HomeMy WebLinkAbout2022-11-22 Water Board Meeting Minutes MINUTES
DEPARTMENT OF WATER SUPPLY
COUNTY OF HAWAI`I
WATER BOARD MEETING
November 22, 2022
West Hawaii Civic Center, Room B2, 74-5044 Ane Keohokalole Highway, Kailua-Kona, HI
MEMBERS PRESENT: Mr. David De Luz, Jr., Chairperson
Mr. Steven Hirakami, Vice-Chairperson
Ms. Julie Hugo
Ms. Kea Keolanui
Mr. Stephen Kawena Lopez
Mr. Kenneth Sugai
Mr.Michael Bell(10:01 a.m.)
Mr. Benjamin Ney(10:02 a.m.)
Mr. Keith K. Okamoto,Manager-Chief Engineer,
Department of Water Supply(ex-officio member)
ABSENT: Mr.Pono Kekela,Water Board Member
Director,Planning Department(ex-officio member)
Director, Department of Public Works (ex-officio member)
OTHERS PRESENT: Ms. Diana Mellon-Lacey,Deputy Corporation Counsel
Mr. Tyler Benner, Office of the County Auditor
Mr. Jeff Zimpher(10:14 a.m.)
DEPARTMENT OF
WATER SUPPLY STAFF: Mr. Kawika Uyehara, Deputy
Mr. Kurt Inaba, Engineering Division Head
Ms. Candace Gray, Waterworks Controller
Mr. Gregory Goodale, Chief of Operations
Mr. Warren Ching, Energy Management Specialist
Mr. William O'Neil,Jr.,Water Service District Supervisor II, DWS Waimea
Mr. Alvin Inouye, Water Plant Electrical/Electronic Equipment Repairer II
Ms. Sunshine Carter,Private Secretary
1) CALL TO ORDER—Chairperson De Luz called the meeting to order at 10:00 a.m. A quorum of six
Board Members were in attendance and two joined the meeting shortly thereafter.
2) STATEMENTS FROM THE PUBLIC-Pursuant to HRS §92-3, oral testimony may be provided entirely
at the beginning of the meeting,or immediately preceding the agenda item. There were no statements
from the public at this time.
Page 1 of 17 November 22,2022,Water Board Minutes
3) APPROVAL OF MINUTES:
• Minutes of the October 25,2022,Public Hearing on the Power Cost Charge
ACTION: Mr. Sugai moved for approval of the October 25,2022, Minutes of the Public Hearing on
the Power Cost Charge; seconded by Ms. Keolanui and carried unanimously by voice vote.
• Minutes of the October 25,2022,Water Board Meeting
Chairperson De Luz asked Ms. Mellon-Lacey if Vice-Chair Hirakami should recuse himself because
he was not present at the October meeting and there is a quorum.
Ms. Mellon-Lacey replied that he should,if he was not present at that meeting.
Chairperson De Luz asked that the record reflect that.
Ms. Hugo and Ms. Keolanui noted they also were not present at the meeting.
Ms. Mellon-Lacey asked if there would be five members present to pass the Minutes.
Chairperson De Luz stated there were five.
Ms. Mellon-Lacey replied that those who were not present should abstain because they were not there.
Chairperson De Luz asked to go back to taking the voice vote on the Minutes of the Power Cost
Charge. He indicated that vote was fine. It is only on the Minutes of the regular meeting for the
selection that there are three recusing. There are five members with Mr. Bell, Mr. Sugai, Mr. Lopez,
Mr.Ney, and himself that will be voting on the Minutes of the October 25, 2022, Water Board
Meeting. He asked the Board to take a moment to review the Minutes.
Ms. Hugo noted that she would be abstaining and not recusing herself.
Ms. Mellon-Lacey stated that abstain is better than recuse.
Chairperson De Luz apologized and that is correct. The parties that were not in attendance are
abstaining from voting on the minutes for that meeting.
ACTION: Mr.Ney moved for approval; seconded by Mr. Sugai and carried by five ayes: Mr. Bell,
Mr. Lopez, Mr.Ney, Mr. Sugai, and Chairperson De Luz. Mr. Kekela was absent. Ms. Hugo,
Ms. Keolanui, and Mr.Hirakami abstained.
4) APPROVAL OF ADDENDUM AND/OR SUPPLEMENTAL AGENDA -None
5) PRESENTATION OF COUNTY OF HAWAI`I AUDIT REPORT ON CONTINGENCY
PLANS (FOLLOW-UP):
Chairperson De Luz asked if there was any testimony for this item. There being none, he continued with
the agenda item.
Copies of the County of Hawaii, Office of Legislative Auditor, "Department of Water Supply
Contingency Plans Follow-up,"Report No. 2022-06, dated October 20, 2022,have been distributed to
Board members. The County's Legislative Auditor, Tyler J. Benner,will present to the Board.
Page 2 of 17 November 22,2022,Water Board Minutes
Mr. Benner stated that Ms. Maxine Pacheco of his office was the lead auditor on this engagement, and she
is at the West Hawaii Civic Center today in case she is needed for anything. Members of the Department
of Water Supply(DWS) leadership team could also assist in answering any technical questions. He
briefed the Board on their Report No.2022-06,which was presented to the Hawaii County Council on
November 15, 2022.
