HomeMy WebLinkAbout2017-11-01 Utilities Advisory Commission Agenda PacketNOTICE IS POSTED IN ACCORDANCE WITH GOVERNMENT CODE SECTION 54954.2(a) OR 54956
I.ROLL CALL
II.ORAL COMMUNICATIONS
Members of the public are invited to address the Commission on any subject not on the agenda. A reasonable
time restriction may be imposed at the discretion of the Chair. State law generally precludes the UAC from
discussing or acting upon any topic initially presented during oral communication.
III.APPROVAL OF THE MINUTES
Approval of the Minutes of the Utilities Advisory Commission Meetings held on September 6, 2017 and
October 4, 2017
IV.AGENDA REVIEW AND REVISIONS
V.REPORTS FROM COMMISSIONER MEETINGS/EVENTS
VI.DIRECTOR OF UTILITIES REPORT
VII.COMMISSIONER COMMENTS
VIII.UNFINISHED BUSINESS
None
IX.NEW BUSINESS
1.2017 Utilities Strategic Planning Update Discussion
2.Staff Recommendation that the Utilities Advisory Commission Recommend Council Action
Adopt a Resolution Amending Utilities Rule and Regulation 11, “Billing, Adjustments and
Payment of Bills” to Update the City’s Billing Adjustment Process
3.Recommendation that the Utilities Advisory Commission Recommend that the City Council Action
Approve the 2018 Update of the Utilities Legislative Guidelines
4.Smart Grid Assessment and Developing Utility Tech Roadmap Update Discussion
5.Discussion of Proposed Distributed Energy Resources Plan Discussion
6.Selection of Potential Topic(s) for Discussion at Future UAC Meeting Action
NEXT SCHEDULED MEETING: December 6, 2017
ADDITIONAL INFORMATION - The materials below are provided for informational purposes, not for action or discussion
during UAC Meetings (Govt. Code Section 54954.2(a)(2)).
Informational Report
12-Month Rolling Calendar
Public Letter(s) to the UAC
UTILITIES ADVISORY COMMISSION
WEDNESDAY, NOVEMBER 1, 2017 – 7:00 P.M.
COUNCIL CHAMBERS
Palo Alto City Hall – 250 Hamilton Avenue
Chairman: Michael Danaher Vice Chair: Arne Ballantine Commissioners: Lisa Forssell, A. C. Johnston, Judith Schwartz, Lauren Segal and Terry Trumbull Council Liaison: Eric Filseth
Utilities Advisory Commission Minutes Approved on: Page 1 of 10
UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF SEPTEMBER 6, 2017 MEETING
CALL TO ORDER
Chair Danaher called the meeting to order at 7:05 p.m. Meeting of the Utilities Advisory Commission (UAC).
Present: Chair Danaher, Commissioners Forssell, Schwartz, Segal, Johnston, and Trumbull
Absent: Vice Chair Ballantine
ORAL COMMUNICATIONS
David Carnahan, Deputy City Clerk, said the City was recruiting for members of the Architectural Review
Board (2 positions), Historical Resources Board (4 positions), and Planning and Transportation Commission
(2 positions).
Jeff Hoel, Resident, noted the UAC/Council joint study session had been rescheduled. He was hoping to see
information regarding the current financial position of the Fiber Fund in the Utilities quarterly report. Also,
in April 2013 staff had predicted the financial position of the Fiber Fund through 2018. There has not been
such a projection since 2013, and he would like to see one produced if possible.
APPROVAL OF THE MINUTES
Commissioner Johnston moved to approve the minutes from the August 2, 2017 UAC meeting.
Commissioner Trumbull seconded the motion. The motion carried 6-0 with Commissioners Chair Danaher
and Commissioners Forssell, Schwartz, Segal, Johnston, and Trumbull voting yes, Vice Chair Ballantine
absent.
AGENDA REVIEW AND REVISIONS
None.
REPORTS FROM COMMISSION MEETINGS/EVENTS
None.
UTILITIES GENERAL MANAGER REPORT
Chief Operating Officer Dean Batchelor delivered the General Manager’s Report.
Community Workshop for Strategic Plan Update
Utilities is hosting a community workshop to provide information on our Strategic Planning efforts and
gather public input. As the Commission is aware, the Strategic Plan will provide a road map to guide our
efforts over the next three to five years. We are inviting community members to join us and share their
perspectives on key trends, priorities, and actions to consider as we try to align our Strategic Plan with
community and other stakeholder goals. The workshop is scheduled for October 4, from 6-8pm at the Palo
Alto Art Center, located at 1313 Newell Road in Palo Alto. Light refreshments will be provided. We ask
DRAFT
Utilities Advisory Commission Minutes Approved on: Page 2 of 10
people to please RSVP at UtilitiesStrategicPlan.brownpapertickets.com Questions or feedback can be
directed to UtilitiesStrategicPlan@cityofpaloalto.org
Carbon Neutral Outreach
This month we are ramping up outreach about our carbon neutral natural gas and electric utilities. While
carbon neutrality for natural gas is new, we have discovered that many community members are unaware
that the City’s electric supply has been carbon neutral since 2013. Palo Alto is the first City in the nation to
have a completely carbon neutral electric and gas portfolio!
Starting in September, residents and businesses will begin seeing a line item charge of 4 cents per therm on
their utilities bills for Carbon Neutral Natural Gas. As part of our communication with the public, we are
unveiling new web pages, bill inserts and a video to explain what it means to be carbon neutral and to
stress the continued importance of being energy efficient. Carbon neutrality for our energy portfolio is
another step on our path of sustainability, and helps the City advance toward its goal of achieving an 80
percent reduction in greenhouse gas emissions by the year 2030. You can watch the video about our
carbon neutral energy portfolio at cityofpaloalto.org/carbonneutral.
Bay Area Sunshares
As we mentioned last month, the City is participating in the Bay Area SunShares program, which opened
August 7. SunShares allows residents or employees of businesses in the Bay Area, Yolo and Sacramento
counties to receive discounts on solar photovoltaic systems, zero emissions vehicles, and electric vehicle
charging stations. Those interested in participating in the program will need to register by November 10.
Details are available at cityofpaloalto.org/sunshares.
Upcoming Events and Workshops - Details and Registration at cityofpaloalto.org/workshops
Tue, Sept 12: Intro to Zero Net Energy and Beyond: Design Tools & Strategies Training for Single-
Family Residential Buildings
Sat, Sept 23: Bay Area SunShares Workshop
Sat, Sept 30: Maintaining Native Gardens and Leak Detection
Wed, Oct 4: Community Workshop for Strategic Plan Update
Sat, Nov 4: Designing Native Gardens and Rainwater Harvesting
COMMISSIONER COMMENTS
Commissioner Trumbull recognized City of Palo Alto Communications Manager Catherine Elvert, who w as
being recognized by the Tuolumne River Trust as one of their environmental champions.
UNFINISHED BUSINESS
None.
NEW BUSINESS
ITEM 1: DISCUSSION: Utilities Strategic Plan
Tony Georgis, NewGen Consulting, gave a brief overview of the Strategic Plan process and how far the
process had progressed. Several employee and stakeholder workshops had already taken place and the
core planning team for the plan had met multiple times. The target for full Council adoption was January or
February 2018. He shared a draft “Strategic Direction” statement for the Utilities Department, an analysis
of strengths, weaknesses, opportunities, and threats (SWOT analysis), as well as a list of key priorities
identified by employee and stakeholder groups. He asked the UAC for feedback on the Strategic Direction,
SWOT analysis, and key priorities.
Chair Danaher noted that in the Strategic Direction exercise, “ahead of the tech curve” was listed, which he
did not agree was true for the utility. The City of Palo Alto Utilities is not a technology leader.
Utilities Advisory Commission Minutes Approved on: Page 3 of 10
Commissioner Segal asked for clarification of the relationship between the Strategic Direction statement
and the Mission Statement.
Georgis said the two are aligned, with the Strategic Direction being supportive and providing more depth
for the broader Mission Statement.
Chair Danaher said the Strategic Direction was well written.
Commissioner Schwartz was concerned about the statement by the stakeholder group that Palo Alto was a
leader. She asked who was at the stakeholder meeting. She felt that there were excellent things being done
by other utilities and she was concerned that the community was not aware of areas where Palo Alto was
not leading relative to other utilities both in policy and technology areas. She felt there was a lot of lessons
to be learned from other utilities. There was a lot of potential for the City of Palo Alto Utilities to become a
leader but it’s premature to consider itself as a leader. She said the City needed to ask how it could better
educate itself to become a leader and take advantage of what other utilities have done.
Georgis said there will be tools in the strategic plan to facilitate the leadership discussion going forward
within the organization and outside of the City.
Jonathan Abendschein, Assistant Director of Utility Resource Management, asked the commissioners if they
could identify other areas besides technology where they may have concerns of perception versus reality.
Commissioner Schwartz said Utilities is proactive and does exceptional work in identifying exceptions for
program changes. However, Utilities does not send staff to enough external meetings and conferences to
learn what leading utilities are doing well such as innovative and effective community outreach. For
example, the City has one of the highest concentration for EVs but we may not have the most advanced EV
program compared to other communities.
Commissioner Schwartz said that with respect to opportunities, it would be good to bifurcate
electrification. She was supportive of transportation electrification, but she thought that electrification of
building heating was not as high a priority, and there were specific issues with building electrification that
had been discussed in the past. She said another important priority was listening to customers. She thought
the utility often did this well, but that it was important to state active listening as a priority.
Chief Operating Officer Dean Batchelor said electrification would be a good item for discussion at the joint
UAC and Council meeting because Council may have a different perspective and approach.
Chair Danaher said the City has the opportunity to coordinate utility efforts with building codes and
transportation policies more than PG&E and other utilities.
Georgis asked what role the UAC would like to take in the October 4 workshop, whether in a facilitative role
or an active listener role.
Batchelor explained that in a facilitative role the UAC might lead a small breakout group of workshop
participants.
Commissioner Johnston recommended the UAC take a listening role. Commissioner Trumbull agreed.
Commissioner Forssell said it was possible to listen while being in a facilitative role, but she was open to
any role needed. Commissioner Schwartz agreed. Chair Danaher said that the UAC could fulfill whatever
role was most useful.
Utilities Advisory Commission Minutes Approved on: Page 4 of 10
Commissioners Schwartz and Trumbull requested some advance information on the workshop structure so
they could be more useful and make the meeting more effective.
Chair Danaher asked whether consumer involvement or customer experience was missing in the priorities.
Georgis said that most of the customer focused programs and services will be embedded in the technology
and collaboration priorities.
Commissioner Segal asked if the City will be soliciting the community’s key priorities. There needs to be an
area or opportunity for the community to provide their feedback.
Georgis said the purpose of the workshop is to gather the community’s feedback to see whether the City’s
priorities are aligned with the community’s priorities or if there are gaps. There will be other opportunities
and mechanisms to gather community feedback such as UAC and external stakeholder meetings and
strategic planning email address.
Commissioner Forssell commented on the Strategic Direction, noting that it was so broad that it may be too
generic, not utilities-specific, and it may not resonate with employees. The priorities were clear, but not the
Strategic Direction.
ACTION: No action.
ITEM 2: DISCUSSION: Discussion of Electric Integrated Resource Plan – Hydroelectric Resources and
Carbon Neutral Portfolio Alternatives
Jim Stack, Senior Resource Planner, gave an overview of the City’s electric supply resources, focusing on the
hydroelectric resources. He discussed the large contribution that these hydro resources make to the City’s
overall portfolio of supply resources, and the issues associated with the year-to-year variability of the
output of these resources. He also highlighted the major decision the City will be faced with in a few years,
when the City will have the option of extending its long-term contract for the Western Base Resource for an
additional 30 years, or simply letting it expire.
Commissioner Schwartz asked whether it was possible to sell excess power produced by Calaveras.
Stack confirmed that was the case. He noted that excess power can easily be sold on the spot market,
although the price the City would receive for that power is highly uncertain.
Commissioner Johnston asked what choices were available to the City in managing the Calaveras
hydroelectric resource.
Stack noted that, as a partial owner of the Calaveras project, the City can provide input to the Northern
California Power Agency (NCPA), which operates the facility, about how aggressively to use the water in the
reservoir at any given time. He also noted that a more extreme option for managing the cost variability
associated with this resource would be to try to lay off the City’s share in the project to another utility.
Abendschein noted that approximately 70 to 80% of the annual cost associated with the Calaveras project
is related to debt service, and that about half of this debt will be paid off in 2024 with the remainder being
paid off in 2032. He noted that when that debt is fully paid off, Calaveras will become a very low-cost,
carbon-free resource.
Chair Danaher asked whether the Western hydro resource was less variable than Calaveras because it was
more geographically distributed.
Utilities Advisory Commission Minutes Approved on: Page 5 of 10
Stack confirmed that was the case.
Commissioner Trumbull asked whether the Federal government would have to respect California water
rights in the operation of the Central Valley Project as flows into the Sacramento Delta were adjusted.
Stack confirmed that was the case. He noted that the Bay Delta Unimpaired Flow Criteria is a state water
use policy under consideration that could dramatically alter the flexibility that the federal government has
in using the water in the Central Valley Project.
Commissioner Forssell asked about the other benefits that the Calaveras resource provided – such as
capacity, ancillary services, and load following – and whether they could be quantified and added to the
graph of Calaveras value.
Stack said some of them were quantifiable, others, such as load following, were much more difficult.
Commissioner Johnston asked about the “dispatchability” of Western, and how that was different from
load following.
Stack said that the two terms were synonymous. He indicated that with Western, the City is prescribed a
certain amount of generation that it will receive from the resource every day, and NCPA (which schedules
the project’s output on the City’s behalf) can decide which hours of the day to schedule that energy into.
Thus Western is dispatchable, but not quite as flexible as Calaveras.
Stack then presented a discussion of the City’s Carbon Neutral Plan, first giving an overview of the Plan and
the resources the City uses to comply with it, and also addressing the question of whether to modify the
City’s definition of carbon neutrality. He also described a variety of different alternative portfolios of supply
resources that the City could pursue in the event that it does not renew its full share of the Western
contract in 2025. He discussed the pros and cons of these different alternative portfolios, and requested
UAC feedback on the metrics that staff proposed using to evaluate these alternative portfolios.
Commissioner Schwartz asked what the City’s electric supply emissions would look like if they were looked
at on a short-term basis, rather than on an annual basis. Commissioner Schwartz also recommended
including in the evaluation metrics the impact of renewables over generation and exposure to negative
market prices.
Stack indicated that staff would consider the ability of different portfolios of resources to balance the City’s
load and supply on a shorter timescale, and their impact on customer rates in their analysis.
Commissioner Trumbull noted that this was a very complex decision process facing the City.
Commissioner Johnston asked what the downside was to including more baseload renewables in the
portfolio. He asked if there was an issue with price.
Stack confirmed that the price for baseload renewables were roughly double the cost of intermittent
renewables.
Chair Danaher asked if it was true that geothermal resources are subject to supply variability too.
Stack confirmed that was the case, and also noted that another factor weighing against geothermal
resources is that they produce greenhouse gas emissions.
Commissioner Segal recommended adding contract flexibility and operational control of resources into the
evaluation metrics.
Utilities Advisory Commission Minutes Approved on: Page 6 of 10
Chair Danaher asked to see long-term price trends for transmission, storage, and other resources that could
impact the decision. He recommended consideration of threats and opportunities from distributed
generation, as well as long-term weather-related risks and other risks like earthquakes. He would like to see
uncertainty bands in the cost analysis as well. He also noted that the City should be prepared for a future
where resources are more distributed and disaggregated, and pointed out that some utilities in Europe are
planning for a future when producing electrons is virtually free.
Commissioner Schwartz noted that the UAC should be careful not to press staff for precision without
accuracy, and that they should be aware that when they ask for cost projections, these numbers are not
going to be particularly accurate.
ACTION: No action.
ITEM 3: DISCUSSION: Local Solar Programs and Community Solar Survey Discussion
Sonika Choudhary, Resource Planner, gave an overview of past and present local solar programs and shared
survey results related to customer interest in a potential community solar program. Palo Alto has been
supporting local solar programs close to 20 years now. The Local Solar Plan has involved moving away from
State mandated programs to more cost-effective and innovative local programs. This include transitioning
to the Net Energy Metering (NEM) successor program, successfully promoting the Group Buy (or
SunShares) program for past three years, and proving trusted solar information to customers. Community
solar and solar donation, two new programs contemplated under Local Solar Plan, are still under
formulation. Sonika shared an illustrative graph showing prices of local solar across programs, including an
overview of value of local solar (or avoided cost) and CLEAN program PPA price.
Chair Danaher asked to clarify the chart showing CPAU’s cost of obtaining electricity, what the comparisons
represented, and if the CLEAN program column presumed a price four cents above the avoided cost.
Choudhary said that the CLEAN program column represents CPAU’s cost of procuring electricity under the
feed-in-tariff, which was above avoided cost. For the NEM program, the price shown represents
compensation provided to the customer. The community solar program had not yet been developed, but
the price shown represented what CPAU was likely to pay for a local solar PPA. 14 cents/kWh represented
staff’s estimate of community solar project PPA prices. Staff would aim to bring that price down closer to 10
cents per kWh.
Chair Danaher further asked if the 14 cents per kWh accounted for the additional staff time that would go
into setting-up the program.
Choudhary said that would be additional, approximately one cent per kWh. It was not shown in the chart,
only the PPA price of local solar.
Chair Danaher commented that UAC has not yet been briefed with a clear chart representing the cost of
community solar program compared to other sources of electricity. Such a comparison would give a
baseline to establish any additional costs associated with the program.
Choudhary said that majority of the cost for such program would be cost of solar resource itself (or PPA
payments). Staff time and administration cost would be additional, approximately one cent per kWh for
such a program. Staff time and administration costs to establish the program exist across all customer
programs and are to be accounted for 20 – 25 years over the life of the program.
Chair Danaher said that this chart implies the cost of procuring renewable resources from the central valley
is about 8 cents and for local solar it is in the range of 14 to 15 cents.
Utilities Advisory Commission Minutes Approved on: Page 7 of 10
Choudhary confirmed. Jonathan Abendschein, Assistant Director of Utility Resource Management, added
that the 14 to 15 cents/kWh price for local solar is on the higher end and staff’s earlier proposal on
community solar had elements such as pre-payment and other contractual strategies to bring that price
down.
Commissioner Schwartz commented that we are not seeking local solar as a cheapest electricity source but
supporting it because of other reasons.
Abendschein added that it is also important to consider who pays across these different programs. The idea
behind community solar is that participating customers pay for the differential between 8 cents and the
final negotiated price. By contrast, NEM is a State law and effectively all ratepayers pay for any additional
costs.
Chair Danaher said that moving ahead to the survey results, the survey questionnaire did not ask if
participating customers would pay a six cent per kWh premium, and instead it asked if customers would
pay 5% premium.
Abendschein responded that community solar program in not intended to have subsidies and if the price
differential were six cents per kWh the City was unlikely to go ahead with the program. If the price
differential could be brought down to around two cents per kWh we may have a successful program. The
challenge with start-up costs is that it is not viable to recover all such costs upfront. For example, for the
Palo Alto Green program, start-up and administration costs were recovered over the life of the program.
The total risk for the first community solar project was an additional cost of about $25,000 to $50,000 per
year if the project was not fully subscribed. Whether to take that risk was a policy decision for the UAC and
Council.
Choudhary shared the community survey results. This survey was shared using one time e-mail to 13,000
self-subscribed customers (mainly representing single-family residents) and 1,700 randomly selected rental
customers.
Commissioner Schwartz asked a question on survey demographics and why there is a considerable spike in
responses from the Midtown neighborhood. Was this because more neighbors talked to each other?
Lisa Benatar, Utility marketing program manager, responded that it could be because of less shading in the
Midtown neighborhood as compared to other neighborhoods.
Choudhary continued sharing the survey results regarding interest in utility programs. Solar programs and
Electric Vehicle programs were two areas that survey respondents were interested in.
Councilmember Filseth commented that the two survey groups: one self-selected and other one randomly
selected from multi -dwellings doesn’t represent a true random sample. Both were skewed samples.
Choudhary said the second group, the rental population, represents a key interest group for a community
solar program. Staff hasn’t randomly selected survey participants from entire 26,000 residential customers
but selected the survey population set that would be interested in such program.
Commissioner Schwartz added that rental population sample was not skewed, and that this group
represented a group that was more likely to be interested in community solar.
Abendschein added that key research question for the survey was to gauge whether there was adequate
interest to sustain a community solar program rather than to create a truly randomized assessment of all
Palo Altans attitudes toward community solar.
Utilities Advisory Commission Minutes Approved on: Page 8 of 10
Chair Danaher asked what number of households the City would need to sign-up to make the program
viable.
Choudhary said for first 500 kW project would have capacity to meet energy needs of 100 to 200
households. For a full 3 MW program, it would entail up to 1000 households.
Chair Danaher asked a clarification question related to survey respondents willingness to pay. The survey
question asked whether participants would be willing to pay 5 to 20% premium on monthly bills. The
differential in 10 cents/KWh PPA price and 8 cents/kWh avoided cost a 25% premium. How do these values
relate?
