Feb 01, 2024 Utilities Commission

UM, I AM HERE, UH, TO PRESENT OR I'M HONORED TO PRESENT OUR RECOMMENDATION, UM, REGARDING OUR GENERAL MANAGER, CHRIS GARNER ON, UH, JANUARY 4TH AND JANUARY ITEM TWO.

I'M SORRY, THERE'S A DISSENT THEN.

WHO, WHAT, WHAT IS, WHAT IS THE, PROVIDE THE PRESIDENT'S REPORT IF, OR YOU CAN CALL IN THE GENERAL MANAGER FOR HIS REPORT.

SO IS THAT YOU? YEAH.

YAY.

THANK YOU VERY MUCH.

JUST REAL QUICKLY, A COUPLE THINGS.

UH, ONE, UM, I'VE, I'VE BEEN READING THE NEWS AND, UH, WITH ALL THIS RAIN, NOW THEY'RE TALKING, YOU KNOW, YOU, YOU ALWAYS HEAR ABOUT THE DROUGHT.

NOW IT'S, UH, THEY'RE DIFFERENTIATING.

IT'S THE SNOW DROUGHT.

SO THERE'S A LOT OF RAIN, BUT NOT MUCH SNOW.

AND SO, UH, THE GOOD NEWS IS THE RESERVOIRS ARE STILL ABOVE AVERAGE, UH, FROM LAST YEAR.

AND SO WE HAVE A CUSHION GOING INTO THIS YEAR, BUT, UH, UH, SNOWFALL IS STILL ABOUT 50%.

UM, IN THE SIERRAS, UH, ABOUT 35% IN THE LOWER SIERRAS, A LITTLE OVER 50, 60% IN THE UPPER SIERRAS.

UH, BUT THEY'RE HOPING WITH THIS LATEST STORM THAT, UH, THERE'LL BE A BIG IMPROVEMENT IN THE ENTIRE WESTERN UNITED STATES.

SO HOPEFULLY THAT'LL BE GOOD FOR US.

UM, AND THEN THE SECOND THING, I BELIEVE YOU RECEIVED AN EMAIL.

UM, WE WILL BE HAVING THE MAYOR AND THE CITY MANAGER COME OUT AND, AND ADDRESS THE BOARD ABOUT THE UPCOMING POTENTIAL, UM, CHARTER CHANGE ON CIVIL SERVICE.

AND SO I THINK THAT'S GONNA BE A GREAT OPPORTUNITY TO HEAR, UM, SOME OF THEIR THOUGHTS.

UM, UH, OBVIOUSLY YOU'VE HEARD ME, UH, RANT OVER THE YEARS ABOUT HOW, UM, WE NEED TO CHANGE THINGS AND, UH, SO IT'S A GOOD OPPORTUNITY.

UH, THERE'S, UM, YOU KNOW, I, I'VE, I'VE TOLD PEOPLE BEFORE THAT THE CURRENT SYSTEM, AND MR. SHANNON'S GOES BACK A LONG WAY.

HE KNOWS THIS TOO, THAT THE CITY'S HAD A LONG HISTORY OF REALLY BEING VERY, UH, PROBLEMATIC IN ITS HIRING AND ONBOARDING.

AND IT'S, IT'S GOTTEN WORSE OVER THE YEARS.

UH, LAST YEAR, UH, THE MAYOR ANNOUNCED THAT WE HAD A 22% VACANCY RATE IN THE CITY.

THAT, THAT'S, THAT'S JUST TERRIBLE.

I MEAN, PEOPLE ARE LOOKING FOR, THESE ARE GOOD JOBS.

UM, AND SO THE CURRENT PROCESS, MY THOUGHTS FOR THE MAYOR AND CITY MANAGER GET HERE IS THAT THE CURRENT SYSTEM DOES NOT SERVE WELL.

THE CANDIDATES DOES NOT SERVE WELL.

THE OPERATIONS DOES NOT SERVE THE, UH, TAXPAYERS VERY WELL.

AND SO IT NEEDS TO BE CHANGED.

AND SO WHETHER THE CHARTER CHANGES THE SOLUTION, THAT'S FOR THE VOTERS TO DECIDE.

BUT, UH, UM, CERTAINLY, UH, I BACK SOME TYPE OF CHANGE IN WHAT WE HAVE RIGHT NOW 'CAUSE IT'S NOT WORKING.

THAT CONCLUDES MY REPORT.

THANKS, CHRIS.

APPROVE THE, UH, BOARD MEETING MEETING MINUTES FROM THE JANUARY 18TH MEETING? MOTION SECOND.

UM, AND NOW, LISA, IS IT ITEM ONE? OKAY.

I, UM, DO I HAVE A MOTION TO

[1. 24-51971 Recommendation to approve January 18, 2024 Board meeting minutes. Suggested Action: Approve recommendation. ]

ANY PUBLIC COMMENT? MOTION CARRIES.

UM, ITEM NUMBER TWO,

[2. 24-51972 Recommendation to adopt Resolution UT-1508 authorizing an amendment to the terms of compensation for the General Manager. Suggested Action: Approve recommendation. ]

HERE'S WHERE I GET TO DO MY THING.

UM, UH, REGARDING OUR GENERAL MANAGER, WE DID MEET THE COMMISSION MEMBERS MET, UH, WITH, UH, SUPPORT FROM STAFF ON JANUARY 4TH AND JANUARY 18TH FOR THE EVA, UH, CHRIS GARNER'S EVALUATION.

AND, UM, THIS IS HIS FIRST EVALUATION SINCE THE MERGER OF WATER,

[00:05:01]

NATURAL GAS AND SEWER UTILITIES.

A YEAR AGO, UM, GOODNESS, IN JANUARY, 2020 3, 515 EMPLOYEES IN THE NEW LONG BEACH UTILITIES DEPARTMENT BEGAN REPORTING TO THE GENERAL MANAGER OF LONG BEACH UTILITIES WITH A COMBINED ANNUAL BUDGET ADMINISTERED BY THE GENERAL MANAGER, WHICH IS NOW $335 MILLION.

PRIOR TO THE MERGER, THE GENERAL MANAGER WAS RESPONSIBLE FOR 275 WATER AND SEWER EMPLOYEES AND $170 MILLION BUDGET.

SO YOU CAN SEE IT ALMOST DOUBLED, DID DOUBLE ON BEHALF OF THE BOARD, I'D LIKE TO SAY THAT, UM, WE'RE VERY PLEASED WITH MR. GARNER'S LEADERSHIP OF THE DEPARTMENT.

IT'S BEEN EXTRAORDINARY YEAR, UM, IN RECOGNITION OF THE INCREASED SCOPE OF WORK AND THE NUMBER OF EMPLOYEES THAT HE OVERSEES.

AND, UH, BASED ON, UH, RESEARCH INTO MARKET CONDITIONS, THE COMPETITIVE ANALYSIS, THIS BOARD WOULD LIKE TO, UH, RAISE MR. GARNER'S SALARY TO 334,813 AND 6 CENTS EFFECTIVE , THE PAY PERIOD INCLUSIVE BACK TO OCTOBER 1ST, THAT 6 CENTS IS REALLY GONNA BE A KILLER.

UH, MR. GARNER HAS, UM, BEEN A DEPARTMENT DIRECTOR FOR 26 YEARS, AND HE HOLDS A MASTER'S DEGREE IN BUSINESS ADMINISTRATION FROM LOYOLA MARYMOUNT UNIVERSITY.

AND HE'S LED VARIOUS INDUSTRY GROUPS INCLUDING, UH, CALIFORNIA MUNICIPAL UTILITIES ASSOCIATION AS ITS PRESIDENT FROM 2020 TO 2022 VERY RECENTLY.

UM, THERE ARE, UM, NO OTHER TERMS OF THE GENERAL MANAGED COMPENSATION AND BENEFIT PACKAGE SHALL CHANGE.

AND, UH, WE ARE HONORED AND, UM, DELIGHTED TO PROVIDE THIS RECOGNITION OF, UH, UM, EXTRAORDINARY SERVICE.

HE HAS BEEN, UM, AS I SAID, 26 YEARS WITH, UM, THIS DEPARTMENT AND OVERALL BELIEVE 40 YEARS WITH THE CITY OF LONG BEACH, WHICH IS EXTRAORDINARY.

SO, UM, WITH THAT, UH, LET, LET ME SEE HERE.

GO BACK TO MY NOTES, WHAT I DO NEXT.

UM, ARE THERE ANY PUBLIC COMMENTS OR ANNOUNCEMENTS FOLLOWING THAT PRESENTATION? UM, WE NEED, WE NEED THIS TO BE, UM, THIS, THIS IS A ROLL CALL VOTE.

CORRECT.

IS THIS A ROLL CALL? VOTE? YES, IT IS.

WE NEED A MOTION AND A SECOND.

I DO, I HAVE A MOTION TO, A MOTION TO APPROVE.

UH, WE HAVE A MOTION TO APPROVE BY, UH, COMMISSIONER CORDERO AND A SECOND BY COMMISSIONER SHANNON.

WAS IT, WAS THAT, OR DID YOU DO THAT? SCOTT SHANNON.

YOU DID THAT.

I WASN'T WATCHING.

SO, , UM, ANY PUBLIC COMMENT OR COMMISSIONER COMMENT? OKAY, GO AHEAD.

UM, JUST VERY BRIEFLY.

UM, I WISH THE COMMISSIONER, THE WHOLE FULL BOARD HAD BEEN HERE.

'CAUSE I KNOW THAT PRESIDENT REI, UM, IS, IS ALSO, UH, IN ALLIANCE.

BUT, UM, WE TAKE IT VERY SERIOUSLY.

WE, I THINK WE STALLED ON THIS FOR A WHILE, MAINLY JUST BECAUSE OF SCHEDULES.

UM, BUT WE TOOK IT VERY SERIOUSLY AND WE SAT DOWN AND WE LOOKED, WE LOOKED AT A LOT OF THINGS, JUST, JUST SO YOU'LL KNOW.

UM, A LOT OF SLIDES, A LOT OF WHERE, WHERE ARE WE, WHERE OTHER PEOPLE IN THE STATE, HOW DO WE FEEL THAT OUR GENERAL MANAGER HAS DONE, UH, WITH REGARDS TO THE LAST YEAR, UH, WHERE HAS HE BEEN THE LAST SEVERAL YEARS, AND WHERE HAS HE BEEN ABLE TO TAKE US? AND THEN WE LOOK AT HIS LEADERSHIP, HIS LEADERSHIP STYLE, UM, AND, AND COMMUNICATION.

SO THERE'S A LOT OF THINGS THAT GO INTO IT, JUST, JUST SO THAT YOU'LL KNOW THIS.

UM, SO WE DO TAKE IT VERY SERIOUSLY.

UM, WE WERE, WE WERE PLEASED IT WAS UNANIMOUS THAT WE ALL AGREED, UM, THAT WE WANTED TO PUT 'EM UP AT THIS, THIS POINT WHERE WE ARE TODAY.

UM, SO HOPEFULLY WE'LL GET, UH, WE'LL PASS THIS.

UH, CHRIS HAS BEEN STELLAR IN HIS LEADERSHIP IN THE CITY, BUT ALSO ENDING HIS CAREER, YOU KNOW, AT AT, AT OUR DEPARTMENT AT MERGING THE TWO GREAT, GREAT DEPARTMENTS THAT WE ARE, UM, HAS BEEN I THINK, ONE OF HIS BIGGEST FEAT.

