HomeMy WebLinkAbout2016-02-03 Utilities Advisory Commission Agenda Packet
NOTICE IS POSTED IN ACCORDANCE WITH GOVERNMENT CODE SECTION 54954.2(a) OR 54956
I. ROLL CALL
II. ORAL COMMUNICATIONS
Members of the public are invited to address the Commission on any subject not on the agenda. A reasonable
time restriction may be imposed at the discretion of the Chair. State law generally precludes the UAC from
discussing or acting upon any topic initially presented during oral communication.
III. APPROVAL OF THE MINUTES
Approval of the Minutes of the Utilities Advisory Commission Special Meeting held on January 13, 2016
IV. AGENDA REVIEW AND REVISIONS
V. REPORTS FROM COMMISSIONER MEETINGS/EVENTS
VI. DIRECTOR OF UTILITIES REPORT
VII. COMMISSIONER COMMENTS
VIII. UNFINISHED BUSINESS
None.
IX. NEW BUSINESS
1. Update on Ongoing Preparation of a Sustainability/Climate Action Plan (S/CAP) to Discussion
Update and Replace the City’s 2007 Climate Protection Plan
2. Discussion of Pilot Approach for Commissioner-Initiated Placement of Items on Discussion
Utilities Advisory Committee Agendas, Distribution of Informational Materials
3. Selection of Potential Topic(s) for Discussion at Future UAC Meeting Action
4. Preliminary Financial Forecasts and Rate Changes for Electric, Gas, Wastewater Discussion
Collection, and Water Utilities
5. Update and Discussion on Impacts of Statewide Drought on Water and Discussion
Hydroelectric Supplies
X. NEXT SCHEDULED MEETING: March 2, 2016
UTILITIES ADVISORY COMMISSION
WEDNESDAY, FEBRUARY 3, 2016 – 7:00 P.M.
COUNCIL CHAMBERS
Palo Alto City Hall – 250 Hamilton Avenue
Chairman: Jonathan Foster Vice Chair: James F. Cook: Commissioners: Arne Ballantine, Michael Danaher, Steve Eglash, Garth Hall, and Judith Schwartz Council Liaison: Gregory Scharff
Utilities Advisory Commission Minutes Approved on: Page 1 of 17
UTILITIES ADVISORY COMMISSION SPECIAL MEETING
MINUTES OF JANUARY 13, 2016
CALL TO ORDER
Chair Foster called to order at 7:03 p.m. the meeting of the Utilities Advisory Commission
(UAC).
Present: Chair Foster, Vice Chair Cook, and Commissioners Ballantine, Danaher (arrived at 7:06
pm), Eglash, Hall, and Schwartz
Absent: Council Liaison Scharff
Chair Foster also welcomed Council Member Filseth, the Alternate Council Liaison to the UAC,
who was also present in the audience at the meeting.
ORAL COMMUNICATIONS
None.
APPROVAL OF THE MINUTES
Chair Foster proposed to amend the draft minutes for the December 2 , 2015 UAC meeting
under the New Business Item 3 as follows:
Change:
“Herb Borock noted that there was a Council item on fiber on Monday this week (November
30). He summarized the Council discussion on Fiber -to-the Premises (FTTP). He noted that
the citizens committee has lost some of its members and that Chair Foster is now on the
committee. He said he was skeptical that the Google deal was beneficial to the city.”
To:
“Herb Borock noted that there was a Council item on fiber on Monday this week (November
30). He summarized the Council discussion on Fiber -to-the Premises (FTTP). He noted that
the citizens committee has lost some of its members. He said he was skeptical that the
Google deal was beneficial to the city.”
Vice Chair Cook moved to approve the minutes from the December 2, 2015 UAC meeting with
the proposed amendment and Chair Foster seconded the motion. The motion carried
unanimously (6-0) with Chair Foster, Vice Chair Cook, and Commissioners Ballantine, Eglash,
Hall, Schwartz voting yes and Commissioner Danaher absent.
Commissioner Danaher arrived at 7:06 pm.
DRAFT
Utilities Advisory Commission Minutes Approved on: Page 2 of 17
AGENDA REVIEW AND REVISIONS
To allow Commissioner Hall to participate, Commissioner Eglash suggested that “Commissioner
Comments” be moved up to just after “Director of Utilities Report”. Chair Foster agreed with
the suggestion.
Staff noted that the legislative guidelines will be split up into all the non-water guidelines, then
the water-related guidelines to accommodate Commissioner Hall.
REPORTS FROM COMMISSION MEETING/EVENTS
Commissioner Schwartz reported that she was invited to speak at conference in Columbia to
talk about utility trends and customer engagement. She reported that the large utility there
“runs the town” and has been active pushing out the drug cartels.
UTILITIES DIRECTOR REPORT
Assistant City Manager and Interim Director of Utilities Ed Shikada introduced himself to the
commission.
1. Hayworth Solar Project
On December 22nd, the Hayworth Solar project officially achieved commercial operations,
becoming the second of the City’s large-scale solar PV projects to do so. The 27 megawatt
(MW) project, located just east of Bakersfield, is expected to generate almost 64,000 megawatt
hours (MWh) per year, or about 6.6% of the City’s total electric load. With the addition of this
project, the City’s renewable portfolio standard (RPS) level is now projected to be 36.5%—
which exceeds the 33% target in the City’s Long-term Electric Acquisition Plan (LEAP). The three
remaining large-scale solar PV projects that are under contract with the City are all expected to
come online by the end of 2016.
2. Palo Alto CLEAN Program
On January 8, the City received its first application for the Palo Alto Clean Local Energy
Accessible Now (CLEAN) Program, a program to purchase locally generated renewable
electricity within City boundaries. Through CLEAN, the City will purchase all energy and output
from eligible solar photovoltaic (PV) generating systems for 16.5 ¢ per kilowatt hour (kWh) for
either a 20- or 25-year contract term, up to a maximum program capacity of 3 MW. This first
application is for a 113 kW solar carport installation at the Unitarian Universalist Church of Palo
Alto for a 25-year contract term.
3. Georgetown University Energy Prize Competition
Georgetown University released the latest rankings of top performing cities and counties
participating in the Energy Prize Competition. After the first quarter of the energy-saving
challenge - 6 months of the total competition timeframe of 24 months - Palo Alto ranked in the
top third! The City is stepping up its efforts to increase energy savings through programs like
the new Home Efficiency Genie audit, while encouraging customers to help with renewables
Utilities Advisory Commission Minutes Approved on: Page 3 of 17
generation and climate protection goals through participating in local solar and PaloAltoGreen
Gas programs.
4. City to Pilot Heat Pump Water Heater Program as Part of Electrification Initiativ e
In early 2016, CPAU is launching a pilot program to encourage residential customers to replace
gas water heaters with electric Heat Pump Water Heaters. These appliances are more efficient
and help reduce greenhouse gas emissions since the City’s electric supplies are carbon neutral.
The program is being developed as part of the City’s evaluation of electrification opportunities
and is a task in the Council-approved electrification work plan. The initial pilot will target 20
homes. The program hopes to address the barriers to adoption that may surround the
technology and gather customer feedback on the retrofit process and appliance performance.
5. Drought Continues
Palo Alto is well on the way to meeting its 24% water use reduction target, but staff continu es
to communicate that drought regulations are in effect through at least the end of February and
water conservation must continue. State regulators will likely extend water use restrictions past
February if drought conditions persist and are also discussing adopting permanent water
conservation regulations.
Interim Director Shikada also mentioned that there has been heavy activity by the Utilities
operations crews in the field recently and through the holiday season fixing and maintaining
various parts of the distribution systems.
With respect to the report on the h eat pump water heater pilot, Chair Foster asked how
participants will be selected. Assistant Director Jane Ratchye said that the design of the pilot is
at the beginning stages so the details have not yet been worked out.
COMMISSIONER COMMENTS
Commissioner Eglash discussed the issue of dewatering requirements when a basement is
constructed. He noted that the Council will discuss the topic at its Jan uary 25 meeting and is
already very engaged in the issue. Commissioner Eglash said that he plans to attend the
meeting. He advised that one of the outcomes from the meeting could potentially be Council
direction that the UAC get involved in the issue.
Commissioner Schwartz would like to understand how to share information with the rest of the
commission and the public, noting that since she’s been on the commission, she has
experienced several ways including her reading a draft colleagues memo into the record at one
meeting and another commissioner made a technical presentation at a meeting. She indicated
that she would like to share some information such as an article, potentially with commentary,
with the rest of the commission.
Interim Director Shikada said that information typically comes through the Director. Regarding
providing things to the Council, any citizen can forward anything to the Council and it becomes
part of their meeting packets. He suggested that staff and the UAC engage in some
Utilities Advisory Commission Minutes Approved on: Page 4 of 17
experimentation to determine what works and the role of staff. He noted that there is the
route of using a Colleagues memo to the Council.
Chair Foster said that sending articles to the Director and requesting the Director send them to
the rest of the commission as has been past practice works and can continue.
Commissioner Schwartz noted that Commissioner Ballantine made a presentation to answer a
question that arose at a meeting about the function of solar PV inverters.
Senior Deputy Assistant City Attorney Jessica Mullin said that it may a good idea to agendize the
topic about commission communication for a future meeting.
Chair Foster said that one of the problems with commissioner requests to agendize is that the
agenda is set by the Director based on staff resources and priorities and this has led to irritation
on the part of the commission.
Interim Director Shikada noted that under New Business agenda Item 5 (Selection of Potential
Topics for Discussion at Future UAC meeting), the commission could come back to this topic
and confirm that it will be agendized for the next Commission meeting.
UNFINISHED BUSINESS
None.
NEW BUSINESS
ITEM 1: DISCUSSION: Update Regarding Staff Work Plan for Fiber-to-the-Premises and
Wireless Network and Ongoing Discussion with Google & AT&T
Senior Management Analyst Jim Fleming provided an update about staff’s Council-approved
work plan for fiber-to-the-premises and wireless, in addition to the status of discussions with
Google Fiber and AT&T. His statement is as follows:
“At the September 28, 2015 Council meeting, Council approved a Mot ion directing staff
to pursue several tasks simultaneously related to fiber and wireless initiatives. These
tasks include:
Establishing a Work Plan related to the Fiber-to-the-Premises Master Plan and Wireless
Network Plan prepared by the City’s consultant, CTC Technology & Energy. This
additional work required amending the contracts with CTC to provide additional
consulting services to complete the various fiber and wireless tasks included in the
Council’s Motion;
In addition to the City’s current fiber and wireless evaluations related to the FTTP
Master Plan and Wireless Network Plan, Council also directed staff to initiate discussions
with third-party broadband service providers, which involves pursuing discussions with
Google Fiber and AT&T to explore so-called ‘co-build’ opportunities for fiber-to-the-
premises.
Utilities Advisory Commission Minutes Approved on: Page 5 of 17
Also, in anticipation of the large volume of work related to these various fiber and
wireless initiatives, at the November 30, 2015 Council meeting, the Council approved a
staff recommendation to hire a temporary Fiber and Wireless Program Manager.”
“The tasks in the fiber-to-the-premises Work Plan and target completion dates are as
follows:
First, with the assistance of CTC, staff is reviewing outside plant cost estimates in the
FTTP Master Plan with the Citizen Advisory Committee and will document any
disagreements between the committee’s estimates and CTC’s estimates. The target
date for completion of this task is mid-February and the specific disagreements will
be reported to the Council as directed in their September 28, 2015 Motion.
Second, as previously mentioned, staff was directed to initiate co -build discussions
with Google Fiber and AT&T. These discussions are proceeding with Google; staff
contact with AT&T has been initiated, but discussions with AT&T have not yet
occurred.
The third task is to develop a “Dig Once” Ordinance to advance the expansion of
broadband in Palo Alto. The City Attorney’s office is responsible for this task. Many
Cities have adopted some form of “dig-once” policy that opens streets and rights-of-
way to utility construction when related projects are underway. Such policies
protect roads and sidewalks and minimize traffic and other disruptions related to
utility construction — but also create a more uniform and efficient means of
constructing network infrastructure by giving multiple entities, including the City
itself, the opportunity to place fiber or conduit inexpensively. The target completion
date for the ordinance is the end of March.
Fourth, with the assistance of CTC, develop and issue a request for information (RFI)
to explore municipally-owned and public-private partnership models for fiber-to-
the-premises. Work on the RFI is underway and once a draft is ready, staff will
review it with the Citizen Advisory Committee and request their feedback. The
target date to issue the RFI is the end of March. Evaluation of the RFI responses will
occur between June and September 2016.
“The Council directed tasks for the Wireless Network Plan and the completion dates are
as follows:
The first task is to update the citywide wireless network scenarios in the plan with
20-year forecasts. Task completed and provided to the Council on November 30,
2015 (Reference CMR ID #6301).
With the assistance of CTC, the second task is to develop fiber backhaul information
and cost estimates to expand Wi-Fi access in unserved City facilities and high-traffic
retail areas such as California Avenue and University Avenue. The target completion
date to complete the development of this information is mid-February. Once this
task is completed, CTC will work with staff to develop an RFP with a plan to issue the
RFP by the end of March.
Third, with the assistance of CTC, issue a separate RFP for dedicated wireless
communications for Public Safety and Utilities, also by the end of March.
Utilities Advisory Commission Minutes Approved on: Page 6 of 17
Evaluation of the RFP responses will occur between June and September of this year .
CTC will assist staff in this effort. Public Safety staff is working with IT and Utilities
staff in developing the RFP and will be involved in the evaluation of the responses.”
“Separate from the current co-build discussions with Google, there is ongoing work to
develop various agreements for a citywide fiber-to-the-premises network build-out by
Google Fiber. This work and agreements include:
Evaluating Google’s draft Project Description, including construction methods,
related to required environmental review of the project under the Californ ia
Environmental Quality Act. At a very high-level, Google’s proposed network
deployment would be largely limited to the public rights -of-way, both underground
and on utility poles. Google is proposing to construct an FTTP infrastructure that
would facilitate offering gigabit Internet and video service throughout the City.
This review of the project description also includes developing a Master
Encroachment Agreement for the proposed project, in addition to a Master License
Agreement for the attachment of fiber network facilities on utility poles jointly -
owned by the City and AT&T.
Due to the significant amount of City resources required for the Google Fiber
project, staff is also working with the City Attorney’s office to develop a Cost
Recovery Agreement so Google can reimburse the City for the cost of using these
resources. This anticipated large volume of work for City staff includes the
processing of applications required to attach fiber-optic infrastructure to
approximately 6,000 utility poles, which will require coordinating with Google,
AT&T and Comcast to perform: field investigations, utility pole load calculations,
utility pole make-ready work, pole replacements, mapping, inspections, traffic
control plans and tree trimming coordination.”
“In addition to Public Works processing various permits to do aerial and underground
construction work in the public rights-of-way, temporary staff will need to be added for
this work. Staff anticipates bringing these agreements to Council in the next 30-45
days.”