The scope of the audit reviewed the DWS' contingency plans from April 22 until October 22. Follow-up
audits are limited to reviewing and reporting on the implementation of recommendations made during an
initial audit and does not consider new or unrelated issues that do not relate to our original
recommendations. This audit evolved somewhat uniquely. Around 2016/2017,pumps and/or
infrastructure at various wells began failing in quick succession,resulting in water service disruption and
water restrictions of between 10% and 25%. This culminated in five wells going offline or experiencing
severe capacity restrictions and former Mayor Harry Kim declaring a state of emergency in September of
2017. As a result, after constituent concerns and repair delays, former Councilmembers Karen Eoff and
Dru Kanuha brought forth Resolution No. 287-17. That Resolution,passed by Council, sought to
understand DWS' possessed plans to ensure sufficient water delivery service,including during the
disruption of service at a well system. The original audit was published on March 3, 2020;but because it
coincided with the COVID-19 pandemic, the Auditor's office never debriefed Council or the Water Board
of the outcomes of the engagement. The initial audit found that DWS lacked formalized contingency
plans, communication plans, and complete vendor contact information and made three recommendations.
The original recommendations and their staff s follow-up are as follows:
Recommendation 91: "We recommend that DWS develop a written contingency plan,by district, to
address emergency situations to mitigate potential impacts on any community or, at a minimum,include
contingency plans that address important risk scenarios into their Continuity of Operations Plan. That
followed with a thorough review of contingency plans,technical reports, spare pump and motor lists, and
procurement notices. We noted that these plans could be further developed to include risk scenarios that
could be used, generally, across districts. DWS did prepare functional equivalents through an emergency
response plan, a risk and resiliency report, and a preparedness technical memorandum,which were
required by the American Water Infrastructure Act and the Federal Emergency Management Agency.
Although we noted some exceptions,we consider this recommendation resolved and offer the Department
additional proactive suggestions to further strengthen controls such as reviewing and updating written
plans accordingly, consolidating applicable guidance, making plans accessible to appropriate DWS staff,
and recertifying the Continuity of Operations Plan annually. Pump,motor, and infrastructure can and do
break down; and DWS has demonstrated that they can draw on 23 water systems to support any of its out
of service deepwells. It is important to remember it is a best practice act--contingency plans for
worst-case scenarios for emergencies, compared to a continuity plan,which is required by law--a plan
covering how an organization can and will get set up again. DWS does have both plans."
Recommendation 92: "We recommend that DWS develop and implement a communications plan to
notify the public, administrators, stakeholders, and all governmental agencies that rely on information that
may affect them or the community. The plan should include,but not limited to, timely notices and
updates, status of water events, and holding community public meetings timely. On follow-up,we found
that thorough review of accommodation of communication plans, flow charts, Water Board minutes,
bulletin board, social media, and the Department's website, that DWS has demonstrated the use of
multiple mediums to notify and inform the public. We consider the recommendation implemented and
offer the Department additional proactive suggestions to further strengthen controls, such as consolidating
written guidance such as drought triggers and three stages of water shortage conservation into their
communications plan."
Page 3 of 17 November 22,2022,Water Board Minutes
Recommendation 93: "We recommend the DWS update their Continuity of Operations Plan to include
essential vendor contact information to ensure that quick reference information is accessible and available
during emergencies. At follow-up,we compared the Department's 2010 to 2022 [plan] and verified that
information for essential vendors as well as plan review and updates were in place. We consider this
recommendation implemented."
Mr. Benner noted that as date of publication, twelve of the fourteen wells are operational; and two wells,
Wai`aha and Makalei Estates, are out of service with a brief explanation of each in their executive
summary. He thanked DWS for unrestricted access to sites,personnel, and information. Their
cooperation was exceptional. They have added their information to their remediation tracker,which is
available on their department's page at www.hawaiicounty.gov. He thanked the Board and staff for the
time and opportunity to present and invited Board Members' discussion at this time.
Chairperson De Luz asked if there were any questions from the Board.
Mr. Hirakami asked if this is a periodic audit; and if so,when the next one would be.
Mr. Benner replied that it is not a periodic audit. They do risk-based auditing; and as described in their
report,the background necessitated that the risk was increasing rapidly and necessitated the audit. At this
point, they have done the initial audit and have done the follow-up. They intend to conduct this as a
remedial type of audit.
Mr.Ney asked if the Department addressed all of the well sites with this review and scope of the audit, or
whether it was only on the wells that had issues.
The Manager-Chief Engineer replied that the Department addressed all of the 23 water systems,but not in
particular to this audit.
Mr.Ney mentioned that there might not be as much redundancy with some of the other systems.
The Manager-Chief Engineer agreed and added that the Continuity of Operations Plan is an island-wide
plan, covering all of the Department's systems. There are contingency plans by particular systems that
will be continued to be refined.
Mr. Hirakami asked if the Continuity of Operations Plan would be something the Department would
exercise in Puna in case of lava flows or anything causing loss of water.
The Manager-Chief Engineer replied that it would be more along the lines of a contingency-type of plan.
Chairperson De Luz mentioned the Department's plan to improve resiliency,redundancy, and efficiency
and the study done by Brown and Caldwell, assisted by the Board's creation of a Permitted Interaction
Group in 2017 regarding the North Kona wells. It might be good to have an index to these plans for new
members who join the Water Board. Within the past five years from that previous Board, the Department
has completed quite a bit of proactive situations with regard to its wells. On behalf of the Board,he
thanked Mr. Benner for his presentation today.
(Mr. Benner thanked the Board and left the meeting at 10:17 a.m.)
Page 4 of 17 November 22,2022,Water Board Minutes
6) POWER COST CHARGE:
Chairperson De Luz asked if there was any testimony for this item. There being none, he continued with
the agenda item.
