HomeMy WebLinkAbout2001-06 DRAFT
FIL
HE ETHE SECRETARY
MINUTES OF STEERING COMMITTEE MEET/l�i OFFICE OF
waE COUNTY gEgRATIOH DISTFIICT
Wednesday, June 27, 2001 JUL 18 201
A meeting of the Steering Committee of the Orange County Sanitation District was--
- - -
held on Wednesday, June 27, 2001 at 5 p.m., in the District's Administrative Office.
(1) The roll was called and a quorum declared present, as follows:
STEERING COMMITTEE MEMBERS: OTHERS PRESENT:
Directors Present: Thomas L. Woodruff, General Counsel
Norm Eckenrode, Chair Don Hughes
Peter Green,Vice Chair
Pat McGuigan, Chairman, OMITS Committee STAFF PRESENT:
Steve Anderson, PDC Committee Blake Anderson, General Manager
Shirley McCracken, Chairman, FAHR Committee Bob Ghirelli, Director of Technical Services
Jim Silva, County Supervisor Bob Ooten, Director of Operations and
Alice Jempsa, Director, Guest of Chair Maintenance
Mike Moore, ECM Manager
Directors Absent: Lisa Lawson, Communications Manager
Jean Tappan, Committee Secretary
(2) APPOINTMENT OF CHAIR PRO TEM
No appointment was necessary.
(3) PUBLIC COMMENTS
There were no comments by any member of the public.
(4) RECEIVE. FILE AND APPROVE MINUTES OF PREVIOUS MEETING
The minutes of the May 23, 2001 Steering Committee meeting were approved as drafted.
(5) REPORT OF THE COMMITTEE CHAIR
Committee Chair Norm Eckenrode reminded the members of the Legislators' Breakfast meeting
scheduled for Friday, June 29,2001. There will also be a Directors Workshop on Saturday,July 14
between 8 and 11. The main topic for discussion will be levels of treatment. The CASA Annual
Conference is being held in San Diego August 15-18 in San Diego. The deadline for registering is
July 19.
This afternoon, Director Jim Silva hosted a meeting with Huntington Beach leaders and Orange
County Health Care Agency staff to discuss beach issues with District staff. Director Silva reported
Minutes of the Steering Committee
Page 2
June 27,2001
that the meeting was very informative and thanked the staff for their efforts. The group decided that
they would meet monthly during the summer for updates on the beach monitoring and testing
program.
Chair Eckenrode announced that there isn't a need for a closed session. He also stated that he will
be on vacation for the next couple of weeks and Vice Chair Peter Green will be Chair pro tam in his
absence.
Director Alice Jempsa, Los Alamitos, was welcomed as the Chair's guest for this meeting.
(6) REPORT OF THE GENERAL MANAGER
A. Huntington Beach Status Report
General Manager Blake Anderson reported that the context of the testing at
Huntington Beach includes the application for the permit renewal. He said that the
choices the District has made up to today are because of considering air, land and
water impacts and balancing them to make the most environmental sense. Bob
Ghirelli said that the Board approved an interim budget of$2.9 million for the
testing/monitoring program and it now appears that the final number will be closer to
$5-5.1 million. Two of the six 48-hour surveys have been completed and he
described the preliminary results from the June 19 testing. What it shows so far is that
the beach is hot; the water is not.
B. Public Opinion Survey Status Report
Lisa Lawson stated that the survey is underway. The results will help staff evaluate
the public's understanding of issues of importance to the District and what will be
necessary to educate the public through our outreach program.
C. Btasolids Short-term Options Status Report
Mr. Ghirelli and Mike Moore updated the members on the Impacts to the District's
biosolids disposal program now that Class B biosolids will be banned for land
application in 2003 in Kam County and now in Riverside County. In order to use the
biosolids on these land applications, they will have to meet Class A standards. A draft
report has been submitted that looked at many options and it recommends further
study on four technologies: composting; chemical stabilization; rail haul to Arizona;
and heat drying technologies. Staff is evaluating the draft report and will make a
recommendation to the OMITS Committee in August or September. Whichever option
is chosen, the costs for biosolids disposal will be about double what is now being
spent.
