Mar 21, 2024 Utilities Commission

THE MEETING IS

[00:00:01]

[CALL TO ORDER]

[ROLL CALL]

PRESIDENT RAINEY.

I'M HERE TODAY.

VICE PRESIDENT MCGUIRE.

HERE.

SECRETARY SCOTT.

PRESENT.

COMMISSIONER SHANNON.

MR. COMMISSIONER CORDS ABS.

OKAY.

UH, PLEDGE OF ALLEGIANCE.

[PLEDGE OF ALLEGIANCE]

PLEDGE ALLEGIANCE, THE FLAG, THE UNITED STATES OF AMERICA.

AND TO THE REPUBLIC, WHICH STANDS? ONE NATION UNDER GOD.

INDIVISIBLE.

INDIVISIBLE WITH LIBERTY, JUSTICE FOR ALL.

OKAY.

UM,

[ANNOUNCEMENTS]

I THINK THIS PRO MIGHT NOT BE PROTOCOL, BUT I'M GONNA DO IT ANYWAY.

COMMISSIONER CORDERO IS EXCUSED.

UH, AND THEN THERE'S ANNOUNCEMENTS WE WANT TO, UM, RECOGNIZE.

SO WILL ALL AWARDEES? 'CAUSE I DON'T HAVE MY PAPER AND I MISSED YOU GUYS, BUT I HAD SOMETHING VERY IMPORTANT TO DO.

TAKE CARE OF MY HUSBAND, WHO'S IN HOSPICE.

SO I'M GONNA ANNOUNCE ONE.

OUR DIANA TANG WAS REAPPOINTED BY SUPERVISOR JAN HAHN.

JANICE HAN TO WAIT, BABY.

SPEAK UP LOUD.

NOW.

YOU KNOW, I DON'T HAVE MY HUSBAND'S.

OKAY.

AND THEN I ALSO LEARNED THAT SHE WAS ONE OF THE AWARDEES AND WE WERE EVERYBODY THAT GOT AN AWARD.

WILL YOU PLEASE STAND? , AND DIANA, TELL US WHAT, GIRL, COME STAND UP.

WHEN YOU GET OLD LIKE ME.

YOU GONNA BE WANTING THE AWARD? WHAT, WHAT AWARD DID YOU GET? AND CHRISTIAN AWARDS? YOU, SO WE HAVE TO EXPLAIN THIS.

THERE WAS A COMMITTEE, NOW I KNOW THAT I MISSED YESTERDAY AND I FORGET ONE DAY, .

UH, BUT IT WAS A COMMITTEE AND THEY, PEOPLE WERE NOMINATED, THE PEOPLE THAT GOT THE AWARDS.

'CAUSE WE DON'T WANT THEM TO SAY THAT CHRIS LOVES OTHER THAN NAOMI RAINEY, COMMISSIONER HEAD.

UM, BUT THERE WAS A COMMITTEE AND PEOPLE NOMINATED.

EVERYBODY HAD A CHANCE TO NOMINATE SOMEONE.

SO WE ARE SO PROUD OF YOU.

EXCUSE ME.

CAN YOU SAY SOMETHING? YEAH, JUST, OKAY.

I, I HAVE A QUICK SOMETHING TO SAY.

I WASN'T ABLE TO MAKE IT, UH, TO THE MEETING TODAY, AND I, I REALLY, I REALLY DID MISS IT.

I USED TO COME ALL THE TIME TO THE WATER DEPARTMENT, UH, UH, MEETINGS.

AND, UH, THIS IS PROBABLY MY LAST YEAR, UH, IF THE MAYOR'S PAYING ATTENTION, .

UM, BUT IF IT IS MY LAST YEAR, I HAVE TO SAY THIS WOULD BE MY 10TH YEAR AND EVERY YEAR I WAIT FOR CHRIS TO BE NAMED MANAGER OF THE YEAR.

AND HE NEVER HAS MADE IT.

AND I, THIS IS IT.

I, I, I DON'T KNOW WHAT WE CAN DO GOING FORWARD.

MAYBE TY CAN HELP US OUT ON THAT ONE.

.

OKAY.

CHRIS.

WELL, FIRST I GOTTA MAKE SURE THE MAYOR'S PAYING ATTENTION.

.

BUT, UH, SO YESTERDAY WE HAD OUR EMPLOYEE RECOGNITION AND, UH, APPRECIATION.

UH, BREAKFAST ON THE QUEEN MARY, UM, IS OUR, OUR FIRST OPPORTUNITY REALLY TO GET ALL 500 EMPLOYEES ALL IN ONE ROOM.

AND WE HAD LOOKED AT VARIOUS VENUES, UM, BUT, UM, ACTUALLY THE QUEEN MARY WAS, GAVE US THE BEST DEAL AND, UH, THEY WERE FANTASTIC.

AND SO IT WAS, IT WAS GREAT TO GET BACK ONTO THE HISTORIC SHIP.

AND IT WAS, UM, PROBABLY THE FIRST TIME ON THE SHIP FOR PROBABLY ABOUT A THIRD OF THE EMPLOYEES.

AND SO I, I THOUGHT THAT WAS FANTASTIC, AND WE GAVE 'EM A LITTLE BIT OF TIME AFTERWARDS TO TOUR THE SHIP.

UM, SO AT THE, UH, CEREMONY YESTERDAY, WE, UH, ANNOUNCED EMPLOYEES OF THE YEAR AND, UH, UH, SUPERVISORS OF THE YEAR AND MANAGER OF THE YEAR.

IT'S ALL, I'LL INVITE ALL THE, UH, AWARD WINNERS TO, UH, COME TO A FUTURE MEETING SO THAT, UH, WE CAN RECOGNIZE IT PROPERLY.

WE ALSO, UH, RECOGNIZE PEOPLE THAT HAD, UM, UH, MILESTONE AWARDS OF 10, 15, 20, 25, AND 30 YEARS.

UH, LISA SQUIRES GOT THE 30 YEAR, UH, AWARD.

UM, AND THAT WAS NOT A NOMINATION, THAT'S JUST A SHOWING UP TO WORK EVERY DAY.

AND, AND, AND, AND TO CLARIFY.

YES.

UH, I'M JUST JOKING.

OKAY.

SO, UH, UM, THE WAY WE DO IT IS, AND WE'VE DONE THIS FOR YEARS, IS WE HAVE A, UH, NOMINATION FORM FOR ALL THE

[00:05:01]

AND SO WE HAD PROBABLY, I THINK, 10 DIFFERENT WORK GROUPS, UH, THAT WE, UH, HAD NOMINEES FOR.

UM, AND THEN WHAT THAT DOES IS I TAKE THOSE NAMES AND THEN WE DISCUSS IT AS A MANAGEMENT TEAM ON WHO IS PROBABLY THE MOST WORTHY.

AND THEN WE MAKE A DECISION FOR THE MANAGER OF THE YEAR.

UH, THERE IS NO NOMINATION.

I, I DECIDE MYSELF.

THAT'S, SO THAT'S HOW I DO IT.

.

AND THIS YEAR WE'RE GONNA HAVE COMMISSIONER OF THE YEAR.

, WE DIDN'T GET ANY NOMINATION, SO , BUT COMMISSIONER SCOTT WAS THERE, SO WE APPRECIATE THAT.

YEAH.

SO HE WAS OUR COMMISSIONER OF THE YEAR.

THAT'S IT.

SO I, I JUST, AGAIN, I'LL BRING ALL THE AWARD WINNERS TO, TO A FUTURE MEETING SO WE CAN RECOGNIZE THEM.

HE GAVE ME A HEADACHE.

? NO, HE HE ACTUALLY GOT WHAT, 20 YEARS? 20 YEAR? YEAH.

.

YEAH.

SO HE GOT 20 YEAR.

YES, I, YES, I GOT A 20 YEAR SERVICE.

ANYTHING ELSE, ANYBODY? OH, UH, BRANDON GOT WHAT, 15 YEARS SHOWING UP? YES.

OH, TONY.

15.

OKAY.

WELL, THANK YOU FOR INDULGING REGULAR AGENDA

[1. 24-52606 Recommendation to approve March 7, 2024 Board meeting minutes.       Suggested Action: Approve recommendation. ]

NO.

DOES ANY COMMISSION AGENDA APPROVE THE MARCH 7TH BOARD MEETING? MINUTES CAN AND SECOND BY MCGUIRE.

ALL IN FAVOR? AYE.

AYE.

ANY OPPOSITION? CARRY NONE.

IT CARRIES.

