Board of Public Utilities - Regular Meeting

Like to welcome you to the Board of Public Utilities meeting. This meeting is called to order. We will now play the inclusion statement.

Pursuant to the City Council rules of procedure in order of business resolution, the members of all boards and commissions and the public are reminded that they must preserve order and decorum throughout the meeting. In that regard, members of the boards and commissions and the public are advised that any delay or disruption in the proceedings or a refusal to obey the orders of the board or commission where the presiding officer constitutes a violation of these rules. The city of Riverside is committed to fostering a workplace that provides dignity, respect, and civility to our employees, customers, and the public they serve.

Okay. Well Pete Bogermuth please lead us in the pledge of allegiance. Okay, roll call please.

Good evening, board members. Board member Wright?

Present.

Board member Goldwere? Here. Board member Rand?

Here.

Board member Montgomery? Here. Board member Evans? Here. Board member Becker? Here.

Vice Chair Woolgemuth?

Here.

And Chair Sayana?

Here.

Thank you.

Okay. We will now move to public comment.

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Good evening, everyone. Melissa McKeith with CURE. I want to draw your attention to the public comments that I submitted today about the 2025 urban water Management Plan and how the drafting and commenting of this document could really help to raise the level of knowledge of particularly new RPU board members about our long term water conditions. It's a document we submit every five years to the State of California. Fortunately, because we do have a significant amount of water relative to many other agencies and have done a decent job with our conservation planning.

Most of the concerns that the state have are not difficult for us to fill in the paperwork. But the document really can, in fact, serve as a much more meaningful blueprint in Riverside, particularly as we address more growth in an area that is going to be increasingly hot due to climate. We spent many hours with RPU staff five years ago, can't believe it's been five years, incorporating and having the City Council incorporate the need to really identify how much water we would need in order to sustain our green spaces and particularly our trees in light of heat and changes. This could also serve as a vehicle if we had a meaningful discussion about where RPU should be weighing in as part of the general plan now, not waiting for consultants who are not particularly prioritizing the water end of the spectrum. I know this from having attended some of their meetings.

And what do I mean by this? We have procedures that we could encourage. For example, on the North Side where we have a lot of new development, there should be dual plumbing so that in ten or twenty years when it's less expensive to use non treated groundwater, we would have that infrastructure in place. It's very expensive to do that after the fact. It's not expensive on the front end.

I also think that we could do much more in recommending what kinds of trees developers should plant versus those they shouldn't. We have the knowledge, we know how much water trees need, but we also know how certain trees provide efficient shade in order to substantially reduce the electricity demands on our city. Those are just a couple thoughts, but I do encourage, as some of your board members suggested four or five months ago when we approved the consultants, that we have a bit more outreach, especially to people who are interested or knowledgeable about these topics before the draft is finalized. So often, it's just a rush. And I know these are

Thank you, miss McKeith. Are there any other public comments? No? Okay. So for item number two, I'll ask our board members if anyone has any conflicts of interest to disclose on our agenda. Okay. I am seeing none. And we will move now move to the consent calendar. Does anyone wish to pull an item on our consent calendar? Tom?

Yeah. I'd like to pull is this on? I'd like to pull item 10. Well, I I just wanna have a comment about it. Okay.

And

But I move the approval of the rest of Second. The consent Second.

Okay. Thank you, Gary. Please vote. Roll call.

Seven yes votes, one no vote. Member Evans, motion carries.

I made a mistake because I meant to push yes.

Vote again.

Not that it matters.

Motion passes unanimously. Thank you. Okay.

So, we're calling, for item 10, to be presented by Farid Bouchakhi.

I just have a comment. I don't need a presentation. Okay. And this really somewhat relates to the comment that, Ms. McKeith commented on.

Several weeks or several times we've had a discussion about the general plan update and each time I've asked that RPU board have an opportunity to provide specific input into the general plan And I've been assured several times that that was going to happen. But so far it hasn't. And I don't know what the time seemed like the time is running out. But it all relates to again, the use of non potable water, water supplies in future, other development aspects. So I just want to reinforce that I think this Board should have a specific discussion regarding the general plan and it relates back to the what's in item 10 and as well as the urban water management plan.

I think we need to open for public comment. Okay. Sorry, I forgot that. Sorry to cut you off.

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I'm waiting for a response. Okay. But that should be after? Oh, I see. So the public comment should come first because we're not actually getting the presentation.

Sorry. It depends how you wanna do it. If you're not interested in hearing the presentation, then, yeah, you should get public comment before any substantive discussion.

Okay. Well, there is a caller. So I'm going I think we should let them comment now. Sure. Okay. So please let the caller in.

Melissa again. You know, it would help this is not an insignificant issue. I understand why it's not consent, but maybe for the new Board members or maybe even for those of us who didn't read the consent agenda, it's nice to get at least like two minutes of staff presentation on an item because you are going to have to vote on this item individually. If it was worthwhile pulling from the consent agenda, it helps to hear. I don't want to sound like one of those obnoxious sticklers who call in every meeting to complain about due process and the Brown Act. That's not my goal here. But I do think once something's pulled off a consent, having a short introduction would be useful. Thank you.

Excuse me. Okay. So, yeah. Was there no comment on Okay. There's no comment.

I can address board member Evans' comment regarding general plan and the opportunity to participate.

Oh yes, yes let's move to close public comment.

So board member Evans, the city is going through the general plan updates and having community meetings and posting for comment and participation. I can get you those dates for when those meetings are going to be held. There's going be several community meetings to ensure that we get public participation. That would be an opportunity to voice any ideas and thoughts you might have regarding water supply and within the city's general plan document.

But that's not my point. And I've said this before, as a Board, we our message is much more powerful than any one of us going to any one of those community meetings and putting a sticker on the board that will be ignored. So the board needs to provide input. And that's what I was assured would happen. End of of comment.

What I mean what is the timeline for that? We're getting a little off topic but I mean it's noted but what is the timeline for this general plan? So the general plan it's in its process

participation point at this point. So you're looking at probably to the next six to nine months of the document being drafted. Okay.

So there's time.

Okay.

Okay. Any other comments?

Yes. I want to address Ms. McKee's point, which is give us a minute or two. Thank you.

Another minute or three minutes? Yes.

Can we please have the presentation loaded? Thank you.

Thank

you. So, this is a presentation to highlight the requirements for the state mandate that started in 2022. So, this is our fifth time going to the city council to get adoption and submitting to the state. Basically the purpose of the annual water supply and demand assessment report is to evaluate for the agencies to evaluate their water supply or liability. And it's specific for the current year and you have to do a projection for the next six months.

And also generate and submit an annual shortage report on the annual assessment and result every year regarding their anticipated shortages if they have any. So, I think I'm just going to go to the mid of the presentation. So, this is our current rights, eighty five thousand seven hundred. If we add the recycle supply and the potential for purchase imported water that it goes to 108,000 acre feet. Our demand on the other hand, it fluctuates from year to year depends on the weather and the climate condition.

And as of last year, we were at almost 75,000 acre feet of demand. So, basically, we don't have a shortage. And that is highlighted in our tables that we submit and also in this graph. Basically, graph just shows that on the demand side, we are putting it as a cumulative curve to see by the beginning of the year, the fiscal year in this case. And then we do the projection for the next six months thereafter.

How much water is expected to be needed by our customers. And on top of that is the supply or our current supply, one without the purchasing option and the other one with the purchasing option. And so, shows clearly that Riverside have plenty of supply to cover the demand and we are not in that 25 shortage that the intent of this legislation was intended for. And I think this graph, we had a comment last year to fix the supply because it's a fixed number. However, the report is on a monthly basis.

So, try to combine the suggestion from Board member last year is to do this cumulative curve on the demand side. But yeah, this is just so and then the recommendation is to approve the Riverside twenty six-twenty seven annual water supply and demand assessment and recommend that the city council adopt the annual water supply and demand assessment. And if there is any questions, we're here to answer I think Robin, David, and myself.

Okay. Any comments?

On demand, according to the graph on page or the chart on page seven, our total water use in 2025 was almost 75,000 acre feet, as you pointed out. However, on the graph, it only appears that we're using like 62,000 acre feet. Why the difference?

Yes. So, this is a projection for the next year.

I see.

Yeah. So, it's basically we do some estimates from the what is the demand table? Should have that. Yes. So yes. So if we do that.

I see it varies over time. And it's been higher and it's been lower. And you're projecting for 2027 based on the current conditions about $62,000

That's correct.

Yes. Okay. Again, as you point out, there appears to be no water shortage. We're well below the $85,000 So shouldn't be a problem. And even if it was, we could buy more.

Thank

you. Thank you.

Any other comments? Do Rebecca

I don't give me timing again of when this is gonna come back to this group and then also I guess to address indirectly, maybe directly, the public comment, while there are super smart people employed by this place, not all the super smart people are employed by this place. So I'd like to know beyond what's happening with the general plan, how we're soliciting feedback on frankly any of the water plans.

So I can't talk too much about the general plan because it's not on the agenda, but it is an item that we can bring. But so as far as this report is concerned, this report is an annual report that required to submit to the state regarding our water supply. We will be coming in the next couple of board meetings with the urban water management plan, which was part of that public comment. So it's really that is the detail planning for the next five years for the water system and that will be coming to the board for discussion in the next couple of months.

And then is there any timing on when it has to get to like to counsel or is it just?

Right. Friedwitz, the deadline is at July 1.

So July 1 is the deadline to submit to the state and I think we are scheduling it in

I'm sorry, not on this required document On the urban water.

Yes.

Okay. Same stuff. Okay. Sorry. Go ahead.

The

problem not the problem. The issue with the urban water management plan is it's we have to wait until the end of the year for the data to collect and submit to the consultant by 2025, and then the state just gives us six months. So lot of stuff and also the consultant, are kind of rushing to have that as ready as possible. But I think it's scheduled for June. So but we have to submit it to through the process by the end of early May.

When will the consultants be done?

