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Home My WebLink AboutMinutes - July 23, 2019 SSLODI CITY COUNCIL SHIRTSLEEVE SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, JULY 23, 2019 A. Roll Call by City Clerk An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, July 23, 2019, commencing at 7:02 a.m. Present: Council Member Mounce, Council Member Nakanishi, and Mayor Pro Tempore Kuehne Absent: Council Member Johnson, and Mayor Chandler Also Present: City Manager Schwabauer, Deputy City Attorney Fukasawa, and City Clerk Ferraiolo NOTE: Council Member Mounce participated in the meeting via teleconference. B. Topic(s) B-1 Third Quarter Fiscal Year 2018/19 Water, Wastewater and Electric Utility Department Financial Reports (CM) Interim Electric Utility Director Melissa Price provided a PowerPoint presentation regarding the Electric Utility (EU) Department quarterly update. Specific topics of discussion included EU fund cash flow summary, cash balances, Reserve Policy, Capital Improvement Project five-year spending plan, power sales, Energy Cost Adjustment revenue, operating results, power supply costs, load coverage, Risk Oversight Committee report highlights, and City Council strategic areas of focus. Mayor Pro Tempore Kuehne suggested the City consider adding more electric vehicle charging stations in town since the public benefits account has a high fund balance. In response to Mayor Pro Tempore Kuehne, Ms. Price stated that time-of-use meters is mandatory for investor-owned utilities, but not for publicly-owned utilities. Some publicly-owned utilities are moving toward that; however, Lodi is not at this time because it would be extremely expensive to change out all of the meters, build the necessary infrastructure, and update the billing system to handle time-of-use billing. City Manager Schwabauer added that the City installed new meters prior to the current version of smart meters being introduced and to change out those meters now would leave stranded costs unamortized, which is not a best business practice. Ms. Price stated the cost of a new meter varies depending on the type, i.e. small residential customer versus large commercial customer, and could range from $100 to $1,000 per meter plus installation costs. Mayor Pro Tempore Kuehne asked if the City requires smart meters be installed in new homes being built, to which Ms. Price responded in the negative, stating the infrastructure and billing system would have to change to accommodate smart meters. Mr. Schwabauer added that the entire system must communicate with itself, it cannot have different functioning meters and systems. Council Member Mounce stated this is a costly endeavor that Council previously discussed. Council Member Nakanishi stated he is pleased that Lodi is not required to move to time-of-use billing because low-income customers could not afford the high rates and would be suffering during the hot summer months. Myrna Wetzel, member of the public, expressed concern about time-of-use billing, stating that people can reduce air conditioning use during 5 to 8 p.m., but they still need to cook dinner for 1 their families during that timeframe, which should be addressed. Mr. Schwabauer assured her the City is not moving to time-of-use rates at this time. Utilities Manager Lance Roberts provided a PowerPoint presentation regarding the Water/Wastewater quarterly update. Specific topics of discussion included Wastewater fund cash flow summary, operating results, cash balances, planned and Capital projects; Water fund cash flow summary, operating results, cash balances, and planned Capital projects; and Water/Wastewater utility activities. Mayor Pro Tempore Kuehne and Council Member Mounce requested a Shirtsleeve Session to receive an update from staff on the PCE/TCE issue, and Mr. Roberts added that staff will also update Council on the new constituent of PCE at that time. Mike Lusk, member of the public, posed questions regarding the 230 kV line and associated savings in transmission costs, the reason for the