Mar 31, 2025 Utilities Commission - Special Meeting (Board Retreat)

CIP PLANS IN PREVIOUS YEARS WHEN WE WERE PROJECTING THAT'S, WE HAVE FIVE YEARS, BUT WE SAME.

UM, AND HOW DOES THIS RELATE TO PREVIOUS HOW

[00:20:01]

SO THIS IS THE, WE'RE GETTING, UH, SWITCHING OVER TO A 10 YEAR PLAN.

CAN YOU GO BACK TO THE, THE SLIDE, DANIEL, YOU HAD THE, THE MULTIPLE CATEGORY CIP, NOT THE SCENARIO PREVIOUS ONE, THAT ONE.

SO ONE OF THE OTHER GOALS THAT WE HAVE TOO IS BY DOING THIS TYPE OF LONG RANGE PLANNING IN ORDER TO DEAL WITH SOME OF THE DECISIONS THAT YOU FACE AS A BOARD GOING FORWARD, THE GOAL IS TO ACTIVELY WORK WITH ENGINEERING AND LEVELIZE.

THE CIP WHEN WE SAY LEVELIZE, THE CIP, IS WE'RE TRYING TO TAKE A VERY HARD LOOK AT THE PROJECTS THAT HAVE TO BE IN THERE FOR NORMAL REPAIR AND REHABILITATION OF THE SYSTEM, AND TAKE THAT VERY CAREFUL HARD LOOK TO ESTABLISH THAT BASELINE CIP THAT MUST BE THERE SO THAT ANYTHING OVER AND ABOVE ON A PROGRAM THAT COMES FORWARD, YOU HAVE THE ABILITY TO UNDERSTAND WHAT CHANGES THAT IS MAKING THE CIP AND WHAT CHOICES YOU FACE.

BECAUSE IF WE DIDN'T LEVELIZE THE CIP, YOU'D START ASKING YOURSELF, WELL, I MEAN, WHY DON'T WE JUST MOVE THINGS AROUND? YOU COULD STILL DO THAT, BUT NOW YOU UNDERSTAND THE CONSEQUENCES OF MOVING THAT BECAUSE WE MADE THAT EFFORT TO CATEGORIZE THIS BASE, CIP AS TO WHAT NEEDS TO BE DONE.

SO TO THE, TO THE OTHER GRAPH, DANIEL, THE ONE WHERE YOU WERE SHOWING AN EXAMPLE OF SCENARIO, UH, THE PREVIOUS ONE? NO, THAT ONE.

SO IN THIS INSTANCE, IT'S A QUESTION OF ACCELERATING SOME PROJECTS AND YOU CAN SEE THAT THERE'S A REPRIORITIZATION, BUT IN FACT, WHAT YOU MIGHT SEE IN A FUTURE SCENARIO IS DIFFERENT COLOR SCHEMES OR DIFFERENT PROJECTS THAT SIMPLY GET ADDED.

AND WHEN YOU SEE THAT, THEN IN THE FINANCIAL MODEL, YOU'LL SEE THE CONSEQUENCES OF EFFECTS ON RATES, EFFECTS ON FUND BALANCES, EFFECTS ON DEBT COVERAGE.

'CAUSE THE LIKELIHOOD IS THAT YOU'LL HAVE TO BOND FOR IT.

YOU'LL HAVE TO SEE WHAT KIND OF CASH YOU CAN GENERATE TO MAINTAIN DEBT SERVICE RATIOS, .

SO, UM, I'M WONDERING, UH, AND I'VE SEEN THE ACTUAL AIRTABLE MODEL AND IT'S IMPRESSIVE.

SO, UH, IT'S A LITTLE PREMATURE TO DEBUT NOW, BUT ASSURE YOU, IT'S, IT'S VERY IMPRESSIVE.

CAN YOU DESCRIBE TO ME THE PROCESS? LIKE WITH ANY MODEL, IT'S SORT OF, UH, IT'S ONLY AS GOOD AS THE INPUT FIGURE.

SO HOW ARE YOU GATHERING THE INPUT FIGURES? I KNOW YOU'RE SORT OF EXPANDING THE FIVE YEAR PROJECTIONS, MOVING OUT TO 10 YEARS, BUT WHAT'S, WHO ARE YOU WORKING WITH TO GATHER, UH, THE DATA THAT YOU'RE INPUT? SO FOR THE FY 26 BUDGET, WE HAD, UH, MET WITH ALL THE MANAGERS BACK IN, UH, JANUARY OR JANUARY, I BELIEVE WE WENT THROUGH, UH, EACH LINE ITEM.

AND THAT IS QUITE AN UNDERTAKING.

SO EACH HIGH LINE ITEM IS WHAT WE, UH, GO BY.

UH, SO THAT WOULD REQUIRE MANY HATS, ANY WORKSHOPS.

SO THEN WHAT WE DO IS WE TAKE THAT FACE CASE AND THEN WE APPLY THOSE INFLATIONARY ASPECTS TO THAT TO GET TO THE TENURE.

SO I, I GUESS I'LL JUMP IN WITH A, A SOFTBALL QUESTION FOR YOU.

UH, SO, SO ONE OF THE EARLY SLIDES, YOU POINTED OUT THE OBJECTIONS FOR FUTURE DEMANDS AND FUTURE PUMPING.

UM, CAN YOU JUST SPEAK TO A LITTLE BIT OF HOW THAT AFFECTS THE, UM, THE RATE PROJECTIONS THAT, THAT YOU'VE GOT? AND, AND ALSO SPEAK TO, UH, WHERE WE'RE AT CURRENTLY WITH, WITH RESERVES AND WHAT THE, THAT DECREASE IN DEMAND, HOW, HOW THAT MIGHT PLAY INTO HOW THAT IMPACTS OUR RESERVES AND THE RATE INCREASES FOR THE FUTURE.

SO, UM, TO ANSWER YOUR QUESTION, UH, THE WAY THAT, SO THE, THE COST THAT WE HAVE PLUGGED IN FOR THE DEMAND, THAT'S, THAT, THAT GOES INTO THE TOTAL COST.

SO ULTIMATELY IT GOES INTO ONE POT, AND WE LOOK AT IT EVERYTHING DIFFERENTLY FROM EXPENSE SIDE TO THE REVENUE SIDE.

SO REALLY ONCE WE ACCOUNT FOR ALL THE EXPENSES, WE USE METRICS LIKE THIS ONE TO DETERMINE WHAT RATE INCREASE WE WOULD NEED TO, UH, COVER THOSE DEFICITS ESSENTIALLY.

UM, BUT YEAH, I MEAN THAT'S, THAT'S PRETTY MUCH IT.

I JUST A QUESTION.

WHAT'S THE LAST 10 YEAR FORECAST THAT WE DID AS A UTILITIES? I KNOW IT'S A LITTLE DIFFERENT BECAUSE WE'RE YEAH, WE ACTUALLY DONE ONE.

UH, THIS IS THE, YEAH, THIS IS OUR FIRST SORT OF SEEING WHAT THE 10 YEAR WILL LOOK LIKE.

TYPICALLY WE WOULD DO A FIVE YEAR, BUT YES.

SO INCREASE IN REVENUE.

IS THAT NET INCOME STYLE REVENUE, OR IS THAT, UH, INCLUDING THE PASS THROUGHS? NO, THAT'S, UH, GROSS.

UH, IT'S UNFORTUNATE THAT I WISH WE COULD EDUCATE THIS COMMUNITY.

THIS, THIS IS ON THE WATER BUDGET.

IT'S NOT ON THE WATER SIDE.

OH, SORRY.

NO, BUT THAT, THAT'S AN EXCELLENT

[00:25:01]

WOULD YOU HAPPEN TO HAVE A SIMILAR 1% INCREASE ON THE GAS SIDE? UH, YOU KNOW WHAT, THEY DON'T ACTUALLY HAVE ON, SORRY, COMMISSIONER CORD, I, I JUST WANNA, YOU, I HAVE, I THINK I SPEAK FOR ALL OF US THAT WE HAVE A LOT OF CONFIDENCE IN THE STAFF.

AND THIS IS ACTUALLY, UM, REALLY GOOD WAY TO BEGIN THIS, THIS PROCESS, UM, WHERE WE'RE ALL HERE IN ONE HEARING THIS, UM, IN MY, I DON'T, FINANCE IS NOT MY AREA, BUT UNDERSTANDING THAT IT MEANT WE ARE GONNA INCREASE RATES.

UM, AND THEN, SO IT'S ALMOST LIKE, AND THEN I HEAR AS FOR THE WAY SOMEONE STARTED WAS, WE'RE BALANCING AFFORDABILITY AS WELL AS THE LONG-TERM HEALTH AGENCY.

AND SO IT, TO ME, I I KIND OF LOOK AT IT AS A, AS A ALMOST A TRIANGLE WITH PORTABILITY AND RESERVES, WHICH AS WE KNOW, HAS BEEN VERY IMPORTANT, ESPECIALLY WITH WHAT HAPPENED MOST RECENTLY UP HERE.

UH, AND, AND I, I GUESS I'M ALWAYS TRYING TO THINK AHEAD ON HOW WE FRAME THIS.

SO AT SOME POINT WE TELL THIS COMMUNITY THAT WE ALL SERVE HOW IMPORTANT IT IS TO HAVE THE WORK THAT WE'RE DOING, THAT YOU'RE ALL DOING, THAT WE'RE HOPEFULLY TRYING TO UNDERSTAND THAT WE CAN MAKE SOME GOOD DECISIONS ON.

SO IF IT'S MORE OF A COMMENT, IT'S NOT REALLY A QUESTION.

SO I, I APPRECIATE, HAVE TO TURN IT ON.

THANK YOU COMMISSIONER GERD FOR THAT COMMENT.

UM, I ACTUALLY TOOK A COUPLE OF NOTES HERE, AND THANK YOU, DANIEL FOR, FOR PRESENTING THIS.

UM, WHAT WE TALK ABOUT BETWEEN DANIEL AND I AND OUR FINANCE GROUP IS WE REFER TO IT AS ZOOMING IN AND ZOOMING OUT.

SO WE ZOOM IN, WE LOOK AT THE DATA THAT'S PROVIDED BY EVERYONE HERE IN THIS ROOM, AND WE ZOOM OUT.

WE DO LOOK AT THREE PILLARS, WHICH ARE AFFORDABILITY OR RESERVES, WHICH TELLS OUR FINANCIAL HEALTH.

AND WE ALSO LOOK AT AGING INFRASTRUCTURE.

SO IN THAT, WE'RE, AND WE'RE, UH, ANALYZING AND ASSESSING REACTIVE MAINTENANCE VERSUS PROACTIVE MAINTENANCE.

SO AS MUCH AS WE WOULD LIKE TO BE PROACTIVE IN ENSURING OUR CIP AND OUR INFRASTRUCTURE DOESN'T HAVE ANY ISSUES, WE STILL HAVE TO MAINTAIN OUR REACTIVE WORK.

AND ONE OF THE CHALLENGES THAT WE'RE SEEING RIGHT NOW IS THE COST OF INFLATION AND CCI.

SO WE DO OUR BEST IN TAKING IN ALL OF THE INFORMATION AND PROVIDING DIFFERENT SCENARIOS AND WORKING WITH OUR EXECUTIVE MANAGEMENT TEAM AND THEN PRESENTING IT TO YOU, WHICH WE'VE DONE FOR THE PAST COUPLE OF YEARS.

SO THIS ISN'T NECESSARILY NEW.

WE'VE DONE THIS PRO, UH, PROCESS FOR AT LEAST I HAVE FOR THE PAST TWO YEARS.

WE'RE JUST NOW BUILDING IT OUT FOR 10 YEARS BECAUSE WE ARE SEEING MORE LONG RANGE IMPACTS.

SO THANK YOU FOR THAT.

ANY OTHER QUESTIONS? I HAVE ONE COMMISSIONER.

OH, GO AHEAD.

GO FIRST.

YOUR, UH, YOUR DEMAND CURVE, IT LOOKS LIKE OVER THE NEXT 10 YEARS HAS A PRETTY SUBSTANTIAL DECLINE.

IS THAT, CAN YOU SHARE WHAT THAT'S BASED ON? UH, THAT'S BASED ON THAT PIECE, DIRECTIONS? YEAH.

SO REALLY, UH, OVER THE LAST 20, 30 YEARS, THERE'S BEEN A, A QUITE STEADY DECLINE IN OUR DEMAND.

AND, UH, GIVEN THE LONG-TERM FRAMEWORK THAT'S REQUIRED BY THE STATE, THE WATER CONSERVATION, UH, IT'S ANTICIPATED THAT OUR DEMAND WILL CONTINUE TO, TO GO DOWN, UH, SLIGHTLY SLOWER THAN IT HAS HISTORICALLY, BUT, UH, NONETHELESS LOWER.

AND PART OF THE QUESTION I WAS TRYING TO DRIVE AT EARLIER WAS JUST KNOWING THAT FACT THAT WE'RE GONNA HAVE LESS WATER DEMAND, UM, LESS WATER SALES.

IT'S, IT'S GOING TO, UM, REQUIRE CERTAIN RATE INCREASES BECAUSE, UH, WE'RE GONNA BE SELLING LESS WATER AND HAVE TO COVER ESSENTIALLY FIXED COSTS, UM, MAINTAINING THOSE, THOSE FIXED REVENUES.

SO THAT'S, THAT'S GONNA BE ONE OF THE CHALLENGES THAT WE'RE GONNA FACE OUT 10 YEARS FROM NOW.

AND OH, AS YOU'LL SEE, THAT'S GONNA BE A COMMON THEME WHEN WE GET TO ALMOST EVERY SEGMENT OF THIS.

IT IS DECREASED REVENUES OVER FIXED COSTS, WHICH CLEARLY LEADS TO INCREASED RATES.

SO THAT'S EXACTLY WHAT I WAS GONNA ASK.

OH, NAILED IT.

CAN I JUST GO, YEAH.

I, I ALMOST WISH WE COULD, UM, HAVE SOMEONE FROM MEDIA HERE BECAUSE, YOU KNOW, I THINK YOU ALL DO THIS JOB EVERY DAY AND, AND SO HOPEFULLY YOU DON'T GET LOST, LOST IN THE FACT THAT WHAT YOU'RE DOING, I KNOW, YOU KNOW, IT'S EXTREMELY IMPORTANT AND I WISH PEOPLE COULD SEE THAT THERE'S SO MUCH ENERGY BEING PUT INTO THAT TO TRY AND DO THE BEST JOB WE CAN, TRY AND KEEP THIS, THIS ORGANIZATION RUNNING AND OUR INFRASTRUCTURE, THE INTEGRITY, HEALTHY, UH, BUT ALSO TO TRY AND KEEP OUR RATES AS LOW AS WE CAN.

[00:30:01]

I THINK LONG BEACH IS A PERFECT PLACE TO EDUCATE PEOPLE ON EXACTLY THIS SORT OF A THING.

SO, UM, HOPEFULLY AT SOME POINT WE'LL GET TO DO THAT.

AND I KNOW I KEEP PARKING ON THAT, BUT I THINK IT'S, IT'S REALLY IMPORTANT THAT, THAT PEOPLE HERE, GREAT WORK THAT YOU'RE ALL DOING, WE'RE SITTING AROUND A ROOM TRYING TO KEEP THINGS RUNNING SMOOTHLY AND AFFORDABLE AS WELL FOR THIS COMMUNITY TO WELL SERVE.

SO YEAH, THAT GUESS IF I CAN QUICKLY ADD, UM, YOU KNOW, FIRST OF ALL, DANIEL PUT A LOT OF WORK INTO EXPANDING IT FROM A FIVE YEAR MODEL TO A 10 YEAR MODEL.

IT SOUNDS MAYBE EASY, BUT IT'S, IT'S DEFINITELY NOT.

AND PART OF, I THINK THE BENEFIT OF THE 10 YEAR MODEL IS, HISTORICALLY WHEN WE WERE BUDGETING FIVE YEARS, OR LOOKING AT THREE YEARS ON THE DEMAND FRONT, WE REALLY WEREN'T PROJECTING THAT MUCH OF A DECLINE.

AND SO, SEE IN THE LAST COUPLE YEARS WHERE WE'VE HAD, UM, YOU KNOW, REVENUE, SALES SHORTFALLS, IT'S REALLY AFFECTED US.

AND SO THE BENEFIT OF TAKING A LONGER TERM OUTLOOK IS YOU CAN MORE APPROPRIATELY PROJECT FOR THAT, THAT DECLINE.

UM, SO, SO IT REALLY, IT IS A LOT OF WORK THAT GOES INTO EXTENDING TO A 10 YEAR MODEL AND, AND THERE'S A LOT OF BENEFIT.

HEY, DANIEL? YES.

ON THE, UM, IF YOU GO BACK TO GO BACK TO THE METROPOLITAN WRD TABLE.

SO METROPOLITAN IS FACING THE SAME SITUATIONS AND STRESSORS THAT WE ARE, EXCEPT THEY'RE FACING IT AS A WHOLESALER.

THEY ALSO HAVE A LARGE BASE OF FIXED COSTS, AND THEY'RE STRUGGLING WITH A DECLINE IN DEMAND.

BUT I WANTED TO HIGHLIGHT THIS TABLE BECAUSE YOU CAN SEE THE 10 AT 11 AND A HALF AND 11 AND A HALF.

AND UNFORTUNATELY THERE'S A THREAT THAT IT MIGHT GO HIGHER THAN 11 AND A HALF, BUT YOU CAN SEE HOW IT ATTENUATES AFTERWARDS.

RIGHT.

AND DANIEL, CAN YOU GO TO YOUR TENURE PROJECTION? AND I, I WANT YOU TO JUMP IN WITH ME 'CAUSE YOU AND I WERE TALKING ABOUT THIS, AND WHEN WE TALK ABOUT FINANCIAL PLANNING AND THE CHALLENGES THAT WE FACE AND THE ISSUES OF AFFORDABILITY, I'M GONNA PITCH IT BACK TO YOU, DANNY, 'CAUSE YOU WERE EXPLAINING TO ME ONE OF THE THINGS OF THE BENEFITS OF THE LONG RANGE IS YOU BEGAN TO SEE THE CONSEQUENCES OF RATE INCREASES.

CORRECT.

SO IT'S MORE OF THE ACCELERATING GROWTH.

SO A LOT OF TIMES WE HAVE THESE LARGER RATING MIGHT BE ADDRESSING A MORE SPECIFIC, UH, ISSUE THAT'S COMING SOONER.

UM, SO WITH THE 10 YEAR FORECAST, WE'RE ABLE TO SORT OF STABILIZE AND GET A BETTER PICTURE OF WHERE WE'RE TRENDING.

SO IN YEARS 30 THROUGH 34, NOW WE CAN SEE THAT WE'RE AT LEAST HEADING IN THE RIGHT DIRECTION.

AND I THINK THAT'S, THAT'S WHAT'S THE HELPFUL, UH, ASPECT OF THE TENURE VERSUS A FIVE YEAR INDEED, IT, IT HELPS YOU SEE THAT SOMETIMES YOU MAY STRUGGLE WITH QUESTIONS OF AFFORDABILITY IN THE SHORT TERM, BUT IF YOU STRUCTURALLY ADJUST YOUR BUDGET AND RATES IN THE SHORT TERM, IT CREATES STABILITY IN THE LONG TERM.

AND SOMETIMES WITH THE SHORT-TERM FORECAST, YOU'RE UNABLE TO CONVEY THAT.

AND IT'S DIFFICULT.

IT'S ALSO DIFFICULT TO UNDERSTAND THE CONTEXT OF YOUR DECISIONS AND UNDERSTAND THAT YOU HAVE INDEED STABILIZED IT AND NOW YOU WILL SEE WHAT COMES NEXT AND YOU CAN WEIGH THE CHALLENGES OF WHAT COMES NEXT AGAINST WHAT YOU BELIEVED YOU WERE CREATING IN THE LONGER TERM FORECAST.

IF YOU GO, UH, SO THAT, THAT WINDS UP LIKE 4% IN THE OUT YEARS AND YOUR, YOUR SCENARIO ANALYSIS HAD THE OTHER OPTION, CAN YOU GO TO THAT ONE? AND SO YOU WENT A LITTLE HIGHER IN THE OUT YEARS.

AND THAT WAS ALSO DEALING WITH THE, THE SHORT TERM.

THERE'S ANOTHER, THERE'S ANOTHER ELEMENT TO YOUR MODEL, DANIEL, WHICH IS THE FUND BALANCE.

RIGHT? AND THE FUND BALANCE ALSO LOGICALLY IS YOU BEGIN TO MAKE STRUCTURAL CHANGES TO YOUR REVENUE IN THE EARLY YEARS.

YOU BEGIN TO GROW YOUR RESERVES, AND YOU CAN SEE HOW IN THE LONG TERM YOU CAN STAY COMMITTED TO YOUR FIN FISCAL POLICY ON THE RESERVES AND GET THERE.

ADMITTEDLY, I, I THINK ONE OF YOU JUST COMMENTED THAT YOU MAY WANNA GET TO THAT RESERVE LIMIT FASTER.

AND IF YOU DO, THEN YOU UNDERSTAND WHAT THOSE CHANGES ARE IN RATES THAT GET YOU TO A MUCH MORE QUICKER, UH, RISE TO YOUR, UH, MINIMUM FUND BALANCE.

SO THE, THE MODEL ALLOWS YOU TO, TO MANEUVER AND, AND WORK WITH A VARIETY OF DECISIONS THAT YOU CAN MAKE IN THAT, IN THAT REGARD.

YOU TURNED, UM, UH, SLIDE FOUR BACK TO, UH, METROPOLITAN WATER DISTRICT.

UH, 28, AND THEN IT DROPPED SUBSTANTIALLY.

UM, I SEE IT, AND AGAIN, I'M SAYING, I'M ASKING THIS QUESTION AS, AS A NON-FINANCE EXPERT, LOOKS LIKE GLORIA, UM, THESE SUBSTANTIAL RATE INCREASE IT'S SKINNY IN 26 THROUGH,

[00:35:01]

BUT WHAT IS THE LOGIC BEHIND THAT? GOOD QUESTION, DEAN.

GOOD QUESTION.

A*****E .

IT IS INDEED THE EFFECT, THIS STRUCTURAL EFFECT THAT HAPPENS WHEN YOU TAKE IMMEDIATE ACTION ON THE STRUCTURAL DEFICIT.

SO GLORIA, COMMISSIONER CORDERO AS DIRECTOR CORDERA AT METROPOLITAN WAS IN THE MIDDLE OF THE DISCUSSION FOR 20 26, 20 27 AND 2028, WHERE THEY WERE BUDGETING AT A MUCH HIGHER, HIGHER SALES LEVEL, AND THE BOARD DIRECTED STAFF TO INTENTIONALLY LOWER THE SALES FORECAST AND CARRY THAT FORECAST INTO THE FUTURE.

ON TOP OF THAT, ON TOP OF THE LOW SALES, THE METROPOLITAN BOARD HAD MADE THE DECISION TO BEGIN SHOWING THE CONSEQUENCES OF PURE WATER SOUTHERN CALIFORNIA.

SO THE CIP BEGAN TO SHOW SOME PRETTY DRAMATIC INCREASES IN INVESTMENT IN 20 27, 20 28 AND OUT.

SO A STRUCTURAL SHOCK TO BUDGET AND RATES AND THE WAY TO KEEP A CERTAIN FUND BALANCE LEVEL WAS INDEED TO HAVE DRAMATIC RATE INCREASES DRIVEN BY THOSE TWO FACTORS.

HOWEVER, BY DOING THAT AND KEEPING TO A MINIMUM RESERVE LEVEL AND NOT ALLOWING IT TO DROP, THEN THE OUT YEARS HAD STABLE RESERVES, ENOUGH REVENUE AT A CONSERVATIVE SALES FORECAST THAT ALLOW THEM TO GET PAST THE SHOCK OF THAT INVESTMENT AND THE SHOCK OF THAT LOWER SALES FORECAST.

AND THAT, THAT'S THE DRAMATIC EFFECT.

THEY DID NOT HAVE TO DO 11 AND A HALF AND 11 AND A HALF, BUT THEY WOULD'VE FALLEN BELOW THEIR MINIMUM RESERVE LEVELS, WHICH AS A BOARD POLICY, THEY DO NOT ALLOW, AND THEY WOULD'VE HAD TO EXTEND OUT.

AND I THINK YOU REMEMBER THAT IT WASN'T FIVE, IT WAS LIKE SEVEN AND SIX AND ALL OF THOSE INTO THE OUT YEARS.

BUT BY DOING THOSE IMMEDIATE RATE INCREASES RIGHT AT THE BEGINNING, THEY WERE ABLE TO STABILIZE INTO THE FUTURE.

IMMEDIATE PAIN AND LONG-TERM GAIN, BASICALLY WHAT YOU'RE SAYING? YES.

AND SO WHAT YOU'RE SAYING IS, AND DON'T, I'M NOT TRYING TO PUT WORDS IN YOUR MOUTH, IS THAT MAINTAINING A, UH, A SUBSTANTIAL RESERVE LEVEL IS A PRIMARY CONSIDERATION, WHETHER IT BE METROPOLITAN WATER DISTRICT OR LONG BEACH GAS OR LONG BEACH WATER.

AND YOU SAID YOU DIDN'T KNOW FINANCE.

I DON'T, I DON'T BELIEVE ME, BUT, UH, UM, SO THIS, WHAT I'M GETTING AROUND TO IS IT'S EQUALLY TRUE OF LONG BEACH GAS.

YES, ABSOLUTELY.

SO WHEN WE GET TO LONG BEACH GAS, IF WE SEE, UH, A, UH, SUBSTANTIAL DECREASE IN RESERVES, THAT'S SOMETHING TO BE CONCERNED OF, RIGHT? YEP.

STEPHANIE? OKAY.

CAN'T WAIT.

YEAH, , AS I MENTIONED, THE RESERVES ARE AN INDICATOR OF OUR FINANCIAL HEALTH AND, UH, WE TRY TO ENSURE THAT WE AT LEAST HAVE A MINIMUM.

WE DO HAVE A TARGET.

WE HAVE BEEN TRYING TO MAKE IMPROVEMENTS IN OUR FINANCIAL ANALYSIS, ESPECIALLY ON, ON THE GAS SIDE, BECAUSE PRIOR TO THE MERGER, THIS WAS NOT SOMETHING THAT WAS DONE IN A FIVE YEAR PRODUCTION.

SO WE ARE, WE ARE ASSESSING THAT.

AND WHAT IS THE, WHAT IS THE VIEW FROM POWERS THAT THE OUTSIDE OF THE UTILITIES WITH REGARDS TO OUR RESERVES, UH, DO THEY, DO THEY VIEW RESERVES AS IMPORTANT ELEMENT, UH, THAT WE SHOULD NOT GO BELOW OUR RESERVES, WHICH WE ARE OBVIOUSLY BELOW OUR RESERVES? OR DO THEY VIEW IT AS MORE OF A FUND BALANCE ISSUE THAT, UH, YOU KNOW, WE CAN, WE CAN GO BELOW OUR RESERVES AND, AND STILL BE FINE? I'M ASSUMING YOU'RE REFERRING TO THE CITY AND YES, THEY DO.

THEY DO.

UH, THEY ARE CONCERNED ABOUT OUR, OUR FUND BALANCE.

THEY ALSO CALCULATE IT AS WELL.

WE RECONCILE TO THE INFORMATION THAT THEY HAVE JUST PRIOR TO THE UTILITIES MERGER.

ABOUT A YEAR PRIOR, I MET WITH THE, UH, BUDGET MANAGER AND DIRECTOR OF FINANCIAL MANAGEMENT, AND WE DID COME TO AN AGREEMENT OF WHAT A HEALTHY FUND BALANCE WOULD LOOK LIKE.

UH, WE DIDN'T ESTABLISH A, A POLICY PER SE, BUT WE DID HAVE A A DOLLAR AMOUNT FIGURE IN MIND.

HOW DOES THAT FUND BALANCE RELATE TO OUR RESERVE BALANCE? IT'S THE SAME.

FUND BALANCE AND RESERVES INTERCHANGE.

SO, SO THEY SEE OUR RESERVES AS IMPORTANT AS, AS WE SEE THE FUND BALANCE, RIGHT? THEY SEE OUR RESERVES AS IMPORTANTLY AS WE DO.

I THINK WE MAY HAVE A LITTLE MORE , UM, FAVORABILITY IN, IN HOW WE LOOK AT OUR FINE BALANCE.

THEY LOOK AT THINGS ALSO FROM A HOLISTIC PERSPECTIVE AS A POOL

[00:40:01]

CASH.

BUT, UM, I, I THINK IT IS STILL A CONSTANT DISCUSSION, A CONTINUOUS DISCUSSION WE SHOULD HAVE WITH 'EM.

BUT IT WOULD BE, I, IT WOULD FIT, BUT IT WOULD BE TIGHT.

UH, AND THEN CAN I JUMP BACK TO, I THINK MAYBE DEAN, UM, SO DEMAND FORECAST ON A SCALE OF ONE TO 10, UM, ARE WE AGGRESSIVE? ARE WE CONSERVATIVE? UH, ARE YOU TRYING TO NAIL THE NUMBER AS, UH, AS CLOSELY AS YOU CAN OUT INTO 10 YEARS? WHAT, WHAT'S YOUR, WHAT'S YOUR THEORY? YEAH, SO IN WHAT DANIEL HAS SHOWN, AND YOU KNOW, I'D SAY MOST OF THESE NUMBERS ARE SOMEWHAT ACCURATE.

UM, BUT A LOT OF THESE ARE JUST FOR SAKE OF DISCUSSION, UM, THESE SPECIFIC FORECASTS ARE TRYING TO, TO KIND OF NAIL THE, THE MIDDLE LINE OF, UH, BETWEEN THE UPPER AND LOWER.

UH, WE'RE GOING THROUGH THE PROCESS RIGHT NOW OF, UH, UPDATING OUR WATER RESOURCES PLAN, WHICH WE'LL HAVE A MORE IN DEPTH LOOK AT A RANGE, UH, AN UPPER AND A LOWER RANGE.

UH, AND SO WITHIN THE NEXT YEAR OR SO, WE'LL HAVE A BETTER, UH, 25 YEAR FORECAST, ACTUALLY, OF OUR, OUR WATER DEMAND.

BUT RIGHT NOW, THIS IS KIND OF THE, UH, TREND, UH, BASED OFF OF THE, THE RECENT DATA THAT WE HAVE.

SO THAT RANGE MIGHT INDICATE CONSERVATIVE VERSUS AGGRESSIVE.

RIGHT? THANKS.

WANNA KEEP PRESSURING, DEAN, IF I CAN , I SHOULD HAVE SAT HIM THERE.

SO, UM, YOU KNOW, WE'RE TALKING ABOUT FINANCIAL RESERVES, BUT ON THE OTHER SIDE OF IT, THERE'S ALSO THE WATER RESERVE AND THE GROUNDWATER RIGHT? RESERVE IN, IN, IN THIS PARTICULAR SCENARIO, OUR GROUNDWATER PUMPING IS RUNNING FROM 32,000 ACRE FEET DOWN TO 20 34, 20 6,000 ACRE FEET.

SO OUR WATER RIGHTS ITSELF IS 33,000.

SO WE'RE LOSING A LOT OF WATER RIGHTS ALONG THE TABLE.

SO ARE THERE ANY LEVERS THAT WE CAN PULL ON THE RIGHT SIDE TO MAINTAIN THOSE RESERVES OR RESERVE IT SOMEHOW ON THE RIGHT SIDE, BUT HOW DOES THAT LOOK SHOWING? YEAH, AND, AND YOU KNOW, I DON'T WANT TO TAKE TOO MUCH FROM Y'S PRESENTATION LATER, BUT THERE'S, THERE'S DIFFERENT ELEMENTS TO THIS.

SO, SO ONE, YEAH, TY'S POINTING OUT THAT, UM, ON THAT, THE PUMPING GIG FEET, IT'S 26,000 OUT IN THE FUTURE.

ACTUALLY, WE'RE NOT EVEN AT 33,000, WHICH IS HOW MANY, UH, ACRE FEET OF RIGHTS WE HAVE NOW.

AND SO EACH YEAR WE ESSENTIALLY HAVE A SURPLUS OF RIGHTS AND, YOU KNOW, SEEING THIS FORECAST, IT, IT, IT GIVES US A COUPLE DIFFERENT, UH, OPTIONS TO CONSIDER.

ONE IS, WE DON'T EVER THINK WE'RE GOING TO USE THOSE RIGHTS AGAIN.

WE CAN LEASE OUT OR SELL THOSE RIGHTS, AND THAT WOULD BE A FINANCIAL BENEFIT.

UH, WE CAN STORE THOSE RIGHTS, WHICH IS AN IMMEDIATE, IMMEDIATE FINANCIAL IMPACT TO US.

UH, WE'VE PAY TO STORE THAT WATER, BUT BECOME A RESOURCE FOR US IN THE FUTURE.

YOU SEE, THE COST OF METROPOLITAN WATER, YOU KNOW, PAYING, PAYING TO STORE THAT GROUNDWATER TO HAVE AVAILABLE IN THE FUTURE IS GONNA, AGAIN, TO THAT LOT 10 YEAR, PROBABLY 20 YEAR OUTLOOK, REALLY GONNA SAVE OUR RATE PAYERS IN THE LONG RUN.

UM, SO THAT DISCREPANCY BETWEEN OUR WATER RIGHTS AND THE PROJECTED PUMPING IS, IS SOMETHING TO, UM, THAT WE, WE WILL CONTINUOUSLY DISCUSS WITH THE BOARD DIFFERENT SOLUTIONS, UH, TO OL'S POINT PROGRAM, PROBABLY VARIOUS PROJECTS, UH, PROGRAMS TO ADDRESS THAT, THAT DISCREPANCY.