D. GW RS Operating Agreement
Mr. Anderson updated the members on the status of the operating agreement for the
GW RS project. Terms are still being negotiated, and Mr. Anderson explained some of
the issues that have not been resolved. He stated that he was confident agreement
will be reached.
Minutes of the Steering Committee
Page 3
June 27, 2001
E. LEAD Program
Mr. Anderson reported that 70 supervisors, managers and department heads
completed the first leadership development program. Chapman University facilitated
this effort. The consensus after the training was that all employees would benefit from
this type of training. Mr. Anderson said that he is discussing a similar voluntary two-
day workshop for electeds in Orange County with the heads of other Orange County
agencies.
F. Space Utilization Study
The conceptual study for utilizing and improving workspace in the Administration
Building has been completed. Staff is reviewing the study's recommendations and a
formal report will be forthcoming-
G. Public Information/Outreach Effort for GW RS Project
Mr. Anderson provided a heads-up on the status of the public information/outreach
program. Additional funds will be requested at the Board meeting for interim services
until the four-year contract is awarded in September. The estimated annual level of
effort is$900,000 per year.
(7) REPORT OF GENERAL COUNSEL
General Counsel Tom Woodruff updated the members on the history leading to the action on the
Board agenda on the proposed agreement with Southern California Edison that addresses
renewable energy pricing and payment issues.
(8) DISCUSSION ITEM
A. Committee Changes Authorized by PDC Committee
Mr.Anderson reviewed the changes to the agenda report process that the PDC
Committee approved at its last meeting. The reasons for the changes are to
streamline and simplify the agenda reports and to help run the meeting more
efficiently. The changes will be presented to the OMTS and FAHR Committees in
August and if they accept the changes, the new agenda report form will be
implemented beginning in September.
(9) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY
A. Director Green suggested that staff consider a sergeant-at-arms for the Board
meetings. Arrangements will be made for security services.
B. Directors Pat McGuigan and Steve Anderson asked for darification on two items on
the Board agenda.
(10) MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A
SUBSEQUENT MEETING
There were none.
Minutes of the Steering Committee
Page 4
June 27, 2001
(11) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR
ACTION AND/OR STAFF REPORT
There were none.
(12) CONSIDERATION OF UPCOMING MEETINGS
The next Steering Committee meeting is scheduled for July 18, 2001 at 5 p.m.
The next Board Meeting is scheduled for July 18, 2001 at 7 p.m.
(13) CLOSED SESSION
There was no closed session.
(14) ADJOURNMENT
The Chair declared the meeting adjourned at 6:44 p.m.
Submitted by:
Jeffirappan
SqWng Committee Secretary
Giwpmelpeneel5leemq rnmmm«WIwM701 SC.0 Gme
STATE OF CALIFORNIA )
)SS.
COUNTY OF ORANGE )
Pursuant to California Government Code Section 54954.2, 1 hereby certify that the Notice
and the Agenda for the Steering Committee meeting held on Wednesday, June 27, 2001, was duly
posted for public inspection in the main lobby of the District's offices on Friday, June 22, 2001.
IN WITNESS WHEREOF, I have hereunto set my hand this 27th day of June, 2001.
�✓ 4"'
Penny Kyle, SeErbtatey of the B rd of Directors of
Orange County Sanitation Dis ct
Posted: June 22 , 2001, 7:35 a.m.
By
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CI ORANGE COUNTY SANITATION DISTRICT
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BOARD SECRETARY (2)
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mailing address:
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NOTICE OF MEETING
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92728.8127 OF THE
sD.ec address: STEERING COMMITTEE
108"Ellis Avenue
Faonwin Valley CA
92706 7016 ORANGE COUNTY SANITATION DISTRICT
Member
a a WEDNESDAY, JUNE 27, 2000 - 5 P.M.
