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HomeMy WebLinkAbout2001-03-10 Utilities Advisory Commission Summary Minutes CITY OF PALO ALTO UTILITIES ADVISORY COMMISSION MEETING MINUTES OCTOBER 3, 2001 ROLL CALL _______________________________________________________________ 2 ORAL COMMUNICATIONS __________________________________________________ 2 APPROVAL OF MINUTES ___________________________________________________ 2 AGENDA REVIEW AND REVISIONS __________________________________________ 2 REPORTS FROM COMMISSIONER MEETINGS/TRIPS ___________________________ 3 DIRECTOR OF UTILITIES REPORT ___________________________________________ 5 NEW BUSINESS ____________________________________________________________ 7 ALTERNATIVE EMERGENCY WATER SUPPLY OPTIONS STUDY ______________ 7 NCPA INTERCONNECTION AGREEMENT UPDATE __________________________ 19 VOLUNTARY COMMERCIAL TIME OF USE ELECTRIC RATES ________________ 27 FY 2001-03 DEMAND SIDE MANAGEMENT AND PUBLIC BENEFITS PLAN _____ 32 STRATEGIC PLAN PERFORMANCE MEASURE REPORT ______________________ 35 NCPA COMMISSION REPORT _____________________________________________ 38 TANC REPORT __________________________________________________________ 38 LONG TERM U.A.C. AGENDA _____________________________________________ 39 APPROVE PRIMARY OBJECTIVES FOR ELECTRIC PORTFOLIO DEVELOPMENT 42 UAC MINUTES 10/03/01 ROLL CALL Chairman George Bechtel called the meeting to order at 7:30 p.m. Also present were Commissioners Dick Rosenbaum, Richard Carlson, Rick Ferguson and Dexter Dawes. Bern Beecham (Council Liaison) is in attendance. Bechtel: All commissioners are present including our Council Liaison Mr. Beecham. ORAL COMMUNICATIONS Bechtel: Next item on the agenda is Oral Communications and members of the public are invited to address the commission on any subject not on the agenda. Anyone wish to speak tonight? I have no cards and there’s no indications so we’ll move to the next item which is Approval of Minutes of the Utility Advisory Commission held on September 5th, 2001. APPROVAL OF MINUTES Bechtel: Any comments or corrections to the minutes of September 5th? Being none, do I hear a motion to approve. Ferguson: I move to approve. Bechtel: Mr. Ferguson. Second by Mr. Rosenbaum. All in favor of approval of minutes please indicate “Aye”. All Commissioners: “Aye” Bechtel: Approved unanimously. AGENDA REVIEW AND REVISIONS Bechtel: Item #4 Agenda Review and Revisions. We have just one change unless Commissioners wish to make other suggestions, but to request of Mr. Kirk Miller, we would like to move item #5 under new business, Alternative Emergency Water Supply Options Study up to the first item under New Business. Kirk has an appointment and then has to leave at 8:30 so if there are no objections to that, we will move that item up. Any other comments on the agenda? None, then we will move to item #5, Reports From Commissioner Meetings and Trips. UAC MINUTES 10/03/01 REPORTS FROM COMMISSIONER MEETINGS/TRIPS Bechtel: Last week, 3 of us, three Commissioners had the pleasure along with the staff and Bern to attend the meeting of NCPA, the annual meeting in South Lake Tahoe. The meeting was about 2 days in length or 3 days, actually Wednesday through Friday morning and as always, I’ve found these meetings are real interesting. Not only do we hear the status of what NCPA is doing, but we also get a chance to meet with our colleagues in the municipal utility industry. And I’d say, I don’t want to spend a lot of time on this item, but I have asked a couple of the Commissioners to report on least what I thought were the key parts of that meeting. I guess maybe the tone I had was this time was at least we see a trend for utility rates down. The outlook is that electric power is going to increase. We don’t seem to be making a lot of progress in California and getting our act together, but the municipal utility seem to be making a strong stand for our position in the utility world in California. On that note, I’d like to ask Rick who sat in on the legislative session on Thursday morning to give his take on at least the key legislative things that affect the munies. Ferguson: Thank you Mr. Chairman. There are actually some very good write-ups -- bill-by-bill, point-by-point updates -- so I won’t regurgitate that, but the overall report is this. At the State level, the mission of NCPA and its “leg-reg” volunteers mostly has amounted to helping to dodge bullets. There was a general tendency in the legislature, with the support of if not the encouragement of the Governor, to include municipals in all of the reforms and punitive measures brought to bear on IOUs. Fortunately we dodged, I think, virtually all those bullets. Assembly member Elaine Alquist from San Jose was given the NCPA’s Legislator of the Year Award primarily because she was extremely effective in committee work: always identifying the fact that munis were different, munis were taking a bum rap in many ways and munis deserved to be carved out of many of these legislative measures. So the state-level legislative agenda worked out well. There were no affirmative “proactive” wins, but we and NCPA achieved all the defensive objectives that it had in mind. At the Federal level, the world divides into pre-September 11 and post-September 11. The mission prior to September 11 was to push for 3, 4 or 5 objectives. I think predominantly it was to establish a credible threat of legislative action. to encourage FERC action at the regulatory level. By and large that was successful. The new administration made some favorable appointments to the FERC and the legislative back up or back stop that we supported with APPA, I think proved largely effective in moving the FERC action on a number of topics. Whatever was in motion September 11 has basically been frozen. It’s going to be revived with various national security labels on it. But I think the general picture is clear. There’s going to be a much more substantial FERC role in our municipal lives, whether we like it or not. It will come under a new RTO label on the transmission front. It will come in some variation on PUHCA repeal. PUCHA repeal is grudgingly supported by APPA and only to the extent that there aer antitrust protections and comparability protections written in, so that we can have a fair fight with the IOUs. But both the Democratic Bingaman energy bill, and the Joe Barton UAC MINUTES 10/03/01 bill at this point have PUCHA repeal built in. The odds are that if either of these succeeds as the model, we’ll live in a somewhat less favorable but still competitive world, but who’s to say. The Federal world is going to be paralyzed for several months to come. NCPA plans to go back and gear up and restart its activity, and we’ll probably have more to report on that come about the first of February. On the regulatory front, the story at the State level has been the remarkable independence of the California Public Utilities Commission. Just notice the last couple of day’s events: they made a decision 4 to 1 in the face of the Governor’s preferences to basically give rate relief to Edison down south and to turn down the Governor’s bonding proposal. This is remarkable, and as the leg-reg staff explained to us, the CPUC has a very large exemption under California law from any kind of appellate court remedial action. The CPUC has a very powerful and independent life. So we’re looking at a real Battle of the Titans here: The Governor’s appointees on CPUC versus the Governor. It remains to be seen what will happen next at the state legislative level again. The munis have been protected. We haven’t been lumped with IOUs with one exception, and that exception is this investigative power. We’re being put to 100s of thousands of dollars of investigative costs, producing copies of sales documents and so forth. But we’re no longer the brunt of the price-gouging attack by the Senators, by the Governor. So I guess the report is that NCPA has done its job on the legislative front, and it’s a new ball game at the Federal level. Bechtel: Thanks Rick. Dexter, do you want to talk? Friday morning we had a session, a panel session chaired by our Utility Director, John Ulrich, on FERC and bankruptcy, so Dexter, do you want to talk about that? Dawes: Thank you Mr. Chairman. My view was perhaps the most interesting and last on the docket on the convention. With respect to the PG&E bankruptcy, the most important aspect of that for City of Palo Alto is the status of the so-called “topping” contract that PG&E sells to Western, the so called 2948A contract. There’s not a definitive statement in the PG&E bankruptcy filing that was made a week or so before we arrived there as to their expected disposition of that contract but the lawyers on the panel said that there was a rumor or certain of the PG&E individuals had stated that they expected to have that contract continued. If in fact that is the outcome, that would be very good news for Palo Alto. That outcome is coupled with an outcome of the FERC hearings, which I’ll discuss later. The second aspect of the reorganization plan was PG&E’s requesting that their hydro and nuclear generation facilities be transferred to an unregulated subsidiary. Thereafter, all of their debts would be paid in full with interest. Clearly the latter part of that statement has a huge attraction to the creditors committees who are understandably and legally charged with having the maximum amount of the debtor’s obligations paid off. It’s unclear that if in fact this was to happen, in other words, hydro and nuclear to unregulated status, what affect that would have on us in a post 2004, post 2948A contract status and I’ll just leave it at that. The second piece of the puzzle is the activities that the Federal Regulatory Commission. There’s a request preceding the bankruptcy of PG&E that PG&E had that right to unilaterally change the rate they charge Western under the 2948A contract. FERC staff evidently made a strong pitch to the administrative law UAC MINUTES 10/03/01 judge that this was inappropriate and the administrative law judge has passed on an opinion to the full commission that that in fact is inappropriate. As far as PAU is concerned, October 28th is a key date. PG&E has the right to start charging their new rates on that date absent any full commission approval. We understand again through rumor that the full commission may in fact rule prior to the 28th of October and if in fact they do and if in fact the ruling is in our favor or if the ruling parallels the logic of their own staff and the administrative law judge, that contract stands as it was written and this would mean we would enjoy the availability of topping or integrated power through the balance of 2002, 2003 and 2004. It would be an absolutely outstanding outcome if that was the case and we hope that that will be the case and that was the substance as far as I can glean from hearing it. Bechtel: Good. Thank you very much Dexter. Bern, did you want to add anything from your attendance at the meeting? John comes up next so he has his chance. Beecham: Well, I probably won’t say much. As I look out at the audience, I realize that about half of us in this room were at the meeting and the other half work with those who were there. It was an excellent meeting. The attendance was superb even though it was coming after the September 11th event. I think the staff, the NCPA staff, did put on an excellent presentation full of factually informative discussion as well as many entertaining informative discussions, including the fast talker, who we could hardly keep up with as he went through his presentation -- which was excellent. So for all of you who did not have a chance this year to join us, I hope you can do that next year. Bechtel: Thanks Bern. Next item on the agenda is the Director of Utilities Report. The floor is yours John. DIRECTOR OF UTILITIES REPORT Ulrich: Well good evening Commissioners and Mr. Beecham. I have probably the best job in the world. All of you had a great opportunity to go up to the conference and most of you were able to go and those of you who couldn’t, checked in and found out what we were doing. Your reports covered very comprehensively all the things that we did, so I am very pleased that you took the time to go up there, became engaged and worked very hard. As you all pointed out, there were huge moneys at risk both now and in the future and being involved in those activities and decision processes will help us save a lot of money and assure our reliable electric service from this conference to continue to come into Palo Alto. I only have just a couple of quick items and then we a very comprehensive and long agenda and I’d like to get into that. One, I would like to thank you for the support and comments and expansion of our request for the 25 megawatt contract that we’re defining as filling the hole. Several years from now after the conclusion of our present contract with Western, we’re moving forward to put that together and go on to the finance committee and the city council. The other area is we received a proclamation from our state Senator for the upcoming power weekend. If you will indulge me, I will read that and present it to you and then convey it from the UAC UAC MINUTES 10/03/01 over to Mr. Beecham who can then convey this to the city council on Monday night. It will only take a minute and I’d just like to show it to the group. Bechtel: Great thanks. Ulrich: This is a resolution from Byron Sher, the 11th Senate District. Relative to honoring the City of Palo Alto Electric Utility: “Whereas the nation’s publicly owned electric utilities are celebrating public power week from October 7 through October 13, 2001 and whereas the City of Palo Alto Electric Utility has operated electric utility, it says 1898-1900, and whereas the City of Palo Alto Electric Utility provide service to more than 60,000 citizens and whereas the City of Palo Alto Electric Utility has continued to fulfill its obligation to serve the citizens of Palo Alto with reliable and economic electricity, and whereas the City of Palo Alto Electric Utility is responsive to the needs of the citizens of Palo Alto, and whereas the City of Palo Alto Electric Utility has maintained adequate reserves to meet its customer’s needs through the current energy supply shortage and whereas the City of Palo Alto Electric Utility has managed the impacts of an extremely volatile spot market on its consumers. “Now therefore be it resolved by Senator Byron D. Sher, that he hereby commends the City of Palo Alto Electric Utility and the City of Palo Alto for their services to California and the citizens of Palo Alto during the current energy crisis and be it further resolved that it congratulates the City of Palo Alto Electric Utility on the celebration of National Public Power Week.” And if you have a chance, everybody should take a look at this. It’s an incredibly beautiful resolution and with your permission, I’ll convey this to Mr. Beecham. Bechtel: Please do. And our thanks to Senator Sher for recognizing, the fact that he sat here for many years and is very familiar with our role as a provider of utility service to Palo Alto residents. Ulrich: It also gives me an opportunity to convey and thank the staff, some of which are here tonight and many of which you see at every utility advisory commission leading these changes that are appropriate for dynamic utility we’re in and what we’re trying to do so good time to thank everybody for all of that too. I will move ahead and move on to the other new business if you’d like. I guess one, couple of things first. There are a couple of ads that are in front of you that you can take and I always like to show these to you because you’ll get questions from the public and about your energy. This one focuses on Public Power Week and also reliability and a bill insert on public power. I don’t have enough copies, but this is an example of the communications we have with the public. It’s on the back of Info Palo Alto which is the