Abendschein replied that 8 cents/kWh is just the energy price. A 20% differential on the energy price is
more like a 10% differential on the entire retail rate, which includes distribution costs as well.
Council member Filseth commented that it is great to have 75% survey respondents showing a willingness
to pay. However, the demand curve falls very steeply with an increase in premium amount.
Commissioner Schwartz added that lots of community solar projects are financed by third-party developers.
It should not be a problem for Palo Alto to find a third-party financier and developer.
Chair Danaher commented that the main policy question was whether the City should spend the staff time
up front to figure out if the cost of a community solar program could be low enough to have adequate
subscription demand from customers.
Abendschein added that utilities does have extensive experience in conducting RFPs and selecting a solar
developer.
Commissioner Forssell asked if $25,000 to $50,000 in cost per year is for the scenario where the project
gets constructed but no one subscribes to it.
Choudhary confirmed and added that this amount corresponds to the difference between the cost of a
local project and the cost of a large project outside Palo Alto. These costs would be absorbed in the City’s
electric portfolio if there are no program participants. For context, the City’s electricity procurement costs
were on the order of $80 million per year.
Chair Danaher asked if staff would seek subscribers before the project was built out.
Choudhary confirmed and added that the June proposal was to issue an RFP for a 500 kW solar project, get
an estimate of PPA prices, market the program, and finalize the deal only if there is demonstrated
subscriber interest.
Commissioner Schwartz added that community solar project could be developed in partnership with an
electricity customer with onsite demand, with some solar energy used on-site and the remaining energy
sold via subscriptions.
Chair Danaher added that he felt that survey was written in a certain way to reach certain conclusions. He
requested to provide cost and benefits in a clear manner before the discussion with the Council.
Commission Schwartz added that some of the use cases for the community solar would be helpful to
analyze.
Council Filseth asked if CPAU had any metrics for resiliency.
Utilities Advisory Commission Minutes Approved on: Page 9 of 10
Abendschein replied that such assessment was done for siting a gas-plant in Palo Alto. He thought he
recalled that the minimum plant size that provided local resiliency was about 50 MW, a fairly large plant.
ACTION: No action.
ITEM 4. DISCUSSION: Update on Smart Grid Pilot Projects and Development of the Utility Technology
Implementation Roadmap
Shiva Swaminathan, Senior Resource Planner presented the lessons learned from smart grid pilot projects
implemented since 2013. These automated metering infrastructure (AMI) pilot projects were designed to
provide energy and water usage information to customers and to test a time-of-use (TOU) rate with some
customers. The program had a budget of $450,000 over five years. The lessons learned from these pilots
included: the value of water leakage detection to customers, the shifting of electric vehicle charging loads
to night-time, some customer concerns regarding the impact of radio frequencies from the AMI meters, the
need to use external contractors to install meters, and the value of implementing a conservation voltage
reduction program. The insights gained will be incorporated when evaluating and implementing a full scale-
AMI system. Shiva also shared a chart outlining a five year draft timeline for implementing technology
projects through 2022, including AMI systems.
Commissioner Schwartz commented that customers who express concerns regarding RF exposure should
be given the opportunity to opt-out of the AMI program. Commissioner Schwartz also expressed doubt
whether a 2 cent discount on electric rates would encourage EV owners to shift their charging pattern.
Jonathan Abendschein, Assistant Director of Utility Resource Management, acknowledged that Palo Alto
can apply a number of lessons the industry has learned on TOU rates in the past few years. He also
cautioned that all rates must be set based on cost to serve the load rather than the desired behavioral
results, or they might be considered a tax under the State constitution.
Commissioner Schwartz referred to publications that document the experience other utilities have had with
smart grid implementation.
Dean Batchelor, Utilities Chief Operating Officer, mentioned that staff was in touch with other utilities to
learn from their experience and is exploring potential collaboration with other municipal utilities through
Northern California Power Agency.
ACTION: No action.
ITEM 5. ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend Council
Adopt a Hydroelectric Generation Variability Management Strategy
ACTION: This item was moved to the December 2017 Utilities Advisory Commission meeting.
ITEM 6. ACTION: Selection of Potential Topics(s) for Discussion at Future UAC Meeting
Chair Danaher asked for comments from Commissioners by the end of the month on topics for the joint
UAC and Council study session.
Commissioner Schwartz recommended agendizing a discussion of the outcomes from the Joint Study
Session at the November meeting.
Chair Danaher agreed.
Utilities Advisory Commission Minutes Approved on: Page 10 of 10
Commissioner Johnston noted that the UAC would discuss the Strategic Plan at its December meeting, and
would presumably get a presentation from the consultants of what they heard at the upcoming October 4
Community Workshop.
Batchelor said staff would give a brief overview of the outcomes of the workshop in November. He would
have the consultants provide information for the UAC in advance of the October 4 workshop.
ACTION: No action
Meeting adjourned at 9:48 p.m.
Respectfully Submitted,
Marites Ward
City of Palo Alto Utilities
Utilities Advisory Commission Minutes Approved on: Page 1 of 6
UTILITIES ADVISORY COMMISSION MEETING - SPECIAL MEETING
MINUTES OF OCTOBER 4, 2017 MEETING
CALL TO ORDER
Chair Danaher called the meeting to order at 6:05 p.m. Special Workshop Meeting of the Utilities Advisory
Commission (UAC).
Present: Chair Danaher, Vice Chair Ballantine Commissioners Forssell, Johnston, Schwartz, Segal, and
Trumbull
Absent:
ORAL COMMUNICATIONS
None.
NEW BUSINESS
ITEM 1: DISCUSSION: Community Strategic Planning Workshop
Tony Georgis, NewGen Consulting, gave an introduction to the strategic planning process and the reasons
for engaging in strategic planning. He shared basic background information about the utility, including its
mission statement (“To provide safe, reliable, environmentally sustainable and cost-effective services”), the
services it provides (electric, gas, water, wastewater collection, and fiber), and some basic financial and
demographic statistics. He shared feedback from previous stakeholder group discussions, which included
comments on:
• paying attention to the impact of electrification (vehicle and building) on the utility and defining its
role in achieving an 80% reduction in greenhouse gas emissions by 2030
• facilitating customer options and choice
• finding ways to reduce red tape for customers
• making use data available to customers and using it strategically
• understanding climate change impacts and resiliency needs of the community
• looking for opportunities to partner with customers
• attracting and retaining employees
• remaining competitive
• pursuing water recycling
• the importance of collaboration across the entire City.
Generally, the previous stakeholder groups had talked about the high level of trust the utility held with the
community, and the fact that its reliability and sustainability were highly valued.
Utilities General Manager Ed Shikada discussed the draft “Strategic Direction”:
DRAFT
Utilities Advisory Commission Minutes Approved on: Page 2 of 6
At the City of Palo Alto Utilities, our people empower tomorrow’s ambitions while caring for today’s
needs! We make this possible with our outstanding professional workforce, leading through
collaboration, and optimizing resources to ensure a sustainable and resilient Palo Alto.
He noted that what was most important was how this direction was implemented. He highlighted several
key aspects of the strategic direction:
• People: The workforce was a critical part of the organization’s ability to move forward.
• Empowering tomorrow’s ambitions: The utility has the opportunity to be a leader, particularly in
sustainability, and serves a community that strives to be a leader and that affords utility staff the
opportunity to interact with world-leading companies.
• Caring for today’s needs: The same staff that focuses on utility leadership also focuses on the day-
to-day work of keeping the lights on and fixing problems on the various distribution and collection
systems.
• Collaboration: This was a key focus area for the utility to be successful.
• Optimizing resources: This included optimizing human resources, natural resources, financial
resources, and technology.
• Sustainability: This was a core value for the utility.
• Resiliency: This was also an important value to the community – how would the utility respond to
natural and man-made disasters?
Georgis introduced the community workshop breakout sessions to discuss Strategic Plan “priorities,” which
Georgis defined as “a problem, concern, or challenge that your organization must address in order to
achieve its strategic direction.” “Strategies” were focused efforts to address the priorities. Staff would be
sharing four priorities (Workforce, Collaboration, Technology, and Financial and Resource Optimization)
and discussing strategies to address those priority areas. Staff was eager to hear community feedback.
The community members, staff, and UAC members broke out into small groups to discuss the four
priorities. Community members were provided the opportunity to discuss multiple priority areas over the
course of the evening.
Workforce Priority
Staff discussed the “Workforce” priority, sharing an early draft list of strategies:
Workforce Priority: We must create a vibrant and competitive environment that attracts, retains, and
invests in a skilled and engaged workforce.
• Strategy 1: Enhance recruitment strategies and offer alternative work options
• Strategy 2: Invest in life-long learning & professional growth
• Strategy 3: Promote a positive work culture to create an environment of teamwork, innovation,
diversity, respect and trust.
• Strategy 4: Promote job satisfaction and improve employee feedback opportunities
• Strategy 5: Evaluate and consider alternative solutions to achieve workforce needs in each
department.
Chief Operating Officer Dean Batchelor summarized the results of the discussion. There was some
discussion of creating affordable housing or micro-units to address the long commutes that made it difficult
to recruit employees. There was discussion of benchmarking salaries against other utilities to determine
appropriate salaries. Participants recommended reaching out to colleges and universities and creating
internships and positions to train and develop new staff effectively.
Utilities Advisory Commission Minutes Approved on: Page 3 of 6
In the community discussion sessions, staff noted the following comments, questions, and areas of concern:
• Workforce is the hardest to solve of the 4
priorities
• Off-load “projects” to contractors, use staff
for maintenance
• Consider selling one or more of the utilities
• Workforce issues (compensation,
opportunity, etc.) are “internal” and should
be easy to resolve. You don’t need “outside”
approval – just fix it!
• Outsource / use a labor pool
• Consider a hybrid workforce option with
employees and contractors
• Create apprenticeships
• Recruit/conduct outreach at local colleges
(community and private)
• Create a “cool” factor (office space, provide
staff lunches) for millennials
• Offer internships
• Provide entry-level jobs
• Promote advancement/define career paths
• Offer financial incentives to offset the high
cost of living
• Provide a housing allowance
• Provide housing solutions for employees such
as shared housing
• Use satellite offices for certain functions
• Survey existing employees – why do they
stay?
• Offer rotational job opportunities
• Provide affordable housing (similar to
initiatives for teachers)
• Poach staff from other agencies in the vicinity
• Consider contracting “senior” level positions
• Consider retirees from private utility
providers
• Create satellite offices
• Provide more commute options
• Increase wages
• Provide a housing subsidy
• Consider co-housing options to attract
millennials
• Create advertising similar to PG&E’s where
staff promotes the utility – “a great place to
work”
• Provide tuition reimbursement
• Provide a paid certificate program
• Use technology to enhance training
• Create a “family”-like work
environment/atmosphere
• Consider part-time staff
Collaboration
Staff discussed the “Collaboration” priority, sharing an early draft list of strategies:
Collaboration Priority: We must collaborate to deliver exceptional services.
• Strategy 1: Increasing communication with the community enhances customer satisfaction and
community trust
• Strategy 2: Strengthening communications across City departments aligns goals while improving
performance and efficiency
• Strategy 3: Fostering a culture of cooperative work within Utilities improves productivity and awareness,
and understanding common goals
• Strategy 4: Collaborate with outside agencies/organizations
Communications Manager Catherine Elvert summarized the workshop discussions. Community members
had discussed how to communicate with the community, including getting out to community events and
reaching out through neighborhood groups. There was discussion of involving the community in helping to
recruit qualified workers to the utility. It was also important that collaboration not just be a vague
statement, but that there be metrics for how effective the community was. It was also important to help
community members make informed decisions about their energy use, and to partner with customers on
sustainability and technology measures like electric vehicles. Staff should participate in industry workshops
to learn best practices. It was important to break down City Department silos and coordinate effectively.
Utilities Advisory Commission Minutes Approved on: Page 4 of 6
In the community discussion sessions, staff noted the following comments, questions, and areas of concern:
• Look at whole picture
• Need explicit tie to the mission – safe,
reliable, environmentally sustainable
• Align Utilities Department direction with
City’s direction
• Systems should be applicable with all
departments, e.g. programs/needs are
aligned
• Housing for employees
• Work with outside agencies, e.g., first
responders, IEEE industry groups – devote
funding to this.
• Tree concepts coordinated with solar –
shorter trees? Look at public/street trees
• Find some incentive/reward
• Be a learning organization
• Break down siloes
• Metrics are key
• Listen
• Utilities Department is great at answering
questions/addressing issues
• Broken, cracked sewer lines – coordinate, fix
before repairing the road
• Communicate across department to
coordinate projects
• One city – communicate across the
departments
• Work with residents to increase capacity to
charge electric vehicles
• Town Halls – perhaps hold a big workshop
once per year, for example: share
goals/strategic initiatives
• Interns go door-to-door, encourage people to
come out to Town Halls
• Improve water use efficiency resources, e.g.,
leak detention program for water
• Address issue properly with one call
• Coordination with Public Works – Urban
Forestry Division
• What percentage of customers satisfied that
their concerns are satisfactorily addressed –
one phone call?
• Interactive portal for customers
° How are they doing?
° How could they do better?
° How can they collaborate with neighbors,
etc?
• Get information to the public
• Phone responsiveness – answer questions,
who to call
• Can we help resident/businesses be more
informed about problems with utilities – gas
leak, e.g.
• How can CPAU help its customers live better,
more economically efficient in every aspect
of their lives?
• As an EV driver, where should I charge?
• What are impacts to the distribution system
with more electric vehicles
• Make info on website easier to find
• Help resident with information to get ready
for electric cars
• Fiber deployment like Chattanooga
• Increasing communication with the
community enhances customer satisfaction
and trust
• Identify obstacles to customer electrification
and options for CPAU support
• Prioritize providing customers what they
need to make informed decisions about
utility use and purchases
• Move neighborhood interactions – neighbors
helping to inform neighbors/need to use City
resources
• MSC open house was excellent – help
customers learn what utility does and why
they should come to the event.
• More utility pop-up events
• Exchanges of information among people -
small groups of neighbors sharing
information like Cool block
• Net energy metering for solar customers
• Go to where people are
• Surprised most people don’t know we have
our own municipal utility
• Get people interested in their municipal
utility
• Cost of solar generation – don’t leave
customers stranded, e.g. if something
happens in the Central Valley
• Have community help collaborate with
human resources to reach out to other
companies/organization to recruit people to
City
• Use volunteers to attend meetings, take
notes – help City leverage community as a
resource
• Narrow topics for email, newsletters, e.g.
“check to receive emails on topics related to
solar”
• Ensure communication is effective
Utilities Advisory Commission Minutes Approved on: Page 5 of 6
• How do I report an outage at my house if the
power is out and my phone is dead?
• Can you make status of utilities “self-
reporting?”
• Have webinars about utility information
• Improve website interface
• Make website more interactive
Technology
Staff discussed the “Technology” priority, sharing an early draft list of strategies:
Technology Priority: We must invest in and utilize technology to enhance the customer experience and
maximum operational efficiency.
• Strategy 1: Invest in Technology infrastructure to enhance customer engagement and satisfaction.
• Strategy 2: Facilitate customer adoption of new Technologies to enhance the customer experience.
• Strategy 3: Implement Technology to improve response time, security and operational efficiency.
• Strategy 4: Ensure and empower employees to adopt and utilize Technology.
Senior Resource Planner Heather Dauler summarized the discussion. Cyber-security and physical security
were important priorities for the participants. Participants discussed having an easily understandable online
“one-stop shop” where customers could interact with the utility, including finding out about carbon
profiles. Smart metering was a topic of discussion. Integrating distributed solar and storage was important,
as well as forecasting the potential for increasing load from electric vehicles.
In the community discussion sessions, staff noted the following comments, questions, and areas of concern:
• Implement technology to improve response
time, security and operational efficiency
° Workforce mobility
° Field tablets
° GIS
° Supervisory control and data acquisition
• Tie clearly to mission – 2nd transmission path
• Microgrids - think carefully about resiliency
and security (cyber- and physical-)
• What’s the new tech the City is considering?
e.g. AMI rollout in 3-5 years
• Website, enhance customer portal
• Can our distribution system handle a
significant bad event?
• Community evaluation of resiliency – share
what we know
• Underground infrastructure
• Use self-driving vehicles as a way to reduce
labor
• AMI – use it to provide feedback in real time
about usage
• Interaction of utility with DG and storage –
are we flexible if DG and storage become
highly cost effective?
• Are we prepared for a dramatic load shift?
• Do we consider various scenarios in our
resource planning models?
• Ensure customer-facing tech is easily
understandable; one-stop-shop for all needs
• Residential and commercial real time
indication of carbon cost/impact
Financial & Resource – Optimization
Staff discussed the “Financial and Resource Optimization” priority, sharing an early draft list of strategies:
Financial and Resource Optimization Priority - We must optimize financial management and efficient use of
resources to achieve our service priorities.
• Strategy 1: Cost-effective, efficient, customer-focused service goals.
• Strategy 2: Excellent management and execution of work.
• Strategy 3: Effective maintenance and replacement of utility infrastructure.
• Strategy 4: Sustainable and resilient energy and water supply.
Utilities Advisory Commission Minutes Approved on: Page 6 of 6
Jonathan Abendschein, Assistant Director of Utilities Resource Management summarized the feedback
from the Financial and Resource Optimization discussions. The first discussion group had focused on
sustainability and environmental goals. What role would the utility have in partnering with customers who
want to install new technologies coming on to the grid? The second discussion group focused on making
sure the utility was careful with its spending and kept rates competitive. The third discussion group focused
on good utility management, making sure that the utility was effectively delivering services, and measuring
that through metrics and benchmarks. The final group focused on resiliency, making sure the community
understands how resilient the utility is so they can prepare, and making sure the utility is prepared for a
variety of threats, including manmade threats like vandalism and terrorism. Reliability was important,
making sure that necessary infrastructure replacement took place to keep the system reliable.
In the community discussion sessions, staff made note of the following comments, questions, and areas of
concern:
• Effective maintenance and replacement of
utility infrastructure
• Improve our understanding of the conditions
of our pipes and wires to direct investment to
the highest priority replacement need
• Consider other competitive impacts – does the
electric utility become a distribution-only
company?
• In a competitive environment and with our
long-term planning watch out for stranded
assets – long term contracts/pipes and wires
that become useless due to changing market
conditions.
• How will the City collaborate with customers
on solar and storage?
• Collaborate with customers to increase
community resiliency (e.g. storage, load
control)
• What are the metrics you use to know if you
are doing a good job?
• Reserving funds and ordering back-up
equipment to repair major distribution
equipment in case of damage. Consider
second transmission line into the City.
• If large electric generators can provide cheap
power will PA keep buying from local solar?
• Don’t move employees into the utility from
the general fund, minimize transfers to general
fund to keep my bill down and stay
competitive.
• Efficient use of workforce
• What will be the impact of disruptive
technology on the utility business model?
• Help people understand the financial impact
and benefit of their energy/appliance
decisions – use online tools, advice
• Metrics on utility management should be
visible and timely - past quarterly reports
provided good information, need to make
current reports better.
• Manage by objective
• Resiliency – help people understand resiliency
metrics, e.g. restore service in 24-hours
• Resiliency is a priority – plan for issues like
terrorism and vandalism
• Speed up utility undergrounding
• Keep up with infrastructure replacement
consistent with age
• Coordinate with other departments/agency on
construction
ACTION: No action.
Shikada noted that the plan was scheduled to be presented in December or January to the UAC, and there
would be an opportunity at that time for the public to provide additional feedback.
Meeting adjourned at 8:00 PM
Respectfully Submitted,
Marites Ward
City of Palo Alto Utilities
Page 1 of 4
2
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: NOVEMBER 1, 2017
SUBJECT: Staff Recommendation that the Utilities Advisory Commission Recommend Council
Adopt a Resolution Amending Utilities Rule and Regulation 11 “Billing, Adjustments
and Payment of Bills” to Update the City’s Billing Adjustment Process
REQUEST
Staff requests that the Utilities Advisory Commission (UAC) recommend City Council adopt a resolution
amending Utilities Rule and Regulation 11 “Billing, Adjustments and Payment of Bills” to update the
City’s billing adjustment process.
EXECUTIVE SUMMARY
Public comments were directed to the Utilities Department and UAC on July 12, 2017, by customers
having experienced a water leak, and by concerned residents. These comments described a public
perception that the current Utilities billing policies related to water leaks were both harsh and unfair to
customers unaware of such leaks until receipt of a monthly water bill for hundreds to thousands of
dollars higher than normal. Comments also proposed modifications to current policies to ensure leaks
were repaired as soon as possible and bills were less burdensome to the unaware. After discussion, the
UAC requested staff investigate potential changes to Utilities Rule and Regulation 11 to reflect the sense
of the Commission that, while the current policy accurately put responsibility for leak costs on the
responsible customers, there must be multiple solutions to the problem, since other water utilities
would have customers in similar situations.
