CENTRAL ARIZONA PROJECT
Board of Directors
November 3, 2011 – 10:00 a.m.
Central Arizona Project
23636 North Seventh St.
Times shown are approximate. Some items may take more or less time than scheduled
or the President may grant requests to hear items in an order other than shown.
1. Pledge of Allegiance to the Flag, Moment of Silence and Safety Minute—McGrath (10:00)
2. Consideration of Action to Approve Items on the Consent Agenda* (10:05)
a. Approval of Minutes of the October 6, 2011, Regular Meeting—Pickard
b. Approval of Two-year Contract for Security Services Between CAWCD and Shetler Security Services (Project Reliability: Managing our Workforce, Maintain Business Continuity^)—Delgado
c. Approval of Agreement between CAWCD and Vidler Water Company to Store Water at the Superstition Mountains Recharge Project (Water Supply: Reliability of the CAP Water Supply^)—Ticknor
d. Award of Equipment Contract to Alstom for Combined Instrument Transformers (Power: Effectively Manage Transmission Costs^)—McCann
3. Consideration of Action to Approve Items Removed from the Consent Agenda
4. Report on CAP Maintenance Activities (Project Reliability: Effectively Operate and Maintain CAP Assets^)—Ramon (10:10)
a. Apprenticeship Program (Project Reliability: Managing our Workforce^)—Dennis Anthony
b. Recognition of 2011 Apprentice Graduates Chris Duncan (heavy equipment operator) and John Ford (maintenance electrician) (Project Reliability: Managing our Workforce^)—Modeer/Pickard
5. Report of Committees and Consideration of Committee Recommendations
a. Public Policy Committee—Tenney (10:25)
i. Approval of Proposed 2012 State Legislative Agenda (Leadership & Public Trust: Relationships-Other Stakeholders; Water Supply: Reliability of the CAP Water Supply^)
ii. Approval of Proposed 2012 Federal Legislative Agenda (Leadership & Public Trust: Relationships-Other Stakeholders; Water Supply: Reliability of the CAP Water Supply; Power: Generation Resources^)
b. Finance, Audit & Power Committee—Burns (10:30)
i. Approval of the Recommended CAP Biennial Budget for Calendar Years 2012 and 2013 (Finance: Maintaining CAP's Financial Health; Project Reliability: Effectively Operate and Maintain CAP Assets^)—Cooke/Dunlap
ii. Approval of Property & Casualty Coverage and Funding for Captive Insurance for Calendar Year 2012 (Project Reliability: Maintain Business Continuity; Finance: Maintaining CAP's Financial Health^)—Shockley
iii. Approval of Participation Agreement Among Arizona Public Service, Salt River Project and CAWCD for Transmission Line Project (Power: Transmission Resources^)—Ijams
c. CAGRD & Underground Storage Committee—Bray (10:40)
6. Discussion of Transfer of $2 Million of the CAWCD Contingency Reserve from the General Fund to the Captive Fund to Meet State of Hawaii Capitalization Requirements Associated with the Assumption of Self-Funded Health Insurance by the Captive (Finance: Maintaining CAP's Financial Health^)—Cooke (10:45)
7. Report on Power Portfolio (Power: Generation Resources, Transmission Resources^)—Ijams (10:50)
a. Post-2011 Power Operations
b. First Addendum to AEPCO Agreement for Trading, Scheduling, Imbalance and Interchange Services
8. Report on Colorado River Activities Including but not Limited to Water Supply and Discussions Among the Seven Basin States on Management of the River (Water Supply: Reliability of the CAP Water Supply^)—McCann (11:05)
9. Report on CAP Operations, Including but not Limited to CAP Water Diversions and CAP Deliveries (Project Reliability: Effectively Operate and Maintain CAP Assets^)—McCann (11:15)
10. Consideration of Action to Fill Small Use Orders for Excess Water in 2012, as an Exception to the CAWCD Procedure to Distribute Excess Water, Adopted June 4, 2009 (Public Trust: Improve Relationships with Customers; Project Reliability: Provide Reliable and Cost Effective Water Deliveries^)—McCann (11:25)
11. Report on Legal Matters (Water Supply: Reliability of the CAP Supply^)—Ticknor (11:35)
a. Recent Developments Regarding Hpi Tribe's Claims in Little Colorado River Adjudication
12. Directors’ Reports on Current Events (11:40)
13. President’s Report on Current Events—Pickard (11:50)
14. General Manager’s Report on Current Events—Modeer (11:55)
15. Public Comment (12:05)
16. Consideration of Action to go into Executive Session of the Board Pursuant to A.R.S. §§38-431.03.A.3 and 38-431.03.A.4 to consult with the attorneys for the District and consider the District's position and instruct its attorneys regarding Indian Water Rights Settlements.