Departmental power costs from all power sources increased since the last Power Cost Charge rate was
determined. The Department proposes to increase the Power Cost Charge from $2.87 to$3.04 per
thousand gallons as a result of this increase. Power cost charges over the past two years were as follows:
Effective PCC
November 1,2022 $2.87
September 1,2022 $2.75
July 1, 2022 $2.48
May 1,2022 $2.34
March 1, 2022 $2.02
November 1,2021 $2.15
Before the Power Cost Charge is changed, a Public Hearing should be scheduled to accept public
testimony.
RECOMMENDATION: It is recommended that the Board approve holding a Public Hearing on
December 20, 2022, at 9:45 a.m.,to receive testimony on increasing the Power Cost Charge from $2.87 to
$3.04, effective January 1,2023.
MOTION: Mr. Sugai moved for approval of the recommendation; seconded by Mr. Bell.
The Manager-Chief Engineer stated that the hopes were for a downward trend,but unfortunately that did
not happen. This proposed increase is for the evaluation period of September and October of 2022. The
Board will see some background on this increase later in the agenda under the Manager-Chief Engineer's
Report—Energy Update. This is the same evaluation that is done every two months to come up with this
figure. It takes into account the pumping costs compared to water volume.
Mr. Lopez noted that this looked like it will be the sixth proposed power cost increase in this calendar
year and is mindful of the public backlash. Not that the increase is not justified;but it is something to
consider because in his District 8, there is an awful lot of land mass.
Mr.Ney stated that if you look at the trend shown over the past two years,it is adjusted fairly in both
directions.
Mr. Lopez understood but people may not see it that way and only see the increase.
Ms. Keolanui agreed with Mr. Lopez and asked if there has ever been a consecutive rise like this in the
past.
The Manager-Chief Engineer referred to the graph in the Energy Report, showing the history of the power
cost. Before 2008,the Department could only adjust the power cost charge on a yearly basis and had one
year where it lost over$4 million because the escalation in electrical costs could not be recovered. The
rules were changed in 2008 to allow it to be changed bi-monthly. He asked Ms. Gray what the annual
operating expense is in the budget.
Page 5 of 17 November 22,2022,Water Board Minutes
Ms. Gray stated that the Operating Budget is $61 million and$23 million is just for power. In 2008 when
the rules were changed for frequency,it was not actually changed every two months until within the past
year,when electricity costs went up.
Chairperson De Luz stated that Ms. Keolam is question is a good one;but in this timeframe,
unfortunately,it is unprecedented.
Mr. Lopez stated that these are all good reasons and good arguments;but perhaps a suggestion for the
public hearing would be to provide information to the public, from Mr. Okamoto, as Manager-Chief
Engineer of the Department, and that he be prepared with charts and slides, such that are shown here, to
explain why the Department is in this position, even going back to the rate change in 2008 and the impact
of the $4 million. Those were all very good arguments that could be left under the table if they are not
brought out. Some kind of presentation could be held at the beginning of the public hearing by the
Manager-Chief Engineer.
Mr.Hirakami commented that by the amount of zero testimony at these public hearings, either the public
does not know about them or they do not care. This is the sixth proposed increase this year, and he
wondered if the message is getting out there.
Ms. Mellon-Lacey thought that the public must be aware of increasing fuel costs by what is happening at
the gas pump and that the power cost charge is explained on the water bill. Either they are not paying
much attention to it or they may be calling the Department directly to see what is wrong with their bill.
Mr. Hirakami agreed and has noticed a downward trend at the gas pump lately, although utilities do not
have the same reactive time.
Ms. Keolanui agreed that everyone sees the cost of energy going up but is sure that a lot of consumers are
not necessarily educated on the interaction between Hawaiian Electric and Department of Water Supply.
It may be a good point, as Mr. Lopez suggested, to provide more information, showing the graph, and
helping consumers understand that interaction.
Chairperson De Luz suggested that a synopsis could be given on where the Department stands now, only
because of these unprecedented increases. It may help from a public relations capacity.
Ms. Keolanui asked how the notifications of the power cost charge increase are being put out to the
public.
The Manager-Chief Engineer replied that they are placed on the Department's website,the County
Calendar,bulletin boards, and are advertised in the Hawaii Tribune-Herald and the West Hawaii Today.
If the Board wished, they could be advertised more or even put into a press release.
Ms. Keolanui thanked the Manager-Chief Engineer for the clarification and thought that the newspaper
advertisement is pretty thorough.
Mr. Lopez suggested an insert in the billing providing a synopsis, as Chairperson De Luz had mentioned,
and see if that generates interest.
The Manager-Chief Engineer indicated that he would take these recommendations into account.
Chairperson De Luz praised the Department for maintaining its demand charge. Sometimes when you see
a spike in the cost of electricity,it has an impact on the demand charge. The other thing he recalled is that
Page 6 of 17 November 22,2022,Water Board Minutes
there will be a water rate increase next year,which has no opportunity for public comment as the decision
has been made on that particular increase It may seem like a double whammy,but a more articulated
explanation and synopsis might benefit the Department in fielding concern from the consumers in that
regard.
ACTION: There being no further discussion, Motion was carried unanimously by voice vote.
7) SOUTH KOHALA:
A. JOB NO.2004-847, CONSTRUCTION OF THE PUAKO WATERLINE REPLACEMENT:
Chairperson De Luz asked if there was any testimony for this item. There being none, he continued
with the agenda item.
