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NOTICE IS POSTED IN ACCORDANCE WITH GOVERNMENT CODE SECTION 54954.2(a) OR 54956
I. ROLL CALL
II.ORAL COMMUNICATIONS
Members of the public are invited to address the Commission on any subject not on the agenda. A reasonable time
restriction may be imposed at the discretion of the Chair. State law generally precludes the UAC from discussing or
acting upon any topic initially presented during oral communication.
III.APPROVAL OF THE MINUTES
Approval of the Minutes of the Utilities Advisory Commission Special Meeting held on May 2, 2018
IV.AGENDA REVIEW AND REVISIONS
V. REPORTS FROM COMMISSIONER MEETINGS/EVENTS
VI.GENERAL MANAGER OF UTILITIES REPORT
VII.COMMISSIONER COMMENTS
VIII.UNFINISHED BUSINESS - None
IX.NEW BUSINESS
1.Election of Officers Action
2.Discussion of Special Resiliency Workshop Discussion
3.Long-term Electric Portfolio Analysis Results and Options for Rebalancing Portfolio in the Discussion
Next Five to Ten Years
4.Selection of Potential Topic(s) for Discussion at Future UAC Meeting Action
NEXT SCHEDULED MEETING: August 1, 2018
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)).
12-Month Rolling Calendar
Public Letter(s) to the UAC
UTILITIES ADVISORY COMMISSION
WEDNESDAY, JUNE 6, 2018 – 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 9
UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF MAY 2, 2018 SPECIAL MEETING
CALL TO ORDER
Chair Danaher called the meeting of the Utilities Advisory Commission (UAC) to order at 4:00 p.m.
Present: Chair Danaher, Vice Chair Ballantine, Commissioners Forssell, Johnston, Schwartz, Segal
Absent: Commissioner Trumbull
ORAL COMMUNICATIONS
Frankie Farhad urged the UAC to consider the visual impact of future utility design and to ensure sufficient
funding was available for underground utilities to remain underground especially in residential
neighborhoods. Street work should be done in conjunction with other projects.
Eugene Lee remarked that the lifespan of underground utilities reduced the cost to less than twice the cost
of above‐ground utilities. He hoped staff could find a solution that maintained its integrity for the next 50
years.
APPROVAL OF THE MINUTES
Commissioner Schwartz moved to approve the minutes from the April 12, 2018 special meeting. Vice Chair
Ballantine seconded the motion. The motion carried 6‐0 with Chair Danaher, Vice Chair Ballantine, and
Commissioners Forssell, Johnston, Schwartz, and Segal voting yes.
AGENDA REVIEW AND REVISIONS
None
REPORTS FROM COMMISSIONER MEETINGS/EVENTS
Commissioner Schwartz attended the Low Income Community Solar Working Group's second webcast, which
focused on successful efforts in energy efficiency that might have implications for community solar. Members
of the group were interested in using and funding community solar as one aspect of a resiliency effort and
using community solar on a daily basis as a means to lower the bills of income‐qualified customers.
Commissioner Segal and she met with staff for a productive discussion of a community survey.
Commissioner Segal appreciated the opportunity to make changes to the survey.
UTILITIES GENERAL MANAGER REPORT
Dean Batchelor, Chief Operating Officer, delivered the General Manager’s Report.
Water Individual supply Guarantee Transfer to East Palo Alto (EPA): On May 7, Council will consider a
permanent transfer of 0.5 million gallons per day of Hetch Hetchy Regional Water Supply System Individual
Supply Guarantee (ISG) to the City of East Palo. The additional water supply is needed to support EPA long‐
term water needs and several planned developments in EPA, including a primary school and affordable
DRAFT
Utilities Advisory Commission Minutes Approved on: Page 2 of 9
housing, as well as to enable EPA’s new planned groundwater wells to be used on a limited basis to preserve
their operational capacity as emergency backup wells. Palo Alto is in a position to alleviate EPA’s long‐term
water supply deficit because Palo Alto has reduced its potable water consumption and is extremely unlikely
to rely on its full 17 million gallon per day ISG in the future.