UM, YEAH, AND, AND Y'S PRESENTATION, WE'LL, WE'LL TOUCH ON IT LATER, BUT, UH, YOU KNOW, WE, WE HAVE THE OPTION TO, UH, INVEST IN NEW INFRASTRUCTURE TO TAKE ADVANTAGE OF THOSE RIGHTS AND, AND NOT JUST RESIGN TO 26,000 ACRE FEET OF PUMPING.

SO WE'LL SAVE THAT DISCUSSION FOR LATER.

TONY, WHY DON'T YOU MOVE US ALONG? ALRIGHT, THANK YOU, DANIEL.

THANK YOU, STEPHANIE.

APPRECIATE IT.

ALRIGHT, HOW YOU DOING? YOU HANGING IN THERE? ALRIGHT, LET'S MOVE ON TO SECTION THREE.

UH, IN OUR NEXT PRESENTATION, LED BY A KEVIN TUBAS, IT WILL FOCUS ON CAMPUS CONSOLIDATION.

THIS 20 MINUTE SESSION INTRODUCES A RANGE OF CAMPUS DESIGN CONCEPTS, WHAT THE ARCHITECT CALLS THEM, SCENES INCLUDING BOTH FAMILIAR AND NEW IDEAS, WHICH MAY BE A FIRST IMPRESSION TO MANY OF YOU.

AND THAT'S THE GOAL.

THIS SESSION IS ABOUT EXPLORING POSSIBILITIES.

RATHER THAN ARRIVING ON THE FINAL ANSWER, YOU'LL BE INTRODUCED TO FOUR CONCEPTS.

YES, UH, THAT REMAINS THE CASE.

UH, EACH WITH ITS OWN SET OF TRADE OFFS, FINANCIAL, OPERATIONAL, LOGISTICAL, RATHER THAN, THAN EVALUATING COMPLEX DATA TODAY, HELP US TO BEGIN CONSIDERING THE ADVANTAGES AND DISADVANTAGES OF EACH APPROACH AND TO ASSESS HOW THEY ALIGN WITH OUR LONG-TERM UTILITY STRATEGY.

AS ALWAYS, WE ENCOURAGE YOU TO ASK QUESTIONS AND SHARE YOUR THOUGHTS INTERACTIVELY.

FEEL FREE TO ENGAGE, UM, ON ANY GIVEN SLIDE.

YOUR PERSPECTIVE AS A BOARD IS VITAL TO SHAPING WHERE WE GO FROM HERE.

LET'S WELCOME KEVIN TGA.

[00:45:08]

THANK YOU, TONY.

MORNING COMMISSIONERS, RIGHT? UM, THOSE OF YOU ON INSTRUCTOR COMMITTEE, THIS MAY BE A LITTLE BIT OF A REVIEW, BUT, UH, UH, HOPEFULLY, UH, I CAN STILL MAKE IT SOMEWHAT ENTERTAINING.

UH, TODAY WE'RE GONNA REVIEW, AS TONY MENTIONED, FOUR, UH, CONCEPTS OR SCHEMES.

UH, IT'S JUST LIKE YOU SAID, THE ARCHITECT.

IT'S NOT LIKE I HAVE A MASTERMIND PLAN HERE, MY SCHEME .

UM, WE'LL GIVE AN UPDATE ON THE ELM UPDATE, UH, OUR OFFICE SPACE THAT WE, UH, I GUESS IT'S OUR, OUR FOURTH CAMPUS THAT WE OWN.

UH, AND THEN REVIEW OF SOME OF THE MAJOR COMPONENTS AND OUTSTANDING ISSUES THAT WE'RE GOING TO IMPACT THE DESIGN AND THE IMPLEMENTATION AND THE NEXT STEPS.

SO BEFORE I JUMP INTO SHOWING YOU SOME OF THE, UH, BEFORE CONCEPTUAL MASTER PLANS, I WANNA GIVE A LITTLE HISTORY ON WHICH EACH DEPARTMENT HAD BEEN DOING PRIOR TO THE MERGER.

SO I'LL START ON THE GAS SIDE.

IN 2019, UH, WE HAD STARTED WORKING ON DOING A, A GAS CAMPUS REMODEL.

UH, THE CATALYST THERE WAS, UH, THE KIND OF THE STRUCTURAL INTEGRITY OF SOME OF OUR BUILDINGS THERE.

WE, WE ADDED A NEW OFFICE FACILITY THERE IN APPROXIMATELY 2011, BUT THE REST OF THE INFRASTRUCTURE THERE NEEDED AT LEAST, WE DECIDED IT NEEDED TO BE REPLACED.

AND THEN IN 2021, UH, THE GAS DEPARTMENT PURCHASED, UH, THE ELM AVENUE OFFICE SPACE, THE FOURTH FLOOR THERE.

SO WE MODIFIED THAT PLAN, UH, AND IT WORKED OUT TO A NEW WAREHOUSE AND A NEW MULTIPURPOSE ROOM, SOME NEW OFFICE SPACE, IT'S APPROXIMATELY $50 MILLION.

AND THEN A LOT OF THE ADMINISTRATIVE STAFF WERE, WERE GOING TO BE HOUSED AT THE ELM AVENUE OFFICE SPACE.

AND THEN ON THE, ON THE WATER SIDE, UH, THE WARDLOW, UH, CAMPUS HAD BEEN RECOGNIZE IT, IT WAS RUNNING OUT OF OFFICE SPACE, IT NEEDED SUBSTANTIAL, UH, REPAIRS AND AN EXPANSION.

SO THAT WAS ONGOING.

AND THEN ALSO TREATMENT PLANT.

THERE'S NEEDS FOR SOME ROOF REPAIRS.

AND ALSO, UH, KIND OF A THEME HERE, WE'RE RUNNING OUTTA OFFICE SPACE THERE AS WELL.

AND THOSE HAD BEEN WORKED ON, BUT NOT PRESENTED TO THE BOARD.

PREVIOUSLY.

BEFORE WE MERGED, WE DECIDED TO DO THIS NEW, UH, KIND OF ALL DEPARTMENT INFRASTRUCTURE PLANNING.

AND THEN ALSO I JUST WANTED TO MENTION TO OUR, OUR CONSULTANT, GPA MET WITH ALMOST EVERY MANAGER IN THIS ROOM AND DID A NEEDS ASSESSMENT TO COME UP WITH SOME OF THESE CONCEPTUAL, UH, DESIGNS.

SO FIRST, THE FIRST PLAN, UH, IS THE, THE FIRST TWO WILL BE THE TWO CAMPUS MODELS.

SO THE FIRST ONE, UH, THE ADMINISTRATION, UH, PORTION OF OUR, UH, OPERATIONS IS AT THE TREATMENT PLANT.

SO IT'S JUST RIGHT HERE OFF OF, UH, UP HERE, RIGHT BEHIND THE, UH, THE EOC, THE EMERGENCY OPERATIONS COMMAND CENTER.

SO WE'D HAVE THE ADMIN HERE, THE, THE BOARD ROOM, ALL OF OUR KIND OF ENGINEERING FINANCE TEAM WOULD BE LOCATED AT THIS, AT THIS LOCATION.

AND THEN OUR FIELD OPERATIONS, OUR CONSTRUCTION SERVICES WOULD BE LOCATED AT THE SPRING STREET OR THE GAS CAMPUS.

UH, WE REQUIRE, THAT'S A MULTI-LEVEL PARKING GARAGE FOR OUR EMPLOYEES.

NEW CONSOLIDATED WAREHOUSE FOR SERVICE, BOTH GAS, WATER, AND SEWER.

AND THEN, UH, JUST OFFICE SPACE AND SOME SHOPS FOR, FOR THE STAFF.

AND SCENE TWO, IT'S, IT'S JUST THE REVERSE.

SO WE ARE NOW HAVING ALL OF OUR ADMIN STAFF LOCATED AT SPRING STREET, BUILDING A NEW, UH, OFFICE SPACE, MULTIPURPOSE ROOM PLACE FOR OUR, WHERE OUR BOARD MEETINGS WOULD BE HELD.

THIS IS THE, THE BUILDING WE BUILT IN 2011 THERE THAT, UH, WE WOULD RE UTILIZE.

AND THEN JUST LARGE OFFICE SPACE RIGHT THERE, HERE IN GENERAL.

SO A LOT OF EMPTY LAND THERE, WE COULD STILL FIGURE OUT TO HOW TO UTILIZE AND EXPAND INTO.

AND THEN OVER AT THE TREATMENT PLANT, WE HAVE OUR, OUR FIELD OPERATIONS.

SO WE HAVE A CENTRALIZED WAREHOUSE HERE, BROAD SPACE FOR OUR PARKING AND SOME SHOPS AND, UH, AREAS FOR, UH, WHERE THEY DO THE WORK THAT THEY CAN DO.

AND THEN THAT, THAT COMES IN, UH, I, I, I'LL, I'LL MENTION THE COST AGAIN.

I HAVE A SUMMARY PAGE.

SO ON SCHEME THREE, THIS IS WHAT WE'RE CALLING THE ONE CAMPUS OR THE CENTRALIZED MODEL.

UH, WE HAVE EVERYONE LOCATED AT TREATMENT.

UM, ONE, ONE THING TO NOTE HERE IS TO, TO DO THIS, WE HAVE TO ACTUALLY GET SOME LAND FROM THE CITY.

THERE'S SOME LAND HERE THAT, UH, I DON'T KNOW IF IT'S BEING UTILIZED BY DON TEMPLE OR NOT, BUT IT'S, THERE'S LAND THAT WE WOULD HAVE TO WORK WITH THE CITY, UH, TO ACQUIRE, BUILD TO FIT EVERYONE HERE.

[00:50:01]

SO IT WOULD HAVE OUR ADMINISTRATIONS, UH, PORTION IS UP HERE, MULTI-LEVEL, UH, MULTI-LEVEL PARKING GARAGE.

I THINK THAT'S A, A SIX LEVEL PARKING GARAGE.

UH, EVEN OUR SHOPS WHERE WE WORK ON OUR, SOME OF OUR VEHICLES, THIS IS MULTI-LEVEL AS WELL.

UH, AND THEN, YOU KNOW, CENTRALIZED WAREHOUSE.

AND SO THIS PLAN, UH, IS $210 MILLION.

AND THEN FINALLY, SCHEME FOUR IS WE REMAIN KIND OF UTILIZING ALL THREE OF THE CAMPUSES.

SO WHAT I'M SHOWING HERE IS KIND OF WHAT OUR ORIGINAL DESIGN WAS AT THE GAS CAMPUS PRIOR TO THE MERGER, BUILDING A WAREHOUSE, SOME OFFICE SPACE, AND THEN A NEW MULTIPURPOSE ROOM AND UTILIZING THAT EXISTING BUILDING.

SO IN THIS, IN THIS SCHEME, WE WOULD HOLD OUR, OUR BOARD MEETINGS AT THIS NEW MULTIPURPOSE ROOM.

IT'D BE ON A FIRST FLOOR, EASIER ACCESS AND, UH, A LARGE BUILDING WHERE WE COULD USE IT FOR LARGE MEETINGS THAT THE GM WANTS TO HAVE WITH ALL THE STAFF.

OR WE COULD DO IT FOR, UH, PARTITION IT FOR JUST BOARD NEWS.

AND THEN ALTOGETHER IT'S ABOUT $128 MILLION.

SO HERE'S A SUMMARY SLIDE OF ALL THE, DID YOU HAVE A QUESTION? UH, I'M SORRY, YOU HAD A QUESTION? I THINK I MIGHT HAVE MISSED IT.

THIS IS AT SPRING OR SCHEME FOUR.

THIS ONE.

THAT, THAT'S, SO THIS IS, WE'RE STILL, WE'RE ACTUALLY UTILIZING ALL THREE.

WHAT I'M SHOWING HERE IS WHAT'S AT SPRING, BECAUSE THAT'S THE ONLY AREA WHERE WE'RE GONNA BE DOING NEW CONSTRUCTION.

SO TO KIND OF CONTINUE THAT PRODUCT ON SCHEME FOUR, WE'RE, WE'RE DOING SOME REPAIRS AT WARLOW, THAT ADDITIONAL OFFICE SPACE THAT WE NEED A TREATMENT PLANT.

SO THAT COMES IN ABOUT $128 MILLION.

SCHEME ONE, SCHEME TWO AND SCHEME THREE, THEY'RE THE TWO CAMPUS, ONE CAMPUS MODELS.

THEY ALL COME IN AT APPROXIMATELY 200 MILLION.

SO, UH, THE SCHEME FOUR IS ABOUT APPROXIMATELY 70 MILLION LESS.

NOW I'LL GO OVER THE KIND OF PROS AND CONS OF EACH OF THE, THE, THE DESIGNS.

SO FOR CENTRALIZED CAMPUS, OBVIOUSLY A PRO IS, WE'RE ALL TOGETHER.

SO WE SHOULD HAVE INCREASED COLLABORATION, WE'RE GONNA HAVE A ECONOMIES OF SCALE.

WE'RE GONNA HAVE, WE'RE GONNA HAVE BUY LESS PRINTERS, LESS WE MATERIALS IN FOR OUR STAFF TO HAVE NEED.

SO WE SHOULD SAVE MONEY THERE.

UH, WE ALSO GET TO MAXIMIZE, UH, SURPLUS LAND THAT WE WANT.

WE WOULD NO LONGER NEED TO SPRING IN THE WORKLOAD UNDER THE CENTRALIZED, SO WE COULD THINK ABOUT RENTING OR SELLING THAT PROPERLY.

AND THEN, UH, HAS ZERO, I WOULD SAY ZERO DISTRIBUTOR PLAN MIGHT BE DISRUPTED, BUT IT HAS THE MOST MINIMAL DISRUPTION TO OUR STAFF.

'CAUSE YOU HAVE A WHOLE BLANK SLATE THAT YOU'RE CONSTRUCTING ON.

AND THEN ONCE IT'S DONE, YOU CAN ALL VACATE WARDLOW AND SPRING AND MOVE IN.

UH, THE CON IS, IT'S, IT'S GONNA, IT IS A LITTLE TIGHT.

IT, IT WILL FIT, BUT IT PROBABLY LIMITS OUR FUTURE EXPANSION.

WE MAY NOT HAVE ABILITY TO SET UP LIKE TRAINING CENTERS FOR OUR FIELD STAFF TO PRACTICE, UH, DITCH, DITCH DIGGING, SHORING.

THEY WANTED TO REHEARSE HOW TO STOP A LINE LEAK BOTH WATER AND GAS.

WE WOULDN'T PROBABLY HAVE THE LAND TO BE ABLE TO DO THAT.

UH, I DO HAVE SOME CONCERNS ABOUT THE PUBLIC ACCESSING THE AREA.

WE WANNA KEEP, OBVIOUSLY THE AREAS THAT WE WORK SECURE, BUT TO ALLOW THE PUBLIC IN THAT WOULD MEAN THAT THE ONLY ACCESS IS OFF OF SPRING.

SO YOU, IF YOU'RE HEADING EAST, YOU'D ONLY BE ABLE TO MAKE A RIGHT TURN INTO IF YOU WANTED TO COME FOR A PUBLIC MEETING.

THAT COULD BE, THAT COULD BE CONCERNING.

AND THEN, YOU KNOW, I MENTIONED ALREADY WE'D HAVE TO WORK WITH THE CITY TO GIVE SOME ADDITIONAL LAND.

SO FOR THE TWO CAMPUS MODEL, AND I'M TALKING BOTH, YOU KNOW, THE ONES WHERE WE HAVE, UH, ADMIN EITHER AT TREATMENT PLAN OR AT SPRING.

THE PROS IS, YOU KNOW, WE PROVIDE ADDITIONAL SPACE FOR THAT TRAINING THAT I WAS JUST TALKING ABOUT.

UH, UNDER SCHEME ONE, WE DON'T HAVE TO WORK WITH THE CITY TO, TO GET ADDITIONAL LAND, BUT UNDER SCHEME TWO, WE NEED TO DO THAT.

UH, ADDITIONAL REVENUE FROM REPURPOSED LAND, EITHER BOTH SALE OR RENTING.

UM, FOR WARD LOAD, THAT ALLOWS, UH, THE CONTINUED SUPPORT OF A NINE ONE ONE CALL CENTER.

I DON'T KNOW IF YOU KNOW, WE HAVE A NINE ONE SUPPORT BACKUP CALL CENTER, BUT THAT'S ACTUALLY AT THE SPRING STREET, UH, IN THE, UH, UH, AUDITORIUM.

AND, UH, IT PROVIDES THE CENTRALIZED WAREHOUSE OPTION.

UH, A CON WOULD BE THAT, UH, THE CONSTRUCTION PHASING ON SCREEN WOULD BE DISRUPTIVE.

SO THIS IS LIKE MID-LEVEL DISRUPTION FOR, FOR OUR STAFF, UH, REDUNDANCY.

A LOCATION WILL REQUIRE, WE DO GET SOME ECONOMIES SCALE, BUT IT'S, IT'S NOT AS MAXIMIZED AS A CENTRALIZED CAMPUS.

AND THEN, YOU KNOW, ALSO BY BEING DIVIDED, WE'RE NOT, WE'RE ON TWO DIFFERENT LOCATIONS, SO MAYBE NOT AS EFFICIENT AT COLLABORATION IN THE THREE CAMERAS MODEL, THE

[00:55:01]

POSITIVE IS THE COST.

IT'S ABOUT A $7 MILLION RIGHT NOW.

ESTIMATED SAVINGS COMPARED TO THE OTHER, UH, THREE PLANTS, UH, WE WOULD BE ABLE TO HAVE SOME CONS, UH, CONSOLIDATION OF THOSE VARIOUS SMALLER WORK GROUPS UTILIZING, UH, THE OFFICE SPACES TO GET ENGINEERING, FINANCE, HUMAN RESOURCES ALTOGETHER.

UH, IT WILL PROVIDE, SINCE WE'RE BUILDING A NEW MULTIPURPOSE ROOM, WE'LL HAVE A NEW NICE STATE OF THE ART, UH, AREA FOR BOARD MEETINGS AND, AND FOR LARGER MEETINGS.

UH, THE CON AND, AND THIS IS PROBABLY A REALLY BIG ONE TO CONSIDER, IS THE CONSTRUCTION PHASE WOULD BE THE MOST DISRUPTIVE TO OUR STAFF.

UH, WITH ALL THE, THE WORK BEING DONE AT THE SPRING STREET, IT, IT'S PROBABLY PARKING CONGESTION.

UH, WE'RE, WE'RE JUST DOING EV INSTALLATIONS RIGHT NOW AND, AND I THINK PEOPLE PROBABLY ARE UPSET WITH ME BECAUSE I, I'M JUST THE ONE WHO HAPPENS TO SEND THE EMAILS OUT ABOUT THE DEPARTMENT RESTRICTIONS.

BUT IT'S CAUSED A LOT OF, UH, A LITTLE BIT OF TURMOIL CONGESTION, OUR STANDING FROM OUR CAMPUS NOW.

SO IF YOU CAN IMAGINE TRYING TEAR DOWN BUILDINGS AND, AND BUILD NEW, NEW FACILITIES, BE VERY DISRUPTIVE.

I, SO IN, IN THE DISRUPTION WOULD BE TEMPORARY OFFICE.

THAT WOULD HAVE TO BE CONSIDERED.

IF, IF, IF THE ARCHITECT THINKS THAT THEY'RE WORKING WITH OUR CONSULTANT, IF WE'RE GOING TO HAVE THAT LARGE OF A DISRUPTION, WE WOULD PROBABLY NEED TO CONSIDER, UH, TEMPORARY OFFICE SPACE.

RIGHT.

ALL RIGHT, PROPERTY APPRAISAL.

UH, AGAIN, THREE LO, THREE LOCATIONS.

LESS COLLABORATION, LESS KINDS OF SCALE PROBABLY IS WHAT WE HAVE TODAY IN TERMS OF OUR, OUR KIND OF OUR OFF COSTS FOR JUST KEEPING, UH, ELECTRICITY MAINTENANCE, EVERYTHING ASSOCIATED WITH, UH, THE THREE CAMPUSES.

SO PIVOTING TO ELM AVENUE, UH, WE, YOU KNOW, THIS IS THE, THE FLOOR PLAN SO FAR, UH, THIS AREA HIGHLIGHTED IN RED IS THE TENANTS WILL BE ENERGY RESOURCES.

SO THEY, THEY CURRENTLY ARE OUR TENANTS TODAY.

THEY ARE AT, UH, THE SPRING STREET WHEN, WHEN THIS IS READY, THEY WOULD MOVE IN OVER TO THAT LOCATION.

AND THEN WE STILL HAVE TO WORK TO FIND, UH, TENANTS FOR THE REST OF THAT SPACE.

SO JUST A LITTLE HISTORY ON ELM, AS I MENTIONED, WE SPENT $6 MILLION, THE GAS FUND TO PURCHASE THE FOURTH FLOOR OF THAT PROPERLY.

IN, UH, FISCAL YEAR 25, WE'RE GOING TO BE ASKED TO COMMIT ANOTHER $3 MILLION FOR TENANT IMPROVEMENTS.

AND IN TOTAL IT'S BEEN, IT'S ESTIMATED TO BE ABOUT $6.2 MILLION IN TENANT IMPROVEMENTS.

I WILL CAVEAT THAT BY SAYING THAT THEY'VE ALREADY WARNED US IT COULD GO HIGHER, AND IT'S BECAUSE THEY FOUND THAT THE HVAC SYSTEM IS IN NEED OF MORE REPAIRS THAN PREVIOUSLY THOUGHT.

UM, WE ARE ACTIVELY LOOKING FOR ADDITIONAL TENANTS, BUT WE ARE RESTRICTED, IT WOULD HAVE TO BE A CITY DEPARTMENT, AND THAT'S BECAUSE OF THE BONDS THE CITY USED TO SECURE THE PROPERTY.

WE HAVE TO RENT TO ANOTHER FELLOW CITY DEPARTMENT.

AND, UH, THE CITY'S EXPECTING OUR COMMITMENT AND PLANS TO UPGRADE ELM IN EARLY SECOND QUARTER OF CALENDAR YEAR 25, WHICH IS TOMORROW.

SO WE WORKED WITH A CONSULTANT AND CAME UP WITH A PROPERTY APPRAISAL FOR BOTH AWARD LOAN AND SPRING.

UH, THEY BOTH CAME IN AT APPROXIMATELY $55 MILLION EACH.

UH, ALSO, THEY ALSO EVALUATED IF WE WANTED TO RENT THE SPACE, IF WE RENTED THE SPACE, EACH PROPERTY TO GENERATE PER YEAR, APPROXIMATELY $3.3 MILLION IN REVENUE.

BUT THAT WOULD ALSO REQUIRE US TO DO SOME TENANT IMPROVEMENTS BEFORE WE PROBABLY HAD THAT PROPERTY READY FOR RENT.

SO WE'D HAVE TO WEIGH THOSE, WEIGH THOSE OUT.

UM, BOTH PROPERTIES WOULD HAVE TO BE REZONED IF WE WANT TO RENT OR SELL.

UH, WARDLOW IS, UH, ZONE INSTITUTIONAL AND, UH, SPRING IS INDUSTRIAL.

I GUESS WE COULD KEEP IT INDUSTRIAL.

DEPENDS ON WHAT PURPOSE, UH, THE BUYER HAD IN MINE.

UH, MAYBE YOU KNEW THIS, BUT, UH, BOTH PROPERTIES ARE OWNED BY THE WATER FUND.

SO ANY, I THINK ANY BENEFITS, UH, THAT ARE GAINED FROM THE SALE OR THE RENT OF THAT WOULD GO TO THE WATER FUND ONLY.

AND A CAMPUS DESIGN BASED ON PROCEEDS FROM SELLING OR RENTING INTRODUCES RISK.

AND WHAT I MEAN BY THAT IS IF WE MAKE AN ASSUMPTION THAT WE CAN SELL, UH, ONE OF THE PROPERTIES FOR 55 MILLION AND WE AREN'T ABLE TO DO THAT, OR WE'RE BECOME SUBSTANTIALLY LOWER, THAT INTRODUCES RISK IN OUR, ON OUR FINANCIAL MODELS THAT, UH, WE'RE GONNA BE WORKING ON IN THE NEXT QUARTER.

ANY OTHER, SO OTHER OUTSTANDING ISSUES.

UH, RIGHT NOW OUR FLEETS ARE MANAGED, OUR VEHICLE FLEETS.

GAS IS MANAGED BY THE CITY FLEET.

SEWER AND WATER ARE MANAGED IN-HOUSE BY THIS DEPARTMENT.

UH, IT'S JUST SOMETHING SINCE WE'RE CONSOLIDATING CAMPUSES THAT WE SHOULD PROBABLY LOOK INTO, WE WANNA CENTRALIZE OUR FLEET MANAGEMENT.

UH, CENTRALIZED WAREHOUSE IS ADDRESSED IN SCHEMES

[01:00:01]

ONE, TWO, AND THREE.

IN SCHEME FOUR, WE WE'RE GOING WITH THE THREE CAMPUS MODEL, BUT SINCE WE'RE STARTING WITH A BLANK SLATE AND SOMEWHAT OF A BLANK SPLIT SLATE IN SPRING, WE COULD BUILD A LARGER WAREHOUSE AND WEIGH, IF THAT'S AN OPTION WE WANT TO DO, WHERE WE'D HAVE WATER, SEWER, A GAS, ALL FROM A CENTRALIZED WAREHOUSE AND A SPRING STREET FACILITY, AND WEIGHED THAT AGAINST THE CON OF HAVING, YOU KNOW, THEIR, THEIR MAIN WORKSTATION BEING AT .

WE'D ALSO HAVE TO DETERMINE IF PUBLIC WORKS WANTS TO STAY AT SPRING.

I DON'T KNEW THAT AS WELL.

WE HAVE, UH, THEY'RE, THEY'RE A TENANT OF OURS, THE TRAFFIC DIVISION.

AND SO WE'D HAVE TO, I THINK IN THOSE PLANS THERE WERE SOME, THOSE BLOCK DIAGRAMS INCLUDED BUILDING A BUILDING FOR THEM.

BUT WE DON'T, WE HAVE TO ENGAGE WITH THEM TO SEE IF THEY'RE WILLING, UH, TO PAY THEIR SHARE OF THE CAPITAL, UH, TO STAY THERE.

UM, WE HAVE TO WORK WITH THE CITY ON ACQUIRING THAT LAND NEAR THE TREATMENT PLAN.

AND THEN, AS ANNA ALREADY MENTIONED, WE'RE GONNA HAVE TO INVESTIGATE TEMPORARY OFFICE SPACE.

SO NEXT STEPS.

SO FOR EACH PROPOSED PLAN, SO ALL FOUR, UH, WE'LL DEVELOP A FINANCING AND CONSTRUCTION SCHEDULE.

AND THE PLAN IS TO BRING THOSE BACK SOMETIME WITHIN THE THIRD QUARTER OF THIS FISCAL YEAR.

UH, WE'LL, SO ON THE FINANCE SCHEDULE FOR EACH PLAN, UH, WE'LL LOOK AT THE IMPACT TO RATE PAYERS FOR EACH, EACH OF THE SCHEMES, THE VALUE OF, AND HOW WE WOULD UTILIZE THAT SUPER SURPLUS LAND AND COST OF, OF BORROWING.

AND THEN FOR THE CONSTRUCTION SCHEDULE FOR EACH PLAN, WE'LL LOOK AT OUR PHASING OF OUR, OUR OF OUR CONSTRUCTION, THE IMPACT OF THE CONSTRUCTION ON STAFF AND, UH, THE SCHEDULING OF CONSTRUCTION.

OBVIOUSLY LIKE DECENTRALIZED PLAN, I THINK WE CAN MOVE IN FASTER 'CAUSE YOU'RE, WE'RE NOT IN THE WAY, WHEREAS MODEL TWO, WELL, THE OTHER ONES, UH, WE HAVE TO WORK TO MINIMIZE AND FAX THE STAFF.

SO THE CONSTRUCTION SCHEDULING BE SLOWER.

AND WITH THAT, I THINK I'LL TAKE ANY QUESTIONS IF YOU HAVE OH, I CAN, I CAN GET US STARTED, UH, ON THE TWO CAMPUS PLAN.

UM, YOU MENTIONED WHAT YOU DESCRIBED AS MID-LEVEL DISRUPTION.

SO I KNOW THAT THIS IS TEMPORARY HOUSING, IS IT A PHASE CONSTRUCTION? WHAT, WHAT DOES TEMPORARY DISRUPTION, MID-LEVEL DISRUPTION LOOK LAW? SO MOST OF THE DI MEAN, FOR IN, IN THAT CASE, THE DISRUPTIONS ARE AT SPRING.

SO FOR, UM, THE TWO CAMPUS MODEL, UH, EITHER THE, WE, WE CAN BUILD EITHER AN ADMIN OR A ALL THE FIELD OFFICE LOCATIONS AT TREATMENT PLAN.

SO FOR THEM THEY CAN, THEY COULD MOVE OUT AND, AND GO OVER THERE AND, AND HAVE, I GUESS, MINIMAL DISRUPTION.

BUT THE, THE STAFF, THE OFFICE STAFF THAT ARE WORKING IN THE FIVE 70 BUILDING AND THE ADMIN BUILDING, UH, THEY'RE JUST, WE WOULD BE BUILDING THOSE NEW STRUCTURES, NEW WAREHOUSE, RIGHT THERE IN THE MIDDLE OF THE CAMPUS.

SO IT WOULD JUST, IT WOULD JUST HAVE AN IMPACT PARKING, JUST SO WE MAY NEED TO LOOK AT TEMPORARY OFFICE SPACE TO, TO MINIMIZE ITS DISRUPTIONS.

SO, SO, UH, COUPLE QUESTIONS ON, UH, LET'S SEE.

I'LL JUST WORK BACKWARDS.

SO, UH, WE'RE LOOKING AT EACH CAMPUS AS A STANDALONE, UH, CHUNK OF LAND THAT IS UNDIVIDABLE.

BUT ARE ARE, DO WE HAVE THE ABILITY TO DIVIDE UP THE CAMPUSES AND SELL OFF PARCEL PART PORTIONS OF THEM? OR DO THEY, ARE WE REQUIRED TO SELL THE WHOLE THING? I, I DON'T KNOW.

I'M GONNA SAY, I'M SURE WE COULD DIVIDE IT UP AND SELL ONLY A, A PORTION OF IT, BUT I, I DON'T, I DON'T KNOW THE ANSWER TO THAT.

UH, 'CAUSE IT SEEMS TO ME SOME OF THE, UH, YEAH, IF WE WERE TO LOOK AT SCHEME ONE, UM, AND, AND THE TIGHTNESS OF THE SPACE, AND I, I, I SEE EXACTLY WHAT YOU'RE SAYING THERE, BUT IT SEEMS LIKE IF WE COULD SPIN OFF SOME OF, OF SAY FLEET AND WASHING, UH, CAPABILITY AND THEN A TRAINING GROUND, UH, SPIN THAT OFF TO ONE OF THE OTHER TWO REMAINING CAMPUSES, JUST A PORTION OF THEM, THAT, THAT MIGHT GIVE US SOME ADDITIONAL FLEXIBILITY.

YOU, YOU'RE TALKING ABOUT IF WE DID A, THE CENTRALIZED, IF WE DID THE CENTRALIZED, UH, BUT TAKE SAY, FLEET, IT WOULD BE TO ME, ONE OF THE, THE MORE LOGICAL ONES TO REMOVE FROM THERE.

UM, AND, AND PUT THAT AT A, A REMOTE LOCATION.

THAT MAYBE AN OPTION.

WE CAN, WE CAN EXPLORE THAT.

UM, UH, THE OTHER QUESTION ABOUT, UH, THE WATER FUND OWNING THE GAS AND WATER CAMPUS, UH, THIS IS MAYBE MORE OF A FINANCE QUESTION, BUT, UH, I'M ASSUMING THOSE PROCEEDS COULD STILL BE USED TO, TO BUILD WHATEVER CAMPUS DESIGN WE, WE CHOOSE.

SAY IT'S, IT'S A SCHEME ONE,

[01:05:01]

A COMBINED CAMPUS.

UM, IS THERE ANY INABILITY FOR, FOR THAT MONEY TO BE USED TO BUILD THE CAMPUS? I DON'T SEE WHY NOT.

EVEN THOUGH IT'S WATER FUND MONEY, IT COULD STILL BE USED.

THEY JUST HAVE TO DO A TRANSFER, INTER FUND TRANSFER.

AWESOME.

UM, I THINK IT WOULD BE A, A LEGAL QUESTION.

SO YOU CAN CONSTRUCT ANYTHING THAT NEEDS TO BE CONSTRUCTED.

AND SO THE PROCEEDS COULD BE USED AT THE SAME TIME UNDER PROP TWO 18, IT CANNOT GO TO THE BENEFIT OF THE GAS FUND.

SO IF THE GAS UTILITY IS OCCUPYING, THEN THERE HAS TO BE SOME COMPENSATION.

SO GAS COULD PAY WATER, RIGHT? CORRECT.

ESSENTIALLY.

AND TODAY IT DOES NOT.

UH, KILROY AIRPORT, UH, THOSE MIDRISE BUILDINGS THAT ARE THERE, UH, I THINK THERE'S THREE, MAYBE FOUR DIFFERENT MIDRISE BUILDINGS ARE, YOU'RE FAMILIAR WITH THE COMPLEX ADJACENT TO THE TREATMENT PLANT PROPERTY, RIGHT? YEP.

