* This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting. [CALL TO ORDER] [00:00:04] STATES [PLEDGE OF ALLEGIANCE] OF AMERICA TO THE REPUBLIC FOR WHICH IT STANDS. ONE NATION UNDER GOD WITH LIBERTY, ANCESTORS FOR ALL. THANK YOU. WE HAVE A GUEST IN THE AUDIENCE TODAY. I'LL JUST LEAD WITH THAT. CHARLIE PARKIN, OUR NEW COMMISSIONER. WOULD YOU STAND ROW TWO? YAY. WELCOME. HE'S HERE TO, TO WATCH AND OBSERVE TODAY AND, AND WE'LL TAKE HIS PLACE IN JULY AS I UNDERSTAND IT, SO GREAT. OKAY. UM, I CALL ON DINA FOR THE ROLL CALL, [ROLL CALL] PRESIDENT MCGUIRE. HERE, VICE PRESIDENT SCOTT, PRESENT. SECRETARY CORDERO. COMMISSIONER SHANNON IS ABSENT. COMMISSIONER RAINEY IS ABSENT. WE HAVE A QUORUM. GREAT. UM, FOR THE RECORD, COMMISSIONER SHANNON AND COMMISSIONER RAINEY ARE EXCUSED FROM TODAY'S MAY 15TH BOARD MEETING. AND IF THERE ARE, ARE THERE ANY OBJECTIONS FROM THE BOARD? SEEING NONE, DO I HAVE A MOTION TO, TO APPROVE? LET'S MOVE ON TO, OKAY. ACTUALLY WE [1. 25-55280 Recommendation to approve May 1, 2025 Board meeting minutes.       Suggested Action: Approve recommendation. ] DON'T NEED A MOTION, DO WE? NO. OKAY. MOVE ON TO THE REGULAR AGENDA. PUT THAT AWAY FROM ME. OKAY. UH, ITEM NUMBER ONE IS TO APPROVE THE MAY 1ST, 2025 BOARD MEETING MINUTES. ARE THERE ANY PUBLIC COMMENTS? SEEING NONE. ARE THERE ANY COMMISSIONER COMMENTS? YOU HAVE A MOTION TO APPROVE? THANK YOU. AND WE HAVE A SECOND. ALL IS IN FAVOR, SAY AYE. ALL AYE. ANY OPPOSED? THE MOTION CARRIES ITEM NUMBER TWO, [2. 25-55281 Recommendation to approve Retirement Order Nos. 6185 and 6186 for inventory items that are no longer being used during the current year.       Suggested Action: Approve recommendation. ] TO APPROVE RETIREMENT ORDER NUMBER 61 85 AND 61 86 FOR INVENTORY ITEMS THAT ARE NO LONGER BEING USED DURING THE CURRENT YEAR. ARE THERE ANY PUBLIC COMMENTS? COMMISSIONER, COMMENT? DO I HAVE A MOTION TO APPROVE? THANK YOU COMMISSIONER SCOTT. THANK YOU. COMMISSIONER CORDERO FOR YOUR SECOND. ALL IN FAVOR SAY AYE. AYE. ANY OPPOSED? THE MOTION CARRIES. THANK YOU. IT'S REALLY SIMPLE WITH ONLY THREE OF US. [3. 25-55282 Recommendation to receive and file the Annual Comprehensive Financial Report (ACFR) for the period ended September 30, 2024.       Suggested Action: Approve recommendation. ] ITEM NUMBER THREE IS, IS TO RECEIVE AND FILE THE ANNUAL COMPREHENSIVE FINANCIAL REPORT, A CFR FOR THE PERIOD ENDED SEPTEMBER 30TH, 2024. A LOT OF PAPER THAT WE RECEIVED, A REALLY GIANT DOCUMENT. THANK YOU FOR ALL THAT WORK. DO I HAVE ANY PUBLIC COMMENTS? ANY COMMISSIONER COMMENT? COMMISSIONER. GOD, THANK YOU. UH, CAN I 0.1 THING OUT ON THE CER? UM, SO PAGE 76 OF THE DOCUMENT, UM, I HAVE ONE HERE IF YOU WANT. 76. SO 76. UH, THE TITLE IS THE NET POSITION BY COMPONENT, WHICH IS, UH, THIS COMPONENT IS THE GAS FUND. UH, AND IT'S OVER THE LAST 10 YEARS SINCE 2015. UM, WOULD YOU DESCRIBE NET POSITION AS BEING SIMILAR TO A COMPANY'S NET EQUITY THAT ARE ROUGH EQUIVALENT IN GOVERNMENT TERMS? I WOULD THINK SO, YES. AND I, I THINK SO TOO. UM, SO I JUST WANTED TO POINT OUT, UM, THE CONSOLIDATED UTILITY, UH, BECAME EFFECTIVE IN 2023, I'M NOT MISTAKEN. UM, AND IF WE'RE LOOKING AT THIS 10 YEAR, UH, BACK TO 2015, UH, IT, IT SHOWS A NET POSITION, UM, IN THE NEGATIVE FOR THOSE PAST 10 YEARS. I MIGHT HAVE TO LOOK INTO THIS FURTHER FOR YOU. ARE YOU TRYING, ARE YOU, ARE YOU LIKE, SO MY, MY QUESTION IS WHEN WE CONSOLIDATED AS A UTILITY, UH, IF, IF WE GO TO THE, THE NEXT COUPLE PAGES, IT, IT SHOWS THAT THE SAME GRAPH FOR THE WATER FUND AND FOR THE SEWER FUND, BOTH OF WHICH ARE, ARE IN POSITIVE TERRITORY FOR [00:05:01] THE PAST, FOR THE PAST 10 YEARS, UM, WHEN WE, FOR LACK OF A BETTER TERM, INHERITED THE GAS FUND, UM, FROM, UH, THE OTHER DEPARTMENT THAT WAS MANAGING IT BEFORE. UM, IT SEEMS TO ME LIKE IT WAS NOT IN THE BEST OF FINANCIAL HEALTH COMPARED TO THE WATER AND SEWER FUND. AND I THINK WHAT I, I'VE ALLUDED TO THIS IN THE PAST, IS THAT EVERYTHING WE'VE DONE ON THE GAS FUND HAS BEEN BASED ON A PAYGO APPROACH RATHER THAN DEBT FINANCING. SO THE CASHFLOW DOES VARY SIGNIFICANTLY FROM WATER AND SEWER. SO, UH, LOOKING AT THE FUND BALANCE THEN OF THE GAS FUND, UM, I THINK OVER THE LAST 10 YEARS, FIVE OF THOSE YEARS HAVE BEEN A NEGATIVE TERRITORY AS FAR AS THE, UH, WHERE THE FUND BALANCE WAS, WAS POSITIVE OR NEGATIVE FOR THAT YEAR. UM, AND FOUR OF THOSE YEARS WERE, WERE POSITIVES. DOES THAT INDICATE THAT, UH, MAYBE WE DIDN'T RECEIVE THE GAS FUND IN AS GOOD OF A CONDITION AS THEY ARE WATER FUND AND SEWER FUND? I THINK IN THE, IN THE MOST RECENT YEARS, THERE HAVE BEEN TRANSACTIONS THAT HAVE OCCURRED THAT WERE UN ANTICIPATE AND, UH, WE, WE WENT THROUGH A GAS PRICE CRISIS. WE HAD, UH, THE PURCHASE OF ELM. UM, I DON'T KNOW IF IT WAS NECESSARILY IN A BAD OR UNHEALTHY POSITION, UM, JUST PRIOR TO THE MERGER. UH, I DO KNOW THAT AGAIN, IT, IT DOES, THIS DOES REFLECT, UH, HOW WE'VE DONE BUSINESS IN THE PAST WITH TRANSACTIONS. AND SO WE'RE HOPING WITH OUR PRESENTATION TODAY, WE SHOWCASE OUR ABILITY TO GET OUT OF, UH, THIS FINANCIAL CHALLENGE THAT WE'RE CURRENTLY IN. THAT'S EXACTLY WHERE I WAS HEADED. UM, I JUST WANTED TO GIVE A LITTLE HISTORICAL, GOING BACK 10 YEARS TO, TO LOOK AT WHERE THE GAS FUND HAS BEEN. UH, AND I UNDERSTAND WE'VE HAD A COUPLE CHALLENGES, BUT, UM, WE'VE ONLY HAD THE GAS FUND FOR A COUPLE YEARS, BUT, UM, IT HELPS TO EXPLAIN WHY OUR RESERVES IN THE GAS FUND ARE AS CRITICALLY LOW AS THEY ARE. UM, OR I BELIEVE OUR RESERVES AND THE GAS FUNDER ARE ONE 10TH OF WHAT OUR MINIMUM RESERVE IS. UM, SO I THINK A LITTLE HISTORICAL CONTEXT, AND I'M NOT SURE I SAW THAT IN THE UPCOMING BUDGET REVIEW. UM, I'M NOT SURE IF WE HAVE THAT SIGNIFICANT OF A 10 YEAR, UH, HISTORICAL LOOK BACK. JUST WANTED TO BRING THAT OUT TO BE ABLE TO, TO SHOW THAT THE CAFFER DOES SHOW THAT, THAT WE'VE GOT A LONG WAYS TO GO, BUT WE DIDN'T RECEIVE THE GAS FUND IN THE BEST OF PHYSICAL HEALTH. AND YOU CAN SEE IN FY 24, WE HAVE ALREADY MADE INCREMENTAL PROGRESS. YES, EXACTLY. YEAH. NO, I AGREE. THAT'S ALL I HAD. THANK YOU. OKAY. ARE THERE ANY COMMENTS, COMMISSIONER? UM, THANK YOU. VERY COMPREHENSIVE. THANK YOU. EXTREMELY, UM, DETAILED, BUT THIS IS PROBABLY MORE OF A COMMENT AND MAYBE A LITTLE QUESTION AT THE END. SO FOR CLARIFICATION FOR MYSELF, UM, THIS DOCUMENT MY INTEREST WAS LOOKING AT, WENT RIGHT TO WHAT IS THIS DOCUMENT SUPPOSED TO DO? AND IT, IT REALLY IS NOT GIVING US ANY RECOMMENDATIONS, IT'S JUST GIVING US AN ASSESSMENT, CORRECT. BECAUSE THAT IT LOOKS LIKE IT SAYS, IDENTIFY AND ASSESS THE RISKS OF MATERIAL MISMANAGEMENT, FINANCIAL STATEMENTS CREATE AN UNDERSTANDING OF INTERNAL CONTROL RELEVANT TO THE AUDIT AND EVALUATE THE APPROPRIATENESS OF ACCOUNTING POLICIES. IS THAT CORRECT? YES. THE, THE INTENT OF HAVING AN ANNUAL COMPREHENSIVE REPORT, FINANCIAL REPORT IS TO ENSURE THAT WE HAVE BEEN FINANCIALLY SOUND AND WE'VE BEEN, UH, COMPLIANT WITH, UM, OF GOVERNMENTAL ACCOUNTING PRACTICES. AND A THIRD PARTY ACCOUNTING FIRM HAS COME IN AND THEY REVIEW OUR PROCESSES THROUGH AND THROUGH AS WELL AS OUR FINANCIAL HEALTH. UM, THEY DON'T, WILL NOT NECESSARILY MAKE A RECOMMENDATION UNLESS THERE IS AN AUDIT FINDING, BUT, UM, TO OUR KNOWLEDGE WE HAD A CLEAN REPORT. OH, GREAT. OKAY. SO THEN THIS IS SOUND. AND THEN, SO BETWEEN THAT AND WHAT WE HEAR TODAY, UM, SOMEWHERE IN THE, I GUESS THAT'S ALL COMPREHENSIVE, WE JUST NEED TO UNDERSTAND THE WHOLE PAPER. YES. THE, I I HAVE TWO TEAMS AND ONE IS ACCOUNTING AND ONE IS BUDGET. SO THIS, UH, ANNUAL COMPREHENSIVE FINANCIAL REPORT WAS COMPILED BY THE ACCOUNTING TEAM. THE ACCOUNTING TEAM LOOKS AT WHAT'S HAPPENED IN THE PAST AND THE BUDGET TEAM LOOKS AT WHAT'S HAPPENED IN THE PAST AND WHERE ARE WE GOING. OKAY, PERFECT. THAT'S CLARIFICATION ENOUGH FOR ME. THANK YOU. HATE THAT A**L. DID YOU HAVE A COMMENT? YEAH, I JUST WANTED TO PROVIDE YOU A, A SUMMARY ON, ON ITEM THREE, UH, WHICH IS HERE. IT, IT IS A REGULAR ANNUAL PROCESS THAT WE DO. I, I WOULD QUALIFY TO YOU THAT IT'S ONE OF THOSE SITUATIONS WHERE MUCH LIKE, UM, [00:10:02] MUCH LIKE WATER QUALITY, THERE, THERE IS AN ELEMENT TO US THAT IS BOTH ROUTINE AND YET FUNDAMENTAL AT THE SAME TIME. UH, WE TELL YOU THAT WE MEET OR EXCEED WATER QUALITY STANDARDS EVERY YEAR, UM, AND THAT'S FANTASTIC. UM, I WANT YOU TO THINK ABOUT IT IN THE OPPOSITE CONTEXT, RIGHT? EVERYTHING WE DO AND WE DO IT, AND WE HIT THAT EVERY YEAR BECAUSE REALLY THE CONSEQUENCE IS NOT TO HIT IT EVERY YEAR, THE CONSEQUENCES, WHAT WOULD HAPPEN IF WE DID NOT DO THAT? THE AFER IS AN AUDIT OF ALL OF THE MATERIAL NUMBERS AND STATEMENTS THAT WE HAVE DELIVERED TO THE BOARD OVER THE COURSE OF THE PRIOR YEAR, WHETHER IT'S IN THE MOUS AND THE TRANSFERS, WHETHER IT'S IN THE, UH, ACTUALS RECEIVED TO DATES, WHETHER IT'S IN THE ESTIMATES TO CLOSE, ALL THOSE NUMBERS ARE REFLECTED BACK INTO THE AFER AND THEY ARE ACTUALLY SUBMITTED TO AN AUDIT TEAM FOR AUDITING TO HOLD US ACCOUNTABLE TO WHETHER IT IS TRUE. THAT'S WHY THE AFER IS A RESTATEMENT OF INFORMATION THAT HAS ALREADY BEEN PRESENTED TO THE BOARD IN THE PAST. IT IT HAS, BECAUSE IT'S PART OF THE ENTIRE PRIOR BUDGET PROCESS, THE ENTIRE, UH, ASPECT OF ESTIMATES TO CLOSE AND YEAR END. IT IS A CITY PROCESS. SO THEREFORE WE DO THIS PROCESS HAND IN HAND WITH THE CITY, WHICH IS ALSO MARSHALING FORWARD ITS ENTIRE FINANCIAL STATEMENTS AND GOING THROUGH THE AUDIT PROCESS FOR ITS OWN ACT. AS WE DO THAT, HOLDING HANDS TOGETHER WITH THE CITY, ADMITTEDLY, THE CITY HAS A DIFFERENT SCHEDULE FOR ITS BUDGET. THE CITY IS NOT GONNA APPROVE BUDGET UNTIL SEPTEMBER. THEY ARE NOW IN THE INITIAL STAGES OF ASSEMBLING THE BUDGET THAT WILL EVENTUALLY GET PRESENTED IN COMMITTEES AND DEBATED AND SO FORTH AND GONE. WE HAVE AN OBLIGATION TO HAVE, MAKE SURE THAT YOU AS A GOVERNING BOARD ACTUALLY HAVE AN OPPORTUNITY TO ADOPT BUDGET AND SUBMIT IT TO THE MAYOR'S DEADLINE BY JULY. SO THEREFORE WE GO FIRST, ADMITTEDLY IN MAY TIMEFRAME, YOU'RE A BIT EARLY COMPARED TO SEPTEMBER, BUT THAT ALSO PUTS US IN A VERY PO IN A VERY DIFFICULT POSITION WITH THE CALENDAR ASSOCIATED WITH THE AFER AND WHAT THE AFER GOES AND MARSHALS ITS WAY THROUGH THE AUDITING PROCESS AND TO BE PUBLICATION. IT OCCURS ROUGHLY AT ABOUT THE SAME TIME THAT WE'RE JUST WRAPPING UP BUDGET. AT THE SAME TIME THOUGH, THE NUMBERS THAT ARE PRESENTED IN THE ACT FOR ARE INDEED A RESTATEMENT OF ALL NUMBERS AND INFORMATION THAT HAVE BEEN PRESENTED TO YOU BEFORE. SO IN THAT SENSE, RIGHT, IT IS BOTH AN AUDITING TRUE UP, A RESPONSIBLE DOCUMENT THAT TELLS US YOU ARE GOOD IN TERMS OF THINGS THAT YOU HAVE SAID BEFORE. AND AT THE SAME TIME IT INFORMS US GOING FORWARD, BUT AT THE SAME TIME, WE ARE BRINGING YOU NUMBERS THAT YOU HAVE SEEN BEFORE IN THE PAST. THESE ARE JUST RESTATED AND THEN CERTIFIED BY AN AUDITING FIRM GIVING US THAT SEAL OF APPROVAL AS WE GO FORWARD. AND THAT'S ALL I HAD. THANK YOU. CAN I ADD, UH, TO THAT A**L, UH, SO I WANNA HIGHLIGHT THE TIMELINE AS WELL OF THE ACT FOR. SO, UH, OUR YEAR END CLOSE, AS YOU KNOW, ENDS SEPTEMBER 30TH. SO MOST PEOPLE WOULD ASSUME THAT WE WOULD HAVE OUR FINANCIALS COMPLETED BY OCTOBER OR NOVEMBER, BUT THE TIMEFRAME OF THE AUDIT AND PREPARING FOR THE BERG DOESN'T START UNTIL JANUARY. AND IT IS A THREE MONTH LONG PROCESS IN WHICH I UNFORTUNATELY HAD THREE RETIREMENTS IN DECEMBER, AND THESE WERE PEOPLE WHO HAD VERY, UM, SEASONED EXPERIENCE FOR 30 PLUS YEARS. SO, UH, I WANNA GIVE CREDIT TO TWO OF MY SENIOR ACCOUNTANTS WHO AREN'T HERE. I WASN'T PLANNING ON SPEAKING ON THIS ITEM TODAY, BUT THEY WORKED TIRELESSLY ON THIS, UH, FOR THOSE THREE MONTHS. AND IN THIS TIMEFRAME, WE BROUGHT TO YOU THE FINANCIAL, UH, UPDATE FOR FY 24. SO THAT EXPLAINS SOME OF THE, WHAT MAY HAVE SEEMED LIKE A DELAY, BUT WE ARE FOLLOWING THE CITY'S, UH, FINANCIAL CLOSE PROCESS AND TIMELINE. UH, THIS YEAR WE ISSUED THE ACT FOR ON MARCH 28TH, WHICH WAS EARLIER THAN WHAT'S BEEN DONE IN THE PAST. IT'S USUALLY DONE IN APRIL. THERE, UH, WAS A NEED BY THE CITY TO ACCELERATE THE TIMEFRAME. AND SO, UM, THIS, THIS DOESN'T ALWAYS COINCIDE WITH THE BUDGET TIMEFRAME, SO ESPECIALLY IF WE TRY TO ACCELERATE OUR BUDGET TIMELINE IN FUTURE YEARS, UM, WE MAY NOT HAVE THE ACT FOR IN TIME FOR BUDGET, BUT WE'LL AT LEAST HAVE PRELIMINARY YEAR END CLOSE FINANCIALS. OKAY. THANK YOU STEPHANIE. THANKS, A**L COMMISSIONER SCOTT, I JUST THANK YOU FOR BOTH, BOTH OF YOU FOR THAT. UM, I THINK SINCE WE'RE LOOKING FORWARD, UH, TODAY WITH THE, WITH THE BUDGET PROCESS, I THINK IT'S ALWAYS IMPORTANT TO LOOK BACK ON [00:15:01] THE, ON THE CAFFER, UM, , , CALL IT CER. UM, IT'S, IT'S ALWAYS IMPORTANT TO LOOK BACK ON WHERE WE'VE BEEN, UM, AND MAKE SURE THAT WHERE WE THOUGHT WE WERE GOING A COUPLE YEARS AGO, MAKE SURE THAT, THAT WE ACTUALLY ENDED UP WHERE WE THOUGHT WE WERE GOING. UH, BECAUSE I THINK THAT HELPS US IN, IT HELPS INFORM US MOVING FORWARD WITH THE BUDGET AND THE BUDGETS FORWARD LOOKING, THE ACT FOR IS BACKWARD LOOKING, AND I THINK THE TWO TOGETHER ARE IMPORTANT TO CONSIDER. GREAT DISCUSSION. THANK YOU. SEEING NO OTHER COMMENT, DO I HAVE A MOTION TO RECEIVE AND FILE? SECOND, THANK YOU FOR BOTH. ALL IN FAVOR SAY AYE. AYE. ANY OPPOSED? MOTION CARRIES. THANK YOU. [4. 