SO, THANK YOU, CHRIS.

ANY OTHER COMMISSIONER COMMENT? WELL, COMMISSIONER CORDERO LAID IT ON PRETTY THICK.

UM, BUT, UH, UH, I, WE DO AGREE AND I DO EMPHASIZE THAT IT WAS A DEFINITELY UNANIMOUS VOTE.

UH, CHRIS HAS DONE A FANTASTIC JOB, AND I JUST JOINED AND, UH, AND, UH, THE COMMISSIONER'S COMMENTS AND, UM, YOU KNOW, I'M TOTALLY AWARE OF THE FACT THAT HE HAS SOME BLESSED AND EASY PEOPLE TO WORK WITH TOO.

YOU KNOW, YOU GOT DIANA, YOU'VE GOT TY AND, UH, YOU KNOW, OTHERS.

AND OF COURSE, MOST SPECIFICALLY THE CITY ATTORNEY'S OFFICE, RICH ANTHONY.

BUT, UH, YOU CAN'T PICK YOUR, UH, LEGAL ADVISOR.

CAN'T FIRE ME.

[00:10:01]

THANK YOU VERY MUCH, CHRIS, FOR ALL YOUR GOOD WORK.

NO OTHER COMMENTS? UH, WE HAVE A MOTION AND A SECOND ON THE FLOOR, CORRECT? UH, LISA, ROLL CALL.

VOTE VICE PRESIDENT MCGUIRE.

YES.

SECRETARY SCOTT.

COMMISSIONER SHANNON.

COMMISSIONER CORDERA? YES.

SO, I, I JUST WANNA SAY THANK YOU VERY MUCH FOR THE KIND WORDS.

I, I WISH YOU HAD SAID NOTHING.

IT'S ALWAYS AWKWARD AND, AND SO I APPRECIATE ALL THE KIND WORDS.

ABSOLUTELY.

[3. 24-51973 Recommendation to authorize the General Manager to execute a one-year contract, with the option for two one-year extensions, with The Gualco Group to provide state advocacy and lobbying services, in an amount not to exceed $95,000. Suggested Action: Approve recommendation. ]

GOOD MORNING COMMISSIONERS.

ITEM NUMBER THREE ON THE AGENDA IS TO AUTHORIZE THE GENERAL MANAGER TO EXECUTE A CONTRACT WITH THE ALCO GROUP.

DIANA WILL PRESENT.

UM, TODAY WE HAVE BEFORE YOU A RECOMMENDATION TO EXECUTE A CONTRACT WITH ALCO GROUP.

ALCO HAS BEEN WITH US FOR QUITE SOME TIME, AND I'M PLEASED TO INTRODUCE YOU ALL.

UM, FOR THOSE OF YOU WHO HAVE NOT MET JACK WELCO.

UM, AND HE WILL GIVE YOU A PRESENTATION ON LONG BEACH UTILITIES, UM, THE STATE OF KIND OF LEGISLATIVE AFFAIRS IN SACRAMENTO, WHAT WE CAN EXPECT TO SEE IN THE COMING YEAR RELATIVE TO WATER, GAS, AND SEWER.

SO THAT JACK MADAM PRESIDENT COMMISSIONERS, JACK WALCO, IT'S A PLEASURE TO BE HERE.

THANK YOU, DIANA, FOR THE, UH, INTRODUCTION.

AND, UH, IT'S BEEN A DELIGHT TO WORK WITH YOU DESPITE WHAT COMMISSIONER SANDIN SAID.

SO, UH, NICE TO BE HERE THIS MORNING, AND I DIDN'T REALIZE THAT, UH, CHRIS GARDNER AND I SHARE, UH, LOYOLA LOYOLA CONNECTION, BUT MINE'S NEW ORLEANS.

YOURS IS HERE.

SO, UH, NICE TO BE ABLE TO SHARE THAT.

UM, I THINK THE LAST TIME I WAS HERE, IT RAINED LIKE CRAZY TOO.

SO, UH, I'LL TRY TO DO THAT EVERY YEAR.

JUST MAYBE TONIGHT.

TODAY'S A LITTLE BIT OF MORE OF A DELUGE, SO SORRY ABOUT THAT PART OF IT.

UH, SO, UH, LOOKING BACK AT 2023 REAL QUICKLY, UM, IT WAS QUITE THE YEAR.

UM, I'M GONNA SKIP ALL THAT RIGHT THERE.

UM, WE REALLY SPENT A LOT OF TIME, UNFORTUNATELY, ON THE WHOLE WATER RIGHTS BATTLE THAT SEEMED TO OCCUPY THE FIELD IN DISCUSSIONS LAST YEAR.

AND, UM, YOU KNOW, IT'S REALLY A CRITICAL QUESTION THAT'S BEING RAISED BY BOTH, UH, THE INTEREST GROUPS AND THE LEGISLATURE ABOUT WHETHER THE CURRENT SYSTEM NEEDS TO BE RECONFIGURED.

AND MOST OF THE ARGUMENT RAISED IN OPPOSITION WAS, COMMUNITIES HAVE HAVE DEVELOPED AND BUILT ECONOMIES BASED UPON THE CURRENT SYSTEM.

AND IF WE'RE TALKING ABOUT RECONFIGURING IT, THEN WE NEED TO UNDERSTAND WHAT THE POTENTIAL CONSEQUENCES ARE AND TRY TO FORECAST ALL OF THOSE IS NEARLY IMPOSSIBLE.

SO THE LEGISLATURE DEFAULTED TO SUPPORTING A BILL BY SENATOR BEN ALLEN THAT GIVES THE STATE WATER RESOURCES CONTROL BOARD ADDITIONAL AUTHORITY TO GO OUT AND INVESTIGATE WATER, WHITE WATER RIGHT POSITIONS HELD BY VARIOUS ENTITIES, PUBLIC AND PRIVATE.

SO THAT AUTHORITY IS NOW BEING WORKED ON BY THE WATER BOARD, AND THEY'LL COME UP WITH A SET OF GUIDELINES AND RECOMMENDATIONS FOR THE WATER BOARD ITSELF TO CONSIDER.

SO THAT WAS REALLY THE PRIMARY FOCUS OF 2023.

FRANKLY, IN THE WATER WORLD, THERE WAS SOME EARLY TALK ABOUT CONFIGURING A, A CLIMATE WATER BOND.

THOSE DISCUSSIONS FELL BY THE WAYSIDE FOR A VARIETY OF REASONS, AND THERE WAS HOPE THAT OVER THE FALL, THE ADMINISTRATION, THE TWO HOUSES WOULD GET TOGETHER AND FIGURE OUT A PATH FORWARD.

BRINGS US TO 2024.

NOW WE'RE FACING A BUDGET DEFICIT SOMEWHERE BETWEEN 38 AND $58 BILLION.

THE LOWER FIGURE BEING THE GOVERNOR'S FORECAST, THE UPPER FIGURE BEING THE LEGISLATIVE ANALYST THAT HE ORIGINALLY SAID 68, HE'S BROUGHT IT DOWN TO 58.

BUT THE GOVERNOR'S PROJECTION IS BASED ON 8% ECONOMIC GROWTH IN CALIFORNIA IN 2024.

AND I THINK WE ALL RECOGNIZE THAT'S A WAY TO OPTIMISTIC FORECAST.

SO THE LEGISLATURE IS FACED WITH SOME CRITICAL DECISIONS.

WHAT THE ADMINISTRATION HAS DONE ALREADY IS FREEZE HIRING, FREEZE TRAVEL, AND SWEEP ALL UNENCUMBERED FUNDS BACK INTO THE GENERAL FUND.

THOSE SPECIAL ACCOUNTS THAT EXIST, THOSE WILL BE SUBJECT TO LOANS WITH A REPAYMENT OBLIGATION PLUS INTEREST, OF COURSE.

BUT THAT'S THE, THAT'S THE SITUATION WE'RE IN.

SO FOR BOTH THE GOVERNOR AND THE LEGISLATURE, THEY'RE HAVING TO DEAL WITH PROBABLY ONE OF THE WORST ECONOMIC DOWNTURNS WE'VE HAD SINCE THE GREAT RECESSION.

THE CRITICAL DIFFERENCE BEING THAT WE ACTUALLY HAVE RAINY DAY FUNDS IN PLACE, AND THE LEGISLATURE IS SET ASIDE MONEY ABOVE AND BEYOND THAT.

SO THAT IS A GOOD THING.

HAD THAT NOT HAPPENED, UM, THEN WE WOULD'VE REALLY BEEN IN A TOUGH POSITION.

SO AS WE LOOK INTO 2024, WE'VE GOT A BIG CHANGE COMING IN THE STATE SENATE.

MIKE MCGUIRE, WHO IS, UH, A DEMOCRAT FROM THE NORTH COAST, WILL BE TAKING OVER

[00:15:01]

ON MONDAY FROM SENATOR TONY ATKINS, WHO HAS JUST RECENTLY ANNOUNCED FOR GOVERNOR.

SO THAT MAKES IT ALL EVEN MORE INTERESTING BECAUSE THE PRESIDENT OF THE SENATE HAPPENS TO BE, UH, A CANDIDATE FOR GOVERNOR HERSELF.

ELENI KUNA LAKAS, THE CURRENT LIEUTENANT GOVERNOR.

SO WHILE IT'S A, YOU KNOW, TITULAR POSITION, FOR THE MOST PART, UH, THEY DO SHARE THE PRESIDENCY, UH, OR SHE DID, BUT SHARE THE PRESIDENCY OF THE SENATE.

SO LOOKING AT MIKE MCGUIRE'S POTENTIAL CHANGES IN THE SENATE COMMITTEE, LEADERSHIP WILL BE CRITICAL.

AS YOU KNOW, SENATOR DAVE MIN, UH, FROM ORANGE COUNTY IS RUNNING FOR KATIE PORTER'S CONGRESSIONAL SEAT.

SO WE'LL SEE IF HE GETS SWAPPED OUT FOR SOMEBODY ELSE.

AND THERE'LL BE OTHER CHANGES.

UM, I'M NOT SURE IF WE'RE GONNA SEE MUCH CHANGE IN THE UTILITIES COMMITTEE WITH SENATOR BRADFORD, BUT WE'LL SEE SINCE HE'S TERMED OUT.

SO YOU CAN SEE AS WE GO THROUGH THE LIST OF THINGS HERE, IT'S SO MUCH IS FOCUSED ON THE TRADITIONAL, YOU KNOW, ISSUES THAT WE DEAL WITH.

PUBLIC SAFETY AND CRIME HAS CERTAINLY RAISED, HAS BEEN RAISED TO THE TOP OF THE LIST.

AND WHEN YOU'VE SEEN THAT IN RULING, AND IT'S CERTAINLY GONNA BE, BE A BIG FOCUS OF WHAT THE LEGISLATURE DEALS WITH THIS YEAR, PARTICULARLY 'CAUSE OF THE SPIKE IN RETAIL CRIME.

UM, ON, ON THE REGULATORY SIDE, SOMETHING THAT WE'VE BEEN KEEPING IN CLOSE CONTACT WITH DIANA ON IS CONSERVATION IS A WAY OF LIFE.