“Timeline: from the point Google begins its construction, completion of the network
would take 24-36 months. Regarding potential co-build opportunities, City Manager
Keene and CIO Reichental have met with Google Fiber officials to explore what a ‘co-
build model’ for fiber-to-the-premises would look like at a conceptual level. The key
objective of these discussions is to explore the possibility of the City collaborating with
Google as they build-out their network to install a parallel City dark fiber network in
areas currently not passed by the existing backbone, particularly in residential
neighborhoods. The intent of the discussions at this time is to form the basis for a set of
principles to pursue a model that would need to obtain an initial vetting by the legal
counsel of both organizations. The City and Google will meet again during the week of
January 18 to continue these discussions. If there are co-build opportunities, a timeline
is not known at this time; however, Google has stated that predictability and speed are
key cornerstones of their network build-out.”
Utilities Advisory Commission Minutes Approved on: Page 7 of 17
“Regarding AT&T GigaPower:
GigaPower is an AT&T initiative that is expected to deliver an ultra-fast fiber
network, with broadband speeds up to 1 Gigabit per second, to 100 candidate cities
in AT&T’s operating territories throughout the country; Palo Alto is one of those
cities.
In Palo Alto, AT&T plans to install approximately 27 cabinets in about half of the City.
We understand that most of these cabinets will be located next to existing cabinets
already in place for AT&T’s U-verse service. If AT&T gains a sufficient take-rate for
GigaPower service, the remainder of the City would be built-out.
AT&T is in the process of initiating permits to use the rights-of-way to install these
cabinets for GigaPower service with a timetable to begin constru ction this year.”
“The current staffing for the current fiber and wireless initiatives is 1.75 FTEs from t he IT
and Utilities departments. Based on the anticipated staffing needed for the City’s fiber
and wireless initiatives, in addition to the anticipated high volume of work due to
Google’s and AT&T’s plans, the amount of staff and necessary skill-sets is not currently
in place; as a result, at the November 30 , 2015 Council meeting, the Council approved a
staff recommendation to hire a temporary Fiber and Wireless Senior Program Manager
position for up to three years at an annual cost of $228,000. Staff also plans to bring a
recommendation to Council next month to issue an RFP for a contractor to supplement
City staff to handle the volume of work for a c itywide build-out by Google. The cost for
this will be reimbursed by Google under the Cost Recovery Agreement. The job
description for this temporary program manager position is currently under
development and recruitment is expected to begin soon. This position will work across
city departments and with third party providers. The preferred candidate should have a
background in fiber network design, engineering and construction, in addition to an
ability to navigate City processes for a large-scale construction project. The candidate
for this position will also be expected to communicate effectively with the City Council,
Utility Advisory Commission, staff and the community about the various fiber and
wireless related initiatives.”
Commissioner Hall: Google had a process in place to select cities for roll out of its FTTP and
what’s the status of this now. Fleming replied that Palo Alto is still in the running and is
working through the many issues with Google Fiber representatives.
Commissioner Hall: I understand that the co-build model is in process, but how could this be
structured while the City itself has a proposal to expand its own fiber system. Fleming said that
Council directed staff to issue an RFI. It is an awkward time with lots of activi ty.
Commissioner Danaher: City only laying backbone conduit, not to the premises. Jonathan said
that the discussion still ongoing with Google and we don’t want to limit the options at this
stage. Google’s plan is to have fiber throughout the city.
Utilities Advisory Commission Minutes Approved on: Page 8 of 17
Commissioner Schwartz: Are any other cities asking to do a co-build? Fleming replied no.
Commissioner Schwartz: Is that likely to make Google less interested in Palo Alto? Reichental
replied no, they are ready to proceed. Google is interested in speed and that may be an issue if
the City takes too long.
Commissioner Schwartz: Why is the City doing this? We need to take a step back and finding
out the objectives and how will it be used, what’s it for. This has not been addressed in any
document so far. Fleming noted that the project cost is high and there are ways to mitigate the
risk by evaluating public-private partnership opportunities in the RFI process.
Chair Foster replied that the goal is high speed Internet. Commissioner Schwartz said that what
people can do with this new fiber service that can’t be done now needs to be fleshed out.
Reichental commented that a business case does need to be developed – economic outcomes,
enables smart grid. City is already a high speed broadband city, but the world is headed to
greater connectivity, big data, tele-medicine, the Internet of Things (“IoT”), etc. The community
feels strongly that there is a need for this in the community. To enabl e high speed access, you
need all the different aspects working, not just the last bit of fiber to the home. It is not a
guarantee of better service, but it will be very fast and, as other parts of the entire system
improve, it will be a piece of future. Fleming said that new applications requiring substantial
amounts of bandwidth are emerging and the world is changing fast. Commissioner Schwartz
noted that these benefits need to be added to the reports on the subject and they haven’t been
described in prior reports.
Vice Chair Cook said that the next topic on undergrounding relates to this issue since many
areas of the city are not undergrounded and won’t be for many years. What about putting a
requirement that, when the area is converted from overhead to underground, that the fiber
provider must contribute to the cost of conversion.
ITEM 2. DISCUSSION: Report on Current Status of the Electric Overhead to Underground
Conversion Program
Electric Engineering Manager Tom Ting reviewed the written report, noting that the last time
the UAC discussed this topic, it recommended Council establish a citizen advisory committee to
study the program. However, the Council did not approve this recommendation so the program
has continued as planned. Staff is also working with AT&T to determine other areas which
meet the requirements for AT&T contributing to the cost of the project.
Commissioner Schwartz asked how fiber will be addressed. Ting said that when an
undergrounding district is completed, all services (fiber, electric, telephone, CATV) are
undergrounded. Google, or any other third party lease of pole space from of CPA or AT&T,
would need to remove their lines as the poles will be removed. They could participate in a joint
trench and share of the cost of undergrounding.
Assistant Director Dean Batchelor stated that it costs about $20,000 per house to underground
services, but AT&T only pays $2,000. The total cost to underground the 14,000 homes that are
not currently undergrounded is about $280 million and AT&T’s share of the cost is $28,000,000.
Utilities Advisory Commission Minutes Approved on: Page 9 of 17
Commissioner Hall asked who determines which services would be undergrounded. Ting said
that once an undergrounding district is defined, all the utilities must be undergrounded.
Commissioner Hall asked about the process for deciding to proceed with an underground
district and if there some sort of threshold of support by homeowners in an area. Ting replied
that there is no threshold. Staff surveys impacted property owners and the survey information
presented to Council which makes the final decision on establishment of undergrounding
district.
Commissioner Hall asked what the limiting factors are to moving quickly to underground the
entire city. Ting replied that the factors are generally cost , time and effort since these projects
take a lot of work and it may take up to 3 years to complete one undergrounding district
project, from start of the administrative process till end of construction.
Commissioner Schwartz stated the having an overhead system could be an advantage for
getting Google to provide service.
Commissioner Ballantine asked what the benefits are, including cost savings, and reliability.
Ting said that new districts are more reliable in the beginning, but as equipment ages they can
experience outages that are more difficult to troubleshoot and take longer to repair.
Underground utilities are also more costly to maintain and the equipment has a shorter life,
with submersible transformers having an expected life of 15 years while padmount transformer
are expected to last at least 30 years.
Commissioner Ballantine asks if undergrounding is an opportunity to make upgrades in
capacity. Ting said that every undergrounding plan is reviewed and designs are brought up to
current standards to improve reliability and meet future capacity needs.
Batchelor said as we underground residential neighborhoods due to limitations of space and
probable objections for homeowners, transformers will most likely be placed below ground as
homeowners will not want a padmount transformer on the lawn or visible from the front
window.
Vice Chair Cook asked how much does the AT&T participation really saves. The report seems to
indicate that AT&T’s participation saves just 10%. Batchelor replied we estimate AT&T’s
contribution of project cost at 10%, or $28,000,000 for undergrounding the remaining overhead
lines.
Vice Chair Cook said that undergrounding hasn’t been done in a way that benefits all
neighborhoods. He said that undergrounding is an improvement in people’s quality of life and
the community has shown a willingness to spend money to improve the quality of life. He
noted that the program should continue to make progress.
Commissioner Eglash said that Vice Chair Cook made a good point and sees that the difference
in contribution from AT&T is not substantial enough to stop the program. He asked why the
Utilities Advisory Commission Minutes Approved on: Page 10 of 17
pace can’t be increased. Ting said that the pace can be increased but how it is paid for needs to
be determined. Commissioner Eglash asked if staff can review the costs and identify policy
alternatives to increase the pace. With the analysis, the Council can make a decision about the
appropriate level of expenditure.
Commissioner Hall agreed with Commissioner Eglash’s remarks that the undergrounding
timeframe should be re-examined. The staff should prepare an analysis for the UAC to provide
details on what it would take and how long to underground the remaining overhead lines in the
city.
Commissioner Eglash said that this is not the normal way that the UAC contributes to the
discussions since it usually reacts to staff’s operations including areas such as rate design.
However, he feels that this is an area that a fact-based recommendation could be developed.
Commissioner Ballantine said that undergrounding can’t be done for aesthetics at the cost of
reliability. Perhaps more money could be spent to improve the electronics in the distribution
system so that outages in the underground systems can be repaired more quickly. Ting later
commented that there is a separate initiative looking at smart grid and advanced meters. This
would include automation of the distribution system and sensing to help troubleshoot during
outages.
Commissioner Danaher said that property owners should pay more since it does increase a
home’s value. Perhaps it could be financed with a vote of the people . Ting said that the
objective of the citizen’s advisory committee that was recommended to council in 2013 was to
come up with various methods of financing the added cost of the undergrounding program.
Commissioner Hall asked if the UAC should have a more in depth discussion in the future to
identify alternatives going forward given the changing circumstances (e.g. smart grid, f iber,
etc.).
Public Comment
Herb Borock said that the cost sharing arrangement for undergrounding projects has changed
over time. The UAC should see the total costs that would be paid by all parties – other service
providers, ratepayers, property owners. Is it necessary to spend the 2% budgeted on both new
underground districts as well as existing underground district rebuilds.
ITEM 3. ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend
that the City Council Adopt a Resolution Approving a Power Purchase Agreement with Hecate
Energy Palo Alto LLC for up to 75,000 Megawatt-hours Per Year of Energy over a Term of up to
40 years for a Total Not to Exceed Amount of $101 Million
Senior Resource Planner Jim Stack summarized the written report. He explained that staff
issued a request for proposals (RFP) last spring in order to replace the energy provided by an
old wind energy contract that is set to expire in 2021, and also because the 30% federal
investment tax credit (ITC) was scheduled to fall to 10% at the end of 2016. He said that 41
project proposals were received in the spring 2015 RFP.
Utilities Advisory Commission Minutes Approved on: Page 11 of 17
Commissioner Hall asked why staff decided to reject the other RFP proposals, and whether it
was for any reason other than cost. Stack explained that the evaluation criteria staff used
included price and value as well as project viability.
Stack described the Wilsona Solar Power Purchase Agreement (PPA) as having a capacity of 26
megawatts (MW), which would generate 7.5% of the City’s annual electric supply and would
have an online date of June 1, 2021. The levelized price is $36.76 per megawatt-hour (MWh)
over term of the PPA, which could range from 25 years to 40 years, and the project is located in
Los Angeles County near Palmdale. He noted that the City can request that Hecate build an
energy storage facility at the project site at any time, and that Hecate has some experience
developing such facilities. Stack discussed the risks of the proposed PPA and the risk mitigation
measures that are part of the contract, which include having the project developer post
development and performance assurance deposits in amounts that are significantly greater
than those that have been posted for all of the other renewable energy PPAs the City has
executed.
Stack stated that the proposed PPA could deliver more energy than the City needs in 2021
through 2028 in the event that all the other solar projects that the City has contracted with are
completed and the hydroelectric generation is average or better. He noted that in 2028, earlier
renewable PPAs expire creating the need for more renewable energy.
Stack said that the electric portfolio is highly affected by hydro conditions and that, in wet
hydro conditions, surplus renewable energy would be sold in the market, but that the RECs
could be banked to meet Renewable Portfolio Standard (RPS) goals as well to maintain carbon
neutrality.
Stack explained that the green premium for the Wilsona project is estimated at -$1.1 million
per year, and that this commitment would bring the City’s total committed green premium
level for all renewable energy projects down to $1.2 million per year, which is equal to a rate
impact of about 0.12 cents/kWh.
Stack stated that in late December Congress passed a multi-year extension of the 30% federal
ITC, which, along with the passage of the state’s 50% RPS law last summer, changed the
landscape for renewable energy in California. He noted that the ITC extension undermined one
of the main drivers for issuing the RFP in 2015, and that if the City rejected the proposed PPA
staff could still issue another RFP in 2018 or 2019 and execute a PPA for a project that would
still be able to capture the 30% federal ITC.
Commissioner Schwartz asked what happens if there is too much solar being generated in the
area where this project is located and it gets curtailed, and what mitigation measures we have
to reduce congestion. Stack explained that there are typically no physical constraints on the
project delivering energy to the grid, but rather that at times when there is too much energy
being generated or too little demand for the energy the market price of the energy from the
project can go negative. In those situations the City would likely want to curtail the project’s
Utilities Advisory Commission Minutes Approved on: Page 12 of 17
energy in order to avoid those negative prices, and the proposed PPA includes a provision
allowing the City to avoid paying the developer for the first 50 hours per year of curtailment
that it requests. This provision is different from the City’s other PPAs, which all require that the
City pay for all of energy that gets curtailed at its own request.
Commissioner Ballantine noted that there could actually be scenarios where there is too much
energy being generated in southern California and not enough demand for it, such that the
electricity actually does need to physically flow from southern California to northern California.
Compliance Manager Debbie Lloyd added that this issue of grid congestion and over-generation
is largely a California Independent System Operator (CAISO) market design issue. She explained
that for all of the energy consumed in Palo Alto, the City has to pay the CAISO a northern
California load price; and all of the City’s generating resources get paid by the CAISO a price
that’s specific to their locations on the grid. So congestion problems manifest themselves as
price differentials between the price the City pays for its load and the price it gets paid by the
CAISO for the energy generated by its resources.
Nicholas Bullinger, Chief Operating Officer of Hecate Energy, was in attendance at the meeting,
and Chair Foster invited him to speak. Bullinger described his company’s background, noting
that it focuses on the development of a range of different energy technologies, although it
started out focusing on natural gas-powered generation. He described the financing that the
company plans to use for the project and stated that they have partnered with other cities in
the past. He explained that they have large solar projects with the City of Los Angeles.
Commissioner Hall asked Bullinger about the fact that permitting and CEQA review for the
project have not been completed yet, and whether there may be any issues with protected
species at the project site. Bullinger stated that the project site is on disturbed agricultural land
so it will not have any issues with protected species, and that the site has many advantages
including being located close to high voltage transmission facilities.
Commissioner Eglash asked why the City sought this contract in 2015 since it wouldn’t be online
for many years. Stack said that the primary factor that led staff to issue the RFP in 2015 was
the fact that at the time the RFP was issued the 30% federal ITC was slated to drop to 10% at
the end of 2016, and that staff was concerned that renewable energy prices would increase
significantly after that time.
Commissioner Eglash said it was worth taking a moment to review the success of the City’s RPS
program and the carbon neutral portfolio. He also appreciated the fact that staff included a
section in the report and presentation explaining the alternative to approving the project. He
noted that the price appears to be so low as to make the project unbuildable, but that he was
happy with the risk mitigation measures included in the PPA, particularly the large development
security that the developer is required to provide.
