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HomeMy WebLinkAbout2016-11-02 Utilities Advisory Commission Agenda PacketUtilities Advisory Commission Minutes Approved on: Page 1 of 6 UTILITIES ADVISORY COMMISSION MEETING MINUTES OF OCTOBER 5, 2016 CALL TO ORDER Vice Chair Danaher called to order at 7:05 p.m. the meeting of the Utilities Advisory Commission (UAC). Present: Vice Chair Danaher, Commissioners Forssell, Johnston, and Trumbull Absent: Chair Cook, Commissioners Ballantine, Schwartz, and Council Liaison Scharff ORAL COMMUNICATIONS None. APPROVAL OF THE MINUTES Commissioner Forssell moved to approve the minutes from the August 31, 2016 UAC special meeting and Commissioner Johnston seconded the motion. The motion carried unanimously (4- 0) with Vice Chair Danaher, and Commissioners Forssell, Johnston, and Trumbull voting yes and Chair Cook and Commissioners Ballantine and Schwartz absent. AGENDA REVIEW AND REVISIONS None. REPORTS FROM COMMISSION MEETINGS/EVENTS None. UTILITIES DIRECTOR REPORT 1. Bay Area SunShares Solar PV & Zero-Emissions Vehicle Program This is the last month to sign up for the Bay Area SunShares program, which offers discounted rates on solar PV systems and zero-emissions vehicles. By harnessing the bulk buying power of homeowners and vehicle buyers, SunShares aims to make it simpler and cheaper to go solar or purchase a zero-emissions vehicle. Participation is open to residents and employees of companies located in any of the nine Bay Area counties, as well as Yolo and Sacramento counties. The last day to join is November 4. Details and registration are available at cityofpaloalto.org/SunShares or bayareasunshares.org 2. No Better Time to Go Solar! With Council direction to revise the method to calculate the Net Energy Metering (NEM) cap, Palo Alto’s NEM cap increased 13% from 9.5 megawatts (MW) to 10.8 MW. Solar customers can still take advantage of the NEM rate, which offers full retail value for their solar production, before the program closes. The City could reach the new NEM cap within the next six months, after which new solar customers will be placed on the NEM Successor DRAFT Utilities Advisory Commission Minutes Approved on: Page 2 of 6 rate. The expansion of the NEM cap and the availability of the SunShares program make now the best time to go solar! Information on Palo Alto’s solar programs is available at cityofpaloalto.org/solar 3. Georgetown University Energy Prize Competition The City continues its participation in the Georgetown University Energy Prize competition which culminates at the end of December 2016. Utilities is collaborating with the Palo Alto Unified School District to develop programs designed to engage residential customers. At the core of the programs is CPAU’s new Utility Portal, an online tool that enables customers to learn about their energy and water use, efficiency measures and tips to reduce usage. In order to increase Portal engagement, Utilities is developing an Energy Passport initiative for elementary schools, as well as a Portal Sign-Up campaign for middle schools and high schools. PAUSD is also connecting its curriculum with the real-life information on energy and water use. More at www.cityofpaloalto.org/georgetown 4. Events & Workshops – details and registration are at cityofpaloalto.org/workshops  September 17, CPAU hosted a workshop on the Bay Area SunShares program  September 18, CPAU tabled at the Midtown Residents Association Ice Cream Social  September 24, CPAU hosted a Landscape Design and Planting Workshop  October 2, CPAU tabled at the Bike Palo Alto, Bike and Roll event  October 15, CPAU will host a Pruning, Propagation & Dead Heading Workshop 5. Joint UAC/Council Meeting The Joint Study Session between the Council and UAC is currently being re-scheduled for either November 28 or December 5. Please look for an email message asking for your availability on those dates. COMMISSIONER COMMENTS None. UNFINISHED BUSINESS 1. Selection of Potential topics for the Joint Study Session with Council Noting that the date for the joint meeting with t he Council has to be rescheduled, Vice Chair Danaher said that he and Chair Cook would meet with the Mayor and Vice Mayor to discuss topics for the meeting. NEW BUSINESS ITEM 1: ACTION: Recommendation that the Utilities Advisory Commission Recommend that Council Adopt a Net Energy Metering (NEM) Transition Policy Assistant Director Jane Ratchye noted that, in accordance with the UAC’s recommendation, Council adopted the proposed Net Energy Metering (NEM) Successor Program on August 22, 2016, but requested that staff return to Council with options for the NEM Transition Policy. She added that Council also directed staff to use an alternate method to calculate the NEM cap. Ratchye indicated that the original staff proposal for the NEM Transition Policy was that customers would remain in NEM for 20 years from the date of interconnection and that customers may expand their systems by up to 10% and still remain in NEM . However, solar Utilities Advisory Commission Minutes Approved on: Page 3 of 6 photovoltaic (PV) system expansions larger than 10% would result in the e ntire system being under the NEM Successor Program. Ratchye indicated that a community group, Carbon Free Palo Alto, developed an alternative for the system expansion aspect of the Transition Policy such that systems could expand and remain under NEM, but that the transition period would be proportionally reduced by the amount of the increase. Ratchye said that the proposal is now staff’s new recommendation. She explained that staff’s original proposal accommodated increased systems that would be prompted by the need to replace a failed panel or two in a system. The revised expansion policy accommodates larger PV system expansions that could be prompted by the desire to increase a system size since the price of PV panels has decreased or because electric use has increased with the addition of an electric vehicle (EV), or after electrification of an appliance. Ratchye indicated that the revised methodology for calculating the NEM cap is 5% of the sum of the customer class non-coincident peak loads, rather than 5% of the overall system load. The revised calculation increases the NEM cap from 9.5 megawatts (MW) to 10.8 MW providing more room under the cap for the Vice Chair Danaher described the NEM program as one that pays the retail rate for all PV generation and noted that the program will transition to the NEM Success Commissioner Johnston clarified that the original proposal allowed an expansion of a system by up to 10% without any change in the transition period, but the new proposal would shorten the transition period even with a system expansion of up to 10%. Ratchye said that this statement was correct. ACTION: Commissioner Forssell made a motion that the UAC recommend that Council adopt the proposed Net Energy Metering Transition Policy. Commissioner Johnston seconded the motion. The motion carried unanimously (4-0, with Vice Chair Danaher and Commissioners Forssell, Johnston, and Trumbull voting yes and Chair Cook and Commissioners Ballantine and Schwartz absent). ITEM 2. ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Approve Design Guidelines for the 2017 Gas Cost of Service Analysis Vice Chair Danaher asked staff to provide some background on why the City completes cost of service analyses (COSAs) prior to developing its rate proposals. Acting Rates Manager Eric Keniston explained that, for gas and electric rates, the City is subject to the requirements of Proposition 26, which requires that all rates be based on the cost of service. A cost of service analysis allocates expenses across ratepayer groups. Vice Chair Danaher noted that the City’s electric supplies are carbon neutral and that the Council will consider a proposal to convert the gas supplies to be carbon neutral . He said that the Council encourages, and the UAC supports, moving towards electrification. Commissioner Forssell asked if the 9% projected rate increase in July 2017 will change as a result of the COSA. Keniston responded that the system wide rate increase will be determined by the City, but that the COSA may reveal the need to make adjustments between costs allocated to different customer groups. Utilities Advisory Commission Minutes Approved on: Page 4 of 6 Commissioner Johnston asked if there would be different customer gro ups identified. Keniston said that this would be looked at and is addressed by proposed Design Guideline 3 (The COSA should involve a review of all existing rate schedules for applicability in the COSA). Senior Deputy Assistant City Attorney Jessica Mullan said that the first guideline is the overall guiding principle and that any policies that may be considered must be compliant with the overarching cost of service guideline and must be in compliance with Proposition 26. ACTION: Commissioner Trumbull made a motion that the UAC recommend that Council a pprove the proposed Design Guidelines for the 2017 Gas Cost of Service Analysis. Commissioner Forssell seconded the motion. The motion carried unanimously (4-0, with Vice Chair Danaher and Commissioners Forssell, Johnston, and Trumbull voting yes and Chair Cook and Commissioners Ballantine and Schwartz absent). ITEM 3. DISCUSSION: Discussion of Energy Storage and Microgrid Applications in Palo Alto Senior Resource Planner Shiva Swaminathan presented the study results on the application of microgrid and energy storage systems in Palo Alto. He outlined that the study did not find any cost-effective application for such system at present, but anticipated the proliferation of energy storage in the coming years as cost decline and value for such services increase. He also outlined elements of a potential storage pilot project for 125kW/500 kWh at a cost of $250,000. Commissioner Trumbull indicated that he was confused because he is an advocate for switching from natural gas to electricity, but asked why we are saying that folks should get off of natural gas and use only electricity if we are exposing them to reliability issues. Swaminathan acknowledged that, having two fuel sources coming to your home—electricity and natural gas—will have diversification value in the event of an emergency like an earthquake. However, there may be other customers who want to eliminate the smoke coming out o f their smoke stacks at home by burning gas; for them, electrification may be the solution. Swaminathan said that it is a trade-off each person has to make. Vice Chair Danaher asked staff to explain the State’s establishment of storage mandates. Swaminathan explained that the State is interested in storage to manage intermittent renewables like solar and wind. Since storage is a fast-acting resource and can respond to the vagaries of intermittent resources, storage is expected to take on a larger role in the coming years. Commissioner Forssell noted that backup power is one value stream shown in the analysis, but there are other values too such as frequency regulation. Swaminathan concurred. Commissioner Forssell asked which customers value backup generation. Swaminathan indicated that many customers such as hospitals and location with computer servers need higher reliability service. He said that if a customer is totally reliant on electricity and does not use natural gas, they may wish to have energy storage systems to improve reliability. Utilities Advisory Commission Minutes Approved on: Page 5 of 6 Vice Chair Danaher noted to the visiting students in the audience that the City has large utility- scale solar resources and other renewable supplies, but that the City relies on others to manage the transmission grid to deliver this power to Palo Alto. Vice Chair Danaher mentioned that the energy price arbitrage is a low value. Swaminathan concurred. Commissioner Forssell asked whether the pilot project proposal was to partner with a customer to install storage at their site and learn from the operations. Swaminathan agreed, but mentioned that the objective is to have more than one customer participate in the pilot. Commissioner Johnston asked if staff had identified any customers to participate in the pilot. Swaminathan said no, but that there have been inquiries. Vice Chair Danaher agreed with the analysis finding that there was low value proposition at this time and asked for the rationale for spending $250,000 for a pilot project. Swaminathan said the objective was to learn about the technology, the permitting rules, how to optimally operate the system, and the impact on such systems on the retail rate-making process. Vice Chair Danaher asked if there was a way to reduce the cost. Swaminathan said that the project could be scaled down, but the minimum size to bid ancillary services into the CAISO is 100 kilowatts (kW), the size of the proposed pilot. Vice Chair Danaher mentioned the value is to determine how to bid these resources into the CAISO system. Vice Chair Danaher asked if we have control of Calaveras hydro project operation. Swaminathan replied in the affirmative. Vice Chair Danaher asked about the objective of a pilot. Swaminathan responded that this technology is coming and the idea is to learn about how we could have a win-win solution in conjunction with our customers; the question of whether we can afford such a pilot is part of this discussion. Swaminathan indicated that staff believes that spending $50k/per year for 5 years in R&D funds may be a good use of funds to better prepare for the future. Vice Chair Danaher asked for an explanation of the value chart. Swaminathan outlined the multiple value chains shown in the “spider-chart” in the report. Commissioner Trumbull again asked why the City is encouraging electrification if there is an issue of reliability. Assistant Director Jane Ratchye mentioned that the current reliability level is very high. She also pointed out that no decision has been made about electrification and we are not walking down the road of wholesale electrification yet. Commissioner Forssell added that the purpose of this discussion today is to meet a legislative requirement under AB 25142 and not the topic of electrification at the Commission’s prior meeting. Vice Chair Danaher asked how Demand Response (DR) differs from storage. Swaminathan mentioned that DR resources tend to be less expensive, but storage is faster acting and more reliable. Vice Chair Danaher asked if there are other DR programs that would be more productive than storage, such as EV batteries. Swaminathan mentioned that staff is working on a program with Utilities Advisory Commission Minutes Approved on: Page 6 of 6 EVs and expect to come to the Commission in the spring along with the storage recommendation. Vice Chair Danaher asked if staff could describe the City’s new technology program. Swaminathan explained the elements of the Program for Emerging Technology (PET), which is designed to provide an opportunity to demonstrate new technologies on City facilities or using willing Utilities customers, at no cost to the City. Technologies tested under PET include PV on streetlights with a grid monitoring sensor and motion sensing LED lights installed in City Hall’s parking garage. Commissioner Forssell said she supported the R&D pilot like Commissioner Danaher and that she was looking forward to seeing a fleshed out pilot project proposal from staff. ITEM 4. ACTION: Selection of Potential Topic(s) for discussion at Future UAC Meeting Commissioner Forssell asked that she would like a discussion on the next steps on the Fiber to the Premises (FTTP) project and stated that it could be a discussion at the UAC/Council joint meeting. General Manager Shikada said that this would be a good topic to revisit with the Council at the joint meeting. Vice Chair Danaher noted that the Utilities strategic planning is also a topic that will be coming to the UAC and could be discussed at the joint meeting. ACTION: None. Meeting adjourned at 8:18 p.m. Respectfully submitted, Marites Ward City of Palo Alto Utilities Page 1 of 10 1 MEMORANDUM TO: UTILITIES ADVISORY COMMISSION FROM: UTILTIES DEPARTMENT DATE: November 2, 2016 SUBJECT: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Adopt a Resolution to Continue the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program and Amend Associated Program Rules: (1) for Local Solar Resources with a Tiered Pricing Structure Starting at 16.5 ¢/kWh to a 3 MW Cap Which Declines to the City’s Avoided Cost Value Upon Reaching 6MW of Program Capacity; and (2) for Local Non-Solar Resources With No Capacity Limit at a Price of 8.4 ¢/kWh to 8.5 ¢/kWh REQUEST Staff recommends that the Utilities Advisory Commission (UAC) recommend that the City Council adopt a resolution (Attachment A) to: 1. Establish a tiered schedule for the Palo Alto CLEAN program price for local solar energy resources as follows: a. For the first 3 MW, maintain the current price of 16.5 cents per kilowatt-hour (¢/kWh) for a 20-year or 25-year contract term; b. For the next (fourth) MW, reduce the price to 14 ¢/kWh for a 20-year or 25-year contract term; c. For the next 1 (fifth) MW, reduce the price to 12 ¢/kWh for a 20-year or 25-year contract term; d. For the next 1 (sixth) MW, reduce the price to the greater of the avoided cost or 10 ¢/kWh for a 20-year or 25-year contract term; and e. For any capacity over 6 MW, reduce the price to the avoided cost of such energy (currently 8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term); and 2. Raise the Palo Alto CLEAN program price for local non-solar eligible renewable energy resources to the updated avoided cost of such energy (8.4 ¢/kWh for a 20-year contract term, or 8.5 ¢/kWh for a 25-year contract term), from the prior price (8.1 ¢/kWh for a 20-year contract term, or 8.2 ¢/kWh for a 25-year contract term), and to remove the program limit of 3 MW for local non-solar eligible renewable resources. Page 2 of 10 EXECUTIVE SUMMARY In March 2012 the Council adopted the Palo Alto CLEAN program (also commonly referred to as a feed-in tariff, or FIT, program). The program was designed to address the Long-term Electric Acquisition Plan (LEAP) objective to enhance supply reliability through the pursuit of local generation opportunities, and to complement the City of Palo Alto Utilities’ (CPAU’s) existing PV Partners solar rebate program. Palo Alto CLEAN created an additional alternative for property owners by enabling them to build a new solar system on their property and sell the energy to CPAU under a long-term, fixed-rate, standardized contract rather than use the energy on site. Though solar developers expressed interest in Palo Alto CLEAN in 2012, the initial contract price (14 ¢/kWh for a 20-year term) proved insufficient to facilitate the most common business model used by project developers, which involves a third-party investor leasing roof space from a property owner. Council increased the Palo Alto CLEAN price to 16.5 ¢/kWh in December 2012, and has maintained it at that level ever since (last reaffirming it in March 2016). In May 2015, Council added a 25-year contract term option, and expanded the program to include non- solar eligible renewable energy resources, setting their contract prices at the avoided cost level. Although it started the year with only one participant, the CLEAN program appears to be about to reach the 3 MW program capacity limit for solar resources. In the first two months of this year, Komuna Energy executed CLEAN contracts for five projects that would account for about 1.4 MW of capacity. And last month, one of the City’s large commercial customers submitted an application for a CLEAN project that would consume the remaining 1.7 MW of program capacity—and potentially significantly more than that amount. Staff recommends that all solar capacity installed under the CLEAN program in excess of the 3 MW program cap—including that portion of the large commercial customer’s system that exceeds the cap—be compensated according to a tiered schedule that gradually reduces the CLEAN price for solar energy to the avoided cost of that solar energy after the program has 6 MW of installed capacity. BACKGROUND CPAU has a long history of supporting solar power. It initiated the PV Partners program in 1999 to provide rebates to residential and commercial customers who install solar for their own use , and in 2007 the program was expanded to meet the requirements of the State’s Million Solar Roofs Bill (Senate Bill 1 (SB1), 2006). CPAU was mandated by SB1 to offer rebates through the PV Partners until the total SB1 program budget of $13 million was exhausted, which occurred in April 2016, when all rebate funds for commercial solar PV systems were reserved. All residential rebate funds were reserved as of August 2014. In March 2012, the City expanded its support for local distributed generation by launching Palo Alto CLEAN (Clean Local Energy Accessible Now) with a price of 14 ¢/kWh for a 20-year contract (Staff Report 2548, Resolution 9236). The program, which was set to expire in December 2012, expanded the options available to property owners by enabling them to sell energy directly to CPAU under a standardized long-term contract instead of using the energy on site. After Page 3 of 10 receiving no response to the program, in December 2012, Council extended the CLEAN program and increased the rate to 16.5 ¢/kWh for a 20-year contract (Staff Report 3316, Resolution 9308). In February 2014, Council extended the CLEAN program again at the rate to 16.5 ¢/kWh for a 20-year contract, and increased the program capacity limit to 3 MW (Staff Report 4378, Resolution 9393). In April 2014, the City Council adopted the Local Solar Plan (Staff Report 4608, Resolution 9402), which set the overarching goal of meeting 4% of the City’s to tal energy needs from local solar by 2023 and unified the City’s approach toward local solar and described a set of diverse strategies for meeting the 4% target in a cost-effective manner that does not create a burden on non-solar customers. Prior programs, incentives, and policies involving solar installed in the City—including specifically PV Partners, net energy metering, and Palo Alto CLEAN—are integrated into the Local Solar Plan strategies. The 3 MW of solar PV expected from the CLEAN program plays an integral role in achieving the Local Solar Plan goal, contributing about 0.5% of the City’s total energy needs. In May 2015, the Council voted to: extend the CLEAN program again at the rate of 16.5 ¢/kWh for a 20-year contract for solar resources; add a 25-year contract term option at the same rate; and expand the program to include non-solar eligible renewable energy resources—setting contract prices for such resources at the level of their avoided cost, which at the time was 9.3 ¢/kWh for a 20-year contract or 9.4 ¢/kWh for a 25-year contract, and setting a separate 3 MW program capacity limit on such resources (Staff Report 5849, Resolution 9552). In March 2016, after the Finance Committee voted unanimously to reduce the contract rate for solar resources to the avoided cost level (8.9 ¢/kWh for a 20-year contract or 9.0 ¢/kWh for a 25-year contract), the Council voted to continue the CLEAN program again at the rate of 16.5 ¢/kWh for solar resources (Staff Report 6641, Resolution 9618). At the same time, Council also voted to reduce the price for local non-solar eligible renewable energy resources to the updated avoided cost estimate for such energy (8.1¢/kWh for a 20-year contract term, or 8.2¢/kWh for a 25-year contract term) and continue with a separate program limit of 3 MW for local non-solar eligible renewable resources. The energy generated by 3 MW of local solar projects will supply about 0.5% of the City’s total electricity needs. Table 1 below shows the history of the Palo Alto CLEAN price since the program began as well as the rate impact of the CLEAN price based on the difference between the price and the avoided cost of local solar generation. Page 4 of 10 Table 1 – History of Palo Alto CLEAN Program Prices and Avoided Cost for Local Solar Council Approval Avoided Cost of Local Solar Generation * (¢/kWh) CLEAN Price (¢/kWh) Annual Excess Cost (Rate Impact) Total Excess Cost over 20- year Term March 2012 13.6 14.0 $15,000 (0.01%) for 2 MW cap $300,000 December 2012 11.6 16.5 $160,000 (0.10%) for 2 MW cap $3.2 million February 2014 9.9 16.5 $332,500 (0.27%) for 3 MW cap $6.45 million May 2015 10.3 16.5 $310,000 (0.26%) for 3 MW cap $6.2 million March 2016 8.9 16.5 $380,000 (0.32%) for 3 MW cap $7.6 million * The cost of buying remote solar energy outside of Palo Alto and transmitting it to Palo Alto. When establishing the CLEAN price of 16.5 ¢/kWh in December 2012, Council reviewed the market value of local solar energy and determined that, beyond the value of the energy itself, there were additional financial and environmental benefits to increasing local solar generation. In March 2016, when Council reaffirmed the 16.5 ¢/kWh price, staff estimated the cost of buying remote solar energy outside of Palo Alto and transmitting it to Palo Alto was 8.9 ¢/kWh (including renewable energy value, transmission and capacity) for a 20 -year contract. Therefore, purchasing the energy generated from 3 MW of local solar projects at 16.5 ¢/kWh was expected to cost about $380,000 per year more than buying the same energy outside of Palo Alto (and having it transported to Palo Alto). This extra cost is equivalent to a 0.32% increase in the electric utility’s costs. DISCUSSION Updated Value of Local Renewable Solar Energy In April 2015, the City released an RFP for renewable energy projects that would deliver energy to the City starting in 2021. In March 2016, the Council approved a Power Purchase Agreement (PPA) with Hecate Energy resulting from this RFP, at a contract rate of 3.676 ¢/kWh for a 25- year term (Staff Report 6637, Resolution 9578). However, this price was a bit of an outlier in the RFP; the average proposed price of the 10 highest-ranking proposals was 5.4 ¢/kWh. Using this more conservative value as the estimated value of renewable energy in California and adding on the cost to deliver that energy to Palo Alto, combined with the capacity related benefits that local solar would provide, yields a total value of local solar energy of 8.9 ¢/kWh for a 20-year term, as illustrated in Figure 1. Over a 25-year term, the levelized delivery- and capacity-related cost is slightly higher, yielding a total value of local solar energy of 9.1 ¢/kWh. These avoided cost values are the same as determined last year (as shown in Table 1 above). Page 5 of 10 Figure 1 – Avoided Cost Components of Local Solar Energy (20-Year Term) Updated Value of Local Renewable Non-Solar Energy For non-solar local eligible renewable energy resources, the estimated avoided cost experienced a slight increase compared to last year’s estimate, even though the renewable energy price it was based on was the same as last year (i.e., the results of the City’s 2015 renewable energy RFP). This was due to an updated analysis of the relative value of energy produced with a “baseload” generation profile (i.e., operating at a fairly constant high capacity, around-the-clock) versus energy produced with a typical solar generation profile. The energy generated by 3 MW of local non-solar renewable energy projects would supply about 2.2% of the City’s total electricity needs (assuming that the projects are “baseload” resources). For these resources, the current estimated avoided costs are 8.4 ¢/kWh for a 20-year term, and 8.5 ¢/kWh for a 25-year term—up from 8.1 ¢/kWh and 8.2 ¢/kWh, respectively, in March 2016. Table 2 compares the current proposal to the price offered since May 2015 when non-solar resources were first eligible for the Palo Alto CLEAN program. Since the price is set equal to the avoided cost, the excess cost and rate impact are zero. Therefore, staff proposes removing the 3 MW program cap for local non-solar renewable energy projects. Page 6 of 10 Table 2 – Palo Alto CLEAN Program Prices for Local Non-Solar Eligible Renewables Council Approval Avoided Cost of Local Non- Solar Renewable Generation * (¢/kWh) CLEAN Price (¢/kWh) Annual Excess Cost (Rate Impact) Total Excess Cost over 20- year Term May 2015 9.3 9.3 $0 (0%) for 3 MW cap $0 March 2016 8.1 8.1 $0 (0%) for 3 MW cap $0 Current Proposal 8.4 8.4 $0 (0%) for 3 MW cap $0 * The cost of buying remote baseload renewable energy and transmitting it to Palo Alto. CLEAN Program Activity At the start of 2016, the City received the first application for a project under the CLEAN program (for a 113 kW project at the Unitarian Universalist Church of Palo Alto). In February 2016, the commercial solar developer, Komuna Energy, executed CLEAN contracts for four additional projects on City-owned parking garages, which bring the total reserved program capacity to 1.4 MW. These projects are now actively engaged in the permitting process with the Planning Department. Staff has also received word that one of the City’s large commercial customers is planning to submit a CLEAN application for a solar project that would consume the remaining 1.7 MW of program capacity—and potentially up to 1.4 MW in excess of the program cap. That customer is awaiting Council’s decision on how the portion of its project that would exceed the CLEAN program’s 3 MW capacity cap would be compensated before deciding what size project to pursue under the program. Proposed Structure and Alternatives Staff proposes that the CLEAN price beyond the current 3 MW cap for solar projects be stepped down in an orderly fashion to provide certainty for project developers until projects with a total of 6 MW of capacity are installed. After the 6 MW cap, any additional projects would be compensated at the avoided cost for local solar projects: currently 8.9 ¢/kWh for a 20-year term or 9.1 ¢/kWh for 25-year term. While this option does continue having an annual excess cost after the initial 3 MW cap is reached, the excess cost decreases over time. This approach, where the contract price steps down in a scheduled manner as certain capacity levels are achieved, is used by a number of utilities with feed-in tariff programs, including the Los Angeles Department of Water and Power (LADWP) and Marin Clean Energy (MCE). Below, for example, is MCE’s price schedule for various types of eligible renewable energy resources in their seven-tier program. (According to MCE’s website, they are currently about halfway through the capacity limit of Tier 2.) Page 7 of 10 Table 3 – Marin Clean Energy Feed-in Tariff Tiered Price Schedule Tier Level Capacity Reserved (MW) Solar Price (¢/kWh) Wind Price (¢/kWh) Baseload Price (¢/kWh) 1 0-2 13.766 10.057 11.649 2 2-4 12.0 9.5 10.5 3 4-6 11.5 9.0 10.0 4 6-8 11.0 9.0 9.5 5 8-10 10.5 9.0 9.5 6 10-12 9.5 9.0 9.5 7 12-15 9.0 9.0 9.0 Staff proposes that the Palo Alto CLEAN program price would be stepped down as more capacity is added as shown in Table 4. For the first 3 MW, the 16.5 ¢/kWh price is maintained and the price steps down as capacity is reserved in 1 MW chunks until 6 MW is installed, when the price goes to the avoided cost value. Project applications that straddle two or more of these tier levels would receive a capacity-weighted average contract price based on the amount of capacity they have in each of the tier levels they straddle. Table 4 – Proposed Palo Alto CLEAN Tiered Price Schedule Tier Level Capacity Reserved (MW) Solar Price (¢/kWh) Annual Excess Cost [1] (Rate Impact) Total Excess Cost over 20-year Term 1 0-3 16.5 $380,000 (0.32%) for 3 MW $7.6 million 2 3-4 14.0 $87,000 (0.07%) for 1 MW $1.75 million 3 4-5 12.0 $53,000 (0.04%) for 1 MW $1.05 million 4 5-6 10.0 $15,000 (0.01%) for 1 MW $0.3 million 5 Over 6 Avoided cost $0 $0 Total $535,000 (0.45%) $10.7 million 1 Assumes the avoided cost (the cost of buying remote solar energy outside of Palo Alto and transmitting it to Palo Alto) is equal to 8.9 ¢/kWh for 20-year term. In addition to the recommended proposal, staff evaluated the following four alternatives: 1. Strictly enforce the current 3 MW program cap on local solar resources that received the 16.5 ¢/kWh price; 2. Compensate the first 3 MW of applications at 16.5 ¢/kWh, then compensate everything after that at the avoided cost; 3. Compensate the entire “last project in” (the one that pushes the program over the 3 MW cap) at 16.5 ¢/kWh, then compensate everything after that at the avoided cost; 4. Remove or raise the 3 MW program cap, while continuing to offer the 16.5 ¢/kWh price to all local solar resources. Page 8 of 10 Option 1 – Strict 3 MW Program Cap This approach, which reflects a literal interpretation of the current program rules, was rejected for two reasons. First, it would be impractical to try to enforce a precise 3 MW cut -off line; as the program approaches its capacity limit there will almost certainly be an application for a project that would push slightly over the limit. Second, this approach could leave value on the table for the City. If a project is capable of being developed at a contract rate equal to (or less than) the City’s avoided cost for that energy, it would be in the City’s interest to accept that project into the program, regardless of the amount of capacity already participating. Option 2 – Avoided Cost after 3 MW Cap Reached This option involves a strict enforcement of the 3 MW participation cap for local solar resources at the 16.5 ¢/kWh contract rate, while allowing unlimited participation in the program at the avoided cost level after the 3 MW cap is reached. This approach honors the Council’s desire, when it last updated the CLEAN program price for solar projects in March 2016, to limit the excess costs and rate impact to the initial 3 MW level. However, staff does not expect any projects to be developed at this time if the y are compensated at the avoided cost level, but if such projects become feasible in the future as solar costs fall it would be in the City’s interest to enable them to be developed. Option 3 – Avoided Cost after Last Project In This option is similar to the recommended proposal, except it would allow the final project accepted into the program to be compensated at the 16.5 ¢/kWh price, regardless of how far beyond the 3 MW capacity limit this project pushes the program. The problem with this approach is evident in the situation with the large commercial customer that recently submitted a CLEAN program application that would cause the total program capacity to reach 4.4 MW. When Council reapproved the program in March 2016, Council set a 3 MW program capacity limit that would result in an excess cost of $380,000 (a 0.32% rate impact). If the program capacity reaches 4.4 MW (with all of that capacity being compensated at 16.5 ¢/kWh), the cost would be $560,000 per year for 20 or 25 years (a 0.47% rate impact), and would exceed those prior Council established parameters. Option 4 – Remove 3 MW Program Cap In this option, the 3 MW cap to receive the 16.5 ¢/kWh price would be increased, or even eliminated. This approach would certainly promote greater participation in the CLEAN program, and might go a long way towards helping the City meet the overall goals established in the Local Solar Plan. However, if the cap was removed altogether, it would expose the City to virtually unlimited excess costs. Table 5 below presents the staff’s proposed program structure along with the various alternatives described above. Page 9 of 10 Table 5 – Potential Program Structures for Local Solar after 3 MW Capacity Limit Alternatives Capacity at 16.5 ¢/kWh CLEAN Price after reaching 3 MW cap (¢/kWh) Annual Excess Cost (Rate Impact) Total Excess Cost over 20- year Term Proposal 3 14 for 4th MW, 12 for 5th MW, 10 for 6th MW, then avoided cost (8.9) $535,000 (0.45%) $10.7 million Option 1 – Strict 3 MW limit, then close program 3 N/A $380,000 (0.32%) $7.6 million Option 2 – avoided cost after 3 MW 3 8.9 $380,000 (0.32%) $7.6 million Option 3 – 16.5 ¢/kWh for Last Project In * ~4.4 16.5 $560,000 (0.47%) $11.2 million Option 4 – No Cap Unlimited 16.5 Unlimited Unlimited * Assumes that the capacity for the last project is 3 MW (1.4 MW over the 3 MW cap). Recommendation Staff recommends that the current CLEAN price of 16.5 ¢/kWh for solar projects continue until the program reaches the 3 MW capacity limit, after which additional capacity would receive a contract price that gradually steps down as described above until the City’s avoided cost for such energy (currently 8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term) is reached. In addition, staff recommends continuing to offer non -solar eligible renewable energy resources a CLEAN price equal to the avoided cost of the energy produced by those resources, which is currently estimated at 8.4 ¢/kWh for a 20-year term, and 8.5 ¢/kWh for a 25-year term. Finally, staff recommends removing the program cap of 3 MW for local non-solar local renewable resources. RESOURCE IMPACT Staff estimates that the current cost of buying energy from solar resources outside of Palo Alto is 8.9 ¢/kWh (including transmission and capacity) for a 20-year contract, or 9.1 ¢/kWh for a 25- year contract. Purchasing the energy generated by local solar projects at this avoided cost level is therefore not expected to impact the cost to the Utility. Purchasing energy at rates higher than these avoided costs would impact the cost to the Utility, by the amounts listed above in Table 5. Likewise, purchasing the energy generated from 3 MW of local, non-solar renewable energy projects at the avoided cost level is not expected to impact the cost to the Utility. Aside from the excess costs described above, staff time is associated with marketing the CLEAN program and project review. The project review can be absorbed with existing staff over the life of the program, and costs will be recovered through project review fees. POLICY IMPLICATIONS The recommendation to continue the Palo Alto CLEAN program supports the City's carbon neutral electric supply portfolio policy, the Local Solar Plan, and the LEAP Objective to enhance supply reliability through the pursuit of local generation opportunities. ENVIRONMENTAL REVIEW Adoption of the attached resolution and the associated amendment of the CLEAN Program Eligibility Rules and Requirements is not subject to California Environmental Quality Act {CEOA) review because adoption of this resolution and associated amendment of CLEAN Program rules is an administrative government activity that will not result in any direct or indirect physical change to the environment as a result (CEQA Guidelines section 15378(b){S)). AITACHMENTS Attachment A: Resolution Continuing the Palo Alto CLEAN Program Exhibit 1 to Attachment A: Updated Palo Alto CLEAN Program Eligibility Rules and Requirements PREPARED BY: REVIEWED BY: ~M STACK, Senior Resource Planner (Ji ;-NE RATCHVE, Assistant Director, Resource Management ~~ APPROVED BY: ED SHIKADA Utilities General Manager Page 10of 10 *NOT YET APPROVED* 161024 jb Mullan/UTL/01-0024 Resolution No. _________ Resolution of the Council of the City of Palo Alto Continuing the Palo Alto Clean Local Accessible Now Program at the Contract Rate of 16.5 ¢/kWh for Local Solar Resources with a Tiered Pricing Structure that Declines to the City’s Avoided Cost Value upon Reaching 6 MW of Program Capacity; and Increasing the Contract Rate for Non-solar Renewable Energy Resources to 8.4 ¢/kWh to 8.5 ¢/kWh Based on the Avoided Cost of Local Renewable Energy and Amending Associated Program Rules R E C I T A L S A. On March 5, 2012, the City approved the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program (or feed-in tariff). Under the Palo Alto CLEAN Program, participants who build a new solar generating system in Palo Alto may obtain a long-term, fixed-price contract with the City to sell the energy from the system to the City’s electric utility. B. Council extended the program beyond its original termination date of December 31, 2012 and has periodically reviewed the contract price and program cap. C. On March 28, 2016, Council approved Resolution 9580 (as amended for clarification by Resolution 9618 (8/22/16)), which continued Palo Alto CLEAN at the contract price of 16.5 cents per kilowatt-hour (¢/kWh) for local solar resources, and reduced the contract prices for local non-solar renewable energy resources to 8.1 ¢/kWh for a 20-year term or 8.2 ¢/kWh for a 25-year term. The contract rates for non-solar resources were set to be equal to the then current estimated avoided cost of the energy generated by these resources. The resolution further continued the separate program caps of 3 megawatts (MW) of generating capacity for both the solar and non-solar resources. D. In the past year, the City has received five CLEAN Program project applications for local solar facilities, which together will total 1.26 MW of capacity, or 42% of the 3 MW program cap. E. The City wants to continue the CLEAN program for solar resources at the current contract price of 16.5 ¢/kWh until the program reaches the 3 MW cap, and extend the program after reaching the 3 MW cap, but reduce the contract price gradually in steps according to the following schedule: the fourth MW of capacity would receive a contract price of 14 ¢/kWh, the fifth MW of capacity would receive a contract price of 12 ¢/kWh, the sixth MW of capacity would receive a contract price of 10 ¢/kWh, and all additional capacity would receive a contract price equal to the City’s avoided cost of such energy (currently 8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term). Therefore, the 3 MW program cap is eliminated since the contract price after 6 MW of capacity is reached is equal to the City’s avoided cost of energy such that there is no rate impact. F. Additionally, the City wants to raise the contract prices available to local non- solar eligible renewable resources to 8.4 ¢/kWh for a 20-year term or 8.5 ¢/kWh for a 25-year term for such resources, which is equal to the current estimated avoided cost of energy ATTACHMENT A *NOT YET APPROVED* 161024 jb Mullan/UTL/01-0024 generated by these resources. For local non-solar resources, the 3 MW cap is eliminated since there is no rate impact when the contract price is equal to the avoided cost of energy for these resources. The Council of the City of Palo Alto RESOLVES as follows: SECTION 1. The Council adopts revised Palo Alto CLEAN Program Eligibility Rules Requirements, set forth in Exhibit 1 attached to this Resolution. SECTION 2. The Council authorizes the City Manager or his designee to sign contracts for the output of one or more solar, or other non-solar eligible renewable energy resource meeting the CLEAN Program Eligibility Rules and Requirements described in Section 1. SECTION 3. The Council finds that the adoption of this resolution and the associated amendment of CLEAN Program Eligibility Rules and Requirements is not subject to California Environmental Quality Act (CEQA) review because adoption of this resolution and associated amendment of CLEAN Program rules is an administrative government activity that will not result in any direct or indirect physical change to the environment as a result (CEQA Guidelines section 15378(b)(5)). 