Bids for this project were received and opened on October 31, 2022, at 2:00 p.m., and the following
are the bid results:
Bidder Bid Amount Adjusted Bid Amount
w/Preferences*
Drainpipe Plumbing & Solar $5,781,520.01 $5,781,520.01
LLC
Goodfellow Bros, LLC $6,485,550.00 $6,161,272.50
Isemoto Contracting & $9,182,810.00 $8,723,669.50
Demolition, LLC
Jas. W. Glover, LTD $10,174,800.00 $10,174,800.00
Koga Engineering & $7,657,000.00 $7,274,150.00
Construction, Inc.
Nan, Inc. $7,481,645.00 $7,107,562.75
*Bids were adjusted(for purposes of award) to provide credits in the State Apprenticeship Program,
in accordance with Hawai`i Administrative Rules
Project Scope: This project involves construction of approximately 11,500 linear feet of new 12" and
8"zinc coated ductile iron waterline, 112 service laterals, 24 fire hydrants and appurtenances along
Puak6 Beach Drive. It is also anticipated that the construction will take approximately 1 year to
complete (365 days). The engineers estimate for the project was $4,700,000.00.
Project Cost:
1) Low Bidder(Drainpipe Plumbing & Solar LLC) $5,781,520.01
2) Construction Contingency(10%) 578,152.00
Total Construction Cost: 6,359,672.01
Funding for this project will be funded by a State Revolving Fund loan.
RECOMMENDATION: It is recommended that the Board award the contract for JOB NO.
2004-847, CONSTRUCTION OF THE PUAKO WATERLINE IMPROVEMENTS,to the lowest
bidder, Drainpipe Plumbing & Solar LLC, for their bid amount of$5,781,520.01 plus $578,152.00 for
construction contingency, for a total contract amount of$6,359,672.01, and that either the
Page 7 of 17 November 22,2022,Water Board Minutes
Chairperson or the Vice-Chairperson be authorized to sign the contract, subject to review as to form
and legality by Corporation Counsel.
MOTION: Mr. Lopez moved for approval of the recommendation; seconded by Ms. Keolanui.
Mr.Ney asked if the Department has used this company before; and if so,if they were satisfactory.
Mr. Inaba replied that they worked on a Kapoho Beach project and were satisfactory.
Mr. Lopez asked about the adjusted bid amount for the State Apprenticeship Program.
The Manager-Chief Engineer explained that the State implemented this to use for awarding purposes.
If a company has an apprenticeship program,they can knock off a couple of percentage points and
their bid will be evaluated at the lower amount. There is no money involved. It only adjusts their
amount for award purposes, and they will be paid for their bid amount.
Chairperson De Luz, Vice-Chairperson Hirakami, and Ms. Keolanui asked if they need to recuse
themselves as the know the principle of the company, Mr. John Gapp. (Ms.Mellon-Lacey replied that
knowing a person is not a reason that a board member would have to recuse themselves,unless they
feel they cannot be fair and impartial.) Chairperson De Luz, Vice-Chairperson Hirakami, and
Ms. Keolanui announced that they would, therefore, feel comfortable in voting on this matter.
Mr.Ney asked if the company is feasible and has the manpower to do this job.
Ms. Mellon-Lacey stated that when they are evaluated, the Department looks at the most reasonable
and also responsible bidders.
The Manager-Chief Engineer added that the bidders need to have the proper license; and every two
years, they have to update their Qualification Questionnaire which is on file with the Department.
The Questionnaire includes information on their technical, financial, and managerial capacities to
perform the work.
ACTION: There being no further discussion, Motion was carried unanimously by voice vote.
B. JOB NO.2020-1160,PARKER#2 DEEPWELL REPAIR—REQUEST FOR
ADDITIONAL FUNDS:
Chairperson De Luz asked if there was any testimony for this item. There being none, he continued
with the agenda item.
The Contractor, Beylik/Energetic A JV is requesting a contract change order for additional work that
was required for machining new column pipe to install a positive seal check valve directly connected
to the pump and to submerge the positive seal check valve within the water column. The description
of the additional work and associated fees are as follows:
Item Description Amount
Original Contract Amount $783,000.00
Original Contingency Amount: $78,000.00
1"Additional Funds Request Removal of the existing discharge head, furnish $42,000.00
(Approved 12/21/2021) new discharge head and replacement of nine
Page 8 of 17 November 22,2022,Water Board Minutes
damaged 10"x 20' long galvanized steel
column pipes.
2nd Additional Funds Request Modifications to the new discharge head.
(Approved 7/26/2022) Inclusive of labor, shipping and other related $7,909.00
costs.
3rd Additional Funds Request Machining work to contractor supplied 10"x 5' $5,903.15
column pipe and replacement of 10"x 17'
column pipe with extra 10"x 20' column pipe.
Total Revised Contract Amount $916 812.15
Staff reviewed the request for the additional funds and found that the $5,903.15 is justified. The
contractor also requested a contract time extension of 7 calendar days but that request was not
justified.Note:Payment of this work shall be performed by force account.
RECOMMENDATION: It is recommended that the Board approve an increase in contingency of
$5,903.15 to Beylik/Energetic A JV, for a total project cost of$916,812.15 for JOB NO. 2020-1160,
PARKER 92 DEEPWELL REPAIR.
MOTION: Ms. Keolanui moved for approval of the recommendation; seconded by Mr.Ney.
Mr. Lopez asked why it is being changed from 10 inches by 5 feet to 10 inches by 17 feet.
Mr. Goodale explained that the are two lengths of pipe that were required for this was so that the new
positive seal check valve would be within the water column. When all of the measurements were
taken,it was found that it would not have extended appropriately into the water column as necessary.
Therefore, those two additional pieces would make it the length that was needed.
