VALLEY CENTER MUNICIPAL WATER DISTRICT
Regular Board Meeting
Monday, October 20, 2008
Time: 3:00 P.M.
Place: Board Room
29300 Valley Center Road
Valley Center, CA 92082
The Valley Center Municipal Water District Board of Directors’ meeting was called to order by President Broomell at 3:00 P.M.
ROLL CALL
Board members present were: Directors Broomell, Polito, and Haskell. Staff members present were: General Manager Arant, General Counsel Cowett, District Engineer Grabbe, Director of Operations Hoyle, Director of Accounting Jeffrey, Sr. Administrative Assistant Johnson, Consumer Services Supervisor Tilley and IT Specialist Learue. Spectators present were: Randy Palombi and Erik Oh of CPower.
CONSENT CALENDAR
1. Upon motion by Polito, seconded by Haskell and unanimously carried, the following consent calendar items were approved:
· Minutes of the Board meeting held October 6, 2008
· Audit demand check numbers 120075 through 120266
· Treasurer’s Report and Financial Statements for the period ended August 31, 2008
· Board of Director’s request for per diem compensation and reimbursement of expenses
PRESENTATION
2. Presentation on the District’s New Demand Response Program:
Mr. Randy Palombi, General Manager of CPower, addressed the Board to explain the program and benefits of the Demand Response Program which the District signed into contract with on September 15, 2008. Mr. Palombi stated that CPower provides services to about 2,000 megawatts of load across the U.S. and represents approximately 1,500 customers. CPower was the first preferred Demand Response vendor to ACWA, and that water agencies are their single largest concentration of customers. Demand Response is adjusting your demand for electricity in response to a triggered event. Typically, the two types of events are economical or reliability. Supply and demand must be balanced in real time. There are times when it is more economical for the utilities to pay customers to stop using electricity than it is to go out and procure it on the wholesale market. A reliability event would be if they are unable to buy it, a plant goes down, the transmission lines are over constrained, etc. and there is the fear of a brown-out or black-out. Under these conditions, the utilities will call a curtailment event, through CPower, to reduce consumption which their customers will be paid for. CPower’s role is to provide site assessments, curtailment plans, metering and monitoring, event notification, payment processing and dispute management. CPower is able to bring a large portfolio of customers, can provide large blocks of megawatts, and is able to manage the reliability and reduce the volatility if there is a performance issue. There is a very short period of time throughout the year where there is peak demand. To meet peak demands the ultility companies have two options: to build more power plants, or pay customers to use less electricity.
The Demand Response program is similar to Critical Peak Pricing. The major difference is same day notification. During a curtailment event, we may receive as little as three hours notice. CPower has been working with the Field Dept. on putting together processes on how to execute a curtailment plan once an event is called. They do site assessments and look at the different load sources. They will then put a module on each meter which will be participating. This allows them to remotely monitor the performance in real time and access how well we perform. Payments are based on performance levels which SDG&E determines. CPower does a shadow settlement by calculating the data they have collected and comparing it to the utility. If they find a discrepancy, they will handle all dispute management. By participating, the District expects to be compensated approximately $444,000 per year (almost 10% of our annual electricity cost) if it can meet all of the requested demand response events. An analysis of each event is performed by CPower to go over what worked and what didn’t work. They are able to adjust how much of our load we put into the program each month, based on operations. No out of pocket penalties or expenses will be incurred by the District for participating.
3. Resolution Formally Approving the Energy Services Agreement with Solar Electric Solutions and Budget Adjustment:
General Manager Arant requested adoption of Resolution No. 2008-37, formally approving the agreement with Solar Electric Solutions for the Corporate Facility Photovoltaic Solar Project. To facilitate this project, a $15,000 budget to fund outside structural analysis and provide inspection and administrative services was requested to be established for Account No. 01-5603.78. In addition, staff feels it would be prudent to coordinate repaving the employee’s parking lot in conjunction with this project and requested allocating $60,000 to augment Account No. 01-5454.25 to accomplish the resurfacing. Funding for both amendments will be from Unappropriated Reserves for Future Capital Improvements.