Staff reviewed alternative methods and proposes that the UAC recommend that Council adopt a
resolution to amend specific changes to the applicable sections of Rule and Regulation 11, “Billing,
Adjustment and Payments of Bills” to: a) update the City’s billing adjustment policies for water leaks; b)
delete references to natural gas leaks as not applicable in this context, and c) update billing adjustment
policies for accounts impacted by incorrect meter or billing system data.
BACKGROUND
The current Utilities Rule and Regulation 11, “Billing, Adjustments and Payments of Bills” was adopted
by Council on May 9, 2006 (CMR: 219:06).
Section L. WATER OR GAS LEAK CREDITS (from 5-9-2006 to present)
It is the Customer’s responsibility to maintain their lines and equipment in a reasonable condition
such that leaks do not occur. CPAU shall not make billing adjustments for Water, Gas or Wastewater
Charges resulting from leakage in a line on the Customer Premises beyond the CPAU Meter, unless
CPAU determines that City staff were solely responsible for such leakage.
Page 2 of 4
This section of Rule 11 was designed to ensure fairness to all customers and encourage customers to
keep their water lines, particularly irrigation systems, in good condition. As such, it has also been
consistent with statewide water regulatory trends that put a premium on water conservation and are
focused on eliminating water waste. When water leaks occur on the customer’s side of the meter, City
staff encourages those customers to investigate whether their homeowner insurance policy covers the
costs associated with leaks. The Utilities Department also works with customers to devise a payment
arrangement for back bills to address financial hardship by spreading payments over extended periods.
While the Rule is clear, and facilitates consistent application by staff, public comments suggests the
current policy is burdensome for those having suffered a non-visible water leak and only identified when
the water meter is next read, up to 33 days later.
DISCUSSION
Summary of July 12, 2017 UAC Discussion:
Comments by the public and the Commissioners indicated that the goal of the current policy to
financially hold harmless the other “non-leaking” water utility customers was being met. But water costs
have also risen so that even minor leaks are being quickly repaired when detected. The relatively few
customers experiencing major water leaks that have resulted in significant financial losses are also quick
to identify the source of the problem (often leaking toilets or irrigation system breaks) and make repairs.
Unfortunately, because the Utilities Department reads water meters monthly, such knowledge comes
too late for them to avoid very high water bills. Concerned residents and members of the
Commissioners opined that the current “Water or Gas Leak Credits” policy could be changed to create
less of a financial impact on the individual customer by spreading some (not all) of the high water leak
costs across more of the overall water customer base. The public and the commission suggested
potential revisions to the current policies should include:
• Consistent customer application and Utilities Department interpretation.
• Ensure that the source of the leak was identified and repaired.
• The number of leak adjustments per customer should be limited.
• Leak credits should be financially shared between the Utilities Department and the applicant.
Utilities staff proposed to return to the Commission with Rule modifications that could address the
concerns indicated at the Commission meeting of July 12, 2017.
Staff Recommendations for Utilities Rule and Regulation 11, “Billing, Adjustments, and Payment of
Bills”
a) Deletion of Natural Gas references from Rule and Regulation 11, Section L, “Water or Gas Leak
Credits” as not relevant to the primary issue of water leaks. Natural gas was originally included
because it was a metered commodity capable of leakage. Due to the use of chemical odorants,
natural gas leaks are very quickly identified and located by customers, gardeners and the
general public and are not susceptible to the month-long “hidden” capabilities of water leaks.
b) Add new language to the renamed Section L, “Water Leak Adjustments”:
It is the Customer’s responsibility to maintain their lines and equipment in a reasonable
condition such that leaks do not occur. Unintentional Water loss caused by broken or
damaged plumbing fixtures, pipes or irrigation equipment can result in greater than normal
bills for Water and Wastewater Services. The General Manager of Utilities, or delegate,
may approve Water billing adjustments for Customer’s Water and Wastewater Accounts
(when Wastewater charges are based on Water consumption) under the following
conditions:
1. Customers who have discovered and repaired a Water leak on their Premises may
apply for a Water and/or Wastewater bill adjustment, as applicable, by requesting and
Page 3 of 4
downloading from the Utility website a Leak Adjustment Application form and
submitting it to the General Manager of Utilities within 60 days from the
bill’s due date for the period in which the Water leak occurred.
2. Leaking systems must be repaired before the Customer seeks a bill adjustment, to
ensure future bills are not impacted by the same leak. Shutting off the source of the
leak is not considered a repair. Undetermined or general high water consumption is
not eligible for adjustment.
3. Utilities Department staff must be permitted by the Customer to visually inspect the
repair and verify that repairs have been completed. If repairs were completed by a
third party, Customer receipts may be accepted in lieu of a visual inspection by
Utilities Department staff.
4. Water leaks may occur over multiple billing periods. Water and Wastewater bill
adjustments are time-restricted to two consecutive Utilities billing periods.
5. Customers are restricted to one Water and/or Wastewater leak-related bill
adjustment in each 36-month period.
6. The 36-month period begins on the billing date following the period covered by the
Leak Adjustment Application.
7. Calculation of leak volumes will be made using averages for the billing period(s) based
on the prior three years of the Customer’s historical consumption. Leaks will be
defined as the volume of water greater than 100% of normal consumption compared
to the historical consumption. Leaks will be calculated using the applicable meter
readings based on the Commodity Rate on the applicable Water Rate Schedule. Leak
volumes and charges will be first subtracted from the higher tiered Commodity Rates,
then, if necessary, from lower tiered Commodity Rates. The maximum Water leak bill
adjustment will be $500 per application.
8. Wastewater bill adjustments related to Water leaks will be made based upon the
adjusted Water volume, and are not included in the $500 Water leak billing
adjustment limit.
9. Utilities User Tax (UUT) adjustments will be based upon the adjusted Water volume
and are not included in the $500 Water leak billing adjustment limit.
10. Decisions regarding leak-related Water and Wastewater billing adjustments, including
eligibility and leak volume calculations, will be determined by the General Manager of
Utilities, or designee, and are final.
c) Add new item to Rule 11, Section I, “Metered Service Billing Errors and Adjustments”:
Item 1. Where a Customer has been undercharged or overcharged for metered Service,
the date and cause of which can be reliably established by CPAU, the retroactive
billing adjustment (back bill or refund) shall not exceed three years. The
maximum bill adjustment for undercharges shall be $500 per Account, per
incident.
RESOURCE IMPACT
Adoption of the staff recommendation will not impact the Gas Enterprise Fund since there has never
been a gas leak bill adjustment made under this policy, and the gas leak adjustment language is
recommended to be removed from Rule and Regulation 11.
Adoption of the staff recommendation to amend the water leak credit policy will result in unknown
annual financial losses to the Water and Wastewater Funds until one fiscal year has passed allowing for
projection of future losses. Prior to adoption of the current water leak adjustment policy in 2006, the
annual water leak adjustment costs totaled $50,000 to the Water Enterprise Fund. Adoption of the staff
recommendation will result in unknown financial losses to the General Fund due to reductions in Utility
User Tax revenue by Utilities Department reductions to customer consumption from water leaks. The
passage of one fiscal year will allow for projections of future annual losses .
Adoption of the staff recommendation for new language in "Metered Service and Billing Errors" will
correct those bills of customers having been incorrectly billed, subject to the three-year look back period
in Rule 11(1), and will not result in significant revenue impacts for metered services.
POLICY IMPLICATIONS
The current Utilities Department policy for the water and gas adjustments for leaks was approved by
Council in 2006. Council adoption of the recommended changes would become effective immediately
upon adoption. Past leaks will not be retroactively covered by this change in policy.
ENVIRONMENTAL REVIEW
Council adoption of changes to the Utilities Rules and Regulations does not meet the definition of a
project under the California Environmental Quality Act {CEQA), pursuant to Public Resources Code
Section 21065.
ATTACHMENTS
A. July 12, 2017 UAC Report-Discussion Regarding Utilities Leak Adjustment Rules
B. Excerpted Draft UAC Minutes of the July 12, 2017 Special Meeting
C. Proposed Utility Rule and Regulation 11, "Billing, Adjustments and Payment of Bills"
D. Resolution -Rule 11 Billing Adjustments Payments Draft
PREPARED BY:
REVIEWED BY:
APPROVED BY:
t)J0itoM AUZENNE, Assistant Director, Utilities Customer Support Services
L:!TCHEL R, Utiliti:s Chief Operating OfficerJ;b...... 0~
ED SHIKADA, Assistant City Manager/General Manager of Utilities
Page 4of4
Page 1 of 7
3
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: July 12, 2017
SUBJECT: Discussion Regarding Utilities Leak Adjustment Rules
RECOMMENDATION
Staff requests that the Utilities Advisory Commission (UAC) discuss and provide feedback to
staff regarding the current Utilities Policy for the financial billing of potable water and natural
gas leaks occurring on the customer’s side of the revenue meter. If the UAC wishes to provide
feedback on the current policy or alternatives for reasons of business process improvements or
customer satisfaction, staff can return for a follow-up discussion and/or action based upon
customer or business parameters identified in UAC discussion.
EXECUTIVE SUMMARY
To summarize the CPAU policy for water and natural gas leaks: if water or natural gas has
passed through the revenue meter serving the customer and that meter is accurate within the
established CPAU standards, it is the customer’s responsibility to pay the bill, unless it can be
shown that CPAU was responsible for the increased consumption.
BACKGROUND
Current Policy
A policy change to Utilities Rule and Regulation 11, “Billing, Adjustments and Payments of Bills”,
Section L., “Water or Gas Leak Credits”, was adopted by Council on May 9, 2006 (CMR : 219:06):
L. WATER OR GAS LEAK CREDITS (from 5-9-2006 to present)
It is the Customer’s responsibility to maint ain their lines and equipment in a reasonable
condition such that leaks do not occur. CPAU shall not make billing adjustments for
Water, Gas or Wastewater Charges resulting from leakage in a line on the Customer
Premises beyond the CPAU Meter, unless CPAU determines that City staff were solely
responsible for such leakage.
Water is a metered service and the City’s responsibility ends where the water exits the meter
and is taken into the customer's distribution lines. It is the customer’s responsibility to maintain
their distribution lines and end-use equipment so that leaks do not occur. Based on this
principle, no Utilities usage or payment credits are given for water leaks once the water has
passed through the meter and consumption has been counted. Rule 11(I) of the City of Palo
ATTACHMENT A
Page 2 of 7
Alto’s Utilities Rules and Regulations requires that all utility billing errors, both instances of
underbilling and overbilling, be corrected over a three year look-back period.
This Rule is designed to ensure fairness to all customers, such that some customers do not
effectively subsidize leaks on other customers’ properties. The City’s bright line rule for water
leaks is consistent with statewide water regulatory trends that put a premium on water
conservation and are focused on eliminating water waste. The rule is clear and facilitates
consistent application by staff in a manner that has the potential to strengthen the C ity’s
position should the City become involved in litigation over costs or charges in the future. City
staff does encourage customers to investigate whether their homeowner insurance policy
covers the costs associated with leaks. The Utilities Department also works with customers to
devise a payment arrangement for back bills to address financial hardship by spreading
payments over extended periods.
Prior Policy
The prior leak credit policy (effective 11-22-1999 until 5-9-2006), also under Rule and
Regulation 11, but as Section G, “Billing Adjustments”, Subsection 4, “Water or Gas Leak
Credits”, and Subsection 5, “Billing Adjustments in Connection with Force Majeure Events”
stated:
4. WATER OR GAS LEAK CREDITS: (from 11-22-1999 through 5-9-2006)
Billing adjustments may be made for water or gas lost as a result of leakage in a
line on the Customer premises beyond the CPAU meter. Leaking faucets, toilets,
hoses, or sprinklers do not qualify for a billing credit unless a determination has
been made by CPAU that the Customer had no control of such device(s) leaking.
Under no circumstances will a billing credit be provided a Customer when the
facts indicate that a Customer had knowledge of a water or gas leak, but failed to
take corrective measures in a timely manner. It is the Customer’s responsibility
to maintain their lines and equipment in a reasonable condition such that leaks
do not occur.
(A) Generally, a leakage credit will be granted for a one month billing cycle.
However, depending on the circumstances, a two-month billing cycle may
be granted by the Supervisor, Customer Service Center. Such
circumstances include, but are not limited to, a leak occurring while a
Customer is out of town for an extended period of time. Leak credits will
not be provided beyond a two-month billing cycle.
(B) All Customer classes are eligible for the leak credit. To qualify for the
water leak credit, evidence of having repaired the leak is required. Such
evidence may consist of a plumber’s repair bill, materials receipt, or field
verification by CPAU. Customers who are negligent or slow to react in
repairing a leak do not qualify for a leak credit.
(C) To arrive at the corrected bill amount, which reflects the leak credit,
CPAU will estimate what would have been the normal consumption and
Page 3 of 7
calculate a normal bill based on that consumption. Then, actual
consumption in excess of the normal figure will be billed at CPAU’s
current wholesale commodity cost plus ten percent. The sum of these
two calculations represents a revised billing amount. The leak credit is
the difference between the revised billing amount and the original bill.
5. BILLING ADJUSTMENTS IN CONNECTION WITH FORCE MAJEURE EVENTS
(A) For purposes of this Rule and Regulation, the term “force majeure” means
the occurrence of an event that is beyond the reasonable control of the
utility Customer and, which by reasonable efforts, the Customer could not
prevent. Such events include, but are not limited to, an Act of God, an
irresistible, superhuman cause, fire, flood, earthquake, or any other similar
cause.
(B) Water, Gas, and/or Electric
(1) A water, gas, and/or electric billing adjustment in connection with
a force majeure event shall be limited to charges for water, gas,
and/or electricity consumption in excess of the historical average
for the customer. The billing adjustment will be applied as a
credit on the customer’s bill. The credit is for the amount of
excess usage and represents the difference between the amount
charged for the applicable period and an amount calculated based
on the customer’s average consumption for a similar period. This
credit shall include a refund of any applicable utilities users tax
that was based on the amount of excess usage.
(2) The Director of Utilities shall determine the historical average
consumption. Depending on the availability of data and other
reasonable considerations, the basis for calculating such averages
may be the same month(s) in a previous year, a recent 12 month
average, a 6 month seasonal average for winter or summer, or
other appropriate period(s) as determined by the Director of
Utilities.
(C) Debris Boxes
(1) A billing adjustment or refund in connection with debris boxes
serviced by the City’s contracted Collector shall be limited to City’s
Collector charges incurred or to be incurred out-of-pocket by the
resident, owner, or business for removal of flood -damaged
materials only. Refunds will not be applied to charges paid
through insurance policies. The City’s Collector will keep a record
of those residences and businesses that request debris boxes
during the applicable refund period.
Page 4 of 7
(D) To qualify for an adjustment under this section, the Customer may be
required to provide documentation to verify damage to the residence or
building, or contents thereof. In circumstances in which the City has
previously verified such damage such as by a field visit or has made a
determination from other information resources, documentation from
the Customer may not be required. However, to qualify for a refund for
debris box rentals, a signed statement by the Customer is required that
attests that the debris box was used for flood-damaged materials only
and that the Customer has not and will not be reimbursed by
homeowners insurance or any other agency. (end)
The implementation difficulty that CPAU had with this earlier policy included:
Regulatory definitions were difficult to consistently interpret and apply.
Not being responsible for the full cost of repairing irrigation leaks and defective
plumbing equipment has the potential to prevent some customers from upgrading,
properly maintaining/inspecting, or repairing older, defective, or degraded plumbing.
Extensive time and expense was required by CPAU field, office and management staff to
investigate and interpret instances of high water consumption…essentially having to
prove to the customer that there was a leak for which they were responsible.
Determine the relative merits of each submission, and to establish and maintain
precedents. For instance, customers (still) argue that “there was no way they could have
used that much water” because they weren’t home, there was no standing water
indicating the presence of an irrigation leak, there was no running toilet, etc.; and,
Did not preclude customers from both filing for a reduced-payment CPAU water leak
adjustment and filing a claim with their insurance carrier for the full retail value of the
water bill.
DISCUSSION
CPAU uses a manual meter reading process that occurs once per billing cycle, or roughly once
per month. CPAU Customer Services staff attempts to contact the affected customer as soon as
the abnormally high reading is downloaded from the meter reading device and identified. In
between two meter reading periods a variety of high water consumption events could have
taken place some visible to the naked eye (wet spots in landscaping, broken irrigation head,
water flowing down the gutter or across hardscape), and some not (running toilet, under slab
burst pipe, or water heater valve discharging under the house).
There are three types of leaks that ordinarily occur: (1) the slow leak where consumption
gradually increases to the point where it seems excessive to the customer, or out-of-range to
CPAU, (2) the single-event burst pipe/irrigation valve, and (3) the single-event “Unknown
Cause”, with no visible problem, no one admitting to be in residence, and no wet spots noticed
by the gardener. All three events result in high consumption and high bills. They also result in
customer calls to the Utilities Call Center.
Page 5 of 7
For Fiscal Year 2016-2017 (11 months to date) there have been 509 double-checks of the
original water meter reading resulting from customer calls about their high water bills.
For Fiscal Year 2016-2017 (11 months to date) there have been 1,925 double-checks of
an original water meter reading resulting from “out-of-range” meter readings in the
billing system.
The vast majority of “check-reads” have been found to be accurate. There are approximately
20,600 water meters in the system totaling 247,200 water meter readings per year. The
consolidated annual meter reading error rate (915,100 water, gas, electric meter readings) is
less than 0.05%.
Since 2009 there have been 74 escalated calls about high water consumption requiring the
attention of a supervisor or manager. Of these, there have been approximately one dozen
significant-volume water leaks where the dollar values of these leaks ranged from several
hundred to several thousand dollars (high of $7,000). The causes of these leaks encompassed all
three of the types identified above (irrigation system failures, running toilets, or “unknown
causes”).
When confronted with the reality of a water leak, customers mitigate the situation in several
ways. Aged, leaking toilets are identified through home visits of CPAU water efficiency
contractors, or by using dye tablets available from local hardware stores. The toilet is then
repaired or replaced with a more efficient low volume model. Leaking irrigation systems can be
discovered from broken sprinkler heads or valves, or from soft or wet spots in yard or turf.
Locating deeper irrigation leaks or the troublesome “unknown causes” may require the services
of a specialized leak detection company using sophisticated acoustical or H2 tracer sensor
technologies. Preventing future high bills from water leaks can be addressed by homeowner
installation of wired or wireless water leak alarms and/or sensors installed in basements or on
the customer’s side of the CPAU water meter. If CPAU moves forward with the procurement and
installation of “smart” water meters, customers would also be provided with built -in leak
detection and notification capabilities.
Alternative Policies Used by Other Water Agencies
Each water agency, public or private, typically has their own policy and/or methodology for
handling water bill reductions due to high water consumption. These policies range from formal
to informal to none. Specific water leak policy language can be found in Municipal Codes,
Ordinances, Fee Schedules, Rate Schedules, Department Policies, and other references
commonly available to the public. Agencies without specific policies or remedies do not address
the topic at all in their customer-facing publications. Policies include:
1. Some agencies include language stating that maintaining and repairing the water
distribution system on the customer’s side of the meter is the cust omer’s responsibility.
2. Agencies variously define “water leak”. For instance, some consider a “water leak” to
mean: a) plumbing failures on the customer’s side of the meter due to normal “wear
and tear”, b) a plumbing failure event “not resulting from theft, vandalism or other
Page 6 of 7
third-party actions”, c) increased water consumption over time as a result of broken
pipes or fittings, or d) a single event, catastrophic failure of a water line or appliance.
3. Some agencies do not provide specific regulatory remedies. Requests for billing
adjustments are handled administratively through the department or City Manager’s
Office on a case by case basis.
4. Some agencies have “water leak adjustment” policies that provide specific regulatory
remedies in the event of a water leak. These include: a) reduction in charges to the
lowest applicable rate Tier, b) time/term limits on the number/years that adjustments
requests can be made (i.e. once every three years; once per lifetime; etc.), c) proof of
completed leak repair, d) a maximum number of bills that can be adjusted, e) an
adjustment maximum for dollars or percentage of bill (i.e. a 25% cap on bill reduction),
and f) minimum years of water agency service to qualify for a leak adjustment.
NEXT STEPS
The UAC may wish to provide input on the current policy for water and gas leak adjustments as
stated in Rule and Regulation 11. Depending upon UAC’s feedback, staff may consider returning
with alternatives based upon customer or business parameters identified in UAC d iscussion.
RESOURCE IMPACT
Maintaining the current policy for water and gas leak adjustments as stated in Rule and
Regulation 11, there will be no future financial impact to the Water Fund. Adoption of an
alternative policy will require financial impacts to be calculated based upon the recommended
policy.
POLICY IMPLICATIONS
The current City of Palo Alto Utilities policy for the handling of water leaks was approved by
Council in 2006. Specific changes to the current policy may require the amendment of Utility
Rules and Regulations and/or development of internal guidelines for department
implementation.
ENVIRONMENTAL REVIEW
Discussion of and solicitation of feedback from the UAC concerning the City’s water leak
adjustment rules does not meet the definition of a project under the California Environmental
Quality Act (CEQA), pursuant to Public Resources Code Section 21065.