AND THE WATER BOARDS RATHER, I'D SAY DRACONIAN PACKAGE ADOPTED NOT THAT LONG AGO, HAS BEEN CRITICIZED HEAVILY BY THE LEGISLATIVE ANALYST AS OVERREACHING, OVERLY REGULATORY, NOT TAKING INTO ACCOUNT THE COST OF IMPLEMENTATION BY RETAIL AGENCIES LIKE YOU.

SO I EXPECT THAT THERE'LL BE SOME SIGNIFICANT PUSH FOR CHANGE.

SO WE WILL KEEP YOU CLOSELY POSTED ON THAT, ALTHOUGH YOU ARE WAY OUT AHEAD OF THE CURVE.

SO HOW THAT, YOU KNOW, DIRECTLY AFFECTS YOU, DIANA KEEPS, YOU KNOW, KEEPS US ON THE STREET AND NARROW ON THAT, BUT I THINK, YOU KNOW, YOU'VE BEEN A LEADER IN THAT AREA, SO YOU PROBABLY IN BETTER POSITION THAN MOST.

SO, AS I INDICATED, THERE'S THE CHANGE IN LEADERSHIP.

NOW, THE OTHER INTERESTING ONE, OF COURSE, IS ROBERT RIVAS TAKING OVER AS A SPEAKER OF THE ASSEMBLY.

AND SO WE'RE GONNA HAVE TWO RURAL DEMOCRATS AS LEADERS OF THE LEGISLATURE.

UH, MIKE MCGUIRE, JUST SO YOU KNOW, IS JUST, UH, AN ENERGIZER BUNNY.

THE GUY JUST NEVER STOPS MOVING, SO HE, HE'S GONNA BE INTERESTING TO WATCH.

AND THEN MR. RIVAS, UM, COMES FROM A VERY HUMBLE BACKGROUND, UM, WAS RAISED IN, IN RURAL SAN BONINO COUNTY AND HAS A BIG FOCUS ON FARM WORKER RIGHTS, RURAL ECONOMIC DEVELOPMENT, UH, VERY MUCH FOCUSED ON NATURAL RESOURCES ISSUES.

AND, UM, MOVED A BILL THROUGH AT THE END OF LAST YEAR THAT EXPEDITED PERMITTING FOR A MAJOR FLOOD CONTROL PROJECT IN HIS DISTRICT.

SO HE DEFINITELY DIGS IN AND GETS INTO THE DETAILS.

HE'S SAID THEY'RE BOTH DELIGHTFUL PEOPLE, SO I WISH THEM WELL.

AND THEN YOU ARE BLESSED WITH A GREAT LEGISLATIVE DELEGATION.

AND WHAT HAPPENS WITH SENATOR GONZALEZ IN THE, IN THE CHANGE IS SOMETHING WE'RE ALL WATCHING VERY CAREFULLY.

I MEAN, SHE'S RUMORED IS POTENTIAL MA MAJORITY LEADER IN THE SENATE APPROPRIATIONS CHAIR.

SO REGARDLESS, I THINK SHE'S GONNA END UP IN A GOOD SPOT.

AND THEN MIKE GIBSON AND JOSH LAL ARE ALWAYS AVAILABLE, ALWAYS WILLING TO HELP, AND IT'S A DELIGHT TO WORK WITH THEM BOTH.

SO MORE INFORMATION ON THE FIRM, BUT I'M HERE TO ANSWER QUESTIONS AND DELIGHTED TO DO SO.

ACTUALLY, BEFORE YOU BEGIN, IF YOU CAN GO BACK TO THAT LAST SLIDE.

WHAT, WHAT WERE THOSE YEARS AFTER, AFTER THE 2032 AND 2034.

2026 MM-HMM.

WHAT, WHAT ARE THOSE? THAT'S, THEY'RE, WHEN THEY'RE TERMED OUT.

ANY OTHER, UH, PUBLIC COMMENT OR COMMISSIONER COMMENT? THANK YOU.

THANK YOU FOR, YOU GOT LAURIE, THAT'S , GO AHEAD.

I, I JUST HAVE A QUESTION.

THANK YOU VERY MUCH FOR THAT, UM, FOR MENTIONING HUMAN RIGHT TO WATER FOR DISADVANTAGED COMMUNITIES, BUT WE DIDN'T TALK ABOUT LOW INCOME RATE ASSISTANCE.

IS THAT LIKE NOT ANYWHERE ON THE HORIZON? I, I, I KNOW EVEN AT METROPOLITAN, WE'VE, WE'VE TALKED ABOUT THAT AND MM-HMM.

, IS THERE ANY CHANCE EVER IN THIS STATE THAT SOMEONE WOULD TAKE THAT ON? IT'S TALKED ABOUT QUITE A BIT.

IF, IF THE DEFICIT WASN'T AS BAD AS IT IS, I THINK IT WOULD'VE GOTTEN MORE ATTENTION.

UM, THERE IS THE $130 MILLION, IT'S AVAILABLE THROUGH THE GREENHOUSE GAS REDUCTION FUND FOR IMPROVEMENTS TO, UH, SMALL COMMUNITY DRINKING WATER SYSTEMS. BUT I THINK THAT'S ABOUT AS FAR, BUT, YOU KNOW, WE WENT THROUGH THE LOW, YOU KNOW, THE LOW INCOME RATE ASSISTANCE PROGRAM, AND IT'S BEEN EXHAUSTED AT THIS POINT.

SO I, I THINK TRYING TO GET IT IN A DEFIC YEAR IS GONNA BE VERY DIFFICULT.

THAT'S DISCOURAGING IN A LOT OF WAYS.

ANY OTHER COMMENT? OKAY.

THANK YOU FOR

[00:20:01]

YOUR REPORT.

THANK YOU FOR YOUR ADVOCACY.

THANK YOU SO MUCH FOR THAT.

I APPRECIATE YOU.

UH, I, I NEED A, UH, MOTION TO AUTHORIZE THE GENERAL MANAGER TO EXECUTE A CONTRACT MOTION TO APPROVE.

SECOND, IT'S BEEN, UM, MOTION THEN ACCEPTED OR SECONDED.

UM, ALL IN FAVOR SAY AYE.

I HAVE ANOTHER QUESTION.

I, A QUICK QUESTION JUST REAL QUICK.

UM, UH, THE HUMAN RIGHT TO WATER, IS IT TRUE THAT CALIFORNIA IS THE ONLY STATE THAT HAS THAT, YOU KNOW, I BELIEVE WE ARE.

OTHER THAN NATIONAL EPA POLICY, BUT YES, THAT WOULD BE OKAY.

YEAH, THAT'S RIGHT.

IS IT, IS IT, IS IT HARD FOR LIKE, NATIONALLY TO DO SOMETHING LIKE THAT? BECAUSE IT COMES WITH, UM, PEOPLE SAYING, WELL, THERE, IF THERE'S A HUMAN RIGHT TO WATER, THEN YOU SHOULD, EVERYBODY SHOULD GET IT REGARDLESS OF COST OR WHATEVER.

IS THAT WHAT KEEPS PEOPLE FROM SAYING THAT? I MEAN, THE, THE THING IS TO CREATE SOMETHING THAT AS LOFTY AS A HUMAN RIGHT TO WATER, WHICH IS RIGHT, IT SHOULD BE, WE SHOULD DO THAT.

MM-HMM.

IS THAT WHAT THE CONSTRAINT IS, IS THAT IT COMES WITH THE NUANCE THAT IF THAT'S THE CASE, IT'S A HUMAN RIGHT TO WATER, THEN THE GOVERNMENT SHOULD PAY FOR IT.

IS THAT, THAT'S A, THAT'S A LOT OF IT.

AND I THINK THERE'S JUST A NORMAL POLITICAL STALEMATE ON CAPITOL HILL ABOUT GETTING IT TO THAT.

AND I THINK THERE, IF I CAN SEE THE BIDEN ADMINISTRATION PUSHING FOR IT THROUGH EPA, BUT IT, THERE WOULD BE PUSHBACK IN THE SENATE WITHOUT QUESTION.

AND I KNOW THE HOUSE MAJORITY WOULD PROBABLY DO THE SAME.

SO JUST STARTING WITH CALIFORNIA, THE, THE THING THAT, I LOVE THE FACT THAT WE SAY HUMAN RIGHTS WATER IN CALIFORNIA, BUT REALLY, WE HAD SOMEBODY AT METROPOLITAN COME AND SPEAK.

I THINK HE WAS FROM UCLA, HE WAS A, IN A NONPROFIT FIELD WITH UCLA.

UM, AND HE SAID IT'S, IT'S BASICALLY WHAT HE SAID.

THERE'S NO TEETH, THERE'S, THERE'S JUST, IT'S JUST A, YOU KNOW, HUMAN RIGHT TO WATER SOUNDS GOOD, BUT I MEAN, YOU'RE RIGHT, WE HAVE FARM WORKERS THAT DON'T HAVE WATER.

THERE'S PEOPLE THAT, YOU KNOW, PROBABLY CLOSE BY HERE THAT ARE NOT, DON'T HAVE GOOD WATER, RELIABLE CLEAN WATER.

SO, UM, I, IT REALLY BOTHERS ME THAT WE, WE HAVE THAT SET AS A LOFTY GOAL, BUT WE DON'T REALLY HAVE THE, THE TEETH TO PUT IN IT.

AND I WANNA THANK YOU BECAUSE I KNOW WORKING WITH DIANE AND THE OTHERS, WE, WE'VE DONE, WE ARE MOVING IN A GOOD DIRECTION BOTH WITH CONSERVATION AND ARE TRYING TO FIGURE OUT HOW WE DEAL WITH LOW INCOME ALSO.

BUT, UM, HOPEFULLY WE ARE AN EXAMPLE THAT, JUST A COUPLE WHAT, A COUPLE COMMENTS.

ONE IS THAT IT'S THE BASIS FOR LITIGATION AND THE ENVIRONMENTAL NI AID COMMUNITIES WILL USE IT WHEN THEY SEE THAT, UH, A COMMUNITY SERVE A PROVIDER IS NOT DOING WHAT THEY NEED TO DO, OR THAT THERE'S A POLICY DIRECTION TAKEN BY EITHER THE WATER BOARD OR DWR.

BUT QUITE FRANKLY, THE CHAIR OF THE WATER BOARD, JOAQUIN RAMALA, IS VERY CLEAR ABOUT PUSHING ART IN THAT DIRECTION.

HMM.

BUT A NEW DEVELOPMENT, IT HAS TAKEN PLACE IN THE LAST COUPLE WEEKS WHERE THERE'S A PROPOSED CONSTITUTIONAL AMENDMENT TO GUARANTEE THE HUMAN RIGHT TO WATER AND TO CLEAN AIR.

AND, UM, IT'S ACTUALLY CAUSING DIVISION IN THE ENVIRONMENTAL COMMUNITY BECAUSE THEY SEE IT AS AN OPPORTUNITY TO FAST TRACK PROJECTS LIKE THE SINGLE TUNNEL IN THE DELTA.

SO IT'S, IT'S NOT, IT'S NOT THE, THE INTEREST GROUPS ARE NOT LINING UP AS ONE WOULD NORMALLY EXPECT IN THIS CASE, BECAUSE THEY VIEW IT AS A, AS A JAIL BREAK NOTWITHSTANDING THE, THE, UH, THE WONDERFUL LANGUAGE.

AND YOU CAN YOU KEEP US ABREAST ON THAT.