Cities
Anehegm DISTRICT'S ADMINISTRATIVE OFFICE
Brno
Buena Perk 10844 ELLIS AVENUE
,un:a'v,`e F FOUNTAIN VALLEY, CALIFORNIA 92708
Fullerton
Garden Grove
Huntington Beach
Irvine
La Hehre
La Palma A regular meeting of the Steering Committee of the Board of Directors of
nmrgort se
Los,i,Batch
t Orange County Sanitation District, will be held at the above location, date and
9ange time.
Racenhs
Bents Ana
Beal Beech
Stanton
Tu.&n
Villa Park
Yenta Linda
Caanty m Orange
U.lcsry Districts
Ca,,. MCaJ
Midway Dry
Water Districts
Irvine Panch
To maintain worldolass Ieadarsh,in waate.ta,and water resource management.
STEERING COMMITTEE AND BOARD MEETING DATES
FOR THE NEXT TWELVE MONTHS
Wednesday, July 18, 2001*
Wednesday, August 22, 2001
Wednesday, September 26, 2001
Wednesday, October 24, 2001
Wednesday, November28, 2001
Wednesday, December 19, 2001*
Wednesday, January 23, 2002
Wednesday, February 27, 2002
Wednesday, March 27, 2002
Wednesday, April 24, 2002
Wednesday, May 22, 2002
Wednesday, June 26, 2002
*Tentatively rescheduled from regular fourth Wednesday.
STEERING COMMITTEE
(1) Roll Call:
Meeting Date: June 27, 2001 Meeting Time: 5 p.m.
Meeting Adjourned:
Committee Members
Norm Eckenrode, Chair
Peter Green,Vice Chair
Steve Anderson, Chair, PDC Committee
Pat McGuigan, Chair, OMTS Committee
Shirley McCracken, Chair, FAHR Committee
Jim Silva,Supervisor
Others
Alice Jempsa, Guest Director
Thomas L. Woodruff, General Counsel
Don Hughes
Staff Present
Blake P. Anderson, General Manager.................................
Greg Mathews, Assistant to the General Manager.............
Jean Tappan, Secretary.......................................................
Bob Ghirelli, Director of Technical Services........................
Gary Streed, Director of Finance.........................................
Lisa Lawson, Communications Manager.............................
c: Lenora Crane
AGENDA
REGULAR MEETING OF THE STEERING COMMITTEE
ORANGE COUNTY SANITATION DISTRICT
WEDNESDAY, JUNE 27, 2001 AT 5 P.M.
ADMINISTRATIVE OFFICE
10844 Ellis Avenue
Fountain Valley, California
In accordance with the requirements of California Government Code Section 54954.2, this agenda has
been posted in the main lobby of the District's Administrative Office not less than 72 hours prior to the
meeting date and time above. All written materials relating to each agenda item are available for public
inspection in the office of the Board Secretary.
In the event any matter not listed on this agenda is proposed to be submitted to the Steering Committee
for discussion and/or action, it will be done in compliance with Section 54954.2(b)as an emergency item
or that there is a need to take immediate action which need came to the attention of the District
subsequent to the posting of the agenda, or as set forth on a supplemental agenda posted not less than
72 hours prior to the meeting date.
All current agendas and meeting minutes are also available via OCSD's
Internet site located at www.ocsd.com. Upon entering OCSD's web site,
please navigate to the Board of Directors section.
(1) ROLL CALL
(2) APPOINTMENT OF CHAIR PRO TEM. IF NECESSARY
(3) PUBLIC COMMENTS
All persons wishing to address the Steering Committee on specific agenda items or matters of
general interest should do so at this time. As determined by the Chairman, speakers may be
deferred until the specific item is taken for discussion and remarks may be limited to three
minutes.
Matters of interest addressed by a member of the public and not listed on this agenda cannot
action taken by the Committee except as authorized by Section 54954.2(b).