[The discussions and minutes of the executive session shall be kept confidential. The executive session of the Board is not open to the public.]** (approx 12:05)
17. Reconvene in Open Session
18. Consideration of Action Regarding Items Discussed in Executive Session (1:05)
Members of the CAP Board of Directors may attend in person or by telephone conference.
* Items listed in the Consent Agenda may be acted on by the Board without discussion. Any item listed on the Consent Agenda may be removed from the Consent Agenda and acted on separately by the Board.
** The Executive Session is expected to last approximately one hour and will not be open to the public.
^ Linkage to 2010 CAWCD Board of Directors Strategic Plan
To avoid interference with the conduct of the meeting, persons (including those with media credentials) wishing to video record any portion of the public meeting should notify CAP's media relations office at 623.869.2135 at least forty-eight (48) hours in advance of the meeting to make arrangements.
In accordance with the Americans with Disabilities Act (ADA), if you need reasonable accommodations due to a disability, please contact the CAP office at (623.869.2333) or TDD (623.869.2170) at least seventy-two (72) hours in advance of the meeting. Assisted listening devices are available at the Security Desk.
REGULAR MEETING OF THE BOARD OF DIRECTORS
November 3, 2011
The regular meeting of the Central Arizona Project (“CAWCD” or “CAP”) Board of Directors was called to order by President Pamela Pickard on November 3, 2011, at 10:00 a.m. The meeting was held at the Central Arizona Project Headquarters Building, located at 23636 North Seventh Street, Phoenix, Arizona, in the Board Room. Secretary Timothy Bray was present.
Board members present were President Pamela Pickard, Maricopa County; Vice President Gayle Burns, Maricopa County; Secretary Timothy R. Bray, Maricopa County; Lisa Atkins, Maricopa County; Frank Fairbanks, Maricopa County; Jim Holway, Maricopa County; L.M. "Pat" Jacobs, IV, Pima County; Terri Kibler, Pinal County; Mark Lewis, Maricopa County; Jean McGrath, Maricopa County (by teleconference); Sharon B. Megdal, Pima County; Cynthia Moulton, Maricopa County; Warren Tenney, Pima County; Janie Thom, Maricopa County and Carol Zimmerman, Pima County.
Staff members present were David Modeer, General Manager; Ted Cooke, Assistant General Manager, Finance; Tom Delgado, Assistant General Manager, Employee Services; Jay Johnson, General Counsel; Tom McCann, Assistant General Manager, Operations, Planning & Engineering; Marie Pearthree, Assistant General Manager, Business Planning and Government Programs; Greg Ramon, Assistant General Manager, Maintenance Administration; Kathryn Schmitt, Director of Communications and Public Relations; Dennis Anthony, Administrator, Apprentice Program; Gary Ijams, Manager, Power Programs and Donna Micetic, Management Liaison to the Board.
PLEDGE OF ALLEGIANCE TO THE FLAG, MOMENT OF SILENCE AND SAFETY MINUTE
Ms. Burns led the Directors and public in reciting the pledge of allegiance to the flag of the United States of America and a moment of silence to remember all the people who serve this country, past and present. Ms. Burns presented a safety minute on preventing drowsy driving.
Mr. Modeer introduced Jay Johnson, the new General Counsel for Central Arizona Project.
CONSIDERATION OF ACTION TO APPROVE ITEMS ON THE CONSENT AGENDA
On a motion (Mr. Tenney) and second, the Board approved the minutes of the October 6 , 2011, Regular Meeting; approved the award of a contract to Shetler Security Services for security services for two years beginning January 1, 2012, through December 31, 2013, for up to $1,980,000, with the option for CAP to renew the contract for two additional two-year terms and authorized the General Manager to execute the agreement; approved the Agreement for Water Storage at the Superstition Mountains Recharge Project between CAWCD and Vidler Water Company; and approved the award of a contract to Alstom for the supply of Combined Instrument Transformers for approximately $325,123 plus $16,256 contingency, and authorized the General Manager, or his designee, to execute the contract with Alstom, and administer the contingency of up to $16,256.
