HomeMy WebLinkAbout2020-07-01 Utilities Advisory Commission Agenda PacketAMERICANS WITH DISABILITY ACT (ADA)
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NOTICE IS POSTED IN ACCORDANCE WITH GOVERNMENT CODE SECTION 54954.2(a) OR 54956
****BY VIRTUAL TELECONFERENCE ONLY***
https://zoom.us/join Meeting ID: 966 9129 7246 Phone: 1 (669) 900-6833
Pursuant to the provisions of California Governor’s Executive Order N-29-20, issued on March 17, 2020, to
prevent the spread of COVID-19, this meeting will be held by virtual teleconference only, with no physical
location. The meeting will be broadcast on Cable TV Channel 26, live on YouTube at
https://www.youtube.com/c/cityofpaloalto, and Midpen Media Center at https://midpenmedia.org.
Members of the public who wish to participate by computer or phone can find the instructions at the end
of this agenda.
I.ROLL CALL
II.ORAL COMMUNICATIONS
Members of the public are invited to address the Commission on any subject not on the agenda. A reasonable time
restriction may be imposed at the discretion of the Chair. State law generally precludes the UAC from discussing or
acting upon any topic initially presented during oral communication.
III.APPROVAL OF THE MINUTES
Approval of the Minutes of the Utilities Advisory Commission Meeting held on June 17, 2020
IV.AGENDA REVIEW AND REVISIONS
V.REPORTS FROM COMMISSIONER MEETINGS/EVENTS
VI.UTILITIES DIRECTOR REPORT
VII.COMMISSIONER COMMENTS
VIII.UNFINISHED BUSINESS - None
IX.NEW BUSINESS
1.Election of Officers Action
2.Discussion of the Demand Side Management Report for Fiscal Year 2019 Discussion
3.Discussion and Update on the Progress in Implementing Utility Customer Programs to Discussion
Facilitate Electric Vehicle Adoption in Palo Alto
4.Staff Recommendation That the Utilities Advisory Commission Recommend the City Action
Council Amend the City's Electric Supply Portfolio Carbon Neutral Plan and Electric Utility
Reserves Management Practices
UTILITIES ADVISORY COMMISSION – SPECIAL MEETING
WEDNESDAY, July 1, 2020 – 5:30 P.M.
ZOOM Webinar
Chairman: Michael Danaher Vice Chair: Lisa Forssell Commissioners: Donald Jackson, A.C. Johnston, Greg Scharff, Lauren Segal, and Loren Smith Council Liaison: Alison Cormack
Presentation
AMERICANS WITH DISABILITY ACT (ADA)
Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s
compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance.
Action
Discussion
5.Staff Recommendation That the Utilities Advisory Commission Recommend to Council on
Whether to Direct Staff to Evaluate the Impact of Including Upstream Emissions and Using a
20-year Time Horizon for Global Warming Potential on the Community’s Carbon Emissions
6.Discussion of the FY21 Council-Adopted Budget Overview
7.Selection of Potential Topic(s) for Discussion at Future UAC Meeting Action
NEXT SCHEDULED MEETING: August 5, 2020
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 Reports 12-Month Rolling Calendar Public Letter(s) to the UAC
AMERICANS WITH DISABILITY ACT (ADA)
Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s
compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance.
PUBLIC COMMENT INSTRUCTIONS
Members of the Public may provide public comments to teleconference meetings via email,
teleconference, or by phone.
1. Written public comments may be submitted by email to UACPublicMeetings@CityofPaloAlto.org.
2. Spoken public comments using a computer will be accepted through the teleconference meeting.
To address the Commission, click on the link below for the appropriate meeting to access a Zoom-
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Meeting ID: 966-9129-7246
Utilities Advisory Commission Minutes Approved on: Page 1 of 5
UTILITIES ADVISORY COMMISSION VIRTUAL MEETING
MINUTES OF June 17, 2020 SPECIAL MEETING
Due to technical difficulties the meeting was not recorded.
CALL TO ORDER
Chair Danaher called the meeting of the Utilities Advisory Commission (UAC) to order at 9:04 a.m.
Present: Chair Danaher, Vice Chair Forssell, Commissioners Jackson, Johnston, Scharff (joined at 9:06),
Segal, Smith
Absent: None
ORAL COMMUNICATIONS
None.
APPROVAL OF THE MINUTES
Vice Chair Forssell moved to approve the minutes of the May 20, 2020 meeting. Commissioner Segal
seconded the motion. The motion carried 6-0 with Chair Danaher, Vice Chair Forssell, and Commissioners
Jackson, Johnston, Segal and Smith voting yes, and Commissioner Scharff absent.
AGENDA REVIEW AND REVISIONS
None.
REPORTS FROM COMMISSIONER MEETINGS/EVENTS
None.
UTILITIES DIRECTOR REPORT
Dean Batchelor, Utilities Director, delivered the Utilities Director's Report.
Utility Sales and Delinquencies - Staff has been tracking changes in water, gas, and electric consumption
related to shelter in place. Consumption is currently down across all utilities, though most substantially in
the electric utility.
• Water utility: In the water utility consumption is currently roughly the same as last year, but about
4% to 6% below the last dry year, 2018. We have seen a substantial decrease in small and large
commercial water use compared to 2018, though residential water use is higher.
• Gas utility: In the gas utility consumption has been at or above previous year consumption, except
that gas usage dropped to summer levels early, in early May rather than in the middle of June. This was
primarily due to significant drops in small business gas use. Staff will monitor this summer as shelter in
place restrictions are relaxed to see if usage rebounds.
• Electric utility: Up until the last two weeks electric utility consumption was 8% to 10% lower than
previous years, but in the last two weeks it has rebounded, with consumption similar to previous years.
This may be a short term effect of the warmer weather.
DRAFT
Utilities Advisory Commission Minutes Approved on: Page 2 of 5
• Utility Bill Delinquencies: The total dollar balance of utility bills that are between 30 and 90 days
overdue was approximately $750,000 for all utilities, up from $385,000 in late April. This is still well below
the total amount for defaults assumed in the Financial Plans.
Utilities Meter Reading Resumed June 1 - Earlier this year, some meter reading activities were suspended to
comply with state and county Shelter-in-Place orders and to protect the health and safety of our community
members and CPAU staff. With the recent easing of some of these requirements from the county, we
resumed reading all customer utility meters the week of June 1. CPAU staff are being diligent about safety
and abiding by social distancing protocols.
Public Safety Power Shutoffs - Bay Area agencies are meeting with PG&E to discuss the potential for Public
Safety Power Shutoffs (PSPS) this year. The purpose of PSPS is to reduce the risk of wildfire caused by electric
equipment impacted by high winds or other extreme weather events. PG&E will de-energize certain electric
circuits and facilities until risks subside. While PG&E does not directly serve electricity to CPAU customers,
the City intakes electricity from PG&E’s transmission system. The Foothills have been identified as the area
at the greatest risk for potential wildfire and may be the only part of Palo Alto that could lose power if PG&E
implements a PSPS west of highway 280. Palo Alto customers did not experience outages last year from a
PSPS and it is unlikely that an incident will occur this year. CPAU’s practice is to closely monitor our own
power lines and during periods of extreme weather, make decisions about our local operations based on the
safety and best interest of our customers. PG&E has been working on infrastructure upgrades to reduce the
number of customers impacted by power shutoffs and enhancing communication protocols to provide better
notifications to municipal utilities and customers the agency serves. CPAU is also developing outreach
materials to inform our customers about what to expect, including how we will manage our local electric
distribution system and communicate with customers if we anticipate a power shutoff in Palo Alto; either
from PG&E or on our own distribution system. Find details at cityofpaloalto.org/safeutility
CALeVIP Program status update: CPAU is partnering with four agencies in the California Electric Vehicle
Infrastructure Project (CalEVIP) which will provide rebates for electric vehicle charging stations at commercial
customer sites and is scheduled to launch this fall. The state program is administered by the Center for
Sustainable Energy (CSE). The California Energy Commission and CSE will host a workshop on June 23 to
explain the program details. Information is on our website at cityofpaloalto.org/workshops
COVID-19 Update - On Friday, June 5, revisions to the public health order for Santa Clara and other counties
took effect. These revisions relax some restrictions on shelter in place, including allowing socially distanced
small outdoor gatherings, recreation, and expanded business activities. Health officials strongly recommend
that we all stay at home as much as possible and remain in contact with only our family units to try to help
prevent the spread of COVID-19. Face coverings are strongly recommended by the county and still required
in Palo Alto. The county has observed a recent uptick in COVID-19 cases, which is likely related to loosening
restrictions in mid-May. Health officers will continue a regular cadence of making small cautious changes
while observing the data on number of cases, expanding testing opportunities and improving efforts at
contact tracing. The county provides a library of frequently asked questions on its website and is utilizing 211
for the public. Palo Alto continues to update its cityofpaloalto.org/coronavirus webpage with new
information and helpful resources.
Testing: The city and county began offering free voluntary testing for city employees this week at City Hall.
Members of the public are welcome to use these testing services, including non-Palo Alto residents. Testing
is available June 16 through June 19 from 10am to 4pm in the City Hall lobby. The city is also working with
the county to set up mobile testing sites.
Summer Streets: The city is launching a new Summer Streets initiative to expand outdoor dining and retail
options in the California Avenue and downtown core of the city. As of last Thursday, California Avenue is
closed to traffic to allow restaurants and retail establishments to spread out on sidewalks, streets, and
parking areas for social distancing. This temporary closure is in effect through early July and may be extended
longer if deemed necessary. Discussions continue about potentially closing University Avenue as well, but
there is much debate within the business community about this. The city is working through processes for
efficient and effective permitting, encroachment permissions, and safety practices.
Return to Work: City leadership are discussing a variety of options for return to work plans for staff. This
includes developing official policies for on-site versus remote work, administrative leave, and safety protocols
to protect everyone in the workforce. Our Utilities operations, metering and customer service teams have
Utilities Advisory Commission Minutes Approved on: Page 3 of 5
resumed much of their typical work while observing social distancing practices. For staff who can effectively
work remotely and remain productive, they will likely continue to do so through the summer or longer. The
timeline for an actual physical reporting in to city facilities is dependent upon further updates from the county
public health officer and our city’s readiness to set up workspaces in order to safely bring employees back.
Budget: City Council continued budget discussions this week in preparation for official adoption of the full
budget on June 22. The city’s finances have been significantly impacted by the COVID-19 pandemic,
particularly in the General Fund. Approximately 100 full-time and part-time staff in other departments face
layoffs. Some of those staff in the SEIU may have “bumping rights” over more junior-level staff with the same
job descriptions. We do not yet know specifically who will be laid off, nor who in SEIU could possibly “bump”
staff in Utilities or other departments. We will do whatever we can to retain our staff.
COMMISSIONER COMMENTS
None.
UNFINISHED BUSINESS
None.
NEW BUSINESS
ITEM 1: DISCUSSION: of Advanced Metering Infrastructure (AMI) Systems and Platforms to Maximize Value
of the Utility’s AMI Investment for Customers
• Did not record some of the early comments and questions – there were questions about wireless
transmission protocols, comments that we should move faster on introducing Phase 2 and Phase 3
features (Slide 15) and various questions about costs>
• Jackson: various questions about TOU rates. Need to communicate to people that TOU is coming. He
wanted to know the exact wireless protocol to be used. He was concerned about people hacking the
meters and using it to discover whether people were home or not, or to turn their services on or off.
• Cormack: be effective about identifying the benefits to the end users and communicating it to them
effectively. Keep the conversation at Council about the benefits rather than about the details of the
system. She agreed with Scharff that Phase 2 and Phase 3 should be accelerated. She asked whether
we were behind. Swaminathan said we were, though the economic benefits to Palo Alto are lower
and he felt this was the right time to do it. Batchelor noted that only one other small POU in Northern
CA had implemented AMI – we were not behind our cohort.
• Segal: Agreed with previous comments. Asked about all-electric rates and whether AMI was required.
Swaminathan said all-electric rates did not require AMI and staff was working on a rate, but at higher
penetrations, AMI would be needed to manage distribution impacts. Jackson speculated it could be
possible to submeter electrified loads and reported separately to charge those uses less. Segal said
if AMI was needed for electrification, we should accelerate the AMI program.
• Smith: Agreed we should advance the schedule for AMI rollout. Asked if CVR (Phase 3) could be
moved up – it seemed less complicated to implement. Swaminathan said that, upon reflection, it
could. Smith asked whether water leak reduction had been incorporated into the cost/benefit
analysis. Swaminathan said it had.
• Forssell: Suggested a group buy for residential customers to get in-home displays and connectors.
Asked about the benefits to commercial customers. Swaminathan spoke about connecting smart
meters to energy management systems and its use in installing efficiency measures.
• Scharff: We need to make sure it is easy for the consumer to take advantage of the system. People
will not go out and buy extra equipment – it needs to be accessible to everyone. Swaminathan said
the myCPAU portal would allow people to access their AMI data (day after), will look at ways to
facilitate the benefits of real-time information.
ACTION: None
Utilities Advisory Commission Minutes Approved on: Page 4 of 5
ITEM 2: DISCUSSION: Discussion of 2020 Sustainability and Climate Action Plan Update: Updated Goals and
Key Action
•Christine Luong gave a brief update on the work since the last S/CAP discussion
•Danaher: Make sure micromobility (scooters, e-bikes) is part of the solution. Brought up the example
of scooter charging stations on light poles. Luong highlighted that we were considering a
micromobility pilot before COVID, but it was canceled due to concerns about transmission.
•Johnston: Looking forward the AECOM analysis to get a sense of costs. Encouraged raising prices as
a way to get people to convert, though he acknowledged some of the legal and equity challenges
there. It will also require a massive outreach and education effort to get people to accept this – need
to reach well beyond the minority of people in the community who are already prepared to electrify.
Need to start working on education and outreach right away.
•Smith: We can encourage telecommuting by installing fiber to the home. (Danaher agreed)
•Scharff: Conundrum – do we count offsets? Thinks it is the right thing to do to retain offsets while
getting people to reduce gas use in buildings. We could not actually prohibit people from buying gas
vehicles. Not realistic to expect this can all get done within eight years. Land use and mobility changes
are very, very hard, require a lot of staff time, and it will be difficult to get community buy-in.
Encourages us to be honest with ourselves about how hard this will be.
•Public Comment:
o Colin Roche: Palo Alto High graduate, founded SwiftMile, a micromobility company. Provides
a small vehicle charging system you can attach to public infrastructure (e.g. light poles).
Wants to work with Palo Alto.
•Jackson: In the interest of time, asked that the minutes reflect the comments he e-mailed before the
meeting (see attached), and he would forgo his verbal comments.
•Forssell: Asked why large commercial reduction goals were lower than residential. Tam said
commercial building end uses were much harder to electrify. Forssell noted that the Energy section
was less than 80% from 1990 levels. Abendschein clarified that greater reductions were required
from Mobility and EVs, and less from Energy, and between the three they totaled an 80% from 1990
levels for all emissions. Forssell said that spoke to the importance of calculating the value of upstream
emissions to understand accurately those tradeoffs. She noted it should be OK to have Level 1
chargers in residential locations. She thought a carbon tax or something equivalent would be a good
approach to the problem (or items in the S/CAP with some equivalence to a carbon tax, like paid
public parking), though she understood the potential legal issues with it.
•Segal: Worries about the feasibility of achieving these goals in the time we have before 2030 given
competing priorities. Wondered which of these programs have been implemented elsewhere, and
what were the successes and failures? Looking forward to the AECOM report. Thinks it would be hard
to mandate anything that forces action (e.g. forcing someone to buy a car when they are not
otherwise planning to vs. providing incentives when they are in the market) – would be hard to get
community buy-in. City should lead by example – buy electric vehicles for City fleet, micromobility
for City employees, etc.
•Danaher: Thinks commuting and traffic patterns may shift long term due to the pandemic. Fleets roll
over slowly, so EV adoption will be challenging. We will not get a new fleet by 2030. Offsets are a
viable transition strategy – should talk more about what they accomplish and why they result in real
reductions. Whatever we do, take steps other communities can take as well. Many of these measures
would not be replicable. Re-emphasized the value of micromobility as a measure.
ACTION: None
ITEM 3: DISCUSSION: Discussion of City Water System Operations
Tomm Marshall delivered an overview of the City’s emergency water supply
Utilities Advisory Commission Minutes Approved on: Page 5 of 5
ACTION: None
ITEM 4: DISCUSSION: Discussion of the Demand Side Management Report for Fiscal Year 2019
Delayed to the July 1, 2020 UAC meeting in consideration of time.
ACTION: None
NEXT SCHEDULED MEETING: July 1, 2020
Vice Chair Forssell moved to adjourn the meeting. Commissioner Scharff seconded the motion. The motion
carried 7-0 with Chair Danaher, Vice Chair Forssell, and Commissioners Jackson, Johnston, Scharff, Segal and
Smith voting yes.
Meeting adjourned at 12:21 p.m.
Respectfully Submitted
Tabatha Boatwright
City of Palo Alto Utilities
Attachment A:
Honorable Councilpeople:
The S/CAP goals relating to energy, electric vehicles, and water are areas under the purview of the UAC,
on which I am a Commissioner, and as such, I’ve had many opportunities to study, reflect, and receive
staff reports on those topics.
My thoughts regarding updated S/CAP goals:
Energy:
The overarching goal here is to reduce GHG emissions, by reducing the use of natural gas
(“electrification”), and by increasing energy-use efficiency.
At present, we are not meeting our electrification goals, e.g. "the number of residents who have
voluntarily replaced their water heaters is far lower than the goals”.
Several proposed actions start with “increase awareness…”
Collectively, we are not doing nearly enough to articulate the problems with natural gas, and the need
for electrification.
When I joined the UAC last Summer, I had NO IDEA that natural gas use was any problem at all,
and it would not surprise me to learn that many/most Palo Altans have yet to hear this message.
I propose:
Council and S/CAP make a definitive proclamation regarding the goal to eliminate the use of natural gas
in Palo Alto, including:
•The eventual shutdown of our gas utility
•The elimination (or sharp curtailment) of new connections to the gas utility
This proclamation should be sent as an official notice to every Palo Alto home and building owner.
The recent changes to the Reach Code to require all-electric new residences are a good start,
now Council/Staff must follow through to extend this to include new commercial buildings.
Mandate replacement of gas appliances wherever possible, including:
•Prohibit replacement and new installations of gas furnaces, hot-water-heaters,
stoves/cooktops/ovens, and clothes-dryers.
•Require replacement of gas appliances on remodels
•Require replacement of gas appliances on sale of home
•Require electrification of houses/buildings in lieu of repairing/replacing existing gas lines.
The financial impact of electrification to home and building owners is exacerbated by the higher cost of
electricity (than natural gas).
CPAU must institute an “all-electric” rate plan, to lower the cost of increased electricity usage resulting
from electrification.
After the implementation of AMI/smart-meters, explore the possibility of reduced electricity rates for
electrification-specific usage (EV charging, HVAC, hot-water-heating, etc.)
Funding the replacement of existing gas appliances will be a challenge to home/building owners, CPAU,
and the City.
CPAU must develop and provide the capability to support “on-bill” financing of electrification
improvements for homeowners.
Electrification projects may require upgrades of electric utility service and electric panel upgrades.
Streamlining permitting, and on-bill financing would help homeowners.
In May, the UAC unanimously recommended that Council/CPAU institute the sale of CPAUs Bucket-1
RECs
in order to raise as much as $17MM (over several years) for the electric utility.
It is my understanding that this proposal is scheduled for the August 17th Council meeting.
I strongly support this proposal, and if adopted, urge Council and CPAU to use this money to help fund
the aforementioned electrification initiatives.
Water:
Increasing the use of recycled water is a key goal.
At the CPAU/system level, planned programs regarding water treatment and desalination will increase
the supply of recycled water, however I don’t see any significant infrastructure plans for distribution of
recycled water back into the City.
I am not aware of any effort to collect or use recycled or “gray water” at the household/building level.
Segregating “gray water” from sewage would seemingly require infeasible/unrealistic changes to
existing structures,
however, we should explore requiring plumbing support for gray-water collection for new construction
and “whole home” remodels.
Electric Vehicles:
It is my perception that there is little "lack of awareness” regarding the benefits of EVs among Palo
Altans, so minimize additional spending and Staff time
for this.
Removing obstacles to EV ownership/use remains an important goal, consider:
• Mandating/incentivizing EV chargers for rental housing
• Streamlining permitting of EV chargers
• Streamlining electric panel upgrades required for EV chargers
• Provide a lower electricity rate for EV charging
Explore penalizing the use and purchase of gas vehicles, perhaps institute a permit/tax/levy on (new?)
gas-powered vehicles.
S/CAP As A Concept:
The challenges we face regarding climate change are enormous, involving a multitude of efforts over
decades.
Having a document that articulates and defines both our near and longer term goals is an incredibly
valuable tool that we all can (and do!) use to evaluate and consider
individual new proposals and initiatives.
It is rare and amazing to have our goals and aspirations so well defined and documented,
and I commend and thank all Palo Altans, Council, and Staff for their past and ongoing contributions,
efforts, and commitment to this process.
Utilities Advisory Commission Minutes Approved on: August 05, 2020 Page 1 of 11
UTILITIES ADVISORY COMMISSION MEETING
MINUTES OF JULY 1, 2020 SPECIAL MEETING
CALL TO ORDER
Chair Danaher called the meeting of the Utilities Advisory Commission (UAC) to order at 5:33 p.m.
Present: Chair Danaher, Vice Chair Forssell, Commissioners Jackson, Johnston, Scharff, Segal, and
Smith
Absent: None
ORAL COMMUNICATIONS
None.
APPROVAL OF THE MINUTES
Commissioner Johnston moved to approve the minutes of the June 17, 2020 meeting as presented.
Commissioner Scharff seconded the motion. The motion carried 7-0 with Chair Danaher, Vice Chair Forssell,
and Commissioners Jackson, Johnston, Scharff, Segal, and Smith voting yes.
AGENDA REVIEW AND REVISIONS
None.
REPORTS FROM COMMISSIONER MEETINGS/EVENTS
None.
UTILITIES DIRECTOR REPORT
Dean Batchelor, Utilities Director, delivered the Utilities Director's Report.
COVID-19 Update – Last week one of the Water/Gas/Wastewater staff members tested positive due to
exposure from a family member. It effected nine other staff members. The good news is all nine tested
negative and came back to work Monday, June 29th. Of the 217 staff members, 110 members are working
onsite, and 107 are working from home.
Street Closures – Starting June 26th, University Avenue from Cowper to High Streets was closed to
through traffic to support in-street dining and retail experiences. The closure will start slowly this
weekend from Friday to Sunday, with University reopening June 28th at 10 p.m. to support traffic
patterns as a result of a closure on Hamilton Avenue on June 29th for a Black Lives Matter Art Installation.
Beginning on July 3rd, the University Ave. closure will run from 10 a.m. – 10 p.m. daily through August
2nd. We are aware of one media outlet writing a story on this effort likely for publication tonight or
tomorrow. Staff is notifying businesses directly via email and through a digital newsletter. Social media
outreach will begin this evening as well. The dedicated website on this effort is
www.cityofpaloalto.org/summerstreets. California Avenue Summer Streets closure continues through
Utilities Advisory Commission Minutes Approved on: August 05, 2020 Page 2 of 11
July 5th, and staff is working to gain business feedback this week to potentially expand to later in the
summer.
Soft Launch of MyCPAU New Online Customer Site – MyCPAU, the improved customer website, has
replaced the existing online My Utilities Account. MyCPAU offers a fast and secure way to pay your bill
online and set up automatic or recurring payments. Customers are able to view monthly utility usage,
learn about opportunities to lower their bills, set notification preferences and alerts, and receive
direct digital support from Customer Service staff. Our customers are excited about this much-needed
upgrade to our online utility customer services.
