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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 Meeting held on August 28, 2018 and
September 5, 2018
IV.AGENDA REVIEW AND REVISIONS
V. REPORTS FROM COMMISSIONER MEETINGS/EVENTS
VI.GENERAL MANAGER OF UTILITIES REPORT
VII.COMMISSIONER COMMENTS
VIII.UNFINISHED BUSINESS
1.Action Utilities Advisory Commission Recommendation that the Finance Committee
Recommend that the City Council Adopt a Resolution to Approve the 2018 Electric
Integrated Resource Plan (EIRP), Updated Renewable Portfolio Standard Procurement
Plan and Enforcement Program, and Related Documents
IX.NEW BUSINESS
2.Discussion of Results of Residential Survey on Adoption of Distributed Energy Discussion
Resources Technologies
3.Discussion of Recycled Water Expansion and Other Water Reuse Opportunities Discussion
4.Discussion of CPAU’s Role in Community Resilience Including Workshop Summary Discussion
and Draft Vision and Goals
5.Selection of Potential Topic(s) for Discussion at Future UAC Meeting Action
NEXT SCHEDULED MEETING: November 7, 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)).
Informational Report 12-Month Rolling Calendar Public Letter(s) to the UAC
UTILITIES ADVISORY COMMISSION
WEDNESDAY, OCTOBER 3, 2018 – 7:00 P.M.
COUNCIL CHAMBERS
Palo Alto City Hall – 250 Hamilton Avenue
Chairman: Michael Danaher Vice Chair: Judith Schwartz Commissioners: Arne Ballantine, Lisa Forssell, A. C. Johnston, Lauren Segal and Terry Trumbull Council Liaison: Eric Filseth
Utilities Advisory Commission Minutes Approved on: Page 1 of 4
UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF AUGUST 28, 2018 SPECIAL MEETING
CALL TO ORDER
Ed Shikada, Utilities General Manager, called the meeting of the Utilities Advisory Commission (UAC) to
order at 4:03 p.m.
Present: Chair Danaher, Vice Chair Schwartz, Commissioners Ballantine, Forssell, Segal, and Trumbull
Absent: Commissioner Johnston
ORAL COMMUNICATIONS
None
RESILIENCE WORKSHOP #1: DEFINE RESILIENCE, VISION AND GOALS
A. Introductions and Meeting Objectives
Ed Shikada, Utilities General Manager, explained that the workshop is intended to identify aspects of
resilience that are important to the community and to explore the roles of the Utilities Department and
utilities in general in a new and evolving vision of community resilience. During the update of the Strategic
Plan, stakeholders related that resilience is an important dimension of utility services. Shikada shared
definitions of resilience provided by stakeholders. Given the range of concepts, staff decided to engage the
UAC and community in a discussion to understand community assets, potential hazards, and resilience
needs related to utility services. Utility investments in infrastructure are typically large and long-term; thus,
changing the priorities and practices for utility investments is difficult to effect quickly. Questions for
consideration are how should the City of Palo Alto Utilities' (CPAU) role in building public infrastructure be
balanced with encouraging private investment and development on individual properties; what
investments should be prioritized for resilience while continuing to meet other City needs; how is resilience
impacted by staffing strategies and human resources; and other similar questions.
Mindy Craig, facilitator, advised that the intent of the workshop is to develop a common vocabulary, to
learn about CPAU activities, and to begin to establish goals, priorities, and a vision for resiliency. A future
workshop will explore solutions. A panel of experts will provide broad perspectives, and then staff will
share CPAU projects and studies. Hopefully, a video presentation will create a sense of urgency that
resiliency is important because of the many things that can impact CPAU. Participants will talk about what
resilience means to the City of Palo Alto, and small groups will identify details of resilience. Lastly,
participants will identify priorities and next steps.
B. Resilience Experts Panel
Corinne Bartshire, Urban Areas Security Initiative (UASI), related the background of UASI. One of UASI's
tasks is to prepare a Threat and Hazard Identification and Risk Assessment (THIRA), which is a tool for
looking at threats and risks across the Bay Area. The THIRA does take into account the interconnections of
utilities and transportation. UASI manages several working groups that facilitate conversations throughout
the Bay Area. The Emergency Management Work Group has focused on large special event planning and
DRAFT
Utilities Advisory Commission Minutes Approved on: Page 2 of 4
sharing law enforcement and security; commodity points of distribution; and on local agency capabilities
for care and shelter. An upcoming area of focus is critical transportation. UASI materials are available to the
public on UASI's website.
Josh Schellenberg, Nexant, reported on the difficulties of assessing the risk of a resilience investment for an
electric system. The focus on assessing risk has increased because of the increasing frequency and severity
of significant disasters. The Department of Energy, Lawrence Berkeley National Laboratory, and Nexant will
publish reports that provide guidance and recommendations for assessing the costs and benefits of
resilience investments. Nexant has conducted many studies of the value of grid resiliency and the direct
and indirect costs to businesses. Electricity is highly valued due to the high level of business productivity in
the Bay Area. The cost of a long-duration power outage is highest for small and medium businesses because
they cannot easily shift production from one time period to another. Methodological debate and challenges
continue around understanding the economic impacts of disasters. Based on information obtained in prior
studies, a power interruption lasting multiple weeks in the Bay Area could cost billions of dollars. The
impacts to critical infrastructure may require a separate assessment for the potential of a micro grid or grid
islanding capabilities.
Benson Joe, ABB Enterprise Software, summarized regulations to increase renewable energy standards and
to reduce carbon emissions. The California Independent System Operator (CAISO) power supply queue
includes 8,000 megawatts (MW) of solar power, 3,000 MW of wind power, and 12,000 MW of energy
storage. CAISO has to ensure the instantaneous supply of generation matches the instantaneous demand
for generation. As the amount of renewable energy in the power system increases, the reliability of the
system decreases. As a solution, adding more rooftop solar can be challenging in that too much generation
without sufficient load can damage equipment. Another solution is a micro grid, but the business
proposition must be considered. A discussion of grid resiliency has to include the question of what is the
acceptable duration of a power outage.
In response to questions from participants, Schellenberg advised that a great deal of research into everyday
outages has been conducted. The billions of dollars in cost applies to outages lasting multiple weeks. The
cost of a single-day outage is closer to $100 million. Joe added that there are tradeoffs to increasing the
resilience of existing infrastructure and building a micro grid for islanding during short-term outages. Mindy
Craig, facilitator, remarked that the benefit of resilience includes having a better community or better
resources as well as recovering from an outage. Schellenberg indicated most businesses believe that
insurance would cover only physical damages caused by an outage. Business interruption insurance or
another type of insurance probably would not cover the high cost of an extended outage. In many ways,
investment in infrastructure could be considered insurance. Joe likened insurance for an outage to an
extended warranty for a consumer product. The business has to compare the cost of a replacement product
amortized over its lifespan to the annual cost of an extended warranty. Bartshire reported the regional
THIRA identifies risks and resources but not action steps to respond to and recover from threats, which is
the role of local jurisdictions, cities, counties, etc. A local THIRA identifies actions and implementation.
Sharing and witnessing the effects of disasters has led to community preparedness. Schellenberg indicated
a survey of Palo Alto businesses could provide a fiscal analysis of resilience, but existing research can be
extrapolated to Palo Alto. Craig reported the community should help CPAU understand the qualitative
values.
C. Community Risks and Resources for a Resilient Palo Alto
Kenneth Dueker, City of Palo Alto Office of Emergency Services Director, reported the City of Palo Alto is
one of the only local jurisdictions to have a THIRA. The City's THIRA addresses natural disasters such as
earthquakes and floods, accidents, and human-caused events. Resilience is the ability to suffer an event
and return to a reasonable level of functionality. Public safety's mission is to prepare for, prevent when
possible, mitigate, respond to, and recover from hazards. Following the airplane crash into the transmission
Utilities Advisory Commission Minutes Approved on: Page 3 of 4
line in 2010, the City considered spending millions of dollars to mitigate risks. However, the City has only
identified options for mitigating risks.
Karla Dailey, CPAU Senior Resource Planner, noted the City of Palo Alto Comprehensive Plan and other City
documents address resilience. Specifically, the Comprehensive Plan addresses cooperative planning with
other agencies, community awareness, and long-term resilience for water and energy, community safety,
and CPAU infrastructure. The City completed its Emergency Water Supply Plan by refurbishing five wells
and developing three new wells. Along with the Santa Clara Valley Water District, staff is exploring an
expansion of local resilient water supplies.
Debra Lloyd, CPAU Acting Assistant Director of Utility Engineering, remarked that a loss of water would be
catastrophic on a long-term basis. Communications is a vital part of resilience and emergency planning.
With respect to local distribution, resiliency means prevention, recovery, and survivability. Water,
wastewater, and gas pipes are being replaced with pipes made of materials that are amenable to
liquefaction. Electric systems are not loaded to capacity so that supply can be switched among systems.
Vegetation management is important for the electric utility. Prevention strategies include installing
barriers, elevating equipment, relocating equipment and infrastructure, and increasing security. Staff is
investigating battery storage and smart grid pilot programs. Recovery plans, on-call field staff, and the
outage management system aid in recovering from a disaster. Survivability strategies include battery
backups at substations, natural gas generators to power low-voltage electronics, and communications to
the community.
In reply to questions from participants, Dailey advised that lines for recycled water (purple pipes) are not
being installed city wide. Romel Antonio, Senior Project Engineer, reported generators have been installed
at El Camino Park and the Mayfield Pump Station to pump water, and three portable generators can be
transported to facilities as needed. The City can provide 9 million gallons of water per day from ground
wells if electricity is available. A participant suggested CPAU consider long-term power for cell towers and a
rebate program for homeowner purchase of Tesla wall packs. Dueker agreed that City staff need to live in
or near Palo Alto in order to provide manpower during an emergency situation.
D. Resilience and Palo Alto
The video HayWired (a USGS video depicting a 7.0 earthquake and the cascading impacts) was shown
followed by a large group discussion of “What does resilience mean to Palo Alto?”
Participants offered their definitions of resilience, including self-sufficiency and organization, continuation
of critical facilities, sheltering in home, the community working together, people of all income levels having
access to resources, safe and functional schools, clear roadways, pre-planning to ensure recovery in hours
or days, communications and charging of cell phones, and neighbor networks.
E. Small Group Exercise: What are the Problems We Need to Address?
Participants met in small groups to discuss the impacts and vulnerabilities that the Utility should prioritize
with the question in mind of “What are the problems we need to address?” and then reported back their
top priorities and focus areas for utilities. Each group had a scenario to consider and responded to
questions focusing on one of five asset categories: Critical Services; Economy; Natural Environment; People
& Community; or Built Environment.
• The critical services group identified a hierarchy of critical services, i.e., electric service for water
pumps, public safety, and communications; water for fire suppression, drinking, and medical
services; and communications for emergency responders and individuals. They also discussed the
location of utility infrastructure and risks of being in liquefaction zones.
• The economy group identified high priority retail services of hardware stores, pharmacies, gas
stations, and grocery stores and the need for utilities and employees at those businesses.
Employees may be able to work remotely if data centers and internet providers are operational.
Utilities Advisory Commission Minutes Approved on: Page 4 of 4
Daycares and schools will be needed for employees to return to work in physical locations. A barter
system will be needed to replace cash and credit cards for purchases. The group also discussed the
need for highway recovery as “delivery systems” so that supplies can be brought in.
• The natural environment group considered impacts on flora and fauna by season. People displaced
from their homes could camp in parks, in which case health, safety, and utility resources will be
needed in parks. Parks could be used as quarantine spaces to prevent the spread of disease. A
second natural environment group considered priorities of natural infrastructure, wildlife, parks
and recreation areas, and protecting and preserving the water supply, communications, and
electricity.
• The people and community resources group identified priorities of housing for workers, integration
of workers into the community, care facilities, and at-risk residents. Community Emergency
Response Team (CERT) and Palo Alto Neighborhood Disaster Activities (PANDA) volunteers and
resource maps will be needed. A second people and community group identified workforce housing
for City staff and staff retention and recruitment as priorities. Volunteers could be trained to
substitute for utility workers in the event of an emergency. Neighborhood leaders could compile
information regarding residents with special needs to ensure they have the resources they need.
• The built environment group identified priorities of minimizing and mitigating damage, converting
buildings to housing for displaced residents, and meeting Building Code and Code enforcement
needs. A second built environment group, guided by the importance of surviving a disaster as a
community, identified the priorities of safe housing, buildings, churches, schools, and water supply
and distribution.
F. Wrap Up and Next Steps
Participants identified needs for a roadmap to a secure smart grid for electricity, water, and gas; waste
disposal; secure CPAU infrastructure; decentralized operations for community hubs; meaningful support of
emergency volunteers; utility volunteers; a list of appliances and products to be turned off when electric
service resumes; and micro grids for community hubs that are distributed around Palo Alto.
Ed Shikada, Utilities General Manager, reported staff will provide information from the workshop to the
UAC so that the UAC can direct staff.
Meeting adjourned at 7:05 p.m.
Respecfully Submitted
Rachel Chiu
City of Palo Alto Utilities
Utilities Advisory Commission Minutes Approved on: Page 1 of 8
UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF SEPTEMBER 5, 2018 REGULAR MEETING
CALL TO ORDER
Chair Danaher called the meeting of the Utilities Advisory Commission (UAC) to order at 7:00 p.m.
Present: Chair Danaher, Vice Chair Schwartz, Commissioners Ballantine, Forssell, Johnston, and
Trumbull
Absent: Commissioner Segal
ORAL COMMUNICATIONS
David Carnahan, City Clerk's Office, shared information regarding recruitment for three vacancies on the
Architectural Review Board, three vacancies on the Parks and Recreation Commission, and two vacancies on
the Planning and Transportation Commission. The deadline for submitting applications for the positions is
October 17 at 4:30 p.m. Commissioners are requested to encourage residents to apply for the vacancies.
APPROVAL OF THE MINUTES
Chair Danaher revised the second sentence of the second paragraph on page 8 to "If safety requires it,
transformers should be pad-mounted …"
Commissioner Johnston requested staff complete the final sentence of the second paragraph on page 5.
Commissioner Trumbull moved to approve the minutes from the August 1, 2018 meeting as amended.
Commissioner Johnston seconded the motion. The motion carried 5-0 with Chair Danaher and
Commissioners Ballantine, Forssell, Johnston, and Trumbull voting yes, Vice Chair Schwartz abstaining, and
Commissioner Segal absent.
AGENDA REVIEW AND REVISIONS
Chair Danaher announced Item 3 under New Business will be heard first.
REPORTS FROM COMMISSIONER MEETINGS/EVENTS
Vice Chair Schwartz reported in June she led a workshop for the Low-Income Community Solar Working
Group where participants learned about business models other than subscription. In July, she attended the
Smart Electric Power Alliance (SEPA) Grid Evolution Summit. In August, Vice Chair Schwartz attended a low-
income energy issues forum and community solar webcast. As a merit reviewer of applications for
Department of Energy (DOE) grants, she found the latest innovations for solar projects interesting.
UTILITIES GENERAL MANAGER REPORT
Dean Batchelor, Utilities Chief Operating Officer, delivered the General Manager’s Report.
Council Votes to Support Bay Delta Plan - On July 6, the State Water Resources Control Board issued a Draft
Final Bay Delta Plan Update, also known as the Bay Delta Plan, calling for 40% unimpaired flow on the
DRAFT
Utilities Advisory Commission Minutes Approved on: Page 2 of 8
Tuolumne River between the months of February and June, regardless of water supply conditions. To-date
the SFPUC, the City’s water supplier, and BAWSCA, an association of wholesale water suppliers (including
Palo Alto) served by the SFPUC, have advocated for a voluntary settlement agreement among affected parties
rather than adoption of the 40% unimpaired flow requirement. On August 20, the City held a public hearing
to discuss the State’s proposed Bay Delta Plan. City staff recommended Council support a voluntary
negotiated settlement process, and Council instead voted unanimously to support the Bay Delta Plan,
including the flow criteria. The plan has not yet been adopted. While the State Board had originally planned
to issue a final decision by August 23, action was delayed to allow more time for voluntary settlement and
preserve what the State referred to as an “opportunity to make the non-flow elements more concrete and
reduce the potential water supply impact.” On August 28, Palo Alto’s water supplier, the SFPUC, held a public
hearing and heard testimony from advocates, but took no action to change its position. Another SFPUC
hearing is expected at a later date. The Santa Clara Valley Water District, of which the City is part, also held a
public hearing on August 28 on the Bay Delta Plan. The District Board voted unanimously to support a
voluntary settlement process.
Emergency Tabletop Exercise this Week - On September 6, the City will participate in an annual regional
disaster exercise known as Urban Shield. Simulating the aftermath of a major earthquake, staff from Utilities,
Public Safety, Public Works, and other City departments will operate from the Mobile Emergency Operations
Center (MEOC), collaborating with other regional agencies on a disaster recovery response. City Council will
also proclaim National Emergency Preparedness Month at their September 10th meeting. Learn more about
the City’s emergency preparedness efforts at cityofpaloalto.org/preparedness.
Upcoming Events
• Midtown Residents Association Ice Cream Social - Utilities staff will host an information booth at
the annual Midtown Residents Association Ice Cream Social on September 16. Please join us and
other community organizations at Hoover Park from 1 to 4 pm.
• Electric Vehicle Ride & Drive Event – Also on September 16, the City is co-sponsoring an electric
vehicle ride and drive event at the Peninsula Conservation Center. To commemorate National Drive
Electric Week, EV owners and dealers will bring out various zero-emissions vehicles for interested
drivers to test out. Find details and registration at cityofpaloalto.org/workshops.
• SunShares Workshop - On September 29, the City is hosting an introductory workshop on the
SunShares solar and zero-emissions vehicle program. Attendees can learn more about these
technologies, incentives, benefits of combining solar with electric vehicles, and how to access the
program’s group-buy discounts. Register at cityofpaloalto.org/sunshares.
COMMISSIONER COMMENTS
Commissioner Ballantine remarked on the importance of the esoteric Department of Energy analysis
regarding N+1+1 redundancy given the scenario presented at the resilience workshop. The PG&E natural gas
pipeline is probably an asset in N+1+1 scenarios; whereas, in the given scenario, it was not an asset. Another
takeaway from the workshop was the need for City of Palo Alto Utilities (CPAU) staff or qualified volunteers
to be in place following a disaster so that recovery can begin.
Commissioner Forssell understood the purpose of the workshop was to understand the community's
perception of resiliency and the community's values. While the workshop illuminated interesting properties
of the City's preparedness, it provided little time for residents to share their thoughts. Staff's presentations
were more relevant than the consultants' presentations.
Vice Chair Schwartz stated the experts were supposed to answer questions rather than give presentations.
The workshop should have been more interactive. The scenario should have been less drastic and more
realistic to demonstrate the need for CPAU to invest in projects that aid recovery from realistic events.
Commissioner Trumbull concurred with use of the word esoteric in relation to the workshop.
Utilities Advisory Commission Minutes Approved on: Page 3 of 8
UNFINISHED BUSINESS
None
NEW BUSINESS
ITEM 1: DISCUSSION: Discussion of the 2018 Electric Integrated Resource Plan (EIRP) and Related
Documents.
Jim Stack, Senior Resource Planner, reported the EIRP needs to be approved by the City Council by the end
of the year and submitted to the State. In October, staff will present the full EIRP to the UAC and request the
UAC recommend the City Council approve it. The EIRP objectives, strategies, and work plan will guide staff
over the next few years during implementation of the EIRP. Integrated resource planning is the process used
to develop a roadmap for meeting energy needs over a specific planning horizon while achieving objectives
for cost, sustainability, and reliability. SB 350 revised all the requirements for the Renewable Portfolio
Standard (RPS) and energy efficiency; established formal greenhouse gas reduction targets for the electric
sector; and requires all larger utilities to submit a periodic EIRP to State regulators. Since June 2017, staff has
presented components of the EIRP every few months to the UAC. Previously, staff performed integrated
resource planning under the framework of the Long-Term Electric Acquisition Plan (LEAP), which was last
updated in 2012. Since 2012, targets for greenhouse gas emission reduction, RPS, and energy efficiency have
increased, and distributed generation has proliferated along with growth in energy storage markets and
electric vehicles. CPAU has adopted a carbon-neutral supply plan, almost tripled its RPS level, reduced
greenhouse gas emissions, initiated a feed-in tariff program, signed six new solar Power Purchase
Agreements, realized major energy efficiency savings, installed electric vehicle chargers on City property, and
adopted a new Strategic Plan, a Sustainability and Climate Action Plan (S/CAP), a Local Solar Plan, and an
Electrification Work Plan since 2012. CPAU's supply portfolio reflects the growth of solar purchases over the
past few years, which places the RPS level far ahead of State requirements. The City's greenhouse gas
emissions reached zero in 2013 with adoption of the Carbon Neutral Plan. Discussion of the appropriateness
of the current methodology for carbon accounting will continue over the next year. CPAU's target for
greenhouse gas emissions is a range because the State has not formally adopted a methodology. Staff expects
the portfolio will include supply-side resources such as efficiency and behind-the-meter solar by 2020. By
2030, the amount of landfill gas and wind in the portfolio will decrease as contracts expire. A detailed look at
the load forecast between 2018 and 2030 depicts the impacts staff expects on the load from various types of
Distributed Energy Resources (DER). Electric vehicles (EV) and heat pump water and space heaters are
expected to add to the load while efficiency and behind-the-meter solar are expected to reduce the load by
a greater amount. Over all, staff expects the load to decrease slightly from the current level. Jonathan
Abendschein, Resource Management Assistant Director, clarified that the 6.6% is not a decrease from the
current level but a decrease from where the utility would be in 2030.
Stack further stated that the overall objective for the EIRP is derived from CPAU's Mission Statement. To fulfill
the objective, staff proposes nine strategies to pursue an optimal mix of supply side and demand side
resources. The strategies are to maintain a carbon neutral supply; to actively manage portfolio supply cost
uncertainties; to manage the portfolio to ensure the lowest possible ratepayer bills; to partner with external
agencies to implement optimization opportunities; to manage supplies to meet changing customer loads and
load profiles; to ensure reliable and low-cost transmission services; to support local electric supply resiliency;
and to comply with all State and Federal laws and regulations.
The EIRP Work Plan is organized around the nine strategies and lists a description of activities staff plans to
pursue. First, staff will evaluate the merits of a new 30-year Western contract. The Western contract is the
largest single resource in the portfolio in that it supplies almost 40% of CPAU's energy needs in an average
year. The contract expires at the end of 2024. Western has been a good, low-cost resource; however, it is not
as attractive now because of the availability of many new renewables and because of uncertainty around its
output and cost. Analysis of the net value of a renewed Western contract indicates the Western contract will
have the highest expected net value of all resources evaluated, except for new in-state wind resources.
Utilities Advisory Commission Minutes Approved on: Page 4 of 8
However, there are many large uncertainties around the expected value for Western. Staff will attempt to
narrow the uncertainties and get a better sense of the actual cost and value of the resource. Staff will also
focus on negotiating the Western contract language in the next year to build flexibility into the contract.
Second, staff will evaluate the merits of rebalancing the supply portfolio to more closely match load with
resources. From season to season, the load profile does not change significantly, but the supply profile does.
This is based on the assumption that staff dispatches hydroelectric resources in order to maximize their value
based on market price signals rather than matching load with supply. Hydroelectric and solar generation
exacerbate the imbalance between load and supply. Other resources, particularly out-of-state wind, may be
complementary to the current profile. Staff will continue to examine the issue over the coming year in
coordination with analysis of the Western contract. Third, staff will evaluate how best to utilize the City's 50
megawatt (MW) share of the California Oregon Transmission Project (COTP) transmission asset starting in
2024. The COTP Project is a way to import low-cost wind resources. Staff needs a more thorough examination
of all potential uses for the resource and decide the best use of the resource. Fourth, staff will evaluate
various methods of accounting for the supply portfolio's carbon content and consider updating the definition
of carbon neutrality. Currently, calculation of the portfolio's emissions is based on the net annual volumes of
market power purchases. However, the carbon content associated with market power on the grid varies
significantly over the course of a year and a single day. The State is currently undertaking three initiatives
regarding the accounting methodology. Fifth, staff will evaluate the merits of monetizing excess RPS supplies
and consider different approaches to achieving RPS compliance. In November 2017, the UAC indicated its
preference for a focus on cost minimization by selling excess supplies and potentially swapping some high-
value category 1 resources for lower-cost category 3 resources. Staff is planning to return to the UAC with
some analysis of different options for pursuing that approach. SB 100, if signed by the Governor, will provide
certainty on CPAU's ultimate RPS target for 2030.
In response to Commissioner Forssell's query regarding SB 100's definition of clean energy, Stack understood
the definition was basically renewables and large hydroelectric, but he would confirm the definition.
Stack further reported that staff will explore synergistic opportunities to work with the Northern California
Power Agency (NCPA) and other agencies, including transacting with them or operating joint customer
programs. Lastly, staff will undertake a competitive assessment of the Electric Utility within the context of
the proliferation of customer-side DER technologies and will develop contingencies to address the potential
for large changes in load as a result of DER adoption. DERs have the potential to substantially alter the
magnitude and shape of the load.
Commissioner Johnston remarked that the slides dramatize the problem of matching resources with load and
remind him that matching is a major issue.
Commissioner Ballantine questioned the projections that the load will remain flat or decrease given the
electrification of homes and vehicles. It is very possible if not likely that the electric load will increase while
the overall energy load decreases. Lena Perkins, Resource Planner, advised that the projections are consistent
with statewide projections. The main drivers for the projections are the requirements for increasing energy
efficiency and the decrease in manufacturing and industrial loads. The California Energy Commission (CEC)
developed a Palo Alto-specific forecast that projects Palo Alto's load will decrease 10-15%. Abendschein
added that CPAU's load is 20% residential and 80% commercial. A large increase in the residential load does
not dramatically increase the Citywide load. Commissioner Ballantine commented that an analysis of a
scenario wherein all houses and all vehicles are electric would be interesting. Perkins suggested staff could
run that scenario as a sensitivity case. Doubling the residential load would total only 15% of the Citywide
load. Chair Danaher noted the possibility of more commuters charging their vehicles at work. Perkins advised
that the trend is the opposite; approximately 80% of charging happens at home. Stack indicated staff needs
to consider the possibility of significant increases as well as decreases in load, build flexibility into the
portfolio, and plan for such uncertainty.
Utilities Advisory Commission Minutes Approved on: Page 5 of 8
In reply to Vice Chair Schwartz's query as to whether staff has considered block chain, Perkins reported staff
has not considered block chain in any scenarios to date. Vice Chair Schwartz requested staff add some charts
regarding coincident and non-coincident demand because everyone needs to understand those terms, as
they have implications on whether the electrons they are using are truly carbon neutral. It would be useful
to look at bulk storage options and other things that the utility could implement to utilize all the solar power
generated in the City. A discussion of storage should include personal storage and the public safety of battery
storage.
Commissioner Forssell expressed interest in the new average hydroelectric year given the effects of climate
change. Stack advised that staff recently updated the long-term forecast for Western, based on recent
historical data, and reduced the expected level of hydroelectric by approximately 10%. The updated data is
reflected in the graphs. Commissioner Forssell hoped the initiative to rebalance the portfolio did not mean
balancing the load just to Palo Alto, but to the wider California grid.
Chair Danaher concurred with prior comments about energy storage. Energy storage will become much more
cost effective. The water resource will be at risk, which affects geothermal resources as well as hydroelectric
resources.
Commissioners requested the next presentation include information regarding coincident and non-
coincident demand; resources that could fill the voids in supply so that the cost effectiveness and value of
storage can be determined; and information about the COTP transmission asset.
ACTION: No action
ITEM 2. ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that 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.
Shiva Swaminathan, Senior Resource Planner, reported staff framed the discussion in the broader context of
coordinating projects for the Electric Resource Plan (ERP) System, the Customer Infrastructure System (CIS),
and Advanced Metering Infrastructure (AMI). Staff quantified the benefits where possible, but there are
significant qualitative benefits. The net present value for investment over an 18-20 year period was calculated
to be zero with operating expenses of $27 million and capital expenses of $17 million.
In answer to Chair Danaher's question regarding inclusion of expanding the time-of-use (TOU) billing system
and more aggressive or new demand response approaches as benefits, Swaminathan indicated that demand
response was included, but a TOU rate was not included. The coincident capacity is accounted for. Benefits
such as influencing the load with smart meters to charge at the right time were too difficult to quantify.
Swaminathan further reported that the expected customer bill impact is neutral, but a wide range occurs
based on the outcomes of cost sensitivities. In adverse scenarios, the bill impact is predicted to be 1-2%. In
more beneficial scenarios, the bill impact is a decrease of 0.5%.
Abendschein clarified that the staff recommendation is an indication that the general roadmap for AMI is
acceptable to the UAC and Council. If the UAC wishes to submit a letter to the Finance Committee and Council
regarding the UAC's position, he would appreciate any direction from the UAC.
Commissioner Johnston expressed some discomfort with the expected outcomes in each case falling at the
bottom of the sensitivity range. In response to his question regarding AMI interaction with DERs,
Swaminathan explained that AMI meters will aid in differential compensation for customers who invest in
DERs. To the extent AMI can incentivize EV charging at a particular time, it can reduce the adverse impact on
the distribution grid. For commercial customers, AMI can aid the implementation of TOU rates. Commissioner
Johnston stated that reinforces the importance of AMI.
Utilities Advisory Commission Minutes Approved on: Page 6 of 8
Herb Borock questioned whether customers could choose not to utilize a smart meter, the security of data
transmissions, and whether fiber to the premises (FTTP) could be utilized with AMI. Swaminathan reported
customers could opt out of smart meters with the cost of manual meter reading charged to the customer.
FTTP is an option for data transmission, but it occurs at backhaul nodes only.
Vice Chair Schwartz remarked that utilities receive so much more value from AMI than anticipated.
Techniques to enhance customer buy-in are known and available. Allowing customers to opt out of smart
meters should be a policy. The DOE is developing a voluntary code of conduct that will align with information
and data privacy concerns in both the U.S. and Europe. She volunteered to compile a list of publications and
videos that explain all the components of AMI.
Dean Batchelor, Utilities Chief Operating Officer, agreed that customers have many concerns about radio
waves and data security. The most important component of implementing AMI is a communication plan for
all residents and businesses. Staff has plenty of time to explore best practices and lessons learned by other
jurisdictions.
Vice Chair Schwartz believed the value of AMI is all the things it will enable.
In reply to Chair Danaher's query regarding communicating the UAC's strong support for implementing AMI
to the Council, Councilmember Filseth did not believe AMI would be a controversial issue for the Council
because the numbers work.
Chair Danaher commented that the numbers omit many of AMI's benefits.
Commissioner Forssell felt it is important for staff to point out to the Council that the business case does not
express the full value of AMI.
ACTION: Commissioner Trumbull moved to recommend that 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. Commissioner
Forssell seconded the motion. The motion carried 6-0 with Chair Danaher, Vice Chair Schwartz, and
Commissioners Ballantine, Forssell, Johnston, and Trumbull voting yes, and Commissioner Segal absent.
ITEM 3. DISCUSSION: Discussion of 2019 California Energy Standards and Associated Rooftop Solar Mandate.
Melanie Jacobson, Integrated Design 360, reported that enforcement of the new Building Code will begin
January 1, 2020. The solar photovoltaic (PV) updates to the Energy Code create a mandatory requirement for
new construction residential buildings, which include single-family homes and low-rise residential buildings.
PV sizing requirements will be based on the annual electricity load. The consumption prediction is based on
energy modeling software created by the California Energy Commission (CEC). The software remains in
research mode with respect to all-electric homes with no gas hookup.
In response to Vice Chair Schwartz's inquiry regarding a home with no gas hookup or a home not allowed to
have a gas hookup, Jacobson answered a home without a gas hookup. A larger PV system will likely be
required for an all-electric home compared to a home with a gas hookup. The official requirement will be
known when the compliant software is released in January 2019.
Jacobson continued with the presentation, stating several exceptions to the regulation have been provided
for new residential construction that participates in community solar programs. The Code provides
exceptions and specific requirements for situations where existing trees, hilltops, or adjacent structures
inhibit the use of solar. Homeowners who install battery storage with PV will reduce the PV requirement by
up to 25%.
Utilities Advisory Commission Minutes Approved on: Page 7 of 8
In reply to Vice Chair Schwartz's hypothetical scenario of one neighbor planting a tree in his yard that could
grow to block the solar panels on an adjacent neighbor's newly constructed house, Jacobson explained that
the 2009 Solar Shade Act gives precedence to the item existing first.
Jacobson further stated that essentially any new residential permit submitted after January 1, 2020 will need
to meet the requirement, but existing residential buildings undergoing any sort of alteration and all
commercial construction will not be impacted by the requirement.
In answer to Commissioner Forssell's question regarding Code requirements to optimize roof design for solar
and placement of solar panels, Jacobson advised that the Code provides specific rules for designing the roof
and situating solar panels.
Chair Danaher noted 100-200 buildings in Palo Alto would be affected each year by the requirement. Over
ten years, the requirement would impact the electric load. The regulation will cause cities to incur a higher
cost for obtaining carbon neutrality, and staff will consider that and the regulation's impact on the tree
canopy when discussing the City's legislative agenda.
Vice Chair Schwartz commented that implementation of Palo Alto's smart grid will occur two years after the
regulation becomes effective; therefore, the City will not be able to manage the regulation effectively. With
hundreds of new PVs and hundreds of new electric vehicles, CPAU could be in a difficult position. Palo Alto
needs more time to comply with this regulation. Perhaps staff could conduct an audit to determine possible
locations for community solar, even though it is more expensive, as a means to comply with PV requirements.
Christine Tam, Senior Resource Planner, reported that the CEC analyzed the solar mandate based on cost-
effectiveness for each kilowatt hour (kWh) of solar generation from the rooftop. The analysis looked at the
dominant utility in each climate zone, and Palo Alto's climate zone is based on PG&E's retail rates. PG&E has
much higher electric retail rates than Palo Alto. The buy-back rate for Palo Alto residents is not as favorable
as PG&E's rate. The analysis was noted to CEC staff, who replied that language in the Energy Code allows Palo
Alto to request an exemption from the solar mandate if it can demonstrate that rooftop solar is not cost
effective for Palo Alto residents. The solar mandate would not be cost effective for Palo Alto residents;
however, most people are excited about mandate.
Vice Chair Schwartz remarked that most people do not understand the tradeoffs and are supporting the
mandate based on their emotions. Palo Alto residents will not be happy to learn they cannot plant trees.
Chair Danaher requested a future staff report regarding plans and strategies for seeking changes in the law.
Commissioner Ballantine noted an oddity in that the mandate provides a reverse incentive to install solar
with energy storage as opposed to a mandate for solar with energy storage. The only positive thing for Palo
Alto would be promotion of solar energy with energy storage.
ACTION: No action
ITEM 4. ACTION: Selection of Potential Topic(s) for Discussion at Future UAC Meeting.
Chair Danaher reported staff will share their analysis of charging systems at a future meeting.
Jonathan Abendschein, Resources Management Assistant Director, advised that multiple cost of service
studies and financial forecasts will be presented to the UAC over the next several months.
Commissioner Johnston requested an agenda item for energy storage.
ACTION: No action
Utilities Advisory Commission Minutes Approved on: Page 8 of 8
NEXT SCHEDULED MEETING: October 3, 2018
Meeting adjourned at 8:57 p.m.
Respectfully Submitted
Rachel Chiu
City of Palo Alto Utilities
Page 1 of 8
1
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: October 3, 2018
SUBJECT: Utilities Advisory Commission Recommendation that the Finance Committee
Recommend that the City Council Adopt a Resolution to Approve the 2018
Electric Integrated Resource Plan (EIRP), Updated Renewable Portfolio
Standard Procurement Plan and Enforcement Program, and Related
Documents
______________________________________________________________________________
REQUEST
Staff requests that the Utilities Advisory Commission (UAC) recommend that the City Council
adopt a resolution to approve:
1. The 2018 Electric Integrated Resource Plan (EIRP) (Attachment A), which includes the
four standardized tables required under the California Energy Commission’s (CEC) IRP
Guidelines, and updated versions of the City’s Renewable Portfolio Standard (RPS)
Procurement Plan and RPS Enforcement Program;
2. The EIRP Objective and Strategies to guide future analysis and decisions (Attachment B);
and
3. The EIRP Work Plan outlining planned staff initiatives to implement the EIRP
(Attachment C).
EXECUTIVE SUMMARY
In September, staff presented a report to the UAC with the Executive Summary and Table of
Contents from the 2018 EIRP, and which provided an overview of the whole report. As noted in
September, the EIRP is a comprehensive long-term electric supply planning document that the
City is required to complete every five years under state law (Senate Bill (SB) 350 from 2015).
With this report, staff presents the complete EIRP to the UAC for review and recommendation
to approve.
The current EIRP, which must be approved by Council by January 1, 2019 in order to satisfy the
City’s SB 350 regulatory requirements, has a planning period of 2018 through 2030. The City of
Palo Alto Utilities (CPAU) currently has more than sufficient supply resources to meet projected
loads through 2024, with approximately 45% of its resources from hydro supplies and the
remaining 55% from renewable contracts.1 The City’s 20-year contract with the Western Area
1 The City’s first long-term renewable contract—for wind power—expires at the end of 2021 and the other wind
contract and all five landfill-gas-to energy contracts expire in the late 2020’s or early 2030’s, while the solar
contracts all extend beyond 2040.
Page 2 of 8
Power Administration (WAPA) for hydroelectric resources, which supplies nearly 40% of the
City’s energy needs in a normal hydro year, expires at the end of 2024. A primary focus of the
EIRP is the question of whether to exercise the option to renew the contract with WAPA for an
additional 30-year term (and if so, at what participation level) and/or seek other renewable
supplies to meet City loads.
As required by the CEC’s IRP Guidelines, the EIRP includes a set of four standardized tables,
which detail the City’s energy, capacity, and greenhouse gas (GHG) emissions projections
through 2030, as well as updated versions of the City’s RPS Procurement Plan and RPS
Enforcement Program.
In addition to the City’s 2018 EIRP and its associated documents, this report includes: (1) the
proposed EIRP Objective and Strategies to guide future analysis and decisions, and (2) a set of
new initiatives, and timelines for their completion, that staff recommends undertaking in order
to prepare the City’s electric supply portfolio for the upcoming shifts in the electric utility
industry—including additional analysis focused on the 2025 Western contract decision and
portfolio rebalancing initiatives. These two documents were shared and discussed at length
with the UAC in September, and are virtually unchanged since then.2
BACKGROUND
The last time the City completed an integrated resource plan (IRP) was in 2012, when the City’s
updated Long-term Electric Acquisition Plan (LEAP) was approved by Council on April 16, 2012
(Staff Report 2710, Resolution 9241). A few years later, in 2015, SB 350 was signed into law,
and it includes a requirement that publicly-owned utilities (POUs) serving loads greater than
700,000 megawatt-hours per year, such as Palo Alto, develop and adopt an IRP and submit it to
the California Energy Commission (CEC) by January 2019 and every five years thereafter.3
The current EIRP planning period is from 2018 through 2030. As noted in the EIRP report,
through 2024 the City has sufficient resources to meet its forecasted electric loads, with
renewable power contracts supplying over 50% of its needs and the remainder coming from
hydroelectric resources. The City’s contract for the Western hydroelectric resource expires at
the end of 2024, but is available to be renewed under similar contractual terms for an additional
30-year period. A major consideration for the EIRP—and the subject of a significant amount of
the efforts outlined in the work plan (Attachment C)—is whether to renew the contract with
Western (and if so, at what participation level) and/or seek other carbon neutral power
supplies.4 Staff presented a preliminary analysis of the City’s long-term electric supply portfolio
2 One sentence has been added to Initiative #4 in the work plan in response to Commissioner comments at the
September UAC meeting, regarding an evaluation of the way the City communicates with the public regarding the
carbon content of the electric supply portfolio.