difference in transmission costs as stated during the presentation, the reality of PG&E shutting off Lodi's power due to the wildfire situation, the feasibility of constructing a westward connection to the White Slough Water Pollution Control Facility, and whether the City is charged through the California Independent Service Operator or through PG&E for extra power costs for high-energy times during the day. Mr. Schwabauer responded that Electric Utility purchases power at both high and low load hours, which is similar to a time-of-use rate but not passed onto customers in a time-of-use base rate. With regard to the 230 kV project, there are two funding sources: one is money paid statewide by all utility payers for transmission costs, and the other is funded by the Utility for interconnection between the systems, which the City anticipates will be paid back by reduced costs for no longer paying the low-voltage transmission access charge. In response to potential PG&E shut offs, staff is evaluating options, all of which would have a significant expense for the amount of hours anticipated being without power. One option is the suggestion made by Mr. Lusk going west to White Slough; however, such a project could potentially cost upwards of $20 million. In further response, Ms. Price stated that transmission costs referenced in the presentation have increased due to costs being passed down to utilities to maintain and add lines to move power around the state. Mr. Lusk questioned when the City will receive the $4 million reimbursement from the State for the pond project at White Slough and whether Impact Fee revenues are being applied toward the Certificates of Participation for the White Slough and Water Treatment Plant facilities. Public Works Director Charlie Swimley stated the City continues to receive portions of the reimbursement from the State as the pond is being constructed. Deputy City Manager Andrew Keys confirmed that the new development of the portion of Impact Fees is being allocated toward the debt service. C. Comments by Public on Non-Agenda Items Betty Wilson, member of the public, requested the City Council consider adopting an ordinance requiring homeowners to maintain redwood trees on their properties on a regular basis, based on the concern of the size of the trees and the risk of falling debris or trees toppling onto adjacent properties. Council Member Mounce requested staff look into this matter and report back to Council. While she does not like forcing regulations onto homeowners, at-risk trees negatively effect neighboring homes, especially with the increased fire dangers plaguing the state. D. Adjournment No action was taken by the City Council. The meeting was adjourned at 7:57 a.m. ATTEST: Jennifer M. Ferraiolo City Clerk 2 1Public Works DepartmentWater/WastewaterFY 19 Quarterly Update(Ending March 31, 2019)City Council Shirtsleeve SessionJuly 23, 2019 2Wastewater FundCash Flow Summary(Ending March 31, 2019)Budget Actuals % of BudgetRevenueSales 15,208,130 11,862,264 78%Development Impact Mitigation Fees 1,062,470 981,992 92%Other (interest, septic, misc.) 3,550,000 2,746,672 77%Total Revenues19,820,600 15,590,928 79%ExpensesOperating 8,044,710 5,236,111 65%Capital 14,876,800 5,940,267 40%Debt Service 3,343,510 2,681,178 80%Cost of Services Payment To General Fund 1,083,710 812,783 75%Total Expenses27,348,730 14,670,339 54%Beginning Cash (Operations Only) 11,443,143Ending Cash (Operations Only) 13,142,147Days Cash (Excluding Capital) 406% of Target – 90 Days Cash on Hand 452% 3WastewaterOperating Results(Ending March 31, 2019)Budget Actuals % of BudgetPersonnel $ 3,920,820 2,988,084$ 76%Supplies, Materials, Services $ 2,670,360 1,269,834$ 48%Equipment, Land, Structures $ 280,000 72,511$ 26%Other Payments $ 406,160 300,442$ 74%Utilities $ 739,060 605,239$ 82%Work for Others $ 28,310 -$ 0%Total Operating Expenses $ 8,044,710 $ 5,236,111 65% 4Operating (530)13,142,147Utility Capital / Infrastructure Replacement (531)1,533,322Capital Reserve (532) (Fund used to pay White Slough