Utilities Website – Starting this month through the middle of August, Utility staff will be migrating content
from the existing website onto the new platform. The final outcome will be a more robust website that will
support the following Citywide and Utility goals:
• Increase information sharing, communications and community engagement
• Reflect the City's standing as the birthplace of Silicon Valley and reinforce the City's branding
• Ensure mobile capacity and ADA compliance
• Act as a springboard for the public to use other e-services offered by the City
• Expand integration with other digital communications, including social media
• Ensure the City has the ability to adapt to the evolving technology landscape. Of the approximate 3,780
pages are on the site, utilities have 445 pages that need to be updated or old content delete . It is
estimated that the new site will go live at the first of the year.
In response to Commissioner Segal's question about outage information on social media platforms, Batchelor
advised that the new outage management system will automatically update outage information on the
website.
In reply to Vice Chair Forssell's inquiry regarding the City utilizing a .gov domain name for its website,
Batchelor did not believe the web address would change.
COMMISSIONER COMMENTS
None.
UNFINISHED BUSINESS
None.
NEW BUSINESS
ITEM 1: ACTION: Election of Officers.
ACTION: Chair Danaher moved to approve the nominations of Vice Chair Forssell as Chair and Commissioner
Segal as Vice Chair of the Utilities Advisory Commission. Commissioner Scharff seconded the motion. The
motion carried 7-0 with Chair Danaher, Vice Chair Forssell, and Commissioners Jackson, Johnston, Scharff,
Segal, and Smith voting yes.
ITEM 2: DISCUSSION: Discussion of the Demand Side Management Report for Fiscal Year 2019.
Jonathan Abendschein, Assistant Director of Resource Management, reported the Demand Side
Management Report is an annual report and is intended to summarize all programs, their cost effectiveness
and general effectiveness.
In response to Commissioner Smith's inquiry regarding creating or reinstating the photovoltaic (PV) rebate
fund, Abendschein recalled when staff presented the Local Solar Plan to the UAC and the Council, both
wanted to encourage solar but not if it involved additional subsidies to solar customers. Consequently, staff
is not considering another rebate program. Commissioner Danaher noted rooftop solar power did not
Utilities Advisory Commission Minutes Approved on: August 05, 2020 Page 3 of 11
provide any carbon gains and was more expensive. In reply to Commissioner Smith's question about the
public's interest in solar power, Abendschein explained that residents' interest is driven by a sense of energy
independence, resiliency gains, or the desire to generate renewable energy onsite. The desire to install solar
panels in Palo Alto is not driven primarily by economics.
In answer to Commissioner Scharff's question about resiliency gains requiring energy storage, Abendschein
advised that more people are installing Tesla batteries with solar panels. Commissioner Scharff stated
installing solar panels in Palo Alto does not achieve resiliency gains unless the customer uses a Tesla battery
or service.
Commissioner Johnston requested an update regarding the State’s progress toward its goal of doubling
efficiency savings and how that goal affected the City’s goals. Lena Perkins, Senior Resource Planner,
explained that the State goal does not apply directly to public utilities' efficiency programs but is a statewide
goal taking into account not just public utiliy efficiency programs, but also local, State, and Federal building
codes and other programs. Publicly utilities were not necessarily required to double their efficiency goals.
The City of Palo Alto Utilities (CPAU) committed to increasing its efficiency goals by 15% and is conceivably
on track to achieve the goal. The California Energy Commission (CEC) views Palo Alto's savings as one of many
efforts that could double efficiency savings. In reply to Commissioner Johnston's queries regarding measuring
CPAU's energy efficiency savings and the large fluctuations in meeting water efficiency goals, Micah Babbitt,
Resource Planner, related that the savings depend on the measures implemented. When customers apply
for programs, staff compares their current energy usage with energy usage with the technology to be
installed and tracks the change at the project level. Wet years and dry years affect water savings. In 2019,
savings rose because staff began tracking water savings associated with the Green Building Ordinance, which
led to a considerable amount of water savings.
Commissioner Jackson advised that, with respect to PV and storage, adding storage seems to greatly increase
the complexity of a PV project and Code-compliance constraints. Perkins added that solar can operate in
island mode without storage if it is wired correctly, though only when the sun was shining. PV could provide
resiliency without a battery. In answer to Commissioner Scharff's question regarding the number of homes
wired for island mode, Perkins believed more and more homes are being wired this way, but historically few
homes were wired for island mode. In reply to Commissioner Scharff's inquiry as to CPAU's preference for
homes to be wired for island mode, Perkins advised that CPAU's role as facilitator is to ensure homeowners
understand what they are buying. CPAU has a number of programs to ease the solar installation process.
Commissioner Jackson indicated there is an opportunity to educate the public regarding PV installation
models, costs, complexity, and tradeoffs. In reply to Chair Forssell's question regarding workshops providing
this information, Abendschein related that educational materials discuss storage and solar, but information
related to islanding without storage may be missing. He agreed to work with staff to adapt material.
In answer to Vice Chair Segal's query regarding continued savings from nonresidential customers, Babbitt
advised that the business new construction program ended a few years ago, but the savings could not be
realized until the project was complete in the prior fiscal year. A fair amount of lighting could be converted
to increase efficiency and provide savings moving forward. The savings from new construction depends on
whether large customers have projects. In any given year, the savings could increase or decrease quite a bit.
CPAU is launching new home energy and water report programs that will provide some additional savings in
the coming years. CPAU is also launching a small to medium business program that will hopefully drive some
additional savings. There could be a reduction in savings in the current fiscal year, but staff hopes the new
programs will increase savings. Perkins added that staff expects savings to be low in fiscal year 2020 because
of COVID.
Commissioner Smith referred to Appendix B of the staff report, Tables B.1 and B.2, and indicated the savings
from PV on residential competes well with some of the programs highlighted in Table B.1. Commissioner
Danaher believed the table is misleading because CPAU would be getting solar power for that energy anyway.
Abendschein explained that there are multiple ways to look at the data. Because solar is behind the meter,
Utilities Advisory Commission Minutes Approved on: August 05, 2020 Page 4 of 11
it reduces the measured sales. Commissioner Smith clarified that solar reduces the demand of an individual
single-family resident because the resident is pulling from solar. Commissioner Danaher stated the single-
family resident would use the same amount of energy either way. Commissioner Smith agreed that solar
does not necessarily change individual consumption. If the source is a single-family resident's personally
owned solar installation and if it reduces the demand from CPAU's source, he would consider it a savings.
Abendschein reported there is significant savings potential (or generation potential, depending on one's
viewpoint) to reduce the amount of energy that those customers are drawing from the grid. There is
significant potential in Palo Alto. However, solar is generally not a cost effective way to reduce the amount
of energy that residential or other customers draw from the grid as compared to things like efficient lighting
or heating. Solar is not cost effective compared to importing that energy from outside the community.
Incentive programs that are based on adding solar tend to add to the overall cost of energy for the whole
community. When individual customers put solar on their roofs for their own reasons, though, it does benefit
the community because the costs are borne entirely by the individual customer. Customers that install solar
feel the cost is worthwhile. Commissioner Scharff agreed that subsidizing solar makes no sense. If the
customer pays for solar installation, it is a big benefit to the community. Abendschein added that is why staff
promotes education and group buys and tries to reduce barriers to solar. Perkins clarified that solar while
solar can be cost effective for most single-family homeowners, from a utility and societal perspective, solar
is not nearly as cost effective as energy efficiency.
In reply to Chair Forssell's inquiry regarding the provisions of the Green Building Ordinance and the new
construction code that drove water and electric efficiency savings, Christine Tam, Senior Resource Planner,
advised that the water savings come from primarily landscape requirements but also from low-flow faucets
and toilets. In answer to Chair Forssell's query regarding a typical amount of water saved when comparing a
new building with an older building, Tam related that she could provide the data at a later time. The Council
adopted an Energy Reach Code that requires energy savings beyond the State's requirements. CPAU can claim
the additional energy savings that the City mandates beyond the State. The City requires all new
nonresidential construction projects be 10% or 12% higher than the State building efficiency standards. The
architect or building engineer has to design the building to meet that additional efficiency requirement. In
response to Chair Forssell's question regarding the new home energy reports, Lisa Benatar, Utilities
Marketing Program Manager, reported the sad face has been eliminated, but text will let customers know
they are not doing as well as their neighbors. Specific messaging will be sent to solar and electric vehicle (EV)
customers.
In answer to Councilmember Cormack's question about actual measurable reductions, Perkins indicated Staff
measures and de-rates the reductions. The reductions are more stringent than measured. The savings are
"claimed" because in the past shareholder dividends from investor-owned utilities were benchmarked to
validated savings. Councilmember Cormack suggested staff provide energy and water usage information in
the City's twice weekly email with suggestions for activities during shelter in place.
ACTION: None
ITEM 3: DISCUSSION: Discussion and Update on the Progress in Implementing Utility Customer Programs to
Facilitate Electric Vehicle Adoption in Palo Alto.
Hiromi Kelty, Program Manager, reported 107 new charging ports have been installed since the launch of the
EV charger rebate program in 2017. Of the 107 ports, 7 have been installed at multifamily mixed-use
properties, 61 at schools, and 39 at nonprofits. Staff expects to pay approximately $500,000 in rebates for
these installations. Participation in the program has been spurred by an increase in rebate amounts and the
Technical Assistance Program (TAP). The goal is to install 180-360 ports at 60-90 sites by 2022. Currently, 30
sites are participating in TAP and considering installing anywhere from four to 20 EV ports each. Staff
anticipates installation of an additional 100-plus ports through both programs by the end of the calendar
year. One hundred twenty-one new Level 2 chargers and 25 new DC fast chargers have been installed
throughout the City. Because of shelter-in-place orders, site visits and community outreach and events have
been put on hold. Staff has used the time to develop a template for final report presentations to customers
Utilities Advisory Commission Minutes Approved on: August 05, 2020 Page 5 of 11
and to work with the engineering team in reviewing transformers that may be affected by charger
installations. In addition, staff is exploring virtual classes and hopes to launch them in the next six months.
CPAU was awarded $1 million in grant funding to install DC fast chargers through the California Electric
Vehicle Incentive Project (CALeVIP), which will launch in the fall. Staff hopes this program will translate to
about 10 DC fast chargers at key neighborhood locations. The City also contributed $1 million in matching
funds that will translate into roughly 200 workplace and multifamily chargers, which will be installed over the
next two years. Staff expects $2 million will be fully reserved once funds are available. EV programs are
funded through Low Carbon Fuel Standard (LCFS) credits. $6.1 million represents about 75% of the budget
and is dedicated to funding Level 2 chargers. Staff expects this funding will lead to installation of about 600
chargers in two years. The number of ports needed to support the City’s goal to reduce carbon emissions
80% from 1990 levels (the “80 by 30” goal) is estimated at 10,000. Based on current programs and business
plans, about half the number of chargers the community may need could be funded. Hopefully, the private
sector will install infrastructure to help meet the anticipated demand. To meet 80 by 30 goals, Palo Alto's
needs are considerably higher than the State's recommendation. The estimates for chargers do not include
any single-family home chargers because the number changes daily and is difficult to track. The data assumes
current charging patterns, which could dramatically change over the next ten years. Staff is working on an EV
charging network needs analysis. To reach 80 by 30 goals, the number of EVs in Palo Alto will have to increase
from 4,500 to 42,000. Policy makers can set high incentive levels, lower electricity rates, accelerate EV
charging infrastructure with additional funds, and implement mandates.
In reply to Commissioner Johnston's query regarding a congestion fee that would be waived for EVs, Kelty
indicated staff has discussed such a fee and looked at programs around the world. Staff is accepting feedback
on a direction for the program. Commissioner Johnston believed a congestion fee is a less extreme version
of a fee on fossil-fuel vehicles and worth consideration.
Vice Chair Segal favored charging for parking with a waiver for EVs and inquired about the amount of funding
needed to install all the needed ports. Kelty advised that the average cost per port has been about $11,000.
PG&E's average cost thus far is $18,000 per port. The cost depends on the infrastructure at the site.
Commissioner Scharff felt the goal is unattainable. The EV adoption rate would have to increase 7% per year
to reach the goal. He questioned whether the number of existing chargers support the number of existing
EVs and asked if anyone thinks the EV adoption rate would be 14% in 2021. Kelty suggested by 2029, the
adoption rate will be a lot higher than it is now. Commissioner Scharff wanted to focus on scaling up the
installation of EV chargers to be ahead of the curve. The City could not reach an 80% adoption rate unless
the State takes action. Low-income people cannot afford to purchase vehicles often; therefore, equity should
be considered as well as environmental benefits. The 80% goal is so high that it could make the City do things
that seem extreme, such as banning fossil-fuel vehicles. He expressed concern that staff is spending resources
on investigating unattainable actions like fossil-fuel vehicle bans. An incremental and practical approach to
EV adoption would foster better results.
Commissioner Smith remarked that funding and staff resources are insufficient. The funding gap is at least
$90-$100 million. In response to his inquiry about what portion of the $90-$100 million related to CPAU costs,
Jonathan Abendschein, Assistant Director of Resource Management, did not believe any of it is related to
CPAU staffing, and the costs were not insignficant. For example, processing permits for the 30 sites currently
in the TAP would require 0.25-0.5 Full-Time Equivalent (FTE) of engineering time plus some portion of an FTE
for field staff over a couple of years. Scaling up to the levels needed to achieve 80 by 30 goals would require
hiring 5-10 new engineers to begin processing applications. Staffing capacity is a real issue. In reply to
Commissioner Smith's query regarding the only barrier being the lack of staffing, Abendschein suggested the
processes could be improved such that less staffing is needed. Commissioner Smith related that his main goal
for the programs and projects would be their impact. A program or project that reduced the estimated
numbers by a scale or order of magnitude would be worthwhile. The gap needs additional thought.
Utilities Advisory Commission Minutes Approved on: August 05, 2020 Page 6 of 11
Commissioner Jackson did not believe a time-of-use electrical rate would be an effective incentive for
electrification related to EV charging, cooking, HVAC, and water heating. He did not think the combination of
automated metering infrastructure (AMI) and time-of-use rates is a substitute for an all-electric rate or a
lower EV charging rate. Abendschein advised that Proposition 26 requires all rates to be cost-based. CPAU is
not allowed to create incentive rates for EVs. The issue with tiered rates is that a customer who adds an EV
or a heat-pump water heater is pushed into the second tier. The purpose of tiered rates is to encourage
efficiency. Adding an EV is an efficient use of energy, but an EV uses more energy. A higher first tier is intended
to prevent customers from being penalized. Staff has been exploring ways to implement those rates.
Choosing a cost-based design is a big challenge. Time-of-use rates relieve the issue because it moves away
from tiered rates, and customers are not pushed into the second tier. He noted that electricity for EV charging
is cheaper than gasoline, in contrast to electricity for uses like space heating, which is more expensive than
natural gas.
Commissioner Danaher requested a quarterly informational report listing the number of chargers installed
at workplaces, multifamily/mixed-use properties, schools, and nonprofits. In answer to his query regarding
tracking the usage of charging stations, Kelty indicated staff tracks statistics for the City's public chargers.
Once the draft final report has been finalized, it can be shared with Commissioners and members of the
public. Commissioner Danaher commented that utilization data over time would determine whether the
programs are effective. Kelty noted usage rates for EV chargers around the world are 10-17% because of the
pandemic. Commissioner Danaher clarified his interest in utilization rates over the next five years. In response
to his inquiry about the profit from chargers offsetting installation costs, Shiva Swaminathan, Senior Resource
Planner, explained that the City's General Fund, not CPAU, owns the chargers. The breakeven charge is 26
cents per kilowatt hour (kWh), which assumes no cost for the chargers. Kelty added that the utility industry
views EV chargers as a business opportunity because they lead to more electricity sales. Commissioner
Danaher recalled that at least one company will install chargers at no cost in exchange for advertising on the
charger. Obtaining third-party payments for chargers would be great. Energy savings will be generated by
different traffic patterns and people switching from cars to smaller vehicles. Therefore, the number of
chargers and EVs estimated in the presentation may be exaggerated. The decision to purchase an EV is driven
by the cost of the vehicle. The cost of EVs will decrease quite a bit over the next four to five years, which will
drive adoption more than incentives. Kelty advised that studies have shown an EV is less expensive to own
and operate than a gas-powered vehicle over the life of the vehicle, even though EVs currently cost about
$20,000 more than a gas-powered vehicle up front.
Commissioner Scharff questioned whether charging the breakeven rate is smart given that a profit could fund
the installation of more chargers, whether high goals have resulted in a misallocation of resources, and
whether other programs could have more impact for less cost. The impact of programs should always be
considered.
Swaminathan advised that EV chargers will not result in a revenue stream for the City because the rate
charged does matter. The rate for EV charging at a residence with a PV system is in the range of 10 cents. The
industry consensus is owning a charging network will not generate a profit. With limited resources of a couple
of million dollars a year, the focus on multifamily homes, mixed-use properties, and low-income is providing
the most bang for the buck. The installation of chargers is driven by customer demand with a subsidy from
CPAU.
In answer to Commissioner Scharff's questions regarding the rate charged at charging stations in multifamily
housing and electricity being less expensive than gas, Swaminathan indicated the rate charged at multifamily
housing is closer to 25-30 cents per kWh. Electricity for charging is less expensive than gasoline primarily
when an EV is charged at a single-family home with a PV system. From a societal viewpoint, some people feel
EVs are not cost effective if grant funding is not considered. Customers feel EVs are cost effective because of
the grants, tax breaks, and a rate of 10 cents per kWh.
Utilities Advisory Commission Minutes Approved on: August 05, 2020 Page 7 of 11
Councilmember Cormack reported the Council asked staff to present a realistic understanding of what it
would take to achieve the goal set by a prior Council. The discussion of the goals and high interventions are
worth the time and staff resources. A simple quarterly report of charging station numbers would be a good
investment. Another way to think about the number of charging stations installed and to be installed is the
percent of eligible sites with an EV charger. Shared EVs in low-income communities is worth remembering.
Kelty appreciated the UAC's comments. Staff grapples with balancing resources, developing equitable
programs, and having the greatest impact on emissions.
ACTION: None
ITEM 4: ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend the City Council
Amend the City's Electric Supply Portfolio Carbon Neutral Plan and Electric Utility Reserves Management
Practices.
Jim Stack, Senior Resource Planner, reported that, in March, staff proposed updating the carbon accounting
methodology in the Carbon Neutral Plan to use an hourly emissions factor. With the budget impacts of the
COVID situation, staff has focused on finding new sources of revenue from the electric supply portfolio. In
May the UAC discussed the concept of selling more in-state renewables (Bucket 1 Renewable Energy Credits,
or RECs) and purchasing out-of-state renewables (Bucket 3 RECs) to achieve carbon neutrality. Staff requests
feedback regarding a timeframe for staff to execute transactions and use of the resulting revenue. The
difference between a Bucket 1 and a Bucket 3 REC is that in the former case the electricity is delivered with
the REC and in the latter case it is separated from the REC. From an environmental or carbon standpoint,
staff views in-state and out-of-state renewables as identical. Unfortunately, the State does not agree. State
regulations do not allow the reporting of out-of-state RECs as renewable or zero carbon on the Power Content
Label (PCL). Under the Renewable Portfolio Supply (RPS) mandate, the Electric Utility has to meet 75% of the
renewables requirement using in-state resources. That requirement leads to a price differential between in-
state and out-of-state resources. Because the Electric Utility's portfolio consists entirely of in-state
renewables and hydroelectric power, the Electric Utility has far more in-state renewables than required
under the RPS mandate. Selling some of the renewables at a high premium and purchasing out-of-state
renewables at a much lower premium would lead to potential revenue. Staff proposes to sell as many in-
state renewables as possible and purchase only enough out-of-state renewables to achieve carbon neutrality.
As of July 1, staff estimates the transactions will generate potential revenue of $3.8 million in fiscal year (FY)
2021 and slightly more than $3 million in each of the succeeding four fiscal years. Council approval of the
proposed action is needed. Staff plans to present the proposal to the Council on August 17th, which could
reduce the amount of revenue the Electric Utility receives in the current fiscal year. Staff is in the process of
selling surplus renewables that exceed the community’s annual electric load, which will consume most of the
July renewables and the beginning of August renewables. If the Council approves the proposal in mid-August,
the Electric Utility will realize slightly less than $3.8 million. Staff proposes limiting transactions to FY 2021
and 2022. The proposal will impact the PCL. The calendar year 2021 RPS level will change from 62% to 36%,
and staff will have to report some unspecified sources in the portfolio. The carbon emissions intensity, which
will be reported for the first time this year, would change from 6 kg CO2/MWh to 102 kg CO2/MWh. This
carbon emissions intensity on the PCL will be considerably higher than if these REC exchanges did not take
place, but would still be below the average statewide emissions intensity. Staff proposes allocating $1 million
per year to building electrification and local decarbonization programs with the remainder utilized to reduce
electric rates. Staff also proposes creating a new Cap and Trade Program Reserve Fund for these revenues.
In response to Vice Chair Segal's query regarding the difference between revenue from selling Bucket 1 RECs
and revenue from the Cap and Trade Program, Stack indicated they are different revenue streams. The
proceeds from selling the RECs would flow into the General Utilities Fund. A large portion of the proceeds
from selling the allowances will fund renewable energy purchases. Jonathan Abendschein, Assistant Director
of Resource Management, advised that staff has clear guidance that allowance revenue can be used for local
decarbonization programs. Staff continues to explore the availability of other revenue streams for those
Utilities Advisory Commission Minutes Approved on: August 05, 2020 Page 8 of 11
programs. Selling renewables that were previously funded with allowance revenue frees up allowance
revenue for use towards local decarbonization programs in a way that is clearly legally defensible.
Commissioner Scharff requested clarification of the primary driver for the use of cap and trade allowance
revenue in staff's proposal. Abendschein explained that the $1 million proposed for local decarbonization
programs will be funded through allowance revenue. The earnings used to offset the economic impacts of
COVID have no relationship to the allowance revenue.
In reply to Commissioner Smith's inquiry about whether there is a requirement to limit the transaction period
to two years, Stack indicated there is no requirement and it is the Council’s decision whether to limit the
program duration. In answer to Commissioner Smith's question about losing revenue if the Council does not
approve the two-year period and subsequently extend the time period for the subsequent three fiscal years,
Stack responded that if the Council does not approve the sale of Bucket 1 RECs in August, some revenues
would be lost. To receive the maximum revenue from the sale of Bucket 1 RECs, they have to be sold before
the energy is generated. The sales can be spread throughout the year, but the bulk of renewables come in
the summer months with solar generation. Staff proposed limiting the transactions to two fiscal years
thinking the budgetary impacts of COVID-19 are likely to have been mitigated within two years. In March, the
UAC seemed to support selling only the renewables that exceed the annual load. Commissioner Smith felt
the Council rescinding its authorization or directing staff to cease selling RECs would be easier than staff
obtaining an extension or reauthorization of the sale of RECs in 2022. He preferred to authorize the sale of
RECs without a time limit. In June, a primary driver of the UAC's discussion was to provide critically needed
funds for either rate reduction or decarbonization programs. The ultimate goal of the UAC's discussion was
providing a source of funding for local decarbonization. The method for expending the funds or establishing
a reserve fund is logical. He was less comfortable with utilizing the funds to offset rates given the UAC's
decision to hold rates flat and preferred to invest the funds in electrical infrastructure to support local
decarbonization.
Commissioner Johnston noted the policy represents a big change in the way the community understands the
Electric Utility's carbon neutrality and will require a lot of explanation. He supported the change; however, a
review of the policy in two years would reveal the community's response to the explanation of carbon
neutrality. He agreed with using some of the revenue for local decarbonization efforts as a way to help explain
that the Electric Utility remains true to its environmental goals while generating needed revenue for the City.
Commissioner Scharff concurred with Commissioner Johnston's comments. The change in the PCL will seem
to indicate the Utility is no longer carbon neutral. There will be a cost to changing the policy. Staff believes
the community can overcome the apparent loss of carbon neutrality with the proper education. He would
support the sale of RECs to avoid deep cuts to the Electric Utility budget and to fund decarbonization
programs. In two years, the Council should review PCL issues, the community's response to education,
continued authorization of the sale of RECs and, if appropriate, allocation of revenues.
