HomeMy WebLinkAbout2016-08-31 Utilities Advisory Commission Agenda PacketNOTICE 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 Meeting held on June 1, 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.Selection of Potential Topics for the Joint Study Session with Council Action
2.Recommendation that Council Approve a Carbon Neutral Natural Gas Action
Portfolio Plan to Achieve Maximum Carbon Neutrality Using a Combination
Of Offsets and Biogas in the Gas Supply Portfolio by Fiscal Year 2018 with No
Greater than 10¢/Therm Rate Impact; and Related Termination of the Palo
Alto Green Gas Program
3.Discussion and Status Update Concerning City Initiatives on Fiber-to-the-Premises and Discussion
Wireless Network Issues, Including Work Related to Potential Google Fiber and AT&T
GigaPower Deployments and Co-Build Opportunities in Palo Alto
4.Staff Recommendation that the Utilities Advisory Commission Recommend that the Action
City Council Adopt a Resolution Amending Utility Gas Rate Schedules G-1, G-1-G, G-2,
G-2-G, G-3, G-3-G, G-10, and G-10-G to Include a Separate-Transportation Charge
as a Discrete Pass-Through Component
5.Update and Discussion on Impacts of Statewide Drought on Water and Discussion
Hydroelectric Supplies
6.Selection of Potential Topic(s) for Discussion at Future UAC Meeting Action
X.NEXT SCHEDULED MEETING: October 5, 2016
UTILITIES ADVISORY COMMISSION - SPECIAL MEETING
WEDNESDAY, AUGUST 31, 2016 – 7:00 P.M.
COMMUNITY MEETING ROOM
Palo Alto City Hall – 250 Hamilton Avenue
Chairman: James F. Cook Vice Chair: Michael Danaher: Commissioners: Arne Ballantine, Lisa Forssell, A. C. Johnston, Judith Schwartz and Terry Trumbull Council Liaison: Gregory Scharff
XI.INFORMATION REPORTS A complete list of informational reports provided to the UAC can be viewed at
http://www.cityofpaloalto.org/gov/boards/uac/reports/default.asp and at City Hall, 3rd Floor, Utilities
Administration office. Information reports cannot be discussed during UAC meetings, in compliance with Govt.
Code Section 54954.2(a)(2
Utilities Advisory Commission Minutes Approved on: Page 1 of 14
UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF JUNE 1, 2016
CALL TO ORDER
Vice Chair Cook called to order at 7:00 p.m. the meeting of the Utilities Advisory Commission
(UAC).
Present: Vice Chair Cook, Commissioners Ballantine, Danaher, Forssell, Johnston, Schwartz, and
Trumbull
Absent: Council Liaison Scharff
ORAL COMMUNICATIONS
Resident Bob Lenox summarized the snags he has had getting solar on his roof, which caused
the cost to increase by 40%, making the project not economically viable. The issue is that long
driveway is beyond the maximum distance triggering the need to install a new utility pole
according to City requirements.
Interim Director Ed Shikada said that he heard about this issue and will follow up with the
resident.
APPROVAL OF THE MINUTES
Commissioner Schwartz moved to approve the minutes from the May 4, 2016 UAC special
meeting and Commissioner Danaher seconded the motion. The motion carried unanimously (7-
0) with Vice Chair Cook, Commissioners Ballantine, Danaher, Forssell, Johnston, Schwartz, and
Trumbull voting yes.
AGENDA REVIEW AND REVISIONS
None.
REPORTS FROM COMMISSION MEETINGS/EVENTS
Commissioner Schwartz participated in low income utility workshop in Pittsburg. While Palo
Alto may not have an extensive problem in this area, the ideas discussed were valuable as rate
increases expected this year will be an issue for some customers and she advised that the
impact on low income customers should be part of the UAC’s discussion when discussing rate
adjustments in the future.
UTILITIES DIRECTOR REPORT
1. Finance Committee action: On May 17, the Finance Committee reviewed the proposed
Electric and Gas Financial Plans and rate adjustments. The Finance Committee agreed
DRAFT
Utilities Advisory Commission Minutes Approved on: Page 2 of 14
with the UAC and unanimously supported the plans and rate adjustment proposals.
Council will make a final decision on all rate adjustments at the budget hearing on June
13.
2. Frontier Solar Project Ribbon Cutting: On May 18, the developer of the 20 megawatt
Frontier Solar project hosted a ribbon-cutting ceremony at the project site near the
town of Newman. Utilities staff attended and were given the honor of officially cutting
the ribbon – giant scissors and all! The project is expected to begin commercial
operations in early June. Frontier Solar will be the City’s third utility-scale solar project
to begin operating. Two more solar projects are expected to begin operations by the
end of 2016 and the sixth project is not expected to be operating unti l 2021.
3. City to Give $1 Million in Prize Money to School District if Palo Alto Wins Georgetown
Competition: On May 9, the Palo Alto City Council approved giving $1 million to the
Palo Alto Unified School District if the City wins the $5 million Georgetown University
Energy Prize Competition. This national competition is set up to drive innovation in
programs and education delivered by local governments to increase energy savings
among residential, municipal, and public school utility customers. The City is hoping to
increase its success by partnering with the school district to identify and prioritize
energy efficiency and sustainability projects that involve students. The City hopes
schools can include projects in class curricula, allowing students to come up with ideas
to look for ways to save energy and win the "Million Dollar Challenge" for the schools.
The school district may use the $1 million prize money for new educational programs for
energy efficiency, putting solar on schools, or upgrading light ing and HVAC systems. The
City is engaging a team of high school students through “Get Involved Palo Alto,” a City -
sponsored internship program, to generate ideas to help students, staff, and family
members examine more closely their home energy use and try to reduce consumption.
4. Events and Workshops: On May 21, the City hosted a free residential graywater
workshop that taught close to 60 attendees how to simply and safely reuse water from
sinks, showers and clothes washers to irrigate plants and trees. Attendees learned how
to install a “laundry to landscape” graywater system, which qualifies for a rebate from
the City. Installing such a system is a “do-it-yourself” type project, and is an easy way to
reduce use of potable water in the landscape, while keeping our trees healthy and
green!
The July 1 UAC meeting has been cancelled. The next regularly scheduled meeting is August 3.
Commissioner Schwartz asked if the schools will do what they plan to do even if the City
doesn’t get the prize. Shikada said that they will try to help the City win the prize by improving
energy efficiency regardless.
COMMISSIONER COMMENTS
Vice Chair Cook welcomed the three new commissioners to the UAC.
Utilities Advisory Commission Minutes Approved on: Page 3 of 14
UNFINISHED BUSINESS
None.
NEW BUSINESS
ITEM 1: ACTION: Election of Officers
Commissioner Schwartz nominated Vice Chair Cook to be the Chair of the UAC . There were no
other nominations for the Chair.
ACTION:
The UAC voted unanimously (7-0) to elect Vice Chair Cook to the position of Chair of the UAC
with Vice Chair Cook, Commissioners Ballantine, Danaher, Forssell, Johnston, Schwartz, and
Trumbull voting yes.
Commissioner Ballantine nominated Commissioner Danaher to be the Vice Chair. There were
no other nominations for the Vice Chair.
ACTION:
The UAC voted unanimously (7-0) to elect Commissioner Ballantine to the position of Vice Chair
of the UAC with Chair Cook, Commissioners Ballantine, Danaher, Forssell, Johnston, Schwartz,
and Trumbull voting yes.
ITEM 2. ACTION: Utilities Advisory Commission Discussion on Alternatives to the Existing
Voluntary Opt-In PaloAltoGreen Gas Program Including an Opt-Out Mechanism and a Carbon-
Neutral Natural Gas Portfolio
Senior Resource Planner Karla Dailey summarized the written report.
Commissioner Schwartz asked why is was so expensive just to convert from opt-in to opt-out
since the rate is not being changed. Dailey explained that changes to the billing system made up
the bulk of costs. Dailey pointed out that, after the initial investment, administrative costs drop
significantly for the opt-out program. Commissioner Schwartz stated that the cost estimate
seemed very high and questioned the advisability of making changes to the billing s ystem,
which is planned for replacement.
Interim Director Shikada said the timing of an opt -out program should take into account the
legacy billing system.
Commissioner Trumbull asked about the bill impact. Dailey confirmed the bill impact is only for
those customers in the voluntary program.
Commissioner Ballantine asked about the customer breakdown. Dailey said 50% is residential,
30% is small commercial and 20% is large commercial.
Commissioner Forssell asked about the variability for a typical resid ential customer. Dailey said
some residential customers probably have much higher bills.
Utilities Advisory Commission Minutes Approved on: Page 4 of 14
Dailey described the types of customers with respect to an opt-out program structure: active
supporters, passive supporters, unaware supporters, ambivalent customers, unaware
opponents, passive opponents, aware opponents and active opponents. Dailey said staff is
concerned about the customers who would be opposed to an opt -out structure, but do not opt-
out right away for whatever reason leading to resentment and poor customer relations at a
later date as well as issues around refunding the PAG Gas fee should a customer demand that.
Commissioner Schwartz said that bill impact was so small that it shouldn’t cause harm to most
customers and, if it was easy to opt-out, an opt-out program shouldn’t be a problem for
anyone. If there were customers that found out later and were mad, the program could be
designed to allow for refunding those customers. Dailey said that this is problematic.
Commissioner Schwartz said that the risk to consumer attitude seems not to be a large issue.
Continuing with the presentation, Dailey said that another option is to convert all, or a portion
of, the natural gas portfolio to carbon neutral supplies.
Commissioner Johnston asked if there would be any mechanical issues with running biogas
through the pipeline. Dailey said that there would be no problem since biogas must meet the
pipeline quality standards. Commissioner Ballantine added that the quality requirements
depend on whether the gas is used for generation directly, or put in the pipeline—and the
biogas can be mixed with natural gas to meet the pipeline quality standards.
Chair Cook asked how the $1/therm incremental cost of biogas compared to the cost of natural
gas. Dailey said that the current commodity cost of natural gas is about 20 cents per therm.
Commissioner Johnston asked if there were limits to the number of offsets available . Dailey
said that there would be sufficient offsets for our portfolio.
Chair Cook asked staff to describe the offsets. Dailey said that the protocols for the offsets are
all California Air Resources Board approved although the offsets themselves are not CARB
certified. She explained the extra CARB certification would be needed for offsets used for
compliance purposes rather than a voluntary program.
Public Comments
Sandra Slater stated that she and Lisa Van Dusen have prepared a letter with comments on the
issue. She said that she supports the opt -out program, but her favorite is to have the gas
portfolio carbon neutral. She said that climate change is a huge problem and time is getting
short. She said that offset purchases can be a bridge in a plan to purchase biogas . She said that
the success of the PaloAltoGreen program proves that there is large support for such a
program. She also referenced the 80% GHG reduction goal by 2030 Council directive. She
advised that we need to wean ourselves off of fossil fuels and move to electrification . She said
there will be a few people, maybe as many as a h undred, who will be opposed, but a small
number of people should not dictate the direction of the utility. She said that it would be nice
to have local offsets, but supporting methane capture projects outside of Palo Alto is valuable
since we have a global problem.
Utilities Advisory Commission Minutes Approved on: Page 5 of 14
Lisa Van Dusen said that the main point is that there is fundamental responsibility to take
control of the impact caused. She advised that the City should take a bold action, noting that
nothing is perfect. The goal is to maximize carbon reductions, minimize the potential for
grumbling customers, minimize the impact to ratepayers, and allowing customers to have a
choice. She said that higher gas prices also acts to encourage additional gas use efficiency.
Commissioner Johnston said that the City should move away from the opt-in program design
and advised that it should be easy for customers to opt out of the program.
Commissioner Ballantine supported the option of moving to a carbon neutral gas portfolio,
rather than transitioning to an opt-out program. He said that during the rate adjustment
process, the larger users had a smaller percentage impact than the lower using customers,
which is due to the fixed costs to operate the system. He said that it is not free to have a carbon
neutral electric portfolio. He said that the move to electrification may be problematic if the
electric portfolio is carbon free, but the gas portfolio isn’t.
Commissioner Forssell asked if he program would only apply to residential customers only . She
asked if we first go to an opt-out program and allow customers to opt out, then transition to a
portfolio could be a problem since you first allow them out, then force them in . She said that
we could start with carbon neutral portfolio that is not 100%, but could transition there over
time.
Commissioner Schwartz said that all points of view are represented in Palo Alto. She said that
she is in favor of an opt-out program since this is an opportunity to practice how to do that . If
there is no way to opt out, this could be a problem for some customers who will create a large
issue in the community as it has been elsewhere with respect to having smart meters.
Commissioner Trumbull said he did not opt -in to the current program. He was also concerned
about opt-out as a transition to carbon-neutrality.
Vice Chair Danaher said he stated at the prior UAC meeting on the subject that he was
supportive of a carbon neutral gas portfolio and, after seeing the analysis, he is even more
supportive of that option. Danaher asked if there was any negative feedback for the carbon
neutral electric portfolio. Assistant Director Jane Ratchye said that there was no negative
feedback that she knew of regarding the carbon neutral electric portfolio . Vice Chair Danaher
said that there could be a cost for morality and that he supports moving to a carbon neutral
portfolio rather than moving to an opt-out program.
Chair Cook asked Chief Sustainability Officer Gil Friend whether the choices would support the
City’s carbon goals. Friend noted that natural gas represents 25% of the City’s GHG emissions.
Interim Utilities Director Ed Shikada noted that there was no staff recommendation for this
item and views this discussion as one of values . He said that a survey of the community could
be done to determine the community’s view on the issue.
Utilities Advisory Commission Minutes Approved on: Page 6 of 14
Chair Cook noted that staff did not provide a recommendation as it usually does and said he
thought that this was appropriate in this case . He stated that we are talking about this at a time
when gas rates are very low and also at a time when rates across the board are rising
significantly this year. He said that he had not heard any protest regarding carbon neutrality for
electric supplies, but says that a transition to carbon neutral gas can start and increase over
time. It would be perhaps most advisable to start with offsets first and move to renewable
biogas over time. He would recommend #3 and move to #4 by 2030. He would like to see the
costs for these options.
Commissioner Schwartz said that the issue with smart meter rollout happened when there
were many missteps caused by a rate increase, very hot weather and the new meters were
blamed. She said that rising rates are not a good time to introduce a new program that costs
more. The downside is that the program could fail spectacularly if it becomes the rallying point
for complaints.
Commissioner Schwartz advised that a survey could be taken to determine the level of support.
Chair Cook said he appreciated the additional options presented by staff. He pointed out that
gas prices are currently very low and rates in the five utilities are increasing. Chair Cook said he
was not prepared to adopt a carbon -neutral program supplied with only biogas. He said the
rate impact would be less than the opt -in or opt-out options for a carbon-neutral portfolio.
Dailey confirmed that administrative costs for the portfolio are near zero. He said he prefers
starting with offsets and slowing adding biogas to the carbon -neutral portfolio. Chair Cook
recognized that there will be some complaints but said the rate imp act is low and the impact of
a carbon-neutral portfolio is high.
Commissioner Trumbull stated that he was supportive of having more detail available for a
program before going to Council with a final recommendation.
ACTION:
Vice Chair Danaher made a motion that the UAC recommend that Council adopt a carbon
neutral gas portfolio and direct staff to develop an implementation plan . Commissioner
Trumbull seconded the motion. The motion passed (6-1) with Chair Cook, Vice Chair Danaher,
and Commissioners Ballantine, Forssell, Johnston and Trumbull voting yes and Commissioner
Schwartz opposed.
Vice Chair Danaher left the meeting at the conclusion of the discussion of item #2.
ITEM 3. ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend
the City Council Approve the Proposed Low Carbon Fuel Standard Credit Program, Including the
Use of Revenues From the Sale of Low Carbon Fuel Standard Credits
Senior Resource Planner Shiva Swaminathan summarized the written report. He said the overall
proposal is to reduce greenhouse gas (GHG) emissions by increasing the use of Electric Vehicles
(EVs) both by residents and by commuters. He noted that the majority of the City’s GHG
emissions are related to transportation. He said the Low Carbon Fuel Standard (LCFS)
regulations emanate from the Global Warming Solutions Act, AB32 in 2006 and aims to reduce
Utilities Advisory Commission Minutes Approved on: Page 7 of 14
the carbon intensity of transportation fuels . Staff projects that the electricity used to charge
EVs in Palo Alto is less than 1% of the total electricity used in the City currently, but is expected
to grow to about 5.5% of total citywide use. These projections are based on the 1,300 EVs
currently in the City (or 3% of the City’s vehicles) and the expectation that EVs will comprise 30-
60% of the total number of vehicles by 2030.
