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HERE.THANKS FOR THOSE WHO ARE HERE FOR THIS MEETING AND, UH, PRESIDENT SCOTT FOR BEING HERE FOR BRINGING THIS TO US.
[REGULAR AGENDA]
REGULAR, REGULAR AGENDA ITEM NUMBER[1. 25-57035 Recommendation to receive and file a report on the Long Beach Public Utilities Department’s (LBPUD) participation at the California Public Utilities Commission’s (CPUC) Long-Term Gas Planning Workshop held September 22, 2025, in San Francisco, California. Suggested Action: Approve recommendation. ]
ONE IS TO RECEIVE AND FILE A REPORT ON THE LONG BEACH PUBLIC UTILITIES PARTICIPATION AT THE CPU'S LONG-TERM GAS PLANNING WORKSHOP ON SEPTEMBER 22ND IN SAN FRANCISCO.TONY, FIRST OF ALL, DO I, DO I HAVE TO DO THE MOTION NOW? YES.
UM, DO I HAVE A MOTION TO RECEIVE AND FILE? OKAY.
WE HAVE A MOTION TO RECEIVE AND FILE, AND I WILL SECOND, UH, ALL RIGHT.
READY TO GO? I THINK WE CAN, UH, DO WE, DO WE HAVE TO ANY PUBLIC COMMENT? I'M SORRY.
THIS IS THE FIRST TIME I'M DOING THIS.
ANY PUBLIC COMMENT CALL ON DIANA.
WE MAY CALL ON DIANA AND THEN WE DO PUBLIC COMMENT, CORRECT? UH, SURE.
UH, INTRODUCING THE ITEM? YES.
UM, SO THANK YOU, UM, COMMITTEE, UH, THIS IS THE FIRST TIME WE'RE DOING A COMMITTEE STRUCTURE FOR THIS TYPE OF PRESENTATION, SO WE'RE REALLY EXCITED TO SHARE JUST SOME OF THE BACKGROUND ON THE MORE SUBSTANTIVE DAY-TO-DAY WORK THAT GOES ON IN OUR, UM, DEPARTMENT.
AND EARLIER, UM, THIS FALL, TONY FOSTER, NICK RUSSELL, AND CHRISTOPHER KUNZ, WHO'S OUR CITY DIRECTOR OF COMMUNITY DEVELOPMENT, OVERSEEING HOUSING PERMITS AND LONG-TERM PLANNING, HAD AN OPPORTUNITY, UM, TO GO UP TO THE CALIFORNIA PUBLIC UTILITIES COMMISSION AT THEIR INVITATION, ACTUALLY, UM, TO PRESENT ON KIND OF THE CITY OF LONG BEACH'S CLIMATE ADAPTATION GOALS, UM, OUR CLIMATE ADAPTATION PLAN, AND JUST SOME OF THE THINGS THAT WE ARE THINKING ABOUT AS WE THINK ABOUT HOW WE BECOME MORE GREEN SUSTAINABLE AND RESPONSIBLE WITH OUR NATURAL RESOURCES.
AND IN THIS CASE, NAMELY, UM, NATURAL GAS.
SO WITH THAT, I'LL TURN IT OVER TO TONY TO SHARE WITH YOU THE PRESENTATION THAT HE PRESENTED, UM, TO THE CPUC.
THANK YOU DIANA AND, UH, THE INAUGURAL, UH, RESOURCES, UH, COMMITTEE.
SO, UH, GOOD MORNING COMMISSIONERS.
THANK YOU FOR THE OPPORTUNITY TO SPEAK TODAY.
I'M PLEASED TO PRESENT THIS RECEIVE AND FILE REPORT TO THE RESOURCES COMMITTEE TO HIGHLIGHT SOME OF THE ACTIVITIES STAFF ARE UNDERTAKING IN THE CONTEXT OF A SPECIFIC REGULATORY WORKSHOP ON LONG-TERM GAS PLANNING HOSTED BY THE PUBLIC, UH, CALIFORNIA PUBLIC UTILITIES COMMISSION.
SO THIS ITEM REPORTS OUR PERSPECTIVE DURING THE SEPTEMBER 22ND, 2025 PUC WORKSHOP ON HOW MUNICIPAL UTILITIES CONTRIBUTE TO CALIFORNIA'S LONG-TERM GAS TRANSITION IN A WAY THAT REMAINS GROUNDED IN SAFETY, RELIABILITY, AND AFFORDABILITY.
GUIDED BY SB 1221 AND THE CITY'S OWN CLIMATE ACTION PLAN, WE ARE EXPLORING TARGETED PLACE-BASED ELECTRIFICATION STRATEGIES, PARTICULARLY NON PIPELINE ALTERNATIVES TO ASSESS WHETHER COORDINATED GAS AND ELECTRIC PLANNING COULD REDUCE LONG-TERM CAPITAL COSTS WHILE SUPPORTING EQUITABLE DECARBONIZATION.
TODAY'S PRESENTATION SUMMARIZES THE INSIGHTS WE SHARED IN THE PUC WORKSHOP AND HIGHLIGHTS HOW A BUILT OUT CITY LIKE LONG BEACH IS PREPARING FOR THE NEXT GENERATION OF ENERGY PLANNING.
SO, AS YOU KNOW, LONG BEACH IS CALIFORNIA'S SEVENTH LARGEST CITY HOME TO MORE THAN HALF A MILLION RESIDENTS, AND AN AGING HOUSING STOCK THAT HEAVILY INFLUENCES OUR ENERGY TRANSITION STRATEGY.
THE CITY OPERATES BOTH A FULL SERVICES UTILITY DEPARTMENT RESPONSIBLE FOR WATER, GAS, AND SEWER SERVICES, AND A COMMUNITY DEVELOPMENT DEPARTMENT THAT OVERSEES PLANNING, PERMITTING, UH, AND CLIMATE ACTION IMPLEMENTATION.
TOGETHER, THESE TWO ARMS OF LOCAL GOVERNMENT PROVIDE A UNIQUELY INTEGRATED VANTAGE POINT WHERE WE CAN ALIGN CLIMATE POLICY, LAND USE REALITIES, AND RATE PAYER AFFORDABILITY WITH A UNIFIED PLANNING FRAMEWORK.
THIS LEVEL OF CON OF LOCAL CONTROL ALSO ENABLES TARGETED INNOVATION, ESPECIALLY IN IDENTIFYING MICRO COMMUNITIES WHERE COORDINATED GAS AND ELECTRIC INVESTMENTS CAN MEANINGFULLY SHAPE LONG-TERM EMISSION TRAJECTORIES AND CUSTOMER COSTS.
IN 2022, LONG BEACH ADOPTED A CLIMATE ACTION AND ADAPTATION PLAN RECOGNIZED UNDER CE Q AS A QUALIFIED CLIMATE CLIMATE
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ACTION PLAN.THE CAP COMMITS THE CITY TO REDUCING EMISSIONS AND PREPARING FOR CLIMATE IMPACTS, WHILE MAINTAINING FLEXIBILITY FOR HOW ELECTRIFICATION OCCURS ACROSS OUR DIVERSE BUILDING STOCK.
ELECTRIFICATION IS REQUIRED FOR LARGE RESIDENTIAL PRODUCTS, PROJECTS, AND FULLY AFFORDABLE DEVELOPMENTS.
WHILE SMALLER PROJECTS LIKE ADUS ARE ENCOURAGED BUT NOT MANDATED TO FULLY ELECTRIFY.
THIS BALANCED APPROACH ACKNOWLEDGES BOTH OUR CLIMATE OBLIGATIONS AND THE ECONOMIC REALITIES OUR RESIDENTS FACE.
IT ALSO LAYS THE POLITY POLICY FOUNDATION FOR EXPLORING NON PIPELINES ALTERNATIVES WHEN FEASIBLE AND COST EFFECTIVE.
SO, OUR CLIMATE ACTION PLAN BEGINS WITH A CLEAR BASELINE UNDERSTANDING WHERE OUR EMISSIONS COME FROM TODAY SO WE CAN, CAN CHART A REALISTIC PATH FORWARD, UH, TOWARDS REDUCTION.
THE FIRST BOX ON THIS SLIDE INDICATES THAT NEARLY HALF OUR GREENHOUSE GAS EMISSIONS STEM FROM STATIONARY SOURCES.
WHAT YOU SEE HERE, UH, IS THE FOUNDATION FOR LONG BEACH'S, LONG-TERM DECARBONIZATION STRATEGY, QUANTIFYING STATIONARY SOURCES OF, UH, ENERGY, TRANSPORTATION, WASTE, AND OTHER SECTORS TO, UH, IDENTIFY THE MOST IMPACTFUL OPPORTUNITIES.
THESE GOALS GUIDE PLANNING DECISIONS FROM ELECTRIFICATION REQUIREMENTS TO NON PIPELINE ALTERNATIVES.
BY GROUNDING OUR WORK IN DATA, WE ASSURE THAT EACH STEP WE TAKE IS TARGETED, ACHIEVABLE, AND ALIGNED WITH A STATEWIDE PUSH TOWARDS A SAFER, MORE RESILIENT LOW CARBON FUTURE.
IN THE STATIONARY ENERGY SECTOR, BUILDINGS ARE AMONG THE LARGEST SOURCES OF EMISSIONS IN LONG BEACH, WHICH IS WHY OUR CL CLIMATE ACTION PLAN FOCUSES ON FLEXIBLE PHASED APPROACH TOWARDS ELECTRIFICATION.
AGAIN, LARGER RESIDENTIAL AND FULLY AFFORDABLE PROJECTS ARE NOW REQUIRED TO ELECTRIFY.
WHILE SMALLER DEVELOPMENTS LIKE ADUS ARE ENCOURAGED BUT NOT MANDATED, THIS REFLECTS THE REALITIES OF COST, INFRASTRUCTURE, READINESS, AND EQUITY.
THIS BALANCED APPROACH LETS US REDUCE EMISSIONS RESPONSIBLY WHILE GIVING HOMEOWNERS BUILDERS AND UTILITIES TIME AND SUPPORT NEEDED TO MODERNIZE AGING STRUCTURES AND ENSURE SMOOTH TRANSITION TO CLEANER ENERGY.
LONG BEACH'S AGING HOUSING STOCK IS ONE OF THE CORE REALITIES SHAPING OUR ENERGY TRANSITION.
MANY OF OUR HOMES WERE BUILT LONG BEFORE MODERN CODES, MEANING LIMITED ELECTRICAL CAPACITY, OLDER APPLIANCES, AND HIGHER COSTS.
TO ELECTRIFY THESE CONDITIONS, PARTICULARLY AFFECT FIXED INCOME AND RENTER HOUSEHOLDS, UNDERSCORING THE NEED FOR EQUITY AS WE EVALUATE NON PIPELINE ALTERNATIVES AND MICRO ZONES.
UNDERSTANDING THE AGE AND CONDITION OF OUR BUILDINGS HELPS DETERMINE WHERE ELECTRIFICATION IS FEASIBLE, WHERE INFRASTRUCTURE UPGRADES ARE NEEDED, AND HOW WE CAN SUPPORT RESIDENTS THROUGH THAT TRANSITION INTO A FAIR, IN A FAIR AND AFFORDABLE WAY.
OUR MUNICIPAL NATURAL GAS SYSTEM SERVES 150,000 CUSTOMER ACCOUNTS, WHICH IS ABOUT WHICH OF WHICH ABOUT 90% ARE RESIDENTIAL.
YET THOSE RESIDENTIAL CUSTOMERS REPRESENT ONLY HALF OF OUR OVERALL CONSUMPTION.
WITH THE OTHER HALF COMING FROM ROUGHLY 10% COMMERCIAL AND INDUSTRIAL USERS, WE MAINTAIN ABOUT 1900 MILES OF DISTRIBUTION PIPELINE, MUCH OF IT INSTALLED DECADES AGO.
THIS INFRASTRUCTURE REALITY MAKES LONG BEACH AN IDEAL CANDIDATE FOR TARGETED PLACE-BASED ELECTRIFICATION STRATEGIES.
UH, AREAS WITH AGING MAINS AND HIGH USAGE PROVIDE POTENTIAL OPPORTUNITIES TO AVOID COSTLY REPLACEMENT.
THIS IS PIPELINE REPLACEMENT, WHILE TRANSITIONING CUSTOMERS TO CLEANER ENERGY OPTIONS.
OVER THE PAST FIVE YEARS, LONG BEACH HAS OBSERVED A STEADY 1% ANNUAL DECLINE IN RESIDENTIAL NATURAL GAS USE.
THIS REDUCTION ALIGNS WITH THE STATE, WITH STATEWIDE ENERGY STANDARDS CHANGING CUSTOMER BEHAVIORS AND THE EARLY EFFECTS OF ELECTRIFICATION.
THESE TRENDS UNDERSCORE WHY IT IS CRUCIAL TO ANALYZE LONG-TERM DEMAND.
REALISTICALLY, AS CONSUMPTION DECLINES, THE MARGINAL COST OF MAINTAINING OR REPLACING PORTIONS OF THE GAS SYSTEM INCREASES.
THIS E ECONOMIC TENSION IS WHAT MAKES THE EXPLORATION OF NON PIPELINE ALTERNATIVES, ESPECIALLY THOSE IN SPECIFIC NEIGHBORHOODS, AN IMPORTANT TOOL
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IN LONG-TERM GAS PLANNING.UNDER SB 1221, LONG BEACH IS ACTIVELY PARTICIPATING IN STATEWIDE PLANNING DISCUSSIONS BECAUSE MUNICIPAL UTILITIES BRING A DISTINCT PERSPECTIVE.
OUR CLIMATE GOALS ALIGN WITH THE STATES, BUT WE MUST ALSO ENSURE AFFORDABILITY FOR A CUSTOMER BASE DISPROPORTIONATELY AFFECTED BY ECONOMIC PRESSURES.
WE AIM TO AVOID REPLACE IN PLACE INFRASTRUCTURE INVESTMENTS WHERE VIABLE CLEAN ALTERNATIVES EXIST, PARTICULARLY IN END OF LIFE AREAS.
