(a) Includes in-lieu

(b) Transmission and telecom sales

• MWh sales of 79,468 for February were below the budgeted amount of 83,990. Temperatures were cooler than average with heating degree days of 266 versus a 30 year average of 235. Year-to-date MWh sales remain below budget due to conservation efforts and cooler than average temperatures in the summer.
• Wholesale gross margins were below budget for the month of February. Winter months generally produce less wholesale sales due to a decrease demand in energy. Year-to-date wholesale gross margin continues to be higher due to BWP�s ability to efficiently use utility assets to increase sales in the wholesale market during the summer months.

• Magnolia 5 is unavailable for service because of an air compressor failure.
• Olive 1 and 2 are unavailable for service until the NOx retrofit is complete.
• Olive 3 and 4 are available for service.
• Lake One is available for emergency use only.
• The South Coast Air Quality Management District (AQMD) issued authority to construct the Olive 1 Retrofit. Equipment deliveries started for the Olive Retrofit Project. The kick-off meeting was held with AUS and all subcontractors this month. RM Myers Corporation began work on the final lead abatement for the Olive 1 structure. The Olive boiler inspections and overhaul of the equipment continues. The AQMD has not yet issued authority to construct Olive 2. The application is currently under EPA review.
• The Magnolia 5 Combustion Turbine was down due to air compressor damage.
• The Lake One AQMD Source Testing was performed on February 11^th. VOC tests were successfully rerun under an alternative procedure approved by the AQMD. The AQMD will review and issue a letter authorizing operation by April, 2003.

• Transmission and Regional Transmission Organizations (RTOs)

There is still a lot of uncertainty surrounding the future of the Federal Energy Regulatory Commissions (FERC�s) Notice of Proposed Rulemaking (NOPR) which deals with the Standard Market Design (SMD) for RTOs. Opposition to SMD is strong in many parts of the country. Consequently, it remains unknown what the final form and schedule for implementation will ultimately be. Burbank filed comments with FERC regarding potential problems that could result if SMD is not implemented properly. Consequently, we are recommending that FERC adopt a go-slow approach and do further studies on the potential adverse effects. Our input was well received by FERC and other industry participants. Our work was one of the most complete evaluations of the SMD issues. It demonstrated technical problems with the approach that must be fixed in order to avoid serious problems.

• FERC Data Requests and Refund Calculation

The major activity in this area focused on responding to six data requests from California Parties representing the Attorney General and various State agencies asking over 130 questions related to our marketing efforts from January 2000 through June 2001. As well, our Washington FERC attorneys submitted testimony on our behalf in the case arguing that Burbank did not engage in market manipulation activities during the period under investigation.

Implementation of the Comprehensive Settlement by Southern California Gas Company (SoCalGas) is still under suspension. The California Public Utilities Commission (CPUC) decided late in the month that it would hold a series of hearings regarding the comprehensive settlement implementation. It is unclear whether the settlement will be approved. BWP does not support turning over the SGC system to trading as outlined in this settlement.

The RTU installation at Victory Distributing Station has been completed, as well as the annunciator change out at Naomi Distributing Station. The new Remote Terminal Units (RTUs) have been installed at the SCADA Center and the McCambridge, Naomi and Winona Stations and have been released for testing. Fieldwork for the RTUs at Town Station has begun. The Interchange Transaction Scheduling (ITS) software now correctly reflects BWP�s energy scheduling practices, including tag designations as well as the ability to quickly calculate and display percent line loading, power factor, etc. from incoming data.

Work continued on the link from SCADA to the Distributed Control System (DCS) at the Olive Power Plant and Lake One. Work continued on the system database and several applications, as well as on the specification for the energy scheduling and trading software.

• Telecom

BWP personnel completed the fieldwork to provide fiber optic service for Ascent Media (formerly Liberty Livewire) connecting 2901 W. Alameda Ave. to 2130 N. Hollywood Way.

BWP Telecom Engineering issued a fiber job order to connect Modern VideoFilm at 4411 W. Olive Ave. in Burbank to their satellite facility at 1733 Flower Street in Glendale.

BWP Telecom Engineering received consent to proceed and issued a fiber job order to connect TVN Entertainment at 4111 W. Alameda Ave. to 2901 W. Alameda Ave.

