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HomeMy WebLinkAboutD-1.2. October 26 UB MinutesCITY OF AZUSA MINUTES OF THE REGULAR MEETING OF THE AZUSA UTILITY BOARD/CITY COUNCIL MONDAY, OCTOBER 26, 2015 – 6:30 P.M. Chairman: Edward J. Alvarez Vice-Chairman: Angel A. Carrillo Boardmember: Joseph Romero Rocha Boardmember: Uriel Edward Macias Boardmember: Robert Gonzales Secretary: Jeffrey Lawrence Cornejo, Jr. The Utility Board/City Council of the City of Azusa met in regular session, at the above date and time, in the Azusa Light and Water (ALW) Conference Room, located at 729 North Azusa Avenue, Azusa, California. Chairman Alvarez called the meeting to order at 6:30 P.M. Pledge to the flag was led by Police Captain Stephan Hunt. ROLL CALL: Roll call was taken by Secretary Cornejo. Boardmember Carrillo joined the meeting at 6:37 p.m. after roll call. PRESENT: BOARDMEMBERS: ROCHA, MACIAS, GONZALES, CARRILLO, ALVAREZ ABSENT: BOARDMEMBERS: NONE ALSO PRESENT Elected Officials: Secretary Cornejo. Staff Members: City Manager Butzlaff, City Attorney Martinez, Utilities Director Morrow, Assistant Director of Resource Management Lehr, Assistant Director of Electric Operations Langit, Administration and Financial Services Manager Johnson, Police Captain Hunt, Assistant Director Customer Care Solutions Kalscheuer, Public Works Director/City Engineer Bobadilla, Economic and Community Development Director Christiansen, Storekeeper Alvarez, Neighborhood Services Coordinator Quiroz and Administrative Technician Juarez. PUBLIC PARTICIPATION Mr. Jorge V. Rosales addressed the Board and requested clarification on the cost of travel expenses in relation to Item E-1. In regards to Item F-2, he addressed his concerns about an increase in water rates for customers due to a reduced consumption of water. UTILITIES DIRECTOR COMMENTS Utilities Director George Morrow stated that he will respond to the public comments when the items are addressed. Call to Order Flag Salute Roll Call Also Present Public Part Utilities Director Comments D-1.2 UB-12 APPROVED UTILITY BOARD 11/23/15 He also announced that water customers have conserved 28% from June to September. Through October 25, 2015, water conservation was at 20.3% which is just over the State’s target of 20%. Mandatory restrictions are in place until February 2016. CONSENT CALENDAR: Moved by Boardmember Gonzales, seconded by Boardmember Rocha, to approve Consent Calendar Items D-1 through D-4, with the exception of item D-3 which was handled under the special call portion of the agenda by the following vote of the Board: YES: BOARDMEMBERS: ROCHA, MACIAS, GONZALES, CARRILLO, ALVAREZ NO: BOARDMEMBERS: NONE ABSTAIN: BOARDMEMBERS: ALVAREZ (abstained from item D-1 only) 1.The minutes of the special meeting of September 8, 2015, were approved as written. 2.The transaction for 26 MW of 2016 Local Resource Adequacy Capacity (including 13 MW of Flexible Capacity) so that Azusa’s counterparty is GenOn Energy Management LLC was re-approved and the Director of Utilities was authorized to execute the associated Confirmation Agreement 3.Special Call. 4.The bids received for acquiring a Hybrid Bucket Truck were rejected and staff was authorized to advertise and rebid the acquisition pursuant to Section 2-519 of the City’s new purchasing procedures. SPECIAL CALL PURCHASE OF COMPACT PICK-UP TRUCKS FOR FIELD SERVICES Utilites Director Morrow and City Manager Troy Butzlaff responded to a question posed by Chairman Alvarez stating that the salvage value for the four trucks that will be replaced, will be based on their age and condition. The vehicles will be considered surplus which will require approval by the City Council at a later date. The funds that are received from the sale of the vehicles will then go back into the Utility Budget. Moved by Chairman Alvarez, seconded by Boardmember Carrillo to approve the purchase of four Toyota Tacoma pick-up trucks from National Auto Fleet Group in the amount of $88,279.16 by the following vote of the Board: YES: BOARDMEMBERS: ROCHA, MACIAS, GONZALES, CARRILLO, ALVAREZ NO: BOARDMEMBERS: NONE SCHEDULED ITEMS Update on Due Diligence Review of Proposal by Sensus USA, Inc. on Advanced Metering Infrastructure (AMI) Project, and Contract with Utiliworks to Assist Azusa Light & Water to Develop an AMI Contract with Sensus USA, Inc. Utilities Director Morrow introduced the item stating that the next step in the AMI Project is to approve a contract for the negotiation of a detailed performance based contract with Sensus USA, Inc. Assistant Director Customer Care Solutions Cary Kalscheuer described the AMI Project which is a “Meter Replacement Project” that will require the replacement of about 19,000 water meters and 16,000 electric meters with meters that have the ability to communicate with a wireless network. The meters would increase the efficiency and accuracy of reading meters, for billing purposes; allow for faster connection of new service and disconnection for non-payment; and online consumption data would be available to 10/26/2015 – PAGE TWO Consent Calendar Minutes RT Lawrence Contract Special Call Bids, Hybrid Bucket Truck Special Call Purchase of Trucks Scheduled Item AMI Contract with Sensus USA, Inc. UB-13 customers. In terms of the Electric Division operational improvements, AMI lays the foundation for improved management of electric and water distribution systems. It enables better management of electricity distribution in the future through load management, and improves power outage management. The water system benefits include a reduction in water loss at customer premises and in the distribution system through leak detection; improved use of capital funds; and water shortage management. He provided the Board with an update on the Due Diligence review of the