Book Page I
-2- June 27, 2001 Agenda
(4) APPROVE MINUTES OF PREVIOUS MEETING
Approve draft minutes of the May 23, 2001 Steering Committee meeting.
(5) REPORT OF COMMITTEE CHAIR
A. Legislators Breakfast, Friday,June 29
B. Directors Workshop, Saturday,July 14, 2001, 8-11 a.m.
C. CASA Annual Conference in San Diego,August 15-18, 2001
(6) REPORT OF GENERAL MANAGER
A. Huntington Beach Status Report
B. Public Opinion Survey Status Report
C. Biosolids Short-tens Options Status Report
D. GW RS Operating Agreement
E. LEAD Program
(7) REPORT OF GENERAL COUNSEL
A. Proposed Agreement with Southern California Edison Company Addressing
Renewable Energy Pricing and Payment Issues
(8) DISCUSSION ITEM (Item A)
A. Report on Committee Changes Authorized by PDC Committee
(9) OTHER BUSINESS COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS IF
ANY
(10) MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A
SUBSEQUENT MEETING
(11) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA
FOR ACTION AND STAFF REPORT
(12) FUTURE MEETING DATES
The next Steering Committee Meeting is scheduled for 5 p.m.,Wednesday,July 18, 2001.
The next Board Meeting is scheduled for 7 p.m., Wednesday,July 18, 2001.
Book Page 2
-3- June 27, 2001 Agenda
(13) CLOSED SESSION
During the course of conducting the business set forth on this agenda as a regular meeting of
the Steering Committee, the Chair may convene the Committee in closed session to consider
matters of pending real estate negotiations, pending or potential litigation,or personnel matters,
pursuant to Government Code Sections 54956.8, 54956.9. 54957 or 54957.6,as noted.
Reports relating to (a) purchase and sale of real property; (b) matters of pending or potential
litigation; (c)employment actions or negotiations with employee representatives; or which are
exempt from public disclosure under the California Public Records Act, may be reviewed by the
Directors during a permitted closed session and are not available for public inspection. At such
time as final actions are taken by the Board on any of these subjects, the minutes will reflect all
required disclosures of information.
A. Conference with General Counsel-Anticipated Litigation - Government Code
Section 54956.9(c), One (1)potential case.
B. Reconvene in regular session
C. Consideration of action, if any, on matters considered in closed session.
(14) ADJOURNMENT
jt
G.IVIRWANGENM\STEORING COMMIT ODWUNN63701 AGENDA,MEETING CALENDAR AND ROLL GALL aHEMDOC
Notice to Committee Members:
For any questions on the agenda or to place items on the agenda, Committee members should contact the
Committee Chair or the Secretary ten days in advance of the Committee meeting.
Committee Chair: Norm Eckenrode (714)993-8261 (Placentia City Hall)
Secretary: Jean Tappan (714)593.7101
(714)962-0356(Fax)
E-mail: Ita DDa nf�OCSd.COm
Book Page 3
DRAFT
MINUTES OF STEERING f'OMMITTEE MEETING
Wednesday, May 23, 2001
A meeting of the Steering Committee of the Orange County Sanitation District was
held on Wednesday, May 23,2001 at 5 p.m., in the Districrs Administrative Office.
(1) The roll was called and a quorum declared present, as follows:
STEERING COMMITTEE MEMBERS: OTHERS PRESENT:
Directors Present: Thomas L. Woodruff, General Counsel
North Eckenrode, Chair Don Hughes
Peter Green, Vice Chair Director Beth Krom, Guest
Pat McGuigan, Chairman, OMTS Committee Director Tony Kawashima, Guest
Steve Anderson, PDC Committee Ryal Wheeler
Shirley McCracken, Chairman, FAHR Committee
Jim Silva, County Supervisor
STAFF PRESENT:
Directors Absent: Gary Streed, Director of Finance
None Bob Ghirelli, Director of Technical Services
Bob Ooten, Director of Operations and
Maintenance
David A. Ludwin, Director of Engineering
Lisa Tomko, Director of Human Resources
Lisa Lawson, Communications Manager
Penny Kyle,Acting Committee Secretary
(2) APPOINTMENT OF CHAIR PRO TEM
No appointment was necessary.