25-55283 Recommendation to adopt Request for Proposal UD-25-238 for As-Needed Industrial Electrical Services and authorize the General Manager to award contracts to (1) Baker Electric & Renewables, LLC, a California corporation, (2) AMTEK Construction, a California corporation, and (3) FIELDTEK Electric, LLC, a California limited liability company, for on-call industrial electrical services in a total aggregate amount not to exceed $750,000 for a one year period, with the option to renew for up to two additional one-year periods at the discretion of the General Manager; and authorize the General Manager to execute all documents necessary to enter into the contracts, including any necessary subsequent amendments.       Suggested Action: Approve recommendation. ] OKAY, ITEM NUMBER FOUR, TO ADOPT REQUEST FOR PROPOSAL UD 25 DASH 2 38 AS NEEDED, INDUSTRIAL ELECTRICAL SERVICES AND AUTHORIZE THE GENERAL MANAGER TO AWARD CONTRACTS TO BAKER ELECTRIC AND RENEWABLES. AND NUMBER TWO, AMTECH CONSTRUCTION. AND NUMBER THREE, FIELD CHECK ELECTRIC FOR ON-CALL INDUSTRIAL ELECTRIC SERVICES, I CALL SKIP FULTON. HI, GOOD MORNING. THANK YOU FOR THE INTRODUCTION. GOOD MORNING COMMISSIONERS. MY NAME IS SKIP FULTON. I'M THE MANAGER OF WATER TREATMENT. BEEN WITH THE DEPARTMENT FOR OVER 23 YEARS NOW. LONG BEACH RESIDENT, BORN AND RAISED HERE. SO THIS IS PRETTY EXCITING FOR ME TO, UH, GET THIS OPPORTUNITY. IT'S MY FIRST PRESENTATION BOARD. UH, BUT I WANT TO EMPHASIZE THE IMPORTANCE OF WHAT I'M PRESENTING TODAY BECAUSE AS IT RELATES TO MY JOB, CRITICALITY OF WHAT WE DO, UH, I OVERSEE IN THE TREATMENT DIVISION IS OUR INDUSTRIAL ELECTRICAL SYSTEMS. SO, UH, I HAVE A BRIEF PRESENTATION HERE JUST TO GO THROUGH WHAT THOSE ITEMS ARE. SO WE, WE HAVE OVER 70, UH, FACILITIES THAT WE OPERATE AND MAINTAIN, INCLUDING THE GROUNDWATER TREATMENT PLANT, UH, MANY WELLS, SEWER PUMP LIFT STATIONS, UH, A RECYCLED WATER SYSTEM, AS WELL AS, UH, GAS CAMPUS, WATER CAMPUS. UM, SO WHY DOES THIS MATTER? WHY, WHY ARE WE HERE TODAY ASKING FOR THIS? WELL, ONE OF THE KEY COMPONENTS TO MAINTAINING THESE FACILITIES IS HAVING HIGHLY SKILLED, HIGHLY TRAINED INDUSTRIAL ELECTRICIANS, UH, HERE TO ENSURE THAT OUR SERVICES ARE CONTINUOUS, MULTIPLE FACILITIES THAT REQUIRE A LOT OF TECHNICAL KNOW-HOW. AND WE DO HAVE IN-HOUSE STAFF TO DO A LOT OF THIS WORK, BUT THERE ARE TIMES WHERE WE NEED TO GO ABOVE AND BEYOND OUR EXISTING WORKFORCE AND CONTRACT, BRING IN, UH, SKILLED LABOR TO ASSIST US. SO WE HAVE THREE MAJOR CATEGORIES WHERE THESE ELECTRICIANS MAINTAIN AND OPERATE SYSTEMS. SO FIRST BULLET POINT THERE IS 110 TO 2,400 VOLT ELECTRICAL SWITCH GEARS. SO PICTURES HERE KIND OF GIVE YOU A ROUGH IDEA OF WHAT THESE THINGS LOOK LIKE. WHERE WE LEFT MAIN ELECTRICAL FEED TO OUR TREATMENT PLANT, BIG CABINETS, THOSE ARE ALL SWITCH GEAR. SO, UH, WE HAVE A LOT OF PUMPS AND MOTORS IN OUR SYSTEMS AND MOTOR CONTROL CENTERS. AND THAT'S WHAT THIS PICTURE HERE DEMONSTRATES, UH, VERY COMPLEX CIRCUITRY AND REQUIRES A LOT OF EXPERIENCE AND KNOW-HOW TO WORK ON THEM, UH, AS WELL AS EMERGENCY GENERATORS. SO WHAT THESE SERVICES PROVIDE SUPPLEMENT TO OUR EXISTING STAFF, RIGHT? SO IF WE, IN THE TIMES OF NEED WHERE WE CAN CALL ON THESE CONTRACTORS TO PROVIDE INSTALLATION, MAINTENANCE SERVICES, THEY CAN TROUBLESHOOT AND REPAIR ELECTRICAL SYSTEMS FOR US. AND ONE BIG COMPONENT OF THAT IS BEING ON CALL 24 7 FOR THINGS LIKE POWER OUTAGES. THERE'S TIMES WHERE WE HAVE TO, UH, TOW OUT PORTABLE GENERATORS TO GET A FACILITY UP AND RUNNING AGAINST, SUCH AS SEWER LIFT STATIONS. WE HAVE [00:20:01] TO KEEP THE SEWAGE FLOWING AND MOVING, OTHERWISE WE RUN INTO MUCH BIGGER PROBLEMS. SO HERE AGAIN, THIS JUST SOME PHOTOS JUST TO KIND OF GIVE, UH, AN IDEA OF WHAT WORK LOOKS LIKE. UM, IT'S A VERY DANGEROUS JOB AS WELL, AND AGAIN, REQUIRES A LOT OF TRAINING, A LOT OF EXPERTISE TO KNOW HOW TO WORK IN AND AROUND THE TYPE OF EQUIPMENT. YEAH, SO WE HAVE A, WE HAVE A NEED. WE'VE BEEN UTILIZING THESE TYPES OF SERVICES FOR SEVERAL YEARS. BEEN A, IT, IT'S, IT'S AN INSURANCE FOR US TO ENSURE THAT WE ALWAYS HAVE STAFF AVAILABLE, WHETHER IT'S THROUGH CONTRACT OR IN-HOUSE TO KEEP OUR FACILITIES OPERATED. UH, SO RFP WAS POSTED ON MARCH 15TH, 2025. THE RESULTS CAME IN ON APRIL 4TH, 2025. THREE VENDORS SUBMITTED PROPOSALS, ALL CONFORMING AMTECH CONSTRUCTION, BAKER ELECTRIC, RENEWABLES, FIELD TECH ELECTRIC. OH, UH, BIG ASK TODAY IS TO HAVE BOARD ADOPT REQUEST FOR PROPOSAL UD 25, 2 38 OR AS NEEDED INDUSTRIAL ELECTRICAL SERVICES AND HAVE AUTHORIZED A GENERAL MANAGER TO AWARD CONTRACTS TO BAKER ELECTRIC AND RENEWABLES, LLC, CALIFORNIA CORPORATION, AMTECH CONSTRUCTION, CALIFORNIA CORPORATION, FIELD TECH ELECTRIC, LLC, CALIFORNIA LIMITED LIABILITY COMPANY FOR ON-CALL INDUSTRIAL ELECTRICAL SERVICES. IN TOTAL AGGREGATE AMOUNT OF NOT TO EXCEED 750,000 OR A ONE YEAR PERIOD WITH THE OPTION TO RENEW FOR UP TO TWO ADDITIONAL ONE YEAR PERIODS. THE DISCRETION OF THE GENERAL MANAGER AUTHORIZE THE GENERAL MANAGER TO EXECUTE ALL DOCUMENTS NECESSARY, ENTER INTO THE CONTRACTS, INCLUDING ANY NECESSARY SUBSEQUENT AMENDMENTS THAT IF YOU HAVE ANY QUESTIONS, I'D BE GLAD TO TAKE THEM. OKAY, THANK YOU. DO I HAVE ANY PUBLIC COMMENT? ANY COMMISSIONER COMMENT? GLORIA, THANK YOU. UM, THANK YOU SKIP. UM, YOU DID A GOOD JOB. REALLY GOOD JOB. AN EASY STYLE TO LISTEN TO. BUT, UM, I, I REALLY LIKE THE FACT THAT YOU TALKED A LOT ABOUT THE NEED FOR HIGHLY SKILLED SUPPLEMENTAL, YOU KNOW, SUPPORT BECAUSE OBVIOUSLY WE HAVE A LOT OF, UM, HIGHLY SKILLED PEOPLE INTERNALLY WHO HAVE TO WORK WITH OUR CONTRACTORS. UM, I JUST WANNA THANK YOU FOR THAT, POINTING THAT OUT. I ALSO LIKE THE FACT THAT YOU WERE SO PASSIONATE ABOUT LIVING IN LONG BEACH, BEING FROM LONG BEACH AND, AND BEING IN TRUE TO THE CITY. SO THANK YOU FOR THAT AS WELL. UM, I THINK THESE ARE GOOD MESSAGES FOR PEOPLE TO HEAR. UM, ONE THAT PEOPLE ARE SO PASSIONATE. A LOT OF OUR STAFF, WHETHER YOU LIVE IN LONG BEACH OR YOU'RE FROM LONG BEACH OR NOT, UM, BUT ALSO WHO ARE HERE TO DO THE GOOD WORK. AND I, I GUESS THIS COMES UP BECAUSE I, WE'VE GOTTEN SOME COMMENTS RECENTLY ABOUT HIGHWAY, YOU KNOW, STAFF'S, WAGES AND, YOU KNOW, PAYING PEOPLE A LOT OF MONEY TO DO THIS JOB, BUT WE'RE TRYING TO BE COMPETITIVE AND TRYING TO MAINTAIN THE INTEGRITY OF OUR SYSTEM. SO WE JUST HAD THIS DISCUSSION AT METROPOLITAN ABOUT HOW DO WE RETAIN PEOPLE EVEN AT MET WHO PAYS, YOU KNOW, PROBABLY MORE THAN WE DO IN DWP. SO EVERYONE'S THINKING ABOUT THIS. AND SO TO THE PEOPLE OUT THERE WHO THINK THAT WE JUST PAY PEOPLE TO PAY THEM, IT'S BECAUSE WE NEED TO MAINTAIN THE INTEGRITY OF THE SYSTEM. AND SO THANK YOU VERY MUCH FOR YOUR PASSION ON THIS. THANK YOU. THANK YOU, GLORIA. COMMISSIONER SCOTT, JUST REAL QUICK, 23 YEARS. YES. AND THIS IS YOUR FIRST PRESENTATION. OH, HOW'D YOU GET AWAY WITH THAT ? I'D HAVE TO DO SOMETHING ABOUT THAT. . THANK YOU. IT WON'T BE THE LAST. THANK YOU. ALL GOOD? HEY, DO I HAVE A MOTION TO APPROVE? AND A SECOND. THANK YOU. ALL IN FAVOR SAY AYE. AYE. ANY OPPOSED? NO, THE MOTION CARRIES. OKAY. ITEM NUMBER [5. 25-55284 Recommendation to adopt Resolution No. UT-1535 authorizing the General Manager to execute a contract, and any necessary subsequent amendments, with Convergint Technologies, LLC, a Delaware limited liability company, for providing maintenance, repairs, and enhancements to Long Beach Public Utilities Department’s (LBPUD) security system on the same terms and conditions specified in the Sourcewell Cooperative Purchasing Agreement, in an amount not to exceed $2,600,000 until the Sourcewell contract expires on February 18, 2029, with the option to renew for as long as the Sourcewell contract remains in effect.       Suggested Action: Approve recommendation. ] FIVE. I THINK YOU GET TO STAY UP THERE, SEAN. OH, HERE WE GO. . OH, SEAN CURTIS. WE HAVE ANOTHER SEAN HERE. OKAY. UM, TO ADOPT RESOLUTION NUMBER UT 1535, AUTHORIZING THE GENERAL MANAGER TO EXECUTE A CONTRACT AND ANY NECESSARY SUBSEQUENT AMENDMENTS WITH CONVERGENT TECHNOLOGIES LLC FOR PROVIDING MAINTENANCE REPAIRS AND ENHANCEMENTS TO LONG BEACH PUBLIC UTILITIES DEPARTMENT SECURITY SYSTEM. [00:25:01] SEAN CURTIS. GOOD MORNING COMMISSIONERS. THANK YOU FOR THIS OPPORTUNITY TO PRESENT TO YOU THIS MORNING. THE ITEM I BRING BEFORE YOU IS NUMBER FIVE RELATED TO SECURITY SYSTEM, MAINTENANCE SERVICES. AND WHAT WE'RE ESSENTIALLY REQUESTING IS TO, UH, ADOPT A RESOLUTION TO ENTER INTO A CONTRACT WITH CONVERGENT TECHNOLOGIES TO PROVIDE SERVICES FOR MY PRESENTATION. I WILL BE GOING OVER THE BACKGROUND, UH, SPECIFICALLY TALKING ABOUT THE SECURITY FIVE YEAR MASTER PLAN, WHAT THE SCOPE OF SERVICES WILL, UH, ENTAIL FROM CONVERGENT, UH, WHY WE ARE UTILIZING THE SOURCE WELL COOPERATIVE. AND CLOSING WITH THE RECOMMENDATION. UH, BACK IN 2023, UH, I BELIEVE IT WAS SEPTEMBER, 2023, I, I PROVIDED A CLOSED SESSION TO THE BOARD OUTLINING THE FIVE YEAR MASTER PLAN AND DETAILED SPECIFIC PROJECTS TO ENHANCE OUR SECURITY AT OUR FACILITIES. UH, THE PRIMARY OBJECTIVES WE WERE TRYING TO ACHIEVE IN THE FIVE YEAR MASTER PLAN IS ENHANCING OUR TECHNOLOGY USAGE, UH, AND CREATING LAYERED SECURITY MEASURES AT OUR FACILITIES TO HELP DETER, DETECT, DELAY, AND DEFEND OUR PROPERTIES. WE ARE GOING, WE ARE IMPLEMENTING A LIFECYCLE MANAGEMENT PROGRAM TO ENSURE OUR TECHNOLOGY IS MAINTAINED AND RELIABLE. WE ARE EXPANDING TECHNOLOGIES INTO OUR REMOTE LOCATIONS, SUCH AS WELL SITES RE, UH, NATURAL GAS REGULATE REGULATOR STATIONS AND SO FORTH, SUPPORTING OUR EMPLOYEES WITH SECURITY AND INTEGRATING THE TECHNOLOGY THAT WE HAVE, UH, FOLLOWING THE MERGER. SO THERE ARE DIFFERENT SYSTEM UTILIZED, UH, GUEST, UH, FACILITY THAT WE ARE MERGING INTO THE, UH, FORMER WATER SECURITY SYSTEM. UH, FOLLOWING THAT