Mr. Lopez asked who made the change request.
The Manager-Chief Engineer replied that the Department made the request.
Mr.Hirakami asked for more clarity on the lengths of pipe.
The Manager-Chief Engineer replied that it is actually two different pipes. There is a l Ox5-foot
section of pipe that needed to be machined,which is one component of the extra work. To lower the
pump even deeper into the well,they had to replace a 17-foot piece of pipe with a 20-foot piece of
pipe, so there were actually two pieces of pipe that were modified.
Mr. Goodale stated that the sole purpose of this request was so that it would extend into the water
column appropriately.
ACTION: There being no further discussion, Motion was carried unanimously by voice vote.
8) MISCELLANEOUS:
A. MONTHLY PROGRESS REPORT:
Chairperson De Luz asked if there was any testimony for this item. There being none, he continued
with the agenda item.
Page 9 of 17 November 22,2022,Water Board Minutes
Mr. Inaba reported on the Hala`ula Well Development Phase 2 project. The well was run and purged
and water samples were collected and sent to the Department of Health laboratory for testing. Once
the results come back,the consultant can submit a new source report. Once that is done,water can be
put into the system.
The Manager-Chief Engineer added that there is a light at the end of the tunnel here. Likely,the early
part of next year is when water will be flowing into the system. The project lasted longer than
anticipated. It is a much-needed project for the area; and down the road, engineering and operations
are looking at contingency plans and opportunities to see if the Hawi wells can be backed up. It might
take some tweaks to the system.
Mr. Hirakami asked if power was energized.
Mr. Inaba replied it was energized last week.
Chairperson De Luz stated that his understanding is that Hawaiian Electric is looking at extending
their high-voltage transmission line in that area from Waimea. He asked if it would impact the
Department's infrastructure there. Perhaps there is a conversation and public comment that could be
had with regard to impacts to the DWS' system.
The Manager-Chief Engineer thanked the Chair for mentioning it. The Department is looking at
opportunities to talk with their major stakeholders and customers on overall hardening opportunities
for their system,utilizing some federal funding. The Department shared its needs and suggestions
with Hawaiian Electric; and one of the key takeaways was the position of increasing capacity for
quicker restoration of facilities rather than making a facility bullet proof against natural disasters. If
there is an opportunity there with federal funds, the thought is how to increase capacity for restoration
because short-term outages can be endured with extra storage.
Mr. Hirakami asked where `Ola`a No. 3 Well B,Phase 1,is located.
Mr. Inaba replied that it is on the site of a I-million-gallon reservoir off the Volcano Highway in front
of Kamehameha School. It is a project that has become a potential project for FEMA funds.
B. REVIEW OF MONTHLY FINANCIAL STATEMENTS:
Chairperson De Luz asked if there was any testimony for this item. There being none, he continued
with the agenda item.
Ms. Gray reviewed the Financial Statements for October of 2022. This is one-third of the way
through the fiscal year. Two items of note are on the Income Statement, customers accounting
increased $139,445,or 39%, from prior year due to an annual maintenance cost for the Northstar
billing system; and interest revenues increased $9,483, 37% from prior year,which is due to the
interest earned on DWS' checking account. She mentioned that the Manager-Chief Engineer had
asked if the DWS is moving in the right direction, and she had explained what she does is she looks at
the net position and change, going along from month to month. It is a quick way to get an idea of the
Department's financial position. It is also included in the annual audit report.
C. MANAGER-CHIEF ENGINEER'S REPORT:
Chairperson De Luz asked if there was any testimony for this item. There being none, he continued
with the agenda item.
Page 10 of 17 November 22,2022,Water Board Minutes
The Manager-Chief Engineer provided an update on the following:
1. North Kona Wells—the Deputy reported that twelve out of fourteen wells are in use or available to
use. The Department continues to work with the developer for Makalei Well to schedule a
pre-construction meeting. Hualalai Well is being monitored,which had gone offline this past June.
Over the last two to three weeks, a drop in pumpage has been noticed. It was over 800 gallons per
minute (gpm)back in July, and now it is down to about 575 gpm. In line with contingency
planning, staff has already started to get the process moving on possible repair specifications and
how to look at other sources in the area to redirect water in the event of well failure.
Mr.Ney asked if that is attributed to a pump performance issue.
The Deputy replied that the pumpage is decreasing. In July of this year,the motor was replaced,
but the pump was reused.
The Manager-Chief Engineer introduced Mr. Alvin Inouye, Water Plant Electrical/Electronic
Equipment Repairer IL Mr. Inouye is key in making sure the water comes out of the ground and is
distfibuted within the system on the Kona side. Beginning December 1,he will be assuming the
position of Operations Superintendent and will fall directly under Mr. Goodale, Chief of
Operations. He asked Mr. Inouye to share some of his insights into what is happening with
Hualalai Well.
Mr. Inouye stated that the drop in gpm was noticed and is being investigated. In his 20 years'
experience, sand gets in this particular well and can come up and damage the pump. Staff has
noticed sand in the tank and are trying to find some type of filter or a pump that is built for these
conditions, such as oil wells. This well is run 24/7 due to demand.
