October 1, 2001

Regular Board Meeting

Monday, October 1, 2001

Time: 1:00 P.M.

Place: Board Room

29300 Valley Center Rd.

Valley Center, CA 92082

The Valley Center Municipal Water District Board of Directors’ meeting was called to order by

President Broomell at 1:00 P.M.

Board members present were: Directors Broomell, Polito, and Stone. Director Aleshire arrived at

2:35 p.m. Staff members present were: General Manager Arant, General Counsel Strand, District

Engineer Jewell, Director of Finance Jarrell, Director of Operations Dacus, Pump & Motor Facilities

Supervisor Stetson, Assistant District Engineer Grabbe and Board Secretary Stetson. Spectators

present were: Messrs. Dyson, Haskell, Bathgate, Mitchell, Stehly, Stepp, Economides, Nordgren,

Davis and Ross and Ms. Millay.

1. Interviews with Candidates to Fill the Board Position as Division 2 Representative:

Interviews with the two candidates to fill the open seat on the Board of Directors from

Division 2 commenced. The first interview was with Mr. William G. Dyson, which was

followed by an interview with Randy D. Haskell.

Mr. Dyson addressed the Board stating that he is interested in serving on the Board of the

Valley Center Municipal Water District noting that he has resided in Valley Center for over

9 years and in San Diego County for 65 years. He stated he has an understanding of the

need for good water management citing the growth patterns in the region and source of

water. This introduction was followed by questions by the Board members in which

Mr. Dyson expressed that a role of a Board member is to plan for the future to accommodate

water needs of the community. He added that his knowledge of the electrical industry and

safety management practices will be an asset. Mr. Dyson stated that his expertise could

provide guidance in developing policy positions, but that the daily running of the District is

the responsibility of staff. In response to a question pertaining to the continued viability of

agriculture in Valley Center, Mr. Dyson replied that the District will be faced with immense

problems and decisions due to its growth from groves subdividing, and, as such, the Board

should take an active role in directing and participating in this process to assure that

building does not outpace ability to meet water demands. He further stated that he is in

favor of a sewer system if it is needed and development is in compliance with the

established General Plan’s zoning.

Mr. Haskell addressed the Board stating that he is interested in serving on the District’s

Board of Directors as it serves a predominantly agricultural area and he has been involved

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in the agricultural industry for the past 15-20 years. He served as President of Sierra Pacific

Farms for 4 years, but currently is pursuing agricultural developments. His experience with

Sierra Pacific would bring to the Board experience in both agriculture and business

management. Mr. Haskell opined that, because of the importance of agriculture to Valley

Center, water rates must be carefully moderated and that, as a Board member, he would

communicate agriculture’s perspective. Mr. Haskell responded to questions from the Board

stating that he feels it is prudent to plan for the future, i.e. 3-5 years, to establish goals and

objectives. In response to a question concerning the role of a Board member, Mr. Haskell

stated it is the responsibility of the Board member to research and become knowledgeable

on an issue to prudently guide policy development. He opined that growth in the area

cannot be controlled but rather should be managed with implementation of plans to meet

the water and/or sewer service needs of the community. Pertaining to Lake Turner,

Mr. Haskell stated that the lake and surrounding District property are a great asset and that

he would be supportive of alternative uses of this asset if it does not raise water rates.

Mr. Haskell added that, if financially feasible to growers, he is in favor of exploring use of

the lake for irrigation of nearby groves.

Audience members, Messrs. Bathgate, Mitchell, Stehly and Stepp, spoke in favor of

appointment of Mr. Haskell to fill the Board vacancy. They voiced that the preservation of

agriculture in Valley Center is extremely important to the community, and that Mr. Haskell’s

extensive experience in and knowledge of agriculture would be an asset to the District’s

Board.

President Broomell explained that action by the Board to appoint a Board member to fill the

Division 2 vacancy will be deferred until later in the meeting under “Board of Directors’

Agenda” at which time it is expected that Director Aleshire will be present to participate in

the selection process.

2.

3. Request for Budget Adjustment Re: V.C. 8 Flow Control Connection to Pipeline 2A Project:

Adoption of Resolution No. 2001-45 to adjust the Fiscal Year 2001-02 budget to appropriate

an additional $220,000 in funding for the Connection to Pipeline 2A project was requested.

District Engineer Jewell explained that this project has been ongoing since 1991 which

consists of a new connection, VC #8, to the San Diego County Water Authority’s pipeline

(Valley Center Pipeline 2A). This connection will allow abandonment of the District’s pipeline

under the I-15 freeway. Actual connection to the Authority’s pipeline has been associated

with putting the pipeline in service which is dependent upon completion of the Authority’s

pump station located east of the connection.

Original estimates by the San Diego County Water Authority for its Flow Control Facility had

been $380,000, which now is increased by $180,000 to $560,000. Mr. John Economides of

the SDCWA stated that the original cost estimate had not been realistic, and, as such, the

subsequent adjustment to a cost of $560,000, was necessary. Some cost increases for this

project have been absorbed by the SDCWA because of the construction delays and

management by the Authority of the project. The Flow Control Facility is expected to be

completed by December 31, 2001.