AND THEN THE OTHER THING, I'M GLAD YOU BROUGHT UP THE DELTA CONVEYANCE AND THEN ALSO SITES.

WHAT DO YOU, WHAT ARE YOU, YOU KNOW, WHAT ARE YOU HEARING ON THOSE? WELL, SITES GOT BLESSED BY THE GOVERNOR AND PUT ON THE FAST TRACK THAT WAS, UH, RESULT OF RECENT LEGISLATION.

SO I THINK SITES IS MOVING IN THE DIRECTION LAWSUITS HAVE BEEN FILED AS ONE WOULD EXPECT AS HAS HAPPENED WITH, UH, THE ENVIRONMENTAL DOCUMENTS FOR THE SINGLE TUNNEL.

SO WE'RE BACK, BACK WHERE WE, ALL WE ARE IS ALWAYS ARE IN CALIFORNIA.

DEALING WITH LITIGATION OVER A MAJOR, YOU KNOW, CONSTRUCTION PROJECT.

A LOT MORE QUESTIONS, BUT WE CAN TALK LATER.

ANY OTHER COMMENTS? I HAVE A, A MOTION AND A SECOND WE'LL CALL THE VOTE.

ALL IN FAVOR? AYE.

ANY OPPOSED? THE MOTION CARRIES.

[4. 24-51974 Recommendation to authorize the General Manager to issue a project task order to JIG Consultants under On-Call Professional Engineering Contract No. UT-3802 for the Large Potable Water Valve Replacement Project - De Ora Way, Palo Verde Avenue, Orange Avenue, El Dorado Park, and Wardlow Road (EO-3674) in the amount not to exceed $231,020. Suggested Action: Approve recommendation. ]

SO WE HAVE A LARGE VALVE REPLACEMENT PROGRAM.

ITEM NUMBER FOUR ON THE AGENDA IS TO AUTHORIZE THE GENERAL MANAGER TO ISSUE A PROJECT TASK ORDER TO JIG CONSULTANTS.

AND WE HAVE ROB PRESENTING GOOD MORNING COMMISSIONERS.

UH, THE ITEM I HAD BEFORE YOU THIS MORNING IS REQUESTING THE BOARD TO AUTHORIZE THE GENERAL MANAGER TO ISSUE A TASK ORDER TO JIG CONSULTANTS UNDER THE ON-CALL PROFESSIONAL ENGINEERING CONTRACT NUMBER UT 38 0 2 FOR A LARGE VALVE REPLACEMENT PROJECT AT VARIOUS LOCATIONS AND THE AMOUNT NOT TO EXCEED $231,020.

UH, I HAVE A SHORT PRESENTATION FOR YOU TO PROVIDE SOME BACKGROUND INFORMATION ON THIS PROJECT.

[00:25:05]

UH, SO ANNUALLY WE TRY TO REPLACE, UH, VALVES THAT ARE 16 INCHES AND LARGER, UH, THAT ARE PART OF OUR, UH, POTABLE WATER TRANSMISSION MAIN SYSTEM.

UH, TYPICALLY THE VALVES THAT ARE TARGETED FOR REPLACEMENT ARE EITHER INOPERABLE OR THEY'RE PAST THEIR USEFUL LIVES.

UH, SO THIS, FOR THIS PARTICULAR PROJECT, WE'VE IDENTIFIED SEVERAL VALVES THAT HAVE BEEN INSTALLED BETWEEN 1948 AND 1962.

SO THAT'S, THAT EQUATES TO 76 TO 62 YEARS OLD.

UH, I DO HAVE A COUPLE OF SHORT VIDEO CLIPS TO SHOW THE DIFFERENCES BETWEEN GAIT AND BUTTERFLY VALVES.

SO THE EXISTING VALVES IN THE GROUND RIGHT NOW ARE GAIT VALVES, AND WE ARE GONNA REPLACE THEM WITH BUTTERFLY VALVES.

SO ABE, CAN I GET SOME ASSISTANCE ON TIME? SURE.

SO FOR A GAIT VALVE, YOU ESSENTIALLY HAVE A DISC OR PLATE THAT RISES UP AND DOWN TO PREVENT FLOW FROM COMING IN, OR, UH, PREVENT FLOW FROM COMING IN.

AND NEXT ONE.

AND FOR A BUTTERFLY VALVE, YOU ACTUALLY HAVE A DISC THAT ROTATES WITHIN THE PIPELINE SUCH AS THAT, AND THAT'S HOW YOU CONTROL FLOW, UH, WITH A BUTTERFLY VALVE.

UH, ANOTHER BIG DIFFERENCE BETWEEN THE TWO IS, UH, THE NUMBER OF TURNS IT TAKES TO OPEN AND CLOSE A VALVE.

SO, JUST FOR REFERENCE PURPOSES, UH, ONE OF THE VALVES WE'RE REPLACING ON THIS PROJECT, IT'S AN OLD GATE VALVE.

IT TAKES ABOUT 141 TURNS IN ORDER TO CLOSE THAT VALVE.

UH, WE RECENTLY INSTALLED A BUTTERFLY VALVE A COUPLE YEARS AGO, A PROJECT IN FRONT OF THE TREATMENT PLAN ON REDONDO AVENUE.

UH, THAT BUTTERFLY VALVE TAKES ABOUT 14 TURNS, UH, TO OPEN AND CLOSE.

SO THERE IS QUITE A BIG DIFFERENCE IN TERMS OF, UH, OPERATION OF THE VALVES.

AND THESE ARE JUST PICTURES OF, UH, PREVIOUS, UH, LARGE VALVE REPLACEMENT PROJECTS.

AS YOU CAN SEE, THIS IS AN OLD GATE VALVE THAT ROSE A REMOVED PART OF THE REDONDO AVENUE, UH, PROJECT.

UH, THE FOOTPRINT FOR A LARGE DIAMETER GATE VALVE IS QUITE LARGE.

UH, YOU HAVE A BONNET ON TOP OF THE VALVE WHERE THE DISC OR PLATE RISES UP INTO, UH, WHERE YOU DON'T HAVE THAT WITH A BUTTERFLY VALVE BECAUSE THE DISC IS INSIDE THE VALVE ITSELF.

UM, AND HERE YOU HAVE, UH, CONTRACTOR WORKERS, UH, IN THE PROCESS OF REMOVING A VALVE.

AND THESE ARE MORE PICTURES, UH, OF THE VALVE REMOVAL AS WELL.

SO THIS, FOR THIS PARTICULAR PROJECT, WE HAVE, UH, IDENTIFIED REPLACEMENT OF TWO 30 INCH VALVES, 1 36 INCH VALVE, 1 28 INCH GATE VALVE, AND ONE 20 INCH BUTTERFLY VALVE.

SO AGAIN, THE RECOMMENDATION, WELL, BEFORE I GET TO THAT, UH, LET ME HAVE SOME MORE BACKGROUND INFORMATION.

UM, SO ON OCTOBER 4TH, UH, WE DID SEND OUT A REQUEST FOR PROPOSAL TO 23 CONSULTANTS IN OUR PIPELINE IMPROVEMENTS CATEGORY OF THE ON-CALL BENCH FOR PROFESSIONAL ENGINEERING SERVICES.

WE RECEIVE SIX PROPOSALS AND EVALUATE AND ANALYZE.

ALL SIX STAFF RECOMMENDS GIG CONSULTANTS BASED ON THEIR EXPERIENCE ON SIMILAR PROJECTS, UH, PROJECT TEAM AND REASONABLENESS OF FEES.

UH, THE NOT TO EXCEED AMOUNT FOR THEIR SERVICES IS $231,020.

AND THE DURATION OF THE PROJECT TASK ORDER IS THROUGH PROJECT COMPLETION.

SO THE RECOMMENDATION IS TO AUTHORIZE THE GENERAL MANAGER ISSUE THAT TASK ORDER TO JIG CONSULTANTS.

UH, WITH THAT, THAT CONCLUDES MY PRESENTATION AND I'LL BE HAPPY TO ANSWER ANY, ANY QUESTIONS THE BOARD MAY HAVE.

DO WE HAVE ANY PUBLIC COMMENT, COMMISSIONER COMMENT, , THAT SOUNDS LIKE YOU DID A GREAT JOB, RON.

WE DID.

UM, DO I HAVE A MOTION TO APPROVE? SO MOVED.

THANK YOU COMMISSIONER SHANNON, DO I HAVE A SECOND? SECOND.

COMMISSIONER CORDERO.

ALL IN FAVOR? AYE.

ANY OPPOSED? THE MOTION CARRIES.

[5. 24-51975 Receive and file presentation on Gas Purchasing 101. Suggested Action: Receive and file. ]

NOW, UM, ITEM FIVE ON THE AGENDA IS, UM,

[00:30:01]

GAS PURCHASING 1 0 1.

WE'VE ALL BEEN LOOKING FORWARD TO THIS .

WE, WE GOT AN UPDATE SOMEWHERE AROUND THIS TIME LAST YEAR.

I THINK OUR FIRST FORAY INTO THE ISSUE FOR ME, CERTAINLY INTO HEDGING AND ALL OF THE ABOVE .

SO I TURNED THAT OVER TO CHRIS.

RIGHT MORNING COMMISSIONERS.

UH, SO TONY FOSTER IS, IS OUR MANAGER OVER THAT GROUP THAT, UH, IS IN CHARGE OF PROCURING OUR GAS SUPPLIES.

UM, AND HE'S, SO HE IS GONNA GO INTO QUITE A BIT OF DETAIL ON THIS, BUT I, I JUST WANNA POINT OUT THAT THE, THERE'S A BIG DIFFERENCE BETWEEN, UH, HOW WE PURCHASE WATER SUPPLIES VERSUS GAS SUPPLIES.

UH, ANTONIO WILL GET INTO IT, BUT GAS WAS DEREGULATED.

AND SO, UM, WE COMPETE ON A DAILY BASIS, UH, ON GAS SUPPLIES.

WE COMPETE AGAINST BUYERS ACROSS THE COUNTRY.

AND SO, UM, YOU KNOW, THE, YOU HAVE TO BE ON TOP OF YOUR GAME ON THIS.

IT'S NOT, YOU DON'T JUST GET A BILL FOR THE SUPPLY.

YOU HAVE TO GO OUT THERE AND YOU HAVE TO BE CREATIVE AND AGGRESSIVE, BUT, UH, ALSO PROTECT THE CUSTOMER.

SO I'LL TURN IT OVER TO TONY.

MM-HMM.

UM, WE WERE TASKED, THE CHALLENGE WAS PRESENTED BY CHRIS AND DIANA TO PROVIDE AN OVERVIEW OF A GAS PROCUREMENT IN 15 MINUTES OR LESS.

SO WE ACCEPT THAT CHALLENGE, BUT I HAVE TO PROVIDE THE CAVEAT THAT THIS DOES NOT INCLUDE INTERJECTIONS FROM CHRIS WHO USED TO DO THIS JOB AND KNOWS IT INSIDE OUT, OR ANY OTHER QUESTIONS THAT YOU MAY HAVE.

SO LET'S JUST JUMP RIGHT IN.

UH, SINCE OUR MERGER OVER A YEAR AGO, WE CAN GO BACK TO THE TITLE SLIDE.

