisions to Azusa Transmission Tariff to implement same as well as to reflect changes in the underlying California Independent System Operator (ISO) Tariff via Board resolution. BACKGROUND On January 1, 2003 Azusa along with the Cities of Anaheim, Riverside, and Banning became Participating Transmission Owners ("PTOs") under the ISO tariff. (City of Pasadena became a PTO later, in 2004). Achieving PTO status allowed the cities to recover costs of their investments in transmission assets by collecting monies via the ISO's Transmission Access Charge from all entities that transmit power on the cities owned or controlled transmission rights. By doing business within the ISO's PTO construct, Azusa can recover costs associated with Azusa's ownership share of the Mead-Adelanto and Mead-Phoenix projects (including certain rights at McCullough 500 kV and Adelanto 500kV switchyards), and all costs associated with transmission contracts currently in force with the Southern California Edison Company. In addition Azusa can recover all regulatory, legal and administrative costs and expenses incurred in association with administering and conducting Azusa's transmission business. 078 Azusa Transmission Tariff Revisions November 28,2011 Page 2 In order for Azusa to recover its transmission costs through the ISO, it must have a FERC accepted Transmission Owner tariff along with a FERC approved cost itemization, accounting and recovery methodology, i.e., a Transmission Revenue Requirement(TRR). Since the original 2003 filing of the Azusa Transmission Tariff and associated TRR, several changes in Azusa's underlying transmission rights and contracts have occurred such as one transmission contract with Los Angeles Department Water and Power, two contracts with Southern California Edison, and one with Burbank. In addition, Edison has implemented a continuous wave of rate increases in our remaining transmission agreements, principally to recover costs of Edison's massive transmission expansion to import renewable resources into Southern California. Finally, the ISO Tariff, a document governing our transmission business in the PTO "world", has undergone a number of revisions and amendments. In light of the above it is imperative to recalculate Azusa's TRR and make the requisite changes and amendments to Azusa's Transmission Tariff. Attached for reference is a draft of amended Azusa Transmission Tariff along with an updated Attachment I. FISCAL IMPACT The proposed TRR recalculation, if approved by the Federal Energy Regulatory Commission, will allow Azusa to recover an additional $500,000 to $600,000 of its transmission costs per year. The cost of necessary legal and technical support to implement this filing is estimated to be about $50,000 and will be recovered via the recalculated TRR. Prepared by: Yarek Lehr, Assistant Director of Resource Management 079 RESOLUTION NO. A RESOLUTION OF AZUSA UTILITY BOARD REVISING AND UPDATING THE AZUSA TRANSMISSION TARIFF AND TRANSMISSION REVENUE REQUIREMENT. WHEREAS, on September 23, 2002, The Azusa Utility Board/City Council issued Resolution No.02-C 101 establishing the City of Azusa, California Transmission Owner Tariff and approving Azusa's Transmission Revenue Requirement ("TRR"), both to become effective as of the later of January 1, 2003 or Azusa's execution of the Transmission Control Agreement ("TCA") with the California Independent System Operator ("ISO"); and WHEREAS, on January 1, 2003, by executing and becoming a party to the TCA and thereby turning operational control of its transmission assets and entitlements to the ISO, Azusa became an ISO Participating Transmission Owner("PTO") under the ISO Tariff,; and WHEREAS, under the provisions of the ISO Tariff a PTO is entitled to recover all prudently incurred costs associated with ownership, administration, upkeep, and operation of its transmission facilities and entitlements, as calculated in the TRR; and WHEREAS, since the original Azusa TRR filing there have been changes in Azusa's transmission rights and entitlements which increased Azusa's transmission cost burden; and WHEREAS, in order to recover Azusa's increased transmission costs, a new Azusa TRR calculation has to be performed and filed with FERC 080 NOW, THEREFORE, BE IT RESOLVED BY THE UTILITY BOARD/CITY COUNCIL OF THE CITY OF AZUSA AS FOLLOWS: SECTION 1: The Utility Board of the City of Azusa hereby finds and determines that the recitals contained herein above are true and correct and that there are compelling reasons to justify recalculation of Azusa's TRR. SECTION 2: The Utility Board of the City of Azusa hereby authorizes the Director of Utilities or his designee to undertake any efforts necessary to recalculate and file with the Federal Energy Regulatory Commission an updated Azusa TRR. SECTION 3: The Utility Board of the City of Azusa hereby approves the proposed changes to the Azusa Transmission Tariff and its Appendix Ito, among other things, reflect changes in the ISO Tariff and to provide for automatic pass through of rate increases in Azusa's Existing Transmission Contracts with Southern California Edison. SECTION 4: The Utility Board of the City of Azusa hereby authorizes the Director of Utilities or his designee to make any such future changes to Appendix I of the Azusa Transmission Tariff for the purpose of expeditious recovery of Azusa's incurred transmission costs. SECTION 5: The City Clerk of the City of Azusa shall certify to the passage of this resolution, and thereupon and thereafter the same shall be in full force and effect. 2 081 APPROVED AND ADOPTED this 28`d day of November, 2011. JOSEPH R. ROCHA, Mayor ATTEST: VERA MENDOZA, City Clerk STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I, Vera Mendoza, City Clerk of the City of Azusa, do hereby certify that the foregoing Resolution No. was duly introduced and adopted at a regular meeting of the Azusa Utility Board on the 28th day of November, 2011, by the following vote, to wit: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: Vera Mendoza, City Clerk 3 082 CITY OF AZUSA, CALIFORNIA FERC ELECTRIC TARIFF 083 TABLE OF CONTENTS Preamble ..1 Effective Date .. 2 TO Definitions 3 Eligibility . 4 Access Charges 5 Transmission Revenue Requirement 5.1 Transmission Revenue Balancing Account Adjustment ("TRBAA") 5.2 Ancillary Services—Applicability and Charges 6 Billing and Payment 7 Expansion and Interconnection for Azusa's Interests in MPP, MAP, and Marketplace Substation ..8 Expansion . 8.1 Interconnection 8.2 Project Managers and Operators ..8.3 Obligation to Interconnect or Construct Transmission Expansions and Facility Upgrades 8a Participating TO Obligation to Interconnect 8a.1 Participating TO Obligation to Construct Transmission Expansions or Facility Upgrades ... 8a.2 Request for FERC Deference Regarding Need Determination ..8a.3 Expansion Process for Azusa's Interests in MPP, MAP, and Marketplace Substation 9 Expansion Process 9a Determination of Facilities .9a.1 Obligation to Build ..9a.2 Provisions Relating To Transmission Construction On the Systems Of Other TOs 9a.3 Interconnection Process for Azusa's Interests in MPP, MAP, and Marketplace Substation ..10 084 Interconnection Process l0a Applicability 10a.1 Applications .10a.2 Completed Application 10a.3 Notice of Need for System Impact Study ..10a.4 System Impact Study Cost Reimbursement and Agreement 10a.5 System Impact Study Procedures ..10a.6 Relevant Sections Apply Upon Receipt of Facilities Study Agreement 10a.7 Partial Interim Service 10a.8 Expedited Procedures for New Facilities ..10a.9 Uncontrollable Forces and Indemnification .11 Procedures to Follow if Uncontrollable Force Occurs 11.1 Indemnification 11.2 Regulatory Filings 12 Miscellaneous 13 Notices .13.1 Waiver .13.2 Confidentiality .13.3 Titles .13.4 Severability .13.5 Preservation of Obligations 13.6 Governing Law 13.7 Appendices Incorporated 13.8 Consistency with ISO Tariff .. 13.9 Disputes 13.10 APPENDIX I —Transmission Revenue Requirement and TRBA Adjustment APPENDIX II—Notices 085 1. Preamble. Azusa's TRR for its high voltage transmission facilities and Entitlements placed under the ISO's Operational Control, and certain terms and conditions relating to transmission expansion of and interconnection with Azusa's high voltage transmission facilities and Entitlements placed under the ISO's Operational Control, are set forth in this TO Tariff. 2. Effective Date. This TO Tariff is effective on the date on which Azusa becomes a Participating TO and shall continue to be effective so long as Azusa is a party to the TCA. 3. TO Definitions. Certain capitalized terms used in this TO Tariff that are set out immediately below shall have the meanings set out immediately below. Capitalized terms used in this tariff and not defined below shall have the meanings set out in the ISO Tariff as it may be amended from time to time. 3.1 Completed Application. An application that satisfies all of the information and other requirements of this TO Tariff, including any required deposit. 3.2 Direct Assignment Facilities. Facilities or portions of facilities that are constructed by the Participating TO for the sole use or benefit of a particular party requesting Interconnection under this TO Tariff. Direct Assignment Facilities shall be specified in the Interconnection Agreement that governs service to such party. 3.3 Existing Transmission Contract Pass-Through Clause. The mechanism that adjusts Azusa's fligh Voltage Base "HRR for changes in the costs associated with certain Existinjr 'I ransniissiol Contracts LI(s consisting_of,Azusa's projected annual cot of its I I_C;'s with Southern California Edison ('ompanv ("Edison') flir the next calendar vicar, based upon the stated Edison I Iigh Voltage Existing Contracts Access Charge ("FIVECAC") rate in effect. at the time of Azusa's annual ETC fhlifg. plus the tiucupSpostti\e or nc ata\C> Ofthe prior year.5-„costs osuch l ICs (as invoiced.to Azusa by_Edison clurin . the cIiod of October through September) as compared with the projected ETC costs or the same period. including interest on the true-up amount at the rate computed, by the Federal Energy ulatory Commission pursuant to 18 t_` 1' R -§ 35.19a. 3.4 Facilities Study Agreement. An agreement between a Participating TO and either a Market Participant, Project Sponsor, or identified principal beneficiaries pursuant to which the Market Participants, Project Sponsor, and identified principal beneficiaries agree to reimburse the Participating TO for the cost of a Facility Study. 