Municipal Services Center (MSC) Open House: Back by popular demand – the City is hosting an open house
at the Municipal Services Center on May 12! As part of Public Service Employee Recognition week, which is
May 6‐12 this year, the City is hosting a series of activities to celebrate our employees and connection with
the community. In addition to an employee appreciation picnic and service awards for staff. We are inviting
the public to join us on Saturday, May 12, at the MSC for a behind‐the‐scenes look at the City services that
keep our community running. The MSC will be open to the public from 9:00 am to 1:00 pm with project
demonstrations, displays, and fun activities from Utilities, Public Works, Facilities, Police, Fire, and
Community Services. We invite the UAC to join us!
Is an Electric Vehicle Right for You? CPAU is partnering with Stanford Medicine's Health Improvement
Program (HIP) for the second time to offer an interactive EV workshop. The event will include a panel
discussion by 4 long‐time EV drivers and experts, ready to answer any and all EV‐related questions. A wide
variety of EVs will also be available for attendees to explore. When the City cohosted the program last
October, we attracted a sold‐out crowd of 90 participants and expect another big turn‐out for this upcoming
free class. Thursday, May 17, 5:30‐730 pm, Mitchell Park Community Center.
Maintaining Native Gardens and Leak Detection: Learn how maintenance of water‐conserving landscapes
differs from that of traditional landscapes. This lecture includes maintaining drought‐tolerant plants and
managing irrigation system issues such as fixing leaks and clogs. Saturday, May 26, 9:00 am‐Noon, Mitchell
Park Community Center
Chair Danaher suggested electric bikes and scooters be available during the workshop.
COMMISSIONER COMMENTS
In response to Chair Danaher's comment regarding a future agenda item for undergrounding utilities, Dean
Batchelor, Chief Operating Officer, agreed to bring an item before the UAC.
UNFINISHED BUSINESS
None
NEW BUSINESS
ITEM 1: ACTION: Staff recommendation that the Utilities Advisory Commission recommend the City Council
accept the Utilities Smart Grid Assessment and Utilities Technology Implementation Plan including advanced
metering infrastructure‐based smart grid systems to serve electricity, water, and natural gas utility
customers.
Jeff Hoel believed the correct financial calculation showed a loss of $7.3 million over 18 years. The current
time‐of‐use (TOU) rate provides discounts at night when electric vehicle (EV) users are charging their vehicles.
He wondered about the EV users' reaction if TOU discounts occurred during the day. Replacing gas and water
meters because of dead batteries would be a cost and nuisance over time. He questioned whether staff would
learn of dead batteries quickly. He questioned whether the number of data samples would provide sufficient
information to persuade anybody to increase conservation. Meters should not encrypt data before sending
it.
Chair Danaher announced the current discussion is introductory, and a vote on staff's recommendation will
be taken at a subsequent meeting so that Commissioners have more time to study the document. The UAC
may wish to draft an informational report of its thoughts to the Council following a recommendation to the
Council.
Utilities Advisory Commission Minutes Approved on: Page 3 of 9
Dean Batchelor, Chief Operating Officer, announced the item will return to the Commission in August for
further discussion.
Jonathan Abendschein, Assistant Director of Resource Management, advised that the report represents an
initial high‐level exploration of the cost and benefits of advanced metering infrastructure (AMI) and a high‐
level map of the work leading to implementation. The UAC's vote to accept the Smart Grid Assessment and
Utilities Technology Implementation Plan (Plan) would indicate staff is planning appropriately. Over time, the
Council will need to approve multiple policies, procedures, budgets, and contracts. Throughout the process,
the Plan can be refined.
Shiva Swaminathan, Senior Resource Planner, reported the Plan recognizes three major elements of
technology projects that staff is going to undertake in the next five years, the Customer Information and
Billing System (CIS), the Enterprise Resource Planning System (ERP), and advanced metering infrastructure
(AMI). When work on these elements begin in earnest, other projects may have to be delayed or not initiated
until these three projects are complete. Staff views the investment costs as equipment and vendor costs,
which total approximately $16.5 million. Staff estimated additional staffing‐related costs at $1‐$2 million.
The Capital Improvement Program (CIP) amount of $19 million is comprised of $10 million for electric, $5
million for water, and $3.5 million for gas. Electric meters will be replaced, but radios will be placed on water
and gas meters. The water and gas meter radios operate on batteries and, when the battery runs out, the
radio will be replaced.
Chair Danaher calculated a cost per residence of approximately $700.
