May 4, 2023 1:00 PM - Redding City Council - Special Meeting - Budget Workshop

[ GAVEL ] >>Okay, will going to call to order a special meeting of redding City Council budget workshop for May 4, 2023 your first item is roll call >>[ ROLL CALL ] >>Next item is budget workshop this is Mr. Tippin going to present your >>Thank fully I'm going to mostly other specter tonight so are today but I'll give you a very brief overview of the event and our intent unless the Council is interested in having some additional information presented to them at a future time is that the last of the budget workshop after this City staff will take all of the directions received from counsel, beginning to develop Department of overviews which we've already started finish off the goal and objective put together the budget book our intent to present that you as early as June 6 depending on how that L comes together over the next few weeks today is really focused on enterprise funds more specifically Redding s electric utility public works which are the utilities and our airports which an enterprise and will take a little bit more about airports as it gets going.Any questions? >>Okay, >>Will do it that way. >>Good afternoon I'm going to grab the slide.Good afternoon Hon. Mayor members of the Council appeared I think this is good for me my brain works better at 1 PM get this presentation were going to walk through it's really three parts. First were going to died in to our organizational key performance indicator for our EU and jail will get into that in a second the second part will dive little deeper into the FY 24 25 back in support of the workshop and because of the nature of how budget we need to talk about our five-year financial plan which will be the third piece of today's presentation. The five-year financial plan includes a look at forecasted rates retail rates, which our budget has to assume in order to make all this happen.As you might remember last fall I brought an update on our strategic plan to counsel I think it was December 1 of the items coming out of the strategic plan updates that we created five strategic categories and we've created measurements or metrics of our performance in those five years. We talk about we going to great dashboard internally for us to track and monitor and that's what we did. That's five areas from personal safety operation finance and customer satisfaction there's two main performance matrix and is one of those but I'm going to do here walk you through this is or it looks like I believe it was Councilmember Mezzano had asked to see this more often than once a year. So this is actually a screenshot of a software program called smart sheet that we as. This is the dashboard that internally will look for a Ricky performance in either and gives us an indication on the health status appeared so jumping in the first API is customer satisfaction. Is broken down by two different matrix. One is affordability for our residential customers. The other is customer satisfaction driven by a survey appear to asked for is a full liberty to goes our goal is to keep our residential, the typical residential bill for typical usage under 2 1/2% of a family of force median income in area. The highest we've been is to present about a decade ago and that's when you really start to get duties I call it the dinner table when you're paying your bills (INAUDIBLE) we don't present a trifold where you start to see and feel they why is this getting so expensive? Right preaching in order to I have present the goal currently was 1.85% and that is that level that where you know were very proud of you brought it from the 3%. On one point On one .5% and a you will see later on this presentation how is this forward-looking basis.Here is a customer satisfaction since we just set in matrix up we don't have a good baseline we are going through a survey process our commercial customers have been surveyed and residential our next take that survey data and use to drive very see our customers as far as satisfied they are with our services and there are a lot of different areas second KPI is financially related to parts the first part is total number of the date of cash on hand which is actually our financial management policy this Council approved it will receive 1414 appeared the goal is 150 days the cash reserves on hand the minimum is 75 days currently we are at 109 can't indicator. Operational speaking will look at two sources a data first order " " source of data is for customers that experience an outage what is the average time they were without power? This is average over three years so that we don't grab you know large unexpected event it's more useful work the goal is trend is down I think we can still searching for good industry data for service area. The size of Redding with the overhead and underground and trying we have.But we do want to see number 10 down and so the more investment we can on distribution system and the Morrill nexus the liability measure we take care expect to see the average minutes of an outage decrease. Our customer that is how they see the value of investing the system. The second item is energy resource that we need to meet our load or our customer usage. The goal is to keep within 90% to 150% of our next need pure and that's okay you have every variation doesn't have to be 100 on the thought because there's time that the year that you need to see how your Hydro focus will come hydropower to us there could be change load having variation is good right now. They are at 112% which is okay. Personal two matrix were looking for is our vacancy rate your I think it's pretty normal for most operations to monitor the number of position the position of our goal is to keep it under 10% right now were at 14% and this is helping us to look at this differently some changes to our and you know becoming more training organization branching out more for Cigna engineers you know, getting more involved in the college is doing everything theEven changing our jaw flyers right? I mean were trying to change everything that we can number down inside keeper inside of the KPI goal area appeared the second item is employee satisfaction. There's a lot of music and measure that to get it up going to the fastest way. Is eager to measuring how many separations are expired " thus experiencing that Aaron say full retirement? Right? If somebody retires of the full retirement the rain yet that's fantastic pure and right now it's at 3.9% and we need that to trim down you can see in Q1 all for FY 22 is 4% it moves around and was looking at this data trying to establish a pattern and see you know we can come up the last KPI safety. I think it was Councilmember Winter asked how many fires hard are you started in 2000 calendar year 22 was five you can see and 21 it was eight in 2020 and was nine our goal of course is zero right? So where the mitigation efforts that were working through with our system hardening with scroll and raptor. The second metric is our total wreck recordable injury rate of employee we want to keep this industry standard is less than three for fiscal year and thankfully for 2022 we are now two-story doing good their status what I have for KPIs and I design now and they are running and we will be updating data. All bring it to the Council to the next time you will see it this hopefully is when you tap the strategic plan probably does fall November December everything we can