UM, HAVE WE EXPLORED, I KNOW BUILDING BUILDINGS RIGHT NOW IS, IS, UH, UH, MAY NOT MAKE AS MUCH FINANCIAL SENSE AS MOVING INTO AN EXISTING BUILDING.

UH, HAVE WE EXPLORED THE OPTION OF, OF SOMEHOW UTILIZING KILROY AIRPORT, UH, PLAZA OR WHAT, WHATEVER THAT THAT CONFLICT IS CALLED? UH, MAYBE OCCUPYING ONE OF THOSE EXISTING BUILDINGS, WHICH IS IN THE NEIGHBORHOOD AS A PERMANENT SOLUTION? OR ARE YOU, ARE YOU REFERRING TO AS FROM THE TEMPORARY SOLUTION AS A PERMANENT SOLUTION? WE HAVE NOT.

AGAIN, THAT'S, THAT'S SOMETHING YOU CAN MAKE NOTE OF, UH, BECAUSE THEN WE WOULD STILL BE IN A COMBINED CAMPUS SITUATION, UH, UH, IN PROXIMITY.

UM, AND THAT WOULD POTENTIALLY FREE UP SOME OF THE, THE LAND USE ISSUES THAT, THAT WE HAVE WITH THE COMBINED CAMPUS UNDER SCHEME ONE.

TO THE EXTENT THAT WE DON'T OWN THAT PROPERTY, THAT WOULD MEAN THAT THERE WOULD'VE TO BE A WILLING SALE SALE OR A LONG-TERM LEASE.

THAT WOULD BE A DECISION THE BOARD WOULD ENGAGE IN TO OCCUPY PROPERTY THAT IT DOES NOT OWN.

JUST, JUST TRYING TO EXPLORE EVERY POSSIBLE OPTION.

RIGHT.

UH, BEFORE WE GET TOO FAR DOWN THE ROAD WHERE WE'RE LOCKED IN.

THEN ONE LAST ONE, I'M SORRY.

THE ACCESS AGAIN, GOING BACK TO, UH, THE TREATMENT PLAN AREA.

TREATMENT PLANT, UM, I THINK THE WAY THE CURRENT, UH, DESIGN IS SET UP, IT LOOKS AS THOUGH THE ONLY ENTRANCE TO THE PARKING STRUCTURE IS OFF OF SPRING.

BUT WOULD IT NOT BE POSSIBLE TO USE KILROY EL AIRPORT? REALLY HARD? YES.

THAT, THAT, THAT STREET, IT WOULD BE A PLAN TO ENTER HERE RIGHT NOW FOR STAFF.

MAYBE, YOU KNOW, YOU'RE RUNNING OFF OF KILROY, YOU MAY HAVE A SECURE GATE THAT YOU CAN GET THROUGH.

BUT MY CONCERN WOULD BE IS IF ON PUBLIC MEETING DAYS, I'M NOT SURE WE WANT THE PUBLIC COMING INTO OUR SECURITY AND, AND GETTING THERE.

WE, WE WANNA LIMIT THE ACCESS TO THE PUBLIC TO BE COMING RIGHT OFF OF IN THIS DESIGN RIGHT OFF THE SPRING IN THIS DESIGN.

IS THERE, I'M SURE THERE'S POTENTIALLY A WAY TO MAKE A, A GATE THAT WOULD BE, UH, FOR PUBLIC ACCESS OFF OF KILROY.

WHEN I WAS TALKING TO THE ARCHITECT, WE WERE THINKING ABOUT IF WE CREATE A LANE, IF THERE WAS SPACE, CREATE A LANE HERE WHERE IT WOULD ALLOW THE PUBLIC TO COME IN THAT WAY.

AND, BUT NOT GIVE 'EM FULL ACCESS TO OUR CAMPUS.

YEAH, JUST CURIOUS.

HAVE TO, AND WE WOULD COORDINATE WITH CITI BECAUSE THE DESIGN FEATURE WOULD BE THE LEFT TURN ACCESS OFF OF SPRING ONTO KILROY IS ALSO, UM, RESTRICTED.

SO IT HAS A VERY, VERY NARROW LEFT TURN LANE THAT BACKS UP ALREADY WITH THE EXISTING TRAFFIC.

SO IF WE ADD TRAFFIC TO IT, THEN THAT MAY, THAT MAY BE A NO GO.

WE'D HAVE TO DO A TRAFFIC STUDY OR, YEAH.

AND I, I A LIGHT THERE, RIGHT? A TRAFFIC? THERE IS A LIGHT THERE, BUT THE LEFT TURN LANE ITSELF IS FAIRLY SHORT.

SO I CAN SPEAK FROM EXPERIENCE THAT GENERALLY IS IMPACTED, UH, DURING RUSH HOUR WITH THE EXISTING OCCUPANCY AT KILROY.

IF WE SIMPLY COMPOUND IT, THEN THAT COULD BECOME A QUESTION WHERE THEY WOULD SAY, DON'T, DON'T DO THAT.

ANYONE ELSE? A QUESTION FOR KEVIN AND, AND FOR STEPHANIE IN AND LIKE MIND WHEN WE TALK ABOUT ELM AVENUE OFFICE SPACE AND THE REVENUE OBTAINED FROM THAT LEASING, THE REVENUE OBTAINED FROM THAT LEASING GOES TO THE GAS FUND.

IS THAT CORRECT? YEAH.

[01:10:01]

SO ELM COULD BE A MONEY GENERATOR PERSON, RIGHT? YES.

UH, JUST A QUESTION FOR THE RENTING OPTION SCENARIO, DO WE HAVE TO, ARE WE COMMITTED TO UPGRADING ANY OF THE EXISTING, UH, OFFICE SPACE IF WE WERE TO RENT THEM OUT? OR IS IT AS IS YOU'RE TALKING ABOUT FOR L NO, FOR ANY OF THESE? SO IF WE WERE TO CONSOLIDATE INTO EITHER ONE OR TWO CAMPUSES, WHICHEVER ONES ARE REMAINING TO BE RENTED OUT, DO WE, ARE WE, DO WE HAVE TO MAKE ANY UPGRADES OR I ASSUME IT WOULD BE PART OF A LEASE GRADE, SO IF WE WANTED TO MAKE IT NICE, WE COULD PROBABLY ASK FOR MORE RENT.

IF YOU DON'T WANT TO AND YOU'RE GONNA ALLOW THE TENANT TO DO WHAT THEY NEED TO DO TO MAKE IT, UH, HOW THEY WANT TO USE IT, IT PROBABLY REDUCES THE VALUE.

THANK YOU KEVIN.

THAT WAS, UH, A LOT OF INFORMATION TO GO THROUGH.

UM, AND FOR THE BOARD AND THE AUDIENCE, HOW ARE WE DOING? GOOD.

GOOD MORNING, COMMISSIONER.

LET'S MOVE ON TO SECTION FOUR, OUR NEXT SECTION, UH, LED BY YIN ZANG AND DEAN WANG FOCUSES ON WATER UTILITY OPERATIONS THAT IS SCHEDULED FOR 25 MINUTES.

PRIMARY GOAL IS TO FACILITATE A THOUGHTFUL DISCUSSION ABOUT THE WATER PROGRAM PLAN CONSIDERING OUR CURRENT SUPPLY CONDITIONS, OPERATIONAL CHALLENGES, AND OPPORTUNITY FOR LONG-TERM RESILIENCE.

YOU'LL HEAR ABOUT THE EVOLVING DYNAMICS BETWEEN GROUNDWATER AND ONBOARD WATER USE SYSTEM LIMITATIONS AND IDEAS TO ENHANCE OUR GROUNDWATER RELIABILITY.

THIS ISN'T, THIS ISN'T JUST AN INFORMATIONAL UPDATE.

IT IS A CHANCE TO ENGAGE WITH THE CONCEPTS TO HELP SHAPE THE DIRECTION OF FUTURE PLANNING ATHLETES.

AS WITH THE EARLIER SESSIONS, WE MIGHT NEED TO INTERJECT WITH YOUR QUESTIONS AND COMMENTS THROUGHOUT.

YOUR FEEDBACK IS ESSENTIAL AS WE BUILD A PROGRAM THAT ALIGNS WITH THE, BOTH THE NEEDS OF OUR COMMUNITY AND THIS BOARD.

SO PLEASE WELCOME, UH, JAN AND DEAN.

THANK YOU TOMMY.

SO YOU ALREADY HAVE A PRETTY GOOD PREVIEW OF WHAT WE'RE GONNA TALK ABOUT.

SO YOU AND I TODAY, WE'RE GONNA TAG TEAM AND THE MEETING TO A MORE INDEPTH DISCUSSION ABOUT WATER OPERATION.

SO I'LL GET THAT STARTED.

SO ASSUMING MAY RECALL FROM THE WATER INFORMATION WORKSHOP FROM, UH, ADMINS AND ALSO BOX ANALOGIES, WATER UTILITIES ACROSS THE BOARD ARE FACED WITH A LOT OF CHALLENGES AND LIMITATIONS.

FOR EXAMPLE, WATER RESOURCES, SUSTAINABILITY, AGING INFRASTRUCTURE, REGULATORY PRESSURE, AND WORKFORCE ISSUES, AND OF COURSE, AFFORDABILITY.

SO FOR THIS DISCUSSION, WE'RE GONNA FOCUS ON TALKING ABOUT ENSURING OUR WATER SUPPLY, SUSTAINABILITY AND ALSO FUTURE INFRASTRUCTURE.

SO YOU ARE, UH, PRETTY FAMILIAR WITH THIS MAP AND GRAPHICS.

WE HAVE OUR, UM, WATER SYSTEM MAP IN THE CENTER AND OUR TWO MAJOR WATER SUPPLIES.

ONE SUPPLY IS COMING FROM METROPOLITAN IMPORT WATER.

SO METROPOLITAN GETS ITS WATER EITHER FROM NORTHERN CALIFORNIA, NORTHERN SIERRA, NEVADA, AND THE, SO THE STATE WATER PROJECT OR THROUGH THE COLORADO RIVER AND THE WATER FROM BOTH SOURCES COME INTO ONE OF MWS FIVE TREATMENT PLANT.

AND THIS TRICKY WATER GOES TO, UH, THIS IS DELIVERED TO OUR EITHER OUR J JOHNSON RESERVOIR, WHICH SERVES MW ZONE OR IT GOES TO ALTOS RESERVOIR.

BUT BEFORE THE, UH, MW WATER GOES TO ALTOS, WE ALSO HAVE OUR OTHER IMPORTANT WATER SOURCE THAT'S OUR LOCAL GROUNDWATERS, WHICH WE TREAT AND OUR WATER TREATMENT PLANT.

SO THIS FULLY TREATED GROUND WATER IS MIXED WITH UNDER WATER, AND THEN THEY GO TO OUR MIDDLE RESERVOIR AND SERVE OUR PLANT BASED ZONE.

SO WE TALK A LOT OF THIS MORNING ABOUT OUR WATER DEMAND BECAUSE AGAIN, THAT'S THE OTHER IMPORTANT THIRD SIDE OF THE EQUATION OF WATER SUPPLY AND WATER DEMAND.

WE NEED TO PLAN AND MANAGE OUR WATER SUPPLY TO MEET OUR CURRENT AND FUTURE WATER DEMAND.

[01:15:01]

SO THIS GRAPH, WE WANT TO SHOW YOU THE WATER DEMAND CHANGE STARTING FROM 2005.

SO ARE ANY WATER DEMAND IN ACRE FEET? WE STARTED ABOUT 70,000 ACRE FEET.

OF COURSE, WITH A LOT OF CONSERVATION EFFORT.

IN THE PAST DECADES, WE HAVE SEEN, UH, STEADY DECLINE OF OUR WATER DEMAND.

BY ABOUT 2019, WE STAYED AROUND 50,000 ACRE FEET.

AND WHEN WE DID OUR FIRST WATER RESOURCE PLAN IN 2019, THAT'S WHEN WE DID A 30 YEAR PROJECTION OF OUR WATER LAND.

AS YOU CAN SEE, UM, THE PROJECTION FOR LONG BEACH FOR THE NEXT 30 YEARS, IT IS RELATIVELY STABLE, ABOUT 50,000 ACRE FEET.

OF COURSE, THERE IS A UPPER AND LOWER LOWER IMAGE, JUST AS COMMISSIONER SCOTT SAYS, BASED ON AGGRESSIVE AND CONSERVATIVE ASSUMPTIONS, YOU HAVE A UPPER AND LOWER IMAGE OF ONE EVENT.

SO THAT BASED ON THAT PROJECTION, WE SHOULD STAY RELATIVELY IN THAT RANGE.

BUT IN REALITY, WHAT WAS MORE AGGRESSIVE CONSERVATION EFFORT AND EXTREME WEATHER CONDITIONS, WHAT ACTUALLY HAPPEN IS THAT OUR ACTUAL DEMAND DROPPED EVEN LOWER THAN THE LOWER LIMIT.

SO THAT MEANS WE NEED TO MAKE ADJUSTMENT FROM OUR PROJECTION IN HAS ALREADY DID THE PRELIMINARY ADJUST, UH, ASSUMPTIONS WAS NEW PROJECTION.

SO, BUT, AND HE AND HIS TEAM IS GONNA WORK ON MAKING MORE IN DEPTH ANALYSIS TO MAKE THAT MORE ACCURATE.

THAT'S WHAT THE RESOURCE PLAN UPDATE.

AND WITH, WITH THE FINANCIAL MODEL, WE ALSO TALK ABOUT THE COST OF THE GROUNDWATER COMPARED TO IMPORT WATER.

WE ALWAYS KNOW THAT GROUND WATER IS CHEAPER THAN IMPORT WATER.

HERE.

UH, WANT TO SHOW YOU THE ACTUAL COST FOR THE PAST DECADE.

SO BACK IN 2014, GROUND WATER SHOWN HERE IN BLUE, THE COST OF GROUND WATER IS ABOUT $500 PER ACRE.

BUT THAT'S INCLUDING THE COST OF ASSESSMENT.

THE ELECTRICAL COST, THE CHEMICAL COST, AND COMPARED TO THAT IMPORT WATER IS ABOUT $900.

SO THE DIFFERENCE IS ABOUT $400.

AND THE OVER TIME BOTH SOURCES, WE SEE A STEADY INCREASE OF THE COST.

THE GAP IS MAINTAINED ABOUT THE SAME EXCEPT FOR THE LAST BILLION YEARS.

OF COURSE, WE SEE A MUCH HIGHER COST INCREASE FOR IMPORTED WATER AND MAKING THE DIFFERENCE BETWEEN THE TWO EVEN BIGGER.

SO, OF COURSE, MAKE MAKES SENSE FOR US TO TRY TO REDUCE THE USE OF IMPORTED WATER.

AND THAT'S WHAT WE HAVE BEEN DOING FOR THE PAST COUPLE DECADES.

SO HERE ARE THOSE, UH, STAR CHARTS.

WE JUST WANT TO SHOW YOU A SNAPSHOT OF THE CHANGES ON OUR WATER SUPPLY CONTRIBUTION.

UH, WE HAVE THE STRONG WATER IN BLUE IMPORT WATER IN ORANGE AND RECYCLED WATER IN GRAY.

SO I DIDN'T MENTION RECYCLED WATER EARLIER 'CAUSE UM, WE ACTUALLY GET THE RECYCLED WATER FOR FREE FROM .

BUT BECAUSE THAT WATER IS, UH, WATER SOURCE IS PRETTY LIMITED, THEN WE CAN ONLY USE IT IN A CERTAIN PORTION OF OUR SYSTEM.

SO THAT'S NOT A PRIMARY SOURCE FOR OUR POTABLE WATER PREVENT CONSIDERATION.

BUT JUST TO LOOK AT THE CONTRIBUTION CHANGE BACK IN 2014, UH, IMPORTING WATER CONTRIBUTES TO ABOUT 44% OF THE WATER WE USE.

AND THEN 2023 THIS JOB TO 33%.

AND ON THE OTHER HAND, GROUNDWATER CHANGED FROM 46% TO 51% AND THE RECYCLE WATER CHANGED FROM 10% TO 16%.

AND I WANT TO POINT OUT THAT THIS CHANGE IS MOSTLY DUE TO OUR OVERALL REDUCTION OF WATER DEMAND.

AS YOU CAN SEE IN 2014, OUR DEMAND IS ABOUT 65,000 ACRE FEET.

AND THIS WENT DOWN TO 52,000 ACRE FEET.

AND THIS IS REFLECTED IN, IN THE IMPORTING WATER VOLUME.

SO IN 2014, IMPORTING WATER WAS 29,000 ACRE FEET AND THEY DROPPED DOWN TO 17,000 ACRE FEET IN 2023.

AND JUST TO REFLECT THE COST, AGAIN, BOTH COMPARED IMPORTING WATER TO GROUND WATER.

AND BOTH YEARS WE SEE THE BIG COST DIFFERENCE.

SO LOOKING AT 2014 IMPORT WATER, 29,000 ACRE FEET, GROUND WATER, 30,000 ACRE FEET.

BUT THE COST OF IMPORTED WATER IS $25 MILLION, $11 MILLION HIGHER THAN GROUND WATER.

AND IT COMES TO .

BUT THE COST IS SIMILAR.

SO AGAIN,

[01:20:01]

THIS MAKES SENSE FOR US TO REDUCE THE USE OF IMPORTING WATER AND TRY TO MAXIMIZE THE GROUNDWATER USE.

BUT WE HAVE TWO FACTORS THAT'S PREVENTING US FROM DOING THAT.

FIRST, WE HAVE A LIMITED PUMPING CAPACITY.

OUR CURRENT PUMPING CAPACITY IS BELOW THE LEVEL REQUIRED FOR US TO PUMP OUR FULL WATER RIGHTS IN CENTRAL BASIN.

SO THAT'S 32 6 92 ACRE FEET A YEAR.

THAT'S WHAT I WAS TALKING ABOUT.

33,000 ACRE FEET WE SHOULD BE ABLE TO PUMP.

AND THE OTHER FACTOR IS GROUNDWATER USE IS CURRENTLY ONLY LIMITED TO BLENDED ZONE.

AS YOU CAN SEE, OVER THE YEARS, WE HAVE DROPPED OUR DEMAND SIGNIFICANTLY AND WE'RE STARTING TO SEE A TREND IN BLENDED ZONE ALONE.

WE'RE NOT ABLE TO USE SOME ALL GROUND WATER FOR OUR PUMPKIN RIGHTS ANYMORE.

AND HERE THIS GRAPH, I WANT TO PRESENT YOU IN MORE DETAIL WHAT THOSE LIVING FACTORS MEAN.

UM, WE HAVE ON THE Y ACCESS IN GALLONS PER DAY AND X ACCESS JUST A YEAR STARTING FROM 2012.

AND HERE THE RED LINE SHOWS YOU THE MINIMUM WELL CAPACITY THAT WE NEED TO PUMP FOR WATER RIGHTS.

SO THAT'S BASICALLY ASSUMING WE CAN CONSTANTLY PUMP AND LET THAT LEVEL THROUGHOUT THE YEAR WITH A FEW WEEKS OF, UH, DOWNTIME, HOW MUCH PUMP WE NEED IN ORDER TO FI UH, FINISH PUMPING ALL OUR PUMPING.

RIGHT? AND WE COMPARE THAT WITH OUR ACTUAL PUMPING CAPACITY AS BLUE LINE OVER HERE.

AND YOU CAN SEE BACK IN EARLY 20 10, 20 12, WE STARTED WITH SUFFICIENT PUMPING CAPACITY.

BUT THEN THE PUMP CAPACITY START TO DECLINE, ESPECIALLY ABOUT A DECADE AGO, WE HIT A LOW POINT AND WE START TO HAVE A LOT OF, UH, WELL REHAB ACTIVITY, TRY TO RECOVER THAT.

AND WE WERE ABLE TO GO UP THE CAPACITY A LITTLE BIT, BUT STILL THAT DOESN'T REALLY STOP THE DECLINING CHANCE.

SO THAT'S WHY ABOUT FIVE YEARS AGO, WE START TO NOT JUST ONLY REHABBING OUR EXISTING WELLS, WE START TO BUILD NEW WELLS TO TRY TO LOSE OUR PUMP PLASTIC.

AND WE WENT OR MORE.

BUT CURRENTLY IT'S STILL BELOW THE, AT MINIMUM LEVEL.

SO THAT'S A WELL CAPACITY.

YEP.

AND THE OTHER FACTOR IS THE BLEND IS ON DEMAND SHOWN IN THE GRADE LINE HERE.

SO YOU CAN CLEARLY SEE A TREND OF SEASONAL CHANGES.

WE HAVE HIGH DEMAND IN THE SUMMER AND LOWER DEMAND IN THE WINTER THAT'S EXPECTED.

AND THEN THE OTHER IMPORTANT TREND IS WE SEE LOWER DEMAND OVER TIME, ESPECIALLY IN RECENT YEARS, THE PAST COUPLE YEARS, WE SEE MOST OF THE TIME OUR DEMAND INLAND ZONE IS BELOW THE COMING LEVEL REQUIRED FOR US TO USE OUR COMPANY RIGHTS.

AND WHAT THIS MEANS THAT IN THE LOWER DEMAND MONTHS WE CAN PUMP BECAUSE WE CAN'T PUSH THAT WATER INTO OUR SYSTEM.

BUT EVEN IN HIGH SUMMER DEMAND MONTHS, WE DON'T HAVE THAT MANY DAYS OF THAT.

SO WE CAN'T MAKE UP THE PUMP.

AND HOW DO WE REALLY USE ALL THAT GROUND WATER? WE CAN'T REALLY USE THAT IN BLEND DESIGN ANYMORE.

SO WE NEED TO EXPAND THE GROUNDWATER USAGE TO MW ZONE AND HOW DO WE DO THAT? SO WE NEED TO BUILD WELLS IN OR NEAR MW ZONE, WHICH WILL HELP US REDUCE THE NEED FOR IMPORT WATER IN THAT WEST SIDE AND ALSO BRING ANOTHER SUPPLY FOR THE WEST SIDE AS WELL.

AND WE NEED TO BUILD CENTRALIZED TREATMENT PLAN AT J JOHNSON RESERVOIR.

THAT'S TO ENSURE OPERATIONAL RELIABILITY, WATER QUALITY, AND ENSURE WE HAVE SUFFICIENT WATER STORAGE FOR EMERGENCY SITUATIONS.

AND WE NEED TO BUILD INTERCONNECTION CAPACITY BETWEEN THE TWO SIDES TO HELP US HAVE A RELIABLE OPERATION AND FLEXIBILITY.

AND WE WANT TO LOOK AT EXPLORING GROUND WATER AUGMENTATION OPPORTUNITIES, BASICALLY USING NEW WATER SUCH AS IN REUSE USING, UH, PURE WATER AND ALL THOSE COMPONENTS TOGETHER BECOMES GROUND WATER RESILIENCE PROGRAM.

SO PRESENT YOU, UM, THIS CONCEPTS GRAPHICALLY HERE WE WANT TO SHOW YOU.

SO AT JOHNSON RESERVOIR WE HAVE CENTRALIZED TREATMENT PLAN WEST, AND THE ORANGE LINE HERE IS THE WEST BASIN EXPANSION LINE.

SO THAT'S BASICALLY TO BRING UP ALL THE WELLS, SEND THE WATER TO THE TUMOR PLANT AT JOHNSON.

AND THEN OVER HERE WE HAVE THE PURPLE CAPACITY ENHANCEMENT LINE.

THAT'S TO BRING UP ALL THE NEW WELLS CAPACITY.

WE'RE GOING FROM THE CENTRAL BASIN AND THAT WELL WATER CAN BE EITHER SENT TO OUR

[01:25:01]

EXISTING TREATMENT PLAN OR SENT TO THE JOHNSON RESERVOIR TREATMENT PLAN, WHICH NEEDS TO BE INTERCONNECTED WITH THIS SYSTEM IMPLICATION LINE.

AND JUST LIKE SAID EARLIER, ALL THOSE INDIVIDUAL PROJECTS TOGETHER BECOME A PROGRAM.

AND THIS IS GROUNDWATER RESILIENCE PROGRAM.

AND OF COURSE THIS IS A VERY LARGE INVESTMENT WE NEED TO CONSIDER.

AND AS EXPECTED IT WILL HAVE AN IMPACT ON OUR FARM WATER COST.

AND HERE WE JUST WANT TO SHOW YOU SOME POTENTIAL SCENARIOS HOW THAT COST MIGHT LOOK LIKE.

SO BRING BACK THE COST FROM, AGAIN, WAS GROUND WATER OVER HERE WITH A GROUND WATER PROGRAM INVESTMENT, IT'S LIKELY THAT WE MIGHT SEE A HIGHER COST INCREASE FOR OUR GROUND WATER.

BUT WHERE THIS MIGHT END UP, WE DON'T KNOW YET.

ON THE OTHER HAND, WITH THE IMPORT WATER AND UH, LAURA ALREADY SAID A LOT, THERE ARE A LOT OF UNCERTAINTIES AND PRESSURES EVEN FROM THAT AND THEIR COST INCREASE, WE DON'T KNOW.

IT MIGHT STAY UP HIGH, IT MIGHT GO LOWER OR IT MIGHT EVEN GO UP HIGHER.

SO OVERALL, COMPARE THAT IMPORT WATER WITH GROUND WATER, WE MIGHT STILL MAINTAIN THAT GAP BETWEEN IMPORT WATER AND GROUND WATER, OR WE MIGHT SEE GROUND WATER CONVERGE CLOSER TO IMPORTING WATER.

BUT RIGHT NOW THERE ARE A LOT OF QUESTIONS WE THAT WE DON'T HAVE ANSWERS TO.

BUT WHAT WE CAN DO IS WHAT THE GROUND WATER RESILIENCE PROGRAM WE CAN LOOK AT OUR CAPITAL INVESTMENT MEANS BECAUSE THE PROJECTS PLAN AND BUILDING FINANCIAL MODELS TO TRY TO HELP US UNDER WHERE WE MIGHT END UP WITH STRONG MODEL COST.

AND THAT'S WHAT WE'LL GO INTO THE FINANCIAL BUILDING MODEL, HOPEFULLY IN THE NEXT SIX MONTHS WILL BRING BACK TO YOU FOR LONG INFORMATION.

AND I THINK THAT CONCLUDES MY PRESENTATION.

IF YOU ANSWER ANY QUESTIONS WITH YOU ANSWERED ALL MY QUESTIONS THAT I WROTE DOWN SURE.

ON THE GWG AT IT, IS IT FEASIBLE? IS IT, YEAH, SO, SO RIGHT NOW THE, THE GRAPHIC THAT WE HAVE AT THE GROUND ROOT WATER RESILIENCE PROGRAM, UM, THAT WAS AN OPTIMIZATION STUDY THAT WE FINISHED.

I CAN'T REMEMBER EXACTLY WHICH YEAR.

BUT FOLLOWING THAT STUDY TO IDENTIFY THAT AS YOU SHOULD, THE NEXT STEP WAS TO IDENTIFY EXACTLY WHAT EXTRACTION WELLS AND INJECTION WELLS.

THAT STUDY'S ONGOING RIGHT NOW, I BELIEVE WRAPPING UP, UH, NEXT YEAR.

SO WE HAVE AN IDEA OF EXACTLY WHERE WE WOULD PLACE THE INFRASTRUCTURE.

UM, THEN WE WOULD COME BACK TO THE BOARD, PRESENT THE RESULTS OF THAT, AND AT THAT TIME START PUTTING TOGETHER THE, THE PROGRAM, A MORE DETAILED PROGRAM, UH, THE PROGRAM COSTS, UH, THE BENEFIT OF THE, THE FINANCIAL MODEL THAT DANIEL HAS PUT TOGETHER.

NOW WE CAN PUT IN THOSE CROSSING TO THAT FINANCIAL MODEL.

SO REPORT CAN EVALUATE, BUT WHAT THAT LOOKS LIKE AS FAR AS RATES, UM, BUDGET IMPACTS, IF WE WERE TO PROCEED WITH ACTUALLY, UM, CONSTRUCTING THAT INFRASTRUCTURE.

SO, SO SHORT, SHORT, SHORT ANSWER IS WE'RE FINISHING THE NEXT STUDY NEXT YEAR AND, AND THAT HELPS US BETTER SERVE THE WEST SIDE, CORRECT? YEAH.

BUT WE ARE GONNA HAVE THE WELL CITING STUDY PRETTY SOON.

SO I THINK WE, WE'LL HAVE SOME PRELIMINARY INFORMATION EARLIER TOO, BUT THAT, THAT GIVES YOU A SENSE OF TIME.

'CAUSE 'CAUSE YOU SAID, SO THAT WILL HELP US SERVE IT'S STUDY.

SO THE CONCLUSION OF THE STUDY WILL IDENTIFY PERHAPS AN OPTIMAL PLAN FOR DESIGN, WHICH CAN THEN BE CONSTRUCTED.

AND ONCE IT'S CONSTRUCTED IN COMBINATION WITH CONSTRUCTING THE TREATMENT PLANT, YOU WOULD ACTUALLY THEN BE ABLE TO PROVIDE GROUNDWATER.

SO I I'M MEASURING THAT THAT OUT.

SO YOU GET A SENSE OF THIS PROGRAM APPROACH OF STUDIES, DESIGN, CONSTRUCTION, OPERATIONAL CAPABILITIES.

IT, IT TAKES TIME TO PUT THIS ALL IN PLACE, RIGHT? SO IT IT, IT WON'T BE IMMEDIATE.

IT, IT'LL, IT'LL TAKE SEVERAL YEARS.

UH, IN ORDER TO BRING THIS TO, TO FRUITION, SORRY, BUT I CORRECT IN SAYING THAT THIS SORT OF A DECISION, WHICH IS A GOOD DECISION, LIKE A GAME OF CHESS WHERE YOU HAVE TO FIGURE OUT, OKAY, THE, THE STUDY THAT WE'RE LOOKING AT IN TERMS OF CAMPUS IMPROVEMENT SAVINGS THAT YOU MAKE ON ONE SCENARIO, RIGHT? YES.

IMPACT THE FACT THAT WE WANTED, RIGHT? THIS VERSUS IS, AND THAT, AND THAT BLENDS RIGHT INTO YOUR EXPERIENCE ON THE METROPOLITAN BOARD BECAUSE I WAS COMMENTING BEFORE THAT YOU SAW THE METROPOLITAN RATES AND THAT WAS PURE WATER OF SOUTHERN CALIFORNIA.

AND YOU KNOW, AS A DIRECTOR THAT YOU'RE FACING DECISIONS ON SITE'S RESERVOIR AND DELTA CONVEYANCE.

AND WHEN THAT TIME COMES,

[01:30:01]

THEY WILL LAYER THOSE FINANCIAL OBLIGATIONS ON TOP OF PURE WATER.

AND THEN THE RATE FOR RATE FORECAST WILL CHANGE AGAIN, RIGHT? AS YOU ENGAGE IN THOSE DEBATES, RIGHT? SO INDEED WITH THE FINANCIAL MODEL THAT DANIEL SHOWED YOU, YOU PUT ON CAMPUS CONSOLIDATION AND YOU HAVE A CERTAIN EFFECT, YOU PUT THIS ON TOP OF IT AND YOU HAVE ANOTHER EFFECT, RIGHT? AND IMPORTANT IS TO NOT THINK OF THE SHEER QUANTITY OF NUMBER BECAUSE YOU'RE GOING TO FINANCE IT, BUT IN FINANCING IT, YOU'LL HAVE THAT OTHER ELEMENT OF THE FINANCIAL PLAN, WHICH IS YOUR DEBT SERVICE RATIO, AND YOU'LL BE TRYING TO MAKE SURE THAT YOU FALL WITHIN THOSE COVENANTS AND HOLDING TO THOSE.

IS THERE PARTNERING OPPORTUNITIES WITH THE TREATMENT PLANT? IS THAT EVEN A REASONABLE QUESTION? LIKE THERE OPPORTUNITIES WHERE WE COULD PROVIDE TREATED GROUNDWATER TO OTHER WATER ENTITIES? YEAH, SO, SO LIKE RIGHT NOW WE HAVE AN INTERCONNECT WITH LAKEWOOD.

LAKEWOOD HELPS US.

UM, SO, SO YES, AS PART OF THE EVALUATION, WELL CITING WE ARE LOOKING OUTSIDE OF THE CITY LIMITS.

UM, I KNOW BEFORE I STARTED HERE, THERE WERE, UH, TO US WITH PARAMOUNT CITY, PARAMOUNT THEM SHARING A WELL WITH US.

UM, SO THEY WOULD HAVE ADDITIONAL, UH, WELL CAPACITY TO THEIR NEEDS.

SO YES, THERE'S, BUT THERE'S, WERE YOU ASKING ABOUT THE TREATMENT PLANT WITH THE, AND THAT'S, THAT'S GOOD INFORMATION TOO.

BUT YEAH, WITH THE, WITH THE NEW TREATMENT PLANT, WE'D BE ABLE TO PARTNER OR SELL TREATED WATER TO OTHER ENTITIES THAT WOULD'VE TO DO WITH THE SIZING OF THE TREATMENT PLANT.

SO THEN THERE WOULD BE INCREASED COSTS.

AND THEN THERE'S ALSO WATER QUALITY ASPECTS.

I'M GOING TO TURN IT TO YEN AND TY ON, THERE'S ASPECTS OF INTERCONNECTING WITH OTHER SYSTEMS BECAUSE THEY'RE NOT DISINFECTED THE SAME WAY.