CLOSED SESSION, UH, THE BOARD AUTHORIZED THE RESOLUTION TO UTILIZE THE SOURCE WALL COOPERATIVE PURCHASING AGREEMENT WITH, UH, SOURCE WALL, UH, WITH CONVERSION TECHNOLOGIES. THAT AGREEMENT WAS SET TO EXPIRE ON APRIL 22ND, WHICH IS, UH, LAST MONTH. THE AGREEMENT DID INCLUDE A ONE YEAR RENEWAL OPTION, BUT THAT, UH, WAS NOT EXERCISED. SO THAT'S WHY I'M HERE TODAY. IN TERMS OF THE SCOPE OF SERVICES THAT, UH, THE CONTRACTOR WILL PROVIDE IS THE CONTIN CONTINUING THE IMPLEMENTATION OF THE FIVE YEAR SECURITY MASTER PLAN PROJECTS, WHICH IS RARELY SECURITY ENHANCEMENTS AND MAINTENANCE. UH, THEY WILL BE PERFORMING PREVENTATIVE MAINTENANCE ON HARDWARE AND SOFTWARE, PROVIDING AS NEEDED SYSTEM REPAIRS, AS WELL AS ENSURING THAT OUR SYSTEM, UH, ENOUGH WITH CYBERSECURITY PROTECTIONS SOURCE WALL, UH, RECENTLY AWARDED A NEW COOPERATIVE AGREEMENT WITH CONVERGENT TECHNOLOGIES. UH, THAT CONTRACT IS VALID THROUGH, UH, FEBRUARY OF 2029 AND ALSO INCLUDES THREE, UH, ONE YEAR RENEWAL OPTION SOURCE WALL SELECTED CONVERGENT, UH, BASED ON THEIR PAST PERFORMANCE COMPETITIVE PRICING, AS WELL AS THE EXTENSIVE SOLUTIONS OFFERED. AND THE REASON THAT THE, UH, SOURCE WALL AND CONVERGENT DID NOT ELECT TO EXERCISE THAT ONE YEAR RENEWAL OPTION IS THAT THERE HAVE BEEN A LOT OF IMPROVEMENTS IN SECURITY TECHNOLOGY, UH, A LOT AROUND THE UTILIZATION OF ARTIFICIAL INTELLIGENCE. AND THE PREVIOUS CONTRACT DID NOT INCORPORATE, UH, A LOT OF THE NEWER TECHNOLOGY. SO BY ENTERING INTO A NEW AGREEMENT, IT COULD EXPAND THE SCOPE AND BREADTH OF TECHNOLOGY OPTIONS. UNDER THE CONTRACT. WITH THAT STAFF IS, UH, REQUESTING THAT THE BOARD ADOPT RESOLUTION NUMBER UT 15 FIVE, AUTHORIZING THE GENERAL MANAGER TO EXECUTE A CONTRACT AND ANY NECESSARY SUBSEQUENT AGREEMENTS WITH CONVERGENT TECHNOLOGIES, LLCA DELAWARE LIMITED LIABILITY COMPANY FOR PROVIDING MAINTENANCE REPAIRS AND ENHANCEMENTS TO LONG BEACH PUBLIC UTILITIES DEPARTMENT'S SECURITY SYSTEM ON THE SAME TERMS AND CONDITIONS SPECIFIED IN THE SOURCE WALL COOPERATIVE PURCHASING AGREEMENT IN AN AMOUNT NOT TO EXCEED $2,600,000 UNTIL A SOURCE WALL, UNTIL THE SOURCE WALL CONTRACT EXPIRES ON FEBRUARY 18TH, 2029, WITH THE OPTION TO RENEW FOR AS LONG AS THE SOURCE WALK CONTRACT REMAINS IN EFFECT. WITH THAT, I CONCLUDE MY PRESENTATION AND I WOULD BE HAPPY TO ANSWER ANY QUESTIONS COMMISSIONERS MAY HAVE. WELL, THANK YOU SEAN. I'M REALLY GLAD TO SEE THIS. IT'S WONDERFUL. UM, DO I HAVE ANY, ANY PUBLIC COMMENT? COMMISSIONER COMMENT? COMMISSIONER SCOTT, THANK YOU FOR THAT. UH, YES, I'VE BEEN WAITING, UH, EXCITEDLY AND PATIENTLY FOR THIS. UM, UH, IT'S A BUNDLE OF MONEY, UH, AND I HOPE OUR CUSTOMERS AND RATE PAYERS UNDERSTAND HOW IMPORTANT IT IS THAT WE ARE ON TOP OF THIS [00:30:01] SECURITY CYBERSECURITY IS NEWS ALMOST EVERY SINGLE DAY. AND UNLESS WE'RE AHEAD OF WHAT THE BAD ACTORS ARE DOING, WE'RE, UH, SETTING OURSELVES UP TO BE VICTIMS OF . SO I THINK THIS IS SUPER IMPORTANT, UH, AND I THINK THE FIVE YEAR MASTER PLAN, UH, SECURITY FIVE YEAR MASTER PLAN IS SUPER IMPORTANT THAT WE CAN CONTINUE. THANK YOU. APPRECIATE YOUR SUPPORT. YES, COMMISSIONER CORDERA. JUST WANNA ECHO THAT. UM, COMMISSIONER SCOTT'S COMMENTS, AND ALSO THANK YOU FOR THE GOOD WORK, BUT, UM, WHAT, IN TERMS OF SUPPORTING EMPLOYEES AND SECURITY PERSONNEL WITH ADDITIONAL SECURITY RESOURCES, EXTREMELY IMPORTANT. SO WHAT, WHAT ARE THOSE ADDITIONAL RESOURCES? SO WE ARE MAKING ENHANCEMENTS FOR NOTIFICATIONS TO EMPLOYEES TO ALERT THEM OF, LET'S SAY AN ACTIVE SHOOTER TYPE INCIDENT OR ANY TYPE OF FACILITY EVACUATION THAT MAY BE NEEDED. SO THAT WILL BE INTEGRATED INTO OUR SECURITY SYSTEM. AND THEN THE, UH, UH, EXPANDING THE SECURITY TECHNOLOGIES YOU SPECIFICALLY SAID TO OUR WELL CORRECT, EXTREMELY IMPORTANT. THAT'S, WE HAVEN'T BEEN DOING THAT HASN'T BEEN DONE, SO WE'RE UPGRADING IT OR EXPANDING IT. SO WE'RE GONNA BE ADDING SECURITY TECHNOLOGY AT THOSE SITES CURRENTLY, IT IS PRIMARILY THROUGH SITE VISITS. UM, WONDERFUL. GOOD WORK. THANK YOU. THANK YOU. WITH THAT, I'LL, I'LL SUPPORT MOVE THE MOTION. OKAY. THANK YOU. DO I HAVE A SECOND? ALL IN FAVOR? PARDON ME? THIS IS ACTUALLY A ROLL CALL VOTE. I'M JUST LOOKING AT MY NOTES. UM, I HAVE A MOTION AND A SECOND FOR THIS ROLL CALL VOTE. DINA WILL CALL ON US. IT'S KRISTEN SCOTT. AYE. SECRETARY CORDERO. YES. PRESIDENT MCGUIRE. YES. A THE ROLL CALL. VOTE CARRIES. THANK YOU. ITEM NUMBER SIX, [6. 25-55285 Recommendation to authorize the General Manager to execute all documents necessary to amend the existing contract with Quality Fence Co., Inc., to furnish, deliver, and install permanent and temporary fencing on an as-needed basis, increasing the total contract amount by $100,000, for a revised not-to-exceed amount of $300,000.       Suggested Action: Approve recommendation. ] TO AUTHORIZE THE GENERAL MANAGER TO EXECUTE ALL DOCUMENTS NECESSARY TO AMEND THE EXISTING CONTRACT WITH QUALITY FENCE COMPANY INCORPORATED TO FURNISH, DELIVER AND INSTALL PERMANENT AND TEMPORARY FENCING ON AN ANE AS NEEDED BASIS. SEAN, YOU'RE STILL WITH US. THANK YOU. THANK YOU. SO FOR ITEM NUMBER SIX, UH, STAFF IS REQUESTING THAT THE BOARD AUTHORIZE THE GENERAL MANAGER TO AMEND, UH, OR AGREEMENT WITH, UH, QUA FENCE CO COMPANY TO, UH, BASICALLY INSTALL, UH, TEMPORARY AND PERMANENT FENCING ON AN AS NEEDED BASIS. WE ARE REQUESTING A, A FUNDING ENHANCEMENT OF A HUNDRED THOUSAND DOLLARS TO THAT. UM, FIRST AND BACKGROUND, UH, THE CITY COUNCIL AWARDED QUALITY FENCE WITH AN AGREEMENT FOR TEMPORARY AND PERMANENT FENCING ON A CITYWIDE BASIS BACK IN NOVEMBER OF 2022. UH, STAFF, UH, ELECTED TO, UH, LEVERAGE THIS, UH, THE CITY SELECTION PROCESS. AND SO WE ISSUED A PURCHASE ORDER UNDER THE BOARD, UH, UNDER THE THRESHOLD REQUIRING BOARD AUTHORIZATION. UH, HOWEVER, DUE TO THE BIXBY HILL, UH, HOA MAIN BREAK, WE HAVE HAD SOME UNFORESEEN FENCING NEEDS TO SUPPORT THE RESPONSE AND SECURITY OF THE PROPERTY. UM, SO WE, UM, ARE, ARE IN NEED OF ADDITIONAL FUNDING SO THAT WE CAN CONTINUE NORMAL DAY-TO-DAY OPERATIONS TO PROTECT OUR FACILITIES AS WELL AS, UH, TEMPORARY CONSTRUCTION FENCING FOR, FOR A VARIETY OF PROJECTS. AND SO WHAT STAFF IS RECOMMENDING IS THAT WE AUTHORIZE THE GENERAL MANAGER TO EXECUTE ALL DOCUMENTS NECESSARY TO AMEND THE EXISTING CONTRACT WITH QUALITY FENCE O INC. TO FURNISH, DELIVER AND INSTALL PERMANENT AND TEMPORARY FENCING ON AN AS NEEDED BASIS, INCREASING THE CO TOTAL CONTRACT AMOUNT BY $100,000 FOR REVISED NOT TO EXCEED AMOUNT OF $300,000. WITH THAT, I CONCLUDE MY PRESENTATION. OKAY, THANK YOU. THAT'S GREAT. ANY PUBLIC COMMENT, COMMISSIONER COMMENT? LOOKS LIKE WE'RE GOOD TO GO. DO I HAVE A MOTION TO APPROVE? UH, MOTION. SECOND AND A SECOND. RECEIVED. THANK YOU. ALL IN FAVOR SAY AYE. AYE. ANY OPPOSED? NO, THE MOTION CARRIES. THANK YOU VERY MUCH, SEAN. ITEM NUMBER SEVEN, [7. 25-55286 Recommendation to receive and file an overview of Fiscal Year 2026 Gas, Water, and Sewer Fund Proposed Budgets, Projections, Reserves, and Rates.       Suggested Action: Approve recommendation. ] TO RECEIVE AND FILE AN OVERVIEW OF FISCAL YEAR 2026, GAS, WATER, AND SEWER FUND, PROPOSED BUDGETS, PROJECTIONS, RESERVES, AND RATES. AND I CALL ON A**L GAN TWO, LEAD US. PICK THIS OFF. THANK YOU. THANK YOU PRESIDENT MCGUIRE. SO THE PRESENTATION FOR YOU TODAY, STAFF HAS ORGANIZED IT TO GIVE YOU INFORMATION IN, IN CERTAIN SEGMENTS IN THESE PRESENTATIONS. SO WE'RE GONNA START OFF AND GIVE YOU AN OVERVIEW OF THE CAPITAL INVESTMENT PLAN FOR BOTH WATER AND SEWER AND THE GAS FUND. UM, IT IS IMPORTANT TO SEE WHAT IS BUDGETED IN TERMS OF [00:35:01] THE PROJECTS AND THEIR CONNECTION TO INFRASTRUCTURE AND HOW THAT PLAYS OUT. IT IS, UH, GOING FORWARD NOW A DEBT FUNDED CIP, SO ON THE WATER AND SEWER, YOU ALREADY HAVE SOME EXPERIENCE WITH THAT, WHAT'S COMING FORWARD IN THE GAS FUND THAT WILL ALSO BE DEBT FUNDED. SO IT'S IMPORTANT TO UNDERSTAND THAT BALANCE AS IT COMES FORWARD. AFTER THAT, WE'LL GO INTO THE ACTUAL BUDGETS THEMSELVES. UM, AND YOU'LL SEE IN THE PRESENTATION SOME OF THE NUANCES AND SUBTLETIES DEALING WITH THE GAS FUND AND AS A BOARD, WHAT YOUR RESPONSIBILITIES ARE WITH REGARDS TO THE BUDGET ITSELF, TO THE REVENUES, THE RATES, CONNECTION TO THE REVENUES. UM, I ASKED STAFF TO INCLUDE IN THE PRESENTATION. IT'S NOT GOING TO BE ON THE SLIDE ITSELF, BUT IT'S IN THE PACKET OF INFORMATION AVAILABLE. UH, A DETAILED ASSESSMENT OF THE EFFECTS ON THE PROPOSED CHANGE TO THE GAS RATES THROUGH THE VARIOUS TIERS SO THAT YOU CAN SEE HOW THAT CHANGE IS BEING PROPOSED. AND THEN WHAT IS THE COMPARISON TO SOCAL GAS. SO YOU CAN HAVE THAT IN A MORE DETAILED, UH, SEGMENT. ASIDE FROM THAT, YOU'LL SEE IN THE BUDGET ITSELF AN OVERVIEW OF THE CHALLENGES BEING FACED IN EACH OF THE FUNDS, THE PROJECTIONS. IT'S NOT A COMPREHENSIVE 10 YEAR FINANCIAL PLAN. IT IS AT LEAST AN OUTLOOK FOR THE FIVE YEARS AHEAD. WHEN WE MET IN THE RETREAT, I HAD IDENTIFIED TO YOU THAT ONE OF MY PRIORITIES WAS TO BRING YOU A 10 YEAR FINANCIAL PLAN THAT ALLOWS YOU A MORE IN-DEPTH DISCUSSION OF WHAT LIES AHEAD, UM, LIKE COMMISSIONER SCOTT JUST MENTIONED. AND SO THAT CONTINUES TO BE MY OBLIGATION TO YOU AND TO DELIVER THAT IN THE JUNE JULY TIMEFRAME TO BRING THAT FORWARD SO THAT YOU CAN ENGAGE AND HAVE MORE COMPREHENSIVE DISCUSSIONS ABOUT WHAT LIES AHEAD. SO THAT'S PRETTY MUCH IT. UM, I'LL CIRCLE BACK TOWARDS THE END, UH, TO GIVE YOU A SENSE OF OUR RECOMMENDATION AND THE BASIS FOR THAT RECOMMENDATION. BUT FOR RIGHT NOW, I'M GONNA TURN IT BACK OVER TO STAFF. THEY'RE GONNA GET THE PRESENTATION STARTED. SO FIRST WE HAVE THE WATER FUND, CIP, AND THAT'S ROB. GO AHEAD, ROB. UH, GOOD MORNING, PRESIDENT MCGUIRE AND COMMISSIONERS. UH, I'M, I'M ROB ELLIS. I'M THE DIRECTOR OF WATER AND SEWER ENGINEERING. UH, I'VE BEEN WITH THE CITY FOR 23 YEARS ALSO. UH, I USED TO LIVE IN LONG BEACH. UH, I DID GRADUATE FROM LONG BEACH STATE. AND, UH, I'M HERE TODAY TO KICK OFF, BUT BUDGET WORKSHOP NUMBER TWO, AND I WILL BE PROVIDING A OVERSIGHT OF THE WATER AND SEWER FUND, CIS. SO WE'LL START OFF WITH THE WATER FUND. AND THIS SLIDE IS MEANT TO GIVE YOU A GLIMPSE OF THE, UH, MAGNITUDE OF OUR WATER SYSTEM INFRASTRUCTURE. UH, THIS BY NO MEANS IS COMPREHENSIVE OF EVERYTHING IN OUR WATER SYSTEM, BUT MOST OF OUR PROGRAMS, CIP PROGRAMS ARE BUILT AROUND THESE, UH, DIFFERENT AREAS. SO WE HAVE 36 TANKS, UH, THAT HOLD, THREE AND A HALF MILLION GALLONS EACH. UH, WE HAVE ONE BOOSTER STATION. UH, WE HAVE 22 GROUNDWATER WELLS THAT ALLOWS US TO, UH, TAKE ADVANTAGE OF LOCAL WATER, UH, RESOURCES. WE HAVE 912 MILES OF PIPE OF VARIOUS SIZES AND MATERIAL. UH, OBVIOUSLY WE HAVE OUR GROUNDWATER TREATMENT PLANT AND WE HAVE, UH, EIGHT MWD, UH, TURNOUTS OR INTERCONNECTS. SO HOW DO WE COME ABOUT, UH, DOING OUR CIPS? UH, WE MASTER PLANNED EVERYTHING. UM, EXAMPLES OF OUR MASTER PLANNING AND STUDIES ARE OUR WATER DISTRIBUTION SYSTEM MASTER PLAN, AS WELL AS OUR RECYCLED WATER MASTER PLAN UPDATE. UH, BOTH OF THESE, UH, STUDIES WILL BE GOING IN FY 26. UM, WE ALSO WORKING CONJUNCTION WITH OTHER MASTER PLANNING AND STUDIES SUCH AS OUR GROUNDWATER AUGMENTATION STUDY AND OUR WATER RESOURCES PLAN. WE ALSO RECEIVE INFORMATION FROM OPERATIONS BOTH ON THE WATER AND SEWER SIDE. SO THAT INCLUDES VALVE EXERCISE DATA, UH, INSPECTIONS, OUR SEWERS, AS WELL AS MAIN BREAK HISTORY ON THE WATER SIDE. UH, LASTLY, WE DO TARGETED CONDITION ASSESSMENTS. UM, WE DID THAT FOR OUR SPINNAKER BAY WATER MAIN REPLACEMENT PROJECT, AS WELL AS, UH, THE REPLACEMENT OF THE HVAC AC