local resource guide published by the Palo Alto Weekly for the year 2001 and 2 and we’re very prominently on the back. So this will be on coffee tables and locations where people can see and get a good idea on the kinds of reliable service that they will receive if UAC MINUTES 10/03/01 they’re here in Palo Alto. And with that, with your permission, we’ll go ahead and introduce Kirk and Item #, it’s listed as Item #5 Alternative Emergency Water Supply Options Study. Bechtel: This is information item only. Ulrich: That is correct. NEW BUSINESS ALTERNATIVE EMERGENCY WATER SUPPLY OPTIONS STUDY Ulrich: Some time back, we’ve been working on the water studies options and felt that this was the time to come back and give you an updated report. And you’ve had a chance to take a look through it and you may find it’s more convenient to ask some questions and engage Kirk and other members of the staff and feeling comfortable with the work that is been done. It’s probably a good time to also thank all of you for taking the time today to dress in uniform (as I am) to go out and look at the physical water system in Palo Alto from the top near Skyline all the way down to within just a few miles, a short distance from City Hall, the water infrastructure that’s here, pumps and storage. So thanks for coming along and you now have all the answers to your questions so I’m glad to fill in details. Bechtel: Well I found it very informative and very helpful and I think touring Palo Alto’s facilities is very useful to us as commissioners. Many of these are hidden away. I would think, Kirk, did you want to make a, set the reason why this report is coming to us first of all? You know, we talked about it, now why is it coming back again? Miller: As you are aware, we made a presentation of the draft version of this report to the UAC in July. At that time, there were a number of valuable questions and comments that the UAC made and we’d like to have the opportunity to present answers to those questions and comments and that’s included in the staff report. Also, we’d like to discuss briefly, a couple of the items in the report with you. Overall, we’re really pleased with the final report and Carollo has done fine work answering important questions and confirmed the value of the improvements that we have planned for the water system. Two items that I would like to outline for you, backing up from that, the questions that we attempted to answer were questions relating to large reservoirs, the connection to Stanford University, the seismic analysis which is ongoing which is a companion piece to this, connection to the Santa Clara Valley Water District where we stand with that and questions on water rights and I’m available to provide any further information on those items if I can. The two items that I’d like to highlight to you; I’ll move to the other mike to do this. Figure one in your report is one that we found very useful when we created it. When we were working on the study in the draft version, we were analyzing all the various options, UAC MINUTES 10/03/01 essentially all of the colors up there except for the white. And we’re looking at it and figuring out what works in moderate droughts or 3 day, 60 day and looking at what types of recommendations or conclusions could come from this. Then between the draft and the final, we put on this white bar which is the 1999 study improvements and what we found was that in all of the scenarios that we looked at, the package of improvements in the 1999 study provided significant value and the 1999 studies are essentially improvements to wells and a number of other improvements and a large reservoir. So that to us was very valuable information to see the value that it provided in these different emergency scenarios. The second piece of information that’s useful, and I don’t have copies of it here, but I believe it’s in the Frequently Asked Questions, which has been provided to you either today on the tour or at other times. What this chart shows is our usage, which are these gray bars for fiscal year 2001 on an average monthly basis. The 2 lines, the lower line is the existing well capacity and the next one is the future well capacity after we do the 1999 improvements. And what you’ll see is that in the winter months here, we’re looking pretty good if we have an outage with our future well capacity. We’ll be able to meet on average our demands during those months. In the summer months, it’s not looking quite so good, but if we look at the demand during a drought year and we use ’91-’92 as this year, what you’ll see is that this dotted line which represents future well capacity provides a significant portion of our water needs on an average monthly basis for all of the months, so that this is very encouraging news, that the improvements that we are planning look better than we had thought when we brought the draft report to you. This concludes my comments and I’m available to answer any questions that you have about the report or the issues that we brought up in the staff report. Bechtel: Thank you Kirk. Questions from Commissioners? Mr. Carlson. Carlson: Yes, I’ve got one question, basically the relationship between the water emergency and our electric supply options. We’re basically going to be primarily reliant on pumps which takes a lot of power and if the transmission lines are cut off in earthquake type emergency, the only local power we’ll have will be the local 5 megawatt generator. Is that enough to run the pumps in other emergency things and is the system isolatable to get the power from over there from where the pumps are? Ulrich: Well the way the distribution system is designed, it’s not designed to take the 5 megawatts from the generator at the MSC and move it specifically to those pump sites. What we’d have to rely on is emergency generators, which the stations are equipped to do that so if we lost power, we would in a priority basis, put in new generators in. That was shown on the tour today that there’s an option for doing that. Carlson: Okay, so we have the generators or we know where to get them quickly? Ulrich: That’s correct. Carlson: Okay great. UAC MINUTES 10/03/01 Bechtel: Other questions? Mr. Ferguson. Ferguson: Thank you. Three questions here. First of all, let me start with the water rights question. I’m foursquare in favor of the emergency CIP spending proposal as I’ve said many times. But it’s been a little over 2 years in my time on the commission that we’ve asked for and made a good case for getting a report, either quick or long drawn out, from the City Attorney on water rights. At this point, my reason for asking for that is simple. I’m prepared to support the CIP proposals that back up this plan. It’s the right thing to do. On the other hand, if we’ve lost our water rights, if in the face of an emergency or if we kicked it in for long-term supply purposes -- either scenario -- and we end up subject to some kind of injunction from other pumpers on the aquifer, then we may have wasted a lot of money. So it’s almost a gating kind of question. I’d like an opinion without elaborate analysis from the City Attorney’s office on whether we’re in the zone where we can win that argument, or whether it’s really marginal. We ought to get that before it’s time to address the CIP budget items for the next year. Miller: Yes, that request has been made to the City Attorney’s office a while back. I’ll accept responsibility for not following up on that and we will be following up on that immediately starting next week with them. Ferguson: That will reach my next question which was, part of our reason for rejiggering the annual schedule here is that we understand staff proposals for budget items are going to start bubbling up in November and December. I assume that some of the items that we talked about for this emergency water supply plan, the year-2 proposals, are going to firm up and they’re going to come in front of us in March for the CIP approvals. Are you prepared to summarize or change what you think are the FY 01-02 spending proposals for the emergency plan? If we like this plan, what are the implications for spending starting in July 1 next year? Ulrich: I’m not sure there’s any difference. The plans that we put together. I don’t see any foreseeable any reasons why we would change, but of course they could we’re into discussion about the storage for example and many of those items require land use rights that we’re working on those. Ferguson: And that leads to my last question. I kind of restated one of the Paul Johnson questions and it came back with my name on it. This time, I’m satisfied that from an engineering standpoint, the staff and the consultants have addressed all the reservoir options and we’re looking at a pretty good engineering conclusion. So I’m not worried about the engineering analysis. I am worried about the political risk of making a big land use decision on the choice of reservoirs. I know we don’t have a deal with Stanford. There’s lots of things that still have to be done behind the scenes and that again, is understandable. But I sure would hate to have a multi-million dollar budget proposal surface when we’re trying to execute on the plan. We’re trying to get our supply, our 30 day supply in place, and then lose 6 months or a year in city debate about whether our reservoir site was wise or not. One of the reasons why Paul brought this up and the UAC MINUTES 10/03/01 component of his reasoning that I share, is that I don’t think there’s been a headline. I don’t think there’s been an invitation, a really clearly-defined invitation for public discussion about where we put in an extra multi-million dollar reservoir in town. That’s just land use politics and land use debate. By ducking that issue, except within the confines of a UAC meeting, I think we may be risking delay at a time when we’re not as well prepared to afford it. So, is there a way to raise the reservoir choice question before the public takes some shots. Can it take some hits, take some debate on that outside the UAC, and kind of bleed off that risk ahead of time, before it’s time to commit money? Thanks. Ulrich: I guess on the latter, just a brief comment. It’s maybe naive on my part, or maybe it’s your choice of words about the debate or the public discourse on this. We’ve selected in the study and it’s been out for some time and there’s been communication with Stanford about locating the underground reservoir on El Camino Park. We’ve had recent discussions with them. None of those discussions have had a context of debate or “is this the right place to put it?”. It’s been more in the land use and giving Stanford an opportunity to look at it and look at it in relationship to their long term plans and as Stanford has pointed out, they have a number of other issues and discussions of land with the City of Palo Alto and their preferences to do work on those in some level of order and not move and make commitments on things. But I’ve not had any comments back about a debate and that I think we’ve been able to show or in the process of doing that, we stand for the value of this particular storage is significantly high value to Stanford because of the housing and of the shopping center. That is the primary beneficiary of this increased emergency supply. So unless you have some area that we need to focus on that we haven’t considered we have not gone out and put a plan B together and working this in parallel with it or at this particular point. You may want to have some addition discussions about this or we can come back to it at a later time. Ferguson: I have one other comment, but maybe first, Commissioner Rosenbaum. Bechtel: Dick? Rosenbaum: At the July meeting, we put together some sort of a motion asking the Utility Director to work with the Mayor to set up a meeting of the Stanford Council Liaison Committee to discuss the alternative to the El Camino Park reservoir involving the interconnection of the Stanford and Palo Alto water systems. In the material presented to us, there’s no indication that that discussion took place, rather there’s discussion of John meeting with the significant Stanford people to discuss an El Camino Park reservoir. What happened to the original idea? Ulrich: Well the original idea, I’ve had discussion with them, but as I point out, part of negotiation is doing such that. I have not come back and talked publicly about that. I think Stanford needs to think about it, but in general terms, they’re not particularly interested in those kinds of alternatives and they’re interested in other things unrelated to what we would like to do. Our focus has been more on the storage as the original UAC MINUTES 10/03/01 proposal has, but because I think the objective is to get the project done and so we’re working that area. Rosenbaum: At some point after we finished our discussion, I would like to propose a motion to once again to further our role as advisors to the council with respect to this issue. Bechtel: Okay, thanks Dick. Other comments on the Alternative Emergency Water Supply Options Study? Mr. Dawes. Dawes: Yes, I too share Commissioner Rosenbaum’s puzzlement as to why the write up in the summary of the Alternative Water Supply Treatment Options spoke only about asking about digging up El Camino rather than interconnecting the system which was our suggestion. And again to simply reiterate that... Ulrich: Excuse me. I thought I said that I had done that and they had no interest in that. Dawes: Okay. It just wasn’t, didn’t get included in the write up. Ulrich: That’s correct. Dawes: Okay. I wanted to discuss briefly the Santa Clara Water District connection. I think to lead off with this. This is an excellent package. It satisfies our needs and is not unduly expensive. I’ve been attracted to the Santa Clara Water District idea not in the way that evidently they think about it, and I wanted to query the staff to see if there were any options that might appeal to them and to us. As I looked at the pluses and the minuses as in the write up, certainly the pluses, they evidently have indicated they can go up to 9 million acre feet a year for Palo Alto roughly half of our output or requirements which is more than the wells would provide us after we had made our investment in it. On the downside, it’s they proposed it as they would finance it on a take or pay basis so we’d be looking at the need to supply our citizens with water of inferior quality which we all have commented on from time to time is not something that would be politically palatable is too strong a word but it would cause some discomfiture to some of our citizens. But I wanted to ask whether or not there had ever been a proposal made to Santa Clara Water District to the effect that an interconnection is a situation which could benefit both parties in an emergency. Think of it as an emergency interconnect only. One in which Palo Alto would pay for it instead of Santa Clara Valley. We would not be obligated to take water from it. It would be like our well rehabilitation expenditure of roughly similar proportions. We’re going to be spending a lot of money on wells but we don’t expect to draw on them except in an emergency. So from that respect, the money versus the outcome is quite similar in my view and the commitment would be if a major emergency such as an earthquake and that seems to be on the tip of most people’s tongue as the most likely problem, a big earthquake can take out both systems but the chances are if one was fatally injured for a period of time, the other might not be and it might be of attraction to UAC MINUTES 10/03/01 that district to have a stand by supply where we would be available to swap water to them or them to us under emergency situations. That’s the first issue. The second issue is the issue that we would be cut back in a drought situation and I don’t have the level of knowledge I should have asked during our tour today about drought conditions and water wells but the underlying assumption is that water wells