Vice Chair Cook congratulated staff on this contract. He asked if there were any provisions
included in the PPA to adjust the contract price in the event that the project’s development
costs turn out to be much higher than expected. Stack said that there are no price adjustment
Utilities Advisory Commission Minutes Approved on: Page 13 of 17
mechanisms included in the PPA, and that the developer holds all of the price risk related to
development costs. He added that there are off-ramps included in the contract allowing the
City to terminate the PPA in the event the developer experiences problems getting the project
built and fails to meet the contractual deadline for starting construction.
ACTION:
Chair Foster made a motion that the UAC recommend that the City Council adopt a resolution
to:
1. Approve a Power Purchase Agreement (PPA) with Hecate Energy Palo Alto LLC
(HEPA), a Delaware limited liability company, for the acquisition of up to 75,000
Megawatt-hours (MWh) per year of energy from the Wilsona solar project (Wilsona)
over a maximum of forty years at a total cost not to exceed $101 million; and
2. Waive the application of the investment-grade credit rating requirement of Section
2.30.340(d) of the Palo Alto Municipal Code, which applies to energy companies that
do business with the City, as HEPA will provide a $5.2 million letter of credit as a
development assurance deposit, and a subsequent $2.6 million letter of credit as a
performance assurance deposit.
3. Delegate to the City Manager or his designee, the authority to execute on behalf of
the City the PPA with HEPA, the three contract term extension options available to
the City under the PPA, and any documents necessary to administer the agreements
that are consistent with the Palo Alto Municipal Code and City Council approved
policies.
4. Waive the application of the anti-speculation requirement of Section D.1 of the
City’s Energy Risk Management Policy as it may apply to surplus electricity purchases
resulting from the City’s participation in the Wilsona PPA, due to the variability of
the City’s hydroelectric resources.
Commissioner Danaher seconded the motion. The motion carried unanimously (7-0) with Chair
Foster, Vice Chair Cook, and Commissioners Ballantine, Danaher, Eglash, Hall, and Schwartz
voting yes.
ITEM 4. DISCUSSION: Solar Hot Water Heating Program
Assistant Director Jane Ratchye stated that this item, which was provided as an informational
item last month was requested to be put on the agenda for discussion by the Commission.
Chair Foster said that solar hot water heating systems have been successful in many parts of
the world, but have not been successful here. He suspects low gas prices and high installation
costs. He noted the success of the Peninsula SunShares group/discount buy program for solar
PV. He wondered if a collective buying program could drive down the price so that more
customers would participate.
Commissioner Schwartz asked if the 43 customers who have participated are happy with these
systems. Ratchye responded that an expert on the program could be available to answer
detailed questions if requested by the Commission , but that this is not on the staff work plan.
Utilities Advisory Commission Minutes Approved on: Page 14 of 17
She noted that the City did have a successful group-buy solar hot water heater program in the
early-1980s, but that the technology was much simpler and installation was relatively cheap.
Commissioner Schwartz asked if she could put someone from Columbia who has a successful
solar hot water heating program in touch with staff to discuss their programs. Commissioner
Eglash said that he wanted to be sensitive to requests for staff time and work plan. He is
concerned about asking staff to spend time to meet with vendors and asked what the UAC’s
objective is in this request.
Commissioner Ballantine said that he wanted to talk about the high level physics and the best
way to capture solar energy. He said that the best efficiency for PV is about 20%, but the
efficiency for solar thermal is much higher. The Department of Energy’s (DOE’s) website said
that the best way to reduce CO2 emissions is thermal solar. The National Renewable Energy
Lab (NREL) produced a paper that highlights the advantages of thermal solar. He said that if we
want to attack climate change, we need to do something drastic and thermal solar is much
more efficient than solar PV. If we have a strategy towards electrification, then we’ll have
problems with finding local solar energy to power the new loads and with outages, etc. It may
be better to meet the thermal loads (building and water heating) with thermal solar systems,
rather than with electricity, even if renewable. It will be impossible to put enough solar PV
panels on your roof to meet all of your loads, if all the appliances are all electric. I am looking
for the DOE’s expert on solar thermal systems.
Commissioner Schwartz noted that solar thermal energy systems are consistent with the
passive solar movement that the City is supportive of. She said that, in response to
Commissioner Eglash’s concern regarding staff resources, considering solar thermal systems is
consistent with the overall City work plan.
Commissioner Eglash said that if the UAC wants to expand the discussion to climate change and
electrification options, there is a very broad context for this discussion. He said that separately,
they are discussing using electrification and how to deal with natural gas and that this is a large
part of the future discussion. He said that the early 1980’s systems had issues with leaks and
weight of the systems as well as the difficulty with replacing roofing materials. He said that the
discussion could be broad enough to discuss water heating in gene ral with a comprehensive
evaluation of electric water heaters, heat pump water heaters, natural gas water heaters, and
solar thermal water heating systems.
Commissioner Danaher said after the heat pump water heater pilot project is complete could
be the optimal time for such a broad discussion after getting feedback from pilot participants.
Ratchye commented that the City does have a program and do offer rebates to encourage solar
hot water heating systems, but the program has not been very successful since the systems are
not cost-effective and, therefore, are difficult to convince customers to purchase. If there are
other solutions and systems that would be cost-effective, then those vendors have the
opportunity to sell them in California since all util ities are required to have a program to offer
rebates for solar hot water heating systems.
Utilities Advisory Commission Minutes Approved on: Page 15 of 17
Commissioner Eglash said that the some people have installed these solar hot water systems
with natural gas water heaters used as a backup.
Interim Director Shikada asked how best to tackle the topic given the work plan. He said that
the issue of how topics are brought forward for discussion should be examined. This can be
discussed together with staff. Staff’s work plan is developed in the context of the budg et and,
currently, the Sustainability and Climate Action Plan, which has many activities. He sees a need
for some organizing around the development of topics to be brought forward to the UAC.
Chair Foster said that the community has long been very committed to climate protection,
renewable energy, and green energy in general. The voluntary PaloAltoGreen program was the
top ranked program in the country demonstrating a willingness to pay extra for sustainability -
related efforts. Thus, the UAC reflects that commitment to these efforts and likes to push the
envelope on these programs. This, however, bounces up against the limits of staff resources,
but would like to discuss how to think about solar hot water heating can be successful.
Perhaps, the UAC can do some work on this.
Commissioner Eglash said that, despite the community’s interest in these topics, rates are also
a very big issue. There has been big push-back whenever a new staff position is proposed to
work on these areas. At least once a year, the UAC scrutinizes CPAU’s rates and compares
them to PG&E and nearby municipal utilities. We then take pains to explain whenever we are
not the lowest rates, without even mentioning reliability and safety. It’s only because CPAU has
done a good job controlling costs and achieving high reliability and safety that we can even
have these discussions.
Chair Foster agreed with what Commissioner Eglash said and said that the UAC has never
suggested that a staff person be hired to respond to UAC input. However, CPAU has hired
people over the years to run the various programs and would like to have a discussion of staff
resource availability.
Commissioner Eglash remarked that the Office of Sustainability (OOS) may have resources that
could be utilized for these activities. The UAC has often have bumped up against CPAU’s work
plan and priorities, but the Chief Sustainability Officer may have resources available. He said
that he wished that the UAC had some jurisdiction over the OOS since many of the things such
as this topic discussed by the UAC could be a better use of time than other things being done
from that office.
Interim Director Shikada reminded the UAC to attend the Sustainability Summit on Sunday,
January 24.
Commissioner Hall said that he was interested in learning about topics such as this and asked
that if other commissioners had items of interest to them, he would appreciate it if they could
be forwarded to the rest of the commissioners.
Utilities Advisory Commission Minutes Approved on: Page 16 of 17
Commissioner Ballantine indicated that he would send a link to the NREL paper to Interim
Director Shikada so it could be sent out to the commission.
Chair Foster added that this technique of a commissioner sending items of interest to the rest
of the commission through the Director has worked well in the past and that practice should
continue.
ITEM 5. ACTION: Selection of Potential Topic(s) for Discussion at Future UAC Meeting
Chair Foster asked that the process to agendize topics be put on the agenda for discussion.
Interim Director Shikada agreed.
Commissioner Hall asked that undergrounding topic be added in the future. Vice Chair Cook
suggested that he and Commissioner Hall meet with staff and determine the next steps and
report out to the commission at a future meeting.
ACTION:
None.
Commissioner Hall left the meeting at 10:03 pm after the conclusion of item #5.
ITEM 6. ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend
that the City Council Adopt a Resolution Approving the Amended City of Palo Alto Utilities
Legislative Policy Guidelines
Compliance Manager Debbie Lloyd introduced Senior Resource Planner Heather Dauler who is
taking over the management of the Utilities’ legislative and regulatory program.
Lloyd and Dauler presented a summary of the written report including a brief review of
legislative activity in 2015, expected legislative activities in 2016, and the proposed changes to
the Utilities legislative policy guidelines.
Chair Foster asked why the City would advocate for privacy concern s with respect to AB 802,
the building benchmarking bill, and that he was in favor of energy use disclosure, Commissioner
Schwartz agreed. Commissioner Danaher stated that he may have a different opinion since he
was aware that certain commercial customers, such as server farms, were sensitive that their
energy profile could provide competitors with insight on their operations. Commissioner
Schwartz said that aggregated customer information would not disclose any useful/sensitive
information. Commissioner Eglash said he understood customer privacy concerns. Chair Foster
asked that staff acknowledge that there were different opinions on the issue of energy and
water use disclosure.
Commissioner Eglash asked what we are advocating for with respect to a Net Energy Metering
(NEM) successor program. Lloyd replied that the goal is for local agencies such as Palo Alto to
have the ability to develop and design their own programs that make sense for their customers.
Utilities Advisory Commission Minutes Approved on: Page 17 of 17
The commissioners discussed the proposed ch anges to “All Utilities” Goals 1 and 3and
recommended the original language be retained as the reference to environmental goals
carried more weight in goal #1.
Chair Foster said that the new overall guideline #8 with respect to customer data security
should still allow that anonymized customer data. He said that there is a balance and that
there are companies that can use usage data for good reasons, including those that lead to
energy efficiency and climate protective improvements. Lloyd stated that guideline #8
addresses security of data such as personal credit card info, etc. Commissioner Eglash noted
that there is clearly a diversity of opinions on the matter of customer use data.
Commissioner Schwartz noted that the issue of privacy is being worked by many bodies and no
one is advocating releasing personal customer data. She suggested that the City’s legislative
guidelines will not influence this debate.
ACTION:
Vice Chair Cook made a motion that the UAC recommend that the City Council approve the
revised guidelines after discarding the proposed changes to “All Utilities” Goals 1 and 3 .
Commissioner Danaher seconded the motion. The motion carried unanimously (6-0) with Chair
Foster, Vice Chair Cook, and Commissioners Ballantine, Danaher, Eglash, and Schwartz voting
yes and Commissioner Hall absent.
ITEM 7: DISCUSSION: Update and Discussion on Impacts of Statewide Drought no Water and
Hydroelectric Supplies
Ratchye provided an update on the ongoing drought. She said that the City used 28% less water
in 2015 than in 2013. She added that for the water savings compliance period starting June 1,
2015 to date, the City has saved 32.8% and will very likely meet the 24% savings target for the
period, which ends at the end of February 2016. The service area of the San Francisco Public
Utilities Commission has also exceeded its savings target for 2015, which will lead to a higher
than expected wholesale water rate increase for fiscal year (FY) 2017.
Commissioner Schwartz noted that rate increases need careful communication.
Ratchye closed by showing the impact of the drought on the electric utility, which normally gets
about half its supplies from hydroelectric resources. The drought is expected to increase FY
2016 costs by over $9 million.
Meeting adjourned at 10:46 p.m.
Respectfully submitted,
Marites Ward
City of Palo Alto Utilities
Page 1 of 2
1
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: OFFICE OF SUSTAINABILITY
DATE: FEBRUARY 3, 2016
SUBJECT: Update on Ongoing Preparation of a Sustainability/Climate Action Plan (S/CAP)
to Update and Replace the City's 2007 Climate Protection Plan
This is an update on the development of the SCAP and identification of aspects of particular
relevance to the City of Palo Alto Utilities Department (CPAU) and the Utilities Advisory
Commission (UAC).
Palo Alto has reduced its greenhouse gas (GHG) emissions by an estimated 35% since 1990
(largely achieved in the last nine years). The State of California has set goals of 40% reduct ion
by 2030 (on the way to 80% reduction by 2050). Palo Alto is uniquely positioned —in large part
because of CPAU’s initiatives, including provision of carbon neutral electricity —to act well
ahead of state goals.
The Office of Sustainability (OOS) team has conducted detailed analysis of three potential
scenarios: meet the California goals (80x50), meet those goals 10 years early (80x30) and
“moonshot” goal of carbon neutral city (100x25). OOS conducted a community Climate Summit
Sunday January 24 (with the participation of more than 300 people, including all nine
Councilmembers), and two study sessions with City Council January 25—one a presentation by
Professor Stefan Heck of Stanford on the disruptive future of transportation, energy and
buildings, and one on the SCAP.
OOS has proposed a goal of reducing GHG emissions 80% from 1990 levels by 2030 ("80x30”),
and has presented supporting analyses of a portfolio of initiatives that could potentially meet
those goals. Council discussed this goal, and a potential stretch goal of moving from carbon
neutral electricity to carbon neutral utility to “carbon neutral city.” Council also discussed
potential willingness to adopt goals and fundamental principles this spring, and approve specific
strategies and programs in subsequent meetings.
Several aspects of the strategies identified by the SCAP effort have direct relevance to CPAU,
including, but not limited to: electrification strategies (including implications for the future of
the natural gas utility, and structure of PaloAltoGreen Gas); intensification of efficiency
services; the potential vulnerability of our carbon neutral electricity offering to variability in
hydroelectricity supplies; expansion of local solar; smart grid and microgrid development; CPAU
data and City "open data" initiatives; and the evolution of CPAU business models and services
offerings in the face of continue disruption of the utility industry by the rapid
price/performance changes in distributed generation, distribution storage, EVs, sensor
technology. Many of these were discussed in a prior study session with the UAC in April 2015.
Please note the relevant sections in the attached study session CMR.
ATTACHMENTS:
CMR #6566 (Jan 25 2016 Council meeting)
PREPARED BY:
APPROVED BY:
GIL FREND Chief Sustainability Officer
JAM'S NE
City Manager
Page2of2
City of Palo Alto (ID # 6566)
City Council Staff Report
Report Type: Study Session Meeting Date: 1/25/2016
City of Palo Alto Page 1
Summary Title: Sustainability/Climate Action Plan Study Session
Title: Study Session Regarding Ongoing Preparation of a
Sustainability/Climate Action Plan (S/CAP) to Update and Replace the City's
2007 Climate Protection Plan
From: City Manager
Lead Departm ent: City Manager
Recommendation
Staff recommends that the Council review and discuss the City’s developing Sustainability and
Climate Action Plan (S/CAP), including the proposed Greenhouse Gas (GHG) reduction goals and
key measures regarding transportation, energy, and water.