General Manager Arant also discussed alternative parking arrangements needed during construction of the project. Staff will be encouraged to ride share with other employees, a park and ride shuttle at the Moosa plant is being evaluated, as well as temporarily assigning District vehicles for at home, overnight parking during construction.
Upon motion by Polito, seconded by Haskell and unanimously carried, the Board approved Resolution No. 2008-37 formally approving an agreement with Solar Electric Solutions, establishing a Capital Improvement Account No. 01-5603.78 with a budget of $15,000, and augmenting Account No. 01-5454.25 by $60,000 to repave the employee’s parking lot in conjunction with the Corporate Facility Photovoltaic Solar Project.
RESOLUTION NO. 2008-37
RESOLUTION OF THE BOARD OF DIRECTORS OF
THE VALLEY CENTER MUNICIPAL WATER DISTRICT
APPROVING ENERGY SERVICES AGREEMENT WITH
SOLAR ELECTRIC SOLUTIONS AND AMENDING THE
2008-2009 BUDGET TO ESTABLISH AND FUND THE
CORPORATE FACILITY PHOTOVOLTAIC SOLAR PROJECT
CAPITAL ACCOUNT AND REPAVING PROJECT
was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, and Haskell
NOES: None
ABSENT: Aleshire and Stone
4. Status Report on Metropolitan’s Interim Agricultural Water Program (IAWP) and the Authority’s Special Agricultural Water Rate (SAWR) and Consideration of Allocation Methodology for 2009:
General Manager Arant discussed that the MWD’s board voted to approve the phase out of the IAWP. As approved, the current discount and requirement for usage reduction will phase out in equal increments by the end of 2012. Current IAWP participants will also have the ability to totally opt of the IAWP starting in January 2009, and in each year thereafter until the program ends. Part of MWD’s motion was to establish an agricultural conservation program, funded by Metropolitan, for qualifying ag users that opt out of the program. There will be money available for “on farm” improvements such as new irrigation systems or weather base controllers, etc. for farming operations. They are also discussing a Palo Verde style discount program where a grower would be paid to sign up a certain amount of acreage. When the water is needed, the grower would be paid a fee to not use water.
The SDCWA Administrative Finance Committee held a meeting last week and recommended that their current ag program, with their current discount levels and application procedures, would continue for a minimum of 2 years. They will reevaluate the program next year to decide if they want to continue it past the 2 year period. VCMWD will advocate that they extend the program indefinitely because we feel that the reduced emergency storage and no access to the supplemental water supplies will continue past the 2 year period and would be a valid reason for maintaining the discount. This decision will go before their full board later this month.
VCMWD customers will be considering a number of options regarding staying in or opting out of the IAWP and SAWR programs. Staff has drafted two versions of the informational items to mail out to customers based on whether SDCWA does or does not continue as a stand-alone program. The materials will explain their options and will allow them approximately one month to decide what works best for them. We must notify MWD by January 15, 2009 which customers will be opting out and how much water will be transferred over to the full price. For those who exit the program(s) there is no re-entry.
Mr. Arant stated that he would be meeting with staff to discuss our recommendation for the domestic rates for 2009 if there is a cutback. One option would be a conservation rate structure, and the other option we will be discussing is placing all customers on an allocation. The tiers would be a pass through of the MWD penalty rates. This will be brought back before the board with specific recommendations.