Sensus USA, Inc. proposal for the AMI Project. ALW staff learned a few lessons from the process such as the Sensus “Flexnet” radio communications network should be a part the project; the GE’s I-210+c electric meters should be used; the accuracy of Sensus iPerl water meters; core software should be hosted off-site with services provided through the cloud; a pilot program is important; and an opportunity to for a reduction of installation costs should be explored. A brief description of Sensus USA, Inc. was provided to the Board and Assistant Director Customer Care Solutions Kalscheuer responded to a question posed by Boardmember Rocha stating that the 10,000 worldwide customers of Sensus are a combination of Cities and Utilities. A ten (10) year financial forecast model which included cost savings in labor, vehicle replacement, vehicle operating and maintenance, meter reading equipment and meter replacements, was presented to the Board. Efficiency improvements and long term cash flow changes were not considered in the model because impacts are not known with certainty. In regards to the affect that this project will have on staffing, the three (3) temporary meter reader positions would no longer be necessary, two (2) regular meter reader positions could be reduced by year three (3) and one (1) additional meter reader position could be lost due to attrition by year five (5). ALW will work with affected employees to provide career counseling and training and will continue to meet with staff and bargaining unit representatives on transition planning. These are projections for study purposes only. The project, with offsite software hosting and cloud based service, is financially beneficial and could be cash flow positive shortly after full deployment. The initial capital costs could be fully amortized by year nine (9) of the project and result in ongoing cash flow benefits of about $1.5 million per year. ALW staff believes that current water and electric reserves should be considered to pay for meters and meter installation costs. Due to the projected financial benefits of the AMI project after full deployment, ALW staff expects to implement it without a rate increase or adverse cash flow impact. Utilities Director Morrow and Assistant Director Customer Care Solutions Kalscheuer responded to a question posed by Boardmember Rocha stating that the AMI project has the ability to generate positive cash flow, which should help contribute to solving the issue with the water revenue but will not cause the need for additional rate recovery. The rate recovery will be needed due to the inability to meet bond coverage because of use reductions. The water utility is a fixed cost business and because of conservation there is a reduction in revenue. Assistant Director Customer Care Solutions Kalscheuer discussed ALW staff’s recommendation to proceed with the development of a contract to implement the AMI project with the assistance of UtiliWorks. A funding plan with the final negotiated contract to make use of available reserve funds and minimize rate impacts will be submitted to the Board. Discussion was held regarding the financing of the project. Moved by Boardmember Macias, seconded by Vice-Chairman Carrillo, to approve a Professional Services Agreement with UtiliWorks in an amount “not to exceed” $48,000, plus travel expenses/business license cost, by the following vote of the Board: 10/26/2015 – PAGE THREE UB-14 YES: BOARDMEMBERS: MACIAS, GONZALES, CARRILLO, ALVAREZ NO: BOARDMEMBERS: ROCHA STAFF REPORTS/COMMUNICATIONS Drought Enforcement Update Utilities Director Morrow provided an update on drought enforcement stating that customers have reduced water consumption by 28% during the period of June through September, which was when enforcement efforts were increased. Enforcement activities include onsite education about restrictions and issuance of warnings and citations, which have been well dispersed throughout the service territory. 82% of the violations were issued in the form of a warning and have resulted in greater compliance with water use restrictions. Update of Financial Impacts of Reduced Water Sales Utilities Director Morrow updated the Board on the impacts of reduced water sales stating that ALW lost 18% of its revenues due to the 28% conservation. Updated water rates are necessary because prolonged periods of high conservation without rate changes will result in rapidly declining cash balances. Retail revenues for June-September were $510,000 less than budgeted. If conservation trends continue without rate adjustments, retail revenues are expected to be over $1.1 million lower than projected. A rate study is ongoing and ALW staff will update the Board once the results are received. 2015 Strategic Directions-Smart Grid Report Utilities Director Morrow presented the 2015 Strategic Directions: Smart Utility Report by Black & Veatch which captures planning concepts from utilities that are upgrading their infrastructure to help manage traditional operational concerns and respond to new challenges. Summary of SB 350 (de Leon) Utilities Director Morrow provided a summary of SB 350 (de Leon) which was signed into law on October 7, 2015 and titled “Clean Energy and Pollution Reduction Act of 2015” to the Board. The bill will increase California’s renewable energy standard to 50% by 2030 and require a 50% increase in building energy efficiency by 2030. ADJOURNMENT It was consensus of the Utility Board to adjourn the meeting. TIME OF ADJOURNMENT: 7:34 P.M. __________________________________________ CITY CLERK/SECRETARY NEXT RESOLUTION NO. UB-15-2015. Next Regular Meeting: November 23, 2015. 10/26/2015 – PAGE FOUR Drought Enforcement Update Reduced Water Sales Impacts Strategic Directions- Smart Grid Rpt SB 350 Summary Adjourn UB-15