3 The Clean Energy and Pollution Reduction Act of 2015 also raised the state’s renewable portfolio standard (RPS)
to 50% by 2030 and required a doubling of energy efficiency savings by 2030. The primary objective of the IRP
requirement in SB 350 is to ensure that the state’s large POUs are on track to reduce their greenhouse gas
emissions, helping the state meet its overall target of reducing GHG emissions to 40% below 1990 levels by 2030.
4 Based on the current milestone schedule presented by the Western Area Power Administration (WAPA) related
Page 3 of 8
and a variety of potential new resource options (including the 2025 Western contract), along
with draft EIRP Objectives and Guidelines for UAC discussion and input in June 2018.
As part of the 2012 LEAP update, the City Council approved a set of electric portfolio decision-
making Objectives and Strategies. At the outset of the current EIRP development process, staff
developed an updated Objective and Strategies (Attachment B). The current version, which
aligns with the Utilities 2018 Strategic Plan, is very similar to the ones adopted in 2012, with the
new Objective and Strategies placing greater emphasis on managing uncertainty related to
resource availability and costs, regulatory uncertainty, and the increased penetration of DERs.
Beginning in June 2017, staff has presented eleven different reports to the UAC and Council
(including the present one) directly or indirectly related to the development of Palo Alto’s 2018
EIRP. These presentations and reports are summarized in Table 1 below.
Table 1: Public Process Summary for Development of the 2018 EIRP
Forum Date Topic Link
UAC 6/7/2017 Overview of CPAU’s EIRP Development Process Report
UAC 8/2/2017 Discussion of DER Plan Development Report
UAC 8/2/2017 Discussion of California Wholesale Energy Market and Electric
Portfolio Cost Drivers
Report
UAC 9/6/2017 Discussion of Hydroelectric Resources and Carbon Neutral
Portfolio Alternatives
Report
UAC 11/1/2017 Discussion of Proposed DER Plan Report
UAC 12/6/2017 Discussion of Renewable and Carbon Neutral Portfolio Strategy Report
UAC 4/12/2018 Assessment of CPAU’s Distribution System to Integrate DERs Report
UAC &
Council
5/2/18 &
5/21/2018 CPAU Demand Side Management Annual Report – FY 17 UAC,
Council
UAC 6/6/2018 Long-term Electric Portfolio Analysis Results and Options for
Rebalancing Portfolio in the Next Five to Ten Years
Report
UAC 9/5/2018 2018 EIRP Executive Summary, Objective & Strategies, Work Plan Report
UAC 10/3/2018 Recommendation to Approve the 2018 EIRP N/A
Through these presentations and discussions, staff has laid out the motivations and context for
the EIRP, and described the resources currently in the City’s supply portfolio as well as the
upcoming planning decisions and uncertainties facing the City. Staff felt that this level of public
discussion was important given that: (1) the City must make some important planning decisions
in the next several years and (2) the electric utility industry has undergone dramatic changes
since Palo Alto prepared its last LEAP update in 2012, with a major shift underway towards
greater levels of variable, distributed, low-emissions generation, along with an expanding suite
of regulatory mandates that the City must satisfy.
to the post-2024 contract extension process, staff’s understanding is that the City must execute the new contract,
accepting the updated project allocation, by April 2020. However, according to WAPA there will be a “one-time
contract reduction/termination provision” available to customers who execute the new contract in July 2024.
https://www.wapa.gov/regions/SN/PowerMarketing/Documents/2025/2025-milestone-schedule.pdf
Page 4 of 8
CEC IRP Guidelines & Required Elements
The schedule and structure of the EIRP process has been dictated in large part by regulatory
requirements imposed by SB 350,5 which states that Palo Alto’s IRP must be adopted by Council
by January 1, 2019, submitted to the CEC by April 30, 2019, and updated at least every five
years thereafter. At a minimum, Sections 9621 and 454.52 of the State Public Utilities Code
require that the City’s IRP shall:
• Ensure procurement of at least 50% renewable resources by 2030 6;
• Meet Palo Alto’s share of the greenhouse gas emission reduction targets
established by the California Air Resources Board (CARB) for the electricity sector,
to enable California to achieve the economy wide greenhouse gas emissions
reductions of 40% from 1990 levels by 2030;
• Minimize impacts to customer bills;
• Ensure system and local reliability;
• Strengthen the diversity, sustainability, and resilience of the bulk transmission,
distribution systems and local communities;
• Enhance distribution systems and demand-side energy management;
• Minimize localized air pollutants and other greenhouse gas emissions with early
priority to disadvantaged communities; and
• Address the following procurement topics:
o Energy efficiency and demand resources that are cost effective, reliable
and feasible;
o Energy storage;
o Transportation electrification;
o A diversified procurement portfolio of short term electricity, long term
electricity, and demand response products; and
o Resource adequacy capacity.
The EIRP report presented herein satisfies all of the above statutory requirements. And, it is
worthy to note, Palo Alto has already exceeded the state’s 2030 goals under SB 350 of sourcing
50% of electricity supplies from renewable resource and reducing greenhouse gas emissions by
40%—which are the primary drivers of the IRP requirement in the first place.
In addition to addressing the above topics in its EIRP, the City is required to submit the
following four Standardized Tables to the CEC along with the EIRP:
5 SB 350 also requires the doubling of energy efficiency savings targets by 2030 and establishes a new Renewable
Portfolio Standard (RPS) to meet 50% of the City’s load from applicable renewable supplies by 2030. The 10-Year
Energy Efficiency Potential Plan approved by Council in March 2017 addresses the new energy efficiency savings
requirements, while the City expects to achieve an RPS of 59% in 2018.
6 Note that in September 2018, Governor Brown signed SB 100 into law, which raises the state’s RPS requirement
to 60% by 2030, in addition to establishing a target of 100% zero-carbon electricity supplies in 2045. However, the
CEC’s IRP Guidelines only require that agencies address the goals established under SB 350. Future IRPs will require
that the City address the state’s updated RPS requirements.
Page 5 of 8
• Capacity Resource Accounting Table (CRAT): Annual peak capacity demand in each
year and the contribution of each energy resource in the portfolio to meet that
demand.
• Energy Balance Table (EBT): Annual total energy demand and annual estimates for
energy supply from various resources.
• RPS Procurement Table (RPT): A detailed summary of a resource plan to meet the
RPS requirements.
• GHG Emissions Accounting Table (GEAT): Annual GHG emissions associated with
each resource in the portfolio to demonstrate compliance with the GHG emissions
reduction targets established by the California Air Resources Board (CARB).
Finally, the City is also required to submit to the CEC additional supplementary information
along with the EIRP. This supplementary information includes updated versions of the City’s
RPS Procurement Plan, and RPS Enforcement Program. The City last updated these documents
in 2013 and 2011, respectively, and they are required to be updated again to reflect changes in
the state’s RPS regulations resulting from the passage of SB 350. The four Standardized Tables
and the new RPS Procurement Plan and RPS Enforcement Program are all included as
appendices to the EIRP (Attachment A).
DISCUSSION
At the September 2018 UAC meeting, staff presented the Commission with an overview of the
EIRP, along with a look ahead at the plan for implementing its recommendations. The primary
elements of that presentation were: (1) a background section describing the statutory
requirements for the EIRP and a description of its development process; (2) an overview of the
City’s current electric supply portfolio; and (3) a description of the overall objective of the EIRP,
the strategies that staff plans to execute in order to carry out that objective, and a series of new
tasks and initiatives that staff intends to pursue over the next few years.
EIRP Overview
Broadly speaking, the 2018 EIRP itself is organized in a similar manner, albeit with greater
emphasis and detail on the current makeup of the City’s supply portfolio and customer
engagement programs (Sections IV, VIII, and IX of the EIRP). The EIRP also addresses the many
sources of uncertainty facing the City over the EIRP planning horizon, in particular with respect
to uncertainty around the City’s energy and peak demand forecasts (Section III), which is a
major area of focus for staff given the burgeoning use of various types of distributed energy
resource (DER) technologies and their impacts on customer energy usage. As discussed in
Section III of the EIRP, some DERs will grow the City’s electric load (e.g., electric vehicles, heat-
pump water heaters, and heat-pump space heaters) while others will reduce it (e.g., rooftop
solar and energy efficiency). In addition, there is always the possibility that a new large
customer could enter the City’s service territory, or that an existing large customer could leave.
Overall, staff projects that the City’s total electricity supply needs in 2030 will be slightly lower
than they are in 2018, although there is significant uncertainty around that estimate—which
demands the use of a maximally flexible approach to contracting for future supply needs.
Section V of the EIRP discusses the City’s future procurement needs – which, as noted above,
are minimal during the planning horizon with the exception of the 2025 Western contract
Page 6 of 8
renewal and/or replacement decision. This section also provides an overview of the portfolio
rebalancing analysis that staff presented to the UAC in June 2018, and which will be the subject
of future work under the EIRP work plan. The body of the EIRP concludes (Section X) with a
description of the City’s recommended supply portfolio for 2030, and an outline of staff’s next
steps for implementing this plan, and the key issues (and sources of uncertainty) that staff will
monitor and attempt to influence in the coming years.
And as discussed above, the EIRP includes several pieces of supplementary information as
appendices, as required by the CEC IRP Guidelines—including the four Standardized Tables, an
updated RPS Procurement Plan, and an updated RPS Enforcement Program.
EIRP Work Plan
As described in detail in the EIRP and in the September UAC report, Palo Alto faces a wide range
of uncertainties in the course of the EIRP planning horizon. In particular, there is significant
uncertainty around the costs and generation levels associated with the Western hydroelectric
resource, and around the magnitude and shape of the City’s customer load.
As such, and as part of the process of revisiting the assumptions and analysis described in the
EIRP, staf f developed a proposed work plan describing ongoing activities and new initiatives,
along with timelines for completing these initiatives, to be undertaken as a means to mitigate
the uncertainties mentioned above. The new initiatives identified in the EIRP work plan
(Attachment C) are listed below.
EIRP Work Plan ‘New Initiatives’
1. Western Contract Decision – Evaluate the merits of committing to a new 30-year contract with
Western starting in 2025.
2. Portfolio Rebalancing Analysis – Evaluate the merits of rebalancing the electric supply portfolio
to lower seasonal and daily market price exposure by more closely matching the City’s hourly
and monthly electric supply to the hourly and monthly electric loads.
3. COTP decision – Evaluate how to best utilize the City’s share of the California-Oregon
Transmission Project (COTP), when the long-term layoff of this asset ends in 2024.
4. Carbon accounting – Evaluate the carbon content of the electric portfolio on an hourly basis,
and discuss the merits of buying carbon offsets to ensure the carbon content of the cumulative
hourly portfolio is zero on an annual basis. Also evaluate the manner in which the City
communicates with customers about the carbon content of the electric portfolio.
5. RPS compliance strategy – Investigate the merits of monetizing excess RECs to minimize the cost
of maintaining an RPS-compliant and carbon neutral electricity supply portfolio.
6. Partner with external agencies – Explore greater synergistic opportunities with NCPA and other
agencies to lower Palo Alto’s operating costs.
7. Competitive assessment and load uncertainty – Undertake a competitive assessment for the
electric utility within the context of the proliferation of customer-sited DER technologies, and
develop contingencies to address the potential for changes in the City’s load served or hourly
load profile.
In addition to these new initiatives, staff will continue its activities in pursuit of lowering the
overall cost to serve load (and addressing the tradeoffs – which the UAC noted at the June 2018
meeting – between pursuing “greener” supply resources and lowering supply costs). These
Page 7 of 8
ongoing initiatives include continuing to optimize the use of the City’s Calaveras resource, and
evaluating the benefits of the NCPA pool and/or the procurement of alternative scheduling
services for the City’s renewable resources.
NEXT STEPS
Staff plans to present the final EIRP report (and associated documents) to the Finance
Committee in October and to the City Council in November. Under state law, final approval of
the EIRP report is required by January 1, 2019, and staff must submit it to the CEC by April 30,
2019. Once approved by Council, staff will begin executing the tasks listed in the Work Plan, and
will provide the UAC with updates on the progress, successes, and new challenges over the
implementation period of this IRP.
RESOURCE IMPACT
Using existing staffing resources, staff expects to devote approximately 0.75 to 1.5 FTE in the
coming years to pursuing elements associated with the Work Plan, including investigating
strategies to rebalance the electric portfolio to meet the challenges of the coming decades.
In addition, staff has access to a wide pool of resources through NCPA to assist with the new
initiatives listed in Attachment C. The 2025 Western contract decision, in particular, is a complex
and highly important matter, and staff may seek external consulting and legal assistance to
augment NCPA’s resources and services, as well as those of the City Attorney’s office. The cost
of such external resources may amount to $100,000 to $200,000 over the next few years.
The annual budget associated with electric power purchases is $61.5 million in FY 2019, of
which costs related to the Western contract account for $13.5 million. The uncertainly in cost
and value associated with the Western hydro resource is considerable over the 30-year term
starting 2025. Though the approval of the EIRP by itself does not have direct impact on
portfolio-related costs, the different initiatives that will be undertaken in the coming years—in
particular the Council decision on whether and how to rebalance the supply portfolio—will
greatly influence the electric supply costs in the coming decades.
POLICY IMPLICATIONS
The EIRP report, Objective and Strategies, and work plan are in line with the Utilities Strategic
Plan mission and strategic direction. Specifically, the EIRP report itself was contemplated under
Strategy 4, Action 5, of the Financial Efficiency and Resource Optimization Priority of the
Utilities 2018 Strategic Plan. These EIRP documents are also in line with the Sustainability and
Climate Action Plan goals of continuing to lower the carbon footprint of the community.
ENVIRONMENTAL REVIEW
The Utilities Advisory Commission’s review and recommendation to Council on the 2018 EIRP
report does not meet the definition of a project under Public Resources Code 21065 and
therefore California Environmental Quality Act (CEQA) review is not required.
ATTACHMENTS
A. 2018 Electric Integrated Resource Plan
B. Electric Integrated Resource Plan Objective and Strategies
Electric Integrated Resource Plan Work Plan
Draft Excerpts of the UAC Meeting Minutes from 09/05/2018
PREPARED BY:
REVIE
JIM STACK, Senior Resource Planner
SHIVA SWAMINATHAN, Senior Resource Planner
LENA PERKINS, Resource Planner'
ED BY: JONATHAN ABENDSCHEIN, Assistant Director, Resource Management
APPROVED BY:
ED SHIKADA
General Manager of Utilities
Page 8 of 8
City of Palo Alto
2018 Electric Integrated Resource Plan
ATTACHMENT A
Table of Contents
i
Table of Contents
Executive Summary .................................................................................................................... 1
CEC IRP Guidelines & Required Elements................................................................................. 3
Public Process Summary ........................................................................................................... 4
Background & Achievements to Date ......................................................................................... 6
CPAU History and Mission Statement ...................................................................................... 6
Previous IRPs & Recent Accomplishments ............................................................................... 6
Changing Planning Environment .............................................................................................. 7
Increasing DER Penetration & Load Profile Uncertainty ................................................... 7
GHG Emission Reductions ................................................................................................. 9
Renewable Portfolio Standards (RPS) ............................................................................... 9
Energy Efficiency ............................................................................................................. 10
Overview of EIRP methodology .............................................................................................. 10
Forecast Methodology for Energy and Peak Demand ................................................................ 12
Description of Econometric Forecast Models ........................................................................ 14
Energy Econometric Model ............................................................................................. 14
Peak Demand Econometric Model .................................................................................. 14
Description of Distributed Energy Resources Forecasts ........................................................ 14
Energy Efficiency Forecast............................................................................................... 16
Solar Photovoltaic Forecast ............................................................................................. 17
Transportation Electrification Forecast........................................................................... 17
Energy Storage Forecast .................................................................................................. 17
Demand Response Forecast ............................................................................................ 18
Electrification of Space and Water Heating Forecast ..................................................... 18
SB 338 Requirements ...................................................................................................... 18
Existing Resource Portfolio ....................................................................................................... 20
Energy Efficiency & Local Renewable Generation .................................................................. 21
Energy Efficiency ............................................................................................................. 21
Local Renewable Generation .......................................................................................... 22
Hydroelectric Resources ......................................................................................................... 23
Western Base Resource .................................................................................................. 23
Calaveras ......................................................................................................................... 25
Renewable Energy Resources ................................................................................................. 26
Table of Contents
ii
Wind PPAs ....................................................................................................................... 26
Landfill Gas (LFG) PPAs .................................................................................................... 26
Solar PPAs ........................................................................................................................ 26
Market Purchases & RECs ....................................................................................................... 27
COBUG .................................................................................................................................... 27
California-Oregon Transmission Project (COTP)..................................................................... 27
Resource Adequacy Capacity.................................................................................................. 28
Future Procurement Needs and Portfolio Rebalancing .............................................................. 29
Needs Assessment: Energy, RPS, Resource Adequacy Capacity ............................................ 29
Portfolio Rebalancing Analysis ............................................................................................... 30
Portfolio Expected Net Value .......................................................................................... 33
Portfolio Fit ...................................................................................................................... 34
Portfolio Cost Uncertainty and Management ................................................................. 35
Supply Costs & Retail Rates ...................................................................................................... 36
Transmission & Distribution Systems ........................................................................................ 37
Transmission System .............................................................................................................. 37
Distribution System ................................................................................................................ 37
Low-income Assistance Programs ............................................................................................. 38
Localized Air Pollutants ............................................................................................................ 39
Electric Vehicle Programs ....................................................................................................... 39
Local Renewable Energy Programs ........................................................................................ 39
Electrification of Space and Water Heating Programs ........................................................... 39
Refrigerant Recycling Program ............................................................................................... 40
Path Forward & Next Steps ...................................................................................................... 41
Recommended Portfolio ........................................................................................................ 41
GHG Emissions ........................................................................................................................ 42
Scenario Analysis .................................................................................................................... 42
Next Steps ............................................................................................................................... 43
Key Issues to Monitor & Attempt to Influence ...................................................................... 43
Appendices ......................................................................................................................... XI—1
Key Supplemental Reports and Documents ....................................................................... XI—1
RPS Procurement Plan ........................................................................................................ XI—2
RPS Enforcement Program ............................................................................................... XI—16
Table of Contents
iii
Standardized IRP Tables ................................................................................................... XI—20
Capacity Resource Adequacy Table (CRAT) .............................................................. XI—20
Energy Balance Table (EBT) ....................................................................................... XI—21
GHG Emissions Accounting Table (GEAT) ................................................................. XI—22
RPS Procurement Table (RPT) ................................................................................... XI—23
List of Figures
Figure 1: The Duck Curve – Net Load in California with Penetration of Intermittent Generation............. 8
Figure 2: Palo Alto Power Supply in 2012 and 2018 ................................................................................. 10
Figure 3: Annual Energy Forecast including DERs (2018-2030) ................................................................ 13
Figure 4: Impact of DERs on Hourly Summer Load Shape in 2030 ........................................................... 13
Figure 5: Projected Palo Alto Electric Supply Mix in CY 2020 by Resource Type ..................................... 20
Figure 6: Palo Alto’s RPS Generation Projections and RPS Compliance Requirements .......................... 29
Figure 7: Expected Net Value of New Resources and Western Relative to Market Value....................... 33
Figure 8: Average Hourly Load and Generation Profiles for Each Month for Western and Potential New
Resources (Normalized to Average Hourly Load) ............................................................................. 34
Figure 9: Palo Alto’s Projected Resource Supply Mix in 2030 .................................................................. 41
Figure 10: CPAU Electric Supply GHG Emissions (2005-2030) .................................................................. 42
List of Tables
Table 1: California Energy Market Changes Since 2012 ............................................................................. 1
Table 2: City of Palo Alto Energy-Related Changes Since 2012 .................................................................. 2
Table 3: Public Process Summary for Development of the 2018 EIRP ....................................................... 5
Table 4: Projected Number of DER Systems (2017-2030) ........................................................................ 15
Table 5: Projected Contribution to Energy Sales of DER Systems (2017-2030) ....................................... 15
Table 6: Palo Alto’s Resource Adequacy Capacity Portfolio ..................................................................... 28
Table 7: Relative Merits of Candidate Resources Considered to Rebalance Supply Portfolio ................. 32
List of Key Supplemental Reports and Documents
1. NCPA-CAISO Metered Sub-System Agreement
2. Ten-Year Electric Energy Efficiency Goals (2017)
3. Energy Storage Assessment Report (2017)
4. Proposed Distributed Energy Resources Plan (2017)
5. Distribution System Assessment Report (2018)
6. Demand Side Management Annual Report (2018)
Section I: Executive Summary
1
Executive Summary
The City of Palo Alto’s 2018 Electric Integrated Resource Plan (EIRP) is a comprehensive plan for
developing a portfolio of power supply resources to meet the utility’s objective of providing safe,
reliable, environmentally sustainable, and cost-effective electricity services while addressing the
substantial risks and uncertainties inherent in the electric utility business. The EIRP also supports the
City’s mission to promote and sustain a superior quality of life in Palo Alto. In partnership with our
community, our goal is to deliver cost-effective services in a personal, responsive and innovative
manner.
The IRP meets the requirements of California Senate Bill (SB) 350 (de León, Chapter 547, Statutes of
2015), which requires publicly owned utilities (POUs) with an average annual energy load greater than
700 gigawatt-hours (GWh) to submit an IRP at least every five years to the California Energy
Commission (CEC).
The EIRP discusses current and anticipated California regulatory and policy changes facing Palo Alto
and the electric utility industry. Additionally, the IRP presents the analyses conducted and underlying
assumptions, and outlines a resource plan to reliably and affordably meet customers’ energy needs
through calendar year 2030.
The electric utility industry has undergone significant changes since Palo Alto prepared its last Long-
term Electric Acquisition Plan (LEAP) update in 2012, with a major shift underway towards greater
levels of variable, distributed, low-emissions generation, along with an expanding suite of regulatory
mandates that the City must satisfy. Table 1 provides an overview of some of the key structural
changes in California’s electricity market that must be addressed in the 2018 EIRP, compared to their
status at the time of the 2012 LEAP update.
Table 1: California Energy Market Changes Since 2012
EIRP Topic 2012 Status 2018 Status
GHG Emissions Targets Statewide emissions reduced to
1990 levels by 2020 40% below 1990 levels by 2030
Cap and Trade Authorized through 2020 Authorized though 2030
Renewable Procurement 33% by 2020 and beyond 50% by 2030 and beyond
Distributed Generation Modest growth High growth
Energy Efficiency Utility-specific targets (all cost-
effective energy efficiency)
Statewide goal of doubling energy
efficiency savings by 2030
Energy Storage No explicit requirement Requirement to study adoption of
targets
Transportation
Electrification No explicit requirement Requirement to address
procurement of EV infrastructure
Structured Markets Hourly market Intra-hour market
Resource Adequacy Local and system capacity
requirements
Local, system, and flexible
capacity requirements
Section I: Executive Summary
2
Similarly, Palo Alto itself has undergone a myriad of changes over the past six years—both in its long-
term planning goals and in how it uses electricity currently. Table 2 describes some of the major
changes and accomplishments in Palo Alto since 2012, from dramatic changes in the City’s power
supply and emissions reduction targets, to considerable growth in local solar generation and electric
vehicles (EVs).
Table 2: City of Palo Alto Energy-Related Changes Since 2012
Topic 2012 Status 2018 Status
Community-wide
GHG Emissions
(from electricity,
natural gas and
transportation)
Goal: Reduce GHG emissions to 15%
below 2005 levels by 2020.
Achieved: 22% below 2005 emission
levels (28% below 1990 emissions
levels).
Goal: Reduce GHG emissions to 80%
below 1990 by 2030.
Achieved: 43% below 1990 emission
levels.
Electric Supply
Portfolio
Goal: 33% RPS by 2015
Achieved: 21% RPS
Goal: 50% RPS by 2030; 100% Carbon
Neutral by 2015
Achieved: 58% RPS; 100% Carbon Neutral
Local Solar PV
Systems
Goal: 0.71% of load by 2017
Achieved: 0.57% of load
(502 systems)
Goal: 4% of load by 2023
Achieved: 1.94% of load
(1,081 systems)
Energy Efficiency Goal: 0.63% avg. annual load
savings; 4.8% cumulative savings
(2014-2023)
Achieved: 0.68% of avg. annual
load; 4.2% cumulative 6-year savings
(2007-2012)
Goal: 0.75% avg. annual load savings;
5.7% cumulative savings
(2018-2027)
Achieved: 0.73% of avg. annual load;
4.4%1 cumulative 6-year savings
(2013-2018)
Energy Storage Goal: No explicit goal. Goal: No explicit goal or rebates as not
yet cost-effective. Facilitate customer
adoption in coordination with Building
department.
Transportation
Electrification
Goal: Support California State goal
Achieved: approx. 200 EVs
registered in Palo Alto.
Goal: Target 90% EVs by 2030
Achieved: approx. 3,000 EVs registered in
Palo Alto; 60 public EV chargers;
Incentives for EV charger installation.
Annual Energy
Load 972 GWh 925 GWh
Summer Peak
Capacity Load 170 MW 182 MW
Average Retail
Rate 2 11.6 cents/kWh 13.9 cents/kWh
1 Includes savings related to Codes and Standards changes, as well as estimated savings for 2018.
Section I: Executive Summary
3
The EIRP planning period is from 2018 to 2030. Through 2028, the City of Palo Alto Utilities (CPAU) has
sufficient renewable contracts to supply over 50% of the City’s needs. The City’s first long-term
renewable contract—for wind power—expires at the end of 2021 and the other wind contract and all
five landfill-gas-to energy contracts expire in the late 2020’s or early 2030’s, while the solar contracts
all extend beyond 2040. The City’s contract with the Western Area Power Administration (WAPA) for
hydroelectric resources, which supplies nearly 40% of the City’s energy needs in a normal hydro year,
expires at the end of 2024. A major consideration for the EIRP is whether to renew the contract with
WAPA (and if so, at what participation level) and/or seek other renewable supplies.
CPAU expects to continue operating within the Northern California Power Agency’s (NCPA) Metered
Sub-System Aggregation (MSSA) Agreement with the California Independent System Operator (CAISO).
Under this agreement, NCPA balances CPAU’s loads and resources to comply with CAISO planning and
operating protocols. With resources available under the NCPA MSSA Agreement, Palo Alto has access
to sufficient system, local, and flexible capacity, as well as resources to provide ancillary services to
reliably meet City loads.
Costs are projected to increase through 2030, primarily due to system upgrade costs, increasing
environmental regulations, and renewable integration costs (which are part of the tradeoff between
pursuing sustainable electricity supplies and reducing overall supply costs). Costs are increasing, but
retail energy sales are decreasing due to increases in energy efficiency and local solar installations, and
are further expected to decline in 2020 and beyond due to building codes mandating new homes be
net zero annual energy. Part of this reduction in electrical energy use is expected to be offset by higher
penetration of electric vehicles and electrification of natural gas appliances.
CPAU staff will provide public updates on the progress, successes, and new challenges over the
implementation period of this IRP.
CEC IRP Guidelines & Required Elements
The schedule and structure of the EIRP process is being guided in large part by requirements imposed
by SB 350,3 which states that Palo Alto’s IRP must be adopted by Council by January 1, 2019, submitted
to the CEC by April 30, 2019, and updated at least once every five years thereafter. At a minimum,
Sections 9621 and 454.52 of the State Public Utilities Code require that the City’s IRP will need to:
• Ensure procurement of at least 50% renewable resources by 2030 (see EIRP Sections II.B,
II.C.iii, V.A, X.A)
• Meet Palo Alto’s share of the greenhouse gas emission reduction targets established by the
California Air Resources Board (CARB) for the electricity sector, to enable California to
2 Retail rate and energy efficiency values are for Fiscal Years 2012 and 2018; the rest of the values in Table 2 are for
Calendar Years 2012 and 2018.
3 SB 350 also requires the doubling of energy efficiency savings targets by 2030 and establishes a new Renewable Portfolio
Standard (RPS) to meet 50% of the City’s load from applicable renewable supplies by 2030. The 10-Year Energy Efficiency
Potential Plan approved by Council in March 2017 addresses the new energy efficiency savings requirements and the City
expects to achieve an RPS of 58% in 2018.
Section I: Executive Summary
4
achieve the economy wide greenhouse gas emissions reductions of 40% from 1990 levels by
2030 (Sections II.B, II.C.ii, X.B)
• Minimize impacts to customer bills (Section VI)
• Ensure system and local reliability, including in the hour of peak net demand (Sections
III.B.vii, IV.E, IV.F, VII)
• Strengthen the diversity, sustainability, and resilience of the bulk transmission, distribution
systems and local communities (Sections II.B, IV.A.ii, IV.E, IV.F, VII, VIII)
• Enhance distribution systems and demand-side energy management (Sections IV.A.i, VII.B)
• Minimize localized air pollutants and other greenhouse gas emissions with early priority to
disadvantaged communities (Sections II.B, IV.A.ii, IX)
• Address the following procurement topics:
o Energy efficiency and demand resources that are cost effective, reliable and feasible
(Sections II.B, II.C.iv, III.B.i, IV.A.i)
o Energy storage (Section III.B.iv)
o Transportation electrification (Section II.B, III.B.iii)
o A diversified procurement portfolio of short term electricity, long term electricity,
and demand response products (Section III.B.v)
o Resource adequacy (Sections IV.G, V.A)
The City currently has the resources and systems in place needed to achieve all of the objectives
addressed by these IRP requirements. In addition, CPAU is submitting the following four Standardized
Tables as part of the EIRP:
• Capacity Resource Accounting Table (CRAT): Annual peak capacity demand in each year and
the contribution of each energy resource (capacity) in the POU’s portfolio to meet that
demand.
• Energy Balance Table (EBT): Annual total energy demand and annual estimates for energy
supply from various resources.
• RPS Procurement Table (RPT): A detailed summary of a POU resource plan to meet the RPS
requirements.
• GHG Emissions Accounting Table (GEAT): Annual GHG emissions associated with each
resource in the POU’s portfolio to demonstrate compliance with the GHG emissions
reduction targets established by the California Air Resources Board (CARB).
This EIRP along with the four aforementioned Standardized Tables and the materials listed in the
Supporting Information section satisfy the IRP filing guidelines listed in Chapter 2 of the CEC guidelines.
Public Process Summary
Palo Alto staff has provided numerous reports and presentation related to various facets of the EIRP to
the Utilities Advisory Commission (UAC) over the past 15 months. The current EIRP report was
reviewed by the UAC on September 5, 2018 and October 3, 2018, before being presented to the
Finance Committee and City Council for approval in October and November 2018. Table 3 below lists
all public presentations related to the EIRP, with links to the associated reports.
Section I: Executive Summary
5
Table 3: Public Process Summary for Development of the 2018 EIRP
Forum Date Topic Link
UAC 6/7/2017 Overview of CPAU’s EIRP Development Process Report
UAC 8/2/2017 Discussion of DER Plan Development Report
UAC 8/2/2017 Discussion of California Wholesale Energy Market and
Electric Portfolio Cost Drivers
Report
UAC 9/6/2017 Discussion of Hydroelectric Resources and Carbon Neutral
Portfolio Alternatives
Report
UAC 11/1/2017 Discussion of Proposed DER Plan Report
UAC 12/6/2017 Discussion of Renewable and Carbon Neutral Portfolio
Strategy
Report
UAC 4/12/2018 Assessment of CPAU’s Distribution System to Integrate DERs Report
UAC &
Council
5/2/18 &
5/21/2018 CPAU Demand Side Management Annual Report – FY 17 UAC,
Council
UAC 6/6/2018 Long-term Electric Portfolio Analysis Results and Options for
Rebalancing Portfolio in the Next Five to Ten Years
Report
UAC 9/5/2018 Discussion of 2018 EIRP Executive Summary, Objective &
Strategies, and Work Plan
Report
UAC 10/3/2018 Recommendation to Approve CPAU’s 2018 EIRP TBD
Finance 10/16/2018 Recommendation to Approve CPAU’s 2018 EIRP TBD
Council Nov 2018 Approval of CPAU’s 2018 EIRP TBD
An IRP represents a snapshot of a continuous process that evolves and transforms over time. The
conditions and circumstances in which utilities must make decisions about how to meet customers’
future electric energy needs are ever-changing. The IRP process utilizes a methodology and framework
for assessing a utility’s ever-changing business and operating requirements and adapting to factors
such as changing technology, regulations, and customer behavior. Assumptions, scenarios, and results
are all reviewed and updated as information and events unfold, and the process is continually revisited
under formal or informal resource planning efforts.
Section II: Background & Achievements to Date
6
Background & Achievements to Date
CPAU History and Mission Statement
The City of Palo Alto Utilities' (CPAU) history began over one hundred years ago, in 1896, when the
water supply system was first installed. Two years later, the wastewater or sewer collection system
came online. In 1900, the municipal electric power system began operation, followed in 1917 by a
natural gas distribution system. While CPAU and the utilities industry have evolved dramatically over
118 years, the City has nonetheless maintained a consistent set of core values: Quality, Courtesy,
Efficiency, Integrity, and Innovation.
Palo Alto’s 2018 EIRP is a comprehensive planning document to guide long-term power planning
aligned with CPAU’s Mission Statement, which is “to provide safe, reliable, environmentally sustainable
and cost effective services.”4
Previous IRPs & Recent Accomplishments
Palo Alto regularly engages in long-term planning efforts related to its electric supply portfolio –
previously under the auspices of the Long-term Electric Acquisition Plan (LEAP) and in the future under
the EIRP.5 The last time the City completed a LEAP update was on April 16, 2012 (Staff Report 2710,
Resolution 9241). A few years later, in 2015, Senate Bill 350 (SB 350) was signed into law, and it
includes a requirement that publicly-owned utilities (POUs) serving loads greater than 700,000
megawatt-hours per year, such as Palo Alto, develop and adopt an IRP by January 1, 2019 and submit it
to the CEC by April 30, 2019 and every five years thereafter.6
As part of the 2012 LEAP update, the City Council approved a set of electric portfolio decision-making
Objectives and Strategies. At the outset of the current EIRP development process, staff developed an
updated Objective and Strategies. The current version, which aligns with the Utilities 2018 Strategic
Plan, is very similar to the ones adopted in 2012, with the new Objective and Strategies placing greater
emphasis on managing uncertainty related to resource availability and costs, regulatory uncertainty,
and the increased penetration of DERs.
The 2012 LEAP update included an Implementation Plan describing a set of ongoing tasks and new
initiatives for the City to undertake in order to satisfy the LEAP Objectives and Strategies. In carrying
out this Implementation Plan and other initiatives, Palo Alto has accomplished the following over the
past six years:
4 See the City of Palo Alto Utilities 2018 Strategic Plan, which includes the Mission Statement and Strategic Direction, here:
https://www.cityofpaloalto.org/civicax/filebank/documents/64505.
5 Staff will hereafter discontinue using the term LEAP and in the future use the term EIRP when seeking long-term electric
portfolio plan approvals from the Council.
6 The Clean Energy and Pollution Reduction Act of 2015 also raised the state’s renewable portfolio standard (RPS) to 50% by
2030 and required a doubling of energy efficiency savings by 2030. The primary objective of the IRP requirement in SB 350
is to ensure that the state’s large POUs are on track to reduce their greenhouse gas emissions, helping the state meet its
overall target of reducing GHG emissions to 40% below 1990 levels by 2030.
Section II: Background & Achievements to Date
7
• Developed a Carbon Neutral Electric Supply Plan and implemented it every year, beginning in
2013;
• Increased the renewable energy supply from 21% of total load to 57% of total load;
• Reduced GHG emissions related to electricity by 109,000 MT CO2e, helping reduce community-
wide emissions by 43% compared to 1990 levels;
• Developed and launched a Feed-in Tariff program (Palo Alto CLEAN) for local renewable energy
projects, which currently has 1.6 MW of operating solar PV projects and an additional 1.3 MW
of solar projects in development;
• Executed six new utility-scale solar contracts (totaling 153 MW of capacity), of which five
projects (127 MW capacity) are currently operational;
• Achieved cumulative energy efficiency savings of 4.4%7 since 2012;
• Coordinated with other departments on the installation of 60 public EV charger ports owned
and maintained by the City;
• Approved a Local Solar Plan setting a goal of producing 4% of the community’s power supply
with local solar resources by 2023;
• Approved an Electrification Work Plan to facilitate the electrification of natural gas loads in
buildings and facilitate adoption of electric vehicles;
• Adopted aggressive energy efficiency goals which are 20% greater than a business as usual
approach and require new and innovative programs;
• Adopted a Sustainability and Climate Action Plan with a goal of reducing community emissions
to 80% below 1990 levels by 2030;
• Approved a new CPAU Strategic Plan; and
• Continued to balance our own loads and resources under the CAISO-NCPA Metered Subsystem
Agreement.
Changing Planning Environment
Across the industry, integrated resource planning has undergone significant changes in recent years.
Traditionally, an IRP was an opportunity for a utility to evaluate the steady growth of its customer
loads over a 10+ year planning horizon, and develop a plan for meeting that load growth through
staged additions of new centralized thermal generation resources. Today ’s IRPs, however, have to
consider how to integrate increasing volumes of variable and/or distributed generation in an
environment of declining loads and increasing regulatory mandates, all while maintaining reliability and
controlling costs. Accordingly, the objective of this IRP is to evaluate Palo Alto’s portfolio of resources
against the changing utility landscape and California’s environmental requirements, while
recommending strategies to ensure Palo Alto continues to meet the Council’s goals for affordability and
sustainability. The following is a description of some of the primary changes to the utilities planning
environment over the past several years.
Increasing DER Penetration & Load Profile Uncertainty
California’s resource mix has changed considerably as a result of its ambitious renewable mandates
and the rapidly declining costs of solar and wind resources. The shift to renewables has led to lower
(sometimes negative) market prices for power at certain times of the day, but has changed the daily
7 Includes savings related to Codes and Standards changes, as well as estimated savings for 2018.
Section II: Background & Achievements to Date
8
load shape, which traditionally had a single peak lasting a few hours each day. The changing load shape
means new resources will be needed, and existing resources will need to be used differently, while
maintaining affordability for customers.
Solar and wind resources, unless paired with multi-hour energy storage systems, are intermittent
sources of generation, where energy output is a function of fuel availability (i.e., sunlight and wind). In
order to accommodate large volumes of intermittent resources, the system must include a sufficient
supply of highly responsive resources (or load) to follow this new demand profile, which is referred to
as net load (i.e., gross electricity consumption less intermittent generation). Recent capacity additions
for RPS compliance have largely been solar resources, which are introducing a surplus of energy supply
in the daytime hours, particularly in the spring and fall when renewable resources maintain higher
levels of output and customer loads are at seasonal lows.
Figure 1: The Duck Curve – Net Load in California with Penetration of Intermittent Generation
(Source: CAISO)
Figure 1 is a visual representation of the difference in load vs net load, highlighted by the beige area.