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 PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW) PROGRAM ELIGIBILITY RULES AND REQUIREMENTS Effective __________ A. PARTICIPATION ELIGIBILITY: The Palo Alto Clean Local Energy Accessible Now Program (the “CLEAN Program”) is open to participation by any Eligible Renewable Energy Resource, as defined in Section D.4, that satisfies these Program Eligibility Rules and Requirements. B. TERRITORIALITY REQUIREMENT: In order to be eligible to participate in the CLEAN Program, an Eligible Renewable Energy Resource must be located in and generating electricity from within the utility service area of the City of Palo Alto. C. PRICES AND TERM FOR ELIGIBLE RENEWABLE RESOURCES: The following purchase prices shall apply to the electricity produced by an Eligible Renewable Energy Resource participating in the Program, except as provided in Section D.5. Solar Energy Resources: Total Solar Capacity Reserved Contract Term Contract Price 0-3 MW 20 or 25 years $0.165 / kWh 3-4 MW 20 or 25 years $0.140 / kWh 4-5 MW 20 or 25 years $0.120 / kWh 5-6 MW 20 or 25 years $0.100 / kWh More than 6 MW 20 years $0.089 / kWh More than 6 MW 25 years $0.091 / kWh Solar Energy Resources that straddle multiple pricing tiers shall receive a weighted-average purchase price based on the amount of their capacity that is contained in each tier. Non-Solar Eligible Renewable Energy Resources: Contract Term Contract Price 20 years $0.084 / kWh 25 years $0.085 / kWh D. ADDITIONAL RULES AND REQUIREMENTS: 1.The owner of the Eligible Renewable Energy Resource shall enter into an Eligible Renewable Energy Resource Power Purchase Agreement (“PPA”) with the City of Palo Alto prior to delivering energy to the City. EXHIBIT 1 TO ATTACHMENT A PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW) PROGRAM ELIGIBILITY RULES AND REQUIREMENTS Effective __________ 2. An application for participation in the CLEAN Program to sell output to the City (the “Application”) may be submitted at any time. Applications will be considered in the order received. 3. Eligible Renewable Energy Resource means an electric generating facility that: (a) is defined and qualifies as an “eligible renewable energy resource” under California Public Utilities Code Section 399.12(e) and California Public Resources Code Section 25471, respectively, as amended; and (b) meets the territoriality requirement set forth in Section B. 4. The California Energy Commission’s (“CEC”) certification of the Eligible Renewable Energy Resource shall be required within six (6) months of the commercial operation date of the generating facility; the facility’s owner shall provide written notice of the CEC’s certification to the City within ten (10) business days of receipt of said certification. If the City agrees, in its sole discretion, to take delivery of the generating facility’s electricity prior to the CEC’s certification, then, as the facility’s electricity cannot be considered in fulfillment of the City’s RPS requirements, the price that the City will pay for the generating facility’s electricity (the “Pre-Certification Price”) will be set to $0.076 per kWh (for a 20-year contract term) or $0.08 per kWh (for a 25-year contract term), based on the estimated levelized cost of brown power over a 20-year or 25-year period, respectively. Upon the CEC’s certification of the generating facility and the provision of notice of such certification to the City in accordance with this section, the City will pay the Price set forth in Section C of these CLEAN Program Rules and Requirements and the PPA (collectively referred to as the “Contract Price”) for the generating facility’s electricity delivered on and after the date of the CEC’s certification. The City will, in its sole discretion, “true-up”, as appropriate, the difference between the Contract Price and the Pre-Certification Price for any electricity received and paid for by the City, effective as of the date of certification of the Eligible Renewable Energy Resource. 5. If an Eligible Renewable Energy Resource is authorized to participate in the CLEAN Program, then that Resource shall not be entitled to receive any rebate or other incentive from the City’s Photovoltaic (PV) Partners Program or any other similar incentive program funded by the City’s ratepayers. To the extent any rebate or incentive is paid to the owner of the Resource, that rebate or incentive shall be disgorged and refunded to the City upon 30 days’ notice, if the Eligible Renewable Energy Resource continues to participate in the CLEAN Program. If a rebate or an incentive has been paid to the Eligible Renewable Energy Resource, then that Resource shall be ineligible to participate in the CLEAN Program. 6. All electricity generated by the Eligible Renewable Energy Resource shall be delivered only to the City. No portion of the electricity may be used to offset any load of the generating facility (other than incidental loads associated with operating the generating facility). PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW) PROGRAM ELIGIBILITY RULES AND REQUIREMENTS Effective __________ 7. A metering and administration fee will be charged to each Eligible Renewable Energy Resource that participates in the CLEAN Program. See Utilities Rate Schedule E-15 (Electric Service Connection Fees). 2 MEMORANDUM TO: UTILITIES ADVISORY COMMISSION FROM: UTILITIES DEPARTMENT DATE: NOVEMBER 2, 2016 SUBJECT: Utilities Advisory Commission Review and Discussion of the Draft 2017 Water Integrated Resource Plan Guidelines RECOMMENDATION Staff requests that the Utilities Advisory Commission (UAC) discuss and provide feedback on the draft updated Water Integrated Resource Plan (WIRP) Guidelines. No action is required. EXECUTIVE SUMMARY The past several years have brought unprecedented drought conditions and regulatory action by the State Water Resource Control Board (SWRCB), including the first-ever mandatory potable water use reductions. During this time, much focus has been placed on the sustainability of water supply in California. The Water Integrated Resource Plan (WIRP) Guidelines, which were last updated in 2003, are a roadmap for the City of Palo Alto’s future potable water supply. In this WIRP, the following potable water supply alternatives were evaluated: 1) water from the San Francisco Public Utilities Commission (SFPUC); 2) groundwater (with or without groundwater recharge); 3) treated water from the Santa Clara Valley Water District (SCVWD); and 4) Demand Side Management (DSM). Recycled water is being evaluated outside of the WIRP in the Recycled Water Strategic Plan process that will include an evaluation of direct and indirect potable reuse as well as the feasibility and advisability of expanding the existing non- potable recycled water distribution system. The evaluation concluded that DSM is the best resource, but potable water supplies are still needed. While SFPUC water is more expensive, it has higher water quality than groundwater or treated water from the SCVWD. In addition, groundwater and SCVWD treated water supplies may increase in cost and aren’t likely to offer additional protection in droughts. In summary, the draft 2017 WIRP Guidelines are: 1. Pursue all cost-effective water efficiency and conservation; 2. Survey potentially impacted customers about their preference for SFPUC water versus blended water; 3. Proceed with the Recycled Water Strategic Plan to determine how to reduce the demand for imported water; and 4. Continue to investigate ways to increase the use of non-traditional, non-potable sources such as black water, storm water, and nuisance water from basement construction. The WIRP Guidelines will need to be revisited after the Recycled Water Strategic Plan is completed so that a comprehensive, regional water strategy can be developed. BACKGROUND The City prepared its first WIRP in 1993 when the City was faced with a decision to participate in a regional recycled water expansion program. The 1993 WIRP assessed the costs and benefits of the recycled water project compared to other supply alternatives, and ultimately concluded that recycled water was not cost effective relative to existing supply. In 2003, the City updated the WIRP. The 2003 WIRP indicated that supplies from the SFPUC were adequate during normal years, but additional supplies were needed in dry years to avoid shortages. The key conclusions from the 2003 WIRP analysis were: • The City’s existing contractual entitlement with the SFPUC provides adequate supplies; • The cost to connect to the SCVWD treated water pipeline was prohibitive; • Continuous use of groundwater is not recommended; • The City should continue to evaluate recycled water; and • Continue the current Demand Side Management programs and explore additional measures. In December 2003, Council adopted WIRP Guidelines (Attachment B) for the development of new water resources and the preservation of existing supplies, which are summarized below: 1. Preserve and enhance SFPUC supplies 2. Continue to advocate for an interconnection between SFPUC and SCVWD 3. Participate in the development of cost effective regional recycled water programs 4. Scope water conservation programs to comply with Best Management Practices (BMPs) 5. Maintain emergency water conservation measures to be activated in case of droughts 6. Retain groundwater supply options in case of changed future conditions 7. Survey community to determine its preferences regarding the best water resource portfolio As a first step toward updating the 2003 WIRP, a Preliminary Assessment (Attachment C) was completed and provided to the UAC in February 2013. The Preliminary Assessment provided a general evaluation of the following water resources: 1) water from the SFPUC; 2) groundwater; 3) treated water from the SCVWD; 4) recycled water; 5) DSM; and 6) sale of the City’s Individual Supply Guarantee. No recommendations were made based on the Preliminary Assessment, although staff found that groundwater, SCVWD treated water, recycled water and the sale of the City’s Individual Supply Guarantee merited further evaluation. DISCUSSION For the current analysis, each potable water supply alternative was evaluated for normal and dry year availability, water quality, cost, sustainability, emergency robustness, and sensitivity to regulations and environmental review. For each alternative, the following attributes were considered: 1. Normal and dry year availability; 2. Water quality; 3. Cost; 4. Sustainability; 5. Emergency robustness; and 6. Sensitivity to regulations and environmental review. The current analysis made the following conclusions: 1. Cost-effective DSM is the superior resource, but DSM alone can’t eliminate the City’s need for potable water. 2. While SFPUC water is expected to be slightly more expensive than other potable water alternatives, it has the highest water quality. 3. The cost of SCVWD supplies—both groundwater and treated water—may increase dramatically if purified water is fully developed and/or if the California Water Fix (“twin tunnels”) project is constructed. However, SCVWD does not have excess treated water to sell. 4. Groundwater in the county is susceptible to mandated water use reductions just like imported supplies. 5. Blending groundwater with SFPUC water at only the El Camino well is the least expensive, most sustainable alternative to 100% SFPUC supplies. Whether the residents and businesses that would receive the water would consider the tradeoff between cost and quality to be acceptable is worth investigating. 6. The most promising way to increase reliability and increase sustainability is to reduce the demand for potable water by expanding the use of recycled water. The Recycled Water Strategic Plan will provide valuable analysis and information to help the City and SCVWD formulate a comprehensive strategy for the future. Table 1 shows a summary of the WIRP analysis. Table 1: Summary Comparison of Potable Water Supply Alternatives Water Resource Normal Year Availability Dry Year Availability Quality Cost Emergency Robustness Sustainability Sensitivity to Regulations and Environmental Review SFPUC Groundwater Groundwater (w/recharge) ? SCVWD Treated Water Demand Side Management The draft WIRP Guidelines are: 1. Pursue all cost-effective water efficiency and conservation; 2. Survey potentially impacted customers about their preference for SFPUC water versus blended water; 3. Proceed with the Recycled Water Strategic Plan to determine how to reduce the demand for imported water; and 4. Continue to investigate ways to increase the use of non-traditional, non-potable sources such as black water, storm water, and nuisance water from basement construction. NEXT STEPS Staff will incorporate the UAC’s input and return to the UAC with proposed updated WIRP Guidelines in January 2017. The WIRP Guidelines will be presented to City Council for approval in early 2017. The WIRP Guidelines will again need to be updated after the completion of the Recycled Water Strategic Plan. POLICY IMPLICATIONS Adoption of the proposed WIRP Guidelines will replace the 2003 Guidelines and will determine the water resource planning activities for the next three years. The proposed WRIP Guidelines are consistent with the City’s Urban Water Management Plan, the Utilities Strategic Plan, and the City’s Sustainability and Climate Action Plan. ENVIRONMENTAL REVIEW The UAC’s review and discussion of the Water Integrated Resources Plan does not require California Environmental Quality Act review, because the review and discussion does not meet the definition of a project under Public Resources Code 21065. AlTACHMENTS · A. Draft 2017 Water Integrated Resource Plan B. Council-approved Water Integrated Resource Plan Guidelines (2003} C. 2013 Preliminary Assessment of Water Resource Alternatives Karla Dailey, Senior Resource Planner \u0 ~ne chye, Assistan~ Director, Resource Management PREPARED BY: REVIEWED BY: DEPARTMENT HEAD: Ed Shikada Utilities General Manager Attachment A DRAFT 2017 Water Integrated Resources Plan November 2016 i 2017 Water Integrated Resources Plan Table of Contents List of Figures ___________________________________________________________ iii List of Tables ___________________________________________________________ iii List of Acronyms _________________________________________________________ iii I. Executive Summary ____________________________________________________ 1 II. WIRP Drivers _________________________________________________________ 2 III. Background __________________________________________________________ 3 IV. Water Supply History ________________________________________________ 6 V. Water Use Projections __________________________________________________ 7 Urban Water Management Plan (UWMP) ________________________________________ 8 Summary Water Resource Mix _________________________________________________ 8 VI. Attributes Evaluated and Water Resource Alternatives Examined ____________ 9 Attributes Evaluated for each Water Resource Alternative ___________________________ 9 Water Resource Alternatives Examined __________________________________________ 9 Water Resource Alternatives NOT Examined _____________________________________ 10 VII. Water from the SFPUC ______________________________________________ 13 Availability ________________________________________________________________ 13 Water Quality ______________________________________________________________ 15 Cost ______________________________________________________________________ 16 Sustainability ______________________________________________________________ 17 Emergency Robustness ______________________________________________________ 17 Sensitivity to Regulations and Environmental Review ______________________________ 18 VIII. Potable Groundwater _______________________________________________ 19 Availability ________________________________________________________________ 20 Water Quality ______________________________________________________________ 22 Cost ______________________________________________________________________ 23 Sustainability ______________________________________________________________ 25 Emergency Robustness ______________________________________________________ 25 Sensitivity to Regulations and Environmental Review ______________________________ 26 ii IX. Treated Water from the SCVWD _________________________________________ 27 Availability ________________________________________________________________ 28 Water Quality ______________________________________________________________ 29 Cost ______________________________________________________________________ 29 Emergency Robustness ______________________________________________________ 31 Sustainability ______________________________________________________________ 31 Sensitivity to Regulations and Environmental Review ______________________________ 32 X. Demand Side Management ____________________________________________ 32 Availability ________________________________________________________________ 33 Water Quality ______________________________________________________________ 35 Cost ______________________________________________________________________ 35 Emergency Robustness ______________________________________________________ 36 Sustainability ______________________________________________________________ 36 Sensitivity to Regulations and Environmental Review ______________________________ 37 XI. Comparison of Water Supply Alternatives _________________________________ 37 Availability ________________________________________________________________ 37 Water Quality ______________________________________________________________ 38 Cost ______________________________________________________________________ 38 Emergency Robustness ______________________________________________________ 40 Sustainability ______________________________________________________________ 40 Sensitivity to Regulations and Environmental Review ______________________________ 40 XII. Conclusions _______________________________________________________ 40 iii List of Figures Figure 1: Historic Water Use (1988-2016) ...................................................................................... 7 Figure 2: 2010 and 2015 UWMP Demand Forecast Projection Comparison ................................. 8 Figure 3: Summary of 2015 UWMP Water Resource Composition ................................................ 9 Figure 4: Projected Frequency of Shortage for RWS Based on 91-Year Historical Hydrologic Record and Estimated Demand .................................................................................................... 15 Figure 5: SFPUC Actual and Projected Cost of Water ................................................................... 16 Figure 6: Map of SFPUC Regional Water System .......................................................................... 18 Figure 7: Estimated Well Production for Various Treatment Options ......................................... 23 Figure 8: Cost at Each Well for Each Treatment Option ............................................................... 24 Figure 9: Unit cost of Various Treatment Options ........................................................................ 24 Figure 10: West Pipeline Extension Map ...................................................................................... 27 Figure 11: SBx7X7 Targets, Results, and Projections .................................................................... 34 Figure 12: Monthly Potable Water Consumption......................................................................... 35 Figure 13: Water Demand Forecast with Future Water Efficiency .............................................. 36 Figure 14: Commodity Cost Comparison of Water Supply Alternatives ...................................... 39 Figure 15: Present Value Unit Cost Comparison of Water Supply Alternatives ........................... 39 List of Tables Table 1: Estimated Well Capacity ................................................................................................. 21 Table 2: Water Quality Resulting from Various Treatment Options ............................................ 22 Table 3: SCVWD Treated Water Connection Cost Summary ........................................................ 30 Table 4: Water Efficiency Costs ($/AF) ......................................................................................... 35 Table 5: Water Quality Parameters for Water Resource Alternatives ......................................... 38 Table 6: Summary Comparison of Potable Water Resource Alternatives .................................... 41 List of Acronyms AFY Acre Feet per Year AMI Advanced Metering Infrastructure BAWSCA Bay Area Water Supply and Conservation Agency BMP Best Management Practice CCF One hundred cubic feet CDPH California Department of Public Health CEQA California Environmental Quality Act CPAU City of Palo Alto Utilities CVP Central Valley Project DPR Direct Potable Reuse iv DSM Demand Side Management EIR Environmental Impact Report ESA Endangered Species Act FERC Federal Energy Regulatory Commission GHG Greenhouse gas GPCD Gallons per capita per day GWMP Groundwater Management Plan IPR Indirect Potable Reuse ISA Interim Supply Allocation ISG Individual Supply Guarantee ISL Interim Supply Limitation MGD Million gallons per day PPM Parts per Million RWQCP Regional Water Quality Control Plant RWS Regional Water System (refers to SFPUC’s Hetch Hetchy system) SBx7-7 Water Conservation Bill SCVWD Santa Clara Valley Water District S/CAP Sustainability and Climate Action Plan SFPUC San Francisco Public Utilities Commission SGMA Sustainable Groundwater Management Act SWP State Water Project SWRCB State Water Resources Control Board TDS Total Dissolved Solids UAC Utilities Advisory Commission UWMP Urban Water Management Plan WIRP Water Integrated Resource Plan WSA Water Supply Agreement WSIP Water System Improvement Program Page 1 I. Executive Summary The past several years have brought unprecedented drought conditions and regulatory action by the State Water Resource Control Board (SWRCB) including the first-ever mandatory potable water use reductions. During this time, much focus has been placed on the sustainability of water supply in California. The Water Integrated Resource Plan (WIRP) Guidelines, which were last updated in 2003, are a roadmap for the City of Palo Alto’s future potable water supply. In this WIRP, the following potable water supply alternatives were evaluated: 1) water from the San Francisco Public Utilities Commission (SFPUC); 2) groundwater (with or without groundwater recharge); 3) treated water from the Santa Clara Valley Water District (SCVWD); and 4) Demand Side Management (DSM). Recycled water is being evaluated outside of the WIRP in the Recycled Water Strategic Plan process that will include an evaluation of direct and indirect potable reuse as well as the feasibility and advisability of expanding the existing non- potable recycled water distribution system. For each alternative, the following attributes were considered: 1. Normal and dry year availability; 2. Water quality; 3. Cost; 4. Sustainability; 5. Emergency robustness; and 6. Sensitivity to regulations and environmental review. Major findings of the evaluation are: 1. Cost-effective DSM is the superior resource, but DSM can’t eliminate the City’s need for potable water. 2. While SFPUC water is slightly more expensive than groundwater and SCVWD treated water, it has the highest water quality. 3. The cost of SCVWD supplies may increase dramatically if purified water is fully developed and/or if the “twin tunnels” project in the Delta is constructed. 4. SCVWD does not have excess treated water available to sell. 5. Like other potable water supplies, groundwater in the county is susceptible to mandated water use reductions. 6. Blending groundwater with SFPUC water at only the El Camino well is the least expensive, most sustainable alternative to 100% SFPUC supplies. It is unclear whether the customers that would receive the water would consider the tradeoff between cost and quality to be acceptable. 7. Expanding the use of recycled water and other non-potable sources will reduce the reliance on potable water, but more work needs to be done and no conclusions about the cost-effectiveness of those resources can be drawn from this study. Page 2 In summary, the recommended 2017 WIRP Guidelines are: 1. Pursue all cost-effective water efficiency and conservation; 2. Survey potentially impacted customers about their preference for SFPUC water versus blended water; 3. Proceed with the Recycled Water Strategic Plan to determine how to reduce the demand for imported water; and 4. Continue to investigate ways to increase the use of non-traditional, non-potable sources such as black water, storm water, and nuisance water from basement construction. II. WIRP Drivers There are several drivers for updating the WIRP Guidelines at this time. a) Dry year need – The City has an Individual Supply Guarantee of 17.07 million gallons per day (MGD) from the regional water system operated by the SFPUC. The City has no foreseeable supply deficiency in normal years, but SFPUC supplies will likely be inadequate during dry years. Many of the supply alternatives available to the City are also subject to drought shortfalls. A critical question to address is the level of reliability the City will provide to residents and businesses and at what cost. b) Legislative & Regulatory Risks – In 2015, the SWRCB overrode individual supplier water shortage assessments and mandated potable water use reduction targets. It is prudent to evaluate Palo Alto’s water supply alternatives relative to this new regulatory risk. c) Cost Increases – The SFPUC’s Water System Improvement Program (WSIP) is 90% complete. The WSIP included 81 projects for a cost of $4.8 billion (including $1.6 billion for projects within, and completely paid for by ratepayers within, the City and County of San Francisco). The largest project remaining is the re-build of the Calaveras Dam which has encountered unexpected geological challenges. As a result of the WSIP and other capital projects, the cost of SFPUC water has risen dramatically and is projected to continue to increase in the future. With the increase in costs, other alternatives are increasingly competitive with SFPUC supplies, although other supply alternatives such as groundwater from the SCVWD and treated water from the SCVWD have also increased in cost and are expected to continue on that trajectory. d) Recycled Water and the Nexus with Potable Supplies - Recycled water from the Regional Water Quality Control Plant (RWQCP) is an available local supply source with the potential to reduce the City’s demand for SFPUC water. Recycled water could be deployed for non- potable uses or converted to potable water through Indirect Potable Reuse (IPR or recharging the deep aquifer followed by groundwater pumping) or Direct Potable Reuse (DPR or highly purified water that can be injected directly to the potable water distribution system). A renewed commitment at the State level may change the viability of recycled Page 3 water projects. There is also regulatory pressure to reduce the amount of water discharged to the San Francisco Bay. e) Council Commitment to Sustainability - The issue of climate change has become an important factor in water resources planning in the State, though the extent and precise effects of climate change remain uncertain. There is convincing evidence that increasing concentrations of greenhouse gasses have caused, and will continue to cause, a rise in temperatures around the world, which will result in a wide range of changes in climate patterns. Moreover, observational data show that a warming trend occurred during the latter part of the 20th century and virtually all projections indicate this will continue through the 21st century. Climate change could result in the following types of water resource impacts, including impacts on the watersheds in the Bay Area: • Reductions in the average annual snowpack due to a rise in the snowline and a shallower snowpack in the low and medium elevation zones, such as in the Tuolumne River basin (the primary source of SFPUC’s regional water system), and a shift in snowmelt runoff to earlier in the year; • Changes in the timing, intensity and variability of precipitation, and an increased amount of precipitation falling as rain instead of as snow; • Long-term changes in watershed vegetation and increased incidence of wildfires that could affect water quality and quantity; • Sea level rise and an increase in saltwater intrusion; • Increased water temperatures with accompanying potential adverse effects on some fisheries and water quality; • Increases in evaporation and concomitant increased irrigation need; and • Changes in urban and agricultural water demand. The updated Sustainability and Climate Action Plan (S/CAP) will include aggressive goals and robust strategies for ensuring Palo Alto has a sustainable long-term water supply. In particular, local water sources need to be considered with this new focus in mind. f) Community Engagement on All Things Water Related – The current drought shined a spotlight on the lack of adequate water supplies for the state as a whole. Media attention and actions by the Governor raised awareness among Palo Alto’s educated, engaged community resulting in a need to provide to the public more information on the City’s water supply planning efforts. III. Background The first WIRP was prepared largely because the City was faced with a decision regarding participation in a regional recycled water program. This 1993 WIRP assessed the costs and benefits of a recycled water project compared to other supply alternatives, and ultimately determined that recycled water was not cost effective relative to existing supplies. In 1999, the Page 4 City began working on a new WIRP, and completed the effort with approval by the City Council of seven WIRP Guidelines in December 2003 1: 1. Preserve and enhance SFPUC supplies. 2. Advocate for an interconnection between SFPUC and the District 3. Actively participate in development of cost-effective regional recycled water plans 4. Focus water DSM programs to comply with BMPs 5. Maintain emergency water conservation measures to be activated in case of droughts 6. Retain groundwater supply options in case of changed future conditions 7. Survey community to determine its preferences regarding the best water resource portfolio During the process to prepare the 2003 WIRP, several studies were conducted to inform the effort: 1. Water, Wells, Regional Storage, and Distribution System Study, 1999, Carollo Engineers 2 – This study identified system improvements to the distribution system to meet water demands and fire flows following a catastrophic interruption of service on the SFPUC system. Among the recommendations was to refurbish the 5 existing wells and construct three new wells and a new water storage tank. 2. Long Term Water Supply Study, 2000, Carollo Engineers – The report examined the issues and costs of using new or rehabilitated wells as active sources of supply. The alternatives examined in the report included: (1) Using the wells for active supply either on a long term basis or during droughts; (2) using groundwater for irrigation; and (3) connecting to the SCVWD treated water pipeline. 3. Groundwater Supply Feasibility Study, 2002, Carollo Engineers – The report evaluated whether operating one or two of the City’s water wells as active supplies would cause significant decrease in groundwater levels or deterioration in groundwater quality. 4. Santa Clara Valley Water District’s West Pipeline Extension Conceptual Evaluation Final Report, 2003, SCVWD. – The report evaluated an extension of the existing SCVWD West Pipeline to enable an interconnection of the Palo Alto and SCVWD systems at Page Mill turnout. The 2003 WIRP analysis indicated that SFPUC supplies were adequate during normal years, but additional supplies were needed in dry years to avoid shortages. Since SFPUC supplies were adequate in normal years, the following conclusions were drawn: 1. The City’s existing ISG through its water supply contract with San Francisco provides adequate supplies; 1 CMR:547:03: https://www.cityofpaloalto.org/civicax/filebank/documents/51715 2 See Executive Summary here: http://www.cityofpaloalto.org/civicax/filebank/documents/25618 Page 5 2. The cost to connect to the SCVWD treated water pipeline is prohibitive assuming that Palo Alto would bear the entire project cost; 3. Continuous use of groundwater was not recommended; 4. The City should continue to evaluate recycled water; 5. Continue the current DSM programs and explore additional measures; and 6. Additional supplies are needed in a drought if water use restrictions are to be avoided. Following Council approval of the 2003 WIRP Guidelines, staff surveyed residential customers to gain a sense of community preferences on the use of groundwater during a drought. The survey asked respondents to rank several options for water supply during a drought: (A) blend groundwater with existing SFPUC supplies; (B) use no groundwater; and (C) treat groundwater at the well location prior to introduction to the distribution system. Survey respondents generally preferred Options B (no groundwater) and C (treat groundwater), but Option A (blend groundwater) was not soundly rejected. The results of the survey were presented to the Utilities Advisory Commission (UAC) in June 2004 3. Based on the results staff made the following recommendations: 1. Do not install advanced treatment systems for the groundwater at this time. This option is expensive, both in terms of capital and operating costs. 2. Blending at an SFPUC turnout is the best way to use ground water as a supplemental drought time supply while maintaining good water quality. 3. Staff should await the conclusion of the environmental review process before proceeding with any site selections for wells to be used in dry years. 4. Actively participate in the development of long term supply plans with the Bay Area Water Supply and Conservation Agency (BAWSCA) and/or SCVWD. 5. Continue efforts identified in the Council-approved WIRP guidelines: a. Evaluate a range of demand side management options to reduce long term water demands. b. Evaluate feasibility of expanding recycled water. c. Maintain emergency water conservation measures to be activities in case of droughts. In 2013, a Preliminary Assessment of Water Resource Alternatives was prepared and presented to the UAC 4 as a first step toward updating the WIRP. Other high-priority tasks, such as drought management and completion of the 2015 Urban Water Management Plan, delayed work on the WIRP until now. The City has several policies embodied in the Comprehensive Plan that relate to groundwater and water supplies. The relevant policies are listed below, with program elements, if applicable. An update of the Comprehensive Plan is underway. 3 http://www.cityofpaloalto.org/cityagenda/publish/uac-meetings/3354.pdf 4 http://www.cityofpaloalto.org/civicax/filebank/documents/33029 Page 6 1. POLICY N-51: Minimize exposure to geologic hazards, including slope stability, subsidence, and expansive soils, and to seismic hazards including ground shaking, fault rupture, liquefaction, and land sliding. 2. POLICY N-18: Protect Palo Alto’s groundwater from the adverse impacts of urban uses. a. PROGRAM N-22: Work with the SCVWD to identify and map key Groundwater recharge areas for use in land use planning and permitting and the protection of groundwater resources. 