Commissioner Jackson noted the potential for $15 million in revenue. The funding needed to reduce
emissions by a substantial amount is huge. Some of the revenue could be used to lower rates and help
ratepayers. RECs should be sold for as long as possible because the sales will not cause a net increase in
carbon in the western U.S. and the revenues will be used primarily for decarbonization purposes. The Council
can revoke the authorization at any time.
Commissioner Danaher said a helpful analogy is the production of non-GAAP financial statements by
corporations. Staff could produce an analogous “non-GAAP PCL” as part of the community education. The
change in the PCL should not be that hard to explain. He supported a Council review of the policy in two
years. In two years, there could be more data on the value of out-of-state RECs that challenges assumptions.
Vice Chair Segal concurred with a Council review in a couple of years. In the short term, an allocation of some
of the earnings to support the Utility and ratepayers is appropriate. Over time, earnings should go more
Utilities Advisory Commission Minutes Approved on: August 05, 2020 Page 9 of 11
toward decarbonization because that is a compelling reason to support the sale of RECs. City communications
could be an opportunity to provide the explanation that is not allowed on the PCL.
Commissioner Jackson stated the messaging should emphasize $15 million in funding for decarbonization
programs rather than a change in the PCL.
Chair Forssell remarked that her opinion has changed to support the sale of RECs. Accepting Bucket 3 RECs
and showing the money that can be saved and the uses for it have some value that could be considered
alongside the change in the PCL. In reply to her query regarding the customer electric supply carbon content
report required by Attachment A, Item 6c, Stack explained that with statewide changes to the PCL, the Electric
Utility is required to report carbon intensity. Since 2013, staff has reported to the Council regarding the
Carbon Neutral Plan and RPS progress. With both of those reports, a report of the electric supply portfolio's
carbon content is redundant. Chair Forssell noted the report required by Item 6c seems to address educating
customers about the PCL. Item 6c should remain in the Carbon Neutral Plan. Abendschein proposed pairing
the report with the PCL. Chair Forssell agreed and stated a review of the policy in two years is appropriate.
ACTION: Commissioner Scharff moved to recommend the Council:
1. Adopt an amendment to the Carbon Neutral Plan to:
(a) modify the definition of carbon neutrality to use an hourly emissions accounting standard;
(b) minimize electric supply portfolio costs by authorizing the exchange of bundled RECs from the City's
long-term renewable resources (Bucket 1 RECS) for RPS-eligible, unbundled RECS (Bucket 3 Recs) to
the maximum extent possible while maintaining compliance with the State's RPS regulations;
(c) for calendar years 2020-2024, authorize the purchase of Bucket 3 RECs to neutralize any residual
emissions resulting from the switch to an hourly emissions accounting methodology; and
(d) continue to provide a report of the electric supply portfolio's carbon content to supplement the
mandated Power Content Label.
2. Create a Cap and Trade Program Reserve in the Electric Fund which will hold revenues from the sale of
carbon allowances freely allocated to the Electric Utility under the State’s Cap and Trade Program;
3. Direct staff to return to Council in 2022 to review the City’s authorization to minimize electric supply
portfolio costs by authorizing the exchange of bundled RECs from the City’s long-term renewable
resources (Bucket 1 RECs) for RPS-eligible, unbundled RECs (Bucket 3 RECs), to the maximum extent
possible, while maintaining compliance with the State’s RPS regulations; and
4. Direct staff to return to Council with a review of the Carbon Neutral Plan by the end of 2024 to evaluate
the effectiveness of these policy changes and to modify them, if necessary, with particular attention to
mitigating the cost of hourly emissions.
Commissioner Jackson seconded the motion. The motion carried 7-0 with Chair Forssell, Vice Chair Segal, and
Commissioners Danaher, Jackson, Johnston, Scharff, and Smith voting yes.
Commissioners discussed the amount of funding to be allocated to local decarbonization efforts, the use of
a dollar amount versus a percentage, and the language that reflects the UAC's intent.
ACTION: Commissioner Danaher moved to recommend the City Council, consistent with the City's Cap and
Trade Revenue Use Policy adopted in January 2015, (1) for the first two years, allocate at least one-third of
the revenue to local decarbonization efforts and (2) thereafter prioritize local decarbonization efforts.
Commissioner Scharff seconded the motion. The motion carried 7-0 with Chair Forssell, Vice Chair Segal, and
Commissioners Danaher, Jackson, Johnston, Scharff, and Smith voting yes.
The Commission took a break from 8:29 p.m. to 8:35 p.m.
Utilities Advisory Commission Minutes Approved on: August 05, 2020 Page 10 of 11
ITEM 5: ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend to Council
Whether to Direct Staff to Evaluate the Impact of Including Upstream Emissions and Using a 20-Year Time
Horizon for Global Warming Potential on the Community's Carbon Emissions.
Chair Forssell questioned whether this item can be continued to the August meeting. Commissioner Danaher
stated a recommendation to the Council is not necessary if Director Batchelor intends to report the
information. Chair Forssell understood one of the options was more expensive and would require Council
approval. Commissioner Danaher did not believe the second option would provide more information or be
more accurate than the first option.
Lena Perkins, Senior Resource Planner, advised that the UAC may continue the item if it wishes.
Commissioner Scharff preferred the first option.
Perkins noted the estimate would assess upstream emissions using both a 100-year and a 20-year global
warming potential of emissions.
Vice Chair Segal concurred with Commissioner Danaher's comments. Including a 20-year time horizon for
internal purposes would be a worthwhile exercise.
In reply to Commissioner Johnston's question regarding the methodology to estimate the upstream
emissions from electricity, propane and liquid fuels and the additional resources needed to do that, Perkins
indicated in order to use numbers for any sort of decision-making that might involve trading off carbon-
reduction actions meant to address different types of fuels or to look at a dollar per carbon mitigated, all fuel
systems need the same system boundary. If staff is doing an estimate, adding the other energy streams will
not extend the time beyond the week of staff time noted in the report. Commissioner Johnston preferred to
have the additional information if it does not increase staff time.
Chair Forssell supported the inclusion of upstream emissions. Including both a 100-year and 20-year global
warming potential is an interesting and valuable idea, and both views have value.
In answer to Commissioner Danaher's query, Dean Batchelor, Utilities Director, advised that Council approval
is not required.
ACTION: None.
ITEM 6: DISCUSSION: Discussion of the FY21 Council-Adopted Budget Overview.
Dave Yuan, Strategic Business Manager, reported FY 2021 gas rates will increase by 2% to avoid future rate
increases of 8%-10% and to maintain reserve levels within guidelines. Fiber and storm drain rates will increase
by 2.5%. All other rates will remain unchanged. The average increase for a monthly residential bill will be
approximately 0.5% or $1.50. Five vacant positions have been frozen for FY 2021 and will not impact
operations, projects, or programs. Staff is reorganizing CPAU Engineering into two divisions, one for Electric
and Fiber and one for Water, Gas, and Wastewater. The Electric Capital Improvement Program (CIP) was
reduced by $2.4 million, building electrification by $300,000, the Gas CIP by $3 million, and the Wastewater
Collection CIP by $700,000. No changes were made to the Carbon Neutral Gas carbon offset program, the
cross-bore safety inspection program, the AMI project, the Corte Madera Reservoir replacement project, and
the Fiber Network Expansion project. Operation Reserve Fund balances, with the exception of Wastewater,
fall within guidelines. The Wastewater Reserve Fund balance is not a concern because it has fewer variable
factors.
In reply to Commissioner Smith's query regarding growth in the Fiber Reserve Fund, Yuan explained that the
balance increases by approximately $2 million dollars per year plus interest.
ACTION: None.
Utilities Advisory Commission Minutes Approved on: August 05, 2020 Page 11 of 11
ITEM 7: ACTION: Selection of Potential Topic(s) for Discussion at Future UAC Meeting.
Vice Chair Segal requested a discussion of the feasibility of closing the Gas Utility and a potential timeframe
for doing so.
Commissioner Danaher requested an update regarding the fiber expansion project in the fall. Dave Yuan,
Strategic Business Manager, advised that the consultant will address the UAC in August.
Commissioner Scharff requested an update regarding a second interconnect. Councilmember Cormack
concurred, especially in light of the Public Safety Power Shutoffs.
Commissioner Scharff proposed the UAC meet in the morning hours. Commissioner Danaher preferred
evening meetings. Commissioner Scharff suggested the UAC meeting earlier in the evening. Chair Forssell
requested staff poll Commissioners for meeting times between 4:00 and 5:30 p.m.
ACTION: None
NEXT SCHEDULED MEETING: August 5, 2020
Commissioner Jackson moved to adjourn. Commissioner Danaher seconded the motion. The motion carried
7-0 with Chair Forssell, Vice Chair Segal, and Commissioners Danaher, Jackson, Johnston, Scharff, and Smith
voting yes. Meeting adjourned at 8:57 p.m.
Respectfully Submitted
Tabatha Boatwright
City of Palo Alto Utilities
City of Palo Alto (ID # 11067)
Utilities Advisory Commission Staff Report
Report Type: Agenda Items Meeting Date: 6/17/2020
City of Palo Alto Page 1
Summary Title: Demand Side Management Report
Title: Discussion of the Demand Side Management Report for Fiscal Year
2019
From: City Manager
Lead Department: Utilities
Recommendation
This memo and the attached report present the achievements of Demand Side Management
(DSM) programs implemented by the City of Palo Alto Utilities (CPAU) during Fiscal Year (FY)
2019. This is for the Commission’s information and no action is required.
Executive Summary
The FY 2019 DSM Annual Report provides updates on the ac hievements of CPAU’s electric,
natural gas, and water efficiency programs, as well as locally-sited solar photovoltaic (PV), solar
water heating program and sustainability-related programs. The DSM Report also provides
updates on various customer outreach and research and development initiatives that are
related to achieving savings in electric, gas and water.
CPAU exceeded its electric and water efficiency goals for FY 2019 but fell short of meeting its
gas goals. The decline in gas savings is largely driven by less savings able to be claimed from
home energy report savings persistence as well as the fact that the small and medium
business efficiency program was not active in FY 2019 as it is in the process of being updated
and launched.
Background
As a municipal utility that delivers electric, gas and water services to customers in its service
territory, CPAU is subject to state laws that govern resource conservation and related
expenditures. Key legislation that affects CPAU includes:
Assembly Bill (AB) 1890 (1996) requires publicly owned electric utility (POUs) to establish a
public benefit charge of 2.85% of revenue to fund any or all of the following “public benefit”
programs:
•Cost-effective, DSM services to promote energy-efficiency and energy conservation.
Staff: Karla Dailey
City of Palo Alto Page 2
• New investment in renewable energy resources and technologies consistent with
existing statutes and regulations that promote those resources and technologies.
• Research, development, and demonstration programs in the public interest which
advance science, or a technology not being adequately provided for by competitive and
regulated markets.
• Services for low-income electricity customers such as targeted energy-efficiency
installations.
Senate Bill (SB) 1037 (2005) requires each POU, in procuring energy, to first acquire all available
energy efficiency and demand reduction resources that are cost -effective, reliable and feasible.
AB 2021 (2006), as amended by AB 2227 (2012), requires POUs to develop annual electric
efficiency targets over ten years based on all potentially achievable cost-effective energy
savings, update the goals every four years, and provide annual reports to their customers and
the California Energy Commission. CPAU adopted its first ten -year electric and gas efficiency
targets in 2007 and has since updated these goals twice with the last update completed in
December 2012.
SB 1 (2006) requires all POUs to adopt, implement and finance a solar initiative program to
encourage the installation of residential and commercial solar energy systems.
AB 1470 (2007) requires each POU providing gas service to retail end -use gas customers to
adopt, implement and finance a solar water heating system incentive program.
SBx7-7 (2009) requires water suppliers to reduce the state average per capita daily water
consumption by 20% by December 31, 2020. This requirement is incorporated in the 2015
Urban Water Management Plan, adopted by California’s urban water suppliers including Palo
Alto.
SB 350 (2015) sets targets for utilities of 50% renewable electricity retail sales and double the
energy efficiency savings in electricity and natural gas, both by 2030. The law grants compliance
flexibility for publicly owned utilities that achieve 50% or more of retail sales from certain large
hydroelectric power.
Discussion
CPAU offers incentives and education programs for customers to encourage energy and water
efficiency, customer-owned renewable generation, and enrollment in voluntary renewable
energy programs. The table below summarizes the FY 2019 goals and achievements. As
shown, the achievements for electric and water efficiency exceeded the goals set for FY
2019. Gas savings missed the target as there was a drop off in commercial gas efficiency
projects.
City of Palo Alto Page 3
Goals versus Achievements
Resource
FY 2019
Savings Goals
(% of load)
FY 2019
Savings Achieved
(% of load)
FY 2019
Savings Achieved
Electricity 0.88% 1.02% 8,980 MWh
Gas 1.05% 0.57% 167,186 therms
Water 0.91% 3.04% 134,242 CCF
Despite not meeting all efficiency savings goals, the portfolio of programs generated cost-
effective savings across all three utilities. More information on this can be found in the report.
Furthermore, CPAU develops a range of marketing campaigns to promote gas, electric, and
water efficiency programs and increase public engagement. Promotional methods include
community outreach events, print ads in local publications, utility bill inserts, messaging on bills
and envelopes, website, email newsletters, videos for the web and local cable television
channels, and the use of social media (Twitter/Facebook/NextDoor/Videos).
The attached DSM Report provides details about CPAU’s FY 2019 DSM programs including costs
and resource savings by program and by end use, description of customer outreach efforts, and
research and development initiatives that are underway.
Stakeholder Engagement
CPAU receives significant stakeholder engagement on its demand side management programs
during the energy efficiency target setting performed every four years. In addition, many
program offerings are developed with input from community members, third party subject
matter experts, and feedback provided from the UAC and Council.
Environmental Review
The Demand Side Management Report is not subject to review under the California
Environmental Quality Act since receiving this report will have no foreseeable direct or indirect
physical change in the environment and therefore does not meet the definition of a Project
under Public Resources Code 21065.
Attachments:
• Attachment A: FY 2019 Demand Side Management Annual Report
Fiscal Year 2019 Demand Side Management Report
OVERVIEW:
The City of Palo Alto Utilities (CPAU) is the only city-owned utility in California that operates
its own utilities for electric, natural gas, water, fiber optic, storm drain, wastewater and refuse
services. We have been providing quality services to the citizens and businesses of Palo Alto
since 1896.
MISSION:
To provide safe, reliable, environmentally sustainable and cost-effective services.
STRATEGIC DIRECTION:
At CPAU, our people empower tomorrow’s ambitions while caring for today’s needs. We make
this possible with our outstanding professional workforce, leading through collaboration and
optimizing resources to ensure a sustainable and resilient Palo Alto.
PRIORITIES:
Workforce: We must create a vibrant and competitive environment that attracts, retains, and
invests in a skilled and engaged workforce.
Collaboration: We must collaborate with internal teams and external stakeholders to achieve
our shared objectives of enhanced communication, coordination, education, and delivery of
services.
Technology: We must invest in and utilize technology to enhance the customer experience
and maximize operational efficiency.
Financial Efficiency and Resource Optimization: We must manage our finances optimally and
use resources efficiently to meet our customers’ service priorities.
Attachment A
Fiscal Year 2019 Demand Side Management Report
TABLE OF CONTENTS
EXECUTIVE SUMMARY ..................................................................................................................... 3
1 ELECTRIC EFFICIENCY ACHIEVEMENTS ..................................................................................... 7
2 GAS EFFICIENCY ACHIEVEMENTS ........................................................................................... 10
3 WATER EFFICIENCY PROGRAMS ............................................................................................. 13
4 SUSTAINABLE ENERGY PROGRAMS ....................................................................................... 16
APPENDIX A: PROGRAM DESCRIPTION ........................................................................................... 19
APPENDIX B: FY 2019 ACHIEVEMENTS BY DSM PROGRAM ............................................................. 24
APPENDIX C: HISTORICAL DSM PROGRAM EXPENDITURES ............................................................. 26
APPENDIX D: CITY POLICIES/PLANS AND STATE MANDATES IMPACTING DSM PROGRAM GOALS AND
IMPLEMENTATION ........................................................................................................................ 27
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EXECUTIVE SUMMARY
The City of Palo Alto Utilities (CPAU) is pleased to issue the Demand Side Management (DSM)
Report for Fiscal Year (FY) 2019. This report is a useful public document showing the efficiency
achievements and customer programs. CPAU is committed to supporting environmental sustainability
through conservation of electric, gas and water resources. Additionally, CPAU promotes distributed
renewable generation, building electrification, and electric vehicles using incentives and educational
programs. CPAU accomplishes these goals by delivering a wide range of customer programs and
services as described in this report, and strives to do so while remaining personable and in-touch with
customer needs.
This annual report provides updates on:
♦ Electric and natural gas energy efficiency (EE) programs
♦ Water conservation programs
♦ Sustainability and carbon-reduction programs
♦ Customer engagement and satisfaction programs
♦ Achievements and expenditures
ENERGY EFFICIENCY AND WATER CONSERVATION GOALS AND ACHIEVEMENTS
CPAU offers incentives and education programs for customers to encourage energy and water
efficiency - Table ES.1 summarizes the FY 2019 efficiency goals and achievements. FY 2019
represents the second year of increased energy savings targets 1 established since SB 350 was enacted
in 2015 with the aim to double the energy efficiency savings in electricity and natural gas in buildings
by 2030. CPAU exceeded the higher new electricity efficiency savings goal for 2019 (using gross
accounting basis), while falling short of the goal for natural gas efficiency savings. The decline in gas
savings is partially driven by the suspension of the home energy report program which is scheduled to
resume in FY2021. Water efficiency savings dramatically increased in 2019, because a process to
collect data for water savings associated with the Green Building Ordinance was developed.
Table ES.1: Efficiency Goals versus Achievements
Resource
FY 2019
Savings Goals
(% of load)
FY 2019
Savings Achieved
(% of load)
FY 2019
Savings Achieved
Electricity 2 0.88% 1.02% 8,980 MWh
Gas 1.05% 0.57% 167,186 therms
Water 0.91% 3.04% 134,242 CCF
1 Electric goals: https://www.cityofpaloalto.org/civicax/filebank/documents/56087; Gas goals:
https://www.cityofpaloalto.org/civicax/filebank/documents/56113
2 Savings goals and savings achieved are given in Table ES.1 on a gross efficiency savings accounting basis. As a percentage
of load, the net electricity savings goal was 0.75% and the net savings achieved was 0.61% or 5,372 MWh. Net values
account for the impact of “free ridership” or customers who would have upgraded to more efficient measures without the
program or incentive. Gas and water goals and achievements are only tracked on a gross basis, and therefore electricity
efficiency savings are shown on a gross basis in Table ES.1 above for consistency.
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CPAU is committed to implementing all cost-effective energy and water efficiency measures (i.e. those
that are less expensive than supply-side resources). Table ES.2 summarizes the cost of efficiency over
the last three years compared to the projected cost of supply resources. Electric, natural gas, and
water efficiency portfolios were cost-effective compared to additional supply-side resources in FY
2019. Overall cost of the portfolios were lower than the historical average. New programs are planned
for launch in 2020-2021, and total expenditures are expected to increase as a result.
The rolling 3-year average provides the longest view for interpreting the cost effectiveness of
efficiency portfolios, as it accounts for yearly variations in program engagement and funding. The
rolling 3-year average shows that the electric and water efficiency portfolios have been cost-effective.
On the other hand, the 3-year average cost of gas efficiency savings is higher than the future supply.
This was driven by very high program costs in FY 2017 as well as inexpensive future supply. The FY
2018 and 2019 gas efficiency cost effectiveness has improved versus future supply cost of gas, but
staff continues to assess ways to improve the cost-effectiveness of the gas portfolio going forward.
The cost of both the electricity and natural gas efficiency portfolios are also negatively impacted by
the Home Efficiency Genie program. The Home Efficiency Genie program is a customer service
program that provides great educational value to Palo Alto residents but delivers fairly small energy
efficiency savings.
Table ES.2: Actual Levelized Efficiency Costs versus Projected Supply Costs
FY 2017
Efficiency
FY 2018
Efficiency
FY 2019
Efficiency
3-yr average
Efficiency
Future
Supply
Electric $/kWh $0.056 $0.034 $0.024 $0.038 $0.105
Gas $/therm $1.86 $0.56 $0.56 $0.99 $0.61
Water $/CCF $4.62 $4.71 $0.26 $3.20 $5.77
SUSTAINABILITY GOALS AND ACHIEVEMENTS
In FY 2019 efforts around building electrification and electric vehicle charger rebates were increased.
Staff also continued working with a marketing consultant to upgrade the marketing materials for all
programs including a full website migration. In addition, CPAU claimed energy savings for the third year
achieved by Palo Alto’s building energy reach code and improved the data collection process to claim
water savings. Staff worked with TRC, a third party auditor who conducted CPAU’s Evaluation,
Measurement & Verification to estimate and claim energy savings from projects that reported time
dependent valuation (TDV) energy summaries. Finally, CPAU was able to claim savings from its Business
New Construction program for one large project that took multiple years to complete but accounted
for a significant contribution to overall energy savings.
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CPAU supports a variety of programs designed to promote sustainability and reduce carbon emissions
in Palo Alto. The Electric Vehicle Supply Equipment (EVSE) rebate focuses on “hard-to-reach” market
segments for EV chargers by targeting multifamily dwellings, nonprofits and schools. The state-
mandated solar water heating program is not cost-effective; CPAU offers the program but does not
actively promote it. Given the lack of promotion and the low natural gas prices, installed solar water
heating systems continue to fall short of the goal. This program is expected to close at the end of July
2020, assuming no new legislation extends the state mandate.
Table ES.3: Sustainability Programs and Goals
Sustainability Program Program Goal FY 2019
Achievement
Cumulative Achievement
Through FY 2019
Heat-Pump Water Heater (HPWH)
Rebate
110 installed by July
2019 10 40
EV Charger Rebate (EVSE) 200-400 new charging
ports by 2021 8 22
Solar Water Heating Compliance – Not Cost
Effective 0 systems 68 systems since 2008
CUSTOMER SATISFACTION GOALS AND ACHIEVEMENTS
Supporting the community is at the heart of CPAU’s mission. CPAU offers some programs that are not
intended to achieve efficiency savings but are offered for educational value or as a customer service
program to increase customer satisfaction. Palo Alto once again hosted two educational workshops for
the SunShares program, which is a bulk buy program of PV systems for the nine counties comprising
the Bay Area. Once again Palo Alto was the number one outreach partner in number of systems installed
and kWs installed.
Table ES.4: DSM Program Areas
Community Engagement Program Program Goal FY 2019
Achievement
Cumulative Achievement
through FY 2019
Residential Satisfaction >50%3 76%4 -
SunShares PV GroupBuy PV capacity 76 kW 497 kW
Home Efficiency Genie 120 audits year 76 358
3 This goal is from the 2018 City of Palo Alto Utilities Strategic Plan in the priority area of Collaboration.
4 This residential satisfaction is from the 2018 RKS residential survey in Attachment D of the October 2, 2019 UAC report.
The survey is conducted every other year.
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HIGHLIGHTS OF FISCAL YEAR 2019
Three years after implementing the Business New Construction program, one large project was fully
closed out in FY2019 and the resulting energy savings were eligible to be claimed. Successful completion
of this project accounted for almost half of all gross electric savings.
The Commercial and Industrial Energy Efficiency Program is the flagship of CPAU’s commercial portfolio.
With three engineering firms working closely with CPAU Key Account Representatives, this program
provides the bulk of Palo Alto’s energy savings. The engineering firms assist customers with audits,
engineering studies, vendor selection, rebate processing and post-installation inspection making the
process as easy as possible for the customer. Roughly a quarter of the gross energy savings resulted
from this program. CPAU mirrored this program design into the residential market with the Home
Efficiency Genie as “Your Trusted Energy Advisor” and have begun seeing increased engagement with
residents.
