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ACTION AGENDA
3. Report on the Biennial Actuarial Valuation of the District’s Retirees’ Health Benefits Plan:
An actuarial valuation of the District’s Retirees’ Health Benefits Plan is performed every two
years per the Plan’s guidelines. Means & Associates, LLC was selected as the actuarial firm
to provide the valuation of the Plan as of July 1, 2000. The valuation provides a
determination as to the financial status of the Plan.
The valuation performed took into consideration the transfer of the District’s contribution (8%
of payroll) to fund Cal-PERS. A funding schedule incorporating a graduated contribution
program was included in the actuarial assumptions to meet projected Plan liabilities.
Mr. Dan McLellan of Means & Associates, LLC, who performed the valuation of Plan,
addressed the Board summarizing his actuarial opinion. Utilizing the same valuation
methodology as in 1998, an updated mortality, interest, and medical care trend assumptions,
along with updated census information, it was determined that the present value of plan
liabilities of $2,703,000 to $3,631,000 is offset by expected future contributions of $1,458,800
to $1,967,000 plus assets of $1,282,300. Under the worst case scenario, there could be a
deficit of $381,700. Expected future contributions were based on a formula of 0% of payroll
for two years, 1% of payroll for the third year, and increasing 1% per year to a maximum of
6%.
The valuation took into effect the changes in employee data, increased asset value, and
updated premium information from Kaiser, Medicare (Part B), and a sampling of other
insurance carriers. A positive impact on the funding status of the Plan was Kaiser’s Medicare
Risk HMO, Senior Advantage Program. Due to the continued improvement in this Program,
and the enlarged area of its coverage, it was assumed that 50% of the District’s eligible
retired employees would participate in this option. Mr. McLellan certified that the District’s
Retirees’ Health Benefits Plan’s funding status is sufficient at this time, utilizing the
contributions formula proposed in the valuation.
4. Presentation by California Power Partners, LLC:
Mr. Rob Preston, Vice President of Business Development for California Power Partners,
LLC, (CPP), addressed the Board and introduced John Scalone, Vice President in Technical
Services, and Mike Pfeiffer, Regional Account Manager. CPP is a San Diego based company
with an alliance with The Hanover Company, currently the world’s largest gas compression
company that expanded into electric generation in 1998. The CPP was formed to address
opportunities resulting from the deregulation of domestic energy markets. Mr. Preston stated
that the CPP has a transaction-based business plan focusing on development efforts for
energy solutions with a “total turn-key” approach through alliances with ancillary services
organizations. CPP’s business focus is to build long-term business relationships in the
energy sector, worldwide, and to be a single-source provider of innovative energy solutions
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at both the utility and industrial levels. Its proposition is to present to a customer the
opportunity to participate in a program to stabilize their power requirements and possibly
benefit from a revenue sharing or participation on an equity basis with a power plant.
The strengths of the CPP and Hanover Company were reviewed as listed below:
CPP, LLC
Sales, marketing and project development throughout the U.S.
Financial modeling and proforma analysis
Power purchase agreements
Market development
Engineering and project management
Hanover Company
Own, operate equipment
Lease, finance
Packaging and overhaul facilities
Access and knowledge in all forms of generation equipment
Permitting staff
CPP has proposed siting, permitting, financing, constructing and operating a 49.9 megawatt
gas fired power plant. Critical to the siting of a plant is the dual proximity to a natural gas
source and power lines with adequate capacity. Power delivery options were reviewed which
include:
• Distributed generation at point of usage to handle critical District needs.
• Bilateral power contract for electric power supply through local sited power plant.
• Small (50 to 100 MW) power plant in area to serve local needs.
The advantages and disadvantages of the 3 power delivery options were outlined and are
attached hereto as Exhibit “A”.
The recommended system configuration of the proposed plant is a combined cycle
cogeneration plant which allows taking advantage of the generation of the fuel and converting
some of the heat by-product through a heat recovery steam generator to generate additional
power. It would include GE LM-6000 Spring PC turbines that are the most efficient with a
proven performance record, including a dry low NOX combustor and noise reduction
equipment. A 1 acre site would be adequate for the proposed configuration of a 50 MW plant
or 3 acres for a 100 MW site.