3.45 Facility or Facilities Study. An engineering study conducted by a Participating TO to determine required modifications to the Participating TO's transmission 086 system, including the cost and scheduled completion date for such modifications that will be required to provide needed services. 3.56 Local Regulatory Authority. In the case of Azusa, the Azusa City Council. 3.67 MAP Joint Ownership Agreement. That certain agreement entered into by the Mead Adelanto owners, as the same may be revised, amended or supplemented from time to time. 3.78 MAP Coordinating Committee. Governing committee of the MAP. 3.89 MAP Operation Agreement. That certain agreement entered into by the Mead- Adelanto owners and Los Angeles, which, among other things, designates Los Angeles as operation manager for the Mead-Adelanto Project. 3.910 Marketplace Administrative Committee. Governing committee of the Marketplace Substation. 3.1011 Marketplace Owners. Each of the Mead-Phoenix owners and each of the Mead- Adelanto owners, their successors and assigns. 3.4412Marketplace Substation. The common terminal for the Mead-Phoenix and Mead-Adelanto Projects and includes the Marketplace-McCullough tie line as common facilities, as more fully described in the Marketplace Substation Participation Agreement. 3.1-213 Marketplace Substation Participation Agreement. That certain agreement entered into by the Marketplace Owners, which provides, among other things, for ownership, construction, operation, maintenance, and rights of use associated with the Marketplace Substation. 3J314 Mead-Adelanto Project or MAP. A 500 kV AC transmission line with termination facilities at the Adelanto Switching station and Marketplace Substation, as more fully described in the Mead-Adelanto Project Agreements as defined in the MAP Joint Ownership Agreement. 3.1-415 Mead-Phoenix Project or MPP. A 500 kV AC transmission line interconnecting the Westwing Switchyard, Mead Substation, and Marketplace Substation, as more fully described in the Mead-Phoenix Agreements as defined in the Mead-Phoenix Joint Ownership Agreement. 3.4516 MPP Joint Ownership Agreement. That certain agreement entered into by the Mead-Phoenix owners, as the same may be revised, amended or supplemented from time to time. 3.4-617 MPP Management Committee. Governing committee of the MPP. 087 3.1718 MPP Operation Agreement. That certain agreement entered into by the Mead- Phoenix owners, SRP and Western, which, among other things, designates SRP and Western as operation managers for the Mead-Phoenix Project. . . ' }I of: 1 ) The revenue received by Azusa from the &ale:-suet on, or other transfer of the--FT-R-s Prov ded to- -t--pursuu-rpt--te.4tSO-Tafi-€4 Section 9A.3, or any substantivt 't . . .. ''stn ofthe-ISO-`farifl and 2) for each hour: a)the Usage Charge revenue received by Azusa assoc-ice with its ISO Tariff Section 9A.3 F.1....Rs; minus b) Usage Charges that-ltre•: i) incurred--by-#lie `gehe lulir •-€fx4r-dinatoI--€ter-A it -uncle—ISO_Tariff'-Suet-ion• 7.3.1.'1. II) associated with Azusa's ISO Tarif! i*n-9.71.3 1 T-I s- --i-ii4 incurred by Azusa for its energy transactions but not incurred as a result of the use of the transmiss-fo -ba-t-1}i-rd-party and minty -c) the charges paid-by-r zi+sa pttt-i t-ia+}t-tfi-f,S(3 1 ari-f 4-Sec-tic-n 74:1.7,to t:1 e--exte-nt...site-h--:-haFees-{ e—i-+x.t{-I-c ci_la • - • 1i-ng--(' rt-inator-ofAz,usa on-Coir te4--1+iie--/; til Iit =f=ree-es.t-hut-ur, associated with the-I-S-0 Tariff f Section 9.4.3 FIR.s-.ro-' ided to-A;.usa.-441e component of Net FIR Revenues represented by item 2) immedia-tily above shad *t-bc-Tess than-zero-fftr--inn-v--hottr.- 3.19 Participating TO. A party to the TCA whose application under Section 2.2 of the TCA has been accepted and who has placed its transmission assets and Entitlements under the ISO's Operational Control in accordance with the TCA. A Participating TO may be an Original Participating TO or a New Participating TO. For purposes of this TO Tariff, the Participating TO is Azusa. 3.20 Project Proponent. A Market Participant or group of Market Participants that: (i) advocates a transmission addition or upgrade; (ii) is unwilling to pay the full cost of the proposed transmission addition and upgrade, and thus is not a Project Sponsor; and (iii) initiates proceedings under the ISO ADR Procedures to determine the need for the proposed transmission addition or upgrade. 3.21 System Impact Study. An engineering study conducted by a Participating TO to determine whether a request for Interconnection to the Participating TO's transmission system would require new transmission additions or upgrades. 3.22 System Impact Study Agreement. An agreement between a Participating TO and an entity that has requested Interconnection to the Participating TO's transmission system pursuant to which the entity requesting Interconnection agrees to reimburse the Participating TO for the cost of a System Impact Study. 3.23 Transmission Revenue Balancing Account Adjustment("TRBAA"). A mechanism established by the Participating TO which will ensure that all Transmission Revenue Credits and other credits specified in Sections 6 and 8 of Appendix F, Schedule 3 of the ISO Tariff, flow through to ISO Tariff and TO Tariff transmission customers. 088 3.24 Transmission Revenue Credit. Collectively, 1) the sum of: --a) ,.'fall revenues received by the Participating TO from the ISO for Wheeling service, - ped by the Part t)-1 tr=uant-to See-bion-7.3.1_6{.i .l...al he 1S ).-1 tn-ift plus-e-)--Net--11444-4Z.-e-venue reeeivedb the Participating=1=():--m-i-rius 2) an -- -attributable to the Participating TO (but not those attributable to the FFR I-lokle$pursuant to Section 7.3.1.7 of the 1-SOTari-tTi-p1-us-3-}-tlie-s-hoft-f ll-tr--surplus-r ;ul-ti-n.g...:1t= -changes to the--transmission-service rates lo-r Existing C*ntract-s between Azuea aid-Soathet-n-California Edison Company ("Fd-iso1=) due-te cht+nfes i-n rattst +ss-ion-l4 en e-Ba-lanem•g.Ae.-count Adjustment. After--t-1 -4 ransition-lent --cit forth in the ISO Tari-€=1; t-he-deti ition of I . Particily e as that of the-Original Part-ie-ipat-ing TOS. 3.25 Transmission Revenue Requirement. The TRR is the total annual authorized revenue requirements associated with transmission facilities and Entitlements turned over to the Operational Control of the ISO by the Participating TO. The costs of any transmission facility turned over to the Operational Control of the ISO shall be fully included in the Participating TO's TRR. The TRR includes the costs of transmission facilities and Entitlements and deducts Transmission Revenue Credits and credits for Standby Transmission Revenue and the transmission revenue expected to be actually received by the Participating TO for Existing Rights and Converted Rights. The TRR is shown in Appendix I. 4. Eligibility. Transmission service over Azusa's high voltage transmission facilities and Entitlements placed under the ISO's Operational Control shall be provided only to Eligible Customers as defined by the ISO Tariff Any dispute as to whether a customer is eligible for wholesale transmission service shall be resolved by FERC and any dispute as to whether an Azusa End-Use Customer is eligible for service under this TO Tariff shall be resolved by the Local Regulatory Authority. At the present time, there are no Azusa End-Use Customers eligible for service under this tariff. 5. Access Charges. The applicable Access Charges are provided in the ISO Tariff 5.1 Transmission Revenue Requirement. As set forth in the ISO Tariff, the Transmission Revenue Requirement for each Participating TO shall be used to develop the Access Charges set forth in the ISO Tariff Azusa's Transmission Revenue Requirement is set forth in Appendix I. 5.2 Transmission Revenue Balancing Account Adjustment ("TRBAA"). The Participating TO shall maintain a Transmission Revenue Balancing Account ("TRBA") that will ensure that all Transmission Revenue Credits and the refunds, specified in Sections 6 and 8 of Appendix F, Schedule 3 of the ISO Tariff, flow 089 through to transmission customers. The TRBAA shall be equal to: TRBAA = TRCF+TRCT +I TRCT= The balance representing the prior period difference between the projected Transmission Revenue Credits and the actual credits. TRC F= The forecast of Transmission Revenue Credits for the following calendar year. I = The interest balance for the TRBA, which shall be calculated using the interest rate pursuant to Section 35.19(a) of FERC's regulations under the Federal Power Act (18 CFR Section 35.19(a)). Interest shall be calculated based on the average TRBA principal balance each month, compounded quarterly. Azusa's TRBAA, calculated in accordance with the ISO Tariff and approved by the City Council, is stated in Appendix I. 6. Ancillary Services—Applicability and Charges. If any Ancillary Services are required, Azusa will not provide such services, but the transmission customer will be required to meet any such requirement in accordance with the ISO Tariff. 7. Billing and Payment. 7.1 [intentionally left blank] 7.2 The ISO, in accordance with the ISO Tariff, shall pay the Participating TO, among other things, Wheeling.4 a :and Access Charge revenues.-inn i--1:1 R auct-i n-proceeds (exciudl-inage ('harg reN enues pati able to 1'=I R 1-14 } in accordance with the ISO Tariff. 7.3 Users of Azusa's high voltage transmission facilities and Entitlements placed under the ISO's Operational Control shall pay to the ISO all applicable charges in accordance with the ISO Tariff. 