CPAU added an EV Charger Rebate Program in late FY 2017, using funds from the Low Carbon Fuel
Standard credit sales and, in 2019, invested additional staff time to expand the program by contracting
with a third-party vendor to provide prospective customers with technical assistance. The EV Technical
Assistance Program launched in FY 2020. CPAU continues to promote the Heat Pump Water Heater
rebate program in effort to achieve the City’s S/CAP goals, but the program has relatively low
participation. Both EV charging rebates and the Heat Pump Water Program remained a high priority for
staff in FY 2019, reflecting the ongoing community priority of reducing CO2 emissions. Palo Alto
participated in the SunShares program again, which is a bulk buy program of PV systems for the nine
counties comprising the Bay Area, and once again Palo Alto was the number one outreach partner in
number of systems installed and kWs installed. Finally, CPAU continued buying carbon offsets to offset
the emissions of the entire natural gas portfolio.
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1 ELECTRIC EFFICIENCY ACHIEVEMENTS
1.1 Electric Efficiency Savings versus Goals
City Council approved CPAU’s first Ten-Year Energy Efficiency Portfolio Plan in April 2007,
which included a 10-year cumulative savings target of 3.5% of the forecasted energy use. As
mandated by California law, the electric efficiency targets have been periodically updated, with
the most recent 10-year cumulative savings goal set at 5.7% between 2018 and 2027. The goal
has been impacted by increasingly stringent statewide building codes and appliance standards.
The substantial energy savings from these “codes and standards” can no longer be counted
towards meeting CPAU’s EE program goals displayed below. With stricter codes and standards,
higher efficiency goals and over 30 years of running programs in Palo Alto, staff needs to
continue to innovate to maintain and increase efficiency savings.
CPAU’s electric efficiency savings goals and achievements as a percentage of the City’s
electricity usage are shown in Table 1 below. In FY 2019, on a gross efficiency savings basis,
CPAU achieved electric efficiency savings of 1.02% of its total electricity sales through its
customer efficiency programs. This exceeded the 2019 CPAU electric efficiency goal by 14%.
Table 1: Electric Savings versus Goals
Year Annual Savings
Goal (% of load)
Savings Achieved
(% of load)
Savings Achieved
(MWh)
Goal Source
FY 2008 0.25% 0.44% 4,399 2007
FY 2009 0.28% 0.47% 4,668
FY 2010 0.31% 0.53% 5,270
FY 2011 0.60% 0.58% 5,497 2010
FY 2012 0.65% 1.31% 12,302
FY 2013 0.70% 0.85% 8,074
FY 2014 0.60% 0.86% 8,218 2012
FY 2015 0.60% 0.65% 6,063
FY 2016 0.60% 0.59% 5,530
FY 2017 0.60% 0.65% 5,986
FY 2018 0.88%5 (0.75%) 1.00%5 (0.66%) 8,9885 (5,957) 20175
FY 2019 0.88%5 (0.75%) 1.02%5 (0.61%) 8,9805 (5,372)
5 Electricity efficiency savings goal and achievements are presented here on a gross basis, and the net numbers are added in
parenthesis for FY 2018 and 2019. CPAU will be reporting both net and gross electricity efficiency savings going forward,
due to discrepancies between anticipated net to gross ratios during the 2017 goal setting and actual net-to-gross ratios for
electric efficiency measures implemented. Staff is will be revising goals in 2020-2021 and is also considering a study specific
to Palo Alto to develop a local net-to-gross ratio for programs and measures.
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When accounting for the metric of “free-ridership” the net electric efficiency savings achieved
dropped to 0.61% of load, and experts have suggested a Palo Alto specific study to examine free-
ridership levels on incentive programs. Staff is currently weighing the relative impact of such a
study compared to investing program innovation. Since there is so much uncertainty in the levels
of free-ridership, the goals and achievements of the electric efficiency savings are presented on
both a net and gross basis. For context, gas and water efficiency measures are both reported on
a gross basis.
1.2 FY 2019 Electric Efficiency Savings by End Use and Customer Segment
Non-residential customers account for approximately 80% of CPAU’s electric sales, and non-
residential efficiency program savings represent about 83% of CPAU’s total electric efficiency
savings, as shown in Figure 1. Non-residential new construction and non-residential lighting
accounted for approximately 77% of the total electric portfolio savings. The City of Palo Alto’s
Energy Reach Code Ordinance is a local ordinance that exceeds state minimum efficiency
standards and also contributed substantial electricity efficiency savings.
Figure 1: Composition of Net Electric Efficiency Savings in FY 2019
Non-Res Lighting
30%
Non-Res New
Construction
47%
Non-Res Energy Reach
Code Ordinance
8%
Res Home
Energy Report
7%
Home Efficiency
Genie
1%
Multifamily Lighting
3%
Low-Income
1%
Other
3%
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Figure 2 shows the historical annual electric efficiency savings and annual electric
efficiency program expenditures.
Figure 2: FY 2008 to FY 2019 Electric Efficiency Savings and Expenditures
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1,000
2,000
3,000
4,000
5,000
0.0%
0.4%
0.8%
1.2%
1.6%
2.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
$
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Electric Efficiency Program Expenditures Net Savings Achieved as % of Load
Completion of a significant EE project at a
large commercial customer site
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2 GAS EFFICIENCY ACHIEVEMENTS
2.1 Gas Efficiency Savings versus Goals
In parallel with the development of ten-year electric goals, City Council adopted CPAU’s first
set of gas efficiency targets in 2007 to reduce 10-year gas consumption by 3.5%. The most
recent goal, set in 2017, is a 5.1% cumulative efficiency savings between 2018 and 2027. Gas
savings from heat-pump water heater rebate program are included below.
CPAU’s gas efficiency savings goals and achievements as a percentage of sales are shown in
Table 3. CPAU has continued to expand its gas efficiency program portfolio in the past several
years, with most gas savings delivered through third-party administered programs.
Table 3: Gas Savings versus Goals
Year Annual Savings
Goal (% of load)
Savings Achieved
(% of load)
Savings Achieved
(therms)
Goal Source
FY 2008 0.25% 0.11% 35,057 2007
FY 2009 0.28% 0.29% 146,028
FY 2010 0.32% 0.35% 107,993
FY 2011 0.40% 0.55% 164,640 2010
FY 2012 0.45% 0.74% 220,883
FY 2013 0.50% 1.13% 327,077
FY 2014 0.50% 1.20% 337,079 2012
FY 2015 0.50% 0.92% 229,373
FY 2016 0.55% 1.08% 289,442
FY 2017 0.55% 0.81% 228,707
FY 2018 1.00% 0.93% 264,960 2017
FY 2019 1.05% 0.57% 167,186
2.2 FY 2019 Gas Efficiency Savings by End Use and Customer Segment
Non-residential customers account for 52% of CPAU’s gas sales, and in FY 2019, non-residential
gas efficiency savings represented about 47% of CPAU’s total gas savings. Non-residential HVAC
comes from customers who upgrade HVAC equipment. Home Energy Reports (HERs), which
compare customers’ electricity and gas usage to that of similar homes, were discontinued in FY
2015 but provided savings based on assumed persistence of the program’s effects 6. In FY 2019,
the HER program accounted for 35% of total gas savings and is the final year persistence will be
claimed. Had Palo Alto been able to roll out the new Home Energy Report earlier we would have
30% higher gas savings. This program is currently being configured, and will hopefully help
customers begin saving natural gas in FY2021. Figure 3 shows the breakdown of gas savings in
FY 2019 by end use. The City of Palo Alto’s Energy Reach Code Ordinance is a local ordinance
that exceeds state minimum efficiency standards and also contributed natural gas efficiency
savings.
6 Savings from a behavioral program can be claimed at a declining level for five years after it closes (Cadmus 2015 report).
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Figure 3: Composition of Natural Gas Efficiency Savings in FY 2019
Non-Res HVAC
35%
Non-Res Service and
Domestic Hot Water
8%
Non-Res Energy
Reach Code Ordinance
1%
Res Home Energy
Report
36%
Home Efficiency
Genie
12%
Low Income
3%
Heat Pump
Water Heater
1%Other
4%
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Figure 4 compares the historical annual gas efficiency savings and annual gas DSM
expenditures.
Figure 4: FY 2008 to FY 2019 Gas Efficiency Savings and Expenditures
-
300
600
900
1,200
1,500
0.0%
0.3%
0.6%
0.9%
1.2%
1.5%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
$
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Gas Efficiency Program Expenditures Actual Savings Achieved as % of Load
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3 WATER EFFICIENCY PROGRAMS
3.1 Water Efficiency Savings versus Goals
CPAU’s water savings goals and achievements as a percentage of sales are shown in Table 5.
Table 5: Water Savings versus Goals
Year Annual Savings Goal
(% of load)
Savings Achieved
(% of load)
Savings Achieved
(CCF)
FY 2008 0.34% 0.72% 39,323
FY 2009 0.34% 0.98% 52,983
FY 2010 0.34% 1.35% 68,948
FY 2011 0.90% 0.47% 23,409
FY 2012 0.91% 1.09% 55,067
FY 2013 0.91% 0.53% 26,513
FY 2014 0.91% 0.64% 32,325
FY 2015 0.91% 1.54% 68,227
FY 2016 0.91% 1.96% 74,484
FY 2017 0.91% 1.40% 57,154
FY 2018 0.91% 0.47% 23,209
FY 2019 0.91% 3.04% 134,242
The City partners with the Santa Clara Valley Water District (Valley Water) to provide water
conservation programs. Valley Water administers the programs for Palo Alto customers, and
CPAU markets and promotes the programs. FY 2019 is the first year the City has claimed savings
associated with the City of Palo Alto’s Green Building Ordinance. Historically, participants were
not required to submit water savings data, but the City began collecting that information at the
end of FY 2018. Local ordinances such as the City of Palo Alto’s Green Building Ordinance are
generally agreed to be an effective way to improve conservation and the FY2019 water efficiency
and savings data proves this out.
3.2 FY 2019 Water Efficiency Savings by End Use and Customer Segment
The Green Building Ordinance accounted for nearly 90% of all water savings with the remaining
10% coming from the water programs administered by Valley Water.
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Figure 5: Composition of Water Efficiency Savings in FY 2019
Green Building
Ordinance
89%
Valley Water
11%
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Figure 6 compares the historical annual water efficiency savings and annual water DSM
expenditures.
Figure 6: FY 2008 to FY 2019 Water Efficiency Savings and Expenditures
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200
400
600
800
1,000
0.0%
0.4%
0.8%
1.2%
1.6%
2.0%
2.4%
2.8%
3.2%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
$
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Water efficiency program expenditures ($)Actual water savings as % of load
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4 SUSTAINABLE ENERGY PROGRAMS
4.1 Overview of Sustainable Energy Programs
CPAU offers a variety of programs to encourage residents and non-residents to improve the
environmental impacts associated with their gas and electric consumption. Customer-side
renewable generation programs are available to support the installation of both solar
photovoltaic (PV) and solar water heating (SWH) systems.
4.2 PV System Installation Achievements versus Goals
As of the end of FY 2019, there were a total of 1,168 PV installations (1,139 residential, 85 non-
residential, 6 CLEAN) since CPAU began supporting local solar PV installations in 1999. These
customer-side generation systems are not included in CPAU’s Renewable Portfolio Standard
(RPS) supply requirements. In FY 2018, the first PV system went live for the Clean Local Energy
Accessible Now (CLEAN) program, which purchases electricity from renewable energy
generation systems in CPAU’s service territory. The CLEAN program provides a Feed-In-Tariff
rate of $0.165/kwh for the first 3 MW of installed capacity. Nearly half of the capacity was
reserved in FY 2018 with the remaining capacity reserved in FY 2019.
In 1999 CPAU began offering incentives for PV system installations through the PV Partners
Program. In FY 2008 the PV rebate budget was increased as mandated by Senate Bill 1 (2006)
and Palo Alto’s share of the state-wide goal established by SB 1 was 6.5 MW by 2017. By June
30, 2017, Palo Alto exceeded its share of the state-wide goal, with a total capacity of all Palo
Alto PV systems at 8.6 MW, generating about 1.5% of the City’s annual electric energy needs.
The PV rebate funds were fully reserved in August 2014 for residential projects and in April 2016
for commercial projects, but rebate payments are expected to continue through FY 2023 due to
the five-year performance-based incentive schedule. Residents and commercial customers
continue to install solar without a rebate largely due to the continued decrease in solar
installation costs, net metering and the 30% Federal Tax Credit.
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Figure 7: Photovoltaic (PV) Installations by Fiscal Year
Figure 8: PV System Capacity (kW) added by Fiscal Year
FY00-
07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
CLEAN 3 3
Res 176 112 43 52 44 49 49 103 93 131 84 77 64
Non-Res 9 5 9 2 2 4 3 10 9 5 7 8 12
0
50
100
150
200
In
s
t
a
l
l
a
t
i
o
n
C
o
u
n
t
FY00-
07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
CLEAN 1,500 1,500
Res 542 328 152 205 187 195 214 543 474 633 409 449 375
Non-Res 123 227 1,037 15 295 249 49 1,383 378 465 508 1,049 591
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Ca
p
a
c
i
t
y
A
d
d
e
d
(
k
W
-AC
)
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4.3 Solar Water Heating System Installation Achievements versus Goals
A total of 68 solar water heating (SWH) systems have been installed since CPAU began offering
SWH rebates to residential and commercial customers in 2008. The SWH rebate program was
mandated by AB 1470 (2007) and was recently extended for two additional years by AB 797
(2017). It is administered by the Center for Sustainable Energy (CSE), which also administers
SWH rebate programs in the San Diego area. As shown in Figure 9, the number of SWH systems
installed has been consistently below target, primarily due to low gas prices which reduce the
cost-effectiveness of SWH systems. Unlike PV systems, the cost for SWH systems has not
decreased over time.
Figure 9: Customer-Side Solar Water Heating Systems—Program Achievements versus Annual Goal of
30
7 17 10 1 1 11 15 1 1 4 0
0%
25%
50%
75%
100%
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
Installed by Fiscal Year Installation Goal
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APPENDIX A: PROGRAM DESCRIPTION
The programs offered by CPAU are designed to assist all customer groups achieve efficiency savings in
electricity, natural gas and water in a cost-effective manner. Please see Appendix B for the savings totals
associated with each program.
RESIDENTIAL PROGRAMS
• Home Efficiency Genie
The Home Efficiency Genie (HEG) has become CPAU’s flagship residential program. Launched in
June 2015, the program enables our residents to call the ‘Genie’ to get free utility bill reviews
and phone consultations. For a fee, residents also have the option to receive an in-depth home
efficiency assessment which includes air leakage testing, duct inspections, insulation analysis,
energy modeling and a one-on-one review of assessment reports with an energy expert. This
package is also followed up with guidance and support throughout home improvement projects.
The HEG program has a high educational component for Palo Alto residents, which likely leads to
additional savings that staff cannot track and include in this program’s savings totals. The Genie
also tables at various events throughout the year. In FY 2019, the Genie continued to be the
gateway to all of CPAU’s residential programs.
• Educational Programs and Workshops
A variety of educational programs and workshops are held throughout the year. Typically,
residential workshops on water and energy programs occur in the spring near Earth Day and in
the “Summer Workshop Series.” Many workshops focus on water efficiency, landscaping, energy
efficiency, solar, home comfort and green building. CPAU is also invited to table at various events
throughout the year to educate residents about the various programs we offer. Customers also
receive timely E-newsletters on a variety of efficiency matters.
• Home Energy Reports
CPAU stopped providing residents with individualized reports comparing their home energy use
with neighbors in similarly sized homes in FY 2015. The program was ended due to customer
complaints about being compared to neighbors, as well as disputes over the basis of the
comparison. Staff began focusing on developing a portal that could replace both reports, but the
portal vendor later discontinued their product. Studies have shown that savings persist after the
program has ended but decrease at a rate of 20% per year, so some reduced savings are still
claimed (Cadmus 2015 report).
• MultiFamily Residence Plus+ Program
This first-ever CPAU program focusing on multifamily buildings provides free, direct installation
of EE measures to multifamily residences with 4 or more units including hospices, care centers,
rehab facilities and select small and medium commercial properties. In its first year the program
focused on energy-efficient lighting and insulation upgrades. In the summer of 2016, the program
was revamped to include more LED lighting upgrades as the price of LEDs had decreased and the
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quality of the lights improved greatly. The addition of LEDs drew excitement from many property
managers and building owners who were initially not interested in participating in the program.
As a result, CPAU will continue to re-evaluate the program to accommodate this underserved
market. Staff expects energy savings to remain high for this program, with a focus on upgrading
below-market-rate apartment complexes.
• Residential Energy Assistance Program (REAP)
REAP provides weatherization and equipment replacement services at no cost to low-income
residents and those with certain medical conditions. This program has equal focus on efficiency
and comfort, and therefore it is not included in the cost effectiveness calculation used in
reporting. The program provides LED lighting, heating system upgrades, insulation for walls and
roofs and weather-stripping for doors and windows.
• Do-It-Yourself Water-Wise Indoor Survey
Palo Alto residents can request a free indoor water survey kit that can help conserve water and
save money on utility bills. Residents also become educated on opportunities for conservation in
their homes, and they can request free tools to improve efficiency. The program is offered in
partnership with the Valley Water.
• Free Water-Wise Outdoor Survey
Palo Alto residents can schedule a free outdoor survey with a trained irrigation professional. The
trained specialist will provide an on-site evaluation of the resident’s irrigation system and provide
recommended upgrades and repairs. The program is offered in partnership with the Valley
Water.
• Landscape Rebate Program (LRP)
The Landscape Rebate Program provides rebates for various irrigation hardware upgrades,
including rain sensors, high-efficiency nozzles, dedicated landscape meters, and weather-based
irrigation controllers, as well as landscape conversion rebates that encourage residential and
commercial customers to replace high-water-use landscaping with low-water-use landscaping.
During FY 2016 residents were eligible to receive rebates of $3.00/square foot ($2.00 from Valley
Water and $1.00 from CPAU). A new agreement with Valley Water was signed in early 2017,
continuing our partnership in the LRP. Residents are now eligible to receive rebates of $2/square
foot of replaced landscaping ($1.00 from Valley Water and $1.00 from CPAU).
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BUSINESS PROGRAMS
• Commercial Advantage Program
Business customers are offered rebates for investments in a catalog of energy efficiency products
including lighting, motors, HVAC and custom projects that target peak demand and energy
reductions.
• Commercial and Industrial Energy Efficiency Program (CIEEP)
This is the fourth year that CPAU expanded this program to offer Key Accounts (the largest
commercial energy users in Palo Alto) the option of picking one of three engineering consulting
firms to assist in helping them evaluate and implement energy efficiency projects. Designed for
the large commercial customer, CIEEP offered highly effective building commissioning services
using third-party contractors Enovity, Ecology Action and BASE. The contracts were extended in
June 2018 for two additional years. This assistance included reviewing lighting and
heating/cooling systems and their operating specifications. Customers then obtained rebates for
replacing chillers, building control systems, linear fluorescent lighting, occupancy sensors, boilers
and insulation.
• Empower SMB
Through third party vendors, this program assisted the installation of electric and gas efficiency
savings measures for small and medium sized business customers. This program ended in FY 2018
and is being revamped to launch in FY 2020 but may not generate savings until FY 2021.
• Commercial and Industrial Water Efficiency Program
CPAU partners with the Valley Water to provide non-residential customers with free landscape
irrigation audits, and direct installation of high-efficiency toilets and urinals. Rebates are available
for facility process improvements, landscape conversions, irrigation hardware upgrades and
weather-based irrigation controllers.
• Landscape Survey and Water Budget Program
Through Valley Water, the City provides landscape irrigation surveys, water budgets and
customized consumption reports for customers with large landscape sites. The service is
provided by Waterfluence. The water budget for each landscape site is derived based on the
amount of irrigated area, type of plants, type of irrigation system and real-time weather
monitoring. Monthly reports documenting a site’s irrigation performance are distributed to site
managers, landscapers, HOA board members and other relevant parties, as approved by utility
account holders. Through a web portal, customers can access site-specific recommendations,
verify water budget assumptions and request a free landscape field survey from an irrigation
expert. This program has been in place since 2012 and to date there are 118 large landscape sites
covered under this program.
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• PaloAltoGreen
This highly successful program enabled residents and businesses to pay a small premium for
100% renewable energy. In June 2014, Council terminated PaloAltoGreen for residential
customers since the City’s electric supplies are 100% carbon neutral. Commercial customers can
still participate in this program by enrolling in the PaloAltoGreen 100% option or by purchasing
blocks in 1,000 kWh increments. Participation enables commercial customers to be recognized
under the U.S. EPA Green Power Leadership program or to earn Leadership in Energy and
Environmental Design (LEED) Green Power credits.
• Palo Alto Clean Local Energy Accessible Now (CLEAN) Program
Through the CLEAN (Clean Local Energy Accessible Now) program CPAU offers a feed-in tariff,
wherein developers of renewable energy generation projects in Palo Alto can receive a long-term
purchase agreement for the output of their projects. All the generated electricity is procured to
contribute towards fulfilling Palo Alto’s Renewable Portfolio Standard (RPS) requirement. For
fiscal year 2018, the prices are 16.5 ¢/kWh fixed for 15, 20 or 25 years for solar renewable energy
resources, up to a capacity limit of 3 MW (and 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 beyond that limit), and 8.3
¢/kWh for a 15-year contract term, 8.4 ¢/kWh for a 20-year contract term and 8.5 ¢/kWh for a
25-year contract term for non-solar eligible renewable energy resources. At the end of FY 2019,
3MW were reserved of the program’s 3 MW limit.
• EV Charger Rebate Program
The California Air Resources Board (CARB) developed the Low Carbon Fuel Standard (LCFS)
program in compliance with AB 32 (the Global Warming Solutions Act of 2006) to reduce the
carbon intensity of transportation fuels used in California 10% by 2020. Electric utilities that
provide electricity to charge electric vehicles (EVs) are eligible to receive LCFS credits. The City
began participating in the program in April 2014 and CARB has been allocating LCFS credits to the
City since then. Using funds from the sale of LCFS credits, CPAU launched an EV charger rebate
program in FY 2017 to help build out EV infrastructure in anticipation of an increase in the
number of EVs in Palo Alto from its current level of 2,500 to between 4,000 and 6,000 EVs by
2020. Staff determined that providing EVSE rebates for underserved segments of the market
would be valuable which would include multi-family and mixed-use buildings, schools and non-
profits. The LCFS funds are also used for EV education and outreach efforts.
PROGRAMS FOR ALL CUSTOMER SEGMENTS
• PV Partners
CPAU has offered incentives for local solar photovoltaic (PV) installations since 1999, and the
City increased the PV rebate budget in 2007 as mandated by SB 1 (2006). Residential rebates
were fully reserved in August 2014, and funds for non-residential PV systems were reserved in
April 2016. This program is for systems interconnected behind the customer’s electric meter, and
customers receive net metering billing as required by SB 1.
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• Solar Water Heating
CPAU began to offer rebates to residential and commercial customers that install solar water
heating (SWH) systems in 2008. The SWH rebate program was mandated by AB 1470 (2007) and
is administered by the Center for Sustainable Energy, which also administers SWH rebate
programs in the San Diego area. AB 797 recently extended the SWH mandate for two additional
years. Incentives are limited to solar water heating for domestic use; solar water heating systems
for pools, spas, or space heat are not eligible.
• Green Building Ordinance
In April 2015, City Council approved revisions to the City’s Green Building Ordinance (GBO), which
includes the Local Energy Efficiency Reach Code requiring new construction projects to exceed
California’s building energy efficiency standards (“2013 Title 24 Standards”) by 15%, i.e. a
building’s energy consumption must be 15% more efficient than current building code. The
Energy Efficiency Reach Code took effect in September 2015. The new 2016 Title 24 Standards
went into effect in January 2017 and the GBO mandates that new buildings be 10% more efficient
than the new stricter code. CPAU is coordinating with Development Services to report the energy
savings attributed to the Green Building Ordinance. CPAU is currently investigating ways to
educate, assist and encourage customers to adopt green building principles and energy efficient
systems when planning remodeling or new construction projects.
