Sep 25, 2017 Public Utilities Board on 2017-09-25 9:00 AM

It's 9 o'clock. We have a quorum, so we'll go ahead and open the meeting. We do have a closed meeting scheduled. However, in essence, we do have some folks that have presentations in open meeting or in the regular meeting. So if it's OK with everybody, if we can move the closed meeting to the end of the-- after the open meeting so we can get folks back in their office and do all that stuff. So with that, we have-- in our regular meeting, we have our consent agenda first. We have three items on consent agenda. Would ask if there's any members of the board who would like to pull any of those items for individual consideration. I would like to pull all three of them. OK. All right. That makes it simple. All right, then. We will start for individual consideration. We'll start with item A, which is to consider recommending approval of the 2018 Water and Wastewater Impact Fee Update, professional services proposal from Kimley-Horne and Associates. And I believe PS is there. Are there any specific questions that I can answer? Oh, I would just like for you to just give just a brief overview, just for the thinking of the public as the audience, just so the public can know. OK. It seems fairly self-explanatory to me. We started the impact fees for water wastewater back in 1998. And by state law, we have to do an update study every five years. So we had a study in 2003, 2008, 2013. And this is for the 2018 now. Because it takes a certain amount of time. So we started the process a little bit early because we had to go through a public hearing process, capital improvement advisory committee, and then the council. So there's a certain amount of time it takes. So sometime we anticipate in June or so we will have the impact fees again updated and in place and would have been approved at that time. Why do we have impact fees? It is really growth paying for growth. What we do is we look at what is the additional capacity that we need to accommodate growth in the future. So there is a cost to that. The cost is in building larger pipes, larger pump stations, larger waste treatment plants, wastewater and water treatment plants. So there's a cost involved in it. So state law describes a method. And we'll use that method to assess what is the cost for a single family equivalent, if you will. And then that is what we charge. The new development. It is not assessed to existing homes, only to new development that comes out. So that is the essence. That's what impact fees are. So we got our RFQ done through the Purchasing Department. And we had five consulting companies that sent their RFQs. We evaluated them. Kimley-Horn was ranked number one. And we have a very good proposal. And the fees that we got look pretty reasonable. So we are happy to bring it to you for approval. Thank you. Is this a consulting group that the city has worked with in the past? Yes, they have. Actually, they did the road impact fees. I was involved in that. That went into effect last year. And they did a very good job on the road impact fees, above and beyond. Excellent. Excellent. So this is a special skill set. It seems to me this is a special skill set that we would need to contract out for, rather than having this to-- Yes, it requires planning effort on their part, growth scenarios for what is the growth in the city, engineering, evaluation, and then the cost evaluation. Yes. OK, yes. Thank you. So this seems like a good return on investment to me, in the sense that if we get somebody to really do this right, we spend-- I think it was-- It's a little over $91,000. Yeah, around $90,000. But we end up getting back a lot in terms of impact fees. And also, the $91,000 we spend actually goes back into the charge we will assess. Whatever cost we have, we put back at the cost. Yes. OK, well, thank you very much. That sounds great. Yes, is this the third party methodology that's prescribed by state law? Is that correct? Yes, sir. OK. So it's really a requirement in addition to being a good idea, to have a third party look at it. Yes, sir. Yes. That way you get an independent view of what we need to charge for. Right. OK. All right, any other questions? PS, no? Is there a motion then to approve item A? Make a motion. I motion. Motion. Second. And a second. You have to flip a coin, whichever. I'll let Kim make that decision. We have a motion and a second on item A. Or is there any further discussion? If not, all in favor say aye. Aye. Any opposed? Motion carries. Item B, which is to consider recommending approval of a professional services agreement with Enterprise Risk Consulting of Santa Fe, New Mexico to assist the city in developing a power supply head strategy and implement a risk management process in an amount not to exceed 200,000. Brian? Morning. Brian Langley, Deputy City Manager. Did you also want me just to provide some overall comments? Or do you have any specific questions? For me, anyway, it was just in terms of explaining to the public their return on investment. I know that there's a lot of cynicism about consultants. And I think it's a good idea to just explain to the public why it makes financial sense to spend this money, why it's a good investment for us. Well, with the board's indulgence, I'll talk about items B and C together, which is really a companion is the Deloitte study. So I'll go through that overview for you. So first of all, for Deloitte, which is item C on your agenda, there are two particular tasks that we're asking them to look at. And these are the ones that we talked about with you at your last meeting that they presented. The first would be to look at the 2017 benchmark analysis to see what is the right benchmark