ATTACHMENTS
A) City of Palo Alto Utilities Rule and Regulation 11, "Billing, Adjustments and Payments of
Bills" (2016)
B) City of Palo Alto Utilities Rule and Regulation 11, "Billing, Adjustments and Payments of
Bills" (1999)
PREPARED BY: TOM AUZENNE, Assistant Director-Customer Support Service~
REVIEWED BY: ~ATCHELOR, Chief Operating Officer
APPROVED BY: [___ / ~
EDSHIKADA
General Manager of Utilities
Page 7of7
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective 6-27-2016
Sheet No 1
A. BILLING UNITS
All metered billing units used for billing purposes shall be determined to the nearest whole unit.
Such units may include, kW, kWh, kVA, kVar, hp, Therms, and/or ccf.
B. PAYMENT OF BILLS
CPAU issues bills to its Customers on a regular interval. Bills shall be deemed received upon
physical or electronic delivery to Customer, or three calendar days following the deposit of the bill in
the United States Mail to the Customer’s billing address. Bills for CPAU Services are due and
payable 20 calendar days following issuance of the bill statement. Bills unpaid after the 20 day
period are considered delinquent (“past due”). If a Customer’s payment is not received by CPAU
after 25 days of bill issuance, the outstanding balance will be assessed a late payment Charge.
For the convenience of Customers there are a number of ways to pay CPAU bills:
1.By enclosing the bill stub and check and mailing to: CPAU, P.O. Box 10097, Palo Alto, CA
94303-0897.
2.By enrolling in the Utilities Bank Draft Program. Payments will be drafted from a
Customer’s designated checking or saving account and automatically applied to the
Customer’s Utility Account for each current Billing Period.
3.By paying in Person at the Civic Center, Revenue Collections, 1st Floor, 250 Hamilton
Avenue, Palo Alto between the hours of 8:00 a.m. and 4:30 p.m. The City offices are closed
on alternate Fridays. Customers should call 650-329-2317 to ensure the office is open.
Credit card payments are accepted at Revenue Collections. Customers should call to see
which credit cards are accepted. Customers can pay delinquent bills with a credit card by
phone by calling the Utility Customer Service Center during business hours.
4.By depositing the payment in the walk-up Night Depository Box in the front of the City Hall
building on the Civic Center Plaza, or at the drive-up Night Depository Box in the Civic
Center Garage, on “A” Level.
5.By paying online through the “My Utilities Account” application, accessible from the
ATTACHMENT A
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective 6-27-2016
Sheet No 2
Utilities’ website. Payment through the “My Utilities Account” may be made by credit card
or by bank draft.
6. By enrolling at a financial institution or service company that can provide electronic
payments to CPAU on behalf of the Customer.
7. By Property Managers completing a “Revert to Owner (RTO) Agreement” in order to
maintain utility service to units during the interim period between tenants.
C. BUDGET BILLING PAYMENT PROGRAM
The Budget Billing Payment Program establishes equalized monthly payments and is available to all
Residential Customers who qualify as set forth below:
1. Customers may join the Budget Billing Payment Program at any time providing the
Customer Account balance is zero and the Customer has not been previously removed from
the Budget Billing Program for non-payment.
2. A Customer electing to utilize the program shall agree to make monthly payments based on
CPAU’s forward estimate of the Customers’ Charges for the subsequent twelve-month
period.
3. CPAU does not guarantee that the total actual Charges will not exceed, or be less than, its
original estimate. Customers should review their Account on an ongoing basis and request
changes to the budget billing amount in response to changes in their household usage. CPAU
may require that Customers pay a revised monthly amount as a condition to continuing
participation in the plan, if CPAU determines that substantial changes in Customer usage
patterns or consumption has occurred.
4. CPAU will perform an annual true-up on Customer Budget Billing Accounts every twelve
months. This will result in either a Customer credit for CPAU over-collection or an
outstanding balance due from the Customer for under-collection by CPAU during the prior
twelve months.
D. DISCONTINUANCE OF BUDGET BILLING
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective 6-27-2016
Sheet No 3
The Customer’s Budget Billing Payment Program shall remain in effect, subject to review of the
monthly payment amount, and shall terminate when:
1. The Customer notifies CPAU to terminate participation in the Budget Billing Program;
2. CPAU notifies the Customer of the termination of its Budget Billing Payment Program:
3. The Customer no longer takes Service at the Premises; or
4. The Customer owes an amount of two or more monthly payments. However, if the Customer
eliminates the delinquency, removal from the program will not occur.
Upon termination of either Utility Service or participation in the Budget Billing Payment Program,
any amount owed by the Customer for actual Charges shall immediately become due and payable or
any amount due to the Customer shall be refunded or credited.
E. INSUFFICIENT FUNDS FOR PAYMENT
1. A Service Charge will be made and collected by the City of Palo Alto for each check
returned by a bank to CPAU for the reason of insufficient funds in accordance with Rate
Schedule C-1.
2. Unsuccessful Bank Drafts due to insufficient funds will be subject to late payment fees in
accordance with Rate Schedule C-1.
F. PRORATION OF BILLS
1. Bills for Utility Services will be prepared for each Billing Period in accordance with the
applicable Rate Schedules or CPAU contract applicable to the Premises served.
2. Proration is intended to produce a uniform average unit cost for the commodity regardless of
the number of days in the Service period. Services will be prorated if the number of actual
Service days differs from the number of days in the applicable Billing Period. Electric
Demand (kW) and Electric Power Factor Charges will not be prorated. Proration will not
occur for those Rate Schedules that contain Meter fees, connection fees, deposits, and other
miscellaneous fees.
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective 6-27-2016
Sheet No 4
3. If Rate Schedules change during the Billing Period, Charges will be prorated on the basis of
the number of days covered by the previous Rate Schedule and the number of days covered
by the new Rate Schedule.
G. DELINQUENT BILLS AND LATE PAYMENT CHARGES
1. Utilities Charges incurred in the applicable Billing Period are due and payable by the “Due
Date” indicated on the front of the bill statement. Bills unpaid by the due date are delinquent
and a late payment Charge will be added to the outstanding balance as specified in Rate
Schedule C-1.
2. Residential and commercial Accounts having unpaid balances older than 180 days shall be
subject to collection action by the City. Collection action may result in notifications to credit
reporting agencies.
3. Late payment Charges may be suspended by CPAU if the Customer is withholding full or
partial payment pending final resolution of disputed bill. The late payment Charge may be
waived by CPAU based upon the ultimate resolution of a disputed Charge.
4. Full or partial payments towards outstanding balances will be applied to the oldest
outstanding Charges. Failure to pay outstanding balances will result in late fees and
termination of Service for non-payment.
5. In the event that a Customer donating to the ProjectPLEDGE Program has a delinquent bill,
the late Charge percentage will not be applied to the amount of the Customer’s pledge.
However, the Customer’s participation in ProjectPLEDGE will be discontinued after three
consecutive Billing Periods in which the Customer has not included their pledge amount in
the bill.
6. Customers whose Utility bills include payments of principal and/or interest on loans from
CPAU which are secured by deeds of trust on real property shall be charged a late payment
Charge when any current Utility bill includes an unpaid installment on such loan from a prior
bill. Nothing in this Rule and Regulation shall be construed to alter in any way the duty of the
Customer to pay any installment on a loan from CPAU when due, or to alter the rights of
CPAU to enforce the payment of such installments.
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective 6-27-2016
Sheet No 5
H. DISPUTED BILLS
If bill accuracy is questioned or disputed by the Customer, Customers shall request an explanation
from CPAU within the current Billing Period or as soon as reasonably possible. After reviewing the
disputed bill, CPAU will:
1. Issue a corrected bill to the Customer or reflect the correction on the bill in a subsequent
Billing Period.
2. Determine if an amortization period (“payment arrangement”) for the Charge-in-question
shall be provided by CPAU. If a payment arrangement is offered by CPAU and agreed to by
the Customer, Utility Services will not be discontinued for nonpayment while the Customer
complies with the payment arrangement for the “past due” balance , and subsequent Utilities
bills are paid on time during the payment arrangement period.
3. Advise the Customer that the bill is correct as presented. The Customer may choose, at the
Customer’s option, to have the Meter removed for testing under the Provisions of Rule 15
“Metering” and payment of the applicable fee found in Rate Schedule C-1 “Exchange Meter
for Accuracy Test”.
I. METERED SERVICE BILLING ERRORS AND ADJUSTMENTS
Where a Customer has been undercharged or overcharged for metered Service, the date and cause of
which can be reliably established where a customer has been undercharged or overcharged, the
retroactive billing adjustment (back bill or refund) shall not exceed three years.
1. When, as a result of either a CPAU or a Customer-initiated accuracy test, an Electric or Gas
Meter is found to register more than two percent (2%) fast or a Water Meter is found to
register more than one and a half percent (1.5%) fast, CPAU will refund the Customer the
overcharge based upon the corrected Meter readings for the period the Meter was in use, or
three years, whichever is less. Any applicable late payment will be waived.
2. When, as a result of a test, a Customer’s Electric or Gas Meter is found not to register or to
register more than two percent (2%) slow, or a Water Meter is found not to register or to
register more than one and half percent (1.5%) slow, CPAU may bill the Customer for the
undercharge base on an average bill. The bill will be computed based on an estimate of the
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective 6-27-2016
Sheet No 6
Customer’s consumption during a prior month in the same season or on the consumption in
the same period of the prior three years.
3. When, a billing or consumption problem has been investigated and verified, Utilities will
attempt to notify the Customer within 30 working days or a reasonable amount of time
depending on the complexity of the error.
J. UNMETERED SERVICE BILLING ERRORS AND ADJUSTMENTS
Where a Customer has been undercharged or overcharged for unmetered Service, the date and cause
of which can be reliably established where a customer has been undercharged or overcharged, the
retroactive billing adjustment (back bill or refund) shall not exceed three years.
K. THEFT OF SERVICE
Where there is evidence that meter tampering or theft of Utility Service has occurred, CPAU will
retroactively bill, and collect any underpayment or nonpayment of Charges as well as any labor or
material costs related to investigating the theft and making any required corrections. The applicable
period to assess Charges shall commence from the date it can be reasonably established the theft
began to the date in which the underpayment was discovered and initially established. The labor and
material costs related to investigating the theft will be calculated in accordance with Utility Rate
Schedule C-1 and/or any other applicable Utility Rate schedules. All underpayments or non-
payments shall become immediately due and payable. Customers committing theft of Utility Service
may also be subject to legal action pursuant to Rule 1, California Penal Code sections 487,496, 498,
591, 592, 593 and California Civil Code sections 1882 through 1882.6.
Customers billed for theft of service can dispute the charges by following the process described in
Rule and Regulation 11.H. If that process does not resolve the matter, customers billed for theft of
service may, within thirty (30) calendar days, request (by telephone, in writing, or in person) an
administrative hearing. If a hearing is requested, the city manager or his designee shall schedule a
date and time for said hearing as soon as possible after the request is filed, but no later than ten (10)
business days after the filing of such request for hearing.
At the hearing, the customer billed for theft of service may offer evidence in person or in the form of
a written statement, setting forth the reasons why the customer believes the determination of theft is
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective 6-27-2016
Sheet No 7
incorrect. Utilities personnel shall also be allowed to offer whatever evidence they may have as to
why they have established the customer engaged in utilities theft. The city manager or his designee
shall make a determination as to whether the customer is liable for the charges for theft of service.
L. WATER OR GAS LEAK CREDITS
It is the Customer’s responsibility to maintain their lines and equipment in a reasonable condition
such that leaks do not occur. CPAU shall not make billing adjustments for Water, Gas or Wastewater
Charges resulting from leakage in a line on the Customer Premises beyond the CPAU Meter, unless
CPAU determines that City staff were solely responsible for such leakage.
M. REFUSE BILLING ERRORS, DISPUTES AND ADJUSTMENTS
1. Adjustments to the Refuse bill shall be requested to the City’s Collector. Customers with
adjustments unresolved by the City’s Collector, may dispute their claim with the City’s
Public Works Department, Refuse. Billing adjustments will be resolved by following the
City’s Rules and Regulations, Chapter 5.20 of the Palo Alto Municipal Code and specific
regulations promulgated by the City Manager pursuant to the authority established in Chapter
5.20.
2. When an error in billing has occurred, the date and cause of which can be reliably established
where a Customer has been undercharged or overcharged, the retroactive billing adjustment
shall not exceed three years.
(END)
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 11-22-1999
Supercedes Sheet No. 1 dated 9-1-99 Sheet No. 1
A. PREPARATION AND PRORATION OF BILLS:
1. Bills for utility services will be prepared on a monthly basis in accordance with the rate
schedule or CPAU contract applicable to the premises served, as determined by CPAU.
2. The monthly service charge for metered water (and related wastewater), gas, and/or electric
service, as well as flat-rate charges for refuse, storm drain, wastewater, and other non-
metered services will be prorated if the number of actual service days is less than 25 or
greater than 35. Proration will be based on the number of days in the service period to the
number of days in an average month namely, 30.0.
3. Proration for all water, gas, and electric rate schedules that contain rate steps (consumption
blocks) will occur when the actual days of service differ from the standard 30-day billing
period. Proration is intended to produce a uniform average unit cost for the commodity
regardless of the number of days in the service period. Electric demand (kW) and electric
power factor rates will not be prorated.
4. In the event that water, gas (therm factor), electric, refuse, wastewater and/or storm drain
rates change during the service period, charges will be prorated on the basis of the number of
days covered by the previous rate schedule to the number of days covered by the new rate
schedule. Mid-period proration will not occur on rate schedules that contain connection fees,
deposits, and other miscellaneous fees.
B. BILLING UNITS:
1. All metered billing units used for billing purposes shall be determined to the nearest whole
unit. Such units may include, kW, kWh, kVa, kVar, hp, therms, and/or ccf.
C. PAYMENT OF BILLS:
ATTACHMENT B
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 11-22-1999
Supercedes Sheet No. 2 dated 9-1-99 Sheet No. 2
CPAU issues bills to its customers on a monthly basis. Bills shall be deemed received upon personal
delivery to Customer or three days following the deposit of the bill in the United States Mail to the
Customer’s last known address. Bills for CPAU services are due and payable 20 days following
issuance of the bill statement. Bills unpaid after the 20-day period are considered delinquent. If a
Customer’s payment is not received by CPAU before the next bill statement is issued, the
outstanding balance will be assessed a late payment charge in accordance with this rule. For the
convenience of CPAU Customers’ there are a number of ways to pay CPAU bills:
1. By enclosing the bill stub and check and mailing to: CPAU, P.O. Box 10097, Palo Alto, CA
94303-0897.
2. By paying in person at the Civic Center, Revenue Collections, 1st Floor, 250 Hamilton
Avenue, Palo Alto between the hours of 8:00 a.m. and 4:30 p.m. Visa and Master card
payments can be processed at Revenue Collections.
3. By dropping the payment in the Night Depository Box either in the front of the Civic Center
Plaza or at the drive-up Night Depository Box in the Civic Center Garage, A level.
4. By banking at a financial institution or subscribing to a service company that provides
automatic payments by telephone transfer between the Customer and the bank. This involves
the Customer notifying (by touch-tone telephone) the bank or service company each month
of the utilities bill amount, the amount is deducted from their bank account, and the bank
issues a check to CPAU.
D. LATE PAYMENT CHARGES:
1. Any unpaid balance from a prior billing period is delinquent and assessed a late payment
charge. Utilities charges incurred in the current billing period are due and payable by the
“Due Date” indicated on the front of the bill statement. Bills unpaid by the due date are
considered delinquent and a late payment charge is added to the outstanding balance.
2. Based on the particular merits of a given situation, late payment charges may be waived by
CPAU. Examples of situations where a waiver is granted are generally those under which
the Customer is faced with circumstances beyond his or her control. Two examples are:
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 11-22-1999
Supercedes Sheet No. 3 dated 9-1-99 Sheet No. 3
(A) The posting of payments received by CPAU is delayed or in error.
(B) The Customer is withholding payment or partial payment pending resolution of an
inquiry.
3. In the event the Customer makes a payment of less than the total amount of bill rendered,
which amount includes any previous balance owing, CPAU shall apply said payment first to
the previous billing charges and the remainder, if any, to the current billing charges unless
otherwise agreed to by CPAU.
4. In the event that a Customer participating in the ProjectPLEDGE Program has a delinquent
bill, late charges will not be applied. However, the Customer’s participation in
ProjectPLEDGE will be discontinued after three consecutive months in which the Customer
has not included their pledge amount in the bill.
5. The late payment charge will be computed as one percent on the balance forward.
6. Subparagraphs D (1) and D (2) to the contrary notwithstanding, Customers whose CPAU
bills include payments of principal and/or interest on loans from CPAU which are secured by
deeds of trust on real property shall be charged a late payment charge when any current
CPAU bill includes an unpaid installment on such loan from a prior bill, provided that twenty
(20) days have elapsed since the day of the last billing. For closing bills, the elapsed time
will be thirty (30) days. The late charge on such loan payment shall be six percent (6%) of
the installment due or five dollars ($5), whichever is greater. No charge will be imposed
more than once for a late payment for the same installment; provided, however, that the
imposition of the late charge on any late payment will not eliminate or supersede late charges
imposed on prior late payments. No late charge will be imposed on any installment which is
paid or tendered in full on or before its due date, or within the ten (10) days after notice is
given that the late charge will be imposed even though an earlier installment or installments,
or any late charges thereon, may have been paid in full when due. For purposes of
determining whether late charges may be imposed, any payment tendered by the Customer
shall be applied by CPAU to the most recent installment due. Nothing in this Rule and
Regulation shall be construed to alter in any way the duty of the Customer to pay any
installment on a loan from CPAU when due or to alter the rights of CPAU to enforce the
payment of such installments. Nothing in this subparagraph shall alter the payment or
collection of late charges assessed in accordance with subparagraphs (1) and (2) of this Rule
and Regulation for CPAU bills or portions thereof which do not include payments on loans
secured by real property.
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 11-22-1999
Supercedes Sheet No. 4 dated 9-1-99 Sheet No. 4
7. In the event a Customer’s payment of principal and interest is past due on an unsecured loan
from CPAU, the applicable late payment charge may be established in the contract with the
customer.
E. RETURNED CHECK CHARGE:
1. A service charge will be made and collected by the City of Palo Alto for each check
returned by a bank to CPAU for the reason of insufficient funds in accordance with Rate
Schedule C-1.
F. DISPUTED BILLS:
1. CORRECTNESS OF BILL
If the correctness of a bill is questioned or disputed by the Customer, an explanation should
be requested from a Utilities Customer Service Representative within five (5) days of
receiving the utility bill. If the bill is determined to be incorrect, a corrected bill will be
issued to the Customer.
2. BILL REVIEW PROCEDURE
(A) A Customer who has initiated a complaint or requested an investigation within five
(5) days of receiving the utility bill shall be given an opportunity to review the
complaint with the Supervisor, Customer Service Center. The review shall include
consideration of whether the Customer should be permitted to amortize the unpaid
balance of their account over a reasonable period of time.
(B) After reviewing the disputed bill, the Supervisor, Customer Service Center will:
(1) Authorize any necessary adjustments; or
(2) Advise the Customer that the bill is correct as presented; and
(3) Determine if an amortization period is warranted.
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 11-22-1999
Supercedes Sheet No. 5 dated 9-1-99 Sheet No. 5
(C) If an amortization period is warranted and agreed to by the Customer, service will not
be discontinued for nonpayment provided the Customer complies with the
amortization agreement, and provided the current bill is paid within 20 days of the
date issued.
(D) If the Customer fails to comply with the amortization agreement, service shall be
subject to discontinuance for nonpayment of bills as provided in Rule 14.
(E) Failure of the Customer to notify CPAU of a billing error or to request an explanation
of charges within 20 days of the date of the bill will constitute acceptance by the
Customer of the bill as rendered.
3. PAYMENT OF BILLS IN DISPUTE
If a Customer disputes a specific utility charge on a utilities bill covering multiple utilities,
the bill amount for utility services which are not in dispute shall be due and payable by the
date due on the bill statement. The Customer is not obligated to pay the utility charge in
dispute while CPAU is investigating the disputed charges. Upon completion of the
investigation, CPAU will notify the Customer if and when a payment is required.
G. BILLING ADJUSTMENTS:
Under certain circumstances, CPAU will adjust a Customer’s bill to correct for billing error or for
reasons of equity and fairness. Such adjustments are generally of a one-time nature. Billing error is
the incorrect billing of an account due to an error by CPAU or the Customer, which results in
incorrect charges to the Customer. Some billing errors also arise if the Customer provides incorrect
information to CPAU.
Billing adjustments applied to Customer charges for reasons of equity and fairness include water or
gas leak credits, smoothing, and in cases where excessive consumption of water, gas, and/or
electricity occurred and where Customers rented debris boxes as a result of the Customer’s
reasonable efforts to mitigate or remedy property damage or loss caused by an event of force
majeure.
