HomeMy WebLinkAbout1999-03-01 City Council (6)City of Palo Alto
C ty Manager’s Report
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT:UTILITIES
DATE:MARCH 1, 1999 CMR:158:99
SUBJECT:STATUS REPORT ON THE IMPLEMENTATION OF THE
RECOMMENDATIONS FOR THE UTILITIES
ORGANIZATIONAL REVIEW
This is an informational report and no Council action is requested.
BACKGROUND
In December 1994, the City Council approved the City Manager’s recommendation to
perform an organizational review of the Utilities Department. The goal was to ensure that
the Utilities were prepared organizationally for future competition in the industry and had the
ability to meet the customers’ service expectations efficiently while remaining competitive.
The consulting firm of Theodore Barry and Associates (TB&A) conducted the study from
April through November 1996. The final report was presented to Council in December of
that year.
In January 1997, staff outlined the strategy for responding to the 39 recommendations from
TB&A. Staff addressed the organizational recommendations pertaining to positions with the
FY 1997-98 budget and returned to Council with greater detail on these during the budget
issues discussion. In November 1997, staff provided a status report on the thirty-nine
recommendations. This report addresses the status of those items noted as still in progress
in the last report.
DISCUSSION
Listed below are the recommendations and the status of each as of February 1999.
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Establish a business planning process for each commodity provided by the
utility.
Complete.
A team composed of members of the Utilities and Administrative Services Departments
(ASD) completed the business plans for the Electric and Gas Supply and Distribution
business units in the Spring of 1998. A similar team completed the business plans for the
Water and Wastewater utilities in January 1999.
o Determine reliability needs of each customer class; rank projects by
contribution to reliability; link with business plan.
Complete.
Staff has completed an initial analysis of the reliability needs for all the utilities.
Engineering planning is being done to expand the reliability of the gas and electric systems
and capital improvement projects are being designed to increase the flexibility of the systems
to respond to changing customer loads. The business plan has established the priorities for
the projects.
Join with Public Works Department to conduct a detailed study of tree trimming
policies, methods and intervals (including a bench marking study of "best of
class" utilities); determine reliability needs; improve reporting and analysis of
data by cause; and set goals to reduce total costs of tree trimming program
Complete.
Electric Operations and the Public Works Department have completed the study, reviewing
existing practices, investigating expenditures, budget practices, and manpower. No changes
are recommended. Palo Alto’s $47.00 average cost per tree $48.00 is well within reason.
Costs for similar sized cities run as high as $74.00 per tree. During the Winter of 1997-98
Palo Alto did not experience the tree related outages that other utilities experienced, due to
the tree trimming and monitoring by Public Works. Many cities do not maintain a tree
inventory and have no idea how many trees are in their systems. Public Works has a
complete inventory of all trees, which includes type of tree, the growth cycle and tree
trimming cycle.
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However, the Public Utilities Commission of the State of California enacted a change to
General Order 95 which requires operators of utilities in California to maintain an eighteen
inch minimum clearance between trees and supply conductors of 750-22,500 volts. The TB
& A study occurred prior to the changes in General Order 95. The change from a six inch
clearance, as required in previous years, to an eighteen inch clearance will increase the
Electric Utility’s tree trimming costs in the future. Since the bench marking involved cities
in other states, the results may no longer be relevant.
Monitoring the expenses in tree trimming is an ongoing activity. Implementation of the tree
replacement program with Canopy will assist in containing inflationary cost increases.
Develop a job costing system to better manage costs; revise accounting system
to separate operations from maintenance expenses and transmission from
distribution. Upgrade the Interactive Financial Accounting System (IFAS) to
allow job costing capabilities; work with the Administrative Services
Department (ASD) to conduct a search for "best practices" at other utilities.
Investigate availablejob costing vendor packages. Expected implementation will
be by the end of FY 1999-2000.
In progress.
Job Costing System: Staff from the Utilities, Administrative Services and Public Works
Departments (primary users of the current costing system) have been meeting regularly for
the past months to identify the City’s job costing needs. The City Auditor’s Office has taken
the lead in organizing and facilitating these meetings. In 1998, staff completed a needs
assessment to identify the features and functions needed in a new job costing system. After
the needs assessment, staff evaluated the feasibility and costs of upgrading the job costing
module of the City’s existing financial system, the job costing capabilities that exist in the
new Utilities Customer Information System (CIS) and investigated vendor sottware package
and job costing systems utilized at other utilities. Funds are included in the FY 1999-2000
budget to purchase a system based on the prior analysis. Staff has reviewed several vendor
packages and a Request for Proposals for a job costing system will be issued in FY 1998-99.