DO YOU, DO YOU WANNA COMMENT ON THAT? SO REAL QUICKLY, UM, MAJORITY OF THE SYSTEMS NEAR US THAT USE GROUNDWATER USE A PARTICULAR CHLORINE DISINFECTANT.

IT'S FREE CHLORINE.

AS OPPOSED TO WHAT WE DO, WE MATCH METROPOLITAN, WE USE A CHLORINE, SO CALLED CHLORINE.

THOSE TWO WATER IS, IT'S KINDA LIKE BLOOD, LIKE BLOOD TYPE A BLOOD DOES A REALLY MIX .

SO, SO SAME THING, TWO DIFFERENT CHLORINE DOESN'T MIX VERY WELL.

UM, IT CREATES CERTAIN WATER QUALITY PROBLEM.

SO IT DOES HAVE CHALLENGES, NOT THAT YOU CAN'T DO IT, IT JUST DOES HAVE CHALLENGES FOR OTHER ENTITIES TO, TO ACCEPT THE WATER.

UM, BUT WHAT WE'RE ALSO EXPERIENCING, UM, IN TERMS OF THE EFFECTS OF CONSERVATION, A LOT OF THE CITIES LIKE LAKEWOOD AND CERRITOS, THEY HAVE EXCESS WATER RIGHTS TOO, BECAUSE THEIR GROUNDWATER IS MORE THAN THEIR DEMAND AS WELL.

AND SO PARTNERSHIP OPPORTUNITIES BECOMES MORE OF A EMERGENCY TYPE OF SCENARIO VERSUS LIKE A DAY-TO-DAY SCENARIO.

THEY'RE CERTAINLY WORTH EXPLORING.

UM, YOU WANNA PULL A, MAYBE NOT A SOFTBALL QUESTION, BUT, UM, HOW WOULD IPR AND INTEGRATION OF METROPOLITAN'S PURE WATER PROGRAM WITH EJECTION WELLS IN LONG BEACH IMPACT? WELL, SIDING AND THE NEED FOR SECOND TRUTH.

EXPLAIN IPR, SORRY.

UM, INDIRECT POTABLE REUSE.

SO AS METROPOLITAN'S BUILDING OUT THE PURE WATER PLANT, WHICH IS TAKING WASTEWATER AND TURNING IT INTO WHAT I CALL ASTRONAUT WATER, UM, AND THEN INJECTING INTO THE GROUND, THERE ARE SOME RULES, UM, FOR THAT WATER AND HOW IT CAN BE REUSED OR INDIRECT POTABLE, IPO.

UM, AND SO I WAS GONNA THROW THAT QUESTION.

AS WELL AS THE MWD ZONE? YES.

SO BASICALLY THAT'S, THAT'S ONE OF THE COMPONENTS OF THE RESILIENCE PROGRAM IS FOR US TO LOOK AT GROUND WATER AUGMENTATION.

AND THAT WATER IS CONSIDERED THE NEW WATER SOURCE NEW RECYCLED WATER.

AND THAT CAN BE INJECTED TO THE GROUND.

THAT BECOMES ADDITIONAL WATER RIGHTS THAT WE CAN PUMP OUT.

AND BECAUSE WE'RE, UH, PURE WATER COMING IN, IT COMES FROM THE WEST SIDE OF THE CITY.

SO MOST LIKELY THOSE, UM, IPRS UH, WELL INJECTION SITES WILL BE LOCATED CLOSE TO THE, UH, UNDER THE DB ZONE.

SO THAT'S WHERE WE CAN HAVE ADDITIONAL WATER RIGHTS ON THE WEST SIDE.

AND BESIDES WHAT WE ALREADY HAVE IN CENTRAL BASIN, I WAS SAYING EARLIER, SO THE AUGMENTATION STUDY AS A WHOLE IS GOING TO WRAP UP NEXT YEAR, BUT THE NEXT PIECE IS ACTUALLY, UH, ONGOING, I THINK THIS MONTH AND THE NEXT COUPLE MONTHS IS THE WELL SIGHTING TIES NOT TOO HARD TO FLUSH IT IS WHEN YOU CITE INJECTION WELLS, YOU CAN'T PUT YOUR EXTRACTION WELLS RIGHT NEXT TO THEM.

YOU HAVE TO HAVE SORT OF SPACE.

AND SO IF YOU'RE IN, UH, IF YOU'RE TRYING TO CITE BOTH INJECTION AND EXTRACTION, THAT OBVIOUSLY STANDS OUT THAT THE FOOTPRINT, UH, ACROSS THE CITY OR MULTIPLE CITIES THAT WE HAVE TO CITE OUR WELLS.

AND THAT'S AN EFFORT THAT'S GONNA HAPPEN, UH, HERE SHORTLY, IS IDENTIFYING HOW WE WOULD HAVE THE SPACE, THOSE WELL TO, TO, UM, OPTIMALLY BE ABLE TO INJECT AND EXTRACT.

IS THERE IPR INJECTION SITES IN THE BLENDED ZONE

[01:35:01]

SO ACTUALLY, UH, WRD JUST COMPLETED, UH, OR WILL BE COMPLETING THIS YEAR AN INJECTION WELL OUT, UH, THE LVL PLANT.

SO SIDE IN THE CITY, UH, THAT IS AN OBJECTIVE SITE AND WE COULD CITE ADDITIONAL WELLS ON THE EASTERN SIDE AS WELL.

UM, TO, TO THE GRAPHS THAT YOU'VE SEEN ON THE DEMAND ON THE EASTERN SIDE, WE DON'T REALLY NEED TOO MUCH ADDITIONAL SUPPLY ON THAT EASTERN SIDE.

UH, WHEN WE LOOK AT WATER RIGHTS, OUR WATER RIGHTS, UH, 33,000 ACRE FEET ARE IN CENTRAL BASE.

WE LOOK AT WEST BASIN, WHICH IS THE WESTERN PORTION OF THE CITY.

WE DON'T REALLY HAVE TOO MUCH 0.7 AC, THAT'S ACTUALLY, SO AUGMENTATIONS HERE, WATER THAT GIVES US A, A WATER SOURCE, UH, THAT WE WOULDN'T HAVE TO NECESSARILY GO OUT AND INQUIRE DIFFERENT WATER RIGHTS.

UH, SO, SO THOSE ARE DIFFERENT CONSIDERATIONS THAT WE'RE GONNA HAVE IN THIS AUGMENTATION STUDY THAT'S GONNA HAPPEN OVER THE NEXT YEAR IN.

SO A COUPLE OF QUESTIONS.

SO WITH THE GRAPH THAT YEN HAD ON THE COST SPREAD BETWEEN METROPOLITAN AND GROUNDWATER, AND YOU CAN SEE METROPOLITAN DRAMATICALLY GOES UP, YOU MIGHT, YOU MIGHT ASK YOURSELF AND SAY, SO THE NUMBER ONE OBJECTIVE IS TAKE ZERO METROPOLITAN WATER AT ALL COSTS.

BUT DEAN, RECENTLY YOU CAME ACROSS IN WORKING ON METROPOLITAN BUSINESS MODEL AND TALKING TO OTHER GROUNDWATER AGENCIES THAT THAT'S NOT INHERENTLY AN ACCURATE PICTURE.

CAN YOU, CAN YOU SHARE WHAT YOU FOUND OUT BY TALKING TO SOME OF THE GROUNDWATER AGENCIES OVERALL AND HOW THEY MANAGE THEIR GROUNDWATER IN METROPOLITAN? UH, SURE.

TALKING ABOUT THE MAINTENANCE, RIGHT? MAINTAINING GROUNDWATER, THERE'S A CERTAIN MAINTENANCE OBLIGATION TO IT THAT CAUSES YOU TO FLIP, RIGHT? SO CAN I ASK YOU TO GO TO THE, I CAN'T HEAR WELL QUITE AS WELL.

UH, SO PART OF WHAT ANOL WAS TALKING ABOUT, I GO BACK TO HERE.

UH, SO, SO WE HAVE ONE TREATMENT PLANT CURRENTLY, UH, IT, IT DOESN'T, YOU KNOW, RUN PERPETUALLY WITHOUT MAINTENANCE.

AND SO OFTEN WE HAVE TO TAKE THE TREATMENT PLANT DOWN, UH, TO, TO MAINTAIN IT, REPAIR, MAKE UPGRADES, IMPROVEMENTS, AND WHEN WE DO THAT, WE LOSE THE OPPORTUNITY TO PUMP GROUNDWATER IN THOSE MONTHS.

AND SO THAT'S VERY SIMILAR FOR MOST OTHER GROUNDWATER AGENCIES.

AND SO, UH, PART OF THE BENEFIT OF HAVING A SECOND TREATMENT PLANT AT JOHNSON RESERVOIR IS THAT WE CAN ALTERNATE WHEN WE TAKE THOSE, UH, TREATMENT PLANTS OFFLINE, WE CAN CONTINUOUSLY BE PUMPING GEAR ROUND.

UH, AND SO, UM, PART OF WHAT ANTO WAS SPEAKING ABOUT, YOU KNOW, OUR GOAL WOULD BE TO TAKE ZERO IN BORDER WATER, BUT, UM, IT'S GOING TO BE A BENEFIT TO US TO HAVE DIVERSITY OF WATER SUPPLY.

WE NEVER KNOW WHAT COULD HAPPEN TO ONE OF OUR TREATMENT PLANTS OR, OR GROUNDWATER IN A CERTAIN AREA.

UM, ADDITIONALLY, UH, ONE OF THE CHALLENGES THAT WE'LL FACE WITH, UM, I SHOULD SAY SO, SO, SO WELL ON, ON THE, ON THE RATE SIDE, METROPOLITAN IS ALSO FACING THE SIMILAR PRESSURES AS WE ARE DECREASING DEMAND.

AND SO THEY'RE HAVING TO INCREASE THE RATE.

AND SO THEY'RE DISCUSSING AND ACTUALLY LIKELY GOING TO IMPLEMENT A RATE MODEL, WHICH REGARDLESS OF HOW MUCH WATER YOU TAKE, YOU'LL HAVE TO CONTINUE TO PAY A, A HIGHER FIXED COST.

AND SO WE, WE WILL BE INVESTED IN METROPOLITAN PAYING THEM REGARDLESS OF, YOU KNOW, HOW MUCH WATER WE TAKE GOING INTO THE FUTURE.

AND SO THAT'S, THAT'S ONE CONSIDERATION.

UM, THE OTHER CONSIDERATION IS THAT, UH, AS OUR, UM, ABILITY TO TAKE IMPORTER HOW THE WATER GOES DOWN OR VOLUNTARILY TAKE WATER, IMPORT WATER GOES DOWN THROUGH WATER QUALITY CONCERNS.

AND SO THE LESS WATER MOVES, THE MORE IT STAGNATES IN THEIR SYSTEM, UH, THE MORE IT BECOMES A, A CHALLENGE FOR US AND, AND THE TREATMENT PLANT TO ACTUALLY DELIVER THE LITTLE BIT OF IMPORTER WATER THAT, THAT WE CONTINUE TO TAKE.

AND SO AS PART OF THE WATER RESOURCES PLAN, UM, THAT WE'RE, WE'RE STARTING THIS YEAR, UH, ONE OF THE, THE IMPROVEMENTS AND DIFFERENTIATIONS THAT WE'RE MAKING FROM THE LAST TIME WE WENT AROUND IS IDENTIFYING THE DIFFERENCES BETWEEN THE BLENDED ZONE AND THE METROPOLITAN ZONE AND REALLY SEPARATING THE DEMAND AND I I AND UNDERSTANDING THE FUTURE DEMAND, UH, NEEDS FOR THOSE TWO ZONES SEPARATELY.

UH, AND THEN ALSO, UH, ENGAGING IN, UH, WE'RE GONNA INVITE METROPOLITAN AND HAVE THEM, UH, INFORMED OF OUR FUTURE PLANS AND HAVE 'EM AS A PARTNER, UH, IDENTIFYING SOLUTIONS FOR ADDRESSING THAT WATER QUALITY WHEN WE TAKE LESS WATER FROM 'EM.

UM, 'CAUSE TY CAN PROBABLY SPEAK BETTER TO IT, BUT WE ARE, UH, SOMEWHAT AT THE END OF THEIR SYSTEM AS WELL, ALMOST A DEAD END.

AND SO IF WE DON'T TAKE WATER AND HELP FROM METROPOLITAN MOVE WATER THROUGH THEIR SYSTEM, THEY HAVE CHALLENGES WITH WATER QUALITY.

UM, SO THIS DECREASING, UH, USE OF IMPORTED WATER IS A CHALLENGE.

IT'S SOMETHING THAT WE JUST HAVE TO PLAN FOR, UM, WELL AHEAD OF TIME.

RIGHT? WHO IS THAT SECTION ONE? MAYBE A QUICK QUESTION.

CAN WE GO BACK TO THE SLIDE, UM, THAT SHOWS OUR CURRENT, UM, OUR CURRENT MAKEUP OF WATER? YES.

THIS ONE?

[01:40:01]

SO A LOT OF TIMES WHEN WE'RE TALKING ABOUT RATES AND SAYING RATES, THE QUESTION COMES UP, WHAT IS THE RATE, INCREASED PAIN FLOW? UM, AND A LOT OF TIMES WE'LL TRY AND ANSWER THAT QUESTION BY TALKING ABOUT OUR CIP PROJECTS, BUT I, I THINK THAT THROUGH THROUGHOUT THE CONVERSATION THAT WE'VE HAD BEEN HAVING TODAY AND SEEING THESE CHARTS SIDE BY SIDE, UH, BEING ABLE TO MOVE MORE TOWARDS GROUNDWATER, UM, HAS ACTUALLY OFFSET THOSE.

IF YOU'RE JUST LOOKING AT THE COST OR THE DOLLAR AMOUNT ON THE BILL, BASED ON OUR, OUR WATER MAKEUP FROM ABOUT, YOU KNOW, ABOUT 10 YEARS AGO WE WERE PAYING ABOUT THE SAME AMOUNT BASED ON YOUR JUST BILL.

UM, AND, AND SO I THINK THAT IS, UM, PRETTY IMPRESSIVE.

'CAUSE 10 YEARS IS A LONG TIME.

UM, BUT, BUT THEN IN SOME OF OUR EARLIER CONVERSATIONS TOO ABOUT CCI AND OTHER COST PRESSURES THAT WE'RE FACING, IT'S THE COST PRESSURE PLUS CIP THAT IS REALLY DRIVING THE RATE INCREASES, UM, ON BASELINE LEVEL WHEN WE'RE TALKING ABOUT RATES.

AND THEN OF COURSE EVERYTHING, UM, WITH RESPECT TO FUND BALANCE AND RESERVES AND, AND ANY OF THE ADDITIONAL THAT WE'VE BEEN LOOKING AT ADDS ON TOP OF THAT.

IS THAT AN ACCURATE INTERPRETATION OF THIS SLIDE AND A LITTLE BIT ABOUT OUR RATES? SAY THAT AGAIN, ? NOT ALL OF IT.

NOT, SO, NO, NO, THIS IS A GOOD CONVERSATION.

THIS IS A GOOD CONVERSATION.

I'M GONNA ARTICULATE JUST HOW TO EXPLAIN OUR RATE INCREASES BECAUSE CPI IS IS A VERY CONCRETE WAY TO DISCUSS IT, BUT THIS CHART SHOWS THAT IT'S NOT THE ONLY WAY.

MOST PEOPLE DON'T UNDERSTAND ANY OF ANYTHING ABOUT THAT IN THE CITY OF LONG BEACH.

SO LET, LET ME COMMENT AND YOU, AND YOU ADD TO IT TO BUILD OFF OF WHAT YOU SAID.

SO AS I WAS LOOKING AT THE PIE CHART AND I WAS LISTENING TO YOU, SO I LOOKED AT THE DOLLARS AND SO THE DOLLARS OF THE BLUE AND ORANGE IS ESSENTIALLY THE SAME.

IT'S ESSENTIALLY $40 MILLION PLUS SOMEWHERE IN THAT RANGE.

AND AS YOU WERE TALKING, I WAS ALSO THINKING ABOUT THE WATER USAGE, RIGHT? SO THE WATER USAGE IS 59,000 ACRE FEET.

THE OTHER SIDE IS QUICKLY 43,000 SOMETHING.

AND I WAS THINKING AS YOU WERE BUILDING IT, THE CUSTOMER GOES, SO I'M CONSERVING, WHY DIDN'T MY COST GO DOWN? AND THEY DIDN'T GO DOWN FOR A NUMBER OF REASONS.

AND THEN YOU ADD THE CONSTRUCTION COST INDEX FROM C UH, CIP, AND NOW I'M PLAYING BACK TO YOU, RIGHT? .

NO, UM, JOY AND I OFTEN HAVE, UM, THE WONDERFUL CHALLENGE OF EXPLAINING WHAT OUR RATES PAY.

AND, AND PEOPLE WILL OFTEN SAY, WELL, I USE LESS WATER, SO WHY AM I PAYING MORE? AND WHAT I THINK, UM, THIS CHART REALLY ILLUSTRATES IS YES, YOU'RE USING LESS WATER, YOU'RE PAYING THE SAME FOR THE WATER YOU'RE REALLY PAYING FOR IS CIP PLUS THIS CONSTRUCTION COST INDEX THAT MOST PEOPLE, UNLESS YOU'RE IN THE CONSTRUCTION INDUSTRY, DON'T REALLY INTERACT WITH.

UM, BUT WE DO BECAUSE OUR, OUR BUSINESS UNLIKE A LOT OF, UM, MAYBE THE CITY'S GENERAL FUND, GENERAL FUND IS PRIMARILY PERSONNEL BASED.

YOU ARE GOING TO CUT OR YOU'RE GOING TO INCREASE COSTS.

IT'S PRIMARILY IN THE GENERAL OR IN THE PERSONNEL FACTOR.

BUT OUR BUDGET IS, IS OUR, UM, OUR COMMODITY PLUS CIP AND OUR PERSONNEL IS, IS A PART OF IT, BUT IT'S NOT NEARLY TO THE SAME, UM, PROPORTION AS THE CITY'S JOURNAL FUND IS.

AND SO, UM, I THINK TRYING TO GET BACK TO EXPLAINING WHAT OUR RATES PAY FOR IT'S COMMODITY, UM, AS FLAT COST, DESPITE THE CONSERVATION PLUS THE CIP PROJECTS THAT ARE EXPERIENCING A CCI, UM, THAT IS OVER AND ABOVE WHAT MOST PEOPLE WOULD EXPERIENCE IN THEIR PERSONAL LIVES IS SEEK EXACTLY, EXACTLY WHAT MEANT JUST COST AND VOLUMETRIC.

BUT THIS WOULD, YOU'RE RIGHT, YOU HAVE TO ADDRESS THAT AT THE LOCAL LEVEL.

PEOPLE WOULD SAYING, WELL, I'M USING LESS.

I'M NOT USING A LOT OF YOUR WATER.

WE HAVE AGENCY THAT MATTER ARE SAYING IT'S BASICALLY , RIGHT? YES.

AND YOU FIND THAT IN THE ORANGE, NOT SO MUCH IN THE BLUE FOR WRD, IT'S A DIFFERENT PROFILE THERE, ALTHOUGH PUMPING IS DOWN, BUT DRAMATICALLY THE SAME COMPONENTS THAT DIANA REFERENCED FOR US ARE GOING ON AS THE DRIVERS IN THE ORANGE AS WELL.

THE CONSTRUCTION COST INDEX.

THERE'S A BASELINE OF INFRASTRUCTURE METROPOLITAN HAS TO MAINTAIN IN THE FACE OF DECLINING REVENUE AND THEY INCREASE THEIR COSTS AS WELL.

AND IT HAS, IT'S OVER AND ABOVE CPI.

SO THE CHALLENGE IS CONVINCING THE CUSTOMERS THAT THE ADDITIONAL COST FOR, FOR CAPITAL IMPROVEMENT PROGRAMS IS TO THEIR LONG-TERM BENEFIT AND, AND SOMEHOW BEING ABLE TO SHOW THAT YES, IT'S NECESSARY.

AND I, AND I THINK THAT GROUNDWATER,

[01:45:01]

YOU KNOW, HOW FORTUNATE WE ARE AND HOW WE HAVE THIS RESOURCE THAT A PART PART OF OUR CPI IS ALL OF US, YOU KNOW, DEVELOPING THOSE RESOURCES FOR MORE EQUITABLE DISTRIBUTION FOR THE CITY.

SO THOSE ARE REALLY POWERFUL STATE.

THIS IS ALSO TRUE THAT FROM A POLITICAL STANDPOINT, METROPOLITAN HAS THE ADVANTAGE OF NOT HAVING TO DEAL DIRECTLY WITH THE, WITH THE PUBLIC.

TO ME, TO ME THAT'S A SIGNIFICANT, THAT'S A SIGNIFICANT DIFFERENCE.

YOU DON'T THINK THAT'S TRUE? NO, IT'S, IT, IT'S TRUE.

THE EXTENT THAT YOU DON'T NECESSARILY HAVE THE, THE PEOPLE FROM, WELL, NO, THEY'RE WHOLESALE.

SHE SAID THEY WERE WHOLESALE, RIGHT.

BUT WE HAVE 60, 60 PEOPLE LINING UP TO TALK TO METROPOLITAN BECAUSE THEY ARE REPRESENTING THE PEOPLE THAT YOU WERE TRYING TO TALK TO.

DIANA, YOU KNOW, SO YOU HAVE, UH, KNOW WATER FOR LIFE PEOPLE IN THE SIERRA CLUB AND THAT THEY'RE ALL COMING OUT AND SAYING AFFORDABILITY IS, YOU KNOW, IMPORTANT.

WE'RE TRYING TO EXPLAIN THE SAME THING THAT WE'RE TRYING TO, THAT WE WERE TRY TO DO HERE AS, AS A WHOLESALER.

METROPOLITAN IS NOT SUBJECT TO PROP TWO 18.

NO.

SO IT HAS OTHER DRIVERS TO MAKE SURE THAT IT'S COST OF SERVICE BASED.

IT'S MEMBER AGENCIES DEMAND EQUITY IN, IN COST OF SERVICE.

SO THEY, THEY, THE 26 AGENCIES DRIVE THAT DISCUSSION AT THE SAME TIME THAT YOU'RE NOT SUBJECT TO PROP TWO 18 METROPOLITAN EXISTS IN A PUBLIC SPHERE THAT PERHAPS OTHER CITY RETAILERS DO NOT.

SO THE LA TIMES AND OTHERS MONITOR AND DRIVE THAT DISCUSSION.

METROPOLITAN'S RATES INVARIABLY MAKE IT TO THE FRONT PAGE OF THE LA TIMES ON A REGULAR BASIS.

SO I WOULD SAY IT'S A BALANCE TO THE EXTENT THAT THEY'RE A WHOLESALER, THE EXTENT THAT THEY'RE A WHOLESALER, THEY ARE NOT SUBJECT TO PROP TWO 18 AND THEY DON'T HAVE A LOT OF PEOPLE KNOCKING ON THEIR DOOR AT THE TIME OF RATES PER SE.

AT THE SAME TIME, THE PUBLIC SPHERE DRIVES THAT PROCESS IN A WAY THAT GIVES THEM SOME PUBLIC EXPOSURE THAT WE TYPICALLY DO, DO NOT GET.

AND MAYBE LET JUST START TO, TO ADD YOUR COMMENT OF HOW WE COULD FRAME THE, THE CONVERSATION WITH THE GENERAL PUBLIC AS FAR AS THE RATE INCREASES AND WHAT THEY PAY FOR.

AND PART OF THE, THE HARD STORY TO TELL IS, UM, YOU KNOW, WHAT, WHAT WE DON'T KNOW WOULD'VE HAPPENED IN THE FUTURE IN THE SENSE OF ABSENT THE INFRASTRUCTURE IMPROVEMENTS THAT WE'RE GOING TO MAKE AND THE RATE INCREASES THAT WE'RE GOING TO ASK FOR RATE INCREASES IN THE FUTURE BE EVEN HIGHER.

AND SO, YOU KNOW, I, I KNOW IT'S, IT DOESN'T MAKE PEOPLE FEEL BETTER WHEN WE'RE RAISING THEIR RACE AND, AND SAYING IT'S FOR YOUR OWN GOOD.

BUT YOU KNOW, THAT'S REALLY THE STORY THAT, YOU KNOW, I THINK A LOT OF THIS RETREAT IS CENTERED AROUND IS THE, THE HARD DECISION THAT THE WORD WE'RE THIS GONNA HAVE TO MAKE SHORT TERM PAYING FOR, FOR LONG TERM GAIN.

I WANNA HIGHLIGHT, KIND OF GO BACK TO MY EARLIER QUESTION.

WHEN DANIEL WAS UP THERE, BACK TO THIS PARTICULAR GRAPH SHOWING THAT WE'RE AT 23, 20 6,300 ACRES FEET, THE SHORTFALL IN PUMPING, WHAT IS THEN THE PROJECTED COST DIFFERENCE THAT WOULD PAYING EXTRA BASED ON YOUR PROJECTED MET SEPARATION, DO YOU KNOW? OR, OR JUST THE TOTAL DOWN SOUTH ACRE FEET.

YEAH, SO WHAT IS THE, SO 7,000 ACRE FEET, WHAT IS THEN THE PROJECTED CURRENT DIFFERENTIAL BETWEEN PROVIDING GROUNDWATER VERSUS NET WATER? $400 HUNDRED FOR OF THE DIFFERENCE IS 7,000 ACRE FEET.

SO IS IT STILL ONLY FOUR THOUGH? IT'S 2.8 MILLION.

NO, TWO POINT MILLION IF IT'S $400 DIFFERENCE, BUT IN THE PAST COUPLE OF YEARS IT'S ACTUALLY MORE LIKE $700 DIFFERENCE.

SO THAT'S LIKE $5 MILLION DIFFERENCE.

THAT WAS A RHETORICAL QUESTION, RIGHT? ? WE WERE HAVING A GOOD, YOU'RE HAVING A GOOD TIME.

EVERYBODY WAS SMILING.

SMILING.

NO, THAT'S AN IMPORTANT POINT.

THAT'S AN, THAT'S AN IMPORTANT POINT.

AND THIS MAY BE COVERED LATER.

THE, OUR CAPACITY.

ARE WE CONTINUING MOVING FORWARD WITH OUR CAPACITY ENHANCEMENTS? YES.

DO WE HAVE A SO HERE IN PUBLIC CAN ANSWER THAT QUESTION BETTER.

YES, WE ARE BUILDING MORE.

WELL GO GO BACK TO YOUR SLIDE ON THE CAPACITY YOUNG.

'CAUSE THAT'S, THAT'S WHEN I SAW THAT GRAPH, IT, IT REALLY DROVE THE POINT THAT THE BLENDED ZONE IS THE LIMITS OF OUR PUMPING AND THE RED LINE REPRESENTS THE WELL CAPACITY NEEDED TO PUMP OUR FULL RIGHTS.

SO YOU CAN SEE THE BLUE LINE AND INDEED ENGINEERING CONTINUES TO DESIGN AND BUILD WELLS AND REHAB WELLS.

SO IT'S, IT'S NOT JUST NEW WELLS, IT'S ALSO REHABILITATING WELLS TO BOOST THAT CAPACITY.

THE

[01:50:01]

GRAY LINE BECOMES AN IMPORTANT FACTOR THAT WHEN THE BLUE LINE IS ABOVE THE GRAY LINE, IT DOESN'T MATTER THAT THE WELL IS THERE, THERE'S SIMPLY NOT ENOUGH DEMAND TO PUMP THAT WATER.

THE MWD ZONE, THE METROPOLITAN ZONE DEMANDS METROPOLITAN WATER.

THERE'S NO WAY TO USE THAT EXCESS CAPACITY BETWEEN THE GRAY AND THE BLUE AND SHOVE IT INTO THE METROPOLITAN ZONE.

SO WHILE WE DO INDEED NEED TO, THIS GOES BACK TO THE, THE CORE CIP, THERE IS A CORE CIP AND REHABILITATION OF WELLS AND MAINTAINING WELLS AND IN SOME CASES A VERY OLD WELL WE JUST SIMPLY HAVE TO SCRAP IT AND BUILD A NEW ONE.

THAT ACTIVITY CAN EXIST FOR THE BLENDED ZONE REGARDLESS OF AUGMENTING AND TRYING TO MOVE WATER INTO THE MWD ZONE.

BUT UNLESS, UNLESS WE FIND AND CHART A COURSE TO GET OURSELVES AN ABILITY TO MOVE GROUNDWATER INTO THE MWD ZONE, THE EXISTING DRIVE FOR WELL CAPACITY IN AND OF ITSELF DOESN'T SATISFY THAT.

THANK YOU YEN AND DEAN, AT THIS POINT, UM, JUST TRYING TO GAUGE THE ROOM.

HOW DOES EVERYBODY FEEL ABOUT AN EIGHT MINUTE RECESS? THAT BE GOOD? OKAY.

OKAY FOLKS, LET'S HEAD BACK TO MORE SEATS.

UH, MAY I ASK THE, UH, PRESIDENT TO UH, PUT AN EIGHT MINUTE RECESS? YOU RECESS FOR EIGHT MINUTES? WE'RE TAKING AN EIGHT MINUTE RECESS.

YOU'LL KEEP US.

[01:59:52]

[02:00:13]

WOMEN'S ARE WHEN? FINAL FOUR, WELL THEY GOT A BEON.

UH, DID YOU SEE THAT CA? THANK YOU JOHNNY.

THANK YOU PRESIDENT MCGUIRE.

SO SECTION FIVE, OUR NEXT PRESENTATION IS BY DANA MANONE AND MICHAEL ACH COVERING SEWER UTILITY OPERATIONS IS 20 MINUTE SESSION FOCUSES ON KEY CAPITAL PROJECTS TIED TO LONG BEACH'S PREPARATIONS FOR THE 2028 OLYMPICS AND PARALLEL OLYMPIC GAMES.

THESE PROJECTS SPAN HIGHLY VISIBLE VENUES INCLUDING THE CONVENTION CENTER, THE WATERFRONT, BELMONT SHORE, AND OTHER MAJOR TOURIST AREAS.

OH, OKAY.

TARGET TARGETING UPDATED UPGRADES, CRITICAL OR INCREASED PUBLIC USE.

THE GOAL IS TO RETURN TO THE BOARD LATER THIS SECOND QUARTER, UH, THIS FISCAL YEAR WITH A FULL CAPITAL IMPROVEMENT AND FINANCING PLAN.

TODAY'S PRESENTATION GIVES US AN OPPORTUNITY AND AN IMPORTANT EARLY LOOK AT THE SCOPE COSTS AND OPERATIONAL IMPACTS.

WE VERY MUCH APPRECIATE YOUR PARTICIPATION, SO PLEASE JOIN ME IN WELCOMING DANA AND MICHAEL.

HI EVERYBODY.

UH, SO WE'RE HERE TO TALK ABOUT SOME SEWER CIP IN PREPARATION FOR THE OLYMPICS.

UM, SO LET'S START WITH SOME BACKGROUND FIRST.

SO THE CITY PROVIDED US A LIST OF POTENTIAL OLYMPIC VENUES BACK IN SUMMER OF LAST YEAR.

THESE INCLUDED THE LONG BEACH CONVENTION CENTER, UH, THE LONG BEACH WATERFRONT, THE BELMONT SHORE AREA AND ING STADIUM.

WE ALSO HIGHLIGHTED A COUPLE AREAS THAT WE BELIEVE ARE GONNA SEE IMPACTS TO INCREASE PUBLIC USAGE SUCH AS TOURISTY AREAS AND THE MAJOR THOROUGH EFFECTS.

THESE INCLUDED THE QUEEN MARY THE SECOND AND PCH COMMERCIAL AREA AND ALSO CHERRY AVENUE'S MAJOR THOROUGHFARE THE CITY.

SO OUR PLANS ARE TO REHABILITATE SEWER FACILITIES WITHIN THESE VENUES AND IN PROXIMITY TO THESE AREAS AND PREPARE FOR THE INCREASED PUBLIC USE THAT WE'RE ABOUT TO SEE.

UH, JUST TO NOTE, A LOT OF THESE PROJECTS ARE WITHIN THIS, UH, THE COASTAL ZONE.

SO WE ARE UTILIZING, UH, CITY PLANNING TO HELP US OUT WITH THOSE.

THAT ALSO LEADS US TO KIND OF TRY TO BE MORE AGGRESSIVE IN OUR ATTEMPTS TO DO, TO DO ALL THE CONSTRUCTION SINCE WE NEED TO BE FINISHED UP BY 2027.

SO OUR FIRST VENUE IS GONNA BE THE BEL MASHO BEACH AREA.

THE SPORT HERE FOR THE OLYMPICS IS GONNA BE SAILING.

AND YOU CAN SEE ON YOUR TOP LEFT WE HAVE AN ARROW POINTING TO THE WEST.

THAT'S THE LOCATION OF OUR CLOSEST SEWER LIFT STATIONS.

[02:05:01]

THE NEXT VENUE IS THE LONG BEACH WATERFRONT.

UH, THIS VENUE IS GOING TO BE USED FOR MARATHON SWIMMING AND A TRIATHLON.

AND WE HAVE A VENUE POINTING EAST TO OUR NEAREST PUMP STATIONS.

SO THESE ARE GONNA BE THE PUMP STATION IN BETWEEN THOSE TWO VENUES.

THESE ARE OUR BEACH STATIONS KNOWN AS UH, S 14, 15, 16, AND 17.

AND WE'LL GET BACK TO THEM JUST A LITTLE BIT TO HIGHLIGHT THE REPAIRS WHERE WE WANNA SHOW YOU ONE MORE VENUE IMPACTING THIS AREA.