REPORT ON CAP MAINTENANCE ACTIVITIES
Mr. Ramon reported that staff has been performing canal maintenance during the south end canal and pumping plant outage. Mr. Anthony provided an overview of CAP's apprenticeship program and introduced the 2011 CAP apprentice graduates: Chris Duncan, Heavy Equipment Operator and John Ford, Maintenance Electrician.
REPORT OF COMMITTEES AND CONSIDERATION OF COMMITTEE RECOMMENDATIONS
Public Policy Committee
A report was given by Mr. Tenney on behalf of the Public Policy Committee.
On a motion (Mr. Tenney) and second, the Board adopted the Proposed 2012 State Legislative Agenda.
On a motion (Mr. Tenney) and second, the Board adopted the Proposed 2012 Federal Legislative Agenda.
Finance, Audit & Power Committee
A report was given by Ms. Burns on behalf of the Finance, Audit & Power Committee.
On a motion (Ms. Burns) and second, the Board approved the Recommended 2012 and 2013 Budget presented at today's meeting. The Board voted by roll call. Mses. Atkins, Burns, Kibler, Megdal, Moulton, Pickard, Thom and Zimmerman and Messrs. Bray, Fairbanks, Holway, Jacobs, and Tenney voted in favor of the motion. Ms. McGrath and Mr. Lewis voted against the motion. The motion passed on a vote of 11.76 in favor and 2.04 against.
On a motion (Ms. Burns) and second, the Board approved funding for the 2012 calendar year insurance program in the amount of $7,792,118 of which $7,252,191 is funding for the Captive.
Mr. McCann reported that the Finance, Audit & Power (FAP) Committee recommended approval of the Participation Agreement for the Palo Verde-Morgan 500kV Transmission Project among Arizona Public Service Company, Salt River Project Agricultural Improvement and Power District and CAWCD; however, after the FAP Committee recommended approval, other parties to the agreement raised issues as to its terms. As a result, the parties are not yet ready to move forward with the agreement. Mr. McCann recommended that the Board not take action at this time. No action was taken.
CAGRD & Underground Storage Committee
A report was given by Mr. Bray on behalf of the CAGRD & Underground Storage Committee.
DISCUSSION OF TRANSFER OF $2 MILLION OF THE CAWCD CONTINGENCY RESERVE FROM THE GENERAL FUND TO THE CAPTIVE FUND TO MEET STATE OF HAWAII CAPITALIZATION REQUIREMENTS ASSOCIATED WITH THE ASSUMPTION OF SELF-FUNDED HEALTH INSURANCE BY THE CAPTIVE
Mr. Cooke reported that in December, the Board will be asked to consider the transfer of $2 million in reserve funds from the General Fund to the Captive Fund for the medical insurance program as required by the State of Hawaii.
REPORT ON POWER PORTFOLIO
Post-2011 Power Operations
Mr. Ijams reported that the October 1, 2011, changes made to CAP power operations occurred without incident.
First Addendum to AEPCO Agreement for Trading, Scheduling, Imbalance and Interchange Services
Mr. Ijams reported that in December, the Board will be asked to consider an addendum to the agreement between CAWCD and Arizona Electric Power Cooperative (AEPCo) for Trading, Scheduling, Imbalance and Interchange Services. The addendum is intended to refine certain provisions based on the parties' operating experience and will clarify that AEPCo is not liable for mistakes made by Western Area Power Administration in marketing Navajo Generating Station energy.
REPORT ON COLORADO RIVER ACTIVITIES INCLUDING BUT NOT LIMITED TO WATER SUPPLY AND DISCUSSIONS AMONG THE SEVEN BASIN STATES ON MANAGEMENT OF THE RIVER
Mr. McCann reported on the following:
· Although the water year is just beginning, the Bureau of Reclamation (BOR) is projecting that Lake Powell will be in equalization mode again in 2012 and that the elevation of Lake Mead will continue to rise as a result.
· Discussions are ongoing with Mexico concerning a potential bi-national agreement that could include shortage sharing.