OUR COLLABORATION WITH SOUTHERN CALIFORNIA EDISON ON PLACE-BASED ELECTRIFICATION REFLECTS OUR EFFORTS IN THIS APPROACH.
WE'RE SEEKING OPPORTUNITIES FOR COORDINATED ELECTRIC UPGRADES THAT ELIMINATE THE NEED FOR FUTURE GAS INVESTMENTS.
THE GOAL IS TO UNDERSTAND EMERGENT ENERGY OPTIONS WHILE PROTECTING SAFETY AND AFFORDABILITY IN LONG BEACH.
OUR PRELIMINARY WORK FOCUSES ON EVALUATING WHERE NON PIPELINE ALTERNATIVES MAY OFFER A CLEANER AND POTENTIALLY LOWER COST OPTION AND TRADITIONAL GAS MAIN REPLACEMENT.
WE ARE ASSESSING SPECIFIC END USES, SPACE AND WATER HEATING, COOKING, AND EVALUATING WHETHER ELECTRIFICATION OR HYBRID SOLUTIONS COULD SERVE THEM EFFECTIVELY.
NPAS, WHICH ARE NON PIPELINE ALTERNATIVES, ARE NOT A BLANKET STRATEGY.
THEY ARE PLACE SPECIFIC AND REQUIRE CLOSE COORDINATION WITH THE ELECTRIC UTILITY.
BUT IN THE RIGHT LOCATIONS, NPAS MAY AVOID COSTLY FUTURE STRANDED ASSETS WHILE SUPPORTING EMISSIONS REDUCTIONS.
LONG BEACH UTILITIES HAVE PART HAS PARTNERED WITH THE RAM CORPORATION ON A CALIFORNIA ENERGY COMMISSION FUNDED STUDY TO UNDERSTAND THE TRUE COSTS AND EQUITY IMPACTS OF A FULLY A FULLY ELECTRIFYING LOW-INCOME HOMES.
RAND'S ANALYSIS FOUND THAT ELECTRIFICATION IN OLDER BUILDINGS CAN BE EXPENSIVE, OFTEN REQUIRING MAJOR PANEL UPGRADES, APPLIANCE REPLACEMENTS, AND IN SOME CASES ASBESTOS OR LEAD REMEDIATION, PLACING SUBSTANTIAL FINANCIAL PRESSURE ON INCOME HOUSEHOLDS.
THE STUDY ALSO SHOWED THAT CURRENT ELECTRIC RATES CAN INCREASE MONTHLY BILLS UNLESS PAIRED WITH EFFICIENCY OR TECHNOLOGIES LIKE HEAT PUMPS OR SOLAR.
MOST IMPORTANTLY, RAND CONFIRMED THAT EQUITABLE ELECTRIFICATION MUST CENTER COMMUNITY VOICES AND LOCAL CONDITIONS.
OUR PARTICIPATION HELPED IDENTIFY FEASIBLE PILOT SITES AND SHAPED STATEWIDE GUIDANCE ON HOW TO PLAN TRANSITIONS THAT ARE REALISTIC, EQUITABLE, AND GROUNDED IN COMMUNITY NEEDS.
SO SUPPORTED BY THE NON-DISCLOSURE AGREEMENT AUTHORIZED BY THIS, UH, UTILITIES COMMISSION IN JUNE OF 25.
LONG BEACH AND SOUTHERN CALIFORNIA EDISON HAVE JOINTLY, UH, ARE JOINTLY STUDYING UP TO TWO PILOT MICRO ZONES.
CLUSTERS OF ROUGHLY FIVE LOW INCOME, HIGH USES HOUSEHOLDS, HIGH USAGE HOUSEHOLDS LOCATED NEAR OLDER GAS INFRASTRUCTURE, AND ALIGNED WITH THE PLANNING PRIORITIES EMPHASIZED BY FB 1221.
THE STUDY EXTENDS BEYOND INFRASTRUCTURE TO EVALUATE CUSTOMER EXPERIENCE, ELECTRIFICATION, FEASIBILITY, UPFRONT COSTS, ONGOING ENERGY BILLS, AND ELECTRIC READINESS, ENSURING ANY POTENTIAL PILOT IS BOTH TECHNICALLY SOUND AND SOCIALLY EQUITABLE.
HOWEVER, BASED ON OUR MOST RECENT DISCUSSIONS, EDISON'S SENIOR MANAGEMENT HAS INDICATED THAT THE PILOT MAY NOT DELIVER BENEFITS COMMISERATE WITH THE EFFORT OF REQUIRED PRELIMINARY FINDINGS, SUGGEST THAT THE NUMBER OF ELIGIBLE PILOT PARTICIPANTS IS LIMITED.
POTENTIAL GAS SAVINGS MAY BE MODEST, AND THE OVERALL MODEL MAY NOT SCALE EFFECTIVELY.
THAT SAID, WE CONTINUE TO BE OPEN AND WILLING TO PARTICIPATE IN ANY STUDY THAT IS CONCLUDED BY OUR, IN, BY OUR INDUSTRY AND REGULATORY PARTNERS.
WE LOOK FORWARD TO EXPLORING RESPONSIBLE AND FEASIBLE WAYS TO MAKE PROGRESS ON THE STATE AND LOCAL CLIMATE POLICY GOALS.
OUR ENERGY ASSESSMENT FRAMEWORK EXTENDS BEYOND ELECTRIFICATION TECHNOLOGIES.
WE'RE EVALUATING GRID CAPACITY, EMISSIONS REDUCTION, POTENTIAL CUSTOMER AFFORDABILITY, AND LONG TERM INFRASTRUCTURE IMPLICATIONS.
THESE CONSIDERATIONS WILL INFORM BOTH THE PILOT AND THE BROADER CPUC PROCEEDING.
THEY ALSO HELP US ANSWER A CRITICAL QUESTION IN A BUILT OUT CITY WITH AN AGING INFRASTRUCTURE, WHICH INVESTMENTS DELIVER THE GREATEST LONG-TERM VALUE FOR RATE PAYERS AND CLIMATE GOALS.
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IN CLOSING, LONG BEACH IS COMMITTED TO BEING A PROACTIVE PARTNER IN THE STATE'S LONG-TERM GAS TRANSITION.AS A MUNICIPAL UTILITY, WE HAVE THE PLANNING TOOLS, LOCAL KNOWLEDGE AND FLEXIBILITY TO PILOT INNOVATIVE APPROACHES FOR REMAINING GROUNDED IN THE CORE PRINCIPLES OF SAFETY, EQUITY, AND AFFORDABILITY.
THE WORK AHEAD IS COMPLEX, BUT WE BELIEVE BY COLLABORATING ACROSS AGENCIES, SHARING DATA AND EVALUATING MPAS WITH A CLEAR-EYED METHODOLOGY, WE CAN TURN THOUGHTFUL POLICY INTO PRACTICAL COMMUNITY-CENTERED IMPLEMENTATION.
SO OUR RECOMMENDATION IS TO RECEIVE AND FILE THIS REPORT SUMMARIZING OUR PARTICIPATION IN THE CPCS SEPTEMBER 22ND WORKSHOP.
THIS IS AN IN, UH, INFORMATIONAL ITEM, BUT IT REPRESENTS AN IMPORTANT STEP IN ALIGNING THE CITY'S LOCAL PLANNING WITH STATEWIDE GAS TRANSITION EFFORTS.
AS THE CPUC CONTINUES IMPLEMENTING SB 1221, UH, THROUGH PROCESSES SCENARIO ANANA ANALYSIS, INFRASTRUCTURE PLANNING, LONG BEACH WILL REMAIN FULLY ENGAGED, ENSURING OUR RESIDENTS NEEDS ARE REPRESENTED IN THE STATE'S EVOLVING, EVOLVING ENERGY LANDSCAPE.
I'M AVAILABLE FOR ANY QUESTIONS.
I'M, I'M SURE WE'LL HAVE A FEW.
UM, DINA, I NOW ASK FOR PUBLIC COMMENTS.
ARE WE HAVE ANY PUBLIC COMMENTS ON THIS ITEM? OKAY.
SEEING NONE, ANY COMMISSIONER COMMENTS? YES, TONY, THANK, THANK YOU FOR THE GREAT PRESENTATION AND INSIGHT.
UH, WAS CURIOUS RELATED, GOING BACK TO THE SLIDE RELATED TO, UM, EDISON AND THE COORDINATION WITH, WITH, UH, SOUTHERN CALIFORNIA EDISON MM-HMM
YOU MENTIONED, UM, THAT IT MAY NOT HAVE THE, THE OUTCOMES THAT WILL REQUIRE, I GUESS THE, THE JUICE MIGHT NOT BE WORTH THE SQUEEZE.
AND, AND I'M TRYING TO FIGURE OUT HOW, HOW WE, WE, WE, WE CAN, CAN, CAN STREAMLINE AND, AND, AND GET TO THOSE GOALS AS ARE WE ENCOURAGING FOLKS TO GO TANKLESS WITH THEIR WATER HEATERS AND THEIR AND RESIDENTIAL? UM, SURE.
SO MAYBE A LITTLE MORE BACKGROUND ON THE EDISON COLLABORATION, WHICH WE BELIEVE CAN STILL MOVE FORWARD.
BUT A A QUICK SUMMARY ON THAT.
EDISON RECEIVED SOME GRANT MONIES, AND THIS GRANT MONEY, UH, PAID FOR ROUGHLY $30,000 PER HOUSEHOLD ONLY IN SINGLE FAMILY LOW INCOME AREAS WHERE THESE GRANT FUNDS COULD BE USED TO IMPLEMENT, UH, IMPLEMENT ELECTRIFICATION OF THOSE HOMES.
THEY ESTIMATED THAT THEIR GRANT MONEY WOULD COVER FIVE TO 10 HOMES, AND WITHOUT THAT GRANT MONEY, THEY WERE UNWILLING TO DO IT.
SO THE FIRST CONSTRAINT WAS THIS VERY LIMITED SCOPE OF WHICH THE GRANT MONEY WOULD BE, UH, AVAILABLE.
THE SECOND COMPONENT, WHICH LED TO SORT OF A TEMPORARY STALLING OF THIS, IS WE WERE INTERESTED IN THIS EFFORT FROM A THEORETICAL STANDPOINT, THAT WE WANTED THIS TO BE A VERY DETAILED COSTING EFFORT EXERCISE WHERE WE WOULD SHARE OUR DATA WITH EDISON.
EDISON WOULD SHARE THEIR DATA WITH US, AND WE COULD BEGIN TO START MODELING SOME VERY DETAILED EXERCISES ABOUT THE TRUE COST OF ELECTRIFICATION.
THEY CAME FROM A DIFFERENT STANDPOINT.
THEY WANTED AN ACTUAL PHYSICAL IMPLEMENTATION OF THIS MEANING THAT WE WOULD PULL MAIN PIPELINE FROM THE GROUND, COMPLETELY STRAND THOSE HOUSEHOLDS, UH, FROM GAS IN ORDER FOR THEM TO IMPLEMENT THIS GROUND MONEY.
NATURALLY, WE WERE UNWILLING TO DO SO, AND FROM EDISON'S STANDPOINT, THE JUICE CAME NOT WORTH THE SQUEEZE.
THAT DOESN'T MEAN THE CONVERSATIONS ARE OPEN.
WE ARE VERY MUCH STILL INTERESTED IN DETAILED COSTING EXERCISES, WHICH COULD, UH, ADVANCE OUR UNDERSTANDING OF THE TRUE COST OF ELECTRIFICATION.
NO, YOU, YOU GO AHEAD AND THEN I'LL THANK YOU.
AND ANTO, THEN COMMISSIONER AUSTIN, IF I COULD WRAP UP TONY'S, UM, RESPONSE TO YOUR INITIAL QUESTION, WHICH IS, ARE WE STILL TRYING TO, OR HOW ARE WE TRYING TO, AS A DEPARTMENT INCENTIVIZE, UM, SOME CLEANER ENERGY USES? AND SO THIS PRESENTATION THAT WE DID AT THE CPUC WAS VERY NARROWLY, UM, IN RESPONSE TO THEIR EFFORTS THROUGH SB 21, 12 21, 12 21, WHICH IS ABOUT ZONAL ELECTRIFICATION.
NOW, ZAL ELECTRIFICATION IS NOT THE ONLY WAY TO BECOME
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CLEANER AND GREENER MORE SUSTAINABLE.THERE ARE OTHER MECHANISMS, UM, OF WHICH THE STATES CAP AND INVEST NOW PROGRAM IS A MUCH LARGER KIND OF UMBRELLA FOR, AND BECAUSE THE CITY OF LONG BEACH THROUGH LONG BEACH UTILITIES IS A NATURAL GAS SUPPLIER, WE ARE VERY UNIQUE IN THAT WE RECEIVE AB FREE AB 32 ALLOWANCES TO HELP OUR, OUR CUSTOMERS TRY AND REDUCE THEIR GREENHOUSE GAS DEMAND.
AND SO, UM, YOU ALL, AS THE GOVERNING BOARD OF THAT PROGRAM, UM, ARE ABLE TO APPROVE FUNDING FOR PROGRAMS THAT ARE ADMINISTERED THROUGH THIS DEPARTMENT, THROUGH DEAN'S TEAM, JOEY AND OTHERS, UM, WHERE WE ARE DOING, UM, IN-HOME APPLIANCE REPLACEMENTS AND OTHER, UM, EFFORTS TO TRY AND, UM, BE MORE, UM, I GUESS RESPONSIBLE WITH OUR RESOURCES, WHETHER IT BE WATER OR GAS.
UM, AND, AND SO THAT IS SEPARATE FROM, FROM SB 1221, BUT STILL, UM, IN SUPPORT OF THE OVERALL CLIMATE INITIATIVES THAT WE'RE WORKING ON.
DIANE, I GREATLY APPRECIATE THAT THE WAY YOU STARTED THAT.
UM, 'CAUSE I HAVE A LITTLE BIT OF WHIPLASH ON THIS.