Separate Accounting for Maintenance and Transmission: In FY 1998-99, changes were
made to the accounting system to provide for separate tracking of utility distribution and
supply revenues, expenditures, and reserves. Staff from the Administrative Services and
Utilities Departments will continue to evaluate the benefits of budgeting and tracking
maintenance and transmission costs separately and will revise the City’s General Ledger
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account structure to accommodate changes under the new structures if deemed necessary.
12.Set a long-term goal for the customer service group to become the primary call
and dispatch center, supported after hours by Utility Dispatch Center (new CIS
technology is critical). In the short-term, study the feasibility of utility handling
calls.
In progress.
Staff is working with Police Communications to see if the requirements can be met with
the new CAD system installed and operating. Investigation of costs indicates that the best
solution would be to continue to use Police Communications for Water-Gas and Waste
Water calls and have it provide additional information to the operations managers. The
majority of the electric utility calls are currently handled at the Utilities Control Center. The
Customer Service Center is reviewing ways to shorten customer response time in the field,
improve communications lines between staff in the office and the field, and achieve cost
savings to the department.
14.Review gas meter testing approach; visit "best practice" firms.
Complete.
A survey was conducted of ten "best practice’ meter shops. No clear, constant practice
emerged from the survey except the testing of all new gas meters in-house by the City gas
meter shop. Palo Alto started this testing of new residential gas meters to check for
variances of plus or minus 10 percent. Meters which fail this test are not used. In addition,
staff is reviewing the gas meter exchange database to determine if enough information is
¯ available to develop a Performance-based exchange program as opposed to the current
program of exchanging gas meters by years of service. The analysis of the existing database
was completed at the end of 1998. Operational improvements based on this analysis have
been instituted.
16.Develop and document the process for responding to customer requests for new
rates (e.g. unbundling)o Process must include Rates, Customer Service, and
Resource Management.
Complete and on-going.
This process was established in 1997 and reaffirmed in 1998, identifying responsibilities
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between staffwork units with regard to responding to customer requests for rates. Periodic
meetings are conducted between staff from Rates, Marketing Services, Customer Services
and Supply Resources to discuss rate issues.
18.Develop and document a process for responding to customer inquiries/needs that
includes the mutually agreed-upon delineation of responsibilities between
Customer Services and Marketing. Inform customers whom they should call
under various circumstances.
Complete.
Reorganization of the department in December 1998 resulted in the marketing function
moving to the Administrative Services division in the Utilities Department. This change
unites the marketing functions together with the customer services functions into one
division. This alignment establishes marketing as the primary point of contact for major
account inquiries and improves communications between customer and marketing services.
22.Strengthen productivity tracking capabilities. Current workload does not justify
large scale work management effort. Instead concentrate on improving cost
management.
Complete.
A team composed of staff from the Utilities Department, Administrative Services
Department, and the City Auditor’s office has completed the needs assessment for the new
work order system. Productivity will be a function of the new work order system.
Implementation expected by the end of FY 1999-2000.
26.Reconsider City requirements imposed on contractors that tend to increase costs.
Complete.
Staff surveyed contractors and received a 67 percent response rate. The most significant
cost items were material storage restrictions, temporary use permits limited to 45 days, and
denial of permit renewals if a complaint is filed by a resident. The Utilities and Public
Works Departments will continue looking at options for a permanent storage site. Also of
concern to contractors was the high cost of replacing asphalt pavement "in kind". Working
with Public Works, staff has negotiated an acceptable alternative to this practice. Finally,
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contractors expressed dissatisfaction with the City truck routes, considered to be restrictive.
Contractors are required to move material extra distances in and out of the City. The
changing of truck routes in the City was discussed with the City’s Transportation Division
in FY 1998-99, but no traffic routes will be changed in Palo Alto. Traffic routes are set to
benefit the community as a whole and will not be changed to accommodate construction
needs. A study may be considered by the Transportation Division in FY 2000-01 to create
a revised truck route map for Palo Alto. This study will be subject to approval of the study
funding of approximately $125,000. Special traffic routes may be approved for individual
Capital Improvement Projects (CIP) projects where appropriate alternate truck routes can
be identified agreed by the Police Department and the Transportation Division. CIP Project
Managers will work to identify alternate truck routes when appropriate.
28.Review allocation of gas transmission and distribution (T&D) costs; be prepared
to lower T&D rates for non-core natural gas customers (G-3 rate schedule) to
meet competitive pressures.
Complete.
Council approved a gas rate reduction effective 7-1-98, which significantly lowered the G-3
rate schedule.