to manage and measure the energy management organization moving forward, to look at different methodologies, identify the advantages and disadvantages of those, and make a recommendation to us of how we measure performance going forward. And then the second task that they have is what they call the EMO capability maturity model that they'll look at. And basically, just look at the overall governance that we have of the EMO. What are our policies? What are our procedures for that? Understand all those activities. Try to understand whatever risk we're taking on with that operation. If there are any process gaps that we have, any issues that need to be resolved, they'll identify those for us and recommend any improvements that are needed. And so the companion to that is enterprise risk, is once we have that recommendation from Deloitte and the issues that have been identified, they'll review those for us and give us a practical application of how do they think we can actually close those gaps. What are the recommendations that they would have for us to implement the recommendations from Del oitte and help us revise the governance structure as needed. So as you may recall, we have a front office, a middle office, and a back office for the EMO. We have some policies that are in place. What would that need to look like if there are any process gaps, if any are identified by Deloitte. And then the second component of their work is to look at our power supply issues that we've been talking about. So looking at how do we take on more renewables going forward? What's the right mixture of those going forward? How do we develop a hedging strategy for that? How do we use the deck for that? And how do we build a financial pro forma going forward that takes into account all those different elements? And we'll bring that back through the board and the city council. And they're looking to come back in October. Their work is due to us for their first phase of the work, what we've already contracted with them on October 16. And we hope to be back to you on October 23 to have that discussion. So in terms of cost, Deloitte is, for an amount not to exceed, $145,000, combined with what we've already spent with them, that would be about $231,000. Task one is the benchmark analysis that we mentioned. It's about $35,000. The EMO maturity assessment is $110,000. We expect both of these tasks to be completed by the first week of December and have a report available for you to come back and talk through. And that will help us, again, better understand the operations, the risk, how to measure success for EMO, and develop appropriate strategies to manage that operation if any improvements are needed to be made. So for enterprise risk consulting, it's for an amount not to exceed $200,000. That would be a total of $299,000 with our existing scope of work that we've already performed with them. We do think that there's a range of costs here that we have . It's about $135,000 to $182,000 plus some travel-related expenses. The reason for that range is we really don't know what we're going to find out of the Deloitte study, what kind of improvements might need to be made, what's the depth of those improvements perhaps. So that will be known once we have the Deloitte report. But we expect the EMO portion of the findings and recommendations to come forward in the spring of 2018. And the rest of the work will be done throughout the year and delivered no later than the end of September. And the reason for that is we have the debt coming online next year. And so how to manage that properly will be determined through that process. We have some renewable RFPs that are on the street that we'll be working through. And so that will take a little bit more time. But we'll certainly get updates for them and bring that back to you as we get up. So those are my overall comments for those two items. I'd be happy to answer any specific questions that you might have. Questions? Has Enterprise been asked to factor in a timeline for the phasing out of the gas plant? No, that's going to be a part of our power portfolio. And so they've been asked to look at how to best utilize that and how to best maximize that use. OK, so that comes from us. Is that what you're saying? We give that to them and then they figure out? Sure, it's an asset that we have, as well as some of the other contracts, power supply contracts that we have in place that are known elements of our power supply. And so then the question for Enterprise is how best to utilize those and add in more power supply options over time. OK, and they asked to consider how storage and distributed generation-- we're working to that picture. I think they addressed the storage question at the last council meeting and just didn't feel like it was a viable alternative at this point. Although in the next few years it could be viable, but at this point they didn't feel like that was a viable option. OK, thanks. Yeah, I was really impressed with them. I think they're terrific. That was the one thing that I'm skeptical about. It seems to me that storage has gotten really good, both utility scale and-- Well, I can certainly-- if that's something the board's interested in, I can certainly ask them to come back and explore that further at their next opportunity when they're going to come back and present to you in October. We can certainly have them add some information to address that for you. If I could, I think the initial scope here is really to put something in writing that illustrates kind of where we're going, what our strategies are for renewables, something we can go back and visit each year, continue to refine. The comment that was made about storage the