2. Department of Water Supply Energy Report -Mr. Ching reviewed the Energy Report. For the
third quarter of 2022,the total power cost was slightly under$6.8 million,which was 39.7% from
the same quarter last year. Compared to the previous quarter,it was up 10.2%. Figure 1 shows
some history, and he touched on the demand cost and energy cost difference. The quarterly
demand cost has not changed much,but the demand charge from Hawaiian Electric has not
changed. The energy cost,or per kilowatt cost, that changes every month is where you can see the
difference from quarter to quarter. Customer water consumption and total energy use for the third
quarter of 2022 was a little over 2.3 billion gallons, down 2.3% from the same quarter of 2021; and
compared to the previous quarter,it was up 1.8%. Total energy use for the third quarter 2022 was
over 14.7 million kilowatt hours,which was up 1% from the same quarter of 2021. Compared to
the previous quarter,it was up 1.1%. For Hawaiian Electric,the Department still has 158 accounts
broken down into three different rate schedules. The average Hawaiian Electric energy rate for the
third quarter of 2022 was about 44.2 cents per kilowatt hour,up 40.6% from the same quarter of
2021. Compared to the previous quarter,it was up about 4%. The demand rate average for the
third quarter is $20.50 per kilowatt,which has not changed. Going on to the figure referenced
during the power cost charge item, the current power cost is $2.87 per thousand gallons. It was last
adjusted November 1, 2022. The history shown goes back over the past three years. As Ms. Gray
had mentioned,in recent months,the Department began implementing a change in the power cost
charge every two months to help closely follow large or steep increases. The Department could
easily fall behind if that short interval is not there. As seen in his report,prior to March of this
year,the Department was averaging about a four-month interval. Electrical rates were fairly steady
and there were no steep changes up or down. At the beginning of the COVID pandemic,the
demand went to almost nothing for oil because no one was traveling, and oil prices dropped for
that reason. Throughout the pandemic, the supply was adjusted to meet the demand; therefore,
Page 11 of 17 November 22,2022,Water Board Minutes
prices were still low but getting a little back to normal. Early this year, demand for oil started to
increase again as people were travelling, and the supply needed to catch up to the increase. This
resulted in higher oil prices beginning earlier this year, compounded with the Russian invasion of
Ukraine,which drastically increased oil prices because of unknowns. Hawaiian Electric prices
increased at a steep rate and resulted in DWS going through a two-month interval for the power
cost charge to try and catch up.
The Manager-Chief Engineer stated that it is not a catch up,but rather to recoup what was lost. It
is still in the negative, about$1 million.
Mr. Hirakami stated that it is good to reflect that the power cost went up 39.7% from the third
quarter of 2021 to 2022; and if you look at the difference between November 1, 2021, and
November 1,2022,it is 33.5% and he could see what was meant by not really catching up.
Mr. Lopez stated that this report is what he was referring to for a presentation at the public hearing.
It could be distilled,but the first page is great. This explanation on recovering rather than catch-up
is good, and he appreciated this report.
Mr.Ney asked at what point you would know you have to retain high rates for some time to bring
down the $1 million negative number. That is a substantial amount of money and it has to be
plugged at some point. He wondered at what point it would become hard to reconcile.
Chairperson De Luz asked the Manager-Chief Engineer if it is interjected into the Operating and
Maintenance costs when budgeting.
The Manager-Chief Engineer replied that is partly where it is attempted to be recouped. The
Department cannot legally overcharge and make up lost revenue. It has to be based on actual costs
for electricity compared to what is pumped.
Ms. Hugo asked how long a period the Department was in the negative at$1 million.
Ms. Gray replied that for this fiscal year,it is actually $1.4 million.
Chairperson De Luz stated that it is good to note the Department is not recovering 100% of any
rate increases and is absorbing it somewhere else. Another thing to note are conservation efforts
that consumers can do so their impact is nominal to the increase of this power cost surcharge.
There is content on the Department's website about conservation, and it could be emphasized by a
link to give customers some information.
The Manager-Chief Engineer agreed that this is an area where the Department can be better at
communicating that kind of information.
Mr. Ching continued with his report,highlighting some partnerships the Department is involved in.
Hawaii Energy has been supportive of the Department's leak detection program and has given
rebates for leak detection loggers and battery kits. These loggers are deployed to pinpoint leaks,
after which the leaks are repaired, allowing less run time on pumps. The Hazard Mitigation Grant
Program FEMA funds for generator transfer switches make switching to generator power quicker
and safer. They were placed at four well sites, all of which are high priority, critical sites. This
was a 75% Federal funds split with the Department, and he recognized HIEMA (Hawai`i
Emergency Management Agency)for their partnership. The Solar Photovoltaic(PV) Systems at
Five DWS Locations project is ongoing. Construction is complete on four out of five sites. Hilo
Page 12 of 17 November 22,2022,Water Board Minutes
Baseyard is anticipated to be complete this upcoming January. This is a Power Purchase
Agreement(PPA)where the average Hawaiian Electric rate is 44 cents per kilowatt hour,but this
PPA will be for 19 cents per kilowatt hour for a 20-year term. It is a good project. Pi`ihonua 93
Booster A Replacement is a project to replace old infrastructure. Completion is anticipated for
December of this year. Hawi#2 Booster C construction is complete and awaits final testing.
Pi`ihonua 91 Well C VFD (Variable Frequency Drive)installation was completed and is awaiting
final testing results. These projects will provide power factor credits and demand savings.
Mr.Ney mentioned the process of adjusting the power cost charge up or down and asked what
would have to happen to change the way it is being done and whether it is on a State Legislative
level or what needs to be changed. An example would be when you pay taxes,you pay anticipated
earnings and hopefully get a credit back. He could not see why the Department cannot make sure
it has enough money to cover the cost of energy, and if it has collected too much,it could be
credited back to the customer accordingly. There is nothing dishonest about that. He feels it
should be done that way rather than what is in place now,which does not work very well. He
would love to understand what it would take to rework the way it is done.