Commissioner Schwartz asked if the City gets the numbers of EVs from the Department of
Motor Vehicles (DMV). Swaminathan replied that the City gets the numbers from the California
Air Resources Board (CARB), which gets them from the DMV so the City gets a total number of
EVs registered in the City, but does not know where they are located. Swaminathan said that
the number can also be obtained from the number of vehicles that got rebates from the State
and that this is public information and available on the web.
Commissioner Forssell asked if the number of EVs includes both plug-in hybrids and all electric
(battery) vehicles. Swaminathan said that the numbers include all EVs that plug in.
Swaminathan says that the value of the LCFS credits for EVs is about $500,000 in 2016 and is
estimated to grow to $1 million per year in 2020. The credits for CNG use is expected to stay
flat at about $30,000 per year. Swaminathan showed the usage of the City-owned 30 EV
chargers noting that they are used by 4 to 6 charging sessions per year per charger and that the
total cost to the City for the electricity is about $40,000 per year, but that the charging is
currently provided for free.
Commissioner Ballantine noted that the 30 City-owned chargers do not serve very many EVs.
Swaminathan agreed and added that there are about 400-600 privately-owed chargers at
businesses and other locations in addition to all the chargers in private residences.
Commissioner Forssell asked if there is a time limit for parking at the City-owned charging
stations. Swaminathan confirmed that there is a time limit.
Swaminathan stated that the revenues from the sale of LCFS credits must be used to benefit
current and future EV owners. He discussed the options examined for using the revenues.
Several options were evaluated and the ones that are not preferred include providing a
discount for permit fees for chargers, cash rebates to EV owners, and providing free electricity
at the City’s charging stations. He noted that most of the investor-owned utilities including
PG&E and also the Sacramento Municipal Utilities District are planning to provide one -time
cash rebates directly to EV owners.
Commissioner Schwartz said that she did not support providing a rebate to EV owners and
asked if there was any justification for such a proposal. Swaminathan said that justification used
by those utilities who are planning to provide rebates is that the cr edits were generated by
those EV owners. Assistant Director Jane Ratchye added that the proposal is not to provide
these rebates, but the regulations require that the funds be used to benefit EV owners and
rebates do exactly that, which is why PG&E plans to do—a one-time rebate to EV owners who
generated the credits. Commissioner Schwartz said that more EV chargers would benefit EV
owners and it doesn’t make sense to give the money to those who already have made a
Utilities Advisory Commission Minutes Approved on: Page 8 of 14
decision to buy an EV. Swaminathan added that the community stakeholders also did not
support the proposal to provide rebates.
Chair Cook clarified that the money is supposed to benefit both current and future EV owners
so there is some reason to consider rebates. Chair Cook doesn’t necessarily support the idea,
but understands that it is a viable option.
Swaminathan stated that each EV owner generates 2 credits per year and that each credit is
worth from $100 to $120 so about $200 per year is generated by each EV registered in Palo
Alto. He said that another idea evaluated, but determined not be the best way to use the
proceeds, is to provide the energy at City-owned chargers for free.
Swaminathan described the items that are being proposed for the implementation in the near
term. These include providing rebates for Electric Vehicle Supply Equipment (EVSEs, or
chargers) for locations other than single-family residences, discounted Utilities fees related to
any required service upgrades, discounting off -peak rates, incentives to EV owners that provide
access to charging information, and education and outreach programs.
Chair Cook asked if the City would be eligible for these rebates for EVSEs since it would benefit
EV owners to have more chargers and noted that employment locations such as the schools
would be good places for charger installations since employees would be able to charge while
at work and that would encourage them to purchase an EV. Swaminathan said that these
would eligible and that the initial program restricts the rebates to 3 chargers per site, but that
for schools, since they have many campuses, the initial program would allow schools to get
EVSE rebates of up to $30,000 per year. He said that the schools indicated that EV chargers are
viewed by the schools as a way of attracting good teachers since they may not live in Palo Alto.
Swaminathan described the proposal to provide discounted Utilities fees related to any
required service upgrades since sometimes, a new transformer may be required in a
neighborhood as a result of a new EV charger being installed.
Commissioner Ballantine asked if this would apply when the next EV charger installation would
require a transformer upgrade. Swaminathan confirmed that this is exactly the situation that
would trigger this upgrade and the proposal is to partially fund the additional cost. He agreed
that this situation may be more prevalent in the future as the number of EVs rise.
Swaminathan described the idea to use LCFS funds to give a larger off-peak price discount for
EVs to charge at night. He said that there are billing issues with this, but it is an idea that will be
explored more in the future.
Commissioner Schwartz asked why we would want to discount non -solar electrons to
encourage charge EVs at night since the carbon conte nt of the electricity should be a
consideration. Swaminathan said that the “off -peak” timing may change over time, but there
could also be impacts on the distribution system that call for encouraging off-peak charging. He
noted that the last customer installing a charger may trigger the need for a distribution system
upgrade that could be avoided by shifting charging to night -time, or off-peak hours. He said
Utilities Advisory Commission Minutes Approved on: Page 9 of 14
that energy storage is also coming and could assist in effectively moving solar energy to off -
peak hours.
Commissioner Johnson said that if a discount for off-peak energy use was provided, how would
the utility know if the energy used off peak was for EV charging, or for any other energy use
such as a clothes dryer used at night. Swaminathan acknowle dged that the utility would not
know that, or try to determine that, and it would consider the point when designing the
discount. Swaminathan said that the utility does not want to install a separate meter for EV
chargers.
Swaminathan said that another idea is to provide an incentive to EV owners who are willing to
share information about their EV charger profile.
Commissioner Schwartz asked if interval meters would be provided to access that type of data.
Swaminathan said that the information would come directly from the charger itself and interval
meters would not be needed.
Commissioner Johnston asked if a rebate would be provided for those buildings that are
required to install EVSE. Swaminathan said that those would not be eligible for rebates .
Commissioner Johnston asked if a building owner was required to put in 10 chargers, but
decided to put in more, could the owner get the rebate for the additional chargers .
Swaminathan said that additional chargers beyond what is required would be eligible.
Commissioner Ballantine asked if there was any consideration to providing an incentive to
direct DC charging, or at least providing some funds for research and development for such
activities as vehicle-to-grid infrastructure. Swaminathan said that staff has not considered this
for these funds, but there may be some funds for that type of work in the evaluation of storage
alternatives that is currently being done. He added that there are a number of storage systems
being installed at residences with the potential to use DC power.
Swaminathan said that LCFS credits are also available for compressed natural gas (CNG)
vehicles. Staff proposes to use those funds to fund improvements at the City’s CNG station or
subsidize the CNG dispensed.
Commissioner Johnston said that there is the potential to dramatically increase EV adoption
with more chargers available.
Commissioner Ballantine said that he likes the idea of supporting infrastructure build-out and
providing more EV chargers where employees are.
Commissioner Forssell supports the rebates for the EVSEs, especially for multi-family, mixed-
use and commercial buildings. She asked if a requirement for receiving a rebate for chargers be
that they be communication enabled to allow collection of data since it is important to
understand EV charging patterns. Swaminathan noted that the cost for a “dumb” charger is
about $200 and the cost for “smart” (communication-enabled) chargers is $2000 so we didn’t
want to require them. Also dumb chargers, or even Level 1 chargers, may be very appropriate
Utilities Advisory Commission Minutes Approved on: Page 10 of 14
in some situations such as a workplace or school where employees park and can charge all day
and do not need Level 2 chargers. Commissioner Forssell said that discounting night-time rates
for charging may not be the best message if off-peak times change since people have a
tendency to learn a behavior once and there may be difficulty if the message about the optimal
time to charge changes. She added that she supports educational and outreach activities.
Commissioner Schwartz said that the rebate offered for providing information may be
unnecessary as most people would volunteer that information to the City to be helpful . She
said that people will most likely do this if asked and would not be motivated to do so by a
rebate and that the City can just appeal for the information and likely would receive it. She said
that the money could be better spent on additional chargers for schools and non -profits
organizations that could use them for their fleet veh icles.
Chair Cook said that it may be difficult to spend all the money in a year’s time and expects that
staff will return with additional ideas to spend the money generated. He suggested a group -buy
could be used to reduce the cost of chargers for multi-family facilities, schools, etc.
Swaminathan said that the underlying assumption is that the Utility will take a hands -off
approach and does not intend to buy or own the chargers, unlike what PG&E plans to do by
using ratepayer money to get into the business of building charger infrastructure. Chair Cook
agreed that the City could facilitate the purchase of EVs without owning them.
ACTION:
Commissioner Trumbull made a motion that the UAC recommend that Council LCFS program
and the use of revenues from the sale of LCFS credits and requested that staff explore the
suggestions the UAC discussed for the program. Commissioner Johnston seconded the motion.
The motion passed unanimously (6-0) with Chair Cook, and Commissioners Ballantine, Forssell,
Johnston, Schwartz and Trumbull voting yes and Vice Chair Danaher absent.
ITEM 4. ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend
that the City Council Amend the Net Surplus Electricity Compensation Rate (E-NSE-1)
Chair Cook asked that the staff presentation on the item be kept to a minimum as he
understands that this item is administrative in nature and has a very small dollar impact on the
utility. Assistant Director Jane Ratchye confirmed that this rate affects a very small group of
customers and that the annual impact is quite small . She said that basically the proposal is to
increase the rate for surplus generation to use the same methodology that is used for the Net
Energy Metering (NEM) successor rate and only impacts those customers who generate more
energy on-site than they use on-site over a 12-month period. For most NEM customers are not
affected by the change since they usually generate less energy than they use over a 12-month
period.
Acting Rates Manager Eric Keniston stated that the proposal is to increase the Net Surplus
Electricity Compensation Rate (E-NSE-1) from 5.841 cents per kilowatt-hour (kWh) to 7.21
cents/kWh for the amount of energy that is generated that is surplus to a customers’’ needs
over a 12-month period. The methodology is changed from the current rate, which is based on
the cost of renewable supplies, to be consistent with the NEM successor rate, except that it
Utilities Advisory Commission Minutes Approved on: Page 11 of 14
looks back 12 months using actual costs, while the NEM successor rate looks forward 12
months using projected costs.
Commissioner Johnston asked how this program is different from the Palo Alto CLEAN program .
Ratchye explained that the CLEAN program pays for 100% of the solar generation at the
established price for the contract term, but that for customers with net energy metering, the
majority of the generation is used onsite to meet the customer’s energy usage and this rate is
only for buying the generation that exceeds the customer’s usage over a 12 -month period.
Chair Cook said that has a PV system on his roof and does not have surplus energy generation,
but may in the future and asked the City Attorney if there would be a personal conflict of
interest since he could be a beneficiary of this rate . Deputy Assistant City Attorney Jessica
Mullan recommended that any potential conflict of interest be discussed in advance of the
meeting. She said that the considerations include whether the actions would have an impact on
a commissioner’s personal finances and whether that impact would be foreseeable and
material and whether you would be impacted differently from any member of the public.
ACTION:
Commissioner Schwartz made a motion that the UAC recommend that Council amend the Net
Surplus Electricity Compensation Rate Schedule (E-NSE-1) as proposed. Commissioner
Ballantine seconded the motion. The motion passed unanimously (6-0) with Chair Cook, and
Commissioners Ballantine, Forssell, Johnston, Schwartz and Trumbull voting yes and Vice Chair
Danaher absent.
ITEM 5. DISCUSSION: Cross-Bore Program Update: Phase 2 (Presentation)
Assistant Director Dean Batchelor said that the UAC asked about the cross-bore inspection
program during the budget process and this presentation was prepared to ensure that the UAC
understands the program and to answer any questions about the program.
Commissioner Trumbull stated the approach and delivery of this presentation should be taken
from the perspective of having no previous or background information .
Senior Engineer Romel Antonio said that the purpose of the presentation is to provide an
update on the cross-bore efforts to date and have an open discussion at the end of this
presentation with a goal to establish a solid framework of understanding about the program
and consensus going forward. He said that the three key-takeaways are 3-fold: 1) Understand
the significance in why we’re doing what we’re doing; 2) recap where we’ve been and where
we’re at with evaluating and quantifying the risks to the Phase 1 work; 3) present a roadmap
for Phase 2 of where we’re heading. So, what’s a cross-bore? (material props were referenced
and provided to the commissioners); a cross-bore is a condition which exists when a new pipe
such as a gas main or service is installed by trenchless construction methods through an
intersecting different utility line, as shown by the sewer main example on Channing Ave. shown
on the slide. Trenchless construction methods for utility service lines and mains installation has
been employed since the 1970s, nothing new. The touted benefits to trenchless installation
techniques are that they’re less expensive and require minimal surface disruption in
comparison to traditional open-cut construction methods. Antonio reviewed the City’s cross-
Utilities Advisory Commission Minutes Approved on: Page 12 of 14
bore safety program. He said that since 1989, polyethylene gas service lines have been installed
in the City through horizontal directional drilling installation methods and that other utilities
such as water followed suit in 1996. He said that gas service pipe cross-bores through
wastewater laterals can cause backups and that efforts to clear these blockages with
mechanical equipment, commonly used by plumbers, may damage cross -bored gas lines
causing natural gas to leak and migrate up the sewer lateral, possibly leading to property
damage, injury, and or even death.
Antonio said that the City issued a request for proposals in April 2011 along with extensive
communications and public outreach. In July 2011, Council awarded a contract to Hydromax
USA, Inc. for Phase 1 of the Cross-Bore Investigation Project with a total budget of $3.8 million.
The project was designed to ensure the safety of the City’s customers and residents, reduce risk
and liability, find and eliminate legacy cross-bores and repair damaged facilities, and create a
searchable video record system for all inspections.
Antonio said that of Palo Alto’s approximate 18,040 total sewer laterals, 13,022 sewer laterals
were inspected as of the end of 2013. He said that 26 gas cross-bores and a few cross-bores for
electric, water, storm drain and telecom were discovered and corrected. The inspected sanitary
sewer laterals were categorized into the “Completed” or the “Efforts Exhausted” categories. Of
the 13,022 inspected laterals, 7, 166 were Completed—they were fully investigated and cross-
bore was not found and property clearance form was filed . The 5,856 sanitary sewer laterals in
the Efforts Exhausted category, were not fully inspected due to either maintenance or
construction issues. To complete the inspection of laterals in Efforts Exhausted category,
construction or maintenance work is required to remove the impediment conditions
encountered which may include buried cleanouts, roots, offset (angled) pipes, and no access in
the private and public segments of the laterals, thus preventing proper inspection completion
of the laterals. As of December 31, 2013, approximately 28% of the total laterals were not
investigated (5,018), giving rise to the current Phase 2 efforts.
Antonio said that staff has prioritized evaluations of the sanitary sewer laterals based on the
following Prioritization Criteria: a) installation date; b) high priority/occupancy properties such
as schools and hospitals; c) Excess Flow Valve (EFV) for gas services. CPAU began installing
excess flow valves in 1999 which can stop the flow of gas when the volume increases beyond a
pre-set rate, which would occur if a service pipeline is severed during an event such as a dig-in
or an earthquake; d) gas service and horizontal separation distance between the sanitary sewer
lateral; e) gas main crossings of sanitary sewer laterals; and f) gas service material made of PE
as it was typically installed through trenchless construction methods. Using this criteria and
lessons learned from Phase 1, staff determined that the highest priority laterals for Phase 2 fell
into four groups: 1) Gas mains crossings; No EFV; high priority properties; PE gas service
crossings; 2) EFV; high priority properties; 3) No EFV: PE gas service up to 10 LF (linear feet); and
4) EFV: PE gas service crossing. Staff performed a risk analysis on the sanitary sewer laterals
that were not completed during Phase 1, including prioritization of the sewer laterals identified
in the “Not Completed” category, to establish the Phase 2 road map. Upon Phase 2 completion,
staff will re-evaluate the risk analysis of sanitary sewer laterals for Phase 3 implementation ,
which is expected in FY 2020.