UM, YOUR GAS BUSINESS SERVICES TEAM HAS WORKED DILIGENTLY TO SOURCE, MARKET, TRANSPORT AND SUPPLY, SAFE, RELIABLE, AND REASONABLY PRICED NATURAL GAS TO ALL HOMES AND BUSINESSES IN LONG BEACH AND SIGNAL HILL.

THIS YEAR WE CELEBRATE 100 YEARS OF GAS OPERATIONS, AND WE ARE HERE THIS MORNING TO PRESENT A BRIEF OVERVIEW OF OUR NATURAL GAS PROCUREMENT PRACTICE.

SO NOW SLIDE, JUMP RIGHT IN NATURAL GAS DEREGULATION SPRING FROM LEGISLATION THAT BROKE UP UTILITIES TO ALLOW THIRD PARTY SUPPLIERS TO COMPETE.

THIS IS SOMEWHAT ANALOGOUS TO THE BREAKUP OF BELL TELEPHONE.

IN THE EARLY 1980S, GAS RE DEREGULATION CREATED BOTH WHOLESALE AND RETAIL GAS MARKETS.

PRIOR TO THIS, UTILITY COMPANIES CONTROLLED THE ENTIRE GAS SUPPLY CHAIN.

NATURAL GAS FIRST BEGAN TO BE DEREGULATED UNDER THE NATURAL, UH, NATURAL GAS POLICY ACT OF 1978.

THIS ACT BEGAN A PROCESS OF CUSTOMER CHOICE IN SOME STATES, WHILE NEWS COVERAGE FOCUSED MORE ON ELECTRICITY, DEREGULATION, GAS DEREGULATION ACTUALLY CAME FIRST AND THERE ARE MORE DEREGULATED GAS UTILITIES THAN DEREGULATED ELECTRIC UTILITIES.

FINALLY, IN 1992 FOR PASSED ORDER 6 3 6, THIS CALLED FOR THE COMPLETE SEPARATION OF GAS SUPPLY CHARGES FROM DELIVERY CHARGES ON CUSTOMER BILLS.

THE BENEFITS THE FEDERAL GOVERNMENT HELPED TO FACILITATE GAS DEREGULATION BY PUTTING PRICE CAPS ON GAS PIPELINES TO MAKE GAS MORE ACCESSIBLE AND AFFORDABLE FOR CONSUMERS.

THIS ALLOWED FOR COMPETITION TO OFFER AFFORDABLE GAS IN THE MARKET.

BY THE EARLY 1990S, MANY STATES AND UTILITIES BEGAN TO ADOPT DEREGULATED GAS MARKETS.

THE UPSIDE IS BEST DESCRIBED IN TWO WORDS, COMPETITION AND CHOICE.

THE IMPLICATIONS WERE TREMENDOUS.

THE OPPORTUNITY TO SOURCE, PURCHASE AND TRANSPORT OUR GAS FROM ANYONE ANYWHERE IN THE COUNTRY CREATED ENTIRELY NEW VALUE PROPOSITIONS.

THIS CREATED EFFICIENCIES NOT ONLY IN PHYSICAL GAS MARKETS, BUT ALSO IN FINANCIAL MARKETS.

FOR EXAMPLE, THE INNOVATIVE $1 BILLION GAS PREPAY AGREEMENT THAT WAS NEGOTIATED BY CHRIS AND HIS TEAM IN THE MID TWO THOUSANDS UNDER THIS DEAL, 30 YEARS WORTH OF NATURAL GAS WAS PURCHASED IN ADVANCE IN EXCHANGE FOR A FIXED DISCOUNT OFF THE INDEX PRICE OF GAS, REGARDLESS OF EXISTING MARKETING CONDITIONS.

THIS IS A MAJOR ACCOMPLISHMENT FROM WHICH WE CONTINUE TO BENEFIT FROM TODAY.

FORECASTING DEMAND SINCE DEREGULATION CREATED THE ABILITY TO PURCHASE GAS ANYWHERE.

LET'S TAKE A LOOK AT HOW MUCH GAS IS CONSUMED BY OUR CUSTOMERS.

WHEN TALKING ABOUT UNITS OF GAS, WE USE THERMS AS MEASURING UNITS.

ONE, THE OF GAS IS THE ENERGY CONTENT OF ABOUT 100 CUBIC FEET OF GAS AT STANDARD TEMPERATURE AND PRESSURE.

A TYPICAL HOME USES BETWEEN 20 AND 60 THERMS PER MONTH, DEPENDING ON THE WEATHER.

THIS GRAPH ILLUSTRATES THE CITY'S AVERAGE CONSUMPTION IN DECK OF THERMS, WHICH IS 10 THERMS BY MONTH OVER ONE CALENDAR YEAR.

WE CALL IT A DUCK CURVE BECAUSE IT LOOKS LIKE THE CURVE OF A DUCK'S BACK AS IT PLA AS IT PLOTS THE CYCLICAL RISE AND FALL OF DEMAND EVERY YEAR.

CONSUMPTION

[00:35:01]

STARTS RELATIVELY HIGH IN JANUARY THROUGH MARCH WHEN IT IS TYPICALLY COOLER AND CUSTOMERS USE MORE GAS TO STAY WARM.

THEN, AS THE WEATHER GRADUALLY WARMS THROUGHOUT THE SPRING AND SUMMER CONSUMPTION DIPS ONLY TO RISE AGAIN AS FALL MOVES INTO WINTER.

THIS IS AN INTERESTING POINT TO POINT OUT THAT CONSUM, THIS CONSUMPTION PATTERN IS INVERSE TO THAT OF WATER CONSUMPTION, WHICH GENERALLY DECREASES IN FALL AND WINTER AND INCREASES IN SPRING AND SUMMER.

THIS WORKS TO HAVE A BALANCING EFFECT ON CUSTOMER BILLS.

NOW.

NOW LET'S LOOK AT OUR CUSTOMER BASE FIRST.

BY CONSUMPTION NOTE THAT 51% OF THE GAS WE SELL IS CONSUMED BY RESIDENCES.

19% BY COMMERCIAL USES 12% BY INDUSTRIAL TRANSPORT CUSTOMERS THAT BRING IN THEIR OWN GAS THROUGH OUR SYSTEM.

8% BY ELECTRIC GENERATION CUSTOMERS WHO USE OUR GAS TO CREATE ELECTRICITY LIKE THE AQUARIUM OF THE PACIFIC AND TOYOTA TRI GEN 5% BY LARGE INDUSTRIAL CUSTOMERS LIKE THE CONVENTION CENTER AND THE QUEEN MARY.

AND LASTLY, 5% BY COMPRESSED NATURAL GAS CUSTOMERS LIKE LONG BEACH TRANSIT AND FLEET OPERATIONS.

BUT THERE IS ANOTHER INTERESTING LOOK AT OUR DEMAND PROFILE.

THE NEXT PIE CHART IS OF OUR CUSTOMERS BY RATE CLASSIFICATION.

THIS CHART SHOWS THAT 97% OF OUR CUSTOMERS ARE RESIDENTIAL.

THE REST EXCEPT FOR COMMERCIAL CUSTOMERS AT 3% ARE TOO SMALL TO SEE ON THIS PIE CHART.

UH, THESE ARE OUR INDUSTRIAL CUSTOMERS ARE CNG CUSTOMERS, OUR ELECTRIC GENERATION AND OUR TRANSPORT CUSTOMERS EACH AT LESS THAN ONE 10TH OF A PERCENT.

THIS SHOWS THAT LONG BEACH IS PRIMARILY A BEDROOM COMMUNITY, UH, FROM A GAS UTILITY PERSPECTIVE.

BUT WHY DOES THIS MATTER? WELL, FOR EXAMPLE, DURING OUR PERIODIC HEARINGS WITH SOCAL GAS, BEFORE THE CALIFORNIA PUBLIC UTILITIES COMMISSION, TO DETERMINE HOW GAS OPERATIONS ARE ALLOCATED TO WHOLESALE CUSTOMERS LIKE US, WE CONSTANTLY AND SUCCESSFULLY SOUND THE ALARM THAT ALTHOUGH WE PURCHASE GAS LIKE A LARGE WHOLESALE CUSTOMER, SAY FOR EXAMPLE, LIKE SOUTHERN CALIFORNIA EDISON, WE SERVE MOSTLY HOMES.

AND THESE HOMES CAN'T PASS ON COST INCREASES UNLIKE POWER PLANTS, WHICH CAN MORE EASILY RAISE THEIR RATES.

CUSTOMER DEMAND IN GENERAL GAS CONSUMPTION OVER THE PAST 35 YEARS HAS DECREASED, ALBEIT SLOWLY.

IN THE EARLY 1990S, THIS DEPARTMENT STOPPED SUPPLYING GAS TO THE ELECTRIC GENERATION PLANTS LOCATED IN LONG BEACH.

SINCE THEN, GAS CONSUMPTION HAS CONTINUED TO DECREASE AS SOME LARGE INDUSTRIES HAVE LEFT, AND THE REMAINING HOMES AND BUSINESSES BECOME MORE ENERGY EFFICIENT THROUGH IMPROVED CONSTRUCTION METHODS AND THE UTILIZATION OF VASTLY MORE ENERGY EFFICIENT APPLIANCES.

THOUGH THIS CONSUMPTION HAS BEEN A THOUGH, THIS, UH, CONSUMPTION HAS BEEN A SLOW DECLINE WITH NEW LAWS LIKE CAP AND TRADE EXERTING DOWNWARD PRESSURE ON CONSUMPTION.

A RECENT UPTICK IS LARGELY ATTRIBUTED TO NEW CONSTRUCTION, INCLUDING ACCESSORY DWELLING UNITS.

THE GROWTH IN THIS SEGMENT IS QUITE SIGNIFICANT, UH, SIGNIFICANT.

AND FISCAL YEAR 2023, WE EXPENDED APPROXIMATELY $80 MILLION TO PER THE GAS, PROCURE GAS FOR THE CITY NATURAL GAS SUPPLIERS.

OUR PRIMARY SOURCE IS THE GAS PREPAY AGREEMENT.

THIS 2007 AGREEMENT IS MASSIVE AND PROVIDES APPROXIMATELY 70% OF THE GAS CONSUMED BY OUR CUSTOMERS.

UNDER THIS AGREEMENT, WE RECEIVE A CONTRACTED VOLUME OF GAS THAT VARIES EACH MONTH.

AS MENTIONED EARLIER, WE RECEIVE A SIGNIFICANT DISCOUNT OFF THE MARKET PRICE OF THIS GAS INDEXED AT THE SOUTHERN CALIFORNIA BORDER.

THIS IS A BIG DEAL WE HAVE, AS WE'VE RECENTLY WITNESSED.

THE COMMODITY PRICE OF GAS CAN BE VOLATILE.

LOOKING, UH, LOCKING IN A FIXED DISCOUNT THROUGH 2037 PROVIDES A HUGE ADVANTAGE EVEN NOW WHEN COMMODITY PRICING IS RELATIVELY INEXPENSIVE.

I THINK GAS TODAY IS AROUND TWO 30 OR SO, SOMEWHERE IN THAT RANGE.

UM, WE RECEIVE AN ADDITIONAL, WELL WHEN IT'S AT THAT RANGE, WE RECEIVE AN ADDITIONAL 30% OFF THE INDEX PRICE.

LONG BEACH IS ALSO FORTUNATE TO HAVE A LONG HISTORY OF OIL PRODUCTION, WHICH IS ALSO A SOURCE OF READILY AVAILABLE LOCALLY PRODUCED GAS, THOUGH NOT ENOUGH TO SUPPLY ALL OUR NEEDS.