AND THAT'S GONNA BE THE LONG BEACH CONVENTION CENTER.

UH, HERE THEY'RE GONNA HAVE ARTISTIC SWIMMING, WATER POLO AND HANDBALL.

AND OUR NEAREST LIFT STATIONS HERE ARE LOCATED SOUTH.

SO THESE ARE OUR MARINA AND OR FINGER LIFT STATIONS.

THAT'S AS 20, 21, 22, AND 23.

AND THEY SERVICE A LOT OF THE SHORTS AND MARINA AREA.

SO THESE PROJECTS ARE GONNA BE KNOWN AS THE MARINA AND BEACH STATION, UH, MAIN REPLACEMENTS, THAT'S ALL THE BEACH STATIONS AND THE MARINA STADIUMS THAT WE, THE STATION THAT WE SHOWED YOU PREVIOUSLY.

THESE PIPELINES ARE OWNED BY US, BUT THE STATIONS THEMSELVES ARE OWNED BY PRM.

SO IN THE FUTURE, WHEN WE DO THE ACTUAL STATION REHABILITATIONS, THOSE COSTS WILL BE REIMBURSED TO US BY THE PARTS DEPARTMENT.

SO THE ISSUES THAT WE ARE HAVING WITH THESE PRESSURE MAINLINES, WE'VE HAD A COUPLE PAST SEWER SPILLS DOWNSTREAM OF A COUPLE OF OUR OB STATIONS.

THAT'S S 14 AND S 17.

WE'VE ALSO HAD SOME IN-HOUSE REPAIRS ALONG MARINA STATIONS.

THE PIPELINE'S THERE AND WE BELIEVE THIS IS CAUSED BY THE PUMP STATE TURNING ON AND OFF.

THE MOVEMENTS CREATED IN SANDY AREA CAUSED THE JOINTS TO SPLIT APART AND THAT'S WHY WE HAVE THESE SEW BILLS.

SO AS PART OF OUR UPCOMING CIP, WE WANNA REPLACE THESE PIPELINES WITH PRESSURE MAIN LINES WITH FUSION BONDED JOINTS, THAT'S HTP OR PVC.

UH, IN PART OF THIS PROJECT WE'RE GONNA REPLACE APPROXIMATELY 4,700 LINEAR FOOTAGE OF THESE UH, PIPELINES.

AND THESE ESTIMATED COSTS ARE AROUND $2.9 MILLION.

OUR NEXT VENUE IS GONNA BE THE MARINE STADIUM.

WITHIN THIS VENUE ITSELF, WE HAVE ONE LIFT STATION S 28 AND THE SPORTS HERE ARE GONNA BE CANOE SPRINT IN ROW.

THIS IS JUST A CLOSER LOOK AT OUR S 28 LIFT STATION.

UH, THIS IS AT THE END OF BOATHOUSE LANE, LOCATED CLOSEST TO THE LONG BEACH ROWING ASSOCIATION.

AT THE END THERE, WE ALSO HAVE A TOURIST AREA OF THE QUEEN MARY.

AND HERE WE HAVE THREE THOSE STATIONS.

WITHIN THIS PROXIMITY, WE HAVE S 19 ON THE TOP LEFT, S 29 AND S 30, RIGHT NEAR TO THE QUEEN MARY.

SO S 19 IS LOCATED JUST OUTSIDE OF THE RESIDENCE AND HOTEL.

THIS IS A VERY VISIBLE AREA.

WE HAVE S 28, WHICH WAS ONE WITHIN BRAIN STADIUM.

WE HAVE A COUPLE OLYMPIC EVENTS THERE.

WE HAVE S 29 AND S 30 LOCATED JUST OUTSIDE OF THE QUEEN MARY.

AND A LOT OF THE REPAIRS LOCATED HERE ARE PRETTY MUCH THE SAME.

A LOT OF DISCHARGE PIPING THAT NEEDS TO BE REPLACED.

A LOT OF ELECTRICAL AND COMMUNICATION UPGRADES.

AND NEAR TO S 30, WE ACTUALLY HAD A RECENT EMERGENCY REPAIR THAT ACTUALLY HIGHLIGHTED SOME AREAS OF CONCERN WITH ENFORCEMENT THERE.

SO AS PART OF THIS PROJECT, WE DEFINITELY WANNA GO IN THERE AND EITHER BELINE THAT LIST THAT FORCEMENT OR BE, ALIGN IT ENTIRELY THAT IN THE ESTIMATED COST FOR ALL OF THESE REPAIRS, THERE'S GONNA BE APPROXIMATELY $4.1 MILLION.

ALRIGHT, NEXT UP WE HAVE THE TOURIST AREA IN YOUR SECOND MPCH.

AND THIS IS GONNA IMPACT TWO LIFT STATIONS IN THE AREA.

S EIGHT ON THE TOP LEFT IS ALREADY UNDER REHABILITATION.

S NINE AT THE BOTTOM IS NOT.

SO THAT'S ONE OF OUR PRODUCTS.

SO S NINE IS LOCATED ALONG MARINA DRIVE IN THAT PARKING LOT AND IT TAKES A LOT OF THE SEWAGE FROM UPSTREAM RESTAURANTS SUCH AS BALLAST POINT, BOATHOUSE AND THE BAY AND THE CRAB BOTTOM.

SO THIS STATION IS OWNED BY A PRM AND, BUT IT'S MAINTAINED AND OPERATED BY US.

SO AS FAR THIS PROJECT, PRM IS GOING TO REIMBURSE US FOR THE COST OF REHABILITATE THE STATION.

THE PROPOSED REHABILITATION OF THE STATION IS GONNA INCLUDE A LOT OF SITE IMPROVEMENTS, A LOT OF, UH, STRUCTURAL REPAIRS THAT WE'VE SEEN, REPLACEMENT OF THE SUCTION PIPE IN A COUPLE OF UPGRADES.

AND THE ESTIMATED COST FOR THIS STATION IS 1.1.

AND FINALLY WE HAVE A MAJOR THOROUGH FOR HERE ON CHERRY AVENUE.

JUST TO POINT OUT, THIS MAP IS FIRM OVER TO THE RIGHT JUST SO WE CAN SHOW THE FULL EXTENT.

UM, AND CHERRY AVENUE IS ONE CORRIDOR THAT WE HIGHLIGHTED AS A POTENTIAL MAJOR THOROUGHFARE FOR PUBLIC.

THE PROJECT HERE THAT CHERRY AVENUE AND VIRGINIA MEANS THAT LIMITS OUR, WHAT WE SAW IN THE MAP PREVIOUSLY, THE ISSUES THAT WE'VE SEEN IS A LOT OF DETERIORATED PIPE, THE WAY IDENTIFIED TO CCTV.

AND A LOT OF THESE, UH, MAIN LINES REQUIRE UPSIZING.

SO WE'RE UPSIZING APPROXIMATELY 3000 LINEAR FOOTAGE, AND THE ESTIMATED COST HERE IS 3.9 MILLION.

AND THE ISSUE HERE IS THAT IF WE HAD A, A BREAK OR SOME KIND OF EMERGENCY DURING THE OLYMPICS, THAT'S A MAJOR THIRD FIRM THAT WE NEED TO CLOSE OFF.

SO WE WANNA DO THAT, UH, IN ADVANCE.

SO IN SUMMARY, WE HAVE FOUR CAPITAL IMPROVEMENT PROJECTS THAT WE'RE PROPOSING TO PREPARE OUR SUMER SYSTEM FOR THE UPCOMING GAMES.

[02:10:01]

THE ESTIMATED COST EQUAL AROUND $12 MILLION AND THE, THE SCHEDULED COMPLETION FOR ALL OF THESE STATIONS ARE 4 20 28.

UH, AN ISSUE THOUGH IS SEWER MASTER FUND THAT WE COMPLETED LAST YEAR HAD A DIFFERENT COMPENSATION PRIORITIZATION.

SO THESE OLYMPIC AND PARALYMPIC PROJECTS REQUIRE ADDITIONAL FUNDING FROM US.

AND THIS IS GONNA BE SHOWN HERE IN THIS LIFE.

SO ON THE LEFT YOU HAVE THE MILLION MILLIONS OF DOLLARS ON THE BOTTOM, YOU HAVE OUR FISCAL UNITS AND USUALLY THE ENGINEERING CIP IS PRETTY CLOSE.

IT'S HIGHLIGHTED IN GREEN AROUND FIVE TO $8 MILLION PER YEAR.

BUT FOR THE NEXT THREE YEARS, YOU'RE GONNA SEE A PRETTY DRASTIC INCREASE POTENTIALLY BECAUSE OF HAYES THAT IS IN BLUE, THE HAYES GENERATED STATION WE'RE BUILDING A SEWER PIPELINE.

AND IN YELLOW WE HAD THE OLYMPIC GAMES.

UH, YOU CAN SEE IN 2027, WE HAVE A PRETTY DRASTIC INCREASE BECAUSE OF PAINS IN THE OLYMPICS.

AND THAT'S BECAUSE ALL OF OUR CONSTRUCTION COSTS WOULD POTENTIALLY BE AT THAT TIME.

SO 2026, WE'RE DOING A LOT OF THE DESIGN IN 2027 RIGHT BEFORE THE OLYMPIC GAMES, WE'LL BE DOING LOT OF THE CONSTRUCTION.

SO THATS PRESENTATION.

WE CAN, UH, TAKE THE QUESTIONS.

I HAVE A QUESTION.

UH, HOW FREQUENTLY ARE THE PIPES INSPECTED AND CLEAN TO PREVENT POTENTIAL BLOCKAGES OR OVERFLOWS DURING HIGH USAGE PERIODS? CURRENTLY OUR NORMAL OPERATION AND MAINTENANCE, BUT CAN, SO CURRENTLY OUR NORMAL OPERATION AND MAINTENANCE, UM, FOR CCTV, IT'S ON A FIVE YEAR SCHEDULE.

SO THE ENTIRE CITY SHOULD BE TELEVISED WITHIN 12 YEARS.

FOR ROUTINE CLEANING, UM, TRY AND TELEVIS ENTIRE CITY FOR NORMAL OPERATION MAINTENANCE, HOWEVER IN ADVANCE.

SO EVENTS LIKE THE GRANT FREE AND FOR OLYMPICS, TRY TO TELEVISE EVERY RIGHT BEFORE THE MAIN EVENT JUST TO ENSURE THAT WE DON'T HAVE ANY ISSUES WHILE THE EVENT IN TERMS OF FUNDING PROJECTS AND PREPARATION FOR OLYMPICS.

UM, QUESTION MORE TOWARDS THE EXECUTIVE TEAM.

DO WE KNOW IF, UH, LA 28 WILL ALLOCATE ANY SORT OF FUNDING FOR PEOPLE OR FOR THE, THE HOST CITY? UH, HAVE WE BEEN IN THOSE CONVERSATION? WILL THERE BE POTENTIAL REIMBURSEMENTS FOR THIS? I'VE HAD CONVERSATIONS WITH L-A-D-W-P.

L-A-D-W-P FINDS ITSELF AS A UTILITY ON THE FRONT LINES JUST AS US, UH, BUT TO A MUCH LARGER DEGREE ON THESE ELEMENTS OF IMPROVEMENTS.

WHEN I ASKED L-E-D-W-P IF THERE WAS A SOURCE OF OLYMPIC FUNDING FOR THIS TYPE OF EFFORT, AND THE ANSWER WAS NO.

SO THERE IS NO FUNDING SOURCE BEING MADE AVAILABLE FOR THESE TYPES OF INFRASTRUCTURE IMPROVEMENTS FOR THE VENUES.

DOES THE, DOES THE CITY COVER ANY OF THIS THOUGHTS THAT WE THE CITY DOESN'T HAVE A SOURCE OF FUNDING MUCH LIKE LA AND L-A-D-W-P DON'T FIND THEMSELVES WITH SOURCES OF FUNDING FOR THEIR INFRASTRUCTURE IMPROVEMENTS SPECIFICALLY FOR THE VENUES LIKE THIS, PARKS AND REC AND MARINE ? WELL, ONLY TO THE DEGREE THAT NATURALLY THE RELATIONSHIP BETWEEN US WAS THAT PARKS AND REC WAS GOING TO PAY FOR SOME OF IT.

IS THAT RIGHT DANA? YEAH.

FOR THE S NINE LIFT STATION AND, UH, THE FUTURE, UH, LIFT STATION UPGRADE FOR THE BEACH RA SO IN THAT, IN THAT SENSE, THESE PROJECTS WERE ORIGINALLY SCHEDULED, BUT AS A RESULT OF THE SCHEDULING OF THE OLYMPICS, WE'VE TRIED TO ACCELERATE THEM AND IN ACCELERATING THEM, WE'LL GET BENEFITS FROM ACCELERATING THE CIP AND THOSE RELATIONSHIPS WILL STAY THE SAME.

SO THE OBLIGATIONS FOR PAYMENT AND SO FORTH REMAIN BETWEEN THE TWO, UH, DEPARTMENTS BETWEEN US AND PARKS REC AND, AND MARINE.

I HAVE A FOLLOW UP.

THEN IF THERE'S AN ASSUMPTION THAT THE INCREASED REVENUE FROM TOURISM FROM THE LA 28 ACTIVITY WILL LONG BEACH UTILITY, SEE ANY OF THAT TAX REVENUE FROM A, PARDON ME, WHAT, WHAT IS IT? IT'S A UTT OR THE HOTEL TAX THAT WE GET, UH, THAT THE CITY GETS.

ARE THERE ANY CONVERSATIONS ABOUT ANY A PIECE OF THAT BECAUSE OF THE REPRIORITIZATION OF THESE PROJECTS? WE, WE HAVE NOT HAD THOSE CONVERSATIONS.

AND THERE'S AN ELEMENT THAT OLYMPIC VENUES, THEIR EXPERIENCE IS OLYMPIC AND THEN THE PARALYMPICS, THE SPECIAL OLYMPICS OCCUR IMMEDIATELY AFTERWARDS.

OKAY, TONY, UH, WHEN WOULD THESE VENUES START BEING USED FOR THE OLYMPICS? UH, WHAT ARE THE TIMELINES? SO IN THE, UH, CITY AGREEMENT THAT WE SAW THE DRAFT AGREEMENT, THEY HAD A NON-EXCLUSIVE USE PERIOD STARTING MARCH OF 2028 AND A NON-EXCLUSIVE POST USE ENDING OCTOBER, 2028.

SO THE MAJORITY OF 2028.

[02:15:02]

SO THE OLYMPIC VENUE TIMEFRAME GETS EXTENDED, RIGHT? AND SO THE DISCUSSION OF THESE PROJECTS WAS IN THAT CONTEXT, NOT JUST OF A SINGLE YEAR'S WORTH OF EFFORT, BUT ACTUALLY SEVERAL YEARS AND ADJUSTING THOSE PROJECTS AS WELL.

DANA, CAN YOU COMMENT ON THE BLUE REFERENCE TO HANES AND WHAT THAT IS? SO WE WENT TO THE BOARD A COUPLE YEARS AGO TO SIGN AN MOU WITH L-E-D-W-P AND HELPED 'EM WITH THEIR PLANT UPGRADES FOR THE HANES GENERATING STATION.

SO THEY NEEDED TO DISCONTINUE THEIR USAGE ONCE THEIR COOLING.

SO THEY NEEDED A NEW SOURCE OF WATER, WHICH THEY'RE TRYING TO GET RECYCLED WATER FOR THEIR USE.

AND THEY NEEDED A NEW DISCHARGE PROPORTION, WHICH WOULD BE PRETTY MUCH INTO STRAIGHT INTO THE LONG BEACH RECLAMATION PLAN.

SO THEY TASKED US TO HELP THEM WITH DESIGNING CONSTRUCTION AFTER WE FINISHED CONSTRUCTION.

ALL OF THAT SEWER MAIN LINE IS GONNA BE TURNED OVER TO DWP AND THEY'RE GONNA REIMBURSE US FOR ANY COST.

SO ALL OF THE COSTS THAT YOU SEE INCLUDE ARE REIMBURSABLE COSTS SO THAT THAT'S REIMBURSABLE AND THAT'S EXCELLENT.

IN TERMS OF THE EFFORT, RIGHT? THE EFFORT IS GOING TO COME FROM WHERE THE EFFORT FOR MANAGING DESIGN AND CONSTRUCTION.

HOW MANY, HOW LONG CAN THAT BE EXTENDED OUT? UM, I'M NOT SURE ACTUALLY.

THAT'S IN-HOUSE.

SO OUR ENGINEERS ARE THE ONES THAT ARE HELPING WITH DESIGN AND CONSTRUCTION, AND WE ARE FINISHING UP DESIGN.

WE SHOULD BE READY TO BID NEXT YEAR, EARLY NEXT YEAR.

AND A QUESTION FOR STEPHANIE, I'M WRITING DOWN A QUESTION TOO, A QUESTION FOR STEPHANIE IS IN TERMS OF WHAT YOU SEE IN THE YELLOW, SO THE SEWER CIP IS FAIRLY SMALL, AND SO THE ENTIRE COMBINATION OF OF INFRASTRUCTURE IMPROVEMENTS IS SOMEWHERE IN EXCESS OR JUST OVER $10 MILLION IN THAT RANGE.

RIGHT? AND SO FINANCING OPTIONS BECOME A BIG CONSTRAINT BECAUSE THE ENTIRE AMOUNT IS RELATIVELY SMALL, YOU WOULDN'T NECESSARILY BOND FOR IT.

THAT'S CORRECT.

CAN YOU EXPAND ON THAT FOR JUST A LITTLE BIT IN TERMS OF WHAT OUR FINANCING OPTION MIGHT BE? THEN WE COULD DO A LINE OF CREDIT AS AN OPTION .

UM, THAT I, I THINK THAT WOULD BE OUR ONLY, ARE THESE, IF THEY'RE ALL R AND R TOO, IT WOULD NOT NECESSARILY QUALIFY FOR THE BOND.

AND ALSO THE AMOUNT MAY NOT BE SUFFICIENT.

SO A LINE OF CREDIT WOULD BE LINE OF CREDIT OR SEGO AND MEETINGS GOING DOWN OUR RESERVES.

SO THE LINE OF CREDIT, THE LINE OF CREDIT COULD, COULD BE A LINE OF CREDIT THAT IS IN ITS EARLY STAGES, INTEREST ONLY, BUT THEN THE OBLIGATIONS BECOME TO PAY IT DOWN RELATIVELY QUICKLY.

RIGHT? THE LIST FOR RATE INCREASES .

AND SO , SO ONE OF THE CHALLENGES THAT WE FACE, AND, AND DANIELLE, I'M GONNA PUT YOU ON THE SPOT JUST ON, ON THE ORDER OF MAGNITUDE, RIGHT? YOU, YOU DID SHARE IN YOUR FINANCIAL MODELS THAT FOR, FOR AN ASSUMPTION OF WHAT A RATE INCREASE ON THE WATER FUND DOES WAS ABOUT $1.3 MILLION OR 1% INCREASE IN RATES, RIGHT? THAT'S THE AMOUNT OF REVENUE THAT GETS GENERATED.

BUT THE SEWER FUND IS A MUCH SMALLER BUDGET.

SO CAN YOU GIVE ME A, AN ORDER OF MAGNITUDE ON WHAT 1% ON THE SEWER RATES DOES IN TERMS OF REVENUE? 'CAUSE IT IS MUCH SMALLER.

IT'S ROUGHLY 300,000 FOR JUST THAT SAME 1%.

SO 300,000 MM-HMM .

AND SO THAT, THAT IN ESSENCE PRESENTS THE BOUNDARIES OF THE CHALLENGE.

RIGHT THERE.

THERE'S THIS EMPHASIS OR NEED, IT DOES PROVIDE BENEFITS BECAUSE THE SEWERS, A IP HAD THESE PROJECTS, THEY WERE JUST FURTHER OUT IN TIME.

SO YOU ARE IN ESSENCE AVOIDING THOSE PROJECTS IN THE FUTURE.

'CAUSE YOU'VE DONE THEM NOW, UM, YOU PERHAPS CORRECT ELEMENTS OF FURTHER SPILLS AND REPAIRS BECAUSE THE NATURE OF THE PIPE THAT YOU'RE PUTTING IN CHANGES.

SO THERE ARE, THERE ARE INHERENT BENEFITS.

THE FINANCIAL CHALLENGES ARE STILL THERE.

AND THEN IN TERMS OF THE ENGINEERING CHALLENGES, THAT'S WHY I ASKED DANA THAT QUESTION BECAUSE EVEN IF THE MONEY IS THERE, THE EFFORT STILL REMAINS INTERNALLY.

SO THE STAFFING COMPLIMENT IT'S ACCESS TO CONSULTANTS MANAGING THE CONTRACTS.

THAT ENTIRE EFFORT STILL REMAINS IN-HOUSE AND HAS TO BE DEALT WITH.

THE TERM ON THE LINE CREDIT, IS THAT, HOW,

[02:20:01]

I KNOW ON THE SEWER WE DID HAVE IT FOR QUITE SOME TIME.

UM, I THINK IT JUST LIKE MAKES THE MOST SENSE FINANCIALLY IS WHERE WE 10 YEARS, 20 YEARS? WELL, I DON'T KNOW ABOUT THAT.

SO FIVE YEARS, 10 YEARS.

I, UM, I WANNA SAY I'M NOT ACTUALLY REALLY SURE TO BE HONEST.

I KNOW THE LINE OF CREDIT WE HAD FOR SEWER WAS ONLY ABOUT LESS THAN 10 YEARS.

THE, THE LINE OF CREDIT HAS TWO FEATURES TO IT.

SO THE LINE OF CREDIT IS GONNA HAVE THE ACTUAL CAPACITY FEE.

SO LET'S SAY THAT IT'S A $10 MILLION LINE OF CREDIT.

SO YOU WILL ALWAYS PAY A FEE FOR THE $10 MILLION, THE ABILITY TO ACCESS $10 MILLION EVERY YEAR THAT YOU HAVE IT IN EXISTENCE.

AND THEN YOU WILL HAVE THE INTEREST CHARGES ON THE ACTUAL AMOUNT BORROWED.

SO THE LONGER TERM THAT YOU CARRY, THE LONGER THAT YOU CARRY THOSE TWO CHARGES, IRRESPECTIVE OF HOW MUCH YOU ARE PAYING DOWN THE ACCUMULATED PRINCIPLE.

RIGHT? SO THAT, THAT THE LONGER WE GO, IT'S FINE, BUT WE JUST HAVE THOSE ELEMENTS AND I'M SURE A BANKING INSTITUTION WOULD BUILD THAT FOR US AND THEN WE WOULD HAVE THOSE CORRESPONDING CHARGES.

AND THEN, UH, GRANT FUNDING.

IS THERE ANY OPTIONS ON GRANT FUNDING, ESPECIALLY FEDERAL GOVERNMENT? I KNOW THAT'S GIANT UNKNOWN RIGHT NOW.

WE CAN, WE CAN LOOK INTO IT.

THE, UH, ELEMENT HERE IS THAT THE BASIS FOR IT MIGHT BE A LITTLE BIT DIFFERENT THAN I KNOW ON THE WATER SIDE WE'VE ARGUED CLIMATE CHANGE, CLIMATE ACTION PLAN, UM, ALL THOSE DIFFERENT ELEMENTS COMING INTO PLAY IN ORDER TO GET GRANT FUNDING FOR CERTAIN ELEMENTS.

BUT HERE IT MIGHT, MIGHT BE MORE DIFFICULT.

COMMISSIONER SCOTT? UH, HE ASKED MY QUESTION.

GOOD.

UM, QUICK QUESTION.

SO THERE ARE TWO PROJECTS THAT, UM, REFER TO REIMBURSEMENTS FROM PRM.

DO WE KNOW THE TOTAL ESTIMATE OF REIMBURSEMENTS FROM PRM? SO WHEN WE SPOKE TO UM, PRM, WE TOLD THEM THEY WOULD BE RESPONSIBLE FOR ALL COSTS OF S NINE.

SO THAT'S THE 1.1 MILLION THAT YOU SEE THERE FOR THE MARINA AND BEACH LIFT STATIONS.

NONE OF THOSE COSTS WOULD BE REIMBURSABLE TO PRM.

IT WOULD BE THE FUTURE COST TO UPGRADE THE ACTUAL LIFT STATION.

THIS PROJECT IS JUST FOR THE PIPELINE.

SO THAT'S US.

YOU KNOW, IF, IF THESE REPAIRS ARE MADE TO THESE FACILITIES NOW, WHAT IS THE NEED TO GO BACK IN THE FUTURE? IS THERE A NEED? DOES IT TAKE CARE OF IT? IS IT ONGOING? LIKE DIANA MENTIONED, A LOT OF THESE REPAIRS FOR ALL OF 'EM WERE PLANNED FOR THE FUTURE OR JUST FAST TRACKING THEM.

UH, I JUST WANNA MENTION TOO THAT WHEN, UM, WHEN THE CITY ASSUMED FULL RESPONSIBILITY OF THE QUEEN MARY, WE ALSO INHERITED ABOUT THREE LIFT STATIONS AND A NUMBER OF SEWER PIPELINES THAT WERE IN PRETTY, UM, POOR WOULD BE KIND, UM, CONDITION.

AND SO AS WE WERE CONSIDERING WHAT WE NEEDED TO DO TO PREPARE FOR THE OLYMPICS, UM, AS DANA MENTIONED, NONE OF THESE PROJECTS ARE NEW, UM, TO US EXCEPT PERHAPS MAYBE THE QUEEN MARY PROJECTS BECAUSE OF THE PAST, UM, UTILITIES AND WATER WAS NOT RESPONSIBLE FOR THOSE.

UH, NONE OF THESE PROJECTS ARE NEW.

THEY'RE SIMPLY BEING ACCELERATED, UM, BECAUSE OF OUR, OUR ARE FRANKLY FEAR THAT THEY MAY FAIL .

UM, IF, UM, WELL THERE'S A, A SIGNIFICANT, UM, DEMAND THAT IT'S NOT TYPICALLY USED TO SUPPORTING, UM, WITH THE INFLUX OF, OF TOURISTS.

UM, BUT WE ARE CONSTANTLY KEEPING AN EYE OUT FOR ADDITIONAL FUNDING.

UM, BUT YOU'VE PROBABLY ALSO SEEN THAT LA IS FACING SOME OF THESE SAME QUESTIONS AND CONCERNS.

AND, UH, THE, THE ISSUE IS QUESTION ALWAYS IS DO CITIES MAKE MONEY FROM OLYMPICS? THAT'S DIFFICULT BALANCE.

HOW DOES TIDELANDS FIGURE INTO A, SEEMS LIKE ALL OF THESE ARE IN THE TIDELANDS AREA.

YEAH, SO THE MAJORITY OF THESE PROJECTS ARE THE TIDELANDS AREA.

UM, CHERRY IS, IS ONE THAT IS NOT, UH, BUT THE CITY DOES HAVE AN INFRASTRUCTURE COMMITTEE.

THEY HAVE A STEERING COMMITTEE FOR, FOR THE OLYMPICS.

AND UH, WE ARE AS PART OF THAT PROCESS, SHARING OUR, UM, NORMAL OPERATIONS AND MAINTENANCE.

THAT WAS ONE OF THE, UM, THE DATA SETS THAT THEY WERE LOOKING AT.

AND THEN WHAT WE BELIEVE WE MAY NEED TO DO TO ACCESS THE VENUES DURING.

AND THEN THIS, THE NEXT SET DATA FOR IS THIS INFORMATION, THE VERY SAME INFORMATION THAT YOU SEE HERE, UM, TO THE CITY.

AND AS ANTO MENTIONED, AS THOSE CONVERSATIONS CONTINUE, WE WILL BE LOOKING FOR WAYS, UM, TO PROPORTIONALLY RECUPERATE SOME COSTS, UM, OR AT LEAST BALANCING OUT.

BUT I THINK THAT'S A DIFFICULT CONVERSATION BECAUSE THE CITY THEMSELVES ARE IN INCREASING OR INCURRING COSTS AND ARE UNSURE ABOUT WHAT THE INCREASED, UM, TRENDS OF OCCUPANCY TAX AND OTHER SALES TAX NUMBERS COULD BE NEY.

UM, I WANTED TO CONTINUE TO SORT OF RE UH, EMPHASIZE THE THEME OF SHORT-TERM PAIN VERSUS LONG-TERM GAIN.

SO,

[02:25:01]

SO YOU, THERE IS SOME SAVINGS IN THE CONSTRUCTION COSTS, UH, INDEX AND FUTURE INFLATION PRICES.

SO WHEN WE DO OUR BUDGETING, WE DO 3% INCREASE YEARLY.

SO WE WOULD BE SEEING SOME SAVINGS FROM FAST RANKING, BUT AGAIN, IT WOULD BE PAID NOW TO SAVE MONEY LATER.

SO IN THE FINANCIAL MODEL THAT DANIEL WAS LAYING OUT, THEN AS YOU SEE TWO DIFFERENT OPTIONS AND THE DECISIONS THAT YOU FACED, YOU WOULD SEE THE CONSEQUENCES OF ACCELERATING THAT IT SHOULD REFLECT ITSELF IN A REDUCED CIP IN THOSE OUT YEARS, AT LEAST AT THIS MOMENT IN TIME, CONTRASTING THOSE TWO OPTIONS AND YOU, YOU'D BE ABLE TO SEE THE BENEFITS OF DOING THAT.

SO IT'LL BE REALLY EXCITING IN LONG BEACH, UH, NEAR THE DOWNTOWN AREA.

SUPPOSEDLY FROM WHAT DANA SAID, THEY'RE GOING TO BE DOING HANDBALL THERE.

AND SO IF YOU'VE NEVER EXPERIENCED WATCHING EUROPEAN HANDBALL, I SUGGEST THAT YOU GO WATCH IT.

'CAUSE IT IS A FASCINATING SPORT THAT IS NOT PLAYED IN THE UNITED STATES.

UM, BUT IT'S A LITTLE BIT LIKE INDOOR SOCCER, A LITTLE BIT LIKE BASKETBALL ALL AT THE SAME TIME.

SO IT'S, IT IS PRETTY INTERESTING.

YES, I UNDERSTAND THAT THEY HAVEN'T ANNOUNCED ALL OF THE EVENTS.

UH, IS THERE A POSSIBILITY THAT THIS LIST COULD EXPAND OR THE VENUES COULD EXPAND? I DIDN'T WATCH OVER THE NEWS THAT I THINK THEY WERE MAKING CHANGES TO ARTISTIC SWIMMING, BUT I CHECKED THIS MORNING AND THE LA 28 WEBSITES STILL SHOWN THERE.

SO THERE IS SUBJECT TO CHANGE, BUT AT THIS POINT WE DON'T KNOW.

UH, BELIEVE WITH THE BOARD'S PLEASURE, WE HAVE MADE A MEANTIME DECISION.

WE ARE GONNA POSTPONE, UH, SECTION SIX UNTIL AFTER LUNCH.

UM, SO IF THAT IS OKAY, WE CAN MAKE THAT REARRANGEMENT.

WE WILL STILL RETURN HERE AT, UH, 1:00 PM AND CONTINUE ON WITH SECTION SIX, AND THEN WE HAVE SOME OVERFLOW TIME TO FOLLOW UP ON ANY QUESTIONS AND PRESENT OUR WRAP, IF THAT'S OKAY WITH YOU? YEP.

I DON'T KNOW IF YOU HAVE ANY MORNING SESSION CLOSING REMARKS.

ADMITTEDLY A LOT OF INFORMATION, HOWEVER, THIS 20 MINUTE SESSION WILL PROVIDE A CONCISE AND FOCUSED OVERVIEW OF GAS INFRASTRUCTURE, PROCUREMENT, AND RATE SETTING OPERATIONS, ALL AREAS THAT WE ARE NOT ONLY HIGHLY, THAT ARE NOT ONLY HIGHLY REGULATED, BUT ALSO REQUIRE SUBSTANTIAL HANDS-ON LABOR AND ONGOING COMPLIANCE OVERSIGHT.

SO AS WE BREAK FOR LUNCH, WE INVITE YOU TO ENJOY A UNIQUE SELF-GUIDED TOUR OF RANCHO LOS ALAMITOS, ONE OF LONG BEACH'S MOST CHERISH HISTORIC RODEO.

RANCHO ANTS ARE STATIONED THROUGHOUT THE GROUNDS TO SHARE INSIGHTS TO THE RANCHOS RICH HISTORY ARCHITECTURE, BEAUTIFULLY PRESERVED GARDENS.

WE WILL HAVE 90 MINUTES TO ENJOY BOTH LUNCH AND THE TOUR, SO WE ENCOURAGE YOU TO EXPLORE AT YOUR OWN PACE.

BUT PLEASE BE MINDFUL OF THE TIME.

WE WILL RESUME PROMPTLY AT 1:00 PM WITH SECTION SIX AND SECTION EIGHT, WHICH IS THE EVENT SUMMARY AND THE NEXT STEPS.

THIS FINAL SESSION IS AN IMPORTANT OPPORTUNITY TO REFLECT, ALIGN SUBSEQUENT ACTIONS AND CLOSE OUT OUR DAY TOGETHER.

SO ENJOY THE BREAK.

FOOD IS PROVIDED BY LONG BEACH'S OWN FINAL ALCHEMY AND THE SURROUNDINGS, AND WE WILL SEE YOU BACK HERE SHORTLY.

GOOD.

YOU HAVE THREE SEATS BACK AT ONE O'CLOCK.

YOU HAVE TO GO.

PRESIDENT MCGUIRE AND EVERYONE ENJOY OUR LUNCH AND TOUR.

