May 14, 2026 Utilities Commission - Resources Committee

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UM, WE'RE

[CALL TO ORDER]

IT'S ABOUT 1119, UH, THE MEETING OF THE RESOURCES COMMITTEE AT MAY 14TH.

UH, THEY CALL ME, CALL THE MEETING TO ORDER.

UH, UH, DINA, CAN YOU PLEASE DO ROLL CALL? YES.

[ROLL CALL]

MEMBER AUSTIN.

HERE.

THANK YOU.

OKAY.

UH, WE HAVE, UH, FOUR ITEMS. OUR FIRST

[1. 26-55126 Recommendation to approve February 19, 2026 Resources Committee meeting minutes.       Suggested Action: Approve recommendation. ]

DO I HAVE A MOTION WITH MOTION? I HAVE A, AND I'LL SECOND THAT.

ANY PUBLIC COMMENT? SEEING NONE.

ANY COMMISSIONER COMMENT? YES.

NO, NO COMMISSION.

ALL RIGHT.

ALL THOSE IN FAVOR SAY AYE.

AYE.

OPPOSED? MOTION CARRIES.

ITEM NUMBER TWO IS

[2. 26-55127 Recommendation to receive and file Water Supply Update.       Suggested Action: Approve recommendation. ]

DO I HAVE A MOTION TO RECEIVE AND FILE? SO MOVED BY, UH, COMMISSIONER AUSTIN, AND I'LL SECOND THAT.

UH, AND WE WILL, WITH THAT WE'LL CALL ON DEAN WANG, WHO'LL GIVE US OUR REPORT.

THANK YOU, CHAIR CORDERO.

SO THIS IS A, A GREAT ACTUALLY SEGUE FROM THE, THE CLOSING COMMENTS AT, AT THE BOARD MEETING REGARDING ALL THE DIFFERENT WATER SUPPLY ISSUES FACING THE REGION.

UM, AND, AND REALLY, YOU KNOW, I'M, I'M GLAD THAT KIND OF TEES UP THIS, THIS CONVERSATION.

SO THE WATER SUPPLY UPDATE, UH, JUST TO GET A RECAP OF THE, THE TIMELINE THAT WE TYPICALLY GO THROUGH EACH WATER YEAR, UH, IN OCTOBER IS THE START OF THE WATER YEAR.

WE GET THROUGH THE WET SEASON, GET THE INITIAL STATE WATER PROJECT ALLOCATION IN DECEMBER.

UH, WE CHECKED IN, UH, MIDWAY THROUGH THE, THE RAINY SEASON, UH, TO SEE WHERE WE STAND, YOU KNOW, HOW THE, THE WATER YEAR WAS LOOKING AT THE BEGINNING, UH, WITH WATER SUPPLY UPDATE IN FEBRUARY.

AND NOW HERE WE ARE IN MAY, TOWARDS THE END, ESSENTIALLY, OF THE, THE POSSIBLE RAIN THAT, THAT WE SEE HERE IN SOUTHERN CALIFORNIA ESPECIALLY, AND EVEN NORTHERN CALIFORNIA, UH, TO GIVE THE FINAL WATER SUPPLY UPDATE OF THE YEAR BEFORE WE GO INTO ESSENTIALLY THE WET OR THE, THE DRY HOT SUMMER SEASON.

SO, TO RECAP, WHERE WE ARE AT THE END OF THIS, UH, WATER YEAR, UH, ESSENTIALLY, UH, THE STORY THIS YEAR WAS, UH, EVEN THOUGH IT WAS A VERY AVERAGE, UH, UH, PRECIPITATION YEAR, UH, FROM THAT, FROM THE STANDPOINT OF RAIN AND SNOW AS A TOTAL, REALLY, UH, THAT CAME IN THE FORM OF RAIN AND SNOWPACK WAS MUCH LOWER THAN YOU WOULD EXPECT FOR THE AMOUNT OF PRECIPITATION THAT WE GOT.

AND SO WHAT YOU'LL SEE, UH, OVER ON THE LEFT SIDE IS THE STATE WATER PROJECT, UM, AREA.

AND SO IN THE NORTHERN SIERRA, WE RECEIVED 97% OF AVERAGE PRECIPITATION, BUT THAT ONLY TRANSLATED INTO 43% OF THE AVERAGE, UH, SNOWPACK.

AND SO THE IMPORTANCE OF THE SNOWPACK IS THAT IT HELPS HOLD THOSE, UH, WATER SUPPLIES, YOU KNOW, IN, IN THE FORM OF SNOW, AND SLOWLY RELEASES THAT OVER THE COURSE OF THE NEXT SEVERAL MONTHS SO THAT WE'RE BA BETTER ABLE TO, TO UTILIZE, UH, THAT IN WATER SUPPLY AND CAPTURE THAT IN RESERVOIRS.

AND SO THE FACT THAT THE MAJORITY OF, UH, RAINFALL, UH, DID NOT TRANSLATE INTO SNOWPACK MAKES IT MORE DIFFICULT TO ACTUALLY MANAGE THOSE WATER SUPPLIES.

AND, AND IN REALITY, UM, WE'RE, WE'RE LESS ABLE TO USE THAT, THAT TOTAL, UH, PRECIPITATION.

SO SIMILARLY, IN THE COLORADO UPPER COLORADO RIVER BASIN PRECIPITATION, YOU'LL SEE IT WASN'T TOO BAD, 85% OF NORMAL, BUT THAT TRANSLATED INTO A VERY, VERY DISMAL 27% OF SNOWPACK, UH, WHICH IN A LOT OF WAYS IS, IS BREAKING RECORDS IN, IN A BAD WAY.

UH, AND SO IN, IN BOTH OUR, UH, BOTH OF METROPOLITANS IN PORT WATERSHED AND PORTED WATERSHEDS, THE, UH, STATE WATER PROJECT AND THE COLORADO RIVER, THEY'RE FACING REALLY, UH, DIFFICULT RUNOFF, UM, EXPECTATIONS.

SO, UH, IN THE, THE GM REPORT, WE TALKED ABOUT THE STATUS OF LAKE MEAD, WHICH, YOU KNOW, I'LL HAVE A MAP HERE ON THE NEXT SLIDES.

BUT, UH, IF YOU FOLLOW THE, THE WATER, UH, UPSTREAM, UH, FROM LAKE MEAD, UH, WHICH IS IN THE LOWER UH, BASIN, YOU'LL GO UP TO THE, THE UPPER BASIN, WHICH, UH, IN THE UPPER BASIN, UH, UH, THAT WATER IS STORED AT LAKE POWELL.

AND SO WE'RE, WE'RE FACING ISSUES ON LAKE MEAD.

THAT'S TRUE AND TOUGH DECISIONS COMING FORWARD AS FAR AS LAKE MEAD ELEVATIONS.

UH, BUT THIS IS REALLY THE, THE FIRST, UH, TIME THAT LAKE POWELL UPSTREAM OF LAKE MEAD, UH, IS REALLY STRUGGLING AS WELL.

AND SO YOU THINK ABOUT IF THERE'S LESS WATER UPSTREAM AT POWELL TO EVENTUALLY MAKE ITS WAY DOWN TO MEAD, IT'S REALLY GOING TO CULMINATE IN, IN REALLY TOUGH DISCUSSIONS ON, ON THE OVERALL COLORADO RIVER.

SO WHAT THIS SCREEN HERE SHOWS, THIS GRAPH HERE SHOWS IS THE ELEVATION OF LAKE POWELL.

AND SO THERE IS A CRITICAL ELEVATION FOR LAKE POWELL, UH, RIGHT HERE, THIS DOTTED LINE, IT'S THE MINIMUM POWER POOL.

SO, UH, 34, UH, 90 FEET, IF IT DIPS BELOW THAT, UH, LAKE POWELL IS ESSENTIALLY, UH, IN UNABLE TO PRODUCE POWER.

UH, AND SO THERE, THERE'S CRITICAL, UM, STEPS THAT NEED TO BE TAKEN TO PREVENT THAT FROM HAPPENING.

AND SO WHAT YOU'LL SEE IS THE HISTORICAL, UH, ACTUAL LINE HIT OUT HERE IN THE, THE SOLID BLACK LINE, AND THEN

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UH, AND SO, UH, WE'RE HERE NOW, UH, THIS WAS, UH, MADE AVAILABLE IN APRIL, BUT NOW WE'RE HERE IN IN MAY.

AND, UH, LAST I CHECKED, UH, WE ARE FOLLOWING VERY CLOSELY TO THAT, THAT DOTTED GREEN LINE.