IT SAYS ANY PUBLIC COMMENTS.

OKAY.

WE HAVE OUR MOTION AND OUR SECOND ITEM NUMBER TWO

[2. 24-52609 Recommendation to approve Transfer of Funds for March 21, 2024.       Suggested Action: Approve recommendation. ]

ANY PUBLIC COMMENTS? ANY COMMISSIONER'S COMMENTS? DO I HAVE A MOTION AND A SECOND MOTION TO APPROVE? OKAY.

MOTION TO APPROVE BY MCGUIRE.

OKAY.

AND, UM, OUR SECOND BY KEVIN SCOTT.

ALL IN FAVOR? AYE.

WHAT? ALL IN FAVOR? OH, SO IT IS ONLY THREE WE SAY? NO, IT'S FOUR.

SO WE SAY AYE.

NEXT IS THE, LET'S SEE, ONE, TWO.

THE AUTHORS

[3. 24-52610 Recommendation to authorize the General Manager to execute an agreement with HDR Engineering, Inc., to provide professional services for the Groundwater Augmentation, Groundwater Collection System, and New Wells Site Study (EO-3529), in an amount not to exceed $1,859,745.       Suggested Action: Approve recommendation. ]

WHAT IS HDR? THAT'S THE PART OF THEIR NAME.

YES, IT IS.

YES.

AND IT'S AN ACRONYM.

SO WE ACTUALLY HAVE, UH, THE PROJECT MANAGER FROM HT R WITH, IF WITH US IN ATTENDANCE TODAY.

UM, LEANNE, COULD YOU HELP US? OKAY.

UNDERSTAND WHAT HT YEAH.

H .

HE CAN GO UP TO SPEAK TO MIKE, PLEASE.

GOOD MORNING.

UH, LEANNE HAMMOND WITH HDR.

WE ARE AN ENGINEERING CONSULTING FIRM HERE IN SOUTHERN CALIFORNIA.

WE'RE A NATIONAL, A CONSULTING FIRM.

AND SO HDR IS, UH, THE, A LITTLE BIT, THE INITIALS, THE INITIALS OF OUR, OUR FOUNDERS.

I DIDN'T HEAR YOU BABE.

SORRY.

HDR IS ARE THE INITIALS OF OUR FOUNDERS, WHICH I WILL NOW LOOK UP AND FIGURE OUT WHO THEY ARE.

I'VE BEEN WITH THREE CONSULTING FIRMS. I COULD TELL YOU THAT THE FOUNDERS OF ALL, UH, THE OTHER THREE.

AND SO, UM, I WILL COME BACK WITH NOTES WITH, FOR, FOR WHO OUR HDR FOUNDERS ARE.

YOUR THIRD GRADE TEACHER WAS GOOD.

SHE TAUGHT YOU ACRONYM.

ACRONYM.

OKAY.

LET'S GO ON.

THANKS, LEANNE .

SO, UH, LET'S SEE.

IT'S BEEN A WHILE SINCE I, ALRIGHT, SO GOOD MORNING COMMISSIONERS.

I'M HERE TO PRESENT ON AGENDA ITEMS THREE AND FOUR, WHICH ASK THE BOARD TO AUTHORIZE THE GROUNDWATER AUGMENTATION STUDY WITH HDR ENGINEERING AS WELL AS A COST SHARE MOU WITH, UH, THE WATER REPLENISHMENT DISTRICT.

[00:10:01]

SO THIS GRAPHIC THAT YOU SEE HERE MAY LOOK FAMILIAR TO SOME.

IT IS SOMETHING THAT WE PRESENTED BACK AT THE BORDER TREAT, SO AROUND A YEAR AND A HALF AGO.

AND IT SHOWS A DIFFERENT, UH, A COUPLE DIFFERENT THINGS.

FIRST, IT SHOWS THE OVERALL WATER DEMAND FROM OUR PAST, CURRENT, AND FUTURE SCENARIOS, UH, WHICH IS REPORTED IN THE GRADE OUT NUMBERS AND, UM, UH, LISTED AS TOTAL ACRE FEET.

AND THEN SECOND, IT SHOWS THE BREAKDOWN OF HOW WE FULFILL THIS DEMAND, UH, WITH THE DIFFERENT TYPES OF WATER RESOURCES THAT WE HAVE.

SO THE DARK BLUE IS CATEGORIZED AS LOCAL GROUNDWATER.

THE, I CAN'T REALLY TELL IF IT'S TEAL OR GREEN OR AQUAMARINE, UH, WHICH REPRESENTS IMPORTED WATER PURCHASES.

AND THEN THE PURPLE, WHICH REPRESENTS RECYCLED WATER SUPPLIES.

SO THE TWO TAKEAWAYS THAT I AM ASKING THE BOARD TO CARRY ON WITH THEM THROUGH THE REMAINDER OF THIS PRESENTATION, UH, IS TIED TO THE OVERALL WATER DEMAND AND HOW IT'S BEEN DECREASING FROM OUR PAST AVERAGES TO OUR TODAY AVERAGES AND HOW WE ANTICIPATE THIS TREND TO CONTINUE GOING ON INTO THE FUTURE.

OVERALL, WE JUST DON'T USE AS MUCH WATER AS WE USED TO, AND WE ANTICIPATE THIS TREND, UH, CONTINUING ON GOING FORWARD.

THE SECOND TAKEAWAY IS TIED TO THE BREAKDOWN AND MAKEUP OF HOW WE SUPPLY, UH, AND FULFILL OUR DEMAND.

YOU'LL NOTICE THAT IN THE PAST WE RELIED MORE ON IMPORTED WATER PURCHASES TO FULFILL OUR DEMAND, UH, COMPARED TO LOCAL GROUNDWATER RESOURCES.

BUT THIS RELATIONSHIP HAS SHIFTED.

UH, WHEN YOU TALK ABOUT PRESENT DAY CONDITIONS, WE'RE DOING A LOT BETTER OF A JOB OF GETTING RECYCLED, OR, SORRY, OF GETTING LOCAL GROUNDWATER RESOURCES TO FEED OUR DEMAND.

UM, AND GOING ON INTO THE FUTURE, WE ANTICIPATE PUSHING THIS RELATIONSHIP EVEN FURTHER SO WE CAN REALLY MAX OUT OUR ALLOWABLE PUMPING ALLOCATION, OTHERWISE KNOWN AS A PA OR OUR PUMPING RIGHTS.

SO THOSE TWO TAKEAWAYS THAT I BRIEFLY SUMMARIZED, THEY WERE ACTUALLY PART OF A LARGER PLANNING EFFORT, UH, COVERED UNDER THE WATER RESOURCES PLAN, WHICH CONCLUDED BACK IN 2019.

AND THE BOARD AT THE TIME ACTUALLY WENT THROUGH THAT PROCESS AND CONTRIBUTED TO THE PLANNING EFFORTS.

AND SHORTLY AFTER THAT, UH, EFFORT CONCLUDED, THE BOARD AUTHORIZED THE OPTIMIZATION STUDY, UH, WHERE WE TAKE A LOOK AT, UM, INFRASTRUCTURE AND DIFFERENT ALTERNATIVES OF, OF INFRASTRUCTURE THAT WOULD HELP THE DEPARTMENT INCREASE IN BOOST UP, UH, UM, GROUNDWATER PRODUCTION SO THAT WE'RE ABLE TO DELIVER OUR MAXIMUM A PA, WHICH WE ARE CURRENTLY LIMITED TO ABOUT 32,000 ACRE FOOT PER YEAR.

AND SO EVENTUALLY, UH, WHAT THE STUDY CONCLUDED WAS IT CREATED A SLEUTH OF PROJECTS, UH, THAT WE PACKAGED UP IN A REALLY NICE FORMAT AND TERMED THE GROUNDWATER RESILIENCE PROGRAM, WHICH WE ALSO CAME AT A, UH, AT A PREVIOUS BOARD MEETING ABOUT A YEAR AGO, UM, UH, BACK IN APRIL LAST YEAR.

AND WE PROVIDED A SUMMARY OF WHAT THE PROGRAM ENTAILS AND WHAT THAT LOOKED LIKE IN TERMS OF COSTS AND, UM, YOU KNOW, WE SOME REALLY NICE ICONS AT THE TIME AS WELL.

UM, SO WHAT THE STUDY DID ULTIMATELY WAS IT IDENTIFIED NEW INFRASTRUCTURE THAT WE COULD BUILD SO THAT WE CAN BEEF UP OUR GROUNDWATER PRODUCTION.