Now we are in the second round of second comment period. And I think their draft is supposed to be submitted second time by next week or week after that.

In theory, how many drafts will you do?

So it depends on how the level of detail or if you have more feedback to the consultant. So when we are in that process. Board Member Goldwere,

the document as we go through just kind of this editing of the draft, we probably have maybe a couple more iterations to go through. Once that's complete, it will be brought back to the Board in time for comments by this board should there be suggestions that the board has to include in urban water management plan that weren't in the plan therefore we could make those edits and changes before it's actually submitted before July 1.

Can it also go to groups like CURE?

Yes. And I know we send letters out for comment with other water suppliers. I'm not sure if it goes out to environmental folks.

Yeah, I think we sent notifications. I think this year we sent notification to about 28 to 30 public agencies. And I don't think Cure was part of one of them.

We could send a letter to Cure though. Yes.

Also don't know and I'll give it to Brian but there's a research institution up the street that probably has some people who might have some information to comment on if you haven't already solicited. Thanks.

Thank you.

Thank you. Any other comments? Okay. I just had one quick question on the available water supply from Bunker Hill. Does that number, the $55,000 include the additional available water from the expanded recharge basin?

Not yet because it hasn't been put in the Warmaster report. Western is our representative as a plaintiff. Whenever we have a chance, we ask when he's I think I was told that it will be added for the next Warmaster report. So, we'll see. So, if that's the case, it's going to increase by I forgot the number. I think 300 or two sixty acre feet. Okay. That's pretty small difference.

Sorry, when will that come online?

The next Warmaster?

No, when will the number show up here?

So after they add it to to the to the to the the court and it it we we can add it when we when when we our hands, think.

Which is when?

Ballpark. I was told next year. I think they submit by March, April. Awesome. Thanks. Okay.

Do we

have a motion?

Second.

Okay. Thank you. Roll call please.

Please vote. Motion passes unanimously. Thank you.

Okay. We'll now move on to the proper discussion calendar and we will now open for public comment for item number 12.

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Okay and we call for presentation of item number 12 by Fadi Megala.

Good evening board chair and board members. My name is Fadi Megala, engineering manager with energy delivery. And tonight, I'll be presenting for you the request for approval for the procurement of two grounding transformer for Wilderness Substation, which is part of the RTRP project. This grounding transformer is a specialized piece of equipment that is a long lead, we need to order it now to keep the project on track. So I'll start with a background about the RTRP project.

So currently, the city of Riverside has only one interconnection to the state grid, and that's via Edison Substation called Vista Substation. Having only one interconnection to the electric grid pauses some challenges for us in terms of reliability, also in terms of capacity. So the board and the council approved the RTRP project with the intent of creating a second interconnection to the state grid. To achieve that, Edison has to build a substation called Wildlife, and Wildlife will provide a two twenty kV feed to City Of Riverside. And for City Of Riverside to receive this two twenty kV, we need to build a new substation called Wilderness.

So the purpose of Wilderness will be is to receive the two twenty kV and transform the two twenty kV to 66 kV. And from Wilderness, we will create or build new sub transmission lines to feed the western part of our system. So right now, we have only one interconnection. Once the RTRP is built, we're gonna have two systems. The east system will be fed from the existing Edison Vista Substation and the west portion of our system will be fed from Wilderness Substation.

So we came to the board in the past to order material to get approval approval for equipment. The board approved the power transformer, capacitors, circuit switchers, and the grading. And tonight, we're asking for approval for another piece of equipment, which is the grounding transformer. So what is a grounding transformer? So when you hear in general about transformers, you're thinking about transforming.

You're transforming voltage from one level to another, whether you're raising the voltage or lowering the voltage. However, the grounding transformer is a little bit different. All it does is it create what we call a neutral reference for us. So what is that import how is that important for us? When we have a fault on a on a non grounding Delta system, we cannot detect fault unless we have the grounding transformer.

So the purpose of the grounding transformer is to support our protection system to be able to detect if there are grounding faults. And in addition so the scope is only limited to the procurement and the delivery of those units. Actual construction will come in the future to the board for awarding a contract. We're not planning on building the substation with our field forces. We're planning on contracting that portion and probably we're gonna come back in next year for that.

So regarding the bids, we requested bids for the two sixty six kV grounding transformer. We issued the bids in October, and we allowed more than two months for the bidding process because it's very detailed specification, and we knew that a lot of transformer manufacturers

right now are busy. So we wanted to allow

them detailed time. And in addition to that, they requested even extension. We allowed the extension for them. We ended up with three bids. The apparent lowest bidder was Waukesha.

When we evaluated their proposal, we found that they took exceptions, exceptions to terms and condition, some of it technical. And most importantly, they took exception for a requirement in the bid that they hold the price for one hundred and twenty days. And this is common practice for us. We have been doing that for the last three, four years. And the reason why we do it is because it takes us long time to negotiate the terms and conditions and, also get the technical clarification and going through also the board, process.

So we didn't reject them directly. We basically engaged with them. We tried to, see if we can give them a letter of intent. So a letter of intent will say that you are the apparent lowest bidder, and our intent is award to you as long as we start negotiation and we agree on the terms and conditions. But you have to hold the one twenty days because they are requirement, and you have to meet all the requirements similar to other bidders.

They rejected that. So at that point, we consulted with both our purchasing department and legal, and they both confirmed this is a mandatory requirement. They have to, abide by it. At this point, we still reached out again one more time to them, letting them know that they will be considered non responsive and we're gonna move forward with the second lowest responsive bidder. They said they understood.

They're not gonna challenge it. But at this point, they cannot hold the pricing. So the next lowest bidder was Niagara power transformer. And they were determined to be, at this point, the lowest responsive and responsible bidder. And their cost is at $2,762,537 and that was within our engineering estimate of 3,000,000.

So our recommendation is that the Board of Public Utilities award bid number SUB-02C for the procurement of two sixty six kV grounding transformer for world level substation with Niagara Power Transformer of Buffalo, New York in the amount of 2,762,537 with a change order authority of 10% and also authorized the city manager or his designee to execute any documents necessary to effectuate the procurement described herein as well as the ability to make minor non substantive changes in alignment with all purchasing policies. And with that, that will bring me to end of my presentation. I'll be more than happy to answer any of your questions.

Thank you. Do we have any public comment? Okay. We have no callers at this time. Do we have any comments from the board?

Okay. Well, I do appreciate the explanation, about the, non compliant, non responsive, bidder. Mhmm. Fortunately, right, it was half a percent, more for the next bidder. All of these bids were really tight in their price, so didn't seem to affect much. And, so But I do appreciate the explanation. Okay. Do we have a motion? Motion to approve. And second. Second by Gary.

Please vote. Motion passes unanimously. Thank you. Okay.

We will now open public comment for item 13.

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Okay. We call for presentation of item number 13 by Brian Sinterior.

Alright, good evening board chair Cianna and members of the board. My name is Brian Sinterior, assistant general manager of finance and administration. And tonight, I'm happy to be here to present the public utilities electric and water two year budget for fiscal year twenty twenty six-twenty seven and twenty seven-twenty eight. This slide, I'll start off with the budget timeline. We've been working on this for quite some time.

It's big lift and a collaborative effort for RPU divisions but also city departments. We've had a lot of collaboration with the city departments and you'll see how we interact with the city departments as move into the budget. But we're here tonight on April 13 with the proposed budget to the Board of Public Utilities. Then the budget will be going to the Budget Engagement Commission on May 14. Then proposed to the city council on May 19 and scheduled city council budget adoption on June 23 to be effective July 1.

Department overview. The electric and water utility serve most of the city. The electric utility has over a 114,000 metered customers with 475 employees. The water utility has over 66,000 metered customers and 165 employees for a total of six forty. Our mission and vision remain unchanged.

Our mission is the Riverside Public Utilities Department is committed to the highest quality water and electric services at the lowest possible rates to benefit the community. Our vision is that our customers will recognize RPU as a unique community asset with a global reputation for innovation, sustainability and enhanced quality of life. Our department core values remain unchanged. There's the safety, honesty and integrity teamwork. And at the end there, environmental stewardship.

This pie chart represents the electric and water utility by proposed, sorry, budgeted expenses for the first year of the budget, fiscal year twenty six-twenty seven next year. It's $749,000,000 Almost $750,000,000 for the first time. The blue portion of the pie chart is the non personnel operating costs. The significant portion in there is the electric power supply portion of the budget. Next is the red, the kind of bottom left, RPU personnel cost of a combined 121 $120,000,000.

RPU capital costs actually are a little bit higher than personnel there. Sorry. They're a 100 Almost $125,000,000 for electric and water. The combined GFT is $60,000,000 And then we have the service department cost. The direct positions are $3,700,000 The operating, direct operating costs are 2,600,000.0.

And the service department cost allocation plan, the cap, is 11,800,000.0. And I'll go into those in a little more detail. The second year of the budget is actually a little less at $725,000,000 The reductions are in the RPU non personnel and operating. There's lower power supply costs as we exit IPP. And on the capital side, there's a little bit less capital cost specifically in electric due to some of the supplemental capital that we'll be proposing tonight, specifically related to our internal generation work in Clearwater.

So, before getting into the revenue expenses of the budget or the the bud Electricum budgets themselves, I wanted to discuss We're discussing the service department cost. The So, there's direct positions. These are the costs of specific service departments within the city, maybe HR or finance, or there's FTEs that support RPU directly with an identified percentages of their time and I'll show you a chart on that. And then there's direct operating costs. These costs are specific department operating costs that support RPU directly, such as software.

So this chart or table are the direct positions that rpu funds in the different city departments. These positions are 100% allocated to rpu. They serve rpu and are housed in these different divisions within the city. There's 22 and a half positions. The only new position on here this year proposed is in the finance department.