The Manager-Chief Engineer stated that would be a good thing to place on an agenda for
discussion,perhaps in January or a subsequent month. He asked Ms. Mellon-Lacey if it is
something the Board could handle without State Legislation.
Chairperson De Luz stated that it would be a change to the rules.
Ms. Mellon-Lacey stated that she would check the Statutes to make sure;but to change the rules is
a process in itself and requires public hearing.
Chairperson De Luz suggested that the Manager-Chief Engineer might want to check with the
consultant for the water rate study as they go through their new rate study for next year, and also
check with other municipalities.
The Manager-Chief Engineer replied that conversation could be had, and it just needs to be
agendized for a future meeting.
3. Pacific Water Conference, February 7 to 9, 2023 —Hawai`i Convention Center, Honolulu, Hawaii
The Manager-Chief Engineer announced the subject conference and indicated there may be budget
for four or five Board Members to attend. He asked Ms. Mellon-Lacey if there was anything
special required or to be cautious of.
Ms. Mellon-Lacey replied that, generally speaking, two Board Members can attend without a
problem;but it is possible for Board Members to attend training after which they have to report
back to this group on what they learned and they need to be cognizant of the Sunshine Law when
they are at the training.
Chairperson De Luz asked who the Board Members should express their interest to.
The Manager-Chief Engineer replied that it would be to either to the Board Secretary or the Private
Secretary. He will have the conference notice sent to the board by bee email.
Page 13 of 17 November 22,2022,Water Board Minutes
ITEMS TAKEN OUT OF ORDER
Chairperson De Luz asked the Board's concurrence to take up the public items on the agenda before
going into the Executive Session items 8D and 8E. That way, the Manager-Chief Engineer could
dismiss his staff after the public portion only because this meeting is in Kona. If that is appropriate
with Corporation Counsel, he would like to take Items 8G and 8H out of order.
Ms. Mellon-Lacey indicated that the Chairperson could make that change on his own.
Chairperson De Luz went on to Item 8G.
G. ELECTION OF CHAIRPERSON AND VICE-CHAIRPERSON FOR 2023:
Chairperson De Luz began by stating that his term (District 3) and Mr. Sugai's term (District 6)will
end on December 31 of this year. Although they can serve a hold-over of 90 days,it does not give
them the privilege of holding a Chair or a Vice-Chair position. He then opened the floor for
nominations for Chairperson, and mentioned that a board member can self-nominate.
MOTION: Ms. Keolanui nominated Mr. Steven Hirakami for Chairperson; seconded by Mr. Bell.
Chairperson De Luz called for a Motion to close nominations for Chairperson as there were no further
nominations.
ACTION: Ms. Hugo moved to close nominations; seconded by Mr.Ney. A vote was taken on the
Motion to elect Mr. Steven Hirakami as Chairperson for 2023; carried unanimously by voice vote.
Chairperson De Luz opened the floor for nominations for Vice-Chairperson for the 2023 term. He
stated that the importance of the Vice-Chairperson is to run the meeting in the event that the
Chairperson is unavailable and also,because this is a fiduciary board,in the event that documents
need to be signed and the Chairperson is not available.
MOTION: Mr. Bell moved to nominate Mr. Stephen Kawena Lopez for Vice-Chairperson for the
2023 term; seconded by Ms. Keolanui.
There being no further nominations for Vice-Chairperson, Chairperson De Luz called for a Motion to
close nominations.
ACTION: Ms. Hugo moved to close nominations; seconded by Mr.Ney. A vote was taken on the
Motion to elect Mr. Stephen Kawena Lopez as Vice-Chairperson; carried unanimously by voice vote.
Chairperson De Luz congratulated Mr. Hirakami as Chairperson and Mr. Lopez as Vice-Chairperson
for calendar year 2023. He added that Ms. Sunshine Carter will be contacting them appropriately with
regard to the need for signing documents in the new year.
The Manager-Chief Engineer added that the Department will also recruiting to fill the Board Secretary
position after her retirement.
H. CHAIRPERSON'S REPORT:
Mr. Lopez asked if is there a point in the agenda when he can bring up matters, such as the Water
Board Schedule for next year, given out today,which he felt should be ratified by the Board, and also
a place where he could bring up something that has come to his table and needs to respond to a
Page 14 of 17 November 22,2022,Water Board Minutes
member of the community. He has letters from a Councilperson asking him to get involved; however,
he would not take a position on anything without the Board. He did not see a place on the agenda for
Old Business or New Business.
Ms. Mellon-Lacey stated that if a Councilperson is asking him to get involved in something,it
sounded like it was something that should go directly to the Manager-Chief Engineer,but it was hard
to answer because she did not know what the content was.
The Manager-Chief Engineer asked Mr. Lopez to send the matters he was referring to by email to the
Board Secretary and he would see to it that they are communicated to the Board Chair or staff,
whichever is the appropriate venue. As for the 2023 Water Board Schedule,it will be placed on the
agenda for next month.
Ms. Mellon-Lacey stated that usually the way it should go is if it is something for consideration for
the Board,to have it go to the Secretary for the Board and then the Board would make the
Chairperson and Manager-Chief Engineer aware that there may be more discussion. Two board
members can talk and then the decision could be made. That should be placed on the agenda for the
next meeting or maybe there is another way to resolve it if it is just a question that someone has asked
a board member and they want to give an answer to or something like that.