3. POLICY N-19: Secure a reliable, long-term supply of water for Palo Alto. In April 2016 5, Council approved the framework of the City’s Sustainability and Climate Action Plan. The section, “Getting Smart about Water” included two goals: (1) Reduce consumption of potable water and (2) Supplement existing water supplies. As part of the S/CAP Implementation Plan process, a revised set of goals and strategies will be presented to Council for approval. IV. Water Supply History The water utility was established on May 9, 1896, two years after the City was incorporated. Local water companies were purchased at that time with a $40,000 bond approved by the voters of the 750-person community. These private water companies operated one or more shallow wells to serve the nearby residents. The city grew and the well system expanded until nine (9) wells were in operation by 1932. In December 1937, the City signed a 20-year contract with the City and County of San Francisco for water deliveries from the newly constructed pipeline bringing Hetch Hetchy water from Yosemite to the Bay Area. Water deliveries from San Francisco commenced in 1938 and well production declined to less than half of the total citywide water demand. A 1950 engineering report noted, "The capricious alternation of well waters and the [San Francisco] water...has made satisfactory service to the average consumer practically impossible." Groundwater production increased in the 1950s leading to lower groundwater tables and increasing water quality concerns. In 1962, a survey of water softening costs to City customers determined that the City should purchase 100% of its water supply needs from San Francisco. A 20-year contract was signed with San Francisco and the City’s wells were placed in a standby condition. Since 1962 (except for some very short periods) the City’s entire potable water has come from San Francisco’s Hetch Hetchy regional water system administered by the SFPUC. In 1974, several wholesale customers joined Palo Alto and filed a lawsuit against San Francisco in protest of an increase in water rates that was higher for wholesale customers than it was for 5 Staff Report 6754: http://www.cityofpaloalto.org/civicax/filebank/documents/51856 Page 7 direct retail customers. In 1984, settlement negotiations resulted in the “Settlement Agreement and Master Water Sales Contract between the City and County of San Francisco and Certain Suburban Purchasers in San Mateo, Santa Clara and Alameda Counties”. The 25-year agreement was approved in 1984. The 1984 agreement included the creation of a “Supply Assurance” equal to 184 million gallons of water per day (MGD) for the benefit of the wholesale customers.6 The agreement included a mechanism to allocate the 184 Supply Assurance between the wholesale agencies. The City’s allocation, its “Individual Supply Guarantee” or ISG, is 17.07 MGD. Each agency’s ISG is perpetual in nature and survives termination or expiration of the water supply contract with San Francisco. In 2009, a new 25-year Water Supply Agreement (WSA) was executed between San Francisco and the City7. The City’s historical water use and supply sources are illustrated in Figure 1. Figure 1: Historic Water Use (1988-2016) V. Water Use Projections The City of Palo Alto Utilities (CPAU) regularly prepares water supply and demand forecasts to prepare financial forecasts, to meet regulatory requirements, or as part of ongoing regional planning efforts. Like many water agencies in California, the City has experienced a significant 6 The Supply Assurance is expressed as an annual average and does not constitute an obligation on the part of the SFPUC to meet daily or hourly peak demands. 7 CMR: 269:09: http://www.cityofpaloalto.org/civicax/filebank/documents/15985 Page 8 drop in water use since 2007, which is largely attributable to the 2008 economic recession and the recent drought and resulting water conservation. Urban Water Management Plan (UWMP) The UWMP is submitted to the Department of Water Resources every five years; the City Council approved the most recent 2015 UWMP in June 20158. Water demand forecast for the 2015 UWMP are shown in Figure 2. For comparison purposes, the forecast from the 2010 UWMP is also included in Figure 2. The water use projection results are revealing in that the City, along with most water agencies in California, did not anticipate the dramatic drop in water demand from 2007 to 2009. Potable water demands from 2009 to the present appear to have leveled off and have begun to trend upwards again, albeit slowly, and it remains to be seen if water demands will follow the increase forecasted in the 2010 UWMP. Figure 2: 2010 and 2015 UWMP Demand Forecast Projection Comparison Summary Water Resource Mix The 2015 UWMP provided detailed information on baseline water resources through 2040. SFPUC supplies were assumed to remain the primary potable supply for the foreseeable future. Recycled water consumption was projected to continue at current levels and no expansion was assumed in the 2015 UWMP. Finally, demand side management and conservation program penetration and savings were projected contribute to a modest decrease in potable water use. A representation of the future water resource mix is provided in Figure 3. 8 Staff Report 6851: http://www.cityofpaloalto.org/civicax/filebank/documents/52272, Resolution 9589: http://www.cityofpaloalto.org/civicax/filebank/documents/53456 Page 9 Figure 3: Summary of 2015 UWMP Water Resource Composition VI. Attributes Evaluated and Water Resource Alternatives Examined Attributes Evaluated for each Water Resource Alternative In this section, each potential water resource option is evaluated and compared based on the following attributes: 1. Normal and Dry Year Availability – The quantity, timing, peak flow or capacity, and any expected changes over time during normal years and during dry years. 2. Water Quality – All options must meet water quality regulations, but supply resources may differ in their relative water qualities (i.e. taste, odor, color, hardness, mineral content, trace levels of contaminants, etc.). 3. Cost – The capital and operating and maintenance (O&M) costs of the resource. 4. Sustainability – The long-term outlook for the supply source given climate change, sea level rise, and the Council preference for local resources. 5. Emergency Robustness – The availability of the resource under various emergency scenarios. 6. Sensitivity to Regulations and Environmental Review – Vulnerability to existing or potential federal, state, or local regulations and required environmental review. Water Resource Alternatives Examined The potable water resource alternatives evaluated in this 2017 WIRP process include: 1. Water from the SFPUC Page 10 2. Groundwater (with or without groundwater recharge) 3. Treated Water from the SCVWD 4. Demand side Management Water Resource Alternatives NOT Examined The WIRP is an analysis of potable water resource alternatives. However, non-potable water sources can both satisfy unmet water needs and reduce dependence on potable water. The City is moving forward on several fronts regarding recycled water and other non-potable supplies, but an evaluation of those supplies is not included in this analysis. The following is a summary of the water resources not included in WIRP due to cost, technical obstacles, or regulatory restrictions. A number of non-potable water sources are under development or are being studied in parallel with the WIRP effort. 1. Recycled Water – The City of Palo Alto operates the Regional Water Quality Control Plant (RWQCP), a wastewater treatment plant, for the East Palo Alto Sanitary District, Los Altos, Los Altos Hills, Mountain View, Palo Alto, and Stanford University. The City, in partnership with the SCVWD, is embarking on a Recycled Water Strategic Plan that will include a holistic evaluation of this important resource. The costs and benefits of expanding the current recycled water distribution system will be re-examined. The study will include an analysis of the nexus between recycled water and potable water through Indirect Potable Reuse (IPR), whereby highly purified wastewater in used to recharge the groundwater for future potable use, and Direct Potable Reuse (DPR), whereby highly purified wastewater is injected directly into the potable water distribution system. a. Non-potable Recycled Water - In September 20159, Council certified the Environmental Impact Report (EIR) for a project that includes capital improvements to the existing distribution system needed to increase deliveries to the Stanford Research Park. The Recycled Water Strategic Plan will re- evaluate the cost effectiveness of this project given an updated demand assessment for non-potable water, current cost estimates including potential outside funding sources. The potential impact on potable water demand of expanding the use of non-potable recycled water is considered in this analysis. b. IPR and the Nexus with Groundwater – State regulations allow recharging groundwater with purified water, and projects are in operation in other parts of the state. A project in Palo Alto would include a pipeline to a suitable site where a facility could be constructed to successfully recharge the aquifer. Because understanding the hydrology is such an important aspect of successful recharge and because data for this part of the county is incomplete, the Recycled Water 9 Staff Report 5962: http://www.cityofpaloalto.org/civicax/filebank/documents/49079, Resolution 9548: http://www.cityofpaloalto.org/civicax/filebank/documents/49865, and Resolution 9549: http://www.cityofpaloalto.org/civicax/filebank/documents/49866 Page 11 Strategic Plan includes a study of the upper and lower aquifers and the connectivity between the two and they relate to the water balance. The WIRP does include an analysis of groundwater as an alternative resource but does not include a cost estimate to recharge groundwater with purified water from the RWQCP. c. DPR – While it is technically possible, as evidenced by the new SCVWD Advanced Water Purification Plant, to produce recycled water that meets all drinking water requirements, state law still prohibits injecting purified recycled water directly into drinking water distribution systems. In addition, the cost of treating recycled water to this degree is not yet cost-competitive. State lawmakers, however, are embarking on a process to establish the regulations for DPR, and since the supply is drought-proof, it will likely be a viable alternative in the future. 2. Desalination – BAWSCA is evaluating a desalination project as part of its long-term water supply plan. The demand analysis, however, revealed that current water resources are adequate in normal water years through 2040. Less expensive, more flexible alternatives such as water transfers are more suited to filling the supply gaps during dry years. Because the projected timeline for completing any desalinization project is very long, BAWSCA intends to continue studying this resource and seeking alternate funding for such projects. 3. Sale of the City’s Individual Supply Guarantee (ISG) - The City’s access to water from the SFPUC Regional Water System is embodied in the 2009 WSA. The City’s ISG of 17.07 MGD is a perpetual guarantee, but the delivery of water is subject to interruption for reason of water shortage, drought, or emergency. The City’s average year water needs, after consumption bounces back from the recent drought, are projected to be about 9.5 MGD. The City of East Palo Alto (EPA) lacks adequate long-term water supplies for development and is interested in increasing its ISG. Any transfer of Palo Alto’s ISG would be permanent and may impact the percentage Palo Alto would be required to cutback in a water shortage. Discussions between the City and EPA are underway and are separate from this analysis. 4. Small scale irrigation wells - Individuals may drill their own wells without City review or permits, but are subject to SCVWD’s rules, restrictions, and permitting requirements. The City does have the option of using small wells for irrigation of large landscapes, such as for City parks. However, locating, maintaining, and operating small wells is cost- prohibitive and operationally problematic. 5. Treated Contaminated Groundwater – There are several entities in the City that treat contaminated groundwater and discharge the groundwater to the storm drain system and, to a lesser extent, the sanitary sewer system. The primary purpose of these Page 12 facilities is to remediate contaminated groundwater with finite operations. The potential end uses for this water are limited due to its very low quality. 6. Nuisance Groundwater from the Oregon Expressway Underpass - The Santa Clara County Oregon Expressway dewatering pumps discharge significant amounts of nuisance groundwater to the storm drain system to keep the underpass dry. The City evaluated the capture and conveyance of the Oregon Expressway groundwater for irrigation purposes and determined the effort would require significant conveyance and storage infrastructure investments that are not cost effective. 7. Nuisance Groundwater from Basement Dewatering - Basement construction groundwater pumping occurs when a basement is constructed in areas of shallow groundwater, typically in the neighborhoods closer to the bay or near current or former creek beds. Dewatering continues until enough of the house has been constructed to keep the basement in place. The shallow and deep aquifer research to be undertaken by the City in coordination with the SCVWD in the Recycled Water Strategic Plan will provide valuable insight to the relationship between the aquifers in the north part of Santa Clara County. While the City has long regulated several aspects of basement groundwater pumping for both residential and commercial sites, recent public concern over the appearance of wasted water prompted Council’s adoption of several new requirements for builders. Where groundwater pumping is needed, builders must install a fill station and submit a Groundwater Use Plan describing how use of the pumped groundwater will be maximized. On February 1, 2016 10, Council approved the following additional requirements and actions: • Public outreach to encourage greater fill station use; • Increased outreach on the water cycle and value of fresh water flows to storm drains, creeks and bay; • Additional requirements for Groundwater Use Plans such as maximizing on-site water reuse (e.g. watering on-site and nearby vegetation), providing water truck hauling service for neighbor and City landscaping, and piping to nearby parks or major users where feasible; • Expansion of fill station specifications to address water pressure issues from multiple concurrent users, including separate pumps for neighbors where needed and sidewalk bridges for hoses to reduce tripping hazards; and • Submission of a determination of the effects of groundwater pumping on nearby buildings, infrastructure, trees, or landscaping. 10 See Staff Report 6478: http://www.cityofpaloalto.org/civicax/filebank/documents/50690 Page 13 8. Graywater and Black Water – Graywater is relatively clean waste water from baths, sinks, washing machines, and other kitchen appliances while black water is waste water from toilets. Treating and reusing both types of water at the building level can decrease the demand for potable water. The City’s draft Sustainability Implementation Plan includes designing programs for cost-effective incentives for grey water and black water systems and developing a local ordinance that facilitates the use of non-traditional water sources such as grey water and black water. 9. Storm water – Storm water is precipitation that can soak into the soil (infiltrate), be held on the surface and evaporate, or run off and end up in nearby streams etc. Capturing and using storm water in Palo Alto can reduce the demand for potable water, help to recharge the aquifer, and prevent pollutants from entering the San Francisco Bay. Storm water can be a useful resource for keeping Palo Alto’s urban canopy well-watered. The draft Sustainability Implementation Plan includes developing a Storm Water Infrastructure Plan by 2019 to include design guidelines, funding sources, and prioritized projects. The draft plan also includes promoting permeable paving material through mandates and rebates and incentives and exploring new applications for permeable paving. VII. Water from the SFPUC The City currently purchases 100% of its potable supplies from the SFPUC under the 2009 WSA. The WSA is administered for the City by BAWSCA which represents the interests of 24 cities and water districts and two private utilities that purchase wholesale water from the San Francisco regional water system. These entities provide water to 1.7 million people, businesses and community organizations in Alameda, Santa Clara and San Mateo counties. The City of Palo Alto is a member of BAWSCA and has a Council-appointed representative on the BAWSCA Board of Directors. Availability The City’s right to water from the SFPUC system is embodied in the 2009 WSA. The City’s ISG of 17.07 MGD is a perpetual right, but the delivery of water is subject to interruption for reason of water shortage, drought, or emergency. Normal Year SFPUC Water Availability While the City’s ISG is 17.07 MGD, the City’s long-term projected potable water demand forecast is only about 9.5 MGD. The WSA includes an interim water delivery limitation 11 from the SFPUC system of 265 MGD until its expiration in 2018. The City’s share of the interim 11 This limitation applies to all users of the San Francisco regional water supply system, the City of San Francisco and all the BAWSCA member agencies. Page 14 limitation, or its Interim Supply Allocation (ISA), is 14.70 MGD 12. Based on the water demand forecast from the 2015 UWMP, there is no foreseeable need for additional supply beyond the City’s ISG, or the ISA. There is one situation where the City’s ISG could be involuntarily reduced. Under the terms of the 1962 contract between the City of Hayward and San Francisco, the City of Hayward’s contractual entitlement from the SFPUC system essentially equals its water demand. In theory, since the collective Supply Assurance of the wholesale customers cannot exceed 184 MGD, if Hayward’s water usage increases substantially, the other wholesale agencies could experience a proportional ISG reduction to ensure the 184 MGD limit is not exceeded. However, BAWSCA’s 2014 Regional Demand and Conservation Projections Project showed total agency demand for SFPUC water to be 168 MGD in 2040, well below the 184 MGD limit. Dry Year SFPUC Water Availability SFPUC’s WSIP includes a level of service goal of no greater than a 20% system-wide supply shortage during a drought. The 2009 WSA includes a water shortage allocation plan to share water from the regional system between the SFPUC retail and group of BAWSCA agencies (also known as the “wholesale customers”) during a shortage of up to 20% (Tier I plan). The wholesale customers further divided the wholesale allocation based on a formula adopted by all the wholesale customers (Tier II plan)13. The Tier II formula results in larger cutbacks from the wholesale customers compared to SFPUC’s retail customers, however, the formula expires in 2018, unless extended by mutual agreement of the BAWSCA members. This analysis assumes that, in the future, any voluntary or mandatory water use reductions will be commensurate with the needed system-wide reduction. Based on the 2040 regional demand assumptions and using 91 years of historical hydrologic data and the SFPUC’s Hetch Hetchy/Local Simulation Model, drought year supply shortages of 10 percent to 20 percent on SFPUC’s Regional Water System are estimated to occur up to 8 times during the 91-year historical hydrologic sequence (i.e., 1920 through 2011) that the SFPUC uses for water supply planning purposes. This is the equivalent of a shortage event on the Regional Water System approximately every 11 years. The estimated frequency of shortage is conceptually illustrated Figure 4. 12 See informational Staff Report 1321: https://www.cityofpaloalto.org/civicax/filebank/documents/26211 13 Staff Report 1308: http://www.cityofpaloalto.org/civicax/filebank/documents/40970, Resolution 9141: http://www.cityofpaloalto.org/civicax/filebank/documents/31879 Page 15 Figure 4: Projected Frequency of Shortage for RWS Based on 91-Year Historical Hydrologic Record and Estimated Demand As identified in the 2015 UWMP, the City has developed a Water Shortage Contingency Plan for implementation during a drought. The Water Shortage Contingency Plan identifies several stages of drought response, depending on the degree of supply reduction required. Responses range from informational outreach to severe water use restrictions and modified rate structures. While the City has the option of pumping groundwater as supplemental supply in a water supply shortage determined by the SFPUC, this may not be a viable option in a State-mandated potable water reduction. This is discussed in more detail in the groundwater section below (Section VII Potable Groundwater). Water Quality SFPUC supplies are of extremely high quality. See Table 2 (in Section VII Potable Groundwater) which lists key water quality parameters for SFPUC water, SCVWD treated water and groundwater. Water provided by the SFPUC is a mix of Hetch Hetchy water and water from the East Bay and Peninsula reservoirs. In a normal year, Hetch Hetchy water makes up 85% of the mix. Due to maintenance requirements, the SFPUC typically will shut down the Hetch Hetchy supply for a period during the low demand winter months and draw from the local reservoirs. It is not unusual to experience temporary water quality changes due to these events, though the water still meets all drinking water quality standards. The SFPUC uses chloramine as the primary drinking water disinfectant and adds fluoride14. 14 In 1957 the voters in Palo Alto adopted a measure that requires fluoride be added to the City’s water supply (Palo Alto Municipal Code Section 12.24.010). Page 16 Cost The City purchases 100% of its potable water supply from the SFPUC, with the current cost structure composed of a volumetric charge and a small fixed monthly meter charge. With the $4.8 billion WSIP nearly complete, the cost of SFPUC water has increased significantly over the past 10 years. The recent decline in region-wide water consumption has intensified the problem since the cost, which is almost all fixed, is spread over fewer sales units. The historic and projected wholesale volumetric rate for SFPUC water is illustrated in Figure 5. Figure 5: SFPUC Actual and Projected Cost of Water While the SFPUC charges wholesale customers based on how much water is used, the costs of the SFPUC system are almost entirely fixed costs—in other words, even if usage drops the cost to operate the system (O&M, debt service, etc.) remains essentially the same 15. The SFPUC wholesale water rate projections in Figure 5 assume that the current rate structure remains in place. However, the WSA provides some flexibility for the SFPUC to adjust rate structures and the SFPUC has signaled an interest in exploring alternative rate structures16 including increasing the fixed charge component or allocating charges based on the ISG, rather than actual water usage. The City’s ISG of 17.07 MGD is approximately 9.23% of the total BAWSCA agencies’ Supply Assurance of 184 MGD. If collection of the Wholesale Revenue Requirement is based on each agency’s ISG and if the City chose to not permanently transfer any of its ISG, the City could pay 20-30% more for SFPUC water annually. 15 The SFPUC system is largely gravity fed, so little variable O&M is required for water deliveries. 16 SFPUC Comments, July 2012 BAWSCA Board of Director’s meeting Page 17 Sustainability The SFPUC views assessment of the effects of climate change as an ongoing project requiring periodic updates to reflect improvements in climate science, atmospheric/ocean modeling, and human response to the threat of greenhouse gas emissions. Climate change research by the SFPUC began in 2009 and continues to be refined. In its 2012 report “Sensitivity of Upper Tuolumne River Flow to Climate Change Scenarios,”17 the SFPUC assessed the sensitivity of runoff into Hetch Hetchy Reservoir to a range of changes in temperature and precipitation due to climate change. Key conclusions from the report include the following: • With differing increases in temperature alone, the median annual runoff at Hetch Hetchy would decrease by 0.7-2.1 percent from present-day conditions by 2040 and by 2.6-10.2 percent from present-day by 2100. Adding differing decreases in precipitation on top of temperature increases, the median annual runoff at Hetch Hetchy would decrease by 7.6-8.6 percent from present-day conditions by 2040 and by 24.7-29.4 percent from present-day conditions by 2100. • In critically dry years, these reductions in annual runoff at Hetch Hetchy would be significantly greater, with runoff decreasing by up to 46.5 percent from present-day conditions by 2100 utilizing the same climate change scenarios. In addition to the total change in runoff, there will be a shift in the annual distribution of runoff. Winter and early spring runoff would increase and late spring and summer runoff would decrease. Under all scenarios, snow accumulation would be reduced and snow would melt earlier in the spring, with significant reductions in maximum peak snow water equivalent under most scenarios. Given the current regional system demand projection, the shorter-term effects of climate change are not expected to be relevant. The potential impact of runoff decreasing by nearly 50% by the next century, however, represents a dramatic shift in the availability of water sourced in the Sierra Nevada including water in the Hetch Hetchy system. The SFPUC is planning to conduct a comprehensive assessment of the potential effects of climate change on water supply. The assessment will incorporate an investigation of new research on the current drought and is anticipated to be completed in 2017. Emergency Robustness Since the SFPUC is the City’s primary potable supply source, the City is vulnerable to service interruptions on the SFPUC system. One of the major drivers behind the WSIP was to address 17Accessed September 29, 2016: http://bairwmp.org/docs/climate- change/Bay%20Area%20Impacts/Water%20Supply/SFPUC%202012%20Sensitivity%20of%20Upper%20Tuolumne% 20River%20Flow%20to%20Climate%20Change%20Scenarios.pdf/view Page 18 reliability deficiencies, which under some circumstances could have resulted in an interruption of SFPUC service for up to 60 days following a catastrophic event such as an earthquake. The WSIP level of service objective for seismic reliability is to deliver basic service 18 within 24 hours after a major earthquake. The performance objective is to provide delivery to at least 70 per cent of the turnouts in each region, and full restoration to meet average day demand within 30 days after a major earthquake. Palo Alto may be better situated than other agencies in having two distinct connection points to the SFPUC system: three SFPUC connections are served by the Palo Alto Pipeline connection to Bay Division Pipelines 1 and 2, and two SFPUC connections are served by Bay Division Pipelines 3 and 4. Figure 6 below is a schematic of the SFPUC Regional Water System. Figure 6: Map of SFPUC Regional Water System 19 Sensitivity to Regulations and Environmental Review The SFPUC supply is the current baseline supply source for the City. Subsequent sections analyze several alternatives to the current and projected supply mix, and the resulting potential environmental impacts. Increased water use within an agency’s ISG does not require any action by an agency’s governing body, and therefore does not trigger any California Environmental Quality Act (CEQA) review obligation. For many water systems in California, the availability of water supplies depends on many factors, including legislative and regulatory changes that may impact future supply conditions. 18 Basic service is defined as average winter month usage. 19 Source: SFPUC: http://www.sfwater.org/index.aspx?page=355 accessed September 29, 2016. Page 19 The SFPUC system is no different, and has several future regulatory risks that could impact water supply reliability and/or cost 20: 1. Federal Energy Regulatory Commission (FERC) relicensing of the Don Pedro Project a. State Water Resources Control Board (SWRCB) 401 Certification of FERC relicense b. Endangered Species Act (ESA) Section 7 consultation for FERC relicense 2. Central Valley Total Maximum Daily Load regulations 3. Bay-Delta proceedings (SWRCB, Legislative actions) 4. ESA Habitat Conservation Plans for SFPUC local watersheds The SFPUC manages these risks, with support from BAWSCA and the wholesale customers. VIII. Potable Groundwater The SCVWD manages an integrated water resources system that includes the management of groundwater, supply of potable water, flood protection and stewardship of streams on behalf of Santa Clara County's 1.8 million residents. The SCVWD manages ten dams and surface water reservoirs, three water treatment plants, nearly 400 acres of groundwater recharge ponds and more than 275 miles of streams. The SCVWD provides wholesale water and groundwater management services to municipalities, private water retailers, and individual property owners operating groundwater wells in Santa Clara County. In 2012, the SCVWD prepared a Groundwater Management Plan (GWMP)21 which provided information regarding general groundwater conditions in the area and characterized the SCVWD groundwater activities in terms of basin management objectives, strategies, and outcome measures. The GWMP described the Santa Clara sub basin as being divided into upper and lower aquifers separated by low permeability clays and silts. The SCVWD refers to these as the shallow and principal aquifer, with the latter generally defined as 150 feet below ground surface. The principal aquifer is the primary drinking water aquifer, and is the source for the any increased reliance on groundwater to meet current or future potable water demands. The SCVWD is responsible for managing Santa Clara County’s groundwater basin to ensure there is adequate supply and overdraft conditions are minimized. The SCVWD accomplishes this goal by maximizing conjunctive use, the coordinated management of surface and groundwater supplies, to enhance supply reliability. Programs to accomplish this goal include the managed recharge of imported and local supplies, in-lieu groundwater recharge through the delivery of treated surface water22 and acquisition of supplemental water supplies, and programs to protect, manage and sustain water resources. The SCVWD adopted level of service 20 Source: SFPUC’s 2010 UWMP 21 See SCVWD website: http://www.valleywater.org/services/groundwater.aspx accessed September 26, 2016. 22 The SCVWD and the SFPUC wholesale customers in Santa Clara County are partners in conjunctively managing the water resources in the county. The SFPUC customers in the county have contracts with the SFPUC. Page 20 goals as part of its 2012 Water Supply and Infrastructure Master Plan 23 effort, including the development of water supplies designed to meet at least 100% of average annual water demand identified in the SCVWD 2010 UWMP during non-drought years and at least 90 percent of average annual water demand in drought years24. Managed and in lieu recharge programs are in balance with withdrawals. Groundwater levels have dropped significantly over the past several years as a result of the drought conditions and lack of State Water Project water imported to the county. The groundwater conditions in the Santa Clara sub-basin vary, and groundwater pumping from different locations will have different effects depending on location, elevation, recharge conditions, and pumping activity. In September 2014, Governor Brown signed the Sustainable Groundwater Management Act (SGMA) to promote the local, sustainable management of groundwater supplies. SGMA requires sustainable groundwater management for all medium and high priority basins in California. SGMA identifies the District as the exclusive groundwater management agency for Santa Clara County. The SCVWD’s 2012 Water Supply and Infrastructure Master Plan described how the SCVWD will support future water supply needs and reliability. The adopted strategy identifies conservation, increased recycled water use, indirect potable reuse, additional groundwater recharge ponds, grey water, imported water reoperations, and dry year options as important components of the plan. The City maintains close involvement with the SCVWD as it is an important water wholesaler and the steward of groundwater resources in Santa Clara County. The City also partners with the SCVWD on conservation activities. The community is represented on the SCVWD Board of Directors by the District 7 Director. The City’s mayor also appoints a representative to the SCVWD Commission, an advisory body to the SCVWD Board of Directors. In 2015, the City completed the Emergency Water Supply and Storage Project 25. The project consisted of the repair and rehabilitation of five existing wells, construction of three new wells, and construction of a 2.5 million gallon storage reservoir and associated pump station, and other upgrades to the water distribution system. Availability Normal Year Availability As a city in Santa Clara County, Palo Alto has the ability to pump groundwater with the understanding that SCVWD will appropriately manage the groundwater resources in the county. If the basin has been drawn down to critical or severe levels over multiple years of 23 See SCVWD website: http://www.valleywater.org/Services/WaterSupplyPlanning.aspx accessed Sept. 26, 2016 24 SCVWD Board Agenda Item 4.2, June 12, 2012 25 See more at: http://www.cityofpaloalto.org/gov/depts/utl/eng/water/emergency/default.asp Page 21 drought, it may take several years of normal or above-normal precipitation for the aquifer to recover. Assuming groundwater levels in the county are healthy, the City could use potable water from some or all of its eight wells. As shown in Table 1, if all eight wells were used full time at full capacity, they could produce more than 18,000 acre-feet per year (AFY). These well capacities26 compare to 11,000 AF/Y, the average forecasted demand for the 20-year WIRP planning. This level of pumping, however, may be beyond the basin’s sustainable yield, estimated in the 2000 Carollo Study to be 3,500 to 6,100 AFY. The Recycled Water Strategic Plan will result in an updated estimate of that yield. Production levels will be impacted by the treatment options chosen as discussed in the section regarding quality. Table 1: Estimated Well Capacity Dry Year Groundwater Availability Because groundwater discharge and recharge happens at different rates, the available groundwater supply may not coincide precisely with wet and dry years. During dry periods, water users pump more groundwater and recharge is reduced or halted exacerbating the situation. Even though the SCVWD may prudently manage local water supplies, the reliance on imported water subjects water users in the county to potential water supply shortfalls. In 2014 imported water from the State Water Project was reduced to almost zero, and the SCVWD asked for voluntary reductions of 20%. In 2015, groundwater levels continued to drop prompting the SCVWD to call for a 30% reduction in potable water use. This reduction was, in many cases, more drastic than the targets imposed by the SWRCB imposed to meet the Governor’s 25% state-wide water use reduction goal. Notwithstanding average precipitation experienced in 2016, as of September 2016, the SCVWD continues to request a 20% reduction while groundwater levels slowly recover. A prolonged drought could result in a request for cuts of 40%. 26 Estimate provided by Utilities Engineering 2015 Well Capacity (AF/Y Hale 2,340 Rinconada 5,326 Fernando 1,130 Peers 2,744 Matadero 1,130 El Camino 2,986 Eleanor 1,614 Library 968 Total 18,238 Page 22 Water Quality The water quality of the groundwater is considered good, though historically the groundwater in the area has had iron (Fe), manganese (Mn) and Total Dissolved Solids (TDS) levels that exceed secondary27 drinking water quality standards. All potable water scenarios must comply with water quality requirements. Wells are sampled based in accordance with the SWRCB requirements. It is permissible to be out of compliance with secondary standards on a short-term basis during emergencies, but for full-time operation the City must be in compliance with secondary standards or apply for a waiver 28. The waiver requires justification and includes a community survey demonstrating a high degree of acceptance to establish support for the provision of water that exceeds secondary standards. Several treatment and blending options for the wells were evaluated in 2000 in the “Long Term Water Supply Study”, including: 1. Blend water with SFPUC water to meet water quality limits for manganese and iron. The blended water will meet regulatory limits, but will have TDS levels 2-3 times the current level in the distribution system29. 2. Provide iron and manganese treatment at each well site. The water will likely not exceed TDS limits, but it will be 5-7 times the current TDS levels in the distribution system. 3. Provide iron and manganese treatment at each well site and blend with SFPUC supplies to reduce the well water TDS levels. 4. Provide iron, manganese and TDS treatment at each well site. The treated water at the injection point will be comparable to SFPUC supplies. The resulting water quality of each treatment option is provided in Table 2 30. Table 2: Water Quality Resulting from Various Treatment Options Water Quality Parameter 31 Option 1 (blend) Option 2 (treat for Fe, Mn) Option 3 (treat for Fe, Mn and blend) Option 4 (treat for Fe, Mn and TDS) TDS (500 ppm) 130-300 440-700 120 120 Manganese (<0.05 ppm) 0.04-0.05 <0.05 <0.01 <0.05 Iron (<0.3 ppm) 0.08-0.3 <0.3 0.05-0.06 <0.3 27 Primary drinking water quality standards apply to contaminants that affect health while secondary standards apply to those constituents that affect aesthetics, taste and odor. 28 Title 17 Code of Regulations, Chapter 64449.2 29 Since completion of the Emergency Water Supply and Storage project, the El Camino Well water can be blended with SFPUC water in the new 2.5 million gallon storage tank in El Camino Park in a similar manner to Option 1. 30 Estimate provided by Utilities Engineering 2015 31 Manganese and Iron have single consumer acceptance contaminant levels, while TDS is a consumer acceptance contaminant level range (recommended = 500; short term= 1000 and upper limit = 1500) Page 23 Treating and/or blending the groundwater affect the well production. Figure 7 shows the production potential for all eight wells using each of the treatment options. Figure 7: Estimated Well Production for Various Treatment Options Cost The SCVWD levies a groundwater extraction fee, or “pump tax”, on each acre-foot of water that is pumped from the groundwater basin. The charge varies depending on a variety of factors, including end use (agriculture vs. municipal) and geographic location in the County. The new and refurbished wells were constructed with chlorine disinfection injection points and the capability to accommodate fluoride and other needed chemical injection points. The use of the wells on a regular basis will require a detailed operational plan and some or all of the sites will need modifications to accommodate backup power, chemical storage, and any equipment associated with the selected treatment option. Not all sites will have the space to accommodate these additional requirements, so an estimate of land acquisition needs was included. The total annualized unit cost in 2017 dollars including O&M and capital cost for each treatment option at each well is shown in Figure 8 32. Capital costs include equipment, pipelines, and land acquisition, if needed. O&M costs include the SCVWD groundwater production charge, chemicals, replacement parts, personnel, and energy. The cost for the blending alternatives is only for the groundwater and does not include the cost of SFPUC water. 