29.Update Water Master Plan; provide written response to Master Plan
recommendations and establish procedures to track implementation of
recommendations (see recommendations in wastewater).
Complete.
A written report onthe recommendations of the 1983 Water System Study was prepared
and evaluated by the Water-Gas Wasterwater Engineering Manager. All recommendations
of the 1983 study have been installed in the system’s operational components except for the
addition of a two million gallon storage reservoir recommended for construction in Pressure
Zone 2 atop Coyote Hill. The recommendation to construct a new two million gallon water
storage reservoir in Pressure Zone 2 was proposed in a previous CIP budget process, but the
project was eliminated from the final CIP budget.
The consultant hired to study the water system will finish by September 1999. The
recommendations of this study will be evaluated by staff and future CIP proposals will be
proposed for Council consideration. Implementation of the new water study
recommendations will be accomplished through the CIP budget process. The Water Senior
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Engineer continues to prepare annual status reports on the recommendations of the
previously completed Water System Study.
31.Preventative maintenance for water system needs to be scheduled and
procedures written; intervals/practices need to be compared against industry
best practices.
Complete.
Staff reviewed and evaluated several different maintenance management systems.
Benchmark soffccare was purchased. Staff has been ~rained on the software, and is presently
loading the data.
32.Review allocation procedures and method of allocating Administration &
General expense among Utility funds and to the Water Fund.
On-going.
In the Spring of 1998, Utilities staff met with staff from the Administrative Services
Department to achieve a better understanding of the methodology for calculating cost plan
charges. It was decided first to continue with the accounting changes deemed necessary for
the split between supply and distribution in the Electric and Gas Funds. Any
recommendations for changes must be synchronized with the budget process. Further efforts
will be conducted this year in the on-going efforts to review the allocated charges during the
budget cycle.
33.Evaluate method, of assessing rate of return and General Fund transfers for
water.
In progress.
Administrative Services Division working with Utilities staff hired a consultant in January
1999. The consultant is currently working with City staff to develop the recommendations.
Final results will be presented to Council with the 1999-2000 City Manager’s Proposed
Budget.
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35.Prepare written schedules and procedures for preventative maintenance on the
wastewater lift station and manhole inspections.
Complete.
The responsibility for operations and maintenance of the wastewater lift station has been
transferred from the Water Transmission Section to the Wastewater Maintenance Section.
Written preventative maintenance procedures and schedules have been developed and
implemented. Manhole inspections are included as part of the preventative maintenance
cleaning of the wastewater collection system. Each section of the collection system is
scheduled for biannual cleaning that includes inspection of the access manholes. Needed
repairs, if any, are noted on the daily cleaning record. The Section supervisor develops a
work order and schedule for repairs.
37.Develop a business plan that defines the strategic goals for the water utility and
allocates resources according to their relative importance.
Complete.
See recommendation #1. Funds were included in the FY 1997-98 budget. Work began
once the business plans for the Electric and Gas Utilities were completed. A consultant was
hired in the summer of 1998. The plans are complete and will soon be distributed.
38.Provide written responses to Wastewater Master Plan recommendations and
establish procedures to track implementation of recommendations.
Complete.
A written report on the Status of the 1998 Wastewater Master Plan was prepared by the
WGW Engineering Manager in October, 1997. The recommendations of the Brown and
Caldwell Inflow/Infiltration Study (B&C) and the Camp, Dresser, and McKee Master Plan
(CDM) has provided the basis for the City’s 20 year Rehabilitation/Augmentation
accelerated infrastructure replacement program. A limited update of the CDM Master Plan
was completed last year and was used in the City’s Sewer Network Analysis Program
(SNAP). The SNAP model has been updated and was used to compute the projected design
flows, capacity constraints, and relief pipe requirements identified in the CDM Master Plan.
Through continual evaluation and analysis of the collection system, the results of the CDM
Master Plan recommendations will be monitored. As recommended, CDM projects are
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completed, and the Wastewater Senior Engineer will continue to review and evaluate proj ects
originally recommended by the CDM Master Plan. The development of a new dynamic
sewer system model will be proposed as a future CIP which will aide Wastewater
Engineering in the evaluation of the remaining CDM Master Plan projects. The Wastewater
Senior Engineer will continue to prepare yearly updates on the progress of the Wastewater
Master Plan.
ENVIRONMENTAL ASSESSMENT
This report does not constitute a project for California Environmental Quality Act (CEQA)
purposes, therefore, no environmental assessment is required.
PREPARED BY: Rosemary Ralston, Utilities Administrator
DEPARTMENT HEAD APPROVAL:
Director of Utilities
CITY MANAGER APPROVAL:
HARRISON
Assistant City Manager
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