do is send you our quarterly financial updates we can put this up to and the nice part of this as a director this helps when will they get budget in five-year plan information we should be spending our money and improve the performance of the utility we have an operational issue? Do we need to find more in our safety area? How do we move this around to keep the performance we going to for direction. So next and were going to jumped into is the FY 24 " 25 budget pics of the highlights really four areas in this timeframe for projecting relatively flat be deal sales or the other way to say it's the amount of power peered over customers are going to use were saying flat their new growth of Reading peered no buildings brand-new homes, but there's also a lot of solar coming in the area there's also energy efficiency. So the older air conditions when they start to feel the only air conditioner you can get today is high-efficiency right? You get new lights when you change out lightbulb is going to be an LED. So, when you mix that in our load forecast consultant that uses a we call a econometric forecasting. Feels that an average were going to be pretty flat but all talk about what were seen in figures 4 and five outside of this budget but in the five year plan because were starting to see an uptick second item really is the budget is power supply costs are going up. Soft talk about the prior meetings the cost of natural gas the cost of power last fall, the cost of power went through the roof in California because they are short on resource. Natural gas skyrocketed and the war in the Ukraine and Russia chuckling fuel supplies of Europe. Europe then went to purchase large amount of liquefied natural gas that shipped out to the states in which drove up demand for gas this isn't anymore of it. So well are you are fantastic at hedging we have energy risk policy our financial team our resource team does a wonderful job hedging spikes and current events. We are not able to hatch ourselves out of forward of the future right much like Southwest airlines that they hedged their jet fuel cost of our crazy price spikes of weather and other things like that but you going to future years or three and five and you have to go by fuel or power your at mercy of the market just like anybody the goodness there is a no increase in our headcount we did add 10 positions we registered as TL transmission owner transmission operator, so we don't see need now to add headcount of course with 13 vacancy were trying to get position that our approved field and the biggest story of this afternoon for us is our significant capital expenditure is that were seeing in the two years budget and a five-year plan soul like the waterfall chart for me it's a good place I can start with the where are we at right now? So the budget the FY 23 amendment budget which is that were right now. Isn't interested yet is 152 million on that far? Right now I 25 proposes 17 8 million and here's what we get there in this budget so we added for 4.4 4.5Million in personal cost and I have separate slide on that so we can well dive. Goes up 1.5 million that that is just at 17,500 savings our debt is fixed but like mortgage at your house. The $17,000 savings power supply for costs are moving out and like just mention the price of gas and power and most the capital almost $40 million in the time frame shared service have slight increased booth mostly relational so revenue assumptions are what we are zoned streaming for funding coming into our EU appeared so we have utility rates right? Our customers pay our retail rates we've assumed annual rate increase efficiency January 1 we had a rate increase January 1 of this year just if you want to go for 2% distorted winter we plan to bring the Council a rate proposed and will go be going through the process with our stakeholders in our workshop here and will hold those assumption here we assume some loose growth find out years four and five related electrification in some population growth here also show them some load reduction that I mentioned to energy efficiency and distributed generation which is we can do solar from the most part but we also have wholesale sales revenue under contract that will issue into common to help with budget. This is our retail load forgot so it is interesting if you look by 2009 that was kind of through the high point in this chart anyway the most energy be sold in your our customer and as our population is actually increased in ready from 2009. Right here what would happen from 2009 today is likely said air condition much more efficient call light being much more efficient Coblentz is much more efficient, building codes and standards. You know the required Tiger envelopes right? So you know in here is the solar we have over 20 MW of solar on customers proof whether it's commercial residential behind the meter that's a big solar generator. That's making energy every year. That we don't have the cell tower customer. So what you did is all you can see us trending down but it did the story here is that the chart in 2027 and 28 even and when saving of energy efficiency in with better building codes and standards you start to see the impact of electric vehicles and electric building codes for commercial and residential business is. So, this is our for cost, we had two different consultants work with it on us but it's really educated guess to speak it could calm foster or could be slower. It important to talk about our revenue blend so fiscal 24 we are proposing what were seeing from their kills like. So our customer that they are detail rates residential, which is the lion share 65.2 million small commercial 19.7 million small commercial we have I want to say roughly 4000 small commercial accounts that in commercial business and most of those account actually will use the same meter size. The large commercial is 41.5 million so large commercial you know, think hospital manufacturing in our large customer on wholesale revenue side 11.2 million in natural gauze sales and 4 million contract powers he appeared I think we put this together about 80% of our revenue comes from retail sales 20 comes from wholesale. On this expenditures side on where do we spend our money, for fiscal year 24 were looking at 171.8 million in expenditures so discreetly referencing back to FY 23 around 150 2 million. This is quite an uplift it's a big jump you're going from one 53 million on one fiscal year to 170 almost 1 72 million the next. And again rivers are heavy and dense capital spending wires and pulsating powers supply cost. Fiscal year 25 that jumps to 178 and have million because we can show you here in the white part of the chart spending more money on capital. The majority of our cost in either fiscal years power supply at 75 million up to 77 million that was takes to get a power there to serve our customer whether it's purchasing, natural, gas fuel copying for our hydropower and contract and federal government paying for our wind agreement Bighorn with project operating the power plant paying for transmission likes all that together is about 75 to 77 million per year this budget other major costs are running and operating our distribution system so keeping the pulse encouraging transformers 18 old paying for our line crew in our trucks and all the equipment it takes to make sure that we are on 100 of the time we have adapted service we have in loop payment and ending with speak take