Sook Yon Chang

The Recycled Water Committee meeting covered updates on the renewable energy and electrical reliability program. Key discussions involved the food waste co-digestion facilities project, which cost $9.1 million with anticipated net cost of $2.2 million after grants and tax credits, aiming to increase biogas production. A major upcoming initiative is the Renewable Energy Improvements project, estimated at $52.6 million, designed to upgrade biogas to renewable natural gas for sale to PG&E, potentially yielding $1.9 to $5.85 million in annual revenue, with an expected payback period of 5 to 6 years if tax credits and favorable tariff rates are secured. This project includes upgrades to anaerobic digestors, biogas conditioning, and replacement of old co-generation systems with linear generators. Another critical project is the Regen Power Connection, a $5.5 million effort to connect directly to Regen's power source for the Advanced Water Purification Facility, expected to save the agency approximately $1.8 million annually in electricity costs from PG&E. The final project discussed was the Regional Treatment Plant Electrical Upgrade and Interconnection, aimed at replacing the 35-year-old electrical service from PG&E.

The Budget Personnel Committee meeting involved the initial receipt and review of the preliminary budget for the fiscal year 2026-2027 for the Wastewater Fund and the Monterey County Water Resources Agency (MWA). Key discussion points included strategic objectives such as leveraging technology, implementing innovative approaches for water and energy neutrality, and community engagement. Goals for the proposed budget emphasized investing in agency infrastructure, presenting a water rate structure, and assisting low-income customers. Major accomplishments highlighted included no sewer overflows, the 35th anniversary of the LTP, and the replacement of an emergency power generator and EV charging station. The committee reviewed the fiscal year 2027 capital projects, totaling significant amounts across various funds, and discussed the critical nature and financing challenges associated with the $2.5 million switch gear replacement project at the SVRP. Furthermore, the committee noted the significant milestone of the Wastewater Fund paying off its Series 2012 and 2013 bond debt in June 2026, resulting in no bond debt service payments for FY 2027.

The board meeting commenced with a roll call confirming a quorum, followed by the Pledge of Allegiance. The agenda approval proceeded unanimously. During general public comment, a representative from Invoice Maps presented a case for adopting AI-driven asset management and infrastructure reliability software, highlighting features like interactive maps, real-time data updates, and security protocols. Following consent approval, committee reports were noted, including the cancellation of the Budget Personnel Committee meeting and the approval of the minutes for the Recycled Water Committee meeting held on January 15th. Action items included the approval of Change Order Number Three for the CP310 RTP electrical upgrades project, involving costs of $638,471, and the release of an additional $1,311,529 in contingency funds, bringing the total contingency to $2,940,000, necessitated by owner-initiated changes to accommodate future renewable energy and electrical reliability projects. Information items covered an update on the Pure Water Program, noting the retirement of Dave Lindau and milestones such as injecting 603 acre-feet of water in December, and an update on the Renewable Energy and Electrical Reliability Program, focusing on shifting the strategy from a central power plant to conditioning biogas to Renewable Natural Gas for sale to PG&E.

The meeting included roll call confirmation for various districts, the Pledge of Allegiance, and approval of the agenda. Key discussions involved the close session for labor negotiations concerning the general manager. Following the close session, the general public comment period was held. The consent agenda was approved. Committee reports covered the Budget and Personnel Committee (cancelled) and the Recycled Water Committee, which involved receiving draft minutes. The primary agenda item concerned receiving the final water recycling agreement expense audit. Discussion focused heavily on Finding 1, which alleged a $1.1 million overcharge to the Water Resources Agency over four years due to differing methodologies for calculating indirect charges, specifically regarding the use of a draft formula (Exhibit J) versus an alternative formula. Staff detailed efforts to reconcile time tracking between the Eden and Lucity systems and noted ongoing efforts to improve data correlation, which is expected to involve additional costs, especially as the agency transitions to a new ERP system. Finding 3 addressed non-compliance with monthly reporting requirements to the Water Resources Agency, which staff indicated has been rectified.

The primary focus of the meeting was the decision and subsequent financial implications of re-implementing bimonthly billing instead of the previously planned transition to property tax roll billing. Staff reported significant unbudgeted costs, estimated around $630,000, associated with re-establishing vendor contracts, community pay stations, and other necessary system updates. Further financial impacts include costs related to the ongoing replacement of the Main Financial, HR, and Utility Billing software, where the inclusion of utility billing component is projected to increase initial first-year costs by approximately $213,000 and subsequent annual costs by $990,000, potentially limiting vendor options. Additionally, the reversal impacts the Customer Assistance Program, requiring manual adjustments for enrolled customers, and delays Phase Two of the program for renters. Directors discussed the estimated million-dollar total impact and the subsequent need to draw from contingency funds, as well as the potential negative impact on bond ratings and future rate increase studies due to the less consistent revenue stream compared to tax roll billing. Staff confirmed that a communication letter apologizing for the pivot would be sent to all customers in English and Spanish.