COP Debt Service)282,402Wastewater IMF (533)1,582,171Rate Stabilization Reserve (534)500,000Storm Drain IMF (535)1,217,288Total18,257,330Wastewater FundsCash Balances(Ending March 31, 2019)Amounts above reserve target are held for scheduled capital maintenance Wastewater Planned Capital Projects5FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23Villa Fiore Reimbursement 930,000Lockeford Street Improvements 100,000Storm Drain Trash Handling 750,000 750,000MSC Security Improvements 35000Misc. System Relocations 35,000 35,000 35,000 35,000 35,000Misc. Wastewater Taps 40,000 40,000 40,000 40,000 40,000Collection System Capacity Enhancement Projects 20,000 200,000Pipeline Condition Assessment 500,000Main Replacement Project #7 2,000,000 2,600,000 2,000,000Northeast Sewer Lift Pipe Repl. 60,000Sewer Lift Station Wet Well Rehab250,000Kofu Storm Water Pump Rehab200,000Salas Storm Water Pump Rehab200,000Vinewood Storm Water Pump Rehab 100,000Lincoln Storm Pump Rehab 75,000Vehicles/Equipment 135,000 150,000 150,000 75,000 75,000Upgrade Blowers 750,000Irrigation Improvements 1,300,000 750,000Plant Maintenance Improvements 235,000 265,000 320,000 250,000 260,000Compliance Studies and Reports 200,000 200,000 200,000 200,000 200,000Aeration Diffuser Replacement500,000Digester #4 Cleaning 220,000Pump & Equipment Upgrades 345,000Electrical/Screen/SCADA Design 200,000 900,000 600,000Electrical Upgrades/SCADA Construction 1,000,000 7,000,000White Slough Recycled Water Storage 4,000,000Field #5 Road Repair 150,000Miscellaneous Future Projects 100,000 100,000Totals $11,455,000 $4,565,000 $2,095,000 $5,550,000 $8,310,000 6Water FundCash Flow Summary(Ending March 31, 2019)Budget Actuals % of BudgetRevenueSales 12,872,190 10,075,836 78%Development Impact Mitigation Fees 476,310 481,055 101%Other (interest, tap fees, water meters, misc.) 1,100,040 1,145,914 104%Total Revenues 14,448,540 11,702,805 81%ExpensesOperating 7,139,150 4,661,167 65%Capital 4,016,117 793,785 20%Debt Service 2,969,160 834,175 28%Cost of Services Payment To General Fund 821,900 616,425 75%Total Expenses 14,771,105 6,905,552 47%Beginning Cash (Operations Only) 5,902,387Ending Cash (Operations Only) 6,968,238Days Cash (Excluding Capital) 309% of Target – 90 Days Cash on Hand 342% 7WaterOperating Results(Ending March 31, 2019)Budget Actuals % of BudgetPersonnel $ 3,239,320 2,171,290$ 67%Supplies, Materials, Services $ 1,563,660 876,837$ 56%Equipment, Land, Structures $ 105,000 12,628$ 12%Other Payments $ 1,647,500 1,179,887$ 72%Utilities $ 483,670 420,526$ 87%Work for Others $ 100,000 -$ 0%Total Operating Expenses $ 7,139,150 $ 4,661,167 65% 8Water FundsCash Balances(Ending March 31, 2019)Operating (560)6,968,238Utility Capital / Infrastructure Replacement (561) 103,368IMF (562)1,596,128PCE/TCE Settlements 9,171,947PCE/TCE Rates (565) 4,015,262Total 21,854,943Amounts above reserve target are held for scheduled capital maintenance Water Planned Capital Projects9FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23Water Meter Program 5,980,000 1,000,000 1,000,000Lockeford Street Imprv. 400,000Water Taps 75,000 75,000 75,000 75,000 75,000Misc. Water Mains 50,000 50,000 50,000 50,000 50,000Water Meter Replacement Program 75,000 75,000GAC Replacement 300,000 300,000 300,000 300,000Meter Shop Design/Construction 200,000Water Plant Generator 300,000MSC Security Improvements 35,000Well 7 Pump Rehab 175,000Well 14 Pump Rehab170,000Well 16 Pump Rehab 166,000Well 17 Pump Rehab185,000Well 21 Pump Rehab 200,000Well 22 Pump Rehab 166,000Well 23 Pump Rehab 80,000Well 24 Rehab Rehab 165,000Well 25 Pump Rehab200,000Well 27 GAC Treatment & Standby Generator 70000 750,000Well 28 GAC Treatment 70,000 950,000Vehicles/Equipment 120,000 80,000 40,000 50,000 50,000Totals1,370,000 7,471,000 2,081,000 1,905,000 1,750,000 10Water / Wastewater Utility ActivitiesOperationalWater DistributionWater ProductionCollection SystemWastewater TreatmentRegulatorySSO’sDischarge ViolationsMonitoring and Reporting Electric Utility Department FY 19 Quarterly Update (Ending March 31, 