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 11-22-1999
Supercedes Sheet No. 6 dated 9-1-99 Sheet No. 6
Billing errors include, but are not limited to, incorrect meter reads or meter read estimates, clerical
errors, wrong therm factors, wrong meter multiplier, incorrect voltage discount, meter installation,
crossed meters, undercharges due to meter tampering, an inapplicable rate, an oversight in the
process of entering the appropriate meter information into the computer system for billing, or field
errors such as installing the meter or regulator incorrectly.
1. SMOOTHING ADJUSTMENT
(A) A smoothing adjustment averages the usage of a customer over two billing periods.
The Supervisor, Customer Service Center or a designated representative shall
determine if a smoothing adjustment is indicated.
(B) A smoothing adjustment may be appropriate if consumption between two billing
cycles changes to an extraordinary high level and is caused by the following.
(1) An estimated meter reading by CPAU; or
(2) A longer or irregular billing cycle.
2. METER ERRORS AND OTHER BILLING ADJUSTMENTS
(A) When, as a result of a test, a meter is found to be more than two percent (2%) fast,
CPAU will refund the Customer the overcharge based upon the corrected meter
readings for the period the meter was in use.
(B) When, as a result of a test, a meter in residential use is found not to register, or to
register more than ten percent (10%) slow, CPAU may bill the Customer for the
undercharge based on an average bill. The bill will be computed upon an estimate of
consumption based upon the Customer’s prior use.
(C) When, as a result of a test, a meter in other than residential use is found not to
register, or to register more than two percent (2%) slow, CPAU may bill the
Customer for the undercharge base on an average bill. The bill will be computed
upon an estimate of consumption based upon the Customer’s prior use during the
same season of the year.
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 11-22-1999
Supercedes Sheet No. 7 dated 9-1-99 Sheet No. 7
3. APPLICABLE ADJUSTMENT PERIOD FOR METER ERRORS, RETROACTIVE
BILLING, AND REFUNDS
(A) When it is found that a meter is recording in error or an error in billing has occurred,
the date and cause of which can be reliably established, the retroactive billing
adjustment will apply as follows:
(1) Where the Customer has been undercharged, the period to be backbilled shall
not exceed 6 months;
(2) Where the Customer has been overcharged the period to be refunded shall not
exceed 12 months;
(B) Where there is evidence that theft of energy or water has occurred, CPAU shall
retroactively bill and collect any underpayment or nonpayment of charges. The
applicable period to assess charges shall commence from the date it can be
reasonably established the theft began to the date in which the underpayment was
discovered and initially established. The applicable period shall not exceed 4 years.
4. WATER OR GAS LEAK CREDITS:
Billing adjustments may be made for water or gas lost as a result of leakage in a line on the
Customer premises beyond the CPAU meter. Leaking faucets, toilets, hoses, or sprinklers do
not qualify for a billing credit unless a determination has been made by CPAU that the
Customer had no control of such device(s) leaking. Under no circumstances will a billing
credit be provided a Customer when the facts indicate that a Customer had knowledge of a
water or gas leak, but failed to take corrective measures in a timely manner. It is the
Customer’s responsibility to maintain their lines and equipment in a reasonable condition
such that leaks do not occur.
(A) Generally, a leakage credit will be granted for a one month billing cycle. However,
depending on the circumstances, a two-month billing cycle may be granted by the
Supervisor, Customer Service Center. Such circumstances include, but are not
limited to, a leak occurring while a Customer is out of town for an extended period of
time. Leak credits will not be provided beyond a two-month billing cycle.
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 11-22-1999
Supercedes Sheet No. 8 dated 9-1-99 Sheet No. 8
(B) All Customer classes are eligible for the leak credit. To qualify for the water leak
credit, evidence of having repaired the leak is required. Such evidence may consist
of a plumber’s repair bill, materials receipt, or field verification by CPAU.
Customers who are negligent or slow to react in repairing a leak do not qualify for a
leak credit.
(C) To arrive at the corrected bill amount, which reflects the leak credit, CPAU will
estimate what would have been the normal consumption and calculate a normal bill
based on that consumption. Then, actual consumption in excess of the normal figure
will be billed at CPAU’s current wholesale commodity cost plus ten percent. The
sum of these two calculations represents a revised billing amount. The leak credit is
the difference between the revised billing amount and the original bill.
5. BILLING ADJUSTMENTS IN CONNECTION WITH FORCE MAJEURE EVENTS
(A) For purposes of this Rule and Regulation, the term “force majeure” means the
occurrence of an event that is beyond the reasonable control of the utility Customer
and, which by reasonable efforts, the Customer could not prevent. Such events
include, but are not limited to, an Act of God, an irresistible, superhuman cause, fire,
flood, earthquake, or any other similar cause.
(B) Water, Gas, and/or Electric
(1) A water, gas, and/or electric billing adjustment in connection with a force
majeure event shall be limited to charges for water, gas, and/or electricity
consumption in excess of the historical average for the customer. The billing
adjustment will be applied as a credit on the customer’s bill. The credit is for
the amount of excess usage and represents the difference between the amount
charged for the applicable period and an amount calculated based on the
customer’s average consumption for a similar period. This credit shall
include a refund of any applicable utilities users tax that was based on the
amount of excess usage.
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-2005
Supercedes Sheet No. 9 dated 11-22-1999 Sheet No. 9
(2) The Director of Utilities shall determine the historical average consumption.
Depending on the availability of data and other reasonable considerations, the
basis for calculating such averages may be the same month(s) in a previous
year, a recent 12 month average, a 6 month seasonal average for winter or
summer, or other appropriate period(s) as determined by the Director of
Utilities.
(C) Debris Boxes
(1) A billing adjustment or refund in connection with debris boxes serviced by
the City’s contracted Collector shall be limited to City’s Collector charges
incurred or to be incurred out-of-pocket by the resident, owner, or business
for removal of flood-damaged materials only. Refunds will not be applied to
charges paid through insurance policies. The City’s Collector will keep a
record of those residences and businesses that request debris boxes during the
applicable refund period.
(D) To qualify for an adjustment under this section, the Customer may be required to
provide documentation to verify damage to the residence or building, or contents
thereof. In circumstances in which the City has previously verified such damage such
as by a field visit or has made a determination from other information resources,
documentation from the Customer may not be required. However, to qualify for a
refund for debris box rentals, a signed statement by the Customer is required that
attests that the debris box was used for flood-damaged materials only and that the
Customer has not and will not be reimbursed by homeowners insurance or any other
agency.
6. REFUSE BILLING DISPUTES AND ADJUSTMENTS
(A) Adjustments to the refuse bill shall be requested to the City’s collector. Customers
with adjustments unresolved by the City’s collector, may dispute their claim with the
City’s Public Works Department. Billing adjustments will be resolved by following
the City’s Rules and Regulations and specific regulations established in Chapter 5.20
of the Palo Alto Municipal Code.
(B) When an error in billing has occurred, the date and cause of which can be reliably
established, the retroactive billing adjustment will apply as follows:
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 7-1-2005
Supercedes Sheet No. 10 dated 11-22-99 Sheet No. 10
(1) Where the Customer has been undercharged, the period to be back billed
shall not exceed 6 months;
(2) Where the Customer has been overcharged, the period to be refunded shall
not exceed 12 months;
(C) Customers requesting refuse collection services to be suspended or requesting for a
service credit to be issued shall obtain from the City a non-occupancy status. Refuse
bill shall be adjusted accordingly.
H. BUDGET BILLING PAYMENT PLAN:
A Budget Billing Payment Plan establishes equalized monthly payments and is available to all residential
Customers who qualify as set forth below.
1. Customers may join the Budget Billing Payment Plan at any time prior to July 1, the
beginning of the annual budget payment cycle, providing however, the Customer account
balance is zero, and the Customer has not been removed from the budget plan for non-
payment within the previous six months.
2. A Customer electing to utilize the plan shall agree to make monthly payments based on
CPAU’s estimate of the Customer charges for the twelve-month period July 1 through the
next June 30, reflecting anticipated rate changes.
3. CPAU does not guarantee that the total actual charges will not exceed or be less than its
estimate. CPAU will review the account on a periodic basis and may revise its estimate in
response to changing rates or variations in the amount of service used. CPAU may require
that Customers pay a revised monthly amount as a condition to continuing participation in
the plan.
4. DISCONTINUANCE OF BUDGET BILLING:
The Budget Billing Payment Plan shall remain in effect from year to year, subject to review
of the monthly payment amount, and shall terminate when:
(A) The customer notifies CPAU to terminate participation in the plan;
(B) CPAU notifies the customer of the termination of its budget payment plan:
(C) The Customer no longer takes service at the premises; or
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 11-22-1999
Supercedes Sheet No. 11 dated 9-1-99 Sheet No. 11
(D) The Customer owes an amount of two or more monthly payments. However, if the
customer eliminates the delinquency, removal from the plan will not occur.
(E) The Customer participates in Direct Access and buys from another Energy Service
Provider.
Upon termination of either CPAU service or participation in the budget payment plan, any
amount owned by the Customer for actual charges shall immediately become due and any
amount due the Customer shall be refunded as soon as possible.
I. RESALE PROHIBITED:
1. Customer shall use services only for the purposes specified in the service agreement
and applicable rate schedule(s). CPAU service shall not be resold except as provided
in this rule.
2. Premises that are receiving service in conflict with this Rule as of the effective date
of this Rule may continue to receive service under such conditions if so authorized in
writing by CPAU.
3. Sub-metering shall be considered sufficient evidence that utilities are being resold,
with the exception of provision I-4 below.
4. Property owners may bill the cost of providing utilities to individual tenants
separately from rent only with written consent of the Assistant Director of Utilities,
Administrative Services. Charges for utilities may be allocated based upon metering,
square footage, or another methodology determined to be reasonable by CPAU.
Under no circumstances can the total costs of CPAU services allocated to tenants
exceed the costs of CPAU services billed to the property owner by CPAU. A
property owner using a billing procedure coming within the scope of this Rule must
disclose all information used to determine a tenant’s utilities bill to the tenant or
CPAU, or both, upon request. Property owners are responsible for resolving utility
bill disputes with their tenants. Tenants may request and receive from CPAU a copy
of previous bills for a period not to exceed 12 months, charged to the property owner
who sub-meters.
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 11-22-1999
Supercedes Sheet No. 12 dated 9-1-99 Sheet No. 12
J. ACCOUNTING, BILLING, AND PAYMENT FOR GAS SERVICE PROVIDERS
1. INFORMATION CHARGES
CPAU shall charge, and the Gas Service Provider shall pay, for any non-confidential or non-
proprietary information requested by the Gas Service Provider pertaining to the Eligible
Customer which is in addition to information normally provided in accordance with CPAU’s
procedures.
2. BILLING
All billings between the Gas Service Provider and CPAU for services under a Gas Service
Provider Agreement shall be performed by CPAU or the Pool Manager on a calendar month
basis.
(A) All billing statements shall reflect the period from 7:00 a.m. PST on the first Day of
each calendar month until 7:00 a.m. PST hours on the first Day of the following
calendar month; provided, however, the billing statements for any partial first month
and partial last month of service shall be prorated by the number of Gas Days of
service during such month.
(B) Bills sent to the Gas Service Provider shall be sent to the appropriate billing address
specified in the Gas Service Provider Agreement.
(C) Payments for amounts billed to the Gas Service Provider shall be due on the last Day
of the month in which the billing statement is issued or the fifteenth (15th) Day after
receipt of the billing statement, whichever is later. Payments for amounts owed by
CPAU to the Gas Service Provider shall be applied as a credit to the Gas Service
Provider’s bill within the time in which the Gas Service Provider is required to pay
CPAU’s bills. If, as a result of the credit, the Gas Service Provider is owed money,
CPAU shall make payment in accordance with this Rule. Payment shall be made at
the offices designated in The Gas Service Provider Agreement, or by electronic funds
transfer to accounts specified in The Gas Service Provider Agreement.
(D) Amounts not paid on or before the due date shall be payable with interest accrued at
the rate of one percent (1%) per month, or the maximum interest rate permitted by
Law, whichever is less, prorated by Days from the due date to the date of payment.
BILLING, ADJUSTMENTS, AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO UTILITIES
Issued by the City Council
Effective 11-22-1999
Supercedes Sheet No. 13 dated 9-1-99 Sheet No. 13
When payments are mailed to CPAU, the billing statements shall be deemed paid on
the dates of receipt by CPAU.
(E) If the Gas Service Provider disputes the accuracy of any portion of the billing
statement, then the Gas Service Provider shall pay the undisputed portion within the
time required herein. Upon a determination that any disputed amount should be paid
by the Gas Service Provider, the Gas Service Provider shall pay such amount, plus
accrued interest, at the rate established in this Rule.
(F) CPAU shall adjust a billing statement as deemed reasonably necessary by the
Utilities Director for any billing statement error that is established. All adjustments or
billing statement errors shall be resolved promptly as practicable, and, upon
resolution, shall be included in the billing statement for the next regular Billing
Period.
3. RECORDS
CPAU and the Gas Service Provider shall keep accounting records and books for two (2)
years in accordance with generally accepted accounting principles and practices in the
industry. CPAU and the Gas Service Provider shall have the right to examine those books
and the accounting records of the other during that two-year (2-year) period.
Any examination will be at the examining Party’s expense, must be conducted at a
reasonable time, and must be confined to the extent necessary to verify the accuracy of any
statement, charge, or computation or any demand made under or as a result of transporting
Customer-owned Gas.
{End}
EXCERPTED DRAFT MINUTES OF THE JULY 12, 2017
UTILITIES ADVISORY COMMISSION - SPECIAL MEETING
ITEM 3. DISCUSSION: Discussion Regarding Utilities Leak Adjustment Rules
Utilities General Manager Ed Shikada said this issue had been discussed in one of the
neighborhood e-mail groups and had led to some misconceptions. As a result he felt it was
important to bring this to the UAC.
Assistant Director of Customer Support Services Tom Auzenne gave an overview of water
metering and billing. He said customers occasionally experienced leaks on their water systems
and experienced a high bill. If the utility observed a leak or had it reported to them, staff would
contact the customer. Sometimes a customer or neighbor would contact the utility, and
described how staff helped diagnose whether there was a leak, and how difficult it can be to
find a leak in the house or irrigation systems. He explained that people often do not inspect or
test their irrigation systems for leaks. In the future, with advanced meters, customers may be
able to receive a notification when unusual flow was observed, but right now customers often
do not discover the leak until they receive their bill. It was not their fault, but neither was it the
water utility’s fault.
Chair Danaher noted there had only been twelve leaks in the past eight years.
Mark Harris, a Palo Alto resident of Crescent Park addressed the Commission. He said the utility
had previously had a policy to provide a bill credit when a customer experienced a water leak.
He recommended returning to the water leak adjustment policy that was in place prior to 2006.
He said a policy should include three elements: first, the number of adjustments for any
individual customer should be limited. Second, the burden of proof to demonstrate the
consequence of the leak and the fact that it had been fixed should be the customer’s
responsibility. Third, the customer should pay at least the wholesale price of the water. He said
the leak policy would not result in any Proposition 218 issues, and the current policy in fact
resulted in a windfall from customers who experience a leak. He said that he had previously
been an Assistant Director of the City of Palo Alto Utilities and had handled several water leak
credit requests when he was there. Later, as Director of Utilities for Mountain View he used the
City of Palo Alto policy as a model. He said the concerns in the staff report could be addressed
and offered his assistance if it was desired.
Jonathan Foster, a Palo Alto resident and former UAC member said this was an easy problem to
fix. The leaks were infrequent and would not result in a significant cost to other customers. He
ATTACHMENT B
recommended instituting a leak adjustment policy. He was comfortable paying an additional
minor amount on his water bill to help other residents deal with the problem.
Vice Chair Ballantine agreed that the cost impact among all customers would be negligible. He
said it would make sense in the future to address the design issues around water appliances so
that appliances and systems shut off when they are experiencing a leak.
Commissioner Schwartz agreed that the problem was small and that if customers fix the
problem, there should be a leak forgiveness policy. Customers who had experienced these leaks
would likely be excited to participate in advanced metering or leak detection pilots.
Councilmember Filseth asked whether it would make sense to go to a separated distribution
and wholesale water rate.
Auzenne said there was currently a fixed and variable component to the rate.
Councilmember Filseth said customers experiencing leaks should pay the wholesale water cost
but not necessarily the distribution component. Also, part of the marketing pitch for smart
meters should be leak detection.
Auzenne said the City’s pilot smart meter project had detected some leaks and those customers
were contacted in advance of their scheduled meter read date.
Commissioner Johnston noted there were a high number of check reads. He asked whether
there had been a significant change in customer calls about leaks after the City moved away
from the 2006 policy.
Auzenne said that there had not been a significant change in the number of customer calls after
the policy change. Auzenne also said the number of check reads was driven by automated
quality control algorithms in the billing system. He said the recent rise in check reads and water
leak complaints was the result of customers beginning to use their irrigation systems more
frequently since the California drought had officially ended.
Commissioner Schwartz said it sounded like the City was doing the right things from a Customer
Service standpoint.
Chair Danaher supported instituting a well-designed leak adjustment policy.
Commissioner Segal discussed staff remarks related to homeowner insurance and whether that
was applicable in the case of a water leak. There was a comment from the audience that
homeowner’s insurance typically would not cover the cost of water associated with the leak.
ACTION: No action.
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective x-xx-xxxx
Sheet No 1
A. BILLING UNITS
All metered billing units used for billing purposes shall be determined to the nearest whole unit.
Such units may include, kW, kWh, kVA, kVar, hp, Therms, and/or ccf.
B. PAYMENT OF BILLS
CPAU issues bills to its Customers on a regular interval. Bills shall be deemed received upon
physical or electronic delivery to Customer, or three calendar days following the deposit of the bill in
the United States Mail to the Customer’s billing address. Bills for CPAU Services are due and
payable 20 calendar days following issuance of the bill statement. Bills unpaid after the 20 day
period are considered delinquent (“past due”). If a Customer’s payment is not received by CPAU
after 25 days of bill issuance, the outstanding balance will be assessed a late payment Charge.
For the convenience of Customers there are a number of ways to pay CPAU bills:
1.By enclosing the bill stub and check and mailing to: CPAU, P.O. Box 10097, Palo Alto, CA
94303-0897.
2.By enrolling in the Utilities Bank Draft Program. Payments will be drafted from a
Customer’s designated checking or saving account and automatically applied to the
Customer’s Utility Account for each current Billing Period.
3.By paying in Person at the Civic Center, Revenue Collections, 1st Floor, 250 Hamilton
Avenue, Palo Alto between the hours of 8:00 a.m. and 4:30 p.m. The City offices are closed
on alternate Fridays. Customers should call 650-329-2317 to ensure the office is open.
Credit card payments are accepted at Revenue Collections. Customers should call to see
which credit cards are accepted. Customers can pay delinquent bills with a credit card by
phone by calling the Utility Customer Service Center during business hours.
4.By depositing the payment in the walk-up Night Depository Box in the front of the City Hall
building on the Civic Center Plaza, or at the drive-up Night Depository Box in the Civic
Center Garage, on “A” Level.
5.By paying online through the “My Utilities Account” application, accessible from the
ATTACHMENT C
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective x-xx-xxxx
Sheet No 2
Utilities’ website. Payment through the “My Utilities Account” may be made by credit card
or by bank draft.
6. By enrolling at a financial institution or service company that can provide electronic
payments to CPAU on behalf of the Customer.
7. By Property Managers completing a “Revert to Owner (RTO) Agreement” in order to
maintain utility service to units during the interim period between tenants.
C. BUDGET BILLING PAYMENT PROGRAM
The Budget Billing Payment Program establishes equalized monthly payments and is available to all
Residential Customers who qualify as set forth below:
1. Customers may join the Budget Billing Payment Program at any time providing the
Customer Account balance is zero and the Customer has not been previously removed from
the Budget Billing Program for non-payment.
2. A Customer electing to utilize the program shall agree to make monthly payments based on
CPAU’s forward estimate of the Customers’ Charges for the subsequent twelve-month
period.
3. CPAU does not guarantee that the total actual Charges will not exceed, or be less than, its
original estimate. Customers should review their Account on an ongoing basis and request
changes to the budget billing amount in response to changes in their household usage. CPAU
may require that Customers pay a revised monthly amount as a condition to continuing
participation in the plan, if CPAU determines that substantial changes in Customer usage
patterns or consumption has occurred.
4. CPAU will perform an annual true-up on Customer Budget Billing Accounts every twelve
months. This will result in either a Customer credit for CPAU over-collection or an
outstanding balance due from the Customer for under-collection by CPAU during the prior
twelve months.
D. DISCONTINUANCE OF BUDGET BILLING
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective x-xx-xxxx
Sheet No 3
The Customer’s Budget Billing Payment Program shall remain in effect, subject to review of the
monthly payment amount, and shall terminate when:
1. The Customer notifies CPAU to terminate participation in the Budget Billing Program;
2. CPAU notifies the Customer of the termination of its Budget Billing Payment Program:
3. The Customer no longer takes Service at the Premises; or
4. The Customer owes an amount of two or more monthly payments. However, if the Customer
eliminates the delinquency, removal from the program will not occur.
Upon termination of either Utility Service or participation in the Budget Billing Payment Program,
any amount owed by the Customer for actual Charges shall immediately become due and payable or
any amount due to the Customer shall be refunded or credited.