away here is will look at the administration cost about 26.9 million and FY 24 that's the size of the pie it takes for us the staff and our cost to run the utility so you can see how intensive it is on the capital and power supply versus labor. And were trying our best if you look at FY 25 to keep that flat on administration costs I mentioned earlier that I had slight especially specifically on personal expenditure initially the 4.5 million increase seems high very high but we have to put the context so FY 23 budget was created in the screen in 2021. So really it's a $4.5 million increase from where we were in the spring of 20 want to were well and displaying for the summer of 2025. So it's really for your span and inside of that for years we added some position for our transmission owner transmission operator certification Council approved MOU changes for wages and benefits. There's changes in retirement cost you're the big take away from meI step back and say 11 1/2% from spring at 2020 want to summer 2025 what's the cost of what was CPI the consumer price index. Consumer price index is almost 13% just from 2021 " 23 and probably that if it is trying too hard to bring inflation down were probably going to see another seven to 8% in 2024 " 25 so inflation could be 20% which the impacts we just and personal costs across the spectrum. What we've been able to do in FY 23 " 22 and 23 is a vacant position to cover discuss. But now that were coming into this budget were trying to capture that and caught up and put in a budget. Now inference as well in our KPI of filling vacancies then we will have to vacant his saving and we be able to continue using those to offset some of the budgeting and planning if you have position you should budget for them here when M expenditure a big goal the theme that I had is the director of this budget is in our staff did a fantastic job. Let's keep our OEM cost as low as possible were going into hyper hyper inflation were seeking tremendous capital spending we know there's been personal cost increase everywhere else will look from the will this apply to knots and bolts and everything that we need that we can for operating the day today we need to keep it down so were seeing it letter its power supply cost or PG's were saying is. We are looking at the doc's hydropower delivers forever based on changes in environment hydrology were increasing about 9.2% and the two fiscal years which we feel is anhour under inflammation especially if will look at producer price index which is almost more educative and we you know we are running in industry but I'm pretty proud of this I think our own expenditure are in line and I don't to we didn't really find any exciting here or anywhere is was good. Jumping into capital outlay which I keep mentioning this is capital project spending above and beyond the day-to-day maintenance of our system. So we have day-to-day menu nines of changing our old pull.This is based on our strategic plan and consultant for cost and I would just say the general trajectory of our state your thesis getting ready for an electric teacher someday. We don't know when it will be when electric cars really coming full force or when electric homes and businesses will be full force your but the trajectories their timing is you know, ensure our a running this utility is we cannot be caught pure flat-footed we have to be ready. So when we are customers to get their electric vehicle and to go home and they want to boot level II children their garage and electrician the her electrician comes out puts in garage what it is(panel or maybe our customers get to this vehicle and put the charges in the garage? How can happen is from their home out of the street of the transformer and all through our system that we can serve it is not an option so what we have to do invest heavily to be ahead of the pier the other thing that can happen is when gasoline and diesel and natural gas and I'll hand it to Dir. Auckland who has mentioned this a lot the fears of moving of our fuels into one fuel electricity is would be very important when you're home his car and everything depends on electricity our liability as high as possible to get that we have to invest in our system. So you can see and FY 24 were about 19.2 million is what were opposing FY 25 is 26.5 million I would say this are lofty goals for capital expenditures considering a supply chain situation I'm not totally certain you can get the ports that we need on time to spend capital in this manner we have going to RFP for additional services contract labor for our system with longer spirit they did response they are available pure that's great you're the next up is the material supply is going to be here. So the majority a second transmission distribution maintenance we've got some generator maintenance. We've got improvements on our system for TMD and the remote metering beer this is not what we would all thinking is we call it a MRI or remote meters where we have we don't have meters readers come out and read meters anymore this are meters says that are strategically placed around his our system and fitting our outpatient management system to give us real-time feedback on studies of power quality on of things like that. It's important to talk about the Strategy when were talking about much capital right now you have no new proposal at this time and I'll show you in the five-year plan how we there and unrolled up services remains a $14.4 million per year if we need to a wants the future start giving ourselves the money back into our replenish or cash reserves for all the capital spending were doing were returning the Council that we will be very transparent process it will be very clear of what we need to do and how much and when it's timing of it again and mentioned on it for our credit line is $25 million was recently renewed.so very important for us to allow us to resource monitoring the speed of that and help timeAs with using bonds bring to revenue back into our bank account and to having credit line available today ups made plans working on then something happens it'll say we have turbine generator failure the power plant needs five or six $7 million exposure then we can lean on the credit line to over that closet should up and replenish ourselves says is you thing about you you know you're at the personal life of your credit line sitting there it's fantastic. This is the annual picture of our depth service if you look at 19 22 you see the orange it says MSR that is our joint power agency. Modesto Santa Clara Redding that's were involved in those them associated with this on one call plan to be excited outlined in 2013 and June 2 admission upgrades required of the federal level we decided it was time to get out and we finally paid the debt by 2022 so roles of the green tank the Sauer transmission agency in Northern California that were that is the debt that we issued to found our California Oregon transmission project runs from capital Jack Oregon down to Tracy we have hundred and 140 MW of rights on that line the is it just is power in the Pacific Northwest is ongoing got there and the salmon color I guess I'm sure that is a dark orange that is not death or you has which is mostly or powerplant related so the big picture here is in 2030 when you see me going from paying almost 60 million a year down to say 4 million a year that services does work great shape here because in 2013 and beyond there's