32 Costs are only those costs incurred by Water Utility. Customer costs, including water softening or filtration devices will be additional costs borne by individual customers Page 24 Figure 8: Cost at Each Well for Each Treatment Option The total annualized unit cost in 2017 dollars including O&M and capital cost for each treatment option, assuming all wells are used, is shown in Figure 9. Because El Camino is already configured to be a blending facility, the least cost option is blending at that site. If a decision to use groundwater is made, a site-by-site evaluation of cost and operational challenges will be needed, and it is likely that not all wells will be practical to use. Figure 9: Unit cost of Various Treatment Options Page 25 The various treatment options will generate waste streams with elevated levels of iron, manganese, TDS, and chemical residuals used in the treatment process. Due to regulatory restrictions on the RWQCP and environmental protections for the San Francisco Bay, discharging the raw waste stream to the storm water system or the wastewater collection system for delivery to the Palo Alto RWQCP is not acceptable. Additional costs to manage this waste stream are not included in this analysis. Sustainability Managing the groundwater resource in Santa Clara County is, ultimately, the SCVWD’s responsibility. Palo Alto, however, would collaborate with SCVWD to ensure the basin remains healthy. While the 2000 Carollo study estimated sustainable yield to be between 3,500 and 6,100 AFY, there are still unanswered questions regarding the hydrology in this part of the county. The Recycled Water Strategic Plan will shed more light on the water balance, the sustainable yield, the interconnectivity between the shallow aquifer and the lower aquifer, and the possibilities for groundwater recharge. Using the lower end of Carollo’s estimate, the City may be able to safely rely on groundwater for about 30% of its potable water needs. In that case, one or two high-production wells would likely be operated with treatment at those sites only. Should the City chose to use groundwater on an ongoing basis for a significant amount of its potable water needs, IPR may prove beneficial. Since the City does not have land for percolation ponds, IPR would not only require advanced treatment at the RWQCP, but a new pipeline to an injection facility as well. The cost of an IPR project is not included in the cost analysis of groundwater in this WIRP. If imported water supplies are required to be delivered to the recharge facilities, those supplies need to be identified. Emergency Robustness Refurbishing the five older wells and constructing three new wells and a 2.5 million gallon storage reservoir and pump station was all part of the Emergency Water Supply and Storage project, the primary goal of which was to maintain basic water service and fire flows in all pressure zones in the City following a catastrophic interruption of SFPUC service. The City can provide a minimum of eight hours of normal water use at the maximum day demand level and four hours of fire suppression at the design fire duration level and will be capable of providing normal wintertime supply needs during extended shutdowns of the SFPUC system. Page 26 The groundwater system may also be used to a limited extent during drought emergencies, but is subject to the following mitigation measures, as stated in the Environmental Impact Report (EIR) completed for the project 33: 1. An aquifer test shall be conducted following the City’s well construction and rehabilitation efforts to verify the basin’s response to pumping; and 2. Emergency demand pumping shall be limited to 1,500 acre-feet (AF)34 in one year. Following this level of pumpage, groundwater production shall be restricted until groundwater levels recover to pre-pumping levels. Sensitivity to Regulations and Environmental Review All wells are currently permitted and designated by the California Department of Public Health as “Standby” and, as such, can only be used for 5 consecutive days up to 15 days in a year35. The wells may collectively supply up to 1,500 AF per year during a drought, with restrictions on when the wells can resume pumping following that level of groundwater extraction. It is important to note that the pumping restriction only applies to the project as defined in the EIR prepared for the Emergency Water Supply and Storage Project. This includes the 5 existing wells and 3 new wells. Individual property owners can install their own wells and pump groundwater. The SCVWD has indicated that the process to increase the current limitation will require supporting information on the sustainable yield of the groundwater basin in order to demonstrate increased pumping by the City will not have significant impacts36. With the current 1,500 AFY dry year groundwater extraction limitation, there is little risk any dry year pumping program could result in significant impacts to the groundwater basin37. The use of the wells to meet dry year needs is currently permitted subject to a pumping limitation of 1,500 AF per year. A significant increase to this limitation could require supplemental environmental review. Staff anticipates issues such as sustainable yield, dry year availability, subsidence risk, saltwater intrusion, dewatering of local creeks and contaminated plume migration, would be considered in such an environmental analysis. The Sustainable Groundwater Management Act (SB 1168, SB 1319 and AB 1739) was a first step toward more regulation of California’s groundwater resource. Santa Clara County, however, is already managed by the SCVWD, an agency considered to be a model for the rest of the state. It is very unlikely, therefore, that the new state regulations will have any impact on groundwater activities in the county. The San Francisquito cone is the aquifer below the City, 33 Environmental Impact Report, Emergency Water Supply and Storage project, Mitigation Measure 3.5-4(a) & 4(b). See http://www.cityofpaloalto.org/civicax/filebank/documents/8372/ accessed September 29, 2016 34 1500 AF/Year is equal to 1.34 MGD, or approximately 12% of FY 2012 water consumption 35 California Code of Regulations, Title 22, Section 64414(c). 36 In summer 2012, staff met with SCVWD representatives to discuss the current limitation and the process to increase/remove the limitation. 37 The 1500 AFY limitation is a CEQA derived mitigation measure that has undergone the public review process. Page 27 and this formation includes part of San Mateo County. In general, more management of the groundwater basin by the District in the north county would be beneficial for the City should groundwater become a part of the City’s long-term water supply. Potential State and Federal water quality regulations for potable water are a concern. Changes in regulations could make the groundwater supply less attractive and more expensive due to additional needed treatment. IX. Treated Water from the SCVWD In addition to managing the groundwater, the SCVWD produces and delivers treated drinking water to water retail agencies in Santa Clara County. The existing treated water delivery system does not serve the northwest portion of the county. A potential project known at the SCVWD as the “West Pipeline Extension” involves extending the treated water pipeline from its current terminus at Foothill Expressway and Miramonte Road to SFPUC’s Bay division Pipelines 3 and 4 at Foothills Expressway and Arastradero Road (a distance of about 4.5 miles). A map of the potential project is provided in Figure 10. Figure 10: West Pipeline Extension Map Page 28 In 1999, the City sent a letter to the SCVWD advising it that information was needed to analyze the City’s option to connect to the SCVWD West Pipeline. The SCVWD responded with an estimated cost for the extension of the West Pipeline that would have to be fully borne by Palo Alto. In February 2002, Palo Alto and four other county retailers requested that the SCVWD conduct a feasibility study of a West Pipeline extension from both a supply perspective and the additional reliability of having an additional interconnection with the SFPUC system. The SCVWD prepared a report on extending the West Pipeline, entitled: “Santa Clara Valley Water District’s West Pipeline Extension Conceptual Evaluation Final Report”38. The report evaluated an extension of the existing SCVWD West Pipeline to enable an interconnection of the Palo Alto and SCVWD systems at Page Mill turnout39. Because the pipeline extension by itself would not increase water supply to the county, it is not likely to be recommended in the SCVWD’s 2017 Water Supply Master Plan. The pipeline combined with an SFPUC intertie is, however, one of 15 projects being considered in the Bay Area Regional Reliability Project 40. Availability Normal Year Treated Water Availability The SCVWD has a diverse water supply portfolio, including State Water Project, Central Valley Project, and local reservoirs. SCVWD’s 2015 UWMP 41 indicated the SCVWD anticipates having adequate supplies to meet future needs through 2040. As in other parts of the state, water demand has decreased dramatically due to mandatory water use restrictions and usage reduction targets. SCVWD’s water supply and demand projections do not assume any treated water deliveries to Palo Alto or any other agency that does not currently receive treated water from the SCVWD. If the SCVWD extends the West Pipeline and the City negotiates a contract to receive water from that pipeline, the terms of the treated water contract would determine the amount of water delivered during normal years. 38 The City of Palo Alto participated in the preparation of the 2012 Water Supply and Infrastructure Master Plan (WSIMP). As part of that process, staff requested the SCVWD include the West Pipeline extension for project consideration. The SCVWD noted in the Final 2012 WSIMP that the project is not recommended in the WSIMP because it does not contribute to long-term supply reliability. However, the SCVWD stated that it would be considered during a planned Infrastructure Reliability Master Plan. 39 The SFPUC and the SCVWD have an emergency interconnection near Milpitas that could theoretically be used to wheel water to Palo Alto. Staff does not anticipate it will be feasible to wheel normal year supplies via the intertie, but the use of the intertie during dry years may be possible. However, in general the SCVWD system is more dry year sensitive than the SFPUC system, so it is unclear whether supplies would be available to be wheeled to Palo Alto via this mechanism. 40 http://www.bayareareliability.com/ accessed September 29, 2016 41 See SCVWD website: http://www.valleywater.org/Services/WaterSupplyPlanning.aspx accessed Sept. 29, 2016 Page 29 Dry Year Availability It is unlikely treated water will be available during dry years. SCVWD’s 2015 UWMP showed an adequate supply of available water to meet demands for one dry year, but multiple dry years result in insufficient water supply to meet demand. The water produced at SCVWD’s state-of-the-art purified water plant is currently blended with recycled water for non-potable uses. Future plans include IPR and, possibly, DPR which could increase SCVWD’s potable water supply availability. The cost of that water will also be impacted and is not included in this analysis. Water Quality Carollo Engineers evaluated the SCVWD treated water line in the 2000 Long Term Supply Study and provided information on the issues of blending SCVWD supplies with SFPUC supplies. In general, SFPUC supplies are of superior quality to SCVWD supplies, but there were several specific issues that were identified in the previous study. If the district decides to extend the West Pipeline to achieve system reliability and if Palo Alto is interested in moving forward with an interconnection with the SCVWD system, additional analysis will need to be performed to determine if the previous issues still remain, and what additional issues have arisen. On the positive side, the SCVWD’s decision to include fluoridation at its treatment plants removes the need to provide fluoridation at the interconnection points to ensure the water supply complies with the municipal code. In a similar manner, the SFPUC uses chloramine for residual disinfection. This removes some water quality related issues associated with blending treated water from different sources that use different disinfectants. There may be other issues related to water quality that could require the two water supplies to be isolated in the distribution system. This would result in water from difference sources being provided to customers depending on their location in the distribution system. Cost SCVWD’s West Pipeline Extension Report provided detailed cost estimates for several pipeline configurations, which are summarized in Table 3. Both scenarios require a new parallel pipeline from Rinconada Water Treatment plant to the current terminus of the West Pipeline at Miramonte Road. From there, a new pipeline would be constructed to Page Mill Road. The cost differential between the two scenarios is largely attributed to different pipe sizing requirements and an intertie pump station. Page 30 Table 3: SCVWD Treated Water Connection Cost Summary 42 Alternative Assumptions Total Cost of Alternative ($million) Cost to SFPUC ($million) Cost to Palo Alto ($million) Rate Increase to SCVWD Retailers ($/AF) Parallel and Extension • Existing treated water contractors and new retailers share cost of parallel pipe • New retailers pay for extension $160 N/A $64 $8 Parallel, Extension and Intertie • Existing treated water contractors and new retailers share cost of parallel pipe • SFPUC pays for half of incremental cost of intertie • Existing and new retailers share cost of extension and half of incremental cost of intertie $120 $23 $37 Pump Tax: $14 Treated Water: $20 SCVWD’s West Pipeline Extension Report concluded that the City and neighboring jurisdictions must pay for the costs of constructing the extension via a “take or pay” contract, which is a common payment mechanism for all retail water agencies in the county that purchase SCVWD treated water. The amount of the take or pay contract is determined by the amortized construction costs divided by the annual treated water rate. For example, if Palo Alto’s obligation for a West Pipeline extension was $37 million, it would pay an annual cost of $2.5 million (assuming an interest rate of 3%/year for a 20-year financing period). Using a treated water rate of $1,350 per AF 43, Palo Alto would be required to purchase about 2,000 AF/year ($2.5 million divided by $1,350/AF), or about 18% of the City’s expected average water usage for the WIRP planning horizon. During the term of the contract, the City would have limited ability to adjust its annual water purchase from the SCVWD. There are several agencies in Santa Clara County that purchase both SCVWD and SFPUC treated water, and they are subject to minimum “take or pay” contract provisions from both providers. The City would receive similar treatment. The cost estimates in Table 3 do not account for any distribution system improvements that may be required to configure Palo Alto’s distribution system to receive SCVWD treated water. If the pipeline extension came to fruition through a regional reliability implementation plan, the terms of a potential treated water supply contract with Palo Alto may be adjusted to account for the regional system reliability provided to all customers as a result of the project. 42 Cost of additional supply is not included in project cost. Costs have been escalated 3% from 2003 dollars to provide a representation of potential cost ranges. 43 This is SCVWD’s projected treated water rate for FY 2018 Page 31 The California Water Fix (also known as the “Twin Tunnels”) is a proposal to address the co- equal goals of water supply reliability and environmental sustainability. The proposed water conveyance solution is a pair of tunnels underneath the Delta from an intake on the Sacramento River to the South Delta Diversion/Pumping facilities. Such a facility will take decades to build and the costs will likely be borne by State and Federal water contractors, including the SCVWD. The SCVWD will likely continue to collect revenue for all SWP costs through property taxes rather than through water rates. Palo Alto property owners will, thus, bear those costs whether or not water is delivered to Palo Alto. Emergency Robustness The SCVWD’s Water Utility Infrastructure Reliability Plan was completed in in 2005. The project measured the baseline performance of critical facilities in emergency events and identified system vulnerabilities. The plan concluded that the water supply system could suffer up to a 60- day outage if a major event, such as a 7.9 magnitude earthquake on the San Andreas Fault, were to occur. A series of projects were implemented and the expected outage time in a major event is now estimated to be 30 days. The SCVWD is currently updating its Infrastructure Reliability Plan. The goal of the update is to identify new reliability improvements that are more regional, less capital intensive alternatives to the well fields. The updated plan and final recommendations will be complete in in the near future. If the West Pipeline was extended to provide potable water service to Palo Alto, the City would have one connection to the SCVWD system44, compared to 5 connections to the SFPUC system. It is unclear what level of reliability would be provided in the event of catastrophic event. The SFPUC level of service goal following an earthquake is to provide for average wintertime demands with delivery to 70% of the turnouts within 24 hours following a major earthquake. The SCVWD level of service goal provides for service resumption to one turnout within 7 days of a similar event, though the location of a Palo Alto interconnection at the end of the treated water line may be a weak point, so it is unclear if there will be adequate supplies or system pressures to provide meaningful service. In addition, the SCVWD plans on extracting groundwater for raw water delivery to the treatment plants and on to the retailers during an emergency. The Emergency Water Supply and Storage project was designed to serve this purpose for Palo Alto. Sustainability Like all water suppliers in California that rely on imported water, the SCVWD’s ability to provide a reliable, clean water supply is challenged by the potential of warmer temperatures, changing 44 There may be additional connection options to a new SCVWD treated water pipeline, such as a new extension to the existing Arastradero SFPUC turnout. However, the cost of additional connections was not included in the initial cost estimate and would likely be borne by the City. Additional connections may allow increased use of and more efficient distribution of SCVWD treated water, though they may not provide any additional reliability assurances. Page 32 precipitation and runoff patterns, reduced snow pack, and rising sea levels. The SCVWD’s water supply vulnerabilities to climate change include a potential decrease in imported water supplies as a result of a reduction in snow pack and a shift in the timing of runoff, a decrease in local surface water supplies as result of reduced precipitation, more frequent and severe droughts, changes in surface water quality associated with changes in flows and temperature, and changes in imported water quality due to salinity intrusion in the Delta. Additional vulnerabilities include infrastructure and water quality issues from more frequent algal blooms, invasive and/or non-native species, and wildfire. During the drought in the late 1980’s and again in recent years, SCVWD supplies from both the state and federal sources were drastically reduced. Groundwater was relied upon heavily causing levels to rapidly decrease. Sustainability will be improved if purified water from the SCVWD’s plant is ultimately used for IPR or DPR in the county. Sensitivity to Regulations and Environmental Review A West Pipeline extension will require CEQA review. The SCVWD would be the lead agency for the CEQA process. Because the SCVWD imports water from both the State and Federal water projects, it is vulnerable to actions that impact those sources. Since Council approved the 2003 WIRP, federal and state water deliveries have been reduced on several occasions due to Delta related issues. Most recently, state water deliveries were curtailed dramatically due to the drought. X. Demand Side Management The City is committed to support conservation and efficient use of its water supply. It is the goal of the City to continue to look for opportunities, innovative technologies, and cost-effective programs that best utilize the City’s water conservation budget. The City works with other BAWSCA members, the SCVWD, and other water agencies in the Bay Area to implement Best Management Practices (BMPs) related to water conservation programs. The Water Conservation Bill of 2009 (SBx7-7) was enacted in November 2009. It requires water suppliers to reduce the statewide average per capita daily water consumption by 20% by December 31, 2020. To monitor the progress towards achieving the 20% by 2020 target, the bill also requires urban retail water providers to reduce per capita water consumption 10% by 2015. The City met the interim 2015 SBx7-7 target and is projected to meet the 2020 target. The following measures have been implemented over the past five years and/or will be implemented to achieve the City’s water use target pursuant to SBx7-7: 1. Water Waste Prevention Ordinance: The City has enforced water waste prevention as part of the City’s Municipal Code since 1989 (Palo Alto Municipal Code Chapter 12.32). Page 33 Enforcement includes written warning notices and may result in fines and installation of a flow restrictors, and billing the costs of such installation to the responsible customer or purchaser, as applicable. 2. Metering: The City is currently implementing a pilot program using advanced electric, gas and water meters at 300 single-family homes. Customers with these advanced meters can monitor their hourly water usage from a secured website. The City plans to deploy advanced water meters to all customers by 2022. 3. Conservation Pricing: Since 1976, the City has implemented conservation-based pricing for water usage, within an overall cost-based rate structure. 4. Public Education and Outreach: Since 2006, the City has partnered with BAWSCA to offer free workshops on water efficient landscaping, irrigation and water conservation. In addition to public workshops, CPAU staff attends community, corporate and school events to promote water conservation programs and practices, in addition to energy efficiency, waste reduction and other sustainability practices. The City carries out various seasonal and general water conservation campaigns via the use of television, online, social media and print advertisements. Palo Alto also regularly updates the City’s website on water conservation programs and public workshops. The City utilizes utility bill inserts, brochures and email newsletters to customers as part of its outreach efforts. 5. Programs to Assess and Manage Distribution Systems Real Loss: For over two decades, the City has pursued an aggressive Water Main Replacement Capital Improvement Program. In addition, the City maintains a Water Meter Replacement Program that replaces 500 to 1,000 meters per year in accordance with American Water Works Association (AWWA) standards. 6. Water Conservation Program Partnership with SCVWD: Since 2002, the City has partnered with SCVWD to promote and cost-share a wide range of water conservation programs to encourage residents and businesses to improve water use efficiency. These programs include free indoor and outdoor water audits, as well as rebates for upgrading a wide range of water-using fixtures to high efficiency models, including toilets, urinals, clothes washers, laundry to landscape graywater systems, high water-using landscapes, irrigation hardware, commercial food service and other process equipment. 7. Greywater Use: Laundry to Landscape Graywater rebates are available from the City and SCVWD for residents who properly connect a clothes washer to a graywater irrigation system following rebate program and California Plumbing Code guidelines. Availability Normal Year Availability The SBx7-7 goal is consistent with the City’s longstanding policy of providing cost effective conservation programs to the community. Figure 11 shows the targets, the City’s progress to date, and a projection of the City’s future water demand. Page 34 Figure 11: SBx7X7 Targets, Results, and Projections Dry Year Availability During SFPUC water shortage events or state-mandated potable water use reductions, the City implements its Water Shortage Contingency Plan (WSCP) as outlined in the UWMP. The WSCP included water use restrictions and other actions to be taken to achieve specific water use reduction targets. The stages are: Stage I: 5%-10% water use reduction Stage II: 10%-20% water use reduction Stage III: 20%-35% water use reduction Stage IV: 35%-50% water use reduction From June 1, 2015 until February 28, 2016, the City was subject to a mandatory 24% potable water use reduction by the SWRCB using usage during calendar year 2013 as the baseline. All of Stage II actions, a subset of Stage III actions and the additional State-mandated actions were implemented. The City was able to achieve a 31.4% reduction in potable water use over the compliance period, proving the WSCP is an effective means to reduce water demand when needed. Figure 12 demonstrates the City’s successful drought response. Page 35 Figure 12: Monthly Potable Water Consumption Water Quality Demand side measures do not present any water quality issues. Cost The City takes advantage of opportunities, innovative technologies, and cost effective programs that best utilize the water conservation budget. In FY 2011, the City dramatically increased conservation program savings goals to meet the requirements of SB7x-7, the Water Conservation Bill of 2009 which required water suppliers to reduce the average per capita water consumption in their service territories 20% by 2020. Each demand side measure is assessed in terms of financial impact to the utility, which includes rebate costs as well as any other administrative costs. Table 4 depicts the actual cost of water efficiency to the utility for the past several years. For comparison, as shown in Figure 5 above, the cost of SFPUC water is currently almost $2,000 per AF and is expected to increase to $2,800 per AF in 10 years. Table 4: Water Efficiency Costs ($/AF) FY 2013 FY 2014 FY 2015 3-Year Average $1,294 $1,359 $2,008 $1,555 As the cost of potable water increases, some conservation programs become more cost effective, though the easiest, most cost-effective measures have largely been deployed. Page 36 Adjustments are made to conservation programs depending on several factors, including program penetration and community preferences. The 2015 UWMP identified Advanced Metering Infrastructure (AMI) as the primary future water efficiency program. Anticipated savings from AMI and other incremental water efficiency activities are shown in Figure 13. New efficiency programs are projected to shave off about 1.2% from the expected demand forecast. Figure 13: Water Demand Forecast with Future Water Efficiency Emergency Robustness The 2015 UWMP contains a summary of demand side options that can be implemented under various scenarios. During a catastrophic interruption of SFPUC supplies, the City will immediately initiate emergency supply options to meet potable demands and fire flow requirements. At the same time, the City will begin informational outreach programs to inform the community that emergency conditions are in effect and water consumption behavioral changes are required (i.e. no irrigation). Sustainability Demand side management is the most sustainable resource. Every cubic foot of water saved can be put to some beneficial use. Measures that specifically target landscape conversions or efficiency changes have been the subject of concern by tree advocacy groups who are Page 37 concerned about impacts on trees due to decreased landscape watering. The City includes information on proper tree maintenance for those customers converting to drought resistant landscapes. Sensitivity to Regulations and Environmental Review Demand side measures are not limited by any regulations. In light of the current drought, State agencies are reviewing the existing long-term conservation targets and water shortage contingency planning scenarios. It is likely that by the 2020 UWMP cycle, new conservation targets and new planning criteria will be in place. Additionally, requirements to implement measures may be proposed, or compliance with certain efficiency standards (e.g. per capita water use) may be required, especially if seeking State or Federal grant or loan assistance for a project such as the recycled water project. XI. Comparison of Water Supply Alternatives Availability Normal Year Availability • SFPUC supplies are sufficient in normal years. • Groundwater without recharge may not always be available depending on the amount of water pumped by the City, the sustainable yield determined in the Recycled Water Strategic Plan, and the groundwater levels throughout the county. o A coincident recharge project with purified recycled water would improve the availability of this resource. o Using the El Camino well alone for blending will meet only about 15% of the City’s demand. • Treated water from the SCVWD is not in abundance. • Demand side management is possible, but many of the easy cost-effective measures have already been implemented. Dry Year Availability • All potable water supplies, including SFPUC supplies, are subject to 20% reductions or more by the State. • SFPUC supplies are subject to reductions in availability of up to 20% due to drought. • Groundwater may be restricted up to 40% by the SCVWD or subject to State-mandated reductions. • Water deliveries from State and federal projects may impact the amount of treated water available from the SCVWD requiring water use reductions of up to 40%. • Demand side management is very effective during dry years. Page 38 Water Quality Key water quality parameters for untreated groundwater, water from the SFPUC and treated water from the SCVWD are compared in Table 5. All of these sources meet primary drinking water standards. The table lists several secondary standards and a sampling of other parameters. Groundwater used as a regular long-term supply source would require treatment and/or blending to meet the secondary standards. Table 5: Water Quality Parameters for Water Resource Alternatives Water Source Fe (ppm) Mn (ppm) TDS (ppm) Sodium (ppm) Hardness (as CaCo3) (ppm) Turbidity (NTU) Drinking Water Quality Standard .300 .050 500 N/A N/A 5 SFPUC Water (1) ND ND 132 13.5 57 0.16 SCVWD Treated Water (2) ND ND 209 37 90 0.07 Groundwater (3) 0.25-1.3 0.13-0.31 440-710 75-170 - 0.33-7.7 (1) SFPUC values are average water quality values reported by the SFPUC in its 2011 Water Quality Report (2) Average values from 2011 SCVWD Rinconada Water Treatment Plant Water Quality Data Summary (3) Based on the City’s well water testing records ND = non detect Cost Figure 14 shows projected commodity rates for SFPUC water and groundwater and treated water from the SCVWD. In the near term, SFPUC water is expected to be more expensive. By 2037, even with SCVWD subsidizing the cost of its State Water Projects costs by collecting those costs via property taxes, SCVWD and SFPUC rates are expected to converge. These projected rates for the SCVWD do not include the cost of using the purified water plant to supply potable water nor do these rates include the cost of the California Water Fix (the “twin tunnels” project in the Delta). Both of those projects will cause steep increases for SCVWD rates. The total groundwater rate does not include the cost of local treatment that may be required to improve the water quality from that shown in Table 5 above. In addition, both SFPUC and SCVWD rates are extremely sensitive to the volume of water sold as both systems’ costs are mostly fixed. Cost-effective demand side management measures are, by definition, the lowest cost resource. Costs of demand side measures were assumed to rise with inflation. The exhaustion of easy measures may cause costs to be higher, but technology developments may result in lower costs. Page 39 Figure 14: Commodity Cost Comparison of Water Supply Alternatives Figure 15 shows the present value unit cost over 20 years for each option including the cost of groundwater treatment. The cost of blending at the El Camino well is shown as a separate option because blending at that specific wellsite is the least cost groundwater alternative. Figure 15: Present Value Unit Cost Comparison of Water Supply Alternatives Page 40 Emergency Robustness • The SFPUC has nearly completed a massive capital project to improve the reliability of the regional water system, however some risks still exist. • Groundwater is a reliable and available emergency resource. • Treated water from the SCVWD may not be available in an emergency. • Demand side management is very effective during emergencies. Sustainability • SFPUC supplies originate as snowpack in the Sierra and may be impacted by climate change. • Groundwater may be sustainable at lower pumping rates and sustainable at higher pumping rates with a recharge project. • Treated water available from the SCVWD originates as Sierra snowpack, which may be impacted by climate change, and the Delta, which has already been determined to be unsustainable in its current state. • Demand side management is very sustainable as long as the urban canopy is properly cared for. Sensitivity to Regulations and Environmental Review • SFPUC supplies may be sensitive to future regulations. • Groundwater is managed by the SCVWD. A groundwater recharge project would be subject to environmental review. • Water deliveries from State and Federal projects may be sensitive to future regulations. The Delta is experiencing environmental challenges now. • Demand side management is not sensitive to regulations or environmental review. XII. Conclusions Table 6 is a side-by-side comparison of the potable water resource alternatives based on the attributes considered in this WIRP. Page 41 Table 6: Summary Comparison of Potable Water Resource Alternatives Water Resource Alternative Normal Year Availability Dry Year Availability Quality Cost Emergency Robustness Sustainability Sensitivity to Regulations and Environmental Review SFPUC Groundwater Groundwater (w/recharge) ? SCVWD Treated Water Demand Side Management Cost-effective demand side management is the superior resource and should be diligently pursued but can’t eliminate the City’s need for potable water. While SFPUC water is slightly more expensive, it has higher water quality. The cost of SCVWD supplies may increase dramatically if purified water is fully developed and/or if the twin tunnels project is constructed. However, SCVWD does not have excess treated water to sell and groundwater in the county is susceptible to mandated water use reductions just like SFPUC supplies are, arguably more so. Blending groundwater with SFPUC water at only the El Camino well is the least expensive, most sustainable alternative to 100% SFPUC supplies. Whether the residents and businesses that would receive the water would consider the tradeoff between cost and quality to be acceptable is worth investigating. The most promising way to increase reliability and increase sustainability is to reduce the demand for potable water by expanding the use of recycled water. The Recycled Water Strategic Plan will provide valuable analysis and information to help the City and SCVWD formulate a strategy for the future. In summary, the recommended 2017 WIRP Guidelines are: 1. Pursue all cost-effective water efficiency and conservation; 2. Survey potentially impacted customers about their preference for SFPUC water versus blended water; 3. Proceed with the Recycled Water Strategic Plan to determine how to reduce the demand for imported water; and 4. Continue to investigate ways to increase the use of non-traditional, non-potable sources such as black water, storm water, and nuisance water from basement construction. WIRP Guidelines Adopted by Resolution by the City Council on December 8, 2003 [CMR:547:03] Guideline 1 – Preserve and enhance SFPUC supplies: With respect to the City of Palo Alto Utilities’ (CPAU’s) primary water supply source, the San Francisco Public Utilities Commission (SFPUC), continue to actively participate in the Bay Area Water Supply and Conservation Agency (BAWSCA) to assist in achieving BAWSCA’s stated goal: “A reliable supply of water, with high quality, and at a fair price.” Objectives in support of that overall goal include: A. That the regional water system gets rebuilt cost-effectively and that BAWSCA monitor implementation of AB 1823 – San Francisco should safeguard the water system against damage from earthquakes and other foreseeable hazards. BAWSCA will monitor progress on the system repairs and on completing the requirements of the legislation that the BAWSCA agencies supported to oblige San Francisco to repair and rebuild the regional system. B. That the cost of improvements is fairly allocated – San Francisco should commit to maintaining cost-based pricing, with the costs of the wholesale water system shared between the City and its wholesale customers based on their proportionate share. C. That future water needs can be met – San Francisco must evaluate the ability of the regional system to meet future supply and capacity requirements and must use the BAWSCA agencies’ long-term water demand forecasts as the basis for regional water demand projections. D. That there are adequate supplies during droughts – San Francisco should arrange back-up supplies for dry years and should “drought proof” the entire service area, not just San Francisco itself. If rationing becomes necessary, San Francisco should use a system that allocates available water between San Francisco and wholesale customers in a way that (1) is fair and (2) avoids penalizing long-term conservation efforts and/or development of alternative supplies, such as recycled water. E. That communities prepare for potential water outages – San Francisco should coordinate with the BAWSCA agencies to develop a crisis management plan. F. That agencies implement cost-effective water conservation activities – San Francisco should provide agencies enough information so that they can prepare for possible outages, including the provision of conservation programs for their communities. BAWSCA can act as coordinator for these programs to improve the cost- effectiveness of agencies offering such programs. G. That water received must meet drinking water standards – San Francisco should continue to protect the purity of Hetch Hetchy water and commit to provide its wholesale customers with water that meets EPA and California drinking water standards. H. That the Master Contract is properly implemented and a new Master Contract is in place prior to 2009 – San Francisco should commit to maintaining cost-based pricing, with the costs of the wholesale water system shared between the City and its wholesale customers based on their proportionate share. I. That there is ongoing support of efforts to protect health, safety and economic well being of the water customers and communities – BAWSCA should maintain the support of the many allies who supported the legislative effort to ensure San Francisco repairs, rebuilds, and maintains the regional system. Attachment B Guideline 2 – Advocate for an interconnection between SFPUC and the District: Work with the Santa Clara Valley Water District (District) and the SFPUC to pursue the extension of the District’s West Pipeline to an interconnection with the SFPUC Bay Division Pipelines 3&4. Continue to re-evaluate the attractiveness of a connection to an extension of the District’s West Pipeline. Guideline 3 – Actively participate in development of cost-effective regional recycled water plans: Re-initiate discussions with the owners of the Palo Alto Regional Water Quality Control Plant (PARWQCP) on recycled water development. In concert with the PARWQCP owners, conduct a new feasibility study for recycled water development. Since the feasibility of a recycled water system depends upon