This is commonly referred to in the industry as the “duck curve.” As seen in Figure 1, solar contributes
to meeting load in the middle of the day, but rapidly trails off in the evening when load is still at or
near its daily peak. For reliability, this creates the added capacity challenge of being able to meet the
ramp, in addition to meeting peak demand. The resource fleet must be able to ramp down in the
morning to accommodate increases in solar output, then ramp back up very rapidly to meet peak
demand as solar generation diminishes with the setting sun. And while utility-scale solar is a challenge
for grid operators to integrate, the growing amounts of distributed solar are an even more vexing, as
these resources are essentially invisible to grid operators – thus they add a significant amount of
uncertainty to net load projections.
Section II: Background & Achievements to Date
9
GHG Emission Reductions
In 2006, California passed Assembly Bill (AB) 32, the California Global Warming Solutions Act. AB 32 is a
mandate for several sectors, including the electricity sector, to reduce GHG emissions to 1990 levels by
2020. In 2016, AB 32 was augmented by Senate Bill (SB) 32, which mandated a GHG emissions
reduction target of 40% below 1990 levels by 2030. California’s goal of reducing GHG emissions will be
achieved through a combination of market mechanisms (Cap and Trade) and prescriptive mandates
(RPS) to retire and replace high emitting resources with cleaner resources.
In order to achieve the SB 32 targets, many sectors of the economy – including industry,
transportation, and electricity – will need to reduce their GHG emissions. The state’s electric sector
GHG emissions in 1990 were 108 MMT CO2e. Reducing this amount by 40% creates a target of 64
MMT CO2e; however, CARB’s proposed range of 30-53 MMT CO2e for the electricity sector is a 51% to
72% reduction, well in excess of the sector’s pro-rata share of the overall reduction target.8
The electricity sector is expected to surpass its pro-rata emission reduction share due primarily to the
50% RPS goal and aggressive energy efficiency requirements. SB 350 requires that POU IRPs not only
describe how they will meet their 2030 50% RPS target, but also how they will contribute to the
electricity sector's share of GHG emissions reductions by 2030. For benchmarking in this IRP and for
portfolio planning purposes, Palo Alto used the mid-range value of 42 MMT CO2e as the 2030 target
for the electricity sector (of which Palo Alto’s load-based pro rata share is 73,013 MT CO2e). These
goals are for planning purposes and not compulsory; however, if changes to the regulations occur, Palo
Alto will reflect those updates in its future resource planning efforts.
Renewable Portfolio Standards (RPS)
One of the primary mechanisms for reducing GHG emissions in the electricity sector is the state’s RPS.
The state’s RPS program mandates that an increasing percentage of retail sales be served by qualifying
renewable generation. An RPS mandate was first imposed on Palo Alto by SB X1-2 in 2011, and
subsequently expanded by SB 350 in 2015. Currently, the major targets are 33% renewables by 2020,
and 50% by 2030. In addition to the minimum renewable generation procurement requirements, the
RPS program also includes portfolio balancing requirements and long-term contract requirements, as
described in Palo Alto’s RPS Procurement Plan (included as Supplementary Information).
Palo Alto satisfies its RPS requirements through a diverse portfolio of qualifying renewable resources –
wind, solar, bioenergy (landfill gas), and small hydro. In addition, approximately half of Palo Alto's load
is served by large hydro, a carbon-free resource that helps reduce GHG emissions, yet cannot be
counted for RPS compliance. Figure 2 illustrates Palo Alto’s actual and projected power supply mix for
2012 and 2018. (Note that 2012 was a slightly dry year, so the hydroelectric supply was a bit lower
than average. Also, about 1% of the overall hydro supply is RPS-eligible “small hydro.”) If the City
8 The two other major sectors in the economy are the industrial and transportation sectors. In the Scoping Plan, CARB
estimates the industrial sector can reduce GHG emissions between 8% and 15%, while the transportation sector can reduce
GHG emissions between 27% and 32%. Much of the transportation sector’s emissions reduction burden is expected to be
shifted to the electricity sector via transportation electrification, which was not accounted for in CARB’s Scoping Plan. This
means the electricity sector’s GHG emissions reduction burden will be even greater than it appears.
Section II: Background & Achievements to Date
10
renews its contract with the Western Area Power Administration after 2024, the 2030 power supply
mix is projected to be similar to the 2018 mix, but with less wind and landfill gas and more solar.
Figure 2: Palo Alto Power Supply in 2012 and 2018
Energy Efficiency
California has continually increased the energy efficiency of its new buildings and appliances since the
Warren Alquist Act of 1974. These efficiency standards (Title 24) were updated to mandate Zero Net
Energy (ZNE) residential new construction starting in 2020. ZNE homes require energy efficiency that
will be achieved through implementing a high-efficiency envelope (insulation, windows, etc.), and
efficient heating, ventilation, and air conditioning units. The remaining energy consumption must be
offset by on-site generation, sized so that the annual building electricity consumption is equal to the
building’s electricity generation. By 2030, staff anticipates that the CEC will incorporate a carbon metric
as part of the Title 24 building standards.
Overview of EIRP methodology
Integrated resource planning is the process that utilities undertake to determine a long-term plan to
ensure generation resources are adequate to meet projected future peak capacity and energy needs,
while achieving other utility goals such as maintaining an adequate capacity reserve margin for system
reliability. Resource plans must ensure generation reliability is maintained at or above industry-
standard levels. IRPs should also forecast long-term costs and potential rate impacts to customers to
ensure that the utility can monitor and track trends with sufficient time to implement solutions to
ensure reliability, compliance, and affordable electric service. An effective resource plan should also
Section II: Background & Achievements to Date
11
provide a reasonable degree of flexibility for the utility to deal with uncertainty in technological change
and future regulations.
IRPs require the use of sophisticated analytical tools capable of evaluating and comparing the costs and
benefits of a comprehensive set of alternative supply and demand resources. Supply options typically
include the evaluation of new conventional generation resources, renewable energy technologies, and
distributed energy resources. Demand options typically include consideration of demand response
programs, energy efficiency programs, and other “behind the meter” options which may reduce the
overall load that the utility must be prepared to supply.
IRPs utilize various economic analyses and methodologies to assess alternative scenarios (e.g.,
different combinations of supply and demand resources) and sensitivities to key assumptions to arrive
at an economically optimal resource plan (subject to various constraints, such as regulatory mandates
and local policies). The key steps in the resource planning process are outlined below.
Step 1: EXAMINE PLANNING FRAMEWORK AND RISKS: Identify and assess challenges the utility
faces in the current business and regulatory environment.
Step 2: ASSESS NEEDS: Develop forecasts of load changes (incorporating impacts of cost-
effective demand-side resources), existing plant conditions, contract terms, and operational
constraints to determine resource needs over the planning period.
Step 3: CONSIDER RESOURCE OPTIONS: Evaluate available generation resources, including
centralized and distributed renewables and long-term market power purchases to identify the
role each will play in meeting customer needs and regulatory and policy goals.
Step 4: DEVELOP RESOURCE PORTFOLIOS: Develop resource portfolios, and evaluate them
quantitatively and qualitatively to determine a preferred portfolio. Evaluation relies upon GHG
emission requirements, needs assessment, and planning data specified in previous steps.
Step 5: PERFORM SCENARIO AND RISK ANALYSIS: Perform detailed evaluations of preferred
resource portfolios through scenario and risk analysis, to assess performance under a range of
potential market and regulatory conditions.
Step 6: IDENTIFY PLAN: Identify a “Preferred Plan” based on the resource portfolio expected to
reliably serve demand at a reasonable long-term cost, while achieving regulatory compliance,
accounting for inherent risks, and allowing for flexibility to respond to future policy changes.
Section III: Forecast Methodology for Energy and Peak Demand
12
Forecast Methodology for Energy and Peak Demand
Palo Alto’s forecasted energy and demand were generated by creating an econometric model for
monthly energy and peak demand and then combining them with separate forecasts for new
distributed energy resources (DERs) expected to be deployed. This approach was used since the
econometric models do not accurately capture new expected growth in these DERs. Separate models
were used to forecast DERs of highest impact. After energy and peak demand profiles for these DERs
were generated, these exogenous forecasts were then applied to the energy forecast as out-of-model
adjustments.
Equation 1: Methodology Energy and Peak Demand Forecast Total Forecast Energy OR Peak Demand=Econometric Forecast Energy OR Peak Demand +New DER Forecasts Energy OR Peak Demand
More details on the DER forecasts and load shape profiles that were generated are available in the
Proposed Distributed Energy Resources Plan, which was presented to the UAC in November 2017.
The DERs modeled for the purpose of this analysis 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)
The base case annual energy forecast is shown in Figure 3. The projected change in hourly load shape
on a peak day in 2030 is shown in Figure 4.
Section III: Forecast Methodology for Energy and Peak Demand
13
Figure 3: Annual Energy Forecast including DERs (2018-2030)
Figure 4: Impact of DERs on Hourly Summer Load Shape in 2030
Section III: Forecast Methodology for Energy and Peak Demand
14
Description of Econometric Forecast Models
The econometric model inputs (i.e. independent variables) have been selected based on the availability
of data, economic theory, and tests to validate the forecasts with actual energy (or demand) data. The
coefficients of the models were obtained via statistical estimation on historical (in-sample) data where
the Yule-Walker Generalized Least Squares method was employed to take into account the
autocorrelation structure of the residuals so as to obtain valid standard error estimates. The
coefficients were then combined with forecasts of each driver (independent variable) to produce the
forecasted energy (or peak demand). Forecasts of the economic driver variable were provided by the
Bureau of Economic Analysis and the forecasted values provided by the UCLA Anderson Forecast
group. Weather variables were obtained from NOAA, and the forecasted weather conditions were set
to reflect normal weather based on average temperatures across the training data set.
Energy Econometric Model
The Energy forecast is an econometric model that maps a set of calendar variables, weather variables,
and an economic driver variable onto Palo Alto’s monthly energy consumption measured at its
California Independent System Operator (CAISO) meter at the Palo Alto City Gate. The monthly
calendar variables are used in the model to capture underlying changes in Palo Alto customers’ electric
consumption caused by changing daylight hours and seasonal electricity usage. Monthly Heating
Degree Days and Cooling Degree Days are used to explain the variation in energy due to the weather.
Investment in non-residential equipment and software as reported by the Bureau of Economic Analysis
was used as the economic driver. This variable represents business activity in the computer software
and equipment sector of the economy, which directly affects Palo Alto’s utility customers’ energy
consumption.
Peak Demand Econometric Model
The Peak Demand forecast is also an econometric model that maps a set of calendar variables, weather
variables, and the energy forecast onto Palo Alto’s monthly peak demand measured at its CAISO meter.
Similar to the Energy Forecast, monthly dummy variables are used in the model to capture underlying
changes in Palo Alto customers’ electric consumption throughout the year. Daily heating and cooling
degree days corresponding to the peak day of the month is used as the weather driver. Monthly
historical energy usage is added as the final variable explaining peak demand.
Description of Distributed Energy Resources Forecasts
Distributed Energy Resource forecasts for a number of technologies were developed and presented to
the Palo Alto UAC in the proposed Distributed Energy Resources Plan in November 2017.
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)
Section III: Forecast Methodology for Energy and Peak Demand
15
DER penetration forecasts and load shape models 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. The forecasts of the number of distributed energy resources in Palo Alto are
shown in Table 4. The impact that these DER systems will have on CPAU’s net electricity sales is shown
in Table 5, and previously in Figure 4.
Table 4: Projected Number of DER Systems (2017-2030)
Projected Number of Systems
DER Technology 2017 (current) 2020 2030
PV 1,000 1,300 2,500
EV 9 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
Table 5: Projected Contribution to Energy Sales of DER Systems (2017-2030)
Contribution to Energy Sales 2017 (current) 2020 2030
DER Technology 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%
ES10 - - - - - -
HPWH 9 - 190 0.02% 2,500 0.3%
HPSH - - 90 0.01% 2,800 0.3%
9 This is the total number of 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.
10 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 currently considered to have any net effect on energy sales.
Section III: Forecast Methodology for Energy and Peak Demand
16
Contribution to Energy Sales 2017 (current) 2020 2030
DER Technology MWh % MWh % MWh %
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 201711 - - -3,200 -0.3% -6,900 -0.8%
Energy Efficiency Forecast
a. Committed Energy Efficiency
AB 2021 (2006) required POUs to identify all potentially achievable cost-effective electric efficiency
savings and to establish annual targets for energy efficiency savings over ten years, with the first set of
EE targets to be reported to the CEC by June 1, 2007, and updated every three years thereafter. AB
2227 (2012) amended this target-setting schedule to every four years. Palo Alto adopted its first Ten-
Year Energy Efficiency Portfolio Plan in April 2007, which included annual electric and gas efficiency
targets between 2008 and 2017, with a ten-year cumulative savings goal of 3.5% of forecasted energy
use. In accordance with California law, the electric efficiency targets were updated in 2010, with the
ten-year cumulative savings goal doubling to 7.2% between 2011 and 2020. Since then, increasingly
stringent statewide building code and appliance standards have resulted in substantial energy savings.
However, these “codes and standards” energy savings cannot be counted toward meeting the utility’s
EE goals. The ten-year electric efficiency targets were updated again in 2012, with the ten-year
cumulative electric efficiency savings being revised downwards to 4.8% between 2014 and 2023. For
fiscal year (FY) 2017, CPAU achieved electric savings of 0.7% of load through its customer efficiency
programs as shown in the most recent Demand Side Management Report. Cumulative electric
efficiency savings since 2006 are about 6% of the FY 2017 electric usage. Adoption rates for EE are
based on the 10-year Energy Efficiency Goals for 2018-2027 which were updated in 2017. The ten-year
cumulative electric efficiency savings target was updated to 5.7% between 2018 and 2027. These
adopted goals are ambitious goals which include new programs in order to achieve a 20% increase over
the last goals adopted. 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 ten-year energy efficiency goals.12 More details on the EE methodology for market
potential can be found in Staff Report 7718 from March 6, 2017.
11 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.
12 The extension of savings through 2030 is based on the methodology put forth in the CEC presentation by Mike Jaske from
September 7, 2017, which can be found here: CEC presentation on Energy Efficiency Savings from Utility Programs.
Section III: Forecast Methodology for Energy and Peak Demand
17
Although CPAU established its EE goals based on net savings, the energy efficiency savings shown in
the tables and graphs here include EE savings due to free-ridership as well as savings from statewide
codes and standards.
b. Additional Achievable Energy Efficiency
There is no additional achievable energy efficiency assumed in this EIRP forecast because the
additional achievable energy efficiency is already included in the ambitious adopted energy efficiency
goals for 2018 to 2027. These ambitious energy efficiency goals are 20% higher than a business-as-
usual case and will require new innovative programs.
Solar Photovoltaic Forecast
Solar PV projections are based on technical and economic potential; they indicate that adoption will
grow 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 potential Community Solar installation that has recently been discussed by the Palo Alto UAC.
In April 2014, the Palo Alto City Council approved the Local Solar Plan, which sets a community-wide
goal of meeting 4% of the City’s energy needs through local solar by 2023 and identifies a number of
strategies to help achieve that goal. These strategies include the development of several solar
programs to encourage installation of roof-top solar such as existing incentives like the feed-in tariff
program and the PV Partners solar rebate program. As of the end of 2017 all solar installations within
the City generate 1.94% of the City’s electricity from about 10 MW of installed local solar capacity.
Transportation Electrification Forecast
To date, Palo Alto has observed residential EV adoption rates approximately three times greater than
the California statewide average, and this residential adoption rate 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.
In addition to the number of residential EVs shown in Table 4 above, there are projected to be
approximately 3,100, 5,900, and 20,000 commuter EVs in 2017, 2020 and 2030, respectively.
Energy Storage Forecast
This forecast is based on statewide projections for batteries and CPAU electricity rate structures. CPAU,
in coordination with the Palo Alto Development Services Department, is facilitating the adoption of
energy storage systems by customers by streamlining the process for permitting and interconnecting
such systems. Detailed analysis in 2017 showed that batteries are currently not cost effective within
CPAU’s service territory or at our remote renewable generation sites and therefore Palo Alto currently
does not provide any rebates for energy storage systems and is not currently planning to install storage
at any of our renewable resources. In August 2017, the Palo Alto City Council adopted a resolution
determining not to set a target for CPAU to procure energy storage systems at the wholesale level (or
Section III: Forecast Methodology for Energy and Peak Demand
18
to establish a rebate program for behind-the-meter installations) due to a current lack of cost-effective
applications for Palo Alto. The City plans to revisit the analysis by 2020.13
Demand Response Forecast
CPAU has been running a voluntary summer demand response program for large commercial and
industrial customers since 2013, with an average of 4-5 DR events per year resulting in 0.5-1 MW of
peak load reduction. For the 2018 demand response program there are a total of 7 commercial
customers enrolled, with 525 kW of projected peak load reduction. The EIRP Energy and Peak Demand
forecasts are based on modest growth projections for the current voluntary large commercial demand
response program. Somewhat more robust growth is expected after the implementation of Palo Alto’s
Advanced Metering Infrastructure (AMI) program in 2023.
Electrification of Space and Water Heating Forecast
The Energy and Peak Demand forecasts use historical solar PV penetration rates as a proxy for
adoption rates of heat-pump water heaters and space heaters. Based on this analysis, staff projects a
natural gas load reduction of up to 1% from HPWH adoption, and an additional 1% load reduction from
HPSH adoption, by 2030.
SB 338 Requirements
On September 30, 2017, SB 338 was signed into law by Governor Brown, including additional
provisions for the POU IRPs, which were effective January 1, 2018. This included revisions to Public
Utilities Code section 9621(c), requiring the POU’s governing board to “consider the role of existing
renewable generation, grid operational efficiencies, energy storage, and distributed energy resources,
including energy efficiency, in helping to ensure each utility meets energy needs and reliability needs in
hours to encompass the hour of peak demand of electricity, excluding demand met by variable
renewable generation directly connected to a California balancing authority, as defined in Section
399.12, while reducing the need for new electricity generation resources and new transmission
resources in achieving the state’s energy goals at the least cost to ratepayers.”
The development of this IRP began well in advance of the effective date of these provisions. However,
as part of the comprehensive process undertaken to develop this EIRP, the City reviewed and
considered resource options that included all of the technologically feasible and cost-effective options
available to it, including what options would be best utilized to meet energy needs and reliability
requirements during hours of peak demand for the utility. This includes a review of the best available
options considering both new and existing preferred resources, as would necessarily be assessed in
order to ensure that Palo Alto provides its customers with the cleanest and most cost-effective
generation resources, while also ensuring that the City meets all of the statutory requirements of not
only Section 9621, but other procurement and resources mandates, as well.
As previously mentioned, in November 2017 staff presented to the Palo Alto UAC an assessment of the
future impact of distributed energy resources (Distributed Energy Resources Plan). This assessment
13 The analysis that led to the City Council’s determination not to adopt a wholesale energy storage target can be found in
this report to the Palo Alto UAC: https://www.cityofpaloalto.org/civicax/filebank/documents/57435.
Section III: Forecast Methodology for Energy and Peak Demand
19
included guidelines for facilitating customer adoption as well forecasts of their potential to mitigate
peak demand for CPAU. The aggressive forecasts and programs for solar PV, energy efficiency, and
demand response have great potential to mitigate CPAU’s peak demand.
Section IV: Existing Resource Portfolio
20
Existing Resource Portfolio
The City’s current electric supply portfolio comprises the following major types of resources:
• Energy efficiency and distributed generation;
• Federal hydro (Western contract);
• Owned hydro (Calaveras);
• Long-term, in-state, RPS-eligible power purchase agreements (PPAs), which include solar, wind,
and landfill-gas resources; and
• Market power purchases, matched with RECs, for monthly/hourly portfolio balancing.
For calendar year 2020, the projected contribution of each of these five resource types to the City’s
overall electric supply portfolio is represented in Figure 5 below.
Figure 5: Projected Palo Alto Electric Supply Mix in CY 2020 by Resource Type
* Estimated Average Annual Unit Cost of 6 ¢/kWh *
Section IV: Existing Resource Portfolio
21
Energy Efficiency & Local Renewable Generation
Energy Efficiency
Palo Alto has long recognized cost-effective energy efficiency (EE) as the highest priority energy
resource, given that EE typically displaces relatively expensive electricity generation and lowers energy
bills for customers.
Palo Alto places such emphasis on energy efficiency and demand side management programs that each
year we prepare a detailed Demand Side Management Annual Report describing and reporting on
efficiency savings from electricity, gas, and water.
Highlights of Energy Efficiency Programs from 2017
• Multifamily Residence Plus+ Program - This program, which focuses on a hard-to-reach
customer segment, was expanded in FY 2016 to include LED lighting measures, as the cost and
quality of LED lighting had improved. In September 2016, the contract with the vendor was
amended to add $500,000 to accommodate demand for the upgrades. As a result, the program
saw an increase in savings of over 950%.
• The Home Efficiency Genie Program - The Genie was launched in the summer of 2015 as a
home efficiency assessment program. The licensed energy auditors still do house calls, but the
program has expanded its focus to include more phone-based customer service on energy and
water-related topics. The Genie now provides information not only about efficiency but also
about the City’s sustainability programs, such as heat pump water heaters (HPWHs) and the
solar group-buy program (SunShares). Staff also changed the program guidelines to allow the
Genie to discuss and advise residents on available rebates.
• Heat-Pump Water Heater Pilot Program - The goal of this program is reduction of greenhouse
gas (GHG) emissions through switching from natural gas appliances to high-efficiency electric
appliances. Installation of heat pump water heaters (HPWHs) has been identified as a good
starting candidate for a pilot program. The pilot program—launched in the spring of 2016—was
designed to facilitate the installation of HPWHs in single-family homes. In April 2017, the City
hosted its first HPWH workshop to educate the community, including contractors, on the
technology and installation of HPWHs.
• Green Building Ordinance – The Green Building Ordinance (GBO) is Palo Alto’s local building
reach code that is more stringent than the state Title 24 standard. This ordinance applies to
both residential and commercial buildings. CPAU previously assisted in the development of this
code, but FY 2017 is the first year for which savings associated with the GBO have been
reported in this report.
• Building Operators Certification (BOC) Course - CPAU hosted a Building Operators Certification
Course taught by Northwest Energy Efficiency Commission (NEEC) from Seattle. BOC is an eight-
class certification course covering all aspects of building management and efficiency. Some
Section IV: Existing Resource Portfolio
22
topics covered were: HVAC, electrical systems, comfort control and lighting. Upon passing an
end-of-class exam, graduates could become Certified Building Operators (CBOs).
• Residential Energy Assistance Program (REAP) - This program provides qualifying low-income
residents with free energy efficiency measures and access to the Rate Assistance Program (RAP)
rate discount. For qualifying customers, a Home Assessment, an application to the RAP, and an
on-site customer evaluation for weatherization and energy efficiency measure installation,
including insulation and lighting, is provided. Customers may have refrigerators and/or furnaces
replaced if the need is found.
Local Renewable Generation
Local renewable energy programs are critical to lowering emissions of local air pollutants and CPAU has
enacted a number of initiatives and programs to facilitate customer adoption. In addition, in 2014 the
Palo Alto City Council adopted the Local Solar Plan with the goal of having local solar photovoltaic
facilities provide 4% of the City’s total energy needs by 2023.
The following is a description of Palo Alto’s current customer-side renewable generation programs:
• Solar PV Group-buy - Every year since 2015 Palo Alto has been an active partner in promoting
the Bay Area SunShares PV Group-buy program which pre-screens solar installers and
negotiates lower rates for customers. In both 2015 and 2017 Palo Alto was the top “Outreach
Partner,” both in terms of the number of solar contracts signed and the kilowatts of rooftop
solar capacity that will be installed through the program. From 2015 to 2017 Palo Alto residents
have signed 88 solar contracts through the SunShares PV Group-buy program for a total of 421
kW of installed rooftop solar capacity.
• PV Partners - The PV Partners Program encourages photovoltaic or solar electric (PV)
installations on Palo Alto homes and businesses by providing a rebate based on the capacity,
measured in watts, of newly installed PV systems. The PV Partners Program continues to be one
of the most successful in the State. Rebate funds were fully reserved in April 2016. The effect of
the PV Partners program can be seen in the cumulative total of PV installations. As of June 30,
2017, there were 1,003 PV installations with the total capacity of 8.617 MW (5.04% of Palo
Alto’s system peak load).
• Net-Energy Metering Successor Program - Prior to January 1, 2018 residential and commercial
customers in Palo Alto who installed approved PV systems were able to sign up for the CPAU
Net Energy Metering (NEM) program. CPAU reached the NEM cap of 10.8 MW in January 2018
and CPAU is now offering a NEM Successor Program instead. The NEM Successor process is
integrated with the permitting process, and customers receive a credit for electricity exported
to the grid based on CPAU’s avoided costs.
• Palo Alto CLEAN (Clean Local Energy Accessible Now) - This feed-in tariff program purchases
electricity generated by renewable energy resources located in Palo Alto’s service territory and
interconnected on the utility-side of the electric meter. The electricity is purchased by Palo Alto
for the electric renewable portfolio standard. The program was launched in 2012 and has been
modified over the past few years. On February 3, 2014 the Palo Alto City Council approved a
total program capacity of 3 MW at a price of 16.5 cents per kilowatt hour (kWh) fixed for 20
Section IV: Existing Resource Portfolio
23
years. On May 8, 2017 the Palo Alto City Council approved minor changes to Palo Alto CLEAN.
The program no longer has a total participation cap for either solar or non-solar eligible
renewable energy resources. CPAU is currently offering to purchase the output of eligible
renewable electric generation systems located in Palo Alto at the following prices:
o For solar energy resources: 16.5 cents per kilowatt hour (¢/kWh) for a 15-, 20- or 25-
year contract term until the subscribed capacity reaches 3 MW – after that the price will
drop to 8.8 ¢/kWh for a 15-year contract term, 8.9 ¢/kWh for a 20-year contract term,
or 9.1 ¢/kWh for a 25-year contract term; and
o For non-solar eligible renewable energy resources: 8.3 ¢/kWh for a 15-year contract
term, 8.4 ¢/kWh for a 20-year contract term, or 8.5 ¢/kWh for a 25-year contract term.
There is no minimum or maximum project size, but the program is best suited for commercial
property owners with available roof-tops or parking lots. Palo Alto’s Public Works Department
recently solicited proposals to install solar PV systems and electric vehicle chargers at four City-
owned parking structures. All four of these parking garage solar PV systems are operational as
of March 2018. As of August 2018, there are a total of six solar PV systems participating in the
Palo Alto CLEAN program, including the four aforementioned systems on City-owned parking
garages. These six projects account for 2.915 MW of the capacity available at the 16.5 ¢/kWh
contract rate, with contract terms ranging from 15 to 25-years; five of them projects are now
operational, and the sixth is expected to be online by the end of 2018.
Hydroelectric Resources
Western Base Resource
Since the 1960s, CPAU’s participation as a power customer of the Central Valley Project (CVP) has been
an instrumental factor in its ability to deliver low-carbon electricity to Palo Altans at low rates. The U.S.
Bureau of Reclamation (BOR) built the CVP in the 1930s and is charged with the operation,
maintenance, and stewardship of the project. The CVP was constructed primarily for flood control of
the Sacramento Valley area; however, it is also used to provide water for irrigation and municipal use
and for navigation and recreational purposes. Hydroelectric generation is a lower priority function of
the CVP, relative to the aforementioned purposes.
The BOR is legally required to first provide power to “Project Use” for operations and pumping water
through the CVP project, and then to “First Preference Customers,” those customers whose livelihood
and/or property/land was impacted by the construction of the CVP. The remaining hydroelectricity
(“Base Resource”) is then made available for marketing under long-term contracts with not-for-profit
entities such as municipal utilities and special districts. The Western Area Power Administration
(WAPA) is the federal Power Marketing Agency charged with marketing and contracting with
customers for the electric output associated with the CVP, and collecting funds to meet allocated
revenue requirements on behalf of the BOR.
In 2000, the City executed a new 20-year contract with WAPA for CVP power deliveries starting in
2005. Under this contract the City receives 12.3% of all the Base Resource product output and is
Section IV: Existing Resource Portfolio
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obligated to pay 12.3% of all the CVP’s revenue requirements as allocated to power customers,
regardless of the amount of energy received. Under normal precipitation and hydrological conditions,
this resource provides nearly 40% of CPAU’s electricity needs. However, since 2005 the amount has
varied from a low of 22% to a high of 64%. The corresponding cost per MWh has ranged from $22 to
$61/MWh.
The current Base Resource contract is set to expire at the end of 2024. Western’s proposed 2025
Power Marketing Plan, submitted to the United States Federal Register Notification (U.S. FRN No
27433), if approved by the Department of Energy, would allow existing Base Resource power
customers to renew up to 98% of their existing allocation for a thirty-year term (2025-2054) under
similar contract terms and conditions to their existing contracts.
The process for extending this contract is well underway and is expected to take five to seven years to
complete (Western's 2025 Power Marketing Plan Tentative Schedule). CPAU staff has been actively
involved in the process by providing informal and formal comments in response to the 2025 Western
Power Marketing Plan and by working with WAPA staff and other Base Resource contract customers to
develop a better model of long-term generation and cost projections. Pending approval of the 2025
Power Marketing Plan, Western will seek commitments through execution of the new Base Resource
contract in 2020 – although participants are expected to have an option to reduce participation and/or
terminate their contract in 2024.
A key topic for consideration in the EIRP is whether or not the City should renew its Base Resource
contract – and if so, at what level. The analysis necessary to aid Council in its decision will need to
consider the cost and the value of the resource going forward, which are both highly uncertain. This is
due in large part to the nature of the CVP and supply availability, which is dependent on unpredictable
precipitation conditions, the long-term effects of climate change, and the potential for new
environmental policies and/or projects which threaten to erode generation value.
The costs associated with participating in the Base Resource are also highly uncertain. First, the BOR
has yet to update the cost allocation study necessary to establish rates for CVP power under the
existing contract, and it is unclear when such rates will be published for the post-2024 period.
Additionally, funding requirements under the Central Valley Project Improvement Act (CVPIA)14 and
the appropriateness of the allocation of Restoration Fund collections between water and power
customers is of serious concern to CPAU and other power customers, who have been actively
encouraging BOR and Congress to adjust this allocation.
Lastly, the potential for changes to local and state RPS requirements – such as portfolio mandates or
carve-outs for baseload renewables and/or not providing consideration for supply variability associated
with large hydroelectric resources – as well as the potential for loss of load due to distributed energy
resources or load defection, increase the risk of a renewed Base Resource contract becoming a
14 The Central Valley Project Improvement Act was passed by the U.S. Congress in 1992 to establish the Restoration Fund,
funding requirements and goals to restore the habitat of the area impacted by the CVP. Water and power customers are
obligated to pay into the Restoration Fund. https://www.usbr.gov/mp/cvpia/docs/public-law-102-575.pdf
Section IV: Existing Resource Portfolio
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stranded resource, unless clear and reasonable termination provisions are included in the new
contract.
NCPA staff and CPAU staff are in the process of assessing the impact magnitude and likelihood of
several issues which threaten to dilute the future value of Base Resource, as well as NCPA’s and CPAU’s
ability to influence these issues. These issues are in addition to highly variable hydrological and
precipitation conditions which create year-to-year variations in value. Staff and NCPA will work
towards refining the analysis of these risk factors, to aid in the decision of how much Base Resource to
renew for the post-2024 period.
Calaveras
Calaveras was bond-funded and built as a joint project between members15 of the Northern California
Power Agency (NCPA) and the Calaveras County Water District (CCWD) in 1983. CCWD holds the
Federal Energy Regulatory Commission (FERC) license and NCPA is the project operator. The project
resides on the North Fork of the Stanislaus River in Calaveras, Alpine and Tuolumne Counties. Calaveras
was built primarily for hydroelectric generation purposes and as such water is stored and managed to
optimize generation value and to meet member owners’ energy needs. Palo Alto’s share in the project
is 22.92%, which serves approximately 14% of the City’s annual load in an average hydro year.
Calaveras’ project capacity is about 253 MW and can generate 575 gigawatt-hours (GWh) of energy
annually under average hydroelectric conditions. Palo Alto’s corresponding share of the output is 58
MW of capacity and 132 GWh of annual energy.
As of January 2019, the City’s outstanding debt on the project is approximately $89 million, of which a
large portion will be maturing in 2024 and the remainder will mature in 2032. Annually through fiscal
year 2024, the City’s debt related to this project is on average about $9 million. For the remaining years
until 2032, the debt is about $5 million. Historically, debt and other costs associated with Calaveras
have resulted in the overall value of the project being below market.16 For FY 2018, Palo Alto’s share of
the project cost, including debt, is $12.5 million and the value is expected to be $5.7 million, resulting
in a net cost of $6.8 million. However, because Calaveras’ variable operating and maintenance costs
are relatively low, the project is dispatched regularly for the purpose of generating energy.
Additionally, Calaveras has the ability to meet several CAISO compliance and operating requirements,
including: following variations in the City’s load in real-time (load following), ancillary services related
to regulation energy and spinning reserves; and meeting some of the City’s Resource Adequacy
15 NCPA members participating in the Calaveras Project via the Calaveras Third Phase Agreement with NCPA include the
cities of Alameda, Biggs, Gridley, Healdsburg, Lodi, Lompoc, Palo Alto, Roseville, Santa Clara, and Ukiah, and the Plumas-
Sierra Rural Electric Cooperative.
16 In anticipation of Direct Access and the possibility for load to leave CPAU, in 1996 Council approved a competitive-
transition-charge (CTC) to be added as a non-by-passable fee on all CPAU customers electricity bills. This was done to collect
the above market cost (stranded cost) associated with Calaveras debt and the funds were held in the Calaveras Reserve,
which had been established in 1983 to help defray cost associated with Calaveras. The Calaveras Reserve was repurposed in
2011 and is now the Electric Special Project Reserve (see Staff Report 2160).
Section IV: Existing Resource Portfolio
26
requirements, including flexible capacity and system capacity. Calaveras also serves as an energy
storage asset, since water is stored in the main reservoir, New Spicer Meadow, and released at optimal
times to meet energy and capacity needs. Long-term it is expected that the value of Calaveras will
increase, assuming average or above average hydroelectric conditions and favorable regulatory
requirements.
While there are no imminent decisions associated with Calaveras, a few issues may be worth
evaluating in the context of the EIRP, including:
1. Assessment of Calaveras value and operating strategies, given the City’s commitment to other
large hydroelectric resources, RPS resources, and hydro risk management objectives;
2. How to best optimize Calaveras given its potential value to meet intermittent resource
integration requirements; and
3. The value of the City’s long-term stake in Calaveras, including the post-2032 period, when the
current FERC license expires.
Renewable Energy Resources
Wind PPAs
Palo Alto currently has two long-term contracts for the output of wind power projects. Under separate
contracts with Avangrid Renewables (formerly Iberdrola Renewables), the City receives a 25 MW share
of the output of the Shiloh I project, and a 20 MW share of the output of the High Winds I project in
Solano County, both of which are located in Solano County. The terms of these two contracts end in
2021 and 2028, respectively. Together, the two resources typically supply about 12% of Palo Alto’s
total electric supply needs. Both projects are considered fully deliverable, and are located in the Bay
Area local reliability area.
Landfill Gas (LFG) PPAs
Palo Alto currently has five long-term contracts with Ameresco for the output of landfill gas electricity
projects. The five contracts include a 1.5 MW share of a project located in Watsonville, a 5.1 MW share
of a project located in Half Moon Bay, a 1.9 MW share of a project located in Pittsburg, and the entire
output of a 1.4 MW project located in Gonzales and a 4.1 MW project located in Linden. The terms of
these agreements are all 20 years, with contract expiration dates between 2025 and 2034. Together,
the five resources currently supply about 11% of Palo Alto’s total electric supply needs. All five projects
are also considered fully deliverable, with two of them located in the Bay Area local capacity area.
Solar PPAs
Since the beginning of 2012, Palo Alto has executed six long-term contracts for utility-scale solar PV
projects. These six contracts include three with sPower (the 26.7 MW Hayworth Solar project located
in Bakersfield, and the 20 MW Western Antelope Blue Sky Ranch B project and the 40 MW Elevation
Solar C project – both of which are located in Lancaster), two with Clēnera (the 20 MW EE Kettleman
Land project in Kettleman City and the 20 MW Frontier Solar project located in Newman), and one with
Hecate Energy (the 26 MW Wilsona Solar project, which is slated to be built near Palmdale). The first
five of these projects are currently operational, and they provide roughly 33% of Palo Alto’s total
electricity needs; meanwhile, the Wilsona project is scheduled to begin energy deliveries in mid-2021.
The terms of these agreements are all at least 25 years, with contract expiration dates starting in 2040.
Section IV: Existing Resource Portfolio
27
The three projects operated by sPower are considered fully deliverable, with the Hayworth project
located in the Kern local capacity area, and the other two located in the Big Creek-Ventura local
capacity area.
Market Purchases & RECs
Palo Alto has nine active Master Agreements (with BP Energy, Shell Energy North America, Powerex
Corp, Cargill Power Markets, Exelon Generation, Iberdrola Renewables, NextEra Energy Power
Marketing, Turlock Irrigation District, and PacifiCorp) to facilitate competitive forward market
purchases and sales to meet Palo Alto’s loads in the short- to medium-term. As of June 30, 2018, Palo
Alto had outstanding electricity purchase commitments for the period July 2018 to June 2020 totaling
79 GWh, and sales commitments for this period totaling 161 GWh. These market based purchases and
sales are made within the parameters of Palo Alto’s Energy Risk Management Program.
In FY 2018, gross market-based purchases (including both forward transactions and spot-market
transactions) provided approximately 14% of Palo Alto’s electricity needs, while gross market-based
sales were equivalent to 23% of Palo Alto's needs (i.e., the City was a net seller of market-based
energy). The volume of market purchases and sales however is highly dependent on hydro conditions
and long-term commitments to renewable resource-based supplies. During normal hydro conditions,
gross market purchases are expected to meet approximately 15% of energy needs, while gross market
sales will amount to approximately 25% of energy needs. NCPA serves as Palo Alto’s scheduling and
billing agent for all transactions, and acts as the interface with the CAISO under a Metered Subsystem
Aggregation Agreement (MSSA).
Since 2013, Palo Alto has operated under a Carbon Neutral Plan for its electric supply portfolio,
ensuring that all electrical generation that serves the City’s needs produces zero GHG emissions on a
net annual basis. To implement the Carbon Neutral Plan, in years when the City has been a net
purchaser of market power (e.g., in very dry hydro years, or before the City’s long-term solar contracts
had started delivering power to Palo Alto), it has purchased Renewable Energy Certificates (RECs) in
volumes equivalent to its net market power purchase volumes.
COBUG
In 2002, shortly after experiencing a series of rolling blackouts during the California energy crisis, the
City decided to invest in a set of locally-sited natural gas-fired back-up generators in order to stave off
such events in the future. These four generators, together known as the Cooperatively Owned Back-Up
Generator (COBUG), total 5 MW in capacity but are seldom operated (generally only for maintenance
purposes). They do, however, serve as an important source of local system reliability in the Bay Area
local capacity area.
California-Oregon Transmission Project (COTP)
Fourteen Northern California cities and districts and one rural electric cooperative, including Palo Alto,
are members or associate members of a California joint powers agency known as the Transmission
Agency of Northern California (TANC). TANC, together with the City of Redding, WAPA, two California
water districts, and Pacific Gas and Electric (PG&E) own the California-Oregon Transmission Project
(COTP), a 339-mile long, 1,600 MW, 500 kV transmission power project between Southern Oregon and
Section IV: Existing Resource Portfolio
28
Central California. Palo Alto is entitled to 4.0% of TANC's share of COTP transfer capability (50 MW). As
a result of low utilization of the transmission capacity and therefore low value relative to costs (in
addition to a focus on acquiring in-state renewable resources), in August 2008 Palo Alto effected a
long-term assignment of its full share and obligations in COTP to the Sacramento Municipal Utility
District (SMUD), Turlock Irrigation District (TID), and Modesto Irrigation District (MID). The long-term
assignment is for 15 years (through 2023), with an option to extend the assignment for an additional
five years.