probably going to be big investment in energy storage renewables transmission system upgrades and other things that are needed at the same moves us by regulation or law towards a role carbon future having the Publicity of issuing new depth to what we need to get our system ready. Really great is that their abilities are not in this utilities have them extending way deep into the 2030s and they are getting very nervous because that may be holding as they're not allowed to run and paying them for it so that summarizes some my presentation on the 24 " 25 budget and as I mentioned the third part here is our financial plan which is a very tight. So this is a snippet from what no assistant director Joe Bowers percent on quarterly and annual financial updates this is our five year plan snippet they choose our proposed rate adjustment increase and decrease in cash reserves and when many days cash we have a and on hand and what we've added here and going forward will be here is our affordability matrix. So what we have been showing counsel is a full proposed 4% in 2024 of 4% and 25 and a 2% in 26 " 27. Because we feel on the affordably the KPI on the bottom that we can keep this at the 1.8 " 1.9% range which is well under our two and half percent goal for our customers so this is a good time to move up a little bit on a proposed rate increase and really start spending more pureIn capital put into your system and invest as I mentioned the (INAUDIBLE) and the speed of our capital spend will depend on our ability to get supplies that we need you know it's fluid this is just the plan is to move forward if were not able to spend capital if that speed and get this is a structure upgrade that fast will revisit in our proposed rate increase may be coming down just simply because we don't need the you funding but for now it's our well-balanced five year plan and I'll show you little deeper what other utilities are facing with their rating and Chris and for you know for comparison it one that I've been looking at here is that reserve days of cash on hand in 2023 is it move Psalm 134 rhino were doing about 109.1 I think it was coming out of really dry Hydro year we spend more power but then you see we drop down to 80 and then back up to 170 in bedded in there is an assured bond issues and were no bringing bond revenue back to our services.So the five-year plan key takeaways again major capital outlay, with our agent distribution system since rate increase would be adopted by counsel and utility will continue to meet as affordability KPI. He meets at the Council's financial management policy reserve metric of 75 days minimum 150 days gold. There are some things that could can tell that I didn't make the slideshow made it worse says yellowing so there is something whence we could have we can have faster rate than we anticipate load growth from electric vehicle and as a it's there is the interest is growing rapidly from fatal manufacturers and they are charging ours we can have significant wholesale sales that bring more revenue than anticipated in which helpAnd depending on how it goes forward with staffing were ever free time we have a vacancy in our utility we step back and as a result is thatStill applicable?As I mentioned I think important that we talk about the were at with rates our talk about the five-year plan in our two-year budget this will recently put out anything on Facebook appeared this is where Reading is falling in order of the typical residential monthly bill. A typical residential consumer uses about 816 kW our beard that was the use and one and what our team does is run into rule different rates working with the California municipal utility associated to determine where do we fit in the pecking order here in this:as you can see investor-owned utilities BGE, San Diego, South electric the highest range we are 40 always in the state just with Roseville Turlock and Santa Clara and were very close to Roseville they are just recently had I want to say it was on 11 rate increase in January. This is a little bit more detail in recent rate increases you can see where utilities were for the total monthly building and 22 and worthy of jump in separate outstanding so this is some of this monthly cost the investor and utilities a records the highest but there's some the other irrigation district and what we call public safety on it the latest events. And substantial year-over-year cost increase for customer bill in 2015 to 20% range and it is our just cultures so far 23 several of this planning emergency rate increase discuss summer to cover their cost so this is going the extent of what I have for that this afternoon I'll take you any questions or any thoughts here >>Let's start with Mr. Mosano >>Thank you Mayor.Our rating is double A- correct? What does it take to get to on A+? >>That's actually so this is not in to achieve and I have to check with Joe often and A+ is a downgrade so it goes a two AA to AAA so to move into yeah so let's just quickly edged to move AAA territory the then you know rating agencies want to see a lot of cash in reserve they want is a large rate increase approved by councils remember a rating agency wants to see money pouring into the utility fuel comfortable right? So this is the balance of how much do you want to collect from your customer and putting your cash reserve versus leaving the money with your customer. >>Okay, this position that you are down my question is what are we doing to reduce it? Or what are we doing to maintain it when we get them? Or maybe we need to talk to chief Schooler about how he got this people and I don't know that's going to the billboard in the Bay Area somewhere being people in here but I'm concerned about being down 10 positions and I don't think you can survive and position vacancies for very long. I get it. I understand how it works but position it's seems to me like it so much should be at and what does he do your other workers out there? >>It's more than 10 position were actually down about 13% our out of 205 so you have our team is working hard and it's you know I would say across the City that is were experiencing and were experiencing it across many sectors it's kind of the where did the workers go right? Where are the employees? And so we you know we are drafted into kind talent roadmap to map out what's working? What is it working? What's the low hiding for it and what's the high for they have gone through the City has gone through a process and maybe see (INAUDIBLE) management you can talk about it's more broad to consultant and from personal perspective but general speaking of the electric sector they have been several new and it is called community choice aggregators spring up across the state. They are utilities so to speak that are ran by counties or cities still served by say PG and EA for Edison or San Diego but the power supply is managed by the aggregator and those springing up and there are 15 more of them there are all hired staff from utility sectors so it's near almost like creating 15 new utilities and other there was no new power industry. Submit so but were talking I would say 10 pronged approach to solving this because it's stressful on them. >>Okay got what else can you do to help you with that? You don't have to answer now but that's a question I'm asking we can work with Mr. Tippin on that if there's more what we can do like to be able to do that my next question is the were shared