BUT WHAT THE STUDY STOPPED SHORT OF WAS IDENTIFYING ADDITIONAL GROUNDWATER RESOURCES THAT THE DEPARTMENT CAN TAP INTO SO THAT WE WOULD BE ABLE TO, UH, PUMP BEYOND OUR A PA, WHICH AGAIN, IS LIMITED TO ABOUT 32,000 ACRE FOOT PER YEAR.

AND THAT'S REALLY WHERE THE AUGMENTATION STUDY STEPS IN.

UH, THE AUGMENTATION STUDY IN A NUTSHELL REALLY JUST COVERS, UH, THE CONCEPT OF, HEY, IF WE INJECT RECYCLE WATER INTO THE BASIN, AND THE, THE IDEA IS WHATEVER WE INJECT INTO THE GROUND, WE WOULD BE ABLE TO EXTRACT OUT IN A SEPARATE EXTRACTION.

WELL, WHAT IS THAT GONNA LOOK LIKE FOR THE DEPARTMENT IF THAT'S SOMETHING THE DEPARTMENT IS INTERESTED IN REALLY PURSUING? AND SO THAT'S WHAT THE AUGMENTATION STUDY, UH, WILL, UH, IS INTENDED TO ACHIEVE.

AND WE'RE TAKING A VERY SIMILAR APPROACH.

WE'RE GONNA BE TAKING AT, UH, A LOOK AT A COUPLE DIFFERENT THINGS, UH, WITH THE ULTIMATE INTENT OF COMING WITH, UH, A SLEUTH OF, UH, CAPITAL PROJECTS, WHETHER IT'S TIED TO NEW INFRASTRUCTURE THAT WE WANNA BUILD OR IMPROVING THE EXISTING INFRASTRUCTURE THAT WE HAVE.

AND WE'RE GONNA PACKAGE IT UP INTO A REALLY NICE PROGRAM.

AND THE PRELIMINARY NAME THAT WE HAVE FOR IT SO FAR IS, UH, CALLED THE RECYCLED GROUNDWATER RECHARGE PROGRAM.

SO I'M STILL TAKING, UH, SUGGESTIONS FOR NEW NAMES IF THAT'S SOMETHING THAT YOU GUYS ARE INTERESTED IN.

UM, SO, UM, I GUESS BEFORE I MOVE

[00:15:01]

SO IS DO, UH, DO ANY OF YOU HAVE ANY QUESTIONS AT THIS TIME? NO.

OH, PERFECT.

OKAY.

SO GETTING STRAIGHT INTO AGENDA ITEM NUMBER THREE, THE GROUNDWATER AUGMENTATION STUDY IS GONNA BE TAKING A LOOK AT A COUPLE DIFFERENT THINGS.

THE FIRST THING THAT WE'RE GONNA BE TAKING A LOOK AT IS WHERE IN THE GROUNDWATER BASIN IS IT GOING TO ACCEPT INJECTED WATER? THIS WATER THAT WE PLAN ON INJECTING, OR THE CONCEPT IS WE'RE GONNA BE TAKING ADVANCED TREATED RECYCLE WATER FROM A VARIETY OF SOURCES, INJECTING THAT INTO THE GROUND WHERE THE GROUND WILL ACCEPT IT WITH THE EVENTUAL INTENT TO RECOVER THAT RECHARGE WATER AT A DIFFERENT EXTRACTION POINT LOCATION.

PART OF THAT EFFORT IS TO REQUIRE UPDATING THE CENTRAL BASIN GROUNDWATER MODEL, UH, WHICH WE ARE PARTNERING WITH, UM, OUR ALLIES OVER AT THE WATER REPLENISHMENT DISTRICT.

AND, UH, WE HAVE, UH, THE MANAGER OF HYDRO GEOLOGY IN ATTENDANCE WITH US TODAY AS WELL.

SO, BRIAN, UH, BRIAN, DO YOU WANNA WAVE? HI.

OR JUST SAY HI ? SO PART OF THE WORK IS TO UPDATE THE GROUNDWATER MODEL, AND THIS REALLY FORMS THE BASIS OF OUR, UH, OF A POTENTIAL GROUNDWATER AUGMENTATION PROGRAM FOR THE DEPARTMENT.

ONCE WE FIGURE OUT WHERE IN THE BASIN, UH, IS GOING TO ACCEPT THIS INJECTED WATER, NOW WE CAN START THINKING ABOUT THE PIPES AND THE WELLS FOR INJECTION AND, UH, POTENTIALLY EXTRACTION.

SO, UH, PART OF THIS IS UNDERSTANDING WHERE DO WE HAVE SPACE TO BUILD THE PIPE AND TO BUILD THE WELLS.

UM, BUT BEFORE THAT IS EVEN CONSIDERED, WE HAVE TO FIGURE OUT, OKAY, WHERE ARE WE GONNA GET THIS RECYCLE WATER FROM SO THAT WE CAN INJECT? ONE OF THOSE SOURCES THAT WE HAVE IN OUR SITE IS COMING FROM METROPOLITAN'S PURE WATER PROGRAM, UH, WHICH IS PRESENTED IN THIS GRAPHIC HERE.

UH, METROPOLITAN IS PROPOSING TO BUILD ONE OF THEIR TRANSMISSION MAINS STRAIGHT THROUGH THE CITY OF LONG BEACH.

UM, CURRENTLY RIGHT NOW THEY'RE PROPOSED, UH, THEY'RE PLANNING TO ROLL THROUGH ALONG DEL LAMA BOULEVARD BEFORE THEY CUT INTO LAKEWOOD, UH, LAKEWOOD, THE CITY OF LAKEWOOD.

UM, AND THEN FINALLY, UH, THE STUDY IS GOING TO TAKE A LOOK AT OUR EXISTING SYSTEM.

SO THE PRIOR TWO TASKS WE WERE DREAMING AND PLANNING OF ALL THIS NEW INFRASTRUCTURE THAT WE DON'T HAVE.

UH, BUT IT'S REALLY IMPORTANT TO COORDINATE AND MAKE SURE THAT ANY NEW INFRASTRUCTURE MESHES WELL WITH THE EXISTING INFRASTRUCTURE THAT WE CURRENTLY OPERATE AND MAINTAIN.

AND THAT'S REALLY GONNA BE TIED TO OUR GROUNDWATER COLLECTION SYSTEM.

UH, PART OF THE WORK, UH, TO, TO COORDINATE BOTH EFFORTS WELL IS TO UPDATE OUR EXISTING HYDRAULIC MODEL.

IT'S GOING TO INCLUDE A FIELD CONDITION ASSESSMENT AS WELL.

AND FROM THESE TWO EFFORTS, WE ARE GOING TO, UH, MOST LIKELY, UH, DEVELOP, UH, SEVERAL IMPROVEMENT PROJECTS, UH, TO OUR EXISTING CAPITAL ASSETS.

SO IT'S GONNA DEVELOP, UH, A SMALL IMPROVEMENT PROGRAM AS WELL.

UM, SO THAT'S PRETTY MUCH THE AUGMENTATION STUDY IN A NUTSHELL.

AND, UH, THIS, THE AUGMENTATION STUDY IS DIFFERENT FROM A TYPICAL MASTER PLAN THAT WE DO HERE, OR A CONDITION ASSESSMENT, UM, BECAUSE IT TIES OUR LONG-TERM GOALS WITH NEW INFRASTRUCTURE.

AND, UM, YOU KNOW, AGAIN, TO REITERATE, WE ARE SO FORTUNATE TO HAVE ALLIES IN THE REGION THAT ARE VERY WELL ALIGNED WITH WHAT THIS STUDY IS TRYING TO ACHIEVE.

UM, WE HAVE ALLIES OVER AT WATER REPLENISHMENT DISTRICT.

WE HAVE ALLIES, UH, AT METROPOLITAN OVER AT LA COUNTY SANITATION.

UM, THESE ARE ALL PARTNERS THAT ARE, ARE REALLY INTERESTED IN WHAT THIS STUDY IS, UH, IS GOING TO ACHIEVE, BUT ALSO, UM, ALLIES LIKE WRD, THEY'RE WILLING TO STEP UP TO THE PLATE AND ACTUALLY, UH, BE AN EQUAL PARTNER, UH, TO US ON THIS STUDY, WHICH I HOPE IS A GOOD SEGUE INTO AGENDA ITEM NUMBER FOUR.

SO, THE WATER REPLENISHMENT DISTRICT OF SOUTHERN CALIFORNIA, WRD, UH, OVERSEAS AND MANAGES CENTRAL AND WEST COAST BASINS.