YES, YES.

THANK YOU AGAIN TO THE RANCHO AND IT'S WONDERFUL STAFF.

UH, IN THIS NEXT SECTION, WHICH IS SECTION SIX, UH, WE WILL HEAR FROM CHUCK , DENNIS BURKE AND MYSELF, AND WE WILL PRESENT ON THE GAS DISTRIBUTION SYSTEM, INFRASTRUCTURE, PROCUREMENT, AND RATES OVERVIEW.

THIS IS

[02:30:01]

THE GOAL TODAY IS TO PROVIDE A CLEAR UNDERSTANDING OF HOW THESE OPERATIONS FUNCTION CHALLENGES THAT WE FACE AND THE STRATEGIES GUIDING OUR WORK.

WE PLAN TO RETURN TO THE BOARD THE THIRD QUARTER OF FISCAL GO YEAR 25 WITH A DEEPER LONG RANGE FINANCIAL PLANNING UPDATE.

AS ALWAYS, WE ENCOURAGE YOUR QUESTIONS AND COMMENTS, YOUR INPUT HELPS US ENSURE WE REMAIN ALIGNED WITH YOUR EXPECTATIONS.

AND PRIOR, PLEASE JOIN ME IN WELCOMING CHUCK AND DENNIS.

GOOD AFTERNOON, EVERYONE.

GOOD, AND HOPEFULLY EVERYONE HAD A GREAT LUNCH AND WONDERFUL BOOK, WONDERFUL TIME ON THE TOUR.

UH, THIS PRESENTATION WILL BE A BRIEF OVERVIEW OF THE GAS UTILITIES INFRASTRUCTURE, FOLLOWED BY A, AN OVERVIEW OF THE GAS CIP AND REGULATORY COMPLIANCE.

AN ESSENTIAL ELEMENT OF THE GAS UTILITIES INFRASTRUCTURE IS THE MATERIAL USED FOR THE PIPELINE AND FOR THE UTILITY.

WE HAVE TWO OPTIONS.

PE PLASTIC FOR STEEL, PE OR POLYETHYLENE IS PRIMARILY USED FOR NEW INSTALLATIONS DUE TO LOWER MATERIAL COSTS, THE EASE OF INSTALLATION AND ITS NON-CORROSIVE PROPERTIES.

WHILE STEEL IS USED FOR LARGE DIAMETER PIPE INSTALLATIONS, TYPICALLY EIGHT INCHES IN DIAMETER OR GREATER.

AS FAR AS, UH, INSTALLING PIPELINE, WE ALSO HAVE TWO OPTIONS, HORIZONTAL DIRECTIONAL DRILLING, HT D AND CONVENTIONAL TRANS EXCAVATION.

HT D IS ESSENTIALLY DONE BY DIGGING TWO HOLES, UH, TWO HOLES RIGHT THERE.

UH, THE DRILLING RIG ENTERS THE, UH, THROUGH THE FIRST HOLE AND ENDS IN THE SECOND HOLE WHERE THE PIPE IS WA TO BE COLD.

AND DD IS THE PREFERRED METHOD OF IN, UH, FOR NEW INSTALLATIONS.

IT'S BECAUSE OF, UH, THE QUICKER INSTALLATION AND IT'S LESS INTRUSIVE TO THE PUBLIC.

HOWEVER, HDD CANNOT BE USED ON SHORTER PIPE INSTALLATIONS OR WHEN MANY UNDERGROUND LINES BLOCK THE PATH OF INSTALLATION UNDER GROUND.

AND THIS IS SIMPLY ONE OF THE DIMENSIONAL, UH, APPROACHES USED.

NOW, ONE OF THE ELEMENTS OF THE GAS INFRASTRUCTURE THAT PRESENTS MANY UNIQUE CHALLENGES TO THE UTILITY IS THE PLACEMENTS OF METERS, WHICH ARE PRIMARILY LOCATED ON CUSTOMER PROPERTY ABOVE GROUND NEXT TO THE BUILDING AND OFTEN BEHIND LOCKED GATES AND NOT READILY ACCESSIBLE TO LVU STAFF.

BECAUSE OF THIS, IT TAKES MUCH LONGER, REQUIRES MULTIPLE VISITS AND MORE NOTIFICATIONS SIMPLY TO GAIN ACCESS TO THE METER, WHICH IS NEEDED BY LVU STAFF TO DO CORROSION SURVEYS AND LEAD SURVEYS, MEN MANDATED BY REGULATION.

UH, IN THE PAST THIS WASN'T AS MUCH OF AN ISSUE BECAUSE WE HAD METER READERS WALKING THE CITY EVERY MONTH.

CITY, UH, IT IS VISITING THE CUSTOMER EVERY MONTH, BUT WITH THE ADVENTS OF A MI OR AUTOMATED METER READING, UH, CUSTOMERS HAVE BEEN LESS WILLING TO PROVIDE ACCESS.

SO THIS LA THIS LAST SLIDE REGARDING GAS INFRASTRUCTURE IS ABOUT HOW WE PROVIDE GAS TO CUSTOMERS AT A SAFE AND LOW PRESSURE.

IN ESSENCE, ALLY RECEIVES GAS INTO THE SYSTEM GAS AT 400 TO A 100 TO 400 BSI.

THE GAS TRAVELS THROUGH THE INFRASTRUCTURE WHERE IS SYSTEMATICALLY BROUGHT DOWN IN PRESSURE AND ULTIMATELY ENDS, UH, ENDS UP WITH THE CUSTOMER AT A, AT THE SAFE AND LOW PRESSURE OF A QUARTER.

PSI.

THESE LAST SLIDES WILL PROVIDE A BRIEF OVERVIEW OF GAS, CIP AND REGULATORY COMPLIANCE, STARTING WITH THE CIP, THE ANNUAL SPEND ON GAS, CIP IS APPROXIMATELY $16 MILLION.

41% OF THAT GOES TOWARDS PIPELINE REPLACEMENT AT 6.6 13%.

UH, GOES TOWARDS METER REPLACEMENT AT 2.2, ABOUT THE SAME AMOUNT GOES TOWARDS, UH, UH, SEWER CROSS FOR INSPECTIONS.

AND LASTLY, 31% GOES TOWARDS, UH, BILLABLE PROJECTS, PRIMARILY DUE TO PIPELINE OR LOCATION WORK BEING DONE FOR THE PORT OF LONG BEACH, UH, PORT OF LONG BEACH'S PEER B RAIL EXPANSION PROJECT.

THIS SLIDE PROVIDES A SUMMARY OF THE FACTORS CONSIDERED

[02:35:01]

IN DEVELOPING CIV PROJECTS.

THE LARGEST CONTRIBUTING FACTOR IS LEAKAGE HISTORY.

SO SECTIONS OF THE SYSTEM THAT ARE CONTINUOUSLY BEING REPAIRED FOR LEAKS ARE TOP CANDIDATES FOR, UH, CIP PIPELINE REPLACEMENT.

ALSO, FAILURES IN THE SYSTEM FOUND THROUGH MANDATED INSPECTIONS ARE CONSIDERED FOR CIP SELECTION.

AND AS MENTIONED IN THE PREVIOUS SLIDE, UH, SPECIAL PROJECTS SUCH AS SEWER CROSS FOR INSPECTIONS AND METER REPLACEMENT, METER REPLACEMENTS ARE MAJOR CIP PROGRAMS. AND LASTLY, A PIPELINE RISK SCORING MODEL AND SOFTWARE PROGRAM MAINTAINED BY THE THE UTILITY IS ALSO CONSIDERED, UH, WHEN SELECTING FOR CIP.

RIGHT, SO THIS IS THE FINAL SLIDE.

IT PROVIDES A QUICK SNAPSHOT OF REGULATORY COMPLIANCE FOR THE UTILITY.

MUNICIPAL GAS UTILITIES AND, UH, MUNICIPAL GAS OPERATORS IN CALIFORNIA ARE OVERSEEING AND REGULATED BY THE FEDERAL DEPARTMENT OF TRANSPORTATION THROUGH ITS AGENCY MSO, UH, WHICH STANDS FOR PIPELINE AND HAZARDOUS MATERIAL SAFETY ADMINISTRATION.

THE CPC AND CPUC REGULATIONS DO NOT APPLY TO MUNICIPAL GAS OPERATORS.

HOWEVER, UH, AUDITS ARE CONDUCTED BY THE CPUC ON BEHALF OF MSO UNDER, UH, FEDERAL REGULATIONS.

AND SHOWN HERE IS A LIST OF, UH, ALL THE REQUIRED SAFETY PROGRAMS THAT GAS OPERATORS ARE, UH, MANDATED TO FOLLOW.

UM, I'M NOT GONNA GO OVER EACH ONE OF THESE.

THE MAIN TAKEAWAY IS THAT KNOW, THE GAS INDUSTRY GAS OPERATORS ARE HEAVILY REGULATED.

EACH OF THESE PROGRAMS HAVE MANY REQUIREMENTS WITHIN AND ARE ALSO AUDITED INDIVIDUALLY BY FMSA.

AND THAT'S, UH, REALLY THE OVERVIEW.

I CAN TAKE ANY QUESTIONS THERE.

ANY GOTCHA.

YEAH, I WAS GONNA SAY, WE'RE GONNA TAKE QUESTIONS ON THIS SECTION FIRST BECAUSE THE NEXT SESSION, IT'S A LITTLE BIT, UH, DRAMATICALLY AS WE GET INTO RATE.

SO ANY QUESTIONS ON THE DISTRIBUTION INFRASTRUCTURE, PASSING THAT ON, ON THE PREVIOUS SLIDE, YOU HAD THE REASONS FOR THE CIP.

CAN YOU JUST SHARE A LITTLE BIT, BIT OF INSIGHT AS TO WHAT GOES INTO A CATHODIC PROTECTION INSPECTION? SURE.

SO, UH, CATHODIC PROTECTION, UH, JUST, UH, REWINDING CATHODIC PROTECTION IS NEEDED TO PROTECT OUR STEEL PIPELINES THAT ARE UNDERGROUND.

UM, I JUST KIND OF SIMPLY STATED, IT'S, YOU WOULD, UH, APPLY ELECTRICITY ON A VERY, VERY LOW VOLTAGE, ELECTRIC ELECTRICITY ONTO THE PIPE SO THAT IT BECOMES LESS, UH, SUSCEPTIBLE TO CORROSION IN AN INSPECTION.

UM, THEY WOULD, UH, TAKE MEASUREMENTS, THEY CALL IT A PIPE TO SOIL.

THEY WOULD MEASURE A CONNECTION TO THE PIPE AND THEN A CONNECTION TO THE SOIL.

AND THEY WOULD GET A VOLTAGE READING.

AND DEPENDING ON THE VOLTAGE READING IT, IT WOULD TELL YOU, YOU KNOW, HOW SUSCEPTIBLE IT IS, CORROSION, IF IT'S DOING REALLY WELL, IF THE HEALTH OF THE, THE STEEL IS, IS WELL OR NOT.

UH, SO THERE'S THAT, THAT ASPECT OF THE INSPECTION.

THERE'S ALSO THE INSPECTION OF THE, WHAT, WHAT WE CALL THE RECTIFIER.

I, I SEE IT AS A BOX THAT SHOOTS THE ELECTRICITY ONTO THE PIPE.

THERE'S INSPECTIONS OF THOSE, MAKING SURE THAT THOSE ARE WORKING WELL TOO AS WELL.

AND BASED ON THAT, LET'S SAY IF UH, A RECTIFIER ISN'T ON PUTTING ENOUGH CORROSION, THEN THAT WOULD, YOU KNOW, THAT RECTIFIER WOULD BE PLACED IN THE CIP REPLACEMENT PROGRAM.

GOT IT.

CAN YOU TALK A LITTLE BIT ABOUT THE SEWER CROSSBO, UH, PROGRAM AND WHAT, WHAT DOES THAT PROGRAM ENTAIL? YES, UH, FOR SURE I TOLD, SO THE SEWER CROSSBO INSPECTION PROGRAM, IT IS A MAJOR PROGRAM.

UM, I BELIEVE THAT KEVIN HAS PRESENTED, UH, TO THE BOARD IN THE PAST.

UH, ESSENTIALLY, UH, WE'RE INSPECTING SEWER PIPE, WE'RE INSPECTING IT, UH, TO MAKE SURE THAT THERE ISN'T ANY GAS THAT'S INTRUDED IN GOING THROUGH THAT PIPE.

AND, YOU KNOW, IN THE PREVIOUS SLIDES WE TALKED ABOUT HDD, THAT'S WHAT CAUSES, THAT IS WHAT CAUSES SEWER CROSS FORCE BECAUSE WE USE THAT METHOD AND THAT, THAT THIS PROGRAM ENSURES THAT WE DON'T HAVE ANY OF THOSE IN OUR SYSTEM.

COMMISSIONER SCOTT.

I, I, I WAS ACTUALLY GONNA FOLLOW UP ON THAT WITH THE SEWER CROSSWALK IT WE'RE TRYING TO INSPECT EVERY SEWER LINE IN THE CITY.

IS THAT, IS THAT WHAT I UNDERSTAND IS THAT PROPER WE'RE INSPECTING, UM, THE SEWER LINES WHERE WE DID HB, UH, USED HT D, SO NOT, UH, ALL SEW LINES AND WE'RE, UH, INSPECTING MOSTLY LATERALS, NOT, UH, MAINS.

UH, SO WE HAVE A COLLECTION OF PROPERTIES IN THE SYSTEM WHERE WE, WE KNOW WE USE HT D AND WE'RE GOING TO THOSE ONE AT ONE AT A TIME AND CLEARING THOSE ONE AT A TIME.

DO YOU KNOW ABOUT WHAT PERCENTAGE WE'VE COMPLETED THAT? UH, I'M NOT SURE WHAT THE PERCENTAGE IS.

UH, AT ONE POINT WE HAD A COLLECTION OF ABOUT 30,000, UH, PROPERTIES.

NOW WE'RE DOWN TO 25,000.

SO I, I

[02:40:01]

CAN'T BE MENTAL MATH.

WE'VE GOT A FEW MORE YEARS TO GO ON THAT.

AND THEN THE METER REPLACEMENT PROGRAM, IS THAT JUST METERS THAT AGE OUT OR IS THAT AN UPGRADE TO, UH, BETTER METERS? YES.

CORRECT ME IF I'M WRONG FROM, YOU KNOW, FROM THE METER GROUP.

SO, UH, THAT IS BEING DONE BECAUSE, UH, OUR METERS HAVE A, A SHELF, LIKE THE BATTERY SPECIFICALLY SHELF.

AND UH, I BELIEVE THAT THEY HAVE A 2020 YEAR, OR 10, 10 YEAR 20 YEARS.

INSTEAD, THANK YOU FOR THAT REASON.

OKAY, GREAT.

THANKS.

UH, COMMISSIONER CORD.

GOOD QUESTION.

HOW, HOW ARE LEAKS REPORTED BY THE PUBLIC THAT, HOW DO THEY COME INTO US? UM, SO LEAKS ARE REPORTED, UH, FROM THE PUBLIC.

UH, THEY, WE HAVE A, AN EMERGENCY NUMBER THAT THEY WOULD CALL IT, UH, CONNECTS THEM DIRECTLY TO OUR GUEST DISPATCH.

AND OUR GUEST, UH, DISPATCH TAKES THOSE, THAT INFORMATION AND SENDS OUT A CUSTOMER SERVICE REPRESENTATIVE TO INVESTIGATE.

UH, THAT IS REALLY THE PRIMARY, UH, WAY THAT CUSTOMERS CAN CALL IN WEEKS.

AND THEN I'M, I'M ASSUMING THAT WHEN WE DO OUR SURVEYS, THAT WE OBVIOUSLY CAN FIND OUR OWN BEFORE THEY CALL IN.

IS THAT CORRECT? I, I, I, I AGREE.

IDEALLY WE WOULD FIND THOSE LEAKS BEFORE THE CUSTOMER FINDS THEM.

AND I WOULD SAY WE PRIMARILY FIND THEM BEFORE, I KNOW WE CAN'T FIND EVERYTHING, BUT I, I WOULD SAY MORE, MOST OF OUR LEAKS ARE FOUND BY US.

S THANK YOU, CHUCK.

ALRIGHT, NEXT UP I'LL INTRODUCE MY COLLEAGUE, DENNIS BUR, AND HE'S GONNA TALK A LITTLE BIT ABOUT HOW WE PROCURE THE GAS AND HOW WE WORK WITH THE RATES.

GOOD AFTERNOON.

HOPEFULLY NOT TOO FULL.

AND MOVE CALL RIGHT NOW WE CAN LITTLE.

SO GAS REQUESTED APPROXIMATELY $4.4 BILLION.

TODAY WE'RE GONNA LOOK UP THE GAS RATE STRUCTURE.

UM, THESE ARE THE RATES WE CHARGE CUSTOMERS, UH, FOR THEIR GAS SERVICE.

UH, THERE'S A COMMODITY RATE, BASIC RATES.

WE CHARGE FOR THE COMMODITY ITSELF AND GET THE GAS FROM OUR INTO OUR SYSTEM.

THERE'S THE CAP AND TRADE RATE.

UH, THIS IS THE RATE CHARGE THE CUSTOMERS TO COVER THE COST OF THE 80 32 PROGRAM.

THERE'S A TRANSMISSION RATE.

UH, THESE ARE THE RATES TO CHARGE, TO TRANSPORT THE GAS THROUGH OUR SYSTEM TO THE END NEWS CUSTOMER.

AND FINALLY, THERE'S A DAILY SERVICE CHARGE, UH, WHICH WE ALSO CALL THE METER FEE.

UM, THIS IS NOW PAID FOR THE METERS AND THE COST OF SERVICE S UM, THE FIRST BUSINESS DAY OF EACH MONTH.

UH, WE CALCULATE THE COMMODITY CHARGE, UH, WHICH IS COVERING THE COST OF PURCHASING THE ACTUAL GAS ITSELF AND THE ESSENTIALLY COST OF GETTING GAS.

OUR SYSTEM, UH, THE COMMODITY CHARGE IS A PASS THROUGH THE CUSTOMERS, MEANING WHAT WE PAY IS WHAT THE CUSTOMERS PAY.

UH, THE ANCE OF THE THE COMMODITY CHARGE INCLUDE, UH, THE GAS SUPPLY ITSELF.

WE RECEIVE GAS FROM SEVERAL, UH, SOURCES, INCLUDING THE PREPAID VOLUMES FROM MERRILL LYNCH, UH, GAS FROM LOCAL PRODUCERS, BIOFUEL, WHICH IS ALSO KNOWN AS RENEWABLE NATURAL GAS.

THERE'S ADDITIONAL GAS PURCHASE THAT VIEW ON THE DAILY MARKET.

AND FINALLY, THERE IS STORAGE GAS.

UM, WHILE ALL OF THESE SOURCES OF GAS ARE PRICED A LITTLE DIFFERENTLY, THEY ARE ALL BASED ON FIRST MONTH MARKET INDEX PRICES, UM, AND THERE'S STORAGE COSTS.

NOW, THIS ISN'T THE COST OF THE GAS ITSELF.

THIS IS THE COST OF US TO MAINTAIN STORAGE RIGHTS ON THE TEL GAS SYSTEM.

UM, IN FACT, A COUPLE WEEKS AGO, THE BOARD OF FOOD GETTING INTO A NEW STORAGE CONTRACT WITH SOCAL GAS, UM, AND THAT BECOMES INFECTED ACTUALLY TOMORROW.

UM, THERE'S ALSO A RECEIPT POINT RIGHTS, UH, IN ORDER FOR GAS TO GET INTO THE SOCAL GET SYSTEM.

FIRST WE NEED TO RESERVE RICE, UH, AT DIFFERENT RECEIPT FUNDS, WHICH IS LIKE THESE LITTLE RED DOTS IN HERE.

SEE THAT.

UM, SO THAT'S A, THAT'S A COST.

UM, THEN THERE'S TRADING COSTS.

UM, I, THE PREPAID AGREEMENT, MERRILL LYNCH IS RESPONSIBLE FOR GETTING OUR PREPAID VOLUMES TO THE BORDER.

THEN THERE'S, UH, TRADING COSTS.

WE GET IT FROM THE ORDER, BUT WILL FIND THE LEGS TO VARIOUS RECENT CLIENTS.

UM, THEN THERE'S, UH, OUR SWAP OF GRIEVANCE

[02:45:01]

WITH GOLDMAN SACHS.

UM, A GOOD WAY TO LOOK AT THESE IS KIND OF LIKE INSURANCE.

UM, IT SAYS A CEILING ON THE AMOUNT OF, UM, THE PRICE WE PAID FOR THE COMMODITY.

UH, IN OTHER PRESENTATIONS YOU PROBABLY HEARD THE CUSTOMERS OF LONG BEACH ARE MOST PROTECTED OF ANY GAS UTILITY IN CALIFORNIA.

THAT WOULD BE BECAUSE OF THESE GOLDMAN SACHS AGREEMENTS.

FINALLY, THERE IS A SHELL ENERGY STORAGE FEE.

UH, THIS IS JUST A SMALL FEE WE'RE CHARGED EVERY MONTH BY SHELL ENERGY.

AND WHAT THEY DO IS THEY, UM, MAINTAIN, UM, THE GAS INTERSTATE SOURCES COMING IN TO CALIFORNIA AND TO THE RECEIPT BOX.

THE CAP AND TRADE PROGRAM, ALSO CALLED 80 32, IS ADMINISTERED BY THE CALIFORNIA AIR RESOURCES BOARD, WITH THE PURPOSE OF REDUCING GREENHOUSE GAS EMISSIONS.

COMPLIANCE OF THIS PROGRAM BEGAN IN 2015.

THE COST OF THIS PROGRAM CONTINUALLY ESCALATING, UH, SINCE WE HAD TO BEGINNING IMPORTING.

UM, THIS CAUSES US TO HAVE TO RAISE THE RATES FOR THE CAPITAL PROGRAM ABOUT ONCE A YEAR TO CUSTOMERS.

UH, THE CITY AS A WHOLE, AMIDST OF 500,000 METRIC TONS OF CARBON DIOXIDE ANNUAL, THE WAY THE PROGRAM WORKS IS, UM, RELEASE RETRO OF TIME OF CARBON DIOXIDE THAT'S EMITTED FROM THE BURNING OF NATURAL GAS.

LONG BEACH UTILITIES IS RESPONSIBLE OF FOR OBTAINING ONE CARBON ALLOWANCE.

AND THIS IS DONE THROUGH A MARKET-BASED PROXY PLATFORM.

AFTER REACHING A HIGH OF ABOUT $42 PER ALLOWANCE IN FEBRUARY 24, UH, PRICES HAVE SETTLED DOWN TO ABOUT $30 IN THE LAST AUCTION AUCTION.

SO JUST DOING THIS SIMPLE MATH OF 500,000 METRIC TONS MULTIPLIED BY ALLOWANCE PRICE, YOU CAN SEE IT PROGRAM COST BETWEEN 15 AND $20 MILLION A YEAR, GAS TRANSITION AND SERVICE RATE.

UM, TO GIVE YOU THE EXACT ORDER FROM MUNICIPAL, FROM THE MUNICIPAL CODE IN SCHEDULE, NATURAL GAS RATES MEANS CHARGES, WHICH ARE REASONABLE AND COMPARABLE TO RAISE MUNICIPAL CHARGES BY OTHER BLACK UTILITIES IN THE SOUTHERN CALIFORNIA AREA.

THESE RATES NEED TO BE APPROVED BY THE UTILITIES BOARD, AND IT IS THE LARGEST SOURCE OF REVENUE TO THE GAS FUND, WHICH IS USED TO, UM, FUND OPERATIONS AGAINST THE TRANSFER TO THE GENERAL FUND.

THESE RATES ARE BENCHMARK AGAINST, UH, SOCAL GAS AND FOR SEVERAL REASONS.

UM, WELL, ONE, IT'S BENCHMARKED TO LIFE UTILITIES IN SOUTHERN CALIFORNIA, AND SOCAL GAS ALMOST CONTROLS THE ENTIRE SOUTHERN CALIFORNIA AREA.

SO IT JUST MAKES SENSE IS TO BE BENCHMARK WITH THAT.

UM, AND THE REASON IS WE HAVE SIMILAR OPERATIONS AS SO CALLED GAS.

UH, MY SYSTEM CLIMATE, I MEAN LIKE TEMPERATURES, UM, IN SOUTHERN CALIFORNIA.

SO THEIR LOW PROFILE IS VERY SIMILAR TO OURS.

SO IN SENSE, SOME BANKS PRODUCT THAT, SO HOW DO, SO GAS SET THEIR RATES.

SO EVERY FOUR YEARS THEY HAVE DO BEFORE THE CALIFORNIA PUBLIC UTILITIES COMMISSION, UH, AND A LATE ALLOCATION PROCEED.

THERE'S TWO PHASES TO THIS, UH, IN THE FIRST PHASE, SO GAS REQUESTING AUTHORITY TO COLLECT A CERTAIN AMOUNT OF MONEY, UH, FROM CUSTOMERS IN ORDER TO FIND THE OPERATIONS AND THEIR SHAREHOLDERS IN 2024.

CPC EXAMINES, IF THIS IS A REASONABLE AMOUNT.

AND ANY OF THESE HAVE, HAVE A RIGHT TO PROTEST THROUGH PHASE TWO.

UH, PHASE TWO DETERMINES INTELLIGENCE COSTS ARE GONNA BE ALLOCATED.

AND IN THIS CASE IT'S $4.4 BILLION INTELLIGENCE GONNA BE ALLOCATED AMONG THE 50 CLASSIFICATIONS AND TIERS.

ENTITIES HAVE A, UM, HAVE THE ABILITY TO PROTEST DURING THIS PHASE.

AND THIS IS WHERE OUR ATTORNEYS COME IN, THEY MONITOR THESE PROCEEDINGS.

AND IF LONG BEACH IS DISPROPORTIONATELY BURDENED BY AN INCREASE IN OUR TRANSMISSION RATES OR OUR SOURCE SPECIFIC STORAGE RATES, UH, THEN OUR ATTORNEYS, ALONG WITH LONG BEACH UTILITY STAFF, UH, CAN PROTEST.

AND THAT BY PRESENTATION

[02:50:03]

, WE ANTICIPATE ANY QUESTIONS.

WE KNOW GAS, UH, SEGMENT OF OUR OPERATIONS IS SORT OF A NEW COMPONENT, UH, OF YOUR OVERSIGHT.

SO WE'RE HERE TO ANSWER ANY QUESTIONS THAT YOU MAY HAVE.

CAN YOU, CAN YOU HELP ME UNDERSTAND, YOU SAY DISPROPORTIONATELY BURDENED, HOW WILL WE BE DISPROPORTIONATELY BURDENED FROM A SOCAL GAS RATE? IT'S SORT OF LIKE, OKAY, LIKE IF THEY, THEY NEEDED LIKE $4.4 MILLION, THEY CAN GET THAT FROM ANY OF THEIR RATE CLASSIFICATIONS.

SO THEY MIGHT SAY, HEY, YOU KNOW WHAT, WE NEED TO COLLECT A BILLION OF THIS FROM LONG BEACH, SO WE'RE GOING TO EXAGGERATE, BUT SO WE'RE REALLY GONNA INCREASE LONG BEACH'S TRANSMISSION RATE.

UM, SO THAT'S WHAT I MEAN BY DISPROPORTIONATELY PUTTING COSTS ONTO OUR SPECIFIC RATES.

SO IT WOULD GO FROM LIKE 8 CENTS A DECATHERM, IN MY CASE IT WOULD GO, YOU KNOW, 30 CENTS A DECATHERM, WHICH WOULD BE JUST OUTRAGEOUSLY TWO BATCHES.

SO SOME OF THAT EXTRA BILLION WOULD NEED TO GO TO OTHER CUSTOMERS TOO, ALONG WITH BONDAGE, IF THAT MAKES SENSE.

NEGOTIATED TO TO SOME EXTENT BECAUSE ALL OF THESE COSTS ARE, ARE SHARED FROM USUALLY, UM, THE EASTERN SIDE OF THE COUNTRY.

YOU'D YOU'D BE SURPRISED, UH, WHEN YOU HIRED, UH, THE LAW FIRM OF DWGP LAST DECEMBER.

THEY ARE THE WATCHDOGS OF THIS.

OF COURSE, DENNIS AND I ARE LOOKING AT THE DAILY, UH, HEARING NOTICES AND PROCEEDING NOTICES.

BUT THIS, THESE ACTIONS ARE CONSTANT AND IT IS NOT UNCOMMON FOR, UH, THE INCUMBENT UTILITY, SOCAL GAS IN OUR CASE, TO ALLOCATE RATES IN A DISPROPORTIONATE MANNER AND MIGHT BURDEN RESIDENTIAL CUSTOMERS OR C AND I CUSTOMERS DISPROPORTIONATELY TO OTHERS.

SO WE HAVE TO BE CONSTANTLY VIGILANT TO WATCH HOW THEY'RE ALLOCATING THESE COSTS.

COST IS IN EXPLAINING THAT'S A BATTLE IN ITSELF TO GET THESE COSTS.

THEY TRY TO INCREASE PRICES AS MUCH AS THEY CAN.

ALL KINDS OF WATCHDOG GROUPS ARE MONITORING THAT, INCLUDING US, AND THEN THEY, UH, ALLOCATE THOSE COSTS UNDER OUR WATCH AS WELL.

I AM CAN YOU GIMME EXAMPLE OF, UM, THE PREMIUM? SURE.

OH YEAH.

UH, YEAH, THAT WAS ACTUALLY THE TRADING COST I SPOKE ABOUT.

UM, SO THE PREMIUM, UM, I CALL TRAINING MICROPHONE.

HI DENNIS.

UM, YEAH, THE TRAINING COSTS, UM, THE PREMIUM DRAIN COSTS, I ONLY ONE AND THE SAME.

AND IT IS TO GET THE GAS, LIKE I SAID, MERRILL LYNCH GETS INTO THE BORDER, SO THERE'S NO COST.

UM, THERE IS A COST FOR THIS LITTLE FINAL STRETCH FROM THE BORDER TO THERE.

AND THAT'S WHAT WE'VE BEEN CALLING THE PREMIUM SLASH TRADING COST.

IT'S KIND OF TWO WAYS YOU CAN GO ABOUT THAT.

YOU COULD OPINION PIPELINE, RIGHT? ACTUAL ON PIPELINE OR ON FACEBOOK CODE GAS PIPELINE.

BUT THAT WOULD BE JUST PROHIBITIVELY EXPENSIVE.

SO IT IS CHEAPER TO ORDER SPECIFIC WIPE, IF THAT MAKES, YEAH, I, I, BEFORE THE LAST, UM, COST ALLOCATION PROCEEDING B AND I GUESS A COUPLE OF AMENDMENTS AGO, GO BACK TO THE BEGINNING OF THE PREPAID CONTRACT.

THERE WAS NO PREMIUM.

UM, AT THE BEGINNING OF OUR GAS PAY PREPAID CONTRACT ABOUT 15 YEARS AGO, THE, THE TOTAL COST OF GAS WAS INCLUDED IN THE PRICE THAT WE HAD SET TO BEGIN WITH.

UM, BUT THE, THE LONG-TERM CONTRACT IS A 30 YEAR CONTRACT.

AND HALFWAY THROUGH, UM, ALONG THESE PIPELINES, THERE ARE MULTIPLE USERS OF THE PIPELINES THAT BRING GAS IN.

SO THERE'S CONTRACT THAT EXPIRED AND, AND MERRI FELT THEY WERE NOT RESPONSIBLE FOR RENEWING IT AND BEARING THE COSTS ON OUR BEHALF.

SO THEN WHAT ENDED UP HAPPENING WAS THAT LONG BEACH UTILITIES, OR LONG BEACH GAS AT THE TIME ENDED UP PAYING A PREMIUM AND, AND THE PREMIUM WAS PRETTY HIGH.

UH, AT ONE POINT THE PREMIUM WAS IT MILLION DOLLARS A A MONTH, UM, $2 MILLION AT THE HIGHEST.

SO WHEN, UM, SO THAT WAS IN THE COST ALLOCATION PERIOD PREVIOUS TO WHERE WE ARE NOW.

SO 2023, UM, WE MERGED AND WE WERE GOING INTO A NEW TCAP CYCLE AND WE LOOKED AT ALL OF THE DIFFERENT COST COMPONENTS OF THE GAS AND WE SAID, OKAY, THIS, THIS JIVES THIS, THIS IS FAIR.

UM, OKAY, THIS MAKES SENSE.

UM, WHAT IS THIS PREMIUM? IT DOESN'T FEEL VERY PREMIUM TO ME, AND, AND WHY IS IT SO HIGH AND, AND WHERE DID IT COME FROM? AND SO THOSE ARE THE TYPES OF COSTS THAT WE'RE CONSTANTLY EVALUATING AND CAN BE, UM,

[02:55:03]

AND AS THE GAS MAKES ITS WAY TO US, THERE ARE NUMEROUS AGREEMENTS, SOME OF WHICH WE ARE PARTY TO, MANY OF WHICH WE ARE NOT ALL, WHICH INCLUDE COSTS THAT WE EVENTUALLY END UP BEARING AS THE COST OF GAS COMING INTO LONG BEACH.

SO THAT'S ONE EXAMPLE OF A, A DISPROPORTIONATE BEARING OF THE COST THAT WE HAVE SINCE MITIGATED.

BUT AGAIN, IT WAS ONE COMPONENT.