(3) PUBLIC COMMENTS
There were no comments by any member of the public.
(4) RECEIVE. FILE AND APPROVE MINUTES OF PREVIOUS MEETING
The minutes of the April 25, 2001 Steering Committee meeting were approved as drafted.
Book Page 5
Minutes of the Steering Committee
Page 2
May 23, 2001
(5) REPORT OF THE COMMITTEE CHAIR
Committee Chair Norm Eckenrode reported the first round of ocean discharge testing began earlier
in the week. He also reported he attended a Watershed Management Workshop with the Santa
River Watershed Group. One of the major issues discussed was the transition of the Chino dairy
area after the dairies are gone and how to develop the land around the dairies that stay.
(6) REPORT OF GENERAL MANAGER
Gary Slreed, Director of Finance, reported that General Manager Blake Anderson was in
Washington, DC, attending an AMSA conference. It was announced that the District was one of
the recipients of the AMSA Gold Award,which is given to those agencies that meet all discharge
requirements for the year.
Bob Ghirelli, Director of Technical Services, reported on the first series of ocean discharge
testing held earlier in the week. He reported the testing went very well, and approximately 2500
samples were collected during a 24-hour period,which is approximately equal to one half of the
samples the microbiology lab does in one year. Approximately 200 staff members have been
trained for the testing series to be conducted throughout the summer. The overall budget cost
for this project will be in excess of$5 million. One of the major factors not originally included in
the previous budget requests was staff time and labor overhead cost. Staff members expressed
concern that AES does not want to contribute any monies toward this testing as previously
reported.
Mr. Ghirelli briefly discussed ocean discharge issues and reiterated the major issue facing the
Board of Directors would be determining what level of treatment the ocean discharge water
receive, should the current studies determine that the District's discharge is contributing bacteria
to the beach.
Bob Doter, Director of Operations & Maintenance, reported on an accelerated research
schedule for microfiltration treatment technology for ocean discharge. If the level or type of
treatment needs to be changed, microfiltration might prove to be a good alternative to full
secondary treatment at a lower cost. The research project was slated for the next fiscal year but
staff felt it was in the District's best interest to move this project for approval by the Board at the
June Board meeting.
Gary Streed reviewed the possible impact of user rates if the District must change the current
level of treatment to full secondary treatment.
An update was then given to the Directors on staffs response to the Orange County Grand
Jurys report on restaurant grease management. The County of Orange is taking the lead to
develop a response to the Grand Jury and a meeting with the affected cities/agencies has been
scheduled. Response to the report will be due by July 25".
Lisa Lawson, Communications Manager, reported the public opinion survey questions were
being finalized. She also reported that the SARI Line Relocation public participation was going
well. A meeting had been held with the citizen's advisory group,which was successful in
reducing the group's anger and mistrust of the District.
Book Page 6
Minutes of the Steering Committee
Page 3
May 23, 2001
(7) REPORT OF GENERAL COUNSEL
Thomas L. Woodruff, General Counsel, reported a need to add three items to the Closed Session,
needing immediate attention which arose subsequent to the posting of the Agenda. General Counsel
stated that these items could be added pursuant to California Government Code Section
54954.2(b)(2) upon a two-thirds vote of the Committee.