Utilities Advisory Commission Minutes Approved on: Page 13 of 14
Antonio proceeded to state that this recommendation is consistent with the Council approved
Utilities Strategic Plan, consistent with Rule and Regulation 23, and with the Finance Council
approved budget. Quote which captures the entire efforts to date and in going forward is from
Winston Churchill, “It is not enough that we do o ur best; sometimes we must do what is
required.” This concludes the presentation and welcome the Commission for further
discussion.
Commissioner Ballantine inquired the City of San Jose is moving to prohibit directional drilling .
Is this something we are looking at?
Engineering Manager Robert Item stated San Jose is in the PG&E territory. PG&E has been
looking at ways to replace their pipes in the same location by bursting them . We looked at this
methodology too. Typically we replace blocks at a time during our CIP projects, which would be
difficult to keep our customers from losing gas service. It would work for short blocks. To get
back the original question directional drilling is cheaper and we will check that laterals to
confirm that there is not a crossbore. During Phase 1 of the project we found 2 instances where
the gas line was ‘cross trenched’.
Assistant Director Dean Batchelor further expounded that typically gas mains are placed on one
side of the street. The longer side services would require us to trench the full cross section of
the street and into their property, which can be very disruptive and costly.
Utilities Director Ed Shikada said that he has discussed this project with Dean and have asked
the Auditor’s office to review the last con tract to improve it.
Commissioner Ballantine said that he understands the need for automatic closing valves (EFV)
on gas services.
Robert Item discussed the issues that occurred during the investigation . The liability associated
with gas crossbores can be very high. As you may have heard about some of the gas explosions
around the US the liability can be in the millions of dollars. Unfortunately there is a value placed
on human’s lives. We learned from the Phase 1 portion of the project that we were a little too
idealistic thinking that we could clear most of the laterals by CCTV. Even with the multiple levels
of QA/QC there is still a slight chance of missing something . There was a picture that shows a
sewer lateral with two bends and the gas service crossing underneath it in two spots. When it
was identified the contractor had three people review the video and found that only 1 of the
three spotted the gas service due to a sag in the line. There was only one frame where the
yellow was visible. We might have 99.99% certainty on the completed laterals, but that is not
100%. To get to the next level 99.999% the costs rise exponentially. As we looked back on the
project to decide how to move forward we found that the cost of construction and inspection
to complete the remaining laterals was extremely high, about $18 million . We decided to
prioritize the remaining work. From Phase 1 we found that the contractor pressed their
equipment more than had been done anywhere in the US at that time . We were making long
lateral launches and the camera manufacturer came out several times to make additional
improvements to their product. We found that approximately one of every two laterals
requires some sort of construction . Phase 1 was an inspection only project and did not include
Utilities Advisory Commission Minutes Approved on: Page 14 of 14
construction. As you can imagine there are all types of situations out there . From the picture of
the two kids on a blanket with an ‘X’ marking the crossbore in front of them an assessment of
lining up the gas meter and the main and the sewer shows that they have a significant distance
between them. The crossbore is actually on a branch from the sewer that goes to a neighboring
house. We found one house that the sewer wrapped around three of the sides of the house.
ITEM 6. DISCUSSION: Update and Discussion on Impacts of Statewide Drought on Water and
Hydroelectric Supplies
For the benefit of the new commissioners, Senior Resource Planner Karla Dailey explained that
staff has provided updates on the drought since it intensified and the Sta te took several
unprecedented actions and imposed emergency water use regulations. She explained that this
year has had above average precipitation and that San Francisco has received much more water
in storage than in the past several years. Assistant Director Ratchye pointed out that San
Francisco has been able to capture two years of supply this year so far which far exceeds the
water captured in recent years. She noted that the reservoirs and groundwater in the state are
in different positions depending on the location with the southern part of the state in poorer
position than the north.
Dailey said that the State Water Resources Control Board adopted a new regulation on May 18,
2016 removing the mandatory water use reduction targets imposed by the State. Each agency
will now self-certify a water use reduction target based on a methodology outlined by the
State. Using that methodology, Palo Alto will have a 0% water use reduction target. San
Francisco, however, uses a more conservative water supply planning model and will ask
customers for a 10% voluntary reduction in water use. Dailey reminded the UAC that an
Ordinance will go into effect around July 7, 2016 expanding the number of permanent water
use restrictions. She said other restrictions mandated by the State are also in effect.
Dailey showed the analysis of the cost of carbon neutrality for the electric portfolio and pointed
out the cost of that program is still well below the rate cap.
ITEM 7. ACTION: Selection of Potential Topic(s) for Discussion at Future UAC Meeting
ACTION:
None.
Meeting adjourned at 10:05 p.m.
Respectfully submitted,
Marites Ward
City of Palo Alto Utilities
2
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: August 31, 2016
SUBJECT: Recommendation that Council Approve a Carbon Neutral Natural Gas Portfolio
Plan to Achieve Maximum Carbon Neutrality Using a Combination of Offsets
and Biogas in the Gas Supply Portfolio by Fiscal Year 2018 with No Greater than
10¢/Therm Rate Impact; and Related Termination of the Palo Alto Green Gas
Program
______________________________________________________________________________
Recommendation
Staff requests that the Utilities Advisory Commission (UAC) recommend that Council:
1.Approve a Carbon Neutral Gas Plan, enabling the City to achieve a carbon-neutral gas
supply portfolio starting in fiscal year 2018 with a rate impact not to exceed ten cents
per therm (10 ₵/therm); and
2.Terminate the PaloAltoGreen Gas program established by Resolution 9405.
Executive Summary
The proposed Carbon Neutral Gas Plan will achieve carbon neutrality for the gas supply
portfolio by Fiscal Year (FY) 2018 with a combination of high-quality environmental offsets
and physical “biogas” or “biomethane”. The proposed cost cap to implement the plan is
10₵/therm. Based on current rates, this equates to about a 10% gas rate increase.
The PaloAltoGreen Gas (PAG Gas) program was launched in December 2014. PAG Gas is a
voluntary program providing customers with the option to negate the impact of greenhouse
gas (GHG) emissions associated with their natural gas usage by purchasing environmental
offsets. Implementation of a carbon-neutral gas portfolio renders the voluntary program
redundant, therefore, suspension of PAG Gas is recommended when implementing the Carbon
Neutral Gas Plan.
Background
City’s GHG Emissions from Natural Gas
Table 1 below, based on data from the 2016 Earth Day report (Staff Report 6754), shows the
estimate for City and community GHG emissions for 1990, 2005, 2012, and 2015.
Page 1 of 17
2
Tab
le 1
Palo Alto Community and City Greenhouse Gas Emissions (in 000’s of Metric Tons of CO2e)
Emissions Category 1990 2005 2012 2015
Natural Gas Use 194 166 160 135
Electricity Use 186 160 75 0
Mobile Combustion * 332 372 320 330
Other ** 68 54 36 36
Total 780 752 591 501
* Consultant estimate based on population, employment, vehicle miles travelled and
vehicular emission profiles
** Includes landfill, refuse and Regional Water Quality Control Plant emissions
As shown in Table 1, GHG emissions from natural gas use in 2015 were reduced by 4,406 tons
due to the PAG Gas program. The bulk of the reduction in emissions associated with natural gas
use is associated with reduced natural gas use (from 37.2 million therms in 1990 to 30.1 million
therms in 2012 to 25.5 million therms in 2015).
Gas Utility Long-term Plan (GULP) and Early Evaluations of Alternative Gas Supplies
In November 2009, the UAC reviewed an analysis of physical biogas as a resource for the gas
supply portfolio.1 At that time, staff determined that physical biogas cost about 50 ₵/therm
more than natural gas, or about $100 per ton of carbon dioxide equivalent (CO2e)2 and would
increase a residential customer’s gas bill by 35%.
GULP includes a strategy to evaluate a voluntary green gas program and evaluate purchasing
non-fossil fuel gas for the gas portfolio. The City Council last approved updates to GULP in April
2012 (Staff Report 2522, Resolution 9244), including GULP Strategy 4:
Reduce the carbon intensity of the gas portfolio in accordance with the Climate
Protection Plan by:
a. Designing and implementing a voluntary retail program using reasonably
priced non-fossil fuel gas resources; and
b. Purchasing non-fossil fuel gas for the portfolio as long as it can be done with
no rate impact.
In response to the GULP strategies, in April 2013, staff presented alternatives for a PAG Gas
program to the UAC3 including the use of physical biogas for the program, but found that it
would cost about $1 per therm more than natural gas based on responses to a request for
proposal issued by the Northern California Power Agency. In addition, the long-term contracts
1 http://www.cityofpaloalto.org/civicax/filebank/documents/17514
2 1 ton/2204.16 lbs * 116 lbs CO2e/1 MMBtu CH4 *1 MMBtu/10 therms = .0053 tons/therm
3 https://www.cityofpaloalto.org/civicax/filebank/documents/33744
Page 2 of 17
required for biogas project developers to secure financing were, and are still, not conducive to
the potentially volatile demand associated with a voluntary green gas program.
PAG Gas
The PAG Gas program was modeled after the highly successful, voluntary PaloAltoGreen (PAG)
program, which allowed participants to receive 100% renewable energy and eliminate the GHG
emissions associated with their electricity use. Participation rates in PAG were the highest
among similar programs throughout the nation earning recognition for the City and creating a
sense of community pride around sustainability efforts. In 2012, approximately 20% of CPAU’s
customers participated in PAG, representing 8% of the City’s total electric usage.
By 2013, the City’s aggressive Renewable Portfolio Standard (RPS) goal combined with its
carbon-free hydroelectric resources rendered the electric supply portfolio largely carbon
neutral. In March 2013, City Council approved the Carbon Neutral Plan committing CPAU to
pursue only carbon neutral electric resources beginning in calendar year 2013 (Staff Report
3550, Resolution 9322). In September 2013, City Council suspended PAG and directed staff to
develop a new voluntary PAG Gas program to afford participants the opportunity to eliminate
the GHG emissions associated with their natural gas use (Staff Report 4041, Resolution 9372).4
In April 2014, City Council approved the establishment of a voluntary PAG Gas program (Staff
Report 4596, Resolution 9405) using high quality offsets to back the program. All offsets
purchased to date have been from a livestock methane capture project. The PAG Gas rate is
12₵/therm, which equates to an avoided GHG emissions cost of approximately $22 per ton of
CO2e.
The PAG Gas program goal is a 20% participation rate by 2020 with a corresponding GHG
reduction of 16,000 tons of CO2e per year. The 2020 goal represents a 10% reduction in the
City’s total GHG emissions associated with natural gas consumption. The reductions are
achieved by purchasing high quality environmental offsets, with a preference for California
projects, on behalf of participants in order to reduce or eliminate the impact of GHG emissions
associated with each participating customer’s gas usage. All customers can sign up for PAG Gas
for their entire gas usage; commercial customers also have the option of participating in the
program for part of their natural gas usage.
Since the program launch in December 2014, roughly 4% of the City’s residential natural gas
customers have participated in PAG Gas accounting for approximately 3,200 tons of GHG
4 In June 2014, since the PAG (electric) program is redundant with the Carbon Neutral Plan, Council eliminated the
PAG program for residential customers (Staff Report 4718, Resolution 9422). At the same time, Council also
reactivated the program for commercial customers since some customers (including City facilities) desire to
participate in a voluntary green electric program to achieve environmental recognition and certifications in line
with their own corporate sustainability goals including participation in the U.S. Green Building Council Leadership
in Energy and Environmental Design (USGBC LEED) Program and the U.S. EPA Green Power Partnership Program.
Page 3 of 17
emissions per year. City facilities began participating in PAG Gas in July 2015 and account for
GHG emissions reductions of approximately 6,000 tons per year. For a typical residential
customer participating in PAG Gas, the cost is approximately $5 per month for an average use
of 42 therms per month. After the June 1, 2016 UAC meeting, staff began to evaluate carbon
neutral gas supply options and suspended active marketing of the program, resulting in
decreased participation in the program
Figure 1 below shows the trajectory of PAG Gas participation for January 2015 through July
2016.
Figure 1: PAG Gas Program Participation
Figure 2 below shows the number of PAG Gas participants by customer type. Figure 3 shows the
percentage of total gas usage by customer type. As shown, the vast majority of participants are
residential customers—as was the case with the PAG (electric) program. The bulk of the
participation in terms of gas usage is for City facilities. Very few commercial customers have
participated in the program to date.
Approximately 4.1% of the City’s residential natural gas customers have signed up for PAG Gas
as of the end of June 2016. In July 2015 all City facilities began participating in the program for
100% of their gas usage.
Page 4 of 17
Figure 2: Number of Customers Participating in PAG Gas
Figure 3: Percentage of the City’s Total Gas Load Participating in PAG Gas
Page 5 of 17
Utilities Advisory Commission Discussions
At its October 7, 2015 meeting the UAC heard public comment on, and discussed the merits
and drawbacks of, an opt-in versus an opt-out structure for the voluntary program. The minutes
from that meeting are provided as Attachment A. As a result of that discussion, at its June 1,
2016, meeting the UAC was presented with an overview and high-level analysis of several
models for reducing the carbon impact of natural gas use in the City. The UAC discussed several
alternatives to the voluntary opt-in program including converting the voluntary program to an
opt-out model (meaning all customers would be automatically enrolled in the program, but
could voluntarily leave the program at any time) and adopting a carbon neutral portfolio for all
customers using either environmental offsets or physical biogas. The minutes from the June
2016 UAC meeting are provided as Attachment B.
The four main options discussed by the UAC at its June 1, 2016 meeting are summarized in
Table 2 below.
Table 2: Alternatives for Gas Portfolio GHG Reduction
Pros Cons
Opt-in
Program
• Consistent with CPAU’s past practices
of providing program and service
options for those who want them.
• Allows participants to feel proud that
they are doing more to help the
environment
• Requires significant and continuing
outreach effort to maximize
participation—and minimize
administrative costs—by capturing all
customers who would participate in the
program if they knew about and
understood it
Opt-out
Program
• Much greater reductions in GHG
emissions associated with natural gas
usage could be achieved sooner and
at a lower cost
• After start up, easy and low cost to
administer
• Risk of harming CPAU’s reputation as the
program can be viewed by customers as
“slamming” or even taking advantage of
customers who are not paying attention
even after being notified of right to opt-
out
• Requires ongoing outreach to notify
customers of their ability to opt-out at any
time
• Requires development of detailed
program rules and processes to allow for
opting out/in, securing refunds and
identifying potential sources of funds for
such refunds.
Gas
Portfolio
Backed by
Offsets
• Maximum reductions in GHG
emissions associated with natural gas
usage
• Minimal administrative costs
• No need for complicated program
terms and conditions
• Could be perceived as an overreaching
mandate
• Small rate increase for all customers
• Cost varies with the cost of environmental
offsets
Page 6 of 17
Pros Cons
Gas
Portfolio
Backed by
Green
Gas
• Maximum reductions in GHG
emissions associated with natural gas
usage if for 100% of the gas portfolio
• Minimal administrative costs
• No need for complicated program
terms and conditions
• Could be perceived as overreaching
• Large rate increase for all customers,
especially if for 100% of the gas portfolio
• Cost varies with the cost of green gas
Opt-In versus Opt-Out Alternative
Staff provided further analysis for the June 1, 2016 UAC discussion comparing opt-in and opt-
out designs including the cost comparison between the two approaches as shown in Table 3.
Table 3: Opt-in versus Opt-out Program Cost Estimates
Opt-in Program Opt-out Program
Units Current Post-
2020
First Year Subsequent
Years
Participation % of gas
usage
6% 10% 90% 80%
GHG emissions reduced tons1 9,000 15,000 135,000 120,000
Offset Cost $/ton2 9.25 9.25 9.25 9.25
₵/therm 4.4 4.4 4.4 4.4
Administrative cost $/year
$/ton
$120,000
13.16
$85,000
5.66
$400,0003
2.96
$40,000
0.33
₵/therm 7.0 3.0 1.6 0.5
Total Cost
Retail Rate
$/ton 22.46 14.91 12.21 9.58
₵/therm 12 8 6 5
Residential Bill Impact4 $/month 4.32 2.88 2.16 1.80
Notes:
1. GHG emissions based on projected gas usage of 28.5 million therms per year (150K tons CO2e)
2. Offset costs will adjust with market conditions
3. Communication activities and billing system changes
4. Median residential customer gas use: 54 therms in winter month and 18 therms in summer
A comparison of anticipated customer reactions to the two approaches was also presented and
is shown in Table 4.