Note: This is the first in a series of Council meetings on this subject scheduled for the spring of
2016. No Council action is proposed ay this time, but has been scheduled in the aftermath of
the S/CAP summit to allow for Council discussion.
Summary
The Office of Sustainability, working with consulting partner DNV GL, has collected input from
the community of Palo Alto, researched global best practices for greenhouse gas (GHG)
emission reductions and resource conservation, and evaluated the cost/benefit ratios for a
range of carbon reduction strategies. Based on that work, staff is pursuing development of a
multi- faceted plan to deliver pace-setting GHG reductions and energy use strategies in ways
that enhance quality of life, prosperity and resilience in Palo Alto. These measures should also
reduce operating costs when implemented holistically, and deliver tangible economic, quality of
service, and quality of life benefits to all residents.
This overview of the draft S/CAP includes potential key elements for Council’s consideration
and comment, with the understanding that the S/CAP is a long-term plan with varying time
horizons for potential changes. It is clear that transportation and natural gas present our
biggest challenges -- road transportation accounts for more than 61% of Palo Alto’s remaining
carbon footprint, while natural gas accounts for more than 25%—and that Palo Alto will be
unable to achieve the State of California GHG reduction goals of 80% by 2050 without
significantly reducing emissions from both these categories. (Key elements are summarized
here, and described in more detail in the Discussion session that follows.)
•Transportation: Make it more convenient not to drive by developing responsive,
multimodal, service-focused transportation services—and ending subsidies such as
City of Palo Alto Page 2
free parking or shifting them to support non-SOV travel—to reduce congestion and
climate impacts.
•Electricity: Support a systematic shift from natural gas to all-electric systems
powered by carbon neutral electricity, wherever technically and legally feasible and
cost- effective. Given the consumer costs and stranded costs to the Utility, this may
require various transition strategies over time.
•Buildings: Explore building stock upgrades to Zero Net Energy or Net Positive
through design, efficiency, renewables and bundled services packages, and (if
technically and legally feasible and directed by City Council) encourage all-electric
new construction.
•Resource Efficiency: Aggressively cut energy and water demand in buildings and
operations, reduce emissions and impacts and save money for the residents,
business, and the City with an emphasis on integrative design1 and policy
approaches to drive large gains in resource efficiency2.
•Sustainable Water Management: Balance water importation, rainwater
harvesting, groundwater management, recycled water use and onsite treatment
options in an integrated, long-term strategy.
•Municipal Operations: Embed sustainability in city procurement, operations and
management, including “default to green,” adoption of internal carbon pricing
and reporting of sustainability impacts in staff reports, capital improvement
project proposals and management reports.
•Financing Strategies: Finance cost-effective initiatives by pricing carbon, applying
a portion of parking revenues to mobility alternatives, and channeling local and
external investment in support of these goals.
Note that the legal and financial implications and cost-effectiveness, and degree of public
support of these elements, and other elements throughout this report, will require detailed
careful consideration and review, and are subject to Council direction.
Future staff analysis and reports will focus on:
•Sea Level Rise Response: Build resilience through risk mapping, mitigation,
adaptation and, where necessary as a secondary response, retreat strategies.
•Ecosystem and Human Systems Protection: Provide a healthy, resilient
environment where all species can thrive and enjoy life.
•Buildings: Rapidly upgrade the resource efficiency of residential and commercial
building stock
•Utility of the Future: Adapt CPAU to the business model challenges facing the
utility industry
•Information systems: Advance “smart city” platforms for transportation, utilities,
buildings, operations, finance, etc.
1 “The conventional definition of integrated design is that project team members from all disciplines work together early and
often throughout the project design process. The enhanced definition presented here includes what goes on when the
design team gets together - the synthesis of climate, use, building design and systems.”
http://designsynthesis.betterbricks.com/what-integrated-design
2 http://www.rmi.org/rmi/Whole%20System%20Thinking%20and%20Integrative%20Design
City of Palo Alto Page 3
•Community engagement, Support household practices and behavior change and
including expanded potential to reduce “scope three” emissions.”3
Relationship to Comprehensive Plan
Staff received instruction from Council to synchronize with the City’s ongoing Comprehensive
Plan Update and provide a holistic approach to sustainability and climate action across all City
activities. The City Council has also -- on several occasions -- indicated its desire to reflect
sustainability and climate adaptation in the vision and goals of all elements of the
Comprehensive Plan Update. Integration of these two plans will provide a policy framework
and a roadmap for achieving emission and consumption reduction targets, and support the
City’s efforts to maintain ecosystems and biodiversity in our parks, gardens, forests and food
systems, and provide a clear process for addressing community needs with high quality
services.
As part of its review of the Comprehensive Plan, Council will want to discuss the format in the
plan for linkage to the S/CAP and adopted sustainability goals.
Staff is asking Council to consider a portfolio of GHG emission reduction strategies that could
collectively achieve GHG reductions at a faster pace than proposed by the State of California,
which has set a reduction target of 80% by 2050, and an intermediate target of 40% by 2030.
Could—and should—Palo Alto, which has already reduced emissions by an estimated 35%, seek
to achieve the State’s 80% reduction goal to be achieved earlier than 2050? What should that
target be and what would be the requirements and implications of doing so?
As Council and community discuss the S/CAP and the options before us, we will need to
consider several key questions:
Leadership: What level of GHG emission reduction goals will Palo Alto target?
Pace: How fast will Palo Alto attempt to achieve these reductions? Implementation: Which
measures will Palo Alto enact to achieve these reductions? Invest: How much will Palo Alto
invest?
Funding: How will Palo Alto fund those investments?
Criteria: What factors will Palo Alto use to make these decisions?
Organization of this report
Background: The Climate Challenge. Technology and the Pace of Change. Palo Alto History and
Opportunities. Why Act Now. Objectives.
Discussion: Footprint. Ten Realms of Action. Key Levers: Rethinking Mobility; Electrifying Our
City; Water. Other Levers: Buildings; Municipal Operations; Palo Alto Utilities; Information
Technology; Engaging the Community; Ecosystems. Potential Sources of Funds. Key Questions.
Timeline: Next Steps/Plan.
Environmental Review
NOTE: This staff report provides a summary of the S/CAP, which is still a work in progress and
3 Indirect emissions, such as those resulting from purchased goods and services and air travel
City of Palo Alto Page 4
provides substantially more detail than presented here. Given the complexity of the issues
discussed, staff decided not to complete and circulate a draft plan until benefiting from Council
and community input on general directions and issues. The full draft will be presented for future
study sessions, at which Council will have the opportunity to go deeper into specific issues, the
extensive quantitative analysis that supports them, and the requirements of both a 15-year
strategic plan (including goals, key strategies and decision criteria) and a series of five-year
action plans to implement them. The focus of this initial study session is to lay out the key
components of the SCAP and strategies under consideration-- focusing more on identifying
aspirations, priorities and concerns rather than detailed assessment of specific actions--and
then come back to Council for deep dives on transportation, energy, water and adaptation (and
other issues that Council may direct).
Background
Palo Alto is at the heart of the region that drives the eighth largest economy in the world, and
what is created in Palo Alto has influence far beyond its borders. Palo Alto has made
remarkable progress toward reducing its carbon impacts, GHG emissions and resource
consumption since establishing one of the first Climate Protection Plans in the US in 2007.
In the eight years since then, the world has gotten hotter, the west has gotten dryer, and more
cities have stepped into the ranks of climate leadership.
As the climate heats up, cities will need to act wisely in order to ensure the wellbeing of their
communities in the face of the challenges ahead. Palo Alto can help show the way ahead,
improve our community’s quality of life and inspire changes elsewhere. Cities around the world
are ratcheting up their own sustainability initiatives, and we can also learn and be challenged by
their efforts.
In the course of developing this new Sustainability and Climate Action Plan, we face two
fundamental choices with regard to climate:
- Will we move from carbon neutral electricity to a carbon neutral utility to
eventually become a carbon neutral city (which will require major changes in
transportation as well as energy use)?
- And how quickly will we do that?
The Climate Challenge
Science: The International Panel on Climate Change (IPCC) has determined that “we risk severe,
pervasive and irreversible impacts” from climate change, and need “substantial” greenhouse
gas emissions reductions (of 40-70% or more) by mid-century. The International Energy Agency
has asserted that 80% of proven fossil fuel reserves must “stay in the ground” if the planet is to
avoid the worst climate change projections. Meanwhile, climate disruption records continued
to be broken in 2014, which was the warmest year recorded since 1880. Munich Re America
reported that “Insured winter storm losses in the United States in 2014 were the highest in
eight years, at $2.3 billion, while insured losses due to severe thunderstorm events exceeded
City of Palo Alto Page 5
$10 billion for the sixth year in a row.”4 The UN World Meteorological Organization (WMO)5
reported that high ocean temperatures contributed to exceptionally heavy rainfall and floods in
many countries and extreme drought in others. Twelve major Atlantic storms battered the
United Kingdom in early months of 2014, while floods devastated much of the Balkans
throughout May. Crippling droughts have struck large swathes of the continental United States
while Northeast China and parts of the Yellow River basin did not reach half of average summer
rainfall, causing severe drought.
State of California: Assembly Bill 32 (the California Global Warming Solutions Act of 2006),
committed the State to reduce its GHG emissions by 20% from 1990 levels by 2020, and
Executive Order S-3-05, signed in June 2005, set an aspirational goal to reduce emissions 80%
by 2050. The first scoping plan by the California Air Resources Board (CARB) detailed ways to
achieve the AB32 goal; CARB’s recent update addressed the need to accelerate reductions to
meet the 2050 goal, and the need for local jurisdictions to meet or exceed the State’s goals.6
Then in April 2015, Governor Jerry Brown issued Executive Order B-30-15 establishing a
California GHG reduction target of 40% below 1990 levels by 2030.7 Recent revisions to
California’s Title 24 will require that all new residential buildings be Zero Net Energy (ZNE) by
2020, and all new commercial buildings by 2030; this will apply to retrofit projects above
certain thresholds.8 Meanwhile, Governor Brown has challenged the state to increase the
renewable portfolio standard (RPS) to 50% of needs, reduce petroleum up to 50% and double
the efficiency of existing buildings by 2030.9 A milestone climate change bill, SB 350, which
passed in 2015, enshrined most of these proposals into law (though it was stripped of the goal
to reduce petroleum use by 50% before it was passed). A companion bill, SB 32, which would
have made the state’s long-term targets for carbon emissions reductions, currently set by
executive order, a matter of law, did not garner sufficient support and staff expects it will be re-
introduced in 2016.
United States: President Obama’s March 19, 2015 Executive Order10 requires the federal
government to cut GHG emissions by 40% by 2025 from 2008 levels and increase Federal
renewable energy sources to 30%; budget savings from these initiatives are estimated at $18
billion. Several major federal suppliers, including Lockheed Martin, General Electric, and IBM,
announced new voluntary GHG reduction commitments; IBM says it will cut energy-related
GHG emissions 35% (against 2005 levels) by 2020. (Among local companies, HP has set a goal to
reduce the GHG emissions from operations 20% by 2020 compared to 2010 levels and SAP
plans a 51% reduction in its total GHG emissions from its year 2007 published baseline levels.)
Europe: The European Union has adopted an emissions reduction target of 40% below 1990
levels by 2030. The United Kingdom has committed to reduce its emissions by 50% below 1990
4 http://www.claimsjournal.com/news/national/2015/03/04/262111.htm
5 http://www.un.org/apps/news/story.asp?News=49970#.VRm-yvnF-So
6 First Update to the Climate Change Scoping Plan: Building on the Framework Pursuant to AB32 – The California Global Warming Solutions
Action of 2006
7 http://gov.ca.gov/news.php?id=18938
8 http://cleantechnica.com/2014/04/15/californias-net-zero-energy-building-will-reshape-us-construction-industry/
9 http://gov.ca.gov/news.php?id=18828
10 https://www.whitehouse.gov/the-press-office/2015/03/19/executive-order-planning-federal-sustainability-next-decade
City of Palo Alto Page 6
levels within the 2022–2027 timeframe, and Germany has set 2030 emissions target of 55%
below 1990 levels.
Other cities: Other cities around the region and around the world have been actively engaging
this issue, with innovative programs around flexible transportation systems, congestion
management, electric vehicles, energy efficiency, and renewable power development—and in
many ways have been leading ahead of their national governments. Examples include:
Table 1: Examples of Climate Action Goals of Other Cities
City of Palo Alto Page 7
Figure 1: Climate Neutral Cities Alliance (CNCA) Goals
Technology and the Pace of Change
Rapid technology change and behavior shifts make the usual practice of planning based on
extrapolation of past trends a bit uncertain. For example, Vehicle Miles Travelled (VMT), the
widely used transportation metric, has risen steadily for decades, but recently shows signs of
turning down, as Millennials buy fewer cars (and reportedly even forego getting drivers’
licenses); car buying by the 18-30 demographic in the US peaked in 1983. The chart below
shows recent projections from the US Department of Transportation, which indicate a
flattening of historically rising VMT projections, with a downturn expected.
City of Palo Alto Page 8
Prices for solar photovoltaic (PV) systems, electric vehicles (EVs), batteries, autonomous vehicle
controls, sensors and many other technology categories have been plummeting for years. Tony
Seba, Stanford lecturer and author of Clean Disruption, asserts that this combination of trends
portends a profound shift in US automobile culture, with potentially rapid displacement of
internal combustion engine (ICE) vehicle by EVs, perhaps by 2030, and potentially a dramatic
reduction in private vehicle ownership in the same time frame. Such trends could make
conservative planning risky; for example, ExxonMobil’s 2014 projection of battery prices in
2040 will likely be reached in the market by 2020.
This makes the job of transportation planners, for example, and parking garage developers,
uncertain and challenging. How will we determine what, where and how much to build in the
face of these trends, and neither overbuild nor underbuild?
Palo Alto History and Opportunity11
For more than 20 years, Palo Alto has been an internationally recognized leader in
sustainability innovation, with a wide range of initiatives—citizen-led, staff-initiated, and
council-directed—that have in many cases raised the bar on urban sustainability. This status is
well deserved, given our community's deep-rooted environmental values and City's early
climate initiatives.
Early actions like our 2007 Climate Protection Plan (one of the first five city climate plans in the
US), bold recent actions like carbon neutral electricity, and systematic improvements ranging
from water conservation and EV readiness to green building ordinances and safe routes to
schools, and hundreds of other measures12 have put Palo Alto in the forefront of sustainability
leadership internationally. Based on annual data for the calendar year 2014, the community of
11 Transportation Research Institute, University of Michigan. National trends.
12 https://www.cityofpaloalto.org/civicax/filebank/documents/45024
Figure 2: Changing Vehicle Miles Travelled Forecasts
11
City of Palo Alto Page 9
Palo Alto has cut its overall greenhouse gas (GHG) emissions by an estimated 34% from 2005
levels and 35% from 1990 levels13—one of the largest reductions of any city in the world.
Because of its community commitments and past accomplishments, Palo Alto is uniquely
positioned to advance a world-leading climate plan.