Swaminathan clarified that the typical measurement is cost per meter. Staff plans to install approximately
72,000 meters at a cost of $300 per meter. Staff proposes funding the electric portion of the project through
the Electric Special Project Reserve. The water and gas portions of the project could be funded through
capitalization or financing over a 20 or 10‐year term. The primary financial benefits of the project are
reduction in meter reading costs and increased conservation. Staff did not quantify non‐financial benefits
such as improved reliability and better customer experience. In November, staff presented the net present
value (NPV) as negative $7 million over 18 years. Since November, staff has determined there could be
greater synergies in staffing and utilization of devices for greater conservation. These changes result in a
breakeven NPV. Implementing AMI will require review of policies, procedures, and staffing resources and
receipt of community and staff input. Change management and communication is a key part of the project.
A transition plan is being discussed and developed for staff as roles change. Selection of technology will be
relatively easy as the technology is mature. Staff has identified approximately 35 risks, the top five of which
are sufficient resources, staff engagement and communication, definition of vendor contracts, integration of
software, and Council approval of policies and protocols. With respect to the impact of the project on utility
bills and rates, the project is a winner across the full utility and for each utility. The overall impact on bills for
residential customers is neutral. In the worst‐case scenario, there could be a 0.35‐0.7% impact on bills if costs
are incurred but benefits do not materialize as projected. Next steps include further discussion and
acceptance of the Plan in August. Some of the capital investments have been included in the fiscal year 2018‐
2019 CIP budget. If the UAC accepts the Plan in August, staff will present it to the Council in September.
In response to Commissioner Johnston's request for additional details of staff's calculation of the NPV,
Swaminathan explained that staff made assumptions initially without considering any sensitivities and
calculated a value. Staff then changed the assumptions and calculated the NPV. Commissioner Johnston did
not find an assessment of the likelihood of not achieving each of the savings used in calculating NPV.
Swaminathan indicated staff does not have a probability for achieving each savings. Staff knows with relative
certainty the capital costs, but staff has a large uncertainty around the ongoing operations and maintenance
cost and the value that can be harvested from the systems. The benefits projections and assumptions
contribute to NPV. Commissioner Johnston inquired about experiences from other cities that staff could
utilize to minimize the risk that the systems would not communicate well with one another. Abendschein
Utilities Advisory Commission Minutes Approved on: Page 4 of 9
related that one of the key ways to control the risk is to hire an excellent implementer who has experience
with utilities similar to City of Palo Alto Utility (CPAU). Staff is investigating different avenues to make that
work. Swaminathan added that the project included a $1 million contract with expert project managers who
have done this type of project multiple times with utilities similar to CPAU. The project managers will be
familiar with CPAU's CIS and ERP.
In reply to Commissioner Segal's question regarding the contractor being responsible for just AMI integration
or CIS and ERP integration, Swaminathan clarified that integration of CIS and AMI is part of the AMI project
budget. Commissioner Segal presumed CIS implementation has to anticipate integration with AMI.
Swaminathan stated the consultant handling the CIS and ERP projects has subcontractors, and one of the
subcontractors will understand AMI integration. There would be no direct integration between AMI and ERP,
only between AMI and CIS.
Vice Chair Ballantine remarked that if the infrastructure supporting telemetry did not have backup systems
all the way through, then the entire telemetry network could be lost in the event of a large earthquake or
other significant catastrophe. In this scenario, staff would not be able to see all the meters to identify the
locations of problems. If all the nodes go to data collection boxes per neighborhood and have no backup
power, they will go out the moment the utility goes out. That would be a disappointing result for the whole
project. Swaminathan reported the collectors have backup batteries. Vice Chair Ballantine responded that
the numbers for recovering from an earthquake are significantly longer than battery life. Abendschein
explained that one purpose of the battery is to pass on the last gasp of information from all of the meters so
that staff has at least a snapshot of what the system looked like when the earthquake hit. Part of the disaster
recovery process is getting the collectors running and getting real‐time telemetry up. Vice Chair Ballantine
commented that if the main hub receiving the data did not stay up to get that blast of data, then all data
would be lost. Often the entire electrical infrastructure goes down even though the damaging event is
localized. If receiving assets also lose power or do not have sufficient battery life to ride through that, then
the data would not get to the main computer asset, which might have backup power. The longer the
collectors last the more they can help staff restore the utility. Abendschein clarified that the collectors are
designed to deal with exactly that problem. The battery is intended to get all that information to the main
system. Batchelor added that staff should explore the length of battery life. Swaminathan advised that the
battery life is days.