AND SO, ABSENT ADDITIONAL ACTIONS TAKEN BY THE US BUREAU OF RECLAMATION, WE WOULD EXPECT THAT THE ELEVATION OF LAKE, UH, POWELL WOULD DIP BELOW THAT, UH, MINIMUM POWER POOL LINE.

AND SO THE USBR HAS PROPOSED, UH, DIFFERENT ACTIONS TO BE TAKEN TO PREVENT THAT FROM HAPPENING.

AND THAT'S WHAT I'LL, I'LL WALK THROUGH, UH, HERE NEXT.

SO THIS IS A MAP OF THE COLORADO RIVER BASIN, AND WHAT YOU'LL SEE HIGHLIGHTED HERE IN THE LIGHT BROWN IS THE UPPER BASIN, UH, AND THE ORANGE IS THE LOWER BASIN.

AND THEN I'LL POINT OUT A COUPLE OF IMPORTANT FEATURES, UH, ON THIS MAP.

UH, WELL, IMPORTANTLY, UH, METROPOLITAN SERVICE AREAS OVER HERE, UH, IN CALIFORNIA, IN CASE YOU'VE FORGOTTEN WHERE WE'RE, UH, BUT ALL OF, ALL OF OUR WATER THAT, THAT WE GET FROM THE COLORADO RIVER, UH, WATERSHED.

AND TO THE, THE POINT OF THIS POINTING THIS OUT TODAY IS THE CRITICALITY OF THE UPPER BASIN IN LAKE POWELL.

UH, AND SO LAKE POWELL, UH, NORMALLY RECEIVES, UH, INFLOW FROM ALL THE DIFFERENT TRIBUTARIES, RAINFALL, PRECIPITATION, SNOW MELT.

AND THIS YEAR THERE'S PROJECTED TO BE ABOUT 3.78 MILLION ACRE FEET, UH, INFLOW INTO LAKE POWELL, WHICH, YOU KNOW, SOUNDS LIKE A BIG NUMBER.

SOUNDS GREAT, UH, BUT, YOU KNOW, GIVE AWAY THE SPOILER.

THAT'S, THAT'S NOT GONNA BE GOOD ENOUGH.

UH, SO IN THE UPPER BASIN, THERE'S A RESERVOIR CALLED FLAMING GORGE RESERVOIR, AND THIS IS A, A A, A FURTHER UPSTREAM RESERVOIR FROM WHICH USBR TYPICALLY DOES RELEASE WATER INTO LAKE POWELL.

SO, AS ONE OF THE MEASURES TO HELP INCREASE ELEVATIONS AT LAKE POWELL, WHAT THE USBR IS PROPOSING TO DO IS RELEASE AN ADDITIONAL 1 MILLION UP TO AN, UH, ADDITIONAL MILLION ACRE FEET OF WATER FROM, FROM FLAMING GORGE TO HELP BOLSTER WHAT IS HAS BEEN, UH, UH, UH, SUB, UH, SUBOPTIMAL AMOUNT OF RUNOFF, UH, INTO LAKE POWELL.

NATURALLY, WE TALKED ABOUT LAKE MEAD, HOW IT'S DOWNSTREAM OF, UH, LAKE POWELL.

AND SO ONE WAY TO KEEP THE ELEVATION AT LAKE POWELL HIGHER IS TO JUST NOT RELEASE AS MUCH DOWN TO LAKE MEAD.

AND SO WHAT'S BEING PROPOSED IS, RATHER THAN THE NORMAL 7.48 MILLION ACRE FEET OF, OF RELEASE FROM POWELL DOWN TO MEAD, USBR IS PROPOSING TO REDUCE THAT RELEASE DOWN TO 6 MILLION ACRE FEET A YEAR.

AND SO BY PUTTING MORE WATER, UH, FROM UPSTREAM INTO LAKE POWELL AND PREVENTING, UH, OR, OR REDUCING THE AMOUNT THAT LEAVES, THAT'S HOW THEY'RE PROPOSING TO KEEP THE ELEVATIONS AT LAKE POWELL ABOVE THE MINIMUM POWER POOL LEVEL.

SO WHAT THAT MEANS FOR US, UH, HERE IN SOUTHERN CALIFORNIA, AND ESSENTIALLY FOR METROPOLITAN WHO, UH, RECEIVES OUR COLORADO RIVER SUPPLIES IS, UH, THERE'S A LOT GOING ON ON THIS GRAPH.

BUT IF YOU LOOK AT THE, THE BLUE LINES AT THE BLUE BARS, THIS IS, HAS ESSENTIALLY BEEN THE HISTORICAL, UH, UM, RELEASES FROM THE UPPER BASIN TO THE, UH, LOWER BASIN.

AND AS PER THE 1922 COLORADO RIVER COMPACT, UH, THE WAY THAT IT'S SUPPOSED TO WORK IS THAT ON A 10 YEAR BASIS, THE UPPER BASIN IS SUPPOSED TO DELIVER 82.5 MILLION ACRE FEET OF, OF WATER OVER A 10 ROLLING 10 YEAR, UH, PERIOD.

SO IF YOU ADD UP ALL THESE BLUE BARS, AND THEN YOU LOOK AT WHAT IS BEING PROPOSED AS 6 MILLION ACRE FEET RELEASE, UH, TO MEET THIS YEAR, THAT MEANS IN ORDER TO MEET THAT 10 YEAR DELIVERY REQUIREMENT PER THE COLORADO RIVER COMPACT, THEY WILL HAVE TO DELIVER OVER 10 MILLION ACRE FEET A YEAR.

AND YOU'LL SEE THAT IN NONE OF THE YEARS PRIOR HAVE THEY DELIVERED THAT MUCH.

AND SO THEY'RE, YOU KNOW, THE USBR IS AT RISK OF NOT MEETING ESSENTIALLY THE 1922 COLORADO RIVER.

AND SO ALL THAT IS UP FOR NEGOTIATION.

UM, AND, AND WHAT WILL HAPPEN IS YET TO BE SEEN, UH, BUT ABSENT A VERY, VERY WET YEAR NEXT YEAR, UH, IT LOOKS LIKE THAT THAT'S, YOU KNOW, ONE OF THE CORE PRINCIPLES OF THE COLORADO RIVER COMPACT THAT IS GOING TO COME INTO CONFLICT.

SO, ENOUGH OF THE BAD NEWS ONTO THE GOOD NEWS IS, UH, EVEN WITH THE REDUCED SNOW PACK THIS YEAR, IT LOOKS LIKE METROPOLITAN WILL BE ABLE TO GET MORE IN SUPPLY, UH, 1.46 MILLION ACRE FEET THAN THEY HAVE IN ESTIMATED, UH, DEMAND.

UH, I THINK THOSE SHOULD ACTUALLY FLIP FLOP, BUT, UM, SO, SO THEY'RE ANTICIPATING TO BE ABLE TO PUT 10,000 ACRE FEET OF WATER INTO STORAGE.

METROPOLITAN HAS BEEN SITTING ON ESSENTIALLY RECORD, UH, AMOUNT OF STORAGE.

AND SO FOR THE NEXT FEW YEARS, THEY SHOULD HAVE SIGNIFICANT, UH, ENOUGH SUPPLY, EVEN IF WE'RE IN, UH, DROUGHT, UH, SITUATION, TO BE ABLE TO DRAW ON THAT STORAGE FOR FUTURE USE.

UH, BUT THAT, THAT'S THE GOOD NEWS, IS THAT, UH, EVEN WITH THE,

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SIMILARLY, GOOD NEWS ON OUR GROUNDWATER CONDITIONS IS, UH, WE DID END UP SOMEWHAT AVERAGE, UH, ABOVE AVERAGE A RAINFALL HERE IN SOUTHERN CALIFORNIA.

UH, LA COUNTY SANITATION, UH, OR LA COUNTY PUBLIC WORKS, UH, IS ABLE TO CAPTURE A LOT OF THAT AT AND, UM, PUT THAT INTO SPREADING GROUNDS, RECHARGE THE GROUNDWATER BASINS FOR US.

AND SO WHAT THAT RESULTS IN IS RIGHT NOW, UH, THIS IS SIMILAR TO OUR, UH, CONVERSATION ABOUT OUR, OUR BUDGET AND HOW WE HAVE A MINIMUM AND A MAXIMUM.

UH, WHAT, WHAT, UH, WRD CALLS THE OPTIMUM QUANTITY IS ESSENTIALLY THE MAXIMUM.

IT'S NOT, IT'S NOT SAYING THAT ONCE IT REACHES THE OPTIMUM, THERE'S NO MORE SPACE IN THE BASIN.

IT'S JUST SAYING THAT'S THE, THE, THE LINE THEY LIKE TO HOVER AROUND.

AND SO RIGHT NOW IN THE, THE GROUNDWATER BASIN, WE ACTUALLY HAVE 123% OF THE OPTIMUM QUANTITY.