SYSTEM AT OUR GROUNDWATER TREATMENT PLANT. SO WE TAKE ALL THESE THINGS INTO CONSIDERATION AND WE COME UP WITH OUR CIPS AND, AND ALSO WE PRIORITIZE AS WELL. SO THIS IS A PIE CHART OF OUR PROPOSED FY 26 WATER FUND, CIP. UH, WE ARE PROPOSING $56.7 MILLION. UH, THE BIGGEST SLICE OF THE PIE IS OUR LOCAL WATER SUPPLY PROJECTS AT 16.1. UH, THIS INCLUDES ALL OUR WELL PROJECTS. NEXT, THE ORANGE SLICE IS OUR PIPELINE JOBS AT 12 AND A HALF MILLION. [00:40:01] WE HAVE 14 AND A HALF MILLION FOR OUR RESERVOIR AND TREATMENT PLANT PROJECTS. WE HAVE ABOUT 200,000 FOR RECYCLED WATER. UH, 2 MILLION FOR WATER CONSTRUCTION. NOW THIS IS OUR IN-HOUSE, UH, CONSTRUCTION PIPELINE REPLACEMENTS AND METER REPLACEMENTS. UH, WE HAVE ABOUT 400,000, UH, FOR FACILITY SECURITY AND TECHNOLOGY PROJECTS. AND LASTLY, WE HAVE $11 MILLION FOR WATER DEVELOPER PROJECTS. AND THIS IS MAINLY OUR L-E-D-W-P HAYES PROJECT, WHICH WE'LL GO OVER IN THE, UH, FUTURE SLIDE. NOW THIS SHOWS OUR WATERFRONT FIVE-YEAR CIP OUTLOOK. UH, AS YOU CAN SEE FROM THE STACK CHART, UH, WE'RE LOOKING TO LEVELIZE THE CIP STARTING IN FY 27. AND THIS BREAKS DOWN, UH, THE CIP ACCORDING TO THE PROGRAMS, UH, THAT WE MANAGE. THAT INCLUDES, AGAIN, FACILITY SECURITY AND TECHNOLOGY, RECYCLED WATER, WATER SUPPLY, PIPELINES, AND RESERVOIR AND TREATMENT PLANT. SO I'M GONNA HIGHLIGHT, UH, CERTAIN PROJECTS FROM THE DIFFERENT PROGRAMS FROM FROM OUR WATERFRONT, CIP, UH, FIRST OFF, UH, LOCAL WATER SUPPLY AT 16.1 MILLION. AGAIN, AS I MENTIONED, THIS INCLUDES A LOT OF OUR WELL PROJECTS AND SOME OF THE PICTURES THAT WILL BE PART OF THIS PRESENTATION ARE REPRESENTATIVE OF THE WORK THAT WE, WE WILL BE DOING AT FY 26. UH, SOME OF THESE PROJECTS HAVE BEEN COMPLETED OR ARE IN PROGRESS RIGHT NOW. SO THIS IS OUR NORTH LONG BEACH 13 AND 14. WELL PROJECT, UH, LOCATED OFF OF JACKSON AVENUE IN BETWEEN ORANGE AND CHERRY IN THE FOREGROUND HERE, YOU SEE NLB 13. NOW THIS IS DURING THE DRILLING PHASE. SO WHEN WE CONSTRUCT A WELL, UH, THERE'S ACTUALLY TWO PHASES OF CONSTRUCTION. UH, FIRST WE DRILL THE WELL, AND AFTERWARDS WE EQUIP THE WELL, WHICH MEANS WE INSTALL PUMPS AND MOTORS, THE ELECTRICAL COMPONENTS, UH, AND WE ACTUALLY TIE THE WELL INTO OUR EXISTING, UH, PIPELINE SYSTEM. SO AS YOU CAN SEE HERE IN THIS PICTURE, WE HAVE THE DRILL RIG, UH, AND WE ALSO BUILD SOUND WALLS AROUND THE PROJECT LOCATION. AND THAT IS TO MITIGATE ANY NOISE, UH, TO THE ADJACENT RESIDENCES. UM, DURING THE DRILLING, UH, THERE ARE 24 7, UH, DRILLING ACTIVITIES, UH, PROBABLY FOR ABOUT A TWO WEEK PERIOD. SO WE PUT THESE, UH, SOUND WALLS UP, UH, TO MITIGATE THE NOISE. UH, IN THE BACKGROUND HERE, YOU SEE N LB 14, UH, THAT WELL WAS ALREADY DRILLED, UH, WHEN THIS PICTURE WAS TAKEN AND THE SOUND WALL IS BEING DISMANTLED. I HAVE A COUPLE OF VIDEOS HERE, UH, 32ND CLIPS OF, UH, THE WELL DRILLING PHASE OF THE PROJECT. I'LL RUN THEM AT THE SAME TIME. UH, THE VIDEO ON THE LEFT SHOWS THE WELL CASING, UH, UH, THAT'S BEING INSTALLED AS PART OF THE WELL INSTALLATION. UH, THESE ARE STAINLESS STEEL CASINGS. AND FOR THE BOARD'S INFORMATION, WHEN THIS WELL WAS DRILLED, IT WAS DRILLED DOWN TO A DEATH OF JUST OVER A THOUSAND FEET. NOW THE VIDEO ON THE RIGHT SHOWS THE CASING BEING MOUNTED ON TOP OF A CASING THAT'S ALREADY IN THE GROUND. AND AT THE END OF THE VIDEO, YOU'LL SEE A COUPLE OF WELDERS START WELDING PIECES TOGETHER. SO THIS PROCESS STARTED IN 2022. SO, SO SOME UPDATES ON OUR WELL PROGRAM, UH, I'M HAPPY TO REPORT THAT NLB 13 AND 14, THEY RECEIVE PERMIT APPROVAL FROM THE DEPARTMENT OF DRINKING WATER. SO THE WELLS WILL BECOME ACTIVE NEXT MONTH. SO THE PICTURE ON THE LEFT IS THE COMPLETED WELL, AND IT'LL BE 13 IN JACKSON PARK, AS I MENTIONED. WE HAVE, UH, SOME OTHER WELL PROJECTS IN FY 26. WE WILL BE EQUIPPING TWO WELLS IN STEARNS CHAMPIONS PARK. AND WE WILL ALSO BE EQUIPPING, UH, WELLS IN EL DORADO PARK. SO THE STEARS PARK WELLS ARE EXPECTED TO BE COMPLETED IN FEBRUARY OF 2026. AND CONSTRUCTION FOR THE EL DORADO WELLS WILL START SOMETIME IN FY 26 AS WELL. SO, RESERVOIR AND TREATMENT PLAN. UH, WE HAVE A COUPLE OF CONSTRUCTION PROJECTS SCHEDULED FOR, UH, AT THE TREATMENT PLANT. UH, THE FIRST ONE IS THE FILTER GALLERY IMPROVEMENT PROJECT, PHASE TWO. NOW THIS PROJECT IS BEING TIMED, UH, TO COINCIDE WITH A PLANT SHUTDOWN, UH, IN EARLY 2026. UH, WE COMPLETED PHASE [00:45:01] ONE A COUPLE OF YEARS AGO DURING THE LAST, UH, PLANT SHUTDOWN FOR MAINTENANCE. UH, THIS IS JUST A SAMPLE OF THE WORK THAT'S TO BE DONE. UNDERNEATH THE FILTER BEDS, YOU HAVE A SPAGHETTI NETWORK OF PIPES AND VALVES, AND WE'RE GONNA BE REPLACING MOST, IF NOT ALL THE VALVES, UH, IN THE FILTER GALLERY, HALF OF THE FILTER GALLERY. WE ALSO HAVE A CHEMICAL FACILITIES IMPROVEMENT PROJECT. UM, THE PICTURE ON THE LEFT IS OUR CHLORINE ROOM WHERE FLOORING GAS IS STORED. AND A PICTURE ON THE RIGHT IS A TYPICAL CHEMICAL STORAGE TANK, UH, THAT'S USED FOR THE TREATMENT PROCESS OF OUR WATER. UH, WE HAVE ONE BOOSTER STATION THAT WE'RE GONNA BE WORKING ON. THAT'S THE ONLY BOOSTER STATION THAT'S PART OF OUR WATER SYSTEM. UH, IT'S OUR 32ND STREET STATION. IT LOOKS PRETTY INNOCUOUS FROM THE OUTSIDE, BUT ON THE INSIDE YOU HAVE PUMPS AND PIPES THAT WILL BE FULLY REHABILITATED, UH, STARTING AT FY 26. UM, AND THIS WILL BE A TWO YEAR CONSTRUCTION PROJECT. ON THE PIPELINE SIDE, WE HAVE A NUMBER OF PIPELINE PROJECTS. UH, I JUST WANNA HIGHLIGHT THE LONG BEACH AIRPORT SOUTH WATER MAIN IMPROVEMENTS. UH, THE CHALLENGE WITH THIS PROJECT IS WE'RE GONNA BE WORKING ON AIRPORT PROPERTY. UH, SO THERE'S A LOT OF COORDINATION EFFORTS WITH AIRPORT TENANTS AND THE AIRPORT DIRECTLY, UH, TO MINIMIZE IMPACTS TO AIRPORT OPERATIONS. UH, MOST OF THIS WORK WILL PROBABLY BE DONE AT NIGHT TO LESSEN THOSE IMPACTS. AND AS, AS YOU CAN SEE, PART OF THE PIPELINE, UH, SNAKES AROUND THE ACTUAL, UH, CONTROL TOWER. SO, UH, I MENTIONED THIS EARLIER, WE ARE MANAGING A PROJECT FOR L-E-D-W-P, UH, BUILDING A NEW RECYCLED WATER PIPELINE, UH, FROM THEIR HANES PLANT TO THE NEAREST, UM, RECYCLED WATER MAIN BELONGING TO US, WHICH IS OFF OF ATHERTON. UH, THIS IS FULLY PAID FOR BY L-L-A-D-W-P. THERE'LL BE, UH, 12 TO 24 INCH PIPELINE, UH, RUNNING ALONG STUDE BAKER. SO I'M GONNA SWITCH GEARS AND GO TO THE SEWER FUND. UH, IT'S A MUCH SMALLER FUND, UM, AND THE PIE CHART IS A LOT SIMPLER. UH, WE HAVE 28 LIFT STATIONS AND 714 MILES OF PIPE PIPE. UH, THE PIPE MATERIAL IS DIFFERENT FOR SEWER. UH, WE TYPICALLY USE CLAY PIPE, WHICH IS RESISTANT TO ANY CORROSION AND GASES EMITTED FROM SEWER. SO THE PIE CHART, WE ARE PROPOSING 14.1 MILLION FOR SEWER. UH, MORE THAN HALF OF THAT IS OUR SEWER LIFT STATIONS AT 7.3 MILLION. SO A SINGLE PROJECT, A SINGLE LIFT STATION PROJECT, AND TAKE UP HALF OF THE SEWER. CAP BUDGET. WE HAVE ABOUT FOUR 4.2 MILLION FOR SEWER PIPELINES, ANOTHER 120,000 FOR FACILITY SECURITY AND TECHNOLOGY, AND ANOTHER TWO AND A HALF MILLION FOR SEWER DEVELOPER PROJECTS. AND AGAIN, THIS IS THE STACK AREA CHART FOR SEWER, THE FIVE YEAR CIP OUTLOOK. AS YOU CAN SEE, THERE'S A SPIKE IN FY 27. AND THIS IS RELATED TO PROJECTS RELATED TO, UH, LA 28, THE OLYMPICS. WE ARE ACCELERATING SOME PROJECTS, SOME LIFT STATION PROJECTS, AND A PIPELINE PROJECT AHEAD OF THE OLYMPICS. NOW THIS IS A SEWER LIFT STATION PROJECT, UH, S SEVEN, WHICH WENT TO THE BOARD, OR WHICH THE BOARD APPROVED NOT TOO LONG AGO. UH, THE STATION ITSELF IS LOCATED UP HERE. UH, THE SYMBOL IS KIND OF SMALL, UH, BUT IT'S LOCATED OFF OF LAKE LAKEVIEW AVENUE, UH, JUST SOUTH OF APPIAN, WAY OVER BY MARINE STADIUM. NOW, THE GREEN PIPELINE SHOW ALL THE SEWAGE THAT EVENTUALLY WINDS UP IN THAT STATION. AND I HAVE A LITTLE ANIMATED CLIP HERE OF WHAT HAPPENS IN A SEWER LIFT STATION. SO THIS CHAMBER RIGHT HERE, THIS ROOM IS CALLED A WET WELL. AND IN THE WET WELL, UM, RAW SEWAGE IS, IS DISCHARGED AND COLLECTED. THOSE ARE DISCHARGE PIPES HERE ON THE LEFT. THESE ARE LEVELS, UH, ALONG THE WALL HERE. THESE ARE THE PUMPS COMING DOWN. NOW, UH, MOST OF OUR STATIONS, THE PUMPS ARE ACTUALLY LOCATED IN A SEPARATE ROOM, UH, NOT WITHIN THE WET. WELL, UH, AS YOU CAN SEE IN A FEW SECONDS, UH, THE ANIMATION WILL CHANGE AND SHOW SEWAGE DISCHARGING. AND BY THE WAY, SEWAGE IS NOT CLEAR [00:50:01] OR NOR IS IT BLUE. SO . SO AS THE LEVELS RISE, IT HITS A LEVEL AND IT TRIGGERS A PUMP TO COME ON. AND WHEN THE LEVELS DROP, TURNS OFF A PUMP. SO THAT CYCLE IS REPEATED PROBABLY ABOUT FIVE TO SIX TIMES AN HOUR. SO FOR SEWER PIPELINES, WE, WE HAVE ABOUT FOUR 4.2 MILLION, UH, PROPOSED FOR BUDGET. AND THIS IS BASICALLY THE FLOW CHART OF HOW A SEWER PIPELINE PROJECT PROCEEDS. UH, IT STARTS OFF WITH, UH, CCTB INSPECTIONS BY OUR SEWER OPERATIONS GROUP. SO THIS IS A, UH, REMOTE CAMERA THAT'S DROPPED INTO A MANHOLE. UM, THIS IS A-C-C-T-V TRUCK. AND HERE YOU HAVE AN OPERATOR WHO CONTROLS THE CAMERA AND IS VIEWING IT ON A MONITOR INSIDE THE TRUCK. NOW THESE FOUR PICTURES IN THE CENTER ARE ARCHIVE PICTURES OF, YOU KNOW, CRACKS AND INFILTRATION FOUND IN INSPECTION. UH, ALL THESE WERE EVENTUALLY REPAIRED, AND HOW DO WE REPAIR THAT? SO ONCE ALL THIS DATA IS COLLECTED BY ENGINEERING, UH, WE MAKE A DETERMINATION OF HOW THE REPAIRS OR REHAB IS GOING TO PROCEED. WE CAN EITHER DO A POINT REPAIR, WHICH IS A LOCALIZED REPAIR. WE CAN DO A FULL PIPE REPLACEMENT FROM MANHOLE TO MANHOLE. AND A MAJORITY OF THE WORK THAT WE DO IS TRENCHLESS REHABILITATION. UH, THIS IS SECURED IN PLACE PIPE. UH, COMMISSIONER SCOTT, YOU HAD A QUESTION ABOUT CIPP AND, UH, UH, IF WE'VE USED IT IN THE PAST. UH, SO IT'S BEEN PREDOMINANTLY USED ON THE SEWER SIDE, SO, AND, AND IT ADDS ABOUT 50 YEARS OF USEFUL LIFE, UH, TO A PIPE, AND IT'S FULLY STRUCTURAL. ALSO, LASTLY, WE HAVE A SEWER DEVELOPER PROJECT AT TWO AND A HALF MILLION. UH, AGAIN, THIS IS A PROJECT THAT WE ARE CURRENTLY MANAGING FOR L-A-D-W-P, UH, AND IT'S AN INSTALLATION OF ABOUT 17 MILES OF SEWER FORCE MAIN. UH, AGAIN, IT'S RUNNING ALONG STUDEBAKER. UM, AND THIS WILL AID IN, YOU KNOW, UM, RECYCLED WATER FOR THE HANES PLANT. AND WITH THAT, I'LL TURN IT OVER TO KEVIN TGA, UH, TO PRESENT THE GAS AND CIP GAS. CIP. THANKS, ROB. UM, SO, UH, I'M HERE TO TALK ABOUT OUR GAS, CIP, OR AS, UH, SOMEONE MENTIONED TO ME, I'M THE LAST, UH, OPENING ACT. BEFORE WE GET TO THE HEADLINE, THE MAIN EVENT, WHAT WE'RE HERE FOR, UH, JUST AS A REMINDER, WE HAVE 1900 MILES OF PIPELINE THAT THIS GAS CIP MAINTAINS. UH, WE HAVE INFRASTRUCTURE THAT'S IN, MOSTLY IN, OBVIOUSLY IN LONG BEACH, BUT ALSO WE SERVE SIGNAL HILL. AND WE HAVE ABOUT 150,000 CUSTOMERS. AND THE, THE AMOUNT OF VOLUME OF GAS THAT WE PUT THROUGH OUR SYSTEM ANNUALLY IS ABOUT 9.5 MILLION DECATHERM, OR IF YOU WANT THAT IN BTS, IT'S 9.5 TRILLION BTS. SO THIS IS, UH, A SLIDE THAT DEPICTS HOW WE DETERMINE WHERE WE SPEND OUR CIP. UH, SO NUMBER ONE, WE HAVE IN-HOUSE CREWS THAT DO LEAK SURVEYS EVERY, EVERY YEAR. AND WE USE THOSE RESULTS, UH, TO GO OUT, YOU KNOW, WHEN THEY FIND LEAK TO GO AND REPLACE OR REPAIR PIPELINES. SOMETIMES WHEN WE'RE DOING THOSE REPAIRS, WE'LL SAY THAT, UH, THE PIPELINE MAY BE IN A CONDITION THAT NEEDS TO BE REPLACED. AND SO IT BECOMES PART OF OUR PIPELINE REPLACEMENT PROGRAM. UH, WE ALSO HAVE, UH, DOT MANDATED INSPECTIONS. SO WE'LL INSPECT OUR VALVES, OUR REG STATIONS, AND, UH, OUR CPS. AND THAT WILL LEAD TO ALSO DEFINING WHERE WE'RE GONNA SPEND OUR CAPITAL IN THOSE AREAS. WE ALSO HAVE SPECIAL PROJECTS LIKE, UH, THE CROSS BORDER PROGRAM THAT I, I I'VE MENTIONED A COUPLE TIMES, AND I'M, I'LL MENTION A LITTLE BIT LATER ON