HomeMy WebLinkAboutAgenda Packet 09/13/2005 UTILITY ADVISORY COMMITTEE
PUBLIC WORKS CONFERENCE ROOM
PORT ANGELEB~ WA 9B362
3.'00 P.M.
AGENDA
I. CALL TO ORDER
II. ROLL CALL
III. APPROVAL O~- MINUTES FOR JUNE 1
hid MEETING HELD JULY 200H
IV, LATE ITEMS
V. DISCUSSION ITEMS
A. DEPARTMENT OF HEALTH Ar~-REEO ORDER
B. £LECTR~C RATE ADJUSTMENTS
C, ELEOTRIO AND SOLID WASTE ~ATE SURVEYS (INFORMATION
ONLY)
VI. NEXT HEETINB DATE - OCTOBER ] ] ~ ~OO~
VII, ADJOURNMENT
UTILITY ADVISORY COMMITTEE
Port Angeles, Washington
June 14, 2005 ~L~
I. Call to Order:
(2hainnan Roger~ ctflled the meeting to order at 3:00 p~.
M~mbem Present: Chairman Rogers, Allen Bentley, Mayor Headrick, Dean R~I,
Councilmember Er/cl~on
Meanbem Absent: None
Staff Present: Michael Quion, William Bloor, Glenn Cutler, Yvonne Ziomkow~ld; Dan
McKean, Mark Madsen, Scott McLain, Gary Kenworthy (4:00),
Sperr (4:00), Cate Rinehart
Others Present: Brian Gawley- Daily N~ws
Brian Davidson - Port Angeles ~ (2enter
Hershel Lester - Port Angeles Care
Liz Buffer - Saint Andrew's Plac~
IlL `41Jl, roval of Minutes:
Chairman Rogers asked if there were any additions or corrections to the meeting mlnute~ of May
10, 2005. Mayor Headriek moved to approve the minutes. Councilmember Erlek~on seconded the
motion, which carried unanimously.
1V. Late Items: Washington Department Of Fisk And Wildlife Wells,dgreement
Western .4nnexatlon Financing l~roJ~osal
Executive Session
Discussion Items:
,4. Medic I UtHiO, Restructuring And Related Rate Modifications
Dan McKeen, lire Chief, distributed a handout and gave a presentation based on that information.
Funding alternatives were explained as well as propose~l rate st~'uctures.
At this point the meeting was adjourned to Executive session (4:03 p.m.) as a long distance phone
call had previously been arranged. Return to regular session (4:35 p.m.) with a continued cli~cuasion
UTILITY ADVISORY COMMITTEE
June 14, 2005
regarding cost allocation and user classifications. Slattwas given a pat on the back for the in-depth rate
study done in house.
Dean Reed moved to recommend City Council adopt ordinance changes pertaining to a Medit I
utility and to authorize rates to be established in accordance with the Medic ! Utility Rate Study.
Councilmember Erickson seconded the motion, which carried unanimously.
Washington State Department of Fisk and Wildlife Agreement on City Property along
the Eiwka River
Steve Spear, Engineexing Manager, noted the WDFW operates five wells on City protmrty along the
Elwha River under an agreement made in 1994. The Depaxtment of Ecology, which had given the
WDFW a temporary permit in 1996 to operate the wells, has now required a new agreement with the
City be.for~ they will ,ruew the temporary permit. There was a brief dimussiun.
Councflmember Ericksen moved to recommend City Council authorize the Mayor to sign an
Agreement with the WDFW to allow the continued use of wells on City property. Allen Bentley
seconded the motion, which carried unanimously.
Western ~4nnexation Utility Ex~ension Project Update
Glenn Cutler, Public Works and Utilities Director, indicated that the material installation bid had just
gone out this morning (duc June 24*) and the const~ction contract bid, which had already gone out, was
due to be opened July 13. A target date of August 1a is the current goal.
bio action taken. Information only.
D. Western Annexation Financing Proxoasal
Yvoune Ziorakowski, Finance Director, distributed a handout and gave a presentation based on that
information. Project expenses, funding, and several bond scenarios were covered. A brief discussion
followed.
bio action taken. Information only.