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APPENDIX B: FY 2019 ACHIEVEMENTS BY DSM PROGRAM
Table B.1: FY 2019 Achievements by Efficiency Program 7
Program Electric savings Gas savings Water savings
kWh/yr % Therms/yr % CCF/yr %
COM-Business New
Construction 4,205,869 47% 6,083 4% 0 0%
COM-Com. Advantage 619,266 7% 13,541 8% 0 0%
COM-CIEEP 2,393,911 27% 59,289 35% 0 0%
RES-HPWH -8,610 8 0% 1,410 1% 0 0%
RES-Home Efficiency Genie 35,641 0% 19,656 12% 12 0%
RES-Home Energy Report 657,110 7% 59,886 36% 0 0%
RES-MultiFamilyPlus 230,641 3% 57 0% 0 0%
RES-REAP Low Inc 92,119 1% 5,666 3% 0 0%
SVWD 0 0% 0 0% 14,295 11%
Green Building Ordinance 753,862 8% 1,598 1% 119,935 89%
Efficiency Total 8,979,809 100% 167,186 100% 134,242 100%
7 All savings reported in this table are gross amounts. Net savings can be found in this year’s state filing found here:
https://www.ncpa.com/policy/reports/energy-efficiency/
8 State utility and energy commissioners are evaluating fuel-substitution measures, like heat pump water heaters, and once
a final decision is adopted, staff will align our reporting methodology for electrification measures with whatever state
methodology is implemented. For this year, we are showing the increase in electricity consumption associated with heat
pump water heaters as negative amount of energy savings.
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Table B.2: FY 2019 Achievements by CPAU’s Solar Programs
Program Number of
Installations
Electricity
kW Saved
kWh/yr %
PV - Residential 64 375 600,000 15%
PV – Commercial (w/ CLEAN) 15 2,091 3,345,600 85%
Solar Water Heating - Single
Family Residential 0 - - -
Solar Water Heating - Multi-
Family Residential Low-Income 0 - - -
Solar Water Heating -
Commercial 0 - - -
Solar Programs Total 89 2,466 3,945,600 100%
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APPENDIX C: HISTORICAL DSM PROGRAM EXPENDITURES
The chart below shows expenditures by type from FY 2012 through FY 2019. The Solar Renewables
category is the sum of expenditures for solar water heating and PV Partners programs.
Figure C.1 DSM Expenditures for Electricity, Gas and Water by Year and Function
$0 $1 $2 $3 $4 $5 $6 $7
2012
2013
2014
2015
2016
2017
2018
2019
Millions
Fi
s
c
a
l
Y
e
a
r
Electric Efficiency Gas Efficiency
Water Efficiency Solar Renewables
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APPENDIX D: CITY POLICIES/PLANS AND STATE MANDATES
IMPACTING DSM PROGRAM GOALS AND IMPLEMENTATION
CITY POLICIES/PLANS
Title Description
Resolution No. 9241 LEAP, the Long-term Electric Acquisition Plan (April 2012)
Resolution No. 9322 Carbon Neutral Plan for Electric Supply (March 2013)
Resolution No. 9402 Local Solar Plan (April 2014)
Staff Report 3706 Program for Emerging Technology (April 2013)
Staff Report 2552 GULP, the Gas Utility Long-term Plan (April 2012)
Staff Report 6851 2015 Urban Water Management Plan (May 2016)
Staff Report 7304 Sustainability and Climate Action Plan (November 2016)
Staff Report 7718 Update of Ten-Year Energy Efficiency Goals for 2018 to 2027 (March
2017)
FULL LIST OF STAFF REPORTS
• CY 2015: cityofpaloalto.org/gov/agendas/city_managers_reports/2015.asp
• CY 2016: cityofpaloalto.org/gov/agendas/city_managers_reports/2016.asp
• CY 2017: cityofpaloalto.org/gov/agendas/city_managers_reports/2017.asp
• CY 2018: cityofpaloalto.org/gov/agendas/city_managers_reports/2018.asp
• CY 2019: cityofpaloalto.org/gov/agendas/city_managers_reports/2019.asp
STATE MANDATES
AB 797 (2017) Extends existing Solar Water Heating Programs and changes the terminology of
“water heating” to “solar thermal.”
AB 802 (2015) Requires utilities to maintain records of the energy usage data of all buildings to
which they provide service for at least the most recent 12-month period and, upon
the request and authorization of the owner (or owner's agent), provide aggregated
energy usage data to the owner in the ENERGY STAR Portfolio Manager.
AB 1164 (2015) Prohibits cities and counties from enacting or enforcing any ordinance or regulation
prohibiting the installation of drought tolerant landscaping, synthetic grass, or
artificial turf on residential property.
AB 1236 (2015) Obliges cities and counties to adopt an ordinance, with certain specific elements,
creating an expedited permitting process for electric vehicle charging stations. For a
city the size of Palo Alto, the ordinance must be passed by September 30, 2017.
SB 350 (2015) The Clean Energy and Pollution Reduction Act of 2015 sets targets for utilities of 50%
renewable electricity retail sales and double the energy efficiency savings in
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electricity and natural gas, both by 2030. The law grants compliance flexibility for
POUs that achieve 50% or more of retail sales from certain large hydroelectric power.
AB 2188 (2014) Requires a city and/or county to adopt an ordinance creating an expedited,
streamlined permitting process for small residential rooftop solar energy systems.
Executive Order Due to continued water shortages, on January 17, 2014, the Governor proclaimed a
State of Emergency and directed state officials to take all necessary actions to make
water immediately available. Part of the proclamation included a 20 percent water
reduction goal. On April 1, 2015, the Governor issued an Executive Order (B-36-15)
mandating the State Water Resource Control Board impose restrictions leading to a
25 percent reduction in potable water use through February 28, 2016.
SB 1420 (2014) Added a requirement to report on distribution system water loss to the UWMP.
SB 73 (2013) The California Clean Energy Jobs Act, an initiative approved by the voters as
Proposition 39 at the November 2012 statewide general election, establishes a Job
Creation Fund with an annual budget of $550M to create clean energy jobs, including
funding energy efficiency projects and renewable energy installations in public
schools, universities, and other public facilities. The Job Creation Fund will be
funded for four years, beginning in the 2013-2014 fiscal year.
AB 2227 (2012) AB 2227 changed the triennial energy efficiency target-setting schedule to a
quadrennial schedule, beginning March 15, 2013 and every fourth year thereafter.
The last EE goals update was due to be submitted to the California Energy
Commission by March 15, 2017. The next EE goals update will need to be submitted
by March 15, 2021.
AB 2514 (2010) Mandates a local publicly owned electric utility to determine appropriate targets, if
any, for the utility to procure viable and cost-effective energy storage systems and
to adopt an energy storage system procurement target, if appropriate, to be
achieved by the utility by December 31, 2016, and a second target to be achieved by
December 31, 2021.
SBx7-7 (2009) The Water Conservation Bill of 2009 requires water suppliers to reduce the
statewide average per capita daily water consumption by 20% by December 31,
2020. To monitor the progress toward achieving the 20% by 2020 target, the bill
also requires urban retail water providers to reduce per capita water consumption
10% by the year 2015.
AB 1103 (2007) Requires electric and gas utilities maintain records of the energy consumption data
of all nonresidential buildings to which they provide service and that by January 1,
2009, upon authorization of a nonresidential building owner or operator, an electric
or gas utility shall upload all of the energy consumption data for the specified
building to the EPA Energy Star Portfolio Manager in a manner that preserves the
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confidentiality of the customer. This statute further requires a nonresidential
building owner or operator disclose Energy Star Portfolio Manager benchmarking
data and ratings, for the most recent 12-month period, to a prospective buyer,
lessee, or lender. Enforcement of the latter requirement began on January 1, 2014.
AB 1470 (2007) Solar Water Heating and Efficiency Act of 2007. Requires the governing body of
each publicly owned utility providing gas service to retail end-use gas customers,
to adopt, implement, and finance a solar water heating system incentive program.
SB 1 (2006) The California State Legislature enacted SB 1 to encourage the installation of 3,000
megawatts (MW) of photovoltaic (PV) solar energy by the year 2017. SB 1
requires all publicly owned utilities to adopt, finance and implement a solar initiative
program for the purpose of investing in and encourage the increased installation of
residential and commercial solar energy systems. CPAU’s share of the state goal is
6.5 MW. In 2007, CPAU increased the PV Partners program funding to meet SB1
requirements. CPAU has fully reserved all rebate funds as of April 2016.
AB 2021 (2006) Requires the CEC on or before November 1, 2007, and every 3 years thereafter, in
consultation with the commission and local publicly owned electric utilities, to
develop a statewide estimate of all potentially achievable cost-effective electricity
and natural gas efficiency savings and establish statewide annual targets for energy
efficiency savings and demand reduction over 10 years.
AB 1881 (2006) Requires cities and counties to implement a Water Efficient Landscape Ordinance
which is “at least as effective as” the Department of Water Resources (DWR) Model
Ordinance in reducing landscape water use. Requirements include enforcing water
budgets, planting and irrigation system specifications to meet efficiency criteria.
SB 1037 (2005) Requires each local publicly owned electric utility, in procuring energy, to first
acquire all available energy efficiency and demand reduction resources that are cost-
effective, reliable, and feasible. Also requires each local publicly owned electric
utility to report annually to its customers and to the (CEC) its investment on energy
efficiency and demand reduction programs.
AB 1890 (1996) Requires electric utilities to fund low-income ratepayer assistance programs, public
purpose programs for public goods research, development and demonstration,
demand- side management and renewable electric generation technologies
AB 797 (1983) The Urban Water Management Planning Act (AB 797) requires all California urban
water retailers supplying more than 3,000 acre feet per year or providing water
to more than 3,000 customers to develop an UWMP. The plan is required to be
updated every five years and submitted to the Department of Water Resources
before December 31 on years ending in 5 and 0.
City of Palo Alto (ID # 11362)
Utilities Advisory Commission Staff Report
Report Type: Agenda Items Meeting Date: 7/1/2020
City of Palo Alto Page 1
Summary Title: Electric Vehicle Customer Program Update
Title: Discussion and Update on the Progress in Implementing Utility
Customer Programs to Facilitate Electric Vehicle Adoption in Palo Alto
From: City Manager
Lead Department: Utilities
Recommendation
This report provides information to facilitate Commission discussion and feedback on the City’s
activities to assist customers with installation of electric vehicle (EV) charging equipment and
with the purchase of EVs. No action is required at this time.
Executive Summary
The report discusses the progress made in implementing utility customer programs to facilitate
electric vehicle (EV) adoption in Palo Alto.
Citywide initiatives to facilitate the accelerated adoption of EVs consist of coordinated effo rts
between Utilities, Public Works, Transportation, and Planning Departments, and include: a)
utility customer programs to facilitate adoption of EVs by residents and commuters, b)
electrification of City’s fleet and installation of public charging infrastructure, and c)
streamlining permitting and planning processes related to installing EV chargers. Coordinated
efforts are also underway to complement the City’s transportation/mobility related initiatives
to increase alternate modes of transportation and to lower fossil fuel-based vehicle miles
travelled (VMT) by residents and commuters.
Background
With the transportation-related greenhouse gas (GHG) emissions accounting for more than 60%
of the community’s emissions, the goal of the City’s active facilitation of EV adoption is to
reduce transportation related emissions by 80%, from 300,000 MT CO2 e /year to 60,000 MT
CO2e /year, over the next 10 years, by:
a.Increasing the number of EVs registered in Palo Alto from 4,500 (2019) to 42,000 (80%
of vehicles).
b.Increasing the share of EV commute vehicles from single digits to 80% by 2030.
Staff: Shiva Swaninathan
City of Palo Alto Page 2
c. Developing a public and private charging network to support these high levels of EV
penetration.
Staff is cognizant that the City currently has limited resources and tools to facilitate mass scale
adoption of EVs. On June 16, 2020 City Council discussed the merits of pursuing a spectrum of
measures to accelerate EV adoption beyond conventional strategies, including passing
Ordinances and recommending voter measures to lower fossil fuel based VMT and accelerating
EV adoption to reach the 80% by 2030 goal (staff report #11304). Staff acknowledges that while
its current programs provide a strong foundation for future efforts, these programs would need
to be significantly scaled up to facilitate the charging network needed to support such large
scale adoption of EVs.
Outlined below is a list of programs, projects and initiatives that are underway across city
departments. Progress on each of the items listed is provided in Attachment A.
1. Utility Customer Programs
1.1 Incentivize and facilitate the installation of EV chargers on private property
(including multifamily & mixed-used properties, non-profits and commercial
buildings).
1.2 Educate and inform the community about the benefits of EVs and encourage
adoption.
1.3 Explore lower electric retail rates for the cost of EV charging.
1.4 Implement comprehensive programs for lower income households.
1.5 Lower hurdles to electricity utility service upgrades, triggered by EV charger
installations, while maintaining safety and reliability standards.
1.6 Collaborate with regional and state entities to implement programs.
2. City Fleet and Public Charging Initiatives
2.1 Electrify city’s fleet.
2.2 Continue to install EV chargers at city facilities, city garages and other public
charging project locations; explore curbside charging options.
2.3 Expand DC fast charging in Palo Alto
3. Transportation Related Initiatives
3.1 Implement measures to reduce fossil fuel vehicle VMT and lower the current
64% share of single occupancy vehicles (SOV).
3.2 Implement measures to increase active transportation modes (walking, biking
and transit) from 19% to 40% for local work trips.
4 Planning Related Initiatives
4.1 Modify parking space requirements to facilitate EV charger installations.
4.2 Lower hurdles associated with EV charger permitting.
4.3 Implement building code requirements for EV chargers for new buildings.
City of Palo Alto Page 3
The table provided in Attachment A summarizes activities and status on each of these projects
and initiatives. This remainder of this report will focus on the progress made in implementing
the utility customer program areas listed as 1.1 to 1.6 above. Attachment B provides details on
fleet activities listed in 2.1. Public charger and DC fast charger activities (listed as 2.2 and 2.3)
are discussed in the report.
Discussion
In September 2019 UAC discussed Utility Customer Programs to Accelerate EV Adoption. The
discussion included the customer survey results which drove the allocation of resources among
programs, tentative allocation of $8.7 million of state funds available for customer programs
over a 3-year period 2019-21, and the key performance indicators (KPI) to measure program
success. The three KPIs by 2021 are as follows:
• Provide rebates to facilitate installation of 250 charging ports to serve multi -family, and
mixed-use properties with priority on low-income and nonprofits.
• Increase EVs registered at multi-family properties by 1,000 vehicles.
• Lower City’s transportation related emissions by 1,000 MT/year (0.3% reduction) by
dispensing electricity from the 250 charging stations.
Though these KPIs may seem modest compared to the 80% GHG reduction goals by 2030, such
conventional measures by the City (combined with state/federal incentives, and actions the
environmentally conscious community), is projected to lower emissions by 25% to 35% by 2030.
For example, the 4,500 EVs currently registered in Palo Alto are estimated to have lowered
emissions by 3% to 4% below the community’s 1990 baseline transportation related emissions.
These programs also provide a foundation upon which an expanded and more comprehens ive
set of programs can be built.
Outlined below is the progress made implementing the six utility customer program areas.
1.1 Incentivize the Installation of EV Chargers at Private Properties
Progress to date
• In the Fall of 2019, staff launched the technical consultant driven Technical Assistant
Program (TAP) to assist customers in evaluating, permitting and installing EV chargers. This
was a major step for CPAU to build capacity to facilitate EV adoption in the community.
Multiple sites are currently under evaluation1.
1 Potentially 36 new ports at 5 sites. The EV charger rebates were also increased from $3-$5,000/port to
$8,000/port in the summer of 2019 (but capped at 75% installation cost). See link here for further details.
City of Palo Alto Page 4
• Since the launch of the EV Charger Rebate Program in 2017, 107 new EV charger ports or
connectors have been installed2. To date, 7 ports have been installed at multi-family/mixed
use properties, 61 at schools and 39 at non-profits.
EV Charger Installations Funded and Facilitated by Customer Rebate Program
CY2017 CY 2018 CY 2019 CY 2020,
As of May 2020
Cumulative,
As of May 2020
EV Ports Installed (#) 12 4 10 81 107
EV Ports Installed w/
CPAU Rebates (#) 12 4 10 40 66
Rebates Paid $50,000 $ 22,703 $43,373
TBD
(Expected to
process $360,000)
$116,076
($464,304 when
rebates are fully
processed)
Illustration of Completed EV Charger Projects
2 Of the 107 new connectors, 26 have been rebated to date and CPAU expects to pay out rebates for 66 more
ports. Staff is starting to see more sites maximize opportunities and install many chargers at once, although our
rebate program only rebates a maximum of 10 ports/site.
City of Palo Alto Page 5
Photos: Fletcher Middle School (18 Level 2 and 1 DCFC), Greene Middle School (14 Level 2 and 1 DCFC), Oak Creek Apartments
(4 Level 2), Stanford Shopping Center (24 Tesla Superchargers, 22 SemaConnect, 2 Electrify America DCFC)
• Based on California Air Resources Board (CARB) data, there are 395 non-residential EV
chargers registered with CARB and receiving LCFS credits based on the electricity dispensed.
Vast majority of these chargers are at the Research Park, but it also includes 30 charging
stations installed at City facilities.
Plans for the next 12 months
• Customers at 30 sites have submitted agreements expressing interest to participate in the
TAP program, with 26 projects in various stages of evaluations by the TAP consultant. Each
site is considering installing anywhere from 4 to 20 EV ports/connectors – a much higher
number than in past years. However, staff anticipates delays in permitting and actual
construction due to COVID-19.
• Despite construction delays, staff anticipates an additional 100+ ports will be installed
under the EV charger rebate program by the end of CY 2020. While this acceleration of
program uptake is an important accomplishment to be celebrated, and while staff expects
to be able to accelerate uptake even more in CY 2021, staff is also conscious that much
faster rates of EV charger construction would be necessary to meet S/CAP goals.
1.2 Educate & Inform the Community About the Benefits of EVs and Encourage Adoption
Progress to date
• Online educational tools and informational resources. These include the EV calculator and
various city, regional and statewide incentives available to accelerate EV adoption.
• Over the past 3 years, the city has sponsored 4 EV related events per year, however due to
COVID-19, staff is re-evaluating ways to continue education and outreach through virtual
platforms as wells as online messaging.
Community Events to Related to Electric Vehicles
City of Palo Alto Page 6
Photos: Mitchell Park Community Center EV Show and Tell and Workshop with 100 attendees
Plans for the next 12 months
• Staff plans to continue current efforts, with the following events already planned:
o CALeVIP virtual workshop for all commercial customers and in stallers – 6/23/2020.
o Collaborate with NCPA to issue a joint EV and Electrification Education and Outreach
RFP to enhance existing programs.
1.3 Provide EV Electric Rates to Lower the Cost of EV Charging
Progress to date
Not much progress has been made in this area. A pilot all-electric home rate has been
developed internally, but due to staffing priorities the rate has not been brought forward for
Council approval. In developing rates, staff must devote extra care and time to ensure these
rates are cost-based, an issue requiring particular focus due to the State constitutional
provisions introduced by the voter initiative AB 26 (2010).
Plans for the next 12 months
Staff anticipates an all-electric home retail rate, a special retail rate for low income customer
charging, and a special rate for DC fast charging locations are anticipated to be developed in the
coming years, with an expected implementation date of 2021-22.
1.4 Implement Comprehensive Programs for Lower Income Households
Progress to date
Since Q4 2019, the Technical Assistance Program (TAP) has engaged over a half dozen low -
income multifamily housing organizations and properties, including Alta Housing (previously,
Palo Alto Housing), Eden Housing, Mid-Peninsula Housing, and John Stewart Company. Property
managers from two Alta Housing properties have completed a workshop designed specifically
for low-income multifamily buildings. Additional organizations have also shown interest in
future low-income multifamily workshops. They will be sched uled with various attendance
options in Q3 2020.
Plans for the next 12 months
• Webster Woods Apartments (Alta Housing) has expressed interest in moving forward with
installation. The TAP consultant will be working with the management of this property to
move this project forward.
• Continue efforts to reach out to other low-income properties via workshops or enhanced
single organization workshops.
• Continue to promote various cash incentives programs available regionally for low-income
customers to purchase EVs.
• Evaluate special EV charging rates for this customer segment.
• Conduct a survey with residents at low-income multifamily properties to gauge interest in
on-site EV car share vs. increased incentives for purchasing new and used EVs.
City of Palo Alto Page 7
1.5 Lower the Barriers to Upgrade Electrical Utility Service Connection
Progress to date
Initiatives in this regard include proving rebates towards discounting utility upgrade fees
utilizing the LCFS funds from the state - see link here for further details. In addition, certain
utility service connection related rules are under review to simplify the process 2.
Plans for the next 12 months
As long as safety and reliability are not adversely impacted, staff is committed to systematically
solve issues as they arise, and to begin a process to proactively examine and resolving other
potential barriers.
1.6 Collaborate with Regional and State Entities to Implement Programs
Progress to date
• Whenever regional EV bulk-buy program opportunities arise, Palo Alto participates and
publicizes the opportunity to the community. EV discounts have ranged from $2 ,000 to
$4,000 and participation in each of the programs (APPA, Sunshares and Drive Clean Bay
Area) has been in the single digits annually, though often at higher participation rate than
adjoining cities.
• City Council approved Palo Alto’s participation in the state -mandated Clean Fuel Rebates
(CFR) Program in May 2020. This additional statewide CFR is expected to p rovide a $1,000
to $2,000 point-of-purchase rebate, per EV, beginning late-2020.
• City secured $1,000,000 in CALeVIP grants to install shared or public EV charging
infrastructure in Palo Alto. The project will launch in the Fall of 2020.
• Information related to regional, state and federal EV programs will be updated bi-annually.
Plans for the next 12 months
• Staff plans to focus on expanding the efforts in the above-mentioned areas. No new
program areas are planned due to staffing and resource constraints.
Attachment B provides details on City’s fleet related activities, listed as 2.1. Public charger and
DC fast charger activities (listed as 2.2 and 2.3) are discussed below.
2.2 and 2.3 Incentivize the Installation of Public Chargers & DC Fast Chargers
2 For example, two electric service connections on the same parcel are currently allowed only under a ‘special
facilities agreement.’ This rule may pose a barrier, if a commercial customer with a large parcel finds it is optimal
to receive a second utility service connection to another part on their site to install EV chargers. Staff is
investigating methods of simplifying the process by making it a standard offering and charge a fixed fee based on
kW capacity connection. If implemented, this change will eliminate the need to negotiate a special facilities
agreement and provide more certainty in cost for the customer. Staff is investigating a similar offering for a
residential customer seeking panel upgrades above 200 Amperes
City of Palo Alto Page 8
Expansion of public charging infrastructure will also be needed to support wider adoption of
electric vehicles, both for Palo Alto residents and inbound commut ers. Residents can use public
fast chargers to supplement slower home charging facilities or for multi-family home residents
it may be their primary charging option. Visitors to Palo Alto can also recharge vehicles before
returning home.
Staff has been working on a variety of projects to expand public charging access in Palo Alto.
Progress to date
• Good progress is being made to install EV chargers at City facilities. Grant funds, city funds
and LCFS funds are being used to expand the network of chargers.
• Chargers are also being installed in new buildings and when a building/facility is upgraded.
• City facilities currently have 57 Level 2 chargers. These chargers are being utilized at a rate,
to lower GHG emission by ~6 MT/charger/year. An additional 26 chargers are being planned
for installation by the end of 2021. See Attachment B for detail.
• Twenty Tesla superchargers were installed at the Stanford shopping center .
Plans for the next 12 months
• Another major focus staff will be to manage Level 2 and Level 3 charger rebates under the
$1 million grant from the California Energy Commission via the CALeVIP (California Electric
Vehicle Infrastructure Project) - https://calevip.org/.
▪ Under the program, 10 to 20 Level 3 DC fast chargers are anticipated to be installed at
neighborhood shopping centers for public charging. These chargers are estimated to
meet approximately 50% of the remaining Level 3 based short term charging needs of
Palo Alto (a high level estimate made using the EVIPro Tool for California/Santa Clara
County).