Commissioner Forssell commented that NPV does not have to be positive in all cases. There might be
nonquantifiable benefits that the CPAU wants to purchase, such as system reliability. In terms of system
reliability, CPAU is already extremely reliable at more than 99%. She inquired about improvements in
reliability that an AMI system could provide. Vice Chair Ballantine remarked that Korea and Japan view the
reliability of U.S. electrical utilities as extremely poor. Swaminathan reported electric reliability is comprised
of length of time to detect and correct the outage and proactively avoiding outages. An AMI system could
provide an outage notice sooner and locate the source faster, thereby reducing the length of an outage. With
AMI, staff could monitor the loads on transformers during specific time periods and proactively upgrade or
replace transformers to avoid outages. Abendschein added that the economic value of reducing an outage
by 15 minutes or 30 minutes is much greater for commercial customers than for residential customers, and
the majority of the utility's customers are commercial. Swaminathan advised that staff attempted to
monetize reliability for both commercial and residential customers using industry statistics. The value is tens
of thousands of dollars a year. Commissioner Forssell assumed that type of value was included in the NPV
calculation. Swaminathan indicated the values were wild guestimates and small. However, preventing an
outage and reducing the length of an outage contributed to customer experience. Commissioner Forssell
requested examples of customer experience benefits other than TOU rates for EV users. Swaminathan
offered potential benefits of resolving billing inquiries quickly, reducing the length of a power outage,
notifying customers of an outage sooner, sending a right price signal to customers, and improving demand
response.
Utilities Advisory Commission Minutes Approved on: Page 5 of 9
Chair Danaher referred to Mr. Hoel's query regarding saving money by using Fiber to the Premises and
inquired whether RF connections were a significant part of the $19 million project. Swaminathan replied no.
Chair Danaher noted smart meters had been used for about 25 years; therefore, a great deal of contractor
experience is available. He asked if NPV numbers were informed by the experiences of other utilities and if
the NPV calculation included an escalation of labor costs. Swaminathan advised that the NPV was informed
by other utilities' experiences and included a labor cost increase of 3% and a benefits increase of 1%.
Commissioner Schwartz remarked that there are many examples of AMI projects and of value added to
utilities. CPAU could avoid some of the painful lessons of other utilities. Technologies and applications are
becoming available that CPAU could utilize right away. Implementing CIS first will allow CPAU to offer more
options and services as soon as meters are installed. She recommended the UAC discuss with the consultant
the kinds of functions that should be installed so that CIS will accommodate those functions from the
beginning. Across the country, outage detection has become an incredibly popular customer experience
benefit. Leak detection is even better for customer experience. Each customer having an endpoint device
that can communicate will allow CPAU to offer different programs to different customers. The UAC should
discuss the kinds of consumer and business‐facing programs that allow variability among customers. CPAU
policy should allow customers to opt out of AMI. At a recent workshop, she learned of an account
reconciliation app. Consumers who utilize the app increase their conservation. The value of AMI should not
be determined by cost per meter but by systemwide benefits.
ACTION: No action
ITEM 2. ACTION: Staff recommendation that the Utilities Advisory Commission recommend that the City
Council adopt the Proposed Operating and Capital Budgets for the Utilities Department for Fiscal Year 2019
Dean Batchelor, Chief Operating Officer, thanked Commissioners Segal, Forssell, and Johnston for their
review of the proposed budget.
Dave Yuan, Strategic Business Manager, reported City of Palo Alto Utilities (CPAU) accomplishments during
the fiscal year include adoption of the Utilities Strategic Plan, beginning construction of the Upgrade
Downtown project, and receipt of awards in the areas of environmental sustainability, local solar, energy
savings, and reduction of carbon footprint. Initiatives for the upcoming fiscal year include improve employee
retention and recruitment; strengthen coordination, collaboration, and communication with the City and
with the community; implement the technology roadmap; and initiate a proactive infrastructure replacement
program. Significant requests contained in the budget include $1 million for overhead construction
contractors, $1 million for the cross bore program, reclassification of a Business Analyst to Senior Business
Analyst, and projects for Caltrain facility relocation and seismic water system upgrades. The average
residential utility bill will increase about $11 or 4%. Staff proposed rate increases of 6% for Electric, 4% for
Gas, 11% for Wastewater, 3% for Water, and 2.9% for Storm Drain. In comparison to neighboring cities, Palo
Alto's average residential bill is 38% less for electricity, 14% less for gas, 33% less for wastewater, and 18%
more for water. The proposed CPAU budget totals approximately $301 million, comprised mainly of
commodity, Capital Improvement Program (CIP), salaries and benefits, and General Fund transfer. In the
outer years, spending is forecast to increase quite a bit because of one‐time projects and the increase in
construction costs.