8. Expansion and Interconnection for Azusa's Interests in MPP, MAP, and Marketplace Substation. Expansion of and/or interconnection to the high voltage transmission facilities presently placed under the ISO's Operational Control by Azusa, which consist of Azusa's minority interests in the MPP, MAP and the Marketplace Substation, require approval of the owners and/or the management committees of those facilities. Therefore Azusa does not have the legal authority to compel expansion and interconnection. Azusa will submit, or assist in the submission of, expansion and/or interconnection requests from third parties to the appropriate bodies of a project pursuant to the individual agreements. It is Azusa's intent to facilitate the submission of such requests to the full extent allowed by the agreements governing or otherwise applying to those projects and the applicable laws and regulations. The project agreements have the 090 provisions, described immediately below, that address expansion and interconnection requests. At this time, the projects do not have explicit procedures for expansions and interconnection requests. In some cases, such procedures may be under development. Third parties making such requests will be responsible for reimbursing all of Azusa's reasonable expenses incurred by Azusa in facilitating submission of such requests to such governing bodies. Sections 8a, 9a, and 10a, and their subparts, of this Azusa TO Tariff shall apply as described in Section 8a. 8.1 Expansion 8.1.1. Mead-Adelanto Project. Pursuant to Section 11.4 of the MAP Operation Agreement, the Project Coordinating Committee may consider increasing the available transmission capability of the transmission line. 8.1.2. Mead-Phoenix Project. Pursuant to Section 11.4 of the MPP Operation Agreement, the Project Management Committee may consider increasing the available transmission capability of the transmission line. 8.1.3. Marketplace Substation. Pursuant to Section 10.6 of the Marketplace Substation Participation Agreement, the Administrative Committee may consider increasing the capability of the Substation. 8.2 Interconnection 8.2.1 Mead-Adelanto Project. Pursuant to Section 6.2.10 of the MAP Ownership Agreement, the Project Coordinating Committee has the power to approve and designate contracts. 8.2.2 Mead-Phoenix Project. Pursuant to Section 6.2.10 of the MPP Ownership Agreement, the Project Management Committee has the power to approve and designate contracts. 8.2.3 Marketplace Substation. Pursuant to Section 13 of the Marketplace Substation Participation Agreement, any entity may interconnect transmission lines at the Marketplace Substation subject to approval by each Marketplace Owner and execution of an interconnection agreement between the Marketplace Owners and the requesting entity. 8.3 Project Managers and Operators. Each transmission project in which Azusa has Entitlements has a project manager and an operating agent. They are as follows and can be contacted in connection with any request for expansion or interconnection. 091 Project Manager Operating Agent Mead-Phoenix Project SRP WAPA (DS W) Mead-Adelanto Project LADWP LADWP Marketplace Substation LADWP LADWP 8a. Obligation to Interconnect or Construct Transmission Expansions and Facility Upgrades. 8a.1 Participating TO Obligation to Interconnect. Sections 8a, 9a, and 10a, and their subparts, are provided for consistency with other PTOs' TO Tariffs and for potential future application should Azusa acquire transmission facilities or acquire additional legal authority in its existing facilities which would provide Azusa sufficient legal authority to implement these Sections. These Sections 8a, 9a, and 10a have no current application to the transmission facilities turned over to the ISO's Operational Control by Azusa, which facilities are Azusa's minority interests in MAP, MPP, and the Marketplace Substation, which are covered solely by Sections 8, 9, and 10 as to expansions and interconnections. Neither are they presently applicable to any other Azusa facilities. If the situation changes so that Azusa has legal authority over transmission facilities so that Azusa is able to implement the provisions of Sections 8a, 9a, and 10a so that those provisions become effective, to the extent consistent with Sections 9a.2.1 and 9a.3.3 of this TO Tariff, the Participating TO shall, at the request of a third party pursuant to Section 210, interconnect its system to the generation of such third party, or modify an existing Interconnection. Interconnections under this TO Tariff shall be available to entities eligible to request interconnection consistent with the provisions of Section 210(a) of the FPA. 8a.1.1 Upgrade to Transmission System. Interconnection must be consistent with Good Utility Practice, in conformance with all Applicable Reliability Criteria, all applicable statutes, and regulations. The Participating TO will not upgrade its existing or planned transmission system to accommodate the Interconnection if doing so would impair system reliability, or would otherwise impair or degrade pre-existing firm transmission service. 8a.1.2 Costs Associated with Interconnection. The cost of any Direct Assignment Facilities constructed pursuant to this section shall be borne by the party requesting the Interconnection. Any additional costs associated with accommodating the Interconnection shall be allocated in accordance with the cost responsibility methodology set forth in the ISO Tariff for transmission expansions or upgrades. Any disputes regarding such cost allocation shall be resolved in accordance with the ISO ADR Procedures. If a Market Participant fails to raise through the ISO ADR Procedures a dispute as to whether a proposed transmission addition or upgrade is needed, or as to the identity, if any, of the beneficiary, then the Market Participant shall be deemed to have waived its rights to raise such 092 dispute at a later date. The determination under the ISO ADR Procedures as to whether the transmission addition or upgrade is needed and the identity, if any, of the beneficiaries, including any determination by FERC or on appeal of a FERC determination in accordance with that process, shall be final. 8a.1.3 Execute Interconnection Agreement. Prior to the construction of any Interconnection facilities pursuant to this TO Tariff, the party requesting an Interconnection shall execute an appropriate Interconnection Agreement that will be filed with FERC, or the Local Regulatory Authority, in the case of a Local Publicly Owned Electric Utility, and that will include, without limitation, cost, responsibilities for engineering, equipment, and construction costs. All costs shall be paid in advance by the requesting party. 8a.1.4 Coordination with ISO on Interconnection Requests. The Participating TO shall coordinate with the ISO, pursuant to the provisions of the TCA, in developing Interconnection standards and guidelines for processing Interconnection requests under this TO Tariff. 8a.2 Participating TO Obligation to Construct Transmission Expansions or Facility Upgrades. The Participating TO shall be obligated to: (1) perform System Impact or Facility Studies where the Project Sponsor or the ISO agrees to pay the study cost and specifies the project objectives to be achieved, and (2) build transmission additions and facility upgrades where the Participating TO is obligated to construct or expand facilities in accordance with and subject to the limitations of the ISO Tariff and this TO Tariff. 8a.2.1 Obligation to Construct. A Participating TO shall not be obligated to construct or expand Interconnection facilities or system upgrades unless and until the conditions stated in Section 9a.2.1 hereof have been satisfied. 8a.2.2 Local Furnishing Participating TO Obligation to Construct. A Local Furnishing Participating TO shall not be obligated to construct or expand Interconnection facilities or system upgrades unless and until the conditions stated in Section 9a.3.3 hereof have been satisfied. 8a.3 Request for FERC Deference Regarding Need Determination. It is intended that FERC grant substantial deference to the factual determinations of the ISO, (including the ISO's ADR Procedures), the Azusa City Council, WECC, or RTG coordinated planning processes as to the need for the construction of a facility, the need for full cost recovery, and the allocation of costs. 9. Expansion Process for Azusa's Interests in MPP, MAP, and Marketplace Substation. The Expansion process for Azusa's Interests in MPP, MAP, and Marketplace Substation, which it has turned over to ISO Operational Control, is as stated 093 in Section 8 above. Section 9a and its subparts do not currently apply to those interests or any other Azusa facilities. 9a. Expansion Process 9a.1 Determination of Facilities. A Participating TO shall perform a Facilities Study in accordance with this Section where (1) the Participating TO is obligated to construct or expand facilities in accordance with the ISO Tariff and this TO Tariff; (2) a Market Participant agrees to pay the costs of the Facilities Study and specifies the project objectives to be achieved in terms of increased capacity or reduced congestion; or(3) the Participating TO is required to perform a Facilities Study pursuant to the ISO Tariff. 9a.1.1 Payment of Facilities Study's Cost. 9a.1.1.1 Market Participant to Pay for Facilities Study. Where a Market Participant requests a Facilities Study and the need for the transmission addition or upgrade has not yet been established in accordance with the procedures established herein and the ISO Tariff, the Market Participant shall pay the cost of the Facilities Study. 9a.1.1.2 Project Sponsor or Project Proponent to Pay for Facilities Study. Where the facilities to be added or upgraded have been determined to be needed in accordance with the procedures established herein and the ISO Tariff, the Project Sponsor, Project Proponent, or the ISO requesting the study shall pay the reasonable cost of the Facilities Study. When the Participating TO is the Project Sponsor in accordance with the ISO Tariff, the costs of the Facilities Study shall be recovered through the Access Charges and transmission rates. 9a.1.1.3 Principal Beneficiaries to Pay for Facilities Study. Where the facilities to be added or upgraded have been determined to be needed and the principal beneficiaries have been identified by the ISO or ADR Procedures in accordance with the ISO Tariff, the Project Sponsor and the identified principal beneficiaries shall pay the reasonable cost of the Facilities Study, in such proportions as may be agreed, or, failing agreement, as determined in accordance with the ISO ADR Procedures. 