Resource Adequacy Capacity
As described above, the majority of Palo Alto’s long-term generation contracts (and its one owned
thermal generating asset) are deemed fully deliverable and provide the City with Resource Adequacy
(RA) capacity to satisfy its CAISO regulatory requirements. The amounts of RA capacity provided by
each resource are detailed in the CRAT standardized table in the appendices of this report, and a high-
level overview is provided in Table 6 below.
Table 6: Palo Alto’s Resource Adequacy Capacity Portfolio
Project Resource Type Local Area Flexible RA? Average NQC (MW)
Western Base Resource Hydroelectric CAISO System No 147.0
Calaveras Hydroelectric CAISO System Yes 58.0
High Winds Wind Bay Area No 4.5
Shiloh I Wind Bay Area No 5.7
Santa Cruz LFG Landfill Gas CAISO System No 1.5
Ox Mountain LFG Landfill Gas Bay Area No 5.1
Keller Canyon LFG Landfill Gas Bay Area No 1.9
Johnson Canyon LFG Landfill Gas CAISO System No 1.4
San Joaquin LFG Landfill Gas CAISO System No 4.1
Hayworth Solar Solar PV Kern No 14.2
Elevation Solar C Solar PV Big Creek-Ventura No 21.9
Western Antelope Solar PV Big Creek-Ventura No 11.0
COBUG Natural Gas Bay Area No 4.5
Section V: Future Procurement Needs and Portfolio Rebalancing
29
Future Procurement Needs and Portfolio Rebalancing
Needs Assessment: Energy, RPS, Resource Adequacy Capacity
Overall, Palo Alto’s resource portfolio has a surplus of energy, and a surplus of RPS generation (relative
to its RPS procurement requirements under SB 350), as detailed in the Standardized Tables presented
in Appendix D. Figure 6 below depicts the City’s projected supplies 17 of eligible renewable generation
for the period 2003 to 2038, as well as the City’s annual RPS generation procurement requirements
under SB 350, based on its actual and forecasted retail sales volumes. Note that this figure presents
only currently contracted resources; no additional resources are assumed to be procured, and no
existing contracts are assumed to be extended.
Figure 6: Palo Alto’s RPS Generation Projections and RPS Compliance Requirements
In terms of capacity, the City has a surplus of system RA capacity, but deficit positions in local and
flexible RA capacity.18 The City makes up these deficits each year via bilateral RA capacity purchases.
One of the challenges that CPAU faces over the IRP planning period is ensuring that it can continue to
17 Note that renewable energy supplies shown in Figure xx which are surplus to the City’s RPS procurement requirements
may ultimately be sold or banked for use in future compliance periods.
18 For additional details on Palo Alto’s projected needs and supplies of electrical generation, RPS generation, and RA
capacity, please see the EBT, RPT, and CRAT standardized tables in Appendix D to this report.
Section V: Future Procurement Needs and Portfolio Rebalancing
30
procure adequate supplies of local and flexible RA capacity – both to satisfy its regulatory compliance
obligations, and to ensure the overall reliability of the CAISO bulk transmission system.19
However, during the IRP planning period, CPAU staff’s primary focus will be on determining whether to
renew its Western Base Resource contract for a new 30-year term starting in 2025 – and if so, at what
capacity share. As such, staff will be heavily focused on negotiating contract terms that provide the City
with protection and flexibility, while also closely monitoring the many issues that are currently creating
uncertainty around this resource’s long-term costs and generation levels. The remainder of this section
of the EIRP will focus on exactly this question: whether to renew the Western Base Resource contract
at the maximum possible level, or whether to “rebalance” the City’s electric supply portfolio by scaling
back (or eliminating) the City’s Base Resource allocation and replacing it with a different generation
resource.
Portfolio Rebalancing Analysis
As noted in the September 2017 report to the Palo Alto UAC, CPAU staff evaluated a very large number
of potential new supply-side and demand-side resources in the portfolio analysis it performed related
to the Western Base Resource contract renewal decision. However, as the analysis progressed, due to
reasons of feasibility/availability and cost/uncertainty, staff narrowed the focus of the analysis to the
following resources:
• A renewed Western Base Resource (Western) contract,
• In-state solar,
• Out-of-state wind,
• Geothermal,
• Local (Palo Alto) solar, and
• Market power purchases matched with renewable energy certificates (RECs).
The Western hydro resource and in-state solar resource characteristics are well understood, given the
large role they each play in Palo Alto’s current resource portfolio. Western is a relatively low-cost,
flexible resource – at least in average years – but it features a large amount of seasonal variability, as
well as year-to-year uncertainty around its cost and level of output. In addition, there are several major
issues currently pending that have the potential to significantly impact the cost and/or operation of the
resource.20 Solar also involves a great deal of seasonal variability and contributes towards the seasonal
19 Also, if Palo Alto opts not to renew its Western Base Resource contract in 2025 – or significantly scales back its share of
this resource – then the City will face the additional challenge of ensuring it has adequate system RA capacity to meet its
planning reserve margin requirements. As Table 6 indicates, the Western Base Resource contract is by far the City’s largest
source of system RA capacity.
20 For example: The State Water Resources Control Board has several proceedings underway that may have very significant
impacts on Western operations, including the consideration of an “unimpaired flow” criteria as part of its Bay Delta Plan
that could result in significantly less generation from Western, particularly in the summer months. There are also long-term
risks associated with an increase in “Aid to Irrigation” payments that Power customers may be required to make to Water
customers, litigation related to the Central Valley Project Improvement Act (CVPIA) Restoration Fund payments that Power
customers make, potential cost impacts to Power customers related to the “Twin Tunnels” project, and the impacts of
climate change on the resource. Staff hopes that many of these uncertainties will be better understood by 2024; however it
is likely that a number of them will remain unresolved. These risks must be more closely examined before making a final
contract commitment in 2024.
Section V: Future Procurement Needs and Portfolio Rebalancing
31
imbalance of the supply portfolio, but with far less uncertainty around its cost or annual output
amount. And while its costs have decreased dramatically in recent years, the huge volume of recent
capacity additions – which have been concentrated in areas with the best solar potential – have driven
down the market value of this energy at least as much, leading to a sharp increase in negative market
prices and curtailments. The rise of solar generation in the state has also led to the Duck Curve
phenomenon21, which has in turn resulted in new regulatory requirements for each load-serving entity
(LSE) to procure sufficient flexible generation capacity to maintain transmission grid reliability.
Out-of-state wind resources – e.g., from the Pacific Northwest or New Mexico – have also become very
low-cost in recent years, in some cases even lower priced than solar.22 Wind resources from these
areas typically have a generation profile that is a good fit for the City’s portfolio, producing somewhat
more energy in the fall and winter months than in the spring and summer months. However, the cost
of obtaining transmission access for them into the state significantly raises their total cost.23
Geothermal resources have also experienced a price decline in recent years, although they are still less
valuable compared with solar or out-of-state wind. New binary cycle geothermal technology also
produces no GHG emissions and can be more flexibly dispatched compared to prior generations of
geothermal technologies. This technology bears further consideration in the coming years as the City
considers options to rebalance the portfolio.
Local solar is the only local supply resource considered in the portfolio analysis. While it would have a
higher value than solar located in the central San Joaquin Valley 24 it is unlikely to be available in
sufficient quantities to make a significant contribution to the City’s overall electric supply needs. The
cost of such local systems would also be relatively high. For example, under the Palo Alto CLEAN
program, even with a contract price of 16.5 cents/kWh, the program existed for several years before
finally securing about 3 MW of participating capacity within the last two years. And the cost of solar
energy from a 500 kW project at the Palo Alto golf course was estimated at 10 to 14 cents/kWh in
21 The Duck Curve refers to the graph shown in Figure 1, illustrating the impact of the increasing adoption of solar PV on
CAISO’s net load (i.e., total load less generation from variable energy resources like wind and solar). Over time, as more
solar generation came online, the CAISO net load curve went from having a slight mid-day peak to having a deep mid-day
trough, bracketed by a steep downward ramp in the morning, as solar plants begins generating, and an even steeper
upward ramp in the evening, as solar generation trails off with the sunset. For more information, see:
https://www.caiso.com/documents/flexibleresourceshelprenewables_fastfacts.pdf.
22 Staff has received numerous proposals for out-of-state wind resources over the past several years, but such resources
were found to be uneconomical compared to in-state solar when Palo Alto made long-term commitments for solar
resources between 2012 and 2016.
23 The availability of transmission pathways to bring this generation into CAISO on a reliable basis is also not assured.
However, for Pacific Northwest wind resources, the City’s allocation of capacity on the California-Oregon Transmission
Project (COTP) could prove very useful. The City laid off this transmission capacity for a 15-year period, but this layoff will
end at the end of 2023.
24 Local solar is currently at least 3 ¢/kWh more valuable than remote solar, given that it would provide enhanced local
resiliency, would not be subject to transmission charges, would reduce the City’s resource adequacy capacity requirements,
and would have a high locational value, due to its mitigating effect on Bay Area transmission congestion.
Section V: Future Procurement Needs and Portfolio Rebalancing
32
2017, which is more costly compared to other resource options, even with the greater value (primarily
due to avoided transmission charges) inherent in local generation.
Finally, market energy purchases combined with unbundled RECs could present an attractive option in
the short-term if the City wishes to reduce its Western contract allocation and seek a different low-cost
solution. In the long-term, however, many forecasts indicate that as the state’s GHG reduction
requirements ratchet up, the cost of carbon allowances will likewise climb, which in turn would raise
market power prices and make this option uneconomic. In addition, this approach would perpetuate
the City’s reliance on traditional GHG-emitting generators. On the other hand, shorter-term market
purchases would provide the City with a great deal of flexibility in terms of contract duration and
volume, and lower the risk of stranded energy resources if the electric loads available to be served by
the City decline significantly.
Table 7 below summarizes the various resource types that staff considered most closely in its portfolio
analysis and their relative merits. The key indicators used for comparing the different portfolio options
are:
• Value: The net value of a resource; the projected revenue from selling the resource’s energy
into the CAISO market less the resource’s bi-lateral contract cost;
• Portfolio Fit: Lower reliance on the grid for hourly load balancing;
• Diversification: Geographic and resource diversity;
• Term Flexibility: Flexibility in length of contract and termination provisions; and
• Cost Certainty: Degree of certainty of future resource costs.
Table 7: Relative Merits of Candidate Resources Considered to Rebalance Supply Portfolio
* Ratings reflect relative changes from current portfolio of resources *
Section V: Future Procurement Needs and Portfolio Rebalancing
33
Portfolio Expected Net Value
First, as far as the net value of a resource contract for the 2025 to 2030 period, Western has the
potential to be a relatively valuable resource, but also has the most uncertainty when it comes to
costs, for the reasons described above. The expected net value of Western and several potential new
contracts, as determined by a scenario-based spreadsheet analysis, is shown in Figure 7. The net value
of each resource is calculated based on its energy values (from each resource’s LMP forecast), along
with the ancillary services value provided by Western, the value of the RECs generated by the
renewable resources, and each resource’s RA capacity. Note that the expected net value of some
resources is negative (less valuable than projected market value), due to the fact that the cost of all of
the renewable resources includes the cost of renewable attributes in addition to energy, and because a
primary goal of a long-term agreement such as a PPA is to hedge and manage exposure to future price
volatility.
Figure 7: Expected Net Value of New Resources and Western Relative to Market Value
* Very High Cost Uncertainty around Western *
One of the primary messages of Figure 7 is that there is a tremendous amount of uncertainty around
the net value of Western, as indicated by the large uncertainty bars featured on that data series.25 It
should be noted that the uncertainty shown in Figure 7 is based on staff’s best estimate of the
25 Figure C-6 does not include market price uncertainty or hydrological uncertainty; the uncertainty range shown for
Western represents purely regulatory and litigation-related cost uncertainty.
Section V: Future Procurement Needs and Portfolio Rebalancing
34
potential range of future Western contract costs. It should also be noted that this uncertainty is heavily
biased toward the negative direction: there is limited “upside” uncertainty while there is a great deal
of “downside” uncertainty, largely related to pending environmental regulatory issues.
Portfolio Fit
Another key indicator is hourly portfolio fit, which will determine how reliant the portfolio is on grid
power (and, as a result, how exposed it is to market prices). Figure 8 displays average hourly
generation profiles for each month (one average day per month is shown) for Western and other
potential new resources relative to the City’s average load. Although total resource supplies from long-
term contracts exceed the City’s load in the spring and summer months, the opposite is true during the
fall and winter months. Thus Figure 8 indicates that out-of-state wind, which produces more energy in
the fall and winter months, would be a good complement to the City’s existing portfolio. In-state wind
(in the Solano hills) and solar, on the other hand, exacerbate the City’s portfolio fit problem, as they
produce more energy in the spring and summer months.
Figure 8: Average Hourly Load and Generation Profiles for Each Month for Western and Potential
New Resources (Normalized to Average Hourly Load)
* New Mexico Wind Resource Profile Complements Palo Alto Portfolio *
Section V: Future Procurement Needs and Portfolio Rebalancing
35
Portfolio Cost Uncertainty and Management
The cost uncertainty of the electric supply portfolio in the short-term is primarily driven by the water
available for hydroelectric production, and is estimated at $10 to $15 million per year at prevailing
market prices. Palo Alto is well positioned to manage this cost uncertainty through its hydro rate
adjustment mechanism 26 and by maintaining sufficient cash reserves. The cost uncertainty related to
seasonally balancing the portfolio27 is minimal since market price variability between seasons is highly
correlated and because staff executes seasonal buy-sell transactions at the same time.
As noted above, in the long-term, there are a number of issues that could dramatically affect the value
of the Western resource in the coming years. As such, a large focus of staff efforts in the next five years
will be to better understand the long-term economics of the Western resource and mitigate the risks
associated with it through flexible contractual terms.
There are also proceedings underway to investigate market restructuring to deal with issues related to
the integration of variable renewable resources, such as over-generation, very steep evening ramp
periods, and the appropriate valuation of dispatchable generation capacity. Volatility in market prices,
as the CAISO and the CEC determine how to send price signals to ensure a reliable grid, could leave a
seasonally unbalanced portfolio such as the City’s current portfolio exposed. Increases in transmission
charges could also make remote resources compare less favorably to local resources and demand-side
management in the future.
26 For additional detail on the hydro rate adjustment mechanism, please see Staff Report ID 8962 (March 2018):
https://www.cityofpaloalto.org/civicax/filebank/documents/63851.
27 Revenues received from the sale of surplus energy during the spring and summer periods are utilized to purchase
electricity needs for the fall and winter periods.
Section IV: Supply Costs & Retail Rates
36
Supply Costs & Retail Rates
Critical to the success of an IRP, in addition to ensuring that the adopted plan leads to compliance with
all regulatory requirements, is ensuring that it also results in supply cost minimization and (ideally) low
and stable customer retail rates. As described in the FY 2019 Electric Utility Financial Plan and Rate
Proposal to the Palo Alto City Council, CPAU staff projects supply costs to rise substantially for the next
several years, largely driven by increases in transmission costs and new renewable energy projects
coming online. Retail rates are also projected to rise due to substantial additional capital investment in
the electric distribution system, and operational cost increases.
In order to ensure adequate revenue recovery, the Palo Alto City Council recently approved a 6% retail
rate increase for FY 2019 (taking effect July 1, 2018), and adopted a Financial Plan that calls for an
additional 3% rate increase for FY 2020 with 0-2% annual rate increases projected thereafter. However,
it should be noted that the City’s current electric rates are far lower than the statewide average
electric retail rates, and, under the recommended portfolio presented in Section X of this report, staff
projects that they will remain so. In fact, even under the worst-case scenarios staff evaluated the
recommended portfolio against, as described in Section X.C of this report, the City’s retail electric rates
remain lower than the projected statewide average rates.
Section VII: Transmission & Distribution Systems
37
Transmission & Distribution Systems
Transmission System
At the transmission level, CPAU staff has two main focuses during the EIRP planning period: (1)
determining the optimal utilization of the COTP asset when Palo Alto’s long-term layoff of this resource
ends on January 1, 2024, as discussed above in the Existing Resource Portfolio section; and (2) pursuing
an additional interconnection point with PG&E’s transmission system. The new interconnection point
with PG&E is being sought in order to provide redundancy, and therefore increased local reliability, in
the event that an outage affects the three current interconnection lines – as happened in February
2010.28 To minimize the possibility of a City-wide outage caused by an interconnection line outage, it is
in the City’s interest to find a physically diverse connection to the PG&E transmission system for power
supply to the City. Staff has been investigating options for an alternative connection to the
transmission grid for numerous years.29
Distribution System
Palo Alto’s electric distribution system is directly interconnected with the transmission system of
Pacific Gas and Electric Company (PG&E) by three 115 kV lines, which have a delivery point at Palo
Alto’s Colorado substation. Palo Alto’s distribution system consists of the 115 kV to 60 kV delivery
point, two 60 kV switching stations, nine distribution substations, approximately 12 miles of 60 kV sub
transmission lines, and approximately 469 miles of 12 kV and 4kV distribution lines – including 223
miles of overhead lines and 245 miles of underground lines.
In 2018 CPAU staff completed a distribution system assessment report to begin the process of
understanding the distribution system upgrades that will be required to integrate increasing
penetration levels of distributed energy resources, particularly electric vehicles. Staff’s conclusion from
this assessment was that at the system level, there is sufficient capacity to accommodate DER growth
for the next five years. However, there are some subcomponents of the system that require further
assessment and monitoring (e.g. residential distribution transformers). The City-wide implementation
of Advanced Metering Infrastructure (AMI), which is planned to occur by 2022, will greatly enhance the
visibility into distribution system operational characteristics and further enable the integration of DERs
by offering new customer programs (such as, time varying rates).
Palo Alto’s current five-year capital plan for electric distribution facilities contemplates spending
approximately $16.5 million per year over this five-year period, primarily to fund infrastructure
replacement and new customer connections.
28 Although three lines would normally provide redundancy and back-up power delivery to the City, all three lines run in a
common corridor on the bay side of the City, a corridor that is in close proximity to the Palo Alto Airport. The common
corridor and proximity to an airport means that the City’s power supply is susceptible to single events that can affect all
three lines, as happened in February of 2010 when a small aircraft hit the power lines resulting in a city-wide power outage
for over 10 hours.
29 See this January 2016 staff report for additional background on the efforts to secure an additional transmission
interconnection point: https://www.cityofpaloalto.org/civicax/filebank/documents/50608.
Section VIII: Low-income Assistance Programs
38
Low-income Assistance Programs
CPAU has three programs to provide financial assistance to low-income customers:
• Residential Energy Assistance Program (REAP): This program provides qualifying low-income
residents with free energy efficiency measures and access to the Rate Assistance Program (RAP)
rate discount. For qualifying customers, a Home Assessment, an application to the RAP, and an
on-site customer evaluation for weatherization and energy efficiency measure installation,
including insulation and lighting, is provided. Customers may have refrigerators and/or furnaces
replaced if the need is found.
• Rate Assistance Program (RAP): This program provides a 25% discount for electric and gas
charges for qualified customers. Applicants can qualify based on medical or financial need.
• ProjectPLEDGE: This program provides a one-time contribution of up to $750 applied to the
utilities bill of qualifying residential customers. Eligibility criteria include experiencing recent
employment and/or health emergency events. Administered by CPAU, this program is funded
by voluntary customer contributions.
Section IX: Localized Air Pollutants
39
Localized Air Pollutants
Electric Vehicle Programs
Given that Palo Alto’s electricity supply is derived entirely from clean, carbon neutral generation
resources, the most important thing that the City can do at this point to improve local air quality is to
reduce the combustion of fossil fuels in the transportation sector – primarily through electrification of
vehicles. The City of Palo Alto Utilities has a number of programs to promote the adoption of electric
vehicles, a summary of which can be found in the 2017 Demand Side Management Annual Report. Two
of the current programs are listed below.
EV Charger Rebate Program - In early 2017 CPAU launched an EV Charger Rebate program using funds
from monetizing Low Carbon Fuel Standard (LCFS) credits. Rebates are targeted towards multifamily
and mixed-use properties, schools and non-profits. Along with the launch, new online resources were
created, including the EV calculator tool.
Online EV/PV Calculator - CPAU launched an online calculator tool for residents to evaluate the costs
and benefits of installing rooftop solar. In addition, residents can now evaluate different electric
vehicles and see the financial impacts and environmental benefits of charging vehicles using Palo Alto’s
carbon neutral electricity. The online calculator uses satellite imagery of Palo Alto homes as well as
current CPAU electricity rates to produce rooftop solar system designs and cost estimates tailored to
Palo Alto.
Local Renewable Energy Programs
In addition to the local renewable electricity generation programs previously mentioned, Palo Alto also
has a Solar Hot Water Program which can replace natural gas combustion and thereby improve local
air quality.
Solar Hot Water Program - Palo Alto launched the solar water heating (SWH) program in May 2008, in
advance of a State law requiring natural gas utilities to offer incentives. This program offers rebates of
up to $2,719 for residential systems and up to $100,000 for commercial and industrial systems. A
sample of these installations is inspected for quality and program compliance by an independent
contractor. The program was recently extended through 2020. A total of 60 systems have been
installed as of June 30, 2017; 54 of these are residential. From 2008 to 2017 $337,911.37 in rebates
were disbursed. In the fiscal year 2017 this program resulted in annual energy savings of 19,826 therms
and 13,387 kWh.
Electrification of Space and Water Heating Programs
The Electrification Work Plan highlighted the potential of lowering carbon emissions and improving
local air quality by electrification of building water and space heating loads thereby removing local
combustion of natural gas. A description of more programs to promote electrification of space and
water heating can be found in the 2017 Demand Side Management Report. Two of the current
electrification programs are listed below.
Section IX: Localized Air Pollutants
40
Heat Pump Water Heater Pilot Program - The goal of this program is reduction of greenhouse gas
(GHG) emissions through switching from natural gas appliances to high-efficiency electric appliances.
Installation of heat pump water heaters (HPWHs) has been identified as a good starting candidate for a
pilot program. The pilot program—launched in the spring of 2016—was designed to facilitate the
installation of HPWHs in single-family homes. In April 2017, the City hosted its first HPWH workshop to
educate the community, including contractors, on the technology and installation of HPWHs.
Multifamily Gas Furnace Retrofit Pilot Program - CPAU has been awarded a 2018 Climate Protection
Grant Program from the Bay Area Air Quality Management District (BAAQMD) for a Multifamily Gas
Furnace Pilot Program. The grant period is two years from 2019-2020.
The Multifamily Gas Furnace Retrofit Pilot targets apartment buildings to replace existing in-unit gas
wall furnaces with high efficiency air source heat pumps. Heat pump systems are far more energy
efficient than gas furnaces, eliminate GHG emissions associated with gas-fired space heaters, while
improving air quality within the dwelling units. However, many questions still exist regarding cost-
effectiveness, building electrical capacity and other technological and logistical hurdles for replacing
gas furnace to heat pump systems in multifamily buildings. This pilot will identify the technical and
logistical hurdles as well as potential solutions, and will document the retrofit cost, energy savings,
avoided GHG emissions as well as other indoor air pollutants from the gas furnace.
Refrigerant Recycling Program
Ensuring that refrigerants are properly disposed of also improves local air quality. CPAU has also been
awarded a 2018 Climate Protection Grant Program from the BAAQMD for a Refrigerator Recycling
Program. The grant period is two years from 2019-2020.
Although the City’s GreenWaste contractor can pick up and remove old refrigerators from customer
houses, they are not certified to recycle the foams and refrigerant chemicals to the level that the US
EPA Responsible Appliance Disposal (RAD) program requires. RAD requirements go above and beyond
the State of California minimum recycling requirements.
This BAAQMD grant will to cover a portion of the cost of recycling in order to enable us to both claim
EE savings as well as meet the RAD standards in a cost-effective manner.
Section X: Path Forward & Next Steps
41
Path Forward & Next Steps
Recommended Portfolio
Because almost six years remain before Palo Alto must make its major planning decision of the EIRP
planning period (the Western contract renewal decision), it is difficult to definitively identify a single
recommended portfolio at this time. The base case in this IRP assumes that Palo Alto will renew the
Western contract at the maximum allocation level. However, given the substantial amount of
uncertainty related to the cost and output levels of this resource (as described in the Future
Procurement Needs and Portfolio Rebalancing section of this report), staff is actively reviewing
attractive alternatives which could replace the entire Western contract when it expires in 2024.
If, in fact, Palo Alto determines that the costs associated with a renewed Western contract are too
high, or too uncertain, CPAU staff would immediately begin working to replace this resource (which
currently supplies nearly 40% of the City’s electric load) with a different carbon neutral supply
resource. As such, the City would continue on its path to meeting or exceeding both the state’s RPS
procurement requirements and GHG emission reduction targets. Figure 9 below depicts Palo Alto’s
projected electric resource supply mix in 2030 where a large portion of this mix currently consists of
undetermined carbon-neutral resources. Given the City’s current policies and the state’s RPS and GHG
emissions mandates, staff can confidently say that these resources will either be hydroelectric or
renewable.
Figure 9: Palo Alto’s Projected Resource Supply Mix in 2030
Section X: Path Forward & Next Steps
42
GHG Emissions
CARB’s 2017 Scoping Plan identified GHG emissions targets for the entire state, as well as individual
economic sectors, including the electricity industry. The Scoping Plan established an overall electric
sector GHG target for 2030 of 30 to 53 million metric tonnes (MMT) of CO2e, of which Palo Alto’s pro
rata share (based on load) is 0.174%, or 52,049 to 92,103 MT CO2e. As Figure 10 indicates, given its
electric supply portfolio consisting entirely of carbon-free resources (hydroelectric, wind, solar, and
biogas), Palo Alto is on track to emit far less than even the most aggressive end of the target range
identified in the CARB Scoping Plan.
Scenario Analysis
As described in Section II.D of this report, an important element of integrated resource planning is to
put the recommended portfolio through scenario and risk analysis, to assess its performance under a
range of potential conditions. Staff has performed such a scenario analysis around the recommended
portfolio presented in this report, evaluating its performance while varying the following factors:
market prices, hydrological conditions, environmental regulations affecting hydro resource operations,
DER adoption rates, and natural customer load growth rates. Under all cases examined, however, the
City’s supply portfolio remained in compliance with the RPS and GHG emissions targets set forth in SB
350, all while keeping Palo Alto customers’ retail rates lower than the statewide average retail rates.
Figure 10: CPAU Electric Supply GHG Emissions (2005-2030)
Section X: Path Forward & Next Steps
43
Next Steps
As there is so much uncertainty regarding the Western resource, and because the decision is such a
consequential one, it merits a follow-up analysis closer to the contract renewal date, which is currently
scheduled for mid-2020. Even after that, WAPA’s 2025 Power Marketing Plan indicates that the City
will have until July 2024 to make a decision to reduce or reject its allocated share of the future
Western contract, which is expected to be approximately as large as its current share. The additional
analysis regarding this decision should include:
1. An examination of the City’s net load forecast and associated uncertainties, in line with the
Draft DER Plan discussed with the UAC in November 2017, with particular emphasis on how it
may be affected by customer adoption of DERs (EVs, Demand Response, Energy Efficiency, Solar
PV, storage, and building electrification) in order to avoid stranding assets.
2. An update and extension of CPAU’s supply portfolio analysis, including updates to the hourly
LMP forecasts and the costs, assumptions, and uncertainties associated with all resource
options.
3. Analysis of the projected costs, output, and flexibility of the renewed Western contract, to
reduce the amount of outstanding uncertainty around this resource.
4. Advocating for flexible contractual provisions in the new Western contract, and examining the
legal and economic merits and risks associated with committing to the Western resource for 30
more years.
Aside from the Western contract decision, staff will be actively following state regulators’ activities
related to electric supply portfolio GHG emissions accounting and allocation of statewide GHG
emissions reduction targets. While the City’s current GHG emissions accounting methodology (adopted
by the City Council in 2013 with the Carbon Neutral Plan) for electric supplies is based on a net annual
accounting of the City’s market power purchases (which are assumed to have the statewide average
GHG emissions intensity), staff is aware that state regulators are evaluating alternative GHG emissions
accounting methodologies, including various types of hourly accounting approaches.
And of course, staff will continue its activities in pursuit of lowering the overall cost to serve customer
loads. These include continuing to optimize the use of the City’s Calaveras resource, evaluating the
benefits of the NCPA pool, and/or the procurement of alternative scheduling services for its renewable
resources.
Key Issues to Monitor & Attempt to Influence
In the course of developing this EIRP, CPAU staff has identified a number of important issues and
sources of uncertainty to closely monitor and attempt to positively influence over the course of the
planning period. Some of the primary issues and uncertainties that staff will be focused on include:
• Cost and operations of Western hydroelectric resource: environmental restoration cost, water
delivery timing and priorities, Western transmission upgrade needs, environmental regulations
affecting water releases, and long-term climate change
• Frequency and magnitude of economic curtailment of solar PV resources
• Renewing the FERC license of the Calaveras hydroelectric project
Section X: Path Forward & Next Steps
44
• Seasonal variation in CAISO energy market prices, given the overall generation profile of CPAU’s
resource portfolio
• Changes in overall energy market price and changes in carbon allowance prices associated with
State's cap-and-trade program
• Increased market prices related to load-following capacity and ancillary services
• Customer load profiles change and loss of customer loads available for the City to serve
• New legislative and regulatory mandates
Section XI: Appendices
XI—1
Appendices
Key Supplemental Reports and Documents
1. NCPA-CAISO Metered Sub-System Agreement
2. Ten-Year Electric Energy Efficiency Goals (2017)
3. Energy Storage Assessment Report (2017)
4. Proposed Distributed Energy Resources Plan (2017)
5. Distribution System Assessment Report (2018)
6. Demand Side Management Annual Report (2018)
Section XI: Appendices
XI—2
RPS Procurement Plan
CITY OF PALO ALTO’S
RENEWABLE PORTFOLIO STANDARD
PROCUREMENT PLAN
Version 3
December 2018
REVISION HISTORY
Version Date Resolution Description
3 12/3/18 Updated to reflect Senate Bill 350 (2015) requirements
2 11/12/13 9381 Updated to reflect adoption of final CEC regulations, effective
10/1/13, permitting the City to adopt rules for Excess Procurement,
Compliance Delay, Cost Limitations, Portfolio Balancing Reductions,
and Historic Carryover. Other non-substantive clean up.
1 12/12/11 9215 Original version per Senate Bill X1 2 (2011) requirements
Section XI: Appendices
XI—3
TABLE OF CONTENTS
INTRODUCTION ....................................................................................................................... XI—4
A. PURPOSE OF THE PLAN (PUC § 399.30(A)) ................................................................... XI—4
B. PLAN ELEMENTS ............................................................................................................... XI—5
1. Compliance Period Definitions ........................................................................................... XI—5
2. Procurement Requirements ................................................................................................ XI—5
3. Portfolio Content Categories (PCC) ................................................................................... XI—6
4. Portfolio Balancing Requirements ..................................................................................... XI—6
5. Long-Term Contract Requirement ..................................................................................... XI—7
6. Reasonable Progress ............................................................................................................. XI—7
C. OPTIONAL COMPLIANCE MEASURES ............................................................................. XI—7
1. Excess Procurement (PUC §399.13(a)(4)(B)) ................................................................... XI—7
2. Delay of Timely Compliance (§ 399.30(d)(2), § 399.15(b)(5)) .................................... XI—8
3. Cost Limitations for Expenditures (PUC § 399.30(d), § 399.15(c)) .......................... XI—10
4. Portfolio Balance Requirement Reduction (PUC § 399.16(e)) .................................. XI—11
5. Historic Carryover ................................................................................................................ XI—11
6. Large Hydro Exemption (PUC § 399.30(l)) ..................................................................... XI—13
D. ADDITIONAL PLAN COMPONENTS ............................................................................... XI—14
1. Exclusive Control (PUC § 399.30(n))................................................................................ XI—14
2. Deliberations & Reporting (PUC § 399.30(e), § 399.30(f)) ........................................ XI—14
3. Annual Review ................................................................................................................. XI—15
4. Plan Modifications/Amendments ..................................................................................... XI—15
Section XI: Appendices
XI—4
INTRODUCTION
This document presents the City of Palo Alto Utilities’ (CPAU) Renewable Portfolio Standard
Procurement Plan (RPS Procurement Plan), as required for compliance with Senate Bill (SB) 350.30 This
legislation, which was signed into law in the 2015 Session of the Legislature, modified the state’s
renewable portfolio standard (RPS) program and set forth RPS requirements applicable to all load-
serving entities in the state. Pursuant to Public Utility Code § 399.30(a) and Section 3205 of the
California Energy Commission’s (CEC) “Enforcement Procedures for the Renewables Portfolio Standard
for Local Publicly Owned Electric Utilities”31 (RPS Regulations), each POU must adopt and implement a
renewable energy resources procurement plan (RPS Procurement Plan). SB X1 2, signed into law in
2011, directed the CEC to adopt regulations specifying procedures for enforcement of the RPS for
Publicly Owned Utilities.
This RPS Procurement Plan replaces the RPS Procurement Plan approved by the Palo Alto City Council
(City Council) on November 12, 2013 (Resolution No. 9381, Staff Report No. 4168) and is consistent
with the provisions set forth in the CEC’s RPS Regulations, which have been adopted by the CEC and
approved by the Office of Administrative Law, with an effective date of April 12, 2016.32
CPAU’s RPS Procurement Plan consists of:
A. Purpose of the plan;
B. Plan Elements;
C. Measures that address each of the optional provisions set forth in §399.30(d) and RPS
Regulations Section 3206; and
D. Additional provisions.
Where appropriate, this RPS Procurement Plan includes section citations to the Public Utilities Code
(PUC) and the CEC’s RPS Regulations.
A. PURPOSE OF THE PLAN (PUC § 399.30(A))
In order to fulfill unmet long-term generation resource needs, the City Council adopts and implements
this RPS Procurement Plan. This Plan requires the utility to procure a minimum quantity of electricity
30 SB 350 (2015) was signed by California’s Governor on October 7, 2015, and made significant revisions to Public Utilities
Code sections 399.11-399.32, the California Renewable Portfolio Standard Program.
31 California Code of Regulations, Title 20, Division 2, Chapter 13, Sections 3200 - 3208 and Title 20, Division 2, Chapter 2,
Section 1240.
32 At the time of writing for this edition of CPAU’s RPS Procurement Plan, the RPS Regulations had not been updated with
SB 350 and subsequent legislative requirements. Where both Public Utility Codes and RPS Regulations are cited but the RPS
Regulations are outdated, CPAU’s RPS Procurement Plan will reflect the more current Public Utility Codes.
Section XI: Appendices
XI—5
products from eligible renewable energy resources, including renewable energy credits (RECs), as a
specified percentage of CPAU’s total kilowatt-hours of electrical energy sold to its retail end-use
customers, during each compliance period, to achieve the targets specified in SB 350 and the RPS
Regulations. This RPS Procurement Plan establishes the framework for achieving the minimum
requirements under SB 350 and the RPS Regulations, and does not include or preclude actions taken by
CPAU to achieve the City Council’s goals.
B. PLAN ELEMENTS
CPAU will comply with the requirements for renewables procurement targets set forth in SB 350 and
the applicable enforcement procedures codified in the CEC’s RPS Regulations, including
implementation of the following Plan Elements:
1. Compliance Period Definitions
CPAU has adopted the relevant compliance period definitions identified in PUC § 399.30(b).
2. Procurement Requirements
CPAU shall meet or exceed the following procurement targets of renewable energy resources
for each compliance period per PUC §§ 399.30(c)(1) and (2) and the CEC’s RPS Regulations:
Compliance Period 1 Target ≥ 20% × (CPAU Retail Sales2011_+ CPAU Retail Sales2012 + CPAU Retail
Sales2013).
Compliance Period 2 Target ≥ 20% × CPAU Retail Sales2014 + 20% × CPAU Retail Sales2015 + 25% ×
CPAU Retail Sales2016
Compliance Period 3 Target ≥ 27% × CPAU Retail Sales2017 + 29% × CPAU Retail Sales2018 + 31% ×
CPAU Retail Sales2019 + 33% × CPAU Retail Sales2020
Compliance Period 4 Target ≥ 34.75% × CPAU Retail Sales2021 + 36.5% × CPAU Retail Sales2022 +
38.25% × CPAU Retail Sales2023 + 40% × CPAU Retail Sales2024
Compliance Period 5 Target ≥ 41.67% × CPAU Retail Sales2025 + 43.33% × CPAU Retail Sales2026 +
45% × CPAU Retail Sales2027
Compliance Period 6 Target ≥ 46.67% × CPAU Retail Sales2028 + 48.33% × CPAU Retail Sales2029 +
50% × CPAU Retail Sales2030
Annually thereafter, CPAU shall procure renewable energy resources equivalent to at least fifty
percent (50%) of retail kilowatt-hour sales.
Section XI: Appendices
XI—6
The procurement targets listed for each individual year above are soft targets. That is, by the end
of each Compliance Period, CPAU’s RPS total for the period has to equal the sum of the annual
targets, but the targets do not have to be achieved in any one year.
3. Portfolio Content Categories (PCC)
CPAU adopts the definitions for qualifying electric products and Portfolio Content Categories
(PCC) per Sections 3202 and 3203 of the CEC’s RPS Regulations.
a. How CPAU Plans to Achieve its RPS Requirements per Section 3205(a)(1) of the CEC’s RPS
Regulations
CPAU’s RPS portfolio will include grandfathered contracts (commonly referred to as
“PCC 0”), which are executed prior to June 1, 2010, and PCC 1 eligible resources, which
are typically directly or dynamically connected to a California balancing authority.
CPAU’s RPS portfolio may also include PCC 2 eligible resources that are scheduled into a
California balancing authority, and PCC 3 eligible resources, which are typically
unbundled renewable energy credits (RECs). PCC 0 resources are defined in Section
3202(a)(2) of the CEC’s RPS Regulations, while PCC 1, 2, and 3 resources are defined in
Section 3203 of the CEC’s RPS Regulations. CPAU shall determine the category to which
each procured resource belongs.
In its 2011 through 2017 RPS Compliance Reports, CPAU listed a total of five PCC 0
contracts. All five of these contracts extend through the end of Compliance Period 3,
and all have achieved commercial operation. On their own, these PCC 0 contracts were
sufficient to enable CPAU to meet its Compliance Period 1 and 2 RPS targets.
CPAU has currently executed six contracts for PCC 1 resources. The first five of these,
executed between 2012 and 2014, have all commenced operation, between 2014 and
2016. The sixth PCC 1 contract, executed in 2016, is contracted to commence operation
in 2021. With these six PCC 1 resources, along with its five PCC 0 contracts, CPAU
forecasts that its renewable energy supplies will be well in excess of its procurement
requirements through at least Compliance Period 6.
4. Portfolio Balancing Requirements
In satisfying the procurement requirements listed in section B.3 of this RPS Procurement Plan,
CPAU shall also satisfy the legally-required portfolio balancing requirements specifying the
limits on quantities for PCC 1 and PCC 3 per PUC § 399.30(c)(3), §§ 399.16(c)(1) and (2). CPAU
shall apply the formulae specified in Section 3204(c) of the CEC’s RPS Regulations to determine
these portfolio balance requirements. Renewable energy procured from PCC 0 contracts shall
be excluded from these portfolio balancing requirement formulae.