It's a principal management analyst and it's three quarter of that position being allocated to electric and water and the remaining quarter percent being allocated to the sewer department. This is primarily to assist with our bond issuances, projecting future debt issuances, coordinating with our financial advisors, all of our disclosure documents, official statements. I could go on and on, but we are really assisted with the city's debt department. So, it's about $3,600,000 projected to go up to $3,900,000 in year two. Here are the direct operating costs that are housed and paid in other divisions but are 100% serviced for, to RPU.

In the city manager, there's officers intergovernmental relations. Skipping down to finance, there's the credit card fees that are applied. These are primarily for customers paying their utility bills and then a portion of the annual financial audit. In IT, there's specific software licenses allocated directly to RPU. So the total is about $2,500,000 in both of the budget years.

Next is the cost allocation plan. The purpose cost allocation plans are to identify and distribute indirect costs to the recipient departments. Most large organizations have this, both public and private. They create cost allocation plan to efficiently and fairly distribute the cost throughout the organization. The Governmental Finance Officers Association, GFOA, underscores this as a best practice for financial management.

Annually, the city staff develops the cost allocation plan and they've been doing this since city staff yet since 2018. In 2021, it was reviewed by an independent consultant ensuring alignment with industry best practices. The benefits include, number one, efficiency. Shared infrastructure, shared expertise. And that specialized expertise.

They're number two. The human resources department is housed in human resources and the finance functions like payroll, accounting, debt, treasuries, housed in finance. And then we can focus on our core functions. RPU can then focus on the electric and water utility. There's standardized processes and procedures and there's compliance and internal controls within those divisions.

Here's the cost allocation plan for the two years of the budget. It's $11,700,000 in year one and $12,300,000 in year two and the different departments are the mayor, city council, city manager, city clerk, city attorney's office, human resources, general services, finance, information technology, citywide property services. The electric and water utility does own a number of properties throughout the city. Non departmental, which is primarily building occupancy and marketing and communications. RPU does have costs that we incur that we do allocate to others within the city.

So I wanted to reflect that this year in the presentation Of about 5 and a half million dollars, we do run or manage and house the 311 call center that RPU and the city is proud of. We allocate that to all city departments, a little over $2,000,000 a year based on number of phone calls, work orders, items that come through the 311 app. And then we have items like customer service, business services, skipping down, utility billing and then the Inquesta version six upgrade that we're in the middle of and almost near completion. Those are allocated to refuse and sewer because those items are billed, those services are billed on our utility bills. So we charge those, charge back for those services.

Now into the budget. The major highlights. Do want do plan to continue with the use of reserves prior to contributing to reserves according to the approved five year rate plan and we will show that. We are including regulatory constraints and mandates, including meeting power supply renewable percentage mandates. And then overall cost increases have caused the operation maintenance and capital cost to increase.

And keeping in mind that we have significant unfunded capital needs due to aging infrastructure and equipment. So the electric utility budget. This chart with the bars is meant to really represent how the utility budget is increasing. To the far left is the prior year actual twenty four-twenty five. The column to the second to left is the 2526 budget.

And then the two bars to the right are the proposed budget. To the left in the light blue is our revenue for the utility and the use of bond proceeds. Proceeds which funds on the left and the darker blues operation and maintenance and then our capital plans. And then we either have a planned use of reserves or contribution to reserves. And I will get into that in more detail.

Here's our historic and projected electric retail sales. So these are sales to our customers. The bars are the customer usage. There's the residential, commercial, industrial and other. And you can see it's been relatively flat and it does fluctuate by year.

Weather does drive a lot of fluctuations in our retail sales. The bar is our historic revenue and then our projected revenue. For the over to the right, third from the right is the projected for this year, fiscal year 'twenty five, 'twenty six. And then the two columns to the right are the projected revenues for the two year budget. This does include the current five year electric rate plan of the 7% rate increase that went into effect 01/01/2024.

And there's a 37% rate increases followed by 22% rate increases. And that last 2% rate increase is in the far right column. Did want to say that projected retail sales is continued to grow at about a 2% rate with a budget also. Here's a summary of the electric revenues. It's there's the operating, non operating sources of funds that I'll go into more detail on.

But first year of the budget is $592,000,000 and the second year of the budget is $571,000,000 First is the operating revenues. It's primarily driven by retail sales, which are about 87% of our operating revenues. Then there's the transmission revenue for our ownership rights in transmission that is turned over to the ISO and we received the transmission revenue requirement on that. There are some fluctuations there. There are additional costs in fiscal year 'twenty six, 'twenty seven that we're able to recover before then that reducing in fiscal year 'twenty seven, 'twenty eight as we exit IPP and the southern transmission system.

We have the other operating revenue that are service charges, charges for scheduling services to other utilities. And then we have the public benefits program. That is our 2.85% surcharge on retail sales that we set aside for specific uses that we'll discuss a little bit later. These are the non operating revenues. It's primarily interest income and that's interest income on all of our reserves.

Our undesignated reserves, our songs decommissioning reserves, reliability charge reserves, and then also our bond proceeds. We have capital contributions that we're projecting. This is contributions from development as development enters in the city. And other non operating revenues is primarily lease and rental revenues, including the Mission Square Building. Other sources of funds are the bond, primarily the bond proceeds.

And this is when we issue debt. That bond proceeds is used every year to fund a portion of our capital improvement plan. Coming down, and then we have the either contributions from, so uses of reserves and rates or the contributions to reserves. And the bottom line there is our total operating, non operating and other sources of funds and that'll match to our expenses. So before going into expenses, the public benefit charge overview includes that it was a mandated charge in 1996.

It's a 2.85% surcharge on electric utility sales revenue. It can fund energy efficiency, research design and development, low income assistance, and renewable energy. In the two year budget, we plan to of the funds that we're budgeting, we plan to spend 73% on energy efficiency, is primarily our rebates and direct install programs. 25% on low income and 2% on research design and development. So electric expenses.

There's personnel, non personnel, the capital improvement plan, also the CIP, and then the general fund transfer. So personnel, this includes known salary adjustments for staff and also increases due to the CalPERS retirement program and CalPERS unfunded actuarial liability. There is a supplemental or suggested increase included in the proposed budget for overtime that's needed that I'll get into in a following slide. I do want to point out that the 20 four-twenty 5 actual is our actual personnel expenses. That included about it usually includes about a 10 to 15% vacancy rate.

So we're not always fully staffed. The budget and the projected budget includes 100% as if we were fully staffed because we budget at 100%. For financial planning purposes in the electric utility, we do plan for about vacancy rate, which is conservative because we usually are closer to that 15%. Non personnel. Largest component of the non personnel is power supply.

In the first year of the budget in fiscal year 'twenty six-'twenty seven, we do have increased costs related to IPP similar to the budget in 'twenty five-'twenty six that we brought back last year as a supplemental appropriation for an additional $12,000,000 for IPP. But then back to that first year of the budget, we do have some incremental renewable energy costs as we exit IPP. And then in fiscal year twenty seven-twenty eight, there's a reduction in power supply that's primarily driven by lower transmission costs as we exit the southern transmission system. In operation and maintenance, you do see the increase to the $32,900,000 in the first year of the budget. And then a slight decrease but still up at the $29,000,000 range.

I will get to a slide here in a second that has what's driving those increases. And then we have the debt service, which is our principal and interest payments on our bonds. We do plan to issue debt in the first year of the budget, fiscal year twenty six-twenty seven. So you can see those principal and interest payments come online fully in fiscal year twenty seven-twenty eight, increasing the debt service to $60,000,000 And then we have the public benefits program where the 13,100,000.0 and the 13,500,000.0 are projected spending based on the amount of public benefits revenues we expect to get that fiscal year. This slide has our projected CIP, which we have additional slides on.

And our capital improvement plan. And then the general fund transfer for the two years of the budget. And in total coming down to that $592,000,000 and $571,000,000 Electric personnel. We currently do have the four seventy five positions in electric. With a proposed budget, we plan to reduce that to four seventy positions.

There's seven vacant utility meter reader positions that are no longer necessary to support the field services operations as we've continued to implement AMI. Offsetting that, we do propose to include a utility analyst to support the analytics and reporting for customer service, three eleven and credit and collections. And then also add a SCADA system supervisor to support the generation sections increasing complexity of technical operations and to ensure the long term organizational resilience. Together or combined, this nets to about a $280,000,000 $280,000 budget savings. These are the supplemental budget increases that we're increasing the O and M and the $300,000 in personnel overtime.

The second line item there is $2,200,000 needed for the upgrade for the work order asset management system that's being led by the city. We do have some money set aside, but this is additional dollars that we may need as we go to upgrade or replace that system. Right now we're just in the needs assessment stage of that project and we should be issuing the RFP soon. We do have various building improvements to Mission Square in the utility operations center of a little over $1,000,000 each year that we need to add to the budget. We're requesting to add to the budget.

We have increased postage and envelope costs for utility bill mailing. Postage has significantly increased over the years and we've maintained our budget. But significant increases here for the postage are needed. Good news, I do want to say, is after we implement version six of the billing system, we do hope to launch a go paperless campaign. So actually, maybe this would reduce and we might not necessarily dig our expenses may not be as high as these proposed budget increases.

We do have some legal support and software support needed for the Kaiso energy markets. We are planning about 250,000 of work at the courtyard for our long term transformer inventory needs. Increased customer service telephone charges as we've continued to add phone lines and continue to improve our phone system, the costs have increased. And then increased miscellaneous safety supplies and training of a little over $100,000 So that increase in the budget in year one by $5,000,000 and $2,700,000 in year two. Here's the proposed CIP, five year CIP for the electric utility in the typical categories that we've we're traditionally presented.

Overhead section of the distribution system, underground substations, which includes our internal generation, recurring obligations to serve, and then system automation. The first two years there are the proposed budget and then we present years three through five for planning purposes. This is consistent with the rate plan with the exception being in years four and five, there is a replacement of in system automation, there's a replacement of the utility billing system included. So just for planning purposes at time, of course. Here's our capital improvement plan and really want to focus on the top part, the revenues and sources of funds.