will produce as much water during drought conditions as they do during non-drought conditions and therefore there would not be a counter-balancing problem here with wells versus the Santa Clara Valley, so that would be the second question if you could address those issues. Bechtel: Jane Ratchye is coming to the podium to answer the question. Ratchye: You had a long series of questions about the Valley Water District options and some of the pros, I agree with you, we can get a lot of water from them, it’s a different source, it’s accessing a different source. We’re 100% dependant right now on San Francisco. I don’t know if you recall the price tag on that extension. It’s about $14 million, so it’s a very expensive option for us and whether the Valley Water District financed it or we paid for it, it would be about the same price. They’re not going to make money on that, so that price would stay the same. So it’s a very expensive option if it’s only for emergency. The other thing is if there is an emergency that’s a major emergency, it’s not clear that that source would be available. If it was such a big emergency that San Francisco System was having a big outage, hopefully the District’s system is in better shape than the PUC’s, but it still very easily can have similar problems. There already is an interconnection now between the Valley Water District’s main transmission lines and San Francisco’s PUC anyways now. So in that presumably if something happened to San Francisco System alone, we can get, the whole PUC system could get water from the Valley Water District. Dawes: I hadn’t realized that so you can just stop everything there if you want to Jane. I was not aware that there was an emergency back up system in place as we spoke. Ratchye: It’s just recently been completed. Dawes: Okay and I just want to go back to the money side. My point was we’re spending $12-15, 16 million on the well rehabilitation. I see these 2 amounts as being basically pretty close to each other and both serve the same function, in other words, we’re going to invest in our wells, but we’re not going to take any water out of them unless we have an emergency. Ratchye: I believe the CIP cost can be broken down. It’s approximately $5 million for the reservoir at El Camino Park. It’s $3.5-4 million for the rehabilitating the 5. And about $2.5-3 million for the 3 new wells. So $14 million is still quite a bit over that and if you wanted to get the full value of spending that money, you’d probably want to take the water all the time, but then you’re talking about the other con you raised about the water quality is not comparable to the PUC’s water. So we just see it as not a great alternative for water supply and not a great alternative for emergency. If it was cheap, it would great to have another connection and access to a different source. It doesn’t turn UAC MINUTES 10/03/01 out to be cheap. The only way it’s possible in my opinion to be a good alternative and we will pursue this when we look at water supply is to do it jointly with Purissima Hills and Stanford. We could split the cost of the extension somehow. It’s conceivable that they would want a larger portion, for example, and they’d pay a big part of it and we’d be maybe $2 million or $3 million. At that point, it would look very interesting from a little additional emergency value and for water supply in a drought or otherwise. Bechtel: Thank you Jane. Ulrich: I think that one of the problems is that we went through this about, it’s been a little over a year ago, and the correspondence with the water district is that old, so we’re a little fuzzy on the numbers, but I thought all of that was shared back during the analytical process on where we or ended up making the recommendations for the wells. And as you know, if we pump water from those wells, then we are subject to and would pay the pump tax back to the county and as the pipeline, if it’s installed and we don’t use any water or if we use water, we would have caring cost, cost of ownership on that pipeline so analysis, I think, concluded that we would that it was better for the wells because one, the wells are here local, it wouldn’t be subject to what may happen if there was a problem with the Hetch Hetchy line could affect the line that is installed from the water district. So I think we went through all that analysis and be pleased to bring that back if you’d like to look at that again. Dawes: No, I’m prepared to support the conclusions. I don’t want to be a dead horse, but there were these issues that I thought would be useful to lay in front. Ulrich: That’s the purpose of this meeting is to take and make sure those horses are taken care of. Bechtel: Other questions? Mr. Ferguson. Ferguson: Just my final comment. I do think between now and the time we get the first drafts of the CIP proposal on this, it would be worth sending out a press release. It’s probably not worth a special study session with the council or the public, but let’s step up to the fact that we’re talking about renovating the wells and creating a reservoir. Defer it until you’ve had your next couple of rounds of negotiations with Stanford. I understand that has to happen first. But I do think that it’s important to raise that up and to invite some comment from the public before its cast in concrete in the CIP proposals. Better to err on the side of raising that earlier rather than creating delay later. That’s all. Thanks. Ulrich: As I recall and Kirk reminded me that that type of communication is built in to the end of the plan so that we do do all of that. I would like to point out one other area that you have not brought up and it is a discussion that is being held with Stanford and that is the use of reclaimed water. As you recall, that was on the table a number of years ago and there was a number of reasons why that wasn’t an economic solution. Well it’s back now and I just want to point out the discussions with Stanford are far broader than just trying to solve the issues that we have. There’s a need to try to fulfill some of the UAC MINUTES 10/03/01 things they’re interested in doing on a long-term basis. They’re very aware of water. They’ve done a lot of studying in that to look out for their needs and they’ve, as you well know, they put in their own emergency storage and have taken care of their 8-hour emergency needs. So we have to find things that are in their interest in the long term at the same time it’s trying to help us out. So those are not being done with just one or two meetings. They have to take a little bit of discussion. Bechtel: No other. Mr. Rosenbaum. I’d like to wrap this up soon if we can. Rosenbaum: I had indicated that I was prepared to offer a motion. You know, speaking of horses, dead or alive. I guess I’m operating under the assumption for lack of information, otherwise that if Stanford would have come to us and said look why bother digging up El Camino Park, why don’t you just interconnect to our system and maybe we can do something with your Mayfield Reservoir to make up for any lost capacity. We’d say that’s a good idea. Ulrich: Well maybe we should sit down and talk about it. Rosenbaum: Alright. So I’m operating under that assumption, but the problem is that, at least at the staff level, there doesn’t seem to be any interest in doing this and that’s precisely the situation where you want to get public officials involved and that’s what I was hoping would be accomplished as a result of our motion at the July meeting and that hasn’t happened yet. So let me offer the following motions and see if there’s commission interest. I would move that the Chairman be directed to write to the Mayor and Council suggesting that a meeting with the Stanford liaison committee be held to consider a possible interconnection between the Stanford and Palo Alto water systems that would eliminate the need for an El Camino Park reservoir. Bechtel: Do I hear a second? Dawes: Second by Dawes. Bechtel: We have a motion by Commissioner Rosenbaum for the Chairman to write a letter requesting that further discussions be held along the lines that we discussed. I’m going to paraphrase Dick along the lines we had talked about earlier in one of our previous meetings. Discussion on this motion? Mr. Carlson. Carlson: Yeah, I would like to hear from the staff about whether this potentially means delay, because we’ve been talking about this long enough and I’m just concerned that we move forward. As long as the two tracks are going parallel. What I am concerned about the potential delay implications. Ulrich: Well this is, I hadn’t had a chance to think about it. I’m not aware of a delay that’s taking place. I think things are moving along so you’re probably, you obviously have a different position on how to get this accomplished looking at it from a political view as opposed to the staff’s moving ahead and working on it. My way of doing things UAC MINUTES 10/03/01 is for the staff knowing exactly what the objective is. We’ve laid out a plan and we’re moving towards it and I think you want to do this, I’m paraphrasing back, in a much more political environment, whereas, staff works more typically in a environment of trying to find needs and letting people get those out in an environment where they feel comfortable telling you the pros and cons of it. That’s how staffs tend to work and we would typically come back and say here’s some ideas we have to work publicly to get things done. For a reason I don’t know, you have either additional information or things that would prompt you to suggest doing it a different way so I’m listening very well to the things you have to say. I’m not quite sure how what happens with the letter and how that, then what happens? Do you have some expectations that after the letter is written, we do something or are you going to let the political environment do that? I’m just talking. I’m just trying to sound out what the, what your long-term plan is because we’ve laid ours out and we’re moving ahead on it. Rosenbaum: George can I respond to that? Bechtel: Yeah, go ahead Dick. Rosenbaum: The letter would be written by our Chairman and what would happen is the Mayor and the interested Council members would say what’s this all about and then they talk to you or they talk to Bern or maybe they would talk to some of us. And based on that, they would decide whether or not it was worthwhile to try to work at a higher level with Stanford people, nothing more than that would happen. If their decision was- no there wasn’t any point to doing that- that would be the end of it and from my perspective, the UAC would’ve fulfilled it’s mission in advising the Council. Bechtel: Bern, go ahead. Beecham: I think that is probably how it would work. The liaison committee is being reconstituted. I look forward to the possibility of being on it and I expect that were you to write a letter, it would go to the Mayor and Council and to the Liaison Committee. I’m sure that the Council would want to consult with the staff to find out what is happening and then would make a decision based on your recommendation and staff comments and where to go with it. Bechtel: Thanks Bern. I agree. It seems to me that that would be the procedure. It could be passed on to committee of the council possibly somewhere in between, but I don’t know if this, in my own view, I’m not sure if this would delay anything. I think that’s what you’re saying John. Ulrich: I wasn’t trying to imply that it would delay anything. Bechtel: I didn’t mean “_______________”, but I think with some of the other questions might have delayed. We are marching ahead with much of the, as a matter of fact, I believe all of the 1999 recommendations are in our CIP over the year, so we are moving UAC MINUTES 10/03/01 ahead at least in our capital budget. So any other discussion on the motion? Mr. Ferguson. Ferguson: My earlier comments went to the fact that there’s a kind of an unexplored zone of political risk here in the decisions on reservoirs. Maybe the right way to say this is that there’s an unexplored area of political benefits and liabilities. The staff has done, I’m sure, a good job of negotiating on the technical matters. The sense of this group and Council member Beecham’s comment is that it’s probably worth running up the flag pole once to see if there’s a valuable political conversation on liabilities and benefits here to be had. So I’d be prepared to support the motion with one exception. I think implicit in the motion is kind of an unstated objective that the alternative here is to eliminate the El Camino reservoir. Maybe we can tone that down and say we’re looking at just an “alternative” reservoir portfolio. I’d be prepared to support it. I don’t think it’s an either/or El Camino yes or no. Ulrich: Can I just ask a clarification question? Ferguson: Sure. Ulrich: Is your objection that you do not want the reservoir, or are you…? Ferguson: No. It’s a question of how to get the reservoir functionality. Is it El Camino? Is it another location? Is it El Camino in a different form with other locations? As I said earlier, I don’t have a problem with the engineering conclusions of the study to date. I think there’s an unexplored dimension of political risk and benefit, and using the committee to do that is something I would support and doing it between now and CIP budget time is the productive time to do it. Ulrich: I guess it’s just more of the naive staff idea in having not been here you know back in the past. You may have a clear objective of what you’re trying to accomplish. It’s over and beyond what the staff is trying to do so it would be helpful, I guess, and that’s probably what you want to articulate in the letter, because as pointed out in this report, it’s my understanding the people who have responsibility for the property and for the development and for the land rights are people we’ve already talked with so you may want to explain what level you’d like to explore so that when we get the letter or when we’re working on it, we understand the objective that would be accomplished that is not being done now and again, that’s not trying to argue you out of it. I’m just trying to understand what you’d like different that is not being done now that would reach an objective that I’m not quite sure I understand. Bechtel: I believe, and let me just state what I believe I heard here tonight, is perhaps Mr. Ferguson doesn’t, possibly doesn’t believe that we have made a final decision or made or put a priority on El Camino as being the first choice, but I believe implicit in what we’re talking about, at least what I’ve heard, is that El Camino is our first choice and that Mr. Rosenbaum would like us to move ahead so that we would have some feeling that whether that is a viable, if that’s our first choice, let’s move ahead, and let’s UAC MINUTES 10/03/01 see if we can get some plan in motion to make that happen over some period of time. Am I responding to both of you? Mr. Dawes. Dawes: I may be getting lost here. I thought back in July, the option was to save roughly $4 million by establishing a relatively low cost connection with the Stanford water system which would obviate the need of a reservoir. It’s not moving it someplace else, it’s getting rid of the damn thing. So that’s where I’m at and that’s why I seconded the motion. Bechtel: We’re in a brief discussion here. With the motion, I believe, Dick, do you want to restate your objective for the contents of the letter? Rosenbaum: Clearly the major objective is to find a less costly solution to the emergency requirements in pressure zone 3. And the explicit way in which this would be accomplished is by not spending $5 million on that reservoir. So I’d be happy to make the language more general, in fact, I’ll suggest different wording here. I move that the Chair be directed to write to the Mayor and Council suggesting that a meeting of the Stanford Liaison Committee be held to consider a possible interconnection between the Stanford and Palo Alto water system that