WATER UPDATE

Water Quality

• Water quality during June met or exceeded State and Federal drinking water standards. 

• The Valley Pumping Plant (VPP) blend ratio for the month of June was 54% MWD to 46% BOU. The average year-to-date VPP blend ratio is 54% MWD to 46% BOU.

Financial and Operations Update

• Potable water sales for June were 929,653 billing units. This was 6% above the budgeted sales. Revenue for June was $1,478,451. Year-to-date potable water sales is 9,737,216 billing units or about 2% above year-to-date budget.  

• Reclaimed water sales for June were 31,497 billing units. Revenue for June was $41,137, not including Power Plant sales. Year-to-date reclaimed water sales is 251,568 billing units or 21% above year-to-date budget. 

• The Water Cost Adjustment Charge (WCAC) account had a balance of $1,748,625 as of June 30, 2004.

• Year-to-date purchased water cost is slightly higher than budget due to construction of the Liquid Phase Granulated Activated Carbon (LPGAC) units. This reduced operating capacity to 62%, compared to the budgeted capacity of 70%. 

• Year-to-date direct operating expenses are lower than budget due to a lower operating capacity and items budgeted but not expensed yet this fiscal year. To date, electricity, chemical, special departmental supplies and private contractual service expenses are approximately $600,000 under budget.     

• Year-to-date allocated operating expenses such as contractual services, professional services, and special departmental supplies are lower than budget due to shifts of project priorities during the year.  

• Year-to-date other income is higher than budget primarily due to water treatment and pumping income from Valhalla Memorial Park. 

• Fiscal Year 2003-04 Year-To-Date preliminary Water Fund Financial Results as of June 30, 2004:

( ) = Unfavorable

* Excluding Power Plant sales.

• Fiscal Year 2003-04 preliminary Water Fund Financial Reserve balances as of June 30, 2004 are summarized in the following table:

Note: There was a payment of approximately $900k for principal and interest on Fund 497 Bonds due on June 1, 2004.

Environmental Protection Agency (EPA)

• Modifications to the Vapor Phase Granulated Activated Carbon (VPGAC) units are being designed by Calgon Corporation. The design work began in January. EPA approval of the design is the controlling feature in proceeding with the project. Fabrication of the new screens and construction will follow the EPA approval, which is anticipated by early August. Construction is projected to take three months once it is approved. The Treatment Plant will experience reduced operating capacity during construction, therefore, there will be an increased need for purchased water from the Metropolitan Water District (MWD).

Capital Projects

• Construction of a new 12-inch main in South San Fernando Blvd. between Verdugo Ave. and Santa Anita Ave. began in April. This construction is related to the Senior Artist Colony project and was completed in May 2004. Tie-overs of existing services to the new main are completed. The old main will be cut out of the system and abandoned in the first week of July.   

• Construction of the 12-inch reclaimed water main between the Empire Center and Chestnut St. along Mariposa Street and Griffith Park Drive is completed. Costco has been connected to reclaimed water for irrigation. The Empire Center will receive reclaimed water in August after a number of administrative and regulatory processes are completed.  

• Upgrade of the Via Montana Booster Station at the intersection of Sunset Canyon Dr. and Via Montana is completed.   

• Construction of a new reclaimed water supply line for the BWP Administration Building air conditioning system is underway. The existing line is being displaced by the MPP project. Work has been temporarily suspended because of a congested construction site. Completion is scheduled by mid August 2004.

Legislative Update

• Refer to the attached legislative reports.

ELECTRIC UPDATE

Electric Reliability

• There were three outages during June 2004 involving Feeders F-7, F-11 and P-17. All three outages were caused by mylar balloons and resulted in a total of 1,443 customers being out of service for up to 1 hour and 50 minutes. As of June 30, 2004, the systemwide average is 0.4077 outages per year, compared with an industry average of 1.2 outages per year. As of June 2004, the average service availability is 99.9959%, exceeding the City goal of 99.99%. The average outage length is 52 minutes, compared with an industry average of 80 minutes.