AND SO, UH, THAT'S IMPORTANT.

UM, IF WE LOOK BACK TO THE LAST DROUGHT, HAD WE NOT BEEN ABOVE THE OPTIMUM QUANTITY IN, IN THE PREVIOUS DROUGHT, WE WOULD ACTUALLY DROP BELOW THE MINIMUM, ESSENTIALLY, YOU KNOW, BELOW ZERO HERE.

UH, BUT WE WERE ABLE TO WITHSTAND THE LAST DROUGHT IN THE GROUNDWATER BASIN BECAUSE WE WERE ABOVE THE, THE OPTIMUM.

AND SO IT'S, IT'S GOOD TO SEE THAT OUR, OUR GROUNDWATER BASINS ARE AT A HEALTHY LEVEL, UM, YOU KNOW, FOLLOWING SEVERAL, SEVERAL WET YEARS.

THIS IS, THIS IS, UH, CENTRAL AND WEST, UH, COAST BASINS.

YES, IT CAN.

ABSOLUTELY.

AND SO ABOVE THAT IS, UM, YOU KNOW, IF YOU LOOK WAY BACK IN HISTORY, UH, THE CITY OF AR ARTESIA WAS ARTESIAN WATER COMING OUT OF THE GROUNDWATER BASINS BECAUSE THE, THE WATER LEVELS WERE SO HIGH.

UM, NOW YOU COULD ARGUE THAT MAYBE THAT'S NOT IDEAL FOR A WATER SUPPLY, UH, PERSPECTIVE, BUT THERE'S PLENTY OF SPACE.

AND ACTUALLY THERE'S, UM, SPACE IN THE, THE BASIN FOR, UH, GROUNDWATER PUMPERS LIKE OURSELVES TO STORE WATER IN THERE.

AND SO THERE, YEAH, THERE'S PLENTY OF SPACE ABOVE THE OPTIMUM.

AND THAT CONCLUDES MY PRESENTATION.

HAPPY TO TAKE ANY QUESTIONS, , I'M HAPPY YOU TAKE MORE QUESTIONS.

SURE.

YEAH.

I SEE TONY FOSTER THERE.

YEAH, WE CAN, WE CAN WORK ON THAT.

ABSOLUTELY.

I DON'T BELIEVE SO.

YEAH.

THIS IS RESOURCES COMMITTEE.

YEAH.

AND, AND YEAH, ABSOLUTELY.

AS WE SCHEDULE OUT THE, THE, UM, UH, RESOURCES COMMITTEE MEETINGS FOR THE REST OF THE YEAR, WE CAN WORK THAT IN, RECEIVE AND FILE

[3. 26-55128 Recommendation to receive and file the Long Beach Public Utilities Department’s 2025 Urban Water Management Plan Summary Report.       Suggested Action: Approve recommendation. ]

DO I HAVE A MOTION TO RECEIVE AND FILE? SO MOVED.

WE HAVE A MOTION.

I'LL SECOND.

AND NOW WE WILL CALL ON DEAN WANG AGAIN.

THANK YOU.

THANK YOU, CHAIR CORDERA.

SO THIS ITEM IS A SUMMARY OF THE URBAN WATER MANAGEMENT PLAN.

ESSENTIALLY, THE, THE WORK THAT THE, THAT STAFF HAS DONE TO, UH, COMPILE ESSENTIALLY WHAT IS A, UH, REGULATORY REPORTING REQUIREMENT.

UH, AND SO IT SUMMARIZES THIS BECAUSE, UH, AT THE NEXT, UH, BOARD MEETING, UH, SORRY, NOT THE NEXT MORNING, THE JUNE, JUNE 4TH BOARD MEETING, THERE WILL ACTUALLY BE A PUBLIC HEARING AS PART OF THE, UH, ADOPTION PROCESS.

THERE'S REQUIRED TO BE A PUBLIC HEARING.

AND SO, UH, TO PROVIDE THE COMMITTEE, UH, AND, AND, UH, COMMISSION ESSENTIALLY A PREVIEW OF WHAT WILL BE REPORTED AND AN UPDATE ON THAT PROCESS, SO THAT YOU ALL ARE AWARE OF WHEN THIS ITEM COMES TO THE, THE BOARD IN THE FORM OF A PUBLIC HEARING, UH, THE PURPOSE AND, AND NATURE OF WHAT'S BEING REPORTED.

SO, AS A QUICK BACKGROUND, THE URBAN WATER MANAGEMENT PLANNING ACT, UH, CAME INTO EFFECT IN 1983, AND ESSENTIALLY MANDATES THAT ON A FIVE-YEAR BASIS, UH, WATER, PUBLIC WATER, UH, AGENCIES HAVE TO, UH, ESSENTIALLY HELP PLAN FOR THE FUTURE.

UH, AND SO EVERY FIVE YEARS, WE GO THROUGH THIS PROCESS OF, UH, DOING AN ASSESSMENT ON HOW MUCH WATER SUPPLIES WE HAVE, UH, WHAT OUR WATER DEMANDS ARE, AND ESSENTIALLY WHAT WE, UH,

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UH, THERE, THERE HAVE BEEN UPDATES SINCE THE 1983, UH, ACT ESSENTIALLY TO MODERNIZE AND ADD ADDITIONAL REQUIREMENTS.

AND SO OVER TIME, THIS REPORT HAS GONE ESSENTIALLY LONGER AND LONGER.

AND, UH, IT TAKES LONGER TO PREPARE, AND THERE'S MORE THINGS TO REPORT ON.

UH, BUT IT, IT, THAT HAS BEEN THE RESULT OF ESSENTIALLY EVERY TIME THERE'S A DROUGHT, UH, WE LEARN FROM THAT AND, AND WE SEE WAYS IN WHICH THE STATE COULD BETTER PREPARE, UH, GOING FORWARD.

AND SO I'LL TOUCH ON SOME OF THOSE THEMES, UH, LATER AS I, I PRESENT THIS SUMMARY.

BUT, UH, EVERY DROUGHT, WE LEARN SOMETHING AND WISH WE HAD DONE SOMETHING BETTER.

AND THAT'S WHEN THE REQUIREMENTS FOR URBAN WATER MANAGEMENT PLANS, UH, ARE UPDATED.

UH, AND SO THIS, I DID DO WANNA HIGHLIGHT THAT THIS IS DIFFERENT THAN A WATER RESOURCES PLAN.

AGAIN, THIS IS A REGULATORY REPORTING REQUIREMENT, ESSENTIALLY, UH, A COOKBOOK, A CHECKLIST OF, HAVE YOU DONE THIS? HAVE YOU DONE THAT? UH, REPORT ON THESE NUMBERS.

WHEREAS THE WATER RESOURCES PLAN REALLY TAKES A, A, A BROADER, HIGHER LEVEL STRATEGIC LOOK AT WHERE WE WANTED TO TAKE OUR DEPARTMENT FROM A A RESOURCES STANDPOINT.

AND SO THERE IS THAT DIFFERENTIATION.

THIS IS, UH, LESS, MUCH LESS, UH, INTENSIVE THAN A WATER RESOURCES PLAN.

UH, SO THE, THE PLANNING HORIZON FOR THE URBAN WATER MANAGEMENT PLAN IS 25 YEAR.

AND, UH, IN, IN THE PLANNING, UH, THE STATE REQUIRES US TO LOOK AT NORMAL CONDITIONS, ESSENTIALLY AN AVERAGE YEAR, A SINGLE DRY YEAR, A SINGLE YEAR DROUGHT, OR AS WE'RE MORE ACCUSTOMED TO EXPERIENCING NOW MULTIPLE YEAR DROUGHTS.

AND SO ESSENTIALLY A CONSECUTIVE DROUGHT OF, OF FIVE YEARS.

AND SO THAT'S WHAT WE'RE PLANNING FOR.

AND THEN, AS I MENTIONED, UH, AS THE, THE, AS WE'VE LEARNED FROM PREVIOUS DROUGHTS, A WATER SHORTAGE CONTINGENCY PLAN IS PART OF THE REQUIRED ADOPTION OF THE URBAN WATER MANAGEMENT PLAN.

AND SO, WATER SHORTAGE, CONTINGENCY CONTINGENCY PLAN IS ESSENTIALLY WHAT DO WE DO IN SHORTAGE? WHAT ARE THE RESTRICTIONS AND, UH, PROHIBITIONS ON WATER USE THAT WE PUT IN PLACE? AND HOW DOES THAT HELP US REDUCE OUR WATER USAGE? SHOULD WE FIND OURSELVES IN A SHORTAGE? UH, AND THEN FINALLY, ALL OF THAT WORK COMES TOGETHER, UH, AND, AND THE BOARD PROCESS, A BOARDED OPTION PROCESS, PUBLIC HEARING PROCESS CULMINATES IN US, UH, SUBMITTING THE, UH, ADOPTED URBAN WATER MANAGEMENT PLAN TO THE DEPARTMENT OF WATER RESOURCES BY JULY 1ST.