9a.1.2 Payment Procedure. Where a Facilities Study is being conducted pursuant to this TO Tariff, the Participating TO shall, as soon as practicable, tender to the Market Participant, Project Sponsor, Project Proponent, ISO, or identified principal beneficiaries, as the case may be, a Facilities Study Agreement that defines the scope, content, assumptions, 094 and terms of reference for such study, the estimated time required to complete it, and such other provisions as the parties may reasonably require and pursuant to which such Market Participant, Project Sponsor, Project Proponent, the ISO, or identified principal beneficiaries agree to reimburse the Participating TO the reasonable cost of performing the required Facilities Study. If the Market Participant, Project Sponsor, Project Proponent, the ISO, or identified principal beneficiaries, as the case may be, agree to the terms of the Facilities Study Agreement, they shall execute the Facilities Study Agreement and return it to the Participating TO within ten Business Days. If such Market Participant, Project Sponsor, Project Proponent, the ISO, or identified principal beneficiary elects not to execute a Facilities Study Agreement, the Participating TO shall have no obligation to complete a Facilities Study. 9a.1.3 Facilities Study Procedures. Upon receipt of an executed Facilities Study Agreement, a copy of which has been provided to the ISO by the party requesting the Facilities Study, the Participating TO will use due diligence to complete the required Facilities Study in accordance with the terms of the Facilities Study Agreement. 9a.2 Obligation to Build 9a.2.1 Due Diligence to Construct. Subject to Section 9a.3.3 of this TO Tariff, the Participating TO shall use due diligence to construct, within a reasonable time, additions or upgrades to its transmission system that it is obligated to construct pursuant to the ISO Tariff and this TO Tariff. The Participating TO's obligation to build will be subject to: 1) its ability, after making a good faith effort, to obtain the necessary approvals and property rights under applicable federal, state, and local laws; 2) the presence of a cost recovery mechanism with cost responsibility assigned in accordance with the ISO Tariff; and 3) a signed Participation Agreement. The Participating TO will not construct or expand its existing or planned transmission system, if doing so would impair system reliability as determined through systems analysis based on the Applicable Reliability Criteria. 9a.2.2 Delay in Construction or Expansion. If any event occurs that will materially affect the time for completion of new facilities, or the ability to complete them, the Participating TO shall promptly notify: (1) the Project Sponsor with regard to facilities determined to be needed; (2) the Parties to the Participation Agreement with regard to facilities determined to be needed pursuant to the ISO Tariff where principal beneficiaries were identified; and (3) the ISO. In such circumstances, the Participating TO shall,within thirty days of notifying such Project Sponsor, Parties to the Participation Agreement, and the ISO of such delays, convene a technical meeting with such Project Sponsor, Parties to 095 the Participation Agreement, and the ISO to discuss the circumstances which have arisen and evaluate any options available. The Participating TO also shall make available to such Project Sponsor, Parties to the Participation Agreement, and the ISO, as the case may be, studies and work papers related to the cause and extent of the delay and the Participating TO's ability to complete the new facilities, including all information that is in the possession of the Participating TO that is reasonably needed to evaluate the alternatives. 9a.2.2.1 Alternatives to the Original Facility Additions. If the review process of Section 9a.2.2 determines that one or more alternatives exist to the originally planned construction project, the Participating TO shall present such alternatives for consideration to the Project Sponsor, Parties to the Participation Agreement, and the ISO, as the case may be. If upon review of any alternatives, such Project Sponsor, the ISO, or Parties to the Participation Agreement wish to evaluate or to proceed with one of the alternative additions or upgrades, such Project Sponsor, the ISO, or Parties to the Participation Agreement may request that the Participating TO prepare a revised Facility Study pursuant to Sections 9a.1.1, 9a.1.2, and 9a.1.3 of this TO Tariff. In the event the Participating TO concludes that no reasonable alternative exists to the originally planned addition or upgrade and the Project Sponsor or Parties to the Participation Agreement or the ISO disagree, the dispute shall be resolved pursuant to the ISO ADR Procedure. 9a2.2.2 Refund Obligation for Unfinished Facility Additions. If the Participating TO and the Project Sponsor, the ISO, or Parties to the Participation Agreement, as the case may be, mutually agree that no other reasonable alternative exists, the obligation to construct the requested additions or upgrades shall terminate and any deposit not yet applied toward the expended project costs shall be returned with interest pursuant to FERC Regulation 35.19(a)(2)(iii). However, the Project Sponsor and any identified principal beneficiaries, as the case may be, shall be responsible for all costs prudently incurred by the Participating TO through the time the construction was suspended. 9a.3 Provisions Relating To Transmission Construction On the Systems Of Other TOs. 096 9a.3.1 Responsibility for Third Party Additions. A Participating TO shall not be responsible for making arrangements for any engineering, permitting, and construction of any necessary facilities additions on the system(s) of any other entity or for obtaining any regulatory approval for such facilities. The Participating TO will undertake reasonable efforts through the coordinated planning process to assist in making such arrangements, including, without limitation, providing any information or data required by such other electric system pursuant to Good Utility Practice. 9a.3.2 Coordination of Third-Party System Additions. Where transmission additions or upgrades being built pursuant to the ISO Tariff require additions or upgrades on other systems, to the extent consistent with Section 9a.3.3 of this TO Tariff, the Participating TO shall coordinate construction on its own system with the construction required by others. The Participating TO, after consultation with the ISO, the Project Sponsor, and Parties to the Participation Agreement, as the case may be, may defer construction if the new transmission facilities on another system cannot be completed in a timely manner. The Participating TO shall notify such Project Sponsor, Parties to the Participation Agreement, and the ISO, in writing of the basis for any decision to defer construction and the specific problems which must be resolved before it will initiate or resume construction of the new facilities. Within forty Business Days of receiving written notification by the Participating TO of its intent to defer construction pursuant to this section, such Project Sponsor, Parties to the Participation Agreement, or the ISO may challenge the decision in accordance with the ISO ADR procedure. 9a.3.3 Expansion by "Local Furnishing Participating TOs". Notwithstanding any other provision of this TO Tariff, prior to requesting that a Local Furnishing Participating TO construct or expand facilities, the ISO or Project Sponsor shall tender(or cause to be tendered) an application under Section 211 of the FPA requesting FERC to issue an order directing the Local Furnishing Participating TO to construct or expand facilities as necessary to provide transmission service as determined pursuant to the ISO Tariff. Such Local Furnishing Participating TO shall thereafter, within ten Business Days of receiving a copy the Section 211 application, waive its right to a request for service under Section 213(a) of the FPA and to the issuance of a proposed order under Section 212(c) of the FPA. Upon receipt of a final order from FERC under Section 211 of the FPA that is no longer subject to rehearing or appeal, such Local Furnishing Participating TO shall construct or expand facilities to comply with that FERC order and shall transfer to the ISO Operational Control over Local Furnishing Participating TO's expanded transmission facilities in accordance with the ISO Tariff. 097 10. Interconnection Process for Azusa's Interests in MPP, MAP, and Marketplace Substation. The interconnection process for Azusa's Interests in MPP, MAP, and Marketplace Substation, which it turned over to ISO Operational Control, is as stated in Section 8 above. Section 10a, and its subparts, do not currently apply to those interests or any other Azusa facilities 10a. Interconnection Process. 10a.1 Applicability. All requests for Interconnection directly to the ISO Controlled Grid from parties eligible to request such Interconnection consistent with Section 210(a) of the FPA shall be processed pursuant to the provisions of this Section 10 which is subject to the applicable interconnection, integration, exchange, operating,joint ownership and joint participation agreements, and the rights and obligations of owners of jointly-owned facilities. 10a.2 Applications. Parties requesting Interconnections shall submit written applications to the Participating TO and shall send a copy of the application to the ISO. The Participating TO shall time-stamp the application to establish study priority. 10a.3 Completed Application. A Completed Application shall provide all of the information listed in 18 CFR § 2.20, including, but not limited to, the following: (i) The identity, address, telephone number, and facsimile number of the entity requesting service; (ii) The Interconnection point(s) and the location of the transmission addition contemplated by the applicant; (iii) The resultant (or new) maximum amount of Interconnection capacity requested at each point which may experience such an increase; and the increased transmission capacity of the transmission addition requested; (iv) The proposed date for initiating an Interconnection. In addition to the information specified above, when required to properly evaluate system conditions, the Participating TO also may ask the applicant to provide the following: (v) The electrical location of the source of the power(if known) to be transmitted pursuant to the applicant's request for Interconnection. If the source of the power is not known, a system purchase will be assumed; (vi) The electrical location of the ultimate load (if known). If the location of the load is not known, a system sale will be assumed; and 098 (vii) Such other information as the Participating TO reasonably requires to process the application. The Participating TO will treat the information in (v) and (vi) as confidential at the request of the applicant except to the extent that disclosure of this information is required by this TO Tariff, by regulatory or judicial order, for reliability purposes pursuant to Good Utility Practice, or pursuant to RTG or ISO transmission information sharing agreements. The Participating TO shall treat this information consistent with the standards of conduct contained in Part 37 of FERC's regulations. 