would provide an alternate less costly solution to the pressure zone 3 emergency requirement. Bechtel: Well stated. Any other, any comments? Dawes: Second. Ferguson: I like it. Bechtel: Thank you. I think we have clarity on what the motion now says. Comment from staff? Being none, we’ll. Ulrich: I think I understand what you’re doing, but I think well, I guess I’m hesitant you know one should not say something unless one’s real clear. I think I understand what you’re trying to do. I think there’s a whole bunch of, there’s a number of pieces of information that you either need to be reminded of and we need to go back and look at the study, because a number of these things have already been looked at. Staff believes that storage is our #1 idea. We did not understand that the objective was to save money over the preferred objective and I tend to think that what you’re saying, correct me if I’m wrong, because I still hear is that you want to get the same level of reliability at a lower cost by using something at Stanford has to be able to take care of the 8 hour emergency without going into putting the storage in El Camino Park. Bechtel: I think that that is correct. Let me say you said that they weren’t interested in interconnection. You said that earlier this evening. I think what we’re saying, at least I think believe Commissioner Rosenbaum’s interest is if we go back with a proposition, that we’re trying to save money in this, would there be even better interest and perhaps we can formulate other arguments that would be a mutual interest to look at an UAC MINUTES 10/03/01 interconnection without just flatly denying it? I believe that’s what the objective is. Mr. Rosenbaum. Rosenbaum: Yes. Bechtel: Any other comments? Mr. Carlson. Carlson: Yeah, I’m concerned about this one because I’m, I think a reservoir in the city is the most, is the least risky way and the most reliable way to meet an emergency and my concern is that we’re chasing a will of the wisp, something that Stanford really isn’t very interested in and if this means, I just fear, my instincts say all this is going to do is delay the key thing we need to have a more reliable water system and I see a lot of risk and I don’t see much gain here. What I think we hit the staff with something so quickly that they’re not sure about the implications either, but my instincts say this looks like a significant plan and unless I know more, I don’t think I can support this. I might be the only one here, but that’s the way I feel right now. Bechtel: Mr. Beecham. Beecham: From what I’ve heard of the motion, I don’t see anything in the motion that delays the staff from taking any action that they may otherwise be planning to do. Carlson: Okay. Bechtel: I think we heard comments from all the commissioners. We’ll take a vote on the motion by Commissioner Rosenbaum for the Chairman to write a letter to the City Council requesting a meeting of the Liaison Committee, Stanford and City of Palo Alto Liaison Committee, for possible interconnection agreement or words to that effect, as a lower cost alternative to storage. Rosenbaum: Mr. Chairman, I’ll present in writing, the exact wording. Ulrich: May I just. I’m sitting here, I think I understand what you want to do. The next step, I’ve now moved on to the next step assuming you agree to do this, are you suggesting that we go back and do an analysis that looks at this specific idea because when you sit down and have a negotiation, you need to know what costs are involved and what we’re trying to gain from this. So at some point, there needs to be, I think, a communication that explains what you’re trying to achieve in a more technical detailed way so that either we go and look at this type of design, so we understand what you’re trying to accomplish in this, so that when we have the meeting and when this takes place, the staff can clearly represent what the view that you have. Bechtel: Well I would assume in the process we mentioned earlier is that the letter would go to the Council, the Mayor, Council would discuss this with you and you can at this point, whenever this comes to you, would have had some idea of how you need to handle it, what resources, what studies you would need and that would come back, either come UAC MINUTES 10/03/01 back to us or the Council would go directly to the meeting based on your recommendation, so that’s presumably how I see it would happen. Is that the? Being no other comments, should we take a motion, a vote on the motion? All in favor say “aye”. Opposed? Carlson: Nay. Bechtel: We have 2 “Nays”. Bechtel and Carlson voting “Nay” and the other members voting “aye”, motion passes. NCPA INTERCONNECTION AGREEMENT UPDATE Bechtel: Next item on the agenda. I’m very pleased that we can have Don Dame make a presentation to us. Don is Assistant General Manager of NCPA and Don, as you heard from those of us who attended the meeting last week, we’re very pleased to be part of the organization, and we’re very pleased to hear you give us an update on the Interconnection Agreement- NCPA’s Interconnection Agreement. You briefed us last week on it. I think it’s a very interesting item and I think the rest of our commissioners would very much like to hear you. So welcome to Palo Alto. Dame: Thank you Mr. Chairman, Commissioners, Mr. Beecham, Mr. Ulrich. It’s a pleasure to be here; and just to pick up on the note of the NCPA Annual Meeting last week, we certainly appreciate Palo Alto’s attendance and participation at that function. I’m going to give you a little bit of an update beyond where we ended up last week. There’s no firm answers regarding the Interconnection Agreement, but we have several options we’re pursuing. So here we are at October 3. We’re going to talk about our IA past, present and future. The IA is really a utility acronym for Interconnection Agreement and it is the contractual arrangement whereby the City of Palo Alto and 9 other NCPA pool members inject power into the system and then in turn, get power off of the PG&E grid to its local distribution system. The 3 areas I’m going to cover: 1) What is the IA? 2) History and current status, and 3) What are the options that we’re pursuing right now? In conjunction with, what actions might we expect the UAC to take over the coming 5 to 6 month period? Somewhat diagrammatically, the red part of the grid here represents the PG&E backbone transmission system. It’s very difficult to see, but the generation that you own, the contracts that you own, come into that grid and basically are taken out by the City of Palo Alto, essentially, here at the Ravenswood substation here not too far from this site. Other contracts and assets that you participate in include the California-Oregon Transmission Project which allows you to transport power from COB or the California-Oregon Border into the PG&E grid, and you also have a small amount of transmission on what we call SOTTS or the South of Tesla Transmission System, which gives you a small amount of transfer capability between the PG&E grid in Southern California. We also have access by way of this arrangement to transfer power between and amongst SMUD, TID and UAC MINUTES 10/03/01 MID and Roseville, all of whom are direct connected to the Western Area Power Administration grid. Now sometimes we inadvertently think of a Interconnection Agreement as simply a way to send and receive power. When we negotiated the Interconnection Agreement with PG&E, which resulted from lots of litigation, lots of activity at FERC and lots of expenditures in the part of NCPA members, it really defines the mutual obligations in membership and utilization of the grid. Not only do you get transmission service, partial requirements transmission service, interruptible transmission services, all the receipt and delivery functions that we may need, but you also get partial requirements power, maintenance power when your plants go down, emergency power when a plant trips, short term firm power in a situation when you don’t have enough power to otherwise meet the load. Not only did PG&E supply that to us, but we also supplied that to PG&E. These are mutual obligations. Also, we received a lot of what’s called ancillary services, station service reserves, spinning reserve capacity reserves, what we call black start capability if the plants go down and curtailment power service. This is all somewhat changed as a part of the 1890 and deregulation in California, but we are still being served under what’s called an ETC, an Existing Transmission Contract, which is set to expire pursuant to a filing by PG&E next April 1. Now prior to 1998, again to get to these mutual obligations, we planned, essentially, on the same basis as PG&E. We had 15, approximately 15-30% excess capacity over the last 10-15 years. PG&E had that. We had that. That provides extra capability during the hot summer days that we have in the Central Valley and also provided for if a transmission line should fail or a major power plant should fail. We could keep the lights on without interruption. We had the right to add and subtract interconnection points for new load and new generation. We had what is called a Deviation Band whereby we had to operate very, very close to what our load is. We didn’t perform what’s called a Control Area Operating Function. That’s the real-time function that was formally provided by PG&E, but is currently provided by the ISO where power supply and the supply demand are actually set to be equal on a minute-to-minute basis. We also had the obligation to give a binding forecast to PG&E, what we thought our loads were going to do and we had the obligation to pay for sufficient transmission to meet those projected loads. Likewise, PG&E had the counter obligation to build sufficient transmission to meet those projected loads. Currently for all of NCPA pool members, the average cost for pre-1998 services were about $4.50/megawatt hour. That’s a little less than a half-cent a kilowatt hour for all the transmission related services received from PG&E and in conjunction with Western Area Power Administration, the cost of California-Oregon Transmission Project and the cost of the South of Tessla Project. I’m told by the staff here Palo Alto that your cost is about $4.00/megawatt hour, a little bit less than that. A lot of it depends on the particular resource position and location of the member. Well where are we right now? PG&E on August 30 of this year filed at FERC a termination of the IA to become effective April 1 of 2002, approximately 6 months from now. We have replaced the Deviation Band. We’re working in the inbalance energy market just allows us a little more flexibility without the potential for a demand penalty. UAC MINUTES 10/03/01 We’re paying the ISO’s GMC, or Grid Management Charge, which is about $1.25 as we speak. It’s going to go up to about $2.00/megawatt hour in the very near future starting the next budget year, January of 2002. We currently share reserves and outages with PG&E. That cost including the GMC is about $5.75-6.00/megawatt hour or about 6/10 of a cent a kilowatt-hour. We also have a little addendum to our Interconnection Agreement called the Stanislaus Commitments. That was actually originally part of the Stanislaus Nuclear Plant proposals licensing conditions. That was transferred because that plant did not get built to the Diablo Canyon plant. It essentially was PG&E’s commitment to provide interconnection services to public entities in Northern California through the year 2050 and it was a very, very strong commitment. The replacement IA, or Interconnection Agreement, that PG&E filed on August 30, we responded to and CPA responded to last Friday. We protested that filing and we are requesting that the Federal Energy Regulatory Commission reject that filing as being non-responsive to PG&E’s commitment to Stanislaus Commitments. That’s currently pending FERC action. As a side bar, both the California Energy Oversight Board and the California Public Utilities Commission have intervened on that docket in support of the PG&E position. Well what are we going to do about this? Six months isn’t a very long time from now and interconnection services are essential for all NCPA members. Well one option we could’ve done is we could’ve just accepted PG&E’s replacement IA, which is a very limited transmission only Interconnection Agreement, which would require NCPA and its members to sign Participating Generator Agreements, PGAs, for all its power plants, which in no small measure. Place those plants under ISO, or Independent System Operator, control. Utility distribution companies like Palo Alto would have been required, or would be required to sign what’s called a UDC agreement, Utility Distribution Company agreements, for their loads. One element of those agreements requires distribution companies like Palo Alto to shed load upon ISO demand on hot summer days or when the system is otherwise stressed, so you’ll very much find yourself in a position like you were back in January, February and March when the system was stressed and we were sharing blackouts with the PG&E service territory. We would buy all those ancillary services, the black start capability, spinning reserves and the like from the market place. This is one place where the ISO market has essentially failed. There is really not a very good market for many of these services right now. Some of these services of which we can and would be able to sell, provide. The total cost under this type of arrangement ignoring congestion, the cost that you would have to pay during system stress when the transfer capability or the transmission capability into Palo Alto or into the Bay Area was insufficient to meet the load in the Bay Area without running high cost generation plants in the Bay Area, would be about $7 to $9, maybe $10, a megawatt hour. Bring this up to about 8/10, 9/10 or perhaps 1 cent a kilowatt-hour, almost a doubling of what we pay now or maybe a 60-70% increase depending on the particular entity. Not something that you couldn’t withstand if there were absolutely no alternative to this, but not a cost you would welcome to incur. Some of the issues we have with the ISO right now is we have very little control over the ISO’s cost and we have very limited influence over what they do. We have concerns about comparability of service. Do public agency customers get treated the same as invest your UAC MINUTES 10/03/01 own utility customers in terms of receipt of ancillary services and transmission services? Do transmission upgrades, XM is an acronym for transmission, do transmission upgrade decisions get made objectively so that public power agencies are ensured to receive fair treatment with the invest your own utility customers and facilities required? And again, as I mentioned earlier, there’s a lot of uncertainty regarding congestion cost and load shedding. If we have to do this, we can do this, but that’s not the option that we’re pursuing right now. The second option, some of these options I’ll get to in the conclusions, are not mutually exclusive. The second option is really to litigate this replacement IA. Again, we have focused on the Stanislaus Commitments and we have requested that FERC reject this filing. While simultaneously pursuing this at FERC, we are working on the possibility of extending the existing IA under what is called the TAC settlement proceedings. TAC is an acronym that stands for Transmission Access Charge and that’s what all entities in California will pay to use the transmission grid. There’s going to be a meeting in Washington DC at the end of October. PG&E, in conjunction with Silicon Valley Power and NCPA in representing of the pool members, are the only ones that have not reached an agreement to extend the IA in a way that would allow this TAC settlement to take place, and FERC Judge Wagner is very much a proponent of having this settlement occur. We may have some leverage there. Another place we may have leverage is under the bankruptcy proceedings. Palo Alto