Benefits to the District to be derived through a partnership with CPP in the power plant
proposal include revenue participation at a negotiated percent based on actual capacity
output of the plant. Another advantage is that the re-regulation of electricity or government
control of the ISO and PX would be mitigated.
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Upon motion by Aleshire, seconded by Armstrong and unanimously carried, staff was
directed to pursue the feasibility of the District’s participation with California Power
Partners, LLC in the construction and operation of a power plant.
5. Update on Electricity Deregulation:
Director of Finance Jarrell reported that the District’s costs per kWh for its electrical
purchases since July 2000 through February 2001 has ranged from 12.79¢ to 25.27¢ or an
average of 16.35¢ per kWh. He reported that SB1X 43 was signed by the Governor which
sets the 6.5¢/kWh price for electricity on large businesses within San Diego Gas & Electric’s
service area retroactive to February 7, 2001. A provision in the bill provides that this rate will
be in effect until the California Public Utilities Commission (PUC) acts to adjust rates to be
comparable with PG&E and SCE.
With the passage of SB1X 43, the District will no longer be subject to the fluctuations of the
electricity market, but, with the transmission charge from SDG&E, the District’s cost for
electricity will be 10¢ to 12¢ per kWh and is expected to be increased to approximately
15¢ per kWh upon the PUC’s ruling.
Staff recommended increasing the District’s pump zone rates by 10% to meet electrical and
natural gas pumping costs that will be incurred under the provisions of SB1X 43. This
proposed increase will be considered by the Board at the May 7, 2001 meeting to be effective
with the billings of May 31, 2001. An additional increase to the District’s pump zone charges
will need to be considered once the rate adjustment expected by the PUC is in effect. Upon
stabilization of the electrical and natural gas prices, the deficit in the District’s Pumping
Reserve ($726,920.14 as of 2/28/01) will be addressed.
6. Water Loss Report for Fiscal Year 1999-2000:
The District’s water loss report for FY 1999-2000 was reviewed in which it was reported that
in the fiscal year the total water loss was 5.1% with a 5-year running average of 5.2%. As
such, the Strategic Plan’s performance standard “to reduce our water loss to be at or below
5%, but never more than our five-year running average” was satisfied.
Water loss within the District’s system is due to meter slippage, evaporation, pipeline leaks,
and water theft. American Water Works Association’s water loss standard is from 8% to
10%. The District has taken measures to reduce its water loss through implementation of
programs such as the portable meter test bench that verifies the accuracy of meters’ registers
on a regular basis with inaccurate meters replaced. The District’s leak detection program and
the covering of reservoirs have also contributed toward reducing water losses. Director
Aleshire recommended that new technologies be investigated that could further reduce water
loss. Programs to further reduce water losses in a cost effective manner will be analyzed,
including technology that transmits flows of meters to determine in a timely manner when a
meter is under registering.
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7. Resolution Authorizing Contract with California Public Employees’ Retirement System (Cal-
PERS:
In compliance with the California Public Employees’ Retirement System membership
regulations, Resolution No. 2001-23, which authorizes a contract between the District and
Cal-PERS for a defined benefit retirement plan for District employees, was presented for the
Board’s adoption. This action follows the affirmative vote by the employees for said
retirement plan. Provisions of the retirement plan include a 2% at 55 retirement benefit
package.
Director Aleshire noted that Cal-PERS is an outstanding retirement program that will provide
a retirement benefit for employees that is known rather than the uncertainty associated with
a defined contribution retirement plan. Cal-PERS will also provide long-term economic
benefits to the District and its ratepayers. Manager of Human Resources Hale, Director of
Finance Jarrell and Manager of Accounting Jeffrey were complimented for their diligence in
developing the Cal-PERS retirement package for the District’s employees.