other day at the city councils is just not quite there yet. But in three, five, 10 years, it very well may be here. So we're viewing this issue from the scope from Enterprise Risk as something that's kind of a living document. And each year or two, we can see how we're doing, how the market's changed. But it's vetted very publicly with all of your input and the city council's input. And as the market changes, we can also change and adapt the plan. So what's important is getting this first scope underway to take a look at how the renewable market changed , how does that change, how we operate the deck, and for all of you to be involved in that policy discussion. And then you'll make that recommendation to council. Things two or three years from now are going to be different than they are today. But at least we've got a document that illustrates our thinking at the time, something we can measure, something we can continually improve upon and adapt as the market adapts. And then in terms of the DOIT study, obviously moving forward and agreeing to how we're going to measure success, the governance structure of the EMO is important because of the risk that's going through there . It is something that the city council was very interested in as well. So these are really documents that everything's in writing, our thought processes, and they will change over time. In terms of decommissioning the gas plant, I don't think that's a realistic conversation to have yet, because we just don't know where the market's going to go. A lot of the utilities and the renewables, the gas contracts we're looking at, you can only contract out in a responsible fashion probably three to five years to really control your costs and make sure that we're always in a good position. But that's not to say that in five years, things are looking very different now, and we've got a totally different strategy in place. But we wanted to make sure that we had something that was vetted from everyone first and that we could all look at one set of facts moving forward. And that's the benefit of this. Oh, yes. Yeah. And I'm convinced of the benefit of it. I just know that there are members of the public that would appreciate an explanation. It seems to me that the coal plant has not been factored in also by Enterprise, or maybe we just haven't been informed of it. That is, it seems that the coal plant is still producing. And have they been asked to look into how that factors into our package? Sure, we'll certainly bring that back to you as part of that, as part of the resource plan, to see all the assets that we have, what's the best way to utilize those assets at the lowest cost. And so that will be a component of that discussion. Excellent. Thank you. I think I read, or maybe it was from the last preliminary report they gave, was they were going to factor in some summer peak time, peak demand, seasonal operation of coal. I mean, that may or may not where it ends up, but at least they're looking at it that way. So I just want to make sure I've got the timing on everything correct. So Deloitte will deliver their report in December. Both reports, right? Yes, sir, for task one and two. And then Enterprise will begin in October. I'm assuming they're pretty confident in their final report we receive on the 16th. It's not going to differ too much from what they told us two weeks ago. I think those are certainly the preliminary findings at this point, but I would expect those to be on the 23rd, a little bit more detailed findings and detailed presentation of how they got there and what their final recommendations are. But that won't be for these items. That will be in the spring for these items that are here on this contract. And then one last question. So the report from Enterprise is expected to be delivered in the spring on the MO and then September for the other item. So do we have-- because they talked about now's the time, if you're going to do renewable contracts, now's the time to do it. I don't know if that makes sure that-- I guess I just want to ask a question I don't want to assume, but I'm assuming that window will still be open, in their opinion, by that time. Yes, sir, we actually have an RFP on the street right now for renewables. We're asking the marketplace to give us some options for that. They're going to help us evaluate what those options are. And as they're developing that resource plan, we can come back with contracts for potentially more renewables that will match up with that. So that's what we think is one of the really good benefits here, is that they're helping us on the front end and actually implement some of that through the process. So hopefully we'll have that in the next couple of months. We'll have something for you to consider. OK. And Brian, I know that Daffner does a lot of their own lean process review. Can you just briefly-- I'm in favor of Deloitte, but could you just briefly tell us why you're using Delo itte rather than doing that? We do have a lean program, a lean government program. We look at processes. My opinion, this is very different than anything else that we do around the city. And there's some process mapping I think would be helpful. But the technical nature of what's going on, you really have to have someone who has some experience and some technical knowledge to help us understand what are the best ways to do this. And it's a very small operation, but it has a lot of different components to it. So that's why we feel like an outside expert would really help us in terms of the dollars that are going through that operation, that we're managing it the best we can. OK. Any other questions? Brian? OK. So we'll take item B first, which is consider