The District has plans and specifications prepared and ready to go out to bid for its

chlorination building. An updated estimate for this project shows an increase of $40,000. A

significant portion of the cost increase can be attributed to changes in the District’s

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disinfection system selection. When design of the project began, the District was using

gaseous chlorine. As gaseous chlorine was being phased out in the District’s system, the

design was changed to a liquid hypochlorite system and then additional time spent for a

design change for utilization of a tablet chlorinator system at the facility. Staff noted that the

tablet chlorinator system is preferred for the District’s operations and it avoids additional costs

associated with gas or liquid disinfection systems. Plans and specifications for the

chlorination building are expected to go out to bid by October 15, 2001. Appropriation of an

additional $40,000 for this project is required.

4. Approval of Consulting Services for the Design of Pipeline Replacements – Valley Center

Road:

Approval of an updated agreement with R.W. Beck Consulting Engineers to complete

preparation of the plans and specifications for the replacement and relocation of the pipelines

in Valley Center Road, both north and south projects, was requested.

The County of San Diego has informed the District that construction of the portion of Valley

Center Road from Banbury Road to the Escondido City limits will commence in April of 2002.

Reconstruction of Valley Center Road north of Banbury Road to approximately the District’s

office location is expected to begin in September 2002. These proposed road construction

projects will interfere with a portion of the District’s 18-inch pipeline near Ridge Ranch Road

and require extensive coordination with the County’s work, as well as replacement of an

existing low pressure pipeline in Charlan Road.

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The County has provided the District with signed, completed drawings of its road construction

project and a letter was obtained from the County’s Assistant Director of Public Works

agreeing to reimburse the District for expenses if additional funds are expended by the

District due to future changes in the County’s road improvement plans.

R.W. Beck Consulting Engineers (formerly McDonald Stephens Engineers) had previously

provided design services for the District’s pipeline replacement and relocation pursuant to a

previous design by the County of the road improvement project. District staff prepared a new

scope of work for the project and a proposal by R.W. Beck with a not-to-exceed amount of

$135,569 was submitted as follows:

Valley Center Road, South $ 40,693

Charlan Road 23,987

Valley Center Road, North 70,889

Total $135,569

5. Approval of Agreement with Laguna Irrigation District to Serve as Energy Provider:

A provision of Assembly Bill 1X 1, as adopted, provided that, if the PUC found it appropriate,

direct access could be terminated for purchasers of electricity in the State. Contracts entered

into for direct access of electricity prior to such action by the PUC would be honored. The

PUC had indicated that it was planned to invoke this provision and terminate direct access

contracts at the meeting of September 13

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Terms of the executed agreement provide that the electricity purchased will be a minimum of

.5¢ per kWh savings under that sold by SDG&E. Savings could be as high as 1.5¢/kWh

under SDG&E’s price for electricity. At the present time, the agreement provides only that

the Moosa Sewer Facility will be serviced by this agreement with Laguna Irrigation District.

However, additional electrical accounts will be reviewed and may be accepted by Laguna for

the discounted electricity. Laguna Irrigation District will be reviewing the consumption profile

of the District’s eligible electrical accounts to determine suitability. Savings to the District

under the Energy Service Provider agreement could be between $100,000 to $500,000 a

year. The term of the agreement is for three years which begins when Laguna Irrigation

District commences service to the first account.

6. Status of Energy Resources Options Assessment and Consideration of Terminating

Construction of a Large Gas-Fired Power Plant:

A status of the evaluation of the District’s energy resources options being conducted by

Dr. Lon House and Boyle Engineering was provided. Dr. House has prepared a document

of an overview of California’s electricity market which was reviewed. Within California, new

generating facilities that will increase power generation by 19,000 MW are under

construction, or approved or in the permitting process. By the end of 2001, an additional

2,729 MW of power will be on line. No shortages of electricity in California are expected

through 2004.

Natural gas prices, which peaked at nearly $60.00/MMBtu in November/December of 2000,

have decreased to below $2.00/MMBtu. The price of natural gas directly affects electricity

prices, as most of the electricity generated in California is with natural gas.

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Dr. Lon House has concluded, based on the availability and new generation of electricity, new

natural gas pipelines coming to California, and the low price for natural gas, that “...a large

generator, dependent upon wholesale market sales, a non economic option. You cannot

build a generator and recover your operating expenses, much less repay your debt, at

3 cents/kWh. A large, wholesale market generator at Betsworth or any other location is, in

my opinion, not a viable option now or during the next several years.” Dr. House further

recommended that he abandon consideration of a large generation plant as an option for the

District as had been set forth in his agreement with the District to complete an energy

assessment.