Table 4: Anticipated Customer Reactions to Opt-in and Opt-out Programs
Customer Opt-In Program Opt-Out Program
Active
Supporter
Participates in PAG Gas Supports, would not opt out
Passive
Supporter
Intend to opt in, but have
not prioritized signing up
Supports, would not opt out
Unaware
Supporter
Would opt-in, but have
not heard about it
Would not opt out
Page 7 of 17
Customer Opt-In Program Opt-Out Program
Ambivalent Don’t pay attention, or
care either way
Unlikely to opt out
Unaware
Opponent
Would not opt in Prefers to opt out, but not paying attention to the City’s
messaging or the resulting changes to their utility bills
Passive
Opponent
Would not opt in Doesn’t support the program, but unlikely to prioritize
opting out
Aware
Opponent
Would not opt in Really don’t want to participate but feel guilty or
embarrassed about opting out, especially if the program
is characterized as being environmentally friendly
Active
Opponent
Would not opt in Would opt-out of the program
Carbon-neutral Gas Portfolio Alternative
Staff presented and the UAC discussed an alternative to both the opt-in and opt-out voluntary
programs, a carbon-neutral portfolio. A carbon-neutral portfolio could be achieved by using
offsets and/or physical biogas with low administrative costs, and the cost of such change in
supply would be borne by all ratepayers based on the cost of providing the carbon neutral gas
portfolio.
UAC Recommendation
After a lively debate, the UAC voted (6-1) to recommend that Council adopt a carbon neutral
gas portfolio and direct staff to develop an implementation plan. The draft minutes from the
UAC’s July 2016 meeting are provided as Attachment B.
Discussion
To design and implement a carbon-neutral gas portfolio plan, several inter-related variables
must be considered, including:
1. Rate impact.
2. Supply source (environmental offsets or biogas).
3. Timeframe over which carbon neutrality is achieved
4. Percentage of the portfolio to be made carbon-neutral.
With respect to each of the variables above, staff makes the following recommendations:
1. Rate impact: No greater than 10¢/therm annually
2. Supply source: Combination of environmental offsets and biogas, with exact mix
designed to maximize carbon neutrality within established rate impact limit. Staff
estimates approximate ratio of offsets (95%) to biogas (5%) at the outset of the
program.
3. Timeframe over which carbon neutrality is achieved: By FY 2018
4. Percentage of portfolio made carbon neutral: 100%
Page 8 of 17
Rate Impact
Staff recommends that Council make a clear determination of acceptable rate impact for a
carbon-neutral gas portfolio. Council took such a step with respect to Carbon Neutral Plan for
electricity where rate impacts, for a variety of reasons, were expected to be less significant than
those potential impacts from a carbon free gas portfolio. The rate impact of achieving carbon
neutrality for the electric portfolio is quite small (on the order of 1-2%) because the
incremental cost to get to carbon-neutrality is diminished by the significant RPS requirement
and the fact that carbon-free hydroelectric supplies provide about half of the City’s energy
requirements in a normal year. The rate cap for the carbon neutral electric portfolio established
by Council is 0.15 cents per kWh (Staff Report 3550, Resolution 9322).
By contrast, the costs associated with a carbon neutral gas supply and associated rate impacts
are not likely to be as low. The gas portfolio is currently supplied 100% by a fossil fuel source,
whereas the electric supply portfolio includes a large fraction of carbon-free hydroelectric
supplies and is subject to the State requirement for renewable supplies to meet a minimum of
33% (now 50% by 2030) of the City’s needs. A rate impact of 10 ₵/therm is equal to
approximately a 10% rate increase based on current gas rates and assuming a commodity rate,
which fluctuates monthly with market prices, of 30 ₵/therm.
Supply Source
Offsets as Supply Source
Using environmental offsets to neutralize the GHG emissions of the gas portfolio is significantly
less expensive than buying biogas. If environmental offsets were purchased today for 100% of
the City’s gas usage, all customers would experience a rate increase of approximately 4%. A
residential customer’s winter bill would increase by about $2 per month (about $0.75 in the
summer). A range of potential offset costs were analyzed and are presented in Figure 4 below.
The current cost of offsets is about $8 per ton of CO2e, which is equivalent to 4 ₵/therm.
Page 9 of 17
Figure 4: Rate and Bill Impact of Using 100% Offsets to Achieve Carbon-Neutrality
Biogas as a Supply Source
Alternatively, the City’s gas needs could be met with renewable physical biogas, a much more
expensive option.
Biogas is a product of organic conversion (from cow manure at a dairy farm or from a landfill,
for example). Most biogas produced in the United States is used as either a transportation fuel
or to generate electricity. Biogas is most valuable as a transportation fuel due to the Federal
Renewable Fuel Standard program and the state regulations like California’s Low Carbon Fuel
Standard (LCFS) and Renewable Portfolio Standard (RPS). Biogas converted to electricity may be
used to meet California’s RPS compliance obligations for electric utilities. State regulation and
pipeline interconnection costs have largely kept biomethane projects out of California, but out-
of-state supply sources are available.
The short-term price for biogas is in the $2-$3 per therm range due to the transportation fuel-
driven demand mentioned above. For a longer-term fixed-price commitment (5-7 years), prices
are discounted to around $1.50 per therm. Two things eliminated the consideration of biogas
for the City’s voluntary PAG Gas program: (1) the cost and the incompatibility between a
voluntary program with uncertain demand; and (2) the biogas project developers’ need long-
term commitments. While cost is still an issue, if it decided to pursue a carbon-neutral portfolio
for the long term, the City would be in a position to make a long-term commitment for biogas.
Page 10 of 17
At a biogas price of $1.50/therm (or $1.20/therm over the projected $0.30/therm cost for
natural gas), supplying 100% of the portfolio with biogas results in about a 120% rate increase
or about $65 more per month on an average residential customer’s monthly winter bill (or
about $22 per month more in the summer when average residential use is 18 therms/month).
Figure 5 shows both the rate and bill impacts at various biogas prices.
Figure 5: Rate and Bill Impact of Using 100% Biogas to Achieve Carbon-Neutrality
The two supply sources, environmental offsets and biogas, could be combined to achieve
carbon-neutrality. However, even a ratio of 5% biogas and 95% environmental offsets results in
a rate impact greater than 10%. Figure 6 shows the rate and bill impacts for different
percentages of the two supply resources using biogas costing $1.50/therm and environmental
offsets costing $8 per ton.
Page 11 of 17
Figure 6: Rate and Bill Impact of Using a Combination of Biogas and Offsets to Achieve
Carbon-Neutrality (Assumes $1.5/therm Biogas & $8/ton Offsets)
Carbon Neutrality: Portfolio Percentage & Timeframe
Two other variables may be adjusted when designing a carbon neutral plan. To reduce the cost
impact of buying green gas for the gas portfolio and the GHG emissions reductions only a
portion of the portfolio could be made carbon neutral. Alternately, or in addition, a green gas
portfolio standard could increase over time (e.g. start at 10% in FY 2018 increasing to 100% by
FY 2021).
Figure 7 shows the rate and bill impacts of various biogas to offset ratios if less than 100% of
the portfolio is carbon-neutral. Again, a $1.50/therm biogas price and an $8 per ton
environmental offset price are assumed.
Page 12 of 17
Figure 7: Rate and Bill Impact of Using a Combination of Biogas and Offsets to Achieve Partial
Carbon-Neutrality (Assumes $1.5/therm Biogas & $8/ton Offsets)
Summary of Proposal
The proposed plan will use a combination of physical biogas and high-quality environmental
offsets to achieve a carbon-neutral gas portfolio by FY 2018. The amount of biogas included in
the portfolio will be maximized while causing rates to increase by no more than 10 ₵/therm.
Given the 10 ₵/therm rate impact cap and current market prices, approximately 5% of the City’s
portfolio can be met with biogas with the remaining 95% neutralized with environmental
offsets.
If the price of offsets increases, the portfolio may need to comprise up to 100% offsets, or the
portfolio may be less than 100% carbon neutral. On the other hand, if the price of offsets
decreases, the proportion of biogas will increase. Purchasing biogas for less than 5% of the total
portfolio demand may be too small for a transaction. In that case, the portfolio will be
comprised of 100% offsets, and the rate impact with be significantly less than 10 ₵/therm.
Cost-effectiveness of a Carbon-neutral Gas Portfolio Compared to Electrification
In May 2015, the UAC reviewed a cost effectiveness study for abating GHG emissions by
electrifying building appliances and passenger vehicles. The report was provided to Council in
August 2015 (Staff Report 5971). Figure 8 shows the societal costs of carbon from that study
compared to the carbon cost of environmental offsets and biogas. The estimated cost of
$1.50/therm for biogas, or an incremental cost of $1.20/therm relative to brown gas, results in
an incremental cost of carbon of $226 per ton of CO2e. Environmental offsets are assumed to
cost $8/ton of CO2e.
Page 13 of 17
Figure 8: Incremental Societal Abatement Cost
As shown in Figure 8, environmental offsets are a much less expensive way to achieve carbon
reductions compared to most electrification options5. Biogas, however, results in higher
abatement costs than converting from natural gas-fired water and space heaters to electric
heat pump water and space heaters and converting from a gas stovetop to an electric stovetop.
Proposed Biogas and Offset Criteria for Carbon-neutral Gas Supply
Offset Criteria – Same as Approved for PAG Gas
For the PAG Gas program, Council approved the use of high-quality environmental offsets from
protocols approved by the California Air Resources Board. The approved protocols currently
include forestry, livestock, landfill, coal mine methane, urban forestry, ozone depleting
substance and rice cultivation projects. Offsets used for PAG Gas do not need to be certified by
CARB as it is an extra expense and only necessary if offsets are to be used for a regulatory
compliance obligation. Staff proposes to apply the same standards to offsets used for the
Carbon Neutral Gas Plan including a preference for California and local projects (Staff Report
4596, Resolution 9405).
Biogas Criteria – “Displacement” Concept Allowed
Biogas is generated from an organic source such a waste from a dairy farm, other agricultural
waste or from a landfill. Very little biogas is produced in California, but the Environmental
Protection Agency’s (EPA) Renewable Fuel Standard Program is driving the development of
projects in other states. The EPA recognizes two things: (1) molecules of biogas go into the
pipeline and rarely end up being burned by the purchaser of that gas and (2) gas transportation
5 The study concluded that (after federal and state incentives) it is cheaper to own and operate a compact electric
car (Nissan Leaf) than a similarly sized gasoline vehicle (Honda Civic) resulting in a negative incremental abatement
cost.
Page 14 of 17
can add significant costs if a biogas purchaser is forced to move gas long distances. The EPA,
therefore, allows for “displacement” whereby biogas is purchased at a point near the project
site and the environmental attributes of that gas are attached to brown gas delivered at a
different location. California’s RPS program, on the other hand, requires entities to contract for
gas transportation from the biogas source to the end use, adding significant cost to the gas.
Because the City is seeking ways to reduce its GHG emissions and is not using offsets or biogas
to meet a compliance obligation, the City has latitude to establish its own criteria for biogas use
and eligibility under the City’s carbon-neutral gas supply program. Staff recommends utilization
of the EPA’s approach, which allows for displacement of biogas in one location for brown gas in
another location under the City’s carbon-neutral gas program.
Implementation Issues
If implementation of the proposed cost-based Carbon Neutral Gas Plan requires amending any
of the City’s gas rate schedules, staff will present those for Council approval.
Existing gas purchasing agreements may be used to procure biogas with details about the
biogas added to the transaction confirmations. Environmental offsets for the current PAG Gas
program are included in the City’s agreement with the program administrator, so new contracts
may need to be developed to purchase offsets for the carbon-neutral portfolio.
Next Steps
Depending on the recommendation from the UAC, the proposed Carbon Neutral Gas Plan will
be presented to the Finance Committee for a recommendation and to Council for approval. If
approved, staff will execute enabling agreements with qualified counterparties for purchasing
environmental offsets. In tandem, new rate schedules will be developed and brought to the
UAC and Finance Committee for recommendations and to the Council for approval. Staff
anticipates that this can be achieved such that the gas portfolio can be implemented in FY 2018.
Because implementation of a carbon-neutral gas portfolio represents a departure from the
Council-approved GULP strategies, GULP will need to be revised before the program is put into
place.
Cancelling PAG Gas will require communication with the customers, repeal of the rate schedule
via resolution, and removal of the charge on participating customers’ bills by the carbon-neutral
implementation date.
Alternatives
There are many alternatives to the proposed program, which can be described by varying the
key determinants. The following examples are ways in which the plan can be modified.
1. Rate impact: A rate impact higher than 10 ₵/therm would result in more biogas versus
offsets being part of the portfolio. If the rate impact limit was reduced, the portfolio may
not be able to be 100% carbon neutral. As another alternative, the rate impact could
Page 15 of 17
increase over time—for example, starting out at 5 ₵/therm and increasing to 10 ₵/therm in
five years.
2. Supply: The proposed plan includes a combination of biogas and offsets such that the
amount of biogas is maximized while limiting the rate impact to a set amount (10 ₵/therm).
Instead of a rate impact measure, the program could be developed with a prescribed ratio
of biogas to offsets. In this case, the rate impact would depend on the cost of the offsets
and the biogas and could change year to year.
3. Carbon-neutral coverage of the portfolio: The proposed plan uses the full 10 ₵/therm to get
up to 100% carbon neutrality with the expectation that most (95%) of the supply will be
environmental offsets with the balance being biogas. However, the goal could be less than
100% carbon neutral supplies—for example, the goal could be to achieve 50% carbon
neutral supplies while under the 10 ₵/therm rate impact, which would allow for purchases
of biogas for about 8% of the gas needs and offsets for about 43% of the gas needs given
current prices for offsets and biogas supplies.
4. Timing: The most aggressive implementation schedule, by FY 2018, is recommended.
Carbon-neutrality could be staged over any number of years with changing rate impact or
changing proportion of offsets to biogas.
These program attributes could be combined in any number of ways to develop a program as
shown in Table 5 below.
Table 5: Proposed Carbon Neutral Gas Plan and Alternatives
Rate Impact
Limit (₵/therm)
Expected Supply 1,2 Carbon Neutral
Portfolio Offsets Biogas
Proposed Program 10 95% 5% 100%
Lower Rate Impact 5 100% 0% 100%
Higher Rate Impact 15 90% 10% 100%
No Offsets
5 0% 4% 4%
10 0% 8% 8%
15 0% 13% 13%
25% Carbon Neutral Portfolio
5 21.5% 3.5%
25% 10 17.5% 7.5%
15 13% 12%
50% Carbon Neutral Portfolio
5 47.5% 2.5%
50% 10 43.25% 6.75%
15 39% 11%
75% Carbon Neutral Portfolio
5 73.5% 1.5%
75% 10 69% 6%
15 65% 10%
Notes: 1 Assumes current prices for environmental offsets and biogas
2 Biogas volumes of less than 5% of the portfolio are likely too small to transact
Page 16 of 17
RESOURCE IMPACT
Implementation of a carbon -neutral gas portfolio will increase retail rates and the gas
commodity budget. The recommendation is to cap the rate impact at 10 ft/therm. At that level,
commodity costs will increase by about $3 million, from $9 million to $12 million, per year.
POLICY IMPLICATIONS
The Council -approved Utilities Strategic Plan includes an objective to offer programs to meet
the needs of customers and the community.
Strategy 4 in the Council -approved GULP states:
Reduce the carbon intensity of the gas portfolio in accordance with the Climate
Protection Plan by:
a. Designing and implementing a voluntary retail program using reasonably
priced non -fossil fuel gas resources; and
b. Purchasing non -fossil fuel gas for the portfolio as long as it can be done with
no rate impact.
Implementation of a carbon -neutral gas portfolio represents a departure from GULP Strategy 4
because the voluntary program will be eliminated and there will be a rate impact resulting from
non -fossil fuel gas resources being purchased for the portfolio. GULP will need to be revised
accordingly should Council approve a carbon -neutral gas portfolio.