VI. Next meeting date: July 12, 2005
VII. ,4djournment: The meeting was adjourned at 5:30 p.m.
Chairman Rogers Cate Rinehart, Administrative
Specialist Il
2
pORTANGELES
W A S H I N G T O N, U.S.A.
UTILITY aDVISORY COMMITTEE MEMO
DATE: September 13, 2005
TO: UTILITY ADVISORY COMMITTEE
FROM: Stephen Sperr, P.E., Engineering Manager
SUBJECT: Agreed Order with the Department of Health
Summary: An Agreed Order has been negotiated between the City and the Washington State
Department of Health (DOH) to formally address the installation of a surface water treatment
plant for the City, as well as the need for corrosion control treatment as a result of past
exceedances of the copper action level.
Recommendation: Recommend to City Council that it (1) approve the terms of the Agreed
Order, and (2) authorize the Public Works and Utilities Director to sign the Agreed Order
and negotiate minor modifications to it.
Background/Analysis: In 1997 a bilateral compliance agreement, BCA//7207, was negotiated
between the City and the DOH. It was in response to findings that the City's potable water
supply exceeded the United States Environmental Protection Agency's (EPA's) action level for
copper. BCA//7207 required the City to cover all of its reservoirs by certain dates, then to
resample for copper and lead. If either copper or lead exceeded its action lead during re-
sampling, the City would be required to install corrosion control treatment to reduce the levels of
copper and/or lead to within acceptable levels.
A separate BCA, #00-02-014, was negotiated in 2001. It addressed a finding by the DOH
designating the City's Ranney Collector well water source as Groundwater Under the Influence
of Surface Water (GWI). This designation required the City to comply with the EPA's Surface
Water Treatment Rule. The agreement and the Rule included a number of options to avoid
construction of a surface water treatment plant by January 26, 2006.
Acknowledging that the federal government was planning to construct a water treatment plant
for the City as part of the Elwha River Ecosystem and Fisheries Restoration Act, in 2004 the
1997 and 2001 BCAs were combined into one BCA,//2004-BCA-0074. The combined BCA has
two requirements: (1) the City will submit construction documents for the treatment plant to the
PW 0101_06 [Revised 07/24/03]
Utility Advisory Committee
Page 2
September 9, 2005
DOH for review by February 28, 2005, and (2) construction of the treatment plant must be
complete and the new plant placed in service by December 31, 2007.
Due to design delays, the treatment plant construction documents have not been submitted to the
DOH. In addition, re-sampling in 2004 showed that the City's water distribution system still
exceeded the action level for copper. For these reasons, City staff and the DOH have negotiated
an Agreed Order. This Order changes the delivery date of the construction documents (the
design) to November 30, 2005 and the construction completion date to August 30, 2008. The
design of the treatment plant incorporates pH adjustment elements that would provide the
required corrosion control.
Agreed Order No. 2005-SAG-0002, like its predecessor #2004-BCA-0074, allows for civil
penalties of up to $5,000 per day for failure to comply with any provisions of the Order. It also
allows for new penalties of up to $10,000 per day if the violation is determined to be a public
health emergency. It also allows the Operating Permit status for the City's water system to be
categorized as red, which may result in loans and building permits being denied tmtil the
violation is corrected.
Besides these changes described above, the terms of the Agreed Order are no different than
#2004-BCA-0074. To avoid being found in violation of #2004-BCA-0074, as well as to gain
more time in meeting the compliance dates for design and construction of the treatment plant,
staff recommends that Agreed Order No. 2005-SAG-0002 be signed by the City. As such, staff
recommends that the Utility Advisory Committee forward a favorable recommendation to the
City Council to approve the terms of the Agreed Order, and authorize the Director to sign the
Agreed Order and negotiate minor modifications to it.
DOH Agreed Order
I)ORTANG ELES
W A S H I N G T O N, U, ~, A,
UTILITY ADVISORY COMMITTEE MEMO
DATE: September 13, 2005
TO: UTILITY ADVISORY COMMITTEE
FROM: Larry Dunbar, Power Resources Manager
SUBJECT: Electric Rate Adjustments
Summary: The Bonneville Power Administration recently made a decision to decrease its
wholesale power rates. HDR Engineering, Inc. will update the rate study based on the wholesale
power cost reduction. The recommended reduction to the proposed retail rates will loc presented
at the Utility Advisory Committee meeting.