SO, JUST A, A VERY, VERY QUICK OVERVIEW.

I I DEFINITELY DON'T INTEND ON HITTING ALL OF THESE, UH, TOPICS, BUT JUST SO THE BOARD'S AWARE OF ALL THE THINGS THAT ARE IN AN URBAN WATER MANAGEMENT PLAN, THERE'S A, AN INTRODUCTION, LATEST DESCRIPTION, ESSENTIALLY EXECUTIVE SUMMARY, UH, PLAN PREPARATION, THE PROCESS THAT STAFF GOES THROUGH TO PREPARE THIS PLAN.

SYSTEM DESCRIPTION, ESSENTIALLY AN OVERVIEW OF OUR, OUR WATER SYSTEM, AND YOU KNOW, HOW WE OPERATE.

CUSTOMER WATER USE LOOKS AT HOW OUR CUSTOMERS USE WATER.

AS YOU CAN IMAGINE, DIFFERENT, UH, WATER AGENCIES SERVE DIFFERENT SERVICE AREAS AND MAY HAVE DIFFERENT NEEDS OR DEMANDS OR PROFILES OF, OF THEIR CUSTOMERS.

UM, CHAPTER FIVE IS OUR CAR CONSERVATION TARGETS.

UH, CONSERVATION, UH, IS NO LONGER, UH, VOLUNTARY OR OPTIONAL.

NOW, FROM A STATE PERSPECTIVE, THERE'S A LOT OF REGULATED, UH, STATE REQUIRED, STATE MANDATED, UH, WAYS THAT, UH, WATER AGENCIES HAVE TO DO CONSERVATION.

AND SO, UH, WE HAVE TO REPORT ON HOW WE'RE MEETING THE STATE MANDATED TARGETS.

UH, CHAPTER, CHAPTER SIX TALKS ABOUT THE WATER SUPPLIES THAT WE HAVE AVAILABLE TO US.

WE'RE VERY BLESSED HERE IN, IN LONG BEACH TO ACTUALLY HAVE A VARIETY OF, UH, WATER SUPPLIES AVAILABLE.

UH, AND, AND, YOU KNOW, GOING INTO THE FUTURE, UH, POTENTIALLY EVEN MORE, UH, SO WE TALK ABOUT THE, THE WATER SUPPLIES THAT WE HAVE.

CHAPTER SEVEN IS, IS REALLY THE CRUX OF, OF THE URBAN WATER MANAGEMENT PLANT SEVEN AND EIGHT, REALLY.

UM, SO WATER SYSTEM RELIABILITY.

WE LOOK AT OUR SUPPLIES, WE LOOK AT OUR DEMANDS.

WE LOOK OUT 25 YEARS AND SEE IF WE ANTICIPATE HAVING SUFFICIENT SUPPLIES FOR THAT 25 YEAR PERIOD.

UH, AND THEN, UH, CHAPTER EIGHT IS, AS I DISCUSSED, THE WATER SHORTAGE CONTINGENCY PLAN.

WHAT DO WE DO IF WE FIND OURSELVES ACTUALLY SHORT OF WATER? AND THEN CHAPTER NINE, DEMAND MANAGEMENT MANAGEMENT MEASURES.

THAT'S ESSENTIALLY A FA, A FANCY WAY OF SAYING, UH, HOW DO WE DO CONSERVATION AND WATER USE EFFICIENCY? AND THEN CHAPTER 10 IS PLAN ADOPTION, SUBMITTAL IMPLEMENTATION, MAKING SURE WE GO THROUGH THE RIGHT, UH, RIGHT PROCESSES TO ADOPT THIS PLAN IN A PUBLIC AND TRANSPARENT MANNER.

SO, SO TO QUICKLY TOUCH ON A COUPLE OF KEY POINTS OF THE URBAN WATER MANAGEMENT PLAN, AND THE, ESSENTIALLY THE ANALYSIS OR THE FINDINGS, UH, OF THIS, UH, OF 2025 ITERATION.

UH, SO WE'LL LOOK AT CUSTOMER WATER USE IN A NORMAL YEAR.

UH, AND THIS WAS PART OF THE HARD WORK AND, UH, UH, ECONOMETRIC DEMAND MODELING THAT WE PRESENTED TO THE BOARD AS PART OF THE WATER RESOURCES PLAN.

UH, BUT PART OF THAT IN THE WATER RESOURCES PLAN, AGAIN, AND BEING MORE COMPLEX, THERE WAS AN UPPER BOUND, UH, UH, UH, MOST PROBABLE AVERAGE AND EVEN A LOWER BOUND OF WHAT WE ANTICIPATE, UH, DEMAND TO BE.

BUT URBAN WATER MANAGEMENT PLAN, AGAIN, IS A MORE SIMPLIFIED STATE REPORTING.

AND SO FROM THAT STANDPOINT, THE OVERALL THEME HERE IS WE WANNA BE CONSERVATIVE, CONSERVATIVE IN OUR PLANNING TO MAKE SURE WE HAVE ENOUGH WATER.

AND SO IN THAT SENSE, WE TOOK THE HIGH PROJECTION FROM THE WATER RESOURCES PLANNING FORECAST.

AND, AND THAT'S WHAT YOU'LL SEE HERE UNDER, UH, THE, THE HIGH GROWTH SCENARIO, ASSUMING WE HAVE HIGH POPULATION, YOU KNOW, HIGH TEMPERATURES THROUGH CLIMATE CHANGE, UH, ARE, ARE, UH, WATER DEMANDS ARE ESSENTIALLY PROJECTED TO STAY

[00:20:01]

YOU KNOW, THE, THE INCREASE IN POPULATION, INCREASE IN THE ECONOMY IS ALL GONNA BE COUNTERBALANCED BY THE FACT THAT WE'RE GONNA CONTINUE TO DO CONSERVATION AND BE MORE EFFICIENT ON A, A PER CAPITA BASIS, ESSENTIALLY.

SO SIMILARLY, IN A, UH, SINGLE DRY YEAR, SINGLE DRY YEAR, YOU DON'T REALLY SEE TOO MUCH IMPACT ON HOW OUR CUSTOMERS USE WATER.

A LOT OF THAT IS THE TESTAMENT TO METROPOLITAN AND THEIR SUPPLY RELIABILITY, HOW THEY CAN WITHSTAND A ONE YEAR DROUGHT, HOW OUR GROUNDWATER BASINS HAVE THAT EXTRA STORAGE, LIKE WE TALKED ABOUT BEING ABOVE THE MINIMUM QUANTITY.

AND SO WE DON'T REALLY ANTICIPATE, UH, IMPACT TO OUR CUSTOMER DEMANDS IN A SINGLE YEAR DROUGHT FOR MULTIPLE YEAR DROUGHT.

YOU MIGHT WONDER, OKAY, WHY IS THIS REMAINING THE SAME? WOULDN'T YOU EXPECT CUSTOMERS BEHAVE DIFFERENTLY IF THEY SEE A MULTIPLE YEAR DROUGHT? BUT THIS AGAIN, GOES TO THE, THE CONCEPT OF BEING CONSERVATIVE FROM OUR PLANNING TO BE UNCONSERVATIVE WOULD BE TO ASSUME THAT CUSTOMERS, WHEN THEY SEE THE NEWS, WHEN THEY SEE THE, THE CRISIS THAT WE'RE IN, THE REALITY IS THEY PROBABLY WILL REDUCE THEIR USAGE.

BUT FROM A CONSERVATIVE PLANNING STANDPOINT, WE'RE GONNA ASSUME THAT THEY WILL NOT REDUCE THEIR, THEIR USAGE AND ANY USAGE THAT, UH, WE WANT THEM TO REDUCE, WE'LL HAVE TO COME FROM OUR, UH, OUR WATER SHORTAGE CONTINGENCY PLAN MEASURES.

SO THAT'S A CONSERVATIVE PLANNING ASSUMPTION.

SO ALL FLAT ACROSS ALL THESE DIFFERENT SCENARIOS FROM A DEMAND STANDPOINT.

SO TRANSLATE THAT INTO A LINE HERE, SINGLE LINE.

AND NOW WE LOOK AT OUR SUPPLIES IN A NORMAL YEAR.

UH, YOU'LL SEE THESE ARE PROJECTED, UH, SUPPLIES, UH, IN, IN A NORMAL YEAR.