LOCAL GAS DOES SUPPLY ABOUT FIVE TO 7% OF OUR DEMAND.

THE LARGEST IS THUMBS AND THE OIL AND GAS THEY EXTRACT BELONGS TO THE STATE OF CALIFORNIA.

SO WE ENTERED INTO AGREEMENTS WITH THE STATE TO SELL US SUPPLEMENTAL GAS SIGNAL.

HILL SAMSON AND BEACH OIL ARE ADDITIONAL LOCAL PRODUCERS.

SINCE LOCAL GAS IS PUT DIRECTLY INTO OUR SYSTEM,

[00:40:01]

WE SAVE ON THE TRANSPORTATION COSTS.

ADDITIONALLY, WE SOURCE RENEWABLE GAS, WHICH WE WILL DISCUSS SHORTLY.

AND LASTLY, WHEN BOTH PREPAY AND LOCAL PRODUCED GAS IS INSUFFICIENT, WE CAN PURCHASE SPOT GAS, WHICH IS PURCHASED THROUGH ONGOING CONTRACTS WITH SEVERAL INVESTMENT BANKS, INVESTMENT BANKS, NATURAL GAS SUPPLY PRICING.

THE COST OF GAS REFLECTS THE CURRENT MARKET PRICE FOR NATURAL GAS.

THIS FLUCTUATES MONTHLY, LARGELY BASED ON THE PUBLISHED MARKET PRICE INDEX.

THIS FIRST OF THE MONTH PRICE SETS THE BASE PRICE FOR NEARLY ALL GAS PURCHASE FOR OUR CUSTOMERS THAT MONTH, INCLUDING PURCHASED UNDER LONG-TERM CON, THE GAS PURCHASE.

UNDER LONG-TERM CONTRACTS.

IT IS IMPORTANT TO NOTE THAT WE ALSO APPLY THE PREPAID DISCOUNT TO LOCAL PRODUCERS.

PER STATE REGULATION, LONG BEACH PASSES THE COST OF GAS ONTO ITS CUSTOMERS MONTHLY.

THE INTENT OF THIS BILLING PRACTICE IS FOR NATURAL GAS CONSUMERS TO BE AWARE OF THE CURRENT MARKET PRICE NEARLY ON A REALTIME BASIS SO THAT THEY CAN ADJUST THEIR GAS USAGE ACCORDINGLY.

IMPORTANTLY, THE COST OF GAS CHARGE DOES NOT INCLUDE ANY MARKUP TO THE CUSTOMER.

AND THEREFORE, UH, THE CITY GAS UTILITY DOES NOT GENERATE ANY PROFIT STORAGE PUT SIMPLY WHEN GAS PRODUCTION IS HIGHER THAN GAS CONSUMPTION, TYPICALLY APRIL THROUGH OCTOBER, IT, IT CAN BE PLACED INTO STORAGE.

WHEN GAS PRODUCTION IS LOWER THAN CONSUMPTION NOVEMBER THROUGH MARCH, IT CAN BE WITHDRAWN FROM STORAGE TO MEET DEMAND.

STORAGE CAN ALSO BE USED TO KEEP GAS FLOWING TO CUSTOMERS IN THE EVENT OF ANY TEMPORARY DISRUPTIONS IN PRODUCTION OR DELIVERY.

THE FLEXIBILITY PROVIDED BY STORAGE IS THE KEY TO MAINTAINING RELIABLE AND RESPONSIVE GAS DELIVERY AT A REASONABLE COST.

THERE ARE ABOUT 12 STORAGE FIELDS THAT ARE USED HERE IN SOUTHERN CALIFORNIA.

GAS STORAGE PLAYS A VITAL ROLE IN MAINTAINING THE RELIABILITY OF SUPPLY NEEDED TO MEET DEMANDS OF GAS CUSTOMERS.

IT ALSO HELPS MEET SEASONAL DEMANDS AND PROVIDES INSURANCE AGAINST UNFORESEEN SUPPLY OR PRICE DISRUPTIONS.

TRANSPORT CUSTOMERS, I'M SURPRISED WE'RE MAKING REALLY GOOD TIME HERE.

TRANSPORT CUSTOMERS DEREGULATION ALLOWS US TO SERVE LARGE INDUSTRIAL AND ELECTRIC GENERATION CUSTOMERS IN OUR SERVICE T SERVICE TERRITORY WHO WISH TO PURCHASE THEIR OWN GAS.

THIS IS IMPORTANT BECAUSE SOME OF THESE CUSTOMERS MAY PREFER TO PURCHASE GAS UNDER A FIXED PRICE CONTRACT OR ENTER YEAR ROUND PRICE HEDGING AGREEMENTS.

THESE CUSTOMERS USE THIRD PARTY SUPPLIERS, INCLUDING SHELL ENERGY AND NRG TO WORK WITH US TO SCHEDULE THEIR VOLUMES THROUGH THE SOCAL GAS SYSTEM.

TO US, THESE CUSTOMERS INCLUDE THUMBS CAL STATE LONG BEACH GOLD BOND BUILDING PRODUCTS, MEMORIAL HOSPITAL AND TOYOTA MOTORS INTERSTATE PIPELINES.

ABOUT 90% OF OUR GAS SUPPLIES ARE MOVED THROUGH A NETWORK OF INTERSTATE AND INTRASTATE STATE PIPELINES.

UNDER THE PREPAY AGREEMENT, MERRILL LYNCH IS OBLIGATED TO SCHEDULE GAS FOR MULTIPLE REGIONS THROUGHOUT THE SOUTHWEST FOUR CORNERS AREA AND CANADA TO RECEIPT POINTS ALONG THE SOUTHERN CALIFORNIA BORDER.

THE INTERSTATE PIPELINES ARE AGING AND THIS CREATES RELIABILITY ISSUES, WHICH CAN INCREASE COSTS.

SINCE WE PAY MERRILL LYNCH FOR THE INTERSTATE PIPELINE COSTS, WE MUST IDENTIFY THE MOST RELIABLE AND COST EFFECTIVE BORDER RECEIPT POINTS, AND WE HAVE DONE SO.

AS A RESULT, WE HAVE NO NEGOTIATED A COST OF DELIVERING PRE PREPAID GAS THAT WAS SETTLED AT 8 CENTS A DECK OF THERMAL.

AND WITHOUT ANY CONTEXT, THIS IS A VERY GOOD PRICE.

SO WE'RE PROUD OF OURSELVES.

INTRASTATE PIPELINES, INTRASTATE PIPELINE, OR INTERSTATE GAS INTEREST, CALIFORNIA VIA SOUTHERN CALIFORNIA GASES ENTER INTRASTATE PIPELINES.

WHAT IS IMPORTANT HERE IS THE RELIABILITY AND COST OF THE RECEIPT POINTS.

WE MUST PAY SOCAL GAS TO UTILIZE THEIR SYSTEM TO DELIVER GAS TO US.

WE COMPETE WITH ALL OTHER GAS DISTRIBUTION ENTITIES TO ACCESS THE MOST RELIABLE RECEIPT POINTS AND COST-EFFECTIVE PRICES.

WE HAVE SUCCESSFULLY ACQUIRED RECEIPT POINTS AT TOPO AND NEEDLES FOR THE NEXT THREE YEARS, WHICH ARE THE MOST COST-EFFECTIVE AND RELIABLE ON THE SOCAL GAS SYSTEM.

FROM HERE, THE GAS TRAVELS TO US IN LONG BEACH.

THIS NEXT SLIDE, UH, THIS NEXT SLIDE IS A SHORT VIDEO, WHICH FURTHER DETAILS HOW GAS FLOWS THROUGH THE SOCAL SYSTEM.

[00:46:20]

ALL RIGHT, TRY TO KEEP THIS IN YOUR HEADS.

WE'RE GONNA COME BACK TO THIS IN A MINUTE, BUT FOR NOW, LET'S JUST KEEP MOVING ON.

LIQUIFIED NATURAL GAS.

THE LNG INDUSTRY HAS EXPERIENCED REMARKABLE GROWTH OVER THE PA OVER THE PAST FIVE DECADES SINCE THE EARLY 1970S WHEN THE FIRST COMMERCIAL LNG EXPORT TERMINAL WAS AL ESTABLISHED IN ALGERIA, THE INDUSTRY HAS EVOLVED INTO A GLOBAL POWERHOUSE.

THE INDUSTRY HAS QUADRUPLED IN SIZE OVER THE LAST TWO DECADES ALONE.

THIS EXPANSION CAN BE ATTRIBUTED TO SEVERAL FACTORS, INCLUDING INCREASED GLOBAL DEMAND FOR CLEANER ENERGY ADVANCEMENTS IN LIQUID ACTION TECHNOLOGY AND NEW, UH, LNG EXPORTING COUNTRIES.

NOTABLY, THE UNITED STATES HAS EMERGED AS A DOMINANT PLAYER AND HAS RECENTLY SOLIDIFIED ITS POSITION AS THE LARGEST EXPORTER OF LNG SHELL GAS REVOLUTION, WHICH UNLOCKED VAST RESERVES OF GAS IN THE US HAS MADE IT ATTRACTIVE FOR LNG, WHICH NOW EXPORTS, WHICH IT NOW EXPORTS WORLDWIDE.

WE ARE KEEPING A CLOSE EYE ON THIS DEVELOPMENT AS IT COULD POTENTIALLY INCREASE DEMAND FOR GAS AS IT IS DIVERTED TO EXPORTATION.

AND THIS COULD INCREASE OUR NATURAL GAS PRICES DOMESTICALLY.

RENEWABLE NATURAL GAS RNG IS A PRODUCT OF DECOMPOSING ORGANIC MATTER THAT HAS BEEN PROCESSED INTO PIPELINE QUALITY GAS.

LIKE CONVENTIONAL NATURAL GAS, RNG CAN BE USED AS A TRANSPORT FUEL IN THE FORM OF COMPRESSED NATURAL GAS.

THE COST OF RNG IS EXPENSIVE RELATIVE TO TO TRADITIONAL GAS, BUT FEDERAL AND STATE CREDITS OFFSET THAT DIFFER DIFFERENTIAL BEGINNING IN 2016.

LONG BEACH UTILITIES EXPORTED RNG TO THREE ENTITIES.

LONG BEACH TRANSIT FOR USE IN ITS CNG POWERED BUSES.

LONG BEACH FLEET SERVICES FOR USE IN ALL STREET SWEEPERS AND REFUSE COLLECTION VEHICLES.

AND THE CNG STATION LOCATED ON THE GAS CAMPUS AT 2,400 EAST SPRING.

SUMMARY OF HOW RNG IMPACTS GREENHOUSE GASES REDUCTION IS FOUND IN THE FOLLOWING FIGURES IN THE LAST FISCAL YEAR.

THIS DEPARTMENT PROCURED AND DISTRIBUTED 312,000 DECATHERM OF RNG BECAUSE RNG IS NET AS A NET NEUTRAL FUEL SOURCE.

OUR ANNUAL CO2 REDUCTION IS APPROXIMATELY 17,000 METRIC TONS.

GAS PRICE FORECASTING.

AN IMPORTANT ASPECT OF GAS PROCUREMENT OPERATIONS IS THE ABILITY TO FORECAST PRICING AS ACCURATELY AS POSSIBLE.