'CAUSE I CAME FROM THE, I WORKED AT THE EDISON COMPANY FOR ALMOST 18 YEARS, AND NOW I'M HERE.
UM, I, WHEN WE BOUGHT OUR HOME, IT WAS A GOLD MEDALLION HOME, AND THEN THAT MEANT NOTHING.
AND NOW WE'RE LIKE GOING, ARE WE GOING BACK TO THAT? I MEAN, WHAT? IT JUST SEEMS VERY ODD.
SO YOU KIND OF ADDRESSED IT, DIANA.
SO THIS IS A, AND I SHOULD KNOW THIS, THIS IS A MANDATE BY THE STATE TO MOVE AWAY FROM OR TOWARD CLEANER, CLEANER, GREENER ENERGY
AND, AND HAVING SAID THAT, UM, THIS IS WHY THIS PROJECT CAME UP.
AND THEN TONY, YOU SAID THAT ONE OF THE CONSIDERATIONS THAT WE NEEDED TO CONSIDER WAS A REMOVAL OF OUR, OF OUR, OF OUR PIPELINES SO THAT THIS COULD BE IMPLEMENTED, WHICH IS NOT A DEAL FOR US.
THE NATURE OF OUR INFRASTRUCTURE, AND THIS INFORMATION COMES FROM KEVIN AND HIS ENGINEERING TEAM, IS THE GAS INFRASTRUCTURE IS A TWO-WAY SYSTEM.
SO IT'S VERY, VERY DIFFICULT TO REMOVE ANY SEGMENT OF THAT SYSTEM, ESPECIALLY FOR A PILOT PROJECT, UM, AND HAVE IT BE, HAVE WITHOUT CREATING ADVERSE IMPACTS TO THE NON-PILOT HOMES CONNECTED TO THAT REMOVED PORTION OF THE SYSTEM.
SO FOR THAT REASON, WE DECLINED TO COMMIT IMMEDIATELY TO DECOMMISSIONING PIPE.
UM, BUT WE STILL WANT TO CONSIDER THE EXERCISE IN A THEORETICAL SENSE OF EVALUATING AREAS THAT POSSIBLY COULD BE DECOMMISSIONED.
YOU MENTIONED, UM, ELIGIBILITY.
THERE WAS A RESTRICTION ON SOME.
WHAT WAS THAT? WHAT WAS THAT? SO THE RESTRICTION ELIGIBILITY WAS SET BY SOUTHERN CALIFORNIA EDISON AND, AND SOUTHERN CALIFORNIA EDISON IS WHO APPROACHED US LONG BEACH UTILITIES TO DO, UH, THE STUDY THAT WAS COVERED BY THE NDA.
AND SO THEY IDENTIFIED AND PUT FORWARD TO US THEIR DESIRED CRITERIA, WHICH WAS THOSE, UM, CLUSTERS OF 20 HOMES, 20 OR MORE HOMES TO TRY AND GET TO SCALE.
UM, THAT WAS NOT, UH, A NUMBER OR A THRESHOLD THAT WE CAME UP WITH, TO BE HONEST.
WE'RE NOT SURE HOW THEY CAME UP WITH THAT NUMBER EITHER.
UM, BUT OVERALL IN THIS PRESENTATION TO THE CPUC, LA BEACH UTILITIES WAS A LOCAL NATURAL GAS PROVIDER, BUT THERE WERE OTHER ENTITIES LIKE CCAS OR COMMUNITY CHOICE AGGREGATES, UM, WHO WERE THERE AS WELL.
PG E, UM, SOCALGAS IS THERE DEFINITELY TAKING NOTES.
UM, AND WHAT WAS UNIQUE, I THINK THAT WE WERE ABLE TO SHARE IS THAT IN BUILT OUT CITIES WHERE THERE IS AN EXISTING NATURAL GAS DISTRIBUTION PIPELINE SYSTEM, THE IDEA OF ZONAL ELECTRIFICATION AND DECOMMISSIONING THAT EXISTING PIPELINE SYSTEM IS A VERY COMPLICATED AND COMPLEX ENDEAVOR.
NOT SAYING IT CAN'T BE DONE, BUT ALSO MIGHT NOT BE THE MOST EFFECTIVE WAY TO GET WHERE WE WANNA GO AS A STATE.
UM, YOU LOOK AT PLACES LIKE LANCASTER OR FRESNO OR, OR KINDA DEVELOPING CITIES WHERE YOU DON'T HAVE THAT EXISTING ENERGY INFRASTRUCTURE IN THE GROUND, AND IN THOSE PLACES IT MIGHT MAKE MORE SENSE, BUT THE TWO ARE NOT THE SAME.
UM, AND THAT'S REALLY WHAT WE TRY TO CONVEY IN THIS PRESENTATION.
NOW, AGAIN, JUST BECAUSE THE TWO ARE NOT THE SAME DOESN'T MEAN THAT THERE ARE NOT OTHER THINGS THAT WE CAN DO AS A UTILITY TO BE CLEANER, GREENER, MORE SUSTAINABLE, ONE OF WHICH IS TO REPLACE OLD ADELAIDE PIPE WITH PLASTIC PIPE, WHICH WE HAVE DONE IN OUR CITY.
UM, A LOT OF THE STUDIES THAT YOU'LL SEE WHERE, UM, YOU KNOW, SOME GROUPS WILL, UH, ATTEST TO, YOU KNOW, HIGH LEAKAGE NUMBERS AND, AND THAT SORT OF THING, WHICH IS BAD FOR THE ENVIRONMENT.
UM, IN A LOT OF THOSE CASES, THOSE ARE OF SYSTEMS WITH THAT OLDER ADELAIDE PIPE, WHICH WE DON'T HAVE.
SO, UM, IS IT, WOULD IT BE A FAIR ASSUMPTION TO SAY THAT A LOT OF PEOPLE DON'T WANNA JUST
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GO ELECTRIC? LIKE WHEN I BOUGHT A, I BOUGHT A NEW RANGE OVEN IN RANGE, I WENT DUAL, DUAL, DUAL FUEL, UM, AND I THINK THERE'S A LOT OF PEOPLE THAT DON'T WANNA COOK WITH ELECTRIC.UM, IS THAT A CONSIDERATION? AND, UH, ABSOLUTELY THE CUSTOMER EXPERIENCE IS A MAJOR COMPONENT OF OUR, UH, STUDIES OF THIS.
AND THIS, NOT ONLY IS THE PHY PHYSICAL READINESS OF THE INFRASTRUCTURE, BUT DO CUSTOMERS ACTUALLY BUY INTO THIS YET? UM, AS IT CURRENTLY STANDS, UH, ELECTRICAL ENERGY ON A PER UNIT ENERGY BASIS IS MORE EXPENSIVE.
A LOT OF CUSTOMERS ARE TURNED OFF BY THE ADDED EXPENSE.
UH, AND SO THE SHORT ANSWER TO YOUR QUESTION IS YES, THAT IS A VERY, UH, SERIOUS CONCERN THAT WE HAVE.
AND THEN JUST LASTLY, AND MAYBE ANTO CAN HELP WITH THIS, WHO AT THE CITY LEVEL IN OUR CITY IS IN, IN OUR UTILITY.
I KNOW WE'RE INVOLVED, YOU'RE INVOLVED, BUT AT THE CITY LEVEL, WHO IS, WHO IS LEADING THIS OR TRYING TO WORK WITH THEM? IT'S INTERESTING BECAUSE AS YOU PROBABLY SOME OF YOU MAY REMEMBER, OR MAY NOT REMEMBER IN THE LATE NINETIES WHEN BOB FOSTER WAS THE PRESIDENT OF EDISON, WE HAD A, A VERY CONTENTIOUS, UH, ISSUE BEFORE US WHEN EDISON'S DISTRIBUTION SYSTEM WAS GOING TO BE TAKEN OVER BY LONG BEACH CITY OF LONG BEACH AND CITY LIGHT AND POWER.
UM, SO NOW IT'S KIND OF INTERESTING HOW THINGS COME AROUND.
I'M ALL FOR PARTNERSHIPS, BUT I, WHO'S LEADING THIS AT THE CITY, AT CITY LEVEL, IT, SO WE'RE IN A VERY UNIQUE TIME IN THE ENERGY SPACE WHERE GAS AND ELECTRIC HAVE NEVER BEEN CLOSER THAN WE HAVE BEEN BEFORE.
UM, AND IT'S KIND OF AN, UH, I WON'T SAY COMPLETELY AWKWARD, BUT IT IS SLIGHTLY AWKWARD
UM, AND, AND THINK ABOUT PROJECTS LIKE THE ONE THAT WE JUST DESCRIBED.
SO ON THE CITY SIDE, A LOT OF IT IS DONE THROUGH COMMUNITY DEVELOPMENT.
THEY DO A LOT OF THE PERMITTING FOR A LOT OF THE HOMES AND BUSINESSES.
UM, AND, AND CERTAINLY AS LONG BEACH UTILITIES, UM, I SAY WE SEE OURSELVES AS A PEER, UH, PEER UTILITY PROVIDER, UM, TO SOCALGAS.
WE ARE NOT A REGULATOR OF THEM, UM, IN ANY WAY.
UM, BUT WITH THAT SAID, UM, WE ARE THROUGH THE CITY AND THAT'S WHY THIS PRESENTATION AT THE CPUC WAS JOINTLY PRESENTED BY UTILITIES THROUGH TONY AND THE CITY OF LONG BEACH THROUGH CHRISTOPHER KONZ.
UM, I WOULD HAVE TO SAY IT'S A JOINT, JOINT EFFORT.
UM, THE RELATIONSHIP THAT YOU KIND OF JUST DESCRIBED, UM, WITH EDISON, AND THE CITY IS STILL THROUGH CITY OF LONG BEACH CITY HALL, THAT IS NOT LONG BEACH UTILITIES.
UM, BUT OF COURSE WE CAN'T BE COMPLETELY ABSENT FROM THE CONVERSATION EITHER.
SO TO, TO ADD TO THIS, AND THEN TONY AND DANIELLE WILL, WILL GUIDE ME IF, IF I MISSTATE CERTAIN ASPECTS OF THIS EMBEDDED WITHIN THIS EFFORT HERE, WHICH WAS SLIGHTLY DIFFERENT THAN YOUR LINE OF INQUIRY, COMMISSIONER AUSTIN, IN TERMS OF WHAT WE DO IN ORDER TO HELP WITH CONSERVATION OF THIS RESOURCE, WHETHER IT'S APPLIANCES OR THINGS LIKE THIS, THERE WAS A CONFLUENCE OF AT LEAST TWO SPECIFIC ASPECTS OF PUBLIC POLICY HERE EMBEDDED WITHIN THIS.
AND THAT THAT IS THE CONCEPT THAT PERHAPS, PERHAPS NOT IN NATURAL GAS, NOT IN WATER, CERTAINLY 'CAUSE YOU JUST HEARD ABOUT OUR PARTNERSHIP FOR SAFE WATER IN EVERYTHING WE DO THAT PERHAPS SOMETIMES IN THE PROVISION OF PUBLIC SERVICES THROUGH INFRASTRUCTURE WHERE THINGS BEGIN TO HAMPER THE ABILITY TO DELIVER THAT THERE IS A DEGRADATION IN THE QUALITY OF THAT INFRASTRUCTURE.
AND INHERENTLY, IF THERE IS A DEGRADATION OF THE PUBLIC INFRASTRUCTURE PROVIDING THAT SERVICE, PERHAPS A STUDY COULD BE DONE THAT WOULD ALLOW YOU TO SEVER THAT INFRASTRUCTURE, REMOVE IT COMPLETELY LOWER YOUR MAINTENANCE COSTS, LOWER YOUR OPERATIONAL COSTS, BUT IN THIS SENSE, HAVE AN ACTUAL FLIP OF THE RESOURCE OR A FLIP OF THE SERVICE BEING PROVIDED.
THAT WAS THE ELECTRIFICATION CONCEPT AS POINTED OUT HERE, THAT OUT, IF PER CHANCE THERE WERE SECTIONS OF THE DISTRIBUTION SYSTEM THAT WERE IN DETERIORATING STATE IN DETERIORATING QUALITY BECAUSE OF A LACK OF PROVISION OF SERVICE, THIS ELEMENT NOW OF GREENER ENERGY MIGHT ALLOW THE ELECTRIC UTILITY TO STEP IN AND SAY, HEY, YOU KNOW WHAT? LET'S RIP IT ALL OUT.
YOU RECALL, AND I RECALL MY FIRST HOME ACTUALLY HAD A MEDALLION.
AND IT, THAT BECOMES IMPORTANT NOW BECAUSE OF ANOTHER COMMENT TONY MADE IN THE PRESENTATION IS THAT LONG BEACH'S HOUSING STOCK AS A BUILT OUT CITY, SOME OF IT IS DECADES OLD, I KNOW FROM PERSONAL EXPERIENCE, AND YOU JUST REMODELED YOUR HOME AS WELL, THAT MANY TIMES THE ELECTRICIAN COMES BACK AND TELLS YOU, I LOVE YOUR IDEAS, BUT YOU DON'T HAVE A PANEL THAT
[00:30:01]
CAN DELIVER ALL THIS JUICE.UH, WE'RE GONNA HAVE TO UPGRADE YOUR HOME.
THAT WAS ALSO IN TONY'S, UH, PRESENTATION TO YOU THAT EDISON IS WEIGHING THE CONSEQUENCES OF THAT PUBLIC POLICY CONCEPT AND SAYING, WELL, I ACTUALLY, IN ORDER TO HAVE A COMPLETE ELECTRIFICATION, DEPENDING ON THE HOUSING STOCK AND WHAT IT IS, I TECHNICALLY HAVE TO BE ABLE TO BE WILLING TO INVEST A LOT OF MONEY TO MAKE THIS BECOME A REALITY.
MAYBE THE JUICE IS NOT WORTH THE SQUEEZE FOR THE CONCEPT.
ALL OF THOSE THINGS ARE, ARE BEING EXPLORED HERE.