Section XI: Appendices
XI—7
5. Long-Term Contract Requirement
In meeting the RPS procurement requirements identified in section B.3 of this RPS Procurement
Plan, CPAU is subject to long-term contract requirements. Consistent with Public Resources
Code § 399.13(b), CPAU may enter into a combination of long- and short-term contracts for
electricity and associated renewable energy credits. Beginning January 1, 2021, at least 65
percent of CPAU’s procurement that counts toward the RPS requirement of each compliance
period shall be from its contracts of 10 years or longer or in its ownership or ownership
agreements for eligible renewable energy resources.
6. Reasonable Progress
CPAU shall demonstrate that it is making reasonable progress towards ensuring that it shall
meet its compliance period targets during intervening years per PUC §§ 399.30(c)(2).
C. OPTIONAL COMPLIANCE MEASURES
As permitted by Section 3206(a) of the CEC’s RPS Regulations, the City Council hereby adopts rules
permitting the use of each of the following five optional compliance measures included in the CEC’s
RPS Regulations: Excess Procurement, Delay of Timely Compliance, Cost Limitations, Portfolio Balance
Requirement Reduction, and Historic Carryover. The City Council also hereby adopts rules permitting
the use of the Large Hydro Exemption as described in PUC § 399.30(l).
1. Excess Procurement (PUC §399.13(a)(4)(B))
a. Adoption of Excess Procurement Rules
The City Council has elected to adopt rules permitting CPAU to apply excess
procurement in one compliance period to a subsequent compliance period, as described
in Section 3206(a)(1) of the CEC’s RPS Regulations.
b. Limitations on CPAU’s Use of Excess Procurement
CPAU shall be allowed to apply Excess Procurement from one compliance period to
subsequent compliance periods as long as the following conditions are met:
1. Excess Procurement shall only include generation from January 1, 2011 or later.
2. In calculating the quantity of Excess Procurement, CPAU shall deduct from actual
procurement quantities, the total amount of procurement associated with contracts
of less than ten (10) years in duration.
Section XI: Appendices
XI—8
3. Eligible resources must be from Content Category 1 or Content Category 2 or
Grandfathered Resources to be Excess Procurement. Resources from Content
Category 3 will not count towards Excess Procurement.
c. Excess Procurement Calculation
CPAU shall calculate its Excess Procurement according to formulae in section 3206
(a)(1)(D) of the CEC’s RPS Regulations.
d. City Council Review
CPAU’s use of the Excess Procurement to apply towards CPAU’s RPS procurement target
in any compliance period will be reviewed by the City Council during its annual review as
per section D.3 of this RPS Procurement Plan.
2. Delay of Timely Compliance (§ 399.30(d)(2), § 399.15(b)(5))
a. Adoption of Delay of Timely Compliance Rules
The City Council has elected to adopt rules permitting it to make a finding that
conditions beyond CPAU’s control exist to delay timely compliance with RPS
procurement requirements, as described in Section 3206(a)(2) of the CEC’s RPS
Regulations.
b. Delay of Timely Compliance Findings
The City Council may make a finding, based on sufficient evidence presented by CPAU
staff, and as described in this Section C.2, that is limited to one or more of the following
causes of delay, and shall demonstrate that CPAU would have met its RPS procurement
requirements but for the cause of the delay:
(1) Inadequate Transmission
i. There is inadequate transmission capacity to allow for sufficient
electricity to be delivered from CPAU’s proposed eligible renewable energy
resource projects using the current operational protocols of the California
Independent System Operator’s Balancing Authority Area.
ii. If the City Council’s delay finding rests on circumstances related to
CPAU’s transmission resources or transmission rights, the City Council may find
that:
a.) CPAU has undertaken, in a timely fashion, reasonable
measures under its control and consistent with its obligations under local,
state, and federal laws and regulations, to develop and construct new
transmission lines or upgrades to existing lines intended to transmit
Section XI: Appendices
XI—9
electricity generated by eligible renewable energy resources, in light of its
expectation for cost recovery.
b.) CPAU has taken all reasonable operational measures to
maximize cost-effective purchases of electricity from eligible renewable
energy resources in advance of transmission availability.
(2) Permitting, interconnection, or other factors that delayed procurement or
insufficient supply.
i. Permitting, interconnection, or other circumstances have delayed
procured eligible renewable energy resource projects, or there is an insufficient
supply of eligible renewable energy resources available to CPAU.
ii. In making its findings relative to the existence of this condition,
the City Council’s deliberations shall include, but not be limited to the following:
a) Whether CPAU prudently managed portfolio risks, including,
but not limited to, holding solicitations for RPS-eligible resources with
outreach to market participants and relying on a sufficient number of
viable projects;
b) Whether CPAU sought to develop its own eligible renewable
energy resources, transmission to interconnect to eligible renewable
energy resources, or energy storage used to integrate eligible renewable
energy resources.
c) Whether CPAU procured an appropriate minimum margin of
procurement above the minimum procurement level necessary to comply
with the renewables portfolio standard to compensate for foreseeable
delays or insufficient supply;
d) Whether CPAU has taken reasonable measures, under its
control to procure cost-effective distributed generation and allowable
unbundled renewable energy credits;
(3) Unanticipated curtailment to address needs of the balancing authority.
c. Procedures upon Approving Waiver:
In the event of a Waiver of Timely Compliance due to any of the factors set forth above,
CPAU shall implement the following procedures:
(1) Establish additional reporting for intervening years to demonstrate that
reasonable actions under the CPAU’s control are being taken (§399.15(b)(6)).
Section XI: Appendices
XI—10
(2) Require a demonstration that all reasonable actions within the CPAU’s control
have been taken to ensure compliance in order to grant the waiver (§
399.15(b)(7)).
3. Cost Limitations for Expenditures (PUC § 399.30(d), § 399.15(c))
a. Cost Limitations for Expenditures
The City Council has elected to adopt rules for cost limitations on the procurement
expenditures used to comply with CPAU’s procurement requirements, as described in
Section 3206(a)(3) of the CEC’s RPS Regulations. These cost limitation rules are
intended to be consistent with PUC §399.15(c).
b. Considerations in Development of Cost Limitation Rules
In adopting cost limitation rules, the City Council has relied on the following:
1) This Procurement Plan;
2) Procurement expenditures that approximate the expected cost of building,
owning, and operating eligible renewable energy resources;
3) The potential that some planned resource additions may be delayed or canceled;
and
4) Local and regional economic conditions and the ability of CPAU’s customers to
afford produced or procured energy products. These economic conditions may
include but are not limited to unemployment, wages, cost of living expenses, the
housing market, and cost burden of other utility rates on the same customers.
The City Council may also consider cost disparities between customer classes
within Palo Alto, and between Palo Alto customers and other Publicly Owned
Utility and Investor Owned Utility customers in the region.
c. Cost Limitations
The City of Palo Alto’s current RPS policy requires that CPAU pursue a target level of
renewable purchases of 33% while “[e]nsuring that the retail rate impact for renewable
purchases does not exceed 0.5 ¢/kWh on average,” i.e., the cumulative incremental cost
of all renewable resources over and above the estimated cost of an equivalent volume
and shape of alternative non-RPS resources shall not cause a retail rate impact in excess
of 0.5 ¢/kWh on average. This limit was first established by the City Council in October
2002 based on public input, and the goal of balancing resource reliability and cost
considerations in the consideration of investment in renewable and energy efficiency
resources.
Section XI: Appendices
XI—11
d. Actions to be Taken if Costs Exceed Adopted Cost Limitation
If costs are anticipated to exceed the cost limitations set by the City Council, staff will
present proposals to the City of Palo Alto’s Utilities Advisory Commission to either
reduce the RPS requirements or increase the cost limitation. Staff and the Commission’s
recommendations will then be taken to the City Council for action.
4. Portfolio Balance Requirement Reduction (PUC § 399.16(e))
a. Adoption of Portfolio Balance Requirement Reduction Rules
The City Council has elected to adopt rules that allow for the reduction of the portfolio
balance requirement for PCC 1 for a specific compliance period, consistent with PUC
§399.16(e), as described in Section 3206(a)(4) of the CEC’s RPS Regulations.
b. Portfolio Balance Requirement Reduction Rules
CPAU may reduce the portfolio balance requirement for PCC1 for a specific compliance
period, consistent with PUC §399.16 (e) and the following:
1. The need to reduce the portfolio balance requirements for PCC 1 must have
resulted because of conditions beyond CPAU’s control, as provided in Section
3206(a)(2) of the CEC’s RPS Regulations.
2. CPAU may not reduce its portfolio balance requirement for PCC 1 below 65
percent for any compliance period after December 31, 2016.
3. Any reduction in portfolio balance requirements for PCC 1 must be adopted at a
publicly noticed meeting, providing at least 10 calendar days’ notice to the CEC,
and include an updated renewable energy resources procurement plan detailing
the portfolio balance requirement changes.
5. Historic Carryover
a. Adoption of Historic Carryover Rules
The City Council has elected to adopt rules to permit its use of Historic Carryover, as
defined in Section 3206(a)(5) of the RPS Regulations, to meet its RPS procurement
targets. Current calculations indicate that CPAU has Historic Carryover due to CPAU’s
early investment in renewable energy resources.
Section XI: Appendices
XI—12
b. Historic Carryover Procurement Criteria
CPAU’s use of Historic Carryover is subject to section 3206 (a)(5) of the CEC’s RPS
Regulations, including the following:
1) Procurement generated before January 1, 2011 may be applied to CPAU’s RPS
procurement target for the compliance period ending December 31, 2013, or
for any subsequent compliance period; and
2) The procurement must also meet the criteria of Section 3202 (a)(2) of the
CEC’s RPS Regulations; and
3) The procurement must be in excess of the sum of the 2004-2010 annual
procurement targets defined in Section 3206(a)(5)(D) of the CEC’s RPS
Regulations; and
4) The procurement cannot have been applied to the RPS of another state or to a
voluntary claim.
5) The Historic Carryover must be procured pursuant to a contract or ownership
agreement executed before June 1, 2010.
6) Both the Historic Carryover and the procurement applied to CPAU’s annual
procurement targets must be from eligible renewable energy resources that
were RPS-eligible under the rules in place for retail sellers at the time of
execution of the contract or ownership agreement, except that the
generation from such resources need not be tracked in the Western
Renewable Energy Generation Information System.
c. Historic Carryover Formula
CPAU will calculate its Historic Carryover according to formulae in section 3206 (a)(5)C)
and (D) of the CEC’s RPS Regulations.
d. Historic Carryover Claims
The number of RECs qualifying for Historic Carryover is dependent upon the acceptance
by the CEC of CPAU’s applicable procurement claims for January 1, 2004 – December 31,
2010, which are due to the CEC within 90 calendar days after the effective date of the
CEC’s RPS Regulations (October 30, 2013). The Historic Carryover submittal shall also
include baseline calculations, annual procurement target calculations, and any other
pertinent data.
e. Council Review
CPAU’s use of the Historic Carryover to apply towards CPAU’s RPS procurement target in
any compliance period will be reviewed by the City Council during its annual review as
per section D.3 of this RPS Procurement Plan.
Section XI: Appendices
XI—13
6. Large Hydro Exemption (PUC § 399.30(l))
a. Adoption of Large Hydro Exemption Rules
The City Council has elected to adopt rules permitting CPAU to reduce its annual RPS
procurement requirements, as described in PUC §399.30(l).
b. Limitations on CPAU’s Use of the Large Hydro Exemption
CPAU shall be allowed to invoke the Large Hydro Exemption as long as the following
conditions are met:
1. During a year with in a compliance period, CPAU shall have received greater than
50% of its retail sales from large hydroelectric generation, which is defined as
electricity generated from a hydroelectric facility that is not an eligible renewable
energy resource.
2. The large hydroelectric generation is produced at a facility owned by the federal
government as a part of the federal Central Valley Project or a joint powers agency.
3. Only large hydroelectric generation that is procured under an existing agreement
effective as of January 1, 2015, or an extension or renewal of that agreement, shall
counted in the determination that CPAU has received more than 50 percent of its
retail sales from large hydroelectric generation in any year.
c. Large Hydro Exemption Calculation
CPAU’s annual RPS procurement target for a year in which the Large Hydro Exemption is
invoked shall equal the lesser of (a) the portion of CPAU’s retail sales unsatisfied by its
large hydroelectric generation or (b) the annual RPS procurement soft target for that
year, as listed in section B.2 of this RPS Procurement Plan. CPAU’s RPS procurement
requirement for the compliance period that includes said year shall be adjusted to
reflect any reduction in CPAU’s annual RPS procurement target pursuant to this section.
d. City Council Review
CPAU’s use of the Large Hydro Exemption to reduce its annual RPS procurement target
in any compliance period will be reviewed by the City Council during its annual review as
per section D.3 of this RPS Procurement Plan.
Section XI: Appendices
XI—14
D. ADDITIONAL PLAN COMPONENTS
1. Exclusive Control (PUC § 399.30(n))
In all matters regarding compliance with the RPS Procurement Plan, CPAU shall retain exclusive control
and discretion over the following:
a. The mix of eligible renewable energy resources procured by CPAU and those additional
generation resources procured by CPAU for purposes of ensuring resource adequacy
and reliability.
b. The reasonable costs incurred by CPAU for eligible renewable energy resources owned
by it.
2. Deliberations & Reporting (PUC § 399.30(e), § 399.30(f))
a. Deliberations on Procurement Plan (§399.30(f)):
(1) Public Notice: Annually, CPAU shall post notice of meetings if the CPA Council
will deliberate in public regarding this RPS Procurement Plan.
(2) Notice to the California Energy Commission (CEC): Contemporaneous with the
posting of a notice for such a meeting, CPAU shall notify the CEC of the date,
time and location of the meeting in order to enable the CEC to post the
information on its Internet website.
(3) Documents and Materials Related to Procurement Status and Plans: When CPAU
provides information to the CPA Council related to its renewable energy
resources procurement status and future plans, for the City Council’s
consideration at a noticed public meeting, CPAU shall make that information
available to the public and shall provide the CEC with an electronic copy of the
documents for posting on the CEC’s website.
b. Compliance Reporting (Section 3207 of the CEC RPS Regulations)
(1) CPAU shall submit an annual report to the CEC by July 1. The annual reports shall
include the information specified in Section 3207(c) of the CEC RPS Regulations.
(2) By July 1, 2021; July 1, 2025; July 1, 2028; July 1, 2031; and by July 1 of each year
thereafter, CPAU shall submit to the CEC a compliance report that addresses the
annual reporting requirements of the previous section, and information for the
preceding compliance period as specified in Section 3207(d) of the CEC RPS
Regulations.
Section XI: Appendices
XI—15
3. Annual Review
CPAU’s RPS Procurement Plan shall be reviewed annually by the City Council in accordance with
CPAU’s RPS Enforcement Program.
4. Plan Modifications/Amendments
This RPS Procurement Plan may be modified or amended by an affirmative vote of the City Council
during a public meeting. Any City Council action to modify or amend the plan must be publicly noticed
in accordance with Section D.2.a.
Effective Date: This plan shall be effective on _______________, 2018.
APPROVED AND ADOPTED this _________ day of __________________, 2018.
Section XI: Appendices
XI—16
RPS Enforcement Program
CITY OF PALO ALTO’s
RENEWABLE PORTFOLIO STANDARD ENFORCEMENT
PROGRAM
Version 2
December 2018
REVISION HISTORY
Version Date Resolution Description
2 12/3/18 Updated to reflect Senate Bill 350 (2015) requirements
1 12/12/11 9215 Original version per Senate Bill X1 2 (2011) requirements
Section XI: Appendices
XI—17
1. The City shall have a program for the enforcement of a Renewable Portfolio Standard (RPS)
program, which shall include all of the provisions set forth herein and shall be known as the
City’s RPS Enforcement Program;
2. The RPS Enforcement Program shall be effective on January 1, 2012;
3. Not less than ten (10) days advance notice shall be given to the public before any meeting is
held to make a substantive change to the RPS Enforcement Program;
4. Annually, the City Manager or his designee, the Utilities General Manager, shall cause to be
reviewed the City’s RPS Procurement Plan to determine compliance with the RPS Enforcement
Program;
5. Annual review of the RPS Procurement Plan shall include consideration of each of the following
elements:
A. By December 31, 2017, December 31, 2018, and December 31, 2019:
1. Ensure that the City is making reasonable progress toward meeting the
December 31, 2020 compliance obligation of 33% renewable resources
electricity, consistent with the RPS Procurement Plan.
B. December 31, 2020 (end of Compliance Period 3),
1. Verify that that the City procured sufficient electricity products to meet the
sum of 27% of its 2017, 29% of its 2018, 31% of its 2019, and 33% of its 2020
retail sales with eligible renewable resources from the specified Content
Categories, consistent with the RPS Procurement Plan;
C. By December 31, 2021, December 31, 2022, and December 31, 2023:
1. Ensure that the City is making reasonable progress toward meeting the
December 31, 2024 compliance obligation of 40% renewable resources
electricity, consistent with the RPS Procurement Plan.
D. December 31, 2024 (end of Compliance Period 4),
1. Verify that that the City procured sufficient electricity products to meet the
sum of 34.75% of its 2021, 36.5% of its 2022, 38.25% of its 2023, and 40% of its
2024 retail sales with eligible renewable resources from the specified Content
Categories, consistent with the RPS Procurement Plan;
Section XI: Appendices
XI—18
E. By December 31, 2025 and December 31, 2026:
1. Ensure that the City is making reasonable progress toward meeting the
December 31, 2027 compliance obligation of 45% renewable resources
electricity, consistent with the RPS Procurement Plan.
F. December 31, 2027 (end of Compliance Period 5),
1. Verify that that the City procured sufficient electricity products to meet the
sum of 41.67% of its 2025, 43.33% of its 2026, and 45% of its 2027 retail sales
with eligible renewable resources from the specified Content Categories,
consistent with the RPS Procurement Plan;
G. By December 31, 2028 and December 31, 2029:
1. Ensure that the City is making reasonable progress toward meeting the
December 31, 2030 compliance obligation of 50% renewable resources
electricity, consistent with the RPS Procurement Plan.
H. December 31, 2030 (end of Compliance Period 6),
1. Verify that that the City procured sufficient electricity products to meet the
sum of 46.67% of its 2028, 48.33% of its 2029, and 50% of its 2030 retail sales
with eligible renewable resources from the specified Content Categories,
consistent with the RPS Procurement Plan;
I. December 31, 2031 and annually thereafter,
1. Verify that that the City procured sufficient electricity products to meet 50% of
its retail sales with eligible renewable resources from the specified Content
Categories, consistent with the RPS Procurement Plan;
J. If targets in any compliance period are not met, the City must:
1. Review the applicability of applying Excess Procurement from a previous
Compliance Period or Historic Carryover consistent with the provisions of the
RPS Procurement Plan;
2. Ensure that any Waiver of Timely Compliance was compliant with the
provisions in the RPS Procurement Plan;
3. Ensure that any Portfolio Balance Requirement Reduction was compliant with
the provisions in the RPS Procurement Plan; and
4. Review applicability and appropriateness of excusing performance based on
the Cost Limitations on Expenditures or the Large Hydro Exemption provisions
of the RPS Procurement Plan.
Section XI: Appendices
XI—19
6. If it is determined that the City has failed to comply with the provisions of its RPS Procurement
Plan, the City Council shall take steps to correct any untimely compliance, including requiring
the City Manager or his designee, the Utilities General Manager to:
A. review the City’s RPS Procurement Plan to determine what changes, if any, are
necessary to ensure compliance in the next Compliance Period;
B. report quarterly to the City Council regarding the progress being made toward
meeting the compliance obligation for the next Compliance Period; and
C. report to the City Council regarding the status of meeting subsequent compliance
targets, and all steps being taken to ensure that the obligation is timely met.
Section XI: Appendices
XI—20
Standardized IRP Tables
Capacity Resource Adequacy Table (CRAT)
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Section XI: Appendices
XI—21
Energy Balance Table (EBT)
State of California
California Energy Commission
Standardized Reporting Tables for Public Owned Utility IRP Filing
Energy Balance Table
Form CEC 110 (May 2017)
Scenario Name: Expected Units = MWh
Yellow fill relates to an application for confidentiality.
NET ENERGY FOR LOAD CALCULATIONS 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
1 Retail sales to end-use customers 3%913,986 911,077 907,555 904,572 903,149 902,329 902,293 902,447 902,638 903,238 903,835 905,452
2 Other loads 600 27,438 27,332 27,227 27,960 27,914 27,887 27,908 27,911 27,916 27,934 27,952 28,001
3 Unmanaged net energy for load 941,423 938,410 934,782 932,532 931,063 930,216 930,201 930,358 930,553 931,173 931,787 933,453
4 Managed retail sales to end-use customers No AAEE 0%913,986 913,986 913,986 911,077 907,555 904,572 903,149 902,329 902,293 902,447 902,638 903,238 903,835 905,452
5 Managed net energy for load 941,423 938,410 934,782 932,532 931,063 930,216 930,201 930,358 930,553 931,173 931,787 933,453
6 Firm Sales Obligations 0 0 0 0 0 0 0 0 0 0 0 0 0
7 Total net energy for load (5+6)941,423 941,423 941,423 938,410 934,782 932,532 931,063 930,216 930,201 930,358 930,553 931,173 931,787 933,453
8 [Customer-side solar generation]18,005 20,277 22,674 24,065 25,620 27,360 29,304 31,474 33,897 36,599 39,614 42,975 46,719 50,890
9 [Light Duty PEV electricity procurement requirement]7,316 9,510 11,967 14,704 17,685 20,933 24,444 28,246 32,275 36,579 41,144 46,008 51,073 56,406
10 [Other transportation electricity consumption/procurement requirement]0 0 0 0 0 0 0 0 0 0 0 0
11 [Other electrification/fuel substitution; consumption/procurement requirement]HPWH& HPSH 146 288 476 730 1,049 1,423 1,876 2,431 3,083 3,831 4,639 5,507
EXISTING AND PLANNED GENERATION RESOURCES
Utility-Owned Generation Resources (not RPS-eligible):
[list resource by name]2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
12a Collierville Hydroelectric 241,017 92,779 115,701 131,668 131,668 131,668 131,668 131,668 131,668 131,668 131,668 131,668 131,668 131,668
Long-Term Contracts (not RPS-eligible):
[list contracts by name]
12h Western Base Resource Generation Is auto-updating 541,539 411,405 409,511 385,814 364,289 364,289 364,289 364,289 364,289 364,289 364,289 364,289 364,289 364,289
12 Total energy from existing and planned supply resources (not RPS-eligible) (sum of 12a…12n)782,556 504,184 525,212 517,482 495,957 495,957 495,957 495,957 495,957 495,957 495,957 495,957 495,957 495,957
Utility-Owned RPS-eligible Generation Resources:
[list resource by plant or unit]
13a New Spicer Hydroelectric Hydroelectric 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
Long-Term Contracts (RPS-eligible):
[list contracts by name]
13i PROJECT #1 - HIGHWINDS Wind 48,207 42,664 42,668 42,754 42,721 42,708 42,672 42,711 42,671 42,709 42,722 12,615 0 0
13j PROJECT #2 - SHILOH #1 Wind 64,513 57,281 57,290 57,425 57,366 0 0 0 0 0 0 0 0 0
13k Santa Cruz (Buena Vist Landfill)Landfill Gas 9,853 8,961 8,961 8,986 8,961 8,961 8,961 8,985 8,961 1,449 0 0 0 0
13l Ox Mountain (Half Moon Bay)Landfill Gas 43,880 42,459 42,459 42,575 42,459 42,459 42,459 42,570 42,459 42,459 42,459 42,575 13,959 0
13m Keller Canyon Landfill Gas 14,894 13,827 13,827 13,865 13,827 13,827 13,827 13,863 13,827 13,827 13,827 13,865 9,205 0
13n Johnson Canyon (Ameresco)Landfill Gas 10,433 9,200 9,200 9,225 9,200 9,200 9,200 9,224 9,200 9,200 9,200 9,225 9,200 9,200
13…San Joaquin (Ameresco)Landfill Gas 30,283 27,468 27,468 27,544 27,468 27,468 27,468 27,540 27,468 27,468 27,468 27,544 27,468 27,468
13…EE Kettleman Land Solar 53,056 52,791 52,527 52,264 52,003 51,743 51,484 51,227 50,971 50,716 50,462 50,210 49,959 49,709
13…Elevation Solar C Solar 100,695 100,191 99,690 99,192 98,696 98,203 97,712 97,223 96,737 96,253 95,772 95,293 94,817 94,343
13…Western Antelope Blue Sky Ranch B Solar 50,367 50,115 49,864 49,615 49,367 49,120 48,874 48,630 48,387 48,145 47,904 47,665 47,426 47,189
13…Frontier Solar Solar 52,338 52,077 51,816 51,557 51,299 51,043 50,788 50,534 50,281 50,030 49,780 49,531 49,283 49,037
13…Hayworth Solar Solar 63,402 63,085 62,770 62,456 62,144 61,833 61,524 61,216 60,910 60,606 60,302 60,001 59,701 59,402
13…Wilsona Solar Solar 0 0 0 0 45,136 74,774 74,400 74,028 73,658 73,290 72,924 72,559 72,196 71,835
13…Palo Alto CLEAN Projects Solar 2,062 2,052 2,042 2,031 2,021 2,011 2,001 1,991 1,981 1,971 1,961 1,951 1,942 1,932
13…Small Part of Western Area Power Association Hydroelectric 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000 5,000
13 Total energy from RPS-eligible resources (sum of 13a…13n, and 13z)553,984 532,171 530,582 529,489 572,668 543,350 541,370 539,743 537,511 528,123 524,782 493,034 445,156 420,115
13z Undelivered RPS energy 279,647 180,530 286,651 280,085 283,889 267,401 268,341 268,959 263,937 260,465 260,927 248,251 231,363 223,885
14 Total energy from existing and planned supply resources (12+13)1,336,540 1,036,355 1,055,794 1,046,970 1,068,625 1,039,307 1,037,327 1,035,700 1,033,468 1,024,080 1,020,739 988,991 941,114 916,073
GENERIC ADDITIONS
NON-RPS ELIGIBLE RESOURCES:
[list resource by name or description]2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
15a
15 Total energy from generic supply resources (not RPS-eligible)0 0 0 0 0 0 0 0 0 0 0 0
RPS-ELIGIBLE RESOURCES:
[list resource by name or description]
16a
16e
16 Total energy from generic RPS-eligible resources 0 0 0 0 0 0 0 0 0 0 0 0
17 Total energy from generic supply resources (15+16)0 0 0 0 0 0 0 0 0 0 0 0
17z Total energy from RPS-eligible short-term contracts
ENERGY FROM SHORT-TERM PURCHASES
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
18 Short term and spot market purchases:81,940 79,524 154,110 182,370 160,888 170,642 172,094 173,495 177,953 184,029 188,028 207,719 239,323 258,553
ENERGY BALANCE SUMMARY
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
19 Total energy from supply resources (14+17+17z)1,336,540 1,036,355 1,055,794 1,046,970 1,068,625 1,039,307 1,037,327 1,035,700 1,033,468 1,024,080 1,020,739 988,991 941,114 916,073
19a Undelivered RPS energy (from 13z)279,647 180,530 286,651 280,085 283,889 267,401 268,341 268,959 263,937 260,465 260,927 248,251 231,363 223,885
20 Short term and spot market purchases (from 18)81,940 79,524 154,110 182,370 160,888 170,642 172,094 173,495 177,953 184,029 188,028 207,719 239,323 258,553
21 Total delivered energy (19-19a+20)1,138,833 935,349 923,253 949,255 945,624 942,548 941,081 940,236 947,485 947,643 947,840 948,459 949,074 950,741
22 Total net energy for load (from 7)941,423 941,423 941,423 938,410 934,782 932,532 931,063 930,216 930,201 930,358 930,553 931,173 931,787 933,453
23 Surplus/Shortfall (21-22)197,409 (6,075)(18,170)10,845 10,842 10,016 10,018 10,020 17,284 17,286 17,287 17,287 17,287 17,288
Historical Data
Section XI: Appendices
XI—22
GHG Emissions Accounting Table (GEAT)
State of California
California Energy Commission
Standardized Reporting Tables for Public Owned Utility IRP Filing
GHG Emissions Accounting Table
Form CEC 111 (May 2017)
Scenario Name: Expected
Yellow fill relates to an application for confidentiality.
Emissions Intensity Units = mt CO2e/MWhGHG EMISSIONS FROM EXISTING AND PLANNED SUPPLY RESOURCES Yearly Emissions Total Units = Mmt CO2e
Utility-Owned Generation (not RPS-eligible):
[list resource by name]Emissions Intensity 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
1a #REF!0 0 0 0 0 0 0 0 0 0 0 0 0
Long-Term Contracts (not RPS-eligible):
[list contracts by name]Emissions Intensity
1h Western Base Resource Generation 0 0 0 0 0 0 0 0 0 0 0 0 0
1n
1 Total GHG emissions of existing and planned supply resources (not RPS-
eligible) (sum of 1a…1n)0 0 0 0 0 0 0 0 0 0 0 0 0 0
Utility-Owned RPS-eligible Generation Resources:
[list resource by plant or unit]Emissions Intensity
2a New Spicer Hydroelectric 0 0 0 0 0 0 0 0 0 0 0 0 0
Long-Term Contracts (RPS-eligible):
[list contracts by name]Emissions Intensity
2h PROJECT #1 - HIGHWINDS 0
2i PROJECT #2 - SHILOH #1 0
2j Santa Cruz (Buena Vist Landfill)0
2k Ox Mountain (Half Moon Bay)0
2l Keller Canyon 0
2m Johnson Canyon (Ameresco)0
2n San Joaquin (Ameresco)0
2…EE Kettleman Land 0
2…Elevation Solar C 0
2…Western Antelope Blue Sky Ranch B 0
2…Frontier Solar 0
2…Hayworth Solar 0
2…Wilsona Solar 0
2…Palo Alto CLEAN Projects 0
2…Small Part of Western Area Power Association 0
2 Total GHG emissions from RPS-eligible resources (sum of 2a…2n)0 0 0 0 0 0 0 0 0 0 0 0 0 0
3 Total GHG emissions from existing and planned supply resources (1+2)0 0 0 0 0 0 0 0 0 0 0 0 0 0
EMISSIONS FROM GENERIC ADDITIONS
NON-RPS ELIGIBLE RESOURCES:
[list resource by name or description]Emissions Intensity 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
4a
4b
4 Total GHG emissions from generic supply resources (not RPS-eligible)0 0 0 0 0 0 0 0 0 0 0 0
RPS-ELIGIBLE RESOURCES:
[list resource by name or description]Emissions Intensity
5a
5b
5 Total GHG emissions from generic RPS-eligible resources 0 0 0 0 0 0 0 0 0 0 0 0
6 Total GHG emissions from generic supply resources (4+5)0 0 0 0 0 0 0 0 0 0 0 0
GHG EMISSIONS OF SHORT TERM PURCHASES
Emissions Intensity 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
7 Short term and spot market purchases:0.428 35,070 34,036 65,959 78,054 68,860 73,035 73,656 74,256 76,164 78,764 80,476 88,904 102,430 110,661
TOTAL GHG EMISSIONS
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
8 Total GHG emissions to meet net energy for load (3+6+7)35,070 34,036 65,959 78,054 68,860 73,035 73,656 74,256 76,164 78,764 80,476 88,904 102,430 110,661
EMISSIONS ADJUSTMENTS
8a Undelivered RPS energy (MWh from EBT)279,647 180,530 286,651 280,085 283,889 267,401 268,341 268,959 263,937 260,465 260,927 248,251 231,363 223,885
8b Firm Sales Obligations (MWh from EBT)0 0 0 0 0 0 0 0 0 0 0 0 0 0
8c Total energy for emissions adjustment (8a+8b)279,647 180,530 286,651 280,085 283,889 267,401 268,341 268,959 263,937 260,465 260,927 248,251 231,363 223,885
8d Emissions intensity (portfolio gas/short-term and spot market purchases)0.428 0.428 0.428 0.428 0.428 0.428 0.428 0.428 0.428 0.428 0.428 0.428 0.428 0.428
8e Emissions adjustment (8Cx8D)119,689 77,267 122,687 119,877 121,505 114,448 114,850 115,114 112,965 111,479 111,677 106,251 99,023 95,823
PORTFOLIO GHG EMISSIONS
8f Portfolio emissions (8-8e)-84,619 -43,231 -56,728 -41,822 -52,645 -41,413 -41,193 -40,859 -36,801 -32,715 -31,201 -17,348 3,407 14,838
GHG EMISSIONS IMPACT OF TRANSPORTATION ELECTRIFICATION
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
9 GHG emissions reduction due to gasoline vehicle displacement by LD PEVs 0.02 0.03 0.04 0.04 0.04 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05
10 GHG emissions increase due to LD PEV electricity loads 0 0 0 0 0 0 0 0 0 0 0 0 0 0
11 GHG emissions reduction due to fuel displacement - other transportation
electrification --------------
12 GHG emissions increase due to increased electricity loads - other
transportation electrification 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Section XI: Appendices
XI—23
RPS Procurement Table (RPT)
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6055046
Electric Integrated Resource Plan (EIRP)
Objective and Strategies
EIRP Objective
To provide safe, reliable, environmentally sustainable and cost-effective electric resources and
services to all customers.
EIRP Strategies
1. Pursue an Optimal Mix of Supply-side and Demand-side Resources: When procuring to
meet demand, pursue an optimal mix of resources that meets the EIRP Objective, with
cost-effective energy efficiency, distributed generation, and demand-side resources as
preferred resources. Consider portfolio fit and resource uncertainties when evaluating
cost-effectiveness.
2. Maintain a Carbon Neutral Supply: Maintain a carbon neutral electric supply portfolio
to meet the community’s greenhouse gas (GHG) emission reduction goals.
3. Actively Manage Portfolio Supply Cost Uncertainties: Structure the portfolio or add
mitigations to manage short-term risks (e.g. market price risk and hydroelectric
variability) and build flexibility into the portfolio to address long-term risks (e.g. resource
availability, customer load profile changes, and regulatory uncertainty) through
diversification of suppliers, contract terms, and resource types.
4. Manage Electric Portfolio to Ensure Lowest Possible Ratepayer Bills: Pursue resources
in a least-cost, best-fit approach in an effort to ensure ratepayer bills remain as low as
possible, while achieving other Council-adopted sustainability, rate, and financial
objectives.
5. Partner with External Agencies to Implement Optimization Opportunities: Actively
engage and partner with external agencies to maximize resource value and optimize
operations.
6. Manage Supplies to Meet Changing Customer Loads and Load Profiles: Maintain
electric supply resource flexibility in anticipation of potential changes in customer loads
due to distributed energy resources, efficiency, electrification, or for other reasons. At
the same time, use retail rates and other available tools to influence customer load
changes in a manner that minimizes overall costs and achieves other Council objectives.
7. Ensure Reliable and Low-cost Transmission Services: Work with the transmission
system operator to receive reliable service in a least-cost manner.
8. Support Local Electric Supply Resiliency: Coordinate supply portfolio planning with
utility-wide efforts to support local measures and programs that enhance community
electric supply resiliency.
9. Comply with State and Federal Laws and Regulations: Ensure compliance with all
statutory and regulatory requirements for energy, capacity, reserves, GHG emissions,
distributed energy resources, efficiency goals, resource planning, and related initiatives.
Attachment B
EIRP Strategies & Related New Initiatives
There are a number of new initiatives and numerous on-going tasks related to implementing
the EIRP Strategies. These activities are supported by about six to eight CPAU staff, both from
the supply side and demand-side (or customer) programs. In addition, CPAU relies on joint
action agencies and external service providers to implement programs and initiatives. Supply
and customer program staff also coordinates with retail rate development, distribution system
engineering, and operations staff to implement programs and investments in an integrated
manner.
Described below are the nine strategies and eight new initiatives that are expected to be
undertaken in the next three to six years. Work tasks related to on-going activities have not
been called out separately.
EIRP Strategies & Related New Initiatives
1. Pursue an Optimal Mix of Supply-side and Demand-side Resources: When procuring to
meet demand, pursue an optimal mix of resources that meets the EIRP Objective, with
cost-effective energy efficiency, distributed generation, and demand-side resources as
preferred resources. Consider portfolio fit and resource uncertainties when evaluating
cost-effectiveness.
a. Initiative #1: Evaluate the merits of committing to a new 30-year contract with
Western starting in 2025. [Recommendation on initial commitment to the UAC in
early 2020; recommendation on final commitment in early 2024.]
b. Initiative #2: Evaluate the merits of rebalancing the electric supply portfolio to
lower its seasonal and daily market price exposure, by more closely balancing the
City’s long-term supplies with its hourly and monthly electric loads. [Initial
scoping assessment report to the UAC by December 2019.]
c. Initiative #3: Evaluate how to best utilize the City’s share of the California-
Oregon Transmission Project (COTP), when the long-term layoff of this asset
ends in 2024. [Initial assessment report to UAC by December 2019, in tandem
with Initiative #2 initial scoping assessment report.]
d. Continue ongoing evaluation of all cost-effective distributed energy resources
(DERs), such as energy efficiency, distributed generation, energy storage, and
demand response. Update forecasts of DER impacts on retail sales and load
shapes for use in strategic planning, rate-making, and budget forecasting. [Initial
assessment to be completed in Distributed Energy Resource (DER) and Customer
Program Plan for Council approval by June 2019.]
2. Maintain a Carbon Neutral Supply: Maintain a carbon neutral electric supply portfolio
to meet the community’s greenhouse gas (GHG) emission reduction goals.
a. Initiative #4: In addition to ensuring 100% of City’s annual electricity energy
needs are met with carbon neutral supplies (on a kWh basis), evaluate the
carbon content of the electric portfolio on an hourly basis, and recommend the
merits of buying carbon offsets to ensure the carbon content of the cumulative
Attachment C
hourly portfolio is zero on an annual basis. Also evaluate the manner in which the
City communicates with customers about the carbon content of the electric
portfolio. [Initial staff recommendation to the UAC by December 2019.]
3. Actively Manage Portfolio Supply Cost Uncertainties: Structure the portfolio or add
mitigations to manage short-term risks (e.g. market price risk and hydroelectric
variability) and build flexibility into the portfolio to address long-term risks (e.g. resource
availability, customer load profile changes, and regulatory uncertainty) through
diversification of suppliers, contract terms, and resource types.
a. This is an on-going active management strategy; no new initiatives are planned.
4. Manage Electric Portfolio to Ensure Lowest Possible Ratepayer Bills: Pursue resources
in a least-cost, best-fit approach in an effort to ensure ratepayer bills remain as low as
possible, while achieving other Council-adopted sustainability, rate, and financial
objectives.
a. Initiative #5: Investigate the merits and economics of monetizing excess
renewable energy certificates to minimize the cost of maintaining an RPS
compliant and carbon neutral electricity supply portfolio. [Initial staff
recommendation to the UAC by December 2019.]
5. Partner with External Agencies to Implement Optimization Opportunities: Actively
engage and partner with external agencies to maximize resource value and optimize
operations.
a. Initiative #6: Explore greater synergistic opportunities with NCPA and other
agencies – such as newly formed community choice aggregators – to lower Palo
Alto’s operating costs and rebalance the supply portfolio. [Initial assessment to
UAC by December 2019.]