10a.4 Notice of Need for System Impact Study. After receiving a Completed Application for Interconnection, the Participating TO shall determine on a nondiscriminatory basis whether a System Impact Study is needed. If the Participating TO determines that a System Impact Study is necessary to accommodate the requested Interconnection, it shall so inform the applicant (and shall send a courtesy copy to the ISO), as soon as practicable. In such cases the Participating TO shall within twenty Business Days of receipt of a Completed Application, tender a System Impact Study Agreement that defines the scope, content, assumptions and terms of reference for such study, the estimated time required to complete it, and such other provisions as the parties may reasonably require, and pursuant to which the applicant shall agree to reimburse the Participating TO for the reasonable costs of performing the required System Impact Study. For an interconnection request to remain a Completed Application, the applicant shall execute the System Impact Study Agreement and return it to the Participating TO within ten Business Days. If the applicant elects not to execute a System Impact Study Agreement, its application shall be deemed withdrawn, and the applicant shall reimburse to the Participating TO and the ISO all costs reasonably incurred in processing the application. 10a.5 System Impact Study Cost Reimbursement and Agreement 10a5.1 Cost Reimbursement. The System Impact Study Agreement shall clearly specify the maximum charge, based on the Participating TO's estimate of the cost and time for completion of the System Impact Study. The charge shall not exceed the reasonable cost of the study. In performing the System Impact Study, the Participating TO shall rely, to the extent reasonably practicable, on existing transmission planning studies. The applicant will not be assessed a charge for such existing studies; however, the applicant will be responsible for the reasonable charges associated with any modifications to existing planning studies that are reasonably necessary to evaluate the impact of the applicant's request. 10a5.2 Multiple Parties. If multiple parties request Interconnection at the same location, the Participating TO may conduct a single System Impact Study. 099 The costs of that study shall be pro-rated among the parties requesting Interconnection. 10a.6 System Impact Study Procedures. Upon receipt of an executed System Impact Study Agreement, the Participating TO will use due diligence to complete the required System Impact Study within a sixty day period. The System Impact Study shall identify any system constraints which cannot be reasonably accommodated through ISO Congestion Management, such that transmission expansions or upgrades would be required to provide the requested Interconnection. In the event that the Participating TO is unable to complete the required System Impact Study within such time period, it shall so notify the applicant and provide an estimated completion date along with an explanation of the reasons why additional time is required to complete the required studies. A copy of the completed System Impact Study and related work papers shall be made available to the applicant and to the ISO. The Participating TO will use the same due diligence in completing the System Impact Study for others as it uses when completing studies for its affiliated UDC. The Participating TO shall notify the applicant and the ISO immediately upon completion of the System Impact Study. 10a6.1 Failure to Execute an Interconnection Agreement. If the Participating TO finds that the transmission system will be adequate to accommodate all of a request for Interconnection and that no costs are likely to be incurred for new transmission additions or upgrades, the applicant must execute an Interconnection Agreement within ten Business Days of completion of the System Impact Study or the application shall be deemed terminated and withdrawn. 10a6.2 Facilities Study Procedures. If a System Impact Study indicates that additions or upgrades to the transmission system are needed to meet an applicant's request, the Participating TO shall, within fifteen Business Days of the date of the System Impact Study, tender to the applicant a Facilities Study Agreement that defines the scope, content, assumptions and terms of reference for such study, the estimated time required to complete it, and such other provisions as the parties may reasonably require, and pursuant to which the applicant agrees to reimburse the Participating TO for performing the required Facilities Study. For a service request to remain a Completed Application, the applicant shall execute the Facilities Study Agreement and return it to the Participating TO within ten Business Days. If the applicant elects not to execute a Facilities Study Agreement, its application shall be deemed withdrawn and the applicant shall reimburse to the Participating TO all costs reasonably incurred in processing the application not covered by the System Impact Study Agreement. 100 10a.7 Relevant Sections Apply Upon Receipt of Facilities Study Agreement. Upon receipt of an executed Facilities Study Agreement by the Participating TO, the relevant portions of Sections 9a1.3 through 9a3.3 of this Tariff shall apply. 10a.8 Partial Interim Service. If the Participating TO determines that there will not be adequate transmission capability to satisfy the full amount of a Completed Application for an increase in the maximum rate of delivery or receipt associated with a new request for Interconnection, the Participating TO nonetheless shall be obligated to offer and provide the portion of the requested Interconnection that can be accommodated without any additions or upgrades. However, the Participating TO shall not be obligated to provide the incremental amount of requested Interconnection that requires the addition of facilities or upgrades to the transmission system until such facilities or upgrades have been placed in service. 10a.9 Expedited Procedures for New Facilities. In lieu of the procedures set forth above, the applicant shall have the option to expedite the process by requesting the Participating TO to tender at one time, together with the results of required studies, an "Expedited Service Agreement" pursuant to which the applicant would agree to compensate the Participating TO for all costs reasonably incurred pursuant to the terms of this TO Tariff In order to exercise this option, the applicant shall request in writing an Expedited Service Agreement covering all of the above-specified items within twenty Business Days of receiving the results of the System Impact Study identifying needed facility additions or upgrades or costs incurred in providing the requested Interconnection. The Participating TO shall tender an Expedited Service Agreement within ten Business Days of the applicant's request. While the Participating TO agrees to provide the applicant with its best estimate of the new facility costs and other charges that may be incurred, unless otherwise agreed by the parties, such estimate shall not be binding and the applicant must agree in writing to compensate the Participating TO for all costs reasonably incurred pursuant to the provisions of this TO Tariff The applicant shall execute and return such Expedited Service Agreement within ten Business Days of its receipt or the applicant's request for Interconnection will cease to be a Completed Application and will be deemed terminated and withdrawn. In that event, the applicant shall reimburse to the Participating TO all costs reasonably incurred in processing the application not covered by the terms of the System Impact Study Agreement. 11. Uncontrollable Forces and Indemnification. 11.1 Procedures to Follow if Uncontrollable Force Occurs. In the event of the occurrence of an Uncontrollable Force which prevents a Party from performing any of its obligations under this TO Tariff, such Party shall (i) immediately notify the other Parties in writing of the occurrence of such Uncontrollable Force, (ii) not be entitled to suspend performance in any greater scope or longer duration than is required by the Uncontrollable Force, (iii) use its best efforts to mitigate the effects of such Uncontrollable Force, remedy its inability to perform, and 101 resume full performance hereunder, (iv) keep the other Parties apprised of such efforts on a continual basis and (v) provide written notice of the resumption of performance hereunder. Notwithstanding any of the foregoing, the settlement of any strike, lockout, or labor dispute constituting an Uncontrollable Force shall be within the sole discretion of the Party to this TO Tariff involved in such strike, lockout, or labor dispute and the requirement that a Party must use its best efforts to remedy the cause of the Uncontrollable Force and mitigate its effects and resume full performance hereunder shall not apply to strikes, lockouts, or labor disputes. No Party will be considered in default as to any obligation under this TO Tariff if prevented from fulfilling the obligation due to the occurrence of an Uncontrollable Force. 