Some of the needed initiatives are within the capacity of City government. Some will require
the active collaboration of neighboring jurisdictions. All will require the support, commitment
and actions our entire community.
While many people still assume that “sustainability” is expensive, and that the initiatives
identified here would require sacrifice of money, comfort or both, the evidence that staff has
reviewed from cities and businesses around the world suggest that well designed and managed
sustainability programs can be fiscally prudent, cost effective and in many cases can yield
attractive returns on investment of public resources.
13 These are revisions of previous estimate, due to an August 2015 modification of their 2013 estimate of 1990 and 2012-2014 transportation
emissions by consultants Fehr and Peers.
City of Palo Alto Page 10
Figure 3: Palo Alto Community-wide GHG Emissions (net of Renewable Energy Credits)
Extrapolating from its historic GHG reduction trend suggests that Palo Alto is well on its way to
an estimated 47% reduction by 2030 and 80% reduction by 2050; note however that this
trend includes the one-time drop in reportable GHG emissions that resulted from the carbon
neutral electricity policy in 2012 and 2013.14 Staff estimates that existing initiatives (including
EV-ready and PV-ready mandates and the electrification initiatives that Council has directed
staff to explore) could bring those reductions still lower.15)
14 The estimate of a 47% reduction by 2030 is calculated by staff based on extending Palo Alto’s 2005-2012 rate of GHG reductions forward to
2030; it excludes the dramatic one-time reduction gained by the City’s carbon neutral electricity policy. There is of course no guarantee that
Palo Alto will sustain that rate of reduction; it may achieve less, or, as proposed in this report, may achieve greater reductions. Note that
the Draft EIR being prepared for the Comprehensive Plan Update will contain a more conservative (i.e. lower) estimate for purposes of
compliance with the California Environmental Quality Act (CEQA).
15 Placeholder estimate. Will be refined by consultant work authorized by Amendment 1 to S/CAP consultant DNV GL’s contract, December 14
2015. Staff anticipates having those results in advance of this January 25 study session.
City of Palo Alto Page 11
Why Act Now
The International Energy Agency has determined that 80% of fossil fuels need to “stay in the
ground for the 2°C target to be within reach. ExxonMobil recently predicted “catastrophic”
climate change, with global temperatures rising 5-7°C. The global climate agreement reached at
the COP21 conference in Paris in December 2015 saw nearly 200 countries agree to common
action on climate.
The New York Times noted (quoting from the agreement) that
The Agreement 'calls for “holding the increase in the global average temperature
to well below 2°C above pre-industrial levels and to pursue efforts to limit the
temperature increase to 1.5°C above pre-industrial levels....” This language
recognizes the scientific conclusions that an increase in atmospheric temperatures
of more than 2 degrees Celsius, or 3.6 degrees Fahrenheit, would lock the planet
into a future of catastrophic impacts...But it also recognizes the scientific
conclusions that warming of just 1.5 degrees Celsius, or 2.7 degrees Fahrenheit,
could present an existential threat to low- lying island nations that would be
inundated by sea level rise at that rate of increase.'
The existing national plans submitted for the conference 'would probably result in
an increase above 3 degrees Celsius.'
'When countries update their commitments, they will commit to the “highest
possible ambition,” but the agreement does not set a numeric target.'
Objectives
In the wake of the Paris conference—where Canada and other countries called the 2°C target
inadequate and proposed a 1.5°C target—we may expect to see changes in global expectations,
and perhaps in California climate policy.16
There are multiple reasons for Palo Alto to pursue the sustainability and climate initiatives
outlined in this plan:
to improve the living standards, quality of life and value delivered to residents;
to save the City and community money through improved efficiency;
to reduce future risk from climate related events and their impacts on the community;
to balance fiscal responsibility with other community values;
to attract and retain innovative clean businesses;
to make our contribution in support of State and international commitments to reducing
global emissions;
to provide a leadership example to other cities and the community for which Palo Alto
is known.
16 Note also that the “80% reductions by 2050” that stands as the global reference target, and California’s stated goal, was a political
consensus based on the “the scientific conclusions that an increase in atmospheric temperatures of more than 2 degrees Celsius, or 3.6
degrees Fahrenheit, would lock the planet into a future of catastrophic impacts”—in other words, a minimal rather than maximal goal,
though many today consider it a “best practice.” In view of the 1.5 degrees Celsius target that was proposed at the Paris COP by Canada
and other countries, that reference target may change. In any case, it may be advisable to consider “80x50” a minimal rather than a maximal
goal.
City of Palo Alto Page 12
Meeting or exceeding California’s GHG reduction goal of 80% by 2050 will require both staying
the course on our current efforts, and building on, intensifying and evolving them in the face of
changing technologies and conditions.
Solutions appropriate for Palo Alto will need to address specific local economic considerations
and community needs. This in turn requires understanding the specific needs of the City and
community related to energy and resource consumption, transportation, development and the
considerations of daily life. And it requires the data systems that provide this view into the
systems that produce the experience of living and working in Palo Alto.
Discussion
For the past year, hundreds of Palo Altans have provided input to the S/CAP planning process,
contributing their ideas regarding objectives of the plan as well as emission reduction measures
that could be used to achieve meaningful GHG reductions and other measures that could
achieve sustainability objectives related to water conservation, adapting to climate change, and
other issues.
Based on this input, the Office of Sustainability considered three possible emission reduction
targets17: 80% emissions reduction by 2050, or “80X50,” consistent with the State’s goal; 80%
emissions reduction by 2030 or “80X30”; or 100% reduction (to carbon neutral or better) by
2025 or “100X25.” In each case, staff identified and started to evaluate (technically and
economically) the mix of strategies that could achieve each goal. Interestingly, staff found that
each target could be achieved with similar strategies implemented at a very different pace.
Based on this analysis, this staff report presents potential strategies for Council consideration
and discussion, and asks whether the Council is interested in further planning to develop an
S/CAP that exceeds the State’s goal, and if so, by how much? Specifically, staff invites Council to
consider whether to:
- Set a goal of reducing GHG emissions by at least 80% by 2030—20 years ahead of
California’s 80% goal, and achieve that goal by:
- Building, step by step, on Palo Alto’s historic Carbon Neutral Electricity Plan to next
become a Carbon Neutral Utility18, by encouraging electrification (and other measures) to
eliminate the impact and eventually the use of natural gas,
- Becoming a Carbon Neutral City soon after by working with its own resources and in
collaboration with neighboring jurisdictions to dramatically reduce dependence on
the internal combustion engine and private vehicles
- Advocating for policies that advance climate positive initiatives across the Bay Area
and the state.
17 Note that in all these scenarios, reductions are partially driven by factors outside our control, including Federal and state policy, legal
and regulatory constraints, cost-effectiveness of measures and technology, the pace of technology innovation, and behavioral changes
by our population. In this way, the S/CAP may be similar to California Air Resources Board’s (CARB’s) update to the State’s scoping plan,
which suggests that near-term actions and targets need to be specific, quantifiable, and within an agency’s control, while longer term
actions and targets may require changes in technology and/or actions by others, and could be less precise.
18 A Carbon Neutral Utility could be achieved in an estimated 15-20 years through the efficiency and electrification strategies discussed
below, or immediately by using carbon offsets as a bridging strategy modeled on Palo Alto’s use of RECs to accelerate the transition to
Carbon Neutral Electricity. Note that this would mean significant economic changes for the gas utility, and could require a full or partial
exit strategy for the gas utility. (This is a “back of the envelope” estimate. S/CAP consultants are producing a more refined estimated
under a Contract amendment authorized by Council December 14 2015.)
City of Palo Alto Page 13
Footprint
Palo Alto has systematically reduced its GHG emissions through a series of measures, many of
them predating the 2007 Climate Protection Plan (CPP). The figures below show Palo Alto’s
emissions reduction trajectory in relation to the State of California’s declared 2050 trajectory,
and the 80x30 trajectory proposed for consideration here.
Figure 4: Projected Emissions Based on Current Palo Alto Trends vs Emissions Reductions
Required to Meet State of California Targets: 1990-2050
City of Palo Alto Page 14
Figure 5: Projected Emissions Based on Current Palo Alto Trends vs Emissions Reductions
Required to Meet State of California Targets: 1990-2030
These historic reductions have been achieved most significantly though the CNE initiative,
ongoing CPAU efficiency and incentive programs; the Green Building Ordinance (GBO) and
Energy Reach Code (which are perhaps the most aggressive in the state and nation) including its
EV-ready and PV-ready requirement; operational improvements at the RWQCP; the ZeroWaste
and Environmentally Preferable Purchasing initiatives; the Urban Forest Master Plan; and more.
Initiatives already in motion or under consideration will drive additional reductions:
electrification analysis; the next green building ordinance (GBO), including potential “zero net
energy” requirements; “default to green” purchasing policy, including rapid electrification of
the City fleet; launching the Downtown Transportation Management Association (TMA) to
achieve a City Council initiated goal of reducing single occupant vehicle (SOV) trips in and
around the City’s commercial centers by 30% or more19; build-out the City’s adopted bicycle
and pedestrian plan; implementing parking technologies to better manage existing downtown
parking supplies; initiating a paid parking study for downtown; and establishing Transportation
Demand Management (TDM) requirements on new development projects.20
It is clear from the chart that transportation and natural gas present our biggest challenges:
road transportation accounts for more than 61% of Palo Alto’s remaining carbon footprint,
while natural gas accounts for more than 25%—and that Palo Alto will be unable to achieve the
State of California goals without significantly reducing emissions from both these categories.
Ten Realms of Action
Staff and consultants have examined ten realms of action: Transportation, Energy, Water,
Buildings, City operations, Palo Alto Utilities, Infrastructure, Adaptation/Resilience, Ecosystems
and Engaging the Community. Key strategies and actions are summarized in Figure 6 and Table
19 https://www.cityofpaloalto.org/civicax/filebank/documents/39106, 2/24/14
20 https://www.cityofpaloalto.org/civicax/filebank/documents/46324
City of Palo Alto Page 15
2; Others are summarized later in this report. This staff report focuses on three: transportation
and energy, because they represent the vast majority of Palo Alto’s emissions (excluding “scope
three” emissions, which are not considered in this analysis), and water, because of the
challenges of the current drought and potential risks of long-term drought. The others are
summarized here but will be addressed in detail in future reports.
Figure 6: S/CAP Levers, Goals and Strategies
City of Palo Alto Page 16
Table 2: Key Actions—Summary
As noted earlier in this staff report, any specific proposals that are developed to implement the
above listed “realms of action” and “key actions” would need to be assessed for their cost-
effectiveness, potential policy trade-offs and legal constraints that might influence the
City of Palo Alto Page 17
design of any such proposal or identify areas where the City could intervene at the federal,
state or local level to advocate for constitutional, statutory or regulatory change.
Investment and Impacts
The charts that follow summarize the investments and impacts associated with the strategies
presented below.21
This “waterfall chart” shows the current estimates of the GHG reductions that could result from
each initiative (in metrics tons of CO2 equivalent, or MTCO2e).
Figure 7: "Waterfall" Chart Showing Potential GHG Reductions from Each Measure
This “McKinsey chart” shows the estimated “mitigation cost” (in $/MTCO2e reduced) for each
strategy.
21 The methodology behind these analyses is explained in Attachment A.
600,000
500,000
400,000
300,000
200,000
100,000
0
City of Palo Alto Page 18
Figure 8: McKinsey Chart": Estimated "Mitigation Cost" (in $/mTCO2e reduced)
It is evident from these charts that the greatest GHG reductions are likely to come from
electrification of vehicle fleets (largely through provision of EV charging infrastructure),
encouraging all-electric new construction, electrification of water and space heating, and
pricing parking; the most economic reductions are to be gained from encouraging all- electric
new construction, issuing universal transit passes, electrification of water heating, pricing
parking, and electrification of vehicle fleets. The intersection of these lists provides an initial set
of priority actions for Council consideration.22
Key Levers: Detail
1.Key Levers: Rethinking Mobility
Road transportation represents about 61% of Palo Alto’s carbon footprint—and a headache for
everyone. Palo Alto’s Comprehensive Plan calls for reducing reliance on the automobile, and
22 Note: The quantities displayed here are estimated, using analytical models based on projections of the potential impacts of different
actions, and assumptions of the potential rates of adoption that could be achieved. As with all such models, it would be prudent to
assume that near term projections (such as the next five years) are more accurate than linger term projections (such as the next 15 or
even 35 years), and staff recommends revisiting and recalibrating the S/CAP every five years—or more often, as new information
warrants. The potential impacts of some actions—like replacing natural gas water heaters with electric heat pump water heaters
(HPWH)—are relatively straightforward to analyze with a high degree of confidence; the potential impacts of other actions—like
advanced mobility strategies—are much more difficult to analyze, because causal relationships for new technologies are not yet
well understood, and because the academic literature often used as a basis for these technologies generally lags the technologies.
As such, these should not be taken as predictions of what will happen, but as a portfolio of strategies that could potentially achieve the
targets set. The S/CAP consultants have constructed these models to be transparent and flexible; it’s relatively straightforward to modify
assumptions and observe the effect those modifications have on outcomes.
City of Palo Alto Page 19
we've made progress in some areas: for example, 44% of high school students commute by
bicycles. Beyond our borders, federal CAFE standards have reduced the carbon intensity of the
US vehicle fleet. But congestion continues unabated, and the majority of Palo Altans, and
commuters to Palo Alto, still make Single Occupancy Vehicle (SOV) trips.
Traditional approaches to transportation—adding capacity by building roads and parking—send
the wrong signals, encourage SOV travel and add pain. But what if we asked a different
question: How could we make it more convenient for anyone, anywhere, anytime to not have
to get into a car and drive?
Issue(s): Emissions. Congestion, Quality of life.
Goals: Reduce congestion. Reduce emissions. Increase convenience. Triple bike share, double
walk mode share and reduce SOV trips 30% in the Downtown area by 2020. Eventually,
eliminate 80- 100% of road transportation emissions, while increasing mobility and
convenience
Levers: Expand non-automobile mobility options. Expand transit facilities and services. Create
the right incentives.
Strategies: Reduce GHG/VMT by shifting vehicle fleets (City owned, privately owned and
commercially owned) from fossil-powered to electric. Phase out automobile subsidies by
requiring drivers to pay for parking. Reduce trips and vehicle miles travelled (VMT) by
developing mobility services that make not driving more convenient than driving. Collaborate
with regional partners.
Barriers/concerns/unknowns: Significant dependence on external factors including technology,
policy, other actors. Possible reluctance to change behavior. Possible resistance to paying for
parking directly (as opposed to indirectly). Significant investments in transit, rideshare, and
non-SOV incentives may be required (though much of this could come from other actors than
the City).
GHGs from road travel are a function of two factors: Vehicle Miles Travelled (VMT), and the
carbon intensity of that travel (GHG/VMT). Reducing GHG/VMT is largely a function of vehicle
technology, driven for example by Federal CAFE standards, state policy, improved fuel
efficiency, electrification and customer adoption. Most of these factors are outside the purview
of cities, but Palo Alto has some ways to influence VMT, by developing attractive alternatives to
SOV trips, and GHG/VMT, largely by encouraging electrification of City, resident and commuter
fleets.