There's last year's actual, twenty four-twenty five, was $44,900,000 and $33,000,000 of that was funded with bond proceeds, dollars 3,000,000 with rates and reserves, and $8,700,000 from contribution and aid. That's from development. As we move out to this year's budget, current year budget, and then the two year proposed budget, you can see that most of the budget will be funded with bond proceeds. The rates reserve component in the budget does increase because we are including in the budget capital repair and replacement to the RERC and Clearwater units to extend the useful lives of those units and funding it with a reliability charge reserve. So that's why the rates reserve component is increasing to 22,000,000 in year one of the budget and 21,500,000.0 in year two of the budget.

This is historical and one year forecasted the current year 'twenty five-'twenty six of our budgeted CIP and then actual spending. We, too, typically underspend. Our spend is growing, but these projects do take a little bit of time to get up and running and completed and often span multiple years. This is the electric supplemental CIP that is included in those CIP numbers. The first is the preliminary study in civil work for a battery storage project that is needed to replace the Springs generation plant.

So this is to get started on that project. It's $3,000,000 funded with reserves. EV charging infrastructure to support RPU fleet vehicle electrification, a $200,000 funded with the greenhouse gas reserves. That will add to some other dollars that we've carried over that was previously budgeted in the capital improvement plan. And then we have the internal generation capital repair and replacement for the RURC and Clearwater, and that funded by the reliability reserves of $9,400,000 in year one and $5,900,000 in year two.

We do wanna share the unfunded electric CIP and that's the purpose of these two slides. The first is that billing system in year four and five of the plan CIP. That's of course cost estimates funded with bonds. We do have additional internal generation capital repair and replacement of about $15,000,000 over the three year period of years three through five of the CIP. There's the springs substation upgrades of $17,000,000 Circuit feeders, three new 12 kV circuit feeders of about $9,000,000 in the North Side area.

Distribution automation upgrades of $4,500,000 And then the top line there, additional funding for that Banerjee energy storage project, including possible land acquisition, preliminary engineering and design and environmental impact studies. And that is, again, the project to replace springs of an additional $4,000,000 Possible facilities relocation and then a distribution transformer load management system. So total unfunded electric CIP of roughly $71,000,000 that we're tracking, want to share and keeping our eyes on this and going to determine different ways to fund these projects and costs and maybe include them in the next five year rate plan. Electric undesignated cash reserves. This is the last electric slide.

And this is the slide where we really measure our financial strength. We did have a better year than anticipated in fiscal year twenty four-twenty five. So far, twenty five-twenty six is projected to also increase on designated reserves. There are still a lot of unknowns. And then with the first year of the projected budget, we are expected to be below that minimum target level.

I'm sorry, the purple line is our minimum target reserve according to our cash reserve policy. And the green line is that target maximum. So you can see on electric we're well below the target maximum. A dipping down below minimum in the first year of the budget, which we can do for three years before we come back up to meet target levels. But of course then, we're using that line of credit, that $35,000,000 which is treated as liquidity, but we do not plan to draw on it to meet minimum target levels in the second year of the budget and then continue to maintain that in five year plan.

The water budget. Very similar slides. The two kind of, I guess, columns on the right are the proposed budget. And this is to reflect the really increase in projected revenues and expenses and use of funds in the two year budget period. This does show a contribution to reserves.

The upper right, a 3,500,000.0 and 2,500,000.0. Really, that contribution to reserves is driven by the receipt of the settlement proceeds for PFAS. So if we remove that, we'll actually be using our reserves slightly which we'll show in the last slide of the electric budget presentation. Water retail sales. So historically, the water retail sales have been very weather driven.

So it's historical sales from fiscal year twenty nineteen and twenty over to the left with the two years of the projected budget all the way to the right, twenty six-twenty seven and twenty seven-twenty eight. Again, customer usage is the bar. There's the residential, commercialindustrial, and then other. We're projecting customer usage to increase at about 1% annually on the water side. The blue line is retail sales.

The retail sales did increase significantly in twenty four-twenty five along with customer usage. We expect that to come back this year in twenty five-twenty six. And then again, customer usage increase at the bar at a rate of 1%. And then revenue will include the 6.5% rate increases the last two years of the rate plan. Water revenues.

These are the similar three categories operating, non operating, and sources of funds. In the operating revenues, the primary revenue is retail sales. Coincidentally, it's about 87% of our operating revenues similar to electric. We also have the wholesale sales to Western Municipal Water District in Norco. We have water conveyance revenue to also Western Municipal Water District and then UCR.

We have other operating revenue which includes customers establishing service and then the large increase in the two years of the budget. We're budgeting for the settlement proceeds for PFAS. When we did this budget two years ago that those settlement proceeds weren't as firm and were quite unknown. So they weren't included in prior year budget. So that's why you see the increase there.

And then we do have the water conservation revenue. So two years of the budget, it's only a $100,000 in year one. It's just interest earnings on the remaining funds that we have to spend. Non operating revenue. Again, primarily interest income on our undesignated reserve, our designated reserves and our bond proceeds.

Projected interest rates are at about 3%, a little bit less on both electric and water. We have capital contributions projected from development. And then we have other non operating revenues. And this is primarily lease and rental also revenues for our properties. Other sources of funds.

Primarily the bond proceeds. It's the those are the bond proceeds to fund our capital improvement plan. And then we have slight contributions to reserves. You'll see in the slides on the undesignated reserves, they're actually decreasing slightly. It's the money from the settlement proceeds that we're setting aside in the treatment reserve that's really driving the contribution to reserves here.

Water conservation charge. Before we get into expenses, it was originally adopted in 2004. 1.5% surcharge on all water sales revenue. In 2014, it was renewed for an additional ten years. And then in 2024, the City Council directed staff to cease collecting it and draw down on the reserves, spin down the reserves. The surcharge can be used to fund conservation, education and water use efficiency programs and also research development and demonstration programs. With the proposed two year budget, we plan to spend the entire budget on water efficiency. Eight residential and commercial water efficiency programs.

Water

expenses. We'll go into these categories of personnel, non personnel, the capital improvement plan and the GFT. In personnel, you'll see a similar jump from actuals to the budget. In water, the vacancy rate is a little closer to 5%, often a little bit higher. But we do forecast and financially plan for 5%.

But with the budget, we budget for 100% full, zero vacancy. The salaries does include known increases and known possible merit increases for staff. There are increases to CalPERS and the CalPERS unfunded actuarial liability costs. Non personnel. The production costs are primarily energy costs related to pumping and transmission and distribution of the water.

That is we are requesting or including a supplemental increase in the proposed budget for energy costs. System operations, that does increase that $8,000,000 in year one of the budget and then just decreases $3,000,000 But that includes some supplemental costs, including a $5,000,000 for the purchase of vehicles. However, it won't be a $5,000,000 one time charge. In order to purchase the vehicles, we have to budget for the entire vehicle cost in one year. We're actually going to fund the vehicles with a seven year capital lease.

So we will make payments over seven years to basically purchase the vehicles and we'll own them after seven years. It's 21 vehicles. I'll show you in slide here in a minute. And then similar to electric, we're projecting to issue new bonds to fund capital in the first year of the budget, 2627. And the full debt service related to that bond issuance will come online in twenty seven-twenty eight, increasing our debt service to $33,900,000 And then we have the water conservation program budget of $1,500,000 to spin down that remaining balance.

So our other uses of funds are the or I'm sorry. Yeah, other uses of funds is to fund the capital improvement program and the general fund transfer. The two years of the projected budget on the right coming down to the $157,000,000 and $153,000,000 number that balances to the revenue slides. These are the water supplemental budget expenses primarily in the personnel and O and M. The first line is 77,084 thousand dollars related to emergency callouts at various water facilities.

Dollars 170,000 for the what we think we need for the work order asset management system. Again, haven't issued the RFP for that project yet. So these are just completely cost estimates. The third line item on there includes the increased energy costs. We do have increased tax assessments and increased costs related to Gauge Canal and other water resources that we need to incorporate into this budget.

And then we have increase in maintenance and repair work, including additional paving expenses that was previously approved by Board and City Council. So about a year ago, we came back increasing the paving contract and said that the paving costs would be included in future budgets. And that's where we're including those costs here. This one is a net zero. This first one here, we're increasing our O and M, but you'll see an offsetting decrease to capital.

We've increased the capitalization threshold. So rather than capitalizing work between that 5,000 and $10,000 range as an asset, as an asset, we're just expensing everything up to $10,000 So we needed to increase our O and M $800,000 a year. The next item is the $5,200,000 That's for the 21 heavy equipment vehicles, including backhoes, dump trucks and service trucks. That will again be capital lease. It will either be one or two capital leases.

And again, that will be expenses over seven years. Then we'll own the assets at the end of that capital lease term. And then the purchase of diesel generators, including transfer switches of $300,000 So coming to a first year increase of $10,300,000 and almost $4,900,000 in year two. Here's the proposed CIP. It's the five year and the two years of the proposed budget are on the left.

And then for planning purposes, we provide the additional years three, four and five. And this is consistent. The total amounts are consistent with the rate plan. Again, focusing on the sources of funds. Again, the water capital improvement program, the CIP is primarily funded with bond proceeds similar to electric.

We do fund some with rates and there are some capital contributions from development. Budget versus actual. Similar to electric, we oftentimes spend a little less than we budgeted. Again, some of these are multiyear projects that take a little time to get up and running. Except for year twenty three-twenty four there, we did have some carryover budget that paid for the cost in the water supply section there, that $10,760,000 for the 7 Oaks Dam project.

So carryovers aren't really included here. But those costs have been previously budgeted in, I think, 'twenty one, 'twenty two. Water supplemental CIP that is included. This is the increased paving expenses. So when we're out there working on leaks then we need to repair the roads.

This is the item we brought back about a year ago. We're including the budget here. And since a lot of the project, paving projects are very small, we're moving $800,000 to o and m rather than caving in capital. So capital is only increasing $825,000 a year. Similar to electric, there's a number of unfunded projects we wanted to share this evening with the budget. First is PFAS. We do have a plan for PFAS. We're working on funding. We're working on identifying the exact cost for the treatment plants. And we are receiving settlement proceeds.