It was moved, seconded and duly carried to: (1)Find that the matters arose subsequent to the
posting of the Agenda, pursuant to authority of California Government Code Section 54954.2(b)(2);
and (2)Add three closed session items, as Item Nos. 13(a)(3), 13(a)(4), and 13(a)(5), to the Agenda,
to wit: Tran, at al. v. Orange County Sanitation District,at al.,Orange County Superior Court Case
No. OOCC05306 (Government Code Section 54956.9); City of Los Alamitos v. Orange County
Sanitation District, at al., Orange County Superior Court Case No. 01CCO2192 (Government Code
Section 54956.9);and Confer with District's Labor Negotiating Team (Thomas L. Woodruff, General
Counsel and Lisa Tomko, Director of Human Resources)re IUOE Local 501 (Government Code
Section 54957.6).
(8) DISCUSSION ITEMS
Committee meetings format was discussed,and discussion centered on streamlining the meetings
and information presented to the Directors in a more efficient manner. it was determined committee
meetings should be limited to a maximum of two hours; presentations should be limited to the times
listed on the agenda; and Directors should contact staff prior to the meeting for answers to specific
questions. It was also suggested that additional workshops be held for newer Directors.
(9) OTHER BUSINESS, COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY
There was no other business discussed.
(10) MATTERS WHICH A DIRECTOR WOULD LIKE STAFF TO REPORT ON AT A
SUBSEQUENT MEETING
There were none.
(11) MATTERS WHICH A DIRECTOR MAY WISH TO PLACE ON A FUTURE AGENDA FOR
ACTION AND/OR STAFF REPORT
There were none.
(12) CONSIDERATION OF UPCOMING MEETINGS
The next Steering Committee meeting is scheduled for June 27, 2001 at 5 p.m.
Book Page 7
Minutes of the Steering Committee
Page 4
May 23. 2001
(13) CLOSED SESSION
The Steering Committee convened at 6:48 p.m. in Closed Session, pursuant to Government Code
Sections 54957.6 and 54956.9,to discuss Agenda Item Nos. 13(a)(1), (2), (3), (4)and (5).
Confidential Minutes of the Closed Session held by the Steering Committee have been prepared in
accordance with California Government Code Section 54957.2,and are maintained by the Board
Secretary in the Official Book of Confidential Minutes of Board and Committee Closed Meetings. No
reportable actions were taken re Agenda Item Nos. 13(a)(1), (2), (3)and (5). The Committee did not
consider Agenda Item No. 13(a)(4), and no report was given.
At 7:00 p.m.,the Committee reconvened in regular session.
(14) ADJOURNMENT
The Chair declared the meeting adjourned at 7:00 p.m.
Submitted by:
Penny NI e
Acting St ering Committee Secretary
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Book Page 8
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WOODRUFF, SP&4DLIN & SMART
A PROFESSIONAL CORPORATION
701 SOUTH PARKER STREET,SUITE SOW•ORANGE.CA 928684760 (714)558-7000 FAX(714)835-7787
DIRECTDIALf (714)560.2605
EMAIL: TLW@MS-LAW COM
June 15, 2001
VIA FACSIMILE & U.S. MAIL
Mr. Bruce L. McCarthy
QF Resources
Southern California Edison Company
2244 Walnut Grove Avenue, Suite 495
Rosemead, CA 91770
Re: Proposed A reement Addressin Renewable EnergyPricingand Pa ment
Issues
Seller: Orange County Sanitation District, Agreement No. QFID No. 1098
Dear Mr. McCarthy:
This letter will serve to confirm a portion of the conversation between myself and
Ms. Elizabeth Matthias of SCE's General Counsel's Office on June 13, 2001,
concerning the above-referenced Agreement. Specifically, this office serves as General
Counsel to the Orange County Sanitation District, and on behalf of our client, we
acknowledge receipt of the proposed Agreement as described above, prepared
specifically for the District and received on June 13, 2001.
The Orange County Sanitation District is a public agency, governed by a Board
of Directors of elected public officials. The authority to execute this Agreement can only
be granted by affirmative action of that Board. The Board is unable to convene prior to
the requested date of June 15, 2001, by which to have the Agreement executed and
returned to your offices. The next meeting of the Board of Directors is scheduled for
June 27, 2001.
