SNOHOMISH COUNTY PUBLIC UTILITY DISTRICT The was convened by President Tanya Olson at 9:00 a.m. in the Commission Meeting Room. Those attending were Kathleen Vaughn, Vice President; CEO/General Manager Craig Collar; Acting General Counsel Shawn Aronow; Assistant General Managers Tom DeBoer, John Haarlow, Glenn McPherson, and Brant Wood; other District staff; members of the public; Clerk of the Board Melissa Collins, and Deputy Clerks of the Board Traci Brumbaugh and Lela Wall. * Items Taken Out of Order **Non-Agenda Items 1. COMMISSION BUSINESS A. Oath of Office - Sidney (Sid) M. Logan, Commissioner District 1 Clerk of the Board Melissa Collins administered the Oath Sidney (Sid) M. Logan for the position of Commissioner District 1. of Office to The meeting recessed at 9:03 a.m. RECONVENE REGULAR MEETING The was reconvened at 10:00 a.m. by President Olson at UniEnergy Technologies, located at 4333 Harbour Pointe Boulevard Southwest, Mukilteo, for a dedication ceremony for the completion of the Modular Energy Storage Architecture (MESA) 2 System. Those in attendance were Kathleen Vaughn, Vice President; Sidney Logan, Secretary; CEO/General Manager Craig Collar; Acting General Counsel Shawn Aronow; other District staff; members of the media, the public, elected officials, and aides; Clerk of the Board Melissa Collins; and Deputy Clerks of the Board Traci Brumbaugh and Lela Wall. 2. ENERGY STORAGE (MESA 2) DEDICATION The dedication ceremony included the following speakers: UniEnergy CEO Gary Yang; Pacific Northwest National Laboratory Associate Laboratory Director Jud Virden; Doosan GridTech Chief Strategy Officer Tom Melling; Snohomish County Public Utility District Board President Toni Olson; and Washington State Governor Jay Inslee. The meeting recessed at 11 :27 a.m.
2 RECONVENE REGULAR MEETING The was reconvened by President Tanya Olson at 1 :30 p.m. in the Commission Meeting Room. Those attending were Kathleen Vaughn, Vice President; Sidney Logan, Secretary; CEO/General Manager Craig Collar; Acting General Counsel Shawn Aronow; Assistant General Managers Tom DeBoer, John Haarlow, Glenn McPherson, and Brant Wood; other District staff; members of the public; Clerk of the Board Melissa Collins, and Deputy Clerks of the Board Traci Brumbaugh and Lela Wall. * Items Taken Out of Order **Non-Agenda Items 3. COMMENTS FROM THE PUBLIC There were no comments from the public. 4. CONSENT AGENDA A. Approval of Minutes for the of March 14, 2017; and the Special Meeting of March 16, 2017 B. Bid Awards, Professional Services Contracts and Amendments Public Works Contract Award Recommendations Over $25,000: Formal Bid Award Recommendations $60,000 and Over: Professional Services Contract Award Recommendations $200,000 and Over: Miscellaneous Contract Award Recommendations $200,000 and Over: Cooperative Purchase Recommendations: CONTRACTS: Purchase Order No. 4500020981 with NC Machinery Purchase Order No. 4500021374 with Western Pacific Crane and Equipment AMENDMENTS: Purchase Order No. 4600000208 with Associated Petroleum Products, Inc. Sole Source Purchase Recommendations: Emergency Declarations, Purchases and Public Works Contracts: Purchases Involving Special Facilities or Market Condition Recommendations: Formal Bid and Contract Amendments:
3 Contract Acceptance Recommendations: C. Consideration of Certification/Ratification and Approval of District Checks and Vouchers D. Consideration of a Resolution Authorizing Execution of a Collective Bargaining Agreement Between the Public Utility District No. 1 of Snohomish County and the International Brotherhood of Electrical Workers, Local No. 77, for the Period of April 1, 2017 to March 31, 2020 A motion passed approving Agenda Item 4A - Approval of Minutes for the of March 14, 2017; and the Special Meeting of March 16, 2017, with Commissioner Logan abstaining. A motion unanimously passed approving 4B - Bid Awards, Professional Services Contracts and Amendments, including Cooperative Purchase Recommendations; 4C - Certification/Ratification and Approval of District Checks and Vouchers and 4D - Resolution No. 5808 Authorizing Execution of a Collective Bargaining Agreement Between the Public Utility District No. 1 of Snohomish County and the International Brotherhood of Electrical Workers, Local No. 77, for the Period of April 1, 2017 to March 31, 2020. 5. PUBLIC HEARING AND ACTION A. Disposal of Surplus Property - 2nd Quarter 2017 President Olson opened the public hearing. There being no questions or comments from the public, the public hearing was closed. Based on staff's recommendation that the items are no longer necessary or useful to the District, a motion unanimously passed approving those items listed on Exhibits A and B of the Surplus Property Recommendation Report be declared surplus and be sold for high bid or disposed of according to policy in the second quarter 2017. 6. ITEMS FOR INDIVIDUAL CONSIDERATION A. Consideration of a Resolution Authorizing the CEO/General Manager to Execute an Interlocal Agreement With the City of Everett Regarding the Relocation of Electrical Distribution Facilities Associated With the Construction of the City's Grand Avenue Park Bridge Project A motion unanimously passed approvmg Resolution No. 5809 authorizing the CEO/General Manager to execute an Interlocal Agreement with the City of Everett regarding the relocation of Electrical Distribution Facilities associated with the construction of the City's Grand A venue Park Bridge Project.