ALL OF THESE ARE DIFFERENT LEVERS THAT GAS SUPPLY CHAIN CAN, CAN ACTIVATE IN ONE WAY OR ANOTHER TO MAKE UP REVENUES THAT THEY MAY HAVE BUDGETED FOR THAT COULD BE FALLING SHORT.

AND EACH ONE OF THESE, UM, SEQUENCE, THERE'S A SLIGHTLY DIFFERENT PRICE ATTACHED TO IT.

UM, SOME ARE MORE EXPENSIVE AND SOME ARE CHEAPER.

UH, WE WERE ABLE TO GET IN THIS LAB BECAUSE EVERY THREE YEARS WE HAVE TO RENEW OUR PIPELINE, RIGHT? UM, AND DURING THIS LAST ROUND, WHICH WAS ABOUT A YEAR AND A HALF AGO, WE WERE ABLE TO GET PIPELINE RECEIPT POINTS, UH, AT THE CHEAPEST FUNDS.

SO, AND UNTIL THE, THE NEW CONTRACT COMES ABOUT IN ABOUT TWO YEARS, UH, WE'VE LOCKED INTO A PRETTY LOW PREMIUM OR TRAINING COST.

AND I WANNA SAY, I MEAN THAT, THAT TAKES A FAIR AMOUNT OF WORK THAT, AS DIANA SAID, THERE'S A FAIR AMOUNT, UH, OF NEGOTIATION.

WE, WE HAVE WITH THIS, UH, WHEN MERRILL LYNCH, WHO IS THE PROVIDER OF OUR P PREPAID AGREEMENTS, WHEN THOSE UPSTREAM RIGHTS, THEY HAVE PURCHASED LICENSING ON PIPELINES TO GET IT TO THE BORDER, WHICH THEY NO LONGER DO.

SO WE HAVE TO WORK VERY CLOSELY WITH THEM IN ORDER TO GET THAT PREPAY GAS TO THE CHEAPEST, MOST RELIABLE RECEIPT POINTS.

AND THAT TAKES A FAIR AMOUNT.

LABOR, ANYTHING, OH, I CAN GRAB ON AND ON ABOUT THIS TOO, HOW SILICON GAS DOES MAINTENANCE AT THESE RECEIPT POINTS.

UM, SO, UM, YEAH, A LOT OF IT ALSO WHERE WE GET OUR GAS DELIVERED DEPENDS ON WHERE SILICON GAS IS DOING AS MAINTENANCE.

UH, WE'VE GOT LIKE NEEDLES, THAT'S OUR CURRENT ONE, BUT THEY WERE DOING, UH, WORK AT THE NEEDLE'S RECEIPT POINT, THEN GAS GETS CUT FROM THERE AND THEN WE DON'T RECEIVE OUR DASH FROM MERRILL LYNCH OR WE CAN DELIVER IT TO A DIFFERENT RECEIPT POINT AND A MUCH HIGHER RATE BRINGING UP THE PREMIUM OR TRADING COSTS.

OH, GO AHEAD.

SO KIND OF TALK A LITTLE BIT MORE ABOUT THAT.

IF I REMEMBER CORRECTLY, THE PREPAY IS ROUGHLY AROUND 80% OF OUR SUPPLY.

HOW MANY MORE YEARS DO WE HAVE ON THE PREPAY AGREEMENT? AND THEN WHAT HAPPENS AFTER THAT PREPAY AGREEMENT EXPIRES? WELL, IT GOES UNTIL NOVEMBER, 2037.

AND WE'RE ALREADY ALREADY TALKING.

GOLDMAN SACHS HAS ALREADY BEEN TALKING TO US.

THEY REALLY WANNA, UM, GET INTO A NEW PREPAID DEAL.

YOU KNOW, STILL IN THE PRELIMINARY STAGES WE'RE NOT COMMITTING ANYTHING.

UM, YEAH, AND IT'LL BE STRUCTURED A LOT LIKE THE ONE NOW WHERE WE GET A DISCOUNT OFF OF THE INDEX PRICE.

GOODNESS.

SO ON, ON AB 32, YOU HAD A CALCULATION THERE AND YOU SAID THAT IT WAS ESTIMATED OR CALCULATED TO BE 500 METRIC TONS.

CORRECT? 500,000.

500,000.

SO WHO OR HOW IS THAT CALCULATION MADE? BECAUSE THAT WHAT, THAT'S WHAT COMPLETES THE MATH, DOES IT? NOT WITH THE ALLOWANCE.

IT'S THE ESTIMATE OF METRIC TONS, RIGHT? YEAH.

UM, ACTUALLY THOUSANDS OF METRIC TONS.

SORRY.

ACTUALLY THE EPA, BOTH EPA AND CAR HAVE A ONLINE TOOL.

UH, WE HAVE, YOU ARE REPORTING EVERY HERE, SO YOU HAVE TO BREAKDOWN BETWEEN SECTOR, LIKE THIS ONE'S CLOSER TO OUR RESIDENTIAL, THIS ONE'S CLOSER OUR GENERATION.

AND YOU PUT IN ALL THE INPUTS OF GAS CONSUMED AND IT BASED LIKE A FORMULA OUT OF IT THAT CALCULATES 500,000 .

SO IT'S THE UTILITIES OFFERING IT FOR OUR SERVICE AREA.

YES, IT IS FOR OUR SERVICE AREA FOR GOT IT.

FOR GREAT CUSTOMER THAT BURNS NATURAL GAS.

THAT WHAT, YEAH, THE WHOLE PURPOSE, AND YOU MIGHT HAVE COVERED THIS EARLIER, AB 32 IS BASICALLY A PRICE SIGNAL.

AND THAT PRICE SIGNAL IS TO INCREASE THE COST OF GAS FOR THE AVERAGE CUSTOMERS TO INCENTIVIZE THEM TO USE LESS.

AND SO CITY OF LONG BEACH, THIS UTILITY EMITS BY SELLING GAS TO ITS CUSTOMERS EMITS ABOUT 500,000 METRIC TONS OF CO2 ANNUALLY.

WE HAVE TO PURCHASE AN ALLOWANCE FOR EACH OF THOSE METRIC TONS OF ADMITTED COST OF THAT ALLOWANCE IS CONTINUALLY INCREASING.

THAT PRICE SIGNAL

[03:00:01]

GETS PASSED ON TO CUSTOMERS IDEALLY TO INCENTIVIZE THEM TO USE LESS.

PROBLEM IS SOMETIMES GAS IS IN ELASTIC, RIGHT? WE CAN ONLY USE THAT SO MUCH AND IT DOESN'T WORK PAST THERE.

SO TO DATE, CARBS RESPONSE IS JUST TO KEEP TWISTING THAT SCRIPT, TO KEEP INCREASING THOSE PRICES TO TRY TO DRIVE DOWN CONSUMPTION.

BUT IT'S ONLY WORKED TO A LIMITED EXTENT.

AND TO GIVE YOU AN IDEA, AT THE BEGINNING OF THE PROGRAM IN 2015, THE CAPTAIN TRADE RATE WAS TWO AND ABSENT A THIRD, UH, IT'S NOW UP TO 18 CENTS A THIRD AND INCREASING AND INCREASING.

BUT, UH, THE GAS CONSUMPTION REALLY HASN'T DECREASED A WHOLE LOT OF THEAS FOR 10 YEARS.

AND WE GOT A BUNCH OF FREE ALLOWANCES, WHICH ARE LONG .

YEAH, THERE'S A LOT MORE INVOLVED IN CALCULATE THE RATE, BUT YEAH, I DON'T WANT GO INTO TO, THANK YOU.

THANK YOU CHUCK.

THANK YOU DENNIS, YOU ALL ARE IN THE HOME STRETCH.

MOVING INTO SECTION EIGHT.

CLIFF, YOU HAVE A QUESTION? OH, YOU HAVE A QUESTION? GO AHEAD, CLIFF.

I, OH, I WANT TO TALK ABOUT THE, THE, UH, TRANSFER OF THE GUEST FUND TO, UH, THE GENERAL FUND.

HELP ME, LET'S DUMB THIS DOWN A LITTLE BIT.

'CAUSE UH, AGAIN, I DON'T CLAIM TO BE AN EXPERT IN FINANCE.

UM, WE USE SOME, UH, RATHER COMPLICATED TERMS IN, IN TALKING ABOUT, UH, COST TO THE, UH, TO THE GAS DEPARTMENT.

UM, WHERE IS THE, UH, WHERE IS THE GAS TRANSFER ENTER INTO ALL OF IT? YEAH, IT'S 12% OF OUR GROSS REVENUES.

THAT'S, SO FOR ALL THE, THE GROSS REVENUES THAT WE COLLECT, THE TRANSFER IS MEASURING CAPSAT AT 12%.

NOW, WE DON'T ALWAYS CAN ASSESS THAT FULL 12%, BUT IT APPROACHES THAT AMOUNT SENSE IS 12 10%.

CITY C DOES, I DON'T KNOW IF STEPHANIE IS HERE.

NO, STEPHANIE IS NOT.

IT WOULD INDEED THE FINANCIAL MODEL THAT YOU SHOWED, THAT YOU SAW HERE AT THE BEGINNING WHEN IT'S DONE FOR THE GAS FUND, IT'S GONNA HAVE ALL OF THE IMPACTS OF COSTS, THE RATE CAPACITY THAT YOU MIGHT HAVE IN RESPONSE TO SOCAL GASES RATES, AND THEN THE RESERVES.

SO THE CITY APPROACH, UH, THEY TELL US HOW MUCH THEY'RE GOING TO TRANSFER, BUT IT NEVER EXCEEDS THAT 12%.

THE CITY TELLS US WHAT WE DON'T NEED TO RUN THE GAS DEPARTMENT.

RAISE IT DOWN.

YES, I'M, I'M THEY TELL US HOW MUCH, DANIEL, DO YOU WANNA I'M GETTING LOST HERE.

I UNDERSTAND.

TANYA, DO YOU WANT TO COMMENT AND THEN I'LL GO AFTER YOU? UM, WELL, I DON'T KNOW THE DOLLAR AMOUNT OFF THE TOP OF MY HEAD, BUT I KNOW THERE WAS A PLAN TO REDUCE THE TRANSFER AMOUNT YOU SAID.

OH, SORRY.

UM, I WAS SAYING THAT, UH, I DON'T KNOW THE DOLLAR AMOUNT OFF THE TOP OF MY HEAD, BUT I DO UNDERSTAND THAT THE PLAN IS TO REDUCE IT GOING FORWARD.

I DON'T KNOW EXACTLY WHAT THAT DOLLAR AMOUNT WOULD BE IN THE FUTURE.

UH, SO AT, AT THIS, AT THIS POINT IN TIME, ME BEING NEW IN MY TENURE, WHAT YOU HIGHLIGHTED IN YOUR QUESTION IS A DISCUSSION THAT TAKES PLACE.

YOU DO HAVE THE CHARTER LANGUAGE AND IN THE CHARTER LANGUAGE YOU HAVE THE MATHEMATICAL BASIS FOR THE TRANSFER.

AND IN FACT YOU HAVE ACTUALLY A GUIDE FOR THE CALCULATION OF THE TRANSFER BECAUSE THERE IS A STEP BY STEP COOKBOOK RECIPE ON HOW TO DEDUCT YOUR COSTS.

WHEN YOU WERE ASKING ABOUT WHAT THE CITY DOES AND THE COMMENT ABOUT THE CITY, THAT'S WHAT I WOULD CALL THE DISCUSSION.

THE CITY HAS IN MIND A NUMBER TO BALANCE AGAINST THE ACTUAL LANGUAGE IN THE CHARTER AND THE ACTUAL MATH IN THE CHARTER.

I THINK AN IMPORTANT TAKEAWAY FROM HERE THAT STARTS WITH THE VERY BEGINNING OF THE RETREAT WHEN YOU SAW THE FINANCIAL MODEL AND WHAT THE FINANCIAL MODEL GIVES YOU THE POWER TO ASSESS AND COMMUNICATE, IT PUTS YOU IN A VERY DIFFERENT POSITION TO DISCUSS THE TRANSFER AS OPPOSED TO HAVING JUST WHAT I CALL AN ANNUAL DISCUSSION OF THAT AMOUNT.

THE FINANCIAL MODEL WITH MORE SOPHISTICATION WE'RE WORKING ON.

IT WOULD ALLOW YOU TO EXPRESS DECISIONS, CHOICES, AND DIRECTIONS THAT YOU'RE CHOOSING TO MAKE AS A BOARD THAT IN FACT INFORM THAT DISCUSSION AND DOES IT IN A TRANSPARENT MANNER FOR THE YEARS AHEAD, NOT JUST YEAR TO YEAR.

IT GETS TO SAY, THIS IS WHERE WE'RE HEADED AND THIS IS WHAT WE'RE DOING.

AND NOW YOU CAN SEE WHAT EFFECT THAT HAS ON THE OPPORTUNITIES FOR THE TRANSFER.

WELL, DOES THIS TAKE INTO ACCOUNT THE CONCEPT OF A PRUDENT RESERVE?

[03:05:01]

AND IN DOING THAT, YOU CAN SEE THE EFFECT OF DISCUSSIONS ABOUT THE TRANSFER, HOW THEY AFFECT RESERVES, AND HOW THEY AFFECT YOUR CAPACITY AGAINST THE SOCAL GAS RATES.

AND IN THAT MIX, BY VIRTUE OF PUTTING IT FORWARD OVER 10 YEARS, IT PUTS YOU IN A VERY DIFFERENT POSITION TO DISCUSS WITH CITY THOSE EFFECTS.

WELL, WILL WE ALSO TAKE INTO CONSIDERATION PRUDENT RESERVE 10 YEARS AGO AS OPPOSED TO THE PRUDENT RESERVE NOW? YES, BECAUSE AS YOU DECIDE AS A BOARD WHAT YOUR FISCAL POLICY IS, BOARDS RESERVES, YOU APPLY THAT POLICY GOING FORWARD.

SO MUCH LIKE WE DID IN THE WATER FUND, WE ESTABLISHED WHAT WAS THE CALCULATED BASIS FOR ESTABLISHING A MINIMUM RESERVE THAT GOES UP AND CHANGES EVERY YEAR INTO THE FUTURE BASED ON WHAT YOUR REQUIREMENTS ARE FOR PROJECTS, WHAT YOUR REQUIREMENTS ARE FOR DAYS, CASH, ALL OF THOSE THINGS AFFECT THAT RESERVE.

SO IT'S NOT WHAT YOU DID IN THE PAST, PER SE, IT'S WHAT YOU SAID IS THE BASIS FOR YOUR RESERVE IN THE FIRST PLACE AND YOUR COMMITMENT TO MAINTAIN THAT RESERVE GOING IN THE FUTURE.

WELL, BUT YOU WILL ADMIT THAT THE PRUDENT RESERVE 10, 20, 15, 20 YEARS AGO WAS SUBSTANTIALLY DIFFERENT THEN THAN IT IS NOW.

AND IF SO, WHAT? WELL, IN THE PAST, MY UNDERSTANDING AND, AND I'LL DEFER TO PEOPLE THAT HAD THAT HISTORY IN THE PAST, UH, IF YOU RECALL DURING CHRIS GARNER'S TENURE, WE WERE ACTUALLY ABLE TO IMPART A FORMULA FOR CALCULATING THE RESERVE.

'CAUSE PRIOR TO THAT, I DON'T BELIEVE THERE WAS ANY CALCULATION THAT WENT INTO ESTABLISHING A RESERVE FOR THE GAS FUND.

IT SIMPLY WAS WHATEVER IT WAS.

BUT YOUR BOARD MADE THAT DECISION AND YOU APPLIED A 90 DAYS CASH APPROACH TO AT LEAST GIVE A SEMBLANCE OF A MINIMUM RESERVE TO THE GAS FUND BALANCE.

AND YOU CONTINUE TO HOLD THAT RESERVE BALANCE GOING FORWARD.

TODAY, 90 DAYS CASH IS ONE OF THE FUNDAMENTAL PIECES OF YOUR MINIMUM GAS FUND RESERVE GOING FORWARD.

AND THIS IS ALL GONNA BE DISCUSSED.

UH, WE BUDGET AT THE BUDGET HEARING IT WILL BE A MAJOR FACTOR IN THE DISCUSSION OF THE BUDGET.

AS YOU LOOK AT DECISIONS ON CIP, THE RATES, THE RATE CAPACITY AGAINST SOCALGAS RATES, ALL OF THOSE ELEMENTS WILL COME AND PLAY THEMSELVES OUT INTO THE DIFFERENT COST COMPONENTS.

AND THE FUND TRANSFER TO THE CITY IS ONE OF THOSE COMPONENTS.

WELL, I'M, I'M, I'M JUST GONNA LAY IT ON THE LINE.

I'M VERY CONCERNED ABOUT THE FACT THAT I'M REFERRING TO COURSE CHRIS'S MEMO OF, UH, OCTOBER 4TH, WHICH SUBMITTED WITH ALL OF ALL OF THE COMMISSION FAMILIAR WITH IT, IN WHICH WE BASICALLY SET FORTH A BUDGET FOR GAS AND IT WAS IGNORED BY THE, UH, BY THE CITY COUNCIL.

THAT NEEDS TO BE DISCUSSED.

IT WILL, I JUST WANNA BE SURE THAT THAT'S THE CASE.

M WAS A STEP IN THE RIGHT DIRECTION TO CAP IT PRIOR TO THAT.

'CAUSE I, I THINK THAT WAS A PRECEDENT SETTING ACTION THAT TOOK PLACE.

HAVE THEY, HAVE THEY EVER, UH, IGNORED US BEFORE? WELL, I THINK AS A CONSOLIDATED UTILITY, YOU FIND YOURSELF IN THAT POSITION NOW WHERE PRIOR TO BEING CONSOLIDATED UTILITY, THERE WAS NO DISCUSSION THAT SIMPLY TOOK PLACE AS A DEPARTMENT HEAD IN THE CITY'S BUDGETING PROCESS.

BUT IT IS, AS YOU POINT OUT, A NEW RELATIONSHIP THAT EXISTS BETWEEN THE UTILITY, THE COUNCIL, AND THE C AND THE CITY FINANCIAL MANAGEMENT.

SO WE WILL DISCUSS THIS THERE.

WE WILL DISCUSS IT, IT WILL BE PART OF THE BUDGET DISCUSSION AND WHEN, WHEN, UH, IT WAS REFERRED TO THE THIRD, THERE WILL BE A DISCUSSION OF THE BUDGET, THE THIRD QUARTER OF 25.

WHEN, WHEN WILL THAT TAKE PLACE? WELL, THE BUDGET, THE BUDGET AND RACE DISCUSSION IS ACTUALLY GONNA TAKE PLACE.

UH, NOW WHEN WE SCHEDULE BUDGET WORKSHOPS IN THE MONTH OF MAY, YOU WILL, UH, WORK YOUR WAY AS A BOARD AND STAFF WILL GUIDE YOU AND WE'LL GET TO A DECISION ON BUDGET AND RATES IN THE ONE OF THE FIRST MEETINGS IN JUNE FOR THE BOARD.

THAT, THAT DEFINITELY WILL HAPPEN.

WHAT WE WERE TALKING ABOUT HERE IS THINGS THAT WILL HAPPEN AFTER THAT TIMEFRAME.

AND WE'LL TALK ABOUT SOME OF THE, UM, WE'LL, WE'LL TALK ABOUT THE GAS FINANCIAL MODEL IN LATE JUNE, AND WE'LL THEN BE ABLE TO USE THE, ALL THE INFORMATION WE HAVE AND PROJECT FORWARD FOR LIKE THE NEXT 10 YEARS, WHAT THESE EFFECTS ARE AS IT RELATES TO THE ENTIRE GAS BUDGET.

SO WE, WE DEFINITELY UNDERSTAND WHERE YOU'RE COMING FROM, COMMISSIONER, COMMISSIONER SHANNON, AND IT'S A SORT OF A BRAVE NEW WORLD WHERE MM-HMM .

WE NOW HAVE A BOARD THAT CAN INTERJECT INPUT INTO THAT TRANSFER OF OVERSIGHT.

MEASURE

[03:10:01]

SAY WE HAD A BANNER YEAR, SAY GAS COMMODITY PRICE WENT UP TO THE SIX, SEVEN, $8 MARK, SORT OF A WINDFALL THE CITY TO THE CITY AND, AND THAT COULD BE POTENTIALLY TRANSFER, BUT WITH THIS VENTURE M THAT'S STILL THE CASE.

AT LEAST IT COUNTS THAT TRANSFER 12%, BUT THERE'S MORE DISCUSSION TO BE HAD.

WELL, I DON'T KNOW HOW BRAVE IT IS, BUT IT IS NEW INDEED.

SO MY QUESTION KIND OF TOUCHES ALONG WITH WHICH SHANNON, UH, ASKED ABOUT.

SO, UH, WE RECENTLY HEARD THAT PRESENTATION FROM VWG AND P AND WE HEARD ABOUT THE ISSUES WITH GASIFIED DIVERSIFICATION, UH, THE INCREASES TO, UH, THE, THOSE CONSUMERS WHO CURRENTLY ARE OUR CUSTOMERS AND HOW THEY CAN BE DISPROPORTIONATELY AFFECTED BY INCREASES ANY GAS SUPPLY ISSUES.

UM, MY QUESTION IS, WILL THAT CHANGE THE PERCENTAGE OF THE AMOUNT THAT'S TRANSFERRED TO THE, TO THE, UH, CITY'S DUR FUND? UH, OR IS THAT KIND OF ALONG THE LINES OF THE COMMISSIONER SHANNON'S POINT IS THAT DISCUSSIONS THAT NEEDS TO BE HAD IN THE CITY.

I MEAN, I'M SURE THE FUTURE DISCUSSIONS ARE NEEDED, UM, BUT IT IS RIGHT NOW BASED ON RESUME MAIL.

LOOK, YOU MEAN LAST YEAR'S PRESIDENT WERE THEY IGNORED US? OH, THAT LACK YOUR DIRECTIONS.

I, I CERTAINLY ME FOR RESPONSE.

UH, YEAH.

I MEAN, I, I DON'T KNOW.

I THINK THOSE DISCUSSIONS BETWEEN THIS UTILITY AND THE CITY NEED TO OCCUR BECAUSE I'M NOT SURE THAT THEY'RE PRIVY TO THE RESERVE LEVEL AS WE TRY TO PRESENT HERE.

THE LEVEL OF, OF LABOR AND, UM, STAFF INPUT THE AMOUNT OF OUR CIP WORK AND THE VOLATILITY OF THE MARKET ITSELF.

THEY, I DON'T, I CAN'T SAY THAT THEY'RE AWARE OF THESE COMPONENTS OF IT AND WE NEED TO HAVE THAT CONVERSATION WITH THEM IN ORDER TO BETTER MANAGE THE TRANSFER.

SO OUR BUSINESS PLAN IS UNDER DEVELOPMENT.

IT'S SEEMS LIKE IT'S NEARLY THERE.

THE FINANCE MODEL, UH, SEEMS LIKE IT'S UNDER DEVELOPMENT, BUT, BUT BEING WORKED ON DILIGENTLY, UM, DO WE FEEL LIKE WE'RE GOING TO GET TO A POINT WHERE WE CAN BRING ALL THAT TO THE CITY WITHIN THIS BUDGET CYCLE? I WILL NOT BE ABLE TO GET IT BEFORE YOU FACE A DECISION ON RATES.

THE REASON I SAY THAT IS BECAUSE AS DANIEL GAVE YOU THE PRESENTATION, AND, AND THIS IS SOMETHING I WAS GONNA TALK ABOUT ANYWAY, SO THIS IS GOOD TIMING IN THE FINANCIAL MODEL THAT YOU HAVE FOR WATER AND SEWER, IT'S A MODEL IN WHICH YOUR DECISION IS FAIRLY EASY IN TERMS OF RATES.

YOU SET THE RATE, WHATEVER RATE IT IS, YOU IMMEDIATELY MAKE THAT CHOICE.

AND THAT GOES INTO FUND BALANCE, DEBT COVERAGE, ALL THESE THINGS, RIGHT? WITH THE GAS BUDGET, YOU ACTUALLY HAVE CERTAIN SOURCES OF REVENUE WHICH ARE SIMPLY PASS THROUGHS AND YET BUDGET PURPOSES, THEY MUST BE TAKEN INTO ACCOUNT, THE AB 32, THE COMMODITY COST.

AND SO THEREFORE, AS YOU DO THAT, YOU HAVE TO TAKE THAT INTO ACCOUNT, INTO THE MODEL.

AND DANIEL'S WORKING ON THAT NOW AS WE SPEAK.

THE OTHER ASPECT THAT YOU HAVE IS THAT IT IS NOT A GIVEN WHAT RATE YOU CAN SET, BUT RATHER THERE'S A RATE CAPACITY THAT YOU HAVE AT ANY POINT IN TIME UNDER THIS LANGUAGE IN THE CHARTER THAT IDENTIFIES, AT LEAST IDENTIFIES THE POTENTIAL OR THE POSSIBILITY THAT SOCALGAS IS YOUR COMPETITOR AND THAT'S WHO YOU TRY TO STAY WITH.

SO IT'S THESE FINER ASPECTS OF THAT FINANCIAL MODEL THAT WE'RE FINE TUNING NOW AND WE'RE GONNA DO IT INTERNALLY AMONGST ALL STAFF TO MAKE SURE THAT WE HAVE A MODEL TO REPRESENT TO YOU AND TO COMMISSIONER SHANNON'S POINT THAT REPRESENTS TO THE CITY.

THIS IS CLARITY AND TRANSPARENCY ON WHAT WE ARE FACING.

AND SO NOW OUR DISCUSSIONS ON THE TRANSFER TAKE ON A DIFFERENT TONE RATHER THAN A SIMPLY SPOT OF THE MOMENT DISCUSSION.

IT REPRESENTS A LONGER TERM DISCUSSION AND SAYING, YOU UNDERSTAND WHAT WE'RE FACING.

AND SO THEREFORE THAT DISCUSSION NOW CHANGES IN TERMS OF THE TRANSFER.

WELL, DON'T YOU THINK IT SHOULD BE MENTIONED THAT THERE IS, I'LL CALL IT SHOCKING, UH, SIGNIFICANT, SHOCKINGLY SIGNIFICANT, UH, TAKEAWAY FROM THE PRUDENT RESERVE.

WHAT WOULD BE A PRUDENT RESERVE IN THE GAS, UH, GAS FUND FROM PICK A TIME 10 YEARS AGO TO THE PRESENT TIME? I, I THINK IT WOULD, I, I HAVE TO GO BACK TO MY COMMENT JUST MOMENTS AGO, WHICH WAS UP UNTIL RECENTLY, THERE WAS NO ESTABLISHED RESERVE POLICY FOR THE

[03:15:01]

GAS FUND.

SO CONSEQUENTLY, 10 YEARS AGO, THERE WAS NO GUIDANCE THAT EXISTS TODAY.

THE FACT THAT YOU AS A BOARD ESTABLISHED 90 DAYS CASH AS THE MINIMUM CRITERIA FOR A FUND BALANCE CHANGES THE NATURE OF THE GAME AND CHANGES THE DISCUSSION.

SO YOU'RE SUGGESTING THAT WE SHOULD SET A MINIMUM, UH, TO THE RESERVE FOR THE GAS DEPARTMENT? WE WE DO HAVE, AT THIS TIME YOU ARE, YOU DECIDED TO MATCH WHAT WE ORIGINALLY CREATED ON THE WATER SIDE.

AND SO YOU HAVE AT A MINIMUM A 90 DAY CASH MINIMUM RESERVE, WHICH IS HOW MUCH WELL IS OUR RESERVE 90 DAYS? 90, 90 DAYS CASH IS GONNA BE A QUARTER.

AND SO IF IT'S A QUARTER AND WE'RE SITTING, UH, UPWARDS OF, UH, A HUNDRED MILLION ON THE GAS, I WOULDN'T BE ABLE TO TELL YOU THAT OFF THE TOP OF MY HEAD, BUT IT'S OPERATING.

SO IT'S MORE OF AN ACCOUNTING FUNCTION I WOULD'VE TO YEAH.

DO ON THAT.

THERE'S AN YEAH, THERE'S AN EXACT NUMBER.

SO I WOULD'VE TO GET BACK TO YOU ON THAT.

WE CAN GET YOU THE NUMBER.

ON THE WATER SIDE IS 30 MILLION, RIGHT? ON THE GAS SIDE, I DON'T BELIEVE IT'S 30 MILLION.

I THINK IT'S A LITTLE BIT LOWER THAN THAT.

IS IS IT FAIR TO SAY THAT IF THIS WAS ON THE WATER SIDE, AND I KNOW WE DON'T DO THIS ON THE WATER SIDE, IF WE DID, THEN WE COULD POINT TO THE FACT THAT OUR RESERVES ARE NOT TO DO THE TRANSFER BECAUSE WE'VE HAD ISSUES WITH THE WATER MAIN, WE HAVE THE OLYMPICS COMING, WE HAVE POSSIBLE FACILITY.

I MEAN, IS THAT, IS THAT SOMETHING THAT COULD YOU AND USE THEM ON THE GAS SIDE? YOU CAN'T USE IT ON THE GAS SIDE, BUT THE FACT THAT YOU COULD ACTUALLY POINT TO THAT IN A MODEL AND SAY, LOOK AT WHAT WE'RE PLANNING TO DO AND LOOK AT WHAT THE CHALLENGES WE FACE, THEN YES, THE MODEL WOULD ALLOW YOU TO DO THAT FOR THE GAS FUND.

JUST A DIFFERENT SET OF PARAMETERS.

AND THOSE PARAMETERS WOULD INCLUDE THE VOLATILITY OF THE COMMODITY ITSELF, RIGHT? I MEAN IT, IT CHANGES EACH AND EVERY MONTH AND SOMETIMES DRAMATICALLY.

LEMME ASK THE OTHER QUESTION.

I KNOW ON THIS IS A QUESTION I THINK I HAD EARLIER ON THE, LIKE IN UTILITIES, YOU HAVE A DEMAND CHARGE.

WE TALKED ABOUT THE , BUT IN CASE SOMEONE'S, YOU KNOW, HAD ALL OF A SUDDEN THERE'S A SURGE IN ELECTRICAL USAGE, YOU HAVE THE ELECTRIC COMPANY HAS TO BE ABLE TO MEET THAT DEMAND.

SO DO WE HAVE THAT ON THE GAS SIDE? I MEAN, AND WE DON'T HAVE THAT.

SO THE FLUCTUATIONS WE JUST TAKE YEAH, IT'S BEEN CONFLICT.

THERE'S SEVERAL METHODOLOGIES, YES, TO YOUR POINT, A TIME OF USE CHARGE FOR GAS, LIKE THEY DO FOR ELECTRICITY.

IT'S BEEN CONTEMPLATED A SMOOTHIE MECHANISM.

SO WE KIND OF KEEP A FLAT RATE THROUGHOUT THE YEAR AND, UH, WE ADJUST TOWARDS YEAR END TO ACCOUNT FOR THE VOLATILITY OF THE COMMODITY .

VARIOUS SCENARIOS.

WE HAVE NOT ENACTED THEM YET.

WE JUST FOLLOW THE SAME MODEL AS THE MARKET RATE, WHICH WAS EXPLAINED EARLIER.

WE DO HAVE SOME FLEX, WE DO HAVE SOME FLEXIBILITY.

WE DO HAVE STORAGE GAS, SO WE DO PUT IN STORAGE THAT'S CHEAPER.

SO IF GAS PRICES DO JUMP, WE CAN PULL FROM STORAGE OPPOSED TO BUY ON THE MARKET.

UH, SO JUST TO PARAPHRASE WHAT YOU SAID, I HATE TO DO IT.

I DON'T WANNA BE AS ACCURATE AS POSSIBLE.

BUT TO PARAPHRASE AND THEN TO, TO KIND OF, UH, PIGGYBACK ON, ON WHAT COMMISSIONER SHANNON IS SAYING, UH, WE ARE GOING TO SET RATES FOR GAS PRIOR TO OUR FINANCE MODEL, FINANCIAL MODEL BEING AVAILABLE TO DEMONSTRATE TO THE CITY.

UH, SO I'M ASSUMING WE'RE GOING TO SET THE TRANSFER AT WHAT WE SEE TO BE A PRUDENT FIGURE.

WILL THE NEGOTIATIONS WITH THE CITY THEN TAKE PLACE THEREAFTER PRIOR TO THE FINAL ADOPTION OF FY 26 BUDGET? I, I WOULD SAY YES.

OUR GOAL IS TO TAKE WHAT WE'VE LEARNED TODAY AND BEGIN SHAPING A SHARED ROADMAP FOR THE FUTURE.

OKAY, MS. WHERE WE, WE OPEN WITH, THERE'S SO MUCH, UH, DETAIL, SO NO SO MUCH NUANCE TO THIS DISCUSSION.

SO WE WILL COME BACK AS OFTEN AS YOU WOULD LIKE US TO COME BACK AND WE CAN DELVE INTO ANY PART OF IT, BEGINNING WITH SECTION EIGHT, WHICH IS OUR VERY NEXT SECTION, AND WISH I CAN MOVE ON TO SECTION EIGHT.

YOU HAVE MORE, MORE QUESTIONS, SO, OKAY.

THANK YOU TONY.

FINAL SECTION.

UH, AS WE MOVE INTO THIS FINAL SECTION OF RETREAT, WE NOW SHIFT FROM ABSORBING INFORMATION TO STEPPING BACK, REFLECTING ON EVERYTHING WE HEARD TODAY.

UH, OVER THE NEXT SAY 30 MINUTES, UH, WE'LL REVISIT THE KEY THEMES AND TAKEAWAYS FROM EACH SESSION.