But the projected cost is $113,000,000 for treatment of PFAS. We have applied for the grant and loan through to the state also. The next item on the list is main replacements. Additional funding needed to achieve a 130 life cycle. So really, costs have increased significantly. And this is what's needed to bring that life cycle down as we move forward. Reservoir retrofits and replacements two reservoirs. Transmission main replacement. Distribution facility replacements. That's additional main and service leak repairs.

Well rehabs. System expansion. Then there's paving, additional paving that's needed from water leaks. And then safety equipment, the arc flash mitigation equipment at well booster and other water facilities. So $216,000,000 in unfunded that we're keeping our eye on, looking for funding sources and attempting to determine if we can include these in the next five year rate plan.

Water and designated reserves. We did have that year of the higher revenue in 'twenty four-'twenty five along with savings in O and M. It was a financially sound year. We expect the undesignated reserves to increase slightly this year. Again, there's a lot of unknowns between now and the end of the year.

I'm sorry. But the undesignated reserves of the dark blue, the bottom part of the bar, the line of credit is the $25,000,000 The purple line is that target minimum according to our reserve policy. And the target maximum is the green. So beginning with the first year, the two year budget, year twenty six-twenty seven, we plan to slightly spin down reserves, continue to spin them down slightly. And then out in the last two years of the five year plan there, start to bring reserves up.

So with the undesignated reserves, combined with the line of credit, we're slightly above that target minimum level. And with that, the tonight we're asking that the Board of Public Utilities recommend that the City Council approve the electric funds, including the public benefit fund proposed fiscal year twenty six-twenty seven budget totaling 523,600,000.0 in revenues, dollars 512,300,000.0 in operating expenditures and $79,700,000 in capital improvements and the proposed fiscal year 'twenty seven-'twenty eight budget totaling 5 and $27,900,000 in revenues, 495,800,000.0 in operating expenses and $75,600,000 in capital improvements. The difference between revenue and expenditures, including capital improvements, to be covered by bond proceeds and undesignated, designated and restricted reserves. And similarly, approve the water funds, including the Water Conservation Fund proposed for fiscal year 'twenty six-'twenty seven budget totaling $121,800,000 in revenues, 112 in operating expenditures, and $45,300,000 in capital improvements. And proposed fiscal year 'twenty seven-'twenty eight budget, totaling $127,300,000 in revenues, 116,000,000 in operating expenditures, and $37,500,000 in capital improvements.

Again, similarly to electric, the difference between revenues and expenditures, including capital improvements, is expected to be covered by bond proceeds and undesignated designated and restricted reserves. Thank you. And after public comment, we're available to answer any questions you may have.

Okay. Thank you very much. Do we have any public comment?

Hi. Melissa McKeith. It's always such a whirlwind when we go through the budget. I have a big picture question. Question. I hope somebody writes it down and asks staff. I'd like to know what our infrastructure impact fees are for developers today. And what I mean by that is for every dollar that's expended, how much of it is paid by a developer so that, for example, when we're doing large development on the North Side or up at the shopping centers and they need a new substation, how much am I paying? How much is being paid by the developers?

And the reason I asked this is back

when Mike Klinsky was there, he made a comment once that we hadn't really increased those impact fees since the nineties. Someone could confirm where we are percentage wise right now, and I realize that's up to the city council, not RPU, but there's often a confusion between development impact fees, which is what we pay for the planners and CEQA versus the actual physical infrastructure, pipes, etcetera. Second comment I had was on the 2% of the water conservation or the public benefit funds, kind of budget dust. But I think we could do a lot more research on issues like, and we've talked about this for years, how much water do we need for maintaining trees and green spaces so that we keep temperatures low? Does the city need to have more strategic planting to keep certain areas, particularly poor areas, cooler?

Take a look at Casablanca, not a lot of trees. And I think that that would be a legitimate public benefit charge that would be more at the macro level versus, you know, this individual give money back or subsidize someone. Just a thought. And then in terms of the $71,000,000 of unfunded electrical projects, maybe you could add my street. I don't think anyone's done anything with the electrical wires since, like, World War two, the way it looks.

Love to get those undergrounded, you guys. You know? And I you know, we had such a war over RTRP, but, really, there's undergrounding all throughout the city that would really enhance what our city looks like because most cities actually have underground in their overhead wires, and particularly in areas with lots of trees, which my particular area has, it's it's a safety issue. Finally, rate increase in turn not within the current, you know, implementation of the five years, but when are we going to have to go back to the public to raise electrical and water rates? Because what I thought was interesting is if we're only using sixty two thousand eight never mind.

Bye.

Thank you very much. Any other callers? Okay, no more callers. Comments from the board? Pete?

Ryan, where'd you go? There you are. No. That's fine. I just saw a blank podium for a while.

Well, now that our eyes have unglazed here, I first wanna thank you and your team for all the hard work that went into this project. It's mind blowing how many moving parts there are and everything else that's going on that we need to keep track of simultaneously. And it's more than my small brain can handle, so I'm glad bigger brains are working on it than me. So thank you. I just wanna reiterate in the the pre meeting conversations that we had last week for the record here is that this is a plan, but there's still flexibility within the plan in case disaster strikes or the global economy goes south.

Right? So the idea here is that, oh, wow. We planned this. Therefore, it has to go forward. But, you know, circumstances change. And I just want to hear from your lips that there is flexibility in here in order to not go lockstep forward with this because the plan tells us to.

Yeah. Board member Wilgamuth, you're a 100% correct. This is a budget. It's very flexible. We can change it any time. And staff will be very will continue to be very transparent with the board on any changes. And specifically where those large costs are with the capital and all of our capital projects come to board for approval. There's a lot of levers we can pull. And we're blessed to have the incredible reserve policy that we're complying with. So we have great reserve levels. But yes, to answer your question, very flexible.

Okay, good. Not to saying that we might need it, but it's good to not box ourselves into a corner that we can't then escape from in the future. Alright. One of my pet peeves is debt service. And you heard this last week, and you're gonna hear it again.

So the fact that we're paying what I consider huge debt service fees For electric, for electric, the debt service exceeds the general fund transfer, and it also exceeds the budget for O and M. I I find that difficult to believe that it's sustainable even though we have reports saying that it is. But it it seems like a huge number. I mean, we're talking, you know, $74,000,000 In the water side of things, the debt service exceeds not only the general fund transfer, but it also equals personnel costs. So we're spending as much on debt service as we are on people to run the department.

I don't see how that's sustainable in the long term. But I've heard from you saying that this is normal. So could you please tell us again why this is a normal state of affair?

Yes. This is the industry standard for not saying that has to happen, but it is industry standard in a capital intensive electric and water utility industry to finance capital improvement program. And again, that's why it's great for us to have the great partnership with the debt team at the city. But it it it allows us to fund significant capital projects and then pay for them over the useful life of that project. So rather than having rate payers pay for that in cash today, we can spread those costs over the life of the project and the customers using that asset pay for it.

Those dollars do look high, the debt amounts, but I wanna reassure you that we do calculate and forecast our debt service coverage ratio. That's the revenue that we're bringing in less expenses and then that number is available to pay for our debt service. On electric, we're maintaining above two times so we can pay twice our debt on water. We're usually around two, one point nine, 1.8. But we're always above the 1.75 in our reserve policy.

We're right there with the industry debt service coverage averages. And the rating agencies, we've given them our historic and projected debt service coverage ratios. They think we are financially sound and we maintain the double a plus rating on electric and no, double a plus rating on water and double a minus on electric. So the numbers do look large. But with a capital intensive utility like we are, it really makes sense to finance most of our capital improvement program.

So if you need more money, we just issue more bonds?

Typically every three to four years.

Yes. Alright. Which then increases the debt service and it goes round and round.

That is correct.

But it's normal. It's concerning that it's normal, to tell you the truth. I don't know about the rest of the people on the diets, but I couldn't run my household that way. So I I if you say it's normal, I I guess I have to believe you, but it's concerning. And I think we should do more than what we're doing try to lower that in spite of the fact it's quote unquote normal and it's okay and everybody does it. But I don't know. I have a problem with that.

All right. Well, before we can I stay on that topic Sure? For a second. So when you say debt service, this is not just paying, the numbers you're giving us is not just paying interest on the debt, it's actually paying down what we, the debt that we have. Right?

Principal also. Correct.

And this is funding nearly all of our former capital investment projects.

That is true.

And so the relevant number that we should be comparing roughly is not to operations or personnel, but to how much our capital investment costs are per year, which are very similar in scale. So so I don't know. I think that yeah. I I I understand the concern, but I don't think it's as as you said, the capital intensive utility, it just is the case that we're spending more money on big capital investment projects often than, you know, specific like personnel and whatnot. So So I think that's that's why that comparison is so large.

Well, okay. Just to me, if you're spending more on debt service you are on personnel costs, that's a problem. So even if it's normal, even if it's acceptable, to me, that's a problem. And I think we're in a capital intensive program because we put ourselves there. So I don't know.

Maybe if we can't afford it, we shouldn't do it. All right. Enough beating that horse. You mentioned an increase in the capitalization threshold. Could you elaborate on that, please?

Yeah. This was to basically as as costs have increased and inflations increased, the capitalization threshold for the city was $5,000 So if it was $5,000 or less, it was O and M, operations and maintenance. Boom. Write it off that year. It was $5,001 it's an asset.

We depreciate it over its useful life. That's increased to 10,000 now. So, it really rather than those items from 10,000 to 5,000 rather than capitalizing them as an asset, now we're just boom, operations and expense that year. That's why we needed to move some of our money from capital over to the O and M side. And it's more impactful on water because we have a lot of those payment repairs for our leak when we have to go open up the street that range from that 5,000 to $10,000 range.

Okay. So in practical purposes, what changes then?