4 B. Consideration of a Resolution Authorizing the CEO/General Manager to Execute Amendment No. 1 to the Wholesale Water Agreement Between the City of Snohomish and the District A motion unanimously passed approving Resolution No. 5810 authorizing the CEO/General Manager to execute Amendment No. 1 to the Wholesale Water Agreement between the City of Snohomish and the District. C. Consideration of a Motion Accepting the 4th Quarter 2016 Financial Conditions and Activities Monitoring Report Assistant General Manager Finance and Treasurer Glenn McPherson facilitated the presentation, beginning with a year-to-year comparison of the Electric System Statement of Operations. Operating Revenues and Expenses were up in 2016, which offset each other, and caused a similar net income between 2015 and 2016. The 2016 increase in purchased power reflects a full-year of Bonneville Power Administration's (BPA) 2015 rate increase. In April 2015, the Board passed a rate adjustment to recover the BPA rate increase, which increased retail sales in 2016, despite lower consumption from the District's customers. Other revenues showed an increase because of larger BPA Energy Efficiency reimbursements received in 2016. Energy efficiency program costs, transmission costs, monthly billing impacts and the ONE Program final costs all impacted the overall increase in operation expenses for 2016. Maintenance expenses were down, largely due to less storm damage in 2016 than in 2015. A graphical representation of Megawatt Hours (MWh) Billed was shown. In 2016, residential hours billed showed a decline in customer consumption, while wholesale hours did not show much variance between 2015 and 2016. A chart of Megawatt Hours - Power Supply showed BPA Block remained approximately the same from 2015 to 2016, but BPA Slice increased, due to a better hydro year in 2016. Wind contracts, Jackson, Woods Creek, and Youngs Creek increased in 2016. Electric System Financial Condition Indicators were compared year-to-date 2014 through 2016. Operating reserve fell below the Board mandated minimum because of low energy sales in 2016. It was noted that the District transferred $10 million from the Resource Reinvestment Reserve, to bring the operating reserve back to its mandated level. Mr. McPherson spoke briefly regarding the 2015 Revenue Bond proceeds, stating it is unlikely that the District will spend the remainder of the bond proceeds before mid-2018. Discussion continued regarding bond proceeds and market conditions. Outstanding Electric and Generation System debt indicators were down for 2016 and showed a modest debt load compared to other utilities. The Debt to Capital Assets Ratio and bond ratings were reviewed and discussed. Electric System Operating Indicators, comparing 2014 through 2016, showed the continuing decline of retail MWh sales, despite customer growth. Net Write Offs to Sales increased slightly, due to the temporary suspension of disconnects succeeding the 2015 move to monthly billing. Higher BPA rates were reflected in an increase in the Average Power Cost per Kilowatt Hour (kwh). New customer connections, total active customers, and Electric System Employees all increased in 2016. Discussion continued about the actual new customer connections compared to the new customer connections
5 conservatively predicted for the budget. Commissioner Vaughn requested the data for the forecasted new customer connections versus actual new customer connections over the last three years. Mr. McPherson reviewed Retail Energy Sales and Retail Energy Usage charts. Discussion continued regarding the impacts of lower customer consumption, an increased number of customers served, a customer service charge, and rate adjustments. The Electric System Budget Status Report compared the estimated end-of-year budget to actuals for 2016. Retail sales were down, operating revenues showed an increase over what was anticipated, and purchased power was down slightly due to lower market purchases. Energy efficiency was noted as the area with the most underspending expenditure in the District's generally underspent Operation and Maintenance (O&M) budget. Mr. McPherson answered questions regarding depreciation and unbilled revenue. The Generation Financial Report Statement of Operations compared year-to-date 2015 through 2016. Operating expenses appeared higher in 2016, due to Capital programs that capitalized labor and overhead costs in 2015. Maintenance expenses were down. Next, the Generation System Budget Status Report, which compared the estimated end-of-year budget to actuals for 2016, was reviewed. Energy Sales were slightly lower than expected and Capital Expenditures were slightly higher, due to the work on Hancock and Callaghan Creek projects moving along faster than anticipated. The Water System Financial Report Statement of Operations for 2015 to 2016 showed minimal variance for those years. The largest variance was noted under Capital Contributions. Water System Financial Condition Indicators were compared year-to-date 2015 through 2016. The Water System has strong reserves and outstanding debt has declined due to past water rate increases that cover the cost of operations and some capital costs. The Water System is heavily influenced by warm dry summers. The past summer was not as warm and dry as 2015, which negatively impacted the cubic feet sold in 2016. The number of new customer connects and active customers increased. Due to vacancies, the number of Water System employees decreased, which can be seen in a decreased O&M. A motion unanimously passed accepting the 4th Quarter 2016 Financial Conditions and Activities Monitoring Report. 7. COMMISSION BUSINESS A. Commission Reports Commissioner Vaughn requested, and CEO/General Manager Craig Collar confirmed, that staff would be available to discuss the Customer Service supplemental report at the next meeting. Commissioner Vaughn reported on her attendance at the American Public Power Association (APPA) Legislative Rally held in Washington, D.C. ; the Cambridge Energy Research Associates Annual Conference (CERAWeek) held in Houston, Texas; and recent Energy Northwest (ENW) budget meetings.
6 Commissioner Vaughn discussed a letter from Bonneville Power Administration (BP A) Senior Vice President, Power Services Mark Gendron, which was sent to all utilities and municipalities in the region. 8. GOVERNANCE PLANNING A. Governance Planning Calendar There were no changes to the Governance Planning Calendar. Commissioner Logan asked to be excused from the April 25, 2017, Commission meeting, due to a prior commitment. Commissioner Olson mentioned that she would not be at the May 9, 2017 meeting, due to her attending the Northwest Public Power Association (NWPPA) annual conference in Sunriver, Oregon. ADJOURNMENT There being no further business or discussion to come before the Board, the of, adjourned at 2:37 p.m. An audio file of the meeting is on file in the Commission Office and available for review. of April 2017. Vice President