11.2 Indemnification. A Market Participant shall at all times indemnify, defend, and save the Participating TO harmless from any and all damages, losses, claims, (including claims and actions relating to injury or to death of any person or damage to property), demands, suits, recoveries, costs and expenses, court costs, attorney fees, and all other obligations by or to third parties, arising out of or resulting from the Participating TO's performance of its obligations under this TO Tariff on behalf of a Market Participant, except in cases of negligence or intentional wrongdoing by the Participating TO. 12. Regulatory Filings. Nothing contained herein shall be construed as affecting, in any way, the right of Azusa to unilaterally make application to FERC as it deems necessary and appropriate to recover its Transmission Revenue Requirements, or for a change in its terms and conditions, including changes in rate methodology, or for a change in designation of transmission facilities and Entitlements to be placed under the ISO's control, pursuant to the applicable FERC rules, regulations, policies, and governing statutes. 13. Miscellaneous. 13.1 Notices. Any notices, demand, or request in accordance with this TO Tariff, unless otherwise provided in this TO Tariff, shall be in writing and shall be deemed properly served, given, or made: (i) upon delivery if delivered in person, (ii) five days after deposit in the mail if sent by first class United States mail, postage prepaid, (iii) upon receipt of confirmation by return electronic facsimile if sent by facsimile, or(iv) upon delivery if delivered by prepaid commercial courier service, in each case addressed to a Party at the address set forth in Appendix II. Any Party may at any time, by notice to the other Parties, change the designation or address of the person specified in Appendix II to receive notice on its behalf. Any notice of a routine character in connection with service under this TO Tariff shall be given in such a manner as the Parties may determine from time to time, unless otherwise provided in this TO Tariff 13.2 Waiver. Any waiver at any time by any Party of its rights with respect to any default under this TO Tariff, or with respect to any other matter arising in 102 connection with this TO Tariff, shall not constitute or be deemed a waiver with respect to any subsequent default or other matter arising in connection with this TO Tariff. Any delay short of the statutory period of limitations in asserting or enforcing any right shall not constitute or be deemed a waiver. 13.3 Confidentiality. 13.3.1 Maintaining Confidentiality if Not for Public Disclosure. The Participating TO shall maintain the confidentiality of all of the documents, data, and information provided to it by any other Party that such Party may designate as confidential, provided, however, that the information will not be held confidential by the receiving Party if(1) the designating Party is required to provide such information for public disclosure pursuant to this TO Tariff or applicable regulatory requirements, or (2) the information becomes available to the Public on a non-confidential basis (other than from the receiving Party). 13.3.2 Disclosure of Confidential Information. Notwithstanding anything in this Section 11.3.2 to the contrary, if any Party is required by applicable laws or regulations, or in the course of administrative or judicial proceedings, to disclose information that is otherwise required to be maintained in confidence pursuant to this Section 11.3.2, the Party may disclose such information; provided, however, that as soon as such Party learns of the disclosure requirement and prior to making such disclosure, such Party shall notify the affected Party or Parties of the requirement and the terms thereof. The affected Party or Parties may, at their sole discretion and own costs, direct any challenge to or defense against the disclosure requirement and the disclosing Party shall cooperate with such affected Party or Parties to the maximum extent practicable to minimize the disclosure of the information consistent with applicable law. The disclosing Party shall cooperate with the affected Parties to obtain proprietary or confidential treatment of confidential information by the person to whom such information is disclosed prior to any such disclosure. 13.4 Titles. The captions and headings in this TO Tariff are inserted solely to facilitate reference and shall have no bearing upon the interpretation of any of the rates, terms, and conditions of this TO Tariff. 13.5 Severability. If any term, covenant, or condition of this TO Tariff or the application or effect of any such term, covenant, or condition is held invalid as to any person, entity, or circumstance, or is determined to be unjust, unreasonable, unlawful, imprudent, or otherwise not in the public interest, by any court or government agency of competent jurisdiction, then such term, covenant, or condition shall remain in force and effect to the maximum extent permitted by law, and all other terms, covenants, and conditions of this TO Tariff and their application shall not be affected thereby but shall remain in force and effect. The 103 Parties shall be relieved of their obligations only to the extent necessary to eliminate such regulatory or other determination, unless a court or governmental agency of competent jurisdiction holds that such provisions are not severable from all other provisions of this TO Tariff. 13.6 Preservation of Obligations. Upon termination of this TO Tariff, all unsatisfied obligations of each Party shall be preserved until satisfied. 13.7 Governing Law. This TO Tariff shall be interpreted, governed by, and construed under the laws of the State of California, without regard to the principles of conflict of laws thereof, or the laws of the United States, as applicable, as if executed and to be performed wholly within the State of California. 13.8 Appendices Incorporated. The appendices to this TO Tariff are attached to this TO Tariff and are incorporated by reference as if fully set forth herein. 13.9 Consistency with ISO Tariff. This TO Tariff is intended to be consistent with the ISO Tariff, and, if necessary, shall be amended to conform with any changes authorized or required in any final order in FERC Docket No. ER00-2019. 13.10 Disputes. Except as limited by law, the ISO ADR Procedures shall apply to all disputes between parties which arise under this TO Tariff or under or in respect of the proposed terms and conditions of a Facilities Study Agreement, System, Impact Study Agreement or Expedited Service Agreement. The ISO ADR Procedures set forth in Section 13 of the ISO Tariff shall not apply to disputes as to whether rates and charges set forth in this TO Tariff(other than charges for studies) are just and reasonable under the FPA. 104 APPENDIX I Transmission Revenue Requirement and TRBA Adjustment The Azusa HV Base TRR is S-17-500.000$2,230,280.00 and is calculated as follows:: HV Base TRR included in ETC Pass-Through Clause: $1,141,200.00 ETC Pass-Through Clause True-Up from Prior Year: $0 HV Base TRR excluded from ETC Pass-Through Clause: $1,089,080.00 Azusa HV Base TRR: $2,230,280.00 The ETC Pass-Through Clause is: The mechanism that adjusts Azusa's High Voltage Base TRR for changes in the costs associated with certain Existing Transmission Contracts ("ETCs"),consisting of Azusa's projected annual cost of its ETCs with Southern California Edison Company ("Edison")for the next calendar year. based upon the stated Edison High Voltage Existing Contracts Access Charge("HVECAC") rate in effect at the time of Azusa's annual ETC filing,plus the true-up(positive or negative)of the prior year's costs of such ETCs (as invoiced to Azusa by Edison during the period of October through September)as compared with the projected ETC costs for the same period, including interest on the true-up amount at the rate computed by the Federal Energy Regulatory Commission pursuant to 18 C.F.R. § 35.19a. The HVTRBAA is $133,495.9g$66,295.98 for calendar year 2011 and has been computed in accordance with ISO Tariff. Azusa's HVTRR is $1,633,195.98$2296,575.98. Azusa's Gross Load, consistent with its TRR(s),used by the ISO to develop the transmission Access Charge is 239,575257,416 MWhI4. All of Azusa's transmission facilities and Entitlements placed under the ISO's Operational Control are High Voltage Facilities as defined by the ISO Tariff. The TRBA Adjustment will be recalculated annually consistent with the ISO Tariff and provided to the ISO. 105 E. 4 , AZUSA IIGHT 6 WATER AGENDA ITEM TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY BOARD , FROM: GEORGE F. MORROW, DIRECTOR OF UTILITIES" �� DATE: NOVEMBER 28, 2011 SUBJECT: PROPOSAL BY ATHENS SERVICES FOR AUTOMATED RESIDENTIAL TRASH COLLECTION SERVICES AND COMMERCIAL ORGANIC WASTE COLLECTION PROGRAM RECOMMENDATION It is recommended that the Utility Board review attached proposal by Athens Services and provide guidance to staff on this matter. BACKGROUND Last year, the Utility Board approved a program to provide technical assistance to businesses on how to set up source separated recycling programs. In carrying out this program, it was discovered that many businesses were generating organic waste which could be recycled. However, the City's contract with Athens Services does not allow third party independent recyclers to charge for recycling service, and so staff contacted Athens Services and asked them to provide a proposal on commercial organics recycling. Athens Services in turn asked City staff if we were interested in receiving a more comprehensive proposal that would involve automated collection of yard waste from residential customers, with the eventual addition of other organic waste to the yard waste stream. City staff indicated interest in receiving such a proposal and on September 29, 2011, Dennis Chiappetta of Athens Services delivered the attached proposal to City staff. Since the proposal involves automated collection of mixed waste and yard waste from residential customers, some background is provided in this report regarding the City's manual collection system, and feedback staff has received from residents over the years 106 Athens Services' Proposal November 28, 2011 Page 2 about manual waste collection in the City of Azusa. Information is also provided about the closure of the Puente Hills landfill as it relates to Athens' proposal. This report then summarizes Athens' proposal, presents some `Pros' and `Cons' about automated collection, and requests the Board's input as to whether it has interest in pursuing automated collection service. Athens' Contract