E. INSUFFICIENT FUNDS FOR PAYMENT
1. A Service Charge will be made and collected by the City of Palo Alto for each check
returned by a bank to CPAU for the reason of insufficient funds in accordance with Rate
Schedule C-1.
2. Unsuccessful Bank Drafts due to insufficient funds will be subject to late payment fees in
accordance with Rate Schedule C-1.
F. PRORATION OF BILLS
1. Bills for Utility Services will be prepared for each Billing Period in accordance with the
applicable Rate Schedules or CPAU contract applicable to the Premises served.
2. Proration is intended to produce a uniform average unit cost for the commodity regardless of
the number of days in the Service period. Services will be prorated if the number of actual
Service days differs from the number of days in the applicable Billing Period. Electric
Demand (kW) and Electric Power Factor Charges will not be prorated. Proration will not
occur for those Rate Schedules that contain Meter fees, connection fees, deposits, and other
miscellaneous fees.
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective x-xx-xxxx
Sheet No 4
3. If Rate Schedules change during the Billing Period, Charges will be prorated on the basis of
the number of days covered by the previous Rate Schedule and the number of days covered
by the new Rate Schedule.
G. DELINQUENT BILLS AND LATE PAYMENT CHARGES
1. Utilities Charges incurred in the applicable Billing Period are due and payable by the “Due
Date” indicated on the front of the bill statement. Bills unpaid by the due date are delinquent
and a late payment Charge will be added to the outstanding balance as specified in Rate
Schedule C-1.
2. Residential and commercial Accounts having unpaid balances older than 180 days shall be
subject to collection action by the City. Collection action may result in notifications to credit
reporting agencies.
3. Late payment Charges may be suspended by CPAU if the Customer is withholding full or
partial payment pending final resolution of disputed bill. The late payment Charge may be
waived by CPAU based upon the ultimate resolution of a disputed Charge.
4. Full or partial payments towards outstanding balances will be applied to the oldest
outstanding Charges. Failure to pay outstanding balances will result in late fees and
termination of Service for non-payment.
5. In the event that a Customer donating to the ProjectPLEDGE Program has a delinquent bill,
the late Charge percentage will not be applied to the amount of the Customer’s pledge.
However, the Customer’s participation in ProjectPLEDGE will be discontinued after three
consecutive Billing Periods in which the Customer has not included their pledge amount in
the bill.
6. Customers whose Utility bills include payments of principal and/or interest on loans from
CPAU which are secured by deeds of trust on real property shall be charged a late payment
Charge when any current Utility bill includes an unpaid installment on such loan from a prior
bill. Nothing in this Rule and Regulation shall be construed to alter in any way the duty of the
Customer to pay any installment on a loan from CPAU when due, or to alter the rights of
CPAU to enforce the payment of such installments.
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective x-xx-xxxx
Sheet No 5
H. DISPUTED BILLS
If bill accuracy is questioned or disputed by the Customer, Customers shall request an explanation
from CPAU within the current Billing Period or as soon as reasonably possible. After reviewing the
disputed bill, CPAU will:
1. Issue a corrected bill to the Customer or reflect the correction on the bill in a subsequent
Billing Period.
2. Determine if an amortization period (“payment arrangement”) for the Charge-in-question
shall be provided by CPAU. If a payment arrangement is offered by CPAU and agreed to by
the Customer, Utility Services will not be discontinued for nonpayment while the Customer
complies with the payment arrangement for the “past due” balance , and subsequent Utilities
bills are paid on time during the payment arrangement period.
3. Advise the Customer that the bill is correct as presented. The Customer may choose, at the
Customer’s option, to have the Meter removed for testing under the Provisions of Rule 15
“Metering” and payment of the applicable fee found in Rate Schedule C-1 “Exchange Meter
for Accuracy Test”.
I. METERED SERVICE BILLING ERRORS AND ADJUSTMENTS
1. Where a Customer has been undercharged or overcharged for metered Service, the date and
cause of which can be reliably established by CPAU, the retroactive billing adjustment
(back bill or refund) shall not exceed three years. The maximum bill adjustment for
undercharges shall be $500 per Account, per incident.
2. When, as a result of either a CPAU or a Customer-initiated accuracy test, an Electric or Gas
Meter is found to register more than two percent (2%) fast or a Water Meter is found to
register more than one and a half percent (1.5%) fast, CPAU will refund the Customer the
overcharge based upon the corrected Meter readings for the period the Meter was in use, or
three years, whichever is less. Any applicable late payment will be waived.
3. When, as a result of an accuracy test, a Customer’s Electric or Gas Meter is found not to
register or to register more than two percent (2%) slow, or a Water Meter is found not to
register or to register more than one and half percent (1.5%) slow, CPAU may bill the
Customer for the undercharge base on an average bill. The bill will be computed based on
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective x-xx-xxxx
Sheet No 6
an estimate of the Customer’s consumption during a prior month in the same season or on
the consumption in the same period of the prior three years.
4. When a billing or consumption problem has been investigated and verified, CPAU will
attempt to notify the Customer within 30 working days , or a reasonable amount of time,
depending on the complexity of the error.
J. UNMETERED SERVICE BILLING ERRORS AND ADJUSTMENTS
Where a Customer has been undercharged or overcharged for unmetered Service, the date and cause
of which can be reliably established where a customer has been undercharged or overcharged, the
retroactive billing adjustment (back bill or refund) shall not exceed three years.
K. THEFT OF SERVICE
Where there is evidence that meter tampering or theft of Utility Service has occurred, CPAU will
retroactively bill, and collect any underpayment or nonpayment of Charges as well as any labor or
material costs related to investigating the theft and making any required corrections. The applicable
period to assess Charges shall commence from the date it can be reasonably established the theft
began to the date in which the underpayment was discovered and initially established. The labor and
material costs related to investigating the theft will be calculated in accordance with Utility Rate
Schedule C-1 and/or any other applicable Utility Rate schedules. All underpayments or non-
payments shall become immediately due and payable. Customers committing theft of Utility Service
may also be subject to legal action pursuant to Rule 1, California Penal Code sections 487,496, 498,
591, 592, 593 and California Civil Code sections 1882 through 1882.6.
Customers billed for theft of service can dispute the charges by following the process described in
Rule and Regulation 11.H. If that process does not resolve the matter, customers billed for theft of
service may, within thirty (30) calendar days, request (by telephone, in writing, or in person) an
administrative hearing. If a hearing is requested, the city manager or his designee shall schedule a
date and time for said hearing as soon as possible after the request is filed, but no later than ten (10)
business days after the filing of such request for hearing.
At the hearing, the customer billed for theft of service may offer evidence in person or in the form of
a written statement, setting forth the reasons why the customer believes the determination of theft is
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective x-xx-xxxx
Sheet No 7
incorrect. Utilities personnel shall also be allowed to offer whatever evidence they may have as to
why they have established the customer engaged in utilities theft. The city manager or his designee
shall make a determination as to whether the customer is liable for the charges for theft of service.
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective x-xx-xxxx
Sheet No 8
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
RULE AND REGULATION 11
L. WATER LEAK ADJUSTMENTS
It is the Customer’s responsibility to maintain their lines and equipment in a reasonable condition
such that leaks do not occur. Unintentional Water loss caused by broken or damaged plumbing fixtures, pipes
or irrigation equipment can result in greater than normal bills for Water and Wastewater Services.
The General Manager of Utilities, or delegate, may approve Water billing adjustments for
Customer’s Water and Wastewater Accounts (when Wastewater charges are based on Water
consumption) under the following conditions:
1. Customers who have discovered and repaired a Water leak on their Premises may apply
for a Water and/or Wastewater bill adjustment, as applicable, by requesting and
downloading from the Utility website a Leak Adjustment Application form and
submitting it to the General Manager of Utilities within 60 days from the bill’s due date
for the period in which the Water leak occurred.
2. Leaking systems must be repaired before the Customer seeks a bill adjustment, to ensure
future bills are not impacted by the same leak. Shutting off the source of the leak is not
considered a repair. Undetermined or general high water consumption is not eligible for
adjustment.
3. Utilities Department staff must be permitted by the Customer to visually inspect the repair
and verify that repairs have been completed. If repairs were completed by a third party,
Customer receipts may be accepted in lieu of a visual inspection by Utilities Department
staff.
4. Water leaks may occur over multiple billing periods. Water and Wastewater bill
adjustments are time-restricted to two consecutive Utilities billing periods.
5. Customers are restricted to one Water and/or Wastewater leak-related bill adjustment in
each 36 month period.
6. The 36 month period begins on the billing date following the period covered by the Leak
Adjustment Application.
7. Calculation of leak volumes will be made using averages for the billing period(s) based on
the prior three years of the Customer’s historical consumption. Leaks will be defined as
the volume of water greater than 100% of normal consumption compared to the historical
consumption. Leaks will be calculated using the applicable meter readings based on the
Commodity Rate on the applicable Water Rate Schedule. Leak volumes and charges will
be first subtracted from the higher tiered Commodity Rates, then, if necessary, from lower
tiered Commodity Rates. The maximum Water leak bill adjustment will be $500 per
application.
CITY OF PALO ALTO
UTILITIES RULES AND REGULATIONS
Issued by the City Council
Effective x-xx-xxxx
Sheet No 9
BILLING, ADJUSTMENTS AND PAYMENT OF BILLS
8. Wastewater bill adjustments related to Water leaks will be made based upon the adjusted
Water volume, and are not included in the $500 Water leak billing adjustment limit.
9. Utilities User Tax (UUT) adjustments will be based upon the adjusted Water volume and
are not included in the $500 Water leak billing adjustment limit.
10. Decisions regarding leak-related Water and Wastewater billing adjustments, including
eligibility and leak volume calculations, will be determined by the General Manager of
Utilities, or designee, and are final.
M. REFUSE BILLING ERRORS, DISPUTES AND ADJUSTMENTS
1. Adjustments to the Refuse bill shall be requested to the City’s Collector. Customers with
adjustments unresolved by the City’s Collector, may dispute their claim with the City’s
Public Works Department, Refuse. Billing adjustments will be resolved by following the
City’s Rules and Regulations, Chapter 5.20 of the Palo Alto Municipal Code and specific
regulations promulgated by the City Manager pursuant to the authority established in Chapter
5.20.
2. When an error in billing has occurred, the date and cause of which can be reliably established
where a Customer has been undercharged or overcharged, the retroactive billing adjustment
shall not exceed three years.
(END)
NOT YET APPROVED
171021 jb 6054031
Resolution No.____
Resolution of the Council of the City of Palo Alto Amending Utilities
Rule and Regulation 11 (Billing, Adjustments and Payment of Bills)
R E C I T A L S
A. Pursuant to Chapter 12.20.010 of the Palo Alto Municipal Code, the Council of
the City of Palo Alto may by resolution adopt rules and regulations governing utility services,
fees and charges.
B. On July 12, 2017 the Utility Advisory Commission received public comments
regarding billing policies related to water leaks, and on November 1, 2017 the Utilities Advisory
Commission recommended that the Council of the City of Palo Alto adopt a resolution amending
Utilities Rule and Regulation 11 (Attachment D).
C. The amended Rule 11 includes a new procedure for requesting water leak
adjustments, deletes references to natural gas leaks as inapplicable in this context, and updates
the City’s billing adjustment policies for accounts impacted by incorrect meter or billing system
data.
The Council of the City of Palo Alto does hereby RESOLVE as follows:
SECTION 1. Pursuant to Section 12.20.010 of the Palo Alto Municipal Code, Utility Rule
and Regulation 11 (Billing, Adjustments and Payment of Bills) is hereby amended as attached and
incorporated. Utility Rule and Regulation 11, as amended, shall become effective Month XX, XXXX.
SECTION 2: The adoption of this resolution amending Utility Rules and Regulation 11
(Billing, Adjustments and Payment of Bills) is not a project requiring California Environmental
Quality Act (CEQA) review, under California Public Resources Code Section 21065 and CEQA
Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will
not cause a direct or indirect physical change in the environment.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
___________________________ ___________________________ City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
___________________________ ____________________________ Assistant City Attorney City Manager
___________________________ Director of Utilities
___________________________ Director of Administrative Services
ATTACHMENT D
Page 1 of 2
3
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: November 1, 2017
SUBJECT: Recommendation that the Utilities Advisory Commission Recommend that the
City Council Approve the 2018 Update of the Utilities Legislative Guidelines
______________________________________________________________________________
REQUEST
Staff requests that the Utilities Advisory Commission (UAC) recommend that the City Council
approve the 2018 update to the Utilities Legislative Policy Guidelines.
BACKGROUND
The utility industry is a high-profile and heavily regulated industry subject to continuous
legislative action at both the state and federal levels. Such legislation can influence, among
other things, commodity procurement practices, customer service, program design, rate design,
and activities and costs associated with climate protection. Representatives of the City
(appointed and elected officials and staff) participate in Federal and State legislative forums to
advocate on utilities-related issues. The City also participates in joint action efforts to support
goals and objectives shared by other publicly-owned utilities.
At the state level, hundreds of bills focused on the utility industry can be introduced each year.
The number of bills introduced, the pace at which bills change and new language is negotiated,
and the speed at which bills can be placed for a legislative vote requires staff and elected
officials to respond quickly if the City is to have any influence on the resulting legislation.
Often, a response to an amended bill is required in a matter of a day or two. These timing
constraints preclude a return to the UAC and Council for approval each time a response is
required.
Therefore, staff annually develops a document identifying guidelines to be applied when
evaluating and responding to legislation. While the guidelines are used by staff for evaluating
legislation, any advocacy positions taken in alignment with these guidelines will be subject to
the approval of the Assistant City Manager/Utilities General Manager or his designee. Although
it is impractical to return to the UAC for approval each time staff wishes to act in a timely,
sometimes, very quick manner, the issues under debate are known to the UAC and Council
through their participation in legislative committee meetings and updates from the City
Manager, the Assistant City Manager/Utilities General Manager, and City staff. Formal letters
responding to utilities-related legislation will be distributed to the UAC and Council.
DISCUSSION
The proposed 2018 Utilities Legislative Guidelines have been updated to reflect how staff can
interact best with any utilities-related issues that could affect the City. Attachment A shows the
proposed revised guidelines. The UAC will note that this document reflects guidelines· only,
without noting specific issues as has been done in years past. This is so for two reasons: (1) it is
impossible to accurately reflect in a static document every possible future issue that might
arise, and (2) if such an attempt were made, the absence of an item that appears as a legislative
issue could be construed as an unwillingness to act, while the inclusion of an item that does not
arise renders the document cluttered and confusing. In sum, this format provides staff limited
flexibility in potentially addressing any issue that could arise. As in prior years, the UAC will
determine the guidelines with which staff acts, and the Assistant City Manager/Utilities General
Manager continues to maintain oversight of staff's actions.
Attachment B provides a summary of key legislation from 2017. In the presentation, staff will
review legislative highlights from the current year and speak to probable items for next year.
Staff returns to the UAC annually with an update to the guidelines; Staff therefore proposes
that, if adopted, the 2018 guidelines remain in effect from the date of Council's adoption until
the next approved update.
RESOURCE IMPACT
There is no direct resource impact associated with adoption of the proposed legislative
guidelines. However, actions taken that support the efficient use of the City's assets and
resources will help control costs, implement the Council's policies and goals, and protect the
interests of utility customers.
ENVIRONMENTAL REVIEW
The UAC's consideration of the legislative guidelines does not meet the California
Environmental Quality Act's definition of a "project" under Public Resources Code Section
21065.
ATTACHMENTS
A. Proposed 2018 legislative Guidelines
B. Summary of Key 2017 Legislation
PREPARED BY:
REVIEWED BY:
DEPARTMENT HEAD:
HEATHER DAULER, Senior Resource Planner Me
BZsistant Director, Utilitie\1_
EDSHIKADA
Assistant City Manager/Utilities General Manager
Page 2of2
Utilities Legislative Policy Guidelines – 2018 update
ATTACHMENT A
Approved by City Council on December XX, 2017
Utilities’ Legislative Policy Guidelines: 2018 Update
City of Palo Alto Utilities Department (CPAU) staff will use the below guidelines as well as
the City’s guidelines to help determine any advocacy position or action on Utilities-related
issues. Formal advocacy requires the approval of the Assistant City Manager/Utilities
General Manager or his designee.
1. Seek to preserve local government flexibility, discretion, accountability, and oversight of
matters impacting utility programs, services, and rates. Oppose action that could reduce the
authority or ability of local government to determine how best to effectively operate local
programs, services, and activities.
2. Where possible, seek funding and program incentives.
3. Advocate for reasonable government action with minimal customer impact that allows for
flexibility and implementation feasibility.
4. Advocate for locally-designed conservation or efficiency programs. Support reasonable State
conservation or efficiency requirements that consider local populations, environment, and
resources.
5. Inform state and federal policymakers about CPAU’s current programs, services, goals, and
reporting requirements.
6. Oppose unnecessary, unreasonable, impractical, or costly rates or mandates.
7. Collaborate with and support the efforts of regional agencies and associations whose goals
align with ours.
8. Advocate for fair cost allocation and support the principle of beneficiary pays.
9. Support efforts to maintain or improve the security and reliability of our infrastructure.
10. Support government action that cost effectively reduces greenhouse gas emissions.
11. Promote locally-designed residential and commercial electrification programs.
12. Support government action allowing CPAU to maintain customer confidentiality.
13. Educate key accounts about significant policy actions that could affect their business.
Summary of 2017 Utilities-related legislation ATTACHMENT B
Water
SB 623 (Monning): Imposes a temporary water fee onto all customers (with exceptions) of a public water
system. Fees depend of the size of the meter. Funding flows to the water systems of disadvantaged
communities. Two year bill.
SB 606 (Skinner) and AB 1668 (Friedman): Both bills impose requirements on water shortage planning and water
loss reporting for urban wholesale water suppliers. Both failed; might be taken up in 2018.
AB 18 (Eduardo Garcia): Places on the June 2018 ballot a bond measure. If approved by the voters, authorizes
the issuance of $3.5 billion in GO bonds to finance a clean water, climate, and coastal protection and outdoor
access for all program. Failed; SB 5, its counterpart, passed.
SB 5 (De Leon). Places on the June 2018 ballot a bond measure, authorizing $4 billion in bonds to finance a
drought, water, parks, climate, coastal protection, and outdoor access for all program. Signed into law.
AB 196 (Bigelow): Specifies that water pump and water distribution systems are eligible for GHG Reduction Fund
money. Failed.
SB 210 (Leyva). Requires grant funding priority be given to drinking water projects for schools that have tested
their drinking water fixtures, and the results show that the water either does not meet federal lead standards or
is above the California maximum contaminant level for any othercontaminant. Substantially amended to
become a non-utlity bill.
SB 427 (Leyva): Makes clarifying changes to help implement last year’s SB 1398 regarding lead service line
identification and replacement requirements. Signed into law.
GHG and Energy
AB 79 (Levine): Requires the ARB to update its methodology for the calculation of emissions of GHG associated
with electricity from unspecified sources. Requires POUs to incorporate the methodology into programs
addressing the disclosure of the GHG emissions (power content labels) and electricity procurement. Vetoed.
SB 338 (Skinner): Requires Palo Alto and some other municipal utilities to consider, as a part of the IRP process,
the role of existing renewable generation, grid operational efficiencies, energy storage, and distributed energy in
helping to meet peak energy and reliability needs, while reducing the need for new generation and new
transmission. Signed into law.
SB 100 (De Leon): Sets state policy for eligible renewable energy resources and zero-carbon electric resources to
supply all electricity in the state no later than December 31, 2045. Increases the Renewables Portfolio Standard
requirement from 50% by 2030 to 60%. Failed.
AB 1405 (Mullin): Requires POUs to consider, as a part of the IRP process, the role of a variety of energy
technologies and resources in meeting energy and reliability needs during and around the hour of peak demand
while reducing the need for new generation and transmission resources. Failed.
Utilities Legislative Report | 2
2
SB 71 (Wiener): Requires the CEC, prior to adopting rooftop solar energy generation system requirements, to
issue findings by climate zone jointly with the Department of Housing and Community Development as to
whether adoption of the requirements will or will not unreasonably or unnecessarily impact the affordability of
housing for Californians. Failed.
SB 356 (Skinner): Requires electric and gas utilities to provide to the owner of 2 or more buildings on a single or
adjacent parcel with 5 or more active utility accounts, upon request, aggregate energy usage data for the
buildings. Failed, will become a two year bill.
AB 1070 (Gonzalez Fletcher): Requires state agencies to make available a "solar energy system disclosure
document" for solar energy customers, compile an annual report documenting consumer complaints relating to
solar contractors and, develop standardized inputs and assumptions to be used in the calculation and
presentation of electric utility bill savings to a consumer. Signed into law.
Other
AB 1184 (Ting). As amended, requires the ARB, by January 1, 2019, to submit to the Legislature a report on the
operations of its vehicle incentive programs and to include information about zero-emissions vehicles. Failed.
AB 797 (Irwin): Extends the current Solar Water Heating program, set to expire in August. Changes the language
from “water heating” to “solar thermal.” Signed into law.