A carbon -neutral gas portfolio would, however, be an important part of meeting Council's
aggressive goal to reduce the City's GHG emissions by 80% by 2030.
ENVIRONMENTAL REVIEW
Implementation of a carbon -neutral gas portfolio does not meet the definition of a project,
pursuant to section 21065 of the California Environmental Quality Act (CEQA)• Offset and biogas
project developers will be responsible for performing necessary environmental reviews and
acquiring permits as offset and biogas projects are developed.
ATTACHMENTS
A. Excerpted Final Minutes from the October 7, 2015 UAC Meeting
B. Excerpted Draft Minutes from the June 1, 2016 UAC Meeting
PREPARED BY:
REVIEWED BY:
DEPARTMENT HEAD:
Karla Dailey, Senior Resource Planner
ne Ratchye, Assistant Director, Resource Management
•
Ed Shikada, Interim Director of Utilities
Page 17 of 17
EXCERPTED FINAL MINUTES OF THE OCTOBER 7, 2015
UTILITIES ADVISORY COMMISSION MEETING
ITEM 2. DISCUSSION: Conversion of the PaloAltoGreen Gas Program From an Opt-In to an
Opt-Out Program
Chair Foster noted that this item is on the agenda due to support for the idea expressed from
members of the community.
Public Comment
Sandra Slater commended the commission for keeping sustainability on the agenda. She said
that it's time to move the needle now. She noted that research shows that participation will be
much higher if the program was converted to an opt-out program. She said that the program
could be changed to make the program supportable by all income levels. Converting the
program to an opt-out program is something the City could do that would have an immediate,
positive impact.
Lisa Van Dusen said that the program is not perfect since it is backed by offsets, but we
shouldn't let the perfect be the enemy of the good. We could pay even more by purchasing
more aggressive offsets. There could be mechanisms to get out of the program during an
"amnesty period" and low income customers on the Rate Assistance Program could be retained
as opt-in customers. She said that there was so much staff effort for the PaloAltoGreen
(electric) program just to achieve 24% participation and that there would be savings from lower
marketing and administration costs in an opt-out program.
Chair Foster said that the money paid by PaloAltoGreen Gas (PAGG) program participants fund
offsets that pay to convert waste into methane that is burned to produce renewable electricity
at a dairy farm in Wisconsin and that this wouldn't be done without the revenue from the
offsets. Assistant Director Jane Ratchye indicated that this is correct. She said that the offsets
that back this program are very high quality as they are selected only from those protocols that
have been certified for use in the state’s cap -and-trade auction by the California Air Resources
Board. One of the requirements of those protocols is that the off set be “additive”, or from a
project that would not have been done without the monetary support from the sale of the
offsets. Chair Foster said that he supports an opt-out program and that the additional cost is
only $5 to $6 per month for the average resident.
Commissioner Ballantine noted that there are ongoing costs to maintain an anaerobic digester.
He said that people who opt-in are causing something real to happen. The greenhouse gas
ATTACHMENT A
emissions reductions from those sources would not otherwise happen without programs like
PAGG.
Vice Chair Cook noted that the PaloAltoGreen (PAG) Electric program was effectively converted
to cover everyone via the carbon neutral program and was a great way to transfer the new
goal. He asked why PAGG was not made an opt-out program originally. Vice Chair Cook added
that Community Choice Aggregation (CCA) programs were successful because they were opt -
out programs. Ratchye replied that the carbon neutral electric supply is not the same as PAG
and that it was not developed as a transition from PAG. She noted that PAG purchased
Renewable Energy Certificates (RECs) for 100% of a residential customer’s load at a cost of 1.5
cents/kWh, or about 12% more than the normal electric rate. On the other hand, the carbon
neutral electric supplies consist of about half carbon-free hydroelectric supplies, renewable
supplies that are eligible under the state’s Renewable Portfolio Standard (RPS) and that RECs
are purchased for the balance of the needs. It is expected that by the end of 2016, the City’s
RPS will be 57% and with hydro supplies (given a normal hydro year), no RECs will be needed
for carbon neutral electric supplies. She said that the state’s new goal for an RPS of 50% would
result in carbon neutrality anyway at no additional cost in a normal hydro year. However, the
increased cost of PAGG for participants is 12 cents per therm, or about 12% more than the
normal gas rate of about $1 per therm. She said that the additional cost for PAGG was a
consideration for making the program an opt-in program like PAG when the program was
originally conceived. In addition, the program was just launched in January 2015 (and has yet
to roll out a comprehensive marketing campaign for the program) and staff was hoping to
determine the community’s appetite for the program. Ratchye agreed that CCAs are successful
opt-out programs, but that they are generally no more costly than the alternative from the local
utility so participants are not paying any extra to be “slammed” into a CCA.
Vice Chair Cook said that our rates are allowed to go up with the carbon neutral electric
supplies and asked what the threshold is for an opt-out versus an opt-in program.
Chair Foster replied that the comparison of PAGG to the carbon neutral plan is diffe rent—like
apples and oranges—since the carbon neutral electric supplies is not an opt-out, or opt-in,
program, but is the electric supply for all customers. The percentage increase in cost to electric
rate payers by going carbon neutral is small compared to the percentage increase to a customer
by paying for participation in PAGG. He said that PAGG should be compared to the PAG electric
program.
Chair Foster asked if there is any legal reason that City Council could not adopt an opt -out
program. Senior Deputy Assistant City Attorney Jessica Mullan said that a legal analysis would
have to be completed and the answer may depend on the program design.
Commissioner Schwartz asked if the point of the program was to reduce gas use or raise
revenue. Chair Foster responded that neither of those options is the point, but that the
objective is to reduce greenhouse gas (GHG) emissions associated with customers’ gas use.
Commissioner Schwartz said that she agreed that more people will do an opt -out program, but
that we need to make sure that participants truly want to participate. We need to provide a
very easy way for people to opt-out and not be penalized for any of the months they were
enrolled if they don’t want to be. A good outreach campaign could be a good way to increase
awareness of the issue and it could have an impact of increasing customers’ awareness. She
said that the program could be a bridge for people to become more conscious of using energy
and would not just be a way to buy ourselves out of the problem.
Commissioner Hall suggested that we not act too hastily, but develop a program like this over
time, similar to the carbon neutral portfolio adoption. He said that he suspects that there
would be a percentage of consumers that would find out later that they were enrolled in a
“voluntary” program and feel cheated. A way forward could be to develop a carbon negative
plan and start with a surcharge that would fund a solution to global warming. He said it could
be a program that would be broadly advertised to ensure that everyone would be aware of the
program.
Commissioner Schwartz noted that she had seen an effective “cow power” video, which is an
example of how the communication can be done in a playful way that would let people
understand that we are in this together, which is a compelling message for many people. She
added that it would be a good messaging experiment.
Commissioner Eglash thanked the public commenters. He also complimented the UAC for
placing the item on the agenda and allowing this discussion to take place. Commissioner Eglash
said that when he weighs the advantages and disadvantages of opt -in versus opt-out, he would
like to avoid disgruntled customers and any worry about customer satisfaction. The greatest
danger of an opt-out plan is potential customer dissatisfaction. We devote a lot of time to
customer satisfaction with the utility. He said it is more risky in this respect and as the price
becomes significant, the danger becomes worse. He said that, with a full marketin g campaign,
is it still plausible that people would not be in the program that wouldn't want to be. He added
that perhaps a very successful campaign would result in the same participation of an opt -out
and an opt-in program. Commissioner Eglash indicated that he is leaning towards maintaining
PAGG as an opt-in program. He added that there should be no action on the item at this time
since there is no staff analysis, no fiscal analysis or legal analysis completed at this time. The
discussion is conceptual at this point; there is no proposed design for an opt-out program.
Chair Foster indicated that he disagrees that the participation rates for opt -in versus opt-out
will converge with a great marketing campaign. He added that this is a discussion item on the
agenda tonight so no action can be done.
Commissioner Schwartz said that customer satisfaction depends on transparency. The fact that
CPAU cares about being green will show that an opt-out program is consistent with the brand.
She added that safeguards to allow folks to opt-out will be consistent with transparency.
Commissioner Eglash said that many people in Palo Alto take pride in the City’s environmental
efforts. He stated that safety, reliability, and low cost are primary considerations and to impose
a greener solution that costs extra money is hazardous and must be done carefully.
Commissioner Ballantine noted that offset resources are finite and that pressures from supply
and demand will eventually bite us as the price for offsets will in crease as demand increases.
He added that an opt-out program would require sufficient offsets to be supplied.
Commissioner Danaher said that the PAGG program has an environmental benefit, a
psychological benefit, and a moral benefit. He said that the best idea is to make the program
neither opt-in or opt-out, but our gas supply for everyone. He added that an opt-out program
still allows people to opt-out easily since it could be very easy to go to the website and opt out.
Commissioner Hall said that we could conduct a poll to see what the customers’ response
would be to an opt-out program. He said that we should want to have this information before
making a decision.
Commissioner Schwartz advised against a poll as it would defeat the purpose of communicating
the benefits of an opt-out program. Commissioner Danaher added that the poll would only be
answered by the small number of people who read and respond to email.
Commissioner Foster said that the program could be designed so that anyone who failed to
opt-out early enough could still get their money back. He asked if the UAC could make a
motion to recommend that the Council direct staff to develop an opt -out program. Director
Fong stated that it can be added to the rolling calendar. Mullan added that the item is
agendized as a discussion item and that the Commission can add it as a future item to be
agendized under Item 4 on this meeting’s agenda.
Vice Chair Cook thanked the public commenters. Commissioner Hall added his appreciation of
the input from the public commenters, even if some commissioners disagree.
EXCERPTED DRAFT MINUTES OF THE JUNE 1, 2016
UTILITIES ADVISORY COMMISSION MEETING
ITEM 2. ACTION: Utilities Advisory Commission Discussion on Alternatives to the Existing
Voluntary Opt-In PaloAltoGreen Gas Program Including an Opt-Out Mechanism and a Carbon-
Neutral Natural Gas Portfolio
Senior Resource Planner Karla Dailey summarized the written report.
Commissioner Schwartz asked why is was so expensive just to convert from opt-in to opt-out
since the rate is not being changed. Dailey explained that changes to the billing system made up
the bulk of costs. Dailey pointed out that, after the initial investment, administrative costs drop
significantly for the opt-out program. Commissioner Schwartz stated that the cost estimate
seemed very high and questioned the advisability of making changes to the billing system,
which is planned for replacement.
Interim Director Shikada said the timing of an opt-out program should take into account the
legacy billing system.
Commissioner Trumbull asked about the bill impact. Dailey confirmed the bill impact is only for
those customers in the voluntary program.
Commissioner Ballantine asked about the customer breakdown. Dailey said 50% is residential,
30% is small commercial and 20% is large commercial.
Commissioner Forssell asked about the variability for a typical residential customer. Dailey said
some residential customers probably have much higher bills.
Dailey described the types of customers with respect to an opt-out program structure: active
supporters, passive supporters, unaware supporters, ambivalent customers, unaware
opponents, passive opponents, aware opponents and active opponents. Dailey said staff is
concerned about the customers who would be opposed to an opt-out structure, but do not opt-
out right away for whatever reason leading to resentment and poor customer relations at a
later date as well as issues around refunding the PAG Gas fee should a customer demand that.
Commissioner Schwartz said that bill impact was so small that it shouldn’t cause harm to most
customers and, if it was easy to opt-out, an opt-out program shouldn’t be a problem for
anyone. If there were customers that found out later and were mad, the program could be
ATTACHMENT B
designed to allow for refunding those customers. Dailey said that this is problematic.
Commissioner Schwartz said that the risk to consumer attitude seems not to be a large issue.
Continuing with the presentation, Dailey said that another option is to convert all, or a po rtion
of, the natural gas portfolio to carbon neutral supplies.
Commissioner Johnston asked if there would be any mechanical issues with running biogas
through the pipeline. Dailey said that there would be no problem since biogas must meet the
pipeline quality standards. Commissioner Ballantine added that the quality requirements
depend on whether the gas is used for generation directly, or put in the pipeline —and the
biogas can be mixed with natural gas to meet the pipeline quality standards.
Chair Cook asked how the $1/therm incremental cost of biogas compared to the cost of natural
gas. Dailey said that the current commodity cost of natural gas is about 20 cents per therm.
Commissioner Johnston asked if there were limits to the number of offsets available. Dailey
said that there would be sufficient offsets for our portfolio.
Chair Cook asked staff to describe the offsets. Dailey said that the protocols for the offsets are
all California Air Resources Board approved although the offsets themselves are not CARB
certified. She explained the extra CARB certification would be needed for offsets used for
compliance purposes rather than a voluntary program.
Public Comments
Sandra Slater stated that she and Lisa Van Dusen have prepared a letter with comments on the
issue. She said that she supports the opt -out program, but her favorite is to have the gas
portfolio carbon neutral. She said that climate change is a huge problem and time is getting
short. She said that offset purchases can be a bridge in a plan to purchase biogas. She said that
the success of the PaloAltoGreen program proves that there is large support for such a
program. She also referenced the 80% GHG reduction goal by 2030 Council directive. She
advised that we need to wean ourselves off of fossil fuels and move to electrification. She said
there will be a few people, maybe as many as a hundred, who will be opposed, but a small
number of people should not dictate the direction of the utility. She said that i t would be nice
to have local offsets, but supporting methane capture projects outside of Palo Alto is valuable
since we have a global problem.
Lisa Van Dusen said that the main point is that there is fundamental responsibility to take
control of the impact caused. She advised that the City should take a bold action, noting that
nothing is perfect. The goal is to maximize carbon reductions, minimize the potential for
grumbling customers, minimize the impact to ratepayers, and allowing customers to have a
choice. She said that higher gas prices also acts to encourage additional gas use efficiency.
Commissioner Johnston said that the City should move away from the opt-in program design
and advised that it should be easy for customers to opt out of the program.
Commissioner Ballantine supported the option of moving to a carbon neutral gas portfolio,
rather than transitioning to an opt-out program. He said that during the rate adjustment
process, the larger users had a smaller percentage impact than the lower using customers,
which is due to the fixed costs to operate the system. He said that it is not free to have a carbon
neutral electric portfolio. He said that the move to electrification may be problematic if the
electric portfolio is carbon free, but the gas portfolio isn’t.
Commissioner Forssell asked if he program would only apply to residential customers only. She
asked if we first go to an opt-out program and allow customers to opt out, then transition to a
portfolio could be a problem since you first allow them out, then force them in. She said that
we could start with carbon neutral portfolio that is not 100%, but could transition there over
time.
Commissioner Schwartz said that all points of view are represented in Palo Alto. She said that
she is in favor of an opt-out program since this is an opportunity to practice how to do that. If
there is no way to opt out, this could be a problem for some customers who will create a large
issue in the community as it has been elsewhere with respect to having smart meters.
Commissioner Trumbull said he did not opt -in to the current program. He was also concerned
about opt-out as a transition to carbon-neutrality.
Vice Chair Danaher said he stated at the prior UAC meeting on the subject that he was
supportive of a carbon neutral gas portfolio and, after seeing the analysis, he is even more
supportive of that option. Danaher asked if there was any negative feedback for the carbon
neutral electric portfolio. Assistant Director Jane Ratchye said that there was no n egative
feedback that she knew of regarding the carbon neutral electric portfolio. Vice Chair Danaher
said that there could be a cost for morality and that he supports moving to a carbon neutral
portfolio rather than moving to an opt-out program.
Chair Cook asked Chief Sustainability Officer Gil Friend whether the choices would support the
City’s carbon goals. Friend noted that natural gas represents 25% of the City’s GHG emissions.
Interim Utilities Director Ed Shikada noted that there was no staff recommendation for this
item and views this discussion as one of values. He said that a survey of the community could
be done to determine the community’s view on the issue.
Chair Cook noted that staff did not provide a recommendation as it usually does and said he
thought that this was appropriate in this case. He stated that we are talking about this at a time
when gas rates are very low and also at a time when rates across the board are rising
significantly this year. He said that he had not heard any protest regarding carbon neutrality for
electric supplies, but says that a transition to carbon neutral gas can start and increase over
time. It would be perhaps most advisable to start with offsets first and move to renewable
biogas over time. He would recommend #3 and move to #4 by 2030. He would like to see the
costs for these options.