UH, WE REPORT TO THEM OUR ANNUAL AND I THINK QUARTERLY, MONTHLY, UH, PRODUCTION NUMBERS WHEN IT COMES TO GROUNDWATER EXTRACTION.

UM, THEY HAVE A PROGRAM CALLED WIN FOR ALL, AND THEIR PROGRAM IS VERY MUCH ALIGNED, UH, WITH WHAT OUR STUDY IS TRYING TO ACHIEVE, WHERE THE CONCEPT OF USING LOCAL SUPR, UH, OF USING LOCAL SUPPLIES, UH, FOR GROUNDWATER PUMPING AND AUGMENTATION.

UM, AFTER DISCUSSION WITH WRD AND STAFF OVER THERE, UH, UH, IT WAS DETERMINED THAT, UM, WRD IS WILLING TO PARTICIPATE IN A 50% COST SHARE FOR THE TASKS RELATED TO GROUNDWATER MODELING AS WELL AS THE INJECTION AND EXTRACTION WELL CITING.

SO ARE THERE ANY QUESTIONS WITH THE, THE MOU ITSELF? NOT YET.

OKAY.

SO,

[00:20:01]

NOT YET.

ALMOST, ALMOST.

SO, UH, IN CONCLUSION, UH, STAFF IS ASKING THE BOARD TO TAKE ACTION ON TWO DIFFERENT ITEMS TODAY.

FIRST IS TO AUTHORIZE AN AGREEMENT WITH HDR ENGINEERING FOR PROFESSIONAL SERVICES FOR THE GROUNDWATER AUGMENTATION STUDY.

AND THEN THE SECOND ITEM IS TO AUTHORIZE AN MOU WITH THE WATER REPLENISHMENT DISTRICT FOR COST SHARE ON THE STUDY ITSELF, WRD AND THE DEPARTMENT WILL BE PARTICIPATING IN A 50 50 SPLIT FOR TASKS RELATED TO GROUNDWATER BASIN MODELING AND THE WELL INJECTION AND EXTRACTION SITING.

THE TOTAL COST OF THE AUGMENTATION STUDY IS APPROXIMATELY $1.8 MILLION, WHICH WILL BE OFFSET BY A WRD REVENUE REIMBURSEMENT OF APPROXIMATELY $435,000, RESULTING IN A NET COST TO THE DEPARTMENT OF $1.4 MILLION.

THESE COSTS ARE INCLUDED IN THE FY 24 BUDGET AND PROJECTIONS FOR FY 25 AND 26.

AND I WOULD ALSO LIKE TO INFORM THE BOARD THAT THERE ARE TWO OTHER GRANT, UH, OPPORTUNITIES THAT MAY PRESENT ITSELF IN AN, IN AN ADDITIONAL $700,000 OF AWARD MONEY.

UH, THAT WOULD BE GOING TOWARDS THE, UH, POTEN, UH, THE, THE PROJECT COSTS.

NOW CONTINGENT ON WHETHER THOSE APPLICATIONS ARE SUCCESSFUL, I MAY BE COMING BACK TO THE BOARD AND, UH, PRESENTING THOSE ITEMS TO, UH, TO THE BOARD FOR THE BOARD TO TAKE ACTION AT THAT TIME.

UM, AND WITH THAT, I'D LIKE TO CONCLUDE MY PRESENTATION AND MORE THAN HAPPY TO TAKE ON ANY QUESTIONS THAT YOU MAY HAVE AT THIS TIME.

I, I JUST WANNA SAY THANK, THANK YOU FOR GIVING THE CONTEXT FOR THIS.

UH, YOU DID AN EXCELLENT JOB WITH THAT.

THANK YOU.

OH, THANK, THANKS.

I, I WAS LIKE, OH, HOW DO I CONDENSE IT DOWN? IT'S LIKE FIVE YEARS WORTH OF WORK, BUT I HOPE I DID AN OKAY JOB.

SO YOU DID A VERY GOOD JOB, .

OKAY.

COMMISSIONER MCGUIRE.

UM, THAT WAS REALLY GOOD.

THANK YOU.

UH, THE TI SO THE TIMELINE FOR THE STUDY IS 24 MONTHS.

DID I READ THAT CORRECTLY? YES.

AND DO YOU EXPECT IT TO TAKE THAT LONG? UM, YEAH.

PRETTY MUCH.

, YEAH, PRETTY MUCH.

OKAY.

PRETTY MUCH, YES.

YES.

OKAY.

AND THEN THE, THE SOURCE OF THIS WATER THAT'S GONNA BE RECHARGED, UM, CLEAR, THE, IS IT PURE WATER FROM THAT? SO PURE IS THE SOURCE.

PURE WATER IS ONE OF THE RESOURCES.

UH, WE'RE ALSO TAKING A LOOK AT THE ADVANCED TREATED TO RECYCLE WATER COMING FROM LVL, UH, WHICH WRD, UH, OWNS AND OPERATES.

OKAY.

CURRENTLY, YEAH.

AND IS, IS THAT PURE WATER? IS IT ON TRACK THAT PROJECT IMPLEMENTATION? ANNA ATOL MAYBE COULD, COULD SPEAK TO THAT.

THE, HOW IS PURE WATER DOING WITH MATT? THE PROJECT IS ON, ON TRACK, AND IN FACT, I THINK WE'RE TRYING TO ARRANGE FOR THE TOUR SO THE COMMISSIONERS ACTUALLY GET TO SEE IT.

WHEN WE SAY ON TRACK, THE FIRST PHASE OF IT IS READY TO BE IN PRODUCTION SOMEWHERE AT THE TURN OF THE NEXT DECADE.

SO AROUND 20 31, 20 32, IT'LL BE IN PLACE, READY TO DELIVER WATER.

AND IF THAT GIVES YOU A, A SENSE OF, OF URGENCY, THEN, SO WE'RE TRYING TO WRAP THIS IN SO THAT WE CAN GET AN UNDERSTANDING OF WHAT WE WOULD NEED TO BUILD.

UM, JUST GEEKING OUT FOR A MOMENT, 24 MONTHS TO DO AN ENGINEERING STUDY.

UM, WHAT TAKES 'EM SO LONG TO DO THAT KIND OF A STUDY? WHEN WE TALK ABOUT GROUNDWATER, UM, THERE'S A GROUNDWATER MODEL AND THAT COMPUTER MODEL IS IMPORTANT TO BE THE MODEL OF RECORD WATER REPLENISHMENT.

DISTRICT HAS A MODEL THAT EVERYBODY HAS TO TAP INTO AND USE SO THAT EVERYBODY UNDERSTANDS THIS IS THE ONE WAY OF UNDERSTANDING HOW THINGS MOVE.

SO THIS EFFORT IS GOING TO UPDATE THAT MODEL AS PART OF THE PROCESS, AND THAT IS INCREDIBLY IMPORTANT.

SO YES, IT MIGHT BE LIKE, DO A COUPLE OF THINGS, BUT THEN INTO THE MODEL AND TRY TO FIGURE OUT THE MODEL, MAKE THAT WORK, AND THEN BACK OUT AGAIN AND BACK INTO THE MODEL.

AND IF IT TOOK ME THIS LONG TO DESCRIBE IT JUST IN THE SENTENCES, THAT'S KIND OF WHY IT TAKES A LOT OF MOVING UP TO TWO YEARS.

A LOT OF MOVING PARTS.

YEAH.

OKAY.

THANK YOU.

THAT'S GOOD.

GOOD.

DO WE TAKE THREE AND FOUR TO GET THE VOTE, OR DO YOU BOTH HAVE THE VOTE SEPARATE? I, I RICH WILL SAY THAT YOU CAN DO BOTH IF THAT'S YOUR, YOU CAN DO BOTH IF THAT'S, IF THAT'S OKAY WITH ALL THE COMMISSIONERS.

AND HEATHER, YOU COMPLETED YOUR REPORT ON BOTH THREE AND FOUR, CORRECT? YEP.

AND COMMISSIONERS SEPARATE OR TOGETHER ANY OBJECTION TO TAKING 'EM TOGETHER? GO FOR IT.

OKAY.

UM, WE WILL TAKE ITEM THREE AND FOUR TOGETHER, AND WE NEED A MOTION AND A SECOND MOTION.

SECOND AND SECOND.

UH, ALL THOSE IN FAVOR? AYE.

AYE.

SO MOTION CARRIES.

OUR NEXT ITEM IS MOTION.