· Southern Nevada Water Authority (SNWA) has a significant volume of unused Colorado River apportionment for 2011. CAWCD, Metropolitan Water District of Southern California and SNWA will ask the Secretary of the Interior to leave the water in the reservoir as protection against future shortages, rather than make it available to another entity.
REPORT ON CAP OPERATIONS, INCLUDING BUT NOT LIMITED TO CAP WATER DIVERSIONS AND CAP DELIVERIES
Mr. McCann reported that CAP is currently in fill mode at Lake Pleasant and is on track to deliver all water available to CAP customers in 2011.
CONSIDERATION OF ACTION TO FILL SMALL USE ORDERS FOR EXCESS WATER IN 2012, AS AN EXCEPTION TO THE CAWCD PROCEDURE TO DISTRIBUTE EXCESS WATER, ADOPTED JUNE 4, 2009
Mr. McCann stated that 2012 Excess Water orders exceed supply. That could cause significant hardship to small water users (those ordering less than 1,000 acre-feet in 2012), many of which rely on CAP water for direct uses such as stock ponds, playgrounds and plant nurseries. To avoid that harm, staff recommends making an exception to the 2009 CAWCD Procedure to Distribute Excess Water by using up to 7,000 acre-feet of the AWBA/CAGRD Replenishment Reserve Pool to fill small water user orders in 2012.
The Board discussed the types of customer uses and the potential impact on Excess Water customers' operations if no exception is made to the procedure for 2012. There needs to be clear communication to all Excess Water customers that the temporary water supply may not be available in the future and they need to obtain other water resources.
Alan Dulaney, City of Peoria, clarified that the city has a contractual obligation to deliver Excess Water to golf courses.
Brad Ross, Resolution Copper, spoke in favor of the staff recommendation or a stepped down reduction in the distribution of Excess Water.
Jason Baran, Arizona Municipal Water Users Association, stated that AMWUA members support the staff recommendation, with the understanding that this is a one-time exception to the procedure.
Laura Grignano, Arizona Public Service, spoke in favor of the staff recommendation.
Tom Buschatzke, Arizona Department of Water Resources, supports the exception to the policy.
Virginia O'Connell, Arizona Water Banking Authority (AWBA), supports the exception to the policy.
Lance Calvert, City of El Mirage, stated that the city requested M&I Excess Water. Since no Excess Water is available for M&I, the city would appreciate being considered for 1,000 acre-feet of Excess Water as a small user.
A motion was made (Mr. Fairbanks) and seconded, to make an exception to the current procedure for distributing Excess Water by filling up to 10 acre-feet of all Excess Water orders and 75 percent of amounts ordered that exceed 10 acre-feet.
A substitute motion was made (Ms. Thom) and seconded, and the Board approved an exception to the current Procedure for Distributing Excess Water by using up to 7,000 acre-feet of water from the AWBA/CAGRD Replenishment Reserve Pool to fill small user water orders in 2012 only. The Board voted by roll call. Mses. Atkins, Kibler, Megdal, Moulton, Pickard and Thom and Messrs. Jacobs and Lewis voted in favor of the motion. Mses. Burns and Zimmerman and Messrs. Bray, Fairbanks, Holway and Tenney voted against the motion. The motion passed on a vote of 7.4 in favor and 5.38 against.
REPORT ON LEGAL MATTERS
This item was not discussed.
CONSIDERATION OF ACTION TO GO INTO EXECUTIVE SESSION
On a motion (Mr. Lewis) and second, the Board convened in Executive Session for the following purposes: Pursuant to A.R.S. §§38-431.03.A.3 and 38-431.03.A.4 to consult with the attorneys for the District and consider the District's position and instruct its attorneys regarding Indian Water Rights Settlements.
The discussions and minutes of the executive session shall be kept confidential. Board convened in executive session from 1:18 p.m. and reconvened in open session at 2:09 p.m.
DIRECTORS' REPORTS ON CURRENT EVENTS
Directors reported on various meetings and events they attended.
PRESIDENT'S REPORT ON CURRENT EVENTS
President Pickard reviewed upcoming events and meeting dates.
GENERAL MANAGER'S REPORT ON CURRENT EVENTS
Mr. Modeer reported on various meetings and events that he has attended and upcoming events and meeting dates.
There being no further business to come before the Board, the meeting adjourned at 2:20 p.m.
Timothy R. Bray, Secretary