In response to Chair Danaher's inquiry regarding particular programs staff debated including or omitting,
Yuan advised that staff debated CIP projects. The list of CIP projects is based on priority and available
resources.
Yuan continued with presentation of the budget for the Electric Fund. Accomplishments include
undergrounding of District 47, installation of new fiber optic cables for storm monitoring, and completion of
interconnection agreements to install solar panels at the Bryant and Webster garages. Upcoming initiatives
include establish and implement a Distributed Energy Resources (DER) plan; determine a Second
Transmission source; and replace aging electric facilities at three substations.
Utilities Advisory Commission Minutes Approved on: Page 6 of 9
Vice Chair Ballantine shared information regarding a newly developed capability to sense the RF emissions at
the onset of an event that would become a catastrophic ground fault. He questioned whether internal metrics
could include the number of outages or the distribution of outages to justify installing telemetry. Yuan
advised that staff tracked the number and duration of outages to assist with prioritizing CIP projects.
In reply to Commissioner Schwartz's question regarding purchase of transformers and other items with long
lead times, Yuan responded that the CIP budget included purchase of transformers and switches.
Yuan further discussed the cost drivers for the Electric Fund. Commodity makes up 50% of the budget for the
Electric Fund.
Chair Danaher remarked that staff has little ability to control expenditures other than delaying CIP projects,
based on the chart.
Yuan presented significant changes between the FY 2018 and FY 2019 budgets. Commodity decreased $2
million or 2% because staff is planning to make fewer market purchases. The CIP is expected to decrease by
$3.3 million because of deferral of the Veterans Hospital and Caltrain facility relocation projects. The increase
in the overhead contract resulted from the lack of senior staff for the project.
In reply to Chair Danaher's query regarding the overhead contract, Yuan reported the contract amount is
$1.5 million per year for three years. Chair Danaher remarked that the contract increase was a more
expensive solution than improving salaries for key staff. Batchelor indicated staff has to work with Service
Employees International Union (SEIU), and contract negotiations will open at the end of 2018.
Yuan continued with Electric CIP projects and the five‐year CIP budget. The five‐year CIP budget reflects
revenue and reimbursement transfers from other funds.
In answer to Commissioner Schwartz's comment regarding learning residents' priorities in relation to
undergrounding utilities, Batchelor explained that staff has to work with AT&T to gain its support and to
determine areas of the City where utilities could be undergrounded. Otherwise, the City would be responsible
for the total cost of undergrounding. After determining an area, staff issues a survey to customers in the area
to learn of customers' interest in undergrounding given the costs to customers. If surveys reflect low interest,
then Staff holds a community meeting to learn of concerns. Commissioner Schwartz assumed the cost of
undergrounding is socialized to the entire customer base. Yuan added that customers could petition the City
to underground utilities, in which case the customers pay the majority of costs.
Yuan further discussed the forecast for the Electric Operations Reserve. The recent rate increases should
raise the reserve balance to fall within the guidelines.
In reply to Commissioner Johnston's question about use of reserve funds to balance the budget, Yuan clarified
that funds would be transferred from reserves at the beginning of the fiscal year to cover the deficit. At the
end of the fiscal year, unspent funds would be returned to reserves.
Yuan next presented the Fiber Fund. Staff has initiated the fiber rebuild project with a new connection in the
Palo Alto Internet Exchange. Fiber optic services have been installed to monitor Public Works pump stations
and creek levels. Staff should issue a Request for Proposals (RFP) to develop a Fiber to the Node (FTTN)
network business case soon. Yuan indicated he would provide a copy of the RFP to Commissioners. Another
project for FY 2019 is installation of Wi‐Fi at Cubberley, Lucie Stern, and the golf course. Staff will continue
to upgrade the existing dark fiber network. Salaries and benefits and CIP represent 30% and 39% respectively
of the Fiber Fund budget. Fiber Reserves total approximately $28 million. Gas Utility accomplishments include
initiation of construction of Gas Main Replacement (GMR) 22, and upcoming initiatives include Phase II of
the cross bore program, a Gas cost of service study, and replacement of ABS/Tenite services. Commodity is
Utilities Advisory Commission Minutes Approved on: Page 7 of 9
the primary driver of the Gas budget. Many costs are fixed or nondiscretionary. The largest year‐over‐year
expense change is the cross bore project with a 70% increase. Commodity is decreasing by $800,000, and CIP
is decreasing slightly.