recommending approval of a professional services agreement with Enterprise Risk Consulting. Is there a motion on that item? Motion to approve. Second. We have a motion and a second. Any further discussion? No. If not, all in favor say aye. Aye. Any opposed? Same sign. OK. Item C is to consider recommending approval of a professional services agreement with Deloitte Touche to perform fiscal 2017 benchmark as well as a risk assessment for the EMO not to exceed the amount of $145,000. Is there a motion on that item? Move approval. Second. And a second. We have a motion and a second. Discussion on that? No. Then all in favor say aye. Aye. Any opposed? Same sign. OK. Thank you. Moving on for individual items for individual consideration . Item A is to consider approval of the Public Utilities Board meeting minutes of September 11, 2017. These have been distributed prior to. Are there any corrections, comments, amendments we need to look at? No. Everything seems OK. All right. Then those will stand approved as submitted then. Item B is the ACM update. Board members, I sent through Kim under a separate memo-- excuse me, a separate email-- a memo that outlined items 3, 4, and 5 of the new business matrix. And so hopefully that will fulfill those requirements unless you have any questions. And then items 6, 7, and 8 will be able to come back to you either through a memo or a subsequent presentation in an upcoming board meeting if you so choose. So any questions? Be happy to answer as best I can. Questions? I just want to say I was very impressed by the numbers of the solar rebate that we're doing here. I mean, it's a good problem to have when you have more than you can do. But at the same time, to look at the number of 41 residential in 2017 so far, and we had to turn people away because we knew we were getting close to running out of money, that's excellent. One thing I didn't mention is what we'll do next time I'll work with Kim to include this memo along with the backup materials in your agenda, not to fill the agenda, but just so that it's in the minutes so that if folks whenever in the public ever want to go back and look at it, they can. They have that information available to them online. How will the new Tesla solar roofing fit into this whole rebate process? Thank you. I was hoping my roof was wrecked so I could do it. Maybe it wasn't. Well, yeah. Not a good reason to get a wrecked roof, but I guess it's all right. OK. That's all the individual items we had on the regular meeting. Any concluding items under section 551.042, this is time to request new metrics items or future agenda items. I'll just say I'd make the comment. I hope that at some point once-- I know we just had a crew that got back from Florida, I guess last week. And so I hope at some point we'll be able to recognize those folks when they come in. Because what they do, leave their families and go where they're needed. And I know the people in Florida are very appreciative. They-- I know the last-- I can't remember which one it was, but there was one hurricane that they're actually bringing them-- the citizens were bringing them baked goods, cookies, and homemade sandwiches and stuff like that while they were out there. So that's-- just go to show you what that means to people that really are in need. So hopefully we can get them in and be recognized at some point once they get rested up. Could I request some website data, some website metrics? I'm interested in knowing how many people view the stream of our meeting or live. I'm interested in how many people view it after the live broadcast. I know it's posted up there to be viewed later as well. I'm also interested in how many people download the agenda, review the agenda and the backup items, maybe even a metric for prior to the meeting and after the meeting. It should be-- that should be pretty easy. Yeah. Good. Good point. That would be really interesting to see. Thank you. Yeah. Thanks. I had two brief things. One is it would be nice, since we keep asking about-- and now I have my own timeline made up of when we're expecting the consultants to come to us and then to counsel with their results. It would be nice to have a tentative timeline, either posted on the PUB part of the website or just added on in the agenda as part of the matrix or something like that. I'm not quite sure how that could fit in, but it would be nice to have something that the public could refer to. It helps. That's fine. Yeah. To kind of get in your mind, OK, December, we know we're going to see this. And spring, we'll see this. Yeah. And people could be made aware that this is tentative, that everything is tentative. If something comes up, it's subject to change, but that helps. And the second thing, I would like to request for future consideration that we consider having all proposed expenditures of $50,000 or more as items for individual consideration. That was the reason why I asked to pull these three from the consent agenda, because all three had a price tag over that amount. Not just for us, but most importantly, for the public. I think it rubs the public the wrong way when they see expenditures of such a large amount on the consent agenda. And I think it does a lot of good for them to see that we're doing our due diligence and that we're concerned about return on investment. I think that'll make a big difference. OK. Thank you. All right, very good. So at this time, we will go into the-- we'll adjourn the open meeting, first of all. I guess we need a motion for that. We'll have a motion and a second. All in favor say aye. Aye. And we will go into a closed meeting, PUB 17-201, deliberations regarding certain public power utilities, competitive matters, under--