has been intimately involved in those proceedings and there’s a possibility that we may be able to trade some limited support for certain aspects of PG&E’s proposed bankruptcy outcome in exchange for potentially some kind of an extension of the IA or some type of more favorable commercial terms. We would like to avoid all non-GMC, non Grid Management/ISO Charges. The ISO tends to bundle up a lot of costs in what’s called a Neutrality Charge in the unaccounted for energy charges. Very, Very difficult to sort those out and you have a tremendous amount of exposure to costs that get embedded in those accounts. Another thing we may do if we’re not successful in getting FERC to reject this filing, we expect an action that may take place within 30 days, is to pay the cost that PG&E thinks we should pay starting next April 1st without changing the existing IA, give them more money and pay that more money subject to refund. One of the issues that we have here- litigation is not free. It’s very expensive. We’re not certain of the outcome. The refund possibility can give us some operational difficulty if we were to have to file signed UDC agreements and PGA agreements. In other words, once you sign those agreements, you can’t go back in time and unsign those agreements. And another thing is PG&E would still be our scheduled coordinator. They still submit our loads and resources under the existing IA to the ISO on our behalf. We met with the 3 people from the ISO staff last week during our annual meeting and another possibility that we are pursuing is a backstop. That’s something that we call ISO light. We would avoid signing the PGA agreements, the UDC agreements and the PTO agreements. PTO agreements are Participating Transmission Owner Agreements. Northern California Power Agency would be the schedule coordinator for the 10 pool members and we would submit balance loads and resources to the ISO without PG&E UAC MINUTES 10/03/01 being in the middle. We’d maintain our Western flexibility where we can schedule, essentially, 3 times an hour and we would pay the appropriate ISO charges. Would our cost go up? A little bit but not the same as full ISO participation. Some of the issues here are: Can we achieve this in a less than 6 months timeframe? The ISO has a lot of problems of its own over there right now. They’re not paying a lot of their bills. There tends to be a management vacuum. We may not get the attention we need to do this. We still potentially have some congestion exposure. We’re not sure how firm our transmission will be and we certainly don’t think that’s our longest-term buyable option. In a longer-term perspective, and one that this commission will likely see again over the next several years, is the possible establishment of a separate control area. For those entities like SMUD and Redding and City of Roseville, who are directly connected to the Western grid, establishing a separate control area doesn’t have quite as many as the complexities as it does for NCPA members that are embedded inside PG&E’s grid like the City of Palo Alto. Technically all those problems can be solved. You still have to have the contractual interface with the other control area operator. In this case, it would be the ISO. We would also need some type of interim Interconnection Agreement to get us through approximately January of 2005. We could do this probably if we went to all out in about a 12-14 month time frame. There is still the issue of the 2948A however which extends through 2004 and Western Area Power Administration who would likely be the control area operator makes sure, at this present juncture, wants to preserve all the benefits of that particular contract through 2004. This would allow us to control our own destiny and we would share the control area operations cost based on the cost to service basis, which is essentially the way NCPA operates. Our cost gets shared amongst the participating members on a cost to service basis. To keep this in perspective, we did have a consultant look at this. The initial review of this says that we can perform control area operating functions for approximately 30-cents/megawatt hour. The ISO’s comparable charge is going to be approximately $2.00/megawatt hour starting in January of next year and that doesn’t include all the ancillary services. That’s just the cost of the staff in communications infrastructure you need to perform those control area operating functions. Some of the issues are: Can we get the contracts between and amongst the public agencies to put this on the ground? How many people are actually going to participate? And again, how do we interconnect and integrate the what we call the disconnected or discontinuous LDCs that are spread out inside PG&E service territory? In summary, we’re litigating PG&E’s filing as we speak. We are pursuing a tax settlement as we speak. We’re negotiating; we’re starting to negotiate ISO light as we speak. We are exploring control area options as we speak. On the down side here, there’s a tremendous amount of market structural uncertainly out there. We don’t know that the ISO is even going to be around in 6 months. We don’t have a glimmer of what their success or entity might look like. Sometimes as a public power likes to recognize the benefits associated with local control where we can indeed take action when we see fit and pursue the outcomes we want to pursue. This is a little difficult because to some extent, we have a lack of control. We’re reacting to the system here as opposed to be UAC MINUTES 10/03/01 able to going out and with exception of the control area operation set up, we’re very much reacting to the alternatives that are being sent to us in the only way we can through litigation and negotiation. And as always, we always seek member input and advice and council on these matters. And with that, I’d be happy to take any questions you may have. Bechtel: Good. Thank you Don. It seems like whatever we’re dealing with, we’re going to be dealing with higher costs under all the options. Can you, if you look at one scenario or the other, can you sort of give us a feel for what we’re looking at in terms of cost, from maybe the best alternative to the worst case alternative in terms of megawatt hours? Under a dollar to over $4.00 it seems to me. Dame: Well, let’s put it in cents per kilowatt-hour. If you’re paying about 4/10 of a cent right now, I’d say the best of these options would have you in about 6/10 of a cent range. The worst of these options would be in about the penny range on the outside. So possibly a 50% to a 150% increase in the cost you’re currently incurring. Palo Alto’s case is somewhat mitigated at least in the near term, because you have a disproportionate amount of Western Area Power Administration power. So that will tend to mitigate at least in the near term, the cost increases that Palo Alto experiences. Bechtel: Thank you. Questions from other commissioners? Mr. Ferguson. Ferguson: Thank you, Don, for a great presentation. I have a strong intuition here that a good way to proceed for Palo Alto and for NCPA is to postulate that there will be a Western RTO and that this FERC from now until 2004, 2005 is going to be bound and determined to make it happen. That’s powerful momentum. So maybe one approach would be to take that as a given, and say to ourselves “how do we see ourselves fitting most beneficially into that FERC-mandated Western RTO?” We don’t like the ISO. None of us can really predict what’s going to happen to the ISO in the 1-2 year timeframe, but I think we have strong feelings about what the Federally imposed RTO is going to look like. So let’s create a friendly vision of our role, with an NCPA role or some other kind of commission format. How would that work with the newly postulated Western RTO? Make that our given. Lock arms with FERC. Lock arms with the Feds. Lock arms with other players in the Western RTO and cut our short-term deals in such a way that we advantage ourselves best in getting to the 2004, 2005 objective. Rather than doing a short-term optimization of the deal, a deal that looks best for only a year or two years. Let’s take a strategic perspective here, and start fitting ourselves into the Western RTO. I think we’re going to end up there anyway. The administration is not going to change for another 3 years. And there’s a certain logic to it. We’ve been arguing in favor of a more sensible RTO approach. So a lot of commitments we’ve already made out to 2004, 2005 militate in favor of that. Also, we’ve got to change the way we do business when 2948A changes and we’re plugging the hole in 2004. So let’s draw a picture that we’re happy with, based on our best guess on what the world is going to look like in 2004, 2005 -- and make our short-term deals support that, rather than to sub-optimize on what things are going to look like a year or two out. UAC MINUTES 10/03/01 Dame: I have just a quick response to that. I appreciate that perspective. When we were back at FERC 3 weeks ago and meeting with FERC staff, we made almost that same speech with the FERC staff saying that we did indeed support their efforts in forming a Western RTO, the sooner the better in any control area that we would establish would indeed embrace and subscribe established under that Western RTO. We’re kind of caught in two areas here. We’re in the short-term web that we must continue to transact business over the next several years, while simultaneously, and I appreciate the perspective, but let’s be forward enough looking to figure out where we want to be that resolves this issue for the longer term. And I appreciate and certainly appreciate the support of this commission to achieve just that. Bechtel: Other questions? Mr. Rosenbaum. Rosenbaum: Well we all recognize that SMUD is the major public power agency in this area. Are we working with them towards some solution? How do they view the situation? Dame: Actually, we’re working very closely with SMUD. On the initial, approximately 2.5-3 months ago now, we let a small contract for $50,000 to do an initial study on what it takes to be a control area operator. SMUD probably funded about 65% of the cost of that study. Modesto Irrigation District cooperated with us in that study. Shasta Lake cooperated with us in the funding of that study. Lassen Municipal Utility District cooperated with us in the funding of that study. So this is a concerted effort on the part of virtually all Northern California publics. Approximately 6500 megawatts of load are represented that we have actually been studying this for. SMUD has mentioned that maybe 2005 timeline may be a little too far out in the future for them and we certainly welcome to move ahead quicker on this and we certainly fully support SMUD if they want to grab the bull by the horns here and move ahead quicker. But we’re very tied in with SMUD on this and we very much have, I believe, their support. In fact, George Frazier, our General Manager, was meeting with Jan Shorie, the SMUD General Manager this afternoon to actually discuss a lot of the communications on how we let out, so to speak, that we’re exploring this option in a way that appropriately puts it in the positive light that I believe it is. Rosenbaum: I’m glad to hear that. Thank you. Bechtel: Other questions? I believe there are no other questions. Oh, did Bern, did you? Beecham: Are we doing questions or comments at the same time? Bechtel: Whatever. Beecham: I think that Rick, you probably hit the nail on the head. And as you were saying also Don to focus on the long term, which is post-2004, which is probably an RTO in the future. Everything else is full of uncertainties. There’s uncertainties with FERC, we’ll find out more in October at the end of this month. There’s uncertainty with the ISO UAC MINUTES 10/03/01 stability. There’s uncertainty if we can stay out of the ISO because of other players who would want us to be in it. There’s a technical uncertainty in what we can do in the short term. How quickly can we set something up? So with all those uncertainties, the only thing we ought and can focus on is the long run and you are doing that, otherwise it’s kind of a scramble among all these other options to find out which one might pan out for us and so you are covering those bases. The only concern is not letting any of those short term options get in the way of ultimately the long run best option. Bechtel: Rick. Ferguson: Just one final comment, to play back some of the numbers you gave us. It may well make sense for us to craft a short-term deal with PG&E or settle the FERC litigation in such a way that we’re paying, say, 0.8 cents in the short-term interim, if what that does is advance the probability that we can enjoy that 0.3 cent cost that you were talking about in a newly constituted role as part of the Western RTO. So we get the 0.3 cent opportunity from 2005 to 2010 though we pay a little bit of extra tax for only the next 2 or 3 years. That would be a better strategic outcome here. And thanks again. Dame: I agree with that and that’s one of the reasons why we’re pursuing some of those other strategies is so we can buy time to get to the more permanent solution without entangling us in a way that we have a very difficult time withdrawing from. Bechtel: Mr. Dawes. Dawes: Just a question that a confusion on my part. Am I correct in assuming that the control area would be all of the munies including SMUD, the whole 6500 megawatts, so it wouldn’t be just NCPA doing theirs and SMUD doing theirs? Dame: Yes, it would be that the whole 6500 megawatts and the way it’s envisaged right now is Western Area Power Administration would be the control area operator. Western operates three other control areas now, so this is not a new function for them and the SMUD control center would function as the back up control area. You need to have a fully functioning back up control area. So those would be the two primary locations for performing the control operating functions. Dawes: And would their wires be part of this arrangement as well, the SMUD and the Western transmission physical assets? Dame: Yes. Bechtel: Thank you again. Let me just say something about, Bern talked about uncertainties in the future, but I think there is one certainty that there will be change and that change perhaps may be for the better and so thanks again for filling us in and we look forward to, I guess, 30 days or so, within the next month, every month we’re going to have a new milestone of one sort or another. So thank you for coming down to Palo Alto and have a safe drive back home tonight. UAC MINUTES 10/03/01 Dame: Thank you for the opportunity to be here. VOLUNTARY COMMERCIAL TIME OF USE ELECTRIC RATES Bechtel: Our next agenda item is Agenda Item #2, a Voluntary Commercial Time of Use Electric Rates. We can take a break. It’s 9:15. I have a timeline that this next item is projected to take 15 minutes and we can wrap up perhaps at 9:30 and take a break there. Commissioners, shall we move ahead to one more item? Let’s do so. This report requests that the Utility Advisory Commission recommends that the City Council approve the introduction of time of use rates as a rate option available to large commercial and industrial electric customers effective January 1st. And so Lucie has joined us at the table and Randy, so do we have presentation or would you like us to just start asking questions? Baldschun: In the spirit of saving some time, why don’t you just start asking the questions? Bechtel: Okay, very good. Mr. Dawes. Dawes: Good evening Lucie and Randy. This follows, as night follows day, the direction of electric rates and I’m delighted to see that we’re moving forward with it. My only question is the proposal talks about having large users obligated to be on the time of use rates sometime in the future and it makes clear that by proposing in the interim a voluntary program that what will probably is going to happen is that anybody that can save some money moving to a voluntary system will and anybody