The City supports a number of emerging transportation demand management (TDM) initiatives
including its first Transportation Management Association (TMA)23 to develop, manage, and
market transportation programs to reduce single occupancy vehicle trips in the Downtown Core
area. The Comprehensive Plan Update also provides an opportunity to establish policies that
outline when TDM should be applied and programs that specify how compliance will be
periodically measured and enforced. TDM plans for individual development projects can
establish TDM requirements and set enforceable SOV mode-share targets. TDM plans would
establish a list of acceptable TDM measures that include transit use, prepaid transit passes,
commuter checks, car sharing, carpooling, parking cash-out, bicycling, walking, and education
23 http://www.paloaltotma.org/
City of Palo Alto Page 20
and outreach to support the use of these modes. They should provide a system for
incorporating alternative measures as new ideas for TDM are developed.
Staff has identified seven strategies for addressing these goals, each with one or more specific
strategies: Expand non-auto mobility options; Expand transit facilities and services; Facilitate
shared transportation; Provide universal transit access; Phase out SOV subsidies by charging for
parking; Ensure that any new development addresses and mitigates its impacts (e.g. through
trip caps or other TDM initiatives); Reduce the carbon intensity of vehicular travel. The most
significant strategies (in terms of potential impact and cost) are summarized here.
Actions
1.a. Reduce the carbon intensity of vehicular travel by encouraging shift to EVs
Expanding the percentage of trips taken in EVs would have the largest impact on emissions
from road transportation, which is in turn the largest category of Palo Alto emissions. Palo Alto
has one of the highest rates of EV ownership in the country (estimated by staff at 2-3% of
registered vehicles), but several factors limit EV adoption, including price (which is dropping
rapidly), total cost of ownership (often poorly understood), and vehicle performance—
especially “range anxiety.”
The City has undertaken a number of measures to address those limitations, including hosting
periodic “ride and drive” events to provide staff and residents direct experience of EV
performance and economics; analyzing total cost of ownership; establishing an “EV first”
preference for the City fleet; and working to expand EV charging infrastructure in Palo Alto by
parking garage operators, employers and potentially third party providers.
City ordinances require all new construction and significant renovations for commercial and
multi-family buildings to pre-wire and allocate parking spaces for Electric Vehicle Supply
Equipment (EVSE), or EV chargers, at specified rates. The City has been adding additional public
charging stations, with grant support from regional agencies; third party providers of charging
systems could enable flexible expansion of charging infrastructure without requiring
commitment of City funds. (The City may want to consider flexible rather than maximal
approach to charging infrastructure, since as the range of available EVs expands, the
importance of “away from home” charging may become less significant, and if private vehicle
ownership continues to decline, as some have suggested, saturation may be achieved at a
lower volume of chargers.)
1.b. End incentives to private car use.
Ending parking subsidies and significantly increasing the cost of parking all over Palo Alto is a
strategy that could reduce reliance on the private automobile and encourage residents and
employees to use transit, ride-hailing services, biking, walking, or other modes. Use parking
revenues to finance non-SOV alternatives, modeled on the “Stanford Engine”.24
Palo Alto provides approximately 4,000 off-street and 7,000 on-street parking spaces in the
downtown and California Avenue areas. A quick web survey of other workplaces and shopping
24 Stanford’s commute alternatives program finances the Marguerite shuttle and other services from a $3/day parking fee. The program
is responsible for reduction of SOV rates from 78% to 48%; it also saved $107m in capital not spent on parking garages that were no
longer needed (and freed land for more academically pertinent uses).
City of Palo Alto Page 21
districts suggests approximately 30,000 additional spaces. The on-street spaces are provided at
no cost to drivers (in contrast to many other cities in the region), and the publicly- owned off-
street spaces are provided at either no cost (short-term parking) or at a cost that is below
comparable rates in neighboring communities (long-term parking).
Given the actual cost of creating and maintaining on- and off-street parking spaces (an
estimated $3,600/year for parking garages, based on the amortized cost of providing parking
spaces at a capital cost of $60,000 per space), free parking provides a significant incentive for
SOV trips, despite the City’s long-standing policy commitment (as noted in the 1998
Comprehensive Plan) to reduce those trips. Instituting and/or requiring parking fees
commensurate with this cost would remove that incentive, reduce SOV trips, and provide a
funding source for programs that make the use of alternative modes easier for all. Potentially,
in combination with other strategies listed here and the shift in driving trends already noted, it
could also reduce the need to build additional parking structures (as has been the case at
Stanford).
Preliminary analysis, based on parking rates in surrounding jurisdictions, suggests that Palo Alto
could potentially realize parking revenues of $5-15 million per year25, which would in turn
provide substantial resources for the programs discussed here. The City has contracted for a
paid parking study, now getting underway, that will provide additional insight into Palo Alto’s
options and more closely examine costs and revenues.
1.c. Provide low cost transit benefits to all Palo Alto residents and employees
A universal EcoPass provides one of the most economical ways to reduce emissions. (See
mitigation costs chart.) EcoPasses are transit passes sold by VTA that enable the carrier to use
their bus system. Presently EcoPasses are available to employers similar to GoPasses (for the
train), and could potentially be made available to residents in transit served areas. The EcoPass
(and comparable passes from other transit providers) could be provided at relatively modest
cost, potentially funded by parking revenues and employer “feebates,” and provide residents
and workers with free access to select transit services. A variant of this approach, already being
explored by the Downtown Transit Management Association, would provide discounts for use
of ride-hailing services like Lyft and Uber as a “first and last mile” solution for commuters.
1.d. Develop “Mobility as a Service” (MaaS) in Palo Alto and the region:
Financial incentives are not the most effective level to change behavior, unless convenience is
addressed as well.
“Mobility as a Service” (MaaS) is a concept that proposes to shift the focus from fixed
transportation to flexible, responsive transportation services designed to meet people’s diverse
and changing needs by providing seamless regional multi-modal mobility services, including
improved transit, and bike share; dynamic, on-demand shuttles; flexible first & last mile
solutions; and walkable/bikeable communities. The full MaaS concept, articulated most fully by
Tekes, the Finland technology funding agency and the Finland Ministry of Transportation and
Communications (with which Palo Alto has developed a collaboration) and the SV MaaS
initiative which Palo Alto initiated with Joint Venture Silicon Valley (JVSV), envisions one or
more “Mobility Aggregator” services that provide subscription-based, customer-centered
25 This is a wide range, estimated by staff by applying a range of regional parking rates to the quantity of Palo Alto’s on street and off
street parking spaces.
City of Palo Alto Page 22
experience that provides “plan/book/buy/ride” access to multiple transportation modes in
a single unified smartphone app with easy fare payment, one-stop billing and integrated
employer subsidies.26
The elements of MaaS are increasingly familiar, as Transportation Network Companies (TNCs)
like Lyft and Uber and responsive shuttle services like Chariot and Bridj grow in familiarity and
market share, and transit agencies struggle to adapt to shifting rider expectations.27
In response to Council’s challenge to reduce SOV trips 30% for key commercial centers by 2020,
staff are exploring pilots of such programs, initially through “first and last mile” programs being
developed by the Downtown TMA, enhancement the City’s own commute alternative program
for employees, and developing an RFP for technology providers that could develop a mobile
app or “wallet” allowing the user to conveniently plan, book, access and pay for a bundle of
transit/rideshare services. (Companies at the Stanford Research Park are exploring comparable
programs.)
1.e. Evaluate what would be required to achieve bicycle mode share levels being
t targeted by other cities, ranging from Portland and Copenhagen and LA.
Palo Alto is a bicycle-friendly city, and the City is making a significant investment in new bicycle
boulevards and other improvements included in the adopted Bicycle and Pedestrian Plan.
However, bicycle ridership is low compared to cities like Portland and Copenhagen and the next
iteration of the Bicycle and Pedestrian Plan could set higher goals and seek to achieve higher
bicycle and pedestrian mode share levels. Provisioning protected bike lanes can be expensive in
terms of GHG mitigation, but provides health and quality of life benefits as well. On the other
hand, expanding surface area for bike at the expense of surface area for cars may prove
controversial, at least until the potential decline in VMT and automobile demand becomes
apparent and palpable to more people.
1.f. Explore “zero impact” standards in residential and commercial development
Adopt plans that target future residential and commercial development in specific transit-
friendly districts. Impose “no net impact” caps for energy, GHGs, water--and trips.
Scenario Four of the Comprehensive Plan EIR contemplates this approach. The cities of Menlo
Park, Mountain View, Sunnyvale, and Cupertino and Helsinki and others have begun to impose
trip caps; for example, developments in North Bayshore in Mountain View are required—as a
condition of permitting—to provide transportation amenities that will keep SOV rates under
45%.
A combination of these four caps is unprecedented (as far as we know), and could provide a
powerful incentive to property owners and developers to build innovative, efficient and
affordable buildings and developments.
26 SV MaaS is testing and refining, with major Silicon Valley employers, a three-pronged strategy to reduce incentives for SOV commutes and
make non-SOV travel increasingly convenient—that could readily scale to other employers throughout the region. The key elements:
a. Gradually increasing the price for parking at major employers.
b. Application of parking revenues to non-SOV transportation alternatives. (Parking pricing + incentives = revenue-neutral
workplace feebate--a self-financing system of charges and rebates to encourage environmentally-preferable practices.)
c.Smart applications (apps) to increase non-SOV convenience for commuters and benefits tracking/management for employers.
27 The Shared Use Mobility Center has developed databases and interactive maps of “shared use mobility” services, programs and policies across
the country. http://www.sharedusemobilitycenter.org/
City of Palo Alto Page 23
Embrace “tactical urbanism”
Many of the innovations in transportation planning and land use encourage small, fast local
experiments are new, some unprecedented, and would benefit by a more flexible and agile and
experimental planning and learning process. (Tactical urbanism is an umbrella term used to
describe a collection of low-cost, temporary changes to the built environment, usually in cities,
intended to improve local neighborhoods and city gathering places. Tactical Urbanism is also
commonly referred to as guerilla urbanism, pop-up urbanism, city repair, or D.I.Y. urbanism.28)
Leverage existing Open Data & Smart City initiatives to support mobility services
Real time access to relevant data is essential to efficient platforms for public & private mobility
service providers. Palo Alto should provide open access to its own transportation data. Since
transportation issues are regional, Palo Alto should work with other communities in the region
to share data and develop common or compatible protocols. Palo Alto should encourage
mobility providers to share their data in turn (or perhaps require that as a condition of
operation.)
Benefits:
These transportation-focused strategies will provide both direct and indirect benefits. Direct
benefits include reduced congestion, reduced GHG emissions, and health and economic
benefits to commuters and developers. Indirect benefits include, for example, reduced CapX
and OpX for roads and parking structures; less capacity pressure on roadways enabling release
of some surface area to bicycle and pedestrian modes; more permeable surfaces as road
demand declines, enabling enhanced storm water capture (see “green infrastructure,” below)
and reduced heat island effect.
2.Electrifying our City
Key Levers: Energy (general)
Issue(s): Natural gas emissions currently represent ~25% of Palo Alto’s carbon footprint.
Natural Gas (i.e., methane, is a potent greenhouse gas, with a global warming potential (GWP)
at least 23 times that of CO2.29 Carbon Neutral Electricity opens the option of fuel switching
from natural gas.
Goals: Reduce or eliminate emissions from natural gas. Reduce costs. Increase comfort,
reliability and resilience.
Means: Efficiency. Renewables. Electrification. Expand PPAs and distributed generation &
storage. Build the “smart grid.” Set a price on carbon. Adapt CPAU’s business model to the
challenges facing the utility industry.
Levers: Staff has identified several “levers” for addressing these goals, each with one or more
specific strategies: Reduce demand through resource efficiency and conservation electrification
of heating and cooking functions currently provided with natural gas; encourage zero net
energy, zero net carbon and all-electric design in new construction; periodically evaluate the
suitability of biogas as pipeline gas; and, potentially, use of carbon offsets as a bridging
28 https://en.wikipedia.org/wiki/Tactical_urbanism#cite_note-1
29 Recent research indicates that the impact natural gas may be 180% of current analysis, due to leakage throughout the supply chain and the
lifecycle of methane in the atmosphere.
City of Palo Alto Page 24
strategy.
Actions:
Set high energy & carbon performance standards for new construction and renovations.
Accelerate retrofits, including electrification.
Raise efficiency & RPS goals; aggressively market toward them; challenge staff and
community to improve efficiency 10% per year for the next ten years.
Develop contingency plans to maintain carbon neutral electricity in face of potential reduced
reliability of hydroelectric power
Explore microgrid and district energy strategies in key districts
Proactively explore “utility of the future” strategies to take advantage of potential disruptive
change facing the industry30
Benefits: Emissions. Savings. Health31. Agility. Resilience.
Palo Alto has made remarkable progress in decarbonizing its electricity sector. In addition to
the City’s purchase of hydro-electric power resources, CPAU has worked actively to develop its
renewable electricity portfolio. In 2013, Palo Alto approved a Carbon Neutral Electric Resource
Plan committing Palo Alto to using carbon neutral electric resources from that year
on—through purchase of Renewable Energy Credits (RECs) for the “brown power” portion of
CPAU’s portfolio that will largely be replaced by 2017 with expanded purchases of renewable
power. However, low hydro production may necessitate the purchase of brown power and
RECs after 2017 as well.
Many CPAU programs are already under way to reduce energy usage in homes and local
businesses, through education and outreach, incentive programs and energy use disclosure
requirements. But the results have been modest and inconsistent. Palo Alto should accelerate
those efficiency gains (to reduce pressure on CPAU’s renewable capacity), drive down natural
gas usage and shift to carbon neutral electricity.
Further reductions in GHG emissions associated with utility energy consumption could be
achieved through:
Breakthrough efficiency in electricity consumption to reduce city’s overall energy
demand and the need for continued energy purchases through power purchase
agreements (PPAs) for renewable power.
Innovation technically and financially to move the city away from natural gas by
both reducing natural gas consumption as much as possible, partly through energy
efficiency, and electrification of traditionally gas uses (i.e. heating) combined with
increase local energy generation and, potentially, transitional use of offsets.
There are potential concerns regarding “complete” electrification, including:
Induced demand. In the absence of adequate energy storage, morning and evening
demand peaks in Palo Alto, which would not be met by local renewables, would call
upon the resources of the existing grid, which would be met by fossil resources; in
30 Discussed at UAC April 1, 2015: http://cityofpaloalto.org/civicax/filebank/documents/47849
31 E.g., indoor air quality and health benefits from electrifying appliances such as stove tops and clothes dryers that are located IN the home due
to reduced hydrocarbon fumes.
City of Palo Alto Page 25
this scenario, according to some, electrification intended to reduce GHG emissions
could potentially increase them.)
Redundancy/resilience. If CPAU customers shifted most or all natural gas demand
to electricity, the city system could be more vulnerable to electrical outages. Micro-
grids, for example, could reduce that risk, but the risks should to be evaluated as
part of any electrification strategy.
CPAU economics. A successful electrification strategy could greatly reduce natural
gas revenues; yet CPAU would still need to maintain the integrity of the natural gas
infrastructure. (See “Utility of the Future,” below.)