sufficient end-user interest, determine how much water Stanford and the Stanford Research Park would take. Guideline 4 – Focus water DSM programs to comply with BMPs: Continue implementation of water efficiency programs with the primary focus to achieve compliance with the Best Management Practices (BMPs) promoted by the California Urban Water Conservation Coalition. Guideline 5 – Maintain emergency water conservation measures to be activated in case of droughts: Review, retain, and prioritize CPAU’s emergency water conservation measures that would be put into place in a drought time emergency. Guideline 6 – Retain groundwater supply options in case of changed future conditions: Using groundwater on a continuous basis does not appear to be attractive at this time due to the availability of adequate, high quality supplies from the SFPUC in normal years. However, SFPUC supplies are not adequate in drought years and circumstances could change in the future such that groundwater supplies could become an attractive, cost-effective option. Examples of changing circumstances could be that the amount of water available to CPAU from the SFPUC for the long-term is reduced. This could occur if regulations or legislation require additional water to be made available to the Tuolumne River fisheries. In addition, in the future allocations or entitlements to SFPUC water may be developed. If those allocations are based on the dry- year yield of the system, allocations to all the users of the system, including CPAU, could be well below their current and projected future needs. CPAU should retain the option of using groundwater in amounts that would not result in land surface subsidence, saltwater intrusion, or migration of contaminated plumes. Guideline 7 – Survey community to determine its preferences regarding the best water resource portfolio: Seek feedback from all classes of water customers on the question of whether to use groundwater during drought to improve drought year supply reliability. At the same time, seek feedback on the appropriate level of water treatment for groundwater if it were to be used in droughts. Survey all classes of water customers to determine their preferences as to the appropriate balance between cost, quality, reliability, and environmental impact. Attachment B             PRELIMINARY ASSESSMENT  OF WATER  RESOURCE  ALTERNATIVES      February 2013 i    2013 Preliminary Assessment  Table of Contents  List of Figures ___________________________________________________________ iii  List of Tables ___________________________________________________________ iii  List of Acronyms _________________________________________________________ iii  I. Introduction __________________________________________________________ 1  II. Background __________________________________________________________ 2  III. Water Supply History __________________________________________________ 3  IV. Water Use Projections _______________________________________________ 6  Urban Water Management Plan (UWMP) _________________________________________ 6  Water Conservation Bill of 2009 _________________________________________________ 7  Summary Water Resource Mix __________________________________________________ 7  V. Attributes Evaluated and Water Resource Alternatives Examined ______________ 8  Attributes Evaluated for each Water Resource Alternative ___________________________ 8  Water Resource Alternatives Examined __________________________________________ 9  VI. Water from the SFPUC ______________________________________________ 10  Availability _________________________________________________________________ 10  Cost ______________________________________________________________________ 12  Water Quality ______________________________________________________________ 13  Long Term Reliability ________________________________________________________ 13  Emergency Robustness _______________________________________________________ 15  Environmental impacts _______________________________________________________ 16  Sensitivity to Regulations _____________________________________________________ 16  VII. Groundwater _____________________________________________________ 17  Availability _________________________________________________________________ 18  Cost ______________________________________________________________________ 20  Water Quality ______________________________________________________________ 21  Long Term Reliability ________________________________________________________ 24  Emergency Robustness _______________________________________________________ 24  Environmental impacts _______________________________________________________ 24  Sensitivity to Regulations _____________________________________________________ 24  VIII. SCVWD Treated Water ______________________________________________ 25  Availability _________________________________________________________________ 26  Cost ______________________________________________________________________ 26  Water Quality ______________________________________________________________ 28  Long Term Reliability ________________________________________________________ 28  Emergency Robustness _______________________________________________________ 28  Environmental Impacts _______________________________________________________ 30  ii    Sensitivity to Regulations _____________________________________________________ 30  IX. Recycled Water ______________________________________________________ 31  Availability _________________________________________________________________ 32  Cost ______________________________________________________________________ 35  Water Quality ______________________________________________________________ 36  Long Term Reliability ________________________________________________________ 37  Emergency Robustness _______________________________________________________ 37  Environmental Impacts _______________________________________________________ 37  Sensitivity to Regulations _____________________________________________________ 37  X. Demand‐Side Management ____________________________________________ 38  Availability _________________________________________________________________ 38  Cost ______________________________________________________________________ 40  Water Quality ______________________________________________________________ 40  Long Term Reliability ________________________________________________________ 41  Emergency Robustness _______________________________________________________ 41  Environmental Impacts _______________________________________________________ 41  Sensitivity to Regulations _____________________________________________________ 42  XI. Individual Supply Guarantee Sale ________________________________________ 42  Availability _________________________________________________________________ 42  Cost ______________________________________________________________________ 42  Water Quality ______________________________________________________________ 43  Long Term Reliability ________________________________________________________ 43  Emergency Robustness _______________________________________________________ 43  Environmental Impacts _______________________________________________________ 43  Sensitivity to Regulations _____________________________________________________ 44       iii    List of Figures  Figure 1: Historic Water Use ........................................................................................................... 5  Figure 2: 2005 and 2010 UWMP Demand Forecast Projection Comparison ................................. 6  Figure 3: 20% by 2020 Compliance Forecast .................................................................................. 7  Figure 4: Summary Water Resource Composition .......................................................................... 8  Figure 5: SFPUC Actual and Projected Cost of Water ................................................................... 12  Figure 6: Historic Water Shortages at Maximum Demand Level (265 MGD) ............................... 15  Figure 7: Map of SFPUC Regional Water System .......................................................................... 16  Figure 8: Projected SFPUC and SCVWD Water Rates ................................................................... 21  Figure 9: West Pipeline Extension Map ........................................................................................ 26  Figure 10: Proposed Recycled Water Project ............................................................................... 32  Figure 11:  Palo Alto Existing Recycled Water Uses for FY 2004‐FY 2012 .................................... 34  Figure 12: Water Conservation Savings Goals .............................................................................. 39    List of Tables  Table 1: City Of Palo Alto Water Shortage Allocation .................................................................. 11  Table 2: Dry Year Shortfall under different demand scenarios .................................................... 14  Table 3: Projected Well Capacities ............................................................................................... 20  Table 4: Water Quality Parameters for Various Water Sources ................................................... 22  Table 5: Well Treatment Alternative Preliminary Cost Analysis ................................................... 23  Table 6: SCVWD Treated Water Connection Summary Costs ...................................................... 27  Table 7: Recycled Water Gross Cost Estimate .............................................................................. 35  Table 8: Water Savings vs. Goals .................................................................................................. 39  Table 9: Conservation Program Costs ........................................................................................... 40    List of Acronyms  AFY  Acre Feet per Year  BAWSCA Bay Area Water Supply and Conservation Agency  BMP Best Management Practice  CDPH California Department of Public Health  CEQA California Environmental Quality Act  CUWCC California Urban Water Conservation Council  CVP Central Valley Project  DSM Demand Side Management  EIR Environmental Impact Report  ESA Endangered Species Act  FERC Federal Energy Regulatory Commission  iv    GWMP Groundwater Management Plan  ISA Interim Supply Allocation  ISG Individual Supply Guarantee  ISL Interim Supply Limitation  MGD Million gallons per day  MOU Memorandum of Understanding  NEPA National Environmental Policy Act  PEIR Program Environmental Impact Report  PPM Parts per Million  RWQCP Regional Water Quality Control Plant  SCVWD Santa Clara Valley Water District  SFPUC San Francisco Public Utilities Commission  SRF State Water Resources Control Board State Revolving Fund  SWP State Water Project  SWRCB State Water Resources Control Board  TDS Total Dissolved Solids  TRC Total Resource Cost  UAC Utilities Advisory Commission  UWMP Urban Water Management Plan  WIRP Water Integrated Resource Plan  WSA Water Supply Agreement  WSIP Water System Improvement Program    Page 1    I. Introduction  Preparation of a Preliminary Assessment of Water Resource Alternatives is the first step  towards development of a Water Integrated Resource Plan (WIRP).  The Preliminary  Assessment collects the available information and data about all water resource alternatives  available to the City of Palo Alto.  The following are a summary of the main drivers for updating  the WIRP at this time.    a) Cost Increases – The San Francisco Public Utilities Commission (SFPUC) is midway through  the $4.6 billion Water System Improvement Program (WISP), which includes an upgrade of  the regional water system.  As a result of the WSIP, the cost of SFPUC water has risen  dramatically and will continue to do so.  With the increase in costs, other alternatives are  increasingly competitive with SFPUC supplies.      b) SFPUC Wholesale Water Charge – The SFPUC currently collects the wholesale revenue  requirement primarily through a volumetric water rate.  The SFPUC may propose changes  to the current wholesale rate structure that include a fixed charge based on the Individual  Supply Guarantee. Since the City has a relatively high Individual Supply Guarantee, this  could change the City’s cost dramatically and make other alternatives more cost‐effective.    c) Dry year need – The City has an Individual Supply Guarantee of 17.07 million gallons per  day (MGD) from the SFPUC system.  The City has no foreseeable supply deficiency in  normal years, but SFPUC supplies are inadequate during dry years.  A critical question to  address is the level of reliability the City will provide to residents and businesses and at  what cost.    d) Disposition of “Surplus” SFPUC Individual Supply Guarantee– The City currently uses  substantially less than its Individual Supply Guarantee.  Considering long lead times to  execute water transfers, it may be the time for the City to proceed towards a sale of a  portion of the Individual Supply Guarantee.   The sale could generate revenue for a variety  of options, including increased dry year reliability, conservation programs, a recycled water  project, or to reduce rates.    e) Alternative Supplies – The Santa Clara Valley Water District’s (SCVWD’s) groundwater and  treated water charges have historically been similar to the cost of SFPUC supplies.  Over  the last few years, and for the foreseeable future, SCVWD water charges will be lower than  SFPUC charges, making groundwater or a connection to the SCVWD’s treated water system  potentially cost‐effective alternatives to SFPUC water.    f) Use of Palo Alto Groundwater System – The City has recently refurbished the five older  wells, developed two new wells and is completing another new well.  One or more of the  Page 2    wells could be used to provide supplemental dry year supplies or as an alternative to  SFPUC supplies during normal years.    g) Legislative & Regulatory Risks – The City’s 2010 Urban Water Management Plan (UWMP)  incorporates recent and future legislative and regulatory requirements to provide a  comprehensive forward looking review of the water utility.  A major new development is  Senate Bill 7x‐7 (2009), which requires a 20% reduction in per capita water use by 2020.  II. Background  The first WIRP was prepared largely because the City was faced with a decision to participate in  a regional recycled water program.  This 1993 WIRP assessed the costs and benefits of a  recycled water project compared to other supply alternatives, and ultimately determined that  recycled water was not cost effective relative to existing supplies.  In 1999, the City began  working on a new WIRP, and completed the effort with approval by the City Council of the  WIRP Guidelines in December 2003 (CMR 547:03).  During the process to prepare the 2003  WIRP, several studies were conducted to inform the effort:    1. Water, Wells, Regional Storage, and Distribution System Study, 1999, Carollo Engineers –  This study identified system improvements to the distribution system to meet water  demands and fire flows following a catastrophic interruption of service on the SFPUC  system.  Among the recommendations was to refurbish the 5 existing wells and construct  three new wells and a new water storage tank.      2. Long Term Water Supply Study, 2000, Carollo Engineers – The report examined the issues  and costs of using new or rehabilitated wells as active sources of supply.  The alternatives  examined in the report included: (1) Using the wells for active supply either on a long term  basis or during droughts; (2) using groundwater for irrigation; and (3) connecting to the  SCVWD treated water pipeline.    3. Groundwater Supply Feasibility Study, 2002, Carollo Engineers – The report evaluated  whether operating one or two of the City’s water wells as active supplies would cause  significant decrease in groundwater levels or deterioration in groundwater quality”.    4. Santa Clara Valley Water District’s West Pipeline Extension Conceptual Evaluation Final  Report, 2003, SCVWD. – The report evaluated an extension of the existing SCVWD West  Pipeline to enable an interconnection of the Palo Alto and SCVWD systems at Page Mill  turnout.    The 2003 WIRP indicated that SFPUC supplies were adequate during normal years, but  additional supplies were needed in dry years to avoid shortages.  Since SFPUC supplies were  adequate in normal years, the following conclusions were drawn:    Page 3    1. The City’s existing Individual Supply Guarantee provides adequate supplies;  2. The cost to connect to the SCVWD treated water pipeline was prohibitive;  3. Continuous use of groundwater is not recommended;  4. The City should continue to evaluate recycled water;  5. Continue the current Demand Side Management programs and explore additional  measures; and  6. Additional supplies are needed in a drought.    Following approval of the 2003 WIRP, staff surveyed residential customers to gain a sense of  community preferences on the use of groundwater during a drought.  The survey asked  respondents to rank several options for water supply during a drought: (A) blend groundwater  with existing SFPUC supplies; (B) use no groundwater; and (C) treat groundwater at the well  location prior to introduction to the distribution system.     Survey respondents generally preferred Options B (no groundwater) and C (treat groundwater),  but Option A (blend groundwater) was not soundly rejected.  The results of the survey were  presented to the UAC in June 2004.  Based on the results staff made the following  recommendations:    1. Do not install advanced treatment systems for the groundwater at this time.  This option  is expensive, both in terms of capital and operating costs.  2. Blending at an SFPUC turnout is the best way to use ground water as a supplemental  drought time supply while maintaining good water quality.  3. Staff should await the conclusion of the environmental review process before  proceeding with any site selections for wells to be used in dry years.  4. Actively participate in the development of long term supply plans with the Bay Area  Water Supply and Conservation Agency (BAWSCA) and/or SCVWD.  5. Continue efforts identified in the Council approved WIRP  guidelines:  a. Evaluate a range of demand side management options to reduce long term  water demands.  b. Evaluate feasibility of expanding recycled water.  c. Maintain emergency water conservation measures to be activities in case of  droughts.  III. Water Supply History  The water utility was established on May 9, 1896, two years after the City was incorporated.   Local water companies were purchased at that time with a $40,000 bond approved by the  voters of the 750‐person community.  These private water companies operated one or more  shallow wells to serve the nearby residents.  The city grew and the well system expanded until  nine (9) wells were in operation by 1932.    Page 4    In December 1937, the City signed a 20‐year contract with the City and County of San Francisco  for water deliveries from the newly constructed pipeline bringing Hetch Hetchy water from  Yosemite to the Bay Area.  Water deliveries from San Francisco commenced in 1938 and well  production declined to less than half of the total citywide water demand.    A 1950 engineering report noted, "The capricious alternation of well waters and the [San  Francisco] water...has made satisfactory service to the average consumer practically  impossible."  Groundwater production increased in the 1950s leading to lower groundwater  tables and increasing water quality concerns.      In 1962, a survey of water softening costs to City customers determined that the City should  purchase 100% of its water supply needs from the San Francisco.  A 20‐year contract was signed  with San Francisco and the City’s wells were placed in a standby condition.  Since 1962 (except  for some very short periods) the City’s entire potable water has come from San Francisco’s  Hetch Hetchy regional water system administered by the SFPUC.     In 1974, several wholesale customers joined Palo Alto and filed a lawsuit against the San  Francisco in protest of an increase in water rates that was higher for wholesale customers than  it was for direct retail customers.  In 1984, settlement negotiations resulted in the “Settlement  Agreement and Master Water Sales Contract between the City and County of San Francisco and  Certain Suburban Purchasers in San Mateo, Santa Clara and Alameda Counties”.  The 25‐year  agreement was approved in 1984.  The 1984 agreement included the creation of a “Supply  Assurance” equal to 184 million gallons of water per day (MGD) for the benefit of the wholesale  customers.1  The agreement included a mechanism to allocate the 184 Supply Assurance  between the wholesale agencies.  The City’s allocation, or Individual Supply Guarantee (ISG), is  17.07 MGD.  Each agency’s ISG is perpetual in nature and survives termination or expiration of  the water supply contract with San Francisco.                                                               1 The Supply Assurance is expressed as an annual average and does not constitute an obligation on the part of the  SFPUC to meet daily or hourly peak demands.  Page 5    In 2009, a new 25‐year Water Supply Agreement (WSA) was executed between San Francisco  and the City.  The City’s historical water use and supply sources are illustrated in Figure 1.    Figure 1: Historic Water Use       Page 6    IV. Water Use Projections  The City of Palo Alto Utilities (CPAU) regularly prepares water supply and demand forecasts to  prepare financial forecasts, to meet regulatory requirements, or as part of ongoing regional  planning efforts.  Like many water agencies in California, the City has experienced a significant  drop in water use since 2006, which is largely attributable to weather, water conservation, and  the recent economic recession.    Urban Water Management Plan (UWMP)  The UWMP is submitted to the Department of Water Resources every five years, and City  Council approved the most recent 2010 UWMP in June 2011 (Staff Report 1688)2.   Water  demands forecast for the 2010 UWMP are shown in Figure 2 below.  For comparison purposes,  the forecast from the 2005 UWMP is also included in Figure 2.   The water use projection results  are revealing in that the City, along with most water agencies in California, did not anticipate  the dramatic drop in water demand from 2007 to 2009.  Potable water demands from 2009 to  the present appear to have leveled off and have begun to trend upwards again, albeit slowly,  and it remains to be seen if water demands will follow the increase forecasted in the 2010  UWMP.    Figure 2: 2005 and 2010 UWMP Demand Forecast Projection Comparison  0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 An n u a l W a t e r U s e ( C C F / Y e a r ) Year Water from San Francisco 2010 UWMP Forecast 2005 UWMP Forecast Individual Supply Guarantee Actual Forecast                                                           2 Typically, UWMPs are due December 31 of years ending in 0 and 5. However, a six‐month extension  was granted  to allow suppliers to comply with new legislation (Senate Bill X7‐7).  Page 7      Water Conservation Bill of 2009  The City is subject to ongoing changes in the regulatory and legislative environment, though  few are as explicit as SB X7‐7, the Water Conservation Bill of 2009.  SB X7‐7 was enacted in  November 2009 and requires water suppliers to reduce the average per capita daily water  consumption in their service territories 20% by 2020.  To monitor the progress towards  achieving the 20% by 2020 target, the bill also requires urban water retail providers to reduce  per capita water consumption 10% by 2015.  Figure 3 illustrates the projected 2015 and 2020  state‐mandated compliance targets and provides preliminary information on the City’s need for  future action to meet SB7x‐7 requirements.      Figure 3: 20% by 2020 Compliance Forecast  100 125 150 175 200 225 250 G a l l o n s P e r C a p i t a P e r D a y Year Actual Forecast 2015 Target = 200.6 SB7 Baseline 2020 Target = 178.6   Figure 3 indicates that the City is on track to meet both the 2015 and 2020 state‐mandated  compliance targets.    Summary Water Resource Mix  The 2010 UWMP provided detailed information on baseline water resources through 2030.    SFPUC supplies were assumed to remain the primary potable supply for the foreseeable future,  Page 8    but were not forecasted to increase dramatically over the 20‐year planning horizon.  Recycled  water consumption was projected to continue at current levels and no expansion was assumed  in the 2010 UWMP.  Finally, demand side management and conservation program penetration  and savings were projected to increase dramatically from the 2005 UWMP.   A representation  of the future water resource mix is provided in Figure 4.    Figure 4: Summary Water Resource Composition    V. Attributes Evaluated and Water Resource Alternatives Examined   Attributes Evaluated for each Water Resource Alternative  In this section, each potential water resource option is evaluated to allow each alternative to be  compared to each other.  The purpose of this evaluation is to provide the best available  information on each water resource alternative and to identify data deficiencies that need to  be addressed.  The attributes evaluated for each alternative are listed below:    1. Availability – The quantity, timing, peak flow or capacity, and any expected changes  over time.  2. Cost – The capital and O&M costs of the proposed action (including system upgrades,  project lifetime, energy costs, chemicals, technical innovation, customer costs, etc.), the  manner which the cost is incurred (pay‐as‐you‐go, debt finance, etc.).  Page 9    3. Water Quality – All options must meet water quality regulations, but options may differ  in their relative water qualities (i.e. taste, odor, color, hardness, mineral content, trace  levels of contaminants, etc.).  4. Long Term Reliability – What is the reliability of the source under different conditions?  What future conditions could affect water deliveries?  5. Emergency Robustness – Will the resource perform under various scenarios, including  an interruption of SFPUC supplies?  6. Environmental impacts – Are there anticipated environmental impacts and what level  of environmental review is required?  7. Sensitivity to Regulations – Is the resource vulnerable or does it have strength in view  of existing or impending federal, state, or local regulations?    Water Resource Alternatives Examined   The water resource alternatives evaluated in this report include:  1. Water from the SFPUC  2. Groundwater  3. Treated Water from the SCVWD  4. Recycled Water  5. Demand‐Side Management  6. Sale of the City’s Individual Supply Guarantee    Water resources that were evaluated in the 2003 WIRP process, but are not included in this  Preliminary Assessment, include:    1. Desalination – BAWSCA is evaluating several desalination alternatives as part of recent  long range supply studies.  When this effort is complete, this alternative can be  evaluated.    2. Small scale irrigation wells  – The City is focusing its efforts on the capital program to  improve the municipal well system to meet the dual purpose of providing emergency  and supplemental potable supplies.  Currently, individuals may drill their own wells  without City review or permits, but are subject to rules and restrictions of the Santa  Clara Valley Water District (SCVWD) and must obtain a permit from the SCVWD. The City  does have the option of using small wells for irrigation of large landscapes, such as for  City parks.  However, the cost to maintain and operate small wells and locate a site for  such facilities is problematic.    3. Treated Contaminated Groundwater – There are several entities in the City that treat  contaminated groundwater and discharge the groundwater to the storm drain system  and, to a lesser extent, the sanitary sewer system.  The primary purpose of these  facilities is to remediate contaminated groundwater with finite operations.  The Santa  Clara County Oregon Expressway dewatering pumps are the exception, and they  discharge significant amounts of nuisance groundwater to the storm drain system to  Page 10    keep the underpass dry.  The City evaluated the capture and conveyance of the Oregon  Expressway groundwater for irrigation purposes and determined the effort would  require significant conveyance and storage infrastructure investments that are not cost  effective.  VI. Water from the SFPUC   The City currently purchases 100% of its potable supplies from the SFPUC under the 2009  Water Supply Agreement (WSA).  The WSA is administered for the City by the Bay Area Water  Supply and Conservation Agency (BAWSCA).  BAWSCA represents the interests of 24 cities and  water districts and two private utilities that purchase wholesale water from the San Francisco  regional water system.  These entities provide water to 1.7 million people, businesses and  community organizations in Alameda, Santa Clara and San Mateo counties.   The City of Palo  Alto is a member of BAWSCA and has a City Council appointed representative on the BAWSCA  Board of Directors.    Availability  The City’s right to water from the SFPUC system is embodied in the 2009 WSA.  The City’s  Individual Supply Guarantee (ISG) of 17.07 MGD is a perpetual right, but the delivery of water is  subject to interruption for reason of water shortage, drought, or emergency.      Normal Year SFPUC Supplies  While the City’s ISG is 17.07 MGD, the City’s water needs are currently only about 11.5 MGD.   The WSA includes an interim water delivery limitation3 from the SFPUC system of 265 MGD  until its expiration in 2018.   The City’s share of the interim limitation, or its Interim Supply  Allocation (ISA), is 14.70 MGD.   Based on the water demand forecast from the 2010 UWMP,  there is no foreseeable need for additional supply beyond the City’s Individual Supply  Guarantee, or the ISA.    Dry Year SFPUC Supplies  SFPUC’s WSIP includes a goal of no greater than a 20% system‐wide supply reduction on the  SFPUC system during a drought.  The 2009 WSA includes a water shortage allocation plan to  share water from the regional system between the SFPUC retail and wholesale customers  during a shortage of up to 20% (Tier I plan).  The wholesale customers further divided the  wholesale allocation based on a formula adopted by all the wholesale customers (Tier II plan).   The detail of the allocation methodology is included in the City’s 2010 UWMP (Section 7 –  Water Shortage Contingency Plan) and was approved by City Council in February 2011 (Staff  Report 1308).  The Tier II formula expires in 2018, unless extended by mutual agreement of the  BAWSCA members.  Table 1 summarizes the effect of the water shortage allocation formula on                                                          3 This limitation applies to all users of the San Francisco regional water supply system, the City of San Francisco and  all the BAWSCA member agencies.  Page 11    Palo Alto during a 20% SFPUC system‐wide reduction under low demand and high demand  scenarios.4    Table 1: City Of Palo Alto Water Shortage Allocation     Palo Alto Allocation (low demand)   Palo Alto Allocation (High demand)  (a) Baseline Demand (MGD) 11.63 13.33  (b) Drought Allocation (MGD) 8.94 10.011  (c) Reduction from Baseline Demand (b‐a)  (MGD) ‐2.69 ‐3.32  (d) Percentage reduction from Baseline  Demand (c/a) ‐23.12% ‐24.90%    The results in Table 1 indicate that the City will experience a water supply deficit of 23‐25% in  the event of a 20% system‐wide water shortage on the SFPUC system.                                                                 4 In general, changes in Palo Alto demand patterns track many of the other BAWSCA members.  However, the  ultimate allocation to each BAWSCA agency depends on many factors, including the water use of each agency  relative to each other.  For these reasons, staff can only provide an approximation of the potential cutback.  Page 12    Cost  The City purchases 100% of its potable water supply from the SFPUC, with the current cost  structure composed of a volumetric charge and a small fixed monthly meter charge.  With the  $4.6 billion WSIP well underway, the cost of SFPUC water has increased sharply.  Recent region‐ wide water consumption declines have intensified the problem since the cost is spread over  fewer sales units.  The historic and projected cost of SFPUC water is illustrated in Figure 5.    Figure 5: SFPUC Actual and Projected Cost of Water  0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 $/ A c r e ‐F o o t Fiscal Year SFPUC Cost Projection SFPUC Projected Rate SFPUC Actual Rate     While the SFPUC charges wholesale customers based on how much water is used, the costs of  the SFPUC system are almost entirely fixed costs – in other words, even if usage drops the cost  to operate the system (O&M, debt service, etc.) remains essentially the same5.        The SFPUC water cost projections in Figure 5 assume that the current rate structure remains in  place.  However, the WSA provides some flexibility for the SFPUC to adjust rate structures and  the SFPUC recently signaled an interest in exploring alternative rate structures6  including  increasing the fixed charge component and allocating charges based on the ISG, rather than  actual water usage.  The City’s share of the costs paid by the BAWSCA agencies (the “Wholesale  Revenue Requirement”), steadily decreased from 8% in 1998 to 7.2% in 2010 as the City’s  proportional share of water purchases dropped relative to the other BAWSCA agencies.  In                                                          5 The SFPUC system is largely gravity fed, so little variable O&M is required for water deliveries.  6 SFPUC Comments, July 2012 BAWSCA Board of Director’s meeting  Page 13    recent years the City’s share of the Wholesale Revenue Requirement has increased slightly,  probably as a result of several SFPUC customers making economic decisions to reduce SFPUC  purchases to minimum amounts in favor of other, less costly supplies.  The City’s ISG of 17.07  MGD is approximately 9.23% of the total BAWSCA agencies’ Supply Assurance of 184 MGD.  If  collection of the Wholesale Revenue Requirement were to be based on each agency’s ISG, the  City could pay 20‐30% more for water annually, with little apparent increase in benefit.    Water Quality  SFPUC supplies are extremely high quality.  See Table 4 which lists key water quality parameters  for SFPUC water, SCVWD treated water and groundwater.   Water provided by the SFPUC is a  mix of Hetch Hetchy water and water from the East Bay and Peninsula reservoirs.  In an average  year, Hetch Hetchy water makes up 85% of the mix.  Due to maintenance requirements, the  SFPUC typically will shut down the Hetch Hetchy supply for a period during the low demand  winter months and draw from the local reservoirs.  It is not unusual to experience temporary  water quality changes due to these events, though the water still meets all drinking water  quality standards.    Since completion of the 2003 WIRP, there were two noteworthy operational changes on the  SFPUC system that related to water quality:  In 2004, the SFPUC starting using chloramine  instead of chlorine as the primary drinking water disinfectant.  In 2005, San Francisco began  adding fluoride to the water supply.  Up until then, the City introduced fluoride at the SFPUC  turnouts, but ceased to do so once the SFPUC began providing fluoridation from a centralized  facility7.    Long Term Reliability  Recent demand projections do not forecast a normal year supply deficiency, given the  perpetual nature of the City’s Individual Supply Guarantee.  However there is one situation  where the City’s Individual Supply Guarantee could be reduced.  Under the terms of the 1962  contract between it and San Francisco, the City of Hayward’s contractual entitlement from the  SFPUC system essentially equals its water demand.  In theory, since the collective Supply  Assurance of the wholesale customers cannot exceed 184 MGD, if Hayward’s water usage  increases substantially, the other wholesale agencies could experience a proportional ISG  reduction to ensure the 184 MGD limit is not exceeded.  The most recent water use projection  shows this will not be an issue until at least 2030, and it will proceed gradually in any event.    SFPUC’s level of service goal is to meet dry year delivery needs while limiting rationing to a  maximum 20% system wide reduction in water service during extended droughts.  However,                                                          7 In 1957 the voters in Palo Alto adopted a measure that requires fluoride be added to the City’s water supply (Palo  Alto Municipal Code Section 12.24.010).    Page 14    recent events have called into question the SFPUC’s ability to maintain a level of service of no  greater than 20% reduction8.    BAWSCA and its member agencies are developing the Long Term Reliable Water Supply  Strategy to quantify when, where, and how much additional supply reliability and new water  supplies are needed throughout the BAWSCA agencies’ service area through 2035.  The report  revealed that several agencies have normal year needs in excess of their ISG and all agencies  have varying dry year deficiencies.  The report also identified several potential resource  alternatives to address these shortfalls, including desalinization, recycled water, and water  transfers.    The BAWSCA report (Section 3.2 of the Phase IIA report) includes a representation of potential  dry year cutbacks based on historic hydrologic conditions for the period from 1920 through  2002.  The analysis used the SFPUC hydrologic system’s operational model to evaluate the  frequency and magnitude of droughts on the system over the 83 years with all WSIP related  projects complete.   The results, as shown in Table 2, indicate there is little supply cutback risk  under low demand scenarios, but the risk rises as demands increase.    Table 2: Dry Year Shortfall under different demand scenarios  Demand Scenario  Number of Years of Projected Supply Cutbacks to the Wholesale  Customers Over 83‐year history  18% Average Wholesale  Customer Supply Cutback  (10% System‐wide shortfall)  29% Wholesale Customer  Supply Cutback  (20% System‐wide Shortfall)  Minimum Demand  Scenario (224 MGD) 0 0  Intermediate Demand  Scenario (252 MGD) 7 1  Maximum Demand  Scenario (265 MGD) 6 2                                                               8 Environmental flow requirements at Crystal Springs and Calaveras Dam were greater than anticipated.  A 2 MGD  water transfer between the Modesto Irrigation District and SFPUC was also rejected recently by the MID Board.  Page 15    Figure 6 provides a representation of the supply cutbacks that would have been experienced  under the maximum demand scenario using historic hydrologic data with all WSIP projects  complete.  The results provide an illustration of the frequency and magnitude of droughts in  the past under the high demand scenario, and are helpful in framing future dry year risks.  As  shown, over the 83 year hydrologic period, there would have been 8 years with water  shortages – 6 years with a 10% system‐wide reduction and 2 years with a 20% system‐wide  reduction.    Figure 6: Historic Water Shortages at Maximum Demand Level (265 MGD)      Clearly there is a potential deficiency in SFPUC supplies during dry years, though the overall  impact and frequency will depend on decisions related to dry year contingency plans and future  portfolio adjustments that could be made to remedy the supply deficiency.  