Just if we classify it as an asset or not or expense it that year. Really, it's the same amount we're spending every year. This is a financial treatment.

Okay. Alright. That's all I have for now. Thanks.

Thank you. I don't know. Well, Tom had his hand up earlier, so we'll go with Tom.

Well, I guess back to the capital discussion. I don't know how you want to do this as far as incrementally. But the capital, what my concern is, if you look at the last four years, we spend about two thirds of what was budgeted. Now on one hand, you can say, well, we're incredibly efficient. But and if that's the case, then great.

But my sense is that by spending 66% of what was budgeted, I looked at four years, average took the total, so the highs and the lows, and I recognize there's inertia in a with the process here. But that means the work is not being done. And if over a four year period of time, we underspend the budget by a third, then I don't think we should budget that much. I think we should cut the CIP by 25%. And that gives you a little bit of a buffer.

But I don't see any point in unless you tell me we've done something magic that suddenly we're now we are capable of spending the budget as opposed, then I think we should reduce the budget by 25%. The capital budget by 25%. So that's my comment. And I don't know how this when it goes to the Budget Engagement Commission and others, what the process is going to be to come back when you come back with this or we change it tonight or nobody else agrees with me. Mean, that's always a possibility, a fairly high possibility perhaps.

But anyway, I don't see I cannot see any point of budgeting when you know you're not going to do the work and spend the money. So tell me I'm wrong.

I think at this juncture you lose your flexibility to be able to do what needs to be done. And obviously like Brian was saying, the capital work is spread over many years and work that is being built out sometimes will happen in one year compared to the earlier years. So I think taking the four year average might be too short looking maybe at a longer period.

Well, that's why I suggest only reducing it by 25%. That gives you some flexibility. If I really wanted to do it, I'd reduce it by a third. Instead of by reducing it by 25%, you still get you still have some there to be flexible and accommodate the inertia that's in, that's built in to the approval process and the implementation process of these projects. But that reduces the amount of money you have to go borrow too.

So, which goes back to Mr. Willemuth's point about debt service. You're building debt for something that won't happen. And so I like to say, I think the budget should be reduced to 75%. And that way, you've got some flexibility based on what you actually did over the last four years in both water and electric. So that's that comment. So I don't know, you want to go.

I think this is a big enough item that we can't I think it's better to address these specific subjects one by one. Okay. And so people have comments on this specific subject, I think that's great. Okay. And that we should I I actually also had a question about that.

You said that there's a lot of inertia and that was why we had underspent over these last couple of years. But presumably, that inertia was there in the previous four years and what was being done you know, if that inertia is always there and and it takes longer than you think always, then, you know unless there was a unless there was a is this too loud? Something ringing? Okay. Unless it there was a ramp up in capital investment that we, for some reason, I don't know, post COVID or something, and then and now we're just getting started.

That would make sense, but I don't know. I I was also wondering, like, if we didn't start four years ago, right, you know? So I I also had that question. And I had a second question. Sorry. I'm not letting you answer. But when you have this capital investment plan, you have specific items on the list that you want to spend this on. Right? So seems that we I don't know. We would be I I recognize the concern.

I agree. I had some issues with this too. But I also am worried that we have a plan with specific projects in mind and a timeline. And so we would have to figure out what 25% to put on hold. I don't know. It okay. Any other comments on this topic?

Rebecca? I'm

not a fan of doing it this way, but it's fine. I think the general one of the things that, in general, we should be paying attention to while we might have not paid attention to in the last four years, we will need to pay attention to the next couple of years because of what is happening globally, and that will impact absolute cost on all of the CIP projects.

Jordan?

Yes, I have a question. So it's pretty clear that a lot of the CIP projects have an amortized debt obligation schedule built in. But what's not clear is if there's a buffer built in project specific or in terms of the overall allocation. So it might be helpful to see clearly how much a buffer we have built in. If we have a 10% project based or if we have a fee built in. Because we understand that the department needs the flexibility so they don't have to come back every single time there's a change order or a change in a price, obviously over a certain threshold.

It's because you're hitting the mic.

That's what

it is. That's what it is. So that was my question. Is there a specific project based buffer or is it built out over the air?

There is a purchasing exception that allows for 10% change order authority. So that does give us a buffer, specifically project wise. Doesn't always pertain to the entire project. And that's typically when we bring that forward, we include it in the cost of the project and the work order authority. So the Board does get to see that also. But as far as a buffer, project buffer, I think really that would be it, the change order authority.

That's right, Brian. And those when we develop those five year CIP plans and even the ten year CIP plans you know those are all planning numbers and those that data and that information that is given is the best of what we can offer today. However, like remember Goldwater mentioned, we're seeing a lot of global instability in pricing. And we're finding that some projects that we had penciled in dollars for prior prior are now increasing in costs, sometimes significantly.

If I could use an example, that first treatment plant for PFAS, I don't remember the numbers off the top of my head, but it may have been $15,000,000 and I think the last time we came to the board, it was maybe $20.25, 29,000,000. That was in a six month period, how much it increased. Yeah, we are subject to significant increases in our capital projects.

Yeah, Rebecca and feel free if you want to continue with your commenting.

Pete was done. Tom, you done?

Well, no, I've got a bunch of other questions.

Yeah, we'll go back to Tom after this, after we finish this part. I do want to get back to, I mean Tom raised a point, like we budget for it, it doesn't necessarily happen in the last few years. So in theory, there's a way to go back and look at the last five consecutive years and go, these X projects got bumped forward because I'm gonna make rain. The transformers didn't come in. Somebody quit at the vendor and like, whatever it was.

Because it's clear that projects did get delayed for various reasons. Maybe we didn't have the resources to complete the project because the cost went up. So we pushed it off to fill in the blank year. I think that was in there for at least one of the projects that got bumped to 29.3 for the back end utility system, right, the payment system. So right, like that's an example, but I don't know how and where that would fit in here.

So maybe that's how the item comes back versus decreasing the amount because we're still gonna approve the expenditures. And while it's in the budget, it's still gonna come here for this group to approve. And then that way at least staff can address the larger concern, which is how it gets budgeted out. And then it can be adjusted in the next year, maybe versus not allowing the budget to go through. Can you guys do that? I know you're processing while I'm talking. See, this is fun.

Board member Goldwere, what was do you want me to try to

answer that question? What was the exact

or is it or was it discussion?

No. I Go ahead and answer it.

Sarah, could you repeat

it? Yeah. Well, you've gone without anything to drink

so sure.

Can staff put together within the last five consecutive years, a review on which projects either got delayed or postponed, whatever the right word is. To address Tom's concern about why funds were under spent from budgeted to actual.

That could be done.

I figured. I don't know if that's good enough for Tom, but it would be interesting to see.

It would be interesting

to see. Okay,

Tom. Can I move the subject a little bit? One is that every time Tracy So to introduces herself, she talks responsible for strategic initiatives. I didn't see those words used anywhere in the budget. So what projects are considered strategic initiatives?

I mean I can name one.

Tracy would you like to come up?

It's not, well I can name one. That I believe is strategic.

I would like to add that from a high level this budget this is a high level presentation of the budget and her division and a number of her initiatives are buried in these slides but Tracy.

Good evening, I'm Tracy Sato, Assistant General Manager Strategic Initiatives. So, strategic initiatives encompasses all of our customer engagement team. So, all of the public benefits programs and water conservation programs and community outreach. But it also addresses, for example, we received a grant and we hired a consultant to come in. One to do an evaluation of efficiency programs, but also to help us develop circuit level projections for demand response, transportation electrification, building electrification and that is a utility wide initiative.

So we are working on the electric side. So we're working with energy delivery and planning and those are the types of initiatives that come to my team is to lead some of these projects that work across the utility, whether it's all the way from fleets all the way up to our planning teams who are doing our generation. We're also responsible for a lot of our legislative and regulatory review and then working across our departments and sometimes across the city to deal with certain regulations, for example, advanced clean fleets or the Low Carbon Fuel Standard Program and working on how those programs work across all of the different departments and divisions within the utility. So it's a small team. I don't have a lot of people on that just do that portion of it.

It's really four people or five people there that do that, lead those types of projects and do the coordination across the utilities on both the regulatory legislative and currently special projects that we're doing. We also support grants, grant writing.

Okay, thank you, I appreciate that. I guess I wouldn't use that term strategic initiatives if I was doing a job title. But that's another, that's for another day. Okay. Because I believe the strategic initiative that the utility has is the replacement of springs fundamentally as in terms of becoming a battery storage and demand capable facility versus a natural gas turbine generator.

So that's what I would call a strategic initiative. I do I guess the question that Melissa McKeith asked, think is a good one as far as what I think it's in here in this presentation that their developer fees cover we capitalize the facilities that the developers install. So is that a line item in here? I couldn't really find it specifically but it must be.

It is a line item in the electric and water utility. I'm sorry, I can't ever since I ended the presentation, I can't move back. But yes, it's a budgeted revenue line item and then it also funds a portion of the capital program related to development.

Okay.

It is in the budget here.

And it reflects actual cost?

The electric utility, it does reflect actual cost. It's all time and materials. And on the water side, we're currently, yes, but we're currently actually updating the study on the water development fees right now.

Okay. Because the developer has the option to put the facilities in themselves, right? And then you And they tell you what the value is and we capitalize it.

Very true. And I didn't go into that detail, but you saw maybe in the in the bars all the way to the left or the columns all the way to the left, usually the developer contributions were a lot higher in that year because you're right board member Evans. Sometimes the developer will do the work or install the infrastructure and then turn that over to the utility as an asset. And we record it on our books. It comes in as a revenue and asset.

Okay. Thank you. And in with respect to the cross departmental charging, We pay a $100,000 for the helicopter police helicopter. Why do they charge us for the helicopter when they don't charge any other business?

That is correct. And I believe it's for over or air overhead. Let's see, monitoring of our properties and our system assets throughout the city.