6. Manage Supplies to Meet Changing Customer Loads and Load Profiles: Maintain
electric supply resource flexibility in anticipation of potential changes in customer loads
due to distributed energy resources, efficiency, electrification, or for other reasons. At
the same time, use retail rates and other available tools to influence customer load
changes in a manner that minimizes overall costs and achieves other Council objectives.
a. Initiative #7: Implement 2018 Utilities Strategic Plan Priority 4, Strategy 4,
Action 2 by undertaking a competitive assessment for the electric utility within
the context of the large proliferation of customer-sited DER technologies,
electrification initiatives, changing customer expectations, and potential
regulatory changes. Develop contingencies to address the potential for large
changes in the City’s load level or load profile. [Initial assessment to UAC in
December 2020.]
7. Ensure Reliable and Low-cost Transmission Services: Work with the transmission
system operator to receive reliable service in a least-cost manner.
a. This is an on-going activity; no new initiatives are planned.
8. Support Local Electric Supply Resiliency: Coordinate supply portfolio planning with
utility-wide efforts to support local measures and programs that enhance community
electric supply resiliency.
a. On-going supporting role in utility-wide efforts.
9. Comply with State and Federal Laws and Regulations: Ensure compliance with all
statutory and regulatory requirements for energy, capacity, reserves, GHG emissions,
distributed energy resources, efficiency goals, resource planning, and related initiatives.
a. Ongoing activities in collaboration with NCPA, CMUA and other joint action
agencies.
Utilities Advisory Commission Minutes Approved on: Page 1 of 3
UTILITIES ADVISORY COMMISSION MEETING
EXCERPTED MINUTES OF SEPTEMBER 5, 2018 REGULAR MEETING
CALL TO ORDER
Chair Danaher called the meeting of the Utilities Advisory Commission (UAC) to order at 7:00 p.m.
Present: Chair Danaher, Vice Chair Schwartz, Commissioners Ballantine, Forssell, Johnston, and
Trumbull
Absent: Commissioner Segal
NEW BUSINESS
ITEM 1: DISCUSSION: Discussion of the 2018 Electric Integrated Resource Plan (EIRP) and Related
Documents.
Jim Stack, Senior Resource Planner, reported the EIRP needs to be approved by the City Council by the end
of the year and submitted to the State. In October, staff will present the full EIRP to the UAC and request
the UAC recommend the City Council approve it. The EIRP objectives, strategies, and work plan will guide
staff over the next few years during implementation of the EIRP. Integrated resource planning is the
process used to develop a roadmap for meeting energy needs over a specific planning horizon while
achieving objectives for cost, sustainability, and reliability. SB 350 revised all the requirements for the
Renewable Portfolio Standard (RPS) and energy efficiency; established formal greenhouse gas reduction
targets for the electric sector; and requires all larger utilities to submit a periodic EIRP to State regulators.
Since June 2017, staff has presented components of the EIRP every few months to the UAC. Previously,
staff performed integrated resource planning under the framework of the Long-Term Electric Acquisition
Plan (LEAP), which was last updated in 2012. Since 2012, targets for greenhouse gas emission reduction,
RPS, and energy efficiency have increased, and distributed generation has proliferated along with growth in
energy storage markets and electric vehicles. CPAU has adopted a carbon-neutral supply plan, almost
tripled its RPS level, reduced greenhouse gas emissions, initiated a feed-in tariff program, signed six new
solar Power Purchase Agreements, realized major energy efficiency savings, installed electric vehicle
chargers on City property, and adopted a new Strategic Plan, a Sustainability and Climate Action Plan
(S/CAP), a Local Solar Plan, and an Electrification Work Plan since 2012. CPAU's supply portfolio reflects the
growth of solar purchases over the past few years, which places the RPS level far ahead of State
requirements. The City's greenhouse gas emissions reached zero in 2013 with adoption of the Carbon
Neutral Plan. Discussion of the appropriateness of the current methodology for carbon accounting will
continue over the next year. CPAU's target for greenhouse gas emissions is a range because the State has
not formally adopted a methodology. Staff expects the portfolio will include supply-side resources such as
efficiency and behind-the-meter solar by 2020. By 2030, the amount of landfill gas and wind in the portfolio
will decrease as contracts expire. A detailed look at the load forecast between 2018 and 2030 depicts the
impacts staff expects on the load from various types of Distributed Energy Resources (DER). Electric vehicles
(EV) and heat pump water and space heaters are expected to add to the load while efficiency and behind-
the-meter solar are expected to reduce the load by a greater amount. Over all, staff expects the load to
decrease slightly from the current level. Jonathan Abendschein, Resource Management Assistant Director,
clarified that the 6.6% is not a decrease from the current level but a decrease from where the utility would
be in 2030.
DRAFT
ATTACHMENT D
Utilities Advisory Commission Minutes Approved on: Page 2 of 3
Stack further stated that the overall objective for the EIRP is derived from CPAU's Mission Statement. To
fulfill the objective, staff proposes nine strategies to pursue an optimal mix of supply side and demand side
resources. The strategies are to maintain a carbon neutral supply; to actively manage portfolio supply cost
uncertainties; to manage the portfolio to ensure the lowest possible ratepayer bills; to partner with
external agencies to implement optimization opportunities; to manage supplies to meet changing customer
loads and load profiles; to ensure reliable and low-cost transmission services; to support local electric
supply resiliency; and to comply with all State and Federal laws and regulations.
The EIRP Work Plan is organized around the nine strategies and lists a description of activities staff plans to
pursue. First, staff will evaluate the merits of a new 30-year Western contract. The Western contract is the
largest single resource in the portfolio in that it supplies almost 40% of CPAU's energy needs in an average
year. The contract expires at the end of 2024. Western has been a good, low-cost resource; however, it is
not as attractive now because of the availability of many new renewables and because of uncertainty
around its output and cost. Analysis of the net value of a renewed Western contract indicates the Western
contract will have the highest expected net value of all resources evaluated, except for new in-state wind
resources. However, there are many large uncertainties around the expected value for Western. Staff will
attempt to narrow the uncertainties and get a better sense of the actual cost and value of the resource.
Staff will also focus on negotiating the Western contract language in the next year to build flexibility into
the contract. Second, staff will evaluate the merits of rebalancing the supply portfolio to more closely
match load with resources. From season to season, the load profile does not change significantly, but the
supply profile does. This is based on the assumption that staff dispatches hydroelectric resources in order
to maximize their value based on market price signals rather than matching load with supply. Hydroelectric
and solar generation exacerbate the imbalance between load and supply. Other resources, particularly out-
of-state wind, may be complementary to the current profile. Staff will continue to examine the issue over
the coming year in coordination with analysis of the Western contract. Third, staff will evaluate how best to
utilize the City's 50 megawatt (MW) share of the California Oregon Transmission Project (COTP)
transmission asset starting in 2024. The COTP Project is a way to import low-cost wind resources. Staff
needs a more thorough examination of all potential uses for the resource and decide the best use of the
resource. Fourth, staff will evaluate various methods of accounting for the supply portfolio's carbon
content and consider updating the definition of carbon neutrality. Currently, calculation of the portfolio's
emissions is based on the net annual volumes of market power purchases. However, the carbon content
associated with market power on the grid varies significantly over the course of a year and a single day. The
State is currently undertaking three initiatives regarding the accounting methodology. Fifth, staff will
evaluate the merits of monetizing excess RPS supplies and consider different approaches to achieving RPS
compliance. In November 2017, the UAC indicated its preference for a focus on cost minimization by selling
excess supplies and potentially swapping some high-value category 1 resources for lower-cost category 3
resources. Staff is planning to return to the UAC with some analysis of different options for pursuing that
approach. SB 100, if signed by the Governor, will provide certainty on CPAU's ultimate RPS target for 2030.
In response to Commissioner Forssell's query regarding SB 100's definition of clean energy, Stack
understood the definition was basically renewables and large hydroelectric, but he would confirm the
definition.
Stack further reported that staff will explore synergistic opportunities to work with the Northern California
Power Agency (NCPA) and other agencies, including transacting with them or operating joint customer
programs. Lastly, staff will undertake a competitive assessment of the Electric Utility within the context of
the proliferation of customer-side DER technologies and will develop contingencies to address the potential
for large changes in load as a result of DER adoption. DERs have the potential to substantially alter the
magnitude and shape of the load.
Commissioner Johnston remarked that the slides dramatize the problem of matching resources with load
and remind him that matching is a major issue.
Utilities Advisory Commission Minutes Approved on: Page 3 of 3
Commissioner Ballantine questioned the projections that the load will remain flat or decrease given the
electrification of homes and vehicles. It is very possible if not likely that the electric load will increase while
the overall energy load decreases. Lena Perkins, Resource Planner, advised that the projections are
consistent with statewide projections. The main drivers for the projections are the requirements for
increasing energy efficiency and the decrease in manufacturing and industrial loads. The California Energy
Commission (CEC) developed a Palo Alto-specific forecast that projects Palo Alto's load will decrease 10-
15%. Abendschein added that CPAU's load is 20% residential and 80% commercial. A large increase in the
residential load does not dramatically increase the Citywide load. Commissioner Ballantine commented
that an analysis of a scenario wherein all houses and all vehicles are electric would be interesting. Perkins
suggested staff could run that scenario as a sensitivity case. Doubling the residential load would total only
15% of the Citywide load. Chair Danaher noted the possibility of more commuters charging their vehicles at
work. Perkins advised that the trend is the opposite; approximately 80% of charging happens at home.
Stack indicated staff needs to consider the possibility of significant increases as well as decreases in load,
build flexibility into the portfolio, and plan for such uncertainty.
In reply to Vice Chair Schwartz's query as to whether staff has considered block chain, Perkins reported
staff has not considered block chain in any scenarios to date. Vice Chair Schwartz requested staff add some
charts regarding coincident and non-coincident demand because everyone needs to understand those
terms, as they have implications on whether the electrons they are using are truly carbon neutral. It would
be useful to look at bulk storage options and other things that the utility could implement to utilize all the
solar power generated in the City. A discussion of storage should include personal storage and the public
safety of battery storage.
Commissioner Forssell expressed interest in the new average hydroelectric year given the effects of climate
change. Stack advised that staff recently updated the long-term forecast for Western, based on recent
historical data, and reduced the expected level of hydroelectric by approximately 10%. The updated data is
reflected in the graphs. Commissioner Forssell hoped the initiative to rebalance the portfolio did not mean
balancing the load just to Palo Alto, but to the wider California grid.
Chair Danaher concurred with prior comments about energy storage. Energy storage will become much
more cost effective. The water resource will be at risk, which affects geothermal resources as well as
hydroelectric resources.
Commissioners requested the next presentation include information regarding coincident and non-
coincident demand; resources that could fill the voids in supply so that the cost effectiveness and value of
storage can be determined; and information about the COTP transmission asset.
ACTION: No action
TO:
FROM:
DATE:
SUBJECT.
UTILITIES ADVISORY COM ISSION
UTILITIES DEPARTMENT
October 3, 2018
Elec
c Integrated Resource Plan (Additional Infor " ation
REQUEST
This is an informational report for review and discussion by the Utility Advisory Commission (UAC)
and no action is requested.
DISCUSSION
On September 5, 2018 the Utilities Advisory Commission (UAC) discussed the Electric Integrated
Resource Plan (EIRP). Some additional information on the California Oregon Transmission Project
(COTP) was requested. Staff has provided additional information (Attachment A).
Staff would also like to provide some clarification on an answer to a question related to SB 100.
Commissioner Forssell asked for clarification regarding what types of generation are included and
excluded under that 2045 target. Staff was unsure of that definition at the time. Staff reviewed
the legislation and found that it refers to 100% "zero -carbon" energy. The legislation is silent on
the definition of "zero -carbon energy." However, the bill's author, Senator de Leon, wrote a letter
attempting to clarify his intent in this legislation. He states that in 2045 all electricity serving
customers in the state shall come from"eligible renewable and `zero -carbon' generating facilities"
and that the "zero -carbon portion of SB 100 is intended to be more inclusive than the RPS portion
in terms of the types of resources that are eligible." The 100% by 2045 target is anticipated to
include all renewables, plus large hydroelectric generation, and possibly other zero -carbon
resources too (e.g., nuclear or fossil generation with carbon capture and sequestration). Staff will
track the regulations implementing this law to be sure about what's allowed and what's not.
ATTACHMENTS
A. Background on California Oregon Transmission Project
PREPARED BY:
APPROVED BY:
JONATHAN ABENDSCHEIN, Assistant Director, Resource Management
ED SHIKADA
General Manager of Utilities
Page 1of1
18 Sept 2018
COTP Fact Sheet
•The California-Oregon Transmission Project (COTP) is a
340-mile, 500-kV AC transmission line between
Southern Oregon and Central California.
•COTP became operational in March 1993, and has a
total rated capacity of 1,600 MW (enough to power 1
million homes).
•From its northern end at the Bonneville Power
Administration's Captain Jack Substation in Southern
Oregon, the COTP continues south to the Western
Area Power Administration's Tracy Substation and on
towards the Tesla Substation (owned and operated by
PG&E) in the CAISO balancing area.
•The Transmission Agency of Northern California
(TANC) is a California Joint Powers Agency, formed in
1984 to facilitate the construction and joint ownership
of transmission projects. Palo Alto was a founding
member of TANC. Other members include MID, TID,
SMUD and the Cities of Alameda, Biggs, Gridley,
Healdsburg, Lodi, Lompoc, Redding, Roseville, Santa Clara, and Ukiah.
•TANC currently owns and operates approximately 87 percent of the COTP.
•The City became a participant in the COTP in 1990 and has a 3.6815%, or approximately 50 MW,
share of TANC’s current entitlement to transfer capability on the COTP.
•Due to changes in the value of the COTP to the City’s electric portfolio, in 2009 the City executed
a 15-year Lay-off Agreement to transfer its full entitlement and obligations of COTP to MID, TID
and SMUD (Resolution No. 8900).
o In FY 2008, the City’s cost of COTP ownership was $2M, while the value of the resource
(the cost difference between California power and Oregon power) was $0.8M.
•Other COTP participants located in the CAISO balancing area, including Alameda and Santa Clara,
have reached similar conclusions about the value of the resource, laying off their shares to COTP
participants located in the Balancing Area of Northern California (BANC).
•Under the lay-off agreement, the City retained its rights to vote at TANC meetings on matters
related to COTP improvements and/or refinancing on COTP indebtedness.
•The long-term COTP lay-off will end in 2024, and the City will be able to resume its use of the
resource while only paying the associated O&M costs. (The lay-off recipients took over the City’s
share of the debt on the resource.)
•One of the COTP's benefits is to provide California access to cheaper and cleaner energy supplies
(e.g., hydro and wind power from the Pacific Northwest). However, the City can still access these
supplies when it is desirable to do so, without holding long-term rights to COTP.
ATTACHMENT A
TO: UTILITIES ADVISORY COM ISSION
FROM: UTILITIES DEPARTMENT
DATE: October 3, 2018
SUBJECT: Discussion ssi of Results of Resider tial S=urve r on Adoption o Dist
Resources Technologies
bated nergy
REQUEST
This is an informational report for review and discussion by the Utility Advisory Commission
(UAC) and no action is requested.
DISCUSSION
In November 2017, Utilities staff presented a draft Distributed Energy Resources (DER) plan to
the Utility Advisory Commission. The draft plan included proposals related to exploring new
customer programs as well as establishing internal priorities to integrate DERs in utility rates,
supply planning, and distribution system planning. To inform the DER Plan, staff contracted with
Fairbank, Maslin, Maullin, Metz & Associates (FM3), a public opinion research firm, to conduct a
residential customer survey with the following objectives:
Assess customers' attitude toward home energy management;
Evaluate customer's interest in the following DER technologies in electric vehicles,
rooftop photovoltaic and battery storage systems, and heat pump water heaters;
Understand customer barriers in adopting these DER technologies.
Online and phone surveys were conducted between June 27 and July 10, with 713 responses.
Attachment A includes the questions and the topline results of the survey. Attachment B is a
Powerpoint summary of the survey results including selected cross -tabulated results.
ATTACHMENTS
A. City of Palo Alto Utilities 2018 Residential DER Survey results
B. Presentation of 2018 Residential DER Survey results
PREPARED BY:
REVIEWED BY:
APPROVED
Y:
CHRISTINE TAM, Senior Resource Planners
DEAN BATCHELOR, Chief Operating Office
JONATHAN ABENDSCHEIN, Assistant Director, Resource Management
ED SHIKADA
General Manager of Utilities
Page
June 27-July 10, 2018
CITY OF PALO ALTO UTILITIES RESIDENTIAL DER SURVEY
320-792 WT
MARGIN OF SAMPLING ERROR ±3.7% (95% CONFIDENCE INTERVAL)
N=713
Hello, I'm ___________ from _________, a public opinion research company on behalf of City of Palo Alto
Utilities. I am definitely not trying to sell you anything. We are conducting an opinion survey about issues
that interest people living in the City of Palo Alto and we are only interested in your opinions. May I speak to
______________?
A. Before we begin, I need to know if I have reached you on a cell phone, and if so, are you in a place
where you can talk safely without endangering yourself or others?
Yes, cell and can talk safely ------------------------------------------------- 61%
Yes, cell but cannot talk safely --------------------------------- TERMINATE
No, not on cell ----------------------------------------------------------------- 39%
(DON’T READ) DK/NA/REFUSED ------------------------- TERMINATE
1.First, when it comes to major purchasing decisions for your household, such as a new car or appliance,
are you the primary decisionmaker? (IF NO, ASK: Do you share responsibility for those decisions with
someone else?)
Yes, primary decision maker ------------ 81%
No, but share responsibility ------------- 18%
No, someone else --------------------------- 1%
(DK/NA) ----------------------- TERMINATE
2.Are you the primary utility bill payer for your residence? (IF NO, ASK: “Do you share that
responsibility with someone else?”)
Primary bill payer ------------------------- 90%
Share responsibility ------------------------- 7%
Someone else -------------------------------- 3%
(DK/NA) ----------------------- TERMINATE
TERMINATE IF CODE 3 IN Q1 AND Q2.
3.Are you a homeowner or renter?
Homeowner --------------------------------- 60%
Renter ---------------------------------------- 40%
(DK/NA) -------------------------------------- 1%
ATTACHMENT A
FM3 RESEARCH 320-792-WT PAGE 2
4. What type of building do you live in? (READ LIST)
Single-family detached home ------------ 67%
Apartment ----------------------------------- 20%
Condominium -------------------------------- 7%
Townhouse ------------------------------------ 4%
Other (SPECIFY _____) ------------------- 2%
(DON’T READ) DK/NA ------------------ 1%
MY NEXT QUESTIONS ARE RELATED TO YOUR INTEREST IN MANAGING ENERGY USE AT
HOME.
5. Which of the following do you currently have in your home? (ALLOW MULTIPLE RESPONSES)
(IF ASKED WHAT DEFINES “SMART”, EXPLAIN THAT “SMART” GADGETS CAN BE
TURNED ON OR OFF REMOTELY, USING A SMART PHONE)
Smart thermostat e.g. Nest --------------- 19%
Smart lighting e.g. Wemo ---------------- 13%
Smart power strip or plug ---------------- 13%
Central air conditioner -------------------- 27%
Room air conditioner --------------------- 17%
None of the above ------------------------- 43%
(DON’T READ) DK/NA ------------------ 1%
6. There are many goals people have in mind when they make decisions about appliances and utility use.
I am going to read you a short list of goals, and would like you to tell me which you would say is your
first priority, and which is a second-place priority. (RANDOMIZE; RECORD FIRST AND SECOND
CHOICE)
First Second
Saving money on my bill -------------------- 38% -------------36%
Reducing my carbon footprint -------------- 21% -------------31%
My comfort and convenience --------------- 37% -------------27%
(DON’T READ) DK/No choice ------------- 4% ------------- 6%
FM3 RESEARCH 320-792-WT PAGE 3
7. The City of Palo Alto Utilities could ask you to adjust the time of day when you use your major
appliances, such as your washing machine, or charging an electric car. I’m going to read you a few
statements about such a request, and would like you to tell me whether you agree or disagree with that
statement, or feel neutral about it. (RANDOMIZE)
AGREE NEUTRAL DISAGREE
[ ]a. If it saved me money on my utility bill, I would shift
the times of day I use major appliances --------------------------------- 66% --------- 22% ---------- 12%
[ ]b. I would shift my energy use to reduce my carbon
footprint ----------------------------------------------------------------------- 65% --------- 23% ---------- 12%
[ ]c. I already try to reduce my energy use at all times of
day ----------------------------------------------------------------------------- 70% --------- 19% ---------- 11%
[ ]d. With my busy schedule, I am not sure I can make these
kinds of adjustments -------------------------------------------------------- 25% --------- 28% ---------- 47%
[ ]e. I would not shift my energy use if it reduced my
comfort and convenience -------------------------------------------------- 28% --------- 35% ---------- 37%
[ ]f. I would try using automation like a smart thermostat so
I don’t have to think about it ---------------------------------------------- 59% --------- 23% ---------- 17%
MY NEXT QUESTIONS ARE RELATED TO ELECTRIC VEHICLES.
8. Do you currently own or lease an electric vehicle?
Yes ------------------------------------------- 15%
No -------------------------------------------- 85%
(DK/NA) -------------------------------------- 0%
(ASK Q9 IF CODE 1 – YES – IN Q8)
9. Next, I am going to read a list of reasons people have mentioned to own or lease an electric vehicle.
After you hear each item, please tell me if it is a major reason, minor reason, or not a reason that you
have an electric vehicle. (RANDOMIZE)
MAJOR MINOR NOT A MAJOR/
REASON REASON REASON (DK/NA) MINOR
[ ]a. I like trying out new technologies ----------------------------- 38% ----- 37% ----- 23% ------ 1% 76%
[ ]b. I like the convenience of doing less maintenance
and not having to refill a gas tank ----------------------------- 52% ----- 33% ----- 13% ------ 1% 85%
[ ]c. It is better for the environment -------------------------------- 79% ----- 15% -------5% ------ 2% 93%
[ ]d. It is a better driving experience -------------------------------- 41% ----- 32% ----- 25% ------ 2% 73%
[ ]e. It gives me access to the carpool lane ------------------------ 40% ----- 34% ----- 24% ------ 1% 74%
FM3 RESEARCH 320-792-WT PAGE 4
(ASK Q10 IF CODE 1 – YES – IN Q8)
10. Where do you usually charge your electric vehicle?
At home ------------------------------------- 72%
At work -------------------------------------- 16%
At public charging stations ----------------- 3%
Other (SPECIFY ____) -------------------- 6%
(DON’T READ) DK/NA ------------------ 2%
(ASK Q11 IF CODE 1 – YES – IN Q8 AND CODE 1-4 IN Q10)
11. Why do you choose to charge your electric vehicle there? (READ LIST; ALLOW MULTIPLE
RESPONSES)
[ ] It’s free ---------------------------------------------------- 18%
[ ] It’s the cheapest option ---------------------------------- 13%
[ ] It’s quicker than other options --------------------------- 6%
[ ] It’s convenient -------------------------------------------- 82%
(ASK ONLY IF NOT CODE 1 – AT HOME - IN Q10)
[ ] I can’t charge it at home ---------------------------------- 6%
(RESUME ASKING ALL RESPONDENTS)
Other (SPECIFY ____) -------------------------------------- 2%
(DON’T READ) DK/NA ------------------------------------ 4%
(ASK Q12 IF CODE 1 – AT HOME – IN Q10)
12. What type of electric vehicle charger do you have at home? (READ LIST)
(IF ASKED WHAT DEFINES “SMART”, CAN EXPLAIN THAT “SMART” GADGETS CAN
BE TURNED ON OR OFF REMOTELY USING A SMART PHONE. SIMILARLY, CAN
DEFINE THAT ELECTRIC CAR NEED TO BE PLUGGED OVERNIGHT AT LEVEL 1
CHARGING. LEVEL 2 CAN FULLY CHARGE AN ELECTRIC CAR IN ABOUT 4 HOURS.)
A Level 1 charger that uses a standard 110-Volt wall outlet -- 43%
A Level 2 regular charger using a 220 to 240-Volt outlet ----- 39%
A Level 2 smart charger using a 220 to 240-Volt outlet ------- 16%
Other (SPECIFY ____) ----------------------------------------------- 0%
(DON’T READ) DK/NA --------------------------------------------- 2%
FM3 RESEARCH 320-792-WT PAGE 5
(ASK Q13 IF CODE 1 – YES – IN Q8)
13. How likely is it that you will purchase or lease a second electric vehicle in the next three years? (READ
LIST)
VERY/SMWT LIKELY ---------------- 70%
Very likely ---------------------------------- 49%
Somewhat likely --------------------------- 21%
TOTAL NOT LIKELY ----------------- 25%
Not too likely ------------------------------- 11%
Not at all likely ---------------------------- 14%
(DON’T READ) DK/NA ------------------ 4%
(ASK Q14 IF CODE 2 OR 3 – NO/DK – IN Q8)
14. How likely is it that you will purchase or lease an electric vehicle in the next three years? (READ
LIST)
VERY/SMWT LIKELY ---------------- 37%
Very likely ---------------------------------- 13%
Somewhat likely --------------------------- 24%
TOTAL NOT LIKELY ----------------- 61%
Not too likely ------------------------------- 29%
Not at all likely ---------------------------- 32%
(DON’T READ) DK/NA ------------------ 2%
(ASK Q15 IF CODE 1 OR 2 – VERY/SOMEWHAT LIKELY – IN Q14)
15. Next, I am going to read a list of reasons people have mentioned to own or lease an electric vehicle.
After you hear each item, please tell me if it is a major reason, minor reason, or not a reason that you
are considering purchasing or leasing an electric vehicle. (RANDOMIZE)
MAJOR MINOR NOT A MAJOR/
REASON REASON REASON (DK/NA) MINOR
[ ]a. I like trying out new technologies ----------------------------- 20% ----- 45% ----- 35% ------ 0% 65%
[ ]b. I like the convenience of not having to refill a gas
tank and doing less maintenance ------------------------------- 49% ----- 36% ----- 15% ------ 0% 85%
[ ]c. It is better for the environment -------------------------------- 82% ----- 14% -------2% ------ 2% 96%
[ ]d. It is a better driving experience -------------------------------- 19% ----- 35% ----- 40% ------ 6% 54%
[ ]e. It will give me access to the carpool lane -------------------- 31% ----- 47% ----- 21% ------ 1% 78%
FM3 RESEARCH 320-792-WT PAGE 6
(ASK Q16 IF CODE 1 OR 2 – VERY/SOMEWHAT LIKELY – IN Q14)
16. Are there any other reasons I didn’t mention? (OPEN END, RECORD VERBATIM)
Noise reduction ------------------------------------------------------------------------------------- 2%
Required complex knowledge to use electric car/not able to use -------------------------- 1%
Lower cost in long run/save money------------------------------------------------------------- 7%
Use less oil/gas/lower gas cost ------------------------------------------------------------------ 4%
Lower maintenance -------------------------------------------------------------------------------- 1%
Concern about high price ------------------------------------------------------------------------ 1%
Better performance/efficiency-------------------------------------------------------------------- 2%
Need place to charge/convenience -------------------------------------------------------------- 2%
Safety ------------------------------------------------------------------------------------------------- 3%
Good for environment/reduce carbon footprint ----------------------------------------------- 6%
Owned one in the past ----------------------------------------------------------------------------- 1%
Other ------------------------------------------------------------------------------------------------- 5%
Nothing/No ---------------------------------------------------------------------------------------- 61%
N/A/Refused/No opinion ------------------------------------------------------------------------- 7%
(ASK Q17 IF CODE 1 OR 2 – VERY/SOMEWHAT LIKELY – IN Q14)
17. Where do you think you would usually charge your electric vehicle?
At home ------------------------------------- 70%
At work -------------------------------------- 16%
At public charging stations ----------------- 4%
Other (SPECIFY ____) -------------------- 4%
(DON’T READ) DK/NA ------------------ 7%
FM3 RESEARCH 320-792-WT PAGE 7
(ASK Q18 IF CODE 1 OR 2 – VERY/SOMEWHAT LIKELY – IN Q14 AND CODE 1-4 IN Q17)
18. Why might you choose to charge your electric vehicle there? (READ LIST; ALLOW MULTIPLE
RESPONSES)
[ ] It’s free ---------------------------------------------------- 13%
[ ] It’s the cheapest option ---------------------------------- 15%
[ ] It is quicker than other options ------------------------ 12%
[ ] It’s convenient -------------------------------------------- 81%
(ASK ONLY IF NOT CODE 1 IN Q17)
[ ] I can’t charge it at home -------------------------------- 10%
(RESUME ASKING ALL RESPONDENTS)
Other (SPECIFY ____) -------------------------------------- 1%
(DON’T READ) DK/NA ------------------------------------ 3%
(ASK Q19 IF CODE 1 OR 2 – VERY/SOMEWHAT LIKELY – IN Q14)
19. What type of electric vehicle charger do you plan to have at home? (READ LIST)
(IF ASKED WHAT DEFINES “SMART”, CAN EXPLAIN THAT “SMART” GADGETS CAN
BE TURNED ON OR OFF REMOTELY USING A SMART PHONE. SIMILARLY, CAN
DEFINE THAT ELECTRIC CAR NEED TO BE PLUGGED OVERNIGHT AT LEVEL 1
CHARGING. LEVEL 2 CAN FULLY CHARGE AN ELECTRIC CAR IN ABOUT 4 HOURS.)
A Level 1 charger that uses a standard 110-Volt wall outlet -- 13%
A Level 2 regular charger using a 220 to 240-Volt outlet ----- 16%
A Level 2 smart charger using a 220 to 240-Volt outlet ------- 22%
Other (SPECIFY ____) ----------------------------------------------- 2%
(DON’T READ) DK/NA ------------------------------------------- 46%
FM3 RESEARCH 320-792-WT PAGE 8
(ASK Q20 IF CODE 3 OR 4 – NOT TOO/NOT AT ALL LIKELY – IN Q14)
20. Next, I am going to read a list of reasons people have mentioned to not own or lease an electric vehicle.
After you hear each item, please tell me if it is a major reason, minor reason, or not a reason that you
are considering purchasing or leasing an electric vehicle. (RANDOMIZE)
MAJOR MINOR NOT A MAJOR/
REASON REASON REASON (DK/NA) MINOR
[ ]a. I won’t need a new car in the next three years -------------- 59% ----- 15% ----- 23% ------ 3% 74%
[ ]b. An electric vehicle is too expensive--------------------------- 39% ----- 28% ----- 31% ------ 2% 67%
[ ]c. I don’t have access to a charging station at home ---------- 32% ----- 26% ----- 40% ------ 2% 58%
[ ]d. I prefer biking, public transit, walking and ride-
hailing apps like Uber and Lyft -------------------------------- 12% ----- 27% ----- 59% ------ 2% 39%
[ ]e. I am worried about the limited drive distance
between charging ------------------------------------------------- 39% ----- 30% ----- 30% ------ 2% 68%
[ ]f. I need a larger vehicle ------------------------------------------- 12% ----- 18% ----- 68% ------ 2% 30%
[ ]g. Charging an electric vehicle at home will increase
my electric bill ---------------------------------------------------- 11% ----- 25% ----- 60% ------ 4% 36%
(ASK Q21 IF CODE 3 OR 4 – NOT TOO/NOT AT ALL LIKELY – IN Q14)
21. Which of the following would make you more likely to purchase or lease an electric vehicle?
(RANDOMIZE; ALLOW MULTIPLE RESPONSES)
[ ] More public or at-work charging stations--------------------- 32%
[ ] A rebate ------------------------------------------------------------- 44%
[ ] Special utility rates for electric vehicle charging ------------ 32%
[ ] Assistance installing charging equipment at home ---------- 30%
Other (SPECIFY _____) ---------------------------------------------- 6%
None of the above ---------------------------------------------------- 32%
(DK/NA) ----------------------------------------------------------------- 4%
(RESUME ASKING ALL RESPONDENTS)
MY NEXT QUESTIONS ARE RELATED TO SOLAR.
22. Do you have a rooftop solar system at your home?
Yes --------------------------------------------- 7%
No -------------------------------------------- 92%
(DK/NA) -------------------------------------- 1%
FM3 RESEARCH 320-792-WT PAGE 9
(ASK Q23 IF CODE 1 – YES – IN Q22)
23. Next, I am going to read a list of reasons people have mentioned to install rooftop solar. After you hear
each item, please tell me if it is a major reason, minor reason, or not a reason that you have rooftop
solar at home. (RANDOMIZE)
MAJOR MINOR NOT A MAJOR/
REASON REASON REASON (DK/NA) MINOR
[ ]a. Solar is a renewable energy source --------------------------- 85% ------ 8% -------0% ------ 7% 93%
[ ]b. Rooftop solar saves money on my utility bills -------------- 76% ----- 12% -------5% ------ 7% 89%
[ ]c. Solar tied to energy storage can provide an
emergency power supply --------------------------------------- 40% ----- 25% ----- 25% ---- 10% 65%
[ ]d. Solar shows my commitment to my community’s
sustainability goals ----------------------------------------------- 48% ----- 28% ----- 18% ------ 6% 76%
(ASK Q24 IF CODE 2 OR 3 – NO/DK – IN Q22)
24. Are you planning to install a rooftop solar system at your home in the next three years?
Yes --------------------------------------------- 8%
No -------------------------------------------- 80%
(DK/NA) ------------------------------------ 12%
(ASK Q25 IF CODE 1 – YES – IN Q24)
25. Next, I am going to read a list of reasons people have mentioned to install rooftop solar. After you hear
each item, please tell me if it is a major reason, minor reason, or not a reason that you are considering
rooftop solar at home. (RANDOMIZE)
MAJOR MINOR NOT A MAJOR/
REASON REASON REASON (DK/NA) MINOR
[ ]a. Solar is a renewable energy source --------------------------- 81% ------ 9% ----- 10% ------ 0% 90%
[ ]b. Rooftop solar saves money on my utility bills -------------- 79% ----- 21% -------0% ------ 0% 100%
[ ]c. Solar tied to energy storage can provide an
emergency power supply --------------------------------------- 54% ----- 29% ----- 16% ------ 2% 83%
[ ]d. Solar shows my commitment to my community’s
sustainability goals ----------------------------------------------- 37% ----- 29% ----- 34% ------ 0% 66%
FM3 RESEARCH 320-792-WT PAGE 10
(ASK Q26 IF CODE 2 OR 3 – NO/DK – IN Q24)
26. Next, I am going to read a list of reasons people have mentioned to not install rooftop solar. After you
hear each item, please tell me if it is a major reason, minor reason, or not a reason that you have not
yet installed rooftop solar. (RANDOMIZE)
MAJOR MINOR NOT A MAJOR/
REASON REASON REASON (DK/NA) MINOR
[ ]a. My electricity supply is already carbon neutral --------------- 5% ----- 11% ----- 69% ---- 16% 16%
[ ]b. I can reduce my carbon footprint in other ways -------------- 8% ----- 22% ----- 59% ---- 11% 30%
[ ]c. My roof is not suitable for installing a solar
system. For example, a tree is in the way or my
roof is too old. ---------------------------------------------------- 21% ------ 9% ----- 54% ---- 15% 31%
[ ]d. I don’t have access to my roof to install solar. For
example, I live in a condo, apartment or other
rental. -------------------------------------------------------------- 40% ------ 3% ----- 53% ------ 4% 43%
[ ]e. Solar economics don’t pan out for my house ---------------- 25% ----- 11% ----- 45% ---- 19% 36%
[ ]f. I don’t have time to look into solar design and costs ------ 11% ----- 21% ----- 59% ------ 9% 32%
(RESUME ASKING ALL RESPONDENTS)
27. The City of Palo Alto Utilities is considering developing a community solar program to enable residents
to experience local solar, even if they are unable to install solar on their own premises. Community
solar projects would be installed at a local site or sites, preferably on municipal land that is open to the
public. The solar installations could provide enough electricity to power between 100 and 1,000 homes
in Palo Alto. Community solar participants would have the opportunity to meet up to 100 percent of
their electricity needs with locally generated solar electricity. Participation in the program would be
voluntary. Does that sound like something you would be extremely interested in, very interested in,
somewhat interested in, or not too interested in?
EXT/VERY INTERESTED ------------ 53%
Extremely interested ---------------------- 28%
Very interested ----------------------------- 25%
SMWT/NOT TOO INTERESTED --- 43%
Somewhat interested ---------------------- 30%
Not too interested -------------------------- 13%
(DON’T READ) DK/NA ------------------ 4%
(ASK Q28 IF CODE 1 OR 2 – EXTREMELY/VERY INTERESTED - IN Q27)
28. Suppose participating in this community solar program resulted in a total additional cost of ____ (READ
EACH, RECORD) per month on your electricity bill. Would you be willing or unwilling to pay that
amount? (DO NOT ROTATE, READ IN ORDER
WILL UNWILL (DK/NA)
a. Up to 20 dollars ----------------------------------------------------------- 54% --------- 32% ----------- 14%
b. Up to 10 dollars ----------------------------------------------------------- 81% --------- 13% -------------6%
c. Up to 5 dollars ------------------------------------------------------------- 87% ----------- 8% -------------5%
FM3 RESEARCH 320-792-WT PAGE 11
(RESUME ASKING ALL RESPONDENTS)
29. Are you planning to invest in a home energy storage system such as Tesla Powerwall in the next three
years, or do you already have one?
Yes --------------------------------------------- 6%
No -------------------------------------------- 77%
Already have one ---------------------------- 0%
(DK/NA) ------------------------------------ 17%
30. From what you know, what percentage of the electricity supplied by City of Palo Alto Utilities is carbon
neutral, that is, produces zero net carbon emissions)? (RECORD VERBATIM RESPONSE AND
CODE IN CATEGORIES BELOW)
Less than 21%------------------------------ 62%
21 to 50 percent ---------------------------- 21%
51 to 80 percent ------------------------------ 4%
81 to 100 percent -------------------------- 12%
THE TRUE SHARE OF C-P-A-U ENERGY THAT IS CARBON NEUTRAL
IS 100 PERCENT. MY NEXT QUESTIONS ARE RELATED TO WATER HEATING.
31. What type of water heater do you have at home? (READ LIST)
TOTAL GAS ------------------------------ 75%
Gas tank water heater --------------------- 69%
Gas tankless water heater ------------------ 6%
TOTAL ELECTRIC ----------------------- 8%
Electric tank water heater ------------------ 6%
Electric tankless water heater -------------- 2%
Other (SPECIFY _______)---------------- 1%
(DON’T READ) DK/NA ---------------- 16%
(ASK Q32 IF NOT CODE 6 – DK – IN Q31)
32. Where is your water heater located? (READ LIST)
Garage --------------------------------------- 38%
Basement ------------------------------------ 11%
Utility closet in basement ------------------ 3%
Utility closet inside the house ----------- 23%
Utility closet outside the house ---------- 16%
Other (SPECIFY ____) -------------------- 8%
(DON’T READ) DK/NA ------------------ 1%
FM3 RESEARCH 320-792-WT PAGE 12
(RESUME ASKING ALL RESPONDENTS)
33. How familiar are you with heat pump water heaters, which are ultra-efficient electric water heaters?
VERY/SMWT FAMILIAR ------------ 26%
Very familiar --------------------------------- 5%
Somewhat familiar ------------------------- 21%
TOTAL NOT FAMILIAR ------------- 71%
Not too familiar ---------------------------- 20%
Not at all familiar -------------------------- 51%
(DON’T READ) DK/NA ------------------ 3%
(ASK Q34 IF CODE 1 OR 2 – VERY/SOMEWHAT FAMILIAR - IN Q33)
34. Would you be interested in switching from a gas water heater to a heat pump water heater to reduce
your personal carbon footprint?