As identified in the  2010 UWMP, the City has developed a Water Shortage Contingency Plan for implementation  during a drought.  The Water Shortage Contingency Plan identifies several stages of drought  response, depending on the degree of supply reduction required.  Responses range from  informational outreach to severe water use restrictions and modified rate structures.  The City  also has the option of pumping groundwater as supplemental supply in water shortage  situations.  This option is discussed in more detail in the section on groundwater.    Emergency Robustness  Since the SFPUC is the City’s only potable supply source, the City is vulnerable to service  interruptions on the SFPUC system.  One of the major drivers behind the WSIP was to address  reliability deficiencies, which under some circumstances could have resulted in an interruption  of SFPUC service for up to 60 days following a catastrophic event such as an earthquake.  The  Page 16    WSIP level of service objective for seismic reliability is to deliver basic service9 within 24 hours  after a major earthquake.  The performance objective is to provide delivery to at least 70 per  cent of the turnouts in each region, and full restoration to meet average day demand within 30  days after a major earthquake.  Palo Alto may be better situated than other agencies in having  two distinct connection points to the SFPUC system: three SFPUC connections are served by the  Palo Alto Pipeline connection to Bay Division Pipelines 1 and 2, and two SFPUC connections are  served by Bay Division Pipelines 3 and 4.  Figure 7 below is a map of the SFPUC regional water  system.    Figure 7: Map of SFPUC Regional Water System      The City is currently completing the Emergency Water Supply and Storage project.  The primary  goal of the project is to maintain basic water service and fire‐flows in all pressure zones in the  City following a catastrophic interruption of SFPUC service.  The project allows the City to  maintain water supply in the event that the SFPUC supplies are disrupted.    Environmental impacts  The SFPUC supply is the current baseline supply source for the City of Palo Alto.  Subsequent  sections analyze several alternatives to the current and projected supply mix, and the resulting  potential environmental impacts.  Increased water use within an agency’s ISG does not require  any action by an agency’s governing body, and therefore does not trigger any California  Environmental Quality Act (CEQA) review obligation.     Sensitivity to Regulations  For many water systems in California, the availability of water supplies depends on many  factors, including legislative and regulatory changes that may impact future supply conditions.                                                           9 Basic service is defined as average winter month usage.    Page 17    The SFPUC system is no different, and has several future regulatory risks that could impact  water supply reliability and/or cost10:    1. Federal Energy Regulatory Commission (FERC) relicensing of the Don Pedro Project  a. State Water Resources Control Board (SWRCB) 401 Certification of FERC  relicense  b. Endangered Species Act (ESA) Section 7 consultation for FERC relicense  2. Central Valley Total Maximum Daily Load regulations  3. Bay‐ Delta proceedings (SWRCB, Legislative actions)  4. ESA Habitat Conservation Plans for SFPUC local watersheds    The SFPUC manages these risks, with support from BAWSCA and the wholesale customers.  VII. Groundwater  The Santa Clara Valley Water District (SCVWD) manages an integrated water resources system  that includes the management of groundwater, supply of potable water, flood protection and  stewardship of streams on behalf of Santa Clara County's 1.8 million residents.  The SCVWD  manages ten (10) dams and surface water reservoirs, three (3) water treatment plants, nearly  400 acres of groundwater recharge ponds and more than 275 miles of streams.  The SCVWD  provides wholesale water and groundwater management services to municipalities, private  water retailers, and individual property owners operating groundwater wells in Santa Clara  County.    Although the City currently purchases all of its potable water from the SFPUC system, the City  maintains close involvement with the SCVWD as it is an important water wholesaler and the  steward of groundwater resources in Santa Clara County.  The city also partners with the  SCVWD on conservation activities.  The community is represented on the SCVWD Board of  Directors by the District 7 Director.  The City’s mayor also appoints a representative to  represent the City on the SCVWD Commission, an advisory body to the SCVWD Board of  Directors.    The SCVWD’s 2012 Water Supply and Infrastructure Master Plan describes how the SCVWD will  support future water supply needs and reliability.  The adopted strategy identifies conservation,  increased recycled water use, indirect potable reuse, additional groundwater recharge ponds,  grey water, imported water reoperations, and dry year options as important components of the  plan.    The City of Palo Alto has several policies embodied in the Comprehensive Plan that relate to  groundwater and water supplies.  The policies don’t provide a preference for the use of                                                          10 Source: SFPUC’s 2010 UWMP  Page 18    groundwater, but indicate preservation of groundwater conditions is of critical importance to  the City.  The relevant policies are listed below, with program elements, if applicable:    1. POLICY N‐51: Minimize exposure to geologic hazards, including slope stability,  subsidence, and expansive soils, and to seismic hazards including ground shaking, fault  rupture, liquefaction, and land sliding.    2. POLICY N‐18: Protect Palo Alto’s groundwater from the adverse impacts of urban uses.  a. PROGRAM N‐22: Work with the SCVWD to identify and map key Groundwater  recharge areas for use in land use planning and permitting and the protection of  groundwater resources.  3. POLICY N‐19: Secure a reliable, long‐term supply of water for Palo Alto.     Availability  As a city in Santa Clara County, Palo Alto has the ability to pump groundwater with the  understanding that SCVWD will appropriately manage the groundwater resources in the  county.   Groundwater conditions throughout the county are generally very good11.   Groundwater elevations have generally recovered from overdraft conditions throughout the  basin since the 1987‐1992 drought, inelastic land subsidence has been curtailed, and  groundwater quality supports beneficial uses.    Background  The SCVWD last published a Groundwater Management Plan (GWMP) in 2001.  Since that time,  SB 1938 and other legislation have amended the requirements for groundwater management  plans.  The 2012 GWMP was prepared under existing groundwater management authority  granted by the District Act.  The purpose of the 2012 GWMP is to characterize the SCVWD  groundwater activities in terms of basin management objectives, strategies, and outcome  measures.    General groundwater conditions in the area are detailed in the SCVWD 2012 GWMP.  The City  of Palo Alto overlies the Santa Clara sub basin.  The Santa Clara sub basin is divided into upper  and lower aquifers, which are separated by low permeability clays and silts.  The SCVWD refers  to these as the shallow and principal aquifer, with the latter generally defined as 150 feet below  ground surface.  The principal aquifer is the primary drinking water aquifer, and is the source  for the any increased reliance on groundwater to meet current or future demands.  The upper,  or shallow, aquifer is of poorer quality and has limited uses beyond small to medium size  distributed irrigation systems. The SCVWD is responsible for managing the groundwater basin  to ensure there is adequate supply and overdraft conditions are minimized.       The SCVWD accomplishes this goal by maximizing conjunctive use, the coordinated  management of surface and groundwater supplies, to enhance supply reliability.  Programs to  accomplish this goal include the managed recharge of imported and local supplies, in‐lieu                                                          11 SCVWD 2012 Groundwater Management Plan  Page 19    groundwater recharge through the delivery of treated surface water12 and acquisition of  supplemental water supplies, and programs to protect, manage and sustain water resources.       Managed and in lieu recharge programs are in balance with withdrawals and the basin is not  currently in overdraft conditions.  The groundwater conditions in the Santa Clara sub‐basin  vary, and groundwater pumping from different locations will have different effects depending  on location, elevation, recharge conditions, and pumping activity.    Emergency Water Supply and Storage Project  As part of the Emergency Water Supply and Storage project, the City has refurbished five older  wells, constructed two new wells, and is constructing another new well and a new 2.5 million  gallon storage reservoir and pump station.  The primary goal of the project is to improve the  City’s emergency water supply capability.  Together with the City’s existing water storage  system, the project will support a minimum of eight hours of normal water use at the maximum  day demand level and four hours of fire suppression at the design fire duration level and will be  capable of providing normal wintertime supply needs during extended shutdowns of the SFPUC  system.  The proposed project would provide up to 11,000 gallons per minute (gpm) of reliable  well capacity and an additional 2.5 million gallons of water storage for emergency use.  The  groundwater system may also be used to a limited extent during drought emergencies, but is  subject to the following mitigation measures, as stated in the Environmental Impact report (EIR)  completed for the project13:    1. An aquifer test shall be conducted following the City’s well construction and  rehabilitation efforts to verify the basin’s response to pumping; and    2. Emergency demand pumpage shall be limited to 1,500 acre‐feet (AF)14 in one year.  Following this level of pumpage, groundwater production shall be restricted until  groundwater levels recover to pre‐pumping levels.    All wells are currently permitted and designated by the California Department of Public Health  as “Standby” and, as such, can only be used for 5 consecutive days up to 15 days in a year15.    Once the project is complete, the wells may collectively supply up to 1,500 AF per year during a  drought, with restrictions on when the wells can resume pumping following that level of  groundwater extraction.  It is important to note that the pumping restriction only applies to the  project as defined in the CEQA documents.  This includes the 5 existing wells and 3 new wells.   Individual property owners can install their own wells and pump groundwater.                                                              12 The SCVWD and the Santa Clara County SFPUC customers are partners in conjunctively managing the water  resources in the county.  The SFPUC customers in the county have contracts with the SFPUC.  The SCVWD has no  contractual relationship with the SFPUC.  13 Environmental Impact Report, Emergency Water Supply and Storage project, Mitigation Measure 3.5‐4(a) & 4(b)  14 1500 AF/Year is equal to 1.34 MGD, or approximately  12% of FY 2012 water consumption  15 California Code of Regulations, Title 22, Section 64414(c).  Page 20    The pumping restrictions for the well system are mitigation measures in the EIR prepared for  the Emergency Water Supply and Storage project.  Any increase in the current restriction could  require new or supplemental environmental review.  The SCVWD has indicated that the process  to increase the current limitation will require supporting information on the sustainable yield of  the groundwater basin in order to demonstrate increased pumping by the City will not have  significant impacts16.     The capacities of the City’s wells are listed in Table 3.  As shown in the table, if all 8 wells were  used full time, they could produce 13.3 MGD, which is equivalent to almost 15,000 AF per year.      Table 3: Projected Well Capacities  Name Capacity (MGD)Status Fernando 0.5544 Refurbished Well/Fully Operational Hale 1.8432 Refurbished Well/Fully Operational Matadero 0.864 Refurbished Well/Fully Operational Peers 1.872 Refurbished Well/Fully Operational Rinconada 4.464 Refurbished Well/Fully Operational Eleanor Pardee 1.296 New Well/Fully Operational Library 1.008 New Well/Fully Operational El Camino Park 1.44 New Well/Under Construction Total 13.3     During the drought in the late 1980’s, substantial pumping by pumpers in the county and  neighboring jurisdictions resulted in a dramatic drop in the groundwater levels in the area.  It is  possible that this scenario could happen again during a drought of similar magnitude if  imported water supplies were reduced.  The SCVWD adopted level of service goals as part of its  2012 Water Supply and Infrastructure Master Plan effort, including the development of water  supplies designed to meet at least 100% of average annual water demand identified in the  SCVWD 2010 UWMP during non‐drought years and at least 90 percent of average annual water  demand in drought years17.   This goal is a countywide goal and includes Palo Alto demands.     Cost  The SCVWD levies a groundwater extraction fee, or “pump tax”, on each acre‐foot of water that  is pumped from the groundwater basin.  The charge varies depending on a variety of factors,  including pumpage type (agriculture vs. municipal) and geographic location in the County.    Historically, the cost of groundwater (including the pump tax and the O&M cost of operating a  well) has been comparable to the cost of SFPUC supplies.  However, due to the increasing cost  of SFPUC water due to the WSIP, the cost to pump groundwater is projected to be less than the  cost of SFPUC supplies (Figure 8).   While the costs of SCVWD groundwater and treated water                                                          16 In summer 2012, staff met with SCVWD representatives to discuss the current limitation and the process to  increase/remove the limitation.  17 SCVWD Board Agenda Item 4.2, June 12, 2012  Page 21    are also projected to rise over the next decade due to capital investment requirements, the  cost of SCVWD water is likely to be less than SFPUC supplies.  The vertical lines above the  groundwater and treated water bars in Figure 8 represent the SCVWD high cost scenario, and  reveal that the cost differential between SFFPUC and SCVWD water remains significant even  under a SCVWD high cost scenario.     Figure 8: Projected SFPUC and SCVWD18 Water Rates  0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 $/ A c r e ‐Fo o t Fiscal Year SFPUC  vs. SCVWD SCVWD ‐ Groundwater Rate SCVWD Treated Water rate SFPUC Treated Water Rate ForecastActual     Water Quality  The water quality of the groundwater is considered good, though historically the groundwater  in the area has had iron (Fe), manganese (Mn) and Total Dissolved Solids (TDS) levels that  exceed secondary19 drinking water quality standards.      All potable water scenarios must comply with water quality requirements.  Staff currently  samples the wells based on the conditions outlined in the California Department of Public  Health (CDPH) permit(s).   The City may be out of compliance with secondary standards on a                                                          18 The SCVWD sets groundwater and treated water rates according to water pricing policies and SCVWD Board  direction.  In general, treated water charges are slightly higher than groundwater charges to account for O&M  costs to pump groundwater.  However, at times, the SCVWD may adjust rates to encourage use of groundwater  instead of treated water, or vice versa depending on the health of the underground water supplies.   19 Primary drinking water quality standards apply to contaminants that affect health while secondary standards  apply to those constituents that affect aesthetics, taste and odor.  Page 22    short term basis during emergencies, but for full‐time operation the City must be in compliance  with secondary standards or apply for a waiver20.  The waiver requires justification and includes  a community survey to establish support for the provision of water that exceeds secondary  standards.  The community survey must demonstrate a high degree of acceptance to justify the  waiver.      Key water quality parameters for groundwater, water from the SFPUC and treated water from  the SCVWD are compared in Table 4.  All of these sources meet primary drinking water  standards.  The table lists several secondary standards and a sampling of other parameters.    Table 4: Water Quality Parameters for Various Water Sources  Water Source Fe  (ppm)  Mn  (ppm)  TDS  (ppm)  Sodium  (ppm)  Hardness  (as CaCo3)  (ppm)  Turbidity  (NTU)  Drinking Water Quality Standard .300 .050 500 N/A N/A 5  SFPUC Water (1) ND ND 132 13.5 57 0.16  SCVWD Treated Water (2) ND ND 209 37 90 0.07  Groundwater (3) 0.25‐1.3 0.13‐0.31 440‐710 75‐170 ‐ 0.33‐7.7 (1) SFPUC values are average water quality values reported by the SFPUC in its 2011 Water Quality Report (2) Average values from 2011 SCVWD Rinconada Water Treatment Plant Water Quality Data Summary  (3) Based on the City’s well water testing records  ND = non detect    Normal Year Groundwater Supplies  Several treatment and blending options for the wells were evaluated in 2000 in the “Long Term  Water Supply Study”:      1. Blend water with SFPUC water to meet water quality limits for manganese and iron. The  blended water will meet regulatory limits, but will have TDS levels 2‐3 times the current  level in the distribution system21.   2. Provide iron and manganese treatment at each well site.   The water will likely not  exceed TDS limits, but it will be 5‐7 times the current levels in the distribution system.  3. Provide iron and manganese treatment at each well site and blend with SFPUC supplies  to reduce the well water TDS levels.  4. Provide iron, manganese and TDS treatment at each well site.  The treated water at the  injection point will be comparable to SFPUC supplies.    The estimated present dollar cost of each option is provided in Table 5 for information  purposes.  The treatment options focus on the costs to address the elevated iron, manganese  and TDS levels under several water quality scenarios.                                                             20 Title 17 Code of Regulations, Chapter 64449.2  21 Upon completion of the Emergency Water Supply and Storage project, the El Camino Well water can be blended  with SFPUC water in the new 2.5 million gallon storage tank in El Camino Park in a similar manner to Option 1.  Page 23      Table 5: Well Treatment Alternative Preliminary Cost Analysis   Treatment Options22   1 (blend) 2 (treat for  Fe, Mn)  3 (treat for Fe,  Mn and blend)  4 (treat for Fe,  Mn and TDS)  Capital Cost23 (Total for 5 wells) $8.5‐10.8 M $8.5‐10.8 M $9.4 ‐ 11.8 M $37.4 ‐ 46.7 M  Well production  Acre feet per year 6300 12800 2500 12800  % of total Potable Demands 50% 100% 25% 100%   Water Quality24  TDS (500 ppm) 130‐300 440‐700 120 120  Manganese (<0.05 ppm) 0.04‐0.05 <0.05 <0.01 <0.05  Iron (<0.3 ppm) 0.08‐0.3 <0.3 0.05‐0.06 <0.3    The new and refurbished wells are being constructed with chlorine disinfection injection points  and the capability to accommodate fluoride and other needed chemical injection points.  The  use of the wells on a regular basis will require a detailed operational plan and some or all of the  sites will need modifications to accommodate backup power, chemical storage, and any  equipment associated with the selected treatment option.  Not all sites will have the space to  accommodate these additional requirements.  These and other additional operating and capital  costs will need to be incorporated as part of a future detailed cost‐benefit analysis.    The various treatment options will generate waste streams with elevated levels of iron,  manganese, TDS, and chemical residuals used in the treatment process.  It is unknown if this  can be discharged to the storm drain system.  Options to address this issue include onsite  treatment facilities at each site or discharging the raw waste stream to the wastewater  collection system for delivery to the Palo Alto RWQCP25.  In addition to these unknown costs,  there may be several challenges that may need to be addressed related to wastewater  constituent changes from the RWQCP.      Dry Year Groundwater Supplies  The City’s new well and reservoir at El Camino Park is currently being configured to blend with  SFPUC supplies so the El Camino Well can be relied upon to provide groundwater during a  drought up to the 1500 AFY limitation.   As a result of blending, the water will meet all  secondary water quality standards, but will be of lesser quality when compared to SFPUC  supplies.   To bring the water quality to a level comparable to SFPUC supplies, the City will need  to install Iron, Manganese and TDS filtration at the new El Camino well site.                                                          22 Costs are only those costs incurred by Water Utility.  Customer costs, including water softening or filtration  devices will be additional costs borne by individual customers  23 All costs were adjusted from the estimates in the 2000 study to provide a likely cost range in 2012 dollars.  24 Manganese and Iron have single consumer acceptance contaminant levels, while TDS is a consumer acceptance  contaminant level range (recommended = 500; short term= 1000 and upper limit = 1500)  25 Discharges to the wastewater collection system for treatment at the RWQCP have associated costs that are not  included in the preliminary cost estimates.  Page 24      Long Term Reliability  The wells are an important resource during a drought and could be an important resource to  serve a portion of the normal year potable needs in the City.  With the current 1500 AFY dry  year groundwater extraction limitation, there is little risk any dry year pumping program could  result in significant impacts to the groundwater basin26.     Since SCVWD manages the groundwater in Santa Clara County, any plans to increase Palo Alto’s  groundwater pumping would need to be discussed with the SCVWD.    Emergency Robustness  The City’s wells are being maintained to provide emergency service during a catastrophic  interruption of SFPUC supplies.  If the portfolio changes in the future such that groundwater  becomes part of the normal year supply, emergency preparedness will need to be evaluated  further to ensure the resource can perform under various scenarios.  Such an increase could  result in the need for the SCVWD to construct recharge facilities to ensure that the county’s  groundwater supplies are properly maintained.  If imported water supplies are required to be  delivered to the recharge facilities, those supplies need to be identified.    Environmental impacts  The use of the wells to meet dry year needs is currently permitted subject to a pumping  limitation of 1500 AF per year.  A significant increase to this limitation could require  supplemental environmental review.   Staff anticipates issues such as sustainable yield, dry year  availability, subsidence risk, saltwater intrusion, dewatering of local creeks and contaminated  plume migration, would be considered in such an environmental analysis.    Sensitivity to Regulations  An area of concern is future State and Federal water quality regulations for potable water.   Changes in regulations could make the groundwater supply less attractive and more expensive  due to additional treatment.  This becomes less of an issue depending on the level of treatment  that is chosen.                                                             26 The 1500 AFY limitation is a CEQA derived mitigation measure that has undergone the public review process.  Page 25    VIII. SCVWD Treated Water  Besides being the manager of groundwater in Santa Clara County, the SCVWD also produces  and delivers treated drinking water to water retail agencies in the county.  Long‐term plans of  the SCVWD include extending the treated water pipeline from its current terminus at Foothill  Expressway and Miramonte Road to a Palo Alto connection point at Foothills Expressway and  Arastradero Road (a distance of about 4.5 miles).  The SCVWD calls this extension the “West  Pipeline Extension”.  However, the project would only be constructed if the City requested  water supply from the SCVWD and signed a treated water contract.    Background  In 1999, the City sent a letter to the SCVWD advising it that information was needed to analyze  the City’s option to connect to the SCVWD treated water West Pipeline.  The SCVWD responded  with an estimated cost for the extension of the West Pipeline that would have to be fully borne  by Palo Alto.  In February 2002, Palo Alto and four other county retailers requested that the  SCVWD conduct a feasibility study of a West Pipeline extension from both a supply perspective  and the additional reliability of having an additional interconnection with the SFPUC system.   The SCVWD prepared a report on extending the West Pipeline, entitled: “Santa Clara Valley  Water District’s West Pipeline Extension Conceptual Evaluation Final Report”27.  The report  evaluated an extension of the existing SCVWD West Pipeline to enable an interconnection of  the Palo Alto and SCVWD systems at Page Mill turnout28.  A map of the potential project is  provided in Figure 9.                                                              27 The City of Palo Alto participated in the preparation of the 2012 Water Supply and Infrastructure Master Plan  (WSIMP).  As part of that process, staff requested the SCVWD include the West Pipeline extension for project  consideration.  The SCVWD noted in the Final 2012 WSIMP that the project is not recommended in the WSIMP  because it does not contribute to long‐term supply reliability.  However, the SCVWD stated that it would be  considered during a planned Infrastructure Reliability Master Plan.  28 The SFPUC and the SCVWD have an emergency interconnection near Milpitas that could theoretically be used to  wheel water to Palo Alto.  Staff does not anticipate it will be feasible to wheel normal year supplies via the intertie,  but the use of the intertie during dry years may be possible.  However, in general the SCVWD system is more dry  year sensitive than the SFPUC system, so it is unclear whether supplies would be available to be wheeled to Palo  Alto via this mechanism.  Page 26    Figure 9: West Pipeline Extension Map      Availability  If the City requested that the SCVWD extend the West Pipeline to serve the City, the terms of  the treated water contract would determine the availability and amount of water that would be  delivered during normal years.  The SCVWD has a diverse water supply portfolio, including State  Water Project, Central Valley Project, and local reservoirs.  SCVWD’s 2010 UWMP and its 2012  WSIMP indicated the SCVWD anticipates having adequate supplies to meet future needs until  2030 when minor deficits begin to materialize.  However, those projections do not assume any  treated water deliveries to Palo Alto.  In addition, there is no guarantee that the water will be  available during dry years.      Cost  SCVWD’s West Pipeline Extension Report provided detailed cost estimates for several pipeline  configurations, which are summarized in Table 6.  Both scenarios require a new parallel pipeline  from Rinconada Water Treatment plant to the current terminus of the West Pipeline at  Miramonte Road.  From there, a new pipeline would be constructed to Page Mill Road.  The  cost differential between the two scenarios is largely attributed to different pipe sizing  requirements and an intertie pump station.    Page 27    Table 6: SCVWD Treated Water Connection Summary Costs29  Alternative Assumptions Total Cost  of  Alternative  ($million)  Cost to  SFPUC  ($million) Cost to  New  Retailers  ($million)  Rate  Increase  to SCVWD  Retailers  ($/AF)  Parallel  and  Extension   Existing treated water  contractors and new retailers  share cost of parallel pipe   New retailers pay for extension  94‐114 N/A Palo Alto:  44‐67  Purissima  Hills: 5‐9  $5‐8  Parallel,  Extension  and  Intertie   Existing treated water  contractors and new retailers  share cost of parallel pipe   SFPUC pays for half of  incremental cost of intertie   Existing and new retailers share  cost of extension and half of  incremental cost of intertie  127‐154 18‐22 Palo Alto:  23‐41  Purissima  Hills: 4‐10  Stanford  University:  4‐8  Pump Tax:  11‐14  Treated  Water: 15‐ 22    The report concluded that the City and neighboring jurisdictions must pay for the costs of  constructing the extension via a “take or pay” contract, which is a common payment  mechanism for all agencies in the county that purchase SCVWD treated water.  The amount of  the take or pay contract is determined by the amortized construction costs divided by the  annual treated water rate.  For example, if Palo Alto’s obligation for a West Pipeline extension  was $30 million with an annual cost of $2 million (using an interest rate of 3%/year for a 20‐ year financing period), and the treated water rate was $634.60 per AF30, then Palo Alto would  be required to purchase about 3,150 AF/year, or about 25% of the City’s water usage in FY  2012.    During the term of the contract, the City would have limited ability to adjust its annual water  purchase from the SCVWD.  There are several agencies in Santa Clara County that purchase  both SCVWD and SFPUC treated water, and they are subject to minimum “take or pay” contract  provisions by both providers.  The City would receive similar treatment.  The cost estimates in  Table 6 do not account for any distribution system improvements that may be required to  configure Palo Alto’s distribution system to receive SCVWD treated water.    Recently, the City conducted an evaluation of property tax collected by SCVWD from Palo Alto  property owners.  It is not uncommon for water districts to rely wholly, or in part, on property  related taxes to build water systems or for surplus capacity for future users.  The SCVWD has  historically relied on taxes to some degree to purchase imported water and fund local                                                          29 Cost of additional supply is not included in project cost.  Costs have been escalated 3‐5% from 2003 dollars to  provide a representation of potential costs ranges.  30 This is SCVWD’s treated water rate for FY 2013  Page 28    groundwater and treated water programs, and continues to do so.  The results of the property  tax evaluation revealed Palo Alto taxpayers have contributed to the development of the SCVWD  water supply, distribution and treatment system, and will likely continue to do so in the future.   This information could be helpful in determining an equitable sharing of the capital costs of an  extension to serve areas of the county that have historically supported the SCVWD system.    Water Quality  See Table 4 in the groundwater section for a comparison of certain water quality parameters of  SCVWD’s treated water, SFPUC water, and groundwater.    Carollo Engineers evaluated the SCVWD treated water line in the Long Term Supply Study and  provided information on the issues of blending SCVWD supplies with SFPUC supplies.  In  general, SFPUC supplies are of superior quality to SCVWD supplies, but there were several  specific issues that were identified in the previous study.  If there is interest in moving forward  with an interconnection with the SCVWD system, additional analysis will need to be performed  to determine if the previous issues still remain, and what additional issues have arisen.  On the  positive side, the SCVWD’s recent decision to include fluoridation at their treatment plants  removes the need to provide fluoridation at the interconnection points to ensure the water  supply complies with the municipal code.  In a similar manner, the SFPUC has completed the  transition to chloramine from chlorine for residual disinfection.  This removes some water  quality related issues associated with blending treated water from different sources that use  different disinfectants.  However, there may be other issues related to water quality that could  require the two water supplies to be isolated in the distribution system.  This would result in  water from difference sources being provided to customers depending on their location in the  distribution system.    Long Term Reliability  It is likely the SCVWD has little surplus imported water to allocate to Palo Alto, so the details of  a potential supply arrangement will need to be evaluated further.  During the drought in the  late 1980’s, SCVWD supplies from both the state and federal sources were significantly  reduced.  It is not clear what level of drought protection would be provided, though the recent  level of service commitment by the SCVWD indicates that there would be no greater than 10%  reduction in supplies during dry years.    Emergency Robustness   In 2003, the SCVWD initiated the Water Utility Infrastructure Reliability Project to determine  the current reliability of its water supply infrastructure (pipes, pump stations, treatment plants)  and to appropriately balance level of service with cost. The project measured the baseline  performance of critical SCVWD facilities in emergency events and identified system  vulnerabilities.  The study concluded that the SCVWD water supply system could suffer up to a  60‐day outage if a major event, such as a 7.9 magnitude earthquake on the San Andreas Fault,  Page 29    were to occur.  Less severe hazards, such as other earthquakes, flooding and regional power  outages had less of an impact on the SCVWD, with outage times ranging from one to 45 days.     The level of service goal identified for the Infrastructure Reliability Project was “Potable water  service at average winter flow rates available to a minimum of one turnout per retailer within  seven days, with periodic one day interruptions for repairs.”  In order to meet this level of  service goal, the project identified a recommended portfolio to mitigate the risks.  The SCVWD  has been implementing the recommended portfolio.  The project is expected to reduce the  post‐earthquake outage period from 45‐60 days to 7‐14 days.     In 2007, the SCVWD created a stockpile of emergency pipeline repair materials including large  diameter spare pipe, internal pipeline joint seals, valves, and appurtenances.  The stockpile  marks a significant increase in reliability of the SCVWD water supply system, as it helps to  reduce outage time following a large earthquake from approximately 60 to 30 days.  The  SCVWD still needs to complete several other emergency planning projects to meet the goal of  reducing outage time to 30 days.  These include developing a post‐disaster recovery plan,  developing mutual aid agreements or expanding participation in the California Water/  Wastewater Agency Response Network , setting up contractor, welder, and equipment rental  company retainer agreements, and setting up post‐earthquake pipeline inspection teams.  The  addition of groundwater wells and line valves to the SCVWD system will further reduce outage  time following a large earthquake from 30 days to 14 days.  The wells will allow the SCVWD to  convey supplies from the groundwater basin to the treated water pipelines following a hazard  event to meet the project’s level of service goal.  The line valves will allow the SCVWD to isolate  damaged portions of pipelines.      If the West Pipeline was extended to provide potable water service to Palo Alto, the City would  have one connection to the SCVWD system31, compared to 5 connections to the SFPUC system.   It is unclear what level of reliability would be provided in the event of catastrophic event.  The  SFPUC level of service goal following an earthquake is to provide for average wintertime  demands with delivery to 70% of the turnouts within 24 hours following a major earthquake.   The SCVWD level of service goal provides for service resumption to one turnout within 7 days of  a similar event, though the location of a Palo Alto interconnection at the end of the treated  water line may be a weak point, so it is unclear if there will be adequate supplies or system  pressures to provide meaningful service.  In addition, the SCVWD plans on extracting  groundwater for raw water delivery to the treatment plants and on to the retailers during an  emergency.  The Emergency Water Supply and Storage project will serve this purpose for Palo  Alto.                                                            31 There may be additional connection options to a new SCVWD treated water pipeline, such as a new extension to  the existing Arastradero SFPUC turnout.  However, the cost of additional connections was not included in the initial  cost estimate and would likely be borne by the City.  Additional connections may allow increased use of and more  efficient distribution of SCVWD treated water, though they may not provide any additional reliability assurances.  Page 30    Environmental Impacts  A West Pipeline extension will require CEQA review.  The SCVWD would be the lead agency for  the CEQA process.    Sensitivity to Regulations  The SCVWD imports water from both the State and Federal water projects, and is vulnerable to  actions that impact those sources.  Since publication of the 2003 WIRP, federal and state water  deliveries have been reduced on several occasions due to Delta related issues.   The Bay Delta  Conservation Plan is currently underway to address the co‐equal goals of water supply  reliability and environmental sustainability.  The most likely water conveyance solution will be a  tunnel underneath the Delta from an intake on the Sacramento River to the South Delta  Diversion/Pumping facilities.  Such a facility will take decades to build and the costs will likely be  borne by State and Federal water contractors, including the SCVWD.     Page 31    IX. Recycled Water  The City of Palo Alto operates the Regional Water Quality Control Plant (RWQCP), a wastewater  treatment plant, for the East Palo Alto Sanitary District, Los Altos, Los Altos Hills, Mountain  View, Palo Alto, and Stanford University.  Approximately 220,000 people live in the RWQCP  service area.  Of the total plant flow, about 60 per cent is estimated to come from residences,  10 per cent from industries, and 30 per cent from commercial businesses and institutions.    In 1992, the City and the other RWQCP partners completed a Water Reclamation Master Plan  (Master Plan).  The Master Plan identified a three stage implementation for recycled water in in  the RWQCP service area.    In 1995, City Council certified the Final Program Environmental Impact Report (PEIR) for the  Master Plan projects.  At the same time, Council decided not to pursue any of the  recommended expansion stages of a water recycling system as the cost could not be justified.   Council adopted a water recycling policy, which included continuation of the existing programs  and monitoring of conditions that would trigger an evaluation of the Master Plan.  The Water  Recycling Policy described five conditions that would trigger evaluation of the Master Plan  projects:    1) Changes in the RWQCP discharge requirements  2) Increased mass loading to the RWQCP  3) Requests from partner agencies or other local agencies  4) Availability of federal or other funds  5) Water supply issues:  a. Water shortages  b. Legislative or Regulatory Initiatives  c. Advanced treatment for potable reuse.    Since the Master Plan, the City prepared a recycled water survey in 2006 and a Facility Plan in  2009 for a project to deliver recycled water to the Stanford Research Park.  