UH,

[5. 24-52612 Recommendation to authorize the General Manager to execute a Schedule I, Transaction-Based Natural Gas Storage Service Agreement with the Southern California Gas Company for natural gas storage capacity rights.       Suggested Action: Approve recommendation. ]

YOU EVER GIVE A PRESENTATION

[00:25:05]

I'M HERE THIS MORNING TO SEEK YOUR AUTHORIZATION OF OUR GAS STORAGE CONTRACT, MORE FORMALLY KNOWN AS THE SCHEDULE I TRANSACTION, UH, BASED NATURAL GAS STORAGE SERVICE AGREEMENT WITH THE SOUTHERN CALIFORNIA GAS COMPANY.

OKAY, HERE'S AN OVERVIEW.

SOME OF OUR DEPARTMENT'S GAS IS STORED IN UNDERGROUND RESERVOIRS TO HELP US MAINTAIN ADEQUATE SUPPLIES OF NATURAL GAS IN A VOLATILE PHYSICAL AND FINANCIAL COMMODITIES MARKET.

OUR GAS IS INJECTED AND HELD FOR WITHDRAWAL ON AN AS NEEDED BASIS.

STORED FACILITATES A RELIABLE SUPPLY OF PHYSICAL GAS AT TIMES WHEN THE DELIVERY INFRASTRUCTURE IS DISRUPTED BY OUTAGES.

BOTH PLANNED OR UNPLANNED OR MARKET CONDITIONS GENERATE UNFORESEEN SPIKES IN THE COMMODITY COST BY INJECTING GAS INTO STORAGE FROM PRICES ARE LOW.

GENERALLY THE SUMMER MONTHS, WE'RE ABLE TO PROTECT CUSTOMERS BY WITHDRAWING THIS RELATIVELY CHEAPER STORED GAS WHEN SEASONAL PRICES ARE HIGH.

GENERALLY THE WINTER MONTHS WINTER SUPPLY AND DEMAND.

THE FOLLOWING GRAPH GIVES US A VISUAL TAKE ON HOW GAS STORAGE BENEFITS OUR OPERATIONS.

THIS GRAPH PROVIDES A SNAPSHOT OF DAILY DELIVERIES, THE ORANGE LINE VERSUS DAILY DEMAND, THE BLUE LINE FOR THIS WINTER SEASON.

WHAT WE SEE HERE IS THAT FOR THE BULK OF THE WINTER SEASON, DEMAND EXCEEDS SUPPLY, ESPECIALLY IN COOLER RAINY WEATHER LIKE WE EXPERIENCED IN JANUARY AND FEBRUARY.

TO MAKE UP THIS DIFFERENCE, WE EITHER BUY IN THE OPEN SPOT MARKET OR WITHDRAW FROM STORAGE.

HOW DO WE DECIDE? LET'S TAKE A LOOK AT THE NEXT GRAPH MARKET RATES.

THIS GRAPH SHOWS THE DAILY OPEN SPOT MARKET PRICES.

WHAT IS IMPORTANT HERE IS THE WINTER PERIODS, THE BLUE SHADED AREAS THAT BOOK IN THIS GRAPH VERSUS THE SUMMER PERIOD, THE UNSHADED AREA IN THE MIDDLE.

THE TAKEAWAY IS THAT THE WINTER SPOT PRICES ARE GENERALLY FAR HIGHER THAN SUMMER SPOT PRICES.

WHY? BECAUSE WINTER PRICING IS AFFECTED CHEAPLY BY DEMAND AMONG OTHER VARIABLES.

WINTER SPOT PRICING INCREASES IN COOLER WEATHER AS PEOPLE USE MORE GAS.

IF WE WERE TO PURCHASE SPOT GAS IN THE WINTER, OUR CUSTOMERS WOULD PAY SIGNIFICANTLY MORE THAN IF WE WITHDREW AND UTILIZED THE CHEAPER GAS THAT WE INJECTED AND STORED IN THE SUMMER.

YOU MAY NOTE THAT THIS WINTER, THE BLUE SHADED AREA ON THE RIGHT DAILY PRICES HAVE BEEN UNUSUALLY LOW, BUT FEAR NOT.

THIS WORKS IN OUR FAVOR BECAUSE NOW WE HAVE AN OPTION TO FURTHER BENEFIT FROM THE LOWER, UH, SPOT PRICES BY PURCHASING ADDITIONAL GAS TO FURTHER INCREASE STORAGE VOLUMES FOR A LITERAL RAINY DAY.

AS WE STAND NOW, BY THE END OF SUMMER, OUR STORAGE VOLUMES WILL BE AT FULL CAPACITY, WHICH WILL PROVIDE MAXIMUM PROTECTION AGAINST FUTURE GAS SUPPLY OUTAGES OR PRICE SPIKES, THE IMPORTANCE OF STORAGE.

WILL THERE BE GAS DISRUPTIONS IN THE FUTURE? WELL, IF RECENT HISTORY IS AN INDICATOR, THE ANSWER IS YES.

A COUPLE OF EXAMPLES.

FEBRUARY, 2021, EXTREME WEATHER ACROSS THE EAST AND MIDWEST, BUT PARTICULARLY IN TEXAS, ROSE WELLHEADS INTERRUPTING PRODUCTION, WHICH QUICKLY LED TO A NATIONAL NATURAL GAS SHORTAGE.

PRICES SKYROCKETED TO NEARLY $200 A DECATHERM BACK HERE IN LONG BEACH.

WE WITHDREW 118,000 DECATHERM FROM STORAGE AT A PRICE OF 3 41 A DECATHERM.

THIS SAVED OUR CUSTOMERS APPROXIMATELY $15 MILLION.

NEXT EXAMPLE, JANUARY, 2023.

A NATURAL GAS SPIKE SPIKE SENT OUR FIRST OF THE MONTH BORDER PRICE TO OVER $40 A DECATHERM.

IN RESPONSE, CHRIS UTILIZED A CONTRACTUAL QUA CLAUSE TO DECLINE PURCHASE OF LOCALLY PRODUCED GAS, WHICH IS ALSO PEGGED AT THE BORDER PRICE, AND INSTEAD WITHDREW IN-KIND VOLUMES FROM STORAGE, WHICH REDUCED THE AVERAGE CUSTOMER'S BILL BY $65.

SO STAFF RECOMMENDS RENEWAL OF STORAGE AUTHORIZATION.

WHAT ARE THE AGREEMENT TERMS? THE STORAGE CONTRACTS ALLOCATE LONG BEACH UTILITIES STORAGE VOLUMES OF 853,298, UH, DECATHERM ON THE SOUTHERN CALIFORNIA GAS COMPANY SYSTEM, WHICH INCLUDES MAXIMUM DAILY INJECTION VOLUMES OF 4,603 DECK OF THERMS A DAY, AND MAXIMUM WITHDRAWALS OF 20,686 DECK OF THERMS A DAY.

THESE FIGURES ARE UNCHANGED FROM LAST YEAR'S AGREEMENT.

THE STORAGE RATES ARE SPECIFIED UNDER SOCAL GASES, GTBS TARIFF.

THE COST OF THIS ANNUAL CONTRACT IS $1.35 MILLION,

[00:30:01]

HOWEVER, WE ARE TRACKING, UH, PUC HEARINGS, WHICH MAY CHANGE THE CONTRACTED TARIFF TO REC.

UH, TO RECAP, WE SEEK YOUR AUTHORIZATION OF OUR GAS STORAGE CONTRACT IN THE AMOUNT OF $1,353,053.

AND THIS CONCLUDES MY REPORT.

I'M HAPPY TO ANSWER ANY QUESTIONS, ANY COMMISSIONERS COMMENT? I HAVE A COMMENT.

SO THE EIGHT, WHAT IS IT? 8 850 3000 DECATHERM? MM-HMM.

, CAN YOU PUT THAT IN LIKE HUMAN TERMS? WHAT, LIKE WHAT PERCENTAGE OF OUR TOTAL USAGE OR WHAT WE BRING IN THE DAY? YOU KNOW WHAT, I'M GONNA CALL UP MY COLLEAGUE DENNIS BURKE, PUT HIM ON THE SPOT HERE.

WHAT OUR DAILY, UH, DECK OF THERM CONSUMPTION IS.

MM-HMM.

.

TO KIND OF PUT THAT IN CONTEXT, PLEASE, ON A VERY COLD WINTER DAY, WE PROBABLY USE ABOUT 40, 45,000 DECK OF THES.

SO IT'LL GET US THROUGH ABOUT THREE WEEKS OF HEAVY USAGE.