Yes ------------------------------------------- 33%
No -------------------------------------------- 44%
I already have one --------------------------- 6%
(DON’T READ) DK/NA ---------------- 17%
(ASK Q35 IF CODE 2 OR 4 – NO/DK/NA - IN Q34)
35. Next, I am going to read a list of reasons people have mentioned to not switch to a heat-pump water
heater. After you hear each item, please tell me if it is a major reason, minor reason, or not a reason
that you are not interested in a heat-pump water heater.
MAJOR MINOR NOT A MAJOR/
REASON REASON REASON (DK/NA) MINOR
[ ]a. I can reduce my carbon footprint in other ways ------------ 11% ----- 33% ----- 52% ------ 4% 44%
[ ]b. I recently replaced my water heater--------------------------- 21% ----- 16% ----- 57% ------ 5% 37%
[ ]c. I have read bad reviews of heat-pump water
heaters ---------------------------------------------------------------- 8% ----- 19% ----- 62% ---- 10% 27%
[ ]d. They are too expensive ------------------------------------------ 36% ----- 22% ----- 33% ------ 9% 58%
[ ]e. I do not make decisions about the type of water
heater --------------------------------------------------------------- 24% ------ 6% ----- 67% ------ 4% 29%
(ASK Q36 IF CODE 2 OR 4 – NO/DK/NA - IN Q34)
36. Which of the following would make you more likely to switch to a heat -pump water heater?
(RANDOMIZE; ALLOW MULTIPLE RESPONSES)
[ ] Better customer reviews ----------------------------------------- 13%
[ ] If the cost were comparable to a regular gas water heater - 46%
[ ] Assistance with selecting a product ------------------------------ 7%
[ ] Learning more about other homeowners’ experiences ----- 18%
Other (SPECIFY _____) -------------------------------------------- 10%
None of the above ---------------------------------------------------- 28%
(DK/NA) ----------------------------------------------------------------- 7%
FM3 RESEARCH 320-792-WT PAGE 13
(ASK Q37 IF CODE 1 OR 3 IN – YES/I ALREADY HAVE ONE - Q34)
37. Next, I am going to read a list of reasons people have mentioned to switch to a heat-pump water heater.
After you hear each item, please tell me if it is a major reason, minor reason, or not a reason that you
are or were interested in a heat-pump water heater.
MAJOR MINOR NOT A MAJOR/
REASON REASON REASON (DK/NA) MINOR
[ ]a. I want to do my part to reduce carbon emissions ----------- 57% ----- 31% ----- 11% ------ 0% 89%
[ ]b. An electric water heater is safer than gas -------------------- 32% ----- 39% ----- 25% ------ 5% 71%
[ ]c. I can use the electricity produced by my rooftop
solar system to power the heat-pump water heater --------- 30% ------ 9% ----- 56% ------ 5% 39%
(ASK Q38 IF CODE 1 - YES - IN Q34)
38. When are you thinking about making the switch? (READ LIST)
Within a year --------------------------------- 7%
Within the next 3 years ------------------- 34%
Later ----------------------------------------- 48%
(DON’T READ) DK/NA ---------------- 10%
(ASK Q39 IF CODE 1 – WITHIN A YEAR - IN Q38)
39. Would you like to be contacted by the City of Palo Alto Utilities to learn more about making a switch
to a heat-pump water heater in the future?
Yes ------------------------------------------ 100%
No ---------------------------------------------- 0%
FM3 RESEARCH 320-792-WT PAGE 14
(RESUME ASKING ALL RESPONDENTS)
40. Are there any other comments regarding the topics we’ve covered that you’d like to share?
(OPTIONAL, OPEN-ENDED. RECORD VERBATIM RESPONSES)
I already have an electric vehicle ---------------------------------------------------------------- 0%
I already have a tankless water heater ---------------------------------------------------------- 0%
I already have solar panels ----------------------------------------------------------------------- 1%
Concerned about maintenance/installation ----------------------------------------------------- 1%
Products are too expensive/need a discount/incentive --------------------------------------- 3%
Interested in reducing my carbon footprint ---------------------------------------------------- 1%
Taking steps to improve energy efficiency ---------------------------------------------------- 1%
Utility Bills Are Too Expensive (Energy, Water) -------------------------------------------- 2%
No interest in products/services discussed in survey ---------------------------------------- 1%
No influence over these decisions (renter, condo, moving out soon, etc.) --------------- 5%
Would like more information from CPAU ---------------------------------------------------- 1%
Issue with/suggestion about survey design----------------------------------------------------- 3%
Interested in water heater ------------------------------------------------------------------------- 1%
Happy to do the survey/appreciate the city asking about these ---------------------------- 0%
Think there is an issue with the water heater-------------------------------------------------- 1%
Think there is an issue with the electric vehicle ---------------------------------------------- 1%
Other ------------------------------------------------------------------------------------------------- 5%
Nothing/No ---------------------------------------------------------------------------------------- 47%
Don't know/Unsure -------------------------------------------------------------------------------- 0%
N/A/Refused/No opinion ----------------------------------------------------------------------- 28%
THESE ARE MY FINAL QUESTIONS. THEY ARE JUST FOR STATISTICAL PURPOSES.
41. (T – HES) How many people live in your household, including yourself?
One ------------------------------------------- 19%
Two ------------------------------------------ 33%
Three to four ------------------------------- 36%
Five or more -------------------------------- 11%
(DK/NA) -------------------------------------- 1%
FM3 RESEARCH 320-792-WT PAGE 15
42. What was the last level of school you completed?
High school graduate or less ------------------- 1%
Some college/vocational school ---------------- 6%
College graduate (4 years) -------------------- 28%
Post graduate work/Professional school ---- 62%
(DON'T READ) Refused ---------------------- 2%
43. Are you currently a university or college student? (IF YES, ASK: Are you a graduate or undergraduate
student?)
Yes, undergraduate -------------------------- 1%
Yes, graduate --------------------------------- 1%
No, not a student -------------------------- 97%
(DK/NA) -------------------------------------- 1%
44. With which racial or ethnic group do you identify yourself: Latino or Hispanic, African-American or
Black, White or Caucasian, Asian or Pacific Islander, or some other ethnic or racial background? (IF
ASIAN OR PACIFIC ISLANDER, ASK: “Are you Vietnamese, Chinese, South Asian or East Indian,
or of some other Asian background?)
Latino/Hispanic ------------------------------ 2%
African-American/Black-------------------- 2%
White/Caucasian --------------------------- 62%
Vietnamese ------------------------------------ 0%
Chinese ---------------------------------------- 6%
South Asian/East Indian -------------------- 5%
Other Non-Asian/Pacific Islander -------- 2%
Other Asian/Pacific Islander --------------- 3%
(DON'T READ) Mixed race -------------- 3%
(DON'T READ) DK/NA/Refused ----- 14%
45. I don’t need to know the exact amount, but I’m going to read you some categories for household income.
Would you please stop me when I have read the category indicating the total combined income for all
the people in your household before taxes in 2017?
Under $60,001 ------------------------------- 6%
$60,001 - $100,000 ----------------------- 11%
$100,001 - $150,000 ---------------------- 14%
$150,001 – $250,000 --------------------- 19%
More than $250,000----------------------- 27%
(DON'T KNOW/REFUSED) ---------- 23%
FM3 RESEARCH 320-792-WT PAGE 16
THANK AND TERMINATE
GENDER (BY OBSERVATION): Male ------------------------------------------ 56%
Female --------------------------------------- 38%
Other/Refused -------------------------------- 6%
LOI (BY OBSERVATION): English---------------------------------------- 99%
Spanish ----------------------------------------- 0%
Chinese ----------------------------------------- 0%
LAND USE TYPE
Condominium -------------------------------- 7%
Apartment ---------------------------------- 22%
Townhome ------------------------------------ 1%
Single-family home ------------------------- 0%
Other/Misc. -------------------------------- 70%
GAS USAGE
More than 591 ----------------------------- 25%
393 to 591 ---------------------------------- 25%
228 to 392 ---------------------------------- 25%
Less than 228 ------------------------------ 25%
ELECTRIC USAGE
7,131.5 or more --------------------------- 25%
7,131.4 to 4,518 --------------------------- 25%
4,517 to 2,696.5 --------------------------- 25%
Less than 2,696.5 ------------------------- 25%
YEAR BUILT
1983-2018 ---------------------------------- 25%
1961-1982 ---------------------------------- 25%
1952-1960 ---------------------------------- 25%
Before 1952 -------------------------------- 25%
PROGRAM USERS
Solar (NEM Rate) --------------------------- 4%
RAP (Low income) ------------------------- 0%
Energy efficiency -------------------------- 29%
BLANK ------------------------------------- 70%
SQFT OF LAND
4,632 or more ------------------------------ 25%
2,196 to 4,632 ----------------------------- 25%
1,527 to 2,195 ----------------------------- 25%
Less than 1,527 ---------------------------- 25%
AGE (VOTER FILE n=211)
18-29 ----------------------------------------- 17%
30-39 ----------------------------------------- 25%
40-49 ----------------------------------------- 14%
50-54 ----------------------------------------- 11%
55-59 ------------------------------------------- 8%
60-64 ------------------------------------------- 5%
65-74 ----------------------------------------- 11%
75+ -------------------------------------------- 9%
PARTY REGISTRATION (VOTER FILE
n=211)
Democrat ------------------------------------ 59%
Republican ------------------------------------ 9%
No Party Preference ---------------------- 30%
Other ------------------------------------------- 2%
9/24/2018
1
1
Residential Survey Results:
Adoption of Distributed Energy Resources Technologies
Presentation to the Utilities Advisory Commission
October 3, 2018
2
Agenda
•Objectives of the 2018 Residential DER survey
•Research approach
•Highlights of survey results
•Key Takeaways
•Next steps
ATTACHMENT B
9/24/2018
2
33
1. Assess residential customers’ attitude toward home energy management
2. Evaluate residential customers’ interest in the following DER technologies in the
next three years:
(i) EV
(ii) Rooftop PV and battery storage/ Community solar
(iii) Heat pump water heaters
3. Understand customer barriers in adopting these DER technologies
Objectives of the 2018 Residential DER Survey
44
Research Approach
Survey results (target 600 households) were weighted to reflect the distribution
in CPAU customer demographics: energy usage, the year that the residence was
built, and square footage of the residence.
Online & phone surveys conducted between June 27 and July 10
410 online and 303 phone
9/24/2018
3
55
Survey Results: Respondent Profile
Overall, respondent characteristics resemble that of CPAU
customers, which may differ from Census data.
Demographic Census Data Survey Respondents
Age
18 to 59 years old 71% of adults 75% of customers
60 or older 29% of adults 25% of customers
Owner/Renter
Owner‐occupied 52% of units 60% of customers
Renter‐occupied 48% of units 40% of customers
Single vs. Multi‐family
Single‐family 57% of units 67% of customers
Multi‐family/Other 43% of units 33% of customers
Household Income
<$150,000 53% of households
(2016 dollars)
27% of customers
(2017 dollars)
>=$150,000 47% of households
(2016 dollars)
47% of customers
(2017 dollars)
Refused N/A 23%
6
Attitudes about
Energy Management
9/24/2018
4
77
Survey Results: Home Energy Management
CPAU customers have adopted a number of home energy systems.
Which of the following do you currently have in your home? (multiple responses allowed)
19%
13%
13%
27%
17%
43%
1%
Smart thermostat e.g. Nest
Smart lighting e.g. Wemo
Smart power strip or plug
Central air conditioner
Room air conditioner
None of the above
Don’t know/NA
57% have at least one
of these technologies.
31% have at least one
“smart” gadget.
Q5. (If asked what defines “smart”, explain that “smart” gadgets can be turned on or off remotely, using a smart phone)
88
Survey Results: Home Energy Management
Saving money is tied with comfort and convenience as a top priority.
There are many goals people have in mind when they make decisions about appliances
and utility use. I am going to read you a short list of goals, and would like you to tell me
which you would say is your first priority, and which is a second‐place priority.
Q6.
38%
37%
21%
36%
27%
31%
6%
Saving money on my bill
My comfort and convenience
Reducing my carbon footprint
Don’t know/No choice
First Second
9/24/2018
5
99
Survey Results: Home Energy Management
7 in 10 say they already try to reduce their energy use throughout
the day.
The City of Palo Alto Utilities could ask you to adjust the time of day when you use your
major appliances, such as your washing machine, or charging an electric car. I’m going to
read you a few statements about such a request, and would like you to tell me whether
you agree or disagree with that statement, or feel neutral about it.
Q7.
70%
66%
65%
59%
28%
25%
10%
12%
12%
17%
37%
47%
I already try to reduce my energy use at all times of day
I would shift my energy use to reduce my carbon
footprint
If it saved me money on my utility bill, I would shift the
times of day I use major appliances
I would try using automation like a smart thermostat so I
don't have to think about it
I would not shift my energy use if it
reduced my comfort and convenience
With my busy schedule, I am not sure I can make these
kinds of adjustments
Agree Disagree
Difference
+60%
+55%
+54%
+43%
‐9%
‐24%
10
Electric Vehicles
9/24/2018
6
1111
Survey Results: Electric Vehicles
About 1 in 7 customers say they already own or lease an EV.
Do you currently own or lease an electric vehicle?
Q8.
Yes
15%
No
84%
Demographic subgroups
Own (19%) vs Rent (9%)
Single family (18%) vs Apartment
(5%)
1 person HH (3%) vs 2 person HH
(14%) vs 3+ person HH (20%)
PV household (23%) vs
non‐PV household (14%)
1212
Survey Results: Electric Vehicles
EV owners are largely motivated by their concern for the environment.
I am going to read a list of reasons people have mentioned to own or lease an electric
vehicle. Please tell me if it is a major reason, minor reason, or not a reason that you have
an electric vehicle.
(Asked of EV Owners Only, N=104)
Q8.
79%
52%
41%
41%
38%
15%
33%
32%
32%
37%
6%
15%
27%
27%
25%
It is better for the environment
I like the convenience of doing less
maintenance and not having to
refill a gas tank
It is a better driving experience
It gives me access to the carpool lane
I like trying out new technologies
Major Reason Minor Reason Major/
Minor
94%
85%
73%
73%
75%
Q9.
9/24/2018
7
1313
Survey Results: Electric Vehicles
Nearly three‐quarters charge their EVs at home.
Where do you usually charge your electric vehicle?
(Asked of EV Owners Only, N=104)
Q10.
72%
16%
3%
6%
2%
At home
At work
At public charging
stations
Other
Don’t know/NA
Demographic subgroups
Single Family Detached:
charge at home (75%)
charge elsewhere (25%)
Apartments:
charge at home (54%)
charge elsewhere (46%)
Condos/Townhomes:
charge at home (55%)
charge elsewhere (45%)
1414
Survey Results: Electric Vehicles
Those who charge at home largely use regular, not smart, chargers.
What type of electric vehicle charger do you have at home?
(Asked of EV Owners Who Charge at Home Only, N=76)
43%
39%
16%
2%
A Level 1 charger that uses a
standard 110-Volt wall outlet
A Level 2 regular charger using a 220
to 240-Volt outlet
A Level 2 smart charger using a 220
to 240-Volt outlet
Don’t know/NA
Q12. (If asked what defines “smart”, can explain that “smart” gadgets can be turned on or off remotely using a smart phone. Similarly, can define that electric car
need to be plugged overnight at level 1 charging. Level 2 can fully charge an electric car in about 4 hours.)
9/24/2018
8
1515
Survey Results: Electric Vehicles
7 in 10 of those with an EV say they are likely to get another.
How likely is it that you will purchase or lease a second EV in the next three years?
(Asked of EV Owners, N=104)
Q13.
49%
21%
11%
14%
4%
Very likely
Somewhat likely
Not too likely
Not at all likely
Don't know/NA
Very/
Somewhat
Likely
70%
Total
Not Likely
25%
1616
Survey Results: Electric Vehicles
Just over one‐third of those currently without an EV are considering
one.
How likely is it that you will purchase or lease an EV in the next three years?
(Asked of Those Who Do Not Own an EV, N=609)
Q14.
13%
24%
29%
32%
2%
Very likely
Somewhat likely
Not too likely
Not at all likely
Don't know/NA
Very/
Somewhat
Likely
37%
Total
Not Likely
61%
9/24/2018
9
1717
Survey Results: Electric Vehicles
The most common reason to not own or lease an EV is not needing a
new car at all.
I am going to read a list of reasons people have mentioned to not own or lease an electric
vehicle. Please tell me if it is a major reason, minor reason, or not a reason that you are
considering purchasing or leasing an electric vehicle.
(Asked of Those Who Do Not Own an EV and Unlikely to Purchase Soon, N=371)
Q20.
59%
39%
39%
32%
12%
11%
12%
15%
30%
28%
26%
27%
25%
18%
26%
32%
33%
42%
61%
64%
70%
I won't need a new car in the next three years
I am worried about the limited drive distance between
charging
An electric vehicle is too expensive
I don't have access to a charging station at home
I prefer biking, public transit, walking and ride-hailing
apps like Uber and Lyft
Charging an electric vehicle at home will increase my
electric bill
I need a larger vehicle
Major Reason Minor Reason Not a Reason/DK/NA
Major/
Minor
74%
69%
67%
58%
39%
36%
31%
18
Differences Between Single-Family Homeowners and Others
Reason All
Customers SFH Owner Customers Other Customers
I won’t need a new car in the next
three years.74% 75% 73%
I am worried about the limited
drive distance between charging 68% 76% 62%
An EV is too expensive 67% 67% 66%
I don’t have access to a charging
station at home 58% 50% 65%
I prefer biking, public transit,
walking and ride‐hailing apps like
Uber and Lyft
39% 39% 39%
Charging an EV at home will
increase my electric bill 36% 40% 33%
I need a larger vehicle 30% 33% 28%
% Major/Minor Reason
9/24/2018
10
1919
Survey Results: Electric Vehicles
A rebate is cited as the most popular program to persuade a non‐EV
owner to purchase or lease an EV.
Which of the following would make you more likely to purchase or lease an electric
vehicle?
(Asked of Those Who Do Not Own an EV and Unlikely to Purchase Soon, N=371, multiple
responses allowed)
Q21.
44%
32%
32%
30%
6%
32%
4%
A rebate
More public or at-work charging stations
Special utility rates for
electric vehicle charging
Assistance installing charging equipment at
home
Other
None of the above
Don’t know/NA
20
Rooftop Solar,
Battery Storage,
Community Solar
9/24/2018
11
2121
Survey Results: Rooftop Solar
7% of respondents reported having rooftop solar at home, with most
citing renewable energy source and saving money on utility bill as the
key reasons to go solar.
I am going to read a list of reasons people have mentioned to install rooftop solar. Please
tell me if it is a major reason, minor reason, or not a reason that you have rooftop solar.
(Asked of Those With Rooftop Solar, N=49)
Q23.
85%
76%
48%
40%
8%
12%
28%
25%
5%
11%
23%
35%
Solar is a renewable energy source
Rooftop solar saves money on my utility bills
Solar shows my commitment to my
community's sustainability goals
Solar tied to energy storage can provide an
emergency power supply
Major Reason Minor Reason Not a Reason/DK/NA Major/
Minor
93%
89%
76%
65%
2222
Survey Results: Rooftop Solar
Most who don’t have rooftop solar say they don’t have access to roof
for panel installation.
I am going to read a list of reasons people have mentioned to not install rooftop solar.
Please tell me if it is a major reason, minor reason, or not a reason that you have not yet
installed rooftop solar.
(Asked of Those Without Rooftop Solar, N=664)
Q26.
Major/
Minor
43%
36%
32%
31%
30%
16%
40%
25%
11%
21%
8%
5%
11%
21%
9%
22%
11%
53%
45%
59%
54%
59%
69%
19%
9%
15%
11%
16%
Solar economics don't pan out
for my house
I don't have time to look into solar design and costs
My roof is not suitable for installing a solar system.
For example, a tree is in the way or my roof is too old.
I can reduce my carbon footprint in
other ways
My electricity supply is already
carbon neutral
Major Reason Minor Reason Not a Reason DK/NA
I don't have access to my roof to install solar. For
example, I live in a condo, apartment or other rental.
Q26.
9/24/2018
12
2323
Survey Results: Rooftop Solar
Among those currently without rooftop solar, just under 1 in 10 are
considering it.
Are you planning to install a rooftop solar system at your home in the next three years?
(Asked of Those Without Rooftop Solar, N=664)
Q26.
Q24.
Yes
8%
No
80%
DK/NA
12%
2424
Survey Results: Energy Storage
Relatively few are planning to install a home energy storage in the
next few years.
Are you planning to invest in a home energy storage system such as Tesla Powerwall in
the next three years, or do you already have one?
Q29.
Demographic subgroups
EV owners (22%) vs non EV
owners (4%)
PV household (17%) vs
non PV household (6%)
Yes
6%
No/DK/
NA
94%
9/24/2018
13
2525
Survey Results: Community Solar
Customers heard or read a brief description of community solar.
Q29.
The City of Palo Alto Utilities is considering developing a community solar
program to enable residents to experience local solar, even if they are
unable to install solar on their own premises. Community solar projects
would be installed at a local site or sites, preferably on municipal land that
is open to the public. The solar installations could provide enough
electricity to power between 100 and 1,000 homes in Palo Alto.
Community solar participants would have the opportunity to meet up to
100% of their electricity needs with locally generated solar electricity.
Participation in the program would be voluntary.
2626
Survey Results: Community Solar
Just over half say they would be interested in community solar
programs.
Does that sound like something you would be extremely interested in, very interested in,
somewhat interested in, or not too interested in?
Q27.
28%
25%
30%
13%
4%
Extremely interested
Very interested
Somewhat interested
Not too interested
Don't know/NA
Extremely/
Very
Interested
53%
Somewhat/
Not Too
Interested
43%
Q27.
Demographic
subgroups
Own (54%) vs Rent
(51%)
SF (55%) vs Apt (45%) vs
Condo/TH (53%)
PV household (41%) vs
non‐PV household
(53%)
9/24/2018
14
2727
Survey Results: Community Solar
Nearly 9 in 10 customers are willing to pay an additional $5 per
month for this program.
Suppose participating in this community solar program resulted in a total additional cost
of ____ per month on your electricity bill.
Would you be willing or unwilling to pay that amount?
Q28.Q27.
87%
81%
54%
8%
13%
32%
Up to $5
Up to $10
Up to $20
Willing Unwilling Difference
+79%
+68%
+22%
2828
Survey Results: Carbon-Neutral Electricity Supply
3 in 5 customers believe that less than 21% of electricity supplied by
CPAU is carbon neutral.
From what you know, what percentage of the electricity supplied by City of Palo Alto
Utilities is carbon neutral, that is, produces zero net carbon emissions?
Q30.Q27.
62%
21%
4%
12%
Less than 21%
21 to 50%
51 to 80%
81 to 100%
9/24/2018
15
2929
Survey Results: Carbon-Neutral Electricity Supply
Customers who answered correctly on the percentage of CPAU
carbon‐neutral electricity are slightly more interested in rooftop PV
and community solar compared to those who answered incorrectly.
Q30.Q27.
Customers who
answered correctly on %
carbon neutral electric
supply
Customers who
answered incorrectly on
% carbon neutral electric
supply
Plan to install PV system
within next 3 years 12% 8%
Extremely/Very Interested in
Community Solar 54% 53%
Cites “Carbon-neutral electric
supply” as reason to not install
rooftop PV
32% 14%
30
Heat Pump Water Heaters
9/24/2018
16
3131
Survey Results: Heat Pump Water Heaters
Three‐quarters of residents have a gas water heater, with majority
located in the garage and utility closet inside the house.
Q31 & Q32.Q27.
What type of water heater do
you have at home?
Where is your water
heater located?
38%
23%
16%
11%
3%
8%
1%
Gas tank
Gas tankless
Electric tank
Electric tankless
Other
Don’t know/NA
Garage
Utility closet (inside)
Utility closet (outside)
Basement
Utility closet (basement)
Other
Don’t know/NA
Total
Gas
75%
69%
6%
6%
2%
1%
16%
Total
Electric
8%
3232
Survey Results: Heat Pump Water Heaters
A majority of respondents are unfamiliar with heat pump water
heaters.
How familiar are you with heat pump water heaters, which are ultra‐efficient electric
water heaters?
Q33.Q27.
5%
21%
20%
51%
3%
Very familiar
Somewhat familiar
Not too familiar
Not at all familiar
Don't know/NA
Very/
Somewhat
Familiar
26%
Total
Not
Familiar
71%
9/24/2018
17
3333
Survey Results: Heat Pump Water Heaters
One‐third of those familiar are interested in switching to a HPWH.
Would you be interested in switching from a gas water heater to a heat pump water
heater to reduce your personal carbon footprint?
(Asked of Those Very or Somewhat Familiar with Heat Pump Water Heaters, N=185)
Q34.
Demographic subgroups
Gas tank (41%) vs Gas tankless
(13%) vs Elec tank (32%) vs Elec
tankless (55%)
PV household (64%) vs non‐PV
household (37%)
EV owners (61%) vs non‐EV
owners (34%)
1 pp HH (26%) vs 2 person HH
(40%) vs 3+ person HH (43%)
Yes
33%
I already have
one
6%
No
44%
DK/NA
17%
Yes + Already Have = 39%
3434
Survey Results: Heat Pump Water Heaters
Environmental concern is the major reason most would be
interested in these heaters.
I am going to read a list of reasons people have mentioned to switch to a heat‐pump
water heater. Please tell me if it is a major reason, minor reason, or not a reason that you
are or were interested in a heat‐pump water heater.
(Asked of Those With or Interested in Heat Pump Water Heaters, N=72)
Q37.
57%
30%
32%
31%
9%
39%
10%
61%
30%
I want to do my part to reduce carbon
emissions
I can use the electricity produced by
my rooftop solar system to power the
heat-pump water heater
An electric water heater is
safer than gas
Major Reason Minor Reason Major/
Minor
89%
39%
71%
9/24/2018
18
3535
Survey Results: Heat Pump Water Heaters
The biggest barrier to switching to HPWH is price.
I am going to read a list of reasons people have mentioned to not switch to a heat‐pump
water heater. Please tell me if it is a major reason, minor reason, or not a reason that you
are not interested in a heat‐pump water heater.
(Asked of Those Uninterested in Heat Pump Water Heaters, N=111)
Q35.
36%
11%
21%
24%
8%
22%
33%
16%
6%
19%
33%
52%
57%
67%
57%
10%
5%
5%
They are too expensive
I can reduce my carbon footprint
in other ways
I recently replaced my water heater
I do not make decisions about the type
of water heater
I have read bad reviews of heat-pump
water heaters
Major Reason Minor Reason Major/
Minor
58%
44%
37%
29%
27%
36
Key Takeaways
EV owners Non-EV
owners
PV owners Non-PV
owners
Currently has smart thermostat 36%16%33%18%
Currently has rooftop PV 11%6%--
Plans to install rooftop PV within 3 years 24%6%-8%
Currently owns EV --23%14%
Currently owns smart EV charger 16%0%19%16%
Plans to invest in home energy storage
within 3 years
22%4%17%6%
Already has/Interested in switching to
Heat Pump Water Heater
61%34%64%37%
EV drivers and PV owners are the likeliest early adopters of DER technologies.
9/24/2018
19
37
Key Takeaways
Key Adoption Barriers Opportunities
EV • Limited Drive Distance
• Limited access to charging at home
• New generation of EVs with longer
drive range
• Available apps/websites with location
of public EV charging stations
PV • Don’t have access to my roof to install
solar
• My roof is not suitable for installing a
solar system
• Don’t have time to look into solar
design and costs
• SunShares program
• Community Solar program
HPWH • Too expensive
• Recently replaced water heaters
• Bad reviews
• HPWH bulk buy program
• Work with distributors and
contractors to promote HPWH
• HPWH workshop
38
Key Takeaways: Relative Interest in DER Technologies
8%7%2%
19%
13% 13%
2%
8%8%
6%4%
8%11%
16%
4%
0%
10%
20%
30%
EV*
(*% of Vehicles)
Solar PV Battery Heat-Pump
Water Heater
Smart
Thermostat
Smart
Lighting
Smart
Plug
Smart
Charger
Data from Respondents
Somewhat Interested
Very Interested
Already Have
250% rate
of CA avg
Actual PV adoption: 3.6%
(≈50% CA avg)
9/24/2018
20
39
Next Steps
•Revisit DER Forecasts for projected adoption rates of DERs
•Design residential customer programs to facilitate DER adoption
‐ include targeted messaging to customer segments
Poll commercial customers on their DER priorities
40
xx
Comments/Questions
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES & PUBLIC WORKS DEPARTMENTS
DATE: OCTOBER 3, 2018
SUBJECT: Discussion of Recycled Water Expansion and Other Water Reuse Opportunities
RECOMMENDATION
This is an informational report to facilitate UAC discussion on recycled water expansion and
other water reuse opportunities. There is no staff recommendation at this time because the
Northwest County Recycled Water Strategic Plan (Strategic Plan) is not complete.
EXECUTIVE SUMMARY
The Regional Water Quality Control Plant (RWQCP) is a local source of drought-proof,
sustainable water, of which only a small fraction is currently in use. Investments in pipeline
expansions and/or additional treatment facilities would increase the RWQCP’s ability to be a
local water source to meet future non-potable and potable demands and decrease the City’s
dependence on imported Tuolumne River water. To the extent wastewater is recycled rather
than being discharged to the Bay, it insures the RWQCP against potential additional treatment
costs associated with stricter discharge regulations staff expects to be adopted in the future,
costs that would be passed on to Palo Alto sewer customers. At its August 2018 meeting the
UAC discussed a business plan for non-potable reuse for irrigation in Palo Alto, and now staff
seeks to continue the discussion of water reuse opportunities by providing an overview of other
alternatives as well as a briefing on preliminary results from the Strategic Plan. Because the
Strategic Plan is not complete, there is no staff recommendation at this time. Staff’s intention
at the end of the Strategic Plan is to recommend a number of near-term actions and describe
potential future alternative uses and the appropriate time when decisions should be made
about which alternative(s) to pursue.
BACKGROUND
Council Policy
In November 2016 Council adopted the Sustainability and Climate Action Plan (S/CAP)
Framework (Staff Report #7304) including four water-specific goals, all of which have
implications for water reuse:
1. Utilize the right water supply for the right use;
2. Ensure sufficient water quantity and quality;
3. Protect the Bay, other surface waters, and groundwater; and
4. Lead in sustainable water management.
3
Two relevant strategies identified in the S/CAP are:
1. Verify ability to meet City’s long term water needs; and
2. Investigate all potential uses of recycled water.
Palo Alto receives 100% of its potable water (about 11,000 acre-feet (AF)1 per year) from the
City and County of San Francisco’s Regional Water System (RWS), operated by the San Francisco
Public Utilities Commission (SFPUC). This supply is predominantly from the Sierra Nevada,
delivered through the Hetch Hetchy aqueducts. About 85% of the supply on the RWS is from
the Tuolumne River. On August 20, 2018, Council voted unanimously that the City of Palo Alto
“express its support for the State Water Resources Control Board’s (SWRCB) Bay Delta Plan to
have 30-50% of unimpaired flow in the San Joaquin Valley enter the Delta from February to
June and associated Southern Delta salinity objectives.” Adoption of the Bay Delta Plan would
reduce the amount of Tuolumne River water available to RWS customers, including Palo Alto,
during dry years. The decision to support the Bay Delta Plan reaffirmed Council’s commitment
to reduce the City’s dependence on imported water. Water reuse is one of a limited number of
water supply alternatives to imported water.
Description of the RWQCP Water Resource
The RWQCP treats and discharges wastewater collected from the communities of Palo Alto,
Mountain View, Stanford University, Los Altos, Los Altos Hills, and the East Palo Alto Sanitary
District. In 2017, the RWQCP treated 23,056 AF, or 7,513 million gallons (MG) of wastewater, of
which 97% was discharged to the Lower South San Francisco Bay and 3% was treated further to
produce high-quality recycled water for non-potable reuse (NPR) in the City and Mountain
View. The RWQCP currently has the treatment capacity to produce 5,040 acre-feet per year
(AFY), or 4.5 million gallons per day (MGD) of NPR water, or 22% of the total wastewater
treated in 2017. As a regional plant, only a portion of the total wastewater treated is owned
and available for reuse by the City; this amount is equal to how much wastewater the City sent
to the RWQCP for treatment. In 2017, this was 8,565 AF (2,791 MG) or 37% of the total flow.
More of this wastewater could be used as a local source of sustainable water for the City.
Water Reuse Planning
In December 2016, Council approved a contract with RMC Water and Environment (now
Woodard and Curran) for the development of the Strategic Plan in collaboration with the Santa
Clara Valley Water District (SCVWD) (Staff Report #7024). City staff from the Public Works and
Utilities Departments have worked closely with the consulting team and the SCVWD to evaluate
the most effective uses of recycled water inside Palo Alto as well as within the Regional Water
Quality Control Plant (RWQCP) service area. All of the work under the Strategic Plan evaluates
how best to implement the water-related sustainability goals adopted by the City in the
December 2017 Sustainability Implementation Plan (Staff Report #8487).
1 Large volumes of water are often measured in acre-feet (one acre of water one foot deep). One acre-foot is equal to
435.6 hundred cubic feet (CCF) of water or 325,828 gallons.
In parallel, the SCVWD has been developing a Countywide Water Reuse Master Plan. One
alternative under consideration is a water transfer from the RWQCP to the SCVWD for use in
other parts of the county. City staff and the SCVWD are collaborating on potential contract
structures for such a transfer recognizing that no decision has been made regarding the use of
that water within Palo Alto or by the other RWCQP partners.
Treatment Options
Investments in pipeline expansions and/or additional treatment facilities would increase
demand and types of approved uses of the RWQCP recycled water, increasing the RWQCP’s
ability to be a local source to meet future non-potable and potable water demands. Since the
construction of the current RWQCP recycled water treatment and transmission system, severe
droughts and advances in treatment technology have driven regulatory support and municipal
demand for the use of recycled water for potable reuse.2 As expected, the treatment
requirements for potable reuse are higher than that for non-potable reuse (Figure 1). Similarly,
the regulatory framework for indirect potable reuse is further along than that for direct potable
reuse.
Figure 1: Treatment Requirements for Production of Different Types of Water Reuse
Recycled Water Distribution System Expansion and the Strategic Plan
In August 2018, the UAC was briefed on the Recycled Water Phase 3 Expansion Business Plan,
as a possible expansion opportunity for non-potable reuse being evaluated under the Strategic
Plan. Phase 3 is a non-potable water pipeline extending the current recycled water distribution
system to the Stanford Research Park. No recommendation regarding Phase 3 was made
because the project is only one of many water reuse alternatives being evaluated in the
Strategic Plan.
2 Recycled water can be treated to a level suitable for non-potable uses like irrigation or toilet flushing, which
requires a separate distribution system (purple pipe). This is the most common use. Less commonly, it can be treated
by reverse osmosis followed by ultraviolet disinfection and advanced oxidation to a level suitable for potable use.
Best practices and regulations are less developed for potable reuse.
DISCUSSION
Key questions for the UAC to consider and discuss:
1.Will the Palo Alto community accept groundwater as a future potable supply if it would
enable indirect potable reuse?
2.Is the Palo Alto community likely to accept purified water in a direct potable reuse project
at some point in the future? If so, under what circumstances?
3.How much, if any, RWQCP treated wastewater should be preserved for Palo Alto use in
the next 60 years?
4.Is Palo Alto open to a 60 year RWCQP treated wastewater transfer to other parts of the
county?
5.Should Palo Alto pursue further non-potable project alternatives in the short-term with
the knowledge that potable alternatives may be additionally implemented in the future,
or should Palo Alto forego further non-potable projects now and wait for potable
alternatives to become more feasible and more necessary to meet demands?
6.Should cost (as opposed to the non-cost criteria described) be the primary water reuse
project evaluation criterion?
Preliminary evaluations under the Northwest County Recycled Water Strategic Plan as well as
parallel work for the SCVWD Countywide Water Reuse Master Plan indicate that multiple water
reuse opportunities are feasible for the City to meet both near and long term water demands
(Table 1 and Figure 2). Near term projects that can be implemented within 5 years include a
regional transfer and expanding the existing non-potable reuse program.
The City has been discussing a long term agreement with the SCVWD to transfer a portion of its
recycled water allocation for eventual use in south Santa Clara County. A regional transfer
would require, at a minimum, pipeline infrastructure to transfer the treated wastewater from
the RWQCP to somewhere outside of the City. It may also include building a purification facility
at the RWQCP that would further treat the recycled water prior to the transfer pipeline.
However, a regional transfer would exclude City use of recycled water beyond non-potable
reuse for the term of the agreement. Non-potable reuse program expansion would require
additional pipeline infrastructure within the City as well as additional oversight of customer
connections.
Long term opportunities that could be implemented within 10 – 40 years, include indirect and
direct potable reuse. Preliminary results indicate that indirect potable reuse is feasible within
the City, but requires a purification facility at the RWQCP, injection wells, and the routine use of
groundwater. Similarly, preliminary results also indicate that direct potable reuse is feasible
within the City, but requires a purification facility at the RWQCP. Preliminary results indicate
that the City could reduce future reliance on water supplied by the RWS by more than 50% by
investing in potable reuse. However, potable reuse (both indirect and direct) when compared
to non-potable reuse requires large investments into additional treatment and distribution
facilities and presents some public acceptance challenges.
As previously mentioned, one of the City’s water-specific goals as outlined under the S/CAP is to
utilize the right water supply for the right use. For recycled water, this would be applied by
using the right quality of recycled water for the right purpose. Recycled water can be used for
various demands based on its level of treatment. Non-potable reuse requires more treatment
than typical wastewater that is discharged to the Bay; similarly, potable reuse requires
significantly more treatment than non-potable reuse to ensure public safety when ingesting the
water. Additional recycled water treatment is expensive and it would not be recommended to
add these treatment processes if the water was to be used to meet irrigation, toilet flushing,
and/or industrial process demands alone.
It should be noted that the near and long term solutions are not all explicitly distinct from each
other; it may be possible to pursue a combination of near and long term solutions as shown in
Figure 2. Both indirect and direct potable reuse opportunities within the City would require the
full Palo Alto wastewater allocation and restrict a regional transfer of water.
Figure 2: Palo Alto Water Source Changes Under Different Water Reuse Opportunities Being Evaluated Under
the Northwest County Recycled Water Strategic Plan (sources: Palo Alto 2015 Urban Water Management Plan &
preliminary results from Northwest County Recycled Water Strategic Plan).
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Current Total
Water Use
Regional
Transfer &
Nonpotable
Reuse
Non-potable
Reuse
Indirect
Potable
Reuse
Direct
Potable
Reuse
Non-potable
& Indirect
Potable
Reuse
Non-potable
& Direct
Potable
Reuse
Wa
t
e
r
S
o
u
r
c
e
P
r
o
j
e
c
t
e
d
D
e
m
a
n
d
(
A
c
r
e
-Fe
e
t
)
SFPUC Recycled Water Groundwater SCVWD
Table 1: Summary of Palo Alto Water Reuse Opportunities for Further Discussion
TYPE OF WATER
REUSE
REGIONAL
TRANSFER
NON-POTABLE
REUSE
INDIRECT POTABLE
REUSE
DIRECT POTABLE
REUSE
BRIEF
DESCRIPTION
Transfer of RWQCP
effluent or recycled
water to the Santa
Clara Valley Water
District (SCVWD)
Enhanced recycled
water used for
irrigation and
commercial uses.