The Facility Plan had  four goals:    1) Define recycled water alternatives and identify a recommended project;  2) Develop a realistic funding strategy  3) Develop an implementation strategy ; and  4) Provide a basis for any future state and federal grant requests for the Project.    Since completion of the Facility Plan, the City initiated the environmental review process for the  project and is currently working on an Environmental Impact Report (EIR) for the project.  The  City is also focusing on outside funding sources to improve the project economics.    The Facility Plan provided a comprehensive overview of the proposed recycled water project to  serve the Stanford Research Park.  The project would connect to the recently completed  Page 32    recycled water transmission line serving the Mountain View area and extend through the City  to serve the target area.  A schematic of the proposed project including water demands and  pipe sizes is provided in Figure 10.    Figure 10: Proposed Recycled Water Project        Availability  The average dry weather flow capacity of the RWQCP is 38 MGD.  The average treated  wastewater discharge to the San Francisco Bay is approximately 22 MGD.  In theory, all of this  could be captured for reuse.  Several RWQCP partners, including Palo Alto, have a contractual  entitlement to the treated wastewater in proportion to the amount of wastewater that is sent  to the RWQCP32.  Palo Alto’s FY 2011 flow share to the plant was approximately 39.2%, or 8.624                                                          32 Personal communication with James Allen, RWQCP Plant Manager, November 2012  Page 33    MGD.  However, operational constraints and plant configuration limit the recycled water  production capability from the RWQCP.    The RWQCP collaborates with the partners to ensure needed capital improvements for future  recycled water expansion goals are incorporated into long range plans.  Considering the  RWQCP’s primary role to provide wastewater treatment services for the partners and to ensure  the RWQCP meets all associated regulatory and permit limitations, the necessary  improvements to accommodate a substantial increase in recycled water deliveries are not a  priority for the foreseeable future.  In the meantime, the RWQCP can deliver up to 4.5 MGD of  recycled water via coagulation and filtration through a multi‐layered filter and disinfection  process.  This additionally treated effluent meets California Department of Health Services Title  22 requirements for “unrestricted reuse”.  The new ultraviolet (UV) disinfection banks can add  6 MGD of recycled water production (8 MGD with an extra bank).  The RWQCP plans to use UV  as backup to the filtration/chlorination recycled water treatment train.   Future plans include  consolidating the systems into a 10.5 MGD recycled water facility, but this would require some  modifications in plant piping and storage tanks to get bottlenecks out of the system.      In constructing the project to extend the recycled water distribution system to serve the City of  Mountain View, the CPAU Water Fund paid $1 million and committed to pay an additional $1  million connection fee in the event the project to serve the Stanford Research Park was built.   By virtue of this arrangement, the CPAU Water Fund has secured capacity on the pipeline for  future use.   The RWQCP cannot currently meet projected recycled water demands under peak  conditions, and additional pumping capacity and possibly storage is needed to accommodate all  project users.  Palo Alto’s recycled water project capital costs include the cost of retrofitting the  RWQCP pump station to accommodate incremental recycled water deliveries to serve the  Stanford Research Park.       Page 34    The RWQCP has had a robust recycled water program for many years, including a substantial  amount for RWQCP onsite needs and irrigation at Greer Park, the Duck Pond and the Palo Alto  Municipal Golf Course.   As shown in Figure 11, the RWWCP uses about 0.5 MGD annually  (about 560 AFY) for irrigation around the plant as well as some cleaning and treatment  processes.   Greer Park and the Duck Pond have each used about 0.04 MGD (45 AFY) on average  over the past five years while the Palo Alto Municipal Golf Course has used about 0.2 MGD (230  AFY) on average over the past five years.    The 2009 Facility Plan identified about 0.8 MGD of new recycled water usage for the project to  expand the recycled water distribution system.  The project would primarily serve the Stanford  Research Park area and the bulk (90%) of the recycled water would be used for irrigation  purposes.    Figure 11:  Palo Alto Existing Recycled Water Uses for FY 2004‐FY 2012         Page 35    Cost  The Facility Plan included a detailed cost plan to build the project (Table 7).  The gross project  cost is approximately $33 million, though this does not include potential outside funding  sources that could lower the project cost.    Table 7: Recycled Water Gross Cost Estimate 1,2      The cost estimates in Table 7 were developed for 2009 Facility Plan using March 2008 dollars  and will need to be updated to reflect current capital and O&M costs.  Based on the 2008 data,  the recycled water cost is approximately $2,700/AF, compared to an SFPUC cost of $1260/AF  (2013) to $2240/AF (2020).  However, these cost estimates do not reflect several grant and low  interest funding programs that the City has been pursuing that will help lower the unit cost of  the recycled water to a more competitive level with SFPUC costs.  These funding options are  listed below:    1. Title 16 ‐ The Bureau of Reclamation's water reclamation and reuse program is  authorized by the Reclamation Wastewater and Groundwater Study and Facilities Act of  1992 (Title XVI of Public Law 102‐575).  The City of Palo Alto is a member of the Bay Area  Recycled Water Coalition, a group of regional recycled water projects that collaborate to  pursue federal funding for recycled water projects.  In order to receive federal funding,  all projects must receive federal authorization.  The City is currently seeking  authorization in the House of Representatives for a federal award of $8.25 million (H.R.  3910).  Obtaining authorization is a first step and subsequent steps include submittal of  Page 36    appropriation requests until the full authorized amount is received.  While authorization  provides a degree of certainty on a grant award, receipt of the full grant amount will  depend on annual appropriations and the federal political process.    2. Proposition 84 through IRWMP – The City is pursuing Proposition 84 grant funds  through the Bay Area Integrated Regional Water Management Plan.  The BAIRWMP  project list was recently updated and the City will have the option to submit funding  requests during future funding rounds.    3. State Revolving Fund Low Interest Loan – The City can apply for low interest  construction loans through the State Water Resources Control Board State Revolving  Fund (SRF) program.  The program provides 20 year loans with an interest rate equal to  half of the most recent General Obligation bond interest rate.  The most recent SRF  interest rate is 1.7%, though the historical rate is typically in the 2‐2.5% range.  SRF  loans have several attractive features, including a payment plan that commences 1 year  after construction and the avoidance of bond issuance costs.    The Title 16 and SRF loan programs represent the best State and Federal funding opportunities  for the project at this time.  The City’s recycled water project is on the SRF project list, and staff  does not anticipate that obtaining an SRF loan will be problematic.  However, obtaining Title 16  authorization for the project will be critical to making the project economically viable.  An SRF  loan and an $8.25 million federal grant would improve project economics such that recycled  water would become competitive with SFPUC potable water within 4‐6 years.    The City’s recycled water project was identified in BAWSCA’s Long‐term Regional Water Supply  Strategy as a project with near term development potential to meet future water supply needs.   Inclusion in the BAWSCA report does not change the project, but it does position the project for  innovative funding opportunities with another BAWSCA agency in exchange for some  equivalent benefit.  Such a partnership could be combined with State and Federal funding  sources to further improve project economics.    Water Quality  The recycled water from the RWQCP meets Title 22 requirements for unrestricted reuse.  The  main purpose of the Palo Alto recycled water project is to offset the use of high quality  imported SFPUC water for irrigation and cooling purposes.  A major challenge for the project is  acceptance by the landscape community of using recycled water for irrigation purposes.   Certain landscapes are particularly vulnerable to the higher salinity that is present in recycled  water, especially those areas with poor drainage and clay soils.    The RWQCP and the plant partners are undertaking efforts to address the elevated salinity  levels in the recycled water by establishing the Salinity Reduction Policy and evaluating the  wastewater collection system for areas where elevated salinity levels indicate Inflow and  Infiltration may be an issue.  For example, the City of Mountain View is currently spending $3‐4  Page 37    million to line a sewer trunk line that has indications of saline water intrusion.  This large  project may yield a significant salinity reduction when complete in February 2013.    Long Term Reliability  Recycled water is one of the most reliable new water supply sources.  As previously mentioned,  CPAU has paid for a future connection to the pipeline that extends from the RWQCP to serve  Mountain View, which has a maximum capacity of 21 MGD.  With the addition of the UV banks,  the recycled water production train could provide up to 10.5 MGD of recycled water.  As it is  local, it is more reliable than imported supplies, which rely on lengthy networks of pipes, pumps  and storage facilities.  In droughts or other water shortage situations, landscape water use is  normally targeted for the largest reductions, but recycled water use would not be subject to  such reductions.      Additional recycled water use will increase the City’s allocations of SFPUC water in drought  times.  Since the drought allocation formula is based on both a seasonal component and overall  water use, increased use of recycled water would provide a double benefit since it lowers  potable water use and also reduces the City’s potable usage during the peak irrigation season.   While it is difficult to assess future drought allocations since much depends on the actions of  other agencies, staff estimates the Stanford Research Park recycled water project could reduce  the dry year cutback by 10‐20%.    Emergency Robustness   Recycled water will be used for irrigation purposes and, to a lesser extent, cooling.  During a  catastrophic emergency, CPAU will focus on operation of the emergency wells and the potable  distribution system to ensure potable requirements and fire flows are maintained.  The RWQCP  will also focus its efforts on returning the RWQCP to normal operations.  Recycled water does  not provide additional emergency preparedness improvements over the current situation.    Environmental Impacts  The City has been preparing the requisite National Environmental Policy Act (NEPA) and CEQA  documents for the project.  The environmental review process has taken longer than  anticipated, largely due to additional study of the use of recycled water on plants in areas of  poor drainage and clay soils.      Sensitivity to Regulations  The recycled water supply is sensitive to regulations, but these can have both positive and  negative impacts due to the unique nature of the recycled water supply.  The RWQCP is subject  to numerous regulatory requirements related to treated wastewater discharges to San  Francisco Bay.  The use of recycled water is recognized as one method to reduce discharges to  the Bay and assists the RWQCP in complying with these requirements.  For example, in March  2012, the Regional Water Board issued a Water Code Section 13267 Technical Report Order to  Page 38    Bay Area wastewater dischargers, including the RWQCP, requiring submittal of information on  nutrients in wastewater discharges (nitrogen and phosphorus).  This information will be  compiled over the next few years and will likely result in the development of future water  quality objectives for the San Francisco Bay estuary.  An increase in recycled water use would  decrease the total nitrogen and phosphorus discharge to the Bay.   As the regulatory  environment for wastewater treatment plants becomes stricter, recycled water will become an  increasingly useful tool to assist wastewater treatment plants in complying with these new  regulations.    In February 2009, the State Water Resources Control Board adopted Resolution No. 2009‐0011,  which established a statewide Recycled Water Policy.  This policy encourages increased use of  recycled water and local storm water.  It also requires local water and wastewater entities,  together with local salt/nutrient contributing stakeholders to develop a Salt and Nutrient  Management Plan  for each groundwater basin in California.  The SCVWD is the lead agency for  this effort in Santa Clara County.  Together with the benchmarks in the SCVWD 2012 GWMP,  recycled water impacts on the groundwater basin will likely be monitored and subject to  regulation in the event there are observed changes.  X. Demand‐Side Management  Demand‐side management measures and Best Management Practices (BMPs) are measures  that can be implemented to conserve water.  The BMPs are included in the California Urban  Water Conservation Council (CUWCC) Memorandum of Understanding (MOU).  Water agencies  that became signatories to the MOU pledged to implement the BMPs and to report progress  biannually to CUWCC.       Since becoming a signatory to the MOU in 1991, the City has saved an estimated 4,135 AF of  water through conservation program implementation.  The 2010 UWMP contains the City’s  reports to the CUWCC, including compliance reports on the BMPs.  The 2010 UWMP included  an increased conservation program commitment, in large part driven by the requirements of SB  X7‐7.      Availability  BAWSCA has assisted its members in assessing the potential for water efficiency measures.  In  October 2008, as part of the adoption of the Water System Improvement Program (WSIP)  Program Environmental Impact Report, BAWSCA coordinated the completion of the Water  Conservation Implementation Plan, which provided a comprehensive analysis of cost effective  conservation measures to identify additional programs that could assist the BAWSCA agencies  in meeting future purchase limitations.  Results from the Water Conservation Implementation  Plan were also used to prepare the City’s 2010 UWMP.  Figure 12 shows the water conservation  goals Council adopted when it approved the 2010 UWMP.  Figure 12 also compares the  Page 39    conservation program commitment in the 2005 UWMP to the new commitments in the 2010  UWMP.    Figure 12: Water Conservation Savings Goals  0 500 1000 1500 2000 2500 2005 2010 2015 2020 2025 2030 Cu m u l a t i v e W a t e r S a v i n g s ( A c r e - F e e t ) Fiscal Year Actual Savings 2005-2010 Projected Savings from 2005 UWMP Projected Savings from 2010 UWMP 13% of Water  Demand 4% of Water  Demand     The annual report to City Council on efficiency goals and achievements includes a summary for  water demand side management goals and achievements as illustrated in Table 8.      Table 8: Water Savings vs. Goals      Note that the savings goal increased threefold starting in FY 2011.  The increase is primarily a  result of legislative requirements (SB 7x‐7) that were captured in the 2010 UWMP.  This  aggressive goal is consistent with the City’s longstanding policy of providing cost effective  conservation programs to the community.  Staff will monitor conservation program  effectiveness and make necessary adjustments if it appears the current program is not meeting  established targets.  Page 40      Cost  It is the goal of the City to look for opportunities, innovative technologies, and cost effective  programs that best utilize the water conservation budget.  In FY 2011, the City dramatically  increased conservation program savings goals to meet the requirements of SB7x‐7.  The 2010  UWMP contains a detailed analysis of the current suite of conservation measures that are  offered by the City.  For each program, the benefit/cost ratio from the Total Resource Cost  (TRC) perspective is shown.    The TRC cost‐effectiveness test compares the total cost of  implementing a measure, regardless of who pays.  The costs include the cost of the device, any  installation costs, and the implementation costs of the program (advertising, tracking,  performance monitoring, rebate processing, etc.).  The benefits include the avoided costs of  water purchases.  The Water Utility assesses each measure in terms of financial impact to the  utility, which includes rebate costs as well as any other administrative costs borne by the Water  Utility.  The water savings summary through 2030 is provided in Table 9, including cost to the  utility.    Table 9: Conservation Program Costs33  2015 2020 2025 2030 Total Savings (Acre‐feet) 672 560 168 448 Total Wastewater Savings (Acre‐feet) 403 314 67 157 Total Outdoor Savings (Acre‐feet) 269 246 101 291 Utility Implementation Cost ($2010) $754,058 $370,843 $364,762 $387,604 Cost/Acre‐feet $1,122 $662 $2,171 $865     Table 9 illustrates that the aggregate conservation program is cost effective when compared to  SFPUC supply alternatives.       As the cost of SFPUC water increases, many conservation programs become more cost  effective, though the Water Utility adjusts conservation programs depending on several factors,  including program penetration, community preferences and the TRC.  Despite the very  aggressive targets in the 2010 UWMP, it may be possible to further increase conservation  program utilization to achieve additional savings.     Water Quality  Demand side measures do not present any water quality issues.                                                            33 The large increase in cost per acre foot in 2025 reflects regular captured savings less a drop off of savings from  those measures initiated in the 2012‐2020 time frame that begin to reach maturity.  Water agencies offer rebates  to make it more attractive for customers to install more efficient, and potentially costlier, measures.  At some  point in the future the measure reaches the end of its useful life and must be replaced.  For some measures, the  models assume the consumer will only have the choice of the more efficient model in the future and therefore no  rebate is needed anymore.  Absent a rebate, the Water Utility does not account for the savings anymore.  Page 41    Long Term Reliability  Staff forecasts and tracks DSM program effectiveness, but the ultimate effectiveness for  different programs varies substantially depending on many factors, including individual  behavioral patterns.  Much research has gone into evaluating the reliability of DSM, and some  of that research could be useful to the City in future efforts to plan and evaluate program  effectiveness.  Due to the large differential between water demand and the City’s Individual  Supply Guarantee, there is no pressing need to strictly monitor DSM program effectiveness like  there may be for an agency that is at risk of exceeding its Individual Supply Guarantee    Water efficiency during a drought is a more complicated issue.  One issue is the concept of  “demand hardening”, which is the assumed loss of demand elasticity during a drought that  results from water conservation programs implemented before the drought.  In other words,  the community may have little flexibility to reduce demand further if conservation programs  have been truly effective.  At the same time, there are certain DSM measures that are not  suitable during normal years that can be implemented during dry years and achieve desired  savings (i.e ‐ steep rate increases, irrigation restrictions).    Emergency Robustness   The 2010 UWMP contains a summary of demand side options that can be implemented under  various scenarios (Section 7 – Water Shortage Contingency Plan).  During a catastrophic  interruption of SFPUC supplies, the City will immediately initiate emergency supply options to  meet potable demands and fireflow requirements.  At the same time, the City will begin  informational outreach programs to inform the community that emergency conditions are in  effect and water consumption behavioral changes are required (i.e no irrigation).       For dry year scenarios, the City will implement informational outreach programs, incentive  based demand‐side management programs, and water audits.  In addition, rate schedules may  be modified, as appropriate, to reflect the water shortage conditions.   Due to the  SFPUC/BAWSCA drought allocation formula, conservation programs provide a benefit in  reducing dry year cutback requirements.  Conservation programs that specifically target  irrigation demands will provide an additional benefit because of the seasonal component of the  drought allocation formula.    Environmental Impacts  For the most part, demand side measures do not present any environmental issues.  Measures  that specifically target landscape conversions or efficiency changes have occasionally been the  subject of concern by tree advocacy groups who are concerned about impacts on trees due to  decreased landscape watering.  The City includes information on proper tree maintenance for  those customers converting to drought resistant landscapes.     Page 42    Sensitivity to Regulations  Demand side measures are not limited by any regulations.  However, additional requirements  to implement measures may be proposed, or compliance with certain efficiency standards (e.g.  per capita water use) may be required, especially if seeking State or Federal grant or loan  assistance for a project such as the recycled water project.  XI. Individual Supply Guarantee Sale  Availability  The City currently purchases approximately 12 MGD of potable water from the SFPUC and has  an Individual Supply Guarantee (ISG), of 17.07 MGD.  A sale of surplus ISG could generate  income for a variety of potential purposes.   Over the past several years there has been  increased interest in an ISG transaction, but the mechanism and value of the ISG has been  difficult to establish, and this has hindered movement on this issue.      The City’s current water use is approximately 12 MGD, and the recent 2010 UWMP forecasted  the City’s water use would increase slightly in the next few years, and then remain flat around  13.6 MGD through 2030.  In the event the City transferred 1‐2 MGD of its ISG to another party,  recent forecasts do not anticipate this will impact the City’s ability to meet normal year potable  demands.      The SFPUC/BAWSCA (Tier II) drought formula is based on the weighted average of two  components, the smaller of which is the ISG34.  This is beneficial to the City since current  consumption is well below the City’s ISG.  An ISG transfer would reduce that benefit and result  in an increased dry year reduction requirement by the City.  At the same time, this aspect of the  role of the ISG in the drought formula would be viewed favorably by a purchasing entity as it  would be acquiring normal year supply and improving its dry year allocation.    There are several possible uses for the funds from an ISG transaction, including increasing dry  year supply reliability.  Examples of potential projects that could reduce the dry year supply  deficiency include retrofitting the City’s wells to provide high quality groundwater, arranging a  dry year water transfer arrangement that could be wheeled via the SFPUC system, or providing  the funds necessary to complete the recycled water project, which is a “drought‐proof” water  supply resource.      Cost  In May 2010, the Purissima Hills Water District indicated an interest in purchasing 0.5 MGD of  the City’s ISG for a one‐time payment of $1 million.  The City declined the offer, citing several                                                          34 It is important to emphasize the Tier II formula expires in 2018, unless extended by mutual agreement of the  Wholesale customers.   It is possible the successor agreement to the current Tier II formula could be quite  different, including a larger or smaller role for the ISG.  Page 43    policy issues that needed resolution prior to any action to initiate an ISG transaction.  With  completion of the Tier II drought allocation process and the Interim Supply Limitation allocation  process, the major policy obstacles have been addressed.     In September 2012, the City of Brisbane executed a term sheet with the Oakdale Irrigation  District to transfer water to Brisbane.  The transaction will require additional agreements with  the Modesto Irrigation District and the SFPUC as intermediate parties.  As is the case with  PHWD, Brisbane’s water use is close to its ISG and it needs additional supplies to meet  anticipated needs.  The term sheet is a preliminary step, but it provides a starting point to  establish a proxy value for an ISG transaction.  The term sheet contemplates a sale of up to  2,400 AFY, with a price of $500/AF for any delivered water and a price of $100 for any water  not delivered (i.e, the difference between 2,400 AF and the delivered quantity).  After five  years, Brisbane must notify Oakdale Irrigation District how much water will be taken during the  remainder of the agreement.  All of that water is paid for at $500/AF, regardless of whether or  not it is actually taken.   If the City were to execute an agreement similar to the  Brisbane/Oakdale transaction, a 2 MGD transfer might generate revenues of $224,000 to $1.1  million per year for the first five years, followed by up to $1.1 million per year for the duration  of the transaction.  Of course, such a transfer would also reduce the City’s ISG from 17.07 MGD  to 15.07 MGD.    Water Quality  A water transfer does not present any water quality issues.    Long Term Reliability  A 2 MGD water transfer would reduce the City’s ISG from 17.07 MGD to 15.07 MGD.  The City’s  current normal year water use is well below 15.07 MGD, and recent forecasts indicate that the  City’s usage will exceed 15.07 MGD for the foreseeable future.  For dry years, a reduction in the  City’s ISG will result in an increased water reduction requirement.  For dry years, the Tier II  drought allocation formula has an ISG component so a reduction in ISG will negatively impact  the City’s allocation during a drought.  Staff estimates a 2 MGD sale would require an additional  5‐7% dry year cutback from the City or could increase reliance on groundwater.  A thorough  evaluation of such a sale is necessary to provide a more detailed assessment.    Emergency Robustness   A nominal ISG transfer would not impact the City’s access to SFPUC supplies following a  catastrophic interruption of SFPUC supplies.    Environmental Impacts  Staff anticipates that the receiving party will initiate any required environmental review under  CEQA.    Page 44    Sensitivity to Regulations  An ISG transaction is subject to Section 3.04 of the WSA.  The SFPUC review is limited to  determining if the proposed transfer complies with the Raker Act and whether the affected  facilities in the Regional Water System have sufficient capacity to accommodate delivery of the  increased amount of water to the proposed transferee.  Section 3.04(a) of the WSA also  specifies the City may “transfer a portion….to one or more other Wholesale Customers...”, thus  indicating an ISG transaction will likely be limited to another Wholesale Customer, or a third  party that plans on receiving the water within the service territory of another Wholesale  Customer.  DOCUMENTS IN THIS PACKET INCLUDE: LETTERS FROM CITIZENS TO THE UTILITIES ADVISORY COMMISSION From:Jeff Hoel To:Council, City; UAC Cc:Hoel, Jeff; Reichental, Jonathan Subject:BBC"s annual municipal FTTP issue Date:Wednesday, October 12, 2016 4:19:16 PM Council members and UAC commissioners, The August/September 2016 issue of Broadband Communities magazine is now available online here. Several of the articles in this issue are about municipal FTTP. http://www.bbpmag.com/ Here's a PDF of the entire issue (63 pages) http://www.bbcmag.com/2016mags/Aug_Sep/BBC_Aug16_webFINAL.pdf The main article is "Cities Take the Lead" (12 pages) http://www.bbcmag.com/2016mags/Aug_Sep/BBC_Aug16_CitiesTakeLead.pdf It says there are 178 networks that are either municipal or public-private partnership. The magazine's interactive database says there are now 185 (169 muni and 16 PPP). http://www.bbpmag.com/search.php Thanks. Jeff ------------------- Jeff Hoel 731 Colorado Avenue Palo Alto, CA 94303 ------------------- From:Jeff Hoel To:ConnectedCity Cc:Hoel, Jeff; Council, City; UAC Subject:COMMENTS -- History of the City of Palo Alto Dark Fiber Optic Backbone Network Date:Wednesday, October 19, 2016 4:13:27 PM CAC members, On 10-14-16, Todd Henderson sent the CAC committee a message that included an attachment about a "brief history of fiber in Palo Alto." (As far as I know, it's not online, but maybe it should be.) Please see my comments (below the "###" line). Thanks. Jeff ------------------- Jeff Hoel 731 Colorado Avenue Palo Alto, CA 94303 ------------------- ###################################################################### > Utilities Department Version:1.0 Footer: > Fiber-to-Fiber Premises and Wireless Communication Initiative > Page 1 of 5 > Date Last Updated 10/11/2016 End footer. (I won't repeat the footer after every page.) > HISTORY OF THE CITY OF PALO ALTO DARK FIBER OPTIC BACKBONE NETWORK The title is misleading. It is -- or should be -- a history of Palo Alto's fiber optic utility, not just its dark fiber optic backbone network. > FIBER-TO-THE-PREMISES AND WIRELESS COMMUNICATIONS INITIATIVES In my opinion, wireless should not be part of the fiber optic utility. > Executive Summary > > This document is intended to provide a summary of the highlights of > the City’s dark fiber optic backbone network, in addition to various > initiatives to expand the network for citywide fiber-to-the-premises > and wireless services. Staff makes no representation regarding the > completeness, accuracy or timeliness of any information and data > contained in this document. It is only meant to inform the reader who > wants to understand the history of the City’s network since it was > conceived in the mid-1990s. This is a very strange caveat. If the document is not accurate, how can it inform? > City of Palo Alto Dark Fiber Optic Backbone Network > > The dark fiber optic backbone network ("fiber network") was > originally conceived by the City in the mid-1990s and is maintained > and operated by City of Palo Alto Utilities ("CPAU"). The City’s > initial telecommunications strategy was to build a dark fiber ring As you can see from a map (January 2013) of the City's dark fiber network, it's not really a "ring." See page 45 here: http://www.cityofpaloalto.org/civicax/filebank/documents/42930 For some -- but not all -- pairs of connection points in the network, there are multiple paths connecting them. But the shortest path might be a lot shorter, and therefore less expensive, than other paths. > around Palo Alto that would be "capable of supporting multiple > network developers and/or service providers with significant growth > potential." Where does this quote come from? The earliest instance I could find on the City's website is from the FY 2013 Adopted Operating Budget (page 292). http://www.cityofpaloalto.org/civicax/filebank/documents/30338 (Google "site:cityofpaloalto.org 'significant growth potential' dark fiber" 8 hits.) In other words, it apparently didn't come from the City's dark fiber "founding fathers" in the mid-1990s. By the way, what's supposed to have the "significant growth potential" -- the City's network or its customers? This 05-18-04 staff report http://www.cityofpaloalto.org/cityagenda/publish/cmrs/3306.pdf cites a 08-05-96 staff report, saying, "The City of Palo Alto established the dark fiber-optic system in 1996 (CMR:361:96) 'as an extension of the City’s long-standing policy of providing utilities infrastructure for the citizens and businesses of Palo Alto,' and 'for accelerating the pace at which high-quality, low-cost, advanced telecommunications services are delivered throughout Palo Alto while limiting any negative impacts on Palo Alto’s physical environment.'" In other words, in 1996, the City was more concerned about serving citizens and businesses than about significant growth potential per se. > In the mid-1990s, most investor-owned and public utilities invested > in fiber optics to improve command and control of their utility > infrastructure. Many of these networks typically had excess > capacity that could be licensed or leased to third parties. This didn't say what was true of Palo Alto's dark fiber network. I believe that it was designed from the beginning to have strands for leasing to customers. In other words, I don't think the idea of leasing strands to customers came about as the result of an accidental "excess capacity." > The first phase of the fiber backbone construction occurred in > 1996-1997. The initial portions of the network were constructed in > a backbone ring architecture in existing utility rights-of-way. > The fiber backbone was routed to pass and provide access to key > City facilities and offices. The majority of the City’s business > parks (e.g. Stanford Research Park) and commercial properties are > also passed by the fiber backbone. In the fiber-to-the-premises (FTTP) context, to "pass" a premises means to provide a connection point close enough to the premises that it could be connected as a matter of routine. The City's dark fiber network doesn't "pass" anything in this sense. To connect a dark fiber customer, the City in general has to do a one-of-a-kind engineering analysis just to see how much it will cost the customer, and the connection might be several blocks long. > The original fiber backbone consisted of 33 route miles On 08-05-96, when Council voted (on a motion made by Simitian and seconded by Kniss) to approve construction of the dark fiber network, it was said to be a 15-mile network. http://www.cityofpaloalto.org/cityagenda/publish/citycouncil-archive/1996/19960805.html (Sorry, I couldn't find the staff report (CMR:361:96) online.) A 12-19-97 article says it was 24 miles. http://www.paloaltoonline.com/weekly/morgue/news/1997_Dec_19.LOOP.html A 06-01-99 article says it was 29 miles. http://www.lightwaveonline.com/articles/print/volume-16/issue-7/news/ftth-trial-approved-in-palo-alto- 53488752.html > with 144 or more strands of single-mode fiber along most routes. Since the late 1990s, the fiber backbone has been expanded to approximately 49 route miles of mostly 144- or 288-count single-mode fiber. These items (from 2007 and 2016) say it's 31 miles. http://www.cityofpaloalto.org/news/displaynews.asp?NewsID=57&TargetID=10 http://www.cityofpaloalto.org/visiting/about_palo_alto.asp In January 2008, a City Auditor report said the dark fiber backbone was 40.6 miles (and that there were also 39.5 miles of service connection fiber). http://www.cityofpaloalto.org/civicax/filebank/documents/10358 This 02-23-10 press release says it's both 41 miles and 41+ miles. http://www.cityofpaloalto.org/civica/press/display.asp?layout=1&Entry=535 On 06-01-11, UAC considered this staff report, http://www.cityofpaloalto.org/civicax/filebank/documents/27421 which said it's 41 miles, and suggested adding another 6.8 miles. But since UAC's agenda listed this item as a "discussion" item, http://www.cityofpaloalto.org/civicax/filebank/documents/27423 UAC could take no action. And the minutes seem to indicate that extending the dark fiber network backbone wasn't even discussed. http://www.cityofpaloalto.org/civicax/filebank/documents/41419 On 11-15-11, the Finance Committee discussed a similar item, and took some actions, but not with respect to extending the dark fiber backbone. http://www.cityofpaloalto.org/civicax/filebank/documents/32516 > Fiber network construction was financed internally by the Electric > Enterprise Fund through a 20-year, $2 million loan at a 0% interest > rate. These funds were used to construct the network and to cover > operating expenses. At the end of Fiscal Year 2008, the fiber optics > business completed the loan repayment to the Electric Enterprise Fund > for all capital and operating expenses from the beginning of the > project. A separate Fiber Optics Enterprise Fund, capable of > maintaining its own capital and operating budgets and financial > operating reserve, was also created. In Fiscal Year 2009, a Fiber > Optics Enterprise Fund Rate Stabilization Reserve (RSR) was > established. > > The fiber network was built in part in response to telecommunications > service providers such as emerging Competitive Local Exchange > Carriers (CLECs) that would use available dark fiber to provide > various telecom services. Did any CLECs actually say they would use the City's dark fiber? Or was it just hoped that they would? > In the mid-1990s, there was a high demand for fiber transport > facilities to support the expansion of bandwidth-intensive > broadband services. > > By the late 1990s, many CLECs left the market either through mergers > with other CLECs or bankruptcy; the so-called "dot com bust" also > occurred at roughly the same time. As a result, the anticipated > demand for dark fiber in the original target market proved to be > somewhat limited. By the late 1990s there was a glut of available > dark fiber in many areas of the country. Nonetheless, it was evident > that a fiber network would be a valuable asset for command and > control of City of Palo Alto Utilities (CPAU) facilities (e.g. > electric substations) and other critical City infrastructure such > as traffic --- page 2 --- > signals. The network would also support a wide range of broadband > voice, data and video applications for City departments, in > addition to various commercial users, telecommunications service > providers, and the community as a whole. > > In 2000, the City began to license "dark fiber" for commercial > purposes. This 12-19-97 article says there were two dark fiber customers, WebTV Networks and Brooks Fiber Communications, http://www.paloaltoonline.com/weekly/morgue/news/1997_Dec_19.LOOP.html And "[a]greements are close to being finalized with six others." This 02-09-00 article says that 17 companies had signed dark fiber agreements. http://www.paloaltoonline.com/weekly/morgue/news/2000_Feb_9.FIBER.html And that Yipes (formerly Nanospace) "ran fiber into an apartment complex on Sheridan Avenue in 1998." > Dark fiber is unused fiber through which no light is transmitted, or > installed fiber optic cable not carrying a signal. This definition makes no sense in the context of the City's dark fiber network. Rather, dark fiber is City fiber that the City does not light -- but its customers do. > The basic business model is to provide dark fiber connectivity to > users requiring access to large amounts of bandwidth. The City doesn't have to know why a customer leases dark fiber. Maybe it's bandwidth. Maybe it's latency. Maybe it's privacy. Maybe it's reliability. Maybe it's freedom to use non-standard protocols. > Customers are responsible for providing and maintaining the equipment > to "light-up" or provision licensed fiber strands. Dark fiber is > licensed or