AND, UH, THIS COUNTS UP OUR GROUNDWATER RIGHTS, UM, AND OUR, UH, OUR IMPORTED WATER AVAILABILITY, AND I WON'T GET TOO MUCH INTO THAT, UH, BUT ESSENTIALLY, UH, THE WAY THAT WE, UH, CAN PURCHASE, UM, IMPORTED WATER FROM METROPOLITAN, THEY'RE, THEY HAVE DIFFERENT, UH, ADMINISTRATIVE RULES AND, UH, PROCEDURES THROUGH WHICH, UH, IN DRY YEARS, UH, WE CAN MAKE CERTAIN ASSUMPTIONS ABOUT HOW MUCH OF THEIR TOTAL SUPPLY WE'D BE ABLE TO GET.

AND SO YOU ADD UP THE, THE, THAT AMOUNT AND OUR GROUNDWATER RIGHTS, AND THIS IS HOW MUCH SUPPLY WE ANTICIPATE TO HAVE IN A NORMAL YEAR.

UH, SIMILARLY, AGAIN, UH, TO THE POINT OF MULTIPLE YEAR STORAGE.

UH, WE DON'T ANTICIPATE A DECREASE IN SUPPLY.

IN A SINGLE YEAR DROUGHT METROPOLITAN WOULD CALL ON THEIR STORAGE AND, AND BE ESSENTIALLY BE ABLE TO PROVIDE US, UH, THE, THE AMOUNT THAT WE NEED.

AND AGAIN, IN A FIVE YEAR DROUGHT, SAME AMOUNT OF SUPPLY.

AND SO THIS IS NOT, UM, SO THIS, THIS GOES TO THE PART OF COORDINATION IN THE PLANNING PROCESS IS, UH, METROPOLITAN SIMILARLY DOES A URBAN WATER MANAGEMENT PLAN.

AND IN THEIR URBAN WATER MANAGEMENT PLAN, THIS IS, UM, THEY HAVE REPORTED THAT THEY PLAN TO BE RELIABLE IN A 25 YEAR PERIOD.

AND SO WE TAKE THEIR PLANNING ASSUMPTIONS, PLUG, PLUG THAT INTO OUR PLANNING ASSUMPTIONS, AND THAT'S WHY WE CAN REPORT HERE THAT IN A FIVE YEAR DROUGHT, WE DON'T ANTICIPATE A DECREASE IN, UH, SUPPLY AVAILABILITY.

AND SO WHAT YOU'LL SEE NOW IS THERE'S A, A DELTA A DEVIATION BETWEEN OUR AVAILABLE SUPPLY AND THE ANTICIPATED DEMAND.

UH, AND, AND, AND THAT'S HOW WE ARE ABLE TO REPORT THAT IN OUR 2025, UH, URBAN WATER MANAGEMENT PLAN, WE ANTICIPATE BEING RELIABLE THROUGH THE 2020, UH, 2050, UH, PLANNING HORIZON.

SO I, I SPOKE ABOUT THE WATER SHORTAGE CONTINGENCY PLAN.

ESSENTIALLY, WHAT DO WE DO IF WE DO FIND OURSELVES IN SHORTAGE? UM, SO THIS WAS PART OF THE LEARNINGS OF THE LAST DROUGHT, REALLY.

UH, IN THE LAST DROUGHT, UH, WHEN THE STATE WAS FACING A WATER CRISIS, THE STATE TRIED TO CALL ON DIFFERENT AGENCIES TO CONSERVE A CERTAIN PERCENTAGE.

AND WHAT THEY FOUND WAS THAT EVERY WATER AGENCY ESSENTIALLY HAD DIFFERENT METRICS, DIFFERENT WAYS, UH, THAT THEY SET OUT THEIR SHORTAGE STAGES.

AND SO THEY DIDN'T KNOW ACROSS THE AGENCIES, OKAY, I NEED YOU TO DO A LEVEL ONE, I NEED YOU TO DO A LEVEL TWO.

THIS, UH, REQUIREMENT URBAN WATER MANAGEMENT PLAN ACTUALLY STANDARDIZES THE SHORTAGE STAGES ACROSS ALL AGENCIES IN THE STATE.

AND SO NOW WHEN WE'RE, UH, WE'RE TALKING THE SAME LANGUAGE AS FAR AS, UH, WHAT DOES A STAGE ONE, UH, SHORTAGE MEAN? AND THAT ESSENTIALLY EQUATES TO A 10% SHORTAGE.

STAGE TWO IS A 20% STAGE THREE 30%, UH, 40%, 50%, AND THEN 50 PLUS PERCENT AT THE STAGE SIX.

AND SO, UH, WHAT I HIGHLIGHT HERE ON THE RIGHT IS JUST A COUPLE OF THE, THE KEY SHORTAGE MEASURES, AND WHEN IT REALLY COMES TO REDUCING WATER USAGE, UH, THE, THE MOST EFFECTIVE IS OUTDOOR, UH, IRRIGATION.

AND SO, UH, ESSENTIALLY WE GO FROM MORE, UH, ALLOWABLE WATERING DAYS DOWN TO LESS WATERING DAYS AS WE, UH, ESCALATE THROUGH THROUGH THE, UM, SHORTAGE STAGES.

BUT IMPORTANTLY, I DO WANNA HIGHLIGHT FOR THE BOARD THAT WE DON'T HAVE A, ACTUALLY ANYTHING DEFINED BEYOND, UH, STAGE FOUR OR BEYOND STAGE THREE, WE DON'T HAVE STAGE FOUR DEFINED.

AND THAT WAS THE DECISION AT THAT TIME, UH, THAT AS, AS WE ESCALATE INTO A STAGE TWO OR STAGE THREE, UM, THAT THE BOARD WOULD DELIBERATE AT THAT TIME BASED ON, YOU KNOW, CONDITIONS WE'RE IN, WHAT TYPE OF ADDITIONAL RESTRICTIONS THAT THAT, UM, WOULD BE, UH, DESIRABLE OR NOT, I SHOULDN'T SAY DESIRABLE.

NONE OF THESE RESTRICTIONS ARE DESIRABLE, BUT, UH, WHICH, UH, RESTRICTIONS WE WOULD BE, UM, MOST LIKELY TO IMPLEMENT.

[00:25:01]

UH, SHOULD WE, UH, START ESCALATING THROUGH THOSE SHORTAGE STAGES? THAT WOULD BE A CONVERSATION THAT WE COME BACK TO THE BOARD FOR DIRECTION ON, UH, WHAT GOES INTO THOSE NEXT STAGES, UM, WITH STAFF RECOMMENDATIONS, OF COURSE.

SO FINALLY, UH, WHAT IS THE, THE PROCESS MOVING FORWARD, NEXT STEPS? UH, SO HERE WE ARE TODAY ON MAY 14TH, A PRESENTATION OF THE RESULTS OF THE URBAN WATER MANAGEMENT PLAN ON SUNDAY, WE ACTUALLY WILL, UH, BE PUTTING A NOTICE IN THE PAPER, UH, THAT, UM, WITH A LINK TO THE DRAFT URBAN WATER MANAGEMENT PLAN FOR PUBLIC COMMENT, PUBLIC REVIEW, UH, AND NOTIFYING EVERYBODY THAT THERE WILL BE A PUBLIC HEARING ON, UH, JUNE 4TH.

AND SO ESSENTIALLY THAT'S THE OPPORTUNITY FOR THE PUBLIC TO COME AND, UM, PROVIDE ANY COMMENTS THAT THEY MAY HAVE, UH, ON THE PLAN AND FOR STAFF TO TAKE THAT INPUT AND, UH, INCORPORATE, UH, ANY CHANGES IF NEEDED.

AND SO, UM, IT IS POSSIBLE THERE COULD BE COMMENTS, UH, BUT IF THERE ARE NO COMMENTS OR NO CHANGES NECESSARY TO, UH, TO THE URBAN WATER MANAGEMENT PLAN, IT IS ALSO POSSIBLE FOR THE BOARD TO GO AHEAD AND ADOPT THE URBAN WATER MANAGEMENT PLAN AT THAT SAME JUNE 4TH MEETING.

IF THERE ARE COMMENTS AND CHANGES NECESSARY, UH, WE HAVE PLANNED, UH, FOR TIME IN THE SCHEDULE TO ALLOW FOR AN ADDITIONAL BOARD MEETING AT THE, UH, JUNE 18TH MEETING TO ADOPT, UH, THE PLAN, UH, AT, AT A LATER DATE AND IF NEED BE, AND AGAIN, ALL, ALL IN, UH, GOAL TO SUBMIT BY THE JULY 1ST DEADLINE.

SO WITH THAT, INCLUDE MY PRESENTATION AND OPEN TO ANY QUESTIONS.