Chairperson De Luz recapped that,unless there is something that needs immediate attention, to take it
to the Board Secretary or the Private Secretary,which would go to the Manager-Chief Engineer's
attention. He will direct it to the Chairperson if it requires Board involvement; and the Chairperson
will work with the Secretary and the Manager-Chief Engineer to see if there are any issues.
Generally, that is what he would suggest as consideration for protocol. He asked Mr. Lopez if that
addressed his concerns.
Mr. Lopez replied that it did and that he just needed a process.
Chairperson De Luz also reported on the delicious lunch the Department's Waimea Baseyard put on
last month when the Board met and had a site visit in that district. He thanked Mr. O'Neil and his
staff for the great food.
D. EXECUTIVE SESSION REGARDING POTENTIAL DISPUTED SETTLEMENT-
JOB NO.2016-1056,WAI`AHA DEEPWELL REPAIR,DISTRICT OF NORTH KONA:
The Board anticipates convening an executive meeting for the purposes of an attorney-client
confidential discussion regarding the above-entitled matter.
Pursuant to Section 92-5(a)(4) Hawaii Revised Statutes, the purpose of the executive meeting is to
consult with the Board's attorney on questions and issues pertaining to the Board's duties,privileges,
immunities, and liabilities. A two-thirds vote is necessary to hold an executive meeting,provided that
the affirmative vote constitutes a majority of the Board.
Chairperson De Luz entertained a Motion to enter Executive Session.
MOTION TO ENTER EXECUTIVE SESSION: Mr. Sugai so moved; seconded by Mr.Ney.
Ms. Hugo asked if the Board would be going into Executive Session on just this one item.
Page 15 of 17 November 22,2022,Water Board Minutes
Chairperson De Luz replied that the Board would address each item separately. He called for roll call
vote to enter into Executive Session for this item.
ACTION: Motion was carried by roll call vote (Ayes: 8 -Mr. Bell,Mr.Hirakami, Ms. Hugo,
Ms. Keolanui,Mr. Lopez,Mr.Ney, Mr. Sugai, and Chairperson De Luz; and one absent:
Mr. Kekela).
(The Board entered Executive Session at 11:53 a.m. and ended at 12:27 p.m.)
RECESS: The Board took recess from 12:27 p.m. to 12:36 p.m.
Chairperson De Luz announced that the Manager-Chief Engineer and staff provided an update to the
Board on the matter and will advise the Board appropriately.
E. EXECUTIVE SESSION: MANAGER-CHIEF ENGINEER AND DEPUTY EVALUATION
AND COMPENSATION FOR CALENDAR YEAR 2022:
The Board anticipates convening an executive meeting to consider the evaluations of the
Manager-Chief Engineer and Deputy for its annual performance review, as authorized by Hawaii
County Charter Section 7-4.6(d) and Hawaii Revised Statutes ("HRS"), Sections 92-4 and 92-5(a)(2).
The Board wishes to have its attorney present,in order to consult with the board's attorney on its
questions and issues pertaining to the board's powers, duties,privileges,immunities, and liabilities
pursuant to HRS Section 92-5(a)(4). A two-thirds vote of the members present,pursuant to HRS
Section 92-4,is necessary to hold an executive meeting,provided that the affirmative vote constitutes
a majority of the board.
Chairperson De Luz asked Ms. Mellon-Lacey if Items E and F can be combined as they are similar or
if the Board needs to take them in a separate action.
Ms. Mellon-Lacey replied that the Board needs to stay with the confines of the Executive Session on
the agenda.
Mr. Lopez recalled having a Human Resources person present for the Board to ask questions during
Executive Session.
The Manager-Chief Engineer replied that the person was not able to be present.
Chairperson De Luz then called for a Motion to enter Executive Session on Item 8E.
ACTION TO ENTER EXECUTIVE SESSION: Ms.Hugo moved to enter into Executive Session to
address the Manager-Chief Engineer and Deputy evaluation and compensation for calendar year 2022;
seconded by Ms. Keolanui and carried by roll call vote (Ayes: 8 - Mr. Bell, Mr. Hirakami,Ms. Hugo,
Ms. Keolanui,Mr. Lopez, Mr.Ney, Mr. Sugai, and Chairperson De Luz; and one absent, Mr. Kekela).
(The Board entered Executive Session at 12:39 p.m. and ended at 1:10 p.m.)
F. MANAGER-CHIEF ENGINEER AND DEPUTY EVALUATION AND COMPENSATION
FOR CALENDAR YEAR 2022:
Chairperson De Luz asked if there was any testimony for this item. There being none, he continued
with the agenda item.
Page 16 of 17 November 22,2022,Water Board Minutes
Chairperson De Luz announced that the Board had discussion; and a final evaluation and
determination for the Manager-Chief Engineer and Deputy evaluation and compensation for calendar
year 2022,will be considered at the December 20,2022, Water Board Meeting.
G. ELECTION OF CHAIRPERSON AND VICE-CHAIRPERSON FOR 2023:
Taken up earlier.
H. CHAIRPERSON'S REPORT:
Taken up earlier.
9) ANNOUNCEMENTS:
1. Next Meeting: - December 20, 2022, 10:00 a.m., at the Liquor Control Conference Room, Hilo
Lagoon Centre, 101 Aupum Street, Room 230,Hilo, Hawaii.
10) ADJOURNMENT
ACTION: Mr. Hirakami moved to adjourn the meeting; seconded by Ms. Keolanui and carried
unanimously by voice vote.
(Meeting adjourned at 1:12 p.m.)
Recording Secretary
APPROVED BY WATER BOARD
(DECEMBER 20, 2022)
Page 17 of 17 November 22,2022,Water Board Minutes