Regulatory constraints. Publicly-owned utilities operate in a complex, highly
regulated legal environment with respect to almost every aspect of the utility
business from rate design to safety and reliability to required program and service
offerings. Investor- owned utilities (like PG&E) operate under a different legal and
regulatory construct, particularly with respect to rate setting. Proposals to address
GHG emissions must always harmonize discrete policy proposals with legal and
regulatory constraints, cost-effectiveness and cost of service principles, and the
overall safety and reliability principles that are at the core of the utility’s mission.
In August 2015, the City Council authorized an electrification (a/k/a “fuel switching”) work
plan32 to research and analyze ten specific electrification strategies; that work is underway and
will yield analytic findings and recommendations over the course of 2016 and early 2017.
Key Actions: Natural Gas [broken out from energy for clarity]
2.a. Encourage all-electric in new construction
Because new construction of advanced alternatives is generally more economic than retrofits,
this strategy is one of the most cost-effective evaluated.
2.b. Make PA GreenGas “opt out.”
Shift PAGG from an opt-in program to an opt-out, which would bring Palo Alto to 40% GHG
reductions—California’s 2030 target—now!).33
2.c. Reduce energy use through efficiency measures and equipment replacement
Continue to support and, where feasible, consistent with legal and regulatory requirements,
and cost-effective, accelerate aggressive energy efficiency and accelerated retrofit cycles
through building codes and CPAU incentives. Develop programs that take advantage of natural
equipment life cycles by encouraging CPAU customers, through focused marketing and/or
predictive analytics, to upgrade at time of replacement to most efficient technology,
determined on a total cost of ownership basis.
2.d. Pursue and apply electrification feasibility analysis.
Encourage “fuel switching” where cost effective from GHG-emitting natural gas to carbon
neutral electricity. Initial analysis of the cost-effectiveness of fuel switching strategies identified
residential water heating (replacing hot water heaters with heat pump water heaters (HPWH)
32 http://www.cityofpaloalto.org/civicax/filebank/documents/48443
33 Emission offsets are controversial, but may play a successful transitional role in reducing natural gas-related emissions. Other options
include: (1) Make the PAGG portfolio the default gas portfolio (2) Explore investing a portion of those funds in qualified local offsets to
fund other S/CAP initiatives, using offsets as “bridging” strategy as the City has done with carbon neutral electricity
City of Palo Alto Page 26
and some EVs as “cost-effective” within current parameters. CPAU plans to begin a pilot
program testing HPWH replacement strategies and customer response in early 2016.34
Other electrification opportunities, including residential space heating electrification,
commercial water heating and space heating electrification, and commercial cooking
electrification, are less cost effective at this time when assessed as individual measures, but
may be more cost-effective when offered as bundled services. (For example, Boulder CO is
developing an integrated service offering that combines energy audit, weatherization, efficient
appliances, rooftop solar and an EV in a single bundle that lowers monthly cost to the customer
and is paid for through on-bill financing. The offering may be target marketed using predictive
analytics, based on customer use patterns and permit data, to identify the customer who would
benefit the most.)
Related actions: Build capacity to serve expanded electrical demand through efficiency, local
generation, and continued renewable power purchase. Adjust rate tiers in order to not penalize
fuel-switchers. Note that all rates must be based on the cost to provide service. Any rate design
proposal must be specifically analyzed for legal, regulatory, and cost-effectiveness issues, or
other barriers (e.g. operational implementation) that may impose constraints on using rates as
a tool to implement or otherwise incentivize or subsidize fuel switching.
2.e. Monitor biogas options.
Biogas (or methane generated from crop or waste resources) is part of the strategy mix in
California’s PATHWAYS analysis. CPAU has determined biogas is not an economically viable
option for Palo Alto at this time, and PG&E has expressed concerns about the safety and quality
of biogas if this commodity is introduced into its pipeline transmission system.
2.f. Monitor the long-range viability of CPAU’s natural gas business.
As customers shift away from natural gas, CPAU’s natural gas revenues will decline, while the
Utility will still need to maintain the safety and integrity of its natural gas pipelines and systems
and retain qualified workers. This could generate financial stress at some point in the future
and leave stranded assets.
2.g. Infrastructure considerations for the natural gas utility
Longer-term implications of moving away from natural gas in Palo Alto need to be studied in
further detail. For instance, natural gas utility estimates for long-term infrastructure planning
costs and anticipated infrastructure upgrades need to be assessed relative to costs and benefits
of electrification for specific natural gas distribution areas and neighborhoods. Aging natural
gas infrastructure needs to be considered as part of assessing electrification opportunities.
Steps may include:
Identifying natural gas distribution areas requiring costly network upgrades
Developing plans to target these areas for electrification and associated electrical
upgrades needed with aggressive, targeted incentives
Assessing whether and how avoided cost of infrastructure upgrades could pay for
34 In addition to cost-effectiveness hurdles, electrification programs may be legally constrained as well. For example, efforts to shift
customers from natural gas to electricity, which will have investment and revenue impacts on each enterprise fund, may raise issues with
regard to Prop 26, which prevents municipal utilities from “cross- subsidizing” electricity and gas customers. This will need to be evaluated
as part of developing electrification strategies.
City of Palo Alto Page 27
electrification
Benefits: Emissions. Savings. Agility. Resilience.
3.Key Levers: Water
Background/Issue(s): Palo Alto has done an outstanding job of meeting annual water use
reduction requirements of the current “drought.” But both potable water supplies and
hydroelectric needs could be challenged by long-term shifts in California’s precipitation regime.
With shifting climate patterns35, significant uncertainty exists related to whether the drought
conditions are the “new normal” for California However, all climate projections show increases
in average temperatures and reduced snowpack where Palo Alto sources much of its water—
which could impact Palo Alto’s hydroelectric power and thus its carbon neutral electricity
strategy.
Under state law36, City of Palo Alto Utilities (CPAU) must prepare an Urban Water Management
Plan every five years. The Plan must assess the reliability of Palo Alto’s water sources over a 20-
year planning horizon and report its progress on a 20% reduction in per-capita urban water
consumption by the year 2020.37
CPAU’s 2010 Urban Water Management Plan presumes continuation of modern California
precipitation regimes, which might not accurately represent the future we face. CPAU is
beginning development of the 2015 plan (due June 2016 to the State). Given current climatic
projections, long-term increases in water supplies from San Francisco Public Utilities
Commission (SFPUC) appear highly unlikely, and any tapping of groundwater supplies, even
with the new storage facilities, would only provide emergency short term relief. The key is
therefore to reduce consumption of water while rapidly increasing the availability and use of
recycled water.
Goals: Safe and reliable water supply for the possible “new normal” of less (and less reliable)
precipitation
Means: Efficiency. Recycled water. Green infrastructure for local storm water capture and
storage. Onsite wastewater treatment.
Strategies: Reduce potable water consumption. Supplement existing water supplies.
Actions:
Develop long-term efficiency goals, and aggressively market toward them Incorporate net
zero water standards in future Green Building Ordinances
Evolve Palo Alto landscapes to adapt to changing precipitation trends, and allocate water
resources to protect our urban canopy
Develop and incent local water capture and storage, from household to social scale Pilot and
evaluate onsite wastewater treatment technologies
Pursue recycled water production and use Benefits: Resilience. Savings.
Strategy: Reduce potable water consumption.
35 The California Department of Water Resources (http://www.sei-international.org/news-and-media/3252 ), the Association of California
Water Agencies (http://www.acwa.com/events/2016-executive-briefing-defining-new-normal) and others are examining the potential
impacts of Climate Change on Hydrologic Trends and Water Management.
36 Water Conservation Bill of 2009
37 http://www.water.ca.gov/urbanwatermanagement/
City of Palo Alto Page 28
In Palo Alto, overall water use per account decreased by 27% between 2000 and 2010, and all
customer classes showed a reduction in annual water use per account. The relative share of the
total water usage made up by the residential customers has continued to grow with residential
single-family users increasing their share from 41% to 47%. Overall water consumption in the
residential sector in total increased its share from 50% to 62% of total citywide consumption.
Palo Alto’s drought response has to date achieved reductions of well over 25% in 2015
compared with 2013 levels.
Long-term water reduction strategies should focus not only on implementing these procedures
during times of drought, but also using the incentives and policy drivers the water management
plan to drive sustained water consumption reduction, which will require structural changes in
water demand (such as building design and landscaping choices) as equipment and fixture
upgrades and behavioral choices.
Strategy: Supplement Existing Water Supplies
New sources of both potable and non-potable water to support redundant supplies for water
security requires 1) increasing ground water capture through capturing rain water, storm water
retention and encouraging ground water recharging through green infrastructure investment,
design criteria and policies, 2) maximizing the potential for water recycling from the Regional
Water Quality Control Plan (RWQCP), and potentially 3) careful exploration of on-site waste
water treatment technologies (such as those in use at Moffett Field).
Ground water capture and management is critical to provide sufficient on-call reserves during
severe droughts, and to maintain sustainable ecosystems. Policies to maximize capture also
reduce the risk of storm water outflow and flooding. Policies the city should promote for
ground water capture include:
Green stormwater infrastructure. Promote the design of green streets and alleys
to promote the integration of green infrastructure elements into the street and/or
alley design to store, infiltrate, and evapotranspire stormwater.
Set policy and codes to require permeable pavement installation on new and
retrofit of commercial building and residential projects. These pavements are
particularly cost effective where land values are high such as in Palo Alto and where
flooding is a problem.
Promote rainwater and greywater harvesting. Address through building policy or
legally compliant, cost-effective utility incentives the capturing rainwater and
greywater and using it for landscape watering needs reducing the use of potable
water for landscape irrigation.
Incent downspout disconnection. Address through building policy or legally
compliant, cost-effective water utility incentive the disconnection of rooftop
drainage pipes to drain rainwater to rain barrels, cisterns, or permeable areas
instead of the storm sewer.
Develop recycled water (and potentially direct delivery of purified water) capacity
and uses, from both the RWQCP and onsite waste water treatment.
City of Palo Alto should also maximize water recycling from the RWQCP. Under current upgrade
plans, the RWQCP could produce as much as 27 million gallons per day, of which approximately
33% meets quality standards for “unrestricted use” and 19.4 MGD of restricted water use.
City of Palo Alto Page 29
The City continues to examine methods to expand the use of recycled water. Completion of the
Recycled Water Market Survey and Facility Plan is a step in that direction. The City expects that
the costs of implementing expanded recycled water use can be reduced through a combination
of regional coordination and state and federal matching funds.
Other Actions [Summary]
These “other actions” are listed in brief summary form, and will be addressed in detail in future
study sessions.
4.Key Levers: Buildings
Goals: “Net Positive,” healthy, productive, efficient built environment
Means: Building ordinances and reach codes. Performance benchmarking and disclosure.
Education & outreach to realtors, developers, building trades, financiers
Actions:
Set & enforce building standards >15% above California’s.
Establish a “loading order” for efficiency & ZNE measures: New buildings > Major retrofits >
Ownership transfer
Apply retro-commissioning and performance benchmarking to ensure and incentivize high
performance. (Retro-commissioning is a systematic process to ensure that a building performs
as designed. Performance benchmarking is comparing one building’s performance to
performance of comparable buildings.)
Ensure that City buildings meet green building requirements. Conduct regular building audits,
set performance improvement goals, assign accountability
Assess and accelerate electrification transition (with CPAU). Use “predictive analytics” to
identify and engage likely candidates for retrofit and equipment upgrades, based on expected
end-of-life of existing equipment
Benefits: Reduced emissions. Operating cost savings. Enhanced asset value. Grid resilience and
more manageable energy demand curve.
5.Key Levers: Municipal Operations
Efficiency, low carbon and other sustainability initiatives can save money, improve operating
performance, reduce emissions, and provide leadership by for the community.
Goals: “We go first”
Means: Procurement. Procedures. Accountability. Training.
Actions:
“Default to Green” in procurement (For example, City policy requires that City management
procure EVs as first choice, and select fossil fueled vehicles only if appropriate EVs are not
available.)
Embed sustainability commitments and criteria into CIP process, building construction,
renovation and operation
Establish internal carbon targets and trading, pricing to increase GHG-reduction
City of Palo Alto Page 30
accountability.38
Apply retrofits to cut resource use 5-10%/year—performance contracting. Reinvest operating
savings into further sustainability initiatives
Collaborate with other cities to share best practices & advance regional initiatives
Benefits: Footprint. Cost savings. Happy customers. Lead by example.
6.Key Levers: Palo Alto Utilities
Goals: Reliable, safe, economical, sustainable and resilient services
Means: Lead the charge. Adapt business model to changing industry dynamics.
Actions:
Promote—and monetize—radical resource efficiency.
Increase PPA contracting to hedge hydro uncertainty, subject to the City’s Risk Management
Policies and Procedures; maximize local solar+storage as resilient complement to grid solar.
Deploy Smart Grid as key part of “smart and connected city”
Restructure rates to not penalize increased electrical demand
Explore and develop microgrids; prepare to upgrade grid to meet rising demand from
electrification.
Adapt CPAU business model to service-focused, Distributed Generation/Storage
Benefits: Leadership. Resilience. Savings.
7.Key Levers: Adaptation & Resilience
This is a large topic, addressed here only briefly. Santa Clara County has conducted extensive
analysis of these topics in their SV 2.0 project. SCAP consultants have provided detailed
assessment of risks and potential responses. City staff have several related workstreams
underway, some of which will be presented in a parallel study session currently scheduled for
January.
Goals: Reduce vulnerability to Sea Level Rise (SLR), flooding, rising temperatures, extreme
weather events
Means: Inform, protect, retreat. Build resilience into City planning.
Actions:
Continue to pursue “green infrastructure” as required by the Regional Water Quality Control
Board and as warranted by staff analysis; include supporting policies in the Comp Plan
Update aimed at increasing storm water infiltration.
Pursue policies and projects to reduce storm and flood vulnerability
Evaluate and if needed strengthen SLR and flooding concerns into planning, zoning,
permitting and insurance requirements
Address the vulnerability of City assets to sea level rise (SLR)
Benefits: Survival of critical assets and services. Reduced costs, public safety.
38 More than 400 companies, 40 nations and 23 cities, states and regions have established internal carbon pricing, as a way of incorporation
climate plan goals into management and operating decisions.
City of Palo Alto Page 31
8.Key Levers: Information Technology
Goals: Enable staff, residents and business to understand trends innovate programs
Means: City as platform: Provisioning data and information services that support operational
efficiency and program innovation
Actions:
Extend open data initiatives to include mobility, utility, operations & environmental quality
Provide visual performance dashboards that simplify tracking and benchmarking
sustainability performance—and support effective action
Accelerate smart grid deployment. Enable customer and 3rd party access to accurate, timely
data. Protect privacy.
Benefits: Agility. Participation. Learning. Data-driven decisions.
9.Key Levers: Engaging the Community
Goals: Broad community engagement, participation, guidance, initiative
Means: Inform & convene. Support individual & collaborative action. Disclose & report impacts.