A MAJOR COMPONENT OF THIS WORK IS THE ANALYSIS OF NATURAL GAS FUTURES FUTURES FORECASTING IS ESSENTIALLY ANALYSIS OF, OF WHAT FUTURES TRADERS ARE PAYING FOR GAS COMMODITIES TODAY FOR DELIVERY ON FUTURE DATES.

THERE ARE MANY FACTORS WHICH CAN POTENTIALLY IMPACT THE ACCURACY OF THE PROJECTIONS, DISRUPTIONS TO PIPELINE OPERATIONS THAT DELIVER GAS TO SOUTHERN CALIFORNIA.

UNEXPECTED SEASONAL DEMANDS, CHANGES IN PRODUCTIONS AND RIG COUNTS, COSTS AND VOLUMES OF STORAGE AND DISRUPTIVE WEATHER EVENTS.

LISTED HERE ARE SEVERAL SOURCES THAT WE UTILIZE FOR THESE PRICE PROJECTIONS.

THEY INCLUDE NATURAL GAS INTELLIGENCE, PLAX, NYMEX, AND HENRY HUB.

THE NYMEX IS A KEY NATIONAL FORECASTING TOOL, BA BASED ON THE INDUSTRY'S GAS PRICING AND WHERE IT'S HEADED.

THE NYMEX LISTED GAS FEATURES CONTRACTS USED BY TRADERS AND HEDGERS,

[00:50:01]

UM, MANAGES RISK.

IT IS BASED ON THE PRICE OF GAS AT HENRY HUB IN LOUISIANA.

WE UTILIZE NYMEX TO GATHER TWO PRIMARY COMPONENTS OF GAS PRICING, COMMODITY PRICE, AND BASIS.

COMMODITY PRICE IS BASED ON THE NYMEX HENRY HUB FUTURES PRICE AND THE BASIS INCLUDES TRANSPORTATION AND STORAGE COSTS.

THE BASIS IS THE REGIONAL DIFFERENTIAL TO THE HENRY HUB HUB PRICE AND CAN BE AN ADDER OR DISCOUNT TO THE NYMEX PRICE.

HENRY HUB SERVES AS A PI OF A PIVOTAL POINT IN THE NATURAL GAS INDUSTRY.

IT PLAYS A CRUCIAL ROLE IN THE NATURAL GAS FUTURES MARKET.

IT IS A CRITICAL HUB FOR THE PRICING AND TRADING OF NATURAL GAS CONTRACTS IN THE UNITED STATES.

THE SIGNIFICANCE OF HENRY HUB LIES IN ITS POSITION AS A PHYSICAL DELIVERY POINT FOR GAS FUTURES CONTRACTS, PARTICULARLY THOSE TRADED ON NYMEX.

THIS HUB IS CONNECTED TO A VAST NETWORK OF PIPELINES THAT TRANSPORT GAS FROM VARIOUS PRODUCTION AREAS TO CONSUMERS AND BUSINESSES ACROSS THE COUNTRY.

ITS STRATEGIC LOCATION MAKES IT A NATURAL GATHERING POINT FOR MULTIPLE PIPELINES.

ONE THING I'D LIKE TO POINT OUT HERE IS THE LARGE CONCENTRATION OF PIPELINES IN THE MIDWEST AND EAST AND THE RELATIVELY FEW PIPELINES LEADING TO CALIFORNIA.

THIS CAN AND DOES HAVE AN IMPACT ON OUR PRICING BECAUSE ANY OUTAGE ALONG THESE FEW PIPE PIPELINES IN THE WEST, IMPACT SUPPLIES AND THEREFORE THE COSTS, UH, TO CALIFORNIA END USERS GAS PURCHASING CONSIDERATIONS.

OUR FOREMOST PRIORITY IS TO SAFEGUARD THE INTEREST OF CUSTOMERS WHILE ENSURING A STEADY SUPPLY OF GAS AT REASONABLE PRICES.

THIS ENTAILS A MULTIFACETED APPROACH THAT TAKES INTO ACCOUNT THE VOLATILE NATURE OF THE GAS MARKET AND THE NEED FOR LONG-TERM STABILITY TO PROTECT CUSTOMERS.

IT IS IMPERATIVE TO DEVELOP A COMPREHENSIVE HEDGING STRATEGY SUCH AS THE RECENT FIXED PRICE SWAP FOR OUR WINTER PREPAY VOLUMES.

WE ESTABLISHED, UM, IN THIS RECENT HEDGE, WE ESTABLISHED A MAXIMUM PRICE FOR THE PURCHASED, UH, GAS OVER THE NEXT THREE YEARS.

FINALLY, TO DEVELOP EFFECTIVE PRICING CONSIDERATIONS, WE MUST ANALYZE A MULTITUDE OF FACTORS DISRUPTIONS, UH, IN PIPELINE OPERATIONS THAT DELIVER NATURAL GAS TO CALIFORNIA SEASONAL DEMAND PATTERNS, FLUCTUATIONS IN NATURAL GAS PRODUCTIONS, AND AGAIN, RIB COUNTS AND STORAGE INVENTORIES ALL WEIGH HEAVILY ON FORECASTING PROCESSES.

THROUGH A COMPREHENSIVE UNDERSTANDING OF THESE FACTORS, WE CAN MAKE INFORMED DECISIONS ENSURING OUR CUSTOMERS THAT RELIABLE GAS AT REASONABLE PRICES, UM, REMAIN AVAILABLE.

OKAY, ARE WE AT TIME? THAT CONCLUDES MY REPORTS AND AVAILABLE FOR ANY QUESTIONS.

I DIDN'T INTERRUPT YOU ONCE.

AH, I NOTICED, I NOTICED I SAVED SOME THINGS.

WOW, TONY.

SO THAT WAS A VERY COMPLEX PRESENTATION, REALLY SEEKS TO ANSWER THE QUESTION, WHERE DOES THE GAS COME FROM? RIGHT? EVERY CHILD'S QUESTION, LIKE WHY IS THERE AIR? ANYWAY, UM, ANY, ANY PUBLIC COMMENT TO ADD? ANY COMMISSIONER COMMENT? THANK YOU.

THAT WAS THAT WAS GREAT.

1 0 1, UH, GAS PURCHASING.

UM, QUICK QUESTION ON THE THREE YEAR, UH, HEDGING AGREEMENT, UM, WHAT ARE THE PLANS TO FOLLOW THAT UP WITH FUTURE, UH, AGREEMENTS? ARE WE LIKE DOING A LADDER, A AGREE, UH, SITUATION OR, YES.

SO, UH, WE WERE FORTUNATE WITH THIS THREE YEAR HEDGE.

IN FACT, IT'S A SWAP, WHICH IS, UM, QUITE PRODUCTIVE, BUT NOT AS PRODUCTIVE AS WE LIKE.

AND AS IN SHORT, THE INDUSTRY IS VERY VOLATILE RIGHT NOW, AND THE COUNTERPARTIES THAT WE USE ARE VERY RELUCTANT TO ENTER INTO MUCH LONGER TERMS FOR THIS.

SO WE'RE GONNA HAVE TO GO OUT FOR THESE SHORTER THREE YEAR PERIODS, WHICH KIND OF PROTECTS BOTH PARTIES BECAUSE AS THE MARKET CHANGES, NEITHER WANTS TO BE STUCK IN A UNTENABLE POSITION.

BUT TO YOUR POINT, MOVING FORWARD, WE DO CONTINUE TO PLAN A HEDGING STRATEGIES, UH, WITH THE BEST HEDGING INSTRUMENTS AVAILABLE.

UM, USUALLY WE LIKE TO PUT A PUT OR CALL OPTION, UH, BUT AT THIS POINT, ONLY THE SWAPS WERE AVAILABLE AND THEY'RE WORKING OUT FOR US.

SO MAY MAYBE I CAN TRY TO EXPLAIN YEAH.

USING THAT LINGO.

UM, SO THIS TIME THE ONLY THING THAT WAS AVAILABLE TO US WAS TO CONVERT THE MARKET PRICE INTO A FIXED PRICE.

SO WE DID THAT FOR, UM, THE NEXT THREE WINTERS.

AND, UM, AND IDEALLY, AND WHAT WE'VE DONE IN THE PAST IS WE'VE DONE MORE OF A COLLAR WHERE YOU HAVE A, YOU PAY THE MARKET PRICE, BUT WITHIN A PARAMETER OF A CEILING AND A FLOOR.

AND THAT'S SOMETHING THAT I, I, I PREFER TO DO, BUT IT WASN'T AVAILABLE

[00:55:01]

THIS TIME.

BUT I COULD SEE US DOING THAT IN THE FUTURE.

UM, ONE, TODAY'S FEBRUARY 1ST.

I HAVE SOME OTHER THINGS I'D LIKE TO TALK ABOUT.

AND SO DENNIS BURKE, DENNIS, WANT YOU TO STAND UP.

SO DENNIS HAS ONE OF THE MOST UNIQUE JOBS IN THE CITY.

HE IS OUR GAS BUYER, AND SO HE IS THE, THE EXPERT ON THIS AND ALONG WITH TONY AND HIS TEAM.

BUT, UH, SO TODAY IS FEBRUARY 1ST.

SO THIS IS WHEN THE MARKET PRICE COMES OUT.

HE'S GONNA BE LOOKING AT THE DEMAND, EXPECTED DEMAND FOR THE MONTH OF MARCH OR MONTH OF FEBRUARY, BUYING THAT SUPPLY.

AND WHAT HE'LL DO IS HE'LL LOOK AT WHAT WE HAVE IN STORAGE, UM, UH, WHAT WE, WE EXPECT TO GET FROM THE LOCAL PRODUCTION, WHAT WE HAVE AS FAR AS THE CONTRACT FOR THE PREPAY, AND THEN PLAY WITH THAT.

AND THEN WHAT WE DO IS WE LOOK AT THAT AND WE COME UP WITH OUR COST OF GAS FORECAST, COST OF GAS, WHICH IS ON THE BILL FOR THE CUSTOMERS FOR THE MONTH OF, UH, FEBRUARY.

UH, SO HE'LL BE DOING THAT, UH, LATER TODAY.

UM, SO HE'LL GET THE, HE'LL GET THE MARKET PRICE THIS AFTERNOON, PROBABLY AROUND ONE OR TWO, THREE A LITTLE BIT LATER.

YEAH, THREE.

UM, THE OTHER THING I WANTED TO POINT OUT, UH, TONY MENTIONED THE, UH, PREPAY DEAL.

SO THAT WAS A, A, A DEAL WE DID BACK IN 97, THE PREPAY, UH, AROUND 2007.

2000, YEAH, 2007.

THAT'S RIGHT.

UM, AND THAT WAS THE FIRST, UM, IT'S, IT'S A VERY COMPLEX DEAL.

IT WAS THE SINGLE LARGEST FINANCIAL TRANSACTION THE CITY HAS EVER DONE.

IT WAS, UH, WE GOT APPROVED FOR OVER A LITTLE, OVER A BILLION DOLLARS, UH, FROM THE CITY COUNCIL TO DO THIS DEAL.

IT WAS THE FIRST 30 YEAR DEAL DONE IN THE UNITED STATES, UH, AS FAR AS PREPAYS.