Commissioner Schwartz said that the issue with smart meter rollout happened when there
were many missteps caused by a rate increase, very ho t weather and the new meters were
blamed. She said that rising rates are not a good time to introduce a new program that costs
more. The downside is that the program could fail spectacularly if it becomes the rallying point
for complaints.
Commissioner Schwartz advised that a survey could be taken to determine the level of support.
Chair Cook said he appreciated the additional options presented by staff. He pointed out that
gas prices are currently very low and rates in the five utilities are increasing. Chair Cook said he
was not prepared to adopt a carbon -neutral program supplied with only biogas. He said the
rate impact would be less than the opt -in or opt-out options for a carbon-neutral portfolio.
Dailey confirmed that administrative costs for the portfolio are near zero. He said he prefers
starting with offsets and slowing adding biogas to the carbon -neutral portfolio. Chair Cook
recognized that there will be some complaints but said the rate impact is low and the impact of
a carbon-neutral portfolio is high.
Commissioner Trumbull stated that he was supportive of having more detail available for a
program before going to Council with a final recommendation.
ACTION:
Vice Chair Danaher made a motion that the UAC recommend that Council adopt a carbon
neutral gas portfolio and direct staff to develop an implementation plan. Commissioner
Trumbull seconded the motion. The motion passed (6 -1) with Chair Cook, Vice Chair Danaher,
and Commissioners Ballantine, Forssell, Johnston and Trumbull voting yes and Com missioner
Schwartz opposed.
Vice Chair Danaher left the meeting at the conclusion of the discussion of item #2.
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: AUGUST 31, 2016
SUBJECT: Discussion and Status Update Concerning City Initiatives on Fiber -to -the -
Premises and Wireless Network Issues, Including Work Related to Potential
Google Fiber and AT&T GigaPower Deployments and Co -Build Opportunities
in Palo Alto
Attached is the Fiber -to -the -Premises and Wireless Network staff report that was discussed at
the Policy and Services Committee meeting on August 16, 2016. The report includes status
update on City Council motions concerning City initiatives on Fiber -to -the -Premises and
wireless networks for Public Safety and Utilities and discussions with Google Fiber and AT&T.
ATTACHMENT
A. Policy and Services Committee Staff Report #7174 - Fiber -to -the -Premises update on City
Council Motions and Google Fiber.
PREPARED BY: DAVE YUAN, Strategic Business Manager
DEPARTMENT HEAD:
ED SHIKADA
Director of Utilities
Page 1 of 1
City of Palo Alto (ID # 7174)
Policy and Services Committee Staff Report
Report Type: Action Items Meeting Date: 8/16/2016
City of Palo Alto Page 1
Summary Title: Fiber-to-the-Premises update on City Council Motions and
Google Fiber
Title: Discussion and Status Update Concerning City Initiatives on Fiber -to-
the-Premises and Wireless Network Issues, Including Work Related to
Potential Google Fiber and AT&T GigaPower Deployments and Co -Build
Opportunities in Palo Alto; and Finding That Such Discussion and Update are
not a Project requiring California Environmental Quality Act (CEQA) Review
From: City Manager
Lead Department: IT Department
Staff Recommendation
Discussion and Status Update of City Initiatives Related to Fiber -to-the-Premise Network and
Wireless Networks Including Potential Google Fiber and AT&T GigaPower Deployments in Palo
Alto.
Background
On February 19, 2014, Google Fiber California, LLC (“Google”) announced its interest in building
a Fiber-to-the-Premises (“FTTP”) network capable of delivering gigabit speed Internet and cable
television service in most of Palo Alto. The cities of Mountain View, San Jose, Santa Clara and
Sunnyvale were also included in the announcement along with eight other metropolitan areas
(Atlanta, Charlotte, Nashville, Phoenix, Portland, Raleigh-Durham, San Antonio and Salt Lake
City). As of June 2016, Google was working to deploy fiber-optic service in twenty-two (22)
metropolitan areas in the United States.
Between February and May 2014, staff completed the Google Fiber City Checklist. The checklist
requested comprehensive information regarding the City’s existing infrastructure and assets
(e.g. public rights-of-way, aerial and underground utility routes); ways to make it easier for
providers to share municipal infrastructure (e.g. utility poles, spare fiber and conduit); helping
ATTACHMENT A
City of Palo Alto Page 2
to make construction speedy and predictable (e.g. streamlined permitting processe s), and
potential City-owned properties to locate Fiber Network Huts.1
Since May of 2014, staff has been engaged with Google representatives regarding the details of
a Master License Agreement (“MLA”) for use of City-controlled space on utility poles, streetlight
poles and in conduit; a Master Encroachment Agreement (“MEA”) for use of the public rights-
of-way and formalizing permitting processes; a Project Description, review of the potential
project under the California Environmental Quality Act (“CEQA”), and terms to recover City
costs associated with the project for staff time necessary to manage the anticipated large
volume of activity required to process permits, utility pole attachment applications, field
inspections and a wide variety of other activities related to Google building a new network from
scratch.
At the Council meeting on September 28, 2015 (CMR ID #6104), the Council approved a Motion
directing staff to:
A. Adopt a preferred alternative of creating a ubiquitous fiber network in Palo Alto
reaching nearly all residents with City ownership of Fiber assets as a public benefit and
that goal will be revisited in the first quarter of 2016; and
B. Request an update to the consultant’s report including:
a. In the Fiber-to-the-Premises (FTTP) Master Plan:
i. Detailed assumptions, and their impacts, used to forecast
the FTTP capital additions are to be reviewed by Citizens
Advisory Committee (CAC); if there is a disagreement
between the consultant’s report and the CAC’s
recommendation, the Staff Report to Council will highlight
the discrepancy; once this is accomplished, a revised
forecast is to be provided to the Council as an Action Item;
and
b. In the Wireless Network Report:
i. A 20-year forecast should be provided consistent with the
FTTP report; and
ii. The description of Scenario 1 lacked both a price forecast
and fiber backhaul details for the proposed municipal
properties to be served; these details should be included
1 Based on Google’s current project description, there are no plans to locate Network Huts in Palo Alto. Palo Alto
will be served by huts located in Mountain View.
City of Palo Alto Page 3
in an update prior to a Request for Proposals (RFP).
Evaluate expanding wireless access in retail areas, with an
option for expanding Wi-Fi coverage at City facilities and
public areas as part of the RFP (Scenario 1); and
C. Issue a Request for Proposal (“RFP”) to add dedicated wireless communications to
increase communication for Public Safety and Utilities Departments (Scenarios 3 and 4);
and
D. Wireless plans will not use Fiber Funds at this time but will be revisited when Council
reviews the Fiber Goals in the first quarter of 2016; and
E. Bring a Dig-Once Ordinance; and
F. Discuss co-build with AT&T and Google, how the City can lay its own conduit to the
premise during their buildouts; and
G. Move forward with Request for Information (“RFI”) exploring both Muni-owned model
with contractors for build and ongoing operations, and public-private model with City
owning fiber and private partner (such as Sonic) operating and owning electronics,
considering both Google in the market and without Google in the market.
Subsequently, Council approved an additional staff recommendation at the Council meeting on
November 30, 2015 (CMR ID #6301), summarized as follows:
A. Approve staff’s plans to pursue the following work concurrently, given that delay in
either case could foreclose future options for the City:
a) Response to Council Motion on Municipal Fiber and Wireless: Staff has
developed the Work Plan set forth below to address, by the third quarter of
2016, the Council’s September 28, 2015 Motion (the “Council Motion”)
requesting clarification and additional work in connection with the City’ Fiber to
the Premises (“FTTP”) Master Plan and Wireless Network Plan; and
b) Third Party Provider (Google Fiber, AT&T) Negotiations: Staff is continuing
discussions and negotiations with third parties considering new service
deployments in Palo Alto, including both Google Fiber (potential citywide FTTP
network) and AT&T (GigaPower service), and is currently targeting the end of
2015 through Q1 2016 for Council consideration of necessary agreements and
approvals.
B. Approve a temporary contract position for a Fiber and Wireless Senior Program
Manager, dedicated to Fiber-to-the-Premises and wireless initiatives, in the amount of
$228,000 annually, $684,000 for a period up to three (3) years.
City of Palo Alto Page 4
C. Approve and authorize the City Manager or his designee to execute amendments to two
contracts with Columbia Telecommunications Corporation dba CTC Technology &
Energy (“CTC”) as follows:
a) Increasing the not-to-exceed amount for Contract No. C15152568 (Wireless
Network Plan) by $94,490 from $131,650 to $226,140 (includes a 10%
contingency for the provision of related additional, but unforeseen consulting
services) and extend the contract to June 30, 2016 to develop a Request for
Proposal for dedicated wireless communications for Public Safety and Utilities, in
addition to evaluating the expansion of wireless access in retail areas.
b) Increasing the not-to-exceed amount for Contract No. C15152569 (FTTP Master
Plan) by $58,850 from $144,944 to $203,794 (includes a 10% contingency for the
provision of related additional, but unforeseen consulting services) and extend
the contract to June 30, 2016 to provide technical analysis of the RFI responses
and any consulting services needed to help develop a “Dig Once” ordinance for
consideration by the Council.
Discussion
Google Fiber
On July 18, 2016, a Google representative informed staff of a further delay in their FTTP
network deployment plans for the Bay Area. Staff understands that it could be up to 6 months
or more before Google moves forward with its network build. Google indicated that they are
exploring more innovative ways of deployment that overcome some of the challenges they are
facing in their current builds. It is the City’s understanding that the cities of Mountain View, San
Jose, Santa Clara and Sunnyvale are also being delayed . As of July 2016, Google Fiber is
continuing work on deploying fiber-optic service in eleven (11) metropolitan areas in the United
States, where construction has already begun.
The following is a map that identifies Current Fiber Cities, Upcoming Fiber Cities and Potential
Fiber Cities. The San Jose area, including Palo Alto, is currently identified as a “potential” Fiber
City.
City of Palo Alto Page 5
Co-Build Concept
At the November 30, 2015 Council meeting (CMR ID #6301), Council directed staff to move
forward with discussions with Google and AT&T to explore the possibility of concurrently laying
City fiber (i.e. “co-build” concept) as their build-outs occur. Since November 30, 2016, staff
approached Google representatives on several occasions to explore the co -build concept and
how it would work. In order to pursue a co-build with Google or any other fiber provider, the
City would need to reach agreement on, among other key terms, cost sharing options,
infrastructure impacts, network design scenarios, specifications and a timetable to implemen t.
The co-build concept is a unique and complex approach to FTTP and from what staff has
learned has never been implemented before by an “overbuilder” like Google and a
municipality. The overriding objective for the City would be to “pass” all premises with City-
owned infrastructure as Google or another fiber provider builds its own network in Palo Alto.
Examples of this type of infrastructure build out model could include installation of conduit in
underground utility areas and “messenger”2 on utility poles to support the installation of fiber
optic cables at a future date. With Google’s FTTP deployment effort currently delayed, related
discussions regarding a possible co-build concept are also on-hold.
2 Messenger is a piece of heavy metal cabling attached to a pole line to support aerial cable (e.g. coaxial, copper or
fiber optic cable).
City of Palo Alto Page 6
Staff also reached out to AT&T representatives and discussed a similar opportunity to co-build
as AT&T deploys their GigaPower Internet service in Palo Alto. As of July, 20, 2016, AT&T has
not yet indicated whether this may be a possibility, but they continue to discuss internally.
Staff Work Plan Update: City Council Motion from September 28, 2015 (CMR ID #6104) and
status of November 30, 2015 (CMR ID #6301) staff recommendations:
Task Target
Date Status
1
Council requests an update to the consultant’s
report including:
a In the FTTP Master Plan:
12/31/2015
Completed. Reviewed
assumptions for outside plant
costs and capital additions in FTTP
Master Plan with CAC and CTC on
1/21/16 and 2/18/16. CAC now in
agreement with CTC’s FTTP
network cost estimates and there
are no discrepancies to report.
Detailed assumptions, and their impacts,
used to forecast the FTTP capital additions
are to be reviewed by Citizen Advisors if
there is a disagreement between the
consultant’s report and the CAC’s
recommendation, the Staff Report to
Council will highlight the discrepancy.
Once this is accomplished, a revised
forecast is to be provided to the Council as
an Action Item
b In the Wireless Network Report:
i. A 20-year forecast should be provided
consistent with the FTTP report 12/31/2015 Completed
ii. The description of Scenario 1 lacked
both a price forecast and fiber backhaul
details for the proposed municipal
properties to be served. These details
should be included in an update prior to an
RFP. Evaluate expanding wireless access in
retail areas, with an option for expanding
Wi-Fi coverage at City facilities and public
areas as part of the RFP (Scenario 1);
9/30/2016
The draft RFP(s) and cost
estimates are currently being
completed by staff for the
following:
1. Extension of existing City Wi-Fi to
unserved City facilities & public
areas/parks
2. Evaluation of expanding Wi-Fi access
in retail areas
2
Issue RFP to add dedicated wireless
communications to increase communication
for Public Safety and Utilities departments
(Scenarios 3 and 4)
9/30/2016
The draft RFP(s) and cost
estimates are currently being
completed by staff for the
following:
1. Citywide Mobile Data Network for
Public Safety
City of Palo Alto Page 7
2. Point-to-Multipoint Network for
Secure City Enterprise Access (Public
Safety & Utilities)
3 Direct Staff to bring a dig-once Ordinance; Fall/Winter
2016
The CTC draft report was provided
on 5/16/16. The report evaluates
existing dig once models from
other municipalities and provides
recommendations for the City to
consider. The CAO, in consultation
with cross-departmental staff, is
currently reviewing the
recommendations contained in
the report.
4
Direct Staff to discuss co-build with AT&T and
Google how the City can lay its own conduit to
the premise during the buildouts;
a AT&T 9/30/2016
The City met with AT&T
representatives to discuss a co-
build opportunity as AT&T
deploys their GigaPower Internet
service in Palo Alto. Follow up
discussions have occurred.
Provided co-build proposal
overview to AT&T on 3/25/16. As
of 7/20/16 there has been no
update.
b Google TBD
At Google’s request, the
discussion regarding deployment
of FTTP for the 5 proposed Bay
Area cities the discussions to
identify the feasibility of various
joint build opportunities and the
potential deployment of Google
Fiber in Palo Alto are on hold
while they examine new,
innovative methods for fiber
deployment.
5
Move forward with RFI exploring both Muni-
owned model with contractors for build and
ongoing operations, and Public—private
model with City owned fiber and private
partner (such as Sonic) operating and owning
electronics, considering both Google in the
market and not.
6/30/2016 Completed. CTC is currently
reviewing the 8 RFIs received.
City of Palo Alto Page 8
6
Approve a temporary contract position for a
Fiber and Wireless Telecommunications
Project Manager, dedicated to Fiber-to-the-
Premises and wireless initiatives, in the
amount of $228,000 annually, $684,000 for a
period up to three (3) years
9/30/2016
Interviews have been completed
and the final 2 candidates have
been identified. References are
currently being checked and the
final decision is expected along
with the extension of an offer
letter is expected in August.
7
Approve and authorize the City Manager or his
designee to execute amendments to two
contracts with Columbia Telecommunications
Corporation dba CTC Technology & Energy
(“CTC”) as follows
a
Increasing the not-to-exceed amount for
Contract No. C15152568 (Wireless
Network Plan) by $94,490 from $131,650
to $226,140 (includes a 10% contingency
for the provision of related additional, but
unforeseen consulting services) and extend
the contract to June 30, 2016 to develop a
Request for Proposal for dedicated wireless
communications for Public Safety and
Utilities, in addition to evaluating the
expansion of wireless access in retail areas
12/31/2015 Completed, amendment finalized
on 1/6/16.
b
Increasing the not-to-exceed amount for
Contract No. C15152569 (FTTP Master
Plan) by $58,850 from $144,944 to
$203,794 (includes a 10% contingency for
the provision of related additional, but
unforeseen consulting services) and extend
the contract to June 30, 2016 to provide
technical analysis of the Request for
Information (RFI) responses and any
consulting services needed to help develop
a “Dig Once” Ordinance for consideration
by the Council
12/31/2015 Completed, amendment finalized
on 1/6/16.
Timeline
The deployment of Google Fiber in the City of Palo Alto has been delayed for up to 6 months or
more. Google indicated that they are exploring more innovative ways of deployment that
overcome some of the challenges they are facing in their current builds.