SB 231 (Hertzberg): Defines “sewer” for purposes of Prop. 218, to allow local governments to fund stormwater
systems via fees adopted via the majority protest process already in place for water, sewer and refuse projects,
rather than requiring stormwater fees to be approved by voters in an election. Signed into law.
AB 1414 (Friedman): Lowers a cap on local government permit fees for rooftop solar energy systems and
extends the cap to cover solar thermal systems; allows local governments to charge higher fees if the cost is
justified. Signed into law.
SB 49 (De Leon): Prevents state and local agencies from amending or revising rules implementing a Water
Quality Control Act, the Safe Drinking Water Act, and other acts to be less stringent than baseline federal
standards. Creates a legal pathway for enforcement. Failed.
SB 649 (Hueso): Provides that small cells are a permitted use in all public right-of-way and utility easements in
residential areas, subject to some restrictions. Wireless companies must comply with an electric POU’s safety,
reliability, and engineering policies. Doesn’t change the current legal rules and compensation structure as they
relate to utility poles, with exceptions. Vetoed.
Federal hydro relicensing reform efforts:
S.1460 (Murkowski R-AK): The Energy and Natural Resources Act of 2017 (reintroduced from last year) and
H.R.3043 (McMorris Rodgers R-WA): Hydropower Policy Modernization Act of 2017.
• Both bills designate FERC as the lead agency to coordinate reviews and licensing.
• H.R.3043 was passed from its last committee; negotiations continue.
Utilities Legislative Report | 3
3
• S.1460 could receive a floor vote, but the Senate has other pressing issues to take up first and as the
author voted against the healthcare bill, she may face backlash on this bill.
Page 1 of 10
5
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILTIES DEPARTMENT
DATE: November 1, 2017
SUBJECT: Discussion of Proposed Distributed Energy Resources Plan
RECOMMENDATION
This is an informational report. UAC approval is not sought at this time. Staff is seeking input on
the proposed Distributed Energy Resources (DER) Plan provided in Attachment A.
EXECUTIVE SUMMARY
DERs are electrical energy resources connected to the City of Palo Alto Utilities (CPAU ) electric
distribution grid that can significantly change the location, timing, and magnitude of the CPAU’s
electric loads. The California Public Utilities Code 769 defines “distributed resources” as
distributed renewable generation resources such as solar photovoltaics (PV), energy efficiency
(EE), energy storage (ES), electric vehicles (EV), and demand response (DR) technologies. New
State guidelines from the California Energy Commission (CEC) require that DERs be incorporated
into the 2019 Electric Integrated Resource Plan (IRP) as they impact supply planning and could
even be used to offset some of the services traditionally provided by utility-scale electricity
generation resources.
As of 2017, the combined effect of DERs (primarily energy efficiency and PV) has been to reduce
CPAU’s net electricity demand by 6.9% relative to 2007, and staff expects the cumulative
reduction from DERs to reach 13.6% by 2030. The proliferation of DERs over the coming decade
means managing and leveraging DERs will be critical for Palo Alto’s utility system operations,
resource planning, and customer programs.
The proposed DER Plan in Attachment A organizes various DER-related initiatives currently
planned or underway into a single plan in order to capture various types of benefits and
coordinate effort wherever possible. It is consistent with current Council-approved policies and
programs related to EE, PV, EVs, ES, DR, and electrification. The DER Plan was developed in
coordination with the Utilities Strategic Plan (USP) initiative currently underway, and will also be
incorporated within the Electric Integration Resource Plan (IRP) being developed in order to
plan for the City’s long-term electricity needs and fulfill state regulations related to Senate Bill
350 (SB 350).
This report is structured as follows: 1) background on DER work to-date; 2) the objectives and
strategies in the proposed DER Plan; and 3) an overview of the timeline and resources required
to implement the Plan over the next five years.
Page 2 of 10
BACKGROUND
The Clean Energy and Pollution Reduction Act of 2015 (SB 350) and related regulations require
CPAU to develop a detailed IRP which should include both forecasts for DERs and their impacts
on electric loads.1 This new emphasis on DERs from the State level is because multiple state
agencies see DERs as key enabling technologies to both lower greenhouse gas emissions (GHG)
and to help electric grid reliability with increased penetration of intermittent renewable energy
supplies.2,3 Locally, CPAU considers energy efficiency and demand reduction as the highest
priority resource 4 and Palo Alto’s Sustainability and Climate Action Plan (S/CAP)5 also identified
several DERs as key technologies for achieving the community’s greenhouse gas (GHG) emission
reduction goals, particularly EVs , high-efficiency heat-pump water heaters (HPWH), and heat-
pump space heaters (HPSH) which displace fossil fuel combustion. Well-integrated DERs could
offer a number of benefits to the Palo Alto community by reducing supply costs, deferring
distribution system upgrades, and increasing system resiliency and flexibility. On the other
hand, unmanaged DERs could increase costs for CPAU by increasing uncertainty and forecast
errors in the electric load-supply balance or by causing adverse impacts on the distribution
system. The goal of this proposed DER Plan is to provide a framework for mitigating the
potential downsides of DERs while leveraging the benefits for all members of the Palo Alto
community.
The proposed DER Plan is consistent with and/or feeds into the following initiatives currently in
effect or underway as shown in Figure 1. This DER plan does not supersede existing plans,
instead it is a supplemental document which includes DER issues which were not specifically
addressed.
• Local Solar Plan (2014)
• Electrification Work Plan (2015)
• Energy Storage Assessment (2017)
• Updated Ten-Year Electric Efficiency Goals (2017)
• Electric Integrated Resource Plan (2018)
• Distribution system assessment to accommodate DER growth (2018)
• AMI installation and evaluation of advanced rate structures (in progress)
• Adopting industry best practices to facilitate DER adoption and integration (on-going)
1 For the full IRP guidelines related to SB 350 see California Energy Commission: Publicly Owned Utility Integrated
Resource Plan Submission and Review Guidelines, September 5, 2017
2 The California Independent System Operator (CAISO) is the transmission system operator for most of California,
and its presentation on how DERs can help the integration of high penetration of intermittent renewables can be
found here: Renewable Integration, CAISO Presentation May 12, 2017. In addition the California Public Utilities
Commission (which regulates Investor Owned Utilities) has been working on a DER Action Plan for California.
3 Local renewables and flexible loads will not lower annual CPAU GHG emissions since CPAU’s electric supply is
100% carbon neutral on an annual basis; however, these resources could lower CPAU’s hourly GHG emissions by
shaping electricity demands to match when intermittent renewable resources are available. DERs such as EVs,
HPWHs, and HPSHs, which displace combustion of gasoline and natural gas, have even greater potential to reduce
GHG emissions in Palo Alto due to CPAU’s carbon neutral electric portfolio.
4 Long-term Electric Acquisition Plan (LEAP) Objectives and Strategies Approved March 7, 2011 (Resolution No.
9152)
5 Palo Alto S/CAP Report to Council (#6754), April 18, 2016
Page 3 of 10
Figure 1: Proposed DER Plan is consistent with planned and existing DER initiatives
It is important to note that CPAU already expends considerable resources promoting DERs in
Palo Alto, with energy efficiency programs currently requiring the most resources. An estimate
of CPAU staff time and annual budget in implementing each of the current DER technology
programs is outlined below in Table 1.
Table 1: Estimate of current staff time and annual expenditure on each DER technology
DER Technology Staff Time (FTE) Current Annual Expenditure
PV 1.5 $100k
EV 1 $200k – $400k
EE 4 $3M – $4M
DR 0.05 $5k – $10k
ES 0.1 None
HPWHs & HPSHs 0.7 $100k
Total 7.35 $3.4M – $4.6M
The adoption of a DER Plan by itself will not significantly change the current resource allocation
among the existing DER programs, as many efforts in the Plan can be incorporated into future
work plans. Staff expects that the DER Plan policies, when implemented, will result in more
effective coordination among City departments on DERs, as well as enable better
communication with the Palo Alto community, UAC, City Council, and industry stakeholders
regarding future DER programs.
Page 4 of 10
DER Projections To -date
As of 2017, staff estimates that CPAU’s net electricity demand would be 6.9% higher than it is
today if currently installed PV, EV, and EE had not been installed. Initial estimates suggest that
DERs, primarily EE, PV, & EV, will lower net electricity demand by another 6.6% from 2017 to
2030, amounting to a cumulative reduction of about 13.6% since 2007. Forecasts predict
electricity sales would grow an average of approximately 0.4% per year were DERs not present.
Therefore the net effect of load growth and DERs is that overall CPAU electricity retail sales are
expected to remain nearly flat from 2017 through 2030, with an overall reduction of 0.6% by
2030.
Since DERs are expected to spread rapidly in Palo Alto over the next decade, Table 2 below
provides a brief summary of the current and projected number of DER systems, the DER impacts
on CPAU’s electricity sales, and a preliminary estimate of the financial impacts of DERs. The
details and assumptions embedded in these preliminary analyses are included in Attachment B.
These financial impacts are rough estimates of changes in the utility’s revenues and its
wholesale electricity supply costs. They do not incorporate possible revenue changes from
potential future changes to utility rate structures, nor do they include costs or savings on
distribution system operations, distribution system upgrades, staffing, or additional benefits or
revenue streams from interactive flexible DERs. More detailed analysis will be required to
better project the long-term financial impacts of DERs over the next decade. However, since
previous load and financial projections have included impacts from PV, EV, and EE adoption,
most of these impacts are already incorporated into the 2017 Electric Utility Financial Plan.
Table 2: Estimates of number of DERs and impact on electricity sales for 2017 and 2030 6
Approximate Number
of DER Systems
Impact on CPAU
Electricity Sales (%)
Financial Impact on
CPAU , $
DER Technology 2017 2030 2017 2030 2017 2030
PV 1,000 2,500 -1.6% -4.9% -$0.8 M -$3.2 M
EV 2,500 7 18,700 +0.8% 6.0% $0.4 M $4.3 M
EE 8 40,880 60,000 -6.0% -15.2 % -$2.9 M -$9.7 M
DR 8 75 - -0.02% - -
ES 11 580 - - - -
HPWH 10 2,700 - 0.3% - -
HPSH - 800 - 0.3% - -
Combined DER
Total 44,409 85,355 -6.9% -13.6% -$3.4 M -$8.6 M
6 These estimates are calculated based on technologies deployed since 2007, and reflect the total impact observed
by 2017, and the estimated impact by 2030.
7 It is estimated that about 2,500 EVs are registered in Palo Alto and another 2,800 commute vehicles drive into
Palo Alto daily.
8 These numbers reflect the number of EE measures implemented, for example the number of boilers replaced or
the number of buildings which added insulation.
Page 5 of 10
In order to understand the impact of DERs on total CPAU electricity sales going forward from
2017, Figure 2 shows the contribution of new DERs to projected electricity sales. This shows
that the combined effect of DERs added between 2018 and 2030 is to lower the electricity sales
by 6.6% by 2030 compared to what it would have been without those DERs. Without the DERs
electricity sales are projected to grow at 0.4% annually, but with the DERs, electricity sales are
expected to remain nearly flat through 2030.
Figure 2: Estimated contribution of different DERs to total energy sales from 2018 to 2030
Insights from Preliminary Projections
With Palo Alto community members projected to make substantial DER investments at their
homes and businesses in the next decade, the City, in coordination with community
stakeholders, will need to plan and implement strategies to maximize the value of these
investments to the community. The utility distribution system and utility rate structures will
also need to accommodate the growth of these customer investments. Some other key
takeaways from the analyses are:
1) While DERs are expected to account for approximately 13.6% of the electrical loads by
2030, they will be unevenly distributed among customer types as well as by location.
Planning for DERs will require more detailed visibility into the operation of the
distribution system and more detailed financial impact modeling.
2) Load growth from residential EVs is projected to increase demand on the residential
sections of the distribution grid by up to 30% by 2030, and therefore must be
proactively managed through strategic programs and incentives.
3) More detailed analytical methods can improve projections of the anticipated growth
and financial impacts of DERs to better mitigate negative impacts of DERs and enable
the City to realize additional benefits.
Page 6 of 10
DISCUSSION
The growth of DERs will have a variety of impacts to the electric utility, and therefore DERs must
be proactively integrated to ensure utility operational and financial resiliency for the future.
While there are already a number of initiatives underway to adapt to the emerging importance
of DERs, the goal of the proposed DER Plan is to formalize several of the best practices required
to ensure successful adaptation, and to ensure clear communication between work groups
especially regarding distribution system planning, supply planning, customer service,
operations, rate design, and customer program design.
While the analysis to-date has focused on the mitigation and planning required to
accommodate high growth of DERs, these technologies also have the potential to provide a
number of benefits to CPAU , the CAISO transmission area, and the Palo Alto community,
including:
• Enhancing CPAU’s system resiliency and reliability;
• Reducing peak demand to reduce the cost of transmission and distribution upgrades;
• Lowering supply costs by reducing curtailment of renewable projects throughout the
CAISO market, including CPAU renewable projects;
• Lowering CAISO and real-time CPAU GHG emissions by load shifting, demand response,
and flexible demand resources to better match electricity demand to when intermittent
renewable resources are available; and
• Enabling customers to directly bid their DER capabilities into the wholesale electricity
markets (e.g. through third-party aggregators or other mechanisms) to provide new
flexible low-cost and low-emission resources for energy and ancillary services, which can
help accommodate a higher penetration of intermittent renewable resources and
provide alternatives to new utility-scale generator construction.
The proposed DER Plan seeks to position CPAU to be able to harness these benefits. In August
2017,9 the UAC provided feedback on staff’s intentions to develop the DER Plan guided by the
following principles:
1) Facilitate the operation of DERs in ways that enhance the value to the DER owner as well
as the rest of the Palo Alto community; and
2) Staff will act as a facilitator of DERs. This means that:
i. Where DERs are cost-effective as an alternative to traditional generation
resources or distribution system upgrades, CPAU will create incentives for
adoption of DERs;
ii. Where DERs are not yet cost-effective alternatives to traditional generation
resources or distribution system upgrades, CPAU will facilitate voluntary
customer adoption;
3) Ensure that both the electric distribution system and electric utility finances can
accommodate DER growth.
9 Developing a Distributed Energy Resource Plan and Load Forecasting Report to UAC - August 2017
Page 7 of 10
These guiding principles have been expanded into the proposed DER Plan in Attachment A,
which encapsulates the City policies and actions that staff is proposing to enable beneficial DER
integration into the community. The goal, objectives, and strategies of the proposed DER Plan
are included in the following section.
City of Palo Alto Utilities - Distributed Energy Resources (DER) Plan
Goal of the DER Plan:
Enhance the value of DERs to all members of the Palo Alto community by using DERs to lower
costs, increase sustainability, and increase the resiliency of CPAU while avoiding or mitigating
any potential negative impacts from DER growth.
Objectives of the DER Plan:
1. Remove internal obstacles to allow greater DER adoption and improve DER value to the
entire community.
2. Facilitate the installation and integration of DERs in Palo Alto in order to increase utility
resiliency, lower utility costs, and reduce the City’s GHG emissions.10
3. Understand the community’s DER adoption potential and diverse needs and develop
DER programs accordingly.
4. Ensure that the utility financial structure and the distribution system can accommodate
DER growth.
5. Be innovative in accelerating adoption of cost-effective DER technologies as well as
initiating pilots programs for strategic emerging DER technologies.
Strategies to Achieve DER Plan Objectives:
This section lists key strategies to implement the DER Plan. Details and tactical actions related
to each of these strategies are listed in Attachment A.
1. Lower Barriers to Adoption – Lower barriers and reduce soft costs that may impede the
adoption and installation of DERs by streamlining processes (such as permitting and
interconnection), training local installers, and evaluating and updating fee structures.
2. Resiliency – Coordinate DER integration efforts with efforts to improve community
resiliency and evaluate how DER technologies can enhance community resiliency in the
future.
3. DER Growth Forecasts and Valuations – Develop and communicate DER growth
forecasts and valuations to ensure that all departments have current forecasts, costs,
10 Although CPAU’s electricity supply portfolio is carbon neutral on an annual basis, DERs have the potential to
lower the real-time GHG emissions in a number of ways, including load shifting to better match electricity
demands to the availability of intermittent renewables.
Page 8 of 10
and benefits. Ensure that these projections are integrated into planning processes (such
as distribution and financial planning).
4. Customer Programs – Develop pilot programs and incentives to encourage DERs that
can provide quantifiable benefits to the electric utility (and therefore to all customers
and the entire community). Prioritize those that are the most cost-effective and provide
the greatest GHG savings.
5. Advanced Metering Infrastructure (AMI) and Advanced Rate Structures – Implement
automated customer metering infrastructure and advanced retail rate structures to
effectively manage the DER resources in the community. Examples include evaluating
and potentially implementing of Time-of-Use rates as well as rates for EV owners.
6. Distribution System Planning – Develop a distribution system plan to accommodate the
adoption of DER growth at the lowest cost while maintaining system reliability to all
customers. Examples include evaluating the cost-effectiveness of installing or
incentivizing DERs as an alternative to local distribution system upgrades. In this way
local DERs could provide benefits to the distribution system while lowering costs for all
community members.
7. Electric Supply Planning – Consider DERs as a preferred resource and plan for maximum
deployment of cost-effective and feasible DERs within Electric Integrated Resource Plans
(IRP). Examples include integrating the forecasts and DER scenarios into short and long-
term electric forecasts related to energy, capacity, and ancillary services.
8. Workforce Development and Industry Resources – Leverage existing industry resources
to grow in-house staff expertise by pursuing strategic partnerships and participating in
industry expert forums. Disseminate knowledge throughout the organization to staff
who will be involved with DERs.
9. Organizational Structures – Ensure effective organizational structures are in place to
accommodate DER growth by establishing multi-departmental teams to implement the
DER Plan and to ensure that the strategies in the DER Plan are integrated into the work
planning, staffing, and resource requirements of all the departments and divisions
affected.
NEXT STEPS
Upon receiving UAC input on this proposed DER Plan, staff will incorporate the feedback and
seek additional stakeholder input. Staff will then return to the UAC in early 2018 to seek UAC
recommendation of the DER Plan for Council approval. Upon Council approval of the DER Plan,
staff anticipates returning to the UAC and Council every two years to report on the progress
made.
The DER Plan will also be incorporated within the Utilities Strategic Plan (USP). It will also be
incorporated within the Electric IRP to meet SB 350-related state regulations.
Page 9 of 10
RESOURCE IMPACT
Approval of the DER Plan in itself will not require additional resources. Many of the strategies
and actions in the plan can be incorporated into existing efforts since they are tightly
intertwined with ongoing staff work in the areas of energy efficiency, electric vehicles, local
solar, and electrification, or integrate with existing financial planning, distribution system
planning, and electricity supply planning processes. However, increasing penetration of DERs
may introduce additional complexity into the electric utility’s operations, and it is not
implausible that additional resources might be needed. If additional staffing needs are
identified, approval will be sought as part of the annual budget development and approval
process. In addition, in order to realize many of the potential benefits of DERs, CPAU will need
to deploy automated metering infrastructure (AMI) and associated smart grid technologies,
currently estimated to be in place by 2022. Therefore, the implementation of this DER Plan will
be broken into two parts: before AMI deployment (Phase 1), and after AMI deployment (Phase
2) as shown in Figure 3.
Figure 3: Phases of DER Plan within the context of the DER adoption curve 11
The resources currently being expended by CPAU staff and contractors to promote DERs are
shown in Table 1, above. Table 3, below, provides a preliminary estimate of additional staff
time and resources required to implement each of the strategies in the next five years under
Phase 1. These estimates will be refined prior to DER Plan adoption, and will be included in the
FY 2019 budget if appropriate.
The resources required to implement and maintain AMI and related smart grid systems are
clearly the largest driver of additional resources and will be further discussed with the UAC and
Council within the context of Utility Technology Roadmap 12 in early 2018.
11 This graphic is adapted from a CAISO presentation and displays the walk-jog-run framework
12 Smart Grid Assessment and Development of Utility Technology Roadmap – May 3, 2017 UAC Report
Table 3: Est imate of additional effort and budget required to implement DER Plan
Additional
Strategy Additional Effort (FTE) 2018-2022
Budget($)
CY CY CY CY CY CY
2018 2019 2020 2021 2022 2018-2022
1. Lower Barriers for Adoption 0.1 0.1 0 .1 0 .1 0.1 $100-$250k
2. Resiliency 0 .1 0 .1 0 .1 0.1 $20-$60k
3. DER Growth Forecasts & Valuations 0 .1 0.1 $10-$30k
4 . Customer Programs 0 .2 0 .2 0 .3 0.3 0.3 $100-$200k
5. AMI & Advanced Rate Structures 0.5 1 2 2 3 $15-$20M
6. Distribution System Planning 0 .3 0 .3 0.3 0.3 0.3 $100-$200k
7. Electric Supply Planning
8. Workforce Dev elopment & Industry Resources $50-$100k
9. Organ izational Structures 0.1 $25 -$50k
Total without AMI Deployment 0.8 0.8 0.8 0.8 0.8 $380-$865k
Total including AMI Deployment 1.3 1.8 2.8 2.8 3.8 $15.4-
$20.9M
POLICY IMPLICATIONS
The policies to be adopted i n th is DER Plan have implications for business practices throughout
the Utilities Department and implications for the services provided to customers with respect
to DERs. They will be coordinated closely with the Utilities Strategic Plan . Thi s DER Plan is
consistent with the Sustainability and Climate Action Plan (S/CAP) and the Electric Integrated
Resource Plan {IRP) currently under development.