I THINK FUNDAMENTALLY FOR US AS A UTILITY, IT GOES BACK TO THIS UNDERLYING PREMISE, WHICH IS IN ORDER TO DELIVER SAFE, CLEAN, RELIABLE WATER, GAS, AND SEWER, WE DON'T HAVE THE ABILITY TO ALTER LEVELS OF SERVICE.
WE PROVIDE THE SAME LEVEL OF SERVICE THROUGHOUT THE COMMUNITY AND THE INFRASTRUCTURE REQUIRED TO DELIVER IT, REGARDLESS OF THE LEVEL OF CONSUMPTION, IS AN OBLIGATION THAT WE HAVE TO THE COMMUNITY.
THAT'S WHERE THESE CONFLUENCES OF TWO ASPECTS OF PUBLIC POLICY CLASH WITH EACH OTHER.
AND THAT'S SOMETHING THAT'S EMBEDDED WITHIN THE STUDY ITSELF HERE, NOT WITHSTANDING THE EFFORTS THAT WE DO OVERALL IN RESPONSE TO CLIMATE ACTION GOALS TO TRY TO HELP THE COMMUNITY SAVE A LITTLE MORE WITH MORE EFFICIENT GAS APPLIANCES AND THINGS LIKE THAT.
I MEAN, THAT IS, BUT YOU DIDN'T HAVE TO GO THAT FAR.
JUST, JUST SO LONG AS IT CONSISTENT.
I, I KEPT MENTIONING SB 1221 AND THE TENANT OF SB 1221 IS TO FIND AGING INFRASTRUCTURE IN THE GAS SYSTEM, DECOMMISSION THAT SYSTEM, THAT PORTION OF THE INFRASTRUCTURE, AND USE THAT CIP SAVINGS TO TRANSITION OVER TO THE ELECTRIFICATION COSTS.
BUT THAT'S WHERE WE REALLY NEED TO HAVE DETAILED INFORMATION BECAUSE THE ELECTRIFICATION COSTS ARE HUGE.
THE GRID MAY OR MAY NOT EVEN BE READY FOR THIS.
SO WE CAN COST OUT HOW MUCH IT WOULD COST TO TAKE PIPE OUTTA THE GROUND, BUT WILL THAT BE ENOUGH TO COVER THE ONGOING ELECTRIFICATION COSTS? AND, AND I WOULD SAY THAT THE OTHER ELEMENT EMBEDDED WITHIN YOUR QUESTION AS WELL IS, WHAT ARE MY FRIDAY DATE NIGHTS WITH MY WIFE? WHICH IS WE GO THROUGH EVERY AISLE OF COSTCO, AND I'LL BE DARNED IF THERE ISN'T TWO AISLES DEDICATED TO ELECTRIFYING EVERYTHING THAT I INTEND TO DO, WHETHER IT'S MAKING FRENCH FRIES, BAKING COOKIES, OR DOING SOMETHING ELSE, RIGHT? SO THERE IS SOMETHING THERE THAT DRIVES THAT.
UM, AND YET AT THE SAME TIME, WE DON'T GO FORWARD IF IT DOESN'T MAKE SENSE.
I'M GONNA HAVE TO TALK TO SANDY ABOUT HER DATE NIGHTS.
I GO, I, I I HAVE A QUESTION ABOUT, UM, THE, THAT IT'S A PILOT PROGRAM, RIGHT? IT, WE, WE NAMED IT A PILOT PROGRAM BECAUSE WE AT LONG BEACH UTILITIES WERE INSISTENT THAT IF WE DIDN'T LIKE THE DATA, WE WEREN'T COMFORTABLE WITH THE DATA THAT WE FOUND THAT WE WOULD NOT MOVE FORWARD.
UM, SO THE NOMENCLATURE WAS INTENDED TO TRY AND PUT A BACKSTOP TO THAT, WHICH I THINK WORKED BECAUSE WHEN THEY JUST ASKED US TO TAKE OUT THE PIPE, WE VERY CLEARLY JUST SAID NO.
I'M SO GLAD YOU THAT WAS SMART OF YOU GUYS TO DO THAT.
BECAUSE IF IT IS A PILOT PROGRAM, THEN IT SHOULD BE, IT SHOULDN'T BE SOMETHING THAT'S PERMANENT.
AND IF YOU, THEY'RE ASKING US TO TAKE OUT, OKAY.
UM, IT'S A HEAVY, I THINK IT'S A HEAVY LIFT, BUT I HAVE TO ASK YOU A QUESTION OF, OF MAYBE A BIGGER QUESTION THAT YOU CAN HELP ME UNDERSTAND.
UM, I KNOW THERE'S SOME CONCERNS ABOUT DATA CENTERS THAT, THAT THEY'RE LOOKING AT BUILDING.
I THINK SOMEONE CAME TO ME AND TALKED ABOUT A DATA CENTER ON THE NAVAJO RESERVATION, AND I DON'T KNOW WHY.
'CAUSE THEY DON'T, THEY HAVE WATER, BUT THEY DON'T HAVE THE INFRASTRUCTURE, BUT I GUESS THEY DO, THEY BUILD IT, BUT IT ALSO TAKES A LOT OF ENERGY AND WATER.
NOW, IT NOW WHAT, WHAT ABOUT THE, THE WHOLE ISSUE OF THE COLORADO RIVER AND HOOVER DAM AND GLEN CANYON AND THE ABILITY TO PROCESS ENERGY, AND ARE WE REALLY THERE? I, I THINK, UM, SO THE CALIFORNIA STATE LEGISLATURE IS DEBATING THE ISSUE.
AND SO WITHOUT, UM, STEPPING INTO THAT ONE WAY OR THE OTHER, TEXAS HAS RECENTLY ADOPTED LEGISLATION, UH, AND AS WELL AS I BELIEVE OREGON AND WASHINGTON JOINTLY, UM, ESTABLISHED NEW TIERS, AT LEAST ON THE ENERGY SIDE TO DEAL WITH DATA CENTERS IN CALIFORNIA.
THERE'S BEEN LEGISLATION, NONE, NONE AS, AS SUBSTANTIVE AS WHAT TEXAS OR, UM, THE STATES NORTH OF US HAVE DONE OF PAST.
UH, AND SO I THINK YOU'RE EXACTLY RIGHT.
THERE IS DEBATE, BUT I'M NOT SURE THAT THERE IS YET AGREEMENT.
YEAH, I, I THINK THIS IS SOMETHING THAT'S REALLY INTERESTING AND HOPEFULLY WE CAN GET MORE, I, I, I THINK, UH, THE PRESIDENT SCOTT WOULD AGREE THAT, UM, THIS IS AN AREA THAT, YOU KNOW, THAT WE REALLY NEED TO LEARN MORE ABOUT.
I THINK YOU GUYS HAVE DONE A GREAT JOB OF BRINGING THIS FORWARD.
THE THE CONCEPT OF ELECTRIFICATION
[00:35:01]
WE HAVE TO ALWAYS KEEP IN MIND IS DECARBONIZATION.AND SO PART OF THIS DATA REQUEST THAT WE WERE HOPING TO GET FROM EDISON, AND THEN WE BELIEVE AS THE RELATIONSHIP DEVELOPS, WE WILL, IS WHEN YOU ELECTRIFY, DOESN'T MEAN IT'S AUTOMATICALLY GREEN, RIGHT? WHERE, HOW IS THIS POWER BEING GENERATED? AND, UH, ALL OF THOSE COSTS HAVE TO GO INTO THIS MODEL AND EVERYTHING AFFECTS EVERYTHING ELSE.
SO, UM, IT, IT'S A VERY COMPLEX DISCUSSION, BUT WE ARE READY, WILLING, UH, TO PARTICIPATE.
SO TO BE MORE SPECIFIC, AS TONY MENTIONED IN HIS SLIDES EARLIER, 50% OF OUR NATURAL GAS USAGE IS BY 90% OF OUR CUSTOMERS, WHICH ARE RESIDENTS.
IF YOU ONLY LOOKED AT OUR CUSTOMER GAS USAGE, WE WOULD BE SEEING CLOSER TO A 2% DECREASE IN NATURAL GAS USAGE YEAR OVER YEAR IN THE LAST FIVE YEARS.
THE REASON WHY WE PUT 1% UP ON THE BOARD IS BECAUSE OUR COMMERCIAL CUSTOMERS USING NATURAL GAS TO CREATE ELECTRICITY ARE USING MORE THAN THEY EVER HAVE BEEN BEFORE TO CREATE THAT ELECTRICITY.
SO IN ESSENCE, WE HAVE BECOME A MIDDLEMAN FOR, FOR ELECTRIFICATION.
UH, THANK YOU FOR POINTING OUT THAT NEXUS.
THAT'S REALLY INTERESTING TOO.
UM, ARE THERE ANY OTHER QUESTIONS? GREAT, GREAT JOB.
SO I THINK WE'RE ALL LOOKING FORWARD TO THE FULL BOARD HEARING, HEARING, UH, MORE ABOUT THIS.
SO THANK YOU BOTH FOR THAT, DIANA AND TONY APPRECIATE IT.
UM, SINCE WE'VE HEARD NO FURTHER QUESTIONS AND WE'VE, UM, HAVE A MOTION AND A SECOND.
UH, ALL THOSE IN FAVOR SAY AYE, OF RECEIVING AND FILE.
UM, WE HAVE A SECOND ITEM, WHICH IS, UH, RECOMMENDATION
[2. 25-57036 Recommendation to receive and file an update on San Diego County Water Authority Exchange Agreement. Suggested Action: Approve recommendation. ]
TO RECEIVE AND FILE AN UPDATE ON SAN DIEGO COUNTY WATER AUTHORITIES EXCHANGE AGREEMENT.ANOTHER ONE OF THOSE THINKING OUTSIDE THE BOX.
GOOD MORNING, CHAIR CORDERO, AND, UH, COMMISSIONER AUSTIN.
SO DEAN, IF YOU COULD HOLD A SECOND, 'CAUSE I KNOW MARSH IS GONNA QUESTION ME ON THIS.
SO, UM, IN ORDER TO, IN HAVE A DISCUSSION OF THE ITEM, THE ITEM HAS TO ACTUALLY BE PUT ON THE FLOOR FOR A VOTE.
SO IN ORDER TO PUT IT ON FLOOR FOR A VOTE, IT NEEDS A MOTION AND A SECOND.
UH, SO, SO THE ITEM TODAY, UH, I'M GONNA DO MY BEST JOB AT, UM, TRYING TO KEEP THIS HIGH LEVEL ENOUGH, UM, SO THAT DOESN'T TAKE, YOU KNOW, HOURS TO, TO GO THROUGH, BUT AT THE SAME TIME GET DETAILED ENOUGH, UH, TO, TO COVER THE, THE IMPORTANT, UM, BACKGROUND AND, UM, REQUISITE INFORMATION NECESSARY TO UNDERSTAND, UH, THE, THE ITEM BEFORE YOU.
SO I, I KNOW, UH, CHAIR CORDERO IN HER, UH, CAPACITY AS, UM, MWD BOARD, UH, DIRECTOR, UH, CORDERO HAS SIGNIFICANT BACKGROUND ON THIS TOPIC ALREADY.
UM, AND TO COMMISSIONER AUSTIN, THIS, A LOT OF THIS MAY BE NEW.
SO, UH, BY ALL MEANS, UH, IF I NEED TO GO IN ANYTHING MORE DETAIL, UH, PLEASE JUST, UH, FEEL FREE TO INTERRUPT ME.
SO, TO, TO START OFF, SAN DIEGO COUNTY WATER AUTHORITY IS A METROPOLITAN MEMBER AGENCY.
UH, I FEEL THIS IS IMPORTANT TO MENTION BECAUSE, UH, IN MANY WAYS THIS SHAPES, UM, THE, THE OUTCOME AND, AND WHERE WE ARE TODAY AS A METROPOLITAN MEMBER AGENCY, UH, AGENCY SAN DIEGO, CAICO COUNTY WATER AUTHORITIES DEPENDENT ON IMPORTED WATER, UM, THROUGH CALIFORNIA'S HISTORY AND THE HISTORY OF METROPOLITAN, UH, IMPORTED WATER IS SUBJECT TO HYDROLOGIC VARIATIONS, DROUGHT AND, AND WET YEARS.
UM, AND SO IF YOU GO BACK THROUGH HISTORY, UM, THERE WERE CERTAIN SHORTAGES, UH, THAT LED SAN DIEGO TO, UH, SAN DIEGO COUNTY TO EVALUATE, UM, HOW DEPENDENT THEY WANTED TO BE ON METROPOLITAN SUPPLIES AND HOW MUCH THEY, UH, FELT THEY NEEDED TO DEVELOP THEIR OWN LOCAL SUPPLIES TO BE INDEPENDENT OF THAT, UM, UH, VARIABILITY FROM METROPOLITAN.
SO, SAN DIEGO COUNTY WATER AUTHORITY, AS THEIR NAME IMPLIES, THEY'RE A COUNTY WATER AUTHORITY.
UH, UNLIKE US, WE'RE A DIRECT METROPOLITAN MEMBER AGENCY, BUT WE'RE A MUNICIPALITY WITH DIRECT RETAIL CUSTOMERS.
SAN DIEGO COUNTY WATER AUTHORITY ACTUALLY SERVES, UH, INDIVIDUAL CITIES, THE CITY OF SAN DIEGO, AS WELL AS OTHER, UM, SUBSIDIARY, UM, MUNICIPAL WATER DISTRICTS AS WELL.
AND SO THEY'RE ALMOST, THEY, THEY ARE AN INTERMEDIATE WHOLESALER, UH, TO, UH, INDIVIDUAL WATER AGENCIES.
[00:40:01]
SO, AS THAT INTERMEDIATE WATER, UH, AGENCY, THEY, UH, DEVELOP TWO SIGNIFICANT, UH, LOCAL WATER SUPPLIES.ONE IS THE CARLSBAD DESALINATION PLANT, UH, WHICH, UH, PROVIDES DESALINATION WATER, UM, ON A BASIS OF A CONTINUOUS BASIS.
SO BASICALLY THAT, THAT FACILITY OPERATES.