Recommendation: Forward a favorable recommendation to City Council to consider
adoption of the proposed retail rates on September 20, 2005 now that the Bonneville Power
Administration has finalized their wholesale power rate adjustment.
Background/Analysis: On September 8, 2005 the Bonneville Power Administration (BPA)
announced a 1.6% reduction to wholesale power rates during their next fiscal year (October 2005
through September 2006). A copy ofa BPA issue alert is attached.
HDR Engineering, Inc. will update the rate study based on the actual BPA wholesale rates. Even
though BPA reduced wholesale power rates it is still necessary to increase retail rates to maintain
the fund in a financially prudent position (mainly due to discontinuing the use of rate mitigation
reserves and a BPA 5.5% wholesale transmission rate increase). The wholesale power rate
decrease will slightly reduce the proposed 9.5% increase to the City's retail rates. The
recommended reduction to the proposed retail rates will be provided to the Utility Advisory
Committee at the meeting.
A Utility Advisory Committee recommendation to City Council will be sought to adopt a new
retail rate ordinance at the September 20, 2005 City Cotmcil meeting.
Attachment: September 8, 2005 BPA issue alert
N:\UAC\Original~Electric COSA 2005C.doc
B 0 N N E V I L L E P 0 W E R A D M I N ~ S T R A T I 0 N
Power rates drop as BPA enters
last of five-year power rate period
For the third consecutive tight supply picture in the West Why a cost-recovery
fiscal year, BPA is dropping and hot weather combined to keep adjustment
its wholesale power rates, wholesale power pdces unusually
Fiscal Year 2006 rates will average high throughout the summer. Tradi- The rate includes an adjustment
1.6 percent lower than the previous tionally, revenues from surplus under the Safety Net Cost Recovery
year's rate. The exception is for Slice power sales have represented from Adjustment Clause.
customers, who purchase power 20 percent to 25 percent of BPA At the beginning of the current five-
under a different set of rates (see power revenues. These revenues year rate pedod, BPA adopted a
below). The 2006 rate, effective are critical to keeping Northwest sedes of cost recovery adjustment
October 1, 2005, is the final year rates down. mechanisms known as CRACs. These
of a five-year rate period. During the Iow-water period, BPA mechanisms were recommended by
This year's decrease comes after hydro operators managed the hydro customers as a means of keeping
base rates lower. Without the ability
extraordinary challenges. It is the system judiciously, and the agency's
to make adjustments based on
sixth year in a row of below average power traders worked to make
water. Also, while the final figures are market choices that would benefit changing load and financial condi-
tions, it would have been necessary
not yet in, additional water spilled for the region.
to set the rates higher to take into
endangered and threatened salmon BPA continued a stringent cost account the risk of changing condi-
will likely have cost BPA tens of
management program to reduce tions to ensure BPA could cover its
millions of dollars.
costs. Working with its partners (the costs and meet its U.S. Treasury
Corps of Engineers, Bureau of payment.
Key factors Reclamation and Energy Northwest),
contributing to the BPA has captured hundreds of For the 2005 fiscal year, the BPA
rate decrease millions in savings over costs pro- administrator used his discretion to
After a dry winter and early spring, jected in 2002. A customer sounding forego implementing the Safety Net
CRAC to help the regional economy.
the region experienced above- board also helped BPA identify addi-
average precipitation in ]ate spring tional cost reductions and revenue This was possible because, with
and early summer. While the Jan.-July enhancements for fiscal years 2004- another year ahead in the rate period,
run-off season was only 76 percent 2005. The result was $ I 11 million there was the reasonable potential
of average, the late precipitation identified savings. And, BPA has been [or better conditions. For 2006,
helped offset some of the dry year successfully holding its power-related however, the administrator did not
zero out the Safety Net CRAC. That
impacts, internal operating costs to 2001
actuals on average through the rate
The late spring rains came at a time period with no increase for inflation. ~'~=~;~7
when market prices were moving
upwards. High natural gas prices, a
decision is based on the risks the BPA's lower cost power (generally, product. As for the Slice product,
agency faces now and threugh FY2006. this is a financial transaction rather any changes to the costs of operat-
than a power exchange). The savings lng the federal hydro system will be
BP~s rate provisions say that the
must be passed on to the utilities' reflected in the upcoming Slice tree-up.