ENVIRONMENTAL REVIEW
The Utilities Advisory Commission's discussion of the proposed DER Plan does not meet the
definition of a project under Pub lic Resources Code 21065 and is therefore California
Environmental Qual ity Act (CEQA) r eview is not requ ired .
ATTACHMENTS
• Attachment A: Distributed Energy Resources (DER) Plan
• Attachment B: Technical Addendum for DER Projections
PREPARED BY:
REVIEWED BY:
APPROVED BY:
LENA PERKINS, Resource Planner dP
SONIKA CHOUDHARY, Resource Planner
SHIVA SWAMINATHAN, Senior Resource Planner ~
cr~IN, Assistant Director, Resource Management.fk
EDSHIKADA
Assistant City Manager/General Manager of Utilities
Page 10of10
Attachment A
Page 1 of 4
City of Palo Alto Utilities - Distributed Energy Resources (DER) Plan
(Draft for Discussion)
Definitions
For the purpose of this document Distributed Energy Resources (DERs) are defined as electrical
energy resources connected to the electric distribution system that can significantly change the
location, timing, and magnitude of the City of Palo Alto Utilities (CPAU) electric loads. This
includes but is not limited to: distributed renewable generation resources such as solar
photovoltaics (PV), energy efficiency (EE), energy storage (ES), electric vehicles (EV), and
demand response (DR) technologies, as well as interactive and flexible resources such as EV
smart chargers, smart thermostats, heat-pump water heaters (HPWH), and heat-pump space
heaters (HPSH).
Goal
Enhance the value of DERs to all members of the Palo Alto community by using DERs to lower
costs, increase sustainability, and increase the resiliency of CPAU while avoiding or mitigating
any potential negative impacts from DER growth.
Objectives
1. Remove internal obstacles to allow greater DER adoption and improve DER value to the
entire community.
2. Facilitate the installation and integration of DERs in Palo Alto in order to increase utility
resiliency, lower utility costs for all customers, and reduce the City’s GHG emissions.
3. Understand the community’s DER adoption potential and diverse needs and develop
DER programs accordingly.
4. Ensure that the utility financial structure and the distribution system can accommodate
DER growth.
5. Be innovative in accelerating adoption of cost-effective DER technologies as well as
initiating pilots programs for strategic emerging DER technologies.
Strategies
1. Lower Barriers to Adoption – Lower barriers and reduce soft costs that may impede the
adoption and installation of DERs by:
a. Streamlining permitting and interconnection processes for all DER technologies,
training customer service and operations staff on revised processes, and
communicating processes to community members and installers.
b. Engaging with industry and DER markets to lower hurdles to adoption through
programs such as:
i. Pursuing bulk-buy programs for PV, EV, EV chargers, ES, HPWH, HPSH, and smart
thermostats; if feasible, pursuing bulk buy programs for strategic emerging DERs;
ii. Training local contractors in DER technologies, interconnection processes, and
permitting processes;
iii. Evaluating and potentially implementing on-bill financing programs for DERs;
Attachment A
Page 2 of 4
c. Regularly updating all fee structures which impact DERs to include the full value of DERs
including the value associated with what time of day and year DERs operate, their
location on electrical distribution system, their carbon reduction potential, and any
secondary benefits attributed to the resource;
d. Researching and evaluating removal of CPAU policies which preclude beneficial uses of
DERs, such as aggregation for the purpose of bidding into electricity wholesale markets.
2. Increase Community Resiliency – use DERs to increase community resiliency by:
a. Evaluating the capabilities of current and emerging technologies to provide the type of
resiliency of highest value to the utility and the community;
b. Investigating the potential to increase flexibility and technical capabilities of all future
and existing DERs on City property, and provide resources for increasing resiliency if
deemed feasible;
c. Investigating the potential for new large DERs to supply emergency back-up services at
City facilities and pursuing projects deemed feasible; and
d. Investigating the potential to modify existing customer incentive programs which could
provide resiliency as well as investigating the potential to supply additional resources to
all customer incentive programs which currently also provide resiliency services.
3. DER Growth Forecasts and Valuations – develop and communicate DER growth forecasts
and valuations by:
a. Regularly monitoring local growth of DER technologies as well as developing and
updating models for growth forecasts based on the technical, economic, and market
potential of DERs;
b. Establishing and updating costs and values associated with location on the distribution
system, time of day and year the DER operates, potential for carbon reduction, value as
a renewable supply of energy, and any secondary benefits attributable to the resource;
and
c. Ensuring consistent projections and valuations are used throughout the organization by
communicating DER growth projections to all relevant divisions and departments
regularly.
4. Customer Programs – maximize value of DER customer programs by:
a. In calculations evaluating cost-effectiveness, developing new incentives and programs,
and prioritizing programs include location on the distribution system, time of day and
year the DER operates, potential for carbon reduction, value as a renewable supply of
energy, and any secondary benefits attributable to the resource;
b. Evaluating strategic pilot programs that can serve local distribution system needs,
enable customers to achieve additional value by serving CAISO market needs, or lower
overall community electric supply and transmission costs, including:
i. Control and communication technologies for DERs (e.g. smart inverters to inject
capacitive energy from PV into the distribution system);
ii. An energy storage pilot program;
iii. A DER aggregation pilot to enable customer participation in wholesale electricity
markets; and
Attachment A
Page 3 of 4
iv. A program for automatic or centrally controlled demand response for commercial
and residential customers.
5. Advanced Metering Infrastructure (AMI) and Advanced Rate Structures – Implement
automated customer metering infrastructure and advanced retail rate structures to
effectively manage the DER resources in the community by:
a. Assessing the impact of current electrical rate structures on DER operations and
exploring cost-justified rate structures that reflect the cost to serve DER-enabled
facilities, while seeking ways to structure these rates such that they allow for cost-
effective operations, maximize benefits to both the utility and the customer, and do
not impede adoption (e.g. Time-of-Use rates, all-electric home rate);
b. Ensuring AMI implementation plan includes an evaluation of the costs and benefits of
system features necessary for effective integration of DERs (such as the ability to
remotely program meters for time-of-use periods); and
c. Forecasting the impacts of DERs on the utility’s long-term financial position.
6. Distribution System Planning – Develop a distribution system plan to accommodate the
adoption of DER growth at the lowest cost while maintaining system reliability to all
customers by:
a. Integrating the impact of DERs into long-term distribution system planning and
considering the cost-effectiveness of DERs to strengthen distribution infrastructure;
b. Performing a Distribution System Assessment at regular intervals that assesses the
available capacity for additional DERs throughout the distribution system within the
context of planned upgrades and projected DER growth;
c. Evaluating the response of the distribution systems for various stresses in the system
(e.g. concentrated locational DER growth, sudden loss of local PV generation due to
cloud cover, operation of protective relays and fault currents, etc.);
d. Evaluating and implementing DER programs that can enhance distribution system
reliability after the implementation of AMI;
e. Re-evaluate the interconnection fee structure and its impact on sizing electric services
to accommodate EVs and all-electric homes;
f. Creating an implementation plan for a Conservation Voltage Reduction (CVR) program
upon implementation of the AMI system when upgrading the substation transformer
controllers; and
g. Developing tools and processes to estimate interconnection fees of large DERs as part
of the initial permitting process.
7. Electric Supply Planning – Consider DERs as a preferred resource and plan for maximum
deployment of cost-effective and feasible DERs within Electric Integrated Resource Plans
(IRP) by:
a. Integrating the DER growth forecasts and scenarios into short and long-term electric
forecasts related to wholesale electricity costs for energy, capacity, and ancillary
services.
b. Considering the risk of stranding assets due to increased penetration of DERs when
evaluating commitments to long-term electric supply resources (i.e., Western contract
renewal and/or new renewable power purchase agreements);
Attachment A
Page 4 of 4
c. Updating as necessary the calculated value of DERs to ensure proper treatment of DERs
in avoiding transmission, distribution and ancillary service costs and/or obligations
using consistent models of time of day DERs operate, location on distribution system,
and potential for carbon reductions; and
d. Analyzing potential DER impacts on sub-annual CPAU carbon emissions and mitigation
strategies.
8. Workforce Development and Industry Resources – Leverage existing industry resources to
enhance in-house staff expertise by:
a. Partnering with industry experts when seeking financing and grant opportunities to
implement DER programs and pilots;
b. Encouraging staff to participate in different industry and expert forums to grow in-
house expertise; and
c. Developing staff training as needed when implementing programs or processes related
to DERs.
9. Organizational Structures – Ensure effective organizational structures are in place to
accommodate DER growth by:
a. Establishing collaborative multi-departmental teams to implement the DER Plan and to
engage with the community and stakeholders effectively (e.g. multi-department
sustainability board, utilities DER Plan implementation team, and technology work
group); and
b. Ensuring that the strategies in the DER Plan are integrated into the work planning,
staffing, and resource requirements of all the departments and divisions affected.
Attachment B
Page 1 of 6
Technical Addendum for Distributed Energy Resource (DER) Projections
Initial projections for DER technologies were developed to inform both the proposed DER Plan
as well as ongoing work regarding DERs. These projections will be updated as more detailed
market assessments are performed.
The distributed energy resources considered for the purposes of these analyses were:
- Energy Efficiency (EE)
- Solar Photovolatics (PV)
- Electric Vehicles (EV)
- Demand Response (DR)
- Energy Storage (ES)
- Heat-pump Water Heaters (HPWH)
- Heat-pump Space Heaters (HPSH)
As shown in Figure 1, projections were developed to address three main areas:
1. DER Adoption Projections: Adoption forecasts for each DER technology.
2. DER Load Impact Projections: Energy used or delivered to the system on an hourly and
seasonal basis to determine the impact of DERs on electric sales and load shape.
3. DER Financial Impact Projections: Financial impact to the utility of DER adoption based
on the adoption and load impact projections. This analysis considered only the impact to
wholesale electric supply costs, and did not include the impact of changes to current
rate structures.
The detailed assumptions and limitations of each of these projections are discussed in their
following respective sections.
Figure 1: DER projections and analyses undertaken to-date
Attachment B
Page 2 of 6
1. DER Adoption Projections
Preliminary forecasts of the number of DER systems through year 2030 are shown below in
Table 1. The 2030 estimates are highly variable, as they depend on market conditions,
technological innovations, and changing regulations, and therefore these estimates could
increase or decrease by up to 50%.
Table 1: Estimated number of DER systems through 20301
Estimated Number of Systems
DER Technology 2017 (current) 2020 2030
PV 1,000 1,300 2,500
EV 2 2,500 5,900 18,700
EE 40,880 45,000 60,000
DR 8 25 75
ES 11 85 580
HPWH 10 200 2,700
HPSH 0 25 800
Assumptions & Limitations:
These projections were developed for long-term load forecasting and budgeting purposes.
They reflect current realistic estimates of technology adoption rates. The current forecasts do
not achieve S/CAP goals by 2030, but staff will be coordinating with the sustainability team to
accelerate adoption wherever cost-effective. These forecasts will be updated regularly and
staff will continue to collaborate with other departments to support City sustainability goals.
- EE: Adoption rates for EE are based on the 10-year Energy Efficiency Goals for 2018-2027
which were updated in 2017.3 For the years 2028 through 2030 the assumed savings are
the average of the savings in 2026 and 2027 which is the methodology suggested by the
CEC for estimating savings beyond the 10-year goals.4 More details on the EE
methodology for market potential can be found in Staff Report 7718 from March 6,
2017.
- PV: These projections are based on a technical and economic potential, with adoption
growing steadily, with the growth rate itself plateauing as is typically seen in a maturing
market. These projections include behind the meter installations in residential and
commercial sectors, but do not include a Community Solar installation. These
projections also do not include the feed-in tariff installations from the CLEAN program as
1 These estimates represent current base case scenarios. Staff will explore appropriate high and low scenarios in
further modeling.
2 This is the total residential EVs currently registered in Palo Alto. There are also EVs which commute into Palo
Alto, some of which charge while in Palo Alto and add to CPAU electricity sales. In addition to the residential EVs
shown here, there are estimated to be approximately 3,100, 5,900 and 20,000 commuter EVs in 2017, 2020 and
2030 respectively.
3 Although CPAU established our EE goals based on net savings, the energy efficiency savings shown here are on a
gross basis (which includes EE savings due to free-ridership).
4 The extension of savings through 2030 is based on the methodology put forth in the CEC presentation September
7, 2017 which can be found here: CEC presentation on Energy Efficiency Savings from Utility Programs.
Attachment B
Page 3 of 6
these are counted as supply resources and count towards the electric utility’s Renewable
Portfolio Standard.
- EV: To -date Palo Alto has observed residential EV adoption rates approximately three
times greater than the California statewide average, and this rate for residential
adoption relative to statewide average projections is assumed to continue to 2030. To
estimate the EV adoption rates of commuters into Palo Alto the observed adoption rate
from 2017 census data for the entire Bay Area was extended to 2030.
- DR: This forecast is based on modest growth of the current voluntary large commercial
demand response program. Somewhat more robust growth is expected after AMI
implementation in 2023.
- ES: This forecast is based on statewide projections for batteries and CPAU electricity rate
structures.
- HPWH: This forecast is based on historical of PV penetration, market readiness, and
CPAU customer program management experience. Based on this forecast, staff projects
a natural gas load reduction of up to approximately 1% from HPWH by 2030.
- HPSH: This forecast based on historical of PV penetration, market barriers, and CPAU
customer program management experience. Based on this forecast, staff projects a
natural gas load reduction of up to approximately 1% from HPSH by 2030
2. DER Load Impact Projections
Table 2 shows the impact of DERs on CPAU’s energy sales based on the number of systems
projected in Table 1. These estimates are also highly variable, as each underlying component
could change by as much as 50% by 2030. Moving forward, the combined impact of all these
DERs is expected to lower energy sales by 2.2% by 2020 and 6.6% by 2030.5 The net effect of
projected DERs coming online after 2017 is to offset other anticipated electricity load growth
throughout CPAU territory,6 leading to essentially flat total CPAU system loads from 2017
through 2030. However, a scenario with higher load growth, lower adoption of EE or PV, or
higher adoption of EVs could result in an overall growth of electricity sales.
Table 2: Estimate of the impact of DERs on CPAU retail energy sales
DER Technology 2017 (current) 2020 2030
Contribution to Energy Sales MWh % MWh % MWh %
PV -15,000 -1.6% -18,800 -2.0% -45,200 -4.9%
EV 7,100 0.8% 14,300 1.6% 54,800 6.0%
EE -55,300 -6.0% -78,800 -8.6% -139,200 -15.2%
DR 7 - 23 - 200 0.02%
ES7 - - - - - -
5 All percentages are relative to Fiscal Year 2017 electricity retail sales.
6 For budgeting purposes the Northern California Power Agency has developed an econometric regression to
forecast electric sales from 2018 to 2030 with the current level of DERs (in other words assuming no additional
DERs). The CPAU overall system load growth from 2017 is the combination of this econometric forecast and the
individual DER forecasts.
7 Batteries and other ES devices may result in either net increased energy retail sales (due to battery losses where
commercial customers use batteries to avoid CPAU demand charges) or net decreased energy retail sales (due to
increased onsite consumption of behind the meter solar). For the purpose of these analyses these two effects are
assumed to be roughly the same magnitude and therefore ES systems are not considered to have any net effect on
Attachment B
Page 4 of 6
HPWH 9 - 190 0.02% 2,500 0.3%
HPSH - - 90 0.01% 2,800 0.3%
Combined DER Impact: from
2007 -63,200 -6.9% -83,000 -9.1% -124,000 -13.6%
Combined DER Impact: from
2017 - - -19,700 -2.2% -60,900 -6.6%
CPAU Overall System Load
Growth from 20178 - - -3,200 -0.3% -6,900 -0.8%
Figure 2: Projected impact of DERs on annual electricity sales from 2018 through 2030
Another important aspect of DERs is their ability to potentially flatten overall peak demand,
especially due to PV and DR. The impact of the projected DERs on a peak summer day in 2030 is
illustrated in Figure 3, showing that the combined effect is to flatten the overall load shape and
lower the peak demand. This overall flattening of peak demand is anticipated to increase the
overall system annual load factor from 62% in 2016 to 70% in 2030.9 A higher load factor and
flatter loads tend to lower overall CPAU costs.
energy sales.
8 Going forward from 2017 the total CPAU load is forecasted to grow at roughly 0.4% per year if no more DERs
were added to the system. With the addition of new DERs, the total CPAU load is projected to decrease by roughly
0.8% from 2017 electricity sales by the year 2030.
9 Annual Load Factor is a measure of transmission and distribution system utilization and is defined as the ratio of
average annual energy load to the peak annual energy load. A high load factor means that system capacity is
highly utilized, with average annual usage that is not much lower than the annual peak. A low load factor indicates
that electric use has a high annual peak relative to annual average usage, meaning that substantial additional
Attachment B
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Figure 3: Potential change in hourly electric loads on a peak summer day (2017 vs. 2030)10
3. DER Financial Impact Projections
As of 2017 CPAU’s retail electricity sales are approximately 6.9% lower due to EE, PV and EV
adoption to date (as illustrated in Table 2), which equates to a reduction of about $7.8 million in
revenues. The corresponding savings related to lower electricity supply purchases is estimated
to be about $4.4 million, which has resulted in a net revenue impact of $3.4 million reduction in
revenues for the utility compared to if those resources were not present in 2017 (considering
only savings in utility electricity supply costs).11 The potential financial impact figures are shown
here in order to facilitate understanding of the potential scale of impact from different DERs in
the future. The impact of successful EE and PV programs on CPAU is an integral part of utility
financial planning and projections.12
DERs projected to come online from 2018 through 2030 are estimated to reduce utility net
revenues by $5.4 million, relative to if those DERs did not come online (based on utility supply
costs and total revenues alone).13 The detailed contribution by resource is shown below in
system capacity is needed to serve that high annual peak, generally resulting in higher costs due to low utilization.
10 HPSH are included on a peak summer day since there is an expectation that heat-pump space heaters will be
used as air conditioners on the hottest days.
11 It should be noted that both EE and PV systems lower participants’ electricity bills, and can provide other
benefits not captured in this cost estimate.
12 Reduction in revenues can put upward pressure on customer retail rates. However, reduced use of utility energy
services due to EE and PV programs as well as other benefits not captured here will tend to lower overall customer
utility bills.
13 These estimates are highly uncertain and depend on the relative growth of different DER technologies, market
supply costs, and also do not include other potential costs and benefits to the utility. Given the levels of
Attachment B
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Table 3. However, total CPAU net revenues are expected to be nearly flat since these load
reductions are expected to be offset by other electricity load growth.
Table 3: Estimated impact of DERs on electricity supply costs & revenues from 2017 14 (∆ 𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹)−(∆ 𝑺𝑺𝑹𝑹𝑺𝑺𝑺𝑺𝑺𝑺𝑺𝑺 𝑪𝑪𝑪𝑪𝑪𝑪𝑪𝑪𝑪𝑪)=(∆ 𝑵𝑵𝑹𝑹𝑪𝑪 𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹𝑹)
2020 Estimate 2030 Estimate
DER
Technology
Revenue
Impact
Supply Cost
Impact
Net Revenue
Impact
Revenue
Impact
Supply Cost
Impact
Net Revenue
Impact
PV -$0.6 M -$0.3 M -$0.3 M -$5.2 M -$2.8 M -$2.4 M
EV $1.1 M $0.5 M $0.6 M $8.3 M $4.4 M $3.9 M
EE -$3.5 M -$1.7 M -$1.8 M -$14.5 M -$7.7 M -$6.8 M
Combined DER
Impact -$3.0 M -$1.5 M -$1.5 M -$11.5 M -$6.1 M -$5.4 M
Well -integrated DERs have the potential to lower electricity supply cost even further, as well as
provide other benefits and value streams.15 Staff will be investigating ways of maximizing the
value of DERs in order to continue to keep customer retail rates low.
uncertainty and potential for technology and market changes, it is entirely possible that the impact on supply costs
and utility revenues could vary by more than 50% from the estimates provided here.
14 The impact on supply costs are estimated based on avoided supply costs of 7.4 cents per kWh in 2020 and 9.3
cents per kWh in 2030. The impact on revenues is based on projections of system-wide average retail rates of 15
cents per kWh in 2020 and 17 cents per kWh in 2030. Due to the high-level of uncertainty, only the largest DERs
are included in this preliminary estimate on utility financial impacts.
15 Additional value streams that could be garnered from DERs that could lower the reduction of net revenues
include: flattening of electricity demand profiles, shaping of electricity demand to better match renewable
resource availability, and enabling customer-owned DERs to bid into electricity wholesale markets.