The following table shows the systemwide reliability statistics for Fiscal Year 2003-04 as compared to Fiscal Year 2002-03:

Financial and Operations Update

• Year-to-date retail margins were higher than budget due mainly to a cost savings from power contract negotiations and  the resale of coal related to the IPP.  

• Year-to-date wholesale gross margins were higher than budget due to BWP�s ability to utilize its assets to increase sales in the wholesale market.

• Year-to-date other income was higher than budget mainly attributed to the FEMA grant due to the 1994 earthquake for the Sylmar retrofit project.

• Fiscal Year 2003-04 year-to-date preliminary Power Financial Results as of June 30, 2004:

 ( ) = Unfavorable

• Fiscal Year 2003-04 preliminary Power Fund Financial Reserve as of June 30, 2004 is summarized in the following table:

* Note: There is a payment of approximately $8.8 million for principal and interest on Fund 496 Bonds due on June 1, 2004.

Local Generation Operations Update

Unit Status

• Olive 1 is in hot-standby and available for service.  

• Olive 2 is in hot-standby and available for service.  

• Lake One is available for service.  

• The Micro-Turbine Project has been awarded to SCS Energy. The project is now in the pre-construction stage. The Micro-turbines will not be running until the summer of 2004. 

• Hydro Energy Production for June was 50,300 kWh compared to the goal of 58,000 kWh. Year-to-date kWh production of 848,000 was above the kWh goal of 642,000.

June 2004 Unit Data

* These units were retired on 12/31/03.

Power Supply

�        FERC Data Requests and Refund Calculation

There were no significant developments regarding this matter in June. In May 2004, FERC decided that it will no longer work directly with BWP on the $6 million refunding issues. BWP must seek refunds through Sempra Energy Trading. BWP has contacted Sempra Energy Trading and has worked on a mechanism to recover costs.   

�        Restructuring of the Gas Industry in Southern California

As reported last month, restructuring of the gas industry in Southern California was put on hold by the California Public Utility Commission (CPUC) on May 27. There has been no major development since.

Future changes to the way intra-state pipeline capacity is allocated on the SoCalGas system may arise out of the Gas Industry Restructuring Order (�GIR�) investigation on SoCalGas� intrastate pipeline later this summer.

�        Sylmar Converter Station Replacement Project

Engineering and fabrication work associated with this project continues on budget with a scheduled date of late 2004.  

�        SCPPA Natural Gas Reserve Procurement

On June 29, Council authorized BWP to participate with other SCPPA members to look into the feasibility of procuring natural gas reserves in the ground. BWP has initially committed to acquiring 1,000 Dekatherms per day (Dth/day) through the program, which represents approximately 5% of future expected annual requirements. The viability to proceed is expected this fall.

Magnolia Power Project (MPP)

The items in this report are provided as a general overview of the status of the Project. These items are discussed in considerable detail among the Project Participants at the Project Coordination Meeting each Friday and at Coordinating Committee meetings.

Safety

Through June, Kvaerner has worked 288,198 man-hours with no lost time cases and three recordable cases.

Budget

Refer to the attachment for detailed information on actual expenditures for the period ending June 30, 2004.

Schedule

The project remains on schedule for a commercial operation date of May 25, 2005. Refer to the attachment for detailed information on Project milestones.

Finance

The Magnolia Power Project Finance Committee has reviewed refunding proposals and has taken no action regarding the refunding of Project A bonds.

California Energy Commission (CEC) Compliance

Excavation monitoring is substantially complete. Monthly reports are being made as required by the CEC.  No violations of conditions have occurred.

Engineering, Procurement and Construction Activities since last Project Director�s Report of June 14, 2004.

Transmission

• Southern California Edison (SCE) Tax Issues on Facilities Agreement. SCE management will be contacted to determine how SCE routinely handles tax issues on facilities improvements with municipal entities. 