BWP Telecom Engineering issued a job order to install a new fiber backbone cable along Buena Vista Street from Riverside Drive to Glenoaks Boulevard. This project includes a new fiber optic cable for the Public Works Traffic Division.

BWP Telecom Engineering issued a job order to install fiber optic facilities to connect CCTV (closed circuit television) cameras at both Valley Switching Station (two cameras) and LADWP Receiving Station "E" (one camera) to the fiber backbone. These digital cameras are equipped with pan, zoom and tilt capabilities and are the first of several to be installed at electrical substations and water facilities. The system will utilize BWP's fiber optic backbone through a series of multiplexers for both camera signal and control back to the CCTV control room located at the BWP guardhouse on Lake Street.

• BWP Administration Building Remodel

Phase II - Window Replacement

Exterior punch list items were completed which allowed for the removal of the scaffolding. Interior punch list items were addressed with the exception of the third floor windows. The window contractor is awaiting further direction from the window manufacturer and once resolved this project will be complete.

Phase III - Interior Building Remodel

Phase III of the Building Remodel Project is pending further review of the final set of construction drawings and specifications.

• Electrical Distribution

Engineering has issued the job to re-insulate the 69,000-volt Toluca-Valley No. 1 line and to replace poles as necessary.

Engineering for the Media District underground project has been completed for extending the ducts and manholes along Hollywood Way from the Warner Ranch Gate to Oak Street, along Oak Street to California Street, along California Street from Oak Street to Alameda Avenue, and also along Avon Street from Oak Street to the alley north of Alameda. J. Fletcher Creamer & Son, Inc. will start construction at the end of March.

Construction of the new offramp (to allow construction of a new Hollywood Way Distributing Station) has begun. BWP staff expects that the new off ramp will be open for traffic in June 2003, and the new Hollywood Way Station will be completed by April 2004.

Underground ductwork has been completed near Hollywood Way and San Fernando, allowing an overhead line to be rerouted along a less visible path.

Engineering for Phase I of the DCSB has been completed; however, at this time there is only approval to reroute the existing services and remove the poles.

The line crews are rebuilding pole lines in the Rancho area, and converting the remaining portion of Feeder N-15 to 12,470 volts.

Victory-Valley No. 2 is energized, and the third 34,500-volt line position at Victory Distributing Station is 50% completed.

Engineering has been completed for replacing oil switches with SF6 switches at San Jose Distributing Station. The underground work has been done, and the switches themselves will be installed in March.

Electric service to Howard Business Park (Ontario Street) from the 34,500-volt system has been completed.

Service to Radio Shack has been rerouted and energized to clear the old Police site.

Eighteen (18) padmounted customer stations have been engineered, and eleven (11) have been issued to the field.

Six street light improvement and undergrounding projects have been issued to the field.

Engineering has been completed for the final phase of the Ben Mar Hills Project and for the Magnolia Boulevard Project. Bid Schedule 1140 is out to solicit bids for this work.

Work is underway to replace 1,200 residential electric meters with meters that can be read remotely; 712 meters have been installed through February 28, 2003.

• Energy Risk Management

BWP staff has completed the development of the Energy Risk Management Policy and Procedures and Credit Risk Policy. The purpose of the two policies is to establish operational guidelines for BWP to plan, execute, and control the management of a variety of risks associated with energy portfolio activities and wholesale energy transactions.

BWP�s primary energy risk management and power supply objectives are to:

• Secure power supply that is adequate to meet expected retail load with sufficient reserves to reasonably assure that expected load can be served at the lowest available cost.
• Minimize the risk of high energy input costs (i.e., natural gas purchases) for retail load customers through cost pricing protection to provide low and stable rates.
• Use wholesale transactions solely for the purpose of maximizing the utilization of temporary surplus retail assets to minimize the cost of serving retail ratepayers.
• Minimize BWP�s operational and financial exposure due to counterparty default by ensuring that the entities with which BWP enters into power transactions are able to meet their operational and financial commitments.

These objectives were reviewed with the BWP Board as well as the procedures associated with the Energy Risk Management Policy and Credit Risk Policy documents on March 6, 2003. BWP staff will be before the City Council on May 6, 2003.

• Refer to the attached reports from the California Municipal Utilities Association (CMUA), the American Public Power Association (APPA), SCPPA�s Government Affair�s Manager and Morgan Meguire, LLC.

RED:RAC:FCF:JWL:GLS:ph

Attachments

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