who’s going to cost more won’t. Since we know what’s going to happen in the future, why don’t we just do it now? Baldschun: I expect you’re referring to the real time pricing comment in the future. Dawes: Right. Baldschun: Well, that’s a question that staff has gone over and between time of use rates is the first step before RTP. Our real time pricing involves a whole other range of issues and implementation. Dawes: Can you explain the difference? Baldschun: Okay. Time of use rates, which are quite common in the United States, they’ve been around for dozens of years, involve charging different prices based on different hours of the day. We would go to Council to approve a rate schedule that would have different prices for Noon to 6 and then from 6 to - there’s a mid-peak and an off- peak. And those prices are set by the Council and they are charged until the next time we have a rate change. The difference between TOU and real time pricing in my mind is that UAC MINUTES 10/03/01 with real time pricing, typically you change the price a day ahead and you don’t notify the customers what the price is going to be or you do it on an even more timely manner, perhaps an hour or half a day ahead. And based on those price signals, customers make decisions on whether or not to shave load and that’s a good pricing signal. As you know right now, our cost are not time differentiated because of our fixed price contracts, so there’s no cost savings to the utility right now by entering into that kind of rate structure, but for the future, post-2005, to the extent real time pricing does make sense, then we might move to that, but there’s no guarantee that we will do that. First of all, we need some progress with time of use rates, which is by itself, a very innovative rate structure. Dawes: My recollection was that, and maybe I read it wrong; I can’t see where my highlighting is. Well I can’t locate it right now but it just seems to me that if we’re going to move in this direction that the voluntary nature, to me it doesn’t resonate and that we should just go to time of day pricing structure with a rate structure that’s approved the Council as this would be and as time goes on, those rates could be modified, changed if depending on how we see the results. Baldschun: Well it is a big change in the way customers are billed and I think we want to be sensitive to the customers’ bills themselves and not invoke or mandate this kind of rate structure for all customers because some customers frankly have legitimate reasons for using power on peak, don’t have the ability to shift and their bills can become quite onerous. I think what we’re going to do is gain some experience with this. We’ve got good load profile data for our system and with this experience, we can predict a lot better what kind of price elasticity’s involved with some of the rate changes that we’ll probably be invoking between now and 2005 and try to determine if it’s an effective DSM tool. I think the real answer to your question is that we want to walk before we run. Our TP is a very complicated, until you mandate it, it’s a very onerous rate structure just to have to mandate, especially given the fact that our cost- we can’t justify it. We can’t tell our customers that we’re going to charge you 5 times or 3 times the peak price compared the off peak price, and oh by the way, our prices that we pay for power is under a 6 term contract. It doesn’t change by the price of day, so there’s a real disconnect between our justification to charge these rates to our customers and the actual cost that we’re incurring. Dawes: Yeah, I can sympathize in particularly with the, I guess, strong probability now that our life will be the same between now and the end of 2004 as we have experienced. In other words, our contracts will remain in place and the same pricing. Beyond 2004, a different ball game and we’re starting to talk about our portfolio and how we’re going to structure that and we don’t have anything beyond 24/7 or at least a quarterly. We’re thinking about our quarterly buys. It just seems to me that it was inevitable and I thought I’d raise the questions. I will certainly support a voluntary program but seemed like a reasonable question to ask. Baldschun: And it’s quite reasonable and we have some reasonable staff here that have asked the same question. But I want to just remind us that you’re going to be looking at several strategies for our long term resources and each of those strategies will likely UAC MINUTES 10/03/01 involve some part of buying of the market, a piece of that, because you’re not going to lock into fixed price contracts for significant amount above our estimated loads. So it’s really that piece that’s going to differentiate by the market. Everything else is going to be fixed. So I’m always thinking, well I have to justify the customer and why I’m going to charge them these rates given our cost profile. Bechtel: Thank you. Rick? Ferguson: Two questions. First leading off with your comment here. Have we talked with customers in this group and do we have a pretty clear picture of implementation, ease or difficulty with them and their willingness to play ball? I like the experimental nature of it, so I support that. And my second question, I’d just like a definition of what is an “acceptable power factor.” You divided the world into power-factor billing and TOU, and how do you define that boundary line? Thanks. Hermina: Yeah, some customers actually asked for TOU and they’ve been asking for it for maybe the last 2 or 3 years. We don’t know whether, of course, they would participate once we see it. We did some analysis and some customers would benefit from signing up and taking this offer and some will not, so we don’t expect everybody, all our large customers, to sign up. Ulrich: I think it’s important to look at this from an acceptance standpoint as opposed to a rule that you have to follow that has all these negatives with it. When you go out and talk to customers, the biggest thing they plead for is the ability to shape their usage around what’s best for their business. And if you give them some time to do that and they think of their business process and the cost involved in doing it, they can work real closely with us on developing a rate schedule that gives them what they need and at the same time, gives it to us. So voluntary is far better. It starts out with a much better relationship. In ?? we have a relatively small number of customers that you can spend the time to work with on this as opposed to trying to come up with a rate schedule that fits whole bunch of people but satisfies very few. Baldschun: On the power factor, the rate schedules require a least 90% power factor and if you fall below 90% power factor, there’s a penalty. Ferguson: So we’re picking up with that traditional 90% figure? That’s our starting point on what an acceptable power factor is? Okay. I like this proposal. It’s like fiber- to-the-home. It’s like green power. We’re responding to a special but real, evidenced customer need and request. It’s part of our strategy. We’ll gamble a little money. We’ll take a few hits, but it’s worth giving it a try, so I applaud the proposal. Thanks. Bechtel: Other questions? I have. Bern, go ahead. Dawes: Are we prepared to offer time of use meters to any other customers that now don’t have it but hear of the program and think they can save money and would want to have one? UAC MINUTES 10/03/01 Hirmina: We actually are going to change them. The plan was to change the meters on the large customers over 500 kW to start with. Right now, we’re going to start with those customers that would be interested and getting on time of use first. Because we wanted to get more information on load data on the customers from you know over 500 kW. Dawes: So if a customer under 500 kWs called up and said, I’d like to be a part of that. I have a lot of my use at night. And you just have to say no not at this time? Hirmina: For now, yes. Baldschun: I think that the answer is that this is like a pilot program. We’ll get a lot of experience from this and we’ll understand the feasibility of extending it to smaller users, smaller commercial and maybe residential someday, but that’s a possibility if this thing is fairly doable to do, doesn’t send a big staff impact in terms of the metering and the billing issues and it’s cost effective to implement it as a voluntary or mandatory basis. In the future we’ll look at that. Bechtel: Bern. Beecham: You indicated that this should be revenue neutral. I assume that if in fact our load is reduced during peak cost periods and we’d lay off our 25 megawatt load a bit better shape, however that might work, that we’d make a little bit of money on this. So it’s maybe revenue neutral but not profit neutral. Would that be right? Baldschun: It’s my understanding that at least until the end of 2004, that we will be in a surplus situation so depending on the market price we could, if the market price goes above our marginal cost, we’ll make some money. Maybe Girish can respond to that if you choose. Balachandran: There is a profit opportunity. It depends on the market and if the market goes, if our load decreases, and we have surplus resources and the market price is high to the extent we have surplus, we’ll make a profit. So there’s an opportunity cost advantage that we could take advantage of. Beecham: I guess I’m not, I know we have a hard price on the 25 megawatts. I’m not expecting we’ll ever make money on that, but our profits will be higher the more we can sell into the market, the more money we make basically. Balachandran: That’s right. The point that Randy’s making is we are making more money selling it to our retail customers right now than we would make selling it outside the city. Beecham: So every kilowatt we save, we lose. And we want to go in this direction? UAC MINUTES 10/03/01 Baldschun: This direction is really something we have to start for the world in 2005. I mean what are we going to stop pushing conservation? There you raise a question which I’m not sure what the answer would be. Ulrich: Well the answer is, we’re not making these decisions in the short run today you’re absolutely right. Two months ago, we would have had a different answer. Any benefits that we would gain would be shared by all the customers. In the sense, when we go back at retail rate schedules and the opposite would also take place. There’s no reason why the cost of doing this program and test and all that can’t be added to the charges to the customers. Baldschun: I think one of the problems we’ve had this year. We’ve seen the mark all over the place and here we are trying to make decisions not for something that’s going to be here for a few days or a few weeks, but something that will probably last for a number of years and yeah right now, we lose some money on the loss of a sale because the retail revenue is higher than our cost, but if you took that point of view and just operated all your decisions over our next 4 or 5 years, I don’t know if we want to do that. I think we have to make some assumptions and the assumptions are that it’s in the long run better for us to have these kinds of programs that reduce demand. Look what happened this summer. We made how much? I won’t go there, but... Bechtel: Don’t go there. Maybe we can move on. Ulrich: I think maybe I can summarize this. What we’re doing is the right thing to do. Looking at the long-term relationship with our customers. Beecham: And I think I agree with that and I do realize now that the marginal cost, the marginal revenue of selling back on the wholesale market is less than what we would be receiving on our retail market so what we do lose on every kilowatt, we make up in volume. And thinking of that, do you have any limits on how many participants you’ll take in? Baldschun: Well we did a worst-case analysis and out of 60 customers, some are going to be paying more and some are going to be paying less and if everybody who is going to save money actually took advantage of it, it would be less than $100,000 impact which is about 1/10th of 1% of our electric revenues so it’s not a revenue issue for us. I’m talking about losing some money but we’re not going to be losing much, at least that’s our projection. Beecham: And I assume that you are assuming that customers who would pay more money under this situation in fact won’t sign up. Baldschun: Correct. Beecham: Okay. Thank you. UAC MINUTES 10/03/01 Bechtel: Any other questions? Otherwise, I’d like to, I’d entertain a motion to approve the staff’s recommendation that we recommend to the Council that we approve a TOU rate plan. Ferguson: So moved. Bechtel: Moved by Mr. Ferguson. Second? Carlson: Second. Bechtel: Second by Mr. Carlson. No lights? All in favor please say “Aye”. All Commissioners: Aye Bechtel: All say “aye” and motion passes unanimously. Why don’t we take a break at this point and then we’ll move to agenda Item 3 which is discussion of DSM and Public Benefits Plan. 5 minutes. FY 2001-03 DEMAND SIDE MANAGEMENT AND PUBLIC BENEFITS PLAN Bechtel: The Council approved a proposed FY 2001, 2003 Demand Side Management and Public Benefits Plan. The staff is provided a summary and then the details of the plan and so we will proceed with discussion of this item. John, do you have a presentation? Ulrich: Excuse me, Tom Auzenne has joined me up here and he’s been responsible for putting this together as you recall some months ago, we discussed where is the public benefit dollars being spent and you recall we had discussion around decisions that were made a number of years ago on some including remote renewables, and so we promised to come back and tell you where the money has been spent and then probably more importantly, new ideas on how to use that money effectively in our current energy situation. How to best use it within Palo Alto. So we’re here this evening to go through that and show that we can have a Public Benefit and Demand Side Management Programs that are focused right on Palo Alto. Do you have anything to say or do you just want to answer questions? Auzenne: I can probably just answer questions, otherwise I’ll just make a speech and you don’t want that. Bechtel: I think the report is fairly clear. I’m looking at the table numbers. There are some great comparisons between what the actual expenses plus encumbrances were and what you’re proposing for this year. And basically we’re looking at a reduction in the number of dollars but that is all well characterized. Comments from commissioners? Mr. Dawes. UAC MINUTES 10/03/01 Dawes: Thank you for coming and staying around Tom to answer these questions. I was, we basically put up $5 million from our reserves to fund a high payback DSM project last summer during the sky high rate period and I assume that those numbers are in the 2001 actual and forecast expenditures and with that in mind, I looked at the 2001-2002 numbers and thought, wow, if we had a special supplement for this last year of $5 million, net that out $1,350,000 coming from the, I’ll call it, the override on the utility bills mandated by 1890. The increase between $1,350,000 to $3,100,000 was very substantial and I wondered, I just want to verify that that whole $3,100,00 was coming out of the state mandated override on all our utility bills. Auzenne: Correct. Basically the source of all of our funds was either the $5 million allocation for the AEEP Program, or the Accelerated Energy Efficiency Program, or our base budget. And what you’re seeing is we actually did not expend at that time, all of the $5 million. So in the budget process, we carried that forward as well, so we’ll be recapturing some additional savings with the unencumbered, unspent dollars that rolled forward. Dawes: Okay, so that includes previously allocated from that rate stabilization reserve. Second question is I had not dwelled upon the fact that we had a water and a gas public benefit fund, all be it small. I’m familiar with the state mandated electric, where does