OKAY? THANK YOU.

THANK YOU.

I'LL, OKAY.

I'LL GIVE YOU A LITTLE BIT OF HISTORICAL, UH, KNOWLEDGE.

YOU REMEMBER THE BIG GAS TANK HOLDER THAT WAS OFF THE, UH, FOUR OR FIVE FREEWAY FOR MANY YEARS THAT WAS BUILT IN 1927.

IT WASN'T PRESSURIZED A AND UM, IT ONLY HELD ABOUT FOUR HOURS WORTH OF GAS ON A COLD WINTER'S DAY.

SO ONCE WE CONNECTED TO THE SOCAL GAS SYSTEM IN THE NINE, LATE 1950S, UM, WE'VE UTILIZED THEIR STORAGE RATHER THAN USING THAT BIG STORAGE TANK OFF THE 4 0 5.

IT'S MUCH MORE EFFICIENT.

UH, ANY OTHER COMMENTS OR QUESTIONS? HEARING NONE? DO WE HAVE A MOTION AND A SECOND? MOTION? SECOND MOTION AND SECOND.

ALL IN FAVOR? AYE.

UM, MOTION CARRIES.

OUR NEXT IS ITEM

[6. 24-52613 Receive and file the Fiscal Year 2024 Mid-Year Financial Review Report.       Suggested Action: Receive and file. ]

ALRIGHT, THERE WE GO.

THANK YOU.

GOOD MORNING, COMMISSIONERS.

BEFORE I BEGIN, I WANNA APOLOGIZE I DIDN'T GET THE MEMO TO, UH, GET THE MATCHING BLUE SWEATER WITH COMMISSIONER SHANNON.

THE, UH, THE STUDIOS GET APPROACHABLE.

LOOK, SORRY, I DIDN'T, I DIDN'T GET THAT.

I WILL, I WILL FIX THAT NEXT TIME.

HI, GOOD MORNING COMMISSIONERS.

TODAY, UM, THE GOAL IS TO GIVE YOU A MID-YEAR FINANCIAL UPDATE FOR OUR GAS, WATER, AND SEWER FUNDS.

AND ALSO SEGUE INTO A MAJOR ITEM THAT'S COMING YOUR WAY.

UH, NEXT, NEXT BOARD, BOARD MEETING.

SO BEFORE WE BEGIN, LET'S TALK ABOUT JUST THE, AT A HIGH LEVEL, THE STRUCTURE OF UTILITIES.

UM, IT'S UTILITIES ARE A VERY CAPITAL INTENSIVE OPERATION.

ABOUT MORE THAN THREE QUARTERS OF EVERY DOLLAR GO TOWARDS ACTUALLY PROCURING AND SINCE SUPPLYING OUR CUSTOMERS WITH GAS, WATER, AND WATER SERVICES.

SO WE ARE VERY, VERY, UM, EXPOSED AND, AND, AND KIND OF AT THE MERCY OF THE MARKET WHEN IT COMES TO THE COMMODITY, WHETHER IT'S THE NATURAL GAS MARKET OR THE WATER MARKET WHEN IT COMES TO PURCHASE WATER, ALONG WITH THE COST OF PIPELINE AND CHEMICALS AND WHATNOT.

SO THE, THE MAIN THEME YOU'RE GONNA SEE HERE ARE EXPENSE PRESSURES THAT ARE MORE OR LESS OUT OF OUR CONTROL WITH A, A DECLINING REVENUE BASE.

AND, AND WHY I MENTIONED THAT IS THIS IS A, A KIND OF A DYNAMIC THAT UNFORTUNATELY IS NOT UNIQUE TO LONG BEACH.

IT'S A REGIONAL PROBLEM, WHETHER IT'S SOCAL EDISON, L-E-D-W-P, OURSELVES, IT'S SOCAL GAS.

WE HAVE A SUPER FIXED HIGH CAPITAL INTENSIVE BUSINESS DE A DEPENDING ON A REVENUE BASE THAT'S MORE OR LESS FIXED, RIGHT? SO THE SOUTHERN CALIFORNIA REGION IS MORE OR LESS BUILT OUT.

AND AS HEATHER MENTIONED IN, IN ONE OF OUR PREVIOUS SLIDES, UH, THE CONSUMPTION IS ACTUALLY DECLINING SLOWLY OVER TIME, SPECIFICALLY ON THE WATER SIDE.

SO THOSE ARE TWO DYNAMICS TO KEEP IN MIND AS WE GO THROUGH THIS MID-YEAR FINANCIAL UPDATE.

SO FIRST, LET'S TALK ABOUT THE GAS FUND.

SO WHAT THIS SLIDE IS SHOWING YOU HERE IS WHERE WE STARTED THE, UH, THE FISCAL YEAR 24, OUR CURRENT FISCAL YEAR FROM A FUND BALANCE PERSPECTIVE.

SO BE BEGAN THE YEAR IN OF FUND BALANCE ROUGHLY UNDER 25 MILLION.

UH, DO DO SOME TRENDS THAT WE'LL, UH, EXPLAIN IN MORE DETAIL THE NEXT FEW SLIDES.

WE'RE PREDICTING THAT WE WILL END THE YEAR WITH A FUND BALANCE HOVERING AROUND $18.5 MILLION.

SO LET'S TALK ABOUT THE DRIVERS OF, OF WHAT'S GOING ON THERE.

AS TONY MENTIONED BEFORE TOO, UM, WE ARE HAVING A, A GAS COMMODITY REVENUE IS DOWN ABOUT $9 MILLION COMPARED TO BUDGET.

THAT'S ACTUALLY A GOOD SIDE AS WE'LL GET TO IT IN THE NEXT SLIDE.

UM, THE, THE UTILITY, WE DO NOT MAKE A SINGLE DOLLAR ON THE PRICE OF COMMODITY.

WE PURCHASED THE COMMODITY FROM THE OPEN MARKET WITHDRAWAL FROM STORAGE AND SELL IT TO CUSTOMERS AT COSTS.

SO WHAT THIS REFLECTING, WHAT THIS IS ACTUALLY REFLECTING IS A LOT OF THE HARD WORK THAT TONY, DENNIS AND HEATHER HAVE DONE TO MAKE SURE THAT WE'RE GETTING THE BEST PRICE WE CAN IN THE OPEN MARKET, UM, UTILIZING THE HEDGE, UM, MECHANISM THAT THE BOARD HAS SEEN A FEW MEETINGS GO TO MAKE SURE THAT WE'RE GETTING, UH, MARKET COMPETITIVE PRICES.

SO AGAIN, THAT'S, THAT'S PRETTY MUCH A WASH.

WE ARE SEEING A SLIGHT DOWNTICK IN TRANSMISSION CHARGES.

SO NET, NET TOTAL CONSUMPTION'S ABOUT FLAT YEAR OVER YEAR IN 24 COMPARED TO

[00:35:01]

SO JUST TO KIND OF ORIENT YOU, WE ABOUT 50% OF CONSUMPTION IS THROUGH HOUSEHOLDS, THROUGH RESIDENTIAL, UH, ON THE GAS SIDE, BUT IT COUNTS FOR ABOUT 70% OF OUR REVENUE.

SO WE'RE SEEING A SLIGHT DOWNTICK ON THE REVENUE SIDE.

HENCE, WE'RE SEEING TRANSMISSION CHARGES SLIGHTLY BELOW.

UH, WHAT WE FORECASTED DURING OUR BUDGET, OTHER GAS SERVICES, BUT THIS IS REFLECTING, AS I MENTIONED BEFORE, IS WE ARE VERY CAPITAL INTENSIVE, UH, OPERATION.

SO WHAT THESE, WHAT THESE, UH, EXPENSES ARE, ARE ACTUALLY INDICATING ARE, ARE, UH, SPED OF INVESTMENT AND METER REPLACEMENT.

SO WHY ARE METERS IMPORTANT? THEY'RE ESSENTIALLY OUR LIFEBLOOD.

IT'S THE CASH, IT'S THE METER TO CASH SYSTEM.

SO WE WANNA MAKE SURE THAT WE HAVE A UPTODATE, UM, WORKING, UH, METER SYSTEM AND INFRASTRUCTURE TO ENSURE TIMELY, ACCURATE BILLING TO CUSTOMERS.

AND ALSO GIVING THEM THROUGH OUR A MI INFRASTRUCTURE, UH, REALTIME DATA ON, ON CONSUMPTION AND USAGE.