UH, THE WAY THAT THEY ENTERED INTO THAT AGREEMENT WAS WITH A PRIVATE CONTRACTOR TO DEVELOP AND BUILD THAT PROJECT, BUT IN EXCHANGE, UH, THEY HAD TO COMMIT TO PURCHASING THAT WATER.
UH, AND SO ESSENTIALLY NOW, UH, RAIN OR SHINE, UH, WHETHER OR NOT THEY NEED THE WATER OR NOT, THEY HAVE TO PAY FOR, FOR THAT WATER SUPPLY, WHICH IS A MUCH MORE EXPENSIVE WATER SUPPLY THAN EVEN IMPORTED WATER OR, UH, THEIR, THEIR OTHER LOCAL WATER SUPPLIES.
UM, TYING THIS BACK TO THE HISTORY OF DROUGHT AND, UM, SAN DIEGO COUNTY'S PLANNING, UH, WE, WE HAD THE LAST PRESENTATION ON PLANNING AND THE IMPORTANCE OF CONSIDERING WHAT HAPPENS IN THE FUTURE AS YOU WEAN YOURSELF OFF AND ON WATER SUPPLIES.
UH, IN SAN DIEGO COUNTY'S PLANNING EARLY ON, UM, THEY SAW IMPORTED WATER COSTS CONTINUE TO GO UP AND AS THEY WILL CONTINUE TO GO UP, AND THEY MADE THE CALCULATION THAT DESALINATION WATER AT SOME POINT WILL BE COMPARABLE OR, UH, COMPETITIVE TO IMPORTED WATER COSTS.
UM, THAT HAS NOT SINCE COME TO PASS, BUT, UH, THAT WAS IN, IN THEIR CALCULATION.
UM, SO, UH, THE SECOND, UH, WATER SUPPLY THAT THEY DEVELOPED WAS A, UH, WATER SUPPLY COMING FROM CONSERVED WATER FROM THE IMPERIAL AND IRRIGATION DISTRICT.
AND SO THAT IS AN IRRIGATION DISTRICT, UH, EAST OF, UH, ALL THE METROPOLITAN SURFACE AREA, UH, IN, IN SOUTHERN CALIFORNIA, JUST SOUTH OF THE, UH, THE SALTON SEA AREA.
AND, UH, BASICALLY I'LL GO INTO A LITTLE BIT MORE DETAIL LATER, BUT BASICALLY THEY PAID FOR WATER CONSERVATION IN EXCHANGE, GOT THE WATER CONSERVED, UM, THAT, UH, WOULD NORMALLY GO FROM THE COLORADO RIVER TO IMPERIAL IRRIGATION DISTRICT.
SO SINCE, UH, THESE WATER SUPPLIES WERE DEVELOPED AND SINCE SAN DIEGO COUNTY HAD HAD DONE THEIR HISTORICAL WATER, UH, PLANNING, UH, CONSERVATION HAS SIGNIFICANTLY REDUCED THEIR DEMANDS.
UH, SO PREVIOUSLY THEY WERE FORECASTING THAT, THAT THEY COULD EASILY USE ALL THESE SUPPLIES AND STILL NEED SOME FOR METROPOLITAN.
UH, BUT DUE TO ALL THE, THE QUICK CONSERVATION THAT HAS HAPPENED, UM, WHAT HAS HAPPENED IS THAT NOW THEIR LOCAL SUPPLIES ACTUALLY EXCEED HOW MUCH WATER THEY EVEN NEED, UH, CURRENTLY.
SO THEY'RE IN THIS, UH, SITUATION WHERE THEY PAID FOR THE CARLSBAD DESALINATION PLANT AT A FIXED COST, AND THEY HAVE TO PAY THOSE COSTS YEAR IN, YEAR OUT.
AND SIMILARLY FOR THE IMPERIAL IRRIGATION DISTRICT WATER SUPPLIES, THEY'RE ALSO PAYING YEAR IN, YEAR OUT WHETHER OR NOT THEY NEED THAT.
SO THEY HAVE MORE SUPPLY THAN THEY NEED AND, AND THEIR, THEIR, UM, CUSTOMERS ARE, UM, HAVING TO PAY FOR THAT, WHETHER OR NOT THEY TAKE THAT WATER.
SO, A LITTLE BIT MORE DETAIL ON THE IMPERIAL IRRIGATION DISTRICT TRANSFER, BECAUSE THAT'S WHAT THE EXCHANGE AGREEMENT IS DEALING WITH, UH, WITH METROPOLITAN, UH, THERE WERE TWO PROJECTS BASICALLY THAT ADD UP TO THE, THE TOTAL AMOUNT OF WATER THAT SAN DIEGO COUNTY WATER AUTHORITY IS RECEIVING.
UH, ONE IS THE ALL AMERICAN CANAL LINING PROJECT.
UH, YOU'LL SEE HERE IN THIS PICTURE, UH, ON THE, THE LEFT SIDE IS THE OLD, UM, ALL AMERICAN CANAL UNLINED.
SO A LOT OF WATER WAS JUST SEEPING INTO THE GROUND.
UH, AND SO BASICALLY, SAN DIEGO COUNTY CAME IN AND HELPED TO PAY FOR THE NEW CANAL ON THE RIGHT, WHICH IS PAVED AND THEREFORE LOSES A LOT LESS WATER.
AND SO, AS, UM, THE AMOUNT OF WATER THAT'S CONSERVED THROUGH THAT PROJECT, UH, SAN DIEGO GETS, GETS THAT, THAT CONSERVED WATER.
THE SECOND IS, UH, SYSTEM CONSERVATION, MEANING ON FARM, UH, IMPROVEMENTS TO, TO MAKE, UH, THE FARMS MORE EFFICIENT IN THE WATER THEY USE.
AND SO BETWEEN THOSE TWO PROJECTS, UH, SAN DIEGO'S RECEIVING, UH, CLOSE TO 300,000 ACRE FEET OF WATER A YEAR, AND I'VE INTENTIONALLY LEFT A LOT OF THE NUMBERS OUT OF THIS.
THIS IS MEANT TO BE A CONCEPTUAL, UH, PRESENTATION.
I, I WANTED TO STEER AWAY FROM ACRE FEET AND, AND DOLLARS.
UM, SO JUST SO TO EXPLAIN THE, THE CONCEPTS HERE, I THINK THAT'S PLENTY ENOUGH TO BE CONFUSING WITHOUT ADDING NUMBERS TO IT.
UM, FOR YOUR SYS THE SYSTEM CONSERVATION PROGRAM FOR IID, A LOT OF THOSE DOLLARS CAME FROM METROPOLITAN, RIGHT? YES.
SO THIS GOES TO, UM, THERE'S A BROADER AGREEMENT IN PLACE, THE QUANTIFICATION SETTLEMENT AGREEMENT.
AND SO METROPOLITAN WAS A PARTY TO THAT AGREEMENT.
AND SO THERE WERE, UH, PAYMENTS, UH, IN THAT, THAT PAID TOWARDS METROPOLITAN SHARE OF, OF A CERTAIN AMOUNT OF THIS WATER AS WELL.
UM, AND SO FORTUNATELY WE HAVE
I THINK BACK IN YOUR DAY, THERE WAS, UH, I THINK THERE, YEAH.
SO THERE, THERE ARE A NUMBER OF PROGRAMS THAT METROPOLITAN IS ENGAGED IN AT CERTAIN PRICES.
UH, EXCLUSIVE TO SAN DIEGO THOUGH IS A SPECIFIC SERIES
[00:45:01]
OF ACTIONS THAT THEY PAY A SPECIFIED CONTRACTUAL PRICE AND OBLIGATION TO IMPERIAL IRRIGATION DISTRICT FOR.AND SO THAT, THAT IS THE MATTER AT HAND HERE WITH SAN DIEGO IN TERMS OF THEIR OBLIGATIONS, THEY HAVE THAT OBLIGATION.
UH, NOTWITHSTANDING THERE'S ADDITIONAL, UH, PROGRAMS, UM, DEAN INDEED PUT ME ON THE SPOT BECAUSE THE NAMES OF THOSE PROGRAMS ESCAPES ME AT THIS MOMENT.
BUT THOSE ARE SEPARATE FROM WHAT SAN DIEGO IS PAYING FOR AND CONTRACTUALLY OBLIGATED TO HERE METROPOLITAN DOES RECEIVE SOME WATER FROM THE OVERALL CANAL AND AND CONSERVATION, BUT YEAH, IT IS, IT IS A SEPARATE AGREEMENT.
I THINK WHERE I WAS GOING, BUT IT'S NOT CORRECT.
I WAS THINKING ABOUT DOUBLE DIPPING IN A WAY BECAUSE MET PAID FOR THOSE CONSERVATION PROGRAMS AND THEN THEY DON'T PAY FOR WATER THAT, THAT THEY GET BACK.
SO, SO THIS, UH, SAN DIEGO PAID THEIR FAIR SHARE OF WHAT THEY'RE RECEIVING, RIGHT? SAN DIEGO PAID THEIR FAIR SHARE AS, AS AN EXAMPLE OF NOT DOUBLE DIPPING.
IT'S, IT'S ALSO FAIR TO SAY, I BELIEVE THAT THE ORIGINAL ASPECTS OF THE ALL-AMERICAN CANAL LINING PROJECT WAS A METROPOLITAN PROJECT.
SO THIS WAS A METROPOLITAN CONSERVATION PROJECT, BUT IN THE COURSE OF THE QUANTIFICATION SETTLEMENT AGREEMENT, THE DECISION WAS MADE THAT THE WAY SAN DIEGO WOULD RECEIVE ITS WATER WOULD BE IN PART FROM THAT PROJECT.
AND SO THEREFORE, IT WOULD TAKE OVER THE FINANCIAL OBLIGATIONS OF THAT PROJECT, AS WELL AS OVERALL SYSTEM CONSERVATION SPECIFIC TO THE SAN DIEGO COUNTY WATER AUTHORITY AMOUNTS.
AND YOU SAID PART OF THIS IS THE QSA AGREEMENT A LITTLE BIT, AND THEN THIS WILL ALSO COME INTO PLAY WITH THE NEGOTIATIONS IN THE LOW IN COLOR IN CALIFORNIA.
SO I WAS GONNA TOUCH ON THAT TOWARDS THE END.
SO THE, I'LL GO, GO AHEAD THEN YOU'LL, SO THE VERY CONCEPT HISTORICALLY THAT DEAN POINTS OUT IS THAT THE WATER AUTHORITY IN AN EFFORT TO TRY TO AT LEAST SECURE SOME SECURITY IN THE FACE OF GROWING AND GROWING AND RAPIDLY GROWING DEMAND, IT WANTS TO SECURE THESE SUPPLIES, ONE OF WHICH IS AN AG TO URBAN TRANSFER OF COLORADO RIVER WATER.
UM, BUT AS DIRECTOR CORDERO WITH THE COLORADO RIVER BOARD KNOWS SOME OF THE HISTORY, THE COLORADO RIVER HAD SOME VERY LOOSE STRUCTURES IN TERMS OF OBLIGATIONS TO EACH OTHER OF THE PARTIES ON THE RIVER, THE SEVEN WESTERN STATES, CALIFORNIA HAD THE ABILITY TO MOVE A LOT OF DROPS OF WATER AROUND WITH NO ACTUAL ACCOUNTING OR ACCOUNTABILITY FOR IT.
SO AS THE NAME IMPLIES, QUANTIFICATION SETTLEMENT AGREEMENT WAS THE CALIFORNIA PARTIES CAME TOGETHER AND SAID, NO, WE'RE GONNA, IN WHAT OUR OBLIGATIONS ARE TO EACH OTHER AND HOW WATER ACTUALLY MOVES AMONGST OUR RIGHTS QUANTIFICATION SETTLEMENT AGREEMENT, THEN BROUGHT FORWARD THESE ELEMENTS OF HOW YOU COULD ACTUALLY SAY, NO, I'M PAYING, AND THIS IS ACTUALLY MY WATER BY VIRTUE OF PAYING FOR IT, AND THEREFORE IT IS MY RIGHT TO IT.
THAT THAT IS THE JUNCTURE OF THE WHOLE EFFORT ON THE COLORADO RIVER OF PAYING FOR THINGS THAT OTHER PEOPLE ARE GOING TO DO, AND THEN HAVE THE EFFECT OF GIVING YOU AN ENTITLEMENT OR A RIGHT TO A SPECIFIC AMOUNT OF WATER.
BUT SINCE WE'RE TOUCHING ON THIS, I'LL JUST PULL THE, THE PORTION FORWARD IS, YOU KNOW, PART OF THE IMPORTANCE OF THIS SUPPLY IN, IN RELATED THE QUANTIFICATION SETTLEMENT AGREEMENT IS THAT AN IMPERIAL IRRIGATION DISTRICT RIGHT, IS HIGHER IN RIGHT THAN METROPOLITAN'S RIGHT TO WATER.
SO AS PART OF WHAT I MENTIONED IN THE HISTORY OF SHORTAGE AND, UM, YOU KNOW, SAN DIEGO'S REACTION TO GETTING SHORTED, UM, METROPOLITAN WATER, THEY WANTED TO SECURE A RIGHT OR A, A SUPPLY THAT WOULD BE HIGHER PARTY AND MORE RELIABLE THAN WHAT THEY COULD GET FROM METROPOLITAN.
AND SO THAT'S IMPORTANT IN CONSIDERATION WHEN WE'RE TALKING ABOUT, YOU KNOW, OTHER AGENCIES OR EVEN METROPOLITAN, CONSIDERING WHETHER OR NOT THEY'RE INTERESTED IN GETTING THIS WATER, IS THAT IT IS A HIGHER RELIABILITY, TECHNICALLY NOT TECHNICALLY, UH, LEGALLY THAN THE METROPOLITAN IMPORTED WATER ITSELF.
SO I MENTIONED EARLIER THE IMPORTANCE OF SAN DIEGO COUNTY WATER AUTHORITY AS A METROPOLITAN MEMBER AGENCY.