• Transmission Legal and Regulatory Study. Legal counsel and Black and Veatch have begun the work to identify the list of issues that will be addressed in the study. 

• Scheduled Services. A proposal will be made to the Project�s ISO participants at the next Coordinating Committee meeting. 

Coordinating Committee Action at its Meeting on May 20

There was no meeting held in June due to a conflict with the American Public Power Association Annual Meeting.

Project Manager�s  Actions Since Last Project Director�s Report of May 17  

With consultation and agreement from Project Participants, the following actions have been taken:

• Authorized $423,616 to Kvaerner for the equipment, engineering and installation of the auxiliary steam distribution system.

• Authorized a deduct ($85,284) to Kvaerner to delete one of the two fuel gas preheaters.  

• Amended the Engineering, Procurement and Construction Contract with Kvaerner to provide that all accrued interest from working capital account is paid to SCPPA.

• Authorized $117,128 to Kvaerner to furnish and install gland steam piping system

• Approved $40,000 Letter of Intent to Siemens-New Energy for services on scheduling system design.

• Awarded contract of $71,625 to ABB, Inc. to supply an isolation transformer for the electric auxiliary steam boiler.

• Authorized $118,620 to Kvaerner for HRSG welding.

Key Milestones and Anticipated Significant Activities For Next 30 Days

Power Supply Capital Projects

�        SCADA/EMS

The old Scipar SCADA hardware was removed from the SCADA Center.

A new SCADA Center Local Area Network (LAN) server was delivered and installed.

The OATI Scheduling and Transaction Management System (STMS) software acceptance testing continued in June. Work is continuing on improving the responsiveness of the OATI software and its ability to provide net schedules on transmission lines. BWP is currently working with the OATI and IT departments to resolve the speed issues.

�        Telecom

Engineering provided a proposal to Universal Studios for fiber optic service connecting Universal Studios through Barham Blvd. to NBC Studios at 3000 W. Alameda Ave.

Engineering provided a proposal to Match Frame Video for fiber optic service connecting two of their facilities: 610 N Hollywood Way to 540 N Hollywood Way.

Engineering provided a proposal to Media Net for fiber optic service connecting the Disney Channel at 3800 W. Alameda Ave. to LADWP Receiving Station �E�.

Engineering provided a proposal to Turner Broadcasting for fiber optic service connecting Cartoon Network at 300 N. Third St. to Glenoaks Plaza at 303 N. Glenoaks Blvd.

Engineering provided a proposal to MeSoft for fiber optic service connecting FotoKem at 2815 W. Olive Ave. to LADWP Receiving Station �E�.

Engineering provided a proposal to Ascent Media for fiber optic service connecting Ascent Media at 2901 W. Alameda Ave. to Disney at 500 S. Buena Vista St.

Engineering released a job order to the Operations Section to restore the fiber optic ring connecting OnFiber to Qwest through the new Hollywood Way Substation.

Engineering released a job order to the Operations Section to provide fiber optic service re-connecting Disney�s D20 link � Disney Feature Animation to Disney at 640 Paula in Glendale.

Engineering released a job order to the Operations Section to reconnect the multiplexer SONET ring and 69 kV relay connections going through the Hollywood Way Substation. This work was completed.

Engineering released a job order to the Operations Section to provide fiber optic service connecting Warner Building 157 at 4000 Warner Blvd to Warner Ranch at Oak Street and Hollywood Way.

Field personnel completed a fiber optic job to connect SohoNet/Warner Building 157 at 4000 Warner Blvd. to West Olive Plaza at 3601 W. Olive Ave.

�        BWP Administration Building Remodel

Signatures were secured for the final space allocation design (offices and workstations) for both the BWP Administration Building and the third floor of the MPP Service and Control Building. Schedules are now being developed for the next phase of the project which is the programming of the individual office and workstation furniture.

�        Electrical Distribution

Construction work for extending the ducts and manholes along Oak Street from California St. to Buena Vista and along Buena Vista to Edison Rd. is completed. Underground cable has been delivered and the field crew is currently installing the cables.