the budget come from for water and gas? Auzenne: The nomenclature Gas Public Benefits was created out of the Gas DSM budget. Let me back it up. In 1996, it was determined that none of our, at that time, Energy Efficiency Demand Side Management Programs were cost effective anymore given the low cost of our wholesale cost and it wasn’t passing any type of test that we could develop. However, that did not accurately reflect the feelings of the community in their interest in efficiency and demand side management, so Council at that time created a new formulation whereby somewhere between .75 of 1% and 1.25% of sales for the prior year were to be allocated for efficiency programs. That was for water and gas and electric and they were all called Demand Side Management Programs, DSM. As a function of AB1890, that essentially took that percentage and increased it to approximately 2.85 for electric and it mandated a change of the name to match what the state requirements were. So then our Electric DSM Program became Electric Public Benefits. We had good authority that the state was going to be doing the same thing for natural gas as well. So in anticipation, we changed the name of our Gas DSM Program to Gas Public Benefits. Well all of that has gone by the way side, but we still continue those programs funded at approximately 1% of sales. Dawes: And that is a separate line item on the bill? Auzenne: Correct. Not on gas. Dawes: So it just is allocated from revenues but not as a separate line item that the customer pays? UAC MINUTES 10/03/01 Auzenne: Correct. Bechtel: Mr. Ferguson. Ferguson: A little mystery question. I’m just curious which projects just barely failed to make the cut? Give me a flavor of what things you left off this list, that were “close but no public-benefit banana.” Auzenne: Electric vehicles for one, as it is becoming a mature, if not a niche technology. The city fleet is already in the process of installing electric vehicles where appropriate, so that’s one example. We’ve reallocated some dollars among Demand Side Management Programs as you see in the body of the text. Something that you don’t see here that I’m still trying to figure out how to do is Water Ultra Low Flow Toilet Program because we are sticking towards what is called Best Management Practices of the California Urban Water Conservation Council and they’ve come out with a strong recommendation that all of their member agencies do that. As soon as I figure out how to do it on my limited budget, I’ll try and do that. Some of it was change as a result of earlier discussions with the Commission. The Remote Renewables obviously was closed some time ago. We are now looking at other opportunities in town and so as we get into program design, these are major design elements without the “t”s crossed and the “i”s dotted, but we’ve heard some of the recommendations of the Commission and the public and Council on all of these issues. Baldschun: I would say that what we’re seeing here is a continuing shift of our Public Benefit Plan to provide more direct benefits within Palo Alto. One point I want to mention too is our Photovoltaic Program. We’re going to continue that. We’re going to continue to have rebates, but I think we’re going to be reducing those rebates, if I’m not incorrect. So you asked what changes and that’s a somewhat of a change in an existing program. Bechtel: Other questions? Mr. Carlson. Carlson: Yes, my question is a link to the previous item. I think within several years a substantially higher proportion of our power is going to be bought on the market, which means we’ll be paying higher prices for peak and that implies that now that we’ve got a little breathing room, to shift both Renewables and the Demand Side Management Programs in the direction of peak shaving. And I want to be sure that’s in the plan because you know we have a couple of years to implement these things and the more we can shave that peak, the better off we are. Is that there? Auzenne: It is there in two ways. One, you saw the beginnings of that with the voluntary Time of Use Program. Once you start establishing a correct price signal, then customers can respond to that. In some of the especially commercial industrial efforts that we’re going to be undertaking, is going to be focusing on customized projects primarily revolving around controls. To my mind, controls are the great untapped resource for a lot UAC MINUTES 10/03/01 of this. With sufficiently robust and intelligent control systems, customers will be able to shift their consumption, to off peak less expensive times, so that is part of my thinking. Carlson: Okay. Great. Bechtel: Thank you Tom. Other questions? This is, does require a vote of the Commission to recommend the action. Do I hear a motion? Carlson: I move that we approve the recommendation. Bechtel: Mr. Carlson moves, motion to approve our recommendation to the Council. Do I hear a second? Rosenbaum: Second. Bechtel: Second by Mr. Rosenbaum. And no other discussion? All in favor, please signal by saying “I”. All Commissioners: I Bechtel: Opposed? Motion passes unanimously. Thank you very much. A good job, I think, of addressing our concerns and of course your astute planning for the future. STRATEGIC PLAN PERFORMANCE MEASURE REPORT Bechtel: The next item is the Strategic Plan Performance Measurement Report. This has been something that we’ve been anxious to see and I think staff has done a great job in putting together a report. This is an information item and how do we want to? Do you want to go ahead and just introduce the subject John and Girish? Ulrich: Well I must confess that I hadn’t realized that one of the key members of our staff, Bernard Erlich, that was, that put this together and has been working with other departments at the last minute was not able to attend. He’s having problems with his motorcycle which he uses for transportation and because of the nature of this as being an information and it’s not imperative that we, well there’s no intent to approve it tonight. We have additional work that we can do within the staff if it’s acceptable to you, at your decision, we could leave this with you and you have it and put it off for another time, next meeting since we have a number of items to cover. Bechtel: That’s agreeable to me. Comments? Mr. Dawes. Dawes: I love it. I just think this is fabulous. What a great start and if you would just let me make a couple comments about it to pass on? I would appreciate it because it’s more with my financial-person hat on that additions that I think would be extremely useful. One: on the annual percentage change in average system rates, if you can have a data box UAC MINUTES 10/03/01 there because the changes are quite small and you can’t really see very well so if you just have the data in the box below for gas and electric and year over year change, it would be very helpful. Secondly, on the financial leverage... Balachandran: I just want to make sure I got what you’ve said. So that’s Exhibit 3? Dawes: Exhibit 3, right. Balachandran: And what do you want there? Data box with actual numbers per year? Dawes: Yes. Balachandran: Okay. Cool. Dawes: On Exhibit 4, Calaveras doesn’t seem to be around and that may be because it’s an NCPA deal. But I think it’s a real liability for us and should be there. I also tend to think of funded debt rather than all debt and this includes all liabilities which includes accounts payable if we owe NCPA for a big billing that’s going to pop up and that’s really not germane to us. We pay our bill every month when we can get them straightened out, so I’d say use funded debt rather than all liabilities on that. And also, I’m not sure if this is gap. You’re talking about debt/equity ratios and I don’t know what our equity is. I don’t know if I’ve ever seen if for utilities. I’d love to know what our equity in the system was. Is it on a cost basis? Is it a replacement cost depreciated? What depreciation schedules do we use? All this impacts what our quote equity is and so a clarification of that would be terrific. And under Exhibit 5, I just put water and waste water question mark. Exhibit 6, the indexes in indicated use have these numbers of .51 and 1.5, I don’t know what they mean. Balachandran: In Exhibit 5? Dawes: Yeah. On the left hand access, it’s not clear under customer satisfaction. Is it individual questions? Is it percents? I don’t know what it is. Balachandran: Okay. We’ll clarify that. Dawes: I think these 9 and 10 are supposed to be in color because poor old Sierra Pacific just went away totally. So the nomenclature is difficult. Couldn’t resist making comments, but they’re terrific. Gosh, a great start! Ulrich: Do we have a motion to? Bechtel: How about a motion to commend the staff? Dawes: Hear hear. Carlson: Amen. UAC MINUTES 10/03/01 Ulrich: Do you have other comments before we move on? Bechtel: Does anyone else have any specific items? No. I think we will bring it back. Yes, Mr. Ferguson. Ferguson: Under the Value of Municipal Onwership, actually two things. There’s an Exhibit 8 cited but no Exhibit 8 appears on the page. Just wondering if you really had another measure in there and dropped it out at the last minute. Be nice to know what that was. But under Value of Municipal Ownership, some additional dimensions to think about. I understand it’s hard to quantify that. Ulrich: Mr. Ferguson, I think what the problem is, it should have been. Exhibit 9 should have been labeled Exhibit 8 and Exhibit 10 should have been labeled 9. Ferguson: So there really wasn’t another candidate measure that just fell off the table at the last minute. Under Value of Municipal Ownership, there are 3 categories that we might put in when there is something of significance. One, is there an activity where we clearly are able to take advantage of our tax-exempt status? Doesn’t always happen. There are continuing big things but there may be new wrinkles from time to time. Another is inter-governmental cooperation that will work to our benefit, whether it’s a BAWUA activity or an NCPA activity or the mere fact that we’re talking governmentese to Western and that works in our favor. And a third one is just outright favorable legislative-regulatory action. So in working out a non-quantifiable punch list there, list of dimensions, consider folding those in. Again, I was delighted to see this. It was more than a rudimentary first cut of development measures. So thanks for a good job. Ulrich: Thank you. Bechtel: I do have one question. Exhibit 7, the units of measurement for SAIDI and SAIFI, if you pronounce those. Ulrich: Yeah, SAIDI and SAIFI. Bechel: I’m sorry? Ulrich: SAIDI and SAIFI. Bechtel: SAIDI and SAIFI. So were the units of measurement for SAIDI and SAIFI are hours or what are they? Ulrich: Scott may be able to answer that. Bechtel: So whatever if. Maybe it would be helpful on many of these. UAC MINUTES 10/03/01 Ulrich: These are used amongst just about every utility in the United States, so we’ll qualify that. Bechtel: Yeah, if you’d just state just a brief definition of what the units are for each of these, it might be helpful particularly for some cases like that. Thank you again. Job well done. NCPA COMMISSION REPORT Bechtel: Next item will be Item #6, the NCPA Commission Report information item. I’m not sure we need to say much about it at this point. Shall we just assume that that item has been addressed already? Ulrich: That would be my recommendation unless anyone has more information from the meeting we attended, because I think in listening we covered all the highlights. Ferguson: Did the Commission take any official votes that we may just want to mention for the record here? I know there were discussions about bankruptcy and strategy and so forth, that were executive-session things, but... Ulrich: Well as you recall on the executive or on the closed session, we discussed in more detail, the view of the OC and what our opinions were as members of the OC and as you can tell from the outcome, we’ve had very favorable participation and expect to continue in that role until we get more clarity on the outcome of the bankruptcy and the reorganization. Would you like the TANC report? TANC REPORT Bechtel: Yeah, that’s Item #7 information TANC report. Balachandran: Just one item that has come up and is going to come up with TANC in the next couple months and it has to do with Path 15. Western had put out a notice for participation for private and public entities. A number of entities responded including TANC and Palo Alto. Non-binding letters of interest. Since then, the private and public entities have come together in a kind of consortium and they’re developing draft agreements. At this point, we have indicated to TANC that we are not interested in investing in this line. We believe the line should be built. But it should probably be built by some kind of RTO kind of organization where the benefits of a line like this are spread over a large number of users as opposed to a few people who may be taking market risk on this. So that’s the direction that we’re headed down. So we want to the line built but we don’t intend to put up money for the long term. It doesn’t satisfy basically some of the issues that, specific issues and risk management for us, so that’s the direction we’re going. Not all the munies in Northern California would have the view that we’re having. UAC MINUTES 10/03/01 Some do. I’ve talked to some people at NCPA and the staff there has a similar view. But this is matter in progress right now and we’ll report to you as we get more information. Bechtel: Thank you Girish. Mr. Rosenbaum. Rosenbaum: Yeah, I guess I’m surprised at the tenure of your comments. A few months ago, there was great enthusiasm for completing that transmission line and everyone was going to cooperate and these little questions of whether we get as much benefit were secondary. Has there been a change in view? Balachandran: I still want that line built. I think having that line built is important for California as a whole. But then the next question becomes how much Palo Alto participates in actually putting money down to get the line built and that’s the question that’s being brought to the floor at TANC right now. So in the past when we had our elected officials go to Washington D.C. we were advocating that the line get built. We were not at the point of saying, “Who’s going to pay for it?” and “How much of a share is Palo Alto going to commit to?” So that’s the distinction. That’s where we are right now. The decision of what we’re being asked for is, “Okay, are you willing to pony up money at this point?” And it’s basically a 30-year investment so that’s where we are. Rosenbaum: I mean, it just seems as if the objection is a generic one that is every agency I assume can make the same statement and look for someone else to pay for it and we might be in the same sort of stalemate we’ve been in for years. Balachandran: That’s precisely the point which is why I think someone like an RTO could be the ISO, could be the State of California, should be the primary person funding this kind of project to get it built because this kind of project has system-wide reliability benefits and we’re talking about all of California. And a small player like Palo Alto would be holding a disproportionate share of costs if we invest in it. Bechtel: If presumably our participation along with all the other users is that we would pay for it through an access charge of some sort so we can make the argument, presumably we can make the argument like that. Yes, we want it, but and we’ll pay for it as we go. Balachandran: Exactly. Bechtel: Any other comments? Thanks very much Girish. LONG TERM U.A.C. AGENDA Bechtel: We have our next item is #8, Long-Term UAC Agenda. We a calendar of our meeting agenda laid out for us for the next year. Basically the purpose behind this was to give us a planning, a year-long planning calendar so John has it up on the screen. As we go through the year, I think we were trying to address several