I SHOW THIS MAP, UM, BECAUSE YOU'LL HAVE THE COLORADO RIVER AQUEDUCTS HERE, AND THIS IS THE METROPOLITAN SERVICE AREA.
AND YOU'LL SEE SAN DIEGO COUNTY WATER AUTHORITIES ALL THE WAY DOWN HERE.
THEY DON'T ACTUALLY HAVE A DIRECT CONNECTION TO THE COLORADO RIVER.
SO THE IMPORTANCE OF SAN DIEGO COUNTY WATER AUTHORITY AS A METROPOLITAN MID MEMBER AGENCY IS THAT IT PRESENTS THIS OPPORTUNITY TO SHARE INFRASTRUCTURE OR USE INFRASTRUCTURE OF METROPOLITAN TO ACTUALLY GET THE WATER FROM THE COLORADO RIVER.
UM, SO, SO BASICALLY, UH, OFF THE MAP IS, UH, LAKE HAVASU, UH, SOMEWHERE ROUGHLY AROUND HERE.
THE COLORADO RIVER WATER ENTERS LAKE HAVASU AND A, AS IT DOES, UM, THAT'S WHEN SAN DIEGO, UM, UH, CAN TECHNICALLY TAKE, TAKE OWNERSHIP OF THE WATER.
[00:50:01]
IT'S, IT'S WITHIN THE ABILITY TO THEN TRANSPORT THROUGH TO THE COLORADO RIVER AQUEDUCT.UM, SO IN THE EXCHANGE AGREEMENT THAT, UH, SAN DIEGO HAS WITH, UH, METROPOLITAN, UH, THIS WATER WILL GO THROUGH THE COLORADO RIVER AQUEDUCT, GET INTO THE METROPOLITAN SERVICE AREA, AND RATHER THAN ACTUALLY TAKING PHYSICAL DROPS OF COLORADO RIVER WATER METROPOLITAN THEN WILL JUST IN TURN DELIVER THEIR IMPORTED WATER, A BLEND OF THE STATE, STATE WATER PROJECT AND COLORADO RIVER SUPPLIES TO SAN DIEGO COUNTY WATER AUTHORITY.
SO THAT'S WHY IT'S CALLED THE EXCHANGE AGREEMENT, IS THAT THE COLORADO RIVER WATER COMES IN METROPOLITAN EXCHANGES, THE COLORADO RIVER WITH SAN DIEGO, OR THE BLENDED IMPORTED WATER SUPPLIES.
UM, SO THE SETTLEMENT AGREEMENT, WHICH WAS, UM, HISTORIC IN THAT THIS HAS BEEN DECADES IN, UM, LITIGATION AND, AND, UH, DISCUSSION AND DEBATE IS, UH, IN THE, IN THE EXCHANGE AGREEMENT, SAN DIEGO HAS TO PAY METROPOLITAN FOR THE ABILITY TO USE THEIR SYSTEM AND DELIVER THEIR WATER.
THERE ARE ENERGY, UH, TREATMENT, UH, COSTS TO PROVIDING THAT WATER TO SAN DIEGO.
AND SO, UH, AS PART OF THE SETTLEMENT AGREEMENT WAS FINALLY DECIDED, UH, THIS EARLIER THIS YEAR, WAS THAT, UH, THE PRICE THAT SAN DIEGO WILL PAY TO METROPOLITAN TO USE THEIR SYSTEM TO DELIVER THAT COLORADO RIVER WATER WILL NO LONGER BE TIED TO METROPOLITAN'S RATE STRUCTURE.
UM, AND, AND THAT'S IMPORTANT AND SIGNIFICANT, UH, FOR, FOR TWO REASONS.
ONE, AS I MENTIONED NOW, SAN DIEGO ESSENTIALLY HAS ENOUGH LOCAL SUPPLY TO NOT, NOT NEED FOR THE FORESEEABLE FUTURE, ANY ACTUAL METROPOLITAN, UH, IMPORTED WATER, OR AT LEAST IN ANY SIGNIFICANT QUANTITY.
AND WITH ALL OF THE INVESTMENTS THAT METROPOLITAN'S LOOKING TO MAKE IN PURE WATER DELTA CONVEYANCE SITES RESERVOIR, THE RATE PROJECTIONS ARE, ARE, ARE GETTING QUITE HIGH AS FAR AS WHAT THE FUTURE RATE INCREASES WILL BE.
AND SO FOR AN AGENCY THAT WANTS TO, OR, OR WILL NO LONGER HAVE A SIGNIFICANT NEED FOR THAT, THOSE SUPPLIES AND RELIABILITY, THEY, THEY SAW IT AS REALLY IMPORTANT TO DECOUPLE WHAT THEY'RE PAYING TO WHEEL THEIR WATER THROUGH THE METROPOLITAN SYSTEM FROM THESE OTHER, UM, RATE PRESSURES THAT METROPOLITAN WILL FACE.
AND SO THE PRICE THAT SAN DIEGO PAYS FOR THIS, THE EXCHANGE AGREEMENT, WILL ESSENTIALLY JUST GO UP BY CPI GOING INTO THE FUTURE.
SO THAT'S SOMETHING IMPORTANT TO CONSIDER AS, AS AGENCIES ARE, ARE BUYING THE SUPPLY FROM SAN DIEGO IS, YOU KNOW, WHERE THEY SEE THE FUTURE PROJECTIONS OF METROPOLITAN'S RATES VERSUS, UH, CPI ESSENTIALLY.
SO, UH, THE SETTLEMENT AGREEMENT ALSO, UH, THE IMPORTANT, UH, ADDITION WAS TO ALLOW SAN DIEGO TO SELL THIS, UH, EXCHANGE WATER TO ANOTHER MEMBER AGENCY OR TO METROPOLITAN.
UM, AND SO THAT'S THE REASON THIS ITEM'S BEFORE THE COMMITTEE TODAY IS BECAUSE THERE'S THE OPPORTUNITY FOR US LONG BEACH AS A METROPOLITAN MEMBER AGENCY TO CONSIDER THE PURCHASE OF THIS WATER FROM SAN DIEGO.
SO WHY WOULD LONG BEACH WANT TO CONSIDER BUYING THIS WATER FROM SAN DIEGO? UM, SO ANOTHER REFERENCE TO TONY'S PRESENTATION EARLIER, UM, YOU KNOW, AS WE CONSIDER HOW TO, TO REDUCE RESOURCES, CONSERVATION CAUSES, UH, SOME CHALLENGES FOR, UH, UTILITY TO CONSIDER AND CAREFULLY PLAN FOR.
UM, SO OVER TIME, UM, WELL, TO THE POINT OF THE MAP, SO THERE'S, WE HAVE TWO DISTRIBUTION ZONES IN OUR, OUR SYSTEM.
WE HAVE THE METROPOLITAN ZONE, AND IT'S CALLED THAT BECAUSE IN THAT AREA, WE CAN ACTUALLY ONLY RECEIVE IMPORTED WATER.
WE DON'T HAVE THE ABILITY TO DELIVER OUR GROUNDWATER FROM OUR TREATMENT PLANT ON THE EASTERN SIDE OF THE CITY TO THESE WESTERN PORTIONS OF THE CITY.
IN THE PAST, UM, THIS WAS NOT NECESSARILY, UM, AS EVIDENT OR, UH, AN ISSUE BECAUSE, UH, THE BLENDED ZONE IS CALLED THE BLENDED ZONE BECAUSE ALTHOUGH IT RECEIVES GROUNDWATER, IT ACTUALLY ALSO TAKES IMPORTED WATER.
AND HISTORICALLY WE HAD ENOUGH TOTAL DEMAND IN LONG BEACH WHERE BOTH ZONES NEEDED IMPORTED WATER TO A CERTAIN EXTENT.
BUT WE ARE VERY QUICKLY, UM, IF NOT ALREADY AT THE POINT WHERE THIS BLENDED ZONE CAN ALMOST ENTIRELY BE SATISFIED BY GROUNDWATER.
AND SO TO THE, THE POINT, UH, ANSEL WAS MAKING EARLIER OF NEEDING TO PROVIDE RELIABLE SERVICE TO THE ENTIRETY OF THE CITY, IT EXPOSES, UH, UH, A WEAKNESS IN OUR SYSTEM NOW THAT THIS WESTERN PORTION OF THE CITY DOESN'T HAVE AS MUCH RELIABILITY AS THIS EASTERN PORTION, OR ACTUALLY, I'LL PUT IT THE OTHER WAY, IS DURING A, A SHORTAGE ALLOCATION FOR METROPOLITAN ON IMPORTED WATER, THE WESTERN PORTION OF THE CITY WILL FACE A BIGGER RELIABILITY HIT THAN THIS EASTERN PORTION OF THE CITY THAT IS NOT DEPENDENT ON THAT RELI UH, IMPORTED WATER.
SO THAT'S SOMETHING TO CONSIDER.
IF WE WANT TO MAKE OUR IMPORTED WATER, UH, DEPENDENT AREAS OF THE CITY MORE RELIABLE, SAN DIEGO COUNTY, UH, WATER AUTHORITY SUPPLIES WOULD HELP US TO DO THAT.
IT IS THE FACT THAT WE, THE DELIVERY ON THE WEST SIDE OF LONG BEACH, IT'S TIED TO, IS IT A LACK
[00:55:01]
OF INFRASTRUCTURE ON THAT SIDE, OR IS YEAH, SO IT'S, IT'S KIND OF GRAVITY AND TY CAN JUMP IN AND CORRECT ME IF I'M WRONG ON ANY OF THIS, BUT, UM, YOU KNOW, YOU SEE HERE, WE, WE HIGHLIGHT SIGNAL HILL AND BIG SP KNOWLES AND OUR JWJA RESERVOIR THAT ESSENTIALLY IS THE NEWPORT INGLEWOOD FAULT.THAT CREATES THE, YOU KNOW, THAT TOPOGRAPHY.
AND SO OUR STREAMING PLANT'S OVER HERE ON THE EASTERN SIDE OF THE CITY TO GET THE WATER UP AND OVER AND ACROSS THE RIVER, THERE ARE JUST PHYSICAL BARRIERS TO PUSHING THE WATER TO THE WEST.
UM, AND AGAIN, HISTORICALLY, THERE JUST WASN'T THAT NEED OR DESIRE BECAUSE, YOU KNOW, UM, WE HAD EN ENOUGH DEMAND ON THIS SIDE OF THE CITY TO, TO USE MORE THAN GR MORE THAN WE HAD IN GROUNDWATER, AND BOTH SIDES NEEDED IMPORTED WATER TO SUPPLEMENT ANYWAY.
RIGHT? BUT WHAT NOW, DUE TO CONSERVATION AND REDUCED DEMANDS, IT KIND OF SHIFTS WHAT OUR WATER SUPPLY BALANCE LOOKS LIKE TO WHERE ALL THE GROUNDWATER IS OVER HERE, ALMOST LITTLE TO NO IMPORTED WATER.
UM, AND SO THAT REALLY KIND OF CHANGES THE CONTEXT OF, OF WHAT THAT MEANS TO WHETHER OR NOT WE WANT TO EXPAND GROUNDWATER.
AND, AND THAT'S, YOU KNOW, UH, WE'LL, WE'LL BE GIVING UPCOMING, GIVING UPCOMING, UH, PRESENTATIONS TO THE BOARD ON THE GROUNDWATER RESILIENCE PLAN ON HOW WE CAN HAVE A SECONDARY TREATMENT PLAN ON THE WESTERN PORTION OF THE CITY TO THEN BE ABLE TO FEED GROUNDWATER TO THE ZONE THAT CURRENTLY DOESN'T HAVE IMPORTED WATER OR DOESN'T HAVE GROUNDWATER.
AND SO THE JW UP THERE IS, IS A, IS IS ON OUR WISHLIST? WELL, THE RESERVOIR EXISTS RIGHT NOW.
THE TREATMENT PLANT IS ON OUR WISHLIST, YES.
SO WOULD THERE BE AN OPPORTUNITY TO FEED THAT SIDE OF LONG BEACH THROUGH PURE WATER? YES, THERE WOULD BE.
SO, SO WE'RE CURRENTLY IN, IN THE PLANNING PHASES, AS IS METROPOLITAN OF, YOU KNOW, EXACTLY HOW PURE WATER WOULD WORK, WHERE OUR, UM, CONNECTIONS WOULD BE IF WE WOULD TAKE PURE WATER FROM METROPOLITAN.
UM, THAT THAT WORK IS BEING DONE BY STAFF CURRENTLY, WE'RE, WE'RE STILL ASSESSING, BUT THERE'S THAT OPPORTUNITY.
SO, SO FINALLY, UM, WITH THIS OPPORTUNITY TO BUY WATER FROM SAN DIEGO COUNTY WATER AUTHORITY, THERE ARE A COUPLE OF CONSIDERATIONS.
AGAIN, JUST CONCEPTUALLY, I DIDN'T WANNA PUT NUMBERS UP HERE, BUT CONCEPTUALLY, THERE ARE ESSENTIALLY, UM, BOOKENDS OR, OR, UM, MILESTONES OR, OR TIERED CEILINGS THAT WE NEED TO THINK ABOUT WHEN WE'RE THINKING ABOUT PRICING AND THE VALUE OF THIS WATER RELATIVE TO THE VALUE OR COST OF, UH, ALTERNATIVES.
UM, AND SO THE FIRST WOULD BE JUST WHAT THE, UH, METROPOLITAN IMPORTED WATER PRICE IS.
UM, SO, SO CURRENTLY, UH, IT IS AT A CERTAIN RATE, AND AS I WAS MENTIONING, UH, WITH ALL THE DIFFERENT PROJECTS THAT METROPOLITAN IS CONSIDERING, THERE ARE SOME, UH, CONSIDERABLE, UH, RATE INCREASES THAT THEY'RE, THEY'RE FACING FOR THE FORESEEABLE FUTURE.
I MADE THE POINT OF COMPARING THAT TO THE EXCHANGE AGREEMENT SETTLEMENT THAT NOW PEGS THE SAN DIEGO COUNTY WATER PRICE TO CPI, WHICH MAY BE, YOU KNOW, MORE, UM, LOWER THAN ESSENTIALLY WHAT MET RATE INCREASES ARE INTO THE FUTURE.