The work on the Council Motions continues and is expected to be completed by the end of
City of Palo Alto Page 9
Calendar Year 2016.
Environmental Review
The discussion and status update concerning City initiatives related to FTTP Network and
Wireless Networks and potential Google Fiber and AT&T GigaPower deployments in Palo Alto is
not a Project requiring California Environmental Quality Act review.
44
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: AUGUST 31, 2016
SUBJECT: Staff Recommendation that the Utilities Advisory Commission Recommend that
the City Council Adopt a Resolution Amending Utility Gas Rate Schedules G-1, G-
1-G, G-2, G-2-G, G-3, G-3-G, G-10 and G-10-G to Include a Separate-
Transportation Charge as Discrete Pass-Through Component
REQUEST
Staff recommends that the Utilities Advisory Commission (UAC) recommend that the City
Council adopt a resolution (Attachment A) to amend Utility Gas Rate Schedules G-1, G-1-G, G-2,
G-2-G, G-3, G-3-G, G-10 and G-10-G, as attached, to separately identify as a pass-through rate
component, a Transportation Charge.
EXECUTIVE SUMMARY
Natural gas purchased by the City of Palo Alto (CPAU) Gas Utility for its customers is brought to
Palo Alto via Pacific Gas and Electric’s (PG&E)’s transportation pipelines. The cost that CPAU
pays to use those pipelines is based on the applicable PG&E transportation rate schedule, G-
WSL, which was changed effective August 1, 2016. This rate schedule is under the purview of
the California Public Utilities Commission (CPUC). Staff receives little notice as to when
transportation rate changes will take effect or what the final rate will be.
Staff proposes that, both due to the uncertainty in timing and to minimize potential under/over
collection of funds with regards to transportation charges, that the City’s Gas Transportation
Charge be: 1) listed as a separate item on the gas rate schedules and customer bills as a
separate item; and 2) be allowed to change to directly pass through PG&E’s G-WSL rate for Palo
Alto.
Due to the relatively small difference between staff’s estimate and the final value of the G-WSL
rate, the initial change to the residential and commercial gas rates will be revenue-neutral,
decreasing the Distribution Charge the same amount as the initial Transportation Charge. The
City’s CNG facility will see a slight rate increase.
Page 1 of 3
4
BACKGROUND
CPAU’s natural gas is transported to Palo Alto’s gas distribution system via PG&E’s
transportation pipelines. The cost that PG&E charges CPAU for transportation services is stated
on PG&E’s Gas Transportation Service to Wholesale/Resale Customers (G-WSL) tariff sheet. This
schedule applies to Palo Alto and other cities and agencies who procure natural gas for resale
(such as Coalinga, Island Energy, and others). As the CPUC oversees PG&E’s rates, and while
staff can and does provide input when changes to the G-WSL rate are proposed, staff does not
know when the CPUC will: (1) approve the new rate, (2) set a date for when it will become
effective, or (3) determine to what extent the final approved rates will differ from PG&E’s
proposed rates.
On December 19, 2013, PG&E filed its application for revised Gas Transmission and Storage
(GT&S) rates for the period of 2015 through 2017. While a decision was initially anticipated by
March 2015, several subsequent events created delays. Briefs were filed by several parties,
including Palo Alto, and final oral arguments were heard in October 2015. Safety related costs
pertaining to PG&E’s response to the San Bruno pipeline explosion caused additional
postponements, and changes to rates due to that investigation were moved to a separate
hearing item that are still under evaluation by the CPUC. On June 23, 2016, the CPUC
announced the most recent change to G-WSL, effective August 1, 2016.
Staff closely followed the proceedings and the proposed rate and the proposed timing of the
effective date for the rate changed many times over the last couple of years. The uncertainty of
when, and by how much, the rate would change caused budgeting uncertainty.
DISCUSSION
As of August 1, 2016, PG&E’s G-WSL rate increased from $0.043 to $0.107 per therm, a 249%
increase. Staff anticipated that the transportation rate would rise significantly based on the
GT&S proceedings and increased costs for transportation were included in the fiscal year (FY)
2017 budget. However, due to timing and cost uncertainties which are outside of Palo Alto’s
control, staff proposes separating out the transportation cost from the distribution costs and
showing it on the rate schedule as a separate Transportation Charge. As with the monthly-
varying Commodity Charge, staff recommends making the Transportation Charge a ‘pass-
through’ charge, based on the PG&E’s G-WSL rate applicable tor Palo Alto, accounting for
delivery losses.
Staff expected and budgeted for a transportation rate of $0.106/therm, and the August G-WSL
rate is very close to that ($0.107/therm). Therefore, staff proposes reducing the Distribution
Charge by the initial Transportation Charge ($0.107/therm), resulting in a revenue-neutral rate
change for most customers. The City’s CNG facility (G-10 rate schedules) will have a slight rate
increase, as described below.
Staff proposes to include a minimum ($0) and a maximum ($0.15/therm) range on the
Transportation Charge. Any future changes to the G-WSL rate will be passed through to
customers as they become effective to CPAU. Changes to the Transportation Charge will be
Page 2 of 3
posted on the City's website. In addition, staff proposes to list the Transportation Charge as
one of the Supply Cost components (along with the Commodity and the Cap and Trade
Compliance charges) as this cost is related to delivering the commodity to Palo Alto and the
Distribution Charges are related to the cost to deliver gas to customers in Palo Alto.
CNG facility rates (G-10 and G -10G)
Gas rates were increased 8% effective July 1, 2016. This rate increase did not wholly recover
costs, but required a drawdown of reserves to cover shortfalls. Separating out the
Transportation Charge from the Distribution Charge on a revenue -neutral basis for most
customers maintains this shortfall. However, the CNG facility is a special case as it is directly
connected to PG&E's high-pressure line from PG&E and does not utilize CPAU's distribution
system, but is still allocated transportation and administrative related costs. Since the existing
rates are under -collecting for these components, including the transportation costs as a
separate charge results in a rate increase for the CNG facility of about $2,400 in FY 2017.
RESOURCE IMPACT
As part of the FY 2017 budget calculations, staff assumed that the transportation cost would be
$0.106/therm, while the final August G-WSL rate ended up being $0.107/therm. The difference
is estimated to be less than $30,000 during FY 2017, and can be absorbed by existing reserves.
In addition, the City's CNG facility will incur additional costs of $2,400 in FY 2017.
POLICY IMPACT
This recommendation does not represent a change to current City policies. The proposed
revisions do not have any policy implications.
ENVIRONMENTAL IMPACT
Adoption of this resolution changing gas rates to meet operating expenses and meet financial
reserve needs is not subject to the California Environmental Quality Act (CEQA), pursuant to
California Public Resources Code Sec. 21080(b)(8) and Title 14 of the California Code of
Regulations Sec. 15273(a).
ATTACHMENT
A. Draft Resolution Amending Utility Gas Rate Schedules G-1, G -1-G, G-2, G -2-G, G-3, G -3-G,
G-10 and G -10-G to Reflect a Pass -Through Transportation Rate Component
B. Utility Rate Schedules G-1, G -1-G, G-2, G -2-G, G-3, G -3-G, G-10 and G -10-G
PREPARED BY:
REVIEWED BY:
APPROVED BY:
ERIC KENISTON, Resource Planner C:'
ANE..R,,TCHYE Assistant Director, Resource Management
1
ED SHIKADA
Assistant City Manager/Interim Director of Utilities
Page 3 of 3
Attachment A
* NOT YET APPROVED *
Resolution No. _________
Resolution of the Council of the City of Palo Alto Amending Rate
Schedules G-1 (Residential Gas Service), G-1-G (Residential Green
Gas Service), G-2 (Residential Master-Metered and Commercial Gas
Service), G-2-G (Residential Master-Metered and Commercial Green
Gas Service), G-3 (Large Commercial Gas Service), G-3-G (Large
Commercial Green Gas Service), G-10 (Compressed Natural Gas
Service Service) and G-10-G (Compressed Natural Green Gas Service)
R E C I T A L S
A. The City’s transportation costs for gas are based on the current Pacific Gas and
Electric Company’s (PG&E’s) G-WSL rate for Palo Alto.
B. Due to the variability in PG&E’s G-WSL, largely dependent on when the California
Public Utilities Commission approves new rates, sets an effective date and makes a
determination on the extent to which the final rates will deviate from PG&E’s proposed rates,
the City has determined that it is best to identify the Transportation Charge as a separate, pass-
through component of the City’s rates so that these transportation costs can be fully and timely
recovered.
C. The Transportation Charge will be based on PG&E’s G-WSL rate for Palo Alto,
accounting for delivery losses to the Customer’s Meter, and will be updated whenever the G-
WSL is changed.
D. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of
the City of Palo Alto may by resolution adopt rules and regulations governing utility services,
fees and charges.
The Council of the City of Palo Alto does hereby RESOLVE as follows:
SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule G-1 (Residential Gas Service) is hereby amended to read as attached and
incorporated. Utility Rate Schedule G-1, as amended, shall become effective xx x, 2016.
SECTION 2. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule G-1-G (Residential Green Gas Service) is hereby amended to read as attached
and incorporated. Utility Rate Schedule G-1-G, as amended, shall become effective xx x, 2016.
SECTION 3. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule G-2 (Residential Master-Metered and Commercial Gas Service) is hereby
amended to read as attached and incorporated. Utility Rate Schedule G-2, as amended, shall
become effective xx x, 2016.
1
Attachment A
* NOT YET APPROVED *
SECTION 4. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule G-2-G (Residential Master-Metered and Commercial Green Gas Service) is
hereby amended to read as attached and incorporated. Utility Rate Schedule G-2-G, as
amended, shall become effective xx x, 2016.
SECTION 5. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule G-3 (Large Commercial Gas Service) is hereby amended to read as attached and
incorporated. Utility Rate Schedule G-3, as amended, shall become effective xx x, 2016.
SECTION 6. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule G-3-G (Large Commercial Green Gas Service) is hereby amended to read as
attached and incorporated. Utility Rate Schedule G-3-G, as amended, shall become effective xx
x, 2016.
SECTION 7. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule G-10 (Compressed Natural Gas Service Service) is hereby amended to read as
attached and incorporated. Utility Rate Schedule G-10, as amended, shall become effective xx x,
2016.
SECTION 8. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility
Rate Schedule G-10-G (Compressed Natural Green Gas Service) is hereby amended to read as
attached and incorporated. Utility Rate Schedule G-10-G, as amended, shall become effective
xx x, 2016.
SECTION 9. The Council finds that the revenue derived from the adoption of this
resolution shall be used only for the purpose set forth in Article VII, Section 2, of the Charter of
the City of Palo Alto.
SECTION 10. The Council finds that the fees and charges adopted by this resolution are
charges imposed for a specific government service or product provided directly to the payor
that are not provided to those not charged, and do not exceed the reasonable costs to the City
of providing the service or product.
SECTION 10. The Council finds that the adoption of this resolution changing gas rates
to meet operating expenses and meet financial reserve needs is not subject to the California
Environmental Quality Act (CEQA), pursuant to California Public Resources Code Sec.
21080(b)(8) and Title 14 of the California Code of Regulations Sec. 15273(a). After reviewing
the staff report and all attachments presented to Council, the Council incorporates these
documents herein and finds that sufficient evidence has been presented setting forth with
specificity the basis for this claim of CEQA exemption.
2
Attachment A
* NOT YET APPROVED *
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
___________________________ ___________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ ___________________________
Senior Deputy City Attorney City Manager
___________________________
Director of Utilities
___________________________
Director of Administrative Services
3
RESIDENTIAL GAS SERVICE
UTILITY RATE SCHEDULE G-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-1-1 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-1-1
A. APPLICABILITY:
This schedule applies to the following Customers receiving Gas Service from City of Palo Alto
Utilities:
1. Separately-metered single-family residential Customers.
2. Separately-metered multi-family residential Customers in multi-family residential facilities.
B. TERRITORY:
This schedule applies anywhere the City of Palo Alto provides Gas Service.
C. UNBUNDLED RATES: Per Service
Monthly Service Charge: ........................................................................................................$10.32
Tier 1 Rates: Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .......................................... $0.10-$2.00
2. Cap and Trade Compliance Charge ..................................................$0.00-$0.25
3. Transportation Charge........................................................................$0.00-$0.15
Distribution Charge: .............................................................................................$0.50213933
Tier 2 Rates: (All usage over 100% of Tier 1)
Supply Charges:
1. Commodity (Monthly Market Based) .......................................... $0.10-2.00
2. Cap and Trade Compliance Charge ...................................................$0.00-$0.25
3. Transportation Charge........................................................................$0.00-$0.15
Distribution Charge: .............................................................................................
........................................................................................................$1.04070.931
9
D. SPECIAL NOTES:
1. Calculation of Cost Components
RESIDENTIAL GAS SERVICE
UTILITY RATE SCHEDULE G-1
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-1-2 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-1-2
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or Taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
The Commodity Charge is based on the monthly natural gas Bidweek Price Index for
delivery at PG&E Citygate, accounting for delivery losses to the Customer’s Meter.
The Cap and Trade Compliance Charge reflects the City’s cost of regulatory compliance
with the state’s Cap and Trade Program, including the cost of acquiring compliance
instruments sufficient to cover the City’s Gas Utility’s compliance obligations. The Cap
and Trade Compliance Charge will change in response to changing market conditions,
retail sales volumes and the quantity of allowances required.
The Transportation Charge is based on the current PG&E G-WSL rate for Palo Alto,
accounting for delivery losses to the Customer’s Meter.
The Commodity, and Cap and Trade Compliance and Transportation Charges will fall
within the minimum/maximum ranges set forth in Section C.
2. Seasonal Rate Changes:
The Summer period is effective April 1 to October 31 and the Winter period is effective from
November 1 to March 31. When the billing period includes use in both the Summer and the
Winter periods, the usage will be prorated based on the number of days in each seasonal
period, and the charges based on the applicable rates for each period. For further discussion
of bill calculation and proration, refer to Rule and Regulation 11.
3. Calculation of Usage Tiers
Tier 1 natural gas usage shall be calculated and billed based upon a level of 0.667 therms per
day during the Summer period and 2.0 therms per day during the Winter period, rounded to
the nearest whole therm, based on meter reading days of service. As an example, for a 30
day bill, the Tier 1 level would be 20 therms during the Summer period and 60 therms during
the Winter period months. For further discussion of bill calculation and proration, refer to
Rule and Regulation 11.
{End}
RESIDENTIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-1-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-1-G-1 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-1-G-1
A. APPLICABILITY:
This schedule applies to the following Customers receiving Gas Service from the City of Palo
Alto Utilities under the PaloAltoGreen Gas Program:
1. Separately-metered single-family residential Customers.
2. Separately-metered multi-family residential Customers in multi-family residential
facilities.
B. TERRITORY:
This schedule applies anywhere the City of Palo Alto provides Gas Service.
C. UNBUNDLED RATES: Per Service
Monthly Service Charge: ........................................................................................................$10.32
Tier 1 Rates: Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .......................................... $0.10-$2.00
2. Cap and Trade Compliance Charges .............................................. $0.00-$0.25
3 Transportation Charge .................................................................... $0.00-$0.15
Distribution Charge:.............................................................................................$0.50213933
PaloAltoGreen Gas Charge .................................................................................. $0.1200
Tier 2 Rates: (All usage over 100% of Tier 1)
Supply Charges:
1. Commodity (Monthly Market Based) .......................................... $0.10-2.00
2. Cap and Trade Compliance Charges ..................................................$0.00-$0.25
3 Transportation Charge .......................................................................$0.00-$0.15
Distribution Charge:.............................................................................................$1.04070.9319
PaloAltoGreen Gas Charge .................................................................................. $0.1200
RESIDENTIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-1-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-1-G-2 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-1-G-2
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or Taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
The Commodity Charge is based on the monthly natural gas Bidweek Price Index for
delivery at PG&E Citygate, accounting for delivery losses to the Customer’s Meter.
The Cap and Trade Compliance Charge reflects the City’s cost of regulatory compliance
with the state’s Cap and Trade Program, including the cost of acquiring compliance
instruments sufficient to cover the City’s Gas Utility’s compliance obligations. The Cap
and Trade Compliance Charge will change in response to changing market conditions,
retail sales volumes and the quantity of allowances required.