2019) City Council Shirtsleeve Session July 23, 2019 2 Electric Utility Fund Cash Flow Summary (March 31, 2019) Budget Actual % of Budget Revenue Sales Revenues 69,708,150 53,347,350 76% Development Impact Fees 178,820 212,192 119% Other Revenues (interest, misc) 3,728,120 2,643,546 71% Total Revenues 73,615,090 56,203,088 76% Expenses Purchase Power 40,699,940 30,009,819 74% Non Power 14,986,240 7,969,195 53% Capital Projects 4,324,000 1,448,603 34% Debt Service 5,522,890 1,720,002 31% Cost of Service/Capital Xfer 2,399,040 1,799,280 75% In-lieu Transfer to General Fund* 7,197,380 0 0% Total Expenses 75,129,490 42,946,899 57% Beginning Cash Balance (6/30/18) 26,573,007 Ending Cash Balance (3/31/19) 42,794,995 Reserve Policy Target 23,714,000 % of Target 180% *Reflects delayed journal entry posted at year end. 3 Electric Utility Funds Cash Balances (Ending March 31, 2019) Operating Funds $ 29,552,151 Utility Outlay Reserve Fund $ 937,500 Public Benefits Fund $ 3,277,608 Impact Fee Fund $ 853,523 Solar Surcharge Fund $ 316,615 Greenhouse Gas Fund $ 7,857,598 Total $ 42,794,995 Electric Utility Reserve Policy (March 31, 2019) 4 Purpose Target Actual* Operating Reserves $ 22,714,000 $ 41,857,495 Capital Reserve $ 1,000,000 $ 937,500 Total Target $ 23,714,000 $ 42,794,995 Cash balances support City Council approved reserve requirements and provide funds for pay as you go Capital Improvement Projects. *Includes cash held locally and at NCPA Capital Improvement Project 5-Year Spending Plan* 5 Project FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Distribution Capacity Program $460,000 $600,000 $800,000 $625,000 $1,100,000 Underground / Overhead Maint $1,200,000 $1,400,000 $1,400,000 $1,400,000 $1,400,000 Streetlight Maintenance / Repair $90,000 $50,000 $50,000 $50,000 $50,000 LED Streetlight Improvements $90,000 $250,000 $250,000 $250,000 $250,000 230 kV Interconnection Project** $60,000 $500,000 $0 $0 $0 Substation Maint / Improvements $525,000 $1,400,000 $800,000 $0 $300,000 Building & Security Improvements $535,000 $2,000,000 $155,000 $35,000 $35,000 Work for Others $100,000 $350,000 $350,000 $550,000 $550,000 Total Projects $3,060,000 $6,550,000 $3,805,000 $2,910,000 $3,685,000 *Reflects FY 18-19 mid-year estimate; does not include vehicles and equipment **Includes planning and design costs only Power Sales (Ending March 31, 2019) 6 Power Sales (kWh) Customer Class Budget Actual Residential 157,969,253 116,230,942 Small Commercial 158,823,735 119,384,846 Large Commercial/Small Industrial 49,847,066 37,244,487 Industrial 68,408,946 46,441,765 Total 435,049,000 319,302,040 Revenue ($) Customer Class Budget Actual Average Rate Residential $ 27,288,494 $ 22,060,650 $ 0.1898 Small Commercial $ 26,883,003 $ 20,314,540 $ 0.1702 Large Commercial/Small Industrial $ 7,717,784 $ 5,580,927 $ 0.1498 Industrial $ 7,818,869 $ 5,391,233 $ 0.1161 Total $ 69,708,150 $53,347,350 $ 0.1671 ECA Revenue (Ending March 31, 2019) 7 Customer Class Total ($) Residential $ 1,404,764 Small Commercial $ 1,410,266 Large Commercial / Small Industrial $ 445,046 Industrial $ 501,947 Total Revenue $ 3,762,023 8 Electric Utility Fund Operating Results (Ending March 31, 2019) Budget Actual % of Budget Personnel $ 9,457,360 $ 6,287,893 66% Supplies, Materials, Services $ 3,874,880 $ 1,428,480 37% Other Payments $ 1,575,100 $ 208,310 13% Utilities $ 78,900 $ 44,512 56% Total Operating Expenses $ 14,986,240 $ 7,969,195 53% Power Supply Costs (Ending March 31, 2019) 9 Budget Actual % of Budget Generation $ 28,723,770 $ 21,882,885 76% Transmission $ 10,591,000 $ 6,864,239 65% Management Services $ 1,385,170 $ 1,262,695 91% Total Power Supply Costs $ 40,699,940 $ 30,009,819 74% Load Coverage 10 Includes energy purchases through June 2019 as approved by the Risk Oversight Committee (ROC) 11 Risk Oversight Committee Report Highlights •Forward Energy Purchases •Cap and Trade Activities •NCPA Solar Project •Energy Procurement & Hedging Guidelines 12 City Council Strategic Areas of Focus •Customer •Technology •Financial •Reliability •Workforce