Okay. And then with respect to the marketing and communications, are 6.5 FTEs associated with that. If we said we only want to pay for three, what won't happen? And we ought to have a choice. We got to be able to make that choice. For example, I brought my bill this month, which paperless would be great frankly.

But

anyway, but we couldn't print these things out except you could send them by email. Are we paying for them to design this?

Yes, that's correct. Yes we are.

So so what wouldn't let's cut that in half let's cut to three. What what won't happen? That's several $100,000 Can

I jump in just because I used to live in this world? You would have to decide by dollar amount, but you would lose your social media piece or you would lose the graphics piece. So one way or the other, the bill is coming, it's just a question of how you want it to come. We used to do it in house. Those are things that like Deb Ferguson did, but now that's outsourced to Citi because they were able to consolidate some other things. All of the postings either on social media that's going out, emails. I don't know if you guys want to jump in now that I've said

But it's a lot of people. Reports Seven FTE.

Yeah, reports, our annual financial report. The report Robin, assistant general manager Glennie just brought forward on water. Yeah, they do a lot of our reporting, lot of our, make the city's media branding consistent throughout the city. But if anybody wants to add to that.

And we have all our publications that the communication department supports us. All the media things that we do. We do have a communications director online. Caitlin, I don't know if there's anything you'd like to share with the communications. Say if we did cut in half what the utility would need to consider as far as its level of efforts that it's putting out to the community to communicate.

What David? Sorry, is Caitlin on? Okay.

Yeah. I think Caitlin you might be on mute.

Are you able to hear me?

Yes. Now we are. Yes.

Okay. Oh, shoot. I'm sorry. Good evening. I am Caitlyn Meyerson, your director of marketing communications.

And we are happy to cover all things RPU when it comes to customer communications. Should there be large projects happening in the area, rebate programs, whether it's print, digital, communicating out to customers, email marketing as was mentioned earlier, advertising, social media, TV, photography, videography, graphic design, all of that falls within our shop. So should you go from six to three or six and a half to three, that would be a discussion of of where we cut, what services we cut.

Okay. Well, I think that's something you gotta challenge yourselves each year because it it is a it's not a trivial amount of people and money. So okay. Then I have my last let's see. Last question. Well, I guess the 2.7 people we pay for in public works presumably is for plan check for street opening permits and stuff like that?

Yes, believe so.

Okay. But I would like to I congratulate you on reducing by seven people or I guess seven vacancies in the meter reading, what's the upside? What's the ultimate that you can get to as far as a full implementation of an automatic meter whatever term you guys use. I call it AMR, but maybe others have something else. But what's the upside or upper limit?

We're continuing to monitor that, really are, because we still have the water meters out there too. So as we're changing out the electric meters to AMI, we still have the water meters that we need to read physically. And the field services team actually helps with meter change outs also. So as we need to change meters out and then install AMI, we are utilizing field services. As we have vacancies, which we just had two more vacancies come up recently, we're hesitating in filling those and just continuing to monitor to see if we can appropriately, I don't wanna say adequately because we wanna go beyond adequate, but keep up with the work.

So really we're continuing to monitor. I'm sorry, don't have a better answer on that board member Evans.

Well, no, think that and being a benevolent employer, reducing vacancies is a lot better than reducing positions where there's a live person in it and they have to figure out some other job to go to. But AMI with water meters is not a myth. I mean, there's other water agencies that do that. So it seems to me that's something that ought to be pursued. Again, I would put in my category of a strategic initiative because it has a significant benefit in terms of ongoing operating cost reduction and improved service to the customer because they can get more immediate information on what their issues are.

You'll improve losses because of improved metering and you'll improve loss on the customer side as they have a leak that they didn't know they had and have to pay for. So being more aggressive being aggressive with that is good. And I'm happy to see that you're accomplishing reduced operating costs. I'll go back to my original point. I believe that the CIP should be reduced by 25% and budget on the basis of what is more realistic and being able to accomplish the work.

And again, you have to borrow less money. That's the real benefit to doing that because you're not borrowing $100,000,000 you're only borrowing $75 So I think that should be a change in proposal of reducing the CIP by 25%.

Brian, when we go out for CIP projects, we don't borrow the money until the projects been planned.

Well, say we'll borrow maybe in one to cover our projected CIP for three, three and a half years. And we have those funds available. But we do develop, to your point, David, a cash flow. So we work with the electric and water teams. They have a $5,000,000 project. They say, okay, we're gonna kick it off here, no costs. But in quarter one, maybe we'll spend a million. Quarter two, 2,000,000 and then could be, you know, six months later, they've got that final payment. So they work with us on the cash flow. I then take that cash flow.

I don't take the budget when we're issuing bonds. We work closely with the electric and water teams and we use the cash flow to determine how much we're gonna need in that next bond issuance. So I think to your point, general manager Garcia and board member Evans that we're not necessarily issuing debt based on what you see here in the budget. It's the projected spend based on how we're implementing those projects according to the approved budget. So there could be that lag. So we do actually realize some of that that the time lag and then some of the savings in a little bit lower bond issuance compared to the budget. Hopefully that helps.

Yeah. So you're doing what I'm telling you, what I'm suggesting, you're just not doing in the budget.

Yeah. We do. We have implemented it because we really don't want to get in a situation where we're issuing a $100,000,000 in debt and then, oh, now we're holding on to this money for six years and we had planned to spend it in three. So we do take that into consideration.

Well, you have to spend it within the timeframe otherwise you get arbitrage.

Exactly right. That's why we wanna avoid that and work with the debt team.

Can I ask one other question? Regarding the facility at Springs, you had an item in here to do environmental analysis for a site for a battery storage facility. Why isn't existing Springs footprint sufficient? How much bigger do you need? I think the utility owns property right next door or Edgemont Community Services District does you could buy it from. But how much bigger does it have to be?

Good evening board. Scott Lesh, AGM Power Resources. We need three acres.

Okay. But how big is it now?

Springs is about one and half of it is a substation. Okay. So it will not Yeah. Facilitate battery.

Yeah. Okay. Thank you.

Okay. Other comments from the board? Yeah, Rebecca.

So Tom wants you to reduce the CIP, but he gave you two new projects to do. So, know, that might balance out the dollar amount. I need you to go back to slide six. So I'm super glad Rosie helped fix the Yeah. The back end problem.

And you already went most of the way there, so that's good. This is one of my favorite slides because it when you look at regular businesses, for profit businesses, like 80% is personnel. So the fact that our little RPU red portion is what, like a quarter. I know that we're not in that space as most, but it helps me anyway understand how we can carry so much debt. So I don't know what the debt service for the city is, but it's clear that you're bringing in more than you are eating.

So and having it amortized over the life makes the projects move forward so that we can keep rates low while we provide high quality. Can you go to 13 now? I told you this question was coming. Most of the increases we think are step increases for salary other than the new positions that you mentioned.

Was it this one here?

It is that one there. Thank you. Nine, not 13. Clearly I had questions on 13 too.

Yeah. Typically these increases from the year '26, twenty seven, twenty seven, twenty eight, the second year of the budget, the less the $260,000 is about 7%. Maybe eight in total here. But it ranges from seven to 10%. We have the, all of these classes include the, all of these departments include the 4.5% salary increases effective 07/01/2027.

That was approved by City Council. And then there's if an employee is eligible for merit or step increase, those are included here and those are up to 5%. That's included in the budget module and the personnel budget. And then PERS, as you saw with the PERS expenses and the PERS UAL increased more than the 7%. So that's really what's driving those increases here.

Thank you. Can you now let's try 13, but maybe it was 14. Try 14. Nope. Go back to 13. There are a couple of lines that have no no, this isn't right. Where's your go forward a couple. I'm sorry. Clearly, I don't know how to write things down. Nope. We're skipping that question. Go back to 17. Maybe I missed it. Why are there decreases from there's a pretty large increase from 25 to 26. I'm sorry.

26 to 27 and then a decrease from 27 to 28?

Yes. Yes.

Why?

In the expense side?

Yes?

The $499,000,000 down to the $482,000,000. That is primarily reduced. So that's in our operations and maintenance, the lighter blue on the right side. Sorry. There's even lighter blue on the left.

But we're gonna work on this slide going forward. But, yeah, the we have reduced power supply in year two for the IPP going away. It's really for the reduced transmission costs related to the southern transmission system. We've got in year 2627, in water, we have the 5,000,000 in vehicles that we have to just budget for because that's when we wanna enter into the capital leases, although we're not spending it. So, that's not an expense in year two.

But this is electric. You said water. Oh, I'm Just making sure. We don't have the vehicles That's in not electric, good

point.

Okay.

It's primarily driven by the power supply. And then up there in the capital, it's primarily driven by a little less capital related to work in Clearwater capital repair and replacement. That's why the we see the decrease in year two.

Okay.

Thank you for catching me on water.

Well, I I have the same question in water. So I don't know if you wanna go there. It's slide 40. Maybe. I haven't gotten any of the slide numbers right. Oh, it's right. So same thing's happening, but different explanation.

Yeah. Let me go to the if you don't mind, a few other slides.

Look where you need to.

Personnel. Yeah. We do see the reduction, slight reduction in the o and m, but not the debt service. So, the o and m is decreasing because of the vehicles. But we do have some supplemental still in year two for the primarily assessments for our water rights and some things for our water resources, sorry. And then our energy costs are increasing. It's the CIP that's really reducing. It's just the planned CIP. We really didn't have significant increases to CIP. I'm sorry.

I know I'm all over the board. In CIP, we didn't add to it. We couldn't afford to in water, to be honest. So most of the items are unfunded. The only additions are the already board and approved PAVI. I think it was $800,000 in capital. So, we just had a spike for a project there and I don't know it off the top of my head in 2627 that was driving the CIP up higher. And that was according to the CIP with a five year rate plan. So we just had a spike in the CIP.

Okay. Thank you. It just occurred to me Melissa's comment about public benefits, I don't remember which side it's on, it doesn't matter. But I don't know David, Tracy, somebody would have to look. But I don't believe what is proposed is necessarily within allowable use of funds.