▪ With $1 million in matching funds from the City (from LCFS funds) approximately 200
additional Level 2 shared EV chargers are anticipated to be installed under the program by
2022.
• A summer intern will be helping assess how much public charging infrastructure is needed in
the long term to support EV adoption at levels needed to achieve the City’s S/CAP goals.
Summary & Next Steps
CPAU has a wide portfolio of customer programs to cover each electric customer segment as
summarized in Attachment C. But much of the staff and technical assistance program
consultant efforts will continue to focus on installation of EV chargers in Palo Alto to reach and
exceed the 250 EV port installation target by the end of CY 2021 and to increase EV adoption by
multi-family residents by 1,000 vehicles.
In the longer term, if the community hopes to achieve its S/CAP goals, more resources will need
to be devoted to help the community build out the EV charging network. Additional funding
City of Palo Alto Page 9
and/or mandates would be needed. The pace of program implementation would need to be
dramatically accelerated. Staff is developing estimates of the EV charging network needed to
support the S/CAP goals and ways to resource the efforts needed to develop such a network.
Public Engagement
The City commissioned a residential customer survey in 2018 to gauge the level of interest in
various distributed energy resource related customer programs, including EV related programs.
These results were discussed in an October 2018 UAC Report . This survey and other community
engagements with environmental leaders and UAC commissioners informed the design of the
EV customer programs. Staff has also discussed various facets of the program with UAC, and
this report is another effort to engage the community on the portfolio and progress of EV
programs. Staff has also sought feedback from the public on its EV efforts via the 2020 S/CAP
update process.
Resource Impact
As discussed with the UAC in October 2019, there are sufficient funds available through the
state’s Low Carbon Fuel Standards (LCFS) program to implement current programs. Staff is
anticipating $8 to $9 million through this program through 2021, of which $6.5 million is
already available, with less than $0.15 million spent to date.
Approximately 1 FTE in utility staffing is devoted to this effort, along with consulting assistance
under the TAP contract with CLEAResult. At current levels of effort, there is sufficient staffing
available, but there is no capacity to expand programs beyond current levels . To expand
programs to support S/CAP goals, new funding sources and additional staffing will need to be
identified.
Estimate of EV Program Funding Allocations through 2021 ($8.7 M)
City of Palo Alto Page 10
Policy Implications
Proposed customer programs meet the Council policy on greenhouse reductions as embodied
in the Sustainability and Climate Action Plan. The use of LCFS and grant funding to implement
these programs minimizes the impact to customer retail rates.
The customer programs meets Utilities Strategic Plan Priority #3 to utilize technology to
improve customer experience and Priority #4 to use resources efficiently to meet customer
service priorities. Under Priority #4, Strategy 4, Action 2 states: Establish and implement a
Distributed Energy Resources plan to ensure local generation (e.g. solar), storage, electric
vehicles (EVs), and controllable loads (like heat pump water heaters) are integrated into the
distribution system in a way that benefits both the customer and the broader community.
Efforts will be made to integrate smart EV chargers to respond to utility signals to meet the
greater community needs.
Environmental Review
This report is an administrative informational update that will not result in direct or indirect
physical changes in the environment (14 CCR Section 15378(b)(5)), and therefore is not a
Project requiring California Environmental Quality Act review.
Attachments:
• Attachment A: Summary of EV Adoption Programs
City of Palo Alto Page 11
• Attachment B: EV Charging Networks
• Attachment C: EV Program Coverage by Customer Segment
1
ATTACHMENT A
Summary of City-Wide Programs and Projects to Facilitate EV Adoptions
Programs and Projects Scope Progress/Status
1. Utility Customer Programs
1.1 EV charger incentives (private
property)
Cash rebates and technical assistance to
install EV chargers in private property
Program well underway with technical assistance program consultant
services; 106 EV ports installed to date
1.2 Educate and inform Educate and inform the community about the
benefits of EV adoption and about resources
available for current and future EV owners or
drivers
Tools and resources made available linked below
• www.cityofpaloalto.org/electricvehicle
• EV calculator
• city, regional and statewide incentives available to accelerate EV
adoption.
• City sponsored EV related events
1.3 Electric rates for charging Develop special electric rates for EV charging
and to encourage day time charging during
solar production periods
• Evaluation underway; no plans for implementation until 2021 due
to resource constraints
1.4 Program for income qualified
residents
Proactively reach out to all low income multi-
family organizations and properties to
encourage EV adoption via technical
assistance, rebates for chargers and EVs, and
lower electricity rates
• Reached out to 6 organizations, 2 responded, evaluation underway
in 1 property. No EV charger installations facilitated by City
programs to date.
1.5 Lower barriers to upgrade
utility service
Lower the barriers to upgrade electrical utility
service connections
• Rebate utility service connection fees for upgrades.
• Lower hurdles by simplifying processes – see details in the report
1.6 Collaborate with regional/state
programs
Participate in statewide and regional
programs to increase EV use and ownership
• Participated in 3 regional EV bulk-buy program opportunities over
the past year; discounts $2k to $4k; final purchases in single digits
annually.
• City Council approved Palo Alto’s participation in the state-
mandated Clean Fuel Rebates (CFR) Program in May 2020; CFR is
expected to provide a $1k to $2k in point-of-purchase rebate, per
EV, beginning late-2020.
• Secured $1M in CALeVIP grant to install shared or public EV
charging; project launch Fall 2020.
2. City Fleet and Public Charging
Initiatives
2.1 Electrify city’s electric fleet • Continue to electrify municipal fleet as
opportunities arise
• Of the 367 self-propelled vehicles in the fleet 14 are EVs – see
attachment B for detail
2
• 3 green-waste trucks are EVs
• Developing comprehensive fleet electrification workplan and
associated EV charging needs by 2021
2.2 Public EV chargers • City continues to install EV chargers at
public garages and city facilities
• City facilitates and provide rebates for
chargers installed for public use
• To date 57 ports are currently installed at garages and city
facilities, dispensing electricity estimated to lower GHG emissions
by 6 MT/port/year; Additional 26 ports installation planned in the
next 12 months
• Planning to support CALeVIP grant based program to install 200
Level 2 shared chargers at public and private facilities
2.3 Public Level 3 DC Fast Chargers • Rebates through the CALeVIP program • Planning to support CALeVIP grant based program to install 10-20
Level 3 public chargers
• Twenty Tesla super chargers were installed at the Stanford
shopping center (no incentive payment, due to proprietary nature
of chargers)
3. Transportation Related
Initiatives
3.1 Lower VMT and SOV
(Vehicles Miles Travelled, Single
Occupancy Vehicles)
Update and strengthen Transportation
Demand Management and implement other
measures to reduce VMT and SOVs
• Progress will be reported separately
3.2 Transportation mode share Increasing the mode share for active
transportation modes (walking, biking, and
transit)
• Progress will be reported separately
4. Planning Related Initiatives
4.1 Allow for Decrease in Parking
Space
Conversion of parking space to EV requires an
accompanying handicapped parking space
needs, which results in reduced number of
parking spaces
• Parking ordinance amendments going to City Council on 6/22
addressing parking spaces related to EV equipment installation,
parking space substitutions, re-striping and maintenance. Staff
report/ordinance link:
https://www.cityofpaloalto.org/civicax/filebank/documents/76827
4.2 Lower the barriers for
Permitting
Identify and resolve barriers related to
permitting, while ensuring safety is not
compromised
• Based on recent experiences, several barriers have been identified.
Staff will be working on potential ways to overcome them. Progress
will be reported at a future date
4.3 Building Code Requirement for
Chargers
City has implemented minimum EV charger
requirements for new constructions and
major remodels; and continues to review
them to further enhance them every three
years
• The building code provision are outlined in the 2019 California
Green Building Standards Code 16.14.420, Section A4.106.8 Electric
vehicle (EV) charging
1
Attachment B
Details Related to City Fleet and Public Charger Activities
Outlined below is the progress made with electrification of City Fleet and Public Charging
Initiatives.
2.1 Progress in Electrify City’s Fleet
The City is committed to electrifying its fleet. This would be achieved by replacing all vehicles
due for replacement with a EV, to the extent such vehicles are available in the marketplace. City
also expects to complete a plan to ensure sufficient charging capacity is available to service the
expanded EV fleet. The table below describes the progress to date.
Electric Vehicles Currently in the City’s Fleet
EVs 12 (2 Ford Focuses, 4 Scissor/Man lifts, 4 Forklifts, 2 Club Car)
Gasoline Hybrids 11 (2 Ford Fusion, 1 Ford Escape, 4 Priuses, 1 Nissan Rogue, 2 Honda Accords, 1 Ford
F-150)
Plug-in Hybrids 2 Chevy Bolts
Total Self-Propelled
Vehicles
367 (265 Light Duty, 54 Medium Duty, 48 Heavy Duty)
Updated April 2020
2.2 Install EV Chargers at City Facilities, City Garages
Good progress is being made to install EV chargers at City facilities. Grant funds, city funds and
LCFS funds are being used to expand the network of chargers. Chargers are also being installed
in new buildings and when a building/facility is upgraded. Tabulated below is a list of City
owned and planned EV chargers.
City Owned and Operated EV Charging Infrastructure
2
Updated April 2020
2.3 Expand DC Fast Charging in Palo Alto
Progress to Date
• Tesla – 20 Superchargers were installed at Stanford Shopping Center.
• CALeVIP (California Electric Vehicle Infrastructure Project) – Awarded $1M from the CEC to
install charging infrastructure matched with $1M from Palo Alto’ s LCFS (Low Carbon Fuel
Standard) funds. Project launching fall 2020. All commercial customers are eligible.
Plans for the next 12 months
• CALeVIP – Program design underway. Workshop to be held on 6/23/2020 for interested
customers (including the City) and installers. Staff expects funds to be reserved quickly and
lead to the installation of ~200 Level 2 and ~10 DC Fast Chargers, over the next 2-3 years.
Attachment C
EV Program Coverage by Customer Segment
City of Palo Alto (ID # 11393)
Utilities Advisory Commission Staff Report
Report Type: Agenda Items Meeting Date: 7/1/2020
City of Palo Alto Page 1
Council Priority: Climate/Sustainability and Climate Action Plan
Summary Title: Carbon Neutral Plan Updates
Title: Staff Recommendation That the Utilities Advisory Commission
Recommend the City Council Amend the City's Electric Supply Portfolio
Carbon Neut ral Plan and Electric Utility Reserves Management Practices
From: City Manager
Lead Department: Utilities
RECOMMENDATION
Staff recommends that the Utilities Advisory Commission (UAC) recommend that the City
Council:
1)Adopt an amendment to the Carbon Neutral Plan (as shown in Attachment A) to:
a.Modify the definition of carbon neutrality to use an hourly carbon emissions
accounting standard;
b.For fiscal years 2021 and 2022, minimize Electric Supply Portfolio costs by
authorizing the exchange of bundled RECs from the City’s long-term renewable
resources (Bucket 1 RECs) for short-term RPS-eligible, unbundled RECs (Bucket 3
RECs), to the maximum extent possible, while maintaining compliance with the
state’s RPS regulations;
c.For calendar years 2020 through 2024, authorize the purchase of RPS-eligible,
unbundled RECs (Bucket 3 RECs) as needed to neutralize any residual emissions
resulting from the difference between emissions calculated under an annual
accounting and hourly accounting methodology; and
2)Direct staff to return to Council with a review of the Carbon Neutral Plan by the end of 2024
to evaluate the effectiveness of these policy changes and to modify them if necessary.
3)Create a Cap and Trade Program Reserve in the Electric Fund which will hold revenues from
the sale of carbon allowances freely allocated to the electric utility under the State’s Cap
and Trade Program. (See Attachment B for background information on the State’s Cap and
Trade Program.) Consistent with the City’s Cap and Trade Revenue Use Policy, adopted in
Staff: Jim Stack
City of Palo Alto Page 2
January 2015, up to $1 million per year of these revenues would be allocated to local
decarbonization efforts. This action, which would require only City Manager approval, will
have little to no impact on rates due to the amendments to the Carbon Neutral Plan
described above (specifically, the exchanges of California renewable energy and RECs for
out-of-state renewable energy and RECs).
EXECUTIVE SUMMARY
This report is a follow-up to a series of reports to the UAC covering the topics of carbon
emissions accounting and Renewable Portfolio Standard (RPS) procurement strategy (e.g.,
reports from May 2019, June 2019, August 2019, February 2020, and March 2020). The two
topics are not only highly complex and esoteric, but also highly interrelated. Further, policy
decisions related to these two topics can have potentially significant impacts on supply costs,
retail rates, and funding for customer programs. As a result, staff, the UAC, and a number of
community members have had extensive discussions about these topics in an attempt to arrive
at a policy position that balances the City’s sustainability goals with its desire to lower costs and
rates.
Since the last UAC discussion devoted to these two topics in early March 2020, the Palo Alto
community has experienced a truly fundamental shift in everyday life—as well as in the City’s
financial outlook—due to the COVID-19 pandemic. The measures put in place by the state to
contain the spread of the novel coronavirus have had a profound negative impact on the City’s
General Fund; they have also led to a reduction in the electric utility’s total sales, which is
projected to cause a multi-million dollar revenue shortfall over the next few years. As a result,
at the UAC’s May 2020 discussion of the Utility’s FY 2021 budget, several UAC commissioners
expressed a strong level of interest, and even urgency, around maximizing the total volume of
exchanges of in-state (Bucket 1) renewables for out-of-state (Bucket 3) renewables in order to
bring in additional revenue to help avoid painful cuts to electric utility programs , positions, and
capital investments, minimize retail rate increases and to potentially enable investment in local
decarbonization measures even during difficult economic conditions . Therefore in the current
report, staff presents a proposal recommended by several Commissioners at the May 2020 UAC
meeting to enable staff to temporarily exchange the City’s Bucket 1 renewable resources for
Bucket 3 renewables to the maximum extent permitted under the state’s RPS law, while
maintaining carbon neutrality.
Staff recommends limiting the authority for these maximized renewable energy exchanges to
the next two fiscal years in order to address the near -term effects of the pandemic. After that
time the City would apply the approach recommended by the UAC at the March 2020 meeting:
utilizing an hourly carbon accounting methodology for both internal decision -making purposes
as well as for the definition of carbon neutrality under the Carbon Neutral Plan, and using out -
of-state renewable energy (Bucket 3 RECs) only to address any residual emissions resulting
from the use of this hourly accounting methodology. Staff recommends re-evaluating the
effectiveness of this carbon accounting policy before calendar year 2024 —at the same the City
City of Palo Alto Page 3
considers whether to renew its share of the Western Base Resource project or rebalance its
portfolio.
If the City enables the short-term REC exchanges described above, it has an opportunity to
redirect some additional funding to local carbon reduction activities like building electrificati on
without significantly impacting utility rates. This action could be undertaken by action of the
City Manager under existing Council authority. Staff recommends that the UAC recommend
that the Council create a Local Decarbonization Reserve in order to en able and account for the
use of this funding.
DISCUSSION
Since the start of the coronavirus pandemic, electricity consumption in Palo Alto has fallen
about 10% from baseline levels; given this reduction in retail sales volumes, the utility now faces
a multi-million-dollar budget gap. As such, there is broad community interest in three different
objectives with respect to the electric utility: (a) closing the utility’s revenue gap, (b) holding
retail rates flat, and (c) maintaining the City’s commitment to carbon neutral supply resources.
Executing short-term exchanges of the City’s in-state/Bucket 1 renewable energy generation for
out-of-state/Bucket 3 renewable generation is one potential way for the City to efficiently satisfy
all three objectives simultaneously. The focus of the current report is therefore the potential
revenue that can be gained through exchanging the City’s in-state renewable resources (“Bucket
1 RECs”) for out-of-state renewables (“Bucket 3 RECs” or “unbundled RECs”) and the impacts
that such exchanges would have on the make-up of the City’s electric supply portfolio.
Additional background information about the City’s Carbon Neutral Plan, the differences
between hourly and annual carbon accounting methodologies, and the qualitative differences
between California-based Bucket 1 renewables and out-of-state unbundled RECs (both of which
were discussed at length in the March 2020 UAC report and presentation) can be found in
Attachment C.
REC Exchange Revenue Potential
The ability to raise new revenue by exchanging in-state for out-of-state renewable generation is
based on the fact that, due to legislative constraints on the ability to use out-of-state renewable
generation to comply with the state’s RPS requirements, in-state generation carries a large price
premium relative to out-of-state generation. Currently, in-state renewable generation is valued
at $15.60 per MWh (in addition to the value of the electrical energy itself), while out-of-state
renewable generation is valued at only $2.00 per MWh. Estimates of the revenue potential of
the proposed REC exchanges is based on these current REC values, the City’s current load
projections (which incorporate a reduction associated with the impact of the COVID -19
pandemic), and the City’s current hydroelectric generation projections. Table 1 below
summarizes the estimated net revenue potential associated with this REC exchange proposal
over the next five fiscal years.
Table 1: Summary of REC Exchange Revenue Potential, FY 2021-2025 ($M)
FY 2021 FY 2022 FY 2023 FY 2024 FY 2025
City of Palo Alto Page 4
Sales of Bucket 1 RECs
Exceeding Annual Load $ 0.62 $ 0.86 $ 1.86 $ 2.58 $ 2.66
Additional Bucket 1 REC Sales $ 3.64 $ 2.56 $ 1.42 $ 0.99 $ 0.61
Bucket 3 REC Purchases Cost $ 0.47 $ 0.33 $ 0.18 $ 0.13 $ 0.08
Net Revenue Potential $ 3.79 $ 3.09 $ 3.09 $ 3.44 $ 3.19
Note that the figures in the table above assume that the City begins the REC exchanges at the
beginning of FY 2021. If the exchanges are delayed by three months, and begin in October 2020,
the net revenue potential for FY 2021 would fall from $3.79 million to $3.43 million. It is also
worth noting that the revenue potential estimates are highly sensitive to the generation
volumes the City receives from its hydro resources, which of course are highly uncertain. In
above-average hydro conditions, the total REC exchange revenue for the next two fiscal years
would be expected to increase from $6.9 million to $8.4 million, while in below-average hydro
conditions the total revenue would fall to $6.4 million.
Impact of REC Exchanges on Electric Supply Portfolio
Although exchanging in-state RECs for out-of-state RECs would have no real impact on the City’s
total electricity-related carbon emissions (see Attachment C for more discussion on this topic),
the downside of this strategy is that it would have a negative impact on the City’s reported
portfolio make-up and carbon emissions. As noted earlier, the state’s RPS law gives preferential
treatment to in-state renewable resources over out-of-state resources, and the same is true of
how such resources are reported to customers on the annual Power Content Label (PCL). As of
calendar year 2020, the California Energy Commission’s (CEC’s) PCL regulations require that
utilities report their out-of-state (Bucket 3) REC purchases as “unspecified sources of power”
rather than under the appropriate renewable energy technology. Furthermore, beginning with
the 2020 PCL, utilities will be required to report the annual average greenhouse gas emissions
intensity of their electric supply. And again, rather than being treated as carbon-free resources
like other forms of renewable energy, Bucket 3 RECs will be treated as having an emissions
intensity equivalent to generic market power purchases (428 kilograms (kg) of CO2 per MWh,
which is almost 20% greater than the emissions intensity of natural gas generation).
As a result, rather than reporting a supply mix that is over 60% renewable and nearly carbon -
free on average1, under the maximized REC exchange strategy the City will have to report a
portfolio mix that is less than 40% renewable and is responsible for a moderate amount of
carbon emissions. Table 2 displays the Power Content Label, RPS level, and emissions intensity
for the City’s electric supply portfolio in CY 2021 (the onl y full calendar year covered by the
proposed period of authority for maximizing the REC exchanges).
1 Although the City’s baseline portfolio mix is entirely comprised of renewables and hydroelectric resources, the
CEC’s proposed PCL regulations assign a small emission intensity to all biomass generation such as landfill gas
generation, which currently accounts for about 10% of the City’s supply mix.
City of Palo Alto Page 5
Table 2: Power Content Label, RPS Level, and Emissions Intensity for the City’s Electric Supply
Portfolio in CY 2021 (Baseline and Maximized REC Exchanges)
Existing
Portfolio
Maximizing
REC Exchanges
Eligible Renewables 60% 31%
Biomass & Biowaste 12% 7%
Geothermal 0% 0%
Small hydroelectric 1% 1%
Solar 37% 18%
Wind 10% 6%
Coal 0% 0%
Large Hydroelectric 40% 46%
Natural Gas 0% 0%
Nuclear 0% 0%
Other 0% 0%
Unspecified Sources of Power 0% 23%
RPS Level (% of sales) 62% 36%
Emissions Intensity (kg CO2/MWh) 6 102
It will no doubt be a communications challenge to explain to customers that the “unspecified
sources of power” on their PCL actually represent out-of-state renewable resources, and that
while the PCL indicates that their power supply is responsible for about 100 kg of CO2 emissions
per MWh (which is still well below the statewide average emissions intensity of 240 kg CO2 per
MWh) by the City’s accounting it is actually carbon neutral. Still, staff feels that this challenge is
worth it for the sake of the several million dollars of additional revenue that this strategy will
bring in, and the deep budget cuts that it will help the City avoid.
Use of REC Exchange Revenues
In the August 2019 UAC presentation on this topic, staff presented a list of potential uses of the
revenue from the sale of surplus renewable resources. (As Error! Reference source not found.
outlines, the net revenue from these sales could be up to $2.24 million per year, on average,
over the 2020-2030 time period.) That list of potential uses included:
• Rate reduction
• Decarbonization efforts (e.g., building electrification or electric vehicle charging
infrastructure or incentives)
• Investments in smart grid infrastructure
• A second transmission line connecting the City’s distribution system to the bulk
transmission system
City of Palo Alto Page 6
In discussions with the UAC and the community prior to the pandemic, the focus for the use of
this new revenue stream was largely on the first two items: rate reduction and local
decarbonization. Since the beginning of the pandemic the focus of these discussions has been
on how to avoid deep cuts to the electric utility budget while avoiding rate increases.
Given the current financial environment caused by the pandemic, staff recommends that the
majority of the proceeds from the recommended REC exchanges over the next two years be
devoted to closing the electric utility’s budget gap and avoiding cuts to programs, staffing levels,
or capital investments. And after the pandemic passes, staff recommends that a portion of the
proceeds from the REC exchanges continue to be devoted to rate reduction, in view of the
ongoing concerns of many in the community about fiscal sustainability.
But staff also recommends reserving a portion of the earnings from the sale of surplus
renewables (up to $1 million per year) and allocating them to local decarbonization efforts.
Doing so will enable the City to make headway on its ambitious Sustainability Implementation
Plan goals related to Energy and Electric Vehicles. To ensure that these funds are used to
support local electrification and carbon reduction efforts, staff recommends the creation of a
Cap and Trade Program Reserve in the Electric Fund which will hold revenues from the sale of
carbon allowances freely allocated to the electric utility under the State’s Cap and Trade
Program. (See Attachment B for background information on the State’s Cap and Trade Program.
And see Attachment D for an updated version of the Electric Utility Re serves Management
Practices reflecting the creation of this reserve.)
The Council’s January 2015 policy on the use of these revenues gives the City Manager authority
to designate the use of these funds among a range of purposes, including local carbon
reduction, so no further Council action would be required. The Electric Utility’s Cap and Trade
revenues are currently allocated 100% to renewable energy purchases. In prior years these
revenues could not be reallocated to local carbon reduction without indirectly incurring a rate
increase. However, the City’s commencement of sales of its renewable energy surplus presents
a unique opportunity to reallocate some of these funds with out incurring a rate increase.
For the period beyond FY 2022, staff anticipates that over $1.1 million per year can be dedicated
to rate reduction (equivalent to roughly a 1% change in rates) even if $1 million per year is
dedicated to local carbon reduction. Ultimately, the ability to make a significant investment in
jumpstarting local decarbonization efforts without raising retail rates by one cent —in fact, while
actually helping to lower retail rates—seems like a proposal that should win broad support.