services? >>Shared services because were a department in the City. Were not standalone's say district we have to have things like legal and personal and finance and all the things that you would need to operate as a standalone any of those are the services that we share with the City and the for services much like we would have it to build our own our own team and on personal teen area >>How's that going to affect your operation? >>I think you know we've thought about right and mean you have sitting on what this does of light and really what we do is really dial back our capital spending rate of our supply we have to serve our little over at the mercy of the market so kind one level that we have here is not pushing hard and investing our system which we have a strategic plan and the plan but if we can't that weekend so we pull back and really what happened there is no your bargaining from the future reliability of the system >>And that leads me to the final question because I just started about the legislation I think I talk with Mr. Acklin about his doing to prepare for this new requirements I think it's by 2025 you have to have electric vehicles in the range of is the FY 150 or 250 vehicle right that's an infrastructure question to me a capital improvement that is on the horizon correctly >>The advance previously and is the name of deregulation was adopted last week requires all fleets of greater than 50 in the state of California to start producing either 50% of your fleet vehicles to be zero mission by actually by January coming out 24 we are at because were considered so your rural area we have to do hundred percent of our fleet starting and 27. So all they do was set up as the pacing in their address this what we've done is commission a consultant of the City of Roosevelt has just frontier to do a City white zero mission structure assembly you know that's and bolts what you're going to look like? They're going to look at our feet on the whole fleet were putting together a stakeholder group from all the City staff the kickoff meeting actually tomorrow morning so it's a very timely the luckily the study was funded by grant money so that's a good start but it will produce a result that looks like a large infrastructure package no. Of the study Don and it looks good that enables us to start applying for granting right there's a lot of grant funding that's I would say it's out there and I think it's really yet but you have the good plan and it's cozy event it's the whole City I think we have pretty good shot at getting some infrastructure funding for the Corporation. >>Thank you. I will finish with I have all the confidence in you to be able to pull this off >>Thank you. >>Thank you Nick, I just had just a couple question it's complicated obviously pure complicated all of us are concerned about rate increases on our customers and rate increases are always difficult my concern I'm wondering if I am a little bit concerned that our rates increases at 4% are actually even adequate form that we need to accomplish I mean we've got a lot of issue we have definitely some significantly lower days of cash on hand I mean it seems in 2024 cash on hand going down to 80 and then again in 2027 down to 81 increasing cost of natural gas we have massive need for capital outlays that we actually have to do to meet our DOT requirements and then of course the ever loving state and federal governmental garments on us at every level so all of that makes me constrained that 4% rate increases are adequate and so I want to get your take on that >>I think is that's probably fair assessment it's were proposing to spend and looking at the in our reserves very confident that as we go into the fall and propose a 4% rate increase that were in the near term because we have more control and were much better suited to track through that I would say we move into say 27 28 will have to look at:like we will have to see where this takes us weed between regulations and do we actually start to go heavy into capital outlay into grade into our system and really really start procure large amount of materials and we get more information and labor cost. >>Thank you and then I wanted to know if you are you put out information or something to consider but to customers about the cost I mean into simple things like find an electric dryer versus having a gas dryer on electric water heater versus a gas water heater do some sort of cost and pricing so that people could figure out what's the cheapest for me >>Sure, we do have call our residential commercial X that have details in their more educational materials but you know, I'll take that and go back to the team and look at this R&D website we are running in you probably see this were running a series of commercials on Channel 7. Read from lecture vehicle so he bites and were going to through process. I think one bigger one major item consider along that one is steel rate considering our costs you know half of outside the City limits is aloof little low were a dollar a gallon equivalent as fuel your electric vehicle there and as much forward in time there's a lot people that live out in the county but driving the writing your day to go work and so if you could fill up your car in writing and half the price it would cost you fill up when you were home that could be even more demand more load >>And do you see more load up? On the things and seeing which interesting in this push to eliminates all of the to a cycle engines and require battery-operated loan equipment do you see that? >>We haven't seen this specifically not yet but it's you know if you think about the whole TD in every sector it's a gradual movement. Moving up as school district starts again electric buses. There's more load as people replace their gospel were with electric more and plug into right and so we don't really see thankfully really large spikes into certain customer sector but what our consultant in the forecasting of our staff doing is looking at it is moving direction where everything starts plugged in on the way or another. >>Thank you. >>Mr. Nunns >>I don't have to infirmity but I have >>It doesn't mean it's consistently we sure we have a better luck data sometimes in August in a year but right now it's operating. >>We have to feel all of this massive trucks by certain time that we have a guarantee that those electric trucks will be able to go where they are supposed to go >>I think that's really your heating at the heart of the issue I know we really pushed hard on our specifically for (INAUDIBLE) for a bucket truck there is one Moto currently available >>I think the answer is no.So I appreciate the yeah diplomacy that's been put out there but answer is no there is today I would say that the requirements as they are proposed or regulated by the state of California not going to be metHere and what will happen is that becomes a realization were going to see some postponement of those requirements and as you have talk about anything part of what happening is that without those regulatory requirements as the innovation is not going home so correct this trying to regulate innovation if that makes sense >>Yes, >>My last question is that PG and E or other big utilities sell more rights to the electricity that we do? >>No >>Their rolling blackouts says allow them to draw more electricity and take away from smaller units? >>So thankfully were writing electric is Nazis situated in the same is called a balancing