Administrator must be able to
residential and small-farm consum-
conclude that the agency's probabil- ers. Other public utilities could seek A caveat
ity of making its annual U.S. Treasury exchange rights, which would in- Even though rates will drop by
payment is above 92.8 percent in
crease expenses. 1.6 percent this October, the true-up
order to zero out the Safety Net for the Financial-Based Cost Recov-
CRAC. The uncertainties BPA faces S]ice customer's ery Adjustment Clause comes into
in FY 2006 create a likelihood that
the probability of payment would be A group of customers has chosen to play after BPA receives the audited
well below that threshold without purchase a Slice product from BPA actuals for Fiscal Year 2005. If the
that is best described as a "slice' of net difference between the numbers
the Safety Net CRAC. Without it,
the generation output of the federal used to calculate the Financial-Based
the rate would have been another
system. The Slice product includes CRAC varies from the audited actuals
I percent lower.
service to net requirements firm load by more than $5 million either way,
What risks does as well as an advance sale of surplus the adjustment must be trued-up.
the agency face power. By purchasing this product, This has the potential to adjust the
the customers assume both the risks Financial-Based CRAC rates either up
There is always the possibility of and benefits of the system. They or down for April through September.
another below-average water year. manage their proportionate share of
Market volatility continues, and high the risks associated with variable New rate
prices could help or hurt BPA de- water volume and price for second- period coming
pending on whether the agency is a ary sales rather than paying BPA a While Fiscal Year 2006 is the end of
buyer or seller, risk premium to manage those risks the current wholesale power rate
on their behalf, period, BPA and its customers have
BPA is exposed to potential addi-
tional costs from pending litigation As for benefits, Slice customers been looking ahead. The agency has
over the FY 2002 Slice tree-up and should benefit from the sale of their been holding informal workshops this
litigation over hydro operations on surplus power about the same way past summer preparatory to a formal
behalf of Endangered Species Act- BPA benefits from its sales of surplus rate case covering Fiscal Years 2007-
2009. Later this fall, BPA will publish
listed fish (the biological opinion), power. Therefore, the Slice custom-
The latter could be extremely costly ers' effective Slice rate will depend on an initial rate proposal for this new
if the court orders additional spill the extent of each customer's three-year rate period. BPA expects
and flow augmentation, success in managing the risks associ- to keep rates well below the market
ated with its sales of surplus power, price for power during that pedod as
well. BPA's financial performance and
One public utility has requested Slice customers will see the an~
'residential exchange' benefits from nounced 1.6 percent rate decrease ending cash reserves for Fiscal Year
BPA, a program under which utilities ord¥ in their block purchases, which 2006 will have a direct bearing on the
with higher average system costs are priced separately from the Slice level of Fiscal Year 2007-2009 rates.
trade their higher cost power for
BONNEVILLE POWER ADMINISTRATION
DOE4B~-3653 ° September 2005
)RT IGELES
W A S H I N G T O N, U. $. A.
UTILITY ADVISORY COMMITTEE MEMO
DATE: September 13, 2005
To: UTILITY ADVISORY COMMITTEE
FROM: Larry Dunbar, Power Resources Manager
SUBJECT: Electric and Solid Waste Rate Surveys
Summary: As part of the public heatings to consider rate adjustments, the City Council
requested staffto provide additional rate comparisons to other utilities.
.
Recommendation: Information only.
Background/Analysis: On September 6, 2005, public heatings were held by the City Council
on the proposed adjustments to electric and solid waste rates. As part of the public hearings,
City Council requested staffto provide additional rate comparisons to other utilities.
An update to the July 2004 solid waste rate survey will be presented at the meeting. The electric
rate comparison requested to Seattle City Light will also be presented at the meeting.
N:\UAC\OriginalkRate Survey.doc
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