20230810 Business and Industry Commission Agenda PacketRegular Business and Industry Commission Meeting Agenda August 10, 2023
Page 1 of 2
Agenda
City of Vernon
Regular Business and Industry Commission Meeting
Thursday, August 10, 2023, 9:00 AM
City Hall, Council Chamber
4305 Santa Fe Avenue, Vernon, California
Duncan Sachdeva, Chair
Hector Morfin, Vice Chair
Cathy Browne, Commissioner
Jack Cline, Commissioner
Thomas Condon, Commissioner
Crystal Larios, Commissioner
Douglas Williams, Commissioner
The public is encouraged to view the agenda and meeting through the
CityofVernon.org/publicmeetings webpage. You may address the Commission in the Council
Chambers, via mail or email to PublicComment@cityofvernon.org, include the meeting date and
item number in the subject line (mail and/or email must be received at least two hours prior to the
start of the meeting).
CALL TO ORDER
FLAG SALUTE
ROLL CALL
APPROVAL OF AGENDA
PUBLIC COMMENT
At this time the public is encouraged to address the Commission on any matter that is within the
subject matter jurisdiction of the Commission. The public will also be given a chance to comment on
matters which are on the posted agenda during Commission deliberation on those specific matters.
PRESENTATIONS
1. Selection of Chair and Vice Chair
Recommendation:
Select one member to serve as Chair and one member to serve as Vice Chair for the term
ending June 30, 2024.
Regular Business and Industry Commission Meeting Agenda August 10, 2023
Page 2 of 2
2. Vernon Public Utilities Electric Cost of Service and Rate Design Study Update
Recommendation:
No action is required by the Business and Industry Commission. This is a presentation only.
CONSENT CALENDAR
All matters listed on the Consent Calendar are to be approved with one motion. Items may be
removed from the Consent Calendar for individual consideration. Removed items will be considered
immediately following the Consent Calendar.
3. Meeting Minutes
Recommendation:
Approve the April 25, 2023 Special Business and Industry Commission and the June 21,
2023 Joint Special Business and Industry Commission and Green Vernon Commission
Meeting Minutes.
ORAL REPORTS
4. Brief Reports, Announcements, or Directives to Staff
ADJOURNMENT
On August 3, 2023, the foregoing agenda was posted in accordance with the applicable legal
requirements. Regular and Adjourned Regular meeting agendas may be amended up to 72 hours
and Special meeting agendas may be amended up to 24 hours in advance of the meeting.
Electric Cost of
Service Analysis &
Rate Design
Update
VERNON PUBLIC UTILITIES
CITY OF VERNON
August 10, 2023
August 10, 2023
Item 2
Staff Presentation
Item 2 Page 2 of 14
Item 2 Page 3 of 14
VPU Electric Fund
Strong
Financial
Coverages
Distribution
Investment for
Reliability
Grow ing &
Diversified
Customer Base
Strategic
Capital
Plan
Competitive
Rates
Strong
Management
for Financial and
Operational
Flexibility
Committed To Maintaining a Strong Financial and Operational Position For The Future
Committed to
Renewable Energy &
Optimize MGS Ops
Item 2 Page 4 of 14
GOAL – Mitigate Financial and Operational Risk and Manage Costs
Energy Risk Management Committee for policy guidance and oversight
Hedging Program designed to reduce financial exposure to volatile market conditions and provide cost certainty to customers
Credit management to manage counterparty risk
Energy Risk Management
Ongoing energy market reporting
Item 2 Page 5 of 14
Electric Fund Financial Strategy
1)Meet De bt Service Coverage Ratio (DSCR) Requirement of 1.1
i.Ta rget of 1.2 DSCR was established for setting rates
2)Establish a m inimum level of cash reserves at approximately 180
days and a target of 300 days cash
3)Implement a long -term VPU Financial Reserves Policy
4)Provide c ompetitive base rates and stable ECA to customers
5)Ma intain highest reliability and customer service standards
Item 2 Page 6 of 14
Cost of Service Analysis Forecasted New Load Growth
New Customer FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30
Data Center 1 13.0 22.0 33.0 33.0 33.0 33.0 33.0
Public EV 1.0 1.5 2.0 2.0 2.0 2.0 2.0
Data Center 2 0.0 3.0 18.0 27.0 35.0 35.0 35.0
EV Charging Depot 0.0 3.0 6.0 6.0 6.0 6.0 6.0
Green Hydrogen/Other 1 0.0 11.0 12.5 12.5 12.5 12.5 12.5
Other 2 0.0 0.0 0.0 0.0 0.0 20.0 40.0
Total 14.0 40.5 71.5 80.5 88.5 108.5 128.5
Item 2 Page 7 of 14
Cost of Service Process
STEP 1
STEP 2
STEP 4
STEP 3
STEP 5
Determine the Financial
Forecast of the utility
Unbundle costs by functions
and services (production,
transmission, distribution, etc.)
Classify costs (demand, energy,
customer costs, etc.)
Allocate cost among customer
classes
Design rates
Financial Forecast
Determination
Cost Allocation
Rate Design
Item 2 Page 8 of 14
Revenue Requirement/ Financial Forecast
Base Year
Financials
Budget Year
2024 Costs
Escalation,
Adjustment,
and
Evaluation
Forecast
2025–2030
Revenue Requirement
Total costs to provide electric services to customers. Foundation of the financial
forecast.
Financial Forecast
Annual revenue requirement compared to annual revenues over the study
period (2024-2028) and the resulting key financial performance indicators.
Financial
Forecast
2024-2030
Item 2 Page 9 of 14
Electric – 5% Rate Adjustment effective 7/1/2023
No Further Base Rate Adjustments
Rate Recommendation
Recommended Energy Cost Adjustment Billing Factor
•FY 2023 – 24: $0.02
•FY 2024 – 25: $0.02
•FY 2025 – 26: $0.01
Utilize $18M from VPU’s Expense Stabilization Fund
Establish VPU Financial Reserves Policy
•September 2023 Report to the City Council
Item 2 Page 10 of 14
Financial Forecast with Rate Recommendation
Item FY 23-24 FY 24-25 FY 25-26
Load (MWh)1,120,945 1,269,826 1,473,633
Base Rate Increase 5.0%0.0%0.0%
ECA ($/kWh)$0.0200 $0.0200 $0.0100
Operating Revenues $210,048,404 $236,225,700 $257,203,864
Operating Expenses
Power Supply $110,730,043 $119,064,978 $134,374,258
Distribution and Trans $17,552,410 $18,037,380 $18,537,189
Customer $966,565 $999,024 $1,032,651
A&G $15,208,484 $15,668,479 $16,148,060
Total Operating Expense $144,457,502 $153,769,860 $170,092,158
Contribution from Rate
Stabilization Fund $18,000,000 $0 $0
Debt Service Coverage Ratio 1.20 1.18 1.25
Days Cash on Hand 231 229 228
Item 2 Page 11 of 14
Rate Benchmarking TOU-V, SCE Projected January 2024
Item 2 Page 12 of 14
Rate Benchmarking TOU-Vt, SCE Projected January 2024
Item 2 Page 13 of 14
Questions/Comments
www.cityofvernon.org
VERNON PUBLIC UTILITIES
Item 2 Page 14 of 14
Business and Industry Commission Agenda Report
Meeting Date:August 10, 2023
From:Lisa Pope, City Clerk
Department:City Clerk
Submitted by:Sandra Dolson, Administrative Secretary
Subject
Meeting Minutes
Recommendation
Approve the April 25, 2023 Special Business and Industry Commission and the June 21, 2023
Joint Special Business and Industry Commission and Green Vernon Commission Meeting
Minutes.
Background
Staff has prepared and submits the minutes for approval.
Fiscal Impact
There is no fiscal impact associated with this report.
Attachments
1. April 25, 2023 Special BIC Meeting Minutes
2. June 21, 2023 Joint Special BIC/GVC Meeting Minutes
Item 3 Page 1 of 7
MINUTES
VERNON BUSINESS AND INDUSTRY COMMISSION
SPECIAL MEETING
TUESDAY, APRIL 25, 2023
COUNCIL CHAMBER, 4305 SANTA FE AVENUE
CALL TO ORDER
Chair Sachdeva called the meeting to order at 4:04 p.m.
FLAG SALUTE
Chair Sachdeva led the Flag Salute.
ROLL CALL
PRESENT:
Duncan Sachdeva, Chair
Hector Morfin, Vice Chair
Cathy Browne, Commissioner
Jack Cline, Commissioner
Thomas Condon, Commissioner
Crystal Larios, Commissioner
Douglas Williams, Commissioner
STAFF PRESENT:
Carlos Fandino, City Administrator
Zaynah Moussa, City Attorney
Lisa Pope, City Clerk
Angela Kimmey, Deputy City Administrator
Robert Sousa, Police Chief
Scott Williams, Finance Director
Freddie Agyin, Health and Environmental Control Director
Dan Wall, Public Works Director
Margie Otto, Public Utilities Assistant General Manager
Richard Corbi, Public Utilities Planning and Analysis Manager
Anthony Serrano, Public Utilities Business and Account Supervisor
Ramzi Raufdeen, Public Utilities Integrated Resources Manager
APPROVAL OF THE AGENDA
Commissioner Larios moved and Commissioner Condon seconded a motion to
approve the agenda. The question was called and the motion carried unanimously.
Item 3 Page 2 of 7
Special Business and Industry Commission Meeting Minutes Page 2 of 3
April 25, 2023
PUBLIC COMMENT
None.
PRESENTATIONS
1. Fiscal Year 2022-23 Budget Overview
Finance Director Williams presented a PowerPoint.
In response to Commission questions, City Administrator Fandino and Finance Director
Williams explained timing of the debt service; and future funding of capital improvement
projects.
2. Vernon Public Utilities Financial Update
Public Utilities Assistant General Manager Otto and Public Utilities Planning and
Analysis Manager Corbi presented a PowerPoint.
In response to Commission questions, Assistant General Manager Otto and Planning
and Analysis Manager Corbi discussed the expected new growth and data centers;
impact from loss of businesses; inclusion of the 5% rate adjustment in the Fiscal Year
2023-24 Budget; need to manage customer expectations, while providing quality
service; the Expense Stabilization Fund; infrastructure restrictions limiting the sale of
utilities to neighboring jurisdictions; and required cash flow covenant for bond funds.
CONSENT CALENDAR
MOTION
Commissioner Williams moved and Commissioner Cline seconded a motion to approve
the Consent Calendar. The question was called and the motion carried unanimously.
The Consent Calendar consisted of the following item:
3. Approval of Minutes
Recommendation: Approve the March 15, 2023 Special Business and Industry
Commission meeting minutes.
ORAL REPORTS
None.
Item 3 Page 3 of 7
Special Business and Industry Commission Meeting Minutes Page 3 of 3
April 25, 2023
ADJOURNMENT
With no further business, Chair Sachdeva adjourned the meeting at 5:41 p.m.
________________________
DUNCAN SACHDEVA, Chair
ATTEST:
_________________________
LISA POPE, Secretary
(seal)
Item 3 Page 4 of 7
MINUTES
VERNON BUSINESS AND INDUSTRY COMMISSION
AND GREEN VERNON COMMISSION
JOINT SPECIAL MEETING
WEDNESDAY, JUNE 21, 2023
COUNCIL CHAMBER, 4305 SANTA FE AVENUE
CALL TO ORDER
Business and Industry Commission (BIC) Chair Sachdeva called the meeting to
order at 3:35 p.m.
FLAG SALUTE
BIC Chair Sachdeva led the Flag Salute.
ROLL CALL
PRESENT:
Business and Industry Commission (BIC)
Duncan Sachdeva, BIC Chair
Hector Morfin, BIC Vice Chair
Jack Cline, BIC Commissioner (arrived at 3:40 p.m.)
Thomas Condon, BIC Commissioner
Douglas Williams, BIC Commissioner
Green Vernon Commission (GVC)
Hector Morfin, GVC Chair
Clara Bustamante, GVC Commissioner
Ronit Edry, GVC Commissioner
Martin Perez, GVC Commissioner
Stan Stosel, GVC Commissioner
ABSENT:
Catherine Browne, BIC and GVC Commissioner
Crystal Larios, BIC Commissioner
STAFF PRESENT:
Zaynah Moussa, City Attorney
Lisa Pope, City Clerk
Todd Dusenberry, Public Utilities General Manager
Margie Otto, Assistant Public Utilities General Manager
Ramzi Raufdeen, Public Utilities Integrated Resources Manager
Yonnie Parker, Deputy City Clerk
Item 3 Page 5 of 7
Special Joint Vernon Business and Industry Commission and Page 2 of 3
Green Vernon Commission Meeting Minutes
June 21, 2023
APPROVAL OF THE AGENDA
MOTION
GVC Commissioner Perez moved and GVC Commissioner Edry seconded a
motion to approve the agenda. The question was called and the motion carried 9-
0, BIC and GVC Commissioner Browne and BIC Commissioner Larios absent.
PUBLIC COMMENT
Cecily Garcia thanked the City for planting trees on City streets.
PRESENTATIONS
1. Presentation on the Integrated Resource Plan (IRP) Modeling Results
Public Utilities Integrated Resource Manager Raufdeen and Anthony Boukarim,
Ascend Analytics, presented a PowerPoint.
In response to Commission questions, Public Utilities Integrated Resource
Manager Raufdeen, Public Utilities General Manager Dusenberry, and Assistant
Public Utilities General Manager Otto explained the means of predicting growth;
daily load monitoring, annual load forecasting and five year review; concern of
global warming and need to have a proper mix of resources; average annual load;
outreach, survey respondents and percentage of business owners responding;
desire for reliability and low cost; requirement for IRPs; ensuring capacity for new
businesses; staff recommendation for Portfolio 1 with continued monitoring of the
other options; outreach dependent on option selected and impact; submission to
State; penalties of not meeting IRP requirements; and electrification efforts and
incentives.
GVC Commissioner Bustamante left the meeting at 4:55 p.m.
CONSENT CALENDAR
MOTION
GVC Commissioner Stosel moved and GVC Commissioner Edry seconded a
motion to approve the Consent Calendar. The question was called and the motion
carried 8-0, BIC and GVC Commissioner Browne, BIC Commissioner Larios and
GVC Commissioner Bustamante absent.
The Consent Calendar consisted of the following item:
2. Meeting Minutes
Recommendation: Approve the May 11, 2023 Joint Special Business and Industry
Commission and Green Vernon Commission Meeting Minutes.
Item 3 Page 6 of 7
Special Joint Vernon Business and Industry Commission and Page 3 of 3
Green Vernon Commission Meeting Minutes
June 21, 2023
ORAL REPORTS
3. Brief Reports, Announcements, or Directives to Staff
None.
ADJOURNMENT
With no further business, BIC Chair Sachdeva adjourned the meeting at 4:58 p.m.
________________________________
DUNCAN SACHDEVA,
Business and Industry Commission Chair
_________________________________
HECTOR MORFIN,
Green Vernon Commission Chair
ATTEST:
_________________________
LISA POPE, City Clerk
(seal)
Item 3 Page 7 of 7