GREAT.

UH, THANK YOU VERY MUCH, DEAN, UH, APPRECIATE THAT.

UM, AND I DO HAVE A COUPLE QUESTIONS.

ANY PUBLIC COMMENT? OKAY.

ANY COMMISSIONER COMMENT, THEY, THEY WILL REVIEW AND APPROVE, UH, THE PLAN ESSENTIALLY FOR COMPLIANCE.

AND SO THERE'S A LONG CHECKLIST.

IT'S, UM, THE REQUIREMENTS ARE SET IN THE WATER CODE, CALIFORNIA WATER CODE.

SO THEY HAVE A CHECKLIST OF, DID YOU DO THIS? DID YOU DO THAT? AND THEY REVIEW OUR PLAN FOR COMPLETENESS AND, AND WE'LL EVENTUALLY, IF IT'S NOT COMPLETE, THEY'LL GIVE US FEEDBACK FOR US TO MODIFY AND, AND RESUBMIT.

AND, AND WHAT HAPPENS IF THE PLAN ISN'T APPROVED? IS THERE A PROCESS OR THEY WITHHOLD FUNDS OR IN THE END THAT IS THE LEVER? I GUESS, THAT, UM, IF YOU DO NOT SUBMIT A PLAN THAT THAT IS TECHNICALLY, YOU MAY NOT BE ELIGIBLE FOR, FOR STATE GRANT FUNDS, UH, BUT THEY TYPICALLY WORK WITH YOU TO MODIFY AND, UH, AND, AND AMEND YOUR PLAN SUCH THAT IT IS ACCEPTABLE.

GREAT.

UM, I THINK THAT'S, THAT'S ALL MY, MY QUESTIONS.

UH, GREAT PRESENTATION.

THANK YOU.

THANK YOU.

THANK YOU, COMMISSIONER.

UM, DEAN, DO, DO, UM, WE, THIS GOES TO THE DEPARTMENT OF WATER RESOURCES, CORRECT.

AND THEN DO WE LOOK, WE LOOK AT METS PLAN, AND THEN WE LOOK AT OURS, AND THEN WE KIND OF PUT THINGS TOGETHER AND THEN WE SEND IT UP.

IS THAT CORRECT? CORRECT.

YEAH.

SO, SO THE COORDINATION AND, UM, INTEGRATION OF METS PLAN, UH, HA ESSENTIALLY HAS GONE INTO THIS ANALYSIS.

AND SO THAT'S WHERE MET STAFF DOES A REALLY GREAT JOB OF GETTING THEIRS COMPLETED REALLY EARLY IN THE TIMELINE SO THAT THEIR MEMBER AGENCIES CAN INCORPORATE THEIR FINDINGS INTO THEIR SUBSEQUENT MEMBER AGENCY OR EVEN, YOU KNOW, SUB RETAILER URBAN WATER MANAGEMENT PLANS.

SO, AND SOME OF WHAT WE DO HERE, UM, WE UTILIZE IN OUR WATER RESOURCES PLAN, IS IT KIND OF, IT'S KIND OF VICE VERSA.

YEAH.

WE, WE, YEAH.

AND THAT'S WHY, UM, WE, WE WERE, WE STARTED THE URBAN, UH, WATER RESOURCES PLANNING PROCESS LAST YEAR TO, IN INPUT INTO THIS, THIS PROCESS.

UM, SO ON THE SUPPLY SYSTEM SUPPLIES, UM, DOES THAT TAKE INTO ACCOUNT LIKE CLIMATE CHANGE AND IS IT, THIS SEEMS PRETTY ROSY, IS IT? IT DOES.

UH, AND SO IT DOES FACTOR IN CLIMATE CHANGE AND, YOU KNOW, KEY TO METROPOLITAN'S ASSUMPTIONS, ARE THERE STORAGE AMOUNTS? AND YOU, YOU, YOU SPOKE TO IN THE INTENTIONALLY CREATED STORAGE AND LIKE MEAD, UM, THEIR DIFFERENT WATER BANKING.

UM, AND SO THE, THE WAY THAT METROPOLITAN HAS OUTLINED IT IS THAT EVEN WITH THE, THE UN OPTIMISTIC ASSUMPTIONS THAT THEY DO ANTICIPATE HAVING SIGNIFICANT ENOUGH STORAGE TO BE ABLE TO WITHSTAND A FIVE-YEAR DROUGHT.

OKAY, PERFECT.

SO THAT, THAT REALLY, I, I MISSED THAT BECAUSE THIS IS SYSTEM SUPPLIES.

IT'S NOT A FORECAST OF WHERE WE IT'S NOT A SINGLE YEAR.

YEAH.

OR IT'S NOT EVEN FIVE YEARS TO SAY, LIKE I SHOWED IN THE, UM, WATER SUPPLY UPDATE.

THEY HAVE RECORD AMOUNTS OF STORAGE RIGHT NOW, AND THAT SHOULD BE ABLE TO WITHSTAND MULTIPLE YEARS.

UM, AND SO THAT'S, THAT'S KIND OF THE ASSUMPTION IS THAT IT'S, IT'S NOT TO SAY THAT THOSE SINGLE YEARS OF SUPPLY, IT'S TO LOOK AT THEIR SYSTEM-WIDE AVAILABLE SUPPLIES.

OKAY.

AND, AND DIDN'T WE AT ONE POINT GO INTO ONE OF, DID WE GO TO STAGE THREE EVER? SO, SO AS PART OF THE

[00:30:01]

AND, AND, UM, AROUND THAT TIME IS WHEN WE STARTED DEVELOPING THE ADDITIONAL, UH, RECOMMENDATIONS.

AND SO WE HAVE THOSE STASHED AWAY AND READY, UH, SHOULD WE NEED THOSE, UH, TO BE DEFINED.

BUT, YOU KNOW, I, I THINK THE CONCERN AT THE TIME WAS A LOT OF THOSE ARE, ARE STARTING TO GET RATHER DRACONIAN IN, IN WHAT NEEDS TO HAPPEN.

AND SO RATHER THAN, I GUESS, GET TOO AHEAD OF THAT IS, IS WE WERE WAITING TO, TO MAKE THOSE DECISIONS WHEN IT WAS NECESSARY.

OKAY.

GREAT.

THANK YOU VERY MUCH FOR THAT.

UH, VERY GOOD REPORT.

UM, DO WE HAVE ANY PUBLIC COMMENT? DID I ASK THAT COMMISSIONER COMMENT? WE DON'T HAVE ANYMORE.

UH, SO WE WILL GO AHEAD AND ALL THOSE IN FAVOR SAY AYE.

AYE.

ANY OPPOSED? MOTION CARRIES.

THANK YOU.

THANK YOU, DEAN.

ALL RIGHT, LAST, UH, WE HAVE ITEM NUMBER FOUR,

[4. 26-55129 Recommendation to receive and file a report on the International Swaps and Derivatives Association (ISDA) Master Agreements to provide natural gas price protection.       Suggested Action: Approve recommendation. ]

UH, DO I HAVE A MOTION TO RECEIVE AND FILE? NO SECOND GLORIA? OKAY.

UH, YES.

AND NOW WE WILL CALL ON TONY FOSTER.

ALL RIGHT.

GOOD MORNING COMMISSIONERS.

TODAY I'D LIKE TO WALK THROUGH NATURAL GAS HEDGING, WHAT IT IS, WHY IT MATTERS FOR LONG BEACH UTILITIES, AND HOW IT CAN HELP PROTECT OUR CUSTOMERS FROM COMMODITY PRICE VOLATILITY.

WE'LL COVER SOME MARKET FUNDAMENTALS, REVIEW OUR RECENTLY SUCCESSFUL HEDGING EXPERIENCE, AND DISCUSS A PRACTICAL PATH FORWARD.

TODAY'S DISCUSSION REALLY HAS THREE PURPOSES.

FIRST, PROVIDE A STRAIGHTFORWARD OVERVIEW OF A NATURAL GAS HEDGING SCENARIOS AND THE MARKET CONDITIONS THAT MAKE IT RELEVANT.

SECOND, TO DISCUSS A NEAR TERM OPPORTUNITY TO POSITION OURSELVES FOR ANOTHER WIN WINTER HEDGING STRATEGY.

AND THIRD, TO BEGIN FRAMING HOW A BROADER HEDGING POLICY SHOULD BE GOVERNED THROUGH THE STRATEGIC PLANNING PROCESS.

BEFORE GETTING INTO HEDGING TOOLS, IT HELPS TO LEVEL SET ON HOW NATURAL GAS PRICING WORKS.

MOST COMMODITY PRICING STARTS WITH HENRY HUB, WHICH IS THE NATIONAL BENCHMARK OUT OF LOUISIANA.