SO ON THE EXPENSE SIDE, AS I MENTIONED PREVIOUSLY, THE, UH, ACTUAL PRICE OF THE COMMODITY WE PURCHASE IS ABOUT $9 MILLION LESS THAN WE ORIGINALLY FORECASTED.

AGAIN, A GOOD SIGN.

AND THEN THE OM AND CIP IS WHAT WHAT WE MENTIONED BEFORE.

AND THEN, UM, ONE REFERENCE POINT I WANNA TALK ABOUT.

SO ABOUT 25 CENTS OF EVERY DOLLAR GOES TO, UH, FOR LABOR ON BOTH IN THE WATER, GAS, AND SEWER SIDE.

SO, UM, THE BUDGET IN FRONT OF YOU TODAY WAS ADOPTED BY YOU GUYS, THE BOARD IN MAY AND JUNE OF LAST YEAR, SUBSEQUENTLY ADOPTED BY CITY COUNCIL IN SEPTEMBER.

AFTER THAT FACT, THE CITY COUNCIL AUTHORIZED VARIOUS LABOR, UH, NEW CONTRACT NEGO, UH, MOUS WITH ALMOST EVERY LABOR GROUP IN THIS CITY.

WHY THAT WAS A GOOD THING IS THAT A LOT OF OUR, UM, SALARIES SPECIFICALLY ON THE FIELD SIDE WERE WELL BELOW MARKET.

AS YOU SAW, WE HAD A, A VERY, VERY LARGE VACANCY RATE INTERNALLY AND ACROSS THE CITY.

I THINK, UH, THE MAYOR MENTIONED WE HAD A 26% VACANCY RATE AT ONE POINT IN THE CITY.

SO WE HAD A VERY, VERY HARD TIME ATTRACTING AND MORE IMPORTANTLY, RETAINING TALENT.

AND THE UTILITY INDUSTRY, SPECIFICALLY ON THE GAS AND WATER SIDE, YOU NEED A VERY, VERY TALENTED, UM, AND, AND TRAINED WORKFORCE.

AND WE, WHEN WE WEREN'T MARKETING COMPETITIVE WITH THOSE RATES, IT WAS VERY, VERY HARD TO ATTRACT AND RETAIN TALENT.

SO WHAT THIS JUMP IS SHOWING YOU HERE IS ESSENTIALLY THE UNB QUOTE UNQUOTE UNBUDGETED COST FOR THOSE LABOR CONTRACTS THAT HAPPEN POST BUDGET ADOPTION.

BUT AGAIN, AS, AS A, UH, UM, A FINANCIAL OPERATION AND A UTILITY OPERATION, WE THINK THIS IS A GOOD THING TO BE ABLE TO BE COMPETITIVE, UH, IN THE MARKET FOR, FOR, UH, HIGHLY TRAINED TALENT.

SO LET'S NOW PIVOT TO THE WATER FUND.

WHAT'S HAPPENING ON THE, ON THE WATER SIDE? AS YOU RECALL, LAST YEAR IN FY 23, IT WAS A VERY, VERY, VERY WET WINTER.

IT WAS A HISTORICALLY WET WINTER.

IT WAS, IT, IT WAS AS WET, UH, THIS THIS WINTER, BUT, BUT LESS SO.

AND WE'LL, WE WILL GET INTO THE DETAILS OF THAT IN A SECOND.

BUT AS HEATHER MENTIONED BEFORE, UM, HISTORICALLY AS FAR BACK AS 2007, OUR DEMAND WAS ABOUT 70,000 ACRE FEET.

WE'RE DOWN TO ABOUT 46,000 ACRE FEET NOW, MORE THAN A 60% DROP.

SO WE'LL GET INTO THOSE, THOSE DRIVERS IN, IN A BIT.

AND AGAIN, AS I MENTIONED, THE GAS SIDE, THOSE LABOR COSTS ARE, ARE HITTING US, UH, THIS YEAR IN, IN THE PROJECTIONS AS YOU SEE.

AND WE'LL TALK ABOUT SOME OF OUR, OUR STRATEGIES TO BE ABLE TO MITIGATE THOSE COSTS IN THIS CURRENT YEAR.

SO MORE DARK PICTURE THAN THE GAS SIDE.

THESE ARE OUR WATER ENDING FUND BALANCES.

THE GRAY IS WHAT WE CAME TO BOARD AND SHOWED YOU DURING OUR BUDGET WORKSHOP.

WE ORIGINALLY IN THE, IN MAY, JUNE, UH, PREDICTED TO START THE FY 24, WHICH STARTED IN OCTOBER WITH ABOUT AN EIGHT AND A HALF BEGINNING FUND BALANCE.

WHAT ENDED UP HAPPENING, WE'LL TALK ABOUT IN A AND A LITTLE LATER WAS, UH, TO FY 23 WAS A HISTORICALLY LOW YEAR FOR CONSUMER DEMAND, WHICH MEANT OUR REVENUE TOOK A, A REALLY, REALLY SEVERE HIT.

SO AS A RESULT, WE ACTUALLY BEGAN FY 24 WITH ROUGHLY A $5 MILLION FUND BALANCE.

SO NET NET WITH ALL THE EXPENSE INCREASES THE REVENUE PICTURE.

WE'RE SEEING OUR INVESTMENT IN CIP.

UM, WE'VE DEFERRED SOME OF OUR CIP PROJECTS FOCUSING ON MORE OF THE CRITICAL, UM, GROUNDWATER TARGETED, UH, PROJECTS.

WE'RE LOOKING TO END THE YEAR, ESSENTIALLY FLAT, STARTING THE YEAR AT ROUGHLY 5 MILLION IN FUND BALANCE AND ENDING AND AT 5 MILLION IN FUND BALANCE.

LET'S GET INTO REAL QUICKLY WHAT'S DRIVING THOSE.

AS I MENTIONED BEFORE, FY 23 WAS AN HISTORICALLY LOW YEAR WHEN IT COME TO WATER CONSUMPTION.

UM, A LOT OF MOVING LINES LOOKS LIKE A DKG MACHINE, BUT ESSENTIALLY JUST FOCUS ON THE BOLDED GREEN LINE BELOW, WHICH IS THE FY 23 CONSUMPTION.

SO THIS IS, UH, BILLABLE CONSUMPTION ON THE WATER SIDE.

MONTH BY MONTH FOR THE PAST FIVE OR SIX FISCAL YEARS, WE CAME TO YOU, UH, DURING BUDGET SIDE AROUND, WE HAD DATA HERE.

WE WERE IN THE MIDST OF WHAT WAS A VERY, VERY, VERY WET WINTER.

WHAT WE THOUGHT WOULD'VE HAPPENED DURING THE REST OF THE FISCAL YEAR WAS CONSUMPTION WOULD BUMP UP BACK TOWARDS HISTORICAL FIVE-YEAR AVERAGES, THE ISSUE THAT PEOPLE WAS WORTH WATERING THEIR LAWNS.

IT WAS A VERY, VERY MILD SUMMER.

SO CONSUMPTION WAS ACTUALLY VERY, VERY LOW.

THE GOOD NEWS IS YEAR TO DATE THROUGH FY 24 THROUGH FEBRUARY, SIMILAR TIME, SIMILAR COMPARISON POINT TO LAST YEAR, CONSUMPTION'S ACTUALLY UP ABOUT 5% TOTAL.

SO WE'RE SLIGHTLY MORE CONFIDENT THAT, UH, THE REVENUE STREAMS WILL BUMP UP TO MORE HISTORICAL AVERAGES AS WE GET TO THE SUMMER MONTHS.

BUT AGAIN, WE MAKE MOST OF OUR MONEY ON THE WATER SIDE FROM A REVENUE PERSPECTIVE LATE SUMMER, EARLY FALL.

SO IT'S

[00:40:01]

THAT'S WHAT WE WILL BE IN CONTACT WITH THE FINANCE COMMITTEE AND, AND YOU WITH THE BOARD TO MAKE SURE THAT YOU GET THE LATEST UP TO DATE INFORMATION AS WE PROGRESS THROUGH THE EARLY SUMMER.

SO AGAIN, WHAT IS DRIVING THAT? ESSENTIALLY A KNOCK ON FUND BALANCE.

AGAIN, WATER SALES ARE ABOUT NOW ABOUT $8.7 MILLION LESS THAN WE ORIGINALLY, UH, BUDGET AND PLANNED FOR WHEN WE CAME TO YOU, UH, FOR OUR FY 24 BUDGET.

LAST MAY AND JUNE.