Director of Finance Jarrell reported that the PUC has approved an increase of approximately

1.46¢/kWh to SDG&E’s rates which became effective as of September 20

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7. Approval of Purchase Order for Purchase of Red Mountain Pump Station Electrical

Equipment:

Approval of a purchase order for equipment for the replacement of three electrical panels at

Red Mountain Pump Station at a cost of $53,732.67, which was the lowest of three quotes

received, was requested. Pump and Motor Supervisor Stetson explained that older electrical

panels are being replaced at the District’s pump stations as their repair parts are no longer

available. Replacement of the panels also brings the equipment up to current code.

Replacement of the Red Mountain Pump Station three electrical panels had been approved

in the Fiscal Year 2001-02 budget.

8. Association of California Water Agencies’ Committee Appointments for 2002 and 2003:

Election of a new Chair and Vice Chair for the Association of California Water Agencies will

take place during ACWA’s upcoming Fall Conference. The new officers’ terms will be for

2002 and 3003 at which time there are appointments of new committee chairs and committee

and subcommittee memberships for the two-year term. ACWA has requested that its member

agencies submit nominees for committee appointment. Currently, the District’s ACWA

committee participation is as follows:

Gary Arant, Chair, Local Government Committee and Co-Chair of

the Joint Communication/Local Government Outreach Task Force

Jere Jarrell, Member, Energy Committee

Linda Hale, Member, Insurance and Personnel Committee

C. Michael Cowett, Member, State Legislative Committee

Staff requested Board nomination for reappointment to these committees and those desired

by the Board.

9. Modification of Position on Senate Bill 350 (Alpert) to a “Watch” Position:

Senate Bill 350, as originally proposed, contained provisions restricting Metropolitan’s and

its member agencies’ management and method of disbursing of excess reserve funds. The

bill also included language requiring the State to complete an analysis of Metropolitan’s

governance structure. SB 350 has been amended to provide that Metropolitan shall develop

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guidelines for its management and reimbursement of reserve funds and further directs that

any reimbursement of excess funds by Metropolitan shall be refunded its members

proportionate to the method in which the funds were collected. Metropolitan has removed

its “oppose” position of the bill with the amended version and Senator Alpert has requested

that the District also remove its “oppose” position. Staff recommended that the District’s

position on Senate Bill 350 be changed from “oppose” to “watch”.

10. Overview of the Status of Existing and Proposed Wastewater Treatment Projects:

The Valley Center Community Planning Group’s Chairman, Larry Glavinic, requested

information on proposed wastewater treatment plants for the Woods Valley Ranch, Live Oak

Ranch, Orchard Run proposed developments and the Country Towns, as the planning group

is reviewing the County’s General Plan 2020 Update process. A letter outlining the status of

the various wastewater treatment projects was forwarded to Mr. Glavinic and was reviewed

for the Board. Project Engineer Grabbe displayed a map outlining the service areas for the

proposed treatment plants to serve the developments of Woods Valley Ranch, Orchard Run

and Live Oak Ranch. The status of these developers’ projects proposed treatment plants is

as follows:

Waste Sewer

Discharge Major Use Construction Service

Permit Permit Plans Agreement

Woods Valley

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considered. Benefits derived from tertiary level treatment are a supplemental irrigation

source for the golf course, reduction of potable water demands and seasonal storage

requirements and the ultimate abandonment of Skyline Ranch’s spray field and possibly one

of the holding ponds.

A review of special projects currently under way at the Lower Moosa Canyon Wastewater

Treatment facility was reviewed as outlined in the attached table labeled Exhibit “A”.

11. Commendations Recognizing the Services and Contributions of Former Director George W.

Armstrong:

Mrs. Armstrong and family members were presented with commendations to honor and

recognize the invaluable contributions and services of the District’s former Board member,

George W. Armstrong, to the water industry and the community. Mr. Armstrong had served

on the Board from January 1975 to August 2001. He passed away on August 20

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12. Review of Miscellaneous Information Items and the San Diego County Water Authority’s

Board of Directors’ Meeting:

• District responses to the San Diego County Water Authority’s Customer Satisfaction

Survey were reviewed by the Board. The Board commented that the District’s

evaluations and comments provided excellent feedback for the Authority’s staff in

assessing their level of responsiveness and service to the District. Staff was directed

to coordinate comments from the Board in next year’s San Diego County Water

Authority’s Customer Satisfaction Survey that could be incorporated in the cover letter.

In this manner, the Board could address issues such as the Authority’s performance and

relationship with Metropolitan Water District of Southern California.

• President Broomell reported that at the September 27

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14. A Closed Session was called by President Broomell at 4:20 p.m. pursuant to:

• Government Code §54956.9(a), Conference with Legal Counsel - Existing Litigation.

Name of case: Sweetwater Authority, et al. v. Dynegy, Inc., et al.

Superior Court Case GIC 760743

• Government Code §54956.9(c), Conference with Legal Counsel - Anticipated Litigation.

Number of potential cases: 1

The Regular Board meeting was reconvened at 4:45 p.m. No action was reported.

15.