objectives and one of UAC MINUTES 10/03/01 which as I recall was bunching some of the utilities up so we could focus, spend as we are tonight, on one particular utility and cover as many as the issues as possible. That was one objective with putting this together. The other was to take into account, annual Council plan, budget plans and so on. John you want to talk more about this and then may we open it up for comments from the commissioners and then take any feedback? Ulrich: I have very little to say. What I’m pleased about here is that what we’re doing is writing down a plan that we would follow throughout the year and in subsequent years and of course, it can be modified, but it allows all of us to see where we’re going and plan accordingly and I think it’s going to eliminate some surprises and also some items slipping through. So I think the organization of it is good and part of the best part of it is it’s really a plan that all of you as Commissioners through your small committee put together to meet your needs that way you can know when we’re coming forward and you can also add things to it. So I just want to make sure what we got down now is quite clear. Are there more modifications that you’d like us to do now? And make sure this is a living document. Bechtel: My first question is I’m trying to remember what we meant by Council update. I’m going to turn to my colleague on my left, Mr. Ferguson, to remind me. Ferguson: Well, the plan was for the UAC to take a look at the performance of the utility against the strategic plan. We’ve been waiting for months to get some specific measures and we saw them tonight, and that just gave us our very first exposure to how that might work. We’re all pleased at seeing the numbers. The intent was to convey that discussion through staff to the Council. The Council wanted to conduct a similar review and we just wanted to be the rehearsal, one month in advance. So I’m looking at staff, and I guess Bern Beecham is gone, but for a suggestion, what more we can do to help frame that presentation at the nominal November agenda date for the Council meeting? Ulrich: Well that’s my recollection too. Before going to the Council with the performance or taking the budget, we have factored in your review time because I think it’s going to be far more valuable and important to them once we reach those conclusions, say on performance, that you go with us to the Council. It gives you the opportunity, which I think you wanted to do, to give a report to the City Council on activities, rather than just the staff going and saying “the UAC agrees with us on this particular area.” That way it’s a much more logical sequence and when we do go to the Council, it’s real clear about what the performance is based on your judgment of how well we’re doing. Bechtel: Well it would seem to me that if we can have another pass at the measurement report. We looked at just a few minutes ago and certainly we can use that as a discussion tool. You see that’s perhaps the way to approach it? Ulrich: Yeah, the most valuable time I think is to take the end of the year results. One of the things that we have not get firm clarity on is when some of the data is available. The end of the year financial results are not ready at the end of the fiscal year. It’s somewhere in September, October, November range before they’re through and then we UAC MINUTES 10/03/01 have to put that together so if you’re going to give a true report, you ought to have a couple months after the data comes out for your review and then go to the Council so I think the dates you know what I like about November for focus on how well we did is probably a good one. And then tweak that depending on how well we do on getting that, all that information out. Ferguson: Who’s going agendize this on the Council calendar? I’m assuming that Council meant what it said when it wanted a twice a year review. Ulrich: Well the role we follow now is that we meet weekly with all the other departments and put together the agenda so we have an opportunity to actually take this agenda and put it into the City Council agenda a year ahead of time where we plan these all out so they then can be moved slightly depending on some other higher priorities but they get a spot on the official planning document. So that’s part of the power of this. They know it’s coming to them 2 or 3 months ahead of time if that’s what we want to do. I might ask, I think there’s probably some benefit in understanding a little more about the words, focus on gas utility or focus on water utility. Was that intended as...that was the month that we’d focus on that particular utility and attempt to gather water related items and gas related items rather than having a number of utilities discussed on the same month? Bechtel: I believe. Yeah, that was our intent. I’ll just leave it like that. That was our intent, is to probably take 5 agenda items, some of those are reports, for example, take an example of tonight. Some of these of course are urgent, not necessarily urgent items, they’re pressing items, but we had a mix of electric and water and both of those had major, there were major issues involved with both of those. If we could have addressed those all in one meeting, then it might have been more productive. But of course, it won’t always work that way. Ulrich: I like the idea of having one utility in that it limits the number, sometimes of staff, that have to come. On the other hand, I don’t think it’s going to be that easy to focus on one utility. We have so many issues and I don’t think we ever say to you well we’re not going to talk about that this week, this month, because it’s the wrong focus. That doesn’t appeal to me at all, and I’m sure to you either. So if we can attempt to try to do that, but you also have to recognize that some of the, there’s different staff working on different issues, so it’s not a, we don’t sit at our staff organization and just work on gas stuff. We have a number of experts so we will I think just bring them accordingly to try to attempt to do it this way, but we’ll make some judgments on it. Bechtel: Yeah, all right. I think we understood that this is also a work in progress and we’ll do what it takes. Any other comments? Mr. Dawes. Dawes: I just a couple of. First, I will be not present for the November meeting. Secondly, March to me seems to be a very heavy schedule and to the extent that some of that could be shredded out to either February, April, I think it would ease the workload a little bit. UAC MINUTES 10/03/01 Bechtel: Other comments? Mr. Rosenbaum. Rosenbaum: George, I think one of the other things we wanted to discuss was the possibility of a special meeting later this month before Dexter left to continue our discussion of renewables and local generation and whether or not we ought to own a public, whether we ought to own a power plant and I don’t know if staff is ready to continue those discussions, but I think that was our intent. Bechtel: Thank you for reminding me. Ulrich: Sure. I think we were going to talk about that on the next item on the long-term portfolio. I think that’s an excellent point. We ought to discuss. Bechtel: Okay. Any other comments on the Long Term Agenda? Good. Thank you. Thanks very much. We’ll, John and then with myself, hopefully we can work through this. APPROVE PRIMARY OBJECTIVES FOR ELECTRIC PORTFOLIO DEVELOPMENT Bechtel: Next item 9 is Approve the Primary Objectives for Electric Portfolio Development. An action item. A carry over from our September 25th meeting and I have a proposal in front of us. This item is a change from the previous recommendation. There were 5 primary objectives. I see in their recommendations that this time we have 4 objectives and so proceed to. Ulrich: Well one thing we didn’t do is we didn’t show you the ones that’s not here that listed what we had last time so if you have a copy of them, you can very easily see what the changes are. I think we’ve, since we’ve had a chance to talk to just about each one of you, and show you some of the additional drafts that most of your comments are in here. So it would be better to answer questions. My objective tonight would be to get your concurrence to it and if you wanted to add things like your definitions of what these objectives are or prioritize them, that would be very helpful too so when we come back, we’re speaking the same language and the same interpretation of what each of these objectives mean. Bechtel: Commissioners? Comments on the objectives? Mr. Ferguson. Ferguson: I think they did a pretty good job of bobbing and weaving through all the comments last time, so I can’t pick any fights with this. I just want to go back to the fundamentals of why we’re doing it. We have some pretty generic statements of strategy and mission in the objectives. I assume that what we have here is a thinking framework that the staff is going to use to make tradeoffs and brainstorm about portfolio options. and this is just a way of organizing our work together. You’re going to use this framework UAC MINUTES 10/03/01 ahead of time when we see the portfolio options delivered to us, you’re going to present it to us, basically, under these 4 bullets, and I think that’s just an efficient way for us to communicate. If any one of us discovers a bright idea for a major fifth objective, I’m sure we’ll bring it up. But for starters, this seems just fine. Bechtel: Mr. Rosenbaum. Rosenbaum: Yeah, I would commend the staff and I would move approval as presented in the memo. Bechtel: We have a motion by Mr. Rosenbaum to approve the primary objectives as presented. Do I hear a second? Carlson: I’ll second. Bechtel: Second by Mr. Carlson. More discussion on this? I see no discussion. I’m assuming that we will all vote on this according to your deepest feelings. The staff has done a good job in reflecting what we wanted, so all those in favor, please say “Aye”. All Commissioners: Aye Bechtel: Opposed? None? Motion passes unanimously. Ulrich: Thank you. I would ask maybe to set a clarification and that would be that these objectives in a sense are in order of priority or if one is in conflict, we look to the above or would you like us to just get them all out? Bechtel: That’s a good question. In terms of priority, I would say that I believe that they are in order of my own personal priorities of how you should operate, but other comments? Is there a sense of prioritization by which the order in which they’re presented or by any other statements in there? I don’t see that other than just the listing here, but it’s, you raise an issue that there ought to be, that perhaps there should be some discussion on that. Ulrich: We don’t need limitations in a sense. We can bring it back, but I, my expectation in saying this is that the top one ensure low and stable electric supply rates for customers is pretty important and I would look at that as one that is probably superior to some of the other ones in some sense. Bechtel: Mr. Carlson. Carlson: The only one I’d push up on the list is reliability and there are situations especially given the interest of our large customers and I would say even our residential customers that you’re going to have to spend some money at times to ensure higher reliability which is exactly what we did with the generation project. UAC MINUTES 10/03/01 Bechtel: Other comments on priorities? I think. So with that we’ll conclude that these notes should be your guiding principles and filling the hole. Ulrich: Thank you. Bechtel: Thank you very much for everyone’s patience in sitting through this. Do I hear a motion? Yes. Ulrich: I’m sorry. There was a question Dick, pardon me, Commissioner Rosenbaum suggested having another meeting. Did you want to discuss that, Dick? Rosenbaum: Yes, I think that was our intention at the end of our last special meeting. You know, if staff is prepared and there’s some useful information you think you can get from us in the next couple of weeks, I think we should certainly consider it. _______: Was there an extra meeting or moving the meeting up so Dexter can come? Rosenbaum: No, it was an extra meeting. Balachandran: I think it would help us, the staff, if our intention was to have as many meetings as you wanted to get on the same page, so what would you like to discuss at that meeting? You did mention renewables. Rosenbaum: Yes, yes, I think we left renewables up in the air and perhaps Carl is trying to prepare something for us and won’t be ready in the next 2 weeks. Balachandran: He is, I will check with him, but from the last time I talked to him, he was ready to go. In fact, he felt he wanted to get into more detail and disappointed he could not at the last meeting, so he’s ready to go. I do know he’s taking a week off, I think next week, so I need to check on the schedule to make sure he’s set. Ulrich: Excuse me. Maybe at this point, just briefly reviewing everybody’s calendar. If we put one together in 2 weeks, is that good or? Commissioners: That works. That works. The 17th. Ulrich: Do you leave on the 17th? Dawes: No, the 17th is 2 weeks from today which we could. No I leave on the 22nd Monday. Bechtel: The 17th works for me, but it turns out there’s a high probability that I will be absent for the November meeting so. Balachandran: That’s the week he’s not here. UAC MINUTES 10/03/01 Bechtel: I’m sorry. Balachandran: That’s the week he’s not here. Ulrich: The week of the 17th. Balachandran: Week of the 15th. Rosenbaum: Then a week from tonight, is that too soon? The 10th. Balachandran: I will talk to him and maybe send the UAC. Commissioners: I’m not available on the 10th. 9th? I can’t do it on the 10th either. Bechtel: Let me also add one other thought. One of the other issues was basically around the idea of reliability which was local generation and correct me if I’m wrong, that was also an issue we’re quite interested in so to pull that together we may not want to brush too far ahead with that, so that would be say next week is too early, the 17th is not possible, then the following week, the 24th. Ulrich: One suggestion might be is that you can just send me an email telling me the dates that we can all share and what we may do instead of say like local generation would be to talk about what is local generation and what would be some of the advantages of putting a coal plant in Palo Alto or something like that and get at least those kind of things out. Because the studies we’re working on with NCPA on the value of local generation may turn out that cost or the benefits of getting someplace else may be a lot clearer in a few months. I think for ease of things, all you can really talk about is in generalities so that we get clarity or get public understanding of what we’re talking about. Bechtel: Well perhaps we ought to just. Why don’t we do this then? We address renewables and then if we have another special meeting or with using as the agenda is available, we can discuss the other one. I’m not sure that there’s a great sense of urgency that we deal with this in a month so. Ulrich: Yeah, I’m sorry for mucking around it. We’re being a little hesitant. We ought to look at the agenda for next month and see if we can just put the renewables on that. You’ll be gone though, Commissioner Dawes? Dawes: And Mr. Bechtel. Bechtel: And I’m likely to be gone too the way it looks like right now. Ulrich: Well maybe we can just adjust the regular meeting to another time? _______: When are you back? UAC MINUTES 10/03/01 Ulrich: Do we move that forward Commissioner Dawes or back? Dawes: I’m out of pocket October 22- November 21. Ulrich: Well. Bechtel: It sounds to me like email exchange of being in town is the first order of business. Ulrich: Just send it to me and I’ll get back to you Mr. Bechtel. Bechtel: Okay. Thank you. Do I hear a motion to adjourn? Ferguson: So moved. Bechtel: Moved by Mr. Ferguson. Seconded by Mr. Carlson. And all in favor, please say “aye”. Ferguson: We’re voting with our feet. All Commissioners: Aye. [The meeting was adjourned.]