Purified recycled
water introduced into
an environmental
buffer, such as a
groundwater basin,
before being sent to
the drinking water
distribution system.
Purified recycled
water introduced
directly into the
drinking water
distribution system.
OPPORTUNITIES
• Near term
implementation
• Increases use of
RWQCP recycled
water regionally
without City-
funded
infrastructure
• No additional
enforcement &
administrative
oversight of Palo
Alto users
• Reduced county-
wide reliance on
imported water,
surface water,
and/or
groundwater
• Near term
implementation
• Clear regulatory
obligations
• Slightly reduce
City reliance on
RWS &
Tuolumne River
water
• Unlimited uses
• Utilizes the
RWQCP as a
larger source of
water
• Clear regulatory
obligations
• No additional
enforcement &
administrative
oversight of users
• More potential to
reduce City
reliance on RWS
& Tuolumne River
water
• Unlimited uses
• Utilizes the
RWQCP as a
larger source of
water
independent of
groundwater
use
• No additional
enforcement &
administrative
oversight of
users
• Significantly
reduce City
reliance on RWS
& Tuolumne
River water
OBSTACLES
• Significant
amount of water
would no longer
be available for
City use for
contract term
(20-30 years
minimum)
• Limited uses per
regulations
• Requires
significant
pipeline
infrastructure
• Requires
significant
enforcement &
administrative
oversight of
users
• Long term
implementation
• Requires
significant
additional
RWQCP
treatment
processes
• Requires the use
of groundwater
with different
aesthetic
properties than
current sources
• Long term
implementation
• Requires
significant
additional
RWQCP
treatment
processes
• Requires
significant
engineered
storage
• Regulations not
yet developed
• Public
acceptance
Evaluation Criteria
In addition to cost, a number of non-cost criteria are being considered when evaluating the
water reuse alternatives in the Strategic Plan. Non-cost criteria include:
1. Amount of water supplied – total recycled water demand;
2. Surety of demand – likelihood of potential customers accepting and continuing to use
the water source;
3. Adaptability – ability to repurpose facilities;
4. Level of agency coordination – effort required by the lead agency;
5. Level of customer retrofits and/or coordination – customer improvement or retrofits
required;
6. Regulatory complexity – permitting requirements;
7. Institutional complexity – number of local agencies involved in implementation and
operation;
8. Regional perspective – number of agencies benefiting from project;
9. Social and economic benefit – positive community impacts; and
10. Environmental benefit – positive impact on local streams, Bay habitat, or other.
City and SCVWD staff developed the relative weight of the non-cost criteria shown in the table
below. How to consider the non-cost criteria relative to cost is still under discussion.
NEXT STEPS
Staff will take results from this UAC discussion to a Council Study Session in the near future.
Feedback received from UAC and Council will be incorporated into the Northwest County
Recycled Water Strategic Plan. Staff will return to the UAC and Council with a recommendation
regarding water reuse alternatives identified in the Strategic Plan including a recommendation
regarding the Phase 3 Recycled Water Expansion Project. Staff will also make a
recommendation regarding a RWCQP water supply transfer agreement with the SCVWD. The
two recommendations are expected to be considered in tandem and will be made in 2019.
No.Criteria Weight
1 Amount of water supplied 17%
2 Surety of demand 16%
3 Adaptability 10%
4 Level of agency coordination 8%
5 Level of customer retrofits/coordination 6%
6 Regulatory complexity 9%
7 Institutional complexity 8%
8 Regional perspective 7%
9 Social and economic benefit 10%
10 Environmental benefit 9%
100%
POLICY IMPLICATIONS
While there is no recommendation at this time, expanding the use of recycled water would be
consistent with the Sustainability Climate Action Plan _ Framework (Staff Report #7304), the
Sustainability Implementation Plan (Staff Report #8487), and the Council's decision to support
the Bay Delta Plan.
ENVIRONMENTAL REVIEW
The UAC's review of the concepts in the forthcoming Northwest County Recycled Water
Strategic Plan does not require California Environmental Quality Act review, because the review
does not meet the definition of a project under Public Resources Code 21065.
ATTACHMENT
A. Recycled Water Reference Sheet
PREPARED BY:
REVIEWED BY:
DEPARTMENT HEAD:
Samantha Engelage, Senior Engineer
Karla Dailey, Senior Resource Planner
Karin North, Watershed Protection Manager
Phil Bobel, Assistant Director, Public Works
Jonathan Abendschein, Assistant Director, Resource Management
Brad Eggleston
Interim Director of Public Works
Ed Shikada
Utilities General Manager
RECYCLED WATER REFERENCE SHEET (last updated 9/7/2016)
WATER REUSE OPTIONS
NONPOTABLE REUSE is the beneficial reuse of recycled water for irrigation,
industrial uses, or other non‐drinking water purposes.
POTABLE REUSE is the use of recycled water for potable uses, such as
drinking. This recycled water is purified to meet or exceed federal and state
drinking water standards.
INDIRECT POTABLE REUSE (IPR) refers to the use of recycled water
that has been further treated and introduced into an environmental buffer such
as a surface water reservoir (through augmentation), or groundwater basin
(through recharge), before being used for potable purposes. IPR regulations are
specified in Title 22, Chapter 3, Division 4 of the California Code of Regulations
(CCR).
DIRECT POTABLE REUSE (DPR) refers to the use of purified recycled
water distributed directly into the raw water supply upstream of a drinking
water treatment plant. In California, DPR regulations have not been adopted or
specified in the CCR.
STATE REGULATIONS
TITLE 22 STANDARDS are requirements established by the State Water
Resources Control Board Division of Drinking Water for the production,
distribution, and use of drinking water and recycled water. Recycled water
standards are covered under Chapter 3, Division 4 of the California Code of
Regulations, which outlines the different levels of treatment required for
allowable uses of recycled water.
GENERAL TREATMENT PROCESSES
STANDARD UNITS
MGD – Million Gallons per Day
PPM – Parts Per Million
mg/L – Milligrams per Liter
ALLOWABLE USES
Irrigation of:
o Parks, playgrounds, schools
o Residential & commercial landscapes
o Cemeteries
o Golf courses
o Food crops, orchard, vineyard, pastures
o Ornamental nursery & sod farm
Impoundments & fish hatcheries
Flushing toilets & urinals
Decorative fountains
Commercial laundries
Street cleaning, dust control, soil compaction
Boiler feed and cooling towers
Flushing sanitary sewers
Other uses approved under Title 22 Standards
All uses listed under Recycled Water
Irrigation of salt‐sensitive species (e.g. Redwoods Trees)
Sensitive industrial uses
SALINITY
TOTAL DISSOLVED SOLIDS (TDS) is a measurement of salinity:
the amount of salts, ions, and dissolved minerals per volume of
water. The RWQCP aims to produce recycled water with a TDS of
600 mg/L and is moving towards developing advanced treatment in
collaboration with the Santa Clara Valley Water District and the City
of Mountain View to produce enhanced water with a TDS of
approximately 450 mg/L for use on salt‐sensitive species.
All uses listed under Enhanced Water
Indirect potable reuse
Direct potable Reuse
Purified Water
TREATMENT TECHNOLOGY
DUAL MEDIA FILTRATION (DMF) refers to the removal of particles in
the water using two different types of filter media, usually sand and finely
granulated anthracite (a type of coal). DMF can remove turbidity and
suspended solids as small as 10‐20 microns under high filtration rate
conditions.
GRANULAR ACTIVATED CARBON (GAC) is a form of carbon that is
processed to be porous, with large surface area for adsorption and used to
remove dissolved contaminants. GAC can remove halogenated compounds
containing chlorine and fluorine, organic contaminants, odor, and taste.
MICROFILTRATION (MF) is an advanced treatment process that
removes contaminants from water using semi‐permeable membranes. MF
membranes can remove contaminants as small as 0.08 microns such as
bacteria. Ultrafiltration (UF) membranes have smaller pore sizes and can
remove contaminants as small as 0.005 microns such as viruses and
proteins.
REVERSE OSMOSIS (RO) is an advanced treatment process that
removes dissolved salts and trace contaminants from water. High pressure
forces the water through a semi‐permeable membrane, while filtering most
contaminants. RO membranes have much smaller pore sizes than
microfiltration and ultrafiltration membranes and can remove contaminants
as small as 0.0001 microns.
RO PERMEATE is the treated water that passes through the RO
membrane.
RO CONCENTRATE is the by‐product from the RO process. It contains
a high concentration of salts and other contaminants from the source
water.
ADVANCED OXIDATION PROCESS (AOP) is a chemically reactive
process that breaks down trace organic contaminants as well as pathogens
in the water by oxidation. AOPs typically use hydrogen peroxide (H2O2) and
ultraviolet (UV) light.
SOIL AQUIFER TREATMENT (SAT) is the natural process that occurs
when water travels through the ground and is purified by the physical and
biological processes that naturally occur in the soil.
WATER TYPES AND QUALITY
EFFLUENT is the treated water leaving the wastewater treatment plant to be
discharged to the San Francisco Bay. At the RWQCP, only some of the effluent is
treated further to produce recycled water.
RECYCLED or RECLAIMED WATER is wastewater that has undergone
secondary or tertiary treatment to allow for beneficial reuse. Recycled water
produced at the RWQCP is treated to tertiary standards including disinfection.
SECONDARY TREATMENT is a process where dissolved and suspended
biological matter (including suspended solids) is removed so that the water may
be disinfected and discharged into a stream or river, or used for irrigation at
controlled locations.
TERTIARY TREATMENT is an additional treatment process beyond
secondary treatment, where water is further filtered and disinfected. It can also
include treatment processes to remove nitrogen and phosphorus in order to
allow discharge into a sensitive ecosystem.
ENHANCED RECYCLED WATER is recycled water blended with advanced
treated water to support additional uses and reduce total dissolved solids (TDS).
ADVANCED TREATED WATER is water that has undergone additional
treatment beyond tertiary treatment to reduce salts, nutrients, trace organics
and constituents of emerging concern (CECs). Common treatments include
microfiltration, reverse osmosis, and advanced oxidation.
PURIFIED WATER is recycled water that has undergone further treatment
processes and has been verified through monitoring to be safe for augmenting
drinking water supplies. Some of these processes include microfiltration, reverse
osmosis, and if needed advanced oxidation.
SURFACE WATER is water stored in a reservoir typically conveyed from
another surface water source via pipelines or aqueducts.
RAW WATER is surface or groundwater that has not gone through an
approved water treatment process.
GRAYWATER is water segregated from a domestic wastewater collection
system and reused on site for nonpotable uses, it can come from showers,
bathtubs, washing machines, and bathroom sinks, but not toilets or kitchen
sinks.
BLACKWATER is untreated wastewater from kitchen sinks, toilets, and
other polluting activities. Recycled Water Enhanced Recycled Water
*Pending DDW Regulations
Note: Palo Alto does not currently have a drinking water treatment plant.
Current Recycled
Water Program
Upgraded
Recycled Water
Program
Blend
Tank
Drinking Water
Distribution
Wastewater
Treatment
CURRENT
Enhanced
Recycled
Water
Recycled Water
Filtration
Tertiary Treatment
Chlorine Disinfection
Effluent
Advanced
Treated Water
Purified
Water
FUTURE Microfiltration (MF)
Advanced Oxidation
Process (AOP)
Reverse Osmosis (RO) Full
Advanced
Treatment
Source
Water
Drinking Water
Treatment Plant
Direct Potable Reuse*
Extraction
Wells
Groundwater
Recharge
Soil Aquifer
Treatment
Indirect Potable Reuse
GLOSSARY
ATTACHMENT A
Palo Alto Recycled Water
Delivery and Expansion
4
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: October 3, 2018
SUBJECT: Discussion of CPAU’s Role in Community Resilience Including Workshop
Summary and Draft Vision and Goals
______________________________________________________________________________
RECOMMENDATION
This report is provided for discussion by the Utilities Advisory Commission (UAC). Feedback is
requested on: 1) the preliminary resilience vision and goals for the Utilities Department
identified during the August 28, 2018 Special UAC Resilience Workshop; and 2) plans for a
second workshop focused on topics to inform solutions.
EXECUTIVE SUMMARY
The purpose of this report is to summarize key findings from the August 28 workshop, present a
draft proposal of a resilience vision and goals for the Utilities Department for the UAC’s review
and feedback, and discuss next steps. Draft minutes of the workshop are included as
Attachment A, and the draft Initial Framework as Attachment B.
A couple of common themes emerged from the group discussions: creating resilient community
hubs with infrastructure, supplies, and materials to support the ability of residents to stay in
place or return quickly to their community after an emergency; and assisting local businesses to
survive and recover. From the discussions the following key areas of focus for the Utilities
Department started to emerge:
• Develop a roadmap to Smart grid / Smart Utility
• Manage critical utility facilities
• Help support Community Emergency Response Training (C.E.R.T.) and neighborhood
emergency volunteers
• Develop and manage a technical utility volunteer group (possibly assist with service
shut downs)
• Communication about what to do after utility outages. E.g. “What to turn on first”
and “what not to turn on”
DISCUSSION
The UAC hosted a community workshop on August 28, 2018 to better understand how the
community’s resilience goals, community priorities, and needs relate to utility services and
improving resilience. Approximately 80 community members, city staff, and commissioners
attended the meeting. The context and purpose of the meeting was to better understand what
aspects of resilience are important to the community and to begin framing the role of the
utilities in achieving the community’s vision. To help establish a common understanding of
resilience and start the conversation, a panel of experts gave presentations covering regional
resilience efforts, the potential economic impacts of disasters, and an overview of alternative
energy approaches to address some resilience issues. This was followed by speakers from the
City specific to the risks in Palo Alto.
The video HayWired (USGS video depicting a 7.0 earthquake and the cascading impacts) was
shown followed by a large group discussion of “What does resilience mean to Palo Alto?” The
video and discussion helped to set up a small group break out conversation on the impacts and
vulnerabilities that the Utility should prioritize with the question in mind of “What are the
problems we need to address?” The small groups reported back on top priorities and focus
areas for the Utility. Mindy Craig, BluePoint Planning (consultant), facilitated and graphically
recorded the meeting.
Resilience and Palo Alto: “What Does Resilience Mean to Palo Alto?”
Following the HayWired video, there was a group discussion on what resilience means for Palo
Alto. The following is a summary of the comments, concerns and questions raised:
• Resilience means that my family is self-sufficient
• Is my home “safe” after a disaster?
• Disaster plans need to be vetted by Devils’ Advocate (someone to ask the hard
questions)
• Critical facilities need to be available
• Want to be able to shelter at home - stay in the neighborhood
• Community needs to be self sufficient
• Community survivability
o The community needs to be resilient to work together to build and recover and
stay in Palo Alto. Surviving together
o Community organization and leadership. Have a known plan - Not ad hoc
• Social Equity – All economic levels/ communities have access to services
• Schools are safe and functional after a disaster
• Streets are “clear” – supplies are able to be brought in
• Communications
o Organized internal communications
o Partner with companies like Google to create a pilot program for cell phone
backup
• Are there reasonable investments the City can make to mitigate disasters within hours/
days not months?
o Bounce back ASAP
• Charging stations
• Conducting emergency drills
• Neighbors knowing each other which can create networks
• Creating decentralized hubs for action
Small Group Report Back - “What are the problems we need to address?”
The attendees broke into small groups of about 10 people per group and discussed which
earthquakes impacts and vulnerabilities the Utility should prioritize in dedicating resources,
funding, and staff. Each group had a table facilitator, a Palo Alto map, and a scenario to
consider and responded to questions regarding the following assets.
• People & Community
• Critical Services
• Built Environment
• Economy
• Natural Environment
The small groups reported back to the large group their top priorities. Below is a summary of
the top areas of focus/priority for the Utility.
People & Community
• Worker Housing
o Need affordable housing. Work with hotels for affordability
o Need workforce housing to give to city workers
o Staff retention
• City workers (who live outside Palo Alto) should be considered part of the community
and integrated into planning.
• Track of senior centers / at risk community members
• Encourage Community Emergency Response Training (C.E.R.T.) and neighborhood
emergency volunteering
• Resource maps distributed indicating resilience hubs. Include special needs population
• Utility services volunteers
o Train residents with technical backgrounds to help volunteer in specialized
utility areas in emergencies
• Schools should be to be open to support parents (ties with Economy category so
parents can work)
Critical Services
• Develop a plan/hierarchy for maximizing utility resilience and planning
resource/infrastructure projects:
o Electricity – for emergency services i.e: water pumps, 911, police and fire,
hospitals
o Water – for fire suppression then drinking water
o Communications
• Address the critical items to keep the city moving. A hierarchy created for each utility
• Location of the utilities needs to be considered. All are within the liquefaction zone. The
infrastructure of the Utilities needs to be on a secured location
• Fuel Reserves are important (backup generators, Tesla batteries…)
Built Environment
• Open/clear roads are needed
• Fault detection to mitigate damage
• Community “Hubs”
o Identify locations for community services /shelters
Schools, community centers, etc., hotels?
o “Hubs” have supplies
Water, power, food, etc.
• Keep water supply available and pumps powered (well water can be pumped
indefinitely as long as there is power)
• Building codes
o There could be some unintended consequences. i.e. sprinklers using too much
water needed for fire trucks
• Keep the mantra of “Surviving as a Community”
o Create safer housing: bolting foundations
o Building “safe” places to go. Build in resilience at the community “Hubs”
o Offer neighborhood bulk ordering for battery backups, food/water drums,
bolting of foundations
Economy
• Keep services available to high priority retail that support the community
o Hardware stores, gas, grocery, pharmacy, big box retail
o How will you know if they are open? Have electricity? Enough water? Enough
employees?
• Large Headquarter companies can work remotely if internet is available
• Need schools in service/open so parents can work and provide the needed
services/retail
• What will be used for money if ATM’s down or credit card machines do not work?
• Need highway recovery (clear roads) “delivery systems” so supplies/goods can be
brought in
Natural Environment
• Seasonal concerns: Summer - fire (Foothills) Winter - flood (king tides, storms)
o Impacts in both concerns to creeks (debris), landslides, wildlife (possibly more
wildlife brought into the City looking for food, sick, etc.)
• Use parks as gathering places
o “Housing” for people displaced from homes
o Provide key resources: health, etc.
o Potential for disease then parks could be used as a quarantine area
• Management of natural areas
• Manage and protect the natural infrastructure
• Water supply
• Communications
• Electricity and power
NEXT STEPS
Workshop #2. Review and Refine Framework and Scenarios
The second workshop will be designed to refine and establish a working Resiliency Framework
and Guiding Principles. This second workshop will be more solution orientated and may include
scenarios such as developing a second transmission line and/or developing a robust Distributed
Energy Resources network. The workshop may be incorporated into the regular UAC meeting in
November or December.
Implementation of identified resiliency efforts
In addition to new efforts identified through the workshops, CPAU has the following ongoing
activities related to resiliency:
• An assessment of the City’s electric distribution system ability to accommodate
Distributed Energy Resources (DER) growth;
• A community DER survey to assess residential customers’ interests, issues, concerns,
priorities, and preferences to inform CPAU’s DER Plan development. The purpose of the
survey is to identify the various attitudinal and/or behavioral characteristics within each
customer segment toward different home energy investment options and more broadly,
their interest in energy and water use issues;
• Evaluation of a second transmission line to provide redundant (backup) connection of
the City’s electric distribution system to the California electric grid;
• Water reservoir study, which, when the system model is complete, can be used to
analyze the City’s ability to maintain water delivery under a number of disaster/system
failure scenarios;
• Recycled water strategic plan: while the purpose of this is to look at long-term options
for alternative water sources, it may also provide insight for short term emergency
supplies;
• Smart grid applications that may enhance trouble-shooting capability to more efficiently
detect and fix faults and resume service, and also increase customer control over their
energy use and allow customers to respond in the event the utility requests reductions
in load use; and
• Day-to-day maintenance and infrastructure replacement plans designed to keep our
utility systems safe and reliable.
RESOURCE IMPACT
Funds of $12,310 for this work are included in the FY 2018 budget. Staffing resources to
manage the consultant and to finalize the work product have also been identified within
existing staff. Funding for projects identified for implementation will be subject to Council
approval in subsequent years.
POLICY IMPLICATIONS
This recommendation sets no new Council policy and is consistent with the Council-approved
2011 Utilities Strategic Plan’s strategy objectives for reliable supply of utility resources.
ENVIRONMENTAL REVIEW
Discussion of workshops to develop a framework and principles for resiliency planning and
efforts does not meet the definition of a project, pursuant to Section 21065 of the California
Environmental Quality Act, thus no environmental review is required.
ATTACHMENTS
A. Draft minutes of August 28, 2018 Special UAC Resilience Workshop B. Draft Initial Framework
PREPARED BY:
REVIEWED BY:
DEPARTMENT HEAD:
DEBRA LLOYD, Acting Assistant Director, Utilities Engineering
DEAN BATCHELOR, Chief Operating Officer, Utiliti+
ED SHIKADA
General Manager of Utilities
Utilities Advisory Commission Minutes Approved on: Page 1 of 4
UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF AUGUST 28, 2018 SPECIAL MEETING
CALL TO ORDER
Ed Shikada, Utilities General Manager, called the meeting of the Utilities Advisory Commission (UAC) to order
at 4:03 p.m.
Present: Chair Danaher, Vice Chair Schwartz, Commissioners Ballantine, Forssell, Segal, and Trumbull
Absent: Commissioner Johnston
ORAL COMMUNICATIONS
None
RESILIENCE WORKSHOP #1: DEFINE RESILIENCE, VISION AND GOALS
A. Introductions and Meeting Objectives
Ed Shikada, Utilities General Manager, explained that the workshop is intended to identify aspects of
resilience that are important to the community and to explore the roles of the Utilities Department and
utilities in general in a new and evolving vision of community resilience. During the update of the Strategic
Plan, stakeholders related that resilience is an important dimension of utility services. Shikada shared
definitions of resilience provided by stakeholders. Given the range of concepts, staff decided to engage the
UAC and community in a discussion to understand community assets, potential hazards, and resilience needs
related to utility services. Utility investments in infrastructure are typically large and long-term; thus,
changing the priorities and practices for utility investments is difficult to effect quickly. Questions for
consideration are how should the City of Palo Alto Utilities' (CPAU) role in building public infrastructure be
balanced with encouraging private investment and development on individual properties; what investments
should be prioritized for resilience while continuing to meet other City needs; how is resilience impacted by
staffing strategies and human resources; and other similar questions.
Mindy Craig, facilitator, advised that the intent of the workshop is to develop a common vocabulary, to learn
about CPAU activities, and to begin to establish goals, priorities, and a vision for resiliency. A future workshop
will explore solutions. A panel of experts will provide broad perspectives, and then staff will share CPAU
projects and studies. Hopefully, a video presentation will create a sense of urgency that resiliency is important
because of the many things that can impact CPAU. Participants will talk about what resilience means to the
City of Palo Alto, and small groups will identify details of resilience. Lastly, participants will identify priorities
and next steps.
B. Resilience Experts Panel
Corinne Bartshire, Urban Areas Security Initiative (UASI), related the background of UASI. One of UASI's tasks
is to prepare a Threat and Hazard Identification and Risk Assessment (THIRA), which is a tool for looking at
threats and risks across the Bay Area. The THIRA does take into account the interconnections of utilities and
transportation. UASI manages several working groups that facilitate conversations throughout the Bay Area.
The Emergency Management Work Group has focused on large special event planning and sharing law
DRAFT
ATTACHMENT A
Utilities Advisory Commission Minutes Approved on: Page 2 of 4
enforcement and security; commodity points of distribution; and on local agency capabilities for care and
shelter. An upcoming area of focus is critical transportation. UASI materials are available to the public on
UASI's website.
Josh Schellenberg, Nexant, reported on the difficulties of assessing the risk of a resilience investment for an
electric system. The focus on assessing risk has increased because of the increasing frequency and severity
of significant disasters. The Department of Energy, Lawrence Berkeley National Laboratory, and Nexant will
publish reports that provide guidance and recommendations for assessing the costs and benefits of resilience
investments. Nexant has conducted many studies of the value of grid resiliency and the direct and indirect
costs to businesses. Electricity is highly valued due to the high level of business productivity in the Bay Area.
The cost of a long-duration power outage is highest for small and medium businesses because they cannot
easily shift production from one time period to another. Methodological debate and challenges continue
around understanding the economic impacts of disasters. Based on information obtained in prior studies, a
power interruption lasting multiple weeks in the Bay Area could cost billions of dollars. The impacts to critical
infrastructure may require a separate assessment for the potential of a micro grid or grid islanding
capabilities.
Benson Joe, ABB Enterprise Software, summarized regulations to increase renewable energy standards and
to reduce carbon emissions. The California Independent System Operator (CAISO) power supply queue
includes 8,000 megawatts (MW) of solar power, 3,000 MW of wind power, and 12,000 MW of energy storage.
CAISO has to ensure the instantaneous supply of generation matches the instantaneous demand for
generation. As the amount of renewable energy in the power system increases, the reliability of the system
decreases. As a solution, adding more rooftop solar can be challenging in that too much generation without
sufficient load can damage equipment. Another solution is a micro grid, but the business proposition must
be considered. A discussion of grid resiliency has to include the question of what is the acceptable duration
of a power outage.
In response to questions from participants, Schellenberg advised that a great deal of research into everyday
outages has been conducted. The billions of dollars in cost applies to outages lasting multiple weeks. The cost
of a single-day outage is closer to $100 million. Joe added that there are tradeoffs to increasing the resilience
of existing infrastructure and building a micro grid for islanding during short-term outages. Mindy Craig,
facilitator, remarked that the benefit of resilience includes having a better community or better resources as
well as recovering from an outage. Schellenberg indicated most businesses believe that insurance would
cover only physical damages caused by an outage. Business interruption insurance or another type of
insurance probably would not cover the high cost of an extended outage. In many ways, investment in
infrastructure could be considered insurance. Joe likened insurance for an outage to an extended warranty
for a consumer product. The business has to compare the cost of a replacement product amortized over its
lifespan to the annual cost of an extended warranty. Bartshire reported the regional THIRA identifies risks
and resources but not action steps to respond to and recover from threats, which is the role of local
jurisdictions, cities, counties, etc. A local THIRA identifies actions and implementation. Sharing and witnessing
the effects of disasters has led to community preparedness. Schellenberg indicated a survey of Palo Alto
businesses could provide a fiscal analysis of resilience, but existing research can be extrapolated to Palo Alto.
Craig reported the community should help CPAU understand the qualitative values.
C. Community Risks and Resources for a Resilient Palo Alto
Kenneth Dueker, City of Palo Alto Office of Emergency Services Director, reported the City of Palo Alto is one
of the only local jurisdictions to have a THIRA. The City's THIRA addresses natural disasters such as
earthquakes and floods, accidents, and human-caused events. Resilience is the ability to suffer an event and
return to a reasonable level of functionality. Public safety's mission is to prepare for, prevent when possible,
mitigate, respond to, and recover from hazards. Following the airplane crash into the transmission line in
2010, the City considered spending millions of dollars to mitigate risks. However, the City has only identified
options for mitigating risks.
Utilities Advisory Commission Minutes Approved on: Page 3 of 4
Karla Dailey, CPAU Senior Resource Planner, noted the City of Palo Alto Comprehensive Plan and other City
documents address resilience. Specifically, the Comprehensive Plan addresses cooperative planning with
other agencies, community awareness, and long-term resilience for water and energy, community safety,
and CPAU infrastructure. The City completed its Emergency Water Supply Plan by refurbishing five wells and
developing three new wells. Along with the Santa Clara Valley Water District, staff is exploring an expansion
of local resilient water supplies.
Debra Lloyd, CPAU Acting Assistant Director of Utility Engineering, remarked that a loss of water would be
catastrophic on a long-term basis. Communications is a vital part of resilience and emergency planning. With
respect to local distribution, resiliency means prevention, recovery, and survivability. Water, wastewater,
and gas pipes are being replaced with pipes made of materials that are amenable to liquefaction. Electric
systems are not loaded to capacity so that supply can be switched among systems. Vegetation management
is important for the electric utility. Prevention strategies include installing barriers, elevating equipment,
relocating equipment and infrastructure, and increasing security. Staff is investigating battery storage and
smart grid pilot programs. Recovery plans, on-call field staff, and the outage management system aid in
recovering from a disaster. Survivability strategies include battery backups at substations, natural gas
generators to power low-voltage electronics, and communications to the community.
In reply to questions from participants, Dailey advised that lines for recycled water (purple pipes) are not
being installed city wide. Romel Antonio, Senior Project Engineer, reported generators have been installed at
El Camino Park and the Mayfield Pump Station to pump water, and three portable generators can be
transported to facilities as needed. The City can provide 9 million gallons of water per day from ground wells
if electricity is available. A participant suggested CPAU consider long-term power for cell towers and a rebate
program for homeowner purchase of Tesla wall packs. Dueker agreed that City staff need to live in or near
Palo Alto in order to provide manpower during an emergency situation.
D. Resilience and Palo Alto
The video HayWired (a USGS video depicting a 7.0 earthquake and the cascading impacts) was shown
followed by a large group discussion of “What does resilience mean to Palo Alto?”
Participants offered their definitions of resilience, including self-sufficiency and organization, continuation of
critical facilities, sheltering in home, the community working together, people of all income levels having
access to resources, safe and functional schools, clear roadways, pre-planning to ensure recovery in hours or
days, communications and charging of cell phones, and neighbor networks.
E. Small Group Exercise: What are the Problems We Need to Address?
Participants met in small groups to discuss the impacts and vulnerabilities that the Utility should prioritize
with the question in mind of “What are the problems we need to address?” and then reported back their top
priorities and focus areas for utilities. Each group had a scenario to consider and responded to questions
focusing on one of five asset categories: Critical Services; Economy; Natural Environment; People &
Community; or Built Environment.
• The critical services group identified a hierarchy of critical services, i.e., electric service for water
pumps, public safety, and communications; water for fire suppression, drinking, and medical
services; and communications for emergency responders and individuals. They also discussed the
location of utility infrastructure and risks of being in liquefaction zones.
• The economy group identified high priority retail services of hardware stores, pharmacies, gas
stations, and grocery stores and the need for utilities and employees at those businesses.
Employees may be able to work remotely if data centers and internet providers are operational.
Daycares and schools will be needed for employees to return to work in physical locations. A barter
system will be needed to replace cash and credit cards for purchases. The group also discussed the
need for highway recovery as “delivery systems” so that supplies can be brought in.
Utilities Advisory Commission Minutes Approved on: Page 4 of 4
• The natural environment group considered impacts on flora and fauna by season. People displaced
from their homes could camp in parks, in which case health, safety, and utility resources will be
needed in parks. Parks could be used as quarantine spaces to prevent the spread of disease. A
second natural environment group considered priorities of natural infrastructure, wildlife, parks
and recreation areas, and protecting and preserving the water supply, communications, and
electricity.
• The people and community resources group identified priorities of housing for workers, integration
of workers into the community, care facilities, and at-risk residents. Community Emergency
Response Team (CERT) and Palo Alto Neighborhood Disaster Activities (PANDA) volunteers and
resource maps will be needed. A second people and community group identified workforce housing
for City staff and staff retention and recruitment as priorities. Volunteers could be trained to
substitute for utility workers in the event of an emergency. Neighborhood leaders could compile
information regarding residents with special needs to ensure they have the resources they need.
• The built environment group identified priorities of minimizing and mitigating damage, converting
buildings to housing for displaced residents, and meeting Building Code and Code enforcement
needs. A second built environment group, guided by the importance of surviving a disaster as a
community, identified the priorities of safe housing, buildings, churches, schools, and water supply
and distribution.
F. Wrap Up and Next Steps
Participants identified needs for a roadmap to a secure smart grid for electricity, water, and gas; waste
disposal; secure CPAU infrastructure; decentralized operations for community hubs; meaningful support of
emergency volunteers; utility volunteers; a list of appliances and products to be turned off when electric
service resumes; and micro grids for community hubs that are distributed around Palo Alto.
Ed Shikada, Utilities General Manager, reported staff will provide information from the workshop to the UAC
so that the UAC can direct staff.
Meeting adjourned at 7:05 p.m.
Respecfully Submitted
Rachel Chiu
City of Palo Alto Utilities
Utilities Advisory Commission
Initial Resilience Vision and Goals
Prepared by BluePoint Planning September 14, 2018
Preliminary Vision
Support Palo Alto Community Resilience by advancing the City’s Utilities to become “Smart”
Utilities, able to assist the City prepare, respond, support, and rebound from manmade and
natural disasters.
Goals
1. Assist the City in ensuring that residents can stay in place or return as soon as possible in
the event of a disaster or emergency.
- Establish Community Resilience Hubs that provide residents access to power, water,
communications, and other critical supplies.
- Provide educational materials related to managing utilities when a disaster occurs.
- Support Community Emergency Response Training (CERT) and neighborhood
volunteers.
- Work with City Zoning to determine if codes support resilience and avoid unintended
consequences.
2. Support Community resilience by prioritizing utility services and infrastructure support to
critical facilities and retail establishments.
- Prioritize improvements and updates of utility services to critical facilities such as
hospitals, emergency providers, transportation, etc. to enable effective (and fast)
response and recovery.
- Evaluate and establish adequate power and water supplies (could be time specific – 1
week? 24 hours?) for these facilities.
3. Enhance the City’s Utilities to ensure their overall resilience.
- Develop Workforce Management and Support Plan
- Strengthen Utility Facilities and Infrastructure to better withstand disasters – consider
replacement, relocation, and upgrades
- Build partnerships with community and surrounding businesses to support the City’s
Utilities when needed.
ATTACHMENT B
MEMORANDUM
TO: UTILITIES ADVISORY COMMISSION
FROM: UTILITIES DEPARTMENT
DATE: OCTOBER 3, 2018
SUBJECT: Update on 2018 State Legislation
The 2018 state legislative session ended on August 31 and the Governor had until September
30 to sign or veto all passed bills. Below is a list of the utility-related bills CPAU tracked, along
with their status as of September 13. Staff intends to appear before the UAC in December for a
discussion of this past session, items that may arise in the 2019 session, and to gain approval
for the 2019 legislative guidelines.
WATER BILLS
AB 2730 (Holden): This bill requires a licensed child day care center that is located in a building
that was constructed before January 1, 2010 to have its drinking water tested for lead
contamination. Water systems like CPAU may become responsible for the testing. Status:
Signed into law.
AB 3206 (Friedman): Would have required the California Energy Commission (CEC) to adopt
regulations setting standards for the accuracy of water meters and required the State Water
Board to adopt protocols to be used by each urban water supplier for the regular sampling and
testing of its customers’ service meters. Status: Failed
SB 623 (Monning): A bill from last year, SB 623 would have imposed fees on the bills of all water
customers to fund failing water systems throughout the state. Status: Failed
SB 845 (Monning): Introduced through the ‘gut and amend’ process in August 2018, this bill
was crafted as a reaction to the failed SB 623. Rather than a mandatory water fee, SB 845
would have required water agencies to augment their billing systems to allow for a voluntary
process whereby water customers could choose to add money to their water bills. The
additional fees would be sent to failing water systems. Status: Failed
SB 998 (Dodd): The City has an opposed position on this bill that imposes many restrictions on
water utilities before terminating residential water service to non-paying customers.
Specifically, the bill mandates we change existing protocols (even if they are working well), limit
reconnection fees, allow an “adult in residence” to appeal a bill, mandate written notification in
languages not area- specific, and more. Status: Passed; to the Governor
SB 1422 (Portantino): Requires the State Water Board to adopt requirements for four years of
testing of the amount of microplastics in drinking water. Also requires the State Water Board
to, on or before July 1, 2020, adopt a definition of microplastics in drinking water. It's
anticipated that water systems like CPAU will be responsible for the testing. Status: Passed; to
the Governor
ENERGY BILLS
AB 813 (Holden): Another attempt at regionalization. This bill would have transformed the
State’s electric grid operator’s (CA Independent System Operator or CAISO’s) governance
structure whereby it would join a regional oversight body rather than standing alone. Once the
provisions of the bill were met, no legislative approval was needed, a point of contention for
many. Status: Failed. The Senate President indicated the legislature may work again on
regionalization in 2019.
AB 893 (E. Garcia): Would have mandated procurement of certain geothermal, solar, and wind
resources. Status: Failed
AB 2450 (Quirk): Requires manufactures of Mylar balloons to place on the balloons a statement
warning of the dangerous risk of fire if the balloon comes in contact with an electrical power
line. Status: Signed into law
AB 2809 (Patterson): The City supported this bill, aimed at allowing energy from large
hydroelectric generation to become an eligible renewable resource for purposes of the State’s
Renewable Portfolio Standard. Status: Failed
SB 100 (DeLeon): This bill accelerates the 2030 Renewable Procurement Standard from 50% to
60% by 2030. The City is on track to exceed the 60% RPS level by 2021, assuming our one large-
scale solar project under development comes online as scheduled. Post 2021, this RPS level is
projected to fall due to contracts expiring and the natural degradation of solar output.
However, because CPAU can bank excess renewable procurement from prior years, we will not
only exceed compliance with SB 100’s RPS targets, but maintain compliance well beyond 2030.
Seperatly, SB 100 also creates the policy of planning to meet all of the state's retail electricity
supply with a mix of certain renewables and zero-carbon resources, including large
hydroelectric generation, by December 31, 2045.
Lastly, and importantly to Palo Alto, SB 100 revised the SB 350 large hydro exemption but still
permits the City to utilize it. The exemption allows POUs receiving 40% or more of its retail
sales from large hydro to procure only a limited quantity of RPS resources. This allows large
hydro-heavy POUs to sell their RPS resources, instead of their large hydro, if the large hydro
plus the RPS-required procurement level equal an over-resourced porfolio. Status: Signed into
law
SB 782 (Skinner): Requires an electric or gas utility to provide to the owner of a property
containing two or more buildings on a single parcel, or adjacent parcels with five or more active
utility accounts, residential or nonresidential, upon request of the owner, aggregate energy
usage data on all such buildings.Status: Signed into
SB 901 (Dodd): Mandates electric utilities annually create, and the governing body approve,
wildfire mitigation plans. Utilities must contract with a qualified independent evaluator to
review the plans. CPAU is well positioned to meet the mitigation plan requirement, as the City
Council has already determined that the foothills area has a "significant risk of catastrophic
wildfire" (statutory language) and approved mitigation measures to minimize the risk of
electrical equipment causing such fires. Status: Signed into
SB 1339 (Stern): Requires that within 180 days of the first request from a customer or
developer to establish a microgrid, an electric utility make available a standardized process for
the interconnection of a customer -supported microgrid, including separate rates and tariffs, if
necessary. CPAU has already prepared interconnection procedures and an applicable tariff.
Status: Signed into
SB 1369 (Skinner): Specifies that green electrolytic hydrogen is an energy storage technology to
be targeted for increased use. Requires the CEC, the California Public Utilities Commission, and
the California Air Resources Board to consider green electrolytic hydrogen an eligible form of
energy storage, and to consider other potential uses of green electrolytic hydrogen. Status:
Signed into law
PREPARED BY:
REVIEWED BY:
APPROVED BY:
HEATHER DAULER, Senior Resource Planner
DEBBIE LLOYD, Acting AD, Utilities Engineering and Utilities Compliance
Manager
Utilities General Manager