Policy Alternatives
Staff has proposed a compromise approach to the use of the sales revenue from the sales and
exchanges of its renewable supplies, allocating up to $1 million per year toward local
decarbonization efforts and the remainder to rate reduction and closing the current budget gap.
Staff hopes that this will be an acceptable compromise for the next few years and will represent
a real step forward in the community’s environmental impact. The community can then revisit
City of Palo Alto Page 7
its long-term policy on the use of hourly carbon accounting for compliance with the Carbon
Neutral Plan in 2023 or 2024. Alternatives to this proposal could include allocating more of the
revenue from this proposal to rate reduction, or allocating more to local carbon reduction.
Other alternatives could include executing these REC exchanges for more than two years.
NEXT STEPS
In the coming weeks, staff will take the UAC’s recommendation regarding amendments to the
Carbon Neutral Plan to the Finance Committee and the City Council fo r approval. Immediately
upon the approval of these amendments, staff will begin to sell the City’s surplus renewable
energy supplies for the year (to the extent that such surpluses are expected, which will depend
on hydro conditions) and execute transactions to sell the City’s in-state renewable resources and
purchase out-of-state renewables. In addition, staff will report on the portfolio’s total emissions
under both an hourly and an annual carbon accounting framework in the annual report to the
City Council on the City’s Renewable Procurement Plan, Renewable Portfolio Standard
Compliance, and Carbon Neutral Electric Supplies (expected in Q4 of 2020).
In addition, in the next couple of years staff plans to carry out a broader and longer-term
analysis of potential options for rebalancing the City’s electric supply portfolio. This analysis will
be presented in the context of making a decision on whether to renew the City’s Western Base
Resource hydro contract after the current one expires at the end of 2024. It will also take into
account options for utilizing the City’s share of the California -Oregon Transmission Project, after
that resource reverts to the City’s control at the end of 2023.
RESOURCE IMPACT
Staff estimates that exchanging the City’s in-state renewable resources (“Bucket 1 RECs”) for
out-of-state renewables (“Bucket 3 RECs”) will generate a total of approximately $6.9 million in
additional revenue for fiscal years 2021 and 2022. For the period beyond FY 2023, staff
estimates that switching to an hourly carbon accounting methodology, using average hourly
emissions intensity factors, and using Bucket 3 RECs to neutralize the residual emissions
resulting from this change, will result in an increase in supply costs of approximately $140,000
in an average hydrological year. However, staff estimates that sales of the City’s surplus
renewable energy supplies would bring in about $3.3 million in revenue per year through 2025.
So overall, for the period beyond FY 2023, staff’s proposal is expected to yiel d $2.1 million in
new net revenue per year through 2030; staff recommends allocating $1 million per year of
these earnings toward local decarbonization efforts and the remainder to rate reduction. This
approach would yield a rate reduction of about 0.7%, or 0.12 cents/kWh, while also providing
substantial funding for local carbon reduction.
POLICY IMPLICATIONS
This report satisfies Initiatives #4 and #5 of the EIRP Work Plan. This report is also in line with
the Sustainability and Climate Action Plan goals of continuing to lower the carbon footprint of
the community.
City of Palo Alto Page 8
ENVIRONMENTAL REVIEW
The Utilities Advisory Commission’s discussion of the City’s carbon accounting methodolog y and
RPS procurement strategy 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:
• Attachment A: Revised Electric Supply Carbon Neutral Plan
• Attachment B: Cap and Trade Program Synopsis
• Attachment C: Carbon Neutral Plan, Carbon Accounting & REC Info
• Attachment D: Updated Electric Utility Reserves Management Practices
ATTACHMENT A
1
Adopted by City Council on March 4, 2013
Revised by City Council on _______________
City of Palo Alto Utilities
Electric Supply Portfolio Carbon Neutral Plan
1. Carbon Neutral Definition
A carbon neutral electric supply portfolio will demonstrate annual net zero greenhouse gas
(GHG) emissions, measured at the Citygate1, in accordance with The Climate Registry’s Electric
Power Sector protocol for GHG emissions measurement and reporting. by applying the average
hourly carbon emissions intensity of the electricity on the CAISO grid to the City’s net load for
each hour of the year.
2. Carbon Neutral Plan Objective
Reduce the City of Palo Alto’s overall community GHG emissions by achieving carbon neutrality
for the Electric Supply Portfolio starting in calendar year 2013 within an annual rate impact not
to exceed 0.15 cents per kilowatt-hour (₵/kWh) primarily through the: 1) engagement of
customers to increase energy efficiency; 2) expansion of long-term renewable resource
commitments; 3) promotion of local renewable resources; 4) continued reliance on existing
hydroelectric resources; and 5) meeting short-term balancing requirements and/or neutralizing
residual carbon through the use of short-term purchases of renewable resources and/or
renewable energy certificates (RECs).
3. Resource Strategies
a. Energy Efficiency
i. Continue to pursue energy efficiency strategies as identified in the Council-
approved ten-year Energy Efficiency Plan.
b. Long-term Renewable Resources
i. Continue to pursue the City’s Renewable Portfolio Standard (RPS) goal to
purchase renewable energy to supply at least 3360% of retail sales by 2015 2030
while ensuring that the retail rate impact of these purchases does not exceed 0.5
₵/kWh.
ii. Continue to pursue local renewable resources through the Palo Alto CLEAN and
PV Partners programs.
iii. Pursue additional RPS-eligible, long-term renewable resources (beyond the RPS
goals) to achieve a target of 100% carbon-free resources based on average year
hydroelectric generation.
1 Citygate is the location of the City’s main meter where the City interconnects to the Pacific Gas and Electric
transmission system. Emissions associated with of the output of the locally sited fossil gas fired combustions units
(COBUG), while not measured at Citygate, will be neutralized.
ATTACHMENT A
2
c. Short-term Renewable Resources and Renewable Energy Certificates
i. For fiscal years 2021 and 2022 (July 2020 through June 2022), minimize Electric
Supply Portfolio costs by exchanging bundled RECs from the City’s long-term
renewable resources (Bucket 1 RECs) for RPS-eligible, unbundled RECs (Bucket 3
RECs) to the maximum extent possible while maintaining compliance with the
state’s RPS regulations;
i. For calendar years 2013 2020 through 20162024, procure short-term
renewables, if the price is comparable to that of an un-bundled REC;
ii. For calendar years 2013 through 2016, procure or RPS-eligible, un-bundled RECs
(Bucket 3 RECs) as needed to achieve carbon neutrality based on actual load and
resources;
iii. Neutralize anthropogenic GHG emissions associated with the City’s purchase of
renewable resources with RPS-eligible unbundled-RECs (Bucket 3 RECs), which
may or may not be RPS-eligible.
d. Banking and Truing Up
i. In the event that there are surplus renewables beyond the City’s load in a
particular year, bank as many RECs as allowable under the TCR EPS protocol from
qualifying renewables from that year to minimize the need for purchasing RECs
in subsequent years.
ii. Neutralize emissions associated with market purchases resulting from deviations
between expected and actual load and renewable and hydroelectric generation
resources with unbundled-RECs, which may or may not be RPS-eligible. For
calendar years 2020 through 2024, neutralize residual emissions that result from
applying an hourly emissions accounting methodology, rather than a net annual
generation methodology, with RPS-eligible unbundled-RECs.
4. Hydroelectric Resources
a. Continue to preserve and advocate for existing carbon-neutral hydroelectric generation
resources that provide approximately 50% of average year resource needs.
b. Plan for and acquire carbon neutral resources assuming average hydroelectric
conditions going forward.
c. Under adverse hydroelectric conditions, procure RPS-eligible unbundled-RECs, which
may or may not be RPS-eligible, to achieve carbon neutrality up to the 0.15 ₵/kWh rate
impact limit and seek Council direction if carbon neutrality cannot be achieved within
the rate impact limit.
d. Under favorable hydroelectric conditions, where carbon neutral resources are expected
to be surplus to needs, even after allowable banking, then pursue selling short-term
renewable energy, or the renewable attributes, associated with one or more carbon-
neutral resources in the portfolio.
5. Financial and Rate Payer Impacts
a. In addition to the RPS annual rate impact limit of 0.5 ₵/kWh, the cost of achieving
carbon neutrality shall not exceed 0.15 ₵/kWh based on an average hydro year.
ATTACHMENT A
3
b. Revenues collected from surplus energy sales related to hydroelectric resources under
favorable conditions (e.g. wet years), will be maintained within reserves to adjust for the
cost of achieving carbon neutrality under adverse hydroelectric years.
c. To the extent available and allowable, revenues from the auction of cap-and-trade
allowances may be used to fund resources acquired to meet the carbon neutrality goals.
6. Reporting and Communication
a. Develop a communication plan for stakeholders to inform them of the City’s efforts
towards achieving a carbon neutral electric supply.
b. Submit an annual, verified report of the carbon content of the electric supply portfolio
to The Climate Registry.
c. Provide customers a report of the electric supply portfolio’s carbon content to
supplement the mandated Power Content Label.
d. Inform large commercial and/or corporate customers of the City’s carbon neutral
portfolio and its relevance to their individual corporate sustainability goals.
e.b.
7. Implementation Plan
The tasks that need to be completed in the next two years pending Council approval of the
Carbon Neutral Plan in February 2013 are listed in the table below.
Item Timeframe
1. Modify electric supply portfolio models and Energy Risk
Management Policies, Guidelines and Procedures to account for
Carbon Neutral objectives, balancing, banking of renewable
attributes, reporting and financial impacts.
By April 2013
2. Modify the Long-term Electric Acquisition Plan (LEAP) to include
the carbon neutral objective
By June 2013
3. Develop communication plan to inform customers and
stakeholders of Carbon Neutral Plan and efforts.
February to April
2013
4. Based on response to the Fall 2012 request for proposals, seek
approval of new renewable power purchase agreements to meet
the City’s RPS up to approximately 100% of the long-term resource
needs in average hydro years.
December 2012 to
June 2013
5. Determine resource needs for CY 2013 through CY 2016 and
develop plan to acquire short-term renewable resources.
By June 2013
6. Determine long-term renewable purchase volumes for beyond CY
2016 and develop plan to acquire long-term renewable resources.
By September 2013
7. Procure RECs as needed to neutralize carbon emissions based on
actual load and resources for CY 2013.
By May 2014
8. Along with annual Power Content Label, produce and report to
customers the carbon intensity of the electric supply portfolio.
May/June 2014 and
annually thereafter
9. Produce and submit Electric Power Sector (EPS) and Local
Governments Operation Protocol (LGOP) reports to The Climate
July and October
2014 and annually
ATTACHMENT A
4
Registry (TCR) for CY 2013. thereafter
10. Get independent verification of TCR reports and submit audited
reports to TCR.
By December 2014
and annually
thereafter
11. Redesign the PaloAltoGreen program according to Council
direction.
By December 2013
ATTACHMENT B
California’s Cap-and-Trade Program Synopsis
The Global Warming Solutions Act of 2006, also known as Assembly Bill (AB) 32, authorized the
California Air Resources Board (CARB) to develop regulations to lower the state’s greenhouse
gas (GHG) emissions to 1990 levels by 2020. CARB developed a cap-and-trade program as one
of the strategies to achieve the 2020 goal. Under the cap-and-trade program, an overall limit on
GHG emissions from capped sectors is established and facilities subject to the cap are able to
trade permits (allowances) to emit GHGs.
To do this, entities whose operations generate emissions are required to hold enough
allowances (an allowance being equivalent to one metric ton of greenhouse gas, or CO2e) to
cover their emitted output in a given year, also called its ‘compliance obligation.’ Entities can
purchase allowances at quarterly auctions held by CARB. The auction has a floor (or reserve)
price, which started at $10 per allowance in 2012 and has increased every calendar year by 5%
plus the rate of inflation as measured by the Consumer Price Index. As of 2020, the Reserve
price is at $16.68 per allowance. Over the last three years, auction prices have settled
anywhere between the reserve price (as it did in the May 2020 auction) to $1.83 more (in the
May 2019 auction).
In addition, certain entities and public power agencies, such as Palo Alto, have been distributed
free allowances to reduce the rate shock to customers from the purchase of required
allowances. The City’s Electric utility was required to participate in the cap-and-trade program
starting in 2013 but does not own or operate fossil fuel-based electricity generation covered by
the cap-and-trade regulations. Therefore, the Electric utility does not incur a compliance
obligation annually, but still receives free allowances. (The utility is, however, indirectly
exposed to cap-and-trade allowance costs to the extent that it makes purchases of generic
market power. The generators of this power must pay for allowances to generate and these
costs are then passed on to the buyers of that output.) The quantity of allowances received is
scheduled to decrease over time—Palo Alto’s allowance allocation was 340,533 in 2013 but is
expected to decrease to 110,496 by 2030. As the Electric utility has no compliance obligation, it
cannot retain any allowances for future use but must instead sell them at auction.
The Palo Alto Gas utility, on the other hand, does incur a compliance obligation annually based
on the amount of gas imported and utilized within the City. The Gas utility has been required to
participate in the cap and trade program since 2015, and while it also receives free allowances
every year, the quantity received does not fully cover the utility’s compliance obligation, and
also decreases annually (in 2015 it was based on about 94% of 2011 emissions, but is expected
to drop to about 51% of 2011 emissions by 2030). A portion of the allowances it receives can be
held towards its compliance obligation, but the remainder must be sold at auction. The share
that must be sold increases every year—in 2015, 25% was required to be sold, increasing by 5%
annually, reaching 100% in 2030. And any allowances required to make up its compliance
obligation must be purchased via auction (the electric utility cannot transfer or sell allowances
to the gas utility directly).
ATTACHMENT B
Revenues from the auction sale of allowances in each utility must be used exclusively for the
benefit of the ratepayers in that utility. The California Code of Regulations (CCR Title 17,
sections 95892 and 95893) details how entities must use those funds, but in general, these can
be for 1) the support for, construction of, or purchase of eligible renewable generation
resources directly to California (this applies to the electric utility only), 2) the funding of certain
energy efficiency rebates, retrofits, and fuel switching programs (fuel switching expenditures
are permitted from electric cap and trade revenues only), 3) funding for programs with
demonstrated GHG reductions, 4) non-volumetric return to ratepayers, either on or off bill, and
5) certain administrative, outreach and educational costs related to items 1-4 above. The City
Council has also adopted a policy on the use of allowance proceeds (Resolution 9487), with
expressed preference that revenues be used for programs and projects rather than being
returned to ratepayers in the form of a bill rebate. Per the current regulations, the utility must
either spend or rebate the funds received in any given year within 10 years (for example, funds
received in 2020 must be spent by 2030, etc.).
ATTACHMENT C
Carbon Neutral Plan Background, Hourly vs. Annual Carbon Accounting Methodologies, In-
State vs. Out-of-State Renewable Energy Credits
Carbon Neutral Plan Background
When Council approved the Carbon Neutral Plan in March 2013 (Staff Report 3550, Resolution
9322), it defined carbon neutrality as a portfolio that “will demonstrate annual net zero
greenhouse gas (GHG) emissions, measured at the Citygate, in accordance with The Climate
Registry’s Electric Power Sector protocol for GHG emissions measurement and reporting.” In
effect, this means that if the City’s carbon neutral supplies (in megawatt-hours (MWh)) equal or
exceed the City’s total load on an annual basis then the electric supply would be deemed to be
carbon neutral. At the time, this accounting methodology was considered to be the most
accurate accounting methodology that could be achieved—or needed. This was in part because
in 2013 there was very little solar generation connected to the California Independent System
Operator (CAISO) grid, and therefore the grid’s average emissions factors did not vary in the
extreme manner that they do today—for example, as in the emissions rate chart shown in
Figure 1 below, for CAISO emissions on February 12, 2020. But, more practically, CAISO did not
begin to publish hourly grid emissions factor data until 2018, and therefore a more granular
accounting methodology was not feasible at that time.
Figure 1: CAISO Average CO2 Emissions Rates for February 12, 2020
In addition, the 2013 Carbon Neutral Plan (CN Plan) did not contemplate the type of situation
the City finds itself in today, where, on an annual basis, it has an ongoing surplus of carbon
neutral supplies (under normal hydro conditions) relative to its load. The original CN Plan
addressed the City’s strategies for obtaining carbon neutral supplies equal to its annual load
(specifically, it authorized the purchase of unbundled RECs on a short-term basis, with an
ATTACHMENT C
ultimate goal of procuring enough long-term renewable supplies to fully satisfy the City’s
annual load).
Hourly vs. Annual Carbon Accounting
At the February 2020 UAC meeting, there was a consensus opinion that hourly accounting
should be used by staff for the evaluation of different supply and demand resources. Staff
strongly supports this position too, believing that an hourly accounting framework is the right
way to think about long-term procurement decisions. (Doing so in a rigorous way will ultimately
require the City to assign a monetary value to carbon emissions—but that topic can be
addressed at a later date.) Staff thinks that hourly grid carbon emissions rates are important to
incorporate into our internal decision-making and reporting in a variety of ways. There is no
immediate cost associated with incorporating hourly accounting into internal decision-making;
doing so simply prepares the City for when energy markets and regulations ultimately shift to a
more granular carbon accounting paradigm.
Adopting hourly carbon accounting instead of annual accounting for measuring the carbon
content of the City’s electric supply portfolio, on the other hand, is likely to have a modest
financial impact.1 The reason for the additional cost associated with this approach is that, in
holding the City’s electric supply portfolio up to a stricter carbon accounting standard, this
approach is likely to show, in an average year, that the City’s portfolio is responsible for a small
amount of “residual” emissions, even though its supplies match its load on an annual basis.2
In order to maintain the carbon neutral status of its electric supply under an hourly accounting
framework, the City would have to purchase additional resources in order to neutralize these
residual emissions. If the City were to adopt the use of hourly accounting for its portfolio
decisions right now, in order to minimize the cost impact associated with adopting an hourly
accounting framework, staff recommends authorizing the purchase of out-of-state renewable
energy (also called “unbundled, Bucket 3 RECs”) on a short-term basis to neutralize these
residual emissions. Based on current market prices for unbundled RECs, staff estimates the cost
associated with neutralizing these residual emissions to be $140,000/year.
1 As described in the February 2020 UAC report, the accounting methodology proposed by staff entails an hourly
comparison of the City’s supplies and load, with each hourly net load/supply value assigned the average hourly
carbon emissions intensity of the CAISO grid to convert it to an hourly emissions total that the City’s electric
portfolio is responsible for. These hourly emissions totals (which can be positive or negative, depending on
whether or not the City’s load exceeds its carbon neutral supplies for that hour) would then be summed across the
hours in a year.
2 These “residual emissions” occur because the City has a heavy concentration of solar resources in its supply
portfolio. Thus, the periods when the City has a surplus of resources relative to its load tend to be in periods when
the grid is relatively clean overall; conversely, the periods when the City typically has supply deficits relative to its
load tend to be at times when the grid is dirtier overall. Based on 2018 grid emissions and generation data for the
City’s resources, staff calculated these residual emissions to be approximately 16,000 MT CO2 for the year.
ATTACHMENT C
In-state, Bundled Renewable Energy (Bucket 1 RECs) vs. Out-of-state, Unbundled Renewable
Energy (Bucket 3 RECs)
The fundamental difference between bundled renewables (or “Bucket 1 RECs”) and unbundled
(“Bucket 3”) RECs, as the diagram in Figure 1 illustrates, is that with bundled renewables both
the energy and the REC (which represents the environmental value of the energy) are sold
together to the same entity. With unbundled RECs, the energy and the REC are sold separately
to different entities. Practically speaking though, Bucket 1 RECs are almost always produced by
in-state renewable generators, while Bucket 3 RECs are produced by out-of-state renewable
generators. Also, because of limitations placed on the use of Bucket 3 RECs for compliance
purposes in the state’s RPS legislation, and because of strong demand for Bucket 1 resources as
Community Choice Aggregators (CCAs) ramp up their energy purchases, Bucket 1 RECs currently
carry a significant price premium relative to Bucket 3 RECs, in spite of the fact that these two
resources represent equivalent amounts of renewable energy.
Figure 2: Bundled (Bucket 1) vs. Unbundled (Bucket 3) RECs Diagram 3
If the community prefers to implement an hourly carbon accounting framework using California-
based Bucket 1 renewables in the long-term, staff can optimize the electric portfolio to
minimize costs under this policy. However, the City will not have an easily available opportunity
to rebalance the electric portfolio until 2024. As a result, implementing hourly accounting using
Bucket 1 renewables right now has significant downsides. The principal drawback to this
approach is its cost impact. Due to the aforementioned price premium for Bucket 1 RECs right
now, staff estimates the cost of neutralizing the residual emissions with Bucket 1 RECs to be
about $620,000/year, as shown in Table 1 below, which is $480,000/year greater than the cost
of using Bucket 3 RECs for this purpose. In staff’s view, this represents a significant increase in
costs (and therefore a significant reduction in funds that could be allocated either to local
3 Source: Pinkel, D., and Weinrub, A., “What the Heck is a REC?” October 2013.
http://www.localcleanenergy.org/files/What%20the%20Heck%20is%20a%20REC.pdf
ATTACHMENT C
decarbonization efforts or rate reduction) with little to no additional environmental value to
show for it.4 In the short-term, utilizing Bucket 1 renewables to neutralize residual emissions
will not result in the construction of any new renewables, just additional expenditures. Use of
Bucket 3 RECs in the short-term, however, has a minimal rate impact and enables the City to
adopt hourly accounting for its electric portfolio in anticipation of long-term portfolio
rebalancing.
Table 1: Summary Comparison of Carbon Accounting Methodology Options
Option 1:
Annual Accounting
(Sell All Surplus)
Option 2:
Hourly Accounting (with
Bucket 1 Renewables)
Option 3:
Hourly Accounting
(with Bucket 3 RECs)
Surplus Sales
Revenue ($M) $ 2.24 $ 2.24 $ 2.24
Residual Emissions
Abatement Cost ($M) $ - $ 0.62 $ 0.14
Net Revenue ($M) $ 2.24 $ 1.62 $ 2.10
Rate Impact (%)* -1.5% -1.1% -1.4%
RPS Level (%)
(Bucket 1 Only) 45% 50% 45%
Energy Supply Level
(% of Annual Load) 100% 105% 100%
(+5% unbundled RECs)
PCL Emissions
Intensity
(lb CO2/MWh)
9.4 10.4 9.4
Hourly Accounting
Emissions Intensity
(lb CO2/MWh)
42.3 - 42.3
*Notes: “Rate Impact” assumes all net revenue is devoted to rate reduction.
Revenue and cost values are annual averages over the 2020-2030 time period.
Furthermore, committing to the use of Bucket 1 renewables in the near-term to neutralize the
portfolio’s residual emissions under an hourly accounting approach forces the City to incur a
relatively large increase in supply costs to address the emissions impact of procurement
decisions made long ago—at a time when the varying hourly emissions profiles of different
types of resources was not foreseeable. Rather than imposing such a large cost on the City to
account for portfolio decisions made years ago, staff recommends taking hourly emissions
accounting impacts into account for future portfolio decisions, as well as reconsidering the use
4 For a full discussion of the environmental merit of Bucket 3 RECs relative to Bucket 1 renewables, please see
Attachment B of this August 2019 UAC report. In short though, Bucket 3 RECs represent all of the environmental
attributes of the underlying generation, including its emissions profile. And within California there is currently an
over-supply of renewable energy at many times of the year, while neighboring states retain a significant reliance
on coal and natural gas generators; as a result, out-of-state renewable generation can be more valuable
environmentally than in-state renewable generation.
ATTACHMENT C
of Bucket 1 renewables for neutralizing the portfolio’s residual emissions the next time the City
has an opportunity to significantly rebalance its supply portfolio—which should be around
2024, when the City will make a final decision on whether or not to renew its Western Base
Resource hydro contract. By that time, market conditions and regulations related to Bucket 1
and Bucket 3 RECs may have changed, and the price premium of Bucket 1 renewables relative to
Bucket 3 RECs may be lower than it is today.