Chair Danaher inquired about the cost of the gas neutral policy, to which Jonathan Abendschein, Assistant
Director of Resource Management, reported the bill impact is 4¢ per therm or an increase of less than 0.5%.
In reply to Commissioner Schwartz's inquiry about the potential effect of PG&E's request to increase the
transfer price of gas, Abendschein advised that the rate cases are pending. One of the proposed increases
could increase bills by 10%. Commissioner Schwartz assumed staff is working to lower the proposed increase.
Abendschein explained that staff worked with groups holding interests similar to CPAU's to push back on the
total costs included in the transmission plan and to ensure costs are not shifted from other users to CPAU.
Much of the increase concerns gas storage. These types of costs are borne by the entire state.
Yuan continued with a presentation of Gas CIP projects. The cost of GMR projects has increased from $3.5
million to almost $6.5 million. One‐time projects include smart grid at a cost of $3.5 million over four years
and Upgrade Downtown at a cost of $9 million. Much of the GMR 22 project will be reappropriated to FY
2019. Gas Operations Reserves exceed the guideline amount because CIP spending has not yet materialized.
Wastewater accomplishment and initiatives include a complete sewer system rehabilitation (SSR) with SSR
28 to occur in 2019, a cost of service study for wastewater, and evaluation of a new sanitary sewer overflow
tracking system.
In response to Commissioner Segal's query regarding integration of the overflow tracking system with CIS,
Yuan indicated there should be some integration of the two. Batchelor added that staff would like to integrate
the overflow tracking system with Geospatial Information Systems (GIS) to locate and track spills.
Commissioner Segal suggested staff track needs so that they can be included in plans for system upgrades.
Yuan reported RFPs for software contain all integration points.
Yuan next presented Wastewater projection changes. A sewer main replacement project was not part of the
prior budget. Treatment charges are increasing due to the CIP project at the Regional Water Quality Control
Plant. CIP projects are customer connections, system improvements, and main replacements. The
Wastewater Reserve balance is currently above the guideline. As CIP projects begin, the balance will
decrease. Water accomplishments include initiation of construction of Water Main Replacement 26,
rehabilitation of the Montebello Reservoir, and assessment of water system configuration and emergency
water supply. Batchelor added that one concern is rehabilitation of reservoirs for $2.5‐$3 million each or
construction of new ones for $2.5 million each. Staff is considering relocation of the reservoirs or perhaps
constructing an underground super tank.
In response to Commissioner Schwartz's question about informing the Council of the UAC's discussion of
maintenance projects, Batchelor suggested the UAC could recommend actions to the Finance Committee
when it considers maintenance projects. Yuan reported the Finance Committee referred the proposed water
rate increase back to staff for alternatives and subsequently recommended to Council a draw on reserve
funds. The Finance Committee is aware that this draw could result in higher rate increases in the future.
Yuan further presented the upcoming Water initiatives of a cost of service study, geological study and
assessment of reservoirs, evaluation of a recycled water project, and repair of a transmission main. The
primary cost drivers for the Water Fund are commodity at 40% and CIP at 26%. Project expense changes are
affected by an $8.9 million increase in CIP and a $1.5 million increase in commodity. The seismic upgrade
project is the main difference in the five‐year CIP plan. Because of increased water consumption, the reserve
balance is at the high end of the guideline range. Staff continues to review projects, performance metrics,
expenditures, and staff positions in an effort to contain costs.
Utilities Advisory Commission Minutes Approved on: Page 8 of 9
Commissioner Johnston noted a discrepancy in the amounts for prior year Electric CIP projects shown on
page 14 of the packet and in Attachment B. Yuan indicated he would provide an explanation at a later time.
In reply to Commissioner Johnston's query regarding cost recovery for customer connections, Batchelor
reported the City receives a benefit from building the infrastructure in that the infrastructure upgrade can
be sold to surrounding structures. The customer pays for the service into the building.