This will advise that based upon my review of the Agreement and the related
information, as of this date, we will have this matter placed on the Agenda of the Board
of Directors for June 27, 2001, with a request that the Board take action at that time.
It would be reasonable to expect that the District Board of Directors would accept
and act favorably upon the recommendation of Staff and Office of General Counsel, to
approve this Agreement. As General Counsel, I will recommend that the Agreement be
approved.
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Book Page 9
Mr. Bruce L. McCarthy
Southern California Edison Company
June 15, 2001
Page 2
1 am advised that SCE will be preparing and distributing a third Agreement (in
addition to the one which is the subject of this letter and one for the gas fired co-
generators) shortly, after processing this renewable source producers Agreement.
It seems clear that OCSD neither generally, nor literally meets the criteria of SCE
for either a "gas fired" producer or a renewable fuel source producer. Based on that, we
will wish to evaluate entering into the Excess Capacity Agreement in lieu of the
Renewable Source Agreement. This is particularly important and relevant in light of the
fact that SCE has not provided the District with any proposed Agreement for its Plant
No. 1 Co-Generation Facility, Contract OFID2460.
It is my understanding in my discussion with Ms. Matthias that the presentation of
this letter will allow Edison to grant the District time to schedule this for Board action at
its June 27, 2001 meeting, and to advise Edison of that action on the following day,
June 28, 2001.
If this is not acceptable to Edison, and would cause Edison to take action
effectively barring the District from executing this or a similar Agreement at a later date,
I request that you advise me immediately upon receipt of this letter, or immediately upon
making your determination, but in any event prior to noon on June 15, 2001.
Very truly yours,
WOODRUFF, SPRADLIN & SMART
A Professional Corporation
777Rq/ v/L`
HOMAS L. WCOOODRUFF
TLW:Iam GENERAL UNSEL-OCSD
cc: 114r. B.P. Anderson
Mr. R.J. Ooten
Mr. M. Esquer
Mr. D. Halverson
Ms. P. Kyle
137661\1
Book Page to
LAW OFFICES OF
WOODRUFF, SPRADLIN & SMART
A PROFESSIONAL COPFONAiION
MEMORANDUM
TO: Chairman and Members of the Board of Directors
Orange County Sanitation District
FROM: Thomas L. Woodruff, General Counsel
DATE: June 21, 2001-
RE: Agreement with Southern California Edison Re Purchase and Sale of District
Generated Excess Electricity
This report is submitted as of this date based upon the
most current information available to the District. There
is a very dynamic changing process which will likely
result in some revisions or modification to the facts
contained herein, which will be presented to the Board
verba&at the meeting of June 27 2001.
As you are generally aware, the District in 1991 and 1992, brought on-line our
Central Generation Project, located at each of the treatment plants. These projects are
the large gas fired internal combustion engines, which energize generators for the
production of electricity. The fuel used by the District for the energy source on all the
engines at Plant No. 2 is almost exclusively the digester methane gas produced in the
ordinary course of the District's wastewater treatment process. Plant No. 1 uses about
30% digester gas and 70% natural gas purchased. The District does have time periods
when it produces more electrical energy than it needs and as is more particularly
described below, sells that energy to Southern California Edison, "SCE", pursuant to
two contracts. The electricity is placed in the region-wide grid system for general public
use.
When the District brought the Central Generation Project on-line, we entered into
two separate agreements with SCE described as "As Available Capacity and Energy
Power Purchase Agreements". The Agreement relating to Plant No. 2 was executed
September 9, 1991, and the Agreement for Plant No. 1 was executed July 2, 1992. The
Agreements have a fixed duration of 30 years and provide for the formula upon which
the excess electricity produced by the District is purchased and paid for by SCE. The
pricing of the electricity purchased is based upon what is known in the industry as a
methodology called Short Run Avoided Cost, "SRAC", calculated and as established by
the California PUC. That rate historically has varied depending upon the cost of fuel.