BUT LONG BEACH DOESN'T BUY GAS THERE.

WE BUY GAS IN SOUTHERN CALIFORNIA WHERE LOCAL PIPELINE CONSTRAINTS, STORAGE CONDITIONS, AND REGIONAL DEMAND CAN CREATE VERY DIFFERENT PRICING.

SO WHILE HENRY HUB IS THE BASELINE, A REAL EXPOSURE IS MUCH CLOSER TO HOME.

THIS CHART TELLS THE STORY PRETTY CLEARLY.

NATURAL GAS PRICES CAN REMAIN CALM FOR LONG STRETCHES AND THEN MOVE DRAMATICALLY IN A VERY SHORT PERIOD OF TIME.

THOSE SPIKES ARE EXACTLY WHAT CREATES RISK FOR UTILITIES AND CUSTOMERS.

WE'RE NOT TRYING TO PREDICT EVERY MARKET MOVE PERFECTLY.

THE GOAL IS TO PREDICT AND PROTECT AGAINST EXTREME EVENTS THAT CAN MATERIALLY AFFECT CUSTOMER BILLS.

GAS PRICES MOVE FOR A LOT OF REASONS, WEATHER, STORAGE, AVAILABILITY, PIPELINE OUTAGES, ELECTRIC GENERATION DEMAND, AND A BROADER MARKET SENTIMENT ABOUT FUTURE SUPPLY CONDITIONS.

THE CHALLENGE IS THAT THESE FACTORS CAN SHIFT QUICKLY.

WHEN THEY DO, PRICES CAN ESCALATE JUST AS QUICKLY.

THAT VOLATILITY IS WHAT MAKES RISK MANAGEMENT IMPORTANT, NOT JUST BECAUSE PRICES ARE ALWAYS HIGH, BUT BECAUSE WHEN THEY SPIKE, THE IMPACTS CAN BE SEVERE.

TODAY OUR GAS PORTFOLIO IS DIVERSIFIED FROM A SUPPLY PERSPECTIVE, WHICH IS HELPFUL, BUT MOST OF THAT SUPPLY STILL ULTIMATELY FLOATS WITH MARKET PRICING.

EVEN OUR PREPAY CONTRACT IS INDEXED TO MARKET COMMODITY MARKETS.

SO DIVERSIFICATION HELPS WITH SUPPLY SECURITY, BUT IT DOESN'T FULLY SOLVE COMMODITY PRICE RISK WITHOUT A HEDGING OVERLAY, CUSTOMERS REMAIN EXPOSED WHEN MARKETS BECOME UNSTABLE.

AT ITS CORE, HEDGING IS SIMPLY A RISK MANAGEMENT TOOL.

IT ALLOWS US TO REDUCE EXPOSURE TO EXTREME PRICE VOLATILITY BY SHIFTING SOME OF THAT RISK TO A FINANCIAL COUNTERPARTY.

THIS ISN'T SPECULATION AND IT DOESN'T REPLACE OUR PHYSICAL GAS PURCHASING STRATEGY.

IT'S AN OVERLAY DESIGNED TO IMPROVE PRICE STABILITY AND HELP PROTECT CUSTOMERS FROM SUDDEN BE SHOPS.

[00:35:02]

FUTURES ARE THE MOST STRAIGHTFORWARD, BUT CAN BE OPERATIONALLY.

RIGID SWAPS ALLOW US TO EXCHANGE FLOATING MARKET EXPOSURE FOR FIXED PRICING, WHICH IS OFTEN MORE PRACTICAL.

OPTIONS PROVIDE PROTECTION WITH MORE FLEXIBILITY, BUT GENERALLY AT A COST.

EACH HAS ADVANTAGES AND TRADE-OFFS DEPENDING ON OUR OBJECTIVES.

TIMING AND MARKET CONDITIONS.

BEFORE IMPLEMENTING ANY HEDGE, WE NEED TO BE CLEAR ABOUT OUR GUARDRAILS.

HOW MUCH EXPOSURE DO WE WANT TO HEDGE? WHICH MONTHS MAKE THE MOST SENSE? HOW MUCH PRICE CERTAINTY DO WE WANT VERSUS MARKET PARTICIPATION? WHAT INDEX ARE WE PROTECTING AGAINST? AND WHAT IS THE COST OF THAT PROTECTION? THESE ARE GOVERNANCE QUESTIONS AS MUCH AS FINANCIAL ONE, AND THAT'S WHERE STRATEGIC PLANNING COMES INTO PLAY.

THIS IS NOT NEW TERRITORY FOR LONG BEACH.

WE'VE SUCCESSFULLY USED HEDGING IN PRIOR YEARS, PARTICULARLY WHEN MARKET CONDITIONS JUSTIFIED IT.

HISTORICALLY, WE FOCUSED ON WINTER MONTHS WHEN USAGE AND EXPOSURE ARE HIGHEST AND TYPICALLY USED A MULTI-YEAR APPROACH TO PROVIDE CONTINUITY AND PRICE STABILITY.

SO THIS IS REALLY ABOUT APPLYING PROVEN PRACTICES THOUGHTFULLY, NOT INVENTING SOMETHING NEW.

IN 2023, AFTER SIGNIFICANT MARKET DISRUPTION, STAFFED MOVED QUICKLY WHEN PRICING CONDITIONS BECAME FAVORABLE AND SECURED A THREE YEAR FIXED PRICE SWAP FOR WINTER PREPAY VOLUMES.

THAT WEIGHTED AVERAGE PRICE WAS ABOUT 62.50 CENTS PER THERM COMPARED WITH MUCH HIGHER MARKET PRICES DURING THE VOLATILE VOLATILITY EVENT, THAT DECISION MATERIALLY STABILIZED CUSTOMER EXPOSURES OVER THE LAST THREE WINTERS.

LET'S TALK ABOUT DIFFERENT TYPES OF HEDGES, BEGINNING WITH A FIXED PRICE SWAP, WHICH IS THE MOST RECENTLY USED HEDGING STRATEGY.

THIS IS THE SIMPLEST HEDGING STRUCTURE TO UNDERSTAND.

INSTEAD OF REMAINING EXPOSED TO MARKET MOVEMENTS, WE LOCK IN A FIXED PRICE FOR A DEFINED PORTION OF OUR SUPPLY THAT CREATES PREDICTABILITY.

THE SOLID BLACK HORIZONTAL LINE, WHICH IS A VALUE WHICH IS VALUABLE FOR CUSTOMERS AND BUDGETING.

THE TRADE OFF, OF COURSE, IS IF THAT PRICE LATER, THIS IS THE INDEX PRICE I'M TALKING ABOUT FALLS BELOW THAT FIXED PRICE.

WE DON'T CAPTURE ALL THAT DOWNSIDE.

THE SOLID BLUE CURVE LINE HERE, YOU CAN SEE THE BROADER MENU OF APPROACHES.

SOME STRATEGIES PRIORITIZE MAXIMUM PROTECTION, BUT COME AT A PREMIUM COST.

OTHERS REDUCE COST, BUT REQUIRE GIVING UP SOME UPSIDE POTENTIAL IF PRICES FALL.

SO THIS REALLY BECOMES A POLICY CHOICE ABOUT AFFORDABILITY, RISKS, TOLERANCE, AND HOW MUCH CERTAINTY WE WANT TO BUY.

A COST CEILING WORKS A BIT LIKE INSURANCE.

IT PROTECTS AGAINST PRICES RISING, RISING ABOVE A DEFINED THRESHOLD WHILE STILL ALLOWING US TO BENEFIT.

IF PRICES STAY LOWER, THAT FLEXIBILITY IS ATTRACTIVE.

BUT LIKE INSURANCE, IT COMES AT A COST.

SO THE QUESTION BECOMES WHETHER THE PREMIUM IS JUSTIFIED BY THE PROTECTION IT PROVIDES.

A CALLER CREATES A PRICING BAND, WE GET PROTECTION AGAINST HIGH PRICES, BUT IN EXCHANGE, WE GIVE UP SOME BENEFIT.

IF PRICES DROP TOO LOW, THIS LOWERS THE COST RELATIVE TO PR, TO A PURE CEILING APPROACH.

AND IT CAN BE A BALANCED OPTION WHEN WE WANT, TO ME, WHEN WE WANT MEANINGFUL PROTECTION WITHOUT PAYING A FULL PREMIUM COSTLESS CALLER.

THIS VARIATION IS INTENDED TO REDUCE OR ELIMINATE UPFRONT PREMIUM COSTS.

THE TRADEOFF IS THAT WE ACCEPT A HIGHER FLOOR, MEANING LESS PARTICIPATION IN LOWER MARKET PRICES, FINANCIALLY EFFICIENT ON PAPER, YES.