A LATER SLIDE. AND THEN, UH, RECENTLY WE'VE BEEN DOING SOME METER REPLACEMENTS MORE SO THAN WE HAVE IN THE PAST. AND THIS IS BECAUSE OF THE, THE A MI BATTERIES ARE, THEY HAVE A LIFE ABOUT 20 YEARS, AND WE INSTALLED THEM ALL AT ABOUT THE SAME TIME. SO WE HAVE TO KIND OF GET AHEAD OF SCHEDULE SO THAT, UH, YOU KNOW, OTHERWISE WE, IF WE WAIT TOO LONG, BATTERIES WOULD BE DYING BEFORE WE GET GET TO 'EM. AND THEN FINALLY, UH, KIND OF LIKE OUR, UH, A BIT OF OUR, LIKE OUR STRATEGIC PLAN IS OUR DISTRIBUTION INTEGRITY MANAGEMENT PLAN. AND SO WE REVIEW OUR ENTIRE INFRASTRUCTURE LOOKING FOR RISKS AND OUR SYSTEM. AND THAT ALSO SHAPES WHAT WE'RE GONNA INVEST OUR CIP. [00:55:03] SO, UH, OUR TOTAL BUDGET FOR OUR CIP IS 16.7 MILLION, AND NOT TO BE ROB CALLED SEWER LOW. AND I'M ONLY BEATING THAT BY 2 MILLION. BUT, UH, UH, AND, AND A LARGE, THE LARGEST PORTION IN THIS CATEGORY IS FOR OUR, OUR BILLABLE. SO THIS IS MOSTLY WORK WE'RE DOING FOR THE PORT OF LONG BEACH AND SOME OF THEIR, UH, PROJECTS TO, TO MOVE OUR PIPELINES TO GET OUT OF THEIR, THEIR WAY. THAT'S $6.1 MILLION FOR BILLABLE. UH, THE NEXT LARGEST CATEGORY IS OUR, OUR PIPELINE REPLACEMENT, UH, AT $5.7 MILLION. THE NEXT ONE IS THE METER ONE I JUST MENTIONED, UH, RIGHT AROUND $2 MILLION. AND THEN OUR CROSS BOARD INSPECTIONS FOR NEXT YEAR. WE'RE GONNA SPEND ABOUT 1.6 MILLION FOR THAT AFTER THAT. UH, THE, THE OTHER CATEGORIES, UH, MAKE UP ABOUT 5% OF THE TOTAL CIP. THAT'S, UH, CATHODIC PROTECTION WORK, VALVE VALVE REPLACEMENTS, REG STATION UPGRADES, AND, UH, PIPE WRAP. AND THEN A SMALL PORTION ON FACILITIES, UH, DOING SOME SECURITY UPGRADES. HERE'S OUR STACK PLOT FOR THE NEXT FIVE YEARS ON CAST CIP. UH, YOU'LL NOTICE THAT THE BILLABLE PROJECTS DROP OFF APPROXIMATELY AROUND THE END OF 2028. AND THAT TIMING WORKS OUT PRETTY WELL BECAUSE I GUESS THIS MAY BE NEWS. UH, SO, YOU KNOW, WE, WE APPLIED FOR A GRANT, UH, WITH FEM A AND WE WERE AWARDED THAT GRANT, AND WE'VE ACTUALLY BEEN FULLY APPROVED FOR THE GRANT. SO $6.8 MILLION TO REPLACE A PIPELINE THAT CROSSES, UH, ON A BRIDGE ON ANAHEIM STREET WHERE WE CROSS LA RIVER AND, UH, SEVEN 10 FREEWAY. AND IT'S CURRENTLY LEAKING THIS, OUR PERMANENT SOLUTION IS WE'RE GONNA USE, UH, HORIZONTAL DIRECTIONAL DRILL TECHNOLOGY TO INSTALL A 12 INCH PIPELINE THAT GOES, UH, UNDERNEATH THE FREEWAY AND, AND THE RIVER. AND, AND WE WILL NO LONGER, THE OTHER REASON WHY WE REALLY WANTED TO DO THIS PROJECT IS EV WE HAVE TO INSPECT THESE PIPELINES. AND SO EVERY TWICE A YEAR, WE HAVE TO SHUT DOWN THE FREEWAY TO DO AN INSPECTION. SO WE CAN AVOID, AVOID DOING THAT. THERE'S STILL OTHERS THAT WE HAVE TO DO, AT LEAST ON THIS ONE, WE'LL BE ABLE TO AVOID IT. BUT THAT'S, THAT'S REALLY GREAT NEWS. SO WE'RE RIGHT NOW IN THE PROCESS OF DOING OUR NEPA ENVIRONMENTAL REVIEW, AND ONCE, ONCE THAT'S COMPLETE, WE CAN START THE PROCESS OF PLANNING CONSTRUCTION FOR THIS PROJECT. UH, THE REST OF THE WORK WILL CONTINUE AT, AT, YOU KNOW, ROUGHLY THE SAME PACE, AND WE'VE INSTALLED OUR, ARE UTILIZING A 5% INFLATION EFFECT BE OUTER YEAR. SO I HAVE TO APOLOGIZE, I HAVE A LITTLE BIT OF A TYPO ON THIS SLIDE. SO THE, UH, THE REPLACEMENT PROJECTS WE'RE, WE'RE, WE'RE GOING TO DO ABOUT 12,000 LINEAR FEET IN NEW PIPELINES, BUT FOR THE BILLABLE PROJECTS, IT'S, IT'S ACTUALLY ABOUT 3,200 FEET. SO, MY, MY FAULT, UH, SOME NOTABLE PROJECTS, UH, WE'RE WORKING ONE ON SPRING AND SNOWDEN, UH, 70, WE'RE INSTALLING 7,500 FEET OF MAINE AND APPROXIMATELY 130 SERVICES ON, ON OVER THERE. AND THAT'S NEAR, UH, MILLIKEN HIGH SCHOOL. SO OBVIOUSLY WE'RE GONNA DO THAT PROJECT IN THE SUMMER TO AVOID PARENTS GETTING UPSET WITH US. ANOTHER NOTABLE ONE IS, UH, SPRING AND CHERRY. THIS IS ACTUALLY IN SIGNAL HILL. IT'S RIGHT IN RIGHT IN, UH, CHERRY AVENUE. AND, UH, WE'RE DOING 700 FEET OF LINEAR FEET THERE, JUST A MAIN REPLACEMENT. UH, BUT THAT'S A VERY BUSY AREA, SO WE WILL HAVE TO BE WORKING DI DILIGENTLY ON OUR TRAFFIC PLANT. AND THEN ON THE, A NOTABLE ONE ON THE PB, UH, FOR THE PORT, WE'RE DOING A, TO SUPPORT THEIR PPB RAIL PROJECT, WE HAVE 2000 FEET OF, OF MAIN THAT WE'RE REPLACING THERE. AND WE'RE GONNA START THAT IN EARLY 26. UH, I WANNA HIGHLIGHT, UH, HERE THE, THIS PHOTO ON THE LEFT, THAT IS A, UH, IT'S THE TECH, THE COMPANY WE USE IS ZAC, BUT IT'S A CROSS COMPRESSION DEVICE. AND IT'S SOMETHING WE'VE, WE'VE STARTED DOING ON OUR PIPELINE REPLACEMENTS OR ANY, ANY TIME WE NEED TO VACATE GAS FROM AN EXISTING LINE. THE WAY WE USED TO DO THIS IN THE PAST IS WE WOULD, WE WOULD TAKE THE GAS AND WE WOULD VENT IT TO THE ATMOSPHERE TO, TO CLEAR THE GAS OUT OF THE LINE. NOW WE USE THIS DEVICE, UH, TO USE WITH, IN CONJUNCTION WITH AN AIR COMPRESSOR. WE CAN PUT PRESSURE TO PUSH THE GAS FROM THE EXISTING LINE THAT WE'RE TAKING OUTTA SERVICE INTO ANOTHER PART OF THE MAIN PIPELINE AND AVOID THAT VENTING AT THE ATMOSPHERE. UH, IT DOESN'T SAVE US MONEY, BUT WE ARE SAVING THE AMOUNT OF METHANE THAT WE'RE EMITTING TO THE ATMOSPHERE. [01:00:01] AND THEN THE LAST SLIDE HERE IS, UH, WANTED TO TALK A LITTLE ABOUT OUR CROSS BOARD INSPECTION PROGRAM. UH, SO IF YOU DON'T KNOW WHAT A CROSSBO IS, WE DO TRENCHLESS INSTALLATIONS ON OUR SERVICES. SO AS THIS PICTURE DEPICTS, UH, THIS WOULD BE IN, THIS WOULD BE THE GAS LINE WOULD BE INSTALLED, UH, WITH US. WHAT ELSE? US KNOWING WHAT'S UNDERGROUND. AND BEFORE WE WERE AWARE THAT WE COULD POTENTIALLY CROSS A SEWER, THERE WAS THE POSSIBILITY THAT WE MAY HAVE GONE THROUGH SOME SEWERS AND WE, WE KNOW WE HAVE BECAUSE WE FOUND THEM. SO WHAT THE CROSS BOARD PROGRAM DOES IS WE RUN, UH, COMPUTERS OR COMPUTERS, WE RUN A LATERAL LAUNCHER TO RUN A CAMERA THROUGH THE SEWER LINE AND THEN, AND TRY TO CLEAR OUT AND ENSURE THAT WE DON'T HAVE THE SITUATION WHERE WE'VE INSTALLED, UH, A GAS LINE SEWER. AND, AND THE RISK THERE IS IF THEY, IF THE CUSTOMER HAS A BLOCKAGE, MAYBE NOT RELATED TO US, MAYBE JUST THE TREE ROOTS, AND THEY, UH, ARE TO CUT THIS GAS LINE, THERE'S A POTENTIAL FOR THAT GAS TO THEN GO INTO THE HOUSE. SO THAT'S WHY WE ARE DOING THIS PROGRAM. AND IT ENHANCES, UH, CUSTOMER SAFETY BY, BY DOING SO, UH, WE HAVE OUR PROGRAM, WE ARE ABLE TO INSPECT ABOUT 2,250 HOMES PER YEAR. WE HAVE A BACKLOG OF ABOUT 24,000. SO WE HAVE ABOUT 11 YEARS OF, OF WORK TO GO THERE. TODAY WHEN WE DO INSTALLATIONS, UH, WE STILL DO TRENCH LIST, BUT WE, WE DO A PRE LOCATE, SO WE HAVE A BETTER IDEA OF WHERE THE SEWER IS. AND THEN WE ALSO RUN A POST CAM TO ENSURE THAT WE DIDN'T CREATE ANY NEW ADDITIONAL ONES. SO THAT HOPEFULLY THAT 24,000 NUMBER I SAID DOESN'T INCREASE, WILL ONLY BE GOING DOWN. AND THEN WE HAVE BEEN WORKING WITH OUR, UH, PUBLIC RELATIONS TEAM TO, TO KIND OF GET THE MESSAGE OUT THERE, ONE FOR THE SAFETY. SO IF, IF THEY HAVE A BACK, YOU KNOW, A BLOCKAGE IN THEIR SEWER AND THEY NEED TO GET IT FIXED, THAT HOPEFULLY THEY WILL CALL US AND FREE OF CHARGE WILL COME OUT THERE AND INSPECT TO ENSURE THAT WE'RE, WE DO NOT HAVE A CROSS BOARD THERE. AND THEN TWO, IT'S ALSO, UH, PART OF THIS PROCESS, IF, IF WE'RE NOT ABLE TO CLEAR IT WITH A LATERAL LAUNCHER, WE HAVE TO GO ON THE PROPERTY. AND AS, AS MUCH AS I LOVE A MI, IT HAS ALSO MAY CONDITION THE PUBLIC TO NOT ANTICIPATE THAT THEY'RE GONNA HAVE, UM, UTILITY WORKERS COME IN ON THEIR, THEIR PROPERTY. AND SO WE'RE, WE'RE HOPING THAT, UH, THROUGH FOR OUTREACH, WE'LL BE A LITTLE MORE ACCEPTABLE THAT'S COMING ON, NEEDING TO GO TO THEIR CLEANOUT LINE. I THINK THAT WAS MY LAST SLIDE. THERE'S THE HEADLINE. ANY QUESTIONS BEFORE I STEP DOWN? I, I HAVE A RIDICULOUS RHETORICAL QUESTION. SO, UH, ALL THE CIP WATER, SEWER, AND GAS ADDS UP TO A TON OF MONEY, WHICH EQUALS, UH, PASSED ALONG TO THE RATE PAYERS CUSTOMERS. WHAT IF WE WERE NOT TO DO ANY OF THESE CIP PROJECTS? WHAT, WHAT EVENTUALLY HAPPENS? WELL, UM, OR FOR GAS, I MEAN, WE ARE REGULATED BY FEMSA. SO IF FEMSA FELT WE WEREN'T DOING OUR DUE DILIGENCE TO INVEST IN OUR INFRASTRUCTURE, THEY COULD, THEY COULD TAKE AWAY OUR, OUR LICENSE TO OPERATE. AND, AND ALL ACROSS THE BOARD ON UTILITIES, IF YOU'RE NOT MAKING INVESTMENTS, YOU'RE EVENTUALLY GONNA HAVE MORE LEAKS IN YOUR SYSTEM. AND, AND IT'S, IT'LL, YOU KNOW, OUR MISSION IS TO PROVIDE RELIABLE, SAFE, AND CLEAN UTILITIES. AND I DON'T THINK IT WOULD BE POSSIBLE TO DO SO IF WE WEREN'T INVESTING IN OUR INFRASTRUCTURE. PERFECT. THANK YOU. THANK YOU KEVIN AND ROB FOR OPENING UP FOR ME. NOW THAT YOU'VE HEARD ABOUT THE CAPITAL IMPROVEMENT PROJECTS AND THE CRITICAL, UH, INVESTMENTS IN OUR INFRASTRUCTURE, WE'RE GOING TO WALK THROUGH, UH, HOW ALL OF THE PROJECTS FIT INTO THE LARGER FINANCIAL PICTURE. WE'VE ALREADY MET, UH, TO REVIEW OUR FY 26 GAS, WATER, AND SEWER FUND PROPOSED BUDGETS, PROJECTIONS, AND RESERVES. AND TODAY WE'LL BE BRINGING TO YOU RATES. AND WHEN WE MEET NEXT MONTH ON JUNE 12TH, WE WILL WRAP UP OUR DISCUSSION AND, AND YOU WILL, THE BOARD WILL ADOPT THE BUDGET AND RATES, WHICH AS YOU WILL SEE AFTER TODAY'S PRESENTATION, WILL HAVE LONG-TERM IMPACTS ON OUR SUSTAINABILITY. SO THIS IS NOW MINE AND AL'S FAVORITE SLIDE. SORRY. CAN WE, CAN WE TAKE A BREAK? 'CAUSE WE DON'T HAVE QUORUM? UH, YES. WE'LL BREAK FOR FIVE MINUTES. [01:05:37] GO BACK TO SLIDE. THANK YOU, GEORGE. OKAY. SO WHEN WE LAST MET, WE REVIEWED THE FY 26 GAS, WATER, AND SEWER FUND, PROPOSED BUDGET PROJECTIONS AND RESERVES. AND TODAY WE'RE BRINGING TO YOU RATES. WHEN WE MEET NEXT MONTH ON JUNE 12TH, YOU WILL ADOPT OUR BUDGET AND RATES FOR FFY 26. AND AFTER TODAY'S PRESENTATION, YOU'LL SEE THAT THE IMPACTS ARE WAY INTO THE FUTURE IN OUR LONG RANGE PLAN AND HOW IT AFFECTS OUR SUSTAINABILITY IN OUR OPERATIONS. WE BROUGHT TO YOU LAST TIME THIS SLIDE, WHICH SHOWS HOW WE BALANCE OUR BUDGET AND AFFORDABLE RATES IN ADOPT. IN PROPOSING THIS BUDGET AND DEVELOPING IT, WE STARTED FIRST WITH COST CONTROLS. SO AS A STAFF, WE'VE REVIEWED A LINE, LINE BY ITEM, BY LINE ITEM OUR BUDGETARY PROPOSALS AND TRIED TO FIND OPPORTUNITIES TO ELIMINATE ANY WASTE. WE'VE ALSO IMPROVED OUR EFFICIENCIES THROUGH CERTAIN PRACTICES THAT WE'VE NOW IMPLEMENTED IN STREAMLINING WORKFLOWS AND SAVING TIME. UH, WE'VE ALSO EXPLORED DEBT FINANCING THROUGH THE LONG RANGE PLAN. AS YOU'LL SEE, WE ARE ABLE TO EXPLORE OPTIONS AND OPPORTUNITIES THAT WE HAVEN'T TAPPED INTO BEFORE FOR FINANCING, ESPECIALLY ON THE GAS SIDE. AND, UH, OUR FINAL MEASURE, WHICH WE, UH, LEAVE TO BE THE LAST IS RAISING, UH, REVENUE GROWTH, UH, THROUGH RATE ADJUSTMENTS. AND THIS IS IN ALIGNMENT WITH CUSTOMER DEMAND AND COST OF SERVICE. SO AS OUR LAST MEETING, I WILL, UH, PRESENT GAS AND HAND IT OFF TO DANIEL TO PRESENT WATER AND SEWER. THIS IS A SLIDE THAT YOU'VE SEEN LAST TIME AND IT REFLECTS THE VARIOUS CONTROLS THAT WE ALLUDED TO FOR, UH, BALANCING OUR BUDGET. AND A REPRESENTS COST CONTROLS, WHICH WE HAD IMPLEMENTED IN FY 25 AND FY 26, AND ACTUALLY WHEN WE LAST MET. UH, WE'VE, SINCE WE'VE LAST MET, WE'VE INCORPORATED ANOTHER HALF MILLION DOLLAR COST SAVINGS BY DEFERRING CIP IN FY 26 B REPRESENTS DEBT FINANCING, WHICH IN WHICH WE WOULD BE ON THE GAS SIDE, UM, FULLY UTILIZING DEBT FINANCING. AND FY 26, THOUGH A HUNDRED PERCENT OF THE CIP WOULD BE FUNDED THROUGH, UM, SOME TYPE OF DEBT FINANCE AND B REPRESENTS A RATE INCREASE THROUGH REVENUE GROWTH. AND ALL OF THIS WAS DONE TO BALANCE THE BUDGET. SO THIS ESTABLISHES SIMPLY THE BASELINE. AND THIS SLIDE, UH, THIS, THIS CHART REFLECTS THE PRIOR SLIDE IN WHICH OUR FUND BALANCE IS ESTIMATED TO BE $2.2 MILLION AT THE END OF THIS YEAR, AND 3.1 FOR NEXT YEAR. THE ONLY OTHER CHANGE SINCE THE