Upon motion by Aleshire, seconded by Armstrong and unanimously carried, the
following resolution, entitled:
RESOLUTION NO. 2001-23
RESOLUTION OF THE BOARD OF DIRECTORS OF
THE VALLEY CENTER MUNICIPAL WATER DISTRICT
AUTHORIZING A CONTRACT FOR PARTICIPATION IN
THE CALIFORNIA PUBLIC EMPLOYEES’ RETIREMENT SYSTEM
was adopted by the following vote, to wit:
AYES: Directors Broomell, Armstrong, Polito, Aleshire and Stone
NOES: None
ABSENT: None
8. Request for Concept Approval of the Welcome View Water and Sewer Improvements and
Approval of Reimbursement Agreement:
Concept approval of water and sewer improvements to serve a 14-acre parcel on Welcome
View that is proposed to be divided into 4 lots was requested. New water meter services will
be connected for the lots on the existing water main. Due to the elevation of the lots and size
of the service area, a gravity sewer system and a lift station at one intermediate low point in
the system were proposed by staff. It was recommended that the lift station be composed of
a standard Environment-One duplex grinder pump unit that would be owned and maintained
by the District. The sewer main would be extended to an existing sewer gravity main. In the
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event of a power outage or pump failure, the collected sewer would accumulate in the line
until such time as the pump is activated. Homes that may connect to the sewer line that are
at a lower elevation than the high point of the line would likely need a private pump to pump
into the sewer system.
Staff recommended that connections to the sewer line served by the lift station be assessed
the pressure sewer maintenance fee in addition to the monthly sewer service charge to fund
costs associated with operation and maintenance of the pump unit.
Other properties within the service area of the proposed sewer improvements may benefit
from these improvements and, as such, the developers have requested approval of a
reimbursement agreement. A reimbursement agreement would provide that properties within
the designated benefit service area that connect to the sewer line extension within the tenyear
term of the reimbursement agreement would pay a special service connection charge
to the developers of the line extension. Said parcels within the designated benefit service
area and the special service connection charge are as shown on the attached Exhibit “B”.
Upon motion by Armstrong, seconded by Stone and unanimously carried, concept
approval of the Welcome View Water and Sewer Improvements was granted and a
reimbursement agreement was approved.
9. Proposed Fiscal Year 2001-2002 Budget – Review of New Programs and Capital Project
Requests:
An overview of the proposed programs and capital projects to be requested in the budget for
Fiscal Year 2001-2002 was provided and is outlined below:
• Estimated water sales will be 37,000 ac. ft. (35,000 ac. ft. had been budgeted in FY 2000-
2001).
• If the proposed $5.00/ac. ft. increase in the San Diego County Water Authority’s
wholesale water rate, to be effective January 1, 2002, is adopted, it will be passed
through in the District’s water rates. No increase from the Metropolitan Water District of
Southern California is anticipated in FY 2001-02.
• Installation of 172 new water meters are anticipated.
• Interest income is projected at 5.5% or $1.2 million (equivalent to $34.00/ac. ft. on water
sales).
• Personnel - One and one-half new positions (Project Manager and increase the
Administrative Assistant for Human Resources from part time to full time).
• A cost of living increase for employees is estimated at 4% per the MOU.
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• Energy costs will be budgeted at $104/ac. ft. (12¢ per kWh for electricity and $1.36 per
therm for natural gas).
• Contract for an AutoCAD operator at $50,000
• Overtime expenditures increased by $25,000
Capital Projects:
Finance -
Computer network improvements $15,000
HP server computer 40,000
Electronic meter purchase system 12,000
Engineering -
Upsizing $23,900
GIS 24,500
Couser Canyon Pipeline 175,000
Lilac pump station 505,000
Cole Grade pipeline 450,000
Jesmond Dene pipeline 110,000
Lilac Road North pipeline 140,000
Lilac Road pipeline 85,000
Electronic data management system 90,000
Pipeline replacement program 100,000
Field -
Weaver Mountain Reservoir recoat $ 60,000
Generator - Main building 45,000
Generator - trailers 45,000
Atmospheric tester 2,600
Betsworth gas engines 600,000
Red Mtn. pump electrical 60,000
Lighting in lower yard 17,000
Brake lathe 7,700
Hydraulic lift 13,100
Moosa Sewer Treatment Fund:
Rising operating costs, primarily in chemical expenses and maintenance, which has been
deferred, indicates a need to increase the Lower Moosa Canyon Water Reclamation Plant
monthly sewer service charge by $3.00/EDU. The STEP pressure maintenance fee will be
proposed to increase $1.00 per month per EDU. A back-up generator to be installed at the
Meadows lift station will be proposed.
The proposed budget for Fiscal Year 2001-2002 is scheduled to be distributed to the Board
approximately May 7