Actions:
Pilot “CoolBlock” collaborations to support neighborhood cooperation toward sustainability
and resilience goals
Deploy/encourage dashboards and “fitbit for sustainability” apps Estimate/report “scope 3”
emissions, to seed conversations about consumption Benefits: QOL, savings, accelerated GHG
reductions, conviviality, political support
10.Key Levers: Ecosystems
Goals: Protect and enhance the regenerative capacity of ecosystems
Means: Value and enhance the common wealth.
Actions:
Use “ecosystem functionality” layers in planning processes.
Expand and protect canopy, biodiversity, soil health and water capture; adapt canopy and
parklands to changing climatic regimes
Value and enhance the common wealth for future generations.
Benefits: Quality of life. Adaptation/resilience.
Potential Sources of Funds39
Staff has identified a variety of potential sources of funds to finance the initiatives that Council
may choose to purse, though all of these sources (including private financial vehicles) need a
more complete assessment of applicable legal and regulatory requirements and the risks and
obligations associated with the various approaches. These include operating savings, parking
feebates, utility rates, revolving loan funds, local offsets, carbon tax or fee, voluntary
contributions, as well as green bonds and private financial vehicles.40 There is evidence that
39 The City of Palo Alto has just been award an $85k grant from USDN for a multi-city exploration of potential sustainability financing
strategies
40 This despite a common misperception: Most people who have not been deeply engaged in sustainability work assume that low-carbon and
other sustainability initiatives will necessarily require financial, performance or quality of life sacrifices, because “better usually costs
more.” As we’ve seen in the world’s product innovation, green building, and corporate eco-efficiency, this is not necessarily the case; in
City of Palo Alto Page 32
market demand exceeds supply for well-
constructed sustainability and climate related investment opportunities; as a result some
initiatives discussed here may be financeable through private investors. (Subject to Council
selection of goals and measures, the strategies outlined here could yield Net Present Value in
the hundreds of millions of dollars.)
Key questions
As Council and community discuss the S/CAP and the options before us, we will need to
consider several key questions:
Leadership: What level of GHG reduction goals will Palo Alto target?
Pace: How fast will Palo Alto attempt to achieve these reductions?
Implementation: Which measures will Palo Alto enact to achieve these reductions?
Invest: How much will Palo Alto invest?
Funding: How will Palo Alto fund those investments?
Criteria: What factors will Palo Alto use to make these decisions?
Legal Issues
Subsequent Study Sessions and Council Reports will address the cost implications and policy
trade-offs of various mandates and proposals, and identify and assess any constraints that may
exist (including any imposed by legal, statutory or regulatory requirements) in more detail.
All measures and actions identified in this broad overview of the current state of the S/CAP
process must be specifically analyzed and considered in the context of all applicable legal,
statutory and regulatory requirements, including, for instance, constitutional limitations on
utility rates and use of ratepayer funds imposed by Californians when they adopted Proposition
26, obligations set forth in the Cap-and-Trade regulations adopted by the California Air
Resources Board, and other miscellaneous requirements embedded in the California Public
Utilities Code.
Timeline: Next steps/Plan
Staff proposes a series of events over the course of the spring, to support Council and
community in developing and reviewing the draft S/CAP and deciding together how to proceed.
- A community summit on January 24, 2015 to engage several hundred Palo Altans (and
most of the Council) in an open discussion of the potential goal and the critical
elements of Transportation, Energy and Water.
- This study session, which can explore the overall strategic sweep and key elements of
the entire SCAP, and begin a high level conversation to surface aspirations and identify
concerns, and frame the study sessions which will follow.
fact a growing body of evidence documents that attractive returns on investment are possible from well-designed and well-executed
sustainability initiatives. In the words of the late Ray C. Anderson, founder and CEO of Interface Flor, “If you think sustainability is too
expensive, you’re doing it wrong.”)
City of Palo Alto Page 33
- A series of study sessions over the course of the year, to enable deeper consideration of
these three elements, and develop understanding of the requirements of both a 15
year strategic plan and a five year action plan.
- The annual Earth Day Review of City sustainability initiatives in late April.
- An action item—potentially in the early fall— to adopt goals and strategies, appropriate
initial funding, establish criteria by which Council will allocate funding in response to
specific staff proposals, and identify next steps.
Resource Impact
This study session has no resource impact beyond the staff and consultant time required to
prepare and review this staff report, and participate in the meeting. Climate plan updates are
significant undertakings for any jurisdiction, and since 2014 the City of Palo Alto has invested
time and resources in this project. The need to allocate multiple members of City staff,
significant time on the City Council’s agenda, and financial resources for consultant assistance
and event/meeting programming will continue until the adoption of the updated Climate Plan
(and its companion environmental document). Implementation of the Climate Plan will require
investment of public funds, in amounts to be determined based on selection of goals and
strategies, across the various funds of the organization.
Policy Implications
The Sustainability and Climate Action Plan will set forth proposed City policies and actions with
regard to the topics addressed, and a framework for future discussions regarding these topics.
The S/CAP Plan addresses many issues that are also addressed by the Comprehensive Plan.
While staff has attempted to coordinate the two work streams as much as possible, there are
inevitable differences, given the nature of each initiative, which will need to be reconciled as
the planning processes advance in 2016. The Comprehensive Plan is an update of Palo Alto’s
1998 Comprehensive Plan, and has been underway since 2008; it will build on the existing plan,
and incorporate goals, policies, and programs addressing climate change and climate adaption
for the first time. The EIR for the Comp Plan Update will take a conservative look at potential
GHG emissions through the year 2030.
The S/CAP is a de novo undertaking, commenced in 2014; it is disruptive in nature, presenting
possible strategies for making Palo Alto more sustainable in 2030 and beyond. As is typical for
such planning efforts, near term actions can be specific and quantifiable, while longer term
actions are necessarily more aspirational and specific, focusing on externally driven goals and
attempting to determine if and how to meet them. These two different processes will converge
on some matters, and not others; however staff recognizes that the two plans must ultimately
work together to express the community’s vision for the future, and establish specific policies
and strategies to guide future investments and decisions. Staff has not attempted to resolve all
these differences as the staff level, since many of them are a matter of political, not
professional, judgment, and thus within the purview of Council and community, not staff.
City of Palo Alto Page 34
Environmental Review
Adoption of a Climate Plan will require review pursuant to the California Environmental Quality
Act (CEQA). While some sustainability measures have been included in the Draft EIR that is
being developed for the Comprehensive Plan Update, the final S/CAP may include strategies
that have not been adequately addressed by the Update. Thus the final S/CAP will have to be
reviewed to determine the appropriate level of CEQA review required. This review may utilize
the Comprehensive Plan EIR, or require preparation of an Initial Study/Negative Declaration, or
even preparation of an additional EIR, depending on the strategies and commitments it
contains.
Attachment:
ATTACHMENT A: Stabilization Wedges and Analytical Assumptions (DOC)
Attachment: Stabilization Wedges and Analytical Assumptions
The projected GHG reductions presented in this CMR are based on extensive analysis,
summarized in these “stabilization wedges” and tables of assumptions.
The wedges, based on the methodology developed by Robert Socolow of Princeton
University, illustrate the GHG reductions delivered over time by each element of a
portfolio of strategies.
The wedges are driven (through an Excel model not presented here, but available for
review) by these tables of assumptions, which show the target implementation levels
and adoption rates for each measure. As these assumptions are changed, projected
GHG reductions change, as shown by the accompanying charts.
These projections were developed using analytical models based on projections of the
potential impacts of different actions (in turn based on engineering analysis or published
research), and assumptions of the potential rates of adoption that could be achieved.
As with all such models, it would be prudent to assume that near term projections (such
as the next five years) are more accurate than longer-term projections (such as the next
15 or even 35 years), and staff recommends revisiting and recalibrating the S/CAP every
five years—or more often, as new information warrants.
Note that the potential impacts of some actions—like replacing natural gas water
heaters with electric heat pump water heaters (HMWH)—are relatively straightforward
to analyze with a high degree of confidence. The potential impacts of other actions—like
advanced mobility strategies—are much more difficult to analyze, because causal
relationships for new technologies are not yet well understood, and because the
academic literature often used as a basis for these technologies generally lags the
technologies themselves.
As a result, these should not be taken as predictions of what will happen, but as a
portfolio of strategies that could potentially achieve the targets we set. (These
projections should be considered estimates within perhaps a +/-20% range.) The S/CAP
consultants have constructed these models to be transparent and flexible; it’s relatively
straightforward to modify assumptions and observe the effect those modifications have
on outcomes.
The target implementation levels and adoption rates shown here are aggressive, and
would require focused and consistent effort to achieve (for example, replacing most gas
water heaters at end-of-life with HPWHs, rather than a few). But these rates provide
one possible roadmap for achieving the 2030 target, and a basis for discussion of what
we choose to accomplish.
Transportation (City & Community GHG Emissions, mTCO2e)
Strategy Name Selected?
(Yes/No) Assumptions Implementation
Level
Target
Year
Annual
Adoption
Rate
BAU -
Transportation
Build out bike
network Yes
Convert all class II bike
lanes to protected bike
lanes (PBL)
Increase bike boulevard
mileage from 22-32 miles
Expand bike share to 28
stations per square mile
40% 2030 2.7%
Expand transit
facilities and
services
Yes
Caltrain modernization
ridership targeted in 2040
achieved
Expand SamTrans, VTA and
Palo Alto shuttles by 100%
El Camino Real and
Dumbarton Bus Rapid
Transit
60% 2030 4.0%
Facilitate shared
transport Yes
Dynamic ridesharing based
on San Francisco casual
carpool rates, with Palo
Alto share proportionate to
Palo Alto Caltrain ridership
60% 2030 4.0%
Provide eco-
pass/universal
transit pass
Yes
Expanded Universal Transit
Pass (UTP) - Caltrain
GoPass, SamTrans
Way2GoPass, and VTA
Ecopass, for all residents
and employees
100% 2030 6.7%
Utilize parking
pricing and
management
approach
Yes
All employment sites
institute parking pricing,
parking cash-out, parking
feebate equivalent to
market price of parking
Full cost pricing of
residential parking
(unbundling or eliminating
minimum parking
requirements)
50% 2030 3.3%
Adopt a
"balanced
community"
approach for
growth
Yes
Target a jobs-housing
balance of 1.44 with growth
in specific areas (e.g.,
Stanford Research Park,
downtown core, Stanford
Shopping Center, etc).
15% 2030 1.0%
Convert Palo Alto
vehicles to EV Yes
Incentives, rebates and
programs to encourage
electric vehicle adoption by
Palo Alto residents
90% 2030 6.0%
Convert all other
vehicles to EV Yes
Offer charging stations, and
other incentives for people
coming into Palo Alto to
drive EVs
80% 2030 4.0%
Carbon offsets No Purchase carbon offsets 0% 2030
Natural Gas (City & Community GHG Emissions, mTCO2e)
Strategies Selected? (Yes/No) Implementation
Level
Target
Year
Annual
Adoption
Rate
BAU - Natural Gas
Residential water heating
electrification Yes 100% 2030 7%
Residential space heating
electrification Yes 70% 2030 5%
Commercial water heating
electrification Yes 85% 2030 6%
Commercial space heating
electrification Yes 85% 2030 6%
Commercial cooking electrification Yes 50% 2030 3%
Restrict natural gas hook-ups/
require ZNE new construction Yes 100% 2030 100%
Carbon offsets No 0% 2030 0%
Biogas No 0% 2030 0%
Page 1 of 2
2
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: FEBRUARY 3, 2016
SUBJECT: Discussion of Pilot Approach for Commissioner-Initiated Placement of Items on
Utilities Advisory Committee Agendas, Distribution of Informational Materials
______________________________________________________________________________
RECOMMENDATION
The Interim Director of Utilities (Interim UD) recommends that the Utilities Advisory
Commission (UAC) discuss this report on a proposed pilot approach for managing placement of
Commissioner-initiated topics on the UAC agenda, and distribution of informational material
among Commissioners as a supplement to existing rules established by state law, the Palo Alto
Municipal Code and the UAC Bylaws.
BACKGROUND
At its January 13, 2016 meeting, the UAC briefly identified the topic of how Commissioner -
initiated issues are agendized and shared with the Commission as a whole, eith er as
informational items or for discussion. The Interim UD agreed to agendize this topic for
discussion at the next UAC meeting.
UAC meeting agendas and information sharing practices are subject to requirements of the Palo
Alto Municipal Code Chapter 2.23 and applicable California law, including the Brown Act,
California Government Code Section 54950 et seq. The City Council has further approved
Bylaws for the UAC, and Section 7 of the UAC Bylaws define protocols for setting meeting
agendas and for Commissioners to request future items for discussion.
CONSIDERATIONS
Feedback from Commissioners has indicated a desire to better enable discussion of emergent
issues, tempered by an appreciation for the need to allow staff to focus on efficient operation
of Palo Alto's utilities. Recognizing that balancing these potentially competing priorities may
change over time, the Interim UD believes that, on a pilot basis, establishing written criteria and
expectations could be a helpful step to clarify roles and meet expectations over the next several
Commission meetings. These criteria could be adjusted as needed over time to maintain
consensus with the Commission and reflect experience in practice.
The Interim UD w~uld therefore like to proceed with the following understanding:
1. Commission-Initiated Topics on UAC Agenda
a. Using either the "Commissioner Memo" or Rolling Calendar methods specified in the
UAC Bylaws, two or three Commissioners may propose a topic for UAC discussion.
Proposed topics should fall within the UAC's purposes and duties (PAMC section
2.23.050).
b. Upon receipt and finalization of a Commissioner memo (using procedures in the Bylaws)
or per the rolling calendar, the Interim UD will agendize the topic. At the subsequent
month's UAC meeting, the Interim UD will identify where the topic has been placed on
the rolling calendar and how it will be agendized . If the item cannot be agendized, the
reason will be identified for the Commission .
c. The topic will be agendized for discussion (not action) if the memo has the potential to
adversely impact staff resources or work priorities. The Interim UD will consider time
and agenda management in placement of Commissioner-initiated topics on future
agendas. Given limited staff availability, the UAC's discussion may proceed without a
presentation or attendance by City staff most knowledgeable on a topic.
d. The item If UAC discussion leads to a desire for action on a discussion topic, the Interim
UD will evaluate the topic and identify a future agenda for follow-up discussion and
possible action. This will then be reflected on the rolling calendar.
2. Distribution of Information to Commissioners
a. A Commissioner may send information to the UD for distribution to the UAC.
b. The Interim UD will review the material to confirm that it falls within the scope of the
Commission's responsibilities. In general, material distributed should be limited to
factual or newsworthy information, and avoid advocacy or promotional content.
Materials that require staff research or review prior to distribution (such as for technical
accuracy or legal considerations) should not require more than one hour of staff time.
c. Based on this review the Interim UD will distribute the information to the UAC or
consult with the UAC Chair and discuss with the Commissioner reasons for not
distributing the information. When distributing materials to the UAC, the Interim UD
will also identify a method for providing the material to the public.
NEXT STEPS
The UAC will discuss this approach at its meeting on February 3rd_ The Interim UD requests
Commissioner feedback on this pilot approach, and will proceed accordingly.
PREPARED BY:
ED SHIKADA
Assistant City Manager/Interim Director of Utilities
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