LAST TIME WE'VE SEEN THIS IS THE ADDITIONAL HALF MILLION DOLLARS. AND I WANNA POINT OUT THAT THE, THE MINIMUM BALANCE, WHICH IS SUPPOSED TO REFLECT, UH, WHY, THE REASON WHY WE LOOK AT THIS IS TO MEASURE OUR FINANCIAL HEALTH AND SUSTAINABILITY, AND ENSURING THAT WE HAVE SUFFICIENT FINANCIAL RESERVES IN THE EVENT OF ANY EMERGENCIES. AND WE ARE, THIS, THIS PRESENTATION OF THIS SLIDE, UH, ONLY GETS US ABOVE ZERO AND, AND JUST TO BALANCE OUR BUDGET, BUT NOT TO, UH, ATTEMPT TO EVEN, UH, REACH THE MINIMUM FUND BALANCE. SO IT'S ONLY FOR ILLUSTRATOR PURPOSES. OKAY, SO NOW WE'RE GONNA GO INTO OUR, OUR, OUR THREE OPTIONS. UM, AND I'LL, I'LL START BY SAYING THAT FOR EACH FUND WE'VE PROPOSED THREE OPTIONS. AND THIS FIRST ONE, UH, FOR GAS, WE'RE SHOWING A TWO STEP RATE INCREASE FOR THIS YEAR AND NEXT YEAR. THE FIRST, UH, RATE INCREASE WOULD REFLECTS A 15%, AND THE SECOND ONE WOULD OCCUR IN FY 26 [01:10:01] AT 12%. SO WHAT YOU SEE HERE IN THIS CHART REFLECTS THE AVERAGE GAS BILL BASED ON SEASONALITY. THE YELLOW BARS REPRESENTS SUMMER MONTHS, AND WINTER REP REPRESENTS WINTER MONTHS. AND THE FIRST SECTION, IF YOU JUST START FROM LEFT TO RIGHT, UH, REFLECTS OUR CUSTOMER'S CURRENT BILL, THE AVERAGE BILL, AND THEN THE SECOND SECTION REFLECTS THE 15% INCREASE. SO AS YOU CAN SEE, THESE WERE ROUNDED TO THE NEAREST DOLLAR, AND WINTER HAS PASSED BILL, WE'LL IGNORE THAT. BUT FOR SUMMER, IF WE WERE TO IMPLEMENT THIS, A RATE INCREASE OF 15%, UH, THE EFFECT ON THE BILL WOULD BE UNDER A DOLLAR AND A 12% RATE INCREASE FOR FY 26 WOULD REFLECT, UH, SLIGHT, UM, MODEST INCREASE FROM $69 TO $74 IN THE WINTER, AND $30 IN THE SUMMER TO $34. UM, THIS STILL PUTS US IN COMPARISON ON THE, ON THE RIGHT BARS, UH, COMPARABLE TO SOCAL GAS, WE WOULD STILL BE BELOW SOCAL GAS BY, UH, $3, TWO TO $3 DEPENDING ON THE SEASON. THE EFFECT OF, UH, SELECTING OPTION ONE WOULD ALLEVIATE SOME OF THE PRESSURES THAT WE WE SAW ON THE BASELINE SLIDE AND ALLOWS US TO, UH, ACHIEVE, GRADUALLY ACHIEVE, UM, A HIGHER FUND BALANCE OVER THE COURSE OF THE NEXT FIVE YEARS. AND THIS IS WHY WE FIND THAT IT'S VERY IMPORTANT TO, TO CONSIDER THE LONG RANGE PLANNING. WHAT WE HAVE HERE THAT IS NEW TO OUR PRESENTATION, ARE THE ELEMENTS THAT FEED INTO THE CHANGES IN, IN THE FUND BALANCE. SO WE'LL START WITH THE REVENUE INCREASE. SO BY IMPLEMENTING A 15% RATE INCREASE THIS YEAR, WE WOULD GET, WE WOULD GENERATE ABOUT $700,000, AND NEXT YEAR FOR A 12%, WE WOULD GENERATE $7.9 MILLION. AND THE OUTER YEARS REFLECT A RELATIVELY STABLE AMOUNT, AND IT'S JUST AN ESTIMATE BECAUSE WE STILL HAVE TO BE COMPARABLE TO SOCALGAS. SO WE DIDN'T MAKE ANY MAJOR ADJUSTMENTS THERE, BUT IT JUST REFLECTS SOME REVENUE GROWTH. AND THE SECOND SECTION BELOW THAT REFLECTS THE COST OF CIP AS, UH, KEVIN HAD ALLUDED TO THE FIVE YEAR PLAN, AND THE FINAL, UH, ROW BELOW IS PAYGO, OR WHAT WE CALL PAYGO OR PAY AS YOU GO. AND THAT BASICALLY MEANS ANY CASH THAT IS FUNDING ANY ASPECT OF CIP. SO AS YOU CAN SEE, WE ARE AIMING TO FULLY DEBT FINANCE AND NOT UTILIZE CASH OR, UH, ASSETS WITH LONGER USEFUL LIFE THROUGH, UM, FY 26 AND A PART OF FY 29. THIS EQUATES TO ABOUT A $40 MILLION, UH, BOND. AND YOU CAN SEE THAT WE ARE, WE'RE REACHING AS HIGH AS $13 MILLION IN FY 29, AND IT STARTS TO TAPER OFF ONCE THE BOND PROCEEDS GO AWAY. ANY QUESTIONS ON THIS SLIDE OR THE LAST ONE? OKAY, SO NOW OPTION TWO IS ANOTHER, UH, TWO STEP INCREASE IN WHICH, UH, WE HAVE A 12 AND 1212 IN AUGUST OF THIS YEAR, AND 12 IN APRIL OF NEXT YEAR. AND IT'S THE SAME STORY FOR THE IMPACT TO THE SUMMER BILL. UM, IT'S, IT'S IN THE PENNIES. AND FOR FY 26, WE SEE AN AN INCREASE OF $4 IN THE WINTER AND $3 IN THE SUMMER, AND WE'RE STILL BELOW SOCAL GAS BY ABOUT THREE TO $4. I I ALSO WANT TO NOTE, UM, THAT SOCAL GAS HAS RAISED THEIR RATES AND, UM, WE ARE ABOUT ROUGHLY 30% BELOW SOCAL GAS, WHICH IS WHY WE HAVE HAVE ROOM FOR FLEXIBILITY, UM, TO, TO BE COMPARABLE. UH, SINCE WE, WE LAST MET LAST YEAR IN BUILDING OUR FY 25 BUDGET, SOCALGAS RAISED THEIR RATES THREE TIMES THE IMPACT TO THE FIVE YEAR, UH, GAS FUND BALANCE FOR THIS OPTION OF, UH, TWO 12% RATE INCREASES ARE ABOUT HALF MILLION DOLLARS IN THIS FISCAL YEAR AND $6.8 MILLION IN THE NEXT FISCAL YEAR, BRINGING OUR FUND BALANCE TO $3.2 MILLION BY THE END OF FY 26. AS YOU CAN SEE, THE FUND BALANCE STILL GROWS OVER THE COURSE OF UTILIZING THE 40 YEAR, UH, $40 MILLION BONDS OVER THE NEXT THREE AND A HALF YEARS, UH, AND BEGINS TO TAPER OFF ONCE THE BOND PROCEEDS, [01:15:01] UH, ARE DIMINISHED. AND OPTION THREE IS A 25% INCREASE IN OCTOBER OF 2025. SO THIS WOULD BE NO RATE INCREASE FOR, FOR THIS YEAR, IT WOULD JUST HAPPEN AT THE START OF THE NEXT FISCAL YEAR. AND WHAT THAT DOES IS, UH, IT, IT RAISES THE AVERAGE BILL BY THREE TO $4, UM, IN NEXT YEAR, AND WE'RE STILL COMPARABLE TO SO CALGAS IN THE WINTER, UH, BUT STILL LESS IN THE SUMMER. AND OPTION THREE PROVIDES THE MOST DRASTIC IN INCREASE OF FUND BALANCE OVER THE NEXT FIVE YEARS WITH, UH, REACHING ABOUT $5 MILLION IN FY 26 AND UP TO $17 MILLION IN FY 29. AND AGAIN, IT TAPERS OFF. SO WITH ALL THE EFFECT OF ALL THREE BILLS FOR COMPARISON PURPOSES, YOU CAN SEE, UH, WHAT HAPPENS TO THE SUMMER BILL AND THE WINTER BILL OF, UH, NEXT FISCAL YEAR FOR, UH, 15%, UH, INCREASE THIS YEAR AND A 12% NEXT YEAR. IT WOULD EQUATE TO ABOUT 60 CENTS IN TO THE BILL STARTING AUGUST THIS YEAR, AND A, AN AVERAGE OF $4 AND 67 CENTS FOR NEXT YEAR. UM, OPTION TWO FOR THE 12 AND 12, WE HAVE A 48 CENTS INCREASE TO THE AVERAGE BILL AND $4 FOR NEXT YEAR. OPTION THREE FOR THE 25% INCREASE HAS NO EFFECT ON THIS FISCAL YEAR, UH, BUT IT ALSO HAS, UM, A HIGHER INCREASE BILL INCREASE EFFECT FOR NEXT YEAR. AND I ALSO, I JUST REALIZED I FORGOT TO SAY SOMETHING, SO IF YOU DON'T MIND, I'M GONNA GO BACK A COUPLE SLIDES IN, IN THIS SLIDE. UM, WE SEE THE $2.2 MILLION, UH, FOR THIS YEAR FOR THE BASELINE. AND WHAT WE'VE ALSO INCORPORATED AS A, A FORM OF COST CONTROLS IS BORROWING FROM AN ABANDONMENT PIPELINE RESERVE THAT WAS DESIGNATED PRE-MERGER, AND IT WAS SET ASIDE AND WE DECIDED TO, TO MOVE FORWARD WITH THIS TO, IN ORDER TO BALANCE OUR BUDGET. SO WE ARE EXHAUSTING ALL OPTIONS. AND WITH THAT, I WILL TRANS OH YEAH, I, I'M JUST CURIOUS ABOUT THE TIMING ON THE, UH, OPTION ONE. UM, GO BACK THERE. I FORGET WHAT THE, WHAT THE TIMING WAS, UH, AUGUST AND APRIL. IS THERE A SIGNIFICANCE IN THOSE? WHY WOULD, WHY WOULD WE CHOOSE THOSE MONTHS? WE'RE CHOOSING THOSE MONTHS BECAUSE IT, IN A WAY OF MANAGING THE RATE INCREASES, WE'RE TRYING TO ALSO BE SENSITIVE ON THE QUESTIONS OF AFFORDABILITY. UH, IT IS A NEED FOR REVENUE GROWTH, A SUBSTANTIAL REVENUE GROWTH. AT THE SAME TIME, WINTERTIME IS THE POINT OF MOST GAS CONSUMPTION. SO IF WE'RE ABLE TO SHOULDER THIS INCREASE, UH, IN A WAY IT GIVES CUSTOMERS THE POWER TO ENGAGE IN OUR CONSERVATION PROGRAMS, IT GIVES THE CUSTOMERS TO ENGAGE WITH THE CUSTOMER PORTAL AND MANAGE THEIR USAGE. IT, IT PUTS THE MAXIMUM AMOUNT OF CONTROL IN THEIR HANDS TO DEAL WITH, WHICH IS ARGUABLY A SIGNIFICANT RATE INCREASE. SO IT IS PECULIAR TO THE GAS FUND. IT'S NOT SOMETHING THAT IS IMMEDIATELY AVAILABLE TO YOU IN THE WATER AND SEWER FUNDS. THE PROP TWO 18 PROCESS IS A FAIRLY EXTENSIVE TIMELINE TO GET A RATE INCREASE. THE GAS FUND HAS THAT BENEFIT THAT IT'S NOT SUBJECT TO PROP TWO 18, THEREFORE YOU DON'T HAVE THAT LONG NOTIFICATION PROCESS. AT THE SAME TIME. TO BALANCE THAT, WE'VE LOOKED AT THESE OPPORTUNITIES TO PERHAPS AT THIS POINT TRIGGERS SOMETHING NOW IN THE SUMMER AND THEN AGAIN AFTERWARDS. THAT WAS THE REASON FOR SHOULDERING IT THAT WAY. THANK YOU. I WAS JUST CURIOUS ABOUT THOSE DATES. YEAH, YEAH. THERE ARE NO FURTHER QUESTIONS. I WILL TURN THIS OVER TO DANIEL TO THAT WATER AND SEWER. GOOD MORNING COMMISSIONERS. SO WE'RE GONNA GO AHEAD AND GET STARTED WITH THE, UH, WATER FUND. UH, THE FIRST TWO SLIDES HERE ARE SLIDES YOU'VE SEEN BEFORE IN, UH, PAST BUDGET WORKSHOPS. HERE WE HAD THE PROPOSED FUND BALANCE GAIN OF THE 6.2 MILLION, AND THEN WE SHOWED YOU WHAT THAT MEANT IN TERMS OF FUND BALANCE, TOTAL FUND BALANCE FOR FY 26. AGAIN, THIS IS THE SLIDE YOU SAW IN THE, YES, AGAIN, THIS IS THE SLIDE [01:20:01] YOU SAW IN THE PREVIOUS BUDGET WORKSHOP. UH, SO HERE WE'RE PROPOSING TO END THE FUND BALANCE WITH, UH, 25 MILLION. AND WHAT THAT MEANS IN TERMS OF A RATE INCREASE IS THE, UH, 12%, UH, FOR FY 26. UH, AND WITH THAT, UH, OPTION ONE IS THE HIGHEST IN TERMS OF RATE INCREASES FOR FY 26. UH, BUT WITH THAT, THAT GETS US BACK DOWN TO THE, UH, 6% RATE INCREASES IN THE OUT YEARS. UM, WE'RE PROPOSING TO BORROW AN ADDITIONAL SEVEN AND A HALF MILLION AND DRAW DOWN THE REMAINING 13 POINT A HALF MILLION IN EXISTING BONDS, BRINGING THE TOTAL DEBT FUNDING TO 21 MILLION. UH, THIS PAYS, UH, THIS, UH, PAIRS WITH OUR PAYGO FUNDING WITH THE 35.7 MILLION. AND OPTION TWO, UH, WE HAVE A 10% INCREASE. UH, AND WITH THAT COMES A HIGHER RATE INCREASE IN THE OUT YEARS. SO WE HAVE, UH, TEN EIGHT PERCENT AND FY 27, UH, AND THEN WE HAVE, UH, 6% AND, UH, FY 28, AND THEN 5% AND 3% IN THE OUT YEARS. UH, WE ALSO SHIFT HOW THE DEBT IS SPREAD. UH, 18 MILLION WOULD BE BORROWED IN FY 26 AND 12 MILLION WOULD BE BORROWED IN FY 27. HERE, UH, WE HAVE THE RATE OPTION WITH THE LOWEST 8%, AND WITH THAT COMES THREE CONSECUTIVE YEARS OF EIGHT, UH, PERCENT RATE INCREASES, AND THEN THE RETURN TO THE 6%, UH, AGAIN, THE 6% IS THE INDUSTRY STANDARD. UH, DEBT TIMING IS SIMILAR TO SCENARIO TWO, AND PAYGO FUNDING REMAINS UNCHANGED. NOW, IN TERMS OF WHAT THAT MEANS, IN TERMS OF THE EFFECT ON THE BILL, UH, THE 12% REPRESENTS, UH, $8 26 CENTS. UH, OPTION TWO 10% IS $6 AND 91 CENTS, AND THE 8% OPTION IS $5 AND 52 CENTS. SWITCHING. NOW OVER TO SEWER, SAME CONCEPT. WE HAD A FUND BALANCE GAIN, UH, PROPOSED OF 1.3 MILLION. WHAT DOES THAT MEAN IN TERMS OF FUND BALANCE? THAT WOULD GET US, UH, JUST ABOVE THE MINIMUM OF 5.1 MILLION. NOW, IN TERMS OF THE OPTIONS, THE FIRST OPTION HERE IS THE 12% OPTION. AND WITH THE 12% OPTION, THAT GETS US RIGHT ABOVE THE, UH, 4.5 MILLION, WHICH IS RIGHT AT THE MINIMUM TARGET LINE. UH, IN FY 27, WE HAVE 11% AND THEN 10%, 10%. SO HERE WE HAVE AN OPTION, UH, THAT PROVIDES, UH, FOUR YEARS OF DOUBLE DIGIT RATE INCREASES. UM, UH, DEBT ISSUANCE WOULD OCCUR OVER THREE YEARS, 8 MILLION IN FY 26, 15 AND A HALF MILLION IN FY 27, AND 4 MILLION IN FY 28 TOTALLING AND 27 POINT A HALF MILLION. UH, ONE OF THE KEY TAKEAWAYS HERE IS A POINT THAT ROB HAD MADE IN FY 27 WE'RE ANTICIPATING A CIP OF 30 MILLION. AND TO PROVIDE, UH, ADDITIONAL CONTEXT, UH, IN THE PAST PREVIOUS YEARS, OUR CIP HOVERED AROUND 6 MILLION, THIS IS QUITE A SUBSTANTIAL JUMP HERE FOR FY 27, WHICH WE ARE PREPARING FOR BECAUSE THOSE RATES WILL AFFECT THAT YEAR AS WELL. OPTION TWO, UH, WE HAVE 15% RATE INCREASE, AND THEN A LOWERED 10% RATE INCREASE IN FY 27, AND THEN THAT TAKES US BACK DOWN TO 8%. UH, AND THE OUT YEARS THERE, TOTAL DEBT REMAINS THE SAME, UH, SCENARIO ONE. SO THERE ARE NO CHANGES. WE'RE STILL LOOKING AT THE TOTAL OF 27 AND A HALF MILLION. UH, HERE WE HAVE OPTION THREE, WHICH IS THE 10% IN THE FIRST TWO YEARS, SO TWO YEARS OF 10% RATE INCREASES, AND THEN FOLLOWED BY TWO YEARS OF 9%, AND THEN 8%. UH, THE MAJOR DIFFERENCE BETWEEN THIS, UH, OPTION AS OPPOSED TO THE OTHER OPTIONS IS THAT WE'RE LOOKING TO TAKE AN ADDITIONAL FOUR AND A HALF MILLION DOLLARS IN DEBT, BRING IN THE TOTAL DEBT OF $32 MILLION. THAT IS THE MAIN DIFFERENCE BETWEEN OPTION THREE AND THE OPTIONS ONE AND TWO. NOW, WHAT DOES THAT MEAN IN TERMS OF