authority as a technical term were in the same pool (INAUDIBLE) and other investor and utility force role blackouts were not in balancing authority of Northern California, which include Sacramento, Desta Roseville Shasta Lake, infinity published six utilities are sick if our balancing authority ran short and gets in trouble then we would be rolling back out here. >>ThankfulThat's largely because were balancing authorities made of all public utilities and pretty much all you know the bulk of the energy provided in the independent system operators section is profit basically just like the GNA. >>I had the one more question here could you speak? Maybe give us an update on there was an increase of fees that PG&E is going to charge the City for natural gas distribution? What's the status on that it was like an astronomical increase >>Sure in order to fuel the Redding powerplant there are gas transmission lines underground of course the PG&E own suicide into that and really room trucks Clear Creek Clear Creek Rd. and 273 fuel Luke on it it will be the east side there is PG&E gas meter guardian hours from there we take our own pipeline that own Doubletree road to the power plant but in order to gather the apathy I guess transportation truth to PG&E gas utility for the right whereas flow fuel through their line we but if you will be managed if you will it's kind of like a tall so speak to move it through the year pipeline we have a negotiated rate with PG&E and Luke Fox you do have negotiator it's PG&E those or expiring PGN is not a guest side of the utility has asked for annually about that " double or 100% an increase in revenue requirement to maintain their gas distribution system Redding along with other folks and we are called Northern California generation coloration and CDC. We were able to negotiate a certain rate structure and you know it's in process now I think were still looking at about 2.2 million inquiriesAbove were to dataflow fuel through the same pipeline >>We don't have any other options though? >>It was a 2% increase in the rate or 30% of one-time went down and that's 1.8 it's the spot somethingIndustry standard? >>That's actually not the Redding and Chris we decided we probably Morehead blue helpful to compare ourselves to ourselves to compare herself to say PG&E and clearly at this point you know PG&E's nearly double if no more than that so we don't find out we really helpful so we had great symmetric to say Reading electric cost to customer every month we did it cost the past we got 2 1/2% goal we want to stay under 2 1/2% of the median family 04 income for a year we want their total electric cost for your >>So if the median incomes goes up even if that doesn't first specifically from is that you could in your prices could go up is still at the same right percentage? >>Right >>Okay, >>And the second question I haveThe debt service and it was pretty flat the orange bars or the brown bars whether it was but then you mention in a couple slight later you said we might have the issue adapt two or 3 24 2030s that taken into account in that one chart or we didn't point >>I think you're making good point I think we could have shown you know propose:and how it's thatHow that could stack in there but the depth costs are included in our budget and the rate forgot >>The depthCalled for hisThe present existing representing existing debt >>If we are issue new in the five-year plan issue the new gap between now and say 2828 that's included in a five-year plan in the 4% and 2% and increased >>Can you find all that with the rate increase that are going to be manageable? Or can you have to issue bonds? >>You see that the rating increased the annual revenue which help us pay the annual cost ofBorn I think of the answer is no cure but part of the five-year plan and the 4% I should issue that in a servicing the annual cost. >>Thank you very much you did a very good presentation.Any comments or questions? >>If the (INAUDIBLE) you spoke of for PG&E is there anywhere in the City where the PG&EFlows through our pipes? >>No >>Even zero we >>No.; and you have any questionsOkay, thank you very much.Next the will be public works. >>Thank you Mayor Dacquisto and members . I willHave to start up and say there's a whole lot of people in my department ways is Martin then me helping to pull this together there's a lot of work that goes into managers and all analysis that's doing fabulous job of making sure that everything in place.Gary doing a great job. I want start out first adopt a little bit about public worksTherePublic works in general is about $142 million a year is onehour both budget is we have 289 full-time employee equivalents but 25% of that budget is dedicated to personnel a good portion 34% of capital.Articulate in our utilities in a talk up quite a bit coming up Material supplies about36% that is the only about 5%That includes nine different division thatFor utilities that will talk about today but also our engineers development construction in our capital programs, transportation sleep, fleet maintenance electrical technicals we do have a lot of work for the utilities but also the work for traffic signals and other and then our you as a locate the low(INAUDIBLE)It is most is this that would talk about 223 I think.Three of them water With water and solid waste water or be dysfunctional was all a dollar amount but we have several thingsAs I mentioned we are talking about the four utilities so I want get quite into the dealThat Nick got on his utility because obviously we've got four of them we got spent a little bit time talking mine a little bit simply areTalking more about dollar amount but as he mentionedWhat's going on this year not only are U-boats public works as well we are looking rate increases as well we have a lot of needs other particularly on the capital slide for wastewaterA little bit more on personal and equipment maintenance aside for solid waste but there are needs out that there we have to meet and this year we are in the middle of developing a rate study cost of services the study we haveA committee of residences that are helping us develop those will have some recommendation coming to the you fallAbout the what we do to the next about for use of the utility somebody start with water kind to go through some of the basic of water got into that division and hours some of the pressures that were filling their it's about30,000 customers that we have in water utility it's not the whole City off of the northIs part of the City is served by Bella Vista we have talked about this multiple times of the Council but we have significant Infrastructure needs because of the size of over 60 being 60 mi. compared to say Chico that's a 30 mi. With has roughly the same population we've got a lot of infrastructure out there in the system.We have theFoot willAnother buying Manzanita and then we also have anotherOne that pulls water out of Whiskeytown Lake that's up to outside of old stress we have to plunge there we have 17 walls groundwater wells and is side and south side of town and it gives a pretty robust system in terms of water observation and of issuesWe talk a lot about over this last year is thatThe City is in pretty good position hereWe can be curledCurtailed induced draft the year distribution system about 565 miles of pipeline out there proposed budget for 22Curtailed induced draft the year distribution system about 565 miles of pipeline out there proposed