In answer to Commissioner Forssell's query regarding the decrease in the workers' compensation amount
and in other revenue under Electric Operating Budget, Yuan advised that the Human Resources Department
calculates the workers' compensation amount based on prior year claims. The decrease in other revenue
could result from the reduced VA Hospital upgrade project. Staff budgeted $2.5 million for the project, but it
had been reduced to $700,000. Abendschein added that the decrease in other revenue is mostly likely caused
by an increase in hydroelectric power or a large one‐time customer connection fee. In response to
Commissioner Forssell's question regarding the Pension Trust Fund contribution in the budget reconciliation,
Abendschein explained that the amount represents a change rather than a transfer of funds. Staff may have
budgeted a certain amount, and the amount was lower than expected.
Commissioner Johnston requested staff add a column for current year forecasted expenses, if different from
the adopted budget, so that Commissioners could make comparisons.
In reply to Commissioner Segal's question about the outlook for pension and retiree medical costs as more
staff retire, Yuan indicated the number of vacant positions resulted in lower amounts for those expenses.
The City as a whole is placing additional funds into a Pension Trust Fund.
Vice Chair Ballantine inquired about Batchelor's satisfaction with the rate at which smart grid technology is
being included in upgrade projects. Batchelor responded that his level of satisfaction is only medium, and
perhaps Commissioners could lobby for additional funding for such projects. The $19 million smart grid
project does not include implementation of smart grid technology in the field.
ACTION: Commissioner Schwartz moved to recommend the City Council adopt the proposed Operating and
Capital Budgets for the Utilities Department for fiscal year 2019. Commissioner Johnston seconded the
motion. The motion carried 6‐0 with Chair Danaher, Vice Chair Ballantine, and Commissioners Forssell,
Johnston, Schwartz, and Segal voting yes.
ITEM 3. ACTION: Selection of Potential Topic(s) for Discussion at Future UAC Meeting
Chair Danaher requested presentations regarding water storage and undergrounding utilities.
Vice Chair Ballantine suggested the undergrounding report include implementation of smart grid
components in the field.
Commissioner Johnston recalled his request for an item regarding the Cool Block program.
In response to Chair Danaher's question regarding a report on the Fiber to the Premise (FTTP) Request for
Proposals (RFP), Dean Batchelor, Chief Operating Officer, advised that the RFP could be released in the next
few weeks, and a report may be ready as early as August. Chair Danaher wanted to ensure the RFP covered
all reductions to installation and equipment costs. In reply to Batchelor's suggestion to provide an FTTP
update in October, Chair Danaher indicated staff should place it on the list of items to be scheduled.
Commissioner Schwartz requested the August meeting be rescheduled to the week of either July 16 or August
13.
Commissioners Forssell and Johnston and Chair Danaher advised that they would not be present for the June
6 meeting.
Utilities Advisory Commission Minutes Approved on: Page 9 of 9
Chair Danaher requested staff poll Commissioners for a meeting date on Wednesday and Thursday in late
June and each Wednesday and Thursday in July and August.
The next meeting is scheduled for June 6, 2018.
Meeting adjourned at 6:30 p.m.
Respectfully Submitted,
Marites Ward
City of Palo Alto Utilities
LAC MEETING
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Received Before Meeting
(Received at Meeting
2
Priority 4/Strategy 5: Engage stakeholders and define CPAU's role in supporting
and facilitating community resiliency
Action 1. Engage in community outreach to identify what aspects of resiliency
are important to the community for each utility to support development of a
resiliency work plan. Complete by December 2018.
• Action 2. Define minimum emergency service commitments and targeted
full system recovery times in case of a major disaster(s) and communicate
general guidance on recovery times to the public.
• Action 3. Develop an outreach and education program to facilitate individual
customer resiliency efforts.
• Action 4. Identify high priority issues that could interfere with emergency
service commitments and recovery times and develop a plan to improve
resiliency in these areas.
A LT,'„,
Define Resilience, Vision, and Goals
• 2 Panels:
3-4 experts in the field of resiliency
Staff to discuss resiliency in Palo Alto context
Break out session to discuss community
assets and potential vulnerabilities
identify hazards impact to Community,
Critical Services, Built Environment,
Economy, Natural Environment
• Identify top 3 priority areas
Refine Resilience Vision and Goals
• Review Resiliency Framework and Guiding
Principles draft from Workshop #1
• Review more specific scenarios such as plans
for a second transmission line and
Distributed Energy Resources development
• Developing clear timing for implementing
resiliency efforts
• Identify further outreach efforts
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