EFFECT ON THE BILL? UM, SMALLER IMPACTS IN TERMS OF RATE INCREASES. SO, UH, FOR 12% WE'RE LOOKING AT $1 47 CENTS. UH, OPTION TWO WAS 15%, UH, AT $1 84 CENTS. AND FOR THE LAST 10%, UH, WE'RE LOOKING AT $1 23 CENTS. ARE THERE ANY QUESTIONS SO FAR BEFORE I HAND THIS OVER? NOW WE'RE GONNA GO OVER THE TOTAL EFFECT ON THE BILLS COMBINED WITH ALL THREE OPTIONS. OKAY. TO SUMMARIZE THE IMPACT OF ALL THREE OPTIONS FOR ALL THREE FUNDS WE HAVE FOR YOU, [01:25:01] OPTION ONE. UM, AND FIRST OF ALL, GAS, WE UTILIZE THE WINTER IMPACT FOR, FOR THE COMPLETE EFFECT. UH, BUT FOR OPTION ONE, WE HAVE A TOTAL BILL IMPACT OF $15 AND 1 CENT. OPTION TWO HAS A TOTAL BILL IMPACT OF $13 AND 7 CENTS, AND OPTION THREE OFFERS 13, $14 AND 69 CENTS EFFECT OF THE TYPICAL BILL BASED ON AVERAGE CONSUMPTION. ANY QUESTIONS? YOU LOOK LIKE YOU HAVE AVERAGE QUESTIONS. OKAY, , I I WANNA START BY SAYING THAT, UH, YOU KNOW, WHEN WE DISCUSS RATES, THIS, WE DON'T TAKE THIS LIGHTLY. AND, AND WE, WE UNDERSTAND THAT THE BOARD FEELS VERY STRONGLY ABOUT THIS TOO. AND, UM, WE'RE, WE'RE IN INFLATIONARY TIMES, BUT AT THE SAME TIME, WE ARE IN THE BUSINESS OF BEING ABLE TO PROVIDE CONTINUED RESILIENCE AND IN OUR INFRASTRUCTURE TO PROVIDE THE LEVEL OF SERVICE TO THE CUSTOMERS, UH, SO THAT WE KEEP EVERYBODY SAFE. AND, YOU KNOW, ALL OF THESE UTILITIES ARE A WAY OF LIFE. SO IT IS A NECESSITY TO MAINTAIN THE AGING INFRASTRUCTURE THAT WE HAVE. LONG BEACH HAS A, A VERY STRONG HISTORY WITH THE WHAT WE HAVE IN THE GROUND, AND WE NEED TO ENSURE, UH, THAT WE HAVE THAT CONTINUED STABILITY IN OUR INFRASTRUCTURE. SO WHEN WE TALK ABOUT THE BUDGET, IT'S NOT JUST ABOUT THE NUMBERS, IT'S ALSO ABOUT HOW WE CAN MAINTAIN OUR UTILITY SERVICES. SO I WANTED TO BRING THIS, UH, IMAGE UP OF OUR TABLE OF THE BUSINESS PLAN, WHICH JENNIFER ROJAS, UH, HAS BEEN WORKING ON WITH, WITH THE TEAM OF PEOPLE ON OUR, OUR UTILITIES STAFF TO DEVELOP. AND THE, THESE ARE OUR OVERARCHING OBJECTIVES AND INITIATIVES. SO OUR TOP PRIORITY IS THE CUSTOMER TO BE ABLE TO PROVIDE THE, THE CLEAN AND SAFE, RELIABLE, UM, SERVICES, WHILE ALSO, UM, FOCUSING ON AFFORDABILITY. UM, FOR THE FINANCIAL ASPECT, WE WANT TO CONTINUE AS WE DISCUSSED IN OUR, UH, REVIEW OF THE ACT FOR THAT WE ARE FINANCIALLY SOUND AND MAKING DECISIONS THAT, UH, PROMOTE LONG-TERM SUSTAINABILITY FOR, FOR ANYTHING THAT COULD OCCUR IN THE NEXT FIVE TO 10 YEARS. AND WE WANNA CONTINUE WITH OPERATIONAL EXCELLENCE AND WORKPLACE CULTURE. UH, TWO ITEMS THAT WE LIVE THROUGH DAY, DAY IN AND DAY OUT, AND MAKING SURE THAT WE HAVE THE RIGHT LEVEL OF, UH, TRAINED AND TALENTED STAFF TO PROVIDE THE SERVICES TO OUR CUSTOMERS. THE, THE UTILITIES IS, IS A SERVICE BASED ORGANIZATION, AND IT'S NOT JUST BASED ON COMMODITY. SO WE NEED THE RIGHT LEVEL OF STAFFING TO CONTINUE, UM, PROVIDING THIS TO EVERYONE IN LONG BEACH AND SIGNAL HILL. UH, WITH THAT, THIS CONCLUDES OUR PRESENTATION FOR BUDGET WORKSHOP TWO, AND WE'D BE HAPPY TO ANSWER ANY QUESTIONS YOU MIGHT HAVE. UM, OKAY. I THINK I'LL CALL FIRST FOR, UM, IF THERE ARE ANY PUBLIC COMMENTS. ANYONE WISHING? OKAY. JUST SPEAK. UM, ANY COMMISSIONER COMMENT, MARIA? YEAH, I, UH, THANK YOU FIRST, THANK YOU EVERYONE FOR ALL THE WORK YOU'VE DONE ON THIS. UM, I THINK THAT LAST PAGE IS EXTREMELY IMPORTANT, UM, BECAUSE IT GIVES US A, A ROADMAP FOR THE THINGS THAT WE'RE CONSIDERING IN ORDER TO MAKE THE DECISIONS THAT WE'RE ALL HAVING AND DIFFICULT DECISIONS THAT WE'RE HAVING TO MAKE. IS IT IS STAFF, UM, WHEN YOU SAY OPTION ONE, TWO, AND THREE ARE, IS STAFF SAYING OPTION ONE IS A PREFERRED? I WAS GONNA BRING FORWARD TO YOU A SUMMARY WITH RECOMMENDATIONS, BUT I'LL, I'LL PAUSE FOR A MOMENT. IF YOU, YOU HAVE SPECIFIC QUESTIONS, PLEASE, BUT BY ALL MEANS, YOU CAN ENGAGE, WE CAN TALK AND DISCUSS AND THEN I'LL PROVIDE YOU SOME SUMMARY COMMENTS. BUT WE DO INTEND TO GET FROM YOU A DIRECTION OFF OF A RECOMMENDATION THAT WE'RE MAKING. YES. OKAY. UM, I'LL, I'LL HOLD FOR NOW. OKAY, COMMISSIONER SCOTT. UM, SO I'M GONNA REFER BACK TO THE, TO THE GAS FUND. UM, SO THE CITY CHARTER, WHICH IS ESSENTIALLY OUR, OUR CONSTITUTION, RIGHT? IT LAYS OUT THAT, UH, I'LL JUST READ FROM IT. UH, RATES AND CHARGES FOR USERS OF GAS SUPPLIED BY THE PUBLIC UTILITIES DEPARTMENT SHALL BE GENERALLY BASED UPON THE PREVAILING RATES FOR SIMILAR SERVICES AND COMMODITIES PROVIDED BY SOCAL GAS. UM, IF WE GO BACK TO SLIDE SEVEN, CAREFUL TO DO THAT NO OTHER WAY [01:30:01] OR SLIDE. WHAT WAS THE TITLE OF THIS? UH, IT'S OPTION ONE FOR GAS. THERE. HERE WE GO. OH, DIFFERENT NUMBER THAN MINE. OKAY. SORRY. UH, SO WHEN WE'RE LOOKING AT, UH, THE OPTION ONE, UH, FISCAL YEAR 26, UH, PROPOSAL VERSUS SOCAL GAS RATES, WE'RE STILL BOTH SUMMER AND WINTER, WE'RE STILL BELOW SOCAL GAS. UM, I'M GONNA MAKE AN UNPOPULAR ARGUMENT WITH REGARDS TO RATES, BUT IF WE ARE GOING, IF OUR, IF OUR CHARTER, OUR CONSTITUTION SAYS THAT WE SHOULD, WE SHOULD BE AT PREVAILING RATES, WHY AREN'T WE TRYING TO MATCH SOCAL GAS DOLLAR FOR DOLLAR? ONE OF THE CRITICAL ASPECTS IN DEALING WITH SOCAL GAS ON AT LEAST TWO FRONTS IS THAT BEYOND THE RATE COMPARISON ALONE, WE HAVE OTHER INSTRUMENTS THAT WE USE TO ENHANCE OUR SERVICE TO THE CUSTOMERS, BOTH IN LONG BEACH AND IN SIGNAL HILL HEDGING. AND WHEN WE HEDGE, THAT COMES AT A CERTAIN PRICE IN ORDER TO EXECUTE THAT HEDGE. AND THAT'S PART OF THE EMBEDDED COSTS. IF WE WERE TO MATCH SOCALGAS EXACTLY DOLLAR FOR DOLLAR, AND THEN ON TOP OF IT INSTITUTE THE HEDGE TO, TO BUFFER, AGAIN, CERTAIN WINTERTIME INCREASES THAT CAN LOGICALLY HAPPEN, SUCH AS WHEN WE HAD THE EMERGENCY THAT OCCURRED A FEW YEARS AGO, WE WOULD ACTUALLY FIND OURSELVES SIGNIFICANTLY OVER SOCALGAS RATES. SO THERE IS ALWAYS THIS ELEMENT OF BUDGETING AND, UH, SETTING RATES, WHICH IS SCIENCE AND ART, WHERE THERE IS A CAPACITY THAT YOU HAVE AGAINST SOCALGAS. HOWEVER, YOU CANNOT USE THAT ENTIRE CAPACITY BECAUSE YOU HAVE THESE OTHER INSTRUMENTS. THE OTHER ELEMENT THAT WE HAVE TO BALANCE AGAINST IS THAT AS A PUC REGULATED UTILITY SOCALGAS IS SUB IS SUBJECT TO, UM, PRICE REDUCTIONS. SO IN SOCAL GAS'S HISTORY, THERE HAS BEEN RATE REDUCTIONS THAT THEY HAVE HAD TO GIVE. AND AS PUBLIC UTILITY, WE DON'T FIND OURSELVES IN THAT ABILITY TO DO THAT BECAUSE WE TRY TO BE AS CLOSELY AS POSSIBLE TO COST OF SERVICE. SO THOSE ARE THE, THE ELEMENTS THAT GO INTO, UH, THE NUMBERS THAT YOU'VE SEEN HERE. I GUESS MY POINT IS, UH, IF I'M LOOKING AT WINTER, UH, SOCAL GAS AT $76 FOR THE AVERAGE BILL AND LB Y 26 PROPOSED AT $74, WHY ARE WE NOT TRYING TO MATCH AT LEAST THE BILL DOLLAR PER DOLLAR? BECAUSE THAT, THAT IS IN THE CURRENT SCENARIO WITHOUT THE EMERGENCY THAT OCCURRED, UH, A FEW YEARS AGO. SO WE HAD A CONSUM, WE'VE HAD A CONSUMPTION AND RATE FORECAST THAT'S BASED ON THAT AND THE HEDGE. AND SO IF WE ACTUALLY TRIED TO RAISE THE SOCAL GAS RATES SO THAT THE TYPICAL BILL, TYPICAL OR AVERAGE BILL WOULD BE AT A CERTAIN LEVEL, IF WE SUFFERED A COMMODITY PRICE SPIKE, THEN WE WOULD FIND OURSELVES, UH, IN IMBALANCE AGAINST SOCAL GAS. WE CAN BRING A MORE DETAILED ANALYSIS, UH, TO EXPLAIN THAT, UH, SO THAT YOU CAN UNDERSTAND IF, IF YOU WANT A MORE DETAILED ANSWER, I CAN TRY TO ASK TONY TO TRY TO GIVE YOU AN ANSWER HERE AT THIS MOMENT. WELL, I'M JUST CURIOUS. UH, SO IF YOU GO TO OPTION TWO, WHICH IS A 12% IN AUGUST, 12% IN APRIL, THAT CHANGES OUR PROPOSED, UH, AVERAGE GAS BILL, $73 FROM $74, ADJUSTING THOSE PERCENTAGES, WHY CAN'T WE ADJUST THE OPTION ONE PERCENTAGES SLIGHTLY HIGHER TO GET US TO THE POINT WHERE IT'S MATCHING THE SOIL GAS? TONY, CAN, CAN YOU DESCRIBE A LITTLE BIT OF, OF WHAT I WAS TRYING TO CHARACTERIZE AS THE JUST NO, NO, ABSOLUTELY. AND THAT WAS WHAT I WANTED OUT OF THE OUTTA THIS IS, THIS IS A WORKSHOP FOR YOU TO BE ABLE TO DIALOGUE AND ASK QUESTIONS. YEAH. SO, UM, THE GAS BILLS ARE PRIMARILY TWO COMPONENTS, TRANSMISSION AND COMMODITY. THESE EXAMPLES, WE'VE KEPT COMMODITY FLAT, RIGHT? BUT AS XOL WAS TRYING TO EXPLAIN, COMMODITY INCLUDES COSTS THAT GENERALLY INCREASE OUR COMMODITY COSTS ABOVE SOCAL. AND SO IF YOU WERE TO INCLUDE THEIR TRUE, OUR TRUE COMMODITY COSTS, IT WOULD PUT US SIGNIFICANTLY ABOVE SOCAL. THESE EXAMPLES SHOW COMMODITY AS EQUAL. AND WHEN WE BUILD IN THINGS LIKE HEDGING COSTS, THAT WILL INCREASE OUR COMMODITY COSTS TO BE SIGNIFICANTLY ABOVE SOCAL, WE NEVER OR VERY RARELY CAN MATCH SOCAL THAT'S BUILT INTO THE SOLD, [01:35:03] WHICH I UNDERSTAND. BUT, UM, SO IN AUGUST OF 25, OPTION ONE HAS A 15% INCREASE. AUGUST OF, UH, OPTION TWO, IT'S A 12% INCREASE. UH, WHAT, WHY WOULDN'T A, FOR EXAMPLE, 17% AUGUST OF 25, WHY WOULDN'T THAT GET US CLOSER TO SOCAL GAS ON THAT OPTION? ONE CLOSER TO THEIR AVERAGE? IT, IT COULD, AS, AS TONY DESCRIBED, THAT'S AN ASSUMPTION THAT THE COMMODITY COSTS ARE FLAT AND WE HAVE TO ASSUME, RIGHT? HOWEVER, IN WHEN WE ACTUALLY CALCULATE AND INCLUDE THE HEDGE, THE COMMODITY COSTS CAN EXCEED SOCALGAS IS COMMODITY COSTS, COMMODITY COSTS AND COMMODITY COSTS. SO THEREFORE WE BALANCE OFF OF, OFF OF THE TRANSMISSION RATE AND THAT'S HOW WE BALANCE TO MAKE SURE THAT THE TOTAL BILL IS EQUAL. NOW, IN DOING THAT, WHEN YOU EXECUTE THE HEDGE, YOU ARE EXECUTING THE HEDGE TO PROTECT AGAINST IMBALANCES IN THE COMMODITY PRICING, WHICH FAR EXCEED ANYTHING THAT WOULD BE AVERAGE COMMODITY COSTS PROJECTIONS. AGAIN, WHAT HAPPENED A FEW YEARS AGO WAS THE TRANSMISSION PIPELINES ACROSS THE NATION SUFFERED MAJOR BLOCKAGES, MAJOR INTERRUPTIONS, AND THE COMMODITY PRICES SPIKED. AND AT THE TIME WE DID NOT HAVE THAT HEDGE, AND SO THEREFORE WE HAD TO ABSORB THE FULL IMPACT AND THE RESIDENTS HAD TO ABSORB THAT FULL IMPACT. WHAT WE HAVE INSTITUTED NOW IS A HEDGE THAT PROTECTS AGAINST THOSE INSTANCES WHERE THAT COULD OCCUR. AND IT'S NOT JUST A PIPELINE. THERE CAN BE INTERNATIONAL TRADE DISRUPTIONS AND THINGS LIKE THAT, BUT IN DOING THAT, THEN THOSE OPPORTUNITIES POSE TO US A SITUATION WHERE SOCAL GASES, COMMODITY COSTS ON A RAW BASIS COULD TECHNICALLY BE LOWER THAN OUR TOTAL COMMODITY COSTS BECAUSE WE HAVE THE HEDGE BUILT INTO IT. NOW, AS I SAID, WE BUFFER THAT ON THE TRANSMISSION RATE, AND SO THEREFORE WE DON'T TAKE THE TRANSMISSION RATE TO MATCH SOCAL GASES EXACTLY FOR EXACT, BECAUSE THEN WITH THE HEDGE AND THE COMMODITY COSTS, WE MAY FIND OURSELVES MORE EXPENSIVE THAN SOCAL GAS AND THEN HAVE THE NET EFFECT THAT THE MONTHLY BILLS WILL NOT BE PREVAILING. THEY WILL FAR EXCEED SOCAL GASES. JUST SORRY FOR THAT LONG-WINDED DISCUSSION OF RATE DESIGN. UH, HOW DID I DO, TONY? YOU DID GREAT. AND JUST TO PROVIDE A LITTLE BIT MORE CLARITY ON THAT, WE INCUR COSTS ON COMMODITY THAT SOCAL DOESN'T. WE HAVE TO BRING THE GAS TO US THROUGH THEIR SYSTEM AND WE HAVE TO PAY THEM. SO THAT'S A COST THAT WE HAVE TO INCLUDE THAT THEY DON'T, WE HAVE TO STORE OUR GAS ON THEIR SYSTEM AND WE HAVE TO PAY THEM FOR USE THEIR PIPELINE ETS SYSTEMS. UM, SO ALL OF THESE THINGS ADD COST TO OUR COMMODITY. THE ONLY WAY WE CAN CONTROL IT IS TO BE SLIGHTLY UNDER ON THE TRANSMISSION SIDE, WHICH IS ELEMENT THAT YOU CONTROL HERE TO ACTUALLY HAVE A COMPARABLE BILL AT THE END OF THE DAY WHEN ALL COSTS ARE FACT THAT WE NEED THAT LITTLE BIT OF, OR WE WOULD RECOMMEND. SO I GUESS TO GET TO THE, THE CRUX OF MY CONCERN IS THE, THE FY 25 FUND BALANCE OF 2.9 MILLION, UM, IT'S ONE 10TH OF WHAT OUR WHAT OUR ANTICIPATED OR WHAT OUR PREFERRED MINIMUM BALANCE. CORRECT. I'M JUST TRYING TO FIND A WAY THAT WE GET CLOSER TO OUR MINIMUM. UM, 'CAUSE IT, IT, WE HAVE ONE BAD YEAR, 2.9 MILLION RESERVES THAT EASILY COULD WIPE OUT OUR ENTIRE