budget for 20 2324 is about just too shy of 40 million " 38 millionParts that's capital$17 million in capital replacement and all take a little bit more detail about that the second year we have a little bit less capital scheduled but ongoing program so that'sDown about $34 million the personal wise we broke up into statement the submission and administration that it meant our staff We have at our treatment plan distribution of the folks that are out there maintaining the system planning this is them doing black foe prevention inspection and also doing construction repair work on the water line services themselves administration Fowlkes is just a couple of folks or water utility Manager and his water conservation specialist the work for the biggest issue we have and will talk about this again againInfrastructure we've got a lot of needs out there were got some old pipes that are out of there and we've got those replaces think of the Council is well aware of some of the problems that we have when those things break we have significant not only damage of the water facilities but obviously the of road underneath that gets readApp and to torn apart we had floodsFlooding of houses that cause a lot of dollars that could be should be putting into system instead of beingFor claims and things like that. And also you notice a couple years ago we had a fairly significant on the major main that broken that in the middle of summerWe had difficulty keeping water in their reserve euro and reserving Dara because that was on the main feed said that the water system disorders a lot to be done of their conversation is a big topic in California now as I mentioned we are pretty robust in our system and that we have both groundwater and surface water and we have the ability the way that the system laid into pump that around you know it obviously cost more pump than have a gravity assist them but we are able to get water across the City and we have very good water rights when our cruelty elements happen with the beer reclamation we have a pretty the major of our water rights are can only be caught back as much last year we are at section I hope that exchanging groundwater management is becoming something that state is getting more and more involved.Terms by function of where is most of the money go a big piece of it is a mention 17 million in the first year as the lighter blue is going to capital treatment and distribution roughly similar 8.1 and 7.8 is respectively so we spend about the same amount on treatment as we do distribution even though we have fewer employees that are working but there's a lot more that goes on one of the things you cannot see the orange highlight up their 1.8 million a year that we actually pay for what appeared that's a very, very small compared a lot of agency across the screen state so we don't have a huge cost of water the cost Sue to fix the rate of having infrastructure place and (INAUDIBLE) that we have that this unit across the system. Want this on a point out here this is a chart ofBit busy but what it's basically telling you is that about 75% of our system is older than 30 years and more than 25% of the system is more than 60 years. We've got pipe in the ground that's north of 80 years and that breaks it causes problem and unfortunately the cause of that is very, very expensive and were common were a lot of those by we can get anywhere between maybe 60 " 80 sometimes there last but the plan for about 75 years of actual pipeline so in this next chart you will see the red is when that pipe is expire and the blue is when we recommend replacing that and you probably can see the years down there but the second couple columns is the years 25 29 the third one is 30 " 34 and as you can see we are getting into the point where we have some significant expiration pipe is going to run for longer 75 years is to replace spirit and so that is benefit both rates and then how we deal with that and whether your plans through and director settled talk a lot about this with (INAUDIBLE) bunting for some the stuff it's got someTalk about in the second word and not doing then then this bond bonding for both the pipe replacement is sure volume and Denise for that were hit on sort of informing term over the cliff coming out there last part of this 10 year budget and build it within the end next few decades we've got significant pipe replacement needs. So on the capital side for this couple years $17 million in the first year most of that eight and happiness goes to the high maintenance 4 million is going into a new source water appeared we have a groundwater will actually have 12 we need some treatment were going to do million dollar in a pump station over here in Cyprus.Again it's a good function if we don't have problem in the area the second year more on the treatment side that will get some facilities on a treatment plan need to be upgraded that the BT is actually beyond this two years so we have significantly more capital to do. On the revenue side where is that money will come from most of it majority is from residential revenue we also asked the blue the red is commercial revenue which makes up for commercial partners and then a little bit money that the oranges in their its impact revenue is so little very little contact with it some of for the treatment plant work here but you said this is a 10 year revenue chart you will roughly about $30 million with the need and expect but the time we get 10 years out will going to the double outThis is just a snapshot of five-year plan and you can see probably not a whole lot on this but I think some of the things focus on is that we really don't have any debt service in the water utility right now we intend to begin some in the year 25 " 26 that's when you see we actually intend to build the pumphouse one and it's about $40 million project we will have saved about $15 million in reserve cash that we would. And so we plan to have a debt service on top of that beginning 25 " 26. And were really trying to balance that the keep in our reserve again (INAUDIBLE) dispatch and he will look at have a bonfire month's worth of oh and M on hand as well as 5% of our capital budget we try to keep it in places so there's our some over the targets that we go for looking a little bit higher right now in terms of foreign (INAUDIBLE) we are looking more in the 8% rate for the first couple years maybe go down but after that again were in the sorting of getting back towards the cliff where it could be going up ended on how much we leverage in the depth services versus paying for that. So this is a little bit about the kind of look that altogether the blue is that the revenue. Neuritis expenses and the grain is what our any cash balances and you can see this the next couple of years we are actually going to be deficit spending because of the capital budget we are projecting to the sum rate increase and this year and people start to change that.So that said the water utility I'll be going through the Panama similar under presentation on the wastewater utility so we can either take questions now or I can wait for the and. >>Note >>Okay I'll jump in the wastewater so there we have a little bit fewer a little more customers I should say about 38,000 customers in the Dragon because most of the cities served and actually even outside of the City has served it's about 43 1/2 million dollars budget proposed for this next year we have two treatment plan that are