and Manual Waste Collection The City entered into an exclusive franchise agreement with Athens Services for refuse collection and recycling in October 2000. Under the current agreement, Athens Services is required to collect residential waste and separated yard waste using manual labor. This arrangement requires residents to purchase their own trash barrels and set them out at curbside. One benefit of the current service is that it allows residents to set out an unlimited number of barrels or bags of waste for collection each week. However, periodically, City staff receive complaints from seniors living alone who only set out one or two barrels and pay the same amount as a large family that sets out six or seven barrels. The main concern of some seniors is that they are paying too much for service. Also, new residents that move into Azusa who come from cities with automated trash collection systems, sometimes call and complain about our manual collection system and how the streets look on trash service day. Some new residents also get confused about what size barrels to purchase. For newer customers accustomed to using 96 gallon automated barrels, a 60 gallon barrel is sometimes perceived to be small. However, Athens' contract limits barrel sizes to 33 gallons or smaller. Another issue with the manual collection system is that it is not resulting in a very high diversion rate for yard waste. This is likely due to the limited capacity at curbside for yard waste and the lack of distinct barrels for yard waste. Contamination is also a factor. Pending Landfill Closure and Loss of Waste Diversion Credit Another issue the City faces is the pending closure of the Puente Hills landfill, which is scheduled to close in October 2013. Presently, yard waste collected from residential customers is delivered to the Puente Hills landfill where it is used as an alternate daily cover material. This allows the City to take recycling credit pursuant to the State's recycling mandate, AB 939. Once the Puente Hills landfill closes, the City will lose recycling credit for its yard waste collection program, which has, in recent years, diverted about 3,000 tons of materials per year. Another effect of the Puente Hills landfill closure is that waste will have to be hauled further distances for disposal once the landfill closes, and the more distant disposal facilities will cost more per ton. Transportation costs and higher landfill fees are expected to spike rates in 2014, and so diverting waste will help control refuse rates. 107 Athens Services' Proposal November 28, 2011 Page 3 Athens' Proposal In response to the above issues, City staff requested Athens Services to propose some program ideas to the City on how Azusa could continue to divert yard waste, possibly increase waste diversion, and help businesses divert more waste, especially organic waste. Athens' proposal is attached for your reference, consideration and input. Following summarize the main points of the proposal: • Provide automated trash collection service to residents using one black 90 gallon container, and one green 90 gallon container for yard waste. • Service would be provided using new trucks powered with compressed natural gas (CNG). • The contents of the black container would be taken to Athens' material recovery facility (MRF) and the yard waste would be taken to Puente Hills until the landfill closes in 2013. • When the Puente Hills landfill closes, the yard waste program would be expanded to allow residents to place acceptable organic waste (like food waste) into the green barrel. • The contents of the green barrel, after the program is expanded to include other organics, would be delivered by Athens to their American Organics facility, an open air compost facility located in Victorville, CA. • After Puente Hills landfill closes, the organics service will be offered to multifamily complexes, and the same trucks used to service single family customers will be used. • It is proposed that an organics collection program be offered right now to commercial customers. Proposed program includes a 90 gallon barrel serviced two times per week. • When the City buys compost for use in landscaping, Athens requests that the City buy compost from Athens or American Organics. Athens is also offering a free compost giveaway event annually in the City. • Athens proposes to indemnify the City against AB 939 fines if the City doesn't reach the 50%waste diversion requirement. • All proposed services outlined in this proposal are included "at no additional cost to the rate payers." However, residents who order extra barrels would pay more— amount to be determined. • In exchange for above program offerings, Athens requests a 4 year extension to the current rolling contract. j08 Athens Services' Proposal November 28, 2011 Page 4 Pros and Cons Athens' proposal has several merits worthy of further consideration and it is presented to the Utility Board at this time to get its input. Some `Pros' and `Cons' are set forth below for consideration. These are not exhaustive,just some preliminary observations by staff PROS CONS • Automated collection system would • Some residents will resist the use of improve the appearance of the City automated barrels at first (but most will • Per barrel pricing for extra barrels is like them much better) more equitable to ratepayers • Residents that need additional black or • Residents would not have to buy their green barrels will pay more own trash barrels or bags to contain • Other program options could be waste offered, i.e., 3 automated barrels, with 1 • City would divert larger amount of yard for commingled recyclables– waste and organic waste using larger environmentally conscious people barrels would feel they are doing their part • Provides long term disposal/recycling • There may be other less expensive option for yard waste—even after compost facilities that could be built Puente Hills closes within the contract term– so City • Added waste diversion from multiple should maintain right to direct yard sectors, residential, multifamily and waste flow commercial, is likely necessary to help • Proposal extends City's obligation to the City comply with new 75% waste continue processing mixed waste at reduction goal of AB 341 Athens' MRF by 4 years; this may be a • Diversion of organic waste from cost issue after Puente Hills closes as multifamily and commercial sectors can Waste-By-Rail costs or Truck Transfer help control long term cost increases if costs will add significantly to MRF gate pass-through agreement terms stay in fee effect • There may be lower cost MRFs • CNG powered trucks would be cleaner developed within proposed contract and quieter than current fleet term or other types of diversion • Automated collection will reduce noise facilities; City may want to secure right levels and perform the trash pickup to use these facilities by end of current function faster contract term Athens has done a good job serving the City of Azusa since 2000 and is fully capable of implementing the proposed programs. Implementation would necessitate development of a contract amendment, which would set forth an implementation schedule, costs/rates for extra barrels, how rates would be adjusted and billed, the contract term, and the City's right to continue to direct yard waste flow. Other items would also have to be reviewed and negotiated, including liability issues regarding the Victorville compost facility. 109 Athens Services' Proposal November 28, 2011 Page 5 Staff requests input from the Utility Board on what level of interest there is in moving toward a residential automated collection system, and any other comments the Board may have about other aspects related to the content of this report or attached proposal. Staff would like to note that it has no preference as to whether a 2 barrel system or 3 barrel system is preferable and would defer such a recommendation to a consultant or the Utility Board. FISCAL IMPACT Cost impacts cannot be fully analyzed at this point due to the lack of some information regarding the cost for extra barrels, cost to transport waste to the compost facility, and the per ton cost at the compost facility; these costs could be compared to the estimated cost of disposing waste following closure of the Puente Hills landfill, and alternately, to the cost of disposing organic waste at any other locally available compost facility. Consultant assistance may be helpful to identify competitive facilities or negotiate with Athens contract changes. Prepared by: Cary Kalscheuer, Assistant to the Director of Utilities 110 riiiimiumiliminimmaimusAAthens Services Waste Collection•Recycling•Transfer•Disposal•Street Sweeping 14048 Valley Blvd. P.O.Box 60009 City of Industry,CA 91716-0009 Fax(626)330-4686 September 29, 2011 (626)336-3636 Cary Kalscheuer City of Azusa 213 E. Foothill Blvd. Azusa,CA 91702 Dear Cary: Athens Services is pleased to respond to your request for organic processing. The last time the City required diversion services, Athens was in a position to assist with compliance through MRF processing. This program had indeed paid dividends as the City became compliant and now the City will be in compliance with AB 32 and AB 341 without implementing costly source separated programs that increase carbon footprint. Other cities are wrestling with ideas to comply and will pay high costs to do so. Once again Athens is in a unique position to assist as the result of our forward planning and acquisition of an organics processing facility. As we discussed by phone, the following is a comprehensive proposal to maximize organic recovery that includes single family, multi-family and commercial sectors. Residential We propose automating the residential collection using a .two container model as soon as possible. All residents would receive a 90 gallon black container for refuse and the content will continue to be processed at our MRF for maximum recovery of recyclables. Residents will also receive a 90 gallon green container for yard waste. The automation of yard waste has netted up to two times that of a manual collection system in our past experience thus reducing landfill costs going forward and we will continue to use the alternate daily cover program until the Puente Hills landfill closure in 2013. Post