Because in theory, the reduction on the use of funds would be for the reduction of kilowatt hours. So I don't know how you get there by keeping, I totally agree with her. We should somehow do more trees, etcetera, for all the reasons we need to keep our houses cool. But the trees in a park or somewhere else, aligning streets, things like that aren't necessarily doing that.

Again, Tracy Sato, Assistant General Manager, Strategic Initiatives. Just to get us through that. There's a potential that the public benefit funds, because they do have a research and development strategy. However, it's typically really really aligned with where can we get energy efficiency savings. Could look, I mean trees do provide an energy efficiency savings through shade on people's property.

What we would be getting at to do a tree study would be trees shading public areas or streets more because we couldn't put trees on people's private land. We might be able to do that study but we wouldn't be able to fund the trees for that unless the city were to take that up because we can maybe fund a portion but not all of it

so okay I think there I mean there could be some interesting ways to think about the study because if you take the heat sink away we don't have to cool so much Right. I mean that could be a piece of it, but so I think it's worth looking into, but I agree with you on the R and D side, it'd probably just be a report. Okay. Other than trying to get Honeyfield up here, you've got all your AGMs that have come up. So I think that's the goal for the end of the meeting. No? Okay.

That's it.

Okay. Thank you. Other comments? Yep. Thank

you, Brian, for the presentation. I just had a quick question. Where exactly does the general fund transfer go?

To the general fund. You Would you like to know

if it's been time? Is it the city general fund or RPU's general fund?

Oh, sorry. City's general fund. It's a transfer of revenues according to the city charter up to 11 and a half percent of electric and water operating revenues and it goes directly to the city's general fund to help provide city services.

Okay.

Because I was looking at it. It's actually a pretty large number to where it could fund five of the electric unfunded CIPs on its own. That's why I was kinda concerned by that. I know mister Wilgemuth touched based on it with the debt consolidation, and there's no way to reduce that in the city charter percentage wise? Because I I I I don't see, like, with what we do, we should be charging our customers to improve RPU. I don't see the benefit RPU gets by transferring that allocation of money to the city.

I believe it's a city council decision, isn't it?

It's it's merely a cost. We look at it as a cost to RPU, the electric and water utility. And it's a part of our cost of service that we build into our revenue requirement. That's really how we consider it.

Okay. Well, thank you very much.

And I believe the charter says up to 11.5%. Alright. I'm in charge. Okay. Any other comments? Okay. Have one.

Just one.

Oh, Go

ahead. Just because the GFT came up. It is a huge benefit to this institution as a municipality to have a utility like we have and while people can disagree on the dollar amount, the general fund transfer from my perspective is what makes so many of the other benefits of the city attractive. Like our parks would look like garbage if we didn't have the general fund transfer. Our streets would be messed up if we didn't have the general fund transfer. Like there's so many other things that the GFT makes it more attractive to then attract businesses that keep the utility rolling. This utility would I think struggle if there weren't dollar amounts transferred to the city to make it better to live here. That's my opinion.

I'm sorry, board member Becker. Should have been more clear of the city general fund.

Yeah. It's quite right. It's just I agree with statement. It's just for me, it's proper budgeting. I just I would feel the city would have to build that budget. Like, I I want the same things that everyone else does. It's just I don't think by charging the customer base of what we think we're paying for and then substituting it to cover debt in other areas in the city. That's all.

I have a follow-up on that. What do you mean by covers debt?

Well, you said parks and recs and different things, that RPU doesn't provide services for besides metering water and irrigation for the parks. So it's an incurred cost by the city, and we're subsidizing the cost of maintaining things that doesn't benefit RPU.

The rate the rate payer is still benefiting.

In hindsight, yes.

I mean, we're gonna pay for it one way or the other if we want it.

No, I know. That's what I'm saying though. It's kind of like a to me, it's a hidden cost of transferring the money from RPU when we're our sole purpose is to maintain infrastructure for electric and water.

I guess that would be maybe your request of the council then to have them call out the things that specifically pay for the GOT. Then it would be more transparent.

I like transparency, so. Yeah. Okay.

I had a comment that was not about the GFT. Okay. So regarding the allocated costs, on slide 13, we're paying outside of personnel costs. We're paying sort of $12,000,000 a year for these various city departments. And I had asked you how these dollar amounts were calculated, and I was I'm sorry. Slide 13. No? Okay. Yeah? Okay.

And I was told that there was an equation that a consultant came in and came up with with the a process that, you know, made it fair that we take out First of all, we take out the cost, you know, of the personnel that we, of course, are paying for in these departments. Makes sense. And then we divide up the cost of the work and then of that work and then, you know, figure out what percent of the work was ours and then allocate that cost. But I thought there was sort of a flaw in that equation and that we are taking out personnel that is doing part of that work, but then we are not taking out that work that the personnel did when we're figuring out the remaining costs. Sorry.

I was gonna make an equation and, but anyway, I didn't do it. But do you see we I think you understood it when I was, discussing it with you that it didn't seem quite fair that we're obviously, we're taking out the per the cost of the personnel because we're paying for it, those those specific FTEs. And then there's the cost of doing business that the city pays, and then we figured out, like, we're 30% of this department or whatever, and then we're charged 30%. But the FTEs that we are paying for are contributing to that 30%. And so if we're not also taking out the work they're doing or some portion of it, then it's figuring out that percentage needs to be done right.

And have you followed up on that at all? No?

I think we do have, our budget manager, Peter, Cacos on the line. But it did We worked extensively through the cost allocation plan with Peter and his budget team this year. And and and the deputy finance director, Sergio Aguilar. But you're right, board member Sienna. We do have the direct allocated positions that serve RPU.

So they're as if they were almost our employee but they specialize in what that department does and serves us. That cost is removed from that department cost and then everything else that's not directly removed like that is allocated to the departments that are being served based on the allocation method. Whether it's agenda items, full time employees, expenditures. But yes, to your point, that is correct. That is the methodology. That's pretty high level. I don't know if Peter wants to add, but that's my understanding of the cost allocation plan.

I can touch on something. Can Peter Kakos, interim budget manager. So regarding the positions, I wanna make sure that we're separating the two things because the direct allocated positions, as Brian said, those are almost exactly as, like, RPU employees. So say, hypothetically, you have a a a buyer in purchasing that is doing work a 100% for RPU. Well, that person's costs, their salary and benefits, is removed prior to the calculation of the cost allocation plan.

Otherwise, there would be a double charge. So though that cost is removed. However, all the other ancillary costs surrounding that person, in other words, that person does not work in a bubble. That person has a desk, software, other utilities that provided by the building, and every other ancillary cost. That is not part of those direct charge positions.

So that leftover ancillary cost is then put into the cost allocation plan and distributed according to various methodologies. So that's basically how the breakdown of the cost allocation plan comes in, and it's done according to, best practices. And we have various allocations, and I believe there's a handout to illustrate the departments as far as how they are allocated so that it's it adheres to those best practices so that we're not that we're following the the best rules in order to fairly and defensively, as the term goes, distribute those costs to the various receiving departments that receive that benefit because the city as a whole is an economy of scale. So we get to we we distribute those costs, and it's more and it's a more efficient manner in to distribute those services to the receiving the benefiting departments, in this case, RPU, to be able to utilize those buyers or those HR people or those marketing people as was discussed previously. Okay.

Thank you. I I think I need to study this you know, look into this more offline. I think I understand what you're saying, but I think I also understand what I'm saying. So and I don't think they quite agree. So anyway, I I would I'd like to look into it a little bit further. But, thank you very much for the explanation.

Uh-huh.

Okay. Do we

have I'll move to your question.

Okay. Second.

Seven yes votes, one no vote. Member Evans. Motion carries. Thank you.

Okay. Thank you. Do we have any board or staff communications to report on item number 14? Okay. I have something. I should have done this at the last meeting, but I just wanted to thank our former chair, Rebecca Coldware, for her year of service as chair. As we saw today, sometimes these things can get complicated, and sometimes it's nice to have somebody who's, you know, organizing it really well, but I'll get there. But anyway, I really do appreciate, all the work you did. Is a lot of extra work and for, organizing this sometimes contentious and complicated things. Thank you very much.

Oh, right. Another thing. Earlier in the week, I went before the, the mobility and infrastructure, committee of the city council. Right. Thank you, Pete.

To, present our annual work plan, to present what we did last year, how we did, on our annual work plan and and our projected work plan for the next year. It was actually really useful exercise. These bureaucratic things can sometimes be annoying, but I had to go and review everything, what we promised. I actually went through every one of our agendas, and realized how much time we spent on our, board policy and standing rules. Anyway, so it, that was it's actually ended up being very useful and there were no concerns or anything from the the committee members. So, yeah, that's all I have on that. Thank you.

Okay.

Thank you. Are there any items for future consideration for item number 15? Okay. Oh, I'm sorry,

Tom. During the budget discussion, we talked about coming back with information on what again expanding on this capital actuals versus non and and what work didn't get done or did whichever way you want to do it. Did you commit to do that? Or did we just talk about that would be nice to do because I think it would be nice to do.

We'll take this as your formal request and add that to the board member request log.

Okay, thank you. Okay, we'll now turn the time over to David Garcia for the General Manager's report.

Thank you, Chair. And you did a fine job at Mobility Infrastructure, so great presentation. I have two items for you tonight. One of them concerning an injury to a couple of our electric employees just earlier last week. One employee two employees were injured, taken to a hospital. One was returned home after about a day stay at the hospital. Another one is still in the hospital recovering. So we send out our prayers for speedy recovery for him. He's in a burn unit right now at a local hospital. Lastly, I wanted to just express our condolences to the Kirks family.

As you all know, Vanessa Kirks had passed away, a long time city employee and in last couple of years, an RPU employee. So we just want to say out to just start our thoughts and prayers to her family. That's all I have, Chair.

Okay, thank you. And so we will adjourn this meeting in memory of Vanessa Kirks. Thanks.