soondenoe
Book Page I I
Chairman and Members of the Board of Directors
June 21, 2001
Page 2
During the first five months of the current fiscal year(FY 'W201), the District sold
and SCE purchased an average of 400,000 Kwh at Plant No. 1 and 550,000 Kwh at
Plant No.2, for a total price of approximately $300,000.00. As we are aware, SCE has
expressed considerable concern over its continued financial viability and there is some
opinion that it could follow with Pacific Gas & Electric "PG&E", and seek protection in
the U.S. Bankruptcy Court. Starting with the November sale of power, SCE has failed
and continues to fail to pay District for power delivered between November 1, 2000 and
March 27, 2001. At the present time, there is a total outstanding balance of
approximately $118,000.00 owing to the District. SCE has paid for all power delivered
since March 27, pursuant to an order of the PUC.
Recognizing that the non-payment was likely to continue for an indefinite period,
the District Staff and Management decided that the Central Generation Project should
be scaled back and turned down with the result that the District has sold drastically
reduced quantities of electricity to Edison, averaging, by example, approximately 30,000
Kwh at Plant No. 1, and 15,000 at Plant No. 2, for most of December through March,
2001. The real reason for the scale back was the tremendously high natural gas prices
that made exports by the District uneconomical. The decision to scale back was made
prior to SCE deciding that they were not going to pay.
Edison has sought relief both with the State Legislature and the State Public
Utilities Commission "PUC"for its own financial crisis.
In an effort to resolve their financial dilemma, SCE has requested the PUC to
approve its negotiating and entering into amendments to existing energy purchase
agreements with their present customers, which would include the District. They have
developed three different standard agreements for each category of generator. The
agreement proposed to the District can be summarized as follows:
• SCE will pay District ten percent (10%) of the outstanding balance due, plus
seven percent (7%) interest, within five (5)days of both parties signing.
• SCE will pay District ten percent (10%) of the balance due, plus seven percent
(7%) interest, within five (5) days of the Legislature and PUC approving its
"bailout" plan.
• SCE will pay the total balance due, including interest, within five (5) business
days of receiving new debt financing proceeds.
• The District and SCE will change the pricing terms for energy sold to SCE to a
fixed rate for a period of five (5)years. SCE to pay 5.37 cents per Kwh.
• All of the terms of the 1991-92 Agreements will remain in force.
We have expressed some significant concern to SCE about the five (5)year fixed
term pricing, and we have also questioned whether we should be included in the
category of the Renewable Sources Providers at all.
wandei
•m I
Book Page 12
Chairman and Members of the Board of Directors
June 21, 2001
Page 3
As of June 18, 2001, 5:00 p.m., SCE determined that they had an insufficient
number of subscribers accepting the proposal amendment to the agreement. They
therefore extended till 5:00 p.m. on June 19, 2001, in which to obtain additional
subscribers. They have indicated that if they failed to have sufficient subscribers by that
time, the proposal will be withdrawn. In such event, no one knows exactly what the next
step would be. The impact on the District is we would continue to simply await any
proceedings that would ensure our receiving the past due sums owing. All electricity
sold to SCE since March 27, 2001, has been paid for on a timely basis by SCE pursuant
to an order of the PUC.
It is the unanimous recommendation of the General Manager and his Staff that
the District not enter into this agreement, and to abide by the terms of the 1991-92
Agreements and await further outcomes to determine the best method for collecting the
past due sum owing to the District
THOMAS L.WOODRUFF
GENERAL COUNSEL-OCSD
TLW:Iam
cc: Mr. B.P. Anderson
Mr. G.G. Streed
Mr. R.J. Ooten
Mr. D.D. Halverson
soonaeme
Book Page 13
Orange County Sanitation District
(714) 962-2411
www.ocsd.com
mailing address:
P.O. Box 8127
Fountain Valley, California
92728-8127
street address:
10844 Ellis Avenue
Fountain Valley, California
92708-7018
published on recycled paper