closure of Puente Hills, the automated yard waste collection will be expanded to include all acceptable organics (list attached). This will be a pilot program and will be tested to determine acceptable levels of contamination. The yard waste/or anics will be transferred to our American Organics facility, composted and used as a soil amendment. The addition of organics will also reduce landfill dependency. wscnpop.lu 111 There will be additional costs for extra containers. Multi-Family We currently service over 250 complexes that total 6,100 units. All locations will be offered the same organic service as single family homes in 2013. post Puente Hills Landfill closure. The 90 gallon green containers will be collected curbside by route day utilizing the same automated trucks used for residential collection. Properly educated, the multi-family could achieve organic diversion equal to single family homes as the number of units in the City is very high. It is an opportune time to take advantage of the City's consultant to do the outreach needed for success. Athens will also dedicate our field representatives to educate the multi-family sector. Commercial We service 650 accounts and will offer any interested participants an organic diversion program now. We will use 90 gallon containers collected twice per week for this program. Again, education will be the key to our success. Compost The key to any successful compost operation is to have markets for the certified organic compost created from the facility. To this end, we request that the City purchase our compost created from Azusa's own waste in place of any current procurements. Athens will also offer free compost giveaways each year whereby residents can avail themselves to the rich compost at a location to be determined. This is a very popular concept well received by residents. AB 939 Indemnity As we discussed, Athens currently has to divert 13,000 tons per year from landfill. We believe the programs outlined above will allow us to indemnify the City against fines and penalties for non-compliance with the 50% diversion goal. Important to note that the City has made the 50% mark easily during recessionary times. The advantage of indemnity will be obvious in inflationary times when disposal increases or as the City continues to grow in population and with new businesses. Financial Impact Athens values our long term relationship with the City of Azusa. As such, we desire to keep it simple and pain free to residents and businesses. knlschprop.Itr 112 We propose providing all of the commercial and multi-family services outlined in this letter at no additional cost to the rate payers. The residential automation including containers and new truck costs will be implemented now at no additional cost to rate payers. Upon the closure of Puente Hills, Athens will guarantee capacity for the yard waste and organics at our American Organics compost facility at a most favored nation rate. This will act as future cost control for Azusa residents and businesses and will be one of the most progressive organic programs in the state. In an effort to enhance our relationship through value added services, we respectfully request a four year extension to our rolling term agreement, not cancellable for four years, in exchange for these services. We have limited daily capacity at American Organics and will guarantee capacity for the Azusa organics. We do not believe this value can be matched. All this plus new trucks and container purchases, millions invested in enhancing our Industry MRF, our American Organics investments as well as our ongoing quest to develop an anaerobic digester facility in their region. A true win, win proposition. Extending the agreement will considerably assist our ability to continue to finance progressive solutions as alternatives to landfill and will save Azusa rate payers millions of dollars over the life of the Agreement. Please consider this proposal and call me to set up a meeting to discuss in detail. I can be reached on my direct line at (626) 855-7205, our general office number (626) 336-3636 or in the evenings and weekends in my home aMIMIN. Sincerely, ennis M. Chiappetta Executive Vice President DMC:bh cc: Fran Delach George Morrow kalscbjmp.hr 113 ORGANICS COLLECTION PROGRAM ", All Food ' - a ' .-' f Toda Comida fruits,vegetables, ' . frutas,verduras, meat,poultry, ‘ ` carnes,mariscos, seafood,shellfish, s a , LL N pescados,huesos, bones,rice,beans, 1111" • ^ .. a• rroz,frijoles,pastas, pasta,bread,cheese 3. - pan,quesos,cascaras and eggshells. de Nuevo. Papel Manchado rFood-soiledpoi Comida Paper , ' carton encerado, servilletas,pintos y waxed cardboard, toallas de papel,filtros napkins,paper towels, 410 paper plates,paper milk y residuos de café,vasos de papel,caps de pizza, cartons,paper cups, -:r .1 reciplentes de carton pizza boxes,tea bags, . - ' • para!eche,bolsas de te, coffee fibers,wooden , ' . cajas de madera, crates,sawdust. aserrin ‘... \ _J Plantstio .. Plantas floral trimmings,tree \ '4 _ , -- recortes de flares y trimmings,leaves,grass ,j'.' 'D' .�'.; -_,,,f, -• arboles,hojas,cesped brush,weeds. J '':; ,,\ P- ` "V Y �pcortado,maiezas, .+1. r hierbas. . i , •;,,, . - *v r.. ofAl 4 . e... 105 `� t 440 . W sac fStytofoeen 1 Glass!Cans J Aluminum Foil!liquids t Hazardous Waast.' j' N f saetStreraarYLatarrPaver deitrus,fn,ati• 114 New exico's Plan to Reduce Regional Haze Meets Federal Standards and Keeps Costs Down - but EPA Mandates a More Costly Approach Key Facts on Two Plans to Improve Visibility Two plans have been developed for New Mexico to meet its obligation under federal law to improve visibility in the regions national parks and wilderness areas: one developed by the State of New Mexico and the other by the U.S. Environmental Protection Agency. Under both plans. the PNM San Juan Generating Station — which serves 2 million customers in New Mexico, Arizona, Utah and California —would install new environmental controls. Both plans meet federal standards and would achieve '= ‘.'isibility improvements — but the state plan does so for one-tenth of the cost: New Mexico's Plan EPA's Plan for New Mexico New technology to be Selective Selective installed at non-catalytic catalytic San Juan Generating Station reduction reduction (within 5 years) (within 5 years) Improves air quality and meets visibility requirements Yes Yes of federal Clean Air Act? Latest cost estimate About $77 million About $750 million -- or more What's Our View? New Mexico's plan makes sense: it works for the environment and the economy ✓ The federal Clean Air Act gives the states the primary role in addressing regional haze. It also sets a long-term, achievable timetable to reduce emissions that contribute to regional haze. ✓ New Mexico met its obligation when it approved a plan in June 2011. That plan improves visibility and meets all federal standards—and we could get started right away. ✓ The state plan would reduce San Juan's emissions of nitrogen oxides (NOx)—a contributor to haze— by 20 percent annually, or 4,900 tons per year. Combined with reductions resulting from a major environmental upgrade completed in 2009, this would represent an annual NOx reduction of 73 percent, or 17,000 tons per year, from 2006 levels. lfie powai-tom atter l<t 115 ( New Mexico's plan deserves EPA's consideration ✓ Instead of approving the New Mexico plan, EPA has imposed San Juan Generating Station its own plan on New Mexico. It sets the bar unreasonably high — Serves 2 Million Electric higher than required by the law and higher than anywhere else Customers in the U.S. Southwest in the country. PNM owns 46 percent of the San Juan ✓ PNM, New Mexico Governor Susana Martinez and the New plant and operates it on behalf of eight Mexico Environment Department each have asked EPA to other owners. Those owners are: reconsider its decision and to adopt the state plan. EPA has not yet responded to those requests. • City of Farmington • Los Alamos County ✓ In addition, PNM, Martinez and NMED are appealing EPA's • Tucson Electric Power decision in federal court and have asked EPA to put its plan on • Southern California Public hold while our appeals are considered by the court. Power Authority • Tri-State Generation and Transmission Association intNew Mexico a ecu ii: eet`isuilietS, a Uelay ttt • MSR Public Power Agency (CA) implementing EPA's decision is critical • City of Anaheim (CA) • Utah Associated Municipal V Under the EPA plan, New Mexico consumers would ultimately Power Systems pay higher electric rates that were not necessary to meet federal standards ✓ Without a delay, PNM and the plant's other owners will be forced to spend $246 million by the end of 2013 to begin implementing a plan that we strongly believe is not in keeping with the Clean Air Act and, thus, unlikely to be upheld in court. ✓ PNM is prepared to implement the state plan right away, knowing that it will meet all federal requirements and do so at a reasonable cost. We it; to protecting Citi customers' interests vwizrie also protecting the environment ✓ We take our role as stewards of the environment seriously. We also take seriously our obligation to keep electricity affordable, especially when so many of New Mexico's citizens are struggling in this tough economy. ✓ The owners of San Juan recently invested $320 million on a major environmental upgrade. The upgrade resulted in a dramatic reduction in the plant's emissions of NOx(44% reduction), sulfur dioxide (71% reduction) and particulate matter(72% reduction). San Juan was one of the first plants in the nation to install mercury removal equipment, resulting in a removal rate of 99 percent. Did You Knciw 1 evv Mexico Air Quality is % t7tvrt we best in the Nation? The World Health Organization just recently released statistics showing that Farmington, N.M., • in San Juan County, has the sixth best air quality in the nation (September 2011). The American Lung Association's"State of the Air 2010"ranked New Mexico among the cleanest states in the country. For example, among all of the 3,143 counties in the United States, four New Mexico counties-- Santa Fe, Chaves, Lea and San Juan --were among those listed by the association as the"Cleanest Counties (in the US)for Day-by-Day Particle Pollution (24-hr PM2.5)." Tha pdw or tllake fife better .er. 116