SO AS WE CONSIDER NEGOTIATING A PRICE WITH SAN DIEGO, EVEN THOUGH IT MAY BE HIGHER TODAY, IF YOU LOOK 10, 20 YEARS OUT INTO THE FUTURE, IT MAY BE COMPETITIVE.
SO, AND IS THAT, I'M, UM, DEAN, THOSE RATE INCREASES SO THAT EVERYBODY HERE WOULD KNOW IS DUE TO THE POSSIBILITY OF FOR WATER SITES RESERVOIR AND THE DELTA CONVEYANCE PROJECT, CORRECT.
ALL OF THE DIFFERENT RATE PRESSURES THAT METROPOLITAN'S FACING, INCLUDING ALSO CONSERVATION, THEIR DEMANDS COMING DOWN, EVERYTHING BASICALLY JUST OVERALL METROPOLITAN.
YEAH, SO METROPOLITAN'S OPERATIONAL BUDGET IS FACING ALL KINDS OF PRESSURES.
UH, I THINK AS A DIRECTOR, YOU'RE EXPERIENCING VERY SPECIFIC, UM, INFORMATION SESSIONS WHERE STAFFING IS BEING DISCUSSED WITH ITS PROJECTED INCREASES IN LABOR COSTS, OPERATIONAL COSTS, AND THEN ALSO AS A MEMBER OF THE BOARD, YOU'RE FACING THESE ADDITIONAL SINGULAR INFRASTRUCTURE INVESTMENTS, WHICH SIMPLY ADD TO THE RATE PRESSURES ON TOP OF THAT.
SO I MENTIONED IN, IN PRESENTING, UH, THIS, THE, THE FUTURE, UM, YOU KNOW, DESIRE PLAN FOR US TO HAVE OUR OWN INDEPENDENT GROUNDWATER TREATMENT PLAN ON THE, THE WESTERN PORTION OF THE CITY, IF ALL GOES WELL AND MOVES FORWARD, YOU KNOW THAT THAT'S IN THE HOPEFULLY 10 YEAR TIMEFRAME.
AND SO WHEN WE'RE LOOKING AT THIS AGREEMENT, UM, WE'RE LOOKING AT SAN DIEGO AND THE SUPPLY IN THE, THE 10, LET'S SAY 15 YEAR TIMEFRAME AT MAX, AFTER WHICH WE'RE HOPING TO BE, UH, INDEPENDENTLY SUPPLIED BY OUR OWN LOCAL RESOURCES.
UM, SO WHEN WE CONSIDER THAT IN THAT TIMEFRAME, AND WE LOOK AT WHERE METROPOLITAN'S UH, STORAGE IS RIGHT NOW, AS OF THEIR, THEIR SURPLUS SUPPLIES FROM THE LAST FEW WET YEARS, METROPOLITAN'S ACTUALLY SITTING ON RECORD HIGH STORAGE.
AND SO WHAT IS THE LIKELIHOOD OF NEEDING RELIABILITY FOR METROPOLITAN IN THE NEXT FEW YEARS, GIVEN THAT FOR AT LEAST A GOOD PROBABLY THREE YEARS MINIMUM, THEY WILL BE RELIABLE AND HAVE DECENT SUPPLIES.
AND IF IT, YOU KNOW, RAINS, UH, A DECENT AMOUNT THIS YEAR THAT JUST EXTENDS THAT WINDOW, WHICH, UH, MORE RELIABLE SUPPLIES FROM SAN DIEGO COUNTY WOULDN'T NECESSARILY BE OF VALUE
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TO US.UH, THE NEXT CON CONSIDERATION IS METROPOLITAN'S WATER SUPPLY ALLOCATION PLAN, OUR WATER SHORTAGE ALLOCATION PLAN.
AND SO I MENTIONED EARLIER IN THE HISTORY OF DROUGHTS AND EXPERIENCE OF SAN DIEGO, UH, AS WELL AS ALL THE OTHER MEMBER AGENCIES, WHEN METROPOLITAN GOES INTO SHORTAGE, THEY HAVE A METHODOLOGY BY WHICH THEY ASSIGN HOW MUCH EACH AGENCY HAS TO CUT BACK.
UM, DUE TO, YOU KNOW, DETAILS I WON'T GO INTO, BUT BASICALLY, UM, ONCE YOU GET AN ALLOCATION DURING SHORTAGE, YOU COULD EXCEED, IF YOU EXCEED THAT ALLOCATION, THEY DON'T SHUT OFF THE TAP.
UH, BASICALLY WHAT HAPPENS IS THEY, THEY CHARGE YOU A PREMIUM, CHARGE YOU A PENALTY FOR EXCEEDING YOUR ALLOCATION.
AND SO, UH, DEPENDING ON THE PRICE OF THE SAN DIEGO COUNTY WATER AUTHORITIES, UM, EXCHANGE, UH, SUPPLY, WE WOULDN'T LOOK TO PAY FOR ANYTHING MORE THAN WHAT WE EXPECT TO PAY IN A PENALTY.
OTHERWISE, IT WOULD JUST MAKE SENSE TO, TO PAY METROPOLITAN THE, THE PENALTY.
UM, THE, THE SECOND OR THE, THE NEXT ITEM IS, UH, METROPOLITAN'S SECOND RIGHT OF REFUSAL, I MENTIONED IN THIS EXCHANGE AGREEMENT, UM, MEMBER AGENCIES CAN BUY THE SUPPLY FROM METROPOLITAN, BUT IF NONE OF THE MEMBER AGENCIES STEP UP TO BUY IT, OR IF WE ONLY BUY A PORTION OF THE SHARE OF, OF THE SOLE SUPPLY, METROPOLITAN COULD BUY THIS.
SO, UH, TWO CONSIDERATIONS THERE.
ONE IS IF WE DON'T BUY LONG BEACH DOESN'T BUY THIS SUPPLY, BUT LET'S SAY ANOTHER MEMBER AGENCY IS INTERESTED AND THEY BUY THE SUPPLY, TECHNICALLY, THAT ACTUALLY MAKES THE EVERYBODY ELSE MORE RELIABLE AS WELL.
UM, SO, SO EVEN THOUGH THE, THE MORE SIGNIFICANT RELIABILITY BENEFIT GOES TO THE AGENCY, THAT ACTUALLY GETS THE SUPPLY BY THEM TAKING THE SUPPLY AND THEREFORE TAKING THEIR DEMANDS OFF OF THE, THE REST OF THE METROPOLITAN, UM, SYSTEM, AND THE, THE REST OF THE TOTAL DEMAND ACTUALLY, UM, MAKES THE, THE REST OF US MORE RELIABLE BY, BY SOMEBODY ELSE BUYING THIS WATER.
SO THAT'S ONE CONSIDERATION IS IF IF SOMEBODY HAS A HIGHER VALUE, UH, FOR THIS WATER THAN WE DO IT, IT'S STILL TO OUR ADVANTAGE IF, IF THEY PURCHASE IT, IF THEY, IF NO MEMBER AGENCY STEPS UP TO BUY IT, UM, IN THE, THE SETTLEMENT AGREEMENT, THERE'S ACTUALLY A STIPULATION FOR HOW MUCH METROPOLITAN WOULD PAY TO SAN DIEGO TO, TO BUY THIS WATER.
UM, SO METROPOLITAN IS NOT OBLIGATED TO BUY THIS, BUT IT IS AN OPPORT OPPORTUNITY THAT PRESENTS ITSELF TO SOUTHERN CALIFORNIA, UM, FOR, FOR METROPOLITAN TO BUY THIS, FOR, TO IMPROVE THE RELIABILITY FOR EVERYBODY.
UH, SO THE, THE QUESTION COMES, AND I, I THINK, UM, UH, COMMISSIONER CORDERA OR DIRECTOR CORDERA, UH, YOU HAD ASKED, YOU KNOW, AS FAR AS THE COLORADO RIVER AND, AND HOW THIS IMPACTS THAT IS DEPENDING ON WHAT CUTS ARE REQUIRED FROM THE, WHICH PARTIES, UM, IN THE, THE FINAL, UM, AGREEMENT, THIS MAY BE ATTRACTIVE TO METROPOLITAN TO HELP SUPPLEMENT OR, OR GO TOWARDS THE COMMITMENT THAT THEY HAVE TO MAKE TOWARDS CUTS ON THE RIVER.
SO UNTIL THAT IS, UM, QUANTIFIED AND DEFINED AND, AND SET, UH, I DON'T KNOW THAT METROPOLITAN STAFF CAN DEFINITIVELY SAY HOW OR HOW THEY WOULDN'T, UM, BE INTERESTED IN, IN PURCHASING THE SUPPLY.
SO, SO THOSE ARE THE CONSIDERATIONS, UH, TO MAKE.
AND THEN WHAT IF MEMBER AGENCIES AND METROPOLITAN BOTH REFUSE TO BUY THAT WATER? IN THAT CASE? I THINK THE, IT WOULD BE A, UM, UH, LOST OPPORTUNITY TO SOUTHERN CALIFORNIA.
UH, THIS WATER MAY OR MAY NOT BE ABLE TO BE STORED BY SAN DIEGO, OR THEY MAY CONSIDER SELLING THIS TO, UH, ANOTHER STATE, UH, OR COLORADO RIVER, UH, ENTITY.
UH, BUT THAT, THAT WOULD HAVE DIFFERENT POLITICAL RAMIFICATIONS AND, AND, UM, CALCULATIONS, UM, TO, TO MAKE, BUT IN ESSENCE, THAT WOULD BE LOST A LOST OPPORTUNITY FOR A LOST SUPPLY TO THE METROPOLITAN SERVICE AREA AS A WHOLE.
AND SO THAT'S ALL PLAYING INTO THE, THE NEGOTIATIONS AND, AND, UH, DISCUSSIONS THAT BOTH, YOU KNOW, OUR STAFF IS GONNA HAVE WITH SAN DIEGO AND SAN DIEGO'S GONNA HAVE TO HAVE WITH METROPOLITAN AS WELL.
AND SO, YOU KNOW, TODAY WAS JUST TO BRIEF THE BOARD THAT, UM, THIS IS VERY QUICKLY, UH, BECOMING A DISCUSSION, THEIR TIMELINES AND AGREEMENT THAT SAY BY DECEMBER 30TH, IF A MEMBER AGENCY WANTS TO, TO PURCHASE A SAN DIEGO WATER, THAT THEY WOULD HAVE TO, UM, UH, NOTIFY, UM, SAN DIEGO AND METROPOLITAN.
AND SO THE DECEMBER 30TH DEADLINE IS, IS GOING TO COME FAST.
UM, SO I ANTICIPATE HAVING ADDITIONAL UPDATES FOR THE BOARD DEAN TO, TO CLARIFY THE DECEMBER 30TH IS TO IDENTIFY WHAT COMMITMENTS NEED TO BE ESTABLISHED FOR THE CALENDAR YEAR FOLLOWING.
IT'S NOT A ALL OR NOTHING FOREVER, IT'S SIMPLY METHODICALLY FOR THE NEXT YEAR, THERE MUST BE RESOLUTION OF HOW THE WATER'S GOING TO GET MANAGED OR ELSE THERE'S CONSEQUENCES TO IT.
THE NEXT DECEMBER 30TH AFTER THAT BRINGS YET ANOTHER ELEMENT.
SO IF THERE WAS SOME LONG-TERM AGREEMENT, THE LONG-TERM AGREEMENT WOULD SIMPLY HIT TO THAT TICKING OF THE CLOCK ON DECEMBER 30TH AND SAY, WELL, AS FAR AS WE KNOW, THIS LONG-TERM AGREEMENT GOVERNS AT LEAST THIS MUCH WATER.
AND SO THIS IS THE FIRST YEAR THAT THIS EXCHANGE AGREEMENT HAS BECOME AVAILABLE, AND SO WE COULD NEGOTIATE A ONE YEAR NEED FOR THIS WATER.
TO MY COMMENT EARLIER OF, UH, METROPOLITAN BEING, UM, HAVING SUFFICIENT STORAGE RECORD AMOUNTS OF STORAGE THAT FACTORS
[01:05:01]
INTO OUR, UH, CALCULATION OF HOW MUCH WE SHOULD BE WILLING TO PAY FOR THIS SUPPLY AND, AND IN A YEAR WHERE WE DON'T ANTICIPATE METROPOLITAN HAVING ANY, UH, SUPPLY ISSUES.UM, BUT, UH, ANY MEMBER AGENCY COULD, UM, ENTER INTO A LONG-TERM AGREEMENT WITH SAN DIEGO.
AND IN WHICH CASE, UM, THAT WOULDN'T NECESSARILY HAVE TO HAPPEN BY DECEMBER 30TH.
THE DECEMBER 30TH DEADLINE IS FOR THIS YEAR'S ALLOCATION OF COLORADO RIVER WATER.
UM, YOU MENTIONED, UM, INTERSTATE EXCHANGE.
THERE'S, THERE'S THAT, THE ABILITY NOW TO DO THAT, RIGHT? THAT HAS TO GO TO CONGRESS.
IS THAT CORRECT? SAY THAT AGAIN, I'M SORRY.
INTERSTATE CHANGE, LIKE IF ARIZONA IN THIS SITUATION WANTED TO GET INTO A DEAL LIKE THIS, THEY CURRENTLY CAN'T DO THAT.
AND UNTIL THE MATTER IS RESOLVED, NOT JUST THE RESOLUTION OF THE NUMBERS OF THE WATER ON THE RIVER, BUT ALSO THAT UNTIL THAT IS RESOLVED WITH THE NEGOTIATIONS THAT YOU'RE EXPERIENCING RIGHT NOW, WE CAN TALK A LOT ABOUT HOW ARIZONA, NEVADA, AND CALIFORNIA CAN TRADE WATER, BUT THERE IS NO ACTUAL LEGAL ABILITY TO DO SO, WHICH I THINK IT'S JUST GONNA BE A HEAVY LIFT WITH CONGRESS.