AND, UM, THE FIXED PRICE DISCOUNT THAT WE, UH, OBTAINED THROUGH THAT CONTRACT IS ROUGHLY ABOUT 200 SOMETHING MILLION DOLLARS IN SAVINGS TO THE CUSTOMERS.

AND, UH, HUGE, WHAT WE DO IS WE TAKE THAT, UH, SAVINGS AND WE APPLY IT TO OUR CAPITAL IMPROVEMENTS ON THE GAS SIDE.

SO RATHER THAN THE CUSTOMERS PAYING FOR THAT, IT'S PAID THROUGH, THROUGH THE SAVINGS, THROUGH THIS PREPAID DEAL.

UM, SO A FA FANTASTIC DEAL FOR US.

UM, LIKE I SAID, IT WAS, IT, IT WAS A LITTLE OVER A BILLION DOLLARS.

UM, AND IT'S, UH, WE GAVE UP ABOUT PROBABLY ABOUT 25% OF THE VOLUME, UH, WHEN THE MARKET SWITCHED IN, UH, THE TWO THOUSANDS.

AND WE GOT, I THINK THEY PAID US 20 SOMETHING MILLION DOLLARS TO DO THAT.

UM, PROBABLY TALKED ABOUT THE INTERSTATE PIPELINES, VERY VULNERABLE.

UM, YOU SAW ON THAT MAP, THERE'S A LOT, UH, PIPELINES GOING.

THE OTHER PARTS OF THE COUNTRY, CALIFORNIA REALLY ONLY HAS, UH, UH, TWO OR THREE MAJOR PIPELINES COMING TO, TO THE STATE.

SO WHEN WE HAD THE GAS CRISIS BACK IN 2000, 2001, WHEN WE HAD THE, THE PRICE, UH, PROBLEM LAST DECEMBER, JANUARY, LARGE PART OF THAT WAS DUE TO DISRUPTIONS ON THE INTERSTATE PIPELINES TO CALIFORNIA.

AND SO YOU CAN GO OUT AND BUY THE GAS, BUT IF YOU CAN'T GET IT TO CALIFORNIA, UM, YOU HAVE TO THEN BOUNCE AROUND AND FIND THE BEST PRICE AND THEN IT GETS VERY, VERY COMPETITIVE.

SO WE'RE VERY VULNERABLE TO THAT, UH, ON THE STATE SIDE.

THEN LASTLY, YOU DON'T HEAR MUCH ABOUT IT.

UM, BUT LUCKILY, I, I THINK IT JUST GOT INTO, UH, SOME ATTENTION ON THE FEDERAL SIDE IS THERE WAS A PROPOSAL APPROVED BY THE FEDS LAST DECEMBER, RIGHT WHEN GAS PRICES STARTED GOING UP, JUST BY COINCIDENCE, UM, TO MOVE, UH, NATURAL GAS FROM OUR TRADITIONAL MARKET, WHICH IS THE SOUTHWEST, FROM SOUTHWEST TO, UH, DOWN TO MEXICO, AND THEN EXPORT IT TO OTHER COUNTRIES, UM, THAT WOULD TAKE SUPPLY AWAY FROM CALIFORNIA, SOUTHERN CALIFORNIA FROM LONG BEACH AND MOVE IT ELSEWHERE.

AND SO THAT IT WOULD HAVE A PRICE IMPACT UPON US.

SO WE'RE REALLY WATCHING THAT, THAT, THAT REALLY CONCERNS ME.

UM, SO WHEN TONY TALKS ABOUT LNG, IF YOU REMEMBER A FEW YEARS BACK WE WERE LOOKING, THE, THE COUNTRY WAS REALLY HURTING FOR NATURAL GAS.

SO WE WERE LOOKING ABOUT IMPORTING LIQUIFIED NATURAL GAS, AND THERE WAS A PROPOSAL TO BY MITSUBISHI TO, UH, BUILD A HUGE LNG IMPORT PLANT IN THE PORT OF LONG BEACH.

AND, UM, UM, THAT FAILED.

AND, UH, IT WAS ACTUALLY BUILT DOWN IN, UM, DOWN NEAR ENSENADA AND BETWEEN, UH, SEMPRA, WHICH IS THE PARENT COMPANY OF SOAK GAS AND SAND, DIEGO GAS ELECTRIC.

AND, UM, UH, SHELL.

AND SO IT WAS BUILT DOWN THERE.

PRICES SWITCHED BECAUSE THE SHALE BOOM HAPPENED, AND ALL OF A SUDDEN THERE WAS A GLUT OF NATURAL GAS.

SO INSTEAD OF IMPORTING NATURAL GAS, IT WAS CONVERTED INTO AN EXPORT.

AND SO THEY'RE EXPORTING, UH, NATURAL GAS TO OTHER PARTS OF THE, THE WORLD.

UM, SAME THING WITH THE, UH, WAR IN UKRAINE.

UM, ALL OF A SUDDEN RUSSIA WAS A BIG SUPPLIER OF NATURAL GAS TO EUROPE.

THEY STOPPED THAT WITH THE WAR.

AND SO ALL OF A SUDDEN THERE WAS A BIG MARKET FOR EXPORTS FROM THE UNITED STATES TO, UH, EUROPE.

UM, SO THAT THAT COULD CHANGE ALSO.

SO REALLY DYNAMIC.

AND SO, SO DENNIS HAS TO MAKE SURE HE GUESSES RIGHT EVERY MONTH, UH, AND PROTECTS OUR CUSTOMERS.

YES, THAT'S IT.

ANY OTHER QUESTIONS? COMMISSIONER CORDERO?

THAT'S AMAZING.

[01:00:01]

UM, THANK YOU VERY MUCH.

WHEN COMMISSIONER MCGUIRE SAID THAT WE WERE REALLY, REALLY LOOKING FORWARD TO THIS, I THOUGHT SHE, SETTING THE BAR A LITTLE HIGH, BUT ACTUALLY BECAUSE IT, IT'S SO COMPLEX, BUT YOU DID A REALLY GOOD JOB AND I, I FOUND IT VERY INTERESTING.

UM, THE TRANSPORT CUSTOMERS, WE, WE ARE ONLY RESPONSIBLE FOR THE DELIVERY.

CORRECT? CORRECT.

THEY SUPPLY THEIR OWN GAS, BUT WE HAVE TO WORK CLOSELY WITH THEM BECAUSE, UM, THERE'S CONSTRAINTS ON THE PIPELINES, BOTH INTERSTATE AND INTERSTATE.

AND IF THEY DO SOMETHING FUNNY THAT WE'RE NOT AWARE OF, IT COULD AFFECT HOW MUCH GAS WE CAN BRING IN.

UH, SO, UM, IN TERMS OF, UM, ANY OTHER COST, ALL THE COSTS ARE ASSOCIATED IN THERE.

IF THERE'S ANY SORT OF, UH, ADDITIONAL THING, NOT JUST DELIVERY, DELIVERY IS ONE THING, BUT IF THERE'S PROBLEMS WITH THE OPERATIONS AND THAT WE ARE ALL COVERED IN THAT CONTRACT, I'M SURE 100%.

UM, THE MOST IMPORTANT THING, AGAIN FOR THE OVERSUPPLY OR UNDERSUPPLY, UH, SOMETHING CALLED OPERATIONAL FLOW ORDERS, THERE'S PENALTIES ASSOCIATED WITH THAT.

MM-HMM.

AND THOSE CONTRACTS CALL FOR THOSE PENALTIES TO BE PASSED ON TO THOSE TRANSPORT CUSTOMERS IF THEY BRING IN MORE OR LESS THAN THEY HAD SCHEDULED.

AND THEN, THIS MAY NOT BE A REAL QUESTION, I DON'T KNOW, BUT SINCE CALIFORNIA IS LIMITED AND WHERE, WHERE THE, UH, OUR GAS COMES FROM, ARE THERE VULNERABILITIES IN CASE OF AN EMERGENT, LIKE A EARTHQUAKE OR ANY OF THAT? DO WE, IS THAT, IS THAT IS SOMETHING THAT WE HAVE TO THINK ABOUT? YES.

THAT'S CONSTANT TALKED ABOUT.

YOU MAY RECALL ELIS CANYON, UM, REALLY UNLIKE WATER, WE HAVE THE ABILITY TO STORE VAST VOLUMES OF GAS.

BUT WHEN THERE ARE, UM, ISSUES ON THAT STORAGE SYSTEM, SUCH AS THE LEAK AT AT ALISO CANYON, IT REALLY AFFECTS OUR ABILITY, UM, TO MOVE GAS IN AND OUT OF STORAGE, UH, AS THE STATE, UH, PUC KIND OF SHUT IT DOWN FOR A WHILE.

RIGHT.

SO THOSE VULNERABILITIES ARE QUITE EVIDENT AND THAT'S SOMETHING THAT DENNIS REALLY KEEPS A CLOSE EYE ON AS WE KEEP THE GAS BRINGING IN .

WELL GREAT.

REALLY GOOD JOB.

IT WAS VERY INTERESTING AND THANK YOU FOR YOUR GOOD WORK, DENNIS, TOO.

GOOD LUCK TODAY.

TONY, DID I HEAR YOU SAY THAT? UH, IT'S A HUNDRED YEARS FOR LONG BEACH GAS.

A HUNDRED YEARS THIS YEAR.

IT'S AN OPPORTUNITY.

WE'RE PLANNING A CELEBRATION UNDER CHRIS AND DIANA, SO THAT'S REALLY COOL.

IT WOULD BE GREAT TO GET SOME OF THIS OUT TO THE SCHOOLS.

IT REALLY IS.

IF YOU COULD SIMPLIFY IT, YOU KNOW, IT'S FASCINATING, FASCINATING WHERE IT COMES FROM.

IT REALLY IS.

I MEAN, IT'S, IT'S CAPTURED LIGHT FROM THE SUN, RIGHT? WHEN YOU REALLY THINK ABOUT IT THOUGH, RIGHT.

SOME SCHOOL KITS COULD REALLY, UH, HELP.

GOOD JOB.

ONE OTHER THING I WANNA POINT OUT.

HE HAD IN HIS, HIS, UM, PRESENTATION IS THAT THIS HAS, THIS DEREGULATION IN THE COMPETITION HAS REALLY WORKED VERY, VERY, VERY WELL FOR THE GAS MARKET.

SO THE PRICE HE WAS TALKING ABOUT TODAY IS AROUND TWO 30, UH, DECATHERM AND THAT'S WHERE IT WAS PROBABLY 40 YEARS AGO.

AND SO, AND THAT'S WITHOUT INFLATION.

AND SO CUS SO OTHER COSTS HAVE OBVIOUSLY INCREASED, BUT THE COMMODITY ITSELF BECAUSE OF COMPETITION AND TECHNOLOGY, IT'S, IT'S WHERE IT WAS 40 YEARS AGO, 35, 40 YEARS AGO.

THANK YOU VERY MUCH FOR THAT.

ANY OTHER PUBLIC COMMENT OR QUESTIONS, COMMENTS? UH, DO I HAVE A MOTION TO RECEIVE AND FILE? FILE? SECOND? UH, MOTION, UH, AND SECOND RECEIVED.

UH, ANY, ALL IN FAVOR? A SAY AYE.

ANY OPPOSED? THE MOTION CARRIES.

GREAT.

[PUBLIC COMMENT Opportunity to address the Utilities Commission on non-agenda items. Each speaker is limited to three minutes to make their comments unless extended by the Chair.]