The Transportation Charge is based on the current PG&E G-WSL rate for Palo Alto,
accounting for delivery losses to the Customer’s Meter.
The Commodity, and Cap and Trade Compliance and Transportation Charges will fall
within the minimum/maximum ranges set forth in Section C. 2. Seasonal Rate Changes:
The Summer period is effective April 1 to October 31 and the Winter period is effective
from November 1 to March 31. When the billing period includes use in both the Summer
and the Winter periods, the usage will be prorated based on the number of days in each
seasonal period, and the charges based on the applicable rates for each period. For
further discussion of bill calculation and proration, refer to Rule and Regulation 11.
3. Calculation of Usage Tiers
Tier 1 natural gas usage shall be calculated and billed based upon a level of 0.667 therms
per day during the Summer period and 2.0 therms per day during the Winter period,
rounded to the nearest whole therm, based on meter reading days of service. As an
example, for a 30 day bill, the Tier 1 level would be 20 therms during the Summer period
and 60 therms during the Winter period months. For further discussion of bill calculation
and proration, refer to Rule and Regulation 11.
RESIDENTIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-1-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-1-G-3 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-1-G-3
4. PaloAltoGreen Gas Program Description and Participation
PaloAltoGreen Gas provides for the reduction of green-house gas (GHG) emissions
associated with a Customer’s Gas usage, through the purchase of certified environmental
offsets, with a preference to projects located in California. Purchases are made to match
100% of the therm usage at the Customer’s premises every month.
Customers choosing to participate shall fill out a PaloAltoGreen Gas Program application
provided by the Customer Service Center.
{End}
RESIDENTIAL MASTER-METERED AND COMMERCIAL GAS SERVICE
UTILITY RATE SCHEDULE G-2
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-2-1 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-2-1
A. APPLICABILITY:
This schedule applies to the following Customers receiving Gas Service from the City of Palo Alto
Utilities:
1. Commercial Customers who use less than 250,000 therms per year at one site.
2. Master-metered residential Customers in multi-family residential facilities.
B. TERRITORY:
This schedule applies anywhere the City of Palo Alto provides Gas Service.
C. UNBUNDLED RATES: Per Service
Monthly Service Charge: ........................................................................................................$78.23
Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .................................... $0.10-$2.00
2. Cap and Trade Compliance Charges ................................................. $0.00-0.25
3. Transportation Charge........................................................................$0.00-$0.15
Distribution Charge: ........................................................................................................ $0.6855
5767
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or Taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
The Commodity Charge is based on the monthly natural gas Bidweek Price Index for
delivery at PG&E Citygate, accounting for delivery losses to the Customer’s Meter.
The Cap and Trade Compliance Charge reflects the City’s cost of regulatory compliance with
the state’s Cap and Trade Program, including the cost of acquiring compliance instruments
sufficient to cover the City’s Gas Utility’s compliance obligations. The Cap and Trade
Compliance Charge will change in response to changing market conditions, retail sales
volumes and the quantity of allowances required.
RESIDENTIAL MASTER-METERED AND COMMERCIAL GAS SERVICE
UTILITY RATE SCHEDULE G-2
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-2-2 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-2-2
The Transportation Charge is based on the current PG&E G-WSL rate for Palo Alto,
accounting for delivery losses to the Customer’s Meter.
The Commodity, and Cap and Trade Compliance and Transportation Charges will fall within
the minimum/maximum ranges set forth in Section C.
{End}
RESIDENTIAL MASTER-METERED AND COMMERCIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-2-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-2-G-1 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-2-G-1
A. APPLICABILITY:
This schedule applies to the following Customers receiving Gas Service from the City of Palo
Alto Utilities under the PaloAltoGreen Gas Program:
1. Master-metered residential Customers in multi-family residential facilities.
2. Commercial Customers who use less than 250,000 therms per year at one site.
B. TERRITORY:
This schedule applies anywhere the City of Palo Alto provides Gas Service.
C. UNBUNDLED RATES:
1. 100% Renewable/Full Green option: Per Service
Monthly Service Charge: ............................................................................................$78.23
Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .......................................... $0.10-$2.00
2. Cap and Trade Compliance Charges .................................................... $0.00-0.25
3. Transportation Charge .......................................................................... $0.00-$0.15
Distribution Charge: ............................................................................................$0.68555767
PaloAltoGreen Gas Charge .................................................................................. $0.1200
2. 100 Therm block option: Per Service
Monthly Service Charge: ............................................................................................$78.23
Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .......................................... $0.10-$2.00
2. Cap and Trade Compliance Charges ....................................................... $0.00-0.25
3. Transportation Charge .............................................................................$0.00-$0.15
Distribution Charge: ............................................................................................$0.68555767
RESIDENTIAL MASTER-METERED AND COMMERCIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-2-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-2-G-2 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-2-G-2
PaloAltoGreen Gas Charge (per 100 therm block) .............................................. $12.00
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or Taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
The Commodity Charge is based on the monthly natural gas Bidweek Price Index for
delivery at PG&E Citygate, accounting for delivery losses to the Customer’s Meter.
The Cap and Trade Compliance Charge reflects the City’s cost of regulatory compliance
with the state’s Cap and Trade Program, including the cost of acquiring compliance
instruments sufficient to cover the City’s Gas Utility’s compliance obligations. The Cap
and Trade Compliance Charge will change in response to changing market conditions,
retail sales volumes and the quantity of allowances required.
The Transportation Charge is based on the current PG&E G-WSL rate for Palo Alto,
accounting for delivery losses to the Customer’s Meter.
The Commodity, and CCap and Trade Compliance and Transportation Charges will fall
within the minimum/maximum ranges set forth in Section C.
2. Request for Service
A qualifying Customer may request service under this schedule for more than one
account or meter if the accounts are located on one. A site consists of one or more
contiguous parcels of land with no intervening public right-of-ways (e.g. streets).
3. PaloAltoGreen Gas Program Description and Participation
PaloAltoGreen Gas provides for the reduction of green-house gas (GHG) emissions
associated with a Customer’s gas usage, through the purchase of certified environmental
offsets, with a preference to projects located in California. Purchases are made to match
100% of the therm usage at the Customer’s facility every month (the 100%
Renewable/Full Green option), or in 100 therm blocks.
RESIDENTIAL MASTER-METERED AND COMMERCIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-2-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-2-G-3 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-2-G-3
Customers choosing to participate shall fill out a PaloAltoGreen Gas Program application
provided by the Customer Service Center.
{End}
LARGE COMMERCIAL GAS SERVICE
UTILITY RATE SCHEDULE G-3
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-3-1 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-3-1
A. APPLICABILITY:
This schedule applies to the following Customers receiving Gas Service from the City of Palo
Alto Utilities:
1. Commercial Customers who use at least 250,000 therms per year at one site.
2. Customers at City-owned generation facilities.
B. TERRITORY:
This schedule applies anywhere the City of Palo Alto provides natural gas service.
C. UNBUNDLED RATES: Per Service
Monthly Service Charge: $377.43
Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .................................................... $0.10-$2.00
2. Cap and Trade Compliance Charges ...................................................... $0.00-0.25
3. Transportation Charge .......................................................................... $0.00-$0.15
Distribution Charge: .....................................................................................................$0.67755687
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or Taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
The Commodity Charge is based on the monthly natural gas Bidweek Price Index for
delivery at PG&E Citygate, accounting for delivery losses to the Customer’s Meter.
The Cap and Trade Compliance Charge reflects the City’s cost of regulatory compliance
with the state’s Cap and Trade Program, including the cost of acquiring compliance
LARGE COMMERCIAL GAS SERVICE
UTILITY RATE SCHEDULE G-3
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-3-2 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-3-2
instruments sufficient to cover the City’s Gas Utility’s compliance obligations. The Cap
and Trade Compliance Charge will change in response to changing market conditions,
retail sales volumes and the quantity of allowances required.
The Transportation Charge is based on the current PG&E G-WSL rate for Palo Alto,
accounting for delivery losses to the Customer’s Meter.
The Commodity, and Cap and Trade Compliance and Transportation Charges will fall
within the minimum/maximum ranges set forth in Section C.
2. Request for Service
A qualifying Customer may request service under this schedule for more than one
account or meter if the accounts are located on one site. A site consists of one or more
contiguous parcels of land with no intervening public right-of- ways (e.g. streets).
3. Changing Rate Schedules
Customers may request a rate schedule change at any time to any applicable City of Palo
Alto full-service rate schedule.
{End}
LARGE COMMERCIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-3-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-3-G-1 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-3-G-1
A. APPLICABILITY:
This schedule applies to the following Customers receiving Gas Service from the City of Palo
Alto Utilities under the PaloAltoGreen Gas Program:
1. Commercial Customers who use at least 250,000 therms per year at one site.
2. Customers at City-owned generation facilities.
B. TERRITORY:
This schedule applies anywhere the City of Palo Alto provides Gas Service.
C. UNBUNDLED RATES:
1. 100% Renewable/Full Green option: Per Service
Monthly Service Charge: $377.43 Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .......................................................... $0.10-$2.00
2. Cap and Trade Compliance Charges .......................................................... $0.00-0.25
3. Transportation Charge ................................................................................. $0.00-$0.15
Distribution Charge: .........................................................................................$0.67755687
PaloAltoGreen Gas Charge: ......................................................................................$0.1200
2. 100 Therm block option: Per Service
Monthly Service Charge: $377.43 Per Therm
Supply Charges:
1. Commodity (Monthly Market Based) .......................................................... $0.10-$2.00
2. Cap and Trade Compliance Charges .......................................................... $0.00-0.25
3. Transportation Charge ................................................................................. $0.00-$0.15
Distribution Charge: ...........................................................................................$0.6775687
PaloAltoGreen Gas Charge (per 100 therm block): ....................................................$12.00
LARGE COMMERCIAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-3-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-3-G-2 Effective 7x-1x-2016
dated 27-1-20156 Sheet No G-3-G-2
D. SPECIAL NOTES:
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and
adjusted for any applicable discounts, surcharges and/or Taxes. On a Customer’s bill
statement, the bill amount may be broken down into appropriate components as
calculated under Section C.
The Commodity Charge is based on the monthly natural gas Bidweek Price Index for
delivery at PG&E Citygate, accounting for delivery losses to the Customer’s Meter.
The Cap and Trade Compliance Charge reflects the City’s cost of regulatory compliance
with the state’s Cap and Trade Program, including the cost of acquiring compliance
instruments sufficient to cover the City’s Gas Utility’s compliance obligations. The Cap
and Trade Compliance Charge will change in response to changing market conditions,
retail sales volumes and the quantity of allowances required.
The Transportation Charge is based on the current PG&E G-WSL rate for Palo Alto,
accounting for delivery losses to the Customer’s Meter.
The Commodity, and Cap and Trade Compliance and Transportation Charges will fall
within the minimum/maximum ranges set forth in Section C.
2. Request for Service
A qualifying Customer may request service under this schedule for more than one
account or meter if the accounts are located on one site. A site consists of one or more
contiguous parcels of land with no intervening public right-of-ways (e.g. streets).
3. PaloAltoGreen Gas Program Description and Participation
PaloAltoGreen Gas provides for the reduction of green-house gas (GHG) emissions
associated with a Customer’s gas usage, through the purchase of certified environmental
offsets, with a preference to projects located in California. Purchases are made to match
100% of the therm usage at the Customer’s facility every month, (the 100%
Renewable/Full Green option), or in 100 therm blocks.
Customers choosing to participate shall fill out a PaloAltoGreen Gas Program application
provided by the Customer Service Center.
{End}
COMPRESSED NATURAL GAS SERVICE
UTILITY RATE SCHEDULE G-10
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-10-1 Effective 7x-1x-2016
dated 47-201-20156 Sheet No.G-10-1
A. APPLICABILITY:
This schedule applies to the sale of natural gas to the City-owned compressed natural gas (CNG) fueling
station at the Municipal Service Center in Palo Alto
B. TERRITORY:
Applies to location at the Municipal Service Center in City of Palo Alto.
C. UNBUNDLED RATES: Per Service
Monthly Service Charge: ........................................................................................................$52.93
Per Therm
Supply Charges:
Commodity (Monthly Market Based) ................................................................ $0.10-$2.00
Cap and Trade Compliance Charges .......................................................................... $0.00 to $0.25
Transportation Charge........................................................................................ $0.00-$0.15
Distribution Charge .......................................................................................................$0.09630093
D. SPECIAL CONDITIONS
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and adjusted for
any applicable discounts, surcharges and/or Taxes. On a Customer’s bill statement, the bill amount
may be broken down into appropriate components as calculated under Section C.
The Commodity charge is based on the monthly natural gas Bidweek Price Index for delivery at
PG&E Citygate, accounting for delivery losses to the Customer’s Meter.
The Cap and Trade Compliance Charge reflects the City’s cost of regulatory compliance with the
state’s Cap and Trade Program, including the cost of acquiring compliance instruments sufficient to
cover the City’s Gas Utility’s compliance obligations. The Cap and Trade Compliance Charge will
change in response to changing market conditions, retail sales volumes and the quantity of
COMPRESSED NATURAL GAS SERVICE
UTILITY RATE SCHEDULE G-10
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-10-2 Effective 7x-1x-2016
dated 47-201-20156 Sheet No.G-10-2
allowances required.
The Transportation Charge is based on the current PG&E G-WSL rate for Palo Alto, accounting for
delivery losses to the Customer’s Meter.
The Commodity, and Cap and Trade Compliance and Transportation Charges will fall within the
minimum/maximum range set forth in Section C.
{End}
COMPRESSED NATURAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-10-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-10-G--1 Effective x7-1x-2016
dated 47-201-20156 Sheet No.G-10-G-1
A. APPLICABILITY:
This schedule applies to the wholesale sale of natural gas to the City-owned compressed natural gas
(CNG) fueling station at the Municipal Service Center in Palo Alto under the PaloAltoGreen Gas
Program:
B. TERRITORY:
The City-owned compressed natural gas (CNG) fueling station located at the Municipal Service Center
in City of Palo Alto.
C. UNBUNDLED RATES: Per Service
Monthly Service Charge: ........................................................................................................$52.93
Per Therm
Supply Charges:
Commodity (Monthly Market Based) .................................................... $0.10-$2.00
Cap and Trade Compliance Charges .................................................. $0.00 to $0.25
Transportation Charge........................................................................................ $0.00-$0.15
Distribution Charge ......................................................................................................$0.0963.0093
PaloAltoGreen Gas Charge ...................................................................................................$0.1200
D. SPECIAL CONDITIONS
1. Calculation of Cost Components
The actual bill amount is calculated based on the applicable rates in Section C above and adjusted for
any applicable discounts, surcharges and/or Taxes. On a Customer’s bill statement, the bill amount
may be broken down into appropriate components as calculated under Section C.
The Commodity charge is based on the monthly natural gas Bidweek Price Index for delivery at
PG&E Citygate, accounting for delivery losses to the Customer’s Meter.
The Cap and Trade Compliance Charge reflects the City’s cost of regulatory compliance with the
COMPRESSED NATURAL GREEN GAS SERVICE
UTILITY RATE SCHEDULE G-10-G
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Supersedes Sheet No G-10-G--2 Effective x7-1x-2016
dated 47-201-20156 Sheet No.G-10-G-2
state’s Cap and Trade Program, including the cost of acquiring compliance instruments sufficient to
cover the City’s Gas Utility’s compliance obligations. The Cap and Trade Compliance Charge will
change in response to changing market conditions, retail sales volumes and the quantity of
allowances required.
The Transportation Charge is based on the current PG&E G-WSL rate for Palo Alto, accounting for
delivery losses to the Customer’s Meter.
The Commodity, and Cap and Trade Compliance and Transportation Charges will fall within the
minimum/maximum range set forth in Section C.
2. PaloAltoGreen Gas Program Description and Participation
PaloAltoGreen Gas provides for the reduction of green-house gas (GHG) emissions associated with a
Customer’s Gas usage, through the purchase of certified environmental offsets, with a preference to
projects located in California. Purchases are made to match 100% of the therm usage at the
Customer’s premises every month.
Customers choosing to participate shall fill out a PaloAltoGreen Gas Program application provided
by the Customer Service Center.
{End}