very significant investment in money we got our Clear Creek plant on the west side of the river in just across the have still water plant drains most of the east side lose a lot of pressure and those are have been on the that area we are talk about some of the chlorine and sulfur dioxide that we need to put in the water to sanitize and disinfect as it is moved out and to discharge into the river and those are hard to get and I'm going to talked a little bit later about some of our sclerotic just to mitigate some of that we got 440 most of pipe out there in 80 and recall lift station as the water drains to certain point you go to kind of feedback so we can contain thing you to drain. We also have our pretreatment folks those are folks that are actually work industrial customers that go out and work with them in terms of making sure is that actually gets into the pie of their facility is not going to cause a distraction down to our treatment plan pure it's a very delicate balance of the bugs and chemical that get up into water to make is that we can treat that before it gets into the river and slugs of pollutants can really disrupt and cause regulatory issues exceeding limits and you know potentially but held.The total budget for 23 " 24 as I mentioned is this is about 43 and have about $19 million or 42% isIntended to go to capital the second year a little bit more to anyone .8 million going to capitalFor us personal we got about 21 full-time. Our in our treatment facilities we are asking for oneNew this year and that has to do with our organics recycling andRizzoli do we have a new system that were building right now we called pyrolysis unit to handle some of the solid that go so the water gets treated gets it Dissented and goes off into the river but we do not have them sullied that we used to be able to sign up to the landfill because of SB 13 to the landfill because of SB 133 we now can take organic material and talk a lot about that when we can get the solid waste >>The collection system those guys and girls that are working out in the system making sure the unit they clean it making sure there's no bugs in it there repairing issues were asking for a couple moreWe call temporary full-time temporary folks that come on work for about six minutes during the summer month's and help us withSome of our work get things done get caught up in particular use them for remote access to so we've got severalLines that go through very remote areas that are difficult to get to and does need to be maintained so we get to him when you have problems soThat said even doing stuff like that. And and also the view some of those system that can't get on their on a year basis they help to clean it up and mentioned the industrial we spokeFor those in on our administration and utility manager are complianceThen we have a part-time YourRegulatory issues mentioned SB 1383 but we also have significant regulatoryIssues in terms of consistent once in the reporting and some of the lowering of limits that we are able to put into their water before It gets into the river and some of the reporting on our we have a naturally certified lab down at our Clear Creek plantWhere doing testing and essentiallyChemistry lab down there and that's about to be certified by the regulatory agencies and Dave got a lot of requirements as to what we need to do. And there's a lot of pressure in that dimension solid handle and that's a big issue at last be capital investment right now moving forwardBy function most of it similarly what is capital what looks like a couple of the colors and the legend didn't show up here but the orange down here is the About 4.6 million our year 5.60 forward Deer CreekPlant 3.12 Stillwater we have some deaf services so that green is 5.6 million here is that weHave dap services and most of that to do with bonds and loans actually it's more short-term and short low-interest loans that we used to put about nearly Hundred million dollars worth of work into clear creek water " " wastewater treatment plan expanding that capacity and disability dongleAlthough father finished future a big issue that we have every year is what we call (INAUDIBLE) inflow and infiltrationSo that we have drawings and cracks and 5C go underground that consult gets into the water all becomes more wastewater and that has to be treated for example we have done flow to going to the treatment plan Creek and of lease seven " $8 million a day in the water was so those go up no north of 50 million gallonsAgain similar to the water utility and that we are getting out in the they are not to the same extent it's not quite as bad but if you get into the beyond 20 2040 and and 2050 we got some huge gun which needs out there in terms of expiring five very expensive. We have to figure out a way to balance our rates and heartaches to be able to pay for those . The capital outlay for this next couple years a good portion of it about five to 6 million about replacing pipe replacement next year we have a fairly big project going on the still water treatment plant in our solid slogans and drying area that we have two invest in the second year we got fairly major with calling inside her scepter it so it's a very large pipe that collects a bunch of residential areas just before actually get down into the treatment plan incorporates calls west side interceptor is going to be about an $8 million job alone just in both upsizing and replacing some of that part so again significant pieces in the capital and I want armored that to. So would base for that again rest of the most part residential rate commercial rates the Lewis residential red is commercial just so you work in the residential side that's pretty much a flat rate but if you look in the commercial and that is commercial side they pay based on water used and in some areas and industrial wants kind of strand of what they are putting out there actually measures some of the constituent would put in out and verify if the higher strand of that spirit connection feesOr in fact peace in the yellow and in the yellow and then we have some other minor revenues snapshot five years for wastewater it's a little bit more reasonable I think in terms of rate expectation that will become the end of fall 4% for his or 5% and again about general costs right now is paying about $64 a month and wastewater were paying about $56 in water and then we'll talk about solid waste about $25 a month so it's really relatively cheap.Some of the things that one thing I want to point out in this particular chart is not unlike water our connection fee or development impact fee is not we are not raising enough revenue to actually pay for those eligible project for that's we have to supplement the (INAUDIBLE) so we will see that actually ending cash on (INAUDIBLE) for several years in the future and a have a for it could be (INAUDIBLE)So told her over the next 10 years is again a revenue expensive and can charge proposed rate increases again like water deficit spending couple years and some of those in cash-rich but you do see we picked up the out years and we have to make decision at the point to whether we want to balance rates and whether we go into either additional (so that's wastewater utility the third will be call wet utility is our storm drain utility and that's our little engine. That could be very small budget very small staff only about $2.2 million a year. There is over 7000 inlets 1300 outfall and that hav