RESERVES. AND WHAT HAPPENS IF WE GO NEGATIVE ON THAT? WELL, IT, IT WOULD BE OUR INTENT TO NOT GO NEGATIVE FUND FOR SURE. SO ONE OF, ONE OF THE ELEMENTS OF MANAGING THE BUDGET AND, AND I'M PREFACING MY SUMMARY COMMENTS AND, AND I REALIZE I'M MINDFUL OF TIME AS WELL. YOU HAVE IN THE BUDGET SESSION HERE THAT WE'VE HAD THREE FUNDS WITH THREE DISTINCTLY DIFFERENT ISSUES TO ADDRESS. AND ADMITTEDLY, SO IN THE GAS FUND, YOU HAVE A VERY, VERY SMALL, UH, SMALL FUND BALANCE AT THIS TIME. AND YOU SEE FROM STAFF'S COMMITMENT, WE'VE, WE'VE EXHAUSTED SO MANY DIFFERENT ELEMENTS EMBEDDED WITHIN THE STRUCTURE OF THE GAS BUDGETING PROCESS AND THE RATE SETTING MY INTENT TO BRING TO YOU A 10 YEAR FINANCIAL PLAN THAT SHOWS YOU THE ACTIONS TO TAKE PLACE OVER TIME THAT BUILD THAT FUND BALANCE BACK. IT, IT IS TRUE IN, IN YOUR COMMENTS ARE SPOT ON COMMISSIONER SCOTT. THERE, THERE IS NO ABILITY IN THIS SINGLE YEAR [01:40:01] TO ADDRESS THAT IMBALANCE. HOWEVER, HOWEVER, MY COMMITMENT IS TO HAVE A COMMITMENT TO SOLID REVENUE GROWTH IN THE YEARS AHEAD THAT BUILDS THAT FUND BALANCE BACK. AND, AND TO CHARACTERIZE ALSO THAT IN ORDER TO BE A DEBT FUNDED AGENCY, YOU HAVE TO HAVE SOME COMMITMENT TO MINIMUM FUND BALANCE. UM, ADMITTEDLY SO I THINK THAT IT'S INSTRUCTIVE AS WELL THAT WHEN WE DISCUSS THAT LONG RANGE FINANCE PLAN, I WILL ASK YOU TO WEIGH IN ON WHAT IS THE PROPER FISCAL RESERVES TO SET, UH, THE FINANCIAL RESERVE POLICY FOR THE GAS FUND. THIS ONE ADMITTEDLY, WAS JUST SIMPLY A CALCULATION OF 90 DAYS CASH. WHETHER THAT IS APPROPRIATE IN AND OF ITSELF IN THE LONG RUN IS SOMETHING THAT IS WITHIN YOUR POWER TO ADJUST AND DECIDE. SO IT'S NOT EASY NEWS TO BRING YOU THESE, THESE BUDGET DECISIONS. IN THIS CONTEXT, I REALIZE THAT THE FUND BALANCE IS LOW, BUT WE BELIEVE THAT IT IS PRUDENT GIVEN THE CAPACITY THAT WE HAVE WITH THE SOCAL GAS RATES. THIS IS PROBABLY THE LIMITS OF WHERE WE WOULD WISH TO GO IN RECENT TIMEFRAME. UH, THE PATTERN, AND WE WILL BRING YOU THIS INFORMATION IN RECENT TIMEFRAME, SOCALGAS HAS HAD THOSE SITUATIONS WHERE IT'S HAD TO REDUCE RATES AND AS A PUBLIC UTILITY, WE DO NOT FIND OURSELVES IN THE POSITION TO DO THAT. UH, YEAH, SO I, I'LL JUST REFER BACK TO MY COMMENTS ON THE, ON THE, ON THE FER, YES. THE, THE NET THE NET POSITION, RIGHT? UH, IT, WE, WE INHERITED A GAS FUND THAT, THAT MAYBE WAS NOT IN THE BEST OF FINANCIAL CONDITION AND THE REASONS FOR THAT COULD HAVE POSSIBLY BEEN BECAUSE OF THE LACK OF ANY RATE INCREASES FOR A NUMBER OF YEARS. IT WAS SO, UH, I I KNOW WE, WE, IT, IT TOOK YEARS AND YEARS FOR THE GAS FUND TO GET IN THIS CONDITION, AND IT'S GONNA TAKE YEARS AND YEARS TO GET US OUT OF THIS CONDITION. UH, I WOULD JUST LIKE TO SEE US ATTACK THE, THE SUPER EXTREMELY LOW FUND BALANCE AS QUICKLY AND AS, AS, AS AGGRESSIVELY AS POSSIBLE. I AGREE. AND SO IF YOU CAN, UM, GEORGE, CAN YOU GET ME TO, UM, THIS SLIDE THAT GOES RIGHT AFTER THIS ONE SO YOU CAN, YOU CAN SEE THAT INDEED AS YOU GO INTO FISCAL YEAR 27 AND 28, SO FISCAL YEAR 25, WE'RE HALFWAY THROUGH, WE'RE ABOUT TO END IT. SO I'M NOT POINTING TO THAT ONE PER SE. UH, ALTHOUGH WE ARE TRYING TO DO COST CONTROLS TO RAISE IT. SO 4.6 7 3 12 1 13, YOU CAN BEGIN TO SEE THE FUND BALANCE GROWTH. AND WE ARE MINDFUL TO SHOW YOU IN THIS SITUATION DIFFERENT THAN THE WATER AND SEWER BECAUSE YOU'RE NOT IN FULL CONTROL OF SETTING THESE RATES BECAUSE OF THE CHARTER LANGUAGE, RIGHT? SO THAT'S WHY WE'VE CHART, WE'VE TITLED THAT ROW REVENUE INCREASE AND THE STEADY GROWTH IN 27, 28, 29 AND 30. THAT'S AN ASSUMPTION OF 6% REVENUE GROWTH. UH, I CAN'T PREDICT WHERE SOCAL GAS WILL GO. WE'LL DEFINITELY MONITOR THAT AND BRING THAT INFORMATION TO YOU, BUT AS THAT CAPACITY RISES, THEN PERHAPS YOU HAVE THE ABILITY TO GO HIGHER. PERHAPS. UH, WE'VE TRIED TO BE CONSERVATIVE IN WHERE WE GO WITH THE FUND BALANCE GROWTH IN THIS, ADMITTEDLY, AND THERE ARE OTHER REVENUE OPTIONS THAT EXIST OUT. BUT I WOULD RATHER WITH, IF YOU WILL INDULGE ME, I WOULD RATHER SAY THAT FOR THE 10 YEAR FINANCIAL PLANNING AND JUST SAY THAT WE BELIEVE THAT THE REVENUE GROWTH IS POSSIBLE UNDER THE SCENARIO, GIVEN THAT WE BELIEVE THE BUDGET IS VERY CONSERVATIVE AT THIS POINT. AND WE DON'T WANT TO FIND YOU, WE DON'T WANT TO FIND YOU WITH STAFF THAT WE HAVE OVER PROMISED THE RESULTS OUTTA THIS BUDGET. I APPRECIATE THAT. I'LL, I'LL REST. THANK YOU. NO, NO, I, THIS IS THE DIALOGUE THAT I HOPED AND, YOU KNOW, SPEAKING ON BEHALF OF STAFF, THIS IS THE DIALOGUE THAT WE WANTED YOU TO HAVE WITH US. WE, WE APPRECIATE VERY MUCH YOUR COMMENTS AND YOUR QUESTIONS. SO I, I THINK, UM, THANK YOU TONY. I, I THINK WHAT I'D LIKE TO DO, I THINK MIKE GUIDE YOUR DISCUSSION IS IF, GEORGE, IF YOU CAN BRING ME BACK TO THE LA TOWARDS THE END OF THE LAST SLIDES, THE ONE WITH THE THREE OPTIONS THERE. SO I, I APOLOGIZE, I HAD IN, IN MY MIND THAT I WOULD GET AT SOME POINT WITH YOUR QUESTIONS AND DIALOGUE, I'D FOCUS YOU BACK ON THIS SLIDE AND GIVE YOU A RECOMMENDATION. SO LET ME DO THAT AT THIS TIME AND THEN MAY THAT MIGHT GUIDE YOUR COMMENTS. SO I WANT YOU TO KNOW HERE THAT OUR RECOMMENDATION IS OPTION ONE. SO WHAT GOES WITH OPTION ONE? OPTION ONE HAS AT ITS CORE ON THE GAS FUND, HAS A DECISION TO INCREASE RATES FOR THE REMAINDER OF FISCAL YEAR 25, WHICH WOULD BE TECHNICALLY AUGUST IS WHEN WE CAN EXECUTE, THAT'D BE A 15% FOR FISCAL YEAR 26 PROPER. ALL THREE FUNDS WOULD HAVE IN THEIR PROPOSAL A 12% RATE INCREASE ACROSS THE BOARD. [01:45:01] YOU'VE SEEN HOW THOSE 12% RATE INCREASES GENERATE DIFFERENT OBJECTIVES WITHIN EACH OF THE FUNDS. UM, AT THE SAME TIME, STAFF HAS ENDEAVORED TO HAVE FOR GAS, WATER, AND SEWER. A VERY, VERY CONSERVATIVE APPROACH. AND EMBEDDED IN THAT IS THE CONSUMPTION LEVEL. AS YOU KNOW, WITH THE INFORMATION SESSIONS AND THE RETREAT, WE TRIED OUR BEST TO CHARACTERIZE YOU THE ENVIRONMENT THAT YOU'RE IN, IN MANAGING UTILITY IS ONE IN WHICH THE SURROUNDING REGULATORY ENVIRONMENT PLACES A, A PRESSURE ON LOWER CONSUMPTION. AND IN THAT LOWER CONSUMPTION, THAT'S THE ONLY WAY TO GENERATE REVENUE FOR THE CRITICAL SERVICES BEING PROVIDED. CONSEQUENTLY, RATES HAVE THE PRESSURE TO RISE IN RESPONSE TO THOSE, THOSE EFFECTS, RIGHT? WE BELIEVE THAT THE CONSUMPTION LEVELS WE HAVE SET FOR GAS AND WATER AND SEWER BY DEFAULT IS INDOOR WATER CONSUMPTION. WE HAVE SET THAT CONSERVATIVELY, THAT WE BELIEVE THAT YOU WILL SEE THE REVENUE GROWTH AS A RESULT OF THESE RATE INCREASES AND PERHAPS MIGHT EVEN SEE SOMETHING SLIGHTLY BETTER. BUT WE BELIEVE IT'S CONSERVATIVE IN THE SENSE THAT WITH THESE RATE INCREASES, WE DON'T WANT YOU TO EXPERIENCE SOMETHING LESS THAN THIS, GIVEN WHERE WE ARE WITH THE FUND BALANCES AND THE COMMITMENT TO DEBT FINANCING, WHICH ALSO HAS TO COME FORWARD. OPTION TWO AND OPTION THREE ARE CERTAINLY AVAILABLE, BUT WE BELIEVE THAT OPTION ONE IS THE MOST PRUDENT TODAY IS A WORKSHOP. IT IS RECEIVE AND FILE AT THE SAME TIME THROUGH YOUR QUESTIONS AND DIALOGUE. OUR HOPES WERE TO BRING BACK TO YOU IN JUNE AN ACTION ITEM THAT WOULD INCLUDE OPTION ONE. AND AT THE SAME TIME, THIS IS A WORKSHOP FOR YOU. YOU HAVE THE CAPACITY TO DIRECT US TO DO OTHERWISE. SO I'LL, I'LL TURN IT BACK TO YOU AND YOUR COMMENTS AND QUESTIONS. COMMISSIONER CORDERO, THANK YOU VERY MUCH. UM, , SORRY. UM, THANK YOU. UH, IT, YOU KNOW, WE FIND OURSELVES DOING THIS EVERY YEAR, DOING WHAT WE NEED TO DO IN TERMS OF ADVANCED RESILIENCY FOR OUR UTILITIES AND THEN KEEPING RATES AFFORDABLE. AND IT'S A REALLY, REALLY TOUGH, TOUGH PLACE TO BE. UM, MY, I GUESS I'D LIKE TO LEAP FORWARD. YOU HAVE REALLY GOOD QUESTIONS AND I, I APPRECIATE THOSE, UH, FOR CLARITY. UM, HOW, HOW RELAYING THIS TO OUR CUSTOMER, THAT'S ALWAYS WHERE I, I TEND TO WANNA GO. YOU KNOW, TALKING ABOUT THE FACT THAT DE BECAUSE ESPECIALLY IN THE WATER DEMAND IS, IS, IS LOWER, YOU KNOW, THE COST OF SERVICE IS UP, POSSIBLY UP OR MAYBE STAGNANT OR UP. UM, AND THEN ALSO HAVING TO CONSIDER OUR RESERVE AMOUNT, WHICH WE SAW THIS YEAR WAS EXTREMELY, EXTREMELY IMPORTANT. ALL THE WHILE THINKING ABOUT OUR CAPITAL IMPROVEMENT PROJECTS THAT WE NEED TO MAINTAIN THE INTEGRITY OF THE SYSTEM. UM, ALSO EQUALLY IMPORTANT, I REFERENCED IT EARLIER, ARE, ARE THE SERVICES THAT THE WAGES. AND MY QUESTION IS THIS, UM, THIS WAS BROUGHT TO MY ATTENTION THROUGH A LETTER. WHEN WE SAY PERSONAL SERVICES, ARE THOSE WAGES, THAT'S LABOR. YES, LABOR, OKAY. LABOR COSTS. THE BUDGETARY SYSTEM IN THE CITY CALLS IT PERSONAL SERVICES, RIGHT? OKAY. SO AGAIN, THERE WAS A REFERENCE TO THAT AND IN A, SOME LETTERS THAT WE RECEIVED ABOUT PERSONAL SERVICES AND WHAT THAT MEANS. AND THAT MEANS THE PEOPLE THAT ARE, THAT ARE ACTUALLY DOING THE HARD WORK AND KEEPING OUR SYSTEM GOING AND DELIVERING, UH, WHAT WE DELIVER TO OUR, OUR CUSTOMERS. SO, UM, IT, IT'S A, IT'S A TOUGH ONE. UM, BUT THERE'S A COUPLE OF THINGS THAT, THAT STICK OUT IN MY MIND AND THAT IS THE RESERVE IS EXTREMELY IMPORTANT. AND THEN ALSO OUR CAPITAL IMPROVEMENT PROJECTS. HAVING SAID THAT, I, I HOPE WE CAN DO, AND OUR PUBLIC AFFAIRS TEAM DOES A GREAT JOB IN THIS. SO WE HAVE PEOPLE OUT, WE MADE A DECISION A LONG TIME AGO TO TAKE MONEY OUT OF SPONSORSHIPS LIKE TABLES AND HAVING, YOU KNOW, JUST RANDOMLY GIVING TABLES AND, AND, AND HAVING ALL OF US SIT THERE AT A TABLE AND IT WAS WELL, WELL SERVED, WE HAVE A LOT OF GREAT NONPROFITS, BUT WE THOUGHT, YOU KNOW WHAT, LET'S TAKE IT TO THOSE PUBLIC EVENTS WHERE IT ISN'T SOMETHING THAT'S GONNA COST PEOPLE TO ATTEND. WE'LL HAVE OUR BUGGY THERE, WE'LL HAVE OUR, OUR SPEAKERS BUREAU, WHICH DOES AN INCREDIBLE JOB. AND THAT'S THE WAY WE, UH, APPROACH THINGS. I THINK IT WAS DURING COVID WHEN WE DID THAT. UM, SO WE ARE LOOKING AT EVERYTHING. WE'RE LOOKING AT DOING A, A GOOD JOB AND CONTINUING THE GOOD JOB OF OUR PUBLIC AFFAIRS AND OUR OUTREACH PEOPLE TO HELP PEOPLE UNDERSTAND THE POSITION THAT WE'RE IN BECAUSE WE'RE DOING THE SAME EXACT THING AT METROPOLITAN. AND, AND AFFORDABILITY IS ON THE TOP OF EVERYONE'S MIND. UH, HOW DO WE KEEP THIS AFFORDABLE WHILE STILL, YOU KNOW, CREATING THE RESILIENCY, KEEPING RESILIENCY AND MAINTAINING THE INTEGRITY. SO WE, WE HAVE [01:50:01] A LOT OF WORK TO DO AND HOPEFULLY, UM, I KNOW WE, WE CAN STEP, STEP UP TO THE PLATE ON THAT. THANK YOU. GREAT. ANATOL, DID YOU HAVE ANY FURTHER COMMENT? NO. UH, AS I EXPRESSED OUR RECOMMENDATION IS, IS THAT OPTION, UH, WE'RE LISTENING TO ANY OTHER GUIDANCE THAT YOU WANT TO GIVE. IT WOULD BE OUR INTENT TO BRING THAT AS THE RECOMMENDED OPTION FOR YOU FOR APPROVAL. IT IS A SERIES OF RESOLUTION, SO IT IS A BUDGET RESOLUTION AS WELL AS A RATE RESOLUTION. UH, ALL OF THAT DOCUMENTATION WILL BE BROUGHT TO YOU FOR, FOR APPROVAL IN JUNE. DO WE HAVE ANY FURTHER COMMENT FROM COMMISSIONERS? OKAY. I WANNA ADD A NOTE THAT WE DID RECEIVE FIVE WRITTEN EMAILS WITH COMMENTS ON ITEM NUMBER SEVEN FOR THE RECORD. DO I HAVE A MOTION TO RECEIVE AND FILE? SECOND AND A SECOND. THANK YOU SO MUCH. ALL IN FAVOR SAY AYE. AYE. ANY OPPOSED? THE MOTION CARRIES. THANK YOU. OKAY. IS THERE [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.] ANYONE WISHING TO SPEAK ON A NON AGENDA ITEM? SEEING NONE, THE COMMENT PERIOD IS CLOSED. ARE THERE ANY ANNOUNCEMENTS? [ANNOUNCEMENTS] I I JUST, THERE WAS STUFF HAPPENING THIS MONTH, BUT I'M GONNA PUT THAT INTO THE GENERAL MANAGER'S REPORT WHEN WE COME IN JUNE, SO, OKAY. I HAVE NO NEED TO DO THAT TODAY. THANK YOU. OKAY. UM, [ADJOURNMENT] THAT COMPLETES OUR MEETING. MEETING IS ADJOURNED. * This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting.