Attachment 2a

DRAFTMinutes

Seattle Water Supply System Operating Board

May 11, 2017

2:00 to 4:00

Mercer Island Community and Event Center

8236 SE 24th Street

Mercer Island, WA 98040
206.275.7609

BoardMembers / Board Alternates / Utility Representatives / SPUAttendees / OtherAttendees
Alex Chen
Sherri Crawford -Alt
Joan Kersnar - Alt
Diane Pottinger
Ron Speer
Ron Little / Shane Young
Matt Everett
Bryan Koehmstedt / Mike Amburgey
Don Fiene
Abdoul Gafour
Ken Howe
Brian McDaniel
Pam Martin
Byron Murgatoryd
Terry Olson / Regina Carpenter
Cameron Findlay
Kelly ORouke
Kathy Curry / Walt Canter
Francie Lake
Shawn Koorn
Pamela Maloney
Darcey Peterson
Steve Pfaff
Debbie Rannfeldt
John Thompson
Jerry Thornton
  • Welcome and Introductions
  • Minutes/Agenda

The April 6, 2017 minutes were approved 6-0.

TheMay 11, 2017agenda was approved as written 6-0.

  • New Business
  • The Annual True-up procedures topic was moved to the second item on the agenda due to Moss Adams not in attendance at the beginning of the meeting.
  • 2018-2020 Rate Study - Rate Impact of O & M and Cascade Payment

Regina Carpenter, SPU Principal Economist started off the presentation with a quick review of the history of wholesale rates (2004-2017),a look at the current preliminary rate path (reflectinga 5% - 6%yearly rate increase for 2018-2020), ahistory of rate study estimates and actuals as they relate toO&M. The current preliminary O & M estimate,cost drivers and finally a review of the Cascade $12M payment and how it affects rates. Next, a look at how decreasing or increasing demand projections impact rates (current projections are calling for demand to remain flat). Some discussion, comments and few Q & A followed:

  • Regina Carpenter remindedeveryone this is a very preliminary look at the rate path, HDR has not looked at the numbers yet and these numbers may go up or down. Also, the table may not add up perfectly due to rounding.
  • Regina Carpenter Comment: One example of lumpy O&M increases is that members were not charged for the 2015 staff raise. That was done as a retroactive adjustment and was not reflected in regional index activities in 2015.
  • Ken Howe, Woodinville Utility Rep – I would like a response to the MLPP question regarding why it’s dollars are increasing and what is taking its place? Regina – we will get back to you on this question.
  • Diane Pottinger, OB member commented – I think tooaggressive of growth assumption would have a negative impact if something happened to the economy.
  • Matt Everett, Highline Rep – I prefer to stick with Bruce Flory’s outlook on demand and keep it flat. I prefer not to go higher and I don’t see a major economic downturn anytime in the near the future.
  • Ron Speer, Ken Howe and Jason Kintner, MI rep (per conversation with Ron Speer) all concur with Matt Everett’s comment on keeping demand flat.
  • OB Medium and Small categories – no comment. Will convene with their members and come back with a response by Friday, May 19th. Update 5.19.17: Medium and Small categories concur to keep long term demand flat.
  • SPU Member commented: SPU prefers Bruce Flory’s outlook on demand staying flat.
  • Annual True-up Procedures

Amy Sutherland from Moss Adams and SPU’s Regina Carpenter asked if there were any changesto the true-up procedures to be performed and request approval to proceed.

  • Byron Murgatroyd, WD 90 Utility Rep – made a request that additional historical data be added to the procedures. SPU and Moss Adams concurred and will include it in the procedures.
  • Ron Speer, Chair called for a motion to for Moss Adams to proceed with procedures, Alex Chen moved the motion, Diane Pottinger 2ndthe motion and the Board approved the 6-0.
  • Facilities Charges – Part II

Regina Carpenter, SPU Principal Economist continued the discussion with a review on FCs in the contract,including explaining when a new asset is addedto the New Supply Cost pool the FC is adjusted. Due to an overfunding in the FC cost pool the excess balance is moved annually to off-set rates, per the contract. The Board will need to determine whether to continue to allocate the CIP portion of the 2019-2028 conservation programs to FCs or switch to rates. The Board will also be asked to weigh in on the rate of new connections for the next FC period (e.g. how much to assume they drop from the current pace of connections for the next X number of years). Examples were provided of how the different options might play out through 2023. After the presentation, some discussion ensued. Members did not request to have the rates options fleshed out for further discussion at the June meeting.

  • 5 minutesBREAK
  • Conservation Discussion continued Options for 2019-2028

Joan Kersnar, Water Planning Manager went over the drivers’ analysis from the April meeting. Joanthen presented the results of the surveys which were used to create options for different packages for discussion. In those packages, Joan included the budget and program emphasis in both the O&M and CIP. Discussion and questions followed:

  • Question: Joan Kersnar asked for clarification on what the members felt “maintain cushion” meant? Members responded with it is to maintain a cushion, in general, and not a specific number.
  • A request camefor another look at the drivers at the June meeting, and to consider including all that were voted on by a utility.
  • Comment: Byron Murgatroyd, WD 90 Utility Rep – Spending should be focused on the new water and what we can do to help with summer water.
  • Joan Kersnar response: There isn’t a need for new water by a certain time, especially within the 10-year period.
  • Ron Speer: the peak season rate has done a lot for keeping summer consumption down
  • Ken Howe: lowering the peak rate would increase the off-peak rate. By maintaining the peak rate, we give people more control over their bills.
  • Discussion on Options: Request to create a new Option 7 by using the survey and focus on the following sections, and then another option that adds a regional low income component:
  • # 1 – 3
  • #2 – 4
  • #3 – 3
  • #4 – 1
  • #5 –2
  • #6 – 2
  • Kelly O’Rourke noted that SPU would like to have more flexibility to shift focus over time by managing the CIP as a pool to the bottom line, instead of breaking it down to residential, commercial and landscaping. There was general concurrence to consider this.
  • There was discussion on the difficulties of defining and administering a regional low income conservation program, and that further discussion would be needed to determine how this would work.
  • Capital Facility Plan 2018-2023
  • The Board ran out of time to cover this topic. Topic is moved to June 1st meeting.
  • Executive Summaries and Other Business
  • Ray Hoffman will be working for Cascade Water Alliance for a couple of days a week to work on reclaimed water.
  • Joan Kersnar – was officially appointed to the AWWA National Water Utility Council
  • DOH Rulemaking update: Three new rules are underway, Lab, Operatorcertification, and Reclaimed water.
  • Future Meetings
  • June 1, 2017 – Meeting will be held at the Cedar River Watershed Auditorium from 9:00 AM – 3:00PM.
  • July 6, 2017
  • For the Good of the Order
  • Public Comment Period

No comments provided

  • Material Presented at Meeting
  • Board meetingwas adjourned @ 4:10 PM

Approved by:

______Chair, Ron Speer Date

Seattle Water Supply SystemOperating Board

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