Since July 1, 2003, a total of 168 pole replacements/installations have been issued to the field. A total of 124 poles have been replaced in this fiscal year. Replacement of a 30-pole line is under construction in the Media District area. In addition to pole replacements, a large area in the Media District is being rebuilt to 12 kV standards in preparation for the future transfer of some Alameda feeder loads to the new Hollywood Way Station.

Since July 1, 2003, 20 pad mounted customer stations have been engineered, two of which was engineered in June. Since July, there have been 14 pad mounted customer stations issued to the field and 17 pad mounted customer stations have been energized.

Since July 1, 2003, four series circuit conversions to low voltage have been completed and twenty-nine new streetlights have been installed. Three streetlight improvement and undergrounding projects have been issued and two have been completed. Construction has started for the second phase of the Magnolia Boulevard Project between Pass Ave. and Buena Vista St. The private contractor, Steiny and Company, Inc. is installing streetlight conduits.

Replacement of the remaining oil switches with pole mounted airbreak switches has been issued to the field with the exception of one, Pacific-16 distributing switch, which will be removed during the unloading of this feeder scheduled for November 2004.

Construction of the new Hollywood Way Substation, and transfer of load from the old Hollywood Way Station, is 100% complete. Construction of the new off-ramp was completed on June 30, 2003. The new Hollywood Way Station was completed and energized on March 1, and the remaining testing was completed by March 8. The dedication ceremony took place on March 30 and the load transfers were completed by April 30. By May 12 2004, five lines were reconfigured to connect from the Capon Switching Station, which completes the work scheduled for this fiscal year. The old Hollywood Way Substation is completely de-energized and the equipment is still on the pads ready to be removed when needed. The Community Development Department (CDD) Transportation and BWP are working on an interim landscaping plan in front of the old/new Hollywood Way and Alameda Substations due to the delay in construction of the SR-134 on ramp project by Caltrans.

The Southern California Public Power Authority (SCPPA) awarded a contract to ABB Inc. to design/build the Gas Insulated Switchgear (GIS) expansion at the Olive Switching Station. This will connect the Magnolia Power Plant to the Olive Switching Station. ABB had two design review meetings with staff and submitted the design for Chief Building Officer (CBO) approval in the first week of February 2004. The construction started at the end of March as scheduled. The GIS equipment is manufactured, tested, and ready to be shipped. The GIS equipment, control building, and all protection and controls arrived on site in June 2004.

Bock Co. has completed the installation of a new underground duct system in the BWP Yard to underground two 69,000 volt overhead lines as a part of BWP�s overall plan to improve and modernize the BWP generating site. Both riser poles north of the Magnolia Bridge are completed along with cables to the first manholes at the northeast corner of the BWP Yard. Cable and all other related materials are ordered. This work is expected to be completed before MPP goes on-line.

The 69,000 volt underground cable and devices were ordered for making the connections from MPP to the Olive Switching Station. The generator step-up (GSU) and other related power transformers were manufactured, tested, and shipped from Turkey in early June 2004. These generator and transformers are expected to arrive on-site on July 23-26.

BWP staff is working on the Olive Switching Station retrofit by upgrading circuit breakers, busses and other equipment. This upgrade is needed for the Magnolia Power Project and approximately forty percent of the work is completed.

BWP Engineering has completed the design for the new underground ducts installation along Verdugo Ave. from Kenwood to California St. Bock Co. is expected to work on this project starting in July 12, 2004.

BWP Electrical Engineering is working with the Community Development Department (CDD) and Public Works departments to install ducts for the underground distribution system in the South San Fernando Redevelopment area.

A total of 1,703 remote meters have been installed; 827 were requested by the Customer Service Division, and 876 were meter change outs performed by the Line Crews or Test Shop.

Legislative Update:

Refer to the attached legislative reports.

RED:RAC:FCF:JWL:GLS:JLF

H:JULYW&E OPERATIONS REPORT

Attachments

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