IS THAT CORRECT? YEAH, I I I WOULD SAY THE HOPE WOULD BE THAT SAN DIEGO FINDS SOMEWHERE WITHIN THE METROPOLITAN AREA TO, TO FIND A HOME FOR THIS WATER.
SO IF THAT'S THE CASE, UM, HOW DOES IT PLAY? HOW, HOW DOES IT PLAY INTO OUR GOAL OF LOCAL AUTONOMY? WE, I MEAN, DOES IT HELP US IN THAT? SURE.
SO, SO, UM, IT COULD, IF, IF, YOU KNOW, WE REALLY, WE HAD NO OTHER PLANS.
UM, WE'RE CURRENTLY GOING THROUGH THE WATER RESOURCES PLAN UPDATE.
UM, IF WE HAD NO OTHER PLANS OR NO MORE, UM, FEASIBLE ALTERNATIVES THAT COULD BE SEEN AS A FORM OF LOCAL SUPPLY RELIABILITY, UM, A DIFFERENT SUPPLY FROM METROPOLITAN SUPPLY.
UM, BUT FOR OUR PLANS, AT LEAST THE DIRECTION THAT WE'RE HEADING AND IN DEVELOPING GROUNDWATER SUPPLY IN THE WESTERN PORTION OF THE CITY IS THAT THERE'S A, A 10 OR 15 YEAR TIMEFRAME THAT WE'D BE LOOKING AT FOR, FOR THIS, THIS SPECIFIC SUPPLY AFTER WHICH WE, WE HOPE TO, TO HAVE OUR OWN LOCAL SUPPLY.
SO WHEN, WHEN WE NEGOTIATE WITH SAN DIEGO, UM, I'M SURE METS AT THE TABLE THEN TOO, RIGHT? NO, THIS IS ACTUALLY NEGOTIATE INDEPENDENTLY OF METROPOLITAN AND THEN THE, THE WHATEVER PRICE OR ARRANGEMENT WE HAVE WITH SAN DIEGO COUNTY WATER AUTHORITY, THAT'S BETWEEN US TWO PARTY AND THEN METROPOLITAN, ALL THEY DO IS NEED, ALL THEY NEED TO KNOW IS TO WHICH AGENCY THE WATER NEEDS TO BE DELIVERED TO OTHER THAN SAN DIEGO.
AND THAT, THAT'S PART OF WHAT THE SETTLEMENT AGREEMENT SPELLED OUT IS JUST THAT METROPOLITAN FOR METROPOLITAN IS JUST DELIVERING WATER TO A DIFFERENT MEMBER AGENCY.
BECAUSE I KNOW, UH, WITH METROPOLITAN, THERE'S ALWAYS, WE'RE ALWAYS, WE'RE ALWAYS TALKING ABOUT IT'S REGIONAL.
WE'RE DOING REGIONAL APPROACHES AND CLEAR WATER AS WE'RE LOOKING CLEAR WATER, WE'RE LOOKING AT IT REGIONALLY AND, AND THE COOPERATION AMONGST THE SIX COUNTIES.
UM, IF THAT'S ON THE TABLE, THEN HOPEFULLY IT WOULD BE, IF IT WORKS FOR US, SOME SORT OF A COMPROMISE IN THIS NEGOTIATION IN TERMS OF PRICING, RIGHT? CORRECT.
YEAH, THAT, AS FAR AS PRICING GOES, THAT, THAT'S WHERE I THINK RIGHT NOW AND SAN DIEGO HAS MAKE THE, MADE THIS CLEAR IS THEY'RE HOPING TO AT LEAST RECOVER THEIR COST OF WHAT THEY'RE PAYING TO, UH, IMPERIAL IRRIGATION DISTRICTS.
UM, BUT YOU KNOW, UH, I THINK THAT THE ANALOGY THAT THAT AMSEL USED WAS, YOU KNOW, YOU HAVE EXPIRING GOODS, UH, AS OF DECEMBER 30TH.
UH, IF, IF THEY DON'T SELL IT TO ANYBODY, THEY, THEY, THEY DON'T MAKE A SALE.
AND SO THEY NEED TO CONSIDER WHETHER OR NOT THEY THINK THEY CAN MAKE A DEAL.
SO YOU MAY HAVE ALREADY ADDRESSED THIS, BUT, UH, IS IT, AND, AND I THINK YOU DID DID, BUT IS IT REALLY FEASIBLE FOR US TO, TO BE ABLE TO AFFORD THE WATER FROM SAN DIEGO WATER AUTHORITY? I WOULD SAY, UH, I'M CONFIDENT TO SAY IF IT'S AT THE PRICE THAT THEY'RE SEEKING FOR FULL COST RECOVERY, IT WOULDN'T MAKE SENSE FOR US TODAY.
SO I WOULD SAY IF THEY ARE LOOKING AT IT, UH, AND DON'T GET OTHER TAKERS AND ARE WILLING TO COME DOWN ON THEIR PRICE, THEN THAT'S WHERE WE WOULD PARTICIPATE.
UH, DEAN'S DONE AN EXCELLENT JOB IN TRYING TO GIVE YOU, WHEN DEAN AND I WERE TALKING ABOUT THIS PRESENTATION TO YOU TO PROVIDE INFORMATION, WE'RE TALKING ABOUT THE CONCEPT OF BOUNDARIES FOR THE DISCUSSION.
SO WE ULTIMATELY WILL HAVE DISCUSSIONS WITH SAN DIEGO COUNTY WATER AUTHORITY MEMBER AGENCY JUST LIKE US.
THERE ARE OTHER MEMBER AGENCIES, ANOTHER 20, ANOTHER 24 MEMBER AGENCIES THAT POTENTIALLY COULD ENGAGE IN THIS TRANSACTION.
AND THAT REPRESENTS ANOTHER ELEMENT TO THE BOUNDARIES OF THE DISCUSSION.
THE OTHER ASPECT IS THAT THE VERY NATURE OF WHAT IS AT THE CORE OF THE DISCUSSIONS IS THE RELIABILITY OF METROPOLITAN'S SUPPLIES.
TO THE EXTENT THAT WE VIEW THEM AS RELIABLE, LIKE DEAN POINTED OUT, IF THERE'S PLENTY OF STORAGE AND SO FORTH, THEN OUR CONCERNS FOR THE CHALLENGES WE FACE ON THE
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WEST SIDE OF THE CITY IN THE NEXT 10 YEARS, THEY'RE DIMINISHED.AND THEREFORE THE VALUE THAT WE WOULD PLACE ON SOMETHING THAT IS OFFERED IS MORE RELIABLE THAN METROPOLITAN.
THAT WOULD CAUSE US TO LOOK AT WHAT IS THE PRICE AND WHAT IS THIS PRICE SPECIFICALLY AGAINST THE METROPOLITAN'S PRICE.
AND THAT CREATES THIS NEW ELEMENT THAT DEAN AND I HAVE BEEN TALKING ABOUT AND SOME OF THE MEMBER AGENCIES ARE TALKING ABOUT, WHICH IS, LET'S SAY YOU COMMISSIONER AUSTIN ARE THE OTHER MEMBER AGENCY, AND WE KNOW WE PAY, LET'S SAY $390, UH, FOR THIS TYPE OF WATER FROM METROPOLITAN, BUT SAN DIEGO'S WATER IS MORE VALUABLE.
WELL, I'M WILLING TO THROW IN A DOLLAR, BUT YOU WANT IT MORE THAN ME.
SO YOU'D BE WILLING TO THROW IN $2 AND WE'LL JUST GO LIKE THAT, JUST LIKE THEY SHOW IN MOVIES AT ART AUCTIONS.
AND WE'LL GO ALL THE WAY TO THE $390 OF THE METROPOLITAN PRICE, AND NOW WE HAVE A DECISION TO MAKE.
BECAUSE IF IT'S REALLY MORE VALUABLE THAN METROPOLITAN'S WATER, YOU OR I ARE GONNA HAVE TO DECIDE IF IT REALLY IS THAT.
AND THEN COMES THIS ADDED DIMENSION.
IF I GO AND LET'S SAY I GO TO $450, OH, INSTEAD OF THREE 90, YOU STAY WITH METROPOLITAN FOR $390, I PAY $450 FOR THIS WATER.
BUT IN REMOVING THAT OBLIGATION FROM METROPOLITAN, METROPOLITAN SUPPLIES TO YOU ARE NOW MORE RELIABLE BECAUSE METROPOLITAN DOESN'T HAVE THIS OBLIGATION.
I SATISFIED IT WITH THAT WATER.
SO IN A VERY STRANGE WAY, I MIGHT BE INCENTIVIZED TO JUST SIT BACK AND LET YOU TAKE THE EXTRA WATER AND PAY FOR IT.
AND I GET THE RELIABILITY IN RETURN THAT EXTENDS EVEN FURTHER.
IF ALL THE MEMBER AGENCIES SAY, WE'LL JUST HOLD BACK, WE'LL LET METROPOLITAN PAY FOR IT, AND WE'RE ALL MORE RELIABLE, AND WE DIDN'T HAVE TO PAY ANY MORE THAN THE REGULAR METROPOLITAN RATE.
THESE THINGS OF NEGOTIATION STRATEGIES COMPOUND THEMSELVES IN THE FACE OF WHAT DEAN POINTED OUT, WHICH IS EVERY YEAR AT DECEMBER 30TH BECOMES BRINKSMANSHIP ON THE WATER.
TECHNICALLY, WE'RE, I'M STILL TRYING TO VERIFY THIS.
TECHNICALLY THE LOSS OF THE WATER BECOMES A LOSS OF THE WATER TO THE RIVER.
IT GOES STRAIGHT TO THE RIVER.
SAN DIEGO WILL HAVE IID UPWARDS OF $780 EQUIVALENT FOR THAT WATER PER UNIT, AND IT WILL HAVE GOTTEN NOTHING IN RETURN AND NEITHER WILL ANYBODY IN CALIFORNIA.
THAT'S THE, THE BOUNDARIES OF THE DISCUSSIONS THAT WE'RE HAVING RIGHT NOW.
WHERE THEY GO IS JUST AN INITIAL DISCUSSION.
COMMISSIONER CORDERO, YOU MENTIONED SOMETHING THAT I NEED TO HIGHLIGHT IS PERHAPS ALSO AN ADDED DIMENSION THAT'S DIFFICULT FOR US IS THAT HISTORICALLY IN THE INTEREST OF THE REGION, THE MEMBER AGENCIES HAVE ALWAYS BEEN TRANSPARENT IN THEIR CONTRACT NEGOTIATIONS WITH METROPOLITAN.
EVERY MEMBER AGENCY CONTRACT IS UP FOR TRANSPARENCY AND VIEWABLE BY ALL, INCLUDING THE TERMS AND THE PRICE.
THERE IS AN UNDERCURRENT RIGHT NOW WHERE SAN DIEGO IS PERHAPS TERMING THAT THESE DISCUSSIONS WILL BE PRIVATE, THERE'LL BE CONFIDENTIAL AND THERE'LL BE NON-DISCLOSURE AGREEMENTS ASSOCIATED WITH IT.
THAT IS A COMPLETE CLASH WITH THE PREVIOUS CULTURE OF REGIONALISM AMONGST THE MEMBER AGENCIES.
YOU DON'T KNOW THAT FOR A FACT YET, BUT I'M HERE IN COMMITTEE STRUCTURE TO JUST GIVE YOU ALL OF THIS BACKGROUND.
WE'RE GONNA CONTINUE TO WORK WITH SAN DIEGO, WITH METROPOLITAN.
AS WE GET MORE INFORMATION, UNDOUBTEDLY WE'LL BRING IT BACK TO COMMITTEE OR WE'LL BRING IT BACK TO BOARD.
NO, NO, THAT WAS THE END OF MY PRESENTATION.
IT'S BEEN A REALLY GOOD DISCUSSION.
AND I THINK ONE AGAIN, THAT, THAT, LIKE THE LAST, UH, ITEM THAT WE DISCUSSED, I THINK THERE'S A LOT MORE THAT WE'RE GONNA WANT.
UM, JUST, JUST AS A FINAL THOUGHT, UM, HAVING WEARING TWO HATS, OF COURSE, I'M ALWAYS, LOOK, I WANT LONG BEACH.
THIS IS WHERE, YOU KNOW, I SERVED AT THE WELL OF THE MAYOR HERE IN ALL OF YOU.
SO, UM, THAT'S VERY IMPORTANT TO ME.
BUT I, I ALSO BUY INTO THE CONCEPT OF, OF METROPOLITAN AS A, AS A, AS A, I HATE TO SAY THE WORD FAMILY, BUT IN A SENSE IT IS.
SO, UM, IF IT WOULD WORK FOR US AND IT WOULD, YOU KNOW, WORK FOR SAN DIEGO, THERE'S NO REASON TO NOT SIT DOWN AND REALLY ROLL UP OUR SLEEVES.
ANYTHING ELSE? HEY, WE LOOK FORWARD TO THE NEXT STEP ON THIS.
I'M SURE THE REST OF THE BOARD WILL APPRECIATE THIS.
I APPRECIATE YOUR GOOD WORK ON THIS ON THE GROUND.
UM, SO DO WE HAVE ANY PUBLIC COMMENTS, ANY FURTHER COMMENTS FROM HIS COMMISSION? OKAY,
[PUBLIC COMMENT Opportunity to address the Resources Committee on non-agenda items. Each speaker will be allowed three minutes to make their comments unless extended by the Chair.]
UM, WE HAVE A MOTION IN A SECOND.[01:15:01]
TO PUBLIC COMMENT.ARE THERE ANY OTHER SPEAKERS HERE WHO WOULD LIKE TO SPEAK ON A NON AGENDA ITEM
[ANNOUNCEMENTS]
AND SEEING NONE, UH, THE PUBLIC, UH, COMMENT PERIOD IS NOW CLOSED.LOOKING FORWARD TO HEARING MORE ABOUT THIS AND THIS MEETING IS ADJOURNED.
[ADJOURNMENT]
IT.