leased by a provider such as the City without the > accompanying transmission service. In contrast, traditional > telecommunication service providers only make available certain > products (commonly known as "managed services") within their > service options that may not adequately meet the requirements of > the specific applications. > > The fiber network has high market share and brand awareness among > commercial enterprises and other organizations that need the > quantity and quality of bandwidth provided by direct fiber optic > connections. > > By connecting to the City’s fiber backbone, the customer gains fiber > access to their Internet Service Provider (ISP) of choice. In general, a dark fiber connection connects any two points the customer wants to connect. Often, but not always, one of the two points is the ISP that the customer wants to connect to. > A dark fiber customer can interconnect communications systems or > computer networks across multiple Palo Alto locations and can also > connect directly to their local and/or long distance carrier(s) of > choice with a full range of communications services. Dark fiber > customers can also have redundant telecommunication connections > for enhanced reliability. > > Many of the City’s commercial dark fiber customers gain access to > the Internet through the Palo Alto Internet Exchange (PAIX, now > owned by Equinix). PAIX is a carrier-neutral collocation facility > and hosts over 70 ISPs at their facility located in downtown Palo > Alto. Equinix has 21 similar facilities in the United States and > other collocation facilities in Asia and Europe. > > The City currently licenses dark fiber connections to 107 commercial > customers. The most recent quarterly utilities update (08-31-16) says there are 105 commercial customers. (PDF page 21.) http://www.cityofpaloalto.org/civicax/filebank/documents/53656 (So maybe two more customers have been added since then.) > The fiber network also serves the following City accounts: IT > Infrastructure Services, Utilities Substations, Utilities Engineering, > Public Works, Water Quality Control Plant and Community Services (Art > Center). The total number of dark fiber service connections serving > commercial customers and the City is 219 The most recent quarterly utilities update (08-31-16) says there are 232 connections. (PDF page 21.) http://www.cityofpaloalto.org/civicax/filebank/documents/53656 > (some customers have more than one connection). At the end of fiscal > year 2016, the licensing of dark fiber service connections resulted > in a fiber reserve of approximately $24 million. More precisely, $23,418,000. (PDF page 38.) http://www.cityofpaloalto.org/civicax/filebank/documents/53656 > There is a separate $1.0 million Emergency Plant Replacement fund. See PDF page 116 here: http://www.cityofpaloalto.org/civicax/filebank/documents/54083 > According to the proposed Fiscal Year 2017 Budget, the fiber reserve is projected to increase by $2.3 million. On PDF page 116, it says the increase will be $1,279,000. http://www.cityofpaloalto.org/civicax/filebank/documents/54083 Am I looking in the wrong place? > Annual dark fiber license revenues come from the following customer categories: > > • City service connections: 27% of gross revenues. > > Private sector entities licensing dark fiber from the City: > > • Resellers: 42% of gross revenues. "Resellers" are telecommunication > companies that purchase large amounts of transmission capacity from > other carriers and resell it to smaller end-users. In the case of the City's dark fiber network, resellers lease dark fiber connections from the City and then allow their customers to make use those connections somehow. > Examples of resellers are telecom companies that sell broadband, > telephony and video services to the commercial and residential > markets. It's not really the City's business what the reseller sells to its customers. But here's an example of a reseller. http://fiberinternetcenter.com/why-fic.html --- page 3 --- > • Various commercial enterprises: 31% of gross revenues. At one point, I believe the dark fiber network connected three residences. Is staff saying that they're considered to be "commercial enterprises"? > Examples of private end-users are companies involved in various > technologies, web hosting, social media, finance, medical, > pharmaceuticals, research and development, software, law firms, > consulting firms, e-commerce, etc. > > Service offerings: Dark fiber backbone license fees are based on the > number of fiber miles per month. The per-month license fees are based on a lot of things, of which length of backbone fiber leased is an important one. http://www.cityofpaloalto.org/news/displaynews.asp?NewsID=1508&TargetID=235 > The base license price is $272.25 per fiber mile, per month. This EDF-3 rate sheet (which I think is still current although it's from 09-18-16) gives you an idea of the complexity of the pricing. http://www.cityofpaloalto.org/civicax/filebank/documents/8108 > Quantity, route, length, topology, and other discounts are available. > The minimum backbone license fee is $425 per month. Lateral > connection (premises to backbone) fees are based on the length and > type of the lateral, with a minimum fee of $210. Not mentioned are the initial fees for creating the connections in the first place. > Available configurations include point-to-point and diverse rings. > > The majority of business parks and commercial properties are passed > by the fiber backbone. Again, they are not "passed" in the sense that you could connect without doing a custom engineering analysis first. By the way, how many business parks are there in Palo Alto, and why is providing dark fiber access to only a simple majority of them considered to be good enough? > In 2014, CPAU completed a project to serve all Palo Alto Unified > School District facilities with dark fiber service connections. > > Fiber-to-the-Premises > > For more than fifteen years, the City has worked to develop a > business case to build a citywide fiber-to-the-premises ("FTTP") > network to serve homes and business. A number of business models > have been evaluated. The following is a summary of the highlights > to develop a network: > > 1999: A Request for Proposal (RFP) was issued to build citywide > FTTP. There were no viable bids. CMR:331:99 (08-02-99) is a staff report about the Universal Telecommunications System (UTS) RFP. http://www.cityofpaloalto.org/civicax/filebank/documents/2084 Attachment A, the RFP itself, is not part of the online document, unfortunately, and I didn't find the RFP online. Apparently there were five (non-viable) bids. http://www.cityofpaloalto.org/cityagenda/publish/cityclerk-reports/documents/060117Item10.pdf CMR:331:99 says, "Although the City supports programs that bring fiber closer to homes and businesses in Palo Alto, the UTS-RFP does not specify a particular network architecture or platform." However, for non-FTTH proposals, it wanted to hear about a "migratory path" to FTTH. (In 1999, the term fiber-to-the-premises had not yet been coined, so FTTH was used to denote fiber to both homes and businesses.) CMR:331:99 says the UTS should "provide high-speed access to various telecommunications services." But it doesn't quantify "high-speed." I remember that when UAC discussed the RFP, it was talking about accepting speeds as low as 9600 bps (!!) so that the incumbents would be able to provide it. > 2000-2005: The City Council approved a Fiber-to-the-Home ("FTTH") > trial to determine the feasibility of providing citywide FTTH > access in Palo Alto. On 04-05-99, Council approved doing both the FTTH Trial and the UTS (7-1, Rosenbaum no, Eakins absent). http://www.cityofpaloalto.org/cityagenda/publish/citycouncil-archive/1999/990405.html > The FTTH trial passed 230 homes I don't think so! I think the Trial was intended never to serve more than number of the homes it served initially, so there was no point in designing it so that more homes could be connected later. The FTTH Trial was originally intended to run for only about a year, but Council ended up extending it a few times. Per CMR:403:02 (11-18-02), Council (12-02-02 consent calendar) extended it to 09-30-03. http://www.cityofpaloalto.org/cityagenda/publish/cmrs/1243.pdf Per CMR:451:03 (10-14-03), Council (consent calendar) extended it indefinitely (i.e., until it was terminated or incorporated into a citywide build-out), since at this point it was cash flow positive. http://www.cityofpaloalto.org/cityagenda/publish/cmrs/2507.pdf Staff then replaced the original Marconi FTTH equipment (about 5 Mbps symmetrical per user) with BPON equipment from Quantum Bridge and Motorola (622/155 Mbps shared among 4 users), ostensibly because it was an emerging FSAN standard. Per CMR:360:04 (07-19-04), Council extended the Trial for another year, provided it wouldn't cost the City anything. http://www.cityofpaloalto.org/cityagenda/publish/cmrs/3545.pdf Per CMR:319:05 (07-25-05), Council voted 6-0 (Morton, Mossar, Ojakian not participating) to terminate the Trial (probably by December 2005 or whenever the equipment failed). http://www.cityofpaloalto.org/cityagenda/publish/citycouncil-meetings/documents/050725minutes.pdf Trial participants strongly objected and talked Motorola into donating the FTTH equipment so that a continuation of the Trial could continue to be cash flow positive. On 10-17-05, Council Member Kishimoto asked for a rethink. On 10-24-05, FOUR Council members (Morton, Mossar, Ojakian, and Kleinberg) recused themselves on the FTTH Trial item. Since "un-terminating" the Trial would have amounted to approving a contract, five affirmative votes were needed. One Council member (Beecham) said he'd vote no. So the Trial remained destined for termination. http://www.cityofpaloalto.org/cityagenda/publish/citycouncil-meetings/documents/051024minutes.pdf Service was terminated on 12-16-05. http://www.paloaltoonline.com/weekly/morguepdf/2005/2005_12_21.paw.section1.pdf > and included 66 participants in the Community Center neighborhood. The 04-05-99 Council minutes don't say explicitly how many homes the Trial would include, but advocate Ken Poulton said that 69 was "inadequate," so I'm guessing that the option approved by Council proposed to do 69 homes. > The purpose of the trial was to test the concept of fiber-to-the-home. > The FTTH trial proved successful (i.e., proved technical feasibility), > but when initial investment and overhead expenditures were included > in the calculation to create a business case, it was not profitable > for the City and the trial was ended. It was never intended that the Trial should have demonstrated "business case" financial feasibility. No history of FTTP in Palo Alto would be complete without the following item: 2002-2004: The City contracted with Uptown Services to write, with staff, 1) a FTTH business case; 2) a FTTH business plan, phase 1; and 3) a business plan, phase 2. On 12-04-02, UAC looked at the FTTH business case, http://www.cityofpaloalto.org/cityagenda/publish/uac-meetings/1322.pdf and recommended (5-0) proceeding to the FTTH business plan, phase 1. http://www.cityofpaloalto.org/cityagenda/publish/uac-meetings/1469.pdf On 05-07-03, UAC looked at the FTTH business plan, phase 1, http://www.cityofpaloalto.org/cityagenda/publish/uac-meetings/1952.pdf and recommended (4-0, Carlson absent) to approve the report. http://www.cityofpaloalto.org/cityagenda/publish/uac-meetings/2578.pdf On 03-17-04 and 03-18-04, UAC looked at a FTTH business plan, phase 2, https://www.cityofpaloalto.org/cityagenda/publish/uac-meetings/3062.pdf and recommended (3-2, Dawes, Bechtel, Melton aye, Rosenbaum, Dahlen nay) to recommend proceeding with FTTH but subject to an advisory vote of the people. http://www.cityofpaloalto.org/cityagenda/publish/uac-meetings/3235.pdf http://www.cityofpaloalto.org/cityagenda/publish/uac-meetings/3236.pdf On 04-19-04, Council had a study session (no staff report) about financing options for FTTH. http://www.cityofpaloalto.org/cityagenda/publish/citycouncil-meetings/3187.pdf (so it took no formal action). http://www.cityofpaloalto.org/cityagenda/publish/citycouncil-meetings/3328.pdf On 05-05-04, UAC considered financing options, http://www.cityofpaloalto.org/cityagenda/publish/uac-meetings/3266.pdf and voted (5-0) to recommend some financing options but not others. Dawes said, "A brief comment. I felt that the last several weeks have been a set-back for this project. I am disappointed that the financing issues did not come to the surface sooner than they have. I feel that a good deal of time and cash was wasted because of the delay in having this come forward." On 07-07-04, UAC considered financing options, http://www.cityofpaloalto.org/cityagenda/publish/cmrs/3545.pdf and voted (3-2, Roesenbaum, Dawes, Bechtel aye; Dahlen, Melton nay) to not have a vote of the people, and to "halt consideration on further action until a viable financial plan emerges." (Note that as of June 2004, the UAC minutes are no longer verbatim. And videos older than 2007 are not online.) http://www.cityofpaloalto.org/cityagenda/publish/uac-meetings/4129.pdf In other words, in 2004, UAC thought that citywide FTTH was financially viable, except that California law might not allow backing FTTH bonds with electric revenues. > 2006-2009: In 2006, the City issued another RFP and negotiated with > a consortium of private firms to build FTTP under a public-private > partnership model. On 07-25-05, Council initiated this effort (5-1, Cordell no, Morton, Mossar, Ojakian not participating) http://www.cityofpaloalto.org/cityagenda/publish/citycouncil-meetings/documents/050725minutes.pdf in response to a 07-21-05 colleagues memo from Beecham and Kishimoto. http://www.cityofpaloalto.org/cityagenda/publish/cityclerk-reports/documents/Fiber-to-the-Home.pdf > In 2009, Staff recommended to Council termination of the RFP process > and negotiations due to the lack of financial resources of the private > firms. > > 2010: The City responded to Google Fiber’s Request for Information. > > 2011: Staff worked with two telecommunications consulting firm to > evaluate the expansion of the existing dark fiber network for its > commercial dark fiber licensing enterprise and also to expand the > network on an incremental basis to attract a "last mile" FTTP > builder and operator. This is a link to the staff report provided > to the Utilities Advisory Commission in June of 2011, and the > Council Finance Committee in November of 2011: > > Subject: Provide Feedback on the Development of a Business Plan > for the Citywide Ultra-High-Speed Broadband System Project > http://www.cityofpaloalto.org/civicax/filebank/documents/27421 > > 2012: Staff worked with a telecommunications consulting firm[s] to > study the feasibility of an alternative model for citywide FTTP > which would rely on homeowners paying on a voluntary basis for some > or all of the cost to build-out the existing dark fiber network into > residential neighborhoods. The name of this model is "user-financed" > FTTP. The --- page 4 --- > analysis concluded that an opt-in FTTP network can be built using a > combination of upfront user fees and City financing; however, there > is very little probability of the debt incurred being repaid through > operations. Ongoing subsidies would be required, very likely in > excess of surpluses in the Fiber Optics Fund reserve generated by > licensing dark fiber. The study was supported by a market survey > which concluded there was limited interest among residents in this > model. If you're curious, read the report. It doesn't actually say how the questions were worded, which is a deficiency. The report says (PDF page 22) that 36 percent of Palo Alto homeowners would be willing to invest, even though the connect fee might be $3,000, plus between $50 and $250 per month for service. > This is a link to the staff report provided to the Utilities Advisory > Commission in June 2012: > > Subject: Request for Feedback Concerning the Dark Fiber Optic > Backbone Network > http://www.cityofpaloalto.org/civicax/filebank/documents/30112 On 06-06-12, UAC voted 4-3 (Cook, Eglash, Hall, Keller yes; Foster, Waldfogel, Melton no) http://www.cityofpaloalto.org/civicax/filebank/documents/31450 to recommend the staff recommendation: giving up on this approach. http://www.cityofpaloalto.org/civicax/filebank/documents/30112 (The dissenting commissioners wanted to send the report back to staff for improvements.) Next, the report should have been considered first by the Finance Committee and then by Council, but it never got there. > 2013 - 2015: The City Council started it’s its > "Technology and the Connected City" initiative and directed staff to > prepare a Fiber-to-the-Premises Master Plan and a Wireless Network > Plan. In 2015, staff worked with a telecommunications consulting > firm to prepare these plans and they are provided for your review > in this September 28, 2015 Council staff report: > > Summary Title: Discussion of Fiber-to-the-Premises and Direction > on Next Steps for Fiber and City Wireless Services > http://www.cityofpaloalto.org/civicax/filebank/documents/49073 > > At the September 28, 2015 Council meeting, staff and the consultant > reviewed these plans with the Council Members. That is, on 09-28-15, Council reviewed this document, and staff and consultants made a presentation and answered questions. > As a result, a Council Motion directed staff to pursue several > initiatives, which are described in this August 16, 2016 staff report > which updated the Council about the various activities from the > Motion: > > Summary Title: Fiber-to-the-Premises update on City Council Motions > and Google Fiber > http://www.cityofpaloalto.org/civicax/filebank/documents/53363 > > 2014 - 2016: Google Fiber announced Palo Alto as a potential "Google > Fiber City" for a build-out of their fiber optic network. Since early > 2014, staff has been engaged with Google personnel to complete an > extensive checklist process regarding City infrastructure and > processes, in addition to negotiating agreements for a project > description, utility pole attachments, encroachment permits, > environmental reviews and other agreements for cost recovery for use > of staff time. Based on Council direction, staff has also worked > with Google to develop a "co-build" concept which would explore the > feasibility of building a City network in parallel with Google’s > network. In July 2016, Google announced a delay in their plans for > up to six (6) months It was reported in the press as "up to six months or more." http://www.mercurynews.com/2016/08/08/san-joses-google-fiber-rollout-is-delayed-while-tech-giant-explores- alternatives/ > to build a fiber optic network in Silicon Valley, which also included > Mountain View, San Jose, Santa Clara and Sunnyvale. Google advised > staff that they are exploring more innovative ways to deploy their > network, which may include implementing wireless technologies. > Co-build discussions have also been delayed. In the summer of 2016, > the City approved permits for two cabinets so AT&T can begin to > deploy their "GigaPower" service. AT&T is exploring deployment of > additional cabinets in 2017. Based on Council direction, staff is > also pursuing co-build discussions with AT&T. > > Wireless Network Plan > > Based on the above-mentioned Wireless Network Plan, Council directed > staff to issue an RFP for a Point-to-Multipoint Secure Access Network > for Public Safety and Utilities communications, in addition to an RFP > for a Mobile Broadband Network to improve "in-vehicle" broadband > access in Public Safety vehicles. Staff is also working to extend the > City’s --- page 5 --- > existing Wi-Fi service to other City facilities that are currently > unserved. Most key City facilities already have Wi-Fi available for > staff and public use. From:Andy Poggio To:Richard Brand; Henderson, Todd; Reichental, Jonathan; Bob & Margie Harrington; Wallace, Joshua; Yuan, Dave; Christine Moe; Donn Lee; Andrew Kau; Tom DuBois; UAC; Hoel, Jeff Subject:Google Fiber "Paused" Date:Wednesday, October 26, 2016 9:36:53 AM See http://googlefiberblog.blogspot.com/2016/10/advancing-our-amazing-bet.html They have stopped work on new deployments, reduced staff, and the relevant CEO has resigned. They may well relaunch with a new, wireless approach — but such a new approach hasn’t been deployed on a massive scale yet. It’s hard to what the timing for a PA launch might be and how well the new technology would work. While I think we should continued to engage Google with respect to a PA/Google partnership, I also feel more and more like we’re on our own to build high-speed, cost-effective internet in PA and that FTTP continues to be the best approach. —andy From:Andy Poggio To:Richard Brand; Henderson, Todd; Reichental, Jonathan; Bob & Margie Harrington; Wallace, Joshua; Yuan, Dave; Christine Moe; Donn Lee; Andrew Kau; Tom DuBois; UAC; Hoel, Jeff Subject:Re: Google Fiber "Paused" Date:Wednesday, October 26, 2016 9:41:40 AM Google announced some Web Pass cities; see https://fiber.google.com/newcities/#viewcities PA isn’t one of them. It’s hard to assess whether this is good news (we’ll get proven fiber instead) or bad (we won’t get anything at all). —andy > On Oct 26, 2016, at 9:33 AM, Andy Poggio <apoggio@pacbell.net> wrote: > > See > > http://googlefiberblog.blogspot.com/2016/10/advancing-our-amazing-bet.html > > They have stopped work on new deployments, reduced staff, and the relevant CEO has resigned. They may well relaunch with a new, wireless approach — but such a new approach hasn’t been deployed on a massive scale yet. It’s hard to what the timing for a PA launch might be and how well the new technology would work. > > While I think we should continued to engage Google with respect to a PA/Google partnership, I also feel more and more like we’re on our own to build high-speed, cost-effective internet in PA and that FTTP continues to be the best approach. > > —andy > From:Tom DuBois To:Andy Poggio Cc:Richard Brand; Henderson, Todd; Reichental, Jonathan; Bob & Margie Harrington; Wallace, Joshua; Yuan, Dave; Christine Moe; Donn Lee; Andrew Kau; UAC; Hoel, Jeff Subject:Re: Google Fiber "Paused" Date:Wednesday, October 26, 2016 11:48:52 AM Beat me to sending this out - very interesting article and I don't see the resignation of the CEO as a good thing. On Wed, Oct 26, 2016 at 9:38 AM, Andy Poggio <apoggio@pacbell.net> wrote: Google announced some Web Pass cities; see https://fiber.google.com/newcities/#viewcities PA isn’t one of them. It’s hard to assess whether this is good news (we’ll get proven fiber instead) or bad (we won’t get anything at all). —andy > On Oct 26, 2016, at 9:33 AM, Andy Poggio <apoggio@pacbell.net> wrote: > > See > > http://googlefiberblog.blogspot.com/2016/10/advancing-our-amazing-bet.html > > They have stopped work on new deployments, reduced staff, and the relevant CEO has resigned. They may well relaunch with a new, wireless approach — but such a new approach hasn’t been deployed on a massive scale yet. It’s hard to what the timing for a PA launch might be and how well the new technology would work. > > While I think we should continued to engage Google with respect to a PA/Google partnership, I also feel more and more like we’re on our own to build high-speed, cost- effective internet in PA and that FTTP continues to be the best approach. > > —andy > From:Tom DuBois To:Andy Poggio Cc:Richard Brand; Henderson, Todd; Reichental, Jonathan; Bob & Margie Harrington; Wallace, Joshua; Yuan, Dave; Christine Moe; Donn Lee; Andrew Kau; UAC; Hoel, Jeff Subject:Re: Google Fiber "Paused" Date:Wednesday, October 26, 2016 11:49:23 AM Another tale http://www.theverge.com/2016/10/25/13411912/alphabets-access-will-lay-off-employees-as- it-moves-away-from-fiber On Wed, Oct 26, 2016 at 11:45 AM, Tom DuBois <tomforcouncil@gmail.com> wrote: Beat me to sending this out - very interesting article and I don't see the resignation of the CEO as a good thing. On Wed, Oct 26, 2016 at 9:38 AM, Andy Poggio <apoggio@pacbell.net> wrote: Google announced some Web Pass cities; see https://fiber.google.com/newcities/#viewcities PA isn’t one of them. It’s hard to assess whether this is good news (we’ll get proven fiber instead) or bad (we won’t get anything at all). —andy > On Oct 26, 2016, at 9:33 AM, Andy Poggio <apoggio@pacbell.net> wrote: > > See > > http://googlefiberblog.blogspot.com/2016/10/advancing-our-amazing-bet.html > > They have stopped work on new deployments, reduced staff, and the relevant CEO has resigned. They may well relaunch with a new, wireless approach — but such a new approach hasn’t been deployed on a massive scale yet. It’s hard to what the timing for a PA launch might be and how well the new technology would work. > > While I think we should continued to engage Google with respect to a PA/Google partnership, I also feel more and more like we’re on our own to build high-speed, cost- effective internet in PA and that FTTP continues to be the best approach. > > —andy > From:Andy Poggio To:Tom DuBois Cc:Richard Brand; Henderson, Todd; Reichental, Jonathan; Bob & Margie Harrington; Wallace, Joshua; Yuan, Dave; Christine Moe; Donn Lee; Andrew Kau; UAC; Hoel, Jeff Subject:Re: Google Fiber "Paused" Date:Wednesday, October 26, 2016 12:14:07 PM CEO resignation likely means a major change they don’t think he can handle. It also likely means things won’t happen quickly. It’s interesting that they didn’t make the Web Pass CEO into the Access CEO. —andy > On Oct 26, 2016, at 11:45 AM, Tom DuBois <tomforcouncil@gmail.com> wrote: > > Beat me to sending this out - very interesting article and I don't see the resignation of the CEO as a good thing. > > > > On Wed, Oct 26, 2016 at 9:38 AM, Andy Poggio <apoggio@pacbell.net> wrote: > Google announced some Web Pass cities; see > > https://fiber.google.com/newcities/#viewcities > > PA isn’t one of them. It’s hard to assess whether this is good news (we’ll get proven fiber instead) or bad (we won’t get anything at all). > > —andy > > > On Oct 26, 2016, at 9:33 AM, Andy Poggio <apoggio@pacbell.net> wrote: > > > > See > > > > http://googlefiberblog.blogspot.com/2016/10/advancing-our-amazing-bet.html > > > > They have stopped work on new deployments, reduced staff, and the relevant CEO has resigned. They may well relaunch with a new, wireless approach — but such a new approach hasn’t been deployed on a massive scale yet. It’s hard to what the timing for a PA launch might be and how well the new technology would work. > > > > While I think we should continued to engage Google with respect to a PA/Google partnership, I also feel more and more like we’re on our own to build high-speed, cost-effective internet in PA and that FTTP continues to be the best approach. > > > > —andy > > > > From:Jeff Hoel To:Andy Poggio; Tom DuBois Cc:Richard Brand; Henderson, Todd; Reichental, Jonathan; Bob & Margie Harrington; Wallace, Joshua; Yuan, Dave; Christine Moe; Donn Lee; Andrew Kau; UAC; Hoel, Jeff Subject:Re: Google Fiber "Paused" Date:Wednesday, October 26, 2016 12:58:36 PM Andy, Thanks for your messages. I think the list of Webpass cities you cited was all from before Google bought them. And their wireless technology was used to make a connection between two tall buildings, but connections to individual premises were still wired. So I think Webpass CEO Charles Barr doesn't have a lot of experience delivering wireless to random premises. Anyhow, who knows what qualities Google wants in its next Access CEO? A randomly found analyst, Jan Dawson, says: http://www.usatoday.com/story/tech/news/2016/10/25/google-fiber-halts-rollout-ceo-leaves/92746288/ "Although Google is framing this as a pause while it considers next generation technologies, I would hope that it's actually a concession on the company's part that being in the access business is a distraction rather than a strategic imperative." I don't know why it's a "hope" for her. Anyhow, what's not a strategic imperative for a private-sector company like Google might well be a strategic imperative for a municipality. Jeff ----- Original Message ----- From: Andy Poggio <apoggio@pacbell.net> To: Tom DuBois <tomforcouncil@gmail.com> Cc: Richard Brand <mmqos@earthlink.net>; "todd.henderson@cityofpaloalto.org" <todd.henderson@cityofpaloalto.org>; Jonathan Riechental <jonathan.reichental@cityofpaloalto.org>; Bob & Margie Harrington <bobharrington@outlook.com>; Josh Wallace <joshua.wallace@cityofpaloalto.org>; Dave Yuan <dave.yuan@cityofpaloalto.org>; Christine Moe <eomac.cam@gmail.com>; Donn Lee <donnlee@gmail.com>; Andrew Kau <akau@waldenintl.com>; uac@cityofpaloalto.org; Jeff Hoel <jeff_hoel@yahoo.com> Sent: Wednesday, October 26, 2016 12:10 PM Subject: Re: Google Fiber "Paused" CEO resignation likely means a major change they don’t think he can handle. It also likely means things won’t happen quickly. It’s interesting that they didn’t make the Web Pass CEO into the Access CEO. —andy > On Oct 26, 2016, at 11:45 AM, Tom DuBois <tomforcouncil@gmail.com> wrote: > > Beat me to sending this out - very interesting article and I don't see the resignation of the CEO as a good thing. > > > > On Wed, Oct 26, 2016 at 9:38 AM, Andy Poggio <apoggio@pacbell.net> wrote: > Google announced some Web Pass cities; see > > https://fiber.google.com/newcities/#viewcities > > PA isn’t one of them. It’s hard to assess whether this is good news (we’ll get proven fiber instead) or bad (we won’t get anything at all). > > —andy > > > On Oct 26, 2016, at 9:33 AM, Andy Poggio <apoggio@pacbell.net> wrote: > > > > See > > > > http://googlefiberblog.blogspot.com/2016/10/advancing-our-amazing-bet.html > > > > They have stopped work on new deployments, reduced staff, and the relevant CEO has resigned. They may well relaunch with a new, wireless approach — but such a new approach hasn’t been deployed on a massive scale yet. It’s hard to what the timing for a PA launch might be and how well the new technology would work. > > > > While I think we should continued to engage Google with respect to a PA/Google partnership, I also feel more and more like we’re on our own to build high-speed, cost-effective internet in PA and that FTTP continues to be the best approach. > > > > —andy > > > > From:Jeff Hoel To:Andy Poggio; Bob Harrington; Richard Brand; Christine Moe; Andrew Kau; Donn Lee; Reichental, Jonathan; Henderson, Todd; Wallace, Joshua; Yuan, Dave; Tom DuBois Cc:Hoel, Jeff; UAC Subject:Fw: BSL List: 10/26/16 Date:Wednesday, October 26, 2016 1:36:00 PM Folks, I recommend the free newsletter about municipal broadband put out by Baller Stokes & Lide. Here's a sample. Today's newsletter has this item about Google Fiber developments: 10-25-16: "Alphabet Cutting Jobs in Google Fiber Retrenchment" https://www.bloomberg.com/news/articles/2016-10-25/alphabet-access-unit-to-cut-about-9-of-google-fiber- staff?mc_cid=1caa6ba2c6&mc_eid=99443c82f8 " Moving into big cities was a contentious point inside Google Fiber, according to one former executive." Jeff ----- Forwarded Message ----- From: "Baller Stokes & Lide, P. C." <list@baller.com> To: Jeff <jeff_hoel@yahoo.com> Sent: Wednesday, October 26, 2016 12:02 PM Subject: BSL List: 10/26/16 WASHINGTON, D.C. October 26, 2016 www.baller.com BROADBAND Google Fiber's CEO, Craig Barratt, announces it will halt operations in "potential Fiber cities" where it had been exploring fiber build-outs. Barratt also said he planned to step down as the company shifted its approach to focus on new technologies and methods to deploy gigabit-capable broadband. | Google Fiber Blog; N.Y. Times ("Google Curbs Expansion of Fiber Network, Cutting Jobs") "Moving into big cities was a contentious point inside Google Fiber, according to one former executive. Leaders like Barratt and Dennis Kish, who runs Google Fiber day-to-day, pushed for the big expansion. Others pushed back because of the prohibitive cost of digging up streets to lay fiber- optic cables across some of America’s busiest cities." | BloombergTechnology (Gary White) "Revenue from providing Internet access—including fixed broadband and cellular charges—is expected to grow at an average of 6.3% a year from 2016 to 2021, producing roughly $177 billion more revenue over that period." | Wall Street Journal "Comcast yesterday sued the Nashville metro government and mayor to stop a new ordinance designed to give Google Fiber faster access to utility poles." | Ars Technica Wilson, NC, agreed to provide telephone and Internet services to Pinetops, NC, for no charge for the next six months in order to avoid shutting off the service entirely due to a state law restriction. City Manager Grant Goings: "We are thankful that, in partnership with our phone service provider, we have identified a way to keep folks connected while Rep. Martin and Sen. Brown work to fix this broken State law." | Community Broadband Networks "Big Apple Claims SF's Miguel Gamiño as New CTO" | Government Technology Spirit Communications and 11 independent ILECS partner to launch "GigUP South Carolina" campaign. | FierceTelecom "Crown Castle’s heavy investments in fiber in recent years are paying dividends as the small-cell market finally begins to pick up some steam." | FierceTelecom The broadband gap exists in urban areas, too. | POTs and PANs WIRELESS "A new WiFi standard named WiGig is poised to dramatically speed up short-range wireless in the new year." But "WiGig only works over relatively short distances of roughly 33 feet (or 10 meters) using unlicensed 60GHz spectrum, which doesn't penetrate walls well." | Broadband Reports VIDEO FCC released a notice of proposed rulemaking that would prohibit the use of "unconditional" most favored nation provisions and "unreasonable alternative distribution method provisions in pay-TV programming distribution contracts. FCC says these rules would foster consumer choice and more diverse programming. Comments due December 27, 2016. Reply Comments due January 23, 2017. | FCC Public Notice Experts warn "[i]t will be hard -- if not impossible -- to stop hackers from weaponizing the 'Internet of Things' anytime soon." | Washington Post OTHER NEWS Bernie Sanders: “If Hillary Clinton is elected president we must do everything possible to make certain that her administration mounts a vigorous anti-trust effort....We must reject the AT&T-Time Warner merger. We need more diverse media ownership, not less.” | Washington Post ** We encourage you to send us links to items of potential interest to our readers. Please use list@baller.com for this purpose. If you beat us to an item that we include in the list, we will gladly acknowledge you as our source – unless you ask us not to do so. ** The Baller Stokes & Lide List is a compilation of relevant news. Articles included on the list may or may not reflect the views or opinions of the firm. View archived Baller Stokes & Lide lists on our website: http://list.baller.com/ Copyright © 2015 Baller Stokes & Lide, P.C., All rights reserved. Emails may be directed to: list@baller.com unsubscribe from this list update subscription preferences Subscribe to the List From:Richard Brand To:Tom DuBois; Andy Poggio Cc:Henderson, Todd; Reichental, Jonathan; Bob & Margie Harrington; Wallace, Joshua; Yuan, Dave; Christine Moe; Donn Lee; Andrew Kau; UAC; Hoel, Jeff Subject:Re: Google Fiber "Paused" Date:Wednesday, October 26, 2016 2:13:46 PM Craig Barratt is a seasoned exec (he worked for Andy Grove at Intel) who is smart enough to know to get out if he does not have the support of his superiors. Can we cancel all permits issued for Serge and Larry? Richard -----Original Message----- From: Tom DuBois Sent: Oct 26, 2016 11:45 AM To: Andy Poggio Cc: Richard Brand , "todd.henderson@cityofpaloalto.org" , Jonathan Riechental , Bob & Margie Harrington , Josh Wallace , Dave Yuan , Christine Moe , Donn Lee , Andrew Kau , uac@cityofpaloalto.org, Jeff Hoel Subject: Re: Google Fiber "Paused" Beat me to sending this out - very interesting article and I don't see the resignation of the CEO as a good thing. On Wed, Oct 26, 2016 at 9:38 AM, Andy Poggio <apoggio@pacbell.net> wrote: Google announced some Web Pass cities; see https://fiber.google.com/newcities/#viewcities PA isn’t one of them. It’s hard to assess whether this is good news (we’ll get proven fiber instead) or bad (we won’t get anything at all). —andy > On Oct 26, 2016, at 9:33 AM, Andy Poggio <apoggio@pacbell.net> wrote: > > See > > http://googlefiberblog.blogspot.com/2016/10/advancing-our-amazing-bet.html > > They have stopped work on new deployments, reduced staff, and the relevant CEO has resigned. They may well relaunch with a new, wireless approach — but such a new approach hasn’t been deployed on a massive scale yet. It’s hard to what the timing for a PA launch might be and how well the new technology would work. > > While I think we should continued to engage Google with respect to a PA/Google partnership, I also feel more and more like we’re on our own to build high-speed, cost-effective internet in PA and that FTTP continues to be the best approach. > > —andy > From:Bob Harrington To:Richard Brand; Tom DuBois; Andy Poggio Cc:Henderson, Todd; Reichental, Jonathan; Wallace, Joshua; Yuan, Dave; Christine Moe; Donn Lee; Andrew Kau; UAC; Hoel, Jeff Subject:Google Fiber "Paused" Date:Wednesday, October 26, 2016 2:41:32 PM Richard, Two different guys: Craig Barratt, Alphabet Access SVP (resigned 2016) Craig Barrett, Intel CEO (retired as CEO in 2005, retired as Board Chair in 2009) Google Fiber, as we came to know it as a GF prospect city, has died. This "Advancing Our Amazing Bet" October 25 Google Blog by outgoing Access CEO Craig Barratt is corporate speak for an obit. Google Fiber as a competitive threat in future cities just evaporated. It is back to business as usual for Comcast, AT&T, Time Warner, etc. Not good news for anyone except Comcast, AT&T, Time Warner, etc. Bob Date: Wed, 26 Oct 2016 14:10:21 -0700 From: mmqos@earthlink.net To: tomforcouncil@gmail.com; apoggio@pacbell.net CC: todd.henderson@cityofpaloalto.org; jonathan.reichental@cityofpaloalto.org; bobharrington@outlook.com; joshua.wallace@cityofpaloalto.org; dave.yuan@cityofpaloalto.org; eomac.cam@gmail.com; donnlee@gmail.com; akau@waldenintl.com; uac@cityofpaloalto.org; jeff_hoel@yahoo.com Subject: Re: Google Fiber "Paused" Craig Barratt is a seasoned exec (he worked for Andy Grove at Intel) who is smart enough to know to get out if he does not have the support of his superiors. Can we cancel all permits issued for Serge and Larry? Richard -----Original Message----- From: Tom DuBois Sent: Oct 26, 2016 11:45 AM To: Andy Poggio Cc: Richard Brand , "todd.henderson@cityofpaloalto.org" , Jonathan Reichental , Bob & Margie Harrington , Josh Wallace , Dave Yuan , Christine Moe , Donn Lee , Andrew Kau , uac@cityofpaloalto.org, Jeff Hoel Subject: Re: Google Fiber "Paused" Beat me to sending this out - very interesting article and I don't see the resignation of the CEO as a good thing. On Wed, Oct 26, 2016 at 9:38 AM, Andy Poggio <apoggio@pacbell.net> wrote: Google announced some Web Pass cities; see https://fiber.google.com/newcities/#viewcities PA isn’t one of them. It’s hard to assess whether this is good news (we’ll get proven fiber instead) or bad (we won’t get anything at all). —andy > On Oct 26, 2016, at 9:33 AM, Andy Poggio <apoggio@pacbell.net> wrote: > > See > > http://googlefiberblog.blogspot.com/2016/10/advancing-our-amazing- bet.html > > They have stopped work on new deployments, reduced staff, and the relevant CEO has resigned. They may well relaunch with a new, wireless approach — but such a new approach hasn’t been deployed on a massive scale yet. It’s hard to what the timing for a PA launch might be and how well the new technology would work. > > While I think we should continued to engage Google with respect to a PA/Google partnership, I also feel more and more like we’re on our own to build high-speed, cost-effective internet in PA and that FTTP continues to be the best approach. > > —andy >