AND JUST AS IMPORTANTLY, THIS IS YOUR OPPORTUNITY TO ASK THE ADDITIONAL QUESTIONS WE'LL SHARE COSTS, WHETHER THEY'RE FOLLOW UPS OF NEW INSIGHTS, SPARKED BY EARLIER DISCUSSIONS.

ANTO AND I WILL HELP LAY THE FOUNDATION FOR THE IMPORTANT WORK AHEAD.

[03:20:01]

ONE THAT'S INFORMED BY THOUGHTFUL DIALOGUE, ROUNDED IN SOUND PLANNING BY WORK COLLECTING INSIGHT.

SO LET'S GET STARTED WITH SECTION EIGHT.

AND YOUR, I'M GONNA ASK YOU TO ADVANCE THIS SLIDE.

SO, UH, JUST YOU OPENING OR YOU WANT JUST JUMP RIGHT IN.

NO, YOU GO.

YOU GO.

START, START.

I'M GONNA DO A MAGIC HERE.

THAT'S IT, .

IT'S CHANGING EVERYTHING.

THIS SESSION WE'LL BRING TOGETHER EVERYTHING THAT WE .

YOU'LL SEE HOW THIS ALIGNS WITH THE CONCEPTS AND IDEAS PRESENTED IN THE WATER INFORMATION SESSION.

THAT MEANS GAS INFORMATION SESSION, LISA, GAS AND .

WE'LL SEE HOW THIS CAN BE USED TO POINT TO THE NEXT STEPS THAT YOU ALL WILL SEE AS A BOARD.

I'LL NOW TURN IT OVER TO ANOL WHO WILL WEAVE THIS TOGETHER FOR ME.

IT'S EITHER WEAVING OR IT'S A KNOT.

SO I THINK IN TALKING TO PRESIDENT MCGUIRE, WE SAID THAT THIS WAS A SCHOOL DAY, IN FACT, PRESIDENT WIRE, YOU GAVE ME THAT IDEA TO TERM IT AS SCHOOL DAY, BUT IT'S NOW TWO O'CLOCK.

COMMISSIONER SHANNON IS STILL HERE, , AND IF I RECALL MY DAYS IN SCHOOL, THIS WAS LIKE THE WORST TIME TO LEARN ANYTHING , RIGHT? SO I'M GONNA TRY TO KEEP MY COMMENTS BRIEF.

UM, IT IS MY GOAL.

LIKE I TOLD YOU BEFORE, IF THIS WAS NOT AN ACADEMIC EXERCISE, I'M GLAD THAT YOU TOOK NOTES.

I'M GLAD WITH YOUR QUESTIONS, QUESTIONS.

AND IN THE END, DON'T WORRY.

WITH ALL THE PRESENTATIONS, ALL THE INFORMATION, WE CAN ALWAYS WEAVE IT AND BRING IT BACK FOR YOU AS WE GO FORWARD.

SO NEXT SLIDE.

REMEMBER THE BOX, , RIGHT? RIGHT.

SO I SAID CLIMATE CHANGE CHANGES EVERYTHING, RIGHT? CLIMATE CHANGE CHANGES EVERYTHING, BUT THIS IS THE BOX.

SO CLIMATE CHANGE IS THE AIR ALL AROUND THE BOX, RIGHT? AND THAT'S INCREDIBLY IMPORTANT BECAUSE CLIMATE CHANGE IS AFFECTING THE REGULATORY ENVIRONMENT.

YOU HEARD TODAY IN SO MANY DIFFERENT ASPECTS WHEN IT COMES TO RESOURCES, THERE IS PRESSURE COMING FORWARD, COMING TO BEAR, TO DEMAND LESS CONSUMPTION, CONSUME LESS OF THE RESOURCE.

AND THAT'S INCREDIBLY IMPORTANT TOO BECAUSE FOR US AS A UTILITY STAFF AND BOARD, WE'RE WORKING IN AN ENVIRONMENT WHERE THE CUSTOMER'S, RESIDENTS, THEY COME FORWARD AND THEY SAY, WHY DO YOU MAKE ME CONSERVE AND THEN CHARGE ME HIGHER RATES? IT SOUNDS LIKE YOU GOT SOMETHING WEIRD GOING ON.

YOU ARE ASKING ME TO CONSERVE YOU, MAKE ME CONSERVE.

I'M A CHANGE.

IT'S CHANGING THE REGULATORY ENVIRONMENT.

AND YOU HEARD TODAY, AND YOU HEARD IN THE INFORMATION SESSIONS, THE REGULATORY ENVIRONMENT IS DEMAND.

WE ARE THE ONES THAT FACE THAT PRESSURE AS THE UTILITY.

BECAUSE YOU HEARD AND SAW TODAY THE PRESSURE ON COST CONTINUES TO GO UP IN THE FACE OF REGULATORY ENVIRONMENT.

THAT DEMAND, RIGHT? YEAH.

SO REGULATORY ENVIRONMENT AFFECTS CUSTOMERS.

WE KNOW THAT THEY HAVE TO CONSERVE, THEY DEMAND THAT YOU PAY THEM TO CONSERVE.

THEY WANT INCENTIVES, RIGHT? THEY, AND WHEN YOU THINK ABOUT WHAT'S THE SUBSTITUTE FOR WATER? WELL THE SUBSTITUTE FOR WATER IS JUST CONSUME LESS OF IT, RIGHT? OKAY.

AND THEN I SAID THE SEWER FILE, HOW DOES SEWER WORK? SEWER WORKS BECAUSE ON A BILLABLE BASIS, WE BUILD BASED ON THE WATER YOU CONSUME INDOORS TO GENERATE REVENUE PER SEWER.

SO SEWER AND WATER HAVE THIS INTERLINKAGE ALWAYS TOGETHER THAT AS WATER GOES SO TO SEWER.

SO FINANCIAL MODEL YOU HEARD TODAY BETWEEN SUBSTITUTES AND THE PRESSURE ON SUPPLIERS, RIGHT? SUPPLIERS ARE FACING INCREASING COSTS THEMSELVES, INCREASING SCARCITY, AND THEIR COSTS ARE DRIVING UP, RIGHT? AND WE FIND OURSELVES WITH INTERNAL COSTS WITH THOSE PRESSURES.

AND AS WE FACE THOSE PRESSURES, THERE COMES THE, THE ISSUE ON AFFORDABILITY, RIGHT? SO HAVING A FINANCIAL MODEL, HAVING A STRONG FINANCIAL MODEL, HAVING A DEDICATION TO THAT MODEL TO CONSTANTLY BE LOOKING AHEAD AND MEASURING THE CHOICES THAT WE HAVE TO MAKE HELPS

[03:25:01]

US TREMENDOUSLY.

IT HELPS US DEAL WITH ALL OF THESE DIFFERENT ELEMENTS AND PROVIDES CLARITY AND TRANSPARENCY FOR THE DIRECTION THAT WE TRY TO PROVIDE.

WHEN IT COMES TO CAMPUS CONSOLIDATION, IF YOU RECALL, I PREVIOUSLY TALKED TO YOU ABOUT THE HUMAN INFRASTRUCTURE RESOURCE INTERFACE, RIGHT? WE KNOW THE RESOURCES, WATER, GAS, SEWER.

THESE ARE PRECIOUS RESOURCES.

THEY'RE FUNDAMENTAL TO LIFE.

THEY'RE FUNDAMENTAL TO OUR CITY'S EXISTENCE AND SOCIETY.

OUR ECONOMY AND HUMANS DEMAND THEM.

THEY ASK FOR THEM, BUT THEIR ONLY ABILITY TO GET THOSE RESOURCES IS THROUGH INFRASTRUCTURE.

AND IN MANY WAYS, IT DOESN'T MATTER HOW MUCH LESS OF A RESOURCE YOU CONSUME, THE COSTS OF INFRASTRUCTURE WILL REMAIN OR IN FACT GO UP.

BUT WE WERE TALKING IN THE INFORMATION SESSIONS IN PARTICULAR WAS ED BEING'S INFORMATION SESSION.

WE'RE TALKING ABOUT AGING INFRASTRUCTURE, AGING WORKFORCE.

AND IN A WAY, FOR CAMPUS CONSOLIDATION, YOU HAVE TO THINK ABOUT THAT.

THIS HUMAN INFRASTRUCTURE RESOURCE INTERACTION, THE VERY WORKSPACE WHERE WE WORK, THAT'S PART OF THE INFRASTRUCTURE.

SO IF WE HAVE A DEDICATION TO MAINTAINING AND REPAIRING AND MODERNIZING OUR INFRASTRUCTURE, MODERNIZING OUR WORKSPACE IS EQUALLY IMPORTANT.

AND YOU SAW THAT TODAY IN THE OPTIONS THAT WE'RE TRYING TO PUT FORTH GROUNDWATER AND INFRASTRUCTURE.

SO SUPPLIERS INCREASING SCARCITY WITH INCREASING SCARCITY, INCREASING COSTS OF IMPORTING, RIGHT? WE KNOW WHAT THE OPTION IS.

THE OPTION IS IF WE MODIFY OUR SUPPLIERS, WE CAN TAKE ADVANTAGE OF GROUNDWATER.

BUT TAKING ADVANTAGE OF GROUNDWATER IS NOT SO EASY A PROPOSITION.

IT TAKES A DEDICATED EFFORT.

AND IN FACT, YOU SAW THAT AS OUR DEMAND DROPS IN OUR CURRENT DISTRIBUTION SYSTEM, WE FACE A CHALLENGE NOT ONLY GENERATING MORE GROUNDWATER, WE FACE A CHALLENGE IN SUSTAINING WHAT WE CURRENTLY HAVE.

SO WE HAVE TO SUSTAIN WHAT WE HAVE, BUT WE HAVE TO AUGMENT, THAT'S A KEY WORD.

AND SO MANY DIFFERENT ASPECTS OF WHAT YOU SEE, YOU'RE GOING TO HEAR ABOUT GROUNDWATER AUGMENTATION.

GROUNDWATER AUGMENTATION IS A KEY WORD THROUGHOUT SOUTHERN CALIFORNIA AND IT'S INCREDIBLY IMPORTANT.

SO AS WE STEP FORWARD THAT PRESENT AN OPPORTUNITY FOR US TO OVERCOME THAT CHALLENGE.

SO SEWER, CIP AS GOES WATER, SO DOES SEWER.

SO IN THE FACE OF DECLINING REVENUES AND IN THE FACE OF DECLINING REVENUES AND CONTINUED INFRASTRUCTURE COSTS, WE FACE A CHALLENGE, A NEED, A DESIRE, A BELIEF, AN INITIATIVE.

AND IF WE CHOOSE TO PIVOT ON CONSUMER, CIP, IN THE FACE OF DEFINING REVENUES AND INCREASING COSTS SOUND, CIP PLANNING AND SOUND, FINANCIAL PLANNING IN THE SEWER BUDGET IS INCREDIBLY IMPORTANT TO UNDERSTAND THE INS AND OUTS OF US BEING ABLE TO DO THAT FIT AND HOW TO MANAGE IT.

RIGHT? AND WE JUST HAD AN INCREDIBLE DISCUSSION ON GAS BUDGET AND RATES, RIGHT? THAT ENCOMPASSES ALL OF THESE DIFFERENT ELEMENTS OF THE BOX, RIGHT? IT IS A DIFFICULT, DIFFICULT PROPOSITION TO HAVE THIS DISCUSSION ON ALL THE NUANCES OF THE GAS BUDGET, ITS RATES, ITS RESERVES, AND THE DIFFERENT WORKING ELEMENTS, NOT JUST THE GAS GENERAL FUND TRANSFER, ALL THE WORKING ELEMENTS OF THE BUDGET.

IT IS DIFFICULT GOING FORWARD AND IT'S THEREFORE INCREDIBLY IMPORTANT TO HAVE A LONG REACH MODEL THAT ENGAGES YOU, THE BOARD WITH STAFF AND ALLOWS US TO HAVE THOSE DISCUSSIONS ON HOW TO MAKE THOSE DECISIONS.

RIGHT? AND ONE MORE THING.

STAFF HAS BEEN WORKING WITH THE PORT OF LONG BEACH NOW FOR SEVERAL YEARS.

THERE IS AN ELEMENT THERE THAT WE'VE BEEN WORKING COLLECTIVELY ON, AND THAT IS A TRANSFER OF A CERTAIN AMOUNT OF THE WATER INFRASTRUCTURE TO THE WATER SYSTEM.

AND IT'S BEING DONE FOR WATER QUALITY REASONS, MAINLY TO HAVE THE PROPER RESPONSIBILITIES FOR WATER QUALITY WITHIN THE BOUNDARIES OF THE WATER FUND, WATER UTILITY, AND NOT THE PORT.

WE'RE ALMOST THERE ON AN AGREEMENT THAT'S BEEN GOING FORWARD AND IT'S GONNA TAKE A COUPLE OF MONTHS MORE TO GET THERE.

BUT ONCE WE GET THERE, THERE IS AN INVESTMENT

[03:30:01]

IN AN INFRASTRUCTURE THAT HAS TO TAKE PLACE.

AND THAT'S ALL WELL AND GOOD.

THAT'S ALL WELL AND GOOD BECAUSE THE PORT OF LONG BEACH UNDER THE AGREEMENT IS COMMITTED TO MAKE THOSE INVESTMENTS TO PAY FOR THEM.

TRUE.

AT THE SAME TIME THOUGH, AT THE SAME TIME, THAT INVESTMENT IS TO BE DESIGNED AND BUILT BY THE WATER UTILITY COURT ON BEHALF OF THE PORT, WHICH IS ALL WELL AND GOOD.

THAT'S WONDERFUL TO HAVE MONEY TO PAY FOR INFRASTRUCTURE, BUT YOU STILL HAVE TO HAVE THE WORKFORCE AND THE INTERNAL INFRASTRUCTURE.

YOUR PEOPLE AND YOUR INSTITUTIONS HAVE TO BE THERE IN ORDER TO DESIGN AND BUILD AND MANAGE AND OPERATE THAT SYSTEM COMING FORWARD.

WE SIMPLY DIDN'T HAVE THE TIME TO BRING THAT TO YOU TODAY, BUT IT IS OUR OBLIGATION TO STAFF TO BRING THAT TO YOU IN THE NEXT COUPLE OF MONTHS SO THAT YOU HAVE THE FULL BOUNDARIES OF THAT DISCUSSION AND WE SEE WHAT THE IMPACTS ARE TO BUDGET GOING FORWARD.

NOT SO MUCH THE REVENUE SIDE THAT WILL BE THERE, RIGHT? BUT THE COST INHERENTLY WILL REPRESENT AN EFFORT THAT WE HAVE DIGITAL, RIGHT? EXCELLENT.

YOU ALREADY SAW THIS, COMMISSIONER SHANNON TOLD ME HE WAS GONNA LEAD BY TWO.

I LOVE .

GOOD ONE.

I'M NOT GONNA DO ANYTHING WITH THAT THOUGH.

UM, SO WE HAD FINANCIAL MODELS.

I SAID THE NUANCES OF THE GAS MODEL IS GONNA TAKE JUST A LITTLE BIT LONGER.

JUNE, 2025, REALLY SECOND HALF OF JUNE, 2025.

WE SHOULD BE ABLE TO BRING YOU ALL THREE MODELS AND BE ABLE TO TALK ABOUT THEM.

THE CAMPUS CONSOLIDATION PLAN YOU HEARD THIRD QUARTER, THAT'S IN ORDER TO LAY OUT THESE PROGRAMMATIC SCHEDULES ALONG WITH THE FINANCES.

WE GOT SOME REVENUE OPTIONS THERE AND BRING THOSE FORWARD.

IRRESPECTIVE OF THAT THOUGH, TODAY WAS THE DAY THAT I TOLD THE CITY THEY NEEDED TO BE AWARE THAT WE WERE HOLDING THIS RETREAT.

AND AFTER THIS I COULD THEN START TALKING TO THEM ABOUT ELM STREET, ELM AVENUE ING OPTIONS.

SO I WILL BE TURNING AROUND IMMEDIATELY AND ENGAGING IN THOSE DISCUSSIONS AND REPORTING BACK TO THE BOARD THE OUTCOME OF THOSE PROBABLY IN SOME INFORMATION ITEMS AS THEY COME FORWARD.

DOCUMENTATION PLAN ALSO THIRD QUARTER, PUTTING THESE OPTIONS TOGETHER.

NOW, PUTTING THIS PROGRAM TOGETHER NOW AND SOMETHING THAT REPRESENTS SOMETHING LONG-TERM SPANNING SEVERAL FISCAL YEARS AND LEADS YOU TO HOW LONG WILL IT TAKE TO HAVE THAT OUTCOME THAT YOU SAW HERE RIGHT BACK COME FORWARD IN THIRD QUARTER.

SO OUR CIP IS SHORTER, RELATIVELY SIMPLE, BUT NOT SO SIMPLE.

SO SIMPLE TO ASSESS WHAT WE NEEDED TO DO IN TERMS OF CIP, NOT SO SIMPLE AS TO HOW WE MANAGED BUDGET AND RATES TO GET THAT DONE.

AND AGAIN, CAN WE SHOW THE BENEFITS OF THAT GOING FORWARD IN TIME, LONG RANGE GAS FINANCIAL PLANNING, RIGHT? I WON'T BELABOR THE POINT, WE JUST HAD THAT DISCUSSION.

SO THIRD QUARTER OF 2025 IN JUNE TIMEFRAME INTO JULY, WE SHOULD NOW BE ABLE TO BEGIN WORKING WITH THE MODEL AND TAKING YOUR INPUT AS WELL AS TO WHAT LIES AHEAD AND THE PORT WATER INFRASTRUCTURE.

HAVE AN INTERNAL MEETING THAT'S GONNA HAPPEN WITH STAFF.

I TRY TO AN ANTICIPATE ENGAGING WITH THE PORT SOMETIME IN APRIL OR MAY TURNAROUND TIMEFRAME.

AND BY ENGAGING THEM THEN AND HAVING A MUTUAL AGREEMENT, WE THEN SHOULD BE ABLE TO GO FORWARD AND REPORT TO YOU THE SHAPES OF THE AGREEMENT, THE ISSUES AND THE DECISIONS THAT WE FACE.

AND THAT IS A LOT, THAT THAT IS A LOT.

BUT IT'S SOMETHING THAT WE COULDN'T HAVE LITTERED SIMPLY INFORMATION ITEMS TO YOU ON A REGULAR BOARD DATE.

SO THAT WAS THE BENEFIT OF US BEING HERE DIDN'T TAKE, HOLD ON.

SO IT IS A DIFFERENCE, RIGHT? TO BRING YOU SOMETHING THAT, LIKE I SAID AT THE BEGINNING OF THE RETREAT, IS A PROGRAM, NOT AN INDIVIDUAL DECISION ON A PROJECT, NOT A CONSULTANT CONTRACT, RIGHT? THIS IS SLIGHTLY DIFFERENT.

THESE EFFORTS AND INITIATIVES WILL ENGAGE YOU WITH STAFF AND COLLECTIVELY WE'LL STEP OUR WAY THROUGH FISCAL YEARS MAKING DECISIONS AND MAKING CHOICES.

WE'LL BE MONITORING THE PROGRESS, AS I TOLD YOU BEFORE YOU PLAN, YOU IMPLEMENT, THEN YOU HAVE TO ADAPT.

NOTHING TURNS OUT THE WAY THAT YOU INITIALLY SET IT OUT.

SO THAT'S THE OTHER ELEMENT THAT WE'RE GOING THROUGH THE FISCAL YEARS.

WE KNOW THE DIRECTIVE AND THE DIRECTION WE WANT TO GO IN, BUT WE'RE ALSO GONNA HAVE TO UPDATE ALONG THE WAY AS WE GET INFORMATION AND GROW AND LEARN, RIGHT? THAT'S ALL I HAD DISCUSSION.

YOU DIDN'T OPEN THE BOX .

[03:35:02]

IF YOU DO IT RIGHT, IF YOU DO IT RIGHT, YOU'RE NO LONGER IN THERE.

OKAY? , THAT'S THE GOAL, RIGHT? THAT'S WHAT I, I LOVED ABOUT THIS ANALOGY FOR MANY, MANY YEARS AGO.

WHAT'S YOUR STRATEGY? DON'T GET BOXED IN CONSERV.

, RIGHT? NEVER GIVE, NEVER GIVE BOXED IN.

YEAH, CONSERVATIVE MERVIN SHOULD HAVE BEEN IN THERE, BUT I GIVE BACK TO JOE, DON'T GIVE BOXED IN THAT.

THAT IN ESSENCE IS THE BEAUTY OF PUTTING THIS TOGETHER AS A LONG-TERM STRATEGY FOR STAFF AND FOR THE BOARD, RIGHT? YOU NEVER, NEVER WANNA GIVE BOXED IN, DON'T LET THESE CHALLENGES RESTRICT YOU IN A WAY THAT YOU CAN'T FIND SOLUTIONS OR WAYS TO OVERCOME THOSE CHALLENGE, RIGHT? OKAY.

OH SEVEN.

ALRIGHT, SO, UH, I WOULD LIKE TO MAKE SOME ACKNOWLEDGEMENTS THAT'S OKAY WITH YOU.

SO I WOULD LIKE TO ACKNOWLEDGE THE RETREAT TEAM.

PLEASE STAND AS I CALL YOUR NAME, DEANNA RUB VO.

KEEP STANDING.

STAY STANDING, KEEP STANDING.

DON'T SIT DOWN YOUR DILIGENCE, IDEAS, INTELLIGENCE, RESOURCEFULNESS.

MAYBE THIS EVENT HAPPENED.

I COULDN'T HAVE DONE THIS.

I'D ALSO LIKE TO ACKNOWLEDGE EACH WERE THE CAPTAINS OF THIS RETREAT, SHIP LOGISTICAL CHALLENGES WERE NO MATCH FOR YOUR DETERMINATION AND SKILLS.

SO THANK YOU.

LAST BUT NOT LEAST, THE PRESENTERS PLEASE STAND FINANCIAL MODELS.

DANIEL GUTIERREZ AND STEPHANIE ING.

I, IONS RESOURCE MANAGEMENT, ZANG AND DEAN WANG, SECRET UTILITY OPERATIONS AND MICHAEL AUGH AND , VERY PLEASED FOR THIS RETREAT, IS GREATLY APPRECIATED.

AND I'D ALSO LIKE TO OFFER A SINCERE THANK YOU TO KRISTEN.

CECIL, I DON'T THINK SHE'S IN THE ROOM, BUT SHE WAS OUR LIAISON HERE AT THE RANCHO.

THANK YOU, YOU AND YOUR STAFF FOR AMAZING, YOUR SUPPORT AND GUIDANCE MADE THIS EVENT A PLEASURE TO PLAN WELL THAT YOU ARE YOUR PLEASURE.

READY TO ADJOURN THE MEETING.

THANK, THANK YOU.

I HAVE A CLOSING.

WE'RE JUST THE BEST.

SO, YEAH, YOU KNOW, WE COULDN'T BE HERE TODAY GOING THROUGH ALL THIS TIME UNLESS SOMEBODY WAS MODERATING, RIGHT? YEAH.

AND WITHOUT TONY'S EFFORTS TO MODERATE AND GET US A CLOCK AND KEEP US ON TIME, , WE COULDN'T HAVE DONE IT.

I, I CAN'T TELL YOU THE EFFORT THAT TONY PUT INTO THIS WITH EVERYBODY, RIGHT? TRYING TO KEEP US ON TIME, COACHING, ON PRESENTATIONS.

IT, IT WAS A PHENOMENAL EFFORT.

SO WE ALL OWE A BUNCH OF GRATITUDE TO TONY FOR, AND ALSO INVARIABLY THE FACT THAT YOU COULD SPEAK TODAY AND YOU DIDN'T HAVE TO DEAL WITH WHAT SOMETIMES YOU SEE AT CONFERENCES, WHETHER THE MIC'S WORKING, NOT WORKING OR STUFF LIKE THAT.

THE MEETING TODAY WAS RECORDED AND IT WAS PERFECTLY FINE.

AND YOU GOT TO SPEAK IN YOUR OWN VOICES AND IT WASN'T AN ISSUE.

AND YOU KNOW WHY? IT'S 'CAUSE OF GEORGE .

I TOLD YOU YOU DIDN'T NECESSARILY HAVE TO TAKE NOTES.

I'M GLAD THAT YOU DID FOR YOUR OWN SAKE, BUT THE MEETING'S RECORDED, WE'LL BE ABLE TO GO BACK AND LISTEN THROUGH AND CATCH DIFFERENT DIALOGUE AND DYNAMIC AS WELL.

SO IT'S THE END OF THE DAY.

I TRIED TO GET THIS OUT BEFORE TWO 30.

YOU KNOW, IN CLOSING, I, I THINK ONE OF THE BIGGEST PIECES OF THIS TOO IS, WELL, IT'S WHAT I CALL COMBINING SOCCER AND WINSTON CHURCH TOGETHER.

SO IN SOCCER, WHEN YOU COACH SOCCER, I WOULD SAY THERE'S AN AMERICAN FASCINATION WITH SPORT.

THEY LOVE SPORT, BUT WHAT YOU'RE ACTUALLY TRYING TO DO WHEN YOU'RE COACHING SOCCER IS YOU'RE TRYING TO ENCOURAGE WHAT THEY CALL THE ABILITY TO STOP THE BALL INSTANTANEOUSLY,

[03:40:01]

NO MATTER HOW HARD ANYBODY IS PASSING TO YOU.

AND YOU DO THAT BY PRACTICING OVER AND OVER AND OVER AGAIN.

REALLY SIMPLE EXERCISE, BACK AND FORTH, BACK AND FORTH.

IT'S MUCH LIKE WHEN YOU'RE PLAYING BASEBALL.

THEY SAY, LET'S JUST PLAY CATCH TOGETHER.

AND YOU JUST PLAY.

WHAT'S THAT GOT TO DO WITH THIS? ONE OF THE GOALS THAT I HAD FOR THE RETREAT IS THAT WE OURSELVES, AS STAFF WORKING WITH YOU, THE BOARD, BECOME COMFORTABLE WITH THE RETREAT.

THAT IT DOESN'T BECOME SOME MONUMENTAL EXPERIENCE, BUT RATHER IT BECOMES A LEARNED EXPERIENCE THAT IN MUCH OF THE BIG DECISIONS THAT LIE AHEAD FOR US, MUCH OF THE EFFORTS THAT LIE AHEAD FOR US, THERE WILL NO DOUBT PROBABLY BE TIMES WHERE WE WANT A DEDICATED SPACE, A DEDICATED TIME AND A MOMENT JUST ENGAGE ON ONE OR MORE ISSUES.

NOW THAT MAY NOT BE ALL DAY, IT MAY NOT EVEN BE A SCHOOL DAY, BUT IT IS QUITE POSSIBLY AN EFFORT THAT WE'LL WANT TO BE CONSCIOUS OF.

AND MAKING THIS EFFORT HERE AND THEN DOING IT OVER AND OVER AND OVER AGAIN IS ONE THING THAT I WOULD HOPE MOST FOR US AS STAFF AND THE BOARD TO HAVE THAT WORKING MEMORY NOW THAT WE KNOW HOW TO ENGAGE IN SOME OF THESE DISCUSSIONS.

AND IT DOESN'T ALWAYS HAVE TO BE AT A BOARD MEETING.

SO WINSTON CHURCHILL.

SO WINSTON CHURCHILL, IT WAS WORLD WAR II AND THE ALLIED FORCES HAD SUSTAINED NO VICTORIES OF ANY SIGNIFICANCE.

IT HAD JUST BEEN LOSSES AFTER LOSSES AFTER LOSSES.

AND IN THE WAR IN NORTH AFRICA, THERE WAS FINALLY A VICTORY.

THE BATTLE OF LLMA.

THEY FINALLY DEFEATED THE AXIS FORCES CAPTAINED BY, UH, GENERAL IRWIN ROMMEL, THE DESERT FOX.

AND SO THE PONS ARE TANKS AND ALL OF THOSE FORCES HAVE BEEN PUSHED BACK.

AND THE BRITISH HAD FINALLY DEFEATED THEM AT L MNY.

AND WINSTON CHURCHILL HAD TO DECIDE WHAT TO TELL THE PEOPLE IN LIGHT OF THIS ONE, ONE MOMENT OF TIME.

AND THAT'S THE QUOTE.

SO THE QUOTE WINSTON CHURCHILL SAID WAS, THIS IS NOT THE END.

THIS IS NOT EVEN THE BEGINNING OF THE END, BUT IT IS PERHAPS THE END OF THE BEGINNING AND BACK TO WHAT I JUST TOLD YOU MOMENTS AGO ABOUT THE RETREAT THAT WE FIND OURSELVES IN THE FUTURE COMFORTABLY ENGAGING THESE KINDS OF DISCUSSIONS, PERHAPS IN THESE TYPES OF SPACES.

THAT'S WHAT I TAKE AWAY FROM THAT QUOTE AS WELL.

SO CHRIS MCGUIRE, WE'LL TURN IT OVER TO YOU.

I LOVE, I LOVE THAT QUOTE, THE BEGINNING, THE END OF THE BEGINNING.

THIS IS LIKE WHAT WE HAVE RIGHT NOW.

YOU'VE BEEN WORKING TOWARD THAT FOR A LONG TIME.

AND I JUST CAN'T SAY HOW DELIGHTED I AM WITH EVERYTHING THAT HAPPENED TODAY AND ALL THESE QUESTIONS, AND THIS GUY HERE , AND ALL THE COMMENTS AND THE EASY DISCUSSION THAT HAPPENED.

AND I HOPE THAT WE ALL KNOW EACH OTHER A LITTLE BETTER NOW.

AND, UM, AND I LOOK FORWARD TO, YOU KNOW, MORE BULLET TRAININGS, A SMALLER, SMALLER, UH, MORE FOCUSED ON A SINGLE ISSUE WHERE WE CAN DIG DEEPER.

BUT CERTAINLY THIS IS A, A WIDESPREAD OVERVIEW FROM THAT 30,000 FOOT OR WHATEVER, BUT SO MUCH WORK TO BE DONE.

IT DOES FEEL A BIT DAUNTING, YOU KNOW, AND LOOKING AT US THE NEXT SIX MONTHS IN PARTICULAR WHERE WE HAVE ALL THESE CHALLENGES WITH OUR BUDGET AND, AND THE DISCUSSIONS THAT NEED TO HAPPEN TO MEDIATE A NEW PLACE FOR LONG BEACH UTILITIES IN THE, IN THE GREATER SCHEME OF LONG BEACH AND ITS FUTURE.

SO THANK YOU MITCHELL, VERY MUCH FOR YOUR LEADERSHIP AND THANKS TO ALL OF YOU.

WHAT FOR ALL THAT YOU DID PREPARING FOR TODAY.

IT'S REALLY, REALLY DEEPLY APPRECIATED.

UM, I GET TO CLOSE THIS, UH, WITH THE USUAL .

UM, SO I, UM, I'M ASKING, I HAVE A RECOMMENDATION TO RECEIVE AND FILE UTILITIES, OPERATIONS, PLANNING, ALIGNING FINANCIAL MODELS, RESOURCE MANAGEMENT AND INFRASTRUCTURE GOALS, AND ASK IF THERE'S ANY PUBLIC COMMENT AND ANY COMMISSIONER COMMENT.

UH, DO I HAVE A MOTION TO RECEIVE ANY FILE? MOTION TO RECEIVE ANY SECOND? THANK YOU.

I HAVE A SECOND AS WELL.

ALL IN FAVOR SAY AYE.

AYE.

ANY OPPOSED? HEARING NONE.

THE MOTION CARRIES TO RECEIVE AND FILE.

COMMENT PERIOD IS NOW CLOSED.

UM, PUBLIC COMMENT.

THIS IS OUR PUBLIC COMMENT PERIOD.

, UM, SEEING NO PUBLIC COMMENT, UM,

[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 Board.]

[ANNOUNCEMENTS]

THE

[03:45:01]

ARE THERE ANY ANNOUNCEMENTS? WE DO HAVE A MEETING THURSDAY, CORRECT? ? I JUST HAVE ONE QUICK ONE.

I I I DON'T KNOW IF WE DID THIS, BUT WE DO A LAND RECOGNITION.

WE DID NOT.

JUST, JUST AS A REMINDER, UM, THAT I'M SURE YOU ALL, YOU WENT THROUGH THE TOUR, YOU WERE REMINDED THAT THIS WAS LAND.

UM, I THINK THAT'S REALLY IMPORTANT FOR US TO SIT HERE AND TO REMEMBER THAT, UM, THERE WERE MANY PEOPLE THAT LIVED ON HERE AND VERY, VERY RESOURCEFUL IN TERMS OF THEIR USE OF WATER.

AND SO I THINK IT'S A GREAT HONOR THAT WE'RE ALL HERE TODAY.

IT TURNED INTO A WONDERFUL EXPERIENCE.

I, AT FIRST I WAS THINKING WE HAVE AN HOUR AND A HALF FOR LUNCH.

THAT'S WAY TOO MUCH TIME, WHICH I'LL JUST COME BACK AND DO THIS.

BUT THE MORE I WALKED AROUND AND GETTING TO SEE THE HOUSE ITSELF, I'VE NEVER BEEN IN THAT HOUSE.

UH, IN ALL THE YEARS I'VE BEEN COMING HERE.

I'VE NEVER HAD THE TIME TO DO THAT.

SO I REALLY APPRECIATE THE SETTING AND WANNA THANK THE RANCHO FOR, FOR ALLOWING US TO BE HERE TODAY.

IT'S JUST SUCH A TREASURE FOR LONG BEACH.