BUT WHETHER IT ALIGNS WITH OUR OBJECTIVES DEPENDS ON OUR APPETITE FOR THOSE TRADE-OFFS.

SO STEPPING BACK, THE KEY POINT IS THIS, HEDGING IS A DISCIPLINED CUSTOMER PROTECTION STRATEGY.

IT ALLOWS US TO MAINTAIN OUR EXISTING PHYSICAL GAS PURCHASING APPROACH WHILE ADDING A LAYER OF FINANCIAL PROTECTION AGAINST EXTREME MARKET EVENTS.

TOOL MATTERS.

THE TIMING, GOVERNANCE, AND EXECUTION DISCIPLINE MATTER JUST AS MUCH.

SO THE PROPOSED PATH IS FAIRLY STRAIGHTFORWARD.

TODAY IS ABOUT DISCUSSION AND FEEDBACK.

LATER THIS MONTH, I THINK ON THE 28TH, WE'LL COME BACK TO SEEK BOARD AUTHORIZATION TO ACT IF FAVORABLE MARKET CONDITIONS.

IF AND WHEN FAVORABLE MARKET CONDITIONS EMERGE.

[00:40:02]

SO WITH THAT, TODAY'S RECOMMENDATION IS SIMPLY TO RECEIVE AND FILE THIS REPORT.

THE INTENT IS TO PROVIDE CONTEXT, ENSURE TRANSPARENCY, AND PREPARE THE BOARD FOR THE FORMAL AUTHORIZATION REQUEST THAT WOULD ALLOW STAFF TO ACT APPROPRIATELY IF THE MARKET CONDITIONS WARRANT.

AND THAT CONCLUDES MY REPORT, AND I'M OPEN FOR QUESTIONS.

THANK YOU.

UH, ANY PUBLIC COMMENT? SEEING NONE, ANY COMMISSIONER COMMENT? COMMISSIONER? YEAH.

THANK YOU FOR THE, THE REPORT.

UM, A LOT TO TAKE IN.

I'M JUST CURIOUS TO KNOW WHAT IS OUR, AND IF YOU MAY ADDRESS IT, FORGIVE ME, BUT, UH, WHAT IS THE CURRENT HEDGING STRATEGY? OR IS THERE YES, YES, THERE IS.

SO THAT'S THE 70% FIXED, AND THEN YOU WANNA GO BACK TO THAT SLIDE, YOU'RE SPOT ON? SURE.

IT'S A FIXED PRICE SWAP.

I THINK I PASSED IT.

WHAT DO WE COVER? FIXED PRICE SWAP HERE.

IT'S, SO IT'S A FIXED PRICE SWAP.

SO WE HEDGE ONLY DURING THE WINTER MONTHS BECAUSE THAT'S WHEN PEOPLE USE THE MOST GAS, AND THAT'S WHEN TA GAS TENDS TO BE MORE VOLATILE.

SO THAT RUNS FROM NOVEMBER THROUGH MARCH.

OKAY.

AND OF THOSE MONTHS, WE APPLY THE HEDGE ONLY TO OUR PREPAID VOLUMES, WHICH LIKE YOU SAID IS 70% OF OUR SUPPLY.

SO WE'RE NOT HEDGING EVERYTHING THAT COMES IN, BUT WE'RE HAVING HEDGING WHAT IS AN APPROPRIATE AMOUNT AGAINST THAT VOLATILITY LEVEL.

SO, UH, WE'VE DONE THAT FOR THE LAST THREE WINTERS.

IT PROVIDES PROTECTION, UH, WHICH IS COMFORTING TO KNOW BECAUSE AS YOU RECALL, IN JANUARY OF 23, WE WERE NOT HEDGED AND THAT WAS A PROBLEM.

SO, UH, DIANA WOULD LIKE TO SAY SOMETHING, IF I COULD JUMP IN.

I'M GONNA GO BACK TO ONE SLIDE HERE.

SO THIS IS THE, THE FIXED PRICE SWAP.

AND SO, UH, THAT'S WHAT WE DID.

BUT FUNCTIONALLY, I'M GONNA WALK OVER HERE.

FUNCTIONALLY, WE AGREED TO PAY THIS AMOUNT IN THE DOTTED LINE.

WE, AND WE AGREED TO THIS PRICING FOR THE NEXT THREE WINTERS BACK IN 2023.

SO WITHOUT KNOWING THE MARKET COST OF GAS FOR THE NEXT THREE WINTERS, WE CHOSE TO PAY A PRICE THAT WAS ROUGHLY THE SAME OR VERY SIMILAR AS WHAT OUR CUSTOMERS WERE PAYING IN 2021.

NOW, TO BE FAIR, AS TONY MENTIONED, HEDGING IS LIKE INSURANCE.

SO YOU MIGHT END UP PAYING A LITTLE BIT MORE THAN YOU WOULD'VE OTHERWISE IF YOU WERE COMPLETELY UNPROTECTED, BUT YOU PROTECT YOURSELF BECAUSE YOU WANT TO MINIMIZE AND STABILIZE COSTS, UM, FOR YOUR HOUSEHOLDS, FOR US, AND FOR OUR, FOR OUR CUSTOMERS.

SO WE WENT INTO THE MARKET, WE DIDN'T JUST TAKE THE FIRST, UM, STRIP.

THEY, THEY CALLED THE, THE PRICING STRIPS.

WE DIDN'T TAKE THE FIRST STRIP THAT WAS OFFERED.

WE WAITED UNTIL THE MARKET WOULD SUPPORT THE COST THAT WE THOUGHT OUR RATE PAYERS COULD, UM, COULD BEAR, WHICH WAS IN 2023.

WE SAID IN 2023, IF WE CAN GUARANTEE THAT FOR THE NEXT THREE WINTERS, OUR CUSTOMERS ARE NOT GONNA BE PAYING ANY MORE THAN WHAT THEY WERE PAYING IN 2021, WE THINK THAT THAT IS A STABLE PRICE.

AND SO THAT IS WHAT WE CHOSE TO DO.

WHAT ENDED UP HAPPENING OVER THE NEXT THREE WINTERS IS THAT PRICES HAVE BEEN PRETTY LOW.

AND SO THERE WAS A COST TO THAT, BUT THE COSTS WERE SO MINIMAL THAT THERE WERE NO COMPLAINTS, WHEREAS WHAT HAPPENED IN JANUARY, 2023 COULD HAPPEN LITERALLY IN A MONTH'S TIME AS IT DID THEN.

AND THEN EVERYONE IS IN A BIND AND THERE'S NOTHING YOU CAN DO ABOUT IT WHEN THAT HAPPENS.

YEAH, THANK YOU FOR THAT, THAT CLARIFICATION.

UM, THAT, THAT HELPS A LOT.

UM, YEAH, SO THE ISSUE IS TRYING TO GET IT RIGHT.

I MEAN, THIS IS CRYSTAL BALL TYPE STUFF, AND AS DIANA SAID, WITH OUR COUNTERPARTIES, AND THERE'S MULTIPLE OF THEM, WE HAVE, WE HAVE THEM RUN FUTURE STRIPS AT VARIOUS TIMES BECAUSE THEY'RE LOOKING OUT THREE YEARS IN THE FUTURE, GOING THROUGH ALL THEIR MODELING EXERCISES AND SETTING A FIXED PRICE WHERE THEY THINK, UH, IS APPROPRIATE, THAT IT MAKES SENSE FOR US TO BUY AND FOR US, THEM, FOR THEM TO SELL.

AND, AND THEN THE SECOND PART OF MY QUESTION IS KINDA RELATED, BUT NOT, BUT I MEAN, OBVIOUSLY, YOU KNOW, PAYING ATTENTION TO WHAT'S HAPPENING ON AN INTERNATIONAL LEVEL, UM, WITH, WITH, YEAH, OIL SUPPLY AND, AND, UM, HOW DOES THAT AFFECT

[00:45:01]

SO WITH ALL THE GEOPOLITICAL ACTIVITY AND WITH LIMITED OIL SUPPLY, WITH OIL EXTRACTION COMES NATURAL GAS PRODUCTION.

WE WERE BRACED FOR SIGNIFICANTLY INCREASES IN THE GAS MARKET.

COUNTER TO THAT WAS WEATHER.

THESE LAST FEW WINTER SEASONS HAVE BEEN UNSEASONABLY WARM.

I DON'T KNOW, UH, HOW MUCH CLIMATE CHANGE PLAYS INTO IT.

IT SEEMS LIKE IT IS BECAUSE THERE'S A DEFINITE UP TREND IN WARMER WINTERS YEAR OVER YEAR.