In considering the use of Bucket 3 RECs for neutralizing residual emissions, it’s important to
note that the original Carbon Neutral Plan established a goal of obtaining Bucket 1 renewable
supplies equal to the City’s load on an annual basis, and it allowed for the use of Bucket 3 RECs
to address the reduction in carbon neutral generation that occurs in low hydro years. However,
the Plan did not contemplate a scenario where the City has an overall surplus of supplies on an
on-going basis (or where grid emissions rates vary significantly over the course of the year).
Using Bucket 3 RECs for neutralizing residual emissions remains true to that original Carbon
Neutral Plan: the City would still have Bucket 1 renewable supplies equal to its load on an
annual basis. This approach simply augments the original Plan by addressing what to do with
the City’s supplies that exceed its annual load, and how to address the fact that grid emissions
now vary dramatically from hour to hour and season to season.
APPENDIX A : ELECTRIC UTILITY RESERVES MANAGEMENT PRACTICES
The following reserves management practices are used when developing the Electric Utility
Financial Plan:
Section 1. Definitions
a)“Financial Planning Period” – The Financial Planning Period is the range of future fiscal
years covered by the Financial Plan. For example, if the Financial Plan delivered in
conjunction with the FY 2015 budget includes projections for FY 2015 to FY 2019,
FY 2015 to FY 2019 would be the Financial Planning Period.
b)“Fund Balance” – As used in these Reserves Management Practices, Fund Balance refers
to the Utility’s Unrestricted Net Assets.
c)“Net Assets” - The Government Accounting Standards Board defines a Utility’s Net
Assets as the difference between its assets and liabilities.
d)“Unrestricted Net Assets” - The portion of the Utility’s Net Assets not invested in capital
assets (net of related debt) or restricted for debt service or other restricted purposes.
Section 2. Supply Fund Reserves
The Electric Supply Fund Balance is reserved for the following purposes:
a)For existing contracts, as described in Section 4 (Reserve for Commitments)
b)For operating budgets reappropriated from previous years, as described in Section 5
(Reserve for Reappropriations)
c)For special projects for the benefit of the Electric Utility ratepayers, as described in
Section 6 (Electric Special Projects Reserve)
d)For year to year balancing of costs associated with the Electric Utility’s hydroelectric
resources, as described in Section 7 (Hydroelectric Stabilization Reserve)
e)For rate stabilization, as described in Section 1.d) (Rate Stabilization Reserves)
f)For operating contingencies, as described in Section 12 (Operations Reserves)
g)Any funds not included in the other reserves will be considered Unassigned Reserves
and shall be returned to ratepayers or assigned a specific purpose as described in
Section 13 (Unassigned Reserves).
Section 3. Distribution Fund Reserves
The Electric Distribution Fund Balance is reserved for the following purposes:
a)For existing contracts, as described in Section 4 (Reserves for Commitments)
b)For operating and capital budgets reappropriated from previous years, as described in
Section 5 (Reserves for Reappropriations)
c)As an offset to underground loan receivables, as described in Section 8 (Underground
Loan Reserve)
d)To hold Public Benefit Program funds collected but not yet spent, as described in Section
9 (Public Benefits Reserve)
e)For cash flow management and contingencies related to the Electric Utility’s Capital
Improvement Program (CIP), as described in Section 10 (CIP Reserve)
f)For rate stabilization, as described in Section 11.d) (Rate Stabilization Reserves)
g)For operating contingencies, as described in Section 12 (Operations Reserves)
Attachment D
h) Any funds not included in the other reserves will be considered Unassigned Reserves
and shall be returned to ratepayers or assigned a specific purpose as described in
Section 14 (Unassigned Reserves).
Section 4. Reserves for Commitments
At the end of each fiscal year the Electric Supply Fund and Electric Distribution Fund
Reserves for Commitments will be set to an amount equal to the total remaining spending
authority for all contracts in force for the Electric Supply Fund and Electric Distribution
Fund, respectively, at that time.
Section 5. Reserves for Reappropriations
At the end of each fiscal year the Electric Supply Fund and Electric Distribution Fund
Reserves for Reappropriations will be set to an amount equal to the amount of all remaining
capital and non-capital budgets that will be reappropriated to the following fiscal year for
each Fund in accordance with Palo Alto Municipal Code Section 2.28.090.
Section 6. Electric Special Projects Reserve
The Electric Special Projects Reserve (ESP Reserve) will be managed in accordance with the
policies and timelines set forth in Resolution 9206 (Resolution of the Council of the City of
Palo Alto Approving Renaming the Calaveras Reserve to the Electric Special Project Reserve
and Adoption of Electric Special Project Reserve Guidelines). These policies and timelines
are included from Resolution 9206 as amended to refer to the reserves structure set forth
in these Reserves Management Practices:
a) The purpose of the ESP Reserve is to fund projects that benefit electric ratepayers;
b) The ESP Reserve funds must be used for projects of significant impact;
c) Projects proposed for funding must demonstrate a need and value to electric
ratepayers. The projects must have verifiable value and must not be speculative, or
high-risk in nature;
d) Projects proposed for funding must be substantial in size, requiring funding of at least
$1 million;
e) Set a goal to commit funds by the end of FY 2017;
f) Any uncommitted funds remaining at the end of FY 2022 will be transferred to the
Electric Supply Operations Reserve and the ESP Reserve will be closed;
Section 7. Hydroelectric Stabilization Reserve
The Hydroelectric Stabilization Reserve is used to manage the supply cost impacts
associated with variations in generation from hydroelectric resources. Staff will manage the
Hydroelectric Stabilization Reserve as follows:
a) Projected Hydro Output: Near the end of each fiscal year, staff will determine the
actual and expected hydro output for that fiscal year, compare that to the long-term
average annual output level (495,957 MWh as of March 2018), and multiply the
difference by the average of the monthly round-the-clock forward market prices for
each month of the current fiscal year.
b) Changes in Reserves. Staff is authorized to transfer the amount described in Sec.
7(a) from the Operations Reserve to the Hydroelectric Stabilization Reserve for
hydro output deviations above long-term average levels, or transfer this amount
from the Hydroelectric Stabilization Reserve to the Operations Reserve for hydro
output deviations below long-term average levels.
c) Implementation of HRA. The level of the Hydroelectric Stabilization Reserve after
the transfers described above shall be the basis for staff’s determination, with
Council approval, of whether to implement the Hydro Rate Adjuster (Electric Rate E-
HRA) for the following fiscal year.
d) Reserve Guidelines. Staff will manage the Hydroelectric Stabilization Reserve
according to the following guideline levels:
Minimum Level $3 million
Target Level $19 million
Maximum Level $35 million
Section 8. Underground Loan Reserve
At the end of each fiscal year, the Underground Loan Reserve will be adjusted by the
principal payments made against outstanding underground loans.
Section 9. Public Benefits Reserve
The Public Benefits Reserve will be increased by the amount of unspent Public Benefits
Revenues remaining at the end of each fiscal year. Expenditure of these funds requires
action by the City Council.
Section 10. CIP Reserve
The CIP Reserve is used to manage cash flow for capital projects and acts as a reserve for
capital contingencies. Staff will manage the CIP Reserve according to the following
practices:
a) The following guideline levels are set forth for the CIP Reserve. These guideline levels
are calculated for each fiscal year of the Financial Planning Period and approved by
Council resolution.
Minimum Level 20% of the maximum CIP Reserve guideline
level
Maximum Level Average annual (12 month)1 CIP budget, for
48 months of budgeted CIP expenses2
b) Changes in Reserves: Staff is authorized to transfer funds between the CIP Reserve and
the Reserve for Commitments when funds are added to or removed from the Reserve
for Commitments as a result of a change in contractual commitments related to CIP
projects. Any other additions to or withdrawals from the CIP reserve require Council
action.
1 Each month is calculated based upon 1/12 of the annual budget.
2 For example, in the Financial Plan for FY 2021, the 48 month period to use to derive the
annual average is FY 2021 through FY 2024. In the FY 2022 Financial Plan, the 48 month period
to use to derive the annual average would be FY 2022 through FY 2025 etc.
c) Minimum Level:
i) If, at the end of any fiscal year, the minimum guideline is not met, staff shall present
a plan to the City Council to replenish the reserve. The plan shall be delivered by the
end of the following fiscal year, and shall, at a minimum, result in the reserve
reaching its minimum level by the end of the next fiscal year. For example, if the CIP
Reserve is below its minimum level at the end of FY 2017, staff must present a plan
by June 30, 2018 to return the reserve to its minimum level by June 30, 2019. In
addition, staff may present, and the Council may adopt, an alternative plan that
takes longer than one year to replenish the reserve, or that does so in a shorter
period of time.
d) Maximum Level: If there are funds in this reserve in excess of the maximum level staff
must propose in the next Financial Plan to transfer these funds to another reserve or
return them to ratepayers in the funds to ratepayers, or designate a specific use of
funds for CIP investments that will be made by the end of the next Financial Planning
period. Staff may also seek City Council to approve holding funds in this reserve in
excess of the maximum level if they are held for a specific future purpose related to the
CIP.
Section 11. Rate Stabilization Reserves
Funds may be added to the Electric Supply or Distribution Fund’s Rate Stabilization Reserves
by action of the City Council and held to manage the trajectory of future year rate increases.
Withdrawal of funds from either Rate Stabilization Reserve requires action by the City
Council. If there are funds in either Rate Stabilization Reserve at the end of any fiscal year,
any subsequent Electric Utility Financial Plan must result in the withdrawal of all funds from
this Reserve by the end of the Financial Planning Period. The Council may approve
exceptions to this requirement, when proposed by staff to provide greater rate stabilization
to customers.
Section 12. Operations Reserves
The Electric Supply Fund and Electric Distribution Fund Operations Reserves are used to
manage normal variations in the costs of providing electric service and as a reserve for
contingencies. Any portion of the Electric Utility’s Fund Balance not included in the reserves
described in Section 4 to d) above will be included in the appropriate Operations Reserve
unless the reserve has reached its maximum level as set forth in Section 12 (e) below. Staff
will manage the Operations Reserves according to the following practices:
a) The following guideline levels are set forth for the Electric Supply Fund Operations
Reserve. These guideline levels are calculated for each fiscal year of the Financial
Planning Period based on the levels of Operations and Maintenance (O&M) and
commodity expense forecasted for that year in the Financial Plan.
Minimum Level 60 days of Supply Fund O&M and commodity expense
Target Level 90 days of Supply Fund O&M and commodity expense
Maximum Level 120 days of Supply Fund O&M and commodity expense
b) The following guideline levels are set forth for the Electric Distribution Fund Operations
Reserve. These guideline levels are calculated for each fiscal year of the Financial
Planning Period based on the levels of O&M expense forecasted for that year in the
Financial Plan.
Minimum Level 60 days of Distribution Fund O&M expense
Target Level 90 days of Distribution Fund O&M expense
Maximum Level 120 days of Distribution Fund O&M expense
c) Minimum Level: If, at the end of any fiscal year, the funds remaining in the Supply Fund
or Distribution Fund’s Operations Reserve are lower than the minimum level set forth
above, staff shall present a plan to the City Council to replenish the reserve. The plan
shall be delivered within six months of the end of the fiscal year, and shall, at a
minimum, result in the reserve reaching its minimum level by the end of the following
fiscal year. For example, if the Operations Reserve is below its minimum level at the end
of FY 2014, staff must present a plan by December 31, 2014 to return the reserve to its
minimum level by June 30, 2015. In addition, staff may present an alternative plan that
takes longer than one year to replenish the reserve.
d) Target Level: If, at the end of any fiscal year, either Operations Reserve is higher or
lower than the target level, any Financial Plan created for the Electric Utility shall be
designed to return both Operations Reserves to their target levels by the end of the
forecast period.
e) Maximum Level: If, at any time, either Operations Reserve reaches its maximum level,
no funds may be added to this Reserve. Any further increase in that fund’s Fund
Balance shall be automatically included in the Unassigned Reserve described in Section
13, below.
Section 13. Unassigned Reserves
If the Operations Reserve in either the Electric Supply Fund or the Electric Distribution Fund
reaches its maximum level, any further additions to that fund’s Fund Balance will be held in
the Unassigned Reserve. If there are any funds in either Unassigned Reserve at the end of
any fiscal year, the next Financial Plan presented to the City Council must include a plan to
assign them to a specific purpose or return them to the Electric Utility ratepayers by the end
of the first fiscal year of the next Financial Planning Period. For example, if there were
funds in the Unassigned Reserves at the end of FY 2016, and the next Financial Planning
Period is FY 2017 through FY 2021, the Financial Plan shall include a plan to return or assign
the funds in the Unassigned Reserve by the end of FY 2017. Staff may present an
alternative plan that retains these funds or returns them over a longer period of time.
Section 14. Intra-Utility Transfers between Supply and Distribution Funds
Transfers between Electric Distribution Fund Reserves and Electric Supply Fund Reserves are
permitted if consistent with the purposes of the two reserves involved in the transfer. Such
transfers require action by the City Council.
Section 15. Low Carbon Fuel Standard (LCFS) Reserve
This reserve tracks revenues earned via the sale of Low Carbon Fuel Credits allocated by the
California Air Resources Board to the City, as well as expenses incurred, in accordance with
California’s Low Caron Fuel Standard program. At the end of each fiscal year, the LCFS
Reserve will be adjusted by the net of revenues and expenses associated with California’s
LCFS program.
Section 16. Cap and Trade Program Reserve
This reserve tracks unspent or unallocated revenues from the sale of carbon allowances
freely allocated by the California Air Resources Board to the electric utility, under the State’s
Cap and Trade Program. Funds in this Reserve are managed in accordance with the City’s
Policy on the Use of Freely Allocated Allowances under the State’s Cap and Trade Program
(the Policy), adopted by Council Resolution 9487 in January 2015.
City of Palo Alto (ID # 11395)
Utilities Advisory Commission Staff Report
Report Type: Agenda Items Meeting Date: 7/1/2020
City of Palo Alto Page 1
Summary Title: Upstream Emissions Accounting
Title: Staff Recommendation That the Utilities Advisory Commission
Recommend to Council on Whether to Direct Staff to Evaluate the Impact of
Including Upstream Emissions and Using a 20 -year Time Horizon for Glo bal
Warming Potential on the Community’s Carbon Emissions
From: City Manager
Lead Department: Utilities
EXECUTIVE SUMMARY
Staff received a Colleague’s Memo (UAC Report ID # 11336) from two Utilities Advisory
Commission (UAC) Commissioners which the UAC discussed at the May 2020 UAC meeting,
detailing the impact on community emissions of including upstream emissions1 and using a 20-
year time horizon global warming potential (GWP) for natural gas. Staff has put this topic on the
agenda as an action item to enable the UAC to make a recommendation to Council to direct
staff to take further action if desired.
While staff has no specific recommendation, if the UAC recommends that Council direct staff to
assess the impact of both including upstream emissions and using a 20-year time horizon for
global warming potential (GWP) on the community’s carbon emissions, staff could
accommodate the following options:
a.Estimate the approximate greenhouse gas impact of the upstream emissions associated
with Palo Alto’s electricity, natural gas, propane, and liquid fu els using both a 20-year and
100-year time horizon GWP. This could be completed by December of 2020 and would
entail approximately one week of staff time; or
b.More precisely calculate the greenhouse gas impact, vetted by an independent consultant,
of the upstream emissions associated with Palo Alto’s electricity, natural gas, propane, and
liquid fuels using both a 20-year and 100-year time horizon GWP. This could be completed
1 Upstream emissions are those emissions associated with the extraction, production, transportation , and
distribution of products, in addition to any emissions from combustion or operations and even tual disposal.
Staff: Lena Perkins
City of Palo Alto Page 2
by the first half of 2021, and would likely cost more than $25,000, and a minimum of three
weeks of staff time.
DISCUSSION
In their memo, UAC Commissioners Segal and Forssell highlighted that both a) including
upstream emissions2 and b) using the 20-year GWP3 show the greenhouse gas emissions due to
natural gas consumption within the City to be much higher than how they are currently
reported in the S/CAP. The Commissioners sought to prompt a discussion about whether
including these additional factors would more closely reflect the actual emissions and
subsequent global warming impact of natural gas transported to and consumed in Palo Alto.
Upstream emissions are an important part of total emissions sometimes called “life-cycle
emissions” and reflect the overall greenhouse gas emissions associated with the extraction,
production, refining, transportation, and distribution of fuels, in addition to the emissions at
their point of use. These emissions are substantial, and required for many standards,4 but are
currently “strongly encouraged” rather than required for community climate inventories.
Climate inventories for cities typically only report direct emissions from within the community,
such as the S/CAP, while upstream emissions are sometimes reported alongside adopted
climate inventory goals.5
It is important to note that there are also substantial upstream emissions for other types of
energy consumed by the Palo Alto community - most notably propane and liquid fuels such as
gasoline and diesel (which are often co-produced with natural gas in the United States). One of
the important aspects of upstream emissions is that combined with direct emissions and other
life-cycle emissions, they reflect a community’s actual carbon footprint, whereas the direct
emissions are used for goal setting by local governments as they center on aspects the local
government can control. In order to educate and empower the community, there are a number
of tools and inventories available for the public to view the total emissions of the community6
or calculate their personal carbon footprint,7 all of which reflect direct emissions and all other
indirect emissions.
2 The U.S. ICLEI Community protocol encourages inclusion full life cycle accounting of major emissions sources,
while a full consumption-based inventory is “strongly encouraged” ICLEI, 2012, p.16).
3 100-year GWP is used by CARB https://ww2.arb.ca.gov/emission-inventory-activities , EPA
https://www.epa.gov/ghgemissions/understanding-global-warming-potentials.
4 For example U.S. EPA requires all upstream and life-cycle emissions to be included for the US Renewable Fuel
Standard Program under the Clean Air Act, as detailed here: https://www.epa.gov/renewable-fuel-standard-
program/lifecycle-analysis-greenhouse-gas-emissions-under-renewable-fuel.
5 Several entities report some upstream emissions, also known as Scope 3 emissions, alongside annual climate
inventory reporting. One example is the Scope 3 emissions reported annually by Stanford University here:
https://sustainable.stanford.edu/sites/default/files/Scope3_Emissions_2018.pdf.
6 A research group from UC Berkeley has published complete emissions inventory by census block that can be
found here: https://coolclimate.org/maps-2050.
7 The U.S. EPA household personal carbon footprint calculator is one of many, and can be found here:
https://www3.epa.gov/carbon-footprint-calculator/.
City of Palo Alto Page 3
With respect to using a 20-year GWP, there is currently an academic trend of reporting the 20-
year GWP impact alongside the 100-year GWP to help communicate the near-term radiative
forcing from gases which trap much more heat than CO2 during their initial decades in the
atmosphere.8 While neither metric fully accounts for the radiative forcing (i.e. carbon budget)
perfectly, there is merit to reporting the 20-yr GWP alongside the 100-yr GWP in order to
better reflect the large impact that the marked increase in methane leakage that started about
ten years ago.
There are a number of complications associated with including upstream emissions in the
community’s emissions inventory at this time, or using them in utility planning or policy
activities in the near term. However, communities are “strongly encouraged” to track these
emissions alongside their emissions inventory to help provide the community carbon footprint
and to provide a foundation for longer-term discussions about the use of upstream emissions
for these activities, staff could provide a summary report later this year. I f directed by Council
to perform this assessment, staff could provide the UAC and Council a report by December 31,
2020 on the approximate greenhouse gas emissions of the upstream emissions associated with
Palo Alto’s electricity, natural gas, propane, and liquid fuels using both a 20-year and 100-year
time horizon GWP.
NEXT STEPS
If directed by Council, staff will complete the analysis and report for the level of precision
specified. Analysis option (a) would be completed by the end of 2020. Analysis option (b) would
be completed by about midyear of 2021.
RESOURCE IMPACT
Staff estimates for each analysis option are below:
a. Estimate the approximate greenhouse gas impact of the upstream emissions associated
with Palo Alto’s electricity, natural gas, propane, and liquid fuels using both a 20-year and
100-year time horizon GWP. This could be completed by December of 2020 and would
require approximately one week of staff time; or
b. More precisely calculate the greenhouse gas impact, vetted by an independent consultant,
of the upstream emissions associated with Palo Alto’s electricity, natural gas, propane, and
liquid fuels using both a 20-year and 100-year time horizon GWP. This could be completed
by the first half of 2021, and would likely cost more than $25,000, an d a minimum of three
weeks of staff time.
8 An explanation of GWP by the U.S. EPA can be found here: https://www.epa.gov/ghgemissions/understanding-
global-warming-potentials. A recent Nature Paper recommends the use of more complex calculations than the 20-
year GWP to reflect the cumulative radiative forcing: https://www.nature.com/articles/s41612-018-0026-8.
Changing to 20-year GWP as the only metric is not recommended, as explained here:
https://climateanalytics.org/briefings/why-using-20-year-global-warming-potentials-gwps-for-emission-targets-is-
a-very-bad-idea-for-climate-policy/.
City of Palo Alto Page 4
ENVIRONMENTAL REVIEW
The Utilities Advisory Commission’s discussion of the City’s carbon accounting methodology
does not meet the definition of a project under Public Resources Code 21065 and therefore
California Environmental Quality Act (CEQA) review is not required.
cityofpaloalto.org
UAC decision on whether
to recommend staff
assess of upstream
emissions & 20-year
global warming potential
Utilities Advisory Commission
July 1, 2020
SStaff: Lena Perkins
Attachment A
•
CITY OF
PALO ALTO
2 2cityofpaloalto.org/sustainabilityplan
•Review upstream emissions & 20-year global warming
potential of emissions
•UAC to decide whether to recommend action on
upstream emissions and/or 20-year global warming
potential of emissions
Today’s Objectives
cityofpaloalto.org
City of Palo Alto (ID # 11467)
Utilities Advisory Commission Staff Report
Report Type: Agenda Items Meeting Date: 7/1/2020
City of Palo Alto Page 1
Summary Title: FY21 Adopted Budget Overview
Title: Discussion of the FY21 Council -Adopted Utilities Budget
From: City Manager
Lead Department: Utilities
Discussion
The City Council adopted the FY21 budget on Monday, June 22, 2020. Staff has brought
forth a brief slide presentation as an overview for the UAC.
Attachments:
•Attachment A: FY21 Adopted Utilities Budget Update
Staff: Dave Yuan and Anna Vuong
July 1, 2020 www.cityofpaloalto.org
FY 2021 Adopted Utilities Operating & Capital Budget Update
Utilities Advisory Commission
FY 2021 Utilities Adopted Operating and Capital Budget Update
1
Staff: Dave Yuan and Anna Vuong
2
ENTERPRISE FUNDS –RATE CHANGES
Total median residential
monthly bill is estimated to
increase $1.47 per month, or
0.5%, to $320.71 per month
Positions Frozen for FY 2021
•Chief Operating Officer
•Assistant Director, Engineering
•Utilities Supervisor/AMI Project
Manager
•Substation Electrician
•Business Analyst
3
4
Capital Improvement and Program Reductions
o Electric CIP ($2.4M)
•Underground Rebuilds 15, 16, 24
•East Meadow Circle 4/12kV Conversion
•Coleridge/Cowper/Tennyson 4/12kV Conversion
o Building Electrification ($0.3M)
o Gas CIP ($3.0M)
•Gas Main Replacement 24
o Wastewater Collection CIP ($0.7M)
•Sewer System Rehabilitation 30
5
Capital Improvement and Program Continuation
o City’s Carbon Neutral Gas carbon offset program
$1M
o Cross-bore safety inspection program $1M
o Advanced Metering Infrastructure Project $19M -
$20M
o Corte Madera Reservoir replacement $6M - $7M
o Fiber Network Expansion Project $2M - $5M
FY 2021 Projected Ending Operation Reserves
Utility FY 2021 Projected
Ending Reserve
Minimum
Guideline
Maximum
Guideline
% of Max
Guideline
Electric 32,581 25,225 46,908 69.5%
Fiber 33,990 943 2,358 1,441%
Gas 8,098 5,839 11,677 69.4%
Water 13,090*7,001 13,090 100.0%
Wastewater Collection 4,343 2,993 7,483 58.0%
*There are additional funds ($0.8M) projected above the maximum guideline level and the financial plan brings
the reserve to within guideline levels by the end of FY 2022.
6