SAME DYNAMIC, UH, AS HAPPENING ON THE WATER SIDE, AS THE GAS SIDE.

AGAIN, LABOR COSTS THAT WERE UNBUDGETED DUE TO THESE SALARY INCREASES ARE, ARE HITTING US.

UM, THIS YEAR ON THE OPERATION SIDE, AGAIN, FOCUS ON OUR METER REPLACEMENT PROGRAM AND MAKING SURE THAT THAT METER TO CASH INTEGRITY, THAT SYSTEM OF FLOW OF CASH IS, IS MAINTAINED IN CUSTOMERS GETTING TIMELY, ACCURATE BILLS.

AND AGAIN, I MENTIONED TO HELP MITIGATE SOME OF THESE INCREASES, WE'VE REALLY FOCUSED OUR EFFORTS WORKING WITH OUR OPERATIONS ENGINEERING TEAM ON THE CRITICAL GROUNDWATER SPECIFIC, UH, PROGRAMS ON THE CIP SIDE AND DEFERRING THOSE, NOT LESS CRITICAL, BUT THOSE THAT CAN WAIT AND BE DEFERRED TO REALIZE ABOUT EIGHT, $8 MILLION OF CURRENT YEAR SAVINGS FOR THIS FISCAL YEAR.

SO WHAT'S DRIVING THIS? YOU'VE SEEN THIS CHART BEFORE.

ESSENTIALLY WHAT THIS IS IS THE LAST FOUR YEARS, THREE YEARS WITH OUR ESTIMATE FOR FY 24.

THE TOP LINE IS CUSTOMER AND DEMAND.

AND AGAIN, IF YOU NOTICE, DEMAND HAS GRADUALLY, UH, YOU KNOW, DECREASED YEAR OVER YEAR.

AGAIN, AS A REFERENCE POINT IN 2007, OUR DEMAND WAS OVER 70,000 ACRE FEET.

SO AGAIN, MORE THAN A 60% DROP IN, IN JUST UNDER 20 YEARS, WHICH IS A SIGNIFICANT SHOCK TO, UM, TO THE REVENUE SIDE.

BUT THROUGH PLANNING AND EFFORTS, WE, WE ARE ESSENTIALLY PLANNING FOR THIS.

AND THIS IS, AS HEATHER MENTIONED IN OUR, IN OUR FUTURE WATER RESOURCES PLANNING IS OUR GOAL IS TO, EXCUSE ME, IS TO DROP THIS PURCHASED AMOUNT HERE.

SO ONE NOTE I WANNA POINT OUT, FY 22 AND FY 24 INCLUDE A TREATMENT PLANT SHUTDOWN.

SO WHAT DOES THAT MEAN? SO THE TREATMENT PLAN IS ESSENTIALLY OUR HEART OF OUR OPERATION AND MAKE SURE THAT WE'RE ABLE TO TREAT AND FILTER AND, UM, MAKE SURE THE WATER'S SAFE AND RELIABLE TO OUR CUSTOMERS BEFORE THEY'RE, BEFORE THEY'RE SENT OUT.

IT'S A MASSIVE, MASSIVE OPERATION.

YOU'VE BEEN THE GROUNDWATER TREATMENT PLANT.

WE WANNA MAKE SURE THAT THAT THING IS RUNNING ON ALL CYLINDERS.

SO WHAT WE DO IS HISTORICALLY, EVERY OTHER YEAR IS SHUT IT DOWN FOR AS, AS LITTLE TIME AS POSSIBLE TO MAKE SURE THAT WE'RE DOING CRITICAL MAINTENANCE TO MAKE SURE THAT FACILITY IS SAFE IN WORKING ORDER.

SO WHAT THAT MEANS, IT'S ABOUT A ANYWHERE FROM A FOUR, SIX WEEK PROCESS.

UM, WE TRY TO KEEP IT AS SHORT AS POSSIBLE AND, AND, AND GET AWAY FROM THOSE HEAVY SEVERAL MONTHS.

THAT'S ABOUT 6,000 ACRE FEET OF WATER THAT HAS TO BE PURCHASED DIRECTLY AS THAT, AS THAT, UH, PLAN IS SHUT DOWN.

SO THESE NUMBERS HERE ACTUALLY INCLUDE ABOUT 6,000 MORE PURCHASE WATER THAN WE WOULD ON A, A QUOTE UNQUOTE TYPICAL YEAR.

SO IF YOU FACTOR THAT IN HERE, IN HERE, OUR PUMPING IS, IS, IS STARTING TO STABILIZE, AND WE'RE TRYING TO REACH THAT TARGET, AS HEATHER MENTIONED, OF OUR A PA, OUR OUR ALLOWABLE WATER PUMPING RIGHTS OF 32,000 FEET.

SO WE'RE SLOWLY BUT SURELY GETTING THERE.

NEXT MEETING, UH, WE WILL COME TO YOU WITH A KIND OF A MORE FIVE YEAR FORECAST TO SHOW YOU KIND OF OUR GOAL TO GET TO THAT, THAT 32,000 AS AS QUICKLY AS POSSIBLE.

AGAIN, ALL THIS INVESTMENT YOU'LL SEE ON THE NEXT SLIDE WITH OUR CAPITAL PROJECT PROGRAM FOCUSES ON REDUCING THE AMOUNT OF PURCHASE WATER AND OUR RELIANCE ON MET AND OUR RELIANCE ON THOSE LARGE COST INCREASES AND FOCUS ON ACCESSING OUR CHEAPER PUMP WATER.

SO THIS IS A CURRENT FIVE-YEAR FORECAST.

I WANT TO CAVEAT THIS VERY, VERY STRONGLY BOLD THAT WE ARE NOT PROPOSING ANY RATE INCREASES RIGHT NOW.

ALL THE, THIS IS, IS A SNAPSHOT IN TIME OF WHAT WE THINK THE NEXT FIVE YEARS WILL LOOK LIKE BASED ON OUR CURRENT ESTIMATES.

AGAIN, TO CAVEAT THIS, THERE'S A LOT OF UNKNOWABLES, RIGHT? WHAT IS GONNA HAPPEN THROUGH OUR PEAK SEASON WHEN IT COMES TO WATER SALES THAT MAY, JUNE, JULY, AUGUST TIMEFRAME.

SORRY.

WHAT'S ALSO VERY, VERY COOL TO NOTE IS THIS IS BASED ON THE, THE MOST RECENT FIGURES WE'VE GOTTEN FROM THE METROPOLITAN WATER DISTRICT.

THEY'RE CURRENTLY IN THEIR BUDGET PROCESS RIGHT NOW AS A REFERENCE POINT RIGHT NOW ON THE TABLE.

THEY'RE PROJECTING OR PROPOSING A 13% RATE INCREASE IN FY 25, AN 8% RATE INCREASE IN FY 26, ANOTHER, I BELIEVE 12% INCREASE IN 27, AN 8% INCREASE IN 28 STABILIZES TO A 5% INCREASE GOING FORWARD.

SO AGAIN, AS I MENTIONED AT THE ON START OF THE PRESENTATION, THESE COST INCREASES ARE, ARE SEEING ACROSS THE BOARD.

AND OUR FOCUS IS TO REDUCE OUR RELIANCE ON METROPOLITAN AND OUT OUTSOURCED WATER, IMPORTED WATER AND FOCUS ON THAT ON THAT CHEAPER GROUNDWATER.

AGAIN.

SO THESE, THESE NUMBERS HERE INCLUDE THAT ASSUMPTION NOW, BUT MATT IS GOING THROUGH A VERY, VERY ROBUST BUDGET PROCESS WITH THEIR 26 MEMBER AGENCIES.

SO THOSE NUMBERS PROBABLY WILL CHANGE AND WE HOPE TO GET CLARITY IN THE MONTH OF APRIL.

SO WHEN WE COME BACK TO THE BOARD FOR OUR BUDGET WORKSHOPS OR FFY 2025 BUDGET WORKSHOPS IN EARLY MAY, WE SHOULD HAVE MORE SOLIDIFIED FIGURES.

SO JUST TO ORIENT YOU WITH THIS CHART, WHAT, WHAT IT'S SHOWING IS THAT, AGAIN, WHERE WE PREDICT THE END THIS FISCAL YEAR AS FAR AS A WATER FUND BALANCE GOES, WHERE OUR FUND BALANCE WILL GO IF NOTHING CHANGES, NO RATE INCREASES, THE EXPENSES KIND OF GO ON AS, AS PROJECTED WE'RE, THIS IS MORE GAMES JUST FOR ILLUSTRATIVE