The final issue is one that the board requested be brought back for further discussion. It concerns the combination ag-domestic customers, and how we treat the first 26 units of allocation. This year we based their allocation of the total water usage. The domestic water usage was not segregated from the total usage. The down side is that the 30% reduction is on a bigger number of units. The up side is that we forced 26 units into every month. If the customer did not use the 26 units in domestic use they could roll that forward and use it as ag in the future. If we segregate the two, customers who underutilized their domestic units could not roll it forward. We also would not allocate them extra water, as we did before. The issue was about the fairness of treating domestic water as agricultural water. In all of last year we only had one or two customers raise this issue. The vast majority of ag customers appreciated the extra allocation and the ability to roll those units over. The advantage to the District is that we have built a small cushion between what water is sold to us by Metropolitan and what we meter to our customers. If we strictly allocate all the domestic water as domestic water and ag water as ag water (approx. 200-300 acre feet) we no longer have a cushion between what our customers use and what Metropolitan delivers to us. Our recommendation is that we maintain the allocation methodology for 2009 that we currently use; to allocate water based on total water usage on accounts combining domestic and agricultural. There is concern that if we wait until the first board meeting in November to further discuss this, we are going to be extremely tight on timing. By January 15, 2009, the Water authority has to report to metropolitan the number of customers and the amount of water that is leaving the IAWP. The Water Authority is going to want our data no later than the end of December. The logistics needed to put this package together, mail it out to our customers, give them at least 30 days to analyze it and get back to us by mid December, the package must be mailed no later than the second week in November.
After discussing both sides of the issue, a motion to maintain using the current allocation methodology for ag-domestic customers that was used in 2008 was adopted by the following vote, to wit:
AYES: Directors Broomell, Polito, and Haskell
NOES: None
ABSENT: Aleshire and Stone
GENERAL MANAGER’S AGENDA
5. Review of Miscellaneous Information Items:
Ø In mid November we will be discussing the many complex issues relating to domestic customers, the allocation base for IAWP, the allocation base for those coming out of the IAWP wishing to remain commercial agricultural customers vs. the allocation basis for domestic customers.
Ø The Board was previously informed of our legal action to enjoin SDG&E. They stipulated to an agreement which runs through October 27th. SDG&E then met with all of the water agencies and asked what they could do to make amends. It was recommended that they notify the media that they backed off on their plan because they had not properly implemented the policy.
Ø The Lake Turner Solar Project is progressing rapidly. The contractor feels that they will be done in mid November.
Ø A representative from Solar Power Partners and Clean Power viewed the Miller Pump Station and Betsworth sites. They are interested in exploring a solar project at Miller.
Ø The Valley Center Trails Committee has been working with the Segal Ranch Development for a trail system that abuts our Miller Reservoir and Miller Pump Station property. The Committee has asked what the District would need from them in order to get a trail across our property. The GM advised them the District would need liability coverage for people using the trail, liability coverage for what people using the trail might do to other people using the trail, security, a commitment to keep the trail clean, and protection from someone using the trail that might start a fire. Of course this would have to come before the board, but if our conditions could be met, we would assign a temporary use easement. If future development of our property conflicts with the trail system it would have to be rerouted or eliminated.
Ø The Desal distribution study has been released and we are having discussions with the Water Authority on exchange policies. Gary met with the City of San Diego and asked if they might be interested in being an exchange partner for us. He will continue to work with them on it.
Ø On the monthly status report for water deliveries, the September 2008 deliveries were 3,926 acre feet, the September 2007 deliveries were much higher at 5,180. The average temperature for the same time period was 5 degrees higher for September 2008 and the average high temperature was 4 degrees higher. This clearly shows that the conservation effort is not weather driven, it is structural. We are still continuing to run at a 40% conservation level, however, many growers have moved their allocation to the early and middle part of the year hoping we would be seeing wet weather by now. Without rainfall these growers will be in trouble, either with penalties or flow restrictions, etc. Other growers will be using whatever credits they have built up. Our hope is that we are at 30% conservation at the end of December.
DISTRICT COUNSEL’S AGENDA
6. Review of Miscellaneous Information Items:
Discussion of motion filed against SDG&E on cutting power during Santa Ana wind conditions.
CLOSED SESSION
7. A Closed Session was called by president Broomell at 4:11 p.m. pursuant to:
· Government Code §54956.9(b), Conference with Legal Counsel, Anticipated Litigation
Number of potential cases: 1
ADJOURNMENT
8. Upon motion by Polito, seconded by Haskell and unanimously carried, the meeting was adjourned at 4:27 p.m.
ATTEST: ATTEST:
____________________________ _______________________________
President Secretary